Würth Finance International B.V.

Annual Report 2021

WÜRTH FINANCE GROUP

WITH CONTINUITY INTO THE FUTURE

Annual Report 2021 Würth Finance Group

Würth Finance Group

REPORT OF THE MANAGEMENT

The world has now been ﬁghting the COVID-19 pandemic for

more than two years. According to Johns Hopkins University,

3.5 million people died as the result of a COVID-19 infection

in 2021. In 2020, the ﬁgure was just under two million people.

Major efforts have been made and initiatives implemented

by governments, public health authorities, scientists and

researchers, the pharmaceutical industry, companies and

employers, as well as central and commercial banks to

mitigate the negative health, economic and social impact.

Given the complexity of such a pandemic, it is not possible

to quantify the concrete beneﬁts of the measures and aid pro-

grammes initiated. However, it was possible to rapidly

develop eﬀective vaccines, which have been widely adminis-

tered. About half a billion vaccinations are currently given

each month, vastly reducing the likelihood of a serious illness

and thereby preventing millions more deaths. Nevertheless,

more than 5,000 people worldwide continue to die every day,

with about 1,000 deaths in the EU alone. Doctors, nursing

staﬀ and the entire medical care infrastructure in many plac-

es remain massively overstretched. The eﬀorts must continue.

Würth Group

Würth Finance Group

platform of Würth Finance International B.V. – recorded

growth of around 25% in the year under review. Value was

also created through the introduction of a multibank-

compatible e-banking system for Würth Group companies.

These initiatives resulted in satisﬁed clients and will be

continued in the coming years.

Consumers have generally been spending less on services

and more on goods since the start of the COVID-19 pandemic.

Companies with logistics expertise and a link to the con-

struction industry beneﬁted from the upturn in the trade in

goods, which was reﬂected in the Würth Group’s remark-

able sales growth of 18.5% to EUR 17,100 million. This

exceeded the expectations of the Central Managing Board.

Exceptionally strong growth ﬁgures were achieved in the

construction-related Würth Line business area, electrical whole-

sale and the eiSos Group, as well as in the southern European

markets in general. By delivering these results, the Würth Group

has clearly demonstrated its ability to withstand the pan-

demic so far and strengthened its competitive position thanks

to the broad diversiﬁcation of its business model. Excellent

relationships with a large number of suppliers around the

world ensured a relatively high delivery capability.

The terms “resilience”, “agility” and “sustainability” currently

feature prominently in many companies’ mission statements

and strategies. They reﬂect a company’s ability to deal with

the risks and opportunities that arise when conditions in

the core business change. This may be triggered by strong

growth or collapsing demand, by sharp procurement price

increases or by persistent supply bottlenecks, for example.

In recent months, these themes have dominated consultations

with many clients and business partners and ensured a

high level of demand for the insurance and ﬁnancial services

solutions oﬀered by the Würth Finance Group, whether in

terms of adjusting insurance coverage as part of corporate

restructuring, optimising risk insurance for employees, pro-

tecting against asset losses due to cyber attacks or hedging

against a strong appreciation of the Swiss franc or rapidly

rising interest rates for corporate ﬁnancing. At the same time,

the Würth Finance Group acts as an interface connecting

With an adjusted pre-tax proﬁt

of EUR 55.5 million, the

Würth Finance Group achieved

a record-high result.

Encouragingly, the Würth Finance Group was able to contin-

uously increase its earnings forecasts for the ﬁnancial year

its clients with investors, lending banks and insurance compa- as the year progressed. Growth in the volume of payments

nies, ensuring that their increasing transparency requirements processed via the Würth Finance Group remained stable

The strong growth resulted in high capacity utilisation and

a corresponding improvement in productivity ratios. Despite

rising manufacturing and procurement prices, the operating

result of the Würth Group improved to a record level

of EUR 1,200 million based on preliminary ﬁgures (2020:

EUR 775 million).

with regard to sustainability are met.

in the double-digit range, for instance. The premium volume

in insurance brokerage was also increased in the second

half of the year. Successful ﬁnancial market positions resulted

in improved securities investment and trading performance

compared with the previous year. At EUR 89.6 million

(2020: EUR 84.0 million), the Würth Finance Group’s adjust-

ed operating income therefore signiﬁcantly exceeded the

target despite considerably lower income from Group Finan-

In this environment, the global economic upswing continued,

although its momentum slowed during the year. In many

OECD countries, production has now surpassed end-2019

levels and is gradually returning to the pre-pandemic trend.

The sharp rise in demand for goods led to bottlenecks in pro-

duction chains. Labour shortages, pandemic-related plant

shutdowns, rising energy and raw materials prices, and short-

ages of some key materials slowed growth and increased

cost pressure in 2021. Inflation rose significantly in many

regions. In addition to cost pressures due to supply bottle-

necks in the manufacturing sector and higher food prices,

imbalances on the energy market were a major factor that

pushed up inﬂation in all economies.

In ﬁnancial year 2021, the

Würth Finance Group

achieved solid progress in the

To ensure the continuous expansion of the business model,

investments were increased moderately to approximately

EUR 500 million (2020: EUR 473 million). Thanks to the

positive cash ﬂow and disciplined investment and working cap-

ital management, the Würth Group’s ﬁnancial position re-

mained very stable. This allowed the company to repay from

liquidity the USD 200 million US private placement due in

September 2021 and is reﬂected in Standard & Poor’s “A” rat-

ing. Equity as at 31 December 2021 amounted to EUR 6,800

million, corresponding to an equity ratio of 45%. With liquidi-

ty of around EUR 1,100 million and undrawn credit lines of

EUR 400 million committed until 2023, the Würth Group has

very comfortable liquidity reserves available. In the meantime

the 1% Eurobond maturing in May 2022 was redeemed

early from the company’s own funds on 21 February 2022.

important area of digitalisation. ^{cing. Operating expenses increased year on year by}

around 8%, from EUR 31.5 million to EUR 34.0 million. This

is partly due to a catch-up eﬀect following the previous

In ﬁnancial year 2021, the Würth Finance Group achieved

solid progress in the important area of digitalisation. For

example, Würth Financial Services AG deployed new systems

that signiﬁcantly enhance eﬃciency in the processing of

tenders and invoices. With the introduction of a new product

called “Powertrader”, Würth Finance International B.V.

provided Würth Group companies with a sophisticated and

secure electronic trading system that is available around

the clock in all time zones for the processing of ﬁnancial trans-

actions. Signiﬁcant successes have also been achieved in

the further development and introduction of electronic pay-

ment services. The strategic partnership with Twint AG

makes it possible to instantly insure products purchased

online in Switzerland via the Twint payment app. The

payment volume processed by the Würth Group’s clients

via the Würth Omnichannel Payment Gateway – the e-payment

year’s cost savings, including the postponement of IT projects,

as well as a general reduction in travel and restraint in ﬁlling

vacant positions and awarding consulting contracts. With an

adjusted pre-tax proﬁt of EUR 55.5 million, the Würth Finance

Group achieved a record-high result (2020: EUR 52.5 million)

and made a signiﬁcant contribution to the consolidated re-

sult of the Würth Group.

Responsibility Statement

In accordance with the EU Transparency Directive and the

Dutch Financial Supervision Act (Wet op het Financieel Toezicht),

the Management of the Würth Finance Group hereby con-

ﬁrms that, to the best of its knowledge, the Financial Statements

for the ﬁnancial year ended on 31 December 2021 give a

true and fair view of the assets, liabilities, ﬁnancial position and

proﬁt or loss of the Group, and that the Management report

includes a fair review of the development and performance

during the ﬁnancial year and of the ﬁnancial situation of the

Group at the balance sheet date, as well as of the risks

associated with its business.

Annual Report 2021 Würth Finance Group

Details on the course of business in the Inhouse Banking and

External Financial Services divisions follow on pages 8 to

19. The Würth Finance Group’s report on risk management

and control can be found on pages 20 to 27. The Würth

Finance Group does not have its own audit committee and is

therefore integrated into the Würth Group’s audit process.

The escalation of the conﬂict and the invasion of Ukraine by

Russian military forces in February 2022, followed by interna-

tional economic and ﬁnancial sanctions against Russia, re-

duce the value of such forecasts. The further developments of

the war are unknown. Hopefully the negative spiral of further

escalations can be interrupted soon. The economic outlook

for Europe and the world has deteriorated abruptly – at least

for the coming quarters – and this is accompanied by a re-

pricing of ﬁnancial assets, which is underway.

Thanks

The Management of the Würth Finance Group is very satis-

ﬁed with the results achieved in ﬁnancial year 2021 and

would like to thank all employees for their important contribu-

tion to the success achieved. These results were achieved

under the sometimes difficult conditions of the remote work

environment and while focusing on digital communication

channels with clients. Thanks also go to our clients and busi-

ness partners, whose trust in the Würth Finance Group

has made our success possible in the ﬁrst place. We look

forward to continuing to work with them in 2022.

Outlook for 2022

The COVID-19 pandemic and the response to it have triggered

developments and changes in many respects – with medium-

and long-term consequences for politics, the economy and

society. Institutions, traditions and values are being questioned

and recalibrated. This may be unsettling, but it is also a great

opportunity to give the concepts of resilience, sustainability

and agility the substance they need to shape the future, in-

cluding in the area of corporate governance.

What is clear is that faster, more coordinated global vacci-

nation eﬀorts are critical in the ﬁght against COVID-19 to

save lives and prevent the emergence of new variants. They

would also help relieve some of the bottlenecks currently

stalling recovery, as factories, ports and borders could fully

reopen. The removal of government pandemic assistance

must be cautious and gradual so as not to weaken the economy.

Roman Fust

Managing Director

Adrian Parpan

Managing Director

These developments and the changes on the insurance and

ﬁnancial markets are creating long-term growth opportunities,

which the Würth Finance Group is focusing on. Consequent-

ly, investments are continuously made in the further develop-

ment and digitalisation of the business model in the Inhouse

Banking and External Financial Services divisions – while

keeping in mind the scope and quality of client services.

This requires signiﬁcant willingness to learn and adapt on the

part of employees. The Würth Finance Group promotes

the continuous professional development of its managers and

employees throughout their entire working lives as the key

to securing the company’s future. Protecting assets – against

cyber attacks, for example – and fulﬁlling regulatory require-

ments are important prerequisites for ﬁnancial and insurance

service providers to conduct their business successfully over

the long term. The Würth Finance Group has the necessary

critical mass and organisational structure to ensure eﬀective

and eﬃcient IT risk and compliance management.

Würth Finance International B.V.

Würth Financial Services AG

To stabilise market conﬁdence and public support, it is critical

that the ﬁscal and monetary authorities clearly communicate

their strategies.

There is a high level of uncertainty. Nevertheless, the Würth

Group intends to take advantage of the current momentum

and, as an adaptable and competitive company with a clear

customer focus, is conﬁdently aiming for growth once again.

Investment, acquisition and development projects are aligned

with the relevant markets and the growth targets for the next

ﬁve years, but will be adjusted to the speed of the economy.

If a recession can be avoided, the Management of the Würth

Finance Group anticipates stable income in both the External

Financial Services and Inhouse Banking divisions in ﬁnancial

year 2022. The Management is aware of the risk of setbacks

from the Ukrainian-Russian war and in the ﬁght against the

COVID-19 pandemic, which could put a brake on economic

recovery and trigger turbulence on the ﬁnancial markets.

Consequently, growth-oriented investment projects and capac-

ity expansion will be implemented gradually and can be

postponed if necessary.

At the beginning of 2022 the OECD expected robust growth

of around 4% in the euro area and the US in the current year.

Inﬂationary pressures were anticipated to be stronger and

more sustained than was expected just a few months ago.

Nevertheless, consumer price inﬂation was expected to

gradually abate during the year as supply constraints were

expected to ease, production capacity to be increased

and disruptions in world trade to normalise.

Annual Report 2021 Würth Finance Group

Report of the Management

INHOUSE BANKING

Alternative Performance Measures (APMs)

comparable IFRS measures. APMs do not have standardised

meaning under IFRS, and therefore may not be comparable

to similar measures presented by other companies.

2021

APM Hedge accounting effect

Inhouse Banking management accounting

Impairment for

credit loss

Segment

Inhouse Banking

In presenting and discussing the Würth Finance Group’s

ﬁnancial position, operating results and net proﬁt, Manage-

ment uses certain alternative performance measures not

deﬁned under IFRS. These alternative performance measures

(APMs) should not be viewed in isolation as alternatives to

in TEUR

Income distribution

To provide a better overview of the development of the

Inhouse Banking activities and their added value for the

Würth Group, APM adjustments are made. They aﬀect

Group Financing

30,015

13,114

16,234

667

596

6,846

37,457

13,710

16,234

667

Net interest income

Income from factoring activities

Other ordinary income

Other

the equivalent IFRS measures, and should be used as supple- the operating income and net proﬁt of the segment Inhouse

mentary information in conjunction with the most directly

667

Banking, as shown in the table below.

Income from participations

Expected credit loss (expenses) /recovery

6,846

in TEUR

2017

4,353

2018

3,742

3,698

2019

2,993

–739

2020

1,492

8,558

2021

–548

Central Settlement

30,653

15,640

30,653

15,196

Hedge accounting eﬀect management accounting

Impairment for credit loss

Income from trading activities and

financial instruments

–48

–396

–6,450

Trading

14,104

1,536

–48

–396

13,660

1,536

Securities investments

Total income

76,308

–21,541

54,767

548

6,450

83,306

–21,541

61,765

• Hedge accounting eﬀect management accounting refers to the eﬀect of the market valuation of interest rate derivatives

to hedge interest rate risk where historically no hedge accounting was applied.

Total expenses

Total Inhouse Banking

548

6,450

As of the implementation of IFRS 9 Hedge Accounting, new hedge relations will be presented as such.

• Impairment for credit loss refers only to related party loss and therefore does not apply to the Würth Group. This position

represents the Würth Finance Group’s impairment of the capital relinquishment of EUR 0.4 million and expected credit

loss (ECL) on loans and receivables as at the balance sheet date. The ECL calculation is probability-weighted applying a

combination of probability of default (PD), exposure at default (EAD) and loss given default (LGD). The LGD is based

on the global corporate average of 60% and the PD is based on the Bloomberg default risk of the Würth Group. The PD

decreased to 0.44% as at 31 December 2021 (31 December 2020: 1.29%); thus a reduction in ECL of EUR 6.8 million is

recognised in the income statement.

2020

APM Hedge accounting effect

Inhouse Banking management accounting

Impairment for

credit loss

Segment

Inhouse Banking

in TEUR

Income distribution

Group Financing

32,898

14,922

16,275

1,701

1,135

566

–1,663

–7,886

23,349

13,259

16,275

1,701

Net interest income

–1,663

Income from factoring activities

Other ordinary income

Other

1,135

Income from participations

Expected credit loss (expenses) /recovery

566

–7,886

Central Settlement

24,926

13,486

24,926

12,985

Income from trading activities and

financial instruments

171

–672

Trading

11, 415

2,071

171

–672

10,914

2,071

Securities investments

Total income

71,310

–19,413

51,897

–1,492

–8,558

61,260

–19,413

41,847

Total expenses

Total Inhouse Banking

–1,492

–8,558

Annual Report 2021 Würth Finance Group

Key events

Communications

Business performance

help. The volumes handled correlate closely with purchasing

behaviour within the Würth Group. Falling reﬁnancing costs

have repeatedly led to price reductions in recent years, and

ﬁnancial year 2021 was no exception. However, owing to

the disproportionate increase in volumes in this business, the

contribution to earnings was almost unchanged compared

with the previous year.

The integration of the Würth Finance Group into the Würth

Group’s overall business operation requires close communi-

cation and an understanding of the diﬀerent business models

at the Group companies that lie behind the transactions and

cash ﬂows that are handled. Close personal contacts with

Group companies, suppliers, banks and central Würth Group

functions are therefore a prerequisite for the optimisation of

the business model and an important success factor for the

Würth Group’s inhouse bank. Unfortunately, the ﬁrst sen-

tence of this report makes it clear why, even in 2021, the

majority of meetings had to be held via online channels,

and it was not uncommon for meetings to be conducted re-

motely from home.

Group performance

Central settlement of payments to suppliers

Depending on location and deﬁnition, the Würth Group’s

ﬁnancial year began in the second COVID-19 wave and

ended in the ﬁfth. In the event, the recovery that followed the

sharp downturn in the ﬁrst half of 2020 had a decisive

impact on the Würth Group’s ﬁnancial year 2021. The

following speciﬁc points can be highlighted:

• catch-up eﬀects in consumer behaviour with

favourable forecasts

• low interest rates amid rising inﬂation

• increased materials prices and very good economic

activity in the construction sector

• bottlenecks along entire supply chains and in logistics

At times it looked as if some customers were busy stocking

up on the C-parts that the Würth Group sells.

Würth Finance International B.V. is the central partner for

the companies of the Würth Group with regard to settling

supplier invoices. Contractual relationships exist with the re-

spective suppliers for a large part of the payment volume.

This means the Würth Group’s volume of payments correlates

with the income realised in this aspect of Inhouse Banking’s

business. Thus, in the year under review payment volumes

increased by 27.1% to EUR 7,300 million, while record

income of EUR 30.7 million was generated.

Net interest income

The market environment continued to be characterised by

very favourable ﬁnancing conditions. Despite a signiﬁcant

rise in inﬂation rates in the euro area, most recently ap-

proaching 5%, the central banks kept in place negative ref-

erence rates and their various bond-buying programmes.

The degree of automation and the security of the systems have

always played an important role in payment transactions.

In order to keep pace with the rise in volumes, with the eﬃ-

ciency expectations of the Group companies and also

with the increasing threat of cyber attacks, further investments

were made and various improvement projects realised in

the past 12 months.

The Würth Group did not participate in the reﬁnancing

markets in the past ﬁnancial year as there was no need to

raise additional funds. Considering the fact that a US

private placement dating from 2011 fell due for redemption

in September 2021, and that the credo of very conservative

ﬁnancial management continued to prevail, this shows how

ample the liquidity reserves were over a number of months.

The “Würth culture” is based

on a high degree of freedom,

ﬂat hierarchies and a clear

The strength of demand and the speed with which suppliers

were pushing through price increases prompted the Central

Managing Board to focus on securing the company’s gross

proﬁt and safeguarding its ability to deliver. In order to main- customer focus.

Intercompany factoring activities

tain a high level of service, a certain increase in inventory

levels in the Würth Group’s warehouses was also tolerated.

Most of the Group companies procure a large proportion of

their merchandise from central purchasing companies of

the Würth Group. Settlement of the associated receivables

is mainly handled via intra-Group accounts at the Würth

Finance Group and includes a pre-ﬁnancing component. As

a result, this leads to savings in bank fees, easier accounts

receivable management and more eﬃcient coordination. The

purchasing Group companies beneﬁt from a straightforward

pre-ﬁnancing solution and from the fact that, in the event

of discrepancies, colleagues at the inhouse bank are there to

For the vast majority of employees, averaging 64 for the

Group Financing volume and revenue from intra-Group lendings

As a result, a signiﬁcant build-up in inventories was reported

in the ﬁnancial ﬁgures along with records in terms of sales

and the operating result. Nonetheless, operating cash ﬂow

was so strong that net debt remained relatively low until

the end of the year. All in all, a remarkable year for the Würth

Group, with noticeable eﬀects on the performance of

the Inhouse Banking division at the Würth Finance Group.

year (previous year: 64), working from home became a

mode of operation that was highly valued as a supplement

to traditional in-oﬃce work activity. Not surprisingly, the

proverbial “Würth culture”, based on a high degree of free-

dom, ﬂat hierarchies and a clear customer focus, made

a noticeable contribution to the company’s resilience in the

year under review.

in million EUR

2,100

52.5

1,800

1,500

1,200

900

600

300

37. 5

22.5

Income distribution

Central Settlement: payment volume/revenue

in million EUR

Income from

factoring activities

–0.0*

Securities

investments

–0.5*

in million EUR

8,000

7,000

6,000

5,000

4,000

3,000

2,000

1,000

in million EUR

7. 5

1.5

2017

Factoring volume

Net lending as at 31 December

Interest and factoring income (right-hand scale)

2018

2019

2020

2021

16.2

Trading

+2.7*

Net

14.1

interest

income

–1.8*

13.1

0.7

Other

ordinary

income

–1.0*

2017

2018

2019

2020

2021

30.7

Payment volume third parties

Contract volume

Income from Central Settlement services (right-hand scale)

Central Settlement

+5.7*

*Change vis-à-vis 2020

Annual Report 2021 Würth Finance Group

The development of earnings in the Group Financing

segment is obvious at ﬁrst glance: high cash inﬂows from the

underlying business, combined with moderate capital

expenditure and acquisition activity, led to a decrease in the

ﬁnancial requirements of the Group companies (reduction

in average net lendings to related parties from approximately

EUR 1,300 million to EUR 900 million) and, in conjunction

with higher liquidity holdings, to a decrease in net interest

income from EUR 14.9 million to EUR 13.1 million. On

closer analysis, this is nevertheless surprising. In the Würth

Group’s business model, the capital commitment eﬀects

in net working capital usually predominate in high-growth

years and lead to an increase in ﬁnancing requirements.

This tendency materialised in the year under review only

in the second half of the year, which meant that any

eﬀect on net interest income remained limited in ﬁnancial

year 2021.

Longer-term loans to Group companies continued to be

hedged with interest rate swaps in order to secure still low

long-term interest rates for the Group. Nevertheless, the

interest rate sensitivity of the Würth Finance Group’s equity

decreased noticeably, as the lower residual term of the

outstanding bonds along with a higher equity capital more

than oﬀset the eﬀect from these hedging transactions by a

wide margin.

deﬁned limits. In addition, the maturity mismatch of asset and

liability items on the balance sheet of the Würth Finance

Group gives rise to additional income opportunities. In the

year under review net trading income of EUR 14.1 million

was recorded, signiﬁcantly exceeding the record result from

the previous year.

In hardly any other ﬁeld of activity is the beneﬁt of hindsight

so great:

• The rise in interest rates was moderate, so the basic

focus on short durations was fundamentally the right one.

However, in retrospect, bond positions were too small.

• Investments in US dollars beneﬁted from a rise in the

exchange rate. It seems the US Federal Reserve is thought

capable of more than the European Central Bank. In

retrospect, that is no surprise.

• Real estate investments generally performed well world-

wide, but an overweight in US stocks against German

companies would have made more sense, as regulatory

fears in the wake of the parliamentary elections and

distortions in individual stocks due to large-scale consoli-

dation in Germany were market-dominating factors.

• Equity investments produced extremely good returns as

a result of falling real interest rates and solid corporate

data. Almost every setback could have been used to

increase the equity allocation.

Securities investments

Taking investment risks, especially through positions in

bonds, equities and commodities has also made a valuable

ﬁnancial contribution to the success of the Würth Finance

Group for many years. However, the beneﬁts of the exper-

tise available here go much further, as the Central Managing

Board is keen to draw on this expertise in a variety of ways

in the ﬁnancial management of the Würth Group.

The Würth Finance Group’s

expertise and credibility in

the ﬁnancial risk management

of the Würth Group are based

on its track record in managing

its own positions in the ﬁnancial

markets.

Trading: income development

On the assets side of the Würth Finance Group’s balance

sheet, a higher loan volume to Group companies (in particu-

lar to the US subgroup in connection with the redemption

of the US private placement) and the corresponding decrease

in liquidity are clearly discernible. On the liabilities side,

the changes are more marginal. Overall, the total assets of

the Würth Finance Group were hardly changed as at

31 December 2021.

in million EUR

With regard to the long-term investment objective of delivering

positive earnings contributions above the risk-free rate of

return even at low volatilities, 2021 can nevertheless be con-

sidered a successful investment year: the return was 2.2% or

EUR 1.5 million. The portfolio shrank slightly in size during

the ﬁnancial year and amounted to EUR 68.5 million at the

end of the year.

Currency hedging and trading with ﬁnancial instruments

The Würth Finance Group’s expertise and credibility in

the ﬁnancial risk management of the Würth Group are based,

among other things, on its track record in managing its own

positions in the ﬁnancial markets. Owing to the broad inter-

national basis of the Würth Group’s core business, the

management of exchange rate risk is the main activity. The

volume of currency exchange and exchange rate hedging

transactions with Group companies correlates with the vol-

ume of transactions in these companies’ underlying business,

albeit to a much lesser extent than the two sources of reve-

nue for Inhouse Banking mentioned above. The constant ﬂow

of funds in diﬀerent currencies and the knowledge of the

needs of the Group companies require ongoing management

of currency positions by the traders and oﬀer the opportunity

to generate additional income from this within clearly

2017

2018

2019

2020

2021

Securities investments: income development

in million EUR

–1

–2

–3

2017

2018

2019

2020

2021

Annual Report 2021 Würth Finance Group

Management Würth Finance International B.V. and Würth Invest AG

At a Glance

INHOUSE BANKING

Core business

Provision of comprehensive advice and a wide range of

treasury products to Group companies

The Inhouse Banking division of the Würth Finance Group

monitors the ﬁnancial risks incurred by the Würth Group and

takes the necessary measures to retain its ﬁnancial stability.

