Integrated Annual Report 2020
Financial-Social-Environmental Performance of Sif Holding N.V.
Highlights 2020
TRIF 9.93
(19.1 in 2019)
Net CO-2 emission 0
(3,990 ton in 2019)
Successful application of
SKY- box on Borssele V
project
Successful deliveries for
Borssele 1-5, Triton Knoll,
Akita-Noshiro offshore wind
projects to include 2,000
th
monopile manufactured by
Sif
Contract-wins for Dogger
Bank A & B, Hollandse
Kust Noord
Financial performance
Revenue EBITDA Profit attributable to
the shareholders
Dividend proposal ROACE Order book for 2021
€335.4 €31.8 €7.3 €0.12 18.9% 185
million million million per share Kton
€ 101.6 million
contribution
EBIT €11.4 million €0.29 per share Pay-out 42.1% EBIT as % of average
equity, loans and bor-
rowings excluding lease-
liabilities minus cash
250 Kton for 2022
and 2023
2020Sif Annual Report
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2020Sif Annual Report
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Key figures 2014 – 2020
X € 1,000 2020 2019 2018 2017 2016 2015 2014 Definition of non-IFRS measures
Revenue 335,433 325,600 235,140 327,180 400,318 321,343 262,523 Total revenue from contracts with customers
Contribution 101,592 101,517 74,336 135,634 129,480 100,536 83,594 Total revenue minus cost of raw materials,
subcontracted work, other external charges,
logistic and other project related expenses
EBITDA 31,756 26,371 12,550 54,592 58,616 55,252 45,741 Earnings before net finance costs, tax,
depreciation and amortization
EBITDA (ex IFRS 16) 25,189 22,038 12,550 54,592 58,616 55,252 45,741 EBITDA excluding Bridge impact on
Production and general manufacturing
expenses, Facilities, housing and maintenance
and General expenses
EBIT 11,408 9,164 -1,132 41,439 49,932 48,266 38,350 Earnings before net finance costs and tax
Net earnings 7,271 5,488 -2,051 30,760 37,365 35,628 27,995 Profit attributable to the shareholders
Net cash from operating
activities
34,336 30,853 5,548 53,886 52,887 25,421 33,570
Net cash from investing
activities
-4,927 -14,485 -3,218 -27,587 -67,962 -16,421 -39,523
Net increase/(decrease) in
cash and cash equivalents
1,066 1,074 -372 573 -28,429 3,740 -10,954
Depreciation and
amortization
20,348 17,207 13,682 13,153 8,684 6,986 7,391
Net debt 52,119 80,291 30,377 25,107 41,969 26,894 11,434 Loans and borrowings including lease
liabilities minus cash and cash equivalents
Net debt (ex IFRS 16) -2,645 21,293 30,377 25,107 41,969 26,894 11,434 Net debt excluding lease liabilties
Net working capital -2,900 4,300 14,200 7,100 8,300 19,300 -5,000 Inventories, contract assets and contract
liabilities, trade and other receivables,
prepayments and trade and other payables
Contribution is an important KPI since it excludes pass-through expenses. Together with production in Kton and EBIT it indicates the quality of Sif’s performance in any reporting period.
2020Sif Annual Report
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Key figures 2014 – 2020
2020 2019 2018 2017 2016 2015 2014 Definition of non-IFRS measures
IN KTON
Production 164 185 138 232 191 150 133
PER SHARE X €
Earnings 0.29 0.22 -0.08 1.21 1.47 1.40 1.10 Profit attributable to the shareholders divided
by the average number of shares outstanding
during the year under review
Dividend 0.12 0 0.10 0.30 0.37 0.94 1.28 2020 subject to AGM approval
Number of shares issued 25,501,356 25,501,356 25,501,356 25,501,356 25,501,356 25,501,356 25,501,356
RATIOS %
ROACE 18.9 8.3 -0.9 35.7 57.0 75.2 64.9 Earnings before net finance costs and tax as a
% of average equity plus loans and borrowings
excluding lease-commitments minus cash
Solvency 39.0 35.6 43.6 45.6 34.8 16.2 43.6 Total equity/balance sheet total
Solvency (ex IFRS 16) 50.0 47.2 43.6 45.6 34.8 16.2 43.6 Total equity/balance sheet total excluding
right of use assets and related tax impact
COVENANT RATIOS
Total debt/EBITDA (ex
IFRS16 )
0.00 1.04 n/a n/a n/a n/a n/a Loans and borrowings excluding lease
commitments devided by EBITDA (ex IFRS16)
Solvency (ex IFRS 16) 50.0 47.2 n/a n/a n/a n/a n/a
Net
debt/(normalized)EBITDA
n/a n/a 2.33 0.4 0.7 0.5 0.2
Cash flow cover n/a n/a 3.02 29.4 3 10.3 4.2
NON-FINANCIAL KPI'S
TRIF per mln manhours 9.93 19.10 15.59 15.65 9.43 11.98 17.39
Sickness leave % 5.50 6.59 7.24 4.46 4.00 4.02 4.77
Gross CO2 footprint in
tonnes
3,157 4,392 5,866 16,643 9,849 na na
Net CO2 footprint in tonnes 0 3,990 2,432 16,643 9,849 na na
2020Sif Annual Report
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CONTRIBUTION
(IN € 1,000)
140,000
112,000
84,000
56,000
28,000
0
2020 2019 2018 2017 2016 2015 2014
101,592
101,517
74,336
135,634
129,480
100,536
83,594
NET EARNINGS
(IN € 1,000)
40,000
32,000
24,000
16,000
8,000
0
2020 2019 2018 2017 2016 2015 2014
7,271
5,488
-2,051
30,760
37,365
35,628
27,995
EBITDA
(IN € 1,000)
60,000
48,000
36,000
24,000
12,000
0
2020 2019 2018 2017 2016 2015 2014
31,756
26,371
12,550
54,592
58,616
55,252
45,741
EARNINGS PER SHARE
(IN €)
1.50
1.20
0.90
0.60
0.30
0.00
2020 2019 2018 2017 2016 2015 2014
0.29
0.22
-0.08
1.21
1.47
1.40
1.10
EBIT
(IN € 1,000)
60,000
48,000
36,000
24,000
12,000
0
2020 2019 2018 2017 2016 2015 2014
11,408
9,164
-1,132
41,439
49,932
48,266
38,350
RETURN ON AVERAGE CAPITAL EMPLOYED
(IN %)
80
70
60
50
40
30
20
10
0
2020 2019 2018 2017 2016 2015 2014
18.9
8.3
-0.9
35.7
57.0
75.2
64.9
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NET WORKING CAPITAL
(IN € 1,000)
20,000
16,000
12,000
8,000
4,000
0
-4,000
-8,000
2020 2019 2018 2017 2016 2015 2014
-2,900
4,300
14,200
7,100
8,300
19,300
-5,000
PRODUCTION
(IN KTON)
250
200
150
100
50
0
2020 2019 2018 2017 2016 2015 2014
164
185
138
232
191
150
133
TOTAL DEBT EX-IFRS16
(IN € 1,000)
48,000
36,000
24,000
12,000
0
2020 2019 2018 2017 2016 2015 2014
-2,645
21,293
30,377
25,107
41,969
26,894
11,434
EMPLOYEES
(IN FTE at YE)
750
600
450
300
150
0
Permanent Flexible
2020 2019 2018 2017 2016 2015 2014
569
658
429
615
620
483
323
TRIF
(PER MLN MANHOURES)
20
18
16
14
12
10
8
6
4
2
0
2020 2019 2018 2017 2016 2015 2014
9.93
19.10
15.59
15.65
9.43
11.98
17.39
SICKNESS LEAVE
(IN %)
8
7
6
5
4
3
2
1
0
2020 2019 2018 2017 2016 2015 2014
5.50
6.59
7.24
4.46
4.00
4.02
4.77
2020Sif Annual Report
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Table of contents
Highights 2020
2 Key figures 2014 - 2020
7 Report of the Executive Board
27 Report of the Supervisory Board
34 Remuneration report
38 Shares and ownership
40 Risk and risk-management
46 Social, Environmental and
Governance policy and MD&A of
progress in 2020
50 > resources and sustainability approach
53 > social: human resources
60 > environmental: natural resources
61 > economic: financial resources
66 > governance
73 Financial Statements
125 Other Information
125 > articles of association
related to profit appropriation
125 > corporate information
127 > independent auditor’s report
136 Glossary
138 Appendix: Bridge
from IFRS to Dutch-GAAP
142 > independent auditor’s report
2020Sif Annual Report
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Report of the Executive Board
Introduction by the CEO
Dear Reader,
The gamechanging year 2020
Apart from the far-reaching impact of the pandemic, 2020 saw the sense of urgency
to rapidly reduce the global CO2 footprint gain broader and more tangible
momentum. Europe took a bold step by committing to its Green Deal. Many
countries in Asia have placed renewable energy higher up the agenda. The change of
leadership following the 2020 elections in the United States resulted in a firm
commitment to invest in renewable energy.
At Sif, we responded pro-actively to the overwhelming effects of COVID-19. With the
exception of work for the Oil & Gas industry, the crisis did not impact our order book
and order intake. This meant we could focus fully on measures to prevent the
transmission of COVID-19 within our organization as much as possible. While this
led to some inconveniences in our production, the bottom-line overall impact on our
operations has been relatively small and we even met our lower sickness absence
targets. All in all, we were able to stick to our plan and successfully implement
initiatives for improving our internal efficiency without any need for COVID19-related
government loans or subsidies.
There are high ambitions as a result of the Green Deal in Offshore Wind energy. We
see this reflected in the increase in tenders for mid-term to long-term projects in
Europe, the United States and Japan. The release and announcement of next-
generation wind turbines from GE, Vestas and SiemensGamesa in the 14-16 MW
range and the fact that monopiles will remain the foundation of choice are leading to
notable demand for more and larger sized monopiles.
‘The supply and demand balance
will be tight from 2021 onwards’
2020Sif Annual Report
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While the first positive results of our efficiency improvement program became
apparent in late 2020, we decided to launch a fundamental research project to
ascertain what the future design and production footprint of Sif should be, given the
obvious mid-term to long-term demand for Offshore Wind monopile foundations.
Recent projects have strengthened our belief that combining design and production
engineering provides benefits. The intended acquisition of ‘KCI the engineers’ gives
Sif a strong knowledge base of design engineering competences on structural
aspects of both bottom fixed foundations and substations and future alternatives
such as floating foundations. Combining design and production engineering will also
help us optimize present and next generation monopiles needed for the 14 plus MW
platforms now offered to the market. Past investments in increasing diameters have
taught us that we cannot automatically assume that a further increase in diameter
can be achieved in an economically viable manner. The dimensions and loads
currently incurred by our production and logistics equipment have become excessive
and come at a serious cost. This is why, with the assistance of external experts on
production technology and processes, we are undertaking this extensive research
project. Pending the outcome and conclusions, expected in the spring of 2021, we
maintain focused on offering and producing monopiles of up to 9 meters in
diameter.
With an order book until mid-2023 for monopiles and transition pieces for projects
involving less than nine-meter diameters, we have created sufficient leeway to
thoroughly study the results of our research project and take the necessary actions
to prepare for bigger diameters.
‘We are shaping tomorrow while
performing today’
Partially due to the pandemic, the market for Oil & Gas (O&G) products all but dried
up in 2020. Given that the long-term outlook is not positive either, we have decided
to transfer our direct and indirect workforce from this division to the Offshore Wind
business and to focus on foundations and pin pile products for the Offshore Wind
market. Depending on the results of our production research program, we will decide
on the destination of the Oil & Gas production lines.
Being more or less 100% active in the renewable energy business, Sif has decided to
take a more visible approach with respect to the “E” section of our Environmental
Social Governance (ESG) ambitions. While environmental aspects have been
covered in our previous annual reports, we are focusing more explicitly in this year’s
report on our ESG targets and the progress being made towards achieving them.
Results
Safety and CO2 footprint, in addition to sickness leave and financial ratios, are our
main performance indicators. Our main safety KPI – Total Recordable Injury
Frequency Rate (TRIF) – did improve to below target but unfortunately not as much
as planned for during the year under review.
The CO2 footprint is negative when the compensation generated by the wind turbine
on our own premises is taken into consideration. The target is, however, to realize
a 50% uncompensated reduction by 2030 and a neutral gross CO2 footprint
preferably by 2040 but certainly not later than by 2050.
‘We aim at an uncompensated
Carbon Dioxide-neutral production
by 2040’
2020Sif Annual Report
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The withdrawal of the Vineyard Wind project in the United States from our order
book was a setback. It was scheduled to go into production in the first quarter of
2020. This required Sif to acquire replacement projects to fill the vacant production
capacity. Closing the Akita Noshiro contract in Japan and moving forward the
execution of the Saint Nazaire order, partially filled this vacant capacity. Despite the
effects of COVID-19 and underutilization, our interim results presented in August
were such that we could maintain the EBITDA forecast, even with lower production
in tons. The ultimate EBITDA amounts to € 31.757 million. In line with our policy,
a proposal to distribute a dividend of € 0.12 per share will be submitted to the
General Meeting of Shareholders
Personnel changes
Sif has a two-tier board structure comprising a two-member Executive Board and
a five-member Supervisory Board. All the members of the two boards are appointed
for a term of four years. In 2020, Peter Gerretse resigned as a member of the
Supervisory Board and was reappointed during the General Meeting of Shareholders.
There is not a resigning member of the Supervisory Board in 2021. Two members of
the Supervisory Board will resign in 2022 and Sif will endeavor at that time to bring
the composition of the board into line with the future legal requirements on diversity.
Our agenda for 2021 and outlook
Assuring a safe and healthy environment for our employees is and will remain the
most important topic in all we do. The availability of vaccines gives hope that the
end of the pandemic is near and the coronavirus can be contained. However, we
need to stay vigilant on not running into a new outbreak. Our orderbook for wind
foundations for 2021 is filled primarily with Hollandse Kust Zuid and Dogger Bank A.
We do not foresee any substantial projects for Oil & Gas. We expect this to result in
an estimated production of almost 185 Kton or 200 monopiles and 65 transition
pieces. The offshore wind industry is still young and dynamic. Innovations remain
key to the entire industry and will continue to feature high on Sif’s management
agenda. A large part of the management’s attention will consequently be focused on
the outcomes and implementation of the conclusions of our research-project on the
future production footprint. In addition, we will obviously prepare ourselves for the
delivery of the orderbook for 2022/23 that contains Dogger Bank B and Hollandse
Kust Noord.
In closing: it’s all about people
We wish to thank all Sif’s clients, vendors and employees for their loyalty to the
company during the challenging year 2020. In particular, we want to thank our
employees and subcontractors for their continued commitment throughout the
pandemic during which they have been faced with far-reaching safety measures that
make their work more complicated. Many of them live outside of the Netherlands,
which often led to additional uncertainty and difficulties. Their actions and adaption
to the ever-changing COVID19 rules demonstrate a high level of commitment and
dedication to this company.
Fred van Beers, CEO
Roermond, 11 March 2021
2020Sif Annual Report
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Vision, Mission, Core Values and Company Profile
Vision
We want to accelerate the growth of Offshore Wind power generation as a key driver
to the world’s energy transition.
Mission
We strive to be the best monopile solution provider through innovation, engineering
and excellent manufacturing with full commitment to the environment and our
employees’ well-being.
Core Values
The ‘Sif spirit’ is based on three core values that unite us. These give direction to
everything that we do, every day.
SIF’S CORE VALUES
Teamwork Focus on results Ownership
The ‘we’ of Sif is super-strong both internally and
externally. That is important, as we are a vital compon-
ent in the wider chain providing wind energy. We help
one another in achieving a common, higher objective.
That’s why we do what we do. Together, we think care-
fully about the right focus to ensure that today is better
than yesterday. Sustainable and quantifiable.
Another word for commitment and responsibility. This
starts with clarity about who does what and an open
culture in which we approach one another with a
focus on solutions and everyone’s share in the bigger
picture.
Company Profile
Sif was founded in 1948 and is a project-oriented manufacturing company
employing 569 full- time equivalents at year- end 2020, realizing revenues of
€ 335 million. We are a leading provider of mission-critical tubular steel foundations
to the offshore energy markets. To support our main services, we participate in
SSSF B.V. for the supply of monopiles and transition pieces, in SBR Engineering
GmbH for the development of special purpose welding equipment and in Twinpark
SIF B.V. for the exploitation of the 12 MW GE Haliade X wind turbine. While Sif
traditionally serves the North-Western European markets, we consider the Offshore
Wind market as an increasingly global market. Our sales office in Tokio is a first step
illustrating Sif is gradually developing its global presence.
2020Sif Annual Report
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SIF GROUP LEGAL ORGANIZATION STRUCTURE
Markets
Sif serves the global Offshore Wind energy markets. In the first half of 2020, global
grid-connected Offshore Wind power increased to almost 30GW (source: World
Forum Offshore’s H1 2020 Global Offshore Energy Report). During the
2020-2030 decade, the installed capacity worldwide is expected to increase to
approximately 234 GW (source: Global Wind Energy Council) and Europe’s Green
Deal, aiming at a climate neutral continent by 2050, is looking at 300 GW European
Offshore Wind capacity by 2050.
‘With estimated global grid-
connection of 234 GW in 2030,
Offshore Wind capacity will have
seven-folded in this decade’
2020Sif Annual Report
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Sif manufactures monopile foundations and foundation-components. There are
different types of foundations for Offshore Wind energy projects (see overview on
page 12). The type used depends on a number of factors including water depth,
wind- and wave impact and the composition of the seabed. The monopile with an
estimated market share in Europe of more than 80% is the most commonly used
foundation for Offshore Wind turbines simply because it provides the best value for
money. It can be used in water depths up to 60 meters. Since monopiles are not
suitable for rocky seabeds, jackets or gravity-based foundations are used as
alternatives in these situations. Floating foundations are the only alternative for
deep-water solutions. In addition to the monopiles and transition pieces, Sif
manufactures components for jacket foundations (legs, pin piles and bracings). The
estimated marketshare of monopiles in Europe is 85% and 60% worldwide. Sif’s
marketshare, based on the last five years, is approximately 40% (Source: Wood-
Mackenzie project database Q3 2020).
‘Grid-connection of 234 GW
implies additional demand for at
least 10,000 monopiles assuming
average turbine-capacity of 12 MW
and 60% global market share for
monopile foundations’
2020Sif Annual Report
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Our clients are energy companies such as Eneco, E-on, Equinor, Iberdrola, Innogy,
RWE, Shell, Vattenfall, developers such as Orsted, SSE, Triton Knoll and EPCI
(Engineering, Procurement, Construction and Installation) contractors and
fabricators such as Boskalis, Dragados, Eiffage, Geosea DEME, Heerema Marine
Contractors, Jan de Nul, Kvaerner, Van Oord, Saipem and Subsea7. Our geographic
focus is on projects in Northwest Europe, with a growing interest in Asian-Pacific
and Northeast American initiatives.
