TKH Group N.V.

TKH Group

Annual Report 2024

TKH Group

Annual Report 2024

TKH Group Annual Report 20242

TKH Group at a glance

Profile 3

Message from the CEO * 4

Highlights 2024 * 6

Strategy and performance *

Technology company TKH 9

The world around us 24

Long-term value creation 28

Financial performance 31

Developments per technology segment 33

Acquisitions, divestments, and investments 36

Outlook 37

Sustainability performance 39

Governance

Members of the Executive Board * 47

Members of the Supervisory Board 48

Report of the Supervisory Board 49

Remuneration report 56

Corporate Governance * 66

Risk management * 68

Management statement * 79

TKH shares 80

Sustainability statements *

General information 84

Environmental information 99

Social information 123

Governance information 139

Appendices 148

Financial statements

Consolidated financial statements 157

Company financial statements 205

Other information

Profit appropriation 215

Proposal for profit appropriation 215

Consolidated entities 216

Independent auditor’s report 217

Limited assurance report of the independent auditor

Stichting Administratiekantoor TKH Group 228

Stichting Continuïteit TKH 229

Ten years overview 230

Alternative performance measures 232

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

Contents

on the sustainability statement 224

3Annual Report 2024 TKH Group

We create innovative

leading technologies for

high growth markets

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

We specialize in the creation of innovative, client-centric

technology systems that drive success in automation,

digitalization, and electrification. By integrating hard-

ware, software, and customer-focused insight, our smart

technologies 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.

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 combined with software

and Artificial Intelligence for Smart Vision, Smart

Manufacturing, and Smart Connectivity technology.

Listed on Euronext Amsterdam (TICKER: TWEKA), we

operate globally and focus our growth across Europe,

North America, and Asia.

4 TKH Group Annual Report 2024

Strategic progress has once again been a high priority. Important milestones were

achieved that have strengthened the foundation for growth. Further focus was

created by divestments and acquisitions within the core activities, in line with our

objectives.

The Smart Manufacturing activities achieved a record

year in terms of turnover and results, supported by

the excellent performance of the tire building systems

segment. With a ROS realization of 19.1%, the target

of 19% for 2025 was exceeded. A remarkable perfor-

mance was achieved by the excellently organized growth

in production output and the associated programs for

production and cost efficiency.

The Smart Vision activities faced headwinds in the first

nine months, mainly due to ongoing destocking at our

customers and the effects of lower customer investments

in a number of end markets. By focusing strongly on

acquiring new customers, winning larger projects and at

the same time introducing new technologies, a record

ROS of 22% was achieved in the fourth quarter. The

high added value of these activities confirmed that our

strategy to continue investing in our sales organization

and product development was the right choice. Partly

due to the increased scale, the realization of our ROS

objective came into view.

Investments in software and AI strengthened our tech-

nology propositions. This is also due to the scale of

the development team that has been created for this in

recent years, which develops algorithms that are leading

Message from the CEO

In terms of important milestones achieved, the opening of

the new subsea cable factory in Eemshaven in September

2024 was a clear highlight. This completed the realiza-

tion of our €200 million strategic capex program. The

order intake of over €300 million for this strategic invest-

ment, with state-of-the-art production and our unique

dry-design cable technology, provides a good basis for

a high occupancy rate and an excellent return in line

with our objectives. The start-up of the new factory was

delayed by some challenges with regard to fine-tuning

of the production processes. Good progress was made

during the last months of the year, but as announced in

November 2024, the desired output will only be achieved

in the course of the first half of 2025. A clear setback

were the market developments within the outdoor fibre

optic Telecom segment. The market within Europe dete-

riorated abruptly as investments were reversed due to

higher interest rates. This had a major impact on volumes,

which led to the decision to concentrate production on

one production location with lower production costs and

to allocate the production location in the Netherlands for

expansion opportunities for the energy transition and the

required capacity expansions. The start-up costs of the

new factories in the Netherlands and Poland had a strong

downward effect on the result of the Smart Connectivity

activities.

5Annual Report 2024 TKH Group

in multiple applications. One recent example is Foreign

Object Detection for Tire Building Machines, an advanced

algorithm designed to detect foreign objects in tread

material using high resolution cameras. Deep Neural

Networks (DNNs) represent another success story that

you will find described in the cases section of this annual

report. Developed in partnership with the University of

Graz, DNNs use network algorithms and adaptive artificial

intelligence to eliminate ambient noise from the voice

signals in intercom systems.

As this is the last year of our Accelerate 2025 strategy,

we have started to review our strategy going forward. We

have achieved many of the milestones we defined for this

period, but also due to geopolitical developments and

resulting market headwinds, we have not realized our

full potential within the timeframe. Building on our strong

foundations, our strategy for the next phase will focus on

Automation and Electrification as guiding global trends.

Our leading positions and mature technologies on the

back of our innovations and R&D roadmap, will allow us

to gain further market share and expand our addressable

market. In addition, a combination of cost optimiza-

tions, optimized integrations and commercial excellence

programs will add to further margin expansion. As part

of our strong focus on Automation and Electrification,

we will implement a matching divestment program, using

the proceeds to further build our core technologies, while

returning any excess cash to shareholders.

ESG continued to be a high priority in our activities. We

made good progress against ESG goals, in particular

increasing investments to reduce our carbon footprint

in relation to scopes 1 and 2. We also further increased

the proportion of women in our executive and senior

management teams, to 21.6% in 2024. Together with

our customers, we create innovative and client-centric

technology systems, to provide answers to sustainability

challenges. In doing so, we add value to make the world

better by creating more efficient and more sustainable

systems and contributing to the United Nations’

Sustainable Development Goals (SDGs). The percentage

of turnover related to the SDGs increased to 71.6%.

Under the CSRD (Corporate Sustainability Reporting

Directive of the European Union), companies in scope

will be required to report on sustainability issues in their

management report for the 2024 financial year and to

obtain an assurance conclusion on this report. However,

the implementation of CSRD in Dutch law has been

delayed. Although there is not yet a formal statutory

requirement to report in accordance with the CSRD due

“Our strategy for the next phase

will focus on the exciting trends of

Automation and Electrification.”

to the delayed implementation, TKH prepared its

sustainability statements 2024 based on the CSRD on

a voluntary basis. At the same time, we obtained a

voluntary assurance on the sustainability statements.

This confirms our focus on sustainability and further

integration of sustainability in our own operations, and

value chains.

Once again, we can say that the passion of our people

makes the difference in achieving exceptional perfor-

mances. These performances did not all translate into

the intended return in 2024. However, they do offer pros-

pects for a strong further development of TKH, linked to

our strategic choices.

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 further value creation in the years ahead.

On behalf of the Executive Board,

Alexander van der Lof, Chairman

6 TKH Group Annual Report 2024

Highlights 2024

TKH worldwide

Europe (other)

€594 million

Asia

€369 million

The Netherlands

€413 million

North America

€251 million

Other

€86 million

€1,713m

Turnover

51.9%

Added value

70.3%

Net CO

e footprint

reduction

8.6

Customer satisfaction

score

11.9%

Return on sales (ROS)

15.2%

Return on capital

employed (ROCE)

71.6%

Turnover linked to SDGs

7.8

Employee satisfaction

score

€203.9m

EBITA

€1.50

Dividend proposal

per share

21.6%

Diversity

0.7

Accident rate

(LTIFR - TKH)

Turnover

7Annual Report 2024 TKH Group

General developments

Completion

our €200m strategic investment program

• Opening of inter-array cable plant in Eemshaven in

September 2024

•

Significant expansion of our capacity in Electrification,

both medium and high voltage cable as well as off-

shore wind inter-array cable

Implemented €15m cost saving measures

• Concentration of all fibre optic cable production in

Poland

• Organizational consolidation of TKH's 2D Machine

Vision brands

Our technology leadership was supported by a record

high investment in R&D of €80.7m

Innovations at 17.6% of turnover

Further strengthening of our proprietary technologies

and market positioning through software and AI

developments such as

• Foreign Object Detection in tire building machines

• Clean Voice from Noise in integrated security intercom

systems

Record high order book of €1,135m per December 31,

2024

The added value increased further from 49.8% to

51.9%, which is an important confirmation of the

strategic development of our portfolio and technology

leadership

Developments per technology segment

The Smart Vision activities faced headwinds in the

first nine months; by focusing strongly on acquiring

new customers, winning larger projects and at the

same time introducing new technologies, a record

ROS of 22% was achieved in the fourth quarter

The Smart Manufacturing activities achieved a record

year in terms of turnover and results, supported by the

excellent performance of the Tire Building systems

segment; with a ROS realization of 19.1%, the target

of 19% for 2025 was exceeded

The Smart Connectivity activities were strongly im-

pacted by the deterioration of the fibre optic market

as well as the ramp-up of the new inter-array cable

facility in Eemshaven leading to a ROS of 4.9%; the

perspective of the investment in Eemshaven was

confirmed by a record high order intake of €336m for

subsea

Sustainability

Sustainability statements aligned with CSRD on

voluntary basis, including voluntary assurance on

the sustainability statements

High-priority investments resulted in 70.3% reduction

of CO

e footprint (scopes 1 and 2)

Diversity ratio increased to 21.6% (females in

executive and senior management teams)

Employee satisfaction rate all-time high at 7.8

71.6% of turnover linked to SDGs

Investments and portfolio optimization

Net investment in property, plant and equipment

of €98.7m, of which €49m related to the Strategic

Investment Program

As part of our strategy to focus on our proprietary

technologies, two non-core entities within Smart

Manufacturing systems, together accounting for €56m

of turnover in 2023, were divested:

• HE System – specialized in efficient electronic

assemblies as well as power modules

• EKB Groep – with a position in both panel building

and industrial automation

Acquisition of three companies with proprietary

technologies which complement our portfolio

• JCAII – providing innovative and reliable communica-

tion systems to the airport industry, complementing

our CEDD technology

• Liberty Robotics – provides 3D volumetric vision

guidance systems for robot applications

• Comark – a company specialized in laser-based

volumetric vehicle measurement

Entering next phase with

Focus and Optimization program

Focus on Automation and Electrification by leveraging

our existing footprint and by deploying proprietary

technologies

Further optimize our operations through integrations

and divestments

Using proceeds to further build on our core technolo-

gies in Automation and Electrification, while we aim to

return excess cash to shareholders through dividends

and/or share buybacks

Key messages

Strategy and

performance

Technology company TKH 9

Who we are and what we do 10

Our values 12

Smart Technologies 13

Operating model 17

Our strategy 18

Strategic pillars 20

Strategic objectives Accelerate 2025 strategic program 23

Strategy update: Focus and Optimization 23

The world around us 24

Megatrends 24

Market drivers and position 25

Stakeholder analysis 26

SWOT analysis 27

Long-term value creation 28

Financial performance 31

Developments per technology segment 33

Acquisitions, divestments, and investments 36

Outlook 37

Sustainability performance 39

Annual Report 2024 TKH Group

9Annual Report 2024 TKH Group

Mission

Making the world a better place

by unlocking the potential of our

differentiated technologies.

Technology company TKH

Vision

We develop class-leading

technologies tailored to the needs

of our customers.

By making their operations ever

more efficient, we aspire to be

the strategic partner they trust to

deliver long-term value that benefits

people, the planet, and future

generations.

TKH Group Annual Report 202410

Committed

people

We are aspirational

Making the world a better place by unlocking the potential of our differentiated technologies.

Smart Vision systems Smart Manufacturing systems Smart Connectivity systems

Sustainability

in action

Differentiation

through innovation

Sound financial

foundation

We develop class-leading technologies tailored to the needs of our customers.

By making their operations ever more efficient, we aspire to be the strategic partner they trust

to deliver long-term value that benefits people, the planet, and future generations.

We are empowered

We are motivated We are customer-focused

Customer first

philosophy

Develop leading positions across our chosen markets in which growth is accelerated by the megatrends automation,

digitalization, and electrification. We aim to maintain and expand our share in these markets by leveraging and scaling

up innovation, investing in the smart elements of our technologies, and actively optimizing our portfolio.

In close partnership with our customers, we integrate

our proprietary technologies with internally developed

software, Artificial Intelligence, and customer-focused

insights, creating fully integrated, one-stop-shop, and

plug-and-play systems.

We operate mainly in growth markets, where our

differentiated technologies, integrated one-stop-shop,

plug-and-play systems or high-quality service levels

enable us to build leading positions. We operate globally,

with our growth primarily focused in Europe, North

America, and Asia.

Our Smart Technologies create unique answers to our

customers’ challenges, helping them to work smarter,

more successfully, and more sustainably. In doing so,

we work to make the world better by creating more

efficient and more sustainable systems.

We believe that innovation drives progress and success.

TKH exists to create sustainable, purposeful innovation

Who we are and what we do

We specialize in the creation of innovative, customer-centric

technology systems for high-growth markets, where growth is

driven by the megatrends automation, digitalization, and

electrification.

TKH business model

Strategic pillars

Mission

Vision

Values

Strategy

Smart Technology

segments

Smart Vison systems

Annual Report 2024 TKH Group 11

We work with a decentralized business model, coupled

with our entrepreneurial, customer-focused culture.

Our short lines of communication enabling our operating

companies to respond swiftly and effectively to

geopolitical and social developments that affect the

challenges our customers face.

We operate in a socially responsible manner, continuously

seeking to strengthen our contribution to a sustainable

society. Socially responsible business practices with a

strong environmental awareness are at the heart of every-

thing we do. More than 70% of our turnover relates to at

least one UN Sustainable Development Goal. Our

portfolio of Smart Technologies supports our customers

in meeting their sustainability targets. And we continue to

integrate sustainability policies into the business

decision-making processes.

We have segmented our Smart Technologies into three

core market segments, Smart Vision, Smart

Manufacturing, and Smart Connectivity systems.

Turnover

€2 billion

in 2025

Return on sales (ROS)

17%

in 2025

Return on capital employed (ROCE)

22-25%

in 2025

Carbon footprint (CO

emissions)

100%

carbon neutral own operations by 2030 (scopes 1 and 2) –

reduction of CO

footprint compared to reference year 2019

Diversity

25%

Female executive and senior management by 2030

Accident rate (LTIFR)

1.0

Key targets

over the long-term. We constantly search for ever more

efficient technologies, guided by an unwavering focus on

real-world requirements. By helping our customers

respond quickly and effectively to changing market

trends, we deliver the differentiation that provides a true

competitive advantage. Our approach to sustainable

innovation is shaped by customer purpose, driven by

research, and scaled up by AI. With over 750 forward-

thinking minds dedicated to R&D, our journey to better

is powered by in-house hardware and software

development, shaped by digital transformation, and

characterized by unique smart technology systems.

Our competitive strength lies in our customer focus,

geographic spread, high-quality innovative and

proprietary technologies, and distinctive technological

capabilities. This strength allow us to respond quickly and

swiftly to changing customer patterns, the accelerating

technological developments and the increasing need for

sustainable solutions and the consolidation of (industrial)

sectors.

Smart Connectivity systemsSmart Manufacturing systems

TKH Group Annual Report 202412

Our values

At TKH, we develop our technologies in a sustainable and socially responsible

manner, using the expertise of our talented people. We conduct our business with

honesty, integrity, accountability, and transparency.

We are aspirational

The commitment to go

beyond the norm

We are focused on driving

success, with the vision to

open new possibilities and

unlock sustainable value for

our stakeholders.

We are empowered

The freedom to make great

things happen

We encourage an entrepre-

neurial mindset, trusting the

talent and the passion of our

people to take the initiative

and deliver the innovation

that sets us and our

customers apart.

We are motivated

The ambition to deliver

sustainable success

More than an innovator, we

are a long-term partner.

We are motivated by and

committed to the best

interests of our customers,

our planet, and our future

generations.

We are customer-focused

The vision to help our

customers thrive

Our close partnerships set

us apart, helping us deliver

the technology that helps

our customers to boost

efficiency, achieve ambitions,

and maintain success.

13Annual Report 2024 TKH Group

Smart

Connectivity

systems

Smart

Vision

systems

Smart

Manufacturing

systems

35%

37%

28%

Turnover per technology segment

Our Smart Technologies, which combine hardware, software,

Artificial Intelligence, and related services into one-stop-shop,

plug-and-play innovations, are centered around three segments:

Smart Vision systems, Smart Manufacturing systems, and Smart

Connectivity systems.

Smart Technologies

2024

TKH Group Annual Report 202414

We develop vision

systems to maximize

accuracy, efficiency,

and security

As a leading innovator in machine vision

systems, our technologies represent

the eyes, the ears and the brains of

automated systems. Our advanced

security vision systems, meanwhile,

empower our clients to effectively

monitor, manage, and control public

spaces, urban environments and infra-

structure. Vision technology accounts

for about 85% of the turnover of the

Smart Vision systems segment.

3D vision

TKH is the global leader in 3D scanning and inspection.

3D machine vision sensors directly digitize the shape of

objects, without the need for additional lighting or

calibration, allowing for increased accuracy, repeatability,

and robustness of the application. Our 3D smart sensor

technologies help factories to achieve 100% inspection,

reduce waste by optimizing processes, and improve

efficiency by simplifying automation.

Security vision

Our security vision systems, combined with advanced

communication technologies, help customers to

effectively manage and control urban infrastructure;

implement intelligent traffic systems; maintain the highest

levels of cybersecurity; and support mission critical

security and communication systems.

Machine vision

Our cutting edge 2D and 3D machine vision systems

sit at the heart of modern automation. In addition to

providing premium hardware, our solutions include

advanced integrated software with Artificial Intelligence

based Machine Learning capabilities, to address the most

difficult processing and automation challenges.

2D vision

Our industry-leading 2D vision technologies optimize a

wide range of processes and systems across a variety of

applications including quality inspection, operation, and

object monitoring. We offer systems that cover the full

breadth of 2D vision technologies, including area scan,

line scan, high-speed, SWIR, UV and polarized imaging,

while the addition of embedded and PC based software

enable turnkey vision solutions.

Smart Vison systems

15Annual Report 2024 TKH Group

Bringing the factory

of the future into the

here and now

We are the automation experts. We

create value for our customers by

empowering them to optimize and

further automate processes, reduce

inventories, and increase ﬂexibility.

Combining engineering expertise,

advanced in-house software, proprietary

technologies, innovative control and

analytical functions, our advanced

automated manufacturing systems

help the world to work more safely

and more efficiently.

Tire building systems (83%)

TKH is the leading global supplier of smart technology for

the manufacture of superior radial tires for passenger

vehicles, light trucks, all-steel trucks, and buses. With a

vast, in-depth knowledge of the tire building market, our

pioneering technologies have led the way to single stage

tire building.

Other (17%)

Our proprietary care system, Indivion, is an innovative,

highly automated, pouch-based medicine packing

machine. It significantly boosts efficiency and reduces

waste in the medicine distribution sector. Our industrial

automation systems, meanwhile, increase automation

and efficiency across industries as varied as food, metal

and chemistry, and pharmaceuticals.

Smart Manufacturing systems

TKH Group Annual Report 202416

Connecting the world

of today to the

generations of tomorrow

The world is becoming ever more

connected, ever more digitalized, ever

more quickly. As a leading supplier of

highly innovative, purpose-specific

connectivity solutions, TKH focuses

on energy distribution, data and

communication networks, and high-

tech industrial environments.

Electrification (48%)

TKH supplies medium and high voltage cables for the

transmission and distribution of on-shore and off-shore

energy. We provide affordable, efficient, and sustainable

cable solutions to network operators, utilities, industry,

and energy companies. And our high-quality cables

connect bio power plants, wind farms, and substations to

the grid. We also offer a complete range of value adding

services covering every step from the engineering

process to the operational phase.

Digitalization (29%)

We lead the way in fibre optic connectivity for data

and communication networks. Our advanced robotics

and software engineering in fibre-to-the home (FttH)

solutions differentiate us from the competition. Our

solution-focused approach provides customers with a

full range of ﬂexible, compatible innovative products,

reducing overall project costs and public disruption.

Other (23%)

We also offer a broad range of other connectivity

systems, including CEDD and specialty cables.

Smart Connectivity systems

17Annual Report 2024 TKH Group

Operating model

With our decentralized operating model, we strive for a high level of

entrepreneurship and a winning culture. We stimulate and incentivize group

synergies, enabling our operating companies in delivering innovative and

unique smart technology solutions to customers at attractive cost levels.

Operating model

Smart

Connectivity

systems

Smart

Vision

systems

Smart

Manufacturing

systems

Customers

Operating

companies

Governance & support functions

Our group synergies are mainly realized in the following

areas:

•

Integrated and combined technology systems across our

three technology segments.

•

Centralized Artificial Intelligence, Machine Learning, and

software development centers and leadership,

supporting operating entities in accelerating their

digitalization and development roadmap.

•

Centralized software development and AI leadership.

•

A unique pool of talent that enables the transfer of skills

and knowledge.

•

Group functions that drive economies of scale through

cooperation, innovation, and procurement.

•

Group management, resources, and competencies to

scale up initiatives across large business units.

•

Corporate support in the area of treasury, legal, tax, and

sustainability.

•

Strong TKH branding, reputation, financial resources,

market access, and global footprint.

Governance model

Operating model Entrepreneurial culture Plan and rewards

• Decentralized operating model.

• Operating companies close to

customers – high level of customer

intimacy.

• Delegated profit and loss responsi-

bility and authority.

• SMART targets and strong monitor-

ing system to control output.

• 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.

• Strategy based on innovation and

business opportunities.

• Clear business plan with SMART

goals and road map

• C

ompensation aligned with

performance.

• Key employees participate in share-

based compensation plans.

18 TKH Group Annual Report 2024

Our growth strategy is built around our core technologies,

creating highly differentiated, customer-centric technologies

that drive sustainable long-term value. Through constant

innovation, we develop leading positions across our chosen

markets in which growth is accelerated by the megatrends

automation, digitalization, and electrification. We aim to

maintain and expand our share in these markets by leveraging

and scaling up innovation, investing in the smart element of our

technologies, and actively optimizing our portfolio.

Accelerate organic growth

Increase our market share by unlocking the full potential of our

innovative technologies and capitalizing on market growth driven

by relevant megatrends.

Sustainability

Deliver a strong performance against our sustainability/ESG targets,

especially CO

e neutrality by 2030 (scopes 1 and 2), and further

develop a sustainable portfolio based on SDG principles.

Cost efficiency

Focus on translating organic growth into an added value conversion

ratio of > 35%. Translate the increase in gross margin into a further

increase in results with greater focus on return and cost ratio as a

percentage of added value.

Innovations

apitalize on our technology 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.

Acquisitions

Accelerate growth by acquiring companies with a total turnover of

€100 – €150 million turnover.

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.

TKH branding

Strengthen and expand TKH’s branding and transition to an efficient

external communication structure.

Talent empowerment

Ensure our workforce is an accurate reﬂection of our society with

respect to diversity and inclusiveness. Continue to ensure the health

d safety of our employees. Engage and retain employees.

Promote

transparency and openness.

Our strategy

19Annual Report 2024 TKH Group

Grow market share through one-stop-shop in

Machine Vision systems

Our comprehensive range of 2D and 3D vision

products and services places us in a unique position

to offer a ‘one-stop-shop’ and capture the market’s

full potential. We aim to drive growth by continually

investing in R&D, AI innovation and sales operations.

Drive systems approach in machine vision

Machine vision represents the eyes, ears, and the

intelligence of automation. We will continue to play

a critical role in the search for ever higher levels of

production automation to boost productivity, safety,

and accuracy. Our R&D investments and AI-driven

innovations will underpin growth in our systems

approach to supporting customers.

Expand market position in mission critical

communication, security systems, and intelligent

traffic systems

Through our own proprietary technology, we will

further increase the synergies and cross selling

between our opco’s, by using local presence,

network and know-how, which will enlarge our

geographical presence.

Expand our product offering within Tire Building

– and beyond

Our undisputed leadership in the tire building

machines industry puts us in a strong position to

benefit from trends such as onshoring by tire

builders, and the quest for ﬂexible, highly automated,

sustainable tire manufacturing. We will expand our

range of markets by introducing new innovations,

driven by R&D and a focus on digital leadership.

We will also continue to grow our spares and

services business.

Offshore Energy: Grow market share in inter-

array cable

Offshore wind parks are crucial to meeting global

electrification goals. Having expanded the capacity

with our state-of-the-art Eemshaven facility, the

unique features our inter-array cables offer will allow

us to grow our market share in this rapidly growing

market with high barriers to entry. TKH is ready to

support the energy transition.

Onshore energy: capture growth in medium and

high voltage cables

We have strengthened our position as the leading

full service energy cable supplier in the Netherlands

by expanding our production capacity for medium

and high voltage cables. TKH is ready to support the

energy transition.

Systems approach in fibre optic cables

Our integrated systems approach for data and

communication networks in the fibre optic cable

market in selected countries in Europe allows us to

capture the growth in the roll-out of the fibre optic

cable network.

Strategic objectives per segment

Smart Vison systems Smart Manufacturing systems Smart Connectivity systems

TKH Group Annual Report 202420

Strategic pillars

We defined five strategic pillars as the core foundation,

incorporating our Accelerate 2025 strategic program

and targets, to drive sustainable long term value.

Committed people

A strong, diverse workforce of talented people come together in an inspiring,

safe, and rewarding environment. Working in close partnership with our

customers, we share the passion and the drive to make great things happen.

Differentiation through innovation

We continuously accelerate and scale the innovations that differentiates us from

our competitors. With over 750 employees active within R&D and software

development, we have registered more than 1,400 patents to date.

Customer first philosophy

We believe in the power of partnership. We work exceptionally closely with our

customers, creating detailed R&D road maps that result in technologies that

answer their challenges, and even accelerating the time-to-market for selected

systems.

Sustainability in action

Six UN Sustainable Development Goals (SDGs) guide our approach to sustain-

ability, with over 70% of our total turnover linked to at least one of them. We

integrate sustainability into our decision-making processes, having defined clear

targets on key ESG topics. In this way, we support our customers in achieving

their sustainability ambitions.

Sound financial foundation

We maintain healthy balance sheet ratios, operate asset light and seek to

generate a strong cash ﬂow from our operating activities. This allows us to

invest in growth, R&D, and sustainable innovation. In doing so, we create

ongoing value for our stakeholders.

Committed people

A key component of our strategy is a strong, diverse workforce of talented

people, with the passion and drive to make things happen. Working together

with talented and qualified people is vital to achieving our mission of creating

best-in-class Smart Technologies.

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 an inspiring, safe, healthy and rewarding environment for

all our employees, and we are constantly striving to improve. We strongly believe

that the diversity of our workforce will further strengthen the success of our

defined strategy. Therefore, one of our priorities is to promote and safeguard

diversity within our organization. In addition, we continue to build on our strong

employer brand to keep attracting the right talents and fill vacancies rapidly,

especially in times of labor shortages.

KPI Objective

Realization 2024

% of female members in executive

and senior management teams > 25% by 2030 21.6%

Accident rate (LTIFR) < 1.0 0.7

Illness rate < 4.0% 3.97%

Employee satisfaction score > 7.5 7.8

21Annual Report 2024 TKH Group Annual Report 2024 TKH Group

Differentiation through innovation

TKH exists to create sustainable, purposeful innovation over the long-term.

Investing in innovative technologies is vital to maintaining our position as a

leading technology company and maximizing sustainable value for our stake-

holders and the world around us.

Our ambition is to generate over 10% of turnover through innovations introduced

in the previous two years. TKH generated €301 million turnover in 2024 from

innovations across our three core technology segments (17.6%). As a result, a

significant share of our technology portfolio is constantly in the early stages of the

product life-cycle, an essential strategic foundation for securing future growth.

In 2024, we spent €80.7 million on R&D activities (2023: €77.2 million) with over

750 people dedicated to R&D and software development. We have registered

more than 1,400 patents to date. Around 30% of our technology is driven by

software developed by our own in-house engineers. By accelerating and scaling

our innovations, we continue to strengthen our leading position and power

growth. With our AI center of excellence, we develop state of the art algorithms

and applying them to real-world R&D challenges across the group. Our Artificial

Intelligence focuses on Computer Vision, Audio AI, Natural Language Processing

(NLP), and Machine Optimization.

Customer first philosophy

We believe in the power of partnership. We work exceptionally closely with our

customers, creating detailed R&D road maps that result in technologies that

answer their challenges, and even accelerating the time-to-market for selected

systems.

We continually search for ever more efficient technologies, guided by an

unwavering focus on real-world requirements. By helping our customers respond

quickly and effectively to changing market trends, we deliver the differentiation

that provides a true competitive advantage. 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. Based on the outcomes, we can take specific

actions to better serve our customers. Our average customer satisfaction survey

score for 2024 is 8.6 (2023: 8.6), which is above the benchmark score of 7.8.

Through 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.

KPI Objective

Realization 2024

Innovations At least 10% of turnover generated

by portfolio introduced in the prior

two years

17.6%

Sustainable innovations with

contribution to SDGs

At least 70% of turnover linked to

SDGs

71.6%

KPI Objective

Realization 2024

Customer satisfaction score > 7.8 8.6

DECENT WORK AND

ECONOMIC GR OWTH

AFFORDABLE AND

CLEAN ENERGY

RESPONSIBLE

CONSUMPTION

AND PRODUCTION

TKH Group Annual Report 202422

Sustainability in action

Scarcer human resources and rising labor costs are driving demand for

automation and ‘hands-off, eyes-off’ manufacturing. The journey towards less

waste and lower energy consumption is being powered by advanced smart

manufacturing technologies. And electrification requires growth in renewable

energies. Together with our customers, we are creating smart, efficient,

customer-centric systems that answer these challenges and help to shape a

sustainable future.

As we integrate sustainability into our product portfolio, our operations, and

our supply chains, we are not only turning responsibility into reality. We are

also helping our customers to meet their own sustainability ambitions. 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

internal 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.

Sustainable innovation is a non-negotiable aspect of our business - and an

essential part of our DNA. We base every business decision not only on the

impact it will have on profitability, but also on people, the environment, and

our reputation. Our focus areas are climate change, circular economy, safe &

attractive workplace, and responsible business operations.

Sound financial foundation

We maintain healthy balance sheet ratios, operate asset light and seek to

generate a strong cash ﬂow from our operating activities. This allows us to

invest in growth, R&D, and sustainable innovation. In doing so, we create

ongoing value for our stakeholders.

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.

TKH will expand through organic growth and acquisitions, with a geographic

focus on Europe, North America, and Asia. Acquisitions will focus on structurally

healthy companies that strengthen our portfolio of proprietary technologies or

enhance our sales network. We are targeting additional turnover of €100 million

to €150 million through acquisitions, while continuing to manage our portfolio to

reduce activities with lower margins and growth potential and limited overlap with

our core technologies.

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

efficiency, acquisitions, and divestments, we want to be well positioned to take

full advantage of the 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%. Market headwinds and geopolitical uncertainties prevent us from

attaining our full potential within the timeframe we had set ourself.

KPI Objective

Realization 2024

Carbon footprint (CO

e emissions) 100% carbon neutrality in own

operations by 2030 (scopes 1 and

2) –

reduction of CO

footprint c

ompared to reference year (2019)

70.3%

% waste of most relevant raw

materials, compared to total

relevant material consumption

< 5% waste 5.4%

Tier-1 copper suppliers certified by

The Copper Mark

> 80% 59.0%

KPI Objective

Realization 2024

Turnover > €2 billion by 2025 €1.7 billion

Return On Sales (ROS) > 17% by 2025 11.9%

Return On Capital Employed

(ROCE)

22% – 25% by 2025 15.2%

Net debt / EBITDA < 2.0 annual target 2.0

Strategic objectives

Accelerate 2025 strategic program

Underlining the strong foundation and value potential of

TKH, and building on our

strategic pillars, we launched our

Accelerate 2025 strategic program in November

2021,

introducing renewed targets for 2025.

In addition, TKH unveiled the technology-focused segmentation, centered on Smart

Technologies: Smart Vision systems, Smart Manufacturing systems and Smart

Connectivity systems. Accelerate 2025 includes actions to boost turnover and ROS by

unlocking the full potential of our innovative technologies in the high-growth markets

in which we operate. By leveraging our current market positions and the megatrends

of automation, digitalization, and electrification, TKH is well positioned to take full

advantage of the expected market growth. In addition, we increased our focus on

sustainability in our strategy, with strong ambitions and sustainability targets.

The Accelerate 2025 strategic program and targets are included in our strategic pillars.

Priorities Accelerate 2025

1 Represents contribution to ROS improvement, based on reference ROS of 12%.

Strategy update:

Focus and Optimization

With our Accelerate 2025 strategy we have created strong

foundations with leading positions in markets such as tire

building machines, machine vision for factory automation,

integrated security systems and energy cable systems. We

have expanded our production capacity in this area and have

developed state-of-the-art technologies with distinctive USPs.

In the next strategic phase, we will focus on our activities which bring the best value

creation potential, given our market leading positions and proprietary technologies on

the back of the global trends.

1 Focus on Automation and Electrification by leveraging our existing

footprint and by deploying proprietary technologies

Within Automation, we will focus on production automation, inspection and security

as core activities. In Electrification, we will build on our significantly expanded

production capacity for offshore and onshore connectivity and capitalize on the

substantial value creation opportunities. Our R&D competences, innovations, smart

software, and AI will remain cornerstones to accelerate growth.

2 Further optimize our operations through integrations and divestments

Organizational optimization and integration will drive further cost efficiencies in our

operations. We will continue to divest non-core business activities that are not

related to Automation or Electrification. This includes our Digitalization activities

within Smart Connectivity systems.

3 Capital allocation

The proceeds of the divestments will be used to further build on our core

technologies in Automation and Electrification, while we aim to return excess cash

to shareholders through dividends and/or share buybacks.

23Annual Report 2024 TKH Group

Areas

Bandwidth

expected turnover

ROS target

>17%

Commentary

Organic Growth

Cost Efficiency

> € 300 mln > 2.5% Scale effect - due to organic growth -

on opex and cost of goods sold, produc-

tivity, and yield improvement programs.

Innovations > € 200 mln > 2.0% Acceleration of our innovations in terms

of turnover, benefit from learning curve

and economies of scale, capital light

future innovations.

Acquisitions + € 100 - € 150 mln

Acquisitions that strengthen our portfolio

of proprietary technologies in the area

software, and/or strengthen our sales

network.

Portfolio

Management

- € 150 - € 200 mln > 0.5% Divestments that do not contribute

towards achieving our long-term strategy

and targets.

24 TKH Group Annual Report 2024

The world around us

Megatrends

TKH operates in a dynamic environment. Trends and

developments provide important input for defining our strategy.

TKH has identified a number of relevant megatrends that are

driving our growth and shaping our strategy and innovations.

Automation

•

Industry 4.0 is driving “hands-off, eyes-off”

manufacturing – shortage of personnel.

•

Technology systems are becoming increasingly

complex, driving demand for larger-scale

technology partners.

•

New technology systems to cope with advances

in AI and Machine Learning (ML) including Internet

of Things (IoT) advancement.

•

Reshoring of production locations closer to

customers.

Digitalization

•

Cloud computing, big data, AI, ML, and (IoT)

requiring the continued development of

higher-speed bandwidth networks.

•

The boom in data acquisition applications with

integrated smart technologies bringing high

demand for cyber security in line with privacy

regulations.

Electrification

•

Global focus on reducing greenhouse gas

emissions to accelerate the energy transition.

•

Boost in power generation from renewable

sources.

•

Public and private ESG ambitions drive

investments.

•

Growth in demand for electricity. Europe aims a

North Sea Offshore wind capacity of 120GW by

2030 and 300GW by 2050.

25Annual Report 2024 TKH Group

Market drivers and position

Market drivers per business segment

Market position per business segment

Smart Vision systems

•

With our full range of Vision Technology and applications,

including AI and ML, TKH is uniquely positioned to

provide customized, one-stop-shop solutions, and

integrated systems based on Smart Technologies.

•

A global market and technology leader within 3D Machine

Vision technology.

•

Strong market position in many growth markets with

superior 2D technologies and service model with SMART

system approach.

•

Leading position in high-end mission-critical communi-

cation technology.

•

One stop shop proposition with integrated solutions with

focus on efficiency, safety, security, and sustainability.

Smart Manufacturing systems

•

Reshoring of production locations closer to customers

requires additional capacity, new factory openings,

expansion of existing factories, modernization of current

factories.

•

Lack of human resources and rising labor costs drive

demand for automation.

•

Demand for reduced inventories, waste and energy

consumption in production, driving the need for advanced

technologies.

•

Increased volume and complexity due to continuous

increase of rim size leading to increase in sizes in range,

requiring more ﬂexibility in tire production.

•

Greater focus on road safety and security, driving demand

for high-quality tires.

•

Need for more sustainable tires; lower rolling resistance,

longer lifetime/mileage, lower noise level, built from

environmentally friendly materials, able to withstand

higher force.

•

New tire structures and new compounds require new

production technology.

Smart Connectivity systems

•

Electrification requires more renewable energy generation

and large investments in the energy infrastructure.

•

Public and private ESG ambitions, budgets, and targets,

driving investments (renewable energy).

•

Scarcity of natural resources, driving the growth in

demand for electricity, both in general and as an

alternative energy source to fossil fuels.

•

Global demand for high-speed bandwidth and data traffic

for cloud computing, big data, AI, ML, and (IoT).

•

Increased demand for connected assets (IoT).

•

Need for advanced mobility, such as autonomous driving

and ITS, leading to increased demand for data

connectivity.

•

Greater demand for monitoring of essential network

components.

•

Growth and increased speed of automation technology,

requiring reliable connectivity systems.

Smart Manufacturing systems

•

Global market leader in the Tire Building industry with

> 70% market share.

•

Unique positioning thanks to superior quality reputation

and scale, and integrated manufacturing systems

including advanced control and analytical functions.

•

Differentiation, innovation, and technology leadership in

Tire Building systems are all ahead of the competition.

•

Integrated proprietary Vision Technology is a key driver for

success in Smart Manufacturing systems.

Smart Connectivity systems

•

Unique positioning thanks to our integrated systems

approach and one-stop-shop offering combined with

24-hour deliveries.

•

Differentiating and innovative subsea cable, increasing

sustainability and improving installation performance

(efficiency, cost savings and risk reduction).

•

Market-leader in the Netherlands in energy connectivity

technology.

•

Strong ESG focus, leading to unique positioning within

energy segments.

•

Market leader in the Benelux and strong position in North

and Western Europe in Fibre Optics technologies.

•

Advanced robotics and software engineering in

Fibre-to-the Home (FttH) solutions, differentiating TKH

from competitors.

•

Market leader in the high-end industrial automation

market and high-end medical market.

Smart Vision systems

•

High demand for automation due to movement towards

Industry 4.0 and “hands-off, eyes-off” manufacturing.

•

Lack of human resources and rising labor costs drive

demand for automation.

•

Continued increased demand for more productivity and

improved quality.

•

Progression of Artificial Intelligence, Machine Learning,

cloud computing, and big data leads to demand for new

technology systems.

•

Enlarged complexity of technology systems drive demand

for technology partners.

•

Increased need for safe and secure buildings and

infrastructures.

•

IoT advancement and rise in IoT based products leads to

high priority for automation.

•

Trend toward advanced mobility technologies that

support the increased need for enforcement and

monitoring.

TKH Group Annual Report 202426

Stakeholder analysis

Our stakeholders are those groups and individuals who directly or indirectly

inﬂuence the activities of TKH and our operating companies.

TKH recognizes and acknowledges the importance of

having a meaningful dialogue with its stakeholders about

sustainability and the company’s strategy including

business model and value chain (stakeholder dialogue).

Meaningful stakeholder dialogue is characterized by

two-way communication and depends on the good faith

of participants on the sides of both TKH and the

stakeholders. TKH uses various methods and channels to

engage in dialogue with its stakeholders, depending on

GRI topic 2023 CSRD topic 2024 Reference annual report 2024

Environmental

Responsible production Pollution of air, soil, and water, and water consumption page 111-112

Resource efficiency (incl. waste & circularity) Resource inﬂows, waste, and waste recycling page 115-118

Climate change & CO

footprint

GHG emissions, energy efficiency and consumption

(climate change mitigation), sustainable innovation

page 99-110

Responsible procurement Child / forced labor, and health and safety

(workers in the value chain)

page 131-134

Social

Sustainable employment Health and safety, diversity page 123- 130

Health & safe work environment Health and safety page 123- 130

Employee satisfaction Health and safety, diversity page 123- 130

Personal development opportunities page 42

Diversity & inclusiveness Diversity page 123- 130

Governance

Integrity, compliance & human rights Corporate culture, corruption and bribery page 139-145

Risk management Management of relationships with suppliers page 139-145

Privacy & IT security Privacy (cybersecurity), AI and algorithm ethics page 135-138, 146-147

Tax page 43-44

While most of the material sustainability topics under the

CSRD are in line with the materiality analysis based on the

reporting requirements of the GRI from the prior year, we

have identified AI and algorithm ethics as an additional

sustainability topic that requires attention because of more

strategic focus on AI applications in the past year.

Furthermore, we have now identified water consumption,

pollution of air, soil, and water, and working conditions

and other work-related rights in the value chain as a

distinct topic, which was previously included under

respectively responsible production and responsible

procurement. The GRI topics employee satisfaction,

personal development opportunities and tax were included

as of less importance in the materiality matrix, and not

identified as material under the CSRD assessment. More

information on the material CSRD topics can be found in

the Sustainability statements.

the nature, purpose, and frequency of the interaction.

More information on stakeholder dialogues including

channels of engagement and key engagement topics

can be found in the section Interests and views of

stakeholders in the sustainability statements.

In previous years we conducted stakeholder

dialogues

based on the GRI to identify material topics. In 2024, we

performed a double materiality assessment based on the

CSRD (Corporate Sustainability Reporting Directive)

through which we identified sustainability-related impacts,

risks and opportunities. In the table on the left, we

mapped the material environmental, social, and gover

nance topics 2023 based on the GRI (previously included

in the materiality matrix) to the sustainability matters

identified as material under the CSRD. Economic topics

are not part of the CSRD assessment, and are included

in the Strategy and performance section as well as the

Performance and Risk management section. Economic

topics are for example financial stability, track record &

performance, and market & geopolitics (e.g., supply chain,

inﬂation, Ukraine war).

27Annual Report 2024 TKH Group

SWOT analysis

Strengths that makes us stand out

•

Creation of advanced innovative technologies and proprietary systems.

•

Leading positions in the growth markets in which we operate.

•

High pricing power through smart technologies, systems integration, and services.

•

Risk diversification through various product/market combinations.

•

Decentralized, customer-focused organizational structure, providing a high level

of customer intimacy leading to repeat customers with ‘spec’d in’ solutions.

•

Entrepreneurship is one of our core values.

•

Sustainability proposition largely linked to SDGs.

•

Strong brand and reputation in active markets.

•

Robust balance sheet and liquidity position.

•

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

•

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

•

State-of-the art production facilities in Smart Connectivity systems with growth

potential.

Weaknesses to improve

•

Brand awareness in some markets where TKH’s presence is still limited.

•

Presence in North America and APAC for 2D Vision and Security Vision.

•

Organizational optimizations and integrations that will drive further cost efficiencies in

the operations and strengthen our branding.

•

Increase of our presence, by using cross selling, synergies, local presence,

network and know-how, in large geographical markets, like India, Japan, US and

Mexico.

•

Gender diversity, especially in executive and senior management positions.

•

Dependence on worldwide supply chains for some of the raw materials and

components.

•

Limited liquidity in trading of TKH shares.

Opportunities for growth

•

High demand for automation due to move toward Industry 4.0.

•

Acceleration of Artificial Intelligence to boost differentiation in technologies.

•

Development and integration of technologies that help improve efficiency and

connectivity.

•

Lack of human resources and rising labor costs drive demand for automation.

•

Demand for reduced inventory, waste, emissions, and energy consumption in

production, driving the need for advanced technologies.

•

Electrification requires a boost in renewable energy generation.

•

Global demand for high-speed bandwidth and data traffic for cloud computing,

big data, AI, ML, and (IoT).

•

Increased focus on intelligent security due to geopolitics and globalization.

•

Technological developments enabling improved customer services and

technologies.

•

Improvement of cost ratio.

Threats we face

•

Shorter product life cycles due to higher level of innovation.

•

Conservativism in certain end markets to embrace our new differentiating

technologies.

•

Disruption by new technologies from competitors.

•

Global delay in electrification.

•

Protectionism of domestic markets by governments, other international geopolitical

developments, and import duties impacting supply chains and investments.

•

Shortage of qualified staff, challenging labor market.

•

Cost and wage inﬂation.

•

Confidentiality, integrity and availability of networks, systems, and data.

•

Declining number of dedicated small and midcap investment funds.

We continuously review our business model and adapt our resources and

capabilities to address risks and create new opportunities. The overview below

summarizes our main insights and positions in the environments in which we

operate.

TKH Group Annual Report 202428

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 our

customers’ developments within our smart technology

segments and, by effectively integrating our technologies

with software, we create unique, innovative, and compre-

hensive systems suitable for multiple applications that

improve efficiency and connectivity.

We employ operational management models

that have been incorporated into an

operational excellence program. In doing so,

we aim to achieve optimal performance of our

operational processes.

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.

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.

During the product development we use

methods and processes which make allow-

ances for environmental aspects, such as

energy savings and recycling. We also expect

our suppliers to act in a sustainable way.

Circulare economy & recycling Research & Development

Customers Engineering & Operations

We focus on organizing efficient, just-in-

time logistical services for our customers,

supported by one-stop-shop solutions

and strong inventories.

TKH’s core technologies are combined to

create innovative, comprehensive systems

to meet customer demand and enhance our

market opportunities. The sustainability of

our innovative product portfolio is crucial.

Logistics

Technologies & comprehensive solutions

29Annual Report 2024 TKH Group

Knowledge sharing and development

• New technologies and innovations.

•

Protected technologies and IP rights

through patents.

•

Solid R&D road map.

Safe and sustainable product

portfolio

• Innovative, reliable, and sustainable

products and services (machines, cables,

camera solutions, maintenance services).

• Contributing to a safe environment and

efficient processes for our customers.

• Broad geographic distribution.

• Long-term contracts and supplier

diversification to mitigate price and

geopolitical risks.

Business and operations

• Sustainable use of energy and raw

materials.

• Procurement from certified suppliers to

ensure sustainability and compliance.

• Operation in accordance with LEAN and

Six Sigma Principles, and ISO 14001 and

45001.

• Implementation of energy-saving, and e

missions and waste reduction programs.

• Supplier audits to assess sustainability-

elated risks, such as raw material extraction

impact.

Financial value

• A healthy balance sheet ratio and strong

operational cash ﬂow.

• An annual increase in earnings per share.

Attractive and responsible employer

• Investment in health and safety.

• Investment in training and development

opportunities.

• Focus on diversity and inclusion.

• Ensuring honesty and openness.

Social and relations

• Good relationships with stakeholders.

• Social engagement.

Committed people

•

Employee satisfaction: 7.8

•

Health and safety

•

LTIFR: 0.7

•

Illness rate: 3.97%

•

Number of fatalities: 0

•

Number of recordable work-related

accidents: 114

•

Diversity: 21.6%

Differentiation through innovation

• Sustainable innovation

• Innovation turnover share: 17.6%

• Turnover connected to SDGs: 71.6%

• R&D expenditure: €80.7 million

Customer first philosophy

•

Customer satisfaction: 8.6

Sustainability in action

• Climate change: CO2e footprint reduction:

70.3% (compared to 2019)

• Resource inﬂows, waste, and waste recycling

• Waste main raw materials: 5.4%

• Recycling: 75.2%

• Water consumption: 116,821 m

• Privacy (cybersecurity) of customers

• Customer satisfaction score: 8.6

• Number of cybersecurity incidents with

impact > €100k: 1

• Working conditions in the value chain

• Tier-1 copper suppliers certified by The

Copper Mark: 59.0%

• Copper suppliers assed with 2024 risk

management assessment: 78.2%

Sound financial foundation

• Strong financial returns, innovation in

sustainable mobility, long-term growth

potential.

• Turnover: €1.7 billion

• ROS: 11.9%

• ROCE: 15.2%

• Net earnings per share: €2.50

• Debt-leverage ratio: 2.0

• Dividend per share: €1.50

Intellectual

R&D road map and technology and software

development for a high-quality, innovative

smart technology portfolio, including

investment in R&D for recyclable materials

and alternative components.

Materials and products

• Raw materials: Steel, aluminum, plastics,

other materials

• Energy: Electricity, natural gas, renewable

sources

• Labor: Skilled workforce, engineers, factory

workers

• Technology: Integrated technologies and

software that create innovative, sustainable,

and comprehensive systems, both

capitalizing on market trends and ensuring

efficiency and connectivity for customers.

Environment

For each decision we take in our business, we

consider its potential environmental impact.

TKH enters into active dialogue with its stra-

tegic suppliers 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 and relations

Close cooperation with stakeholders based

on honesty, integrity, and openness.

Contributing to and investing in the society

around us.

INPUT OUTPUT OUTCOME

Core Technologies

Strategic pillars

BUSINESS OPERATIONS

Purpose

Make the world better by creating more efficient

and more sustainable systems

Core values

•

We are aspirational

• We are empowered

• We are motivated

•

We are customer-focused

Business Operations

Service

Assembly

Outsourced and in-house manufacturing

R&D and system engineering

Customer first

philosophy

Differentiation

through innovation

Sound

financial

foundation

Committed

people

Sustainability

in action

Smart

Vision

systems

Smart

Manufacturing

systems

Smart

Connectivity

systems

DECENT WORK AND

ECONOMIC GROWT

AFFORDABLE AND

CLEAN ENERGY

RESPONSIBLE

CONSUMPTION

AND PRODUCTION

RESPONSIBLE

CONSUMPTION

AND PRODUCTION

DECENT WORK AND

ECONOMIC GROWTH

DECENT WORK AND

ECONOMIC GROWTH

AFFORDABLE AND

CLEAN ENERGY

LMI’s AI-powered

anomaly detector sets

the stage for advanced

inspection solutions

As part of LMI Technologies' commitment to innovation,

the GoPxL Pro Tools series introduced the Anomaly

Detector, a powerful AI-powered toolset designed to en-

hance 3D defect detection in production lines. This solution

leverages traditional and AI-based tools within the GoPxL

software framework, enabling users to train and deploy

defect detection models directly on GoMax hardware

without relying on additional cloud or external resources.

The Anomaly Detector sets the stage for advanced inspection solutions

based on LMI’s IoT-enabled vision inspection software platform. It addresses

the growing demand for advanced inspection and defect detection solutions

across industries such as automotive, food, building materials, tires, and

more. It empowers manufacturers to address evolving challenges in defect

detection, improve production quality, and reduce costs. With its AI-driven

capabilities and seamless integration with LMI’s Gocator and GoMax hard-

ware, the Anomaly Detector is a critical tool for industries aiming to stay

competitive in a rapidly changing manufacturing landscape.

Benefits

The Anomaly Detector provides significant advantages over traditional

inspection methods:

• Detect Features of Varying Shape and Size with high speed and accuracy:

Eliminate the need for manual threshold tuning by training models on data-

sets of OK and NG parts.

• Streamlined Workﬂow: Integrated tools reduce file and dataset management

overhead, saving time and effort.

• Cost and Time Efficiency: Train and update models directly in production

without additional development licenses.

• Enhanced Measurement Capabilities: Pass anomalies to subsequent tools

for precise measurement and gauging based on user-defined criteria.

CASE SMART VISION SYSTEMS

30 TKH Group Annual Report 2024

31Annual Report 2024 TKH Group

Financial performance

Turnover reached €1,712.7 million in

2024, a decrease of 7.3% (2023:

€1,847.5 million), a large part of which

was caused by divestments. Adjusted

for acquisitions, divestments and

currency effects, turnover decreased

organically by 1.2%. Acquisitions

accounted for +0.7% and divestments

accounted for -6.8% of turnover. Of the

three segments, Smart Manufacturing

systems recorded turnover growth in

2024.

The geographical distribution of turnover shifted in favor

of Asia and North America. The turnover share in the

Netherlands declined slightly to 24% of total turnover

(2023: 25%), while the share in Europe, excluding the

Netherlands, declined to 35% (2023: 39%), partly caused

by divestments. In Asia, the turnover share grew to 21%

(2023: 19%), due to a larger share of tire building

machines delivered to Asia, while turnover in North

America grew to 15% (2023: 13%). The turnover share

of the other geographical regions grew to 5% (2023: 4%).

The order intake in 2024 amounted to €1,911.4 million

(2023: €1,834.8 million), resulting in an order book at

year-end of €1,135.0 million (2023 €970.1 million). The

order book at Smart Connectivity systems reached a

record level of €493.6 million (2023: €214.8 million),

driven by a number of large orders for inter-array cables.

The order book at Smart Vision systems increased from

€124.0 million at year-end 2023 to €139.9 million at

year-end 2024. The order book at Smart Manufacturing

systems decreased from €631.3 million at year-end 2023

to €501.5 at year-end 2024. The divestments of HE

Systems and EKB Groep accounted for €40.0 million of

the order decline in Smart Manufacturing systems.

The added value increased to 51.9% in 2024 (2023:

49.8%). All segments reported an increase in added

value. Most notably Smart Connectivity systems’ added

value went from 41.8% in 2023 to 44.0% in 2024.

The increase in added value was mainly attributable to

the elimination of EU anti-dumping duties on fibre optic

cables, a change in product mix, and the impact of

acquisitions and divestments.

Operating expenses (excluding one-off income and

expenses, amortization and impairments) increased by

0.3% compared to last year. Acquisitions and divestments

had a net impact of -3.1%. Operating expenses were

impacted by the start-up and ramp-up of capacity related

to strategic investments, as well as by payroll increases.

Currency effects had a limited impact.

As a result, EBITA excluding one-off income and

expenses decreased organically by 7.5% to €203.9

million in 2024, from €237.0 million in 2023. ROS

decreased to 11.9% (2023: 12.8%). Inﬂationary effects,

destocking at customers and start-up costs of our new

factories all had a dampening effect on ROS. The ROS at

Smart Manufacturing systems increased markedly to

19.1% (2023: 15.8%), driven by high-capacity utilization,

implemented efficiency improvements, and the catch-up

effects from the delivery of previously stored machines in

the course of 2024.

In 2024, one-off expenses on EBITA-level amounted to

€4.0 million (2023: one-off expenses of €2.0 million)

mainly due to the €15 million cost-saving measures

implemented in H2 2024. These included reorganization

costs in Smart Vision systems for the integration in 2D

Vision, restructuring costs in Smart Connectivity systems

EBITA before one-off income and expenses (in € mln)

ROS (in %)

2020 2021 2022 2023 2024

250

225

200

175

150

125

100

in million €

EBITA and ROS Development

in %

TKH Group Annual Report 202432

due to the centralization of fibre optic cable production in

Poland, and acquisition and divestment costs.

Amortization increased to €60.8 million (2023: €56.9

million) due to the higher amortization of capitalized R&D,

as a result of increased investments in previous years and

higher amortization of purchase price allocations due to

acquisitions. Impairments amounted to €8.5 million (2023:

€3.7 million) for mainly underutilized right-of-use and fibre

optics network related assets.

Net financial expenses increased to €29.3 million (2023:

€22.1 million) due to the combination of higher debt levels

and higher interest rates. The results from associates and

subsidiaries amounted to €24.5 million (2023: €51.5

million) and includes the one-off profits from the

divestments of HE System Electronic and EKB Groep of

€24.6 million (2023: divestment of CCG and TKH France

of €54.0 million).

in %

Geographical distribution of turnover

Netherlands 24

Europe (other) 35

Asia 21

North America 15

Other 5

2024

The normalized effective tax rate was stable at 24.4% in

2024 compared to 24.6% in 2023. TKH benefitted from

R&D tax facilities in several countries.

Net profit before amortization of intangible non-current

assets related to acquisitions and one-off income and

expenses attributable to shareholders decreased by

24.2% to €98.9 million (2023: €130.5 million). Net profit

decreased to €99.5 million (2023: €165.8 million).

Earnings per share before amortization, one-off income

and expenses amounted to €2.48 (2023: €3.21).

Ordinary earnings per share were €2.50 (2023: €4.07).

Net bank debt according to bank covenants increased

by €26.8 million from year-end 2023 to €496.0 million at

year-end 2024. The main items affecting the debt level

include the net investments in property, plant, and

equipment of €98.7 million (€49 million of which is related

to the strategic investment program), acquisitions (net

€38.6 million), investments in intangible assets

(€61.7 million), and dividends paid (€67.9 million).

Divestments amounted to €60.3 million in 2024, including

the €24.2 million one-off profit. At year-end 2024, €18.2

million assets were held for sale (year-end 2023: €18.0

million), related to the intended divestment of the test and

measurement system activities, Dewetron. Cash ﬂow from

operating activities amounted to €196.2 million (2022:

€152.9 million), an improvement due to a decrease in

working capital in 2024 compared to an increase a

year earlier. Working capital stood at 17.9% of turnover

(2023: 16.7%). The net debt/EBITDA ratio, calculated

according to TKH’s bank covenant, was 2.0, well within

2020 2021 2022 2023 2024

400

350

300

250

200

150

100

in million €

Turnover from innovations

in %

Turnover from innovations

Innovations as % of turnover

the financial ratio agreed with our banks. Solvency

improved to 39.9% (2023: 39.3%).

At year-end 2024, TKH employed a total of 6,640 FTEs

(2023: 6,899), 351 of which were temporary employees

(2023: 434 FTEs).

33Annual Report 2024 TKH Group

Developments per technology segment

Smart Vision systems

Key figures Smart Vision systems

in € million unless otherwise stated

FY 2024 FY 2023

Δ in % Organic Δ in %

Turnover 489.6 500.5 -2.2% -4.4%

Added value 60.6% 58.9%

EBITA excluding one-off income and expenses

77.7 85.9 -9.5% -12.8%

ROS 15.9% 17.2%

Order book 139.9 124.0 +12.8%

ROCE 13.3% 15.6%

In 2024, turnover in Smart Vision systems decreased by

2.2% to €489.6 million. Adjusted for acquisitions and

currency effects, turnover decreased organically by 4.4%.

The order book increased by 12.8% to €139.9 million

(2023: €124.0 million) resulting from a strong order intake

in Q4 2024. The added value increased from 58.9% to

60.6%. Due to higher operating expenses combined with

lower turnover growth, EBITA excluding one-off income

and expenses decreased to €77.7 million (-12.8%

organically) and ROS reached 15.9%.

Vision Technology

85% of Smart Vision systems’ turnover

In line with expectations, both Security Vision and

Machine Vision posted a record Q4 2024 on the back of a

strong order intake delivery and the delivery of some

larger secured orders. In 2024, Security Vision’s turnover

declined slightly, mainly due to the comparison with a

strong 2023. In Machine Vision, 3D Vision recorded a

decline in turnover due to weak market circumstances in

solar and battery business. The return of the wood market

and the contribution from Liberty Robotics, which was

acquired in the second half of 2024, were not sufficient to

offset this impact. 2D Vision recorded growth during the

year as it benefitted from implemented customer

excellence programs, and expansion into new end

markets such as defense. In both 2D and 3D Machine

Vision, further innovations accelerated by AI were brought

to the market. Machine Vision also saw its share of

customized solutions increase. During the year, steps

were taken to consolidate the organization of TKH's 2D

brands and to strengthen the supply chain, which,

together with the implementation of cost-saving

measures, resulted in one-off expenses of €2.5 million.

These steps will benefit the results of 2D Vision from 2025

onwards. With the return of the wood market, new

markets and solutions with Liberty Robotics, and a

successful penetration into India, we expect the results

for 3D Vision to have bottomed out in 2024 and to start

growing. The growth in the order book is largely due to a

number of larger security and parking automation

projects in Security Vision and to some extent in 2D

Machine Vision.

1 One-off net expenses for Smart Vision systems amounted to €2.6 million in 2024 (2023: € 0.5 million) of which €2.6 million in Q4 2024 (Q4 2023: €0.5 million).

TKH Group Annual Report 202434

Smart Manufacturing systems

Key figures Smart Manufacturing systems

in € million unless otherwise stated

FY 2024 FY 2023

Δ in % Organic Δ in %

Turnover 608.8 573.6 +6.2% +11.1%

Added value 51.5% 50.5%

EBITA excluding one-off income and expenses 116.1 90.6 +28.1% +31.1%

ROS 19.1% 15.8%

Order book

501.5 631.3 -20.6% -15.2%

ROCE 88.1% 66.0%

as UNIXX Beltmaker and Revolute, as well as in tire

building machines, continues to gain traction. During the

year, AI-powered features were introduced, including

Foreign Object Detection, which is based on our

proprietary high-speed

algorithm that analyzes images in

real time with unprecedented accuracy, while minimizing

the number of false positives. The lower order intake in

2024, both for passenger and truck tire machines was

mainly related to a decline in demand at Tier 1 customers,

whereas order intake from Tier 2 and 3 customers

remained at similarly high levels compared to previous

years. The drivers for tire building systems remain very

strong, as the need for more ﬂexibility in production,

increased sustainability demands, and the need for higher

levels of automation will fuel future demand for more

advanced tire building production.

Other

During the year, the divestments of HE System Electronic

and EKB Groep were closed and Dewetron was reclas-

sified to “Held for sale.” New orders were received for

the Indivion, strengthening our position in the Nordics

region.

Smart Manufacturing systems turnover grew strongly

during the year, although growth slowed down in the

second half of 2024, in line with expectations, partly

explained by the strong H2 2023. Adjusted for currency

effects and divestments, turnover in 2024 grew organically

by 11.1%. During 2024, HE System Electronic (2023

turnover €20.7 million) and EKB Groep (2023 turnover

€35.5 million) were divested. The order book at €501.5

million decreased by -20.6% (-15.2% organically)

compared to its record level of €631.3 million on

December 31, 2023. The added value increased further to

51.5% (from 50.5% previously), due to a combination of

product mix and price increases being passed on to

customers. EBITA excluding one-off income and expenses

was up 31.1% organically at €116.1 million, as the

implemented efficiency improvements continued to pay

off, in combination with the high-capacity utilization at

Tire Building systems. As a result, the ROS expanded to

19.1% (2023: 15.8%), with ROS reaching 20.3% in Q4

2024.

Tire Building systems

83% of Smart Manufacturing systems’ turnover

Tire Building systems benefitted from a very strong year

in 2024, driven by a record order book and the catch-up

effect of deliveries, following the easing of earlier supply

chain constraints. Together with the efficiency

improvements implemented during the year, this led to a

strong operational performance. The production facilities

in Poland were further expanded in the first half of 2024.

The order for a UNIXX system booked at the beginning of

2024 is scheduled for delivery and installation in the

second half of 2025, with further strong market interest.

The revolutionary UNIXX technology, implemented in

newly released tire component production machines such

1 The order book as of 31 December 2023 include the order book of the divested companies HE System Electronic and EKB Groep totaling €40.0 million.

35Annual Report 2024 TKH Group

Smart Connectivity systems

Key figures Smart Connectivity systems

in € million unless otherwise stated

FY 2024 FY 2023

Δ in % Organic Δ in %

Turnover 631.9 800.5 -21.1% -9.2%

Added value 44.0% 41.8%

EBITA excluding one-off income and expenses

30.9 81.1 -61.9% -42.9%

ROS 4.9% 10.1%

Order book 493.6 214.8 129.8%

ROCE 5.2% 16.6%

Turnover in Smart Connectivity systems decreased

21.1% to €631.9 million in 2024 (2023: €800.5 million).

Adjusted for the divestment of the commodity connec-

tivity activities in France in September 2023 and currency

effects, turnover declined organically by 9.2%. The order

book grew strongly to €493.6 million (2023: €214.8

million), with the 129.8% increase coming mainly from

inter-array cable orders, including the €200 million

turnkey inter-array cable project with Inch Cape, which

includes the survey, engineering, manufacturing, testing,

supply and installation of the inter-array cables. Added

value as a percentage of turnover increased to 44.0%

from 41.8% in 2023, mainly due to a shift in product mix,

elimination of anti-dumping duties on fibre cables and the

divestment. EBITA excluding one-off income and

expenses decreased organically by 42.9% to €30.9

million, impacted by lower volumes, start-up and ramp up

costs of the new Eemshaven factory, and low levels of

utilization in inter-array and fibre optic cables. ROS

decreased to 4.9%.

Electrification

48% of Smart Connectivity systems turnover

TKH has invested significantly in additional capacity in

offshore wind inter-array cables, and high and medium

voltage onshore energy cable in anticipation of substantial

market growth in the coming years. The €150 million

strategic investment into Electrification is now completed,

and the ramp-up of serial production at the new

Eemshaven plant for inter-array offshore wind cables,

which was initially postponed, is expected to commence

shortly . In the past months, the issues in what is

considered the most critical production processes have

been solved. The remaining production stages are less

complex and have already been successfully completed

for shorter lengths. To meet the demand for inter-array

cables, it was decided to continue the production of

inter-array wind cables at the Lochem plant. The demand

for onshore energy cables in the Netherlands remained

weak due to destocking by utility companies. We made

good progress in positioning our high- and medium-

voltage cables outside the Netherlands in Europe. Our

sales funnel for inter-array cables remains high with more

than >10,000 km up until 2030. In anticipation of the

planned growth and driven by the large order intake, we

expanded our staff. The aforementioned limitations to our

turnover growth in inter-array, high- and medium-voltage

cables, combined with higher start-up and ramp-up costs

impacted the EBITA excluding one-off income and

expenses in 2024.

Digitalization

29% of Smart Connectivity systems turnover

Digitalization continued to be impacted by a deteriorating

market for fibre optic cables in Europe, due to low levels

of investment in the rollout of European fibre networks,

a strong destocking effect, as well as pricing pressure

due to high inventory levels in the Chinese market. The

elimination of EU anti-dumping duties could not compen-

sate for the low utilization rate and ramp-up costs of our

1 One-off net expenses for Smart Connectivity systems amounted to €0.5 million in 2024 (2023: one-off expenses of €0.6 million) of which €0.5 million in Q4 2024

(Q4 2023: next expenses of €2.2 million).

new factory in Poland. In 2024 we decided to close the

fibre optic cable production in the Netherlands and

consolidate production in Poland, which will reduce our

operating expenses from Q2 2025 onwards.

Other

23% of Smart Connectivity systems turnover

TKH’s specialized and customized connectivity systems

for the machine-building and robotics industries

continued to be impacted by the weak German economy.

TKH Group Annual Report 202436

Acquisitions, divestments, and investments

Acquisitions are an important part of

TKH’s strategy and contributes to our

long-term value creation by strength-

ening 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 in total within the medium

term, at the same time as we manage our portfolio to

reduce activities with lower margins and growth potential,

or limited strategic overlap that do not contribute toward

our long-term targets.

Acquisitions & divestments

In January 2024, we acquired JCAI Inc. (JCAII), a Canadian

company that has established a strong track record in the

airport de-icing area, with its patented technology coordi-

nating visual guidance, real time data and operational

messaging to

both ﬂight and ground crew. JCAII’s software

is currently deployed across many airports as well as

airlines. JCAII will be able to take advantage of as well as

accelerate the growth of the advanced TKH CEDD connec

tivity technology especially in the North American market.

TKH acquired Comark Srl in July 2024, an Italian company

specialized in laser-based volumetric vehicle measure-

ment and classification for tolling and free-ﬂow tolling

applications. With this acquisition, TKH can further drive

the optimization of traffic ﬂows through innovative and

AI-driven products, with new high-performance and high-

added value solutions.

In August 2024, we strengthened our position in the 3D

Vision market with the acquisition of the US-based

company Liberty Robotics. Liberty Robotics has estab-

lished itself as a key player in automation for the automo-

tive sector, its systems enabling precise end-of-arm

robotic guidance for applications including part handling

and the application of coatings and sealers.Liberty

Robotics’ guidance systems complement TKH’s advanced

3D vision sensor technology and global market presence.

We also made good progress with our divestment program.

he divestment HE System Electronic GmbH was closed

end of May 2024 and led to an one-off net profit of €14.2

million. The divestment of the EKB Groep B.V. was closed

in August 2024 and led to an one-off net profit of €11.5

million. In October 2024, we divested our 12.5% interest in

the associate Shin-Etsu (Jiangsu) Optical Preform Co. Ltd.

At b

alance sheet date, an active program is in place to

divest certain activities in our Smart Manufacturing seg

ment related to related to test and measurement systems;

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.

2020 2021 2022 2023 2024

in million €

Investments

325

300

275

250

225

200

175

150

125

100

Acquisitions (incl. associates, non-controlling interests,

earn-out and put-options)

Investment in non-current intangible asets

Net investments non-current tangible assets

R&D expenditure (in € mln)

R&D expenditure in % of turnover

2020 2021 2022 2023 2024

in million €

R&D expenditure

in %

5.0

4.5

4.0

3.5

3.0

2.5

2.0

1.5

37Annual Report 2024 TKH Group

2020 2021 2022 2023 2024

Investments in property, plant and equipment

In 2024, the net investment in property, plant and

equipment, excluding right-of-use assets, totaled €88.8

million (2023: €179.4 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 electrification. The execution of these expansions

started in the second half of 2022 and were completed in

2024.

Out of the total amount of €200 million allocated

for strategic investments, €49 million has been spent in

2024 (2023: €124 million). In total, we expect these

investments to generate an additional €250 - €300

million annual turnover in the coming years, the majority

of which will be realized by Smart Connectivity systems.

Depreciation of property, plant and equipment totaled

€35.9 million in 2024 (20

23: €32.6 million).

Investments in intangible assets and goodwill

In 2024, €61.7 million was invested in intangible assets

and goodwill (2023: €53.1 million). The most important

investments related to the ongoing development of our

technologies:

•

2D and 3D Machine Vision portfolio.

•

(Vision) security and communication systems.

•

New generation of Tire Building systems, like the

UNIXX, UNIXX Beltmaker, and Revolute.

•

Portfolio and production technology for connectivity

systems focused on electrification.

•

ACE+ portfolio for patching and connecting within fibre

optic networks.

The investments above do not only relate to hardware

development, but more and more also the development

of smart software based on artificial intelligence. In

addition, there are investments in software including ERP

of €10.4 million and patents and licenses of €2.4 million.

Outlook

TKH has made strong progress in its

strategic positioning with the completion

of the €200 million strategic investment

program, which will start to pay off in

2025. This, combined with the strong

order book, will position us well for 2025.