Central management of bank accounts and ﬁnancial

risk management for the Würth Group

Björn van Odijk

Managing Director

Roman Fust

Managing Director

Philip Guzinski

Alejandro Muñoz

Cash and securities investments

Securing of strategic freedom to act by managing the

cash reserves of the Würth Group

Central management of ﬁnancial investments in the

conﬂicting areas of security, liquidity and return

In close collaboration with the Central Managing Board and

the operational Group companies, the Inhouse Banking division

ensures that the necessary liquid funds are available to the

Würth Group at all times and employs the Group’s funds in

an optimal manner. The division consists of the legal entities

Würth Finance International B.V. and Würth Invest AG.

Facts and figures (at 31 December 2021)

Services

62 employees at the oﬃces in Den Bosch, the Netherlands,

Central settlement of payments to suppliers

Service provider for the central settlement of payments to

beneﬁciaries worldwide

Collection of outstanding invoices on behalf of over 10,000

Würth Group suppliers vis-à-vis all Group companies and,

to a certain extent, insurance of default risk

and Rorschach, Switzerland

Daniel Ochsner

Jorre van Schipstal

Patrik Imholz

Würth Invest AG

530,000 payment transactions with a volume of

EUR 7,300 million in the year under review

Outstanding capital market funding with a total volume of

EUR 1,750 million

E-payment services

Operating expenses

Group ﬁnancing and risk management

Financing of the Würth Group on the capital market,

principally by means of bond issues

Competence centre and interface for banks,

investors, ﬁnancial market regulators, rating agencies and

credit analysts

The COVID-19 pandemic continued to drive increasing de-

mand for e-payment services. In cooperation with Group

companies, a number of projects for establishing electronic

payment options were implemented on new sales channels

such as the customer contact centre and sales support appli-

cations. The services were optimised on an ongoing basis

not only to oﬀer new and eﬃcient payment options in com-

pliance with the highest security standards, but also to auto-

mate the entire payment process. With the Würth Omnichan-

nel Payment Gateway (WOPG), the Würth Finance Group

oﬀers its clients a global infrastructure for processing elec-

tronic payments across all distribution channels. The volume

of payments processed via the WOPG platform rose by

around 25% in 2021 compared with the previous year.

In the year under review, operating expenses of the division

Inhouse Banking increased by 11% to EUR 21.5 million.

Around half of the increase was attributable to higher per-

sonnel expenses. In addition, there was a certain base and

catch-up eﬀect for operating expenses, following a signiﬁ-

cant decline in the previous year. The cost-income ratio was

thus maintained at almost the same level as in the previous

year and the targets were clearly exceeded.

Account relationships with over 400 Würth Group companies

3,370 foreign exchange transactions with 280 Group

companies and a hedging volume totalling EUR 1,160 million

Outlook for 2022

In Europe, consumer spending is healthy, the savings rate is

high, and investment in digitalisation must continue to increase –

there is plenty of upside potential for another good ﬁnancial

year. The Central Managing Board is optimistic that the

Würth Group will also continue growing, despite bottlenecks

in goods and on the labour market. The risks should not be

underestimated, however.

epidemiological situation could strain market conﬁdence and

public support. Thus, to avoid a phase of recession, it will be

crucial that the ﬁscal and monetary authorities manage their

strategies carefully and communicate them clearly, at the

price of a further increase in government debt and the risk of

inﬂation rates becoming entrenched above the target

ranges.

The breakout of the Ukrainian-Russian war at the end of Feb-

ruary 2022 and the reaction of Western governments have

substantially increased the risk for a less dynamic economic

development in Europe and the world. The depth and

breadth of the economic consequences and the revaluation

of ﬁnancial assets will depend on the further development

of the war.

If a recession can be avoided in Europe and a widespread

ﬁnancial crisis can be prevented, stable ﬁgures can be ex-

pected for income in the Inhouse Banking division. This takes

into account the normalisation of liquidity reserves. In order

to secure performance in the long term, investments in the

digitalisation of business processes will be systematically

continued and personnel resources will be gradually

strengthened. This is likely to increase the cost base by a

single-digit percentage. Overall, the Management currently

expects no major deterioration in the operating result of

the Inhouse Banking division in ﬁnancial year 2022.

The Management expects that the process for balancing

supply and demand in many markets, the normalisation of in-

ternational trade and the stabilisation of prices will probably

not come anytime soon. Also a renewed deterioration in the

Annual Report 2021 Würth Finance Group

Report of the Management

EXTERNAL FINANCIAL SERVICES

Supply bottlenecks, rising prices and a focus on sustainability

all shaped the business environment in 2021. The COVID-19

pandemic, which has dominated headlines for the past two

years, has remained ever-present. In addition, companies still

face the challenge of meeting the demands of digitalisation,

ﬁnding solutions to the shortage of skilled workers, and estab-

lishing measures to protect against cyber attacks. Many com-

panies were able to adapt excellently to this environment and

Insurance market situation

Continued consolidation of the

insurance broker market

Focal points in the financial year

Having faced higher claims payments in 2020 due to the

COVID-19 pandemic, severe weather dominated the claims

picture for the insurance market in 2021. Floods and hail-

storms caused massive damage in many places in Switzer-

land, as well as in Europe, and put a strain on insurance

companies’ balance sheets. This contrasted with the positive

In terms of sales, 2021 made a rather subdued start.

The work-from-home obligation made the eﬀorts to personally

introduce WFS to new clients much more diﬃcult. In the ﬁrst

months of 2021, we therefore focused on supporting existing

clients and preparing tenders and annual review meetings.

Many clients issued invitations to tender for occupational pen-

sion plans due to a backlog in 2021. Following the ﬁnancial

market developments in March 2020, companies had post-

poned their pension scheme tendering projects by one year.

A wave of consolidation is still dominating the insurance

broker market. A number of national and international mer-

gers occurred again in 2021. The frequent participation

of pure ﬁnancial investors in these transactions is striking. In

combination with the current market situation, insurance

brokers’ business model is highly attractive to investors. A

signiﬁcant example from 2021 comes from the UK, where

Howden Group acquired the broker Aston Lark for around

USD 1,500 million. However, the competition authorities

still need to approve the acquisition. Such approval was de-

nied in the case of the mega-merger between Aon and

Willis Towers Watson, with major cost implications for Aon.

can look back on a successful ﬁnancial year 2021 that signiﬁ- developments on the ﬁnancial markets, which bolstered

cantly exceeded expectations. Würth Financial Services AG

(“WFS”) also surpassed expectations by a wide margin in 2021

and steadily adjusted its own forecasts upwards over the

course of the year.

insurance companies’ results.

The growing number of successful cyber attacks is posing

major challenges for the insurance market. Just a few years

ago, it was rare for an SME to take out cyber insurance.

Clients had to be oﬀered rock-bottom prices to be persuaded.

Today, cyber attacks are among the biggest threats on a

company’s risk map. The claims burdens on insurers’ books

are rising steeply, and many customers are now facing

the question of whether sharp increases in premiums and the

reduction of coverage limits are still commercially viable.

Digital transformation and

improving process eﬃciency

were a major theme in 2021.

Würth Financial Services AG

surpassed expectations

by a wide margin in 2021 and

steadily adjusted its own fore-

casts upwards over the course

of the year.

This trend can also be seen in the Swiss broker market,

which is likewise considered highly attractive and draws inves-

tors from outside the industry. It is notable how many

international broker organisations are gaining entry to

the Swiss broker market through acquisitions. Howden,

Gallagher, Verlingue, Burrus and Südvers are examples of

international brokerage houses that have recently moved

into Switzerland. These market dynamics also resulted in trans-

actions in 2021. The acquisition of IBC by Qualibroker,

for example, involved two of Switzerland’s largest brokers.

The tougher conditions on the insurance market were very

apparent when tendering for contracts. Risk concepts

frequently needed to be revised due to limit reductions and

premium increases, and it was not always possible to ﬁnd

satisfactory solutions for clients. From a sales perspective,

however, the more diﬃcult environment also gave greater

impetus to clients, who were more likely to look for alterna-

tives and seek second opinions from other insurance brokers.

WFS beneﬁted from these market movements.

The trend towards premium increases in the corporate clients

business remains unbroken, while the reduction of limits –

especially in the international environment – means that the

cover needed can only be found with great eﬀort or is no

longer oﬀered at all. Conditions in the insurance market are

becoming increasingly tough, and there is no end in sight.

Not least due to the COVID-19 pandemic, this is particularly

true in the personal insurance market, where higher claims

and a lack of competing oﬀers are leading to huge premium

hikes.

Digital transformation and improving process eﬃciency were

a major theme in 2021. Alongside the integration of new

tools in the area of tendering, eﬀorts focused on digital invoic-

ing. Thanks to the new module, the invoice processing time –

from incoming mail to dispatch – has been signiﬁcantly

reduced. Through this process, WFS is reaping the beneﬁts

of machine learning and artiﬁcial intelligence developments

for the ﬁrst time. The potential oﬀered by these developments

is enormous and can be transferred to other processes.

Annual Report 2021 Würth Finance Group

Management Würth Financial Services AG

At a Glance

EXTERNAL FINANCIAL SERVICES

Core business

Facts and figures (at 31 December 2021)

The External Financial Services division operates

under the legal entity of Würth Financial Services AG,

one of the leading independent providers of

pension and insurance services to corporate clients

and private persons in Switzerland.

Number of corporate clients: 3,600

Premium volume: CHF 345 million

Number of employees: 56

Adrian Parpan

Managing Director

Beat Jordan

Managing Director

Luciano Viotto

Hans-Jürg Flury

Experienced consultants and highly qualiﬁed specialists

draw up tailor-made solutions and advise clients

on the best choice of pension and insurance products.

Five locations: Rorschach (head oﬃce), Zurich, Lugano,

Arlesheim and Chur

Business performance 2021

Due to the investment in digitalisation, IT costs rose further.

The year-on-year increase amounted to more than 40%, with

Forecasts for 2021 were subject to a high degree of uncertain- the use of the new tendering tools and the further develop-

ty due to the COVID-19 pandemic. Despite the limited sales

opportunities in the ﬁrst half of the year and thanks to encour-

aging new business in the second half, the premium volume

in 2021 increased to CHF 345 million. This represents an in-

crease of 6% compared with the previous year. Revenue

also rose by almost 5% year on year.

ment of the policy administration system the main drivers of

this development. Other administrative expenses remained

constant compared with the previous year, while the operat-

ing result rose by 19%.

Services

Insurance brokerage for corporate and private clients

Claims management

Pension fund advisory services for corporate clients

Insurance solutions for credit card issuers and

payment providers

Development of premium volume

The number of employees declined to 56 from 59 in the previ-

ous year. While the number of sales representatives remained

unchanged at 32, the number of oﬃce staﬀ declined to 24

from 27 in the previous year. This development is attributable

to the centralisation of the back oﬃce at the Rorschach site.

The digitalisation eﬀorts made also meant that the workload

could be handled by a smaller number of employees. At

the same time, human resources was outsourced to the shared

services organisation of Würth Management AG in 2021.

The almost 10% rise in oﬃce staﬀ productivity should be viewed

as a success and shows that the investments in process auto-

mation are also paying oﬀ ﬁnancially.

in million CHF

350

Outlook for 2022

300

250

200

150

100

WFS intends to continue the growth trend of recent years in

2022. In particular, it aims to further increase the number of

sales representatives and broaden the reach of its branches.

The number of oﬃce staﬀ will remain unchanged, with growth

absorbed through more eﬃcient processes. The digitalisation

of additional core processes will remain a focal point in 2022.

It is anticipated that the insurance market will remain challeng-

ing. Clients will demand a professional service and a high

level of advisory expertise, and the competition for specialists

will further intensify. Thanks to the Würth Group’s stability

and the family values that characterise its corporate culture,

WFS oﬀers excellent development opportunities for employ-

ees in the insurance sector. It is superbly positioned to meet

the current challenges over the coming year, as well as in

the long term.

2017

2018

2019

2020

2021

Number of staff

2017

2018

2019

2020

2021

Annual Report 2021 Würth Finance Group

Würth Finance Group

RISK MANAGEMENT AND CONTROL

1 Risk culture

The Würth Group actively promotes a strong risk culture, and

the Central Managing Board or the responsible persons in

the areas of compliance, controlling, information security, IT

security and data protection regularly communicate the ex-

pectations of the risk culture. Employees are also encouraged

to take responsibility for identifying and escalating risks

and rejecting inappropriate measures. Internal control systems,

instructions and training courses ensure that employees are

informed about the current status of legislation and also sup-

port them in identifying and dealing with risks.

2.2 Framework

charge of ﬁnance departments also ensure that all employees

involved in the ﬁnancial reporting process are up to date on

the latest legislation and information of relevance to them.

Mutual trust, predictability, honesty and straightforwardness,

directed both internally and externally, are fundamental prin-

ciples that are deeply ingrained in Würth’s corporate culture

and in the corporate philosophy. This does not just entail

adhering to all applicable laws and inhouse regulations, but

also means ensuring that employees maintain the proper

mindset, which is key to the sustainable corporate success of

the Würth Group. Extensive internal guidelines, known

as the Policies and Procedures Manual, operationalise these

fundamental principles in the form of descriptions of the

structural and process organisation, as well as setting out

speciﬁc rules and codes of conduct.

Taking risks has always been inherent in any entrepreneurial

activity. As a globally active company, the Würth Group is

constantly exposed to risks that can arise both as a result of

its own actions or failure to act and as a result of external

factors. The conscious and systematic approach to addressing

opportunities and risks is inextricably linked to the Würth

Group’s entrepreneurial activities.

Embedded in the Würth Group, Würth Finance International B.V.

has access to the aforementioned Group-wide risk manage-

ment system. It is exposed to a large number of risks that are

directly linked with the divisional activities of its Inhouse Bank-

ing and External Financial Services divisions. The Group’s

most important risk types are credit risks (including default

risks), liquidity risks, market risks (including exchange rate, inter-

est rate and securities price risks) and operational risks.

The decentralised structure of the Würth Group represents a

great advantage, especially given that the individual countries

in which Würth operates vary so greatly in their economic

performance. However, as a result of the internationalisation

of its business activities, the Würth Group is exposed to the

political risks of each economic region. Due to restrictive legal

standards applying to national and international transactions

involving goods, services, payments, capital, technology,

software and other types of intellectual property, compliance

risks have also gained in importance. The Würth Group

always seeks to comply with all regulations and administrative

requirements for its business, both nationally and interna-

tionally. This applies when dealing with Würth’s customers

and suppliers, employees, competitors, other business

partners and public authorities.

2 Risk governance framework

Most of the Würth Group’s ﬁnancial risks are measured,

monitored and controlled centrally by Würth Finance Interna-

tional B.V. It pursues a conservative risk policy as part of its

risk-oriented company management. It refrains from transactions

with imponderable risks and only enters into quantiﬁable risks

within clearly deﬁned limits. This principle forms the basis of

the risk policy and provides guidelines for business decisions.

The general goal is not to eliminate all risk, but to achieve a

balanced relationship between risk and return.

2.1 Governance

Using the Group-wide Würth Information System, an integral

component of the internal control and risk management

system of the Würth Group, all key performance indicators

required to steer the Würth Group are presented in a timely

manner and are available for further evaluation by the Central

Managing Board and Executive Vice Presidents, based on

standardised monthly reporting.

The Würth Group’s risk governance framework makes use of

the three lines of defence model for a functioning control

and monitoring system, in which three independent levels serve

to manage corporate risks and ensure that risk and control

processes function appropriately.

The ﬁrst line of defence consists of all the functions associated

with the implementation of day-to-day business. As the risk

owners, they are responsible for identifying and analysing risks

in the business processes, implementing appropriate controls

on the management of the risks and testing their eﬀectiveness.

This ﬁrst line of defence is intended to prevent or discover and

correct at an early stage all risks that are inherent in the oper-

ational activities.

Würth’s Group-wide, system-based control mechanisms, such

as validation and cross-checks, optimise the quality of the

information used as a basis for decision-making. A Group-wide

online record for the Würth Group entities’ ﬁnancial statements

is not only eﬃcient, but also avoids carry-over errors, safeguards

the uniform provision of information and includes numerous

plausibility checks, without which the information cannot be

forwarded. This platform also ensures that ﬁnancial reporting

changes are implemented in a uniform manner across the Würth

Group. Data are protected against changes by using check

digits and a system of IT access rights. Standard software is

used for consolidation. Changes in the system settings are

Principles and methods for measuring ﬁnancial risks, limits

and permissible instruments for managing ﬁnancial risks, and

the design of an eﬀective information and reporting system

are set out in separate ﬁnancial risk management regulations,

and all ﬁnancial transactions must comply with these. This

framework contains a detailed list of the maximum risk exposure

approved by the Board of Directors of Würth Finance Inter-

national B.V. A core aspect of the framework is a system of

deﬁned, binding limits and permissible ﬁnancial instruments.

Against this background, systematic risk management for

achieving corporate goals has become of central importance.

The Würth Group’s policy on risk and opportunities is aimed

at meeting the medium-term ﬁnancial objectives and at ensuring

sustainable, long-term growth. To achieve this, the Würth

Group has a system that identiﬁes entrepreneurial opportunities

and risks, assesses them using a standardised system, weighs

them against each other and communicates them.

In contrast to the ﬁrst line, the second line of defence primarily

serves to control and monitor the ﬁrst line of defence. It takes

on various tasks in supervising and controlling operating risk

management, ensuring that this works properly. Responsibility

for the second line of defence is assigned to control functions

such as compliance and controlling.

The Würth Finance Group (WFG) maintains an internal

logged centrally. The monthly and annual ﬁnancial statements control system. The self-imposed obligation to check certain

The Central Managing Board of the Würth Group holds over-

all responsibility for the Group-wide risk management process

and deﬁnes the principles of the Würth Group’s risk policy

and strategy. The Management of each Group company is

responsible for establishing a functioning and eﬃcient risk

management system in its entity. They are supported by the

Würth Group risk manager, who reports directly to the Central

Managing Board and coordinates the risk management process

at Würth Group level. The risk manager remains in close

contact with the risk controller of the Advisory Board, who

reports directly to the Chairwoman of the Würth Group.

of Würth Group companies are subject to regular automated

assessment mechanisms, as are the consolidated ﬁnancial

statements. Moreover, Würth’s Policies and Procedures Manual

contains internal procedural instructions.

processes, routines and functions at predetermined intervals

and to monitor the elimination of identiﬁed sources of error

allows the WFG to protect itself in advance against ﬁnancial

losses or liability risks. The internal control system is in place

to ensure the correctness and reliability of accounting.

It contains principles, procedures and measures to ensure the

eﬀectiveness and eﬃciency of accounting. The main objective

of the internal control system is to ensure that all business trans-

actions are recorded, processed and documented correctly

and in full, in accordance with statutory regulations and stan-

dards as well as other internal guidelines.

The third line of defence is the independent auditing body re-

sponsible for internal auditing. It carries out risk-oriented audits

on behalf of the Supervisory Body and is independent

of the ﬁrst two lines of defence and the entity’s management

team. This allows the third line of defence to understand

the processes and risks at the ﬁrst and second lines of defence

and to objectively assess the internal control mechanisms.

Internal publications and training include detailed rules on

ﬁnancial reporting. Compliance with these rules is regularly

reviewed by the central auditing department. External spe-

cialists are consulted to clarify the accounting implications of

legal and tax issues. External actuaries calculate pension and

similar obligations. Central and local training courses for those in

Annual Report 2021 Würth Finance Group

The principles for handling operational risk are anchored in

a comprehensive set of guidelines and procedures that deﬁne

how employees should carry out their activities. The strategic

objective of a balanced relationship between risk and return

is always pursued, applying a cost/beneﬁt analysis. Each

business area takes responsibility for its operational and com-

pliance risks and for having adequate procedures in place

to manage those risks. Entities are supported by designated

second line of defence operational risk and compliance teams

that are responsible for independent risk oversight.

With all external counterparties for ﬁnancial derivatives trans-

actions, the WFG has concluded ISDA agreements, including

a Credit Support Annex that ensures the periodic net present

value cash settlement of the outstanding transactions. The

counterparty risks relating to delcredere business are trans-

ferred in full to insurance companies.

To measure, analyse, monitor and report on liquidity risk, the

WFG prepares liquidity overviews on a daily basis and re-

ports the liquidity and debt status of the whole Würth Group

to the Central Managing Board of the Würth Group on a

monthly basis.

Individual limits are set for each currency or currency group

to manage exchange rate risks. The limits are to be regarded

as open net positions towards the balance sheet currency.

The positions are valued and monitored on a daily basis.

In assessing exchange rate risks, the absolute amount of open

foreign currency positions and changes in their earnings devel-

opment are taken into account. For this purpose, all positions

are valued on a daily basis at market rates (marked to market)

and should not exceed the total amount of EUR 50 million.

In the current reporting period under review all ﬁnancial

requirements were met.

Every Würth Group company is granted a credit limit by

the Würth Group’s Central Managing Board. Würth Finance

International B.V. monitors compliance with these limits on a

monthly basis. In the event of a continuous credit limit breach,

the Würth Group’s Central Managing Board is obliged to

grant a new credit limit. Such credit limit breaches were re-

peated in 2021. The Central Managing Board subsequently

adjusted the credit limits. Any credit risk relating to loans to

individual Würth Group companies with negative equity as

at the reporting date are secured by letters of comfort from

the superordinate parent company.

3.3 Market risk

A large part of the WFG’s business activities is subject to

market risk, deﬁned as the possibility of changes in the fair

values of the trading and investment positions. Risks may arise WFG enters into FX spot transactions, forwards, cross-currency

from changes in exchange rates, interest rates and securities

prices.

In order to control the exposure to exchange rate risk, the

3 Financial risk and opportunities

swaps and currency options with external counterparties.

Further information on the risks arising from ﬁnancial instruments

and their management can be found speciﬁcally in note 18

and in the notes to the separate ﬁnancial report on the web-

site (www.wuerthﬁnance.net).

The deﬁned limits were not exceeded in the current reporting

period under review.

One of the main objectives in dealing with market risks is to

ensure that the risk corresponds with the approved risk appetite

and is appropriate to the deﬁned strategy.

3.3.2 Interest rate risk

3.1 Credit risk

3.2 Liquidity risk

Interest rate risk is the risk of loss arising from changes in interest

rates in all currencies. Interest rate risk arises from balance

sheet positions such as loans, ﬁnancial assets at fair value, pay-

ables to related parties and banks, and derivatives, including

those used for hedge accounting purposes. These positions may

aﬀect other comprehensive income or the income statement,

depending on their accounting treatment. A signiﬁcant pro-

portion of the loans to Würth Group companies are

reﬁnanced by ﬁxed-interest bonds with partially similar inter-

est and maturity structures.

Credit risk is deﬁned as the risk of a ﬁnancial loss caused

by a counterparty failing to meet its ﬁnancial obligations or

by a deterioration in the credit quality of the counterparty.

In the event of a default, the WFG incurs a loss equal to the

amount owed by the debtor, less any recoveries. The maxi-

mum credit risk corresponds to the value of all ﬁnancial assets,

contingent liabilities and unused irrevocably guaranteed

lending commitments reported in the Financial Statements.

The WFG deﬁnes liquidity risk as the risk of being unable to

meet due payment obligations in full or on time. In addition,

there is the risk that reﬁnancing means cannot be procured or

can only be procured at higher market rates (liquidity protec-

tion or reﬁnancing risk).

Both on-balance-sheet and oﬀ-balance-sheet ﬁnancial instru-

ments are used to manage market price risks. Before conclud-

ing new transactions, compliance with the prescribed limits

and the permissibility of derivative ﬁnancial instruments must

be checked. Compliance with the limits is monitored on a

daily basis.

In its function as the main ﬁnancing company of the Würth

Group, the WFG manages the liquidity risks on the basis

of the Central Managing Board’s recorded strategic guidelines

for action and optimises the ﬁnancial result through the

targeted exploitation of market opportunities.

The deﬁned limits were not exceeded in the current reporting

period under review.

Given the nature of its core business activities, the WFG

monitors the counterparty default risk for all its major risk-

related activities.