Competition
Sif Holding NV (the Netherlands), EEW Special Pipe Constructions GmbH (Germany)
and Steelwind Nordenham GmbH (Germany) are the main industrial manufacturers
of monopile foundations, that have built a combined market share of roughly 95%
over the past 5 years (Source: Wood-Mackenzie project database Q3 2020) with
a total annual production capacity of approximately 500 monopiles. All monopile
foundations, also for projects outside Europe (USA, Taiwan, Japan), are fabricated or
prefabricated in Germany or the Netherlands after which they are shipped to and
possibly assembled at their destination. In addition, Bladt Industries A/S (Denmark),
as a multiple product supplier, has limited monopile production capacity and
according to Wood-Mackenzie, had a market share of approximately 5% over the
past 5 years. EEW-Orsted in New Jersey, USA and SeAH in the United Kingdom
announced initiatives for investing in monopile manufacturing plants in 2020.
Key success factors and product-range
Capital, location and reputation are the thresholds to market-entry. Sif’s main
competitive advantages are our proven track-record of being a reliable, fair and
quality-driven partner. Sif has state-of-the-art manufacturing facilities situated on
62-hectare land at Maasvlakte 2 in Rotterdam that is supported by our Roermond
base-location. We have gained twenty years of experience and expertise in the safe
manufacturing and on-time delivery of mission-critical monopiles and transition
pieces for Offshore Wind installations. Our location in the Rotterdam area is ideally
positioned for projects in the Western part of the North Sea and the USA. With
a unique 400-meter quay with 15.6-meter draught, which is lengthened in 2021 to
600-meter and enriched by a new RoRo-quay, we can handle multiple loadings of
vessels for installation or logistic services in parallel.
2020Sif Annual Report
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Sif’s core competence is the serial rolling, automated
welding and coating of extremely thick steel plates to
create unique tubular offshore foundations
(monopiles) and foundation components (jacket legs,
pin piles and pile sleeves).
Cans and cones for monopiles are engineered and
manufactured in Roermond and assembled in
Roermond and Rotterdam. Primary steel for transition
pieces is manufactured in Roermond. A specialized
partner is responsible for outfitting transition pieces
with platforms, boat landings, etc. Components for
jacket foundations are manufactured mainly in
Roermond on a separate production line for smaller
diameters.
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Sif’s strategy
Having started out as a manufacturer of tubular steel pipes for pressure vessels and
jacket foundations, Sif redefined its business in early 2000 to focus on offshore
energy. Sif became a first mover in monopile foundations for Offshore Wind farms.
‘Focusing on Offshore Wind energy
as early as 2000, demonstrates
the long-term view, the innovative
mindset and entrepreneurial spirit
that characterize Sif’
While Sif’s business model has traditionally been based on ‘build-to-print’
manufacturing, we are now moving towards becoming a ‘total solutions partner’
offering engineering and production of extremely large unique monopiles. Sif is
undertaking the following activities with a view to achieving this position:
Optimizing its fabrication assets;a.
Developing design engineering;b.
Developing integrated transition piece alternatives;c.
Growing logistic and marshalling services;d.
Strengthening competences for an EPC (Engineering-Procurement-Construction)
role.
e.
Trends and development
Global energy demand continues to rise, fueled by population and welfare growth. At
the same time, we see growth in demand for making energy production more
sustainable and using more sustainable energy sources. Sif’s aim is to contribute to
the sustainable production of robust and affordable energy through the design and
production of steel foundations (and components) for Offshore Wind farms.
The world is on the brink of an energy transition. The goal is to limit the climate
change caused by carbon dioxide emissions. Various countries have committed to
limiting or reducing carbon dioxide emissions. This has been agreed in several
international treaties such as the Kyoto Protocol and the United Nations’
2015 Framework Convention on Climate Change (UNFCCC). Most recently the EU
presented the European Green Deal, which includes the aim of achieving climate-
neutrality for the continent by 2050. Wind power generation propels climate change
and contributes to the decrease in the costs of energy; Offshore Wind energy can
now compete with any alternative source of energy. The main challence now is to
increase the energy-output per wind energy-production unit. Opportunities for Sif to
contribute to the energy transition are numerous and Sif is well equipped to take
advantage of these opportunities.
2020Sif Annual Report
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SWOT analysis
INTERNAL STRENGTHS WEAKNESSES
Long term view>
Serving environment- friendly market>
Innovative core technology>
Strong commercial and operational track record
and reputation
>
Engineering services>
Strategic location MV2>
Financial strength, access to capital (bank
facilities and equity)
>
Market leadership>
Workforce composition (age, location, diversity)>
(Lack of) storage of wind energy>
Dependent on governmental policies>
Volatility of pricing (depending on alternatives
and interest rates)
>
Volatility due to size of projects>
Large, strong clients>
EXTERNAL
OPPORTUNITIES STRATEGY STRATEGY
Global pressure for climate change>
Technological progress>
Maturing growth-industry>
Geographic expansion to new areas USA and
Japan
>
Expansion in adjacent services to clients>
Global attention for improvement of environment>
Use financial strength, track record, engineering
skills and core technology for development
towards total solutions provider
>
Use strategic location of MV2 to serve clients
with new products and services
>
Closely follow developments in emerging markets
for Offshore Wind
>
Build on environmentally friendly products and
services
>
Build on reputation as tier- one employer in
industry of the future
>
Product development: floating wind farms and
sustainable installation and decommissioning
>
2020Sif Annual Report
20
THREATS STRATEGY STRATEGY
Political impact on regulations>
Local content requirements>
Availability of raw materials>
Availability of skilled labor>
New entrants in Europe and on other continents>
Competing clean energy sources (solar, green
hydrogen)
>
Single product, single market>
Larger contracts with volatility-risks>
Pricing-pressure to decrease LCOE>
Use track record and reputation to strengthen
relationships with suppliers and employees
>
Total solutions provider based on technological
and geographical position and engineering
capacity
>
Optimize production- and costefficiency>
Diversify geographically to decrease dependence
on single market
>
Construct local content by partnering with
transport, field-welding and assembly
contractors
>
Build and maintain long- lasting relationships
with key-suppliers for steel and flanges
>
2020Sif Annual Report
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2020Sif Annual Report
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We have set challenging and achievable objectives
Objective Measurement 2019 Target 2020 2020 Target 2021
1 People: A safe work place and
permanent education
TRIF: Total Recordable Injury
Frequency
19.1 < 13 9.93 <9
Sick-leave 6.59% < 5.5% 5.5% 5.0%
Training expenses €400,000 €400,000
2 Production facilities &
innovation: technological
product- and costleadership
Average number of completed
monopiles per week
€15 million CAPEX in
maintenance &
innovation (product
and process related)
Optimize fabrication
assets to state-of-
the-art facilities
4-5 MP’s per week 5 MP’s per week
Market leader by Kton produced and
number of monopiles (MP) and
transition pieces (TP) completed
185 Kton, 190 MP,
130 TP
185 Kton 164 Kton, 160 MP,
115 TP
Sif and EEW head-to-
head with approx.
40% of market each
over a longer period
185 Kton, 200 MP, 65
TP
Involved in design engineering of
foundations to improve EPC position
Build or acquire
engineering skills
Intended acquisition
KCI
Develop integrated transition piece
alternatives
Presentation of
Skybox
3 Circular production: Sustainable
use of natural resources and
limiting waste
% recycling of manufacturing-waste 96% 95% 98% 100%
Reduction of natural & propane gas
consumption
35% less natural gas
per ton -21%, less
propane per ton
20% reduction of
propane and natural
gas per ton
21% reduction of
natural gas per ton -
4% reduction of
propane gas per ton
10%/ton reduction of
natural and propane
gas
Generation of 100% green energy
(solar & wind) for Sif’s production
Haliade-X 12 MW
turbine operational
30% reduction CO-2 100% reduction of
net CO-2, 28%
reduction of gross
CO-2
2020Sif Annual Report
23
Objective Measurement 2019 Target 2020 2020 Target 2021
4 Communications: Competitive
position outside Europe
Related to market awards trends First contract USA
Japanese sales
office opened
First activity 2020 First contract Japan Invited for tenders USA
and Japan
Discount on financial expenses CO2 emission and safety
performance
0 0.05% discount on
banking fees
0 0.05% discount on
banking fees
5 Financial: Financial continuity Healthy financial position; Sound
financial ratios. Banking covenant:
Total debt/EBITDA (ex-IFRS 16)
0.96 <1.5 0.00 <1.5
Banking covenant: Solvency;
Equity/Total assets (ex IFRS 16)
47.2% >30% after dividend 50.0% >35% after dividend
Healthy working capital 4.3 Neutral working
capital
-2.9. Neutral
Good ROACE EBIT/average equity+loans-cash and
excl lease commitments
8.3% 30% 18.9% ND
Attractive return to shareholders Return to shareholders 0 25- 40% pay out €0.12/share = 42% of
earnings
25-40% of net earnings
2020Sif Annual Report
24
Stakeholder dialogue
Internal stakeholders Employees Employees are based in two locations in the Netherlands. We prefer to communicate personally or through the
intranet, publication boards, staff-magazine and narrowcasting. Most of our employees are craftsmen with limited
online-access. We use toolboxmeetings, cascade-communications and frequently scheduled information sessions for
all employees. Considering that almost 50% of our workforce are non-Dutch; English, German and Dutch are our
languages of communication. With respect to certain positions, we apply the master-student principle for a learning
organization.
Shareholders We build on a relationship of trust that we may draw on when access to capital is needed. We communicate
electronically (through e- mail, website, social media and audio webcasts of results presentations) and at AGMs.
Following the release of our annual and interim results we hold one-on-one meetings with investors and potential
investors. We participate in investor conferences from time to time. In our communications, we adhere to our Policy
on Fair Disclosure that is published on our website. The COVID19-outbreak has caused a shift from vis à vis to virtual
meetings with investors in 2020. We expect this to be the new standard for the majority of the one-on-one or one-on-
small group meetings, also going forward. For the AGM in 2020, we appealed for the temporary emergency law that
applied in the Netherlands in view of the COVID19 pandemic. This law made it possible to organize virtual
shareholders meetings. We organized an audio-webcast with possibilities for shareholders to ask questions both in
advance and live through electronic media.
External stakeholders Customers Customers buy our products often on a basis of co-development. This is why we frequently engage in conversations
with our limited number of customers. Sif often works on less than 10 projects for different clients annually. We also
meet clients and potential clients at trade shows or other events. COVID19 restrictions prevented this in 2020. During
manufacturing, inspectors and other representatives of clients visit our offices on a very frequent basis or are
sometimes stationed at our offices for the duration of the manufacturing process.
Labor markets Labor markets are tight, especially for skilled and experienced craftsmen. In order to fill vacancies, Sif often recruits
new employees internationally through staffing agencies. With a view to filling vacancies for the longer term, Sif
maintains close contacts with technical schools and educational institutes and is often represented at trade fairs if
not restricted for COVID19 measures. Sif applies the master-student principle for training rolling and welding
specialists.
2020Sif Annual Report
25
External stakeholders Suppliers In order of size, Sif’s main suppliers are for steel plates, corrosion protection, flanges, temporary personnel, logistics
and for welding equipment and materials. We maintain close personal relationships with these suppliers given their
importance in facilitating our innovations and growth. In addition, we are in close contact with suppliers of other parts
of a wind farm since they may influence our products by the choices they make. Vice versa they are interested in
state-of-the-art foundation techniques since the drive for larger installations needs to be facilitated by foundations.
This applies to turbine manufacturers more in particular.
Banks/credit insurance
companies
In addition to equity and retained earnings, Sif finances its business through bank facilities. We keep the banking
syndicate informed of the risks and our risk management and guide them on expectations for future results and
activities. We communicate through bank- meetings, on a one-on-one basis, as well as through quarterly reporting.
Subject to the rules of our Fair Disclosure Policy.
Indirect stakeholders Governments Governments make decisions regarding energy-sourcing and commit to sustainability targets. They initiate projects
for wind energy and sometimes subsidize innovations or projects. We communicate through media and at networking
events.
Schools, universities,
research and educational
institutions
We need new employees for succession and to infuse the newest technologies. If not restricted for reasons of COVID-
19 lockdown, we regularly attend trade fairs, where we present ourselves as an attractive employer. We use social
media to create awareness and interest in our company. In addition, we cooperate with technical universities for
innovation.
Competition We operate in a transparent market with a limited number of clients, projects and suppliers of monopile foundations.
The size of the (limited number of) projects entail the risk of volatility in utilization, revenues and income. Fair
competition is one of the principles set out in our Code of Conduct. In this respect, the contacts with competitors are
strictly limited to technical discussions on dimensions with respect to quality and safety.
Analysts Financial, industry and sustainability analysts closely track Sif, our competition and our markets. Observing black-out
periods every four weeks prior to release of quarterly updates and disclosure restrictions, we are in permanent
dialogue with financial, industry and sustainability analysts, organize meetings with financial analysts twice each year
in March and August and participate in sustainability surveys of CDP, ISS and MSCI.
Local residents, neighbours The plants Sif operates involve traffic flows, heavy transports, nightwork and may cause noise pollution. Although they
are located in industrial areas, we may cause nuisance. We are in contact with our neighbours and guide them on
activities we undertake especially during night and weekend-hours.
2020Sif Annual Report
26
2020Sif Annual Report
27
Report of the Supervisory Board
Composition of the Executive and Supervisory Boards
The Supervisory Board is composed in such a way that the knowledge, experience
and insights with regard to both the current issues at Sif and the markets and
activities relevant to Sif are well represented. Each member of the Supervisory Board
possesses the specific expertise necessary to fulfil this role and carry out this task.
The Supervisory Board aims for diversity in its composition in terms of age, gender,
professional and educational background and professional experience. The above-
mentioned elements are included in the profile drawn up by the Supervisory Board
and archived on the company’s website.
SUPERVISORY BOARD PROFILE MATRIX
Area of Expertise Supervisory Board member
Offshore Energy Services Industry André Goedée, Peter Wit, Peter Visser
General Management, Project
Management
Peter Visser, André Goedée, Peter Gerretse, Caroline
van den Bosch
Finance, Administration, Accounting Peter Wit, Peter Visser
Strategy Peter Visser, André Goedée
Marketing, Sales Caroline van den Bosch
Manufacturing, Production Peter Gerretse
Innovation, Research, Development Peter Gerretse
Safety, Environment André Goedée, Peter Gerretse
Human Resources, Personnel,
Organization
Caroline van den Bosch, André Goedée
Information Technology Peter Wit, Caroline van den Bosch
Risk-Management Peter Visser, Peter Wit
Regulatory Peter Wit
In 2020, Peter Gerretse stepped down in accordance with the rotation schedule. He
was reappointed during the Annual General Meeting of Shareholders. Soon as Dutch
law (Section 142b of Book 2 of the Netherlands Civil Code) is effective (expected
1 July 2021), it stipulates an obligation for listed companies to appoint at least one
third women and at least one third men on Supervisory Boards. The Supervisory
Board of Sif currently consists of five members, one of whom is a woman (20%). As
soon as a current member of the Supervisory Board resigns, which will be in 2022 at
the latest, Sif intends to increase female directorship of the Supervisory Board to at
least one third.
ROTATION SCHEDULE SUPERVISORY BOARD
2021 2022 2023 2024 2025
André Goedée
Caroline van den Bosch
Peter Gerretse
Peter Visser
Peter Wit
The composition of the Supervisory Board is such that the members are able to
operate critically and independently of one another, the Executive Board and any
particular interests. There were no conflicts of interest with members of the
Executive and Supervisory Boards as understood in Article 2.7.3-2.7.4 of the
Corporate Governance Code in 2020.
Caroline van den Bosch is recommended by the Works Council for appointment to
the Supervisory Board and as such the Supervisory Board’s primary contact for the
Sif Works Council.
Peter Visser, as a Supervisory Board member and as a board member of 49.4%
shareholder Egeria Industrials AG, is potentially in a conflicting position. Whether this
situation can lead to a conflict-of-interest situation is evaluated at every meeting and
before each agenda item. On one occasion in 2020, this resulted in a withdrawal by
Peter Visser from discussions under one agenda item. Peter Visser left the meeting
when this agenda item was tabled for discussion.
2020Sif Annual Report
28
All transactions conducted between Sif Holding N.V. and any of the Supervisory
Board members are agreed on market terms. Decisions to enter into transactions
that are of material significance to the company and any of its Supervisory Board
members require the approval of the Supervisory Board. Such transactions are
published in the annual report. There were no such transactions in 2020.
Supervisory Board self-assessment
The Supervisory Board convened two meetings in December 2020 to discuss its
own performance and that of its individual members. One Executive Board member
(CEO) attended part of one of these meetings. The performance evaluation covered
the Supervisory Board’s profile and composition, independence, expertise and team
effectiveness, as well as the quality of information provision, the role of the
chairman, secretarial support and relations with the Executive Board. All the other
Supervisory Board meetings were attended by the Executive Board, a listener
representing Egeria and a secretary. On two occasions, the auditor attended part of
the meeting.
2020Sif Annual Report
29
It was concluded that the Supervisory Board functioned well at both the collective
and individual level. The members are of the opinion that they complement each
other sufficiently in the context of their role in advising the company. Improvement
potential is seen in the field of communications, also with the Executive Board, and
in the ongoing discussions of specific subjects that are often constrained by
agenda-items relating to number-reporting. During the closed assessment-meeting,
the items for attention as stated in the best-practice provision of the Code regarding
the independence of the Supervisory Board (2.1.7.) as well as its individual members
(2.1.8.) and the chairman (2.1.9.) were assessed and confirmed.
It was also concluded that the Supervisory Board enjoys a good working relationship
with the Executive Board, the Management Team and the Works Council. It was also
established that none of the members of the Executive Board holds more than two
supervisory positions as referred to in the Dutch Management and Supervision Act.
Based on the list of suppliers and clients and on the confirmations at the start of
each Supervisory Board meeting that no participants at the meeting have conflicts
of interest, the Supervisory Board has no indications of any kind of conflict of
interest between the company and members of the Executive Board.
The composition of the Supervisory Board is as follows:
André Goedée (born 1951, male, Dutch nationality, far right on the picture).
Chairman. Relevant expertise and experience: offshore contracting (EPCI), project
management, human resources and international business. He was first appointed
to the Supervisory Board in January 2016 for a four-year period, but served on the
preceding Supervisory Board from December 2015. Reappointed at the close of the
2019 Annual General Meeting of Shareholders for a four-year term until 2023. He is
currently also the Chairman of the Supervisory Board of Amphia Group (clinical
hospitals) and a member of the Board of FSC (Flight Simulation Company for pilot
and crew training).
