INTEGRATED
ANNUALREPORT
2022
Corporate Governance,
Risk & Remuneration
Financial statements
Sustainability/
Non-Financial Statements
2
Ontex Integrated annual report 2022
Strategic report
Contents
tr
rp
rp
ern, R
& murtio
Finci
mets
uiny/
No-Finci
tmets
Corporate governance report
Risk report
Remuneration report
Statement of the board of directors
Independent auditor’s report
Consolidated statements
Notes to the statements
Events after the reporting period
Reporting basics
Sustainability governance
Product stewardship
Our value chain
How we work with our suppliers
Environmental statements
Social statements
EU taxonomy reporting
GRI content index
Investor relations
Glossary
About this report
Statements of the Chairman and CEO
About us
Our categories
Our value creation model
Our strategy
Our performance
Employees
Markets & society
Innovation
Resources & environment
Finance
Operations
Strategic report
Corporate Governance,
Risk & Remuneration
Financial statements
Sustainability/
Non-Financial Statements
3
Ontex Integrated annual report 2022
" 20 w
cotin cuse
xctio
fundmet r
reiettio w
mbarke o 2021
i er re
pr grw n
cr l r
khers."
Statements of the Chairman and CEO
Statements of the
Chairman and CEO
Ontex Integrated annual report 2022
A year of progress
despite the challenges
Dear shareholder,
Last year was a year of unprecedented
challenges. A major war erupted, causing
immense human suering, creating major
disruptions in the global supply chain and
fueling ination in an already highly volatile
post-pandemic environment. Also our
operations and input costs were heavily
aected.
Despite the many actions taken to mitigate
these negative factors, our nancial results
and market performance remained below our
ambitions. Yet, in 2022 we also saw clear steps
towards recovery with strong revenue growth
throughout and solid margin expansion during
the second half of the year as a result of our
pricing initiatives and cost-saving eorts.
In 2022 we continued the focused execution
of the fundamental strategic reorientation
we embarked on 2021 in order to restore
protable growth and create value for our
stakeholders. This strategy is to concentrate
on our partner brands and healthcare
business in Europe and North America. In
Hans Van Bylen,
Chairman of the Board
July 2022 we signed an agreement to sell our
Mexican business, with an expected closing
of the transaction in Q2 2023. In parallel, we
continue to explore strategic alternatives for
our remaining branded businesses in the
emerging markets.
To increase our agility and accelerate the
transformation of our operations and
business in our core markets in a challenging
context, various leadership and organizational
changes were made. In November 2022
Gustavo Calvo Paz assumed the role of
CEO and also the size of the executive
management team was reduced. The Board
is convinced that Gustavo’s leadership will
boost the overall drive towards a leaner, more
performance-driven organization.
With the same aim and to improve the
eectiveness and speed of its decision-making
the Board also undertook a review of its
governance. As a result of this, in December
2022, we revised the size and composition
of the Board and its Committees and we
dissolved the Strategy Committee. To further
enhance the focus on the execution of turn-
around and alignment between management,
Board and our shareholders, the Board also
reviewed the Management remuneration
policy and identied various changes that we
are proposing to our shareholders at the next
General Meeting.
On behalf of the Board I would like to warmly
thank all Ontex leaders and employees for
their resilience and commitment towards
the transformation and success of Ontex,
together with all our stakeholders and
partners on that journey. We also thank you,
our shareholders, for your continued support
and engagement.
Whilst the world in 2023 will still be turbulent,
we have made good progress in 2022.
Building on this momentum, we are condent
that Ontex and all its stakeholders will be able
to reap the rewards of the execution of our
collective ambition and eorts.
Hans Van Bylen,
Chairman of the Board
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Ontex Integrated annual report 2022
Statements of the Chairman and CEO
4
Gustavo Calvo Paz, CEO
"Ju lk i m
spts, comining
indiu ts
hr mw
wins priz.
veryy lays
r, n
us h r
responies ar
i r min n
cs m, w
ar w poio
sue."
PARTNER OF CHOICE FOR PARTNER BRANDS
AND HEALTHCARE
The strategic vision for Ontex is simple: to
be the number one partner of choice for
partner retail brands and healthcare brands,
in Baby Care, Feminine care and Adult Care,
with leadership positions in Europe and
North America. Compared to where we have
been operating until recently, this means
sharpening our focus on our core markets
to be more ecient as a company. It is for
this reason that we are strongly focused on
divesting our emerging market businesses.
Working successfully with retail brands implies
a high level of partnership and requires
special capabilities. The reputation of our
customers depends on the quality and
innovative features of our products. We must
ensure that we have competitively performant
products, fast innovation in the market, and
solid quality assurance. Our customers count
on us to be reliable partners to them: they
want their products on shelf at all times. That’s
why we need to have best-in-class customer
service and we must be able to address
customers’ requests in an agile and eective
manner. Our customers also count on us to
provide aordable essential products to their
shoppers. That is why it is critical for us to
have cost-ecient operations. Last but not
least: we also support our customers in the
achievement of their own Sustainability and
Transparency goals. That is why Sustainability
is also a key priority for us.
Delivering great value to our customers is
only possible if we have an organization that
is laser-focused on execution. Having a lean,
performance-driven organization is critically
important to achieve this, because it means
that we can make decisions quickly and our
customers know who to cooperate with on
our side. Also, our customers know that if
they need to speak to me, they can.
ACCESSIBLE AND ACCOUNTABLE
LEADERSHIP
My rst priority upon being appointed CEO
was to connect with our people, get to know
our operations, our customers and suppliers.
I wanted to see exactly what we do, and how
we do it. So, upon becoming CEO, I went on
a tour of our company. I visited all plants in
Europe and the Americas and most plants
in the rest of the world, and many of our
commercial oces, customers, investors
and suppliers. I introduced myself at internal
town hall meetings and focused strongly on
conveying our vision and strategy across the
company.
Number one partner
Statements of the Chairman and CEO
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Ontex Integrated annual report 2022Ontex Integrated annual report 2022
5
Ensuring internal clarity on our strategic
priorities is key to ensure laser focus on
execution and empowerment of our teams,
so we can all contribute to delivering strong
performance. I want our Ontex team to
feel inspired by where they are taking the
company, and how they can make a dierence
in our journey together. I am committed
to delivering on this – and once I commit to
something, I work non-stop until I achieve it.
Just like in team sports, combining individual
eorts through teamwork wins the prize.
Everybody plays a role, and if each of us has
our responsibilities clear in our minds and
commits to them, we are well positioned
for success. I am focused on delivering
business performance, and if everyone feels
empowered and accountable in their roles,
then we will have a winning team.
GROWING FASTER THAN THE MARKET
Our strategy has remained consistent since it
was rst announced in 2021, and throughout
the leadership changes. Our focus since
then has been – and will continue to be –
on relentless execution of that strategy.
The results of this commitment speak for
themselves: within our strategic categories, we
are growing faster than the market.
Looking ahead to 2023, we will continue to
face chalIenges from external factors. Ination
will not go away tomorrow, and this means
that consumers will become even more
mindful of their spending. This will continue
to create opportunities for retail brands, and
we should use this as one of the levers to
restore our protability. I expect that 2023
will continue to bring a highly competitive
environment, with innovation playing an ever
more important role. However, a strong focus
on executing on our priorities will position us
well to tackle these challenges: we will strive to
be ecient, innovative, fast, sustainable, and
best-in-class for customer service.
Gustavo Calvo Paz,
CEO
Competitive
Innovation
Strong Sustainability
Performance
Cost-Ecient
Operations
Lean, Focused,
Performance-Driven
Organization
True Customer
Centricity
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Ontex Integrated annual report 2022
About us
About us
WHO WE ARE
We develop, produce and supply personal
hygiene products and solutions to partner
brands and healthcare providers in baby,
feminine and adult care in more than 110
markets around the world, with production
plants and oces in Europe, the Americas,
Middle East, Africa, Asia and Australia.
OUR MISSION AND JOURNEY
At Ontex, we help everyone embrace life’s
many changes. We take pride in providing
products that improve the quality of everyday
lives around the world, supporting people
from birth to old age.
Ontex is continuing to successfully implement
its strategy, dened in 2021, to return
to protable growth. This is enabling the
company to strengthen its leading position in
core markets - in the European market, and
by investing in North America, focused on
partner brands and healthcare.
OUR 2022 ACHIEVEMENTS
Throughout 2022, we’ve doubled down on
implementing our strategy, and clear progress
is evident in several areas. Thanks to our
portfolio focus, we’ve experienced high
growth in various sub-categories, such as baby
pants and adult care.
With the necessity to increase prices to
counter ination, our strategic focus on
customer centricity has proved invaluable.
We provide transparency about cost drivers
to our customers, and together seek to
nd options other than pricing to identify
outcomes that are mutually benecial for
us and our customers. We will continue this
focus on costs in line with our strategy to
be a sustainable, ecient partner for our
customers.
On product innovation, in 2022 we rolled
out our Little Big Change products to our
major European retail customers. Our smart
incontinence management solution for
institutional healthcare providers, Orizon, has
undergone a lot of positive pilot testing in
2022. We have also launched, in cooperation
with US retailers, a hybrid diaper with a
reusable outer shell and disposable pad.
We strive for operational excellence, best-
in-class service, and cost-competitiveness,
by minimizing scrap and operating ecient
product platforms that reduce costs and ease
production, positively impacting customer
service.
From an environmental and social
perspective, in 2022 our work has been
formally recognized. Ontex’s climate action
targets have been approved by the Science-
based Targets initiative. Ontex also received
a top ‘A’ rating on climate action transparency
from the Carbon Disclosure Project. This helps
us to strengthen our partnership with many
retailers and healthcare providers who are
decarbonizing their supply chains.
The resilience and pragmatism of our
organization and culture has enabled
us to respond wholeheartedly to the
various headwinds of 2022, from 1 million
products donated to support Ukrainian
refugees, to transparent and close ongoing
communication with all our stakeholders.
Although Ontex was not unaected by ‘The
Great Resignation’, the large majority of our
people chose to stay with us and showed
great determination and resilience in the face
of unprecedented headwinds. Teamwork
and determination helped us to be a reliable
partner in a unreliable environment.
Ontex is an international personal hygiene products group with more than 40 years of experience. Our core purpose
is to create a world where everyone can embrace life’s many changes.
Ontex Integrated annual report 2022
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Ontex Integrated annual report 2022
Our Categories
Ontex Integrated annual report 2022
Our categories: helping everyone
embrace life’s many changes
Caring for a baby is one of life’s major changes and we are
ready to help. Baby care products represent close to half of
our business. We manufacture baby pants and baby diapers
for retailers as well as for our own brands. Innovations such
as the Climaex
®
diaper absorption technology (rst used in
Ontex’s Little Big Change brand since December 2021) make
Ontex the rst retail brand manufacturer to oer diaper
absorption and skin comfort levels on a par with the leading
A-brands in Europe.
Our innovation strategy in this category is also focused
on pants and premium diaper products with strong eco/
sustainability credentials. This positioning has ensured
that Ontex is able to benet from the increasing consumer
preference shift from diapers to baby pants, an ongoing trend
that is outgrowing the market, and one in which retail brands
are gaining share. Our focus on eciency helps us to keep
baby pants aordable.
Incontinence is a major change in life, but it should not keep
you down. We have more than 40 years of experience in
this eld and use it to help millions. Our products include
pads, adult diapers and underpads sold through healthcare
institutions as well as directly to retailers, other customers
and consumers. This is the largest business of our combined
Europe division, and we have major growth ambitions
in this category. This will be achieved by maintaining our
strong position in the healthcare/institutional channel while
accelerating expansion in retail.
Field trials of our smart diaper solution Orizon continued
successfully throughout 2022, with the goal of improving
comfort, reducing waste, linen costs and sta time spent on
continence care. Orizon aims to reinvent continence care in
partnership with caregivers to make care simpler and easier as
the population ages in many of our core markets.
We provide a range of products including ultra-towels, u
towels, panty liners and tampons for retailers as well as our
own brands. We focus on trading up through innovation and
product mix in premium markets.
We expect increased growth in this category by developing
more attractive products for all our markets through synergies
with our North American business. To this end, we are
investing in capacity in North America, as well as reinforcing
our lifestyle products for feminine hygiene. We are anticipating
considerable expansion of our footprint here in the next two
years.
y car mini car
car
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Ontex Integrated annual report 2022
Employees
Markets
&society
Innovation
&IP
Resources &
environment
Financial
capital
Our Value creation model
Ontex Integrated annual report 2022
Our value creation model
8,800
GROUP EMPLOYEES
ACCIDENTS
3.78
PER MILLION HOURS
WORKED
€25m
TAXES PAID
550
ACTIVE PATENTS
AND APPLICATIONS
-55%
LOWER SCOPE
1-2 CARBON
EMISSIONS VS
2020
€2.46bn
REVENUE
+5%
OVERALL EQUIPMENT
EFFECTIVENESS (OEE)
IMPROVEMENT
20%
WOMEN IN
LEADERSHIP
81.2%
RETENTION
RATE
49%
OF PRODUCTS
WITH ECO AND/OR
HEALTH LABELS
92%
RECYCLING INDEX
PRODUCTION
WASTE
€136m
ADJ EBITDA
-15%
SCRAP
REDUCTION
€(54)m
CASH FLOW
22bn
HYGIENE ITEMS
PRODUCED
1.7m
PRODUCTS
DONATED TO
CHARITIES
25
NEW PATENTS
+2%
INCREASE
SCOPE3 CARBON
EMISSIONS VS
2020
70+
NATIONALITIES
17
FACTORIES
7
INNOVATION
CENTERS ON
3CONTINENTS
€20m
R&D INVESTMENT
€867m
NET FINANCIAL
DEBT
€62m
CAPEX
€506m
MARKET
CAPITALIZATION
CUSTOMERS IN
MORETHAN
110
COUNTRIES AND
TERRITORIES
420 GWh
ENERGY CONSUMPTION
OF WHICH 80%
RENEWABLE ENERGY
1.9bn
PAID TO
3,000SUPPLIERS IN
120COUNTRIES
47%
RENEWABLE MATERIALS
IN OUR PRODUCTS
Our input Our business model Our output
Operations
Our impact
1
1 Ontex has identied six UN Sustainable Development Goals on which it can have the most impact, through its operations or across the value chain, in line with the materiality analysis. You can read more about this topic in section 1.5.4. of the sustainability statements of this report.
Strategy
Corporate
Governance
PROXIMITY
Category
expertise and
customer
centricity
AFFORDABILITY
Best value
oering
FLEXIBILITY
Customer
dierentiation
with common
product
platforms
Fast follow
innovation
Winning
propositions
Deployment
at scale
Our capital
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Ontex Integrated annual report 2022
Our Strategy
Our strategy
We believe driving growth with sustainable healthy margins requires a fundamental step-change of
our competitiveness: strengthened customer-facing business, sustainable cost eciencies and laser-
focused execution. We have set ve strategic priorities.
Competitive
Innovation
Strong Sustainability
Performance
Cost-Ecient
Operations
Lean, Focused,
Performance-Driven
Organization
True Customer
Centricity
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Ontex Integrated annual report 2022
Our Strategy
TRUE CUSTOMER CENTRICITY
Ontex has headroom for growth that we
can further unlock by restoring sustained
competitive advantage in an intensely
competitive environment. Whilst innovation
and cost eciency are essential to our
competitiveness, true customer centricity
across the entire organization is a must to
allow sustained success in the market. In our
customer centricity journey, we aim to deliver
better service, better trust and closer working
relationships with our customers to gain share
among partner brands manufacturers and/
or drive retailer brands penetration. We oer
our customers a consumer-relevant range of
products that allows them to dierentiate in
the market whilst leveraging scale internally to
manage complexity in a smart way.
COMPETITIVE INNOVATION
We are responding directly to the consumers’
and customers’ needs by providing high-
quality, innovative and aordable products
to retail partners and relevant solutions
for institutional healthcare. To remain
competitive, we must deliver innovation fast to
our retail partners. Our innovation priorities
and ways of working are geared towards
greater eciency and speed in deployment.
We leverage our global product platforms with
intentional design for scale, we collaborate
closely with engineering and suppliers to get
primary, privileged and exclusive access to the
latest developments, and we ringfence access
to development lines.
STRONG SUSTAINABILITY PERFORMANCE
Sustainability is a key priority for our long-
term business success and aligns with our
corporate purpose. Sustainability is also a
key priority for our customers, and to be the
#1 partner of choice for our partners, we
must provide solutions that allow them to
deliver their own sustainability agenda. Our
sustainability agenda is set across four key
pillars:
(1) Climate action with Scope III strategies
integrated with our suppliers and customers.
We want to reduce emissions across our
operations (scope 1-2) with 80% by 2030 and
with 25% in our value chain (scope 3) by 2030
compared with 2020.
(2) Plastic reduction through development
of circular solutions across our operations,
products and packaging. Our Innovation
agenda supports our circularity eorts.
(3) Building trust through our commitment
to an inclusive and fair society. We aim for
gender parity and continuous improvement
in occupational health and safety, with the
ambition of zero occupational accidents by
2030.
(4) Sustainable and transparent supply chain
by driving positive change throughout our
supply chain to protect people, climate and
biodiversity, and by ensuring compliance with
the laws and regulations of the markets in
which we operate.
COST-EFFICIENT OPERATIONS
Running cost-ecient operations is critical
for us to be able to provide aordable
essential products to our customers whilst
ensuring sustainable value creation for our
shareholders. Transforming our operations
towards optimum cost competitiveness is
a key priority for us. This transformation
relies on end-to-end complexity reduction,
assets upgrade and optimization, network
optimization and continuous operational
excellence. We are committed to delivering
4% cost reduction year-on-year.
LEAN, FOCUSED, PERFORMANCE-DRIVEN
ORGANIZATION
We ensure laser-focus across the entire
organization on our key strategic priorities. We
are in the progress of divesting our emerging
markets businesses and we are also further
strengthening focus within our core markets.
Delivering strong business performance is
a team eort. We are building a lean and
performance-driven organization to improve
our ability to execute. We have a simple
and attened organizational structure to
enable fast decision-making and execution,
and strong cross-functional teamwork. We
continuously seek to optimize our ways
of working. We empower our teams and
strengthen the resilience and engagement of
our people through leadership. We leverage
reward systems that focus on alignment with
shareholders, nancial and other interests
and drive a high level of accountability and
teamwork.
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Ontex Integrated annual report 2022
Our Performance
Our performance
Ontex is a place where
every employee counts, is
accountable, and can make
a dierence. We’re also
proud to be an employer that
provides opportunities for
professional development,
career progression and
job mobility. We drive KPIs
collaboratively, working across
functional teams to achieve
outstanding results. Together,
we’re better.
Read more
Ontex’s ongoing industrial
transformation journey
means that we are a resilient
and agile company. We’re
consolidating our diverse
asset base, optimising our
networks and increasing
robustness by manufacturing
close to our customers. So far,
we’ve doubled our historical
structural cost reduction and
momentum is continuing,
with the aim of doubling cost
savings again in 2023.
Read more
Markets are central to the
Ontex strategic vision: to
be the number one partner
of choice for partner retail
brands and healthcare
brands, with leadership
positioning in our core
markets of Europe and North
America. Our societal goals
include helping people to
embrace life’s many changes
and delivering great value and
high-quality products for our
customers.
Read more
Our focus on eciency means
that we minimise waste and
keep products aordable.
Ontex is recognised by
both the Carbon Disclosure
Project and the Science-
Based Targets Initiative for
our continuous work on
sustainability. As a company,
we aim to have carbon
neutral operations (scope
1-2) by 2030. Energy is a
key part of that strategy: the
Ontex Group’s total is 93% of
electricity consumption from
renewable sources.
Read more
At Ontex, we believe in
innovation – in fact, we’re
one of the leading Belgian
companies for number of
patents led. Our technical
knowledge and strong
relationships with suppliers
and customers enable us
both to anticipate and to
respond fast to changing
consumer and customer
preferences.
Read more
Ontex has a ‘can do’
approach, and this
determination enabled the
company to successfully
navigate major adverse
headwinds aecting the entire
industry, including ination
and supply chain disruption.
For Ontex, the combination
of pricing, cost savings, and
cash discipline has resulted in
signicant margin recovery.
Read more
mloys
Markts &
city
Itio Finci Ortionsrs &
enronme
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Ontex Integrated annual report 2022
Our Performance
Employees
Jonas Deroo, Chief Human
Resources and LegalOcer
Ontex’s culture varies
from place to place, but
what never changes is
the connection to our
PRIDE values. These ve
corporate values dene
what we stand for at
Ontex. Everywhere you
go, there is a living spirit
of these values – people
have understood them
and integrated them into
their work.
Pio
R
liy
I
gry
D
riv rests
E
vero
We champion Ontex in everything we do.
We deliver on expectations.
We each take responsibility
for doing the right thing.
Only our best is good enough.
We work together to achieve
our shared goals.
HIGHLIGHTS
Ontex people are accountable, persistent,
resilient, passionate, and determined to win.
Our teams have endured and delivered,
despite the challenging headwinds of 2022,
through collaborating across functions.
In October 2022, we gathered our top
eighty people and shared success stories.
Collaboration across functions drove the
success of those projects and outcomes,
regardless of the function that those involved
were representing or the country that they
were based in. It shows that when we work
together, we can do amazing things.
In 2022, Ontex donated more than
1.7 million products to charity, mainly
focusing on Ukraine. This linked back to
the core purpose of our company: helping
people embrace life’s many changes. Driving
accessibility to personal care and hygiene
products is a critical part of that purpose,
and Ontex has played an important role in
supporting wider society during this time of
crisis. See https://ontex.com/news/ontex-
donates-1-million-hygiene-products-for-
refugees-from-ukraine/
>1. M
PRODUCTS DONATED TO CHARITY
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Our Performance
STAKEHOLDER APPROACH
In 2022, we’ve further aligned our short-term
incentive programs so that we can drive
KPIs collaboratively. This is not only for
executives: anyone eligible for the manager
incentive plan is included. For example,
the teams in commercial and operational
functions have an aligned objective around
inventory. The plant controls some inventory
sales and contributes to the inventory
discussion, such as how much is needed of
which products, etc. Collaboration on driving
optimal inventory across the company is a
way to achieve better inventory and working
capital results.
Ontex also intensied its talent review and
succession planning process in 2022. This
has enabled our people managers to think
about their own job mobility and professional
development within Ontex, and to see their
people not just in the jobs they are in today,
but in the jobs they might hold in the future.
This strategic engagement in the war for talent
means that our most talented employees are
supported to further deepen their careers
and advance within the organization and
ensures cohesion between the executive level
and the wider organization.
0 iets
IN 6 ONTEX PLANTS IN2022
> 8,8
EMPLOYEES
> 5
DIFFERENT NATIONALITIES
HEALTHY & SAFE WORKING CONDITIONS
(ACCIDENT FREQUENCY RATE)
2020 2021 2022
5.45
2.96
3.78
FEMALE MANAGEMENT
2020 2021 2022
25%
26%
20%
70% men
30% women
PERFORMANCE
Trends
TAILWINDS
• Hybrid working is
here to stay
• Diversity, equity and
inclusion
• Job creation and
internal mobility
HEADWINDS
• Siloes and steep
hierarchy
• Isolation due to Covid
• Fragmented actions
Goal 2030
0%
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Our Performance
ivery, quy n iuio
ar bui rivers
At Ontex, we believe that diversity, equity, and inclusion are
fundamental principles of an organizational culture that can enable
our people to perform to the best of their abilities. It also helps them
feel that the work they do has meaning – something that is at the
core of performance culture. In 2022, much progress has been made
on further embedding these principles, with executive sponsors, and
business executives leading this topic. That is important because this is
a business topic, not only an HR topic. We have also built a Diversity,
Equity & Inclusion Council with representatives from across the
organization: all people who are passionate about this subject and
understand its importance. As a team, we’re drawing up a roadmap
to take us to 2030 and beyond. This is the framing of key ambitions:
gender parity, building an inclusive company and work environment,
and advancing equity. With that, we will achieve so much more – that is
the true advantage of diversity.
We’re embedding the Code of Ethics into company-wide practice.
Our ‘Speak up’ lines allow people to raise concerns anonymously and
condentially and are in widespread use. Those compliance-related
issues are automatically raised, investigated, and escalated to senior
management and board level as appropriate. Since this has been put
in place, a series of issues have been resolved.
Our belief is that integrity, ethics, and compliance are fundamental
parts of our PRIDE values and necessary for success. We’ve introduced
a global onboarding program which is deployed locally – so now
those key behavioral policies are part of the onboarding of any Ontex
employee.
KEY MESSAGES
• With high hiring gures in 2022,
Ontex creates local jobs. We
support local economies, local
businesses, and local people
with the jobs we create in our
operations around the world.
• Ontex employees are essential
to our shared success. At
Ontex, your input matters,
your voice is heard, and you
can make a dierence.
• Diversity, integrity, ethics, and
compliance are integral to the
way we work and the way we
do business.
• Ontex is continuing to boost
collaboration across teams and
atten hierarchies, to enable
optimal shared outcomes and
increase internal mobility.
Story
.
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Our Performance
Markets & society
Laurent Nielly, President of
the Europe Division
The emphasis is on a
continual eort to improve
the eciency with which we
serve our customers. We
are working with them on
a series of measures – not
just pricing, but also product
design, to help nd solutions
so we can continue to oer
great options to consumers
without sacricing product
performance and quality.
HIGHLIGHTS
In Europe, we’ve seen a continuation of high
growth in various sub-categories. Retail
brands are gaining share within the shift for
baby pants versus diapers. Previously we had
identied the growth potential in adult care
products given the favourable demographics,
and 2022 has seen high growth in this
category, as well as a better-than-expected
performance in feminine care in part driven by
the resurgence of interest in retailer brands
oering cheaper alternatives to key national
brands.
In North America, Ontex has had double-digit
growth since acquiring the business unit in
2016. 2022 has been a year of growth and of
doubling down on our strategy, our product
portfolio, our capacity investments and our
supply footprint in North America. That is the
signal to all our stakeholders – customers,
employees, suppliers, investors – that we are
here to stay and that we are committed to
growth in the market. We expect that growth
to continue and accelerate in 2023 and
beyond.
Ontex’s presence in North America benets
from the international purchasing power of
Ontex in securing materials, packaging, and
freight, and from the company’s broader
cost-reduction initiatives. Our investment in
the new Stokesdale (North Carolina) facility
which opened in July 2022 makes us the
only value-tier baby supplier with bi-coastal
manufacturing operations.
STAKEHOLDER APPROACH
Pricing has been the most dramatic change
in our relationship with our customers in
2022. Historically, we adjusted prices every
one to three years. In 2022, much larger price
increases happened far more frequently, and
outside of the normal contract cycle.
Our approach to pricing with our customers
is collaborative and based on transparency
and clarity. We oer tranparency on cost
drivers and position pricing discussions
in a broader agenda: we try to nd other
solutions to navigate the current inationary
environment. These could be removing
costs where possible along the value chain,
rethinking the denition of the product, or
tweaking products to make them more cost-
eective. The goal is to nd the right balance
between a price that works for us, and what
the consumer is willing to pay. We try to oer
options so that they can get as much value as
possible from their purchases.
While the magnitude of today’s crisis is new,
consumers facing hard choices is not. It is
something we have encountered in every
recession or period of high unemployment,
so we and our customers understand how to
quickly adapt our portfolios.
PERFORMANCE
NEW FACILITY IN STOKESDALE, NORTH CAROLINA, USA
8%
PRICES WERE UP 8% IN OUR CORE
MARKETS OF EUROPE AND NORTH
AMERICA ON AVERAGE IN 2022,
GRADUALLY INCREASING FROM 2% IN THE
FIRST QUARTER TO 14% IN THE FOURTH
QUARTER, SUPPORTED BY CONTRACT
RENEGOTIATIONS. ADDITIONAL PRICING
ACTIONS ARE BEING EXECUTED TO
RESPOND TO THE PERSISTING INPUT COST
INFLATION, WHICH ROSE FASTER THAN
PRICING AND WHICH CONTINUES TO RISE.
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Our Performance
Trends
TAILWINDS
• High growth in
baby pants, adult
care category and
feminine care in
retail
• Average +20%
growth across
emerging markets
• Cost reductions
with increased
cross-functional
collaborations
HEADWINDS
• Unprecedented
levels of ination
throughout 2022 and
still in early 2023
• Some volatility in
demand and supply
• Birth rate decline
in large part of
Europe after recent
improvement
Story
Ox shws sidary
Ukrini rfues
Following the outbreak of war in Ukraine
in February 2022, the whole organization
came together to nd solutions for Ukrainian
refugees, and donated more than one
million products. It was truly amazing,
although our biggest contribution was that
we kept supplying retailers in Ukraine under
extremely dicult circumstances. When many
competitors left, we stayed and supplied
essential care products to the local people.
By mid March 2022, more than one million
donated items were shipped to people
in need in Poland and Ukraine. Hygiene
items like diapers, feminine care pads,
tampons and adult care products were
shipped through Ontex’s own supply chain
network and with trucks of other production
companies, charities and non-governmental
organizations.
To ensure that donated products benet the
most vulnerable groups in society, Ontex has
established a donation policy with guiding
principles to increase the transparency of
donations. For example, it ensures that
donated goods reach the right place.
These actions are consistent with the human-
centred approach of Ontex which was in
evidence throughout the pandemic, with four
million products donated.
KEY MESSAGES
• Ontex has started to
restore protability in
Europe and consolidate of
our leadership position,
providing greater exposure
to growth products in our
categories.
• Pricing eorts are set
to continue, albeit at a
slower rate than in 2022.
• Ontex is the only value-
tier baby supplier with
bi-coastal manufacturing
operations in North
America.
• Emerging markets growth
was more than 20% in
2022. Margin expansion
was driven by pricing
discipline, reducing
business complexity, and
tackling unprotable
business sections.
In May 2022, Ontex donated 6,000 sanitary
napkins to 29schools and boarding schools
of the non-prot association SKOG in Ghent,
Belgium to combat rising menstrual poverty.
In February 2022, Ontex donated
50laptop computers through local charity
4Dewereldgroep Aalst to help school children
from disadvantaged families to follow lessons
from home.
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Our Performance
Innovation
HIGHLIGHTS
In the baby care category, the consumer
preference for baby pants versus diapers
has proven to be a growth engine for
Ontex. Our product is a winner in the market,
so with these expanding market volumes,
we’re extending our product range and
adding sizes to the entire range. Ontex
contains transformation costs by operating
large product platforms. The key aspect is
production with the same equipment. This
goes hand-in-hand with design: our products
are made with aordability, exibility, and
sustainability in mind.
Ontex is one of the leading Belgian
innovation companies for the number
of patents led. We collaborate closely
with our intellectual property team which is
consulted for patentability and freedom-to-
operate checks at the appropriate time and
before further resources are invested into the
development. The intellectual property team
also advises on possible risks and mitigation
options before a nal product is developed.
The in-depth analysis that goes into these
checks is a balance between cost and benet
for the business.
STAKEHOLDER APPROACH
Ontex’s Global Excellence Center in Mayen,
Germany, is key to our customer-centricity
approach. It keeps us close, not only to our
customers, but also to our suppliers, who
come to the center and get direct feedback
from the trials we perform there. Our
customers can examine samples from our
trials, which show them the dierent options
and oerings. It reinforces the connection
between R&D teams, commercial teams, and
our customers.
Our R&D community is made up of product
developers who know the market well. They
develop products according to the needs of
the business and customers and at a high
speed. In October 2022, Ontex received a
request from a major retailer and formulated
the action plan in 48 hours. The new product
design was ready for home-use testing three
months later. To have a new product in three
months might seem impossible, and yet, at
Ontex, it’s a reality.
Annick De Poorter, Executive Vice-
President R&D and Sustainability
Ontex is united in one
vision, and this creates the
right culture and shapes
a lean, performance-
driven organization. Lean
performance means being
ecient, having good
processes in place, clear
project leads, and people
who will deliver. That is where
we are focusing our energy.
PERFORMANCE
20 mlio
IN 2022 INNOVATION REPRESENTED SOME
€20 MILLION IN OPERATIONAL AND CAPITAL
INVESTMENT
1 % LL
IN BABY CARE REVENUE GREW 17% LIKE FOR
LIKE IN OUR CORE MARKETS IN 2023. THE
RETAILER BRAND CHANNEL WAS FAVORABLE
OVERALL, WITH VOLUME GROWTH DRIVEN
BY BABY PANTS, WHILE DIAPERS WERE
LARGELY STABLE. THE SUCCESS OF ONTEX’S
INNOVATION PLATFORM IS DEMONSTRATED BY
THE MARKET UPTAKE OF ITS NEW BABY PANT
PLATFORM HAPPYFIT
®
. DEVELOPED IN 2020, IT
WAS BROUGHT TO THE MARKET IN 2021 AND
REPRESENTS THE BULK OF ONTEX’S GROWTH IN
THE BABY CARE CATEGORY IN 2022.
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Our Performance
Trends
TAILWINDS
• Accelerated innovation: new
baby care product sample in
three months
• Positive pilot testing for
Orizon
• Little Big Change products
rolled out to our major
European retail customers
• Shorter time for qualication
process to mitigate supply
chain risk
• Less complex product
portfolio
• Less scrap waste in production
process
HEADWINDS
• Volatility in supply requiring
constant qualication of new
materials and suppliers
uin n cie pruts m w
sltiv rquirmets n consumer e
Increasingly stringent environmental
and sustainability regulations are set to
have a huge impact going forward. Already,
Ontex is gearing up to ensure compliance
with recent legislation, such as the Non-
Financial Reporting Directive, the Corporate
Sustainability Due Diligence Directive, and the
Corporate Sustainability Reporting Directive.
The requirements of these directives concern
a range of segments and subjects across the
organization, including on matters such as
climate transparency.
Eciency in production is part of Ontex’s
sustainability journey. That’s one of the driving
forces behind our large product platforms.
Design elements change, but the production
is on the same equipment – no need for
multiple sets of machines, which drive costs
up. The product dierentiation that we oer
retailers comes from using dierent raw
material, which is much easier to handle
on the machines and doesn’t require new,
expensive equipment.
This approach has enabled us to bring an
adapted baby pant design from our European
towards our US market, with minimum
transformation cost. We have tested that
design in the US with great success, and are
now actively working with our customers
to fully launch in the US by the third scal
quarter of 2023.
The two main costs that come into play are
the bill of material – the raw materials needed
for our products – and the transformation
costs – what it takes to convert that raw
material into our nished product. Keeping
scrap low is a great way to cut down on costs
because if less raw material is going to
waste, that means we are using as much as
possible of the material we have paid for.
We have a lean team who are working
continuously on sustainability.
Read more in the Sustainability statements of
this report.
Story
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Our Performance
Resources & environment
HIGHLIGHTS
2022 has been an important year in Ontex’s
sustainability journey. Ontex’s climate
targets were validated by the Science-Based
Targets Initiative in 2022. We continued to
build out our renewable energy generation,
with a major solar installation completed at
our factory in Ortona, Italy. We’re aiming at
achieving carbon-neutral operations by 2030
as part of our company-wide sustainability
strategy.
Ontex received an A-rating for leadership in
corporate transparency and performance
on climate change from the Carbon
Disclosure Project. In 2022, we reconrmed
our B rating for sustainable forestry, and
we continue to support our suppliers and
other stakeholders in our value chain in
our collective eorts to reduce negative
environmental impacts.
Read more about our CDP A rating on page 20
STAKEHOLDER APPROACH
Across our industry, there is a growing
understanding from our partners, suppliers,
and customers that we all have to work
together to reduce our impact on the
planet. The topic of sustainability is rising in
importance, alongside concerns over ination
and stability of supply.
Ontex is actively engaging with our customers
to explain our approach and identify
common areas of partnership. These
include working together along the value
chain to ensure eciency, reducing the size
of product packages so that more can t into
each shipment which therefore uses less fuel
in the long run, and consulting our customers
on the use of recycled material, even if it
means compromising on minor details such
as print quality.
A key driver in our sustainability journey is the
move to Scope 3. Some of our customers are
reaching out to ask how our Scope 3 target
is dened, and how we can work towards it
together.
For example, we’re taking measures to
aggressively reduce the quantity of material
used in production; the green energy and
carbon-neutral plans in the majority of our
plants remain ongoing, and we’re also working
with our suppliers to ensure that we use an
increasing ratio of recycled material wherever
possible, especially in packaging.
Jim Skinner, Vice President
andGeneral Manager,
Ontex North America
Our core European
market has traditionally
been more focused on
sustainability. However, this
is now accelerating in our
US core market - both from
a consumer awareness
and behavioral perspective,
as well as via legislative or
retailer-driven initiatives.
Ontex is accelerating its
sustainability drive in all
markets to ensure continued
compliance with regulatory
and customer-driven
requirements.
What are Scope 3 emissions?
Greenhouse gas emissions are categorised
into three groups or ‘Scopes’ by the most
widely used international accounting
tool, the Greenhouse Gas Protocol. Scope
1 covers direct emissions from owned
or controlled sources. Scope 2 covers
indirect emissions from the generation
of purchased electricity, steam, heating
and cooling consumed by the reporting
company. Scope 3 includes all other
indirect emissions that occur in a
company’s value chain.
At Ontex, Scope 3 emissions account for
98% of our total emissions. Read more in
the Sustainability statements section of
this report.
A MASSIVE SOLAR PANEL INSTALLATION COVERS A LARGE
PART OF THE ELECTRICITY CONSUMPTION OF ONTEX’S PLANT
IN ORTONA, ITALY
98%
OF OUR TOTAL EMISSIONS
ARE SCOPE 3 EMISSIONS
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Our Performance
PERFORMANCE
Trends
• SUSTAINABILITY REPORTING AND
ACCOUNTABILITY:
2022 saw an inux
of new sustainability legislation and
regulatory requirements around the
world. We anticipate governments
will enact even more sustainability,
circularity, and ESG-oriented laws and
rules.
• NATURE AND BIODIVERSITY: With the
launch in 2021 of the Taskforce on
Nature-related Financial Disclosures and
the continuous pressure on biodiversity
we anticipate increasing actions on
protecting nature and biodiversity.
• CIRCULAR ECONOMY IMPLEMENTATION:
With new regulations being implemented
throughout Europe to reduce plastic
waste, increase recycling and reuse, and
overall improve circularity and waste
eorts this trend will continue to rise in
importance.
• SUPPLY CHAIN DUE DILIGENCE:
Transparency will be even more
important. Organizations will engage
their suppliers on sustainability, as well
as going deeper into their supply chains
to understand raw materials sourcing,
going beyond tier 1.
• KEEPING THE CLIMATE CRISIS
UNDERCONTROL: According to recent UN
Climate Change reports, we’re on track for
a 2.5°C increase in global temperatures
by 2100 based on current rates of
implementing emissions reduction
strategies. More organizations will set
science-based targets which align with
countries’ goals of committing to the 1.5°
c limit.
Story
Ox rives im aersh A rting om
ro osur ro
Ontex is working continuously on
sustainability. In 2022, our eorts were
recognised with the award of an A-rating
for leadership in corporate transparency
and performance on climate change from
the global environmental non-prot Carbon
Disclosure Project (CDP). Ontex is one of only
four Belgian companies to receive such a
positive rating.
