Balance sheet analysis

The following table sets out the main items in the Company's consolidated statement of financial position for the financial years presented for purposes of the analysis by the Executive Board. Further details of the financial position of the Company are presented in the Consolidated Statement of Financial Position, starting on page 46 and the Notes to the Consolidated Financial Statements, starting on page 51.

Cash Position

The Company's cash position has decreased mainly as a consequence of the positive cash flows from investing activities (related to the sale of the business operations), offset by negative cash flows from financing activities (related to dividend payouts) and negative cash flows from operating activities.

Working capital

The Company's working capital as at September 30, 2023 is not comparable anymore to the situation as at September 30, 2022 as the Company no longer has active business operations. As such, the working capital (calculated as current assets including cash and cash equivalents, less current liabilities) as at September 30, 2023 is mainly comprised of the € 3 million receivable related to the divestment of TIE Kinetix Holding B.V., a VAT receivable and cash in bank accounts, offset by some payables, which the Company has ample liquidity to satisfy. As such, the Company has a healthy current ratio as at September 30, 2023 - calculated as current assets (including cash and cash equivalents) divided by current liabilities. The current ratio is a ratio that measures the Company's ability to meet its short-term obligations and is a measure of the Company's liquidity. 

Equity

The Company's equity decreased. While the result for the year was a profit of € 55.6 million, dividends amounting to € 62.96 million have been distributed. Warrant holders in the Company exercised their rights resulting in a consideration received for new shares issued of € 0.5 million. Further details on the movements in Group equity are detailed in the Consolidated Statement of Changes in Equity, starting on page 49 and the Notes to the Consolidated Financial Statements, starting on page 51

The equity ratio - calculated as total equity divided by total assets - has increased as the Company is almost fully financed with equity as a result of the sale of the business operations. The equity ratio indicates the relative proportion of equity used to finance the Company's assets and is a measure of the Company's solvency.

Cash flow analysis

The following table sets out the main items in the Company's consolidated statement of cash flows for the financial years presented for purposes of the analysis by the Executive Board. Further details of the results are presented in the Consolidated Statement of Cash Flows, starting on page 50 and the Notes to the Consolidated Financial Statements, starting on page 51. The analysis includes both cash flows from continuing and discontinued operations.

Responsibilities

It is the duty of the Supervisory Board of Titan N.V. to exercise supervision over the policies adopted by the Executive Board of Titan N.V. (the “Executive Board”) and over the general conduct of the business of Titan N.V. (the “Company”). Furthermore, the Supervisory Board shall provide the Executive Board with advice. In the performance of their duty, the Supervisory Board members are guided by the interests of the Company, and take into account the relevant interests of all of the Company’s stakeholders. The Supervisory Board has due regard for the corporate social responsibility issues that are relevant to the Company. The Supervisory Board is responsible for the quality of its own performance.

Desired expertise and background

The composition of the Supervisory Board shall be such that the Supervisory Board members are able to act critically and independently of one another and of the Executive Board and any sectional interest. Each Supervisory Board member must be capable of assessing the broad outline of the overall strategy of the Company and its business. As a whole, the composition shall be such that it enables the Supervisory Board to best carry out the variety of its responsibilities and duties to the Company and other stakeholders.

The Supervisory Board shall be constituted in a balanced manner as to reflect the nature and variety of the Company’s businesses and the desirability to have available expertise in such fields as finance, economic, and legal/corporate governance. All members should have proven expertise at university level and substantial (over 20 years) working experience. At least one of the members shall meet the requirements of a financial expert. At least one of the members shall have available expertise in legal, management, and/or corporate governance.

Desired diverse composition

Our diversity policy and diversity aspects that are considered are included in the section Corporate Governance, starting on page 23. The objective of our diversity policy with respect to the composition of the Supervisory Board is to ensure that the Board consists of members with the right expertise, experience and competencies to fulfill their roles and complement each other. In addition, we believe that a balanced distribution among men and women contributes and leads to better decision-making. As a corresponding target, at least one third of our Supervisory Board should consist of women (corresponding to at least 1 woman given the current size of our Supervisory Board).

Size

In principle, the number of members of the Supervisory Board shall amount to at least three (3). The current composition is in line with this.