Between 2003 and 2013, André Goedée was the CEO of Dockwise Ltd. Dockwise is
an offshore energy services provider whose fleet includes heavy lift transportation
vessels. Following the acquisition of Dockwise by dredging and energy services
company Boskalis, André Goedée was appointed a member of the Executive Board
of Boskalis and advisor to the Board. Before joining Dockwise André Goedée was
CEO European Staffing for Vedior Professional Human Resource Services (1999–
2003), Executive Vice-President of EPCI offshore energy services contractor
Heerema Offshore Services (1989–1999) and Executive Vice-President of Neddrill
Drilling Contractors (1977–1989). In 1978, André Goedée obtained a Master Mariner
degree (maritime technical engineering) from the Mercantile Marine College in
Scheveningen/Rotterdam. He has also participated in a number of management and
marketing programs at various academic institutions, including the New Board
Program at Nijenrode University. André Goedée holds no shares in Sif Holding N.V.
Peter Wit (born 1967, male, Dutch nationality, second from the right on the picture).
Relevant expertise and experience: stock exchange listed environment, financial and
management accounting, risk and risk-management, legal, tax and compliance,
auditing, IT and operations. He was first appointed in May 2018 for a four-year
period. Resigning at closing of the 2022 Annual General Meeting of Shareholders.
Peter Wit is currently COO at staffing company Atlas Professionals B.V. (staffing for
energy industry), and member of the Supervisory Board at Doedijns Group
International. Previously Peter Wit was CFO and managing director at recycling
company Inashco B.V. (2014-2017), CFO at offshore energy services provider
Dockwise Ltd (2009-2013), Supervisory Board member at staffing company Atlas
Professionals (2013-2018) and held several positions (finance manager Albania,
M&A advisor in the UK and COO/CFO for Shell’s asset management company) at
Royal Dutch Shell Group between 1992 and 2009. Peter Wit holds a master’s degree
in Business Administration from the University of Groningen and obtained a post-
doctorate controlling degree (RC) from the VU University Amsterdam. Peter Wit
holds no shares in Sif Holding N.V.
2020Sif Annual Report
30
Caroline van den Bosch (born 1964, female, Dutch nationality, centre of the picture).
Relevant expertise and experience: procurement, human resources, information
technology, sales & marketing. She was first appointed in February 2016 for a four-
year period. Reappointed at closing of the 2019 Annual General Meeting of
Shareholders for a four- year term until 2023. Caroline van den Bosch holds 50% of
the shares in Emeritor (procurement services and software). She also holds 50% of
the shares in Meal Company, a manufacturer of food vending machines. Caroline
van den Bosch holds a marketing degree from the school of Business Administration
and Economics (HEAO) in Utrecht as well as a NIMA-C Marketing degree (MBA
level). Caroline van den Bosch is booster for NL2025 and mentor for NLGroeit.
Caroline van den Bosch holds no shares in Sif Holding N.V.
Peter Gerretse (born 1955, male, Dutch nationality, second from the left on the
picture). Relevant expertise and experience: international business, project
management, production, industrialization and automation, international B to
B marketing. He was first appointed in February 2016 for a four-year period.
Reappointed at closing of the 2020 Annual General Meeting of Shareholders. Peter
Gerretse has been a member of the Supervisory Board of Vanderlande Industries
B.V. since 2017. He was a member of the Supervisory Board of Aeronamic Holding
from 2010 to 2017. Between 1995 and 2013, Peter Gerretse worked for Vanderlande
Industries, a leading supplier of logistic process automation at airports and in the
parcel market, where his last position was President and CEO. Before joining
Vanderlande Industries Peter Gerretse held several management positions at Fokker
Aircraft. Peter Gerretse holds an engineering degree in Aerospace Engineering from
Delft University of Technology. Peter Gerretse holds no shares in Sif Holding N.V.
Peter Visser (born 1956, male, Dutch nationality, far left on the picture). Relevant
expertise and experience: general management, finance, auditing, risk management,
M&A. He was first appointed on an interim basis as of 1 November 2017 for the
period until the end of the Annual General Meeting of Shareholders on 3 May 2018.
Appointed on 3 May 2018 for a four-year period. Resigning at closing of the
2022 Annual General Meeting of Shareholders. Peter Visser is co-founder of Egeria
and director of Egeria Capital Management B.V. From 1992 until 1997 he was
Director of the bank MeesPierson N.V. with responsibility for private equity activities
in Europe. From 1983 until 1992 he worked for McKinsey & Company and founded
his own consulting firm, Management & Investment B.V. Peter Visser holds an
economics degree from the University of Groningen. Peter Visser has been
nominated by Sif’s largest shareholder to be appointed a Supervisory Board member
of Sif Holding NV.
2020Sif Annual Report
31
The members of the Executive Board of Sif Holding NV are:
Fred van Beers (born 1962, male, Dutch nationality). CEO. Appointed in September
2018. Entered into a service agreement for a period of four years ending 2022. Fred
van Beers holds a degree in marine engineering and worked as a business unit
manager at aluminium manufacturing company Alcoa and ship propeller
manufacturing company LIPS before joining Wärtsilä (technologies and complete
lifecycle solutions for the marine and energy markets). He served at Wärtsilä as
Managing Director Netherlands from 2007 to 2010 and as Vice President Services
Area North Europe from 2010 to 2015. More recently Fred van Beers was the CEO of
Blohm + Voss shipyards in Hamburg (2015-2017) and served in various other
management positions on an interim basis (2017-2018).
Leon Verweij (born 1960, male, Dutch nationality). CFO. Appointed in May 2017,
following an ad interim appointment in January 2017. Entered into a service
agreement in July 2017 for a period of four years ending 2021. After completing his
degree in business economics, Leon Verweij held several financial positions,
including 23 years as CFO of companies including Grasso’s Koninklijke
Machinefabrieken, Koninklijke IBC (building and property development), Koninklijke
VolkerWessels Stevin (general construction and property development), and
Schoeller Arca Systems Services. He also worked for the Smulders Group during
which time he gained experience in the field of steel foundations for offshore wind
farms. More recently, he served as interim CFO at construction company Ballast
Nedam and as interim CEO at the Oskomera Group. Leon Verweij is also a member
of the Supervisory Board of the Villa Pardoes foundation and an advisor to the
Supervisory Board of N.V. Slibverwerking (sludge processing) Noord Brabant.
2020Sif Annual Report
32
The Supervisory Board’s organization and activities
Board Committees
The Supervisory Board has installed an Audit Committee and a Remuneration
Committee. No separate Selection and Nomination Committee was installed since
nominations are on the full Supervisory Board’s agenda and discussed plenarily.
The Supervisory Board has determined that the Corporate Governance structure as
applied by Sif Holding N.V. is effective.
COMPOSITION OF SUPERVISORY BOARD COMMITTEES
Audit committee Remuneration Committee
André Goedée
Caroline van den Bosch Member
Peter Gerretse Chairman
Peter Visser Member Member
Peter Wit Chairman
Remuneration Committee
The Remuneration Committee convened on two occasions in 2020, always in the
presence of the CEO. All the members of the Remuneration Committee attended the
meetings. On the agenda were the implementation of the new remuneration policy
as approved by the Annual General Meeting of Shareholders, the remuneration
report for 2020 and the performance indicators for variable remuneration. Advised
by external remuneration consultants, the remuneration committee changed the
peergroup that Sif has composed to compare remuneration packages to.
Audit Committee
In 2020, the Audit Committee assessed the audit requirements and discussed the
audit plan and the key audit findings with the external auditor. Sif has not appointed
an internal auditor, but has implemented alternative measures to ensure contacts
between the Audit Committee and the external auditor proceed properly and to
ensure proper documentation of these contacts. The Audit Committee convened on
five occasions in 2020. The CFO of Sif attended all the Audit Committee meetings.
Key audit findings were discussed and progress on follow-up was reported during
the meetings. The Audit Committee and the Supervisory Board as a whole met once
with the external auditor in the absence of the Executive Board. The external auditor
was present at two meetings of the Audit Committee. The CEO and CFO of Sif
presented the monthly numbers to the full Supervisory Board members in monthly
calls.
Supervisory Board
The Supervisory Board convened on eight occasions in 2020. Except for one
Supervisory Board member missing out on one meeting, all the members attended
all the meetings. Most of the scheduled meetings were virtual due to
COVID19 travelrestrictions. The Chairman of the Supervisory Board and the CEO
were in contact on a regular basis in one-to-one (MS Teams) meetings to discuss
business progress and prepare the Supervisory Board meetings. On a monthly basis,
progress was explained by the Executive Board to the full Supervisor Board.
During the Supervisory Board meetings, the topics discussed with the Executive
Board, regularly also attended by the commercial and operational directors, included
trends in the industry and main markets, business progress, sustainability of the
business, internationalization, product development and results development. Other
topics on the agenda were: staffing and succession, risks and risk management, IT-
security and governance and compliance with legislation and regulations. The
Supervisory Board regularly discusses the strategy, the implementation of the
strategy and the main risks of the strategy with the Executive Board.
During the General Meeting of Shareholders on 14 May 2020, Ernst & Young
Accountants LLP were appointed external auditor for the reporting years 2020,
2021 and 2022. Ernst & Young Accountants LLP audited the 2020 financial
statements and explained its findings during a meeting of the Supervisory Board.
Other topics discussed during the same meeting included the 2020 audit plan, the
management letter and the reports of the Executive Board and the Supervisory
Board in respect of 2020.
2020Sif Annual Report
33
Financial accountability and dividends
The Report of the Executive Board and the 2020 financial statements were
submitted to the Supervisory Board in accordance with the provisions of Article
30 of the articles of association. The financial statements were submitted for
auditing to Ernst & Young Accountants LLP (‘EY’), which subsequently issued, on
the basis of its audit, an unqualified auditor’s report on the financial statements.
The Supervisory Board discussed the financial statements with the Executive Board
in the presence of the external auditor and subsequently approved the financial
statements on 11 March 2021. The Supervisory Board will submit the financial
statements for the 2020 financial year to the Annual General Meeting of
Shareholders on 12 May 2021 and recommends that the financial statements be
adopted. The Supervisory Board is of the opinion that the financial statements
constitute a sound basis for the account given by the Executive Board of its
management and by Supervisory Board of its supervision of the management.
The Supervisory Board also proposes that the Executive Board should be discharged
of their liability for the policy pursued and the Supervisory Board of their liability for
the supervision conducted. Profit attributable to the shareholder for 2020 amounted
to € 7.3 million. The Supervisory Board has approved the proposal by the Executive
Board to retain € 4.2 million of the profit attributable to shareholders and to add this
amount to the general reserve of the Company. Pay-out of a dividend of € 0.12 per
share (€ 3.1 million in total) for the year 2020 will be proposed to the Annual General
Meeting of Shareholders in May 2021.
Acknowledgements
The members of the Supervisory Board have signed the financial statements in
compliance with their statutory obligations pursuant to Section 101, subsection 2 of
Book 2 of the Dutch Civil Code.
With 164 Kton production, 2020 was a moderate year from a utilization perspective.
The cancellation of the Vineyard project in the USA could not entirely be
compensated by the win of Akita Noshiro in Japan and the rescheduling of Saint
Nazaire in France. Together with the outbreak of the COVID19 pandemic, this
impacted production, especially during the first half year of 2020, causing Sif to
adjust its production and EBITDA-forecast for the full year. Owing to a sound pricing
environment and improved execution, EBITDA-forecast for the full year ended close
to 18% higher than guided for at last year’s Annual General Meeting of Shareholders.
Projections by industry analysts WoodMackenzie (Foresight 20/20: Offshore Wind
from Niche to ‘hard to ignore’ dated January 2020) and Windeurope (Offshore Wind
in Europe Key trends and statistics 2019 dated February 2020), show a healthy
development of demand over a longer period from now, tipping the supply-demand
balance in favor of the current manufacturing industry.
It is positive to see the high level of loyalty and involvement Sif’s employees
demonstrate with respect to adapting flexibly to the stringent policies and working-
procedures relating to the COVID19 outbreak. After a startled response leading to
higher absence rates in March-April 2020, colleagues resumed their duties and
performed above expectations in operational and financial terms. They once again
proved to be of decisive importance to Sif’s successes. We wish to express our
sincere appreciation to the Executive Board and all employees for their commitment
and the resilience they have demonstrated over the past year. They also continue to
do so because COVID19 has not yet been eliminated, although there is light at the
end of the tunnel. We also wish to thank all our stakeholders, including shareholders
for the confidence they have shown in the company.
Roermond, the Netherlands, 11 March 2021
André Goedée (Chairman)
Peter Wit
Caroline van den Bosch
Peter Gerretse
Peter Visser
2020Sif Annual Report
34
Remuneration report
As referred to in article 2:135b of the Dutch Civil Code and in principle 3.4 of the
Dutch Corporate Governance Code. This Remuneration report is based on the
company’s Remuneration policy. A draft of this policy was presented to the
shareholders, together with the Works Council’s advice, for their approval at the
Annual General Meeting of Shareholders on 14 May 2020. The Remuneration policy
was approved by the AGM and published on the Corporate Governance section of
the website of Sif. An outline of the Remuneration policy is included in the
Governance-paragraph of this annual report on page 67. In their 2020 advice, the
Works Council made two recommendations. The Supervisory Board accepts the
Works Council’s conditions and takes heed of their recommendations. These
recommendations will primarily be reflected in the annual remuneration reports:
To ensure that the pay ratio does not exceed the current level and to keep this
within the bandwidth of 6.8–8.9. The Supervisory Board’s opinion is that the
bandwidth is a reasonable spread for the current structure, certainly when
bearing in mind that the Sif pay ratio has remained well within this range for
many years. In order to maintain flexibility should circumstances suddenly and
drastically change, the Supervisory Board will observe it without including
a bandwith in the policy;
1.
To maintain a balance between short-term and long-term remuneration that tips
toward long-term remuneration. The long-term incentive is currently 20% of basic
salary on award. This is in line with practises at a number of other listed
companies in the Netherlands. Whether this incentive is also 20% of the basic
salary at the time of vesting and payment depends on share-price development.
In 2020 the first LTIP award (to CFO Leon Verweij) vested at 9% of basic salary
or 25% of total variable remuneration. The Supervisory Board will certainly
examine this recommendation, although its inclusion in the policy is complicated
by an uncertainty in the longer-term remuneration at the time of payment.
2.
The remuneration policy is instrumental to the realization of Sif’s strategy and to
longer term value creation for all the stakeholders of the company. For remuneration
of Executive Board members, Sif applies a peergroup comparison. In 2020 Sif
undertook a market analysis with support of external consultants. This resulted in
a revised peergroup including 7 listed and 7 non-listed companies. Main criteria for
peergroup-selection were a combination of the type of business (project-business),
ownership (public ownership) and size (revenues and employees). The median of
the new peer-group, based on total remuneration, appeared to be 5,5 % lower than
the median of the previous peer-group as defined in 2016 for the CEO and 10% lower
for the CFO. Based on the 2019 remuneration SIF takes a median position in this
new peergroup for Executive Board remuneration.
The following overview summarizes the salaries and performance related bonusses
and other remuneration elements of the Executive Board for the past 2 years. The
remuneration for 2020 is based on the Remuneration policy as approved by the
Annual General Meeting of Shareholders in 2020. This policy does not deviate a lot
from the policy that was approved at the Annual General Meeting of Shareholders in
2017. The adoption of social and environmental KPI’s in addition to financial KPI’s
that now also include ROACE, better match the business Sif is in and the strategy Sif
is following. Together with the suggested STI-LTI-balance, these support the
ambition to create long-term value. Scenarios have been analyzed and taken into
consideration when designing the remuneration policy.
Executive Board remuneration
Fred van Beers Leon Verweij
Type of recompense In €, excluding VAT 2020 2019 2020 2019
Base salary 376,747 367,200 282,874 275,706
Employer´s pension contributions 21,281 22,662 41,312 39,615
Pension compensation 48,596 47,315 40,368 48,196
Annual bonus (accrual) 95,893 131,694 98,841 37,760
LTIP - - 25,724 -
Other benefits (car lease, travel expenses
and relocation expenses)
40,992 49,225 38,037 44,611
Social security and other payments 10,182 10,995 10,182 10,995
Total remuneration 593,691 629,091 537,338 456,883
Paid annual bonus in the year, earned over
the previous year
80,370 49,863 78,573 135,624
Paid vested LTIP - - 25,724 -
Total actual paid variable remuneration 80,370 49,863 104,297 135,624
2020Sif Annual Report
35
The remuneration package includes the following elements:
Base salary
The base salary for Executive Board members increased with the cost-of-living index
in 2020. This implies a 2.6% increase.
Annual bonus
The annual bonus is in cash and based on pre-defined KPI’s that may differ for each
Executive Board member. The Supervisory Board confirms that the results on which
the 2020 short term incentive for the Executive Board members is based, are derived
from the audited financial statements. These audited financial statements need
approval by the AGM until which moment the bonus is preliminary and included in
the financial statements as an accrual. Possible deviations in the actual bonus are
booked against this accrual in the subsequent year. The bonus on 2020 is paid in
cash in 2021 as soon as the annual accounts are approved by the Annual General
Meting of Shareholders. The bonus is based on financial performance indicators
EBIT, contribution and ROACE for 60% and on non-financial performance indicators
safety, sickness leave and personal targets for 40%.
target 2020 actual 2020 bonus contribution
Contribution in € mln 99.7 101.6
EBIT in € mln 9.2 11.4 60%
ROACE in % 7.36 18.9
Safety TRIF < 13 9.9 40%
Sickness leave 5.5 5.5
At target, the short-term incentive is 40% of base salary for the CEO and 35% for the
CFO. The maximum short-term incentive is 60% or 50% of base salary for CEO and
CFO respectively. For 2020 the pay-out percentages (actual paid short-term bonus
as a percentage of basic salary in the year of pay-out) for Executive Board members
were 21.3% for the CEO and 27.8% for the CFO. In 2019, the pay-out percentage for
the short-term bonus was 13.6% of fixed base salary for CEO and 49.2% of fixed
base salary for CFO.
Pension
Executive Board members are offered a pension arrangement for a pensionable
salary that is based on the fixed annual compensation including holiday allowance.
The company may contribute for 100% to the pension premiums. The pension
contribution covers the maximum pension amount, the pension compensation
covers the excedent arrangements with or without director-contribution.
LTIP
Under the long-term incentive plan 7,055 PSUs with value of €70,374 were
conditionally awarded to CEO (7,425 in 2019 with value of €73,433) and 5,297 PSUs
with value of €56,572 were conditionally awarded to CFO (5,575 in 2019 with value
of €55,137). The 2017-awards were the first under this LTIP. They vested in 2020.
The pay-out on vested LTIP-arrangements to CFO was € 25,724 in 2020.
Severance payment
Executive Board members are entitled to contractual severance payments
amounting to six months’ salary in the event of a change of control of the Company
and in the case of early dismissal at the request of the Supervisory Board and the
General Meeting of Shareholders other than for termination due to cause.
