TKH Group

Annual Report 2023

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Contents

Profile 3

Message from the CEO * 4

Highlights 2023 * 6

Key messages 6

Financial highlights 7

Sustainability highlights 7

Group synergies 13

Accelerate 2025 strategic program 14

Strategic pillars and targets 15

The world around us 18

Megatrends 18

Market drivers and position 19

Competitive landscape 20

Stakeholder analysis * 21

SWOT analysis * 23

Long-term value creation * 24

Management Report * 26

Sustainability statements 36

General disclosures 36

Environmental 43

Social 49

Governance 54

Governance 58

Members of the Executive Board * 59

Members of the Supervisory Board 60

Report of the Supervisory Board 61

Remuneration Report 68

Consolidated cash flow statement 104

Notes to the financial statements 105

Company financial statements 142

Company statement of profit and loss 143

Company balance sheet 144

Notes to the company financial statements 145

Other Information 151

Profit appropriation 152

Proposal for profit appropriation 152

Consolidated entities 153

Independent auditor’s report 154

Assurance report of the independent auditor on

The paragraphs marked with a * belong to the Management Report as defined in Title 9, Dutch Civil Code 2.

With more than 7,000 employees, TKH pursues sustainable

growth in a culture of entrepreneurship, working closely with

customers to create one-stop-shop, plug-and-play innovations

and Smart Connectivity technology.

Listed on Euronext Amsterdam, we operate globally and focus

our growth across Europe, North America, and Asia.

Profile

We specialize in the creation of innovative, client-centric

technology systems that drive success in automation,

digitalization, and electrification. By integrating hardware,

provide unique answers to customers' challenges. In doing

so, we work to make the world better by creating ever more

efficient and more sustainable systems.

3 TKH GROUP ANNUAL REPORT 2023 |

TECHNOLOGY COMPANY TKH

TKH Group N.V. (TKH) is a leading technology company.

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With passion and dedication, we have focused on the execution of our strategy and the

More than 200 new employees have seamlessly joined our team, bolstered by TKH’s

reputation as an appealing employer, in alignment with our strategic investment program.

Our focus on employee satisfaction has proven to be of great value in creating ambassadors

to support recruitment, and we are enthusiastic about the fact that we were able to further

improve our employee satisfaction score from 7.6 to 7.8 in 2023. We believe that dedication

and passion, combined with a high satisfaction score, make a difference in achieving our

targets. The same applies to our customer satisfaction score, which remained at the very high

level of 8.6.

Beyond this, our innovative power and high-quality service delivered a level of performance

that in many cases exceeded customer expectations. As a result, we continued to gain

5 TKH GROUP ANNUAL REPORT 2023 |

for the TKH group entities. AI provides an additional opportunity to create solutions for our

customers that deliver maximum performance and efficiency in their processes. Many AI

positioning projects were initiated, and the first projects have already been completed.

ESG continued to be a high priority in our activities, as reflected in the significant improve-

ment of several ESG ratings and dashboards. We made good progress against ESG goals,

in particular increasing investments to reduce our carbon footprint in relation to scopes 1

and 2. Our technologies help to create a better and more sustainable world. It is in our DNA

to recognize the importance of Environmental, Social, and Governance (ESG) as well as the

United Nations Sustainable Development Goals (SDGs). Sustainability is embedded in our

strategy and is seen as an opportunity to develop our technology to have a positive impact

on our customers and the use of scarce energy resources.

about the progress of our Accelerate 2025 strategic program. The drive and passion we see

in our operations and among our more than 7,000 employees globally to deliver results is

extremely high. We continued our divestment program successfully completing the transaction

to sell our commodity connectivity activities in France and our remaining interest in CCG.

The one-off net profit related to these transactions was € 54.8 million, demonstrating that we

created value during the time the activities were part of TKH. It is good to see that the new

environment for these activities brings new opportunities for growth and good prospects for

continuity.

We reinvested part of the proceeds from the divestments in two share buyback programs

of € 25 million each and in the acquisition of Euresys, which we acquired to strengthen our

Smart Vison segment. TKH’s transformation has continued, increasing its value-creation

necessary costs related to the roll-out of the strategic investment program, compounded by

the underutilization within Smart Vision and Smart Connectivity systems due to destocking in

the second half of the year, had a strong temporary negative effect on ROS. We decided to

maintain the cost level and capacity in Smart Vision and Smart Connectivity systems at higher

turnover levels in anticipation of market opportunities when the destocking effects are over.