The first qua

rter of 2025 will be weak due to seasonality,

the ramp-up of the Eemshaven plant, and continued

weakness in the fibre optic cable market. For the full year,

we expect turnover and EBITA excluding one-off income

and expenses growth to return in Smart Vision systems,

driven by the stronger order book, expected market share

growth in new markets, and the implemented cost-saving

measures. In Smart Manufacturing systems, turnover and

EBITA excluding one-off income and expenses are

expected to decrease organically due to the lower order

intake in 2024 and the comparison with a very strong

2024, which benefitted from catch-up effects. In Smart

Connectivity systems, we expect the new production

capacity and the high order intake in 2024 to contribute to

significant turnover and EBITA excluding one-off income

and expenses growth in Smart Connectivity systems.

arring unforeseen circumstances, on balance we anti-

cipate organic growth in turnover and EBITA excluding

one-off income and expenses in 2025.

TKH will provide a more specific outlook for the full year

of 2025 at the presentation of its interim results in August

2025.

Completion of €200 million strategic capex

program, with opening of the new subsea cable

factory in Eemshaven in September 2024

AFFORDABLE AND

CLEAN ENERGY

The offshore wind market is evolving rapidly, driven by the

growing demand for renewable energy and electrification.

In this challenging environment TKF is at the forefront of

innovative inter-array cable solutions that on the one hand

have a major impact to prepare the world for a sustainable

future and on the other had preserving the environment

with TKF’s unique and sustainable cable design.

The inter-array Subsea cable solutions from TKF are composed of durable

materials compared to classic subsea. The robust design results in longer

operational life time and without lead and bitumen, there is no risk of leaching

chemicals or metals in the marine environment. A high carbon footprint re-

duction is achieved based on increased recyclability (in and out), opportunity’s

for low carbon and recycled materials and fossil free powered production at

our recently completed state-of-the-art factory in Eemshaven.

Sustainable characteristics

•

No lead or bitumen - unique dry-design.

•

Pyrolise based cable compounds.

•

Recycable and environmentally friendly.

•

Good recyclability after recoveries.

•

Low carbon aluminium.

•

Share of recycled copper and steel.

•

Long durability.

•

Less meterials needed due to the aluminium welded sheath.

CASE SMART CONNECTIVITY SYSTEMS

Sustainable, unique

inter-array cable

solution for offshore

wind parks

38 TKH Group Annual Report 2024

39Annual Report 2024 TKH Group

Sustainability performance

Our focus areas

We aim to create long-term value for

our stakeholders by creating Smart

Technologies for a more efficient and

sustainable world. We aim to do that by

sustainable innovation, which is part of

our DNA and key for our business, in

combination with a focus on strategic

areas of sustainability, which are

increasingly integrated in our operations

and supply chain.

Sustainability is a key element in our product

portfolio and enables our customers to improve

their sustainability performance

The world is facing a shortage of human resources and

rising labor costs, driving the demand for automation and

“hands-off, eyes-off” manufacturing. The need to reduce

carbon footprints by reducing waste and energy

consumption in manufacturing is driving the need for

advanced smart technologies. In addition, electrification

requires more (renewable) energy generation. Together

with our customers, we create innovative and client-

centric technology systems, to provide answers to these

challenges. In doing so, we add value to make the world

better by creating more efficient and more sustainable

systems and contributing to the United Nations’

Sustainable Development Goals (SDGs).

Sustainable innovation table

annual target

2024 2023

Turnover from innovations (in million) €301.4 €297.5

Innovation as percentage of turnover > 10% 17.6% 16.1%

Turnover linked to SDGs > 70% 71.6% 70.2%

Number of live patents 1,422 1,400

Total R&D spend (in million) €80.7 €77.2

R&D capitalized (in million) €46.5 €41.8

R&D capitalized as percentage of total R&D spend 57.5% 54.2%

Integrating sustainability into our operations and

value chain

As we continue to expand our operations, integrating

sustainability enables us to minimize energy use, GHG

emissions, and waste. We want to ensure that we have an

attractive and safe workplace. Raw materials are

becoming scarce due to the increasing demand, which is

why we aim for a sustainable supply chain. We want to do

business in a responsible way by focusing on integrated

governance and transparent sustainability reporting. We

want that sustainability to be integrated throughout our

business and value chain.

As part of the Accelerate 2025 strategic program, we

continue to focus on sustainability in our strategy, with

strong ambitions and non-financial targets for the coming

years. We have a clear focus on the material ESG matters

where TKH has the greatest impact on, with the aim of

reducing the negative impact and/or increasing the

positive impact of:

•

e footprint

•

Circular economy

•

Attractive and safe workplace

•

Responsible supply chain

•

Responsible business

In 2024, we applied the CSRD (Corporate Sustainability

Reporting Directive) voluntarily, since it is not yet

implemented in Dutch law. Going forward, we are going

to use the CSRD to further communicate and monitor

progress on our material ESG topics. In this chapter, we

will highlight the most important aspects of our 2024

performance in relation to our material topics. For

detailed information and reporting on each material topic

aligned with the CSRD framework, please refer to

the sustainability statements.

TKH Group Annual Report 202440

Carbon footprint

In 2024, our net carbon footprint for scopes 1 and 2

decreased by 70.3% compared with the reference year,

2019 (2023: reduction of 64.3% compared to 2019). We

did not purchase any carbon offsets, except for

purchased green certificates.

At our sites, we reduced our scope 1 (direct) emissions.

This was mainly driven by energy efficiency measures,

our program to replace gas with alternative energy

sources, the continuation of working from home, and mild

winters. New buildings, such as our new subsea factory

in Eemshaven in the Netherlands, are constructed without

gas as much as possible. On balance, the emissions

resulting from gas consumption decreased by 27.3%

compared to the previous year. Emissions from transpor-

tation from own and/or controlled vehicles, which include

emissions from lease cars, decreased by 11.2%. This is

mainly due to the electrification of our lease car ﬂeet and

promoting online collaboration to limit travel as much as

possible. Since 2022, new company cars leased in the

Netherlands must be electric, resulting in a share of

electric cars of 34.8% of the total lease car ﬂeet. From

2024, all new lease cars within the group must be electric,

with only a few exceptions. Additionally, we are investing

in the essential charging infrastructure and continuously

expanding our network of electric vehicle charging

stations, conveniently including those within our

employee and visitor parking areas.

ESG topic KPI Target 2024 2023

Environmental

e footprint

Circular economy

Carbon footprint (CO

e emissions) 100% carbon neutrality in own

operations by 2030 (scopes 1

& 2) –reduction of CO

footprint

compared to reference year (2019)

70.3% 64.3%

% production-related waste of

most relevant raw materials

< 5% waste 5.4% 5.2%

% recycling of most relevant raw

materials

> 80% recycling 75.2% 87.3%

Social

Attractive and safe

workplace

Responsible supply chain

Diversity: % of female members in

executive and senior management

teams

> 25% by 2030 21.6% 19.2%

Accident rate (LTIFR) < 1.0 0.7 0.8

Illness rate < 4.0% 3.97% 3.85%

Employee satisfaction score > 7.5 7.8 7.8

Customer satisfaction score Average score above benchmark

(7.8)

8.6 8.6

Code of Supply signed by

suppliers

> 90% strategic suppliers signed

89.4% 91.9%

Governance

Responsible business

Code of Conduct signed by

employees

> 95% 98.9% 96.5%

Our scope 2 emissions were further reduced as a result of

a higher share of renewable energy, resulting from a shift

to renewable energy sources and self-generated energy

through solar panels installed on our buildings and

properties, combined with purchased green certificates

which was the main contributor in the reduction of scope

2 emissions. The share of renewable energy consumption

in the total energy consumption increased from 55.5% in

2023 to 61.9% in 2024.

Waste and recycling

Total waste from the most relevant raw materials used in

cable production (copper, aluminum, and plastics),

compared to total relevant material consumption, was

5.4% in the year under review, compared with 5.2% in

the previous year, and close to the target set for a

maximum of 5% waste compared with total consumption

of materials. The increase is mainly the result of our

start-up activities, for example our new subsea cable

production facility in Eemshaven. The start-up of new

activities and production site results in more waste, e.g.

as a result of testing and commissioning of machines.

In 2024, we expanded our waste reporting by adding

more material streams and by including all of our

operating companies. Reference is made to the sustain-

ability statements chapter E5 circular economy,

containing overviews of resource inﬂows, waste, and

waste treatment per material.

75.2% of the waste from our most relevant raw materials

was recycled in 2024, 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 100% recycled waste. This also applies to the

recycling of aluminum. Plastics that have become

unusable during the cable production process, but are

suitable for recycling, are offered to waste processing

41Annual Report 2024 TKH Group

companies for conversion into new raw materials. Mainly

due to the product mix, we increased the use of plastics,

which resulted in more plastic waste. As a result, the total

recycling percentage decreased.

Diversity

In 2024, the proportion of female executive and senior

management employees increased to 21.6% from 19.2%

in 2023. In the year under review, we expanded our

diversity program, which will continue in 2025 to meet our

ambitious target of 25% by 2030. We initiated specific

programs to recruit women, including a trainee program

for young women. Through this program, female

employees have the opportunity to work in different

(technical and technological) positions combined with a

specific development program to further develop their

other skills including management skills and personal

development. We have also established specific working

groups to promote women within our organizations. In this

way, we aim to increase the inﬂow and throughput of

female employees within our organizations.

Health and safety

The percentage of own workers who are covered by

health and safety management system based on

recognized standards is 51.6%. This is calculated based

on the total own workers and includes both production

sites and office locations. In 2024, 100% of our own

workforce at our production sites was covered by the ISO

45001 standard as health and safety management system.

Fortunately, we neither had any fatality nor any case of

recordable work-related ill health to report on, as in the

two previous years (target: 0). The number of recordable

work-related accidents for own workforce was 114. The

LTIFR for 2024 decreased slightly to 0.7 compared to the

previous year (2023: 0.8) and is below the target of <1.0.

TKH defines its Lost Time Injury Frequency Rate (LTIFR)

as the number of incidents resulting in at least one day’s

absence from work without the possibility of any

replacement work, per million hours worked.

In 2024, the illness rate was 3.97%, which is slightly above

the previous year’s level (2023: 3.85%) and slightly below

the target of a maximum of 4.0%. Flu-related illnesses had

the greatest impact on the small increase of the illness rate.

Employee satisfaction

We have a long history of conducting employee satisfaction

surveys within a four-year cycle

combined with “are we on

track” surveys during this 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. Some operating companies have carried out a

satisfaction survey focusing on (company) specific topics.

Based on the results of the survey, we evaluate where we

need to amend our working methods, policies and develop

a robust action plan. The employee satisfaction score in

2024 was 7.8, reﬂecting surveys from 2021-2024 among

4,788 employees, representing 72% of the number of

employees (headcount) as of December 31, 2024. The

employee satisfaction score is equal compared to 2023

(7.8) but increased compared to the previous years,

demonstrating the effectiveness of the measures and

action plans implemented.

Customer satisfaction

We measure, monitor, and evaluate customers through

customer satisfaction surveys on a four-year cycle. Our

average customer satisfaction survey score for 2024 is

8.6 (2023: 8.6). Through 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.

Responsible supply chain

We expect our suppliers to adopt a zero-tolerance policy

on issues that are material to us. Our principles and

requirements are set out in a Code of Supply, which

covers Environmental, Social and Governance topics

such as human rights, the environmental impact (e.g.

policies, environmental management systems, pollution

prevention etc.), occupational health and safety,

compliance with law and regulations including corruption

and bribery, and ethical behavior. This set of environment,

social and governance topics are part of the selection

criteria of suppliers. In case criteria are not met by the

supplier, the business relationship will be reconsidered.

We oblige our strategic suppliers (supplier with an annual

purchase volume of more than € 1 million must) to sign

the Code of Supply, followed by a desktop assessment

and on-site assessment. The Code of Supply has been

signed by 89.4% (2023: 91.9%) of the total number of

suppliers in scope. The annual target of 90% has not

been achieved, partly due to a longer than expected lead

time for new suppliers to sign the code. We are in close

contact with the suppliers, and we are establishing clear

rules to eliminate such delays as soon as possible.

Responsible business

Each employee working for TKH received the Code of

Conduct and needs to sign the Code of Conduct as proof

of having read and understood what is required. The

managers of our operating companies are responsible for

implementing the Code of Conduct in their organizations.

The content of the Code of Conduct is included in internal

training programs. The Code of Conduct has been signed

by 98.9% (2023: 96.5%) of the total number of employees.

The yearly 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 soon as possible.

TKH Group Annual Report 202442

Other sustainability-related topics

ESG ratings

We continuously improve and increasingly integrate

sustainability in our operations and value chains. In 2024,

this resulted in an improved score of relevant ESG

ratings, reﬂecting our sustainability performance and

commitment.

The following ESG ratings are available for TKH Group:

•

Sustainalytics: score 22.8 (medium risk level)

•

MSCI: score AA (leaders)

•

CDP: climate score B (managing environmental impact)

In addition, a number of other ESG ratings are used by

the operating companies, because these ESG ratings are

better suited to their activities or because they are used

within the value chain. In 2024, the operating companies

VMI and TKF received a silver EcoVadis medal in

recognition of their sustainability achievements.

Facilitating training and education

Our employees are encouraged to develop in the

direction of their choice. Education and training are an

indispensable part of maintaining our knowledge base.

We provide training budgets to further develop our

employees’ skills and enhance their employability. We

organize internal training, with the help of external experts

so that it is as close as possible to TKH’s normal practice.

New employees go through introduction programs,

including product training.

In collaboration with Nyenrode Business University in

Breukelen, the Netherlands, a Management Development

(MD) program has been developed for those identified as

having high potential for accelerated career

advancement. Candidates are nominated by the

management teams of the operating companies based on

predetermined selection criteria. The Executive Board

plays a proactive role in the MD program. In 2023, we

launched a new MD program. In this 2023-2024 MD

program, selected candidates gain in-depth knowledge of

topics such as strategy and leadership, business

development and value creation, business processes and

sustainability, and also work on business cases to put this

into practice.

In 2024, significantly more hours were spent on training

and other courses than in the years before 2023. 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 and 2024, resulting

in more training hours. Our new production facilities, in

particular, require training and education before operators

can begin. On average, we spent 42 hours in training per

FTE in 2024 (2023: 42 hours per FTE). In 2024, we further

scaled up awareness and training programs on ESG

material themes (e.g. the Corporate Sustainability

Reporting Directive), including health and safety, IT

security, and sanctions, among other topics.

Enhancing inclusion

In our recruitment, we are committed to providing a

suitable work environment for people with a disability

and/or disadvantage in the labor market. Disability is an

umbrella 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 disadvan-

tage in the labor market. TKH creates work experience

opportunities for the long-term unemployed or people

returning to the labor market. Workers from sheltered

employment are used to performing repetitive work. In the

year under review, the number of employees with a

disadvantage in the labor market was 125 FTEs (2023:

108 FTEs). Since 2022, TKH has been PSO certified

(“prestatieladder socialer ondernemen”). This certificate is

a quality mark that proves our organization has an

above-average level of social entrepreneurship and

focuses on the employment of vulnerable groups in the

labor market. We have a proven record of contributing to

an inclusive society. By participating in the PSO, organi-

zations around TKH are also encouraged to do business

in a more socially responsible way.

Collective bargaining and social protection

Depending on the sector, for Dutch employees we adhere

to the social conditions of employment as set out in a

collective labor agreement. Agreement-related rules are

implemented in those operating companies where there is

no collective labor agreement. We apply a similar policy

to foreign operating companies, in line with local laws and

regulations. TKH ensures that such agreements are

correctly drafted and observed, particularly regarding

periods of notice, restraint-of-trade and non-compete

clauses, and profit-sharing arrangements, and that the

statutory notice periods and other provisions are

observed. In the case of acquisition opportunities, the

salary structure of the target company is one of the

subjects examined during the due diligence process.

43Annual Report 2024 TKH Group

Political inﬂuence and lobbying activities

TKH and its companies are neither involved in political

activities in the respective countries or regions, nor do

they try to inﬂuence political decision-making by paying

financial or in-kind political contributions to any potential

beneficiary. The same applies for direct lobbying activities

in which neither TKH nor its companies are involved.

Some operating companies are members of local industry

or trade associations, business coalitions, and other

organizations that are dedicated to important industry-

related topics, or work on standardization.

TKH has a global policy in place around corporate gifts and

sponsorships. It states that we should not promise, offer,

give or authorize anything of value, directly or through

others, with the intent to improperly inﬂuence or reward a

business decision. Any corporate gifts that are given or

received must therefore remain within reasonable limits but

their value must in any case not exceed €100 and may

never be accepted in the form of money. All business

transactions entered into on behalf of TKH must be properly

recorded in accordance with the appropriate procedures

and will be available for inspection and verification.

Taxes

Tax is an integral part of our business strategy. The tax

strategy is regularly discussed with and signed off by the

Executive Board. Bodies such as the OECD provide

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. Our tax policy is aligned with

our organizational values.

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 values, does not

engage in aggressive tax planning (including tax havens

as defined by the OECD), and seeks 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, we provide our tax

department with continuous training, and internal training

modules are regularly organized for selected departments

of the various TKH operating companies, focusing on

technical and other tax issues, including tax dilemmas.

We continuously 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 that technology can offer

to in providing 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 a manually-oriented function to a more

data-driven, digitally-enabled one.

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 countries. Our relationship with the authorities is

based on trust, mutual understanding, and transparency.

In this context, it provides an opportunity to discuss

potential tax uncertainties and keep each other informed

of developments and their tax implications, thereby giving

companies more certainty about their tax position,

improving the quality of tax returns and ensuring that

double taxation is avoided.

As of 2024, TKH has been selected for Individual

Customer Management, which is being applied to the

hundred largest and most complex organizations in the

Netherlands, such as multinationals and listed

companies. In the course of 2024, Individual Customer

Management has been given further content and context.

In this respect, TKH actively cooperates with the Dutch

Tax and Customs Administration to share the potential tax

impact of new initiatives with them, and, if necessary, to

embed them in a ruling. This ensures that the tax classifi-

cation of new initiatives is in line with TKH’s tax policy

and meets the expectations of the Dutch Tax and

Customs Administration. It also ensures that activities are

taxed only once at a generally accepted tax rate where

the business is conducted.

International tax developments

TKH submits an annual Country-by-Country (CbC) report

to the Dutch Tax and Customs Administration. This report

is made available through the appropriate channels to the

tax authorities of the countries in which TKH operates. In

addition, TKH is subject to the so-called Mandatory

Disclosure Rules (DAC6), which require TKH and the

advisors involved to report selected cross-border tax

TKH Group Annual Report 202444

arrangements. During the period under review, no

reportable arrangements were disclosed.

TKH is within the scope of the OECD Pillar Two model

rules. Pillar Two legislation has been enacted in the

Netherlands effective as from 31 December 2023 for

financial years starting on or after this date (e.g. financial

year 2024). Under the legislation, the group is liable to

pay a top-up tax for the difference between their (GloBE)

effective tax rate per jurisdiction and the 15% minimum

rate. TKH has assessed the impact of Pillar Two on its

financial position, whereby the initial focus is on the

Transitional CbCR Safe Harbour rules. The Transitional

CbCR Safe Harbour rules are a short-term measure to

exclude a group’s operations in lower-risk countries from

the compliance obligation of preparing full Pillar Two

Corporate income tax

Amounts in thousands of euros

The Netherlands Europe (other) Asia North America Other countries

Amortization PPA

Total

General information

Aggregated revenues realized by the companies in the region without elimination of

intercompany transactions 1,080,706 620,617 250,607 180,027 26,433 0 2,158,390

Result on ordinary activities before tax 39,034 55,761 19,208 15,343 11,123 -16,937 123,532

Property, plant and equipment 323,767 116,465 27,170 6,563 13,164 -963 486,166

Number of own FTE 2,189 2,575 875 552 98 0 6,289

Income taxes (paid)/received

Income tax to be (paid)/received at 1 January 2024 -704 -4,108 -2,725 -50 -1,101 0 -8,688

Income taxes paid -11,894 -20,513 -4,950 -6,329 -760 0 -44,446

Income tax to be (paid)/received at 31 December 2024 2,098 3,807 -1,877 4,363 -1,268 0 7,123

1 Amortization of intangible non-current assets from acquisitions.

calculations. Based on this assessment, there are two

jurisdictions that will likely have an effective tax rate lower

than 15% and consequently fall out of the Transitional

CbCR Safe Harbour rules. Based on a more detailed

assessment it has been determined that this is not likely

to lead to any top-up tax.

Taxes paid by region

The following table shows the tax paid in 2024 by region.

The tax paid often differs from the calculated tax burden

due to prepayments that differ from the final tax burden.

This may be caused by temporary differences, deferred

taxes, and uncertain tax positions.

Commend: introducing

deep neural networks

During 2024, Commend introduced Deep Neural

Networks, to significantly perfect speech intelligibly and

optimize the signal processing of its intercom terminal

series. Developed together with the University of Art

and Design Graz, these deep neural networks are highly

efficient network algorithms for adaptive Artificial Intelli-

gence, ensuring that the voice signal in intercom systems

is perfectly cleaned of ambient noise and echoes during

transmission. Any residual noise is almost completely

suppressed. The neural network can react with high

precision to the many different challenges of everyday

life - for example different voices, ambient noises and

situations.

The result is an unprecedentedly clear, intelligible sound profile that corre-

sponds to transmission in a noiseless environment. In emergency situations

such as an accident on the highway or in a production hall, every second

counts. If background noise or echo effects distort the spoken word or make

it completely unintelligible, in the worst case lives are at stake.

Problem-specific neural network structures are trained using standardized

machine learning algorithms. Using countless hours of audio data, they are

systematically 'taught' the desired recognition capability.

At the 2024 international security trade fair "ICS West" in Las Vegas, the US

Security Industry Association honored the neural network product with the

prestigious "Best in Communication and Networking Solutions" award.

CASE SMART VISION SYSTEMS

Annual Report 2024 TKH Group 45

TKH Group Annual Report 202446

Governance

Members of the Executive Board 47

Members of the Supervisory Board 48

Report of the Supervisory Board 49

Remuneration report 56

Corporate Governance 66

Risk management 68

Management statement 79

TKH shares 80

47Annual Report 2024 TKH Group

Members of the Executive Board

Alexander van der Lof started his career in 1985 at TKH

subsidiary B.V. Twentsche Kabelfabriek (TKF), where

he 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.

J.M.A. (Alexander) Van Der Lof MBA

Chairman of the Executive Board, CEO

Dutch nationality, male, 1958

Term 2001-present

E.D.H. (Elling) De Lange MBA

Member of the Executive Board, CFO

Dutch

nationality,

male, 1965

Term 2008-present

H.J. (Harm) Voortman Msc

Member of the Executive Board

Dutc

h na

tionality, male, 1966

Term 2022-2026

Elling de Lange joined TKH in 1998, having previously

been a member of the Board of C&C Partners in Poland.

In 2002, he was appointed 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

and 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. Prior

to joining TKH Group, he held various international

management positions at Ballast Nedam.

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 of the 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. Prior to his career at TKH Group,

Mr. Voortman worked in various R&D and management

positions at, among others, Shell and Stork.

TKH Group Annual Report 202448

Members of the Supervisory Board

P.W.B. (Peter) Oosterveer

Chairman

Dutch nationality, male, 1957

• 2022 first appointment

• 2026 end of term

Chairman of the Selection and

Nomination Committee

Member of the Audit Committee

Current other non-Executive Board

positions:

• Chairman of the Board, Treysta

• Member of the Board, Statera

• Member of the Board, van Oord

Current other positions:

• Chairman of the Supervisory Board,

kanker.nl

• Advisor Goldman Sachs Asset

Management International

Previous positions:

• CEO and Chairman of the Executive

Board, Arcadis N.V.

J.M. (Mel) Kroon

Vice-chairman

Dutch nationality, male, 1957

• 2017 first appointment

• 2025 end of term

Member of the Audit Committee

Member of the Remuneration

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.

• Member of the Supervisory Board,

LVNL (until 31 December)

• Member of the Supervisory Board,

KVSA B.V.

• Advisor, Mitsubishi Corporation

• Board Member, German-Dutch

Chamber of Commerce DNHK (until

26 June)

• Advisor, Improved

• Member of the Supervisory Board,

Montel SA

• Chairman of the Supervisory Board,

GIGA Storage B.V.

Previous positions:

• Chairman of the Executive Board,

TenneT Holding B.V.

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)

• Member of the Supervisory Board,

Coöperatie TVM U.A., Chairman of

the Audit and Risk Committee (until

May)

• Member of the Supervisory Board,

DAS, Chairman of the Audit and Risk

Committee (2019)

• Member of the Supervisory Board,

NTS (Nederlandse Transplantatie

Stichting) (2020)

• Member of the Supervisory Board,

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

A.M.H. (Marieke) Schöningh

Member

Dutch nationality, female, 1963

• 2020 first appointment

• 2028 end of term

Chairman of the Remuneration

Committee

Current positions:

• Member of the Executive Board and

COO, ProRail

Current other non-Executive Board

positions:

• Member of the Board of Directors

(independent director) and Member

of the Audit Committee, DEME Group

Current other positions:

• Chairman of the Advisory Board of

the Erasmus School of Economics

Previous positions:

• Member of the Management Board

and COO, SHV Energy

• COO and Member of the Manage-

ment Board, DSM Sinochem

Pharmaceuticals

W.A.A. (Jeannine) Peek

Member

Dutch nationality, female, 1969

• 2024 first appointment

• 2028 end of term

Member of the Selection and

Nomination Committee

Current positions:

• Managing Director Capgemini,

the Netherlands

Current other positions:

• Member of Sociaal Economische

Raad (SER)

• Figurehead Topsector ICT

• Supervisory Board Member SIDN

• Member of VNO/NCW

49Annual Report 2024 TKH Group

Report of the Supervisory Board

The Supervisory Board oversees the

way the Executive Board defines and

implements TKH’s strategy to achieve

the identified objectives of the company

and its affiliated companies. In doing so,

the Supervisory Board is provided with

financial, commercial, operational,

sustainability, and governance infor-

mation, thereby focusing on the interests

of all the company’s stakeholders.

The Supervisory Board advises the Executive Board and

oversees the Executive Board's relationship with all

stakeholders, including shareholders. The members of

the Executive Board are appointed by the General

Meeting of Shareholders on a binding recommendation

drawn up by the Supervisory Board. The Supervisory

Board is governed by by-laws, which include rules

covering such matters as its working method, tasks,

decision-making, and competencies.

Composition and diversity

The Supervisory Board is composed in such a way that

the knowledge, experience, and understanding of current

and anticipated future developments at TKH including

financial and sustainability, as well as the markets,

products/technologies and activities relevant to the

company, are well represented by its members. Each

member of the Supervisory Board possesses specific

expertise required to fulfill his or her supervisory role.

The Board’s effectiveness is determined by the team’s

composition in terms of knowledge, experience and

competencies, as well as the cooperation between its

members. In addition to contributing to the regular

plenary discussions, each member of the Supervisory

Board has his or her specific own focus area related to

TKH’s activities and end markets. Continuity in the

composition and operation of the Supervisory Board is

invaluable, given its overall responsibility for the gover-

nance of the various strategic interests aimed at

sustainable long-term value creation. In accordance with

the Dutch Corporate Governance Code (the “Code”),

the Supervisory Board applies a maximum term of office

of 12 years. In addition, as part of the annual (self-)

evaluation and prior to each reappointment, an

assessment is made to determine whether the profile of

the overall composition of the Supervisory Board is

“up-to-date,” and whether the expertise, competencies,

and contribution of the member in question are still

suitable. An introduction program is being used for new

members of the Supervisory Board, which considers the

expertise and knowledge that the member brings to the

Supervisory Board. The introduction program focuses on

the general strategy, financial and sustainability reporting,

and the organizational structure and activities of TKH,

supported by site visits at selected operating companies.

The Supervisory Board values diversity in its composition

in terms of age, gender, background, expertise, profes-

sional experience, and nationality, considering statutory

requirements. These elements are also included in the

profile drawn up by the Supervisory Board for any new

members. In terms of composition, the Supervisory Board

Supervisory Board members

from the top left to the right

Mr. Oosterveer

Mrs. Gorter

Mr. Kroon

Mrs. Schöningh

Mrs. Peek

TKH Group Annual Report 202450

Supervisory Board competences and skills

Supervisory

Board member

Strategy and

business International

TKH products

and technologies Human Capital

Financial and

internal controls

Governance

(incl. business

ethics, legal)

Sustainability

(incl. CSRD

reporting)

Mr. Oosterveer

V V

* * * * *

Mr. Kroon

V V

* * * * *

Mrs. Gorter

* * * *

V V

Mrs. Schöningh

* *

V V

* * *

Mrs. Peek

* * * * * *

Has sufficient/advanced knowledge, skills and experience in the area and can make a balanced judgement on the matter.

Is in addition considered an expert in relation to previous or current roles.

Meetings during the year under review

In 2024, five regular meetings were held and three

additional meetings, which were all also attended by the

Executive Board. The Supervisory Board meetings were

well attended in 2024. In addition to the regular meetings,

exceeds the quota stipulated in Dutch company law of a

balanced distribution of seats of at least 1/3 female and

1/3 male members, insofar as these seats are allocated to

natural persons. The Board strongly supports the view

that diversity contributes to objective and sound

decision-making, whereby diversity is not only considered

important in terms of gender but also in terms of

expertise, competencies, and background. The compo-

sition of the Supervisory Board is such that its members

can act critically and independently of one another, of the

Executive Board, and of any individual interests. In the

opinion of the Supervisory Board, all members meet the

independence requirements stipulated in best-practice

provisions 2.1.7 up to 2.1.9 of the Code.

The composition of the Board and its committees have

changed in the past year. At the AGM 2024, Mrs. Schöningh

was reappointed for a further period of four years. In

addition, Mrs. W.A.A. Peek was appointed as a new

member of the Supervisory Board for a period of four years.

the company visit, the Supervisory Board was informed

about technological and project developments, market

and customer developments, operational challenges and

opportunities, and other company-specific developments.

Specific attention was paid to Artificial Intelligence (AI) and

the opportunities of applying AI to further innovate the

existing product portfolio. This was demonstrated during

the tour of the facility by showing the value of the AI

application ‘Foreign Object Detection’ on the VMI MAXX

tire building machine. This in-line, high speed detection

system utilizes a high-resolution camera to detect foreign

objects in tread material which subsequently allows an AI

algorithm to analyze the images in real-time ensuring

extremely high levels of accuracy and minimizing the

number of false-positive alarms, resulting in optimized

levels of productivity, lower scrap rates, and minimized

usage of energy and raw materials. This innovative

solution is the result of successful cooperation between

the operating companies VMI, Chromasens, LMI, TKH AI

and TKH Technology Poland.

During the tour, special attention was also paid to other

important topics such as health and safety. The Super-

visory Board greatly values these company visits and the

opportunity to meet with local management and

employees, to provide a deeper and more comprehensive

understanding of local capabilities and culture.

Regular meetings

Recurring agenda items include topics such as business

review and financial results and developments, the

progress of the Accelerate 2025 strategic program

including the valuation of TKH, investments and divest-

ments, technological, organizational, and market develop-

ments, as well as sustainability, which are discussed at

each regular meeting. In 2024, specific attention was paid

to the implementation of the CSRD, the divestments of

EKB Groep and HE System Electronic, and the acquisi-

five closed meetings took place, attended only by the

Supervisory Board members. During the year under

review, there were no subjects on the agenda that could

have potentially given rise to conﬂicts of interest. The

2023 annual financial statements were discussed in the

presence of the external auditor. In preparation for the

Supervisory Board 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.

Company visits

At least one regular meeting annually is held at the

location of a TKH operating company. Such visit allows

the Supervisory Board to meet with local management

and employees and to gain a better understanding on the

status and progress of TKH’s activities, technological

developments, and organizational capacity. The Board is

updated on local developments and possible challenges

and opportunities faced by local management. These

visits include presentations and guided tours of the

facility, whereby particular attention is paid to the local

company and safety culture.

In 2024, the Supervisory Board has visited the TKH

operating company VMI in Epe, the Netherlands. During

51Annual Report 2024 TKH Group

tions of JCAI, Liberty Robotics and Comark, to the safety

performance, cybersecurity, digitalization, and

management development and succession. In addition,

developments were discussed related to supply chain

management, cost inﬂation of (raw) materials and labor,

the impact of increasing interest rates and a possible

recession, as well as the impact of global economic and

geopolitical developments on the implementation of

TKH’s strategy, financial position, and results. Specific

attention was paid to the opportunity for expanding TKH’s

scope in projects by providing engineering, installation,

termination and testing services, in addition to the tradi-

tional supply of the cables only. The content of the press

releases concerning the annual and half-year results, and

the Q1 and Q3 Market Update was discussed with the full

Supervisory Board prior to publication. Finally, during

several meetings specific attention was paid to the

valuation of TKH and the opportunities to further unlock

the full potential of the company.

Each regular meeting was used to discuss the progress of

strategic initiatives and business developments, including

the order book, the competitive environment in which TKH

operates, potential business risks, and how these risks are

managed. The Board was furthermore also frequently

updated on the progress of specific innovation projects as

well as the progress on large capital investments. This

strategic capital expenditure program of approximately

€200 million will increase TKH’s production capacity to

respond to the higher market demand for automation,

digitalization, and electrification. In September 2024, the

state-of-the-art production facility to produce inter-array

offshore cables in Eemshaven, the Netherlands, was

opened. Throughout the year, a “deep dive” presentation

was provided by the Executive Board regarding TKH’s

approach to digitalization whereby more insight was

gained into the proposition of digitalization within TKH’s

portfolio, as well as to digita

lization opportunities related to

internal processes including ERP systems, knowledge

sharing, and shared infrastructur

e to further enhance

collaboration within the TKH group.

In the year under review, three additional meetings were

held. In one of the meetings the press release concerning

the Market Update Q3 was discussed. Another meeting

was fully dedicated to the sustainability strategy. The third

additional meeting was fully focused on an assessment

and validation of the Company’s strategy. With the

strategic investment program completed, and a large part

of our commodity-based portfolio divested, the strategy

has been discussed in light of further value creation. More

information is included in the section Strategy update:

Focus and Optimization.

Closed meetings

The Supervisory Board met five times in the absence of

the Executive Board. The most important topics of

discussion were:

•

Explanation by the Remuneration Committee of the

Remuneration Policy for the Executive Board and

Supervisory Board and the remuneration proposal for

the Executive Board.

•

Assessment and validation of the strategy in light of

further value creation.

•

Evaluation of the performance of the Supervisory

Board, its committees, and its individual members.

•

Composition of the Executive Board and the Super-

visory Board and its committees – formal nominations

for reappointments to the Supervisory Board to the

2025 AGM.

The Supervisory Board supervises and advises the Executive Board based on agenda items that recur at every

meeting, and on specific subjects relevant for discussion at any given time.

Topics of Supervisory Board meetings in 2024

Q1 Q2 Q3 Q4

• Business review

• Financial results and press

release

• Progress of strategic program –

valuation of TKH

• Investments and divestments

• Sustainability

• Supervisory Board committees

• Explanation of audit report

• AGM preparation/dividend

proposal

• Remuneration Policy

• Acquisition of JCAI

• Acquisition of Comark

• Acquisition of Liberty Robotics

• Divestment of HE System

Electronic

• Divestment of EKB Groep

• Business review

• Financial results and press

release

• Progress of strategic program –

valuation of TKH

• Investments and divestments

• Sustainability

• Supervisory Board committees

• Preparation for AGM

• Acquisition of Comark

• Acquisition of Liberty Robotics

• Divestment of HE System

Electronic

• Divestment of EKB Groep

• Business review

• Financial results and press

release

• Progress of strategic program –

valuation of TKH

• Investments and divestments

• Sustainability

• Cybersecurity

• Supervisory Board committees

• Company visit to VMI Epe, the

Netherlands

• Opening of Eemshaven factory

• Strategy assessment and

validation

• Business review

• Financial results and press

release

• Progress of strategic program –

valuation of TKH

• Investments and divestments

• Sustainability

• Supervisory Board committees

• Budget and Investment Plan

2025

• Outlook 2025-2027

• Interim Update letter external

auditor

• HR topics including

management development

and succession

• Deep dive digitalization

• Strategy assessment and

validation

TKH Group Annual Report 202452

Culture and organization

TKH has an entrepreneurial culture with a focus on

technological development and a proactive approach to

the market. Given its decentralized organizational

structure, responsibilities are delegated deep within the

organization but governed by centralized oversight and a

general (compliance) framework. The Executive Board

leads by example and provides guidance on norms and

values, including rules and other guidance. To validate the

effectiveness of both the structure and the culture, the

Supervisory Board uses annual as well as individual

company visits to gain insights through discussions with

and presentations by local management. Consultation

with the Central Works Council is another important part

of the assessment of the company culture.

HR and safety

HR developments are discussed at least once a year with

the Executive Board, with particular emphasis on

management development (programs) and succession,

employee satisfaction, employer branding, and diversity.

In 2024, special attention was paid to the implementation

of action plans to increase the proportion of females in

executive and senior management teams. In addition, the

safety performance and actions for further improvements

were discussed to ensure that safety will continue to be

seen as one of the organization’s top priorities, demon-

strated through increased safety awareness in the organi-

zation and enabling employees to take personal

responsibility for safety.

Sustainability (ESG)

The Supervisory Board is regularly updated on the

progress of sustainability initiatives and developments.

Last year, considerable attention was paid to the imple-

mentation of the EU Corporate Sustainability Reporting

Directive (CSRD), including several deep dive sessions

discussing the implementation of the CSRD, the

challenges and opportunities for TKH, as well as the

importance of the double materiality assessment. It is

anticipated that the further implementation will include

additional in-depth discussions with the Executive Board

regarding the impacts, risks and opportunities as well as

the challenges and ambitions related to reducing negative

impacts of the material topics.

Progress on the defined key non-financial KPIs was

discussed, including the progress made toward the target

of CO

e neutrality (scopes 1 and 2) by 2030 and diversity

of the own workforce. The Supervisory Board is

convinced that ESG has become more relevant strategi-

cally and needs to be further integrated within TKH’s

processes and structures and its therefore commendable

that TKH made the choice to adhere to the ESRS

reporting requirements earlier than being required by

Dutch legislation, starting with this year’s annual report.

Contact with the Central Works Council

The Supervisory Board maintains annual contact with the

Central Works Council about TKH’s strategy and topics of

interest to the individual Works Councils. These topics

include staff continuity and employability, safety, and

cooperation between operating companies. In the context

of the Central Works Council’s (strengthened) right of

recommendation, when there are vacancies in the Super-

visory Board, a dialogue is initiated with a view to obtain

input for reappointment of existing members or

appointing new members. The members of the Super-

visory Board have great respect for the professionalism

Supervisory Board visit to VMI, the Netherlands

53Annual Report 2024 TKH Group

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 Super-

visory Board, consultation with the Central Works Council

is also an important element in assessing and validating

the culture within TKH’s 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 governing their conduct.

Selection and nomination Committee

The Selection and Nomination Committee consists of Mr.

P.W.B. Oosterveer (chairman) and Ms. W.A.A. Peek (as

from the AGM 2024). The Selection and Nomination

Committee held two formal meetings in 2024. The

committee also had frequent (virtual) contact on current

topics, in particular regarding the composition of the

Supervisory Board and the retirement schedule and

ensuring that the knowledge and expertise within the

Supervisory Board remains appropriate. Management

development and succession planning is also an

important topic of discussion within the TKH organization.

The Supervisory Board nominates Mr. Kroon and Mrs.

Gorter as candidates for re-appointment to the Super-

visory Board – based in part on the profile specified for

the Supervisory Board – on the condition that, at the

AGM 2025, the general meeting does not invoke its right

of recommendation. The Supervisory Board has

discussed the re-appointments, and its members unani-

mously agree that the knowledge and experience of Mr.

Kroon and Mrs. Gorter bring great value to TKH, and

match the expertise required in the Supervisory Board’s

profile. The members of the Supervisory Board consider

the re-appointments to be in the best interests of TKH,

given their extensive knowledge of TKH and their

excellent performance as a Supervisory Board member.

The Selection and Nomination Committee reported to the

Supervisory Board on the most important results of each

of its meetings and consultations.

Remuneration Committee

The Remuneration Committee consists of Mrs. A.M.H.

Schöningh (chairman), Mrs. C.W. Gorter, and Mr. J.M.

Kroon (as from the AGM 2024). The Remuneration

Committee held two formal meetings in 2024. The

Remuneration Committee also had frequent (virtual)

contact during the past year. The achievement of the

Executive Board’s targets was assessed, based on which

the committee presented a proposal for a decision on the

remuneration of the Executive Board to the Supervisory

Board during a closed meeting. The targets for the

Executive Board for the financial year 2025 have also

been discussed and defined.

In 2023, the Remuneration Committee conducted a

thorough review of the Remuneration Policy. The review

focused, among other things, on the remuneration

structure, KPIs, long-term value creation including

sustainability, and the composition of the reference

group. In addition, relevant legislative and regulatory

developments such as the CSRD and the (in 2022)

revised Dutch Corporate Governance Code was

assessed. The review also included current market

practice, societal trends and expectations, and develop-

ments in corporate governance. Based on the outcome of

this review, the Remuneration Committee developed a

draft Remuneration Policy 2024, which was submitted to

the AGM 2024 for approval. The 2024 Renumeration

Policy for the members of the Executive Board and the

Supervisory Board were adopted by the AGM with 98.8%

and 100.0% respectively. More information can be found

in the Remuneration report section.

The Remuneration Committee reported the most

important findings of each of its meetings and consulta-

tions to the Supervisory Board.

Audit Committee

The Audit Committee consists of Mrs. C.W. Gorter

(chairman), Mr. J.M. Kroon, and Mr. P.W.B. Oosterveer.

Mrs. Gorter also chairs the committee as an expert in

the preparation and audit of the financial statements.

The Audit Committee held four regular meetings in 2024,

and two additional meetings. The Audit Committee

meetings were held in the presence of the external

auditor EY, as well as the CFO, the Director Internal Audit,

the Manager Internal Audit, and the Director of Finance &

Control of TKH. The newly appointed external auditor for

the financial year 2025 (Deloitte) was also present as an

observer, in the context of the transition. TKH’s Tax

Director was present at two meetings to explain national

and international tax developments and specific tax

matters of importance to TKH, such as the application of

the Dutch innovation box scheme, Pillar Two, tax

compliance including the Tax Control Framework and risk

management issues. The Audit Committee discussed the

audit plan, on the basis of which the audit activities have

been carried out, with the external auditor. The scope and

materiality of the audit plan, as well as the key risks in the

annual reporting that the external auditor has identified in

the audit plan, were also discussed. During the year

under review, the external auditor’s audit approach and

performance was reevaluated in consultation with the

Audit Committee.

In addition, at each meeting, the Director Internal Audit

provided an explanation of the findings concerning the

TKH Group Annual Report 202454

internal audit activities. The company’s internal risk

management and control system is an ongoing point of

attention for the Audit Committee. Other topics discussed

within the committee’s remit included 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). Due to the relevance of IT &

Security to both the day-to-day operations and TKH’s

business model in the context of software development

and R&D, this topic is given high priority at every Audit

Committee meeting.

During one of the additional meetings, a deep dive

presentation was delivered on the implementation of the

CSRD and related ESRS, including the outcome of the

double materiality assessment, timing, and challenges.

The relevant upcoming laws and regulations were also

discussed and included topics such as sustainability

(CSRD and CSDDD), cybersecurity (NIS2), and the risk

management statement (VOR) which is likely to be

required for Dutch stock listed companies in 2025 after

being embedded in the Dutch Corporate Governance

Code. The other additional meeting was devoted to the

audit transition plan of the external audit for the 2025

financial year (Deloitte).

In the year under review, there was a dis

cussion of the

key audit matters identified by the external auditor as

having the greatest impact on the audit approach and

activities during the audit. The key audit matters identified

include the recognition of revenue over time and the

related valuation of contract assets and contract liabilities,

and the valuation of capitalized development costs related

to innovation projects in development. Specific accounting

issues in the audit include the valuation of goodwill,

non-compliance with laws and regulations, specifically

(commission) payments to third-party agents and

non-routine transactions in high-risk countries, the

valuation and disclosure of acquisitions and divestments,

the valuation of a specific right of use asset, and the

valuation of inventory at one of the operating companies.

In addition, the audit by the external auditor included other

areas of audit emphasis related to the CSRD reporting, tax

assessments, tax pillar II, and assets held for sale.

In the year under review, increased attention was devoted

to developments in non-financial information, including

the implementation of the CSRD and related ESRS. The

outcome of the double materiality assessment was

discussed, as well as the structure and content of the

sustainability statements and risk management chapter

2024. Internal Audit developed and conducted review

activities focusing on selected non-financial KPIs. This

was also in preparation for the audit of non-financial KPIs

by the external auditor. TKH has received limited

assurance on the sustainability statements 2024. During

the reporting year, further attention was also paid to

supply chain management, cost inﬂation of (raw) materials

and labor, the impact of interest rate volatility and a

possible recession, and the inﬂuence of global economic

and geopolitical developments on the execution of TKH’s

strategy, financial position, and results.

Forensic expertise is used in the development of the audit

plan as well as in performing audit activities to gain a

clearer picture of the possible risks of fraud and review

internal control measures, also given the increased

attention being paid to fraud and corruption in society.

The Audit Committee discussed the company’s fraud risk

assessment, including inherent fraud risks, identified

significant risks, and other risks and attention areas. The

risk mitigating measures were also discussed, both at

TKH group level and at operating company level.

The external auditor explained the interim update letter

with findings in reporting, and administrative organization

and internal control, where relevant to the audit of the

financial statements. The main topics discussed were the

valuation of development costs concerning two specific

assets, a tax assessment received at one of the operating

companies, tax pillar II legislation, the (completion of the)

capital expenditures related to the new factory in

Eemshaven, the acquisition and processing of the

acquisitions of JCAI, Liberty Robotics and Comark, the

divestment and processing of HE System Electronic,

Shin-Etsu (Jiangsu) Optical Preform Co. Ltd. and EKB

Groep, and the valuation of inventories at one of the

subsidiaries. In addition, IT control measures and cyber-

security, fraud and non-compliance management, the

financial statements filing process related to ESEF

reporting, and findings at operating companies that

needed to be followed up were discussed. The external

auditor also updated its audit plan to reﬂect recent

developments, including the reassessment of materiality

levels and scoping. Finally, relevant observations

concerning the sustainability reporting were discussed.

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

and with the Executive Board and Supervisory Board. The

Audit Committee also evaluates the internal audit

function. The input for the evaluations includes the

follow-up on the points of 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 on the

nomination for the (re)appointment of the external auditor

and prepares the selection of the external auditor. In

55Annual Report 2024 TKH Group

doing so, it considers the Executive Board’s observations.

The Audit Committee then submits a proposal to the

Supervisory Board for commissioning and the Super-

visory Board subsequently proposes appointment of the

external by the general meeting to audit TKH’s financial

statements.

In accordance with best practice provision 1.7.4 of the

Code, the Audit Committee held a meeting with the

external auditor in 2024 without the presence of the

Executive Board. It was established that the external

auditor was independent of TKH.

The Audit Committee reported the most important

findings of 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. An evaluation by

each individual member of the Supervisory Board is

carried out by an external advisor. The outcome of this

evaluation is reported to the Supervisory Board. The

evaluation covered the Board's composition, indepen-

dence, 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 its individual members, functioned

well. This honest and open relationship is characterized

by mutual respect. The members complement each other

sufficiently in their advisory and supervisory role toward

the company and cover a wide range of relevant

expertise. The available and desired expertise and

knowledge within the Board was also discussed. 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 each another.

Attendance at meetings of the supervisory board and its committees

Meeting Supervisory Board Audit Committee

Remuneration

Committee

Selection and

Nomination Committee

P.W.B. Oosterveer (chairman) 8/8 6/6 2/2 2/2

J.M. Kroon

7/8 6/6 2/2

C.W. Gorter 8/8 6/6 2/2

A.M.H. Schöningh 8/8 2/2

W.A.A. Peek

5/5

R.L. van Iperen

3/3

1 Mr. Kroon was member of the Selection and Nomination Committee until September 30

2 Mrs. Peek has been appointed as member of the Supervisory Board at the AGM 2024 (May 7, 2024).

Mr. Van Iperen was member of the Supervisory Board until the AGM 2024.

Communication from the Executive Board to the Super-

visory Board takes place in an open, professional, and

constructive manner so Supervisory Board members

have a strong understanding of strategic and operational

issues. It was also established that no member of the

Executive Board has more than two “demanding” super-

visory positions as defined in the Dutch Management and

Supervision Act. The Supervisory Board has no indication

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 points in the Code’s

best-practice provision regarding the independence of

the Supervisory Board (2.1.7), its individual members

(2.1.8), and the chairman (2.1.9) were also assessed.

It was concluded that all members of the Supervisory

Board are independent.

Financial statements 2024

The report of the Executive Board and the 2024 financial

statements were submitted to the Supervisory Board in

accordance with the provisions in Article 31 of the Articles

of Association. The financial statements were submitted

for audit to EY Accountants B.V., which subsequently

issued an unqualified auditor’s report on the financial

statements based on the audit.

The Supervisory Board discussed the financial state-

ments with the Executive Board in the presence of the

external auditor, and subsequently approved the financial

statements on March 3, 2025. The Supervisory Board

submits the financial statements for the 2024 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 that

the proposed appropriation of profits be approved and

that the Executive Board be discharged in respect of the

policies pursued and the Supervisory Board in respect of

the supervision exercised.

Haaksbergen, March 3, 2025

On behalf of the Supervisory Board,

P.W.B. Oosterveer, chairman

TKH Group Annual Report 202456

Remuneration report

This Remuneration Report describes the implementation of the Remuneration

Policy for the members of the Executive Board and the Supervisory Board.

Letter from the Remuneration Chair

On behalf of the Remuneration Committee, I am pleased

to present the 2024 Remuneration Report, which provides

a summary of the remuneration policies for the Executive

Board and the Supervisory Board and an explanation

about how they were applied in 2024. The aim of the

Remuneration Policy is to provide remuneration in line

with the market in order to attract, motivate, and retain

qualified Executive Board members of the publicly listed

company, taking into account the Company’s size,

strategy, and unique characteristics. TKH aims to be an

attractive employer and a sound investment for its Share-

holders, with a focus on sustainable long-term value

creation.

During (part of) 2023 and 2024, the Remuneration

Committee conducted a thorough review of the Remuner-

ation Policy for the Executive Board in line with the Dutch

law, the Dutch Corporate Governance Code, and other

relevant national and international developments. The

Remuneration Committee was assisted by an external

consultant. This process was guided by the following

principles:

•

Remuneration focused on the achievement of the

Company’s strategy.

•

A competitive Remuneration Policy to attract and retain

the right talent.

•

Taking into account stakeholder perspectives and

societal developments.

•

Adherence to good corporate governance practices.

•

Performance criteria that are measurable, transparent,

and verifiable.

We have engaged in active dialogue with the Workers

Council as well as with governance organizations, proxy

advisors and major shareholders on the envisaged

changes, all supported by an external advisor. The

feedback received has been taken into account in the

2024 Remuneration Policy. The key changes in the 2024

Remuneration Policy compared to the 2020 Remuner-

ation Policy, in addition to general textual improvements,

are as follows:

•

Upd

ated reference group. The new reference group now

includes an equal mix of Dutch publicly listed companies

and international (largely European) sector-specific

companies that are comparable to the Company in terms

of size, complexity, and international scope.

•

Addition of a range of 20%-30% sustainability perfor-

mance criteria as part of the Short-Term Incentive (STI).

•

Addition of 20% sustainability performance criteria as

part of the Long-Term Incentive (LTI).

•

Removal of the minimum guaranteed Long-Term

Incentive (LTI) award, allowing for a threshold level of

performance for each of the performance criteria. If the

actual performance is below the threshold, the award

for the relevant performance measure will be 0%. In

addition, the minimum guaranteed total LTI award of

0.25 has been removed so that if the performance

criteria are below the threshold performance level, no

LTI will be awarded.

•

Inclusion of a minimum share ownership guideline of

four times the base salary (total regular income, TRI).

The revised Renumeration Policies were proposed by the

Supervisory Board for adoption by the 2024 General

Meeting of Shareholders, with effect from January 1, 2024.

The Renumeration Policy for the members of the

Executive Board and the Supervisory Board were adopted

by the AGM with 98.8% and 100.0% respectively.

I would like to thank our shareholders and other stake-

holders for their engagement and for sharing their views

on the executive remuneration.

A.M.H. Schöningh

Chair of the Remuneration Committee

57Annual Report 2024 TKH Group

Remuneration Policy of the Executive Board

The remuneration payable to the members of the Executive Board consist of the following:

Total remuneration

Basic salary (TRI) Total regular income. Attracts, engages, and retains Executive Board members to deliver on TKH's

strategic objectives.

Short-Term Incentive (STI) An annual performance bonus. Contributes to TKH’s short-term financial and non-financial

performance objectives of TKH.

Long-Term incentive (LTI) Incentive in the form of a share plan aligning the objectives of the Executive Board member with

the long-term growth strategy and stakeholders' interests of TKH.

Pension A pension commitment including the right to benefits in the event of poor health or disability, and

a widows’ and orphans’ pension in the event of death.

Other compensation elements Business allowances in accordance with what is generally accepted within the TKH organization.

The Remuneration Policy aims to provide remuneration in

line with the market to attract, motivate, and retain qualified

executives for the publicly listed company, taking into

account the Company's size, strategy, and unique charac

teristics. TKH aims to be an attractive employer and a

sound investment for its Shareholders, with a focus on

sustainable long-term value creation. The Remuneration

Policy aims to create sustainable long-term value for the

Company and the sustainability of the Company as a whole

in order to achieve its strategic, financial, and operational

objectives. The Remuneration Policy is aligned with the

business strategy through the establishment of specific

short-term and long-term objectives that link the

remuneration of each Executive Board member to the

success of the Company. The size of the LTI (Long-Term

Incentive) in the total compensation package and the fact

that the members of the Executive Board must invest for

their own account in the same number of shares as are

granted to them within the framework of the LTI including

a holding period of three years are important factors in

ensuring the long-term value creation and continuity of

the Company. Furthermore, personal objectives under the

Short-Term Incentive (STI) are linked to and aligned with

the identity, values, and mission of the Company.

The Remuneration Policy was designed in the context of

national and international market trends, statutory

requirements, corporate governance best practice, the

societal context around remuneration, and the interests

of the Company’s Shareholders and other stakeholders.

The compensation package is periodically reviewed

against market trends using information provided by

external experts. The compensation package is designed

to support both the short-term and long-term objectives

of the company. Based on the objectives set, the

Remuneration Committee performs scenario analyses

regarding the Short-Term Incentive (STI) and Long-Term

Incentive (LTI) to be awarded. The Company believes it is

important to reward the achievement of growth targets,

and the remuneration structure is designed to ensure that

Executive Board members are not encouraged to take

inappropriate risks.

Reference group

To attract qualified individuals to the Executive Board and

retain the current members of the Executive Board for the

long term, TKH Group takes into account external

reference data when determining appropriate levels of

remuneration. A specific reference group (peer group) for

the employment market has been defined for this

purpose. The reference group consists of an equal mix of

Dutch publicly listed companies and international (largely

European) sector-specific companies that are comparable

to the Company in terms of size, complexity, and interna-

tional scope. The Remuneration Committee, supported

by external experts, regularly reviews this reference group

to ensure that the composition remains appropriate.

Long-Term incentive (LTI)

Share Plan Members of the Executive Board receive shares based on the achievement of targets, on the condi-

tion that they personally invest in the same number of shares as they receive under the LTI plan.

Personal Investment Members of the Executive Board receive shares on the condition that they personally invest in the

same number of shares as they receive under the LTI plan. By personally investing in the same

number of shares as they are awarded under the LTI, each member of the Executive Board invests a

significant amount of money in a way that prudently manages risk but still encourages an entre-

preneurial spirit to create long-term value. As a result, the interests of the Executive Board and the

shareholders remain aligned.

TKH Group Annual Report 202458

AMX International sector peers

Aalberts Industries

Arcadis

ASM International

Basic-Fit

Corbion

Fugro

Royal Vopak

SBM Offshore

Barco

Basler

Cognex

Huber+Suhner

Jenoptik

Mersen

NKT

SGL Carbon

Although the external market data provides a reference

point, it is ultimately the responsibility of the Remuneration

Committee and the Supervisory Board to determine and

propose to the General Meeting a remuneration package

at an appropriate level that reﬂects the specific context

and requirements of the Company and the skills and

capabilities of the individual Executive Board members.

As such, external market data will be used to support

rather than drive decision-making. The Remuneration

Committee evaluates the external market data and

recommends adjustments, if necessary, to the Supervisory

Board for approval. The reference point is the median of

total direct remuneration compared to the peer group.

Targets for STI and LTI

The annual targets for the STI and LTI relate to TKH’s

business plan as reﬂected in the financial and non-

financial targets of the Accelerate 2025 strategic program.

Each year, the Supervisory Board sets the performance

criteria, their respective weightings and specific targets

for the year in question in line with the TKH Group’s

strategy, taking into account both financial and non-

financial factors as well as personal objectives. This

enables the Supervisory Board to respond in an agile way

to changing business needs and/or strategy adjustments

in a changing environment. In doing so, the Supervisory

Board takes the following into account:

•

Performance criteria must be derived from TKH Group’s

strategy;

•

The focus should be on criteria that are essential for

creating long-term value creation;

•

Past performance, business prospects, and conditions;

and

•

Stakeholder expectations.

Financial and non-financial targets of the Accelerate 2025 strategic program

Turnover

€2 billion

ROCE

22-25%

ROS

17%

Net Debt/EBITDA

2.0

Carbon neutral own operations

100%

scope 1 and 2 by 2030

Diversity

25%

Female executive and senior management by 2030

Employee satisfaction

7.5

Accident rate (LITFR)

1.0

While financial and non-financial objectives focus on the

achievement of overall strategic business objectives and

sustainability ambitions, personal targets should relate to

the individual member's specific role within the Executive

Board. The above ensures that the STI contributes to

TKH Group’s strategy, long-term interests and sustain-

ability. The full Remuneration Policy is available on the

TKH website.

59Annual Report 2024 TKH Group

1 Basic salary (TRI)

The Remuneration Committee regularly reviews the base

salaries of the members of the Executive Board. Based

on the recommendation of the Remuneration Committee,

the Supervisory Board determines the adjustment (if any),

taking into account, among other things, the collective

labor agreement for the large metal industry (FME) and

the development of base salaries within the reference

group. As a result, the base salaries have been increased

by 3.5% with effect from January 1, 2024.

2 Performance bonus (STI)

Short-term variable pay is an important part of the

remuneration package for members of the Executive

Board. Each year, the Supervisory Board sets the targets

and criteria on which the performance bonus is based in

advance. The Supervisory Board, acting on a recommen-

dation from the Remuneration Committee, determines the

amount of the performance bonus on the basis of the

achievement of the targets and criteria. An ‘at target’

performance results in a bonus of 40% of base salary

(TRI). The performance bonus is capped at 60% of the

base salary (TRI). Achievement of threshold will result in a

bonus of 8% of the base salary (TRI). For below threshold

performance, the bonus is 0% of the base salary (TRI).

STI performance of the Executive Board in 2024

The performance bonus is based on the following perfor-

mance criteria:

•

70% financial performance criteria

•

20% sustainability performance criteria

•

10% personal performance criteria

The STI for members of the Executive Board based on

achievement of the 2024 targets is presented in the table

below. Payment of the variable remuneration to members

of the Executive Board is subject to the condition that the

targets upon which the performance bonus is based or

the circumstances under which the bonus was originally

determined, are accurate.

Application of the Policy in 2024

1 The calculated turnover and EBITA are normalized for acquisitions and divestments, for both target and performance.

Financial performance (70%)

Turnover (20% weighting) and EBITA (50% weighting)

have been defined as financial performance criteria for

2024. The calculated turnover and EBITA are normalized

for acquisitions and divestments, for both target and

STI 2024

Bandwith payout level

Targets

Performance

KPI

Weight

Threshold

On-target

100%

Maximum

150%

Threshold

On-target

100%

Maximum

150% Performance

Performance

payout

Actual payout

% of TRI Threshold On-target Maximum

Turnover (in millions) 20% 0% 20% 30% € 1,538 € 1,810 € 1,900 € 1,675 7.6% 3.0%

EBITA (in millions) 50% 0% 50% 75% € 199.1 € 234.0 € 245.9 € 205.3 5.3% 2.1%

Financial

performance

70% 0% 70% 105% 12.9% 5.2%

Sustainability performance 20% 0% 20% 30% 20.0% 8.0%

Personal performance 10% 0% 10% 15% 3.3% 1.3%

Total performance 100% 0% 100% 150% 36.2% 14.5%

See commentary

performance. TKH achieved a normalized turnover of

€1,675.3 million and a normalized EBITA of €205.3 million

in 2024. The performance, normalized for acquisition and

divestments, resulted in a performance pay-out of 7.6%

for turnover and 5.3% for EBITA.

Sustainability performance (20%)

For 2024, the following two sustainability targets have

been defined:

•

LTIFR 0.7 (10% weighting): To make safety demon-

strable, emphasis is placed on specific, measurable

performance targets for safety measures, including

LTIFR (Lost Time Injury Frequency Rate). Further action

was taken on health and safety programs at the

production facilities. The LTIFR figure for 2024 of 0.7

was at target.

•

ployee satisfaction 7.8 (10% weighting): The employee

atisfaction score in 2024 of 7.8 was at target and similar

to last ye

ar’s score (7.8). In addition, in 2024 more com-

panies were included in the employee satisfaction survey.

The performance in 2024 against sustainability targets

results in an overall performance ratio of 20.0%.

TKH Group Annual Report 202460

Personal performance (10%)

The personal targets defined for 2024 are related to specific

business issues and are not disclosed in detail due to

(commercially) sensitive information. The achievement of

the personal targets in 2024 results in an overall average

performance ratio of 3.3%, consisting of the following

performance ratios for each member of the Executive Board:

•

10.0% for J.M.A. van der Lof MBA

•

0.0% for E.D.H. de Lange MBA

•

0.0% for H.J. Voortman MSc

Total performance 2024

The performance percentages times 40% generates the

actual payout percentage of TRI. This resulted in award

payouts in €1,000 (STI) of the following values for:

J.M.A. van der Lof MBA: 42.8% x 40% x TRI = 135

E.D.H. de Lange MBA: 32.8% x 40% x TRI = 78

H.J. Voortman MSc: 32.8% x 40% x TRI = 75

Share plan (LTI)

An annual long-term variable compensation plan is in

place that provides for share awards linked to long-term

targets. This aligns the interests of the members of the

Executive Board with those of the Shareholders.

The share plan has two components:

1 Acquisition of shares based on the achievement of

long-term targets;

2 Purchase of shares by members of the Executive

Board, for their own account, for an amount equal to

the number of shares received free of charge (1).

Subject to the determination of the Remuneration

Committee and approval of the Supervisory Board, the

share plan enables members of the Executive Board to

acquire shares free of charge in return for which the

members of the Executive Board are required to invest for

their own account in the same number of shares for the

price quoted on the stock exchange at that moment. It is

also important that the interests of the Executive Board of

TKH Group are aligned with those of long-term Share-

holders. As members of the Executive Board are required

to purchase the same number of shares under the LTI as

they have been granted free shares, each member of the

Executive Board invests a substantial amount in TKH

Group shares. This ensures that risks are carefully

managed and that the entrepreneurial spirit for long-term

value creation is maintained. The shares in question are

to be held as a long-term investment and may not be

transferred for a period of three years after their

respective allocation. This applies both to shares

purchased for no consideration and to shares purchased

by members of the Executive Board. The Supervisory

Board has adopted share ownership guidelines that

specify the minimum ownership requirements for

members of the Executive Board. The share ownership

requirement is at least four times the base salary (TRI).

Newly appointed members of the Executive Board are

subject to a “phase-in” rule, whereby the minimum share

ownership is reached after a maximum of eight years.

The Long-Term Incentive is based on the following

targets:

•

40% Financial targets (multiplier A)

•

20% Sustainability targets (multiplier B)

•

40% Share price performance (multiplier C)

The financial targets (40%) are set annually and are based

on long-term strategic objectives such as ROS (Return on

Sales) and ROCE (Return On Capital Employed) and other

relevant financial objectives. The sustainability targets

(20%) are also set annually and are based on strategic

sustainability targets. The performance of the share price

(40%) over the last three years compared to the AMX

index, which is relevant for the company, may lead to an

allocation of shares.

The amount of the long-term bonus is based on the

achievement of targets and is determined by a system of

multipliers:

•

Multiplier A (40%): The applicable performance range

for the financial targets is 0.5 to 1.5, with an “at target”

level of 1.0.

•

Multiplier B (20%): The applicable performance range

for the sustainability targets is 0.5 to 1.5, with an “at

target” level of 1.0.

•

Multiplier C (40%): The performance of the share price

(40%) over the last three years compared to the AMX

index relevant to the Company results in an index with

a performance range of 0.75 to 1.5 with an “at target”

level of 1.0. This index is converted into a multiplier

ranging from 0.5 to 1.8, with an 'at target' level of 1.0.

The amount of the long-term bonus is calculated by

multiplying the multipliers (multiplier A*B*C). The total of

the multipliers multiplied by the standard award of 50%

results in the net LTI award. A threshold performance

level is used for each of the multipliers. If the actual

performance for a KPI falls below this threshold, the

relevant multiplier and therefore the portion of the LTI

based on the weighting of the relevant multiplier is

forfeited. For example, if the achievement of the financial

targets (multiplier A) is below the threshold performance,

40% of the LTI award is forfeited and the remaining LTI

award is calculated using the multiplier B*C. There is no

minimum (total) multiplier; if performance is below

threshold for all of the multipliers, the LTI will be 0%. The

share scheme is capped at a total multiplier factor of 2.7

of base salary (TVI). After the publication of the audited

annual figures, the number of shares awarded is deter-

mined based on the average closing price over the three

trading days following the publication of the annual

figures. The shares vest shortly thereafter.

61Annual Report 2024 TKH Group

Targets and performance 2024

TKH Group’s strategy is to increase the ROS and ROCE

through growth in activities related to high-end techno-

logies where relatively high margins can be achieved.

The ROS and ROCE are important criteria for monitoring

TKH Group’s differentiation power based on the group’s

technology base and the ongoing transformation towards

achieving the ROS and ROCE targets. In addition, the

development of TKH Group’s share price against the

AMX index of Euronext Amsterdam is an important

confirmation of the Shareholders’ appreciation of the

strategy. The sustainability objectives focus on the

achievement of sustainability ambitions as part of the

Accelerate 2025 strategic program with targets on

carbon footprint reduction and diversity in terms of

percentage of females in executive and senior

management positions.

The following multipliers were achieved for each KPI

based on actual overall performance against the

performance ranges.

•

TKH achieved a ROS of 12.3% in 2024, resulting in a

multiplier for ROS (A) of 0.78. The calculated ROS is

normalized for acquisitions and divestments, for both

target and performance.

•

The ROCE in 2024 was 15.0%, and below the

threshold. The calculated ROCE is normalized for

acquisitions and divestments, for both target and

performance. The relevant multiplier and therefore the

portion of the LTI based on the weighting of the relevant

multiplier is forfeited (20%).

•

In 2024, a further reduction in the CO

e footprint was

achieved, resulting in a CO

e footprint reduction of

70.3% compared to the reference year 2019 (2023:

64.3%), and is well on track towards the target of 100%

carbon neutrality for scope 1 and 2 by 2030. The share

of women in executive and senior management teams

increased in 2024 from 19.2% to 21.6% and is well on

track to meet the target of 25% by 2030. The perfor-

mance on sustainability targets resulted in a multiplier

of 1.50.

•

The multiplier for the relative stock price developments

TKH shares compared to the AMX index of Euronext

Amsterdam over the last three years (index of 78%).

These multipliers for each KPI resulted in a total multiplier

for the LTI of 0.65 (A*B*C), based on a weight of 80%,

which meant that 0.65 x 80% x the standard award of

50% was granted.

This resulted in award payouts in €1,000 of the following

net values for:

J.M.A. van der Lof MBA: 0.65 x 80% x 50% x TRI = 206

E.D.H. de Lange MBA: 0.65 x 80% x 50% x TRI = 155

H.J. Voortman MSc: 0.65 x 80% x 50% x TRI = 149

The corresponding gross values are listed in the table

showing “total remuneration” in section 6 of this

Remuneration Report. The number of certificates of

shares associated with the net award will be calculated

based on the average closing price over the three trading

days following the time of publication of the annual

figures. The awarded shares as well as the individually

purchased shares in accordance with the LTI plan are

included in the Executive Board share ownership table.

Members of the Executive Board receive shares on the

condition that they personally invest in the same number

of shares as they receive under the LTI plan.

LTI 2024

Bandwith payout level

Targets

Performance

KPI

Weight

Threshold

multiplier

On-target

multiplier

Maximum

multiplier

Threshold

On-target

100%

Maximum

150% Performance Weight

Multiplier/

payout % Threshold On-target Maximum

A Financial

40% 0.50 1.00 1.50 20% 0.78

ROS 20% 11.7% 12.7% 13.7% 12.3% 20% 0.78

ROCE 20% 17.4% 18.4% 19.4% 15.0% 0% 0.00

B Sustainability 20% 0.50 1.00 1.50 20% 1.50

footprint reduction 10% 64.3% 67.3% 70.3% 70.3% 10% 1.50

Diversity 10% 19.2% 20.0% 20.8% 21.6% 10% 1.50

C Relative stock price development 40% 0.50 1.00 1.80 0.50 1.00 1.80

index 0.78

40% 0.56

Overall performance ratio 100% Performance multiplier: A*B*C 80% 0.65

Actual payout % of TRI

26%

1 The calculated ROS and ROCE are normalized for acquisitions and divestments, for both target and performance.

TKH Group Annual Report 202462

Executive Board share ownership

Balance

at 1/1

Awarded

Individually

purchased shares

Disposal

(at least 3 years

in portfolio)

Balance

at 31/12

J.M.A. van der Lof MBA

2023

118,147 6,547 6,547 -18,594 112,647

2024

112,647 17,388 17,388 -17,388 130,035

E.D.H. de Lange MBA

2023

85,009 4,910 4,910 -14,730 80,099

2024

80,099 13,053 13,053 -26,106 80,099

H.J. Voortman MSc

2023

35,935 4,456 4,456 -4,456 40,391

2024

40,391 12,575 12,575 -11,915 53,626

1 Achieved in the previous financial year and paid out in the following financial year.

4 Pensions

The Remuneration Committee ensures that the pensions

of Executive Board members are in line with generally

accepted standards and ensures that they are consistent

with the pension plans offered for similar positions. In

addition, the pension provisions include a right to benefits

in case of ill health or disability and a widow’s and

orphan’s pension in case of death on terms similar to

those applicable to members of the collective pension

fund. The associated costs, up to the maximum allowed

under tax law, are included in pension costs. The pension

compensation refers to any portion exceeding the

maximum allowed under tax law (2024: €137,800).