2020Sif Annual Report
36
Internal pay ratio
The average total pay per FTE of members of the Executive Board (CEO and CFO) in
comparison to a reference group of all Sif employees (the pay ratio) is 7.6 (8.2 in
2019). The pay ratio at Sif is calculated as the gross expenses of all Sif employees,
Executive Board members excluded. Gross expenses for all Sif employees include
wages and salaries, social security contributions and pension expenses as reported
in Note 7 to the financial statements. This results in total gross expenses of
€25,073 thousand for 313 FTEs (€ 23,985 thousand for 293 FTEs in 2019) when
excluding Executive Board members or € 80,358 (€ 81,838 in 2019) per Sif
employee based on the average number of employees for the year under review. The
comparable expenses for Executive Board members include base salary, employer’s
pension contributions, pension compensation, annual bonus and social security and
other payments as reported in Note 32 to the financial statements. Different than in
previous years, the pay ratio now also includes LTIP value at vesting date. This
results in total gross expenses of €1,052,000 for 2 FTE (€992,138 for 2 FTE in 2019)
or €526,000 (€469,069 in 2019) per Executive Board member.
The 2019 Remuneration report was discussed in the Annual General Meeting of
shareholders 2020 and presented for an advisory vote. Of the shares voted for
(74.02% of shares issued), 84.89% voted in favor. Questions from the shareholders
related to disclosure of targets for short-term incentives. These targets are now
disclosed in hindsight (targets for 2020 in the annual report 2020). Reference is
made to the table on page 35.
Remuneration and company performance
2020 2019 2018 2017 2016 2015
Executive
Remuneration (in €)
Fred van Beers 593,691 629,091 231,677
Jan Bruggenthijs
1
766,327 1,343,678 2,697,661 441,049
Boudewijn Nijdam
2
1,505,289 112,029
René Schmeitz
3
1,481,578 348,810
Leon Verweij 537,338 456,883 609,853 290,482
Pay ratio 7.6 8.2 8.5 7.6
Company
performance
indicators
Contribution/ton* 609 542 539 585 678 670
EBITDA 31,756 26,371 13,258 57,118 65,395 57,815
Net debt (ex-IFRS 16)
year-end
-2,645 21,293 30,377 25,107 41,969 26,894
Chief Executive Officer as of September 2014 until 3 May 2018.
1.
Chief Financial Officer as of September 2015 until January 2017.
2.
Chief Financial Officer until September 2015 .
3.
ex marshalling revenues 2019 and 2020*
2020Sif Annual Report
37
Supervisory Board Remuneration
The General Meeting of Shareholders determines the remuneration of the
Supervisory Board members. The remuneration is in no way dependent on Sif’s
results; Supervisory Board members receive a fixed amount as remuneration; they
do not receive a performance related remuneration nor are they awarded Sif shares
or share options as part of their remuneration.
SUPERVISORY BOARD REMUNERATION
Remuneration
in €
1
2020 2019 2018 2017 2016
André Goedée 70,000 70,000 70,000 70,000 70,000
Maarten Schönfeld
2
20,000 60,000 52,500
Peter Gerretse 45,000 45,000 45,000 45,000 40,000
Caroline van den Bosch 45,000 45,000 45,000 45,000 40,000
Peter Wit
3
45,000 45,000 30,000
Peter Visser 45,000 45,000 45,000 7,500
Alexander van Wassenaer
4
37,500 45,000
Total remuneration 250,000 250,000 255,000 265,000 247,500
excluding VAT and expenses
1
resigned 3 May 2018
2
appointed 3 May 2018
3
resigned 23 October 2017
4
2020Sif Annual Report
38
Shares and ownership
Sif Holding N.V. shares (SIFG.AS) have been listed on the Euronext Amsterdam
stock exchange since May 2016 with ISIN code NL011660485. At the end of 2020,
25,501,356 ordinary shares had been issued with a par value of € 0.20. All the
shares bear equal voting rights and are entitled to dividend paid out of the
Company’s profit reserves (known as the ‘one share one vote’ principle). At the end
of 2020 market capitalization amounted to € 422 million. All issued shares are fully
paid-up, are registered and have been entered into a collective deposit by transfer to
Euroclear Nederland or to an intermediary. Euroclear is listed in the shareholder
register held by the Company. The LEI code of 13016026 Sif Holding N.V. is
724500J0BPD5CLHCK040.
SHARE INFORMATION
2020 2019 2018 2017 2016
Closing price at year-end in € 16.54 12.50 11.66 17.41 15.48
Highest price during the year in € 17.16 14.72 19.50 25.35 15.97
Lowest price during the year in € 7.50 8.72 11.02 15.37 13.15
Average daily trading in number of
shares
44,915 40,766 30,660 80,429 37,020
Market capitalization at year-end in €
1,000,000
422 319 297 444 395
Earnings per share in € 0.29 0.22 -0.08 1.21 1.47
Dividend per share in € 0.12 0.00 0.10 0.30 0.37
Average number of shares issued in
1,000
25,501 25,501 25,501 25,501 25,501
Total dividend in € 1,000 3,060 0 2,550 7,690 9,341
Ownership
Free float in Sif-shares is approximately 40% of the issued shares as at
31 December 2020. The following holdings were disclosed pursuant to the Decree
on Disclosure of Major Holdings and Capital Interests in Securities-Issuing
Institutions as part of the Dutch Financial Supervision Act:
REGULATORY FILING OF SHARE OWNERSHIP
(Ultimate beneficial) shareholder % of total capital
and/or voting rights
Date of disclosure
Schroders Plc 3.02% 3 December 2020
Moneta Asset Management 5.00% 18 May 2020
The Vanguard Group <3.00% 18 November 2019
Egeria Industrials AG 49.38% 31 October 2019
Egeria Capital Holding B.V. 6.46% 13 April 2017
SND Participatie B.V. 4.62% 9 May 2017
Substantial holdings (or short positions) equal to or exceeding 3% of the issued
capital of Sif Holding N.V. should be reported to the Dutch financial markets’
regulator Autoriteit Financiele Markten (Netherlands Authority for the Financial
Markets/AFM). AFM should subsequently be notified again when the substantial
holding (or short position) reaches, exceeds or falls below a certain threshold.
Thresholds for reporting are 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75%
and 95%. The reported percentage as reflected in the table “regulatory filing of share
ownership” are therefore not necessarily the actual percentages that are held.
2020Sif Annual Report
39
Authorization to acquire and issue shares
The General Meeting of Shareholders has authorized the Executive Board to issue
shares and/or to limit or exclude legal pre-emption rights. On 14 May 2020 the
General Meeting of Shareholders extended the authorization of the Executive Board
to resolve, subject to Supervisory Board approval, to issue shares or grant rights to
subscribe for shares and/or to limit or exclude pre-emption rights in relation to an
issuance of shares or a grant of rights to subscribe for shares by a period of
18 months (i.e. until 14 November 2021). The authorization is limited to a maximum
of 5% of the issued capital as at 14 May 2020 plus, in the case of and related to
acquisitions, mergers, unravelling of mergers and strategic alliances, an additional
5% of the issued capital as at 14 May 2020.
The General Meeting of Shareholders has authorized the Executive Board to acquire
fully paid-up shares subject to certain legal and statutory constraints. The Executive
Board has been authorized for a period of 18 months (therefore until 14 November
2021) to resolve, subject to Supervisory Board approval, to repurchase shares for
a price that is higher than €0.20 and that does not exceed 110% of the average
market price of the Company’s shares during the five consecutive trading days prior
to the date the repurchase is decided upon by the Company. The authorization is
limited to 10% of the issued share capital of the Company as at 14 May 2020.
Insider trading
Sif Holding N.V. has an insider trading policy. The Compliance Officer maintains
a list of permanent and deal-related insiders and informs insiders of all obligations
deriving from the applicable regulations. The full text of the insider trading policy is
published on Sif’s website.
2020Sif Annual Report
40
Risk and risk-management
Executing its strategy and running its day-to-day operations exposes Sif to certain
strategic, operational, legal, regulatory and financial risks. In view of the risk
management and control measures in place within Sif, and considering our risk
appetite, the level of risks to which Sif is exposed is acceptable. However, errors,
fraud, losses or unlawful acts may occur.
Sif has formulated mitigating measures to limit risks. The table on the next page
lists the most important mitigating measures and the status of their
implementation. The table also shows which risks Sif is willing to accept in order to
achieve its strategy and which risks it will definitely not accept.
Effective risk management is pursued through various measures including
a compliance framework that focuses on Sif’s organizational structure, processes
and culture. The organizational structure includes good governance and appropriate
checks and balances.
2020Sif Annual Report
41
Sif’s processes are supported by policies such as Supervisory Board rules,
Management Board rules, a contracting policy, an insider trading policy, a fair
disclosure and bilateral dialogue policy and a whistle-blower policy. Operating
processes are designed in accordance with various standards and audited on
a semi-annual basis. Sif is certified to ISO 9001, ISO 3834-2, API-2B/API-Q1,
EN1090-1/EN1090-2, ASME U, U2, S, VCA**, ISO 45001, ISO 14001 and DNVGL-
CP-0352 standards. Annually, Sif is involved in a limited number of large projects.
The impact of single projects on annual results may be large. Before tendering,
sales, operations, QHSE, engineering project management, legal and finance engage
in a thorough contract-review. The review includes manufacturability, required
resources, planning and project-specifics. Once contracted, projects are subject to
a monthly progress and financial review by project controllers, project management
and executive management, during which both progress and the development of the
risk profile are reviewed. Adjustments to anticipated man-hours, project expenses
and results are made if and as required. This is reflected in the progress of the
projects and therefore also in results on the projects that are measured on
percentage of the progress. The statement of financial position, the statement of
profit and loss and other comprehensive income and cash flow statements that
reflect eventual changes in project forecasts are reported to and discussed with the
Supervisory Board on a monthly basis whereby the amount of steel used (in Ktons)
and man-hours spent in relation to completed products and anticipated man-hours
are key- indicators.
The key component to sound risk management is Sif’s corporate culture. Sif’s
values have been translated into standards through the formulation of policies and
a Code of Conduct and must be implemented through good leadership, a drive for
innovation, acquisition and transfer of knowledge and the provision of a rewarding,
non-discriminatory and inclusive working environment where employees are
encouraged to speak out.
Based on the above and the risks that materialized during the year under review, the
Executive Board of Sif is of the opinion that Sif’s internal risk management and
control systems provide a reasonable assurance that the financial reporting does
not contain any errors of material importance and that the risk management and
control systems worked properly in the year under review.
2020Sif Annual Report
42
Risk matrix
The outbreak of a worldwide pandemic was not anticipated in the risk-matrix of the
company. Other risks in the Sif Risk matrix did emerge during the year under review.
This mainly concerned the volatility that can result from the combination of
dependence on a limited number of markets, clients and projects and, more specific
for 2020, of dependence on political decision-making and the uncertainty that
sometimes comes with changes in administrations. The size of the majority of the
projects on the market makes it a challenge to optimize factory utilization. In
2020 the impact of the cancellation or delay of Vineyard underpinned this. Sif was
able to smoothen this impact by contracting Akita-Noshiro and by bringing forward
the Saint Nazaire project.
Important mitigation tools to smoothen capacity utilization are innovation, product
development and in-house detail engineering. Most of the innovations are related to
executed projects. Such as in 2018 and 2019 in Triton Knoll (design- and detail
engineering in contract scope of Sif/Smulders) and Borssele 3+4 (wind farm without
transition pieces). In 2020 innovation initiatives included, amongst others,
participation in design projects for floaters and new designs for transition pieces like
the ‘Sky-box’.
2020Sif Annual Report
43
Formulated
We identified risks and considered the measures and risk
appetite.
In progress
We identified risks, formulated measures and risk appetite.
Implementation is in progress.
Completed
We identified risks, related measures and risk appetite. This
resulted in sufficient response and therefore the status is
completed and incorporated into our internal control
environment.
Strategic risk Materialized 2020 Measures to mitigate strategic risk Risk appetite Status
Dependence on Northwest European
and on immature (emerging) markets
can disrupt the business
Vineyard project in USA was
delayed/cancelled in 2019/2020 with
utilization effects in 2020. Award of first
project in Japan and bringing forward
project Saint Nazaire absorbed part of
the under utilization caused by the
delay/cancellation of Vineyard.
Focus on mature markets in North Sea territory and
Select joint venture partners in emerging markets
Japan, Taiwan and United States to diversify
geographically
Sif will take equipment and know-how to
markets outside Northwest Europe only when
not jeopardizing home markets and only if
sufficient market funnel is in place. Until that
time Sif preferably manufactures from existing
production facilities in The Netherlands.
Dependence on limited number of
products
In 2020 Sif manufactured (components
for) foundations for 8 projects: Triton
Knoll, Borssele 1-2, Borssele 3-4-5, Akita
Noshiro, Saint Nazaire and Hollandse
Kust Zuid and components for Sverdrup
P2 and Hodfield jackets.
Developing new products and add-on services to limit
dependence on limited number of products/projects
and pursue that monopiles remain the solution of
choice for bottom fixed until 60 meters waterdepth by
being the supplier of LCOE optimized total MP
solutions.
Started marshalling activities in 2019 and Selected
acquisition-target KCI to grow engineering activities
Sif will only develop new products for existing
markets or enter new markets with existing
products
Dependence on offshore wind energy
with limited number of clients and
projects
Slowdown of oil & gas offshore
production activities in Europe
Maintain solid contracting principles and thorough
contract review procedures
Maintaining cost leadership and maintaining a certain
flexible workforce to achieve the flexibility required to
deal with volatile project environment
Safeguard balance between permanent and
flexible workforce and include critical positions
in permanent workforce (in stead of flexible).
Competition from new entrants or from
vertically integrated manufacturers
Announcements by Haizea and SeAH to
start monopile production in Spain and
UK from 2023 and by Orsted-EEW to
start in USA
Promote customer loyalty and render best-in-class
services. Maintain investments in innovation.
Current market can absorb 1 or 2 new
manufacturers of monopiles to restore healthy
demand-supply balance
2020Sif Annual Report
44
Legal and Regulatory Materialized 2020 Measures to mitigate strategic risk Risk appetite Status
Damage to reputation due to fraud,
bribery or corruption
none Authorization matrix. Control and assurance.
Company culture.
Zero incidents
Violation of values in Code of Conduct none E-learning and speak-up culture No violations of company values
Product-liability none Quality control and assurance, contracting principles
and insurance
Zero defects to finished products
IT-cyber-security Response to phishing mail Implement multi factor authentication, awareness
training on security and privacy, annual pentests and
introduction of i-babs as a secure environment for
confidential meeting documents
Financial risk Materialized 2020 Measures to mitigate financial risk Risk appetite Status
Inadequate reporting process Strengthening project management and control
function and implemented ERP AX
Timely and reliable monthly financial reporting
(monthly reporting latest on 15
th
day
subsequent to end of month)
Fluctuating material prices Steel showed pricing volatility in 2020
and early 2021
Pass-through costs for certain materials (steel) Very limited to no risk on price changes
Credit, interest rate and liquidity risk none Pursuing a credit policy, maintaining solvency and
healthy cash levels and following treasury policy
guidelines as explained in Note 25 to the Financial
Statements 2020 paragraphs ‘credit risk’, ‘liquidity
risk’ and ‘market risk’ respectively
Zero breaches of banking covenants or
covenant holidays when needed
Changes to global economic conditions Economy standstill due to pandemic Good contracting policies, flexible workforce, strong
balance sheet and cash management
Zero risk of changes of prices for raw
materials; steel is a 100% pass- through item
2020Sif Annual Report
45
Operational risk Materialized 2020 Measures to mitigate operational risk Risk appetite Status
Dependence on limited number of
suppliers or clients may disrupt
production
Outbreak of COVID19 Maintain and develop the strong relationship with key
suppliers based on mutual interest.
Develop relationships with suppliers in other regions.
Treat steel as a pass-through cost to avoid pricing
risk. Negotiate sound payment conditions,
performance bonds or credit insurance.
Tweak production methods to allow for products from
other producers (steelplates, flanges, coating)
Maintaining conditions as defined in
contracting policies
Steel is always a pass- through cost
Positive cash flow from projects
Volatility of project- related business Cancellation of Vineyard Wind project Maintaining a flexible workforce to adjust workforce to
workload. Scale up in-house design engineering for
earlier involvement; engage in flexible capacity
agreements
Safeguard balance between permanent and
flexible workforce
Inadequate alignment of existing and
new factories may cause delays or
disruptions
Loss of efficiency due to sub-
optimalization in 2019 and early 2020
Transferring working methods and techniques from
experienced
Roermond-staff to Maasvlakte2.
Scaling up in-house detail engineering capabilities
Uninterrupted production flow
Limited availability of skilled and
experienced staff may cause delays or
deficiencies
Tight labor market in Western Europe
for technical personell (welders and
rollers) has impacted growth of payroll-
based expertise and resulted in
relatively high quality costs
Strengthening talent development and developing
employee training and loyalty programme to retain
key personnel.
Maintaining good relationships with staffing agencies
Uninterrupted production flow
Insufficient flexibility or resources to
adapt to changing regulations and
specifications
Turn fear for change into opportunities Talent development, training and in-house engineering
know how
Market leadership in manufacturing capacity
and skills
Safety hazards Too many Incidents and near- misses Embedding safety in company culture and
maintaining focus on health of employees
Zero accidents
Risk of flooding of Roermond facilities
that are situated outside the dykes
None Work on a sustainable high water protection program
together with government bodies and industry
partners
Flooding of facilities once every 50 years
2020Sif Annual Report
46
Social, Environmental and Governance policy and MD&A of progress in 2020
Sif contributes to a more sustainable energy production and to a more sustainable
world. In this section of the annual report, we explain the progress we have made
today in terms of objectives that we have set for ourselves. We will explain how we
contributed to four of the Sustainable Development Goals of the United Nations by
serving our markets and applying our resources. The level of success determines
the added value of the company to various stakeholders over a longer period.
Market conditions
Within the energy sourcing and generation market, Sif focuses on Offshore Wind.
Expectations for the supply of offshore generated sustainable energy have increased
year on year. Industry analysts at WoodMackenzie now expect a global average
annual growth rate (AAGR) of 23.5% for the 2019-2029 period (source:
WoodMackenzie; Global Wind Power Market Outlook Update Q4 2020 dated
11 December 2020. The growth in demand is driven by climate-related inter-country
agreements and by the constantly decreasing costs of offshore wind energy.
‘Monopile foundations have
contributed to decreasing costs of
offshore wind energy, making
affordable and sustainable energy
accessible.’
Cost of electricity production are expressed in LCOE (Levelized Cost Of Energy).
LCOE for Offshore Wind electricity has dropped significantly by an estimated 71%
during the period 2009-2020 (source: Lazard’s Levelized Cost of Energy Analysis-
version 14.0 dated October 2020). Partly this is a consequence of low interest rates
for project financing and increasing turbine capacity. Prices of offshore-generated
wind energy fell further below the levels of traditional energy-sources and contribute
to access to affordable, reliable and sustainable energy. Foundations generally are
ordered three years ahead of grid-connection. We have seen confirmation of the
expected growth in our tender-activity and in our order book-additions in 2020 that
now stretches into 2023.
