TKH GROUP ANNUAL REPORT 2021
ANNUAL REPORT 2021
TKH GROUP
| TKH GROUP ANNUAL REPORT 20212
CONTENT
PROFILE 3
MESSAGE FROM THE CEO 4
HIGHLIGHTS 2021 * 6
TECHNOLOGY COMPANY TKH 8
WHO WE ARE AND WHAT WE DO 9
Strategic model * 9
Mission & vision 10
Core values * 11
Smart technologies * 12
Group synergies 13
THE WORLD AROUND US 14
External environment * 14
Megatrends 15
Market drivers and position within technology
segments 16
Competitive landscape 17
Stakeholder analysis 18
CORPORATE STRATEGY 20
Confrontation matrix 20
Accelerate 2025 21
Strategic pillars and targets * 22
LONG-TERM VALUE CREATION * 24
MANAGEMENT REPORT * 26
BUSINESS DEVELOPMENTS 27
SUSTAINABILITY PERFORMANCE 28
Being responsible and sustainability impact 29
Talented people and empowerment 37
Sustainable development goals 42
FINANCIAL PERFORMANCE 45
Group financial performance 45
Developments per business segment 47
Acquisitions, divestments and investments 50
OUTLOOK 51
GOVERNANCE 52
Members of the Executive Board * 53
Members of the Supervisory Board 54
Report of the Supervisory Board 55
Remuneration Report 62
Corporate Governance * 70
Risk Management * 72
Management Statement * 81
TKH Shares * 82
SUSTAINABLE PORTFOLIO 83
FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL STATEMENTS 95
Consolidated statement of profit and loss 96
Consolidated statement of comprehensive income 97
Consolidated balance sheet 98
Consolidated statement of changes in group equity 99
Consolidated cash flow statement 100
Notes to the consolidated financial statements 101
COMPANY FINANCIAL STATEMENTS 138
Company statement of profit and loss 139
Company balance sheet 140
Notes to the company financial statements 141
OTHER INFORMATION 148
Profit appropriation 149
Proposal for profit appropriation 149
Independent auditor’s report 150
Assurance report of the independent auditor
on non-financial KPIs 156
Stichting Administratiekantoor TKH Group 158
Stichting Continuïteit TKH 159
Consolidated entities 160
Non-financial reporting process and methods 164
Ten years overview 168
Alternative performance measures 170
The paragraphs marked with a * belong to the Management Report as defined in Title 9, Dutch Civil Code 2.
Our mission is to create best-in-class technologies in the field of Smart Vision
systems, Smart Manufacturing systems, and Smart Connectivity systems. TKH
aims to create sustainable value for all its stakeholders and provides disruptive
technologies that improve efficiency, sustainability, safety, and security.
The technologies are combined with internally developed software to create
Smart Technologies and one-stop-shop solutions with plug-and-play integrated
PROFILE
TKH Group N.V. (TKH) is a leading technology company focused on advanced innovative technology systems in high-growth markets.
SMART CONNECTIVITY SYSTEMS
SMART MANUFACTURING SYSTEMSSMART VISION SYSTEMS
systems. TKH operates globally, with its growth concentrated in Europe,
North America, and Asia. Employing 6,160 FTE, TKH achieved a turnover of
€ 1.5 billion in 2021.
TKH is listed on Euronext Amsterdam with the ticker symbol TWEKA. TKH
reports in three segments: Smart Vision systems, Smart Manufacturing systems,
and Smart Connectivity systems.
3 TKH GROUP ANNUAL REPORT 2021 |
| TKH GROUP ANNUAL REPORT 20214
MESSAGE FROM THE CEO
OUR EMPLOYEES’
COMMITMENT AND
PASSION IS THE KEY
TO OUR SUCCESS
Our strong recovery in 2021, during the continued challenges of COVID-19, shows the
strength of TKH. It has enabled us to organize sufficient capacity to cope with an
exceptional increase in demand in a very short period of time. But the strong recovery
in market demand for our technologies and innovations has also confirmed the strength
of our portfolio.
Despite the ongoing impact of COVID-19 in 2021, our organization adapted well to new
working standards and challenges related to the pandemic. Traveling to and connecting
with our customers was difficult, since in-person meetings were still largely prohibited.
This made it difficult to commission equipment at our customer’s sites.
Supply chain problems required close cooperation with our suppliers, as well as the
creativity of our procurement teams to find solutions for shortages of materials and
components. The right entrepreneurial spirit within our organization to cope with these
challenges was again an important success factor for the results we achieved during
2021.
We are proud to publish our Annual Report to show the strong growth
and developments of the TKH Group in 2021. At the same time though,
our thoughts go out to all people in Ukraine, and in particular our 128
employees and their families in the area of Kiev. We are deeply concerned
about the war and we are monitoring the situation carefully. We will
support them across our organization as much as possible in this difficult
and uncertain time.
The Capital Markets Day (CMD) on November 17 was a key highlight in 2021. The new
targets for 2025 based on our Accelerate 2025 program give us a strong foundation for future
growth. Moreover, our new focus on segmentation, based on our three core technologies, as
well as the megatrends we presented, should make our business more transparent and give
us a better idea of the potential to create value in the coming years.
The importance of Environmental, Social, and Governance (ESG) issues, and the United
Nations Sustainable Development Goals (SDGs) to which they are aligned, is driving aware-
ness for sustainable business. We have set ourselves challenging new goals, which we
communicated at the CMD. One of our key goals is to achieve net-zero emissions across our
operations by 2030. We took an important step this year in that respect by obtaining limited
assurance on selected non-financial KPIs as disclosed on page 28 of this report. Although it
is already embedded in our strategy, sustainability is also becoming an increasingly important
element in our portfolio. Approximately 70% of our turnover is linked to SDGs that TKH has
identified as highly relevant to our business, thus demonstrating how future-oriented our
company is in this area.
We would like to thank our stakeholders for their trust and cooperation, which has helped
make this challenging year positive nonetheless. A special thank you goes to our employees
for their incredible dedication, passion, and commitment, and for achieving the best possible
results in sometimes challenging situations!
On behalf of the Executive Board,
Alexander van der Lof, Chairman
5 TKH GROUP ANNUAL REPORT 2021 |
HIGHLIGHTS 2021
KEY MESSAGES
TKH WORLDWIDE
THE NETHERLANDS
€ 340 mln turnover
ASIA
€ 293 mln turnover
NORTH AMERICA
€ 169 mln turnover
EUROPE (OTHER)
€ 686 mln turnover
OTHER
€ 36 mln turnover
STRONG RECOVERY DESPITE CONTINUING COVID-19 DISTURBANCES
• Sharp increase in market demand met with well-organized adaption of increased
production capacity to support this demand
• Strength of our innovative technology portfolio confirmed by strong market demand
• Execution of R&D road map well on track to support growth plan, with good
development market traction of innovations within all three technology segments
• Well-structured and strong organization dealt with supply chain challenges
• Strong position and focus to take advantage of megatrends and support organic
growth in the coming years
LAUNCH OF ACCELERATE 2025
New targets with a focus on
• Turnover: > € 2 billion turnover by 2025
• ROS: > 17% by 2025
• Sustainability: own operations 100%
carbon neutral by 2030 (scopes 1 & 2)
New segmentation based on Smart
Technologies to enhance transparency
in reporting and valuation
• Smart Vision systems
• Smart Manufacturing systems
• Smart Connectivity systems
INNOVATIONS
• Remained high, with a 19.8% turnover
share
• Increased focus in R&D programs to
maximize value creation
| TKH GROUP ANNUAL REPORT 20216
KEY FINANCIAL FIGURES KEY NON-FINANCIAL FIGURES
DIVIDEND PROPOSAL
per (depositary receipt of an)
ordinairy share
1.50 €
2020 1.00 E
EBITA
189.6 € MLN
2020 135.5 E MLN
TURNOVER
1,523.8 € MLN
2020 1,289.4 E MLN
ROS
12.4%
2020 10.5%
ROCE
20.5%
2020 14.0%
ORGANIC GROWTH
15.9%
2020 -9.9%
+18%
+40%
+50%
NET CO
2
FOOTPRINT
REDUCTION
compared to reference year 2019
29.8%
2020 17.8%
DIVERSITY
Female Executive and
Senior Management
17.7%
2020 16.8%
+67% +18%
ACCIDENT RATE (LTIFR)
0.7
2020 0.8
TURNOVER LINKED
TO SDGs
68%
2020 70%
-2%
-13%
ESG ASSURANCE
First year of assurance on
non-financial KPIs
(number of KPIs)
11
2020 0
SATISFACTION GRADE
EMPLOYEE
7.4
2020 7.4
+2%
+11
CUSTOMER
8.4
2020 8.1
7 TKH GROUP ANNUAL REPORT 2021 |
TECHNOLOGY COMPANY TKH
WHO WE ARE AND WHAT WE DO 11
Strategic model 11
Mission & vision 12
Core values 13
Smart technologies 14
Group synergies 15
THE WORLD AROUND US 16
External environment 16
Megatrends 17
Market drivers and position within technology
segments 18
Competitive landscape 19
Stakeholder analysis 20
CORPORATE STRATEGY 22
Confrontation matrix 22
Accelerate 2025 23
Strategic pillars and targets 24
LONG-TERM VALUE CREATION 26
Positioned as technology leader, TKH aims to create advanced best-in-class Smart Technologies
to improve its customers’ efficiency, sustainability, safety and security
VISION
SMART TECHNOLOGIES
STRATEGIC PILLARS
ENTREPRENEUR-
SHIP
ENVIRONMENTAL
AWARENESS
TRANSPARENCY ACCOUNTABILITY INTEGRITY
MISSION
Create Smart Technologies for sustainable value creation
CORE VALUES
INNOVATION AND
TECHNOLOGICAL
LEADERSHIP
BEING RESPONSIBLE
AND SUSTAINABILITY
IMPACT
TALENTED PEOPLE
AND EMPOWERMENT
SUSTAINABLE FINANCIAL
PERFORMANCE
TKH is a leading innovative technology company. We create best-in-class technologies for Smart Vision systems,
Smart Manufacturing systems, and Smart Connectivity systems. These technologies are combined with in-house
developed software to provide one-stop-shop solutions and integrated plug-and-play technology systems.
TECHNOLOGY COMPANY TKH
SMART CONNECTIVITY
SYSTEMS
WHO WE ARE AND WHAT WE DO
KEY TARGETS
TURNOVER
> € 2 billion by 2025
RETURN ON SALES (ROS)
> 17% by 2025
RETURN ON CAPITAL EMPLOYED (ROCE)
22-25% by 2025
CARBON FOOTPRINT (CO
2
EMISSIONS)
100% carbon neutrality in own operations by
2030 (scopes 1 & 2) - reduction of CO
2
footprint compared to reference year 2019
% OF FEMALE EXECUTIVE AND SENIOR
MANAGEMENT
> 25% by 2030
ACCIDENT RATE (LTIFR)
< 1.0
STRATEGIC MODEL
SMART VISION
SYSTEMS
SMART MANUFACTURING
SYSTEMS
9 TKH GROUP ANNUAL REPORT 2021 |
| TKH GROUP ANNUAL REPORT 202110
Innovation is key to the success of TKH. Investing in disrup-
tive technologies is vital to maintaining our position as a
leading technology company and maximizing sustainable
value creation for our stakeholders and the world around us.
Our innovations are focused on the creation of advanced
Smart Vision systems, Smart Manufacturing systems, and
Smart Connectivity systems.
TECHNOLOGY COMPANY TKH
MISSION & VISION INNOVATIVE TECHNOLOGY PLAYER
TKH IS AN INNOVATIVE
TECHNOLOGY COMPANY
MORE THAN 15%
TURNOVER REALIZED
BY NEW INNOVATIONS
CREATION OF
ADVANCED
TECHNOLOGY
SYSTEMS
30% OF OUR
TECHNOLOGY
PROPOSITION IS
SOFTWARE DRIVEN
750 FTE IN R&D
AND SOFTWARE
DEVELOPMENT
3,500+ PATENTS TO
SECURE VALUE
PROPOSITION
More than 15% of our turnover is realized by innovations that
have been introduced in the last two years. About 30% of
our technology proposition is software-driven, developed by
in-house engineers. In total, there are 750 employees active
within R&D and software development, and we have regis-
tered more than 3,500 patents to secure our value proposi-
tion. The continuous acceleration and scaling of our innova-
tions is essential to maintaining our leading position and
fostering growth.
Positioned as a technology leader, TKH
strives to create advanced best-in-class
technologies in the areas of Smart Vision,
Smart Manufacturing, and Smart Connectivity,
both to maximize sustainable value creation
and to improve our customers’ efficiency,
sustainability, safety, and security.
TKH is well positioned in high-growth
markets, where we focus on megatrends
related to industrial automation, the energy
transition, digitalization and safety & security.
TKH aims to be an attractive employer and
a solid investment for its shareholders by
keeping socially responsible business
practices at the center of its activities.
CONTINUOUS
ACCELERATION &
SCALING OF
INNOVATIONS
11 TKH GROUP ANNUAL REPORT 2021 |
CORE VALUES
TKH creates its technologies in a sustainable
and socially responsible manner, using the
expertise of our talented people. Our employ
-
ees stay true to our key corporate values of
entrepreneurship, environmental awareness,
transparency, accountability, and integrity.
ENTREPRENEURSHIP – we take ownership of
observing new opportunities and we are driven to
excel in our roles and responsibilities.
ENVIRONMENTAL AWARENESS – we foster a
focus on sustainability and we are keen to contribute
positively to the environment and society.
TRANSPARENCY – we strive for an open culture
and we act transparently.
ACCOUNTABILITY – we make the appropriate
choices after careful consideration and we take
responsibility for our decisions.
INTEGRITY – we value honesty and we act respect-
f
ully to colleagues, customers, and other stakeholders.
STRONG SUSTAINABLE PORTFOLIO
TKH has chosen six Sustainable Development Goals (SDGs)
to guide our approach to sustainability. Two of these focus
on our internal operations and business practices, with the
remaining four focusing on our innovative product portfolio.
TKH’s innovative products make a significant contribution to
the SDGs: approximately 70% of our portfolio’s total
TECHNOLOGY COMPANY TKH
turnover is linked to one of the SDGs that we have defined
as relevant. In this way, we support our customers in
achieving their sustainability goals and simultaneously
provide a clear direction for our own company’s sustainable
development.
SELECTED SUSTAINABLE PORTFOLIO EXAMPLES
SMART VISION SYSTEMS SMART MANUFACTURING SYSTEMS
•
Tire Building Technology focus on
environment and e-mobility leads
to different tire requirements
•
Advanced technology to lower
waste and energy consumption
levels
in production
•
Medication distibution/inspection
system
•
2D and 3D Vision technology which
results in increase in productivity
and improvement of quality
•
Cyber security solutions for mission
critical communication
•
Parking guidance systems increase
efficiency, safety and security
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
SUSTAINABLE CITIES
AND COMMUNITIES
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
GOOD HEALTH
AND WELL-BEING
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
AFFORDABLE AND
CLEAN ENERGY
SMART TECHNOLOGIES
±
70% OF OUR TURNOVER IS LINKED TO ONE OR MORE OF THESE FOUR SDGs
SMART CONNECTIVITY SYSTEMS
•
Fibre optic cable systems
•
Energy cable systems for the energy
transition
•
Subsea cable systems for offshore
wind farms
•
CEDD/Airfield ground lighting
system; energy saving and increase
of efficiency
| TKH GROUP ANNUAL REPORT 202112
SMART TECHNOLOGIES
TECHNOLOGY COMPANY TKH
TKH creates Smart Vision systems, Smart
Manufacturing systems, and Smart
Connectivity systems. Our technologies are
combined with in-house developed smart
software to provide one-stop-shop solutions
and integrated plug-and-play technologies.
TKH leverages its unique expertise to create superior
manufacturing systems, capitalizing on our deep under-
standing of automating production processes in different
industries. Our systems and machines contribute to highly
efficient manufacturing and processing.
There are four building blocks at the foundation of our unique
Smart Manufacturing systems:
• High-level system and assembly engineering skills and
know-how.
• Advanced in-house software development and engineering.
• Integration of TKH Smart Vision and Smart Connectivity
technologies.
• Development of advanced control and analytical functions.
TKH aims to create value for its customers with its Smart
Manufacturing systems by optimizing and further automating
customers’ processes, reducing inventories, increasing
flexibility, and fostering highly efficient manufacturing. Our
Smart Manufacturing systems serve industries from tire
production for cars and trucks to factory automation and
medicine distribution.
Our Tire Building systems represent a share of around 68% of
turnover within the Smart Manufacturing systems segment.
TKH creates state-of-the-art Vision technology, which
represents about 86% of the turnover of the Smart Vision
systems segment. This technology encompasses 2D and 3D
Machine Vision and Security Vision systems. Combining
these technologies with in-house software development leads
to unique, Smart, and integrated plug-and-p
lay systems and
one-stop-shop solutions.
We aim to create value for our customers by optimizing and
further automating their processes using Vision technology.
TKH’s Machine Vision technology systems are used to improve
quality inspections, operations, and object monitoring in
numerous industries, such as consumer electronics, factory
automation, logistics, wood industry, intelligent transport
systems (ITS), and medical and life sciences.
Meanwhile, our Security Vision systems, combined with
advanced communication technologies, enable customers to
efficiently manage and control the urban environment. They
also improve sustainability, safety & security in various
markets, such as infrastructure, parking and building security.
SMART VISION
SYSTEMS
TURNOVER PER SEGMENT
in %
Smart Vision systems
Smart Manufacturing systems
Smart Connectivity systems
2021
28
27
45
SMART MANUFACTURING
SYSTEMS
13 TKH GROUP ANNUAL REPORT 2021 |
GROUP SYNERGIES
TECHNOLOGY COMPANY TKH
With our decentralized operating model, we strive for a
high level of entrepreneurship and a winning culture. We
stimulate and incentivize group synergies, which are
important for our value creation strategy, allowing us to
support our companies in offering distinctive solutions to
our customers at attractive cost levels.
Our group synergies are realized mainly in the following
areas:
•
Integrated and combined technology systems across
our three technology segments.
•
Large-scale in-house software development through
a centralized competence center, which serves
SMART CONNECTIVITY
SYSTEMS
TKH creates advanced Smart Connectivity systems,
engineering complete, unique solutions that bring together
our integrated system approach with our sustainability
proposition. Our solutions are developed for on-shore and
off-shore energy distribution.
At TKH, we aim to add value for our customers thanks to our
increased focus on sustainability, our combination of hardware
technology with intelligent software (creating Smart Technolo
-
gies), and our integrated system approach.
Energy and Digitalization represent, respectively, around 33%
and 38% turnover share of the Smart Connectivity systems
segment. Another important area is Fibre Optic connectivity
systems for data and communication networks. In addition,
TKH produces specialized cable systems for industrial
automation applications in high-tech environments.
TKH also provides a unique connectivity technology for airfield
ground lighting systems: contactless energy and data
distribution (CEDD). This connectivity system consists of hard
-
ware components and intelligent software, to improve the
efficiency and safety of specific airfield applications.
operating entities in each segment with building blocks
that can be applied to multiple entities and segments.
•
Cooperation between operating companies, to utilize
synergies for example related to supply chain.
•
Centralized software development leadership.
•
A unique pool of talent that enables the transfer of skills
and knowledge.
•
Group functions that foster cooperation, innovation, and
growth.
•
Group management, resources, and competencies to
scale up initiatives to sizable business units.
•
Strong TKH branding and reputation, market access, and
global footprint.
SMART
MANUFACTURING SYSTEMS
SMART
CONNECTIVITY SYSTEMS
CUSTOMERS
OPERATING COMPANIES
GOVERNANCE & SUPPORT FUNCTIONS
SMART
VISION SYSTEMS
OPERATING MODEL ENTREPRENEURIAL CULTURE
•
Strategy based on innovation and
business opportunities.
•
Clear business plan with SMART
goals and road map.
•
Compensation aligned with
performance.
•
Key employees participate in
share-based compensation plans.
•
Decentralized operating model.
•
Organizations close to customers
– high level of customer intimacy.
•
Delegated P&L responsibility and
authority.
•
SMART targets and strong monitoring
system to control output.
PLAN AND REWARDS
•
Drive to win.
•
Strong capitalization on new
business opportunities.
•
High-performance execution.
•
Short lines of communication.
•
Management development program
and meetings.
•
Inspiring environment.
•
Diverse workforce.
GOVERNANCE MODEL
OPERATING MODEL
| TKH GROUP ANNUAL REPORT 202114
THE WORLD AROUND US
EXTERNAL ENVIRONMENT
TECHNOLOGY COMPANY TKH
TKH operates in a dynamic environment. Trends and developments are key indicators for defining our corporate-level strategy, while national
and international situations can impact our day-to-day operations. In a review of our current environment, we identified a number of external
factors and grouped them into relevant trends.
TALENT
Scarcity of human resources
AUTOMATION
Industry 4.0 and Smart
Manufacturing
DIGITALIZATION
Higher-speed bandwidth
networks
MATERIALS
Scarcity of natural resources
ESG
Increased focus on ESG
drivers & targets
IT & DATA SECURITY
Preventing cyber attacks
SMART CITIES
Safe & secure living
environment
PANDEMIC
COVID-19
GOVERNANCE
Transparency and law &
regulations
LIFE SPAN
Aging
TRANSPARENCY
Requirements for openness
CLIMATE
The climate is rapidly
changing
LAW & REGULATIONS
Increase in regulation
HEALTHY & SAFE LIVING
ENVIRONMENT
Promoting health
15 TKH GROUP ANNUAL REPORT 2021 |
MEGATRENDS
TECHNOLOGY COMPANY TKH
Based on the external environment and trends and developments we have selected certain megatrends
that are relevant as important growth drivers and shape the future of our strategy and Smart Technologies.
SUSTAINABILITY
•
Increased focus on environment, social, and
governance (ESG) drivers and targets drive public
and private ESG ambitions and investments.
•
Strong governmental ambitions and focus on
existing policies (e.g. the United Nations
Sustainable Development Goals (SDGs), the
Paris Agreement, the EU Green Deal).
•
Global attention on the reduction of greenhouse
gas emissions is accelerating the energy transition.
SAFETY & SECURITY
•
Boom in data acquisition applications with
integrated smart technologies brings high demand
for cyber security aligned with privacy regulations.
•
Greater security focus owing to geopolitics and
globalization, coupled with a lack of surveillance
officers.
•
Smart Cities and infrastructure play a growing role
in safe and secure environments.
AUTOMATION & DIGITALIZATION
•
Industry 4.0 is driving “hands-off, eyes-off”
manufacturing – shortage of personnel.
•
Technology systems are increasingly complex,
which drives demand for larger-scale technology
partners.
•
Cloud computing, big data, artificial intelligence,
machine learning, and Internet of Things (IoT)
demand the continuous development of
higher-speed bandwidth networks.
| TKH GROUP ANNUAL REPORT 202116
MARKET DRIVERS AND POSITION WITHIN TECHNOLOGY SEGMENTS
TECHNOLOGY COMPANY TKH
•
High demand for automation due to movement toward
Industry 4.0 and “hands-off, eyes-off” manufacturing.
•
Continued increase in demand for more productivity and
improved quality.
•
Lack of human resources and rising labor costs drive
demand for automation.
•
Progression of cloud computing, big data, artificial intelli-
gence, and machine learning leads to demand for new
technology systems.
•
Greater complexity of technology systems drives demand
for trusted technology partners.
•
Increased need for safe and secure buildings and infrastruc-
ture.
•
Rise in advanced IoT-based products leads to automation
becoming a high priority.
•
Trend toward advanced mobility technologies that support
the increased need for enforcement and monitoring.
•
Trend toward more local manufacturing to reduce invento-
ries ask for integrated tire manufacturing systems and
enable highly efficient production of small batch sizes.
•
Support manufacturing through automation closer to
end-customers, reducing carbon footprints, inventories, and
delivery times.
•
Scarcity of human resources and rising labor costs drive
demand for automation.
•
Increased volume and types of tires requires more flexibility
in production.
•
Greater focus on road safety and security drives demand for
high-quality tires.
•
Demand for reduced waste and energy consumption in
production fuels the need for advanced technologies.
•
Energy transition requires more power generation from
renewable sources.
•
Public and private ESG ambitions, budgets, and targets
drive investments.
•
Scarcity of natural resources drives the energy transition.
•
Growth in demand for electricity, both in general and as an
alternative energy source to fossil fuels.
•
Global need for high-speed bandwidth and data traffic.
•
Increased demand for connected assets (IoT).
•
Need for advanced mobility – such as autonomous driving
and ITS – leads to an increased need for data connections.
•
Greater demand for monitoring of essential network
elements.
•
Growth and increased speed of automation technology
require reliable connectivity systems.
SMART VISION SYSTEMS SMART MANUFACTURING SYSTEMS SMART CONNECTIVITY SYSTEMS
MARKET POSITION WITHIN TECHNOLOGY SEGMENTS
•
Unique positioning thanks to our full range of Vision
Technology for customized, one-stop-shop solutions and
integrated systems based on Smart Technologies.
•
A global market and technology leader within 3D Machine
Vision technology.
•
Strong global position in high-growth markets with
superior 2D Vision and Security Vision technologies.
•
Unique positioning thanks to our integrated manufacturing
systems, including advanced control and analytical
functions.
•
Global market leader in the Tire Building industry with >
70% market share.
•
Differentiation, innovation and technological leadership in
Tire Building are all higher than the competition.
•
Integrated proprietary Vision Technology is a key driver for
success in Smart Manufacturing systems.
•
Unique positioning thanks to our integrated system
approach and one-stop-shop offering combined with
24-hour deliveries.
•
Market leader in Benelux and strong position in North and
Western Europe in Fibre Optics technologies.
•
Advanced robotics and software engineering in fiber-to-the-
home (FttH) solutions differentiate TKH from competitors.
•
Market-leading position in the Netherlands in energy
connectivity technology.
•
Strong ESG focus leads to unique positioning within energy
segments.
•
Market leader in the high-end industrial automation market
and high-end medical market.
SMART VISION SYSTEMS SMART MANUFACTURING SYSTEMS SMART CONNECTIVITY SYSTEMS
MARKET DRIVERS WITHIN TECHNOLOGY SEGMENTS
COMPETITIVE
LANDSCAPE
Developments in the industry in general and
our competitive landscape in particular are
important for TKH’s positioning in the market.
Customer patterns are changing, technological
developments are accelerating, and there is an
increased demand for sustainable solutions,
as well as the consolidation of (industrial)
sectors. Our geographical spread, high-quality
proprietary technologies, and distinctive
technological capabilities determine our
competitive strength.
GENERAL MARKET POSITION
•
TKH’s market is spread geographically, with our growth
primarily focused in Europe, North America, and Asia.
This allows us to make targeted investment choices and
to work more actively in specific niche markets.
•
We are differentiated by our combination of core
technologies into unique, comprehensive, and one-stop-
shop solutions.
•
Because of the distinctive character of our proprietary
technologies, we operate mainly in niche markets. In
most of these markets, competition is fragmented to
a range of competitors who do not offer the same
integrated solutions or high-quality, one-stop-shop,
logistics services.
•
The barriers for entry into the market are high because of
the advanced technology levels and expertise needed in
combination with significant capital requirements.
Our strategic transformation program has integrated several
of TKH’s operating companies, which leads to economies
of scale and a more efficient organization with short commu-
nication lines. We can respond quickly to geopolitical and
social developments, for example when they lead to a
reluctance to invest or to a shift in focus.
17 TKH GROUP ANNUAL REPORT 2021 |
AUTOMATED TEMPERATURE
AND MASK DETECTION SOLUTION
TECHNOLOGY COMPANY TKH
| TKH GROUP ANNUAL REPORT 202118
STAKEHOLDER
ANALYSIS
Our stakeholders are those groups and
individuals who directly or indirectly influence
the activities of TKH and its operating com-
panies. To further sharpen our strategy and
objectives, we maintain regular dialogs with
our stakeholders. We often work together with
our operating companies when conducting
stakeholder dialogs. We conducted a survey to
determine material topics, from stakeholders’
perspective as well from TKH’s perspective.
The results of the survey are integrated in the
materiality matrix on the right. Based on our
stakeholder dialogue and survey we identified
which material topic is relevant for which
stakeholder group.
TECHNOLOGY COMPANY TKH
SHARE-
HOLDERS
ECONOMIC
BANKS ANALYSTS CUSTOMERS SUPPLIERS EMPLOYEES SOCIETY
1 Financial stability, track record & performance
• • • • • •
2 Technological innovations
• • • • • •
3 Sustainable capital allocation (in alignment with SDGs)
• • •
4 Customer satisfaction
• • • • •
ENVIRONMENT
5 Responsible production
• • • • •
6 Resource efficiency (incl. waste management)
•
7 Climate change
•
8 CO
2
neutral
• • •
9 Responsible procurement
•
10 Circularity
• •
SOCIAL
11 Good & responsible employment
• •
12 Health & safe work environment
• • •
13 Employee satisfaction
• •
14 Personal development opportunities
•
15 Diversity & inclusiveness
• •
GOVERNANCE
16 Integrity & compliance
• • • • • • •
17 Risk management
• • • • • • •
18 Privacy & IT Security
• • • • • • •
19 Ethical tax
• • • • • • •
11
16
17
8
3
18
1
4
16
7
IMPACT OF TKH ON ECONOMIC, ENIRONMENTAL, SOCIAL, AND GOVERNANCE THEMES
MATERIALITY MATRIX
MATERIAL TOPICS
RELEVANCE FOR STAKEHOLDERS HIGH
2
5
16
12
16
13
16
9
16
6
16
15
16
19
16
10
16
14
HIGH
19 TKH GROUP ANNUAL REPORT 2021 |
RELEVANCE FOR TKH
RELEVANCE FOR THE
STAKEHOLDER / MOST
IMPORTANT EXPECTATIONS MEANS OF COMMUNICATION KEY TOPICS IN 2021 SUPPORTIVE TO OUR STRATEGY
EMPLOYEES
•
Crucially important for the success
of TKH.
•
The company’s ambassadors.
•
Most important ‘authorized capital’.
•
Good employment practices.
•
Development opportunities and a
good package of primary and
secondary employment benefits.
•
A safe and healthy working
environment.
• Internet and intranet.
• Staff magazine.
• Employee satisfaction survey.
• Staff meetings.
• Conferences and seminars.
• Webinars.
• Performance reviews.
• Health and safety.
• Diversity.
• Sustainable employability.
• SDGs.
• IT & Security / Privacy.
• Strategic program.
• Commitment to the diversity of the
workforce.
• Learning organization.
• Boost innovative capacity.
• Leadership and entrepreneurship.
• Integrity & zero tolerance.
SHAREHOLDERS
• Investment through a shareholding
in TKH, thereby strengthening our
capital position.
• Good return on investment with
good dividend policy and long-term
value creation.
• Internet.
• Financial reporting and annual
reports.
• General meeting of shareholders.
• Investor days.
• Capital Markets Day.
• ESG.
• SDGs.
• Diversity.
• Strategic program.
• Long-term shareholdings.
CUSTOMERS
•
Buy products and services.
•
Develop sustainable package of
products and services through
collaboration.
• Offer innovative, high-tech
technologies and comprehensive
solutions.
• Good ROI for customers.
• Internet.
• Events, symposia and trade fairs.
• Customer satisfaction survey.
• Sustainable product portfolio.
• SDGs.
• Customer satisfaction.
• Technological developments.
• Growth targets.
SUPPLIERS
• Supply of services and products
for our business operations.
• Fair business practices and doing
good business at market rates.
• Business associates.
• Negotiations.
• Code of supply and site visits.
• Sustainable product portfolio.
• SDGs.
• Technological developments.
• Sustainable procurement.
ANALYSTS
•
With the aid of analysis and
research, prepare profiles and
ratings on the basis of which
investors can make a selection for
their investments.
• Honest and transparent
communication about
developments.
• Internet.
• Financial reporting and annual
reports.
• IR meetings.
• Capital Markets Day.
• Reporting.
• Financial ratios.
• Sectoral developments.
• Strategic program.
• Long-term value creation and
transparency.
BANKS
• Financial service providers with the
aid of which TKH is able to achieve
its growth targets.
• Creditworthy enterprise that is
appropriately balancing risks
against returns and complies with
contractual agreements.
• Internet.
• Financial reporting and annual
reports.
• Half-yearly discussions.
• Financial ratios.
• Risk analysis.
• Sustainable funding policy.
PUBLIC BODIES
• Act as initiator, facilitator of supply
chain and other projects, and driver
of sustainable initiatives.
• Boost the economic appeal in the
region with respect to business
office location and employment.
• Supply cha
in initiatives with a
significant contribution to
sustainability.
• Internet.
• Network and thematic meetings.
• Sustainable and other
developments in the region.
• Strategic investment decisions.
EDUCATION AND
KNOWLEDGE INSTITUTIONS
• Influx of new talent in order to
compensate for such things as a
shortage of technical personnel.
•
Providing a challenging work
environment with ample
development opportunities.
•
P
roviding traineeships – work
experience.
• Internet.
• Trade fairs and seminars.
• Social media.
• Relevance of education (in relation
to the relevant discipline).
• Profiling TKH as an interesting
employer.
• Sustainable workforce.
• Learning organization.
COMMUNITY AND SECTORAL
ORGANIZATIONS (INCLUDING
NGOS)
•
Possess an extensive network and
knowledge of the positions in the
supply chain.
•
Expertise in specific sectors.
• Contribute ideas to and start up
joint ventures.
• Internet.
• Reporting and reports.
• Annual reports.
• SDGs.
• Climate change.
• Sustainable business operations.
• Consolidate social initiatives.
STAKEHOLDERS’ DIALOG
TECHNOLOGY COMPANY TKH
| TKH GROUP ANNUAL REPORT 202120
CORPORATE STRATEGY
TKH’s strategy focuses on technology leadership with our cohesive core technologies in three business segments. As part of the strategy process, four
strategic pillars have been identified: Innovation and technical leadership, Being responsible and sustainability impact, Talented people and empowerment,
and Sustainable financial performance. Based on these pillars, the megatrends, and the confrontation matrix, we have determined our strategic direction and
have defined specific objectives incorporated in our new strategy program Accelerate 2025.
STRENGTHS
Creation of advanced proprietary technologies and innovative systems.
Leading positions in many markets where we operate.
High pricing power due to smart technologies, system integration, and services.
Risk spread across various product/market combinations.
Organizations close to customers giving a high level of customer intimacy.
Entrepreneurship is one of our core values.
Sustainability proposition.
Strong brand and reputation in active markets.
Financial strength and high-quality capital.
Optimal use of R&D resources and investments in markets with largest potential.
WEAKNESSES
Execution of market share growth opportunities in relation to innovations.
Time-to-market for innovations.
Brand awareness in conservative markets where TKH is looking to expand its position with
disruptive, innovative technologies.
Conversion ratio of added value to EBITA.
OPPORTUNITIES
High demand for automation due to movement toward Industry 4.0.
Development and integration of technologies that contribute to the improvement of sustainability.
Lack of human resources and rising labor cost drive demand for automation.
Demand for reduced waste and energy consumption in production fuels need for advanced
technologies.
Energy transition requires a boost in power generation from renewable sources.
Global need for high-speed bandwidth and data traffic infrastructure, escalated by COVID-19.
Greater focus on intelligent security owing to geopolitics and globalization.
Technological developments enabling improved customer services and technologies.
THREATS
Shorter product life cycles due to higher level of innovation.
Disruption by new entrants and technologies.
The risk of COVID-19 or a future pandemic developing or emerging.
Protectionism of internal markets by governments.
Shortage of qualified staff.
Supply chain challenges, with shortages in the availability of raw materials and components.
Cost inflation.
Cyber-attacks.
CONFRONTATION MATRIX
TECHNOLOGY COMPANY TKH
21 TKH GROUP ANNUAL REPORT 2021 |
ACCELERATE 2025
PRIORITIES ACCELERATE 2025
TECHNOLOGY COMPANY TKH
TKH has made significant steps to transform
its organization and increase its focus on
value creation, following the successful imple-
mentation of its Simplify & Accelerate program
introduced in 2019.
On Capital Markets Day in November 2021, TKH
launched a new program: Accelerate 2025. This
program underlines the strong foundation and value
potential of TKH by introducing new and higher targets
for 2025. In addition, TKH unveiled a new technology-
focused segmentation, centered around Smart
Technologies.
Accelerate 2025 includes actions to boost turnover and
ROS by unlocking the full potential of our innovations
and disruptive technologies. Benefiting from current
market positions and megatrends, such as automation
and digitalization, sustainability, and safety and security,
we will take full advantage of the expected market
growth. In addition, TKH will increase its focus on
sustainability within its strategy, with strong ambitions
and new non-financial targets.
ACCELERATE ORGANIC GROWTH
Increase our market share by unlocking the full potential of our
innovations and disruptive technologies, taking advantage of
market growth driven by relevant megatrends.
ACQUISITIONS
Accelerate growth by acquiring € 100 – € 150 million turnover.
SUSTAINABILITY
Deliver a strong performance with regard to our ESG targets,
especially CO
2
neutrality by 2030 (scopes 1 & 2), and further
develop a sustainable portfolio based on SDG principles.
PORTFOLIO MANAGEMENT
Exit activities that offer limited potential for value creation, such
as those with limited strategic fit or low ROS and organic growth
potential.
COST EFFICIENCY
Focus on leveraging organic growth into an added value
conversion ratio of > 35%. Translate the increase in gross margin
into a further increase in results with more focus on return and
cost ratio as a percentage of added value.
TKH BRANDING
Strengthen and expand TKH branding and transition to an
efficient external communication structure.
INNOVATIONS
Exploit our technological leadership by leveraging and
accelerating growth from innovations and using the R&D
pipeline. Bring key innovations to maturity with targeted
profitability and limit the number of new “start-up” projects.
TALENT EMPOWERMENT
Ensure our workforce is an accurate reflection of our society with
respect to diversity and inclusiveness. Continue to ensure the
health and safety of our employees. Engage and retain employees.
Promote transparency and openness.
Areas Bandwidth
expected turnover
Bandwidth ROS
improvement
Target > 17%
1
ORGANIC GROWTH
COST EFFICIENCY
INNOVATIONS
ACQUISITIONS
PORTFOLIO
MANAGEMENT
> E 300 mln
> E 200 mln
+ E 100-150 mln
- E 150-200 mln
> 2.5%
> 2.0%
> 0.5%
Scale effect -due to organic growth- on opex and cost of good sold,
productivity & yield improvement programs
Acceleration of our innovations in terms of turnover, benefit from
learning curve and economies of scale, capital light future innovations
Acquisitions that strengthen our portfolio of proprietary technologies
in the area of software, and/or strengthen our sales network
Divestments that do not contribute towards achieving our long-term
strategy & targets
Commentary
1 ROS improvement is based on Latest Estimate 2021: ROS >12%
| TKH GROUP ANNUAL REPORT 202122
STRATEGIC PILLARS AND TARGETS
TECHNOLOGY COMPANY TKH
INNOVATION AND TECHNOLOGICAL LEADERSHIP
TKH aims to position itself as a technological leader in various niche growth markets.
Innovation is essential to this, enabling us to stay at the forefront of the creation
of best-in-class and innovative technologies. In addition, TKH is an established
technology player with a proven track record of developing advanced and disruptive
Smart Technologies that respond to market trends.
TKH combines its Smart Technologies to create innovative and comprehensive
technology systems. Investments in R&D and the acceleration and scaling of innova-
tions are vital for future growth, and to remain a technology leader.
Our target is for at least 15% of our turnover to be generated through innovations
introduced in the previous two years. As a result, a major part of TKH’s technology
portfolio is always in the early stages of the product life cycle, which is an essential
strategic foundation for securing future growth. Alongside investments in our techno-
logical development, we also invest in partnerships for specific specialisms and
speed up the time-to-market for selected technology systems.
TKH generated € 301 million turnover in 2021 from innovations
across its three core technology segments.
BEING RESPONSIBLE AND SUSTAINABILITY IMPACT
TKH does business in a socially responsible manner with great awareness of our
environment. We continuously seek to strengthen our contribution to a sustainable
society by creating a sustainable product portfolio and business proposition; for
example, around 70% of our turnover is related to one of the SDGs. In addition, our
focus on sustainability also improves TKH’s commercial position, as it supports
customers in achieving their set sustainability criteria.
Furthermore, TKH continues to increase the importance of sustainability in its business
decision-making processes. We attach a great deal of importance to the principles of
good governance, including integrity, transparency, accountability, and adequate
oversight. In addition, we follow a zero-tolerance policy concerning matters such as
fraud, bribery, and corruption. Risk awareness is a constant and integral part of our
culture at TKH, and we apply different systems to deeply embed risk awareness in our
organization and avoid and manage risks.
KPIs OBJECTIVES REALIZATION 2021
Portfolio at an early stage of the life
cycle
At least 15% of turnover generated by
portfolio introduced in the previous two
years
19.8%
Technical innovations with impact on
sustainability (SDGs)
At least 70% of turnover linked to SDGs 68%
KPIs OBJECTIVES REALIZATION 2021
Carbon footprint (CO
2
emissions)
100% carbon neutrality in own operations
by 2030 (scopes 1 & 2) – reduction of CO
2
f
ootprint compared to reference year (2019)
29.8%
% waste of most relevant raw
materials, compared to total relevant
material consumption
< 5% waste 5.2%
Recycling most relevant raw materials
> 80% recycling (copper, aluminum, and
plastics)
83.2%
Customer satisfaction Average score above benchmark (7.8) 8.4
Code of Supply signed by suppliers > 90% strategic suppliers signed up 92.4%
23 TKH GROUP ANNUAL REPORT 2021 |
TECHNOLOGY COMPANY TKH
TALENTED PEOPLE AND EMPOWERMENT
TKH aims to be an attractive and responsible employer. An important pillar of our
corporate level strategy is investing in human capital and building a strong, diverse
workforce of talented people. Working together with talented and qualified people is
vital to achieving our mission of creating best-in-class Smart Technologies.
Being an attractive and responsible employer is an important duty and one we take
seriously. TKH offers an inspiring, safe, and healthy working environment for all its
employees, while always seeking to make further improvements. TKH has an open
business culture with a high level of entrepreneurship and short lines of communication.
Our organization is also characterized by delegated authority, trust, and transparency.
TKH strongly believes that the diversity of its workforce will further bolster the success
of its defined strategy. One of our priorities is therefore to boost and safeguard diversity
within our organization. In addition, TKH continues to build on its strong employer
brand in order to keep attracting the right talents and fill vacancies rapidly, especially in
times of scarcity in human resources.
SUSTAINABLE FINANCIAL PERFORMANCE
Creating added value for all key stakeholders while, at the same time, being a solid
investment for shareholders is a key pillar of TKH’s strategy. We do this with healthy
balance sheet ratios and a strong cash flow from our operating activities, with a focus
on the development of the company. We aim to achieve an annual increase in earnings
per share, and a net debt/EBITDA ratio of no more than 2.0. Cash generated will be
reinvested in businesses with above-average growth potential and/or distributed to
shareholders. Structural excess cash can be used for share buyback programs,
dividends, and/or strategic investments with an attractive return on investment.
TKH will expand through organic growth and acquisitions, with a geographical focus
on Europe, North America, and Asia. In the case of acquisitions, the emphasis is on
structurally healthy companies that strengthen our portfolio of proprietary technologies
or enhance our sales network. We aim to acquire a turnover of € 100 million to € 150
million in the medium term, while continuing to manage our portfolio to decrease
activities with lower margin and growth potential.
Due to our focus on activities with higher margin potential, organic
growth combined with cost efficiency, acquisitions, and divestments,
the medium-term target for our ROS exceeds 17%. The range for
the medium-term ROCE target is 22–25%.
KPIs OBJECTIVES REALIZATION 2021
% of female members in Executive and
Senior Management teams
> 25% by 2030 17.7%
Accident rate (LTIFR)
< 1.0 0.7
Illness rate < 4.0% 3.56%
Employee satisfaction grade > 7.5 7.4
Employees act in accordance with Code
of Conduct
No breaches of the Code of Conduct 0
Number of employees with disabilities
and/or disadvantages on the labor market
Maintain at least current number 107
KPIs OBJECTIVES REALIZATION 2021
Turnover > 2 billion by 2025 € 1.5 billion
Return On Sales (ROS) > 17% by 2025 12.4%
Return On Capital Employed (ROCE) 22-25% by 2025 20.5%
Net debt / EBITDA < 2.0 annual target 0.9
| TKH GROUP ANNUAL REPORT 202124
TECHNOLOGY COMPANY TKH
LONG-TERM VALUE CREATION
TKH’s value creation process is dynamic and ongoing. It aims to use our business processes to respond to the needs of our stakeholders, and to identify
at an early stage any opportunities or risks driven by economic, geopolitical, environmental, sustainability, social, and technological trends. Using detailed
R&D road maps, we focus on development within core technologies and, by effectively integrating these technologies, we create unique, innovative, and
comprehensive solutions suitable for multiple markets. Entrepreneurship and talent development are also key areas of focus within our group to ensure that
we continually improve our value creation (long-term or otherwise).
RESEARCH & DEVELOPMENT
During the product development we use methods
and processes which make allowances for
environmental aspects, such as energy savings and
recycling. We also expect our suppliers to act in a
sustainable way.
CUSTOMERS
Thanks to our technology platforms and contribution
of specific product and market knowledge, we are
able to provide our customers with the best possible
solutions offering a favorable return on investment
(ROI) and sustainable product portfolio.
LOGISTICS
We have steadily centralized our logistical distribution
operations. In the case of transport its impact on the
environment in the distribution chain counts a great
deal in addition to costs and duration.
ENGINEERING & OPERATIONS
We employ operational management models that
have been incorporated in an operational excellence
program. By doing so, we seek to achieve the
optimal performance of our operational processes.
TECHNOLOGIES & COMPREHENSIVE SOLUTIONS
The TKH core technologies are combined to produce
innovative, comprehensive systems, so as to be able
to satisfy customer demand and to boost our oppor-
tunities in the market. Sustainability of our innovative
product portfolio is of decisive importance.
CIRCULAR ECONOMY & RECYCLING
The composition of products constitutes the basis
for optimal recycling. The return of materials,
components and products to the appropriate value
chain gives rise to a sustainable business model.
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CORE TECHNOLOGIES
KNOWLEDGE SHARING &
DEVELOPMENT
• New technologies and innovations.
• Protected technologies and IP rights
through patents.
• Solid R&D road map.
SAFE & SUSTAINABLE PRODUCT
PORTFOLIO
• Innovative, reliable and sustainable
solutions.
• Contributing to a safe environment and
efficient processes for our customers.
• Broad geographical distribution.
BUSINESS AND OPERATIONS
•
Sustainable use of energy and raw materials.
•
Operation in accordance with LEAN and
Six Sigma principles, and ISO 14001 and
45001.
•
Implementation of energy-saving and waste
reduction programs.
FINANCIAL VALUE
• A healthy balance sheet ratio and strong
operational cash flow.
• An annual increase in earnings per share.
ATTRACTIVE & RELIABLE
EMPLOYER
• Investment in health and safety.
• Investment in training and development
opportunities.
• Attention to diversity and inclusion.
• Ensuring honesty and openness.
SOCIAL & RELATIONS
• Good relationships with stakeholders.
• Social engagement.
INNOVATION AND
TECHNOLOGICAL LEADERSHIP
• Turnover: € 1.5 billion
• Innovations: 19.8%
• R&D expenditure: € 64.4 million
SUSTAINABLE FINANCIAL
PERFORMANCE
• ROS: 12.4%
• ROCE: 20.5%
• Net earnings per share: € 2.31
• Debt-leverage ratio: 0.9
• Dividend pay-out ratio: 64.9%
TALENTED PEOPLE AND
EMPOWERMENT
• Number of training hours/FTE: 21
• Employee satisfaction: 7.4
• LTIFR: 0.7
• Illness rate: 3.56%
• Diversity: 17.7%
BEING RESPONSIBLE AND
SUSTAINABILITY IMPACT
• CO
2
footprint reduction: 29.8%
(compared to 2019)
• Recycling: 83.2%
• Customer satisfaction: 8.4
• Breaches of the code of conduct: 0
CORE VALUES AS A GUIDELINE FOR OUR ACTIONS
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
SUSTAINABLE CITIES
AND COMMUNITIES
AFFORDABLE AND
CLEAN ENERGY
GOOD HEALTH
AND WELL-BEING
DECENT WORK AND
ECONOMIC GR OWTH
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
DECENT WORK AND
ECONOMIC GR OWTH
INTELLECTUAL
R&D road map and technology and software
development for a high-quality, innovative
product portfolio.
PRODUCTS
Integrated technologies and software that
create innovative, sustainable, and com
-
prehensive solutions, both capitalizing on
market trends and ensuring efficiency, safety,
security, and sustainability for customers.
ENVIRONMENT
For each decision we take in our business,
we consider its potential environment impact.
TKH enters into active dialog with its strategic
suppliers in order to improve the sustainability
of their products and processes.
FINANCIAL
Equity and loans to invest in proprietary
technologies, our employees, and the growth
of our business.
HUMAN
Talented and skilled employees who reflect a
diverse society. Providing a safe and inspiring
workplace with opportunities for professional
development.
SOCIAL & RELATIONS
Close cooperation with stakeholders based
on honesty, integrity, and openness. Making
a contribution to, and investing in, the society
around us.
BUSINESS OPERATIONS
• Service
• Assembly
• Outsourced & in-house
manufacturing
• R&D and system engineering
BEING RESPONSIBLE AND
SUSTAINABILITY IMPACT
Doing business in a socially responsible
manner.
SMART
VISION
SYSTEMS
SMART
MANUFACTURING
SYSTEMS
SMART
CONNECTIVITY
SYSTEMS
STRATEGIC PILLARS
INNOVATION AND
TECHNOLOGICAL LEADERSHIP
A leading innovative technology player
(operating in niche markets) that creates
comprehensive best-in-class solutions.
TECHNOLOGY COMPANY TKH
TALENTED PEOPLE
AND EMPOWERMENT
An attractive and responsible employer.
SUSTAINABLE FINANCIAL
PERFORMANCE
Creating added value for all stakeholders
while also being a solid investment for
shareholders.
ENTREPRENEURSHIP
ENVIRONMENTAL AWARENESS
INTEGRITY
TRANSPARENCY
ACCOUNTABILITY
25 TKH GROUP ANNUAL REPORT 2021 |
INPUT
BUSINESS OPERATIONS
OUTPUT OUTCOME
MANAGEMENT REPORT
BUSINESS DEVELOPMENTS 27
SUSTAINABILITY PERFORMANCE 28
Being responsible and sustainability impact 29
Talented people and empowerment 37
Sustainable development goals 42
FINANCIAL PERFORMANCE 45
Group financial performance 45
Developments per business segment 47
Acquisitions, divestments and investments 50
OUTLOOK 51
27 TKH GROUP ANNUAL REPORT 2021 |
IMPACT OF COVID-19
COVID-19 continued to have an impact on operations and
financial performance in 2021. Following a slow start in the first
quarter of 2021, due to the ongoing COVID-19 restrictions in
several countries, we saw a strong recovery in most markets.
The airport and parking industries investments were still post
-
poned. During the year, COVID-19 restrictions caused opera-
tional challenges in commissioning equipment at customer sites.
Also, our absence rate was higher than usual due to quarantine
regulations and other precautions. However, despite these chal
-
lenges and limitations, the organization was able to adapt very
well. It is difficult to accurately quantify the impact of COVID-19
on our 2021 performance. However, when it comes to the finan
-
cial impact, the following elements affected our results:
•
TKH hardly made any use of the available COVID-19
government support.
•
TKH eliminated most cost-saving measures from 2020 due
to a higher activity level, but travel and exhibition expenses
remained low.
•
TKH evaluated additional scenarios in its impairment
assessment, which resulted in the recognition of an impair-
ment loss of € 1.6 million, mainly due to COVID-19.
•
Deferred tax payments of € 22 million in 2020 were paid in
2021.
SIMPLIFICATION
After the successful implementation of the Simplify &
Accelerate program (introduced in 2019), strongly focused
on activities with higher ROS and organic growth, TKH has
made significant steps to transform the organization and
increase its focus on value creation during 2021. With several
divestments, integrations, innovations, and acquisitions
financial performance was further increased. The ROS of
13.2% in the second half year of 2021 (H2 2020: 10.9%)
showed that TKH made good progress towards the ROS
target. As part of its simplification, TKH has changed to
new reporting segments: Smart Vision systems, Smart
Manufacturing systems, and Smart Connectivity systems.
The new segmentation reporting will provide more trans-
parency and perspective on the potential of our value creation
in the coming years. To enable comparison, the previous
segmentation is disclosed in the notes to financial statements.
ACCELERATE 2025
On the Capital Markets Day in November 2021, we launched
our new program Accelerate 2025, which aims to increase our
turnover to more than € 2 billion and a ROS of >17% by 2025.
This will be realized by unlocking the full potential of our inno
-
vations and disruptive technologies. Benefitting from mega-
MANAGEMENT REPORT
trends, such as energy transition, digitalization, industrial
automation, and safety and security, we will be able to take full
advantage of the expected market growth.
INVESTMENTS & DIVESTMENTS
To respond to the high market demand related to the mega-
trends, we have decided to prepare for an expansion of our
production capacity and additional capital investments in 2022
and 2023. As part of Accelerate 2025, we expect to acquire
around € 100 - € 150 million in turnover during the coming
years. Around € 150 - € 200 million of turnover will be divested,
as we continue to reduce activities with lower margin and
growth potential. Preparations have started in 2021.
TKH closed the financial year in a strong financial position,
backed by a low working capital ratio of 10.1%, which was
well below the target bandwidth of 12–15%. The net debt/
EBITDA ratio was 0.9 and provides sufficient room for the
execution of our strategy, and the payment of the proposed
dividend of € 1.50.
BUSINESS DEVELOPMENTS
Demand for all our technologies and innovations has strongly recovered with a record high order intake of € 1,842 million. Thanks to
the capabilities and entrepreneurship within our organization we managed to cope with the exceptional increase in demand in a very
short period, despite the supply-chain challenges, COVID-19 restrictions during the year, and availability of workforce.
| TKH GROUP ANNUAL REPORT 202128
SUSTAINABILITY PERFORMANCE
On Capital Markets Day, on November 17, 2021, TKH announced that it would continue to focus on sustainability in its strategy, with strong ambitions
and new non-financial targets for the years ahead. Among other measures, we defined a new diversity target to increase the share of female members in
the Executive and Senior Management teams to at least 25% by 2030. We also set ourselves the target to be CO
2
-neutral by 2030 in our own operations
(scopes 1 and 2).
In 2021, we also decided to reassure TKH’s
stakeholders about TKH’s non-financial informa-
tion
. Therefore, we appointed Ernst & Young
Accountants LLP (EY) to provide independent
limited assurance on our 2021 key KPIs, included
in the table on the right.
MANAGEMENT REPORT
Strategic pillar KPI
Target
2021 2020
BEING RESPONSIBLE
AND SUSTAINABILITY
IMPACT
Carbon footprint (CO
2
emissions) 100% carbon neutrality in own
operations by 2030 (scopes 1 & 2)
–reduction of CO
2
footprint compared
to reference year (2019)
29.8% 17.8%
% waste of most relevant raw
materials, compared to total relevant
material consumption
< 5% waste 5.2% 6.6%
Recycling most relevant raw materials > 80% recycling 83.2% 84.2%
Customer satisfaction Average score above benchmark (7.8) 8.4 8.1
Code of Supply signed by suppliers > 90% strategic suppliers signed up 92.4% 90.7
TALENTED PEOPLE
AND EMPOWERMENT
% of female members in Executive
and Senior Management teams
> 25% by 2030 17.7% 16.8%
Accident rate (LTIFR) < 1.0 0.7 0.8
Illness rate < 4.0% 3.56% 3.51%
Employee satisfaction grade > 7.5 7.4 7.4
Employees acting in accordance with
Code of Conduct
No breaches of the Code of Conduct 0 0
Number of employees with disabilities
and/or disadvantages on the labor
market
Maintain at least current number 107 100
29 TKH GROUP ANNUAL REPORT 2021 |
BEING RESPONSIBLE
AND SUSTAINABILITY
IMPACT
As a matter of strategic priority, sustainability
is firmly embedded in our day-to-day
operations, and sustainability initiatives are
being integrated into our organization. Our
environmental, social, and governance (ESG)
policy provides a framework for both our
short- and medium-term plans without losing
sight of company interests. This means that
business decisions are made not only from
the perspective of its effect on profitability,
but also by taking into account its possible
consequences for the people involved in and
around our organization, and its impact on the
environment and our reputation. In achieving
our financial and non-financial targets, we
consider our social responsibilities in
relation to all relevant stakeholders.
TKH conducts its activities according to the principles of
honesty, integrity, and transparency. We notify our stake-
holders of our operations and developments in the company.
We defined our ESG policy based on internationally recog-
nized quality standards, certification programs, and accredi-
tation marks. Within our operating companies, the ISO
standards that share common ground with sustainability
goals have been implemented, including the environmental
management system, ISO 14001, and the EN-16247 energy
audit system, which is related to the European Energy
Efficiency Directive. In 2021, all production locations of TKH
were certified for the occupational health and safety (OH&S)
management system, ISO 45001.
There is an increasing focus from TKH’s stakeholders –
including customers, employees, regulators, and investors –
on ESG matters. These stakeholders may also have
ESG-related expectations concerning TKH’s business and
operations. In addition, there are an increasing number of
regulatory and legislative initiatives to address ESG issues,
such as the EU Taxonomy Regulation. To comply with these
– and to be responsible – we have bolstered our ESG
commitments toward 2025 and 2030 and have adopted a
comprehensive ESG framework, which we will further
enhance in the years ahead. In 2022, we will also strengthen
our governance structure by expanding and improving
sustainability functions on a group level and throughout the
organization.
CO
2
FOOTPRINT
Efficient energy consumption and reduction of CO
2
emissions
are important performance indicators for all our locations.
Under the terms of the EU Energy Efficiency Directive
(2012/27/EU), member states must ensure that large-scale
organizations undergo an energy audit to gather information
on real-time energy consumption and gain an insight into the
potential for energy savings. At a country level, where
applicable, TKH has drawn up an integrated plan for energy
efficiency to comply with the terms of this Directive. Among
other areas, we use these reports for our energy reduction
plan. We regularly monitor the identified potential for energy
savings so we can safeguard our progress and adherence to
improvement plans. Energy-saving measures that have
already been implemented include replacing conventional
lighting with LED lighting, replacing central-heating boilers
with energy-efficient models, replacing LPG lift trucks with
electric lift trucks, monitoring and reducing energy peaks,
and investing in energy from sustainable sources, such as
solar panels. By constantly improving our production
processes and procedures, and continuing to investigate
new, energy-efficient solutions, we are endeavoring to
consider the energy factor wherever possible. By doing so,
we are attempting to keep both CO
2
emissions and energy
costs to a minimum.
The focus of TKH’s CO
2
footprint reduction remains primarily
on scopes 1 and 2, because most of our direct emissions
occur within these areas. We have expanded our internal
dashboard with components from scope 3, but have not yet
implemented a scope extension for CO
2
emissions in our
calculation model. TKH calculates the energy consumption
and CO
2
emissions associated with our energy consumption
using conversion factors from reputable and authoritative
sources. TKH uses tank-to-wheel emission factors. All
conversion factors are reviewed annually and updated if
necessary. The energy consumed by forklifts is considered
negligible and is therefore not included in TKH’s overall
energy consumption and related CO
2
emissions reporting.
The basis for consolidated energy consumption and CO
2
emissions is activity data, which in turn are based mostly on
meter readings, invoices, and data provided by suppliers.
Where reliable data is not available, TKH uses calculations or
estimations obtained through reliable methods and input
data. TKH is satisfied that the estimates are reliable in all
material respects.
MANAGEMENT REPORT
| TKH GROUP ANNUAL REPORT 202130
In 2021, we set ourselves the target of 100% carbon
neutrality by 2030 for our own operations (scopes 1 and 2).
To report on progress, we compare the CO
2
footprint and
relative reduction with a reference year, which is adjusted
every 5 years. 2015 was used as the reference year until
2020. For 2021 and onward toward 2030, the reference year
will be 2019, representing TKH’s pre-COVID activities.