This is an indication of how seriously we
as a company take the basic elements of
sustainability. Climate is one of our pillars;
we’re anticipating a lot of new regulations in
this area in the coming years, so it is a major
element in Ontex. We have already set targets
for 2030 in the company’s 2030 sustainability
strategy, and we will be putting intermediate
targets in place to help us get there.
Ontex received its top climate action rating
thanks to the transparency on its lean internal
climate action governance, reducing carbon
emissions from its operations by 55% versus
2020 and sourcing 93% of the electricity used
in its plants worldwide – 100% in its European
plants – from renewable sources.
CDP’s annual disclosure process is widely
recognized as the gold standard of corporate
environmental transparency. In 2022, over
680 investors with over US$130 trillion
in assets and 280 major purchasers with
US$6.4trillion in procurement spend
requested companies to disclose data
on environmental impacts, risks and
opportunities through CDP’s platform.
In 2022, Ontex reconrmed its positive CDP
B-rating for sustainable forestry. Sustainable
forestry is key to Ontex because forests
provide the paper u and pulp for the
company’s personal care products. Ontex
sources 100% of its u from controlled or
certied sources. The company invests in a
monitoring system to identify the sources
of its agricultural raw materials. Monitoring
sources enables Ontex to support suppliers
with sustainable practices.
For more information on Ontex’ sustainability
strategy and goals, see https://ontex.com/
sustainability
SCOPE 1-2 EMISSIONS
RENEWABLE ELECTRICITY
RECYCLING INDEX
MANUFACTURINGWASTE
PLASTIC BAGS WITH RECYCLED CONTENT
2020 2021 2022
2020 2021 2022
2020 2021 2022
2021 2022
Goal 2030
Goal 2030
Goal 2025
Goal 2025
100% 75%91%
-40%91%95%
9%
-55%93%92%
19%
-80%100%100%
30%
-%
SCOPE 1-2 EMISSIONS IN 2022
VS BASE YEAR 2020
5 lts
WITH SOLAR PANELS
(BASE YEAR)
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Our Performance
Story
Ox tis lar sar
pwer inltio i ty
In October 2022, Ontex completed a large solar installation
at the site of its factory in Ortona, Abruzzo region, Italy.
The solar plant will produce more than 10 GWh of
electricity per year, equivalent to the yearly consumption
of around 3,400 households. The Ontex factory in Ortona
now houses one of Italy’s largest systems for on-site solar
power generation and consumption. The system was
developed and nanced by the company Menapy Italia srl,
who also installed Ontex’s solar power installation in Eeklo,
Belgium and Segovia, Spain.
Annick De Poorter, Ontex’s Executive Vice President
for R&D and Sustainability, said: “We can now produce
around a quarter of the electricity we need to manufacture
essential hygiene goods at our factory in Italy. This is
another step towards our goal to have carbon-neutral
operations by 2030.”
Ontex plans to become carbon-neutral by 2030. Our
energy strategy is a key part of that target; we aim to be
less dependent on energy from the grid through onsite
renewable energy generation, energy conservation, and
purchasing energy from renewable sources.
Towards that end, the company is opening solar power
installations in our core markets in Europe and the
Americas to produce more energy onsite. Ontex’s factories
in Italy and eight other European countries run on 100%
electricity from renewable sources. The Ontex Group’s
total is 93% electricity from renewable sources.
KEY MESSAGES
• Our sustainability goals are an
integral part of our sourcing,
manufacturing processes,
operations, and long-term
business strategy.
• The Carbon Disclosure Project
has recognised Ontex’s eorts
with an A-rating for leadership
in corporate transparency
and performance on climate
change, and a B-rating for
sustainable forestry.
• With signicant progress
already made in cutting Scope
1 and 2 emissions, Ontex is
engaging with stakeholders
along our value chain to reduce
Scope 3 emissions.
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Our Performance
Financial
HIGHLIGHTS
All in all, 2022 has been a year like no other: a
year of strong delivery but also one of massive
market headwinds. Ination has been running
extremely high and the whole industry has
suered from supply disruption, following
the geopolitical and economic turmoil. As a
result, our cost base was severely impacted,
explaining the lower protability compared to
2021.
Based on a solid commercial foundation,
largely built in 2021, we grew our volumes
consistently by mid-single digits. This clearly
marked a dierence with the past years,
by leveraging the innovation pipeline and
rebuilding customer relationships. A key
driver to margin recovery has been pricing:
beginning cautiously, as it took us time to
renegotiate the contracts with our customers,
but ramping up every quarter, to well above
10% by year end. Revenue thereby grew to a
record level.
Operational cost saving initiatives were also
pursued, to reach a consistent year-over-
year cost reduction of about 4%, an eort
we intend to continue in the coming years.
Combined with the price increases, these
mitigated the major disruptions in the rst
half of the year and led to a year-over-year
improvement in the second half. We will
continue to make gradual margin recovery by
focusing on the underlying value drivers.
While our ability to recover is clearly shown in
the P&L results, the balance sheet recovery
needs more time. Net nancial debt rose over
the year, mostly as working capital needs
increased to support the growing revenue.
Combined with lower protability, this led
leverage to peak at the end of October, to
show improvement over the fourth quarter
with a recovering protability. While we intend
to bring leverage down further, our gross
debt is structurally solid, mostly consisting of
the xed rate bond as well as the term loan
that we will repay with the proceeds of the
upcoming divestment of the Mexican assets.
STAKEHOLDER APPROACH
Pricing has been an ongoing discussion with
our customers in 2022, while we improved
service levels over the year. Throughout 2022,
we have been strongly focused on protecting
and securing service levels, considering
the disruption and nonavailability of some
materials. We decided to keep higher stocks of
raw materials, so that we could protect service
levels.
With Ontex equity and bond investors, we
maintain a transparent dialogue around
performance drivers and explaining how we
have been making progress on those drivers.
These exchanges are critical as they enable
us to show the underlying factors that are
delivering our results quarter after quarter,
and that the bottom line adds up well.
Peter Vanneste,
Chief Financial Ocer
Our can-do approach
is a major part of Ontex’
organizational culture. We
keep going, even when
external circumstances make
it very complicated. We focus
on what we can control -
that is where we can make
a dierence - and that really
has enabled the recovery in
the second half of 2022.
Working with our suppliers, the major topics
of the year were pricing, supply certainty, the
requalication of suppliers, alternative supply
routes and other supply options.
PERFORMANCE
TOTAL GROUP REVENUE WAS
€2,464 mlio
U 1 %
WHILE ADJUSTED EBITDA MARGIN FOR THE TOTAL
GROUP WAS DOWN TO
5.5%
FOR THE YEAR, IT SHOWED SIGNIFICANT
RECOVERY IN Q4 ’22 TO 7.6%.
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Our Performance
Trends
HEADWINDS
• High ination throughout 2022, likely
slowing in the course of 2023
• Industry supply disruption
• Cash conversion cycle under stress
with volume and ination growth,
yet improving
• Raising interest rates
• Economic slowdown in 2023
TAILWINDS
• Pricing accelerating throughout the
year to more than 10%
• Cost optimization pursued at high
level
• Steady mid-single digit volume and
mix growth in 2022
• Margin recovery toward year end
Story
pi n tiv
respons hi
infltio
The high ination mode we brought in was
another strength this year, as well as our
pricing discipline and our agility in managing
the route to market. We have managed to
nd the right channels to optimize the way we
reach our customers.
We have been ruthless with costs, and we
have left no stone unturned because bringing
costs down was an absolute necessity.
Price management has been key, and
rather than wait for the contract roll-
over, renegotiations were initiated with all
customers in our core markets. Year-on-year
prices increases in our core markets rose
from 2% in the rst quarter to 14% in the
fourth quarter, averaging 8% for the year and
more pricing is to come. Despite this, our
brands have been resilient and we have not
lost market share – to the contrary, retailer
brands gained market share versus A-brands.
In emerging markets, price increases were
even more substantial, averaging 19% versus
2021. These were easier to implement as
we sell mostly our own branded products
there, but ination levels were even higher as
well. This was especially the case in Turkey,
where we were dealing with 90% ination.
We switched to high ination mode, where
we adapt our operations faster, and with a
broader magnitude. For example, rather than
reviewing salaries once per year, we did it
every quarter. Price increases went from being
yearly to almost monthly and went up by more
than 10% instead of the usual percentage
point increases.
THE ONTEX TEAM IN ISTANBUL,
TURKEY DURING AN OFFSITE
ACTIVITY
KEY MESSAGES
• Throughout 2022, and in the face
of major disruptions, Ontex has
demonstrated strong commitment to
our strategy, and strategic execution.
In2023, we will continue maintaining
our strategic clarity, and pursue our
goals without hesitation.
• Our focus on operational levers has
proved worthwhile and rewarding
in 2022. The combination of robust
volume growth, accelerated pricing
and steady cost savings has resulted
in signicant margin recovery in Q4.
• Part of the DNA of Ontex is problem-
solving and forward-thinking. Our
teams have put a lot of energy into
nding fast and pragmatic solutions
for concerns as they arose. We all
united in intention, making sure we
acted quickly and wisely in pricing,
cost savings, cash discipline and
ensuring growth – and that has
consolidated us as an organization.
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Financial statements
Sustainability/
Non-Financial Statements
24
Ontex Integrated annual report 2022
Our Performance
Operations
HIGHLIGHTS
Fully aligned with our strategy of being
an ecient, sustainable producer, Ontex
is continuing to work on eciency, scrap
reduction, and lowering carbon emissions.
The implementation of the cost reduction
program continued and has led to additional
savings which were 40% higher than in 2021,
a testimony to the organization’s capability
in accelerating our cost savings initiatives.
That momentum is continuing, with the aim
of reaching a 4% reduction of the cost base
again in 2023. The goal is to deliver better
service levels and accelerated cost reductions
based on the agility and capabilities we have
developed this year.
Contributing to the robustness of our
operations, Ontex manufactures relatively
close to our customer base. Our approach
is to invest in core markets and have local
production lines, where needed to oer the
best service to our customers. Regarding the
global supply chain, particularly in the US, we
have high ambitions for local sourcing within
the economic area.
STAKEHOLDER APPROACH
As Ontex’s industrial transformation journey
progresses, ongoing and transparent
communication enables our stakeholders to
accept and work with the necessary changes.
For our internal stakeholders (employees),
maintaining employee engagement and
retention as we work through our divestment
agenda has been key. Part of our approach
was to exchange openly at the level of
individuals, and the outcome was very
positive: establishing an approach of ensuring
job security through performance. This
is exactly what our teams have done. We
have lost very few people, despite all of the
uncertainty. They have worked incredibly hard,
in very complicated circumstances, and they
have been remarkably committed, passionate,
and resilient.
In fact, the divestment projects brought a lot
of teams closer together. Going through such
a dicult time made each local team much
stronger, and they focused their energy on
caring for their piece of the business so that
they could protect it and create value for that
business and the wider Ontex group
Vincent Crepy,
Chief Supply Chain Ocer
What makes Ontex a
great employer is that every
employee contribution
matters to us, and everyone
makes a dierence, from the
line operators to the plant
manager. It’s energizing to
see everyone taking on these
challenges together and
being so resilient. That is very
fullling and satisfying to see.
PERFORMANCE
THE OVERALL COST BASE FOR THE TOTAL GROUP
ROSE
21%
DUE TO INFLATION
OPERATIONAL COST REDUCTION MEASURES
DELIVERED
€81 mlio
IN GROSS SAVINGS, THEREBY MAINTAINING THE
MOMENTUM TO REDUCE COSTS ANNUALLY BY
ABOUT
4%
Strategic report
Corporate Governance,
Risk & Remuneration
Financial statements
Sustainability/
Non-Financial Statements
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Ontex Integrated annual report 2022
Our Performance
Trends
TAILWINDS
• Sophistication in
manufacturing, engineering,
and product development
• Faster qualifying speed of new
suppliers
• Reduction of shortage levels,
as experienced in 2022
• Softening of ination in raw
materials
HEADWINDS
• Demand for technical skills
• Tight labor market in many
countries
• Volatility in energy prices
• Gas supply in Europe
• Ination level in services and
equipment
Story
Ox’s oning inuri trnmtio:
reie n a
Ontex’s strategy is based on superior
customer service, competitive product
performance, and being an ecient
sustainable producer. An important element
of executing the strategy is optimising our
network. For example, we shut down our
German factory in 2022, allowing us to move
volume to Eastern Europe. This also improves
customer service, as the consolidation of
production means we can share capacity
across multiple customers. We invest
constantly in faster, more reliable machines,
which increases our eciency and reduces
our scrap, in turn saving on costs and energy.
Ontex’s ongoing industrial transformation is a
journey, especially because of our extremely
diverse asset base. This is driven by our desire
to customize but is not always compatible with
our ability to be a highly aordable producer.
Ontex is increasing our capacity utilization
by consolidating production in fewer
production sites and fewer product lines.
We will continue to build platforms to meet
new customer requirements, which constantly
change and evolve. This notwithstanding, the
fact that we have higher revenue with fewer
plants and are using a smaller number of
faster machines shows we are moving in the
right direction.
There have been multiple challenges industry-
wide in 2022, but we have remained resilient
and avoided major disruptions, which
was recognized by many customers who
could continue to oer full shelves to their
consumers. In the midst of turmoil, we have
still been able to deliver and to satisfy our
customers, which shows our exibility.
KEY MESSAGES
• Successful cost optimization
in 2022 is set to further
accelerate in 2023.
• The ongoing industrial
transformation is enabling
agile and resilient operations,
along with increasingly
sophisticated technical
expertise and deployment.
• In 2023, we aim to continue
to restore our service level
after the last two years of
unprecedented external
disruptions, so that we
continue to be the partner of
choice for our partners and
customers.
• Our focus is on robust,
local supply chains and
manufacturing close to core
markets.
Strategic report
Corporate Governance,
Risk & Remuneration
Financial statements
Sustainability/
Non-Financial Statements
26
Ontex Integrated annual report 2022
Our Performance
Story
mar n a
prcurme lps Ox
suefy n
hr gl urmo
Supply chain disruption was simply a fact of life across the
industry in 2022. The phenomenon of COVID-19 showed
its fat tail early in 2022, with blocked ports disrupting trade
ows and the breakout of war driving unprecedented price
volatility.
In the face of these challenges, Ontex’s procurement
teams took an agile approach to supply, and leveraged
their knowledge of the market. Cross-functional
collaboration between teams made a major contribution
to mitigating supply chain risks. The procurement team
agged raw material supply risks to R&D teams, who in
turn accelerated qualication processes to avoid running
out of stock and maintaining service levels. The R&D
and industrialization teams collaborated to mitigate any
shortages.
Our resilience comes from our ability to stay agile. One
of the ways we have done this is by changing suppliers
at a high speed – we have been able to qualify our new
suppliers at double our previous rate, helping to take the
edge o supply shortages. One of our key suppliers has
told us that we are their fastest-qualifying international
customer - a testament to Ontex’s agility. We value
this type of external recognition because the whole
organisation has mobilized to alleviate a ‘perfect storm’
of issues throughout 2022. We were highly exible in
switching between suppliers and working in an agile way
with strategic suppliers to keep raw material ows going.
We tested and introduced new materials fast, often
co-developed with our strategic suppliers and through
exibility and agility of our teams. We will continue this
approach into 2023.
FLEXIBILITY IN SWITCHING BETWEEN SUPPLIERS AND AGILE WORKING THROUGHOUT
2022 KEPT ONTEX RAW MATERIAL FLOWS GOING.
Strategic report
Corporate Governance,
Risk & Remuneration
Financial statements
Sustainability/
Non-Financial Statements
27
Ontex Integrated annual report 2022
rp rp
ern, R ern, R
& murtio& murtio
28
Ontex Integrated annual report 2022
Corporate Governance Statement
THE COMPANY IS COMMITTED TO UPHOLDING HIGH STANDARDS OF CORPORATE GOVERNANCE. IT APPLIES THE BELGIAN CORPORATE GOVERNANCE
CODE (2020) FOR LISTED COMPANIES (THE “2020 CORPORATE GOVERNANCE CODE”), WHICH CAN BE FOUND ON THE WEBSITE OF THE BELGIAN
CORPORATE GOVERNANCE COMMITTEE (HTTP://WWW.CORPORATEGOVERNANCECOMMITTEE.BE).
FURTHER, THE COMPANY HAS ADOPTED A CORPORATE GOVERNANCE CHARTER WHICH DESCRIBES THE MAIN ASPECTS OF THE COMPANY’S
CORPORATE GOVERNANCE, INCLUDING ITS GOVERNANCE STRUCTURE AND THE TERMS OF REFERENCE OF THE BOARD OF DIRECTORS (THE “BOARD”),
THE BOARD COMMITTEES AND THE EXECUTIVE COMMITTEE. THE CHARTER IS AVAILABLE ON THE COMPANY’S WEBSITE
(HTTPS://ONTEX.COM/INVESTORS/LEADERSHIP).
HIGHLIGHTS OF 2022 CORPORATE GOVERNANCE MATTERS
The Company continues to invest in building a “best-in-class” corporate governance, as it believes this serves as a catalyst for the accelerated implementation of Ontex’s strategic plan and its
return to profitable growth. The Company focuses, among others, on the following five corporate governance themes: leadership, governance, remuneration, environment and sustainability,
and investor engagement. Within these themes, several highlights are summarized in this Corporate Governance Statement (and the Remuneration Report that forms part of it).
With respect to leadership and governance, the Company took a number of actions. First, at executive level, the Board appointed Mr. Gustavo Calvo Paz as new Chief Executive Officer, with
effect from November 14, 2022, succeeding Ms. Esther Berrozpe. Second, the size of the Board was reduced from twelve to nine directors, with effect from January 1
st
, 2023. Such reduction
aims to allow the Board to better serve the acceleration of the execution of Ontex’s strategy. Finally, following the initial deployment in 2022 of Ontex’s new strategy, the Board decided to
dissolve the Strategy Committee. This Committee had been established in April 2021 as a temporary committee to support the re-definition of the Company’s strategy. The Strategy Committee
was dissolved with effect from January 1
st
, 2023.
Building on work performed within the Remuneration and Nomination Committee, the Board and the Executive Management continued various initiatives to review and adopt organizational
designs and reward systems and to strengthen succession and development management at the different levels of the organization. With these initiatives, Ontex aims to reinforce a dynamic
and performance-based culture, accelerate strategic decision-making and implementation, and build a solid, current and future, leadership base.
ESG remains at the core of Ontex’s strategy. In December 2022, Ontex received a top ‘A’ rating for leadership in corporate transparency and performance on climate change from global
environmental non-profit organization Carbon Disclosure Project (CDP). Ontex improved on the scores achieved in 2021 and before. Based on data reported through CDP’s 2022 Climate
Change questionnaire, Ontex is one of a small number of companies that achieved the highest ‘A’ rating, out of more than 15,000 companies evaluated by CDP. Ontex received its top climate
action rating as a result of the transparency on its lean internal climate action governance, reducing carbon emissions from its operations by 40% between 2020 and 2021 and sourcing more
than 90% of the electricity used in its plants worldwide – 100% in its European plants – from renewable sources. In addition, Ontex remains strongly committed to its Sustainability Strategy
2030, which includes ambitious, quantified targets and a clear roadmap, and which can be found on Ontex’s website (https://ontex.com/wp-content/uploads/2020/05/Sustainability-strategy-
2030.pdf).
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Ontex Integrated annual report 2022
Lastly, Ontex continues to invest in shareholder engagement. Building on its earlier corporate governance roadshows, Ontex conducted multiple in-depth discussions with investors and proxy
advisors through a corporate governance roadshow in early 2022. Ontex is committed to continuing and further reinforcing this dynamic dialogue and alignment with investors and other
stakeholders.
AMBITION GOING FORWARD
The Board reconfirms its ambition to be an example in corporate governance matters, as it sees this as an important value-add for the business. Going forward, the Board will continue its
optimization endeavors on various levels. In 2020, it adopted a roadmap with actions towards that goal, covering such areas as Board leadership, strategic, risk and ESG alignment, people
and composition, structure and process, and Board culture. In September 2021, the Board dedicated an extensive workshop to evaluating its progress made on that roadmap and agreed on
further actions in each of these areas based on the assessment that was made. In the course of 2022, the Board continued this work and focused, among others, on Board composition and
size, Board and Executive Committee succession planning and CEO and Executive Committee assessment and development.
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Ontex Integrated annual report 2022
1. Board and Executive Management
1.1. BOARD COMPOSITION
On December 31, 2022, the Board was composed as follows:
Name Mandate Board
Other board mandates per
December 31, 2022
Mandate
since
Mandate expires
ViaBylity BV,
permanently represented by Hans Van Bylen
Chair, Independent Director Etex NV, Lanxess AG, AkzoNobel 2020 2024
Regina S.à r.l.,
permanently represented by Regi Aalstad
Independent Director McBride Plc, Plair SA, Gmelius 2019 2025
[1]
Ebrahim Attarzadeh
Non-Executive Director
PGS, MusicBird AG
2022
2026
Inge Boets BV,
permanently represented by Inge Boets
Independent Director
Econoholding NV, Econopolis NV, Econopolis
Wealth Management NV, Qrf, Euroclear Holding
NB, Euroclear Investments NV, Euroclear NV
2014 2026
Michael Bredael Non-Executive Director
Upfield Group BV, Canyon Bicycles GmbH,
Affidea
2017 2025
Alane SRL, permanently represented by Aldo
Cardoso
Non-Executive Director
Bureau Veritas, Imerys, Worldline, DWS
(Deutsche Wealth Management)
2019 2023
[2]
Isabel Hochgesand
Independent Director
N/A
2021
2025
HVV GmbH, permanently represented by Jesper
Hojer
[3]
Non-Executive Director Meatless Farm, Everli, Tom&Co 2021 2025
MJA Consulting BV, permanently represented by
Manon Janssen
Independent Director Gimv, Puratos, Ecorys 2021 2025
Paul McNulty
Independent Director
N/A
2022
2026
Rodney Olsen
Non-Executive Director
Mary Crowley Cancer Research
2021
2025
[1] Regina S.à r.l., permanently represented by Ms. Regi Aalstad, resigned from the Board with effect from January 1st, 2023.
[2] Alane SRL, permanently represented by Mr. Aldo Cardoso, resigned from the Board with effect from January 1st, 2023.
[3] With effect from October 1st, 2022, JH GmbH, permanently represented by Mr. Jesper Hojer (Non-Executive Director), resigned from the Board. With effect from the same date, the Board approved the co-optation of HVV GmbH, permanently
represented by Mr. Jesper Hojer, as new (Non-Executive) Director for the remainder of the term of JH GmbH and to be submitted for approval to the Company’s next shareholders’ meeting.
Jonas Deroo, Chief HR and Legal Officer, is Secretary of the Board.
Further details on the changes in Board composition are detailed in chapter 1.2 of this statement.
The biographical information, skills and experience of each member of the Board as at December 31, 2022 are summarized below. This includes information on other director mandates held
by these members. The Company considers that its directors possess the right competencies to guide and support Management in positioning the Company on the path to accelerated value
delivery.
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Ontex Integrated annual report 2022
HANS VAN
BYLEN
Chair of the
Board of
Directors,
Independent
Director
On May 25, 2020,
ViaBylity BV, with Mr. Hans Van Bylen as
permanent representative, was appointed as
Independent Director and Chair of the Board.
Mr. Van Bylen, formerly CEO of Henkel AG,
brings Ontex his deep knowledge of the
industrial and consumer goods sector and a
wide
breadth of experience spanning the
FMCG industry, retail brand space,
manufacturing and supply chain,
digitalization, sustainability and leadership
development. Mr. Van
Bylen previously
served on the boa
rds of GfK, Ecolab, the
Consumer Goods Forum, the Alliance to End
Plastic Waste and has been president of the
German Chemical Industry Association
(VCI). Moreover, he has also been member
of the European Round Table for Industry
(ERT). In addition, Mr. Van Bylen is also a
board member at Etex,
Lanxess and
AkzoNobel . Mr. Van Bylen holds a Master of
Business Economics and an MBA from
Antwerp Universities RUCA and UFSIA and
certificates from executive education courses
at Harvard Business School, INSEAD and
IMD.
REGI
AALSTAD
Independent
Director
Ms.
Regi Aalstad
has been an
Independent
Director since
2017. Ms. Aalstad has extensive leadership
experience in global fast moving consumer
goods, including in the categories in which
the Company is active. Ms. Aalstad has held
Regional General Manager and Vice
President positions with Procter & Gamble in
Asia, Europe,
Middle East and Africa. Ms.
Aalstad currently serves on the Board of
McBride PLC, several tech start-ups and is
an advisor to private equity. Ms. Aalstad has
previous board experience at the Geberit
Group, the Telenor group and as chair of an
internation
al NGO. Ms. Aalstad holds a
Master of Business Administration in
International Business from University of
Michigan, USA.
EBRAHIM
ATTARZADEH
Non-Executive
Director
On
May 5, 2022,
Mr. Ebrahim
Attarzadeh was
appointed
as a
Non-Executive Director upon the nomination
of ENA Investment Capital LLC. Mr.
Attarzadeh
has more than 20 years’
experience in investment banking, including
in capital markets. He was CEO of Mainfirst
Schweiz AG, a financial institution, from 2011
until 2014, and CEO and Head of Equities of
Stifel Europe Bank AG until end of 2021. Prior
to that, he held other positions at Mainfirst
Bank AG, and prior to that at Deutsche Bank
and Arthur Andersen. Currently,
Mr. Attarzadeh is the Co-Founder and CEO
of Callirius AG.
INGE BOETS
Independent
Director
I
nge Boets BV,
with Ms. Inge
Boets as its
permanent
representative,
was appointed as Independent Director as of
June 30, 2014. Ms. Boets chairs the Audit
and Risk Committee. She was a partner with
Ernst &
Young from 1996 through 2011
where she was the Global Risk leader and
held several other roles in audit and advisory.
Currently, Ms. Boets is also an independent
director and chair of the audit and compliance
committee at Euroclear (Euroclear Holding
NB, Euroclear Investments NV and Euroclear
NV), chair of the board of directors at Qrf City
Retail and chair of the board of directors at
Econopolis (Econoholding
NV, Econopolis
NV, Econopolis Wealth Management NV). In
addition, Ms.
Boets is the owner and
manager of La Scoperta BV. Ms. Boets holds
a master degree in applied economics from
the University of Antwerp, Belgium.
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Ontex Integrated annual report 2022
MICHAEL
BREDAEL
Non-Executive
Director
On May 24, 2017,
Mr. Michael
Bredael was
appointed as Non-
Executive Director
upon the nomination of
Groupe Bruxelles Lambert (GBL).
Mr. Bredael is an
Investment Partner at
Groupe Bruxelles Lambert since 2016. He
started his career at Towers Watson as a
consultant in the United States (Atlanta and
New York) in 2003 before joining the BNP
Paribas Group in 2007. Mr. Bredael held
various investment banking positions at BNP
Paribas, across different offices (New York,
Paris, Brussels and London), particularly
focusing on cross-border M&A transactions.
From 2014 to 2016, he was Head of the M&A
Execution Group
of BNP Paribas London.
Mr. Bredael is director of Upfield Group BV,
Canon Bicycles GmbH and Affidea,
as a
representative of Groupe Bruxelles Lambert.
Mr. Bredael
holds a master’s degree in
applied economics from EHSAL (KU
Leuven).
ALDO
CARDOSO
Non-Executive
Director
On May 24, 2019,
Mr.
Aldo Cardoso
was appointed as a
Non-Executive Director upon the nomination
of Groupe Bruxelles Lambert (GBL).
Mr. Cardoso is the chair of the board of
directors at Bureau Veritas and a Senior
Advisor to CVC. Mr. Cardoso is a member of
the board of directors of Imerys, Worldline
and DWS (Deutsche Wealth Management –
Frankfurt). Mr. Cardoso spent 24 years with
Arthur Andersen in various senior leadership
positions, including as the Firm’s Senior
Partner, Non-
Executive Chair of Andersen
Worldwide, President of Andersen for the
Western European, and President of
Andersen France. Mr. Cardoso has been
Senior Advisor at Deutsche Bank (Global
Banking – Paris) from 2010 to 2014 and then
at Deutsche Bank infrastructure fund in
London from 2015 to 2018. Further, he has
been a member of the Lehman Brothers
European Advisory Committee (2004 to
2008) and has served on the board of
directors
of various listed companies,
including Orange, Accor, Rhodia, Gecina and
Mobistar.
ISABEL
HOCHGESAND
Independent
Director
On May 25, 2021,
Ms. Isabel
Hochgesand was
appointed as an Independent Director.
Ms. Hochgesand is an executive with
extensive international experience in
procurement, supply chain, and marketing of
consumer goods, including in the personal
hygiene sector. She is
Chief Procurement
Officer at Beiersdorf AG, a German
multinational specialized in per
sonal care
products. Prior to that, Ms. Hochgesand held
various senior roles in various countries
worldwide at Procter & Gamble, mostly of her
25 years of tenure in the personal hygiene
sector. Ms. Hochgesand was also the
Managing Director for Supply Chain for P&G
in Germany, Austria and Switzerland for all
brands.
JESPER
HOJER
Non-Executive
Director
On May 25, 2021,
Mr. Jesper Hojer
was appointed as
a Non-Executive
Director upon the nomination of Groupe
Bruxelles Lambert (GBL). Mr. Hojer has vast
experience in the consumer goods and retail
sectors, as well as with the creation and
implementation of digital solutions in the retail
sector, and has a broad international outlook.
He was the CEO of Lidl International, one of
the largest international ch
ains of grocery
stores. Currently, Mr. Hojer is a senior
advisor at McKinsey & Company Inc., and
also acts as chair of The Meatless Farm and
Tom&Co and as board member at Everli.
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Ontex Integrated annual report 2022
MANON
JANSSEN
Independent
Director
On
May 25, 2021,
MJA Consulting
BV, permanently
represented by
Ms. Manon Janssen,
was appointed as an
Independent Director. Ms.
Janssen is an
executive with highly recognized experience
in the fields of marketing, ESG and
professional services in the public sector.
She began her career at Procter & Gamble
where she worked for 16 years in different
countries and where she was responsible for
major brands in the Paper and Health &
Beauty Care divisions. In 2000, she became
Vice President Marketing & Innovation at
Electrolux Europe and in 2005 she became
Chief Marketing Officer worldwide at Philips
Lighting. Ms. Janssen currently is the CEO
and chair of the board of management of
Ecorys, an
international research and
advisory company on ESG-related public
policy matters. In addition, she chairs several
expert committees in the field of energy
transition and climate change, and is a
director at Gimv and Puratos.
PAUL
MCNULTY
Independent
Director
On May 5, 2022,
Mr. Paul McNulty
was appointed as
an Independent
Director upon the nomination of Veraison
SICAV – Engagement Fund
, one of the
Company’s shareholders. Mr. McNulty is
Senior Partner and Member of the Executive
Committee of Veraison Capital AG, the asset
manager responsible for the Veraison SICAV
– Engagement Fund, since June 2020. Prior
to that, he spent five years as a senior analyst
with Sterling Str
ategic Value Limited
(Monaco), the investment advisor for Sterling
investment funds. From 2000 until 2015, he
was a senior fund manager
with Setanta
Asset Management, an active global value-
oriented investment manager. Prior to that,
Mr. McNulty
was a consultant with
PriceWaterhouseCoopers.
RODNEY
OLSEN
Non-Executive
Director
On May 25, 2021,
Mr. Rodney Olsen
was appointed as a
Non-Executive Director upon the nomination
of ENA Investment Capital LLC. Mr. Olsen is
an experienced international finance
executive within the FMCG sector. He is a
former CFO of Kimberly Clark’s APAC
division, and prior to that he held various
senior roles at Kimberly Clark, including CFO
International, CFO Global Finance
Operations and CFO of the EMEA region and
was responsible for large international M&A
transactions. Prior to joining Kimberly Clark,
he was senior manager a
udit at EY, and
senior manager SEC Reporting at the LTV
Corporation. Mr.
Olsen is also a board
member at Mary Crowley Cancer Research.
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Ontex Integrated annual report 2022
COMPETENCY MATRIX
The following table shows the capabilities that have been identified as important to have, given Ontex’s current context and strategic challenges, and how the Board’s current composition
covers these.
Hans Van
Bylen
Inge
Boets
Michael
Bredael
Isabel
Hochgesand
Manon
Janssen
Jesper
Hojer
Rodney
Olsen
Ebrahim
Attarzadeh
Paul
McNulty
Experience
Current/Past CEO ● ● ● ●
International Experience ● ● ● ● ● ● ● ● ●
Expertise
Executive in FMCG/Retail ● ● ● ● ●
Functional Executive (Operations, Procurement, Commercial) ● ● ● ●
Financial/Audit ● ● ● ● ●
Capital Markets ● ● ●
Sustainability ● ● ● ● ●
Diversity
Gender
Male ● ● ● ● ● ●
Female ● ● ●
Regional origin
Belgium ● ● ● ●
International ● ● ● ● ●
Compliance
Independent Director ● ● ● ● ●
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Ontex Integrated annual report 2022
1.2. BOARD EVOLUTION IN 2022
The composition of the Board underwent the following changes during 2022:
• With effect from January 11, 2022, the Board accepted the resignation of Mr. Frédéric Larmuseau, who was an Independent Director.
• With effect from the Company’s annual shareholders’ meeting of May 5, 2022, Mr. Philippe Costeletos (Non-Executive Director) resigned from the Board. On that same date, the
mandate of Inge Boets BV, permanently represented by Ms. Inge Boets, was renewed, and Mr. Ebrahim Attarzadeh (Non-Executive Director, appointed upon nomination of ENA
Investment Capital LLC) and Mr. Paul McNulty (Independent Director, appointed upon nomination of Veraison SICAV – Engagement Fund) were appointed to the Board.
• With effect from October 1
st
, 2022, JH GmbH, permanently represented by Mr. Jesper Hojer (Non-Executive Director), resigned from the Board. With effect from the same date, the
Board approved the co-optation of HVV GmbH, permanently represented by Mr. Jesper Hojer, as new (Non-Executive) Director for the remainder of the term of JH GmbH and to be
submitted for approval to the Company’s next shareholders’ meeting.
• On November 9, 2022, Mr. Gustavo Calvo Paz resigned from the Board. Mr. Calvo Paz was subsequently appointed as new CEO of the company with effect from November 14,
2022.
• Finally, with effect from January 1
st
, 2023, Regina S.à r.l., permanently represented by Ms. Regi Aalstad (Independent Director), and Alane SRL, permanently represented by Mr. Aldo
Cardoso (Non-Executive Director), resigned as Directors.
1.3. BOARD RESPONSIBILITIES AND ENGAGEMENT
The individual attendance rate to the Board meetings during 2022 was as follows:
Name
Board Attendance
[1]
Attendance Rate
ViaBylity BV, permanently represented by Hans Van Bylen
21/21
100%
Regina S.à r.l., permanently represented by Regi Aalstad
21/21
100%
Ebrahim Attarzadeh
[2]
12/12
100%
Inge Boets BV, permanently represented by Inge Boets
21/21
100%
Michael Bredael
21/21
100%
Gustavo Calvo Paz
[3]
17/19
89.47%
Alane SRL, permanently represented by Aldo Cardoso
20/21
95.24%
Philippe Costeletos
[4]
8/9
88.89%
Isabel Hochgesand
17/21
80.95%
HVV GmbH, permanently represented by Jesper Hojer
20/21
95.24%
MJA Consulting BV, permanently represented by Manon Janssen
16/21
76.19%
Paul McNulty
[5]
12/12
100%
Rodney Olsen
20/21
95.24%
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Ontex Integrated annual report 2022
[1] The attendance rate is based on the number of Board meetings held during the mandate of the respective Board members.
[2] Ebrahim Attarzadeh joined the Board as from May 5, 2022, and only 12 Board meetings occurred after that date.
[3] Gustavo Calvo Paz resigned from the Board on November 9, 2022 and only 19 meetings of the Board occurred before that date.
[4] Philippe Costeletos resigned from the Board on May 5, 2022 and only nine meetings of the Board occurred before that date.
[5] Paul McNulty joined the Board as from May 5, 2022, and only 12 Board meetings occurred after that date.
During 2022, the Board met 21 times, with an attendance rate of 93.94%. The number of Board meetings is explained, among others, by the Board’s close follow-up on Ontex’s strategic
projects, including its divestment projects. In addition, the agenda of the Board meetings included recurring items such as the oversight of the operational and financial performance, and review
of the Company’s medium and long-term strategy and business plan.
1.4. BOARD REVIEW AND ASSESSMENTS
In early 2021, the Company conducted a periodic Board assessment with the assistance of an external advisor, including a review of the composition and competencies of the Board. This led
to the nomination of new directors to the Board for approval by the annual shareholders’ meeting held in May 2022 (see under “Board evolution in 2022” above). In the course of 2022, the
Board continued its review and assessment work and focused, among others, on Board composition and size, Board and Executive Committee succession planning and CEO and Executive
Committee assessment and development.
1.5. BOARD COMMITTEES
2022 highlights
In December 2022, following the successful initial deployment of Ontex’s new strategy, the Board decided to dissolve the Strategy Committee. This Committee had been established in April
2021 as a temporary committee to support the re-definition of the Company’s strategy. The Strategy Committee was dissolved with effect from January 1
st
, 2023.
Audit and Risk Committee
In accordance with Article 7:99, §2 of the Belgian Code of Companies and Associations and the 2020 Corporate Governance Code, all members of the Audit and Risk Committee are Non-
Executive Directors. While the legal requirement is to have at least one member who is independent, the Board decided that the Audit and Risk Committee should comprise a majority of
independent members and that the mandate of Chair of the Audit and Risk Committee cannot be cumulated with the mandate of Chair of the Board. The chair and members of the Audit and
Risk Committee collectively have the required skills and expertise regarding accounting and audit matters.
On December 31, 2022, the Audit and Risk Committee was composed as follows:
Name
Position
Inge Boets BV, permanently represented by Inge Boets
Independent Director, Chair of the Audit and Risk Committee
Michael Bredael
Non-Executive Director
Rodney Olsen
Non-Executive Director
ViaBylity BV, permanently represented by Hans Van Bylen
Independent Director
As from January 1st, 2023, Mr. Paul McNulty joined the Audit and Risk Committee as an additional member.
During 2022, the Audit and Risk Committee met six times. The attendance rate was 100%:
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Ontex Integrated annual report 2022
Name
Meetings Attended
[1]]
Attendance rate
Inge Boets BV, permanently represented by Inge Boets
6/6
100%
Michael Bredael
6/6
100%
Rodney Olsen
6/6
100%
ViaBylity BV, permanently represented by Hans Van Bylen
6/6
100%
[1] The attendance rate is based on the number of Board Committee meetings held during the mandate of the respective Board members.
Jonas Deroo, Chief HR and Legal Officer, is Secretary of the Audit and Risk Committee.
The Audit and Risk Committee is entrusted with the tasks set out in Article 7:99, §4 of the Belgian Code of Companies and Associations. It decided on the agenda, frequency and topics of its
meetings, and reviewed the external and internal audit plan as well as compliance reporting, the half year financial statements and the external review on the half-year financial statements, the
quarterly financial information contained in the Q1 and Q3 trading updates, the key risks, and the ESG agenda of the Company.