Product development
In 2020 Sif worked on projects Triton Knoll (UK), Borssele 1-5 (the Netherlands),
Saint Nazaire (France), Akita Noshiro (Japan) and Hollandse Kust Zuid (the
Netherlands). Total production in 2020 included approximately 164 Kton or
160 monopiles and primary steel for 115 transition pieces for these projects. The
foundations for these projects with diameters up to nine meters are designed and
manufactured to carry turbines with capacity ranging from 10 to 13 MW which is
the standard for the next two to three years. Further energy-output and cost-savings
can be realized by increasing size or by innovations to existing technologies. Turbine
manufacturers are now looking at capacities of 15 MW for the period beyond
2023 and have invited parties in the production-chain to facilitate this growth. For
foundations this implies larger diameters and lengths while decreasing the relative
amount of steel. To analyze implications for production at Sif, a research project
was initiated with external project-management support. In addition, Sif participated
in several innovation-initiatives to increase output or decrease lifetime costs.
2020Sif Annual Report
47
2020Sif Annual Report
48
Sif has a permanent innovation agenda consisting of either Offshore Wind energy
projects with embedded innovations or dedicated innovation projects that aim at
higher output, lower manufacturing costs, lower installation expenses, shorter and
safer offshore installation, faster manufacturing, extended lifetime or less nuisance
to the environment. Examples of embedded innovations are the slip-joint connection
at Borssele 5 and the Borssele 3+4 project where transition pieces are no longer
applied and where, as a consequence, savings are realized in steel costs and in
installation time at sea which is shortened dramatically. The innovation that
contributed to this solution is the Skybox where Sif's designers worked together with
DOT (Delft Offshore Turbines) and consulted with technicians to realize
a connection between the monopile and the tower that slides over the monopile with
a slip joint connection. The Skybox uses the slip joint technology to install the
secondary steel on the monopile with one offshore hoist. The use of a catcher plate
at the bottom of the Skybox makes it suitable for DP installation vessels. It is a new
application of slip joint technology (refer to picture on page 72 of this annual report).
2020Sif Annual Report
49
‘Innovations that increase output,
decrease costs, extend lifecycles
and limit residual nuisance
contribute to sustainable energy
production and affordable energy
over a longer term.’
Another example of Sif’s innovative drive is the Triton Knoll project where Sif is
optimizing the design-to-production process by including design engineering in its
contract scope. To expand engineering services for earlier involvement in the design
process, Sif expressed its intention to acquire KCI late 2020. This engineering
company with 60 Fte has extensive know-how of offshore structures in various
parts of the world.
Sif is a member of “Growth through Research development and demonstration in
Offshore Wind (GROW)” and involved in a number of innovative projects that
support the application of monopiles in Offshore Wind projects which in
2020 included floater designs, alternative materials for monopiles and sustainable
installation of very large monopiles.
‘Sif’s innovations are project-
embedded, innovation-projects or
in partnership under the GROW
umbrella.’
Investments that initially were scheduled for the 2019-2021 timeframe as a result of
the PISA design recommendations, addressing the diameter over wall thickness
ratio, are put on hold until more experience has been gathered on 9 meter diameter
designs for monopiles and on the actual stretch in the diameter/wallthickness ratio,
in relation to savings on materials and production costs.
Geographical expansion
Contract wins in 2020 included Hollandse Kust Noord (70 TP-less foundations,
65 Kton) and Dogger Bank A+B (190 foundations and transition pieces, 260 Kton).
Sif also won its first Japanese project in 2020. The 33 Akita- Noshiro foundations
and transition pieces were contracted and delivered in the same year. It partly filled
the capacity that was vacant after Vineyard was postponed and ultimately removed
from Sif’s orderbook in the second half of the year. Expectations are that further
Japanese projects will be realized to total production of 2.1 GW offshore wind by
2022 and that tenders will be issued for an additional 13 GW+ projects for the period
thereafter in view of the target to become carbon neutral by 2050. Sif considers
Japan a potential core market and has opened a sales-office in Tokyo.
2020Sif Annual Report
50
Oil and gas markets
Offshore Oil & Gas have been under pressure since 2015 due to heavy fluctuations
on a lower-level oil price. Projects in which Sif was involved accounted for around 3%
of Sif’s revenue in 2020 (5% in 2019) and consisted of the supply of mega-jacket
legs and pin piles for Hod-field and Sverdrup. Offshore Oil & Gas initiatives dropped
to almost zero in 2020 and production-lines at Sif for these products were
underutilized. On total production-capacity this represents approximately 40 Kton.
Sif is analyzing how this impacts the production set-up.
‘Production for oil & gas markets
dropped to almost zero in 2020.
Sif is analyzing how this impacts
production facilities.’
Resources and sustainability approach
Sif launched the monopile at the beginning of this millennium and has now
produced over 2000 of the approximately 5000 installed monopiles in Europe.
Assuming an average capacity per turbine of approximately 5 MW and an average
production period of 7 years, Sif has thus contributed to the production of more than
70,000 MW of clean, sustainable wind energy. Besides this contribution to the
displacement of CO2-emitting energy, Sif has also examined its own footprint.
We have set the following four targets for our sustainability strategy. They should
contribute to the Global Compact strategy of the United Nations that spells out the
ambition to accelerate and scale the global collective impact of business by
upholding the Ten Principles of the Global Compact Strategy and delivering on
Sustainable Developoment Goals.
From 2023 Sif manufactures on a zero safety-incident basis and contributes
to SDG’s 9 and 12;
Sif employs almost 600 employees in a 24/5 operation. This implies that every hour
of the week (weekends excluded) around 200 people are working for Sif, suppliers
and subcontractors excluded. Safety incidents disrupt production and can have
a serious impact on witnesses to the incident. In addition, it is unacceptable to Sif
that people leave for work in the morning in good health and later return home
injured or end up in hospital. The aim is therefore zero incidents. We have been
recording Lost Time Injury Frequency (LTIF) for many years. This was 2.48 per
million hours worked in 2020 (2.39 in 2019) and is down from about 8 in 2014,
a decrease of about 70%. Later we also started recording the Total Recordable Injury
Frequency (TRIF). TRIF also includes restricted work injuries and medical treatment
injuries that have not resulted in lost time. TRIF provides better insight into the total
number of incidents and therefore offers better tools for action in the workplace.
TRIF was 9.93 per million hours worked in 2020 (19.1 in 2019). Well below the
target of 13 for that year but still not near the zero-incident target for 2023.
2020Sif Annual Report
51
The HSE manager will implement a number of new safety initiatives and monitor
their implementation. The emphasis is on mindset (safety as a first nature, at work,
on the road and at home) and on fabrication design. Ergonomics and further
automation in the production halls should help to reduce the number of incidents to
zero from 2023.
From 2025 Sif's activities are fully powered by renewable energy and
contribute to SDG’s 7,12 and 13;
The compensation of CO2 emissions by Certificates of Origin or variants thereof is
an option for operating as a CO2 neutral entity. The pollution comes at a price. As
Sif, we have also made use of this in recent years. However, we are ready for the
next step, an intrinsic motivation not only to stabilize the burden on the planet with
CO2, but to actually reduce it.
In 2020 the gross carbon dioxide emission by Sif was 3.157 or 19.3 kilos per ton of
processed steel (4.392 tons or 23.7 kilos per ton in 2019). In 2021 Sif will take
further steps to reduce this CO2 emission. Our commitments include:
Pre-heating of welds by gastorches will be replaced by induction pre-heating in
2021-2022. This will result in up to 20% natural gas and propane gas reduction;
>
Heavy transport vehicles (trucks, SPMT) will be fueled by bio-diesel;>
Explore options to reduce CO2 emissions from our supply chain.>
From 2027 Sif manufactures on a zero waste basis and contributes to SDG’s
12 and 13;
Zero waste refers to the circularity of the products we manufacture and to the
process of manufacturing itself.
Monopiles are completely manufactured in steel. No other materials are applied
except for preservation. The first monopiles were manufactured and installed early
this millennium. Based on a twenty-five-to-thirty-year lifetime of a wind farm, the first
ones will become redundant or economically depreciated in 5 to 7 years’ time.
Depending on the soil conditions of the sea-bed, monopiles are hammered to
sometimes 30 meters depth. Circularity implies complete removal of the monopile
(rather than cutting it at 2 meters below the mud-line), cleaning of the preservation
and re-use of the steel. And therefore, circularity requires a supply-chain approach.
Zero waste implies a zero-waste production in Sif’s facilities. We will involve the full
supply chain (steel industry, monopile manufacturing, preservation contractor and
installation/decommisioning companies) to present a zero-waste strategy by
2023 to manufacture zero-waste by 2027 at the latest.
Sif maintains leadership in the global supply of offshore wind foundations
and contributes to SDG's 7, 9, 12 and 13.
We now produce monopiles for 60 meters water depth, tens of kilometers from the
coast. The current dimensions and quality offer the possibility to install turbines with
approximately 13-14 MW capacity. Up to 60 meters waterdepth, the monopile is
economically and technically the best solution. Floating wind farms are the sole
option for deeper water. Sif participates in studies to also make floating solutions
technically and economically feasible.
The success of offshore wind stands with close cooperation between the (design
and construction departments of) suppliers of the individual components. Sif
therefore joined the getting-to-zero coalition in 2020 to jointly give a push to the
decarbonisation of international shipping. Looking together for the optimal
production of energy from offshore wind through optimal coordination of
foundations and turbine capacity.
2020Sif Annual Report
52
Longer-term financial results are the outcome of Sif’s effectiveness in employing
resources, of our social effectiveness and embedding this in the community and of
our responsibility for the environment in which we operate. This integration with our
day-to-day activities is on the agenda of meetings with the Supervisory Board and of
the budget meetings. Sif considers the development of sustainable business
management of prime importance for the continuity of the business, the wellbeing of
its employees and of other stakeholders. Sif follows a strategy on sustainability with
measurable targets for the period 2020- 2021 and for the longer term. Transparancy
is vital to tracking progress towards a sustainable future. Sif demonstrates
commitment to transparency by disclosing through this annual report, through
communications with stakeholders as indicated on page 25 of this annual report
and by disclosing to and through Carbon Disclosure Project (CDP), MSCI and ISS.
In our business we use the following resources:
Facilities and procedures
Sif has two manufacturing facilities equipped with 47 Sif design welding machines
and 8 rollers. The factory in Roermond is specialised in the manufacturing of cans
and cones, transition pieces, pin piles, legs and pile sleeves with wall thicknesses up
to 250mm. The cans and cones are transported down the river Maas to the
assembly and coating facility in Rotterdam, where they are assembled into
monopiles. The 10.8-hectare facilities in Roermond, of which currently 6.1 hectare
buildings, is owned property dating back to 1972. The buildings were re-equipped
and expanded in 2016 -2017. In 2017 a new facility and rolling machine went into
service. The facilities in Roermond, are situated outside the dykes. There is no risk of
flooding of the factory itself but acces can be restricted or limited in case of very
high water-levels in the rivers as seen latest in 1993 and 1995. The facility in
Rotterdam was constructed in 2015–2016 and is situated on 62 hectares leased
property. Hereof, 20 hectares are leased since 2019. The Rotterdam facility is
situated on reclaimed land. None of the factories are situated adjacent to protected
land for bio-diversity.
The purpose for which Sif’s products are used implies that product flaws are
unacceptable. On a constant basis Sif has its quality and operational procedures
under review since the dual-site manufacturing concept is operational and future
plans to eventually expand outside Europe are prepared. Quality control procedures
start with contract and design review and document and data control and continue
through purchasing procedures, production process control, equipment inspection
and testing, materials, parts and components, ultrasonic weld testing and specific
coating tests. These procedures and included check-points ensure Sif’s products are
in an optimal condition before being handed over to the client. Sif has a long-
standing reputation for quality and takes high value in continuous improvement.
The outbreak of the COVID19 pandemic also impacted site inspections and audits at
suppliers. Most audits were performed remotely. In addition to several internal
health and safety audits, six audits were executed at suppliers and potential
suppliers, subcontractors, and business partners. By or on behalf of our clients, six
audits on quality were carried out at Sif’s production sites.
Sif is certified to ISO 9001, ISO 3834-2, API-2B/API-Q1, EN1090-1/EN1090-2, ASME
U, U2, S, VCA**, ISO 45001, ISO 14001 and DNVGL-CP-0352 standards. In
2020 certificating institutions carried out seven audits at Sif in the context of ISO,
VCA, EN and ASME certification. Certification in conformance with ISO 3834-2 is
linked to ISO 9001 and has been subject to surveillance audits in 2020. This
certification applies for both Roermond and Maasvlakte 2. Both locations are ISO
45001, ISO 14001 and VCA** certified. ASME certification applies to the facilities in
Roermond.
‘Our people combine passionate
craftmanship and innovative
vision; ground breaking
engineering with a passion for safe
and flawless manufacturing’.
2020Sif Annual Report
53
Social: human resources
In 2018 Sif 2.0 was launched. Sif 2.0 is the company culture program that prepares
the employees for the future. The transformation of Sif from a single-site
manufacturing company to a project- oriented total solutions provider of monopiles
requires a different approach to information technology, to communication and to
workplace behavior. The emphasis is on safety, teamwork, ownership and workplace
conditions. TIP (The Improvement Project) was introduced, challenging Sif-
employees to contribute to this transformation-process by converting ideas to
practical solutions. Ideas are valued on impact for the organization, practicability
and originality and, eventually, rewarded by a cash-bonus.
Safety is a number-one priority for Sif. It is our responsibility to offer our employees
a safe workplace, provide them with opportunities for training and contribute
towards their personal development. Every new employee (permanent as well as
temporary) receives a login for Sif-academy. He/she is obliged to follow safety-
instructions through Sif-academy before starting at Sif. Once started at Sif,
permanent employees maintain their 24/7-access-login for various e-learnings.
These e-learnings include information on COVID19 and on working from home but
also include training of skills, leadership, and communications. From 2021 an
Onboarding program will be added to facilitate broader HSE-training opportunities. In
addition, our manufacturing staff follow safety and first-aid training and job-related
training such as hoisting and lifting, forklift truck, electrical etc. An annual amount of
€ 250,000 is budgeted for these trainings. An additional € 150,000 per annum is
budgeted for Peronal Development Plans (PDP’s). Where required, our
manufacturing staff are SCC (Safety Health and Environment Checklist Contractors)
or VCA** certificated. Our safety management systems are in accordance with
OHSAS 18001 (Occupational Health and Safety Assessment Series) and safety is
the first item on the agendas of all Supervisory Board and Executive Board meetings.
The target for 2021 is to reduce the LTIF to below 1.5 and TRIF to below 9.
‘An annual € 1,200 per employee is
budgeted for job-related training
and personal development’
To be able to absorb the volatility inherent to the still relatively young mature project
business in which we are active, Sif needs a degree of flexibility in its workforce and
activities. In addition to its permanent (payroll) workforce, Sif employs external
(flexible) workers on a project basis or through staffing agencies and subcontracts
certain activities such as outfitting of transition pieces, preservation for corrosion,
transportation and testing. The increasing maturing of the industry will result in less
volatility in utilization. Anticipating this development, Sif has started to rebalance the
workforce in favor of more permanent jobs. This has resulted in the shift from
flexible to permanent as indicated on page 56. Sif does not employ anyone under the
age of 18 and ensures its suppliers and subcontractors do not employ anyone under
the age of 18. Since activities at Sif are all executed in the Netherlands and since
purchased materials and services are manufactured or rendered in European
countries, the risks of child-labor are limited. To support their health and well-being,
all employees have access to a physiotherapist and to the company-doctor and are
offered an annual medical check-up.
2020Sif Annual Report
54
All Sif’s employees are remunerated on the basis of one of the largest Collective
Labor Agreement (CAO kleinmetaal) in the Dutch metal industry. Collective Labor
Agreements are agreed between the employers-association for the metal industry,
the Dutch government and employee trade unions. All Sif-employees are free to
associate with trade unions and to participate in the collective bargaining on the
closure of Collective Labor Agreements for the industry. Employment conditions are
in-line with or exceed the average employment conditions applicable in the
Netherlands and do foresee in special leave situations. Tax and other deductions
and remittances take place in conformance with European standards, regulations
and legislation. Sif ensures its suppliers and subcontractors pay their workers a fair
wage based on fair working hours regulations and assure fair employment
conditions according to the applicable legislation.
Supply chain
Sustainable production of renewable energy sources requires a value-chain
approach. More efficiency requires integrated design and production of foundations,
towers, turbines and blades. Our clients select us on the basis of the level of value-
addition to the end-product. Therefore, they audit us on our safety performance,
quality, competences, processes, products, policies and financial health. Like we
audit our suppliers and subcontractors on these items to safeguard a healthy,
innovative supply-chain that engineers and manufactures state-of-the-art quality
products and services.
The materials Sif uses the most during its production process are steel plate,
flanges, welding wire, welding powder and utilities (water, industrial gas and
electricity). The services Sif uses are corrosion prevention, non-destructive testing
and transport. These materials and services are purchased from third parties, mostly
European. Sif expects its supply-partners and sub-contractors to work in accordance
with the principles laid-down in Sif’s Code of Conduct. Application of these principles
may deviate slightly due to geographical or cultural reasons.
MATERIALS USED DURING PRODUCTION
2020 2019 2018 2017 2016
Steel (ton) 164,000 185,000 138,000 232,000 191,000
Welding powder (ton) 1,639 1,870 1,517 2,540 2,103
Welding wire (ton) 1,435 1,656 1,456 2,302 1,944
Employee Participation
Sif’s employees are represented by an elected Works Council that is consulted on
intended business-economic, strategic or organizational decisions by the Executive
Board. Further more the Works Council, together with the Executive Board, ensures
that working conditions remain good or improve where required, that the rules
related to employment conditions, working hours and rest periods are complied with,
that employees are treated equally and remunerated fair and in accordance with
applicable laws and collective labor agreements and that Sif keeps an open eye and
constantly investigates the possibility to employ people with disabilities or residents
of the Netherlands who have an immigrant background. Consultation meetings
between the Works Council and the Executive Board during which the Company’s
general business progress is discussed take place in average every two months
formally and on a need-to-discuss basis as often as deemed necessary by one of the
parties. The Executive Board notifies the Works Council of the important decisions
the Board is preparing and how it will involve the Works Council in the decision-
making.
2020Sif Annual Report
55
The Works Council has nine members. In 2020 the Works Council had six
consultation meetings with the Executive Board. During three of these meetings the
Executive Board presented and explained the strategy and the operations plan
(January, February and September), The chairman of the Remuneration Committee
of the Supervisory Board, in presence of the Executive Board, presented the draft
remuneration policy (February). As of April, all meetings were held via Microsoft
Teams. During these meetings the Health-Safety-Environment policies of Sif, the Job
Evaluation System and the Sick Leave Policy were presented and discussed. The
CFO explained the annual 2019 results and the interim 2020 results in June and
September 2020 respectively. The member of the Supervisory Board representing
the Works Council has attended two consultation meetings in 2020.
The Works Council was consulted or asked for assent on the appointment of
a prevention officer, the introduction of a working hours registration system, the
introduction of a job evaluation system and methodology, the new policy on
absenteism, the revision of the house rules, the 2020 operations plan, the
remuneration policy and the re-appointment of Supervisory Board member Peter
Gerretse.