Supply chain constraints required close cooperation with our suppliers and the creativity of

our procurement teams to find solutions to material and component shortages. Inefficiencies

and shortages eased during the course of the year.

We continue to see great opportunities for further growth and we are on the right track with

our investments in these exciting segments. We are confident about the anticipated recovery

of Smart Vision, the rebounding of the energy market conditions in the Netherlands and

We would like to thank our stakeholders for their trust and cooperation, which have been

instrumental in achieving our current results and laying a solid foundation for the years

ahead. In particular, we would like to thank our employees for their dedication, passion, and

commitment to achieving the best possible results in sometimes challenging situations!

On behalf of the Executive Board,

Alexander van der Lof, Chairman

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TECHNOLOGY COMPANY TKH

Highlights 2023

7 TKH GROUP ANNUAL REPORT 2023 |

TECHNOLOGY COMPANY TKH

Technology company TKH

Megatrends 18

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incorporating our Accelerate 2025 strategic program and targets,

Innovation and customer focus are key to keeping us at the forefront of creating

engineers. In total, we employ more than 750 people in R&D and software development,

Continually accelerating and scaling our innovations is essential to maintaining our leading

position and driving growth.

Investing in R&D and accelerating and scaling innovations are vital for future growth, and

to maintaining and expanding our leadership positions in the niche markets in which we

operate. In 2023, we spent € 70.7 million on R&D activities (2022: € 60.9 million).

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is driving the need for advanced technologies. In addition, electrification requires more

(renewable) energy generation. Together with our customers, TKH develops innovative, and

client-centric technology systems to provide answers to these challenges. In doing so, we

work to make the world better by creating more efficient and more sustainable systems.

TKH has a strong sustainable portfolio and has selected six Sustainable Development

Goals (SDGs) to guide our approach to sustainability. Two of these focus on our inter-

nal operations and business practices, while the remaining four focus on our innovative

product portfolio. TKH’s innovative products make a significant contribution to the SDGs:

approximately 70% of our portfolio’s total turnover is linked to one of the SDGs that we

have defined as relevant. In this way, we support our customers in achieving their

As we continue to expand our activities, integrating sustainability enables us to minimize

•

Tire Building Technology focuses on the environment and

e-mobility leads to different tire requirements

•

Advanced technology to lower waste and energy consumption

levels in production

•

Medication distibution/inspection system

•

Fib

re optic cable systems

•

Energy cable systems for the energy transition

•

•

2D and 3D Vision technology which results in increase in

productivity and improvement of quality

•

•

Traffic monitoring systems increase efficiency, safety, and

security

•

We want to ensure that we have an attractive and safe workplace. Being an attractive

and responsible employer is an important commitment that we take seriously. TKH offers

continue to build on our strong employer brand to keep attracting the right talents and fill

vacancies rapidly, especially in times of labor shortages.

transparency.

ratios and a strong cash flow from our operations, with a focus on sustainable long-term

continuity of the company.

We aim to achieve an annual increase in earnings per share, and a debt leverage ratio of no

more than 2.0. Generated cash will be reinvested in businesses with above-average growth

potential and/or distributed to shareholders. Structural surpluses of cash can be used for

share buyback programs, dividends, and/or strategic investments with an attractive return

on investment.

lower margins and growth potential.

By focusing on higher-margin activities, organic growth combined with cost efficiency,

expected market growth and value potential of TKH. Our 2025 target for our ROS is above

17%. The range for the 2025 ROCE target is 22%–25%.

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TECHNOLOGY COMPANY TKH

Electrification requires more renewable energy generation

Public and private ESG ambitions, budgets, and targets,

Global demand for high-speed bandwidth and data traffic.

Increased demand for connected assets (IoT).

Need for advanced mobility, such as autonomous driving

Greater demand for monitoring of essential network

Growth and increased speed of automation technology,

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TECHNOLOGY COMPANY TKH

Relevance for stakeholders High

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Relevance for TKH

• Most important “authorized

• Boost innovative capacity.

• Leadership and entrepreneurship.

• Integrity & zero tolerance.

• Investment through a shareholding

• Long-term shareholdings.

• Buy products and services.

• Develop sustainable package of

• Technological developments.