With respect to its roles and responsibilities, as further described within the Ontex’ Corporate Governance Charter, the Board formally tasked the Audit and Risk Committee with the oversight
of the Company’s ESG initiatives, including to:
assess, review and prepare the decision-making of the Board on ESG actions and practices presenting new opportunities for the Company;
monitor and oversee the process for the development of ESG information and identify ways to integrate ESG information into the reporting cycle; and
measure and monitor the Company’s performance on ESG matters and their impact on society in order to take account of the multidimensional nature of corporate social responsibility.
Remuneration and Nomination Committee
In accordance with Article 7:100, §2 of the Belgian Code of Companies and Associations and the 2020 Corporate Governance Code, all members of the Remuneration and Nomination
Committee are Non-Executive Directors and the majority of the members are independent in accordance with the criteria set out in Article 7:87, §1 of the Belgian Code of Companies and
Associations. The members also have the necessary expertise in the field of remuneration.
On December 31, 2022, the Remuneration and Nomination Committee was composed as follows:
Name
Position
ViaBylity BV, permanently represented by Hans Van Bylen
Independent Director, Chair of the Remuneration and Nomination Committee
Alane SRL, permanently represented by Aldo Cardoso
Non-Executive Director
Ebrahim Attarzadeh
Non-Executive Director
Isabel Hochgesand
Independent Director
MJA Consulting BV, permanently represented by Manon Janssen
Independent Director
As from January 1st, 2023, Alane SRL, permanently represented by Mr. Aldo Cardoso, left the Remuneration and Nomination Committee as a member. As from that same date, HVV GmbH,
permanently represented by Mr. Jesper Hojer, joined the Remuneration and Nomination Committee as an additional member.
During 2022, the Remuneration and Nomination Committee met 12 times. The attendance rate was 95.83%:
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Ontex Integrated annual report 2022
Name
R&N Committee
Meetings Attended
[1]
Attendance Rate
R&N Committee
ViaBylity BV, permanently represented by Hans van Bylen
12/12
100%
Alane SRL, permanently represented by Aldo Cardoso
12/12
100%
Philippe Costeletos
[2]
5/5
100%
Isabel Hochgesand
11/12
91.67%
MJA Consulting BV, permanently represented by Manon Janssen
10/12
83.33%
Ebrahim Attarzadeh
[3]
7/7
100%
[1] The attendance rate is based on the number of Board Committee meetings held during the mandate of the respective Board members.
[2] Philippe Costeletos resigned from the Remuneration and Nomination Committee on May 5, 2022 and only five meetings of the Remuneration and Nomination Committee occurred before that date.
[3] Ebrahim Attarzadeh became a member of the Remuneration and Nomination Committee as from May 5, 2022, and only seven meetings of the Remuneration and Nomination Committee occurred after that date.
Jonas Deroo, Chief HR and Legal Officer, is Secretary of the Remuneration and Nomination Committee.
The Remuneration and Nomination Committee is entrusted with the tasks set out in Article 7:100, §5, of the Belgian Code of Companies and Associations.
During 2022, the Remuneration and Nomination Committee’s work included the following topics, which also explains the number of meetings that took place:
changes within the Board and Board succession;
reviewing the remuneration policy;
review of performance and remuneration of the Executive Committee members; and
succession and leadership assessment and development, including the succession of the former CEO.
Strategy Committee
The Strategy Committee was established in April 2021. The purpose of this committee was to reshape the Company’s strategic agenda, to expedite the Board’s strategic decision-making, and
to shift focus to long-term, forward-looking actions.
On December 31, 2022, the Strategy Committee was composed as follows:
Name
Position
ViaBylity BV, permanently represented by Hans Van Bylen
Independent Director, Chair of the Strategy Committee
Regina S.à r.l., permanently represented by Regi Aalstad
Independent Director
HVV GmbH, permanently represented by Jesper Hojer
Non-Executive Director
Paul McNulty
Independent Director
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Ontex Integrated annual report 2022
During 2022, the Strategy Committee met five times. The attendance rate was as follows 96%:
Name
Strategy Committee
Meetings Attended
[1]
Attendance Rate
Strategy Committee
ViaBylity BV, permanently represented by Hans Van Bylen
5/5
100%
Regina S.à r.l., permanently represented by Regi Aalstad
4/5
80%
Gustavo Calvo Paz
[2]
5/5
100%
HVV GmbH, permanently represented by Jesper Hojer
5/5
100%
Paul McNulty
[3]
2/2
100%
[1] The attendance rate is based on the number of Board Committee meetings held during the mandate of the respective Board members.
[2] Gustavo Calvo Paz resigned from the Strategy Committee on November 9, 2022. Only five meetings of the Strategy Committee occurred before that date.
[3] Paul McNulty became a member of the Strategy Committee on May 5, 2022. Only two meetings of the Strategy Committee occurred after that date.
Jonas Deroo, Chief HR and Legal Officer, was Secretary of the Strategy Committee.
As set forth in Article 5.4 of the Ontex Corporate Governance Charter, the Strategy Committee advised the Board principally on matters regarding the Company’s strategy and long-
term value creation, and, in particular:
focusing on the Group’s sense of purpose, strategic priorities and values as a key driver for innovation, growth and leadership;
assessing industry developments and the impact of industry trends and changes in the competitive activity on the business plan and the Company’s performance;
reviewing the Company’s medium and long-term strategy and the business plan, as prepared by the Executive Committee before being submitted to the Board;
preparing the decision-making of the Board in relation to strategic aspects of transactions or other operations presented to the Board. To this end, the Strategy Committee issues
recommendations on strategic transactions or other strategic operations (such as acquisition or disposal of companies/significant assets, creating or discontinuing presence in a
country, diversification into a new business or discontinuation of a certain business, the entry into or termination of strategic alliances or longer-term cooperation agreements, etc.)
presented by the CEO and/or the Executive Committee to the Board; and
monitoring the implementation of strategic projects and of the business plan including the Company’s progress against strategic goals.
During 2022, the Strategic Committee focused mainly on strategic review and the examination of strategic growth projects and opportunities.
In December 2022, the Board decided to dissolve the Strategy Committee with effect from January 1
st
, 2023.
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Ontex Integrated annual report 2022
1.6. EXECUTIVE MANAGEMENT
The following table shows the composition of the Executive Committee on December 31, 2022:
Name
Position per December 31, 2022
Gustavo Calvo Paz
Chief Executive Officer
Peter Vanneste
Chief Financial Officer and Executive Vice-President Finance and
IT
Vincent Crepy
Chief Supply Chain Officer
Laurent Nielly
President of the Europe Division
Stephanie McDonald
Executive Vice-President Human Resources
Annick De Poorter
Executive Vice-President R&D and Sustainability
Jonas Deroo
Executive Vice-President Legal and Secretary General
Executive management evolution in 2022
The Board appointed Mr. Gustavo Calvo Paz as new Chief Executive Officer, with effect from November 14, 2022, succeeding Ms. Esther Berrozpe.
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Ontex Integrated annual report 2022
Changes after December, 31, 2022
With effect from February 1
st
, 2023, Ms. Stephanie McDonald resigned from the Executive Committee. Her responsibilities were assumed by Mr. Jonas Deroo, acting as Chief HR & Legal
Officer.
Taking this change into account, the following paragraphs set out the biographical information, skills and experience of the current members of the Executive Committee.
GUSTAVO
CALVO PAZ
Chief Executive
Officer
Mr. Gustavo Calvo
Paz has vast
international
experience as an
industry executive with an extensive
background in operations, business
turnarounds, and strategy within the FMCG
sector. Prior to his appointment as CEO, Mr.
Calvo Paz was a member of the Board since
May 25, 2021. He was previously the
president of Kimberly Clark’s EMEA division,
and was an executive member of Kimberly
Clark’s Global Leadership Team. Prior to
that, he held various senior roles at Kimberly
Clark.
PETER
VANNESTE
Chief Financial
Officer and
Executive Vice-
President
Finance and IT
Mr. Peter Vanneste took up the position of
Chief Financial Officer on May 1
st
, 2021. Mr.
Vanneste brings vast experience in finance
and general management in the FMCG
sector from his time in senior roles at Jacobs
Douwe Egberts, where he was Group CFO,
and Procter & Gamble.
VINCENT
CREPY
Chief Supply
Chain Officer
Mr.
Vincent Crepy
took up the role of
Chief Supply Chain
Officer on May 1,
2021. Mr. Crepy joined
Ontex with strong
international experience from consumer
goods companies such as Procter & Gamble,
Reckitt Benckiser, Ventura Foods and
Scandinavian Tobacco Group in which he
held important leadership positions in
operations in the US, Europe, Central
America, and Asia-Pacific.
LAURENT
NIELLY
President
Europe Division
Mr.
Laurent Nielly
joined the Ontex
Group in July 2017
to lead the then acquired business in Brazil,
and was
appointed as President of the
Europe Retail Division in January 2021. His
scope was expanded in July 2021 after the
combination of Retail and Healthcare
Divisions. Mr. Nielly also brings more than 25
years of experience earned in Europe, the US
and Latin America and across companies
such as
P&G, McKinsey & Company,
PepsiCo and Coty. He started his
professional career in finance and strategy,
and
developed expertise in innovation and
commercial
excellence before taking P&L
responsibilities.
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Ontex Integrated annual report 2022
ANNICK DE
POORTER
Executive Vice-
President R&D
and Sustainability
Ms. Annick De Poorter
joined Ontex in 2003
as the R&D Manager
of Feminine Hygiene and was promoted to
R&D and Quality Director in January 2009.
Before joining the Group, she worked at
Libeltex NV in Belgium, and prior to that, she
was a Scientific Researcher at University of
Ghent, Belgium.
JONAS DEROO
Chief HR and
Legal Officer
Mr.
Jonas Deroo
joined Ontex in April
2015
as General
Counsel &
Corporate Secretary. Prior to joining Ontex,
Mr. Deroo was Associate General Counsel at
bpost. He started his career as an attorney at
the Brussels Bar.
Functioning of the Executive Committee
The powers of the Executive Committee include the operational management and organization of the Company, developing or updating on a yearly basis the overall strategy and business plan
of the Company and submitting it to the Board for approval, monitoring the implementation of the overall strategy and business plan of the Company, supporting the CEO in the daily management
of the Company and the exercise of his responsibilities, preparing the Company’s financial statements and presenting accurate and balanced evaluations of the Company’s financial situation
to the Board and providing the Board with the information it needs in order to properly fulfil its duties, setting up and maintaining policies related to the risk profile of the Company and systems
to identify, assess, manage and monitor financial and other risks within the framework set out by the Board and the Audit and Risk Committee.
The size and composition of the Executive Committee is determined by the Board acting on proposal of the CEO, who chairs the Executive Committee. Members of the Executive Committee
are appointed by the Board based on a proposal of the CEO and upon recommendation of the Remuneration and Nomination Committee. Members of the Executive Committee are appointed
for an indefinite period (with the exception of the CEO) and can be dismissed by the Board at any time or cease to be a member of the Executive Committee if their management agreement
with the Company terminates.
The CEO leads and chairs the Executive Committee. The CEO is vested with the day-to-day management of the Company. In addition, he exercises the special and limited powers assigned
to him by the Board or the Executive Committee. The CEO is a permanent invitee to the Board and reports to the Board on a regular basis, including on the actions taken by the Executive
Committee.
During 2022, as a general rule, the Executive Committee met bi-weekly and discussed, among others, the following topics:
strategic review and implementation;
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Ontex Integrated annual report 2022
financial and operational performance;
Ontex’s organizational model;
Ontex’s Sustainability Strategy 2030; and
internal controls and compliance.
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Ontex Integrated annual report 2022
1.7. DIVERSITY WITHIN THE BOARD AND MANAGEMENT COMMITTEE
Ontex strongly promotes diversity and equal opportunities. The Company has adopted a diversity policy.
In 2022, the Board was composed of 12 directors, four of which were women: Ms. Inge Boets (as permanent
representative of Inge Boets BV), Ms. Manon Janssen (as permanent representative of MJA Consulting BV), Ms. Regi
Aalstad (as permanent representative of Regina S.à r.l.) and Ms. Isabel Hochgesand. With effect from January 1
st
,
2023, the Board was reduced to nine members and Ms. Regi Aalstad (as permanent representative of Regina S.à r.l.)
resigned as member of the Board. As a result, the three remaining female members of the Board together represent
33% of the Board members. The Remuneration and Nomination Committee evaluates the composition of the Board
on a yearly basis and formulates suggestions to the Board, while, among other things, taking into account the gender
composition and other diversity elements. The Company complies with the requirement that at least one-third of the
members of the Board should be of the opposite gender as the gender of the majority, as set out in Article 7:86 of the
Belgian Code of Companies and Associations.
On 1 January 2023, Ontex’s Executive Committee counted two female members out of seven, or 29%.
6 | 67%
3 | 33%
Gender
Male Female
5 | 71%
2 | 29%
Gender
Male Female
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Ontex Integrated annual report 2022
2. Share capital, shareholders and investor engagement
2.1. SHARE CAPITAL AND CAPITAL EVOLUTION
At December 31, 2022, the share capital of the Company amounted to €823,587,466.38 and was represented by 82,347,218 shares without nominal value. Each share represents
1/82,347,218th of the capital and carries one vote. The shares are listed on Euronext Brussels. On December 31, 2022, 16,355,865 shares of the Company were registered shares and the
remainder were dematerialized shares.
The Company adopted various Long-Term Incentive Plans (“LTIP”). None of the share instruments granted confer any shareholder rights prior to the exercise or vesting of the respective
instruments. The shares to be delivered to participants are existing shares of the Company with all rights and benefits attached to such shares. A more detailed description of the LTIP is set
out in the Remuneration Report and Remuneration Policy.
The grants made by Ontex under its LTIP provide for a three-year vesting period. Accordingly, the grants that were made in 2019 vested as from 2022. More details about the vested stock
options and RSUs can be found in the Remuneration Report.
As of 2015, Ontex entered into certain forward purchase agreements in order to hedge its obligations under grants made in the framework of its LTIP. These consisted of one-year forward
purchase agreements, which were being extended on a yearly basis. These agreements were not extended in 2022.
On December 31, 2022, 1,270,500 shares of the Company were held by the Company.
2.2. SHAREHOLDER EVOLUTION
Pursuant to the Company’s Articles of Association and Corporate Governance Charter, the applicable successive thresholds as regards the application of the Law of 2 May 2007 on the
disclosure of significant shareholdings in issuers whose shares are admitted to trading on a regulated market and other provisions (the “Law of 2 May 2007”) and the Royal Decree of 14
February 2008 on the disclosure of significant shareholdings, are set at 3%, 5%, 7.5%, 10% and any subsequent multiples of 5%.
On February 21, 2022, the Company received a transparency declaration confirming that, on November 10, 2021, CIAM held 2,463,474 voting securities or voting rights in the Company,
representing 2.99% of voting securities, and thereby crossing downward the threshold of 3%.
On January 23, 2023, the Company received a transparency declaration confirming that, on December 31, 2022, Guangchang Guo and Fosun International Holdings Ltd. held 3,200,373 voting
securities or voting rights in the Company, representing 3.89% of voting securities, and thereby crossing upward the threshold of 3%.
We refer to our website for transparency declarations received after December 31, 2022.
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Ontex Integrated annual report 2022
2.3. SHAREHOLDER STRUCTURE
Based on the transparency declarations received by the Company, the shareholder structure of the Company on December 31, 2022
[1]
was as follows:
Shareholders
Shares
%
[2]
Date threshold crossed
Groupe Bruxelles Lambert SA
16,454,453
19.98%
April 20, 2021
ENA Investment Capital
12,411,999
15.07%
April 29, 2020
Guangchang Guo and Fosun International Holdings Ltd
[3]
3,200,373
3.89%
December 31, 2022
The Pamajugo Irrevocable Trust
2,722,221
3.64%
February 29, 2016
Veraison SICAV – Engagement Fund
2,497,800
3.03%
July 20, 2021
To the knowledge of the Company, no shareholders’ agreements are currently in place.
[1] Updates subsequent to December 31, 2022 are described on our website (https://ontex.com/investors/shareholder-resources-center/).
[2] Percentage based on the outstanding share capital of the Company at the time of the declaration.
[3] Mr. Guangchang Guo is the chairman and co-founder of Fosun International Holdings Ltd. Pursuant to the transparency declaration, the shares in the Company are held through Hauck & Aufhäuser Fund Services S.A., a discretionary investment
manager that is exercising the voting rights on the shares at its discretion in the absence of specific instructions.
2.4. INVESTOR ENGAGEMENT
In early 2022, the Company conducted a corporate governance roadshow. In addition, several group and individual virtual meetings were organized to interact with financial analysts and
investors, following the investor updates and the regular results publications.
2.5. DEALING AND DISCLOSURE CODE
Ontex gives utmost priority to its compliance with applicable market abuse regulations. On June 3, 2014, the Board approved the Ontex Dealing and Disclosure Code (the “Dealing and
Disclosure Code”). The Dealing and Disclosure Code was subsequently amended on April 2, 2015 and most recently on June 28, 2016. The Dealing and Disclosure Code restricts transactions
in the Company’s securities by members of the Board and of the Executive Committee, and by certain senior employees of the Ontex Group during closed and prohibited periods. The Dealing
and Disclosure Code also contains rules concerning the internal approval of intended transactions, as well as the disclosure of executed transactions through a notification to the Belgian
Financial Services and Markets Authority, and disclosure of inside information. The General Counsel is the Compliance Officer for purposes of the Dealing and Disclosure Code.
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Ontex Integrated annual report 2022
3. Relevant information in the event of a takeover bid
Article 34 of the Royal Decree of November 14, 2007 on the obligations of issuers of securities which have been admitted to trading on a regulated market, requires that listed companies
disclose certain items that may have an impact in the event of a takeover bid.
3.1. CAPITAL STRUCTURE
A comprehensive overview of our capital structure at December 31, 2022 can be found in chapter 2 of this Corporate Governance Statement.
3.2. RESTRICTIONS ON TRANSFERS OF SECURITIES
The Company’s Articles of Association do not impose any restrictions on the transfer of shares in the Company. Furthermore, the Company is not aware of any such restrictions imposed by
Belgian law except in the framework of market abuse rules, and neither is the Company aware of any agreements between shareholders which may result in restrictions on the transfer of
securities and or the exercise of voting rights.
3.3. HOLDERS OF SECURITIES WITH SPECIAL CONTROL RIGHTS
There are no holders of securities with special control rights.
3.4. EMPLOYEE SHARE PLANS WHERE THE CONTROL RIGHTS ARE NOT EXERCISED DIRECTLY BY THE EMPLOYEES
The Company’s shares to be delivered to participants upon exercise of the stock options or vesting of the RSUs or performance shares in the framework of the LTIP are existing ordinary shares
in the Company with all rights and benefits attached to such shares. A more detailed description of the LTIP is set out in the Company’s Remuneration report and Remuneration Policy.
The Company has not set up employee share plans where control rights over the shares are not exercised directly by Ontex’s managers or employees.
3.5. RESTRICTIONS ON THE EXERCISE OF VOTING RIGHTS
The Articles of Association of the Company do not contain any restrictions on the exercise of voting rights by shareholders, provided that the shareholders concerned comply with all formalities
to be admitted to the shareholders’ meeting and their voting rights are not suspended in one of the events set out in the Articles of Association or the Belgian Code of Companies and
Associations. Pursuant to Article 11 of the Company’s Articles of Association, the Board is entitled to suspend the exercise of rights attaching to shares belonging to several owners.
The Company is not aware of any restrictions imposed by Belgian law on the exercise of voting rights by the shareholders.
3.6. RULES ON APPOINTMENT AND REPLACEMENT OF BOARD MEMBERS
The maximum term of office of directors under Belgian law is limited to six years (renewable) but the 2020 Corporate Governance Code recommends that it be limited to four years
(Recommendation 5.6). The appointment and renewal of directors is subject to approval by the shareholders’ meeting, upon proposal by the Board on the basis of a recommendation of the
Remuneration and Nomination Committee.
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Ontex Integrated annual report 2022
3.7. RULES ON AMENDMENTS TO THE ARTICLES OF ASSOCIATION
Save for capital increases decided by the Board within the limits of the authorized capital or a change of the seat of the Company (provided such change does not trigger the application of
different rules on the use of languages by companies than those that currently apply to the Company), only an extraordinary shareholders’ meeting is authorized to amend the Company’s
Articles of Association. An extraordinary shareholders’ meeting may only deliberate on amendments to the Articles of Association if at least 50% of the share capital is represented. If the above
attendance quorum is not reached, a new extraordinary shareholders’ meeting must be convened, which will validly deliberate regardless of the portion of the share capital represented at the
shareholders’ meeting. As a rule, amendments to the Articles of Association are only adopted if approved by at least 75% of the votes cast. The Belgian Code of Companies and Associations
provides for more stringent majority requirements in specific instances, such as for modifications of the Company’s corporate object clause.
3.8. AUTHORIZED CAPITAL
On May 25, 2018, the Company’s extraordinary shareholders’ meeting renewed the authorization to the Board with respect to authorized capital under the following conditions:
The Board may increase the registered capital of the Company in one or several times by an amount cumulated over five years of maximum 50% of the amount of the registered capital as
such amount is recorded immediately after the shareholders’ meeting of May 25, 2018, of which maximum 20% of the amount of the registered capital as such amount is recorded immediately
after the shareholders’ meeting of May 25, 2018, in the event of a capital increase with cancellation or limitation of the preferential subscription rights of the shareholders.
This authorization may be renewed in accordance with the relevant legal provisions. The Board can exercise this power for a period of five years as from the date of publication in the Annexes
to the Belgian State Gazette of the amendment to the Articles of Association approved by the shareholders’ meeting on May 25, 2018.
3.9. ACQUISITION OF OWN SHARES
On May 25, 2018, the Company’s extraordinary shareholders’ meeting renewed the authorization towards the Board with respect to the acquisition of own shares subject to the following
conditions:
The Company may, without any prior authorization of the shareholders' meeting, in accordance with Articles 620 ff. of the (former) Belgian Companies Code and within the limits set out in these
provisions, acquire, on or outside the stock market, up to 10% of its own shares, profit-sharing certificates or associated certificates for a price which will respect the legal requirements, but
which will in any case not be more than 10% below the lowest closing price in the last thirty trading days preceding the transaction and not more than 5% above the highest closing price in the
last thirty trading days preceding the transaction. This authorization is valid for five years from May 25, 2018. This authorization covers the acquisition on or outside the stock market by a direct
subsidiary within the meaning and the limits set out by Article 627, indent 1 of the (former) Belgian Companies Code. If the acquisition is made by the Company outside the stock market, even
from a subsidiary, the Company shall comply with Article 620, §1, 5° of the (former) Belgian Companies Code.
Further details with respect to the acquisition of own shares can be consulted in chapter 2.1 of this statement.
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Ontex Integrated annual report 2022
3.10. MATERIAL AGREEMENTS TO WHICH THE COMPANY IS A PARTY CONTAINING CHANGE OF CONTROL PROVISIONS
3.10.1. Senior Facilities Agreement
The Company, and certain of its subsidiaries as guarantors, entered into a €470,000,000 senior term and revolving credit facilities agreement dated June 23, 2021 (the “Senior Facilities
Agreement”), comprising a term loan of €220,000,000 and a revolving credit facility of €250,000,000, having an initial maturity of three years with the option to extend for a period of up to two
years subject to certain conditions set out therein. The proceeds were used for the refinancing of existing indebtedness and for general corporate purposes.
The Senior Facilities Agreement contains provisions that may be triggered in the event of a change of control over the Company. More specifically, the Senior Facilities Agreement provides,
among others, that any person or group of persons acting in concert acquiring, directly or indirectly, beneficial ownership of the issued capital of the Company having the right to cast more than
50% of the votes capable of being cast at a shareholders’ meeting may lead to a mandatory prepayment and cancellation under the Senior Facilities Agreement.
3.10.2.
Indenture
The Company, and certain of its subsidiaries as guarantors, entered into an indenture dated July 7, 2021 (the “Indenture”) pursuant to which the Company issued €580,000,000 3.5000%
senior notes due July 15, 2026 (the “Senior Notes”). The proceeds have been used for the refinancing of existing indebtedness and for general corporate purposes
The Indenture contains provisions that may be triggered in the event of a change of control over the Company. More specifically, the Indenture provides, among others, that any person or
group of persons acting in concert (other than certain exempt persons) acquiring, directly or indirectly, beneficial ownership of more than 50% of the total voting power capable of being cast at
a shareholders’ meeting may lead to a mandatory offer by the Company to repurchase the Senior Notes at a purchase price equal to 101% of the principal amount of the Senior Notes (together
with accrued and unpaid interest).
3.10.3.
Factoring Agreement
The Company entered into a factoring agreement dated February 21, 2018, with BNP Paribas Fortis Factor NV and KBC Commercial Finance NV (the “Factoring Agreement”). The Factoring
Agreement contains provisions that may be triggered in the event of a change of control over the Company. More specifically, the Factoring Agreement provides, among others, that in the
event the effective control of any party is transferred to others, the other party has the right to terminate the Factoring Agreement.
3.10.4.
Hedging Agreement
The Company entered into an ISDA FX hedging agreement dated March 12, 2018 with Crédit Agricole Corporate and Investment Bank (“CACIB”) (the “Hedging Agreement”). The Hedging
Agreement contains provisions that may be triggered in the event of a change of control over the Company. More specifically, the Hedging Agreement, provides, among others, that a change
control, defined as any person or group of persons acting in concert acquiring, directly or indirectly, beneficial ownership of the issued share capital of the Company, provides CACIB the right
to terminate the Hedging Agreement.
3.10.5.
Guarantee Agreement
The Company and its subsidiary Hygiene Medica SAS entered into a guarantee agreement dated November 6, 2018 with Euler Hermes NV (the “Guarantee agreement”), with respect to the
guarantee issued by Euler Hermes NV to Land Rheinland, Finanzamt Mayen, dated November 13, 2018. The Guarantee Agreement includes provisions that may be trigged in case of a change
of control of the Company. More specifically, the Guarantee Agreement provides for acceleration in case the Company has leased a substantial part of her assets to a third party, or the
Company merges or decides to merge, splits or decides to split, or is absorbed by a third party.
The change of control provisions that are referred to above have already been approved by the shareholders’ meeting in accordance with Article 7:151 of the Belgian Code of Companies and
Associations or, earlier, Article 556 of the (former) Belgian Companies Code.
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3.11. SEVERANCE PAY PURSUANT TO TERMINATION OF CONTRACT OF BOARD MEMBERS EXECUTIVE OFFICERS OR EMPLOYEES PURSUANT TO A
TAKEOVER BID
The Company has not concluded any agreement with its Board members, executive officers or employees which would result in the payment of a specific severance pay if, pursuant to a
takeover bid, the Board members, executive officers or employees resign, are dismissed or their employment agreements are terminated.
We refer to the Remuneration Report for further detail on the termination provisions of the members of the Board and the Executive Committee in general.
4. Conflicts of interests
In accordance with Article 7:96 of the Belgian Code of Companies and Associations, if a Board member has a direct or indirect financial interest that is contrary to the interest of the Company
in respect of a decision or transaction which is the responsibility of the Board, he/she must inform the other Board members before any decision by the Board is taken and the statutory auditor
must also be notified. The conflicted Board member cannot be present during the deliberations of the Board relating to these transactions or decisions and cannot vote.
In addition to the legal requirements, the Company, as a general matter and as set forth in its Corporate Governance Charter, also expects each Board member to arrange his or her personal
and business affairs in such a way as to avoid any (appearance of) conflict of interest of a personal, professional or financial nature with the Company, directly or through relatives (including
spouse or life companion, or other relatives (by blood or marriage) up to the second degree and foster children).
No conflicts of interest within the meaning of Article 7:96 of the Belgian Code of Companies and Associations arose in 2022.
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5. Related Party Transactions
During 2022, the Company did not enter into any transactions with related parties within the meaning of Article 7:97 of the Belgian Code of Companies and Associations.
6. Compliance with the 2020 Corporate Governance Code
The Company is committed to high standards of corporate governance and relies on the 2020 Corporate Governance Code as its reference code. The 2020 Corporate Governance Code is
based on a “comply or explain” approach. Belgian listed companies must comply with the 2020 Corporate Governance Code but may deviate from those provisions which are not otherwise
contained in the Belgian Code of Companies and Associations, and provided they disclose the justification for any such deviations in their corporate governance statement included in the
Annual Report in accordance with Article 3:6, §2, first paragraph, 2° of the Belgian Code of Companies and Associations.
On October 9, 2020, when the Company’s Corporate Governance Charter was amended to comply with the requirements of the 2020 Corporate Governance Code, the Board opted to implement
a one-tier governance structure. The Board thus is the highest decision-making body of the Company. It is authorized to perform all acts that are necessary or useful for the realization of the
object of the Company, except for those powers that are reserved by law to the shareholders’ meeting. The Board decides on the strategy of the Company and takes all important investment
and divestment decisions. The Board has delegated the operational management of the Company to the Executive Committee, which exercises such operational management within the
framework of the strategy determined by the Board.
The Company complies with all provisions of the 2020 Corporate Governance Code, except in respect of the following:
Provision 4.2 of the 2020 Corporate Governance Code provides that strategy formulation should not be referred to any permanent committee. In April 2021, the Board established the
Strategy Committee in light of the strategic challenges and need for a strategic review of the Company’s business and operations. The Strategy Committee, an advisory committee,
aimed to enhance and expedite the Board’s strategic decision-making, and to support Executive Management’s reshaping of the Company’s strategic agenda and to exercise support
and oversight in relation to the implementation thereof. Following the successful initial deployment in 2022 of Ontex’s new strategy, the Board decided to dissolve the Strategy
Committee with effect from January 1
st
, 2023. As a result, the Company is now compliant with provision 4.2 of the 2020 Corporate Governance Code.
Provision 7.6 of the 2020 Corporate Governance Code provides that non-executive board members should receive part of their remuneration in the form of shares in the Company.
After due consideration, it has been decided that the remuneration of the Non-Executive Directors will continue to be paid fully in cash, because of the complex tax and social security
consequences of paying part of the remuneration in shares, both for the beneficiaries and for the Company. We are, however, of the opinion that share ownership by Non-Executive
Directors can have a positive impact on their commitment and engagement. Therefore, the Company has issued a recommendation to Non-Executive Directors to build, over their
four-year tenure, an Ontex equity stake equivalent to one time the Non-Executive Director’s fixed fee, and to keep this equity stake during at least one year following the end of their
Board mandate.
7. Events after the end of the reporting period
The relevant events after the end of the reporting period can be found in note 7.32 of the consolidated financial statements.
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8. Risk management and internal control framework
8.1. INTRODUCTION
The Ontex Group operates a risk management and control framework in accordance with the Belgian Companies and Associations Code and the 2020 Corporate Governance Code. The
framework in place is aligned with the management framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
The Ontex Group is exposed to a wide variety of risks within the context of its business operations that can result in its objectives being affected or not achieved. Controlling those risks is a
core task of the Board (including the Audit and Risk Committee), the Executive Committee and all other employees with managerial responsibilities.
The risk management and control system has been set up to reach the following goals:
Achievement of the Ontex Group objectives;
Achieving operational excellence;
Ensuring correct and timely financial reporting; and
Compliance with all applicable laws and regulations
Compliance with policies and objectives set by management
Safeguarding of company assets
8.2. CONTROL ENVIRONMENT
8.2.1. Three lines model
The Ontex Group applies the “three lines model” to clarify roles, responsibilities and accountabilities, and to enhance communication within the area of risk and control. Within this model, the
different lines responding to risks are:
First line: line management is the first responsible for assessing risks on a day-to-day basis and implementing controls in response to these risks.
Second line: the oversight functions such as Finance and Controlling, Quality, Compliance, Sustainability, Tax and Legal oversee risk management as defined by the first line of
defense. The second line of defense actors provide guidance and direction and develop a risk management framework. The Group’s Compliance function works on communicating
and training on Code of Ethics matters.
Third line: independent assurance providers, including internal and external audit functions supervise and control the risk management processes as executed by the first and
second line of defense.
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8.2.2. Policies, procedures and processes
The Ontex Group fosters an environment in which its business objectives and strategy are pursued in a controlled manner. This environment is created through the implementation of different
company-wide policies, procedures and processes such as the Ontex values, the Ontex Code of Ethics (and its different sections which include policies on anti-bribery, anti-money laundering
and fair competition), the Quality Management System and the Delegation of Authorities ruleset. The Executive Committee fully endorses these initiatives. The employees are regularly informed
and trained on these subject matters in order to develop sufficient risk management and control at all levels and in all areas of the organization.
8.2.3. Group-wide ERP system
The large majority of the Group entities operate the same group-wide ERP systems which are managed centrally. These systems embed the roles and responsibilities defined at the Ontex
Group level. Through these systems, the main flows are standardized and key controls are enforced. The systems also allow detailed monitoring of activities and direct access to data.
8.3. RISK MANAGEMENT
Sound risk management starts with identifying and assessing the risks associated with the Company’s business and external factors. Once the relevant risks are identified, the Company strives
to prudently manage and minimize such risks, acknowledging the existence of ordinary business risks and implementing measures to address them, including risk escalation processes to
ensure that the appropriate decision-makers assess and resolve specifically identified risks. The processes in place aim at identifying key risks, assessing them, defining appropriate responses,
communicating them to the right levels in the organization and monitoring the effectiveness of mitigation actions.
All employees of the Ontex Group are accountable for the timely identification and qualitative assessment of the risks within their area of responsibility on a continuous basis. On top of the
continuous input for the risk assessment, a periodic review is conducted with the Executive Committee. As an outcome of the periodic review, the risks are prioritized based on their inherent
impact and the vulnerability of Ontex to these risks.
The Ontex Group has identified and analyzed its key corporate risks. These corporate risks are communicated to the various levels of management.
8.4. CONTROL ACTIVITIES
Control measures are in place to minimize the effect of risk on Ontex Group’s ability to achieve its objectives. These control activities are embedded in the Ontex Group’s key processes and
systems to assure that the risk responses and the Ontex Group’s overall objectives are carried out as designed. Control activities are conducted throughout the organization, at all levels and
within all departments. Key compliance areas are monitored for the entire Ontex Group by the Head of Compliance (at group level) and by Local Compliance Coordinators (at local level). The
Compliance function supports compliance with the Ontex Code of Ethics and the adoption of clear processes and procedures with respect to the Code. The Compliance long term strategy and
yearly objectives are approved by the Executive Committee and by the Audit and Risk Committee and a reporting takes place twice a year towards the Executive Committee and the Audit and
Risk Committee. The Head of Compliance and Internal Audit Manager meet regularly to discuss increasing risks based on incidents in relation to the Code of Ethics and (new or existing) legal
frameworks. More information about Ontex’s approach, strategy and progress towards business ethics and compliance can be found in the Sustainability Statements of this annual report.
In addition to these control activities, an insurance program is in place for certain risk categories that cannot be absorbed without material effect on the Company’s balance sheet.
8.5. INFORMATION AND COMMUNICATION
The Ontex Group recognizes the importance of timely, complete and accurate communication and information both top-down as well as bottom-up. The Ontex Group therefore put several
measures in place to assure amongst others:
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Security of confidential information;
Clear communication about roles and responsibilities; and
Timely communication to all stakeholders about external and internal changes impacting their areas of responsibility.
8.6. MONITORING OF CONTROL MECHANISMS
Monitoring helps to ensure that internal control systems operate effectively.
The quality of the Ontex Group’s risk management and control framework is assessed by the following actors:
Internal Audit. The tasks and responsibilities assigned to Internal Audit are defined in the Internal Audit Charter, which has been approved by the Audit and Risk Committee. The key
mission of Internal Audit as defined in the Internal Audit Charter is “to add value to the organization by applying a systematic, disciplined approach to evaluating the internal control
system and providing recommendations to improve it”.
External Audit. In the context of its review of the annual accounts, the statutory auditor focusses on the design and effectiveness of internal controls and systems relevant for the
preparation of the financial statements. The outcome of the audits, including work on internal controls, is reported to the Executive Committee and the Audit and Risk Committee and
shared with Internal Audit.
Audit and Risk Committee. The Board and the Audit and Risk Committee have the ultimate responsibility with respect to internal control and risk management. For more detailed
information on the composition and functioning of the Audit and Risk Committee, see chapter 1.5. of this Corporate Governance Statement.
8.7. RISK MANAGEMENT AND INTERNAL CONTROL WITH REGARD TO THE PROCESS OF FINANCIAL REPORTING
The accurate and consistent application of accounting rules throughout the Ontex Group is assured by means of a Finance and Accounting Manual.
On a quarterly basis, a bottom-up risk analysis is conducted to identify risk factors. Action plans are defined for all key risks. Specific identification procedures for financial risks are in place to
assure the completeness of financial accruals.
The accounting teams are responsible for producing the accounting figures, whereas the controlling teams check the validity of these figures. These checks include coherence tests by
comparison with historical and budget figures, as well as sample checks of transactions according to their materiality.
Specific internal control activities with respect to financial reporting are in place, including the use of a periodic closing and reporting checklist. This checklist assures clear communication of
timelines, completeness of tasks, and clear assignment of responsibilities.
Uniform reporting of financial information throughout the Ontex Group ensures a consistent flow of information, which allows the detection of potential anomalies. The Group’s ERP systems
and management information tools allow the central controlling team direct access to disaggregated financial and non-financial information.
An external financial calendar is planned in consultation with the Board and the Executive Committee, and this calendar is announced to the external stakeholders. The objective of this external
financial reporting is to provide Ontex stakeholders with the information necessary for making sound business decisions. The financial calendar can be consulted at
https://www.ontex.com/investors.
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8.8 ONTEX MAIN RISKS
Detailed descriptions of the most significant identified risks and opportunities to Ontex are listed below together with how the risk is managed at Ontex (including any mitigation efforts currently
in place or planned goring forward as part of the risk mitigation plan).
These risks may impact the achievement of our strategic drivers as set out in the Strategic Report section of this annual report. They are ordered by type of risk and are not set out in priority
order.
8.8.1 Contextual risks
8.8.1.1 Political instability
Ontex operates around the globe, and as a result is subject to risks associated with operating internationally. Recent and ongoing instability in some of the countries in which we operate may
constrain the way we do business by regulatory deadlocks potentially leading to litigation and fines. Geopolitical tensions can deteriorate trade relations and disrupt the global economic activity
which can directly and indirectly translate into Ontex’s operations or general business.
Risk management
Various stakeholders at Ontex are occupied with monitoring the macroeconomic and geopolitical situation in the regions Ontex is active in. During business review meetings, an assessment of
the situation takes place and remedial actions are discussed.
Our global presence allows us to remediate the risk by providing the flexibility to shift our focus to other areas of the world in case of severe disruptions.
With respect to our operations in Russia, a dedicated operating model was put in place which accommodates the continuity of our operations in Russia in line with the regulatory framework
which is in place and provides the flexibility to adjust in case of changes in regulations.
8.8.1.2 Competition
Ontex is active in a landscape with intense competition from branded product manufacturers and retailer brand manufacturers . Action and counter- reaction from all players in the competitive
environment can impact the market share, provoke price wars and in the long-term affect our margin. Furthermore, our customers frequently tender their business leading to long-term
commitment which makes Ontex sensitive to actions and reactions from its competitors. Ontex is also exposed to the risk that alternative products, solutions or business models meeting
evolving customer needs replace the product portfolio of Ontex. This could jeopardize the company’s position in the market.