The Executive Board appreciates a strong relationship with the Works Council and
stimulates frequent and open cooperation with and involvement of the Works
Council. The discussions with the Works Council are and were fruitfull and highly
appreciated by both the Executive and Supervisory Board.
Diversity
Diversity is reflected in the distribution over gender, age, nationality/race and
education/experience.
The Supervisory Board Profile as published on the Company’s website defines the
required expertise, experience and competences of the Supervisory Board members.
The Board Profile matches the profiles of the individual Supervisory Board members.
Sif’s diversity policy for Executive Board and permanent staff is based on a best-
candidate-for-the-job-basis. In case of equal capabilities, preference is given to
female candidates. Although a more balanced division will be taken into account
when filling positions, both in the Executive and Supervisory Boards as in staff
positions, the nature of the industry combined with the geographical location of Sif
and the presence of high- tech and industrial companies in the region make
competition for female management and female Directors on Sif’s Executive Board,
but also for (technical) other staff positions fierce.
The majority of Sif’s workforce, on the workfloor but also in project management
and support staff, needs technical skills and education. The Dutch Education Council
reported in October 2020 that the share of girls in the technology sector was lowest
in VMBO (preparatory vocational education). About 9.6% of the girls in grades 3 and
4 of VMBO opted for a technical training. The proportion of women in MBO
(secondary vocational education) was higher (19.4%). In higher professional
education it was 18.7% and in university education 36.2% of the total number of
students. The proportion of boys and men in health care training shows a mirror
image. The Education Council found that gender segregation in technology and care
is declining but that it is still reflected in the working environment.
Sif pursues more balance in gender distribution, countries of origin as well as
a broader spread and better balance in terms of age. Sif does not discriminate
between men and women, native or immigrant, Dutch and foreign or otherwise in
remuneration levels and applies the principle of equal opportunity and equal
payment for equal work.
Sif employs people on the Company-paylist (permanent staff) or hired through
external agencies (flexible staff). In 2020, based on year- end, our flexible staff was
44.8% compared to 51.5% at year-end 2019. At the end of 2020, the total workforce
was 569 FTEs (full time equivalents) compared to 658 FTE at the end of 2019.
314 hereof are permanent employees and 255 flexible employees (end of 2019:
319 permanent and 339 flexible). The average number of permanent employees in
2020 was 315 FTE (295 FTE in 2019). Of our flexible workforce, 98% are factory
workers (blue collar); of our permanent workforce, 65% is factory worker. The age
structure of our permanent workforce is reflected in the pie-chart on page 57.
2020Sif Annual Report
56
In the year under review, Sif had two Executive Board members and five Supervisory
Board members. One Supervisory Board member (20%) is female. In 2022 the
rotation schedule includes the resignation of two members of the Supervisory
Board. At that occasion, Sif will bring the composition of the Supervisory Board in
line with the future legal requirements on female representation i.a. at least one third
male and at least one third female members. The Management Team of Sif has five
members, Executive Board members included. Of the five members, one is female.
In 2020, the female proportion of Sif’s permanent staff averaged just over 7% (9% in
2019). In 2020 Sif did not employ people with disabilities or political refugees.
Staff distribution: factory floor – support staff
(IN %)
79
21
Factory floor
Support staff
Staff distribution: flexible - permanent
(IN %)
44.8
55.2
Flexible
Permanent
2020Sif Annual Report
57
Gender distribution of permanent staff
(IN %)
93.0
7.0
Male
Female
Staff distribution: nationalities
(IN %)
53.5
11.8
4.7
14.6
15.4
Dutch
German
Portugese
Polish
Other
age distribution of permanent staff
(IN %)
7.5
34.0
51.5
7.0
18-25
26-40
41-60
61+
2020Sif Annual Report
58
‘Wind is our main energy solution,
iron our main raw material used
for steel plates and flanges as our
main components’.
The aim of the safety-policy is to simply prevent accidents to happen to our
employees or any one else working at or visiting our facilities. Sif constantly invests
in safety. In recent years, our safety policy and investments have led to a reduction
in the number of our lost time injuries frequency and near miss accidents. (Lost
Time Injury Frequency (LTIF) = number of injuries per million manhours worked
whereby the lost time due to an accident exceeds one day).
In 2020 LTIF ended at 2.48 (2.39 in 2019), caused by 3 Lost Time Injuries (LTI),
which is well above the target for LTIF of less than 1.5. In all cases, the injuries were
of such nature that 100% recovery and return to the working place was possible.
Rootcause analysis and corrective actions have been implemented to avoid repeat
effects and thorough communication has been put in place to inform and train
employees. The number of Total Recordable Injuries including first aid-treatments
(TRI) ended at 46 in 2020 (41 in 2019). This resulted in a TRIF (Total Recordable
Injury Frequency per million manhours worked) of 9.93 (19.1 in 2019) which is well
below the target maximum of 15. Medical treatment or first aid was required in
31 cases out of the total of 46 versus 17 out of 41 in 2019. Further improvement will
require a more proactive and broader-based safety culture that is embraced by all
employees. The majority of safety-incidents occurred in our flex-worker community.
This underpins the need for evaluation hereof. Rebalancing permanent and flexible
staff is part of the improvement plan. In 2020 this balance shifted from 48.5%
permanent in 2019 to 55.2% permanent in 2020. The ultimate goal is zero accidents
and work-related illnesses: a 100% safe workplace. That will require beter
supervision and staff-support and an integrated culture of safety-awareness.
Most of the incidents in 2020 resulted from a lack of attention while transporting or
hoisting materials. An unsafe setup or alignment was the root cause. In most cases
this resulted in injuries to arms, hands and fingers (54%) or legs and feet (20%). The
remainder relates to injuries to head, face or torso. We are striving to reduce the
number of incidents through incident-case discussions, better personal awareness
and discipline on the use of safety equipment and personal protection gear and the
continuous training of less experienced newcomers. In 2020 3,291 (1,571 in 2019)
observations and recommendations were reported, analyzed and, in most situations,
resulted in extra toolbox meetings and training or in working place or working
method improvements. Most observations related to workplace tidiness and the
correct use of hoisting equipment. In 2021 hoisting refreshment trainings will be
organized for all workers that had this training in earlier years. In all cases a positive
and stimulating approach is taken towards safety and people are encouraged to
report unsafe situations. Basis for all improvement actions is an improved safety-
culture and personal drive to work safe. For this reason, we have started a safety
culture observation and improvement program with the assistance of an external
expert. Only obvious willful ignorance of safety rules and methods may lead to
disciplined measures.
In 2020 absence for illness decreased to 5.50% (6.59% in 2019), which is on our
2020-target. The target for 2021 is max 5%. Main contributors to the absence rate
were that people reported ill due to the outbreak of COVID19 in March 2020, not only
when suffering symptoms of COVID19 but also those sent home by Sif as
a precautionary measure. This resulted in absence rates of around 10% in the first
half of 2020. Almost 20% of total sick leave percentage relates to employees
between 60 and 65 years of age. Compared to previous years, there was less long-
time (43-365 days) but relatively high medium length (8-42 days) absence.
Considerable attention is being paid to improving working conditions, including
alternative positions, in order to avoid wear and tear impact on employees. Together
with the Works Council a structural improvement plan with clear actions has been
developed which should result in increased labor vitality, lowered risk of sick leave
and a better and safer working place. Of this 3-phase plan, the first phase was
finished in 2020. Phases 2 started in November 2020 and will continue into 2021.
2020Sif Annual Report
59
Unprecedented was the outbreak of the COVID19 pandemic in February 2020. Sif
immediately installed a Corona Crisis Team (Management Team, HSE manager,
Communications manager, Chairman Works Council) that had daily update
meetings to discuss the situation at Sif, also in the light of governmental measures
and actions. Immediate travel-restrictions were announced, workplace adjustments
were made with workplace-dividers and social distancing-measures and information
was shared through the portal and virtual meetings. For office-workers, work-at-
home instructions applied. After some hesitation and uncertainty at the start, people
got used to the new working-methods and production more or less normalized from
April/May 2020 onwards.
SAFETY STATISTICS
2020 2019 2018 2017 2016 2015 2014
LTI 3 3 1 2 3 6 6
TRI 46 41 38 29 14 10 19
LTIF (per mln
hours worked)
2.48 2.39 0.97 1.49 2.83 7.19 8.03
TRIF (per mln
hours worked)
9.93 19.1 15.6 15.7 9.4 12 17.4
Sickness leave
%
5.50 6.59 7.24 4.46 4.00 4.02 4.77
Safety statistics
(number of incidents)
48
42
36
30
24
18
12
6
0
Non-lost time injury Lost time injury
2020 2019 2018 2017 2016 2015 2014
43
3
38
3
38
1
29
2
14
3
10
6
19
6
Safety statistics (LTIF)
(PER MLN MANHOURES)
9
8
7
6
5
4
3
2
1
0
2020 2019 2018 2017 2016 2015 2014
2.48
2.39
0.97
1.49
2.83
7.19
8.03
2020Sif Annual Report
60
‘The volatile nature of Sif’s
business until 2020 required
a certain balance in permanent
and flexible workforce; the coming
years the orderflow tends to
stabilize.’
Environmental: natural resources
Sif aims to reduce the number of natural resources (gas, water and oil) per ton
production-output used during the manufacturing and logistical process, primarily by
replacing these with sustainably generated electricity. The same applies for the
quantity of waste. The products Sif uses the most of during the manufacturing
process are shown below.
SIF ENVIRONMENTAL FOOTPRINT BASED ON 2016 = 100
PER KTON PRODUCED 2020 2019 2018 2017 2016
Steel plates (Kton) 164 185 138 232 191
Welding powder* 10.0 10.1 11.0 10.9 11.0
Welding wire* 8.8 8.9 10.6 9.9 10.2
Natural Gas m
3
2,239 2,861 4,465 3,328 4,984
Propane m
3
2,684 2,791 2,341 1,561 0
Electricity (Mwh)* 103.4 104.8 109.5 89.7 76.4
Water m
3
40.8 42.2 56.7 16.0 17.1
Scrap metal* 33.0 31.5 38.1 35.7 33.0
Oxygen m
3
8.7 9.7 10.0 9.6 7.8
*based on 2015=100
Water consumption per kton produced decreased by 3% in 2020 from 42.2m3/kton
in 2019 to 40.8m3/Kkton. The water is mostly used at the Maasvlakte 2 location
where monopiles are cleaned as part of the coating process.
In 2020 four environmental incidents (eight incidents in 2019) were reported, all
involving oil-spills that were isolated and cleaned, in two situations with aid of
specialized contractors. They mostly were caused by leaking hydraulic systems
(hoses or links). To prepare for oil-spill incidents, BHV-trainings were organized in
2020 to anticipate spill situations and required salvage actions.
In 2020 Sif used 55,958,452 Megajoule energy (69,089,788 MegaJoule in 2019) in
its production process. The change relates to the lower quantity of steel processed.
Consumption per Kton steel decreased by little more than 8%. The target is to
produce energy neutral.
At the end of 2019, the 12 MW GE wind turbine started production of electricity at
our Maasvlakte 2 production site. Electricity used by Sif in 2020 was entirely
produced by wind and therefore, on balance, fully carbon dioxide neutral. Carbon
dioxide emission by Sif were as follows over the past years.
2020Sif Annual Report
61
SIF CO2 FOOTPRINT
2020 2019 2018 2017 2016
Production Kton 164 185 138 232 191
Gross CO2 emission 3157 4392 5865 16643 9849
Net CO2 emission 0 3990 2536 16643 9849
Gross kg per Kton 19.3 23.7 42.4 71.7 51.6
Gross CO2 emission for 3,313 ton (96%) relates to fuel consumtion for heating,
machinery and transport (Scope 1). This was 4,064 ton or 92.5% in 2019. The
remaining 138 ton or 4% relates to business travel (scope 3). This was 328 ton or
7.5% in 2019. Sif produced 12,042,195 Kwh green electricity which is the equivalent
of 6,696 ton CO2. Net CO2 emission therefor was -3,245 ton in 2020. Environmental
management systems are in accordance with ISO 14001. The facilities in Roermond
comply with EU Directive 2010/75/EU (industrial emissions).
Economic: financial resources
Sif applies financial resources that are provided by equity owners of the Company
(paid-up capital, premium and retained earnings), by lenders and by business
partners (working capital). Sif aims optimal financing at the lowest cost of capital
given a certain acceptable risk. These financing sources are balanced through the
dividend policy and banking arrangements, assuming working capital requirement of
close to or just below zero.
‘In addition to corporate tax,
€ 11,107 thousand was remitted in
VAT, € 8,864 thousand was
withheld for income tax and
€ 1,813 thousand was paid to the
municipality for property tax’.
Sif has had debt and guarantee facilities in 2020 with a banking consortium
comprising ABN AMRO, Euler-Hermes, ING, Rabobank and Tokio Marine with an
expiry date 31 March 2022. Early 2021 Sif and the banking consortium agreed on an
extension of the facilities by two years, therefor now expiring 31 March 2024.
Interest is based on Euribor plus a surcharge that depends on covenants on
a quarterly basis. Total debt, Solvency and EBITDA numbers are based on ex-IFRS
16 numbers. Discounts of up to 0.05% can be achieved when realizing certain
sustainability targets on safety and CO2 footprint.
The facilities comprise:
Facility
Revolving credit facility € 100 million
Committed guarantee facility € 250 million
Leverage covenant (Total debt/EBITDA)* Max 2.5
Solvency* Min 35%
*normalized for IFRS16 effects
2020Sif Annual Report
62
Financial performance
To assess and monitor Sif’s underlying financial performance, the Company’s
management uses certain non-IFRS financial indicators, such as contribution and
EBITDA. (reference is made to the Glossary in the annual report for definitions).
Reporting is based on IFRS. To allow for comparison with previous reportings and
with banking covenant ratios, Sif will also use certain indicators that are corrected
for IFRS16 effects. This mainly relates to the landlease at Maasvlakte 2.
ACTIVITY LEVELS AND PROFITABILITY
AMOUNTS IN EUR '000 2020 2019
Wind Oil & Gas Marshalling Other Total Wind Oil & Gas Marshalling Other Total
Revenue from contracts
with customers:
- Revenue from
construction contracts
316,671 10,273 3,122 64 330,130 310,511 9,653 1,116 1,330 322,610
- Operational lease income - - 3,627 1,676 5,303 - - 1,478 1,512 2,990
Total revenue from
contracts with customers
316,671 10,273 6,749 1,740 335,433 310,511 9,653 2,594 2,842 325,600
Segment contribution 92,503 5,199 1,780 2,110 101,592 91,360 6,012 1,144 3,001 101,517
Gross profit 57,413 1,889 1,780 2,030 63,112 51,330 1,936 287 3,254 56,807
Indirect personnel
expenses
(20,888) (19,275)
Depreciation and
impairment
(20,348) (17,207)
Facilities, housing &
maintenance
(5,125) (5,372)
Selling expenses (1,018) (994)
General expenses (4,325) (4,795)
Net finance costs (2,398) (2,689)
Joint ventures (61) 53
Total profit before tax 8,949 6,528
2020Sif Annual Report
63
Revenue, expenses and earnings
Currency effects do not affect Sif’s financial results. Revenues and expenses are
invoiced and paid in Euro, also for projects in UK, USA and Japan. If paid in other
currencies, Sif applies hedging instruments. The price of steel is a pass- through
item. Fluctuations in steel prices therefore have an immediate effect on revenues
but not on earnings. The level of revenues is also subject to the structure of joint
ventures; if Sif subcontracts part of its scope, revenues of the subcontractor are
accounted for in Sif’s revenues. If Sif teams- up in partnership, revenues of the joint
venture partner are not accounted for by Sif unless accounting rules dictate
otherwise.
Because of the above constraints, contribution and contribution per Kton are more
adequate performance indicators for Sif than revenue. All Sif’s activities take place
in the Netherlands and products are as a rule delivered ‘free along ship’ or ‘free on
board’ Rotterdam. Less occasionally products are ‘delivered at place’. This mostly
applies to primary steel for transition pieces or pin piles for jackets. When applicable,
activities are invoiced inclusive of VAT. However, in view of the predominantly
across the border business-to-business nature of the performances, in most cases
this is not applicable.
In 2020 contribution (revenue minus the cost of raw materials, subcontracted work,
other external charges and logistic and other project-related expenses) almost
equalled 2019’s contribution. Of total contribution, €1.780 million was generated by
marshalling activities (€ 1.144 million in 2019). Contribution per Kton throughput,
corrected for marshalling activities, increased to € 609/ton (2019: € 542/ton). The
increase by more than 12% reflects the improving pricing-environment.
‘At 11% less KTon production and
almost equal contribution,
contribution per ton increased by
almost 12% to € 609 in 2020.’
After direct personnel expenses, overhead and production & general manufacturing
expenses this resulted in gross profit of € 63.1 million (18.8% of total revenues)
compared to € 56.8 million (17.5% of total revenues) in 2019. Included in production
and general manufacturing expenses are maintenance of machinery, gas
consumption, energy consumption, support materials and inventory of critical
spareparts. The 10.6% lower direct personel and 20.4% lower production and general
manufacturing expenses relate to the 11.4% lower production output in particularly
the first half when the outbreak of the pandemic caused higher absence rates and
efficiency suffered from the replacement of the Vineyard project by two other
projects. Sif did not apply for subsidies or other pandemic-related government- or
lendersupport. EBITDA in 2020 arrived at € 31.8 million (9.5% of total revenues)
compared to € 26.4 million (8.1% of total revenues) in 2019. The IFRS 16 impact on
EBITDA is + €6.6 million (€4.3 million in 2019).
2020Sif Annual Report
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RESULTS FROM OPERATIONS
X € 1,000 2020 2019
Revenues 335,433 325,600
Raw materials 130,437 151,357
Subcontracted 82,510 47,732
Logistics and other project related 20,894 24,994
Contribution 101,592 101,517
Direct personnel 27,091 30,332
Production, general manufacturing 11,389 14,378
Gross profit 63,112 56,807
Indirect personnel 20,888 19,275
Facilities, housing 5,125 5,372
SG&A 5,343 5,789
EBITDA 31,756 26,371
Depreciation & amortization 20,348 17,207
Operating result (EBIT) 11,408 9,164
Net financing expenses 2,398 2,689
Share in profit of joint ventures 61 -53
Income tax 1,376 818
Total income 7,573 5,710
Non-controlling interests 302 222
Net earnings 7,271 5,488
The covenant ratios are based on results and balance sheet corrected for
IFRS16 effects. Leverage amounted to 0.00 (1.04 in 2019), with covenant at 2.5.
Solvency was 50% as at 31 December 2020 (47% as at 31 December 2019), with
covenant at 35%.
Convenant discipline over time
2.50
2.00
1.50
1.00
0.50
0.00
Leverage covenant Actual leverage
Q1 2017 Q3 2017 Q1 2018 Q3 2018 Q1 2019 Q3 2019 Q1 2020 Q4 2020
Tax
Sif has two manufacturing facilities, both located in the Netherlands. From
a quantity and value perspective, the most important semi finished products are
steel plates that for almost 100% are purchased in Germany. The value of shaping
the steel plates into cylinders or cones is mainly added in the Netherlands.