In 2021, our net carbon footprint decreased by 29.8%
compared with the reference year, 2019. The reported figures
do not include any acquired carbon offsets. In our sites, we
reduced our scope 1 (indirect) emissions. This was mainly
driven by energy efficiency measures, our program to
purchase renewable energy and green certificates, working
from home, and mild winters. We increased our renewable
energy share to 30% in 2021, from 4% in 2020. Combined
with the energy reductions we achieved, this led to a 15.3%
reduction in net emissions from our energy consumption
(scope 1 and scope 2) in 2021 compared to 2020. Our
business travel emissions, covering emissions from lease
cars, decreased by 6.5% compared to 2020
. This is mainly
due to COVID-19, as fewer employees
are now using their
lease cars again post-COVID. In addition, we continue to
electrify our lease fleet and promote online collaboration
post-COVID, to limit travel.
Energy consumption primarily focuses on electricity (kWh)
and natural gas (m
3
). At 73% of the total kWh consumed,
electricity consumption is the largest in terms of absolute
volume, owing to its use in the production process, lighting,
ventilation, air-conditioning, and extraction systems. Energy
consumption (in kWh) was with 5.7% lower compared with
2019. The COVID-19 situation had an important impact on
this. In addition, the divestments also led to a reduction of
10% compared with 2019. Gas represents 27% of the total
kWh consumption and is used for heating buildings and, to a
lesser extent, for process heating. The consumption of diesel
and fuel oil has declined in recent years and now makes up
just 0.5% of total consumption.
In 2022, we will continue to focus on our energy efficiency
programs and increase the share of renewable energy to
re
duce our CO
2
footprint. In addition, we will set up a compen-
sation program to offset residual CO
2
emissions, with the aim
of working toward our carbon neutrality target by 2030.
EU TAXONOMY FRAMEWORK
TKH’s reporting on EU Taxonomy activities follows
Regulation EU 2020/852 of the European Parliament and of
the Council of June 18, 2020. The EU Taxonomy regulation is
intended to serve as a standardized and mandatory classifi-
cation system to determine which economic activities are
considered environmentally sustainable. Reporting which
activities are environmentally sustainable (aligned) starts as
of next year; reporting year 2022. The first requirement for
reporting start in 2021 by reporting on Taxonomy eligibility,
which is done by determining whether an activity falls within
one of the sectors covered by the first two defined environ-
mental objectives (climate change mitigation and adaptation).
As the current EU Taxonomy delegated act only applies to
sectors with the highest CO
2
emissions, TKH’s activities are
limited within the scope of this delegated act and, conse-
quently, a negligible part of TKH’s turnover was eligible under
this taxonomy during 2021.
The Taxonomy Regulation provides a definition of environmen-
tally sustainable economic activities. To qualify as environmen-
tally sustainable, an economic activity should, among other
requirements, contribute substantially to one or more of the six
environmental objectives stated in article 9 of the Regulation.
A delegated act (EU 2021/2139), specifying which technical
screening criteria specific economic activities must comply
with in order to fall under the first two environmental objectives
– climate change mitigation, and climate change adaptation –
was adopted on June 4, 2021. A delegated act specifying the
final four environmental objectives: the sustainable use and
protection of water and marine resources, the transition to a
circular economy, pollution prevention and control, and the
MANAGEMENT REPORT
CO
2
FOOTPRINT REDUCTION
29.8%
2020 17.8%
NET CARBON FOOTPRINT IN KG TON
CO
2
-EQUIVALENT
2021 2020 2019
Scope 1 7,117 6,686 8,642
Scope 2 21,969 27,374 32,773
Total (scopes 1 and 2)
29,086 34,060 41,415
Reference year
compared to reference year 2019
31 TKH GROUP ANNUAL REPORT 2021 |
protection and restoration of biodiversity and ecosystems,
has not yet been adopted. Therefore, TKH’s disclosure on EU
Taxonomy activities in the year 2021 is only for the environ
-
mental objectives (climate change mitigation, and climate
change adaptation). Article 16 of the Taxonomy Regulation
define “enabling” economic activities. However, an economic
activity is only “enabling” under EU Taxonomy provided it
meets the technical screening criteria in the respective section
of Annex I and II to the Climate Delegated Act. Therefore, for
the eligibility reporting in accordance with Article 10 of the
Disclosures Delegated Act, those eligible-to-be-enabling
activities are not in the scope of the eligibility reporting in 2021.
We used the delegated act EU 2021/2139 to identify which of
our activities were eligible, and we concluded that only a very
limited share of our turnover-generating activities should be
included, since this delegated act only applies to sectors with
very high CO
2
emissions. Taxonomy-eligible turnover is 0.3%
in 2021 and is related to data processing, hosting and related
activities (non-eligible turnover: 99.7%). We used the delegated
act (EU) 2021/2178 for the definition and calculation of the
Taxonomy-eligible percentages. Turnover is calculated based
on “total turnover” as per the Consolidated statement of profit
and loss. We also assessed our capital expenditure. Reportable
taxonomy-eligible capital expenditures in 2021 were 0.6% of
the total capital expenditure in 2021 and is related to data
processing, hosting and related activities (non-eligible capital
expenditures: 99.4%). The capital expenditure was determined
based on the 2021 additions to property, plant and equipment,
intangible assets, and additions to right-of-use assets,
excluding any re-assessments and excluding goodwill (refer to
note 3 intangible assets and goodwill, note 4 property, plant
and equipment, and note 5 right-of-use assets of the financial
statements). In a similar way to capital expenditures, we
assessed for relevant operational expenditures activities.
In 2021, we did not record any reportable Taxonomy-eligible
operational expenditures (0%). Non-eligible operational
expenditures were 100%. Operating expenses per the EU
Taxonomy definition covers direct non-capitalized costs that
relate to research and development, building renovation
measures, short-term leases, maintenance and repair, and any
other direct expenditures relating to the day-to-day servicing of
assets of property, plants, and equipment. This differs from the
definition of operating expenses in our financial statements.
We used the following general ledger accounts in the opera
-
tional expenditures assessment: R&D expenditure, mainte-
nance of buildings, repair/maintenance, lease for short periods,
lease for low value items, cost of machinery, cost of warehouse
and furniture, and cost of manufacture and accommodation.
These costs are included in the other operating expenses (refer
to note 26 of the financial statements). The accounting policy
includes references to the related line items in the consolidated
financial statements, making sure to avoid double counting
between the various reporting categories and between the
objectives climate change mitigation and adaptation.
The Taxonomy Regulation is relatively new and there are still
significant uncertainties around its phased implementation. We
will continue to assess our eligibility and the extent of our EU
Taxonomy alignment in 2022. It is expected that the Taxonomy
will be developed into a comprehensive and detailed framework
over the coming years. Future guidance could result in more
accurate definitions and other decision-making in meeting
reporting obligations that may come into force. This could
impact future EU Taxonomy reporting. As of 2022, TKH will
report on activities that can be examined as Taxonomy-aligned.
RESPONSIBLE PRODUCTION & RESOURCE
EFFICIENCY
Sustainable business practice also includes the sustainable
management of resources. We focus on production efficiency
with the operational excellence program, so we never lose
sight of issues such as the reduction of energy consumption
and the use of raw materials. At all our production compa-
nies, from the design stage, we choose raw materials and
other materials that have little or no harmful impact on the
environment. Efficient management of materials and raw
materials is relevant because of the consumption of valuable
metals such as copper and aluminum, which form an
essential part of the cable production process, and because
of the waste that is inevitably generated. The main raw
materials used by TKH are copper, aluminum, and plastics.
All waste produced is in the non-hazardous waste category.
Our policy is aimed at eliminating waste to such an extent
that it has as little impact on the environment as possible.
This also helps us avoid unnecessary costs. The two
approaches we have adopted to this are the following:
•
Quantitative: we aim to reduce the quantity of waste at
source, structurally, by increasing material productivity.
We also reduce waste by improving processes and making
innovations.
•
Qualitative: we aim to minimize the damaging effect of the
waste; this means making as much use of recycled
materials as possible, and optimizing waste treatment via
greater cooperation throughout the value chain.
Total waste from the most relevant raw materials, compared
to total relevant material consumption, was 5.2% in the year
under review, compared with 6.6% in the previous year, and
close to the target set for a maximum of 5% waste compared
with total consumption of materials. Although the total
consumption of materials increased in 2021 compared to
2020 – mainly due to recovery from the COVID-19 pandemic
– we were able to reduce the percentage of material waste.
This was driven by waste reduction and operational excel-
lence programs focused on right-first-time production. In
addition, for part of our portfolio, we replaced the raw
material copper with aluminum, resulting in increases in the
efficiency of our production process and, as a result, less
waste. The decrease in waste, expressed as a percentage of
the consumption of materials, shows that measures to reduce
waste have been implemented effectively, and that we are
well on the way to further reducing our waste flows.
MANAGEMENT REPORT
| TKH GROUP ANNUAL REPORT 202132
From the most relevant raw materials, 83.2% of our total waste
was recycled in 2021 (2020: 84.2%), while our target is to
recycle at least 80%. Our copper supplier reprocesses pure
copper waste into fully usable copper – so the figure for copper
was almost 100% recycled waste. Plastics that have become
unusable during the cable production process, but are suitable
for recycling, are offered to waste processing companies with
a view to turning them into new raw materials. Cables (particu-
larly odd lengths of cable) are sorted as much as possible, and
we are looking into the possibility of completely recycling these
cables – and the same applies to the plastics used as insulation
and sheathing material. The improvement in recycled waste is
also due to investments in production equipment for the
in-house recycling of cable waste.
In selecting raw and other materials, we take sustainability
criteria into account, alongside price and quality. Partnerships
in the value chain also play a part in successfully introducing
sustainable product innovations. We will achieve the innova
-
tions that are needed to fulfill this ambition by working closely
with partners in the value chain. Sustainable cable composition
is given high priority in cable manufacturing companies, and
we continue to look for innovative manufacturing techniques
and opportunities to improve efficiency in the value chain.
We conduct discussions throughout the value chain on how
processes and products can be made more sustainable, so
that we can make more effective use of resources. In addition,
we use product life-cycle assessments as input for sustainable
product innovations, including circularity.
We are trying to reduce the impact our activities have on the
environment as much as possible by continuously meas
uring
and improving our environmental performance. As our activities
may cause nuisance in the surrounding area, we make every
effort to prevent this or to reduce it to a minimum. To this end,
we have drawn up several internal guidelines and implemented
noise-reduction and odor-reduction measures. We register and
manage environmental complaints, and inform those involved
in good time about corrective or preventive measures.
Opportunity category Opportunities
Efficient use of production processes Further implementation of more effective production processes via our “operational
excellence” program
Use of energy sources with lower emissions Further implementation of CO
2
-neutral operations
Development of new products and services by
means of R&D and innovation
Access to markets with our innovations
Focus on zero-emissions products and services Rise in turnover due to demand for those of our innovations that result in lower emissions
Distinctiveness compared with the competition
Participation in value chain (and other)
programs for generation of sustainable energy
Contribution to hitting internationally agreed targets in relation to climate mitigation
Circular economy Continuation of waste-reduction targets and recycling ambitions, so that we can make
a sustainable and demonstrable contribution to the circular economy
Participation in initiatives for renewable energy Obtainment and deployment of our knowledge
MANAGEMENT REPORT
Risk area Risks
Laws and regulations Future implementation of CO
2
taxation/pricing will mean a rise in operational and
compliance costs
Technology High investment costs involved in bringing technology up to the standard at which it can
meet the demand for products and services that can offer reduced emissions
Market demand and market change Failure to match up to the expectations of key stakeholders, including customers and
investors, in relation to information on how we are meeting the challenges of climate
change
Scarcity of resources Increasing volatility in prices and availability of raw materials/resources and materials
RISK AREAS
OPPORTUNITY CATEGORIES
33 TKH GROUP ANNUAL REPORT 2021 |
CLIMATE CHANGE
The potential impact of climate change on our strategy and
our business model has received plenty of attention in the
year under review. Based on recommendations from the Task
Force on Climate-Related Financial Disclosures (TCFD), in
2021, we extensively analyzed the potential risks to our
operations posed by climate change, and how any such
climate-related risks could be converted into opportunities,
for instance through innovations relating to climate adapta-
tion or climate-change mitigation.
Our analysis identified four possible risk areas that could
have an impact on TKH’s strategy and operations, which are
presented in the table on the previous page.
In addition, we specifically assessed physical (acute) climate
change risks, including rising temperatures, resulting in
flooding or extreme weather, and their impact on TKH’s
operations. Due to the locations of our (production) facilities,
the risk is considered less relevant for TKH. However,
physical (acute) climate change risks are part of the assess-
ment in business decisions, for example in the case of a
change in location, or the expansion of our facilities or
activities. We also assessed the exposure of our strategic
suppliers to any material first-order and second-order
physical climate change impacts. This assessment includes
impacts indirectly caused by the physical effects of climate
change, such as significant economic crisis due to physical
damage to business, or human migration due to flooding.
The analysis also highlighted seven possible opportunity
categories that we could use to increase our positive contri-
bution in relation to climate change and climate-change
mitigation, which we have presented here.
In this way, we can gain insight into the acceptance and
mitigation of threats, and we can take further steps to bring
opportunities to fruition. This will ultimately result in a climate
threat profile: a blueprint of how we aim to face up to climate
change. The climate threats we have identified will also be
embedded in the risk-management system, so that such
topics are safeguarded at an organizational level.
SUSTAINABLE CAPITAL ALLOCATION
TKH plays a role in an increasing number of value chains as
a purchaser, producer, supplier, or partner. In all of these
roles, TKH tries to guarantee uniformity in its sustainability
principles. We allocate capital to our sustainable portfolio
and innovations to increase our positive contribution to
Sustainable Development Goals (SDGs), as well as enhance
our positive impact on society and the environment through
our customers. Satisfying sustainability criteria plays an
increasingly decisive role in the way that our customers’
award contracts. We are making a significant contribution to
the SDGs through our innovative product portfolio.
Approximately 70% of our total turnover is now linked to one
of the SDGs that we have defined as relevant. In this way, we
support our customers in achieving their sustainability criteria
and simultaneously provide clear direction on how forward-
looking our company is in terms of sustainable development.
TKH strives for a balanced product portfolio with innovative
solutions tailored to each of our customer’s specifications. In
this respect, sustainability criteria are becoming increasingly
relevant. We are also devoting attention to sustainable
innovation based on our innovation objectives. We have set
ourselves the target that at least 15% of our turnover should
derive from innovations introduced in the two preceding
years. In the year under review, the proportion of innovations
in turnover figures was 19.8% (2020: 21.1%).
Our products and systems have the relevant accreditation
marks and certificates and are supplied with clear manuals
35
30
25
20
15
10
5
350
300
250
200
150
100
50
TURNOVER FROM INNOVATIONS
in million E
Turnover from innovations
Innovations in % of turnover
2018 2019 2020 20212017
MANAGEMENT REPORT
TURNOVER LINKED TO SDGs
68%
2020 70%
Follow-up action includes discussing the results of the
analysis with our strategic stakeholders to obtain a validated
overview of the most significant threats and opportunities.
in %
| TKH GROUP ANNUAL REPORT 202134
and specifications. If desired, we can supply measurement
and test reports to demonstrate the quality of our products
and systems. Products are tested for a continuous improve-
ment process based on the specifications. The potential
impact on health and safety is also taken into account.
TKH’s technologies and solutions support the sustainability
ambitions of our customers. Our subsea-cable systems
contribute to a sustainable energy supply for the future.
The
TKH Tire Building systems increase the efficiency of the
production process, which – in addition to high-quality tires –
results in energy and waste reduction at the customer’s site.
The CEDD®/AGL solution for airports/airfields provides energy
savings due to the use of sustainable LED lighting as well as
the use of low voltage with induction. The parking guidance
systems ensure efficient traffic flow in car parks, leading to a
significant reduction in CO
2
emissions. TKH Vision technology
has become an indispensable application in the optimization of
manufacturing processes, automating and perfecting quality
control, as well as inspections in production processes. This
leads to significant efficiency improvements in the industry
with positive results regarding sustainability criteria. We are
continuing to tailor our portfolio to our customers’ wishes con-
cerning efficiency and sustainability requirements, taking strong
customer relationships as our starting point. In this annual
report, several business cases are presented to further substan-
tiate our sustainable, innovative portfolio, linked to the SDGs.
CUSTOMER SATISFACTION
High-quality technologies, solutions, and corresponding
services are essential to our commercial impact. Customer
interests play a central role when we undertake and imple-
ment operational activities and developments. We measure,
monitor, and evaluate customer loyalty and appreciation
via customer satisfaction surveys, in a three-year cycle.
Based on the outcomes, we can take specific action to
serve our customers even better. The average score of our
customer satisfaction survey is 8.4, which is above the
benchmark score of 7.8. With training and skills management,
standardization of processes, and further improvement of our
availability, information systems, and 24-hour service, we aim
to provide an even better customer experience.
INTEGRITY, COMPLIANCE & RESPONSIBLE
PROCUREMENT
TKH highly values the integrity of its employees’ conduct.
Clear guidelines, operational control, and a zero-tolerance
policy regarding matters of principle, such as fraud, bribery,
and corruption, ensure that work is carried out in accordance
with the appropriate principles and agreements. We have a
Code of Conduct in force to ensure that every employee acts
in accordance with TKH’s guidelines. The Code of Conduct
uses the OECD guidelines as a reference framework. Each
employee confirms in writing that they will act in accordance
with the Code of Conduct, which is linked to a sanctions
policy in case of any unacceptable behavior. The managers of
our operating companies are responsible for implementing
the Code of Conduct within their organizations. The Code of
Conduct has been signed by 96.2% (2020: 93.7%) of the
total number of employees. The desired 100% has not been
achieved due, among other things, to a longer lead time than
intended for signing the Code in the case of new employees.
We are maintaining close contact with the operating compa-
nies and establishing clear rules to eliminate such delays as
quickly as possible. The Internal Audit team ensures that
every part of our organization complies with our Code of
Conduct. There is close co-operation with TKH’s Compliance
Officer and Legal Advisor. Among other aspects, the Internal
Control Framework is used to effectively monitor and assess
possible bribery and corruption risks. The Code of Conduct
can be downloaded from the TKH website.
Employees are expected to be aware of the core values
underlying our actions and our risk profile, and to be respon-
sible for any potential risks they take. They are also expected
to adhere to the principle of TKH’s culture and to act in accor-
dance with TKH’s Code of Conduct. This Code of Conduct is
fundamental to everything we do and describes how we act
as a company, as well as how we make decisions and deal
with different dilemmas within our company. TKH
Group is
committed
to an open culture in which employees can openly
discuss any concerns, problems, or abuses of the Code of
Co
nduct. The
Whistleblower Procedure provides for a clear
course of action for employees who wish to raise such topics
or concerns as, for example, a possible criminal offense or
violation of the law, a violation of TKH's internal policies and/
or procedures, giving or receiving a bribe, disclosure of
confidential information, dishonesty or unethical behavior
(such as discrimination, (sexual) harassment, bullying, etc.),
and tax-related items. Reports are reviewed and investigated
by the local Confidential Officer and/or the Group Compliance
Officer. If deemed necessary, disciplinary and mitigating
measures are taken. External parties can also report to the
Group Co
mpliance Officer. A report will not affect the position
of the whistleblower if the report is made in accordance with
the procedure established for that purpose. In the past year,
two reports were received through the Whistleblower
Procedure. After a thorough investigation, it was concluded
that the two reports were HR-related and therefore not a
report in accordance with the Whistleblower Procedure. It is
difficult to draw clear conclusions about the level of aware
-
ness of acting with integrity, and the possibility of reporting
abuses. We believe it is important to promote an open and
transparent culture and we measure such issues in employee
satisfaction surveys.
Regarding issues that are material to us, we expect a
zero-tolerance policy from our suppliers too. Our principles
are recorded in a Code of Supply, which targets such issues
as human rights, the environment, occupational h
ealth and
safety, and ethical behavior. Our requirements are laid down in
the Code of Supply and focus on human rights, the environ
-
ment, health, safety, and ethical conduct. Every supplier with a
purchase volume above € 1 million must sign the Code of
Supply. The Code of Supply has been signed by 92.4% (2020:
MANAGEMENT REPORT
35 TKH GROUP ANNUAL REPORT 2021 |
90.7%) of the total number of suppliers in scope. The desired
100% has not been achieved due, among other things, to a
longer lead time than intended for signing the Code in the case
of a new supplier. Within a maximum of two years after a Code
of Supply has been signed, there must be an assessment of
the supplier in question to review the items stipulated in the
Code. In the year under review, site visits to suppliers were
severely restricted due to COVID-19. However, where possible,
aspects from the Code of Supply and the associated assess
-
ment were discussed and/or implemented in virtual sessions.
Internal Audit has included auditing the processes to be
carried out in relation to the Code of Supply in its work
program.
We have included provisions regarding the respect and
safeguarding of human rights in both our Code of Conduct
and the Code of Supply. Our policy is not to tolerate violation
of any human rights. We use the OESO guidelines as a
reference framework to enable us to quickly identify potential
risks. These OESO guidelines refer to the Universal
Declaration of Human Rights, which state that all parties in
society, including companies, are obliged to respect and
safeguard human rights. In the assessment that we carry out
with suppliers in the context of our Code of Supply, we
question a supplier on their observance of human rights and
discuss possible areas in which discrimination, the right to
social security, and the risk of child labor in the chain may be
an issue. The assessments carried out with suppliers have
revealed no violations of human rights. Privacy is an
important principle of human rights. People must be able to
live in freedom, without everyone knowing everything about
them. The Privacy Act gives people more rights – and
organizations more obligations – to handle personal data
carefully. Internal Audit covers this theme of human rights as
part of its auditing activities and questions our managers
about their observance of human rights and whether any
potential human rights conflicts could arise, chiefly in the
value chain in which we operate.
ANTI-COMPETITIVE BEHAVIOR AND SANCTIONS
TKH is fully committed to anti-competitive behavior, providing
all parties with the same information, setting realistic require-
ments, and establishing clear contract conditions. We also
avoid any activities that conflict with legislation. To ensure
this, internal guidelines drawn up for strategic management
within the TKH Group must be followed. The guidelines
contain rules relating to decision-making procedures and
internal authorizations. The TKH Code of Conduct also
applies in this respect. Naturally, we abide by the applicable
competition legislation. Internal Audit has an important
auditing function regarding our compliance with laws and
regulations. If sanctions are imposed on our company by
authorities, we will explain the cause and the corrective
actions that have been taken. In 2021, we did not incur any
sanctions.
PRIVACY & IT SECURITY
Due to increasing alertness to potential cyber risks, IT &
Security has been high on the strategic agenda and a clear IT
Security policy has been drawn up at TKH. In addition, IT
audits have been carried out at operating companies, based
on which action plans have been developed to address
vulnerabilities in IT systems. As a result of the IT audits, the
issues of cybersecurity and cyber risks have been given high
priority within the organization, and awareness of potential
risks has been raised. Communication on cybersecurity takes
place via regular newsletters, for example. Penetration tests
have also been carried out at some operating companies to
determine whether the organization is sufficiently resilient to
possible digital attacks. These tests have provided insights
into potential vulnerabilities of our IT infrastructure and their
possible consequences. The ultimate goal is to implement
safe processes and effective controls and to create a safe
and honest culture. The subject is a recurring item on the
agenda in meetings of the Executive Board as well as in Audit
Committee meetings. This ensures attention is consistently
paid to this topic. IT & Security is part of the immediate focus
area of the Internal Audit team. Further information about IT &
Security is included in the risk management chapter.
European legislation on the protection of private information,
the General Data Protection Regulation (GDPR), lays down
strict rules on the use of personal data and the storage of
such information. One of the conditions is the establishment
of a processing register that shows what personal data is
used or stored, where, and for what purposes. The establish-
ment of this register gives insight into and control over data
processing in the organization and the related privacy
controls. A privacy regulation has also been drawn up and
implemented in the organization. Internal Audit, in collabora-
tion with the internal Legal Advisor (who is also the Data
Privacy Officer), ensures the proper application of GDPR
legislation within the organization.
TAXES
Tax is an integral part of our sustainability strategy which, in
turn, is part of our business strategy. Tax is included in the
materiality assessment for sustainability purposes and is an
element of our ESG policy.
The tax strategy is aligned with TKH’s organizational values
and forms an important part of TKH’s ESG policy. The tax
strategy is regularly discussed with the Executive Board.
Bodies such as the OECD provide guidelines on international
tax matters, which are followed by TKH. This is reflected, for
example, in TKH’s tax position, which shows that tax is paid
where economic activity and value creation occur to a
significant extent. For TKH, this is one of the elements that
are relevant in the context of a fair-share tax contribution.
TKH focuses on compliance with applicable tax laws,
regulations, and ethical standards in the countries in which
we operate, and we pay our taxes in accordance with the
letter and the spirit of tax laws and regulations. TKH’s tax
department is guided by TKH’s core values, does not aim at
aggressive tax planning (including so-called tax havens), and
MANAGEMENT REPORT
| TKH GROUP ANNUAL REPORT 202136
strives to limit tax risks. The tax department has global
responsibility for the tax position of TKH Group, particularly in
relation to corporate income tax, restructuring, and transfer
pricing. In carrying out this task, the long-term considerations
and interests of TKH’s various stakeholders are taken into
account.
Tax systems around the world and their application are
becoming increasingly complex. To keep abreast of these
developments and comply with them, permanent education
is provided for the tax department, and internal training
modules are regularly organized for the selected departments
of the various TKH operating companies, with attention paid
to technical and other tax issues, including tax dilemmas.
We continuously seek to invest in technologies to improve
data management, and thus the overall quality of direct and
indirect tax compliance, control, and reporting. We strongly
believe in the benefits technology can offer to enable earlier
access to tax-relevant data, particularly as the legal and
regulatory environment is rapidly evolving and tax authorities
are increasingly embracing digitalization. In recent years, the
Tax Function has evolved from being a manually-oriented
function to a more data-driven, digitally-enabled one.
In our relationship with the tax authorities, we strive to build
strong, mutually respectful relationships based on trans-
parency and trust. We therefore believe in an open and
constructive dialog, both with the Dutch tax authorities and
those in other countries. In the Netherlands, this is explicitly
laid down in the “horizontal monitoring” covenant.
Consultations with the fiscal authorities are progressing on
how this can be taken further once this covenant has been
fully developed. In this respect, we actively co-operate with
the Dutch Tax and Customs Administration to share the
potential tax impact of new initiatives with them and to
embed this in a ruling, if necessary. This ensures that the tax
classification of new initiatives is in line with TKH’s tax policy,
as well as meeting t
he expectations of the Dutch Tax and
Customs Administration.
In addition, it aims to ensure that
activities are only taxed once at a generally accepted tax rate
where the business is conducted.
CORPORATE INCOME TAX 2021
Amounts in thousands of euros The Netherlands Europe (other) Asia North America Other countries Amortization PPA 1) Total
General information
Aggregated revenues realized by the companies in the region without
elimination of intercompany transactions 812,105 720,596 241,226 158,985 14,016 1,946,928
Result before tax 40,493 75,788 15,182 13,617 2,246 -18,412 128,914
Property, plant and equipment 130,011 54,058 32,459 5,566 393 222,487
Number of own FTE 1,963 2,444 867 414 96 5,784
Income taxes (paid)/received
Income tax to be (paid)/received at 1 January 2021 -862 -7,828 237 -857 79 -9,231
Income taxes paid -7,212 -20,750 -2,810 -1,859 -420 -33,051
Income tax to be (paid)/received at 31 December 2021 -938 -1,800 -251 -3,393 -153 -6,535
1 Amortization of intangible non-current assets from acquisitions
MANAGEMENT REPORT
TKH submits an annual Count
ry-by-Country (CbC) report to
the Dutch Tax and Customs Admi
nistration. This report is
made available to the tax authorities of the countries in which
TKH operates through the appropriate channels. In addition,
TKH is subject to the so-called Mandatory Disclosure Rules
(DAC6), which obligate TKH and the advisors involved to report
selected cross-border tax arrangements. During the period
under review, three notifications were made, all resulting from
reorganizations of activities primarily driven by business
motives.
The following table shows the tax paid in 2021, by region.
The tax paid is often different from the calculated tax burden,
due to prepayments that differ from the final tax burden. This
may be caused by temporary differences, deferred taxation,
and uncertain tax positions.
37 TKH GROUP ANNUAL REPORT 2021 |
TALENTED PEOPLE
AND EMPOWERMENT
The quality of both the organization and its
employees are both decisive factors in the
success of TKH Group. We demand a lot from
our employees, who have a clear idea about
what is expected of them and how they can
make an active contribution. It is our duty to
be a good employer and to motivate and help
our employees as best possible so that they
can carry out their work efficiently and with
enthusiasm. We provide our employees with a
healthy working environment where safety
comes first, and we give them opportunities to
develop.
ORGANIZATIONAL STRUCTURE
TKH has a decentralized organization structure, assigning
responsibilities as far down the organization as possible. An
Executive Board – the body bearing ultimate responsibility –
is supported by the Management Board in the operational
implementation of the strategy. In addition to the three
members of the Executive Board, the Management Board
consists of the Director of Finance & Control, Director of
Corporate Development, and the Company Secretary. The
Executive Board is responsible for the decisions taken by the
Management Board and bears ultimate responsibility as
provided for in the company’s articles of association. In
addition, TKH has a Strategic Sounding Board, consisting of
the managing directors of several operating companies. This
board assesses TKH’s strategy and discusses its implemen-
tation. The members of the Strategic Sounding Board provide
input on topics like technological, portfolio, and business
developments within the TKH Group. This platform also
provides an opportunity to involve young talent in the
development and execution of strategy at an early stage, thus
promoting management development.
During the year under review, further steps were made toward
the simplification of the organizational structure, allowing a
concentration on activities with a greater value-creation
potential. Integration of operating companies, with the focus
on the benefits of economies of scale, make it possible to
capitalize on operational synergies and better deploy the
available expertise. As a result, it is possible to clearly
address activities such as product development, procure-
ment, marketing, communications, and sales – an approach
that leads to consistency in both branding and customer
service. The number of operating companies has been further
reduced due to divestment of activities that, given their
nature, have narrow profit margins or limited value creation
potential.
CULTURE AND RISK MANAGEMENT
TKH has a culture in which entrepreneurship is encouraged.
Organizational risks associated with entrepreneurship are
easily identifiable through a clear framework of responsibili-
ties and authorizations. An open and transparent culture in
the organization, coupled with the capacity to be self-critical,
enables it to deal with responsibilities and authorizations
correctly, and identify risks timely. Risk management is firmly
embedded in our management model. This is characterized
by short lines of communication with the Executive Board,
and backed up by close monitoring of agreed objectives
using a comprehensive KPI dashboard that is divided into
weekly, monthly, and quarterly information. It also provides
a clear overview of developments over a longer time frame.
A sound reference framework, such as budgetary and
historical information, helps us to quickly and effectively
detect deviations from the agreements and, where necessary,
adjust operations. This method is encouraged from the top
down, to ensure that it permeates all levels of the company.
Every quarter, or on a monthly or weekly basis if required,
the management teams of the operating companies discuss
a strategic scorecard based on highlights and lowlights for
each business segment, as well as any related short- and
medium-term action points. In this way, it is possible to
get an insight into market, financial, commercial, and sus-
tainability developments. The reports give both quantitative
and qualitative information and are structured along the lines
determined by TKH. This encourages transparent reporting
on both positive and negative issues.
TKH aims to have an open business culture in which
employees are acknowledged and heard and, in this respect,
highly values the integrity of its employees’ conduct. We
encourage an open, transparent professional attitude, in
which our managers lead by example. The Executive Board
and the management of the operating companies lead by
example and set the right values and standards in the
organization. An important principle is achieving a balanced
MANAGEMENT REPORT
| TKH GROUP ANNUAL REPORT 202138
relationship in the company’s senior ranks and ensuring that
there is harmony in terms of personalities, expertise, and
skills. Mutual respect is the basis for making properly
considered decisions. A clear-cut Code of Conduct, opera-
tional control, and a zero-tolerance policy regarding matters
of principle such as fraud, bribery, and corruption are also
important means of ensuring that work is carried out in
accordance with the right principles and agreements.
Because of our open corporate culture, our people feel
involved in the company and call each other to account for
any undesirable or unacceptable behavior according to the
standards and values that we aspire to. Cultural aspects are
assessed using an employee satisfaction survey, which
makes clear any areas where there is still room for improve-
ment. The Executive Board maintains direct contact with
employees within all parts of the organization by, for
instance, attending presentations given by employees,
participating in project meetings, or taking part in informal
gatherings.
EMPLOYEE REPRESENTATION
The interests of the employees are promoted at the operating
company level by the local Works Councils, and at the TKH
group level by the Central Works Council. These councils
ensure ongoing employee representation under the terms of
the Works Councils Act (Wet op de Ondernemingsraden).
During the year under review, the Executive Board and the
Central Works Council held frequent, close consultations
with each other. The topics discussed were the results and
organizational developments, progress in the strategic
program, the budget, investments, and the TKH annual
report. The special topics dealt with during the year under
review were the (re)appointments to the Supervisory Board.
Due to the COVID-19 measures, which included restrictions
on gatherings, it was not possible to hold the annual Works
Council Day. This was due to be a Works Council Day that
would strengthen the bond between the various Works
Councils of the Dutch operating companies, as well as
promote the sharing of knowledge and experiences. TKH
believes that consultations with the Central Works Council
and other Works Councils are important and attaches great
value to an open dialog. We believe that adopting an active
approach to employee representation helps us to stay alert.
EMPLOYEE SATISFACTION
In times of uncertainty, it is all the more important to be able
to measure good employment practices. We have been
carrying out employee satisfaction surveys (ESS) for a long
time, in a three-year cycle. The surveys provide important
information regarding the motivation, satisfaction, and
expectations of our employees. Follow-up surveys also
measure the effects of improvements made in response to
the findings. We carry out these surveys in collaboration with
a specialized third-party research agency. To get an insight
into the impact of the COVID-19 restrictions and measures
on our employees, certain operating companies carried out a
satisfaction survey that focused on the impact of COVID-19
on employees, such as the requirement to work from home,
working together virtually, the balance between work and
private life, and internal communication. Open questions
were among the tools used in the survey to give employees
the opportunity of making their experiences during the
COVID-19 pandemic and needs for the future known. We
evaluate where to amend our HR policy based on the results
of the study and create a robust plan of action.
HEALTHY & SAFE WORK ENVIRONMENT
Safety awareness and safety performance are important
focus areas within the TKH Group, and preventing accidents
and encouraging a professional safety culture form an
important basis to this. We achieve this by being transparent
about accidents and near-misses so that employees are
more alert to potentially risky situations and are able to react
quickly. The manufacturing companies provide information
on safety within the organization and clear work instructions
regarding machinery safety are available. Strict measures are
MANAGEMENT REPORT
MANAGEMENT BOARD
Alexander van der Lof MBA
(Executive Board, chairman & CEO)
Elling de Lange MBA (Executive Board, CFO)
Harm Voortman MSc (Executive Board)
Erik Velderman MBA
Gertjan Sleeking
Derk Postma
39 TKH GROUP ANNUAL REPORT 2021 |
MANAGEMENT REPORT
taken to ensure that employees comply with requirements
such as wearing safety shoes and protective clothing. We
also encourage employees to draw each other’s attention to
situations that could lead to dangerous incidents.
S
afety is a crucially important factor for many of our operating
companies, due to the nature of the work they do, so in
2021, their aim was to obtain ISO 45001 certification. This
ISO standard covers requirements for a management system
relating to occupational health and safety (OH&S) which
means that OH&S risks can be managed, and performance
improves. 100% of TKH operating companies in scope are
certified under the ISO 45001 standard. Regrettably, in 2021
a fatal accident occured at one of our premises involving an
employee of a third party supplier. This proves the need for
continious education and focus on safety matters in our own
organization as well as that of our suppliers.
To make safety demonstrable, we place emphasis on
specific, measurable performance targets for safety measures,
including LTIFR (Lost Time Injury Frequency Rate) and illness
rate. We devoted further attention to health & safety programs
at our production facilities. This resulted in increased attention
and awareness for important health & safety topics. As a
result, the LTIFR figure for 2021 decreased slightly to 0.7 in
comparison with last year (2020: 0.8).
The illness rate was 3.56%, which is slightly above last
year’s level (2020: 3.51%), but below the target of a
maximum of 4.0%. COVID-19 has had the greatest impact
on the rise in illness rate, due to lockdowns, among other
factors. By acting quickly and responding with appropriate
measures to address the COVID-19 situation to guarantee the
health of our employees, we were able to keep absence to an
acceptable level. In addition to the physical condition of our
employees, we paid extra attention to the potential psycho-
logical impact of COVID-19 on individuals’ lives and work
situations, to ensure our people remained healthy and well.
DIVERSITY & INCLUSIVENESS
TKH is an international group of companies with a workforce
that includes many nationalities. In such an international
environment, we take a broad view of diversity. The diversity
policy at TKH focuses on a variety of abilities, skills, and
nationalities, and we employ a mix of men and women, as
well as a balanced distribution of ages. There is good job
occupancy at junior, mid and senior levels. The current age
structure also leads to manageable staff turnover due to
retirement.
Thanks to the diversity of our workforce, we have at our
disposal a wide range of skills in our business, which leads
to greater objectivity and dynamism. We continue to believe
that skills and experience should be the main criteria for
selecting the right candidate. To bring diversity to people’s
attention, specific programs have been set up with different
approaches to better embed this in the organization. There
are, for example, programs for middle and senior manage-
ment on bringing gender balance to jobs and consultation
structures. Moreover, this is also important in the context of
succession planning. Operating companies are responsible
for improving the gender balance within their own organiza-
tions; progress in this respect is closely monitored by the
Executive Board.
Likewise, inclusivity is part of our diversity policy. In our
appointments policy, we are committed to providing a
suitable working environment for people with a disability
and/or disadvantage in the labor market. Disability is an
umbrella term, covering illnesses/disorders, activity limita-
tions, and participation restrictions. An illness/disorder is a
problem in body function or structure. An activity limitation is
a difficulty encountered by an individual in executing a task
or action. A participation restriction is a problem experienced
by an individual in a range of everyday situations resulting in
a disadvantage on the labor market. TKH creates work
experience opportunities for the long-term unemployed or
ACCIDENT RATE (LOST TIME
INJURY FREQUENCY RATE)
0.7
2020 0.8
CENTRAL WORKS COUNCIL
Olaf Karsten (VMI), chairman
Gerard Roolvink (TKF), secretary
Ad Boerma (EKB)
Jan Jaap Derksen (VMI)
Maurice Fliescher (Intronics)
Michel van Scherpenzeel (TKH Security)
Louis Scholten (TKF)
| TKH GROUP ANNUAL REPORT 202140
MANAGEMENT REPORT
people returning to the labor market. Workers from sheltered
employment are deployed to perform repetitive work. In
the year under review, the number of employees with a
disadvantage in the labor market increased to 107 FTEs,
particularly because of an increase in the level of activity in
segments in which these employees are largely active.
TKH pursues a strict policy of equal treatment for all
employees regardless of race, nationality, ethnic background,
age, religion, gender, sexual orientation, or handicap. We do
not differentiate between male and female employees’ basic
salaries and apply market-based remuneration. There may be
differences between countries depending on local market
practices and the tax and social security structure. We have
a remuneration policy based on the requirements of the job,
and the experience and skills of the individual.
For Dutch employees, we adhere to the social conditions of
employment as stated in a collective labor agreement
applicable to the sector (CAO). Agreement-related rules are
implemented in those operating companies where there is no
collective labor agreement. We apply a similar policy for
foreign operating companies, in line with local laws and
regulations. TKH ensures that such schemes are correctly
drafted and observed, particularly in relation to periods of
notice, restraint-of-trade and non-compete clauses, and
profit-sharing arrangements, and that the statutory notice
periods and other provisions are complied with. In the case of
acquisition opportunities, the salary structure of the company
to be acquired is one of the subjects examined during the
due diligence process.
At year-end 2021, the number of employees (in FTEs) was
6,160 (2020: 5,704 FTEs), with 376 of those as temporary
employees (2020: 121 FTEs). As a result of increase
d activity
levels, the number of employees increased by 456 FTEs.
At the end of 2021, 23% of the workforce consisted of
women,
which is almost the same level as last year. The main reason
for the present distribution of male and female employees is
the technical nature of our work coupled with labor market
supply. However, we do see women increasingly choosing
technical professions, so we can start to more specifically
select and recruit women for technical positions within our
organization. TKH has strong ambitions and new, defined
non-financial targets for the years ahead. Among other things,
we set a new diversity target, to increase the share of female
employees in Executive and Senior Management roles to at
least 25% by 2030. At the end of 2021, 17.7% of Executive
and Senior Management personnel were female (2020:
16.8%). In 2022, we will further expand our diversity and
inclusiveness program.
PERSONAL DEVELOPMENT OPPORTUNITIES
Talent and management development are of great strategic
value. Employee skills and backgrounds are matched as
closely as possible to the strategic developments at TKH
and, where necessary, we provide education and training to
help employees grow in their jobs or guide them to their next
career step. At the same time, we are alert to the need to
retain critical skills to pursue our strategic agenda in techno-
logical developments and innovations.
Our employees are encouraged to develop in the direction of
their choosing. Education and training are an indispensable
part of maintaining our knowledge level. We make training
budgets available to further develop our employees’ skills
and to broaden their employability. We organize internal
training, with the help of external professionals, so that this
matches normal practice at TKH as closely as possible.
New employees follow introductory programs, including
product training.
In collaboration with Nyenrode Business University in
Breukelen, in the Netherlands, a Management Development
(MD) program has been developed for those identified as
having a high potential for accelerated career advancement.
GEOGRAPHICAL SPREAD OF WORKFORCE
in %
male
female
total
Netherlands 29 5 34
Europe (other) 31 13 44
Asia 11 3 14
North America 5 2 7
Other 1 0 1
2021
41 TKH GROUP ANNUAL REPORT 2021 |
MANAGEMENT REPORT
Candidates are put forward by the management teams of the
operating companies based on predetermined selection
criteria. The Executive Board has a proactive role in the MD
program. Due to COVID-19, the 2021 MD program has been
postponed to 2022.
In 2021, more hours were spent on training and other courses
than in 2020. The COVID-19 restrictions meant that most
training courses could be followed virtually. Some internal
training courses were suspended, as key aspects of the
success of these opportunities are the group dynamics, and
the insights gained into day-to-day practices through
company visits. On average, FTEs spent 21 hours on training
in 2021 (2020: 18 hours per FTE). In 2022, we will further
scale up awareness and training programs on ESG material
themes, relating to health & safety, IT Security, and our Code
of Conduct, among other topics.
To recruit new talent, TKH maintains close contact with
business schools and universities. We are in contact with
educational institutes that provide job-specific or manage-
ment training courses. We offer work placements, graduation
projects, and short courses to attract potential talent at an
early stage. In addition, we use targeted programs to attract
more students with limited or lower educational attainment –
such as those in vocational training – to give them an
opportunity to improve their skills in practice, and to interest
them in a possible job with our organization.
Recruitment of this kind is a high-priority area. We are seeing
an increasing scarcity of qualified personnel, especially in
technical positions. It will become more challenging to fill
such positions in the coming years. We have, however seen
that positioning our operating companies under the TKH
brand has had a positive effect in attracting new employees.
Employer branding is increasingly being used to reach and
interest future talent. When recruiting external candidates, we
increasingly use referral recruitment, which means we ask our
current employees to propose new colleagues. By recruiting
in this way, we have a higher chance of finding a match, since
our employees can make a good assessment of whether a
potential candidate is suitable for the position and fits the
organization. The COVID-19 situation has led many talented
workers, who may previously have been difficult to attract, to
be more readily available on the labor market. Where capacity
became available due to a reduction in demand or other
restrictions, employees were (in some cases temporarily)
deployed to fill other positions, where possible.
RATIO MEN/WOMEN
Workforce as of December 31
77% 23%
DIVERSITY
Female Executive and Senior Management
17.7%
2020 16.8%
| TKH GROUP ANNUAL REPORT 202142
SUSTAINABLE
DEVELOPMENT GOALS
The Sustainable Development Goals (SDGs),
developed by the United Nations, are a blueprint
for achieving a better and more sustainable
future. TKH recognizes their importance and
aims to contribute to the SDGs through its
business operations and innovative product
portfolio in alignment with the process of long-
term value creation.
TKH has selected six SDGs to guide its
approach to sustainability; four of these focus
on our innovative product portfolio and the other
two focus on internal operations and business
practices.
THE RELEVANCE OF OUR BUSINESS OPERATIONS
AND INNOVATIVE SOLUTIONS TO THE SDGs
To make an effective and targeted contribution through the
SDGs, we focus on areas where we feel we can have the
most impact and make the most direct contribution. In this
context, we decided to focus on six SDGs. First, we
measured these SDGs against our business operations and
core activities, and then we examined our entire value
creation process.
Existing KPIs are now aligned with the SDGs to provide
insight into our current contribution, and to see where
additional actions will be most effective. Furthermore, we
analyzed the opportunities in our value chain, and as a result,
we are making a significant contribution to the SDGs through
our innovative product portfolio. Approximately 70% of our
total turnover is linked to at least one of the SDGs that we
have defined as relevant to our business. In this way, we
support our customers to achieve their sustainability criteria
and simultaneously provide clear evidence of the forward-
thinking approach of our business.
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
SUSTAINABLE CITIES
AND COMMUNITIES
AFFORDABLE AND
CLEAN ENERGY
GOOD HEALTH
AND WELL-BEING
DECENT WORK AND
ECONOMIC G ROWTH
GOOD HEALTH
AND WELL-BEING
EXAMPLES OF OUR INNOVATIVE SDG PORTFOLIO
Care technology platform
Medication distribution and inspection system
Special cable systems for medical equipment
2D-vision systems for medical equipment
Blood pressure sensors
Thermal camera systems
MANAGEMENT REPORT
GOOD HEALTH AND WELL-BEING
TKH’s technologies and solutions support the care
process, resulting in greater efficiency and reliability in
the healthcare sector, for home care, professional care,
and pharmaceutical companies.
Impact
When it comes to the continuously evolving technolog-
ical support of the care process, TKH believes that care
can become more efficient and reliable if technology is
tailored more closely to each client. In fact, “tailor-
made” is at the heart of TKH’s care solutions for both
extramural and intramural care. Our care technology
platform, which includes individual alarm scenarios and
smart sensors, facilitates the rapid and flexible connec-
tion of care systems to a comprehensive range of
functions and applications for care needs. It also helps
make the provision of care more user-friendly and
accessible.
Our Smart Manufacturing technology responds to
increasingly stringent quality measures imposed by the
pharmaceutical industry to package different medicines
with the highest accuracy.
43 TKH GROUP ANNUAL REPORT 2021 |
DECENT WORK AND
ECONOMIC G ROWTH
AFFORDABLE AND
CLEAN ENERGY
MANAGEMENT REPORT
AFFORDABLE AND CLEAN ENERGY
With its Connectivity technologies, TKH is developing
innovative cable systems that contribute to the energy
transition and the deployment of sustainable energy
sources, including offshore wind farms. In this way, we
contribute to the European energy reduction targets.
Impact
TKH’s Connectivity technology plays a fundamental role
in distributing green electricity, such as wind energy. Our
innovative subsea cable concept, for example, connects
wind turbines in offshore wind farms, and stands out in
terms of high performance, risk reduction, installation
efficiency, and sustainable composition.
Due to the electrification trend, there is considerable
demand for upgrading and expanding power grids;
TKH’s power cable systems offer a solution to relieve
this enormous demand. Furthermore, the innovative
usage of recycled materials is stimulated.
INDUSTRY, INNOVATION,
AND INFRASTRUCTURE
TKH has a strong reputation as an in
novator in the tire
building, robotics, and mechanical engineering industries.
We pioneer technologies and innovations to capitalize on
the pillars of “Industry 4.0”, and the demand for increased
productivity, and improved product quality and production
processes. Our technology also makes infrastructure
safer and increases its availability.
Impact
TKH’s Connectivity, Vision, and Security technologies
make it possible to build sustainable infrastructure com-
pliant with strict safety and efficiency standards. Our
innovative vision and manufacturing systems also enable
our customers to make products more efficiently, and
with a higher degree of reliability and flexibility. Our Vision
technology is used for inspection, quality, product, and
process control in, for example, industrial automation
and consumer electronics, and for scientific research.
TKH leverages its unique expertise and deep under-
standing of the automation of production processes for
controlling and monitoring industrial processes, as well
as in comprehensive manufacturing systems for car and
truck tire production.
SUSTAINABLE CITIES
AND COMMUNITIES
SUSTAINABLE CITIES
AND COMMUNITIES
By combining communications and Security technology
to form innovative, comprehensive solutions for the built
environment, we help to increase the efficiency, safety,
and security of the systems used in and around cities.
Impact
TKH’s technologies and resulting solutions help make
cities safer. Our Security technology enables the built
environment to be monitored and controlled with alarm
systems, mission-critical communication systems,
access and recording systems, and evacuation
systems. Mobility security solutions focus on vehicle
tracking, video analytics for public transport, and
security solutions on toll roads. In addition, TKH
technologies improve efficiency, safety, and security in
multi-story car parks, football stadiums, schools, and
financial institutions.
EXAMPLES OF OUR INNOVATIVE SDG SOLUTIONS
Fibre optic cable systems
Access control and security systems
CEDD/Airfield Ground Lighting system
Industrial 2D and 3D vision systems
Tire building systems
Special cable systems for robotics and
mechanical engineering
Test & measurement systems for e-mobility
EXAMPLES OF OUR INNOVATIVE SDG PORTFOLIO
Mobility inspection systems and security solutions
Mission critical communication systems
Parking guidance and security systems
Connectivity systems
EXAMPLES OF OUR INNOVATIVE SDG PORTFOLIO
Energy cable systems for the energy transition
Subsea cable systems for offshore wind farms
| TKH GROUP ANNUAL REPORT 202144
DECENT WORK AND
ECONOMIC G ROWTH
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
MANAGEMENT REPORT
SDGs 8 AND 12 FOCUS ON OUR INTERNAL OPERATIONS AND BUSINESS PRACTICES
DECENT WORK AND ECONOMIC
GROWTH
Through knowledge sharing and our strong R&D focus,
we provide a distinct and innovative product portfolio
with high added value. Healthy balance sheet ratios and
a solid operational cash flow also support TKH’s growth
strategy. Through good employment practices, we
offer our employees a vibrant and safe working environ-
ment with ample development opportunities. At our
subsidiaries where a safe working environment is an
important area of attention, due to the nature of the
activities carried out there, the ISO 45001 certification
in health and safety has been set as standard.
Impact
TKH strives to provide its employees with a safe and
inspiring work environment. We offer our employees the
training and resources they need to perform their
activities and develop their skills effectively. Through
mutual knowledge sharing, TKH further develops its
sustainable portfolio in response to the needs of the
market. Through our operational excellence programs,
which are both systematically focusing on customer
value and on making the best possible use of our
people’s knowledge and capacity, we excel in our
business operations – which are the foundation of our
organization and a platform for our future growth.
RESPONSIBLE CONSUMPTION
AND PRODUCTION
Through its business operations, TKH focuses on
responsible operations and production, and on reducing
its negative impact on the environment as much as
possible. All our operating companies are certified in
accordance with the ISO 14001 environmental manage-
ment system and work according to the LEAN principle
to prevent wastage in the production process.
Impact
TKH’s ESG policy is designed to ensure we make
continuous improvements in our environmental perfor-
mance, and to reduce the negative impact of our
operations on our surroundings as much as possible.
At all TKH production companies, the raw materials
used are – as much as possible – chosen so that they
have little to no harmful effect on the environment from
the initial design stage. TKH’s production environment is
focused on preventing waste as much as possible, and
sets targets on waste reduction and the recycling of raw
materials. Sustainability issues and our Code of Supply
are regularly discussed with our suppliers.
45 TKH GROUP ANNUAL REPORT 2021 |
MANAGEMENT REPORT
GROUP FINANCIAL
PERFORMANCE
The recovery of the order intake, which
already started in the fourth quarter of 2020,
continued during 2021.
We realized a high order intake of € 1,842 million (2020:
€ 1,294 million) on the back of a strong increase in demand
for almost all our activities, leading to an order book at
year-end of € 746.6 million, an increase of 74.3% compared
to last year. Particularly significant growth in order intake was
realized in Machine Vision (Smart Vision systems), Tire
Building (Smart Manufacturing systems), and energy and
digitalization (Smart Connectivity systems).
Turnover increased with € 234.4 million (18.2%) to € 1,523.8
million in 2021 (2020: € 1,289.4 million). Higher raw materials
prices had an upward impact of 2.6% on turnover, while
exchange rates had a negative impact of 0.1%. Divestments
had a downward impact of 0.2%. On balance, TKH recorded
a 15.9% organic growth in turnover. All segments contributed
to the organic growth in turnover. The supply-chain chal-
lenges in the availability and transportation of raw materials
and components had a negative impact of about € 20 – € 30
million on our turnover in 2021, although our procurement
teams managed to find solutions for the majority of issues.
We responded to these challenges by increasing our stock
levels and ensuring a larger supply of replacements for
components, redesigning some of our products, and
contracting alternative suppliers. Our pricing power enabled
us to pass on most of the resulting price increases.
The geographic distribution of turnover remained mostly in
line with 2020. The turnover share in the Netherlands
decreased to a level of 22% of total turnover, whereas the
turnover share in Europe, excluding the Netherlands,
increased to 45%. The turnover share in Asia remained
unchanged at 19%, North America decreased to 11%.
The turnover share of the other geographic areas was 3%.
The gross margin decreased to 48.3% in 2021 (2020: 49.2%)
due to a shift in product mix, with a larger share in Smart
Connectivity systems combined with increased raw material
and component prices.
Operating expenses (excluding amortization and impair-
ments) increased by 9.6% compared with last year. As a
percentage of turnover, operating expenses decreased to
35.9% in 2021, from 38.7% in 2020. The implemented
integrations and cost savings accounted for a significant
share of the relative reduction of costs, in combination
with higher productivity and capacity utilization in TKH’s
FINANCIAL PERFORMANCE
| TKH GROUP ANNUAL REPORT 202146
production companies. At the same time, selling expenses
were still low due to the ongoing COVID-19 restrictions.
Depreciation came in at € 45.2 million, € 0.3 million below
the level of 2020, mainly due to a lower depreciation on the
right-of-use assets.
The operating result before amortization of intangible assets
and one-off income and expenses (EBITA) increased by
39.9% to € 189.6 million in 2021, from € 135.5 million in
2020. All segments contributed to the increase in EBITA;
Smart Vision systems contributed with +18.9%, Smart
Manufacturing systems with +43.5%, and Smart Connectivity
systems with +61.9%, respectively. The ROS improved to
12.4% (2020: 10.5%) due to the turnover growth and a lower
relative cost level. ROS increased in all three segments.
Amortization decreased as the amortization on certain pur-
chase price allocations related to past acquisitions has ended.
The financial result remained stable at € 8.0 million (in
expense). In 2020, a profit of € 5.5 million on divestments was
included. In 2021, foreign exchange results and results from
associates improved, while interest expenses were lower.
The normalized effective tax rate increased to 26.2% in 2021,
from 25.4% in 2020, primarily due to increased profits at
companies that are subject to higher tax rates.
Net profit before amortization and one-off income and
expenses attributable to shareholders increased by 62.0% to
€ 113.9 million (2020: € 70.3 million). Net profit rose by
100.4% to € 95.2 million (2020: € 47.5 million). Earnings per
share before amortization and one-off income and expenses
amounted to € 2.77 (2020: € 1.69). Ordinary earnings per
share were € 2.31 (2020: € 1.14).
The cash flow from operating activities amounted to € 199.0
million in 2021 (2020: € 187.8 million). In 2020, the cash flow
was boosted by a decline in working capital, while there was
little change in 2021. At year-end 2021, working capital fell
as a percentage of turnover to 10.1% (2020: 12.1%) and
therefore ended below the bandwidth target of 12–15%.
The cash flow from net investments in property, plant, and
equipment amounted on balance to € 31.0 million in 2021.
It was higher than in recent years (2020: € 25.3 million), partly
due to the divestment of business premises held for sale in
2020. The investments in intangible assets related to devel-
opment costs, patents, licenses, and software slightly
increased to € 40.5 million in 2021 (2020: € 39.2 million).
TKH spent € 0.5 million on acquisitions (2020: € 0.5 million).
There were no divestments in 2021 (2020: € 21.2 million).
Solvency was stable at 42.5% (2020: 42.3%). Net bank
borrowings fell by € 56.3 million from the level at year-end
2020 to € 205.4 million at year-end 2021. The net debt/EBITDA
ratio, calculated according to TKH’s bank covenant, stood at
0.9, well within the financial ratio agreed with our banks.
At year-end 2021, TKH employed a total of 6,160 FTEs (2020:
5,704), with 376 of those as temporary employees (2020: 121
FTEs).
DIVIDEND PROPOSAL
It will be proposed to the General Meeting that it authorizes
the payment of a dividend of € 1.50 per (depositary receipt
for a) share (2020: € 1.00). Based on the number of shares
outstanding held by third parties at year-end 2021, the pay
out-ratio amounts to 54.2% of the net profit before amortiza-
tion and one-off income and expenses attributable to
shareholders and 64.9% of the net profit attributable to
shareholders respectively. It is proposed that the dividend
be paid out in cash and charged to the reserves. The dividend
will be payable on May 3, 2022.
DEVELOPMENTS PER
MANAGEMENT REPORT
GEOGRAPHICAL DISTRIBUTION OF
TURNOVER
in %
2021
2020
Netherlands 22 24
Europe (other) 45 43
Asia 19 19
North America 11 12
Other 3 2
EBITA AND ROS DEVELOPMENT
in million
E
EBITA before one-off income and expenses (in € mln)
ROS (in %)
16
14
12
10
8
6
4
2
200
175
150
125
100
75
50
25
in %
2021
2017 2018 2019 2020 2021
47 TKH GROUP ANNUAL REPORT 2021 |
TKH creates state-of-the-art Vision systems, and Vision
technology represents about 86% of the turnover of the
Smart Vision systems segment. This technology encom-
passes 2D and 3D Machine Vision and Security Vision
systems. Combining these technologies with in-house
software development allows us to create unique, smart,
integrated plug-and-play systems, and one-stop-shop
solutions.
In 2021, turnover in Smart Vision systems increased by 9.4%
to € 429.8 million. Divestments executed in 2020 reduced
turnover by 0.5%, and currency exchange rates had a
negative impact of 0.6%. The organic growth in turnover was
10.5%, despite limitations in the supply of electronic compo-
nents. The supply constraints slightly impacted turnover,
although in most cases we managed to either secure most of
the required components, or redesigned our products to
include components which were more widely available. The
order book saw a growth of 91.1% to € 139.3 million
compared to last year.
SMART VISION SYSTEMS
BUSINESS SEGMENT
The added value decreased from 59.1% to 58.3%. Higher
purchase prices on secured components had a negative
impact on the added value as a percentage of turnover, but
this was compensated by the volume growth. As a result,
EBITA rose to € 73.8 million, resulting in a ROS of 17.2%.
VISION TECHNOLOGY
The strongest contributor to this segments’ growth in 2021
was Machine Vision, in all regions and end markets. We
successfully maintained our leading market position in 3D
Vision for the consumer electronics and wood industry, while
we also significantly grew our business in the battery,
logistics, and semiconductor markets. Within 2D Vision, the
Alvium portfolio with embedded vision solutions is gaining
traction and sales are growing.
Turnover growth for Security Vision was at a lower rate
compared to Machine Vision due to low investment levels at
parking garages, shopping malls, and airports, which
continued to be impacted by COVID-19 restrictions. This
however, was more than compensated for by growth in other
markets. By securing our supply chain, we were able to meet
this higher market demand. This was particularly applicable
for (video) communication and traffic monitoring systems.
MANAGEMENT REPORT
KEY FIGURES SMART VISION SYSTEMS
(in mln. € unless otherwise stated)
2021
2020
Change in %
Turnover 429.8 393.0 + 9.4%
EBITA before one-off
income and expenses
1
73.8 62.1 + 18.9%
ROS 17.2% 15.8%
1 One-off expenses in 2020 of € 3.1 million due to reorganization costs.
| TKH GROUP ANNUAL REPORT 202148
TKH leverages its unique expertise and deep understanding
of automating production processes in specific industries to
create superior manufacturing systems. TKH engineers
complete manufacturing systems and machines that
contribute to highly efficient processes. Tire Building systems
represent about 68% of the Smart Manufacturing systems
segment turnover share.