Independence

Independence is reported on in the Report from the Supervisory Board. A Supervisory Board member is deemed independent if the following criteria of dependence do not apply to him. The criteria are that the Supervisory Board member concerned, his/her spouse, registered partner or other life companion, foster child or relative by blood or marriage up to the second degree:

• Has been an employee or member of the Executive Board of the Company or an affiliated company in the five years prior to their appointment as Supervisory Board member;
• Receives personal financial compensation from the Company, or an affiliated company, other than the compensation received for the work performed as a Supervisory Board member and in so far as this is not keeping with the ordinary business operations;
• Has had an important business relationship with the Company or an affiliated company in the year prior to the appointment;
• Is a member of management board of a company in which a member of the Executive Board is a supervisory board member;
• Holds at least ten per cent of the shares in the Company's capital (including shares held by natural or

To the shareholders,

This report reflects an overview of what was discussed with the Executive Board. In the financial year 2023, the Supervisory Board met 10 times and no board members were absent. During the financial year 2023, several informal meetings were held.

The Supervisory Board advised the Executive Board on the future development and sale of the FLOW proposition and the development of the strategy for growth of the Company by focusing on 100% digitalization and EDI/Integration. This has been taking shape in the past years and continued in 2023. The organization was aligned for this focus and to successfully implement the strategy of 100% digitalization. The development of the FLOW platform continued and actions have been taken in 2023 to accelerate sales growth, with the introduction of the customer success teams, new business teams and a successful indirect channel strategy.

In the midst of the successful execution of the high growth strategy, the company entered into negotiations resulting in the sale of its business to SPS Commerce Inc.

The Supervisory Board was closely involved in the sale of the business to SPS Commerce Inc., advising the Executive Board on the strategic direction to be taken, on the terms of the sales agreement and liaising with the shareholders to obtain their perspective on this development. Ultimately, the Supervisory Board advised the shareholders to agree to the terms of this transaction at the Extra Ordinary Meeting of Shareholders, convened for September 6, 2023.

Organizational aspects

The Supervisory Board consists of three members. For detailed information of each individual member, reference is made to the section The Supervisory Board, starting on page 13. Except for Mr. Nordling, none of the members of the Supervisory Board hold shares in Titan N.V. Mr. Nordling owns (indirectly) more than 10% of the shares in the Company.

The Supervisory Board is construed in line with best practices provisions as stated in chapter II of the Dutch Corporate Governance Code (dated December 8, 2016). With reference to the Code, members are considered independent, with the exception of Mr. Nordling due to his shareholding. The Supervisory Board as a whole is considered to be independent.

The Supervisory Board notes that the composition of the Supervisory Board is in line with the terms of reference and required profile of the Supervisory Board. Each board member has his specific field of complementary expertise.

Term of appointment

A member of the Supervisory Board will be appointed for a maximum period of four years. On expiry of the four-year term, a member of the Supervisory Board may be reappointed for successive terms of four years each.

On July 13, 2018, all members of the new Supervisory Board were appointed for an initial period of four years, which was later extended at the most recent General Meeting. The current terms for each member are as follows:

• Mr. Georg Werger: Terms ends March 31, 2027;
• Mrs. Gerdy Harteveld: Term ends March 31, 2027;
• Mr. Per Nordling: Term ends March 29, 2028.

General business

The Supervisory Board supervised and monitored the following during the year:

The achievement of the objectives of the Company and its management

The Supervisory Board discussed the objectives of the Company and monitored the development of the results and the actual results versus Company strategy and targets set. The Supervisory Board monitored the cost structure of the Company and advised the Executive Board on all relevant aspects. Unlike prior years, Titan did not start the year with positive cash flows from operating activities, on account of the continuing investments made and expenses incurred to prepare for further growth.

The corporate risk profile and the internal risk management and control system

The Supervisory Board discussed the Company’s risk profile with the Executive Board and with the external independent auditor. The Supervisory Board recognizes that the risk profile of Titan is adequately understood, monitored and acted upon by the Executive Board in a sufficient way. All systems used for the delivery of services to the Company’s customers were carefully screened on their security levels to ensure that all services comply with the highest security levels.

individual’s responsibilities, the individual as well as collective performance, developments in the business environment and developments in the salary level of personnel in the Company. The Supervisory Board shall evaluate the remuneration structure regularly in order to ensure that it meets the objective of the Remuneration Policy. The contract with the members of the Executive Board includes an arrangement for the reimbursement of all reasonable expenses incurred in the performance of their duties. The variable compensation is designed to strengthen the Executive Board member’s commitment to the Company and its objectives. The variable compensation is linked to previously determined and objectively measurable performance targets. The Supervisory Board determined the performance targets for each individual member of the Executive Board, based on a long-term operating plan. These performance targets reflect the individual responsibilities of the member of the Executive Board, such as, but not limited to, financial results and/or operational results per focus area. The performance targets are based on the Company’s strategic agenda, which includes financial targets.