Risk management
Our ambition is to be the number one partner of choice for retailer brands. This needs to be supported by excellence on service and quality. We are constantly aiming to improve our cost and
price competitiveness, refining our customer segmentation and driving customer centricity. Through innovation, we drive the product portfolio further aiming at continued support of customer
and consumer needs. With proactive market research, we follow up and anticipate market trends and follow competitive moves.
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8.8.1.3 Laws and regulations
Unforeseen or non-identified changes to legislation or misinterpretation of existing legislation could lead to litigation or fines or increase the cost of doing business. Changes to regulations can
trigger additional costs or exclusion of market segments in case of non-compliance.
Risk management
Changes to our strategy and product portfolio are increasingly exposing us to more regulated markets and product segments. Various domains in the organization are screening the regulatory
landscape on a continuous basis through participation in industry fora, conferences, etc. and are responsible for creating the required awareness within the organization around such regulatory
changes.
Compliance with existing regulations are enforced via our code of ethics. The code of ethics captures our values with respect to anti-competition, bribery, conflict of interests, professional
conduct, human rights, sanctioned countries. Employees are periodically receiving trainings on the topics included in our code of ethics. On top of that, our suppliers are required to sign a code
of conduct including labor, ethics and health and safety standards. Breaches to our code of ethics can be reported via various channels within the organization or through our (anonymous)
‘Speak Up!’ Web system.
8.8.2 Operational risks
8.8.2.1 Pricing strategy
As our raw material costs are often linked to indices, the cost of goods sold is highly dependent on the volatile evolution of those indices. Ontex is faced with the challenge to preserve its margin
by properly passing inflated costs to its customers which typically have long-term contracts at fixed prices.
Risk management
Ontex is organized to govern pricing mechanisms enabling a fast escalation process to trigger pricing discussions both internally and externally. Our prices and margins are monitored centrally
based upon continuous input collected from our sales and controlling teams and based on shelf price tracking.
In the course of 2023, we will continue to adapt our approach to decrease the time lag between cost and price increases and improve our execution success ratio by expanding our portfolio of
pricing approaches. Those are aimed at enabling faster deployment of additional pricing waves with greater flexibility. Additionally, we have planned to review our approach toward institutional
healthcare customers and will improve our ability to anticipate inflation and to understand better how competitors approach the raw material inflation.
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8.8.2.2 Information security and privacy
We are increasingly reliant on IT systems and information management to run our business. There is a risk of disruption of our IT systems and that sensitive data may be compromised by
intended or unintended leakage of information, malicious cyber-attack or technology failure. A disruption of our IT systems could affect our sales, production and cash flows, ultimately impacting
our results. Unauthorized access and misuse of sensitive information could interrupt our business and/or lead to loss of assets , competitive advantage or investor confidence. It could also lead
to negative, reputational impact.
Risk management
Throughout 2022, our cyber teams responded rapidly and successfully to changing requirements, challenges and security risks arising from an increased and even more complex threat
landscape.
We continued to extend the capabilities of our Cyber Security Operations Centre (CSOC), our central source of cyber-security intelligence and incident support and introduced best of breed
artificial intelligence based, Advanced Threat Prevention and Detection (ATPD) solutions to enable us greater real-time visibility across every part of our IT organization.
Enhanced cyber security tooling deployed during late 2021 and early 2022 is now fully in production and has also transformed our ability to protect our organization’s systems.
With our system-wide monitoring and detection capabilities maturing, considerable focus has been on testing our cyber, continuity controls and countermeasures to ensure their appropriate
effectiveness and robustness and to aid in strengthening our cyber resilience across our platforms and services even further. The measures in place have increased our ability to preventively
block suspicious events and attacks. On the human side, the integration of artificial and automated testing and training platforms into our system environments enabling advanced phishing,
malware, ransomware and cyberattack simulations, personalized for every Ontex user, was a great success.
The pace and intensity of our work will increase throughout 2023-2024, in line with the escalating threat landscape, an incredible era of innovation for Ontex and the increasing cost and risk
associated with digital, data and technology.
8.8.2.3 Product innovation
We need to face competition from manufacturers in production innovation. Rapid time-to-market is key to our competitiveness. Failure to generate timely innovative products or inadequate
choice of new production methods, technology or structural redesign of our raw material components could lead to inability to sustain our market share. It could also lead to irrecoverable
research and development costs or lack of responsiveness to customer demands.
Risk management
Innovation is one of the key strategic pillars at Ontex. We develop and deliver the right product and packaging innovation at the right time, inspired by customer and consumer needs, with
sustainability in mind. New products are created from rigorous research into market trends, customer and consumer insights, the skills of our engineers and, not least, the creativity of our
people. We also collaborate with partner organizations including leading universities, laboratories, institutes, start-ups and research organizations to make sure that we are at the forefront of
change.
Innovation is driven by our own engineering department which is customizing machines to our needs, dedicated pilot production lines which are running in parallel with our operations. This has
led to over 200 innovations which were launched over the past years. We refer for more info to the strategic section of this annual report.
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8.8.2.4 Product design & quality
Our reputation as a business partner relies heavily on our ability to supply quality products. In case of quality issues, this may lead to adverse effects to consumer health, loss of market share,
financial costs and loss of turnover as well as putting the Company reputation at stake.
Risk management
Risk assessments are performed on all Ontex products to identify and control risks that might affect product performance and product safety. The Quality system is providing tools and capability
within the organization to evaluate and control those risks. Ontex’ organization and sites work proactively utilizing continuously the inputs from the market and customer feedback to improve
products and processes to foresee the issues that might have an impact on consumer satisfaction.
In an efficient Quality Management System that represents how we systematically manage to be compliant, efficient, successful and profitable, we capture the requirements of our customers
and of the various regulations applicable to us. It is an end-to-end approach looking at each of Ontex’s key processes. Controls and measurements steer the process efficiency.
We continue to work proactively on fast assimilation, deployment and implementation of the customers’ requirements into the Ontex Management System. We continue our journey to define
processes to be documented and centralize them into one single system: Ontex DNA. This helps to improve communication and know-how within our organization.
Collaboration with defined Single Persons of Contact (SPOC) have a big contribution to the implementation and help all Ontex people in each department to contribute to the continuous
improvement process of the Quality Management System by providing training and guidance.
8.8.2.5 Sourcing: Raw material price volatility and availability
We are dependent upon the availability of raw materials for the manufacturing of our products. On average, the main raw materials and packaging costs account for between 75% and 80% of
our cost of sales. Our raw materials are subject to price volatility due to a number of factors that are beyond our control, including but not limited to, the availability of supply, general economic
conditions, commodity price fluctuations and market demand.
Scarcity of supply of raw materials or transport scarcity could lead to (temporary) unavailability of resources and could affect the continuity of our supply chain. The likelihood of these events
occurring is increasing due to climate changes, more stringent regulatory requirements or due to political instability.
Risk management
The continuity of our supply chain is safeguarded in various ways.
For most of our resources, multiple sources are available and validated.
We have strategic alliances with our key suppliers resulting into long-term contracts with priority access for contractual volumes.
Flexibility of our volume allocations is built into our contracts.
Alternative materials have been validated for usage in case of shortages.
Geographical diversification of our suppliers and sources offsetting local / regional volatility
Financial hedging of our key strategic materials
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Direct hedging via suppliers decoupling from indices where possible
In the course of 2023, we will continue our focus to safeguard our production through more flexible specifications of our raw materials, a fast-track qualification process of new sources and
materials and by continuing the development of our strategic alliances. We will also consider further expansion of the categories which are in scope for financial hedging and explore further
opportunities to decouple pricing from indices.
8.8.3 Governance risks
8.8.3.1 Sustainability risk
Ontex risks not to be able to respond timely to the climate and environmental expectations and requirements from consumers, governments and other stakeholders. Ontex requires certain
sensitive raw materials such as paper pulp and plastics to manufacture its products and Ontex produces disposable finished products of which the environmental impact cannot be ignored.
Ontex risks losing market share if stakeholder expectations cannot be met at a competitive price. Furthermore, new regulations might increase the cost of doing business or could lead to
regulatory fines or taxes.
Risk management
Our Ontex sustainability strategy & related (science-based) goals are framing the path we plan to take to address sustainability-related risks. Via the bi-annual materiality assessment we
identify, assess and set up actions to managing sustainability-related risks. The two key risks for Ontex are climate change and products & packaging contributing to pollution.
We currently do not have substantial financial impacts of climate change on our operations (scope 1-2 emissions) due to the relatively low energy usage in our plants & climate program in
place. Looking to the value chain emissions (scope 3) there might be financial impacts due to legislation. To understand these impacts, we plan to renew our climate scenario assessment in
2023.
We manage sustainability-related risks via different means:
Creating transparency: sustainability data monitoring both in our plants & supply chain to understand where negative environmental & social impacts (can) take place &
communicate them.
Preventive actions: environmental & social management systems in the plants, environmental & social risk assessments in our supply chain, investing in energy-efficiency,
renewable on-site solar energy, carbon reductions integrated in bonus scheme, continuous monitoring of our customers’ requirements, including sustainability in our product designs,
etc.
Mitigation actions: Our sustainability-related policies & procedures describe how we deal with (potential) negative impacts. In addition, the sustainability strategy lays out clear
targets to reduce our climate impact & work towards circular solutions such as e.g. recycled content in packaging & offering reusable products.
The sustainability topic continues to be high on the agenda of our strategy determination and budget discussions and will lead to following actions in the course of 2023:
Progress towards our 2030 sustainability goals focusing at reaching our science-based targets and reducing the environmental footprint of our products whilst adding value for the
consumer.
Assessing the requirements affecting our company & setting up implementation roadmaps in order to make sure we comply with upcoming regulations such as CSRD, EU Taxonomy, HREDD,
EPR schemes, plastic taxes, etc.
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Communicating sustainability performance to consumers via ecolabels & claims, to customers using carbon & plastic footprint assessments & investors by improving our responses
to investor questionnaires.
Enhancing transparency via climate scenario assessments & continuous progress on supply chain due diligence.
Strengthening integrated governance, tools & processes to ensure prevention & management of the risks.
Ensure our infrastructure enables alignment with our 2030 sustainability goals, facilitated by co-operation & partnerships to reach our climate neutral & circular solutions goals.
In 2021, we conducted a scenario assessment. More information on the different climate risks & opportunities and outcome of the scenario assessment can be found in the Sustainability
Statements of this report.
8.8.3.2 Human capital, talent management & retention
A skilled and motivated workforce and agile organization are essential for the continued success of our business. Failure to identify, attract, develop and retain talents to satisfy current and
future needs of the business may affect our ability to compete. In case of failure to recruit and retain adequately, this may result in a decline in business performance.
With the increased ratio of homework, people can become disconnected leading to mental fatigue. Protecting our employees is crucial to safeguard their expertise and motivation is therefore
crucial.
Risk management
The HR team is committed to create a health work environment in addition to delivering professional Human resources services. This translates into initiatives in various domains:
Initiatives to better connect employees and top management cross-functionally and inform employees of the company’s strategy and priorities.
Various local initiatives to improve mental and physical wellbeing.
Local initiatives to create a fun working atmosphere to improve the connection and community.
Initiatives to promote a frequent feedback culture including some local recognition initiatives.
A culture scan was organized in 2022.
In the course of 2023, the HR team will further deploy additional actions including the creation of a culture board, launch a global employee recognition framework, advance our Diversity, Equity
and Inclusion framework and further elaborate the frequent feedback culture.
8.8.3.4 Divestitures
As part of our current strategy, we are screening to find suitable partners to acquire parts of our business in the AMEAA region. The divestment process brings some challenges in terms of
workload for the people involved in the divestment process, employee engagement in the entities to be divested and a fairly negotiated price for the entities to be divested.
Risk management
For the ongoing divestments, a dedicated project team is in place which steers the various steps of the process. We are working together with reputable, international accounting and law firms
and banks, which are guiding Ontex throughout this process and bring the required expertise to make the divestments into a success for both sides of the deal. External parties audit the
divestment process to provide assurance that the divestment process is complying with all laws and regulations. Ontex is committed to find suitable partners to acquire our business and will
take its time to do that. All entities open for divestment will continue to be treated as part of Ontex until any deal takes place.
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8.8.4 Financial and legal risks
8.8.4.1 Intellectual property
Although we are monitoring changes in intellectual property rights, we may inadvertently infringe intellectual property rights owned by others. Secondly, the Company may fail to register
intellectual property rights in a timely manner. As a potential consequence thereof, the Company may face legal claims or have to pay royalties which erode our profit margins. Failing to register
or defend IP could erode the Company profit margins as well.
Risk management
Going hand-in-hand with innovation as one of the strategic pillars of Ontex, intellectual property (IP) is an important enabler to the Company’s ability to develop and deliver the right product
and packaging innovation at the right time. We complete regular third party intellectual property rights screening and legal analyses as well as continue to grow our leading IP portfolio in the
retail segment of the personal hygiene field.
8.8.4.2 Liquidity & Leverage
Over the past years, while endebtness remained largely stable, Ontex was faced with declining results, and thereby the leverage and liquidity of the company need to be monitored closely on
a continuous basis as it impacts our cost of capital, payment conditions with suppliers, shareholder reputation, etc. High focus on the leverage could lead to short term vision or disturbed
priority setting.
Risk management
Detailed reporting and forecasting for our liquidity and leverage are in place. Net sales, adjusted EBITDA, working capital and free cash flow are part of the incentive metrics across the
organization. Those metrics are monitored by various layers in the organization through disciplined reporting and steering to assess their impact on our leverage.
A monthly cash forecast is in place and additional initiatives to stimulate co-ownership of the business on working capital are underway. Furthermore, the proceeds of discontinued operations
will be used to lower the debt.
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9. Remuneration Report
9.1 2022 CONTEXT, PERFORMANCE HIGHLIGHTS AND REMUNERATION OUTCOMES
In financial year 2022, the Company continued to apply its existing remuneration policy. The remuneration policy aims at aligning the interests of the Company’s management with those of its
shareholders.
Although we have seen early signs of recovery in the second half of the year, our full year 2022 financial results were mostly below plan. Solid volume growth momentum, consistent cost
reduction delivery and accelerating pricing, were insufficient to fully offset the unprecedented cost inflation.
Revenue for the total Group, including discontinued operations, was €2,464 million. On a like-for-like basis, excluding forex fluctuations and scope effects, it was €2,372 million versus a €2,226
million plan target. Including mix effects, volumes were up 6%, with consistent growth across the year, based on a solid retailer brand market and the contract gains in the previous periods.
Pricing, to mitigate cost inflation, accelerated from 7% in the first quarter to 16% in the last quarter, to reach 11% overall.
Adjusted EBITDA for the Total Group, including discontinued operations, was €136 million versus a plan target of €153 million. The adjusted EBITDA was hit by an unprecedented inflation
impact of €(405) million. These included raw materials, especially super-absorbent polymers, operating costs, namely energy, distribution and wages, as well as SG&A costs. The inflation could
only be partly offset by the €299 million effect of revenue growth and €81 million gross operating cost savings, including the footprint reduction by closing three plants, operational efficiency
gains, supply chain savings and the benefits of product innovation.
Free cash flow stood at €(54) million versus a target of €0 million in the financial year 2022 and versus free cash flow of €53 million in the financial year 2021. The decrease essentially reflects
the lower EBITDA and an increase in working capital needs, as revenue grew. Capex, lease payments and smaller assets disposals were €(83) million combined. The cash impact of non-
recurring costs and other adjustments to EBITDA was €(37) million. Cash taxes represented €(25) million.
The lower than expected financial performance, compared to the 2022 plan, results in bonus pay-outs which are lower than target: an average of 76% of target for the members of the Executive
Committee (excluding the previous CEO). The details of the bonus calculation can be found in the section on the 2022 remuneration of the members of the Executive Committee (see further).
A significant portion of the total remuneration paid to the members of the Executive Committee comprised contractually agreed termination payments to the Company’s previous CEO, Ms.
Esther Berrozpe, who has left the company in November 2022. The current CEO is not entitled to a bonus related to 2022. With the exception of the new CEO, Mr. Gustavo Calvo Paz (who
was a member of the Company’s board of directors prior to being appointed as CEO), all of the current Executive Committee members have joined the Company prior to 2022.
The overhaul of the Company’s remuneration policy in 2021 also brought about a structural change to the long-term incentive (LTI) award, which – since that date – no longer consists of stock
options and restricted stock units, but solely of performance shares with a 3-year performance-based vesting. This change ensures better alignment between management and shareholder
interests. In line with the remuneration policy, the 2022 LTI grant consisted solely of performance shares. The financial impact on the long-term incentives will become visible for the first time
at vesting of the performance shares in 2024 (2021 grant). The long-term incentives that vested in 2022, as described further, still represent the stock options and restricted stock units that
were granted in 2019, under the previous remuneration policy.
63
Ontex Integrated annual report 2022
9.2 2022 REMUNERATION OF THE DIRECTORS
All members of the Board are Non-Executive Directors. During financial year 2022, each Director received (i) an annual fixed fee as well as (ii) attendance fees which are a function of the
number of Board and committee meetings attended by such Director. Directors did not receive any variable compensation, fringe benefits or pension contribution payments.
It should be noted that there were 21 Board of Director Meetings in 2022 (vs 15 in 2021) and 12 Remuneration & Nomination Committees (vs 7 in 2021).
The composition of the Board underwent a number of changes during 2022:
With effect from the Company’s annual shareholders’ meeting of May 5, 2022, Mr. Philippe Costeletos (Non-Executive Director) resigned from the Board. On that same date, the
mandate of Inge Boets BV, permanently represented by Ms. Inge Boets, was renewed, and Mr. Ebrahim Attarzadeh (Non-Executive Director, appointed upon nomination of ENA
Investment Capital LLC) and Mr. Paul McNulty (Independent Director, appointed upon nomination of Veraison SICAV – Engagement Fund) were appointed to the Board.
With effect from October 1
st
, 2022, JH GmbH, permanently represented by Mr. Jesper Hojer (Non-Executive Director), resigned from the Board. With effect from the same date, the
Board approved the co-optation of HVV GmbH, permanently represented by Mr. Jesper Hojer, as new (Non-Executive) Director for the remainder of the term of JH GmbH and to be
submitted for approval to the Company’s next shareholders’ meeting.
On November 9, 2022, Mr. Gustavo Calvo Paz resigned from the Board. Mr. Calvo Paz was subsequently appointed as new CEO of the company with effect from November 14,
2022.
Finally, with effect from January 1st, 2023, Regina S.à r.l., permanently represented by Ms. Regi Aalstad (Independent Director), and Alane Srl, permanently represented by Mr. Aldo
Cardoso (Non-Executive Director), resigned as Directors.
Finally, the Board committees were reorganized with effect from January 1st 2023, as follows: (i) the Strategy Committee was dissolved; (ii) Mr. Paul McNulty was appointed as a member of
the Audit & Risk Committee; and (iii) Mr. Jesper Hojer was appointed as a member of the Remuneration & Nomination Committee (in replacement of Alane Srl, permanently represented by Mr.
Aldo Cardoso).
The amounts paid to Directors during financial year 2022 are shown in the table below.
Name Mandate
Fixed
fee
(EUR)
# Board
meetings
attended
Board
attendance
fee (EUR)
# N&R
Committee
meetings
attended
N&R
Committee
attendance
fee (EUR)
# A&R
Committee
meetings
attended
A&R
Committee
attendance
fee (EUR)
# Strategy
Committee
meetings
attended
Strategy
Committee
attendance
fee (EUR)
Total
fees for
2022
(EUR)[1]
ViaBylity BV,
permanently
represented by
Hans Van Bylen
Chairman of the
Board of Directors,
Independent
Director
Chairman of the
Strategy Committee
320,000 21/21 5,000 12/12 4,000 6/6 2,500 5/5 4,000 460,500
Regina SARL,
permanently
represented by
Regi Aalstad
Independent
Director
60,000 21/21 2,500 4/5 2,500 106,250
64
Ontex Integrated annual report 2022
Ebrahim Attarzadeh
Non-Executive
Director
40,000[
2
] 12/12 2,500 7/7 2,500 75,833
Inge Boets BV,
permanently
represented by Inge
Boets
Chairwoman of the
Audit and Risk
Committee,
Independent
Director
70,000 21/21 2,500 6/6 4,000 3/3
[3]
2,500 135,000
Michael Bredael
Non-Executive
Director
60,000 21/21 2,500 6/6 2,500 5/5
[4]
2,500 120,000
Gustavo Calvo Paz
[
5
]
Non-Executive
Director
35,000 17/19 2,500 5/5 2,500 89,167
Alane Srl,
permanently
represented by Aldo
Cardoso
Non-Executive
Director
60,000 20/21 2,500 12/12 2,500 120,000
Philippe Costeletos
[
6
]
Non-Executive
Director
20,000 8/9 2,500 5/5 2,500 2/3[
7
] 2,500 47,917
Isabel Hochgesand
Independent
Director
60,000 17/21 2,500 11/12 2,500 111,250
JH GmbH (until
October 1st, 2022)
and HVV GmbH (as
from October 1st,
2022), permanently
represented by
Jesper Hojer [
8
]
Non-Executive
Director
60,000 20/21 2,500 5/5 2,500 105,000
MJA Consulting,
permanently
represented by
Manon Janssen
Independent
Director
60,000 16/21 2,500 10/12 2,500 111,667
Paul McNulty [
9
]
Independent
Director
40,000 12/12 2,500 2/2 2,500 63,333
Rodney Olsen
Non-Executive
Director
60,000 20/21 2,500 6/6 2,500 5/5[
10
] 2,500 117,500
[1] For certain Directors, the total fee for 2022 is lower than the sum of the fixed fee and attendance fees. The reason is that no attendance fee was paid for certain ad hoc Board and Board Committee meetings.
[2] Ebrahim Attarzadeh joined the Board as from May 5, 2022.
[3] Inge Boets BV, permanently represented by Ms. Inge Boets, attended three Strategy Committee meetings as special invitee, for which she was remunerated.
[4] Michael Bredael attended five Strategy Committee meetings as special invitee, for which he was remunerated.
[5] Gustavo Calvo Paz resigned from the Board on November 9, 2022.
[6] Philippe Costeletos resigned from the Board on May 5, 2022.
[7] Philippe Costeletos attended two Strategy Committee meetings as special invitee, for which he was remunerated.
[8] With effect from October 1st, 2022, JH GmbH, permanently represented by Jesper Hojer, resigned from the Board. With effect from the same date, the Board approved the co-optation of HVV GmbH, permanently represented by Jesper
Hojer, as new Director for the remainder of the term of JH GmbH (and to be submitted for approval to the Company’s next shareholders’ meeting).
[9] Paul McNulty joined the Board as from May 5, 2022.
[10] Rodney Olsen attended five Strategy Committee meetings as special invitee, for which he was remunerated.
65
Ontex Integrated annual report 2022
9.3 2021 REMUNERATION OF THE MEMBERS OF THE EXECUTIVE COMMITTEE
9.3.1. Introduction
The composition of the Executive Committee underwent a significant change during 2022. Mr. Gustavo Calvo Paz was appointed as CEO with effect from November 14, 2022. The former
CEO, Ms. Esther Berrozpe, left the Company with effect from that same date. Her remuneration, including termination payments, has been included in this remuneration report up to that date.
9.3.2. Total Remuneration Summary
The 2022 total remuneration paid to the CEOs and the other members of the Executive Committee is summarized in the table below.
Members of the Executive
Committee
Fixed remuneration (EUR) Variable remuneration (EUR)
Extra-ordinary
items (EUR)
Pension
expense (EUR)
Total
remuneration
(EUR)
Base salary Other benefits
One-year
variable
Multi-year
variable
Berrozpe, Esther
Chief Executive
Officer
(01/01/2022 -
13/11/2022)
787,500 89,575 782,500 0 1,980,000 172,260 3,811,835
Calvo Paz,
Gustavo
Chief Executive
Officer
(14/11/2022 -
31/12/2022)
112,500 5,347 0 0 0 15,660 133,507
Other Members of
the Executive
Committee
2,816,586 239,049 1,240,218 106,657 298,993 588,103 5,289,606
The relative share of the different remuneration components in the total remuneration is shown below.
CEO
Other
members
of the
Exec.
Committee
Fixed remuneration as % of total remuneration
30%
69%
Variable remuneration as % of total remuneration 20% 25%
Extraordinary remuneration as % of total remuneration
50%
6%
66
Ontex Integrated annual report 2022
Fixed Remuneration
A. Base Remuneration
The base remuneration of the CEO and the other members of the Executive Committee is aligned with a benchmark representing the median compensation for a European peer group of
personal and household goods companies. The base remuneration of the members of the Executive Committee members who exercised their respective positions throughout the year remained
unchanged (including no adjustment for inflation), in line with the Company’s remuneration policy to keep base remuneration fixed for 3 years.
B. Other Benefits
Other benefits include the cost of medical, life and disability insurances, company car and children school fees.
Variable Remuneration
A. One-year Variable
The 2022 bonus for the former CEO and the other members of the Executive Committee has been determined on the basis of a set of financial and non-financial KPIs.
As set forth in the Company’s remuneration policy, the threshold performance is set at 75% of target for the financial KPIs, with up to 100% of the target bonus earned in case of on-target
performance and a maximum of 200% of the target bonus payable for a performance reaching 125% of target or more.
CEO bonus
In line with the remuneration policy, the former CEO received a pro rata temporis at target bonus of 782,500 EUR.
The new CEO is not eligible for a bonus related to 2022.
Bonus for the other members of the Executive Committee
The 2022 bonus for the members of the Executive Committee with a Group-wide responsibility (CFO, Chief Supply Officer, EVP R&D and Sustainability, CHRO, and EVP Legal & Secretary
General) has been determined on the basis of the following set of financial KPIs.
Group Like-for-like Revenue – weight 25%
Group Adjusted EBITDA – weight 25%
Group Free Cash Flow – weight 25%
Non-financial KPIs – weight 25%
The 2022 non-financial KPIs for these members of the Executive Committee were function-specific.
67
Ontex Integrated annual report 2022
Group bonus Target Delivery
Achieved
Pay-out Total
LFL revenue
€2.226M
€2,.372M
107%
153%
51%
Adj. EBITDA
€153M
€136M
89%
42%
14%
FCF
€0M
€(55)M
0%
0%
0%
Group achieved pay-out (average)
65%
The 2022 bonus for the Divisional President was based on the following KPIs:
Group Financial KPIs – same as other members of the Executive Committee (Group Like-for-Like Revenue, Group Adjusted EBITDA and Group Free Cash Flow) – weight 37.5%
Division Financial KPIs – Like-for-like Revenue, EBIT, Days of Sales Outstanding (DSO, i.e. the number of days it takes the Company to collect payments from its customers) –
weight 37.5%
Function-specific non-financial KPIs – weight 25%
Divisional KPIs
Europe
Target
Delivery
Achieved
Pay-out
LFL revenue
€1
.276M €1.388M
109%
168%
EBIT
€123M
€107M
87%
26%
DIO
40
40
100%
100%
DSO
63
62
103%
112%
Divisional achieved pay-out (weighted)
100%
The total aggregate bonus amount paid to the other members of the Executive Committee for 2022 amounts to 1,240,218 EUR.
The bonus for the members of the Executive Committee is subject to a claw-back (without time limitation) in case the Company’s financial results would have to be materially restated as a
result of their fraud, willful misconduct or gross negligence.
68
Ontex Integrated annual report 2022
B. Multi-year Variable
Long-term Incentive vesting in 2022
The table below shows the restricted stock units and the stock options which were granted in 2019 and which vested in 2022. The value of the restricted stock units is calculated on the basis
of the closing share price of the Ontex share on the trading day preceding the vesting. The value of the stock options is calculated on the basis of the closing share price of the Ontex share on
the trading day preceding the vesting and the grant price, if positive. As indicated in the table below, all the vested options remain under their grant price of 14.00 EUR.
Name Function Grant Date Vesting Date
Share Price
at vest (EUR)
Restricted Stock Units Stock Options
Number
vested
Value at
vest (EUR)
Number
vested
Value at
vest
De
Lathauwer,
Astrid
Executive VP
Human Resources
(01/01/2022 -
31/03/2022)
13-Jun-19 13-Jun-22 7.13 4,236 30,194 14,864
-
De
Poorter,
Annick
Executive VP R&D,
Quality &
Sustainability
13-Jun-19 13-Jun-22 7.13 4,595 32,753 16,125
-
Deroo,
Jonas
Executive VP Legal
& Secretary
General
13-Jun-19 13-Jun-22 7.13 752 5,360 -
-
Nielly,
Laurent
President Europe
division
13-Jun-19 13-Jun-22 7.13 5,380 38,349 18,878 -
Extra-Ordinary Items
The amount reported under extra-ordinary items represents the termination and non-compete indemnities which have been paid to departing members of the Executive Committee as well as
a relocation allowance for the Chief HR Officer.
The Company’s former CEO, Ms. Esther Berrozpe, received a termination indemnity of 1,980,000 EUR, composed of 12 months of fixed fee (900,000 EUR), one year performance bonus at
target (900,000 EUR) and one year of pension contribution (180,000 EUR). This indemnity also covers a 12-months non-compete undertaking. This termination indemnity reflects the contractual
exit provisions agreed with Ms. Esther Berrozpe when joining the company as CEO, in compliance with the company’s remuneration policy.
The Company’s former EVP Human Resources, Ms. Astrid De Lathauwer, received a termination indemnity of 287,283 EUR, including an indemnity covering a 12-months’ non-compete. This
termination indemnity reflects the contractual exit provisions agreed with Ms. Astrid De Lathauwer.
The Chief HR Officer received an allowance of 11,710 EUR related to her relocation to Belgium.
69
Ontex Integrated annual report 2022
Pension Expenses
The pension expenses include the 2022 contributions paid by the Company to a defined contribution pension plan for the benefit of the members of the Executive Committee, for a total amount
of 776,023 EUR. More details on the pension expenses to the CEO and the other members of the Executive Committee are summarized in section 9.3.2 (Total Remuneration Summary).
9.3.3. Share-based Remuneration
2022 LTIP grant
The CEO and members of the Executive Committee also received an LTIP grant in 2022. This 2022 LTIP grant, which took place on March 10, 2022, consisted solely of performance shares.
The KPIs for the 2022 performance shares, which are subject to a 3-year vesting period, are shown in the table below. The grant price for the 2022 performance shares is equal to the closing
price of the Ontex share on Euronext Brussels on March 9, 2022, being 6.91 EUR.
KPI
Weight
Adjusted Basic EPS
50%
Relative Total Shareholder Return (“TSR”)
30%
CO2 Emissions
10%
Labor Accident Frequency
10%
As the Adjusted Basic EPS target for the 2022 performance shares is commercially sensitive, the target and achievement against this target will be disclosed in the Company's remuneration
report after the final date set for the target for the relevant performance shares. For the 2022 performance shares, the adjusted basic EPS target is tested for the period from 1 January 2022
until 31 December 2024, to determine the vesting of shares in 2025. The Company's intention is to disclose the adjusted basis EPS target and the achievement against such target in its
remuneration report with respect to financial year 2024.
Relative TSR will be measured against the STOXX Europe 600 Personal and Household Goods Index. All measures will be evaluated at the end of the 3-year period, i.e. at December 31,
2024. The vesting schedule for this KPI is shown below.
Performance
Vesting
80% of index return (threshold)
50%
100% of index return
100%
120% of index return (cap)
200%
The Company has set the ambition to become CO2 neutral for scope 1 and scope 2 emissions by 2030. The CO2 emission reduction target for the 2022 performance shares reflects the
reduction needed over the 2022-2024 vesting period to achieve that ambition. The measurement for this KPI is tons CO2 per 100 million produced pieces. The targets and vesting scheme for
the CO2 emissions are shown below.
KPI
Threshold
(vesting starts)
Target (100% vesting)
Cap
(200% vesting)
CO2 Emissions
158
140
120
The Company has also set a zero labor accident ambition by 2030. The accident reduction target for the 2022 performance share reflects the reduction of accidents needed over the 2022-
2024 vesting period to achieve that ambition. The measurement for this KPI is the number of labor accidents times 1 million divided by the total hours worked.
70
Ontex Integrated annual report 2022
The target and vesting scheme for the accident KPIs are shown below
KPI
Threshold
(vesting starts)
Target (100% vesting)
Cap
(200% vesting)
Labor Accident Frequency
2.50
1.50
0.50
The tables below provide the details of the 2022 LTIP grant for the CEO and the other members of the Executive Committee.
Performance share units awarded during the reported financial year
Management
Committee Member
Position
Number of
PSUs
awarded and
accepted
Award date Vesting date
Share value
at the time of
the grant
Total value
awarded
Berrozpe, Esther Chief Executive Officer 149,891 10/03/2022 10/03/2025 €6.91 €1,034,997
Crepy, Vincent Chief Supply Officer
35,047 10/03/2022 10/03/2025 €6.91 €242,000
De Poorter, Annick Executive VP R&D, Quality & Sustainability
33,613 10/03/2022 10/03/2025 €6.91 €232,098
Deroo, Jonas Executive VP Legal & Secretary General
23,896 10/03/2022 10/03/2025 €6.91 €165,002
McDonald, Stephanie Chief HR Officer
33,454 10/03/2022 10/03/2025 €6.91 €231,000
Nielly, Laurent President Europe division
35,286 10/03/2022 10/03/2025 €6.91 €243,650
Vanneste, Peter Chief Finance Officer
51,774 10/03/2022 10/03/2025 €6.91 €357,499
71
Ontex Integrated annual report 2022
Overview of share-based remuneration for the CEO and other members of the Executive Committee
The tables below set out the opening and closing balances, as well as movements during the year 2022, in share-based remuneration for the former CEO and the other members (or former
members) of the Executive Committee.
Since 2021, members of the Executive Committee are required to keep 50% of LTIP shares that have vested until they have acquired a shareholding representing 2 times (CEO) or 1 time
(other members of the Executive Committee) their annual base salary. Furthermore, once this amount is reached, members of the Executive Committee will be required to maintain such
shareholding throughout their executive tenure.
Beneficiary
Plan
Type
Main Conditions of the Stock Option
Plan
Information for the reported financial year
Grant
Date
Vesting
Date
Exercise
period
Strike
Price
(EUR)
Opening
Balance
During the Year Closing Balance
Vested
Un-
vested
Number
awarded
Value
awarded
Number
vested
Value
vested
Number
exercised
Value
Exercised
Number
Forfeited
Value
Forfeited
Vested Unvested
Amselem,
Armando
SOP
2016
12-May-
16
13-May-
19
8 years 28.44 15,106 15,106 0
SOP
2017
11-May-
17
12-May-
20
8 years 33.11 14,882 14,882 0
SOP
2018
29-May-
18
30-May-
21
8 years 23.56 23,193 23,193 0
SOP
2019
13-Jun-
19
14-Jun-
22
8 years 14.00 0 15,508 15,508 0 0 0
SOP
2020
28-May-
20
29-May-
23
8 years 13.90 0 32,215 32,215 0 0 0
De
Lathauwer,
Astrid
SOP
2016
12-May-
16
13-May-
19
8 years 28.44 11,666 11,666 0
SOP
2017
11-May-
17
12-May-
20
8 years 33.11 10,559 10,559 0
SOP
2018
29-May-
18
30-May-
21
8 years 23.56 19,441 19,441 0
SOP
2019
13-Jun-
19
14-Jun-
22
8 years 14.00 0 16,722 14,864 0 1,858 0 14,864 0
SOP
2020
28-May-
20
29-May-
23
8 years 13.90 0 22,436 9,349 0 0 13,087
De Poorter,
Annick
SOP
2016
12-May-
16
13-May-
19
8 years 28.44 8,522 8,522 0
SOP
2017
11-May-
17
12-May-
20
8 years 33.11 9,316 9,316 0
SOP
2018
29-May-
18
30-May-
21
8 years 23.56 17,931 17,931 0
72
Ontex Integrated annual report 2022
SOP
2019
13-Jun-
19
14-Jun-
22
8 years 14.00 0 16,125 16,125 0 16,125 0
SOP
2020
28-May-
20
29-May-
23
8 years 13.90 0 24,717 0 24,717
Deroo,
Jonas
SOP
2016
12-May-
16
13-May-
19
8 years 28.44 2,204 2,204 0
SOP
2017
11-May-
17
12-May-
20
8 years 33.11 1,995 1,995 0
SOP
2018
29-May-
18
30-May-
21
8 years 23.56 3,376 3,376 0
Nielly,
Laurent
SOP
2017
11-May-
17
12-May-
20
8 years 33.11 13,734 13,734 0
SOP
2018
29-May-
18
30-May-
21
8 years 23.56 19,212 19,212 0
SOP
2019
13-Jun-
19
14-Jun-
22
8 years 14.00 0 18,878 18,878 0 18,878 0
SOP
2020
28-May-
20
29-May-
23
8 years 13.90 0 19,031 0 19,031
Value awarded is obtained by multiplying the number of options awarded by the value of the option at grant
Value vested is obtained by multiplying the number of options vested by the difference between the grant price and the share price at vesting, if positive
Value exercised is obtained by multiplying the number of options exercised by the difference between the grant price and the share price at exercise, if positive
Value forfeited is obtained by multiplying the number of options forfeited by the difference between the grant price and the share price at the time of forfeiture, if positive
73
Ontex Integrated annual report 2022
Beneficiary Plan Type
Main RSU Conditions Information for the reported financial year
Grant
Date
Vesting
Date
Opening
Balance
During the Year Closing Balance
Unvested
Number
awarded
Value
awarded
Number
vested
Value
vested
Number
Forfeited
Value
Forfeited
Unvested
Amselem,
Armando
RSU 2018 29-May-18 30-May-21 0
RSU 2019 13-Jun-19 14-Jun-22 4,420 4,420 28,642 0
RSU 2020 28-May-20 29-May-23 7,254 7,254 47,006 0
De
Lathauwer,
Astrid
RSU 2018 29-May-18 30-May-21 0
RSU 2019 13-Jun-19 14-Jun-22 4,766 4,236 30,194 530 3,511 0
RSU 2020 28-May-20 29-May-23 5,052 2,105 13,946 2,947
De
Poorter,
Annick
RSU 2018 29-May-18 30-May-21 0
RSU 2019 13-Jun-19 14-Jun-22 4,595 4,595 32,753 0
RSU 2020 28-May-20 29-May-23 5,566 5,566
Deroo, Jonas RSU 2018 29-May-18 30-May-21 0
RSU 2019 13-Jun-19 14-Jun-22 752 752 5,360 0
RSU 2020 28-May-20 29-May-23 799 799
Nielly,
Laurent
RSU 2018 29-May-18 30-May-21 0
RSU 2019 13-Jun-19 14-Jun-22 5,380 5,380 38,349 0
RSU 2020 28-May-20 29-May-23 4,285 4,285
Value awarded is obtained by multiplying the number of RSUs awarded by the closing share price on the date preceding the grant
Value vested is obtained by multiplying the number of RSUs vested by the share price at 12PM on the date of the vesting
Value forfeited is obtained by multiplying the number of RSUs forfeited by the closing share price on the date of forfeiture
74
Ontex Integrated annual report 2022
Beneficiary
Plan
Type
Main PS Conditions Information for the reported financial year
Performance
period
Grant
Date
Vesting
Date
Opening
Balance
During the Year
Closing
Balance
Unvested
Number
awarded
Value
awarded
Number
vested
Value
vested
Number
Forfeited
Value
Forfeited
Unvested
Amselem,
Armando
PS 2019 2019-2021
13-Jun-
19
14-Jun-22 4,420 4,420 28,642 0
PS 2020 2020-2022
28-May-
20
29-May-23 7,254 7,254 47,006 0
PS 2021 2021-2023
27-May-
21
28-May-24 20,814 20,814 134,875 0
Berrozpe, Esther PS 2021 2021-2023
27-May-
21
28-May-24 94,954 35,008 209,173 59,946
PS 2022 2022-2024
10-Mar-
22
10-Mar-25 149,891 1,034,997 116,582 696,577 33,309
Crepy, Vincent PS 2021 2021-2023
27-May-
21
28-May-24 22,202 22,202
PS 2022 2022-2024
10-Mar-
22
10-Mar-25 35,047 242,000 35,047
De Lathauwer,
Astrid
PS 2019 2019-2021
13-Jun-
19
14-Jun-22 4,766 4,766 33,706 0
PS 2020 2020-2022
28-May-
20
29-May-23 5,052 2,107 13,959 2,945
PS 2021 2021-2023
27-May-
21
28-May-24 19,328 14,497 96,043 4,831
De Poorter,
Annick
PS 2019 2019-2021
13-Jun-
19
14-Jun-22 4,595 4,595 32,753 0
PS 2020 2020-2022
28-May-
20
29-May-23 5,566 5,566
PS 2021 2021-2023
27-May-
21
28-May-24 21,293 21,293
PS 2022 2022-2024
10-Mar-
22
10-Mar-25 33,613 232,098 33,613
Deroo, Jonas PS 2019 2019-2021
13-Jun-
19
14-Jun-22 752 752 4,493 0
PS 2020 2020-2022
28-May-
20
29-May-23 799 799
PS 2021 2021-2023
27-May-
21
28-May-24 15,138 15,138
PS 2022 2022-2024
10-Mar-
22
10-Mar-25 23,896 165,002 23,896
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Ontex Integrated annual report 2022
McDonald,
Stephanie
PS 2022 2022-2024
10-Mar-
22
10-Mar-25 33,454 231,000 33,454
Nielly, Laurent PS 2019 2019-2021
13-Jun-
19
14-Jun-22 5,380 5,380 32,146 0
PS 2020 2020-2022
28-May-
20
29-May-23 4,285 4,285
PS 2021 2021-2023
27-May-
21
28-May-24 22,353 22,353
PS 2022 2022-2024
10-Mar-
22
10-Mar-25 35,286 243,650 35,286
Vanneste, Peter PS 2021 2021-2023
27-May-
21
28-May-24 78,670 78,670
PS 2022 2022-2024
10-Mar-
22
10-Mar-25 51,774 357,499 51,774
Value awarded is obtained by multiplying the number of performance shares awarded by the closing share price on the date preceding the grant
Value vested is obtained by multiplying the number of performance shares vested by the share price at 12PM on the date of the vesting
Value forfeited is obtained by multiplying the number of performance shares forfeited by the closing share price on the date of forfeiture
9.4. REMUNERATION AND PERFORMANCE EVOLUTION OVER THE LAST 5 YEARS
The table below sets out the evolution of the remuneration of the Directors, the CEO and the other members of the Executive Committee, the average remuneration of the other employees, as
well as the Revenue and Adjusted EBITDA performance at reported currencies.