Turnover in Smart Manufacturing systems increased by
19.9% organically. Turnover grew from quarter to quarter in
2021 with a strong recovery, especially in Tire Building
systems. Order book increased by 62.7% compared to the
previous year-end and reached a high level of € 369.7 million
on 31 December 2021.
The added value increased slightly from 48.7% to 49.0%.
EBITA was up 43.5% at € 59.4 million. The ROS improved to
14.2% due to high order intake and production output.
TIRE BUILDING
While turnover in Q1 was significantly impacted by the low
order intake in Q2 and Q3 2020, there was a strong recovery
leading to a record order intake in 2021 – broadly supported
by intake from Asian customers as well as the tier 1 tire
manufacturers. Market demand for both passenger and truck
tire systems was high. Production capacity was swiftly scaled
up to cope with the high order intake, which contributed to
the strong improvement in results. The site acceptance of the
UNIXX was delayed due to COVID-19, but the industrializa-
tion phase is progressing well. Several UNIXX modules have
already been sold and successfully commissioned at
customers sites. The commercial launch of the complete
UNIXX platform is scheduled for 2022. Furthermore, we
booked several orders for our new Revolute (combination of
fully automated tire component preparation and bead
assembly) and FLEXX belt maker.
SMART MANUFACTURING SYSTEMS
MANAGEMENT REPORT
KEY FIGURES SMART MANUFACTURING SYSTEMS
(in mln. € unless otherwise stated)
2021
2020
Change in %
Turnover 419.1 349.5 + 19.9%
EBITA before one-off
income and expenses
1
59.4 41.4 + 43.5%
ROS 14.2% 11.8%
1 One-off expenses in 2020 of € 0.3 million due to reorganization costs.
OTHER
Turnover in Care grew at a high rate, driven by the roll-out of
our INDIVION technology in North America, and our service
organization in North America is scaling up to support further
growth in this region. Turnover and growth in our results were
also realized in industrial automation.
BUSINESS SEGMENT
49 TKH GROUP ANNUAL REPORT 2021 |
cables (OFC) from China into the European Union. However,
the impact of this on our 2021 results was very limited.
Substantial growth was also realized in data network cable
systems and broadband products for data centers and
offices, especially in France and Germany.
OTHER
There was substantial growth in specialized connectivity
systems for the machine-building and robotics industry. The
building and construction market saw growth in the first half
of the year, but stabilized in the second half due to limitations
in supply and production capacity.
MANAGEMENT REPORT
SMART CONNECTIVITY SYSTEMS
TKH manufactures advanced Connectivity systems, and engi-
neers complete Smart Connectivity systems with a unique,
integrated system approach and sustainability proposition.
Energy and Digitalization represent about 33% and 38% of
the Smart Connectivity systems segment turnover share.
Turnover in Smart Connectivity systems increased across
almost all market segments by 22.4% to € 692.3 million in
2021. Higher raw material prices had an upward impact of
6.0% on turnover. On balance, turnover increased organically
by 16.4%. Order intake was even higher with a growth of
the order book with 85.3% to € 237.6 million compared to
December 31, 2020.
Added value as a percentage of turnover decreased only
slightly from 40.8% to 40.4% in 2021, although raw material
prices went up during the year.
EBITA increased by 61.9% to € 73.2 million, due to turnover
growth and higher production utilization. This resulted in an
increase in ROS to 10.6%.
ENERGY
The strong demand for renewable energy sources and the
expansion of the current network infrastructure are the main
drivers of growth in our turnover. The extended production
capacity for medium voltage energy cables became opera
-
tional during the third quarter of 2021, and helped increase
our production volumes. In subsea cable activities, production
utilization increased significantly. The demand for Airfield
Ground Lighting (CEDD/AGL) was significantly impacted by
COVID-19, due to investment limitations at airports – however,
the low order intake at airports was more than offset by growth
in demand for energy connectivity systems.
DIGITALIZATION
Turnover increased due to high investment priority for fibre
networks in Europe, and a reduced impact from lockdowns
on clients’ installation capacities. We saw a particularly strong
recovery in France and G
ermany. The impact on price levels
from the overcapacity of optical fibre in China started to
reduce in the second half of the year. Its impact on added
value was offset by a higher share of our connectivity system
portfolio. In the last quarter of 2021, the European Commission
imposed anti-dumping d
uties on imports of optical fibre
KEY FIGURES SMART CONNECTIVITY SYSTEMS
(in mln. € unless otherwise stated)
2021
2020
Change in %
Turnover 692.3 565.6 + 22.4%
EBITA before one-off
income and expenses
1
73.2 45.2 + 61.9%
ROS 10.6% 8.0%
1 One-off income and expenses in 2020 of € 4.3 million due to reorganization and
integration costs.
BUSINESS SEGMENT
| TKH GROUP ANNUAL REPORT 202150
ACQUISITIONS,
DIVESTMENTS, AND
INVESTMENTS
Acquisition is an important part of TKH’s
strategy and contributes to our value creation
by strengthening our business proposition.
We focus on acquiring structurally healthy companies that allow
us to build our portfolio of proprietary technologies, or expand
our geographic sales network within Europe, North America,
and Asia. We aim to acquire a turnover of € 100 million to € 150
million within the medium term, at the same time as we manage
our portfolio to reduce activities with lower margins and growth
potential. In addition, we aim to divest € 150 to € 200 million in
activities that do not contribute toward our long-term targets.
ACQUISITIONS & DIVESTMENTS
No material acquisitions and divestments took place in 2021.
The expenditure related to acquisitions amounted to € 0.5
million (2020: € 0.5 million expenditure and € 0.6 million
increase of purchase price allocations for the acquired brand
names, customer databases, intellectual property, and good-
will). At the balance sheet date, an active program is already
in place to divest certain activities related to the distribution
of our connectivity solutions; accordingly, the associated
assets and liabilities have been reclassified to assets and
liabilities held for sale. Barring unforeseen circumstances, a
transaction is expected within the upcoming 12 months.
INVESTMENTS IN PROPERTY, PLANT AND
EQUIPMENT
In 2021, the net investment in property, plant and equipment,
excluding right-of-use assets, totaled € 29.7 million (2020:
€ 28.0 million). Part of these investments concerned replace-
ment investments. An important part of the investments also
related to the expansion of building and production capacity,
including:
•
Expansion of production capacity for medium-voltage
energy cable systems.
•
Integration of cable production capacity at Ittervoort in
Haaksbergen.
•
Expansion of the R&D and engineering office within Smart
Manufacturing systems.
•
Expansion of the production capacity for 2D and 3D Smart
Vision technology.
Depreciation of property, plant and equipment totaled
€ 30.1 million in 2021 (2020: € 29.8 million).
INVESTMENTS IN INTANGIBLE ASSETS AND
GOODWILL
I
n 2021, € 40.5 million was invested in intangible assets and
goodwill (2020: € 39.6 million). The most important invest
-
ments related to the ongoing development of our technologies:
•
2D and 3D Machine Vision portfolio.
•
Security video and communication systems.
•
New generation of Tire Building systems, like the UNIXX,
FLEXX, and Revolute.
•
Portfolio and production technology for connectivity
systems focused on energy transition.
•
Airfield ground lighting portfolio based on contactless
energy and data distribution (CEDD).
•
Automated system for patching and connecting within
fiber-optic networks.
The investments above do not only relate to hardware
development, but also the development of smart software
based on artificial intelligence. In addition, there are invest-
ments in ERP software of € 4.2 million and patents and
licenses of € 1.8 million.
MANAGEMENT REPORT
R&D EXPENDITURE
in million
E
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
70
60
50
40
30
20
10
R&D expenditure (in € mln)
R&D expenditure in % of turnover
in %
2017 2018 2019 2020 2021
51 TKH GROUP ANNUAL REPORT 2021 |
SMART VISION SYSTEMS
•
Strong demand for our 2D and 3D Machine Vision
technologies is expected to continue into 2022, thanks to
a combination of targeted programs in key markets and
improved market conditions.
•
For Security Vision, we expect the parking industry to
recover gradually.
•
We will increase investments in research & development
and capacity expansion.
SMART MANUFACTURING SYSTEMS
•
Order intake for Tire Building technologies is expected to
continue at a high level, driven by products such as the
MAXX, MILEXX and Revolute. Additional investments in
operational capacity will be executed to fulfill the antici-
pated demand.
•
The turnover in care will grow further, driven by the
successful launch and ramp-up of the INDIVION tech-
nology.
•
In our other markets, mainly through our industrial automa-
tion systems, we expect growth to continue in 2022,
facilitated by a production capacity expansion.
SMART CONNECTIVITY SYSTEMS
•
The demand in the energy infrastructure market continues
to grow rapidly and as such we expanded our capacity for
energy cables in the third quarter of 2021. On top of this,
the order book is well filled, which will help to support a
turnover increase in 2022.
•
The turnover in digitalization is expected to increase,
driven by rising fibre prices and the growing need for
bandwidth in Europe.
•
To respond to the high market demand, we have decided
to prepare for an expansion of our production capacity and
additional capital investments in 2022 and 2023.
As usual, TKH will provide a more specific profit forecast for
the full year of 2022 at the presentation of its interim results in
August 2022.
OUTLOOK
The improved market circumstances for our technologies, combined with our capability to increase manufacturing capacity and utilization
leads to a positive outlook for our business. Based on these developments, we anticipate further organic growth of turnover and result in
2022 in all segments.
Barring any unforeseen circumstances, such as a
worsening of the current supply chain challenges,
sustained disruption from COVID-19, or the
geopolitical situation and conflict surrounding
Ukraine and Russia, TKH expects the following
developments per business segment in 2022.
MANAGEMENT REPORT
GOVERNANCE
Members of the Executive Board 53
Members of the Supervisory Board 54
Report of the Supervisory Board 55
Remuneration Report 62
Corporate Governance 70
Risk Management 72
Management Statement 81
TKH Shares 82
53 TKH GROUP ANNUAL REPORT 2021 |
MEMBERS OF THE EXECUTIVE BOARD
J.M.A. (ALEXANDER) VAN DER LOF MBA
CHAIRMAN OF THE EXECUTIVE BOARD, CEO
Dutch nationality, male, 1958
Term 2001-present
Alexander van der Lof started his career in 1985 at TKH
subsidiary B.V. Twentsche Kabelfabriek (TKF) and held
various management positions, including Commercial
Director. In addition to his career at TKF, Mr. Van der Lof was
Company Secretary of TKH Group for a number of years.
In 1998, Mr. Van der Lof became a member of the Executive
Board of TKH Group and Chief Financial Officer (CFO). Since
2001, he has been chairman of the Executive Board and
Chief Executive Officer (CEO) of TKH Group.
E.D.H. (ELLING) DE LANGE MBA
MEMBER OF THE EXECUTIVE BOARD, CFO
Dutch nationality, male, 1965
Term 2008-present
Elling de Lange joined TKH in 1998, having started out as a
member of the Board of C&C Partners in Poland. In 2002,
he became Financial Director of the Chinese cable production
companies TFO and ZTC, and in 2003 he took the position
of CEO. Since 2006, Mr. De Lange has also been responsible
for the Dutch-Chinese cable production companies.
Mr. De Lange has been a member of the Executive Board and
Chief Financial Officer (CFO) of TKH Group since 2008.
Before he joined TKH Group, he served in several interna-
tional management positions at Ballast Nedam.
H.J. (HARM) VOORTMAN MSC
MEMBER OF THE EXECUTIVE BOARD
Dutch nationality, male, 1966
Term 2018-2022
Harm Voortman joined TKH’s subsidiary, VMI Holland B.V.
in 2004, where he held various management positions,
including Commercial Director. In 2010, Mr. Voortman was
appointed CEO for VMI Group, and in 2015 he also joined
the Management Board of TKH. In 2018, Mr. Voortman was
appointed member of the Executive Board of TKH Group.
Before his career at TKH Group, Mr. Voortman worked in
various R&D and management positions at, among others,
Shell and Stork.
GOVERNANCE
| TKH GROUP ANNUAL REPORT 202154
MEMBERS OF THE SUPERVISORY BOARD
GOVERNANCE
C.W. (CARIN) GORTER
MEMBER
Dutch nationality, female, 1963
2017 first appointment
2025 end of term
Chairman of the Audit Committee
Member of the Remuneration
Committee
Current other non-Executive Board
positions
• Vice-Chairman of the Supervisory Board,
Basic-Fit N.V., Chairman of the Audit and
Risk Committee (2016)
• Supervisory Board member, Coöperatie
TVM U.A., Chairman of the Audit and Risk
Committee (2013)
• Supervisory Board member, DAS,
Chairman of the Audit and Risk
Committee (2019)
• External Audit Committee member,
Ministry of Justice and Security (2017)
• Supervisory Board Member, NTS
(Nederlandse Transplantatie Stichting)
(2020)
• Supervisory Board member, Ebusco
Holding N.V., Chairman of the Audit
Committee (2021)
Current other positions
• Owner, Carin Gorter Advies & Toezicht
Previous positions:
• Senior Executive Vice President & Head of
Group Compliance, Security & Legal, ABN
AMRO
J.M. (MEL) KROON
VICE-CHAIRMAN
Dutch nationality, male, 1957
2017 first appointment
2025 end of term
Member of the Selection and
Appointments Committee
Member of the Audit Committee
Current other non-Executive Board
positions
• Chairman of the Supervisory Board,
Attero B.V.
• Chairman of the Supervisory Board,
Eneco Groep N.V.
Current other positions
• Non-Executive Board Member, Urenco
Ltd & UCN B.V.
• Chairman of the Supervisory Board,
Energyworx B.V.
• Member of the Advisory Board, LVNL
• Member of the Supervisory Board, KVSA
B.V.
• Chairman of the Advisory Board, De Rijke
Noordzee
• Advisor, Mitsubishi Corporation
• Board Member, German-Dutch Chamber
of Commerce DNHK
• Advisor, Improved
• Member of the Market Advisory
Committee, Depsys SA
Previous positions
• Chairman of the Executive Board, TenneT
Holding B.V.
A.J.P. (ANTOON) DE PROFT
CHAIRMAN
Belgian nationality, male, 1960
2014 first appointment
2022 end of term
Chairman of the Selection and
Appointments Committee
Current positions
• CEO & President Septentrio Satellite
Navigation
Current other non-Executive Board
positions
• Chairman of the Supervisory Board, IMEC
• Chairman of the Supervisory Board, Quest
For Growth
Current other positions
• Managing Director, ADP Vision
R.L. (ROKUS) VAN IPEREN
MEMBER
Dutch nationality, male, 1953
2011 first appointment
2022 end of term
Chairman of the Remuneration
Committee
Current other non-Executive Board
positions
• Chairman of the Supervisory Board,
Princess Máxima Center for Pediatric
Oncology
Previous positions
• President & CEO, Canon Europe Ltd.
• Senior Managing Executive Officer, Canon
Inc.
• Chairman of the Executive Board, OCÉ
N.V.
A.M.H. (MARIEKE) SCHÖNINGH
MEMBER
Dutch nationality, female, 1963
2020 first appointment
2024 end of term
Member of the Remuneration
Committee
Current positions:
• Member of the Management Board &
COO, SHV Energy
55 TKH GROUP ANNUAL REPORT 2021 |
The Supervisory Board provides the Executive Board with
advice, as well as oversees the Executive Board's relationship
with stakeholders, including shareholders. The Supervisory
Board is governed by by-laws, which include rules covering
such matters as its working method, tasks, decision-making,
and competencies.
MEETINGS DURING THE YEAR UNDER REVIEW
In 2021, five regul
ar meetings and one additional meeting were
held, which were all attended by the Executive Board. In addi
-
tion, three closed meetings took place attended by the Super-
visory Board members only. Due to the COVID-19 restrictions,
some of the meetings were held virtually or using a hybrid
approach. During the year under review, there were no subjects
on the agenda that could have potentially given rise to conflicts
of interest. The discussion of the financial statements took place
in the presence of the external auditor. In preparation for these
meetings, as well as to discuss other relevant matters during
the year, the chairman of the Supervisory Board maintained
regular contact with the chairman of the Executive Board. The
Supervisory Board supervises and advises the Executive Board
based on both agenda items that recur at every meeting, and
on specific subjects relevant for discussion
at certain moments.
STRATEGY UPDATE: CAPITAL MARKETS DAY 2021
Following the launch of the Simplify & Accelerate program in
2019, TKH has taken significant steps toward transforming
the organization and increasing its focus on long-term value
creation. As part of this program, TKH has divested € 255
million in activities that, due to their nature, had margins
below TKH Group’s average, and had limited organic growth
potential. In addition, group companies with a close
coherence of activities have been integrated, simplifying the
organizational structure, making better use of economies
of scale, and further strengthening key areas, such as R&D,
sales, and marketing. The successful Simplify & Accelerate
program has transformed and streamlined the organization,
and has brought the >15% ROS target within reach,
positioning TKH well for its next phase of value creation.
At the Capital Markets Day on November 17, 2021, the
Executive Board presented a strategy update. It set out
targets for the period 2022–2025, as well as sharing informa-
tion on the business’s position and opportunities within TKH’s
operating segments. Additionally, the new strategy program,
Accelerate 2025, was launched to increase turnover and
results by unlocking the full potential of innovations and
disruptive technologies. Benefitting from megatrends, such
as automation and digitalization, sustainability, and safety
and security, TKH is taking full advantage of the expected
market growth. The new program includes actions to boost
the increase of ROS and organic growth, based on the strong
foundation of current market positions. On top of this, TKH
will also increase focus on acquisitions, and expects to
acquire around € 100 - € 150 million in turnover during the
coming years, while also continuing portfolio management to
decrease activities with lower margins and growth potential.
TKH also announced that its new business structure would
be made up of three units: Smart Vision systems, Smart
Manufacturing systems, and Smart Connectivity systems.
This will better match the company’s long-term strategy.
Going forward, the segment reporting will follow this struc-
ture. In addition, TKH prioritized sustainability within its
strategy, with strong ambitions and new non-financial targets.
The Supervisory Board was intensively involved in the
preparation of the new strategy program, for example using
business analyses and portfolio reviews. The effects of the
implemented transformation program have been discussed at
GOVERNANCE
REPORT OF THE SUPERVISORY BOARD
The Supervisory Board supervises the way the Executive Board defines and implements TKH’s strategy to achieve the defined objectives
of the company and its affiliated companies. In doing so, the Supervisory Board is guided by financial, commercial, operational, and
governance information, focusing on the interests of all the company’s stakeholders.
GOVERNANCE
| TKH GROUP ANNUAL REPORT 202156
length, resulting in a solid target-setting and implementation
plan. Each meeting was used to discuss key elements of the
new program. The most important topics for consultation and
decision-making were:
•
target-setting on financial KPIs;
•
the new segment reporting based on technologies;
•
increased focus on sustainability and related target-setting
on non-financial KPIs.
The progress of the new strategy program, Accelerate 2025,
is a high priority for the Supervisory Board and is being
closely monitored. Regular evaluation of its implementation
will continue to be high on the agenda in the coming year.
COVID-19
The outbreak of the COVID-19 pandemic in 2020 significantly
impacted the global economy, and this impact continued to
be felt in 2021. However, the strong market position and
successful strategy of TKH led to a rapid post-COVID-19
recovery during 2021. Due to the global distribution of TKH’s
operations, COVID-19 was still high on the agenda throughout
the year. Attention was focused on the effects on staff and
their health, the organization, activities, and TKH’s results,
for example, due to supply chain problems. The Board was
frequently informed about the status of employees’ health
and performance at operating companies.
B
ecause of th
e ongoing COVID-19 restrictions limiting
in-person meetings, the arrangements for the General Meeting
2021 were discussed on several occasions. Due to the emer-
gency legislation introduced by the Dutch government, the
General Meeting 2021 took place on the original date, but in
modified, virtual form. In addition, in the preparation of the
General Meeting, the dividend proposal was once again re-ex-
amined. The Board concluded, partly based on scenario anal-
yses, that given the information then available concerning the
impact of COVID-19 and TKH’s solid financial foundation, there
was no reason to adjust or withdraw the
dividend proposal.
COMPANY VISIT
At least one regular meeting is held annually at the location of
a TKH operating company. These company visits allow the
Supervisory Board to meet with local management and
employees, and to strengthen the Board’s insight into TKH’s
activities, technological developments, and organizational
capacity. The Board is updated on local developments, as
well as possible challenges faced by local management.
Company visits, presentations, demonstrations, and guided
tours are always part of the program. Particular attention is
also paid to the local company culture.
In 2021, the Supervisory Board visited the TKH operating
company Commend International in Salzburg, Austria,
which belongs to the segment Smart Vision systems. The
Supervisory Board was informed about technological and
project developments. Special attention was paid to the
opportunities related to the application of artificial intelligence
within security and communication technologies. In the
subsequent guided tour, Commend highlighted their various
phases of development and production and demonstrated
their applications. Market opportunities were also explained.
Other relevant topics were discussed with local management,
including the challenges related to the availability of staff due
to COVID-19, and the availability of important components.
The Supervisory Board greatly values these company visits
and, in particular, the meetings with local management and
employees, since they offer a deeper understanding of local
activities and the company culture. The Supervisory Board
also appreciates the openness and transparency of the
presentations and discussions.
REGULAR MEETINGS
Recurring agenda items, concerning issues such as financial
developments, the progress of the Simplify & Accelerate
and the Accelerate 2025 strategy program, technological,
organizational, and market developments, as well as Investor
Relations, are discussed at each regular meeting. Where
GOVERNANCE
TOPICS OF SUPERVISORY BOARD MEETINGS IN 2021
Q1
•
COVID-19 situation
•
Business review
•
Financial results and press release
•
Progress of strategic program
•
Investments and disposals
•
Supervisory Board committees
•
Explanation of audit report
•
Deep Dive on Artificial Intelligence
•
Cancellation of ordinary shares
•
AGM preparation/dividend proposal
Q2
•
COVID-19 situation
•
Business review
•
Financial results and press release
•
Progress of strategic program
•
Capital Markets Day
•
Investments and disposals
•
Supervisory Board committees
•
Preparation for AGM
Q3
•
COVID-19 situation
•
Business review
•
Financial results and press release
•
Progress of strategic program
•
Capital Markets Day
•
Investments and disposals
•
Supervisory Board committees
Q4
•
COVID-19 situation
•
Business review
•
Financial results and press release
•
Progress of strategic program
•
Capital Markets Day
•
Investments and disposals
•
Supervisory Board committees
•
Budget & Investment Plan 2022
•
HR update
•
Sustainability update, including EU Taxonomy
•
Company visit to Commend International
57 TKH GROUP ANNUAL REPORT 2021 |
applicable, the chairman of the relevant committee of the
Board explains the most important findings of each meeting.
The content of all press releases is discussed with the full
Supervisory Board before their publication.
Using the “strategic scorecard” at each meeting, the progress
of strategic initiatives and business developments was
discussed, including the order book, the competitive field in
which TKH operates, possible business risks, and how these
risks are managed. In this context, the Board was also
frequently informed of the progress of innovation projects.
The fact that TKH’s investments in innovation delivered
results in 2021 and enabled TKH to grow in several markets
is, for the Supervisory Board, a strong validation of the
chosen strategic growth path. Following input from the
Executive Board, the Supervisory Board has discussed and
approved the proposal for the cancellation of ordinary shares
which were purchased under the buy-back program initiated
mid-November 2020.
A “deep dive” presentation was delivered by the Executive
Board concerning artificial intelligence (AI). More insight was
gained into the application of artificial intelligence in the wider
economy and the specific applications of AI within the TKH
technology portfolio. The Supervisory Board has gained a clear
picture of the progress made within the TKH Group in the field
of AI. It has received confirmation that the topic is being given
the necessary attention and that it has been taken to a higher
level within the organization. This is partly reflected in the
increase in the number of applications of AI within the tech-
nologies developed by TKH operating companies.
The Supervisory Board is informed of the progress of
sustainability initiatives and developments at least once a
year. Last year, specific attention was paid to the increasing
relevance of non-financial information focused on ESG
(Environmental, Social, and Governance) themes and its
alignment with existing sustainability themes – including
climate change – and defining new sustainability targets
around CO
2
neutrality by 2030 and diversity, among other
areas. Special attention was also paid to the implementation
of the EU Taxonomy and the validation process by the
external auditor of the most relevant non-financial KPIs. For
the Supervisory Board, this is confirmation that sustainability
is one of the top priorities within the organization and an inte-
gral part of (strategic) business decisions.
CLOSED MEETINGS
The Supervisory Board met three times in the absence of the
Executive Board. The most important consultation topics were:
•
Explanation by the Remuneration Committee of the remu-
neration policy for the Executive Board and Supervisory
Board and of the remuneration proposal for the Executive
Board.
•
Evaluation of the performance of the Supervisory Board,
its committees, and its individual members.
•
Composition of the Supervisory Board and its committees
– formal nominations for appointments to the Supervisory
Board to the AGM 2021 and 2022.
CULTURE AND ORGANIZATION
TKH has an entrepreneurial culture with a focus on techno-
logical development and a proactive approach to the market.
Given its decentralized organizational structure, res
ponsibili-
ties are assigned far down in the organization. The Executive
Board sets the example and provides guidance on norms and
values. To supervise the cultural aspect, the Supervisory Board
makes company visits to, for example, obtain insights into the
situation in the organization and the management of risks
through discussions with and presentations by local manage
-
ment. Consultation with the Central Works Council also
represents an important assessment element in the field of
company culture. TKH applies different methods and systems
to identify and manage risks. Possible risks, as well as the risk
management systems, are discussed regularly with the
Executive Board, and openness about risks is
encouraged.
GOVERNANCE
HR AND SAFETY
HR developments are discussed at least once a year with
the Executive Board, with particular attention given to
Management Development, employee satisfaction, employer
branding, and current HR topics. In 2021, the relevance of
health and safety to TKH and its employees was reaffirmed,
partly due to the COVID-19 situation. The Supervisory Board
pays considerable attention to safety within the organization.
Accidents and near-miss accidents are reported using safety
indicators, for example. In 2021, the Executive Board also
finalized the implementation of ISO 45001 for production
companies. For the Supervisory Board, this is confirmation
that safety has been defined as one of the top priorities within
the organization, increasing safety awareness in the organiza
-
tion and allowing employees to take responsibility for this.
COMPOSITION AND DIVERSITY
The Supervisory Board is composed in such a way that the
knowledge, experience, and insights relating to current topics
at TKH, as well as the markets an
d activities relevant to the
company, are well represented. Each member of the Super-
visory Board possesses the specific expertise necessary to
fulfill their supervisory role. The effectiveness of the Board is
determined by the team’s composition in terms of knowledge
and competencies as well as cooperation between its members.
Continuity in its composition is also valuable, given the Board’s
integral accountability for the consideration of various strategic
interests, which are directed toward long-term value creation.
The Supervisory Board therefore, in principle, applies a
maximum term of office of 12 years, in accordance with the
Dutch Corporate Governance Code (the “Code”). An evaluation
also takes place annually during the (self-)evaluation, as well
as before each reappointment, to determine whether the profile
for the composition of the Supervisory Board is “up-to-date”,
and whether the expertise, competencies, and performance of
the candidate in question are
suitable.
The Supervisory Board aims for diversity in its composition in
terms of age, gender, background, expertise, occupational
| TKH GROUP ANNUAL REPORT 202158
experience, and nationality, taking account of the statutory
requirements. These elements are also included in the profile
drawn up by the Supervisory Board. In terms of composition,
the Supervisory Board complies with the quota in accordance
with Dutch company law concerning a balanced distribution of
at least 1/3 female members and at least 1/3 male members,
insofar as these seats are distributed to natural persons. The
Board supports the view that diversity contributes to objective
and sound decision-making. However, diversity is not only
considered important when it comes to gender – it also relates
to the expertise, competencies, and background. The compo
-
sition of the Supervisory Board is such that the members can
operate critically and independently of one another, the
Executive Board, and any individual interests. In the opinion
of the Supervisory Board, all Supervisory Board members
meet the requirements for independence as referred to in
best-practice provisions 2.1.7 up to 2.1.9 of the Code.
At the AGM of May 6, 202
1, Mr. J.M. Kroon and Mrs. C.W.
Gorter were reappointed for a further period of four years. At
the end of the AGM of April 26, 2022, Mr. R.L. van Iperen will
step down according to the applicable schedule of retirement.
Under the regulations of the Supervisory Board and the articles
of association of TKH, Mr. Van Iperen may be reappointed for
a further period of two years. Mr. Van Iperen has indicated that
he is available for reappointment. The Supervisory Board has
discussed the reappointment of Mr. Van Iperen, and its
members are of the unanimous opinion that his knowledge,
experience, and added value match the desired expertise as
set out in the profile drawn up by the Supervisory Board. The
members of the Supervisory Board consider the reappointment
of Mr. Van Iperen to be in the best interests of TKH, given his
extensive knowledge of the company and his excellent perfor
-
mance as a Board member. His broad experience as a director
with ultimate responsibility and as an entrepreneur, as well as
his expertise in the field of technology, together with his expe
-
rience in international listed companies, fit in well with the
required expertise and competencies.
In addition, Mr. A.J.P. De Proft will resign at the end of the
AGM on April 26, 2022, as per the schedule of retirement.
Mr. De Proft is not available for reappointment due to
increasing time constraints with his other duties. In the context
of safeguarding knowledge and continuity within the Board,
a selection procedure for the succession of Mr. De Proft was
launched during 2021. In filling the vacancy for a member of
the Supervisory Board, we sought a candidate with broad
international experience within an international company and
an affinity for TKH’s technology and activities. After extensive
and thorough selection procedures, Mr. P. Oosterveer (CEO
and chairman of the Executive Board of Arcadis N.V.) agreed
to fill the vacancy and to join the Supervisory Board.
The Supervisory Board will nominate Mr. Van Iperen and
Mr. Oosterveer as candidates for reappointment and appoint-
ment respectively to the Supervisory Board at the AGM 2022,
on the condition that the shareholders at that meeting do not
invoke their right of recommendation. The Central Works
Council was notified of the reappointment and the vacancy,
and profiles of prospective candidates. The Central Works
Council has stated that it does not wish to invoke its right of
recommendation for the reappointment o
f Mr. Van Iperen and
the appointment of Mr. Oosterveer.
Due to the resignation of Mr. De Proft, the function of chairman
has become available. The Supervisory Board has carefully
considered the selection of a new chairman and is delighted to
announce that Mr. R.L. van Iperen has accepted to take on the
role of chairman, starting at the close of the AGM 2022, on the
condition R.L. van Iperen will be reappointed as a member of
the Supervisory Board at the AGM 2022.
INTRODUCTION PROGRAM
An introduction program is in place for new members of the
Supervisory Board, which takes into consideration the exper-
tise and knowledge that the member brings to the Board. The
introduction program partly focuses on the general strategy,
financial and non-financial reporting, and the organizational
structure of TKH. Based on company visits, among other
activities, TKH’s Smart Technologies and commercial interests
are explained. This is vital for the continuing education of the
Supervisory Board’s members.
CONTACT WITH THE CENTRAL WORKS COUNCIL
The Supervisory Board maintains annual contact with the
Central Works Council about the TKH strategy and topics that
are of interest within the individual Works Councils. These
topics include sustainable staff employability, safety, and
cooperation between operating companies. In the context of
the Central Works Council’s (strengthened) right of recom-
mendation, when there are vacancies on the Supervisory
Board, a dialog is entered into regarding the reappointment or
appointment, accordingly. The members of the Supervisory
Board have great respect for the professionalism with which
the Central Works Council deals with important issues and
offers sound advice. The Board regards consultation with the
Central Works Council as being open, constructive, and
valuable. For the Supervisory Board, consultation with the
Central Works Council is also an important element in
assessing the culture within TKH organizations.
COMMITTEES
The Supervisory Board of TKH has three committees: the
Selection and Nomination Committee, the Remuneration
Committee, and the Audit Committee. The committees all
have their own set of rules defining their conduct.
SELECTION AND NOMINATION COMMITTEE
The Selection and Nomination Committee comprises
Mr. A.J.P. De Proft (chairman) and Mr. J.M. Kroon. The
Selection and Nomination Committee held two formal
meetings in the past year. The committee also had frequent
(virtual) contact on current topics, in particular regarding
the preparation and selection of the new member of the
Supervisory Board, including ensuring that the knowledge and
expertise within the Supervisory Board remains appropriate.
GOVERNANCE
59 TKH GROUP ANNUAL REPORT 2021 |
The committee conducted interviews with external advisors as
well as with potential candidates. The committee prepared an
evaluation of the Supervisory Board’s performance.
Succession planning is also an important topic of discussion
within the TKH organization. The Selection and Nomination
Committee reported the most important results of each of its
meetings or each consultation to the Supervisory Board.
REMUNERATION COMMITTEE
With the appointment of
Mrs. A.M.H. Schöningh as a member
of the Supervisory Board at the AGM 202
0, the Central Works
Council exercised its enhanced right of recommendation,
so that, as per the revised EU Shareholders’ Directive,
Mrs. Schöningh automatically becomes a member of the
Remuneration Committee. The Remuneration Committee
consists of Mr. R.L. van Iperen (chairman), Mrs. A.M.H.
Schöningh, and Mrs. C.W. Gorter. The Remuneration
Committee met once during the year at a formal meeting.
The Remuneration Committee also had frequent (virtual)
contact during the past year. One meeting was held in the
presence of the chairman of the Executive Board. The
chairman also had telephone consultations with the commit
-
tee’s external advisor as part of the Committee’s preparatory
work. The remuneration policy of the Supervisory Board and
Executive Board was discussed in the meetings. The
committee concluded that the remuneration policy supports
long-term value creation for TKH and offers effective
remuneration to the Executive Board. Therefore, no changes
have been made to the content of the policy.
The realization of the targets of the Executive Board was
assessed, based on which, in a closed meeting of the
Supervisory Board, the committee presented a proposal for
a decision on the remuneration of the Executive Board.
The targets for the Executive Board for the current financial
year were also discussed and established.
The Remuneration Committee identified possible improve
-
ments to the remuneration report based on the recommenda-
tions made by shareholders, and in consultation with the
committee’s external advisor. These proposals were discussed
with the Executive Board of the company. The Remuneration
Committee reported the most important findings of each of its
meetings or each consultation to the Supervisory Board.
AUDIT COMMITTEE
The Audit Committee comprises Mrs. C.W. Gorter (chairman)
and Mr. J.M. Kroon. Mrs. Gorter also sits on the committee as
an expert in the preparation and audit of the financial
statements.
The Audit Commit
tee met five times (virtually) during the past
year. The meetings of the Audit Committee were held in the
presence of the external auditor, as well as the CFO, the Director
Internal Audit, and the Director of Finance & Control of TKH. In
two meetings, TKH’s Tax Director was present to explain
national and international tax developments and specific tax
matters that are important for TKH, such as the application of
the Dutch innovation box regime, tax compliance including the
Tax Control Framework, and risk management issues.
The Audit Committee discussed the audit plan, based on
which the audit activities have been carried out, with the
external auditor. The scope and materiality, as included in the
audit plan, are also discussed, as well as the key risks in the
annual reporting that the external auditor has identified in the
audit plan. During the year under review, due to the COVID-19
situation, the audit approach by the external auditor was
re-evaluated in consultation with the Audit Committee, with
specific attention given to inventory valuation, impairment
testing, provisions, and revenue recognition. Further attention
was additionally devoted to European Single Electronic
Format (ESEF) reporting, which is the electronic reporting
format in which issuers on EU regulated markets must
prepare and file their annual financial reports.
In addition, at each meeting, the Director Internal Audit
provides an explanation of his findings concerning the internal
audit activities carried out. An ongoing consideration for the
Audit Committee is the company's internal risk management
and control system. Other topics included within the commit-
tee’s remit that were discussed were impairment analyses and
the impact of changes in the International Financial Reporting
Standards (IFRS) on the income statement and balance sheet
including disclosures (financial statements). Because of the
relevance of IT & Security for both day-to-day operations and
TKH’s business model in the context of software development
and R&D, high priority is given to this topic at every Audit
Committee meeting.
In 2021, there was a discussion of the key audit matters that
were identified by the external auditor as having the greatest
impact on the audit approach and activities during the audit.
Specific focal points in the audit include revenue recognition,
profit recognition on projects by estimating costs still to be
incurred, valuation of capitalized development costs and
assets related to innovation projects and/or business activities,
non-compliance with laws and regulations, valuation of
deferred tax assets, and valuation of goodwill.
In 2021, specific attention was paid to a reclassification from
other operating expenses to raw materials, consumables, trade
products, and subcontracted work. The assets and directly
asso-
ciated liabilities held for sale were also discussed. As part of the
Simplify & Accelerate program, TKH decided in the first half of
2021 to start an active program to divest certain activities in the
distribution of connectivity solutions. Accordingly, the associated
assets and liabilities have been reclassified to assets and liabili
-
ties held for sale. Furthermore, the change in segment reporting,
from solution reporting to technology reporting, has been
discussed, including in relation to the requirements in IFRS.
In the year under review, increased attention was devoted to
developments in the field of non-financial information, including
the EU Taxonomy requirements. Internal Audit devel
oped and
conducted re
view activities focusing on the non-financial KPIs
included in the 2020 Annual Report of TKH. This was also in
GOVERNANCE
| TKH GROUP ANNUAL REPORT 202160
preparation for the audit on non-financial KPIs by the external
auditor. TKH appointed Ernst & Young Accountants LLP (EY)
to provide independent assurance of the report to reassure
TKH’s stakeholders about TKH’s non-financial information.
TKH has obtained limited assurance for the KPIs included in
the sustainability performance section on page 28 of the Annual
Report 2021. During the reporting year, further attention was
also paid to supply chain management, cost inflation, and the
influence of global economic and geopolitical developments on
the execution of TKH’s strategy, financial position, and results.
Forensic expertise is used when drawing up the audit plan
and when performing audit activities to gain a clearer picture
of the possible risks of fraud and inspect internal control
measures, also given the increasing attention paid to fraud
and corruption in society.
The external auditor explained the management letter with
findings in the field of administrative organization and internal
control insofar as it is relevant for the audit of the financial
statements. The main topics discussed were IT control
measures and cybersecurity, fraud and non-compliance
management, the financial closing process related to ESEF
reporting, and findings at operating companies that needed
to be followed up. The external auditor also updated his audit
plan to reflect recent developments, including the reassess-
ment of materiality levels and scoping. In addition, an expert
from Climate Change and Sustainability Services at EY
explained relevan
t developments in the EU concerning non-
financial information and reporting. The European Commission
announced its action plan on financing sustainable growth as
an important enabler of the EU Green Deal in 2018. As part of
this action plan, the European Commission introduced several
initiatives including the EU Taxonomy Regulation and the
proposal for a Corporate Sustainability Reporting Directive
(CSRD). In this context, the impact on TKH’s reporting has
been discussed, alongside the defined action plans.
The Audit Committee evaluates the performance of the
external auditor annually regarding the quality of the audit
activities, the adequacy and implementation of the audit
engagement, and the quality and depth of the reports, as well
as any additional contributions. The committee discusses its
findings with the external auditor, as well as with the
Supervisory and Executive Boards. The Audit Committee also
evaluates the Director of Internal Audit. Input for the evalua-
tions includes the follow-up of the points for attention and
improvement of the audit activities as formulated by the
external auditor and TKH regarding the previous financial
year. The Audit Committee also advises the Supervisory
Board about the nomination for the (re)appointment of the
external auditor and prepares the selection of the external
auditor. The observations of the Executive Board are
considered within this. The Audit Committee then submits a
proposal to the Supervisory Board for commissioning the
external auditor to audit the financial statements.
In 2021, the Audit Committee held a meeting with the external
auditor without the Executive Board being present, as per
best practice provision 1.7.4. of the Code. It was established
that the external auditor was independent of TKH. The Audit
Committee reported the most important findings from its
meetings to the Supervisory Board.
EVALUATION
The Supervisory Board also convened a closed meeting to
discuss its own performance and that of its committees and
individual members. A self-assessment form, which served as
a guide during the discussions, was used in preparation for
this meeting. The evaluation covered the Board's composi-
tion, independence, expertise, and team effectiveness, as
well as the quality of information provision, the role of the
chairman, and relations with the Executive Board. Based on
the evaluation, it was concluded that the Supervisory Board
as a whole, as well as the individual members, functioned
properly. This honest and open relationship is marked by
mutual respect. The members complement one another suffi-
ciently within the framework of the advisory and supervisory
role toward the company, while covering a wide range of
focus areas and expertise. Also discussed was the available
and desired expertise and knowledge within the Board. It was
established that there is a good working relationship between
the Supervisory Board and the Executive Board, and that
they are also sufficiently critical of one another. The commu-
nication from the Executive Board to the Supervisory Board
takes place in an open, professional, and constructive
manner so that Supervisory Board members have a strong
understanding of strategic and operational issues. During the
year under review, this was once again confirmed by the way
the Executive Board informed and involved the Supervisory
Board at an early stage regarding the Capital Markets Day. It
was also established that none of the members of the
Executive Board have more than two “demanding” supervi-
sory positions as referred to in the Dutch Management and
Supervision Act. The Supervisory Board has no indications of
any kind of conflict of interest between the company and
members of the Executive Board. The chairman of the
Supervisory Board discussed the findings with the chairman
of the Executive Board.
During the closed meetings, the items for attention as stated
in the best-practice provision of the Code regarding the inde-
pendence of the Supervisory Board (2.1.7.), as well as its
individual members (2.1.8.) and the chairman (2.1.9.), were
also assessed. It was established that all members of the
Supervisory Board were independent.
FINANCIAL STATEMENTS 2021
The Report of the Executive Board and the 2021 financial
statements were submitted to the Supervisory Board in
accordance with the provisions in Article 31 of the articles of
incorporation. The financial statements were submitted for
audit to Ernst & Young Accountants LLP, which subsequently
issued an unqualified auditor’s report on the financial state-
ments based on the audit.
GOVERNANCE
61 TKH GROUP ANNUAL REPORT 2021 |
The Supervisory Board discussed the financial statements
with the Executive Board in the presence of the external
auditor, and subsequently approved the financial statements
on March 7, 2022. The Supervisory Board submits the finan-
cial statements for the 2021 financial year to the AGM and
recommends adopting the financial statements. The
Supervisory Board believes that the financial statements
constitute a sound basis for the account given by the
Executive Board of its management and by the Supervisory
Board of its supervision of the management. The Supervisory
Board also proposes to approve the proposed profit appro-
priation and to discharge the Executive Board in respect of
the policy pursued and the Supervisory Board in respect of
the supervision conducted.
CONCLUSION
The new strategic program Accelerate 2025,
which includes
an update of TKH’s strategy and targets for the period 2022–
2025, as well as the business position and opportunities within
the new operating segments of TKH introduced in 2021, has
created a new dynamic in the TKH organization. Increased
focus on Smart Technologies and software has led to a new
structure comprising three segments. Under the leadership of
the Executive Board, TKH has demonstrated an enormous
drive to make the strategy program a success. The strong
market position and successful strategy of TKH resulted in a
rapid post-COVID-19 recovery during 2021. The Executive
Board’s management of the organization, together with the
management of the subsidiaries, despite all the COVID-19
obstacles (including supply chain problems), is evidence of its
strong leadership. Among employees, the solidarity and drive
to perform day-to-day activities to the highest standard under
challenging conditions was also evident. The Supervisory
Board is convinced that this solid foundation, combined with
the results from the new strategic program and increased
focus on sustainable and responsible business with new
Environmental, Social, and Governance (ESG) targets, will
further strengthen TKH’s sustainable finan
cial performance.
GOVERNANCE
ACKNOWLEDGEMENTS
It has been a great pleasure to serve as member and as the
Chairman of the Supervisory board. It has been a privilege to
be part of this strong company and to help the Executive
Board and the great team to reach for higher goals. I am also
very happy that Mr. Oosterveer will join the Supervisory Board
and Mr. Van Iperen will take its leadership as the Chairman.
I am very confident about the future of TKH.
A.J.P. De Proft
For a period of eight years, Mr. De Proft has fulfilled his role as
a member of the Supervisory Board with great commitment and
dedication. For the majority of this period, he was also chairman
of the TKH Supervisory Board, as well as chairman of the
Selection and Nomination Committee. The Board and the com-
pany have benefited from his extensive professional knowledge
and his wide-ranging managerial and international experience.
The Supervisory Board expresses its sincere thanks for this.
R.L. van Iperen
J.M. Kroon
C.W. Gorter
A.M.H. Schöningh
The Supervisory Board would like to take this opportunity to
thank TKH’s business partners for their long-term business
relationship, and its shareholders and holders of depositary
receipts for the confidence they have shown. We would like
to express our sincere appreciation and gratitude to the
Executive Board and all TKH employees for their valuable
contribution in 2021, and look forward to the further
successful implementation of the new strategic program.
Haaksbergen, March 7, 2022
On behalf of the Supervisory Board,
A.J.P. De Proft, chairman
ATTENDANCE AT MEETINGS OF THE SUPERVISORY
BOARD AND ITS COMMITTEES
MEETING
Supervisory
Board
Audit
Committee
Remuneration
Committee
Selection
and
Nomination
Committee
A.J.P. De Proft 9/9 2/2
J.M. Kroon 9/9 5/5 2/2
C.W. Gorter 9/9 5/5 1/1
P.P.F.C. Houben* 4/4 3/3
R.L. van Iperen 9/9 1/1
A.M.H.Schöningh 9/9 1/1
* Until AGM 2021 – May 6, 2021.
| TKH GROUP ANNUAL REPORT 202162
The revised remuneration policy was proposed by the
Supervisory Board for adoption by the 2020 General Meeting
of Shareholders, on May 7, 2020, with effect from January 1,
2020. The remuneration policy for the members of the
Executive Board and the Supervisory Board was adopted by
the General Meeting with 96.99% and 99.92% respectively.
At the 2021 General Meeting of Shareholders, the advisory
vote was 92.9%, in favor of the remuneration report 2020.
The company has reviewed the opinions expressed, to the
extent known, by those shareholders who issued an
advisory countervote or who abstained from voting. This
feedback did not result in material modifications of the
remuneration report 2021.
The remuneration policy will be submitted to the General
Meeting of Shareholders for adoption every time an amend-
ment is made, and at least once every four years after it has
been approved by (and on the proposal of) the Supervisory
Board. The Remuneration Committee is responsible for
developing the remuneration policy and submitting a proposal
to the Supervisory Board. In doing so, the Remuneration
Committee has taken into account and has followed the best
practice provision 3.1.2 of the Corporate Governance Code.
Our remuneration policy and corporate strategy are aligned
with specific short-term and long-term targets that link the
remuneration of each member of the Executive Board to the
success of the company. The size of the LTI in relation to the
total remuneration package, as well as the criterion that
members of the Executive Board must invest at their own
cost in the same number of shares awarded to them as an
LTI, are important factors in creating long-term value and
continuity for the company. For our full remuneration policy,
please refer to the TKH website.
APPLICATION OF THE POLICY IN 2021
The remuneration payable to the members of the Executive
Board comprises a basic salary (TRI – Total Regular Income),
a pension commitment, and a variable remuneration compo-
nent consisting of an annual performance bonus (STI) and a
long-term incentive (LTI) in the form of a share plan.
The Supervisory Board sets the targets, along with their
respective weighting and criteria, for any given year in
REMUNERATION REPORT
This remuneration report describes the implementation of the remuneration policy for the members of the
Executive Board and the Supervisory Board.
REMUNERATION POLICY OF THE EXECUTIVE BOARD
GOVERNANCE
This remuneration policy aims to provide a competitive
remuneration package to attract, motivate, and retain
qualified managers for a publicly listed company, while
keeping in mind the company’s size and unique characteris-
tics. The policy recognizes the internal and external context
as well as TKH's business needs and long-term strategy. It
is designed to stimulate long-term value creation for TKH and
its affiliated companies, taking into account the provisions for
good corporate governance. The policy also aims to improve
the company’s performance, using financial and non-financial
performance measures, combined with the careful assess-
ment of risks and the right entrepreneurship. It is tested for
market conformity at least once every three years, on the
basis of information provided by external experts. In addition,
internal remuneration ratios are taken into account by
ensuring that the remuneration ratio in the second tier is
appropriate and in line with the market standard. Based on
the targets set, the Remuneration Committee performs
scenario analyses in respect of the Short-Term Incentive (STI)
and Long-Term Incentive (LTI) we aim to achieve.
63 TKH GROUP ANNUAL REPORT 2021 |
alignment with the company’s strategy and general structure.
In the process, the Board considers both financial and
non-financial factors, along with personal targets, in addition
to the following:
•
Targets must be derived from the company’s strategy;
•
Emphasis should be placed on targets that are essential
for long-term value creation;
•
Past performance, business prospects, and conditions
should be taken into account;
•
Stakeholder expectations should be considered.
While financial and non-financial targets focus on the
realization of overall strategic business objectives and
sustainability ambitions, personal targets should relate to the
specific role of the Executive Board as a collective, and to
each individual member on the Executive Board. The factors
considered for personal targets include the company’s
mission and identity, its overall ESG (environmental, social,
and governance) targets, and any important strategic issues
for the coming year. Every effort is made to ensure that the
remuneration contributes to the company’s strategy, long-
term interests, and sustainability criteria.
Among other things, the external assessment and the
remuneration policy are used in formulating the proposal for
the remuneration of the members of the Executive Board. In
accordance with the Corporate Governance Code, the
Remuneration Committee takes note of the views of the
individual directors with regard to the level and structure of
their own remuneration. The remuneration for the members of
the Executive Board was externally reviewed in the previous
reporting year and adjusted for market competitiveness, at
which point it was concluded that the policy pursued with
regard to the TRI, STI and LTI meets the objectives set.
The Supervisory Board applied the remuneration policy in the
reporting year in line with the strategy and financial and
non-financial targets. The Board believes the total remunera-
tion package strikes a good balance for reaching the strategic
targets of TKH. The package encourages the members of the
Executive Board to achieve solid results and execute the
company's strategy in a realistic, but ambitious, manner.
There has been no deviation from the decision-making
process for the implementation of the remuneration policy.
1 LABOR MARKET REFERENCE GROUP
To attract qualified managers for the Executive Board, and
to retain the current members on the Executive Board on a
long-term basis, the company takes external reference data
into account when determining appropriate remuneration
levels. A specific labor market reference group has been
established for this purpose. With reference to the AMX-
companies on Euronext Amsterdam, we primarily make
comparison with companies that are more or less equivalent
to TKH in terms of complexity, size and the international
scope of their activity portfolio.
The Remuneration Committee, supported by external
experts, regularly evaluates this reference group to ensure
that its composition remains appropriate. To enable an
additional assessment of developments specific to the
business sector, a reference group consisting of international
sector peers is used.
No changes occurred in the reporting year with regard to
the reference group other than the adjustments implemented
by Euronext in the compilation of AMX-companies. The
reference group presented on the right was used for 2021.
Although external market data provides useful context, it is
ultimately the responsibility of the Remuneration Committee
and the Supervisory Board to determine appropriate remu-
neration packages that reflect the specific context and
requirements of the company, as well as the skills and
capabilities of the individual members of the Executive Board.
The external market data is therefore used to inform, not to
determine decision-making. The Remuneration Committee
evaluates the external market data and, if necessary, makes
recommendations to the Supervisory Board for approval.
2 TOTAL COMPENSATION
The remuneration payable to the members of the Executive
Board comprises a basic salary (TRI – Total Regular Income),
a pension plan and a variable remuneration component
consisting of an annual performance bonus (STI – Short-Term
Incentive) and a long-term incentive (LTI) in the form of a
share plan. At least once every three years – or more fre-
quently if initiated by the Supervisory Board – the existing
remuneration policy is tested and evaluated against available
reference data from the labor market reference group and
any relevant market developments. The table on the next
page lists the various gross remuneration components and
relative percentages of fixed and variable remuneration.
GOVERNANCE
AMX
Aalberts Industries
Air France-KLM
Arcadis
Basic-Fit
Boskalis
Corbion
Fagron
Fugro
PostNL
SBM Offshore
Vopak
INTERNATIONAL
SECTOR PEERS
Prysmian
Basler
Cognex
Keyence
| TKH GROUP ANNUAL REPORT 202164
Basic salary (TRI)
Once a year, the Supervisory Board determines whether basic
salary levels needs to be adjusted and, if so, by how much,
with due consideration to market developments, the remuner-
ation structures of similar companies in the labor market
reference group, TKH’s results, and wage developments
within the TKH Group. Basic salaries have been increased by
3% with effect from January 1, 2021 based in part on the
external assessment. The basic salary for individual members
of the Executive Board is below the median for the labor
market reference group.
3 OTHER EMPLOYEE BENEFITS
The members of the Executive Board are entitled to certain
business allowances in accordance with what is generally
accepted within the TKH organization, and limited to an
expense allowance, car and (mobile) telephone. No loans,
advances, or guarantees are provided to the members of the
Executive Board. Additional governance-related activities are
not subject to any extra conditions or compensation.
STI performance of the Executive Board 2021
The STI for members of the Executive Board based on
realization of the targets for 2021 is presented in the table on
the next page.
GOVERNANCE
4 PERFORMANCE BONUS (STI)
Variable remuneration is an essential part of the compensa-
tion package for Executive Board members in terms of
rewarding short-term results in line with strategic targets. On
the recommendation of the Remuneration Committee, the
Supervisory Board establishes the targets and criteria for
earning a performance bonus in advance of the reporting
year. Once the reporting year has ended, the size of the
performance bonus is determined by the Supervisory Board,
based on the results achieved and the criteria set. Depending
on the degree to which the targets have been met, the STI
can range from 0% to (a maximum of) 60% of the TRI.
Performance “at target” results in a performance bonus of
40% of the TRI. The Supervisory Board has the discretionary
power to deviate from the targets set if special circumstances
apply. Differentiation in the STI’s received by members of the
Executive Board can occur due to the members’ final scores
on their personal quantitative and qualitative targets.
Payment of the variable remuneration to members of the
Executive Board occurs on the condition that the targets upon
which the performance bonus is predicated or the circum
-
stances under which the bonus was originally stipulated, are
accurate. For 2021, there was no full or partial recovery of a
bonus as referred to in article 135 subsection 8.
5 SHARE PLAN (LTI)
The long-term variable remuneration is aimed at aligning the
interests of the Executive Board members with the long-term
interests of TKH’s shareholders. For that purpose, a share
plan was enacted that arranges for a long-term incentive (LTI).
Under the plan, members of the Executive Board are awarded
shares based on the realization of targets, on the condition
that they personally invest in the same number of shares as
are awarded to them under the LTI plan at the market price of
that time. The shares awarded under the share plan, along
with those personally invested, are meant to be held as a
long-term investment, and they may not be traded for three
years after their allocation or purchase, as the case may be.
The waiting period of three years was determined in light of
the quid pro quo financial consideration required of members
of the Executive Board.
GOVERNANCE
Basic salary (TRI) Variable income (STI) 1)
Share plan (LTI) 1) Pension Pension compensation Total Variable share in the total
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
J.M.A. van der Lof MBA
702
682
410
74
1,126
146
40
39
193
187
2,471
1,128
62.2%
19.5%
E.D.H. de Lange MBA
527
511
308
55
844
110
21
19
73
66
1,773
761
65.0%
21.7%
H.J. Voortman MSc
478
464
279
50
766
100
21
21
60
50
1,604
685
65.2%
21.7%
Total remuneration 1,707 1,657 997 179 2,736 355 82 79 326 303 5,848 2,574 63.8% 20.9%
1 Realized in the previous financial year and paid out in the financial year following
Because amounts are expressed in thousands of euros, rounding differences may arise in
the total figures
TOTAL COMPENSATION EXECUTIVE BOARD
65 TKH GROUP ANNUAL REPORT 2021 |
Achieved (as % of “at target”) Actual award
Turnover EBITA Personal targets
Weighted
average pay-out
level in € 1,000
J.M.A. van der Lof MBA 150% 150% 131% 58.4% 410
E.D.H. de Lange MBA 150% 150% 131% 58.4% 308
H.J. Voortman MSc 150% 150% 131% 58.4% 279
GOVERNANCE
Relative
weighting of the
performance
criteria
Maximum
payment level
(“at target” –
100%)
Turnover 30% 150%
EBITA 50% 150%
Personal targets (incl. ESG, innovations
and strategy realization progress)
20% 150%
The amount of remuneration depends on developments in
the following KPI’s: Return on Capital Employed (ROCE) and
Return on Sales (ROS) in relation to the targets formulated
ahead of time, and the stock price developments for TKH
shares compared to the AMX-index of Euronext Amsterdam
(relative stock price developments). These three KPIs deter-
mine whether it will be possible to proceed with awarding any
shares, as well as how many shares will be awarded.
The performance period pertaining to ROCE and ROS is
one year, with the performance ranges determined at the
beginning of the year, taking medium-term targets into
consideration. The performance period for the relative stock
price developments is three years. For the 2021 allocation,
this entailed reviewing the period from January 1, 2019, to
December 31, 2021.
•
The applicable performance range for the ROS is 0.50 to
1.50, with an “at target” level of 1.0. The score received on
this KPI produces a “multiplier” that determines the
ultimate score achieved.
•
The applicable performance range for the ROCE is also
0.50 to 1.50, with an “at target” level of 1.0. The score for
this KPI is also equal to a “multiplier”.
•
The performance range for the relative stock price devel-
opments runs from 0.75 to 1.5, with an “at target” of 1.0.
This score is converted into a ‘multiplier’ ranging from 0.5
to 1.8, with 1.0 being the multiplier for “at target”.
In setting the amount of the allocation for the total LTI,
multipliers are calculated for each KPI. These multipliers are,
in turn, multiplied by the standard allocation. The standard
award is net and equivalent to 50% of the TRI. The gross
value of the standard award is thus approximately equal to
the TRI. The minimum pay-out of an LTI award in any given
year is 0.25 x the standard award. In this way, even in years in
which the KPIs are not realized, the interests of the Executive
Board and the shareholders remain parallel. After all, the
Executive Board must also personally invest 0.25 x the
standard allocation in this situation. The maximum payout is
2.7 x the standard award.
The following multipliers were reached for each KPI based on
actual overall performance in relation to the performance
ranges. The multipliers for both ROS and ROCE amounted to
the maximum of 1.5. The multiplier for the relative stock price
developments amounted to 0.83. These multipliers for each
KPI resulted in a total multiplier for the LTI of 1.87, which
meant that 1.87 x the standard award was granted.
This resulted in award payouts in € 1,000 of the following net
values for:
J.M.A. van der Lof MBA: 1.87 x 50% x TRI = 656
E.D.H. de Lange MBA: 1.87 x 50% x TRI = 492
H.J. Voortman MSc: 1.87 x 50% x TRI = 447
The corresponding gross values are listed in the table
showing “total compensation” in section 2 of this remunera-
tion report. The number of certificates of shares associated
with the net award will be calculated based on the average
closing price for the three trading days following the time of
publication of the annual figures.
PERFORMANCE CRITERIA STI PERFORMANCE OF THE EXECUTIVE BOARD
| TKH GROUP ANNUAL REPORT 202166
No option rights are awarded to the members of the
Executive Board. Any option rights a member may own were
obtained during the time in which he was already employed
by TKH but had not yet become a member of the Executive
Board. These option rights can be exercised according to the
TKH share option scheme during the applicable execution
periods. In that regard, H.J. Voortman has option rights that
apply to the period before he became a member of the
Executive Board. The movement and balance of the out-
standing option rights awarded to him are shown in the table
on the left. For more information on the share option scheme,
we refer you to note 25 in the annual financial statements.
GOVERNANCE
6 PENSION
The Remuneration Committee is responsible for ensuring that
the members of the Executive Board are provided with a
pension that is in line with normal practice and consistent
with the provisions made for similar positions. In addition, the
pension arrangements include the right to benefits in the case
of poor health or invalidity, and a widows’ and orphans’
pension in the event of death. This is all provided under terms
and conditions comparable and applicable to participants in
the collective pension fund – which is to say, company
employees. The associated costs up to the maximum allowed
under tax law are included under pension costs. Pension
compensation refers to any portion above the maximum
allowed under tax law.