Sometimes handling takes place by subcontractors in Belgium when appendages or
coatings are added. The value added tax follows the products. Revenues of
€ 82 million were realized in the Netherlands, € 108 million in other EU countries and
€ 145 million in the rest of the world (€ 126 million and € 6 million respectively in
2019).
2020Sif Annual Report
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Processing in the Netherlands is done by employees who are on the Sif- payroll, and
for whom wage tax and social premiums are withheld and paid. Or by employees
who work for Sif on a temporary basis and are taxable at the agency they are
seconded by. Sif profits are subject to corporate income tax. In 2020 this amounted
to € 1.4 million (€ 0.8 million in 2019). Sif allocates profit in the jurisdiction in which
the economic activity takes place, namely the Netherlands, and is therefore fully
liable for corporate income tax in the Netherlands. The Netherlands has no regional
corporate taxes. The normal tax rate is 25%. Sif receives discounts on this tax rate,
including discounts related to innovation activities and expenses. These so called
Innovatiebox-discounts relate to € 0.9 million in 2020. Sif’s effective tax burden in
2020 was 15.4% compared to 12.5% in 2019. Sif does not use tax-haven
constructions.
Depreciation and amortization
In 2020, Sif invested € 5 million in tangible and intangible fixed assets (€ 21 million
in 2019). This mainly relates to investments in production facilities that sometimes
are related to specific projects. Sif has leased approximately 62 hectares of land in
Rotterdam. As of 2019 IFRS16 obliges Sif to capitalize the right of use for landlease
and to amortize this over a period in line with the contract term. The positive effect
of IFRS16 in comparison to Dutch GAAP is approximately € 7 million on EBITDA in
2020. The effect on net debt amounts to approximately € 50 million. Due to IFRS
16 depreciation increased by approximately € 5 million per annum.
Working capital, liquidity, cash and cash flows
Net working capital (inventories + contract assets + trade receivables+current
prepayments–trade payables –contract liabilities) amounted to -€ 2.9 million at the
end of 2020 compared to € 4.3 million at the end of 2019. Cash from operations
depends on invoicing milestones agreed with customers, subcontractors and
suppliers and does not affect revenue or earnings recognition. The balance of cash
and cash equivalents at the end of 2020 amounted to € 2.6 million compared to
€ 1.6 million at the end of 2019. Despite the fact that Sif did not use financial
instruments in the year 2020, Sif may use financial instruments to reduce risks
related to interest rate volatility if required. Sif applies a non-speculative approach in
this respect.
CASH FLOW SUMMARY
X € 1,000 2020 2019 2018 2017 2016
Net cash from operating activities 34,336 30,853 5,548 53,886 52,887
Net cash from investing activities -4,927 -14,485 -3,218 -27,587 -67,962
Net cash from financing activities -28,343 -15,294 -2,701 -25,726 -13,354
Cash and cash equivalents at year
end
2,645 1.579 505 877 304
Net debt, Solvency
Net debt at the end of 2020 was -€2.6 million on an ex-IFRS16 basis and
€52.1 million under IFRS16 reporting. The difference is largely determined by the
lease of land at Maasvlakte 2 Rotterdam, lease-commitments for which are
amortised on the balance sheet. At the end of 2020 total equity (paid-in capital
+ retained earnings + non-controlling interests) amounted to € 94.9 million on a ex-
IFRS 16 balance sheet total of € 175 million (solvency of 50%) compared to
€ 86.7 million on a balance sheet total of € 184.4 million (solvency of 47%) at the
end of 2019. When determined on IFRS16 basis total equity amounted to
€ 94.3 million which gives a solvency of 39.0% on a balance sheet total of
€ 241.8 million.
Financial Outlook
The orderbook at the date of signature of this annual report extends well into
2023 with utilization at 85-90% of capacity based on 24/5 working weeks and zero
utilization of Oil & Gas production lines. The sizes of the projects are such that
production efficiency should benefit from long learning-curves. Also, beyond
2023 market conditions look favorable. The drive for larger capacity per unit will
eventually lead to investements to facilitate the foundation-increases that these
larger capacities require. The implications this may have on Sif and Sif’s production
facilities are being investigated and due for decision late first half of 2021.
Annual maintenance CAPEX will be € 5-6 million and annual depreciation close to
€ 21 million.
2020Sif Annual Report
66
Governance
Sif is subject to the Full Large Company Regime (‘Volledig Structuurregime’) as is
required by Dutch law and has a two-tier board structure. Most important rights and
duties of the Annual General Meeting of Shareholders are the issue of additional
shares or the grant of rights thereto, the authorization to acquire fully paid-up
shares, the reduction of issued share capital, the approval of material changes to the
identity or the character of the company, the approval of the remuneration policy,
the appointment of Supervisory Board directors, the remuneration of Supervisory
Board directors, distribution of a dividend, amendments to the articles of
association, adoption of the annual accounts, discharge of Executive and
Supervisory Board directors and instruction of an auditor. Sif endorses the principles
of the Dutch Corporate Governance Code 2016 (the ‘Code’) and applies virtually all
the best practice provisions of the Code. Non-compliance is explained on page
68 and on the website of Sif under the Corporate Governance parapraph.
Board responsibilities
The Executive Board with CEO and CFO is responsible for the day-to-day
management of the Company. The powers of the Executive Board are set out in the
Articles of Association and arise from legislation and regulations. The Executive
Board has adopted internal rules regulating its organization, decision-making
process and other internal Executive Board-related matters. These Management
Board Rules are posted on Sif’s website on the Corporate Governance page.
The Supervisory Board primarily supervises the implementation of the strategy for
long-term value creation by the Executive Board and advises the Executive Board in
the day-to-day management. In performing this task, the Supervisory Board serves
the interests of all the Company’s stakeholders; owners, clients, employees,
suppliers and society. The Supervisory Board Rules that define these duties, roles
and responsibilities of the Supervisory Board are included in the Corporate
Governance section of Sif’s website. This implies that certain rights have been
transferred from the Annual Meeting of Shareholders to the Supervisory Board.
These rights relate primarily to the nomination and resignation of Supervisory and
Executive Board members.
Sif ‘s Supervisory Board, in accordance with Article 10 of the Supervisory Board
Charter, can install Supervisory Board Committees. The committees all have their
own set of rules defining their conduct namely; Audit Committee Rules and
Remuneration Committee Rules, which are both posted on Sif’s website under the
Corporate Governance pages. These committees are tasked with laying the
groundwork for the decision-making process of the Supervisory Board.
The Remuneration Committee Rules define the duties, roles and responsibilities for
the Remuneration Committee. They include the Company’s remuneration policy, the
remuneration of the individual Executive Board members (remuneration structure,
amount of the fixed remuneration, shares and/or other variable remuneration
components, pension entitlements, redundancy payments and the performance
criteria and their application), scenario analyses regarding different levels of variable
remuneration and the Supervisory Board’s remuneration report.
The Audit Committee Rules define the duties, roles and responsibilities of the Audit
Committee and include supervising the effectiveness of the internal
riskmanagement and control systems and of the financial information to be
disclosed by Sif. The Audit Committee also supervises Sif’s compliance program,
tax-planning policy, information and communication technology, cybersecurity and
financing. The Audit Committee maintains regular contact with the external auditor
and nominates the external auditor for appointment by the General Meeting of
Shareholders.
2020Sif Annual Report
67
Appointment and resignation of Executive and Supervisory Board members
The rules governing the appointment and resignation of Board members are
included in the Articles of Association. To summarize these rules: members of the
Supervisory Board are appointed by the General Meeting of Shareholders with
certain rights of (enforced) recommendation for the Supervisory Board, the largest
shareholder of Sif and for the Works Council. Both the General Meeting of
Shareholders and the Works Council can object to nominated candidates by the
Supervisory Board but these objections may be ignored. Members of the Executive
Board are appointed by the Supervisory Board following notification of the General
Meeting of Shareholders of a proposed appointment. Appointments for Executive
and Supervisory Board members are generally for a period of four years. The
Supervisory Board elects an Executive Board member to be the CEO.
Board remuneration policy
As referred to in Section 2:135b of the Dutch Civil Code. The Supervisory Board
determines the remuneration of the Executive Board members in accordance with
the Remuneration policy, most recently approved by the General Meeting of
Shareholders in May 2020 and as published on the Company’s website.
The aim of Sif’s Remuneration policy is to attract, motivate and retain qualified
managers with relevant experience. The policy provides a framework for a result-
driven remuneration that is linked to short- and longer-term strategic financial, non-
financial and personal objectives. The starting point is remuneration based on the
best possible balance between short-term results and longer-term value creation. In
order to link individual remuneration to the company’s performance, the
remuneration package includes a variable part in the form of an annual cash bonus
incentive and a long-term incentive in the form of performance shares. To ensure
market competitiveness of remuneration, Sif offers a remuneration package around
the median level of the market with a defined peergroup of industry peers plus
a range of companies that are of a similar scale and level of complexity. There
should be an alignment between the remuneration package of the Executive Board
and the salary conditions of the employees of Sif, partially expressed by the pay ratio
level. The main components of the remuneration policy are:
A fixed basic salary. Reviewed annually based on the (index for the) cost of
living;
a.
Variable annual cash bonus for short-term results, linked to the results of the
company (one calendar year). Maximum 60% of fixed basic salary for CEO of
which as a starting point 50% dependent upon achievement of financial targets
and 50% dependant on personal targets and maximum 50% of fixed basic salary
for CFO of which as a starting point 77% dependent on financial targets and 23%
on personal targets. Financial targets may include EBIT, contribution, ROACE, net
debt. Personal targets may include safety, sickness leave, CO2 footprint.
corporate culture, reporting and communication. On-target bonus of 40% for CEO
and 35% for CFO. Personal targets are based on areas of responsibility and set
by the Remuneration Committee at the beginning of the year;
b.
Pension accrual for a pensionable salary-arrangement based on the fixed basic
salary;
c.
A Long-Term Incentive Plan (LTIP). Based on discretionary award of
Performance Share Units, granted to a maximum pay-out of 20% of fixed basic
salary annually with a three-year vesting period, conditional upon employment.
The discretionary award is based on financial and/or non-financial KPIs that may
vary from year-to-year in both kind and quantity.
d.
Settlement in principle is in cash with an option to settle in shares. A minimum
holding period following vesting of the shares does not apply unless settlement
has taken place in shares. In that case an extra two-year blocking period applies
in addition to the three-year vesting;
Members of the Executive Board are engaged by means of a services
agreement. The term of which is set at four years.
e.
2020Sif Annual Report
68
Anti-takeover measures and relationship with major shareholder
The duties and powers of the General Meeting of Shareholders, the Supervisory
Board and the Executive Board are balanced in terms of control and influence. The
Company has no actual or potential anti-takeover measures or change-of-control
clauses in place. Sif and Egeria Industrials AG (‘Egeria’) have entered into
a Partnership Agreement. The main elements of this Agreement relate to the
composition of the Supervisory Board and the Board’s committees. The Partnership
Agreement also contains terms regarding an orderly market arrangement and
information sharing. Egeria, when holding more than 50% of the shares in Sif, is
entitled to nominate and propose replacements for two Supervisory Board members.
At least one of these two Supervisory Board members must be independent as
defined by the Code. When holding between 20 and 50% of the shares in Sif, Egeria
is entitled to nominate and propose a replacement for one Supervisory Board
member. The Partnership Agreement will terminate once Egeria ceases to hold at
least 20% of the shares in Sif.
The dividend policy stipulates that Sif will pay a regular dividend in line with the
medium-term to long-term financial performance of the company, with the aim of
gradually increasing the dividend per share. The policy states that Sif will pay out
25%- 40% of annual net earnings as reported in the approved financial statements of
the company in any year. The retained earnings will be added to the reserves of the
company to finance future investments or other spending of the company or to
improve liquidity or for other purposes. The achievement of this reservation and
dividend policy is, however, subject to certain legal limitations and the company’s
liquidity position. Dividends may be distributed in cash, in stock or in a combination
of cash and stock as an optional dividend.
The best practice provisions of the Code with which Sif does not comply are as
follows (paragraph numbers refer to the best practice provisions of the Corporate
Governance Code):
1.3.1- 1.3.5 Internal audit function.
Given the size of Sif and the functioning of its corporate bodies, the Supervisory
and Executive Boards do not consider it opportune at this stage to appoint an
internal auditor or to set up a separate audit department. However, this is
remedied by certain financial and operational audit activities carried out by
internal and/or external parties on an ad hoc basis. Designated employees with
external support carry out other audits (safety, quality, integrity).
>
2.1.5-Diversity.
Latest at occurrence of the next vacancy on the Supervisory Board, Sif will bring
its Supervisory Board in line with diversity laws and regulations.
>
2.3.2 Committees.
The Supervisory Board has not installed a Selection & Nomination Committee.
The relevant best practice conditions apply to the full Supervisory Board
>
2.3.4 Organization of the Supervisory Board and reports:
Composition of the Committees, Independent Audit Committee. Sif’s Audit
Committee has two members. One of the members is not independent as
defined in Article 2.1.8.
>
2.3.10 Company Secretary.
The Secretary of the Executive Board monitors compliance with procedures and
statutory obligations, provides the Supervisory and Executive Boards with the
necessary information and supports the Supervisory Board during its meetings.
>
4.2.3 Meetings and presentations.
Sif’s policy is outlined in its Fair Disclosure and Bilateral Dialogue Policy. Sif
announces press releases, presentations and press conferences in advance.
Analyst conference calls and meetings are scheduled and announced for Full
and Half year presentations and are audio webcast live. Transcripts of the calls
are published on the website. Meetings with individual investors (‘one-on-one’)
or presentations at investor conferences are not webcast for practical reasons,
nor can they be followed through direct phone connections or otherwise.
>
2020Sif Annual Report
69
Integrity
Sif is committed to conducting its business in line with applicable laws and
regulations and in accordance with its Code of Conduct. The principle-based Code of
Conduct formulates Sif’s values. The standards that must be adhered to in order to
ensure these values are promoted are laid down in different policies. These
principles of the Code of Conduct relate to:
Fair competition: Sif operates in a relatively young market environment with a limited
number of clients and vendors. Articles 7 and 8 of the Code of Conduct deals with
Competition and Anti- trust matters and with Bribery and Money laundering. Sif
trains employees and promotes fair and respectful dealing with customers, suppliers
and other business and industry partners. Fair and respectful dealing means that Sif
employees refrain from influencing business partners and from obtaining personal
opportunities or advantages by offering or accepting items of value. Fair dealing also
implies that insider trading regulations are observed. New employees are instructed
on this when hired. In 2020, Sif incurred no legal or other expenses that relate to
a possible violation of these principles.
Sif has joined the Offshore Wind Foundation Coalition, a European initiative founded
in December 2020 aiming agreement by industry-partners on a European technical
standard for offshore wind foundations.
Workplace safety: Workplace safety is dealt with in articles 4 and 5 of the Code of
Conduct. It relates to safety from business accidents but it also relates to
discrimination, intimidation or (sexual) harassment on the workfloor. Sif has no
business with organizations that use forced child labour or that do not respect
human rights. The Sif business environment is mainly North West Europe with
European clients, mainly European suppliers and contractors. When interpreting
workplace safety, we assume our corporate responsibility as stated in the "Guiding
Principles on Business and Human Rights: Implementing the United Nations
‘Protect, Respect and Remedy’ Framework". Workplace safety also implies that
privacy of employees or business partners is observed. The Algemene Verordening
Gegevensbescherming (AVG or ‘general regulation on protection of privacy’) applies
from May 2018. Sif has performed a privacy impact assessment and appointed
a data security officer and is compliant with the AVG.
Company property & sustainable business: Articles 6, 10-13 deal with environmental
impact, the obligation of record keeping of all financial transactions. Efficient and
legitimate use of company property & resources, e- mail and Internet usage for
professional purposes only is pursued and use of corporate opportunities for
personal benefits are prohibited.
Our Whistle blower’s regulation encourages Sif employees, who may remain
anonymous if wished, to report contraventions of the Code of Conduct or other
transgressions. Reports are immediately followed-up appropriately and the Executive
Board is notified. There have been no reports under the whistle blower regulation in
2020 and no violations of the Code of Conduct were assessed. Programs to further
embed the Code of Conduct in the organisation have started during 2018 as part of
the Sif 2.0 program and were continued in 2020.
Executive Board declaration
The Executive Board states that all information, which must be disclosed pursuant
to Article 2a of the “Besluit inhoud bestuursverslag” (Decree content of the Report of
the Executive Board), is included in this Executive Board Report.
The Executive Board declares that, to the best of its knowledge:
The Report of the Executive Board provides sufficient insight into the
shortcomings (which did not occur during the financial year) and operating
effectiveness of the internal risk management and control system;
1.
The aforementioned systems provide a reasonable degree of assurance that the
financial reporting does not include any inaccuracies of material importance;
2.
The current state of affairs justifies the preparation of the financial statements
on a going concern basis (for which we refer to the paragraph: ‘outlook’);
3.
The financial statements as included in this report provide a true and fair view of
the assets, liabilities, financial position and profit for the financial year of Sif
Holding N.V. and the group companies included in the consolidation;
4.
The report of the Executive Board as included in this report provides a true and
fair view of the situation on the balance sheet date, the business development
during the financial year of Sif Holding N.V. and of its affiliated group companies
included in the financial statements. The Report of the Executive Board
describes the material risk to which Sif Holding N.V. is exposed;
5.
2020Sif Annual Report
70
The report of the Executive Board states those material risks and uncertainties
that to the best of our knowledge are relevant to the expectation of the
company’s continuity for the period of twelve months after the preparation of the
report.
6.