(all amounts in EUR)
2018
2019
2020
2021
2022
Remuneration Directors
878 500
796 000
1 384 408
1 356 500
1 663 417
Year-on-year change(1)
22%
-9%
74%
-2%
23%
Remuneration CEO
1 645 643
2 570 254
6 779 690
1 588 121
3 945 342
Year-on-year change (2)
23%
56%
164%
-77%
148%
Remuneration other Executives
7 530 716
9 057 625
7 827 523
6 635 885
5 289 606
Year-on-year change (3)
25%
20%
-14%
-15%
-20%
Reported Revenue (Y-o-Y variance)
-3%
0%
-9%
-3%
+22%
Reported Adjusted EBITDA (Y-o-Y variance)
-12%
5%
-4%
-27%
-21%
Reported Free Cash Flow (Y-o-Y variance) a
18%
46%
-46%
-11%
-203%
Average Employee Remuneration
32 967
39 750
38 944
34 884
39 986
Year-on-year change
8%
21%
-2%
-10%
14%
Year 2018 restated for IFRS 16 (pro forma inclusion payments lease liabilities).
(1) The increase in the remuneration of Directors is explained by the significant increase in the number of Board of Director meeting and Remuneration & Nomination Committee meetings.
(2) The year-on-year change reported from 2021 to 2022 is 148%, which is explained by the reported termination indemnity in 2022 for the former CEO Esther Berrozpe.
(3) The year-on- year decrease is explained by the reduction in severance payments in 2022 vs 2021.
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Remuneration in the table above includes the total remuneration as defined in sections 9.2 (Directors) and 9.3.2 (CEO and other Executives). In addition to the financial KPIs, the variable
remuneration is set based on individually determined qualitative KPIs (for the CEO’s objectives, we refer to section 9.3.2.). Revenue and Adjusted EBITDA are as per financial communications.
The average employee remuneration represents the total remuneration paid to all employees of Ontex in 2022, divided by the average total number of employees during 2022.
The 2022 ratio of the total remuneration of the CEO versus the total remuneration of the lowest remunerated employee (located in Pakistan) is 923. For the calculation of this ratio, the
remuneration includes fixed remuneration, variable remuneration as well as employee benefits on a full-time equivalent (FTE) basis. It excludes employer contributions for social security and
extra-ordinary payments, because of their non-recurring nature.
9.5. 2023 REMUNERATION OUTLOOK
Since the latest overhaul of the Remuneration Policy, the world has changed dramatically and with it the urgency of the Company’s turnaround. Certain exceptional amendments to the
Company’s remuneration policy will be proposed to the Company’s annual shareholders’ meeting of May 2023, among others regarding the short-term and long-term incentivization for the
CEO and the Executive Committee. Given the need to accelerate the turnaround and to create a strong incentive to the CEO and the Executive Committee, It will be proposed that long-term
incentivization will continue to take the form of Performance Share Units, but be focused exclusively on share price evolution. This will also further enhance the alignment with shareholder
interests. Also, rather than an annual grant, the 2023 LTI grant for the CEO and the Executive Committee is proposed to cover three years rather than one year.
CO2 emissions and Accidents Rate will be proposed to become part of the annual bonus KPIs.
The financial KPIs and their respective weights for the 2023 annual bonus will be proposed to remain the same as in 2022, bar one: Free Cashflow will be proposed to be replaced by Cash
Conversion Cycle. As the financial targets are commercially sensitive, they will not be disclosed upfront. They will however be disclosed in next year’s remuneration report, along with actual
results on financial year 2023. The 2023 non-financial bonus KPIs will remain function-specific.
Strategic report
Corporate Governance,
Risk & Remuneration
Financial statements
Sustainability/
Non-Financial Statements
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Finci
mets
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CONSOLIDATED FINANCIAL STATEMENTS
FOR THE FINANCIAL YEARS ENDED DECEMBER 31, 2022 AND 2021
CONTENTS
STATEMENT OF THE BOARD OF DIRECTORS 80
INDEPENDENT AUDITORS’ REPORT 81
1. General information 89
1.1. Corporate Information 89
1.2. Business Activities 89
1.3. History of the Group 89
1.4. Legal status 90
2. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31 91
3. CONSOLIDATED INCOME STATEMENT FOR THE YEARS ENDED DECEMBER 31 93
4. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31 95
5. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31 96
6. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31 98
7. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 100
7.1. Summary of significant accounting policies 100
7.2. Alternative performance measures 113
7.3. Capital management 117
7.4. Critical accounting estimates and judgments 117
7.5. Financial instruments and financial risk management 122
7.6. Operating segments 130
7.7. List of consolidated companies 132
7.8. Disposal group held for sale and discontinued operations 135
7.9. Goodwill and intangible assets 140
7.10. Property, plant and equipment 144
7.11. Leases 146
7.12. Inventories 148
7.13. Trade receivables, prepaid expenses and other receivables 148
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7.14. Cash and cash equivalents 150
7.15. Share capital 151
7.16. Earnings per share 151
7.17. Interest-bearing debts 153
7.18. Employee benefit liabilities 155
7.19. Deferred taxes and current taxes 162
7.20. Current and non-current liabilities 163
7.21. Provisions 163
7.22. Employee benefit expenses 164
7.23. Other operating income/(expenses), net 165
7.24. EBITDA ADJUSTMENTS 165
7.25. Expenses by nature 167
7.26. Net finance cost 168
7.27. Income tax expense 169
7.28. Share-based payments 170
7.29. Contingencies 173
7.30. Commitments 173
7.31. Related party transactions 174
7.32. Events after the end of the reporting period 175
7.33. Audit fees 175
8. Summary statutory financial statements 176
8.1. Statutory balance Sheet after appropriation 176
8.2. Statutory income statement 177
8.3. Extract from Ontex Group NV separate (non-consolidated) financial statements prepared in accordance with Belgian GAAP 177
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• the annual review presents a fair overview of the development and the results of the business and the position of Ontex Group NV and of the entities included in the consolidation, as well
as a description of the principal risks and uncertainties facing them pursuant Article 12, paragraph 2 of the Royal Decree of November 14, 2007
The amounts in this document are represented in millions of euros (€ million), unless noted otherwise.
Due to rounding, numbers presented throughout these consolidated financial Statements may not add up precisely to the totals provided and percentages may not precisely reflect the absolute
figures.
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INDEPENDENT AUDITORS’ REPORT
STATUTORY AUDITOR'S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING OF ONTEX GROUP NV ON THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31
DECEMBER 2022
We present to you our statutory auditor’s report in the context of our statutory audit of the consolidated accounts of Ontex Group NV (the “Company”) and its subsidiaries (jointly “the Group”).
This report includes our report on the consolidated accounts, as well as the other legal and regulatory requirements. This forms part of an integrated whole and is indivisible.
We have been appointed as statutory auditor by the general meeting d.d. 25 May 2020, following the proposal formulated by the board of directors and following the recommendation by the
audit committee. Our mandate will expire on the date of the general meeting which will deliberate on the annual accounts for the year ended 31 December 2022. We have performed the
statutory audit of the Group’s consolidated accounts for 9 consecutive years.
Report on the consolidated accounts
Unqualified opinion
We have performed the statutory audit of the Group’s consolidated accounts, which comprise the consolidated statement of financial position as at 31 December 2022, the consolidated
income statement, consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended,
and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and which is characterised by a consolidated
statement of financial position total of EUR 2,694.5 million and a loss for the year of EUR 270.3 million.
In our opinion, the consolidated accounts give a true and fair view of the Group’s net equity and consolidated financial position as at 31 December 2022, and of its consolidated financial
performance and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal
and regulatory requirements applicable in Belgium.
Basis for unqualified opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Belgium. Furthermore, we have applied the International Standards on Auditing as
approved by the IAASB which are applicable to the year-end and which are not yet approved at the national level. Our responsibilities under those standards are further described in the
“Statutory auditor’s responsibilities for the audit of the consolidated accounts” section of our report. We have fulfilled our ethical responsibilities in accordance with the ethical requirements
that are relevant to our audit of the consolidated accounts in Belgium, including the requirements related to independence.
We have obtained from the board of directors and Company officials the explanations and information necessary for performing our audit.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
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Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated accounts of the current period. These matters were
addressed in the context of our audit of the consolidated accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters
(1) Going concern and liquidity situation
Description of the Key Audit Matter
In 2022 Ontex Group incurred a loss of the year of EUR 270.3 million and profitability and cash flow generation were significantly impacted by the unprecedented raw materials and operating
cost inflation.
As set out in Note 7.4.1, and 7.17 the debt covenants related to the available credit facilities have been renegotiated for the full year 2022 and replaced by a liquidity covenant which the
Group complied with. Management has prepared detailed budgets and cash flow forecasts, which reflect the strategy of the Group. Management is confident that the Company will operate
within the limits of the covenant on March 31, June 30 and December 31, 2023, while recognising that the headroom may not be significant. This confidence is strengthened by the business
performance so far in the year and the continued progress made in the divestment of the Mexican assets, with closing expected in the second quarter. Moreover, the Group is currently in
discussions with the banks to discuss the revolving credit facility extension, currently maturing mid-2024, and will address conditions that meet the financing needs of the Company.
We consider this matter to be of most significance because of the complexity of the assessment process and the significant judgments in respect of assumptions used about the future results
of the business and the related cash flow forecasts.
How our Audit addressed the Key Audit Matter
We obtained management’s assessment that supports the Board’s conclusions with respect to the disclosures provided around going concern. We checked the banking agreement for the
terms of the financing facilities and agreed these facilities to management’s cash flow forecasts . We verified consistency with the Board’s approved budgets, which were subject to timely
oversight and challenge by the Directors. We have critically assessed the historical accuracy of management’s estimates and evaluation of business plans by comparing the prior year’s
forecast with the Group’s actual performance. We tested the calculation method used and the accuracy thereof. We obtained management’s plausible up and downside scenario and
discussed the assumptions that were applied in order to understand the rationale and the appropriateness of those assumptions. We assessed the availability of liquid resources under
different scenarios modelled by management, and the associated covenant test applied. We included a business recovery specialist in our team to assist us with these procedures. We also
assessed the adequacy of the disclosures (Note 7.3, Note 7.4.1, Note 7.5.8 and Note 7.17) in the financial statements.
Our results
We found the assumptions used by the directors to be appropriately reflected in the cash flow forecasts and the disclosures to be appropriate.
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(2) Disposal Group held for sale and discontinued operations
Description of the key audit matter
Following its strategic review announced at the end of 2021 and formalized beginning of 2022, Ontex Group announced it would pursue divestment opportunities for the activities located in
“Emerging Markets”. Ontex entered into a binding agreement in July 2022 to sell its Mexican activities, with closing expected in the second quarter of 2023. Ontex is making progress in the
divestment of its remaining Emerging Markets businesses, as discussions with potential acquirers continue. Based on these considerations, management determined the criteria of IFRS 5
were met and the activities should be presented as discontinued operations on 31 December 2022.
In accordance with IFRS 5 the group reclassified all assets and all liabilities related to these activities as Assets classified as held for sale and Liabilities related to assets classified as held for
sale which amount to respectively EUR 661,7 million and EUR 249,6 million per 31 December 2022. In the consolidated income statement, the loss for the period of the activities located in
Emerging Markets was presented in one line as “Loss for the period from discontinued operations” and amounts to EUR 121,6 million.
We consider this matter to be of most significance because of the size of the operations that are expected to be sold, the complexity of the planned transactions and judgements made by
management in the valuation of the related assets and liabilities at the lower of carrying amount and fair value less costs to sell.
The assets classified as held for sale and the related liabilities, the key lines of the results and cash flows related to discontinued operations are detailed in noted 7.8 of the financial
statements.
How our audit addressed the key audit matter
We read minutes of the Board of Directors and agreements or letters of intent with (potential) buyers of the activities held for sale. We discussed with management the divestment process
and agreements reached with (potential) buyers to evaluate the appropriateness of the accounting treatment, valuation, and disclosure in line with IFRS 5.
We performed procedures to verify completeness and accuracy of the assets, liabilities, results and cash flows presented as discontinued operations, including measurement in accordance
with IFRS 5. Our procedures include but are not restricted to:
- Reconciling the reclassified assets, liabilities and results to the group reporting forms of the activities that are held for sale;
- Validating assumptions taken on carved out assets, liabilities and net results of legal companies active in both continuing and discontinuing activities at Ontex Group based on audit
evidence obtained;
- Reviewing and challenging management’s preliminary estimate of the disposal loss;
- Evaluating the adequacy of the disclosure (Note 7.4.9 and 7.8) of the assets held for sale and discontinued operations in the consolidated accounts;
- Reviewing the restatement of the 2021 consolidated income statement following the classification of the Emerging Markets as Discontinued Operations.
Our results
We agree with management’s position that the IFRS 5 criteria were met as of 31 December 2022. We found the methodologies and the assumptions applied in respect of the reclassified
assets, liabilities and results of the discontinued operations and the preliminary estimate of the disposal loss to be in line with our expectations and the agreements and negotiations with
(potential) buyers. We consider the disclosure on the discontinued operations as appropriate.
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(3) Impairment of goodwill
Description of the key audit matter
Ontex carries a significant value of goodwill on the balance sheet amounting to EUR 797,9 million at 31 December 2022 and recognised an impairment loss of EUR 84,1 million during 2022
on the goodwill of the CGU Russia as detailed in disclosure 7.9. Under the International Financial Reporting Standards as endorsed by the EU (“IFRS’s”), the Company is required to test the
amount of goodwill for impairment at least annually.
We consider this matter to be of most significance because of the complexity of the assessment process and significant judgments in respect of assumptions about the future results of the
business and the discount rates applied to future cash flow forecasts. The most important assumptions relate to the discount rate, growth rates of revenue and operating margin.
How our audit addressed the key audit matter
We challenged whether the goodwill impairment test was performed at the lowest CGU level at which the goodwill is monitored. We challenged the cash flow projections used in the
impairment tests and the process through which they were prepared. We found that the projected cash flows for 2023 were consistent with the Board’s approved budgets, which were subject
to timely oversight and challenge by the Directors. We have critically assessed the historical accuracy of management’s estimates and evaluation of business plans by comparing the prior
year’s forecast with the Group’s actual performance. For the cash flows after 2023 we critically assessed and challenged the assumptions related to the long-term growth rates, by comparing
them to industry forecasts and historical growth rates. We compared the weighted average cost of capital (“WACC”) to the cost of capital and debt of the Group and comparable
organisations, as well as considering territory specific factors. We tested the calculation method used and the accuracy thereof. We compared operating margin, working capital- and CAPEX
percentage with past actuals. We challenged the adequacy of management’s sensitivity analysis of the headroom. For all CGUs we calculated the degree to which these assumptions would
need to move before an impairment conclusion was triggered. We discussed the likelihood of such a movement with management. We included valuation specialists in our team to assist us
with these procedures. We tested the calculation of the impairment recognised on the Russia CGU and assessed the allocation of the impairment charge to goodwill of this CGU. We also
evaluated the adequacy of the disclosures (Note 7.9 and Note 7.4.4) in the financial statements.
Our results
From our sensitivity analysis, we found the likelihood of changes resulting in additional impairment losses to be unlikely.
(4) Valuation of deferred taxes and valuation allowance on deferred tax assets related to tax losses carried forward
Description of the key audit matter
Ontex has recognised a deferred tax asset and a deferred tax liability of respectively EUR 12.1 million and EUR 21.3 million at 31 December 2022. At the same time, a deferred tax asset
position of EUR 121.2 million was not recognised, as disclosed in Note 7.19.1. In 2022 Ontex wrote-off EUR 12.0 million of deferred tax assets on previously recognised tax losses and EUR
23.4 million deferred tax asset positions on tax losses of 2022 were not recognised as disclosed in Note 7.27.
The valuation of the deferred tax positions at Ontex involved significant judgement, more specifically in the determination of the recognition of deferred tax assets related to tax losses carried
forward. The estimation of the future taxable basis is highly judgemental as well as the assessment of the impact of tax laws and regulations, tax planning action and strategies, rulings and
transfer pricing. Because of all the aforementioned reasons, we found this key audit matter to be of most significance for our audit.
How our audit addressed the key audit matter
We challenged the assumptions made to assess the recoverability of deferred tax assets related to tax losses carried forward and the timing of the reversal of deferred tax positions. During
our procedures, we used amongst others budgets, forecasts and tax laws and in addition we assessed the historical accuracy of management’s assumptions. An important management
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Ontex Integrated annual report 2022
judgement was the period over which taxable profits can be reliably estimated and consequently, no deferred tax assets are recognised for tax losses used in any period beyond. We verified
that the deferred tax position was calculated at the enacted tax rate for the year in which the deferred tax position is expected to reverse.
We also assessed the adequacy and completeness of the Company’s disclosure included in Note 7.4.2, 7.19.1 and 7.27 in respect of deferred taxes.
Our results
We found management’s judgements in respect of the Group’s deferred tax positions to be consistent and in line with our expectations.
Responsibilities of the board of directors for the preparation of the consolidated accounts
The board of directors is responsible for the preparation of consolidated accounts that give a true and fair view in accordance with International Financial Reporting Standards as adopted by
the European Union and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determine is necessary to enable the
preparation of consolidated accounts that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated accounts, 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 basis of accounting unless the board of directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to
do so.
Statutory auditor’s responsibilities for the audit of the consolidated accounts
Our objectives are to obtain reasonable assurance about whether the consolidated accounts as a whole are 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 ISAs 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 decisions of users taken on the basis of these consolidated accounts.
In performing our audit, we comply with the legal, regulatory and normative framework applicable to the audit of the consolidated accounts in Belgium. A statutory audit does not provide any
assurance as to the Group’s future viability nor as to the efficiency or effectiveness of the board of directors’ current or future business management at Group level. Our responsibilities in
respect of the use of the going concern basis of accounting by the board of directors’ are described below.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
● Identify and assess the risks of material misstatement of the consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
● Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control;
● Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors;
● Conclude on the appropriateness of the board of directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
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Ontex Integrated annual report 2022
draw attention in our statutory auditor’s report to the related disclosures in the consolidated accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our statutory auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern;
● Evaluate the overall presentation, structure and content of the consolidated accounts, including the disclosures, and whether the consolidated accounts represent the underlying
transactions and events in a manner that achieves fair presentation;
● Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the audit 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 we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and
other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated accounts of the current period and are
therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter.
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Other legal and regulatory requirements
Responsibilities of the board of directors
The board of directors is responsible for the preparation and the content of the directors’ report on the consolidated accounts, the separate report on non-financial
information and the other information included in the annual report on the consolidated accounts.
Statutory auditor’s responsibilities
In the context of our engagement and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in
Belgium, our responsibility is to verify, in all material respects, the directors’ report on the consolidated accounts, the separate report on non-financial information and the
other information included in the annual report on the consolidated accounts and to report on these matters.
Aspects related to the directors’ report on the consolidated accounts and to the other information included in the annual report on the consolidated accounts
In our opinion, after having performed specific procedures in relation to the directors’ report on the consolidated accounts, this directors’ report is consistent with the
consolidated accounts for the year under audit and is prepared in accordance with article 3:32 of the Companies' and Associations' Code.
In the context of our audit of the consolidated accounts, we are also responsible for considering, in particular based on the knowledge acquired resulting from the audit,
whether the directors’ report on the consolidated accounts and the other information included in the annual report on the consolidated accounts, is materially misstated or
contains information which is inadequately disclosed or otherwise misleading. In light of the procedures we have performed, there are no material misstatements we have
to report to you.
The non-financial information required by virtue of article 3:32, §2 of the Companies' and Associations' Code is included in the directors’ report on the consolidated
accounts. The Company has prepared the non-financial information, based on the Global Reporting Initiative (GRI) standards and with reference to the Sustainable
Development Goals (SDG). However, in accordance with article 3:80, §1, 5° of the Companies' and Associations' Code, we do not express an opinion as to whether the
non-financial information has been prepared in accordance with the Global Reporting Initiative (GRI) standards and with reference to the Sustainable Development Goals
(SDG) as disclosed in the directors’ report on the consolidated accounts.
Statement related to independence
● Our registered audit firm and our network did not provide services which are incompatible with the statutory audit of the consolidated accounts, and our registered audit
firm remained independent of the Group in the course of our mandate.
● The fees for additional services which are compatible with the statutory audit of the consolidated accounts referred to in article 3:65 of the Companies' and
Associations' Code are correctly disclosed and itemized in the notes to the consolidated accounts.
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European Uniform Electronic Format (ESEF)
We have also verified, in accordance with the draft standard on the verification of the compliance of the financial statements with the European Uniform Electronic Format
(hereinafter “ESEF”), the compliance of the ESEF format with the regulatory technical standards established by the European Delegate Regulation No. 2019/815 of 17
December 2018 (hereinafter: “Delegated Regulation”).
The board of directors is responsible for the preparation, in accordance with ESEF requirements, of the consolidated financial statements in the form of an electronic file in
ESEF format (hereinafter “Digital consolidated financial statements”) included in the annual financial report.
Our responsibility is to obtain sufficient appropriate evidence to conclude that the format and marking language of the digital consolidated financial statements complies in
all material respects with the ESEF requirements under the Delegated Regulation.
Based on the work we have performed, we believe that the format of and marking of information in the digital consolidated financial statements included in the annual
financial report of Ontex Group NV per 31 December 2022 comply in all material respects with the ESEF requirements under the Delegated Regulation.
Other statements
This report is consistent with the additional report to the audit committee referred to in article 11 of the Regulation (EU) N° 537/2014.
Ghent, 31 March 2023
The statutory auditor
PwC Reviseurs d'Entreprises SRL / PwC Bedrijfsrevisoren BV
represented by
Lien Winne
Réviseur d’Entreprises / Bedrijfsrevisor
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1. GENERAL INFORMATION
1.3. HISTORY OF THE GROUP
Ontex was founded in 1979 by Paul Van Malderen and initially produced mattress protectors for the Belgian institutional market. During the 1980s and the first half of the 1990s, the Company
expanded its product range into its current core product categories and grew the business internationally both organically and through acquisitions.
After opening a production facility in the Czech Republic and acquiring businesses in Belgium, Germany and Spain, Ontex was listed on Euronext Brussels in 1998. Following the listing, Ontex
experienced rapid growth over several years, primarily through bolt-on acquisitions in France, Germany and Turkey.
Ontex was acquired by funds advised by Candover in 2003 and subsequently de-listed from Euronext Brussels. Ontex acquired a diaper production unit of Paul Hartmann in Germany in 2004
and opened a production facility in China in 2006. In 2008, we opened a production facility in Algeria. In 2010, Ontex acquired iD Medica, which sells incontinence products in Germany.
In 2010, Ontex was acquired by funds managed by GSCP and TPG. In 2011, Ontex opened two additional production facilities, one in Australia and one in Russia, and acquired Lille Healthcare,
a company operating in the adult incontinence market in France. In 2013, Ontex acquired Serenity, a company operating in the adult incontinence market in Italy, and opened a production
facility in Pakistan.
In June 2014, Ontex Group NV successfully listed its shares on the Euronext Brussels exchange and trades under the ticker ‘ONTEX’.
In February 2016, Ontex acquired Grupo Mabe, a leading Mexican manufacturer of disposable personal hygiene products.
In March 2017, Ontex has completed the acquisition of the personal hygiene business of Hypermarcas (renamed to “Ontex Brazil”).
In July 2017 Ontex opened its new production plant in Ethiopia for the manufacturing of baby diapers that are specifically meeting the needs of African families.
In February 2019, Ontex opened a new production plant in Radomsko, Poland to support its Central European business.
In July 2020, Ontex acquired the US feminine hygiene assets from Albaad Massuot Yitzhak Ltd. in Rockingham County to further develop the North American business.
In December 2021, Ontex announced its reviewed strategy to focus on its partner and healthcare brands business, which is concentrated in Europe and North America, and thereby is pursuing
alternative strategic solutions for its mainly own brand focused businesses in the emerging markets of Central and South America, as well as the Middle East and Africa. This strategy was
formalized and reflected in the Company’s financial statements beginning of 2022.
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In July 2022, Ontex entered into a binding agreement to sell its Mexican and related export activities to Softys S.A., marking a milestone in the transformation of Ontex. The closing is foreseen
early Q2 2023, subject to the customary conditions, including the applicable merger clearance approvals.
1.4. LEGAL STATUS
registered office at Korte Keppestraat 21, 9320 Erembodegem (Aalst), Belgium
.
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2. CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT DECEMBER 31
ASSETS
Note December 31, 2022 December 31, 2021
in € million
Non-current Assets
Goodwill
9
Intangible assets
9
Property, plant and equipment
10
Right-of-use assets
11
Deferred tax assets
19
Non-current receivables
Current Assets
Inventories
12
Trade receivables
13
Prepaid expenses and other receivables
13
Current tax assets
19
Derivative financial assets
5.1
Other financial assets
Cash and cash equivalents
14
Assets classified as held for sale
8
TOTAL ASSETS
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EQUITY AND LIABILITIES
Note December 31, 2022 December 31, 2021
in € million
Equity attributable to owners of the company
Share capital & premium
15
Treasury shares
(34.2 )
(36.3 )
Cumulative translation reserves
(301.9 )
(333.1 )
Retained earnings and other reserves
(13.4 )
TOTAL EQUITY
Non-current liabilities
Employee benefit liabilities
18
Interest-bearing debts
17
Deferred tax liabilities
19
Other payables
Current liabilities
Interest-bearing debts
17
Derivative financial liabilities
5.1
Trade payables
20
Accrued expenses and other payables
20
Employee benefit liabilities
20
Current tax liabilities
19
Provisions
21
Liabilities related to assets classified as held for sale
8
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
The accompanying notes are an integral part of the audited consolidated financial statements.
.
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3. CONSOLIDATED INCOME STATEMENT FOR THE YEARS ENDED DECEMBER 31
Note
Full Year
in € million
2022
2021*
Revenue
6
Cost of sales
25
(1,294.7 )
(1,007.0 )
Gross Profit
Distribution expenses
25
(191.3 )
(153.4 )
Sales and marketing expenses
25
(82.1 )
(83.1 )
General administrative expenses
25
(75.6 )
(67.6 )
Other operating income/(expenses), net
23-25
(7.0 )
Income and expenses related to changes to Group structure
24
(11.2 )
(34.2 )
Income and expenses related to impairments and major litigations
24
(91.8 )
(25.5 )
Operating profit/(loss)
(69.4 )
Finance income
26
Finance costs
26
(49.3 )
(39.6 )
Net exchange differences relating to financing activities
26
(2.4 )
(2.5 )
Net finance cost
(50.9 )
(41.5 )
Profit/(loss) before income tax
(120.3 )
(10.6 )
Income tax expense
27
(28.4 )
(8.9 )
Profit/(loss) for the period from continuing operations
(148.7 )
(19.5 )
Profit/(loss) for the period from discontinued operations
8
(121.6 )
(42.4 )
Profit/(loss) for the period
(270.3 )
(61.9 )
Profit/(loss) attributable to:
Owners of the parent
(270.3 )
(61.9 )
Profit/(loss) for the period
(270.3 )
(61.9 )
* The 2021 consolidated income statement has been restated following the classification of the Emerging Markets as discontinued operations.
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Earnings per share:
Full Year
in €
Note
2022
2021
For continuing operations
Basic earnings per share
16
(1.83 )
(0.24 )
Diluted earnings per share
16
(1.83 )
(0.24 )
For continuing and discontinued operations
Basic earnings per share
16
(3.34 )
(0.76 )
Diluted earnings per share
16
(3.34 )
(0.76 )
Weighted average number of ordinary shares outstanding during the period
The accompanying notes are an integral part of the audited consolidated financial statements.
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4. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEARS ENDED DECEMBER 31
Full Year
in € million
2022
2021
Profit/(loss) for the period
(270.3 )
(61.9 )
Other comprehensive income/(loss) for the period, after tax:
Remeasurements of defined benefit plans
Deferred tax on items that will not be reclassified subsequently to income statement
(1.6 )
(1.2 )
Items that will not be reclassified subsequently to income statement, net of tax
Items that will be reclassified subsequently to income statement, net of tax
Exchange differences on translating foreign operations
Fair value remeasurements - Cash flow hedge
(3.0 )
Deferred tax on items that will be reclassified subsequently to income statement
(1.8 )
Items that will be reclassified subsequently to income statement, net of tax
Other comprehensive income/(loss) for the period, net of tax
Total comprehensive income/(loss) for the period
(237.0 )
(53.0 )
Total comprehensive income/(loss) attributable to:
Owners of the parent
(237.0 )
(53.0 )
Total comprehensive income/(loss) for the period
(237.0 )
(53.0 )
The accompanying notes are an integral part of the audited consolidated financial statements.
.
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5. CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEARS ENDED DECEMBER 31
Attributable to equity holders of the Company
in € million
Number of
shares
Share capital
Share
Premium
Treasury
shares
Cumulative
translation
reserves
Retained
earnings and
other
reserves
Total Equity
Balance at December 31, 2021
(36.3 )
(333.1 )
Restatement Opening Balance (Hyperinflation non-monetary adjustments)
Restated Balance at December 31, 2021
(36.3 )
(333.1 )
Hyperinflation non-monetary adjustments
Transactions with owners at the level of Ontex Group NV:
Share-based payments
Settlement of share-based payments
(1.7 )
Treasury Shares
Total transactions with owners
(0.7 )
Comprehensive income:
Profit/(loss) for the period
(270.3 )
(270.3 )
Other comprehensive income:
Exchange differences on translating foreign operations
Remeasurements of defined benefit pension plans
Fair value remeasurements - Cash flow hedge
(2.1 )
(2.1 )
Total other comprehensive income/(loss)
Balance at December 31, 2022
(34.2 )
(301.9 )
(13.4 )
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Attributable to equity holders of the Company
in € million
Number of
shares
Share capital
Share
Premium
Treasury
shares
Cumulative
translation
reserves
Retained
earnings and
other
reserves
Total Equity
Balance at December 31, 2020
(38.8 )
(333.5 )
Transactions with owners at the level of Ontex Group NV:
Share-based payments
Settlement of share-based payments
(2.8 )
Treasury Shares
(0.3 )
(0.3 )
Total transactions with owners
(1.5 )
Comprehensive income:
Profit/(loss) for the period
(61.9 )
(61.9 )
Other comprehensive income:
Exchange differences on translating foreign operations
Remeasurements of defined benefit pension plans
Fair value remeasurements - Cash flow hedge
Total other comprehensive income/(loss)
Balance at December 31, 2021
(36.3 )
(333.1 )
The accompanying notes are an integral part of the audited consolidated financial statements.
The shareholding of Ontex Group NV based on the declarations, received in the period up to December 31, 2022, is as follows:
Shareholder
December 31, 2022
%
1
Groupe Bruxelles Lambert SA
16,454,453
19.98%
ENA Investment Capital
12,411,999
15.07%
Guangchang Guo and Fosun International Holdings Ltd.
3,200,373
3.89%
The Pamajugo Irrevocable Trust
2,722,221
3.64%
Veraison SICAV - Engagement Fund
2,497,800
3.03%
1
At the time of the transparency declaration
The accompanying notes are an integral part of the audited consolidated financial statements.
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6. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31
The amounts below include both continuing and discontinued operations. For details regarding the discontinued operations, see note 7.8.
Full Year
in € million
Note
2022
2021
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss) for the period
(270.3 )
(61.9 )
Adjustments for:
Income tax expense
Depreciation and amortization
Impairment losses and items relating to investing activities
Provisions (including employee benefit liabilities)
(20.1 )
Change in fair value of financial instruments
(2.4 )
Net finance cost
Changes in working capital:
Inventories
(11.3 )
(39.2 )
Trade and other receivables and prepaid expenses
(46.9 )
(1.4 )
Trade and other payables and accrued expenses
Employee benefit liabilities
(6.4 )
Cash from operating activities before taxes
Income taxes paid
(24.9 )
(20.6 )
NET CASH GENERATED FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment and intangible assets
(62.4 )
(56.5 )
Proceeds from disposal of property, plant and equipment and intangible assets
Payment for (or Proceeds related to) acquisition of subsidiary, net of cash acquired¹
NET CASH GENERATED FROM / (USED IN) INVESTING ACTIVITIES
(57.7 )
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Full Year
in € million
Note
2022
2021
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings
17
Repayment of borrowings
17
(81.7 )
(1,125.0 )
Interests paid
26
(46.1 )
(26.8 )
Interests received
26
Cost of refinancing & other costs of financing
(7.2 )
Realized foreign exchange (losses)/gains on financing activities
(3.7 )
Derivative financial assets
(7.0 )
(2.4 )
NET CASH GENERATED FROM / (USED IN) FINANCING ACTIVITIES
(9.5 )
(332.4 )
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
(38.9 )
(176.8 )
Effects of exchange rate changes on cash and cash equivalents
(6.7 )
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD
Of which presented as part of Assets classified as held for sale
8
-
1
In 2021, this line item in the consolidated cash flow statement includes the arbitration settlement for an amount of €80.0 million (BRL 500 million) received from Hypera on October 1, 2021. This payment settled
certain claims relating to the acquisition of the Brazilian personal hygiene business of Hypera by Ontex. The Company acquired the Brazilian personal hygiene business from Hypera in March 2017 for an enterprise
value of BRL 1 billion.
The accompanying notes are an integral part of the audited consolidated financial statements.
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Strategic report
Corporate Governance,
Risk & Remuneration
Financial statements
Sustainability/
Non-Financial Statements
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uiny/
No-Finci
tmets
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Sustainability/ Non-Financial statements
1. REPORTING BASICS 180
2. SUSTAINABILITY GOVERNANCE 189
3. PRODUCT STEWARDSHIP 195
4. OUR VALUE CHAIN 197
5. HOW WE WORK WITH OUR SUPPLIERS 198
6. ENVIRONMENTAL STATEMENTS 201
7. SOCIAL STATEMENTS 219
8. EU TAXONOMY REPORTING 229
9. LIMITED ASSURANCE 234
10. GRI CONTENT INDEX 238
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1. Reporting basics
1.1. REPORTING FRAMEWORKS
The main reporting frameworks used to prepare the Annual Integrated Report are: ·
▪ Global Reporting Initiative (GRI): the GRI standards are the main reference for Ontex’s sustainability reporting. Both 2016 and 2021 GRI Standards were used for this report. We
report in accordance with the GRI Standards for the period 1 January 2022 to 31 December 2022.
The Board of Directors is responsible for reviewing and approving the reported information, including our material topics.
▪ United Nations Sustainable Development Goals (SDGs): Ontex has identified the 6 Sustainable Development Goals on which it can have the most impact, through its operations or
across the value chain, in line with the materiality analysis.
▪ EU Taxonomy: a taxonomy statement is added in this report as defined by the EU Taxonomy in the delegated act of April 2021
1.2. REPORTING PERIOD, FREQUENCY & CONTACT POINT
The reporting period runs from the first of January 2022 to the 31th of December 2022. The annual publication of sustainability information happens at the same time as our financial reporting.
The publication date of this report is April 4, 2023
For questions about the reported sustainability information, please reach out to:
Elise Barbé
1.3. REPORTING SCOPE & BOUNDARIES
Unless stated otherwise, the environmental and social reporting boundaries are consistent with the financial reporting scope and boundaries, as described in the “List of companies included in
the consolidation scope” in the financial statements.
Unless stated otherwise, past years are not restated for sustainability indicators. The reporting scope includes all material aspects, as identified in Ontex’s materiality analysis. Some
additional disclosures have been included because they are requested by specific groups of stakeholders, such as water data.