7 PAY RATIO
In formulating the remuneration policy for the Executive
Board, one of the factors the Supervisory Board takes into
account is the organization’s pay ratio. The internal pay ratio
is calculated as the average total compensation for the
members of the Executive Board (TRI, STI and LTI) divided by
the average total compensation for employees (total salary
costs divided by the average number of FTEs). The other
elements of the terms of employment have a minor influence
on the pay ratio and as such are not taken into account in its
EXECUTIVE BOARD SHARE OWNERSHIP
Balance 1/1
Awarded
shares
Individually purchased
shares
Disposal (at least 3
years in portfolio) Balance at 31/12
J.M.A. van der Lof MBA
2020
1
138,147 5,456 5,456 -15,912 133,147
2021
1
133,147 2,216 2,216 -15,432 122,147
E.D.H. de Lange MBA
2020
1
91,468 4,321 4,321 -4,321 95,789
2021
1
95,789 1,662 1,662 -3,324 95,789
H.J. Voortman MSc
2020
1
20,723 3,922 3,922 -3,922 24,645
2021
1
24,645 1,508 1,508 -1,508 26,153
1 Realized in the previous financial year and paid out in the financial year following
OPTION RIGHTS H.J. VOORTMAN MSC
Year of award Exercise price in €
Number as at
01-01-2021
Awarded during
the year
Movement during
the year
Expired during
the year
Exercised during
the year
Number as at
31-12-2021 Exercise period
2016 33.92 12,000 -12,000 0 2019-2021
2017 41.19 7,350 7,350 2020-2022
2018 52.25 8,400 8,400 2021-2023
Total 27,750 0 0 0 -12,000 15,750
67 TKH GROUP ANNUAL REPORT 2021 |
GOVERNANCEGOVERNANCEGOVERNANCE
calculation. The Remuneration Committee follows changes in
the internal pay ratio on a yearly basis and takes them into
consideration when assessing and determining remuneration
for the members of the Executive Board. The pay ratio
calculated for 2021 was 33.8 (2020: 14.6).
8 COMPARATIVE INFORMATION ON REMUNERA-
TION AND COMPANY PERFORMANCE
The table on the right shows the comparative information for
5 years on the changes in remuneration of for the Executive
Board and company performance.
COMPARATIVE INFORMATION ON REMUNERATION AND COMPANY PERFORMANCE
(in € 1,000 unless stated otherwise)
2021 2020 2019 2018 2017
Remuneration of the Executive Board
1
J.M.A. van der Lof MBA 2,237 902 1,134 1,419 1,656
E.D.H. de Lange MBA 1,678 676 850 1,064 1,116
H.J. Voortman MSc
2
1,523 614 772 574
A.E. Dehn
3
114 916
Company performance
ROS 12.4% 10.5% 11.6% 11.3% 10.1%
Organic growth 15.9% -9.9% -1.9% 9.4% 8.8%
CO
2
reduction (vs. 2015, 2021 vs 2019) 29.8% 5.8% 5.4% 2.9% -0.9%
Illness rate of employees 3.56% 3.51% 3.26% 3.47% 3.35%
Average remuneration per FTE
54 50 49 48 47
Executive Board pay ratio
33.8 14.6 18.9 21.9 26.4
1 Based on TRI, STI, and LTI
2 Appointment to the Executive Board with effect from May 3, 2018
3 Member of the Executive Board until May 3, 2018
9 PERSONAL LOANS
The company grants no personal loans or guarantees to
Executive Board members.
10 CHANGE OF CONTROL
There is no “change of control” clause in the employment
contracts of the members of the Executive Board.
11 SEVERANCE PAY
The remuneration in the event of dismissal amounts to a
maximum of one year’s salary (TRI). No severance pay is
awarded if the contract is terminated prematurely on the
director’s account, or if the director has acted in a culpable or
negligent manner.
| TKH GROUP ANNUAL REPORT 202168
This policy aims to provide a competitive compensation
package to attract, motivate, and retain qualified members of
the Supervisory Board for a publicly listed company, while
taking into account the size and unique characteristics of the
company. TKH is a leading technology company, focused on
advanced innovative technology systems in high-growth
markets. The company endeavors to be an attractive employer
and solid investment for its shareholders, with corporate social
responsibility forming a central part of that. This policy was
developed in the context of national and international market
trends and in line with legal requirements, best practices in
corporate governance, the social context of remuneration
practices, and the interests of the company’s shareholders and
other stakeholders. The remuneration package is tested for
market conformity in 2019 and at least once every three years
on the basis of informa
tion provided by external experts.
The guiding principles in the company’s remuneration policy
are to ensure equity and transparency. The remuneration
structure has been developed to promote the satisfactory
fulfillment of their tasks by members of the Supervisory Board
and is not dependent on the company’s financial results.
The Supervisory Board acknowledges its responsibility to act
in accordance with the identity, mission and core values of
the company. In this context, the decision has been made to
opt for fixed compensation without any variable remuneration
components to ensure that members can remain independent
and objective in fulfilling their role of enacting the company’s
corporate strategy and objectives, and creating long-term
value and sustainability for the business. For the full
remuneration policy, please refer to the TKH website.
APPLICATION OF THE POLICY IN 2021
1 REMUNERATION
The remuneration policy aims to reward members of the
Supervisory Board in line with the market on the basis of
their activities, experience and the related allocation of roles
within the Board and its committees. The remuneration is
periodically assessed externally with the same reference
group as for the Executive Board. The remuneration of a
member of the Supervisory Board is not dependent on the
company results. No shares and/or rights to shares are
granted to the members of the Supervisory Board. Any
shares held by a member of the Supervisory Board are for
long-term investment purposes. The General Meeting of
Shareholders adopted the remuneration of the Supervisory
Board in 2019, with effect from January 1, 2019.
REMUNERATION POLICY OF THE SUPERVISORY BOARD
GOVERNANCE
Regular
remuneration
Remuneration
membership
committees Total Total
(in € 1,000)
2021 2020
A.J.P. De Proft, chairman 60 8 68 68
P.P.F.C. Houben
1
19 4 23 55
R.L. van Iperen 45 8 53 53
C.W. Gorter 45 15 60 58
J.M. Kroon 45 13 58 58
A.M.H. Schöningh
2
45 6 51 34
Total remuneration 259 54 313 326
TOTAL REMUNERATION SUPERVISORY BOARD
1 Up to and including May 2021
2 As from May 2020
69 TKH GROUP ANNUAL REPORT 2021 |
The remuneration of the Supervisory Board is based on the
following amounts:
•
Chairman of the Supervisory Board € 60,000
•
Member of the Supervisory Board € 45,000
•
Chairman of the Audit Committee € 10,000
•
Member of the Audit Committee € 7,000
•
Chairman of the Remuneration Committee /
Selection and Appointment Committee € 8,000
•
Member of the Remuneration Committee /
Selection and Appointment Committee € 6,000
If circumstances require members of the Supervisory B
oard
to perform considerably more activities than normal,
they will
receive a fee of € 1,000 per half-day for these activities.
The remuneration of the Supervisory Board has not been
changed in 2021 compared to 2020.
3 SHARE OWNERSHIP OF THE SUPERVISORY
BOARD
Mr. A.J.P. De Proft owns 2,000 (depository receipts of) shares
in TKH as from 2014. The other members of the Supervisory
Board do not own any (depository receipts of) shares in TKH.
4 COMPARATIVE INFORMATION ON
REMUNERATION
The table below shows the comparative information for 5
years on the changes in remuneration of for the Supervisory
Board.
1 Up to and including May 2021
2 3 As from May 2017
4 As from May 2020
5 Up to and including May 2017
6 Up to and including May 2018
GOVERNANCE
COMPARATIVE INFORMATION ON REMUNERATION
(in € 1,000)
2021 2020 2019 2018 2017
A.J.P. De Proft, chairman 68 68 68 47 43
P.P.F.C. Houben
1
23 55 55 44 44
R.L. van Iperen 53 53 53 43 42
C.W. Gorter
2
60 58 52 42 28
J.M. Kroon
3
58 58 57 40 24
A.M.H. Schöningh
4
51 34
H.J. Hazewinkel
5
27
M.E. van Lier Lels
6
18 44
Total remuneration 313 326 285 234 252
2 TOTAL REMUNERATION
The table on the previous page lists the total remuneration
paid to individual members of the Supervisory Board.
| TKH GROUP ANNUAL REPORT 202170
CORPORATE GOVERNANCE
TKH Group N.V., is a public limited liability company under Dutch law, voluntarily applies the limited two-tier entity regime. The management of the company
is delegated to the Executive Board under the supervision of the Supervisory Board. The general powers of the Executive Board arise from legislation and
regulations, and are laid down in TKH's articles of association. The Executive Board and the Supervisory Board are responsible for the Corporate Governance
structure of TKH and compliance with the Dutch Corporate Governance Code (“Code”).
In principle, TKH applies the principles and best practice
provisions of the Code and attaches great value to the Code.
In a few cases, TKH deviates from the Code; the reasons
behind each of these deviations are described below.
TERM OF APPOINTMENT OF THE EXECUTIVE
BOARD
The terms of appointment for the CEO and CFO are not limited
to the four-year term prescribed in the Code. For both, TKH
takes the position that contractual agreements made in the
past cannot be modified, that existing employment contracts
should be respected, and that the limitation of the appointment
is not appropriate. However, it is worth noting that perfor
-
mance is assessed annually and the term of appointment is
continually evaluated. The maximum four-year term of appoint
-
ment does, however, apply to the third member of the
Executive Board. A maximum term of four years is also
followed for newly appointed members of the Executive Board,
and the best practice provision is applied in such cases.
SHARE PLAN
A share plan is in place for the Executive Board, but no share
option scheme. The share plan involves a financial contribu-
tion by the Executive Board since the individual members
have to purchase the same number of shares as they are
awarded within the framework of the plan. Because this
involves a financial contribution from the Executive Board
members, it has been determined that the shares must be
held for at least three years. Additionally, since this scheme
requires a private investment obligation of the individual
members of the Executive Board, the Supervisory Board
believes that it is reasonable and fair to adhere to a term of
three years, and not a term of five years.
INTERNAL AUDIT FUNCTION
TKH has an Internal Audit function, but the position of this
department has not been fulfilled completely independently in
accordance with the Code. In 2021, the Internal Audit team
was expanded, which will further strengthen its independent
position.
GENERAL MEETING
Due to ongoing COVID-19 restrictions, TKH made the
unprecedented decision to ask its shareholders and its
holders of depositary receipts of shares not to attend the
2021 General Meeting in person. This request was in line with
the Dutch Emergency Act on the organization of non-physical
AGMs, which makes it possible to hold a General Meeting
that can only be followed via live stream. Due to this excep-
tional situation, we were forced to deviate from a number of
provisions of the Code relating to the organization and imple-
mentation of a General Meeting.
With regard to invoking a response time concerning
proposals for fundamental strategy changes, TKH applied the
adopted law in September 2020 with regard to a 250-day
reflection period, above the 180 days specified in the Code.
The basic principle here is to ensure that the operation and
effectiveness of the measures that companies can take to
respond adequately to proposals for fundamental strategy
changes are safeguarded.
DEPOSITORY RECEIPTS OF SHARES
Stichting Administratiekantoor TKH Group (“TKH Trust Office
Foundation”) holds ordinary shares in the company. In
exchange for these shares, TKH Trust Office Foundation
issues depositary receipts for those shares. The voting rights
to the shares are vested in TKH Trust Office Foundation. If
requested to do so, TKH Trust Office Foundation gives the
holders of the depositary receipts authorization to cast a vote,
GOVERNANCE
71 TKH GROUP ANNUAL REPORT 2021 |
to the exclusion of TKH Trust Office Foundation, on the
shares for which the holder has depositary receipts at a
General Meeting of Shareholders specified in the proxy. The
authorization is unrestricted and is therefore not subject to
any exchangeability limit. TKH Trust Office Foundation is not
required by law (article 2:118a of the Netherlands Civil Code)
to grant the proxy, and may withdraw a proxy that has been
given if a) a hostile public offer is announced or made (or is
expected to be made), b) one or more persons possess at
least 25% of the depositary receipts and/or shares, or c) in
the opinion of TKH Trust Office Foundation, the voting right of
a holder of a depositary receipt is fundamentally in conflict
with the interest of the company. In the event of one of these
scenarios, TKH Trust Office Foundation must notify the
holders of depositary receipts and explain the reasons behind
their actions. The company considers the issue of depositary
receipts for shares as an important measure to safeguard the
interests of shareholders, holders of depositary receipts and
other stakeholders. This means that the company’s intellec-
tual property and its commercial interests are protected,
which is also important when it comes to long-term value
creation for our stakeholders. Although the Code states that
the issue of depositary receipts is not intended to be used as
a protective measure, TKH expressly chooses to take this
form of protective measure and acts in accordance with the
applicable law in article 2:118a of the Dutch Civil Code. This
is in derogation to principle of the Code.
TKH Trust Office Foundation exercises the rights attached to
the shares in such a way that the interests of the company,
its associated businesses, and all its stakeholders are
protected as far as possible, instead of focusing primarily
on the interests of the holders of depositary receipts, as
defined in best-practice provision 4.4.5. of the Code. The
TKH Trust Office Foundation thus exercises its voting right in
line with legal provision 2:118a. In the General Meeting of
Shareholders, the Board of TKH Trust Office Foundation may,
on request, issue a statement of its intended voting conduct.
A detailed explanation of TKH's Corporate Governance
structure can be found on the TKH website.
ISSUE OF SHARES
Shares are issued according to a decision taken by the
Executive Board. The decision is submitted to the
Supervisory Board for its approval. The extent of this power
on the part of the Executive Board is determined by means of
a resolution adopted by the General Meeting and does or will
not exceed the equivalent of all of those shares in the compa-
ny’s authorized capital that have not yet been issued. During
the general meeting held on May 6, 2021, this power was
extended until November 6, 2022. The directive applies to
ordinary shares and cumulative preference financing shares
up to a total of 10% of the total nominal value of the issued
shares at the time of issue.
PURCHASE OF OWN SHARES
Subject to specific conditions stipulated in the company’s
articles of association and acting in accordance with a deci-
sion taken by the Executive Board, the company may acquire
depository receipts of shares in its own capital in return for
valuable consideration, for a price equivalent to the sum of,
on the one hand, the nominal value which they represent or,
on the other, one hundred and ten per cent (110%) of their
listed price. The decision is submitted to the Supervisory
Board for its approval. During the General Meeting held on
May 6, 2021 the power for the company to acquire shares in
its own capital was conferred on the Executive Board for a
period of 18 months as of that date. Among other things, this
authorization may be utilized for the purposes of purchasing
shares for share and option schemes.
CANCELLATION OF OWN SHARES
In mid-November 2020, TKH announced a share buy-back
program of € 25 million. The program started on November
18, 2020 and was carried out within the conditions set by the
General Meeting, with the intention to reduce the issued
capital in due time. For the execution of the share buy-back
program, TKH has concluded a “Discretionary Management
Agreement” with ABN AMRO to carry out the repurchase of
its own shares during open and closed periods, inde-
pendently of TKH. In the period from November 18, 2020 up
to and including April 1, 2021, TKH purchased 623,334
depositary receipts of shares for an amount of € 25 million,
which completes the share buyback program.
The General Meeting of May 6, 2021 adopted the proposal to
reduce the issued capital with due observance of the provi-
sions of article 2:99 of the Dutch Civil Code and the articles
of association, by cancelling (part of the) ordinary shares that
the company holds or of which it holds the depositary
receipts. The purpose of the capital reduction is to cancel
repurchased (depositary receipts of) shares because there is
currently no intention to re-issue those (depositary receipts
of) shares. In 2021, 623,334 ordinary shares for an amount of
€ 25 million were cancelled.
PREVENTION OF INSIDER TRADING
To ensure that any person deemed to be an “insider” within
TKH does not engage in insider trading, TKH has introduced
regulations to comply with the European Market Abuse
Regulation (EU No. 596/2014 – “MAR”). “Insiders” in the
company have therefore consented in writing to act in
accordance with these regulations. The Company Secretary
serves as Compliance Officer and oversees appropriate
compliance with the legislation and regulations concerning
insider trading and other compliance risks.
GOVERNANCE
| TKH GROUP ANNUAL REPORT 202172
RISK MANAGEMENT
The Executive Board is responsible for compliance with all relevant primary and secondary legislation and for managing the risks associated with the
company’s activities through the appropriate implementation of internal risk management, control and auditing systems. This involves surveying and analyzing
the risks related to the company’s strategy and activities, establishing the risk appetite and defining the necessary measures to counter the risks. The
Executive Board is accountable to the Supervisory Board for setting up effective and smoothly functioning internal risk management and control systems.
RISK MANAGEMENT STRUCTURE
TKH has embedded its risk management policy in all levels of
the organization. This involves using risk management and
control systems that contain the following key components:
•
An Internal Control Framework (ICF) based on the
Committee of Sponsoring Organizations of the Treadway
Commission (COSO 2017). TKH uses this framework to
analyze and evaluate the strategic, operational, financial,
and compliance risks for each operating company.
•
The TKH Manual includes regulations and guidelines for
decision-making procedures and authorization levels for
the strategic management of our operating companies. It
also contains guidelines concerning the treasury policy
(cash and foreign exchange management), as well as
various rules of conduct, such as policy approval proce-
dures, code of conduct for staff members, whistleblower
procedure, and a privacy policy. The manual also contains
guidelines for internal management and control measures
including IT controls, internal and external financial
reporting, insurance, and how to deal with claims.
•
A “strategic scorecard”, which is issued every quarterly or
more frequently if necessary. It features “high-lights” and
“low-lights”, and (potential) risks per business segment.
RISK MANAGEMENT STRUCTURE
SUPERVISORY BOARD
Audit Committee
REPORTING AND DISCUSSION ON RISKS AND MITIGATION
REPORTING AND DISCUSSION ON RISKS AND MITIGATION
EXECUTIVE BOARD
OPERATING COMPANIES / CLUSTER MANAGEMENT
Reporting
Deep dives
Technology roadmap
Reporting Meetings
MANAGEMENT
BOARD
INTERNAL AUDIT
FINANCE &
CONTROL
LEGAL
TAX
COMPLIANCE
OFFICER
ICF
MANUALS
REPORTING
ANALYSIS
Strategic scorecard
Highlights & Lowlights
Budgets
GOVERNANCE
73 TKH GROUP ANNUAL REPORT 2021 |
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HOW DO WE COLLECT THE
INFORMATION NEEDED TO MANAGE RISK?
WHAT ARE THE RISKS?
WHAT IS OUR RISK APPETITE?
HOW DO WE ASSESS RISKS?
It also features the related action points for the short- and
medium-term that need to be discussed between the
Executive Board and local management of the operating
companies.
TKH’s risk management policy matches the organization’s
size and decentralized structure. The components this
management policy are assessed by the Internal Audit
Department. Only continued operations are in scope of the
assessments. Each operating company’s main risks are
identified and analyzed, and their potential impact on the
operating company is determined. For specific themes,
including IT & Security, external specialists are used on a
project basis. The results of these assessments are discussed
with the Executive Board. At least twice a year, the most
important findings of the assessments performed by Internal
Audit are discussed with the Audit Committee of the
Supervisory Board. We consult the guidelines of the Institute
of Internal Auditors (IIA) to ensure our internal audit function
continues to be aligned with IAA standards.
The Executive Board, internal Legal Advisor, Director Finance
& Control and the Compliance Officer also evaluate the risk
management system. The design and operation of the
internal risk management and control systems for financial
reporting are also assessed by the external auditor in the
context of the audit of the financial statements. The outcome
and impact on the audit strategy of the external auditor are
discussed with the Executive Board and the Audit
Committee.
RISK CULTURE
An open, transparent culture with sufficient critical capacity is
a prerequisite for an organization to deal properly with risks,
responsibilities and competencies and to recognize these in
time. TKH views a suitable risk-management model as an
important tool which enable us to create long-term value. A
continuous focus on risk awareness is a key element of TKH’s
culture. The pursuit of a balanced risk profile is embedded in
this culture by means of short lines of communication and
supported by close monitoring of agreed objectives through a
comprehensive Key Performance Indicator (KPI) dashboard.
Employees are expected to be aware of the core values
underlying our actions and our risk profile and to feel respon-
sible for the (potential) risks they take. They are also expected
to adhere to the principle of TKH’s culture and to act in
accordance with TKH’s code of conduct. At the same time
we have the obligation to ensure a safe work environment in
which our employees can excel regardless of their back-
ground, gender and position. The code of conduct is funda-
mental to everything we do and describes how we act as a
company and in the company, how we make decisions and
how we deal with different dilemmas. The code of conduct is
published on our website. We have established a procedure
that enables employees to report any suspicion of conduct
that is unlawful and/or contrary to the code of conduct
including sexual harassment, gender inequities and abuse
by those in power. Reports are reviewed and investigated by
the local Confidential Officer and/or the group Compliance
Officer. If deemed necessary, disciplinary and mitigating
measures are taken. External parties can also report to the
Group Compliance Officer.
DEVELOPMENTS IN 2021
In 2021, we evaluated our internal risk management system
and made several improvements. The activities carried out by
Internal Audit did not lead to any material findings at group
level with regard to the administrative organization and
RISK CULTURE
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WHAT ELSE COULD GO WRONG?
WHAT DO WE DO WITH THE RISKS?
WHICH RISKS ARE
MAJOR VERSUS MINOR?
HOW WELL DO WE MANAGE THE RISKS?
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GOVERNANCE
| TKH GROUP ANNUAL REPORT 202174
internal control. When shortcomings in the administrative
organization and internal control are observed, then we iden-
tify areas for improvement. Continuous monitoring takes
place so we can adjust the internal risk management and
control system to changing internal and external conditions if
necessary. In 2021, we focused on further embedding the
Internal Control Framework within our operating companies.
For operating companies whose size, technology and risks,
such as privacy and reputation, are important in the context
of implementing the TKH strategy, the risks regarding to IT &
Security have been identified and recommendations have
been made to further mitigate these risks. These risks and
their follow-up are frequently discussed with the Executive
Board and the Audit Committee. A number of security inci-
dents occurred during the year under review. By reacting in a
timely manner with a team of cybersecurity experts, we
ensured that these incidents did not result in significant data
leaks or cause significant or permanent damage. However,
these incidents do confirm the need to be constantly vigilant
to IT & Security risks.
The COVID-19 outbreak in 2020 significantly impacted the
global economy and the impact in general was still felt in
2021. Therefore, the “pandemic” (COVID-19) risk remained an
important one for TKH. The worldwide spread of COVID-19
has resulted in lockdowns, quarantines, travel and workplace
restrictions, business shutdowns and restrictions, stagnation
in the supply chain, an increase - albeit small - in the illness
rate, changes in legislation, and general instability of the
economic and financial markets. There still is uncertainty
about how the pandemic will develop in the future and impact
global GDP development and the (end )markets in which TKH
operates. By taking early measures, we were able to limit the
impact on our business operations in 2021.
In 2021, we placed increasing emphasis on the review of
non-financial information. Internal Audit developed and
conducted review activities focusing on the non-financial
KPIs included in TKH’s 2020 Annual Report. The reviews
identified improvements areas that were addressed properly
at various levels of the group. No material shortcomings were
identified. We also devoted further attention to supply chain
management during the reporting year. Important raw mate-
rials such as copper, steel and plastics, and technical (elec-
tronical) components had longer delivery times or were
unavailable or only available in limited quantities. Review
activities were conducted at several of the group’s operating
companies.
RISK PROFILE AND RISK APPETITE
We have identified most important risks and divided them
into four categories: strategic risks, operational risks, financial
and reporting risks, and compliance risks. For each risk, we
then assess its potential impact on the organization and the
probability that this risk will occur. The impact includes
financial and non-financial factors such as reputation.
It is the duty of the Executive Board to weigh the business
opportunities against the expectations and interests of stake-
holders. Decisions regarding changes or the fine-tuning of
our business models are taken by the Executive Board in
accordance with TKH’s risk appetite. A balance is explicitly
sought between acceptable risk, on the one hand, and the
entrepreneurship conducted in the context of long-term value
creation, on the other hand.
GOVERNANCE
RISK OVERVIEW
As part of the strategy process, we have identified four
priority areas: Innovation and technical leadership; Being
responsible and sustainability impact; Talented people and
empowerment; and Sustainable financial performance. Based
on these pillars, we have determined our strategic direction
and defined specific objectives to manage the strategic
process. The risk connectivity matrix shows the most impor-
tant risks for TKH and the strategic pillar from which these
risks are addressed. In addition, a link has been made with
the materiality themes for TKH and our stakeholders, as
shown in the materiality matrix (see the Stakeholders section).
RISK AREA RISK RISK DESCRIPTION STRATEGIC PILLAR MATERIAL TOPICS
RISK
TREND
RISK
APPETITE
STRATEGIC 1. MARKET & GEOPOLITICS
Influence of global economic and geopolitical developments on the execution
of the strategy and financial position and results of TKH.
SUSTAINABLE FINANCIAL
PERFORMANCE
1 Financial stability, track record & performance
2. PANDEMIC (COVID-19)
Impact of a (global) pandemic on the world economy, the (end) markets in
which TKH is active and its business operations.
SUSTAINABLE FINANCIAL
PERFORMANCE
TALENTED PEOPLE AND
EMPOWERMENT
BEING RESPONSIBLE AND
SUSTAINABILITY IMPACT
1 Financial stability, track record & performance
11 Good & responsible employment
12 Healthy & safe work environment
16 Integrity & compliance
17 Risk management
18 Privacy & IT Security
3. TECHNOLOGY &
INNOVATION
Threat to TKH’s long-term value creation due to insufficient technology
development and innovation.
INNOVATION AND
TECHNICAL LEADERSHIP
2 Technological innovations
3 Sustainable capital allocation
4. M&A AGENDA
Fai
lure to successfully integrate and divest (acquired) companies can result in
lower than expected profit contribution and the risk of impairment.
SUSTAINABLE FINANCIAL
PERFORMANCE
1 Financial stability, track record & performance
OPERATIONAL 5. PROJECT MANAGEMENT
Risk of projects not being delivered according to specification, agreements,
time schedule, and planned margins.
SUSTAINABLE FINANCIAL
PERFORMANCE
1 Financial stability, track record & performance
6. IT & SECURITY
Risk of breach of data availability, confidentiality, and integrity (including IP).
INNOVATION AND
TECHNICAL LEADERSHIP
18 Privacy & IT Security
7. STAFF
Shortage of well-qualified staff and inability to retain qualified staff. Health
and safety incidents can cause risks for employees and lead to business
stagnation.
TALENTED PEOPLE AND
EMPOWERMENT
11 Good & responsible employment
12 Healthy & safe work environment
13 Employee satisfaction
14 Personal development opportunities
15 Diversity & inclusiveness
8. SUSTAINABLE BUSINESS
OPERATIONS
Possible impact of climate change on our strategy and business model.
Unsustainable business operations can have an adverse effect on the
environment. Future implementation of CO
2
tax/pricing could mean an
increase in operational and compliance costs.
BEING RESPONSIBLE AND
SUSTAINABILITY IMPACT
5 Responsible production
6 Resource efficiency
7 Climate change
8 CO
2
neutral
9 Responsible procurement
10 Circularity
9. (RAW) MATERIALS &
COMPONENTS
Important raw materials such as copper, steel and plastics, and technical
(electronical) components have long delivery times or are unavailable or only
available in limited quantities. Also, limited availability of (green) energy results
in higher price levels.
SUSTAINABLE FINANCIAL
PERFORMANCE
1 Financial stability, track record & performance
5 Responsible production
6 Resource efficiency
9 Responsible procurement
FINANCIAL AND
REPORTING
10. CURRENCIES
Volatility of currencies which puts pressure on profit margins.
SUSTAINABLE FINANCIAL
PERFORMANCE
1 Financial stability, track record & performance
11. COST INFLATION
Inflation of costs including (volatility of) raw material prices, components and
labor costs, which puts pressure on profit margins.
SUSTAINABLE FINANCIAL
PERFORMANCE
1 Financial stability, track record & performance
5 Responsible production
6 Resource efficiency
12. REPORTING
Risk that TKH’s financial and non-financial reporting contains material errors.
SUSTAINABLE FINANCIAL
PERFORMANCE
BEING RESPONSIBLE AND
SUSTAINABILITY IMPACT
1 Financial stability, track record & performance
16 Integrity & compliance
COMPLIANCE 13. LEGAL & REGULATORY
Dam
age (including reputation) due to violation of legislation and regulations
including export and sanctions regulations, unfair competition, fraud, corruption
and bribery.
BEING RESPONSIBLE AND
SUSTAINABILITY IMPACT
16 Integrity & compliance
14. TAX
Damage (including reputation) due to violation of tax legislation and
regulations.
SUSTAINABLE FINANCIAL
PERFORMANCE
BEING RESPONSIBLE AND
SUSTAINABILITY IMPACT
1 Financial stability, track record & performance
16 Integrity & compliance
19 Ethical tax
RISK CONNECTIVITY MATRIX - OUR MAIN RISKS
avoiding low medium high
increased
equal decreased
new 2021
GOVERNANCE
75 TKH GROUP ANNUAL REPORT 2021 |
| TKH GROUP ANNUAL REPORT 202176
STRATEGIC
MARKET & GEOPOLITICS
Influence of global economic and geopolitical developments
(such as the Russia-Ukraine conflict) on the execution of the
strategy and financial position and results of TKH. Economic
and political confrontations between world powers (trade
tariffs), the erosion of trade agreements, and the impact of
(global) inflation can impact TKH’s turnover and results.
Our specific risk mitigation measures:
•
Spread of activities across multiple product/market combi-
nations.
•
Internal efficiency programs and cost reduction programs.
•
Flexible shell by making use of temporary staff and by
outsourcing the production of mainly commodity products.
•
Geographical spread across Europe, North America, and
Asia with multiple production sites.
•
Strong financial balance sheet and position.
•
Continuous attention to risk analysis during the execution
of the strategy and strategy transformation program.
PANDEMIC (COVID-19)
Impact of a (global) pandemic on the world economy, the (end)
markets in which TKH is active, and its business operations.
Possible specific COVID-19 risks with an impact on TKH:
•
Our employees may face health risks caused by the
COVID-19 pandemic.
•
COVID-19 increased working from home within our organi-
zation, which can have an impact on productivity and our
internal control environment and can increase the risks of
cybersecurity incidents.
•
Disruptions and stagnation of the activities of important
suppliers as a result of COVID-19 can affect us and our
ability to manufacture and supply products to customers.
•
Customers can request a postponement of payment or
other contract changes; in addition customer circum-
stances can cause delays in deliveries and difficulties
achieving other billing milestones due to COVID-19.
•
Installation and maintenance of our systems are part of our
activities with customers all over the world. Travel restric-
tion measures caused by COVID-19 can have an impact
on these activities.
Our specific risk mitigation measures:
•
The health and safety of our employees is and will remain
our top priority. We have taken various preventive
measures to support the well-being of our employees.
This includes facilitating safe and ergonomic possibilities
to work remotely.
•
A strong financial position to respond to the downturn in
activities. This includes the availability of cash and
committed finance facilities, a focus on working capital, an
investment limitation and cost-reduction programs.
•
A f
ocus on leveraging organic growth into an added value
conversion ratio of >35% and translating the increase in
gross margin into a further increase in results with more fo-
cus on return and cost ratio as a percentage of added value.
•
Active involvement with our strategic suppliers and an
increase in stocks of critical raw materials, components,
and products. A search for alternative suppliers where
needed.
•
The implementation of virtual support solutions for remote
support of customers at customer locations.
•
The phasing out of the flexible workforce.
TECHNOLOGY & INNOVATION
Insufficient technology development and innovation can
threaten TKH in terms of long-term value creation. These
risks may emerge in the following areas:
•
The speed of technological developments.
•
The execution of the R&D roadmap.
•
Our competitor’s new technologies.
•
Our payback capacity.
•
The harmonization of niche specifications to produce
standard commodity products and technologies.
Our specific risk mitigation measures:
•
Realize at least 15% of our turnover with innovations that
have been introduced in the last two years.
•
Focus continuously on innovation and the (execution of
the) roadmap including time-to-market.
•
Ensure that the Executive Board and local management
frequently discuss developments concerning technology
and innovation.
•
Spend approximately 4% of our turnover on R&D.
•
Take advantage of technology leadership by leveraging
and accelerating growth from innovations and utilizing
R&D pipeline. Bring key innovations to maturity with
targeted profitability and limit the number of new and large
“start-up” projects.
•
Increase our market share by unlocking the full potential of
our innovations and disruptive technologies by taking
advantage of the market growth driven by relevant
megatrends.
M&A AGENDA
Failure to successfully integrate acquired companies or
execute divestments of group assets can result in lower-
than-expected profit contributions and the risk of impairment.
Our specific risk mitigation measures:
•
Establish procedures and guidelines for the implementa-
tion of a due diligence process.
•
Ensure rapid integration of acquired companies in the TKH
reporting and control systems.
•
Harmonize business processes and systems where neces-
sary and desirable.
•
Devote continuous attention to the identification, creation
and utilization of synergy effects.
•
Ensure a continuous focus on portfolio management.
Restructure or exit activities that offer limited potential for
value creation: limited strategic fit, low return on sales and
organic growth potential.
GOVERNANCE
77 TKH GROUP ANNUAL REPORT 2021 |
OPERATIONAL
PROJECT MANAGEMENT
Inadequate project management can result in the risk that
projects are not delivered according to specification, time
schedules, agreements, and planned margins.
Our specific risk mitigation measures:
•
Invest in qualified staff, as well as train and educate staff.
Ensure sufficient legal knowledge and professional compe-
tence.
•
Ensure guidelines and procedures for approving projects
with an above-average risk, project management, and
adequate project administration.
•
Make sure important projects are discussed at quarterly
meetings between the Executive Board and local manage-
ment.
•
Monitor large projects with an above-average risk on a
regular basis, if necessary with increased involvement of
the Executive Board and/or Management Board and legal
advisor.
•
Constantly evaluate experiences are incorporate them into
the risk model, which can lead to strict acceptance criteria.
IT & SECURITY
IT & Security concerns the risk of breach of data availability,
confidentiality and integrity (including IP). This also includes
cyber-attacks that violate data (including IP) to disrupt busi-
ness operations and infrastructure. The following elements
are important in this respect:
•
A decentralized IT landscape.
•
The use of various ERP systems.
•
The continuity of production sites.
•
The protection of developed technologies (IP protection).
•
Privacy legislation.
Our specific risk mitigation measures:
•
TKH has issued guidelines outlining the requirements for
an ICT infrastructure, including the most important IT
controls, partly within the context of cybercrime risks.
•
Companies from the same region or cluster are encour-
aged to generate economies of scale in the field of ICT.
•
IT managers from the most important operating companies
discuss important IT developments, trends, and risks.
•
The internal and external (IT) security environment is tested
by a specialized external agency.
•
Internal guidelines on privacy handling are established.
•
Increasing awareness of the need for information security
through continuous training and the frequent distribution of
newsletters on relevant (cyber) topics (Security Awareness
Program) such as safe remote working because of COVID-
19.
•
The Internal Audit Department oversees the implementa-
tion of privacy guidelines.
•
The risk were identified for operating companies with a
high and medium risk in this area, based on size, tech-
nology and reputation, and recommendations were made
to further mitigate these risks. These risks and the moni-
toring of risk management are frequently discussed with
the Executive Board and the Audit Committee.
STAFF
Scarcity of highly qualified personnel and the inability to
retain qualified personnel can impact the (progress of the)
execution of TKH’s strategy. Health and safety incidents can
cause risks for employees and lead to business stagnation.
Our specific risk mitigation measures:
•
Introduce performance/talent management program per
operating company.
•
Establish Management Development Program.
•
Conduct regular employee satisfaction surveys.
•
Use good reputation as an attractive employer to recruit
talented employees.
•
Set up cooperation programs between operating compa-
nies and training institutes.
•
Use employer branding and referral recruitment to reach
future talent and arouse their interest.
•
Increase attention on safety by tightening safety standards
and creating even better safety awareness, and by imple-
menting ISO 45001.
•
Facilitating healthy and safe homeworking practices.
•
Communicate frequently with our employees about rele-
vant COVID-19 and business developments through
various channels.
•
Establish hotline where our employees can ask questions
about COVID-19 and all associated measures and also
raise concerns.
SUSTAINABLE BUSINESS OPERATIONS
Possible impact of climate change on our strategy and busi-
ness model. Unsustainable business operations have an
adverse effect on the environment. Future implementation of
CO
2
tax/pricing could mean an increase in operational and
compliance costs.
Our specific risk mitigation measures:
•
Based on the recommendations from the Task Force on
Climate Related Financial Disclosures (TCFD), a compre-
hensive analysis is carried out on possible risks of climate
change and how any climate risks can be converted into
opportunities.
•
Further implementation of optimizations in production
processes via our operational excellence program.
•
Deliver a strong performance regarding our ESG targets, in
particular being CO
2
neutral by 2030 (scopes 1-2) and
further develop a sustainable portfolio based on SDG
criteria.
•
Continued effort to achieve our waste reduction and recy-
cling target so that we can make a responsible and
demonstrable contribution to the circular economy.
•
More information is included in the Being responsible and
sustainability impact section.
GOVERNANCE
| TKH GROUP ANNUAL REPORT 202178
(RAW) MATERIALS & COMPONENTS
The fact that important raw materials such as copper, steel
and plastics, and technical (electronical) components have
long delivery times or are unavailable or only available in
limited quantities, and the limited availability of energy, puts
pressure on profit margins.
Our specific risk mitigation measures:
•
Increase of our stock of critical raw materials and compo-
nents.
•
Redesign products to increase the use of alternative mate-
rials and components with better availability.
•
Use alternative suppliers.
•
Align terms and conditions in purchase and sales
contracts.
•
Optimize (regional) portfolio and local manufacturing foot-
print.
•
Launch cooperation programs between operating compa-
nies to discuss developments, trends, and risks.
•
Ensure that developments, including stock positions and
purchase conditions concerning important raw materials
and components, are frequently discussed between the
Executive Board and local management.
FINANCIAL AND REPORTING
Specific risk mitigating measures for raw material prices
related to copper:
•
The copper positions of each operating company are
monitored for the economic stock positions, stock prices,
rate of turnover and expected relationship between copper
prices and selling prices (price elasticity).
•
Copper price developments are incorporated to the extent
possible in the selling price of products and/or services or
where possible temporarily hedged on the futures market.
•
Every month copper price developments, economic stock
positions and hedges are discussed by a committee
consisting of members from various disciplines and
chaired by TKH’s CFO.
•
Derivatives are used to a limited extent to hedge the price
risk on free inventories.
•
Important raw materials such as copper are purchased
forward to eliminate price risks on the sale of finished
products, if:
•
a sales contract is concluded at a fixed price;
•
delivery does not take place within one month; and
•
a significant amount of raw material is needed for the
production.
REPORTING
The risk that TKH’s financial and non-financial reporting
contains material errors. These reporting risks mainly relate to
the following material items in the financial statements:
•
Turnover – time of recognition of turnover.
•
Goodwill – valuation and impairment testing.
•
Development costs – valuation and impairment testing.
•
Inventory – valuation and provision.
•
Contract assets and liabilities – valuation and provision.
•
Non-financial KPIs.
Our specific risk mitigation measures:
•
Internal procedures and guidelines for internal and external
financial reporting and verification of reports.
CURRENCIES
Volatility of currencies which puts pressure on profit margins.
Our specific risk mitigation measures:
•
A treasury Statute that establishes a currency risk
management approach, including responsibilities, authori-
zations, and reports.
•
Material exchange rate risks are hedged in accordance
with the Treasury Statute if these risks cannot be passed
on in the market.
•
Exchange rate risk that arises from the translation of net
investments into currencies other than euro is partly
hedged for the most important currencies by financing
investments in the local currency. Monetary assets and
liabilities in the same currency are netted as much as
possible.
•
Time differences between the settlement of forward trans-
actions and sales and purchase contracts are overcome
by using foreign currency bank accounts or by rolling over
forward contracts.
COST INFLATION
Inflation of costs including (volatility of) raw material prices,
components and labor costs puts pressure on profit margins.
Our specific risk mitigation measures:
•
Frequent adjustment of market price-lists when applicable.
•
Redesign of products to use alternative materials and
components with better prices.
•
Optimization of (regional) portfolio and local manufacturing
footprint to match labor costs developments.
•
Operational excellence programs to increase labor effi-
ciency.
•
Energy saving and efficiency programs and elimination of
(part of) price risks via medium-term energy contracts.
•
Using different way of transportation to optimize transport
efficiency and costs.
GOVERNANCE
79 TKH GROUP ANNUAL REPORT 2021 |
•
Sustainability Reporting Manual.
•
TKH has drawn up guidelines containing requirements
regarding the capitalization of development costs.
•
Controller meetings are regularly organized during which
important reporting topics are being discussed.
•
Training and education of (financial) staff.
•
The performance of regular impairment testing, including
the annual strategic plans.
•
Deployment of business intelligence tools to gain insight
into risks at an early stage.
•
Representation letter and in-control statement for each
operating company.
•
The Internal Audit Department performs financial audits
and internal audits on non-financial information.
COMPLIANCE
LEGAL & REGULATORY
Non-compliance due to violation of legislation and regulations
- including internal guidelines - can result in damage.
Examples include:
•
Unfair competition, violation of export regulations, and
sanction programs that can lead to significant penalties
and reputational damage.
•
Global business and use of agents who may expose TKH
to local bribery and corruption risks.
•
Undesirable or unethical conduct of employees that leads
to fraud-related matters.
•
Violation of human rights and child labor rules.
Our specific risk mitigation measures:
•
Internal guidelines include internal control measures,
responsibilities and authorization requirements of the
management.
•
Internal guidelines regarding compliance with sanction and
export regulations, including a checklist.
•
Monitoring of financial flows by TKH in part by monitoring:
•
the transactions monitored through the central treasury
system;
•
the establishment of banking authorizations; and
•
the setting of credit limits for each operating company,
with no local credits being permitted with banks outside
of TKH’s banking group, unless TKH has granted
permission for this.
•
The use of banks prescribed by TKH unless another bank
is required at the local level because only a local bank is
able to perform the required service.
•
Durin
g controller meetings and the international manage-
ment meeting attention is paid to the issues of fraud,
corruption, and bribery by means of theory and case
studies.
•
The work with agents and intermediaries is framed by
guidelines and contracts.
•
By means of the TKH code of conduct, all our employees
are aware that they should follow our business ethics, and
confirm this by signing this code of conduct.
•
Employees can report suspicious of misconduct through a
whistleblower policy. Such notifications have no conse-
quences for the position of the reporter, provided they
follow the procedure drawn up for this purpose. External
parties can also report to the Group Compliance Officer.
•
In all layers of our company, compliance with internal
guidelines relating to integrity and behavior is strictly moni-
tored (zero tolerance).
•
Increase the internal legal skills and capacity.
•
The Internal Audit Department performs internal audits on
non-financial information, including supplier assessments.
TAX
TKH is exposed to tax risks which could result in double
taxation, penalties and interest payments. The source of the
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 deliveries
of goods and services, tax risks related to acquisitions and
divestments, tax risks related to permanent establishments,
tax risks relating to tax loss, interest and tax credits carried
forward, and potential changes in tax law that could result in
higher tax expenses and payments. The risks may have a
significant impact on local financial tax results, which, in turn,
could adversely affect TKH’s financial position and results.
Our specific risk mitigation measures:
•
Ce
ntralized monitoring of compliance and developments in
(new) legislation and regulations in field of tax (both
national and international), sanction regulations and general
legal developments, with attention to specific risks in the
areas of transfer pricing, permanent establishment and VAT.
•
Availability and development of transfer pricing documen-
tation in accordance with OECD guidelines as well as
compliance with local regulations.
GOVERNANCE
| TKH GROUP ANNUAL REPORT 202180
•
Periodic monitoring of the financial performance of
operating companies in accordance with the transfer
pricing documentation.
•
Developing good relations with tax authorities based on
mutual respect, transparency and trust. In the
Netherlands, a “horizontal monitoring covenant” has been
agreed with the Dutch Tax Administration in this context.
•
Make use of external (tax) advisors for specialized
subjects.
•
Rollout and update of a Tax Control Framework.
•
Tax reports, including standardized tax reporting packages
for determining the tax position, which are also used for
determining the tax position in the financial statements as
well as “country-by-country” reporting.
•
During internal trainings, theory and case studies are used
to address tax issues (including custom) as well as tax
dilemmas.
OTHER RISKS
In addition to the aforementioned most important risks, we
have identified other risks that are also included in TKH’s
internal risk management system. This includes the following
risks:
STRATEGIC
•
Limited market share and brand awareness in a number of
segments and geographical markets.
•
Dependence on government measures in some markets.
•
Dependence upon customers and suppliers in a number of
segments.
OPERATIONAL
•
Disasters in production facilities.
FINANCIAL AND REPORTING
•
Infringement of IP rights of and by third parties.
•
Inadequate funding.
•
Interest rate volatility.
QUANTIFICATION OF RISKS AND SENSITIVITY
ANALYSIS
For the most important risks, we have qualified, where
possible, the impact on the result and financial position of
TKH should these risks occur. A sensitivity analysis is also
included. The financial statements, including in note 21,
outline TKH’s objectives and policy regarding the use of
financial instruments for risk management, also in the context
of hedging risks associated with all major types of transac-
tions to which TKH is exposed, related to capital, liquidity,
interest, currency, credit, and price risks.
CHANGE IMPACT ON ASSUMPTIONS RELATES TO RISK
Turnover 1% € 7.4 million EBITA No adjustment of operating costs 1, 2, 3, 4, 10, 11
Raw material price
copper
10% € 1.0 million EBITA No derivatives to hedge price risks
1
1
Gross margin 1% € 15.2 million EBITA No adjustments of operating costs 1, 2, 3, 4, 10, 11
Operating
costs 1% € 6.0 million EBITA No adjustment of turnover/gross
margin
Operational and
financial risks
Currencies – financial
instruments
10% € 6.6 million Result before tax All other variables remain constant
1
0
Currencies – financial
instruments
10% € 25.5 million Group equity All other variables remain constant 10
Interest 1% € 2.6 million Result before tax Net bank debt including deduction of
interest rate swaps held at variable
interest rates
Financial risks
Interest – financial
instruments
1% € 0.3 million Group equity Based on concluded interest rate
swaps
Financial risks
GOING CONCERN AND PROSPECTS
We have prepared a budget that includes projections of cash
flows and liquidity requirements for the coming year. This
forecast takes into account current market conditions,
possible changes in results based on these conditions,
including COVID-19, as well as our ability to adjust our cost
structure as a result of changing economic conditions and
turnover levels. Our budget also takes into account the total
available cash and cash equivalents of € 100.1 million as at
December 31, 2021, the possibility of renewing financing
agreements and attracting additional financing, and whether
we operate within the financial ratio agreed with the banks
in the covenant. On this basis, we believe that our available
funds at the end of 2021 will be sufficient to finance our
activities, investments, and existing contractual obligations
for at least the next twelve months.
QUANTIFICATION OF RISKS AND SENSITIVITY ANALYSIS
GOVERNANCE
81 TKH GROUP ANNUAL REPORT 2021 |
During the year under review, our Internal Audit Department
assessed the administrative organization and internal control
systems of TKH and its associated businesses, with a focus
on some of the most important risks and current themes.
Improvements were identified where non-material short-
comings in the administrative organization and internal control
were observed. The Director of Internal Audit discussed
the
results of these audits with the Executive Board and reported
the main findings to the Audit Committee. The activities did
not result in any material findings at group level with regard
to the administrative organization and level of internal control.
Based on the financial results for the 2021 reporting year
and the expectations for the 2022 reporting year, the
Executive Board has assessed the company’s going concern
assumption. Current market conditions, as well as the
possibility of continued impact from COVID-19, have been
taken into account. The Executive Board has also assessed
the strategic, operational, financial, and reporting and
compliance risks, as well as the design and effectiveness of
the internal risk management and control systems, as
described in the Risk Management section of this report.
An explanation of the non-financial information in accordance
with the Decree on the Disclosure of Non-Financial Information
and articles 135b and 145(2) (Book 2 of the Dutch Civil Code),
can be found in the management report in the sections on the
Report of the Executive Board, Remuneration Report, Risk
Management, Corporate Governance, and Report of the
Supervisory Board.
The effectiveness and performance of the internal risk
management and control systems are discussed each year
with the Audit Committee and the Supervisory Board. Taking
into account the aforementioned risks and measures designed
to manage them, and in accordance with the best practice
provision I.4.3. of the Dutch Corporate Governance Code, the
Executive Board declares that to the best of its knowledge:
i.
the report provides sufficient insight into any shortcomings
in the operation of the internal risk management and
control systems;
ii.
the aforementioned systems provide reasonable
assurance that the financial reporting does not contain any
errors of material importance;
iii.
the current situation justifies financial reporting on a going
concern basis, and
iv.
the report contains the material risks and uncertainties that
are relevant to the expectation of the company’s continuity
for a period of twelve months after the preparation of the
report.
With reference to Section 5.25c(2c) of the Financial
Supervision Act (Wft), the Executive Board declares that to
the best of its knowledge:
•
the financial statements provide a true and fair view of the
assets, liabilities, financial position, and profit of TKH and
the companies included in the consolidation;
•
the management report gives a true and fair view of the
situation on December 31, 2021, the state of affairs at TKH
and its affiliated companies during 2021 (the details of
which are presented in the financial statements), and that
the management report describes the fundamental risks
facing the company.
Haaksbergen, the Netherlands, March 7, 2022
J.M.A. van der Lof MBA, Chief Executive Officer
E.D.H. de Lange MBA, Chief Financial Officer
H.J. Voortman MSc, member of the Executive Board
GOVERNANCE
MANAGEMENT STATEMENT
The Executive Board is responsible for the design and effectiveness of the internal systems for risk management and control.
The purpose of these systems is to identify and effectively manage the most significant risks that the company is exposed to.
However, the Board cannot provide an absolute guarantee that the group will achieve its objectives, nor can it entirely prevent
major errors or losses, incidents of fraud, or other actions in breach of laws and regulations.
| TKH GROUP ANNUAL REPORT 202182
DISCLOSURE OF OWNERSHIP AND EQUITY
INTERESTS
In accordance with the requirements governing the disclosure
of ownership and equity interests, any interest in a company's
issued share capital of 3% or more must be reported to the
Netherlands Authority for the Financial Markets (AFM). Based
on the AFM register “Substantial subsidiaries and gross short
positions” (Substantiële deelnemingen en bruto shortposi-
ties), the following investors (holding an interest of 3% or
OPTIONS ON SHARES
The options on shares in the TKH Group (ticker symbol: TKG)
are listed on NYSE Liffe, the European derivatives business of
Euronext. The options expire on the third Friday of the
contract month and their initial term is one to nine months.
Each option represents 100 TKH shares.
TKH’S SHARE STRUCTURE
Excluding registered shares, ordinary shares in the company
are transferred by notarial deed to Stichting Administratie-
kantoor TKH Group (“TKH Trust Foundation Office”). In
exchange for these shares, TKH Trust Foundation Office
issues depositary receipts of shares. The voting rights to the
shares are vested in TKH Trust Foundation Office. If they
request to do so, TKH Trust Foundation Office authorizes the
depositary shareholders to cast a vote to the exclusion of
TKH Trust Foundation Office, based on the shares for which
the holder has depositary receipts in the General Meeting
specified in the relevant proxy. The authorization is not
restricted and is therefore not subject to any conversion limit.
Under the terms of Section 2:118a of the Dutch Civil Code,
TKH Trust Foundation Office is not required to issue a proxy
and may revoke one. The protection afforded by the use of
depositary receipts is based on the 1% rule. The depositary
receipts may be exchanged for ordinary shares, but not for
more than 1% of the total issued capital in the form of ordi-
nary shares. This total includes shares owned directly as well
as indirectly. Priority shares are managed by the foundation,
Stichting Prioriteit, which comprises the company’s Executive
Board members. The foundation may not alienate, pledge or
otherwise encumber shares. No special rights have been
assigned to priority shares. By means of a call option TKH
has conferred on Stichting Continuïteit the right to acquire
cumulative protective preference shares in TKH, subject to a
maximum of 50% of the amount of the total shares
outstanding at the time of placement of the protective shares
or 100% where the limitation on conversion of depositary
receipts ceases to apply.
At the end of 2021, the company's issued share capital
amounted to 42,198,429 ordinary shares, issued at a nominal
value of € 0.25, of which depositary receipts have been
issued for 42,086,217, and registered shares for 112,212.
In addition, 4,000 prioirity shares are issued with a nominal
value of € 1.00. The number of depositary receipts for shares
has decreased by 624,648 compared to December 31, 2020
due to the cancellation of 623,334 ordinary shares and
conversion of on balance 1,314 depositary receipts for shares
into ordinary shares. At the end of 2021, the company held
1,020,885 (depositary receipts of) shares. Further information
on the capital structure of TKH is included in note 7 of the
company’s financial statements. This information is part of
the management report by means of a reference. The divi-
dends for 2021 were issued to the holders of (depositary
receipts of) shares in cash.
The following key figures per ordinary share (or depositary
receipt issued for same) apply in relation to the listing on
Euronext Amsterdam.
GOVERNANCE
TKH SHARES
TKH's shares are listed on and admitted to the trade on the Euronext Amsterdam stock exchange, with the ticker
symbol TWEKA. They have been assigned to the mid-cap index (AMX). In addition, TKH shares are also listed in the
Next 150 Index, established by Euronext.
83 TKH GROUP ANNUAL REPORT 2021 |
GOVERNANCE
DIVIDEND POLICY
TKH aims for an attractive r
eturn for its shareholders, which is
reflected in an appropriate dividend policy. Healthy balance
sheet ratios are very important to the continuity of the
company. In determining the distributable dividend, TKH takes
into account the amount of profit the company ne
eds to retain
to carry out its medium to long-term plans, while also ensuring
a company solvency of at least 35%. Based on the growth
targets for the coming years, TKH will aim for a pay-out of
between 40% and 70% of the net profit before amortization
and one-off income and expenses attributable to shareholders.
INVESTOR RELATIONS POLICY
TKH's investor relations policy is designed to ensure that
actual and potential shareholders, analysts, and other finan-
cial stakeholders are provided with relevant, strategic, finan-
cial and other material information as accurately, carefully,
and punctually as possible. In this way, we ensure that they
have sufficient insight into our company and the markets in
which we operate, as well as information relating to relevant
FINANCIAL CALENDAR
APRIL 25, 2022 Market Update Q1 2022
APRIL 26, 2022 General Meeting of Shareholders
APRIL 28, 2022
Ex-dividend date
APRIL 29, 2022 Dividend record date
MAY 3, 2022 Payment of dividend
AUGUST 16, 2022 Publication interim results 2022
NOVEMBER 15, 2022 Market Update Q3 2022
2021 2020
Annual turnover of shares 19,200,539 29,848,611
Highest price € 56,15 € 51.30
Lowest price € 37.88 € 23.42
Closing price € 55.50 € 39.54
Net earnings per share € 2.31 € 1.14
Dividend € 1.50 € 1.00
Price-earnings ratio as at the end of the financial year 24.0 34.7
Dividend yield on closing price 2.7% 2.5%
Market capitalization at end of financial year (in € millions) 2,285 1,640
more in TKH) are disclosed. The table above is based on
disclosures until the beginning of 2022.
developments in these areas. We maintain frequent contact
with major and other shareholders, interested institutional
investors, and analysts through roadshows, conferences,
company visits, and one-on-one discussions. Due to the
restrictions that were put in place following the COVID-19
outbreak, part of the Investor Relations discussions took
place virtually. All publications, presentations, meetings, other
announcements (non-financial or otherwise), appointments
and explanations occur subject to the applicable regulations
and guidelines issued by Euronext Amsterdam and the
Netherlands Authority for the Financial Markets (AFM), the
Dutch financial markets regulatory authority. We take care to
ensure that such information is equally and simultaneously
supplied to all stakeholders, and that it is readily accessible.
By means of the annual report, the interim report, webcasting,
the website, and through other financial reporting, we strive
for transparent reporting.
GOVERNANCE
Mandatory disclosing party
Interest Date of last disclosure
Allianz Global Investors GmbH 9.99% 01-15-2021
ASR Nederland NV 5.11% 10-06-2008
Kempen Oranje Participaties NV 3.77% 04-04-2011
Lucerne Capital Management, LLC 5.62% 08-20-2019
Teslin Participaties Coöperatief U.A. 5.01% 07-06-2017
Vinke Amsterdam B.V. 5.84% 05-28-2020
Janus Henderson Group plc 3.01% 02-19-2021
AllianceBernstein L.P. 3.03% 01-20-2022
INVESTOR RELATIONS
J.M.A. van der Lof MBA, Chairman of the Executive Board
E.S. Velderman MBA, Director of Corporate Development
More information about TKH and its operating companies is
available on our website at www.tkhgroup.com.
KEY FIGURES PER ORDINARY SHARE DISCLOSURE OF OWNERSHIP AND EQUITY INTERESTS
SUSTAINABLE PORTFOLIO
SMART VISION SYSTEMS
Wafer inspection 86
Access control 87
FactorySmart 88
SMART MANUFACTURING SYSTEMS
FLEXX 89
Windturbine measurement systems 90
Revolute 91
SMART CONNECTIVITY SYTEMS
SPIC Technology 92
Subsea 93
Special cable Medical systems / Robotics 94
TKH has a strong reputation as an innovator of Smart Technologies,
with which we have been distinctive in growth markets for years. Our tech-
nologies go beyond the latest market trends, and an essential element in
developing our innovative portfolio is sustainability. Being aware of the envi-
ronment starts in the design phase, where the first cornerstones are defined
by selecting the suitable raw materials. TKH provides Smart Technologies
composed to distinguish ourselves on sustainability criteria. Due to intelligent
software, we offer a high degree of installation efficiency and solutions that
automatically signal and monitor business processes. The technologies of
TKH improve efficiency, sustainability, and safety & security.
INNOVATIVE SOLUTIONS
FOR A SUSTAINABLE FUTURE
SUSTAINABLE PORTFOLIO
We substantiate the sustainability of our portfolio and make our contribution
demonstrable by making a clear link with relevant sustainability goals for TKH.
About 70% of our total turnover is linked to one of the selected SDGs. It is not
only about supporting our own purposes, but TKH also supports its key
stakeholders in achieving their sustainability criteria. We immerse ourselves in
what customers, partners, and society expect from us and offer sustainable
solutions with which we want to exceed these expectations. Doing so, we
give a clear direction to the importance of our sustainable portfolio in the
future.
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
GOOD HEALTH
AND WELL-BEING
SMART TECHNOLOGIES
±
70% OF OUR TURNOVER IS LINKED TO ONE OR MORE OF THESE FOUR SDGs
SMART
MANUFACTURING SYSTEMS
SMART
CONNECTIVITY SYSTEMS
SMART
VISION SYSTEMS
INDUSTRY, INNOVATION
AND INFRASTRUCTURE
SUSTAINABLE CITIES
AND COMMUNITIES
INDUSTRY, INNOVATIO
N
AND INFRASTRUCTURE
AFFORDABLE AND
CLEAN ENERGY
85 TKH GROUP ANNUAL REPORT 2021 |
| TKH GROUP ANNUAL REPORT 202186
SEMICONDUCTOR
WAFER INSPECTION
TECHNOLOGY
Vision inspection technology for semiconductor
wafer surface
The production of wafers is a complex process where a high
yield is important to enable the efficient use of materials and
energy. For improving sustainable value creation and optimi
-
zing yield through the early detection of defects, it is essential
that customers improve their manufacturing process.
The detection of different kinds of defects on the wafer, like
cracks, scratches, chipping, saw lines, foreign particles, and
more, requires optical inspection at several steps in the pro
-
duction process using high-resolution cameras and different
lights.
TKH’s innovative Vision inspection technology combines high-
speed line scan cameras and precisely adjusted light modules
in a turnkey system. A smart control system enables the captu
-
ring of up to four different images in one pass by switching
between the lights during image acquisition. This combination
of perfectly aligned camera, light modules, and smart flash
technology allows for simultaneous recording of various wafer
surface characteristics to detect even the smallest defects. In
addition, the performance of our Machine Vision technology
enables 100% inspection and consistent high-quality perfor
-
CHALLENGE
Need for a high-resolution camera system covering a wide
field of view to detect the smallest defects, both for highly
efficient quality assurance and to reduce waste.