3.3.1 Exchange rate risk

In order to hedge interest rate risks, the use of derivatives such

as forward rate agreements, interest rate swaps, swaptions,

caps/ﬂoors and cross-currency swaps is permitted in addition

to any balance sheet structure measure. The limit for these

derivative ﬁnancial instruments is set at a notional amount of

EUR 700 million, which was not breached in the current

reporting period under review.

By exchange rate risks, the WFG means the loss risk on the

net assets resulting from exchange rate ﬂuctuations between

the transaction currency and the applicable functional

currency.

The overriding goal of the Würth Group and the associated

risk appetite is the ability to meet its payment obligations at

all times, even in extraordinary situations.

The WFG aims to minimise the credit risk and has deﬁned its

risk appetite in only entering into business relationships with ﬁrst-

class external counterparties. Binding counterparty limits are

deﬁned for each rating level, but the aim is to enter into busi-

ness relationships only with banks with a Standard & Poor’s

minimum rating of “BBB” (equivalent to a rating of “Baa”

from Moody’s and “BBB” from Fitch). The creditworthiness of

all the Würth Group’s banking relationships is controlled

by daily monitoring of ratings and outlook changes. A rating

downgrade leads to a reduction in the credit limits and

to immediate reduction or closure and transfer of open trans-

actions to other banks. During 2021 there were two rating

upgrades and two rating downgrades, which did not aﬀect

the open positions at the counterparties.

The high international creditworthiness of the Würth Group

(Standard & Poor’s has awarded its non-current liabilities an

“A” rating) allows the WFG to raise funds in the international

capital markets on favourable terms. To cover any liquidity

needs that may arise even in extraordinary circumstances, the

WFG also has credit lines granted by various banks. The

annual ﬁnancial requirements plan of the Würth Group serves

as a basis for the size and the management of such liquidity

reserves.

Inhouse Banking’s business is exposed to exchange rate risk;

the insurance brokerage business is only subject to trans-

lation risk from the conversion of business transactions in

Swiss francs into the consolidation currency, which is the euro.

Interest rate risks are measured using gap and sensitivity

analyses, key rate duration analyses and present value calcu-

lations.

Annual Report 2021 Würth Finance Group

The WFG’s appetite for interest rate risks is deﬁned by the net

present value sensitivity of all on-balance-sheet and oﬀ-

balance-sheet exposures to adverse changes in interest rates

by 100 basis points, expressed as a percentage of equity

capital.

4 Operational risk

4.2 Technological risk

The bottleneck risk arising from current demographic trends,

among other considerations, can be countered by attractive

employment conditions, a modern and competitive working

environment and training tailored to individual roles. Employee

training can be internal or external. One focus of personnel

management is the targeted continuing professional develop-

ment and training of employees. Up-and-coming manage-

ment talents attend courses to prepare them for various levels

of management within the Group, via the MC Würth,

High Potential and Top Potential training programmes. These

As the Würth Group’s “payment factory”, the WFG handles

large payment volumes, which rely on high-performance

IT systems and networks. Consequently, the IT systems and

IT security are continually enhanced and monitored via an

information security management system. The WFG, in col-

laboration with cyber security experts, works to counter the

constantly growing and evolving threat from attacks on infor-

mation and communications technology. It does so by extending

technical and organisational protection measures and by

conducting awareness training for employees. In addition, the programmes give employees targeted training that is tailored

WFG has a business disaster recovery system. The ICT infra- to suit their particular ambitions and skills, to prepare them for

structure is highly scalable, enabling additional business vol- further management duties within the Group. Independently

umes to be dealt with cost-eﬀectively and with a high level of

processing quality.

Operational risk is the risk of losses resulting from inadequate

or failed internal processes or systems, human error or external

events.

The deﬁned limits set by the Board of Directors were not ex-

ceeded in the current reporting period under review.

4.1 Legal and compliance risk

By legal and compliance risk, the WFG means the risk of

possible, unintentional non-compliance with laws, regulations

or standards which could have a negative impact on the

business and its business relationships and, in the worst case,

could result in the imposition of payments for damages, ﬁnes,

penalties or other forms of liability.

3.3.3 Securities price risk

Securities price risk is the risk of ﬁnancial loss resulting from

changes in the price of (publicly traded) securities. To assess

securities price risks, the absolute amount of the securities

position and its earnings performance are considered. All

positions are valued at market prices (marked to market).

of the inhouse training programmes, both the Würth Group

and the WFG support any employee training as promoting

lifelong learning.

Meeting regulatory requirements is challenging for providers

of ﬁnancial and insurance services. Among other things, this

entails rules on dealing with employees, with clients and busi-

ness partners, with data and with authorities. It goes without

saying that the WFG endeavours to observe and adhere to

all rules and regulations applying to its business. It has the

necessary critical mass and the organisational set-up to ensure

eﬀective and eﬃcient compliance management and thus to

meet the increasing regulatory requirements in the ﬁnance and

insurance brokerage business. Due to the increasing legal

complexity, the Würth Group has inhouse experts and con-

sults renowned external consultants on a case-by-case basis.

The WFG pursues a conservative investment policy which

allows investment in bonds and money market paper (invest-

ment and sub-investment-grade) and shares on regulated

stock exchanges and capital markets. In addition to a deﬁned

benchmark strategy with strategic equity exposure, securities

price risk is countered through diversiﬁcation of the investment

portfolio. Limits per asset class have also been deﬁned to limit

securities price risk, including an automatic equity position

reduction mechanism which is triggered at a negative YTD

return of the equity portfolio of EUR 750 thousand, maxi-

mising the total negative return of the equity portfolio at

EUR 6 million per ﬁnancial year.

4.3 Personnel risk

The success of the WFG depends to a large extent on its

employees and their know-how. Through their ideas and

suggestions, the employees are deeply involved in particular

activities and work processes and thus make a signiﬁcant

contribution every day to the WFG’s continued existence,

ongoing improvement and innovations. Personnel risks will

continue to inﬂuence the WFG in the coming years, as com-

petition for highly qualiﬁed employees remains intense.

Future success will depend, among other factors, on the extent

to which the WFG succeeds in recruiting, integrating and

retaining skilled employees in the long term.

5 Sustainability

5.1 Foundation

Sustainability is becoming increasingly relevant to society.

This is leading to a heightened awareness for concerns such

as climate change, social injustice and corporate misconduct.

As a result, the market environment is changing rapidly across

all industries. In addition, the inclusion of sustainability criteria

in decision-making by investors and by banks granting loans

has led to an expansion and tightening of the associated require-

ments for corporate governance and risk management at

companies.

Training and education within and outside the (Würth) Group

are carried out regularly to promote awareness of legal and

compliance risks among employees.

In the current reporting period under review this automatic

position reduction mechanism was not activated.

Staﬀ turnover is documented and analysed across all hierarchy

levels. Regular employee surveys conducted by independent

institutions and monthly monitoring of staﬀ turnover are key

tools that allow the WFG to identify unfavourable develop-

ments, analyse their impact on staﬀ recruitment and combat

these eﬀects using targeted measures.

Furthermore, a Group-wide whistleblowing system exists that

can be used not only by employees but also by customers,

suppliers and other stakeholders to anonymously report sus-

picions of compliance breaches.

Thus, sustainability risks, also known as environmental,

social and governance (ESG) risks, also inﬂuence the level of

capital costs and insurance costs as well as the creditworthi-

ness of the Würth Group and its business partners. This

challenge is being met through active sustainability manage-

ment at strategic and operational level and the expansion

of associated reporting, including at the WFG.

For tax compliance, the WFG is structured in the manner that

it needs to comply with both Swiss and Dutch tax legislation

and has embedded operating policies and procedures to en-

sure compliance with these tax legislations.

Annual Report 2021 Würth Finance Group

Sustainability risks relate to the potential impact that a

company, its stakeholders and the environment or society can

have on each other. They are based on a triangular relation-

ship where each nodal point acts in both directions. ESG risks

can have a positive or negative impact on a company’s

assets, business models and reputation. They have a complex

cause-and-eﬀect relationship with the risk framework and

all other risk factors. Considering sustainability risks therefore

requires their systematic integration along the three lines of

defence in the company’s risk framework. The basis for this is

reliable and transparent information.

The WFG intends to support an environmentally friendly

corporate governance of the Würth Group and its business

partners. That includes promoting and funding projects

that help to reduce greenhouse gas emissions and protect the

environment. The ﬁrst step in this direction is the disclosure

and reporting of quantitative metrics on the current situation

and the creation of incentives for positive sustainability

development. To this end, metrics have been put in place in

line with the standards of the GRI and initial data collected.

At the same time, the work of the Task Force on Climate-related

Financial Disclosures (TCFD) will be kept under review and

the latest developments in IFRS standards will be followed.

The WFG sees the integration of environmental and climate

goals into the design of ﬁnancial and insurance solutions as

an opportunity and is examining appropriate adjustments.

5.4 Governance

6 COVID-19

The third element in ESG relates to the factors of good

corporate governance. The guiding principles in this area are

accountability, fairness, transparency and responsibility.

It must be taken into account that the speciﬁc institutional and

cultural context signiﬁcantly inﬂuences the way a company

is set up and monitored.

A sustainable containment of the COVID-19 pandemic has

not yet been achieved. Health systems are overburdened in many

places. There is a continuing need for far-reaching protective

measures that severely restrict people’s freedom. These meas-

ures will continue to place a heavy burden on the global

economy in the coming quarters. The restrictions only can be

lifted and an economic recovery can be expected, when

the majority of the population has been vaccinated against the

virus. In view of the existence of pent-up demand in various

sectors, this may well turn out to be a very dynamic recovery.

The WFG has suitable and eﬀective structures, management

and decision-making systems, procedures and processes

as well as competent staﬃng of management and supervisory

bodies, as important elements in ensuring good corporate

governance. This is complemented by a solid ﬁnancial position,

a comprehensive and eﬀective risk control system and per-

formance-related remuneration structures.

To ensure this transparency, the Würth Group has undertaken

to publish a Group-wide consolidated sustainability report

for the ﬁrst time in 2022. This will be based on the guidelines

and standards of the Global Reporting Initiative (GRI) with

a view to recording the diverse social, economic and environ-

mental activities of the Würth Group. Derived from this and

based on consistent data and metrics, the WFG also intends

to establish its own sustainability reporting. The aim is to

create a system that makes the progress achieved with regard

to sustainability-oriented corporate governance transparent

and comparable.

Until then, there may be eﬀects on operations and on the WFG’s

Consolidated Financial Statements that will not be recorded

until the subsequent reporting period. These may, for example,

relate to the valuation of current and non-current receivables

from related parties, securities and other assets. Weak invest-

ment markets, a fall in premium income in insurance broker-

age, declining payment volumes in the Payment Factory

department and a potential increase in lending volumes will have

direct and partially oﬀsetting eﬀects on revenue and thus on

the operating result, possibly in the double-digit percentage range.

5.3 Social responsibility

The WFG’s corporate governance is geared towards complying

with the relevant legal and regulatory requirements, avoiding

infringements wherever possible and thus protecting the com-

pany’s good reputation. An institutionalised whistleblowing

system helps in the identiﬁcation and reporting of any infringe-

ments. The WFG works closely with the authorities in the

clariﬁcation of conduct that does not comply with the law and

standards.

In the context of ESG, social risks relate to the consequences

of a company’s failure to meet its social responsibilities in

its role as an employer, customer, service provider and stake-

holder in society. For the Würth Group and the WFG, it has

always been self-evident that they need to behave in a social-

ly responsible manner towards all stakeholders and to give

high priority to the relevant values when designing and devel-

oping the company’s social architecture.

The WFG also sees opportunities to take greater account

of sustainability aspects in the design of its own products and

services. The WFG has identiﬁed initial starting points and

will specify them in coordination with the Würth Group’s sus-

tainability strategy.

In view of the existing uncertainties regarding income, the

WFG’s Management has various packages of measures that

can be implemented depending on developments. These

include postponing or cancelling discretionary spending, limit-

ing non-essential capital expenditure, imposing short-time

working and a hiring freeze. The ﬁnancial position of the WFG

and the Würth Group is good. The company has suﬃciently

high liquidity reserves to meet its ﬁnancial obligations in

the coming months and can raise new funds on the capital

market if necessary thanks to its high credit rating.

The decentralised structure of the Würth Group and short

decision-making paths enable the WFG to respond quickly to

changes with regard to the shaping of corporate governance

and thus support long-term, sustainable growth.

With regard to employees, the WFG’s commitment is not

limited to health and safety. It wishes to support its employees

in their activities and work experience. The WFG strives to

attract and foster a broad range of talented employees at all

levels of the company; it is eager to promote workforce

diversity and regards a fair remuneration system as a self-

evident requirement.

5.2 Environmental protection and climate change

Environmental risks arise from the eﬀects of climate change and

eﬀorts to mitigate or contain it. They are divided into two

categories: Physical risks include the direct impact of weather

and climate changes on the economy. Transition risks result

from the societal changes brought about by the shift to a car-

bon-neutral economy.

Based on the values of the Würth Group, the WFG supports

local social projects and organisations in the Netherlands

and Switzerland. These are often linked to volunteering work

by employees, for example as part of Special Olympics, an

organisation that provides training and competition in sports

for people with intellectual disabilities, or with NLdoet, the

largest volunteering scheme in the Netherlands.

The WFG’s Management has concluded that there are no

material uncertainties that might cast signiﬁcant doubt on the

company’s ability to continue as a going concern.

Basic principles of our risk management system

The Management bears the responsibility for all risks incurred

as a result of the company’s business activities and seeks to

achieve a healthy balance between risk and returns.

closure of risks to the Group and company management,

owners, supervisory authorities and other stakeholders.

Revenue is protected on the basis of risk tolerance – i.e. the

maximum risk that the Würth Finance Group can bear given

its ﬁnancial and earning power.

An independent control process forms an integral part of

the corporate structure.

Employees are familiar with and alert to the principal risks

speciﬁc to their area of activity. A central element of risk

control is the comprehensive, transparent and objective dis-

Ultimately, the Würth Finance Group’s reputation depends

on eﬀective risk management and control.

Annual Report 2021 Würth Finance Group

Würth Group

Würth Finance Group

LEGAL STRUCTURE (SIMPLIFIED CHART)

EXECUTIVE BODIES

(As at 31 December 2021)

Würth

Family Foundations

Board of Directors

Würth Finance International B.V.

Elected until:

2022

Joachim Kaltmaier

(Member of the Central Managing Board of the Würth Group)

Chairman

Member

Prof. Dr. h. c. mult. Reinhold Würth

(Chairman of the Supervisory Board of the Würth Group’s Family Foundations)

2025

Dr. Bernd Thiemann

(former Chairman of the Board of Deutsche Genossenschaftsbank AG)

Adolf Würth

GmbH&Co. KG

Germany

2022

Würth Promotion GmbH

Austria

Mag. Michel Haller

(Chief Executive Oﬃcer of Hypo Vorarlberg Bank AG)

2022

Wolfgang Kirsch

(former Chief Executive Oﬃcer of DZ Bank AG, Chairman of the Supervisory Board of Fresenius SE & Co. KGaA)

2022

Dieter Gräter

(Vice President Finance, Würth-Verwaltungsgesellschaft mbH)

Member

2025

Reinhold Würth

International

Holding GmbH

subsidiaries

Germany

Christoph Raithelhuber

Ralf Schaich

(Member of the Supervisory Board of the Würth Group’s Family Foundations, Vice President Adolf Würth GmbH & Co. KG) Member

2025

Managing Directors

Würth Finance International B.V.

International

subsidiaries

Björn van Odijk

Roman Fust

Managing Directors

Würth Financial Services AG

Würth Finance

International B.V.

Netherlands

Würth International AG

Switzerland

Adrian Parpan

Beat Jordan

Managing Directors

Würth Invest AG

Roman Fust

(Delegate of the Board of Directors)

Würth Financial

Services AG

Switzerland

Würth Finance Int’l B.V.

Rorschach Branch

Switzerland

International

subsidiaries

Patrik Imholz

Auditors

EY, Amsterdam/Zurich:

EY, Zurich:

Würth Finance International B.V.

Würth Invest AG

Switzerland

Würth Financial Services AG, Würth Invest AG

Internal auditors

KPMG, Zurich:

Würth Finance International B.V.

Annual Report 2021 Würth Finance Group

Würth Finance Group

INFORMATION FOR INVESTORS

Outstanding Capital Market Transactions by Würth Finance International B.V. at 31 December 2021:

Bonds

Notional amount: Coupon rate:

Issue yield:

1.039%

1.038%

0.782%

Term:

Listing:

EUR 500 m

EUR 750 m

1.000%

0.750%

19.05.2015–19.05.2022 Luxembourg Stock Exchange/ISIN: XS1234248919

25.05.2018–25.05.2025 Luxembourg Stock Exchange/ISIN: XS1823518730

21.05.2020–22.11.2027 Luxembourg Stock Exchange/ISIN: XS2176534795

All bonds have been granted an “A” rating by Standard & Poor’s.

For the bond maturing on 19 May 2022, the 3-month par call option was exercised in due time before 14 January 2022.

The actual maturity of the EUR 500 million bond is therefore 21 February 2022.

There are also 3-month par call options for the bonds maturing on 25 May 2025 and 22 November 2027.

Multi Currency Commercial Paper Programme

Notional amount:

EUR 500 m

Coupon rate:

variable

Maturity period:

7 days–2 years

Under this programme, in addition to Würth Finance International B.V., Adolf Würth GmbH & Co. KG can also issue short-term

commercial paper for up to a cumulative total of EUR 500 million.

Contact address

Würth Finance International B.V.,

Amsterdam

Het Sterrenbeeld 35

NL-5215 MK ’s-Hertogenbosch

Postal address:

P.O. Box 344

NL-5201 AH ’s-Hertogenbosch

Phone +31 73 681 49 00

communications@wuerthﬁnance.net

wuerthﬁnance.net

Würth Finance Group/ Würth Finance International B.V.

FINANCIAL STATEMENTS 2021

Würth Finance Group

CONTENTS

FINANCIAL STATEMENTS 2021

Financial Statements 2021

Würth Finance Group

04 Consolidated Income Statement

04 Consolidated Statement of Comprehensive Income

05 Consolidated Balance Sheet

06 Consolidated Statement of Changes in Equity

07 Consolidated Cash Flow Statement

08 Notes to the Consolidated Financial Statements

Financial Statements 2021

Würth Finance International B.V.

46 Company Income Statement

46 Company Balance Sheet

48 Accounting Policies Used in Preparing

the Company Financial Statements

49 Notes to the Company Financial Statements

55 Other Information

56 Independent Auditor’s Report

Annual Report 2021 Würth Finance Group

Consolidated income statement

Consolidated balance sheet

for the year ended at 31 December

at 31 December before appropriation of profits

in TEUR

Notes

2021

2020

in TEUR

Notes

2021

2020

Operating income

ASSETS

Interest income from financial instruments measured at amortised cost

Interest income from financial instruments measured at fair value through profit or loss

Interest expenses

42,665

15,408

43,808

15,017

Non-current assets

Intangible assets

1,477

1,814

1,536

1,687

–43,903

14,170

–45,036

13,789

Right-of-use assets

Net interest income

Property, plant and equipment

Loans to related companies

Positive fair values of derivative instruments

Other financial assets to related parties

Deferred tax assets

428

317

4, 16

18b, 18c

5, 16

1,429,290

4,670

1,163,513

9,537

Income from factoring activities

16,234

43,725

14,789

797

16,275

37,668

12,376

1,709

Income from commission and service fee activities

Income from trading activities and financial instruments

Other ordinary income from related parties

Expected credit loss (expenses) /recovery

Total operating income

9,896

2,062

Total non-current assets

1,439,741

1,186,486

18a

6,846

–7,886

73,931

96,561

Current assets

Receivables from related companies

Positive fair values of derivative instruments

Other assets

18b, 18c

1,079,652

985

951,433

4,493

Operating expenses

Personnel expenses

–20,701

–11,485

–1,845

–19,394

–10,358

–1,767

3,623

3,940

Other administrative expenses

Amortisation expenses

Total operating expenses

Accrued income and prepaid expenses

Securities held for trading

Cash and cash equivalents

Total current assets

6,828

6,612

7, 18a

68,479

68,937

–34,031

–31,519

859,052

2,018,619

3,458,360

1,126,950

2,162,365

3,348,851

Profit before taxes

Income tax expense

Deferred taxes

62,530

–9,587

–82

42,412

–9,001

–45

Total assets

EQUITY AND LIABILITIES

Shareholders’ equity

Net profit for the year

52,861

33,366

Issued capital

16,000

5,000

16,000

5,000

Additional paid-in capital

Retained earnings

303,345

–8,947

–54

286,899

–14,466

–5

Consolidated statement of comprehensive income

for the year ended at 31 December

Other comprehensive income from cash flow hedges

Foreign currency translation

Net profit for the year

52,861

368,205

33,366

326,794

Total shareholders’ equity

in TEUR

Net of tax

2021

2020

Non-current liabilities

Bonds issued

Profit for the year

52,861

33,366

1,250,060

3,969

610

1,752,348

6,816

Total items that will be reclassified to the income statement

Exchange differences on translation of foreign operations

Net gain/(loss) on cash flow hedges

Liabilities for pension plans

Lease liabilities

–49

662

3,457

–5,608

Payables to banks

4,622

Total items that will not be reclassified to the income statement

Remeasurement gain /(loss) on defined benefit plans

Deferred taxes on cash flow hedges

Negative fair values of derivative instruments

Deferred tax liabilities

18b, 18c

719

3,070

3,080

2,062

–418

320

400

Total non-current liabilities

1,255,678

1,767,918

Other comprehensive income for the year (OCI)

Total comprehensive income for the year, net of tax

8,550

–5,971

27,395

61,411

Current liabilities

Bonds issued

499,843

Commercial paper

Payables to related companies

Lease liabilities

1,283,002

1,220

1,220,451

1,052

Payables to banks

11,988

7,020

1,674

Income tax payables

5,954

Negative fair values of derivative instruments

Other liabilities

18b, 18c

9, 16

8,347

5,696

15,565

7, 492

12,513

6,799

Accrued expenses and deferred income

Total current liabilities

Total equity and liabilities

1,834,477

3,458,360

1,254,139

3,348,851

Annual Report 2021 Würth Finance Group

Consolidated statement of changes in equity

for the year ended at 31 December

Consolidated cash flow statement

for the year ended at 31 December

Foreign

currency

translation

in TEUR

2021

52,861

429

2020

33,366

434

Issued

capital paid-in capital

Additional

Retained

earnings hedge reserve

Cash flow

Net profit for the year

in TEUR

Total

327, 399

33,366

Amortisation and impairments

At 1 January 2020

16,000

5,000

315,317

33,366

–8,858

–60

Adjustment to provision for taxes

1,065

–120

Net profit for the year

Foreign currency translation

Cash flow hedge accounting

IAS 19

Deferred tax expense /(benefit)

–2,143

–3,618

–17,213

–942

–1,138

700

Other expenses and revenues without cash flows

Foreign exchange gains and losses (long-term loans)

Foreign exchange gains and losses (short-term loans)

(Increase)/decrease in operating assets

Redemption of long-term loans to related companies

Lending of long-term loans to related companies

Receivables from related companies

Positive fair values of derivative instruments

Other assets, accrued income and prepaid expenses

Increase/(decrease) in operating liabilities

Payables to related companies

–5,608

–418

13,714

678

–418

Deferred taxes on cash flow hedges

Total comprehensive income for the year

Dividend payments

32,948

–28,000

320,265

–5,608

27, 395

–28,000

326,794

57,083

–584,111

156,959

8,375

60,786

–368,891

423,490

–5,876

At 31 December 2020

16,000

5,000

–14,466

–5

At 1 January 2021

16,000

5,000

320,265

52,861

–14,466

–5

326,794

52,861

–49

100

1,479

Net profit for the year

Foreign currency translation

Cash flow hedge accounting

IAS 19

–49

62,551

300

573,318

5,110

3,457

Negative fair values of derivative instruments

Other liabilities, accrued expenses and deferred income

Net cash flows from operating activities

Purchase of property, plant and equipment, and intangible assets

Disposal of property, plant and equipment, and intangible assets

Purchase of securities

3,080

3,746

–264,557

–421

–5,471

731,579

–168

Deferred taxes on cash flow hedges

Total comprehensive income for the year

Dividend payments

2,062

5,519

2,062

55,941

–20,000

356,206

–49

61, 411

–20,000

368,205

–61

At 31 December 2021

16,000

5,000

–8,947

–54

–28,451

30,449

9,500

11,016

–37,577

31,653

11,068

4,982

Disposal of securities

Würth Finance International B.V. has authorised share capital of EUR 80 million consisting of 160,000 share certiﬁcates with

a nominal value of EUR 500 . Of this authorised share capital, 32,000 share certiﬁcates have been subscribed and fully paid in,

corresponding to EUR 16 million.