• Growth targets.

• Supply of services and products

reports.

• Financial service providers with

• Act as initiator, facilitator of supply

• Influx of new talent in order to

Sustainability proposition largely linked to SDGs.

Strong brand and reputation in active markets.

Capital-light operations in Smart Vision and Smart Manufacturing systems.

Optimal use of R&D resources and investments in markets with greatest potential.

Gender diversity, especially in executive and senior management positions.

Limited liquidity in trading of TKH shares.

High demand for automation due to move toward Industry 4.0.

Development and integration of technologies that help improve efficiency and connectivity.

Demand for reduced waste and energy consumption in production, driving the need for

Global demand for high-speed bandwidth and data traffic infrastructure.

Increased focus on intelligent security due to geopolitics and globalization.

Technological developments enabling improved customer services and technologies.

Improvement of cost ratio.

Disruption by new technologies from competitors.

Protectionism of domestic markets by governments and other international geopolitical

Cost and wage inflation.

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Machine Vision, the performance at the start of the year was good, supported by the battery

and solar market. In the second half of the year, Machine Vision experienced a large impact

from destocking and in some areas a weaker demand due to reduced end user activity,

mainly related to the factory automation market. Overall, the turnover for the Machine Vision

declined throughout the year, for both 2D and 3D. During the year, we further strengthened

our market positioning and cooperation within the group to take advantage of our one-stop-

shop solutions and TKH Vision group’s position as the technology partner for our customers.

Specific developments were initiated to offer plug and play system integration, facilitated by

software including AI propositions.

plug-and-play systems, and one-stop-shop solutions.

1 One-off net expenses for Smart Vision systems amounted to € 0.5 million in 2023 (2022: nil) of which € 0.5 million in

to create superior manufacturing systems. TKH engineers

complete manufacturing systems and machines that

account for 75% of the Smart Manufacturing systems

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MANAGEMENT REPORT

effects, turnover grew organically by 17.1%, with price effects amounting to 1.8%. The order

book grew by 10.2% compared to the previous year-end and peaked at € 631.3 million on

December 31, 2023 (2022: € 573.0 million) with a significant contribution from Tire Building

systems. The added value increased slightly from 49.9% to 50.5%. EBITA was up 31.8%

automation. Also, a high level of activities within the Tire Building industry related to

reshoring has been an important driver for the high order intake. The expansion of the

factory in Poland started production and capacity was successfully ramped up in the

second half of 2023. A further expansion of these production facilities are due to come on

stream in the first half of 2024. At the beginning of 2024, an order was booked for a UNIXX

advanced technology and is a major milestone for further growth in this segment.

mainly due to the divestment of TKH France and higher personnel and manufacturing

expenses as a result of increased headcount in anticipation of the ramp-up in

production capacities. In total, around 200 employees were hired for the ramp-up

of the new production facilities. EU anti-dumping duties on fibre optic cables had a

€ 7.5 million negative impact on EBITA. Impacted by the divestment, lower volumes,

and related underutilization in the second half of the year, ROS decreased to 10.1%.

unique, integrated system approach and sustainability

proposition. Energy and Digitalization account for about 39%

turnover share.

impacted by destocking in the second half of 2023, due to delays encountered by the

Dutch utility companies with the roll-out of their network infrastructure projects. The

offshore Subsea cable capacity was underutilized in the second half of this year due to the

postponement of an order. The new plant for Subsea cables in Eemshaven is on schedule

has already started in Q1 2024 and is running smoothly. We are excited to see the success

of our innovative dry design technology in Subsea gaining traction, as evidenced by the

framework agreement with Vattenfall, and the prospects for new orders in the coming

quarters. The strategic investment program also prepared TKH for substantial additional

plant in Poland during Q3. This new fibre optic plant was officially opened early September

and is rapidly ramping up production. The transition of production from China to Poland

temporarily impacted output and cost levels.

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Acquisitions are an important part of TKH’s strategy and contributes to our long-term

The investments specifically target:

Fibre optic cables: the new plant in Poland, which will

became operational as of Q3 2023; the import duties

incurred in 2023 amounted to € 7.5 million.

connectivity systems became operational in Q3 2023.

systems in Poland became operational early Q2 2023.

Out of the total amount of € 200 million allocated for

strategic investments, € 124 million has been spent in 2023

(2022: € 41 million). In total, we expect these investments to

related to customized electronic assemblies for the industrial

and automotive market; 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.