SOLUTION
Application-specific line scan camera system with smart
flash technology
to
capture wafer surface characteristics
highly efficiently, with one system.
IMPACT
Line scan cameras in combination with smart flash
technology result in different images taken in one pass,
showing even the smallest defects in the resulting images.
The perfectly aligned modules and smart control of camera
and light enable more efficient use of resources, and make
the inspection process quicker and more efficient.
mance. Production issues can be detected earlier, which ena-
bles the reduction of waste. Combining various inspection
techniques, e.g. brightfield and darkfield illumination simulta
-
neously, also results in reduced resource consumption.
Benefits of TKH’s Vision inspection technology:
•
100% inspection
•
Improved efficiency
•
Continuous high-quality performance
•
Reduced resource consumption
•
Lower operating expenses
SMART VISION SYSTEMS
INDUSTRY, INNOVATIO
N
AND INFRASTRUCTURE
87 TKH GROUP ANNUAL REPORT 2021 |
ACCESS VERIFICATION
AND PREVENTION WITH
INTERCOM INTEGRATION
Scanning, mask detection and Intercom work seamlessly
together to protect staff, customers and visitors
As a result of the COVID-19 response measures imposed over
the last two years, access to different territories, buildings, and
transportation worldwide was significantly disrupted. In many
countries, it was mandatory to confirm that people were wea
-
ring a face mask, check body temperature, or verify the status
of a person’s COVID-19 vaccination certificate when monito
-
ring access to buildings and certain other locations. Often, the-
se kinds of verifications require additional staff resources,
which is neither efficient nor safe from the perspective of hygie
-
ne and data privacy.
To respond to these market conditions, TKH created Vision ac
-
cess prevention and verification technology to provide fully au-
tomated monitoring of compliance with the above-mentioned
regulations.
Benefits of TKH’s Vision access technology:
•
Reliable detection within seconds
•
P
eople who pass all checks are granted access automatically
•
Audio/video user interface with Intercom functionality for
information or guidance, in case of non-compliance
SMART VISION SYSTEMS
•
C
ontact surfaces (i.e. touch screen) easy to clean and disinfect
•
Increased safety and compliance, including data protection,
e.g. GDPR
When questions arise at entrance points, further communicati
-
on may be required. This is where integration with TKH techno-
logy brings huge benefits. If support is requested by the visitor,
the situation can be resolved with an explanation. Alternatively,
staff can be directed to the door, gate, or barrier in question.
The Intercom system will also allow visitors to call reception
and ask for directions.
TKH Vision access technology includes an IP-based query
terminal with a thin-film-transistor touch screen for user inter-
action and video display. In daily operation, each visitor who
arrives at the terminal will be presented with a step-by-step
operating guide for accessing the location in accordance with
the applicable regulations. The solution is simple and easy to
use, both indoors and outdoors, and even includes the possibi
-
lity of mobile Intercom terminals to allow for flexible placement.
GOOD HEALTH
AND WELL-BEING
CHALLENGE
Need for access prevention and verification solutions with
Intercom integration, and fully automated monitoring of
compliance with COVID certificate, face mask, and body
temperature requirements.
SOLUTION
All processes are automatically controlled and documented
by a con
nec
ted controller. If required, a digital DSG-
VO-compliant verification list is created, which the system
operator can later use to prove compliance with its
obligations.
IMPACT
These solutions help to make cities and other living spaces
inclusive, safe, and resilient, especially in relation to
COVID-19 response measures, by enabling reliable access
verification and risk mitigation through technical solutions
and support.
| TKH GROUP ANNUAL REPORT 202188
SMART VISION SYSTEMS
INDUSTRY, INNOVATIO
N
AND INFRASTRUCTURE
FACTORYSMART
®
AI VISION
SOLUTIONS
AI Vision technology for automating and
optimizing food production
Many large-scale manufacturing processes benefit from incre-
ased sustainability through innovation and automation with 3D
Vision and AI technology systems. TKH’s FactorySmart
®
AI So-
lutions addresses the need for sustainable value creation with a
tailored approach.
For example, most manual food processing, sorting, grading,
and handling tasks can be automated using AI Vision-based in
-
spection. Since individual food products can have many variati-
ons, the Vision system never sees the exact same item twice.
Whereas rules-based computer vision requires reliable and re
-
peatable features that don’t exist in organic material, AI-based
methods thrive on high product variability and can adapt to the
most challenging food automation and inspection applications.
We apply our specialized knowledge of deep learning models,
pre-and post-processing, and AI infrastructure to develop and
deploy a custom AI solution.
As part of this full-service process, TKH works with the custo
-
mer to implement a highly reliable and accurate vision system
that communicates decisions to a programmable logic control
-
ler, or logic controller on the customer’s production line. TKH
provides the user interface for the factory staff, as well as
access to a remote dashboard service that provides system
telemetry and health data.
FactorySmart® AI provides turnkey visual inspection solutions
that deliver higher product yield, reduced rejects and field
returns (for optimal price per pound), minimized operating
expense, and reduced food wastage. They can also reduce
pandemic (COVID-19) infection risk in the production facility by
minimizing the need for on-premises human contact. The result
is highly accurate and reliable automated defect detection, clas
-
sification, and grading applications that do not require the
customer to invest in engineering expertise, training servers, or
system maintenance.
Benefits of FactorySmart AI:
•
>99% accuracy
•
10x increase in yield
•
Reduction in food waste
•
10x increase in efficiency
•
>40% reduction in operating expenses
CHALLENGE
Need for achieving sustainable automated food processing
that increases yields and improves quality.
SOLUTION
FactorySmart
®
AI provides a turnkey solution including data
collection
, pip
eline development and training, user interface
design, and factory communication to leverage the power
of AI in a production environment. Once deployed, cloud
connectivity allows ongoing optimization and maintenance
of the system to ensure the return on investment is fully
realized.
IMPACT
Smart Technology that allows for innovative, resilient
automated systems that reliably outperform standard food
production systems or human operators, increasing the
production yield as well as the quality and safety of the end
product. Food waste is reduced through both the
increased yield of the production process and the
reduced possibility for recall through higher quality
enforcement.
89 TKH GROUP ANNUAL REPORT 2021 |
THE NEW APPROACH
TO BREAKER MATERIAL
FOR TIRES
Innovative breaker technology, leading to lower
energy use, higher speed and better quality
Tires are built from “breaker” material, which combines a rub-
ber-based compound (meticulously developed to achieve spe-
cific performance criteria), and a fine wire mesh, normally
produced by a calender machine. This is energy-intensive: the
rubber compound must be melted under intense heat, forced
onto the wire, filled under pressure, and then cooled. It is also
dirty, with extremely poor air quality around the machinery.
The material is normally produced in two stages: first by
making the combined rubber/mesh material, and second by
transferring this to a breaker cutting machine, where it is cut to
the right width and angle, then wound onto a roll for use in
tire-building machines.
FLEXX uses a completely new technology, which combines the
calender and cutting machines in one. Wire is fed directly into
the rubber extruder and comes out already embedded in the
compound. This leads to substantial improvements in environ
-
mental and economic performance.
SMART MANUFACTURING SYSTEMS
Benefit of TKH’s Smart Manufacturing technology:
•
Energy savings of at least 25%
•
Highly efficient
•
Near-elimination of air pollution
•
Significant reduction in operating expenses
•
Reduced material requirements, with up to 50% waste re-
duction and further savings achieved by producing thinner
breaker material
Material saving could be the greatest sustainability benefit of
all. First, the greater precision of FLEXX integrated extrusion
allows for reduced rubber thickness while still fully covering the
wire mesh. This also cuts tire weight and rolling resistance.
Second, because material extruded by FLEXX is in 400 mm
lengths, rather than the 1 to 1.2-meter length normal for calen
-
der-generated material, there is much less wastage when
moving from one tire specification to another.
Thanks to FLEXX, manufacturers can deliver short product runs
at no higher cost than large runs. That means this technology is
excellent for the environment, profitability, and long-term sus
-
tainability in business operations.
INDUSTRY, INNOVATIO
N
AND INFRASTRUCTURE
CHALLENGE
Need for more flexible and cost-effective production, with
lower energy costs and less pollution.
SOLUTION
Combi
ned
compound and wire extrusion and cutting,
removing the need for separate calender line, cutting
energy usage, and enabling a faster change of specification
at no extra cost.
IMPACT
Moving from traditional production methods to a more
streamlined, integrated process reduces energy costs by
around 25%, cuts air pollution almost to zero, and cuts
waste by up to 50%. Tire manufacturers can now make
short production runs at low cost, more flexibly adapt to
market demands, and significantly reduce carbon impact,
making their business more sustainable for the environment
and shareholders alike.
| TKH GROUP ANNUAL REPORT 202190
WIND TURBINE
MEASUREMENT
TECHNOLOGY
Advanced measurement systems for
wind turbine testing & optimization
The current energy transition is helping to pave the way to a
climate-neutral future. Wind energy, in particular, plays an key
role in generating sustainable energy, and it is expected that its
contribution will significantly grow in the years to come.
Rigorous tests and inherent optimization are therefore essential
to increasing the viability of sustainable wind energy generation.
TKH creates data acquisition systems, engineered for testing
and analysis, to improve wind turbines and overall wind park
performance. The measurement systems can simultaneously
acquire data from the nacelle (a cover housing that house all of
the generating components in a wind turbine) and on the
ground. The technology analyzes electrical, mechanical, and
environmental parameters to reduce downtime, optimize main
-
tenance processes, and improve systems efficiency. In addition,
the failure rate in harsh environments can be reduced by 47%,
using acquired data for the early detection of failures.
It is also important that manufacturers and operators ensure the
safety, reliability, and activity of wind parks and turbines, at the
same time as optimizing wind park performance; continuous
SMART MANUFACTURING SYSTEMS
AFFORDABLE AND
CLEAN ENERGY
measurement and analysis systems are vital to this. TKH tech-
nology systems can measure parameters such as apparent
versus active power, strain, vibration, wind force, wind direction,
and temperature. Monitoring and analyzing these kinds of
parameters leads to informed decision-making – based on
actual data and dashboards – that helps to ensure safer, more
efficient and more reliable wind farms.
Thanks to advanced measurement technology, constant
measurements and analyses, wind turbines can achieve maxi
-
mum performance with minimum investment.
Benefit of TKH’s advanced system measurement technology:
•
Early detection of potential failures
•
5–10% increase in life cycle
•
Significant reduction of failure rate (more than 40%)
•
Improved performance output of up to 5%
•
Significant reduction in operating expenses
•
Improved safety and reliability
CHALLENGE
All wind farm operators face extensive technical, logistical,
and economic challenges. Achieving a difference of just 1% in
the overall performance of wind turbines can make a decisive
difference between profit or loss, success or failure. Therefo-
re, there is a need for high-performing measurement systems.
SOLUTION
Installing advanced measurement systems, both in the nacelle
and on the ground, to capture key data insights including
electrical, mechanical, and environmental parameters to
measure performance and predict required maintenance.
IMPACT
The measurement technology improves the performance
output of wind turbines by up to 5% and contributes to
the long-term viability of generating affordable wind energy
(increasing the life cycle of wind turbines up to between
5 and 10%). In addition, by using the measurement
technology, wind farm operators can significantly
improve the efficiency, reliability, and safety of wind
turbines and parks.
REVOLUTE: RETHINKING
THE BEAD APEX
PROCESS
Unique machine design delivers
sustainability and efficiency combined
The Apex is a triangular section of compound above the
steel-reinforced bead, providing a cushion for the components
wrapped around the bead. The Bead Apex is critically impor
-
tant, and the process for creating the perfect Bead Apex is the
key to consistent, reliable tire performance.
TKH’s new Revolute machine redefines the process for Bead
Apex production and delivers enhanced sustainability perfor
-
mance. The Revolute’s ground-breaking design ensures a bet-
ter balance in speed and volume between the extruder, buffer,
and assembler. Moreover, the Revolute is easy to use and redu
-
ces machine downtime, since tooling changes are high-speed
and fully automated. Production cycle time is shorter, which,
combined with a long festoon buffer, enables continuous out
-
put, and eliminates the traditional “stop-start” approach.
Benefit of TKH’s Smart Manufacturing technology:
•
Lower power consumption for each bead produced, due to:
•
Reduced air consumption, since the Revolute uses servo
actuators, not pneumatic cylinders
•
The removal of the start-stop process, enabled by the Re-
volute’s single high-volume extruder (which works conti-
SMART MANUFACTURING SYSTEMS
nuously). The Revolute thus uses less energy for each
item produced, with higher efficiency and lower emissi
-
ons
•
Increased productivity and double throughput from a single
extruder
•
The Revolute’s innovative design cuts scrap by:
•
Using a vertical rather than a flat drum, which removes
the need to cut and scrap a triangular piece of material
from each Bead Apex produced
•
Delivering consistently higher-quality output than traditio-
nal machines, reducing rework and scrap
•
Reliable production with lower downtime and reduced need
for manual intervention
The Revolute helps customers improve quality and broadens
their design options. For example, it enables the use of com
-
pounds that are too hard for traditional machines, so that
customers are able to use compounds that reduce rolling re
-
sistance and improve sustainability performance. The Revolute
also includes additional quality monitoring systems, reducing
quality problems in tire building downstream.
INDUSTRY, INNOVATIO
N
AND INFRASTRUCTURE
CHALLENGE
Need for faster, more reliable production, with less
downtime and scrap.
SOLUTION
New design approach that doubles the throughput from a
single, high-performance extruder, using a vertical drum to
reduce waste, enabling
a
wider variety of compounds to be
handled, cutting energy use, and improving quality.
IMPACT
Increased productivity, with lower downtime and reduced
need for manual intervention. Energy consumption is
reduced, and scrap associated with traditional production
is eliminated. A wider range of compounds can be used,
leading to tires with better environmental characteristics,
while the entire process is more sustainable than before.
91 TKH GROUP ANNUAL REPORT 2021 |
| TKH GROUP ANNUAL REPORT 202192
SMART PASSIVE
INFRASTRUCTURE
CONTROL
Making essential unmanned connectivity infra-
structures more secure with intelligent technology
SMART CONNECTIVITY SYSTEMS
INDUSTRY, INNOVATIO
N
AND INFRASTRUCTURE
The exponential growth of various digitalized and connected
products, communicating over fiber-optic networks, necessi
-
tates high-speed bandwidth, data traffic, network automation,
and unmanned network management systems supervision. In
Europe alone, hundreds of thousands of passive cabinets re
-
quire supervision and service, to secure high-quality connecti-
vity networks.
Managing unmanned locations in critical environments, such
as Telecom and Utility services, leads to complexity and high
cost. Multiple network providers often use the same cabinets
and, as a result, various operators have access to these un
-
manned passive network management locations. This leads to
critical situations, as there is a lack of ownership and monito
-
ring. In addition, it is inefficient, time-consuming, and unsustai-
nable.
TKH’s innovative Smart Passive Infrastructure Control (SPIC)
technology makes it possible to manage and monitor passive
network management systems efficiently and securely. The
SPIC technology includes remote access control, including
logs and sensors, to measure tilt and temperatures. All these
can be checked, managed, and automated remotely, offering
operators and service employees improved reliability, efficien
-
cy, and safety. In addition, the technology can be easily integra-
ted into all types of existing street cabinets.
The SPIC technology improves the efficiency and sustainability
of network supervision since key data is digitalized, and fewer
operators need to travel to the various sites. Control and gran
-
ting access take place digitally and remotely for reliable, effi-
cient, cost-saving, and secured connectivity network manage-
ment.
During the Internet of Thing (IoT )Awards in 2021 in France, TKF
won an award for its SPIC technology.
Benefits of TKH’s Smart Connectivity technology:
•
Improved reliability of connectivity networks
•
Significant reduction in emissions and CO
2
footprint
•
Remote control and monitoring
•
Significant reduction in operating expenses
CHALLENGE
Managing unmanned locations in critical environments,
such as telecom and utility services, is complex and costly.
Real-time supervision must be available to determine the
status of these locations at any time.
SOLUTION
TKH’s Smart Passive Infrastructure Control technology
(SPIC) includes intelligent sensors and monitoring software
to remotely supervise and service passive street cabinets.
IMPACT
By combining street cabinets with intelligent technology,
fewer complications occur, resulting in more reliable
connectivity networks and activity. Moreover, this enables a
cost reduction for operators at the same time as increasing
security. In addition, there is a huge emission reduction for
the operators since less travel is required, resulting in more
sustainable business operations.
93 TKH GROUP ANNUAL REPORT 2021 |
OFFSHORE WIND
FARM CABLE
TECHNOLOGY
Sustainable cable systems for the reliable
distribution of renewable energy
The demand for sustainable energy is increasing, and the
offshore wind sector is growing rapidly. Preventing downtime
and reducing failure costs is one of the key priorities within this
fast-evolving segment, to help reduce risk and improve energy
generation and distribution reliability. Sustainable energy pro
-
duction via offshore wind farms is therefore an important
growth market for TKH’s subsea cable systems.
Our innovative cable systems combine modern cable design,
based on state-of-the-art production technology, and modern
and environmentally friendly materials. Robust subsea cables
are supplied as a total solution, equipped with all necessary
smart accessories and connectors. The unique design reduces
installation failures, as well as installation time, risks, and costs,
while improving durability. The environmentally friendly design
does not use polluting materials like bitumen and lead, so that
it is possible for them to be recycled. Due to the HDPE outer
sheath, there is no chance of materials leaching into the marine
environment. This is true during installation, operation, and
eventual recovery. At the end of its operational life, 99% of the
cable is recyclable to equivalent applications. The TKH R&D
team is working on the partial replacement of fossil-based po
-
SMART CONNECTIVITY SYSTEMS
lymers with recycled chemical polymers to reduce the carbon
footprint of the cable further. In 2021, TKH secured significant
orders for the delivery of subsea cable systems for the Baltic
Eagle offshore wind farm in the German waters of the Baltic
Sea, as well as for the “Hollandse Kust (noord)” and “Hollandse
Kust (west)” wind farms in the North Sea.
Benefit of TKH’s Smart Connectivity technology:
•
Modern cable design using environmentally friendly materials
•
99% of the cable is recyclable to equivalent applications
•
Reduction of installation failures and installation time
•
Cost savings
•
Improved durability
AFFORDABLE AND
CLEAN ENERGY
CHALLENGE
Growing demand for sustainable energy from offshore wind
farms, and the need for reliable and sustainable energy
distribution.
SOLUTION
TKH subsea cable systems for energy distribution from
offshor
e
wind farms
IMPACT
Sustainably generated energy from offshore wind farms is
distributed via sustainable subsea cable systems. In this
way, TKH contributes to the increasing demand for clean,
green energy. Innovative cable specifications are compo-
sed of durable materials. The innovative cable concept is
easy to install and provides the customer with installation
efficiency, cost savings, and a reduction in risk. Green
energy calls for sustainable Smart Connectivity systems.
| TKH GROUP ANNUAL REPORT 202194
CUSTOMIZED INNOVATIVE
AND SUSTAINABLE
MEDICAL CABLE
Small, robust, and highly flexible next-generation
endoscopic camera cable
Hospitals are always looking for innovative treatment methods
that will be more comfortable and safer for their patients. Doc
-
tors use a variety of techniques to operate in the least invasive
way possible, to limit the impact on their patient’s body.
TKH’s advanced Connectivity technology, which is used in, for
example, endoscopic camera cables, makes it possible to
further reduce the cable’s effect on the body due to its unique
design, robustness, and flexibility. Smart Connectivity systems
for medical technology not only have to function reliably, but
also need to made as small as possible to allow minimally inva
-
sive surgeries. To meet these high demands, close cooperation
between our research & development team and our customers
is essential. A highly adapted cable design and structure, com
-
bined with the selection and processability of raw materials,
enables more innovative medical cables with more sustainable
resource use.
Hybrid cables that combine various elements under one cable
sheath have become more important in improving the sustaina
-
bility and efficiency of our social and healthcare systems. The
new generation of endoscopy cables is designed using smart,
SMART CONNECTIVITY SYSTEMS
hybrid cables – including fiber optics for high-resolution
imaging – which adhere the highest medical standards, and
enable resource-efficient production
Benefits of TKH’s Smart Connectivity technology:
•
Reduced risk and impact on the body for patients
•
Improved product life cycle (up to 500 sterilization processes)
•
Adherence to the highest medical hygienic standards
•
Reduction in operating expenses
GOOD HEALTH
AND WELL-BEING
CHALLENGE
The need to develop a new generation of endoscopy cables
with the smallest possible dimensions (and meeting the
highest hygiene standards), which allow for high-resolution
imaging through minimally invasive surgeries.
SOLUTION
The creation of highly flexible hybrid cables that contribute
to minimally
invasive surgery techniques, with fiber optics
and non-sticky jacket m
aterial.
IMPACT
TKH innovative endoscopic cables deliver excellent technical
performance and ensure gentle handling during surgeries,
with the least possible impact on the patient. Special grade
material with a non-sticky-jacket surface reduces dirt and
dust susceptibility. Compared to disposable cables, TKH
endoscopic cables can be easily cleaned through a sterilizing
process – up to 500 times – which creates cost
savings and allows the conservation of esources.
Consolidated statement of profit and loss 96
Consolidated statement of comprehensive income 97
Consolidated balance sheet 98
Consolidated statement of changes in group equity 99
Consolidated cash flow statement 100
Notes to the consolidated financial statements 101
CONSOLIDATED FINANCIAL STATEMENTS
| TKH GROUP ANNUAL REPORT 2021
96
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF PROFIT AND LOSS
in thousands of euros Notes
2021 2020
Total turnover
23
Raw materials, consumables, trade products and subcontracted work 787,253 654,977
Personnel expenses 24 378,267 352,852
Other operating expenses 26 123,526 109,081
Depreciation and result on divestment of property, plant and equipment 27 45,166 43,867
Amortization 28 51,110 53,720
Impairments 29 1,564 3,968
Total operating expenses 1,386,886 1,218,465
Operating result 136,887 70,903
Financial income 31 191 342
Financial expenses 31 -7,799 -8,787
Exchange differences 31 -680 -1,965
Share in result of associates 6 2,074 -3,194
Result on sale of subsidiaries 11 0 5,496
Fair value changes of financial liability for earn-out and put options of holders of non-controlling interests 15 -1,759 120
Result before tax 128,914 62,915
Tax on result 32 33,690 15,389
Net result 95,224 47,526
Attributable to:
Shareholders of the company 95,212 47,520
Non-controlling interests 12 6
Earnings per share attributable to shareholders
33
Ordinary earnings per share (in €) 2.31 1.14
Diluted earnings per share (in €) 2.30 1.14
Earnings per share attributable to shareholders from continued operations
Ordinary earnings per share (in €) continued operations 2.31 1.14
Diluted earnings per share (in €) continued operations 2.30 1.14
Ordinary earnings per share before amortization (in €) continued operations
1
Ordinary earnings per share before amortization and one-off income and expenses (in €) continued operations
1
1 Non IFRS measure.
97
TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
in thousands of euros Notes
2021 2020
Net result 95,224 47,526
Items that may be reclassified subsequently to profit or loss (net of tax)
Currency translation differences 16,883 -14,165
Currency translation differences in associates 917 -303
Effective part of changes in fair value of cash flow hedges (after tax)
1
-870 3,098
Items that will not be reclassified subsequently to profit or loss (net of tax)
Actuarial gains/(losses)
1
17 68 -325
Other comprehensive income (net of tax) 16,998 -11,695
Comprehensive income for the period (net of tax) 112,222 35,831
Attributable to:
Shareholders of the company 112,254 35,865
Non-controlling interests -32 -34
Total comprehensive income for the period (net of tax) 112,222 35,831
1 For the impact of taxes is referred to note 32.
| TKH GROUP ANNUAL REPORT 2021
98
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
in thousands of euros Notes
31-12-2021 31-12-2020
ASSETS
Non-current assets
Intangible assets and goodwill 3 537,062 577,330
Property, plant and equipment 4 222,487 219,900
Right-of-use assets 5 68,797 77,357
Associates 6 28,699 25,540
Other receivables 8 748 1,872
Deferred tax assets 16 15,277 14,322
Total non-current assets 873,070 916,321
Current assets
Inventories 7 294,736 236,714
Trade and other receivables 8 185,318 157,363
Contract assets 9 150,131 124,230
Contract costs 9 4,566 3,314
Current income tax 1,310 1,776
Cash and cash equivalents
1
10 100,135 121,645
Total current assets 736,196 645,042
Assets held for sale 11
Total assets 1,697,450 1,565,957
in thousands of euros Notes
31-12-2021 31-12-2020
EQUITY AND LIABILITIES
Group equity
Shareholders’ equity 12 721,930 661,820
Non-controlling interests 13 53 86
Total group equity
Non-current liabilities
Interest-bearing loans and borrowings 18 333,804 409,508
Deferred tax liabilities 16 55,965 55,061
Retirement benefit obligation 17 4,716 5,844
Other non-current financial liabilities 15 2,160 3,408
Provisions 14 8,772 5,741
Total non-current liabilities
Current liabilities
Interest-bearing loans and borrowings
1
19 47,589 57,143
Trade payables and other payables 20 324,696 258,717
Contract liabilities 9 127,044 73,931
Current income tax liabilities 7,845 11,008
Other financial liabilities 15 4,989 4,542
Provisions 14 20,687 19,148
Total current liabilities 532,850 424,489
Liabilities directly associated with assets
held for sale
11 37,200 0
Total equity and liabilities 1,697,450 1,565,957
1 Including € 32.9 million (2020: € 56.0 million) cash and cash equivalents that are part of cash and interest pools. These cash and cash
equivalents are not netted in the consolidated balance sheet.
99
TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN GROUP EQUITY
in thousands of euros Share capital
Share
premium Legal reserve
Translation
reserve
Cash flow hedge
reserve
Retained
earnings
Unappropriated
profit
Total share-
holders’ equity
Non-controlling
interests
Total group
equity
Balance at 1 January 2020 10,709 85,021 80,428 11,835 -1,179 403,654 114,048 704,516 304 704,820
Net result 47,520 47,520 6 47,526
Total other comprehensive income -14,428 3,098 -325 -11,655 -40 -11,695
Total comprehensive income 0 0 0 -14,428 3,098 -325 47,520 35,865 -34 35,831
Appropriation profit last year 114,048 -114,048 0 0
Capital contribution 5 5 7 12
Dividends -62,566 -62,566 -62,566
Acquisition of non-controlling interests 0 -191 -191
Share and option schemes 2,335 2,335 2,335
Purchased shares for share buy-back program -7,144 -7,144 -7,144
Purchased shares for share and option schemes -12,821 -12,821 -12,821
Sold shares for share and option schemes 1,630 1,630 1,630
Change in legal reserve for participations -198 198 0 0
Capitalized development costs 5,331 -5,331 0 0
Balance at 31 December 2020 10,709 85,021 85,561 -2,593 1,919 433,683 47,520 661,820 86 661,906
Net result 95,212 95,212 12 95,224
Total other comprehensive income 17,844 -870 68 17,042 -44 16,998
Total comprehensive income 0 0 0 17,844 -870 68 95,212 112,254 -32 112,222
Appropriation profit last year 47,520 -47,520 0 0
Dividends -41,126 -41,126 -1 -41,127
Share and option schemes 3,869 3,869 3,869
Purchased shares for share buy-back program -18,428 -18,428 -18,428
Cancellation of shares -155 155 0 0
Purchased shares for share and option schemes -9,214 -9,214 -9,214
Sold shares for share and option schemes 12,755 12,755 12,755
Change in legal reserve for participations 76 -76 0 0
Capitalized development costs 6,905 -6,905 0 0
Balance at 31 December 2021 10,554 85,021 92,542 15,251 1,049 422,301 95,212 721,930 53 721,983
| TKH GROUP ANNUAL REPORT 2021
100
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED CASH FLOW STATEMENT
in thousands of euros Notes
2021 2020
Cash flow from operating activities
Operating result
Depreciation, amortization and impairment
Share and option schemes not resulting in a cash flow
Result on disposals
-72 -1,567
Changes in provisions
Changes in working capital
-3,531 42,504
Cash flow from operations 239,529 216,389
Interest received 192 344
Interest paid -7,655 -9,001
Income taxes paid -33,050 -19,905
Net cash flow from operating activities (A)
Cash flow from investing activities
Investments in intangible assets and goodwill 3 -40,692 -39,562
Divestments of intangible assets and goodwill
Purchases of property, plant and equipment -33,551 -31,097
Disposals of property, plant and equipment 2,545 1,664
Dividends received from associates 31
Repayments on loans 630 94
Divestment of associates -212
Divestments of assets held for sale 11 3,853
Ac
quisition of subsidiaries less cash and cash equivalents
acquired
35 -495 -481
Divest
ment of subsidiaries classified as held-for-sale less
trans-
ferred cash
Net cash flow from investing activities (B) -71,550 -43,996
in thousands of euros Notes
2021 2020
Cash flow from financing activities
Dividends paid
-41,127 -62,566
Settlement of financial liabilities regarding put options of
non-controlling interests and earn-out
15 -4,032 -614
Capital contribution non-controlling interests 12
Acquisition of non-controlling interests
-191
Purchased shares for share buy-back program -18,428
-7,144
Purchased shares for share and option schemes
-9,214 -12,821
Sold shares for share and option schemes
Payment of lease liabilities -15,570 -16,005
(Repayments)/proceeds from long-term debts -71,501 -4,985
(Repayments)/proceeds from other long-term debts 2,782 -513
Change in short-term borrowings 19 15,884 -47,676
Net cash flow from financing activities (C) -128,451 -150,873
Net increase/(decrease) in cash and cash equivalents (A+B+C)
-985 -7,042
Exchange differences 3,388 -3,490
Change in cash and cash equivalents 2,403 -10,532
Cash and cash equivalents at 1 January 65,614 76,146
Cash and cash equivalents at 31 December
1
0
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TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 ACCOUNTING PRINCIPLES
General
The consolidated financial statements of technology firm TKH Group N.V . (hereafter ’TKH’) have
been drawn up in accordance with the International Financial Reporting Standards (‘IFRS’) adopted
by the European Commission and applicable on the accounting period that begun on 1 January
2021. The company financial statements are part of the financial statements of TKH. The financial
statements have been prepared based on the historical cost basis, except for the valuation at fair
value of investment property, derivatives and share-based payments. All transactions in financial
instruments are recognized at transaction date. To the extent that alternative performance measures
are used these are explained in the glossary, which is included in the ‘Other information’. TKH has
been incorporated and domiciled in Haaksbergen , the Netherlands . TKH Group N.V . has its
registered office and factual seat at Spinnerstraat 15, 7481 KJ Haaksbergen in the Netherlands in
the Netherlands and is registered in the trade register under number 06045666.
Going concern
TKH has prepared the financial statements on the basis that it will continue to operate as a going
concern.
Comparative figures
Comparative figures may have been reclassified for comparability purposes, if considered to be
material, the relevant disclosure has been added to the applicable note. A reclassification of € 3.2
million has been made in the comparative figures from ‘Other operating expenses’ to ‘Raw materials
,
consumables, trade products and subcontracted work’
New accounting principles and interpretations
As from 1 January 2021 the following amendments of standards and new interpretations are effective:
•
Interest Rate Benchmark Reform – Phase 2 – Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and
IFRS 16
•
Covid-19-Related Rent Concessions beyond 30 June 2021 – Amendment to IFRS 16 (effective
date 1 April 2021)
The adoption of the amendments and improvements did not have material impact on the financial
statements.
TKH has not opted for an early adoption of the following new standards, amendments to standards
and new IFRIC interpretations, which are mandatory for accounting periods that begin on or after
1 January 2022:
•
Reference to the Conceptual Framework – Amendments to IFRS 3
1
•
Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS 16
1
•
Onerous Contracts – Costs of Fulfilling a Contract – Amendments to IAS 37
1
•
AIP IFRS 1 First-time Adoption of International Financial Reporting Standards – Subsidiary as a
first-time adopter
1
•
AIP IFRS 9 Financial Instruments – Fees in the ’10 per cent’ test for derecognition of financial
liabilities
1
•
AIP IAS 41 Agriculture – Taxation in fair value measurements
1
•
IFRS 17 Insurance Contracts
2
•
Classification of Liabilities as Current or Non-current - Amendments to IAS 1
2
•
Definition of Accounting Estimates - Amendments to IAS 8
2
•
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice Statement 2
2
•
Deferred Tax related to Assets and Liabilities arising from a Single Transaction – Amendments to
IAS 12
2
TKH expects that the adoption of the other new standards and amendments in future periods will
not have a material impact on its financials statements.
Consolidation
The consolidated financial statements include the annual accounts of all subsidiaries over which
TKH has or can exercise control. Control is achieved when TKH is exposed, or has rights, to
variable returns from its involvement with the subsidiary and has the ability to affect those returns
through its power over the subsidiary. A list of consolidated entities is included in the overview of
subsidiaries in ‘Other information’. If facts and circumstances indicate that there are changes to one
or more of the three elements of control, TKH re-assesses whether or not it controls a subsidiary.
Consolidation of a subsidiary begins when TKH obtains control over the subsidiary and ceases
when TKH loses control of the subsidiary.
Profit or loss and each component of other comprehensive income (hereafter ‘OCI’) are attributed
to the shareholders of TKH and to the non-controlling interests, even if this results in the non-
controlling interests having a deficit balance. When necessary, adjustments are made to the
financial statements of subsidiaries to bring their accounting principles in line with TKH’s accounting
1 Effective for financial years starting on or after 1 januari 2022
2 Effective for financial years starting on or after 1 januari 2023
| TKH GROUP ANNUAL REPORT 2021
102
CONSOLIDATED FINANCIAL STATEMENTS
principles. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to
transactions between subsidiaries are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an
equity transaction. If TKH loses control over a subsidiary, it derecognizes the related assets
(including goodwill), liabilities, non-controlling interest and other components of equity, while any
resulting gain or loss is recognized in the statement profit and loss.
Segment reporting
As announced on our Capital Markets Day in November 2021, TKH changed its management
structure as from November 2021 and is now organized along the lines of our three technologies:
Smart Vision systems, Smart Manufacturing systems and Smart Connectivity systems. The internal
and external segment reporting as of November 2021 follows this structure. For these segments,
discrete financial information is available that the Executive Board, the highest operational decision-
makers, evaluates regularly. The Executive Board decides on the allocation of resources and
reviews the performance of the three segments. These performances are reviewed and reported to
the level of operating result. The accounting principles that are applied to these consolidated
financial statements also apply to the business segments. The transaction prices for deliveries
between segments are determined on an arm’s length basis. The results, assets and liabilities of a
segment include both items directly linked to that segment as items that can reasonably and
consistently be allocated to that segment. Besides the information about the operating segments,
selective information by geographic region is disclosed. In the annual report 2021, the ‘Information
per segment’ in note 23 is provided for both the previous segmentation (Telecom, Building and
Industrial Solutions) as the new segmentation (Smart Vision systems, Smart Manufacturing systems
and Smart Connectivity systems). In the overview of ‘Consolidated entities’, as part of the ‘Other
information’, is shown in which of the segments the different subsidiaries operate.
Foreign currencies
The consolidated financial statements are presented in euros, which is also the functional currency
of the holding. Transactions in foreign currencies are translated into the respective functional
currencies of the entities of the group, at the prevailing exchange rate at transaction date. In foreign
currency denominated monetary assets and liabilities at the balance sheet date are translated at the
exchange rate prevailing at that date. The result of the conversion occurring exchange differences
on monetary items, are recorded in the statement of profit and loss.
Assets and liabilities of foreign subsidiaries with a functional currency other than the euro are
translated at the exchange rates prevailing at the balance sheet date. The profit and loss accounts
of foreign subsidiaries are translated using the weighted average monthly exchange rates over the
year under review. Goodwill and fair value adjustments related to the acquisition of a foreign entity
are treated as assets and liabilities of the foreign entity and translated at the exchange rates at the
balance sheet date. The exchange differences arising from the translation are recognized through
OCI as a separate item in equity. Exchange differences recorded through OCI are reclassified to the
statement of profit and loss as part of the result on diposal in the period in which the related entities
are disposed of.
Business combinations
Acquisitions of subsidiaries 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 at fair value and the amount of any non-controlling interests in the acquiree, in
exchange for control of the acquiree. Acquisition related costs are recognized in the statement of
profit and loss as incurred. At the acquisition date, the identifiable assets acquired and the liabilities
assumed are recognized at their fair value, except that:
•
deferred tax assets or liabilities and liabilities or assets related to employee benefit arrangements
are recognized and measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
•
liabilities or equity instruments related to share-based payment arrangements of the acquiree or
share-based payment arrangements of TKH entered into to replace share-based payment
arrangements of the acquiree are measured in accordance with IFRS 2 Share-based Payment at
the acquisition date;
•
assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-
current Assets Held for Sale and Discontinued Operations are measured in accordance with that
standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any
non-controlling interests in the acquiree, and the fair value of the net amounts of the identifiable
assets acquired and the liabilities assumed at acquisition date. If the amount is negative, a badwill
(bargain purchase gain) is recognized immediately as benefit in the statement of profit and loss.
Non-controlling interests are reported separately from the group result and group equity. The
acquisition of an additional ownership interest in a subsidiary without a change of control is
accounted for as an equity transaction. Any excess or deficit of consideration paid over the carrying
amount of the non-controlling interests is recognized in equity of the parent in transactions where
the non-controlling interests are acquired or sold without loss of control. TKH has elected to
recognize this effect in retained earnings. When a non-controlling shareholder has an unconditional
right to sell its shares to TKH according to a contractual agreed formula (’put option’), a liability is
recognized by TKH for the shares to be purchased. The liability is recognized at the present value of
the estimated future cash outflow. A legal reserve is accounted for the interest in the equity of the
subsidiary of which the economic ownership has been obtained, but not yet the legal ownership.
Adjustments after the first recognition on the value of the financial liability for put options and earn-
out payments are recognized directly into the statement of profit and loss.
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TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
Intangible assets and goodwill
Goodwill
Goodwill is capitalized and allocated to cash-generating units. Goodwill is not amortized. Instead,
it is tested at least annually for impairment. Any impairment loss is recognized in the statement of
profit and loss as soon as it occurs and is not reversed in subsequent periods. On sale of a
subsidiary, the goodwill is included in the determination of the profit or loss on a disposal.
Other intangible assets
Expenditure for research is charged to the profit and loss when incurred. Expenditure for
development is capitalized if the following conditions are met:
•
An asset is created that can be identified;
•
It is probable that the asset created will generate future economic benefits; and
•
The development costs can be measured reliably.
Development costs are not capitalized if they are directly reimbursed by third parties and TKH does
not obtain the property rights. Other intangible assets are valued at historical cost less amortization.
The amortization is on a straight-line basis over their expected useful life. The expected useful life is
as follows:
•
Capitalized development costs: 3-7 years
•
Patents, licenses and trademarks: 3-10 years
•
Acquired customer relationships: 7-17 years
•
Acquired brand names: 10-15 years
•
Acquired intellectual property: 5-10 years
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment
losses. Property, plant and equipment are depreciated from the date they are ready for their
intended use. Depending on the type of asset, a residual value of 0 to 10% is taken into account.
The expected useful life is as follows:
•
Buildings: 30-33 years
•
Machinery and installations: 5-15 years
•
Other equipment: 3-10 years
Land is not depreciated. Other equipment includes furniture, IT-hardware and transport equipment.
Right-of-use assets
For new agreements, TKH considers whether the contract is or contains a lease. A lease is
defined as a contract or part of a contract, that conveys the right to use an asset for a period of
time in exchange for consideration.
To apply this definition, TKH assesses whether the contract meets three important criteria, namely:
•
The contract contains an identified asset that is explicitly or implicitly identified in the contract;
•
TKH has the right to obtain substantially all economic benefits from the use of the identified
asset during the period of use, given its rights within the defined scope of the contract; and
•
TKH has the right to use the identified asset throughout the period of use. TKH assesses whether it
has the right to determine how and for what purpose the asset is used during the term of the lease.
At commencement date of the lease, TKH recognizes an asset and a lease liability in the balance
sheet. The right of use is valued at cost, which consists of the initial valuation of the lease
obligation, any initial direct costs incurred by TKH, an estimate of any costs for dismantling and
r
emoving the asset at the end of the lease, and all lease payments made before the commencement
date of the lease (after deduction of received incentives). The Right-of-use assets are amortized on
a straight-line basis from the commencement date of the lease to the first of the end of the useful life
of the right of use or the end of the lease period or over the useful life if the underlying asset is
(expected) to be acquired. TKH assesses the asset for impairment when such indicators exist.
On the commencement date, TKH values the lease obligation at the present value of the lease
payments unpaid on that date, discounted using the interest rate implicit in the lease if it is readily
available or the incremental borrowing rate. Lease payments that are included in the measurement of
the lease obligation consist of fixed payments, variable payments based on changes in an index or
price, amounts that are expected to be paid under a residual value guarantee and payments that arise
from extension options that are reasonably certain to be exercized. After the initial valuation, the
obligation is lowered for payments and increased for interest. The obligation is determined again in
the event of changes in underlying provisions. When the lease obligation is remeasured, the
corresponding adjustment is reflected in the asset or in the result if the asset has already been
reduced to zero. TKH has chosen to apply the exemption for short-term leases and for leasing assets
with a low value. Instead of including a right of use and lease obligation, the payments related to these
are recognized as a charge in the income statement on a straight-line basis over the lease period.
Impairment
At least annually, the company reviews its tangible and intangible non-current assets to determine
whether there are indications that those assets have suffered an impairment loss. If there is any
such indication the recoverable value of the asset is estimated to determine the extent
of the
impairment loss. If the asset does not generate cash itself, the company determines the recoverable
value of the smallest cash-generating unit to which the asset belongs. The recoverable amount is the
fair value less cost of disposal or the value in use, whichever is higher. The value in use is based on
the estimated future cash flows that are discounted to their present value using a pre-tax discount
rate that reflects current market assessments of the time value of money and the risks specific to the
asset. If the recoverable amount of an asset is less than its carrying amount, the
ass
et is written down
| TKH GROUP ANNUAL REPORT 2021
104
CONSOLIDATED FINANCIAL STATEMENTS
to its recoverable amount. An impairment loss is recognized immediately in the statement of profit and
loss. When an impairment loss subsequently reverses, the carrying amount of the asset is increased
to the revised estimate of its recoverable amount, with the exception of goodwill, but never higher
than the carrying amount that would have been determined when no impairment loss has been
recognized. The increase is recognized immediately in the statement of profit and loss.
Associates
The associates in which TKH has significant influence in the financial and operating policy
decisions, but no control or joint control, are valued according to the equity method. Under the
equity method, the share in the profit or loss of the associate is recognized in the statement of profit
and loss, provided that it would not result in negative carrying value of the associate, unless TKH is
obliged to partially or completely compensate losses. The share in the associate is determined
based on TKH’s share in the net assets of the associate, including the paid goodwill at acquisition
and less any impairment loss. Dividend from associates is recognized when the shareholders’ right
to receive payments has been established. Receipt of dividends reduces investments in associates.
Inventories
Inventories are stated at the lower of cost and net recoverable amount. The net recoverable amount
is the estimated sales price in normal course of business less estimated cost of completion and
selling expenses. The cost of raw materials and consumables is based on the average purchase
price and cost incurred in bringing the inventories to their present location and condition. The cost
of semi-manufactured and finished products comprise the direct materials and direct labor costs as
well as a surcharge for the attributable production costs.
Contract assets
A contract asset is the right to consideration in exchange for products or services transferred to the
customer. If TKH performs by transferring products or services to a customer before the customer
pays consideration or before payment is due, a contract asset is recognized for the earned
consideration. Upon completion of the performance obligation and acceptance by the customer, the
amount recognized as contract assets is reclassified to trade receivables.
Contract costs
Capitalized contract costs are systematically amortized over the transfer period of the related
products or services to the customer.
Contract labilities
A contract liability is the obligation to deliver products or services to a customer for which TKH has
received consideration (or an amount of consideration is due) from the customer. If a customer pays
consideration before products or services are delivered to the customer, a contract liability is
recognized. Contract liabilities are recognized as revenue when TKH performs under the contract.
Financial instruments
A financial instrument is any contract that gives rise to a financial asset for an entity and a financial
liability or equity instrument for another entity. Financial assets and financial liabilities are recognized
in the balance sheet when TKH becomes a party in a contract. Financial assets and financial
liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the
acquisition or issuance of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value with recognition of changes in value in the profit and loss) are added
to or deducted from the fair value of the financial assets or financial liabilities upon initial
recognition. Transaction costs that are directly attributable to the acquisition of financial assets or
financial liabilities at fair value with recognition of value changes in the profit and loss are recognized
immediately in the profit and loss. An exception to this relates to trade receivables, which are valued
at the transaction price determined under IFRS 15.
Financial assets
Financial assets are at initial recognition classified in one of three groups for the subsequent
measurement:
•
amortized cost,
•
fair value with change in value through OCI or
•
fair value with change in value through profit or loss.
The classification of a financial asset on initial recognition depends on the contractual cash flow
characteristics and the business model of TKH to manage it. A financial asset can only be classified
and valued at amortized cost or fair value through OCI if it generates cash flows that consist solely
of repayment of principal and interest (‘SPPI’) on the outstanding principal. This assessment is
called the SPPI test and is performed at instrument level. The business model refers to the way in
which TKH manages its financial assets to generate cash flows. The business model determines
whether cash flows arise from the collection of contractual cash flows, the sale of financial assets or
both. Purchases or sales of financial assets that require delivery of assets established by regulation
or convention in the market place (regular way trades) are recognized on the trade date, the date
that TKH commits to purchase or sell the asset. Financial assets at amortized cost are then
measured using the effective interest method (“EIR”) and tested for impairment. Gains and losses
are recognized in the income statement when the asset is no longer recognized, adjusted or written
off. The financial assets at amortized cost mainly comprise trade receivables.
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TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
A financial asset is derecognized when:
•
The rights to receive cash flows from the asset have expired, or;
•
TKH has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a ‘pass-through’
arrangement; and either (a) TKH has transferred substantially all the risks and rewards of the asset,
or (b) TKH has neither transferred nor retained substantially all the risks and rewards of the asset,
but has transferred control of the asset.
When TKH has transferred its rights to receive cash flows from an asset or has entered into a pass-
through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership. When it has neither transferred nor retained substantially all of the risks and rewards of
the asset, nor transferred control of the asset, TKH continues to recognize the transferred asset to
the extent of its continuing involvement. In that case, TKH also recognizes an associated liability.
The transferred asset and the associated liability are measured on a basis that reflects the rights
and obligations that TKH has retained. Continuing involvement that takes the form of a guarantee
over the transferred asset is measured at the lower of the original carrying amount of the asset and
the maximum amount of consideration that TKH could be required to repay.
Impairment of financial assets
TKH recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at
fair value through profit or loss. ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows that TKH expects to receive,
discounted at an approximation of the original effective interest rate. ECLs are recognized in two
stages. For credit exposures for which there has not been a significant increase in credit risk since
initial recognition, ECLs are provided for credit losses that result from default events that are possible
within the next 12-months. For those credit exposures for which there has been a significant increase
in credit risk since initial recognition, a loss allowance is required for credit losses expected over the
remaining life of the exposure, irrespective of the timing of the default. A financial asset is written off
when there is no reasonable expectation to recover the contractual cash flows.
For trade receivables and contract assets, TKH applies a simplified approach in calculating ECLs.
Therefore, TKH does not track changes in credit risk, but instead recognizes a loss allowance based
on lifetime ECLs at each reporting date. TKH has established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the
economic environment. A further explanation is included in note 21.
Financial liabilities
Financial liabilities are classified, at initial recognition, as
•
financial liabilities at fair value through profit or loss,
•
loans and borrowings,
•
other payables, or
•
derivatives designated as hedging instruments in an effective hedge.
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs. TKH’s financial liabilities include trade
and other payables, loans and borrowings including bank overdrafts and derivative financial
instruments. The measurement of financial liabilities depends on their classification.
Financial liabilities at fair value through profit or loss
This category include financial liabilities held for trading and financial liabilities designated upon
initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for
trading if they are incurred for the purpose of repurchasing in the near term. This category also
includes derivative financial instruments entered into by TKH that are not designated as hedging
instruments in hedge relationships as defined by IFRS 9. Gains or losses on liabilities held for
trading are recognized in the statement of profit or loss. Financial liabilities designated upon initial
recognition at fair value through profit or loss are designated at the initial date of recognition, and
only if the criteria in IFRS 9 are satisfied. TKH has no designated financial liabilities at the balance
sheet date at fair value with the recognition of changes in value in the statement of profit and loss.
Loans and borrowings
This is the category most relevant to TKH. After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortized cost using the EIR method. The EIR method is a method for
calculating the amortized cost of a financial liability and for allocating interest expenses over the
relevant period. The effective interest rate is the rate that discounts the estimated future cash payments
(including any fees paid or received that are an integral part of the effective interest rate and transaction
costs) over the expected life of the financial liability to the amortized cost of a financial liability. Gains
and losses are recognized in the statement of profit and loss when the liabilities are no longer recognized.
In addition, the EIR amortization is included in the statement of profit and loss as financing costs.
Other payables
The other current liabilities are initially recognized at fair value and subsequently at amortized cost,
which is generally equal to the nominal value.
A
financial liability is derecognized when the obligation under the liability is discharged or cancelled or
e
xpired. When an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange or
modification is treated as the derecognition of the original liability and the recognition of a new liability.
The difference in the respective carrying amounts is recognized in the statement of profit or loss.
| TKH GROUP ANNUAL REPORT 2021
106
CONSOLIDATED FINANCIAL STATEMENTS
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statement of financial position if there is a currently enforceable legal right to offset the recognized
amounts and there is an intention to settle on a net basis, to realize the assets and settle the
liabilities simultaneously.
Derivatives
Derivative financial assets and financial liabilities (‘derivatives’) are recognized in the balance sheet
when TKH concludes a contract for such an instrument. Derivatives are stated at fair value on the
contract date and are then measured at the prevailing fair value at subsequent reporting dates.
Changes in the fair value of derivatives that are designated and effective as hedges of future cash
flows are recognized directly in the OCI and accounted for as a separate item in equity. The ineffective
portion is recognized immediately in the statement of profit and loss. If the cash flow from an existing
commitment or an expected future transaction results in the recognition of an asset or liability, at the
time the asset or liability is recognized the associated gains or losses on the hedging instrument that
had previously been recognized in the OCI are included in the valuation of the asset or the liability. For
hedges that do not result in the recognition of an asset or a liability, the gains or losses recognized in
the OCI are recognized in the statement of profit and loss in the same period as the underlying
hedged transaction is recognized in the statement of profit and loss. Changes in the fair value of
derivatives that do not qualify for hedge accounting are recognized immediately in the statement of
profit and loss. Hedge accounting is discontinued when the hedge instrument expires, is sold,
exercised or no longer qualifies for hedging. The cumulative gains or losses on that hedging
instrument recognized up to that time in equity are recognized in the statement of profit and loss when
the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the
cumulative gains or losses recognized in the OCI are transferred to the statement of profit and loss.
Assets and directly associated liabilities held for sale and discontinued operations
Assets held for sale
Assets and liabilities are classified as held for sale if their carrying amount will be realized primarily
through a sales transaction rather than through continued use. The reclassification takes place when
the assets and liabilities are available for immediate sale and the sale is within one year. Assets and
liabilities held for sale are stated at book value or lower fair value less costs to sell. Selling costs are
the incremental costs that can be directly attributed to the sale of an asset, excluding any financing
costs and income tax. Said classification only takes place if the sale is very likely, in its current
condition the assets are immediately available for sale and the sale is expected to be completed
within one year. Assets and liabilities that are classified as held for sale are presented separately in
the consolidated balance sheet. Non-current assets held for sale are not depreciated.
Discontinued operations
A group of assets being disposed of qualifies as a ‘discontinued operation’ if it is (part of) an entity
that is either disposed of or classified as held for sale, and:
•
represents a separate major line of business or geographical business area;
•
is part of a coordinated plan to dispose of a separately important business activity or
geographical area; or
•
is a subsidiary, which has been taken over solely for the purpose of resale.
Discontinued operations are excluded from the results from continuing operations and are presented
as a single amount in the line ‘Result after tax from discontinued operations’ in the profit and loss
account. All other notes to the financial statements include amounts for continuing operations, unless
otherwise indicated.
Provisions
General
Provisions are recognized when
(a) TKH has a present obligation (legal or constructive) as a result of a past event, (b) it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation
and (c) a reliable estimate can be made of the amount of the obligation. Provisions are recognized
based on the expected expenditure required to settle the obligation. Long-term provisions, with the
exception of the provision for deferred tax, are discounted using a current pre-tax rate that reflects,
when appropriate, the risks specific to the liability. When discounting is used, an increase in the
provision as a finance cost is recognized due to the passage of time.
Pensions
Premiums for defined contribution plans are recognized as expense in the period to which they
relate. For defined benefit pension plans, which relate to foreign plans, the net liability is calculated
per scheme by estimating the defined benefit obligation that employees are entitled to in exchange
for their services rendered during the financial year and previous years. The defined benefit
obligations are discounted. The defined benefit obligations and the costs of the defined benefit
plans are calculated according to the ‘Projected Unit Credit Method’, with actuarial calculations
being made at balance sheet date. This method takes into account future salary increases as a
result of the career opportunities of employees and general wage developments including inflation
adjustment. The discount rate is the yield rate at the balance sheet date on high quality corporate
bonds with a term that approaches the term of the obligations of TKH. Actuarial gains and losses
are directly accounted for in the OCI, which will not be reclassified subsequently to the statement of
profit and loss. If the calculation results in a potential asset, the recognition of the asset is limited to
the present value of any economic benefits available in the form of future refunds from the plans or
reduced future pension contributions (‘asset ceiling’). This is evaluated per pension scheme. In the
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calculation of the present value of economic benefits any minimum funding obligations that apply
are taken into account. Net interest is calculated by applying the discount rate to the net defined
benefit liability or asset. Net interest on defined benefit obligations are accounted for as interest
expense as part of the financial expenses. When pension entitlements are changed under a pension
plan, the change in pension entitlements related to past service or the gain or loss on that change is
recognized directly in the statement of profit and loss. Pension costs, including pension costs on
past service and the impact of settlements and curtailments are recognized as personnel costs.
Jubilee bonuses
The net liability for jubilee bonuses is the amount of future benefits that relate to services from
employees during the financial year or previous periods. The liabilities are discounted to its present
value taking into account estimated dismissal chances and salary increases.
Provision warranty obligations
The provision warranty obligations is recognized for the estimated costs that are expected to arise
from active warranty obligations in respect of goods and services at balance sheet date. The costs
arising from warranty claims are charged against the provision.
Onerous contracts
A loss-making contract is a contract in which the unavoidable costs (i.e., the costs that TKH can not
avoid because it has the contract) to meet the obligations under the contract exceed the economic
benefits that are expected to be received. The unavoidable costs under a contract reflect the lowest
net costs of terminating the contract, the performance of the contract and any compensation or
penalties arising from non-compliance. For a loss-making contract with customers, a provision is
recognized and valued insofar as the unavoidable costs for completing the contracts are higher than
the contract price.
Restructuring liability
This provision relates to costs in connection with the restructuring of operations and is formed if
effectively or legally a commitment for TKH has arisen. A provision is formed if a plan has been
formalized as at balance sheet date and either the legitimate expectation has arisen with the people
involved that the restructuring will be implemented, or that a start has been made with implementing
the restructuring plan.
Other provisions
Unless stated otherwise, the other provisions are valued at the nominal value of the expenditure that
are estimated to be necessary to settle the respective obligations.
Deferred tax
Deferred tax relates to temporary differences between the value in the financial statements and the
value for tax purposes. No deferred tax is recognized for non-deductible goodwill and subsidiaries and
associates included in the participation exemption. Deferred tax assets are only recognized to the
extent that it is probable that they can be realized. The carrying amount of deferred tax assets is
reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient
taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognized
deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has
become probable that future taxable profits will allow the deferred tax asset to be recovered. In
assessing the recoverability of deferred tax assets, TKH relies on the same forecast assumptions used
elsewhere in the financial statements and in other management reports. Deferred tax assets and
liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised
or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively
enacted at the reporting date. Changes in deferred tax are recognized immediately in the statement of
profit and loss, with the exception of deferred tax that relates to items that are recognized in the OCI or
directly in equity. TKH offsets deferred tax assets and deferred tax liabilities if and only if it has a legally
enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and
deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same
taxable entity or different taxable entities which intend either to settle current tax liabilities and assets
on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in
which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
Turnover
The turnover includes the net tu
rnover, as well as other revenues. Net turnover is the revenue from
products and services delivered to third parties during the year under the deduction of discounts,
bonuses and stock returns. Revenue is measured on the basis of the consideration set out in a
contract with a customer. Products are regularly sold with volume discounts based on total sales over
a period of one year. Revenues from these sales are recognized on the basis of the price specified in
the contract, after deduction of the estimated volume discounts. Revenue is only recognized to the
extent that it is highly probable that a reversal will not take place. A refund liability, included in the other
current liabilities, is recognized for expected volume discounts payable to customers in connection
with sales made until the end of the reporting period. There is no financing element applicable because
the sales take place with a relatively short credit term, which is consistent with market practice. The
turnover of TKH consists of products and services within the business segments Smart Vision systems,
Smart Manufacturing systems and Smart Connectivity systems that are delivered to customers as a
separate product/service or as a total solution. TKH recognizes revenue when control of a product or
service is transferred to a customer. In the
following overview the revenue recognition per segment is
further elaborated.
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CONSOLIDATED FINANCIAL STATEMENTS
Segment Products and services Nature and timing of fulfillment of performance obligations
SMART VISION SYSTEMS
Vision technology represents about 86% of the turnover of
the Smart Vision systems segment and consists of 2D & 3D
machine Vision and Security Vision technology. The technolo-
gies are combined with software to create smart technologies
and one-stop-shop solutions with plug-and-play integrated
systems.
Our Machine Vision technology systems improve quality
inspection, operation, and object monitoring within various
industries such as consumer electronics, factory automation,
ITS, medical and life sciences.
Our Security Vision systems, combined with advanced com-
munication technologies, enable the customers to manage
and control the urban environment efficiently. Simultaneously,
the technologies improve sustainability factors, safety and
security in various markets such as Infrastructure, Parking and
Building security.
A large part of the revenue in Smart Vision systems is accounted for when the products are transferred
to the customer in accordance with the delivery conditions of the sales contract and there is no
unfulfilled obligation that could affect the customer’s acceptance. A receivable is recognized at that
moment because the consideration has become unconditional and only the passage of time is
required before the payment is due. To a lesser degree also the following revenue streams exist:
•
Customer-specific products and systems (including software products): Customer-specific
products and systems: A number of products and systems are designed or adapted to customer-
specific requirements. TKH recognizes turnover over a period if (i) the customer has control
during the creation or improvement of the product / system or (ii) a product/system is created
without alternative use and TKH has an enforceable right to payment for the work performed.
Examples of (i) include parking guidance that are built up and commissioned on-site. Examples
of (ii) are amongst others machine vision cameras constructed for a specific customer application
and by TKH integrated security and communication systems. If the two conditions mentioned
above are not met, revenue is only recognized at transfer date.
For customer-specific systems, installation can be part of the transaction price. A distinction is
made between configuration and the physical installation. The configuration is an integral part of
the system sold, while the installation is often regarded as a separate service that is usually out
-
sourced to third parties. The installation services to be delivered are separately identifiable and ac-
cordingly the transaction price is attributed to the system and the installation based on the relative
stand-alone selling prices. Installation is a performance obligation that is fulfilled over time.
If revenue is recognized over a period, this is based on the stage of completion of the contract.
The progress is determined on the basis of the input method based on a cost price method.
Which means, the part of the contract costs incurred for the work that has been carried out to
date in relation to the estimated total contract costs. For the payments due by the customer,
which according to the contract cannot yet be invoiced, a contract asset is recognized for the
period in which the work has been carried out. This contract asset reflects the right to compensa-
tion for work performed to date. If more is invoiced than has been performed to date, a contract
liability is recorded. Contract liabilities are recognized as revenue when TKH performs under the
contract.