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1.4. EXTERNAL ASSURANCE
Enhancing the quality of our reporting and striving for transparency on our sustainability information, we broadened the scope of external assurance of our sustainability data now including
climate and waste information. The aim is to further extend the scope of assurance in the coming years to ensure compliance towards the Corporate Sustainability Reporting Directive. Please
find our assurance report in section 9 Independent Limited Assurance Report of the Sustainability section of this annual report.
1.5. MATERIALITY ANALYSIS
In 2021, we conducted a materiality assessment. The assessment identified environmental, social & economic topics which can impact Ontex, or on which Ontex has the most impact, positive
or negative. We use the Global Reporting Initiative (GRI) as external references for setting up the materiality process.
1.5.1. Process of materiality analysis
Step 1: Identification of relevant topics
We conducted a desktop research to create a longlist of relevant sustainability topics. To do this, we compared the materiality matrices of our customers, suppliers & competitors, analyzed
investor questionnaires and trend reports, and created an overview of upcoming relevant legislation. The result was a longlist of 26 potential important topics.
Step 2: Prioritization of topics
An online stakeholder survey was launched to prioritize the material topics. 299 People from the following stakeholder groups participated: customers, employees, suppliers, non-
governmental organizations, academics, industry associations and consultants.
The topics were ranked according to their perceived impact on the Ontex’s business success & the impact Ontex has on the external world. The 26 potential material topics were ranked and,
where relevant, clustered resulting in 18 topics to focus on.
The internal experts for each material topic & Group Sustainability Department were involved in the prioritization analysis.
Step 3: Validation of topics
The materiality outcome was reviewed & approved by the Management Committee. This review included verification of the consistency with the analysis of the Enterprise Risk Assessment.
Step 4: Review and follow up
Progress was communicated externally annually as part of the annual report. Internally, a sustainability governance structure ensures integration of the material topics in our sustainability
strategy. A materiality analysis is conducted every two years. The next one will take place in 2023.
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1.5.2. Our material topics
VALUE CHAIN
Nr in
Matrix
Materiality
Definition
Forestry cotton
agriculture
Suppliers
Ontex
Customers
retailers
Consumers
Circular solutions
1
Circular economy
Circular economy model: 3Rs and responsible waste
management
9
Sustainable
products
Reducing the carbon intensity of our products and
promotion of sustainable innovations
13
Sustainable
packaging &
packaging reduction
Reducing the environmental impact of packaging
Climate action
2
Climate change
Reducing GHG emissions (scope 1-2-3), and
mitigating the effects of long-term changes in the
Earth’s climate and its physical impacts on business
operations, communities, and the natural
environment. Advocacy and partnerships with others
to reduce climate change impacts.
21
Energy
Energy production and consumption optimization and
management of energy transition
25
Transport &
logistics
Optimizing transportation to reduce the
environmental impact by loading full carriers, using
multi-modal transport, setting maximum emission
norms and decrease volume by efficient packaging
with an optimised number of DCs
Eco-efficiency &
EMS
Eco-efficiency & EMS
KEY: Moderate Significant Major
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Sustainable supply chain
3
Responsible supply
chain
Promoting responsibility in the value chain and
ensuring its traceability
4
Product safety &
quality
Ensuring the safety and quality of products and
components used within them
5
Transparency
Increase of consumer awareness and satisfaction via
transparency and responsible marketing
6
Nature &
biodiversity
Minimization of impact on nature and biodiversity
11
Water
Improving access to water and managing water use
and extraction sustainably across the value chain
17
Human rights
Upholding and promoting the basic rights and
freedoms of all those who work across the value
chain.
Building trust
7
H&S
Occupational safety and health management of
employees and contractors
8
Business ethics &
compliance
Alignment to ethics and regulatory frameworks,
fairness towards competitors and suppliers
10
Diversity & equality
Non-discrimination and diversity management in
operations and management structures
12
Addressing societal
issues
Addressing societal issues such as menstruation,
incontinence,... in our promotional activities and
providing access to affordable hygiene products
16
Fair remuneration &
employer branding
Fair compensation to employees and appeal as a
responsible employer
Table: materiality topics across our value chain
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1.5.3. Materiality matrix
The topics identified were placed on a matrix (see below), their position relative to the degree of stakeholder interest and potential business impact.
Figure 1: Materiality matrix
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1.5.4. Understanding the result of materiality
Gradation of topics
▪ Topics above the line: for these topics, Ontex has a large direct or indirect impact.
▪ Topics below the line: for these topics, Ontex has less influence or stakeholders perceive the topic as less relevant. Ontex is addressing all the material topics identified, but focuses
on the material topics above the line.
Interdependence of topics
Key topics do not exist independently, but are interrelated. For example:
▪ There is a high degree of interconnectedness among the various material topics. Responsible supply chain is in the middle of the matrix, but it is closely linked to climate change,
which is one of the most important topics for external stakeholders. Similarly, human rights are still in the top quadrant of the matrix in 2021. They also depend heavily on business
ethics and compliance, which are further down the matrix.
▪ Thus, a material topic cannot be addressed in isolation. Examining the interdependence of these issues helps us identify the necessary system-wide actions we need to take to
make progress on our 2030 Sustainability Strategy.
Link with the Ontex sustainability strategy 2030
The materiality analysis serves as the basis for our Ontex sustainability strategy. The different material topics have been color-coded to link them with the relevant section in our sustainability
strategy:
▪ Orange: Circular solutions pillar
▪ Green: Sustainable supply chain
▪ Blue: Climate action
▪ Light blue: Building trust
▪ Transparent: Topics which didn’t end up the priority list but were part of the 26 identified topics.
Material issues across the value chain
By conducting our materiality analysis, we can identify and respond to the needs of all stakeholders. Some of the material issues can be addressed directly by us, while others require the
involvement of various stakeholders in our value chain. We assess the material topics to understand where the main impact occurs. The table with material topics shows us that we need the
support of the entire value chain on a number of material issues, such as climate change, circular economy and product safety and quality. On other issues, such as water, we may have little
direct influence because the impacts occur elsewhere in the value chain.
Changes compared with previous year
As the materiality assessment is conducted every two years, no changes have been made versus last reporting. The next materiality analysis will be conducted in 2023, according to the double
materiality principle of the Corporate Sustainability Reporting Directive.
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Material topics and the Sustainable Development Goals (SDGs)
We regularly conduct a comprehensive mapping exercise to evaluate our material topics against all 17 U.N. Sustainable Development Goals (SDGs). For Ontex, the prioritized SDGs are:
At Ontex, we manufacture high- quality products and solutions for baby care, feminine hygiene and adult incontinence care. We ensure access to affordable solutions
that help our customers live healthy and dignified lives.
We strive for creating jobs and providing fair wages and benefits in the markets where we operate.
We strive for solid social accountability in our supply chain ensuring living wages & social compliance.
Consumers are increasingly concerned about the safety of the products they use; the impact they could have on their baby's health or, in the case of feminine hygiene
products, on their own health and well-being.
By providing good and safe working conditions, creating a positive work-life balance and being a company that makes the most of our employees' diverse talents, skills
and personalities, we recognize our employees' contribution to our success. We strive for zero accidents.
We aim to achieve gender parity in leadership and play an active role in development and career advancement of women.
Global economic growth is enabling more and more people to have the opportunity for a better life. But individual prosperity increases demand on already limited natural
resources. We are moving from a traditional, linear take-use-waste model to a circular business model that maximizes the use and reuse of resources, driven by
innovation.
We strive for transparency with our consumers through eco or health labels.
As a company and as people, we understand the need to address global warming with increased urgency. Our strategy commits us to reduce our Scope 1-2 emissions
by 80% by 2030 (BY2020) and Scope 3 emissions by 25% by 2030 (BY2020), with the ambition to have carbon neutral operations by 2030.
We use various raw materials derived from wood, such as pulp, viscose, cardboard in our products and packaging. We are aware of the serious consequences of
deforestation and forest degradation and do not want to contribute to these problems. Therefore, we source agricultural and forestry materials (pulp, airlaid and viscose)
only from FSC® and PEFC
1
certified suppliers (remove after ‘and’)
1
PEFC (PEFC/07-32-261)/FSC® (FSC-C081844)
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1.6. STAKEHOLDER ENGAGEMENT
We are a publicly listed company. Many parties have an interest in the way in which we conduct our business and that’s why stakeholder engagement touches everything that we do. As Ontex
teams are part of the communities in which they work, most of our efforts focus on local aspects, those that are close to our plants, offices and the communities for which we provide essential
personal hygiene solutions. We realize that the relationships that we establish and nurture with stakeholders have a direct impact on our success. All our sites are required to identify their
respective stakeholders and establish the best ways of engaging with them.
Stakeholder group
How we engage
Key topics of concern
Our response
Customers
▪ Monitoring product sales
▪ Contact through our sales team
▪ Regular customer visits
▪ Joint business planning
▪ Surveys and research
▪ Product quality/safety
▪ Product composition
▪ Carbon footprint
▪ Smart, innovative solutions
▪ Eco-labeling
▪ Sourcing
▪ Innovation
▪ Working conditions
▪ Human rights
▪ Consumer insights
▪ Single-use plastics
▪ Evolving regulations
▪ Sustainable manufacture/production
▪ Offering more eco-labeled products
▪ Ensuring safe and healthy working conditions
▪ Responsible and documented sourcing
▪ Sustainable innovation
▪ Ethical operations
▪ Training for our institutional customers
▪ Strengthen Product Stewardship
Consumers
▪ Consumer panels and focus groups
▪ Social media networks
▪ Monitoring product sales
▪ Surveys and research
▪ Product quality & safety
▪ Environmental impact of our
products
▪ Product labeling
▪ Innovation
▪ Service
▪ Ensuring consumer health and safety
▪ Reducing the environmental impact of our products
▪ Offering more eco-labeled products
▪ Sustainable innovation
▪ Customized products addressing local needs
Employees
▪ Recruitment
▪ Personal development reviews
▪ Surveys
▪ Union/worker representative meetings
▪ Internal and external audits
▪ Internal communication via intranet, staff updates, newsletter
▪ Community and employee well-being projects
▪ ‘Speak Up’ line
▪ Social media & website
▪ Health & Safety
▪ Working conditions &
remuneration
▪ Equal opportunities
▪ Business ethics
▪ Leadership
▪ Personal development
▪ Ensuring safe and healthy working conditions
▪ Ensuring business ethics
▪ Supporting diversity and equal opportunities
▪ Training and education
▪ Graduate program
▪ Internal mobility
▪ Talent development
▪ Leadership competency model
▪ Personal Growth Plan
▪ Third-party social audits
Investors
▪ Ongoing dialogue with investors/ analysts
▪ Investor presentations/meetings
▪ Annual General Meeting
▪ Quarterly earnings reports and webcasts
▪ PR
▪ ESG indices and information requests
▪ Governance
▪ Business ethics
▪ Risk management
▪ Environment/carbon footprint
▪ Clear and transparent governance framework & sustainability
strategy
▪ Business ethics
▪ Responding to ESG indices to enhance transparency
▪ Publishing a yearly integrated report including ESG data
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Stakeholder group
How we engage
Key topics of concern
Our response
Suppliers
▪ Visits and meetings
▪ Supplier conferences
▪ Procurement
▪ Supplier tracker
▪ Raw material sourcing
▪ Business ethics/human rights
▪ Management systems
▪ Quality
▪ Innovation
▪ Material safety
▪ Evolving regulations
▪ Purchase all agriculture and forestry material from
▪ certified suppliers
▪ Suppliers audits
▪ Supplier Code of Conduct
▪ Requirements and documentation on material safety & quality
Communities and
non-governmental
organizations
▪ On-going dialogue
▪ Partnerships on common issues
▪ Memberships of business and industry associations
▪ Charitable activities
▪ Information requests from academics and students
▪ Corporate website
▪ Human rights
▪ Environment
▪ End-of-life waste
▪ Consumer health and safety
▪ Local community involvement
▪ Medical face mask production
to meet urgent need
▪ Affordable personal hygiene solutions
▪ Ensuring consumer health and safety
▪ Research
▪ Chemicals/quality protocols/policies
▪ Donations
1.7. MEMBERSHIPS & ASSOCIATIONS
▪ Industry associations: EDANA, Group Hygiène, BAHP, Aphma
▪ Sustainable supply chain: FSC, PEFC, GOTS, OCS, BSCI, SMETA, REDcert
2
▪ Sustainability networks: The Shift
▪ Climate action: Belgian Alliance against Climate Action (BACA)
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2. Sustainability governance
2.1. THE ONTEX SUSTAINABILITY STRATEGY 2030
The Ontex sustainability strategy 2030 was updated in 2021. It is our roadmap to a sustainable future that provides shared value for all. It is structured around the four major impact categories:
climate, circular, sustainable supply chain and building trust. Each of them is embedded in one or more Sustainable Development Goals (SDGs).
It sets out the following main targets to be achieved by 2030
2
:
Climate action
3
▪ -80% scope 1–2 emissions (SBT)
▪ 100% renewable electricity (SBT)
▪ Offsetting scope 1–2 emissions as of 2030
▪ -25% scope 3 emissions (SBT)
SBT = Validated Science-based Target
Sustainable supply chain
▪ Improving the sustainability performance of our supply chain
▪ Ensure sustainable origin of our renewable materials
▪ Product safety & transparency – 100% Chemical Footprint by 2030
Circular solutions
▪ 100% sustainable packaging by 2025
4
▪ Advance sustainable products
▪ Pilot end-of-life solutions
▪ Zero production waste to landfill by 2025
Building trust
▪ Zero occupational accidents
▪ Achieve gender parity in leadership
2
Unless mentioned differently
3
Base year: 2020
4
100% of our packaging is technically recyclable. We are committed to increasing the proportion of renewable and recycled plastic in our plastic packaging by 2025. All cardboard packaging will have 100% recycled content by 2025.
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2.2. ORGANIZATION
Sustainability has long been integrated into all of Ontex’s functions and at all levels of operations.
Our Sustainability strategy 2030 outlines our ambitions and commitments, creating a common agenda for all Ontex units, leading together towards 2030. It provides a focus and roadmap for
everyone within Ontex. Each part of our business has the freedom to set its own goals and targets to contribute to this strategy. This gives room for locally tailored and relevant implementation.
Our Sustainability strategy 2030 is deployed throughout the Group and anchored in the different departments.
The Board of
Directors
o The Board oversees
and approves the Ontex
sustainable development
commitments & monitors
progress through the
Audit & Risk Committee.
The Executive
Management
Committee (EMC)
o Determines strategy and
approves targets
o It monitors the
implementation of the
sustainability strategy
2030
oThe sustainability
responsible, Annick De
Poorter (Executive Vice-
President R&D, Quality &
Sustainability), ensures
the integration of
sustainability into the
management agenda.
The Group
sustainability team
o Defines and deploys the
Ontex sustainability
strategy 2030
o Monitors progress and
presents the result to the
EMC & Board
o The team works closely
together with other
departments to embed
sustainability in the
organization
o Report on a monthly
base to the Board
Steering committees
o Climate steering
committee: Oversees the
performance against our
climate targets, scope 1-
2-3 and steers the
development, challenges
and approves the climate
roadmaps.
o Circular steering
committee: Follows up
on our circular ambitions,
roadmaps, projects.
Sustainability roles
within other parts of
the business
• Implement and/or
contribute to one or more
objectives of the
sustainability strategy
2030
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2.3. SUMMARY OF THE DIFFERENT COMPONENTS OF ONTEX’S SUSTAINABILITY GOVERNANCE
Our standards and policies form the basis for turning our strategy into action and making our vision a reality. Many of our internal standards and policies are based upon international frameworks.
Climate action
Circular solutions
Building trust
Sustainable supply chain
Policies, guidelines or
statements
▪ Code of ethics: >
▪ Human rights policy: >
▪ Speak Up policy/line: >
▪ Diversity policy: >
▪ Supplier code of conduct: >
▪ Ethical sourcing policy: >
▪ Modern slavery statement: >
▪ Sustainable sourcing policy for renewable raw
materials: >
▪ Animal testing statement: >
Sustainability policy: >
Management systems &
certifications
ISO50001: >
ISO14001: >
▪ BSCI & SMETA
▪ ISO45001
BSCI & SMETA
External charters or initiatives
Greenhouse Gas Protocol
LCA based on ISO14040
▪ FSC: >
▪ PEFC: >
▪ GOTS: >
▪ OCS: >
▪ REDcert
2
: >
▪ UN Universal Declaration of Human Rights
▪ ILO Declaration on Fundamental Principles and Rights at Work
▪ UN Guiding Principles on Business and Human Rights
UNSDGs https://ontex.com/sustainability/sustainability-strategy/
Table: Summary of the different components of Ontex sustainability governance
2.3.1. Commitments & policies
Ontex Code of Ethics
Ontex’s Code of Ethics (COE) is the foundation of who we are and how we do business. The tone from our CEO and Executive Management Committee is clear and constant in that meeting
objectives is as important as to how these are achieved.
Our COE is available at the Company’s intranet site, delivered via handouts or posters around our sites and in our external website for employees, customers, suppliers and investors alike.
Strict observance of our COE is expected by all employees and we extend compliance to our suppliers through our Supplier Code of Conduct, setting our expectations on business integrity,
human rights, safety and health and environmental sustainability with our partners. Our expectations are to partner with suppliers who share our ethical, social and ecological standards.
Ontex’s Code of Ethics covers the topics of Caring for People, Integrity in the Market Place, Ethics in our Business Activities and Safeguarding Company Assets.
Trainings, constant messaging from Management, clear delegation of authority policies plus support systems via clear mechanisms for reporting potential violations provide a strong compliance
system guarded by a Compliance function with presence in every market via local compliance coordinators.
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Supplier Code of Conduct
The Supplier Code of Conduct clarifies Ontex’s requirements for raw material and packaging suppliers regarding: Business ethics, human rights, safety & health, environment & reporting
concerns. It is aimed at all our suppliers and available on our website.
Human Rights Policy
Our Human Rights Policy, published on our website, sets out our commitment to respecting human rights and acting with due diligence to avoid any infringement of human rights or any adverse
impact on or abuses of such rights. The policy emphasizes our commitments to our stakeholders, namely our employees and business partners, the communities and environment in which we
operate, and children.
Ethical Sourcing Requirements
In addition, our Ethical Sourcing Requirements stipulate our requirements towards our suppliers towards social audits, as part of our human rights due diligence set up. It is used to assess,
prevent and mitigate risks in our supply chain. This document is published on our website.
Animal testing
At Ontex we do not test our products on animals, unless this is specifically required by law and/or regulatory agencies. We also aim to limit animal testing as much as possible in our supply
chain. For this reason, we have expanded our Conformity Declaration to determine whether any raw materials are still tested on animals and promote the use of fully validated alternative test
methods when available. When such alternatives are not available or accepted, animal tests should only be conducted to the extent necessary. Our standards state that only animal testing
facilities that comply with legal, ethical and professional standards for animal care and treatment can be used.
In 2022 6 animal tests were performed which were mandatory for US registration.
Overview of animal tests commissioned by Ontex
2020
2021
2022
Animal tests commissioned
by Ontex
0
0
6
Anti-Bribery and Anti-Corruption Commitments and Policy on Gifts & Hospitality
Ontex Code of Ethics includes specific sections on Anti-Bribery and Anti-Corruption. Mandatory trainings are given around the Ontex community which include face-to-face trainings in high
risk countries. Further, contacts with authorities and other Government officials is limited to specific individuals who are mandated to involve the Legal or Compliance group in seeking
counsel before any engagement is made and reducing risk. Finally, our agreements with Agents, Distributors and other service providers include sections on Anti-Bribery and Anti-
Corruption.
Ontex has a comprehensive definition of what constitutes a bribe which includes any inducement or reward for action which is illegal, unethical, a breach of trust or improper in any way and
that it can take the form of money, gifts, products, loans, fees, hospitality, services, discounts, the award of a contract or any other advantage or benefit.
Complementing our guidance to address risks on anti-bribery and corruption is a 2022 policy on Gifts and Hospitality which sets authorized maximum monetary values for meals, events and
gifts.
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Anti-competitive behavior commitments
Ontex ensures compliance with antitrust laws everywhere we do business at via mandatory trainings of our Code of Ethics which contains a detailed section on Integrity in the Marketplace
and Fair Competition. Ad-hoc face-to-face trainings are also given to the Sales organization offering an open forum with employees that allows for proper understanding, ensuring
compliance. Our participation at trade associations is very limited. In those cases we do participate, specific rules of engagement apply which include the involvement of the Legal and/or
Compliance group.
2.3.2. Grievance mechanism
Definition
Grievances, as defined by the Global Reporting Initiative (GRI), is perceived injustice evoking an individual’s or a group’s sense of entitlement, which may be based on law, contract, explicit or
implicit promises, customary practice, or general notions of fairness of aggrieved communities. At Ontex this definition is applied to concerns, problems, complaints or another feedback related
to our business, including environmental, social and governance topics. Typically, raised grievances relate to perceived violation of our values, policies and other sustainability obligations
adopted by our company and included in our Code of Ethics.
Grievance mechanisms are processes established for dealing with grievances. At Ontex there are various channels to address grievances depending on the stakeholder group which raises
them. Typically, there are four main stakeholder groups:
1. Internal stakeholders – Ontex employees
2. Clients, customers and consumers
3. Authorities, agencies, certification and accreditation bodies
4. Other external stakeholders, e.g. public at large.
Approach
Individuals are invited to report potential breaches to our Code of Ethics to managers, people of trust or using technology-driven mechanisms that allow for anonymous complaints to be sent,
be duly registered and tracked up to a resolution. Each complaint is treated in a confidential basis and benefits from multi-functional resources to properly investigate and address potential
breaches (in-house resources and, if needed, partnering with third parties -outside counsel and other specialists-).
General complaints and feedbacks of clients, customers and consumers concerning environment, social & governance matters are channeled via Ontex commercial community and registered
via a special dedicated database. Ontex’s speak-up line is also available for them to raise concerns via our Ontex.com page.
The grievances authorities, agencies, certification and accreditation bodies raise are typically non-conformities and corrective and preventive actions as part of certification audits and
inspections. These get registered in specific trackers set up for both types.
Internal stakeholders – Ontex employees and other external stakeholders, for example, local communities are provided with an opportunity to outline their grievances via a so-called ‘speak-up
line’ – either by phone or online. Additionally, there are various internal channels for flagging a concern for Ontex employees.
There is a separate process for each of these channels outlined in dedicated Ontex procedures. The common denominator is that all of them entail acknowledgement, investigation,
implementation of actions to mitigate and prevent from occurrence and communication among involved stakeholders. The effectiveness of the grievance mechanisms is being evaluated during
annual management reviews. These reviews also serve as a platform for reporting on the number of raised grievances and spotlighting the most critical ones. H THERE IS A TABLE HERE)
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Goals and performance
A total of 90 grievances via the Speak-Up line were received in year 2022 (versus 101 received in 2021). 56 of these were Code of Ethics-related while the rest were comments, questions or
complaints not related to our Code of Ethics. After following the investigation process, 27 of these were substantiated, 26 unsubstantiated and three cases remain open.
The most common Code-violations (25) were related to the professional conduct expected in the workplace. The 2023 Action Plan includes communication and training on this specific section
of our Code of Ethics to ensure proper observance by all colleagues.
27 ESG Grievances linked to environmental & social topics were raised in 2022. For each of these grievances an action plan is developed.
2.3.3. Training and communication
Communication and training in Ontex Code of Ethics
Trainings are given using technology (web-based) but also are imparted on an ad-hoc basis, focusing on the different departments in order to address specific risks each internal stakeholder
may represent: General Managers and the Sales Organization are given face-to-face trainings which allow for discussion of the Integrity in the Marketplace and Fair Competition sections of
our Code of Ethics; individuals participating at any particular project that may include interactions with third parties (e.g. Government Officials or a divestiture) also receive ad-hoc and individual
trainings, complemented by written hand-outs and materials.
Finally, communications via “Compliance Capsules” and messaging on compliance is given frequently.
Training in Human rights
We conduct third-party social audits in our plants as part of our human rights due diligence set up. In 2022, an online training was organized for the targeted plants.
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3. Product safety
Consumer articles must not endanger human health and therefore must be safe as laid down in the legally binding European Directive on General Product Safety and the US Consumer Product
Safety Act. Besides these legal obligations for Consumer articles also non-legal requirements have to be followed or need to be considered when originating from the safety perception
expressed in public opinion.
As a convertor, we don’t make any chemical changes to the incoming raw materials. Therefore, it is a must for Ontex and its suppliers to create a certain level of transparency, by having all its
raw materials checked from a product safety point of view to ensure compliance with the REACH regulation and to get familiar with all intentionally added substances and the potential presence
of any non-intentionally added substances.
All raw materials should be carefully selected to ensure they are appropriately biocompatible for their intended clinical use. An important standard in this context is the ISO 10993 (Biological
evaluation of medical devices) series.
Special attention is given to nanomaterials in the design and manufacture of medical devices with the aim to reduce, as far as possible any risks linked to the size and the properties of
nanoparticles which are or can be released into the user's body.
Raw materials suppliers are expected to assist their customers by supplying available information for their materials if relevant.
3.1. MITIGATING RISKS
Absorbent hygiene products can pose skin health risks and cause conditions such as diaper dermatitis. We are mitigating this risk by maximizing product performance, raw material safety, and
by promoting clear health & safety messaging about our products. We also closely monitor customer and end-user complaints.
We are also staying in step with the rapidly evolving regulatory requirements by participating in dialogue facilitated by industry associations such as EDANA, BAHP, Group’Hygiène and
AHPMA UK.
3.2. RAW MATERIAL SAFETY
All our suppliers are required to provide safety-related documentation such as a safety data sheet, an Ontex conformity declaration, test reports (including chemical and biocompatibility tests),
and the complete chemical composition.
These documents are the basis for a safety evaluation by our scientific affairs team in cooperation with an external toxicologist. The conformity declaration is the most important element of the
safety document package as it allows us to confirm compliance with all legal and regulatory obligations.
In 2021, our Regulatory Affairs team launched a new conformity declaration requiring a more comprehensive disclosure on materials’ composition from our suppliers. It also further refines
chemical testing and biocompatibility requirements.
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3.3. PRODUCT TESTING IN TRUSTED LABS
Ontex has a track record of cooperating with trusted external laboratories to ensure our finished products meet the highest safety and performance standards. We use chemical tests in
accordance with OEKO-TEX® 100 criteria for components in contact with skin. This screening has become increasingly popular among our customers and end-consumers.
3.4. TRANSPARENCY & THIRD-PARTY ASSURANCE
We use clear and prominent labelling to give consumers information and reassurance about the health and safety features of our products. On some products, this messaging is enhanced by
third-party product certifications and trademarks. Today, 49% of our turnover comes from products with one or more eco or health labels
Certifications in the Ontex portfolio include OEKO-TEX 100, Asthma&Allergy Nordic and AllergyCertified. Others, such as Blauer Engel, EU Ecolabel, and the Nordic SWAN, confirm safety,
quality and reduced environmental impact.
For selected Ontex products, animal-derived substances used throughout the supply chain are subject to third-party verifications including the V-label and the Vegan Society trademark.
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4. Our value chain
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5. How we work with our suppliers
The supplier base of Ontex is comprised of more than 500 suppliers located in more than 70 countries. However, the biggest share of them is located in Europe (60%) and Latin America (29%).
Raw material suppliers represent slightly over 70% of Ontex spend.
Over 75% of the raw material categories fall under 3 categories: Fluff, Super Absorbent Polymer (SAP) and non-wovens.
Figure 2: Commodity supplied in 2022 (in % of total weight)
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5.1 SUSTAINABLE SOURCING CHALLENGES, RISKS & OPPORTUNITIES
Forests are indispensable. They are our lungs and life-support system, covering 30% of Earth’s land area and hosting 80% of its biodiversity. Forests give us the air we breathe while removing
carbon dioxide from the atmosphere. Today, the world’s forests are in serious peril with the rate of deforestation estimated at 10 million hectares per year between 2015 and 2020. Agriculture
remains as the main driver of deforestation, forest degradation and biodiversity loss. Environmentally responsible sourcing of feedstocks – especially those of natural origin as the most critical
ones – is shifting from a purely voluntary commitment of companies towards a requirement embedded in legislation. Additionally, creating product & supply chain transparency is becoming a
clear expectation from major retailers and consumers. Additional regulations have been drafted recently in both Europe and the US. It's a practice of disclosing detailed information about
products, including what they contain, how they were produced and where they come from. It enables the verification of product quality and safety as well as the monitoring of labor practices
and human rights across global supply chains.
5.2 OUR APPROACH
Our approach is shaped by Sustainable Sourcing Policy and Supplier Code of Conduct. Through these policies we aim to mitigate supply chain risks. We expect our suppliers to be committed
to business integrity, to promote the principles of sustainable procurement in their supply chain, to be compliant with local laws, to ensure health & safety, to minimize the impact on climate and
the environment, and to respect international human rights law on their own sites and from their own suppliers, including abolishing child and forced labor and eliminating discrimination. These
policies are complemented by specific additional requirements, using a risk-based approach. An example are our Ethical Sourcing Requirements.
Currently, this set up explained below valid for all our raw material and packaging suppliers managed by the Group. It excludes a small share of locally managed suppliers, indirect spend
suppliers such as service providers and traded or outsourced goods suppliers.
We have different touch points with our suppliers to assess, prevent and address potential sustainability-related risks when engaging with them:
▪ Potential raw material suppliers of Ontex complete a self-assessment questionnaire including sustainability related questions (covering environment, social and occupational safety).
▪ Each Ontex supplier needs to sign the Ontex Supplier Code of Conduct. It is an annex to Purchasing contracts and includes a reference to Ontex Ethical sourcing policy. Additional
requirements are outlined in the Sustainable Sourcing Policy for Renewable Raw Materials. The latter establishes also the requirement to disclose certain information on origin and
species to facilitate the due diligence process.
▪ As of 2022, Ontex has started to engage its raw material suppliers to Ecovadis – a third-party verified sustainability assessment provider. This assessment gives a better
understanding of environmental, social and governance risks locked in our supply chain. It also helps to unlock the opportunities and drive continuous improvements.
▪ Within Ontex’s supplier portfolio, 120 suppliers were invited to participate in the sustainability assessment through EcoVadis in 2022, selected on their critical share in spend, critical
commodity and supply chain emissions. Over a third of them - 37% - completed the assessment. 86% of the assessed suppliers reached a score of 45 or higher (Ecovadis rating of
good), meaning they actively engage in sustainability. Only 14% of supplier scores indicate a high risk and mitigation actions were put in place.
▪ In addition, we request suppliers located in risk countries to provide us with a valid third party social audit report. In 2022, 28% of our raw material & packaging suppliers which are
managed by the Group were located in a risk-country
5
, of which 42% of them provided us with a valid third party social audit report. No agreements with raw material suppliers were
terminated on the grounds of sustainability-related non-compliance in 2022.
5
Risk-country as defined by amfori BSCI http://duediligence.amfori.org/countryRiskClassification.
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5.3 GOALS & PERFORMANCE
In 2022, we revised our supplier management approach, resulting in the setup of a Supplier Compliance Cell. The aim of the latter is to further develop our supply chain due diligence approach,
identifying, preventing and mitigating potential negative human rights and environmental impacts in our value chain.
Sustainable supply chain
Unit
2020
2021
2022
Supply chain due diligence
% of direct spend covered by sustainability assessments via Ecovadis (NEW)
%
-
-
37
Human rights
100% Supplier Code of Conduct signed by 2030
%
62
93
96
Percentage of new suppliers that were screened using social criteria
%
100
100
100
Suppliers located in risk countries
%
15
15
28
Percentage of risk suppliers covered by a valid social audit report
%
43
32
42
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6. Environmental statements
6.1. CONSOLIDATION ENVIRONMENTAL FIGURES
CLIMATE
Unit
Notes
2020
2021
2022
CO2 EMISSIONS SCOPE 1,2 & 3
E2
Scope 1 & 2 emissions market-based
Scope 1
Tons CO2-equivalent
10,815
15,726
14,373
Scope 2
Tons CO2-equivalent
46,461
18,587
11,403
Total scope 1 & 2
Tons CO2-equivalent
57,276
34,310
25,776
Scope 1 & 2 emissions location-based
Scope 1
Tons CO2-equivalent
10,815
15,726
14,373
Scope 2
Tons CO2-equivalent
128,786
123,978
121,109
Total scope 1 & 2
Tons CO2-equivalent
139,601
139,701
135,482
Absolute reduction of scope 1 & 2 emissions market-based since 2018
%
15
53
64
Absolute reduction of scope 1 & 2 emissions market-based since 2020
%
0
41
55
Carbon intensity ratio of scope 1 & 2 emissions
gCO2/€ product sold
27.5
16.8
10.5
Greenhouse gas emissions in scope 3
Purchased goods & services
Tons CO2-equivalent
1,056,083
1,094,621
1,129,212
Capital goods
Tons CO2-equivalent
89,350
46,436
52,994
Fuel- and energy-related activities
Tons CO2-equivalent
10,904
11,461
10,910
Upstream transportation and distribution
Tons CO2-equivalent
263,098
271,180
286,988
Waste generated in operations
Tons CO2-equivalent
21,537
24,547
20,290
Business travel
Tons CO2-equivalent
432
309
407
Downstream transportation & distribution
Tons CO2-equivalent
77,322
74,842
75,000
End of life treatment of sold products
Tons CO2-equivalent
569,876
528,744
548,676
Total
Tons CO2-equivalent
2,088,602
2,052,140
2,124,477
Absolute reduction of scope 3 emissions since 2020
%
0%
-2%
2%
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CLIMATE
Unit
Notes
2020
2021
2022
ENERGY EFFICIENCY & RENEWABLES
Energy consumption within the organization
E2
Electricity consumption
MWh
383,251
367,618
363,547
Car fuels (diesel/gasoline)
MWh
10,741
14,369
10,657
Fuel oil
MWh
3,872
11,903
12,046
LPG
MWh
1,456
1,168
1,068
Natural gas
MWh
23,969
36,824
33,874
Wood pellets
MWh
2467
942
1,036
Total energy consumption
MWh
425,756
432,824
422,227
Electricity intensity ratio
kwh/1000 finished goods
16.03
16.10*
15.64
Renewable energy
Percentage of renewable electricity
%
75
91
93
Percentage of total renewable energy
%
70
80
80
On-site production renewable electricity
Production plants with on-site renewable electricity generation
Number of sites
2
4
6
Amount of green electricity generated on-site
MWh
2,267
5,212
12,088
SUSTAINABLE PACKAGING & PRODUCTS
Unit
Notes
2020
2021
2022
SUSTAINABLE PACKAGING
E3
Percentage of total packaging that is reusable, recyclable or compostable
%
100
100
100
Share of renewable content in our packaging
%
80,
80
80
Share of recycled content in our plastic packaging
%
0
9
19
Share of recycled content in our paper and cardboard packaging
%
92
96
96
SUSTAINABLE PRODUCTS
E3
Share of renewable content in our products
%
48,
48
47
Share of recycled content in our products
%
0
0
0
Share of eco-/health labels on our products
% turnover
41
48
49
Average product weight intensity
g/1000PC
28.8
29.1
28.3
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PRODUCTION WASTE
Unit
Notes
2020
2021
2022
Non-hazardous
Preparation for reuse
ton
985
1,237
837
Sent to recycling
ton
31,724
38,867
30,373
Other recovery operations
ton
0
0
1,280
Sent to incineration for energy generation/recovery
ton
3,442
3,938
3,242
Sent to incineration without energy generation/recovery
ton
0
212
4
Sent to landfill/storage
ton
3,202
1,946
2,790
Other disposal operations
ton
0
0
204
Hazardous
Preparation for reuse
ton
0
0
0
Sent to recycling
ton
325
120
86
Other recovery operations
ton
2
0
1
Sent to incineration for energy generation/recovery
ton
155
262
12
Sent to incineration without energy generation/recovery
ton
12
30
200
Sent to landfill/storage
ton
469
15
0
Other disposal operations
ton
20
13
29
Total production waste
ton
40,336
46,641
39,058
Production waste intensity ratio (NEW)
kg/1000 PC
1.7
2.1
1.7
Recycling index
%
91
95
92
Waste diverted from disposal
ton
33,036
40,224
32,578
Waste directed to disposal
ton
7,300
6,417
6,480
Waste treatment
Onsite
%
3
0
0
Offsite
%
97
100
100
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PRODUCTION WASTE
Unit
Notes
2020
2021
2022
Waste composition
Metals (iron, aluminum)
%
1
3
3
Paper/cardboard
%
19
19
26
Plastics
%
17
26
32
Product scrap
%
35
26
-
Solvent
%
<1
<1
<1
Textiles
%
4
3
12
Used oil
%
<1
<1
<1
WEEE
%
<1
<1
<1
Wood (pallets)
%
7
6
6
Other
%
16
16
22
WATER
Unit
Notes
2020
2021
2022
Water consumption
Ground water
m³
62,050
59,330
68,485
Surface water
m³
5,747
3,393
4,117
Urban water
m³
119,759
102,609
88,432
Rain water
m³
1,073
937
614
Deep well
m³
0
11,874
12,595
Total water consumption
m³
188,629
178,143
174,243
Water intensity ratio
m³/1000 finished goods
0.01
0.01
0.01
FORESTRY & COTTON
Unit
Notes
2020
2021
2022
Share of fluff coming certified sources (FSC/PEFC)
%
81
83
78
Share of fluff coming from controlled sources
%
19
17
18
Share of cotton from organic sources
%
96
96
94
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ESG RATINGS
Unit
Notes
2020
2021
2022
CDP Climate
Score
E8
B
C
A
CDP Forest
Score
E8
B
B
B
ISS
Score
E8
C
C
C
Ecovadis
Score
E8
/
Bronze
Gold
MSCI
Score
E8
AA
AA
AA
Moody's Vigeo Eiris
Score
E8
41
45
45
Sustainalytics
Score
E8
20.5
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E1 SCOPE OF ENVIRONMENTAL STATEMENTS
Environmental key figures include data from consolidated production sites where Ontex has operational control. The following sites are no longer reported compared to 2021: Ontex Hygienic
Disposables PLC, Ethiopia. These production locations are no longer part of the Ontex group. No additional sites were added to the environmental reporting scope in 2022. This brings the total
number of consolidated production sites that report environmental data in 2022 to 18 (including our Global Excellence Center in Mayen).
Within the scope of Ontex’s reporting framework, most of the sites report their environmental data at the end of the fourth quarter of 2022.
Sites running from the 1st of January to the 31th of December 2022 are included. Sales offices & warehouses that are not related to a manufacturing plant are excluded from the reporting
scope.
E2 CLIMATE DATA
2.1 Definitions
2.1.1 Scope 1-2 carbon emissions
Ontex reports its absolute scopes 1 and 2 emissions according to Greenhouse Gas Protocol methodology. The emissions reported are covering sites outlined in E1. Excluded from the scope
of the calculations are the sales offices that are not related to manufacturing plants. This exclusion falls under the cut-off criteria as they will represent less than 1% of the total impact on climate
change. The disclosed data, scope 1 and scope 2 emissions are expressed in tons CO2-equivalents (tCO2e).
The scopes 1 and 2 emissions are calculated based on primary data collected on-site and converted to GHG emissions using different sources of emission factors based on relevance: Bilan
carbon, UK Government GHG Conversion Factors for Company Reporting, IEA & supplier specific emissions factors for electricity.