Since these targets contain commercially sensitive information, the exact targets shall not be disclosed. However, the information is available for the external independent auditor of Titan.

The Executive Board updates the Supervisory Board on the achievement against the individual performance criteria on a quarterly basis. After the end of a financial year, the Executive Board prepared an evaluation of the past financial year. The evaluation includes the extent to which the individual performance targets have been met. On the basis of this evaluation and its own investigation, the Supervisory Board reviews the performance of the members of the Executive Board and decides whether the performance targets are met and therefore a member of the Executive Board should receive his variable compensation. The Supervisory Board may take special circumstances into consideration.

The management agreements of the members of the Executive Board were concluded with a subsidiary of Titan N.V. and as such have been transferred to SPS Commerce Inc. with the transfer of the business on September 13, 2023. Consequently, Titan N.V. group has remunerated the members of the Executive Board with the Base Management Fee until September 13, 2023.

Due to sale of the business per September 13, 2023, no expenses for short-term incentives have been incurred in 2023. No expenses have been incurred for 2023 long-term incentives.

In FY 2023, in total 9,001 Performance Shares were awarded to the Executive Board for their performance in FY 2022. As the grant occurred after the financial year 2022 balance sheet date, it has been accounted for in financial year 2023.

Termination of employment

The contracts with the members of the Executive Board include an arrangement on the notice period required to terminate the contract. The contracts with the members of the Executive Board will not be renewed or will be terminated if the member of the Executive Board reaches the age of retirement, on the date as provided in the relevant pension scheme. Upon termination of the contract by the Company (or by a competent court on request of the Company) and provided that the special circumstances as described in the contracts with the members of the Executive Board do not apply, the member of the Executive Board will be entitled to a severance payment.

Severance Package

Titan N.V. does not have any written contracts with the members of the Executive Board as per year end (September 30, 2023).

Shares

Titan N.V. does not have any written contracts with the members of the Executive Board as per year end (September 30, 2023).

Loans

Titan N.V. does not have any written contracts with the members of the Executive Board as per year end (September 30, 2023).

Remuneration report

The remuneration of the Executive Board and Supervisory Board is disclosed in detail in the Remuneration Report, starting on page 19. Reference is also made to the Related party disclosures, starting on page 88 of the consolidated financial statements.

On behalf of the Supervisory Board,

G. Werger

Chairman of the Supervisory Board, Titan N.V.

meeting. The Company also prepares the minutes, which will be set by the shareholders at the next General Meeting of Shareholders.

The General Meeting of Shareholder of March 24, 2023, was held in physically in Breukelen, the Netherlands. In addition, the Extraordinary General Meeting of shareholders, was held on September 6, 2023, for the approval of sale and transfer the shares in TIE Kinetix Holding B.V. to SPS Commerce, Inc. We were pleased to be able to welcome our shareholders again in person.

Amendments to the Articles of Association

An amendment to the Articles of Association requires approval of the Annual General Meeting of Shareholders. Amendments have not been made since June 3, 2015, other than the statutory name change of the Company to Titan N.V. that was effectuated on September 13, 2023.

Executive Board

Appointment & dismissal

A member of the Executive Board will be appointed or dismissed by the Supervisory Board and in accordance with the Articles of Association and the Executive Board Terms of Reference. A member of the Executive Board is to be appointed for a maximum period of four years. Upon expiry of the four-year term, a member of the Executive Board may be reappointed for successive terms of four years each. 

Duties

The Executive Board is entrusted with the management of the Company. This means that it is responsible for the achievement of the Company’s targets, its strategy with the associated risk profile, the development of the results and the social aspects of doing business relevant to the Company. For its management the Executive Board is accountable to the Supervisory Board and the General Meeting of Shareholders.

In the performance of its duties, the Executive Board and the Supervisory Board are guided by the interests of the Company, taking the relevant interests of all stakeholders into account and to create long term value in accordance with article 1.1.1 of the Code, as well as control of related risks and opportunities subject to article 1.2.1 and 1.2.2 of the Code and communication with its stakeholders.

The Executive Board performs its activities under the supervision of the Supervisory Board. The Executive Board attends the meetings of the Supervisory Board with exception of the meetings focusing on the evaluation of the Supervisory Board and the Executive Board and the annual meeting with the external independent auditor. The Executive Board provides the Supervisory Board timely with all information essential for the Supervisory Board to exercise its duties.

Composition

The Executive Board consists of Mr. J.B Sundelin and Dr. M. Wolfswinkel. Mr. J. Sundelin, CEO, has been a member of the Executive Board since February 14, 2007. His term was renewed at the General Meeting of Shareholders of March 26, 2021, and will end on March 28, 2025.