•
Maintenance and licenses: Maintenance and licenses are part of the transaction price for a
number of products and systems. These relate to activities that may have to be carried out during
a certain period after sale. This period can thereafter be extended by the customer at then appli-
cable prices. Maintenance and licenses are considered as a separate service. A part of the trans-
action price is therefore allocated to these services based on their stand-alone selling price. The
transaction price allocated to these services is recognized as a contract liability at the time of the
initial sale transaction and is subsequently recognized as revenue on a straight-line basis over the
contract period.
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Using the relative stand-alone sales price method, a portion of the transaction price is allocated to
the service-type warranty and recognized as a contract liability. Revenue is recognized on a
straight-line basis over the period in which the service-type warranty is granted based on the time
elapsed.
Segment Products and services Nature and timing of fulfillment of performance obligations
SMART MANUFACTURING
SYSTEMS
TKH engineers complete manufacturing systems and
machines that contribute to super-efficient manufacturing
and processing. Systems engineering and assembly, control
and analysis software, as well as connectivity and vision
technology, are the basic building blocks for the distinctive
Smart Manufacturing systems supplied to various industries
such as car and truck tire production, factory automation,
and care solution by providing medicine distribution machines.
Tire Building systems represents about 68% turnover share of
Smart Manufacturing systems segment.
•
The majority of the revenue within Smart Manufacturing systems qualifies as Customer-specific
products and systems for which recognition is already described at Smart Vision systems.
Examples are tire building, medicine distribution and industrial automation systems.
In contrast to Smart Vision Systems, for the tire building activities the installation is regarded as
an integral part of the performance obligation to the customer, because on-site systems are
constructed, configured and tested by employees.
The remainder of the revenue relates to standardized products and is accounted for when the
products are transferred to the customer in accordance with the delivery conditions of the sales
contract and there is no unfulfilled obligation that could affect the customer’s acceptance
•
Sales commissions: Agents are used, who earn a sales commission on the revenue collected.
These incremental costs for obtaining a contract are directly related to the sales that were
realized in a certain period. The sales commissions, mostly paid before start of the contract,
are capitalized as contract costs and amortized over the expected contract period.
SMART CONNECTIVITY
SYSTEMS
TKH makes advanced Connectivity systems and engineers
complete Smart Connectivity systems with a unique integrated
system approach and sustainability proposition. Energy and
Digitalization represent about 33% and 38% turnover share of
the Smart Connectivity systems segment.
Our connectivity systems are developed for on-shore and
off-shore energy distribution. Our Fibre Optic connectivity
systems are manufactured for data and communication net-
works. In addition, TKH produces specialized cable systems
for diverse industrial automation applications in high-tech
environments, such as the industrial, marine & offshore and
medical sectors. Our advanced connectivity technology for
contactless energy and data distribution (CEDD) for airfield
ground lighting systems is a connectivity system consisting of
both hardware components and software, to further improve
the efficiency and safety of specific airfield applications.
•
The majority of revenue relates to standardized products and are accounted for in a similar way
as described above. Customer-specific products and systems for which there is no enforceable
right to payment for the work that has already been performed, are also recognized as revenue in
the same way.
•
Customer-specific products and systems are accounted for in the same way in Smart Vision
systems. Examples are special cable and cable systems for machines, robots, medical applica-
tions and subsea cable systems.
The obligation to repair or replace defective products under the standard warranty conditions is
recognized as a warranty provision. In addition, TKH offers to a limited extent an extended warranty
that is sold together with products and systems. Two performance obligations can be distinguished
in such contracts, namely the delivery of products and services and the service-type warranty.
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CONSOLIDATED FINANCIAL STATEMENTS
Operating expenses
General
The cost of production and other expenses directly related to ordinary operational activities, which
underlie the turnover, are stated as operating expenses.
Government subsidies
Government subidies are recognized when there is reasonable assurance that the grant will be
received and all conditions will be met. Government subsidies are recognized in the statement of
profit and loss in the same period as the expenses to which they relate. The subsidy is deducted
from the related costs. Grants related to fixed assets are deducted from these assets and credited
to the profit and loss account over the expected useful life of the asset concerned.
Share-based payments
TKH has a stock option and a share scheme, which both qualify as share-based payments:
•
The stock options are settled in equity instruments. They are valued at fair value at the date they
were granted. The fair value is calculated by using an option pricing model that takes into account
market related vesting conditions attached to the granting of the options. The fair value is charged
to the profit and loss account over the period between the granting of the options and the time that
the share options vest, adjusted for the expected number of share options to be exercised.
•
The shares issued free of charge are also settled in equity instruments and are measured at the
grant date at fair value. The fair value is determined based on the prevailing share price at the
time of grant. The fair value is charged to the profit and loss account in the year to which the
grant relates.
Financial income and expenses
Financial income and expenses comprise the interest received from or paid to third parties relating
to the year under review. Interest is recognized according to the effective interest method. The
interest income and the interest expenses on bank accounts that belong to one and the same
interest compensation system are set off. The interest balance of the interest combination is stated
under interest income or interest expenses. Financial expenses related to the construction of
tangible non-current assets have been recognized as part of the asset. Translation differences on
sale and purchase transactions are classified under financial income and expenses.
Tax
Tax is calculated on the result before tax, taking into account the prevailing tax rates and tax
legislation in the different countries. Tax is accounted for in the statement of profit and loss, unless it
relates to items directly recognized in the OCI, in which case taxes are also accounted for in the
OCI. In addition to the tax directly payable or receivable for the reporting year, the item also includes
the changes in the deferred tax assets and liabilities and adjustments to tax assessments from
previous years.
Non-controlling interest
This item comprises the share of third parties in the results and equity of subsidiaries according to
TKH’s accounting principles.
Cash flow statement
The cash flow statement has been drawn up using the indirect method. With this method, the
o
perating result is adjusted for items in the statement of profit and loss that have no impact on receipts
and payments in the year under review and changes in items in the balance sheet and statement of
profit and loss whose income and expenses are not considered to belong to the operational activities.
The cash position in the cash flow statement consists of cash and cash equivalents less short-term
borrowings included in cash pools as this is part of the daily cash management. Cash flows in foreign
currencies are converted at an average exchange rate. Exchange differences with respect to cash and
cash equivalents are presented separately in the cash flow statement. Income taxes, paid and received
interest are included in the cash flow from operating activities. Received dividends are included in the
cash flow from investment activities, while paid dividends are included in the cash flow from financing
activities. The purchase price of acquisitions is included in the cash flow from investing activities, to the
extent that payment has taken place in cash or cash equivalents. Cash and cash equivalents that are
present in the acquired subsidiaries are subtracted from the purchase price. Transactions, which do not
involve a cash exchange, are not included in the cash flow statement. The payments of the lease terms
are presented as repayments on loans for the repayment component of debt (cash flow from financing
activities) and as paid interest for the interest component (cash flow from operating activities). Payment
of lease installments that are not included in the lease obligation included in the balance sheet
(including leases of assets with a low value or with a term of less than one year) are included under
cash flow from operating activities.
2 SIGNIFICANT JUDGMENTS, ESTIMATES AND ASSUMPTIONS
In preparing the consolidated financial statements management has made judgments, estimates
and assumptions. These judgments, estimates and assumptions affect the reported amounts of
assets and liabilities, revenues and expenses and disclosed contingent assets and liabilities at the
date of the financial statements. The actual outcome can vary from these judgments, estimates and
assumptions. All assumptions, expectations and forecasts used as a basis for judgments in the
consolidated financial statements are as good as possible a reflection of the forecast of TKH.
Management is of the opinion that a reasonable basis exists for the assumptions, expectations and
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forecasts. Judgments are related to known and unknown risks, uncertainties and other factors that
can lead to future results and performances that significantly vary from those forecasted. Significant
judgments, estimates and assumptions are described hereafter.
Fair values
TKH periodically reviews the significant fair value changes regarding specific positions in the
financial statements. In case external information is used to determine the fair value, TKH reviews
the evidence obtained from these third parties to verify if these valuations meet IFRS requirements,
including the level of hierarchy of the fair values in which these valuations are classified. TKH
applies the following hierarchy for determining the fair value of financial instruments:
•
Level 1: Price quotations on active markets for identical assets and liabilities.
•
Level 2: Other inputs than quoted prices included in level 1, that are either directly or indirectly
observable for the asset or liability. TKH makes use of derivatives valuation reports of financial
institutions. These valuations are checked with interest rates, interest curves and exchange rates
that are regularly published.
•
Level 3: Calculations that use input variables that have a significant effect on the fair value and
that are not based on available market quotations. Here TKH may use valuations by independent
appraisers.
The table below shows the hierarchy and carrying amounts of the assets and financial instruments
that are recognized in the balance sheet at fair values:
in thousands of euros Notes Hierarchy
2021 2020
Assets
Financial assets at fair value through P&L Level 3 407 927
Foreign currency forward contracts 21 Level 2 3,020 2,007
Commodities (derivatives) 21 Level 2 1,895 1,874
Total 5,322 4,808
Liabilities
Interest rate swaps 21 Level 2 294 566
Foreign currency forward contracts 21 Level 2 3,305 422
Commodities (derivatives) 21 Level 2 195 159
Total 3,794 1,147
The fair value of the financial assets measured at fair value with recognitio
n of the change in value
through the statement of profit and loss is calculated on the basis of expected cash flows discounted
at the estimated market interest rate. Credit risks are taken into account in this market interest rate.
TKH has concluded derivatives with various financial institutions with an investment grade rating.
Interest rate swaps, forward exchange contracts and forward contracts on commodities are valued
based on present value calculations using market data, such as the credit quality of counterparties,
base spreads, spot and forward prices, yield curves and forward curves. More information about the
assumptions for the determination of the fair value is included in the relevant explanatory notes.
Price, credit, interest and currency risks
Note 21 contains information about these risks.
Intangible assets and goodwill related to acquisitions
In the financial statements a material amount has been reported for intangible non-current assets
acquired in an acquisition. The first recognition of these assets at fair value has been determined on
the basis of valuation models. The outcomes are largely dependent on management estimates with
respect to the assumptions used (such as growth percentages, royalty fees, economic life) and
future expectations. The difference between the purchase price and the acquired net fair value of
the identifiable assets and liabilities is recognized as goodwill. Note 1 and 3 includes information
about intangible assets and goodwill.
Impairments and valuation of tax-losses
Information about impairment testing is included in note 3. TKH regularly invests in R&D (capitalized
development costs), production facilities and new, innovative processes with the aim of developing a
distinctive product portfolio. Particularly where TKH still has a small market position, the degree of
management estimates with regard to learning curve developments, capacity utilization and develop-
ment of returns is higher. On the other hand, management involvement is larger. TKH has valued tax
deductible losses, whereby the entity concerned has incurred a loss in the current and/or previous
financial year. In these cases, the recognition and measurement of these deductible losses are based
on financial forecasts supported by a profitable order book. It should be noted that these deductible
losses often originate from the start-up period of new activities and/or innovations.
Contracts with customers
TKH develops, produces or configures products and systems on behalf of cust
omers on which
revenue is recognized over a period of time. As a result, profit is recognized over time based on the
expected profit on the contract and the estimated level of progress. This estimate makes use of
detailed calculations that are specified for each performance obligation in a contract. Based on the
realization and estimates of project managers and controllers, new estimates are drawn up periodically
for each contract. These are reviewed by local management and then used as the basis for the costs
and revenue to be recognized. In a new innovative portfolio and/or production process, the
uncertainty in management estimates can be significantly higher than in other projects
d
ue to the lack
of historical experience figures and the learning curve that needs to be going through.
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CONSOLIDATED FINANCIAL STATEMENTS
Financial liabilities for earn-out and put option agreements
In the financial statements, financial liabilities are recognized for obligations related to earn-out
agreements and put options granted to shareholders of non-controlling interests. The financial
liabilities for earn-out and put options are based on estimates of future operating results and are
derived from business plans of the companies concerned.
Other provisions
The other provisions relate amongst othe
rs to onerous contracts, warranty liabilities, claims, jubilee
arrangements and restructuring liability. These provisions are based on estimates and available
information. With regard to onerous contracts with customers, reference is made to the previous
paragraph ‘contracts with customers’. With regard to the restructuring liability further reference is
made to note 14
Extension options of lease contracts
When TKH has the option of renewing a lease, management uses its judgment to determine
whether it is reasonably certain that an option would be exercised. Management takes into account
all the facts and circumstances, including their past experience and any costs that will be incurred
to change the asset if no extension option is taken, to determine the lease term.
Goodwill
Brand names, customer relations
and intellectual property Development costs
Patents, licenses, software and
trademarks Total
in thousands of euros Notes
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Historical cost at 1 January 330,832 333,440 288,102 290,213 238,176 209,400 66,193 62,865 923,303 895,918
Accumulated amortization and impairment losses
2,323 2,323 169,741 148,428 127,067 106,882 46,842 41,881 345,973 299,514
Book value at 1 January 328,509 331,117 118,361 141,785 111,109 102,518 19,351 20,984 577,330 596,404
Purchases and capitalization 34,689 34,390 6,003 5,172 40,692 39,562
Acquisitions 35 1,210 383 982 178 1 2,192 562
Reclassification from property, plant and equipment 4 26 3 26 3
Reclassification to assets held for sale -32,768 -136 -594 -896 -34,394 0
Reclassifications -24 80 24 -80 0 0
Disposals -190 -320 -4 -35 -194 -355
Amortization 28 -19,240 -22,907 -25,549 -24,171 -6,321 -6,642 -51,110 -53,720
Impairment losses 29 -965 -323 -31 -996 -323
Adjustment goodwill -1,537 0 -1,537
Exchange differences 1,538 -1,454 709 -695 1,234 -1,065 35 -52 3,516 -3,266
Book value at 31 December 298,489 328,509 100,676 118,361 119,710 111,109 18,187 19,351 537,062 577,330
Accumulated amortization and impairment losses 2,323 2,323 187,269 169,741 149,599 127,067 50,254 46,842 389,445 345,973
Historical cost at 31 December 300,812 330,832 287,945 288,102 269,309 238,176 68,441 66,193 926,507 923,303
Goodwill is allocated to reporting segments, which are considered as cash generating units (‘CGU’)
for goodwill impairment testing purposes. Impairment is assessed at this level. The goodwill is
allocated as follows:
3 INTANGIBLE ASSETS AND GOODWILL
in thousands of euros Goodwill Discount rate before tax
Functional
currency
CGU
2021 2020 2021 2020
Smart Vision systems 238,223 235,537 9.8% n/a EUR/USD
Smart Manufacturing systems 10,530 10,530 11.3% n/a EUR
Smart Connectivity systems 49,736 82,442 10.6% n/a EUR
Total 298,489 328,509
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Land and buildings Machinery and installations Other equipment Assets under construction Total
in thousands of euros Notes
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Historical cost at 1 January 184,273 196,095 253,787 259,482 134,933 126,034 8,828 6,440 581,821 588,051
Accumulated depreciation and impairments 88,914 92,112 173,762 173,968 98,833 90,963 412 70 361,921 357,113
Book value at 1 January 95,359 103,983 80,025 85,514 36,100 35,071 8,416 6,370 219,900 230,938
Purchases 4,121 4,360 13,344 7,870 10,741 14,005 3,951 3,856 32,157 30,091
Acquisitions 5 40 5 40
Disposals -46 -53 -1,276 -1,079 -1,133 -865 -18 -97 -2,473 -2,094
Depreciation 27 -6,419 -6,432 -12,147 -11,995 -11,583 -11,342 -30,149 -29,769
Impairments 29 652 -618 -71 -377 581 -995
Reclassifications -35 -108 271 145 -271 2 0
Reclassification from/to intangible assets 3 -26 -3 -26 -3
Reclassification to assets held for sale 11 -23 -5,502 -994 -4 -191 0 -1,212 -5,502
Exchange differences 1,621 -1,311 1,568 -820 418 -538 95 -137 3,702 -2,806
Commissioning of assets under construction 3,264 314 2,311 882 1,809 0 -7,384 -1,196 0 0
Book value at 31 December 97,842 95,359 83,375 80,025 36,472 36,100 4,798 8,416 222,487 219,900
Accumulated depreciation and impairments 96,381 88,914 180,925 173,762 111,245 98,833 483 412 389,034 361,921
Historical cost at 31 December 194,223 184,273 264,300 253,787 147,717 134,933 5,281 8,828 611,521 581,821
The recoverable amount of the cash generating units, in which goodwill has been reported, is based
on the value in use. The value in use is based on estimated future cash flows. These forecasts are
derived from the internal business plans, which are drawn up annually and have a horizon of five
years. These business plans contain financial budgets and have been prepared by local management
and are approved by the Executive Board. Cash flows after the financial budget period have been
extrapolated, taken into account an annual growth of 1.15% (2020: 1.0%). The future cash flows are
discounted at the discount rate shown in the table, which is based on the risk profile of the CGU.
Based on the assumptions, the impairment test did not lead to impairments at year-end 2021. In
addition, in 2021 impairments totaling € 1.0 million were recognized, mainly related to capitalized
development costs in the CGU Smart Vision systems. The impairment is mainly related to the merging
of activities, as a result of which a part of the portfolio and developments will not be continued. Also
some small development projects did not lead to goods or services for which a sufficient market
demand was expected.
Inherent to the applied calculation methodology, a change in the assumptions can lead to a different
conclusion regarding impairment. For all CGU’s a sensitivity analysis was performed, in which:
4 PROPERTY, PLANT AND EQUIPMENT
In millions of euros
Decrease EBIT-
DA by 10%
Increase
discount rate
by 1%
Decrease growth
rate by 0.5%
Combination
of all
assumptions
Smart Vision systems -140.3 -141.0 -53.2 -294.8
Smart Manufacturing systems -109.1 -110.1 -42.7 -234.0
Smart Connectivity systems -111.1 -101.0 -35.1 -247.2
These scenarios do not lead to an impairment in any of the CGUs in connection with the available
headroom between the recoverable amounts and the carrying amounts.
The market capitalization of TKH amounted to € 2,285 million on 31 December 2021 and was
significantly higher than the book value of the net assets of TKH.
•
absolute EBITDA decreases by 10%, or
•
the discount rate increases by 1%, or
•
the annual growth rate after the financial budget period decreases by 0.5%.
Other parameters remain constant. The amounts relate to the impact on the recoverable amount
based on the sensitivity analysis. This sensitivity analysis does not take any cost savings into
account in order to maintain profitability.
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CONSOLIDATED FINANCIAL STATEMENTS
The impairments in 2020 mainly relate to the closure of the cable production activities in Ittervoort,
whereby the core activities have been transferred to the production site in Haaksbergen. In 2021,
the remaining machineries have been sold which resulted in a partly reversal of the impairment.
5 RIGHT-OF-USE ASSETS
TKH has lease contracts for various buildings, vehicles and other equipment used in its activities.
Building lease agreements generally have a duration of between 3 and 18 years, while vehicles and
other equipment generally have a duration of between 3 and 5 years.
Land and buildings Machinery and installations Other equipment Total
in thousands of euros Notes
2021 2020 2021 2020 2021 2020 2021 2020
Book value at 1 January 71,492 73,959 14 27 5,851 6,766 77,357 80,752
Purchases 8,010 8,725 37 4,577 2,792 12,624 11,517
Disposals -479 -391 -161 -870 -161
Reassesment 6,009 4,358 227 132 6,236 4,490
Depreciation 27 -11,709 -12,013 -44 -13 -3,336 -3,639 -15,089 -15,665
Impairments 29 -1,209 -2,552 -1 -1,209 -2,553
Exchange differences 848 -985 30 -38 878 -1,023
Reclassification to assets held for sale 11 -10,717 -413 -11,130 0
Book value at 31 December 62,245 71,492 7 14 6,545 5,851 68,797 77,357
The impairments relate to the vacancy of rented buildings, as a result of the integration of activities,
either a too low occupancy and a slowdown in revenue growth from rented buildings due to
COVID-19.
In 2021, the costs related to variable lease payments that were not included in the lease obligation
amounted to € 2.7 million (2020: € 2.3 million).
In 2021, the costs of leasing assets with a low value amounted to € 0.2 million (2020: € 0.2 million).
In 2021, the costs of leases with a term of less than one year amounted to € 0.2 million (2020: € 0.1
million).
There are no leases with a residual value guarantee and as at 31 December there are no obligations
with regard to lease agreements that have not yet been started.
See note 19 for the lease liability. See note 31 for the interest charges on lease obligations. See the
consolidated cash flow statement for the lease payments. The total cash outflow from leases in
2021 was € 18.7 million.
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CONSOLIDATED FINANCIAL STATEMENTS
Place Country Equity interest Operating segment
Name of other associate
2021 2020
Speed Elektronik Vertrieb GmbH Schwelm Germany 25.0% 25.0% Smart Connectivity systems
NET Italia S.r.l. Brescia Italy 49.0% Smart Vision systems
Shin-Etsu (Jiangsu) Optical Preform Co. Ltd. Jiangyin PR China 12.5% 12.5% Smart Connectivity systems
Commend Australia Integrated Security and Communication Systems Pty Ltd. Melbourne Australia 49.0% 49.0% Smart Vision systems
Traff Is B.V. Hedel Netherlands 33.3% 33.3% Smart Connectivity systems
Cable Connectivity Group B.V. Benthuizen Netherlands 41.5% 41.5% Smart Connectivity systems
P + S Technik GmbH Ottobrunn Germany 23.2% 23.2% Smart Vision systems
The shares in NET Italia S.r.l. have been sold in the first half of 2021. The amounts involved were
insignificant.
Despite the 12.5% interest in the associate Shin-Etsu (Jiangsu) Optical Preform Co. Ltd., TKH has
significant influence over the financial and operating policies. The associate is an important
manufacturer of preforms (semi-finshed product for the production of fibre optics) for TKH. The
strategic shareholding is linked to a right to 50% of the production capacity of this plant. TKH
provides one of the three Supervisory Board members.
The overview below shows the summarized financial information of the associates on the basis of
the most recent available information, where the financial data are included based on the share of
interest in these companies. Of the ‘summarized financial information other’ a large part relates to
Shin-Etsu (Jiangsu) Optical Preform Co.Ltd.
in thousands of euros Assets Liabilities Turnover Net result
Other comprehensive
income
Share in result of
associates
Summarized financial information 2021 of Cable Connectivity Group 67,115 51,760 83,272 2,266 2,266
Summarized financial information 2021 other 17,380 6,770 5,123 185 135
Summarized financial information 2020 of Cable Connectivity Group 54,616 41,694 62,749 -870 -129 -2,790
Summarized financial information 2020 other 15,214 5,766 4,345 86 -2
Movements in the associates are as follows:
in thousands of euros
2021 2020
Balance at 1 January 25,540 28,635
Share in result of associates 2,401 -2,792
Dividend received -31
Sale of a share interest -128
Exchange differences 917 -303
Balance at 31 December 28,699 25,540
6 ASSOCIATES
TKH owns direct or indirect the following relevant associates:
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CONSOLIDATED FINANCIAL STATEMENTS
7 INVENTORIES
in thousands of euros
2021 2020
Raw materials 119,714 72,241
Work in progress 45,573 34,281
Finished goods 129,449 130,192
Inventories 294,736 236,714
An amount of € 686.0 million is reported in the statement of profit and loss for costs of raw
materials, consumables and finished goods (2020: € 560.0 million). A part of inventories is valued at
lower net recoverable amount. The book value of these written-down inventories is € 25.3 million
(2020: € 24.3 million). The total write-down on inventories, based on aging analysis and sales
statistics, in 2021 recognized in the statement of profit and loss is € 4.5 million (2020: € 3.9 million).
8 TRADE AND OTHER RECEIVABLES
9 CONTRACT ASSETS
The following table provides information on receivables, capitalized contract costs, contract assets
and contract liabilities from contracts with customers.
in thousands of euros
2021 2020
Trade accounts receivable 161,085 137,063
Contract assets 150,131 124,230
Contract liabilities -127,044 -73,931
Refund liabilities from customer volume rebates -10,641 -8,852
Contract costs 4,566 3,314
The changes in the balance of contract assets and liabilities during the financial year are as follows:
in thousands of euros Notes
2021 2020
Trade accounts receivable 161,085 137,063
Loss allowance 21 -6,377 -6,675
Derivatives 21 4,910 3,881
Receivables from related parties 34 444 1,194
Prepayments and accrued income 13,137 7,936
Other short-term receivables 12,119 13,964
Long-term receivables 748 1,872
Receivables
186,066 159,235
The amounts above are expected to be settled within 12 months, with the exception of long-term
receivables. The receivables are mainly held according to a ‘held-to-collect’ business model. For the
other part TKH applies non-recourse factoring that transfers the ownership of the trade receivables and
the associated risks to a factoring company. At the end of 2021 receivables with an amount of € 34.3
million are sold to a factoring company (2020: € 43.6 million). The trade receivables are non-interest
bearing and generally have a payment term between 14 and 90 days. Credit risk is further described in
note 21.
The contract assets mainly relate to the rights of TKH to consideration for work performed, but
which have not yet been invoiced on balance sheet date. The contract assets are reclassified to
receivables when the rights become unconditional. The contract liabilities mainly relate to the
advance payment received from customers, of which the revenues are recognized at the
performance of the contracted work. As at 31 December 2021, performance gurantees amounted
to € 107.5 million (2020: € 75.8 million). These relate to advance payments received from
customers, which are presented as part of contract liabilities. These guarantees are included in the
off-balance sheet commitments (note 22). A large part of the contract assets and liabilities relates
to the segment Smart Manufacturing systems.
Contract assets Contract liabilities
in thousands of euros
2021 2020 2021 2020
Revenue recognized that was included in the contract liability balance at the beginning of the period
73,931 49,187
Increases due to cash received, excluding amounts recognized as revenue during the period
-127,044 -73,931
Transfers from contract assets recognized at the beginning of the period to receivables
-124,230 -115,692
Increases as a result of changes in the measure of progress
150,131 124,230
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TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
The commissions paid to agents for obtaining the contracts are expected to be recovered and are
therefore capitalized as contract costs. Capitalized commissions are amortized when the related
revenue is recognized. In 2021, amortization amounted to € 6.2 million, which is included in the
statement of profit and loss under raw materials, consumables, trading products and outsourced
work. There was no impairment in the financial year in respect of the capitalized contract costs.
The restitution obligations for agreed customer volume discounts are mostly annual bonuses based
on revenue tables. The accrual is calculated based on historical figures, revenue already realized
and the outstanding order book.
The following table shows the expected future revenue with respect to contractual performance
obligations that have not yet (or partially) been satisfied at balance sheet date.
in thousands of euros
2021 2020
Expected to be recognized as revenue within 1 year 705,061 408,168
Expected to be recognized as revenue between 1 and 2 years 35,809 17,945
Expected to be recognized as revenue after 2 years 5,693 2,221
Total 746,563 428,334
10 CASH AND CASH EQUIVALENTS
in thousands of euros
2021 2020
Ca
sh and bank balances as included in the cash flow statemen
t 68,017 65,614
Cash at companies assets held for sale -736
Cash and bank balances in cash and interest pools 32,854 56,031
Cash and bank balances 100,135 121,645
Cash and cash equivalents consist of cash and bank balances and deposits that are direct available
on demand.
11 ASSETS AND DIRECTLY ASSOCIATED LIABILITIES HELD
FOR SALE
As part of the ‘Simplify & Accelerate’ program, TKH decided in the first half of 2021 to start an
active program to divest certain activities engaged in the distribution of connectivity solutions.
Accordingly the associated assets and liabilities have been reclassified to assets and liabilities held
for sale. Besides working capital, goodwill is also an important part of this value. The amount of
allocated goodwill has been updated in the second half of 2021 based on applying the relative value
method. Barring unforeseen circumstances, a sale is highly probable within the upcoming 12
months. The main categories of assets and liabilities classified as held for sale are as follows:
in thousands of euros
2021 2020
Assets
Intangible assets and goodwill 34,394
Property, plant and equipment 5,806 4,594
Right-of-use assets 11,130
Other receivables 494
Deferred tax assets 738
Inventories 25,383
Trade and other receivables 9,503
Cash and cash equivalents 736
Assets held for sale 88,184 4,594
Liabilities
Non-current interest-bearing loans and borrowings 9,693
Deferred tax liabilities 711
Retirement benefit obligation 1,105
Other long-term provisions 10
Current interest-bearing loans and borrowings 2,075
Trade payables and other payables 20,372
Current income tax liabilities 3,234
Liabilities directly associated with assets held for sale 37,200 0
Net assets directly associated with held for sale 50,984 4,594
12 EQUITY
T
he group equity is equal to the shareholders’ equity. The group equity is disclosed in the Consolidated
statement of changes in group equity and in note 7 of the company-only financial
statements.
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CONSOLIDATED FINANCIAL STATEMENTS
13 NON-CONTROLLING INTEREST THIRD PARTIES
At some subsidiaries that are or were not fully owned by TKH during the year at any time, there third
party non-controlling interests that are not significant:
14 OTHER PROVISIONS
The long-term provisions have been discounted. The increase of the provision as a result of
expiration of time and adjustment of the discount rate is not significant. The short-term provisions
have not been discounted since the effect is not material. The short-term part of the provision is
mainly related to reorganizations and warranties. The term of the other provisions is as follows:
in thousands of euros
2021 2020
Other long-term provisions 8,772 5,741
Other short-term provisions 20,687 19,148
Other provisions 29,459 24,889
The breakdown and movement of the other provisions is as follows:
in thousands of euros Warranty Employee liabilities Onerous contracts Restructuring Other Total
Balance at 31 December 2020 6,268 3,334 7,734 5,699 1,854 24,889
Additions 3,575 518 3,141 508 6,085 13,827
Releases -442 -29 -780 -59 -1,310
Utilized -1,363 -154 -1,067 -4,711 -772 -8,067
Other reclassifications -101 -101
Exchange differences 80 6 112 24 -1 221
Balance at 31 December 2021 8,118 3,675 9,920 740 7,006 29,459
Provision for warranties
The provision for warranties is related to warranties on delivered products and services under the
standard warranty conditions. The purpose of the provision is to cover costs arising if products and
services supplied do not meet the agreed specifications and quality requirements under normal
conditions of use. The provision is based on judgments by using historical warranty data relating to
comparable products and services and known warranty claims at balance sheet date. In general the
recorded liabilities are expected to arise in the next one to three years.
Employee liabilities
The provision for employee liabilities mainly relates to defined jubilee arrangements and is in general
long-term.
Restructuring liability
The restructuring provision relates mainly to the lay-off of employees. An important withdrawal is
related to the merging and outsourcing of activities in the Smart Connectivity systems and Smart
Vision systems segments, among which the cable production activities in Ittervoort (NL). The
remaining term is less than 1 year.
Onerous contracts
The provision for onerous contracts mainly relates to contracts with customers, from which the
revenue is recognized over a period of time. This mainly concerns contracts in the segment Smart
Manufacturing systems, which relate to new technologies and sometimes in combination with newly
acquired customers. Because of the strategic importance of these contracts for the future revenue
and profit development of TKH, these have been accepted with a negative or a limited margin at
order acceptance. The duration of a project under such a contract is normally shorter than one year,
but for larger framework agreements, subprojects can be executed and concluded in different years.
Other items
The other items relate to claims, matters of dispute, guarantees which are expected to be claimed
and other contractual obligations. These liabilities consist of amounts at which a judgement by an
independent party will probably lead to compensation. The recognized provisions have been based
on the best estimate, made on the basis of currently available information and will mainly have a
term no longer than one year. There is no asset recognized for expected compensation fees in
relation to the reported provisions.
Result non-controlling interests
Cumulative non-controlling
interests
2021 2020 2021 2020
Various non-controlling interests 12 6 53
86
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TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
15 OTHER FINANCIAL LIABILITIES
The movement of the financial liabilities is as follows:
in thousands of euros Earn-out
Put options of
holders of
non-controlling
interests
Total
Balance at 1 January 2021 7,341 609 7,950
Acquisitions 1,467 1,467
Payment for acquisitions from previous years -3,707 -325 -4,032
Unwinding of discount through the profit and loss account 321 321
Change in value through the profit and loss account 729 709 1,438
Exchange differences 5 5
Balance at 31 December 2021 6,156 993 7,149
in thousands of euros
2021 2020
Term shorter than 1 year 4,989 4,542
Term between 1 and 5 years 2,160 3,408
Financial liabilities 7,149 7,950
Earn-out
For several acquisitions, contractual arrangements have been made about earn-out payments,
when certain targets are realized. The liability for earn-out payments has been determined on the
basis of fair value of the expected future cash outflows.
Put options of holders of non-controlling interests
TKH has option rights on several non-controlling interests held by local management of subsidiaries
of TKH. Besides, TKH has a liability to buy these shares when local management decides to offer
these shares. A financial liability has been recognized for this obligation. On the balance sheet date,
the following option rights and liabilities are outstanding:
Name of subsidiary Percentage
Option exercisable as from
EFB Nordics A/S 10.0% 1 January 2014
USE System Engineering Holding B.V. 25.0% 1 January 2014
JOHRAmont s.r.o. 5.0% 1 January 2022
The liability is based on the discounted value of the expected future cash outflows. The expected
maturity of the above mentioned liabilities is equal to the period as from 31 December 2021 till the
first possibility to exercise. The amount to be paid depends on the future results of the aforemen-
tioned subsidiaries. The year of the cash outflow is dependent on a decision to exercise by TKH or
the option owner. An amount of € 0.8 million has a maturity of shorter than 1 year.
16 DEFERRED TAX
The deferred tax assets and liabilities relate to the following items of which the movements are also
shown:
in thousands of euros
Property, plant &
equipment and
leases
Intangible assets
and goodwill
Inventories and
construction
contracts Provisions
Unused tax
losses and
credits
Financial
instruments
Undistributed
intragroup
profits Other Total
Balance at 1 January 2020 -1,821 -55,823 -3,214 1,497 12,415 405 -2,055 4,030 -44,566
(Charge)/credit to other comprehensive income -89 -1,089 -1,178
(Charge)/credit to profit or loss 2,542 1,612 712 -478 -506 -165 -205 3,512
Adjustment valuation through goodwill for prior year acquisition 1,537 1,537
Acquisitions -44 -44
Balance at 31 December 2020 721
-54,255
-2,502 930 13,446 -684 -2,220 3,825 -40,739
(Charge)/credit to other comprehensive income -8 400 392
(Charge)
/cred
it to profit or loss
251 2,435 -2,353 137 31 5 -511 -97 -102
Reclassifi
cation to assets h
eld for sale
-63 47 635 -276 -370 -27
Acquisitions -212 -212
Balance at 31 December 2021 909 -51,985 -4,220 783 13,477 -279 -2,731 3,358 -40,688
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CONSOLIDATED FINANCIAL STATEMENTS
Certain deferred tax assets and liabilities have been offset in accordance with the applicable principles
in IFRS. The deferred tax assets and liabilities are recognized in the balance sheet as follows:
in thousands of euros
2021 2020
Deferred tax assets stated under non-current assets 15,277 14,322
Deferred tax liabilities stated under non-current liabilities -55,965 -55,061
Deferred taxes -40,688 -40,739
TKH has unused tax losses for which no deferred tax assets have been recognized because
realization is uncertain. These unused tax losses can be compensated with future profits. Based on
current tax legislation, these unused and unrecognized tax losses have the following terms:
in thousands of euros
2021 2020
Term infinite 40,325 31,804
Term longer than 10 years 12,944 10,781
Term between 5 and 10 years 39 39
Term shorter than 5 years 32 5,386
Unrecognized tax losses and credits 53,340 48,010
The subsidiaries neither have any taxable temporary difference nor any tax planning opportunities
available that could partly support the recognition of these losses as deferred tax assets. On this
basis, TKH has determined that it cannot recognize deferred tax assets on the tax losses carried
forward. The unrecognized unused tax losses represent a value of € 12.5 million at the end of 2021
based on the applicable tax rates.
TKH has valued tax deductible losses, whereby the entity concerned has incurred a loss in the
current and/or previous financial year. In these cases, the recognition and measurement of these
deductible losses are based on financial forecasts supported by a profitable order book. It should
be noted that these deductible losses often originate from the start-up period of new activities and/
or innovations.
17 PENSIONS
Defined contribution plans
TKH’s pension plans in the Netherlands differ per subsidiary. The pension scheme of a number of
subsidiaries has been placed with the industry pension fund PME and PMT respectively. As of 1
January 2020, the employees of the other Dutch subsidiaries have a so-called individual defined
contribution scheme, which has been placed with Nationale-Nederlanden. TKH also had guarantee
contracts with external pension insurer Nationale-Nederlanden for a number of subsidiaries until 31
December 2019. These warranty contracts have been terminated as of December 31, 2019. After
termination, the existing indexation deposits have been settled. After termination of the agreement,
TKH has no longer accrued any actuarial risks with regard to the entitlements before 31 December
2019 under the previous contract. On a small part of the entitlements accrued before 31 December
2014, TKH runs an actuarial risk of additional payment in the event of outgoing value transfers.
However, according to TKH, this risk is not material. That is why any additional payment is
accounted for in the P&L in the year that the additional payment will be made. The employees of the
foreign subsidiaries are members of industry or state-managed pension plans. The subsidiaries are
only required to pay a certain percentage of the salary costs to the concerning industry or state
managed pension plans. These pension schemes classify as defined contribution plan. The pension
schemes in the Netherlands, to the extent not already covered by the industry pension schemes,
are recognized as a defined contribution scheme in the financial statements. The total pension
expense recognized in 2021 related to the defined contribution plans amounts to € 15.3 million
(2020: € 14.5 million). The industry pension plans are included in this pension expense. TKH
expects for 2022 a pension expense of € 16 million for all defined contribution plans, of which
about € 11.1 million relates to industry pension schemes.
Defined benefit plans
Multi-employer union plans
In the Netherlands 1,686 employees of TKH participate in the multi-employer union plans of
‘Pensioenfonds van de Metalektro’ (‘PME’) and ‘Pensioenfonds Metaal & Techniek’ (‘PMT’) in
accordance with the collective bargaining agreements applicable for the industry in which the TKH
companies operate. These collective bargaining agreements have no expiration date. PME covers
approximately 1,432 companies and 333,000 participants and PMT approximately 34,000
companies and 1,400,000 participants. The pension rights of each employee are based upon the
employee’s average salary during employment (depending on coverage ratio). TKH’s contribution to
the multi-employer union plans are far less than 5% of the total contribution to the plans. The
pension funds are subject to regulation by Dutch governmental authorities. By law (the Dutch
Pension Act), a multi-employer union plan must be monitored against specific criteria, including the
coverage ratio of the plan assets to its obligations. The multi-employer union plans have reported
the following coverage ratio at year-end:
2021 2020
coverage ratio of PME 103.2% 92.3%
coverage ratio of PMT 100.8% 91.2%
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The actual coverage ratio is calculated by dividing the plan assets by the total sum of pension
liabilities. The coverage ratio is the average coverage ratio over the past 12 months. There are no
additional contribution requirements for participating companies to prevent indexation cuts or
lowering of pensions. The schemes qualify as defined benefit plans because the companies bear
the risk that in the negotiation of the level of pension contributions after 2021 the social partners
take the amount of a surplus or a deficit in the industry pension fund as part of the negotiations.
As a result, future premiums may be somewhat related to deficits or surpluses that relate to pension
entitlements accrued in the past. This concerns shortages or surpluses of current and former
employees of TKH but also of other companies. In addition, there is no consistent and reliable basis
for allocating the pension liability, assets and costs to individual companies participating in the
industry pension scheme. TKH therefore classifies the multi-employer plans as if it were defined
contribution plans (in line with IAS19.34). TKH’s net periodic pension cost for the multi-employer
plan over a financial period is equal to the required contribution for that period.
Other pension schemes
There are some individual defined benefit plans abroad for a small number of participants. These
defined benefits are accrued in the subsidiaries and are not covered by plan assets. The duration of
the defined benefit obligations of these arrangements will be, on average, 12 years at 31 December
2021. Furthermore, there is legislation for the Austrian employees obligating to pay a onetime
compensation at the end of the employment for employees working for the subsidiary before
1 January 2003. The amount of compensation depends on the years of service and the average
salary in the last 3 years of service. The actuarial calculations for the pension schemes are
performed by actuaries.
The following assumptions have been applied in the actuarial calculations:
2021 2020
Discount rate before tax 0.8-2.0% 0.4-2.0%
General percentage salary increase 2.1% 1.6%
The following amounts are recognized in the balance sheet with respect to all defined benefit plans:
in thousands of euros
2021 2020
Present value of the defined benefit obligations 4,716 5,844
Fair value of the plan assets
Net pension obligation 4,716 5,844
The following amounts are recognized in the statement of profit and loss with respect to the defined
benefit plans:
in thousands of euros
2021 2020
Current service costs 62 119
Interest costs included in financial expenses 42 40
Pension expense in the profit and loss account 104 159
For 2022 TKH expects to pay a pension premium of € 0.2 million (including contributions from
participants) related to the defined benefit plans.
The change in the present value of the defined benefit plan obligations is as follows:
in thousands of euros Notes
2021 2020
Balance at 1 January 5,844 5,759
Reclassification to liabilities held for sale -1,039
Current service costs 62 119
Interest costs included in financial expenses 42 40
Actuarial (gains)/losses recognized through other com-
prehensive income
-30 236
Entitlements paid -163 -310
Balance at 31 December 4,716 5,844
Changes in the assumptions have consequences for the present value of the defined benefit
obligation. In the summary below a sensitivity analysis on the gross and net defined benefit
obligation is shown for the three largest pension schemes, which together represent 75% of the net
pension liability, when there is an absolute change of 1% or 1 year in the relevant assumptions:
2021 2020
+1.0% -1.0% +1.0% -1.0%
Discount rate -355 422 -378 453
General percentage salary increase 481 -411 521 -442
+1 year -1 year +1 year -1 year
Mortality table 139 -140 150 -154
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CONSOLIDATED FINANCIAL STATEMENTS
18 NON-CURRENT LIABILITIES
in thousands of euros Notes
2021 2020
Debts to credit institutions 19 268,010 339,511
To be amortized transaction costs for the credit facility -322
Long term lease liabilities (Right-of-use assets) 19 62,528 69,835
Other non-current liabilities 3,266 484
Interest-bearing loans and borrowings 333,804 409,508
The credit margin on the non-current debts to credit institutions is variable and dependent on the
net-interest bearing debt/EBITDA, including the amount of the draws from the credit facility. On
average the margin is 1.4%. The interest is variable and based on Euribor or Libor. The material
subsidiaries are guarantor for the obtained financing. No additional securities were provided. See
note 21 for more details on the capital and liquidity risk.
19 BORROWINGS
Term Interest Amount
in thousands of euros Notes
2021 2020
Bank loans reported under non-current liabilities 18 2.1 years Euribor + margin 268,010 339,511
Long term lease liabilities (Right-of-use assets) 18 1-18 years 2.0% 62,528 69,835
Short term lease liabilities (Right-of-use assets) < 1 year 2.0% 12,959 13,736
Borrowings reported under current liabilities < 1 year Euribor/Libor + margin 34,630 43,407
Cash and cash equivalents 10 < 1 year Euribor/Libor - margin -100,135 -121,645
Net interest bearing debt 277,992 344,844
At year-end 2021, € 32.9 million of the borrowings forms part of cash and interest pools (2020:
€ 56.0 million). The interest on the borrowings is variable and based on Euribor or Libor. The credit
margins differ per credit institution, duration and country and vary from 0.3% to 1.4%. The material
subsidiaries are guarantor for the obtained financing from credit institutions. No special securities
were provided.
The credit margin for lease liabilities differ per right-of-use asset, duration and country and vary
from 1.4% to 26.7%, with a weighted average of 2.0%. The obligations arising from leasing are
guaranteed by the lessor’s property right on the leased assets. See note 21 for more details on the
capital and liquidity risk.
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The overview below shows the changes in the interest-bearing liabilities arising from financing activities
Borrowings reported under current liabilities Bank loans reported under non-current liabilities Total lease liabilities (Right-of-use assets) Total
in thousands of euros
2021 2020 2021 2020 2021 2020 2021 2020
Balance at 1 January 43,407 44,361 339,511 344,258 83,571 84,753 466,489 473,372
Cash flows from financing activities 15,884 -47,676 -71,501 -5,498 -55,617 -53,174
Proceeds/(repayments) from cash pools -23,177 46,052 -23,177 46,052
Payment of lease liabilities -15,570 -16,005 -15,570 -16,005
Non-cash changes:
- Acquisition of subsidiaries 110 0 110
- Reclassification to liabilities held for sale -386 -11,382 -11,768 0
- New leases and reassesments 17,990 15,846 17,990 15,846
- Amortized transaction costs 322 0 322
- Interest 1,700 1,857 1,700 1,857
- Effect of changes in exchange rates -1,098 670 319 -822 -2,880 -1,920 -1,891
Balance at 31 December 34,630 43,407 268,010 339,511 75,487 83,571 378,127 466,489
The withdrawals and repayments of cash pools relate to changes in cash pools presented under
cash and cash equivalents (note 10).
20 TRADE AND OTHER PAYABLES
in thousands of euros Notes
2021 2020
Trade creditors 198,623 139,078
Advance receipts 4,628 2,808
Other taxes and social insurance contributions 23,000 45,247
Derivatives 21 3,794 1,147
Refund liabilities from customer volume rebates 9 10,641 8,852
Other payables and accruals 84,010 61,585
Trade payables and other payables 324,696 258,717
The other payables and accruals relate to, among others, personnel bonuses to be paid,
commissions, holidays and holiday allowances as well as accruals for invoices to be received. At
the end of 2021, a number of suppliers made use of supply chain finance (reversed factoring) for a
total of € 39.7 million (2020: € 27.5 million), which is recognized as trade payables.
| TKH GROUP ANNUAL REPORT 2021
124
CONSOLIDATED FINANCIAL STATEMENTS
21 FINANCIAL INSTRUMENTS AND RISKS
General
The main financial risks faced by TKH relate to the capital and liquidity risk, interest risk, currency
risk, credit risk and price risk. TKH’s financial policy is aimed at minimizing the effects of fluctuations
in currency exchange and interest rates on its results in the short-term and following market rates in
the long-term. TKH uses derivatives to manage the financial risks relating to the business operations
and does not undertake speculative positions. Financial risks and the control by management of
these risks are disclosed in the chapter ‘Risk management’ in the annual report.
Capital and liquidity risk
External financing is contracted by the holding for the entire TKH Group. TKH has a committed
revolving and standby credit facility of € 500 million with a group of banks. The revolving and
standby credit facility has a high flexibility in relation to utilizations and repayments. Next to the
committed facility, there are uncommitted facilities with several banks for a total of € 315 million.
TKH has per 31 December 2021 unused available credit facilities for a total of € 436 million (2020:
€ 395 million). The available credit facilities are reduced for the outstanding bank guarantees. The
maximum credit facility per subsidiary is determined centrally. In the credit facility the following
financial covenant is agreed, which is tested on a quarterly basis:
Covenant
Realization
31-12-2021
Realization
31-12-2020
Net debt compared to EBITDA (debt leverage ratio) < 3.0 0.9 1.6
The debt leverage ratio is calculated excluding the impact of IFRS 16 Leases. Furthermore, it has
been agreed with the banks that in the calculation of the debt leverage ratio acquisitions may be
consolidated pro forma for 12 months. TKH uses internally a debt leverage ratio up to 2.0. TKH
operates within the banks’ required covenant at the end of 2021.
The following table provides an overview of the liquidity risk for the financial liabilities of TKH at the
end of 2021 based on agreed repayment periods:
in thousands of euros Average interest Payable on demand <3 months >3 months <1 year 1-5 years >5 years Contractual cash flows Book value
Bank loans reported under non-current liabilities 1.4% 938 2,814 272,075 275,827 268,010
Lease liabilities (Right-of-use assets) 2.0% 5,939 10,478 38,293 31,165 85,875 75,487
Other financial liabilities 1.5% 4,989 2,499 7,488 7,192
Borrowings reported under current liabilities 1.0% 34,637
34,637 34,630
Trade creditors 198,623 198,623 198,623
Other payables excluding derivatives 94,651
94,651 94,651
Interest rate swaps (derivatives) 64 191 51 306 294
Foreign currency forward contracts (derivatives) 31,615 55,643 17,479 104,737 285
Commodities (derivatives) -638 -732 -330 -1,700 -1,700
Other financial liabilities 34,637 331,192 73,383 330,067 31,165 800,444 677,472
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TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
The following table provides an overview of the liquidity risk for the financial liabilities of TKH at the
end of 2020 based on agreed repayment periods:
in thousands of euros Average interest Payable on demand <3 months >3 months <1 year 1-5 years >5 years Contractual cash flows Book value
Bank loans reported under non-current liabilities 1.4% 1,189 3,567 349,580 354,336 339,673
Lease liabilities (Right-of-use assets) 2.1% 6,240 11,030 42,464 35,732 95,466 83,571
Financial liabilities 1.5% 4,542 3,747 8,289 7,950
Borrowings reported under current liabilities 1.0% 43,416 43,416 43,407
Trade creditors 139,078 139,078 139,078
Other payables excluding derivatives 70,437 70,437 70,437
Interest rate swaps (derivatives) 62 186 338 586 566
Foreign currency forward contracts (derivatives) 24,590 49,287 4,863 78,740 -1,585
Commodities (derivatives) -609 -885 -221 -1,715 -1,715
Financial liabilities 43,416 240,987 67,727 400,771 35,732 788,633 681,382
The cash flows in these statements are not discounted. The cash flows are based on the interest
rates and the exchange rates at the end of the year. The cash flows for interest rate swaps are
based on the contracted fixed interest rates compared to the variable interest rate at balance sheet
date. The interest rate swap and commodity derivatives are net settled. Currency contracts are
gross settled. The following table shows the corresponding reconciliation of these amounts and
their book value:
in thousands of euros
Payable on
demand <3 months
>3 months
<1 year 1-5 years >5 years
31-12-2021
Total
Incoming 32,354 55,444 16,650 104,448
Outgoing -31,615 -55,643 -17,479 -104,737
Net 0 739 -199 -829 0 -289
Discounted at con-
tractual bank rates
681 -73 -893 0 -285
in thousands of euros
Payable on
demand <3 months
>3 months
<1 year 1-5 years >5 years
31-12-2020
Total
Incoming 24,735 50,248 5,027 80,010
Outgoing -24,590 -49,287 -4,863 -78,740
Net 0 145 961 164 0 1,270
Discounted at con-
tractual bank rates
123 1,231 231 1,585
Interest risk
The interest risk policy aims at minimizing the interest rate risks associated with the financing of the
company and thus at the same time optimizing the net interest costs. Long-term financing has been
obtained with a floating-rate and will partly be fixed by means of interest rate swaps, whereby TKH
aims to fix 40-70% of the interest associated with the borrowing. During the past period of negative
interest rates, TKH has chosen to hedge the interest rate risk below this bandwidth. The following
table provides an overview of the, for hedging purposes, agreed interest rate swaps:
Average contracted interest rate Nominal amount
Fair value
in thousands of euros
(unless stated otherwise)
2021 2020 2021 2020 2021 2020
Maturity between
1 and 2 years
0.45% 25,000 -294
Maturity between
2 and 5 years
0.45% 25,000 -566
Cash flow hedge accounting has been applied to all interest rate swaps mentioned above. There
was no material ineffectiveness in relation to these hedges.
| TKH GROUP ANNUAL REPORT 2021
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CONSOLIDATED FINANCIAL STATEMENTS
The following sensitivity analysis of borrowings, bank credits and cash and related interest rate
swaps to interest rate movements assumes an immediate 1% change in interest rates for all
currencies and maturities, with all other variables held constant.
A raise of the interest rates with 1% would result in:
•
Additional interest costs of about € 2.6 million per year as a result of financing and cash with a
floating interest rate (2020: € 3.3 million). The impact is reduced by existing interest rate swaps.
•
An increase of the fair value of the financial instruments with about € 0.3 million (2020: € 0.6
million) as a result of the contracted interest rate swap. This raise would be recognized in the
hedging reserves of the equity through the consolidated statement of comprehensive income.
Currency risk
It is TKH’s general policy to hedge currency risks on purchases if these risks cannot be charged to
the market. Purchase transactions in foreign currencies are hedged when the sales prices are
already fixed in case of material transactions. Sales transactions in foreign currencies are fully
hedged in case of material transactions. The main currencies that cause this exposure are the USD
and CNY. Foreign currency forward contracts are applied to minimize the exposure of fluctuations in
the currency rates. These contracts mainly have a term to maturity of less than one year. In addition
to the currency risk on the purchase and sale transactions, there is a currency risk resulting from the
translation of net investments in TKH subsidiaries denominated in functional currencies other than
euros. The main currencies that cause this exposure are the USD, CNY, and PLN. These risks are
partially hedged by financing these investments in local currency. The remaining risk is not hedged.
The carrying amounts of monetary assets and liabilities specified to currencies are as follows:
Average contract rate Nominal amount in foreign currency
Fair value
in thousands of euros (unless stated otherwise)
2021 2020 2021 2020 2021 2020
Cash flow hedges of balance positions
Sell USD with settlement within 3 months 1.18 1.17 -10,930 -5,511 -354 313
Buy USD with settlement within 3 months 1.18 135 -5
Buy CNY with settlement within 3 months 7.64 7.91 92,894 89,049 591 -214
Cash flow hedges
Sell USD with settlement within 3 months 1.21 1.18 -1,424 -3,466 -83 101
Sell USD with settlement between 3 months and 1 year 1.21 1.19 -33,307 -31,373 -1,966 1,084
Sell USD with settlement after 1 year 1.19 1.19 -19,797 -5,967 -893 231
Buy USD with settlement between 3 months and 1 year 1.11 1.16 159 2,979 10 -55
Buy CNY with settlement within 3 months 7.67 7.99 65,538 47,144 527 -72
Buy CNY with settlement between 3 months and 1 year 7.69 8.11 200,548 171,404 1,883 202
Total -285 1,585
Euro USD CNY Other currencies Total
in thousands of euros
2021 2020 2021
2020
2021
2020
2021
2020
2021
2020
Trade and other receivables 265,406 230,244 37,709 30,505 14,782 6,918 17,552 13,926 335,449 281,593
Cash and cash equivalents 43,573 76,991 28,863 25,428 13,503 6,508 14,196 12,718 100,135 121,645
Non-current interest-bearing loans and borrowings -333,804 -409,508 -333,804 -409,508
Current interest-bearing loans and borrowings -30,012 -35,782 -7,012 -13,177 -629 -488 -9,936 -7,696 -47,589 -57,143
Trade payables and other payables -362,247 -278,639 -37,713 -27,751 -40,292 -17,266 -11,488 -8,992 -451,740 -332,648
Total -417,084 -416,694 21,847 15,005 -12,636 -4,328 10,324 9,956 -397,549 -396,061
On balance sheet date, TKH has entered into foreign currency forward contracts:
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TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
Time differences between the settlement of the forward contracts and the sale and purchase
contracts are anticipated by the use of foreign currency bank accounts or the rollover of forward
contracts. The translation risk on financial instruments, when the euro will decrease with 10%
compared to all other currencies, with all other variables held constant, would be expected to have
an influence of € 6.6 million negative on the result before tax (2020: € 3.4 million negative). The
foreign currency forward contracts are taken into account in this calculation. The impact of a
decrease of the euro on the shareholders’ equity is larger because of the net investments in foreign
subsidiaries with another functional currency. The impact of this is approximately € 25.5 million
positive (2020: € 21.0 million positive). An increase of the euro with 10% will have the opposite
influence, namely a positive influence of € 6.6 million on the result before tax and a negative
influence of € 25.5 million on equity.
Price risk
An important raw material for TKH is copper and aluminium. The price risk of copper and aluminium
is limited by a continuously monitoring of sales prices against the development of the purchase
price where price changes are passed on to customers. Important raw materials such as copper,
aluminum, steel and plastics are purchased with forward delivery contracts, to reduce the price risk
on the sale of finished products, provided that:
•
a sales contract with a fixed price has been entered into,
•
delivery will not take place within one month, and
•
an important quantity is required for production.
With physical purchases on long-term against a fixed price in advance, TKH made limited use of
derivatives to hedge price risks on free inventories and to fix purchase prices of copper regarding
large sales orders with delivery times exceeding one month, if not covered by a long-term purchase.
On balance sheet date TKH has entered into the following derivatives for raw materials:
Average contract rate Quantity in metric tons Fair value
in thousands of euros (unless stated otherwise)
2021 2020 2021 2020 2021 2020
Cash flow hedges
Buy Copper with settlement within 3 months 5.86 5.66 905 699 617 566
Buy Copper with settlement between 3 months and 1 year 8.05 5.55 1,390 1,045 674 813
Buy Copper with settlement between 1 and 3 years 6.48 5.55 161 292 330 221
Buy Aluminium with settlement within 3 months 1.31 1.51 1,724 412 21 43
Buy Aluminium with settlement between 3 months and 1 year 2.43 1.48 2,061 553 58 72
Total 1,700 1,715
A decrease of the copper price with 10% would have a negative impact of approximately € 1.0
million on the result (2020: € 0.6 million negative) if all other factors and conditions remain the
same. This is caused by the free stock, for which price risk is not hedged, which will then be sold at
a lower price.
Credit risk
The financial assets of the group mainly consist of cash and cash equivalents, trade receivables,
contract assets and other receivables. The credit risk for cash and cash equivalents is outstanding
at major international system banks. The credit risks mainly relate to trade receivables and contract
assets. However, it concerns a risk that is spread over a large number of customers that operate in
several countries and in different markets. At balance sheet date there was no concentration of
credit risk for material amounts. Part of the risk is insured at credit insurance companies. In
addition, part of the risk is transferred to factoring companies. The credit risks insurances and
factoring is in particular related to receivables on customers in the reporting segment Smart
Connectivity systems. These customers are mainly located in the Netherlands, Germany and Asia.
In addition, for large projects to foreign customers bank guarantees, advanced payments (towards
a bank guarantee) or confirmed irrevocable ’Letter of Credit’ are used. The maximum exposure to
credit risk is represented by the carrying amounts of contract assets and financial assets that are
recognized in the balance sheet, including derivatives with a positive market value.
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CONSOLIDATED FINANCIAL STATEMENTS
An impairment analysis is performed at each balance sheet date, whereby the expected credit
losses are calculated using a provision matrix. The percentages in the provision matrix are initially
based on historical losses for various customer segments (geographic region, customer type, rating
and coverage by, for example, credit insurance).The historical credit risk percentages in the matrix
are then adjusted with forward-looking information. If the predicted economic conditions are
expected to deteriorate, which may lead to an increase in the number of defaults, the historical
credit risk rates will be adjusted. On each reporting date, the historical observed credit risk
percentages are updated and changes in estimates are analyzed. The assessment of the correlation
between historical observed credit risk percentages, predicted economic conditions and expected
credit losses is a management estimate. The actual future credit losses may differ. Below is shown
the age of the trade receivables, contract assets and the expected credit losses.
in thousands of euros Not overdue Up to 30 days 31 - 60 days 61 - 90 days 91 - 180 days 181 - 365 days Older than 365 days
31-12-2021
Total
Book value 257,130 35,995 8,086 3,679 4,391 2,059 7,550 318,890
Expected credit loss rate 0.1% 0.3% 1.0% 3.3% 6.2% 19.1% 67.5%
Loss allowance 300 117 77 121 272 394 5,096 6,377
22 CONTINGENT LIABILITIES
Framework agreements have been concluded with some suppliers for the availability of some
important raw materials. There are no long-term purchase obligations.
in thousands of euros
2021 2020
Bank guarantees provided to third parties 122,860 87,291
Corporate guarantees provided to banks 13,391 12,904
Purchase obligations arising from orders for property, plant
and equipment
11,935 9,680
The majority of the bank guarantees provided relate to down payments and performance
guarantees issued to customers.