The scope 2 emissions are disclosed according to two methodologies: market-based
6
and the location based
7
.
Greenhouse Gas emissions intensity is calculated using the total from scope 1 and scope 2 (in tCO2e) market-based emissions divided by the total revenues of Ontex (in euros).
GHG emissions intensity (tCO2/€) = (Scope 1 + scope 2)/Total revenues
PwC has provided ISAE 3000 limited assurance on selected environmental data of 2022.The PwC limited assurance report, including the scope of the indicators included in the assurance, can
be found on section 9 of the sustainability statements.
6
“A market-based method reflects emissions from electricity that companies have purposefully chosen”, GHG Protocol Scope 2 Guidance
7
“A location-based method reflects the average emissions intensity of grids on which energy consumption occurs”, GHG Protocol Scope 2 Guidance
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2.1.2 Scope 3 carbon emissions
Ontex reports scope 3 emissions according to the according to Greenhouse Gas Protocol methodology and using the operation control approach
8
. The scope 3 emissions are covering the
following categories: purchased goods and services, upstream distribution, capital goods, business travel, fuel and energy related activities
9
, waste in operation , downstream transportation
and the end-of-life treatment of sold products for the scope 3.
The following scope 3 categories were identified as not relevant and therefore excluded from the scope:
▪ upstream leased assets, , downstream leased assets, franchises and investments: Ontex does not operate in these activities;
▪ use of sold products, processing of sold products: there is not impact related to the use phase of our products.
The conversion from primary data to ton CO2-equivalent is done using supplier specific emission factors or when not available emissions factors published by Ecoinvent, the GLEC, DEFRA
(GHG Conversion Factors for Company Reporting) or the ADEME (Base Empreinte®).
Assumptions and limitations: The use of allocation have been minimized as much as possible but when allocation could not be avoided physical allocations where preferred (e.g. end of life) to
economic factors (e.g. purchased goods and services, capital goods). For consistency and comparison over the year, default emissions factors are not updated on a yearly basis.
2.1.3 Energy consumption
Ontex energy consumption is reported for different types of energy used. The data are collected at the plant level and consolidated at the Ontex group level. Electricity is the largest energy
source we use. Hence, our focus of switching to renewable electricity in our sustainability strategy.
The definition of renewable energy as given in the Greenhouse Gas Protocol scope 2 Guidance has guided us in defining the scope of this indicator. The following energy sources are considered
in scope for this indicator:
▪ Wind energy, solar energy, energy from biomass (including bio- and other naturally produced gas), hydropower (including marine hydro) and geothermal energy.
▪ All on-site electricity production is solar energy.
The electricity intensity ratio is calculated as the electricity consumption divided by the amount of finished goods (per 1000 pieces). It explains how electricity intensive our products are.
Note that there are differences among the different product categories which are not disclosed in the annual report which may lead to variations over time.
The detailed energy consumption per production facility has been reported in our CDP submissions in 2022, accessible here.
8
“Under the operational control approach, a company accounts for 100 percent of the GHG emissions over which it has operational control. It does not account for GHG emissions from operations in which it owns an interest but does not have
operational control”, Corporate Value Chain (Scope 3) Accounting and Reporting Standard
9
Not included in scope 1 or scope 2
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2.1.4 Carbon neutral operations
At Ontex we are conscious of our CO2 emissions, and we are working towards reducing further the carbon footprint of our manufacturing sites and aim to achieve carbon neutrality for our
production sites by 2030.
To achieve this, we follow a 3 steps approach: calculate, reduce energy consumption & offset our remaining carbon emissions. At the end of this process, the manufacturing sites receive a
carbon neutral certification in line with the PAS 2060, the international standard for CO2-Neutrality, guaranteeing credible climate action.
The project we support is VER certified and can be accessed via this link.
2.2 Climate challenges, risks & opportunities
We believe that climate change is one of the biggest challenges that humanity faces. Even if the pledges made at the Paris Climate Conference in 2015 are honored, it still leaves average
surface temperatures on track to increase by more than three degrees, resulting in an unpredictable and unmanageable impact on the climate. The fifth IPCC report highlighted the severity of
the impact we are already experiencing at 1 °C warming and stated that 2 °C of warming is now considered highly dangerous. Therefore, companies need to increase the resilience of their
supply chains and direct operations and aim to stay below 1.5 °C global warming. That is why hundreds of businesses – including Ontex – are setting science-based targets. Some go even
further to aim for net-zero supply chains. The same IPCC report includes urgent recommendations for reducing emissions of GHGs into the atmosphere through a rapid transition from fossil
fuels to renewable energy. About 3% of our carbon footprint is related to the production of our product. The remaining 98% is in our value chain, with raw materials having the biggest climate
impact. That’s why expanding our climate responsibility to our value chain is essential to address climate change
2.2.1. Risk & opportunity description
In the short term, the main climate risks are regulatory. Increasingly stringent regulations on energy use and emissions can induce higher operational costs. In addition, product or packaging-
related legislation or taxes may affect our direct costs. On the other hand, progressive climate stewardship could contribute positively to Ontex' brand equity and reputation and therefore have
a positive impact on our customers & consumer preferences. To take our ambition a step further, we don't only see an opportunity in using renewable electricity but having carbon neutral
production & communicate this to our consumers.
The consequences of climate change are the main long-term risk for Ontex. We have conducted a first climate-related risk analyses in 2021. Two scenarios were chosen for relevance to Ontex:
• Delayed Transition is the scenario in which global warming is limited to 1.3-1.9° degrees above pre-industrial levels by 2100 thanks to stringent mitigation and Carbon Dioxide Removal
technologies, change in policies and implementation of legal instruments. The equivalent IPCC scenario is RCP 2.6.
• For the physical climate scenarios we discovered the RCP6.0 scenario. We consider this as a realistic 'worse case' scenario where there is only a very modest effort towards mitigation
between 2010-2060, but improvements in energy intensity and a global market for emissions permits help limit atmospheric CO2 to 670 ppm by 2100. Global temperatures by 2100
are likely to be 2.6°-3.7°C above pre-industrial levels.
2.2.2 Transition risks
According to the Delayed Transition scenario (<2°C), Ontex will mainly be exposed to two transition risks: (1) the policy risk including the threat of increasing raw material prices due to carbon
prices, as well as eventual upcoming regulations on single-use products, and (2) the market risk, which is currently limited for our company, although solutions are essential in the long term.
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How do we respond to this risk? With our Sustainability Strategy 2030 we set a target to decrease our scope 3 carbon emissions with 25% by 2030. Raw materials are accountable for the
majority of emissions. Our R&D strategy is including the carbon impact calculations of each innovation. In addition, via supplier engagement we aim to reduce emissions on our raw materials
and hence reduce the risk on heavy carbon taxes.
2.2.3 Physical risks
Based on the RCP6.0 scenario, there are physical risks, such as the increase in global temperatures & water stress, potentially affecting the productivity of plants. Just over half of our
manufacturing sites are located in areas of High-Water Stress Risks.
How do we respond to this risk? We do not use process water; hence our consumption of water is limited to sanitary water, air conditioning and water for our sprinkler installations. In the
majority of our plants, we capture rainwater to use for our sprinkler installation & toilet water. We consider the Water Stress risk low due to the type of business we have.
Floodings are another risk which potentially affects 20% of our factories. We already had floodings in the past. As a result, our plants have emergency response plants ready in case an
emergency occurs.
2.3 Our approach
In 2020 we announced our ambition to reach carbon neutral operation
10
by 2030 and in 2022 we have set science-based targets goals which have been approved by the Science Based Target
initiative (SBTi). Our submission can be accessed here.
▪ Ontex commits to reduce absolute scope 1 and 2 GHG emissions 80% by 2030 from a 2020 base year.
▪ Ontex also commits to increase annual sourcing of renewable electricity from 75% in 2020 to 100% by 2030.
▪ Ontex further commits to reduce absolute scope 3 GHG emissions from purchased goods and services, upstream transportation and distribution, and end-of-life treatment of sold
products by 25% by 2030 from a 2020 base year.
On top of the target-approved targets by the SBTi, Ontex aims for carbon-neutral operations by 2030.
To achieve our targets, we are taking a range of different actions. This includes reducing our electricity consumption in our manufacturing sites, transforming our energy mix and investing in
clean technologies.
An externally verified carbon emission reporting system, and responses to rating agencies such as the Carbon Disclosure Project, help us align our efforts with the magnitude of the greenhouse
gas challenges we face.
The reduction of our scope 1-2-3 carbon emissions is part of the Ontex Incentive plan.
10
scope 1 and scope 2 market-based
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2.4 Goals & performance
Table 1: Climate goals & performance
Goals
Performance 2022
80% scope 1–2 emissions reduction by 2030 vs 2020
- 55%
100% renewable electricity by 2030
93%
25% scope 3 emissions reduction by 2030 vs 2020
+2%
In 2022, CDP recognized Ontex as one of the world’s leading companies in terms of its environmental performance and its transparency in fighting climate change, being one of the 2.2% of
companies in the world awarded with A rating for its 2021 performance in the CDP Climate Change questionnaire.
Scope 1-2 emissions
Our total emissions in metric tons of CO2 equivalents for scopes 1 and 2 decreased by 55% versus our base year 2020, mainly due to the switch to renewable electricity sources in US and
Mexico. Furthermore, all our European plants already source 100% renewable electricity, at Group level we were at 93% vs 91% in 2021. Additionally, our total energy use from renewable
sources (electricity and other fuels) represented 80% of our total energy use in 2022 (compared to 70% in base year 2020).
In 2022, we continued installing solar panel rooftops at our plants. 6 Plants now have on-site electricity production, amounting to 12,1 GWh in 2022, or 3% of our total electricity consumption.
Offsetting carbon emissions
In 2022, 5 out of 18 plants were certified carbon neutral factories. Offsetting represents 7824 tCO2e, less than a quarter of our total scope 1-2 emissions.
Ontex supported the development of wind turbines in different regions of India. About 30 turbines of different sizes with a capacity around 32 MW producing on average 54 000 MWh of green
energy per year in the provinces of Karnataka, Andhra Pradesh and Tamil Nadu.
The electricity produced displaces an equivalent amount of energy that would normally be generated using fossil fuel-based power plants leading to a reduction in CO₂ emissions. Project
activities are not only limited to emission reduction but also aim to improve living conditions. The local communities are involved as much as possible, and the Project generates many co-
benefits such as job opportunities and improved infrastructure in the region in line with the United Nations Sustainable Development Goals.
More information can be found via this link: https://registry.verra.org/app/projectDetail/VCS/669
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Scope 3 emissions
Ontex’s total emissions from its value chain in 2022 - scope 3 emissions - amount to 2,12 million metric tons of CO2 equivalent compared to 2,09 million in 2020.
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E3 CIRCULAR SOLUTIONS
3.1 Definitions
Circular economy aims to decouple economic growth from resource consumption. This means leaving behind a circular model – take, use, waste – and move to a circular model where we
maximize resource use and reuse, and where nothing is wasted.
Packaging
Packaging: Our packaging exists of LDPE-film, corrugated cardboard, pallets or paper. Packaging is referred to as primary, secondary & tertiary packaging.
Recyclable packaging: all Ontex packaging is technically recyclable.
Packaging with recycled content: we offer our customers primary plastic & cardboard packaging with recycled content of minimum 35%, going up to 100%. This content can be chemical
recycled post-consumer recycled content or mechanical recycled post-industrial recycled content. For the 2022 reporting, Russian suppliers have been excluded from the reporting on recycled
content in cardboard boxes.
Packaging with renewable content: this is referring to packaging made out of corrugated cardboard or paper.
Products
Recycled content in our products: in 2022, we had no products with recycled content on the market.
Renewable material in our products: about half of the raw material (by weight) used in our products is certified or controlled fluff. The majority of our fluff originates from the pine trees, hence
renewable. In minor amounts we also use certified organic cotton, eucalyptus fluff & non-wovens of natural origin from sustainably harvested sugarcane and corn. Apart from that, we have
adopted plastic alternatives from renewable feedstocks.
3.2 Circular challenges, risks & opportunities
By 2030, the global population is expected to reach nearly 8.5 billion, with nearly half a billion moving into the middle class.
11
This means that more and more people will have a chance at a
better life. But increasing individual prosperity will heighten the demand for already constrained natural resources. Global awareness about plastic pollution and its impact on our ecosystems
continues to grow. Several major global coalitions have been announced to tackle the issue. Businesses are experiencing growing pressure from consumers to reduce single use plastics. Used
personal hygiene products make up a considerable part of household waste. It ends up in incineration or landfill facilities. To address the waste issue, governments are increasing pressure to
move away from single use products via the ‘polluter pays’ principle, or so-called EPR schemes
12
. How we make and use our products directly affects our carbon footprint and our impact on
nature.
11
Source: https://www.un.org/sustainabledevelopment/blog/2015/07/un-projects-world-population-to-reach-8-5-billion-by-2030-driven-by-growth-in-developing-countries/
12
EPR stands for Extended Producer’s Responsibility
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3.3 Our approach
Two of today’s biggest challenges are climate change and resource depletion, driving biodiversity loss and undermining human rights. In response, we are developing circular solutions for our
products and packaging. We identified three priority areas:
▪ Priority 1: Zero production waste to landfill
Our ambition is to send zero production waste to landfill by 2025. This indicator has been changed versus last year increasing the speed of implementation from 2030 to 2025.
▪ Priority 2: Circularity in packaging
All our packaging is technically recyclable. We are committed to increasing the proportion of renewable and recycled plastic in our plastic packaging by 2025. All cardboard
packaging will have a 100% recycled content by 2025.
▪ Priority 3: Sustainable products & services
- Sustainable products require a careful consideration of raw material choice. We aim to replace materials by bio-based, recycled or non-plastic alternatives to reduce our
carbon footprint and plastic consumption.
- We optimize designs so that the materials can be valorized by recycling.
- Developing (partly) reusable products
- Find, pilot & implement end-of-life recycling and composting solutions and services for the sanitary waste stream via partnerships.
3.4 Goals & performance
Goals
Performance 2022
100% recyclable packaging by 2025
100%
> 30% plastic bags with minimum 35% recycled or renewable content by 2025 (by
weight)
19%
100% of our cardboard boxes having recycled content by 2025 (by weight)
96%
Being primarily active on the retailer brand and institutional channel, the pace of transition towards sustainable products & packaging solutions is largely dictated by our customers. However,
we want to be their key partner to provide solutions, share knowledge & tools, and work collaboratively on reducing our impact on the environment.
Circularity in packaging
Our packaging – LDPE bags or cardboard boxes - are theoretically fully recyclable. This means they are designed for recycling, but the recycling rate highly depends on the local waste collection
schemes in the country where the packaging is collected.
During 2022, we commercialized plastic packaging with recycled content. 19% Of our plastic bags had a minimum of 35% recycled content vs 9% in 2021. 96% Of our cardboard boxes had
recycled content. This is in line with our 2025 packaging goals.
Sustainable raw materials
Much of our R&D work focuses on reducing the volume of materials in our products while achieving equal or better performance. The latter is connected with the large inflation on the raw
material prices we faced during 2022.
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Natural or recyclable design
Consumers love nature-based/natural products. An example is the launch of different products with cotton topsheets in 2022.
(Partially) Reusable products
We support the shift from disposables to reusable personal hygiene products. We added hybrid diapers, menstrual underwear and menstruation cups to our product portfolio. Despite of this,
we notice that these products are not used by the mainstream consumer but rather aimed at a niche market. Hence, the share of sales for these products represent below 1% of our total sales.
End-of-life
In May 2022 Ontex renewed its support to Woosh, a Belgian startup that aims to make diaper recycling a reality in Ontex’s home country. Together with waste companies Woosh aims to set
up the first diaper recycling facility in Belgium. We continue to support the scale-up of their business and collect used diapers from day cares.
The pilot project at Les Alchimistes to assess diaper composability has ended and we are now taking the learnings to R&D and product development.
In addition, we are working together with the industry associations EDANA & Group’Hygiène to explore viable recycling options and Extended Producer’s Responsibility (EPR) schemes for
diapers.
E4 PRODUCTION WASTE
4.1 Definitions
Production waste is defined as the total volume of generated waste expressed in ton per year. The distinction between hazardous and non-hazardous waste is made based on the local
regulation for the region where the reporting entity is located. For EU sites, Hazardous Industrial Waste (HIW) is defined according to Appendix III of the Waste Framework Directive
(2008/98/EC). For non-EU countries, classification follows the local legislation.
The recycling index is the ratio of the waste recovered by third parties (including waste recovered as energy through incineration) to the total waste.
Significant spills are accidental release of a hazardous substance that can affect human health, land, vegetation, waterbodies, and groundwater which are included in our financial statements.
4.2 Our approach
Ontex monitors waste production and recovery through waste treatment practices such as recycling, reuse, and waste-to-energy. Our plants seek to maximize the recovery rate for their waste
through on-site sorting and staff training. The latter is part of ISO14001 which the majority of our plants are certified too. To maximize the recovery rate, our plants enter into agreements with
waste contractors that can recover the various types of waste generated and support us in reaching our goal of zero waste to landfill by 2025.
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4.3 Goals & performance
Goals
Performance 2022
0% production waste to landfill by 2025
7%
The amount of production waste generated per product declined by 18% between 2021 and 2022. Although we reduced the absolute amount of production waste in 2022, our recycling index
for production waste decreased by 3% compared to 2021. In 2022, 8% of production waste were either sent to landfill (7%) or incinerated without energy recuperation (1%). The target is to
achieve 0% by 2025. The transformation of one of our European plants into Excellence Innovation centre and the improvement in the reporting had an impact on our waste indicators.
In 2022, our plant in Istanbul was awarded with the Zero Waste Certificate from the Turkish Environmental Ministry.
We did not have any significant spills in 2022.
E5 WATER
5.1 Definitions
Ontex uses water for its sanitary purposes, fire control & air conditioning systems in its production sites. No water is added to manufacture our products. Hence, we do not consider water
withdrawal as a material topic for Ontex. Nevertheless, we monitor water withdrawal figures, including a split up per water source.
Very limited amounts of water are being discharged, according to the local environmental permits & legislation. No goals are defined for water reduction as it is not deemed a material topic to
Ontex. We, however, monitor the volume of water consumption.
5.2 Our approach
Around 58% of Ontex sites are located in areas of High-Water Stress Risks
13
(e.g., Belgium and Mexico). However, we don't use processed water. Sanitary water, water for fire control & air
conditioning are the main sources of water use in our facilities. This also means we don't have (process) water contamination risks.
The volume of water consumption is low. Hence, the risks of water limitations are very limited.
Despite water not being a material issue for Ontex, we monitor the water consumption to ensure actions can be implemented in case anything changes and track potential leaks in an early
stage.
13
Based upon Aqueduct water stress data from WRI's Aqueduct Global Maps dataset
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E6 FORESTRY & COTTON
6.1 Definitions
Ontex purchases a wide array of materials derived from wood, cotton, and other materials of renewable origin:
• Wood-based materials: pulp, airlaid, tissue, viscose, silicone paper, paper and cardboard packaging and auxiliary components
• Cotton-based materials: cotton fibers, yarns, cotton-based and enhanced non-wovens
• Other materials of renewable origin: biobased, biocircular and biomass-balanced plastics (non-wovens, SAP, etc).
These material commodities are linked to a high risk of deforestation, forest degradation or another negative biodiversity impact. Therefore, we at Ontex make sure they are subject to special
scrutiny to ensure we can safeguard the nature and source responsibly.
6.2 Our approach
Traceable and sustainable sourcing of renewable raw materials is a fundamental principle guiding Ontex procurement decisions for wood-, cotton- and other materials of natural origin. This
principle is encapsulated in the Sustainable Sourcing Policy for Renewable Raw Materials. The Policy outlines the applicable credible certification mechanisms a supplier can rely on. From
tother hand, it also vocalizes the requirement for transparency when disclosing the sourcing information to Ontex – a key enabler of the internal due diligence process. Ontex due diligence is
consisting of three parts:
a. gathering information received from suppliers and information available from public sources
b. assessing the risk of non-sustainable origin of these materials – classifying the risk as negligible or non-negligible
c. mitigating the non-negligible risk with the most appropriate measure.
This due diligence exercise is done every year and is also part of a supplier selection and onboarding process. The ultimate goal of the exercise is to ensure that all materials of renewable
origin sourced, used or sold by Ontex are of sustainable origin.
Our approach to sustainable sourcing of such materials largely falls on the certifications existing in this domain: PEFC and FSC for wood-based materials, GOTS and OCS for organic cotton,
REDcert
2
for sustainable origin of renewable feedstock for bio-plastic materials.
Our 2030 goal is to purchase all material from agriculture and forestry from certified suppliers: 100% FSC- or PEFC-certified or controlled wood-based material and 100% organic, BCI or
recycled cotton.
6.3 Goals & performance
In 2022, 96% of our wood-based raw materials came from certified or controlled sources, which is 4% off from our commitment. Due to suspension of the FSC certification in Russia in spring
2022 and switch from international to Russian wood pulp suppliers, this temporary exemption on the requirement to source only certified or controlled wood-based materials needed to be made
to ensure continuity of business operations in the Russian plant of Noginsk.
Pinus sylvestris, Picea Abies and Betula Pendula appear to be the top three species of our wood-based raw materials and packaging: mainly from Europe and the United States.
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As for cotton, 94% of the cotton purchased in 2022 was organic. While the purchased volume of non-organic cotton-enhanced materials has decreased compared to 2021, the volume of the
organic cotton purchase has decreased even more resulting in a slight decline of the overall indicator.
E7 MANAGEMENT SYSTEMS
7.1 Definitions
Environmental and social responsibility of Ontex is driven forward by an integrated sustainability management system. This system is built of policies, procedures and processes helping to
ensure that sustainability is embedded into all aspects of Ontex activities.
7.2 Our approach
The guiding principles of Ontex sustainability management system are outlined in Ontex Sustainability Policy. The Policy underlines the importance of compliance with obligations, an integrated
approach to sustainability, and a special focus on continuous improvements. The main environmental and social responsibility standards taken as the base for Ontex sustainability management
system are those set up by the International Organization for Standardization (ISO):
▪ ISO 14001 – Environmental Management System
▪ ISO 50001 – Energy Management System
▪ ISO 45001 – Occupational Health and Safety Management System
A number of other voluntary and obligatory requirements feed into this system, e.g., BSCI and SMETA social compliance schemes, legal and regulatory obligations, third-party certifications,
UN SDGs and other sustainability frameworks and standards.
A further integration within the company is achieved by aligning the sustainability management system with those for quality and information security. A cross-functional team ensures a single
coherent base for all the management standards Ontex has adopted. The foundations are set up at the Group level and cascaded to sites: a set-up allowing us to share the best practices and
reach the optimal synergy.
The pinnacle of the integrated annual management system is a management review done annually both at all Ontex sites and the Group. It serves as a point of reflection on performance results
of the past year (incl. analysis of complaints received) and underpins risks, opportunities and resources needed for further improvement.
6.3 Goals & performance
12 of our 18 Ontex manufacturing sites are certified to ISO 14001, 7 to ISO 50001 and 3 to ISO 45001, 14 audited against BSCI/SMETA. A sustainability management system is in place in all
sites irrespective of their certification status.
Compared to 2021, the certificates and audit reports for one site have been phased out due to closure of this production site. No environmental or energy accidents were reported in any Ontex
site in 2022.
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E8 ESG RATINGS
We aim to achieving strong ratings in sustainability indices. Positive ratings help us to create a long-term relationship with our stakeholders that is based on trust. In addition, these scorings
also impact our priorities, as it helps us to better understand our stakeholders’ key concerns.
Our main indices:
Ontex obtained an A score on the 2022 Climate Change questionnaire. Only 2.2% of
companies out of the nearly 15000 companies scored received an A.
We got a B score on the CDP Forest questionnaire. This is the same as the previous
year.
Ontex is rated C by ISS ESG, just below the prime score.
We have been awarded a gold medal in recognition of our sustainability achievement.
This is an improvement compared with the last assessment where we scored Bronze.
In 2022, we received a rating of AA (on a scale of AAA-CCC) in the MSCI ESG Ratings
assessment, same as last year.
We received a rating of 45/100 on Vigeo Eiris – Moody’s ESG index. This is the same
score as last year.
Ontex is rated “Medium ESG Risk” by Sustainalytics, same as last year.
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7. Social statements
7.1 CONSOLIDATION SOCIAL FIGURES
Unit
Notes
2020
2021
2022
WORKFORCE
S1
Ontex Employees
Total Number of Active Employees
FTE (Full-time equivalent)
9,807
9,039
8,824
Non-employees
Total Number of Non-employee workers
FTE (Full-time equivalent)
-
-
1,185
Employees in Management
Total Number of Active Employees in
Management
FTE (Full-time equivalent)
79
76
76
Employees by Category
Blue Collar
FTE (Full-time equivalent)
6,399
5,813
5,736
White Collar
FTE (Full-time equivalent)
3,329
3,150
3,088
Employees by Contract Type
Limited duration (temporary)
% of Employees
8
5
3
Unlimited duration (permanent)
% of Employees
92
95
97
Employees by Gender
Percentage of Men in Total Employees
% of Employees
69
71
70
Percentage of Female in Total Employees
% of Employees
31
29
30
Employees by Age
<30 years
% of Employees
23
20
19
30-50 years
% of Employees
61
62
62
>50 years
% of Employees
16
17
19
Inclusive Diversity
Percentage of Female Management
% of Employees
25
26
20
Percentage of persons with disabilities
% of Employees
2
1
2
Number of different Nationalities
Count of different Nationalities
74
75
78
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Ontex Integrated annual report 2022
Unit
Notes
2020
2021
2022
Hires & Dismissals
Total number of hires
FTE (Full-time equivalent)
1,902
1,505
2,063
Total number of hires temporary
FTE (Full-time equivalent)
NA
NA
234
Total number of hires permanent
FTE (Full-time equivalent)
NA
NA
1828
Total number of dismissals
FTE (Full-time equivalent)
1,668
2,134
1,662
Total number of dismissals temporary
FTE (Full-time equivalent)
NA
NA
317
Total number of dismissals permanent
FTE (Full-time equivalent)
NA
NA
1 345
Turnover rate
% of total number of dismissals permanent + special projects /
Total employees permanent
17
24
16
Absenteeism
Absenteeism rate
% of total of unplanned hours of absence / total amount of hours
available in 2022
4
4
3
SOCIAL DIALOGUE
Employees covered by collective bargaining
agreements
% of employees
62
61
57
Employees that are represented by a health &
safety committee
% of employees
87
85
90
TALENT DEVELOPMENT
S2
Percentage of employees trained
% of employees trained/total number of employees
80
83
83
Total number of training hours
Number of training hours
202,272
187,974
137,483
Average number of training hours per employee
Training hours/total number of employees
21
21
16
HEALTH & SAFETY
S3
Occupational accidents
Frequency rate
Ratio
5.45
2.96
3.78
Severity rate
Ratio
0.12
0.10
0.10
Fatal accidents
Number
0
0
0
LOCAL COMMUNITY INITIATIVES
S5
Donations
€
3,985,000
1,150,000
1,760,000
Table 2: Consolidated social figures
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S1 SCOPE OF SOCIAL STATEMENTS
Our Social statements allow Ontex to understand our workforce. We include data from all our locations (all the sites who were operational on the 31/12/2022) in the report.
In 2022 we started to report separately Employees and Non-employees.
1.1 Definitions
Ontex Employees. An employee is a person who has a valid employment contract with Ontex. We take into account only active employees as of 31/12/2022 for the FTE calculation.
Active Employee. An employee is considered active if a person has a valid employment contract with Ontex and regularly attends work. If an employee is away from work for a period shorter
than 2 months, this person is still considered active.
Non-employees. Workers who are not employees are those who perform work for the organization but are not in an employment relationship with the organization. Types of workers who are
not employees include agency workers, apprentices, contractors, home workers, interns, self-employed persons, sub-contractors, and volunteers.
FTE (Full-time equivalent). FTE refers to the total hours worked by a full-time employee on a regular basis. This concept is used for converting the work executed by part time employees as
compared to full time employees.
There are differences in calculating FTE for Ontex Employees (direct labor and indirect labor) and Non-Employees.
Indirect labor Ontex employees: The standardized figure is 1.0, which refers to a full-time worker. 0.5 refers to an employee that works half full-time hours.
Only active employees as of 31/12/2023 are taken into account for the calculation of the FTE. In example, an employee who worked until December 30th will be counted as 0 FTE in the Annual
Report, or an employee who returned to a full-time regime on December 31
st
will be counted as 1 FTE.
Direct labor and Non-Employees: If potential full time working hours of the month = 160 hours, the temps working 120 hours in that specific month will be counted as 120/160 = 0.75 FTE
Employees in Management, we consider everyone with the internal position levels of Band 1, Band 2 and the Executive Management Committee (jointly referred to as Banded) as Employees
in management. The position level is an internal classification, which allows us to weigh the relative contribution of every position in the company based on the description of the role and
responsibilities. There are 10 levels for non-banded roles, from Level J to Level A (Level A being the highest) and 4 for Banded, ranging from BAND 1 to BAND 4 (Band 4 being the highest).
Employees by category. White-collar workers are normally office workers while blue collars are employees working in our plants as part of the production, warehouse, and maintenance.
Inclusive diversity. We use a variety of metrics in the Inclusive diversity category to demonstrate different dimensions of diversity of our workforce. The metrics include the % of female in
management (see the definition of the Employees in management above), the % of people with disabilities in relation to the total workforce and the number of different nationalities
The turnover rate is calculated as the sum of permanent dismissals over the total number of permanent employees at the end of the period. Only Ontex permanent employees are taken into
account in the calculation of turnover (externals are to be excluded). For the calculation we include voluntary and involuntary dismissals for permanent employees.
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Absenteeism is the term generally used to refer to unscheduled employee absences from the workplace. Only active Ontex employees are taken into account in the calculation of absenteeism
(externals and employees on leave are to be excluded).
The absenteeism rate is calculated as the relation between unplanned absences and available hours.
Unplanned absences are the sum of all the hours of absence of active Ontex employees in a given period. Part-time absences (e.g., delays, leaving work earlier than the work shift), planned
absences (e.g., holidays, parental leave) and long-term absence are NOT to be included in the unplanned absences.
Available hours are the expected (theoretical) quantity of hours to be worked in the period excluding holidays and vacations.
1.2 Our approach or explanation figure(s)
Our data is consolidated based on the inputs from each location at Ontex. In this case all the Workforce Data are expressed in FTE’s as of 31/12/2022. The data in this table can vary from the
data mentioned in the statutory report due to different calculations methodologies.
After our Turnover Rate peaked in 2021 (mainly due to increased voluntary turnover driven by the market, uncertainty and some country-specific challenges), we now see a reverse trend and
a decrease of 8% compared with last year. We have changed the calculation during this year to be more accurate by including only permanent employees in the calculation. If we were to keep
the calculation method which we used in previous years the rate would have been 19%, which is still considerably lower than in 2021.
1.3 Performance 2022
In 2022 we put in place a number of measures to curb turnover and retain and motivate our employees. For example, we adjusted salary levels more frequently than usual in the countries
where inflation has had a significant impact on purchasing power of employees; introduced initiatives to better connect employees and top management cross-functionally and give them deeper
understanding of the company’s strategy and priorities (EMC field visits, virtual Leader Chats, Leadership breakfast meetings, "Beyond the Leader" stories on Ontex's intranet, etc.); put in place
targeted development and retention plans for high-potential and high-performing employees; adapted our performance management process to encourage more frequent feedback
conversations; promoted mental and physical wellbeing through #vitality@Ontex program (yoga-sessions, Ontex steps program, global walkathon, @lunch walks/runs instructional videos on
ergonomics, workshops for people mgrs. and employees on topics like resilience, protecting your energy, detecting burnout, etc.). In addition, various Ontex sites also organized local activities,
such as after work apero, team charity events, lunch and learn activities and piloted Eureka! – a peer-to-peer recognition program in Europe.
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S2 TALENT DEVELOPMENT
Within the Talent Development data, we try to measure and understand the impact of our training actions.
2.1 Definitions
Training. Any activity that results in the acquisition of knowledge, skills, and attitudes of an employee. This excludes sensibilization campaigns, or any activity that has as main purpose to
inform.
Percentage of employees trained. All employees that have completed at least 1 training. This allows us to understand the population reached by our initiatives.
Total number of training hours. Sum of training hours completed by all employees.
Average number of training hours per employee. Sum of training hours over the total number of employees. This metric allows us to understand the number of hours provided to each employee.
2.2 Approach
The purpose of Talent Development is to ensure that our employees are competent in executing their tasks to meet organizational, quality and business needs.
Like our Social Statements, the Talent Development data is consolidated based on the inputs from each location at Ontex. For 2022 we have excluded sensibilization campaigns from the
training definition, as we believe sensibilizations inform employees rather than train them. In the past, including in the corrected 2021 figures, our reported training hours did include sensibilization
hours. This is the main reason why we now report a decrease in the training hours and in the average number of training hours per employee in 2022.
2.3 Performance 2022
As mentioned, this year we have worked in a new definition of training to measure what we do to ensure that personnel is competent for executing their tasks to meet the organizational, quality
and business needs. This is the reason why we want only to measure how many training hours we provide for that.
S3 OCCUPATIONAL HEALTH & SAFETY
3.1 Definitions
Occupational safety is about preventing work-related injuries including all the preventive actions undertaken in order to protect and promote physical and psychological health at work, both
collectively and for each individual Ontex employee. Accidents are mostly linked to unsafe behaviors.
An occupational accident is defined as a work-related unexpected and undesirable event resulting in damage or harm, namely injury or illness. Accidents on the way to or from home are not
considered as work-related unless the worker was travelling for Ontex at the time of the accident.
All sites where Ontex has operational control are included in the scope of the occupational safety reporting. Contractors (including temporary workers) are excluded from the reporting. However,
any event that deals with safety is investigated within our plants, whether it involves Ontex personnel or contractors.
To measure the progress, we use two indicators: the accident frequency rate & severity rate.
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Accident frequency rate
The accident frequency rate expresses the number of labor accidents per million worked hours. We use the abbreviation ‘Fr’ for this indicator. Our ambition to have zero occupational accidents
is measured through this formula: number labor accidents x 1.000.000 / total worked hours.
Severity rate
This indicator expresses the number of total lost days per thousand worked hours. We use the abbreviation ‘Sr’ for this indicator which is measured through this formula: number lost calendar
days x 1.000 / total worked hours.
3.2 Challenges, risks & opportunities
Employee safety impacts the employees, their families and our operations. Employee wellbeing is key to both employee retention and recruitment.
We have identified five major operational risks:
▪ Fire: the business is classified as high fire risk and generally requires special authorizations and permits from the authorities that go into detail about the risk assessment in order to
verify whether all the countermeasures taken are effective and enable damage to people and assets to be limited should the event occur.
▪ Explosive atmosphere: due to the production process, explosion risk zones are generated due to the presence of dust in the confined environment. Inspection and maintenance of
critical areas (specifically on mills & filters).
▪ Noise: although the continuous upgrading of production lines allows constant attention to be paid to this risk, production lines produce noise due to the presence of mechanical
moving parts
▪ Manual Handling of Load and Ergonomics: continuous improvement of handling tools is in place and in addition end of line automation project is reducing the risk. Safety practices
are implemented in order to develop right behavior.
▪ Mechanical and cutting risks that could lead to an irreversible (life-altering) injury such as amputation of body parts.
▪ Analyzing the root cause of accident events, however, it must be underlined that many of the accidents are linked to unsafe behavior (non-compliance with procedures, non-use of
PPE, lack of H&S Leadership ...) which remains a priority for the Group.
3.3 Our approach
The safety of our people is a priority for Ontex, as specified in our Sustainability Strategy 2030. We aim for continuous improvement in occupational health and safety, with the ultimate goal of
zero occupational accidents.
As part of our ambition of zero accidents, we track all accidents & near misses. Main injuries are cut wounds, superficial injuries (e.g., bruises) and open wounds caused by use of manual tools
(e.g., drills, grinders,...). The worst-case injuries that could happen, if these are not managed well, are amputations of body parts, resulting from the fact that we're working with rotating elements
at our production lines.
Establishing and promoting a global safety culture is the most meaningful way to ensure health and safety for all our employees worldwide. Our efforts to create a safety culture where all
employees work together and care for one another are based on:
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▪ Increase H&S Leadership at all levels of the Organization and role modelling leading by example.
▪ Behaviors, including raising awareness that unsafe behavior is a risk and a Behavior Based Safety protocol.
▪ Conditions, including our change management procedure and ‘Log out Tag out Try out’ approach.
▪ Standards, enabling us to embed a solid Health & Safety Management System.
▪ Health & Safety employee qualification. Each employee, in relation to the job performed, has to be aware of the risks to which he/she is exposed, the procedures to be put in place in
order to reduce the risks and of the importance of using all the PPE.
▪ Risk assessment process, essential to understand and mitigate (potential) risks.
3.4 Goals & performance
Goals
Performance 2022
Zero occupational accidents (Fr)
3.78
Ontex has consistently prioritized occupational safety. This results in a reduction of our accident frequency rate by 30.60% compared with 2020. Despite this positive evolution over the years,
in 2022 we had a drop back in our accident frequency (+27.79% vs 2021). The latter was mainly due to a combined effect of an increase in the number of accidents and a decrease in total
hours worked. Despite the increase of accidents, the progressive reduction of Severity rate over the years has been stable.
Improvements in occupational health and safety indicators result from the safety culture approach implemented to protect everyone working at Ontex.
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S4 DIVERSITY – EQUITY - INCLUSION
4.1 Definitions
Ontex strives to create a world where everyone can embrace life’s many changes. To do this successfully, Ontex believes in building a culture where everyone is able to bring their best to
work, are treated fairly, feel included within the organization and also feel valued for their unique perspectives and contributions. Advancing diversity, equity & inclusion is a powerful source of
performance and innovation. As a personal hygiene company with a reach in 110 global markets, we also want to understand the unique challenges, needs and preferences of the people who
buy and use our products and services. This is why it is essential for us that our teams are as diverse as the markets and communities we serve.
Additionally, we have an earnest aspiration to make a positive contribution to the resolution of broader societal issues, such as gender inequality. Our commitment to Diversity, Equity and
Inclusion (DEI) is part of our DNA as reflected in our values, our policies (such as the Diversity Policy and Equal Opportunities Charter) and our actions. Our group’s DEI strategy, which was
launched in 2021, is centered around the three main pillars:
▪ Creating a culture of inclusion
▪ Advancing equity
▪ Gender parity
In addition, we will continue enabling our local entities to determine their most relevant DEI priorities and drive related initiatives specific to their needs, their markets and their communities.
4.2 Challenges, risks & opportunities
Women account for half of the global labor supply and about 70% of global consumption demand. Globally, only about half of working-age women are employed, and they earn only about
three-quarters of what men earn, even when they have the same level of education and are in the same occupation. On its current trajectory, it will now take 135.6 years to close the gender
gap worldwide. Various research proves that gender diverse teams achieve better financial and business outcomes
14
. Additionally, research shows that while diverse teams do indeed outperform
and out-innovate homogenous teams, if diversity is not handled properly, they can also be significantly less effective. Inclusion & equity in the workplace is what makes diversity work.