5 Other employee benefits

The members of the Executive Board are entitled to

certain business allowances in accordance with what

is generally customary and accepted within the TKH

organization, which are limited to an expense allowance,

car, (mobile) phone, and insurance. Additional governance-

related activities are not subject to any additional

conditions or remuneration. No option rights are awarded

to members of the Executive Board.

6 Total remuneration

The table below lists the various gross remuneration

components and relative percentages of fixed and variable

remuneration of the members of the Executive Board.

Total remuneration Executive Board

Basic salary (TRI) Variable income (STI) 1 Share plan (LTI) 1 Pension Pension compensation Total Variable share in the total

(in €1,000 unless stated otherwise)

2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023

J.M.A. van der Lof MBA 789 763 135 317 353 1,135 57 50 251 222 1,585 2,487 30.8% 58.4%

E.D.H. de Lange MBA 593 573 78 238 265 852 27 23 80 79 1,043 1,764 32.9% 61.8%

H.J. Voortman MSc 571 552 75 230 256 821 27 23 77 75 1,006 1,700 32.9% 61.8%

Total remuneration 1,953 1,887 288 785 874 2,808 111 95 408 376 3,634 5,951 32.0% 60.4%

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 Super-

visory Board believes that there should always be a

reasonable balance between the remuneration of the

members of the Executive Board and the remuneration of

the other employees. The internal pay ratio is understood

to mean the ratio between the total annual remuneration

of the CEO on the one hand, and, on the other hand, the

average annual remuneration of the employees of the

company and group companies whose financial data are

consolidated by the company, where:

•

The total annual remuneration of the CEO includes all

the remuneration components (such as fixed remuner-

ation, variable cash remuneration (bonus), the share-

based part of the remuneration, social contributions,

pension, expense allowance, etc.) included in the

consolidated annual accounts on an IFRS basis.

•

The average annual remuneration of the employees is

determined by dividing the total wage costs for the

financial year (as included in the consolidated annual

accounts on an IFRS basis) by the average number of

FTEs during the financial year. The labor mix had an

important impact on the average total remuneration of

employees in 2024, in addition to inﬂation effects.

•

The value of the share-based component of the

remuneration is determined at the grant date in accor-

dance with the applicable rules under IFRS.

1 Achieved in the previous financial year and paid out in the following financial year.

63Annual Report 2024 TKH Group

The pay ratio for 2020 is significantly lower due to the

lower value of STI and LTI as part of the remuneration.

This led to a significant reduction in remuneration in 2020

and, consequently, to a relatively low pay ratio for 2020.

The pay ratio for 2022 is lower compared to 2021 due to

the lower value of LTI, mainly as a result of a lower multi-

plier for the relative stock price development. The pay

ratio for 2024 is 26.6 and significantly lower compared to

2023, due to the lower value of STI and LTI as part of the

remuneration.

8 Comparative information on remuneration and

company performance

The table below shows a five-year comparison of the

changes in the remuneration of the Executive Board and

the company’s performance.

Comparative information on Remuneration and Company performance

(in €1,000 unless stated otherwise)

2024 2023 2022 2021 2020

Remuneration Executive Board

J.M.A. van der Lof MBA 1,278 2,215 1,658 2,237 902

E.D.H. de Lange MBA 936 1,663 1,244 1,678 676

H.J. Voortman MSc 902 1,603 1,127 1,523 614

Company performance

ROS 12.7% 12.8% 12.9% 12.4% 10.5%

EBITA 204 237 235 190 129

e reduction (vs. 2019) 70.3% 64.3% 42.7% 29.8%

e reduction (vs. 2015) 5.8%

Illness rate of employees 3.97% 3.85% 4.04% 3.56% 3.51%

Average remuneration per FTE 60 58 57 55 50

CEO pay ratio 26.6 43.0 33.7 45.3 22.4

1 Based on TRI, STI, and LTI.

9 Personal loans

No loans, advances, or guarantees are granted to

members of the Executive Board.

10 Change of control

There is no “change of control” clause in the employment

contracts of the members of the Executive Board. This

will be decided by the Supervisory Board taking into

account customary practices for this type of situation as

well as applicable laws and corporate governance

requirements.

11 Severance pay

The maximum severance payment in the event of

dismissal is one year's salary (TRI), including the notice

period. No severance payment shall be made if the

employment contract is terminated prematurely at the

initiative of the member of the Executive Board or if the

member is guilty of gross misconduct or negligence.

12 Claw-back

The Supervisory Board has the discretionary authority to

claw back variable remuneration awarded to members of

the Executive Board if it is based on inaccurate (financial)

data. In line with claw-back legislation, the payment of

variable remuneration to the members of the Executive

Board is made on the condition that the relevant

(financial) data are correct. For 2024, there was no full or

partial recovery of a bonus.

TKH Group Annual Report 202464

Remuneration Policy of the Supervisory Board

Dutch publicly listed companies and international (largely

European) sector-specific companies that are comparable

to the Company in terms of size, complexity, and interna-

tional scope. The Remuneration Committee, supported

by external experts, regularly reviews this reference group

to ensure that its composition remains appropriate.

Although the external market data provides a useful

reference point, it is ultimately the responsibility of the

Remuneration Committee and the Supervisory Board to

determine and propose to the Annual General Meeting a

remuneration package at an appropriate level that reﬂects

the specific context and requirements of the Company

and the skills and capabilities of the individual Super-

visory Board members. As such, external market data will

be used to support rather than drive decision-making.

The Remuneration Committee evaluates the external

market data and recommends adjustments, if necessary,

to the Supervisory Board for approval.

The General Meeting of Shareholders adopted the

remuneration of the Supervisory Board in 2024 with

100.0%, with effect from January 1, 2024. The full

Remuneration Policy is available on the TKH website.

Application of the Policy

in 2024

1 Remuneration

The individual remuneration of the members of the

Supervisory Board is determined by the General Meeting

on a recommendation by the Supervisory Board. The

remuneration for the members of the Supervisory Board

is set at a level which is considered appropriate to attract

individuals with the necessary international experience

and the ability to make an important contribution to the

Company’s affairs. The remuneration is determined

taking into account the level of responsibility of each

Supervisory Board member and the remuneration paid

by other companies of similar size and complexity.

Indexation of the remuneration for the Supervisory Board

takes place annually.

The remuneration of Supervisory Board members needs

to be at a reasonable level compared to the terms of

employment and average income of the employees in the

company, as well as in relation to the pay ratios that apply

within the company. The compensation of a member of

the Supervisory Board does not depend on the

Company's results and reﬂects the time spent and the

responsibilities of the position. All Supervisory Board

members receive a fixed base remuneration to

compensate them for the services they provide as

members of the Supervisory Board. The Chairman of the

Supervisory Board receives a higher remuneration for

his services. Additional remuneration is also paid for

membership of Supervisory Board committees. If circum-

stances require members of the Supervisory Board to

perform substantially more than their normal activities,

they will receive a remuneration of €1,000 for each part

of a day, up to a maximum of €2,000 per day.

The policy aims to provide a competitive compensation

package to attract, motivate, and retain qualified Super-

visory Board members for a publicly listed company,

taking into account the Company's size, strategy, and

unique characteristics. The policy was designed in the

context of national and international market trends,

statutory requirements, corporate governance best

practice, the societal context around remuneration, and

the interests of the Company’s Shareholders and other

stakeholders. The compensation package is periodically

reviewed against market trends using information

provided by external experts.

The overriding principle of the Company’s Remuneration

Policy is to ensure fairness and transparency. The

remuneration structure is designed to encourage Super-

visory Board members to perform their role adequately

and does not depend on the financial results of the

Company. The Supervisory Board acknowledges its

responsibility to be aligned with the identity, mission, and

core values of the Company. In this context, it has been

decided to have only a fixed remuneration income and no

variable remuneration to be able to have an independent

and objective role regarding the implementation of the

Company's strategy, targets, long-term value creation,

and sustainability.

In order to attract qualified persons to the Supervisory

Board and retain current members of the Supervisory

Board over the long term, the Company takes into

account external reference data when determining appro-

priate levels of remuneration. A specific reference group

(peer group) for the labor market has been defined for this

purpose. The reference group consists of an equal mix of

65Annual Report 2024 TKH Group

Supervisory Board members do not receive any perfor-

mance or equity-related compensation. Supervisory

Board members do not accrue any pension rights with

the Company.

The 2024 remuneration of the Supervisory Board is based

on the following amounts:

2 Total remuneration

The table on the right lists the total remuneration paid to

individual members of the Supervisory Board.

Total remuneration Supervisory Board

Regular

remuneration

Remuneration

membership

committees

Total

2024

Total

2023

(x €1,000)

P.W.B. Oosterveer, chairman 67 21 88 62

J.M. Kroon 51 14 65 63

C.W. Gorter 51 19 70 68

A.M.H. Schöningh 51 7 58 56

W.A.A. Peek

34 3 37

R.L. van Iperen

17 17 75

Total remuneration 270 65 335 324

1 As of May 2024.

2 Up to and including May 2024.

As amounts are expressed in thousands of euros, totals may not add up precisely due to rounding.

Chairman of the Supervisory Board €67,481

Member of the Supervisory Board €50,611

Chairman of the Audit Committee

€11,247

Member of the Audit Committee €7,873

Chairman of the Remuneration Committee /

Selection and Appointment Committee €8,998

Member of the Remuneration Committee /

Selection and Appointment Committee

€6,748

3 Share ownership of the Supervisory Board

The current members of the Supervisory Board do not

own any (depository receipts for) shares in TKH.

4 Comparative information on remuneration

The table on the right shows a five-year comparison of

the changes in the remuneration of members of the

Supervisory Board.

Comparative information on remuneration

(x €1,000)

2024 2023 2022 2021 2020

P.W.B. Oosterveer, chairman

88 62 36

J.M. Kroon MBA 65 63 60 58 58

C.W. Gorter 70 68 64 60 58

A.M.H. Schöningh

58 56 52 51 34

W.A.A. Peek

R.L. van Iperen

17 75 69 53 53

A.J.P. De Proft

23 68 68

P.P.F.C. Houben

23 55

Total remuneration 335 324 304 313 326

1 As of May 2022.

2 As of May 2020.

3 As of May 2024.

4 Up to and including May 2024.

5 Up to and including May 2022.

6 Up to and including May 2021.

TKH Group Annual Report 202466

Corporate Governance

TKH Group N.V., a public limited liability company under Dutch law, applies the

two-tier board 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 derive 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”).

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 for each of these deviations are described below.

Term of appointment of the Executive Board

The terms of appointment for the current CEO and CFO

are not limited to the four-year term prescribed by the

Code. TKH takes the position that contractual agree-

ments made in the past cannot be modified, that existing

employment contracts should be respected, and that the

limitation of the appointment is not appropriate. It should

be noted, however, that performance is assessed

annually and the term of appointment is evaluated on

an ongoing basis. However, the maximum four-year term

of appointment does apply to the third member of the

Executive Board. A maximum term of four years also

applies to newly appointed members of the Executive

Board, and the best practice provision is applied in such

cases.

Share plan

There is a share plan for the Executive Board, but no

share option scheme. The share plan involves a financial

contribution by the Executive Board as the individual

members have to purchase the same number of shares at

their own costs as they are awarded within the framework

of the share plan. Because this involves a financial contri-

bution from Executive Board members, it has been deter-

mined that the shares must be held for at least three

years. Additionally, as 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. The Internal

Audit team has been expanded in early 2024, which will

further strengthen its independent position. According to

best practice provision 1.3.2 of the Code, the functioning

of the internal audit function should be assessed at least

every five years by an independent third party. The evalu-

ation of the Internal Audit function is conducted internally

on a yearly basis. The external evaluation is scheduled for

2025.

General Meeting of Shareholders

A General Meeting of Shareholders is held annually.

Extraordinary General Meetings are held as often as the

Executive Board or Supervisory Board deems desirable

and also as often as shareholders and/or holders of

depositary receipts, representing at least 10% of the

67Annual Report 2024 TKH Group

issued capital, request the Executive Board or Super-

visory Board in writing to do so, specifying the items to

be discussed. With regard to invoking a response time

concerning proposals for fundamental strategy changes,

TKH has applied the legal provision in Article 2:114b of

the Dutch Civil Code 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

Foundation Office”) holds ordinary shares in the company.

In exchange for these shares, TKH Trust Foundation

Office issues depositary receipts for those shares.

The voting rights to the shares are vested in TKH Trust

Foundation Office. Upon request, TKH Trust Foundation

Office will authorize the holders of depositary receipts to

vote for the shares for which the holder holds depositary

receipts at a General Meeting specified in the proxy, to

the exclusion of TKH Trust Foundation Office. The autho-

rization is unrestricted and is therefore not subject to any

exchangeability limit. TKH Trust Foundation Office is not

required by law (article 2:118a of the Dutch 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 Foundation Office, the

voting right of a holder of a depositary receipt is funda-

mentally in conﬂict with the interest of the company.

In the event of one of these scenarios, TKH Trust

Foundation Office 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 protect the interests of

shareholders, holders of depositary receipts and other

stakeholders. This means that the company’s intellectual

property and its commercial interests are protected,

which is also important for sustainable 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 accor-

dance with the applicable law in Article 2:118a of the

Dutch Civil Code. This is in derogation of the principle of

the Code.

TKH Trust Foundation Office exercises the rights attached

to the shares in such a way that the interests of the

company, its associated businesses, and all its stake-

holders are protected to the greatest extent possible,

instead of focusing primarily on the interests of the

holders of depositary receipts, as defined in best-practice

provision 4.5.5 of the Code. The TKH Trust Foundation

Office thus exercises its voting right in line with legal

provision Article 2:118a of the Dutch Civil Code. In the

General Meeting of Shareholders, the Board of TKH Trust

Foundation Office 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.

TKH Group Annual Report 202468

Risk management

The Executive Board is responsible for complying with all relevant primary

and secondary legislation and for managing the risks associated with the

company’s activities through the implementation of appropriate internal risk

management, control, and auditing systems. This involves surveying and

analyzing the risks related to the company’s strategy and activities, estab-

lishing the risk appetite, and defining the necessary measures to manage and

monitor the risks. The Executive Board is accountable to the Supervisory

Board for setting up effective and well-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:

•

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 its operating companies.

•

The TKH Manual containing:

•

regulations and guidelines for decision-making

procedures and authorization levels for the

management of our operating companies;

•

guidelines on the treasury policy (cash and foreign

exchange management), as well as various rules of

conduct, such as policy approval procedures, a

Code of Conduct for staff members, a whistleblower

procedure, and a privacy policy; and

•

guidelines for internal management and control

measures including IT controls, internal and external

financial and non-financial reporting, insurance, and

how to deal with claims.

•

A “

strategic scorecard”, which is issued every quarter or

more frequently if necessary. It features “high-lights” and

“low-lights”, and (potential) risks per business segment.

It also contains related short- and medium-term action

points for discussion between the Executive Board and

management of the operating companies.

TKH’s risk management policy reﬂects the organization’s

size and decentralized structure. The components of this

risk management policy are assessed by Internal Audit,

focusing only on continuing operations. The main risks of

Risk Management structure

ICF & TCF

Manuals

Reporting

Analysis

Internal Audit

Finance & Control

Legal

Tax

Compliance Officer

Sustainability

Supervisory Board

Audit Committee

Reporting and discussion on Risks and Mitigation

Strategic scorecard

Highlights & Lowlights

Reporting

Deep dives

Company visits

Executive Board

Reporting and discussion on Risks and Mitigation

Budgets Reporting Meetings

Operating Companies / Cluster Management

69Annual Report 2024 TKH Group

Control Environment

How well do we manage the risks?

Risk data infrastructure

How do we collect the information

needed to manage risk?

Expertise

What do we do with the risk?

Risk appetite

What is our risk appetite?

Measurement

Which risks are major versus minor?

Governance & policy

How do we assess risks?

Stress test

What else could go wrong?

Scope

What are the risks?

each operating company are identified and analyzed, and

their potential impact on the operating company is deter-

mined. For specific issues, including IT & Security and

sustainability, external specialists are engaged on a

project basis. The results of these assessments are

discussed with the Executive Board. The most important

findings of the assessments conducted by Internal Audit

are discussed with the Audit Committee of the Super-

visory Board. We follow the guidelines of the Institute of

Internal Auditors (IIA) to ensure the internal audit function

meets the IIA standards as closely as possible.

The Executive Board, internal Legal Advisor, Director

Finance & Control, Tax Director, and Compliance Officer

also evaluate the risk management system. The design

and operation of the 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 external

auditor’s audit strategy 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 properly

manage risks, responsibilities, and competencies. TKH

considers a suitable risk management model to be an

important tool for creating sustainable 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 through short lines of communi-

cation and is supported by closely monitoring 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

responsible for the (potential) risks they take. They are also

Risk culture

expected to adhere to the principles of TKH’s culture and

to act in accordance with TKH’s Code of Conduct. At the

same time, we are committed to ens

uring a safe work

environment in which our employees can excel, regard-

less of their background, gender, or position. The Code of

Conduct is fundamental to everything we do and

describes how we act as a company and within the

company, how we make decisions, and how we deal with

different dilemmas. We have established a procedure that

enables employees to report any suspicion of conduct

that is unlawful or violates the Code of Conduct, including

behavior related to sexual harassment, gender inequality,

and abuse of power. Reports are reviewed and investi-

gated 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 2024

In 2024, 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 internal control. When deficiencies in

the administrative organization and internal control are

observed, areas for improvement are identified. The 2024

findings included the payment process, supplier master

data management, purchase management, minor

reconciliation differences in financial and sustainability

reporting and internal controls carried out including docu-

mentation and consistency in way of working regarding

sustainability reporting. Continuous monitoring enables

us to adapt the internal risk management and control

system to changing internal and external conditions as

necessary. In 2024, we continued our focus on further

TKH Group Annual Report 202470

embedding the Internal Control Frame-work in our oper-

ating companies and on further standardizing controls

within the 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, IT & Security

risks 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. In 2024, we have carried

out specific assessments on the implementation of the EU

NIS2 Directive.

Several small and non-material security incidents occurred

during the year under review. However, we experienced

one larger incident due to a successful ransomware attack

at one of our operating companies, which impacted

access to operating systems for two weeks but without

material impact. The incidents reinforce the need to

remain vigilant to IT Security risks.

In 2024, we focused on the implementation of the CSRD

(Corporate Sustainability Reporting Directive) and the

related ESRS (European Sustainability Reporting

Standards). Although there is not yet a formal statutory

requirement to report in accordance with the CSRD due to

the delayed transposition, TKH prepared its sustainability

statements 2024 based on the CSRD on a voluntary basis.

At the same time, we obtained a voluntary assurance on

the sustainability statements. The CSRD requires compa-

nies to report on quantitative and qualitative datapoints on

sustainability topics assessed as material. This led to the

extension of the existing non-financial KPIs and reporting

through our reporting system Cognos. In addition, infor-

mation has been collected manually, for example related

to certain scope 3 emission categories. Because this is

the first year of CSRD reporting and data collection for

certain datapoints, partly manually, and due to the

complexity and higher degree of judgements and estima-

tions, changes in the assumptions and estimates could

result in for example different GHG emissions than those

recorded in the sustainability statements in this annual

report 2024. In the year under review, Internal Audit

performed reviews on selected non-financial reporting

KPIs and operating companies and identified areas for

improvement and optimization. No material deficiencies

were identified. In 2025, we will continue to develop the

review activities related to non-financial information, with

the ambition to include all CSRD-related quantitative

datapoints in the scope of internal audit over time.

In the year under review, we started the implementation of

the risk management statement (VOR) which is required for

Dutch stock listed companies in 2025 as part of the Dutch

Corporate Governance Code. We also performed specific

internal audits on the implementation of the Tax Control

Framework related to VAT at selected operating companies

in the Netherlands. Finally, we also paid specific attention

to the application of the sanction regulation.

Risk overview

The risk connectivity matrix shows the most important

sks for TKH. We 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. The table also

includes the risk trend and risk appetite. The risk trend is

the risk development compared to the previous year. The

risk appetitive represents the risk (amount) we are willing to

accept in pursuit of our strategic objectives. In addition, a

link has been made with the material sustainability topics

as identified through the double materiality assessment

performed under the CSRD. More detailed information on

the material sustainability-related impacts, risks and

opportunities is included in the sustainability statements.

It is the duty of the Executive Board to weigh the business

opportunities against the expectations and interests of

stakeholders. Decisions to change or refine our business

models are made by the Executive Board in accordance

with TKH’s risk appetite. A balance is explicitly sought

between acceptable risk, on the one hand, and entrepre-

neurship conducted in the context of long-term value

creation, on the other hand.

Other relevant risks

In addition to the key risks included in the risk connec-

tivity matrix, we have identified other risks that are also

included in TKH’s internal risk management system.

These include, among other things, the following risks:

•

Natural disasters or incidents in production facilities

e.g. accidents in production facilities that threaten

business continuity.

•

Infringement of intellectual property (IP) rights of and

by third parties.

•

Inadequate funding.

•

Impact of a (global) pandemic on the world economy,

the (end) markets in which TKH is active, and its

business operations.

71Annual Report 2024 TKH Group

Risk matrix – Our main risk

RIsk area Risk category and topics Risk description Material sustainability topic (CSRD)

Risk

trend

Risk

appetite

Strategic

1. Market & Geopolitics

•

Mar

ket / geopolitics

developments

•

Conﬂi

s / wars

•

Protectionism / import duties

•

ssion

Inﬂuence of global economic, market and geopolitical developments on the execution of the strategy

and financial position and results of TKH.

•

Management of relationships with suppliers

2. Portfolio

•

Inn

ovat

ion

•

Techn

olo

gy development

•

Threat to TKH’s long-term value creation due to insufficient technology development, innovation and

application of AI.

•

Sustainab

le innovati

3. M&A agenda

•

quisi

tions

•

Int

egra

tion

•

vest

ments

Failure to successfully integrate (acquired) and/or divest companies can result in lower than expected

profit contribution and the risk of impairment. Changing M&A market circumstances (e.g. interest

developments) can impact (the timing of) our divestment and growth strategy program.

Operational

4. Sustainability

•

footprint, climate change

•

Resource use and waste management

•

Pollution

•

Water consumption

Possible impact of climate change on our strategy and business model. Unsustainable business

operations can have an adverse effect on the environment as well as on the (future) business. Future

implementation of CO2 tax/pricing could mean an increase in operational and compliance costs.

Non-compliance with ESG and material CSRD topics, including pollution and water management, and

not meeting ESG and defined CSRD targets and ambitions, can impact our operations and reputation.

•

GHG em

issi

ons, energy efficiency and con-

sumption (climate change mitigation)

•

Resou

rce

inﬂows, waste, and waste recycling

•

Poll

utio

n of air, soil, and water

•

Wate

consumption

5. IT & Security

•

IP protection

•

Continuity of operations

•

Cybersecurity

•

Privacy and GDPR

Risk of breach of data availability, confidentiality, and integrity (including IP), resulting in damage for

the organization or customers.

•

Priva

(cybersecurity)

6. Personnel

•

Scarcity

•

Development opportunities

•

Diversity

•

Healthy and safe work environment

Scarcity of well-qualified personnel and inability to retain qualified personnel. Health and safety

incidents can cause risks for employees and lead to business stagnation. Inability to reach (young)

potential employees can result in shortage of staff. A non-diverse workforce can result in limited per-

spectives, skills, and experiences, which can lead to decreased creativity, innovation, and

problemsolving within TKH.

•

Div

sity

•

Hea

th and safety

7. Supply Chain

•

Raw materials

•

Components

•

Energy

•

Working conditions in value chain (Connectivity)

Important raw materials such as copper, aluminum and plastics, and technical (electronical)

components have long delivery times or are unavailable or only available in limited quantities. Limited

availability of (green) energy could result in (potential) shortages of energy and higher price levels.

Failing to address relevant human rights related risks in the value chain (Smart Connectivity systems)

can result in regulatory fines, legal penalties, and reputational damage.

•

Management of relationships with suppliers

•

Child / forced labor, health and safety

(workers in the value chain)

8. Project Management Risk of projects not being delivered according to specification, agreements, time schedule, and

planned margins. Expanded scope in projects towards turnkey structures increases contract value

and risk exposure due to the extension of scope, for example by including besides the supply the

engineering, termination and testing, and installation (e.g. inter-array cable contracts).

Financial and

reporting

9. Currencies Volatility of currencies, which can put pressure on profit margins.

10. Interest Volatility of interest rates, which can put pressure on net result.

11. Cost inﬂation

•

Raw materials

•

Components

•

Labor costs

•

Energy costs

Inﬂation of costs, including (volatility of) raw material prices, components and labor costs, which can

put pressure on profit margins.

12. Reporting

•

Financial reporting

•

Non-financial reporting (CSRD)

Risk that TKH’s financial reporting contains material errors, and that new reporting requirements

cannot be met timely and accurately. Inadequate disclosure of environmental, social, and governance

(ESG) factors in accordance with the CSRD may lead to reputational damage and regulatory scrutiny.

These can impact stakeholder trust and business resilience.

Compliance

13. Legal & Regulatory

•

Sanctions

•

Fraud, corruption, bribery

•

Use of agents

•

Non-compliance with law and regulations (incl. AI)

Damage (including reputation) due to violation of legislation and regulations including export and

sanction regulations, unfair competition, fraud, corruption, and bribery.

•

Corporate culture

•

Corruption and bribery

•

AI and algorithm ethics

14. Tax Damage (including reputation) due to violation of tax legislation and regulations.

avoiding low medium highincreased equal decreased

TKH Group Annual Report 202472

Strategic

1 Market & Geopolitics

The impact of global economic and geopolitical develop-

ments and conﬂicts (such as the Russia-Ukraine war) on

the implementation of the strategy and the financial

position and results of TKH. Economic and political

confrontations between world powers (trade tariffs/

barriers, protectionism, availability and price of energy),

the erosion of trade agreements, and the impact of (global)

inﬂation as well as a potential recession may impact TKH’s

turnover and results.

Our specific risk mitigation measures:

•

Diversification of activities across multiple product/

market combinations.

•

Internal efficiency programs and cost reduction

programs (of at least €15 million announced in 2024).

•

Expansion of fibre optic cable production capacity in

Europe, partially replacing production capacity in China.

•

Relocation of fibre optic cable production capacity from

the Netherlands to Poland.

• Energy reduction programs and conversion to alter-

native energy sources.

•

Flexible shell by making use of temporary staff and by

outsourcing the production of mainly commodity

products and product modules.

•

Geographical spread across Europe, North America,

and Asia with multiple production sites, with a tendency

to bring production capacity closer to end markets

where possible.

•

Solid financial balance sheet and position.

•

Ongoing attention to risk analysis in the implementation

of the strategy and Accelerate 2025 strategic program.

2 Portfolio

Insufficient technological development, innovation and

application of AI can threaten TKH’s long-term value

creation. These risks may emerge in the following areas:

•

The pace of technological development.

•

The application of Artificial Intelligence in (new)

portfolio.

•

Conservativism in certain end markets to embrace our

new disruptive technologies.

•

The execution of the R&D roadmap.

•

The contribution of our innovations to the sustainability

performance of our customers.

•

Our competitor’s new technologies.

•

Our payback capacity.

•

The harmonization of niche specifications into

standardized commodity products and technologies.

Our specific risk mitigation measures:

•

Generate at least 10% of our turnover from innovations

that have been introduced in the last two years.

•

Acquisitions to strengthen market position and/or

product portfolio.

•

Spend approximately 4% of our turnover on R&D in the

last few years.

•

Focus continuously on innovation and executing the

roadmap, including time-to-market.

•

Creation of an AI center of excellence, developing state

of the art algorithms and applying them to real-world

R&D challenges across the TKH Group.

•

Ensure that the Executive Board and local management

frequently discuss technology and innovation develop-

ments.

•

Capitalize on technology leadership by leveraging and

accelerating growth from innovations and by utilizing the

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

capitalizing on market growth driven by relevant

megatrends.

3 M&A Agenda

Failure to successfully integrate acquired companies or

execute divestments of business activities can result in

lower-than-expected profit contributions and the risk of

impairment. Changing M&A market circumstances (e.g.

interest rate developments) may impact (the timing of) our

divestment and growth strategy program.

Our specific risk mitigation measures:

•

Apply necessary procedures and guidelines and

organize sufficient expertise for valuations and due

diligence.

•

Ensure rapid integration of acquired companies into

TKH’s reporting and control systems.

•

Harmonize business processes and systems where

necessary and desirable.

•

Continue to focus on identifying, creating and exploiting

synergies.

•

Ensure continued focus on portfolio management.

Restructure or exit activities with limited potential for

value creation or strategic overlap: limited strategic fit,

low return on sales, and organic growth potential.

73Annual Report 2024 TKH Group

Operational

4 Sustainability

The potential impact of climate change and other material

sustainability topics such as CO2 emissions, climate

change, availability of resources and waste management,

pollution, and water consumption/availability on our

strategy, business model, and reputation. Unsustainable

business operations have an adverse effect on the

environment and on the (future) business. Future imple-

mentation of CO2 tax/pricing could mean an increase in

operational and compliance costs. Non-compliance with

ESG and material CSRD topics, including pollution and

water management, and not meeting ESG and defined

CSRD targets and ambitions, can impact our operations,

access to markets/customers, and reputation.

Our specific risk mitigation measures:

• Based on the recommendations of the Task Force on

Climate-Related Financial Disclosures (TCFD), we are

carrying out a comprehensive analysis of potential

climate change risks and how these risks can be

converted into opportunities.

• Continue to optimize our production processes via our

operational excellence program.

• Deliver a strong performance on our sustainability

targets, in particular CO2 neutrality by 2030 (scopes 1

and 2), and further develop a sustainable portfolio based

on SDG criteria.

• Engage with suppliers and customers on topics related

to decarbonization in the value chain.

• Continue to improve relevant ESG ratings by external

rating agencies.

• Measurement program to monitor pollutions to air, water

and soil, in collaboration with external experts.

• Implement water policy including commitment to reduce

water consumption.

• Continue to increase share of recycled content as part

of our resource inﬂows.

• Continue to work towards achieving our waste reduction

and recycling target so we can make a responsible and

demonstrable contribution to the circular economy.

• Health and safety, and diversity programs and targets.

• More information can be found in the sustainability

statements section.

5 IT & SECURITY

IT & Security concerns the risk of a breach of data avail-

abi

lity, confidentiality, and integrity (including IP). This also

includes cyberattacks that compromise data (including IP)

to disrupt business operations and infrastructure. This

could lead to damage for the organization and/or cus-

tomers. The following elements are important in this respect:

• A decentralized IT landscape.

• The use of multiple ERP systems.

• The continuity of production sites.

• T

he protection of developed technologies (IP protection).

• Data protection legislation, including GDPR.

Our specific risk mitigation measures:

• TKH has issued an IT & Security Policy containing

guidelines outlining the requirements for an ICT infra-

structure, including key IT controls, partly within the

context of cybercrime risks.

• Co

mpanies in the same region or cluster are encouraged

to achieve economies of scale in the field of ICT.

• IT managers from key operating companies discuss

important IT developments, trends, and risks.

• The internal and external (IT) security environment is

tested by a specialized external agency.

• Internal expertise is used to assess security environ-

ments of operating companies.

• Internal guidelines on data protection are established.

• Awareness of the need for information security is raised

through ongoing training and frequent newsletters on

relevant (cyber) topics (Security Awareness Program).

• Cyber insurance to cover costs from major incidents

and secure external expertise in the field of IT (recovery),

cybersecurity, legal and other expertise depending on

the incident.

• Internal Audit oversees the implementation of data

protection guidelines.

• Implementation of a AI Tools Policy in 2024 to establish

guidelines for the appropriate use of AI within TKH,

including the use of Generative AI and Algorithmic AI

tools, to ensure that AI technology is used to enhance

productivity, efficiency, and decision-making while

complying with applicable law and respecting privacy,

confidentiality, and data security.

• The risks are identified for operating companies with a

high and medium risk in this area, based on size,

technology, and reputation, and recommendations were

made to further mitigate these risks. These risks and the

monitoring of risk management are regularly discussed

with the Executive Board and the Audit Committee.

• Specific assessments of the risk of ransomware and our

resilience should such an event occur.

TKH Group Annual Report 202474

6 Personnel

A shortage of highly qualified personnel

and the inability to

retain qualified personnel can impact the (progress of the) of

TKH’s strategy. Health and safety incidents can create risks

r employees and cause business to stagnate. Inability to

reach young potential employees can lead to staff shortages

A non-diverse workforce can result in limited perspectives,

skills, and experiences, which can lead to decreased

creativity, innovation, and problem-

solving within TKH.

Our specific risk mitigation measures:

• Performance/talent management programs in each

operating company.

• Management Development Programs, partly in collabo-

ration with Nyenrode University.

• Conduct regular employee satisfaction surveys.

• Use our good reputation as an attractive employer to

recruit talented employees.

• Set up cooperation programs between operating

companies and training institutes.

• Health and safety, and diversity programs and targets.

• Use employer branding and referral recruitment to reach

and engage future talent.

• Increase attention on safety by tightening safety

standards and creating even greater safety awareness,

and by implementing ISO 45001.

• Creation of engineering centrum In India for tire building

systems.

• Facilitate healthy and safe home-working practices.

• Communicate frequently with our employees through

various channels about relevant general and business

developments, and our impact on sustainability topics.

7 Supply chain

A situation where important raw materials such as copper,

aluminum, steel and plastics, and technical (electronic)

components have long delivery times, are unavailable or

only available in limited quantities, as well as the limited

availability of energy and price increases related to raw

materials and energy can put pressure on profit margins.

Failing to address relevant human rights related risks in

the value chain (Smart Connectivity systems) can result in

regulatory fines, legal penalties, and reputational damage.

Our specific risk mitigation measures:

• Maintain high level of inventory of critical raw materials

and components where applicable.

• Redesign products to increase the use of alternative

materials and components with better availability/pricing.

• Use alternative suppliers.

• Adapt terms and conditions in purchase and sales

contracts.

• Optimize (regional) portfolio and local manufacturing

footprint.

• Introduce energy reduction programs, targets, and

switch to alternative energy sources.

• Perform risk assessments on suppliers to identity high

risks related to environmental and human rights aspects,

followed by an action plan and monitoring of implemen

tation of the planned actions.

• Develop cooperation programs between operating

companies to discuss developments, trends, and risks

and to leverage buying power and knowledge within the

group and business segments.

• Ensure that developments, including inventory positions

and purchasing conditions concerning important raw

materials and components are discussed frequently

between the Executive Board and local management.

8 Project management

Inadequate project management can result in the risk that

projects will not be delivered to specification, on time, to

budget and within agreed margins. Expanded scope in

projects towards turnkey structures increases contract

value and risk exposure due to the extension of scope, for

example by including besides the supply the engineering,

termination and testing, and installation (e.g. inter-array

cable contracts).

Our specific risk mitigation measures:

•

igher investment in qualified staff, training, and education.

Ensure sufficient knowledge and professional competence,

also related to turnkey (inter-array cable) contracts.

• Involve external experts to limit project risks related to

complex and technical topics.

• Develop/team-up with competent partners in

back-to-back structures.

• Back-to-back arrangements with subcontractors.

• Use generally accepted project management approaches

and tools to limit project risks, define project milestones,

and monitor development of projects and risk exposures.

• Ensure that guidelines and procedures are in place for the

approval of 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

management.

• 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 counsel.

• Align insurances with the risk exposure on large projects.

• Constantly evaluate lessons learned and incorporate

them into the risk model, which may lead to strict accep

tance criteria.

Operational

75Annual Report 2024 TKH Group

Financial and reporting

9 Currencies

Currency volatility, which can put pressure on profit

margins.

Our specific risk mitigation measures:

• Treasury Statute that establishes a currency risk

management approach, including responsibilities, autho-

rizations, and reporting.

• 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 arising from the translation of net

investments into currencies other than the euro is

generally not hedged. Monetary assets and liabilities in

the same currency are netted as much as possible to

reduce exposure.

• Time differences between the settlement of forward

transactions and sales and purchase contracts are

managed by using foreign currency bank accounts or

by rolling over forward contracts.

10 Interest

Interest rate volatility, which can put pressure on the net

result.

Our specific risk mitigation measures:

• The interest rate policy is determined at corporate level.

• A treasury statute that establishes a interest risk

management approach, including responsibilities,

authorizations, and reporting.

• Balances with credit institutions are compensated to

minimize interest charges.

• Long-term financing is obtained at variable rates, where

appropriate, fixed by means of interest rate swaps.

• Reduce our working capital where applicable by means

of working capital reduction programs per operating

company.

• 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, and interest and currency volatility.

11 Cost Inﬂation

Cost inﬂation including (volatility of) raw material prices,

components, energy, and labor costs can put pressure on

profit margins.

Our specific risk mitigation measures:

• Periodically analyze the impact of price changes per

operating company based on a standard template.

• Frequently adjust market price lists where applicable.

• Redesign products to use alternative materials and

components with better prices.

• Optimize (regional) portfolio and local manufacturing

footprint in line with labor cost developments.

• Introduce operational excellence programs to improve

(labor) efficiency.

• Develop energy saving and efficiency programs and

eliminate (part of) price risks through medium-term

energy contracts.

• Use alternative modes of transportation to optimize

transport efficiency, costs, and sustainability impact.

Specific risk-mitigating measures for raw material

prices related to copper and aluminum:

• The copper and aluminum positions of each operating

company are monitored for the economic stock levels,

stock prices, rate of turnover, and the expected

relationship between copper prices and selling prices

(price elasticity).

• Copper and aluminum price developments are factored

into the selling price of products and/or services where

possible, or temporarily hedged on the futures market.

• Raw material purchases for larger projects are hedged

to eliminate price risks for customers.

• Copper and aluminum price developments, economic

stock positions, and hedges are reviewed every month

and discussed with TKH’s CFO.

• Derivatives can be 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 the raw material is needed for

production.

TKH Group Annual Report 202476

12 Reporting

Risk that TKH’s financial reporting contains material

errors, and that new reporting requirements cannot be met

timely and accurately. Inadequate disclosure of environ-

mental, social, and governance (ESG) factors in accor-

dance with the CSRD may lead to reputational damage

and regulatory scrutiny. These can impact stakeholder

trust and business resilience.

These reporting risks mainly relate to the following

material items in the financial and sustainability state-

ments:

• Turnover – timing of turnover recognition.

• Goodwill and purchase price allocation – valuation and

impairment testing.

• Development costs – valuation and impairment testing.

• Inventory – valuation.

• Contract assets and liabilities – valuation.

• Business combinations / held for sale – recognition and

valuation of acquisitions and divestments.

• Sustainability statements and KPIs including:

• value chain information;

• expected developments to reach 2030 targets;

• scope 3 emissions;

•

estimations used to calculate quantitative datapoints;

and

•

2024 is the first reporting year and the framework and

implementation guidance are still in development.

Different interpretations of the CSRD and ESRS

requirements could result in different outcomes and

reporting.

Our specific risk mitigation measures:

• Internal procedures and guidelines for internal and

external financial reporting and assurance.

• Availability of a Sustainability Reporting Manual.

• TKH has developed internal guidelines in accordance

with IFRS, including requirements for the capitalization

of development costs.

• Regular controller meetings are organized to discuss

important reporting topics.

• Training and education of (financial) staff.

• Deep dive sessions to discuss CSRD reporting and

other sustainability topics.

• Involvement of external (topical) experts on certain

complex sustainability topics.

• Engage with suppliers and customers related to

decarbonization in the value chain, obtain supplier and

customer specific (carbon) data.

• Regular impairment testing, including the annual

strategic planning.

• Use of business intelligence tools to gain early insight

into risks.

• Representation letter and in-control statement for each

operating company.

• Internal Audit performs financial audits and internal

audits on non-financial information.

•

Assurance by the external auditor on the financial state-

ments.

• Limited assurance by the external auditor on the

sustainability statements.

• More information can be found in the sustainability

statements section.

Compliance

13 Legal & Regulatory

Failure to comply with laws and regulations – including inter-

nal guidelines – can result in damage. Examples include:

• Unfair competition, export violations, and sanctions

programs that can result in significant penalties and

reputational damage.

• Global operations and the use of agents who may

expose TKH to local bribery and corruption risks.

• Undesirable or unethical conduct by employees that

results in unacceptable behavior towards other

employees or fraud-related issues.

• AI algorithm could result in harms which may result from

the use of AI algorithm, such as unjustified actions, bias,

discrimination or breach of privacy (AI ethics).

Our specific risk mitigation measures:

• Internal guidelines include internal control measures,

management responsibilities, and authorization require-

ments.

• Internal guidelines on compliance with sanctions and

export regulations, including a checklist.

• Monitoring of financial ﬂows by TKH, including by:

• monitoring transactions through the central treasury

system;

• establishing banking authorizations; and

• setting credit limits for each operating company, with

no local credits allowed with banks outside of TKH’s

banking group, unless approved by TKH.

• The use of banks prescribed by TKH unless another bank

is required locally because only a local bank can provide

the required service.

• Controller meetings and the international management

meeting will address the issues of sanctions, fraud,

corruption, payment frameworks, and bribery by means

of theory and case studies.

Financial and reporting

77Annual Report 2024 TKH Group

14 Tax

TKH is exposed to tax risks that could result in double

taxation, penalties, and interest payments. The source of

the risks could arise from local tax rules and regulations as

well as international and EU regulatory frameworks

(amongst others European ATAD directives, DAC initiatives,

country-by-country reporting and Pillar Two). These

include, but are not limited to, 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 related to

tax loss, interest and tax credits carried forward, and

potential changes in tax laws that could result in higher tax

expenses and payments. These risks can have a signif-

icant impact on (local) financial tax results, which, in turn,

could adversely affect TKH’s financial position and results.

Our specific risk mitigation measures:

• Centralized monitoring of compliance in relation to

developments in (new) legislation and regulations in the

area of tax laws (both national and international),

sanctions regimes, and general tax and legal develop-

ments, with a focus on specific risks in the areas of

transfer pricing, compliance with international standards

such as Pillar Two, permanent establishment, and VAT.

• Availability and development of transfer pricing

documentation in accordance with OECD Guidelines

and compliance with local regulations.

• Periodic monitoring of the financial performance of

operating companies in accordance with the transfer

pricing documentation.

• Maintaining good relations with tax authorities based on

mutual respect, transparency, and trust.

• Making use of external (tax) advisors for specialized

subjects.

Compliance

• Through the TKH Code of Conduct, our employees are

aware that they should adhere to our business ethics

and confirm this by signing this Code of Conduct.

• Employees can report suspicions of misconduct inter-

nally and through a whistleblower policy. Such reports

will not have any consequences for the position of

whistleblowers, provided they follow the procedure

established 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

monitored (zero tolerance).

• Through the TKH Code of Supply, our strategic

suppliers are aware that they should follow our business

ethics and confirm this by signing this Code of Supply.

Compliance with this code is verified during supplier

audits.

• Strengthen internal legal skills and capacity.

• Internal Audit conducts internal audits on non-financial

information focusing on the most important risks,

including supplier assessments and internal policies

(e.g. related to sanctions).

• AI algorithms are classified through internal risk assess-

ments, using the EU AI Act as guiding principle.

• Establishment of an AI Ethics committee responsible for

developing policies and supervising the risk assess-

ments performed by the operating companies.

• Further rollout, monitoring and continuous update of the

Tax Control Framework.

• Tax reporting, 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.

• The use of theory and case studies during internal

training activities to address a broad spectrum of tax

issues (including customs) and tax dilemmas.

TKH Group Annual Report 202478

Risk quantification and sensitivity analysis

For the most important risks, we have, where possible,

quantified the impact on the result and financial position

of TKH should these risks occur. A sensitivity analysis is

also included. The financial statements, including note 20,

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

transactions to which TKH is exposed, related to capital,

liquidity, interest, currency, credit, and price risks.

Risk quantification and sensitivity analysis

change impact on assumptions relates to risk

Turnover 1% €8.9 million EBITA No adjustment of operating costs. 1, 2, 3, 9, 11

Raw material price

copper

10% €1.8 million EBITA No derivatives to hedge price risks. 11

Gross margin 1% €17.1 million EBITA No adjustments of operating costs. 1, 2, 3, 8, 9, 11

Operating costs 1% €7.6 million EBITA No adjustment of turnover/gross margin. Operational and

financial risks

Currencies – financial

instruments

10% €14.4 million Result before tax All other variables remain constant. 9

Currencies – financial

instruments

10% €38.2 million Group equity All other variables remain constant. 9

Interest 1% €5.1 million Result before tax Net bank debt including deduction of interest

rate swaps held at variable interest rates.

Financial risks

Interest – financial

instruments

1% €4.3 million Group equity Based on concluded interest rate swaps. Financial risks

Going concern and outlook

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 condi-

tions, possible changes in results based on these condi-

tions, as well as our ability to adjust our cost structure in

response to changing economic conditions and turnover

levels. Our budget also takes into account the total

amount of cash and cash equivalents and credit facilities

available as at December 31, 2024, the possibility of

renewing financing agreements and attracting additional

financing, and whether we are operating within the

financial ratio agreed with the banks in the covenant.

On this basis, we believe that our available funds at the

end of 2024 will be sufficient to finance our activities,

investments, and existing contractual obligations for at

least the next 12 months.

79Annual Report 2024 TKH Group

Management statement

The Executive Board is responsible for

the design and effectiveness of the

internal risk management and control

systems. The purpose of these systems

is to identify and effectively manage

the most significant risks to which the

company is exposed.

During the year under review, Internal Audit assessed the

administrative organization and internal control systems

of TKH and its associated businesses, with a focus on

the most important risks and current themes. No material

shortcomings were found in the administrative organi-

zation and internal control. Improvements identified were

related to non-material shortcomings. The Director of

Internal Audit discussed the results of these audits with

the Executive Board and reported the main findings to

the Audit Committee. These activities did not result in

any material findings at the group level regarding the

administrative organization and the level of internal control.

Based on the financial results for the 2024 reporting year

and the expectations for the 2025 reporting year, the

Executive Board has assessed the company’s going

concern assumption. Current market conditions and

business plans for 2025 have been taken into account.

The Executive Board has also assessed the key strategic,

operational, sustainability, financial, 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 and Sustainability

Statements section of this annual report.

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 1.4.3 of the Dutch

Corporate Governance Code, the Executive Board

confirms that to the best of its knowledge:

i. the man

agement report (within the meaning of section

2:391 of the Dutch Civil Code) provides sufficient insight

into any shortcomings in the operation of the internal

risk management and control systems related to

strategic, operational, reporting, and compliance risks;

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 describes the material strategic, operational,

reporting, and compliance risks and uncertainties

that are relevant to the expectation of the company’s

continuity for a period of 12 months after the

preparation of the report.

In view of the above, the Executive Board confirms that it

is in compliance with best practice provision 1.4.2 of the

Dutch Corporate Governance Code. It should be noted

that the above does not imply that the internal risk

management and control systems provide certainty as to

the achievement of operational, sustainability, and

financial business objectives, nor can they completely

prevent all misstatements, inaccuracies, errors or losses,

incidents, fraud, or non-compliance with rules and regula-

tions.

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, 2024, the state of affairs at

TKH and its affiliated companies during 2024 (the

details of which are presented in the financial state-

ments), and that the management report describes the

fundamental risks facing the company.

Haaksbergen, the Netherlands, March 3, 2025

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

TKH Group Annual Report 202480

TKH shares

Listing on the stock exchange

TKH’

s (depositary receipts of) shares have been listed on

the Euronext Amsterdam stock exchange since 1953, under

the ticker symbol TWEKA and are included in the mid-cap

index (AMX). Options on TKH shares are listed on NYSE

Liffe, the European derivatives business of Euronext (ticker

symbol: TKG). TKH shares are also included in the Euronext

Next 150 Index, and the Euronext Tech Leaders segment.

TKH’s shares issued and outstanding

2024 2023

Ordinary shares

(nominal value € 0.25 each) 42,198,429 42,198,429

of which depositary receipts 42,069,736 42,077,884

of which registered shares 128,693 120,545

Priority shares

(nominal value € 1.00 each) 4,000 4,000

Total shares issued 42,202,429 42,202,429

of which held by the company 2,325,349 2,400,483

The number of depositary receipts of shares has decreased

by 8,148 compared to December 31, 2023 due to the

conversion of 8,148 depositary receipts of shares into

ordinary shares. At the end of 2024, the company held

2,325,349 of its own depositary receipts of shares. The

company may acquire depositary receipts of shares in its

own capital for purposes such as employee share, option

plans, and share buyback programs.

he ordinary shares, with the exception of the registered

shares of the company, have been transferred by notarial

deed to Stichting Administratiekantoor TKH Group

(“Stichting Administratiekantoor”), which issues depositary

receipts for the shares to the ultimate investors. Stichting

Administratiekantoor is the party entitled to the ordinary

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 power of attorney to vote for the shares corre

sponding 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 Annual General Meeting of Share

holders. The aforementioned power of attorney may be

limited, excluded or revoked by the Board of Stichting

Administratiekantoor in various situations specified by law

(see also Corporate Governance section). In such cases,

Stichting Administratiekantoor may (again) decide to

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 for shares is governed by administrative

conditions. The depositary receipts can be exchanged for

ordinary shares for a maximum of 1% of the total issued

capital in the form of ordinary shares. This total includes

both indirectly and directly held shares. The 1% rule does

not apply to the transfer of ordinary shares to the company

itself. Except as described under “Other information”,

the 4,000 priority shares do not carry any special rights.

The company has granted Stichting Continuïteit TKH an

option to acquire preference shares up to a maximum of

50% of the sum of the other outstanding shares at the

time that the preference shares are issued or up to 100%

of the sum of the other outstanding shares at the time the

preference 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 declaration to that effect with the Chamber of

Commerce. Stichting Continuïteit TKH has not acquired

any cumulative preference shares in TKH in 2024.

Further information on the capital structure of TKH is

included in note 7 to the company’s financial statements.

This information is incorporated by reference in the

management report.

Trading information

The following key figures per (depositary receipt of) share

apply in relation to the listing on Euronext Amsterdam.

Trading information

2024 2023

Annual turnover of shares 21,030,162 20,161,005

Highest price €44.78 €49.10

Lowest price €30.18 €33.64

Closing price €33.32 €39.50

Net earnings per share €2.50 €4.07

Dividend €1.50 €1.70

Price-earnings ratio as at the end

of the financial year 13.3 9.7

Dividend yield on closing price 4.5% 4.3%

Market capitalization at end of

financial year (in millions)

€1,329 €1,572

Shareholders

Under the Dutch Financial Supervision Act, shareholdings

of 3% or more must be disclosed to the Dutch Authority

for the Financial Markets (“AFM”). Based on the AFM

holders hold a stake of 3% or more in TKH.

81Annual Report 2024 TKH Group

Our major shareholders

Mandatory disclosing party Interest Date of last disclo

sure

HAL Trust (HAL Investments B.V.) 5.17% February 3, 2025

Goldman Sachs Group Inc. 3.11% January 28, 2025

Lucerne Capital Management, LLC 5.70% January 25, 2025

FMR LLC 5.08% May 31, 2024

Janus Henderson Group plc 5.01% March 21, 2024

TKH Group N.V. 5.00% November 24, 2023

AllianceBernstein L.P. 3.03% January 20, 2022

Vinke Amsterdam B.V. 5.84% May 28, 2020

Teslin Participaties Coöperatief U.A.

5.01% July 6, 2017

ASR Nederland NV 5.11% October 6, 2008

Dividend policy

TKH aims for an attractive return for its shareholders,

which is reﬂected in an appropriate dividend policy.

Healthy balance sheet ratios are very important for the

company’s continuity. In determining the distributable

dividend, TKH takes into account the amount of profit the

company needs to retain to carry out its medium- to

long-term plans, while also ensuring a solvency ratio of at

least 35%. Based on growth targets for the coming years,

TKH will aim to pay out between 40% and 70% of the net

profit before amortization and one-off income and

expenses attributable to shareholders.

The total dividend paid in 2024 of €67.8 million amounted

to a dividend payout ratio of 40.8% of the net profit before

amortization and one-off income and expenses attributable

to shareholders. The dividends were issued to the holders

of (depositary receipts of) shares in cash.

Investor relations

TKH’s investor relation activities are designed to ensure

that current and potential shareholders, analysts, and other

stakeholders are provided with timely, complete, and

consistent information. TKH’s investor relations activities

focus on helping the market understand our business, our

strategy, our markets, and our financial and sustainability

performance. TKH is committed to transparent reporting.

We communicate through our half-year and full-year

earnings releases and presentations, market updates,

quarterly analyst calls, the annual report, and other

information published on our investor relations website.

We host live webcast presentations of our half-year and

full-year results, conference call of our third quarter market

update, hold the Annual General Meeting of Shareholders,

and have frequent contact with major and other share

holders, interested institutional investors, and analysts

through roadshows, conferences, company visits, investor

days and one-on-one discussions. TKH’s activities comply

with the applicable regulations and guidelines of Euronext

Amsterdam and the Dutch Authority for the Financial

Markets (“AFM”), the Dutch financial markets regulator.

Contact

For further information, please contact

Jacqueline Lenterman, Director of Investor Relations

and Corporate Communications at +31(0)535732900,

j.lenterman@tkhgroup.com.

More information about TKH and its operating companies

is available on our website at www.tkhgroup.com.

May 13, 2025 Market Update Q1 2025

May 15, 2025 General Meeting of Shareholders

May 19, 2025 Ex-dividend date

May 20, 2025 Dividend record date

May 23, 2025 Payment of dividend

August 12, 2025 Publication interim results 2025

September 25, 2025 Capital Markets Day

November 11, 2025 Market Update Q3 2025

Financial Calendar

TKH Group Annual Report 202482

General information 84

Basis for preparation 84

Governance of sustainability issues 86

Strategy, business model, and value chain 89

Material impacts, risks, and opportunities management 94

Environmental information 99

Climate Change (E1) 99

Pollution (E2) 111

Water (E3) 113

Circular economy (E5) 115

Sustainable innovation (entity-specific material topic) 119

Social information 123

Our workforce (S1) 123

Diversity (S1) 127

Health and safety (S1) 129

Workers in our value chain (S2) 131

Consumers and/or end-users (S4) 135

Governance information 139

Business conduct (G1) 139

AI and algorithm ethics (entity-specific material topic) 146

Appendices 148

EU taxonomy disclosure 148

Datapoints derived from other EU regulation 151

Sustainability

statements

83Annual Report 2024 TKH Group

Disclosure Requirements covered by the sustainability statements

ESRS E2 – Pollution

E2-IRO-1 Pollution-related IROs 111

E2-1 Policies 111-112

E2-2 Actions 112

E2-3

Targets 112

E2-4 Pollution metrics 112

ESRS E3 – Water and marine resources

E3-IRO-1 Water and marine resources IROs 113

E3-1 Policies 113-114

E3-2 Actions 114

E3-3

Targets 114

E3-4 Water and marine resources metrics 114

ESRS E5 – Resource use and circular economy

E5-IRO-1 Resource use and circular economy IROs 115

E5-1 Policies 115-116

E5-2 Actions 118

E5-3 Targets 117

E5-4 Resource use and circular economy metrics 117

ESRS S1 – Own workforce

S1-SBM-2 Interests and views of stakeholders 123-126

S1-SBM-3 Own workforce IROs 123

S1-1 Policies

124, 127,

129

S1-2 Engaging with own workers and workers’

representatives

124-125

S1-3 Processes to remediate negative impacts and

channels for own workers to raise concerns

125-126

S1-4 Managing material impacts on own workforce 124-130

S1-5 Targets 127-130

S1-6 Characteristics of the undertaking’s employees 126

S1-9 Diversity metrics 128

S1-14 Health and safety metrics 130

ESRS S2 – Workers in the value chain

S2-SBM-2 Interests and views of stakeholders 131-132

S2-SBM-3 Workers in the value chain IROs 131

S2-1 Policies 131-132

S2-2 Engaging with value chain workers 132-133

S2-3

Processes to remediate negative impacts and

channels for value chain workers to raise concerns

133-134

S2-4

Managing material impacts on value chain

workers

131-134

S2-5 Targets 134-135

ESRS S4 – Consumers and end-users

S4-SBM-2 Interests and views of stakeholders 135

S4-SBM-3 Consumers and end-users IROs 135

S4-1 Policies 135-136

S4-2 Engaging with consumers and end-users 136-137

S4-3

Processes to remediate negative impacts and

channels for consumers and end-users to raise

concerns

136-137

S4-4 Managing material impacts on consumers and

end-users

135-138

S4-5 Targets 137

ESRS G1 – Business conduct

G1-GOV-1 The role of the administrative, supervisory and

management bodies

140

G1-IRO-1 Business conduct IROs 139

G1-1 Corporate culture and business conduct policies

and corporate culture

140-142

G1-2 Management of relationships with suppliers 144-145

G1-3 Prevention and detection of corruption and

bribery

143-144

G1-4 Confirmed incidents of corruption or bribery 144

ESRS 2 – General Disclosures Requirements

BP-1 General basis for preparation of the sustainability

statements

BP-2 Disclosures in relation to specific circumstances 84-85

GOV-1 The role of the administrative, management and

supervisory bodies

86-87

GOV-2 Sustainability matters addressed by management 86-87

GOV-3 Integration of sustainability-related performance

in incentive schemes

GOV-4 Statement on due diligence 88

GOV-5 Risk management and internal controls over

sustainability reporting

88-89

SBM-1 Strategy, business model, and value chain 89-92

SBM-2 Interests and views of stakeholders 92-93

SBM-3 Double materiality assessment results 95-98

IRO-1 Processes to identify and assess material

impacts, risks and opportunities

94-95

IRO-2 Disclosure requirements in ESRS covered by the

sustainability statements

MDR-P Policies, action plans, metrics, and targets 88

ESRS E1 – Climate change

E1-GOV-3 Integration of sustainability-related performance

in incentive schemes

E1-1 Transition plan for climate change mitigation 101

E1-SBM-3 Climate-related risks 99-100

E1-IRO-1 Climate-related IROs 99

E1-2 Policies 100-101

E1-3 Actions 104-106

E1-4 Targets 101-102

E1-5

Energy consumption and mix 110

E1-6 Gross Scopes 1, 2, 3, and Total GHG emissions 107

TKH Group Annual Report 202484

General information

We consolidated data for the non-financial reporting using

the same system as for the consolidated financial data

(Cognos). Any data procured through alternative methods,

such as estimation or extrapolation in our value chain, is

clearly marked as such. Data like this includes a level of

estimation uncertainty. This applies to certain categories

of the scope 3 emissions, for which the data has been

collected manually (category 1, 4, 9, 11 and 12). The

sustainability statements contains value chain information

related to scope 3 GHG emissions (ESRS E1 climate

change), ESRS S2 workers in the value chain, and ESRS

S4 customers and end-users.

No relevant pieces of information were omitted for reasons

related to classified and sensitive information and

information on intellectual property. TKH did not use any

exemptions provided under Article 19a and 29a of

Directive 2013/34 of the European Parliament and of the

Council of the European Union in the preparation of its

sustainability statements. The basis of preparation, the

resulting level of accuracy, the estimation of outcome

uncertainty and, where applicable, planned actions to

improve the accuracy and outcome uncertainty of sustain-

ability information in future annual reports are disclosed

for each material topic in the relevant section of the

sustainability statements.

2024 is the first CSRD reporting year and the framework

and implementation guidance are still in development.

Different interpretations of the CSRD and ESRS

requirements could result in different outcomes and

reporting in the next reporting year.

Time horizons

The time horizons considered in these sustainability

statements align with those applied in the financial

statements. Short-term is the reporting period in our

financial statements, one year; medium-term is from the

end of the short-term up to five years; long-term is defined

as more than five years.

Value chain and sources of estimation, and

outcome uncertainty

All sustainability data from our operating companies,

except for scope 3 GHG emissions, are reported on a

quarterly basis in our financial and sustainability reporting

tool Cognos, according to our Sustainability Reporting

Manual that include definitions, (reporting) procedures and

calculation methods. The sustainability data from our

operating companies are tracked and reported to measure

progress against our sustainability targets.

The KPIs are based on activity data as much a

s possible,

which in turn are based mostly on meter readings, invoices,

and data provided by suppliers. However, the preparation of

the sustainability statements requires management to make

judgments, estimates and assumptions that affect amounts

reported. The estimates and underlying assumptions are

reviewed on an frequent basis. The calculation of the scope

3 emissions have a higher degree of judgement and

complexity for which changes in the assumptions and

estimates could result in different results than those

recorded in the sustainability statements in this annual

report 2024. Data on GHG emissions are based on

measurements and estimates at both TKH group and

operating company level. The emissions figures reported are

TKH’s best estimate. The basis of preparation is data

submitted by our operating companies, which is validated

and consolidated by TKH Group’s sustainability team. In

2024, we extended our scope 3 GHG emissions dashboard

by adding category 1 purchased goods and services,

Basis for preparation

Under the CSRD (Corporate Sustainability Reporting

Directive of the European Union), companies in scope

will be required to report on sustainability issues in their

management report for the 2024 financial year and to

obtain an assurance conclusion on this report. However,

the implementation of CSRD in Dutch law has been

delayed. Although there is not yet a formal statutory

requirement to report in accordance with the CSRD due to

the delayed implementation, TKH prepared its sustain

ability statements 2024 based on the CSRD on a voluntary

basis. At the same time, we obtained a voluntary

assurance on the sustainability statements.

The CSRD requires companies to report their sustainability

statements based on the ESRS (European Sustainability

Reporting Standards), providing the framework and

methodology for reporting. All material datapoints are

reported on, other than those subject to phase-in or are

voluntary. The EU Taxonomy is also included.

The sustainability statements are reported on TKH Group

N.V. level and are prepared on a consolidated basis.

The scope of the consolidation is equal to the scope of

consolidation for the financial statements. Acquired

companies are reported from the date of acquisition in

accordance with the CSRD. In 2024, the following

companies are acquired and added to the sustainability

reporting: JCAI, Comark, and Liberty Robotics. VMI has

opened a new location in India, and this has been added

as well. In 2024, TKH divested the companies EKB Groep

and HE System Electronic. The sustainability reporting of

these companies are included until divestment.

85Annual Report 2024 TKH Group

category 4 upstream transport, category 9 downstream

transport, category 11 use of sold products, and category

12 end-of-life treatment. This emissions data has been

collected through the end of the year, via a manual process.

For the calculations of our scope 3 emissions, we make

use of a high-level of estimations. The following estima-

tions are most relevant:

•

Emission factors are partly based on industry averages.

The database used to retrieve the industry averages are

the EcoInvent databases.

•

The life-time of our sold products is partly estimated

and based on the average portfolio of the operating

company in question (scope 3 category 11 emissions).

•

Energy

consumption of our sold products is partly

estimated based on the average portfolio of the operating

company in question (scope 3 category 11 emissions).

•

In case the exact

treatment of our products at their end

of life (scope 3 category 12) is unknown, we assume the

most conservative and/or polluting outcome of a

treatment (in most cases incineration).

Replacing industry average data to calculate the scope 3

emissions attributed to our suppliers and customers with

supplier and customer specific carbon footprint data is

a key driver to improve our data quality. The use of

estimations are in more detail disclosed in the respective

paragraphs, for estimation used for the GHG emissions

reference is made to the Climate change section. Other

metrics containing estimates are disclosed in more detail

in the respective paragraphs. Part of the inventory of

pollution to air, soil, and water, based on the list of

pollutants and related threshold values specified in Annex

II of Regulation (EC) No 166/2006, is based on estimates

and own calculations, resulting in uncertainty about the

outcome. More information is included in chapter

Pollution E2

Changes in preparation or presentation of

sustainability information

In 2024, we implemented several changes in the

preparation and presentation compared with previous

periods, as we changed the format of the sustainability

statements to align with the CSRD requirements. As a

result, several metrics have been added versus the

previous reporting year to disclose the metrics and targets

required under the CSRD. This also improves the

comparability and understandability of the sustainability

information provided.

Reporting errors in prior periods

Reporting errors in prior periods are restated in the

current reporting period. Where this is the case, we

indicate this through an explanatory footnote. For 2024,

we did not identify any material reporting errors which

resulted in a restatement.

Incorporation by reference

Some disclosures are incorporated by reference.

Wherever we incorporate information by reference (to

other parts of the management report), this is clearly

indicated. The following is a list of the ESRS disclosure

requirements and specific datapoints incorporated by

reference to other parts of the annual report.

# Datapoint Incorporation by reference

ESRS2.GOV-1 The role of the administrative, management, and

supervisory bodies, composition of the Executive

and Supervisory Board

• Members of the Executive Board, page 47

• Members of the Supervisory Board, page 48

ESRS2.GOV-3 Integration of Ssustainability-related performance

in incentive schemes

Sustainability performance described in Remuneration Report, page 59 and 61

• Page 59: Sustainability performance (20%) paragraph with LTIFR and employee satisfaction performance

• Page 59: sustainability performance in STI 2024 table

• Page 61: Targets and performance 2024 paragraph with performance multiplier B on CO

footprint reduction and diversity

• Page 61: B Sustainability in LTI 2024 table

ESRS2.21 iInformation about member's experience relevant to

sectors, products and geographic locations of

undertaking

• Members of the Executive Board, page 47

• Members of the Supervisory Board, page 48

• Report of the Supervisory Board, page 50 table Supervisory Board competences and skills

ESRS2.23 Sustainability-related expertise that the bodies

directly possess or can leverage, and how those

skills and expertise relate to material IROs

• Members of the Executive Board, page 47

• Members of the Supervisory Board, page 480

• Report of the Supervisory Board, page 50 table Supervisory Board competences and skills

ESRS2.38 Elements of strategy that relate to or impact sustain-

ability matters, its business model and its value chain

For background information on our value chain refer to Long-term value creation, pages 28-29

TKH Group Annual Report 202486

Diversity administrative, management, and supervisory bodies

2024 2023

male female total male female total

Supervisory Board (non-executive members) 2 3 5 3 2 5

Diversity percentage 40.0% 60.0% 100.0% 60.0% 40.0% 100.0%

Diversity target Supervisory Board 33.3% 33.3% 33.3% 33.3%

Independent board members percentage 100% 100% 100% 100% 100% 100%

Executive Board (executive members) 3 0 3 3 0 3

Diversity percentage 100.0% 0.0% 100.0% 100.0% 0.0% 100.0%

Diversity target Executive Board 33.3% 33.3% 33.3% 33.3%

Governance of sustainability issues

performance. The Executive Board discusses the sustain-

ability strategy, implementation of policies, KPIs and

progress with the various operating companies at least

once a quarter. This is based on financial and non-financial

reports, with the latter covering all material sustainability

matters. Thus, sustainability management is integrated into

our regular risk management processes and controls.

The responsibilities for sustainability-related impacts,

risks and opportunities are reﬂected in the Supervisory

and Executive Board’s mandates as part of the overall

ownership and supervision on sustainability-related

topics. The individual impacts, risks and opportunities are

not allocated to individual members. The members have

sufficient/advanced knowledge, skills and experience in

the area of sustainability, and can make a balanced

judgement on the matter. Members of the Executive and

Supervisory Board follow internal sustainability training

programs

. In 2023 and 2024, various deep-dive sessions

on sustainability topics have been organized, for example

on the CSRD, the double materiality assessment process

and outcomes including material impacts, risks, and

opportunities management, other upcoming sustainability

laws and regulations, cybersecurity, and bribery and

corruption. The Supervisory Board has been further

informed about developments in the field of sustainability

and TKH's position in this regard, including the sustain

ability strategy. The outcome of the DMA including the

material sustainability-related impacts, risks and opportu

nities are discussed within and approved by the boards.

The KPIs connected to the impacts, risks and opportunities

are part of the quarterly sustainability reporting, and

discussed within the Executive and Supervisory Board.

The role and composition of the Executive Board and

Supervisory Board are in more detail described in the

Governance section.

Administrative, management, and supervisory

bodies

The Supervisory Board oversees the way the Executive

Board defines and implements TKH’s policies and strategy

to achieve the identified objectives of the company and its

affiliated companies. The Supervisory Board also monitors

whether the interests of the various stakeholders have been

sufficiently considered. In doing so, the Supervisory Board

is provided with financial, commercial, operational, sustain

ability, and governance information, thereby focusing on

the interests of the company’s stakeholders. Sustainability

is on the agenda of the Supervisory Board meetings on a

quarterly basis. The Audit Committee of the Supervisory

Board is responsible for overseeing sustainability reporting.

The responsibilities are formalized in the rules of procedure

for the Supervisory Board and its committees.

The Executive Board – the overall ownership of sustain-

ability is with the CEO – is responsible for strategic risk

management and for identifying the impacts, risks and

opportunities using the double materiality analysis. The

Executive Board is responsible for all assessments of

and changes to sustainability aspects in the company

strategy and business model. The Executive Board is

also responsible for approving targets and sustainability-

related policies. This also includes the monitoring of the

performance of each operating company through the

quarterly reporting cycle.

The Executive Board is informed about sustainability

matters during each Management Board meeting, and

quarterly through our internal sustainability reporting. This

includes communication regarding our annual reporting,

IRO identification from the DMA, reporting requirements

based on IROs, and our quarterly sustainability

The Executive Board is supported by the Director

Sustainability in the operational implementation of the

sustainability strategy. The Director Sustainability, who

reports to the CEO, is responsible for setting targets,

monitoring and reporting on sustainability performance and

progress, identifying and managing sustainability-related

impacts, risks and opportunities, and developing sustain

ability-related policies. Sustainability is a standard item on

the agenda at the monthly TKH’s Management Board

87Annual Report 2024 TKH Group

meetings. The Director Sustainability is a member of the

Management Board. Each month the Executive Board

receives an update of the Director Sustainability and

evaluate the progress made within the sustainability

program. Each quarter the Executive Board receives an

update on the performance of sustainability-related KPI’s.