Sales of other financial assets to related parties

Net cash flows from investing activities

Proceeds of borrowings

746,086

–500,000

–100,000

–28,000

118,086

Repayment of borrowings

In 2021, a dividend of TEUR 20,000 (EUR 625 per share) was paid for ﬁnancial year 2020.

Commercial paper

Dividend payments

–20,000

–48

Net cash flows from financing activities

Net foreign exchange difference

Net increase /(decrease) in cash and cash equivalents

–273,589

854,714

Net cash and cash equivalents at the beginning of the year

Net cash and cash equivalents at the end of the year

Net increase/(decrease) in cash and cash equivalents

1,120,654

847,065

265,940

1,120,654

854,714

–273,589

Increase/(decrease) in taxes paid

Interest received

–8,254

69,090

–10,666

71,518

Interest paid

–37,334

–40,870

The funds for this cash ﬂow statement are represented by cash and cash equivalents (net).

Annual Report 2021 Würth Finance Group

Notes to the consolidated Financial Statements

for the year ended at 31 December

2 Accounting principles

Amendments to IFRS 16 COVID-19-Related Rent Concessions

On 28 May 2020, the IASB issued COVID-19-Related Rent

Concessions - amendment to IFRS 16 Leases. The amendments

provide relief to lessees from applying IFRS 16 guidance on

lease modiﬁcation accounting for rent concessions arising as

a direct consequence of the COVID-19 pandemic. As a

practical expedient, a lessee may elect not to assess whether

a COVID-19 related rent concession from a lessor is a lease

modiﬁcation. A lessee that makes this election accounts for

any change in lease payments resulting from the COVID-19

related rent concession the same way it would account for

the change under IFRS 16, if the change were not a lease

modiﬁcation.

General

The consolidated Financial Statements of the Group have

been prepared in accordance with International Financial

Reporting Standards as adopted by the European Union

(EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.

The main accounting principles are described in this section

in order to show how their application inﬂuences the stated

results and information for the Group.

1 Business activity

Fully consolidated companies

The consolidated Financial Statements include the ﬁnancial

statements of Würth Finance International B.V., Amsterdam, and

its subsidiaries, which are represented as a single business

entity known as the Würth Finance Group. Subsidiaries that

are controlled directly or indirectly by the Group have been

consolidated. Control is achieved when the Würth Finance Group

is exposed, or has rights, to variable returns from its involve-

ment with the investee and has the ability to aﬀect those re-

turns through its power over the investee. Control is assumed

if the Würth Finance Group holds more than 50% of the voting

rights of the investee.

Würth Finance International B.V. (in these consolidated Finan-

cial Statements together with its subsidiaries referred to as the

Würth Finance Group) was incorporated in 1987 and is domi-

ciled in Amsterdam, the Netherlands . The address of the

company is Het Sterrenbeeld 35, P. O. Box 344, NL-5201 AH

‘s-Hertogenbosch . The company has a branch in Rorschach,

Switzerland, and also has several subsidiaries in Switzerland.

The consolidated Financial Statements are presented in euros

and all values are rounded to the nearest thousand (EUR ,000),

except when otherwise indicated.

The companies belonging to the Würth Finance Group (sub-

sequently referred to as “the Group”) are part of the interna-

tionally active Würth Group. All share certiﬁcates pertaining

to Würth Finance International B.V. , Amsterdam, are held by

Reinhold Würth Holding GmbH , Künzelsau, Germany, which

is ultimately owned by the family foundation .

The amendment applies to annual reporting periods beginning

on or after 1 April 2021. Earlier application is permitted.

This amendment had no impact on the consolidated Financial

Statements of the Group.

New and amended standards and interpretations

Subsidiaries are consolidated from the date on which they

were acquired by the Group and are deconsolidated from the

date of disposal.

Several amendments and interpretations apply for the ﬁrst

time in 2021, but do not have an impact on the consolidated

Financial Statements of the Group. The Group has not adopted

any standards, interpretations or amendments early that have

been issued but are not yet eﬀective. The nature and eﬀect of

the changes as a result of adoption of these new accounting

standards are described below.

Assumptions and estimates

The IFRS include guidelines that require the Group to make

assumptions and estimates when preparing its consolidated

Financial Statements. These estimates and assumptions are

continuously reviewed and are based on past experience and

other factors, including expectations regarding likely future

developments. The most important assumptions and estimates

relate to the actuarial calculations for pensions and other

post-employment beneﬁts, the expected credit loss, as well

as to the provisions.

The core activities of the Group include providing ﬁnancing to

and carrying out a wide range of ﬁnancial activities with

companies, both at home and abroad, belonging to the entire

Würth Group, as well as providing consulting and other

services in the area of pension funds and insurance to both

private persons and small and medium-sized enterprises.

Method of consolidation

The consolidated Financial Statements comprise the ﬁnancial

statements of Würth Finance International B.V., Amsterdam,

and its subsidiaries as at 31 December. The ﬁnancial statements

of the subsidiaries are prepared for the same reporting period

as the parent company, using consistent accounting policies.

All intra-Group balances and transactions as well as income

and expenses resulting from intra-Group transactions are fully

eliminated.

Amendments to IFRS 7, IFRS 9, IAS 39, IFRS 4 and IFRS 16:

interest rate benchmark reform – Phase 2

The amendments provide temporary reliefs which adresses

the ﬁnancial reporting eﬀects when an interbank oﬀered

rate (IBOR) is replaced with an alternative nearly risk-free

interest rate (RFR). A practical expedient to require con-

tractual changes, or changes to cash ﬂows that are directly

required by the reform, to be treated as changes to a

ﬂoating interest rate, equivalent to a movement in a market

rate of interest. Permit changes required by IBOR reform to

be made to hedge designations and hedge documentation

without the hedging relationship being discontinued. Provide

temporary relief to entities from having to meet the separately

identiﬁable requirement when an RFR instrument is designated

as a hedge of a risk component. These amendments had no

material impact on the consolidated ﬁnancial statements of

the Group. The Group intends to use the practical expedients

in future periods if they become applicable.

The Annual Report of the Group was approved by the

Management on 25 April 2022 and can be obtained from

Würth Finance International B.V., Amsterdam, or down-

loaded from the Würth Finance International B.V. website:

www.wuerthﬁnance.net.

Recognition

Purchases and sales of ﬁnancial assets and liabilities are

recognised on the settlement day. Transactions are thus recog-

nised in the balance sheet mainly on the settlement date

and not on the transaction date. All concluded transactions

are recorded and evaluated. Any unrealised gains or losses

resulting from valuing transactions at market value are recog-

nised in the income statement.

The scope of consolidation of the Group as at 31 December 2021 is composed as follows:

Company

Core activities

No. chamber of commerce Currency Share capital Quota

Würth Finance International B.V., Treasury activities for the Würth Group

Amsterdam

008654700

EUR

CHF

16,000

23,000

1,500

100%

Würth Invest AG,

Chur

Asset management

CH - 350.3.0 07.992- 6

Würth Financial Services AG,

Rorschach

Financial and pension plan consulting/insurance CH-020.3.918.954-7

brokerage for corporate and private clients

Annual Report 2021 Würth Finance Group

Accrual of earnings and expenses

Recognition and measurement of financial instruments

Financial instruments are recognised when the Group becomes

party to the contractual provisions of the ﬁnancial instrument.

Financial assets are derecognised when the contractual rights

to the cash ﬂows from the ﬁnancial asset expire, or when

the ﬁnancial asset and all substantial risks and rewards are

transferred.

Financial liabilities are derecognised when the related con-

tractual obligations are extinguished, discharged/cancelled

or expire.

Any contingent consideration to be transferred by the acquirer

will be recognised at fair value at the acquisition date. A

contingent consideration classiﬁed as equity is not remeasured

and its subsequent settlement is accounted for within equity.

A contingent consideration classiﬁed as an asset or liability that

is a ﬁnancial instrument and within the scope of IFRS 9 Financial

Instruments is measured at fair value with the changes in fair

value recognised in the statement of proﬁt or loss in accordance

with IFRS 9. Other contingent considerations that are not within

the scope of IFRS 9 are measured at fair value at each reporting

date with changes in fair value recognised in proﬁt or loss.

Derivative financial instruments

Interest income and interest expenses are accrued as earned

and recognised as income or expenses respectively. Dividends

are recognised as from the date when they have been formally

declared and approved. Premiums and discounts arising from

the issuance of bonds are amortised over their residual term

using the eﬀective interest rate (EIR) method. Factoring fees are

charged when the receivable is assigned to the Group.

Derivative ﬁnancial instruments are ﬁnancial contracts that

derive their value from underlying changes in interest rates,

foreign exchange rates or other ﬁnancial instruments. The

Group acquires derivative ﬁnancial instruments to manage

exposures to interest, currency and other market risks.

Derivative ﬁnancial instruments are classiﬁed as held-for-trading

ﬁnancial assets / ﬁnancial liabilities, unless they are included

in hedge accounting as hedging instruments.

Collection and delcredere charges are levied when the supplier’s

invoice is paid. Income from services is in principle recorded

when the service is rendered. Brokerage, consulting fees and

other such income are recognised on a pro rata basis through-

out the time the service is rendered. Revenue from new broker-

age mandates is recognised with eﬀect from the signature

date on the basis of past experience.

Financial instruments are recognised and derecognised using

settlement date accounting.

Derivative ﬁnancial instruments are recognised at fair value

at each balance sheet date and reported in the balance sheet

under “positive fair values of derivative instruments” or

“negative fair values of derivative instruments”.

Cash and cash equivalents

On initial recognition, ﬁnancial instruments are measured at

fair value. Fair value on initial recognition includes transaction

cost directly attributable to the acquisition or issue of ﬁnancial

instruments, except for ﬁnancial instruments carried at fair

value through proﬁt or loss, for which transaction costs are rec-

ognised in net income in the period when they are incurred.

Cash and short-term deposits in the balance sheet comprise

cash at banks and on hand and short-term deposits with a

maturity of three months or less, which are subject to an insig-

niﬁcant risk of changes in value. Cash and cash equivalents

are valued at amortised cost.

The fair values recognised in the balance sheet reﬂect the net

fair value of the instruments after the cash settlement.

Foreign exchange translation

The Group’s consolidated Financial Statements are presented

in euros, which is the Group’s presentation currency. Transac-

tions in foreign currencies are initially recorded at the functional

currency spot rate at the date the transaction ﬁrst qualiﬁes for

recognition. Exchange diﬀerences arising from such transac-

tions, as well as income resulting from converting monetary

assets and monetary liabilities denominated in foreign curren-

cies at the rate of exchange applicable at the balance sheet

date, are recognised in the income statement.

Derivative financial instruments and hedge accounting

The Group designates certain derivatives held for risk man-

agement purposes as cash ﬂow hedges or fair value hedges:

• Fair value hedges when hedging the exposure to changes

in the fair value of a recognised asset or liability or an un-

recognised ﬁrm commitment

• Cash ﬂow hedges when hedging the exposure to variability

in cash ﬂows that is either attributable to a particular risk as-

sociated with a recognised asset or liability or to a highly

probable forecasted transaction or the foreign currency risk

in an unrecognised ﬁrm commitment

Securities

Financial instruments are measured in subsequent periods

either at fair value or at amortised cost using the eﬀective

interest rate method, depending on the ﬁnancial instrument

classiﬁcation.

Within the scope of its management and performance meas-

urement activities relating to a documented risk management

and investment strategy, the Group measures securities as

ﬁnancial instruments at fair value through proﬁt or loss. The fair

value of securities that are actively traded in organised

ﬁnancial markets is determined by reference to quoted market

prices. For securities where there is no active market, fair

value is determined using valuation techniques such as price

quotations from securities brokers or on the basis of price

models. The valuations are by their very nature dependent

on the assumptions on which they are based. Traded debt

securities are carried at their clean price.

The eﬀective interest rate is the rate that exactly discounts the

estimated future cash payments and receipts through the

expected life of the ﬁnancial asset or liability to its carrying

amount. When calculating the eﬀective interest rate, the

Group estimates future cash ﬂows, considering all contractual

terms of the ﬁnancial instrument.

Conversion rates at 31 December

US dollar (USD)

2021

1.137

2020

1.224

1.082

0.895

1.558

7.950

The Group documents all hedging relationships and its risk

management objectives, along with its strategy for carrying out

the hedge transactions.

Swiss franc (CHF)

1.036

0.840

1.436

7.232

10.027

7. 438

1.081

British pound (GBP)

Major types of ﬁnancial instruments and

their classiﬁcation

Canadian dollar (CAD)

Chinese renminbi (CNH)

Norwegian krone (NOK)

Danish krone (DKK)

Loans and receivables

Loans and receivables are non-derivative ﬁnancial assets with

ﬁxed or determinable payments that are not quoted in an

active market. All loans and receivables are initially recognised

at their actual cost, which corresponds to the fair value at the

time of the loan being granted. After initial recognition, loans

and receivables are subsequently measured at amortised cost

less value adjustments using the eﬀective interest rate method

and less allowance for expected credit losses.

The Group assesses whether the derivatives used in hedging

transactions are highly eﬀective in oﬀsetting changes in the

cash ﬂow or the fair value of hedged items, both at inception

and over the life of the hedge.

10.484

7.444

1.070

Business combination

In a business combination, the acquirer obtains control over

one or more businesses. Business combinations are accounted

for using the acquisition method. The cost of an acquisition

is measured as the aggregate of the consideration transferred,

which is measured at acquisition date fair value, and the

amount of any non-controlling interests in the acquiree. For each

business combination, the Group elects whether to measure

the non-controlling interests in the acquiree at fair value or at

the proportionate share of the acquiree’s identiﬁable net

assets. Acquisition-related costs are expensed as incurred and

included in administrative expenses.

Swiss franc (CHF) – average exchange rate

On consolidation, all assets and liabilities of the subsidiaries –

with the exception of shareholders’ equity – are translated into

euros at the rate of exchange prevailing at the reporting date

and their statements of proﬁt or loss are translated at exchange

rates prevailing at the dates of the transactions. The exchange

diﬀerences arising on translation for consolidation are recognised

in OCI. On disposal of a foreign operation, the component

of OCI relating to that particular foreign operation is reclassi-

ﬁed in proﬁt or loss foreign currency translation.

If these hedging instruments expire, are sold or no longer meet

the criteria for hedge accounting, the amounts previously

recognised in OCI are reclassiﬁed to the income statement as

net gains or losses on other ﬁnancial instruments during the

periods when the variability in the cash ﬂows or fair values of

the hedged item aﬀects net income. However, if a forecasted

transaction is no longer expected to occur, the cumulative gain

or loss that was reported in equity is immediately transferred

to the income statement under net gains or losses on other ﬁnan-

cial instruments.

The payments on the loans consist solely of interest and

principal. Income and expenses are recognised as income or

expenses respectively.

The Group records an allowance for expected credit loss (ECL)

for all loans. The ECL allowance is based on the credit losses

expected to arise over the life of the asset (the lifetime expected

credit losses or LTECL), unless there has been no signiﬁcant

increase in credit risk since origination, in which case the

allowance is based on the 12 months’ expected credit losses

(12mECL).

When the Group acquires a business, it assesses the ﬁnancial

assets and liabilities assumed for appropriate classiﬁcation and

designation in accordance with the contractual terms, economic

circumstances and pertinent conditions as at the acquisition date.

Financial instruments

A ﬁnancial instrument is any contract that gives rise to a

ﬁnancial asset of one entity and a ﬁnancial liability or equity

instrument of another entity.

This includes the separation of embedded derivatives in host

contracts by the acquiree.

Annual Report 2021 Würth Finance Group

Bonds issued

Changes in the expected useful life or the expected pattern of

consumption of future economic beneﬁts embodied in the as-

sets are accounted for by changing the amortisation period or

method, as appropriate, and treated as changes in account-

ing estimates.

In calculating the present value of lease payments, the Group

uses the incremental borrowing rate at the lease commence-

ment date if the interest rate implicit in the lease is not readily

determinable. After the commencement date, the amount of

lease liabilities is increased to reﬂect the accretion of interest

and reduced for the lease payments made. In addition, the

carrying amount of lease liabilities is remeasured if there is a

modiﬁcation, a change in the lease term, a change in the in-

substance ﬁxed lease payments or a change in the assessment

to purchase the underlying asset.

Taxes and deferred taxes

Issued bonds are initially recognised at the fair value of the

consideration received, net of directly attributable transaction

cost. They are subsequently reported in the balance sheet at

amortised cost using the eﬀective interest method. The amorti-

sation of bond-issuing cost (discount) is recognised in the

income statement over the duration of the term using the eﬀec-

tive interest method. Bonds represent non-current liabilities.

As soon as the remaining term is less than 12 months, the re-

spective bond is reported as a current liability.

Current income taxes are calculated based on the taxable

income in the ﬁscal year and in accordance with the applica-

ble tax laws in the Netherlands and Switzerland, and are

recognised as an expense in the period in which the income

is earned. They are stated as income tax receivables and

income tax payables in the balance sheet.

The amortisation expense is recognised in the income statement

in the expense category amortisation expenses. The amorti-

sation period and amortisation method are reviewed at least

at each ﬁnancial year-end.

Tax eﬀects arising from temporary diﬀerences between the

carrying value of assets and liabilities reported in the balance

sheet and their corresponding tax values are recognised

separately as deferred tax assets and deferred tax liabilities

respectively. Deferred income tax assets arising from tempo-

rary diﬀerences and from loss carryforwards eligible for oﬀset

are recognised only if it seems likely that in future suﬃcient

taxable proﬁts will be available against which those loss carry-

forwards can be oﬀset.

Property, plant and equipment

Leases

Short-term leases and leases of low-value assets

Property, plant and equipment comprise oﬃce furniture and

equipment, interior installations, vehicles, ICT hardware and

works of art. These assets are capitalised if their acquisition or

production cost can be reliably determined, if they will bring

future economic beneﬁt, and if the anticipated usage extends

beyond the reporting period.

The Group assesses at contract inception whether a contract

is, or contains, a lease. That is, if the contract conveys the

right to control the use of an identiﬁed asset for a period of

time in exchange for a consideration.

The Group applies the short-term lease recognition exemption

to its short-term leases of machinery and equipment (i.e. those

leases that have a lease term of 12 months or less from the

commencement date and do not contain a purchase option).

It also applies the lease of low-value assets recognition

exemption to leases of oﬃce equipment that are considered

to be of low value. Lease payments on short-term leases and

leases of low-value assets are recognised as expense on a

straight-line basis over the lease term.

The Group applies a single recognition and measurement

approach for all leases, except for short-term leases and leases

of low-value assets. The Group recognises lease liabilities to

make lease payments and right-of-use assets representing the

right to use the underlying assets.

Deferred income tax assets and liabilities are measured at

the tax rates that are expected to apply in the period in which

the asset is realised or the liability is settled.

Property, plant and equipment are stated at cost, net of accu-

mulated amortisation and accumulated impairment losses,

if any. Amortisation is calculated on a straight-line basis over

the estimated useful life of the assets:

Signiﬁcant judgment in determining the lease term of

contracts with renewal options

Right-of-use assets

Oﬃce furniture and equipment

Interior installations

Vehicles

2–5 years The Group recognises right-of-use assets at the commencement

5 years date of the lease (i.e. the date the underlying asset is available

3–4 years for use). Right-of-use assets are measured at cost, less any

2–3 years accumulated amortisation and impairment losses, and adjusted

for any remeasurement of lease liabilities. The cost of right-of-

The Group determines the lease term as the non-cancellable

term of the lease, together with any periods covered by an

option to extend the lease if it is reasonably certain to be exer-

cised, or any periods covered by an option to terminate the

lease, if it is reasonably certain not to be exercised.

ICT hardware

No amortisation is calculated on works of art.

use assets includes the amount of lease liabilities recognised,

The amortisation periods and methods are reviewed at least at

each ﬁnancial year-end.

initial direct costs incurred, and lease payments made at or

before the commencement date less any lease incentives re-

ceived. Unless the Group is reasonably certain to obtain

ownership of the leased asset at the end of the lease term, the

recognised right-of-use assets are depreciated on a straight-

line basis over the shorter of their estimated useful life and the

lease term. Right-of-use assets are subject to impairment.

Impairment of assets

The value of property, plant and equipment and other ﬁxed

assets is reviewed for impairment at least once a year or if

signiﬁcant events or changes in circumstances suggest that their

book value is too high. Where the carrying amount of an

asset exceeds its recoverable amount, the asset is considered

impaired and is written down to its recoverable amount. An

asset’s recoverable amount is the higher of an asset’s or cash-

generating unit’s fair value less the cost to sell and its value

in use.

Intangible assets

Intangible assets comprise among others software. Intangible

assets acquired separately are initially measured at cost.

The cost of intangible assets acquired in a business combination

is their fair value at the date of acquisition. Following initial

recognition, intangible assets are carried at cost less any accu-

mulated amortisation and accumulated impairment losses.

Intangible assets are amortised over their useful economic life

and assessed for impairment whenever there is an indication

that the intangible asset may be impaired.

Lease liabilities

At the commencement date of the lease, the Group recognises

lease liabilities measured at the present value of lease pay-

ments to be made over the lease term. The lease payments in-

clude ﬁxed payments (including in-substance ﬁxed payments)

less any lease incentives receivable, variable lease payments

that depend on an index or a rate, and amounts expected to

be paid under residual value guarantees. The lease payments

also include the exercise price of a purchase option reasonably

Provisions

Provisions are recognised in the balance sheet when the Group

has a present obligation to a third party as a result of a past

event, it is probable that an outﬂow of resources embodying

economic beneﬁts will be required to settle the obligation,

and a reliable estimate can be made of the amount of the obli-

gation.

Amortisation is calculated on a straight-line basis over the

estimated useful lives of the assets:

EDP software

Activated customer base

2 years certain to be exercised by the Group and payments of penal-

10 years ties for terminating a lease, if the lease term reﬂects the Group

exercising the option to terminate. The variable lease payments

that do not depend on an index or a rate are recognised as

expense in the period in which the event or condition that trig-

gers the payment occurs.

Annual Report 2021 Würth Finance Group

Pensions and other post-employment benefits

The Group Financing segment borrows funds from the money

and capital markets and places them at the disposal of the

Würth Group companies in the form of loans and credits. The

Trading segment purchases and sells currency and interest

rate instruments as well as securities for the purpose of gener-

ating ﬁnancial income and capital gains. The activities relating

to payment for goods purchased by Würth Group companies,

together with the delcredere and collection services for

suppliers of goods, are summarised under Services. Some of

the Group’s excess funds are allocated to a securities port-

folio, which is managed through Würth Invest AG. The results

of these asset management activities are disclosed in the

segment Portfolio Management. The Pension Plans & Insurance

segment comprises the services provided by Würth Financial

Services AG.

3 Intangible assets/right-of-use assets/property, plant and equipment

Intangible assets/right-of-use assets/property, plant and equipment comprise the following items:

At 31 December 2021

The Group operates a number of pension plans for its employ-

ees. These are treated as deﬁned beneﬁt plans in accordance

with IAS 19. Actuarial gains and losses are recognised imme-

diately in the balance sheet with a corresponding debit or

credit to retained earnings through OCI in the period in

which they occur. The impact of the eﬀect is shown in the

consolidated statement of comprehensive income.

Additions

(disposals)

incl. asset Acquisition

retirement

2021

Acquisition

cost

Accum.

cost amortisation

Asset Amortisation

retirement for the year amortisation

Accum.

Net book

value

in TEUR

2020

2021

2020

2021

For separately funded deﬁned beneﬁt plans, the degree of

coverage of the fair value of the beneﬁt obligations compared

with the plan’s assets, valued at market prices, is reported in

the balance sheet as a liability or an asset, taking into consid-

eration claims that still have to be oﬀset and unrecorded

actuarial gains or losses (the “projected unit credit method”).

Intangible assets

Software

2,228

15,280

17,508

133

675

808

2,360

15,956

18,316

–2,075

–13,897

–15,972

–30

–620

–650

–59

–2,165

196

1,281

1,477

Activated customer base

Total intangible assets

Right-of-use assets

Right-of-use land and buildings

Total right-of use assets

Property, plant and equipment

Vehicles

–158

–14,674

–217 –16,839

3,714

1,260

4,975

–2,028

283

–1,417

–3,161

1,814

Transactions with related companies

Direct revenue and expense are allocated to the appropriate

segment. Transfers between the business units are reported

at fair value, which corresponds to the amounts that would be

charged to third parties for similar services. Revenue and

expense arising from activities that are not directly attributable

to the segments are booked to Central Services.