In 2023, the net investment in property, plant and

equipment, excluding right-of-use assets, totaled € 177.1

million (2022: € 91.8 million). In 2022, we launched our

Strategic Investment Program to further increase our global

production capacity to respond to the increased market

demand in the fields of automation, digitization, and

250

225

200

175

150

125

100

TKH has made strong progress in its

completion of the € 200 million strategic

decrease in Q1 2024 compared to Q1 2023.

Investments in intangible assets and goodwill

technologies:

(Vision) security and communication systems.

New generation of Tire Building systems, like the UNIXX,

Portfolio and production technology for connectivity

systems focused on electrification.

Automated system for patching and connecting within

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a more efficient and sustainable world. We aim to do that by sustainable innovation, which

Sustainability is a key element in our product

The world is facing a shortage of human resources and

the United Nations, are a blueprint for achieving a better and

more sustainable future. TKH recognizes their importance

context, we are focusing on four SDGs. Sustainability

is increasingly integrated in our operations and supply

Promote inclusive and sustainable

Build resilient infrastructure, promote

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TKH’s technologies and solutions support the care process,

stringent quality measures imposed by the pharmaceutical

industry to package different medicines with the highest

precision. In addition, the risk of contamination of medicines

is eliminated.

With its Connectivity technologies, TKH is developing

TKH’s Connectivity technology plays a fundamental role in

high performance, risk reduction, installation efficiency, and

TKH has a strong reputation as an innovator in the tire

research. TKH leverages its unique expertise and deep

understanding of the automation of production processes

for controlling and monitoring industrial processes, as well

as comprehensive manufacturing systems for car and truck

tire production.

By combining communications and Security technology to

production companies are selected, to the greatest extent

possible, to have little or no harmful effect on the

environment from the initial design stage. TKH’s production

environment focuses on eliminating waste as much as

possible, and sets targets for reducing waste and recycling

raw materials. We regularly discuss sustainability

opportunities and our Code of Supply with our suppliers.

T

we offer a distinctive and innovative portfolio of high value-

added products. Healthy balance sheet ratios and a solid

operating cash flow also support TKH’s growth strategy.

Through good employment practices, we offer our

and targets on health and safety as well as employee

| TKH GROUP ANNUAL REPORT 202340

significant uncertainties about its phased implementation

after the second reporting year in 2022. However, the EU

is expected to develop a comprehensive and detailed

framework over the coming years.

There are six environmental objectives under the EU

Taxonomy:

Climate change mitigation

The Delegated Acts adopted under the EU Taxonomy

Regulation provide technical screening criteria that must

also be met to conclude on taxonomy alignment. In 2023,

the second Delegated Act was published concerning

proportion in the total turnover, capex and opex. We used

the Regulation (EU) 2020/852, the Delegated Act (EU)

2021/2139, the Delegated Act (EU) 2021/2178, and the

Delegated Act (EU) 2023/2486 for this assessment. In 2023,

companies are required to report on to what extent the

economic activities are eligibility (i.e. contributing to one or

more of the 6 environmental objectives). Report on alignment

to data processing, hosting, and related activities. Because

we do not meet the requirements of the EU Directive on

are not met. As a result this activity is considered to be

eligible but not aligned. The remaining turnover is non-

eligible (99.7%). The turnover is calculated based on the

“total turnover” according to the consolidated statement of

profit and loss. The total value of TKH’s turnover amounts

to € 1,847.5 million.

We also assessed our capital expenditure. The reportable

Taxonomy-eligible but not aligned capital expenditures in

considered to be eligible but not aligned. The remaining

capex is non-eligible (99.5%). The capital expenditure was

determined based on the 2023 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). The total value of TKH’s

capex amounts to € 259.8 million.

This differs from the definition of operating expenses in our

financial statements. We used the following general ledger

accounts in the operational expenditures assessment:

R&D expenses, building maintenance, repair/maintenance,

short-term leases, low-value leases, cost of machinery, cost

of warehousing and furniture, and cost of manufacturing and

housing. These costs are included in the other operating

monitor legislative developments and adapt our disclosures

as necessary.

and inform those concerned in good time of corrective or

preventive measures.