The Director Sustainability is in close cooperation with

other functions, such as finance & control, and with TKH’s

Internal Audit Department in relation to the auditing of

sustainability matters during the internal audits. TKH's

Internal Audit Department carries out sustainability

internal audits on the processes to be carried out and the

accuracy of the data as a permanent part of its work

program. All internal audit reports are shared with the

Executive Board once they are completed, the material

findings are reported to and discussed with the Audit

Committee during the Audit Committee meetings.

New sustainability initiatives are preferably developed in

work groups, in collaboration with (topic experts of)

operating companies. This expedites the building of

support within the TKH Group and makes implementation

of the sustainability strategy and related operational

processes more efficient and effective.

Information about representation of employees and other

workers is included in the section Engaging with our

workforce.

Sustainability-related performance in incentive

schemes

Members of the Supervisory Board do not receive variable

remuneration, or incentives based on financial or sustain

ability-related

performance of TKH. The variable

remuneration for the Executive Board members consist of

a short-term incentive (STI) in the form of a bonus, and a

long-term incentive (LTI) in the form of a share plan.

STI

Variable remuneration is an essential part of the remune-

ration package for Executive Board members in terms of

rewarding short-term results in line with strategic objectives.

The STI is based on annual financial and sustainability-

related performance measures including personal targets.

On the recommendation of the Remuneration Committee,

the Supervisory Board sets 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.

In 2024, the following sustainability topics were part of

the STI targets:

•

employee satisfaction (weight of 10% in STI): target of 7.8

•

LTIFR - safety performance (weight of 10% in STI): target

of 0.7 with a bandwidth pay-out between 0.6 and < 1.0

LTI

The long-term varia

ble remuneration aims to align 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 provides for a

long-term incentive. Under the share plan, members of the

Executive Board receive shares based on the achievement

of targets. Members of the Executive Board receive shares

on the condition that they personally invest in the same

number of shares as they receive under the LTI plan. By

Management Board

Alexander van der Lof (Executive Board member)

Elling de Lange (Executive Board member)

Harm Voortman (Executive Board member)

Jacqueline Lenterman

Gertjan Sleeking

Derk Postma

personally investing in the same number of shares as they

are awarded under the LTI, each member of the Executive

Board invests a significant amount of money in a way that

prudently manages risk but still encourages an entrepre

neurial spirit to create long-term value. As a result, the

interests of the Executive Board and the shareholders

remain aligned.

In 2024, the following sustainability topics

were part of the LTI targets:

•

Diversity (weight of 10% in LTI): target of 20.0%

•

reduction (weight of 10% in LTI): target of 67.3%

reduction scope 1 and 2

A more detailed description of the key characteristics of

the incentive schemes is included in the section

Remuneration Report, on pages 59-61.

Policy name Key contents

Remuneration policy

• Aims to provide remuneration in line with the market to attract, motivate, and retain qualified

executives for the publicly listed company, taking into account the Company's size, strategy, and

unique characteristics.

• Remuneration policy for Executive Board and Supervisory Board.

• Remuneration Committee is responsible for implementation.

• Based on good practices, Dutch Corporate Governance Code, and regulations.

• Published on the website.

TKH Group Annual Report 202488

Policies, action plans, metrics and targets

The following sections (Environmental information, Social

information, and Governance information) indicate the

policies and action plans we have in place to manage each

material topic. Overall, we have policies and action plans

in place for the material topics of our own operations,

although we identified opportunities to improve. A need

remains to gain further insight into which resources we

allocate to the execution of our strategy regarding our

material topics and how we track our progress.

We currently have limited detailed policies and action plans

in place for topics related to the value chain. We will

prepare an action plan to follow up on these. Part of this

plan is to determine ambitions, set up policies and action

plans, allocate resources, set targets and track effective-

ness. This will be aligned with our strategic goals and

embedded in our operation (business planning cycle,

measuring and monitoring). Part of it will always be

qualitative analytics as some topics are not quantitatively

measurable. The sections Environmental information, Social

information, and Governance information contain short

descriptions of the definitions of the datapoints disclosed.

At least once a year the Executive Board a

nd the

Supervisory Board will be informed by the Director

Sustainability about the material impacts, risks and

opportunities, the implementation of due diligence, and

the results and effectiveness of policies, actions plans and

the adopted targets. The Executive Board and the

Supervisory Board will then evaluate and determine how

they will oversee the strategy, risk management process

and important decisions that need to be made, based on

the defined material impact, risks and opportunities. The

metrics included in the sustainability statements are not

validated by an external body other than assurance

provider. The targets are applicable to all operating compa

nies, unless stated otherwise in the specific

disclosure.

Risk management and internal controls over

sustainability reporting

The

general risk management and internal control structure

is included in the Risk management section. In addition to

risk assessment, TKH’s Internal Control Framework (ICF)

based on the COSO 2017 framework includes a structured

process for identifying and managing opportunities. These

are evaluated based on their strategic, operational,

financial, compliance, and sustainability impact. Risks are

assessed on 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.

The risk appetite is also taken into account, representing

Due diligence process

The due diligence process performed to determine our

material impacts, risks and opportunities are included in

the section Impact, risk and opportunity management.

Reference to the information provided in our sustainability

statements about our current sustainability due diligence

process and performance is included in the table below.

We currently have limited detailed policies and action plans

in place for topics related to the value chain. We will

prepare an action plan in 2025 with the purpose to manage

the identified value chain related IROs going forward.

Core elements of due diligence Paragraphs

Embedding due diligence in

governance, strategy and business

model

•

Administrative, management, and supervisory bodies

•

Policies, action plans, metrics and targets

•

Risk management and internal controls over sustainability reporting

•

Strategy, business model and value chain

•

Process to identify, assess, and prioritize material impacts, risks, and opportunities

•

Material impacts, risks, and opportunities

Engaging with affected stakeholders

in all key steps of the due diligence

•

Interests and views of stakeholders

•

Administrative, management, and supervisory bodies

•

Process to identify, assess, and prioritize material impacts, risks, and opportunities

•

Policies, action plans, metrics and targets

Identifying and assessing adverse

impacts

•

Process to identify, assess, and prioritize material impacts, risks, and opportunities

•

Material impacts, risks, and opportunities

Taking actions to address those

adverse impacts

•

E1 Climate change action plans

•

E2 Pollution - Actions

•

E3 Water - Actions

•

E5 Circular economy - Actions

•

Sustainable innovation – Actions

•

S1 Diversity – Actions

•

S1 Health and safety – Actions

•

S2 Workers in the value chain – Actions

•

S4 Consumers and end-users – Actions

•

G1 Business conduct

•

AI and algorithm ethics – Actions

Tracking the effectiveness of these

efforts and communicating

•

Environmental, Social, and Governance information.

89Annual Report 2024 TKH Group

the risk (amount) we are willing to accept in pursuit of our

strategic objectives.

Controls are in place to ensure reliable reporting on

sustainability-related metrics.

The sustainability reporting

processes and definitions used by TKH have been

formalized in our Sustainability Reporting Manual, which

provides guidance on how to collect, consolidate, and

report data. The data has been reviewed for plausibility

and progress by the responsible company officers using

the financial reporting model. The data has been

validated by TKH’s sustainability department on group

level, and analysis have been done. For most of the

reported datapoints differences greater than 10%

compared with the previous year have been investigated.

As the sustainability reporting scope has increased in

2024, we have established a wider range of internal

controls deemed appropriate and adequate following an

ongoing evaluation of the risks related to data accuracy

and completeness.

In addition,TKH's Internal Audit Department carries out

internal audits on the processes to be carried out and the

accuracy of the data as a permanent part of its work

program. All internal audit reports are shared with the

Executive Board, the material findings are reported to and

discussed with the Audit Committee. External expertise is

sought for specific and complex sustainability issues, for

example related to the calculation of scope 3 emissions.

In the year under review,

Internal Audit performed reviews

on selected non-financial reporting KPIs and operating

companies and identified areas for improvement and

optimization. No material deficiencies were identified. The

2024 findings included non-material topics such as minor

reconciliation differences in sustainability reporting

including documentation, and consistency in way of

working regarding sustainability reporting, partly as a result

of the decentralized organizational structure. In 2025, we

will continue to develop the review activities related to

non-financial information, with the ambition to include all

CSRD-related quantitative datapoints in the scope of

internal audit over time.

Identified risks are prioritized based on impact and

likelihood amongst others, following TKH’s risk

management approach. We currently have limited detailed

policies and action plans in place for topics related to the

value chain. We will prepare an action plan in 2025 with the

purpose to manage the identified value chain related IROs

going forward.

More information on the process to identify, assess, and

prioritize sustainability-related material impacts, risks, and

opportunities is included in the section Process to identify,

assess, and prioritize material impacts, risks, and

opportunities.

Strategy, business model,

and value chain

For a general description of our strategy, business model,

and key markets served, see section Strategy and

performance. Details of the business model and value

chain, including the inputs and approach to gathering,

developing and securing those inputs, the outputs, and

the outcomes in terms of current and expected benefits

for customers, investors and other stakeholders are

included in the section Long-term value creation.

KH manufactures computer, electronic and optical

products, as well as electrical equipment and machinery,

which are classified under the NACE Code C26 Manufacture

of computer, electronic and optical products, C27

Manufacture of electrical equipment, and C28 Manufacture

of machinery and equipment. These activities are activities

in high climate impact sectors, based on the sectors that

are listed in Sections A to H and Section L of Annex I to

Regulation (EC) No 1893/2006 of the European Parliament

and of the Council (as defined in Commission Delegated

Regulation (EU) 2022/1288).

TKH has offices and production sites in 34 countries and

serves customers in over 90 countries. TKH’s operations

are grouped into three business segments: Smart Vision

systems, Smart Manufacturing systems, and Smart

Connectivity systems.

Turnover per business segment

in million

NACE

2024 2023

Smart Vision systems C26 €489.6 €500.5

Smart Manufacturing systems C28 €608.8 €573.6

Smart Connectivity systems C27 €631.9 €800.5

Other and eliminations others

€-17.6

€-27.1

Total turnover €1,712.7 €1,847.5

TKH Group Annual Report 202490

Environment Social Governance

Sustainability is a strategic priority

and our operating companies have

implemented relevant ISO environ-

mental standards. By integrating

sustainability into every aspect of

our business, we are minimizing

energy use, GHG emissions, waste,

and raw materials.

We create a healthy work culture

where people and their safety

always come first. We empower

our employees to take the initiative,

respecting and valuing every

individual equally regardless of age,

sex, race, religion.

We conduct our business with

honesty, integrity, accountability,

and transparency. We continuously

engage with stakeholders through

dedicated events and relevant

channels, while complying with all

relevant sustainability laws and

regulations wherever we operate.

Targets

Environment Social Governance

100% carbon neutrality in own

operations by 2030 (scopes 1 and 2)

> 25% of female members in executive

and senior management teams by 2030

> 90% strategic suppliers assessed

> 80% recycling (copper, aluminum,

and plastics)

< 1.0 Accident rate (LTIFR) Enhance (sustainability) policies and

procedures

< 5% waste < 4.0% Illness rate

> 7.5 Employee satisfaction score

DECENT WORK AND

ECONOMIC GROWTH

AFFORDABLE AND

CLEAN ENERGY

RESPONSIBLE

CONSUMPTION

AND PRODUCTION

Employees

in headcount

2024 2023

Smart Vision systems 2,241 2,203

Smart Manufacturing systems 1,822 2,036

Smart Connectivity systems 2,438 2,426

Other 164 104

Total employees 6,665 6,769

More information per business segment is included in note

22 in

formation by segment in the financial statements.

TKH’s strategic program Accelerate 2025 includes actions

to increase turnover and ROS by unlocking the full

potential of our innovative technologies in the high-growth

markets in which we operate. By leveraging our current

market positions and the megatrends of automation,

digitalization, and electrification, TKH is well positioned to

take full advantage of the expected market growth.

In addition, we prioritized sustainability in our strategy,

actions, and targets, driven to improve our performance

on sustainability. TKH will further improve its strategic

resilience through by addressing material impacts and

risks while capitalizing on opportunities. This will be

achieved through:

1 Diversified business model & market positioning:

•

Operating across three business segments (Smart

Vision, Smart Manufacturing, and Smart Connectivity

systems) reduces dependency on a single industry

or market.

•

Focus on high-growth sectors (automation and

electrification) aligns with long-term market trends.

2 Sustainability & risk management integration:

•

The Accelerate 2025 strategy embeds sustainability

into business operations, addressing risks related to

imate change, resource scarcity, and regulatory shifts.

•

Proactive supplier diversification and long-term

contracts and engagement mitigate risks from raw

material shortages (e.g., copper, aluminum).

3 Operational ﬂexibility & innovation investments:

•

A €200 million investment program completed in

2024, strengthening innovation capacity in AI,

electrification, and smart manufacturing.

•

Global production ﬂexibility allows adaptation to

supply chain disruptions and geopolitical risks.

4 Scenario analysis & actions 2025:

•

Stress testing and risk assessment ensure adaptability

to climate and regulatory changes.

•

Investments in digital transformation and automation

position TKH to take advantage of emerging opportu-

nities.

Our defined (annual) sustainability targets and goals for

2030 are ambitious and present challenges. We focus on

multiple markets and operate globally with a global value

chain, which inherently results in regions facing potential

political and industry/sector challenges in the areas of

human rights, corruption/bribery and the environment.

This includes topics such as human rights and working

91Annual Report 2024 TKH Group

conditions of value chain workers, availability of renewable

technologies to realize GHG emissions reduction targets for

scope 1 and 2, resource shortages and diversity, and

availability and collaboration in the value chain e.g. related

to decarbonation of scope 3 GHG emissions and human

rights. Sustainability-related challenges are disclosed in

more detail in the respective paragraphs.

In 2024, the strategy and the business model of TKH were

not amended. As part of the execution of the Accelerate

2025 strategy, TKH acquired the companies Liberty

Robotics and JCAI. In addition, the companies EKB Groep

and HE System Electronic were divested. The strategic

investment program of €200 million was completed in 2024.

Smart Vision systems

TKH creates state-of-the-art Vision technology, which

accounts for about 85% of the turnover of the Smart

Vision systems segment. This technology includes 2D

and 3D Machine Vision and Security Vision systems.

TKH’s 2D and 3D Machine Vision technology systems are

used to improve quality inspections, operations, and

object monitoring in numerous industries, such as

consumer electronics, factory automation, logistics, the

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

efficiency, safety and security in various markets, such

as infrastructure and building security. Within this

segment, there is no significant dependency on key-

suppliers or customers, as there are diverse material

inputs and substitutable suppliers, and different market

segments and customers served.

Smart Manufacturing systems

At TKH, we leverage our unique ex

pertise to create

superior manufacturing systems, capitalizing on our deep

understanding of the automation production processes in

different industries. Our systems and machines contribute

to highly efficient manufacturing and processing. Our Smart

Manufacturing systems serve industries ranging from tire

production for cars and trucks to factory automation and

medicine distribution. Our Tire Building systems represent

a share of about 83% of turnover within the Smart

Manufacturing systems segment. Within this segment there

is no major dependency on specific key customers, as

a wide range of customers are served. There is a depen-

dency on one particular supplier, because customers

prescribe this supplier as their factory automa

tion system.

Tire Building’s value chain

Raw materials

Stainless steel,

steel and aluminum

Production

Technology

segment

Consumers (B2B)

Transport Transport

Upstream

Own operations Downstream

Electrical OEMs

Mechanical OEMs

Mechanical

Outsourcing

(producing based

on drawings)

Other suppliers

Assembly

Poland

China

Germany

Netherlands

Tire makers

Semi-finished

products

Finished goods to

be add supplement

Tire Building

systems

R&D department

software

R&DSuppliers

R&D department

software

2D Machine

vision systems

3D Machine

vision systems

Security Vision

systems

Other systems

Materials

hardware

R&D

Production

Technology

segment

Consumers (B2B)

Transport Transport

Suppliers

Assembly

Electronics

mainly purchased

through ERM partners

Optics

range of suppliers

Housing

range of suppliers

Germany

Canada

Belgium

Austria

Finland

Italy

Netherlands

Wood suppliers

Battery inspection suppliers

Consumer electronics

Medical care

Health care

Factory automation

Mobility

Building security

Access control

Intercom systems

Health care

Alarm systems

Vision technology’s value chain

Upstream

Own operations Downstream

TKH Group Annual Report 202492

Smart Connectivity systems

TKH cr

eates advanced Smart Connectivity systems,

engineering complete, unique solutions that combine

our integrated system approach with our connectivity

proposition. Electrification and Digitalization represent a

share of about 48% and 29% of turnover of the Smart

Connectivity systems segment respectively. Our

Electrification solutions are designed for on-shore and

off-shore energy distribution. Digitalization represents Fibre

Optic connectivity systems for data and communication

networks. In addition to Electrification and Digitalization,

TKH produces specialized cable systems for industrial

automation applications in high-tech environments. In

addition, TKH offers a unique connectivity technology

for airfield ground lighting systems: Contactless Energy

and Data Distribution (CEDD). This connectivity system

consists of hardware components and intelligent software,

to improve the efficiency and safety of specific airfield

applications. Within this segment there is no major

dependency on specific key customers, as a wide range

of market segments and customers are served. There is

a dependency on suppliers of raw materials (copper and

aluminium), due to the limited numbers of global suppliers.

Interests and views of stakeholders

TKH recognizes and acknowledges

the importance of

having a meaningful dialogue with its stakeholders about

sustainability and the company’s strategy including

business model and value chain. Meaningful stakeholder

dialogue is characterized by two-way communication and

depends on the good faith of participants on the sides of

both TKH and the stakeholders. TKH’s Stakeholder

Engagement Policy has been published on our website,

and serves to include the interests of relevant stakeholders

in defining and further developing the sustainability

strategy. This requires effective consultation and

engagement with our stakeholders, in which context we

strive to optimally serve their interests and build lasting

relationships with them. This policy provides guidelines

and principles to maintain and strengthen these relation-

ships. The CEO is responsible for implementation of the

policy. The policy defines our key stakeholders being our

employees, shareholders, customers, suppliers, analysts,

banks, public bodies and other stakeholders including

sectoral organizations and NGOs. If the (central) works

council of the company is considered a participant in a

stakeholders dialogue, the chair of the works council will

be invited to participate in such dialogue in case the

stakeholder dialogue will be held in groups. This is also

the case when the stakeholder dialogue with the works

council has already taken place in regular contacts

between the Executive Board and the works council (and

the Supervisory Board).

TKH uses various methods and channels to engage in

dialogue with its stakeholders, depending on the nature,

purpose, and frequency of the interaction. The Executive

Board decides whether a stakeholder dialogue will be

held with more stakeholders at the same time (collec-

tively) or through (one or more) year-round bilateral

contacts between the company and a specific stakeholder/

representative of a group of stakeholders (individually).

The main outcomes of the stakeholder dialogues are

discussed with the Executive and Supervisory Board.

We consulted with representatives from these key

stakeholder groups on sustainability-related impacts,

risks and opportunities. We prioritize the input from

stakeholders, based on frequency (how often specific

issues are mentioned by multiple stakeholders), severity

(the potential magnitude of the impact on our stake-

holders or business, and the alignment (how these issues

align with our long-term strategic goals and regulatory

requirements). The views of these stakeholders shape our

strategic decision-making process. We incorporate

feedback on specific areas of our business into our

planning, actions, targets, policies and disclosures.

Electrification and Digitalization's value chain

Netherlands

• Haaksbergen

• Lochem

• Eemshaven

Fibre optic

cable systems

Energy

cable systems

Industrial and

other systems

Production

Technology

segment

Consumers (B2B)

Transport Transport

Own operations Downstream

Suppliers

Preform suppliers

(e.g. Shin - Etsu)

Alumium suppliers

Plastics suppliers

Copper suppliers

Metal suppliers

Other suppliers

China

• Fibre optics

Telecom and network

companies

Offshore and onshore

utility companies

Industrial customers and

wholesale industry

Poland

• Fibre optics cables

Upstream

93Annual Report 2024 TKH Group

Table with stakeholders, channels of engagement and key engagement topics

Stakeholder Relevance and purpose Engagement channels Key engagement topics 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.

• Survey on materials impacts, risks,

and opportunities (IROs).

• Health and safety.

• Diversity.

• Climate change.

• Sustainable employability.

• SDGs.

• IT & Security / Privacy.

• Strategic program.

• Defining materials impacts, risks, and

opportunities (IROs).

• Commitment to the diversity

of the workforce.

• Learning organization.

• Boost innovative capacity.

• Leadership and entrepre-

neurship.

• 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.

• Survey on materials IROs.

•

Financial reporting and annual reports.

• Sustainability.

• SDGs.

• Diversity.

• Climate change.

• Strategic program.

• Defining materials IROs.

• 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.

• Survey on materials IROs.

• Sustainable product portfolio.

• SDGs.

• Customer satisfaction.

• Climate change.

• Defining materials IROs.

• 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.

• Survey on materials IROs.

• Sustainable product portfolio.

• SDGs.

• Defining materials IROs.

• 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.

• Survey on materials IROs.

• Financial reporting and annual reports.

• Financial ratios.

• Sectoral developments.

• Strategic program.

• Defining materials IROs.

• 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.

• Survey on materials IROs.

• Financial reporting and annual reports.

• Financial ratios.

• Risk analysis.

• Defining materials IROs.

• 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 chain initiatives with a significant contribution to sustainability.

• Internet.

• Network and thematic meetings.

• Survey on materials IROs.

• Sustainable and other developments

in the region.

• Defining materials IROs.

• 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.

• Providing 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.

• Survey on materials IROs.

• SDGs.

• Climate change.

• Defining materials IROs.

•

Sustainable business

operations.

• Consolidate social initiatives.

TKH Group Annual Report 202494

Material impacts, risks, and opportunities management

Group. This ensures we do not miss possible IROs, taking

into account TKH Group’s various and globally dispersed

(production) sites, the complex and diverse supply chains

as well as the broad customer base in several end

markets. All these 67 sustainability topics and the related

IROs were evaluated and prioritized based on their

respective nature (impact, risk or opportunity) by

considering both the impact and financial materiality.

The impact materiality is defined as follow:

•

Positive impact materiality: scale and scope of the impact

•

Negative impact materiality: scale, scope, and

irremediable character of the impact

Positive and negative impacts have been assessed for

actual and potential impacts, where for potential impacts

the likelihood is assessed.

The financial materiality is defined as follow:

•

Risks and opportunities: financial size times likelihood

In determining the financial size and likelihood we used

our existing risk management model, based on a five-

point scale. The EBITA used to determine the financial

size is based on the EBITA of the most recent full

reporting year at the time of the execution of the DMA.

Size

Potential size category Financial size in % of EBITA

1. Very low <5%

2. Low between 5% and 10%

3. Medium between 10% and 20%

4. High between 20% and 40%

5. Critical >40%

Process to identify, assess, and prioritize material

impacts, risks, and opportunities

TKH identified material sustainability topics by following

the double materiality approach (impact materiality/

financial materiality - DMA) brought forward by the

European Sustainability Reporting Standards (ESRS).

The following steps were taken from the start of the DMA

project to the sign-off of material sustainability topics:

•

Defining the scope and objectives

•

Identifying potential material sustainability matters

(longlist of sustainability topics)

•

Determining definitions, thresholds and value chains

•

Assessing of material sustainability matters (shortlist of

sustainability topics)

•

Internal validation of assessment outcomes

•

Validation by other internal and external stakeholders

•

Signing-off on material topics by the Executive Board

and Supervisory Board

In performing this assessment, we used the list of sustain-

ability matters covered in the topical ESRS provided in

application requirement 16 of ESRS 1. Based on these

sustainability matters we defined a comprehensive longlist

of 130 potentially relevant sustainability topics. This longlist

was narrowed down to a shortlist of 67 sustainability topics

by scoping out sustainability topics which are not relevant

due to the nature of our business and value chain (for

example animal welfare and invasive alien species). For

each of the 67 sustainability topics on the shortlist we

assessed the impacts, risks, and opportunities (IROs) in

the short, medium and long-term, as well as their

respective materiality. The assessment on the IROs was

enriched by including the business segments and value

chains perspectives and experiences from across TKH

Likelihood

Potential size category Likelihood in %

1. Rare <20%

2. Unlikely between 20% and 40%

3. Possible between 40% and 60%

4. Likely between 60% and 80%

5. Almost certain >80%

Also the scale, scope, and irremediable character are

defined based on a five-point scale:

Scale, scope, and irremediable character

Scale Scope Irremediable character

1. Very low 1. Operating company 1. Very low (immediately)

2. Low 2. Local 2. Low (0-1 year)

3. Medium 3. Country 3. Medium (1-5 years)

4. High 4. Regional 4. High (5-20 years)

5. Critical 5. Global 5. Critical (>20 years)

The outcome of the DMA has been validated at the group

level by leveraging internal expertise, industry reports,

and specialist insights. This was followed by an

assessment at the business segment level to ensure that

key value chain topics are adequately addressed in the

respective segments.

For our Smart Connectivity segment, we conducted an

in-depth evaluation due to the heightened risk of adverse

impacts on workers in the value chain. In this process, we:

1 Mapped dependencies and impacts by analyzing labor

conditions, supply chain resilience, and regulatory

developments.

2 Identified risk and opportunity linkages by assessing

how labor risks could lead to operational disruptions,

Annual Report 2024 TKH Group 95

reputational risks, and potential regulatory compliance

costs, while also considering opportunities for

enhanced worker welfare programs and stronger

supplier relationships.

3 Integrated findings into risk management by aligning

our assessment with scenario analyses and stakeholder

consultations, ensuring that business decisions reﬂect

identified connections.

4 Monitored ongoing developments through engagement

with industry bodies, regulatory frameworks, and

supply chain monitoring to track evolving risks and

opportunities.

In addition, we consulted with representatives from key

stakeholder groups on the sustainability-related topics.

For this, we used the outcome of the internal assessment

of the DMA and asked our external stakeholders to

prioritize the material sustainability topics and to provide

input if sustainability topics were missing or are of less

importance in their perspective. The engagement with

external stakeholders did not result in additional sustain-

ability topics. More information on stakeholder

engagement is included in the Interests and views of

stakeholders section.

The DMA process was initiated in 2023, and formally

finalized in 2024. We will update the DMA on an annual

basis, including engaging with relevant stakeholders, but

will monitor for significant updates on an ongoing basis.

We will also assess how we can improve the DMA

process further, to mitigate the risks that sustainability

topics have been wrongly classified as non-material.

There is a risk that an internal or external stakeholder

does not have sufficient in-depth knowledge of the ESRS,

which could lead to incorrect input or interpretations.

Training programs on ESRS and sustainability topics are

important in this sense. At the same time, this is the first

year of reporting under the ESRS framework which is still

in development by providing additional implementation

guidance. This entails the risk that we have interpreted

certain ESRS requirements differently than intended.

Material impacts, risks, and opportunities

The DMA resulted in 13 material sustainability topics,

which are grouped into the ESRS categories

Environmental, Social, and Governance in the graph and

table on the next page, including the reference to the

ESRS topical standard, the IROs, and the value chain

boundary.

The material sustainability topics includes two company

specific topics: sustainable innovation and AI and

algorithm ethics. While most of the material sustainability

topics are in line with the materiality analysis based on

the reporting requirements of the GRI from the prior year,

we have identified AI and algorithm ethics as an

additional sustainability topic that requires attention

because of changes in the execution of our strategy over

the past year. Furthermore, we have now identified water

use, compliance with environmental regulations, and

human rights in the value chain as a distinct topic, which

was previously included under respectively responsible

production and responsible procurement.

Material IROs

Environmental

Climate change mitigation

Pollution of air, soil, and water

Water consumption

Resource inﬂows, waste, and waste recycling

Sustainable innovation

Social

Diversity

Health and safety

Child / forced labor, and health and safety

(workers in the value chain)

Privacy (cybersecurity)

Governance

Corporate culture

Corruption and bribery

Management of relationships with suppliers

AI and algorithm ethics

TKH Group Annual Report 202496

Sub-topic Impacts Risks Opportunities

E1-Climate change

GHG emissions, energy

efficiency and consumption

(climate change mitigation)

• Emissions contributes to global warming and climate change, and

have an actual negative impact on the environment.

• Inability to reduce our carbon footprint through energy efficiency

improvements and renewable energy sources, leading to missed

net zero commitments or increased costs to meet targets.

• GHG emissions may be subject to carbon pricing mechanisms,

which can increase operating costs and reduce profitability.

E2-Pollution

Pollution of air, soil, and

water

Smart Connectivity systems

Potential negative impacts related to our cable production sites:

• P

ollution caused by spills in the soil of toxic/polluting materials as a

result of accidents during cable production.

• Emissions into the atmosphere of as a result of cable production

activities (e.g. Nitrogen oxides (NOX), sulphur oxides (SOX)).

• Pollution of water in the proximity of TKH cable production sites,

as a result of release of pollutants into process water.

• Environmental pollution leading to remediation costs, sanctions,

fines, and reputational damages.

E3-Water and marine

resources

Water consumption

• The consumption and quality of water resources have an actual

negative impact on the environment, as well as on communities

that depend on those resources.

• Interruption of operations due to unavailability of water.

E5-Resource use and

circular economy

Resource inﬂows, waste,

and waste recycling

• Sourcing resources unsustainably and waste have an actual

negative impact on the environment, including greenhouse gas

emissions.

• TKH is dependent on resource inﬂows, limited availability of

resource inﬂows such as copper and other (raw) materials could

affect the company in a negative way.

• Waste can pose financial risks for due to its impact on resource

efficiency, operational costs, and environmental compliance.

Entity-specific

Sustainable innovation

• Sustainable innovation and technology are actually making a

positive contribution to the achievement of the SDGs by promo-

ting sustainable production and consumption, and addressing

environmental challenges at customers. This can help create a

more sustainable world.

• Insufficient technological development and innovation can

threaten TKH’s long-term value creation.

• Customer’s need for

sustainable innovation and

technology offers TKH

opportunities for growth

and value creation.

Environmental - material IROs

Reasonably expected time horizons

Upstream

Own operations Downstream

Short-term, Medium-term, Long-term

Climate change mitigation

Pollution of air, soil, and water

Water consumption

Resource inﬂows, waste, and waste recycling

Sustainable innovation

97Annual Report 2024 TKH Group

Sub-topic Impacts Risks Opportunities

S1-Own workforce

Diversity

• A lack of diversity could have a potential negative impact on the

overall health, wellbeing, and performance of our own workforce.

• A lack of diversity can result in employees feeling not valued, res-

pected, and supported, resulting in negative reputation, impacting

performance of employees and organization and therefore costs.

S1-Own workforce

Health and safety

• Health and safety incidents have an actual negative impact on the

health and safety of our own workforce.

• Health and safety incidents can increase the risk of illness, injury

and death, leading to lower morale, increased absenteeism and

decreased productivity.

S2-Workers in the value

chain

Child / forced labor,

and health and safety

Smart Connectivity systems

• Bad working conditions, incidents, and violations of work-related

rights, could have a potential negative impact on the overall health

and wellbeing of workers in the value chain (copper mines).

• Suppliers in the upstream copper value chain who do not respect

working conditions and labor rights, can pose a reputational risk,

which could lead to financial losses.

S4-Consumers and/or

end-users

Privacy (cybersecurity)

• Data leaks or cyber incidents involving GDPR-sensitive data, and

loss of business sensitive information, have an actual negative

impact on the right of data protection.

• Privacy can be a financial risk. If customer data is not adequately

protected it could lead to violation of laws, fines, and penalties and

loss of trust.

Social - material IROs

Reasonably expected time horizons

Upstream

Own operations Downstream

Short-term, Medium-term, Long-term

Medium-term, Long-term

Short-term, Medium-term

Health and safety

Child / forced labor, and health and safety

Privacy (cybersecurity)

Diversity

TKH Group Annual Report 202498

Sub-topic Impacts Risks Opportunities

G1-Business conduct

Corporate culture

• Absence of good corporate culture can potentially have a negative

impact as a result of a lack of accountability, unethical behavior,

and inadequate response to environmental and social challenges.

• Failing to address the potential negative impact can result in

regulatory fines, legal penalties, and reputational damage.

G1-Business conduct

Corruption and bribery

• Not preventing the spread of unethical and illegal practice could

have a potential negative impact on societal well-being.

• Corruption and bribery can result in a lack of transparency and

accountability, leading to erosion of public trust and damage to

TKH's reputation.

G1-Business conduct

Management of relation-

ships with suppliers

• Conﬂicts, for example as a result of geopolitical developments

(such as the Russia-Ukraine war, trade tariffs, availability and price

of energy), could have a potential negative impact on people and

the environment.

• Reputational risks, as well as legal and financial liabilities. TKH

may also face risks from political instability, including expropriation

or nationalization of assets of suppliers (based on their location).

• Inadequate management of relationships with suppliers can result

in non-productive relationships with suppliers, leading to inade-

quate inﬂow of (raw) materials and thus, discontinued production

and operations.

Entity-specific

AI and algorithm ethics

• Unjustified actions, bias, discrimination or breach of privacy due

to the use of AI systems could have a potential negative impact on

people.

• Insufficient adequate use of AI tools can lead to leakage of

business sensitive information such as intellectual property.

• Non-compliance with AI algorithm could lead to violation of laws,

fines and penalties, reputational damage, and loss of trust.

Governance - material IROs

Reasonably expected time horizons

Upstream

Own operations Downstream

Short-term, Medium-term, Long-term

Corruption and bribery

AI and algorithm ethics

Management of relationships with suppliers

Corporate culture

99Annual Report 2024 TKH Group

Environmental information

Climate change (E1)

Environmental

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

GHG emissions, energy

efficiency and consumption

(climate change mitigation)

* * *

• Emissions contributes to global warming

and climate change, and have an actual

negative impact on the environment.

• Inability to reduce our carbon footprint

through energy efficiency improvements

and renewable energy sources, leading to

missed reduction targets or increased costs

to meet targets.

• GHG emissions may be subject to carbon

pricing mechanisms, which can increase

operating costs and reduce profitability.

Our approach to determini

ng our material impacts, risks

and opportunities is described in the General information

section. Climate mitigation is important; we are committed

to minimizing our consumption and related impacts to the

extent possible (scope 1 and 2). Our assessment showed

both GHG emissions, as well as energy efficiency and

consumption, to be assessed as material topics for TKH –

the former for our full value chain and the latter for our own

operations. As part of the DMA and related analysis, we

have considered the climate-related physical risks and

climate-related transition events listed in the climate change

application requirements. We also assessed our impact

on climate change through our GHG emissions. In 2024,

we completed our scope 3 emissions inventory and started

assessing our ambitions and identifying decarbonization

levers for scope 3. We are currently working on the

detailed plans for implementation in the coming years.

Introduction

TKH's production processes rely on energy

and material

inputs, leading to GHG emissions that contribute to

climate change. TKH's cable portfolio is a key component

in technologies that support the transition to a net-zero

economy, including renewable energy development.

With our vision and tire building systems, we improve the

sustainability performance of our customers. Reducing the

energy consumption of our products during their use

phase, improving recyclability of our products and

increased production output by using our technologies at

customers sites reduces the environmental impact.

As we continue to expand our activities, integrating

sustainability enables us to minimize energy use and GHG

emissions. Our operating production companies have

implemented the ISO standards that share common

ground with sustainability goals, including the ISO 14001

environmental management system and the EN-16247

energy audit system, which is related to the European

Energy Efficiency Directive.

Climate-related risks and opportunities

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. We analyzed the potential climate-

related transition risks to our operations posed by climate

change, and how these climate-related transition risks

could be turned into opportunities, for instance through

innovations in climate adaptation or climate-change mitiga

tion. Our climate risk and opportunity assessment follows

the TCFD framework, integrating key risk categories into

our sustainability strategy. The high-level 2024 assessment

primarily focused on physical (acute) risks, while transition

risks will be formally identified and assessed in the coming

years as part of an expanded scenario analysis. The

assessment performed is based on the current situation of

TKH, and does not yet include a climate scenario analysis

considering for example a high-emissions and 1.5 degree

aligned scenario. In 2024, TKH did not conduct a compre

hensive resilience analysis in accordance with the full

requirements of the CSRD. These include defining time

horizons for climate-related risks and opportunities,

evaluating exposure of assets and business activities to

transition risks (likelihood, magnitude, and duration), and

integrating scenario analysis. While our general time

horizons for sustainability align with our financial reporting

(short-term: 1 year, medium-term: 2–5 years, long-term:

>5 years), we have not yet explicitly defined these time

TKH Group Annual Report 2024100

Risk area Climate-related transitions risks

Regulatory risks Future implementation of CO

taxation/pricing will mean higher operational and

compliance costs

Technology risks High investment costs to bring technology up to a level where it can meet

the demand for products and services that can offer reduced emissions

Market demand and market

change risks

Failure to meet the expectations of key stakeholders, including customers and

investors, in relation to information on how we are addressing the challenges of climate change

Resource scarcity Increasing volatility in the price and availability of (raw) materials/resources

TKH's strategy already integrates climate-related

considerations through its transition plan, decarbonization

roadmap, and sustainability-linked incentive schemes

for executives. While we have not yet conducted a full

resilience analysis, we are actively implementing

mitigation strategies such as electrification, energy

efficiency improvements, and supplier engagement.

Future scenario analyses will help refine our adaptation

strategies to ensure resilience against climate risks.

Opportunity area Climate-related opportunities

Efficient production Further implementing more efficient production processes via our Operational Excellence Program

Renewable energy use Further implementing carbon neutral operations by purchasing green energy,

self-generated energy through solar panels, green certificates, etc.

R&D and innovation Accessing markets with our innovations

Increasing turnover through demand for those of our innovations that result in lower emissions for our

customers

Differentiating ourselves from the competition

Renewable energy programs

in value chain

Contributing to the achievement of internationally agreed climate mitigation targets, and acquiring and

leveraging our knowledge by participation in initiatives for renewable energy

Circular economy Continuing to pursue waste-reduction targets and recycling ambitions to make a

sustainable and demonstrable contribution to the circular economy

Our approach and policies

In 2021, as part of our Capital Markets Days (CMD) targets,

we announced ambition to reduce our GHG emissions for

our own operations (scopes 1 and 2) with 100% by 2030

(carbon neutral). We take 2019 as our baseline, which

represents TKH’s activities prior to COVID-19.

The focus on sustainability performance including climate

change is also reﬂected in the remuneration of the

Executive Board. The main goals related to sustainability

aspects are included in the short-term incentive (STI) as

well as the long-term incentive (LTI) performance targets.

The STI includes targets for employee satisfaction and

safety performance. The LTI contains targets on diversity

and CO

reduction, both related to the progress towards

our 2030 targets.

A detailed breakdown of the targets, including the 2024

performance, is included in the General information on

page 87 and the Remuneration report on pages 59-61.

We have integrated environmental policies per operating

company as part of the health and safety policy focusing

on various environmental-related topics such as climate

and energy, waste, transportation and supply chain. They

also address our (local) compliance with environmental

laws and continuous improvement of practices. We are in

the process of considering an environmental policy that

involves the whole group.

horizons for specific climate-related risks and opportunities.

We recognize the importance of such an analysis and plan

to expand our assessment in the coming years to align

with best practices and regulatory expectations

Due to the locations of our (production) facilities, the

physical (acute) 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 (suppliers with an annual purchase

volume above €1 million) 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 a significant

economic crisis due to physical damage to business, or

human migration due to ﬂooding.

Our analysis identified four potential climate-related

transition risk areas that could impact TKH’s strategy and

operations, which are presented in the table on the left.

In addition to managing risks, we have identified seven

key opportunity areas to drive climate adaptation and

mitigation, which are presented in the table on the left.

The climate-related risks and opportunities are also part

of the DMA process.

101Annual Report 2024 TKH Group

TKH is not excluded from any EU Paris-aligned

benchmarks as we do not meet any of the exclusion

criteria stated in Article 12.1 (d) to (g) of Commission

Delegated Regulation (EU) 2020/1818.

Transition plan

In 2024, we further developed the existing transition plan,

including by further developing the scope 3 GHG

emissions inventory and targets. Our transition plan has

been defined based on the following steps.

1 Develop a GHG Calculation Framework

We developed unified guidelines for all companies to

calculate their scope 1, 2, and 3 GHG emissions

according to the GHG protocol. The guidelines are

included in our Sustainability Reporting Manual as well as

in our Cognos system used for sustainability reporting.

2 Define Carbon footprint & baseline

We reviewed our calculated GHG emissions for scope 1,

2, and 3. We completed GHG calculations for previously

unreported scope 3 categories. For scope 1 and 2, the

base year for the emission target is set at 2019 as part of

our Accelerate 2025 targets defined in November 2021.

The base year for the emission target for scope 3 is 2024,

because the carbon footprint inventory for scope 3 was

completed in 2024.

3 Identify Emissions Hotspot

Based on the reported carbon footprint by each operating

company, we have identified the (group of) operating

companies and business segments with the highest

emissions. These are Smart Manufacturing systems (VMI

– tire building machines) and Smart Connectivity systems

(TKF - cable production company) due to their size and

global footprint. In the roadmap for achieving the reduc-

tion targets, these operating companies are prioritized.

4 Benchmarking

We benchmarked our carbon footprint with best practices

and investigated peers’ decarbonization initiatives. We

also evaluated emission reduction potential of taken or

planned actions, as per information collected in the as-is

analysis.

5 Assessment of ambition and identification of levers

We collected external and internal views on our reduction

ambitions. Also we identified emission reduction initiatives

by assessing our product portfolio to determine potential

portfolio shifts, and by assessing technology to determine

feasible options to reduce emissions in our value chain.

6 Business case, Strategy & Recommendations

We created business cases for prioritized decarbonization

initiatives. We still need to develop recommendations for

additional decarbonization initiatives to close the gap and

reach the target for scope 3 emission. Based on the

information available, we formulated our decarbonization

strategy.

7 SBTi Target setting

We assessed possible scenarios based on identified

emission reduction initiatives. We agreed upon the target

setting for scope 1 and 2 aligned with SBTi (science-

based target initiative). For this we used the near-term

SBTi tool, aligning with the Paris Agreement and 1.5˚C

scenario. We will consider to engage with SBTi for

commitments and target approval.

8 Organizational implementation

The transition plan has been approved by the Executive

and Supervisory Board. The CEO is responsible for the

implementation of the transition plan, supported by the

Director Sustainability. We analyzed the consequences of

our defined strategy for our organization (e.g. finance,

personnel capacity, procedures). We designed mecha-

nisms to enable or accelerate organization implementa-

tion, such as awareness campaigns and integrating

sustainability into our annual strategic plan and budget

process. Progress of the implementation is monitored

through the quarterly sustainability reporting. This ensures

that the transition plan is embedded and aligned with

TKHs’ overall business strategy and financial planning.

GHG emissions reduction targets and ambitions

In 2021, as part of our CMD targets, we announced an

ambition to reduce our carbon emissions for our own

operations (scopes 1 and 2) by 100% by 2030. This is a

carbon neutral market-based target, also taking into

consideration GHG removals or carbon credits, if any. We

take 2019 as our baseline, which represents TKH’s

activities prior to COVID-19. Because these CMD targets

are more ambitious than the SBTI-aligned targets, they are

also aligned with the Paris Agreement and 1.5˚C scenario.

In 2024, we aligned our near-term reduction targets with

SBTi, resulting in a 2030 carbon reduction target for

scope 1 and 2 of 42.0%. The SBTi-aligned net-term

carbon reduction targets by 2030 are based on net-zero

science-based targets, meaning excluding carbon credits

and including neutralization. The SBTi-aligned carbon

reduction targets are calculated based on the SBTi

GHG emissions reduction targets scope 1 and 2

Reduction target Target year Base year

Scope 1 and 2 – SBTi-aligned 42.0% 2030 2023

Scope 1 and 2 – CMD carbon neutral market-based target 100.0% 2030 2019

The reduction targets value are in absolute terms as % of the base year. CMD: Capital Markets Day.

TKH Group Annual Report 2024102

Future expected developments such as changes in sales

volumes, autonomous growth, shifts in customer

Terms used Definition

Greenhouse Gas (GHG)

Protocol

The Greenhouse Gas (GHG) Protocol is a comprehensive global standardized framework to help

measure and manage GHG emissions from private and public sector operations, value chains, and

mitigation actions. The SBTi’s criteria and recommendations, including the Corporate Net-Zero Stan-

dard, rely on the accounting frameworks developed by the GHG Protocol.

Carbon Carbon dioxide (CO

- by far the biggest contributor to climate change).

Near-term science-based

targets

Near-term science-based targets outline GHG emissions reduction over the coming 5 to 10 years

that are in line with what climate science deems necessary to limit warming to 1.5°C above pre-

industrial levels.

Net-zero science-based

targets

SBTi-aligned net-zero targets include both near- and long-term science-based targets. They are

GHG mitigation targets that imply:

•

Reducing scope 1, 2 and 3 emissions to zero or a residual level as defined within eligible pathways;

• Permanently neutralizing any residual emissions at the net-zero target year and any GHG

emissions released into the atmosphere thereafter.

Neutralization Neutralization refers to measures that companies take to counterbalance the climate impact of GHG

emissions which are impossible to avoid after their net-zero target date. Neutralization involves

permanent removal and storage methods of CO

from the atmosphere. In order to achieve net-zero,

once companies have achieved their long-term target, they must neutralize any residual emissions

(usually less than 10% of base year emissions) using permanent carbon removals and storage.

Forward looking

ambition adjustment

An adjustment applied by SBTi target-setting tools to calculate the ambition of near-term scope 1

and 2 absolute and intensity targets that do not use the most recent reporting year as the base year.

Net-zero emissions Net-zero emissions are achieved when human-caused GHG emissions are balanced by removing

the same quantity of emissions from the atmosphere over a specified period of time. Net-zero GHG

emissions must be achieved at the global level to stabilize temperature increase at 1.5°C.

Carbon neutral Carbon neutral is generally used when counting the use of carbon offsets (i.e. investing in

ojects that remove carbon from the atmosphere to counterbalance some or all GHG emissions)

Carbon neutral does not necessarily mean that direct emission reductions have taken place. Carbon

neutrality claims also do not necessarily include GHGs other than carbon dioxide.

Scope 1 and 2

We have developed a decarbonization strategy (see water-

fall chart on the next page) to assess and align our actions

with our ambition of reducing our carbon footprint in our

own operations by 100% by 2030 (carbon neutral). In the

decarbonization strategy towards 2030 we assumed a

15% increase in our scope 1 and 2 emissions due to

activity growth.

The first key decarbonization lever is electrification. This

represent 17.1% of the reduction. We aim to replace 100%

our ﬂeet with electric cars by 2030. In the coming years we

also scheduled several replacements of gas using (heating)

systems by electric (heat) pumps. The second key

decarbonization lever is energy efficiency by reducing the

amount of energy we consume. This represent 11.7% of the

reduction. The third key decarbonization lever is renewable

energy, representing 49.0% of the reduction. The share of

self-generated renewable electricity will increase in the

coming years due to investments done and planned related

to solar panels on our buildings and parking places. In

cross-sector (absolute contraction methodology) emission

reduction factor and the base year 2023. The near-term

reduction target includes a forward looking ambition (FLA)

adjustment, which enables companies to count early

emission reductions towards achieving their near-term

SBTs, while at the same time prevents companies from

setting targets that have already been achieved.

In 2024, we completed our scope 3 emissions inventory

and started assessing our ambitions and identifying levers

for scope 3. We are currently working on the detailed

plans for implementation in the coming years.

preferences and demand, and new technologies are part

of the GHG emissions in the coming years and therefore

also part of the reduction target. We have assumed that

this will result in a 15% increase in our GHG scope 1 and

2 emissions. The impact of acquisitions and divestments

in 2024 on the emissions inventory of the base year 2023

is considered to be non-significant because they relate to

non-production sites. Inﬂuences from external factors in

the base year, such as temperature anomalies, are

considered to be non-material.

Decarbonization levers

We evaluated emission reduction potential of taken or

planned actions, as per information collected in the

reported carbon footprint and sustainability-related plans

for the period 2025-2029 as submitted by each operating

company. This covers both identified emission reduction

initiatives related to our own operations, as well as the

feasible options to reduce emissions in our value chain.

The table on the next page provides an overview of the

most relevant decarbonization levers including the scope

where it applies.

103Annual Report 2024 TKH Group

Decarbonization levers

GHG emission

category

Description

1 Electrification Scope 1 Electrify the organization ﬂeet, and change of energy sources to electricity (reducing gas consumption).

2 Energy efficiency Scope 1 and 2 Reduce energy consumption by using technologies with lowest possible energy consumption.

3 Renewable energy Scope 2 Increase share of renewable energy and self-generated renewable electricity by installing solar installations.

4 Business model innovation Scope 3

Transitioning from a product-based model to a service-based model, resulting in less emissions from the production and use of sold products.

5 Product and service design Scope 3

Design products and services with sustainability as a priority to lower emissions throughout their lifecycle.

6 Supply chain and circularity

(supplier engagement)

Scope 3

Collaborate with suppliers to enhance their environmental performance by setting joint emission reduction targets, providing training and

resources, and establishing supplier sustainability programs. Prioritize sourcing from suppliers with lower carbon footprints and choose

sustainable materials and products by incorporating carbon reduction criteria into procurement decisions.

7 Customer engagement Scope 3

Educate and involve customers to encourage the sustainable use of sold products by offering recycling incentives and providing guidance on

reducing carbon footprints (to reduce emissions associated with product use and disposal).

8 Waste management Scope 3

Adopt operational policies on waste management by implementing waste reduction and recycling programs.

9 Transportation Scope 3

Reduce emissions from transportation from suppliers (purchased goods) and to customers (sold products) by using other ways of transportation.

10 Travel Scope 3

Adopt operational policies on business travel and employee commuting by promoting remote work to cut down on commuting emissions,

and encouraging the use of public transport.

addition, the share of renewable energy will increase by

purchasing renewable energy and green certificates.

The planned actions are expected to further decarbonize

our scope 1 and 2 footprint by 77.8% over the period

2025-2030. Compared to the base year 2023, we expect to

decarbonize our scope 1 and 2 emissions by 79.6%

(period

2023-2030), which is above the SBTi-aligned reduction

target of 42.0

%. The remaining expected reduction of

20.4%, to realize our carbon neutral ambition by 2030,

will be further investigated in 2025 and included in our

decarbonization strategy. The realization of the target is

partly dependent on available and affordable low-carbon

technologies and

green certificates until 2030. This might

be a challenge for some countries in which we operate

Replacing gas-based systems with electric heat pumps

in older buildings presents challenges and may lead to

locked-in emissions. Green certificates for gas will be

used where possible for the residual emissions and any

remaining emissions in 2030 would have to be offset.

Scope 3

In 2024, we completed our scope 3 emissions inventory.

The boundaries and defin

itions for scope 3 emissions are

aligned with the GHG protocol. The main contributors in

our scope 3 emissions are the emissions resulting from the

purchase of raw materials and products used to manufac-

ture our products (category 1), and the emissions occurring

during the use phase of our products (category

11).

Using our products during their life time results in direct

and indirect emissions. Direct emissions are resulting from

products that directly consume energy (electricity) during

use, for example our vision systems or tire building

machines. Our cables, for example energy and communi-

Base year 2023 Reduction realized

2024

Activity growth

2025-2030

1 Electrification 2 Energy efficiency

3 Renewable energy

Target year 2030

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

2,217

-79.6%

expected reduction

based on current plans

2030 carbon neutral

market-based target

(CMD target)

Carbon emmisions reduction scope 1 and 2

-42.0%

SBTi 1.5C-aligned

reference target value

14,781

-2,532

-1,725

-7,242

20.4%

reduction to

be planned

3,013

-2,487

reductions planned in own operations

TKH Group Annual Report 2024104

Therefore, these emissions resulting from energy losses

are considered as indirect emissions within category 11 of

scope 3, and included in the scope 3 category 11

emissions inventory according to the GHG protocol.

When it comes to reducing carbon emissions across our

value chain (scope 3), we have identified seven key levers

that should help us achieve our ambition. Collaboration

Electrification, energy efficiency, and renewable

energy

Efficient energy consumption and the reduction of CO

emissions are important performance indicators for all our

sites. Under the terms of the EU Energy Efficiency

Directive (2012/27/EU), member states must ensure that

large organizations undergo an energy audit to gather

information on real-time energy consumption and gain

insight into the potential for energy savings. At a country

level, where applicable, TKH developed an integrated plan

for energy efficiency to meet the requirements of this

Directive. We use these reports for our energy reduction

plan, among other things. We regularly monitor the

identified potential for energy savings to ensure our

progress and compliance with improvement plans.

Energy-saving measures that already have been

implemented include replacing conventional lighting with

LED lighting, replacing central-heating boilers with

energy-efficient models, replacing LPG forklifts with

cation cables, together with accessories, transport

electricity between two locations. During this transport,

part of the energy is lost, as the passage of the electric

current through the conductor produces heat, known as

Joule effect. This energy loss is not related to a direct

consumption of energy by the cable, but due to the

inherent resistivity of the conductive material when

electricity is transmitted through the conductor.

Decarbonization levers Key actions

1 Electrification

•

Phase out gas installations.

•

Phase out petrol and diesel cars from our ﬂeet.

•

New purchased or leased forklifts are electric, resulting in increasing percentage of electric forklifts.

2 Energy efficiency

•

Develop smart buildings solutions, e.g. using LED lights, intelligent thermostats and other building

automation (light sensors, automatic switch on/off).

•

Reduce unnecessary space in office facilities to reduce energy usage.

3 Renewable energy

•

Increase percentage of renewable electricity.

•

Increase percentage of self-generated renewable electricity.

•

Add renewable electricity requirements in rental contracts.

4 Business model innovation

•

Develop and implement new service programs, and extend existing service programs.

5 Product and service design

•

Implement development principles based on EcoDesign.

•

Improve energy efficiency of products during use phase.

•

Improve recyclability of materials part of sold products.

6 Supply chain and circularity

(supplier engagement)

•

Increase share of recycled content part of copper purchase.

•

Prioritize sourcing from suppliers with lower carbon footprints and choose sustainable materials

and products by incorporating carbon reduction criteria into procurement decisions.

•

Engaging with strategic suppliers to stimulate them to reduce their carbon footprint.

•

Setting joint emission reduction targets.

•

Providing training and resources, and establishing supplier sustainability programs.

7 Customer engagement

•

Educate and involve customers to encourage the sustainable use of sold products.

•

Offering recycling incentives.

•

Providing training and guidance on reducing carbon footprints.

8 Waste management

•

Implementing waste reduction programs.

•

Implementing recycling programs.

9 Transportation

•

Reduce/eliminate use of air freight.

•

Implement green transport procurement strategy.

10 Travel

•

Promote online meetings and remote work.

•

Encouraging the use of public transport.

•

Bicycle purchase and repair plans for employees as part of their employee benefit budget.

with our value chain partners is key to collectively

decarbonize. These collaboration projects are grouped

under the categories supply chain and circularity (supplier

engagement) and customer engagement. With business

model and product innovations we targeted to reduce the

emission during their use phase. Lastly, we identified

decarbonization opportunities related to waste

management, upstream and downstream transportation,

and travel although the contribution of these categories

are of less impact compared to the other decarbonization

levers. In 2025, we will work further on the implementation

of our decarbonization strategy for scope 3 and expected

decarbonization opportunities by developing detailed

plans per decarbonization lever.

Key actions planned and progress 2024

The following key actions per decarbonization lever are

planned.

105Annual Report 2024 TKH Group

conveniently including those within our employee and

visitor parking areas.

Our scope 2 emissions were further reduced as a result of

a higher share of renewable energy, resulting from a shift

to renewable energy sources and self-generated energy

through solar panels installed on our buildings and

properties, combined with purchased green certificates

which was the main contributor in the reduction of scope

2 emissions. The share of renewable energy consumption

in the total energy consumption increased from 55.5% in

2023 to 61.9% in 2024.

Business model innovation, and product and

service design

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 to undertake such an analysis

specifically for tire building machines. This cradle-to-

grave analysis examined the entire lifecycle of the

machine, emphasizing aspects under VMI’s control.

EcoDesign is a crucial approach that VMI values, and VMI

provides training on it to their lead engineers. This training

equips engineers with the knowledge and tools to

seamlessly incorporate environmental considerations into

the product development process, leading to a more

sustainable product and therefore lower scope 3

emissions. EcoDesign essentially 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 a product.

This approach aims to create products that have the least

possible negative impact on the environment throughout

their entire life cycle, from the initial idea to when they’re

no longer in use. During the training, engineers focus on

a strategy called life cycle design using a tool called the

LIDS wheel. This strategy encourages engineers to think

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. In addition, transitioning from

a product-based model to a service-based model will

result in less emissions from the production and use of

sold products.

Supply chain and circularity (supplier engagement)

We actively engage with our suppliers to share our

ambitions and encourage these key stakeholders to do

the same. Key impact areas for suppliers are: increasing

process efficiency; moving to renewable energy; and

reducing the use of fossil materials and fuels. We also see

more intensive collaboration with suppliers on developing

new innovative solutions as a key driver towards reducing

our full value chain carbon footprint. We held in-depth

discussions with selected key suppliers on how their

plans can support our ambition and how we can collab-

orate to close any gaps. In 2024, one of our suppliers

introduced a first-of-its-kind circular jacketing solution for

low- and medium-voltage cables that marks a significant

milestone in sustainable development for the wire and

cable industry. This fully formulated natural medium-

density polyethylene (MDPE) jacketing compound

contains 50% post-consumer recyclate, reducing CO

emissions during production by an estimated 0.2 kg per

kg of compounded polymer – a 13% decrease compared

to its virgin equivalent.

electric forklifts, monitoring and reducing energy peaks,

and investing in energy from sustainable sources, such as

solar panels. With a total of 64,000 m² of office and

factory space in Haaksbergen, 3,251 lighting fixtures have

been replaced by LED. The total effect of replacing these

3,251 fixtures on electricity consumption was calculated

at an annual saving of 1,840 MWh at the end of the

project. By constantly improving our production processes

and procedures, and continuing to explore new,

energy-efficient solutions, and investigating the opportu-

nities to invest in self-generated electricity, we aim to

address the energy factor wherever possible. By doing so,

we are attempting to minimize both CO

emissions and

energy costs.

In 2024, our net carbon footprint for scopes 1 and 2

decreased by 70.3% compared with the reference year,

2019 (2023: reduction of 64.3% compared to 2019). We did

not purchase any carbon offsets. At our sites, we reduced

our scope 1 (direct) emissions. This was mainly driven by

energy efficiency measures, our program to replace gas

with alternative energy sources, the continuation of working

from home, and mild winters. New buildings, such as our

new subsea factory in Eemshaven in the Netherlands, are

constructed without gas as much as possible. On balance,

the emissions resulting from gas consumption decreased

by 27.3% compared to the previous year. Emissions from

transportation from own and/or controlled vehicles, which

include emissions from lease cars, decreased by 11.2%.

This is mainly due to the electrification of our lease car ﬂeet

and promoting online collaboration to limit travel as much

as possible. Since 2022, new company cars leased in the

Netherlands must be electric, resulting in a share of electric

cars of 34.8% of the total lease car ﬂeet. From 2024, all

new lease cars within the group must be electric, with only

a few exceptions. Additionally, we are investing in the

essential charging infrastructure and continuously

expanding our network of electric vehicle charging stations,

TKH Group Annual Report 2024106

Customer engagement

Many of our customers are setting targets for

decarbonization themselves, moving to renewable

electricity and cleaner sources of powering their

processes. This is increasingly leading to a lower carbon

footprint during the use phase of our products. Through

customer engagements, we aim to align customers

decarbonization targets with our ambitions.

Waste management

This lever focuses on reducing the end-of-life impact of

the materials in our products. This can mainly be achieved

by increasing the amount of renewable materials, which

can be done through applying recycled materials, among

others. In 2024, our operating company TKF introduced

the green label, by announcing the Green YMvK: the first

green installation cable. This cable consist of 100%

recycled copper and bio-based plastics for minimal

environmental impact. During the research we looked at

the reuse of used raw materials, without making

concessions to the quality and especially the user-friend-

liness of the cable. The packaging was also included in

this. For example, this cable is supplied on 100 meter rings

or on reels, where the reels are made of 100% recycled

material and the rings are provided with a foil that consists

of 50% recycled material and that is fully recyclable.

Transportation

We actively engage with our transportation service

providers to share our ambitions. For example, our

operating company TKF has worked with one of their

transportation service providers for over two years to

achieve zero-emission transport. Currently, 80% of TKF’s

transport in the Netherlands runs on 100% HVO

(Hydrotreated Vegetable Oil), including the cranes.

Additionally, since last spring, all our transport forklifts

have been 100% electric. We are now taking it a step

further by introducing new electric trucks.

Travel

Recognizing our global presence and the necessity of

travel for meetings and maintenance at customer sites, we

actively promote alternatives such as telephone and video

conferences whenever feasible. This approach allows us to

reduce the environmental footprint associated with

travel while still ensuring effective communication with our

customers on a global scale. At one of our operating

companies, we use shuttle buses to make our company

accessible via public transportation, contributing to

sustainability by reducing individual car usage and

promoting eco-friendly commuting options. Additionally,

we provide bicycles for employees, further encouraging

sustainable transportation choices and reducing the

environmental impact of daily commutes.

Transition plan related investments

No capital expenditures (capex) have been made related

to coal, oil or gas-related economic activities. There have

not been any site-related investments in 2024 with

locked-in GHG emissions that might impede our

emission-related targets, based on our assessment as

per end of 2024. Locked-in GHG emissions of our

products could inhibit our scope 3 GHG emissions

reduction. For a quantitative assessment of our potential

locked-in GHG emissions associated with purchased

foods and use of sold products, please refer to the GHG

metrics section below.

For climate mitigation and adaption, the current expendi-

tures are included in the EU taxonomy reporting (see

Appendix). In the coming 5 years, we planned invest-

ments to support the implementation of our transition

plan with regard to scope 1 and 2 GHG emissions.

Identified investments in the form of capex amounts to

€3.6 million and are mainly related to replacements of gas

systems with electric heat pumps, installation of solar and

photovoltaic panels, and other investments to reduce

energy consumption. We identified €2.7 million additional

operating expenses (opex) in the coming 5 years to

implement sustainability related programs. This is calcu-

lated based on the identified additional opex for 2025

times the 5 years period. The additional opex are related

to the hire of additional employees for sustainability

functions at operating companies, supply chain

programs, trainings, replacement of cars, purchase of

green certificates, implementation of a leadership and

development program for females, and other programs.

The capex and opex investments are based on plans and

estimates at this moment and will be examined again in

2025 whether additional investments and expenditures

are necessary to meet the targets and our ambitions.

These investments are not planned for aligning our

economic activities (turnover, capex, opex) with the

criteria established in Commission Delegated Regulation.

GHG metrics

The GHG emissions are prepared on a consolidated

basis. The scope of the consolidation is equal to the

scope of consolidation for the financial statements. The

companies in which TKH has a minority ownership stake

are not included in the sustainability statements, because

we have no operational control over them. The GHG

inventory boundaries for scope 1, 2, and 3 are based on

the GHG protocol. The turnover to calculate the energy

intensity rate and the GHG emissions intensity reconciles

with the total turnover included in note 22 of the financial

statements. The total turnover included in the financial

statements is based on the requirements in accounting

standard IFRS 15.

We have not used contractual instruments for the sale

and purchase of energy bundled with attributes about the

energy generation or for unbundled energy attribute

claims.The percentage of scope 1 GHG emissions from

regulated emission trading schemes is zero.

107Annual Report 2024 TKH Group

GHG emissions scope 1 and 2

Retrospective

Milestones and target years

in ton CO

-equivalent unless otherwise stated

2024 2023

base year

movement %

2030

target year

% target / base year

Scope 1 GHG emissions

Gross scope 1 5,049 6,285 -1,237 -19.7% 3,645 42.0%

Scope 2 GHG emissions

Gross scope 2 (location-based) 54,794 55,677 -883 -1.6%

Gross scope 2 (market-based) 7,245 8,496 -1,251 -14.7% 4,928 42.0%

Total scope 1 and 2 GHG emissions (location-based) 59,843 61,962 -2,119 -3.4%

Total scope 1 and 2 GHG emissions (market-based) 12,294 14,781 -2,487 -16.8% 8,573 42.0%

GHG emissions scope 3

in ton CO

-equivalent unless otherwise stated

2024

base year

% of total

Significant scope 3 GHG emissions

Cat. 1 – purchased goods and services 420,168 12.8%

Cat. 2 – capital goods 19,843 0.6%

Cat. 3 - fuel- and energy-related activities 11,330 0.3%

Cat. 4 - upstream transportation and distribution 4,805 0.1%

Cat. 5 - waste generated in operations 5,246 0.2%

Cat. 6 - business travel 4,941 0.2%

Cat. 7 - employee commuting 10,237 0.3%

Cat. 9 - downstream transportation 4,282 0.1%

Cat. 11 - use of sold products 2,731,018 83.1%

Cat. 12 - end-of-life treatment of sold products 74,436 2.3%

Total gross scope 3 GHG emissions 3,286,306 100.0%

GHG emissions total

in ton CO

-equivalent unless otherwise stated

2024

Total GHG emissions

Total GHG emissions (location-based) 3,346,149

Total GHG emissions (market-based) 3,298,600

GHG emissions intensity (location-based) 1,954

GHG emissions intensity (market-based) 1,926

Scope 1

Our scope 1 emissions derive from fuel for leased and

owned cars, fuel for buildings, and gas for building

heating. Scope 1 emissions decreased by 19.7%

compared to previous year, mainly driven by a reduction

of our gas consumption and electrification of our ﬂeet.

Emissions from gas consumption reduced by 27.3% due

to energy efficiency, and an impact from divestments.

The share of electric cars in the total ﬂeet increased from

26.1% in 2023 to 34.8% in 2024, on balance resulting in

an emission reduction of 11.2% compared to previous

year.

The basis for scope 1 emissions is activity data, which in

turn are based mostly on meter readings, invoices, and

data provided by suppliers. All conversion factors are

reviewed annually and updated if necessary. For scope 1,

TKH calculates the energy use and the related CO

emissions, using conversion factors from co2emis-

siefactoren.nl. TKH uses tank-to-wheel emission factors.

Scope 2

Our scope 2 accounts for electricity consumption at our

production sites and offices. Scope 2 location-based

emissions decreased by 1.6%. This decrease is a

TKH Group Annual Report 2024108

combination of factors, such as an impact of divestments,

and the shift from cable production activities from China

to Poland resulting is on balance less energy

consumption. Due to the nature of the reporting, the

location-based method does not take investments in

renewable energy into consideration. Scope 2 market-

based emissions decreased by 14.7% as a result of

increased purchased renewable energy (20.8%) and

self-generated renewable energy (43.8%) compared to

the previous year. Electricity consumption covered by

green certificates was on a similar level as 2023.

Location-based emissions

Emissions are calculated by using the country-specific

conversion factors for electricity for the energy grid. This

method reﬂects the energy mix within the specific country

of consumption and does not consider any purchase of

renewable energy or credits. To calculate GHG emissions,

the EcoInvent 3.11 database has been used.

Market-based emissions

Emissions are calculated by taking a specific conversion

factor which an organization uses for its purchased

electricity. Renewable energy purchases and green

certificates are considered when accounting for indirect

GHG emissions using the market-based approach.

To calculate the residual GHG emissions, the conversion

factor of co2emissiefactoren.nl been used for all

remaining entities.

using material weight per material type, multiplied by a

matching emission factor from the EcoInvent 3.11

database.

10.7% of the reported emissions is based on the

spend-based method. The costs per material per

operating company has been corrected for inﬂation in the

relevant country of spend using inﬂation rates from

IMF2024, and converted from local currency to EUR,

multiplied by the corresponding spend-based emission

factor from Exiobase (2019).

For emissions derived from purchases of goods, 12.8% of

the emissions have been based on supplier-specific data.

2 capital goods

GHG emissions associated with the additions to tangible

assets, are calculated as the amount of capitalized cost

per type of investment (land, buildings, machinery instal-

lations, and other equipment), multiplied by a matching

spend-based emission factor from Exiobase (2019).

3 fuel- and energy-related activities

GHG emissions related to fuel- and energy-related

activities not accounted for in scope 1 or scope 2,

comprise indirect emissions associated with the

production of purchased fuels, gas and electricity. The

GHG emissions are calculated using the country emission

factors from the EcoInvent 3.11 database multiplied by

the scope 2 (electricity) consumption, and the emission

factors from co2emissiefactoren.nl for the others.

4 upstream transportation and distribution

The GHG emissions associated with the upstream

transportation are calculated as follows.

18.3% of the reported emissions is based on the asset

tool 2024v2.2. of CE Delft. The asset tool values are

Scope 3

Scope 3 emissions are the indirect GHG emissions

attributed to an organization’s value chain. Scope 3

comprises 15 categories. The main development during

the year was the completion of the scope 3 GHG

emissions calculation, by adding the categories purchased

goods and services (1), capital goods (2), transportation

(4 and 9), employee commuting (7), use phase (11), and

end-of-life treatment of sold products (12). In addition,

the collection of waste data for waste generated in own

operations (5) has been extended. With these additions,

cover approximately 97% of our value chain emissions.

Category 1 and 11 accounted for approximately 96% of

the total scope 3 emissions.

1 purchased goods and services

GHG emissions associated with the purchase of services

are calculated as the direct cost associated with a

specific type, multiplied by a matching emission factor

from Exiobase (2019).

The GHG emissions associated with the purchase of

goods are calculated as follows. 56.2% of the reported

emissions is based on the asset tool 2024v2.2. of CE

Delft. The asset tool values are based on EcoInvent 3.9.1

processes, the used LCIA method is IPCC 2021 GWP100

V1.02.

33.1% of the reported emissions is based on the

average-date method. The GHG emissions are calculated

GHG emissions scope 1 and 2 – progress towards CMD targets

in ton CO2-equivalent unless otherwise stated

2024 2023 2019

base year

Gross scope 1 GHG emissions 5,049 6,285 8,642

Gross scope 2 GHG emissions (market-based)

7,245 8,496 32,773

Total Sscope 1 and 2 GHG emissions (market-based) 12,294 14,781 41,415

Carbon footprint reduction scope 1 and 2 compared to based year (market-based)

-70.3% -64.3%

109Annual Report 2024 TKH Group

based on EcoInvent 3.9.1 processes, the used LCIA

method is IPCC 2021 GWP100 V1.02.