Claims
TKH and its subsidiaries are involved in a number of legal proceedings. According to the information
currently available and legal advice received, TKH expects any adverse effects from the outcome of
these legal proceedings to be adequately covered by other provisions or insurance.
in thousands of euros Not overdue
Up to 30 days 31 - 60 days 61 - 90 days 91 - 180 days 181 - 365 days Older than 365 days
31-12-2020
Total
Book value 211,460 39,212 8,420 2,812 2,466 1,343 8,363 274,076
Expected credit loss rate 0.1% 0.6% 1.6% 3.0% 12.1% 20.3% 65.1%
Loss allowance 202 239 133 83 299 273 5,446 6,675
There are no significant overdue account receivables that are not largely covered by insurances or
guarantees or for which no provision has been recognized. The movement of the allowance for
doubtful debts is as follows:
in thousands of euros
2021 2020
Balance at 1 January 6,675 7,261
Additions 1,236 806
Releases -749
Acquisitions -13
Reclassification to assets held for sale -468
Utilized -418 -1,207
Exchange differences 101 -172
Balance at 31 December 6,377 6,675
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TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
23 INFORMATION BY SEGMENT
As announced on our Capital Markets Day in November 2021, going forward from November 2021,
TKH changed its management structure and is now organized along the lines of our three technologies:
Smart Vision systems, Smart Manufacturing syst
ems and Smart Connectivity systems. The segment
reporting as of November 2021 follows this structure. This note contains disclosures for the previous
segmentation (Telecom, Building and Industrial Solutions) and new segmentation (Smart Vision
systems, Smart Manufacturing systems and Smart Connectivity
systems).
Smart Technology segmentation (November 2021 onwards)
In the overview of ‘Consolidated entities’, as part of the ‘Other information’, is shown in which of the
segments the different subsidiaries operate. In the annual report, a detailed overview of the
activities by business segment is shown.
Operating segments
Smart Vision systems Smart Manufacturing systems Smart Connectivity systems Other and eliminations Total
in thousands of euros (unless stated otherwise)
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Geographic segments
Netherlands 38,130 39,100 41,540 38,268 260,136 226,943 2 86 339,808 304,397
Europe (other) 175,230 173,362 145,558 111,792 364,137 271,906 184 642 685,109 557,702
Asia 109,920 86,855 146,554 121,915 37,012 37,091 293,486 245,861
North America 81,369 77,455 80,079 71,123 7,458 6,034 35 29 168,941 154,641
Other 20,143 11,527 2,488 2,375 13,798 12,865 36,429 26,767
External turnover 424,792 388,299 416,219 345,473 682,541 554,839 221 757 1,523,773 1,289,368
Inter-segment revenue 4,986 4,657 2,835 3,987 9,780 10,745 -17,601 -19,389 0 0
Total turnover 429,778 392,956 419,054 349,460 692,321 565,584 -17,380 -18,632 1,523,773 1,289,368
Timing of revenue recognition
Revenue at a point-in-time 401,273 356,845 81,484 68,931 567,626 481,932 36 86 1,050,419 907,794
Revenue over time 22,492 30,776 334,683 276,521 114,229 72,738 1 471,405 380,035
Inter-segment revenue 4,986 4,657 2,835 3,987 9,780 10,745 -17,601 -19,389 0 0
Revenues from contracts with customers 428,751 392,278 419,002 349,439 691,635 565,415 -17,564 -19,303 1,521,824 1,287,829
Other revenues 1,027 678 52 21 686 169 184 671 1,949 1,539
Total turnover 429,778 392,956 419,054 349,460 692,321 565,584 -17,380 -18,632 1,523,773 1,289,368
Added value 250,760 232,174 205,417 170,350 279,942 230,930 401 937 736,520 634,391
Added value in % 58.3% 59.1% 49.0% 48.7% 40.4% 40.8% 48.3% 49.2%
EBITDA 88,512 77,528 67,354 49,357 94,914 66,203 -16,053 -12,101 234,727 180,987
EBITA 73,791 62,057 59,391 41,384 73,207 45,221 -16,828 -13,144 189,561 135,518
ROS 17.2% 15.8% 14.2% 11.8% 10.6% 8.0% 12.4% 10.5%
One-off income and expenses 3,129 318 4,317 -837 0 6,927
Amortization 37,588 40,499 9,561 9,037 3,903 4,108 58 76 51,110 53,720
Impairments 2,237 2,930 -51 208 -653 830 31 1,564 3,968
Segment operating result 33,966 15,499 49,881 31,821 69,957 35,966 -16,917 -12,383 136,887 70,903
| TKH GROUP ANNUAL REPORT 2021
130
CONSOLIDATED FINANCIAL STATEMENTS
Operating segments
Smart Vision systems Smart Manufacturing systems Smart Connectivity systems Other and eliminations Total
in thousands of euros (unless stated otherwise)
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Other information
Investments in intangible assets, property, plant and equipment,
Right-of-use assets, including acquisitions
40,888 35,185 17,418 17,116 28,557 29,066 807 834 87,670 82,201
Employees (FTE) 1,862 1,827 1,677 1,609 2,162 2,061 83 86 5,784 5,583
Balance sheet
Assets 731,607 688,230 342,306 303,350 488,877 501,807 17,777 42,436 1,580,567 1,535,823
Assets held for sale 87,140 3,577 1,044 1,017 88,184 4,594
Associates 2,884 2,886 25,813 22,652 2 2 28,699 25,540
Total assets 734,491 691,116 342,306 303,350 601,830 528,036 18,823 43,455 1,697,450 1,565,957
Total liabilities 203,627 178,363 260,367 159,746 223,521 189,341 287,952 376,601 975,467 904,051
Capital employed current year 488,804 473,896 71,645 128,481 350,350 314,290 16,955 6,673 927,754 923,340
Return on Capital Employed (ROCE) 15.3% 12.6% 59.4% 33.2% 22.0% 13.6%
20.5% 14.0%
Added value is calculated by deducting ‘Raw materials, consumables, trade products and
subcontracted work’ from ‘Total turnover’
TKH has no individual customers representing 10% or more of the consolidated turnover. Other
revenues relate to other services provided to third parties, such as rental, insurance payments and
charged costs.
Non-current assets
1
Employees (FTE)
in thousands of euros (unless stated otherwise)
2021 2020 2021 2020
Geographic segments
Netherlands 288,263 272,659 34% 36%
Europe (other) 448,523 514,419 43% 42%
Asia 63,514 52,027 14% 14%
North America 47,396 57,993 7% 7%
Other 10,097 4,901 2% 1%
Total 857,793 901,999 100% 100%
1 The non-current assets are shown excluding the deferred tax assets.
131
TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
Solutions segmentation (until November 2021)
Operating segments
Telecom Solutions Building Solutions Industrial Solutions Other and eliminations Total
in thousands of euros (unless stated otherwise)
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Geographic segments
Netherlands 46,783 52,378 250,909 209,201 41,391 42,818 339,083 304,397
Europe (other) 161,140 117,569 296,836 263,765 227,858 176,368 685,834 557,702
Asia 9,014 10,887 122,041 101,355 162,430 133,618 293,485 245,860
North America 544 514 85,314 79,536 83,082 74,592 168,940 154,642
Other 1,689 1,787 27,714 18,676 7,028 6,304 36,431 26,767
Total turnover 219,170 183,135 782,814 672,533 521,789 433,700 0 0 1,523,773 1,289,368
Timing of revenue recognition
Revenue at a point-in-time 217,718 181,730 723,151 627,196 109,550 98,868 1,050,419 907,794
Revenue over time 1,341 1,301 58,474 44,681 411,590 334,053 471,405 380,035
Revenues from contracts with customers 219,059 183,031 781,625 671,877 521,140 432,921 0 0 1,521,824 1,287,829
Other revenues 111 104 1,189 656 649 779 1,949 1,539
Total turnover 219,170 183,135 782,814 672,533 521,789 433,700 0 0 1,523,773 1,289,368
Result
EBITA before one-off income and expenses 29,344 23,108 96,155 77,257 77,175 47,328 -13,113 -12,175 189,561 135,518
ROS 13.4% 12.6% 12.3% 11.5% 14.8% 10.9% 12.4% 10.5%
One-off income and expenses -8,606 1,679 0 -6,927
Amortization -1,005 -1,139 -40,311 -43,276 -9,781 -9,291 -13 -14 -51,110 -53,720
Impairments 182 -1,615 -3,796 51 -354 -1,564 -3,968
Segment operating result 28,339 22,151 54,229 21,579 67,445 39,362 -13,126 -12,189 136,887 70,903
Other information
Investments in intangible assets, property, plant and equipment,
Right-of-use assets, including acquisitions
9,859 8,952 57,312 52,755 19,924 19,979 575 86 87,670 81,772
Depreciation and amortization 6,773 6,843 67,866 70,587 21,468 19,899 169 258 96,276 97,587
Employees (FTE) 730 718 2,741 2,657 2,282 2,178 31 30 5,784 5,583
Balance sheet
Assets 183,025 179,380 952,495 904,131 418,485 395,220 26,562 57,092 1,580,567 1,535,823
Assets held for sale 20,914 48,708 3,646 18,357 948 205 88,184 4,594
Associates 10,017 8,959 2,851 2,847 15,829 13,732 2 2 28,699 25,540
Consolidated total assets 213,956 188,339 1,004,054 910,624 452,671 409,900 26,769 57,094 1,697,450 1,565,957
Liabilities 48,033 46,551 209,233 201,544 261,426 169,171 456,775 486,785 975,467 904,051
| TKH GROUP ANNUAL REPORT 2021
132
CONSOLIDATED FINANCIAL STATEMENTS
Total turnover
in thousands of euros
2021 2020
Vertical markets
Fibre Optics Networks 151,341 121,837
Parking 33,679 37,119
Infrastructure 146,994 130,557
Marine & Offshore 74,181 55,303
Care 63,124 52,129
Machine Vision 199,454 173,391
Tire Building Industry 285,940 242,467
Other vertical markets 569,060 476,565
Total turnover 1,523,773 1,289,368
The turnover in the vertical growth market Fiber Optic Networks is mainly realized in Telecom
Solutions. Tire Building Industry mainly concerns the segment Industrial Solutions, while Care
covers both Building Solutions and Industrial Solutions. The other vertical growth markets mainly
relate to Building Solutions.
24 PERSONNEL EXPENSES
The personnel expenses include the following items:
in thousands of euros
2021 2020
Wages and salaries 303,004 287,202
Share-based payments 5,042 2,592
Social insurance contributions 49,243 46,491
Pension costs 15,421 14,627
Temporary labor 19,506 17,047
Capitalized development costs -27,571 -26,969
Other personnel expenses 13,622 11,862
Personnel expenses 378,267 352,852
Personnel costs for 2020 include one-off charges of € 7.7 million associated with restructuring
within the ‘Simplify & Accelerate’ program. During the year 2021 no significant use has been made
of available COVID-19 government support. In 2020, government support programs reduced
personnel costs with € 6.8 million, often related to schemes for job retention or a form of short-time
working. In the Netherlands, no government support has been used.
25 SHARE-BASED PAYMENTS
Stock option scheme settled in equity instruments
Option rights to (depositary receipts of) ordinary shares of TKH are granted to the management of the
subsidiaries. The rights can never be exercised until after the publication of the company’s annual
results three calendar years following the year in which the rights were granted, and have an exercise
period of two years. Partly to avoid abuse of inside knowledge, the conditions for participation have
been laid down in an internal regulation and have been accepted in writing by the participants.
Executive Board
No option rights are granted to the members of the Executive Board and the Supervisory Board.
Mr. H.J. Voortman has been awarded options in the period before being appointed as a member of
the Executive Board. The movement and balance of the outstanding option rights granted to him is
as follows:
Year of
allocation
Exercise
price in €
Number at
01-01-2021
Granted
during the
year
Expired
during the
year
Elapsed
during the
year
Exercised
during the
year
Number at
31-12-2021 Exercise period
2016 33.92 12,000 -12,000 2019-2021
2017 41.19 7,350 7,350 2020-2022
2018 52.25 8,400 8,400 2021-2023
Total 27,750 0 0 0 -12,000 15,750
Other option beneficiaries
The movement and balance of the outstanding option rights granted to the other option beneficiaries
are as follows:
Year of
allocation
Exercise
price in €
Number at
01-01-2021
Granted
during the
year
Expired
during the
year
Elapsed
during the
year
Exercised
during the
year
Number at
31-12-2021 Exercise period
2016 33.92 194,450 -2,210 -780 -191,460 2019-2021
2017 41.19 218,328 -1,756 -145,998 70,574 2020-2022
2018 52.25 220,091 -2,004 -1,008 217,079 2021-2023
2019 46.02 312,860 -2,683 310,177 2022-2024
2020 32.28 306,515 -2,449 304,066 2023-2025
2021 37.88 335,669 -4,495 331,174 2024-2026
Total
1,252,244
335,669 -2,210 -14,167 -338,466
1,233,070
At the end of 2021, the company owns 1,020,885 purchased (depositary receipts of) shares to cover
the option rights. These (depositary receipt of) shares have been purchased against an average
share price of € 40.27. The total purchase value is € 41,113,418. The average share price on the
133
TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
date at which the share options were exercised during the financial year was € 36.96. The options
were granted during the financial year on 9 March 2021. The estimated fair value of the options
granted in 2021 is € 2,766,232. The fair value was determined on the basis of a binomial valuation
model with the following assumptions:
2021 2020
Fair value at the date of allocation (in €) 8.12 8.41
Expected volatility 35.7% 26.7%
Expected dividend 3.0% 3.0%
Risk free rate -0.380% -0.453%
Expected period to expiry of the option (in years) 4.0 4.0
The current restrictions on the exercise of the options, the chances that employees will leave the
company and possible personal considerations of option holders have been taken into account for
the expected expiry period of the options. TKH has a reported total charge of € 2,237,169 (2020:
€ 1,936,252) for these share-based payments which have been settled in equity instruments.
Other share-based payments
Based on the share scheme, (depositary receipts of) shares have been allotted to the members of the
Executive Board. During 2021 Mr. J.M.A. van der Lof was allotted 2,216 (depositary receipts of) shares,
Mr. E.D.H. de Lange 1,662, and Mr. H.J. Voortman 1,508 (depositary receipts of) shares related to the
performance for the year 2020. At the same time, the Executive Board members purchased respec-
tively 2,216, 1,662 and 1,508 (depositary receipts of) shares at the actual share price of € 38.44, all in
accordance with the regulation of the share scheme. As a result of the share-based payments, TKH
has recognized a total charge of € 2,805,000 (2020: € 656,000) in the statement of profit and loss.
26 OTHER OPERATING EXPENSES
Other operating expenses include overhead, selling, accommodation and manufacturing expenses.
27 DEPRECIATION
in thousands of euros
2021 2020
Depreciation of property, plant and equipment 30,149 29,769
Depreciation of Right-of-use assets 15,089 15,665
Result on disposal of propery, plant and equipment -72 -1,567
Depreciation 45,166 43,867
28 AMORTIZATION
in thousands of euros
2021 2020
Amortization of intangible non-current assets 31,870 30,813
Amortization of intangible non-current assets from acquisi-
tions as a result of ‘Purchase Price Allocations’
19,240 22,907
Amortization 51,110 53,720
29 IMPAIRMENT
in thousands of euros Notes
2021 2020
Impairment of intangible assets and goodwill 3 996 323
Impairment of property, plant and equipment 4 -581 995
Impairment Right-of-use assets 5 1,209 2,553
Onerous contracts -60 97
Impairment 1,564 3,968
30 RESEARCH AND DEVELOPMENT COSTS
The total operating expenses over the financial year include the following items:
in thousands of euros
2021 2020
Research and development costs 64,422 60,643
Less: Capitalized development costs -34,689 -34,390
Add: Amortization of development costs 25,549 24,171
Add: Impairment on capitalized development costs 965 323
Research and development costs accounted for in the
profit and loss account
56,247 50,747
Government subsidies for research and development costs 3,680 4,288
| TKH GROUP ANNUAL REPORT 2021
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CONSOLIDATED FINANCIAL STATEMENTS
31 FINANCIAL INCOME AND EXPENSES
in thousands of euros
2021 2020
Exchange and translation differences, including the effect of
realized cash flow hedges
-680 -1,965
Amortized transaction costs -322 -322
Interest costs in defined benefit plans -10 -15
Interest expense on lease liabilities -1,700 -1,857
Interest expenses -5,767 -6,593
Interest income from debt instruments at fair value through P&L
30 30
Interest income 161 312
Financial income and expenses -8,288 -10,410
32 TAX
in thousands of euros Notes
2021 2020
Current tax 33,852 19,154
Adjustments for previous years -264 -253
Deferred tax 16 102 -3,512
Total tax on result 33,690 15,389
The taxes that are included directly in the statement of other comprehensive income are shown
below.
in thousands of euros Notes
2021 2020
Deferred taxes on revaluation of cash flow hedges 16 -400 1,089
Deferred taxes on actuarial gains and losses 16 8 89
Total tax on other comprehensive income -392 1,178
The tax rate is calculated at the prevailing tax rates in each country. The tax rate over the year can
be reconciled with the profit before tax as follows:
in thousands of euros (unless stated otherwise)
2021 2020
Result before tax 128,914 62,915
Tax calculated at the Dutch tax rate 32,229 25.0% 15,729 25.0%
Correction due to tax effect for:
Tax participation exemption -380 -0.3% -495 -0.8%
Non-deductible expenses 2,564 2.0% 1,000 1.6%
Non-taxable income -245 -0.2% -459 -0.7%
Advantages from tax facilities -3,110 -2.4% -2,862 -4.5%
Write off/recognition of deferred taxes 72 0.1% 209 0.3%
(Recognition)/derecognition of deferred tax
asset for unused tax losses
1,206 0.9% 1,725 2.7%
Settlement of income tax returns for previous
years
-264 -0.2% -253 -0.4%
Differences in tax rates for foreign subsidiaries 2,248 1.7% 1,576 2.5%
Change in statutory tax rate -586 -0.5% 1,093 1.7%
Other tax benefits -44 0.0% -1,874 -2.9%
Effective tax rate 33,690 26.1% 15,389 24.5%
The effective tax rate increased compared to last year. The change is mainly attributable to the
following circumstances:
•
The non-deductible expenses increased due to higher costs related to share based payments;
•
In 2020, TKH received government support for COVID-19, which was in some countries
classified as non-taxable income;
•
Although the benefits from tax R&D facilities increased compared to previous year, the relative
reduction of the tax rate decreased as a result of a governmental change to less favorable tax
facilities in the Netherlands and China. These current facilities mainly relate to the Netherlands
(innovation box), Canada (SR&ED) and Austria;
•
Not fully recognizing tax losses resulted in a tax loss of € 1.2 million in 2021 (2020: € 1.7 million);
•
Differences in tax rates for foreign subsidiaries causes on balance a higher effective tax rate. This
mainly applies to our subsidiaries in Germany, France, Canada and Australia;
•
Changes in statutory tax rates applied in the calculation of deferred taxes resulted in a tax benefit
of € 0.6 million (2020: tax expense of € 1.1 million); and
•
In 2020, there was a tax write-down on a business premises, which was recognized as other tax
benefits.
135
TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
33 EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS
in thousands of euros (unless stated otherwise) Notes
2021 2020
Weighted average number of (depositary receipts of) shares (x 1,000) 41,184 41,729
Effect of share options (x 1,000) 158 29
Weighted average number of (depositary receipts of) shares diluted (x 1,000) 41,342 41,758
Net profit 95,224 47,526
Less: Non-controlling interests -12 -6
Net profit attributable to the shareholders of the company 95,212 47,520
Amortization of intangible assets from acquisitions 3 19,240 22,907
Taxes on amortization -5,045 -6,014
Net profit before amortization attributable to the shareholders of the company 109,407 64,413
One-off costs for restructurings, integrations, divestments and acquisitions 6,927
Result from divestments and purchase price allocations in the result of associates 1,556 -2,143
Impairments 1,564 3,968
Fair value changes of financial liability for earn-out and put options of holders of non-controlling interests 15 1,759 -120
Tax impact on one-off expenses and benefits -391 -2,723
Net profit before amortization and one-off income and expenses attributable to the shareholders of the company 113,895 70,322
Earnings per share attributable to shareholders
Ordinary earnings per share (in €) 2.31 1.14
Diluted earnings per share (in €) 2.30 1.14
Ordinary earnings per share (in €) continued operations 2.31 1.14
Diluted earnings per share (in €) continued operations 2.30 1.14
Ordinary earnings per share before amortization (in €) continued operations
1
2.66 1.54
Ordinary earnings per share before amortization and one-off income and expenses (in €) continued operations
1
2.77 1.69
1 Non IFRS compulsory disclosure
In 2020, the one-off costs related to the execution of the ‘Simplify & Accelerate’ program. Various
integrations and mergers, in particular in the segments Smart Connectivity systems and Smart Vision
systems, resulted that year in restructuring costs and write-downs.
| TKH GROUP ANNUAL REPORT 2021
136
CONSOLIDATED FINANCIAL STATEMENTS
34 RELATED PARTIES
Trade transactions
During the year trade transactions with non-consolidated related parties have taken place. These
transactions were concluded at market prices, taking into account discounts for volumes and the
existing relationship between the parties. The following transactions with related parties occurred
during the year:
Remuneration of the Executive Board and the Supervisory Board
The remuneration payab
le to the members of the Executive Board comprises a basic salary (TRI),
pension and a variable element, comprising an annual performance bonus (STI) and a long-term
bonus (LTI) scheme entailing a share scheme. The remuneration of the Supervisory Board consists of
a fixed remuneration and a remuneration for participation in a committee. The various remuneration
components are explained below, as well as the amount charged to the legal entity and its subsidiary
or group companies.
Total regular income (TRI) Bonus (STI) Share scheme (LTI) Pension
Compensation for pension
premium
Total
in thousands of euros
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Executive Board 1,707 1,657 997 179 2,736 356 82 79 325 303 5,847 2,574
Supervisory Board 313 326 313 326
Total remuneration 2,020 1,983 997 179 2,736 356 82 79 325 303 6,160 2,900
The breakdown of the remuneration per person and according to the various remuneration
components is included in the remuneration report that is part of the annual report.
Sold to Bought from Trade receivables Trade payables
in thousands of euros
2021 2020 2021 2020 2021 2020 2021 2020
Cable Connectivity Group B.V. 3,096 4,769 5,996 5,325 280 1,027 731 631
Shin-Etsu (Jiangsu) Optical Preform Co. Ltd. 16,626 10,960 7,980 2,307
Speed Elektronik Vertrieb GmbH 216 352 136 226 18 3 2
Commend Australia Integrated Security and Communication Systems Pty Ltd. 588 560 88 39
NET Italia S.r.l. 202 7 125 7
Total 3,900 5,883 22,758 16,518 386 1,194 8,711 2,947
Shareholdings of members of the Executive Board and the Supervisory Board
During the financial year J.M.A. van der Lof sold in total 15,432 (depositary receipts of) shares at an
average stock price of € 46.00, E.D.H. de Lange sold 3,324 (depositary receipts of) shares at a
stock price of € 38.44 and H. Voortman sold 1,508 (depositary receipts of) shares at a stock price of
€ 38.44, in accordance with the share scheme. In addition, Messrs. J.M.A. van der Lof, E.D.H. de
Lange and H.J. Voortman purchased under the share scheme respectively 2,216, 1,662 and 1,508
(depositary receipts of) shares at a stock price of € 38.44. Among the members of the Executive
Board, Mr. J.M.A. van der Lof owned 122,147 (depositary receipts of) shares, Mr. E.D.H. de Lange
owned 95,789 (depositary receipts of) shares and Mr. H.J. Voortman owned 26,153 (depositary
receipts of) shares shares at the end of 2021. Of the Supervisory Board, Mr. A.J.P. De Proft owned
2,000 (depositary receipts of) shares at the end of 2021.
137
TKH GROUP ANNUAL REPORT 2021 |
CONSOLIDATED FINANCIAL STATEMENTS
35 ACQUISITIONS
On 27 January 2021, TKH, through its subsidiary LMI Technologies (LMI), completed the acquisition
of FringeAI, an innovative AI and IIoT / 5G inspection company based in Boston, Massachusetts.
The company delivers a software suite that leverages integrated deep learning, dedicated edge
devices and IIoT / 5G connected cloud services to deliver AI-based solutions in many markets.
The activities within TKH are part of the business segment Smart Vision Systems.
The purchase price was immaterial and paid in cash. In addition, a contingent consideration / earn-
out has been agreed for the acquisition. This amount is estimated on the basis of expected future
results. The actual compensation to be paid in the future may deviate positively or negatively based
on future realization.
The company’s contribution to the consolidated activities of TKH was immaterial in 2021. TKH
expects the acquisition to have an immaterial effect on earnings per share in 2022.
36 NON-CASH TRANSACTIONS
There were no material non-cash transactions.
37 EVENTS AFTER BALANCE SHEET DATE
No events of fundamental significance for insight into the financial statements and the preceding
period occurred after balance sheet date.
However, after balance sheet date, the geopolitical situation and conflict surrounding Russia-
Ukraine escalated, which can impact our operations and outlook. For the financial statements 2021,
this is treated as a non-adjusting event. In 2021, TKH realized in Ukraine a turnover of € 1 million
(2020: € 1 million) and in Russia a turnover of € 10 million (2020: € 21 million). At December 31,
2021, the order book related to Russian and Ukrainian customers was in total € 11 million, but the
amount of outstanding contract assets and receivables are limited. Furthermore, TKH has a
subsidiary based in Kiev (Ukraine) with 128 FTE active in the assembly of specialized connectivity
systems. The equipment, right-of-use assets and inventories have a book value of about € 4 million,
of which a part has been transported to Poland.
38 SERVICE FEES PAID TO EXTERNAL AUDITORS
The service fees paid to the external auditor EY, recognized as other operating expenses, can be
specified as follows:
Ernst & Young Accountants
LLP (Netherlands) Other parts of EY Total
in thousands of euros
2021 2020 2021 2020 2021 2020
Audit of the financial statements
1,113 1,315 596 543 1,709 1,858
Other assurance engagements 70 5 3 70 8
Other non-audit services 11 9 28 20 28
Servicecosts external auditors
1,194 1,320 605 574 1,799 1,894
COMPANY FINANCIAL STATEMENTS
Company statement of profit and loss 139
Company balance sheet 140
Notes to the company financial statements 141
139
TKH GROUP ANNUAL REPORT 2021 |
COMPANY FINANCIAL STATEMENTS
COMPANY STATEMENT OF PROFIT AND LOSS
in thousands of euros Notes
2021 2020
Net turnover 14 9,768 9,387
Wages and salaries 15 11,091 8,795
Social insurance contributions 1,069 1,128
Depreciation and result on divestment of property, plant and equipment 188 227
Other operating expenses 9,488 6,883
Total operating expenses 21,836 17,033
Operating result -12,068 -7,646
Financial income 5,475 1,386
Financial expenses -3,476 -4,044
Exchange differences 114 -246
Change in value of financial liability for earn-out and put-options of holders of non-controlling interests -1,620 120
Result before tax -11,575 -10,430
Tax on result 16 -1,160 -1,669
Company result -10,415 -8,761
Share in result of participations after tax 105,627 56,281
Net result 95,212 47,520
| TKH GROUP ANNUAL REPORT 2021
140
COMPANY FINANCIAL STATEMENTS
COMPANY BALANCE SHEET
As of 31 December before profit appropriation
in thousands of euros Notes
2021 2020
ASSETS
Non-current assets
Intangible assets and goodwill 2 170,828 147,181
Property, plant and equipment 3 465 494
Financial non-current assets 4 832,534 788,043
Deferred tax assets 5 890 800
Total non-current assets 1,004,717 936,518
Current assets
Receivables on subsidiaries 33,751 50,447
Other receivables 6 5,641 3,855
Cash and cash equivalents 12 3,372 4,747
Total current assets
42,764
59,049
Total assets 1,047,481 995,567
in thousands of euros Notes
2021 2020
EQUITY AND LIABILITIES
Shareholders’ equity
Share capital 10,554 10,709
Share premium 85,021 85,021
Legal reserve 92,542 85,561
Translation reserve 15,251 -2,593
Cash flow hedge reserve 1,049 1,919
Retained earnings 422,301 433,683
Unappropriated profit 95,212 47,520
Total shareholders’ equity 7 721,930 661,820
Provisions
Deferred tax liabilities 5 581 597
Other financial liabilities 11 345 3,157
Provisions 10 33,989 25,259
Total provisions 34,915 29,013
Non-current liabilities
Interest-bearing loans and borrowings 85 35
Total non-current liabilities 85 35
Current liabilities
Interest-bearing loans and borrowings 12 34 28
Payables to group companies 280,058 295,906
Other financial liabilities 11 4,989 4,542
Other current liabilities 5,470 4,223
Total current liabilities 290,551 304,699
Total equity and liabilities 1,047,481 995,567
141
TKH GROUP ANNUAL REPORT 2021 |
COMPANY FINANCIAL STATEMENTS
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1 ACCOUNTING PRINCIPLES
For setting the principles for the recognition and measurement of assets and liabilities and
determination of the result for its separate financial statements, TKH makes use of the option
provided in Article 2:362 sub 8 of the Dutch Civil Code. This means that the principles for the
recognition and measurement of assets and liabilities and determination of the result for the
separate financial statements of TKH are the same as those for the consolidated financial
statements. For a description of these accounting principles, reference is made to the accounting
principles of the consolidated financial statements.
Investments in subsidiaries are valued at net asset value. The net asset value is determined on basis
of the valuation principles, as described in note 1 of the consolidated financial statements. The net
asset value of subsidiaries consists of cost price, exclusive goodwill, the share of TKH in the sum of
the assets, liabilities and provisions of the subsidiary, plus the share in the result of the subsidiary
since the takeover that is attributed to TKH, less the received dividends.
The expected credit losses as prescribed in IFRS 9 Financial Instruments on receivables on group
companies are included in the carrying amount of the participations.
2 INTANGIBLE ASSETS AND GOODWILL
Goodwill
in thousands of euros
2021 2020
Historical cost at 1 January 148,871 149,692
Accumulated impairment losses 1,690 1,690
Book value at 1 January 147,181 148,002
Acquisitions 383
Transfer within the group 23,150
Adjustment goodwill -1,537
Exchange differences 497 333
Book value at 31 December 170,828 147,181
Accumulated impairment losses 1,690 1,690
Historical cost at 31 December 172,518 148,871
The ‘Transfer within the group’ relates to an internal restructuring where some additional
subsidiaries now reside directly under TKH Group N.V. The adjustment of goodwill in 2020 relates to
an upward adjustment of the valuation of the carry forward losses of an acquisition from 2019.
3 PROPERTY, PLANT AND EQUIPMENT
Other equipment
in thousands of euros
2021 2020
Historical cost at 1 January 2,665 2,803
Accumulated depreciation and impairments 2,171 2,072
Book value at 1 January 494 731
Purchases 177 48
Disposals -18 -58
Depreciation -188 -227
Book value at 31 December 465 494
Accumulated depreciation and impairments 1,994 2,171
Historical cost at 31 December 2,459 2,665
| TKH GROUP ANNUAL REPORT 2021
142
COMPANY FINANCIAL STATEMENTS
4 FINANCIAL NON-CURRENT ASSETS
Subsidiaries Associates Receivables on subsidiaries Total
in thousands of euros
2021 2020 2021 2020 2021 2020 2021 2020
Balance at 1 January 748,637 830,299 24,884 27,997 14,522 334,259 788,043 1,192,555
Acquisition and/or incorporation of subsidiaries and associates 348 0 348
Disposals -24,367 0 -24,367
Capital contribution 15,780 20,374 -20,374 15,780 0
Result 100,877 54,154 2,370 -2,802 103,247 51,352
Result after tax from discontinued operations -31 -31 0
Dividend received -86,681 -42,184 -86,681 -42,184
Change in cash flow hedge reserves -1,073 3,059 -1,073 3,059
Liquidation -3 -3 0
Transfer within the group 1,889 -405,057 1,889 -405,057
Loans granted less repayments -14,522 5,158 -14,522 5,158
Actuarial gains/(losses) from defined benefit plans 64 -243 -83 64 -326
Other changes 1,537 0 1,537
Reclasification between receivables and participations -130 -100,536 100,536 -130 0
Reclassification provision subsidiaries and associates 8,567 18,741 8,567 18,741
Exchange differences 16,504 -12,545 880 -228 17,384 -12,773
Balance at 31 December 804,431 748,637 28,103 24,884 0 14,522 832,534 788,043
In 2020, the majority of the receivables from group companies, together with the associated
external financing, were transferred within the group to TKH Finance B.V. The shown reclassification
between receivables and participations are also a consequence of this. A number of loan
agreements with group companies were in 2021 and 2020 converted into share capital. This has
resulted in a reclassification of receivables from group companies to consolidated subsidiaries. An
at arm’s length interest rate is charged on the receivables from and debts to group companies with
a credit risk premium ranging from 1.0% to 2.8%.
143
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COMPANY FINANCIAL STATEMENTS
5 DEFERRED TAXES
The deferred tax assets and liabilities are related to the following items:
in thousands of euros
Undistributed
intragroup profits
Tax write-down
of loans
Financial
instruments Total
Balance at 1 January 2020 -853 659 154 -40
(
Charge)/credit to other comprehensive
income -13 -13
(Charge)/credit to profit or loss 256 256
Balance at 31 December 2020 -597 659 141 203
(Charge)/credit to other comprehensive income
-65 -65
(Charge)/credit to profit or loss 16 155 171
Balance at 31 December 2021 -581 814 76 309
Certain deferred tax assets and liabilities are offset in accordance with the principles provided in
IFRS. The deferred taxes are recognized in the balance sheet as follows:
in thousands of euros
2021 2020
Deferred tax assets stated under non-current assets 890 800
Deferred tax liabilities stated under non-current liabilities -581 -597
Deferred taxes 309 203
6 OTHER RECEIVABLES
in thousands of euros
2021 2020
Taxes and social security premiums 5,007 2,928
Other receivables 634 927
Other receivables 5,641 3,855
7 EQUITY
For the movement schedule is referred to the consolidated statement of changes in group equity.
The company only movement schedule for equity, excluding the movement of the non-controlling
interests, is the same.
Authorized capital
2021 2020
x1,000 € ‘000 € ‘000
The authorized capital consists of:
Ordinary shares 59,984
Cumulative preference financing shares 10,000
Convertible cumulative preference financing shares 10,000
Cumulative preference protective shares 60,000
Each nominal € 0.25 139,984 34,996 34,996
Priority share 4
Each nominal € 1.00 4 4 4
Authorized capital 35,000 35,000
Of which not issued 24,446 24,291
Issued capital
1
10,554 10,709
1 Concerns 4,000 priority and 42,198,429 (depositary receipts of) shares.
The issued capital was reduced with 623,334 ordinary shares on 23 November 2021 following the
resolution on the Annual General Meeting on 6 May 2021. The number of shares
that has been
cancelled relate to the depositary receipts of shares that have been purchased under the share-
buyback program initiated on November 18, 2020 with a value of € 25 million. The registered ordinary
shares, with the exception of the register-shares in the company, have been transferred to Stichting
Administratiekantoor TKH Group (‘Trust Foundation’), which issues depositary receipts of shares to
the ultimate capital providers. Stichting Administratiekantoor is the party entitled to the shares and
also exercises the voting right, unless it has granted power of attorney to the holders of the depositary
receipts. The holders of depositary receipts are entitled to receive a power of attorney to cast a vote
on the shares corresponding to the depositary receipts they own. Stichting Administratiekantoor
remains entitled to vote for the shares for which the holders of depositary receipts are not present or
represented at the meeting. The aforementioned power of attorney may be limited, excluded or
revoked by the executive committee of Stichting Administratiekantoor in various situations specified in
the law (see also Corporate Governance). In that case Stichting Administratiekantoor may (again)
exercise the voting right for all shares for which depositary receipts have been issued. The relationship
between Stichting Administratiekantoor and the holders of depositary receipts of shares is governed
by the administrative conditions. The protection afforded by the use of depositary receipts is based on
the 1% rule. The depositary receipts may be exchanged for ordinary shares but not for more than 1%
of the total issued capital in the form of ordinary shares. This total includes shares owned indirectly as
well as directly. However, this does
not ap
ply to the transfer of ordinary shares to the company itself.
| TKH GROUP ANNUAL REPORT 2021
144
COMPANY FINANCIAL STATEMENTS
Every transfer of preference financing shares, convertible preference financing shares and preference
protective shares must be approved by the Executive Board. The Executive Board may only grant its
approval with the approval of the Supervisory Board.
Besides from what is mentioned in the ‘Other information’, no special rights are attached to the
priority shares. The company has granted the Stichting Continuïteit TKH (‘Continuity Foundation’) an
option to take preference protective shares for up to a maximum of 50% of the sum of the other
outstanding shares at the time that the preference protective shares are issued or 100% of the sum
of the other outstanding shares at the time that the preference protective shares are issued if the
restriction on the cancellation option lapses, which will occur if and when the Executive Board of the
company so decides and files a statement to that effect with the Chamber of Commerce.
Share premium reserve
The share premium reserve is fully exempt from Dutch taxes on distribution.
Legal reserve
The legal reserve relates to:
in thousands of euros
2021 2020
Capitalized development costs 87,666 80,760
Legal reserve for participations 4,876 4,801
Legal reserve 92,542 85,561
The legal reserve is not available for distribution to the company’s shareholders.
Revaluation reserves
The revaluation reserves are not available for distribution to the company’s shareholders.
Hedging and translation reserve
The hedging and translation reserves are legal reserves and not available for distribution to the
company’s shareholders.
8 DIVIDEND
TKH recognizes a liability to pay a dividend when the distribution is no longer at the discretion of the
company. A dividend payment is due under Dutch law if approved by the shareholders. At that moment,
the amount is recognized directly in equity. At the General Meeting of shareholders in 2021 the dividend
in thousands of euros Earn-out
Put options of
holders of non-
con
trolling interests
Total
Balance at 1 January 2021 7,342 357 7,699
Change in value through the profit and loss account 911 709 1,620
Payment for acquisitions from previous years -3,707 -278 -3,985
Balance at 31 December 2021 4,546 788 5,334
For more details about the financial liabilities see note 15 of the consolidated financial statements.
for the year 2020 was declared at € 1.00 per (depositary receipt of) ordinary share. The dividend was
paid in cash. The dividend on the priority shares was declared at € 0.05 per share. The total amount of
dividends paid in 2021 was € 41,125,796 and this amount was charged to the retained earnings.
After 31 December 2021, the Executive Board has proposed a dividend. With regard to Article 33 of
the Articles of Association, the Executive Board proposes to the holders of (depositary receipts of)
ordinary shares a dividend of € 1.50 per (depositary receipt of) ordinary share. The dividend proposal
is subject to approval at the annual general meeting and has not been recognized in the balance
sheet and does not impact the corporate income tax.
9 SHARE-BASED PAYMENTS
The share-based payments are disclosed in note 25 of the consolidated financial statements.
10 OTHER PROVISIONS
in thousands of euros
2021 2020
Liability for subsidiaries with negative equity 33,484 24,917
Other long-term provisions 505 342
Total of other long- and short-term provisions 33,989 25,259
For more background details about other long-term provisions see note 14 of the consolidated
financial statements.
11 OTHER FINANCIAL LIABILITIES
145
TKH GROUP ANNUAL REPORT 2021 |
COMPANY FINANCIAL STATEMENTS
12 NET INTEREST BEARING DEBT
in thousands of euros
2021 2020
Bank loans reported under non-current liabilities 85 35
Borrowings reported under current liabilities 34 28
Cash and cash equivalents -3,372 -4,747
Net interest bearing debt -3,253 -4,684
For more details about the facilities, conditions and securities see notes 10, 18, 19 and 21 of the
consolidated financial statements.
13 CONTINGENT LIABILITIES
Under Article 2:403, paragraph 1 sub f of the Dutch Civil Code the company has assumed joint and
several liability for debts arising from the legal actions for all Dutch subsidiaries of which TKH owns
directly or indirectly 100% of the shares. The declarations to that effect have been deposited for
inspection at the office of the Chamber of Commerce in the place where the legal entity for which
the guarantee was given has its registered office.
The company is formally a guarantor for a total sum of € 44.9 million (2020: € 45.4 million) for bank
credit and bank guarantee facilities provided to a number of foreign subsidiaries. This facility was
called on for a sum of € 14.1 million (2020: € 0.1 million) at the end of 2021.
The company and the majority of its 100% owned Dutch subsidiaries form a ta
x group for the
corporate income tax. Consequently, the company is liable for the income taxes of these
subsidiaries.
14 TURNOVER
The turnover is related to the charged head office costs in the year for services provided to
subsidiaries of the company.
15 OPERATING EXPENSES
The share-based payments and remuneration of key management are included in notes 25 and 34
of the consolidated financial statements.
16 TAX
in thousands of euros Notes
2021 2020
Current tax -703 -2,011
Adjustments for previous years -286 598
Deferred tax 5 -171 -256
Total tax on result -1,160 -1,669
The reconciliation of the tax expense in the year with the result before tax is as follow:
in thousands of euros (unless stated otherwise)
2021 2020
Result before tax -11,574 -10,430
Tax calculated at the Dutch tax rate -2,894 25.0% -2,608 25.0%
Correction due to tax effect for:
Non-deductible expenses 2,060 -17.8% 597 -5.7%
Settlement of income tax returns for previous
years
-286 2.5% 598 -5.7%
Taxes on (un)distributed profits of foreign
subsidiaries
-15 0.1% -256 2.4%
Change in statutory tax rate -25 0.2%
0.0
Effective tax rate -1,160 10.0% -1,669 16.0%
17 SIGNATURE OF THE FINANCIAL STATEMENTS
Haaksbergen, 7 March 2022
Executive Board Supervisory Board
J.M.A. van der Lof MBA, chairman A.J.P. De Proft, chairman
E.D.H. de Lange MBA J.M. Kroon, vice-chairman
H.J. Voortman MSc R.L. van Iperen
C.W. Gorter
A.M.H. Schöningh
OTHER INFORMATION
Profit appropriation 149
Proposal for profit appropriation 149
Independent auditor’s report 150
Assurance report of the independent auditor
on non-financial KPIs 156
Stichting Administratiekantoor TKH Group 158
Stichting Continuïteit TKH 159
Consolidated entities 160
Non-financial reporting process and methods 164
Ten years overview 168
Alternative performance measures 170
OTHER INFORMATION
149
TKH GROUP ANNUAL REPORT 2021 |
PROFIT APPROPRIATION
Since no protection preference and financing preference
shares were outstanding or issued, within the meaning of Ar-
ticles 33.1, 3, 4, 5, 6, paragraphs b and c, 8, 9 and, 12 below,
only the articles governing the profit appropriation in relation
to the outstanding shares are included here.
ARTICLE 33 OF THE ARTICLES OF ASSOCIATION
READS AS FOLLOWS:
2. The company may make distributions to the shareholders
and other persons entitled to distributable profits only to
the extent that its shareholders’ equity exceeds the sum
of the paid-up and called-up part of the capital, plus the
reserves that must be maintained pursuant to the law or
the articles of association.
6a. From any profit remaining after application of the previous
paragraphs, five percent (5%) of the nominal amount of
the priority shares shall, if possible, be distributed on such
priority shares. No further distribution shall be made on
the priority shares.
7. If in any year the profit does not suffice to make the dis-
tributions referred to above in paragraph 6 of this article,
the provisions in paragraph 6 and in paragraph 10 shall
not apply in the subsequent financial years until the deficit
has been made up. Subject to the approval of the Super-
visory Board, the Executive Board is authorised to resolve
to distribute an amount equal to the deficit referred to in
the previous sentence charged to the reserves.
10. Of the profit remaining thereafter, the Executive Board
shall, subject to the approval of the Supervisory Board,
reserve as much as it deems necessary. In so far as the
profit is not reserved under application of the previous
sentence, it shall be at the disposal of the general meet-
ing, either fully or partially for reservation, or fully or par-
tially for distribution to holders of ordinary shares propor-
tionately to their holding of ordinary shares.
For other provisions of the articles of association, please refer
to TKH’s website: www.tkhgroup.com.
PROPOSAL FOR PROFIT
APPROPRIATION
in thousands of euros
Net profit attributable to shareholders € 95,212.
In accordance with Article 33 of the articles of association,
we propose paying the holders of (depositary receipts of)
ordinary shares a dividend of € 1.50 per (depositary receipt
of) ordinary share.
The dividend will be made available for payment on May 3,
2022.
The dividend for 4,000 priority shares has been set at € 0.05
per share of € 1.00.
| TKH GROUP ANNUAL REPORT 2021
150
OTHER INFORMATION
INDEPENDENT AUDITOR’S REPORT
To: the shareholders and Supervisory Board of TKH
Group N.V.
REPORT ON THE AUDIT OF THE FINANCIAL STATE-
MENTS 2021 INCLUDED IN THE ANNUAL REPORT
OUR OPINION
We have audited the financial statements 2021 of TKH Group
N.V. based in Haaksbergen, the Netherlands. The financial
statements comprise the consolidated and company financial
statements.
In our opinion:
•
the accompanying consolidated financial statements give
a true and fair view of the financial position of TKH Group
N.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 TKH Group
N.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.
The consolidated financial statements comprise:
•
the consolidated balance sheet as at 31 December 2021;
•
the following statements for 2021: the consolidated state-
ment of profit and loss, the consolidated statement of
comprehensive income, consolidated statement of
changes in group equity and consolidated cash flow state-
ment;
•
the notes comprising a summary of the significant
accounting policies and other explanatory information.
The company financial statements comprise:
•
the company balance sheet as at 31 December 2021;
•
the company statement of profit and loss for 2021;
•
the notes comprising a summary of the accounting poli-
cies and other explanatory information.
BASIS FOR OUR OPINION
We conducted our audit in accordance with Dutch law,
including the Dutch Standards on Auditing. Our responsibili-
ties under those standards are further described in the Our
responsibilities for the audit of the financial statements sec-
tion of our report.
We are independent of TKH Group N.V. (hereinafter also
referred to as the company or the group) in accordance with
the EU Regulation on specific requirements regarding statu-
tory audit of public-interest entities, the “Wet toezicht
accountantsorganisaties” (Wta, Audit firms supervision act),
the “Verordening inzake de onafhankelijkheid van accoun-
tants bij assurance-opdrachten” (ViO, Code of Ethics for
Professional Accountants, a regulation with respect to inde-
pendence) and other relevant independence regulations in the
Netherlands. Furthermore we have complied with the
“Verordening gedrags- en beroepsregels accountants”
(VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
INFORMATION IN SUPPORT OF OUR OPINION
We designed our audit procedures in the con
text 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.
Our understanding of the business
TKH Group N.V. is an internationally operating technology
company and heads a group of operating companies and we
have 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. 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 proce
-
dures 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,
misrepresentations, or the override of internal control.
Materiality
Materiality EUR 7.6 million (2020: EUR 5.2 million)
Benchmark
applied
4% of Earnings before interest, taxes, im-
pairments and amortization (EBITA) (2020:
4% of EBITA)
Explanation Based on our professional judgment we
consider an earnings-based measure as
the most appropriate basis to determine
materiality. TKH Group N.V. primarily uses
earnings before interest, taxes, impairments
and amortization (EBITA) to report on its
financial performance.
We have also taken into account misstatements and/or possi-
ble misstatements that in our opinion are material for the
users of the financial statements for qualitative reasons.
We agreed with the supervisory board that misstatements in
excess of EUR 340,000, which are identified during the audit,
would be reported to them, as well as smaller misstatements
that in our view must be reported on qualitative grounds.
OTHER INFORMATION
151
TKH GROUP ANNUAL REPORT 2021 |
Scope of the group audit
TKH Group N.V. is at the head of a group of entities. The
financial information of this group is included in the consoli-
dated financial statements.
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 pro-
file 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.
Following our assessment of the risk of material misstatement
to the consolidated financial statements, we have selected
sixteen components which required an audit of the complete
financial information (Full Scope components). Furthermore,
we selected nine components requiring audit procedures on
specific account balances or specified audit procedures on
significant accounts that we considered had the potential for
the greatest impact on the group financial statements, either
because of the size of these accounts or their risk profile
(Specific- or Limited Scope components). The audit of the
Dutch operating companies within the scope of the group
audit was performed by ourselves. With the exception of four
operating companies in Germany and one in Finland, the
audit of the foreign operating companies in scope of our audit
were performed by EY component teams. We provided the
foreign component teams with detailed instructions and the
component teams performed their audit procedures on the
basis of those instructions and reported the results of their
audit procedures to us. Component performance materiality
was determined using professional judgment, based on the
relative size of the component and our risk assessment.
Component performance materiality did not exceed EUR 2.4
million and the majority of our component auditors applied a
performance materiality that is significantly less than this
threshold. We performed audit procedures ourselves on cer-
tain accounting areas managed centrally, such as goodwill
and other intangibles of acquired companies, and valuation of
deferred tax assets arising from unused tax losses.
Because of the
continuing (international) travel restrictions
and social distancing due to the Covid-19 pandemic, we
needed to limit the visits of local component management
and component auditors to discuss, among others, the busi-
ness activities and the identified significant risks or to review
and evaluate relevant parts of the component auditor's audit
documentation and to discuss significant matters arising
from that evaluation on site. In these circumstances we pre-
dominantly used communication technology and digital
information exchange. We have had sessions with local
management of components in Germany, France and
Canada through video teleconferencing facilities. Additionally
we interacted regularly with the component teams during
various stages of the audit, through the use of video or tele-
conferencing facilities. Furthermore we reviewed key working
papers of EY component auditors in Canada, France and
Germany using the EY electronic audit file platform, screen
sharing or by the provision of copies of work papers direct to
the group audit team. Also we have visited the non-EY com-
ponent team in Germany where we reviewed key working
papers.
Of the remaining components, we performed selected other
procedures, including analytical review and test of details to
respond to potential risks of material misstatements to the
financial statements that we identified.
As a result of our scoping of the complete financial informa-
tion, specific account balances and the performance of audit
procedures at different levels in the organization, our actual
coverage varies per financial statement account balance and
the depth of our audit procedures per account balance varies
depending on our risk assessment.
Accordingly, our audit coverage, for selected account balances
i
ncluded in the key audit matters stated below, are summa-
rized as follows:
By performing the procedures mentioned above at compo-
nents of the group, together with additional procedures at
group level, we have been able to obtain sufficient and appro
-
priate audit evidence about the group’s financial information to
provide an opinion on the consolidated financial statements.
Teaming and use of specialists
We ensured that the audit teams both at group and at compo-
nent levels included the appropriate skills and competences
which are needed for the audit of a listed client like TKH Group
N.V. We included EY specialists in the areas of IT audit (in-
cluding cybersecurity), corporate governance (including remu-
neration), sustainability, IFRS accounting, valuation of goodwill
and other intangible fixed assets of acquired companies, real
estate, share based payments, taxes and forensics.
Our focus on climate risks
Climate objectives will be high on the public agenda in the
next decades. Issues such as CO
2
reduction impact financial
reporting, as these issues entail risks for the business
EBITA
OVER-TIME REVENUE
CAPITALIZED DEVELOPMENT COST
FULL SCOPE
SPECIFIC SCOPE
OTHER PROCEDURES
67%
7%
26%
FULL SCOPE
OTHER PROCEDURES
FULL SCOPE
SPECIFIC SCOPE
OTHER PROCEDURES
85%
15%
80%
1%
19%
| TKH GROUP ANNUAL REPORT 2021
152
OTHER INFORMATION
operation, the valuation of assets ('stranded assets') and provi-
sions or the sustainability of the business model and access to
financial markets of companies with a larger CO
2
footprint.
The Executive Board has reported in section ‘Being responsible
and sustainability impact’ and section ‘Sustainable develop
-
ment goals’ on the Environmental, Social and Governance
(ESG) factors directly and indirectly impacting TKH Group N.V.’s
business, and their consideration of the impact of climate
change including the potential impact of climate-related risks.
As part of our audit of the
financial statements, we evaluated
the extent to which climate-related risks are materially
impacting judgements, estimates and significant assumptions
applied by TKH Group N.V. Furthermore, we read the manage
-
ment report and considered whether there is any material
inconsistency between the non-financial information in section
‘Being responsible and sustainability impact’ and section ‘Risk
Management’ and the financial statements. Based on the audit
procedures performed, we do not deem climate-related risks to
have a material impact on the financial reporting judgements,
estimates or significant assumptions and as such we have not
identified a key audit matter.
Our focus on fraud and non-compliance with laws and
regulations
Our responsibility
Although we are not responsible for preventing fraud or
non-compliance and we cannot be expected to detect
non-compliance with all laws and regulations, it is our
responsibility to obtain reasonable assurance that the finan-
cial statements, taken as a whole, are free from material mis-
statement, whether caused by fraud or error.
Our audit response related to fraud risks
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 environ-
ment and the components of the system of internal control,
including the risk assessment process and the executive
board’s process for responding to the risks of fraud and
monitoring the system of internal control and how the super-
visory board exercises oversight, as well as the outcomes.
We refer to section ‘Risk Management’ of the management
report for the executive board’s fraud risk assessment and
section ‘Report of the Supervisory Board’ in which the super-
visory board reflects on this fraud risk assessment. We evalu-
ated 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 implementation
of internal controls designed to mitigate fraud risks.
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 in
close co-operation with our forensic specialists. We evaluated
whether these factors indicate that a risk of material misstate-
ment due to fraud is present.
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. As in all of our audits, we addressed the
risks related to management override of controls and we
have performed procedures among others to evaluate k
ey
accounting estimates for management bias that may represent
a risk of material misstatement due to fraud, in particular
re-
lating to important judgment areas and significant accounting
estimates as disclosed in note ‘1. Accounting principles’ to
the financial statements. We have also used data analytics
to identify and address higher risk journal entries. These risks
did however not require significant auditor’s attention in
addition to the fraud risk identified below.
We considered available information and made enquiries of
relevant executive and management board members, direc-
tors (including internal audit, legal advisor, compliance officer
and regional directors) and the Supervisory Board.
The fraud risks we identified, 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.
Our audit response related to risks of non-compliance
with laws and regulations
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 the
Executive Board, the management board, the head of legal
affairs, the compliance office and internal audit as well as
reading minutes, inspection of internal audit reports perform-
ing substantive tests of details of classes of transactions,
account balances or disclosures.
Given the company is a global organization, operating in multi-
ple jurisdictions, in our assessment of the risk of non-compli-
ance with laws and regulations, we also considered the poten-
Fraud risk related to revenue recognition
Fraud risk When identifying and assessing fraud risks we presume that there are risks of fraud in revenue recognition.
We evaluated that the over-time revenue from contracts with customers in particular give rise to such risks,
including the risk of management override of controls through inappropriate estimations around the percentage
of completion and the cost to come.
Our audit approach We describe the audit procedures responsive to the presumed risk of fraud in revenue recognition in the
description of our audit approach for the key audit matter “Over-time revenue recognition, and related valuation
of contract assets and contract liabilities”.
OTHER INFORMATION
153
TKH GROUP ANNUAL REPORT 2021 |
identify serious doubts on the company’s ability to continue as
a going concern for the next 12 months. 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.
Our key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the finan
-
cial statements. We have communicated the key audit matters
to the Supervisory Board. The key audit matters are not a
comprehensive reflection of all matters discussed.
The key audit matter related to the valuation of contract assets
and contract liabilities which was included as a separate key
audit matter in our last year’s auditor’s report, is now combined
with the key audit matter relating to over-time revenue recogni
-
tion considering these matters are related. In addition the key
audit matter related to the valuation of capitalized development
costs related to new innovation projects in development does
no longer include the risk of valuation of new businesses.
Over-time revenue recognition, and related valuation of contract assets and contract liabilities
Risk TKH Group N.V. manufactures products, which vary from subsea cable systems to integrated systems for the
manufacturing of car and truck tires, whereby revenues have a fixed contract price and are recognized over-time.
This results in the recognition of contract assets and liabilities per balance sheet date and prompting manage-
ment to make estimates of the percentage of completion of the projects, as well as the cost to come and the
expected result of the projects. This process involves relative complex estimations and requires judgment.
There is a risk of management override of controls over accelerating revenues through inappropriate estimations
around the percentage of completion and the cost to come.
Based on the above mentioned risk factors we considered this a key audit matter.
Further reference is made to note 1, Accounting principles, and note 23, Information by segment, to the
consolidated financial statements.
Our audit approach We have obtained and updated our understanding of the revenue recognition process within the different s
egments. Over-time revenue is recognized in all three segments, being Smart Vision systems, Smart Connectivity
systems and Smart Manufacturing systems. Our procedures included, among others, auditing the application
of the revenue recognition standard (IFRS 15 ‘Revenue from Contracts with Customers’) and identification of
control measures taken by the company with regard to revenue recognition and correspondingly the valuation
of contract assets and contract liabilities. Furthermore, we have conducted the following substantive audit
procedures with respect to the identified risks:
•
We evaluated management’s assessment in relation to over-time revenue recognition of projects recorded
over-time, by challenging the assumptions, performing back-testing procedures on previous assessments,
evaluating the percentage of completion and auditing the adequacy of capitalized costs on projects;
•
We have performed margin analyses per significant revenue stream and product line;
•
We have performed test of details on individual revenue transactions in which we tested the proper
identification of contractual arrangements, allocation of revenue to the specific arrangements and cut-off;
•
We have evaluated the adequacy of revenue-related disclosures, including the disclosures related to contract
assets and contract liabilities.
Key observations We consider management’s assumptions relating to determine the percentage of completion of the projects, as
well as the cost to come and the expected result of the projects to be within an acceptable range. In addition,
we evaluated the revenue disclosures are reasonable.
tial risk from TKH Group N.V.’s interactions with third-party
distributors. We refer to section ‘Risk Management’ in the
management board report. Our audit approach included the
following steps:
•
Obtain an understanding of the environment and the
Company to enable the detection of non-compliance with
laws and regulations related to bribery and corruption;
•
Obtain an understanding of the internal control environ-
ment and the measures for mitigating those risks (by the
company) in the light of applicable anti-corruption laws
and regulations;
•
Executed substantive audit procedures in order to obtain
adequate evidence for the mitigation of the risk of non-
compliance with laws and regulations related to bribery
and corruption.
We also inspected lawyers’ letters and correspondence with
regulatory authorities and remained alert to any indication of
(suspected) non-compliance throughout the audit. Finally we
obtained written representations that all known instances of
non-compliance with laws and regulations have been dis-
closed to us.
Our audit response related to going concern
As disclosed in section ‘Going concern’ in note 1 to the finan-
cial statements, the Executive Board made a specific assess-
ment 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 the
Executive Board exercising professional judgment and main
-
taining professional skepticism. We considered whether the
executive board’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. 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. Based on our procedures performed, we did not
| TKH GROUP ANNUAL REPORT 2021
154
OTHER INFORMATION
Valuation of capitalized development costs related to new innovation projects in development
Risk TKH Group N.V. is investing in the development of new technologies. At 31 December 2021, the total carrying
value of capitalized product development cost amounted to EUR 119.7 million The related costs are capitalized
in accordance with IAS 38 ‘Intangible assets’. Management is required, for projects which are in development,
to test these capitalized development costs for impairment at least annually, or more frequently if there is an
indication for impairment. We focused on development projects related to new innovation projects which are in
development as these do not yet generate sales and therefore there is a higher level of judgement involved in
setting the significant assumptions in determining the value in use to support the carrying value.
Based on the above mentioned risk factors we considered this a key audit matter.
Further reference is made to note 1, Accounting principles, and note 3, Intangible assets and goodwill, to the
consolidated financial statements.
Our audit approach As part of our audit we assessed and tested the assumptions, methodology (discounted cash flow model) and
data used by the company in calculating the value in use of the investments in new innovation projects in
development. Our audit procedures included, among others, the following substantive audit procedures:
•
We performed a sensitivity analysis by stress testing key assumptions, among others, discount rate and ex-
pected growth rates, to consider the degree to which the assumptions would need to change before an
impairment would have to be recognized. Based on these sensitivity analysis, our main focus was on those
development projects in new innovations with limited headroom;
•
We gained a more in-depth understanding of the development stage of these projects in new innovations as
well as the projected financial information used in management’s assessment of whether the value in use
exceeds the carrying value;
•
We assessed and tested the key assumptions with our main focus on discount rate, market size and share and
expected development costs by comparing to historical or market information;
•
We performed backtesting procedures on previous impairment analysis on the key assumptions in manage-
ment’s forecast;
•
We evaluated the adequacy of the company’s disclosures relating to capitalized development costs.
Key observations We consider management’s assumptions to be within a reasonable range. We agree with management’s
conclusion that the carrying value of the development cost related to new innovation projects in development is
reasonable.
In addition, we evaluated the disclosures of capitalized development costs and related impairments as included
are reasonable.
Report on other information included in the annual report
The annual report contains other information in addition to
the financial statements and our auditor’s report thereon.