Life Cycle Assessment (LCA)

We use product life-cycle assessments as input for

sustainable product innovations, including circularity. For

example, our operating company VMI achieved a remarkable

milestone by conducting a comprehensive Life Cycle

Assessment for their MAXX tire building machine. This

accomplishment marked a pioneering effort in the tire

manufacturing industry, as VMI became the first manufacturer

control. EcoDesign is a crucial approach that VMI values,

means finding a balance between environmental and

economic factors. It’s about making sure that environmental

concerns are a fundamental part of every step in developing

about a product’s entire life cycle, including how it’s made,

how it’s used, how it’s maintained, and what happens to it

when it’s no longer needed. By embracing EcoDesign

principles and using the LIDS wheel, VMI’s lead engineers

are better equipped to develop products that not only work

well and make economic sense but also contribute positively

to environmental sustainability. This commitment not only

benefits VMI but also aligns with global efforts to make

products that have a smaller impact on the environment.

The potential impact of climate change on our strategy and

our business model has received a great deal of attention in

the year under review. Based on recommendations from the

we extensively analyzed the potential risks to our operations

posed by climate change, and how these climate-related risks

could be turned into opportunities, for instance through

innovations in climate adaptation or climate-change mitigation.

Our analysis identified four potential risk areas that could

the risk is considered less relevant for TKH. However, physical

(acute) climate change risks are part of the assessment when

making business decisions, for example when changing

locations or expanding our facilities or activities. We have

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

| TKH GROUP ANNUAL REPORT 202348

with our strategic stakeholders to gain a validated overview

of the key threats and opportunities. In this way, we can gain

insight into the acceptance and mitigation of threats, and we

can take further steps to realize opportunities. To verify and

conducted several stakeholder dialogues in 2023. The

results of the survey and the stakeholder dialogues did not

result in material changes to the risks and opportunities

identified. Therefore, the climate threat profile, a blueprint for

an organizational level.

TKH is not a water-intensive company. Water is mainly used

One of our production locations is located in a high water

our water withdrawal is limited compared to other industrial

address potential water-related risks. We will utilize publicly

accessible tools such as the Aqueduct Water Risk Atlas by

WRI and WWF Water Risk Filter to define and respond to

these risks.

expected of them and how they can make an active contribution. It is our duty to be a

good employer and to motivate and support our employees as much as possible, so they

procurement, marketing, communications, and sales can be

activities that, by their nature have narrow profit margins or

Culture and Risk Management

TKH has a culture that encourages entrepreneurship.

Organizational risks associated with entrepreneurship are

easily identified through a clear framework of responsibilities

that is divided into weekly, monthly, and quarterly information.

from the top down to ensure that it permeates all levels of

the company. Every quarter – or, if necessary, every monthly

We provide our employees with a healthy work environment

where safety comes first, and we give them opportunities to

develop. Since 2021, the production locations of TKH are

certified for the occupational health and safety (OH&S)

Organizational structure

TKH has a decentralized organizational structure, in which

possible. The Executive Board – the body bearing ultimate

responsibility – is supported by the Management Board in

responsible for the decisions taken by the Management

Board and bears ultimate responsibility in accordance with

the company’s Articles of Association.

During the year under review, further steps were taken to

simplify the organizational structure, and to focus on

activities with a greater value creation potential. The integra-

tion of the operating companies, with a focus on the benefits

of economies of scale, will enable operational synergies to

be exploited and existing expertise to be better leveraged.

As a result, activities such as product development,

| TKH GROUP ANNUAL REPORT 202350

The interests of the employees are represented at the level

of the operating companies 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 Ondernemings-

raden). During the year under review, the Executive Board

and the Central Works Council held frequent, close consulta-

tions. Topics discussed included the results and organiza-

tional developments, progress on the strategic program

Employee satisfaction

year (2022: 0.78) and is below the target of <1.0. In 2023,

there were 38 work-related incidents resulting in injury (2022:

46) of which 9 were occupational accidents resulting in

absenteeism where replacement work was not possible

focus on safety issues in both our own organization and that

of our suppliers. There were no fatalities in 2023, as in the

two previous years. In 2024, our cable production company

TKF aims to obtain the Safety Culture Ladder certification

flu-related illnesses had the greatest impact on the reduction

Diversity and inclusiveness

the year under review, the number of employees with a

disadvantage in the labor market was 108 FTEs. Since

2022, TKH has been PSO certified (“prestatieladder socialer

ondernemen”). This certificate isa quality mark that proves

entrepreneurship and focuses on the employment of

vulnerable groups in the labor market. We have a proven

term that covers illnesses/disorders, activity limitations, and

participation restrictions. An illness/disorder is a problem in

the function or structure of the body. 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 that results

in a disadvantage in the labor market. TKH creates work

experience opportunities for the long-term unemployed or

people returning to the labor market.

are responsible for improving the gender balance within their

own organizations, and progress is closely monitored by the

Executive Board.