Dr. Wolfswinkel joined the company as CFO on August 19, 2013, and has been appointed to the Executive Board on November 28, 2013. His term was renewed at the General Meeting of Shareholders of March 26, 2021, and will end on March 28, 2025.

For future appointments, selection criteria are taken into account that reflect a balance between the requirements of the role to be filled in and diversity requirements. Further information is provided on this below.

Remuneration

The remuneration of the members of the Executive Board has been set in line with the Remuneration Policy of the Company and is in line with the provisions of the Code. In the Remuneration policy a claw back clause on variable pay has been incorporated. The severance package of the Executive Board is in line with best practice provision 3.2.3. of the Code. More information about the remuneration of the Executive Board can be found in the Report from the Supervisory Board, starting on page 16 and the Remuneration Report, starting on page 19.

Conflicts of interest

The Executive Board avoids (the appearance of) conflicts of interests between the Company and a member of the Executive Board. All transactions in which a conflict of interest exists or is deemed to exist must be concluded on terms at least customary in the sector concerned. Resolutions for entering into such transaction must be approved by the Supervisory Board. In the financial year 2023, there were no reports on conflicts of interest.

Internal audit function

At present, there is no internal audit function in the Company. Due to the company's limited size, the internal controls including the accounting and governance processes, are of limited complexity. As such, this allows for the Executive Board to closely monitor the internal control system and report to the Supervisory Board. The Company stimulates its employees to identify areas for improvement in risk management and control systems. The employees are in direct contact with the Executive Board so that suggestions are assessed at the appropriate level and an improvement plan rolled out as appropriate. Furthermore, the absence of an internal audit function has not been identified as a principal risk that would require mitigation. In this respect, reference is made to the section Risk Management and Control, starting on page 28.

Conflicts of interest

The Supervisory Board avoids (the appearance of) conflicts of interests between the Company and a member of the Supervisory Board and/or a member of the Executive Board. In the financial year 2023, there were no conflicts of interest.

Diversity policy and criteria for the Executive Board and Supervisory Board

The Terms of Reference of the Executive Board and Supervisory Board describe the diversity requirements for both Boards. The objective of our diversity policy with respect to the composition of the Executive Board and Supervisory Board is to ensure that both Boards consist of members with the right expertise, experience and competencies to fulfill their roles and complement each other. In addition, we believe that a balanced distribution among men and women contributes and leads to better decision-making. As a corresponding target, at least one third of our Supervisory Board should consist of women (corresponding to at least 1 woman given the current size of our Supervisory Board).

In preparation of appointment of a new member of the Supervisory Board or Executive Board, selection criteria are considered that reflect a balance between the requirements of the role to be filled in and diversity requirements. In determining the optimal composition of the Executive Board and Supervisory Board, the Company considers various criteria of diversity.

The following criteria are considered for an appointment:
1. Expertise
2. Experience
3. Competencies
4. Gender
5. Development opportunities/potential
6. Age
7. Nationality
8. Ethnic background
9. Education

Composition

The current compositions of the Executive Board and the Supervisory Board as disclosed above satisfy the policy objectives for the diversity of the Boards. Nonetheless, the Company continues to re-evaluate its policies and criteria as necessary and has taken notice of the recent developments in the field of diversity and expectations of stakeholders around this subject. This includes the new law on growth quota for a better male-female ratio in the Netherlands, which entered into effect on January 1, 2022.

This law requires that at least one third of the supervisory boards of listed companies consists of men, and at least one third of women. This quota applies to new appointments. The current composition of the Supervisory Board of Titan is therefore in compliance with the requirements of this law.

Further notes on the Company's Corporate Governance

All members of the Executive Board and the Supervisory Board comply with the rules of Dutch corporate governance regarding the limitations of the number of board positions in Dutch large companies as all members of the Executive Board and the Supervisory Board have no other positions than their position within the Company.

PricewaterhouseCoopers Accountants N.V. has been the external independent auditor during the financial year 2023, being appointed at the General Meeting of Shareholders of March 24, 2023.

Legal structure

Titan N.V. is an standalone company without any direct and indirect subsidiaries. On September, 13 2023 Titan N.V. has sold the shares of TIE Kinetix Holding B.V., and investments in the Group's operating entities. The operating entities where located in the Netherlands, Germany, France and the United States.

Risk management forms an integral part of how Titan N.V. is governed. The objective of our risk management system is to identify and mitigate risks with a potential major impact on achievement of our strategic and financial goals, and therefore on the overall value of the Company.