3,714

1,260

4,975

–2,028

283

–1,417

–3,161

1,814

The Group is responsible for concentrating and optimising the

worldwide cash ﬂows within the Würth Group, managing the

ﬁnancial risks and handling the Würth Group ﬁnancing. In this

connection, by its very nature the Group carries out a very

wide variety of transactions with associated companies, that

is, with companies belonging to the Würth Group. Only a

relatively small proportion of transactions are carried out with

third parties outside the Würth Group.

635

655

–482

204

–121

–399

256

Art objects

Office equipment/installations

Total property, plant and equipment

Total

2,789

3,458

24,680

143

164

2,232

2,932

3,621

26,912

–2,658

–3,140

–21,140

–45

159

–208

–90

–211

–2,794

–3,193

138

428

–1,845 –23,193

3,719

Transactions performed within the Group are eliminated for the

purpose of these consolidated Financial Statements. All intra-

Group transactions are consolidated within the framework of

the consolidated ﬁnancial statements of the Würth Group.

At 31 December 2020

Additions

(disposals)

Acquisition

cost

incl. asset Acquisition

Accum.

Asset Amortisation

retirement for the year amortisation

Accum.

Net book

value

Segments

retirement

2020

cost amortisation

2020

in TEUR

2019

2020

The Group generates income through a wide range of activi-

ties, which are divided into the following segments:

• Inhouse Banking with Group Financing, Trading, Portfolio

Management, Central Settlement and Central Services

• External Financial Services with Pension Plans & Insurance

Intangible assets

Software

2,698

15,231

17,929

–470

2,228

15,280

17,508

–2,553

–13,695

–16,248

539

–43

496

–61

–2,075

153

1,383

1,536

Activated customer base

Total intangible assets

Right-of-use assets

Right-of-use land and buildings

Total right-of use assets

Property, plant and equipment

Vehicles

–159

–13,897

–421

–220 –15,972

This structure forms the basis for the primary segment reporting.

Segment reporting by geographic area is not considered

meaningful as the services are only provided from the Nether-

lands and Switzerland.

2,934

780

3,714

–1,219

523

–1,333

–2,028

1,687

2,934

780

3,714

–1,219

523

–1,333

–2,028

1,687

743

–108

635

–457

126

–151

–482

153

Art objects

Office equipment/installations

Total property, plant and equipment

Total

2,727

3,504

24,367

2,789

3,458

24,680

–2,590

–3,047

–20,514

–5

–63

–214

–2,658

–3,140

130

–46

313

121

1,140

317

–1,767 –21,140

3,540

Annual Report 2021 Würth Finance Group

in TEUR

Right-of-use assets

in TEUR

Lease liabilities

1,713

6 Other assets

As at 1 January 2021

Accretion of interest

Additions

1,687

As at 1 January 2021

Accretion of interest

Payments

in TEUR

2021

3,002

621

2020

2,671

1,269

3,940

–1

Receivables from third parties

Other assets

1,544

–1,417

1,814

118

Amortisation expense

As at 31 December 2021

1,830

Total other assets

3,623

in TEUR

Lease liabilities

Amortisation expense of right-of-use assets

Interest expense on lease liabilities

–1,416

7 Securities

Expense relating to short-term leases (incl. in cost of sales)

Expense relating to leases of low-value assets (incl. admin. expenses)

Variable lease payments (incl. in cost of sales)

Market value

2021

Acquisition cost

2021

Market value

2020

Acquisition cost

2020

in TEUR

Equities/funds

Bonds

10,775

52,389

3,451

10,170

50,961

3,361

6,615

56,363

3,644

5,733

54,462

3,534

981

Total amount recognised in income statement

–1,415

Sub-investment-grade bonds

Hedge funds

1,119

Commodities

Total securities

1,864

68,479

1,590

66,082

1,196

956

68,937

65,666

4 Loans to related parties

in TEUR

2021

1,167,421

584,111

–57,083

22,390

2020

1,122,678

368,891

Securities are recognised at market values.

Balance at 1 January

New loans granted, increase in existing loans

Repayments

–60,786

–20,173

–238,013

Currency and other adjustments

Term reclassification

8 Bonds issued

–283,641

In 2021, no new bonds were issued.

Overview of bonds issued at 31 December 2021

Expected credit loss

–3,908

–9,084

Total loans to related parties

1,429,290

1,163,513

Long-term loans to related companies, granted in foreign currencies, are translated into euros at the year-end conversion rates.

The average interest rates for the major currencies at 31 December are:

in TEUR

Maturity

Notional

amount

Premium/

discount

Own bonds

Total

Coupon

1.000%

Short term

2021

1.76%

0.99%

3.63%

1.02%

2020

1.75%

0.94%

3.72%

1.08%

19.05.2022

500,000

–157

499,843

EUR

CHF

USD

DKK

Total book value short-term bond liabilities

Long term

499,843

25.05.2025

500,000

750,000

3,135

503,135

746,925

1.000%

0.750%

22.11.2027

–3,074

Total book value long-term bond liabilities

Total book value bonds issued

1,250,060

1,749,903

5 Other financial assets to related parties

Notional

(excluding own

in TEUR

Maturity

bonds)

500,000

750,000

Market value

500,900

Coupon

1.000%

0.750%

In its function to provide funds to other Würth Group companies to operate their business, the Group established a funding

relationship with Internationales Bankhaus Bodensee AG (IBB). In 2021 the last part of this funding relationship was repaid.

The following table shows the exposure for the year ended on 31 December:

19.05.2022

25.05.2025

516,165

22.11.2027

773,055

in TEUR

2021

2020

9,896

Total market value at 31 December

1,790,120

Capital relinquishment

Total other financial assets to related parties

For the bond maturing on 19 May 2022, the 3-month par call option was exercised in due time before 14 January 2022.

The actual maturity of the EUR 500 million bond is therefore 21 February 2022.

These funds are not guaranteed.

There are also 3-month par call options for the bonds maturing on 25 May 2025 and 22 November 2027.

Annual Report 2021 Würth Finance Group

Overview of bonds issued at 31 December 2020

10 Interest income and expenses

in TEUR

Maturity

Notional

amount

Premium/

discount

At 31 December 2021

Own bonds

Total

Coupon

Long term

Parent

companies

Associated

companies

Third

parties

in TEUR

Total

19.05.2022

500,000

750,000

–578

6,521

499,422

506,521

1.000%

0.750%

Interest income

25.05.2025

Interest income from financing activities at amortised cost

Interest income from financing leasing activities at amortised cost

32,518

2,580

32,494

2,580

22.11.2027

–3,595

746,405

Total book value long-term bond liabilities

Total book value bonds issued

1,752,348

Interest income from liquid assets at amortised cost

Interest income from current accounts

7,567

7,521

7, 493

Interest income from bank accounts, time deposits and money market funds

Notional

(excluding own

bonds)

Interest income from financial instruments at fair value through profit and loss

Valuation gains/(losses) from interest rate and cross-currency swaps (realised)

Interest income from interest rate and cross-currency swaps

15,408

6,251

9,157

in TEUR

Maturity

Market value

507,765

Coupon

1.000%

0.750%

9,157

14,138

1,268

4,981

1,268

19.05.2022

500,000

750,000

Other interest income from financial instruments

25.05.2025

525,710

Total interest income

58,073

48,818

9,227

22.11.2027

789,908

Total market value at 31 December

1,823,383

Interest expenses

Interest expenses for current accounts and time deposits

Interest expenses for bonds issued

308

234

The market values shown in the tables are calculated as the sum of all discounted cash ﬂows based on the swap curves

(source: Bloomberg).

20,562

2,188

18,374

Interest expenses from financial instruments

18,928

5,491

13,437

Valuation (gains) /losses from interest rate and cross-currency swaps (unrealised)

Interest expenses from interest rate and cross-currency swaps

Other interest expenses from financial instruments

5,491

The issued bonds are irrevocably and unconditionally guaranteed by joint and several guarantees of Adolf Würth

GmbH & Co. KG, Künzelsau.

15,136

3,792

9,645

3,792

Other interest expenses (third parties)

4,105

4,104

The eﬀective interest rates do not signiﬁcantly diﬀer from the nominal interest rates.

Total interest expenses

43,903

2,188

5,566

36,149

9 Other liabilities

At 31 December 2020

in TEUR

2021

2020

Parent

companies

Associated

companies

Third

parties

Payables for deliveries and services

of which to third parties

8,583

3,005

5,578

6,179

1,135

5,044

in TEUR

Total

Interest income

of which to related parties

Interest income from financing activities at amortised cost

Interest income from financing leasing activities at amortised cost

34,217

2,709

34,107

2,709

Compensation-related liabilities

Other liabilities

4,626

2,356

4,356

1,978

Interest income from liquid assets at amortised cost

Interest income from current accounts

6,882

6,548

334

6,593

269

–65

334

Total other liabilities

15,565

12,513

Interest income from bank accounts, time deposits and money market funds

Other liabilities primarily comprise accruals for services received but not invoiced during the ﬁnancial year.

Interest income from financial instruments at fair value through profit and loss

Valuation gains/(losses) from interest rate and cross-currency swaps (realised)

Interest income from interest rate and cross-currency swaps

15,017

7,234

7, 783

13,674

1,343

6,399

835

7,275

508

Other interest income from financial instruments

Total interest income

58,825

104

50,643

8,078

Interest expenses

Interest expenses for current accounts and time deposits

Interest expenses for bonds issued

514

513

22,839

2,065

20,774

Interest expenses from financial instruments

20,180

1,191

179

6,479

–432

13,522

1,623

Valuation (gains) /losses from interest rate and cross-currency swaps (unrealised)

Interest expenses from interest rate and cross-currency swaps

Other interest expenses from financial instruments

14,325

4,664

5,889

1,022

8,436

179

3,463

Other interest expenses (third parties)

1,503

1,496

Total interest expenses

45,036

2,245

6,999

35,792

Annual Report 2021 Würth Finance Group

11 Income from commission and service fee activities

The following ﬁgures provide an overview of the ﬁnancial situation regarding the deﬁned beneﬁt plans as at 31 December:

in TEUR

2021

13,094

30,631

43,725

2020

12,765

24,903

37,668

in TEUR

2021

2020

Acquisition commissions, brokerage fees

Collection and delcredere agreements

Total income from commission and service fee activities

Pension cost

Current service cost

1,181

1,197

Net interest expense /(income)

Foreign currency translation

Pension cost recognised in income statement

–26

1,164

130

1,339

12 Income from trading activities and financial instruments

Revaluation of defined benefit plan

Actuarial (gains)/losses due to changes in demographic assumptions

Actuarial (gains)/losses due to changes based on experience

Return on plan assets (less interest income)

Foreign currency translation

–2,765

863

346

1,677

–1,610

in TEUR

2021

1,125

2020

1,685

Income from securities transactions

–1,205

Income from foreign exchange transactions

Total income from trading activities and financial instruments

13,664

14,789

10,691

12,376

Revaluation recognised in OCI

–3,080

418

Liabilities for pension plan

Defined benefit obligation at 31 December

Fair value of plan assets at 31 December

Net liabilities at 31 December

43,190

–39,221

3,969

40,572

–33,756

6,816

13 Other ordinary income from related parties

Other ordinary income comprised TEUR 797 (2020: TEUR 1,709) of income out of the funding relationship with IBB as well as

fees charged to other Würth Group companies for services rendered.

Changes in the benefit obligations

Benefit obligation at 1 January

40,563

36,595

Interest expense

Current service cost

1,181

947

1,197

929

14 Personnel expenses

Plan participant contributions

Actuarial (gains)/losses due to changes in demographic assumptions

Actuarial (gains)/losses due to changes based on experience

Benefit payments

–2,765

863

346

At 31 December personnel expenses were as follows:

1,676

–333

in TEUR

2021

17,333

1,164

1,456

748

2020

15,975

1,339

1,440

640

514

Wages and salaries

Pension cost

Foreign currency translation

1,825

43,190

Benefit obligation at 31 December

40,571

Social security cost

Other employee cost

Total personnel expenses

Changes in the plan assets

Fair value of plan assets at 1 January

Interest income

20,701

19,394

33,767

30,362

Pension plan

The investment risks remained with the pension scheme, which

was responsible for the asset management. The pension scheme

was an addition to the statutory social security insurance.

Return on plan assets (less interest income)

Plan participant contributions

Employer contributions

1,205

947

1,610

929

The Group had no direct or indirect share or option-based

remuneration in favour of employees.

1,080

514

1,075

–333

Benefit payments

The pension plan in the Netherlands consists of a deﬁned

contribution plan. The salary over which pension was built up

was maximised at TEUR 98 (2020: TEUR 96). The premium

was partly paid by the employer.

The employees paid a savings contribution amounting to

1.5%–10% of their insured annual salary. The employees’

contribution amount is age-related. In addition, the

employees had the option of paying voluntary contributions.

Foreign currency translation

Fair value of plan assets at 31 December

1,655

39,221

33,764

Assumptions

Discount rate

0.30%

0.15%

0.50%

0.00%

0.15%

0.50%

0.00%

In Switzerland, the individual Group companies participated

in a semi-autonomous pension scheme in which several Swiss

Würth entities participated. In this plan actuarial risks (longevity,

disability and death) are vested in an insurance company.

In another scheme for authorised representatives and

Managing Directors in Switzerland, the annual employee

contributions amounted to 50% of the total sum.

Expected return on plan assets

Future salary increases up to age 54 P /A

Future salary increases from age 55 P/A

Future pension increases

Probability of termination of service

BVG 2015/Generation table

Annual Report 2021 Würth Finance Group

Sensitivity of benefit obligation

15 Income tax

in TEUR

Defined benefit

obligation

Gross service

cost

Tax positions are, inherently to operating internationally

and across borders, in certain cases uncertain. Accruals

resp. provisions were made where deemed necessary.

Würth Finance Group is exposed to tax risks which amongst

others could result in double taxation. The source of these

risks could originate from local tax rules and regulations as

well as international and EU regulatory frameworks. These

include transfer pricing risks on internal cross-border deliver-

ies of services, tax risks related to acquisitions and divest-

ments, tax risks related to permanent establishments, tax

risks relating to tax losses, interest and tax credits carried

forward and potential changes in tax law that could result in

higher tax expenses and payments.

future relating to the ﬁnancial years up to and including 2021

are accrued as at 31 December 2021.

Defined changes in assumptions

Assumption at 31.12.2021

Discount rate

43,190

2,168

The relevant tax rate for the Netherlands was 25% (2020: 25%).

Due to separate taxation of the head oﬃce in the Netherlands,

the branch oﬃce in Switzerland and the subsidiaries in

accordance with valid legislation in the corresponding coun-

tries, there was a diﬀerence between the eﬀective tax rate

and the relevant tax rate for the Netherlands.

The relevant tax rates in Switzerland were 8.5% (2020: 8.5%)

on a federal level and a maximum of 8.5% (2020: 8.8%) on

a cantonal level.

Increase by 25 basis points

Decrease by 25 basis points

Rate of salary increase

Increase by 50 basis points

Decrease by 50 basis points

43,363

46,779

2,081

2,261

45,531

44,520

2,168

Plan asset allocation by category:

2021

25.7%

38.7%

26.5%

9.1%

2020

24.8%

37.4%

25.4%

12.4%

Equities

The withholding tax credits not utilised in the Netherlands

amounted to TEUR 6,693 (2020: TEUR 6,404) and are

available for carryforward indeﬁnitely.

Bonds

The Group is subject to income tax in the Netherlands and in

Switzerland. All taxes that were due or are payable in the

Real estate

Other

Total of plan asset allocation

100.0%

The reconciliation of income taxes is composed as follows:

The plan assets of the pension funds consisted either of credit

balances with an insurance company or a semi-autonomous

pension scheme.

For ﬁnancial year 2022, the Group anticipated contributions

to deﬁned beneﬁt pension plans amounting to approximately

TEUR 2,168.

in TEUR

2021

62,530

15,633

2020

42,412

10,603

–551

–1,031

223

Income before taxes

Tax expense using the assumed average tax rate (25%)

Effect on tax-free income /effect on non-taxable expenses

Difference between actual and assumed tax rates

Withholding tax payments

in TEUR

2021

2,335

2020

2,124

–4,296

174

Short-term employee benefits

Total compensation paid to key management personnel

(De)recognition deferred taxes

Tax effects related to prior years

Other effects

–93

–198

–2,471

722

Compensation of key management personnel of the Group

In 2021 and 2020, no other forms of compensation were

paid to key management staﬀ.

The key management comprised the Managing Directors of

the Group companies (2021: 5 persons; 2020: 5 persons).

Net effective tax expenses

9,669

9,046

Remuneration for the Managing Directors of the Group

companies totalled TEUR 2,335 in the year 2021 (2020:

TEUR 2,124).

In 2021, fees of TEUR 240 were paid to members of the

Board of Directors (2020: TEUR 240).

The deﬀered tax assets of TEUR 2,062 are based on the other comprehensive income from cash ﬂow hedges of TEUR –11,009.

in TEUR

2021

2,062

2020

Deferred tax assets on cash flow hedges

Deferred tax assets

in TEUR

2021

320

2020

301

Deferred tax liabilities on intangible assets

Deferred tax liabilities on IBB capital relinquishment

Deferred tax liabilities

320

400

Annual Report 2021 Würth Finance Group

16 Transactions with related parties

17 Commitments and contingencies

As the operative treasury unit of the Würth Group, the Group

is responsible for concentrating and optimising the worldwide

ﬂow of payments, managing the ﬁnancial risks and handling

the ﬁnancing of the Würth Group companies.

In addition to all the companies belonging to the Würth Group,

the “related parties” also included the members of the Board

of Directors and Management of the Group, as well as their

families and companies closely associated with them.

The Group has issued guarantees, letters of comfort and letters

of credit. These represent commitments and contingencies

in favour of third parties for associated company liabilities.

The contingent liabilities included contractual commitments

in connection with loans received by Würth Group of North

America Inc. (private placement). The lending commitments,

which had been guaranteed, but not yet utilised, are disclosed

at nominal value.

in TEUR

2021

212,126

2020

349,135

At 31 December 2021

Guarantees, letters of comfort, letters of credit

Total contingent liabilities

Parent

companies

Associated

companies

in TEUR

Total

Receivables from related parties

Loans to related companies

in TEUR

2021

42,198

2020

20,481

1,429,290

Unutilised lending commitments

Total unutilised lending commitments

Other financial assets to related parties

Receivables from related companies

Current accounts

1,079,652

353,586

7, 712

1,071,940

353,586

526,634

191,720

Short-term loans

526,634

Factoring

199,432

7, 712

18 Financial instruments and risk management

Total receivables from related parties

2,508,942

7, 712

2,501,230

a) Financial risk management

Foreign currency risk

Payables to related parties

Financial risks are inherent in the Group’s business activities

but are carefully measured, controlled and monitored by

means of a systematic risk management process. To provide

secure auditing and transparent information, a strict segre-

gation was made between the functions of bodies that take risks

and those that monitor risks. The ﬁnancial risks were measured

and monitored without restriction by the Group’s risk controlling

bodies. The control of ﬁnancial risks was eﬀected on the

basis of internal directives deﬁned in writing or with reference

to strategic guidelines for action. Amendments to the internal

directives were made by a deﬁned process and must be ap-

proved by the Group’s supervisory bodies.

Due to its operating activities the Group enters into foreign

currency transactions for companies of the Würth Group

worldwide and was therefore exposed to exchange rate ﬂuctu-

ations. The Group deems foreign currency risks to mean the

loss risk on the reported assets and revenues arising from the

change in the relationship between exchange rates of the

exposure currency and the balance sheet currency, the euro.

Payables to related companies

Current accounts

1,283,002

1,266,385

16,617

415,982

867,020

850,403

16,617

Fixed-term deposits

Other payables to related parties

5,578

Total payables to related parties

1,288,580

415,982

872,598

At 31 December 2020

For the control of foreign currency risks, individual limits were

set for each currency or for each geographical region. To

control the currency risks, spot transactions, forward transac-

tions, currency swaps, cross-currency swaps and currency

options were used. The positions were valued and monitored

on a daily basis.

Parent

companies

Associated

companies

in TEUR

Total

Receivables from related parties

Loans to related companies

1,163,513

9,896

1,163,513

9,896

In order to mitigate the ﬁnancial risks and optimise income

on the ﬁnancial resources, the Group entered into derivative

ﬁnancial instrument transactions. The Group expected that

any reduction in value of one such instrument will generally

be compensated by a corresponding increase in the value

of the underlying hedged transaction.

Other financial assets to related parties

Receivables from related companies

Current accounts

951,433

236,296

566,067

149,070

7,028

944,405

236,296

566,067

142,042

Sensitivity analysis for material foreign currency

positions at 31 December

Short-term loans

The following table discloses the sensitivity of the Group’s

proﬁt before tax (due to changes in the fair value of monetary

assets and liabilities) triggered by a reasonably possible

change in the exchange rate, with all other variables held

constant. The table reﬂects the most important currencies

for loans and deposits for the Würth Finance Group.

Factoring

7,028

Total receivables from related parties

2,124,842

7,028

2,117,814

The ﬁnancial risks were limited by determining the authorised

instruments and by adhering to a limit system on a daily basis.

Corresponding reporting by the bodies which control the

risk for the attention of management was eﬀected daily. The

management of market risks (foreign currency, interest rate,

security price), credit risks and liquidity risks is described below.

Payables to related parties

Payables to related companies

Current accounts

1,220,451

1,198,535

21,916

327, 379

327,379

893,072

871,156

21,916

Fixed-term deposits

Other payables to related parties

5,044

Total payables to related parties

1,225,495

327,379

898,116

2021

Market scenario

2020

Market scenario

Impact on profit

(in TEUR)

Impact on profit

(in TEUR)

The receivables from related companies (short-term loans) above includes an amount of TEUR 596 (2020: TEUR 2,266)

related to the expected credit loss (ECL) reference is made to Note 18.