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TKH has strong ambitions and has set ambitious non-financial

employees in executive and senior management roles to at

least 25% by 2030. These positions are defined as follows:

level (reporting directly to the Executive Board).

operating company’s management team and responsible

for specific business units or departments (e.g. finance,

At year-end 2023, the number of employees (in FTEs) was

6,899 (2022: 6,607 FTEs), of which 434 were temporary

employees (2022: 409 FTEs).

Recruitment of this kind is a high-priority area. There is an

increasing shortage of qualified (female) personnel, especially

in technical and technological positions. It will become more

challenging to fill such positions in the coming years.

However, we have seen that the positioning of our operating

companies under the TKH brand has had a positive effect in

being used to reach and interest future talent. When

recruiting external (female) candidates, we are increasingly

using referral recruitment, i.e. asking our current employees

can make a good assessment of a potential candidate’s

suitability for the position and fit with the organization. When

capacity became available due to reduced demand or other

constraints, employees were (in some cases temporarily)

reassigned to fill other positions, where possible.

In 2023, the proportion of female executive and senior

management employees increased to 19.2% from 18.4% in

(technical and technological) positions combined with a

specific development program to further develop their

this way, we aim to increase the inflow and throughput of

The Executive Board, Management Board and Supervisory

Board aim for diversity in their composition in terms of age,

consists of three members, all of whom are male. The

Management Board consists of six members, of which five

are male and one female. TKH will strive to ensure that new

appointments to the Executive Board, Management Board,

and Supervisory Board are made with the aim of having of at

least 1/3 female members and at least 1/3 male members.

value. Our employees’ skills and backgrounds are matched

as closely as possible to the strategic developments at TKH

in their careers. At the same time, we are mindful of the

need to retain critical skills to pursue our strategic agenda

in technological development and innovation. Yearly

performance interviews are conducted to discuss

2023, 76% of all employees received a performance review

(2022: 72%). This is not 100% because not all of the

employees are eligible for performance review, for example

because they just have been hired and the one-year period

Our employees are encouraged to develop in the direction of

possible to TKH’s normal practice. New employees go

ship, business development and value creation, business

processes and sustainability, and also work on business

cases to put this into practice.

In 2023, significantly more hours were spent on training and

other courses than in 2022. Fewer COVID-19 restrictions

meant that more training courses could be held, in addition

to virtual training. In addition, the number of FTEs increased

in 2023, resulting in more training hours. Our new production

facilities, in particular, require training and education before

operators can begin. On average, FTEs spent 42 hours in

Gertjan Sleeking

Derk Postma

Olaf Karsten (VMI), chairman

Jan Jaap Derksen (VMI)

Maurice Fliescher (Intronics)

Onno Verkerk (TKH Security)

Louis Scholten (TKF)

material themes (e.g. the Corporate Sustainability Reporting

Directive), including health and safety, IT security, sanctions,

and our Code of Conduct, among other topics.

Customer satisfaction

High-quality technologies, solutions,

and corresponding

services are essential to our commercial impact. Customer

interests play a central role in the way we conduct and

implement operational activities and developments. We

measure, monitor, and evaluate customer loyalty and

appreciation through customer satisfaction surveys on a

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.

| TKH GROUP ANNUAL REPORT 202354

meetings), and relevant channels (e.g. our annual report and social media) to share our

sustainability strategy, programs, and performances.

TKH has embedded its risk management policy at all levels

sessed by Internal Audit. An open, transparent culture with

be an important tool for creating sustainable long-term

value. A continuous focus on risk awareness is a key

communication and is supported by closely monitoring

agreed objectives through a comprehensive Key Perfor-

mance Indicator (KPI) dashboard. More information can

be found in the Risk Management and Management

Statement sections.

TKH highly values the integrity of its employees’ conduct.