46.3% of the reported emissions is based on the

average-date method. The GHG emissions are calculated

using distance, weight, and method of transportation per

shipment (road, rail, water, and air), multiplied by a

matching emission factor from the Defra 2024 database.

In case the exact distance cannot be derived from our

systems, we have assumed the distance between the

capitals of the countries. In case the exact weight cannot

be derived from our systems, we have assumed an

estimated weight per material based on the total weight.

35.4% of the reported emissions is based on the

spend-based method. The transportation costs per

operating company has been corrected for inﬂation in the

relevant country of spend using inﬂation rates from

IMF2024, and converted from local currency to EUR,

multiplied by the corresponding spend-based emission

factor from Exiobase (2019).

5 waste generated in operations

GHG emissions of waste generated in own operations

refers to the emissions resulting from the disposal and

treatment of waste produced by a company’s operations.

The GHG emissions are calculated using actual waste

data per operating company. The following material

categories are used: copper, plastics (PVC, XLPE, PE),

other plastics, steel, aluminium, wood, paper and board,

electronics, hazardous materials, and other materials. For

each category the waste treatment has been reported

being recycling, incineration, landfill or unknown. In case

the waste treatment is uncertain, the treatment is

reported under unknow. This means that that highest

waste treatment emission factor is used for that particular

material category. We applied the assumption that the

majority of copper, aluminium, and steel waste will be

recycled. The GHG emissions are calculated using the

material-specific emission factors from the EcoInvent 3.11

database multiplied by the weight of waste per material.

For the category other materials we used the median of

the emission factors applied for the other material

categories.

6 business travel

GHG emissions associated with the business travel

activities are calculated as the amount of kms per travel

category (air short-haul, air medium-haul, air long-haul,

rail, bus, and car) multiplied by the travel-specific

emission factors from the EcoInvent 3.11 database.

7 employee commuting

GHG emissions related to employee commuting are

linked to the indirect emissions generated from the

transportation of employees between their homes and

their place of work. The emissions are calculated as the

amount of kms per commuting category (car, public

transport, and other) multiplied by the commuting-specific

emission factors from the EcoInvent 3.11 database.

Emissions have been calculated based on a combination

of activity data and estimations. Estimations are for

example based on answers to a survey with questions

regarding the means of transportation and type, and

average weekly days spent working in the office. These

average commuting weeks have then been multiplied by

the number of employees of the particular operating

company.

9 downstream transportation

The GHG emissions associated with the downstream

transportation are calculated as follows.

16.9% of the reported emissions is based on the asset

tool 2024v2.2. of CE Delft. The asset tool values are

based on EcoInvent 3.9.1 processes, the used LCIA

method is IPCC 2021 GWP100 V1.02.

81.2% of the reported emissions is based on the

average-date method. The GHG emissions are calculated

using distance, weight, and method of transportation per

shipment (road, rail, water, and air), multiplied by a

matching emission factor from the Defra 2024 database.

In case the exact distance cannot be derived from our

systems, we have assumed the distance between the

capitals of the countries. In case the exact weight cannot

be derived from our systems, we have assumed an

estimated weight per material based on the total weight.

1.9% of the reported emissions is based on the

spend-based method. The transportation costs per

operating company has been corrected for inﬂation in the

relevant country of spend using inﬂation rates from

IMF2024, and converted from local currency to EUR,

multiplied by the corresponding spend-based emission

factor from Exiobase (2019).

11 use of sold products

GHG emissions of the use of sold products refers to the

direct and indirect emissions resulting from the use of our

products during their life time.

Direct emissions are resulting from products that directly

consume energy (electricity) during use, for example our

vision systems or tire building machines. Our cables, for

example energy and communication cables, together with

accessories, transport electricity between two locations.

During this transport, part of the energy is lost, as the

passage of the electric current through the conductor

produces heat, known as Joule effect. This energy loss is

not related to a direct consumption of energy by the

cable, but due to the inherent resistivity of the conductive

material when electricity is transmitted through the

TKH Group Annual Report 2024110

conductor. Therefore, these emissions resulting from

energy losses are considered as indirect emissions within

category 11 of scope 3. The GHG emissions are

calculated as follows.

75.4% of the reported emissions is based on the asset

tool 2024v2.2. of CE Delft. The asset tool values are

based on EcoInvent 3.9.1 processes, the used LCIA

method is IPCC 2021 GWP100 V1.02.

24.6% of the reported emissions is based on the

average-date method. The GHG emissions are calculated

using the number of products sold, the estimated energy

use per product or group of products, and the expected

lifetime, multiplied by the country-specific emission factors

from the EcoInvent 3.11 database. We assumed that the

area in which the use phase takes place is equal to our

customer’s location. In case the exact energy usage of our

product cannot be derived from our systems or other

sources, we used estimates or general available sources.

12 end-of-life treatment of sold products

GHG emissions of end-of-life treatment of sold products

refers to the emissions resulting from the disposal and

treatment of our product at the end of their lifetime. The

GHG emissions are calculated as follows.

92.0% of the reported emissions is based on the asset tool

2024v2.2. of CE Delft. The asset tool values are based on

EcoInvent 3.9.1 processes, the used LCIA method is IPCC

2021 GWP100 V1.02.

0.3% of the reported emissions have been based on LCA

data obtained from suppliers.

7.7% of the reported emissions are calculated using material

weight data per

operating company. The following material

categories are used: copper, plastics, other plastics, steel,

aluminium, wood, paper and board, electronics, lenses, fibre,

hazardous materials, and other materials. For each category

the waste treatment has been reported being recycling,

incineration, landfill or unknown. In case the waste treatment

is uncertain, the treatment is reported under unknow. This

means that that highest waste treatment emission factor is

used for that particular material category. We applied the

assumption that copper, aluminium, and steel waste will be

100% recycled. The GHG emissions are calculated using the

material-specific emission factors from the EcoInvent 3.11

database multiplied by the weight per material. For the

category other materials we used the median of the emission

factors applied for the other material categories.

Other categories

The other scope 3 categories are considered as not-

applicable for TKH, because we have limited activities

connected to these categories.

•

Category 8 upstream leased assets: we do not have

any leased assets that are not in our control.

•

Category 10 processing of goods sold: we do not sell

physical products that require further processing by our

clients.

•

Category 13 downstream leased assets: we do not act

as a lessor.

•

Category 14 franchises: we do not operate with

franchises.

•

Category 15 investments is designed primarily for

private financial institutions (e.g., commercial banks),

but is also relevant to entities with investments not

included in scope 1 and scope 2. Our business

activities do not involve significant financial investments

that lead to indirect GHG emission.

Energy consumption and mix

in MWh unless otherwise stated

2024 2023

movement %

Fuel consumption from coal and coal products 1,276 1,105 171 15.5%

Fuel consumption from natural gas 16,710 20,147 -3,437 -17.1%

Consumption of purchased or acquired electricity, heat, steam, and cooling from

fossil sources

15,837 20,876 -5,042

-24.1%

Total fossil energy consumption 33,823 42,131 -8,308 -19.7%

Share of fossil energy consumption in total energy consumption (%) 37.7% 44.5% -6.8%

Consumption from nuclear sources 336 0 336

Share of consumption from nuclear sources in total energy consumption (%) 0.4% 0.0% 0.4%

Consumption of purchased or acquired electricity, heat, steam, and cooling

from renewable sources 53,852 51,449 2,403 4.7%

Consumption of self-generated non-fuel renewable energy 1,658 1,153 505 43.8%

Total renewable energy consumption 55,510 52,602 2,908 5.5%

Share of renewable energy consumption in total energy consumption (%) 61.9% 55.5% 6.4%

Total energy consumption 89,668 94,733 -5,065 -5.3%

Energy intensity rate (for high climate impact sectors) in MWh/turnover in million €

52.4 51.3 1.1 2.1%

111Annual Report 2024 TKH Group

Pollution (E2)

Environmental

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

Pollution of air, soil,

and water

Smart Connectivity

systems

Potential negative impacts related to our cable

production sites:

• Pollution caused by spills in the soil of toxic/

polluting materials as a result of accidents

during cable production.

• Emissions into the atmosphere of as a result

of cable production activities (e.g. Nitrogen

oxides (NOX), sulphur oxides (SOX)).

• Pollution of water in the proximity of TKH

cable production sites, as a result of release

of pollutants into process water.

• Environmental pollution leading to remedia-

tion costs, sanctions, fines and reputational

damages.

Our approach to determining our material impacts, risks

and opportunities is described in the General information

section. For pollution, the material sub-topics identified

are pollution of air, soil and water. The sub-topic

microplastics has not been considered material. The

material topics are relevant to our own cable production

sites, as part of our business segment Smart Connectivity

systems. We have not conducted specific consultations

with potential affected communities, other than through

our stakeholder engagement process.

Introduction

Our products, including parts and materials from

suppliers, are subject to regulation by various government

and regulatory agencies, e.g., Restriction of Hazardous

Substances (RoHS) and Registration, Evaluation,

Authorization and Restriction of Chemicals (REACH) and

other (local) regulations regarding pollutions. Since part of

our raw materials are delivered to us in the form of

pellets, TKH actively recognizes the potential risks of

environmental pollution and contamination by pellet loss.

In addition, pollution could occur by spills in the soil of

toxic/polluting materials as a result of accidents during

cable production. Cable production results into emissions

into the atmosphere, for example Nitrogen oxides (NOX)

and sulphur oxides (SOX). Pollution of water in the

proximity of TKH cable production sites also could occur,

as a results of release of pollutants into process water.

Our approach and policies

All operating companies to whom the Health, Safety &

Environment (HSE) policy is relevant have established

and implemented it, including a clear commitment

to preventing pollution and minimizing health risks.

Stak

eholders are not directly involved in policy and target

setting. We are actively exploring the development of a

comprehensive pollution policy that applies to the entire

group, further strengthening our environmental commit

ments. To proactively identify and mitigate pollution-related

risks, we conduct structured screenings of our site

locations and business activities. These assessments

evaluate both actual and potential pollution-related impacts

within our operations. The methodologies, assumptions,

and tools used in this process includes ISO 14001-

certified environmental management systems at all

production locations. Each relevant operating company

(mostly cable production companies) has established

internal awareness programs and procedural safeguards

to minimize pellet loss and prevent contamination.

Our cable production companies demonstrate a strong

commitment to pollution mitigation by implementing

specific measures, amongst others by filtering dust from

the factories’ chimneys, by purifying the chimney gases.

Environmental matters are managed by the local Health,

Safety & Environment (HSE) function. In performing the

local HSE functions, systems are adopted with the inten-

tion to guarantee strict compliance with the regulations

in accordance with best practices. The systems collect

and analyze environmental data using a platform, it

monitors the exposures to risks using specific indicators,

organizes specific training and conduct audit work at the

production locations. The HSE policy of operating

compa

nies include explicit commitments to preventing

incidents and managing emergency situations through

structured risk

assessments, proactive control measures,

and targeted employee training. Additionally, it defines

TKH Group Annual Report 2024112

clear response procedures to minimize the impact of

incidents on people and the environment. This update

aligns with our broader risk management framework and

reinforces our commitment to safety, sustainability, and

operational resilience.

Actions

We defined the following actions for 2025:

•

Review whether it is necessary to develop a group-wide

pollution policy to ensure consistent approach to all

operations.

•

Completion of the inventory of relevant emissions at our

cable production sites, supported by (laboratory)

measurement reports, followed by defining a target to

prevent and control the emissions.

Actions related to pollution are revisited every year and

integrated in the activities at operating company level.

Due to the nature of the actions, the resources needed for

these actions are opex-related and do not require any

significant capex. The opex are also not significant, since

these initiatives are embedded in ongoing environmental

management efforts. Targets are determined by the

Executive Board. Tracking effectiveness is part of our

quarterly sustainability reporting. In cases where no

quantitative measures are available we report on progress

based on qualitative information. The ambitions and

annual targets set are included in the relevant tables.

Policy name Key contents

Health, safety and environ-

mental (HSE) policy (at

operating company level)

• Describes how the operating company deals with health and safety issues, including safety

instructions and procedures.

• Applicable for all production sites, and if relevant for other locations.

• Managing director of the operating company is responsible for implementation.

• Based on ISO 14001 standard.

• Published on the intranet of the operating companies, and part of local procedures/handbooks.

Pollution metrics

In line with the HSE policy’s commitment to preventing

pollution and minimizing health risks, we monitor emissions

from our cable production processes. In this way, we can

measure reductions in emissions by gradually introducing

new methods and/or products, particularly for cable degas

sing, isolation and printing operations. The inventory of

pollution to air, soil, and water, is based on the list of

pollutants and related threshold values specified in Annex II

of Regulation (EC) No 166/2006. For part of the pollutants,

we have determined on the basis of (laboratory) measure

ment reports and reports from external sources

that the

listed threshold values have not been exceeded in 2024.

We used estimates for the pollutants which are not

measured through (laboratory) measurements reports

provided by external parties. These estimates are

calculated by internal technical engineers and the health,

safety and

environmental department. Information used in

the calculation is based on available internal information,

e.g. related to chemicals used in the production process,

internal registration of pollution and losses of pollutants,

impact of filter systems used, and the impact of suspended

particles, amongst other things. Based on this, we con

cluded that the listed threshold values have not been

exceeded in 2024. Due to the use of estimates and own

calculations, there is uncertainty in the outcome of the

assessment. We will further optimize the process in 2025,

including by having measurements carried out by external

experts for the remaining relevant pollutants in order to

further substantiate that the listed thresholds for the

relevant pollutants are not exceeded. While we are in the

optimization the emissions inventory, no target has been

defined yet.

We record all environmental inc

idents, breaches, and fines,

with voluntary targets of zero environmental breaches and

fines related to our own operations. The target is based on

compliance. An environment incident is an incident having

environmental impact. An environmental breach occurs

when there is a failure to comply with an environmental

legislative obligation, e.g. breaches or non-compliances

Environmental compliance table

annual target

2024

Number of environmental incidents 0 5

Fines for environmental breaches (in €) €0 €0

Number of environmental breaches 0 0

(which can result in fines). The amount of environmental

incidents, breaches and fines provides an indication of

how well we control air pollutants, emissions to water, and

pollution to soil. In 2024, no confirmed environmental

breaches or fines were reported, while five environmental

incidents reported. Each incident is assessed to determine

if additional internal control measures or other actions are

needed. Depending on the topic, an external researcher

may be appointed to ensure independence and objectivity.

If deemed necessary, disciplinary and corrective measures

are taken. The reported 2024 environmental incidents are

related to small oil leakages from machines or during

transportation. Therefore, we concluded that no further

action was deemed necessary, as all remediation actions

were addressed directly upon detection.

113Annual Report 2024 TKH Group

Water (E3)

Environmental

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

Water consumption

• The consumption and quality of water re-

sources have an actual negative impact on

the environment, as well as on communities

that depend on those resources.

• Interruption of production sites due to

unavailability of water.

Our approach to determining our material impacts, risks

and opportunities is described in the General information

section. For water and marine resources, the material

topic identified is water consumption, mainly related to

our sites in water scarce areas. The material topic only

applies to our own operations. We have not screened our

assets and activities using specific methodologies or

tools to identify impacts, risks and opportunities in our

own operations and its upstream and downstream value

chain, other than by assessing the business description,

portfolio and asset base per operating company. We have

not conducted specific consultations with potential

affected communities, other than through our stakeholder

engagement process.

Introduction

The significance of water use lies not only in its direct

impact on the operating costs of a business, but more

essentially, on the broader environmental implications.

Importantly, careful and intentional management of water

use demonstrates the commitment to sustainable

operations. At TKH, we acknowledge the inherent water

use of our operations. Being active with manufacturing

companies in the cable production industry, we rely on

water for our production processes. Water is essential for

cooling and serves both drinking and sanitary purposes

at our factories and offices. Therefore, water has proven

to be material in this report’s materiality analysis.

Our approach and policies

t TKH, our water policy focuses on reducing our

operational impact on water consumption and quality.

Interests of key stakeholders in setting the policy are not

considered specifically. Water-related considerations are

not a direct factor in product and service design across our

business segments. Our primary focus is on operational

water efficiency, compliance with environmental standards,

and responsible water management within our production

facilities. We commit to transparently disclose relevant

water management indicators in line with global reporting

standards, including CDP Water and ISO 14001

Environmental Management. We measure and monitor the

water risk and stress, applying internationally accepted

methodologies and mitigate risks through efficient water

management, conservation and protection. Our established

processes are integrated into the functions that are

responsible for daily adherence to our policies.

Environmental topics are continuously addressed through

our ISO 14001 certifications.

We also ensure adequate water, sanitation, and hygiene

facilities at all workplaces globally. We raise awareness of

water related environmental impacts and possible actions

that can be taken to reduce them. We reduce water

consumption by using efficient equipment or technology,

and minimize water consumption by reusing water and

we promote industrial closed-loop water processes. We

concentrate our water consumption reduction efforts at

our sites in water scarce areas. ISO norms such as

14001, which are already established in our production

companies, help us understand and manage these

valuable resources better. Annually, we perform an

assessment of our operational sites to address potential

water-related risks. We 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.

We have no policies or practices adopted related to

sustainable oceans and seas, because this subtopic is

not material for TKH. Prevention and abatement of water

Policy name Key contents

Water policy • Describes how we strive to reduce our impact related to water, defining goals, implementing

actions, and monitoring results.

• Applicable for all operating companies.

• Not based on a specific framework or guidelines.

• Managing director of the operating company is responsible for implementation.

• Provided to managing directors and available for all functions having access to the reporting

system Cognos.

TKH Group Annual Report 2024114

pollution is considered to be not-material and not part of

the water policy.

Water metrics

We have not identified any material targets relevant to

disclose. We have the ambition to keep the average water

consumption per headcount on the same level as the

previous reporting year, to monitor water consumption

and to identify measures.

Among our production sites, one location has been

identified as exposed to substantive financial and strategic

risks related to water. This site is situated in China in an

area with extremely high-water stress. In response, we

defined the risk exposure and anticipated potential losses,

and implemented proactive measures to mitigate business

interruption. Important production sites are ﬂexible to

ensure we can shift production capacity from high-water

stressed areas to other locations. In addition, we have

office locations are based in high-water stress areas. For

these locations we assessed that the anticipated potential

losses and business interruption are limited.

At this stage, specific mitigation actions have not yet been

fully implemented due to the need for a comprehensive

feasibility study on the technical, financial, and regulatory

aspects of water sourcing and operational ﬂexibility.

Additionally, in 2025, we will assess the cost-effectiveness

Water metrics table

2024 2023

Water consumption (in m

) 116,821 153,948

Water consumption in areas of high-water stress (in m

) 27,021 26,339

Water recycled and reused (in m

) 10,840 13,670

Water stored (in m

) 0 0

Changes in water storage (in m

) 0 0

Water intensity ratio 68.2 83.3

and long-term sustainability of potential solutions to ensure

alignment with broader strategic objectives.

The water intensity ratio is calculated based on the total

water consumption (in m

) divided by the total turnover,

with the total turnover included in note 22 of the financial

statements. Reported water consumption is sourced from

direct measurements from water meters and water invoices

which are stored locally at the operating companies.

The total water consumption in 2024 was 116,821 m

, a

24.1% decrease compared to 2023. This decrease is

mainly the result of the closing of cable production activities

in China, and the shift from fibre cable production activities

from China and the Netherlands to Poland.

For our cable production activities we assumed that water

is not stored but reused, because part of the water with-

drawal is used in a closed system. For the cooling of our

extrusion lines we have a central cooling system where

water is evaporated via a condenser. The cooling water is

pumped from there to the factory to cool the lines. In

2024, we improved our estimation on water reuse. Based

on meter reading of the pumps, we calculated that water

is pumped around 154 times before the water has

completely evaporated. We calculated this by dividing the

ﬂow rate of the circulation pump (the amount of water that

ﬂows through a certain point on the pump per unit of time)

by the ﬂow rate of the water supply (the amount of water

that ﬂows through a certain point on the water supply per

unit of time). The water recycled and reused of 10,840 m

for 2024 represents the (one-time) water withdrawal

which is then used in the closed system (and reused

approximately 154 times).

Actions

Going forward, we will continue our efforts to maintain

our ISO 14001 certification, and promote responsible

environmental behavior both internally and in dialogue

with business partners.

One of our production sites is located in China, an area

experiencing extremely high-water stress. We have

identified a material risk of business interruption due to

potential water shortages. In response, we have assessed

risk exposure and anticipated potential losses. As part of

our 2025 action plan, we will strengthen our disclosure on

water-related risks and implement the following mitigation

measures for relevant operating companies:

•

Water efficiency optimization: improve water

management practices in production processes to

reduce consumption and enhance efficiency.

•

Diversified water sourcing: conduct feasibility studies

and evaluate alternative water supply solutions to

ensure operational continuity.

•

perational resilience: assess potential scenarios for

adjusting production planning, including shifting produc

tion to other sites in the event of severe water scarcity.

The implementation of our 2025 action plan may result

in investments in research and technical assessments,

for example collaboration with environmental experts

or water resource specialists. These measures will be

integrated into our broader sustainability strategy, ensuring

transparency, financial planning, and long-term water

resilience across our operations.

The consumption in areas of high-water stress is based on an assessment via Aqueduct Water Risk Atlas (wri.org).

115Annual Report 2024 TKH Group

Circular economy (E5)

Environmental

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

Resource inﬂows, waste, and

waste recycling

• Sourcing resources unsustainably and

waste have an actual negative impact on

the environment, including greenhouse gas

emissions.

•

TKH is dependent on resource inﬂows,

limited availability of resource inﬂows such as

copper and other (raw) materials could affect

the company in a negative way.

• Waste c

an pose financial risks for due to its

impact on resource efficiency, operational

costs, and environmental compliance.

Introduction

Our approach to determining our material impacts, risks

and opportunities is described in the General information

section. For circular economy, the material topics

identified are resource inﬂows, waste, and waste

recycling. The material topics applies to our own

operations. We have not screened our assets and

activities using specific methodologies or tools to identify

impacts, risks and opportunities in our own operations

and its upstream and downstream value chain, we rely on

analysis of the business description, portfolio and asset

base per operating company. We have not conducted

specific consultations with potential affected

communities, other than through our stakeholder

engagement process.

The main raw materials used by TKH are copper,

aluminum, and plastics, being part of the supply chain of

Smart Connectivity systems. Within Smart Manufacturing

systems the main materials used are steel and

electronics. Lasty, within Smart Vision systems the main

materials used are steel, aluminium, and electronics.

Other materials used are mainly packaging materials

(wood, paper and board, plastic foils). The majority of the

waste is classified as non-hazardous (2024: 96.6% of

total waste). More information on our value chain is

included in the section Strategy, business model and

value chain.

Companies that generate waste and fail to implement

effective waste management practices may face

regulatory fines, legal liabilities, and reputational damage.

On the other hand, implementing sustainable waste

management practices, such as reducing waste

production, recycling, and repurposing, can improve

resource efficiency, reduce operational costs, and

enhance the company's reputation. By considering waste

as a potential source of financial risks and opportunities,

TKH adopted more sustainable waste practices, to

reduce our environmental impact, and increase our

financial stability.

As a strategic priority, sustainability is firmly embedded in

our day-to-day operations, and sustainability initiatives

are being integrated into our organization. Integrating

sustainability enables us to minimize waste. Raw

materials are becoming scarce due to the increasing

demand. As a company, we want to take responsibility for

our incoming products, which is why we are aiming for a

sustainable supply chain.

Our approach and policies

Sustainable business practices also include the sustainable

management of resources. Our Operational Excellence

Program focuses on production efficiency, so we never lose

sight of issues such as reducing energy consumption and

the use of raw materials. At all our manufacturing sites, we

aim to select raw materials and other materials that have

little or no environmental impact from the design stage.

Efficient management of materials and raw materials is

important because of the consumption of valuable metals

such as copper and aluminum, which are essential compo-

nents of the cable production process, and because of the

waste that is inevitably generated. Our ambition is to elimi-

nate waste to the extent that it has the least impact on the

environment. This also helps us to avoid unnecessary costs.

We have adopted the following two approaches to this:

•

Quantitative: we aim to reduce the amount of waste at

source, structurally by using the raw materials most

efficiently and therefore increasing material productivity.

We also reduce waste through process improvement

and innovation.

•

Qualitative: we aim to minimize the harmful effects of

waste by maximizing the use of recycled materials and

optimizing waste treatment through greater cooperation

throughout the value chain.

TKH Group Annual Report 2024116

practices and regulatory requirements. These include:

•

ISO 14001 certification. All TKH production sites comply

with ISO 14001 environmental standards, ensuring a

responsible disposal and recycling of electronic waste,

promoting circular economy principles.

•

Industry initiatives & ESG Ratings (e.g., EcoVadis, CDP,

or other programs). TKH and part of the operating

companies participates in relevant third-party sustain-

ability assessments to track environmental performance

and identify improvement opportunities. These

standards form the foundation of TKH’s waste

reduction, resource efficiency, and sustainable

procurement efforts, ensuring regulatory compliance

and industry best practices.

TKH actively incorporates stakeholder perspectives into

the development of policies related to resource use and

circular economy. Key stakeholder engagement methods

include:

The Executive Board of TKH is accountable for

implementing current and future policies related to

resource use and the circular economy. The Internal Audit

Department is responsible for overseeing policy

execution, and ensuring compliance with environmental

regulations. The Managing Directors of each operating

company are responsible for local execution, ensuring

alignment with TKH’s environmental objectives. TKH

integrates globally recognized environmental

management and sustainability standards into its

operations to ensure alignment with industry best

We have health, safety and environmental (HSE) policies

at operating company level. These HSE policies do not

explicitly include measures to reduce virgin material,

increase recycled content, and promote sustainable

sourcing.

•

Regular sustainability meetings to align with evolving

environmental and business expectations.

•

Supplier dialogues to ensure responsible sourcing and

compliance with sustainability criteria.

•

ESG

reporting consultations to address investor and

regulatory concerns regarding sustainability performance.

•

egulatory updates and industry working groups to stay

aligned with global best practices and emerging standards.

This structured approach ensures that TKH’s circular

economy strategy remains relevant, effective, and aligned

with external expectations while fostering collaboration

across the value chain.

TKH ensures that practices and policies on resource use

and circular economy are and will be accessible and

communicated effectively to both internal and external

stakeholders through multiple channels:

•

Internal distribution: Policies are published on the TKH

intranet, integrated into operating company handbooks,

and included in employee training programs.

•

Supplier engagement: Sustainability criteria and

environmental expectations are embedded in supplier

contracts, procurement guidelines, and Code of Supply.

•

Public transparency: Policy commitments are disclosed

in TKH’s sustainability report, website, and investor

ESG presentations.

•

Regulatory compliance and audits: Policies are subject

to internal audits, external assessments, and

compliance reviews to ensure proper implementation

and accountability.

Resource inﬂows metrics

The main (raw) materials used by TKH are copper,

aluminum, steel, plastics, and electronics which results in

respective waste streams. Other materials are mainly

related to packaging materials, and consists of wood,

paper and board, plastic foils and other materials.

In addition to price and quality, we consider sustainability

criteria when selecting raw materials and other materials.

Partnerships in the value chain also play a role in the

successful introduction of sustainable product

innovations. By working closely with our partners in the

value chain, we will achieve the innovations needed to

meet this goal. Sustainable cable composition is a high

priority for cable manufacturing companies, and we

continue to look for innovative manufacturing techniques

and ways to improve efficiency in the value chain. We are

engaged in discussions

throughout the value chain on how

to make processes and products more sustainable, so we

can use resources more effectively. A key example is that

approximately 23% of purchased copper is from

secondary reused or recycled sources, which means that

23% of the copper we purchase contains recycled

content. This is calculated based on information provided

by suppliers, and public available information on recycled

content.

Our resource inﬂow is calculated based on r

ecorded

purchases in the reporting year. To determine the weight of

the materials, we used the weight recorded on the purchase

orders, purchase invoices, or transportation documents. In

case a weight could not be obtained, the weight is

Policy name Key contents

Health, safety and

environmental (HSE) policy

(at operating company level)

• Describes how the operating company deals with environmental, health and safety issues,

including safety instructions and procedures.

• Applicable for all production sites, and if relevant for other locations.

• Managing director of the operating company is responsible for implementation.

• Based on ISO 14001 standard.

• Published on the intranet of the operating companies, and part of local procedures/handbooks.

117Annual Report 2024 TKH Group

estimated bas

ed on the estimated share of the material in

the total weight of the product. To avoid double counting,

intercompany shipments are not included, ensuring only

external material purchases are accounted for.

Waste metrics

We have not set any material targets relevant to disclose.

Our established processes at our operating companies

are anchored within the functions that have day-to-day

responsibility for ensuring adherence to our policies.

Environmental topics are also addressed on a continuous

basis through our ISO 14001 certifications for our

production sites.

Due to the importance of the materials, and their contri-

bution to the total waste resulting from our own

operations, we focus mainly on the raw materials copper,

aluminium and plastics used to produce our products,

covering our cable production activities. Our internal

targets are not aligned with ESRS metrics, and are

focusing on the total waste from the most relevant raw

materials used in cable production (copper, aluminum,

and plastics) compared to total relevant material

consumption, and the percentage of recycling of this

waste. More information is included in the section

Sustainability performance.

Our waste is calculated based on recorded waste in the

reporting year. To determine the weight and treatment

method of the waste, we used the weight and treatment

method recorded on reports of external recycling and

waste processing companies. In case a weight could not

be obtained, the weight is estimated based on the

estimated share of the material in the total weight of the

product. In case the treatment method could not be

obtained, we have assumed that the waste is incinerated.

To avoid double counting, intercompany shipments are

excluded.

Resource inﬂows

in ton

2024

Overall total weight of materials used 84,022

Percentage of biological materials that is sustainably sourced 0%

Weight of secondary reused or recycled components, secondary intermediary products and secondary materials 3,488

Percentage of secondary reused or recycled components, secondary intermediary products and secondary materials 4.2%

Waste from own operations

in ton

2024

% of total

Total waste 11,509 100.0%

Copper 2,265 19.7%

Aluminum 1,339 11.6%

Steel 479 4.2%

Plastics (e.g. PVC, XLPE, PE) 2,235 19.4%

Wood 2,122 18.4%

Paper and board 824 7.2%

Electronics 9 0.1%

Other plastics (e.g. foils, packaging)

161 1.4%

Hazardous materials 394 3.4%

Other materials 1,682 14.6%

Hazardous waste disposal 394 100.0%

Incineration 381 96.7%

Landfill 1 0.3%

Recycling 8 2.0%

Other disposal operations 4 1.0%

Non-hazardous waste disposal

11,115 100.0%

Incineration 2,279 20.5%

Landfill 951 8.6%

Recycling 6,839 61.5%

Other disposal operations 1,046 9.4%

Total weight non-recycled waste

4,663

Total percentage non-recycled waste of total waste 40.5%

TKH Group Annual Report 2024118

Approximately 55% of the waste is related to our main

raw materials copper, aluminium, steel, and plastics.

Our

operational excellence programs are focused on

right-first-time production to reduce waste in our

own

operation

s. TKH does not have radioactive waste.

Our copper suppliers reprocesses pure copper waste into

fully usable copper. This means that copper waste is

100% recycled. This also applies to aluminum and steel.

Plastics that have become unusable during the cable

production process, but are suitable for recycling, are

offered to waste processing companies for conversion

into new raw materials. Mainly due to the product mix, we

increased the use of plastics, which resulted in more

plastic waste. As a result, the total recycling percentage

decreased. Cables (particularly 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 in insulation and

sheathing material.

Since 2023, our cable production company TKF partic-

ipates in the International Responsible Business Conduct

(IRBC) agreement for the Renewable Energy Sector. While

the renewable energy sector has achieved great progress

on environmental and societal issues, including climate

change, there are still numerous obstacles to overcome.

As a prominent player in the cable production and telecom

industry in the Netherlands, TKF understands the vital

importance of sustainable practices and responsible

behavior in an ever-evolving world. TKF has a responsi

bility as a supplier of subsea cables for offshore wind

energy to bring the industr

y expertise to the forefront and

acknowledge the hurdles faced by our company and

many others involved in the renewable energy value chain.

By participating in this agreement, TKF is committed to

collaborating with our stakeholders, as well as all others

participating in the renewable energy agreement. We aim

to identify and mitigate our own (including suppliers) risks

and impacts on both society and the environment. We are

also in continuous conversation with our main copper

suppliers regarding a responsible supply chain. Our

largest supplier in terms of purchase volume is part of The

Copper Mark industry initiative. The Copper Mark is an

initiative that requires a review of the sustainability

standards at copper production sites including mines,

smelters, and refineries. The Copper Mark covers the 32

sustainability criteria set out in the Responsible Minerals

Initiative’s (RMI) Risk Readiness Assessment and

incorporates all major environmental, social and

governance issues, such as child labor and occupational

safety. The Copper Mark is also aligned with the United

Nations Sustainable Development Goals (SDGs).

In the year under review, TKF received several certificates

for validation of raw material passports. The raw material

passport was created a few years ago and makes it

possible to clearly calculate the degree of circularity of a

raw material and the CO

emissions. This certification

validates the circularity data in raw material passports. Our

ambition is to have raw material passports available for all

our cable portfolio.

Actions

We defined the following actions for 2025:

•

Review whether it is necessary to develop a group-wide

procurement policy, to reduce virgin material, increase

recycled content, and promote sustainable sourcing.

Actions related to circular economy are revisited every year

and integrated in the activities at operating company level.

Due to the nature of the actions, the resources needed for

these actions are opex-related and do not require any

significant capex. The opex are also not significant, since

these initiatives are an integral part of our day-to-day

expenses and procurement activities.

119Annual Report 2024 TKH Group

Sustainable innovation (entity-specific material topic)

Environmental

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

Sustainable innovation

• Sustainable innovation and technology are

actually making a positive contribution to

the achievement of the SDGs by promoting

sustainable production and consumption,

and addressing environmental challenges

at customers. This can help create a more

sustainable world.

•

Insufficient technological development and

innovation can threaten TKH’s long-term value

creation.

• Customer’s need for

sustainable innovation and

technology offers TKH

opportunities for growth

and value creation.

DECENT WORK AND

ECONOMIC G ROWTH

AFFORDABLE AND

CLEAN ENERGY

RESPONSIBLE

CONSUMPTION

AND PRODUCTION

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 line with its long-term value creation process.

To make an effective and targeted contribution through

the SDGs, we focus on areas where we believe we can

have the greatest impact and make the most direct

contribution. Sustainability is a key element in our

product portfolio and enables our customers to improve

their sustainability performance. In this context, we are

focusing on four SDGs. Sustainability is increasingly

integrated in our operations and supply chain, with two

other SDGs we focus on internal operations and business

practices.

Our approach to determining our material impacts, risks

and opportunities is described in the General information

section. The material topic only applies to our own

operations.

Introduction

Sustainable innovation is an entity-specific material topic,

because innovation is key to TKH’s success and

supported by the outcomes of the DMA process. Our

sustainable innovations and technologies contribute to

the achievement of the SDGs by promoting sustainable

production and consumption, and addressing environ-

mental challenges for customers. This helps creating a

more sustainable world.

Investing in innovative technologies is vital to maintaining

our position as a leading technology company and

maximizing sustainable value for our stakeholders and

the world around us. Innovation and customer focus are

key to keeping us at the forefront of creating best-in-class

and innovative technologies and responding quickly and

effectively to changing market trends.

Insufficient technological development and innovation

can threaten TKH’s long-term value creation.

These risks may emerge in the following areas:

•

The pace of technological development

•

Conservativism in certain end markets to embrace our

new disruptive technologies

•

The execution of the R&D roadmap

•

Our competitor’s new technologies

•

Our payback capacity

Our approach and policies

e do not have a specific policy for sustainable innovation

other than the target we have set. We will review whether it

is necessary to develop a group-wide sustainable

innovation policy. We focus continuously on innovation and

executing the strategic roadmap, ensuring efficient time-to-

market. The Executive Board and local management

frequently discuss the latest technology and innovation

developments. We capitalize on technology leadership by

leveraging and accelerating growth from innovations and by

utilizing the R&D pipeline. We bring key innovations to

maturity with targeted profitability and limit the number of

new and large “start-up” projects. In addition, we are

focused on expanding market share by unlocking the full

potential of our innovations and disruptive technologies

and aligning our innovation strategy with relevant

megatrends that drive long-term industry growth.

TKH Group Annual Report 2024120

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 technological

support of the care process, TKH believes that care can

become more efficient and reliable by tailoring technology

more closely to each client. In fact, “tailor-made” is at the

heart of TKH’s care solutions for both extramural and intra-

mural care. Our care technology platform, which includes

customized alarm scenarios and smart sensors, facilitates

the rapid and ﬂexible connection of care systems to a

comprehensive range of functions and applications for

care needs. It also helps to make care delivery 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 precision.

In addition, the risk of contamination of medicines is

eliminated.

Examples of our innovative SDG solutions

•

Care technology platform

•

Mission critical communications systems

•

Medication distribution and inspection system

•

Special cable systems for medical equipment

•

2D Vision systems for medical equipment

•

Blood pressure sensors

•

Thermal camera systems

With its Connectivity technologies, TKH is

developing innovative cable systems that

contribute to the energy transition and the use

of sustainable energy sources, including offshore wind

farms. In this way, we contribute to Europe’s energy

reduction targets.

Impact

TKH’s Connectivity technology plays a fundamental role

in the distribution of green energy, such as wind power.

Our innovative subsea cable concept, for example,

connects wind turbines in offshore wind farms and is

characterized by high performance, risk reduction, instal-

lation efficiency, and sustainable composition. With the

trend towards electrification, there is a considerable need

to upgrade and expand power grids; TKH’s power cable

systems offer a solution to alleviate this enormous

demand.

Examples of our innovative SDG solutions

•

Energy cable systems for the energy transition

•

Subsea cable systems for offshore wind farms

TKH has a strong reputation as an innovator in

the tire building, robotics, and mechanical engi-

neering 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 more available.

Impact

TKH’s Connectivity, Vision and Security technologies

make it possible to build sustainable infrastructure that

meets strict safety and efficiency standards. Our

innovative vision and manufacturing systems also enable

our customers to make products more efficiently, reliably

and ﬂexibly. Our Vision technology is used for inspection,

quality, product, and process control in amongst others

industrial automation, battery inspection, consumer

electronics, and scientific research. TKH leverages its

unique expertise and deep understanding of the

automation of production processes for controlling and

monitoring industrial processes, as well as compre-

hensive manufacturing systems for car and truck tire

production.

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

AFFORDABLE AND

CLEAN ENERGY

SDG 3: good health and well-being SDG 7: affordable and clean energy SDG 9: industry, innovation and infrastructure

121Annual Report 2024 TKH Group

By combining communications and Security

technology to develop innovative, compre-

hensive solutions for the built environment, we

help to improve the efficiency, safety, and security of the

systems used in and around cities.

Impact

TKH’s technologies and resulting solutions contribute to

making 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

•

Mobility inspection systems and security solutions

•

Mission-critical communication systems

•

Parking guidance and security systems

•

Connectivity systems

Through our business operations, TKH focuses

on responsible operations and production, and

on reducing our negative impact on the

environment as much as possible. All our production

companies are certified in accordance with the ISO 14001

environmental management system and work according

to the LEAN principle to eliminate waste in the production

process.

Impact

TKH’s sustainability policy is designed to ensure that we

continuously improve our environmental performance and

minimize the negative impact of our operations on the

environment. All of the raw materials used by TKH

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 sustain-

ability opportunities and our Code of Supply with our

suppliers.

SDGs 8 and 12 focus on our internal operations and business practices

Through knowledge sharing and our strong

R&D focus, 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 employees a vibrant

and safe working environment with ample development

opportunities. We have set KPIs and targets on health

and safety as well as employee satisfaction.

Impact

TKH is committed to providing a safe and inspiring work

environment for our employees. We offer our employees

the training and resources they need to perform their

activities and develop their skills effectively. By sharing

knowledge, TKH further develops its sustainable portfolio

in response to market needs. Through our operational

excellence programs, which systematically focus on both

customer value and on making the best possible use of

our people’s knowledge and skills, we excel in our

business operations.

DECENT WORK AND

ECONOMIC G ROWTH

SDG 11: sustainable cities and communities

SDG 8: decent work and economic growth SDG 12: responsible consumption and production

TKH Group Annual Report 2024122

Sustainable innovation metrics

To measure how effective our practices are in increasing

positive outcomes for the environment and related financial

effects, we set a target on turnover resulting from our

innovations. Our target is to generate more than 10% of

our turnover from products that have been introduced in

the prior two years. As a result, a major part of our tech

nology portfolio is always in the early stages of the product

life cycle, which is an essential strategic foundation for

securing future growth. With the various strategy programs

implemented in the past decade including acquisitions, we

strengthen our portfolio of proprietary technologies. To

reﬂect the current position in the transformation of TKH

towards a technology company, we adjusted the inno

vation target in 2024 (from 15% in 2023 to 10% in 2024).

We do not engage directly with stakeholders in setting

targets related to sustainable innovation.

TKH generated

€301 million turnover in 2024 from innovations across our

three business segments. The percentage of turnover

generated from innovations was 17.6%, well above our

target of 10%. Investing in R&D and accelerating and

scaling innovations are vital for future growth, and for

maintaining and expanding our leadership positions in the

niche markets in which we operate. In 2024, we spent

€80.7 million on R&D activities (2023: €77.2 million).

TKH has a strong sustainab

le portfolio and has selected

six Sustainable Development Goals (SDGs) to guide our

approach to sustainability. Two of these focus on our

internal 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. Our target is to have at least 70% of our

turnover linked to SDGs. In 2024, 71.6% of our portfolio’s

total turnover is linked to 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.

To measure the result of our innovations, we also monitor

the number of live patents. We also use patents to secure

our value proposition. In addition to investing in our own

technology development, we also invest in partnerships for

specific specialisms and speed up the time-to-market for

selected technology systems. Lastly, via acquisitions we

aim to strengthen market position and/or product portfolio.

We have

1,422 live patents in 2024. Continually

accelerating and scaling our innovations is essential to

maintaining our leading position and driving growth.

Turnover from innovations is based on the turnover in the

reporting year from new products launched in the current

and previous two reporting years. Innovation as percentage

of turnover is calculated based on the turnover from innova

tions divided by the total turnover, with the total turnover

included in note 22 of the financial statements. TKH posi

tions itself as an innovative technology company. This

measure provides useful information of the ability of TKH to

bring innovations to the market and translate these in turn

over. Turnover linked to SDGs is calculated by allocating

TKH’s portfolio based on internal reporting of turnover in the

reporting year by end-market combined with portfolio infor

mation included in quarterly reports of operating companies,

divided by the total turnover, with the total turnover included

in note 22 of the financial statements. This measure provides

useful information about the ability of TKH to bring portfolio

to the market which is connected to one of the

SDGs.

Sustainable innovation table

annual target

2024 2023

Turnover from innovations (in million) €301.4 €297.5

Innovation as percentage of turnover > 10% 17.6% 16.1%

Turnover linked to SDGs (percentage) > 70% 71.6% 70.2%

Number of live patents 1,422 1,400

Total R&D spend (in million) €80.7 €77.2

R&D capitalized (in million) €46.5 €41.8

R&D capitalized as percentage of total R&D spend 57.5% 54.2%

Actions

We defined the following actions for 2025:

•

Increase comparability of reported metrics by exploring

industry benchmarks and standardizing measurement

methodologies.

•

Further development and integration of our technologies

through the execution of our R&D roadmap.

•

Review whether it is necessary to develop a group-wide

sustainable innovation policy.

Actions related to sustainable innovation are revisited

every year and integrated in the activities

at operating

company level. More information on differentiation through

innovation is included in the section Strategy and

business. Due to the nature of the actions, the resources

needed for these actions require significant capex. For

2025, we expect a similar level of R&D spending and

percentage of capitalized as in 2024. The opex are not

significant, since these initiatives are an integral part of our

day-to-day expenses and R&D activities.

The ambitions and annual targets set are included in the

tables. Targets are determined by the Executive Board.

Tracking effectiveness is part of our quarterly sustain-

ability reporting. In cases where no quantitative measures

are available we report on progress based on qualitative

information.

123Annual Report 2024 TKH Group

Social information

Our workforce (S1)

Social

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

Diversity

•

A lack of diversity could have a potential

negative impact on the overall health,

wellbeing, and performance of our own

workforce.

•

A lack of diversity can result in employees

feeling not valued, respected, and supported,

resulting in negative reputation, impacting

performance of employees and organization

and therefore costs.

Health and safety

•

Health and safety incidents have an actual

negative impact on the health and safety of

our own workforce.

•

ealth and safety incidents can increase the

risk of illness, injury and death, leading to

lower morale, increased absenteeism and

decreased productivity.

Introduction

TKH has a decentralized structure with an open business

culture and a high level of entrepreneurship with short

lines of communication. Our organization is also charac-

terized by delegated authority, trust, and transparency.

A key component of our strategy is a strong, diverse

workforce of talented people, with the passion and drive

to make things happen. Working together with talented

and qualified people is vital to achieving our mission of

creating best-in-class Smart Technologies. We strongly

believe that the diversity of our workforce will further

strengthen the success of our defined strategy. Therefore,

one of our priorities is to promote and safeguard diversity

within our organization.

We also 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 an inspiring, safe, and healthy

working environment for our workforce, and we are

constantly striving to improve. It must always be our key

priority to make sure that all our employees return home

safe and sound at the end of each workday.

The contributions of our workforce are essential to our

achievements. A lack of diversity can result in employees

feeling not valued, respected, and supported, resulting in

negative reputation, impacting performance of employees

and organization and therefore costs. Health and safety

incidents can negatively impact employees by increasing

their risk of illness, injury and death, leading to lower

morale, increased absenteeism and decreased

productivity.

Our people

Our own workforce consist of employees and non-

employees. Employees are on the payroll based on an

employment relationship according to national law or

practice, and consists of permanent and temporary hires

with a contract for an indeterminate or a limited period for

full-time or parttime work, including employees with a

non-guaranteed hours contract. Non-employees are not

on the payroll and consist of interns/stagiaires, and other

temporary workers hired for a short duration mostly from

employment agencies (e.g. in Dutch “uitzendkrachten”,

self-employed people).

Identified potential material negative impacts on the

overall health and wellbeing of our own workforce applies

to all own workforce and are not related to individual

incidents. Our policies to manage material impacts, risks

and opportunities applies therefore to all own workforce.

We have no operations at significant risk of incidents of

forced or child labor or compulsory labor, either in terms

of type of operation or countries or geographic areas with

operations considered at risk. Own workforce performing

production activities may be at greater risk of harm

related to health and safety issues. TKH employs people

with a disability and/or disadvantage in the labor market.

TKH is acknowledging these people to be particularly

TKH Group Annual Report 2024124

vulnerable. No material impacts on workers that may

arise from transition plans for reducing negative impacts

on environment and achieving greener and climate-

neutral operations were identified. There are no material

positive impacts.

Our policies

Code of Conduct

We have included provisions regarding the respect and

protection of human rights in our Code of Conduct

towards our employees. Our policy is based on the UN

Guiding Principles on Business and Human Rights, to not

tolerate any violation of human rights. We use the OECD

Guidelines and ILO Declaration on Fundamental

Principles and Rights at Work as a reference framework

to enable us to quickly identify potential risks. These

OECD Guidelines refer to the Universal Declaration of

Human Rights, which states that all parties in society,

including companies, have an obligation to respect and

protect human rights. In 2024, we endorsed the

guidelines provided in the UN Global Compact. Related

to our own workforce we do not accept trafficking of

human beings, forced or compulsory labor and child

labor. In case of violations human rights, possibilities to

remediate human rights impact are investigated and

implemented. Existing policies are also reviewed as well

as other measures to prevent this in the future.

Discrimination

TKH has a strict policy of equal treatment for all

employees regardless of race, nationality, ethnic

background, color, age, religion, gender, sexual

orientation, political opinion or disability. Through our

Code of Conduct we ensure discrimination is prevented,

mitigated and acted upon once detected. Violations can

be reported though our internal procedures. We have

established a process for recruiting new employees

based on an appropriate profile for the function. We do

not differentiate between male and female employees’

base salaries and apply market-based remuneration.

There may be differences between countries depending

on local market practices and 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.

Enhancing inclusion

In our recruitment, we are committed to providing a

suitable work environment for people with a disability

and/or disadvantage in the labor market. Disability is an

umbrella 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. Since 2022, TKH

has been PSO certified (“prestatieladder socialer

ondernemen”). This certificate is a quality mark that

proves our organization has an above-average level of

social entrepreneurship and focuses on the employment

of vulnerable groups in the labor market. We have a

proven record of contributing to an inclusive society. By

participating in the PSO, organizations around TKH are

also encouraged to do business in a more socially

responsible way.

Engaging with our workforce

Engaging with employees

We gain insight into the perspectives of our own

workforce included the people who may be particularly

vulnerable to impacts via direct engagements, meetings

with works councils, employee satisfaction surveys, and

yearly performance reviews.

The Executive Board maintains direct contact with

employees in all parts of the organization, for example by

attending employee presentations, participating in project

meetings, or taking part in informal gatherings. In

addition, at least one regular Supervisory Board meeting

is held annually at the location of a TKH operating

company. Such a company visit allows the Supervisory

Board to meet with local management and employees

and to gain a better understanding of TKH’s activities,

technological developments, and organizational capacity.

The Supervisory Board is updated on local developments

and 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.

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 Ondernemingsraden). During the year under

review, the Executive Board and the Central Works

Central Works Council

Olaf Karsten (VMI), chairman

Gerard Roolvink (TKF), secretary

Jan Jaap Derksen (VMI)

Maurice Fliescher (Intronics)

Onno Verkerk (TKH Security)

André van Loon (TKF)

125Annual Report 2024 TKH Group

Council held three informal meetings. From the Executive

Board, the CEO was present as the function and most

senior role within TKH that has operational responsibility

for ensuring that engagement happens and that results

inform TKH's approach. Topics discussed included the

results and organizational developments, progress on the

strategic program including acquisitions and divestments,

the budget, and TKH’s annual report including the

performance on non-financial KPIs compared to the

targets. This includes sustainability-related matters such

as diversity, and health and safety. An annual Works

Council day is held on a regular basis to strengthen the

ties between the various Works Councils of the Dutch

operating companies and to promote the exchange of

knowledge and experience. TKH considers consultation

with the Central Works Council and other Works Councils

to be important and places great value on an open

dialogue. We believe that an active approach to employee

representation helps us to remain vigilant.

Process for remediating negative impacts and

channels to raise concerns

It is very important to measure good employment

practices and the effectiveness of engagement with our

own workforce. Important aspects are assessed through

employee satisfaction surveys and employee

performance reviews. The surveys and review meetings

provide important information regarding the motivation,

satisfaction, and expectations of our employees.

Identified areas for improvement are included in the HR

plans at the concerning operating company.

We have a long history of conducting employee

satisfaction surveys within a four-year cycle combined

with “are we on track” surveys during this 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. Some operating companies

have carried out a satisfaction survey focusing on

(company) specific topics. Based on the results of the

survey, we evaluate where we need to amend our working

methods, policies and develop a robust action plan. The

employee satisfaction score in 2024 was 7.8, reﬂecting

surveys from 2021-2024 among 4,788 employees,

representing 72% of the number of employees

(headcount) as of December 31, 2024. The employee

satisfaction score is equal compared to 2023 (7.8) but

increased compared to the previous years, demonstrating

the effectiveness of the measures and action plans

implemented.

Yearly performance interviews are conducted to discuss

performance and opportunities for further development,

as well as possible improvement for the organization and

expectation of our employees. In 2024, 63% of all

employees received a performance review (2023: 76%).

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 has not yet

passed.

TKH is committed to an open culture in which employees

can openly discuss any concerns, problems or abuses.

Employees are encouraged to report matters to their

(direct) manager or supervisor. Employees can report in

confidence and the employee shall suffer no detriment

from making such a report. In addition, we established a

Whistleblower Procedure for a clear course of action for

employees who wish to raise issues or concerns such as

a possible criminal offense or violation of the law, giving or

receiving a bribe, disclosure of confidential information,

dishonesty or unethical behavior (such as discrimination,

(sexual) harassment, bullying, etc.), and tax-related issues.

TKH has implemented specific measures to ensure that

any form of retaliation is prevented, and it remains vigilant

in safeguarding whistleblower anonymity and protection.

Reports are reviewed and investigated by the local

confidential officer and/or the Group Compliance Officer.

Depending on the topic, an external researcher may be

Policy name Key contents

Code of Conduct • Describes how we act as a company, how we make ethical decisions, and how we deal with

different dilemmas within our company.

• Applicable for all operating companies.

• Managing director of the operating company is responsible for implementation.

• OECD Guidelines is used a reference framework, in addition to the guidelines provided in the

UN Global Compact.

• Published on our website and should be read and signed by each employee.

Whistleblower procedure • Procedure to raise issues or concerns such as 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, etc.

• Applicable for all employees and third parties.

• Managing director of the operating company is responsible for implementation.

• Based on the EU Whistleblower Directive 2019/1937.

• Provided to managing directors, confidential officers, and available for all functions having access

to the reporting system Cognos.

TKH Group Annual Report 2024126

appointed to ensure independence and objectivi

ty. If

deemed necessary, disciplinary and corrective measures

are taken. We track and monitor the issues raised by

ensuring all received reports are recorded, investigated,

and closed. We track the effectiveness of the procedure via

engagement with our own workforce, including via employee

urveys, and performance reviews. TKH promotes

awareness of the whistleblower procedure through internal

training and various communication channels such as

shared folders. In case of violations or incidents, possibilities

to remediate the impact on own workforce are investigated

and implemented. Existing policies are also reviewed as well

as other measures to prevent this in the future.

More information is included in Business conduct policies

and corporate culture.

Our people: key figures

Total number of employees (in head count), at December

31, 2024 is 6,665. Total average number of employees

(head count), during 2024 is 6,795. Total number of

full-time equivalent (FTE) is 6,492, and reconciles with

the FTE number in note 22 of the financial statements.

Total number of employees who have left TKH in 2024 is

826. Percentage of employee turnover is 12.4%. This is

calculated based on the number of employees who left

TKH in 2024 divided by the number of employees at

December 31, 2024.

Employees by gender

2024 2023

Male 5,095 5,154

Female 1,569 1,615

Other 1 0

Total 6,665 6,769

Employees by type and gender

2024

male female other total

Permanent employees 4,476 1,358 5,834

Temporary employees 535 170 705

Non-guaranteed hours 84 41 1 126

Total 5,095 1,569 1 6,665

Employees by region

2024 2023

Netherlands 2,375 2,458

Germany 1,153

Europe (other) 1,475 2,830

Asia 848 883

North America 565 498

Other 249 100

Total 6,665 6,769

The total number of employees decreased slightly from

6,769 end of 2023 to 6,665 end of 2024. This is caused

by, on the one hand, divestments and relocation of

production activities from China and the Netherlands to

Poland, and on the other hand, the scaling up of activities

resulting from our strategic investment program (for

example the new subsea factory in Eemshaven).

The employees included in the tables are reported in

head count and at the end of the reporting period (31

December). HR data are obtained every quarter. HR data

are derived from the HR accounts held by TKH’s

operating companies. The table with employees per

region is based on the location of the operating company

where the employee is contracted. The nationality or

actual place of work/living is irrelevant for this breakdown.

127Annual Report 2024 TKH Group

Diversity metrics

To measure effectiveness of diversity initiatives, we

monitor KPIs and

have set an ambitious diversity target in

2021 to increase the proportion of female employees in

executive and senior management roles to at least 25% by

2030. This target was determined based on the 2020

diversity figure of 16.8%, benchmarking with other

technical companies, and engagement with various

stakeholders.

Operating companies are responsible for

improving the gender balance within their own organi-

zations, and progress is closely monitored by the

Executive Board.

The executive and senior management positions (top

management) are defined as follows:

•

Executive management: statutory management director

level (reporting directly to the Executive Board).

•

Senior management: managers who are members of

the operating company’s management team and

responsible for specific business units or departments

(e.g. finance, human resources, sales, marketing, legal,

R&D, QHSE, supply chain and operations).

To recruit new (female) talent, TKH maintains close

contact with business schools and universities. We are in

contact with educational institutions that provide

job-specific or management training courses. We offer

internships, graduation projects, and short courses to

attract potential talent at an early stage. In addition, we

use targeted programs to attract more (female) students

with limited or lower levels of education – 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 in our organization.

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 attracting new employees. Employer

branding is increasingly 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 to recommend new

colleagues. By recruiting in this way, we have a higher

chance of finding a match, as our 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 2024, the proportion of women in our total workforce

decreased slightly to 23.6% (2023: 23.9%). The male-to-

female ratio was relatively high due to the technical and

technological nature of our work and the labor market

supply. However, women are increasingly choosing

technical and technology-related careers, so we can

continue to target and recruit more women for the

positions in our organization. In 2024, the proportion of

female executive and senior management employees

increased to 21.6% from 19.2% in 2023. In the year under

review, we expanded our diversity program, which will

continue in 2025 to meet our ambitious target of 25% by

2030. We initiated specific programs to recruit women,

including a trainee program for young women. Through

this program, female employees have the opportunity to

work in different (technical and technological) positions

Diversity (S1)

Our approach and policies

A diverse workforce can bring a variety of perspectives,

skills, and experiences, which can lead to increased

creativity, innovation, and problem-solving within TKH.

Diversity can also contribute to a more inclusive and

equitable workplace, where all employees feel valued,

respected, and supported. At the same time, there could

be a potential negative impact on the overall health and

wellbeing of our own workforce in case this topic is not

managed properly. To advance the positive impacts and

manage potential negative impacts we create an open

culture in which employees can openly discuss any con-

cerns, problems or abuses. Also, we integrated diversity

in our HR policies, amongst other things concerning

recruitment, development and retention of women. TKH is

an international group of companies with a workforce of

many nationalities. In such an international environment,

we take a broad view of diversity. The diversity practices

at TKH focuses on a variety of abilities, skills, and

nationalities, and we employ a mix of men and women

and age distribution. The current age structure results in

a manageable level of staff turnover due to retirement.

We developed targeted programs

to raise awareness of

diversity and to better embed it in the organizatio

n. For

example, there are programs for middle and senior manage

ment to achieve a better gender balance in jobs and consul-

tation structures. Moreover, this is also important in the

context of succession planning. By ensuring the work seam

lessly matches the skills and capabilities of each employee,

we not only save costs but more importantly, relieve our

highly qualified technical staff of repetitive tasks, allowing

them to focus on more complex tasks. This approach

enhances our technical employees’ job satisfaction, thereby

enhancing their long-term connection

with our organization.

TKH Group Annual Report 2024128

Employees by function and gender

2024 2023

male female other total male female total

Supervisory Board

2 3 5 3 2 5

Percentage 40.0% 60.0% 100.0% 60.0% 40.0% 100.0%

Target % Supervisory Board 33.3% 33.3%

Executive Board 3 0 3 3 0 3

Percentage 100.0% 0.0% 100.0% 100.0% 0.0% 100.0%

Target % Executive Board 33.3% 33.3%

Management Board 5 1 6 5 1 6

Percentage 83.3% 16.7% 100.0% 83.3% 16.7% 100.0%

Target % Management Board 33.3% 33.3%

Executive and senior management 279 77 356 282 67 349

Percentage 78.4% 21.6% 100.0% 80.8% 19.2% 100.0%

Target % executive/senior management by 2030 25.0% 25.0%

Total 5,095 1,569 1 6,665 5,154 1,615 6,769

Percentage 76.4% 23.6% 0.0% 100.0% 76.1% 23.9% 100.0%

combined with a specific development program to further

develop their other skills including management skills and

personal development. We have also established specific

working groups to promote women within our organi-

zations. In this way, we aim to increase the inﬂow and

throughput of female employees within our organizations.

The Executive Board, Management Board and Supervisory

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

gender, background, expertise, occupational experience,

and nationality, taking into account the statutory

requirements. In terms of gender diversity, the Supervisory

Board has a balanced composition of at least 1/3 female

members and at least 1/3 male members. The Executive

Board 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.

Number of employees by age

2024 2023

male female other total male female total

Under 30 years old

820 232 1 1,053 820 209 1,029

Percentage of employees under 30 years old 16.1% 14.8% 100.0% 15.8% 15.9% 12.9% 15.2%

Between 30 and 50 years old 2,730 894 3,624 2,779 949 3,728

Percentage of employees 30 and 50 years old 53.6% 57.0% 54.4% 53.9% 58.8% 55.1%

Over 50 years old 1,545 443 1,988 1,555 457 2,012

Percentage of employees over 50 years old 30.3% 28.2% 29.8% 30.2% 28.3% 29.7%

Total 5,095 1,569 1 6,665 5,154 1,615 6,769

Actions

We defined the following actions for 2025:

•

Continue targeted programs to attract more (female)

students – recruitment of females.

•

Strengthen development programs to improve skills

including management skills and personal development,

enabling women to be promoted to senior and executive

positions.

•

Review of measures to remedy any negative impact on

our own workforce related to diversity.

Actions related to our own workforce are revisited every

year and integrated in the activities at operating company

level. Due to the nature of the actions, the resources

needed for these actions are opex-related and do not

require any significant capex. The opex are also not

significant, since these initiatives are an integral part of our

day-to-day expenses and HR activities.

The ambitions and annual targets set are included in the

tables. Targets are determined by the Executive Board.

Tracking effectiveness is part of our quarterly sustainability

reporting including diversity metrics. In cases where no

quantitative measures are available we report on progress

based on qualitative information.

129Annual Report 2024 TKH Group

Health and safety (S1)

Our approach and policies

A lack of health and safety measures can negatively

impact employees by increasing their risk of illness, injury

and death, leading to lower morale, increased absenteeism

and decreased productivity. Safety management, including

awareness and performance, is therefore a top priority

within TKH, and preventing accidents and promoting a

professional safety culture are an important part of this.

We achieve the latter by being transparent about accidents

and near-misses, so employees are more aware of

potentially risky situations and can react quickly.

Within our operating companies we have implemented a

health and safety policy, a safety management system,

and health and safety awareness programs. In addition,

we measure effectiveness though targets and KPIs to

manage actual negative impacts. Through our health and

safety policies at our manufacturing companies, we

acknowledge our responsibility for protecting the health

and safety of our employees. It covers all aspects of the

work environment, including physical conditions, working

hours, workload, ergonomics, psychosocial factors, and

clear work instructions on machine safety. Strict

measures are taken to ensure that employees comply

with requirements such as wearing safety shoes and

protective clothing. We also encourage employees to

alert each other to situations that could lead to dangerous

incidents. Our primary goal with our health and safety

policy is to prevent health problems and work-related

accidents.

Safety is crucial for our operating production companies.

Due to the nature of their work, the TKH’s manufacturing

companies are certified under the ISO 45001 standard.

This ISO standard covers requirements for an occupa-

tional health and safety (OH&S) management system,

which means that OH&S risks can be managed and

performance improved. To make safety demonstrable, we

focus on specific, measurable performance targets for

safety indicators, including work-related injuries with lost

time and ill health. We aim to identify, assess, and take

appropriate preventive measures against risks. We

continued to focus on health and safety (awareness)

programs at our production facilities. Regular risk

assessments are conducted to identify potential safety

risks. In some cases, this resulted in the relocation of

machinery or material storage to eliminate the risk. For

certain activities with a higher safety risk, the employee

concerned must first complete a special safety course.

As part of an ongoing safety learning program, safety

questions are asked on a weekly basis. The aim is to

increase attention for and awareness of important health

and safety topics.

Policy name Key contents

Health, safety and environ-

mental (HSE) policy (at

operating company level)

• Describes how the operating company deals with health and safety issues, including safety

instructions and procedures.

• Applicable for all production sites, and if relevant for other locations.

• Managing director of the operating company is responsible for implementation.

• Based on ISO 14001 standard.

• Published on the intranet of the operating companies, and part of local procedures/handbooks.

Health and safety metrics

We are firmly committed to achieving a zero recordable

accident result and our goal is to create a culture of

safety that is ingrained in everything we do. For this

reason, we deeply analyze each accident and share the

lessons learned across the group to avoid similar

incidents from happening in other places. Besides, we

actively encourage each employee to speak up should

one see or experience something that is unsafe or could

be improved.

The percentage of own workers who are covered by health

and safety management system based on recognized

standards is 51.6%. This is calculated based on the total

own workers and includes both production sites and office

locations. In 2024, 100% of our own workforce at our

production sites was covered by the ISO 45001 standard

as health and safety management system.

The number of recordable work-related accidents for own

workforce was 114. The LTIFR for 2024 decreased slightly

to 0.7 compared to the previous year (2023: 0.8) and is

below the target of < 1.0. TKH defines its Lost Time Injury

Frequency Rate (LTIFR) as the number of incidents

resulting in at least one day’s absence from work without

the possibility of any replacement, per million hours

worked. Reportable incidents are based on actual

TKH Group Annual Report 2024130

occurrences and are never extrapolated or estimated.

Despite a range of measures and an open safety culture,

there is an inherent risk of under-reporting accidents,

because of self-reporting of accidents (in most cases).

Reported hours are measured, calculated, or estimated.

The absolute number of serious accidents reported

covers all employees on TKH’s payroll, excluding

employees of third-party contractors. The LTIFR is

reported at group level and not specified by region or

gender.

The fact that accidents have occurred confirms the need

for continuous training and focus on safety issues in both

our own organization and that of our suppliers. In 2024,

our cable production company TKF obtained the Safety

Culture Ladder certification (level 3) in addition to the ISO

45001 certification. This will further support the

implementation and monitoring of health and safety

measurements, to mitigate the risk of incidents resulting

in work-related injuries.

Actions

Looking ahead to 2025, we have defined the following

actions to further improve health and safety:

•

Continue with safety awareness programs – to reduce

number of incidents.

•

Review of existing health and safety program.

•

Review of measures to remedy any negative impact on

our own workforce related to health and safety.

•

Setting specific targets on CSRD health and safety

metrics, in addition to existing internal health and safety

targets (see section Sustainability performance).

Actions related to our own workforce are revisited every

year and integrated in the activities at operating company

level. Due to the nature of the actions, the resources

needed for these actions are opex related and do not

require any significant capex. The opex are also not

significant, since these initiatives are an integral part of

our day-to-day expenses and HR activities.

Targets are determined by the Executive Board. Tracking

effectiveness is part of our quarterly sustainability

reporting including health and safety metrics. In cases

where no quantitative measures are available we report

on progress based on qualitative information. The

ambitions and annual targets set are included in the

tables.

Health and safety metrics own employees

annual

target

2024

Percentage of own workers who are covered by health and safety management system 51.6%

Number of fatalities as result of work-related injuries and work-related ill health 0 0

Number of fatalities as result of work-related injuries and work-related ill health of other workers working

on undertaking's sites 0 0

Number of recordable work-related accidents 114

Rate of recordable work-related accidents 9.6

Lost time injury frequency rate (LTIFR) – no replacement work possible (TKH KPI) < 1.0 0.7

131Annual Report 2024 TKH Group

Workers in our value chain (S2)

Social

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

Working conditions and other

work-related rights (child /

forced labor, and health and

safety)

Smart Connectivity

systems

•

Bad working conditions, incidents, and

violations of work-related rights, could have a

potential negative impact on the overall health

and wellbeing of workers in the value chain

(copper mines).

•

Suppliers in the upstream copper value chain

who do not respect working conditions and

labor rights, can pose a reputational risk, which

could lead to financial losses.

implemented a code of supply, we perform desktop

reviews and on-site assessments at tier-1 suppliers, and

we measure effectiveness though targets and KPIs. We do

not have a specific policy for workers in the value chain.

There are no mechanisms and processes on monitoring

compliance with the UNGC, ILO Declaration and OECD

Guidelines described in our current policies, nor are the

measures to remedy any negative impact on human

rights. We will review whether it is necessary to develop a

supplement to existing policies.

Through the signing of our Code of Supply, we request

our tier-1 suppliers to respect and comply with the

fundamental rights granted to all employees under

applicable national statute. Furthermore, we expect our

tier-1 suppliers to fully recognize the labor standards

issued by the International Labor Organization (ILO),

taking into due account the applicable laws and

regulations in different countries and at different sites.

This includes, but is not limited to, the following subjects:

•

Employment should be freely chosen in accordance

with the Universal Declaration of Human Rights of the

United Nation.

•

e expect our suppliers to prohibit and refrain from any

kind of trafficking in human beings, forced labor or

compulsory labor and child labor within their organization.

•

We expect that our suppliers promote equal opportu-

nities and equal treatment.

•

Furthermore, we expect our suppliers to prohibit any

form of discrimination in recruiting, promoting or

selecting employees for basic or advanced training

programs. Within the organization of our suppliers, no

employee may be discriminated against, based on his

or her gender, age, ethnicity, nationality, sexual

orientation, disabilities, union membership, political

affiliation or religious conviction.

•

We expect our suppliers to respect employee’s rights

with regard to collective bargaining and freedom of

association.

•

We expect our suppliers to fully comply with applicable

national statute on working time.

•

Furthermore, we expect that the employees of our

suppliers receive a remuneration which is in line with

applicable national statute.

•

We expect our suppliers to ensure a safe working

environment and therefore to fully comply with applicable

national statute governing health and safety at work.

•

Our suppliers are expected to establish and maintain an

appropriate occupational health and safety management

system (in accordance with ISO 45001, or national

equivalent).

•

We expect our suppliers to protect the health and safety

of employees and contract labor and minimize any

adverse work conditions.

Introduction

While we are active with a wide range of technology

portfolio in different business segments, geographical

areas with suppliers worldwide, TKH has an indirect

impact on workers in its value chain. A worker in the value

chain is an individual performing work in the value chain of

TKH who are or can be materially impacted by TKH,

regardless of the existence or nature of any contractual

relationship with TKH. This includes all workers who are

not part of TKH’s own workforce.

Based on our double materiality assessment the topics

health and safety (working conditions) and child/forced

labor (work-related rights) are identified as material, with a

potential negative impact on all the workers in copper

mines, being part of the value chain of our business

segment Smart Connectivity systems. Suppliers in the

upstream copper value chain who do not respect working

conditions and labor rights, can pose a reputational risk,

which could lead to financial losses. There are no material

positive impacts.