Currency

CHF

10%

1,071

10%

828

–ꢀ10%

–1,071

–ꢀ10%

–828

USD

GBP

CAD

CNY

DKK

NOK

10%

–ꢀ10%

880

–880

10%

–ꢀ10%

319

–319

10%

–ꢀ10%

–44

10%

–ꢀ10%

–56

10%

–ꢀ10%

–96

10%

–ꢀ10%

–70

10%

–ꢀ10%

–36

10%

–ꢀ10%

131

–131

10%

–ꢀ10%

–19

10%

–ꢀ10%

–23

10%

–ꢀ10%

123

–123

10%

–ꢀ10%

106

–106

Annual Report 2021 Würth Finance Group

Balance sheet by currency at 31 December 2021

Balance sheet by currency at 31 December 2020

Amounts in TEUR countervalue

in TEUR

Total

EUR

USD

CHF

DKK

Others

in TEUR

Total

EUR

USD

CHF

DKK

Others

ASSETS

Non-current assets

Software

196

1,281

–190

386

1,281

594

Software

153

1,383

–190

343

1,383

495

Activated customer base

Right-of-use land and buildings

Operating equipment and furnishings

Loans to related companies

Positive fair values of derivative instruments

Other financial assets to related parties

Deferred tax assets

Activated customer base

Right-of-use land and buildings

Operating equipment and furnishings

Loans to related companies

Positive fair values of derivative instruments

Other financial assets to related parties

Deferred tax assets

1,814

1,220

–49

1,687

1,192

–31

428

324,416

–226,615

477

5,390

317

150,280

–83,539

348

6,872

1,429,290

4,670

940,831

249,939

91,824

–18,654

66,829

1,163,513

9,537

860,804

115,852

9,896

96,432

–22,776

49,125

9,896

2,062

1,193,813

Total non-current assets

1,439,741

97,801

75,908

5,390

66,829

Total non-current assets

1,186,486

987,523

66,741

76,224

6,872

49,125

Current assets

Receivables from related companies

Positive fair values of derivative instruments

Other assets

1,079,652

985

715,613

41,003

77,532

–36,093

55,760

–4,750

1,488

40,463

190,284

825

Receivables from related companies

Positive fair values of derivative instruments

Other assets

951,433

4,493

646,390

49,583

67,569

–36,551

38,293

–10,838

1,209

37,170

162,011

2,299

3,623

2,130

3,940

2,723

Accrued income and prepaid expenses

Securities held for trading

Cash and cash equivalents

Total current assets

6,828

5,536

–624

319

1,593

2,461

13,579

208,747

275,576

Accrued income and prepaid expenses

Securities held for trading

Cash and cash equivalents

Total current assets

6,612

3,279

367

2,937

68,479

42,821

5,499

323

17,698

391,522

462,037

537,945

68,937

48,810

4,037

601

13,343

312,537

354,912

431,136

2,747

859,052

2,018,619

3,458,360

452,330

1,259,433

2,453,246

1,298

41,765

47,155

1,126,950

2,162,365

3,348,851

794,602

1,545,387

2,532,910

1,132

38,308

45,180

18,078

188,079

237,205

46,637

144,438

35,679

102,420

Total assets

EQUITY AND LIABILITIES

Shareholders’ equity

EQUITY AND LIABILITIES

Shareholders’ equity

Issued capital

16,000

5,000

16,000

5,000

Issued capital

16,000

5,000

16,000

5,000

Additional paid-in capital

Retained earnings

Additional paid-in capital

Retained earnings

303,345

–8,947

–54

303,345

–8,947

–54

286,899

–14,466

–5

286,899

–14,466

–5

Other comprehensive income from cash flow hedges

Foreign currency translation

Net profit for the year

Other comprehensive income from cash flow hedges

Foreign currency translation

Net profit for the year

52,861

368,205

52,861

368,205

33,366

326,794

33,366

326,794

Total shareholders’ equity

Non-current liabilities

Bonds issued

Non-current liabilities

Bonds issued

1,250,060

3,969

610

1,250,060

3,969

401

1,752,348

6,816

1,752,348

6,816

453

Liabilities for pension plans

Lease liabilities

Liabilities for pension plans

Lease liabilities

209

662

Payables to banks

202

Payables to banks

4,622

Negative fair values of derivative instruments

Deferred tax liabilities

719

500

Negative fair values of derivative instruments

Deferred tax liabilities

3,070

1,207

1,828

320

4,707

400

301

Total non-current liabilities

1,255,678

1,250,471

500

Total non-current liabilities

1,767,918

1,753,863

1,828

12,227

Current liabilities

Bonds issued

499,843

Bonds issued

Commercial paper

Payables to related companies

Lease liabilities

1,283,002

1,220

1,096,775

1,016

58,218

12,149

204

–801

116,661

Payables to related companies

Lease liabilities

1,220,451

1,052

859,287

994

63,186

158,474

10,473

129,031

Payables to banks

11,988

7,020

7,160

4,828

740

Payables to banks

1,674

918

756

Income tax payables

6,280

Income tax payables

5,954

5,272

682

Negative fair values of derivative instruments

Other liabilities

8,347

6,385

1,606

1,113

159

197

Negative fair values of derivative instruments

Other liabilities

5,696

4,322

1,084

1,397

290

15,565

7,492

5,952

5,761

2,739

12,513

6,799

4,563

4,909

1,644

Accrued expenses and deferred income

Total current liabilities

Total equity and liabilities

7,394

Accrued expenses and deferred income

Total current liabilities

Total equity and liabilities

6,714

1,834,477

3,458,360

1,630,805

3,249,481

61,021

61,521

23,855

28,562

–801

119,597

1,254,139

3,348,851

882,069

2,962,727

65,734

67,561

164,431

176,658

10,473

131,431

Balance sheet position

–796,235

82,917

509,383

47,956

155,979

Balance sheet position

–429,817

34,859

254,478

34,707

105,774

Annual Report 2021 Würth Finance Group

Interest rate risk

Sensitivity analysis of equity as at 31 December

The following table discloses the sensitivity of the Group’s

equity to a parallel shift of the interest rates, with all other

variables held constant. Compared to last year the interest

rate sensitivity has decreased due to the lower residual

term of the outstanding bonds. The table reﬂects the most im-

portant currencies for loans and deposits in terms of volumes

for the Würth Finance Group. Compared to the previous

year volumes in currencies exposure has increased in total.

However, interest rate risks have been kept minimal.

Balance sheet by maturity at 31 December 2021

The Group ﬁnances Würth Group companies all over the

world and is consequently exposed to interest rate risks. The

Group deems interest rate risk to mean the negative impact

on the ﬁnancial position and the earnings situation arising from

changes in the interest rates in all currencies. Loans to

Würth Group companies were partially reﬁnanced by ﬁxed-

interest bonds with similar interest and maturity structures.

The maximum willingness to take risks in the interest rate sector

is deﬁned by a sensitivity in relation to the equity capital.

In the event of adverse changes in the interest rates on the indi-

vidual currencies by 100 basis points, the maximum loss

potential is related to equity. The Group keeps the impact of

interest rate changes on the equity capital base or on the

asset and income situation relatively low and is guided in the

medium term by the target value of 5% for the equity sensitivity.

Furthermore, the Group enters into derivative ﬁnancial instru-

ments to optimise its interest rate exposure.

Maturity

<1 year

in TEUR

Total

Sight

1–5 years

>5 years

ASSETS

Non-current assets

Software

196

1,281

196

Activated customer base

Right-of-use land and buildings

Operating equipment and furnishings

Loans to related companies

Positive fair values of derivative instruments

Other financial assets to related parties

Deferred tax assets

1,281

1,814

428

1,096,492

2,928

332,798

1,742

1,429,290

4,670

2,062

2,686

Total non-current assets

1,439,741

1,101,234

335,821

Current assets

Receivables from related companies

Positive fair values of derivative instruments

Other assets

1,079,652

985

553,018

985

526,634

3,623

Sensitivity of equity 2021

Accrued income and prepaid expenses

Securities held for trading

Cash and cash equivalents

Total current assets

6,828

68,479

in TEUR

Duration

859,052

2,018,619

3,458,360

859,052

1,491,985

1,494,671

Change in

basis points

526,634

Currency

EUR

≤6 months

6 months to 1 year

1–5 years

>5 years

Total

Total assets

526,634 1,101,234

335,821

100

–100

711

173

–730

–576

–352

594 –15,478 16,213

37, 431 –40,332

22,088 –24,255

USD

–100

–80

–177

–42

–8

364

–36

–34

–1

–1,743

–31

–70

1,828

–2,057

2,213

–2,264

–2,752

2,427

2,934

–43

–9

EQUITY AND LIABILITIES

Shareholders’ equity

CHF

–1,218

1,319

DKK

Issued capital

16,000

5,000

16,000

5,000

CNH

NOK

CAD

GBP

Additional paid-in capital

Retained earnings

303,345

–8,947

–54

303,345

–8,947

–54

–3

–17

–11

–14

–56

–66

–39

–80

Other comprehensive income from cash flow hedges

Foreign currency translation

Net profit for the year

–6

–44

–43

–4

–52

–25

52,861

368,205

52,861

368,205

Others

–295

307

–403

420

Total shareholders’ equity

Non-current liabilities

Bonds issued

1,250,060

3,969

610

503,135

746,925

Sensitivity of equity 2020

Liabilities for pension plans

Lease liabilities

3,969

610

in TEUR

Duration

6 months to 1 year

Payables to banks

702

Change in

basis points

Negative fair values of derivative instruments

Deferred tax liabilities

719

Currency

EUR

≤6 months

–1,603 1,636

1–5 years

2,592 –2,783

>5 years

35,502 –38,729

Total

34,842 –38,177

320

100

–100

–1,649

–65

–129

1,698

Total non-current liabilities

1,255,678

3,969

504,447

746,942

USD

–100

–176

219

181

–223

–17

–6

–778

–63

–2

816

–238

–1,641

–23

245

1,736

CHF

133

–24

–5

–953

1,011

Current liabilities

Bonds issued

499,843

DKK

Commercial paper

16,617

1,220

CNH

NOK

CAD

GBP

–11

Payables to related companies

Lease liabilities

1,283,002

1,220

1,266,385

–89

–6

–9

–21

–58

–14

–6

–99

–181

–296

103

189

309

–80

Payables to banks

11,988

7,020

–1

–176

–542

184

569

Income tax payables

7,020

Others

–27

–43

–176

187

Negative fair values of derivative instruments

Other liabilities

8,347

15,565

7, 492

10,939

7, 492

4,626

Accrued expenses and deferred income

Total current liabilities

Total equity and liabilities

1,834,477

3,458,360

1,312,171

1,680,696

522,306

526,275

504,447

746,942

Balance sheet position

–186,025

359

596,787

–411,121

Annual Report 2021 Würth Finance Group

Balance sheet by maturity at 31 December 2020

Balance sheet by interest rate exposure at 31 December 2021

Maturity

<1 year

Fixed

interest rate

Variable

interest rate

Non-interest

bearing

in TEUR

Total

in TEUR

Total

Sight

1–5 years

>5 years

ASSETS

Non-current assets

Software

196

1,281

196

1,281

Software

153

1,383

153

Activated customer base

Right-of-use land and buildings

Operating equipment and furnishings

Loans to related companies

Positive fair values of derivative instruments

Other financial assets to related parties

Deferred tax assets

Activated customer base

Right-of-use land and buildings

Operating equipment and furnishings

Loans to related companies

Positive fair values of derivative instruments

Other financial assets to related parties

Deferred tax assets

1,687

1,383

1,814

1,687

428

317

346,882

1,429,290

4,670

1,429,290

1,163,513

9,537

816,631

9,537

4,670

9,896

2,062

8,637

Total non-current assets

1,439,741

1,431,104

Total non-current assets

1,186,486

470

827,855

358,161

Current assets

Receivables from related companies

Positive fair values of derivative instruments

Other assets

1,079,652

985

526,634

353,586

199,432

985

Receivables from related companies

Positive fair values of derivative instruments

Other assets

951,433

4,493

385,366

4,493

566,067

3,623

3,940

Accrued income and prepaid expenses

Securities held for trading

Cash and cash equivalents

Total current assets

6,828

16,090

Accrued income and prepaid expenses

Securities held for trading

Cash and cash equivalents

Total current assets

6,612

68,479

52,389

68,937

859,052

2,018,619

3,458,360

859,052

1,216,261

1,126,950

2,162,365

3,348,851

1,126,950

1,596,298

1,596,766

579,023

2,010,127

223,335

231,972

566,067

Total assets

827,855

358,162

EQUITY AND LIABILITIES

Shareholders’ equity

EQUITY AND LIABILITIES

Shareholders’ equity

Issued capital

16,000

5,000

16,000

5,000

Issued capital

16,000

5,000

16,000

5,000

Additional paid-in capital

Retained earnings

Additional paid-in capital

Retained earnings

303,345

–8,947

–54

303,345

–8,947

–54

286,899

–14,466

–5

286,899

–14,466

–5

Other comprehensive income from cash flow hedges

Foreign currency translation

Net profit for the year

Other comprehensive income from cash flow hedges

Foreign currency translation

Net profit for the year

52,861

368,205

52,861

368,205

33,366

326,794

33,366

326,794

Total shareholders’ equity

Non-current liabilities

Bonds issued

Non-current liabilities

Bonds issued

1,250,060

3,969

610

1,250,060

1,752,348

6,816

1,005,943

746,405

Liabilities for pension plans

Lease liabilities

3,969

Liabilities for pension plans

Lease liabilities

662

610

662

Payables to banks

4,622

1,274

Negative fair values of derivative instruments

Deferred tax liabilities

719

320

1,039

Negative fair values of derivative instruments

Deferred tax liabilities

3,070

1,796

320

400

Total non-current liabilities

1,255,678

1,250,670

3,969

Total non-current liabilities

1,767,918

11,438 1,008,401

747,679

Current liabilities

Bonds issued

499,843

Bonds issued

Commercial paper

21,916

1,052

Payables to related companies

Lease liabilities

1,283,002

1,220

16,617

1,266,385

Payables to related companies

Lease liabilities

1,220,451

1,052

1,198,535

1,220

Payables to banks

11,988

Payables to banks

1,674

Income tax payables

7,020

8,347

15,565

7, 492

39,644

408,888

Income tax payables

5,954

Negative fair values of derivative instruments

Other liabilities

8,347

Negative fair values of derivative instruments

Other liabilities

5,696

15,565

7, 492

12,513

6,799

8,157

4,356

Accrued expenses and deferred income

Total current liabilities

Total equity and liabilities

Accrued expenses and deferred income

Total current liabilities

Total equity and liabilities

6,799

1,834,477

3,458,360

516,460

1, 767,130

1,278,373

1,282,342

1,254,139

3,348,851

1,226,815

1,554,010

27, 324

38,762 1,008,399

747, 679

Balance sheet position

242,997

–66,081

–176,916

Balance sheet position

42,757

527,305 –180,544

–389,518

Annual Report 2021 Würth Finance Group

Balance sheet by interest rate exposure at 31 December 2020

Security price risk

monitored on a daily basis. In the event of the bond being down-

graded, it is immediately disposed of. However, the Group

has a limit of maximum EUR 15 million in market value for

sub-investment-grade bonds. Furthermore, the Group uses

derivative instruments to hedge security price risks.

Due to its investment activities, the Group is exposed to

security price risks. The Group deems security price risks to

mean the exposure to loss resulting from changes in the

prices of listed securities.

Fixed

interest rate

Variable

interest rate

Non-interest

bearing

in TEUR

Total

ASSETS

Non-current assets

Software

153

1,383

153

1,383

Basically, a minimum rating of BBB– (Standard & Poor’s) is

required when selecting bonds. The trend of the rating is

The composition of the portfolio is monitored on a daily basis.

The allocation is shown in the table below:

Activated customer base

Right-of-use land and buildings

Operating equipment and furnishings

Loans to related companies

Positive fair values of derivative instruments

Other financial assets to related parties

Deferred tax assets

1,687

317

Asset allocation at 31 December 2021

1,163,513

9,537

1,163,513

9,537

9,896

in TEUR

Market value

10,775

52,389

3,451

15.7%

76.5%

5.1%

9,896

Equity/equity funds

Investment-grade bonds/bond funds

Sub-investment-grade bonds

Hedge funds

Total non-current assets

1,186,486

1,165,200

21,286

0.0%

Current assets

Commodities

1,864

2.7%

Receivables from related companies

Positive fair values of derivative instruments

Other assets

951,433

4,493

566,067

236,296

149,070

4,493

Total asset allocation

68,479

100.0%

2,671

3,940

1,269

Accrued income and prepaid expenses

Securities held for trading

Cash and cash equivalents

Total current assets

6,612

Asset allocation at 31 December 2020

68,937

56,364

12,573

1,126,950

2,162,365

3,348,851

1,126,950

1,365,917

in TEUR

Market value

6,615

9.6%

622,431

1,787,631

174,017

195,303

Equity/equity funds

Investment-grade bonds/bond funds

Sub-investment-grade bonds

Hedge funds

Total assets

56,364

3,644

81.8%

5.3%

EQUITY AND LIABILITIES

Shareholders’ equity

1,119

1.6%

Commodities

1,196

1.7%

Issued capital

16,000

5,000

16,000

5,000

Total asset allocation

68,938

100.0%

Additional paid-in capital

Retained earnings

286,899

–14,466

–5

286,899

–14,466

–5

Other comprehensive income from cash flow hedges

Foreign currency translation

Net profit for the year

Credit risk

In order to minimise credit risks, transactions are only con-

ducted with ﬁrst-class external counterparties. For each rating

level, binding counterparty limits are deﬁned. Their absolute

value is subject to regular critical reviews by the supervisory

bodies and is adjusted if necessary. Würth Group counter-

parties are monitored by Würth Finance International B.V. to-

gether with the appropriate member of the Würth Group’s

Central Managing Board, and granted a credit limit. ISDA

agreements are concluded with external counterparties with

whom the Group carries out transactions within the frame-

work of ﬁnancial risk management.

The corresponding credit rating of the internal and external

counterparties and the limitation on aggregated individual

party risks are constantly monitored.

33,366

326,794

33,366

326,794

Total shareholders’ equity

Non-current liabilities

Bonds issued

The counterparty risks relating to delcredere business were

transferred in full to insurance companies.

1,752,348

6,816

1,752,348

6,816

Liabilities for pension plans

Lease liabilities

662

The maximum credit risk corresponds to the value of all the

ﬁnancial assets, contingent liabilities and unused irrevocable

credit commitments stated in the annual accounts. Any credit

risks relating to loans to individual Würth Group companies

with negative equity as at 31 December are covered by

letters of comfort from the superordinate parent company.

Payables to banks

4,622

Negative fair values of derivative instruments

Deferred tax liabilities

3,070

400

3,470

400

Total non-current liabilities

1, 767,918

1,753,010

11, 438

Current liabilities

Bonds issued

Commercial paper

Payables to related companies

Lease liabilities

1,220,451

1,052

21,916

1,198,535

1,052

Payables to banks

1,674

Income tax payables

5,954

5,696

12,513

6,799

32,014

362,278

Negative fair values of derivative instruments

Other liabilities

5,696

12,513

6,799

Accrued expenses and deferred income

Total current liabilities

Total equity and liabilities

1,254,139

3,348,851

21,916

1,774,925

1,200,209

1,211,648

Balance sheet position

12,707

154,270

–166,977

Annual Report 2021 Würth Finance Group

in TEUR

2021

2020

made if there are objective indications of impairment as of the

balance sheet date.

The objective of liquidity management is to ensure that the

Würth Group is able to meet its payment obligations.

The liquidity situation is monitored by the Cash Management

department of Würth Finance International B.V.

Credit risks at 31 December

Total Würth Group long term

1,433,198

1,080,249

1,172,598

953,699

The PD at year-end amounted to 0.4404% (2020: 1.2912%)

which caused the reduced impairment credit amount of

EUR 6,846 over 2021. The reduction is mainly driven by the

impact of the changed PD of TEUR 8,701.

Total Würth Group short term

The high international creditworthiness of the Würth Group

(Standard & Poor’s has awarded a Senior Unsecured “A”

rating to Adolf Würth GmbH & Co. KG) allows the Group to

raise liquid funds in the international capital markets on

favourable conditions. Würth Finance International B.V. had

established a committed credit line of EUR 400 million.

The syndicate providing the funds consisted of 14 banks. The

credit line was granted until 15 July 2023 and is guaranteed

by Adolf Würth GmbH & Co. KG, Künzelsau. Additionally the

Group had arranged credit lines with various banks to cover

any potential liquidity requirements.

Cash and cash equivalents

Other financial assets to related parties

Positive fair values of derivative instruments

Other assets

859,052

1,126,950

9,896

Liquidity risk

5,655

14,030

The Würth Group needs suﬃcient liquidity to fulﬁl its

ﬁnancial obligations. In compliance with the superordinate

Würth Group policy, Würth Group companies are

required to transfer their excess liquidity to Würth Finance

International B.V. and, with the latter’s support, to make

it available to other Würth Group companies to bridge any

potential shortages in liquidity.

3,623

3,940

Contingent liabilities

212,126

42,198

3,636,101

349,135

20,481

Lending commitments

Total credit risk exposure

3,650,729

There is only a diﬀerence between the gross and net credit risk

exposure for derivative transactions, which can be netted,

based on the ISDA agreements. In principle, cash and cash

equivalents are invested at banks with a minimal rating of “BBB”.

The PD represents the probability of a default over a certain

period of time. The third component, the LGD, represents

an estimate of the loss at the time of a potential default during

the life of a ﬁnancial instrument.

b) Derivative ﬁnancial instruments

Positions at 31 December 2021

Credit losses are inherent costs of the Group’s operations

and their occurrence and amount may be irregular in nature.

Possible credit risk losses are reported in the Financial State-

ments using the approach for determining impairments based

on forward-looking expected credit losses (ECLs) introduced

in IFRS 9. From a credit risk modelling perspective, the ECL

parameters are the following three parameters: exposure

at default (EAD), probability of default (PD) and loss given

default (LGD). The EAD reﬂects the ﬁnancial assets as

potential credit risk at the reporting date. It represents the

outstanding cash ﬂows, taking into account expected

repayments, interest payments and provisions, discounted

at the eﬀective interest rate.

The Group’s impairment approach applied to long-term

loan commitments and short-term receivables from related and

external companies that are not measured at fair value

through proﬁt or loss. The methodology the Group applied to

calculate an individual probability-weighted unbiased ECL

is by using LGD amounting to 60% and PD based on the

Global Corporate Average Cumulative Default Rates

(Bloomberg).

In accordance with IFRS 9, a three-stage model is used to

calculate the ECL, which takes into account the change in credit

quality since initial recognition using diﬀerent impairment

models. A shift from Stage 1 to Stage 2 reﬂects a signiﬁcant

increase in credit risk. A shift from Stage 2 to Stage 3 is

Contract value or

in TEUR

notional value

Positive fair value

Negative fair value

Foreign currency instruments

Forward currency contracts

Options

1,504,281

3,347

–19,184

Total foreign currency instruments

1,504,281

3,347

–19,184

Interest rate instruments

Interest rate swaps

605,618

290,663

9,328

6,919

1,551

–3,523

–1,251

Cross-currency swaps

Financial futures

Total interest rate instruments

Reduction due to CSA

905,609

8,477

–6,169

5,655

–4,774

14,892

–9,066

Total derivative financial instruments

2,409,890

Expected credit loss

in TEUR

31.12.2021

3,908

31.12.2020

9,084

Positions at 31 December 2020

Loans to related companies

Short-term receivables from related companies

Total expected credit loss

Contract value or

notional value

596

2,266

in TEUR

Positive fair value

Negative fair value

4,504

11,350

Foreign currency instruments

Forward currency contracts

Options

1,543,424

14,418

10,530

–7,239

Total foreign currency instruments

1,557,842

10,530

–7,239

ECL movements (in TEUR)

Balance as of 1 January 2021

Changes due to

Stage 1

11,119

Stage 2

Stage 3

Total

231

11,350

Interest rate instruments

Interest rate swaps

667,923

154,284

19,833

842,040

9,695

13,178

–3,489

–2,636

Net movements from new and

derecognised transactions

1,454

291

108

1,745

110

Cross-currency swaps

Stage migration

Financial futures

Remeasurements

–8,286

4,289

–415

215

–8,701

4,504

Total interest rate instruments

Reduction due to CSA

22,873

–19,373

14,030

–6,125

4,598

–8,766

Balance as at 31 December 2021

Total derivative financial instruments

2,399,882

Legend

Net movements from new and derecognised transactions

Eﬀects resulting from the change in volume; calculated using the current

closing balance of the assets multiplied by the PD of the previous year

The total derivative ﬁnancial instruments were presented

gross per counterparty.

within the framework of ﬁnancial risk management. For this

reason, the positive and negative fair values of the derivative

ﬁnancial instruments are recorded in the Financial Statements

(balance sheet, income statement) in net terms, considering

also the cash settlement based on the CSAs.

Stage migration

Remeasurements

Shifts between the stages due to reassessment of the credit risk

ISDA master agreements with a CSA are concluded with

those counterparties with whom transactions are carried out

Residual amount represents the inﬂuence of the changed PD

Annual Report 2021 Würth Finance Group

The foreign currency instruments were mainly used to hedge

the currency positions in USD and CHF recorded in the

balance sheet. The net positions of the fair values were as

follows: EUR –13.5 million (2020: EUR 0.5 million) had a

maturity date of less than 12 months and EUR –2.3 million

(2020: EUR 2.8 million) mature in 1–5 years.

The interest rate instruments were mainly used to hedge

currency and interest rate risks on non-congruent asset and

liability positions in EUR, USD and CHF. The maximum

maturity was 7 years.

c) Fair value of ﬁnancial instruments at 31 December

Carrying amount

2021

Fair value

2021

in TEUR

2020

ASSETS

Non-current assets

Loans to related companies

1,429,290

1,163,513

9,537

1,524,096

1,259,881

9,537

Positive fair values of derivative instruments

Other financial assets to related parties

4,670

Offsetting financial instruments

Positions at 31 December 2021

9,896

Total non-current assets

Current assets

1,433,960

1,182,947

1,528,766

1,279,314

Gross amounts offset

in accordance with Net amount presented

the offsetting criteria

Receivables from related companies

Positive fair values of derivative instruments

Securities held for trading

1,079,652

985

951,433

4,493

1,084,789

985

956,898

4,493

Gross carrying amounts

(before offsetting)

in TEUR

in balance sheet

FINANCIAL ASSETS

68,479

68,937

68,479

68,937

Derivative financial instruments

11,824

–6,169

5,655

Cash and cash equivalents

859,052

2,008,168

1,126,950

2,151,814

859,341

2,013,594

1,128,285

2,158,613

Total

11,824

–6,169

5,655

Total current assets

FINANCIAL LIABILITIES

Derivative financial instruments

Total

EQUITY AND LIABILITIES

Non-current liabilities

–23,958

14,892

–9,066

–23,958

14,892

–9,066

Bonds issued

1,250,060

1,752,348

4,623

1,302,614

1,862,695

4,698

Payables to banks

Negative fair values of derivative instruments

719

3,070

719

3,070

Positions at 31 December 2020

Total non-current liabilities

Current liabilities

1,250,779

1,760,041

1,303,333

1,870,463

Gross amounts offset

in accordance with Net amount presented

the offsetting criteria

Bonds issued

499,843

505,925

Gross carrying amounts

(before offsetting)

in TEUR

in balance sheet

Commercial paper

FINANCIAL ASSETS

Payables to related companies

Payables to banks

1,283,002

11,988

8,347

1,220,451

1,674

1,283,441

11,994

8,347

1,220,886

1,674

Derivative financial instruments

33,403

–19,373

14,030

Total

33,403

–19,373

14,030

Negative fair values of derivative instruments

Total current liabilities

5,696

1,803,180

1,227,821

1,809,707

1,228,256

FINANCIAL LIABILITIES

Derivative financial instruments

Total

–13,365

4,598

–8,766

–13,365

4,598

–8,766

Upon initial recognition, the Group recognised derivative

ﬁnancial instruments at fair value and non-derivative ﬁnancial

instruments with ﬁxed or determinable payments that are

not quoted in an active market at their amortised cost using

the eﬀective interest method.