15
4.3 Our approach
In 2022 we continued to lay the foundations to enable successful execution of DEI initiatives across the Group. In the beginning of the year, we developed governance for DEI and appointed
two Executive Sponsors, Pascal Nizette, Senior Vice President Emerging Markets, and Annick De Poorter, Executive Vice President R&D and Sustainability, whose role is to advocate for DEI
internally and externally and ensure the right support and resources for the DEI initiatives. We also created a DEI Council – a group of 15 Ontex employees diverse by gender, cultural
background, age, work location, job function and position level, which serves as the advisory and recommending body to the Executive Management Committee on DEI initiatives and priorities
and leads specific initiatives at the group level. Most recently we also appointed DEI Champions in every major Ontex location. Their role is to ensure local implementation of the group-wide
initiatives and determine local focus areas and actions.
We also begun sharing our vision for DEI with all Ontex employees during Staff Update calls and organized a more in-depth and intimate panel discussion with the then-CEO Esther Berrozpe
and both Executive Sponsors for the company’s management during the Extended Leadership Team meeting in October.
14
Source: https://www.weforum.org/reports/global-gender-gap-report-2021
15
Source: https://www.kornferry.com/insights/featured-topics/diversity-equity-inclusion/the-importance-of-inclusion-in-the-workplace
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Additionally, we worked to make ontex.com website more accessible for people with dyslexia and visual impairments, including better contrast and additional special features.
4.4 Our performance
Our locations continued to implement actions that correspond to the needs and realities of their communities. For example, our plant in Buggenhout, Belgium focused on optimizing the
employment plan for older workers (45+). They organized information sessions for older workers as well as training sessions for people leaders to support them in conducting conversations
about workable work (an environment where everyone can flourish from start to pension).
In Istanbul, Turkey the local team concentrated on providing more flexibility to employees in terms of time and space. For example, the company granted bridge holidays to connect public
holidays with weekends to allow employees to take longer weekends. Besides that, all employees were given a day off on their birthdays and working parents could take a day off at the start
of the school year. Additionally, everyone working in or visiting the office building could take advantage of a praying and lactation rooms and in the plant, modifications were made to the
parking lot and the entrance ramp to ease the access to premises for employees with disabilities.
The team in Italy organized several dedicated trainings for employees to raise awareness about gender equality issues. As an example, one of these trainings addressed the use of written or
spoken language inspired by respect and kindness toward women. Practices like this and the hard work of the local team allowed them to obtain an important Gender Equality Certification
according to UNI PdR 125:2022.
The team in Segovia, Spain focused on advancing gender equality and providing more flexibility to working parents. For example, to fulfill our commitment to promote women into positions
which are historically male dominated, our colleagues in Spain signed an agreement with the vocational training institutes of Segovia and Ávila to advertise these professions among women.
In addition, parents of young children were given 15 days of lactation leave – one day extra to the legal minimum and a possibility to work 50% without the impact on pay for the first fifteen
days of the period of adaptation to the nursery. And to support pregnant women Ontex Spain now offers a possibility to take fully paid maternity leave as of the 20th week of their pregnancy
for plant-based employees and as of the 7th month for office-based employees.
With people of 20 different nationalities working side by side in one building, Paris, France is one of the most culturally diverse locations at Ontex. To celebrate their international cultures the
team organized a Potluck event whereby every employee brought an edible specialty of the country or area where they come from to share with colleagues.
Turnov, Czech Republic, has been employing workers coming from Ukraine for years, but because of the war the number of Ukrainians applying for our jobs has significantly increased last
year. In order to support and integrate the newcomers the team in Turnov took a number of actions, among which dedicating an info board to information for Ukrainian colleagues regarding
the visa process, possibilities of accommodation, assistance center etc. They have also dedicated 9 experienced people managers from production and all HR employees to be the contact
points for the employees from Ukraine in case they have questions, need help or just would like to have a listening ear. As an example of such help, they lent a company van to one of the
operators so that he could pick up his family from the border with Ukraine and bring them to Czech Republic.
Ontex Brazil have been making strides reflecting on the benefits of diversity, equity and inclusion in the workplace by holding regular meetings to share examples, discuss and deep dive into
this topic. During their recent meeting across different functions, they reflected on the benefits of diversity in the work environment, the differences between equity and equality, and the role of
social inclusion as an instrument to make the company more diverse, inclusive and fair. The input received allowed the team to gauge employees' expectations in this area and became the
basis of the strategic plan that the local leadership committed to execute.
These and many other efforts resulted in an increase in diverse representation in some areas, for example, we expanded the variety of nationalities employed by Ontex and restored the
employment of people with disabilities to the level of 2020. However, we still have work to do in some other areas. For example, regretfully, we have seen a decrease in the number of women
in management. However, as achieving gender parity in leadership remains an important priority for us, we are confident that we will be able to restore and further grow the share of women
in leadership roles in the future.
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S5 LOCAL COMMUNITY INITIATIVES
5.1 Definitions
Local societal actions are referring to volunteer activities developed by a site or at the corporate level and/or monetary or product donations. These actions or donations have a positive societal
impact on at least one of the United Nations Sustainable Development Goals.
5.2 Our approach
We want to give something back to the community in which we operate as part of our way of doing business. The projects or organizations we support focus on social and/or environmental
issues. Social issues are related to children, women, elderly, and victims of emergencies such as the war in Ukraine. The prioritized environmental issues are related to the protection of natural
resources, climate change and education in these areas.
As a matter of policy, Ontex does not make donations to political parties or organizations.
5.3 Our performance
In 2022, we donated over 1.78 million products to vulnerable groups in 12 countries. Examples include the food bank in Puebla, Mexico, organizations that support Ukrainian refugees, the
Belgian Red Cross, the LEAD charity for girls in North Carolina and premature diapers for a hospital in Karachi, Pakistan. Handover pictures of several 2022 donations can be found at
https://ontex.com/sustainability/building-trust/ontex-donations-and-donation-policy/
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8. EU Taxonomy reporting
CORE BUSINESS ACTIVITIES – TAXONOMY -NON-ELIGIBLE
The Taxonomy Regulation is a key component of the European Commission's action plan to redirect capital flows towards a more sustainable economy. It represents an important step towards
achieving carbon neutrality by 2050 in line with EU goals as the Taxonomy is a classification system for environmentally sustainable economic activities.
Article 8(2) of Regulation (EU) 2020/852 requires non-financial undertakings to disclose information on the key performance indicators (KPIs) related to the proportion in their turnover of
environmentally sustainable economic activities (‘Taxonomy-aligned activities’), and the proportion of their capital expenditure (‘CapEx’) and their operating expenditure (‘OpEx’) related to
assets or processes associated with environmentally sustainable economic activities.
As indicated in the Delegated Regulation of (EU) 2021/2178, non-financial undertakings shall disclose the proportion of Taxonomy-eligible and alignment of economic activities in their total
turnover, capital and operational expenditure and the qualitative information for reporting year 2022, including comparative figures for eligibility
We have examined the Taxonomy-eligible economic activities applying the NACE codes on our activities as a producer for personal hygiene products for the reporting period 2022.
We concluded that our economic activities and hence the products we offer are not Taxonomy-eligible.
ACCOUNTING POLICIES
We determine the Taxonomy-eligible KPIs in accordance with the legal requirements and describe our accounting policy in this regard as follows:
Turnover KPI - Definition
The proportion of Taxonomy-eligible economic activities in our total turnover (i.e. consolidated revenue as presented in the consolidated income statement of the Group) has been calculated
as the part of the revenue derived from products and services associated with Taxonomy-eligible economic activities (numerator) divided by the consolidated revenue (denominator). The
denominator of the turnover KPI is based on our consolidated revenue in accordance with IAS 1.82(a). For further details on our accounting policies regarding our consolidated revenue, see
paragraph 7.1.12 of the consolidated financial statements 2022.
With regard to the numerator, we have not identified any Taxonomy-eligible activities as explained above.
Reconciliation
Our consolidated revenue can be reconciled to our consolidated financial statements, i.e. the consolidated income statement in the consolidated financial statements 2022.
Capex KPI - Definition
The Capex KPI is defined as Taxonomy-eligible Capital Expenditures (‘Capex’) (numerator) divided by our total Capex (denominator). With regard to the numerator, we refer to our explanations
below.
Total Capex is defined as purchases of property, plant and equipment (IAS 16) and intangible assets (IAS 38) during the financial year. For further details on our accounting policies regarding
our Capex, see paragraphs 7.1.6 and 7.1.7 of the consolidated financial statements 2022.
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Our total Capex can be reconciled to the line item “Purchases of property, plant and equipment and intangible assets” in the consolidated statement of cash flows.
Opex KPI
The Opex KPI is defined as Taxonomy-eligible Operating Expenditure (‘Opex’) (numerator) divided by our total Opex (denominator). With regard to the numerator, we refer to our explanations
below.
Total Opex consists of direct non-capitalised expenses incurred to meet the ongoing operational costs of running a business. This includes, among others, expenses relating to non-capitalised
research and development, short-term and low-value leases, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of fixed assets (i.e. property, plant
and equipment and intangible assets).
Direct costs for training and other human resources adaptation needs are excluded from the denominator and the numerator. This is because Annex I to Art. 8 Delegated Act lists these costs
only for the numerator which does not allow a mathematically meaningful calculation of the Opex KPI.
Explanation on the numerator of the Capex KPI and the Opex KPI
As Ontex has not identified Taxonomy-eligible economic activities, we do not record Capex/Opex related to assets or processes that are associated with Taxonomy-eligible economic activities
in the numerator of the Capex KPI and the Opex KPI.
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Table proportion of Taxonomy-eligible economic activities in total turnover (%)
Substantial contribution criteria
DNSH criteria ('Does not
significantly harm')
Economic Activities (1)
Code(s) (2)
Absolute turnover (3)
Proportion of turnover (4)
Climate change mitigation (5)
Climate change adaptation (6)
Water and marine resources (7)
Circular economy (8)
Pollution (9)
Biodiversity and ecosystems (10)
Climate change mitigation (11)
Climate change adaptation (12)
Water and marine resources (13)
Circular economy (14)
Pollution (15)
Biodiversity and ecosystems (16)
Minimum safeguards (17)
Taxonomy-
aligned
proportion
of
turnover,
year 2022
(18)
Taxonomy-
aligned
proportion
of
turnover,
year 2021
(19)
Category
(enabling
activity
or) (20)
Category
(transitional
activity
(21))**
Mio€
%
%
%
%
%
%
%
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Y/N
Percent
Percent
E
T
A. TAXONOMY-ELIGIBLE
ACTIVITIES
A.1. Environmentally
sustainable activities
(Taxonomy-aligned)
Turnover of environmentally
sustainable activities
(Taxonomy-aligned) (A.1)
-
0%
A.2. Taxonomy-eligible but
not environmentally
sustainable activities (not
Taxonomy-aligned
activities)
Turnover of taxonomy-
eligible but not
environmentally sustainable
activities (not Taxonomy-
aligned activities) (A.2)
-
0%
Total (A.1 + A.2)
-
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
Turnover of Taxonomy-
non-eligible activities (B)
2,464.5 m€
100%
Total (A+B)
2,464.5 m€
100%
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Ontex Integrated annual report 2022
Table proportion of CapEx from products or services associated with Taxonomy-aligned economic activities in 2022
Substantial contribution criteria
DNSH criteria ('Does not
significantly harm')
Economic Activities (1)
Code(s) (2)
Absolute CapEx (3)
Proportion of CapEx (4)
Climate change mitigation (5)
Climate change adaptation (6)
Water and marine resources (7)
Circular economy (8)
Pollution (9)
Biodiversity and ecosystems (10)
Climate change mitigation (11)
Climate change adaptation (12)
Water and marine resources (13)
Circular economy (14)
Pollution (15)
Biodiversity and ecosystems (16)
Minimum safeguards (17)
Taxonom
y-aligned
proportio
n of
CapEx,
year N
(18)
Taxonomy-
aligned
proportion
of CapEx,
year N-1
(19)
Category
(enabling
activity
or) (20)
Category
(transitiona
l activity
(21))
mio€
%
%
%
%
%
%
%
Y/
N
Y/
N
Y/
N
Y/
N
Y/
N
Y/
N
Y/
N
Percent
Percent
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
%
A.1. Environmentally sustainable
activities (Taxonomy-aligned)
CapEx of environmentally
sustainable activities (Taxonomy-
aligned) (A.1)
-
0%
A.2. Taxonomy-eligible but not
environmentally sustainable
activities (not Taxonomy-aligned
activities)
CapEx of taxonomy-eligible but not
environmentally sustainable
activities (not Taxonomy-aligned
activities) (A.2)
-
0%
Total (A.1 + A.2)
-
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
CapEx of Taxonomy-non-eligible
activities (B)
62.4
m€
100
%
Total (A+B)
62.4
m€
100
%
233
Ontex Integrated annual report 2022
Table proportion of OpEx from products or services associated with Taxonomy-aligned economic activities
Substantial contribution criteria
DNSH criteria ('Does not
significantly harm')
Economic Activities (1)
Code(s) (2)
Absolute OpEx (3)
Proportion of OpEx (4)
Climate change mitigation (5)
Climate change adaptation (6)
Water and marine resources (7)
Circular economy (8)
Pollution (9)
Biodiversity and ecosystems (10)
Climate change mitigation (11)
Climate change adaptation (12)
Water and marine resources (13)
Circular economy (14)
Pollution (15)
Biodiversity and ecosystems (16)
Minimum safeguards (17)
Taxonomy
-aligned
proportion
of OpEx,
year N (18)
Taxonomy
-aligned
proportion
of OpEx,
year N-1
(19)
Category
(enablin
g activity
or) (20)
Category
(transitiona
l activity
(21))
Mio€
%
%
%
%
%
%
%
Y/
N
Y/
N
Y/
N
Y/
N
Y/
N
Y/
N
Y/
N
Percent
Percent
E
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable
activities (Taxonomy-aligned)
OpEx of environmentally
sustainable activities (Taxonomy-
aligned) (A.1)
-
0%
A.2. Taxonomy-eligible but not
environmentally sustainable
activities (not Taxonomy-aligned
activities)
OpEx of taxonomy-eligible but not
environmentally sustainable
activities (not Taxonomy-aligned
activities) (A.2)
-
0%
Total (A.1 + A.2)
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
B. TAXONOMY NON-ELIGIBLE ACTIVITIES
OpEx of Taxonomy-non-eligible
activities (B)
121,9 m€
100
%
Total (A+B)
121,9 m€
100
%
234
Ontex Integrated annual report 2022
9. Independent limited assurance report on a selection of sustainability KPI’s in the Integrated annual report 2022
of Ontex Group NV
To the Board of Directors of Ontex Group NV
This report has been prepared in accordance with the terms of our engagement contract dated 12 January 2023 (the “Agreement”), whereby we have been engaged to issue an independent
limited assurance report in connection with a selection of sustainability KPIs included in the Integrated Annual Report as of and for the year ended 31 December 2022 of Ontex Group NV (the
“Report”), as listed in the Appendix of this assurance report.
THE DIRECTORS’ RESPONSIBILITY
The Directors of Ontex Group NV (“the Company”) are responsible for the preparation and presentation of the selection of sustainability KPIs for the year 2022 included in the Report, as listed
in the Appendix of this assurance report (the “Subject Matter Information”), in accordance with the criteria disclosed in the Report (the “Criteria”).
This responsibility includes the selection and application of appropriate methods for the preparation of the Subject Matter Information, for ensuring the reliability of the underlying information
and for the use of assumptions and estimates for individual sustainability disclosures which are reasonable in the circumstances. Furthermore, the responsibility of the Directors includes the
design, implementation and maintenance of systems and processes relevant for the preparation of the Subject Matter Information that is free from material misstatement, whether due to fraud
or error.
AUDITOR’S RESPONSIBILITY
Our responsibility is to express an independent conclusion about the Subject Matter Information based on the procedures we have performed and the evidence we have obtained.
We conducted our work in accordance with the International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial
Information” (ISAE 3000), issued by the International Auditing and Assurance Standards Board. This standard requires that we comply with ethical requirements and that we plan and perform
the engagement to obtain limited assurance as to whether any matters have come to our attention that cause us to believe that the Subject Matter Information has not been prepared, in all
material respects, in accordance with the Criteria.
The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of
assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable engagement been performed. The selection
of such procedures depends on our professional judgement, including the assessment of the risks of material misstatement of the Subject Matter Information in accordance with the Criteria.
235
Ontex Integrated annual report 2022
The scope of our work comprised the following procedures:
▪ assessing and testing the design and functioning of the systems and processes used for data-gathering, collation, consolidation and validation, including the methods used for
calculating and estimating the Subject Matter Information as of and for the year ended 31 December 2022 presented in the Report;
▪ conducting interviews with responsible officers;
▪ reviewing, on a limited test basis, relevant internal and external documentation;
▪ performing an analytical review of the data and trends in the information submitted for consolidation;
▪ considering the disclosure and presentation of the Subject Matter Information.
The scope of our work is limited to assurance over the Subject Matter Information. Our assurance does not extend to information in respect of earlier periods or to any other information included
in the Report.
OUR INDEPENDENCE AND QUALITY CONTROL
We have complied with the independence and other ethical requirements in respect of auditor independence, particularly in accordance with the rules set down in articles 12, 13, 14, 16, 20, 28
and 29 of the Belgian Act of 7 December 2016 organizing the audit profession and its public oversight of registered auditors, and with the independence and other ethical requirements of the
Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional
competence and due care, confidentiality and professional behaviour.
Our firm applies International Standard on Quality Management n°1, Quality Management for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance Related
Services Engagements], and accordingly, maintains a comprehensive system of quality management including documented policies and procedures regarding compliance with ethical
requirements, professional standards and applicable legal and regulatory requirements.
OUR CONCLUSION
Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Subject Matter Information within your
Integrated Annual Report as of and for the year ended 31 December 2022 has not been prepared, in all material respects, in accordance with the Criteria.
OTHER ESG RELATED INFORMATION
The other information comprises all of the ESG related information in the Report other than the Subject Matter Information and our assurance report. The directors are responsible for the other
ESG related information. As explained above, our assurance conclusion does not extend to the other ESG related information and, accordingly, we do not express any form of assurance
thereon. In connection with our assurance of the Subject Matter Information, our responsibility is to read the other ESG related information and, in doing so, consider whether the other ESG
related information is materially inconsistent with the Subject Matter Information or our knowledge obtained during the assurance engagement, or otherwise appears to contain a material
misstatement of fact. If we identify an apparent material inconsistency or material misstatement of fact, we are required to perform procedures to conclude whether there is a material
misstatement of the Subject Matter Information or a material misstatement of the other information, and to take appropriate actions in the circumstances.
236
Ontex Integrated annual report 2022
OTHER MATTER - RESTRICTION ON USE AND DISTRIBUTION OF OUR REPORT
Our report is intended solely for the use of the Company, to whom it is addressed, in connection with their Report as of and for the year ended 31 December 2022 and should not be used for
any other purpose. We do not accept or assume and deny any liability or duty of care to any other party to whom this report may be shown or into whose hands it may come.
Diegem, 31 March 2023
PwC Bedrijfsrevisoren BV/Reviseurs d'Entreprises SRL
represented by
Marc Daelman
16
Registered auditor
16
Marc Daelman BV, member of the Board of Directors, represented by its permanent representative Marc Daelman
237
Ontex Integrated annual report 2022
APPENDIX – SUBJECT MATTER INFORMATION
In the “Sustainability/ Non-financial statements” chapter “6.1 Consolidation environmental figures”:
▪ On page 201:
‐ total scope 1 & 2 emissions market-based [tons CO2-equivalent]
‐ total scope 1 & 2 emissions location-based [tons CO2-equivalent]
‐ total greenhouse gas emissions in scope 3 [tons CO2-equivalent]
▪ On page 203:
‐ total production waste [ton]
‐ recycling index [%]
‐ Waste diverted from disposal [ton]
‐ Waste directed to disposal [ton]
238
Ontex Integrated annual report 2022
10. GRI content index
Statement of use
Ontex has reported in accordance with the GRI Standards for the period 1 January 2022 – 31 December 2022.
GRI 1 used
GRI 1: Foundation 2021
Applicable GRI Sector Standard(s)
None
GRI Standard/
other source
Disclosure
Location
Omission
Require-
ment(s)
omitted
Reason
Explanation
GENERAL DISCLOSURES
GRI 2: General
Disclosures 2021
2-1 Organizational details
Strategic report ‘About us’
2-2 Entities included in the organization’s sustainability
reporting
Sustainability statements 1.3 Reporting scope & boundaries
2-3 Reporting period, frequency and contact point
Sustainability statements 1.2 Reporting period, frequency & contact point
2-4 Restatements of information
Sustainability statements 1.3 Reporting scope & boundaries
2-5 External assurance
Sustainability statements 1.4 External assurance &
9. Independent Limited Assurance Report
2-6 Activities, value chain and other business
relationships
Strategic report ‘About us’
Sustainability statements 4. Our value chain
2-7 Employees
Sustainability statements 7. Social statements
2-8 Workers who are not employees
Sustainability statements 7. Social statements
2-9 Governance structure and composition
Corporate Governance Statement (under “Board and Executive Management”)
2-10 Nomination and selection of the highest
governance body
Corporate Governance Charter (link).
2-11 Chair of the highest governance body
Corporate Governance Statement (under “Board Composition”)
2-12 Role of the highest governance body in
overseeing the management of impacts
Sustainability statements 2.2 Organization
2-13 Delegation of responsibility for managing impacts
Corporate Governance Charter (link) (section 6.4 (Relationship with the Board
of Directors).
2-14 Role of the highest governance body in
sustainability reporting
Sustainability statements 2.2 Organization
2-15 Conflicts of interest
Corporate Governance Statement (under “Conflicts of interest”)
Corporate Governance Charter (link) (section 4.6.2 (Conflicts of interest)).
2-16 Communication of critical concerns
[Sustainability statements 2.3.2 Grievance mechanisms
2-17 Collective knowledge of the highest governance
body
Corporate Governance Statement (under “Competency matrix”)
2-18 Evaluation of the performance of the highest
governance body
Corporate Governance Statement (under “Board review and assessments”)
and Remuneration Report
239
Ontex Integrated annual report 2022
GRI Standard/
other source
Disclosure
Location
Omission
Require-
ment(s)
omitted
Reason
Explanation
GENERAL DISCLOSURES
GRI 2: General
Disclosures 2021
2-19 Remuneration policies
Remuneration policy (link)
2-20 Process to determine remuneration
Remuneration policy (link)
2-21 Annual total compensation ratio
Remuneration report 9.4 Remuneration & performance evolution
2-22 Statement on sustainable development strategy
Sustainability statements 2.1 Ontex sustainability strategy 2030
2-23 Policy commitments
Sustainability statements 2.3.1 Commitments & policies
2-24 Embedding policy commitments
Sustainability statements 2.3.1 Commitments & policies
2-25 Processes to remediate negative impacts
Sustainability statements 2.3.2 Grievance mechanisms
2-26 Mechanisms for seeking advice and raising
concerns
Sustainability statements 2.3.2 Grievance mechanisms
2-27 Compliance with laws and regulations
Financial statements 7.21 Provisions & 7.29 Contingencies
2-28 Membership associations
Sustainability statements 1.7 Memberships & associations
2-29 Approach to stakeholder engagement
Sustainability statements 1.6 Stakeholder engagement
2-30 Collective bargaining agreements
Sustainability statements 7. Social statements
MATERIAL TOPICS
GRI 3: Material
Topics 2021
3-1 Process to determine material topics
Sustainability statements 1.5 Materiality analysis
3-2 List of material topics
Sustainability statements 1.5.2 Our material topics
INDIRECT ECONOMIC IMPACTS
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements S5 Local community initiatives
GRI 203: Indirect
Economic
Impacts 2016
203-1 Infrastructure investments and services
supported
Sustainability statements 7. Social statements & S5 Local community
initiatives
203-2 Significant indirect economic impacts
Sustainability statements 7. Social statements & S5 Local community
initiatives
ANTI-CORRUPTION
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements 2.3.1 Commitments & policies
GRI 205: Anti-
corruption 2016
205-1 Operations assessed for risks related to
corruption
205-1 & 205-3
Information
unavailable/
incomplete
205-2 Communication and training about anti-corruption
policies and procedures
Sustainability statements 2.3.1 Commitments & policies
205-3 Confirmed incidents of corruption and actions
taken
-
240
Ontex Integrated annual report 2022
GRI Standard/
other source
Disclosure
Location
Omission
Require-
ment(s)
omitted
Reason
Explanation
ANTI-COMPETITIVE BEHAVIOR
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements 2.3.1 Commitments & policies
GRI 206: Anti-
competitive
Behavior 2016
206-1 Legal actions for anti-competitive behavior, anti-
trust, and monopoly practices
Financial statements 7.21 Provisions
MATERIALS
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements E3 Circular solutions
GRI 301:
Materials 2016
301-1 Materials used by weight or volume
Sustainability statements 6.1 Consolidation environmental statements
301-2 Recycled input materials used
Sustainability statements 6.1 Consolidation environmental statements
301-3 Reclaimed products and their packaging
materials
-
301-3
Not
applicable
due to nature
of the
products.
ENERGY
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements E2 Climate data 2.3 Our approach
GRI 302: Energy
2016
302-1 Energy consumption within the organization
Sustainability statements 6.1 Consolidation environmental statements
302-2 Energy consumption outside of the organization
Sustainability statements 6.1 Consolidation environmental statements
302-3 Energy intensity
Sustainability statements 6.1 Consolidation environmental statements
302-4 Reduction of energy consumption
Sustainability statements 6.1 Consolidation environmental statements
302-5 Reductions in energy requirements of products
and services
Sustainability statements 6.1 Consolidation environmental statements
241
Ontex Integrated annual report 2022
GRI Standard/
other source
Disclosure
Location
Omission
Require-
ment(s)
omitted
Reason
Explanation
EMISSIONS
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements E2 Climate data 2.3 Our approach
GRI 305:
Emissions 2016
305-1 Direct (Scope 1) GHG emissions
Sustainability statements 6.1 Consolidation environmental statements
305-2 Energy indirect (Scope 2) GHG emissions
Sustainability statements 6.1 Consolidation environmental statements
305-3 Other indirect (Scope 3) GHG emissions
Sustainability statements 6.1 Consolidation environmental statements
305-4 GHG emissions intensity
Sustainability statements 6.1 Consolidation environmental statements
305-5 Reduction of GHG emissions
Sustainability statements 6.1 Consolidation environmental statements
305-6 Emissions of ozone-depleting substances (ODS)
-
305-6
Information
unavailable/
incomplete
305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and
other significant air emissions
-
305-7
Information
unavailable/
incomplete
WASTE
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements E4 Production waste 4.2 Our approach
GRI 306: Waste
2020
306-1 Waste generation and significant waste-related
impacts
Sustainability statements 6.1 Consolidation environmental statements
306-2 Management of significant waste-related impacts
Sustainability statements 6.1 Consolidation environmental statements
306-3 Waste generated
Sustainability statements 6.1 Consolidation environmental statements
306-4 Waste diverted from disposal
Sustainability statements 6.1 Consolidation environmental statements
306-5 Waste directed to disposal
Sustainability statements 6.1 Consolidation environmental statements
SUPPLIER ENVIRONMENTAL ASSESSMENT
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements 5. How we work with our suppliers
GRI 308: Supplier
Environmental
Assessment 2016
308-1 New suppliers that were screened using
environmental criteria
Sustainability statements 5. How we work with our suppliers & 5.3 Goals &
performance
308-2 Negative environmental impacts in the supply
chain and actions taken
Sustainability statements 5. How we work with our suppliers & 5.3 Goals &
performance
242
Ontex Integrated annual report 2022
GRI Standard/
other source
Disclosure
Location
Omission
Require-
ment(s)
omitted
Reason
Explanation
EMPLOYMENT
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements S1 Social statements 1.2 Our approach
GRI 401:
Employment 2016
401-1 New employee hires and employee turnover
Sustainability statements 7. Social statements 7.1 Consolidation social
statements
401-2 Benefits provided to full-time employees that are
not provided to temporary or part-time employees
-
401-2
Information
unavailable/
incomplete
401-3 Parental leave
-
Information
unavailable/
incomplete
OCCUPATIONAL HEALTH AND SAFETY
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements S3 Occupational Health & Safety 3.3 Our approach
GRI 403:
Occupational
Health and Safety
2018
403-1 Occupational health and safety management
system
Sustainability statements E7 Managements systems & 3.3 Our approach
403-2 Hazard identification, risk assessment, and
incident investigation
Sustainability statements 3.2 Challenges, risks & opportunities & 3.3 Our
approach
403-3 Occupational health services
-
403-3
Information
unavailable/
incomplete
403-4 Worker participation, consultation, and
communication on occupational health and safety
Sustainability statements 7.1 Consolidation social statements
403-5 Worker training on occupational health and
safety
-
403-5
Information
unavailable/
incomplete
403-6 Promotion of worker health
-
403-6
Information
unavailable/
incomplete
403-7 Prevention and mitigation of occupational health
and safety impacts directly linked by business
relationships
Sustainability statements 3.2 Challenges, risks & opportunities & 3.3 Our
approach
403-8 Workers covered by an occupational health and
safety management system
Sustainability statements E7 Managements systems & 7.1 Consolidation
social statements
403-9 Work-related injuries
Sustainability statements 7.1 Consolidation social statements & 3.3 Our
approach
403-10 Work-related ill health
-
403-10
Information
unavailable/
incomplete
243
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GRI Standard/
other source
Disclosure
Location
Omission
Require-
ment(s)
omitted
Reason
Explanation
TRAINING AND EDUCATION
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements S2 Talent development & 2.2 Approach
GRI 404: Training
and Education
2016
404-1 Average hours of training per year per employee
Sustainability statements 7.1 Consolidation social statements
404-2 Programs for upgrading employee skills and
transition assistance programs
-
404-2
Information
unavailable/
incomplete
404-3 Percentage of employees receiving regular
performance and career development reviews
Sustainability statements 7.1 Consolidation social statements & 2.2 Approach
DIVERSITY AND EQUAL OPPORTUNITY
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements S4 Diversity – equity – inclusion 4.3 Our approach
GRI 405:
Diversity and
Equal
Opportunity 2016
405-1 Diversity of governance bodies and employees
Sustainability statements 7.1 Consolidation social statements
Corporate governance statements 1. Board and Executive Management –
Competency matrix
405-2 Ratio of basic salary and remuneration of women
to men
-
Information
unavailable/
incomplete
SUPPLIER SOCIAL ASSESSMENT
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements 5. How we work with our suppliers
GRI 414: Supplier
Social
Assessment 2016
414-1 New suppliers that were screened using social
criteria
Sustainability statements 5. How we work with our suppliers & 5.3 Goals &
performance
414-2 Negative social impacts in the supply chain and
actions taken
Sustainability statements 5. How we work with our suppliers & 5.3 Goals &
performance
CUSTOMER HEALTH AND SAFETY
GRI 3: Material
Topics 2021
3-3 Management of material topics
Sustainability statements 3. Product safety
GRI 416:
Customer Health
and Safety 2016
416-1 Assessment of the health and safety impacts of
product and service categories
Sustainability statements 3. Product safety
416-2 Incidents of non-compliance concerning the
health and safety impacts of products and services
Sustainability statements 3. Product safety
244
Ontex Integrated annual report 2022
Investor relations and
financial communications
OUR AIM IS TO PROVIDE RELIABLE, CONSISTENT INFORMATION ON A TIMELY BASIS ABOUT THE STRATEGY, GOALS AND PROGRESS OF ONTEX TO ALL
FINANCIAL MARKET PARTICIPANTS. SINCE OUR IPO IN JUNE 2014, WE ARE CONTINUOUSLY BUILDING OUR INVESTOR RELATIONS PROGRAM.
SHAREHOLDER STRUCTURE
The shareholder structure of the Company on December 31, 2022,
1
was, based on the transparency declarations received by the Company, as follows:
Shareholders
Shares
%
2
Date threshold crossed
Groupe Bruxelles Lambert SA
16,454,453
19.98%
April 20, 2021
ENA Investment Capital
12,411,999
15.07%
April 29, 2020
Guangchang Guo and Fosun
International Holdings Ltd.
3,200,373
3.89%
December 31, 2022
The Pamajugo Irrevocable Trust
2,722,221
3.64%
February 29, 2016
Veraison SICAV – Engagement Fund
2,497,800
3.03%
July 20, 2021
1
Updates subsequent to December 31, 2020 are described on our website (https://ontex.com/investors/leadership/).
245
Ontex Integrated annual report 2022
SHARE PERFORMANCE
Our share is listed on Euronext Brussels. Performance of the Ontex share compared with market indices and hygienic disposable manufacturers:
0%
20%
40%
60%
80%
100%
120%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Share price performance in 2022 vs peers & indices
(indexed at 100% in euro)
Ontex
-10.7%
Essity
-14.6%
P&G
-1.6%
Kimberly Clark
+0.9%
STOXX PHG
-12.9%
BEL 20
-14.1%
246
Ontex Integrated annual report 2022
FINANCIAL CALENDAR 2023-2024
Financial Calendar 2022
Date
Q1 2023
May 4, 2023
Annual General Meeting of Shareholders
May 5, 2023
Q2 & H1 2023
July 28, 2023
Q3 2023
October 27, 2023
Q4 & FY 2023
February 28, 2024
247
Ontex Integrated annual report 2022
Glossary
Description
Adjusted Profit
(or Adjusted Basic
Earnings)
Adjusted Profit is defined as profit for the period including EBITDA adjustments and the tax effect of these adjustments, attributable to the owners of the
parent. A
Adjusted Basic Earnings
per share
Adjusted Basic Earnings per share are defined as Adjusted Basic Earnings divided by the weighted average number of ordinary shares.
Adjusted EBITDA
Adjusted EBITDA is defined as EBITDA plus EBITDA adjustments.
Adjusted EBITDA margin
Adjusted EBITDA margin is adjusted EBITDA divided by revenue.
Free Cash Flow
Free cash flow is defined as net cash generated from operating activities (as presented in the consolidated cash flow statement, i.e. including income taxes
paid) less capital expenditures (Capex, defined as purchases of property, plant and equipment and intangible assets), less repayment of lease liabilities and
including cash (used in)/from disposal.
EBITDA
EBITDA is defined as earnings before net finance cost, income taxes, depreciations and amortizations.
Like-for-like (LFL)
revenue
Like-for-like revenue is defined as revenue at constant currency excluding change in scope of consolidation or M&A and
hyperinflation impacts.
LTM adjusted EBITDA
LTM adjusted EBITDA is defined as adjusted EBITDA generated in the last twelve months (LTM). For the period ending on December 31, this corresponds to
the adjusted EBITDA of the year.
Net Financial Debt
Net financial debt is calculated by adding short-term and long-term debt and deducting cash and cash equivalents.
Net financial debt/LTM
adjusted EBITDA ratio
(leverage)
Net financial debt divided by Adjusted EBITDA for the last twelve months (LTM).
EBITDA adjustments
EBITDA adjustments are made for Income and expenses that are considered by management not to relate to transactions, projects and adjustments to the
value of assets and liabilities taking place in the ordinary course of activities of the Group. These income and expenses are presented separately, due to their
size or nature, so as to allow users of the consolidated
financial statements of the Company to get a better understanding of the normalized performance of the Company, and relate to:
• acquisition-related expenses;
• changes to the measurement of contingent considerations in the context of business combinations;
• changes to the Group structure, business restructuring costs, including costs related to the liquidation of subsidiaries
and the closure, opening or relocations of factories;
• impairment of assets and major litigations.
In the consolidated income statement these EBITDA adjustments are composed of the following items:
• income/(expenses) related to changes to Group structure; and
• income/(expenses) related to impairments and major litigations.
Working Capital
Working capital is calculated by adding current inventories, trade receivables and prepaid expenses and other receivables
and deducting trade payables and accrued expenses and other payables.
248
Ontex Integrated annual report 2022
About this Report
EACH YEAR ONTEX PUBLISHES AN INTEGRATED REPORT COVERING THE ECONOMIC, ENVIRONMENTAL AND SOCIAL ISSUES THAT MATTER MOST TO US
AND OUR STAKEHOLDERS. OUR LATEST REPORT WAS PUBLISHED ON APRIL 6, 2022.
THIS REPORT CONTAINS FINANCIAL AND NON-FINANCIAL INFORMATION FOR THE PERIOD JANUARY 1, 2022 TO DECEMBER 31, 2022, UNLESS OTHERWISE
SPECIFIED. IT ENCOMPASSES OUR OPERATIONS IN 20 COUNTRIES ON FIVE CONTINENTS AS WELL AS OUR HEADQUARTERS IN AALST, BELGIUM, WHICH
TOGETHER EMPLOY ~8,800 PEOPLE. SOME MANUFACTURING SITES AND OFFICES DO NOT REPORT ALL SOCIAL OR ENVIRONMENTAL DATA, AND IN
THESE CASES THE TYPE OF DATA THEY REPORT MAY DIFFER FROM SITE TO SITE. SEE THE NOTES IN SUSTAINABILITY STATEMENTS CHAPTER OF THIS
REPORT.
We have used the Global Reporting Initiative (GRI) Standards (Core option) with reference to the Sustainable Development Goals (SDGs) to guide us in preparing this report. GRI is the
international standard for sustainability reporting. The SDGs define global sustainable development priorities and aspirations for 2030 and seek to mobilize global efforts around a common set
of goals and targets.
Disclaimer: This report may include forward-looking statements. Forward-looking statements are statements regarding or based upon our management’s current intentions, beliefs or
expectations relating to, among other things, Ontex’s future results of operations, financial condition, liquidity, prospects, growth, strategies or developments in the industry in which we operate.
By their nature, forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results or future events to differ materially from those expressed or
implied thereby. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Forward-looking statements
contained in this report regarding trends or current activities should not be taken as a report that such trends or activities will continue in the future.
This report represents the directors’ report prepared in accordance with article 3.32 §1 of the Belgian Company Code. In most of the tables of this report, amounts are shown in € million for
reasons of transparency. This may give rise to rounding differences in the tables presented in the report. This report has been prepared in English and translated into Dutch. In the case of
discrepancies between the two versions, the Dutch version will prevail.
The Group prepares and discloses its financial statements in the European Single Electronic Format (ESEF) in Dutch and English. In addition, the Group makes available its financial statements
in Dutch and English in pdf format. The Dutch financial statements prepared by the Group in the ESEF format are the only official ESEF version of the financial statements that exempt the
Group from the obligations contained in the European Transparency Directive. The financial statements made available in pdf format on the Group's website, as well as financial statements
prepared in ESEF format in a language other than Dutch, are therefore considered unofficial versions and translations. The official ESEF version prevails over all unofficial and translated
versions. The official ESEF version of the Group's financial statements is filed on the Group's website ontex.com.
The Ontex leadership team has validated this report.
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Ontex Integrated annual report 2022
CONTACT DETAILS
Annual Report
Maarten Verbanck + 32 492 724 267
Investors
Geoffroy Raskin +32 53 333 730
VP Investor Relations and Financial Communications
Sustainability
Elise Barbé +32 53 333 756
Group Sustainability Manager
Send us your feedback: https://ontex.com/contact or [email protected]