Our approach and policies

lac

k of attention to health and safety can negatively

impact workers in the value chain by exposing them to

dangerous conditions and increasing the risk of injury or

illness. To manage potential negative impacts we

TKH Group Annual Report 2024132

•

Our suppliers are expected to take

all the necessary

actions to ensure consumer safety. Supplier will ensure

that their products will not be made of hazardous

substance as defined in EU Directive Restriction of

Hazardous Substances.

Policy name Key contents

Code of Supply • Describes how we expect our strategic suppliers to act, including criteria on environmental, social

and governance topics.

• Applicable for all suppliers.

• Managing director of the operating company is responsible for implementation.

• Based on labor standards issued by the International Labor Organization (ILO).

• Published on our website and should be read and signed by each strategic supplier (annual

purchase volume >€1 million).

human rights, environmental aspects and our leverage.

The assessment takes also into account the tier-2 and

tier-3 suppliers. For the latter part, we are dependent on

the information publicly available or provided by the tier-1

suppliers. Human rights risks are classified into three

categories using the Human Rights Guidance Tool for the

financial sector, based on EIRIS analysis of the human

rights (ethical investment research services).

Environmental aspects are mainly focused on GHG

emissions. Based on our relative share in the purchased

volume, we assess the leverage we have. The combined

scores on human rights, environmental aspects and our

leverage result in a risk classification of the supplier. We

will monitor the classification on an annual basis. We will

engage with suppliers classified as high risk to manage

Tier-3 Tier-2 Tier-1

Mining

Recycling

Smelting and refining Semi-fabrication Product manufacture Cables

Value chain of copper

Own operations Customers

Value chain of copper

Copper is an important raw material for our cable

production companies which are part of the business

segment Smart Connectivity systems. Copper is a global

industry, from the mines of South America to refineries in

Asia. Copper's supply chain has several inherent risks

including health and safety (working conditions) and

child/forced labor (work-related rights). We are at the end

of the value chain, with tier-1-2-3 suppliers in the

upstream value chain. We purchase semi-fabricated

copper products such as copper wires from our tier-1

suppliers. Our tier-2 suppliers are companies smelting

and refining copper purchased from tier-3 suppliers being

the copper mining companies.

In 2024, we implemented a classification system for our

tier-1 suppliers at our largest cable production site

through a comprehensive risk assessment focusing on

the identified potential risks. In addition, we monitor

whether our suppliers are certified for the Copper Mark,

the leading international recognized assurance framework

for a responsible supply chain in copper production.

Engaging with workers in the value chain

We do not engage directly with workers in the value

chain. Consequently, they are also not directly involved in

target setting. We manage relationships with suppliers via

meetings, and we perform desktop assessment and

on-site supplier assessments on our strategic suppliers to

obtain information on the working conditions of value

chain workers. The purchase departments within our

operating companies have the operational responsibility

for ensuring that engagement happens, under supervision

of the managing director. A full description of how we

manage supplier relationships is included in the

Management of relationship with suppliers section and in

the paragraph Due diligence process below. The human

rights section of these supplier assessments include

questions on child labor, forced and compulsory labor,

working hours, minimum wages, freedom of association,

discrimination and harassment.

TKH is committed to an open culture in which employees

can openly discuss any concerns, problems or abuses.

Also external parties like suppliers or workers in the value

chain are able to report matters, directly to the operating

company via a complaint procedure, or by reporting to

133Annual Report 2024 TKH Group

TKH. A Whistleblower Procedure is established for a clear

course of action for employees or third parties (employees)

who wish to raise issues or concerns such as a possible

criminal offense or violation of the law, giving or receiving

a bribe, disclosure of confidential information, dishonesty

or unethical behavior (such as discrimination, (sexual)

harassment, bullying, etc.), etc. TKH is committed to

protecting workers in the value chain from retaliation.

Reports made in accordance with the established

procedure will not negatively affect the workers in the

value chain position. Every complaint or report is

investigated through the local complaint procedures.

Reports received by TKH are reviewed and investigated

by the Group Compliance Officer. In case of violations,

possibilities to remediate the impact on workers in the

value chain will be investigated and implemented. If the

supplier does not respond adequately, the business

relation with the supplier concerned will be reconsidered.

Existing policies will also be reviewed as well as other

measures to prevent this in the future. In 2024, no severe

human rights issues and incidents have been reported.

We do not specifically assess whether our workers in the

value chain are aware of the complaint procedure. TKH

trusts these structures and processes as a way to raise

concerns/needs, and have them addressed.

We also engage with value chain partners through the

International Responsible Business Conduct (IRBC)

agreement for the Renewable Energy Sector. In particular,

we focus on copper suppliers classified as high risk

based on our risk assessments. We are in direct contact

with these tier-1 suppliers, focusing on reducing the

identified risks and implementation of action plans.

Due diligence process

We have implemented proactive measures to mitigate

harm of workers in the value chain. As part of the

onboarding process of new suppliers we perform a

high-level pre-screening, followed by direct suppliers

engagement via our Code of Supply and assessments.

We oblige our strategic suppliers to sign the Code of

Supply, followed by a desktop assessment and on-site

assessment based on our self-assessment checklist.

Strategic suppliers are suppliers with an annual purchase

volume of more than €1 million (in the reporting year).

Code of Supply table

annual target

2024

% of strategic suppliers that signed the Code of Supply > 90% 89.4%

% of strategic suppliers that signed the Code of Supply and received a desktop assessment 54.7%

% of strategic suppliers that signed the Code of Supply and received an on-site assessment 31.7%

The assessments carried out with suppliers have not

revealed any material violations of human rights. In case

of violations, the business relation with the supplier will

be reconsidered.

More information is included in the Management of

relationship with suppliers section.

Copper from responsible production

Since 2023, our cable production company TKF

participated in the International Responsible Business

Conduct (IRBC) agreement for the Renewable Energy

Sector. While the renewable energy sector has achieved

great progress on environmental and societal issues,

including climate change, there are still numerous

obstacles to overcome. As a prominent player in the cable

production and telecom industry in the Netherlands, TKF

understands the vital importance of sustainable practices

and responsible behavior in an ever-evolving world. TKF

has a responsibility as a supplier of subsea cables for

offshore wind energy to bring the industry expertise to the

forefront and acknowledge the hurdles faced by our

company and many others involved in the renewable

energy value chain. By participating in this agreement TKF

is committed to collaborating with our stakeholders, as

well as all others participating in the renewable energy

agreement. We aim to identify and mitigate our own

(including suppliers) risks and impacts on both society

and the environment.

We are also in continuous conversation with our main

copper suppliers regarding a responsible supply chain.

This is important because through our tier-1 suppliers we

source raw materials from around the world. The

countries of origin for the copper supply includes regions

that could pose risks regarding compliance with human

rights related sustainability standards. Therefore, TKH

values long-term business relationships with companies

in the copper supply chain. This strategy is crucial for

fulfilling the growing global demand for responsibly

produced copper. Primary raw materials such as copper

will also be needed in the future to satisfy the growing

needs for metals for the green transition.

In 2024, we assessed 78.2% of the tier-1 copper

suppliers of our largest cable production site based on

our new developed comprehensive risk assessment (see

value chain of copper, based on purchased kg). Our

largest supplier in terms of purchase volume is part of

“The Copper Mark” industry initiative. The Copper Mark is

the leading international recognized assurance framework

for a responsible supply chain in copper production.

The Copper Mark covers the 32 sustainability criteria

set out in the Responsible Minerals Initiative’s (RMI) Risk

Readiness Assessment and incorporates all major

TKH Group Annual Report 2024134

environmental, social and governance issues, such as

child labor and occupational safety. The Copper Mark

is also aligned with the United Nations Sustainable

Development Goals (SDGs). Our target is to have at

least 80% of our copper suppliers certified by The

Copper Mark by 2030. In 2024 in total 59.0% of our

tier-1 suppliers (based on purchased kg) were certified

by The Copper Mark.

Actions

We defined the following actions for 2025:

•

Review whether it is necessary to develop a

supplement policy for workers in the value chain to the

existing policies.

•

Review of measures to remedy any negative impact on

workers in the value chain.

•

Review of mechanisms and processes on monitoring

compliance with the UNGC, ILO Declaration and OECD

Guidelines described in our current policies.

•

Extend the risk assessment by adding other tier-1

copper suppliers to our assessment, by classifying

them as a high, medium or low risk supplier. This will

allow us to defined more precise targets in 2025.

•

Focus on suppliers classified as high risks by engaging

on mitigating the identified potential risks.

Tier-1 copper suppliers table

target

2030 2024

% of tier-1 copper suppliers certified by The Copper Mark (based on purchased kg) > 80% 59.0%

% of tier-1 copper supplier assessed (2024 risk management assessment – based on purchased kg) 100% 78.2%

Actions related to workers in the value chain are revisited

every year and integrated in the activities at operating

company level. Due to the nature of the actions, the

resources needed for these actions are opex-related and

do not require any significant capex. The opex are also

not significant, since these initiatives are an integral part

of our day-to-day expenses and procurement activities.

The ambitions and annual targets set are included in the

tables. Targets are determined by the Executive Board.

Tracking effectiveness is part of our quarterly sustain-

ability reporting. In cases where no quantitative measures

are available we report on progress based on qualitative

information.

135Annual Report 2024 TKH Group

Consumers and/or end-users (S4)

Social

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

Privacy (cybersecurity)

* *

•

Data leaks or cyber incidents involving

GDPR-sensitive data, and loss of business

sensitive information, have an actual negative

impact on the right of data protection.

•

Privacy can be a financial risk. If customer

data is not adequately protected it could lead

to violation of laws, fines and penalties and

loss of trust.

Introduction

TKH is active with a wide range of technology portfolio in

different business segments, and geographical areas with

customers worldwide. All sales transactions are business-

to-business. As a result, we have an indirect impact on

consumers and end-users. Consumers and end-users are

individuals who acquire, consume and ultimately use or are

intended to ultimately use a particular product or service

for personal use, either for themselves or for others.

Based on o

double materiality assessment the topic

privacy (cybersecurity) is identified as material. Data leaks

or cyber incidents involving GDPR-sensitive data, and loss

of business sensitive information, have an actual negative

impact on the right of data protection. TKH depends on

consumers' trust in the security systems of its operating

companies, such as intercoms, (surveillance) cameras, and

vision systems. A perceived risk of data leaks could lead to

decreased sales, contract terminations, or reputational

damage. Additionally, privacy concerns may result in

stricter regulatory requirements, impacting product design

and compliance costs.

Data protection is also relevant for our products that store

customer data, related to the aforementioned portfolio and

customer production data stored in our tire building

machines and vision systems. Privacy and cybersecurity

covers both the privacy and security of our products and

services sold to our customers and the cybersecurity of our

organization developing and producing these products and

services. If customer data is not adequately protected it

could lead to violation of laws, fines and penalties and loss

of trust. There are no material positive impacts.

Our approach and policies

We do not have a specific policy for consumers and/or

end-users. Consequently, they are also not directly

involved in target setting. There are no mechanisms and

processes on monitoring compliance with the UNGC, ILO

Declaration and OECD Guidelines described in our

current policies, nor are the measures to remedy any

negative impact on human rights. We will review whether

it is necessary to develop a specific policy for consumers

and/or end-users.

We have included provisions regarding the respect and

protection of human rights in our Code of Conduct. Our

Code of Conduct is based on the UN Guiding Principles

on Business and Human Rights, to not tolerate any

violation of human rights. We use the OECD Guidelines

and ILO Declaration on Fundamental Principles and

Rights at Work as a reference framework.

Cybersecurity con

cerns the risk of a breach of data

availability, confidentiality, and integrity (including IP). This

also includes cyberattacks that compromise data (including

IP) to disrupt business operations and infrastructure.

mportant elements in this respect are our decentralized IT

landscape, the use of multiple ERP systems, the continuity

of production sites, the protection of developed

technologies (IP protection) and data protection legislation,

including GDPR. To manage potential negative impacts we

implemented an IT and Security policy, and we perform IT

audits and penetration testing and we measure effective-

ness though targets and KPIs. We guide our operating

companies to implement cybersecurity measures.

The IT and Security policy covers various topics,

including detailed policies on specific topics such as

business continuity, operational IT controls, and specific

guidelines to securely develop software. 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. Communication on

cybersecurity takes place through regular newsletters, for

example. Penetration tests have also been carried out at

some operating companies to determine whether the

organization is sufficiently resilient to potential digital

attacks. These tests have provided insights into potential

vulnerabilities in our IT infrastructure and their potential

consequences. The ultimate goal is to implement secure

TKH Group Annual Report 2024136

processes and effective controls and to create a safe and

honest culture, without material incidents.

In 2024, we placed increasing emphasis on the risk of

ransomware and our resilience should such an event

occur, as well as the EU NIS2 Directive, which is partly

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

meetings. As a result, this topic continues to receive the

attention it deserves. IT & Security is part of the

immediate focus area of the Internal Audit team.

uropean 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

information. One of the requirements is the establishment

of a processing register that shows what personal data is

being used or stored, where, and for what purpose. The

establishment of this register provides insight into and

control over the organization’s data processing and the

related privacy controls. An internal privacy policy has 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.

Collectively, these policies and procedures reﬂect our

strong commitment to respect the human rights of both

consumers and end-users.

Policy name Key contents

Code of Conduct • Describes how we act as a company, how we make ethical decisions, and how we deal with

different dilemmas within our company.

• Applicable for all operating companies.

• Managing director of the operating company is responsible for implementation.

• OECD Guidelines is used as reference framework, in addition to the guidelines provided in the

UN Global Compact.

• Published on our website and should be read and signed by each employee.

IT security policy • Guidance on IT controls and information security, including security breach/incident reporting,

intellectual property protection, amongst other things.

• Applicable for all operating companies.

• Managing director of the operating company is responsible for implementation.

• Based on ISO 27001:2022 controls.

• Provided to managing directors and the IT and security responsible of each operating company.

personal employee data within our company.

• Applicable for all operating companies.

• Managing director of the operating company is responsible for implementation.

• Based on the EU General Data Protection Regulation (GDPR).

• Provided to managing directors and available for all functions having access to the reporting

system Cognos.

Engaging with consumers and end-users

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 collaborate closely with our customers

to get insights and knowledge of the consumers and

end-users to understand their needs and if there is a risk

for material impact on them. We measure, monitor, and

evaluate customers through customer satisfaction surveys

on a four-year cycle. The survey contains predefined

topics, but also provides the opportunity for customers to

raise any other concerns for example related to privacy or

data protection. Based on the outcomes, we can take

specific action to better serve our customers. Through

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. The

managing director of the operating company is

responsible for executing the survey, and the implemen-

tation of defined actions.

TKH is committed to an open culture in which employees

can openly discuss any concerns, problems or abuses.

Also external parties like customers are able to report

matters, directly to the operating company via a complaint

procedure, or by reporting to TKH. A Whistleblower

Procedure is established for a clear course of action for

employees or third parties who wish to raise issues or

concerns such as a possible criminal offense or violation

of the law, giving or receiving a bribe, disclosure of

confidential information, dishonesty or unethical behavior

(such as discrimination, (sexual) harassment, bullying),

etc. TKH is committed to protecting customers from

retaliation. Reports made in accordance with the

established procedure will not negatively affect the

customers’ position. Every complaint or reported is

investigated. Complaints reported to the operating

company are investigated through the local complaint

137Annual Report 2024 TKH Group

procedures. The number of received complaints and

number of complaints settled within five working days are

KPIs and quarterly reported as part of the sustainability

reporting. Reports received by TKH are reviewed and

investigated by the Group Compliance Officer. Depending

on the topic, an external researcher may be appointed to

ensure independence and objectivity. If deemed

necessary, disciplinary and corrective measures are taken.

We do not specifically assesses that our consumers and/

or end-users are aware of and trust these structures or

processes as a way to raise their concerns or needs and

have them addressed. More information is included in the

section Business conduct.

Data leaks and cyber incidents require immediate action

to stop the incident, and our procedures are set in motion.

If the data leak or cyber incident involves a GDPR breach

that presents a risk to the affected individuals, we

immediately inform the customer, who reports the incident

to the relevant local authority and the affected individuals.

The affected individuals’ perspectives do not inﬂuence the

management of actual GDPR incidents. However,

concerning potential impacts, citizens can contact the

data controller (our customers) to invoke their GDPR rights

and, if applicable, we will conform to the request.

In the event of a project experiencing system failure or

downtime, we have established procedures to manage

and mitigate such issues. We act immediately to stop the

incident, and we will communicate with the customer and

keep the client updated regarding the reestablishment of

normal operations. The consumers and end-users do not

inﬂuence the management of this. However, engagement

with the affected consumers and end-users happens via

the customers, who will provide them with the necessary

information.

The engagements have not revealed any material

violations of human rights. In case of violations, the

business relation will be reconsidered.

In addition, possibilities to remediate the impact on

consumers and end-users will be investigated and

implemented. Existing policies will also be reviewed as

well as other measures to prevent this in the future.

More information is included in Business conduct policies

and corporate culture.

Consumers and/or end-users metrics

We continuously train our employees t

o detect phishing

attempts sent by email. We do so by sending fake phishing

emails to employees on a regular basis, to raise awareness

and train detection skills. If they miss the signs of phishing

and slip, they are informed what signs in the fake phishing

email they should have

noticed.

Several small and non-material security incidents occurred

at our own operations during the year under review.

However, we experienced one larger incident due to a

successful ransomware attack at one of our operating

companies, which impacted access to operating systems

for two weeks but without material impact. These

incidents reinforce the need to remain vigilant to IT

Security risks. Consumer and end-user topics are also

addressed on a continuous basis through ISO 27001, as

part of our operating companies are ISO 27001 certified.

The ISO 27001 provides security requirements which

mitigates the risk of cybersecurity incidents and their

potential impact. In 2025, we will update our IT security

policy and continue with internal audits to identify

improvements. Further information about IT security is

included in the Risk management section.

We measure, monitor, and evaluate customers through

customer satisfaction surveys on a four-year cycle. Our

average customer satisfaction survey score for 2024 is

8.6 (2023: 8.6). The customer satisfaction score reported

(maximum score of 10) is based on the outcome of the

most recent customer satisfaction surveys conducted by

an external research company. Each year, a number of

operating companies conduct the survey. A survey

reﬂects the customer base of the respective operating

company. The customer satisfaction score reported in

2024 reﬂects surveys from the period 2021-2024 and is

based on the weighted average of the responses from all

customers in this period.

Through 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.

Customers and end-users table

annual target

2024 2023

Number of reported cybersecurity incidents within own operations with direct financial

impact on TKH of > €100k 0 1 0

Customer satisfaction survey score > 7.8 8.6 8.6

TKH Group Annual Report 2024138

Actions

We defined the following actions for 2025:

•

Review whether it is necessary to develop a

supplement policy for consumers and/or end-users to

the existing policies.

•

Review of mechanisms and processes on monitoring

compliance with the UNGC, ILO Declaration and OECD

Guidelines described in our current policies.

•

Review of measures to remedy any negative impact on

human rights of consumers.

•

Update our IT and security policy to incorporate best

practices for encryption, multi-factor authentication,

resilience against ransomware, and other developments

for example related to new laws and regulations.

We did not identify any specific action in relation to our

own practices regarding product design, marketing or

sales, or whether wider industry or collaborative action

with other relevant parties is required. Actions related to

consumers are revisited every year and integrated in the

activities at operating company level. Due to the nature of

the actions, the resources needed for these actions are

opex-related and do not require any significant capex.

The opex are also not significant, since these initiatives

are an integral part of our day-to-day expenses and sales

activities.

The ambitions and annual targets set are included in the

tables. Targets are determined by the Executive Board.

Tracking effectiveness is part of our quarterly sustain-

ability reporting. In cases where no quantitative measures

are available we report on progress based on qualitative

information.

139Annual Report 2024 TKH Group

Governance information

Business conduct (G1)

Governance

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

Corporate culture

• Absence of good corporate culture can

potentially have a negative impact as a result

of a lack of accountability, unethical behavior,

and inadequate response to environmental

and social challenges.

• Failing to address the potential negative

impact can result in regulatory fines, legal

penalties, and reputational damage.

Corruption and bribery

• Not preventing the spread of unethical and

illegal practice could have a potential

negative impact on societal well-being.

• Corruption and bribery can result in a lack of

transparency and accountability, leading to

erosion of public trust and damage to TKH's

reputation.

Management of

relationships with suppliers

* *

•

Conﬂicts, for example as a result of geopoliti-

cal developments (such as the Russia-Ukraine

war, trade tariffs, availability and price of ener-

gy), could have a potential negative impact on

people and the environment.

•

Reputational risks, as well as legal and finan-

cial liabilities. TKH may also face risks from

political instability, including expropriation or

nationalization of assets of suppliers (based

on their location).

•

Inadequate management of relationships

with suppliers can result in non-productive

relationships with suppliers, leading to

inadequate inﬂow of (raw) materials and thus,

discontinued production and operations.

Introduction

As a global technology company with decentralized

operations in more than 30 countries, and interaction with

a large number of business partners including suppliers,

TKH depends on transparency, trust, ethical business

conduct and compliance throughout its organization and

value chains. Compliance with applicable laws and

regulations and TKH’s policies, procedures and guidelines

can help mitigate a range of risks, including those

associated with fraud, corruption (i.e. abuse of entrusted

power for private gain), bribery (i.e. dishonestly

persuading someone to act in your favor by giving them a

gift of money or another inducement), unfair competition,

export violations, sanctions, human rights including child

labor, IT security, health and safety, environment, data

privacy, and financial and sustainability reporting

requirements. Failure to comply with applicable

regulations and expectations for responsible business

conduct can result in loss of license to operate and could

expose TKH to investigations, criminal and civil sanctions

such as fines and penalties, and materially impact

financial results. The defined targets are based on

compliance, therefore key stakeholders are not directly

involved in target setting. The company has procedures in

place related to fraud, bribery, or material non-compliance

issues, specifically relating to accounting, internal controls,

auditing matters. Fraud and non-compliance is also an

attention point during the Audit Committee meetings and

the audit by the external auditor.

In addition, non-compliance on relevant environmental,

social and governance topics by suppliers could result in

risks on people and the environment. Inadequate

TKH Group Annual Report 2024140

our risk profile, and to take responsibility for any potential

risks. They are also expected to act in accordance with

TKH’s Code of Conduct. This Code of Conduct is

fundamental to everything we do and describes how we

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

how we deal with different dilemmas within our company.

Additional policies have been implemented in relation to

the principles included in the Code of Conduct, including:

•

rules and guidelines for decision-making and approval

procedures and authorization levels for the

management of our operating companies;

•

an Internal Control Framework (ICF) which is used to

analyze and evaluate the strategic, operational

including sustainability, financial, and compliance risks

for its operating companies;

•

various rules of conduct for employees, customers, and

suppliers including a whistleblower procedure; and

•

guidelines for internal control procedures, IT security

policy, treasury policy, and a financial and non-financial

(including sustainability) reporting manual.

More information can be found in the Risk management

section.

Code of Conduct

We have a Code of Conduct in place to ensure that every

employee acts in accordance with TKH’s guidelines.

The Code of Conduct uses the OECD Guidelines as a

reference framework, in addition to the guidelines

provided in the UN Global Compact endorsed by TKH.

Our Code of Conduct defines the way we live our core

principles every day. It covers various topics related to

principles of honesty, integrity and transparency,

management of those relationships could jeopardize

adequate inﬂow of important (raw) materials. Global

economic, market and geopolitical developments could

inﬂuence the execution of the strategy and the financial

position and results of TKH. Examples are the Russia-

Ukraine war and economic and political confrontations

between world powers (trade tariffs, availability and price

of energy), the erosion of trade agreements, and the

impact of (global) inﬂation. In this context, monitoring of

(dependency) of suppliers is also of importance.

More information on human rights in the value chain can

be found in the Social information section.

Role of administrative, management, and

supervisory bodies

The Executive Board, led by the CEO, holds ultimate

responsibility for defining, implementing, and monitoring

business conduct policies across the organization. This

includes ensuring governance policies are aligned with

strategic objectives, regulatory requirements, and ethical

business practices.

To ensure effective oversight of business conduct, TKH

has established clear procedures and accountability

mechanisms, covering:

•

Policy development: Governance policies are devel-

oped by the Executive Board, reviewed by the

Supervisory Board, and formalized in internal

procedures.

•

Implementation & monitoring: The Director of

Sustainability, reporting to the CEO, is responsible for

operational enforcement of compliance beyond

reporting obligations.

•

Risk management & internal controls: The Internal Audit

Department assesses governance risks related to

business conduct, ensuring controls are in place to

mitigate potential ethical and compliance risks.

•

Training & awareness: Board members and senior

management undergo corporate ethics, business

conduct, and compliance training. Where no formal

program exists, action plans will be developed to

address this gap.

The Supervisory Board ensures that the Executive Board

not only monitors governance and sustainability but

actively enforces ethical business practices and

compliance frameworks, intervening when necessary to

uphold integrity standards. Beyond overseeing sustain-

ability reporting, the Audit Committee ensures continuous

improvement of governance policies, monitors the

effectiveness of governance policies and internal

controls, and assesses compliance with business

conduct requirements to safeguard ethical integrity.

Both boards have expertise in corporate governance, risk

management, compliance, and sustainability, ensuring

effective oversight of business conduct. Members

possess backgrounds in finance, legal, ESG compliance,

and general business ethics, supporting informed

decision-making and strategic alignment with regulatory

and ethical standards.

Corporate culture

TKH conducts its business according to the principles of

honesty, integrity, accountability, and transparency. We

are committed to complying with relevant laws and

regulations that are enforced. These core values define

the culture and behaviors that we’re committed to

embedding throughout TKH. All employees are expected

to be aware of the core values underlying our actions and

Code of Conduct table

annual target

2024 2023

% of total employees that signed the Code of Conduct 100.0% 98.9% 96.5%

141Annual Report 2024 TKH Group

including anti-bribery and anti-corruption, honest

business conduct, conﬂicts of interest, health and safety

and human rights. 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.

Each employee working for TKH received the Code of

Conduct and needs to sign the Code of Conduct as proof

of having read and understood what is required. The

managers of our operating companies are responsible for

implementing the Code of Conduct in their organizations.

The content of the Code of Conduct is included in internal

training programs. The Code of Conduct has been signed

by 98.9% (2023: 96.5%) of the total number of

employees. The yearly 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 soon

as possible. The Internal Audit team plays an important

role in monitoring the effectiveness of the Code of

Conduct. It works closely with TKH’s Compliance Officer

and Legal Advisor.

Policy name Key contents

Code of Conduct • Describes how we act as a company, how we make ethical decisions, and how we deal with

different dilemmas within our company.

• Applicable for all operating companies.

• Managing director of the operating company is responsible for implementation.

•

OECD Guidelines is used a reference framework, in addition to the UN Global Compact guidelines.

• Published on our website and should be read and signed by each employee.

Whistleblower procedure • Procedure to raise issues or concerns such as 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, etc.

• Applicable for all employees and third parties.

• Managing director of the operating company is responsible for implementation.

• Based on the EU Whistleblower Directive 2019/1937.

• Provided to managing directors, confidential officers, and available for all functions having access

to the reporting system Cognos.

Internal Control Framework • Describes how we act as a company, how we make ethical decisions, and how we deal with

different dilemmas within our company.

• Applicable for all operating companies, except for companies classified as small (< 20 FTEs).

• Managing director of the operating company is responsible for implementation.

• Based on the COSO 2017 framework.

• ICF per process (e.g. sales, procurement) is included in reporting forms in the reporting system

Cognos, and available for all functions having access to the reporting system Cognos.

Code of Supply • Describes how we expect our strategic suppliers to act, including criteria on ESG topics.

• Applicable for all suppliers.

• Managing director of the operating company is responsible for implementation.

• Based on labor standards issued by the International Labor Organization (ILO).

• Published on our website and should be read and signed by each strategic supplier (annual

purchase volume > €1 million).

Internal control procedures • Guidance on specific internal control procedures, addressing adequate segregation of duties,

adequate security of valuable and moveable assets, monthly reviews of operating performance and

reporting to TKH, amongst other things.

• Applicable for all operating companies.

• Managing director of the operating company is responsible for implementation.

• Based on general internal control standards and the COSO 2017 framework.

• Provided to managing directors and available for all functions having access to the reporting

system Cognos.

IT and security policy • Guidance on IT controls and information security, including security breach/incident reporting,

intellectual property protection, amongst other things.

• Applicable for all operating companies.

• Managing director of the operating company is responsible for implementation.

• Based on ISO 27001:2022 controls.

• Provided to managing directors and the IT and security responsible of each operating company.

TKH Group Annual Report 2024142

Policy name Key contents

Financial Reporting Manual • Guidance on financial reporting, addressing accounting principles and valuation methods for

balance sheet and profit and loss accounts, including guidance on the reporting through our finan-

cial reporting system Cognos.

• Applicable for all operating companies.

• Managing director of the operating company is responsible for implementation.

• Based on IFRS.

• Provided to managing directors and available for all functions having access to the reporting

system Cognos.

Sustainability Reporting

Manual

• Guidance on non-financial (sustainability) reporting, addressing accounting principles and estima-

tion methods for defined KPIs connected to the identified material sustainability topics, including

guidance on the reporting through our reporting system Cognos.

• Applicable for all operating companies.

• Managing director of the operating company is responsible for implementation.

• Based on the CSRD and ESRS.

• Provided to managing directors, the sustainability responsible of each operating company, and

available for all functions having access to the reporting system Cognos.

Internal reports and whistleblower procedure

TKH is committed to an culture where employees can

openly discuss any concerns, problems, or (suspected)

violations of the Code of Conduct. Employees can report

misconducts or (suspected) violations though an internal

reporting

procedure

. Depending on the situation, the

report can be done to the direct supervisor, HR or local

management.

In addition, a whistleblower procedure provides for a

clear course of action for employees who wish to raise

issues or concerns such as 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 issues. To strengthen the

organization's commitment to ethical practices, an

updated whistleblower procedure will be implemented in

2025 combined with a new online platform through which

(anonymous) reports can be submitted. This new online

platform will replace existing (local) systems and reporting

channels. In addition, a new training program will be

introduced for staff receiving and managing whistleblower

reports (confidential officers), including any measures

ensuring they are adequately prepared. TKH promotes

awareness of the whistleblower procedure through

internal training and various communication channels. In

addition, this topic is part of the employee satisfaction

surveys to foster a transparent culture.

TKH is committed to protecting whistleblowers from

retaliation. Reports made in accordance with the

established procedure will not negatively affect the

whistleblower’s position within the company. Additionally,

TKH has implemented specific measures to ensure that

any form of retaliation is prevented, and it remains vigilant

in safeguarding whistleblower anonymity and protection.

Reports are reviewed and investigated by the local

confidential officer and/or the Group Compliance Officer.

Depending on the topic, an external researcher may be

appointed to ensure independence and objectivity. If

deemed necessary, disciplinary and corrective measures

are taken. External parties can also report to the Group

Compliance Officer. In 2024, no report was received

through the whistleblower procedure (annual target is

receiving all reportable cases). TKH received one report in

2023 which has been carefully investigated in 2024 by an

external researcher specialized in the relevant research

topic. The investigation into the facts and circumstances

that led to the report in 2023 shows that there was no

indication for a suspicion of wrongdoing as referred to in

the TKH whistleblower procedure.

In 2024, three violations of the Code of Conduct were

reported through the internal reporting procedure. These

incidents are not related to bribery or corruption. As a

result, 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. We believe it is important to

promote an open and transparent culture and to measure

these issues in employee satisfaction surveys.

Actions related to the procedure are part of our annual

business plan and are revisited every year. Due to the

nature of the actions, the resources needed for these

actions are opex related and do not require any

Internal reports and whistleblower table

annual target

2024 2023

Number of reports through internal reporting procedure all 3 2

Number of reports through whistleblower procedure all 0 1

143Annual Report 2024 TKH Group

Actions

We defined the following actions for 2025:

•

Implement an updated whistleblower procedure.

•

Implement a new online platform through which

(anonymous) reports can be submitted.

•

Introduce new training program for staff receiving and

managing whistleblower reports (confidential officers).

Actions related to business conduct are revisited every

year and integrated in the activities at operating company

level. Due to the nature of the actions, the resources

needed for these actions are opex related and do not

require any significant capex. The opex are also not

significant, since these initiatives are an integral part of

our day-to-day expenses and (HR) activities.

Targets are determined by the Executive Board. Tracking

effectiveness is part of our quarterly sustainability

reporting. In cases where no quantitative measures are

available we report on progress based on qualitative

information.

Corruption and bribery

We are committed to conducting our business fairly,

transparently and with integrity, while applying high

ethical and legal standards. We do not approve any form

of corruption and bribery including any other form of

unethical business practice. We have a Code of Conduct

in place, covering various topics including anti-corruption

and anti-bribery. TKH endorsed the ten principles of the

Global Compact of the United Nations in the areas of

human rights, labor, environment and anti-corruption

which are aligned with the United Nations Convention

against Corruption. We are committed to not only avoid

bribery, extortion and other forms of corruption, but to

proactively develop policies and concrete programs to

address corruption internally and within our most

important supply chains.

As part of our TKH Manual we have a set of internal

guidelines and procedures related to anti-corruption or

anti-bribery, focusing on internal control measures,

management responsibilities, and authorization

requirements. In addition, we have internal guidelines and

checklists on compliance with sanctions and export

regulations for transactions with customers. Through the

TKH Code of Supply, our strategic suppliers are aware

that they should follow our business ethics and confirm

this by signing this Code of Supply. Compliance with this

code is verified during supplier audits. As described

under business conduct policies, any violation of our

anti-corruption or anti-bribery rules and procedures can

be reported through our whistleblower or internal

reporting procedure and is investigated by the Group

Compliance Officer and/or an independent team,

separate from the chain of management. Each report is

submitted to the Executive and Supervisory Board

through the Audit Committee.

TKH has embedded its risk management policy at all

levels of the organization. This involves an Internal

Control Framework (ICF) which is used to analyze and

evaluate the strategic, operational including sustainability,

financial, and compliance risks for its operating

companies (including potential corruption and bribery

risks). TKH’s risk management policy reﬂects the organi-

zation’s size and decentralized structure. The implemen-

tation of the components of this risk management policy

are assessed and monitored by Internal Audit. An open,

transparent culture with sufficient critical capacity is a

prerequisite for an organization to properly manage risks,

responsibilities, and competencies. TKH considers a

suitable risk management model to be an important tool

for creating sustainable 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 through short lines of communi-

cation and is supported by closely monitoring agreed

objectives through a comprehensive Key Performance

Indicator (KPI) dashboard.

More information can be found in the Risk management

and the Management of relationship with suppliers section.

The company’s internal risk management and control

system is also an ongoing focus for the Audit Committee

of the Supervisory Board. Topics such as non-compliance

with laws and regulations, specifically (commission)

payments to third-party agents and non-routine

transactions in high-risk countries, are frequently

discussed. At least once a year the Audit Committee

discusses the company’s fraud risk assessment,

including inherent fraud risks, identified significant risks,

and other risks and attention areas including corruption

and bribery. Internal Audit performs audit activities to

gain a clearer picture of the possible risks of fraud,

non-compliance, corruption, bribery, and review internal

control measures related to these risks. Fraud and

non-compliance is also an attention point during the audit

by the external auditor. Based on internal fraud risk

assessments performed, we determined a potential and

inherent corruption/fraud risk in the value chain of our

business segment Smart Manufacturing systems due to

the use of third-party agents towards part of our end

customers. To mitigate the risk, we implemented various

measures such as governing the working relationship with

agents and intermediaries by guidelines and template

contracts. We also train our third-party agents to ensure

that every agent acts in accordance with TKH’s

guidelines.

significant capex. The opex are also not significant, since

these initiatives are an integral part of our day-to-day

expenses and HR activities

TKH Group Annual Report 2024144

Actions

We defined the following actions for 2025:

•

Introduce new training program for functions at-risks of

corruption and bribery, including members of

supervisory bodies.

Actions related to anti-corruption and anti-bribery are

revisited every year and integrated in the activities at

operating company level. Due to the nature of the

actions, the resources needed for these actions are opex

related and do not require any significant capex.

The opex are also not significant, since these initiatives

are an integral part of our day-to-day expenses and (HR)

activities.

Targets are determined by the Executive Board. Tracking

effectiveness is part of our quarterly sustainability

reporting. In cases where no quantitative measures are

available we report on progress based on qualitative

information.

Management of relationship with suppliers

We expect our suppliers to adopt a zero-tolerance policy

on issues that are material to us. Our principles and

requirements are set out in a Code of Supply, which

covers Environmental, Social and Governance topics

such as human rights, the environmental impact (e.g.

policies, environmental management systems, pollution

prevention etc.), occupational health and safety,

compliance with law and regulations including corruption

and bribery, and ethical behavior. This set of environment,

social and governance topics are part of the selection

criteria of suppliers. In case criteria are not met by the

supplier, the business relationship will be reconsidered.

We oblige our strategic suppliers (supplier with an annual

purchase volume of more than € 1 million must) to sign

the Code of Supply, followed by a desktop assessment

and on-site assessment.

As part of our internal training program we organized

several physical and online meetings to address

important topics related to fraud, corruption, and bribery.

We specifically focus on functions at-risks of corruption

and bribery, which include procurement, sales, legal,

financial administration and senior and executive

management. The yearly training program addresses

topics such as sanctions regulation, the procedure to be

followed in that respect, definition of fraud and the fraud

triangle, definition of corruption and bribery including

examples, and the internal payment framework, by means

of theory and case studies. In addition, our operating

companies implemented company specific training

programs focusing on the most relevant corruption and

bribery risks for their business, for example related to

commission payments to third-party agents (Smart

Manufacturing systems). In 2025, we will launch a new

training program for functions at-risks of corruption and

bribery, to help our employees to act in line with our

anti-corruption and anti-bribery rules and procedures.

To enhance governance competencies, board members

participate in regular training on various topics. In

2023-2024, deep-dive sessions covered double

materiality, cybersecurity, and sustainability regulations,

Anti-corruption and anti-bribery training table

target

2025 2024

% of headcount at-risk covered by anti-corruption and anti-bribery training > 90% 27.5%

In 2024, no confirmed incidents of corruption or bribery

were reported as well as by no convictions for violation of

such laws (annual target: no incidents or fines). In

addition, there are no instances of employees being

dismissed or disciplined for corrupt practices during the

year. Any incident of corruption or bribery is assessed to

determine if additional internal control measures or other

actions are needed. Each incident is investigated by the

Group Compliance Officer. Depending on the topic, an

external researcher may be appointed to ensure

independence and objectivity. If deemed necessary,

disciplinary and corrective measures are taken. Each

incident is reported to the Executive and Supervisory

Board through the Audit Committee. Although we

concluded that no action was necessary due to the

absence of any known corruption cases, we will launch

a new training program in 2025 to further enhance

awareness.

Incidents of corruption and bribery table

annual target

2024

Number of convictions for violation of anti-corruption and anti-bribery laws 0 0

Amount of fines for convictions for violation of anti-corruption and anti-bribery laws €0 €0

ensuring continuous learning and adaptation to evolving

governance challenges. Members of the Executive and

Supervisory Board will also participate in the new 2025

training program for functions at-risks of corruption and

bribery.

145Annual Report 2024 TKH Group

Code of Supply table

annual target

2024

% of strategic suppliers that signed the Code of Supply > 90% 89.4%

% of strategic suppliers that signed the Code of Supply and received a desktop assessment 54.7%

% of strategic suppliers that signed the Code of Supply and received an on-site assessment 31.7%

The Code of Supply has been signed by 89.4% (2023:

91.9%) of the total number of suppliers in scope.

The annual target of 90% has not been achieved, partly

due to a longer than expected lead time for new suppliers

to sign the code. We are in close contact with the

suppliers, and we are establishing clear rules to eliminate

such delays as soon as possible.

Within a maximum of two years after signing the Code of

Supply, a desktop assessment of the supplier in question

must be carried out to review the items stipulated in the

Code. Within five years after signing the Code of Supply,

an on-site assessment must be carried out. Internal Audit

has included the auditing of processes related to the

Code of Supply in its work program.

We have included provisions regarding the respect and

protection of human rights in both our Code of Conduct

and our Code of Supply. Our policy does not tolerate any

violation of human rights. We use the OECD Guidelines

as a reference framework to enable us to adequately

identify potential risks. These OECD Guidelines refer to

the Universal Declara

tion of Human Rights, which states

that all parties in society, including companies, have an

obligation to respect and protect human rights. In addition,

the guidelines provided in the UN Global Compact are

endorsed by TKH.

As part of the assessment we carry out with suppliers as

part of our Code of Supply, we ask suppliers about their

human rights record and discuss possible areas such as

discrimination, the right to social security, and the risk of

child labor in the value chain. The assessments carried out

with suppliers have not revealed any violations of human

rights. In case of violations, the business relationship will

be reconsidered. Privacy is an important human rights

principle. People must be able to live in freedom without

everyone knowing everything. The Dutch Privacy Act,

including the EU Regulation (EU GDPR) gives people more

rights – and organizations more obligations – to handle

personal data carefully. Internal Audit covers human rights

as part of its auditing activities and asks our managers

about their compliance with human rights and whether

any potential human rights conﬂicts could arise, especially

in the value chain in which we operate.

Optimizing (regional) portfolio and local manufacturing

footprint also contributes in lowering supplier risks. A

situation where important raw materials such as copper,

aluminum, steel and plastics, and technical (electronic)

components have long delivery times, are unavailable or

only available in limited quantities, as well as price

increases related to raw materials can put pressure on our

profit margins. To mitigate these risks, we increase our

inventory of critical raw materials and components where

applicable. At the same time, we try to redesign products

as much as possible to increase the use of alternative

materials and components with better availability/pricing,

in addition to the use of alternative suppliers. Lastly, we

developed cooperation programs between operating

companies to discuss developments, trends, and risks

and to leverage buying power and knowledge within the

group and business segments.

Actions

We defined the following actions for 2025:

•

Review of existing policies related to management of

suppliers, including the code of supply and connected

self-assessment.

•

Evaluate if additional programs are required to further

increase the number of suppliers that signed the code

of supply, received a desktop-assessment or on-site

assessment.

Actions related to management of relationship with

suppliers are revisited every year and integrated in the

activities at operating company level. Due to the nature of

the actions, the resources needed for these actions are

opex related and do not require any significant capex.

The opex are also not significant, since these initiatives

are an integral part of our day-to-day expenses and

procurement activities.

Targets are determined by the Executive Board. Tracking

effectiveness is part of our quarterly sustainability

reporting. In cases where no quantitative measures are

available we report on progress based on qualitative

information.

TKH Group Annual Report 2024146

privacy, confidentiality, and data security. This Policy

applies to all employees and to all (independent)

contractors who perform services for TKH. Interests of

key stakeholders in setting the policy are not considered

specifically, as the policy is based on the EU AI Act

2024/1689 and the TKH IT security policy.

AI and algorithm ethics (entity-specific material topic)

Governance

Value chain boundary Material IROs

Sub-topic

Upstream Own operations Downstream

Impacts Risks Opportunities

AI and algorithm ethics

* *

• Unjustified actions, bias, discrimination or

breach of privacy due to the use of AI sys-

tems could have a potential negative impact

on people.

• Insufficient adequate use of AI tools can lead

to leakage of business sensitive information

such as intellectual property.

• Non-compliance with AI algorithm could

lead to violation of laws, fines and penalties,

reputational damage, and loss of trust.

Introduction

AI and algorithm ethics is an entity-specific material topic,

because AI is an important part of TKH’s business

strategy and R&D roadmap, and supported by the

outcomes of the DMA process.

Artificial intelligence (AI) is not just about efficiency and

streamlining laborious tasks. Thanks to machine learning

and deep learning, AI applications can learn from data

and results in near real-time, analyzing new information

from many sources and adapting accordingly, with a level

of accuracy that’s invaluable to business. This ability to

self-learn and self-optimize means AI continually

compounds the business benefits it generates. In this

way, AI helps our businesses to adapt at speed, with a

regular stream of insights to drive innovation and

competitive advantage in a world of constant disruption.

When scaled, AI can become a key enabler of our

strategic priorities.

At the same time, the use of AI systems must not go

beyond what is necessary to achieve a legitimate aim.

Therefore, risk assessment should be used to classify

AI algorithm systems to prevent harms which may

result from such uses, such as unjustified actions, bias,

discrimination or breach of privacy (AI ethics). Non-

compliance with AI algorithm could lead to violation

of laws, fines and penalties, reputational damage, and

loss of trust. In addition, the use of AI tools within our

own operations could lead to leakage of business

sensitive information such as intellectual property.

Use of AI tools

The input of confidential or sensitive information into an

AI Tool could result in the disclosure of such information

to third parties, and, similarly, input of personal identi-

fiable information can lead to breaches of privacy laws.

Therefore, in order to mitigate these risks we developed

an AI Tools policy in 2024. The purpose of this policy is to

establish guidelines for the appropriate and ethical use of

AI within TKH, including the use of Generative AI and

Algorithmic AI tools, to ensure that AI technology is used

to enhance productivity, efficiency, and decision-making

while complying with applicable law and respecting

Policy name Key contents

AI Tools policy • Provides guidelines for the appropriate and ethical use of AI within TKH, including the use of

Generative AI and Algorithmic AI tools.

• Applicable for all employees and contractors.

• Managing director of the operating company is responsible for implementation.

• Based on the EU AI Act 2024/1689 and the TKH IT security policy.

• Published on our intranet, and distributed to all managing directors of our operating companies,

and their management teams.

As a general principle, all AI Tools are disallowed for use,

unless they have been approved for use by the internal AI

Tooling Committee. It is never allowed to use AI Tools for

non-work related purposes, illegal activities, spamming or

any other unsolicited advertising. No AI user may use AI

Tools for selection or recruitment of employees or job

candidates, for placing targeted job advertisements or for

screening or filtering applications. All users must at all

times comply with the Code of Conduct and the IT &

Security Policy issued by the relevant operating company

147Annual Report 2024 TKH Group

when using AI Tools. A (suspected) violation can be

reported through the internal reporting procedure.

Implementation at operating companies will also be

monitored by internal audit. Violations of the policy may

result in disciplinary action for employees or, in case of an

(independent) contractor, to termination of the contract.

Classification of AI systems

It is important to define AI ethics as a set of guiding

principles that stakeholders (from engineers to

government officials) use to ensure AI technology is

developed and used responsibly. This means taking a

safe, secure, humane, and environmentally friendly

approach to AI. To ensure this, we follow the AI Act of the

European Union as a guiding principle. The Act assigns

applications of AI to three risk categories. First,

applications and systems that create an unacceptable

risk, such as government-run social scoring of certain

type, are banned. Second, high-risk applications, such as

a CV-scanning tool that ranks job applicants, are subject

to specific legal requirements. Lastly, applications not

explicitly banned or listed as high-risk are largely left

unregulated.

The EU AI Act entered into force on August 1, 2024. The

law will become applicable in number of milestone dates,

starting in February 2025 (Prohibited Systems) and

finalizing in August 2026. TKH started the process of

implementation by establishing an AI Ethics committee in

the second half of 2024. The committee includes persons

with legal, AI and compliance knowledge and is

responsible for developing policies and supervising the

risk assessments performed by the operating companies.

A self-assessment procedure has been developed,

through which each AI system needs to be assessed by,

amongst other things, classifying the AI system, the

scope and the general purpose. This procedure will be

further implemented in 2025. Since we have not yet

classified our AI systems, no target has been defined yet.

Our ambition is to have no AI system classified as

unacceptable and to have a complete algorithms register

in 2025. The classification of AI systems contributes to

the insight in compliance with the AI Act, and can also be

compared with other companies using AI systems.

Actions

We defined the following actions for 2025:

•

Review of mechanisms and processes on monitoring

compliance with the AI Tools Policy.

•

The classification of AI systems started in Q4 2024, and

will continue in 2025 in combination with setting a

target. Our ambition is to have all AI system classified

as acceptable and to have a complete algorithms

•

Implement a training program to ensure the proper

knowledge level of our employees and contractors,

related to AI systems and the AI Act.

•

Update our IT security policy to reﬂect most recent

developments, e.g. related to new laws and regulations.

Actions related to AI are revisited every year and

integrated in the activities at operating company level

having AI tools or developing AI systems. Due to the

nature of the actions, the resources needed for these

actions are opex related and do not require any significant

capex. The opex are also not significant, since these

initiatives are an integral part of our day-to-day expenses

and AI activities.

Targets will be set by the Executive Board. Tracking

effectiveness will be integrated into our quarterly sustain-

ability reporting in 2025.

TKH Group Annual Report 2024148

Appendices

EU taxonomy disclosure

KH’s reporting on EU taxonomy activities follows

Regulation EU 2020/852 of the European Parliament and

of the Council supplemented with Commission Delegated

Regulation (EU) 2021/2139, Commission Delegated

Regulation (EU) 2023/2485, Commission Delegated

Regulation (EU) 2023/2486 and Commission Delegated

Regulation (EU) 2022/1214. The EU Taxonomy Regulation

is intended to serve as a standardized and mandatory

classification system to determine which economic

activities can be considered environmentally sustainable,

and it requires companies to report on how and to what

extent their activities are associated with such taxonomy-

eligible activities. There are still uncertainties about the

interpretation of the Taxonomy Regulation and the compre-

hensive and detailed framework is still in development.

The EU Taxonomy Regulation provides certain conditions

for taxonomy alignment. The relevant activity must sub-

stantially contribute to one or more of the following six

environmental objectives, while not significantly harming

any of the others.

There are six environmental objectives under the EU

Taxonomy:

•

Climate change mitigation

•

Climate change adaptation

•

Sustainable use and protection of water and marine

resources

•

Transition to a circular economy

•

Pollution prevention and control

•

Protection and restoration of biodiversity and

ecosystems

The Delegated Acts adopted under the EU Taxonomy

Regulation provide technical screening criteria that must

also be met to conclude on taxonomy alignment, while

also doing no significant harm to the remaining objectives

and meeting minimum standards on human rights and

labor standards. For an economic activity to be considered

environmentally sustainable under the EU Taxonomy, it

must be determined whether it is taxonomy eligible and

whether it is taxonomy aligned, and the proportion in the

total turnover, capex and opex.

EU Taxonomy turnover

Based on our assessment we concluded that only a very

limited proportion of our turnover-generating activities

should be included. The Taxonomy-eligible but not

Taxonomy-aligned turnover was 0.3% in 2024 and

related to 8.1 data processing, hosting, and related

activities. Because we do not meet the requirements of

the EU Directive on Data Centre Energy Efficiency the

technical screening criteria 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 €1,712.7 million.

EU Taxonomy capex

We also assessed our capital expenditure. The reportable

Taxonomy-eligible but not aligned capital expenditures in

2024 were 6.4% of the total capital expenditure in 2024

and related to 6.5 Transport by motorbikes, passenger

cars and light commercial vehicles (1.2%), 7.7 Acquisition

and ownership of buildings (4.4%), and 8.1 data

processing, hosting, and related activities (0.8%). Because

we do not meet the requirements, the technical screening

criteria are not met. As a result, this activity is considered

to be eligible but not aligned. The remaining capex is

non-eligible (93.6%). The capital expenditure was deter-

mined based on the 2024 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 €167.7 million.

EU Taxonomy opex

The Taxonomy-eligible but not aligned operational expen-

ditures in 2024 were 8.4% and related to 7.7 Acquisition

and ownership of buildings. Not eligible operational

expenditures were 91.6%. Operating expenses per the EU

Taxonomy definition covers direct non-capitalized costs

that relate to research and development, building renova-

tion 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 operational expenditures assess-

ment: R&D expenses, building maintenance, repair/main-

tenance, 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 expenses (refer to note 25 of the

financial statements). The total value of TKH’s opex

amounts to €50.3 million.

Our EU taxonomy accounting policy includes references

to the related line items in the consolidated financial

statements, to avoid double counting between the various

reporting categories and objectives. We will continue

to monitor legislative developments and adapt our

disclosures as necessary.

We have no economic activities related to nuclear energy

and fossil gas.

149Annual Report 2024 TKH Group

EU taxonomy turnover table

EU Taxonomy turnover table

Substantial contribution criteria Do no significant harm criteria

Economic activities

Code

Absolute turnover

Proportion of turnover,

2024

Climate change

mitigation

Climate change

adaption

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Climate change

mitigation

Climate change

adaption

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum safeguards

Proportion of Taxonomy-

alligned (A.1) or -eligible

(A.2) turnover, 2023

Category enabling

activity

Category transitional

activity

€ million %

Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL

Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T

A. Taxonomy eligible activities

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1)

Of which enabling

Of which transitional

A.2. Taxonomy-eligible but not environmentally sustainable activities

(not Taxonomy-aligned activities)

• Data processing, hosting and related activities 8.1 5 0.3% N N/EL N/EL N/EL N/EL N/EL 0.3%

Turnover of Taxonomy-eligible but not environmentally sustainable activities

(not Taxonomy-aligned activities) (A.2)

5 0.3% 0.3%

Turnover of Taxonomy-eligible activities (A.1 + A.2) 5 0.3% 0.3%

B. Taxonomy non-eligible activities

Turnover of Taxonomy non-eligible activities (B) 1,708 99.7% 99.7%

Total (A+B) 1,713

100.0%

EU taxonomy capex table

EU Taxonomy capex table

Substantial contribution criteria Do no significant harm criteria

Economic activities

Code

Absolute capex

Proportion of capex,

2024

Climate change

mitigation

Climate change

adaption

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Climate change

mitigation

Climate change

adaption

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum safeguards

Proportion of Taxonomy-

alligned (A.1) or -eligible

(A.2) capex, 2023

Category enabling

activity

Category transitional

activity

€ million %

Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL

Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T

A. Taxonomy eligible activities

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Capex of environmentally sustainable activities (Taxonomy-aligned) (A.1)

Of which enabling

Of which transitional

A.2. Taxonomy-eligible but not environmentally sustainable activities (not

Taxonomy-aligned activities)

• Transport by motorbikes, passenger cars and light commercial vehicles 6.5 2 1.2% N N/EL N/EL N/EL N/EL N/EL 0.0%

• Acquisition and ownership of buildings 7.7 7 4.4% N N/EL N/EL N/EL N/EL N/EL 0.0%

• Data processing, hosting and related activities 8.1 1 0.8% N N/EL N/EL N/EL N/EL N/EL 0.5%

Capex of Taxonomy-eligible but not environmentally sustainable activities

(not Taxonomy-aligned activities) (A.2) 10 6.4% 0.5%

Capex of Taxonomy-eligible activities (A.1 + A.2) 10 6.4% 0.5%

B. Taxonomy non-eligible activities

Capex of Taxonomy non-eligible activities (B) 158 93.6% 99.5%

Total (A+B) 168

100.0%

TKH Group Annual Report 2024150

Nuclear and fossil gas related activities

Nuclear energy related activities YES/NO

1. The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that

produce energy from nuclear processes with minimal waste from the fuel cycle

2. The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for

the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies.

3. The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the

purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades.

Fossil gas related activities YES/NO

4. The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels. NO

5. The undertaking carries out, funds or has exposures to construction, refurbishment, and operation of combined heat/cool and power generation facilities using fossil

gaseous fuels.

6. The undertaking carries out, funds or has exposures to construction, refurbishment and operation of heat generation facilities that produce heat/cool using fossil

gaseous fuels.

EU Taxonomy opex table

Substantial contribution criteria Do no significant harm criteria

Economic activities

Code

Absolute opex

Proportion of opex,

2024

Climate change

mitigation

Climate change

adaption

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Climate change

mitigation

Climate change

adaption

Water and marine

resources

Circular economy

Pollution

Biodiversity and

ecosystems

Minimum safeguards

Proportion of Taxonomy-

alligned (A.1) or -eligible

(A.2) opex, 2023

Category enabling

activity

Category transitional

activity

€ million %

Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL Y;N;N/EL

Y/N Y/N Y/N Y/N Y/N Y/N Y/N % E T T

A. Taxonomy eligible activities

A.1 Environmentally sustainable activities (Taxonomy-aligned)

Opex of environmentally sustainable activities (Taxonomy-aligned) (A.1)

Of which enabling

Of which transitional

A.2. Taxonomy-eligible but not environmentally sustainable activities

(not Taxonomy-aligned activities)

• Acquisition and ownership of buildings 7.7 4 8.4% N N/EL N/EL N/EL N/EL N/EL 0.0%

• Data processing, hosting and related activities 8.1 0 0.0% N N/EL N/EL N/EL N/EL N/EL 0.0%

Opex of Taxonomy-eligible but not environmentally sustainable activities

(not Taxonomy-aligned activities) (A.2) 0 0.0% 0.0%

Opex of Taxonomy-eligible activities (A.1 + A.2) 4 8.4% 0.0%

B. Taxonomy non-eligible activities

Opex of Taxonomy non-eligible activities (B) 46

91.6%

100.0%

Total (A+B) 50

100.0%

151Annual Report 2024 TKH Group

Datapoints derived from other EU regulation

The table below outlines the datapoints derived from

other EU legislation as listed in ESRS 2 Appendix B. It

indicates where these datapoints can be found in our

report and identifies which data points are assessed as

not-material or not-relevant.

not-material: information not material to reporting

not-relevant: information not relevant to our own

operations or value chain

Datapoints derived from other EU regulation

Disclosure Requirement and related datapoint SFDR (1) reference Pillar 3 (2) reference Benchmark Regulation (3) reference

EU Climate Law

(4) reference pages/reference

ESRS 2 GOV-1

Board's gender diversity paragraph 21 (d)

Indicator number 13 of Table #1

of Annex 1

Commission

Delegated Regulation

(EU) 2020/1816 (5),

Annex II

ESRS 2 GOV-1

Percentage of board members who are independent para-

graph 21 (e)

Delegated Regulation

(EU) 2020/1816,

Annex II

ESRS 2 GOV-4

Statement on due diligence paragraph 30

Indicator number 10

Table #3 of Annex 1

ESRS 2 SBM-1

Involvement in activities related to fossil fuel activities para-

graph 40 (d) i

Indicators number 4

Table #1 of Annex 1

Article 449a Regulation (EU) No 575/2013;

Commission Implementing Regulation

(EU) 2022/2453 (6)

Table 1: Qualitative information on Environmental risk and

Table 2: Qualitative information on Social risk

Delegated Regulation (EU) 2020/1816,

Annex II

not-relevant

ESRS 2 SBM-1

Involvement in activities related to chemical production

paragraph 40 (d) ii

Indicator number 9

Table #2 of Annex 1

Delegated Regulation (EU) 2020/1816,

Annex II

not-relevant

ESRS 2 SBM-1

Involvement in activities related to controversial weapons

paragraph 40 (d) iii

Indicator number 14

Table #1 of Annex 1

Delegated Regulation (EU) 2020/1818 (7),

Article 12(1) Delegated Regulation (EU) 2020/1816,

Annex II

not-relevant

ESRS 2 SBM-1

Involvement in activities related to cultivation and production

of tobacco paragraph 40 (d) iv

Delegated Regulation (EU) 2020/1818,

Article 12(1) Delegated Regulation (EU) 2020/1816,

Annex II

not-relevant

ESRS E1-1

Transition plan to reach climate neutrality by 2050 paragraph

Regulation

(EU) 2021/1119,

Article 2(1)

101-106

ESRS E1-1

Undertakings excluded from Paris-aligned Benchmarks

paragraph 16 (g)

Article 449a Regulation (EU) No 575/2013;

Commission Implementing Regulation

(EU) 2022/2453

Template 1: Banking book-Climate Change transition risk:

Credit quality of exposures by sector, emissions and residual

maturity

Delegated Regulation (EU) 2020/1818,

Article12.1 (d) to (g), and Article 12.2

101

ESRS E1-4

GHG emission reduction targets paragraph 34

Indicator number 4

Table #2 of Annex 1

Article 449a Regulation (EU) No 575/2013;

Commission Implementing Regulation

(EU) 2022/2453

Template 3: Banking book – Climate change transition risk:

alignment metrics

Delegated Regulation (EU) 2020/1818,

Article 6

101

TKH Group Annual Report 2024152

Datapoints derived from other EU regulation

Disclosure Requirement and related datapoint SFDR (1) reference Pillar 3 (2) reference Benchmark Regulation (3) reference

EU Climate Law

(4) reference pages/reference

ESRS E1-5

Energy consumption from fossil sources disaggregated by

sources (only high climate impact sectors) paragraph 38

Indicator number 5

Table #1 and Indicator n. 5 Table

#2 of Annex 1

110

ESRS E1-5 Energy consumption and mix paragraph 37 Indicator number 5

Table #1 of Annex 1

110

ESRS E1-5

Energy intensity associated with activities in high climate

impact sectors paragraphs 40 to 43

Indicator number 6

Table #1 of Annex 1

110

ESRS E1-6

Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44

Indicators number 1

and 2 Table #1 of

Annex 1

Article 449a; Regulation (EU) No 575/2013;

Commission Implementing Regulation

(EU) 2022/2453

Template 1: Banking book – Climate change transition risk:

Credit quality of exposures by sector, emissions and residual

maturity

Delegated Regulation (EU) 2020/1818,

Article 5(1), 6 and 8(1)

107

ESRS E1-6

Gross GHG emissions intensity paragraphs 53 to 55

Indicators number 3

Table #1 of Annex 1

Article 449a Regulation (EU) No 575/2013;

Commission Implementing Regulation

(EU) 2022/2453

Template 3: Banking book – Climate change transition risk:

alignment metrics

Delegated Regulation (EU) 2020/1818,

Article 8(1)

107

ESRS E1-7

GHG removals and carbon credits paragraph 56

Regulation

(EU) 2021/1119,

Article 2(1)

not-relevant

ESRS E1-9

Exposure of the benchmark portfolio to climate-related

physical risks paragraph 66

Delegated Regulation (EU) 2020/1818,

Annex II Delegated Regulation

(EU) 2020/1816, Annex II

not-relevant

ESRS E1-9

Disaggregation of monetary amounts by acute and chronic

physical risk paragraph 66 (a)

ESRS E1-9

Location of significant assets at material physical risk

paragraph 66 (c).

Article 449a Regulation (EU) No 575/2013;

Commission Implementing Regulation

(EU) 2022/2453

paragraphs 46 and 47; Template 5: Banking book - Climate

change physical risk: Exposures subject to physical risk.

not-relevant

ESRS E1-9 Breakdown of the carrying value of its real estate

assets by energy-efficiency classes paragraph 67 (c).

Article 449a Regulation (EU) No 575/2013;

Commission Implementing Regulation

(EU) 2022/2453

paragraph 34; Template 2:Banking book -Climate change

transition risk: Loans collateralised by immovable property -

Energy efficiency of the collateral

not-relevant

ESRS E1-9

Degree of exposure of the portfolio to climate- related

opportunities paragraph 69

Delegated Regulation (EU) 2020/1818,

Annex II

not-relevant

153Annual Report 2024 TKH Group

Datapoints derived from other EU regulation

Disclosure Requirement and related datapoint SFDR (1) reference Pillar 3 (2) reference Benchmark Regulation (3) reference

EU Climate Law

(4) reference pages/reference

ESRS E2-4

Amount of each pollutant listed in Annex II of the

E-PRTR Regulation (European Pollutant Release and Transfer

Indicator number 8

Table #1 of Annex 1

Indicator number 2

Table #2 of Annex 1

Indicator number 1

Table #2 of Annex 1

Indicator number 3

Table #2 of Annex 1

111-112

ESRS

E3-1

Water and marine resources

paragraph 9

Indicator number 7

Table #2 of Annex 1

113-114

ESRS

E3-1

Dedicated policy paragraph

Indicator number 8

Table 2 of Annex 1

113-114

ESRS E3-1

Sustainable oceans and seas paragraph 14

Indicator number 12

Table #2 of Annex 1

not-relevant

ESRS E3-4

Total water recycled and reused paragraph 28 (c)

Indicator number 6.2

Table #2 of Annex 1

114

ESRS E3-4

Total water consumption in m3 per net revenue on own

operations paragraph 29

Indicator number 6.1

Table #2 of Annex 1

114

ESRS 2- IRO 1 - E4 paragraph 16 (a) i Indicator number 7

Table #1 of Annex 1

not-relevant

ESRS 2- IRO 1 - E4 paragraph 16 (b) Indicator number 10

Table #2 of Annex 1

not-relevant

ESRS 2- IRO 1 - E4 paragraph 16 (c) Indicator number 14

Table #2 of Annex 1

not-relevant

ESRS E4-2

Sustainable land / agriculture practices or policies paragraph

24 (b)

Indicator number 11

Table #2 of Annex 1

not-relevant

ESRS E4-2

Sustainable oceans / seas practices or policies paragraph

24 (c)

Indicator number 12

Table #2 of Annex 1

not-relevant

ESRS E4-2

Policies to address deforestation paragraph 24 (d)

Indicator number 15

Table #2 of Annex 1

not-relevant

ESRS E5-5

Non-recycled waste paragraph 37 (d)

Indicator number 13

Table #2 of Annex 1

117

ESRS E5-5

Hazardous waste and radioactive waste paragraph 39

Indicator number 9

Table #1 of Annex 1

117

ESRS 2- SBM3 - S1

Risk of incidents of forced labour paragraph 14 (f)

Indicator number 13 Table #3 of

Annex I

not-relevant

ESRS 2- SBM3 - S1

Risk of incidents of child labour paragraph 14 (g)

Indicator number 12 Table #3 of

Annex I

not-relevant

TKH Group Annual Report 2024154

Datapoints derived from other EU regulation

Disclosure Requirement and related datapoint SFDR (1) reference Pillar 3 (2) reference Benchmark Regulation (3) reference

EU Climate Law

(4) reference pages/reference

ESRS S1-1

Human rights policy commitments paragraph 20

Indicator number 9

Table #3 and Indicator number

11 Table #1 of Annex I

123-126

ESRS S1-1

Due diligence policies on issues addressed by the funda-

mental International Labor Organisation Conventions 1 to 8,

paragraph 21

Delegated Regulation (EU) 2020/1816,

Annex II

123-126

ESRS S1-1

processes and measures for preventing trafficking in human

beings paragraph 22

Indicator number 11 Table #3 of

Annex I

123-126

ESRS S1-1

workplace accident prevention policy or management

system paragraph 23

Indicator number 1 Table #3 of

Annex I

129

SRS S1-3

grievance/complaints handling mechanisms paragraph 32 (c)

Indicator number 5 Table #3 of

Annex I

124-125

ESRS S1-14

Number of fatalities and number and rate of work- related

accidents paragraph 88 (b) and (c)

Indicator number 2 Table #3 of

Annex I

Delegated Regulation (EU) 2020/1816,

Annex II

130

ESRS S1-14

Number of days lost to injuries, accidents, fatalities

or illness paragraph 88 (e)

Indicator number 3 Table #3 of

Annex I

phased-in

ESRS S1-16

Unadjusted gender pay gap paragraph 97 (a)

Indicator number 12 Table #1 of

Annex I

Delegated Regulation (EU) 2020/1816,

Annex II

not-material

ESRS S1-16

Excessive CEO pay ratio paragraph 97 (b)

Indicator number 8 Table #3 of

Annex I

not-material

ESRS S1-17

Incidents of discrimination paragraph 103 (a)

Indicator number 7 Table #3 of

Annex I

not-material

ESRS S1-17 Non-respect of UNGPs on Business and

Human Rights and OECD paragraph 104 (a)

Indicator number 10

Table #1 and Indicator n. 14

Table #3 of Annex I

Delegated Regulation (EU) 2020/1816,

Annex II Delegated Regulation

(EU) 2020/1818 Art 12 (1)

not-material

ESRS 2- SBM3 – S2

Significant risk of child labour or forced labour in the value

chain paragraph 11 (b)

Indicators number 12

and n. 13 Table #3 of Annex I

131-134

ESRS S2-1

Human rights policy commitments paragraph 17

Indicator number 9

Table #3 and Indicator n. 11

Table #1 of Annex 1

131-133

ESRS S2-1 Policies related to value chain workers paragraph

Indicator number 11 and n. 4

Table #3 of Annex 1

131-133

ESRS S2-1Non-respect of UNGPs on Business and Human

Rights principles and OECD guidelines paragraph 19

Indicator number 10

Table #1 of Annex 1

Delegated Regulation (EU) 2020/1816,

Annex II Delegated Regulation

(EU) 2020/1818, Art 12 (1)

131-133

155Annual Report 2024 TKH Group

Datapoints derived from other EU regulation

Disclosure Requirement and related datapoint SFDR (1) reference Pillar 3 (2) reference Benchmark Regulation (3) reference

EU Climate Law

(4) reference pages/reference

ESRS S2-1

Due diligence policies on issues addressed by the funda-

mental International Labor Organisation Conventions 1 to 8,

paragraph 19

Delegated Regulation (EU) 2020/1816,

Annex II

131-134

ESRS S2-4

Human rights issues and incidents connected to its upstream

and downstream value chain paragraph 36

Indicator number 14

Table #3 of Annex 1

131-134

ESRS S3-1

Human rights policy commitments paragraph 16

Indicator number 9

Table #3 of Annex 1 and Indicator

number 11 Table #1 of Annex 1

not-material

ESRS S3-1

non-respect of UNGPs on Business and Human Rights, ILO

principles or and OECD guidelines paragraph 17

Indicator number 10

Table #1 Annex 1

Delegated Regulation (EU) 2020/1816,

Annex II Delegated Regulation

(EU) 2020/1818, Art 12 (1)

not-material

ESRS S3-4

Human rights issues and incidents paragraph 36

Indicator number 14

Table #3 of Annex 1

not-material

ESRS S4-1 Policies related to consumers and end-users

paragraph 16

Indicator number 9

Table #3 and

Indicator number 11

Table #1 of Annex 1

135-136

ESRS S4-1

Non-respect of UNGPs on

Business and Human Rights

and

OECD guidelines paragraph 17

Indicator number 10

Table #1 of Annex 1

Delegated Regulation (EU) 2020/1816,

Annex II Delegated Regulation

(EU) 2020/1818, Art 12 (1)

135-136

ESRS S4-4

Human rights issues and

incidents paragraph 35

Indicator number 14

Table #3 of Annex 1

137

ESRS G1-1

United Nations Convention against Corruption para-

graph 10 (b)

Indicator number 15

Table #3 of Annex 1

139-142

ESRS G1-1

Protection of whistle- blowers paragraph 10 (d)

Indicator number 6

Table #3 of Annex 1

142

ESRS G1-4

Fines for violation of anti- corruption and anti-bribery laws

paragraph 24 (a)

Indicator number 17

Table #3 of Annex 1

Delegated Regulation (EU) 2020/1816,

Annex II)

144

ESRS G1-4

Standards of anti- corruption and anti- bribery paragraph

24 (b)

Indicator number 16

Table #3 of Annex 1

143-144

1 Regulation (EU) 2019/2088 of the European Parliament and of the Council of

27 November 2019 on sustainability-related disclosures in the financial

services sector (Sustainable Finance Disclosures Regulation) (OJ L 317,

9.12.2019, p. 1).