Based on the following procedures performed, we conclude
that the other information:
•
Is consistent with the financial statements and does not
contain material misstatements;
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 per-
forming these procedures, we comply with the requirements
of Part 9 of Book 2 and Section 2:135b sub-Section 7 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 executive board is responsible for the preparation of the
other information, including the management report in accor-
dance with Part 9 of Book 2 of the Dutch Civil Code and
other information required by Part 9 of Book 2 of the Dutch
Civil Code. The executive board and the supervisory board
are responsible for ensuring that the remuneration report is
drawn up and published in accordance with Sections 2:135b
and 2:145 subsection 2 of the Dutch Civil Code.
REPORT ON OTHER LEGAL AND REGULATORY
REQUIREMENTS AND ESEF
Engagement
We were engaged by the general meeting as auditor of TKH
Group N.V. on 14 May 2014, as of the audit for the year 2015
and have operated as statutory auditor ever since that date.
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.
European Single Electronic Reporting Format (ESEF)
TKH Group N.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).
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 TKH Group
•
Contains the information as required by Part 9 of Book 2
for the management report and the other information as
required by Part 9 of Book 2 of the Dutch Civil Code and
as required by Sections 2:135b and 2:145 subsection 2 of
the Dutch Civil Code for the remuneration report.
OTHER INFORMATION
155
TKH GROUP ANNUAL REPORT 2021 |
Executive Board is responsible for assessing the company’s
ability to continue as a going concern. Based on the financial
reporting frameworks mentioned, the Executive Board should
prepare the financial statements using the going concern basis
of accounting unless the Executive Board either intends to
liquidate the company or to cease operations, or has no
realistic alternative but to do so. The Executive Board 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. The supervisory board is responsi
-
ble for overseeing the company’s financial reporting process.
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.
Our audit has been performed with a high, but not absolute,
level of assurance, which means we may not detect all mate-
ri
al errors and fraud during our audit. 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 materiality affects the nature,
timing and extent of our audit procedures and the evaluation of
the effect of identified misstatements on our opinion.
We
have exercised professional judgment and have maintained
professional skepticism throughout the audit, in accordance with
Dutch Standards on Auditing, ethical requirements and indepen
-
dence requirements. The ‘Information in support of our opinion’
section above includes an informative summary of our responsi
-
bilities and the work performed as the basis for our opinion.
Our audit further included among others:
•
Performing audit procedures responsive to the risks identi-
fied, 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 com-
pany’s internal control;
•
Evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates and
related disclosures made by the executive board;
•
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.
Communication
We communicate with the supervisory board 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 in
accordance with Article 11 of the EU Regulation on specific
requirements regarding statutory audit of public-interest enti
-
ties. The information included in this additional report is con-
sistent with our audit opinion in this auditor’s report.
We provide the supervisory board with a statement that we
have complied with relevant ethical requirements regarding
independence, and to communicate with them all relation-
ships and other matters that may reasonably be thought to
bear on our independence, and where applicable, related
safeguards. From the matters communicated with the super-
visory board, we determine the key audit matters: those mat-
ters 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 commu-
nicating the matter is in the public interest.
Amsterdam, 7 March 2022
Ernst & Young Accountants LLP
signed by F.J. Blenderman
N.V., complies in all material respects with the RTS on
ESEF.
The Executive Board is responsible for preparing the annual
report, including the financial statements, in accordance with
the RTS on ESEF, whereby the executive board combines the
various components into a single reporting package.
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.
DESCRIPTION OF RESPONSIBILITIES REGARDING
THE FINANCIAL STATEMENTS
RESPONSIBILITIES OF THE EXECUTIVE BOARD
AND THE SUPERVISORY BOARD FOR THE
FINANCIAL STATEMENTS
The Executive Board 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, the Executive Board is responsible for such inter
-
nal control as the Executive Board determines is necessary to
enable the preparation of the financial statements that are free
from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, the
| TKH GROUP ANNUAL REPORT 2021
156
OTHER INFORMATION
ASSURANCE REPORT OF THE INDEPENDENT AUDITOR ON NON-FINANCIAL KPIs
To: the shareholders and Supervisory Board of TKH
Group N.V.
OUR CONCLUSION
We have performed a limited assurance engagement on
selected non-financial key performance indicators (hereinafter:
the selected non-financial KPIs) in the annual report for the
year 2021 of TKH Group N.V. based in Haaksbergen.
Based on our procedures performed and the evidence
obtained, nothing has come to our attention that causes us
to believe that the selected indicators are not prepared, in
all material respects, in accordance with the reporting criteria
as included in the ‘
Reporting criteria’ section of our report.
The selected non-financial KPIs consist of the following KPIs
as included in the table on page 28 of the Annual Report:
•
Carbon footprint (CO
2
emissions)
•
% waste of most relevant raw materials, compared to total
relevant material consumption
•
Recycling most relevant raw materials
•
Customer satisfaction
•
Code of supply signed by suppliers
•
% of female members in Executive and Senior
Management teams
•
Accident rate (LTIFR)
•
Illness rate
•
Employee satisfaction grade
•
Employees acting in accordance with Code of Conduct
•
Number of employees with disabilities and/or disadvan-
tages on the labor market
BASIS FOR OUR CONCLUSION
We have conducted our limited assurance engagement on
the selected non-financial KPIs in accordance with Dutch law,
The absence of an established practice on which to draw, to
evaluate and measure the selected non-financial KPIs allows
for different, but acceptable, measurement techniques and
can affect comparability between entities and over time.
UNASSURED CORRESPONDING INFORMATION
No assurance engagement has been performed on the
selected non-financial KPIs for the period up to 2020.
Consequently, the corresponding selected non-financial KPIs
for the period 2020 are not assured.
LIMITATIONS TO THE SCOPE OF OUR ASSURANCE
ENGAGEMENT
Our assurance engagement is restricted to the selected
non-financial KPIs. We have not performed assurance proce-
dures on any other information as included in the annual
report in light of this engagement.
The selected non-financial KPIs include prospective informa-
tion such as ambitions, strategy, plans, expectations and
estimates. Inherent to prospective information, the actual
future results are uncertain. We do not provide any assurance
on the assumptions and achievability of prospective informa-
tion in the selected non-financial KPIs.
References to external sources or websites are not part of our
assurance engagement on the selected non-financial KPIs.
We therefore do not provide assurance on this information.
Our conclusion is not modified in respect to these matters.
including Dutch Standard 3000A “Assurance-opdrachten
anders dan opdrachten tot controle of beoordeling van
historische financiële informatie (attest-opdrachten)’’
(Assurance engagements other than audits or reviews of
historical financial information attestation engagements). Our
responsibilities under this standard are further described in
the ‘Our responsibilities for the assurance engagement on
the selected non-financial KPIs’ section of our report.
We are independent of TKH Group N.V. in accordance with
the “Verordening inzake de onafhankelijkheid van accoun-
tants bij assurance-opdrachten” (ViO, Code of Ethics for
Professional Accountants, a regulation with respect to
independence) and other relevant independence regulations
in the Netherlands. This includes that we do not perform any
activities that could result in a conflict of interest with our
independent assurance engagement. Furthermore, we have
complied with the “Verordening gedrags- en beroepsregels
accountants” (VGBA, Dutch Code of Ethics).
We believe that the assurance evidence we have obtained is
sufficient and appropriate to provide a basis for our conclusion.
REPORTING CRITERIA
The selected non-financial KPIs need to be read and under-
stood together with the reporting criteria. TKH Group N.V. is
solely responsible for selecting and applying these reporting
criteria, taking into account applicable law and regulations
related to reporting.
The reporting criteria used for the preparation of the selected
non-financial KPIs include topic specific disclosures of the
Global Reporting Initiative (GRI) and own developed supple
-
mental reporting criteria as disclosed in chapter ‘Non-financial
reporting process and methods’ of the annual report.
OTHER INFORMATION
157
TKH GROUP ANNUAL REPORT 2021 |
RESPONSIBILITIES OF THE EXECUTIVE BOARD
AND THE SUPERVISORY BOARD FOR THE
SELECTED NON-FINANCIAL KPIs
The Executive Board is responsible for the preparation of reli-
able and adequate selected non-financial KPIs in accordance
with the reporting criteria as included in the ‘Reporting crite-
ria’ section of our report. In this context, the Executive Board
is responsible for the identification of the intended users and
the criteria being applicable for their purposes. The choices
made by the Executive Board regarding the scope of the
selected non-financial KPIs and the reporting policy are sum-
marized in chapter ‘Non-financial reporting process and
methods’ of the annual report.
Furthermore, the Executive Board is responsible for such
internal control as it determines is necessary to enable the
preparation of the selected non-financial KPIs that are free
from material misstatement, whether due to fraud or errors.
The supervisory board is responsible for overseeing the
reporting process of TKH Group N.V.
OUR RESPONSIBILITIES FOR THE ASSURANCE
ENGAGEMENT ON THE SELECTED NON-FINAN-
CIAL KPIs
Our responsibility is to plan and perform our limited assurance
engagement in a manner that allows us to obtain sufficient and
appropriate assurance evidence for our conclusion.
Procedures performed to obtain a limited level of assurance
are aimed to determine the plausibility of information and vary
in nature and timing from, and are less in extent, than for a
reasonable assurance engagement. The level of assurance
obtained in a limited assurance engagement is therefore sub-
stantially less than the assurance obtained in a reasonable
assurance engagement.
We apply the “Nadere voorschriften kwaliteitssystemen”
(NVKS, Regulations for Quality management systems) and
accordingly maintain a comprehensive system of quality con-
trol including documented policies and procedures regarding
compliance with ethical requirements, professional standards
and applicable legal and regulatory requirements.
The procedures of our limited assurance engagement
included amongst others:
•
Performing an analysis of the external environment and
obtaining an understanding of the sector, insight into
relevant social themes and issues, relevant laws and
regulations and the characteristics of the company as far
as relevant to the selected non-financial KPIs.
•
Evaluating the appropriateness of the reporting criteria
used, their consistent application and related disclosures
on the selected non-financial KPIs. This includes the eval-
uation of the reasonableness of estimates made by the
executive board.
•
Obtaining an understanding of the reporting processes
for the selected non-financial KPIs, including obtaining a
general understanding of internal control relevant to our
assurance engagement.
•
Identifying areas of the selected non-financial KPIs with
a higher risk of misleading or unbalanced information or
material misstatements, whether due to fraud or errors.
Designing and performing further assurance procedures
aimed at determining the plausibility of the selected non-
financial KPIs responsive to this risk analysis. These further
assurance procedures consisted amongst others of:
•
Interviewing management and relevant staff at corpo-
rate and business level responsible for the strategy,
policy and results relating to the selected non-financial
KPIs.
•
Interviewing relevant staff responsible for providing the
information for, carrying out internal control procedures
on, and consolidating the data in the selected non-
financial KPIs
•
Obtaining assurance information that the selected
non-financial KPIs reconcile with underlying records of
the company.
•
Reviewing, on a limited test basis, relevant internal and
external documentation.
•
Performing an analytical review of the data and trends
in the information submitted for consolidation at
corporate level.
•
Evaluating the consistency of the selected non-financial
KPIs with the information in the annual report which is not
included in the scope of our assurance engagement.
Amsterdam, 7 March 2022
Ernst & Young Accountants LLP
signed by J. Niewold
| TKH GROUP ANNUAL REPORT 2021
158
OTHER INFORMATION
REPORT OF STICHTING ADMINISTRATIEKANTOOR TKH GROUP
The objective of the Stichting Administratiekantoor TKH Group
(“TKH Trust Foundation Office”) is to acquire and hold in trust
ordinary shares in TKH Group N.V. (“TKH”), a public company
with its registered office in Haaksbergen (the Netherlands), in
exchange for the allocation of convertible, registered deposi
-
tary receipts for shares. In accordance with the provisions of
article 7.1.3 of the Terms and Conditions of the TKH Trust
Foundation Office governing the shares of TKH, the TKH Trust
Foundation Office reports on the activities during the year
under review, 2021, exclusively in relation to the administra
-
tion of shares for which depositary receipts were issued. The
total nominal value of the ordinary shares of TKH held in
administration amounted to € 10,521,554.25 on December 31,
2021, in exchange for which 42,086,217 depositary receipts
for shares
1
,with a nominal value of € 0.25 each, were issued.
MEETINGS OF THE BOARD
The Board of TKH Trust Foundation Office met three times
during the financial year. Due to COVID-19 restrictions, some
of these meetings took place virtually. The topics discussed
in the meeting of March 29, 2021 were the Annual General
Meeting of Shareholders (“General Meeting”) 2021 and the
TKH Annual Report 2020.
The agenda items of the General Meeting were discussed in
the meeting of May 6. Due to the special circumstances
under which the General Meeting took place on May 6, 2021,
with ongoing COVID-19 restriction still limiting in-person
meetings, it was decided that no discussion at the General
Meeting would be possible regarding the provisional voting
determination by the Board of TKH Trust Foundation Office.
Because of this, the Board decided to definitively determine
its voting behavior in its meeting on May 5, 2021.
Those who hold depositary receipts for shares in the capital
of the company were given the opportunity to vote inde-
pendently on the agenda items voted on in the General
Meeting, regarding the shares corresponding with their
depositary receipts and subject to the relevant statutory
provisions. Holders of depositary receipts of shares collec-
tively representing 63.8% of the capital entitled to vote,
requested a proxy from the TKH Trust Foundation Office to
vote independently on the shares in question by giving
voting instructions to the TKH Trust Foundation Office. TKH
Trust Foundation Office voted for the remaining 35.9% of the
capital entitled to vote. In doing so, the Board voted in favor
of the agenda items in the General Meeting.
In the meeting of September 20, 2021, the company gave an
explanation of the published interim figures in 2021. The
retirement schedule for 2022 was discussed, as well as the
procedure to be followed in respect of the vacancy due to
arise in mid-2022, following Mr. H.L.J. Noy’s end of term
(who is not available for reappointment).
Following the implementation of the “Bestuur en Toezicht
Rechtspersonen Act” in July 2021, the articles of association
of the Foundation Trust office were amended as per Decem-
ber 1, 2021.
BOARD OF TKH TRUST FOUNDATION OFFICE
The board of TKH Trust Foundation Office has currently three
independent members:
•
Mr. H.L.J. Noy, Chairman
•
Mr. J.S.T. Tiemstra
•
Mr. G.W.Ch. Visser
Personal details of the members of the Board and the
retirement schedule can be found on the TKH Trust
Foundation Office website.
CONTACT DETAILS
Address: Spinnerstraat 15, 7481 KJ Haaksbergen (the
Netherlands)
Website: www.stichtingadministratiekantoortkh.com
Email: stak@tkhgroup.com
Haaksbergen, March 4, 2022
TKH Trust Foundation Office
The Board
STATEMENT OF INDEPENDENCE
The Executive Board of TKH Group N.V. and the Board of the
TKH Trust Foundation Office hereby state that, jointly and
severally, they are of the opinion that the TKH Trust Founda-
tion Office is a legal entity that is independent of TKH Group
N.V. within the meaning of Section 5.71(1)(d) of the Financial
Supervision Act.
Haaksbergen, March 4, 2022
TKH Group N.V.
The Executive Board
Haaksbergen, March 4, 2022
TKH Trust Foundation Office
The Board
1 The number of depositary receipts for shares has decreased by 624,648 compared to
December 31, 2020, due to the cancellation of 623,334 ordinary shares and conversion of
on balance 1,314 depositary receipts for shares into ordinary shares.
OTHER INFORMATION
159
TKH GROUP ANNUAL REPORT 2021 |
STICHTING CONTINUÏTEIT TKH
The objective of Stichting Continuïteit TKH (“Continuity
Foundation”) is to look after the interests of TKH Group N.V.
(“TKH”) and all the businesses associated with it, in such a
way that those interests are secured as far as possible. In
addition, it should resist any influences which could affect
the independence, continuity, or identity of TKH and its
affiliated companies in conflict with those interests are
resisted as far as possible, as well as avoid any activities
related to or conducive to the above.
By means of a call option TKH has conferred on the Continu-
ity Foundation the right to acquire cumulative protective
preference shares in TKH, subject to a maximum of 50% of
the amount of the other shares outstanding at the time of
placement of the protective shares, or 100% should the
limitation on conversion of depositary receipts cease to
apply. The protective shares should not be left on issue
longer than is strictly necessary. In the event that TKH
shareholders acquire a degree of control that is seen as
undesirable, and is not in the interests of TKH and its
affiliated companies, or there is a danger of them doing so,
TKH’s Executive and Supervisory Board will be at liberty -
among other things - to determine their degree of control, to
consider and explore possible alternatives, and to elaborate
on these if necessary. The Continuity Foundation did not
acquire any cumulative protective preference shares in TKH
in 2021.
TKH has also conferred on the Continuity Foundation the
right to initiate an inquiry procedure in the event that the
Continuity Foundation believes there are grounds to doubt
the policy pursued by, and state of affairs prevailing in, TKH
and by invoking this right it would be acting in the interests
of TKH and the businesses associated with it.
THE BOARD OF THE CONTINUITY FOUNDATION
The Board of the Continuity Foundation consists of:
•
Mr. M.P. Nieuwe Weme, chairman
•
Ms. S. Drion
•
Mr. A. Nühn MBA
•
Mr. A.J.M. van der Ven
Haaksbergen, March 4, 2022
Continuity Foundation
The Board
STATEMENT OF INDEPENDENCE
The Executive Board of TKH Group N.V. and the Board of the
C
ontinuity Foundation state that, jointly and severally, they are
of the opinion that the Continuity Foundation is a legal entity
that is independent of TKH Group N.V. within the meaning of
Section 5.71(1)(c) of the Financial Supervision Act.
Haaksbergen, March 4, 2022
TKH Group N.V.
The Executive Board
Haaksbergen, March 4, 2022
Continuity Foundation
The Board
| TKH GROUP ANNUAL REPORT 2021
160
OTHER INFORMATION
CONSOLIDATED ENTITIES
The following directly or indirectly held subsidiaries are included in the consolidation:
NEW SEGMENT REPORTING OLD SEGMENT REPORTING
Name Place Country
Ownership
31-12-2021
1
Ownership
31-12-2020
1
Smart
Vision
systems
Smart
Manufacturing
systems
Smart
Connectivity
systems
Telecom
Solutions
Building
Solutions
Industrial
Solutions
Alphatronics B.V. Nijkerk Netherlands 100.0% 100.0%
•
•
BB Lightpipe B.V. Doetinchem Netherlands 100.0% 100.0%
•
•
B.V. Twentsche Kabelfabriek Haaksbergen Netherlands 100.0% 100.0%
• • • •
Commend Benelux B.V. Prinsenbeek Netherlands 100.0% 100.0%
•
•
EKB Groep B.V. Beverwijk Netherlands 100.0% 100.0%
•
•
Eldra B.V. Ittervoort Netherlands 100.0% 100.0%
•
• •
Heerlen Parkeerexploitatie B.V. Haaksbergen Netherlands 100.0% 100.0%
•
•
IC Intracom Nederland B.V. Barneveld Netherlands 100.0% 100.0%
• • • •
Intronics B.V. Barneveld Netherlands 100.0% 100.0%
• • • •
Isolectra B.V. Capelle a/d IJssel Netherlands 100.0% 100.0%
•
•
LMI Technologies B.V. Kerkrade Netherlands 100.0% 100.0%
•
•
Mextal B.V.
2
Nuenen Netherlands 100.0% 95.0%
•
•
Siqura B.V.
5
Gouda Netherlands 100.0%
•
•
Texim Europe B.V. Haaksbergen Netherlands 100.0% 100.0%
•
• • •
TKH Airport Solutions B.V.
2
Haaksbergen Netherlands 75.0% 75.0%
•
•
TKH Finance B.V. Haaksbergen Netherlands 100.0% 100.0%
TKH Logistics B.V. Haaksbergen Netherlands 100.0% 100.0%
• • •
TKH Logistics Vastgoed B.V. Haaksbergen Netherlands 100.0% 100.0%
• • •
TKH Security B.V. Amsterdam Netherlands 100.0% 100.0%
•
•
VMI Holland B.V. Epe Netherlands 100.0% 100.0%
•
•
INEC N.V. Herentals Belgium 100.0% 100.0%
• • • •
Techno Specials N.V. Gent Belgium 100.0% 100.0%
•
• •
Texim Europe BVBA Brüssel Belgium 100.0% 100.0%
•
• • •
EFB Nordics A/S Ballerup Denmark 90.0% 90.0%
• • •
TKH Airport Solutions A/S Nykøbing Falster Denmark 100.0% 100.0%
•
•
TKH Security GmbH
3
Erkrath Germany 100.0% 100.0%
•
•
Allied Vision Technologies GmbH
3
Stadtroda Germany 100.0% 100.0%
•
•
ASP GmbH
3
Erkrath Germany 100.0% 100.0%
•
•
Augusta Technologie GmbH i.L. Bielefeld Germany 100.0% 100.0%
•
Chromasens GmbH
3
Konstanz Germany 100.0% 100.0%
•
•
Dewetron Deutschland GmbH
3
Wernau Germany 100.0% 100.0%
•
•
EEB Kabeltechnik GmbH
3
Forst Germany 100.0% 100.0%
•
•
EFB Elektronik GmbH
3)
Bielefeld Germany 100.0% 100.0%
• • • •
OTHER INFORMATION
161
TKH GROUP ANNUAL REPORT 2021 |
NEW SEGMENT REPORTING OLD SEGMENT REPORTING
Name Place Country
Ownership
31-12-2021
1
Ownership
31-12-2020
1
Smart
Vision
systems
Smart
Manufacturing
systems
Smart
Connectivity
systems
Telecom
Solutions
Building
Solutions
Industrial
Solutions
EFB Elektronik Real Estate B.V. & Co KG
3
Bielefeld Germany 100.0% 100.0%
• • • •
Ernst & Engbring GmbH
3
Oer-Erkenschwick Germany 100.0% 100.0%
•
•
FocalSpec GmbH i.L. Berlin Germany 100.0%
•
•
HE System Electronic GmbH
3
Veitsbronn Germany 100.0% 100.0%
•
•
IV-Tec GmbH
3
Freiburg Germany 100.0% 100.0%
•
•
Lakesight Technologies Holding GmbH
3
Unterschleissheim Germany 100.0% 100.0%
•
Lakesight Technologies German Holding GmbH
3
Unterschleissheim Germany 100.0% 100.0%
•
LMI Technologies GmbH
3
Teltow Germany 100.0% 100.0%
•
•
Mikrotron GmbH
3
Unterschleissheim Germany 100.0% 100.0%
•
•
New Electronic Technology GmbH
3
Finning Germany 100.0% 100.0%
•
•
Profipatch GmbH Herford Germany 100.0% 100.0%
•
•
Schneider Intercom GmbH
3
Erkrath Germany 100.0% 100.0%
•
•
SVS-Vistek GmbH
3
Gilching Germany 100.0% 100.0%
•
•
Texim Europe GmbH
3
Quickborn Germany 100.0% 100.0%
•
•
•
TKD Immobilien GmbH
3
Bielefeld Germany 100.0% 100.0%
•
TKD Kabel Real Estate B.V. & Co KG
3
Bielefeld Germany 100.0% 100.0%
•
TKF GmbH
3
Bielefeld Germany 100.0% 100.0%
• •
TKH Airport Solutions GmbH
3
Bielefeld Germany 100.0% 100.0%
•
•
TKH Deutschland GmbH
3
Bielefeld Germany 100.0% 100.0%
TKH Deutschland Verwaltungs GmbH
3
Bielefeld Germany 100.0% 100.0%
TKH Grundstücksverwaltungs B.V. & Co KG
3
Bielefeld Germany 100.0% 100.0%
• •
TKH Deutschland Service GmbH
3
Erkrath Germany 100.0% 100.0%
•
•
TKH Technologie Deutschland AG
3
Bielefeld Germany 100.0% 100.0%
TKH Security SAS Argenteuil France 100.0% 100.0%
•
•
CAE Data SAS Wissous France 100.0% 100.0%
• • • •
ID Cables SAS Wissous France 100.0% 100.0%
• • • •
MAN SAS Wissous France 100.0% 100.0%
• • • •
TKF SAS Wissous France 100.0% 100.0%
• •
TKH France SAS Wissous France 100.0% 100.0%
• •
Commend France SAS Saint Ouen France 100.0% 100.0%
•
•
Dewetron France SARL Chilly Mazarin France 100.0% 100.0%
•
•
LMI Finland Oy Oulu Finland 100.0%
100.0%
•
•
TKH Finland Holding Oy Riihimäki Finland 100.0% 100.0%
•
TKH Finland Oy Riihimäki Finland 100.0% 100.0%
• •
Lakesight Technologies Holding Srl. Mairano (Brescia) Italy 100.0% 100.0%
•
TKH Vision Italy Srl. Mairano (Brescia) Italy 100.0% 100.0%
•
•
| TKH GROUP ANNUAL REPORT 2021
162
OTHER INFORMATION
NEW SEGMENT REPORTING OLD SEGMENT REPORTING
Name Place Country
Ownership
31-12-2021
1
Ownership
31-12-2020
1
Smart
Vision
systems
Smart
Manufacturing
systems
Smart
Connectivity
systems
Telecom
Solutions
Building
Solutions
Industrial
Solutions
TKH Security Srl. Conegliano Italy 100.0% 100.0%
•
•
Commend Italia Srl. Carobbio Degli Angeli (BG) Italy 100.0% 100.0%
•
•
Tattille Srl. Mairano (Brescia) Italy 100.0% 100.0%
•
•
E&E Cable Solutions (Ukraine) Kiev Ukraine 100.0% 100.0%
•
•
Commend International GmbH Salzburg Austria 100.0% 100.0%
•
•
Dewetron Elektronische Messgeräte GmbH Graz Austria 100.0% 100.0%
•
•
EFB Elektronik Austria GmbH Wien Austria 100.0% 100.0%
• • • •
Texim Austria GmbH Salzburg Austria 100.0% 100.0%
•
• • •
C&C Partners Sp. z.o.o Leszno Poland 100.0% 100.0%
•
• •
TKH Technology Sp. z.o.o Leszno Poland 100.0% 100.0%
•
•
VMI Poland Sp. z.o.o Leszno Poland 100.0% 100.0%
•
JOHRAmont s.r.o Svidník Slovakia 95.0% 95.0%
•
•
Commend Iberica SL Barcelona Spain 100.0% 100.0%
•
•
TKH Security SL Malaga Spain 100.0% 100.0%
•
•
INEC Espana SA Malaga Spain 100.0% 100.0%
• • • •
ParkEyes SL
5
Malaga Spain 100.0%
•
•
Siqura SL
5
Madrid Spain 100.0%
•
•
EFB Elektronik Ltd. Istanbul Turkey 90.0% 90.0%
•
•
Comm
end Güvenlik ve İletişim Sistemleri Ltd.
Şti
5
Istanbul Turkey 85.0%
•
•
Commend UK Ltd.
4
Stansted UK 100.0% 100.0%
•
•
TKH Security UK Ltd.
4
Rotherham UK 100.0% 100.0%
•
•
Siqura Ltd.
4
Rotherham UK 100.0%
•
•
TKH Security Ltd.
4
London UK 100.0% 100.0%
•
•
Commend Scandinavia AB Tierp Sweden 100.0% 100.0%
•
•
VMC Elteknik AB Strängnäs Sweden 100.0% 100.0%
• • •
Commend AG Fehraltorf Switzerland 100.0% 100.0%
•
•
Multi Media Connect (Aust) Pty Ltd. Tuggerah Australia 100.0% 100.0%
• •
Park Assist Holdings Pty Ltd. Sydney Australia 100.0% 100.0%
•
•
TKH Security Pty Ltd. Sydney Australia 100.0% 100.0%
•
•
Jacques Technologies Pty Ltd. Brisbane Australia 100.0% 100.0%
•
•
VMI South America Ltda. Itatiaia Brazil 100.0% 100.0%
•
•
Allied Vision Technologies Inc. Burnaby Canada 100.0% 100.0%
•
•
LMI Technologies Inc. Vancouver Canada 100.0% 100.0%
•
•
Allied Vision Technologies (Shanghai) Co, Ltd. Shanghai China 100.0% 100.0%
•
•
Dewetron Test and Measurement Equipment (Beijing) Co. Ltd
Beijing China 100.0% 100.0%
•
•
Dewetron Test and Measurement Equipment (Shanghai) Co. Ltd
Shanghai China 100.0% 100.0%
• •
OTHER INFORMATION
163
TKH GROUP ANNUAL REPORT 2021 |
NEW SEGMENT REPORTING OLD SEGMENT REPORTING
Name Place Country
Ownership
31-12-2021
1
Ownership
31-12-2020
1
Smart
Vision
systems
Smart
Manufacturing
systems
Smart
Connectivity
systems
Telecom
Solutions
Building
Solutions
Industrial
Solutions
E&E Cable (Zhangjiagang) Co, Ltd Zhangjiagang China 100.0% 100.0%
• •
FocalSpec Asia Ltd. Hong Kong China 100.0% 100.0%
•
•
FocalSpec China Co, Ltd. Suzhou China 100.0% 100.0%
•
•
LMI (Shanghai) Trading Co, Ltd. Shanghai China 100.0% 100.0%
•
•
TKH Building Solutions Shanghai Co, Ltd. Shanghai China 100.0% 100.0%
• •
Twentsche (Nanjing) Fibre Optics Co, Ltd. Nanjing China 100.0% 100.0%
• •
VMI Yantai Ltd. Yantai China 100.0% 100.0%
•
•
VMI Ltd. Yantai China 100.0% 100.0%
•
•
Isolectra Communications Technology Sdn Bhd Shah Alam Malaysia 100.0% 100.0%
•
• •
VMI SEA Office Sdn Bhd Shah Alam Malaysia 100.0% 100.0%
•
•
Ithaca SA Casablanca Morocco 100.0% 100.0%
•
•
LMI Technologies Co. Ltd. Tokyo Japan 100.0% 100.0%
•
•
NET Japan Co. Ltd. Yokohama Japan 90.0% 90.0%
•
•
SVS-Vistek K.K. Yokohama Japan 100.0% 100.0%
•
•
Multi Media Connect (N.Z.) Pty Ltd. Paraparaumu New Zealand 100.0% 100.0%
•
•
Allied Vision Technologies Pte Ltd. Singapore Singapore 100.0% 100.0%
•
•
Commend South East Asia Pte Ltd. Singapore Singapore 100.0% 100.0%
•
•
TKH Security & Airport Solutions Pte Ltd. Singapore Singapore 100.0% 100.0%
•
• •
LMI Technologies yuhan hoesa South Korea South Korea 100.0% 100.0%
•
•
VMI Thailand Ltd. Thailand Thailand 100.0% 100.0%
•
•
Commend Middle East FZE Dubai United Arab Emirates 100.0% 100.0%
•
•
Allied Vision Technologies Inc Boston USA 100.0% 100.0%
•
•
Commend Inc. New York USA 100.0% 100.0%
•
•
Dewetron America Inc. Wakefield USA 100.0% 100.0%
•
•
FocalSpec Inc. Santa Clara USA 100.0%
•
•
Fringe AI Ltd. Boston USA 100.0%
•
•
LMI Technologies Inc. Detroit USA 100.0% 100.0%
•
•
NET USA Inc. Highland USA 100.0% 100.0%
•
•
TKH Security LLC New York USA 100.0% 100.0%
•
•
SVS-Vistek Inc. Carrolton USA 100.0% 100.0%
•
•
Siqura Inc.
5
Germantown USA 100.0%
•
•
TKH USA Holding Inc.
5
Wilmington USA 100.0%
•
•
VMI Americas Inc. Stow USA 100.0% 100.0%
•
•
1 Economic ownership is equal to the legal ownership, unless mentioned differently.
2 Economic ownership is 100%.
3 The aforementioned German subsidiaries included in TKH’s consolidated financial statements make use of the exemption in § 264 (3),
§ 264 (b) HGB to prepare, audit and publish individual annual accounts. TKH Deutschland GmbH is not required to draw up consolidated
annual accounts pursuant to § 291 HGB.
4 The listed subsidiaries above based in the UK are controlled and consolidated by the group, where the Directors have taken the exemption
from having an audit of its financial statements for the years ended 31 December 2020 and 31 December 2021. This exemption is taken in
accordance with the UK Companies Act, S479A.
5 Merged within the group.
| TKH GROUP ANNUAL REPORT 2021
164
OTHER INFORMATION
NON-FINANCIAL REPORTING PROCESS AND METHODS
REPORTING PROCESS
The Annual Report 2021, including all material aspects, is com-
piled by the Executive Board and discussed with the Super-
visory Board. TKH uses the reporting system Cognos for non-
financial information (including CO
2
, waste, safety, and HR),
which is the same system used for the financial reporting. The
reporting processes and definitions used by TKH have been
formalized in our Sustainability Reporting Manual, which pro
-
vides guidance on how to collect, consolidate, and report data.
SCOPE AND CHANGES COMPARED TO LAST YEAR
The ESG policy was adjusted in 2021. The policy changes,
which are related to HR KPIs and our CO
2
footprint calculation,
are described below for each specific topic. Compared to past
reporting, there are no material changes in the system of
measuring. For some sustainability criteria, the divestment of
activities or the integration of companies has impacted our
sustainability performance. Where relevant, these effects are
explained. There have been no changes in structure or owner
-
ship either. Unless stated otherwise, the data are based on all
our domestic and foreign operating companies. We explicitly
mention it when this is not the case. The acquired operating
companies will start reporting on ESG in accordance with the
TKH reporting structure in the year following acquisition. Com-
panies in which TKH has a minority ownership interest are not
included in the report. We consolidated data for the non-finan
-
cial report using the same system used to consolidate financial
data. Any estimates are based on historical information.
REPORTING NON-FINANCIAL KEY PERFORMANCE
INDICATORS
This chapter provides further information on TKH’s main
non-financial key performance indicators. Other quantitative
indicators, disclosures on the reporting scope, and methods
used are given elsewhere in this report.
CO
2
EMISSIONS
To measure and report the CO
2
emissions, we use the dif-
ferent scopes of the Greenhouse Gas (GHG) protocol.
•
Sc
ope 1 covers the direct CO
2
emissions caused by fuels
that we purchase and consume ourselves, and mainly con
-
cerns gas, gasoline, and diesel (including company cars).
•
Scope 2 covers indirect CO
2
emissions from electricity
consumption.
•
Scope 3 covers indirect CO
2
emissions from our fleet
(commuting), waste generated from operations, and the
transportation of goods.
Our focus remains primarily on scopes 1 and 2 because most
of our emissions occur within those scopes. We have expanded
our internal dashboard with components from scope 3 but have
not yet implemented a scope extension for CO
2
emissions in
our calculation model. TKH calculates the energy consumption
and CO
2
emissions associated with our energy consumption
using conversion factors from reputable and authoritative
sources. TKH uses tank-to-wheel emission factors. All conver
-
sion factors are reviewed annually and updated if necessary.
The energy consumed by forklifts is considered negligible and
is therefore not included in TKH’s overall energy consumption
and related CO
2
emissions. The basis for consolidated energy
consumption and CO
2
emissions is activity data, which in turn
are based mostly on meter readings, invoices, and data pro
-
vided by suppliers. Where reliable data are not available, TKH
uses calculations or estimations using reliable methods and
input data. TKH is satisfied that the estimates are reliable in all
material respects. The reported CO
2
emissions reduction is com-
pared to the reference year 2019 (2020: reference year 2015).
The EU Energy Efficiency Directi
ve (2012/27/EU) obliges
member states to ensure that large companies undergo an
energy audit. The energy audit is a systematic, four-yearly
REPORTING CRITERIA: GRI STANDARDS – CORE
This report has been prepared in accordance with the GRI
standards: Core option. We focus on topics that have been
an integral part of our Environmental, Social, and Governance
(ESG) policy. Our GRI index is available on TKH’s website
(www.tkhgroup.com/en/csr). In this overview, more informa-
tion is disclosed on the nature and coverage of reporting per
non-financial KPI (e.g. quantitatively or qualitatively). The
content and definition of the report are based on the materi-
ality analysis whereby TKH focuses on the topics that are
most material and that have a strong connection with TKH’s
strategy and business operations. The GRI standards were
used to define and set our KPIs. These standards stress the
need to make an accurate assessment of issues that are suf-
ficiently important for a company to report. The significance
(materiality) of the issues that are ultimately selected is deter-
mined by analyzing the impact of the key data on people, the
environment, and society, in relation to the value stakeholders
attach to those issues. We monitor our objectives based on a
dashboard in our internal reporting system and evaluate the
results every quarter during meetings with our operating com-
panies. ESG is also part of the annual budgeting process.
REPORTING PERIOD AND REPORTING FREQUENCY
In the Report of the Executive Board (which is part of the TKH
Annual Report 2021), we provide an overview of, among other
things, our sustainability performance during the year under
review from 1 December 2020 up to and including 30
November 2021. KPIs related to HR data are based on the
calendar year 2021. This report presents both quantitative
and qualitative data. TKH uses a different reporting period for
part of the KPIs because the process requires more time as a
result of the operating and reporting structure. This ensures
that the reported data are reliable and adequate.
OTHER INFORMATION
165
TKH GROUP ANNUAL REPORT 2021 |
approach that aims to gather information about a company’s
current energy consumption. We use input from those TKH
operating companies that fall under the defined scope and
must carry out a mandatory energy audit for our reporting on
energy reduction and future improvement plans.
WASTE AND RECYCLING
The reporting scope of waste and recycling includes the main
raw materials leaving TKH’s production sites, mainly based on
waste tickets and data provided by suppliers. We use reliable
methods to either measure, calculate, or estimate waste in our
reporting. The main raw materials we use are copper, plastics,
and aluminum.
SUPPLIERS
The products delivered by TKH comply with the European
REAC
H (Registration, Evaluation, Authorization and Restriction
of Chemicals) regulation and RoHS (Restriction of Hazardous
Substances in Electrical and Electronic Equipment) directive.
REACH is a European system for registering, evaluating (risks
to people and the environment), and authorizing chemical sub
-
stances in Europe. RoHS is a European directive that prohibits
certain hazardous substances from being used in electrical
and electronic devices.
TKH reports the percentage of stra-
tegic suppliers agreeing with TKH’s Code of Supply. Strategic
suppliers are defined as external suppliers with an annual
purchase volume of over € 1 million on a yearly basis.
CUSTOMERS
The customer satisfaction grade reported is based on the
outcome of the most recent customer satisfaction surveys
conducted by an external research company. A survey is rep-
resentative for the customer base of the operating company
concerned. The reported customer satisfaction grade in 2021
represents surveys from the period 2019-2021.
HUMAN RIGHTS
In the context of human rights, TKH conducts business activi-
ties according to the Universal Declaration of Human Rights.
We refer readers to our Code of Conduct and the Code of
Supply (both of which can be downloaded from our website
www.tkhgroup.com). We rely on the OECD guidelines for
guidance regarding issues such as supply chain responsi-
bility, human rights, child labor, and the environment. We sub-
mitted input on the Transparency Benchmark information
platform, an initiative of the Ministry of Economic Affairs and
Climate Policy. The Dutch government asks companies to be
transparent about their ESG policies and activities. Through
the Transparency Benchmark, the ministry sheds light on how
the largest Dutch companies report on their ESG activities.
We also consult the “spearhead letters” from advocates on
issues related to sustainability and governance, such as
those from VBDO, Eumedion, and VEB, as a guideline for
further transparency.
BUSINESS CONDUCT AND TRANSPARENCY
TKH has selected the number of reported breaches of the
Code of Conduct as a KPI for business conduct and trans-
parency. The scope includes all employees on TKH’s payroll.
The Code of Conduct is published on our website. We have
established a procedure that enables employees to report
any suspicion of conduct that is unlawful and/or contrary to
the Code of Conduct. Reports are reviewed and investigated
by the local Confidential Officer and/or the group Compliance
Officer. If deemed necessary, disciplinary and mitigating mea-
sures are taken. External parties can also report to the group
Compliance Officer.
HUMAN RESOURCES (HR)
HR data are obtained every quarter. HR data are derived from
the HR accounts held by TKH’s operating companies. TKH’s
illness rate is calculated by the number of days of absence
(for at least one day) divided by the number of total working
hours. All cases of absence are included except pregnancy
leave. The number of working hours is matched with the
working hours recorded by the HR department and includes
overtime. If data is not available, the number of working hours
is calculated based on the average FTE on the payroll during
the year times the average working hours per person. The
illness rate reported covers all employees on TKH’s payroll
excluding the third party contractors and joint ventures
employees. The illness rate is reported at a total group level
and not specified by region or gender.
TKH reports on the number of employees with a disability
and/or disadvantage in the labor market. Disability is an
umbrella term, covering illnesses/disorders, activity limita-
tions, and participation restrictions. An illness/disorder is a
problem in body function or structure. An activity limitation is
a difficulty encountered by an individual in executing a task or
action. A participation restriction is a problem experienced by
an individual in involvement in life situations resulting in a
disadvantage on the labor market.
The 2021 employee satisfaction grade is based on the out-
come of the most recent employee satisfaction surveys exe-
cuted by an external research company from 2018 to 2021
among 3,144 FTEs representing 54% of total FTEs.
The sustainability report contains data on the gender balance
in executive and senior management positions. These posi-
tions are defined as follows:
•
Executive management: statutory management director
level (direct reports to the Executive Board).
•
Senior management: managers who are members of the
management team within your organization and respon-
sible for specific business units or departments (e.g.
finance, marketing, and production).
•
Middle management: link between the senior management
and the lower operational levels of the organization.
•
Operational workforce: other workforce.
| TKH GROUP ANNUAL REPORT 2021
166
OTHER INFORMATION
SAFETY
TKH defi
nes its Lost Time Injury Frequency Rate (LTIFR) as the
number of reported incidents leading to absence from work for
at least one working day, without the possibility of any replace
-
ment, per million hours worked. Reportable incidents are based
on actual occurrences and are never extrapolated or estimated.
Despite a range of measures and an open safety culture, there
is an inherent risk of incomplete accident reporting. Reported
hours are measured, calculated, or estimated. The absolute
number of serious accidents reported covers all employees on
TKH’s payroll excluding the third party contractors and joint
ventures employees. The LTIFR is reported at a total group level
and not specified by region or gender.
VERIFICATION AND INTERNAL CONTROL
The data have been audited by the responsible company offi-
cers as to plausibility and progress using the Cognos financial
reporting model. Data were verified by TKH’s financial depart
-
ment. All reported differences greater than 10% compared
with the previous year have been explicitly investigated. TKH's
Internal Audit Department carries out internal audits on the
processes to be performed and the accuracy of the data as a
permanent part of its work program. Internal Audit has spent
specific attention during its audit work on compliance with the
Code of Conduct within our operating companies and the
implementation of the Code of Supply at strategic suppliers.
For specific sustainability issues, external expertise is hired.
TKH appointed Ernst & Young Accountants LLP (EY) to provide
independent assurance on non-financial KPIs to provide TKH’s
stakeholders with reassurance about TKH’s non-financial
information. TKH has obtained limited assurance for the KPIs
included in the ‘Sustainability performance’ section on page 28
of the Annual Report 2021.
TRENDS
In
our business operations, we focus on external and internal
environmental factors, analyzing trends that can affect our
activ
ities and operations. We then make an assessment of the
oppor
tunities and threats and see how we can provide added
value for our stakeholders and society in general. The table
‘Trends in CSR’ shows our added value in the field of CSR for
each trend and how we steer this internally by setting concrete
goals.
STAKEHOLDER DIALOGUES AND MATERIALITY
MATRIX
TKH regularly enters into dialogue with various stakeholders on
topical and social issues. Our stakeholders’ varied bacgrounds
and their knowledge of TKH and the environment in which we
operate is a good starting point for engaging in dialogue. It
provides useful insights into stakeholders' interpretations of
current topics that affect TKH. We also use the dialogue to
broaden our understanding of our stakeholders’ needs and
expectations. In addition, stakeholder engagement helps us to
make better use of opportunities and identify risks in a timely
manner. The dialogue is also useful to clearly explain specific
issues and thus increase support for them or, in certain cases,
to create understanding when an issue is given less priority in
our business operations. The results of the dialogues are also
included in the review of the materiality matrix. The Executive
Board is closely involved in determining material themes and
how much weight they are ultimately given by TKH.
Because of COVID-19, the dialogue with stakeholders mainly
took place online. We conducted a survey to determine
material themes, from stakeholders’ perspective as well from
TKH’s perspective. The results of the survey are included in
the materiality matrix included in the section stakeholder
analysis of this annual report. We have ranked topics that
have been deemed important for all stakeholder groups
(vertical axis) and which have the most impact on TKH
(horizontal axis) and are priorities in our strategic roadmap.
We measure and report on material issues. The subjects that
are designated as less or non-material are managed in our
organization without further numerical substantiation in the
annual report.
The sources we consult to identify and review material
aspects each year include:
•
Dialogues with strategic stakeholders
•
Investor relations meetings about ESGs
•
General governance assumptions
•
Topics suggested by civil society organizations such as
VBDO, VEB, and Eumedion
•
G
uidelines from the Global Reporting Initiative (GRI) and inter-
national guidelines such as the OECD’s guidelines for multi-
national enterprises and the Sustainable Development Goals
•
Sustainability rating agencies such as the Carbon
Disclosure Project (CDP), Vigeo, MSCI, and EcoVadis
TKH Group is an active member of industrial and branch
organizations.
•
The FTTH Council in Europe, North America, the Middle
East, North Africa, Latin America, and Asia-Pacific. This
non-profit organization was established to accelerate Fibre
to the Home (FTTH) technology. Members are manufac-
turers, system designers, consultancies, and academic
institutions.
•
The International Cablemakers Federation (ICF) represents
most of the global manufacturing capacity of the wire and
cable industry. As the federation of the world's leading wire
and cable producers, ICF provides a global forum for
members to increase the visibility of the industry by high-
lighting the relevance of its products and technologies, as
well as its contribution to building a sustainable society.
•
The European Machine Vision Association (EMVA) is repre-
sented by organizations in more than 20 countries. It aims
to promote the development and use of machine vision
technology and to support the interests of its members.
•
The Retread Tire Association (RTA) represents suppliers in
the renewal and tire repair industry.
EXTERNAL REPORTING
We have provid
ed input to the CDP, MSCI, EcoVadis, Vigeo,
and the S&P Dow Jones Indices. In terms of the circular
OTHER INFORMATION
167
TKH GROUP ANNUAL REPORT 2021 |
economy, we endorse the objectives set by the Netherlands in
the circular innovation program called “Plastic and rubber in the
underground infrastructure,” as well as the “Mission Statement
Fair Infra” issued by Dutch infrastructure companies.
DILEMMAS
Various groups are developing an increasing number of sus-
tainability initiatives that require an increased contribution from
industry. We take responsibility in this, but we continue to
relate it to our business operations so we can also make a
material contribution to the sustainability initiatives and thus
create the necessary support. In some cases, this leads to a
conscious choice not to focus on certain issues or not to
collaborate, even though we are asked to. In certain markets,
the price factor is still decisive, and there may be implicit
reasons for reducing ESG efforts. In such situations, it is a
challenge to convince the stakeholder of the importance of
sustainability, which may drive the price up. Reducing our
energy consumption calls for the thorough coordination of our
manufacturing processes, and these processes, in turn, are
dictated by current demand. Over the past few years, we have
focused strongly on reducing energy consumption, which has
resulted in the successful implementation of many savings
plans. Coming up with new reduction plans to make major
savings is therefore becoming increasingly challenging.
Furthermore, the expansion of our production facilities and the
integration of activities into one location have further increased
our energy consumption compared to the output produced, as
this consumption cannot yet be fully compared with the return
that these investments will yield. The amount of waste we pro
-
duce is also subject to a ‘learning curve’ as our production
equipment needs to be properly aligned with the production of
innovative, high-quality new cable types. The quality require
-
ment of the product is a priority in that respect, and this can tip
the balance away from our waste reduction targets.
Increasingly, we are being asked to provide data on external
information platforms and portals. Due to price-sensitive
(inside) information and competition-sensitive information, it is
not always possible to honor all requests. We take a selective
approach to lending our cooperation and make considered
choices regarding the information posted. In the case of
external ratings on sustainability, TKH is often rated by peers in
the production/manufacturing industry. TKH's activities focus
increasingly on in-house technology development, in which the
software component plays an increasingly important part. For
this reason, the ratings give a distorted picture and call for
additional communication by our organization.
ESG IN THE ORGANIZATION
To safeguard the ESG policy, the Executive Board is directly
involved in ESG developments in the TKH organization, and
executive compensation is linked to ESG performance (see
also ‘Remuneration Report’). TKH's Director Sustainability is
responsible for developing and implementing the ESG
strategy and policies for the TKH Group. ESG is a standard
item on the agenda at meetings of the Management Board of
TKH, on which the Director Sustainability has a seat. There is
close collaboration with the Director Finance & Control, who
is also a member of the Management Board. There is also
close cooperation with TKH’s Internal Audit Department in
relation to the auditing of ESG issues during the internal
audits. New ESG initiatives are preferably developed in
working groups. This expedites the building of support within
the TKH Group and makes implementation more efficient and
effective. Initiatives in the value chain are always attended by
commercial managers to guarantee a pragmatic approach.
In conducting the stakeholder dialogues, we work with exec-
utives from our operating companies, business line man-
agers, account managers, and HR. Contact persons of the
Confidential Officers rely on the operation of the TKH Code of
Conduct and the associated whistleblower regulations. If a
report is made to an operating company that identifies inad-
missible behavior, the Confidential Officer of the operating
company will promptly notify the Compliance Officer of TKH
Group, who is the central point of referral for integrity issues.
The latter, acting together with the Executive Board, will deal
with the report and, if desired, will consult the company
Confidential Officer of the subsidiary in question. After the
report has been investigated, the Executive Board will make a
decision in consultation with the board of the operating com-
pany in question or a representative of that board. The whis-
tleblower scheme can be downloaded from the TKH website.
We discuss issues concerning the Code of Supply with pur-
chasing managers. If a supplier fails to meet one or more of
the requirements in the code, action has to be taken to
ensure that the supplier will become compliant in an effective
and efficient way as soon as possible. If the supplier refuses
to cooperate or fails to make sufficient progress toward com-
plying with the code, TKH will reconsider its partnership with
that supplier. In certain cases, local conditions may prevent
the supplier from meeting particular requirements of the code.
In such a case, we enter into dialogue to work towards a
satisfactory solution. In such conversations, best practices
are shared with the supplier in question to help them make
improvements and share ideas. The purchase manager has
a pioneering role in this. The Code of Supply and the assess-
ment form can be downloaded via the TKH website.
The Executive Board discusses progress in ESG at least every
quarter with the various operating companies. This is based on
financial and non-financial reports, both of which cover ESG.
We have embedded the KPIs concerning ESG in our Cognos
financial reporting system so that it is an integral part of our
information system. At least once a year, progress in the field of
ESG is also discussed with the Supervisory Board, and future
developments and the appropriate follow-up steps are explained.
For more information about TKH’s sustainability program,
please contact TKH’s Director Sustainability Derk Postma
(d.postma@tkhgroup.com). Please feel free to send any feed-
back you may have on this report to this e-mail address.
For up-to-date information on sustainability, you can also
consult our website: www.tkhgroup.com/csr.
| TKH GROUP ANNUAL REPORT 2021
168
OTHER INFORMATION
10 YEARS OVERVIEW
In millions of euros
2021
2020
2019
1
2018
2
2017 2016 2015 2014 2013 2012
Consolidated statement of profit and loss
Turnover 1,524 1,289 1,490 1,458 1,485 1,341 1,375 1,346 1,198 1,102
Raw materials, consumables, trade products and subcontracted work 787 655 771 768 817 710 743 770 699 652
Added value 737 634 718 690 668 631 632 576 499 450
Personnel expenses 378 345 369 352 347 331 326 296 277 234
Other operating expenses 124 108 133 137 147 131 133 124 103 113
EBITDA 235 181 216 201 174 169 173 156 119 103
Depreciation
3
45 46 45 26 25 22 22 20 19 17
EBITA before one-off income and expenses 190 136 171 175 149 147 151 136 100 86
One-off income and expenses 7 18 4 6 9 -7 -12
EBITA 190 129 154 171 143 147 151 145 93 74
Impairments 2 4 5 2 2 1 1 1
Amortization 51 54 50 40 37 33 32 26 26 21
Operating result 137 71 99 129 104 113 118 118 67 53
Financial result -6 -14 -10 -4 -7 -7 -10 -13 -12
Fair value changes of financial liability for earn-out and put options of holders of
non-controlling interests
-2 0 4 1
Result on ordinary activities before taxes 129 57 89 125 108 107 111 108 54 41
Taxes 34 15 20 27 20 20 23 22 12 10
Net result for the period from continued operations 95 42 69 98 88 87 88 86 42 31
Result after tax from discontinued operations 45 11
Non-controlling interests 1 1 2 3 5 3
Attributable to shareholders 95 42 114 109 87 86 86 83 37 28
Key figures 2021
2020
2019
1
2018
2
2017 2016 2015 2014 2013 2012
EBITA/Turnover (ROS)
3 4
12.4 10.5 11.6 12.0 10.1 10.9 11.0 10.0 8.3 7.8
Net result before amortization and one-off income and expenses/Group equity
3 4
15.8 10.6 14.9 17.6 16.1 16.5 19.3 17.8 13.7 11.7
EBITA/Average capital employed (ROCE) 20.5 14.0 17.4 21.3 19.7 20.1 22.1 21.2 15.9 15.9
Net debt/EBITDA ratio
3 4
0.9 1.6 1.5 1.4 0.9 1.0 0.9 1.0 1.5 1.6
Net result before amortization and one-off income and expenses/Turnover
3 4
7.5 5.5 7.1 7.8 6.5 7.2 7.4 6.6 5.0 4.5
1 The comparative figures for 2018 have been restated due to discontnued operations.
2 The comparative figures for 2017 have been restated due to retrospective application of IFRS 15 ‘Revenue from contracts with customers’.
3 After restatement as a result of change in accounting principles for land and buildings and prior period restatements (see Accounting
Principles) for the years 2014 up to 2016. The years 2012 up to 2013 have not been restated.
4 Before one-off income and expenses. The one-off income and expenses in 2020 mainly concern restructuring costs and integrations of
€ 8.9 million, book profit and sale of buildings of € 2.0 million and impairment losses of € 4.0 million. The one-off income and expenses in
2019 were restructuring and acquisition costs of € 18.3 million, impairments of € 1.5 million and impairment losses of € 5.0 million.
OTHER INFORMATION
169
TKH GROUP ANNUAL REPORT 2021 |
In millions of euros
2021 2020 2019
1
2018
2
2017 2016 2015 2014 2013 2012
Consolidated balance sheet
Intangible assets and goodwill 537 577 596 544 392 395 400 352 349 343
Property, plant and equipment
3
222 220 231 246 229 215 196 176 199 195
Right-of-use assets 69 77 81
Financial non-current assets 45 42 52 31 28 46 34 28 30 31
Total non-current assets 873 916 960 821 649 656 630 556 578 569
Inventories 295 237 239 267 219 207 194 202 185 197
Trade and other receivables 341 286 300 356 327 295 248 288 234 201
Cash and Cash equivalents 100 122 79 83 88 88 179 145 80 66
Total current assets 736 645 618 706 634 590 621 635 499 464
Assets held for sale 88 5 39 3 7
Total assets 1,697 1,566 1,617 1,527 1,283 1,246 1,251 1,194 1,077 1,040
Shareholders' equity
3
722 662 705 647 594 574 521 483 378 364
Non-controlling interests 1 9 9 9 17 61 60
Group Equity 722 662 705 648 603 583 530 500 439 424
Provisions
3
90 86 97 86 69 74 71 68 112 105
Non-current interest-bearing loans and borrowings 334 410 416 239 187 214 223 259 259 202
Current interest-bearing loans and borrowings 48 57 58 171 57 52 126 59 15 60
Other financial liabilities 7 8 9 5 15 23 27 14
Other current liabilities 459 343 319 378 352 300 274 294 252 249
Liabilities directly associated with assets held for sale 37 13
Total equity and liabilities 1,697 1,566 1,617 1,527 1,283 1,246 1,251 1,194 1,077 1,040
Other information in euros (unless stated otherwise)
2021 2020 2019
1
2018
2
2017 2016 2015 2014 2013 2012
Solvency (in %) 43 42 44 42 47 47 42 42 41 41
Investments in property, plant and equipment 30 28 32 42 41 46 38 34 19 25
Depreciations of property, plant and equipment 30 30 29 28 24 23 23 20 19 17
Cash flow from operating activities 199 188 182 127 160 103 182 95 79 75
Number of shares outstanding and held by third parties at year end (x 1,000) 41,178 41,487 41,999 42,003 42,045 42,161 41,724 41,400 37,985 37,658
Net result per ordinary share of € 0.25 2.31 1.14 2.72 2.58 2.05 2.04 2.07 2.14 0.98 0.76
Net profit before amortization and one-off income and expenses from continued operations
attributable to shareholders
2.77 1.69 2.51 2.72 2.27 2.25 2.40 2.23 1.48 1.27
Dividend per share 1.50 1.00 1.50 1.40 1.20 1.10 1.10 1.00 0.75 0.65
Highest share price 56.15 51.30 55.05 60.15 56.68 38.14 40.50 27.18 26.40 20.86
Lowest share price 37.88 23.42 38.82 38.36 36.45 28.47 25.35 22.13 18.55 15.41
Share price at year-end 55.50 39.54 49.90 40.70 52.93 37.59 37.44
26.36 25.40 19.50
1 The comparative figures for 2018 have been restated due to discontnued operations.
2 The comparative figures for 2017 have been restated due to retrospective application of IFRS 15 ‘Revenue from contracts with customers’.
3 After restatement as a result of change in accounting principles for land and buildings and prior period restatements (see Accounting
Principles) for the years 2014 up to 2016. The years 2012 up to 2013 have not been restated.
| TKH GROUP ANNUAL REPORT 2021
170
OTHER INFORMATION
ALTERNATIVE PERFORMANCE MEASURES
TKH uses alternative performance measures to measure and
monitor its operational performance. These measures are
used in this Annual Report but are not defined in any law, nor
in the International Financial Reporting Standards (IFRS). The
European Securities and Markets Authority (ESMA) has is-
sued guidelines for the use and disclosure of alternative per-
formance measures. The terms TKH believes are relevant to
alternative performance measures are included in this chapter
of the Annual Report. It also includes a definition, as required
by the ESMA guidelines.
ADDED VALUE
Added value is calculated by deducting Raw materials, con-
sumables, trade products and subcontracted work from Total
turnover
CAPEX (CAPITAL EXPENDITURE)
Investments in Property, plant and equipment and intangible
assets and goodwill. Capex spending is a one-time invest-
ment.
CAPITAL EMPLOYED
Group equity plus long-term debt plus short-term borrowings
less cash and cash equivalents.
DEBT LEVERAGE RATIO (NET DEBT/EBITDA)
Long-term debt plus short-term borrowings minus cash and
cash equivalents divided by EBITDA.
DIVIDEND PAYOUT RATIO
This ratio indicates what portion of the net profit is paid out to
shareholders ((dividend/net profit after tax) times 100).
EBITA
Result before interest, taxes, impairments, and amortization.
EBITDA
Result before interest, taxes, impairments, depreciation, and
amortization.
INNOVATIONS TKH
At least 15% of turnover realized from innovations introduced
in the previous two years.
NET RESULT PER SHARE
Net result/weighted average shares outstanding. This ratio
indicates how much profit a company has available per share.
OPEX (OPERATING EXPENSES)
Operating expenses are the recurring costs of a product or
system.
ROCE (RETURN ON CAPITAL EMPLOYED)
Return on capital employed is the EBITA for the last twelve
months divided by the capital employed at the beginning
of the period plus capital employed at the end of the period
divided by two.
ROS (RETURN ON SALES)
EBITA divided by total turnover as a percentage.
SOLVENCY
Percentage of the equity relative to the total liabilities.
TCO (TOTAL COST OF OWNERSHIP)
The sum of Capex and Opex. The Capex expenditure is often
high initially, but over the life of a system, the Opex will even-
tually be the largest cost component of TCO.
OTHER INFORMATION
171
TKH GROUP ANNUAL REPORT 2021 |
Editor and text
TKH Group NV, Haaksbergen
Design
Monter, Amsterdam
Photography
Maarten de Kok (page 4, 53)
For actual information about TKH Group and our sustainability
developments please visit our website: www.tkhgroup.com.
15 March 2022