In order to calculate the fair value of non-derivative ﬁnancial

instruments that are not actively traded and quoted, the

valuation technique of a discounted cash ﬂow model is used

(fair value hierarchy level 2). The discounted cash ﬂow

valuation technique calculates fair values by using estimated

expected or contractual future cash ﬂows and then discounts

these cash ﬂows with a discount rate that reﬂects the credit

spreads required by the market for instruments with similar

risk and liquidity proﬁles to produce a present value. The dis-

count factors within the calculation are generated using in-

dustry standard yield curve modelling techniques.

Oﬀsetting rights that do not meet some or all of the criteria for oﬀsetting in the balance sheet are not disclosed since the eﬀects

are considered immaterial.

Financial instruments classiﬁed as available for sale or held

to maturity do not exist in the Group’s portfolio at the time of

reporting.

Annual Report 2021 Würth Finance Group

Assets and liabilities measured at fair value at 31 December 2021

Assets and liabilities measured at fair value at 31 December 2020

in TEUR

Level 1

Level 2

Level 3

Total fair value

in TEUR

Level 1

Level 2

Level 3

Total fair value

ASSETS

Derivative financial instruments

Interest rate swaps

6,919

1,551

6,919

1,551

Interest rate swaps

9,695

13,177

9,695

13,177

Cross-currency swaps

Financial futures

Forward currency contracts

Reduction due to CSA

3,347

–6,169

3,347

–6,169

Forward currency contracts

Reduction due to CSA

10,530

–19,373

10,530

–19,373

Financial instruments held for trading

Securities

Financial instruments held for trading

Securities

68,479

68,937

Financial instruments at amortised cost

Receivables from related companies

Cash and cash equivalents

Financial instruments not held for trading at fair value

Other financial assets

Financial instruments at amortised cost

Receivables from related companies

2,608,885

859,341

2,216,779

1,128,285

859,341

Cash and cash equivalents

1,128,285

Financial instruments not held for trading at fair value

Other financial assets

9,896

LIABILITIES

Derivative financial instruments

Interest rate swaps

3,523

1,251

3,523

1,251

Interest rate swaps

3,489

2,636

3,489

2,636

Cross-currency swaps

Foreign currency contracts

Reduction due to CSA

Other liabilities at amortised cost

Bonds issued

Cross-currency swaps

Foreign currency contracts

Reduction due to CSA

Other liabilities at amortised cost

Bonds issued

19,184

–14,892

19,184

–14,892

7,239

–4,598

1,808,539

1,283,441

1,808,539

1,283,441

11,994

1,862,695

1,220,886

1,862,695

1,220,886

1,674

Payables to related companies

Payables to banks

Payables to related companies

Payables to banks

11,994

1,674

Fair value is the price at the reporting date that would be re-

ceived for an asset sale or paid to transfer a liability in an

orderly transaction between market participants in the market.

All ﬁnancial instruments measured at fair value are catego-

rised into one of the three fair value hierarchy levels. The levels

of the fair value hierarchy as deﬁned below are an indication

of the availability of market prices or price valuation inputs.

pricing model. These valuations are by their nature dependent

on the assumptions on which they are based. This category

comprises all derivative ﬁnancial instruments, receivables from

related companies, loans to family foundation, bonds issued

and payables to related companies.

For all ﬁnancial instruments categorised within level 2, a

description of the valuation techniques and the inputs used in

the valuation (e.g. interest rates, volatilities, market price of

the underlying, price in a similar transaction, etc.) are transpar-

ently documented. If there is a change in valuation technique,

the reason for it has to be disclosed.

Level 1 ﬁnancial instruments are those ﬁnancial instruments

whose fair value is based on quoted prices in active markets.

This category comprises securities issued by public sector

entities and corporates, cash and cash equivalents, and pay-

ables to banks.

Level 3 ﬁnancial instruments are those whose fair value is

based on a valuation method that uses at least one signiﬁcant

input parameter that cannot be observed directly or indirectly

in the market. At the balance sheet date, the Group had no

assets and liabilities measured at fair value level 3.

Level 2 ﬁnancial instruments are those whose fair values must

be derived using valuation techniques for which all signiﬁcant

inputs are based on observable market data. The fair value

is calculated using a discounted cash ﬂow analysis in which

expected future cash ﬂows are discounted. The fair value

of ﬁnancial instruments that are actively traded on organised

ﬁnancial markets is determined by reference to quoted market

prices. For ﬁnancial instruments where there is no active market,

fair value is determined using valuation techniques such as

price quotations from securities brokers or the Black-Scholes

During the reporting period ending 31 December 2021, there

were no transfers between level 1 and level 2 fair value

measurements, and no transfers into or out of level 3 fair

value measurements.

Annual Report 2021 Würth Finance Group

Capital management

ﬂow ﬂuctuations arising from foreign exchange and interest rate

risk for an instrument or a group of instruments.

Fair value hedges

The Group’s fair value hedges principally consist of interest

rate swaps that are used to protect against changes in the fair

value of the ﬁxed-rate Würth bond maturing in 2025 as well

as the loans to related parties and cross-currency swaps that

are used to protect against changes in the fair value of the

ﬁxed-rate foreign currency loans.

The primary objective of the Group’s capital management

is to ensure a strong credit rating towards external parties.

The Group manages its capital structure and makes adjust-

ments to it based on the equity ratio and the return on equity.

The Group designates fair value hedges as part of an overall

interest rate risk management strategy that enables the Group

to keep interest rate sensitivities within its deﬁned limits and to

reduce fair value ﬂuctuations of ﬁxed-rate ﬁnancial assets as if

they were ﬂoating-rate instruments linked to the attributable

benchmark rates.

The Group mainly uses interest rate swaps to hedge its cash

ﬂows associated with its highly probable forecasted transactions

and cross-currency swaps to hedge its cash ﬂows associated

with its foreign currency loans to related parties.

d) Hedge accounting

The table below sets out the result of the Group’s hedging

strategy, in particular the notional and carrying amount of the

derivatives the Group uses as hedging instruments:

Cash ﬂow hedges

The table below sets out the results of the Group’s hedging

strategy, in particular the notional and carrying amount of the

derivatives the Group uses as hedging instruments:

The Group designates cash ﬂow hedges as part of its strategy

to mitigate its interest rate and foreign currency revaluation

ﬂuctuations within its established limits and to reduce the cash

Carrying amount 2021

Carrying amount 2020

Carrying amount 2021

Carrying amount 2020

Transaction

in TEUR

currency Notional amount

Assets

Liabilities

Assets

Liabilities

Transaction

in TEUR

currency Notional amount

Assets

Liabilities

Assets

Liabilities

Micro cash flow hedges

Würth bond 2025

EUR

USD

EUR

USD

150,000

30,000

10,000

130,000

40,000

10,000

25,000

4,373

678

8,122

Hedges to related parties

Forecasted – new bond issued 2018¹

Forecasted – new bond issued 2020²

CHF

USD

CHF

EUR

9,000

12,000

20,000

37,500

15,000

7,000

275

158

Hedges to related parties

1,383

234

171

843

2,184

1,748

856

1,642

2,230

680

914

481

886

764

368

15,000

19,937

616

260

10,705

The following table shows the maturity and interest rate risk proﬁle of the Group’s hedging instruments used in its fair value

hedges. As the Group applied only micro hedges with one-to-one hedging ratios, the table below eﬀectively shows the outcome

of the fair value hedges:

336

12,691

in TEUR

Carrying amount

The following table shows the maturity and interest rate risk proﬁle of the Group’s hedging instruments used in its cash ﬂow hedges.

As the Group applied only micro hedges with one-to-one hedging ratios, the table below eﬀectively shows the cash ﬂow hedges.

1 year

1–5 years

5 years

As at 31 December 2021

Würth bond 2025

4,373

678

in TEUR

Carrying amount

1 year

1–5 years

5 years

Hedges to related parties EUR 30,000

Hedges to related parties EUR 10,000

Hedges to related parties USD 130,000

Hedges to related parties EUR 40,000

Hedges to related parties USD 10,000

Hedges to related parties USD 25,000

171

2,230

764

At 31 December 2021

Hedges to related parties CHF 12,000

Hedges to related parties USD 20,000

Hedges to related parties USD 37,500

Hedges to related parties USD 15,000

Hedges to related parties USD 7,000

Hedges to related parties USD 15,000

Hedges to related parties CHF 19,937

275

158

680

914

481

886

368

616

For derivatives that are designated and qualiﬁed as fair value

hedges, the carrying value of the underlying hedged items

is adjusted to fair value for the risk being hedged. Changes in

the fair value of these derivatives are recorded in the same

line item of the consolidated income statement as the change

in fair value of the risk being hedged for the hedged assets

or liabilities to the extent the hedge is eﬀective. The change in

fair value representing hedge ineﬀectiveness is recorded

separately in trading revenues.

ﬁxed-rate receiver interest rate swaps to hedge its ﬁxed-rate

liabilities.

Since the issuance of the bonds and the subsequent recogni-

tion of interest expense result in the forecasted transaction af-

fecting proﬁt and loss, the associated gains or losses recog-

nised in other comprehensive income are reclassiﬁed into

proﬁt and loss.

forecasted transactions. As a result, there is no hedge ineﬀec-

tiveness to be recognised in the statement of proﬁt or loss.

As at the end of 2021, hedge ineﬀectiveness resulting from credit

valuation adjustment/debit valuation adjustment is marginal.

When a hedging instrument expires, is sold, terminated, exer-

cised, or when a hedge no longer meets the criteria for hedge

accounting under IFRS 9, any cumulative gain or loss that

has been recognised in OCI at that time remains in OCI and

is recognised when the hedged forecasted transaction is ulti-

mately recognised in the income statement. When a forecasted

transaction is no longer expected to occur, the cumulative

gain or loss that was reported in OCI is immediately transferred

to the income statement.

If the hedging instrument expires or is sold, terminated or exer-

cised, or when the hedge no longer meets the criteria for

hedge accounting, the hedge relationship is discontinued

prospectively. If the relationship does not meet the hedge

eﬀectiveness criteria, the Group discontinues hedge account-

ing from the last date on which compliance with hedge

eﬀectiveness is demonstrated. If the hedge accounting rela-

tionship is terminated for an item recorded at amortised cost,

the accumulated fair value hedge adjustment to the carrying

amount of the hedged item is amortised over the remaining term

of the original hedge by recalculating the EIR. If the hedged

item is derecognised, the unamortised fair value adjustment is

recognised immediately in the income statement.

For designated and qualifying cash ﬂow hedges, the eﬀective

portion of the gain or loss on the hedging instrument is initially

recognised directly in OCI within equity in the cash ﬂow hedge

reserve, while any ineﬀective portion of the gain or loss on

the hedging instrument is recognised immediately in the income

statement. The terms of the current cross-currency swap

contracts match the terms of the expected highly probable

The Group assesses hedge eﬀectiveness by comparing fair

value movements of the hedging instruments and the hedged

items attributable to changes in these benchmark rates using

the hypothetical derivative method.

In accordance with its hedging strategy, the Group matches

the principal of the hedging instruments to the principal of the

hedged items. The Group uses ﬁxed-rate payer interest rate

swaps to hedge its ﬁxed-rate debt instruments and loans and

¹This micro cash ﬂow hedge is related to the bond issued in May 2018. The loss resulting from the termination of the hedging instruments will be designated in the income

statement form OCI (cash ﬂow hedge reserve) starting May 2019 over the actual swap term.

²This micro cash ﬂow hedge is related to the bond issued in May 2020. The loss resulting from the termination of the hedging instruments will be designated in the income

statement form OCI (cash ﬂow hedge reserve) starting May 2020 over the actual swap term.

Annual Report 2021 Würth Finance Group

19 Segment information

Income statement by segment at 31 December 2020

Inhouse Banking

External

Financial

Services

The Group provides segment reporting by business line. Segment reporting by geographic areas is not considered meaningful

as the Group only provides services from the Netherlands and Switzerland.

Total

Würth

Finance

Group

Income statement by segment at 31 December 2021

Total

Inhouse

Banking

Group

Financing

Securities

Central

Insurance

Brokerage Elimination

in TEUR

Trading investments Settlement Services

Inhouse Banking

External

Financial

Services

Income

Interest income

57,161

–43,902

13,259

16,275

700

–167

533

57,861

–44,069

13,792

16,275

–3

964

–964

58,825

–45,036

13,789

16,275

Total

Würth

Finance

Group

Interest expenses

Total

Inhouse

Banking

Group

Financing

Securities

Central

Insurance

Brokerage Elimination

Net interest income

Income from factoring activities

in TEUR

Trading investments Settlement Services

Income

Income from commission and

service fee activities

Interest income

56,308

–42,598

13,710

16,234

636

–175

461

56,944

–42,773

14,171

–1

1,129

58,073

–43,903

14,170

16,234

24,926

12,742

37,668

Interest expenses

–1,129

Income from trading activities

and financial instruments

10,914

1,538

12,452

1,701

–21

–55

12,376

1,709

Net interest income

Income from factoring activities

Other ordinary income

1,701

16,234

Expected credit loss

(expenses)/recovery

Income from commission and

service fee activities

–7,886

30,653

13,072

43,725

Total segment income

23,349 10,914

2,071

24,926

61,260

12,726

–55

73,931

Income from trading activities

and financial instruments

13,660

1,075

14,735

667

14,789

797

Other ordinary income

667

130

Expenses

Expected credit loss

(expenses)/recovery

Personnel expenses

Other administrative expenses

Amortisation

–969

–503

–3,049

–4,984

–8,863

–1,045

–9,505

–8,863

–1,045

–9,889

–1,495

–722

–19,394

–10,358

–1,767

6,846

Total segment income

37,457 13,660

1,536

30,653

83,306

13,206

96,561

Segment expenses

–969

–503

–3,049 –14,892 –19,413

–12,106

–31,519

Expenses

Personnel expenses

Other administrative expenses

Amortisation

–1,101

–529

–3,589

–5,226 –10,445

–10,256

–1,526

–708

–20,701

–11, 485

–1,845

Segment result

22,380

10, 411

2,071

21,877 –14,892

41,847

620

–55

42,412

–9,959

–1,137

–9,959

–1,137

Income tax expenses

–8,888

–76

–8,888

–113

–9,001

Deferred taxes

–76

–45

Segment expenses

–1,101

–529

–3,589 –16,322 –21,541

–12,490

–34,031

Net profit for the year

22,380

10, 411

2,071

21,877 –23,856

32,883

538

–55

33,366

Segment result

36,356

13,131

1,536

27,064 –16,322

61,765

716

62,530

Income tax expenses

–9,429

–75

–9,429

–158

–9,587

Deferred taxes

–75

–7

–82

Net profit for the year

36,356

13,131

1,536

27,064 –25,826

52,261

551

52,861

Annual Report 2021 Würth Finance Group

Balance sheet by segment at 31 December 2021

Inhouse Banking

External

Financial

Services

Total

Würth

Finance

Group

Total

Inhouse

Banking

Group

Financing

Securities

Central

Insurance

Brokerage Elimination

in TEUR

Trading investments Settlement Services

Würth Finance International B.V.

Balance sheet

Segment assets

3,481,182

3,176,871

5,648

8,091

73,017

59,914

29,304 3,589,151

344,275 3,589,151

6,442

–137,233 3,458,360

Segment liabilities

FINANCIAL STATEMENTS 2021

Additional segment

information

Capital expenditures

133

286

419

Balance sheet by segment at 31 December 2020

Inhouse Banking

External

Financial

Services

Total

Würth

Finance

Group

Total

Inhouse

Banking

Group

Financing

Securities

Central

Insurance

Brokerage Elimination

in TEUR

Trading investments Settlement Services

Balance sheet

Segment assets

3,636,065

3,368,249

13,879

8,766

72,530

60,160

39,620 3,762,094

324,919 3,762,094

5,432

–418,675 3,348,851

Segment liabilities

Additional segment

information

Capital expenditures

125

164

20 Events after the reporting period

24 February 2022 saw the outbreak of armed conﬂict in connection with the Ukraine crisis. The direct and indirect economic

implications and risks for the Würth Finance Group are diﬃcult to forecast at the present time.

Annual Report 2021 Würth Finance International B.V.

in TEUR

Notes

2021

2020

Company income statement

for the year ended at 31 December

EQUITY AND LIABILITIES

Shareholders’ equity

Issued capital

16,000

5,000

16,000

5,000

in TEUR

Notes

2021

61,001

667

2020

52,658

1,702

Additional paid-in capital

Retained earnings

Net income

294,344

52,861

368,205

272,428

33,366

326,794

Other operating income

Total operating income

Net profit for the year

Total shareholders’ equity

61,668

54,360

Wages and salaries

–9,646

–799

–8,732

–773

Provisions

Social security charges

Liabilities for pension plans

Deferred tax liabilities

Total provisions

2,059

3,569

Amortisation of intangible and tangible fixed assets

Other operating expenses

–1,137

–9,866

–21,448

40,220

–1,045

–8,788

–19,338

35,022

2,059

3,668

Total operating expenses

Non-current liabilities

Bonds issued

1,250,060

209

1,752,348

209

Financial income

18a

56,308

6,846

57,161

–7,886

–44,555

39,742

Lease liabilities

Impairments of assets

Financial expenses

Profit before taxes

Payables to banks

4,623

–43,299

60,075

Negative fair values of derivative instruments

Total non-current liabilities

18b, 18c

719

3,070

1,250,988

1,760,250

Income tax expense

–9,297

2,083

–8,591

2,215

Current liabilities

Share in result from participating interests

Net profit for the year

Bonds issued

499,843

1,285,592

1,015

1,222,310

993

52,861

33,366

Payables to related companies

Lease liabilities

Payables to banks

11,988

1,674

Income tax payables

6,305

5,305

Company balance sheet

for the year ended at 31 December

Negative fair values of derivative instruments

Other liabilities

18b, 18c

7,372

5,696

12,920

9,925

Accrued expenses and deferred income

Total current liabilities

Total equity and liabilities

7,492

6,799

Before appropriation of profit

1,832,527

3,453,779

1,252,702

3,343,414

in TEUR

Notes

2021

2020

ASSETS

Non-current assets

Intangible assets

Software

1,220

172

1,191

191

Right-of-use assets

Right-of-use land and buildings

Property, plant and equipment

Operating equipment and furnishings

Financial assets

Participations in Group companies

Loans to related companies

Positive fair values of derivative instruments

Other financial assets to related parties

Deferred tax assets

4, 23

33,842

1,429,290

4,670

30,359

1,163,513

9,537

18b, 18c

5, 23

9,896

2,062

Total non-current assets

1,471,256

1,214,687

Current assets

Receivables from related companies

Positive fair values of derivative instruments

Other assets

18b, 18c

1,197,132

978

1,351,064

4,342

2,285

2,803

Accrued income and prepaid expenses

Cash

6,417

6,094

775,711

1,982,523

3,453,779

764,424

2,128,727

3,343,414

Total current assets

Total assets

Annual Report 2021 Würth Finance International B.V.

Accounting policies used in preparing

the company Financial Statements

for the year ended at 31 December

Notes to the company Financial Statements

for the year ended at 31 December

21 Intangible assets/right-of-use assets/property, plant and equipment

Intangible assets/right-of-use assets/property, plant and equipment are composed as follows:

At 31 December 2021

Basis of preparation

A subsequent share of the proﬁt of the subsidiary is recognised

only if and to the extent that the accumulated share of the

previously unrecognised loss has been made good.

The company Financial Statements have been prepared in ac-

cordance with Part 9 of Book 2 of the Dutch Civil Code. In

accordance with the provisions of Section 362-8 of Book 2 of

the Dutch Civil Code the accounting policies used are the

same as those used in the notes to the consolidated Financial

Statements, prepared under IFRS as adopted by the European

Union, unless stated otherwise below. The Financial Statements

were prepared on 25 April 2022. Where the notes in the

company Financial Statements were similar to the notes in the

consolidated Financial Statements we refer to the notes in

the consolidated Financial Statements.

Information on the use of ﬁnancial instruments and on related

risks for the Group was provided in the notes to the consolidated

Financial Statements.

Additions

(disposals)

incl. asset Acquisition

retirement

2021

Acquisition

cost

Accum.

cost amortisation

Asset Amortisation

retirement for the year amortisation

Accum.

Net book

value

in TEUR

2020

2021

2020

2021

The company Financial Statements were presented in EUR

thousands unless otherwise stated.

Intangible assets

Software

1,471

1,470

–1,471

–1,470

Total intangible assets

Right-of-use assets

Right-of-use land and buildings

Total right-of-use assets

Property, plant and equipment

Vehicles

1,471

1,470

–1,471

–1,470

Changes in accounting policies

For details of changes in accounting policies, please refer to

the consolidated accounting principles.

2,839

1,015

3,855

–1,648

–987

–2,635

1,220

Participations in related companies

Investments in subsidiaries are valued using the net asset value

method, determined by applying the IFRS accounting policies

as described in the consolidated Financial Statements. Under

this method, subsidiaries are carried at the company’s share in

their net asset value plus its share in the results of the subsidi-

aries and its share of changes recognised directly in the equity

of the subsidiaries as from the acquisition date, determined in

accordance with the IFRS accounting policies disclosed in the

consolidated Financial Statements, less its share in the dividend

distributions from the subsidiaries. The company’s share in the

results of the subsidiaries is recognised in the income state-

ment. If and to the extent that the distribution of proﬁts is

subject to restrictions, these are included in a legal reserve.

2,839

1,015

3,855

–1,648

–987

–2,635

1,220

The company made use of the option to eliminate intercom-

pany expected credit losses against the book value of loans

and receivables to Group companies, instead of elimination

against the investments in Group companies.

416

–4

412

–266

–110

–329

Art objects

Office equipment/installations

539

577

–532

–40

–521

Total property,

plant and equipment

Equity interests

Parent company

989

1,023

6,348

–798

–149

–850

172

Total

5,299

1,049

–3,917

–1,137

–4,955

1,392

Würth Finance International B.V., Amsterdam, is the parent

company of the companies as listed below and includes the

ﬁnancial data of these companies in its consolidated Financial

Statements, copies of which are available at cost from the

head oﬃce of Würth Finance International B.V., Amsterdam.

At 31 December 2020

Additions

(disposals)

incl. asset Acquisition

retirement

2020

If the value of the subsidiary under the net asset value method

has become nil, this method is no longer applied, with the

subsidiary being valued at nil as long as the net asset value

remains negative. In connection with this, any long-term interests

that, in substance, form part of the investor’s net investment in

the subsidiary are included. A provision is formed if and to

the extent that the company stands surety for all or part of the

debts of the subsidiary or if it has a constructive obligation to

enable the subsidiary to repay its debts.

Fully consolidated companies

• Würth Financial Services AG, Rorschach, Switzerland:

wholly owned subsidiary (2020: 100%)

Acquisition

cost

Accum.

cost amortisation

Asset Amortisation

retirement for the year amortisation

Accum.

Net book

value

in TEUR

2019

2020

2019

2020

Intangible assets

Software

• Würth Invest AG, Chur, Switzerland:

wholly owned subsidiary (2020: 100%)

2,012

–541

1,471

–1,996

541

–15

–1,471

Total intangible assets

Right-of-use assets

Right-of-use land and buildings

Total right-of-use assets

Property, plant and equipment

Vehicles

2,012

–541

1,471

–1,996

541

–15

–1,471

The percentages stated represent the equity interests held.

1,842

997

2,839

–755

–894

–1,648

1,191

1,842

997

2,839

–755

–894

–1,648

1,191

470

–54

416

–224

–125

–266

150

Art objects

Office equipment/installations

540

–1

539

–524

–11

–532

Total property,

plant and equipment

1,044

4,898

–55

401

989

–748

–136

–798

191

Total

5,299

–3,499

628

–1,045

–3,917

1,382

Annual Report 2021 Würth Finance International B.V.