2 Regulation (EU) No 575/2013 of the European Parliament and of the Council

of 26 June 2013 on prudential requirements for credit institutions and

investment firms and amending Regulation (EU) No 648/2012 (Capital

Requirements Regulation “CRR”) (OJ L 176, 27.6.2013, p. 1).

3 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8

June 2016 on indices used as benchmarks in financial instruments and

financial contracts or to measure the performance of investment funds and

amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No

596/2014 (OJ L 171, 29.6.2016, p. 1).

4 Regulation (EU) 2021/1119 of the European Parliament and of the Council of

30 June 2021 establishing the framework for achieving climate neutrality and

amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European

Climate Law’) (OJ L 243, 9.7.2021, p. 1).

5 Commission Delegated Regulation (EU) 2020/1816 of 17 July 2020 supple-

menting Regulation (EU) 2016/1011 of the European Parliament and of the

Council as regards the explanation in the benchmark statement of how

environmental, social and governance factors are reﬂected in each benchmark

provided and published (OJ L 406, 3.12.2020, p. 1).

6 Commission Implementing Regulation (EU) 2022/2453 of 30 November 2022

amending the implementing technical standards laid down in Implementing

Regulation (EU) 2021/637 as regards the disclosure of environmental, social

and governance risks (OJ L 324,19.12.2022, p.1.).

7 Commission Delegated Regulation (EU) 2020/1818 of 17 July 2020 supple-

menting Regulation (EU) 2016/1011 of the European Parliament and of the

Council as regards minimum standards for EU Climate Transition Benchmarks

and EU Paris-aligned Benchmarks (OJ L 406, 3.12.2020, p. 17).

156 TKH Group Annual Report 2024

Foreign Object

Detection

In 2024, VMI introduced Foreign Object Detection on

the VMI MAXX tire building machines, the first Artificial

Intelligence application within the MAXX machine.

This in-line, high speed detection system utilizes a

PIXXEL camera to detect foreign objects on tread material.

As foreign objects might lead to scrap and ultimately

potential failure of tires, they need to be detected before

building a tire, to prevent negative impact for both tire

manufacturers as well as end customers.

A superfast AI algorithm analyzes images in real-time which ensures

extremely high levels of accuracy, resulting in optimized levels of productivity,

whilst minimizing the usage of energy and raw materials. Ultimately, this new

feature will contribute to lower scrap rates and increased safety of tires.

VMI’s Foreign Object Detection is a seamless collaboration between different

TKH entities, including TKH Artificial Intelligence, TKH Technology and TKH

Vision’s Solution Center.

Features

•

Foreign Object Detection

checks the tread base for particles, like plastic

liner or wood chips.

•

The particles are detected by a smart AI algorithm.

•

If a foreign object is found, the operator will see a picture of the defect

on the HMI and can decide to start the automatic removal cycle or remove

it by hand.

•

Retrofittable on existing VMI MAXX machines.

CASE SMART MANUFACTURING SYSTEMS

Financial

statements

TKH Group Annual Report 2024

Foreign Object

Detection

In 2024, VMI introduced Foreign Object Detection on

the VMI MAXX tire building machines, the first Artificial

Intelligence application within the MAXX machine.

This in-line, high speed detection system utilizes a

PIXXEL camera to detect foreign objects on tread material.

As foreign objects might lead to scrap and ultimately

potential failure of tires, they need to be detected before

building a tire, to prevent negative impact for both tire

manufacturers as well as end customers.

A superfast AI algorithm analyzes images in real-time which ensures

extremely high levels of accuracy, resulting in optimized levels of productivity,

whilst minimizing the usage of energy and raw materials. Ultimately, this new

feature will contribute to lower scrap rates and increased safety of tires.

VMI’s Foreign Object Detection is a seamless collaboration between different

TKH entities, including TKH Artificial Intelligence, TKH Technology and TKH

Vision’s Solution Center.

Features

•

Foreign Object Detection

checks the tread base for particles, like plastic

liner or wood chips.

•

The particles are detected by a smart AI algorithm.

•

If a foreign object is found, the operator will see a picture of the defect

on the HMI and can decide to start the automatic removal cycle or remove

it by hand.

•

Retrofittable on existing VMI MAXX machines.

CASE SMART MANUFACTURING SYSTEMS

Consolidated statement of profit and loss 158

Consolidated statement of comprehensive income 159

Consolidated balance sheet 160

Consolidated statement of changes in group equity 161

Consolidated cash ﬂow statement 162

Notes to the Consolidated financial statements 163

Consolidated

financial statements

TKH Group Annual Report 2024158

Consolidated statement of profit and loss

in thousands of euros

Notes

2024 2023

Total turnover

22 1,712,735 1,847,532

Raw materials, consumables, trade products and subcontracted work 824,229 928,220

Personnel expenses

477,618 478,467

Other operating expenses

158,965 156,968

Depreciation and result on divestment of property, plant and equipment

26 52,003 48,828

Amortization

27 60,808 56,860

Impairments

8,504 3,720

Total operating expenses 1,582,127 1,673,063

Operating result 130,608 174,469

Financial income

1,351 1,316

Financial expenses

-30,669 -23,440

Exchange differences

-2,962 -750

Share in result of associates

249 -3,309

Result on sale of associates and subsidiaries

24,221 54,802

Fair value changes of financial liability for earn-out and put options of shareholders of non-controlling interests

733 -146

Result before tax 123,531 202,942

Tax on result

24,000 37,180

Net result 99,531 165,762

Attributable to:

Shareholders of the company 99,561 165,704

Non-controlling interests -30 58

99,531 165,762

Earnings per share attributable to shareholders

Ordinary earnings per share (in €) 2.50 4.07

Diluted earnings per share (in €) 2.50 4.07

Ordinary earnings per share before amortization (in €)

2.83 4.38

Ordinary earnings per share before amortization and one-off income and expenses (in €)

2.48 3.21

1. Non IFRS measure.

159Annual Report 2024 TKH Group

Consolidated statement of comprehensive income

in thousands of euros

Notes

2024 2023

Net result 99,531 165,762

Items that may be reclassified subsequently to profit or loss (net of tax)

Currency translation differences 12,587 -6,350

Currency translation differences in associates 19 -532

Effective part of changes in fair value of cash ﬂow hedges (after tax)

-1,391 3,718

11,215 -3,164

Items that will not be reclassified subsequently to profit or loss (net of tax)

Actuarial gains/(losses)

-234 151

Other comprehensive income (net of tax) 10,981 -3,013

Comprehensive income for the period (net of tax) 110,512 162,749

Attributable to:

Shareholders of the company 110,552 162,769

Non-controlling interests -40 -20

Total comprehensive income for the period (net of tax) 110,512 162,749

1. For the impact of taxes is referred to note 31.

TKH Group Annual Report 2024160

Consolidated balance sheet

in thousands of euros Notes

31-12-2024 31-12-2023

Assets

Non-current assets

Intangible assets and goodwill

611,082 565,696

Property, plant and equipment

486,166 436,019

Right-of-use assets

78,006 84,012

Associates

6 29,738 35,987

Other receivables

842 752

Deferred tax assets

16,949 15,824

Total non-current assets 1,222,783 1,138,290

Current assets

Inventories

7 398,563 403,259

Trade and other receivables

250,044 243,622

Contract assets

9 165,861 217,123

Contract costs

10,325 8,014

Current income tax 12,939 2,603

Cash and cash equivalents

10 125,629 93,697

Total current assets 963,361 968,318

Assets held for sale

34 27,197 21,171

Total assets 2,213,341 2,127,779

in thousands of euros Notes

31-12-2024 31-12-2023

Equity and liabilities

Group Equity

Shareholders' equity

882,979 835,565

Non-controlling interests

12 108 148

Total group equity 883,087 835,713

Non-current liabilities

Interest-bearing loans and borrowings

17 620,085 572,368

Deferred tax liabilities

15 58,985 57,722

Retirement benefit obligation

16 3,070 3,679

Other non-current financial liabilities

14 3,825 1,033

Provisions

13,093 12,740

Total non-current liabilities 699,058 647,542

Current liabilities

Interest-bearing loans and borrowings

18 90,270 75,864

Trade payables and other payables

19 327,684 357,245

Contract liabilities

9 176,645 176,130

Current income tax liabilities 5,815 11,290

Other financial liabilities

14 1,939 1,639

Provisions

13 19,824 19,209

Total current liabilities 622,177 641,377

Liabilities directly associated with

assets held for sale

34 9,019 3,147

Total equity and liabilities 2,213,341 2,127,779

1. Including €63.3 million (2023: €24.5 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.

161Annual Report 2024 TKH Group

Consolidated statement of changes in group equity

in thousands of euros Share capital

premium Legal reserve

Translation

reserve

Cash ﬂow

hedge reserve

Retained

earnings

Unappro-

priated

profit

Total

shareholders'

equity

Non-

controlling

interests

Total group

equity

Balance at 1 January 2023 10,554 85,021 102,115 16,772 -4,243 439,471 137,083 786,773 168 786,941

Net result 165,704 165,704 58 165,762

Other comprehensive income -6,804 3,718 151 -2,935 -78 -3,013

Total comprehensive income 0 0 0 -6,804 3,718 151 165,704 162,769 -20 162,749

Appropriation profit last year 137,083 -137,083 0 0

Dividends -67,696 -67,696 -67,696

Share and option schemes 4,997 4,997 4,997

Purchased shares for share buy-back program -50,004 -50,004 -50,004

Purchased shares for share and option schemes -8,545 -8,545 -8,545

Sold shares for share and option schemes 7,271 7,271 7,271

Change in legal reserve for participations 7,329 -7,329 0 0

Capitalized development costs 5,717 -5,717 0 0

Balance at 31 December 2023 10,554 85,021 115,161 9,968 -525 449,682 165,704 835,565 148 835,713

Net result 99,561 99,561 -30 99,531

Other comprehensive income 12,616 -1,391 -234 10,991 -10 10,981

Total comprehensive income 0 0 0 12,616 -1,391 -234 99,561 110,552 -40 110,512

Appropriation profit last year 165,704 -165,704 0 0

Dividends -67,884 -67,884 -67,884

Share and option schemes 3,827 3,827 3,827

Purchased shares for share and option schemes -2,108 -2,108 -2,108

Sold shares for share and option schemes 3,027 3,027 3,027

Change in legal reserve for participations -2,046 2,046 0 0

Capitalized development costs 7,283 -7,283 0 0

Balance at 31 December 2024 10,554 85,021 120,398 22,584 -1,916 546,777 99,561 882,979 108 883,087

TKH Group Annual Report 2024162

Consolidated cash ﬂow statement

in thousands of euros Notes

2024 2023

Cash ﬂow from operating activities

Operating result 130,608 174,469

Depreciation, amortization and impairment 121,652 109,494

Share and option schemes not resulting in a cash ﬂow 3,827 4,997

Result on disposals -337 -85

Changes in provisions -14 -124

Changes in working capital 13,910 -71,338

Cash ﬂow from operations 269,646 217,413

Interest received 1,351 1,317

Interest paid -29,490 -21,792

Income taxes paid -45,296 -44,063

Net cash ﬂow from operating activities (A) 196,211 152,875

Cash ﬂow from investing activities

Investments in intangible assets

-61,696 -53,128

Purchases of property, plant and equipment -100,714 -177,761

Disposals of property, plant and equipment 1,992 705

Dividends received from associates 60

Repayments on loans -90 -139

Acquisition of associates

-27,624

Acquisition of subsidiaries less cash and cash equivalents acquired

34 -38,640 -42,913

Divestment of associates and subsidiaries classified as held-

for-sale less transferred cash

34 60,259 130,460

Net cash ﬂow from investing activities (B) -138,829 -170,400

in thousands of euros Notes

2024 2023

Cash ﬂow from financing activities

Dividends paid -67,884 -67,696

Settlement of financial liabilities regarding put options of

non-controlling interests and earn-out

14 -447 -1,379

Purchased shares for share buy-back program -50,004

Purchased shares for share and option schemes -2,108 -8,545

Sold shares for share and option schemes 3,027 7,271

Payment of lease liabilities -16,005 -16,537

Proceeds from long term debts 44,086 397,050

Repayments on long-term debts -335,000

(Repayments)/proceeds from other long-term debts -631 -1,005

Change in short-term borrowings

-22,992 86,628

Net cash ﬂow from financing activities (C) -62,954 10,783

Net increase/(decrease) in cash and cash equivalents (A+B+C) -5,572 -6,742

Exchange differences 256 -2,351

Change in cash and cash equivalents -5,316 -9,093

Cash and cash equivalents at 1 January 69,294 78,387

Cash and cash equivalents at 31 December

63,978 69,294

163Annual Report 2024 TKH Group

Notes to the Consolidated financial statements

MATERIAL ACCOUNTING PRINCIPLES

General

Technology firm TKH Group N.V. 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 in Haaksbergen in the Netherlands and is registered in the trade register under

number 06045666. The consolidated financial statements of 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 2024. 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 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’.

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.

New accounting principles and interpretations

As from 1 January 2024 the following amendments of standards and new interpretations are

effective:

•

Classification of Liabilities as Current or Non-current - Amendments to IAS 1

•

Lease Liability in a Sale and Leaseback - Amendments to IFRS 16

•

Disclosures: Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7

The adoption of the amendments and improvements did not have material impact on

the financial statements. Regarding additional disclosures regarding Supplier Finance

Arrangements reference is made to note 19.

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 2025:

•

Lack of Exchangeability – Amendments to IAS 21 (starting 1 January 2025)

•

Classification and Measurement of Financial Instruments - Amendments to IFRS 9 and IFRS

7 (starting 1 January 2026)

•

Annual Improvements to IFRS Accounting Standards—Volume 11 (starting 1 January 2026)

•

IFRS 18 – Presentation and Disclosure in Financial Statements (starting 1 January 2027)

•

IFRS 19 - Subsidiaries without Public Accountability: Disclosures (starting 1 January 2027)

• Contracts Referencing Nature-dependent Electricity – Amendments to IFRS 9 and IFRS 7

(starting 1 January 2026)

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. IFRS 18 might have implications

regarding the presentation, classification and disclosures relating to the statement of profit

and loss. This will be further assessed in the upcoming period.

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. An overview of consolidated entities is

included in the '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 principles. All intra-group assets and liabilities, equity, income, expenses and

cash ﬂows relating to transactions between subsidiaries are eliminated in full on consolidation.

TKH Group Annual Report 2024164

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

TKH is 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 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 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.

165Annual Report 2024 TKH Group

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 non-current 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.

Borrowing costs directly attributable to the acquisition, construction or production of

qualifying assets, which are assets that necessarily take a substantial period of time to get

ready for their intended use or sale, are added to the cost of those assets, until such time as

the assets are substantially ready for their intended use or sale.

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 removing 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.

TKH Group Annual Report 2024166

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 asset is written down

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.

167Annual Report 2024 TKH Group

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.

Derecognition of financial assets

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 20.

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.

TKH Group Annual Report 2024168

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.

Derecognition of financial liabilities

A financial liability is derecognized when the obligation under the liability is discharged or

cancelled or expired. 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.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consol-

idated 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. Non-current assets held for sale are not depreciated. 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. When these criteria are no longer met, TKH ceases to classify

the assets and liabilities as held for sale. These assets and liabilities will then be measured

at the lower of (a) Its carrying amount before the asset was classified as held for sale or for

distribution, adjusted for any depreciation, amortisation or revaluations that would have been

recognised had the asset (or disposal group) not been so classified and (b) Its recoverable

amount at the date of the subsequent decision not to sell or distribute.

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

169Annual Report 2024 TKH Group

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

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

TKH Group Annual Report 2024170

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 utilized. 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 realized 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 turnover, 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 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. 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.

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.

171Annual Report 2024 TKH Group

Segment Products and services Nature and timing of fulfillment of performance obligations

Smart

Vision

systems

Vision technology represents about 85% of the

turnover of the Smart Vision systems segment

and consists of 2D & 3D machine Vision and

Security Vision technology. The technologies

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 communication 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

outsourced to third parties. The installation services to be delivered are separately identifiable and accordingly 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 compensation 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 applicable prices. Maintenance and licenses are

considered as a separate service. A part of the transaction 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.

TKH Group Annual Report 2024172

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 83% 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 48% and

29% 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 acco

unted for in the same way in Smart Vision systems. Examples

are special cable and cable systems for machines, robots, medical applications and subsea cable systems.

173Annual Report 2024 TKH Group

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

overnment 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 property, plant and equipment 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

operating 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. Payments and proceeds on borrowings are presented on a net basis due

to the high ﬂexibility and turnover in relation to utilizations and repayments.

TKH Group Annual Report 2024174

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 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 following table 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 eurosNotesHierarchy2024 2023AssetsFinancial assets at fair value through P&L Level 3 407 407Foreign currency forward contracts 20Level 2 559 1,182Commodities (derivatives)20Level 2 946 1,085Total 1,912 2,674LiabilitiesInterest rate swaps 20Level 2 307 155Foreign currency forward contracts 20Level 2 3,366 2,610Commodities (derivatives)20Level 2 617 181Total 4,290 2,946

The fair value of the financial assets measured at fair value with recognition 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 20 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.

175Annual Report 2024 TKH Group

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 development 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 customers 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 due to the lack of historical experience figures

and the learning curve that needs to be going through.

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 others 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 13.

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.

Geopolitical developments

Global economical and geopolitical developments and conﬂicts (such as the Russia-Ukraine

war), economic and political confrontations between world powers (trade tariffs/barriers,

protectionism, availability and price of energy), the erosion of trade agreements, climate

change and the impact of (global) inﬂation as well as a potential recession can impact TKH’s

turnover and results. Reference is made to the paragraph ‘Risk management’ as included in

the Management report for further disclosures on these risks. These risks have been weighed

in making judgements and applying estimates, amongst other valuation of customer contracts,

impairment analysis and determining the useful live of our assets.

Climate change

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. We extensively analyzed the potential climate-

related transition risks to our operations posed by climate change, and how these climate-

related transition risks could be turned into opportunities, for instance through innovations in

climate adaptation or climate-change mitigation. Our climate risk and opportunity assessment

follows the TCFD framework, integrating key risk categories into our sustainability strategy.

TKH has considered the impact of climate change on the estimates and judgements used in

preparing the financial statements. The following items were considered:

•

The impact on the residual values and useful lives of assets

•

Recognition and measurement of provisions and contingencies

•

Impairment indications and the forecast of cash ﬂows used in the impairment testing of

goodwill and non-current assets.

No material impact from climate change risks on the financial reporting was identified and

as a result the valuation of assets and/or liabilities was not significantly impacted. Due to the

locations of our (production) facilities and the nature of our activities, the risk is considered less

relevant for TKH for the foreseeable future from a valuation and impairment perspective.

TKH Group Annual Report 2024176

INTANGIBLE ASSETS AND GOODWILL

GoodwillBrand names, customer relations and intellectual propertyDevelopment costsPatents, licenses, software and trademarks Totalin thousands of euros Notes2024 2023 2024 2023 2024 2023 2024 2023 2024 2023Historical cost at 1 January 320,378 303,067 286,306 290,841 334,875 292,876 84,769 75,626 1,026,328 962,410Accumulated amortization and impairment losses 2,323 2,323 199,633 205,411 197,861 165,173 60,815 55,658 460,632 428,565Book value at 1 January 318,055 300,744 86,673 85,430 137,014 127,703 23,954 19,968 565,696 533,845Purchases and capitalization 2,459 46,460 41,847 12,777 11,281 61,696 53,128Acquisitions3425,918 17,866 22,631 18,003 2,783 361 11 48,910 38,663Reclassification from property, plant and equipment4456 372 1 372 457Reclassification to assets held for sale -1,234 -115 -5,222 -187 -252 -6,643 -367Reclassifications 274 -514 225 515 -226 275 -1Amortization27-17,684 -16,522 -35,316 -33,522 -7,808 -6,816 -60,808 -56,860Impairment losses28-934 -1,790 -934 -1,790Exchange differences 1,176 -440 225 -238 1,111 -688 6 -13 2,518 -1,379Book value at 31 December 344,189 318,055 94,304 86,673 142,599 137,014 29,990 23,954 611,082 565,696Accumulated amortization and impairment losses 1,948 2,323 221,582 199,633 223,037 197,861 65,095 60,815 511,662 460,632Historical cost at 31 December 346,137 320,378 315,886 286,306 365,636 334,875 95,085 84,769 1,122,744 1,026,328

The impairments of development costs relate to discontinued R&D projects due to unfavorable

technological and/or market developments. 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:

in thousands of euros GoodwillDiscount rate before taxFunctional currencyCGU2024 2023 2024 2023Smart Vision systems 270,757 257,909 10.8% 10.5% EUR/USDSmart Manufacturing systems 8,644 9,603 12.4% 12.0% EURSmart Connectivity systems 64,788 50,543 11.3% 10.3% EURTotal 344,189 318,055

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 2.0%

(2023: 2.0%). 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 2024. 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:

•

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.

177Annual Report 2024 TKH Group

In millions of eurosDecrease EBITDA by 10%Increase discount rate by 1%Decrease growth rate by 0.5%Combination of all assumptionsSmart Vision systems -141.1 -129.9 -46.4 -277.8Smart Manufacturing systems -99.8 -94.2 -37.0 -206.8Smart Connectivity systems -173.2 -171.5 -63.1 -360.4

PROPERTY, PLANT AND EQUIPMENT

Land and buildings Machinery and installations Other equipment Operating assets in progress Totalin thousands of euros Notes2024 2023 2024 2023 2024 2023 2024 2023 2024 2023Historical cost at 1 January 239,931 199,912 280,037 269,248 173,709 159,380 154,158 74,452 847,835 702,992Accumulated depreciation and impairments 101,644 101,688 184,503 186,902 124,759 118,974 910 483 411,816 408,047Book value at 1 January 138,287 98,224 95,534 82,346 48,950 40,406 153,248 73,969 436,019 294,945Purchases 7,298 20,732 8,778 24,888 15,273 19,983 59,149 114,428 90,498 180,031Acquisitions 5,112 51 302 493 302 5,656Disposals -39 -1,402 -283 -214 -239 -98 -1,655 -620Depreciation26 -7,960 -7,198 -13,348 -12,134 -14,638 -13,242 -35,946 -32,574Impairments28 -76 -1,171 -193 -124 -6 -426 -1,295 -701Reclassifications -169 5 169 -475 -17 478 0 -9Reclassification from/to intangible assets3 23 535 -372 -1,015 -372 -457Reclassification to assets held for sale34 -1,814 -495 -8 -2,246 -1,990 -7,642 -4 -336 -3,816 -10,719Exchange differences 1,328 100 876 -779 183 -57 44 1,203 2,431 467Commissioning of assets in progress 3,294 21,883 7,687 4,336 3,275 8,736 -14,256 -34,955 0 0Book value at 31 December 140,225 138,287 97,115 95,534 51,017 48,950 197,809 153,248 486,166 436,019Accumulated depreciation and impairments 107,113 101,644 196,214 184,503 128,554 124,759 483 910 432,364 411,816Historical cost at 31 December 247,338 239,931 293,329 280,037 179,571 173,709 198,292 154,158 918,530 847,835

The purchases in ‘Operating assets in progress’ relate for a large part to our new plant for

inter-array cable in Eemshaven, which is expected to be commissioned in 2025. In 2024, an

amount of €8.4 million (2023: €5.0 million) was capitalized relating to borrowing costs. The

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 €1.329 million on December 31, 2024 and was

significantly higher than the book value of the net assets of TKH.

capitalization rate used equals the interest rate on bank borrowings as mentioned in note

18. The impairment of machinery and installations is mainly related to obsolescence due to

relocation of production capacitiy in the Smart Connectivity systems segment.

TKH Group Annual Report 2024178

RIGHT-OF-USE ASSETS

KH has lease contracts for various land and buildings, vehicles and other equipment used in

its activities. Land and building lease agreements generally have a duration of between 3 and 28

years, while vehicles and other equipment generally have a duration of between 3 and 5 years.

Land and buildings Machinery and installations Other equipment Totalin thousands of euros Notes2024 2023 2024 2023 2024 2023 2024 2023Book value at 1 January 76,125 69,415 128 73 7,759 5,824 84,012 75,312Purchases 10,422 13,960 29 121 5,079 4,508 15,530 18,589Acquisitions 403 346 13 578 416 924Disposals -446 -74 -10 -219 -456 -293Reassesment 4,639 7,390 143 675 4,782 8,065Depreciation26 -12,514 -12,723 -65 -66 -3,815 -3,550 -16,394 -16,339Impairments28 -6,275 -1,230 -6,275 -1,230Exchange differences 496 -341 10 -8 506 -349Reclassification to assets held for sale34 -3,396 -618 -719 -49 -4,115 -667Book value at 31 December 69,454 76,125 82 128 8,470 7,759 78,006 84,012

The impairments relate to the vacancy of rented buildings in our Smart Vision segment, as a

result of a too low occupancy and a slowdown in revenue growth from rented buildings. For

the methodology applied, reference is made to the accounting policies and disclosures

regarding impairment calculatons. In 2024, the costs related to variable lease payments that

were not included in the lease obligation amounted to €3.6 million (2023: €3.2 million). The

costs of leasing assets with a low value amounted to €0.2 million (2023: €0.2 million) and the

costs of leases with a term of less than one year amounted to €2.2 million (2023: €1.7 million).

There are no leases with a residual value guarantee and as at December 31, there are no

obligations with regard to lease agreements that have not yet been started. See note 18 for

the lease liability.

See note 30 for the interest charges on lease obligations. See the consolidated cash ﬂow

statement for the lease payments. The total cash outﬂow from leases in 2024 was €22.0

million.

ASSOCIATES

TKH owns direct or indirect the following relevant associates: Place Country Ownership and control Operating segmentName of associate2024 2023Speed Elektronik Vertrieb GmbH Schwelm Germany 25.0% 25.0% Smart Connectivity systemsShin-Etsu (Jiangsu) Optical Preform Co. Ltd. Jiangyin PR China 12.5% Smart Connectivity systemsCommend Australia Integrated Security and Communication Systems Pty Ltd. Melbourne Australia 49.0% 49.0% Smart Vision systemsSCS Wagram Holding Paris France 39.1% 40.0% Smart Connectivity systems

179Annual Report 2024 TKH Group

The 12.5% interest in the associate Shin-Etsu (Jiangsu) Optical Preform Co. Ltd. has been

divested in 2024. Reference is made to note 34 for further disclosures.

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. Note that the turnover and net result 2023 for SCS

Wagram Holding only apply for the period after 1 October 2023.

in thousands of euros AssetsLiabilitiesTurnoverNet result Other comprehensive incomeShare in result of associatesSummarized financial information 2024 of SCS Wagram Holding 56,387 32,388 47,476 222 228Summarized financial information 2024 other associates 6,425 449 2,115 10 21Summarized financial information 2023 of SCS Wagram Holding 55,671 32,194 11,844 -1,153 -1,153Summarized financial information 2023 other associates 18,145 5,618 5,999 -2,315 -2,156

Movements in the associates are as follows:

Associatesin thousands of euros2024 2023Balance at 1 January 35,987 12,204Acquisition of an interest 27,624Share in result of associates 249 -3,309Dividend received -60Sale of a share interest -6,457Exchange differences 19 -532Balance at 31 December 29,738 35,987

TRADE AND OTHER RECEIVABLES

in thousands of euros Notes2024 2023Trade accounts receivable 223,654 218,074Loss allowance20 -4,832 -5,997Derivatives201,505 2,266Receivables from related parties33463 1,077Prepayments and accrued income 13,915 13,038Other short-term receivables 15,339 15,164Long-term receivables 842 752Receivables 250,886 244,374

The amounts above are expected to be settled within 12 months. 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 2024 receivables with an amount of €43.3 million

are sold to a factoring company (2023: €40.9 million) and were subsequently derecognized.

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 20.

INVENTORIES

in thousands of euros2024 2023Raw materials 168,298 181,800Work in progress 84,845 70,794Finished goods 145,420 150,665Inventories 398,563 403,259

An amount of €665.5 million is reported in the statement of profit and loss for costs of raw

materials, consumables and finished goods (2023: €776.8 million). A part of inventories is

valued at lower net recoverable amount. The book value of these written-down inventories

is €62.7 million (2023: €53.3 million). The total write-down on inventories, based on aging

analysis and sales statistics, in 2024 recognized in the statement of profit and loss is €3.7

million (2023: €9.6 million).

TKH Group Annual Report 2024180

CONTRACT ASSETS

The following table provides information on receivables, capitalized contract costs, contract

assets and contract liabilities from contracts with customers.

in thousands of euros2024 2023Trade accounts receivable 223,654 218,074Contract assets 165,861 217,123Contract liabilities -176,645 -176,130Refund liabilities from customer volume rebates -14,171 -13,826Contract costs 10,325 8,014

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. A large part of the contract assets and liabilities relates

to the segment Smart Manufacturing systems.

The changes in the balance of contract assets and liabilities during the financial year are as

follows:

Contract assets Contract liabilitiesin thousands of euros2024 2023 2024 2023Revenue recognized that was included in the contract liability balance at the beginning of the period176,130 186,473Increases due to cash received, excluding amounts recognized as revenue during the period-176,645 -176,130Transfers from contract assets recognized at the beginning of the period to receivables-217,123 -204,142Increases as a result of changes in the measure of progress165,861 217,123

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 2024, amortization amounted to €10.5 million

(2023: €4.8 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 euros2024 2023Expected to be recognized as revenue within 1 year 840,121 785,077Expected to be recognized as revenue between 1 and 2 years 208,961 166,885Expected to be recognized as revenue after 2 years 85,922 18,143Total 1,135,004 970,105

181Annual Report 2024 TKH Group

CASH AND CASH EQUIVALENTS

in thousands of euros2024 2023Cash and bank balances as included in the cash ﬂow statement 63,978 69,294Cash at companies assets held for sale -1,650 -57Cash and bank balances in cash and interest pools 63,301 24,460Cash and bank balances 125,629 93,697

Cash and cash equivalents consist of cash and bank balances and deposits that are direct

available on demand.

EQUITY

The group equity is disclosed in the Consolidated statement of changes in group equity and in

note 8 of the company-only financial statements.

NON-CONTROLLING INTEREST THIRD PARTIES

Some subsidiaries are or were not fully owned by TKH during the year at any time. Theses

third party non-controlling interests are not significant:

Result non-controlling interestsCumulative non-controlling interests2024 2023 2024 2023Various non-controlling interests -30 58 108 148

OTHER PROVISIONS

The long-term provisions have been discounted. The increase of the provision in the year

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 euros2024 2023Other long-term provisions 13,093 12,740Other short-term provisions 19,824 19,209Other provisions 32,917 31,949

The breakdown and movement of the other provisions is as follows:

in thousands of eurosWarranty Employee liabilities Onerous contracts Dismantling Other TotalBalance at 31 December 2023 7,645 3,468 8,909 4,901 7,026 31,949Additions 5,711 908 1,213 4,492 12,324Releases -616 -44 -221 -1,956 -2,837Acquisitions 893 893Utilized -2,062 -111 -5,466 -1,719 -9,358Other reclassifications -94 -279 52 -321Exchange differences 61 -9 104 10 101 267Balance at 31 December 2024 10,645 3,933 4,539 4,911 8,889 32,917

TKH Group Annual Report 2024182

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.

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. Additions and releases to this provision are mostly presented as

costs of ‘Raw materials, consumables, trade products and subcontracted work’.

Dismantling obligation

The provision mainly relates to the costs to restore leased assets to its original condition as

required by the terms and conditions of that specific lease. The provision is valued at the

best estimate of the future expenditure that would be required to restore the assets. This is a

long-term provision, which has been discounted at a rate of 4.66%.

Other items

The other items also relate to reorganizations, claims, matters of dispute, guarantees which

are expected to be claimed and other contractual obligations. The restructuring provision

relates mainly to the lay-off of employees and the remaining term is less than 1 year. 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 from third parties in relation to the reported

provisions.

OTHER FINANCIAL LIABILITIES

The movement of the financial liabilities is as follows:

Notes

in thousands of euros Earn-outPut options of holders of non-control-ling interests TotalBalance at 31 December 2023 1,576 1,096 2,672Acquisitions4,267 4,26734 Payment for acquisitions from previous years -220 -227 -447Change in value through the profit and loss account -319 -414 -733Exchange differences 5 5Balance at 31 December 2024 5,309 455 5,764

in thousands of euros2024 2023Term shorter than 1 year 1,939 1,639Term between 1 and 5 years 3,825 1,033Financial liabilities 5,764 2,672

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 subsidiaryPercentage Option exercisable as fromEFB Nordics A/S 10.0% 1 January 2014

The l

iability is based o

n 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 2024 till

the first possibility to exercise. The amount to be paid depends on the future results of the

aforementioned subsidiaries. The year of the cash outﬂow is dependent on a decision to exercise

by TKH or the option owner. An amount of €0.1 million has a maturity of shorter than 1 year.

183Annual Report 2024 TKH Group

DEFERRED TAX

The deferred tax assets and liabilities relate to the following items of which the movements are also shown:

in thousands of euros2024 2023Term infinite 58,106 47,006Term longer than 10 years 11,118 15,268Term between the 5 and 10 yearsTerm shorter than 5 years 451Unrecognized tax losses and credits 69,675 62,274

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

€16.9 million at the end of 2024 (2023: €14.6 million) 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.

in thousands of eurosProperty, plant and equipment and leasesIntangible assets and goodwillInventories and construc-tion contracts Provisions Unused tax losses and creditsFinancial instrumentsUndistributed intragroup profits OtherTotalBalance at 1 January 2023 902 -50,991 -4,827 474 11,518 1,519 -1,716 3,924 -39,197(Charge)/credit to other comprehensive income -15 -1,293 -1,308(Charge)/credit to profit or loss -2,681 2,136 -51 697 2,489 -56 -1,144 2,290 3,680Reclassification to assets held for sale 92 92Reclassification to current income tax liabilities -817 -817Acquisitions -4,348 -4,348Balance at 31 December 2023 -1,779 -53,203 -4,786 339 14,007 170 -2,860 6,214 -41,898(Charge)/credit to other comprehensive income 59 484 543(Charge)/credit to profit or loss -416 -2,649 -780 647 3,218 42 1,230 4,262 5,554Reclassification to assets held for sale 1,342 -3,591 -101 -2,350Reclassification to current income tax liabilities -178 -178Acquisitions -3,707 -3,707Balance at 31 December 2024 -2,195 -58,217 -5,566 867 13,634 696 -1,630 10,375 -42,036

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 euros2024 2023Deferred tax assets stated under non-current assets 16,949 15,824Deferred tax liabilities stated under non-current liabilities -58,985 -57,722Deferred taxes -42,036 -41,898

TKH has unused tax losses and carry forward interest expenses (ATAD 1) 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:

TKH Group Annual Report 2024184

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.

s of January 1, 2020, the employees of the other Dutch subsidiaries have a so-called individual

defined contribution scheme, which is managed by Nationale-Nederlanden.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 2024 related to the defined

contribution plans amounts to €21.6 million (2023: €20.7 million). The industry pension plans are

included in this pension expense. TKH expects for 2025 a pension expense of €21.4 million for

all defined contribution plans, of which about €14.2 million relates to industry

pension schemes.

Defined benefit plans

Multi-employer union plans

In the Netherlands 1,938 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 1,500 companies and 350,000 participants and PMT approximately

34,000 companies and 1,300,000 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:

2024 2023coverage ratio of PME 112.7% 113.3%coverage ratio of PMT 108.5% 109.8%

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 2024 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), reference

is made to the paragraph above. 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,

10 years at December 31, 2024. 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 January 1, 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:

2024 2023Discount rate before tax 3.2-3.4% 3.2-4.2%General percentage salary increase 2.5% 2.5%

The following amounts are recognized in the balance sheet with respect to all defined benefit

plans:

in thousands of euros2024 2023Present value of the defined benefit obligations 3,070 3,679Fair value of the plan assetsNet pension obligation 3,070 3,679

185Annual Report 2024 TKH Group

NON-CURRENT LIABILITIES

NET INTEREST-BEARING DEBT

in thousands of euros Notes2024 2023Bank loans reported under non-current liabilities171.1-4.1 years Euribor + margin 542,965 498,879Long term lease liabilities (Right-of-use assets)171-28 years 3.3% 74,162 73,100Short term lease liabilities (Right-of-use assets) < 1 year 3.3% 13,563 14,054Borrowings reported under current liabilities < 1 year Euribor/SOFR + margin 76,707 61,810Cash and cash equivalents10< 1 year Euribor/SOFR - margin -125,629 -93,697Net interest-bearing debt 581,768 554,146

At year-end 2024, €63.3 million of the cash and cash equivalants forms part of cash and

interest pools (2023: €24.5 million). The interest on the borrowings is variable and based on

Euribor or SOFR. The credit margins differ per credit institution, duration and country and

vary from 1.0% to 1.7% (2023: 1.0% to 1.5%). The material subsidiaries are guarantor for the

obtained financing from credit institutions. No special securities were provided. The discount

rate used for lease liabilities differ per right-of-use asset, duration and country with a weighted

average of 3.3%. The obligations arising from leasing are guaranteed by the lessor's property

right on the leased assets. See note 20 for more details on the capital and liquidity risk.

in thousands of euros Notes2024 2023Debts to credit institutions18 542,965 498,879To be amortized transaction costs for the credit facility -1,292 -1,819Long term lease liabilities (Right-of-use assets)74,162 73,100Other non-current liabilities4,250 2,208Interest-bearing loans and borrowings 620,085 572,368

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 draw downs from the credit

facility. On average the margin is 1.7%. The interest is variable and based on Euribor or SOFR.

The material subsidiaries are guarantor for the obtained financing. No additional securities

were provided. See note 20 more details on the capital and liquidity risk.

TKH Group Annual Report 2024186

The overview below shows the changes in the interest-bearing liabilities arising from financing

activities:

Borrowings reported under current liabilitiesBank loans reported under non-current liabilitiesTotal lease liabilities (Right-of-use assets) Totalin thousands of euros2024 2023 2024 2023 2024 2023 2024 2023Balance at 1 January 61,810 56,391 497,060 431,746 87,154 82,077 646,024 570,214Cash ﬂows from financing activities -22,992 86,628 44,086 62,050 21,094 148,678Proceeds/(repayments) from cash pools 38,841 -81,775 38,841 -81,775Payment of lease liabilities -16,005 -16,537 -16,005 -16,537Non-cash changes:- Acquisition of subsidiaries 340 2,413 414 924 414 3,677- Reclassification to liabilities held for sale -4,200 -685 -4,200 -685- New leases and reassesments 19,856 21,724 19,856 21,724- Amortized transaction costs 527 527 527 527- Interest 2,475 1,746 2,475 1,746- Effect of changes in exchange rates -952 226 324 -1,969 -2,095 -2,921 -1,545Balance at 31 December 76,707 61,810 541,673 497,060 87,725 87,154 706,105 646,024

The withdrawals and repayments of cash pools relate to changes in cash pools presented

under cash and cash equivalents (note 10).

TRADE AND OTHER PAYABLES

in thousands of euros Notes2024 2023Trade creditors 177,145 201,351Advance receipts 4,040 5,440Other taxes and social insurance contributions 28,444 25,355Derivatives204,290 2,946Refund liabilities from customer volume rebates914,171 13,826Other payables and accruals 99,594 108,327Trade payables and other payables 327,684 357,245

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 2024, a number of suppliers made use of supply chain finance (reversed

factoring) for a total of €39.4 million (2023: €44.1 million), which is recognized as trade

payables and under the bank covenants with the banks not regarded as financial indebt-

edness. Of this amount about 93% was already paid by finance providers towards suppliers at

the end of 2024. The supply chain finance program enables included suppliers to collect their

invoices at an earlier date than based on regular payment terms. The payment terms of TKH

under this program are on average in the upper (longest) range of the payment terms TKH

has with non-included suppliers. Reference is also made to note 20 regarding liquidity risk.

187Annual Report 2024 TKH Group

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. On February 13,

2023, TKH signed a new sustainability-linked €625 million multicurrency committed credit

facility, consisting of a revolving credit facility (“RCF”) of €500 million and a term loan of €125

million. The revolving credit facility of €500 million has a remaining maturity of 4.1 years, which

has been extended in January 2025 to a termination date of February 13, 2030. The term loan

of €125 million has a remaining maturity of 1.1 years. A sustainability-linked adjustment will

provide for a maximum discount or premium of 2.5 basis points on the credit margin.

Next to the committed facility, there are uncommitted facilities with several banks for a total

of €304 million (2023: €310 million). TKH has per December 31, 2024 unused available

committed credit facilities of €85 million (2023: €130 million) and unsued available uncommitted

redit facilities for a total of €93 million (2023: €142 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:

CovenantRealization 31-12-2024Realization 31-12-2023Net debt compared to EBITDA (debt leverage ratio) < 3.0 2.0 1.8

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 2024 and has no

indication that it will have difficulty complying with this convenant in the 12 months after

reporting date.

in thousands of eurosAverage interestPayable on demand <3 months>3 months <1 year 1-5 years>5 yearsContractual cash ﬂows Book valueBank loans reported under non-current liabilities 4.4% 5,973 17,918 602,118 626,009 542,965Lease liabilities (Right-of-use assets) 3.3% 5,318 11,804 41,388 48,670 107,180 87,725Financial liabilities 1.5% 1,939 4,075 6,014 5,764Borrowings reported under current liabilities 4.4% 76,777 76,777 76,707Trade creditors 177,145 177,145 177,145Other payables excluding derivatives 113,765 113,765 113,765Interest rate swaps (derivatives) -97 -292 764 375 307Foreign currency forward contracts (derivatives) 46,496 52,412 10,703 109,611 2,807Commodities (derivatives) -262 -19 -49 -330 -330Financial liabilities 76,777 348,338 83,762 658,999 48,670 1,216,546 1,006,855

The following table provides an overview of the liquidity risk for the financial liabilities of TKH

at the end of 2024 based on agreed repayment periods:

TKH Group Annual Report 2024188

in thousands of eurosAverage interestPayable on demand <3 months>3 months <1 year 1-5 years>5 yearsContractual cash ﬂows Book valueBank loans reported under non-current liabilities 5.4% 6,735 20,205 570,687 597,627 498,879Lease liabilities (Right-of-use assets) 2.5% 5,280 11,720 41,429 44,325 102,754 87,154Financial liabilities 1.5% 1,639 1,283 2,922 2,672Borrowings reported under current liabilities 5.4% 61,880 61,880 61,810Trade creditors 201,351 201,351 201,351Other payables excluding derivatives 122,153 122,153 122,153Interest rate swaps (derivatives) -91 -273 -1,444 -1,808 155Foreign currency forward contracts (derivatives) 33,315 66,196 44,486 143,997 1,428Commodities (derivatives) -475 -444 15 -904 -904Financial liabilities 61,880 368,268 99,043 656,456 44,325 1,229,972 974,698

in thousands of eurosPayable on demand <3 months>3 months <1 year 1-5 years>5 years31-12-2024 Totalin thousands of eurosPayable on demand <3 months>3 months <1 year 1-5 years>5 years31-12-2023 TotalIncoming 32,467 65,723 44,406 142,596Outgoing -33,315 -66,196 -44,486 -143,997Net 0 -848 -473 -80 0 -1,401Discounted at contractual bank rates -1,060 -458 90 -1,428Incoming 45,840 50,834 10,018 106,692Outgoing -46,496 -52,412 -10,703 -109,611Net 0 -656 -1,578 -685 0 -2,919Discounted at contractual bank rates -756 -1,454 -598 -2,808

The following table shows the corresponding reconciliation of these amounts and their book

value:

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 provides an overview of the liquidity risk for the financial liabilities of

TKH at the end of 2023 based on agreed repayment periods:

189Annual Report 2024 TKH Group

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 strong interest rates movements, TKH has chosen to hedge the

interest rate risk below this mentioned bandwidth. The following table provides an overview of

the, for hedging purposes, agreed interest rate swaps:

Average contractedinterest rateNominal amountFair value in thousands of euros (unless stated otherwise)2024 2023 2024 2023 2024 2023Maturity <1 yearMaturity between 2 and 5 years 2.22% 2.45% 75,000 25,000 -307 -155

Cash ﬂow hedge accounting has been applied to all interest rate swaps mentioned above.

There was no material ineffectiveness in relation to these hedges.

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 €5.1 million per year as a result of financing and cash with

a ﬂoating interest rate (2023: €5.6 million). The impact is reduced by existing interest rate

swaps.

•

An increase of the fair value of the financial instruments with about €4.3 million (2023: €1.2

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.

Euro USDCNY Other currenciesTotalin thousands of euros2024 2023 2024 2023 2024 2023 2024 2023 2024 2023Receivables 293,959 336,445 87,654 94,553 11,648 13,051 22,643 16,695 415,904 460,744Cash and cash equivalents 46,913 33,723 17,219 18,881 36,302 20,012 25,195 21,081 125,629 93,697Non-current interest-bearing loans and borrowings -620,085 -572,368 -620,085 -572,368Current interest-bearing loans and borrowings -69,938 -65,783 -14,979 -6,493 -939 -1,193 -4,414 -2,395 -90,270 -75,864Trade payables and other payables -342,730 -391,617 -105,312 -86,058 -24,902 -31,277 -31,385 -24,422 -504,329 -533,374Total -691,881 -659,600 -15,418 20,883 22,109 593 12,039 10,959 -673,151 -627,165

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 and CNY. These risks are partially hedged by financing

some of 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:

TKH Group Annual Report 2024190

On balance sheet date, TKH has entered into foreign currency forward contracts:

Average contract rateNominal amount in foreign currency Fair value in thousands of euros (unless stated otherwise)2024 2023 2024 2023 2024 2023Cash ﬂow hedges of balance positionsSell USD with settlement within 3 months 1.11 1.10 -13,180 -6,160 -800 177Buy USD with settlement within 3 months 1.07 1,403 28Buy CNY with settlement within 3 months 7.64 7.60 135,928 155,081 222 -875Cash ﬂow hedgesSell USD with settlement within 3 months 1.12 1.10 -4,560 -453 -330 1Sell USD with settlement between 3 months and 1 year 1.11 1.09 -29,389 -32,402 -1,633 519Sell USD with settlement after 1 year 1.11 1.11 -11,120 -49,157 -598 90Buy USD with settlement within 3 months 1.10 582 29Buy USD with settlement between 3 months and 1 year 1.10 1.11 1,186 3,769 61 25Buy CNY with settlement within 3 months 7.61 7.61 74,441 52,772 95 -363Buy CNY with settlement between 3 months and 1 year 7.57 7.64 174,456 255,908 118 -1,002Total -2,808 -1,428

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 €14.4 million negative on the result before tax (2023:

€10.4 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 €38.2 million positive (2023: €33.3 million positive). An increase of the

euro with 10% will have the opposite inﬂuence, namely a positive inﬂuence of €14.4 million on

the result before tax and a negative inﬂuence of €38.2 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 PVC 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.

191Annual Report 2024 TKH Group

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)2024 2023 2024 2023 2024 2023Cash ﬂow hedgesBuy Copper with settlement within 3 months 6.28 6.89 1,175 2,112 -229 374Buy Copper with settlement between 3 months and 1 year 6.71 7.12 1,237 1,886 3 395Buy Copper with settlement between 1 and 3 years 7.97 7.73 92 391 49 -18Buy Aluminium with settlement within 3 months 1.17 2.07 2,422 1,833 491 101Buy Aluminium with settlement between 3 months and 1 year 1.16 2.10 2,158 512 16 49Buy Aluminium with settlement within 1 and 3 years2.28 203 3Total 330 904

A decrease of the copper price with 10% would have a negative impact of approximately

€1.8 million on the result (2023: €1.8 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 and Germany. 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.

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 Up to 30 daysNot overdue31 - 60 days61 - 90 days91 - 180 days 181 - 365 daysOlder than 365 days31-12-2024 TotalBook value 297,283 66,251 13,450 3,132 14,525 1,663 3,842 400,146Expected credit loss rate 0.1% 0.5% 1.7% 6.7% 2.1% 18.9% 79.1%Loss allowance 434 315 223 210 298 314 3,038 4,832

TKH Group Annual Report 2024192

in thousands of euros Up to 30 daysNot overdue31 - 60 days61 - 90 days91 - 180 days 181 - 365 daysOlder than 365 days31-12-2023 TotalBook value 357,210 61,814 7,258 6,491 3,370 2,958 6,573 445,674Expected credit loss rate 0.1% 0.4% 1.2% 8.2% 4.9% 18.4% 60.9%Loss allowance 414 251 90 531 164 545 4,002 5,997

There are no significant overdue account receivables that are not largely covered by credit

insurances or payment guarantees or for which no provision has been recognized.

The movement of the allowance for doubtful debts is as follows:

in thousands of euros2024 2023Balance at 1 January 5,997 6,300Aditions 978 1,148Releases -459 -565Acquisitions 88 1Reclassification to assets held for sale -906 -18Utilized -812 -827Other reclassifications -180 -28Exchange differences 126 -14Balance at 31 December 4,832 5,997

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 euros2024 2023Bank guarantees provided to third parties 162,010 110,463Corporate guarantees provided to banks 11,958 13,784Purchase obligations arising from orders for property plant and equipment 15,643 37,567

The majority of the outstanding bank guarantees relate to down payments and performance

guarantees issued to customers relating to constructions contracts. The related advance

payments received from customers are presented as part of contract liabilities.

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.

193Annual Report 2024 TKH Group

INFORMATION BY SEGMENT

The management structure and segment reporting of TKH is organized along the lines of

our three technologies: 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.

In the annual report, a detailed overview of the activities by business segment is shown.

Operating segmentsSmart Vision systems Smart Manufacturing systems Smart Connectivity systems Other and eliminations Totalin thousands of euros (unless stated otherwise)2024 2023 2024 2023 2024 2023 2024 2023 2024 2023Geographic segmentsNetherlands 43,530 45,170 32,006 47,675 337,837 361,787 81 12 413,454 454,644Europe (other) 207,128 209,390 160,358 141,397 226,229 366,215 32 1 593,747 717,003Asia 106,852 114,300 227,147 201,183 34,729 37,685 -1 368,728 353,167North America 109,318 105,725 133,987 128,307 8,102 5,559 17 23 251,424 239,614Other 15,044 15,097 51,849 49,691 18,489 18,316 85,382 83,104External turnover 481,872 489,682 605,347 568,253 625,386 789,562 130 35 1,712,735 1,847,532Inter-segment 7,725 10,844 3,496 5,310 6,514 10,978 -17,735 -27,132 0 0Total turnover 489,597 500,526 608,843 573,563 631,900 800,540 -17,605 -27,097 1,712,735 1,847,532Timing of revenue recognitionRevenue at a point-in-time 439,313 444,656 95,412 99,118 491,405 654,330 18 21 1,026,148 1,198,125Revenue over time 38,673 40,624 509,759 468,931 133,524 134,827 -1 681,955 644,382Inter-segment 7,725 10,844 3,496 5,310 6,514 10,978 -17,735 -27,132 0 0Revenues from contracts with customers 485,711 496,124 608,667 573,359 631,443 800,135 -17,718 -27,111 1,708,103 1,842,507Other revenues 3,886 4,402 176 204 457 405 113 14 4,632 5,025Total turnover 489,597 500,526 608,843 573,563 631,900 800,540 -17,605 -27,097 1,712,735 1,847,532Raw materials, consumables, trade products and subcontracted work192,853 205,744 295,491 283,716 353,738 466,008 -17,853 -27,248 824,229928,220Added value 296,744 294,782 313,352 289,847 278,162 334,532 248 151 888,506 919,312Added value in % 60.6% 58.9% 51.5% 50.5% 44.0% 41.8% 51.9% 49.8%Personnel expenses 157,640 147,329 153,206 155,495 147,195 154,164 19,577 21,479 477,618 478,467Other operating expenses 47,473 45,179 34,731 34,134 75,677 78,456 1,084 -801 158,965 156,968One-off income and expenses -2,639 -508 -513 -618 -844 -857 -3,996 -1,983EBITDA 94,270 102,782 125,415 100,218 55,803 102,530 -19,569 -19,669 255,919 285,861Depreciation 16,538 16,896 9,302 9,582 24,883 21,398 1,280 952 52,003 48,828EBITA 77,732 85,886 116,113 90,636 30,920 81,132 -20,849 -20,621 203,916 237,033ROS 15.9% 17.2% 19.1% 15.8% 4.9% 10.1% 11.9% 12.8%One-off income and expenses 2,639 508 513 618 844 857 3,996 1,983Amortization 42,951 42,662 11,593 10,978 6,251 3,214 13 6 60,808 56,860Impairments 6,298 3,445 434 83 1,772 193 -1 8,504 3,720Segment operating result 25,844 39,271 104,086 79,575 22,384 77,107 -21,706 -21,484 130,608 174,469

TKH Group Annual Report 2024194

Operating segmentsSmart Vision systems Smart Manufacturing systems Smart Connectivity systems Other and eliminations Totalin thousands of euros (unless stated otherwise)2024 2023 2024 2023 2024 2023 2024 2023 2024 2023Other informationInvestments in intangible assets, property, plant and equipment, Right-of-use assets, including acquisitions 74,965 92,229 28,647 34,114 110,418 167,711 3,322 2,937 217,352 296,991Employees (FTE) 2,122 2,142 1,751 1,954 2,297 2,274 119 95 6,289 6,465Balance sheetAssets 822,900 801,964 404,627 474,075 895,093 790,353 33,786 4,229 2,156,406 2,070,621Assets held for sale 27,197 21,171 27,197 21,171Associates 2,671 2,764 27,065 33,220 2 3 29,738 35,987Total assets 825,571 804,728 431,824 495,246 922,158 823,573 33,788 4,232 2,213,341 2,127,779Total liabilities 194,929 190,671 317,436 314,612 208,686 239,764 609,311 547,168 1,330,362 1,292,215Capital employed previous year 574,414 528,933 163,169 111,584 544,566 430,069 20,945 23,146 1,303,094 1,093,732Capital employed current year 595,111 574,414 100,359 163,169 654,601 544,566 30,017 20,945 1,380,088 1,303,094Return on Capital Employed (ROCE) 13.3% 15.6% 88.1% 66.0% 5.2% 16.6% 15.2% 19.8%

EBITDA and EBITA are exluding one-off income and expenses. Reference is made to note 32

for a further detail on the one-off income and expenses.

The geographic split of turnover is based on the customer-location.

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.

1Non-current assets Employees (FTE)in thousands of euros (unless stated otherwise)2024 2023 2024 2023Geographic segmentsNetherlands 519,893 481,377 37% 37%Europe (other) 528,399 512,746 39% 42%Asia 38,065 40,977 13% 13%North America 106,167 72,301 9% 7%Other 13,310 15,065 2% 1%Total 1,205,834 1,122,466 100% 100%1.The non-current assets are shown excluding the deferred tax assets.

195Annual Report 2024 TKH Group

PERSONNEL EXPENSES

in thousands of euros2024 2023Wages and salaries 377,026 368,950Share-based payments 4,425 6,247Social insurance contributions 63,869 61,968Pension costs 21,998 20,777Temporary labor 29,812 33,250Capitalized development costs -40,888 -32,876Other personnel expenses 21,376 20,151Personnel expenses 477,618 478,467

Executive Board

No option rights are granted to the members of the Executive Board and the Supervisory

Board.

Other option beneficiaries

The movement and balance of the outstanding option rights granted to the other option

beneficiaries are as follows:

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.

Year of allocation Exercise price in € Number at 01-01-2024Granted during the yearExpired during the yearElapsed during the yearExercised during the year Number at 31-12-2024Exercise period2019 46.02 223,995 -223,995 2022-20242020 32.28 143,842 -2,027 -25,836 115,979 2023-20252021 37.88 328,174 -17,300 -10,527 300,347 2024-20262022 44.52 351,142 -10,100 341,042 2025-20272023 45.16 370,434 -13,705 356,729 2026-20282024 37.12 389,029 -2,480 386,549 2027-2029Total 1,417,587 389,029 -223,995 -45,612 -36,363 1,500,646

At the end of 2024, the company owns 1,086,906 purchased (depositary receipts of) shares

to cover the option rights. These (depositary receipt of) shares have been purchased against

an average share price of €42.03. The total purchase value is €45,686,334. The average share

price on the date at which the share options were exercised during the financial year was

€37.82. The options were granted during the financial year on March 5, 2024. The estimated

fair value of the options granted in 2024 is €2,968,291.

TKH Group Annual Report 2024196

The fair value was determined on the basis of a binomial valuation model with the following

assumptions:

2024 2023Fair value at the date of allocation (in €) 7.63 11.68Expected volatility 29.3% 35.8%Expected dividend 3.0% 3.0%Risk free rate 2.762% 3.502%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

€3,284,237 (2023: €3,250,187) for these share-based payments which will be 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 2024 Mr. J.M.A. van der Lof was allotted 17,388

(depositary receipts of) shares, Mr. E.D.H. de Lange 13,053, and Mr. H.J. Voortman 12,575

(depositary receipts of) shares related to the performance for the year 2023. At the same time,

the Executive Board members purchased respectively 17,388, 13,053 and 12,575 (depositary

receipts of) shares at the actual share price of €38.05, 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 €1,140,348 (2023: €2,996,652) in the statement of profit and loss.

OTHER OPERATING EXPENSES

Other operating expenses include overhead, selling, accommodation and manufacturing

expenses.

DEPRECIATION

in thousands of euros2024 2023Depreciation of property, plant and equipment 35,946 32,574Depreciation of Right-of-use assets 16,394 16,339Result on disposal of property, plant and equipment -337 -85Depreciation 52,003 48,828

AMORTIZATION

in thousands of euros2024 2023Amortization of intangible assets 43,124 40,338Amortization of intangible assets from acquisitions as a result of 'Purchase Price Allocations' 17,684 16,522Amortization 60,808 56,860

IMPAIRMENT

in thousands of euros Notes2024 2023Impairment of intangible assets and goodwill3 934 1,790Impairment of property, plant and equipment41,295 701Impairment Right-of-use assets56,275 1,230Onerous contracts -1Impairment 8,504 3,720

RESEARCH AND DEVELOPMENT COSTS

The total operating expenses over the financial year include the following items:

in thousands of euros2024 2023Research and development expenditure 80,749 77,235Less: Capitalized development costs -46,460 -41,847Add: Amortization of development costs 35,316 33,522Add: Impairment on capitalized development costs 934 1,790Research and development costs accounted for in the profit and loss account 70,539 70,700Government subsidies for research and development costs 6,470 4,925

197Annual Report 2024 TKH Group

in thousands of euros (unless stated otherwise)2024 2023Result before tax 123,531 202,942Tax calculated at the Dutch tax rate 31,871 25.8% 52,359 25.8%Correction due to tax effect for:Tax participation exemption -4,748 -3.8% -13,652 -6.7%Non-deductible expenses 2,278 1.8% 2,278 1.1%Non-taxable income -107 -0.1% -80 0.0%Advantages from tax facilities -6,989 -5.7% -5,440 -2.7%Write off / recognition of deferred taxes -908 -0.7% 1,209 0.6%(Recognition)/derecognition of deferred tax asset for unused tax losses 2,130 1.7% 145 0.1%Settlement of income tax returns for previous years 841 0.7% 92 0.0%Differences in tax rates for foreign subsidiaries -214 -0.2% 774 0.4%Change in statutory tax rate -131 -0.1% -483 -0.2%Other tax benefits -23 -0.0% -22 -0.1%Tax on result and effective tax rate 24,000 19.4% 37,180 18.3%

FINANCIAL INCOME AND EXPENSES

in thousands of euros2024 2023Exchange and translation differences, including the effect of realized cash ﬂow hedges -2,962 -750Amortized transaction costs -527 -527Interest costs in defined benefit plans -53 -51Interest expense on lease liabilities -2,475 -1,746Interest expenses -27,614 -21,116Interest income from debt instruments at fair value through P&L 79 72Interest income 1,272 1,244Financial income and expenses -32,280 -22,874

TAX

in thousands of euros Notes2024 2023Current tax 28,713 40,768Adjustments for previous years 841 92Deferred tax15-5,554 -3,680Total tax on result 24,000 37,180

The taxes that are included directly in the statement of other comprehensive income are

shown below.

in thousands of euros Notes2024 2023Deferred taxes on revaluation of cash ﬂow hedges15-4841,293Deferred taxes on actuarial gains and losses15-5915Total tax on other comprehensive income -543 1,308

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:

TKH Group Annual Report 2024198

The effective tax rate increased somewhat compared to last year. The following elements

are worth noting:

•

A significant decreasing effect of the effective tax rate is resulting from the application

of the Dutch and (partial) German participation exemption on the divestments of

shareholdings that took place during 2024. When this would be normalized, the

effective tax rate would be approx. 23.2%.

•

The non-deductible expenses include regular items such as non-deductible personell

expenses, share based payments.

•

The benefits from tax R&D facilities decrease the effective tax rate and during 2024

these benefits increased. The R&D facilities mainly relate to the Netherlands (innovation

box), Canada (SR&ED), China and Austria.

•

The recognition of a deffered tax liability for withholding taxes had in 2024 a reducing

impact on the effective tax rate.

•

During the current year tax losses were recognized and included in a deferred tax

asset, which resulted in a reduction of the effective tax rate. This effect was however

more than offset by the restriction of interest deductibility in the Netherlands, based

on the so-called earning stripping rules, for which only partly a deferred tax asset was

recognized.

•

The settlement of income tax returns for previous years for several legal entities in

different countries, which includes other prior year taxes that come up from tax returns

and tax audits, was increasing the effective tax rate in 2024 (2023: impact was limited);

•

Differences in tax rates for foreign subsidiaries caused on balance a lower effective tax

rate. This mainly applies to our subsidiaries in Germany, Italy, France and USA; and

•

Changes in statutory tax rates applied in the calculation of deferred taxes resulted in a

tax benefit of €0.1 million (2023: tax benefit of €0.5 million).

TKH is within the scope of the OECD Pillar Two model rules. Pillar Two legislation has

been enacted in the Netherlands effective as from 31 December 2023 for financial years

starting on or after this date (e.g. financial year 2024). Under the legislation, the group is

liable to pay a top-up tax for the difference between their (GloBE) effective tax rate per

jurisdiction and the 15% minimum rate. TKH has assessed the impact of Pillar Two on

its financial position, whereby the initial focus is on the Transitional CbCR Safe Harbour

rules. The Transitional CbCR Safe Harbour rules are a short-term measure to exclude a

group’s operations in lower-risk countries from the compliance obligation of preparing full

Pillar Two calculations.

Based on this assessment, there are two jurisdictions that will likely have an effective tax

rate lower than 15% and consequently fall out of the Transitional CbCR Safe Harbour

rules. The reason that both countries fall out of the Transitional CbCR Safe Harbour rules

is the tax benefit arising from the recognition of loss compensation. In case a country

falls out of the Transitional CbCR Safe Harbour rules, the next question is whether

there would be any top-up tax liability due. Considering that the underlying reason for

falling out of the Transitional CbCR Safe Harbour rules in is entirely attributable to the

recognition of a previously unrecognized DTA with respect to tax losses, this is likely

not to lead to any top-up tax under the detailed Pillar Two calculations. Since these

unrecognized tax losses were disclosed in the financial statements before FY2024 , any

deferred taxes attributable to the recognition of these, are effectively disregarded in the

detailed Pillar Two calculations. Consequently, the recognition of previously unrecognized

DTAs relating to tax losses should not lead to any top-up taxation and therefore no

detailed Pillar Two calculation is deemed necessary. Based on the abovementioned,

TKH has not booked any current tax expenses related to Pillar Two in the 2024 financial

statements.

The TKH Group applies the exception to recognizing and disclosing information about

deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the

amendments to IAS 12 issued in May 2023.

199Annual Report 2024 TKH Group

EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS

in thousands of euros (unless stated otherwise) Notes2024 2023Weighted average number of (depositary receipts of) shares (x 1,000) 39,852 40,666Effect of share options (x 1,000) 24 86Weighted average number of (depositary receipts of) shares diluted (x 1,000) 39,876 40,752Net profit 99,531 165,762Less: Non-controlling interests 30 -58Net profit attributable to the shareholders of the company 99,561 165,704Amortization of intangible non-current assets from acquisitions 317,684 16,522Taxes on amortization -4,565 -4,244Net profit before amortization attributable to the shareholders of the company 112,680 177,982One-off income and expenses 3,996 1,983Result from divestments, one-off expenses and purchase price allocations in the result of associates -22,454 -51,891Impairments 8,504 3,720Fair value changes of financial liability for earn-out and put options of shareholders of non-controlling interests14 -733 146Tax impact on one-off income, expenses and impairments -3,125 -1,426Net profit before amortization and one-off income and expenses attributable to the shareholders of the company98,868 130,514Earnings per share attributable to shareholdersOrdinary earnings per share (in €) 2.50 4.07Diluted earnings per share (in €) 2.50 4.071Ordinary earnings per share before amortization (in €) 2.83 4.381Ordinary earnings per share before amortization and one-off income and expenses (in €) 2.48 3.211. Non IFRS measure

The number of (depositary receipts of)

shares outstanding with third parties as per

December 31, 2024 was 39,877.080. (2023:

39,801,946). The amount of own shares

held by TKH amounts to 2,325,349 per 31

december 2024, which represents 5.51%

(2023: 5.69%) of the total outstanding shares.

The one-off income and expenses in 2023

and 2024 mainly relates to restructuring,

acquisition and divestment costs.

TKH Group Annual Report 2024200

Remuneration of the Executive Board and the Supervisory Board

The remuneration payable 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)PensionCompensation for pension premium Totalin thousands of euros2024 2023 2024 2023 2024 2023 2024 2023 2024 2023 2024 2023Executive Board 1,953 1,887 288 785 874 2,808 111 96 408 375 3,634 5,951Supervisory Board 335 325 335 325Total remuneration 2,288 2,212 288 785 874 2,808 111 96 408 375 3,969 6,276

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.

RELATED PARTIES

Trade transactions

Sold to Bought from Trade receivables Trade payablesin thousands of euros2024 2023 2024 2023 2024 2023 2024 2023CAE Data SAS 2,089 913 96 287 795 27 330Shin-Etsu (Jiangsu) Optical Preform Co. Ltd. 25,589 239 8,075Speed Elektronik Vertrieb GmbH 684 416 84 9 48 60 9Commend Australia Integrated Security and Communication Systems Pty Ltd. 658 598 127 153Total 3,431 1,927 84 25,694 462 1,008 275 8,405

Shareholdings of members of the Executive Board and the Supervisory Board

During the financial year Mr. J.M.A. van der Lof sold in total 17,388 (depositary receipts of)

shares at an average stock price of €38.05, Mr. E.D.H. de Lange sold 26,106 (depositary

receipts of) shares at a stock price of €38.05 and Mr. H. Voortman sold 11,915 (depositary

receipts of) shares at a stock price of €38.05, 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 17,388, 13,053 and 12,575 (depositary receipts of) shares at a stock price

of €38.05. Among the members of the Executive Board, Mr. J.M.A. van der Lof owned 130,035

(depositary receipts of) shares, Mr. E.D.H. de Lange owned 80,099 (depositary receipts of)

shares and Mr. H.J. Voortman owned 53,626 (depositary receipts of) shares at the end of 2024.

201Annual Report 2024 TKH Group

BUSINESS COMBINATIONS

Acquisitions

During 2024 TKH acquired the following companies:

Name subsidiaryCountry Legal ownership and control Consolidation as from Operating segmentJCAI Inc Canada 100.0% 1 February 2024 Smart Connectivity systemsComark Srl Italy 100.0% 1 August 2024 Smart Vision systemsLiberty Robotics Inc United States 100.0% 1 September 2024 Smart Vision systems

On January 24, 2024, TKH acquired 100% of the shares in JCAI Inc. JCAI offers state-of-

the-art guidance software and equipment that provides airports with the tools needed to

ensure the aircraft is directed automatically over the tarmac, allowing for maximization of

throughput, whilst balancing safety. JCAI’s software is currently deployed across many

airports as well as airlines. JCAI will be able to take advantage of as well as accelerate the

growth of the advanced TKH CEDD connectivity technology especially in the North American

market. JCAI is based in Toronto, Canada, employs 35 people and realized an annual turnover

in 2023 of CAD 13.7 million with 25% of turnover derived from recurring software sales and an

EBITA and ROS at a minimum in line with our Smart Connectivity segment. For 2024 turnover

is lower and EBITA is negative due to a lack of equipment projects, the acquisition is expected

to have a positive effect on TKH’s earnings per share from 2025 onwards.

On July, 16, 2024, TKH acquired Comark Srl, a company specialized in laser-based volumetric

vehicle measurement and classification for tolling and free-ﬂow tolling applications. With this

acquisition, TKH can further drive the optimization of traffic ﬂows through innovative and

AI-driven products, with new high-performance and high-added value solutions. Comark is

based in Udine, Italy and realized a turnover of €2.8 million in 2023 and an EBITA and ROS

at a minimum in line with our Smart Vision segment. The turnover and EBITA are pro-rata in

line with 2023 and the acquisition already had a positive effect on TKH’s earnings per share in

2024.

On August 2, 2024, TKH acquired Liberty Robotics Inc., a state-of-the-art 3D vision guidance

systems provider for robotic applications. Liberty Robotics is headquartered in Ann Arbor,

Michigan, and has 32 employees, of whom 70% are in R&D. Liberty Robotics’ turnover

amounted to US$7 million in 2023 and an EBITA and ROS at a minimum in line with our Smart

Vision segment. Liberty Robotics has a strong foothold in the North American market and

besides automotive, also services the material handling/packaging and logistics industries

which complements our 3D Vision portfolio. Liberty Robotics is expected to profit from our

global sales network. The turnover and EBITA are pro-rata in line with 2023 and the acquisition

already had a positive effect on TKH’s earnings per share in 2024.