Conduct uses the OECD Guidelines as a reference frame-

work. Employees confirm in writing that they will act in

accordance with the Code of Conduct, which is linked to

a sanctions policy in the event of unacceptable behavior.

The managers of our operating companies are responsible

for implementing the Code of Conduct in their organizations.

The Code of Conduct has been signed by 96.5% (2022:

97.7%) of the total number of employees. The target of

100% has not been achieved, partly due to a longer than

expected lead time for new employees to sign the Code.

We are in close contact with the operating companies, and

we are establishing clear rules to eliminate such delays as

downloaded from the TKH website.

underlying our actions and our risk profile, and to take

responsibility for any potential risks they take. They are

also expected to adhere to the TKH culture and to act in

accordance with TKH’s Code of Conduct. This Code of

how we act as a company, how we make decisions, and

how we deal with different dilemmas within our company.

TKH Group is committed to an open culture where

employees can openly discuss any concerns, problems,

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 issues. Reports

are reviewed and investigated by the local Confidential

Officer and/or the Group Compliance Officer. If deemed

necessary, disciplinary and corrective measures are taken.

External parties can also report to the Group Compliance

Officer. A report will not affect the position of the

the employees involved were dismissed after various

conversations and measures to improve their behavior and

to ensure that they would act in accordance with the Code

of Conduct. It is difficult to draw clear conclusions about the

level of awareness of acting with integrity and the possibility

of reporting wrongdoing. We believe it is important to

promote an open and transparent culture and to measure

these issues in employee satisfaction surveys.

We also expect our suppliers to adopt a zero-tolerance

policy on issues that are material to us. Our principles are

must sign the Code of Supply. The Code of Supply has

been signed by 91.9% (2022: 91.9%) of the total number of

suppliers in scope. Within a maximum of two years after

signing the Code of Supply, an assessment of the supplier in

question must be carried out to review the items stipulated

in the Code. Internal Audit has included the auditing of

processes related to the Code of Supply in its work program.

Unfortunately, we have been scammed in four instances,

in which a fraudster impersonated an existing customer.

As a result, products were delivered for which no payment

People must be able to live in freedom without everyone

knowing everything about them. The Privacy Act, including

Anti-competitive behavior and sanctions

TKH is fully committed to combating anti-competitive

behavior by providing all parties with the same information,

setting realistic requirements, and establishing clear contract

conditions. We also avoid any activities that conflict with

legislation. To ensure this, internal guidelines drawn up for

our compliance with laws and regulations. If sanctions are

imposed on our company by authorities, we will explain the

cause and the corrective measures been taken. In 2023, we

did not incur any sanctions.

| TKH GROUP ANNUAL REPORT 202356

Increased awareness of potent

ial cyber risks has placed IT &

Security high on the strategic agenda, and a clear IT security

policy has been developed at TKH. In addition, IT audits have

been carried out at the operating companies, based on which

action plans have been developed to address vulnerabilities in

the IT systems. As a result of the IT audits, cybersecurity and

cyber risks have been given a high priority in the organization

and awareness of potential risks has been increased.

event occur, as well as the upcoming EU NIS2 Directive,

which will be implemented into national law by EU Member

States in 2024. The topic is a recurring item on the agenda

in meetings of the Executive Board and Audit Committee

focus area of the Internal Audit team. Several security

incidents occurred during the year under review. By

experts, we ensured that these incidents did not result in

significant data leaks, cause significant or permanent

damage, or impact business continuity. However, these

incidents reinforce the need to remain vigilant to IT Security

risks. Further information about IT security is included in

European legislation on the protection of private data, the

General Data Protection Regulation (GDPR), imposes strict

rules on the use of personal data and the storage of such

also been drawn up and implemented in the organization.

Internal Audit, in collaboration with the internal Legal Advisor

(who is also the Data Privacy Officer), ensures the proper

application of GDPR legislation within the organization.

element of our ESG policy.

guidelines on international tax matters, which TKH follows.

This is reflected, for example, in TKH’s tax position, which

shows that taxes are paid where there is significant

economic activity and value creation. For TKH, this is one

of the relevant elements 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

engage in aggressive tax planning (including tax havens as

Working together with tax authorities

We strive to build strong, mutually respectful relationships

with the tax authorities based on transparency and trust.

We therefore believe in an open and constructive dialogue,

both with the Dutch tax authorities and those in other