22 Participations in Group companies

24 Interest income and expenses

in TEUR

At 31 December 2021

Net book value at 1 January 2020

OCI

28,336

–192

in TEUR

Total

Parent Subsidiaries Associated Third parties

Interest income

Share in profit/(loss) of participating interests

Net book value at 31 December 2020

2,215

Interest income from financing activities at amortised cost

Interest income from financing leasing activities at amortised cost

32,518

2,580

32,494

2,580

30,359

Interest income from liquid assets at amortised cost

Interest income from current accounts

6,407

6,361

–1,160

7, 493

Net book value at 1 January 2021

OCI

30,359

1,400

Interest income from bank accounts, time deposits and money market funds

Share in profit/(loss) of participating interests

Net book value at 31 December 2021

2,083

Interest income from financial instruments at fair value through profit and loss

Valuation gains/(losses) from interest rate and cross-currency swaps (realised)

Interest income from interest rate and cross-currency swaps

14,803

5,615

9,188

33,842

9,188

14,168

633

4,980

633

Other interest income from financial instruments

Total interest income

56,308

–1,160

48,182

9,258

23 Transactions with related parties

Related party transactions were based on arm’s length terms and conditions.

At 31 December 2021

Interest expenses

Interest expenses for current accounts and time deposits

Interest expenses for bonds issued

308

234

20,562

2,188

18,374

Interest expenses from financial instruments

18,928

5,491

13,437

Valuation (gains) /losses from interest rate and cross-currency swaps (unrealised)

Interest expenses from interest rate and cross-currency swaps

Other interest expenses from financial instruments

5,491

Parent

companies

Associated

companies

15,136

3,792

9,645

3,792

in TEUR

Total

Subsidiaries

Receivables from related parties

Other interest expenses (third parties)

3,501

3,500

Loans to related companies

1,429,290

Total interest expenses

43,299

2,188

5,566

35,545

Other financial assets to related parties

Receivables from related companies

Current accounts

1,197,132

354,021

7,713

117,490

446

1,071,929

353,575

Short-term loans

643,678

117,044

526,634

At 31 December 2020

Factoring

199,433

7,713

191,720

Total receivables from related parties

2,626,422

7,713

117,490

2,501,219

in TEUR

Total

Parent Subsidiaries Associated Third parties

Interest income

Payables to related parties

Interest income from financing activities at amortised cost

Interest income from financing leasing activities at amortised cost

34,217

2,709

34,107

2,709

Payables to related parties

Current accounts

1,285,592

1,268,975

16,617

415,982

2,595

867,015

850,398

16,617

Interest income from liquid assets at amortised cost

Interest income from current accounts

5,874

5,541

333

–1,008

6,594

268

–65

333

Fixed-term deposits

Other payables to related parties

5,578

Interest income from bank accounts, time deposits and money market funds

Total payables to related parties

1,291,170

415,982

2,595

872,593

Interest income from financial instruments at fair value through profit and loss

Valuation gains/(losses) from interest rate and cross-currency swaps (realised)

Interest income from interest rate and cross-currency swaps

14,361

6,553

7,808

13,699

662

6,399

154

7,30 0

508

Other interest income from financial instruments

Total interest income

57,161

104

–1,008

49,963

8,102

At 31 December 2020

Parent

companies

Associated

companies

Interest expenses

in TEUR

Total

Subsidiaries

Interest expenses for current accounts and time deposits

Interest expenses for bonds issued

514

513

Receivables from related parties

Loans to related companies

Other financial assets to related parties

22,858

2,065

20,774

1,163,513

9,896

1,163,513

9,896

Interest expenses from financial instruments

20,178

1,191

179

6,477

–432

13,522

1,623

Valuation (gains) /losses from interest rate and cross-currency swaps (unrealised)

Interest expenses from interest rate and cross-currency swaps

Other interest expenses from financial instruments

Receivables from related companies

Current accounts

1,351,064

236,832

7,028

399,640

545

944,396

236,287

566,067

142,042

14,323

4,664

5,887

1,022

8,436

179

3,463

Short-term loans

965,162

399,095

Other interest expenses (third parties)

1,005

998

Factoring

149,070

7,028

Total interest expenses

44,555

2,245

6,997

35,294

Total receivables from related parties

2,524,473

7,028

399,640

2,117,805

Payables to related parties

Current accounts

1,222,310

1,200,394

21,916

327,380

1,887

893,043

871,127

21,916

Fixed-term deposits

Other payables to related parties

5,044

Total payables to related parties

1,227,354

327, 380

1,887

898,087

Annual Report 2021 Würth Finance International B.V.

25 Income tax expense

29 Equity

in TEUR

2021

2,062

2020

Foreign

currency

translation

Issued

capital paid-in capital

Additional

Retained

earnings hedge reserve

Cash flow

Deferred tax assets on cash flow hedges

Net deferred tax assets

in TEUR

Total

327, 399

33,366

At 1 January 2020

16,000

5,000

315,317

33,366

–8,858

–60

Net profit for the year

Foreign currency translation

Cash flow hedge accounting

IAS 19

in TEUR

2021

2020

–5,608

–418

Deferred tax liabilities on IBB capital relinquishment

Deferred tax liabilities

–418

Deferred taxes on cash flow hedges

Total comprehensive income for the year

Dividend payments

32,948

–28,000

320,265

–5,608

27, 395

–28,000

326,794

For other details see the consolidated statement note 15 Income tax.

At 31 December 2020

16,000

5,000

–14,466

–5

At 1 January 2021

16,000

5,000

320,265

52,861

–14,466

–5

326,794

52,861

–49

26 Other assets

Net profit for the year

in TEUR

2021

1,664

621

2020

1,534

1,269

2,803

Foreign currency translation

Cash flow hedge accounting

IAS 19

–49

Receivables from third parties

Other assets

3,457

3,080

Total other assets

2,285

Deferred taxes on cash flow hedges

Total comprehensive income for the year

Dividend payments

2,062

5,519

2,062

55,941

–20,000

356,206

–49

61, 411

–20,000

368,205

At 31 December 2021

16,000

5,000

–8,947

–54

27 Bonds issued

The Board of Directors proposed to allocate the net income of TEUR 52,861 to retained earnings.

For details see the consolidated statement note 8 Bonds issued.

30 Payables to banks

28 Other liabilities

The non-current payables to banks in previous year refers to a payable in the amount of TCHF 5,000. The movement of the

year therefore consisted of the exchange diﬀerence arising from the CHF payable. This position moved to current payables to

banks in 2021. The further increase in current payables to banks refers to a higher current account debt.

in TEUR

2021

2020

Payables for deliveries and services

of which to third parties

8,576

2,998

5,578

6,183

1,139

5,044

of which to related parties

Compensation-related liabilities

Other liabilities

2,970

1,374

2,513

1,229

9,925

Total other liabilities

12,920

Other accrued expenses and deferred income primarily comprise accruals for services received but not invoiced during

the ﬁnancial year.

Annual Report 2021 Würth Finance International B.V.

31 Personnel expenses

Other information

for the year ended at 31 December

The average number of staff (in FTEs) employed by the

company in 2021 was 64 (2020: 64).

In 2021 and 2020, no other forms of compensation (post-

employment beneﬁts or other long-term beneﬁts, termination

beneﬁts, share-based payments) were paid to key management.

Articles of Association provisions governing proﬁt appropriation

The company’s Articles of Association provide for the net proﬁt for the year to be fundamentally put at the disposal of the

shareholders.

The key management comprised the Managing Directors of

the company.

In ﬁnancial year 2021, fees of TEUR 240 were paid to

members of the Board of Directors (2020: TEUR 240).

Remuneration for the Managing Directors of the company

totalled TEUR 925 in the year 2021 (2020: TEUR 885).

Other branches

The company has the following branch:

Würth Finance International B.V.

Rorschach Branch

Churerstrasse 10

32 Audit fees

9400 Rorschach

The cost of the Group for the external auditor, the audit organisation and the entire network to which the audit organisation

Switzerland

belongs charged for the ﬁnancial year is set out below.

Amsterdam and Rorschach, 25 April 2022

in TEUR

2021

2020

Ernst & Young

B. van Odijk

R. Fust

Audit of the Financial Statements

Other audit engagements

Total

227

104

331

193

111

304

Managing Director

The fees stated above for the audit of the Financial Statements are based on the total fees for the audit of the 2021

Financial Statements, regardless of whether the procedures were already performed in 2021.

33 Events after the reporting period

For details see the consolidated statement note 20 “events after the reporting period”.

Annual Report 2021 Würth Finance Group

Independent auditor’s report

Information in support of our opinion

To: the shareholder and board of directors of

Würth Finance International B.V.

We designed our audit procedures in the context of our audit of the ﬁnancial statements as a whole and in forming our

opinion thereon. The following information in support of our opinion and any ﬁndings were addressed in this context, and

we do not provide a separate opinion or conclusion on these matters.

Report on the audit of the financial statements 2021

included in the annual report

Our understanding of the business

The core activities of Würth Finance International B.V. and its subsidiaries include providing ﬁnancing to and carrying out

a wide range of ﬁnancial activities with companies belonging to the Würth Group, as well as providing consulting and other

services in the area of pensions and insurance to both private persons and small and medium-sized enterprises. The group

is structured in components and we tailored our group audit approach accordingly. We paid speciﬁc attention in our audit to

a number of areas driven by the operations of the group and our risk assessment.

Our opinion

We have audited the ﬁnancial statements 2021 of Würth Finance International B.V., based in Amsterdam. The ﬁnancial

statements comprise the consolidated and company ﬁnancial statements.

In our opinion:

We start by determining materiality and identifying and assessing the risks of material misstatement of the ﬁnancial statements,

whether due to fraud or error in order to design audit procedures responsive to those risks and to 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, misrepresenta-

tions, or the override of internal control.

• the accompanying consolidated ﬁnancial statements give a true and fair view of the ﬁnancial position of Würth Finance Inter-

national B.V. as at 31 December 2021 and of its result and its cash ﬂows for 2021 in accordance with International Financial

Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code.

• the accompanying company ﬁnancial statements give a true and fair view of the ﬁnancial position of Würth Finance Interna-

tional B.V. as at 31 December 2021 and of its result for 2021 in accordance with Part 9 of Book 2 of the Dutch Civil Code.

Materiality

The consolidated ﬁnancial statements comprise:

• the consolidated balance sheet as at 31 December 2021

• the following statements for 2021: the consolidated income statement, the consolidated statements of comprehensive income,

changes in equity and the consolidated cash ﬂow statement

• the notes comprising a summary of the signiﬁcant accounting policies and other explanatory information

Materiality

EUR 8.8 million (2020: EUR 5 million).

0.5% of total amount of bonds issued

Benchmark applied

Explanation

Based on our understanding of the business and our professional

judgment, we consider the total amount of bonds issued is the most

appropriate benchmark for the stakeholders of the company.

The company ﬁnancial statements comprise:

• the company balance sheet as at 31 December 2021

• the company income statement for 2021

We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users

of the ﬁnancial statements for qualitative reasons.

• the notes comprising a summary of the accounting policies and other explanatory information

We agreed with the board of directors that misstatements in excess of EUR 435,000, which are identiﬁed during the audit,

Basis for our opinion

would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.

We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under

those standards are further described in the Our responsibilities for the audit of the ﬁnancial statements section of our report.

Scope of the group audit

Würth Finance International B.V. is at the head of a group of entities. The ﬁnancial information of this group is included in the

consolidated ﬁnancial statements.

We are independent of Würth Finance International B.V. (the company) in accordance with the EU Regulation on speciﬁc

requirements regarding statutory audit of public-interest entities, the “Wet toezicht accountantsorganisaties” (Wta, Audit ﬁrms

supervision act), the “Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten” (ViO, Code

of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations

in the Netherlands. Furthermore we have complied with the “Verordening gedrags- en beroepsregels accountants” (VGBA,

Dutch Code of Ethics).

Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the

group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities.

Decisive were the size and/or the risk proﬁle of the group entities or operations. On this basis, we selected group entities for

which an audit or review had to be carried out on the complete set of ﬁnancial information or speciﬁc items.

We believe the audit evidence we have obtained is suﬃcient and appropriate to provide a basis for our opinion.

We have performed full scope audit procedures at Würth Finance International B.V. For the remaining components, Würth

Financial Services AG and Würth Invest AG, we performed, amongst other, analytical procedures to corroborate our assess-

ment that there were no signiﬁcant risks of material misstatements within these components.

By performing the procedures mentioned above at components of the group, together with additional procedures at group

level, we have been able to obtain suﬃcient and appropriate audit evidence about the group’s ﬁnancial information to provide

an opinion about the consolidated ﬁnancial statements.

Teaming and use of specialists

We ensured that the audit team has the appropriate skills and competences which are needed for the audit of a listed client

in the ﬁnancial industry. We included specialists in the area of transfer pricing.

Our focus on fraud and non-compliance with laws and regulations

Annual Report 2021 Würth Finance Group

Our responsibility

Our audit response related to going concern

Although we are not responsible for preventing fraud or non-compliance and we cannot be expected to detect non-compli-

ance with all laws and regulations, it is our responsibility to obtain reasonable assurance that the ﬁnancial statements, taken

as a whole, are free from material misstatement, whether caused by fraud or error.

Management made a speciﬁc assessment of the company’s ability to continue as a going concern and to continue its

operations for at least the next 12 months.

We discussed and evaluated the speciﬁc assessment with management exercising professional judgment and maintaining

professional skepticism.

Our audit response related to fraud risks

We considered whether management’s going concern assessment, based on our knowledge and understanding obtained

through our audit of the ﬁnancial statements or otherwise, contains all events or conditions that may cast signiﬁcant doubt on

the company’s ability to continue as a going concern, including considerations to the ﬁnancial position of Würth Group in

cooperation with the group auditor. If we conclude that a material uncertainty exists, we are required to draw attention in our

auditor’s report to the related disclosures in the ﬁnancial statements or, if such disclosures are inadequate, to modify our

opinion.

We identify and assess the risks of material misstatements of the ﬁnancial statements due to fraud. During our audit we

obtained an understanding of the company and its environment and the components of the system of internal control, including

the risk assessment process and management’s process for responding to the risks of fraud and monitoring the system of inter-

nal control and how board of directors exercises oversight, as well as the outcomes.

We refer to section risk management and control of the report of the management for management’s (fraud) risk assessment

and the Report of the board of directors in which the board of directors reﬂects on this (fraud) risk assessment.

Based on our procedures performed, we did not identify serious doubts on the company’s ability to continue as a going

concern for the next 12 months.

We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as

well as the code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementa-

tion and, where considered appropriate, tested the operating eﬀectiveness, of internal controls designed to mitigate fraud risks.

Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or

conditions may cause a company to cease to continue as a going concern.

As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to ﬁnancial reporting fraud,

misappropriation of assets and bribery and corruption. We evaluated whether these factors indicate that a risk of material

misstatement due to fraud is present.

Our key audit matters

Key audit matters are those matters that, in our professional judgment, were of most signiﬁcance in our audit of the ﬁnancial

statements. We have communicated the key audit matter to the board of directors. The key audit matter is not a comprehensive

reﬂection of all matters discussed.

We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures

and evaluated whether any ﬁndings were indicative of fraud or non-compliance.

In comparison with previous year, our key audit matter did not change.

As in all of our audits, we addressed the risks related to management override of controls. We have used data analysis

to identify and address high-risk journal entries. We evaluated the business rationale of transactions with related parties and

whether these were accounted for at-arm’s length and in accordance with transfer pricing documentation. We have also

performed procedures among others to evaluate key accounting estimates for management bias that may represent a risk of

material misstatement due to fraud, in particular relating to important judgment areas and signiﬁcant accounting estimates,

including the measurement of expected credit losses, as disclosed in the ’Assumptions and estimates’ in note 2 to the ﬁnancial

statements. We refer to our audit response in the key audit matter ‘Estimation uncertainty with respect to valuation of loans

to related companies and receivables from related companies’.

Estimation uncertainty with respect to valuation of loans to related companies and receivables from related companies

Risk

Our audit approach

Key observations

At 31 December 2021 the loans to related

companies amount to EUR 1,429 million and

receivables from related companies amount

to EUR 1,080 million. Per 31 December 2021

the allowance for expected credit losses

amounts to EUR 4.5 million.

Our audit procedures included, amongst

others, assessing the appropriateness of the

company’s accounting policies related to

the recognition of expected credit losses

according to IFRS9 “Financial Instruments”.

Based on our procedures performed we

consider the impairment losses on loans to

related companies and receivables from

related companies to be reasonable.

We evaluated whether the accounting policies The disclosure on loans to related companies

and methods applied for making estimates

have been applied consistently. We have

obtained an understanding of the process for

recognizing expected credit losses and

performed substantive procedures thereof.

and receivables from related companies,

including the allowance for expected credit

losses are considered appropriate and meet the

requirements under EU-IFRS.

The allowance for expected credit losses

represent the company’s best estimate of

expected credit losses (ECL) on these loans

and receivables at balance sheet date.

We considered available information and made enquiries of relevant members of management and the board of directors

as well as the group auditor of Würth Group.

The ECL calculation is probability-weighted

using a combination of probability of default

(PD), exposure at default (EAD) and loss given

default (LGD). The LGD applied is 60%, based

on input from Moody’s and Bloomberg. The

PD is based on the PD of Würth Group as

stated in the Global Corporate Average

Cumulative Defaults Rates from Bloomberg as

We verified that management measured

The consideration of the potential risk of management override of controls or other inappropriate inﬂuence over the ﬁnancial

reporting process, enquiries and other available information did not lead to speciﬁc indications for fraud or suspected fraud

potentially materially impacting the view of the ﬁnancial statements.

the allowance for expected credit losses, taking

into consideration the external credit rating

of Würth Group and events subsequent to

31 December 2021. For the year-end expected

credit losses we have evaluated the appropri-

ateness of the LGD benchmark used and verified

Our audit response related to risks of non-compliance with laws and regulation

We assessed factors related to the risks of non-compliance with laws and regulations that could reasonably be expected

to have a material eﬀect on the ﬁnancial statements from our general industry experience, through discussions with manage-

ment, reading minutes, inspection of internal audit and compliance reports of Würth Group, and performing substantive

tests of details of classes of transactions, account balances or disclosures.

per 31 December 2021, and pro rata calculated the PD used with the Global Corporate Average

based on the remaining term of the loans.

Cumulative Defaults Rates from Bloomberg.

Furthermore, we have assessed the recoverabil-

The loans to related companies and receivables ity of loans to and receivables from related

from related companies are material to the

Company’s balance sheet and we considered

parties, especially for those companies with a

negative equity above a threshold of EUR

the related estimation uncertainty on impairment 100,000 as per the balance sheet date. We

losses as well as the potential risk of manage- have obtained comfort letters from group

ment override of controls. As such, we consider parent companies that guarantee the outstand-

We also inspected lawyers’ letters and correspondence with regulatory authorities, enquired with the group auditor of Würth

Group, and remained alert to any indication of (suspected) non-compliance throughout the audit. Finally we obtained a written

representation that all known instances of non-compliance with laws and regulations have been disclosed to us.

this a key audit matter.

ing amounts in the situation the related party

defaults. We assessed the creditworthiness

The accounting principles and IFRS 9 disclosure of those group parent companies that issued

on impairment calculation and transactions

with related parties, including the expected

the comfort letters.

credit losses, are disclosed in note 2 Accounting Finally, we evaluated the related disclosures in

principles, note 4 Loans to related parties

and note 18 Financial instruments and risk

management.

compliance with EU-IFRS requirements.

Annual Report 2021 Würth Finance Group

Report on other information included in the annual report

Description of responsibilities regarding the financial statements

The annual report contains other information in addition to the ﬁnancial statements and our auditor’s report thereon.

Responsibilities of management and the board of directors for the ﬁnancial statements

Management is responsible for the preparation and fair presentation of the ﬁnancial statements in accordance with EU-IFRS

and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as

management determines is necessary to enable the preparation of the ﬁnancial statements that are free from material

misstatement, whether due to fraud or error.

Based on the following procedures performed, we conclude that the other information:

• Is consistent with the ﬁnancial statements and does not contain material misstatements

• Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code for the management report and the other

information as required by Part 9 of Book 2 of the Dutch Civil Code.

As part of the preparation of the ﬁnancial statements, management is responsible for assessing the company’s ability to continue

as a going concern. Based on the ﬁnancial reporting frameworks mentioned, management should prepare the ﬁnancial

statements using the going concern basis of accounting unless management either intends to liquidate the company or to cease

operations, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast

signiﬁcant doubt on the company’s ability to continue as a going concern in the ﬁnancial statements.

We have read the other information. Based on our knowledge and understanding obtained through our audit of the ﬁnancial

statements or otherwise, we have considered whether the other information contains material misstatements. By performing

these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720.

The scope of the procedures performed is substantially less than the scope of those performed in our audit of the ﬁnancial

statements.

The board of directors is responsible for overseeing the company’s ﬁnancial reporting process.

Management is responsible for the preparation of the other information, including the management report in accordance with

Part 9 of Book 2 of the Dutch Civil Code and the other information required by Part 9 of Book 2 of the Dutch Civil Code.

Our responsibilities for the audit of the ﬁnancial statements

Our objective is to plan and perform the audit engagement in a manner that allows us to obtain suﬃcient and appropriate

audit evidence for our opinion.

Report on other legal and regulatory requirements and ESEF

Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material

errors and fraud during our audit.

Engagement

We were engaged by the board of directors as auditor of Würth Finance International B.V., as of the audit for the year 2002

and have operated as statutory auditor ever since that ﬁnancial year.

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 ﬁnancial statements. The mate-

riality aﬀects the nature, timing and extent of our audit procedures and the evaluation of the eﬀect of identiﬁed misstatements

on our opinion.

No prohibited non-audit services

We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on speciﬁc requirements

regarding statutory audit of public-interest entities.

We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance

with Dutch Standards on Auditing, ethical requirements and independence requirements. The ‘Information in support of

our opinion’ section above includes an informative summary of our responsibilities and the work performed as the basis for

our opinion.

European Single Electronic Reporting Format (ESEF)

Würth Finance International B.V. has prepared the annual report in ESEF. The requirements for this are set out in the Delegated

Regulation (EU) 2019/815 with regard to regulatory technical standards on the speciﬁcation of a single electronic reporting

format (hereinafter: the RTS on ESEF).

Our audit further included among others:

In our opinion, the annual report, prepared in the XHTML format, including the partially marked-up consolidated ﬁnancial

statements, as included in the reporting package by Würth Finance International B.V., complies in all material respects with the

RTS on ESEF.

• Performing audit procedures responsive to the risks identiﬁed, and obtaining audit evidence that is suﬃcient and appropriate

to provide a basis for our opinion

• Obtaining 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 company’s internal control

• Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related

disclosures made by management

Management is responsible for preparing the annual report, including the ﬁnancial statements, in accordance with the RTS on

ESEF, whereby management combines the various components into a single reporting package.

• Evaluating the overall presentation, structure and content of the ﬁnancial statements, including the disclosures

• Evaluating whether the ﬁnancial statements represent the underlying transactions and events in a manner that achieves fair

presentation

Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package

complies with the RTS on ESEF.

Our procedures, taking into account Alert 43 of the NBA (the Netherlands Institute of Chartered Accountants), included

amongst others:

• obtaining an understanding of the company’s ﬁnancial reporting process, including the preparation of the reporting

package

• obtaining the reporting package and performing validations to determine whether the reporting package containing the

Inline XBRL instance document and the XBRL extension taxonomy ﬁles, has been prepared in accordance with the technical

speciﬁcations as included in the RTS on ESEF

• examining the information related to the consolidated ﬁnancial statements in the reporting package to determine whether

all required mark-ups have been applied and whether these are in accordance with the RTS on ESEF.

Annual Report 2021 Würth Finance Group

Communication

We communicate with the board of directors regarding, among other matters, the planned scope and timing of the audit and

signiﬁcant audit ﬁndings, including any signiﬁcant ﬁndings in internal control that we identify during our audit.

In this respect we also submit an additional report to the audit committee of Würth Group in accordance with Article 11

of the EU Regulation on speciﬁc requirements regarding statutory audit of public-interest entities. The information included in

this additional report is consistent with our audit opinion in this auditor’s report.

We provide the board of directors 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 board of directors, we determine the key audit matters: those matters that were of

most signiﬁcance in the audit of the ﬁnancial statements. We describe these matters in our auditor’s report unless law or

regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter

is in the public interest.

Amsterdam, 25 April 2022

Ernst & Young Accountants LLP

Signed by K. Tang