Our risk management and control system

As any business, the Company is exposed to a variety of risks. To be able to detect, assess, determine the risk appetite and take mitigating measures if needed, the Company relies on its risk management and control system. The main features of this system are described in the following paragraphs. Both the Executive Board and Supervisory board are satisfied that the structure and operation of the risk management and control system is organized adequately given the size and complexity of the Company and its business. To this extent, our system is designed to manage, rather than eliminate, the risk that we fail to realize our strategy and create long-term value for our stakeholders. Our internal control system is based on the principles of the COSO 2017 Enterprise Risk Management framework.

Control environment

The Executive Board has the ultimate responsibility for risk management and control within the Company. This responsibility includes identifying and evaluating opportunities and risks, and to take appropriate measures if deemed necessary, so that the Company may utilize opportunities and avoid losses where possible.

The Executive Board aims to maintain a culture of ethical behavior and integrity by setting the tone at the top. This contributes to avoiding unnecessary risks and the overall effectiveness of the Company's risk management and control system. This is done by, for example:

• Leading by example and acting in accordance with our Company values;
• Maintaining relevant policies such as our Code of Conduct and Whistleblower Policy and ensuring awareness of these policies among staff;
• Having clear practices and procedures with respect to corporate governance.

The Executive Board is monitored by the Supervisory Board and the performance of the Company's risk management and control system is reported on and evaluated annually.

Risk appetite

The risk appetite represents our willingness to assume calculated risks and uncertainties. The risk appetite is determined by the Executive Board and is regularly re-evaluated in the face of changing circumstances and as part of the process of evaluating and responding to risks. Our risk appetite differs per category of risks. At a high level, the level of the company’s risk appetite is outlined in the following table, organized by the main categories of risks that we identify. This gives guidance on the level and extent of measures that are taken to control or mitigate the risks belonging to the respective categories, though it is at the discretion of the Executive Board to increase or decrease the extent to which the Company responds to an individual risk or uncertainty.

Principal risks and uncertainties

The following summary lists the following:

• The principal risks and uncertainties allocated to each of the categories of risks that we discern;
• The impact on result or financial position that we anticipate when such risks and uncertainties manifest themselves, classified as high, moderate or low;
• The trend that the development in the risk exposure is showing, classified as increasing, decreasing or remaining stable; and
• The Company's appetite for the respective risk or uncertainty.

The Executive Board's assessment of the development in the risk exposure represents how the risk is expected to develop in the near future compared to the past year. This regards to the inherent risk, excluding the mitigating effect of any measures that the Company has taken.

In this respect, this assessment takes into account the disposal of all of the Company's business operations that occurred in September 2023. Of course, this development has drastically altered the risk profile of the Company and means the Company is exposed to much less risk now that it is without active business operations. This is reflected in the downward trends in the graphic below.

Please note that this overview may not be exhaustive. It is possible that principal risks that have not yet been identified, or that other types of risks that are currently regarded as not material, will have a significant adverse effect on the company’s ability to achieve its objectives at a later date. The Company’s internal risk management and control system is, as described before, geared to the timely identification of such risks as much as possible.

The following tables describe the identified principal risks and uncertainties, their impact and their trend in more detail, as well as describe the measures the Company has taken in response to the respective risks and uncertainties.

The main risks that have materialized over the past year are marked with an asterisk (*). These risks have had impact on the Company's financial result; the impact is stated in the tables.

Climate change risk

Climate (change) risks can be divided into physical risks and transition risks. Physical climate risks are risks arising from climatic events, which in turn have a financial impact due to, for example, damage to physical assets, lower productive capacity and lower output. Climate transition risks are risks of stemming from a disorderly transition to a low-carbon economy, when climate policies (e.g. carbon tax) and regulations are implemented late with regard to the climate targets and cannot be fully anticipated by investors.

Climate risk assessment

Given the lack of any current active business operations, the Company does not hold physical assets that are subject to physical climate risk. Acute physical climate risks could impact the Company’s operations if these were to occur in any of the territories in which the Company operates and its employees, contractors, board members or suppliers would be impacted. Management concludes that the Company does not have an inherently high exposure to physical climate risk.

With respect to climate transition risk, management notes that the (upcoming) climate and environmental policies and regulations that are currently known do not significantly impact the Company or its financial position.

Financial reporting process control system

This section sets out the main features of the control system of the entity related to the financial reporting process of the Company.

The Company's CFO is responsible for the Company's finances and accounting, including its information systems. As of financial year 2024, the company makes use of an external service provider for accounting and reporting compliance services. Books are closed on a monthly basis. External financial reporting is prepared on a bi-annual basis, based on the information captured in the Company's accounting systems.