TKH Group Annual Report 2024202

The purchase price, net asset valuation and preliminary fair value adjustments are as follows:

Liberty Robotics ComarkJCAITotal acquisitions 2024in thousands of eurosBook value Adjustments Fair value Book value AdjustmentsFair valueBook value Adjustments Fair value Book value Adjustments Fair valueIntangible assets 8,062 8,062 13 3,0823,095347 11,487 11,834 360 22,631 22,991Property, plant and equipment 7 7 32 32 263 263 302 302Right-of-use assets 233 233 183 183 0 416 416Deferred tax assets 1,682 1,682 0 241 241 1,923 1,923Inventories 231 231 382 382 379 379 992 992Trade and other receivables 1,550 1,550 490 490 1,523 1,523 3,563 3,563Cash and cash equivalents 1,205 1,205 1,310 1,310 857 857 3,372 3,372Pensions 0 -60 -60 0 -60 -60Provisions 0 0 -893 -893 -893 -893Non-current liabilities -160 -160 -148 -148 -2,672 -2,672 -2,980 -2,980Deferred tax liabilities -3 -1,693 -1,696 -740 -740 -93 -3,101 -3,194 -96 -5,534 -5,630Borrowings -74 -74 -33 -33 0 -107 -107Current liabilities -1,473 -1,473 -344-344-1,711 -1,711 -3,528 -3,528Acquired net assets 3,198 6,369 9,567 1,825 2,3424,167-1,759 8,386 6,627 3,264 17,097 20,361Goodwill paid 8,3502,93714,631 25,918Purchase price 17,9177,10421,258 46,279Contingent consideration -3,304 -963 -4,267Cash and cash equivalents acquired -1,205-1,310-857 -3,372Purchase price paid 13,408 5,794 19,438 38,640

The goodwill paid is attributable to the knowledge and skills of the workforce, expected

synergy benefits through intensification of cooperation within the TKH Group and alignment

with TKH’s strategic development. The recognized goodwill is not tax deductible. The purchase

price is paid in cash. Also a conditional compensation for JCAI and Liberty Robotics is included

based on turnover in the next three years. The actual compensation to be paid in the future

can deviate positively or negatively on the basis of actual results. A material deviation is not

deemed likely.

Divestments

On May 15, 2024, TKH Group N.V. announced the divestment of HE System Electronic

GmbH (“HE”) to Magna International Inc. HE, which is part of TKH’s Smart Manufacturing

systems, employs a total of 118 FTEs and has operations in Germany. In 2023, turnover at

HE amounted to €20.7 million and EBITA of €1.9 million. Closing of the transaction has taken

place at the end of May 2024, from which date HE has no longer been consolidated in TKH

Group’s results. The sales agreement includes a guarantee and contingent consideration,

which is based on specific customer-contract developments in the coming three years and

can potentially have a positive or negative impact on the presented result of this divestment.

Currently this consideration is valued at a net amount of nil. The divestment of HE has resulted

in a one-off net profit contribution of €14.2 million

In July 2024, TKH reached an agreement on the sale of its 100% share in EKB Groep B.V. The

transaction was closed in August 2024, from which date EKB has no longer been consolidated

in TKH Group’s results. The turnover of EKB, part of TKH’s Smart Manufacturing segment,

totaled €35.5 million in 2023 with an EBITA of €2.6 million and 199 FTE. EKB operates mainly

in The Netherlands. The divestment of EKB has resulted in a one-off net profit contribution of

€11.5 million.

In October 2024, we divested our 12.5% interest in the associate Shin-Etsu (Jiangsu) Optical

Preform Co. Ltd. The associate was part of our Smart Connectivity segment.

203Annual Report 2024 TKH Group

At the end of September 2023 TKH announced that the divestment of its TKH France activities

to private equity group Argos Wityu has been closed. The activities will be continued by a

newly established company under the name SCS Wagram Holding, in which TKH acquired a

minority interest of 40%. The cash outﬂow from acquisition of associates of €27.6 million as

mentioned in the cashﬂow statement 2023 is related to this acquisition of a minority interest.

The transaction results in a one-off net profit contribution of about €20 million for TKH in 2023.

Following the closing of this divestment, TKH France will no longer be consolidated in TKH

Group’s results. In 2023 until end of September, the turnover of TKH France totaled

€95.8 million with a recurring EBITA of €12.9 million and 180 FTEs.

In December 2023, TKH has sold its 100% share in Isolectra Communications Technology

Sdn Bhd, located in Malaysia. The company generated around €1 million turnover in 2023.

The divestment generated a small loss.

The reconciliation between the result on divestment and the cash ﬂow is as follows:

in thousands of euros2024 2023Net assets at the time of divestment 38,849 102,080Result on sale of associates and subsidiaries 24,221 54,802Cash and cash equivalents divested -2,811 -26,422Cash ﬂow from divestments 60,259 130,460

Assets and directly associated liabilities held for sale

As part of the Strategic program Accelerate 2025 TKH has decided in 2024 to start an active

program to sell certain activities within Smart Manufacturing Systems related to test and

measurement systems. The amount of allocated goodwill has been based on applying the

relative value method. Besides working capital, capitalized R&D is also an important part of

this value. Barring unforeseen circumstances, a sale is highly probable within the upcoming 12

months. TKH expects an one-off net profit upon sale.

The balance per end of 2023 relates to HE System Electronic, for which reference is made to

‘Divestments’ above.

The main categories of assets and liabilities classified as held for sale are as follows:

in thousands of euros2024 2023AssetsIntangible assets and goodwill 6,153 1,179Property, plant and equipment 963 10,718Right-of-use assets 2,811 667Deferred tax assets 3,591 398Inventories 7,755 4,363Trade and other receivables 4,268 2,071Contract assets 1,718Current income tax 6 Cash and cash equivalents 1,650 57Assets held for sale 27,197 21,171LiabilitiesNon-current interest-bearing loans and borrowings 2,330 536Deferred tax liabilities 1,342 490Retirement benefit obligation 1,247 Current interest-bearing loans and borrowings 536 149Trade payables and other payables 3,424 1,972Short term provisions 94 Current income tax liabilities 46 Liabilities directly associated with assets held for sale 9,019 3,147Net assets directly associated with held for sale 18,178 18,024

NON-CASH TRANSACTIONS

There were no material non-cash transactions, besides lease transactions as mentioned in

note 5

EVENTS AFTER BALANCE SHEET DATE

No events of material significance for insight into the financial statements and the preceeding

period occurred after balance sheet date.

TKH Group Annual Report 2024204

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:

TotalEY Accountants B.V. (Netherlands)Other parts of EY Totalin thousands of euros2024 2023 2024 2023 2024 2023Audit of the financial statements 1,405 1,3526146632,0192,015Other assurance engagements 371 86 8 18 379 104Tax fees 2 10 2 10Other non-assurance engagements6868Servicecosts external auditors 1,776 1,438 630 699 2,406 2,137

The fees related to other assurance engagements includes the limited assurance engagement

on the sustainability statement.

Company statement of profit and loss 206

Company balance sheet 207

Notes to the company financial statements 208

Company financial

statements

Financial

statements

TKH Group Annual Report 2024206

Company statement of profit and loss

in thousands of euros Notes

2024 2023

Net turnover

15 14,744 13,231

Wages and salaries

16 11,941 13,340

Social insurance contributions 1,765 1,366

Depreciation and result on divestment of property, plant and equipment 544 302

Other operating expenses 11,944 10,916

Total operating expenses 26,194 25,924

Operating result -11,450 -12,693

Financial income 4,405 4,084

Financial expenses -20,840 -15,595

Exchange differences -248 11

Change in value of financial liability for earn-out and put-options of holders of non-controlling interests 575 -96

Result before tax -27,558 -24,289

Tax on result

-5,953 -3,802

Company result -21,605 -20,487

Share in result of participations 121,166 186,191

Net result 99,561 165,704

207Annual Report 2024 TKH Group

Company balance sheet

As of 31 December before profit appropriation

in thousands of euros Notes

2024 2023

Assets

Non-current assets

Intangible assets and goodwill

2 232,793 211,145

Property, plant and equipment

1,375 595

Right-of-use assets

4 2,377 2,525

Financial non-current assets

5 1,047,530 945,677

Deferred tax assets

6 907 858

Total non-current assets 1,284,982 1,160,800

Current assets

Receivables on subsidiaries 85,501 122,669

Other receivables

17,394 11,986

Cash and cash equivalents

13 468 2,116

Total current assets 103,363 136,771

Total assets 1,388,345 1,297,571

in thousands of euros Notes

2024 2023

Equity and liabilities

Shareholders' equity

Share capital 10,554 10,554

Share premium 85,021 85,021

Legal reserve 120,398 115,161

Translation reserve 22,584 9,968

Cash ﬂow hedge reserve -1,916 -525

Retained earnings 546,777 449,682

Unappropriated profit 99,561 165,704

Total shareholders' equity

8 882,979 835,565

Provisions

Deferred tax liabilities

981 879

Other financial liabilities 12 3,106 0

Provisions

11 58,689 46,378

Total provisions 62,776 47,257

Non-current liabilities

Interest-bearing loans and borrowings

13 2,212 2,325

Total non-current liabilities 2,212 2,325

Current liabilities

Interest-bearing loans and borrowings

13 223 23,916

Payables to group companies 431,981 379,640

Other financial liabilities

12 1,660 1,484

Other current liabilities 6,514 7,384

Total current liabilities 440,378 412,424

Total equity and liabilities 1,388,345 1,297,571

TKH Group Annual Report 2024208

Notes to the company financial statements

ACCOUNTING PRINCIPLES

The company financial statements of TKH Group N.V. (TKH) are prepared in accordance

with Part 9, Book 2 of the Dutch Civil Code. 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.

INTANGIBLE ASSETS AND GOODWILL

Goodwill

in thousands of euros

2024 2023

Historical cost at 1 January 212,835 172,957

Accumulated impairment losses 1,690 1,690

Book value at 1 January 211,145 171,267

Acquisitions 20,638 17,866

Transfer within the group 805 21,917

Exchange differences 205 95

Book value at 31 December 232,793 211,145

Accumulated impairment losses 1,690 1,690

Historical cost at 31 December 234,483 212,835

The ‘Transfer within the group’ in 2023 relates to an internal goodwill reallocation following the

divestment of the TKH France activities.

PROPERTY, PLANT AND EQUIPMENT

Other equipment

in thousands of euros

2024 2023

Historical cost at 1 January 2,783 2,482

Accumulated depreciation and impairments 2,188 2,043

Book value at 1 January 595 439

Purchases 1,020 301

Disposals -11

Depreciation -229 -145

Book value at 31 December 1,375 595

Accumulated depreciation and impairments 1,275 2,188

Historical cost at 31 December 2,650 2,783

209Annual Report 2024 TKH Group

RIGHT OF USE ASSETS

Buildings Other equipment Total

in thousands of euros

2024 2023 2024 2023 2024 2023

Historical cost at 1 January 2,461 353 212 2,814 212

Accumulated depreciation and impairments 83 206 132 289 132

Book value at 1 January 2,378 0 147 80 2,525 80

Purchases 2,461 171 141 171 2,602

Reassessment -4 -4 0

Depreciation -248 -83 -67 -74 -315 -157

Book value at 31 December 2,126 2,378 251 147 2,377 2,525

Accumulated depreciation and impairments 331 83 273 206 604 289

Historical cost at 31 December 2,457 2,461 524 353 2,981 2,814

FINANCIAL NON-CURRENT ASSETS

Subsidiaries Associates Total

in thousands of euros

2024 2023 2024 2023 2024 2023

Balance at 1 January 910,460 833,809 35,217 30,763 945,677 864,572

Acquisition and/or incorporation of subsidiaries and associates 18,675 35,894 27,624 18,675 63,518

Disposals -10,909 -105,486 -6,457 -19,219 -17,366 -124,705

Capital contribution 26,919 69,882 26,919 69,882

Result 110,619 134,820 174 -3,430 110,793 131,390

Dividend received -63,064 -68,578 -60 -63,124 -68,578

Change in cash ﬂow hedge reserves -1,279 3,815 -1,279 3,815

Transfer within the group -76 -76 0

Actuarial gains/(losses) from defined benefit plans -234 71 -234 71

Other changes -134 0 -134

Reclassification provision subsidiaries and associates 14,908 12,425 14,908 12,425

Exchange differences 12,647 -6,058 -10 -521 12,637 -6,579

Balance at 31 December 1,018,666 910,460 28,864 35,217 1,047,530 945,677

The difference between the abovementioned result on subsidiaries and associates and the result

as included in the company statement of profit and loss relates to the result on divestment of

subsidiaries and associates as disclosed in note 34 of the consolidated financial statements.

TKH Group Annual Report 2024210

DEFERRED TAX

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 2023 -618 814 -25 171

(Charge)/credit to profit or loss -261 69 -192

Balance at 31 December 2023 -879 883 -25 -21

(Charge)/credit to other comprehensive income -54 -54

(Charge)/credit to profit or loss -102 103 1

Balance at 31 December 2024 -981 986 -79 -74

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

2024 2023

Deferred tax assets stated under non-current assets 907 858

Deferred tax liabilities stated under non-current liabilities -981 -879

Deferred taxes -74 -21

OTHER RECEIVABLES

in thousands of euros

2024 2023

Taxes and social security premiums 15,541 10,414

Other receivables 1,853 1,572

Other receivables 17,394 11,986

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 capital2024 2023x1,000 €'000 €'000The authorized capital consists of:Ordinary shares 59,984Cumulative preference financing shares 10,000Convertible cumulative preference financing shares 10,000Cumulative preference protective shares 60,000Each nominal €0.25 139,984 34,996 34,996Priority share 4Each nominal €1.00 4 4 4 Authorized capital 35,000 35,000Of which not issued 24,446 24,4461Issued capital 10,554 10,5541. Concerns 4,000 priority and 42,198,429 (depositary receipts of) shares.

The number of outstanding (depositary receipts of) shares with third parties as per December

31, 2023 amounted to 39,801.946. Due to the exercise of options rights and share schemes,

a balance of 75,134 (depositary receipts of) shares were sold in 2024. As a result, the number

of (depositary receipts of) shares outstanding with third parties as per December 31, 2024 was

39,877,080. The amount of own shares held by TKH amounts to 2,325,349 per 31 december

2024, which represents 5.51% (2023: 5.69%) of the total outstanding shares.

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

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

211Annual Report 2024 TKH Group

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 apply to the transfer of ordinary shares to the company itself.

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 euros2024 2023Capitalized development costs 107,730 100,447Legal reserve for participations 12,668 14,714Legal reserve 120,398 115,161

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.

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 2024 the dividend for the year 2023 was declared at €1.70 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 2024 was €67,883,344

and this amount was charged to the retained earnings.

After December 31, 2024, 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.

SHARE-BASED PAYMENTS

The share-based payments are disclosed in note 24 of the consolidated financial statements.

OTHER PROVISIONS

in thousands of euros

2024 2023

Liability for subsidiaries with negative equity 58,172 45,872

Other long-term provisions 517 506

Total of other long- and short-term provisions 58,689 46,378

For more background details about other long-term provisions see note 13 of the consolidated

financial statements.

TKH Group Annual Report 2024212

OTHER FINANCIAL LIABILITIES

in thousands of euros Earn-out

Put options

of holders of

non-controlling

interests Total

Balance at 1 January 2024 734 750 1,484

Change in value through the profit and loss account -161 -414 -575

Purchases 4,267 4,267

Payment for acquisitions from previous years -174 -227 -401

Other reclassifications -9 -9

Balance at 31 December 2024 4,666 100 4,766

For more details about the financial liabilities see note 14 of the consolidated financial

statements.

NET INTEREST-BEARING DEBT

in thousands of euros

2024 2023

Bank loans reported under non-current liabilities 2,212 2,325

Borrowings reported under current liabilities 223 23,916

Cash and cash equivalents -468 -2,116

Net interest-bearing debt 1,967 24,125

For more details about the facilities, conditions and securities see notes 10, 17, 18 and 20 of

the consolidated financial statements.

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 €12.0 million (2023: €13.8 million) for

bank credit and bank guarantee facilities provided to a number of foreign subsidiaries. This

facility was called on for a sum of €nill (2023: €nill) at the end of 2024.

The company and the majority of its 100% owned Dutch subsidiaries form a tax group for

the corporate income tax. Consequently, the company is liable for the income taxes of these

subsidiaries.

TURNOVER

The turnover is related to the charged head office costs in the year for services provided to

subsidiaries of the company.

WAGES AND SALARIES

The share-based payments and remuneration of key management are included in notes 24

and 33 of the consolidated financial statements. The number of employees amounted to FTE

28 end of 2024. (2023: 26)

TAX

in thousands of euros Notes

2024 2023

Current tax -5,815 -3,675

Adjustments for previous years -137 -319

Deferred tax

-1 192

Total tax on result -5,953 -3,802

213Annual Report 2024 TKH Group

The reconciliation of the tax expense in the year with the result before tax is as follow:

in thousands of euros (unless stated otherwise)

2024 2023

Result before tax -27,558 -24,289

Tax calculated at the Dutch tax rate -7,110 25.8% -6,267 25.8%

Correction due to tax effect for:

Non-deductible expenses 865 -3.1% 1,614 -6.6%

Other non-deductible costs 327 -1.2% 459 -1.9%

Adjustments prior year other 450 -1.9%

Settlement of income tax returns for previous years -137 0.5% -319 1.3%

Taxes on (un)distributed profits of foreign subsidiaries 102 -0.4% 261 -1.0%

Effective tax rate -5,953 21.6% -3,802 15.7%

SIGNATURE OF THE FINANCIAL STATEMENTS

Haaksbergen, March 3, 2025

Executive Board Supervisory Board

J.M.A. van der Lof MBA, chairman P.W.B. Oosterveer, chairman

E.D.H. de Lange MBA J.M. Kroon

H.J. Voortman Msc C.W. Gorter

A.M.H. Schöningh

W.A.A. Peek

Other

information

Profit appropriation 215

Proposal for profit appropriation 215

Consolidated entities 216

Independent auditor’s report 217

Limited assurance report of the independent auditor

on the sustainability statement 224

Stichting Administratiekantoor TKH Group 228

Stichting Continuïteit TKH 229

Ten years overview 230

Alternative performance measures 232

215Annual Report 2024 TKH Group

Profit appropriation

Since no protection preference and financing preference

shares were outstanding or issued, within the meaning of

Articles 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 share-

holders 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

distributions 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 Supervisory 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 meeting, either fully

or partially for reservation, or fully or partially 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 €99,561.

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 23, 2025.

The dividend for 4,000 priority shares has been set at

€0.05 per share of €1.00.

TKH Group Annual Report 2024216

Consolidated entities

A list of all subsidiaries is available at the Chamber of

Commerce (the Netherlands). TKH Group N.V. is

registered in the Trade Register under No. 06045666.

The most important (group of) entities included in the

consolidated financial statements of TKH are listed below,

including the segment in which they operate. All of the

subsidiaries are 100% owned, unless indicated

otherwise.

The hereafter mentioned 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.

TKH Security GmbH, Allied Vision Technologies GmbH,

TKF GmbH (former ASP GmbH), Chromasens GmbH,

Dewetron Deutschland GmbH, EEB Kabeltechnik GmbH,

EFB Elektronik GmbH, EFB Elektronik Real Estate B.V. &

Co KG, Ernst & Engbring GmbH, Lakesight Technologies

Holding GmbH, Lakesight Technologies German Holding

GmbH, LMI Technologies GmbH, New Electronic

Technology GmbH, Profipatch GmbH, Schneider

Intercom GmbH, Sensor to Image GmbH, SVS-Vistek

GmbH, Texim Europe GmbH, TKD Immobilien GmbH,

TKH Airport Solutions GmbH, TKH Deutschland GmbH,

TKH Deutschland Verwaltungs GmbH, TKH

Grundstücksverwaltungs B.V. & Co KG, TKH Deutschland

Service GmbH, TKH Technologie Deutschland AG.

The listed subsidiaries below 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 year ended December

31, 2024. This exemption is taken in accordance with the

UK Companies Act, S479A.

Commend UK Ltd., TKH Security Ltd.

Smart Connectivity Systems Smart Manufacturing Systems Smart Vision Systems TKH Group Support

E&E TFO Dewetron VMI Alphatronics Allied Vision TKH Group

EFB TKF Texim Europe C&C Partners Chromasens TKH Finance

Intronics TKH Airport Solutions Commend LMI Technologies TKH Logistics

Isolectra Mextal SVS-Vistek TKH Artifical Intelligence

TKH Security NET

Techno Specials Euresys

Tattile

217Annual Report 2024 TKH Group

Independent auditor’s report

To: the shareholders and supervisory board of TKH Group N.V.

Report on the audit of the financial statements 2024 included in the annual report

Our opinion

We have audited the accompanying financial statements

for the financial year ended 31 December 2024 of TKH

Group N.V. based in Haaksbergen, the Netherlands.

The financial statements comprise the consolidated and

company financial statements.

In our opinion:

• The consolidated financial statements give a true and

fair view of the financial position of TKH Group N.V. as

at 31 December 2024 and of its result and its cash ﬂows

for 2024 in accordance with International Financial

Reporting Standards as adopted in the European Union

(EU-IFRSs) and with Part 9 of Book 2 of the Dutch Civil

Code

• The company financial statements give a true and fair

view of the financial position of TKH Group N.V. as at 31

December 2024 and of its result for 2024 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 2024

• The following statements for 2024: the consolidated

statement of profit and loss, the consolidated statement

of comprehensive income, the consolidated statement

of changes in group equity and consolidated cash ﬂow

statement

• The notes comprising material accounting policy infor-

mation and other explanatory information

The company financial statements comprise:

• The company balance sheet as at 31 December 2024

• The company statement of profit and loss for 2024

• The notes comprising a summary of the accounting

policies and other explanatory information

Basis for our opinion

We conducted our audit in accordance with Dutch law,

including the Dutch Standards on Auditing. Our responsi-

bilities under those standards are further described in the

Our responsibilities for the audit of the financial state-

ments section 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

statutory 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

independence) and other relevant independence regula-

tions in the Netherlands. Furthermore we have complied

with the Verordening gedrags- en beroepsregels accoun-

tants (VGBA, Dutch Code of Ethics for professional

accountants).

We believe the audit evidence we have obtained is suffi-

cient and appropriate to provide a basis for our opinion.

Information in support of our opinion

We designed our audit procedures in the context of our

audit of the financial statements as a whole and in forming

our opinion thereon. The following information in support

of our opinion and any findings were addressed in this

context, and we do not provide a separate opinion or

conclusion on these matters.

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 determined materiality and identified and assessed the

risks of material misstatement of the financial statements,

whether due to fraud or error in order to design audit

procedures responsive to those risks and to obtain audit

evidence that is sufficient and appropriate to provide a

basis for our opinion.

Materiality

Materiality EUR 8.0 million (2023: EUR 9.5 million)

Benchmark applied 4% of earnings before interest, taxes, impairments and amortization (EBITA) (2023: 4% of EBITA)

Explanation We applied earnings before interest, taxes, impairments and amortization (EBITA) as benchmark as

in our perception, it is an important and stable performance indicator for the company and the users

of the financial statements. We determined materiality consistent with prior financial year.

TKH Group Annual Report 2024218

We have also taken into account misstatements and/or

possible misstatements that in our opinion are material for

the users of the financial statements for qualitative reasons.

We agreed with the supervisory board that misstatements

in excess of EUR 400,000, 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.

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 finan-

cial statements.

We are responsible for planning and performing the group

audit to obtain sufficient appropriate audit evidence

regarding the financial information of the entities or busi

ness units within the group as a basis for forming an

opinion on the financial statements. We are also respon

sible for the direction, supervision, review and evaluation of

the audit work performed for purposes of the group audit.

We bear the full responsibility for the auditor’s report.

Based on our understanding of the group and its environ-

ment, the applicable financial framework and the group’s

system of internal control, we identified and assessed

risks of material misstatement of the financial statements

and the significant accounts and disclosures.

Based on this risk assessment, we determined the nature,

timing and extent of audit work performed, including the

entities within the group (components) at which to perform

audit work. For this determination we considered the

nature of the relevant events and conditions underlying

the identified risks of material misstatements for the

financial statements, the association of these risks to

components and the materiality or financial size of the

components relative to the group.

We communicated the audit work to be performed and

identified risks through instructions for component audi-

tors as well as requesting component auditors to commu-

nicate matters related to the financial information of the

component that is relevant to identifying and assessing

risks.

We have pe

rformed the audit work for the Dutch operating

companies within the scope of the group audit ourselves,

as well as centralized audit work, such as goodwill and

other intangibles of acquired companies, business combi

nations, interest bearing loans and valuation of deferred

tax assets arising from unused tax losses. Furthermore, we

selected 22 components to perform audit work for group

reporting purposes. With the exception of four operating

companies in Germany, the audit work for the foreign

operating companies in scope of our group audit were

performed by teams of EY Global member firms.

This resulted in a coverage of 73% of the EBITA, 89% of

the over-time revenue and 81% of capitalized develop-

ment cost.

For the other components, we performed selected other

procedures, including analytical procedures and to

corroborate that our risk assessment and scoping

remained appropriate throughout the audit.

We performed site visits to meet with local management

and component teams, observe the component opera-

tions, discuss the group risk assessment and the risks of

material misstatements for several components assigned

a scope. We reviewed and evaluated the adequacy of the

deliverables from component auditors and reviewed key

working papers for selected components to address the

risks of material misstatement. We held planning meet-

ings, key meetings required based on circumstances and

we attended closing meetings with local management and

component teams for components assigned a scope.

During these meetings and calls, amongst others, the

planning, procedures performed based on risk assess-

ments, findings and observations were discussed and any

further work deemed necessary by the primary or compo-

nent team was then performed.

By performing the audit work mentioned above at the

entities or business units within the group, together with

additional work at group level, we have been able to

obtain sufficient and appropriate audit evidence about the

group’s financial information to provide an opinion on the

financial statements.

Teaming and use of specialists

We ensured that the audit teams both at group and at

component levels included the appropriate skills and

competences which are needed for the audit of a listed

client like TKH Group N.V. We included specialists in the

areas of IT audit (including cybersecurity), corporate

governance (including remuneration), IFRS accounting,

valuation of goodwill and intangible assets of acquired

companies, real estate, share based payments, income

taxes and forensics.

Our focus on climate-related risks and the energy

transition

Climate change and the energy transition are high on the

public agenda. Issues such as CO

reduction impact

financial reporting, as these issues entail risks for the

business operation, the valuation of assets (stranded

assets) and provisions or the sustainability of the business

model and access to financial markets of companies with

a larger CO

footprint. The executive board summarized

the TKH Group N.V.’s commitments and obligations, and

reported in the section ‘Sustainability Statements’ of the

management report how TKH is addressing climate-

related and environmental risks.

219Annual Report 2024 TKH Group

As part of our audit of the financial statements, we evalu-

ated the extent to which climate-related risks and the

effects of the energy transition and the TKH Group N.V.’s

commitments and (constructive) obligations, are taken i

nto account in estimates and significant assumptions.

Furthermore, we read the management report and consid-

ered whether there is any material inconsistency between

the non-financial information in section ‘Sustainability

Statements’ and ‘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 as at 31 December 2024.

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

financial statements, taken as a whole, are free from

material misstatement, whether caused by fraud or error.

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.

Our audit response related to fraud risks

We identified and assessed the risks of material misstate-

ments of the financial statements due to fraud. During our

audit we obtained an understanding of the company and

its environment and the components of the system of

internal control, including the risk assessment process

and management’s process for responding to the risks of

fraud and monitoring the system of internal control and

how the supervisory board exercises oversight, as well as

the outcomes.

We refer to section ‘Risk Management’ of the manage-

ment report for the executive board’s (fraud) risk assess-

ment and section ‘Report of the Supervisory Board’ in

which the supervisory board reﬂects on this (fraud) risk

assessment.

We evaluated the design and relevant aspects of the

system of internal control and in particular the fraud risk

assessment, as well as the code of conduct, whistle

blower procedures and incident registration. We evaluated

the design and the implementation of internal controls

designed to mitigate fraud risks.

As part of our process of identifying fraud risks, we evalu-

ated fraud risk factors with respect to financial reporting

fraud, misappropriation of assets and bribery and corrup-

tion in close co-operation with our forensic specialists.

We evaluated whether these factors indicate that a risk of

material misstatement due to fraud is present.

We incorporated elements of unpredictability in our audit.

We also considered the outcome of our other audit proce-

dures and evaluated whether any findings were indicative

of fraud or non-compliance.

We addressed the risks related to management override of

controls, as this risk is present in all organizations. For

these risks we have performed procedures among other

things to evaluate key accounting estimates for manage-

ment bias that may represent a risk of material misstate-

ment due to fraud, in particular relating to important

judgment areas and significant accounting estimates as

disclosed in note 1 ‘Material accounting principles’ to the

financial statements.

We have also used data analysis to identify and address

high-risk journal entries and evaluated the business ratio-

nale (or the lack thereof) of significant extraordinary trans-

actions, including those with related parties.

The following fraud risk identified required significant

attention during our audit.

Presumed risk of fraud in revenue recognition

Fraud risk We presumed that there are risks of fraud in revenue recognition. We evaluated the pressure and

incentive from quantitative targets and expectations from shareholders as revenue is considered

one of the key performance indicators. We evaluated that a material misstatement may result from

the over-time revenue recognition from contracts with customers in particular, through inappropri-

ate estimations around the percentage of completion, including the cost to come and the expected

result of the projects.

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”.

We considered available information and made enquiries

of relevant executives, directors (including internal audit,

head legal affairs, and compliance officer) and the super-

visory 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.

TKH Group Annual Report 2024220

Our audit response related to risks of non-

compliance with laws and regulations

We performed appropriate audit procedures regarding

compliance with the provisions of those laws and regula

tions that have a direct effect on the determination of

material amounts and disclosures in the financial state

ments. Furthermore, 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,

reading minutes, inspection of internal audit and compli

ance reports, and performing substantive tests of details of

classes of transactions, account balances or disclosures.

Given the company is a global organization, operating in

multiple jurisdictions, in our assessment of the risk of

non-compliance with laws and regulations, we also

considered the potential 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:

• Obta

in 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 regula-

tions have been disclosed to us.

Over-time revenue recognition, and related valuation of contract assets and contract liabilities

Risk Revenue is one of the key performance indicators of the company’s performance and considered a

focus of the users of the financial statements.

TKH Group N.V. manufactures products, which vary from special 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 reporting date

and prompting management 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. Over-time revenue is recognized in all three segments, being Smart

Vision systems, Smart Connectivity systems and Smart Manufacturing systems.

As mentioned in the section ‘Our audit response related to fraud risks’ above we identified a fraud risk of

accelerating revenues through inappropriate estimations around the percentage of completion, including

the cost to come and the expected result of the projects.

Given the focus of users of the financial statements and the identified fraud risk, we consider

improper revenue recognition a key audit matter.

Further reference is made to section ‘Turnover’ in the notes to the consolidated financial statements,

and note 22, ‘Information by segment’, to the consolidated financial statements.

Our audit approach Our procedures included, among others, auditing the application of the revenue recognition standard

IFRS 15 ‘Revenue from Contracts with Customers’, and whether the accounting policies have been

applied consistently. We have obtained and updated our understanding of the revenue recognition

process within the different segments and evaluated the company’s controls relevant to revenue

recognition. Furthermore, we have conducted the following substantive audit procedures with respect to

the identified risks:

• We evaluated management’s assessment in relation to 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 performed margin analyses per significant revenue stream and product line;

• We 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 evaluated management’s estimate of the cost to come, including discussion with project

managers and reconciliations to supporting evidence;

• We 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, including the cost to come and the expected result of the projects to be within an acceptable

range.

221Annual Report 2024 TKH Group

Our audit response related to going concern

As disclosed in section Going concern in note 1 ‘Material

accounting principles’ to the financial statements, the

financial statements have been prepared on a going

concern basis. When preparing the financial statements,

the executive board made a specific assessment of the

company’s ability to continue as a going concern and to

continue its operations for the foreseeable future.

We discussed and evaluated the specific assessment with

the executive board exercising professional judgment and

maintaining 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 relevant 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 identify

material uncertainties about going concern. Our conclu-

sions 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 profes-

sional judgment, were of most significance in our audit of

the financial 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. In comparison with previous year, the nature of

our key audit matters did not change.

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 2024, the total

carrying value of capitalized product development cost amounted to EUR 143 million. As such, TKH

Group N.V. has capitalized a significant amount of product development costs, 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 the development projects related to new innovation projects

which are in development as these do not yet generate sales and as such there is a higher level of

judgment involved in setting the significant assumptions in determining the value in use to support the

carrying value.

We identified a higher risk of overstatement of the capitalized development costs, specifically related to

new innovation projects which are in development phase, and given the amounts involved, we consider

this a key audit matter.

Further reference is made to section ‘Intangibles assets and goodwill’ in the notes to the consolidated

financial statements , and note 3, ‘Intangible assets and goodwill’, to the consolidated financial

statements.

Our audit approach Our procedures included, among others, auditing the application of the intangible assets standard IAS

38 ‘Intangible assets’, and whether the accounting policies have been applied consistently. We have

obtained and updated our understanding of the impairment process, and evaluated the company’s

controls relevant to the impairment process.

Furthermore, we have conducted the following substantive audit procedures with respect to the

identified risks :

• 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;

• We performed a sensitivity analysis by stress testing key assumptions, among others, discount rate

and expected 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

management’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 costs related to new innovation projects in

development is reasonable.

TKH Group Annual Report 2024222

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

• Contains the information as required by Part 9 of Book 2

of the Dutch Civil Code for the management report

(excluding the sustainability statement) 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

2:145sub-section2 of the Dutch Civil Code for the

remuneration report.

We have read the other information. Based on our

knowledge and understanding obtained through our

audit of the financial statements or otherwise, we have

considered whether the other information contains

material misstatements. By performing these procedures,

we comply with the requirements of Part 9 of Book 2 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

accordance with Part 9 of Book 2 of the Dutch Civil Code

and other information required by Part9 of Book 2 of the

Dutch Civil Code. The executive board and the supervi-

sory board are responsible for ensuring that the remunera-

tion report is drawn up and published in accordance with

Sections2:135b and 2:145sub-section2 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 tech

nical 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 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 accor-

dance 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.

We performed our examination in accordance with Dutch

law, including Dutch Standard 3950N, ”Assur-

ance-opdrachten inzake het voldoen aan de criteria voor

het opstellen van een digitaal verantwoordingsdocument”

(assurance engagements relating to compliance with

criteria for digital reporting). Our examination included

amongst others:

• Obtaining an understanding of the entity’s financial

reporting process, including the preparation of the

reporting package

• Identifying and assessing the risks that the annual report

does not comply in all material respects with the RTS on

ESEF and designing and performing further assurance

procedures responsive to those risks to provide a basis

for our opinion, including:

• Obtaining the reporting package and performing

validations to determine whether the reporting

package containing the Inline XBRL instance docu-

ment 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.

223Annual Report 2024 TKH Group

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-IFRSs and Part 9 of Book 2 of the Dutch Civil

Code. Furthermore, the executive board is responsible for

such internal control as the executive board determines is

necessary to enable the preparation of the financial state-

ments that are free from material misstatement, whether

due to fraud or error.

As part of the preparation of the financial statements, the

executive board is responsible for assessing the compa-

ny’s ability to continue as a going concern. Based on the

financial reporting framework 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 circum-

stances that may cast significant doubt on the company’s

ability to continue as a going concern in the financial

statements.

The supervisory board is responsible 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 appro-

priate audit evidence for our opinion.

Our audit has been performed with a high, but not abso-

lute, level of assurance, which means we may not detect

all material misstatements, whether due to fraud or error

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 evalua-

tion of the effect of identified misstatements on our

opinion.

We have exercised professional judgment and have main-

tained professional skepticism throughout the audit, in

accordance with Dutch Standards on Auditing, ethical

requirements and independence requirements. The Infor-

mation in support of our opinion section above includes

an informative summary of our responsibilities and the

work performed as the basis for our opinion.

Our audit further included among others:

• Performing audit procedures responsive to the risks

identified, and obtaining audit evidence that is sufficient

and appropriate to provide a basis for our opinion

• Obtaining an understanding of internal control relevant

to the audit in order to design audit procedures that are

appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness

of the company’s internal control

• Evaluating the appropriateness of accounting policies

used and the reasonableness of accounting estimates

and related disclosures made by 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 signifi-

cant findings in internal control that we identify during our

audit. In this respect we also submit an additional report

to the audit committee of the supervisory board in accor-

dance with Article11 of the EU Regulation on specific

requirements regarding statutory audit of public-interest

entities. The information included in this additional report

is consistent with our audit opinion in this auditor’s report.

We provide the supervisory board with a statement that

we have complied with relevant ethical requirements

regarding independence, and to communicate with them

all relationships and other matters that may reasonably

be thought to bear on our independence, and where

applicable, related safeguards.

From the matters communicated with the supervisory

board, we determine the key audit matters: those matters

that were of most significance in the audit of the financial

statements. We describe these matters in our auditor’s

report unless law or regulation precludes public disclosure

about the matter or when, in extremely rare circumstances,

not communicating the matter is in the public interest.

Amsterdam, 3 March 2025

EY Accountants B.V.

Signed by W.M. Braakman

TKH Group Annual Report 2024224

Limited assurance report of the independent

auditor on the sustainability statement

To: the shareholders and the supervisory board of TKH Group N.V.

Our conclusion

We have performed a limited assurance engagement on

the consolidated sustainability statement for 2024 of TKH

Group N.V. based in Haaksbergen, the Netherlands in

section Sustainability statements of the accompanying

management report including the information

incorporated in the sustainability statement by reference

(hereinafter: the sustainability statement).

Based on our procedures performed and the evidence

obtained, nothing has come to our attention that causes

us to believe that the sustainability statement is not, in all

material respects:

• prepared in accordance with the European Sustain-

ability Reporting Standards (ESRS) as adopted by the

European Commission and compliant with the double

materiality assessment process carried out by TKH

Group N.V. to identify the information reported pursuant

to the ESRS; and

• compliant with the reporting requirements provided for

in Article 8 of Regulation (EU) 2020/852 (Taxonomy

Regulation).

Our conclusion has been formed on the basis of the

matters outlined in this limited assurance report.

Basis for our conclusion

We have performed our limited assurance engagement on

the sustainability statement in accordance with Dutch

law, including Dutch Standard 3810N, “Assurance-

opdrachten inzake duurzaamheidsverslaggeving”

(Assurance engagements relating to sustainability

reporting), which is a specified Dutch standard that is

based on the International Standard on Assurance

Engagements (ISAE) 3000 (Revised), “Assurance

engagements other than audits or reviews of historical

financial information”.

Our assurance engagement was aimed to obtain a limited

level of assurance that the sustainability statement is free

from material misstatements. The procedures vary in

nature and timing from, and are less in extent than for, a

reasonable assurance engagement. Consequently, the

level of assurance obtained in a limited assurance

engagement is substantially lower than the assurance

that would have been obtained had a reasonable

assurance engagement been performed.

Our responsibilities in this regard are further described in

the section ‘Our responsibilities for the limited assurance

engagement on the sustainability statement’ of our report.

We are independent of TKH Group N.V. in accordance

with the Verordening inzake de onafhankelijkheid van

accountants bij assurance-opdrachten (ViO, Code of

Ethics for Professional Accountants, a regulation with

respect to independence) and other relevant

independence regulations in the Netherlands. This

includes that we do not perform any activities that could

result in a conﬂict of interest with our independent

assurance engagement and we are not involved in the

preparation of the sustainability statement, as doing so

may compromise our independence. Furthermore, we

have complied with the Verordening gedrags- en

beroepsregels accountants (VGBA, Dutch Code of Ethics

for Professional Accountants). The ViO and VGBA are at

least as demanding as the International code of ethics for

professional accountants (including International

independence standards) of the International Ethics

Standards Board for Accountants (the IESBA Code) as

relevant to limited assurance engagements on sustain-

ability statements of public interest entities in the

European Union.

We believe that the assurance evidence we have obtained

is sufficient and appropriate to provide a basis for our

conclusion.

Emphasis of matter

The sustainability statement has been prepared in a

context of new sustainability reporting standards,

requiring entity-specific interpretations and addressing

inherent measurement or evaluation uncertainties. In this

context, we want to emphasize the following matters:

225Annual Report 2024 TKH Group

Emphasis on the most significant uncertainties

affecting the quantitative metrics and monetary

amounts

We draw attention to section Value chain and sources of

estimation, and outcome uncertainty in the sustainability

statement that identifies the quantitative metrics and

monetary amounts that are subject to a high level of

measurement uncertainty and discloses information

about the sources of measurement uncertainty and the

assumptions, approximations and judgements TKH

Group N.V. has made in measuring these in compliance

with the ESRS. The comparability of sustainability

information between entities and over time may be

affected by the lack of historical sustainability information

in accordance with the ESRS and by the absence of a

uniform practice on which to draw, to evaluate and

measure this information. This allows for the application

of different, but acceptable, measurement techniques,

especially in the initial years.

Emphasis on the double materiality assessment

process

We draw attention to section Process to identify, assess,

and prioritize material impacts, risks, and opportunities in

the sustainability statement. This disclosure explains

future improvements in the ongoing due diligence and

double materiality assessment process, including robust

engagement with affected stakeholders. Due diligence is

an on-going practice that responds to and may trigger

changes in TKH Group N.V.’s strategy, business model,

activities, business relationships, operating, sourcing and

selling contexts. The double materiality assessment

process requires TKH Group N.V. to make key judgments

and use thresholds and may also be impacted in time by

sector-specific standards to be adopted. Therefore, the

sustainability statement may not include every impact,

risk and opportunity or additional entity-specific

disclosure that each individual stakeholder (group) may

consider important in its own particular assessment.

Our conclusion is not modified in respect of these matters.

Comparative information not assured

Sustainability information for Financial Year 2019 up to

Financial Year 2023 included in the sustainability

statement, has not been part of this limited assurance

engagement. Consequently, we do not provide any

assurance on the comparative information and thereto

related disclosures in the sustainability statement for

Financial Year 2019 up to Financial Year 2023.

Our conclusion is not modified in respect of this matter.

Limitation to the scope of our assurance

engagement

In reporting forward-looking information in accordance

with the ESRS, the executive board describes the

underlying assumptions and methods of producing the

information, as well as other factors that provide evidence

that the forward-looking information reﬂects the actual

plans or decisions made by TKH Group N.V. (actions).

Forward-looking information relates to events and actions

that have not yet occurred and may never occur. The

actual outcome is likely to be different since anticipated

events frequently do not occur as expected. We do not

provide assurance on the achievability of forward-looking

information.

Our conclusion is not modified in respect of this matter.

Responsibilities of the executive board and the

supervisory board for the sustainability statement

The executive board is responsible for the preparation of

the sustainability statement in accordance with the ESRS,

including the double materiality assessment process

carried out by TKH Group N.V. as the basis for the sustain

ability statement and disclosure of material impacts, risks

and opportunities in accordance with the ESRS. As part of

the preparation of the sustainability statement, the execu

tive board is responsible for compliance with the reporting

requirements provided for in Article 8 of Regulation (EU)

2020/852 (Taxonomy Regulation). The executive board is

also responsible for selecting and applying additional

entity-specific disclosures to enable users to understand

TKH Group N.V.’s sustainability-related impacts, risks or

opportunities and for determining that these additional

entity-specific disclosures are suitable in the circum

stances and in accordance with the ESRS.

Furthermore, the executive board is responsible for such

internal control as it determines is necessary to enable

the preparation of the sustainability statement that is free

from material misstatement, whether due to fraud or error.

The supervisory board is responsible for overseeing the

sustainability reporting process including the double

materiality assessment process carried out by TKH Group

N.V.

Our responsibilities for the limited assurance

engagement on the sustainability statement

Our responsibility is to plan and perform the limited

assurance engagement in a manner that allows us to

TKH Group Annual Report 2024226

obtain sufficient and appropriate assurance evidence for

our conclusion.

We apply the applicable quality management

requirements pursuant to the Nadere voorschriften

kwaliteitsmanagement (NVKM, regulations for quality

management) and the International Standard on Quality

Management (ISQM) 1, and accordingly maintain a

comprehensive system of quality management including

documented policies and procedures regarding

compliance with ethical requirements, professional

standards and other relevant legal and regulatory

requirements.

Our limited assurance engagement included amongst

others:

• Performing inquiries and an analysis of the external

environment and obtaining an understanding of relevant

sustainability themes and issues, the characteristics of

TKH Group N.V., its activities and the value chain and

its key intangible resources in order to assess the

double materiality assessment process carried out by

TKH Group N.V. as the basis for the sustainability

statement and disclosure of all material sustainability-

related impacts, risks and opportunities in accordance

with the ESRS

• Obtaining through inquiries a general understanding of

the internal control environment, TKH Group N.V.’s

processes for gathering and reporting entity-related

and value chain information, the information systems

and TKH Group N.V.’s risk assessment process relevant

to the preparation of the sustainability statement and

for identifying TKH Group N.V.’s activities, determining

eligible and aligned economic activities and prepare the

disclosures provided for in Article 8 of Regulation (EU)

2020/852 (Taxonomy Regulation), without obtaining

assurance information about the implementation or

testing the operating effectiveness of controls

• Assessing the double materiality assessment process

carried out by TKH Group N.V. and identifying and

assessing areas of the sustainability statement,

including the disclosures provided for in Article8 of

Regulation (EU) 2020/852 (Taxonomy Regulation),

where misleading or unbalanced information or material

misstatements, whether due to fraud or error, are likely

to arise (‘selected disclosures’). Designing and

performing further assurance procedures aimed at

assessing that the sustainability statement is free from

material misstatements responsive to this risk analysis

• Considering whether the description of the double

materiality assessment process in the sustainability

statement made by the executive board appears

consistent with the process carried out by TKH Group

N.V.

• Determining the nature and extent of the procedures to

be performed to confirm our understanding of the

reporting process at corporate and local level. For this,

the nature, extent and/or risk profile of these sites are

decisive. Based thereon, we selected the operating

companies VMI Holland B.V. (Smart Manufacturing

systems), EFB Elektronik (Smart Connectivity systems)

and LMI Technologies (Smart Vision systems). The visits

(physical or virtual) are aimed at, on a local level,

obtaining an understanding of the control environment

and reporting processes to corporate level related to

sustainability information

• Performing analytical review procedures on quantitative

information in the sustainability statement, including

consideration of data and trends

• Assessing whether TKH Group N.V.’s methods for

developing estimates are appropriate and have been

consistently applied for selected disclosures. We

considered data and trends, however our procedures

did not include testing the data on which the estimates

are based or separately developing our own estimates

against which to evaluate the executive board’s

estimates

• Analyzing, on a limited sample basis, relevant internal

and external documentation available to TKH Group

N.V. (including publicly available information or

information from actors throughout its value chain) for

selected disclosures

• Reading the other information in the annual report to

identify material inconsistencies, if any, with the

sustainability statement

• Considering whether the disclosures provided to

address the reporting requirements provided for in

Article 8 of Regulation (EU) 2020/852 (Taxonomy

Regulation) for each of the environmental objectives,

reconcile with the underlying records of TKH Group N.V.

and are consistent or coherent with the sustainability

statement, appear reasonable, in particular whether the

eligible economic activities meet the cumulative

conditions to qualify as aligned and whether the

technical screening criteria are met, and whether the

key performance indicators disclosures have been

defined and calculated in accordance with the

Taxonomy reference framework, and comply with the

reporting requirements provided for in Article 8 of

227Annual Report 2024 TKH Group

Regulation (EU) 2020/852 (Taxonomy Regulation),

including the format in which the activities are

presented

• Considering the overall presentation, structure and

fundamental qualitative characteristics of information

(relevance and faithful representation: complete, neutral

and accurate) reported in the sustainability statement,

including the reporting requirements provided for in

Article 8 of Regulation (EU) 2020/852 (Taxonomy

Regulation)

• Considering, based on our limited assurance

procedures and evaluation of the evidence obtained,

whether the sustainability statement as a whole, is free

from material misstatements and prepared in

accordance with the ESRS

Communication

We communicate with the supervisory board regarding,

among other matters, the planned scope and timing of

the assurance engagement and significant findings that

we identify during our assurance engagement.

Amsterdam, 3 March 2025

EY Accountants B.V.

Signed by J. Niewold

TKH Group Annual Report 2024228

Stichting Administratiekantoor TKH Group

The purpose of 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 depositary receipts for shares. In

accordance with the provisions of article 7.1.3 of the

Terms and Conditions of TKH Trust Foundation Office

governing the shares of TKH, TKH Trust Foundation

Office reports on the activities during the year under

review (2024) exclusively in relation to the administration

of shares for which depositary receipts were issued. The

total nominal value of the ordinary shares of TKH held in

administration amounted to €10,517,434.00 on December

31, 2024, in exchange for which 42,069,736 depositary

receipts for shares

, 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. The topics discussed in

the meeting on March 21 were the Annual General

Meeting of Shareholders (“AGM”) 2024 and the TKH

Annual Report 2023. The annual accounts 2023 of TKH

Trust Foundation Office have been discussed, approved,

and adopted. The retirement schedule was also

discussed, which showed that none of the Board

members is eligible to resign in 2024.

During the meeting on May 7, the agenda items of the

AGM 2024 were discussed. The Board decided on its

preliminary voting intentions prior to the actual

deliberations of the meeting. Holders of depositary

receipts for shares in the capital of the company were

given the opportunity to vote independently on the

agenda items voted on at the AGM in respect of the

shares represented by their depositary receipts and

subject to the relevant statutory provisions. Holders of

depositary receipts of shares collectively representing

54.8% of the capital entitled to vote requested a proxy

from TKH Trust Foundation Office to vote independently

on the shares in question by giving voting instructions to

TKH Trust Foundation Office. TKH Trust Foundation

Office voted for the remaining 37.0% of the capital

entitled to vote. The Board of TKH Trust Foundation

Office decided to vote in favor of all agenda items for

those shares for which no voting instructions were

received.

In the meeting of September 20, 2024, the Executive

Board of TKH gave an explanation of the published

interim figures for 2024. The budget for the next financial

year of TKH Trust Foundation Office was also discussed

and approved.

The Board of TKH Trust Foundation Office

The Board of TKH Trust Foundation Office currently

consists of three independent members:

•

Mr. G.W.Ch. Visser, Chairman

•

Mr. J.S.T. Tiemstra

•

Mr. C.M. Jaski

The 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 31, 2025

TKH Trust Foundation Office

The Board

Statement of independence

The Executive Board of TKH Group N.V. and the Board of

TKH Trust Foundation Office, jointly and severally, state

that they are of the opinion that TKH Trust Foundation

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 31, 2025

TKH Group N.V.

The Executive Board

Haaksbergen, March 31, 2025

TKH Trust Foundation Office

The Board

1 The number of depositary receipts for shares has decreased by 8,148 compared to December 31, 2023, due to the conversion of 8,148 depositary

receipts for shares into ordinary shares.

229Annual Report 2024 TKH Group

Stichting Continuïteit TKH

The purpose of Stichting Continuïteit TKH (“Continuity

Foundation”) is to serve the interests of TKH Group N.V.

(“TKH”) and all the businesses affiliated with TKH, in such

a way that those interests are safeguarded to the greatest

possible extent and that any inﬂuences which could

undermine the independence, continuity, or identity of

TKH and its affiliated companies in conﬂict with those

interests are averted to the greatest possible extent, as

well as to avoid any activities related to or conductive to

the above.

By means of a call option, TKH has granted the

Continuity 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 the placement of the protective

shares, or 100% should the limitation on the conversion

of depositary receipts cease to apply. The protective

shares should not remain outstanding longer than is

strictly necessary. In the event that TKH shareholders

acquire a degree of control that is considered 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 2024.

TKH has also granted 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 TKH and the state of affairs

prevailing in TKH, and that in 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 31, 2025

Continuity Foundation

The Board

Statement of Independence

The Executive Board of TKH Group N.V. and the Board of

the Continuity Foundation, jointly and severally, state that

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 31, 2025

TKH Group N.V.

The Executive Board

Haaksbergen, March 31, 2025

Continuity Foundation

The Board

TKH Group Annual Report 2024230

10 years overview

In millions of euros

2024 2023 2022 2021 2020 2019 2018 2017 2016 2015

Consolidated statement of profit and loss

Turnover 1,713 1,847 1,817 1,524 1,289 1,490 1,458 1,485 1,341 1,375

Raw materials, consumables, trade products and subcontracted work 824 928 959 787 655 771 768 817 710 743

Added value 889 919 858 737 634 718 690 668 631 632

Personnel expenses 474 476 435 378 345 369 352 347 331 326

Other operating expenses 159 156 140 124 108 133 137 147 131 133

EBITDA 256 287 283 235 181 216 201 174 169 173

Depreciation

52 50 48 45 46 45 26 25 22 22

EBITA excluding one-off income and expenses 204 237 235 190 136 171 175 149 147 151

One-off income and expenses 4 2 -10 7 18 4 6

EBITA 200 235 245 190 129 154 171 143 147 151

Impairments 8 4 2 4 5 2 2 1 1

Amortization 61 57 55 51 54 50 40 37 33 32

Operating result 131 174 190 137 71 99 129 104 113 118

Financial result -8 29 -9 -6 -14 -10 -4 -7 -7

Fair value changes of financial liability for earn-out and put options of holders of

non-controlling interests 1 -2 4 1

Result on ordinary activities before taxes 124 203 181 129 57 89 125 108 107 111

Taxes 24 37 44 34 15 20 27 20 20 23

Net result for the period from continued operations 100 166 137 95 42 69 98 88 87 88

Result after tax from discontinued operations 45 11

Non-controlling interests 1 1 2

Attributable to shareholders 100 166 137 95 42 114 109 87 86 86

Key figures 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015

EBITA/Turnover (ROS)

3 4

11.9 12.8 12.9 12.4 10.5 11.6 12.0 10.1 10.9 11.0

Net result before amortization and one-off income and expenses/Group equity

3 4

11.2 15.6 19.9 15.8 10.6 14.9 17.6 16.1 16.5 19.3

EBITA/Average capital employed (ROCE) 15.2 19.8 23.2 20.5 14.0 17.4 21.3 19.7 20.1 22.1

Net debt/EBITDA ratio

3 4

2.0 1.8 1.1 0.9 1.6 1.5 1.4 0.9 1.0 0.9

Net result before amortization and one-off income and expenses/Turnover

3 4

5.8 7.1 7.9 7.5 5.5 7.1 7.8 6.5 7.2 7.4

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 for

the years 2015 up to 2016.

4 Excluding one-off income and expenses. The one-off in 2023 and 2024 mainly concern restructuring, acquisition and

divestment costs. The one-off income in 2022 mainly concern book profit on sale of buildings. 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.

231Annual Report 2024 TKH Group

In millions of euros

2024 2023 2022 2021 2020 2019 2018 2017 2016 2015

Consolidated balance sheet

Intangible assets and goodwill 611 566 534 537 577 596 544 392 395 400

Property, plant and equipment

486 436 295 222 220 231 246 229 215 196

Right-of-use assets 78 84 75 69 77 81

Financial non-current assets 48 53 26 45 42 52 31 28 46 34

Total non-current assets 1,223 1,138 930 873 916 960 821 649 656 630

Inventories 399 403 386 295 237 239 267 219 207 194

Trade and other receivables 439 471 459 341 286 300 356 327 295 248

Cash and Cash equivalents 126 94 185 100 122 79 83 88 88 179

Total current assets 963 968 1,030 736 645 618 706 634 590 621

Assets held for sale 27 21 109 88 5 39

Total assets 2,213 2,128 2,068 1,697 1,566 1,617 1,527 1,283 1,246 1,251

Shareholders' equity

883 836 787 722 662 705 647 594 574 521

Non-controlling interests 1 9 9 9

Group equity 883 836 787 722 662 705 648 603 583 530

Provisions

95 93 84 90 86 97 86 69 74 71

Non-current interest-bearing loans and borrowings 620 572 503 334 410 416 239 187 214 223

Current interest-bearing loans and borrowings 90 76 70 48 57 58 171 57 52 126

Other financial liabilities 6 3 4 7 8 9 5 15 23 27

Other current liabilities 510 545 587 460 343 319 378 352 300 274

Liabilities directly associated with assets held for sale 9 3 33 37 13

Total equity and liabilities 2,213 2,128 2,068 1,697 1,566 1,617 1,527 1,283 1,246 1,251

Other information in euros (unless stated otherwise) 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015

Solvency (in %) 40 39 38 43 42 44 42 47 47 42

Investments in property, plant and equipment 89 179 105 30 28 32 42 41 46 38

Depreciations of property, plant and equipment 36 33 32 30 30 29 28 24 23 23

Cash ﬂow from operating activities 196 153 116 199 188 182 127 160 103 182

Number of shares outstanding and held by third parties at year end (x 1,000) 39,873 39,798 41,001 41,178 41,487 41,999 42,003 42,045 42,161 41,724

Net result per ordinary share of €0.25 2.50 4.07 3.34 2.31 1.14 2.72 2.58 2.05 2.04 2.07

Net profit before amortization and one-off income and expenses from continued

operations attributable to shareholders 2.48 3.21 3.50 2.77 1.69 2.51 2.72 2.27 2.25 2.40

Dividend per share 1.50 1.70 1.65 1.50 1.00 1.50 1.40 1.20 1.10 1.10

Highest share price 44.78 49.10 54.90 56.15 51.30 55.05 60.15 56.68 38.14 40.50

Lowest share price 30.18 33.64 31.24 37.88 23.42 38.82 38.36 36.45 28.47 25.35

Share price at year-end 33.32 39.50 37.16 55.50 39.54 49.90 40.70 52.93 37.59 37.44

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 2015 up to 2016.

TKH Group Annual Report 2024232

Alternative performance measures

Net profit before amortization of intangible non-current assets related to

acquisitions (after tax) and one-off income and expenses attributable to

shareholders (summarized as: ‘Adjusted net profit’)

Reference is made to note 32 of the consolidated financial statements for a reconciliation and

calculation. TKH deems this measure useful in comparing the performance to other

companies in comparable industries.

Capital employed and ROCE (return on capital employed)

Capital employed: Group equity plus Interest-bearing loans and borrowings current and

non-current, less total lease liabilities and less cash and cash equivalents.

Return on capital employed: is the EBITA for the last 12 months divided by the average of

capital employed at the beginning and at the end of the period.

The measure provides useful information to management and investors to evaluate our ability

to allocate capital to generate returns.

in thousands of euros Notes

2024 2023

Group equity 883,087 835,713

Add: Interest-bearing loans and borrowings, non-current 620,085 572,368

Add: Interest-bearing loans and borrowings, current 90,270 75,864

Less: Total lease liabilities

-87,725 -87,154

Less: Cash and cash equivalents -125,629 -93,697

Capital employed current year 1,380,088 1,303,094

Capital employed previous year 1,303,094 1,093,732

Average capital employed 1,341,591 1,198,413

EBITA

203,916 237,033

ROCE 15.2% 19.8%

Net interest bearing debt and Debt leverage ratio (net interesting bearing debt/

EBITDA)

Net interest bearing debt: Bank loans reported under non-current liabilities plus lease

liabilities plus borrowings reported under current liabilities less cash and cash equivalents.

Debt leverage ratio: Net interest bearing debt according to bank covenants, divided by

EBITDA according to bank covenants.

This measure provides insight in the financial solidity of TKH and is a measure of our ability to

operate within the covenants set by our banks.

TKH uses alternative performance measures to measure and monitor its financial and

operational performance. These measures are used in this Annual Report but are not defined

in any law or in the International Financial Reporting Standards (IFRS). As far as non-IFRS

financial measures are not used in the financial statements they have not been audited or

reviewed by our external auditors.

The measures TKH deems to be relevant and reliable alternative performance measures are

included in this chapter of the Annual Report. We consider these measures important

supplemental measures of TKHs’ performance and believes that they are widely used in the

industries in which TKH operates as a means of evaluating a company’s performance. TKH

believes that an understanding of its turnover development, profitability, financial strength

and funding requirements is enhanced by reporting the following non-IFRS measures.

Added value

otal turnover less the cost of ‘Raw materials, consumables, trade products and subcontracted

work’ for products sold and services delivered. Added value is presented as an absolute

value, as well as a percentage from turnover.

Reference is made to note 22 of the consolidated financial statements for a reconciliation and

calculation. TKH deems this a relevant performance measure as it is an indicator of the

pricing power TKH has in its specific markets and the ability to create added value for its

customers.

EBITA and EBITDA and ROS (return on sales)

EBITA: Earnings before interest, taxes, impairments, and amortization.

EBITDA: Earnings before interest, taxes, impairments, depreciation, and amortization.

ROS: EBITA excluding one-off income and expenses, divided by total turnover as a

percentage.

Reference is made to note 22 of the consolidated financial statements for a reconciliation and

calculation.

Measures as EBITA and EBITDA are broadly used by analysts, rating agencies and investors

in their evaluations. One-off income and expenses are excluded when using a measure to

improve insight in the underlying operational performance of our activities.

233Annual Report 2024 TKH Group

in thousands of euros Notes

2024 2023

Net interest bearing debt 18 581,768 554,146

Less: adjustment according to bank covenants -85,741 -84,952

Net interest bearing debt according to bank covenants 496,027 469,194

EBITDA

22 255,919 285,861

adjustment according to bank covenants -13,077 -23,516

EBITDA according to bank covenants 242,842 262,345

Debt leverage ratio 2.0 1.8

The ‘adjustments according to bank covenants’ mainly relate to the exclusion of lease

liabilities from the calculation of the net interest bearing debt and some adjustments in

determining EBITDA. All based on specific arrangements as included in the credit facilities

with our banks.

Dividend payout ratio ‘Adjusted net profit’

This ratio indicates the portion of net profit that is paid out to shareholders: (dividend/net

profit before amortization and one-off income and expenses attributable to shareholders )

times 100.

Dividend payout ratio ‘Net profit’

This ratio indicates the portion of net result that is paid out to shareholders ((dividend/net

result) times 100).

TKH deems this a useful measure for investors to compare our dividend yields and financial

performance with peers.

Notes

2024 2023

Proposed dividend per share

9 comp

1.50 1.70

Ordinary earnings per share before amortization and one-off

income and expenses (in €)

32 2.48 3.21

Payout ratio 'Adjusted net profit' 60.5% 53.0%

Notes

2024 2023

Proposed dividend per share

9 comp

1.50 1.70

Ordinary earnings per share (in €)

2.50 4.07

Payout ratio Net result 60.0% 41.7%

Innovations %

Last 12 months turnover from new products launched in the previous two years, divided by

last 12 months turnover. TKH positions itself as an innovative technology company. This

measure provides useful information of the ability of TKH to bring innovations to the market

and translate these in turnover.

Notes

2024 2023

Turnover from innovations 300,889 297,461

Total Turnover 1,712,735 1,847,532

Turnover from innovations % 17.6% 16.1%

Normalized effective tax rate

Tax on result divided by Result before tax less the impact of Share in result of associates,

Result on sale of associates and subsidiaries and Fair value changes of financial liability for

earn-out and put options of shareholders of non-controlling interests.

The mentioned elements can hinder the insight in the tax burden TKH incurs as those are

non-taxable. Therefore the normalized effective tax rate is deemed an useful measure in

reporting our tax burden.

Notes

2024 2023

Result before tax 123,531 202,942

Less: Share in result of associates -249 3,309

Less: Result on sale of associates and subsidiaries -24,221 -54,802

Less: Fair value changes of financial liability for earn-out and put

options of shareholders of non-controlling interests -733 146

Normalized result before tax 98,328 151,595

Tax on result 24,000 37,180

Normalized effective tax rate 24.4% 24.6%

One-off income and expenses

Income and expense items of such nature, size and/or frequency of occurrence that their

disclosure is relevant to explain TKH performance, including impairments, restructuring costs

and gains and losses from acquisition and disposal. One-off income and expenses are

identified both within the operating result, result of associates, result from divestments and

fair value changes of financial liability for earn-out and put options of shareholders of

non-controlling interests.One-off income and expenses are excluded when using as a

measure to improve insight in the underlying performance of our activities.

Reference is made to note 32 of the consolidated financial statements for further details.

Operating expenses excluding one-off expenses, amortization and impairments

This relates to the operating expenses excluding one-off expenses, amortization and

impairments. This is used when reconciling between Added value and EBITA excluding the

one-off income and expenses.

TKH Group Annual Report 2024234

Notes

2024 2023

Total Operating expenses 1,582,127 1,673,063

Less: Raw materials, consumables, trade products and subcontracted work -824,229 -928,220

Less: One-off income and expenses

22 -3,996 -1,983

Less: Amortization -60,808 -56,860

Less: Impairments -8,504 -3,720

Operating expenses (excluding one-off expenses, amortization and impairments) 684,590 682,280

Order book and Order intake

Expected future turnover with respect to contractual performance obligations that have not

yet (or partially) been satisfied at balance sheet date.

Reference is made to note 9 of the consolidated financial statements for further detail.

The order intake is calculated as follows:

in thousands of euros

(unless stated otherwise)

Smart Vision Systems Smart Manufacturing Systems Smart Connectivity Systems Other & eliminations Total

2024 2023 2024 2023 2024 2023 2024 2023 2024 2023

Order book at 1 January 124,035 159,173 631,285 572,989 214,784 239,744 1 1 970,105 971,907

Acquisitions and divestments 343 10,896 -37,231 3,144 -1 0 -33,745 10,896

Turnover -489,597 -500,526 -608,843 -573,563 -631,900 -800,540 17,605 27,097 -1,712,735 -1,847,532

Order intake 505,080 454,492 516,295 631,859 907,611 775,580 -17,607 -27,097 1,911,379 1,834,834

Order book at 31 December 139,861 124,035 501,506 631,285 493,638 214,784 -2 1 1,135,004 970,105

Organic turnover growth

Growth of turnover corrected for the impact of acquisitions, divestments and foreign

exchange effects from translating turnover in foreign currencies. The correction for

divestments is determined by adjusting ‘Turnover growth’ for the turnover of the previous

year period for which the divested company was no longer part of the consolidation in the

current year. The correction for acquisitions is determined by adjusting ‘Turnover growth’ for

the turnover of the current year period for which the acquired company was not yet part of

the consolidation in the previous year. This is used as a measure to improve insight in and

comparability of our turnover development which can potentially be hindered by the effects

of acquisitions, divestments and foreign exchange effects.

in thousands of euros

(unless stated otherwise)

Notes

Smart Vision

Systems Δ in %

Smart

Manufacturing

Systems Δ in %

Smart

Connectivity

Systems Δ in %

Other &

eliminations

Total

2024 Δ in %

Turnover current year

489,597 608,843 631,900 -17,605 1,712,735

Turnover previous year

500,526 573,563 800,540 -27,097 1,847,532

Turnover growth -10,929 -2.2% 35,280 6.2% -168,640 -21.1% 9,492 -134,797 -7.3%

Impact of acquisitions & divestments -10,048 -2.0% 27,895 4.9% 93,514 11.7% 0 111,361 6.0%

Impact of foreign exchange effects -1,117 -0.2% 506 0.1% 1,161 0.1% 0 550 0.0%

Organic turnover growth -22,094 -4.4% 63,681 11.1% -73,965 -9.2% 9,492 -22,886 -1.2%

235Annual Report 2024 TKH Group

Organic EBITA growth

Growth of EBITA corrected for the impact of acquisitions, divestments and foreign exchange

effects from translating EBITA in foreign currencies. The correction for divestments is

determined by adjusting ‘EBITA growth’ for the EBITA of the previous year period for which

the divested company was no longer part of the consolidation in the current year. The

correction for acquisitions is determined by adjusting ‘EBITA growth’ for the EBITA of the

Working capital ratio

Working capital ratio is calculated by dividing working capital by turnover.

in thousands of euros (unless stated otherwise)

2024 2023

Current assets 963,361 968,318

Less: Cash and cash equivalents -125,629 -93,697

Current liabilities -622,177 -641,377

Add: Current interest-bearing loans and borrowings 90,270 75,864

Working capital 305,825 309,108

Turnover 1,712,735 1,847,532

Working capital ratio 17.9% 16.7%

current year period for which the acquired company was not yet part of the consolidation in

the previous year. This is used as a measure to improve insight in and comparability of our

EBITA development which can potentially be hindered by the effects of acquisitions,

divestments and foreign exchange effects.

in thousands of euros

(unless stated otherwise)

Notes

Smart Vision

Systems Δ in %

Smart

Manufacturing

Systems Δ in %

Smart

Connectivity

Systems Δ in %

Other &

eliminations

Total

2024 Δ in %

EBITA current year

77,732 116,113 30,920 -20,849 203,916

EBITA previous year

85,886 90,636 81,132 -20,621 237,033

EBITA growth -8,154 -9.5% 25,477 28.1% -50,212 -61.9% -228 -33,117 -14.0%

Impact of acquisitions & divestments -2,645 -3.1% 2,573 2.8% 15,014 18.5% 0 14,942 6.3%

Impact of foreign exchange effects -170 -0.2% 131 0.1% 393 0.5% 0 354 0.1%

Organic EBITA growth -10,969 -12.8% 28,181 31.1% -34,805 -42.9% -228 -17,821 -7.5%

Solvency

Percentage of the Total group equity relative to the Total equity and liabilities. This percentage

is presented to express the financial strength of TKH.

Notes

2024 2023

Total group equity 883,087 835,713

Total equity and liabilities 2,213,341 2,127,779

Solvency 39.9% 39.3%

Turnover related to the sustainable development goals

Total of TKH’s portfolio’s turnover linked to one of the 17 SDGs (Sustainable Developments

Goals), adopted by all United Nations Member States in 2015. This is calculated by allocating

TKH’s portfolio based on internal reporting of turnover by end-market combined with

portfolio information included in quarterly reports of operating companies. This measure

provides useful information about the ability of TKH to bring portfolio to the market which is

connected to one of the SDGs. Reference is also made to the chapter ‘Sustainability

Statements’ which includes a paragraph 'Sustainable Development Goals'.

Notes

2024 2023

Turnover linked to SDGs 1,226,631 1,296,403

Total Turnover 1,712,735 1,847,532

Turnover linked to SDGs % 71.6% 70.2%

TKH Group Annual Report 2024236

Editor and text

TKH Group NV, Haaksbergen

Design

Monter, Amsterdam

Photography

Maarten de Groot (page 4,47), Dirk Verwoerd (page 37,38).

For actual information about TKH Group and our sustainability

developments please visit our website: www.tkhgroup.com.

237Annual Report 2024 TKH Group