Roermond, 11 March 2021
Fred van Beers (CEO)
Leon Verweij (CFO)
FINANCIAL CALENDAR 2021
14 April AGM record date
10 May Deadline for registration or voting for AGM
12 May Release of Q1 2021 trading update
12 May Annual General Meeting of Shareholders
14 May Quotation ex-dividend
17 May Dividend record date
21 May Payment of net dividend to Financial Intermediaries for distribution
to shareholders
21 May Payout of gross dividend to large shareholders
28 August Publication of 2021 interim results
5 November Publication of Q3 2021 trading update
2020Sif Annual Report
71
2020Sif Annual Report
72
2020Sif Annual Report
73
Sif Annual Report 2020
74 Consolidated statement of profit or loss for the year ended
31 December 2020
75 Consolidated statement of financial position as at 31 December 2020
(before appropriation of result)
76 Consolidated statement of changes in equity for the year ended
31 December 2020
77 Consolidated cash flow statement for the year ended
31 December 2020
78 Consolidated cash flow statement for the year ended
31 December 2020 (continued)
79 Notes to the consolidated financial statements for the year ended
31 December 2020
120 Separate statement of profit or loss for the year ended
31 December 2020
121 Separate statement of financial position as at 31 December 2020
(before profit appropriation)
122 Notes to the separate financial statements for the year ended
31 December 2020
2020Sif Annual Report
74
Consolidated statement of profit or loss
for the year ended 31 December 2020
AMOUNTS IN EUR '000 Notes 2020 2019
Total revenue from contracts with customers 6 335,433 325,600
Raw materials 130,437 151,357
Subcontracted work and other external charges 82,510 47,732
Logistic and other project related expenses 20,894 24,994
Direct personnel expenses 7 27,091 30,332
Production and general manufacturing expenses 11,389 14,378
Indirect personnel expenses 7 20,888 19,275
Depreciation and amortization 20,348 17,207
Facilities, housing and maintenance 5,125 5,372
Selling expenses 8 1,018 994
General expenses 9 4,325 4,795
Operating profit 11,408 9,164
Impairment losses on financial assets (2 ) (22 )
Finance costs 10 (2,396 ) (2,667 )
Finance costs and impairment losses (2,398 ) (2,689 )
Share of profit of an associate and joint ventures 11, 17 (61 ) 53
Profit before tax 8,949 6,528
Income tax expense 12 1,376 818
Profit after tax 7,573 5,710
Attributable to:
Non-controlling interests 22 302 222
Equity holders of Sif Holding N.V. 7,271 5,488
Profit after tax 7,573 5,710
Earnings per share 13
Number of ordinary shares outstanding 25,501,356 25,501,356
Basic earnings per share (EUR) 0.29 0.22
Diluted earnings per share (EUR) 0.29 0.22
2020Sif Annual Report
75
Consolidated statement of financial position as at 31 December 2020
(before appropriation of result)
AMOUNTS IN EUR '000 Notes 31-Dec-2020 31-Dec-2019
Assets
Intangible fixed assets 14 1,265 1,609
Property, plant and equipment 15 110,340 119,459
Right-of-use assets 30 51,902 56,567
Investment property 16 400 400
Investments in joint ventures 17 33 94
Deferred tax asset 12 349 181
Total non-current assets 164,289 178,310
Inventories 18 375 312
Contract assets 19 29,555 13,345
Trade receivables 20 43,661 45,242
Other current financial assets 15 20
Prepayments 1,307 803
CIT receivable - 2,376
Cash and cash equivalents 21 2,645 1,579
Total current assets 77,558 63,677
Total assets 241,847 241,987
AMOUNTS IN EUR '000 Notes 31-Dec-2020 31-Dec-2019
Equity
Share capital 22 5,100 5,100
Additional paid-in capital 22 1,059 1,059
Retained earnings 80,316 74,828
Result for the year 7,271 5,488
Equity attributable to
shareholder 93,746 86,475
Non-controlling interests 524 222
Total equity 94,270 86,697
Liabilities
Revolving credit facility - non-
current 23 - 22,872
Lease Liabilities - non-current 23, 30 50,139 54,255
Employee benefits - non-current 26 273 287
Other non-current liabilities 27 1,484 1,487
Total non-current liabilities 51,896 78,901
Lease Liabilities - current 23, 30 4,625 4,743
Trade payables 63,438 37,733
Contract Liabilities 19 14,319 17,625
Employee benefits - current 26 2,042 2,390
Wage tax and social security 1,557 317
VAT payable 5,482 1,731
CIT payable 498 -
Other current liabilities 27 3,720 11,850
Total current liabilities 95,681 76,389
Total liabilities 147,577 155,290
Total equity and liabilities 241,847 241,987
2020Sif Annual Report
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Consolidated statement of changes in equity for the year ended 31 December 2020
AMOUNTS IN EUR '000 Share capital
Additional paid-
in capital
Retained
earnings
Result for the
year Total
Non-controlling
interests Total equity
Balance as at 1 January 2020 5,100 1,059 74,828 5,488 86,475 222 86,697
Appropriation of result - - 5,488 (5,488 ) - - -
Total comprehensive income
Profit for the year - - - 7,271 7,271 302 7,573
Total comprehensive income - - - 7,271 7,271 302 7,573
Balance as at 31 December 2020 5,100 1,059 80,316 7,271 93,746 524 94,270
Balance as at 1 January 2019 5,100 1,059 79,429 (2,051 ) 83,537 - 83,537
Appropriation of result - - (2,051 ) 2,051 - - -
Total comprehensive income
Profit attributable to the shareholder - - - 5,488 5,488 222 5,710
Total comprehensive income - - - 5,488 5,488 222 5,710
Transactions with owners of the Company
Dividend distributions - - (2,550 ) - (2,550 ) - (2,550 )
Total transactions with owners of the
Company - - (2,550 ) - (2,550 ) - (2,550 )
Balance at 31 December 2019 5,100 1,059 74,828 5,488 86,475 222 86,697
2020Sif Annual Report
77
Consolidated cash flow statement for the year ended 31 December 2020
AMOUNTS IN EUR '000 2020 2019
Cash flows from operating activities
Profit before tax 8,949 6,528
Adjustments for:
Depreciation and amortization of Property, Plant and Equipment 15,051 12,773
Depreciation of right-of-use assets 5,297 4,434
Unrealised changes in joint ventures 61 (53 )
Impairment losses on financial assets 2 -
Net finance costs 2,396 2,667
Changes in net working capital
o Inventories (63 ) 55
o Contract assets and liabilities (19,516 ) 12,092
o Trade receivables 1,579 2,366
o Prepayments (1,007 ) 431
o Trade payables 18,716 (721 )
Total changes in net working capital (291 ) 14,223
VAT payable and receivable 3,751 (2,545 )
Other financial assets 5 -
Employee benefits (362 ) 807
Provisions - (263 )
Wage tax and social security 1,240 (1,154 )
Other liabilities (2,099 ) (984 )
Income taxes received / (paid) 1,330 (2,913 )
Interest received / (paid) (994 ) (2,667 )
Net cash from operating activities 34,336 30,853
2020Sif Annual Report
78
Consolidated cash flow statement for the year ended 31 December 2020 (continued)
AMOUNTS IN EUR '000 2020 2019
Cash flows from investing activities
Purchase of intangible fixed assets (277 ) (417 )
Purchase of property, plant and equipment (4,650 ) (14,138 )
Loans and borrowings to joint ventures - 70
Net cash from (used in) investing activities (4,927 ) (14,485 )
Cash flows from financing activities
Movements in revolving credit facility (22,698 ) (8,490 )
Proceeds from new borrowing - 80
Payment of lease liabilities (5,645 ) (4,334 )
Dividends - (2,550 )
Net cash from (used in) financing activities (28,343 ) (15,294 )
Net increase / (decrease) in cash and cash equivalents 1,066 1,074
Cash and cash equivalents at 1 January 1,579 505
Cash and cash equivalents at 31 December 2,645 1,579
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Notes to the consolidated financial statements for the year ended 31 December 2020
Reporting entity1
Sif Holding N.V. (the ‘Company’) is a limited liability company domiciled in the
Netherlands. The Company’s registered office is at Mijnheerkensweg 33, Roermond.
These consolidated financial statements comprise the Company and its subsidiaries
(collectively the ‘Group’ and individually ‘Group companies’). Information on the
structure of the Group is provided in note 29. The company is registered with the
Netherlands Chamber of Commerce Business Register under number 13016026.
The consolidated financial statements of the Group for the year ended 31 December
2020, were authorised for issue in accordance with a resolution of the Executive
Board on 11 March 2021.
As from 12 May 2016 the shares of the company have been listed on Euronext
Amsterdam.
Basis of preparation2
These consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European Union (EU-
IFRS). The financial statements also comply with the financial reporting
requirements included in section 9 of Book 2 of the Netherlands Civil Code.
The consolidated financial statements have been prepared on a historical cost basis,
except for investment property that have been measured at fair value. The Group’s
consolidated financial statements are presented in EUR (‘000), which is also the
Company’s functional currency, if not stated otherwise. All values are rounded to the
nearest thousands (EUR ‘000) on individual line items which can result in minor
rounding differences in sub-totals and totals, except when otherwise indicated.
The consolidated financial statements provide comparative information in respect of
the previous period.
Going concern
In determining the appropriate basis of preparation of the consolidated financial
statements, management is required to consider whether the Group can continue in
operational existence for the foreseeable future.
The future financial performance of the Group is dependent upon the wider
economic environment in which it operates. The factors that particularly affect the
performance of the Group include political decision making and global economic
conditions. COVID-19 has heightened the inherent uncertainty in the Group’s
assessment of these factors. However, the outlook remains positive: the orderbook
is fully contracted until halfway 2023 and early 2021 the financing arrangements
have been extended until 31 March 2024. Furthermore, the market for offshore
generated sustainable energy is expected to continue growing for the coming years,
which results in sufficient opportunities on the longer term.
Accordingly, management considers there to be no material uncertainties that may
cast significant doubt on the Group’s ability to continue to operate as a going
concern. Therefore, the Group continues to adopt the going concern basis in the
preparation of the consolidated financial statements.
Management estimates and judgements
The preparation of the Group’s consolidated financial statements requires
management to make estimates and assumptions. To make these estimates and
assumptions the Group uses factors such as experience and expectations about
future events that are reasonably expected to occur given the information that is
currently available. These estimates and assumptions are reviewed on an ongoing
basis.
Revisions of accounting estimates and assumptions, or differences between
accounting estimates and assumptions and the actual outcomes, may result in
adjustments to the carrying amounts of assets and liabilities, which would be
recognised prospectively.
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COVID-19 impact
The Group assessed the impact of the COVID-19 pandemic on the various estimates
and risks in the consolidated financial statements, such as liquidity risk, credit risk,
impairment risk and the risk for onerous contracts.
As COVID-19 did not impact the Group’s orderbook and order intake and the impact
on the Group’s operations has been limited, the Group has been able to extent the
financing arrangements until 31 March 2024. Therefore, the Group considers there
to be no significant impact on liquidity risk, impairment risks and the risk for
onearous contracts.
Furthermore, the Group has used external credit agencies for the estimates of credit
risk and therefore the possible impact of COVID-19 on the creditworthiness of the
Group’s customers has been taken into account. This did not result in a significant
increase of the expected credit loss provisions.
Contract assets and liabilities
Revenues from contracts with customers and direct costs are recognised in the
statement of profit or loss in proportion to the satisfaction of each performance
obligation. In the Wind, Oil & Gas and Other segments the satisfaction is assessed
based on the actual hours incurred compared with the estimated hours needed to
complete the full performance obligation. In addition, management estimates at
each reporting date the total expected costs to be incurred for each individual
performance obligation and adjustments are made where appropriate. Detailed
explanations of the degree of judgment and assumptions used are included under
the respective section in the notes to the financial statements related to revenues
from contracts with customers (note 6 Operating segments).
Leases
The Group rents warehouse/factory facilities and several housing units in order to
carry out its activities. As of September 2015, the Group entered into a lease
agreement with Havenbedrijf Rotterdam N.V. for the lease of two plots in the
Rotterdam harbor. The lease of plot A started at 1 September 2015 and will end on
1 July 2041 (cancellable as per 1 July 2031), the lease of plot B started at 1 July
2017 and will end on 1 July 2041 (cancellable as per 1 July 2021 and as per 1 July
2031). As of July 2019, the Group entered into a lease agreement with Havenbedrijf
Rotterdam N.V. for plot C. The lease for plot C started on 30 July 2019 and will end
on 1 July 2041 (also cancellable as per 1 July 2021 and as per 1 July 2031).
Extension options or cancelation options are included in the lease term when the
group has such an economic incentive that exercising the option is reasonably
certain. The group considers available evidence at the time of the assessment,
including potential favourable terms upon extension, potential termination penalties,
the relative costs associated with potential relocation or termination of the lease and
the extent of leasehold improvements undertaken. Additionally, the size and the
relative importance of the leased premises as well as the availability of easily
substitutable assets is taken into consideration when assessing whether the group
has an economic incentive to extend a lease for which it holds an option to do so.
The Group applies judgement in evaluating whether it is reasonably certain it will or
will not exercise the option to renew or terminate the lease. That is, it considers all
relevant factors that create an economic incentive for it to exercise either the
renewal or the termination. After the commencement date, the Group reassesses
the lease term if there is a significant event or change in circumstances that is
within its control and affects its ability to exercise or not to exercise the option to
renew or to terminate (e.g., construction of significant leasehold improvements or
significant customisation to the leased asset).
No changes have been made in these estimates in 2020.
Jubilee scheme
The costs of the jubilee scheme are calculated according to actuarial method. This
method uses assumptions about discount rates, future salary increases, and
retention rates. Such estimates are very uncertain, owing to the long-term nature of
the scheme. The assumptions used are reviewed each reporting date (see
note 26 employee benefits).
Significant accounting policies3
The Group has consistently applied the following accounting policies to all periods
presented in these consolidated financial statements.
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Basis of consolidation3.1
Subsidiaries
The consolidated financial statements comprise the financial statements of the
Group and its subsidiaries as at 31 December 2020. Control is achieved when the
Group is exposed, or has rights, to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if, and only if, the Group has:
Power over the investee (i.e., existing rights that give it the current ability to
direct the relevant activities of the investee);
1.
Exposure, or rights, to variable returns from its involvement with the investee;2.
The ability to use its power over the investee to affect its returns.3.
The Group re-assesses whether or not it controls an investee if facts and
circumstances indicate that there are changes to one or more of the three elements
of control. Consolidation of a subsidiary begins when the Group obtains control over
the subsidiary and ceases when the Group loses control of the subsidiary. Assets,
liabilities, income and expenses of a subsidiary acquired or disposed of during the
year are included in the consolidated financial statements from the date the Group
gains control until the date the Group ceases to control the subsidiary. A change in
the ownership interest of a subsidiary, without a loss of control, is accounted for as
an equity transaction. If the Group loses control over a subsidiary, it derecognizes
the related assets (including goodwill), liabilities, non-controlling interest and other
components of equity while any resultant gain or loss is recognized in profit or loss.
Any investment retained is recognized at fair value.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses
arising from intra-group transactions, are eliminated. Unrealised gains arising from
transactions with equity-accounted investees are eliminated against the investment
to the extent of the Group’s interest in the investee. Unrealised losses are eliminated
in the same way as unrealised gains, but only to the extent that there is no evidence
of impairment.
Significant accounting policies3.2
Revenue from contracts with customers
The Group is primarily involved in the manufacturing of foundation piles for offshore
wind farms and metal structures, parts of metal structures, pipes, pipe structures,
and components for the offshore industry. Furthermore, the Group is providing
Marshalling and logistics services to its clients. Revenue from contracts with
customers is recognised when control of the goods or services is transferred to the
customer at an amount that reflects the consideration to which the Group expects
to be entitled in exchange for those goods or services. The Group has generally
concluded that it is the principal in its revenue arrangements, because it typically
controls the (series of) goods or services before transferring them to the customer.
The Group applied the following judgements that significantly affect the
determination of the amount and timing of revenue from contracts with customers:
Construction contracts
Identify the contract(s) with a customer
The Group identifies a contract with a customer when all the criteria of IFRS 15 are
met. The price as agreed upon may vary in the beginning of the project. The initial
contract price is normally determined based on situations in the past and the
company is working with its customers on the final design and development of the
project. The change in the contract price is a change within the existing contract and
relates mainly to adjustments before the start of the production. A combination of
contracts is considered for every individual contract, although mostly not applicable
as contract prices are determined on a standalone basis and no discounts are given
related to other contracts. Contract modifications are relatively limited.
Under IFRS 15 cost to obtain a contract - when they are incremental - and if they are
expected to be recovered —should be capitalized and then amortized consistently
with the pattern of revenue for the related contract. However, since the expected
amortization period is approximately one year or less, the cost to obtain a contract
are expensed when incurred.
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Identify the performance obligations in the contract
The goods of the Group include mainly monopiles, transition pieces, legs, piles and
pilesleeves. Goods within a contract that are substantially the same and that have
the same pattern of transfer to the customer are considered as series of distinct
goods. These series and the other individual goods are identified as separate
performance obligations as the customer can benefit from the goods on its own or
with readily available resources and the goods are distinct within the context of the
contract. This results in an accounting treatment with a series of goods on
a performance obligation for the aforementioned goods, as the series of goods are
designed for a specific project and connected to each other without having the
opportunity to adjust these easily. The aforementioned goods are separated as
these can be considered to be distinct.
Determine the transaction price
The transaction price is the price that the company expects to receive for the
satisfaction of the performance obligations taking into account among others:
discounts, financing components, liquidated damages and penalties. Before
including any amount of variable consideration in the transaction price, the Group
considers whether the amount of variable consideration is constrained. The Group
determined that the estimates of variable consideration are not constrained based
on its historical experience, business forecast and the current economic conditions.
In addition, the uncertainty on the variable consideration will be resolved within
a short time frame. The variable considerations are relatively limited, as the
company provides no volume rebates, no rights of returns, no performance bonuses,
no refunds nor credits.
Allocate the transaction price to the performance obligations in the contract
The transaction price is separately agreed for the relevant performance obligation or
are spread over the performance obligations based on the calculation which was the
basis for the contract.
Recognise revenue when (or as) the entity satisfies a performance obligation
The Group recognizes revenue when (or as) a performance obligation is satisfied,
i.e., when control of the (series of) goods or services underlying the particular
performance obligation is transferred to the customer. The Group recognise revenue
over time, since its performance creates or enhances an asset that the customer
controls as the asset is created, its performance does not create an asset with an
alternative use to the entity and the entity has an enforceable right to payment for
performance completed to date.
Marshalling services
During 2019 the Group started to provide marshalling and logistic services to its
clients. These services can comprise of (a combination of) mainly renting out
logistical area and facilities, and providing logistical handling services.
Contracts with bundled sales of renting out space and logistical handling services
are comprised of at least two performance obligations, because the renting and
handling services are both sold on a stand-alone basis and are distinct within the
context of the contract. Accordingly, the Group allocates the transaction price based
on the relative stand-alone selling prices of the services.
As renting out logistical space is considered a lease contract within the scope of
IFRS 16, the related accounting is performed in accordance with the policies as
described in the section “Leases”. As the lease contracts are concluded to be
operational lease, the related revenues are accounted for as operational lease
income in the period the space is leased.
The logistical handling services agreed in the contract can be distinct, or a series of
distinct services that are substantially the same and that have the same pattern of
transfer to the customer. As a customer simultaneously receives and consumes the
benefits provided by an entity’s performance and the throughput time of an
individual performance obligation is limited, the Group transfers the control of the
service at a point in time.
For some contracts the Group needs to incur costs in order to enable the Group to
fulfil the performance obligations in the contract. In accordance with IFRS 15, in the
accounting of those costs to fullfill a contract, any other applicable accounting
standards are considered first. If other standards are not applicable to contract
fulfilment costs, the following criteria are applied for capitalisation as contract costs:
2020Sif Annual Report
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The costs directly relate to a contract or to a specifically identifiable anticipated
contract (e.g., costs relating to services to be provided under renewal of an
existing contract or costs of designing an asset to be transferred under
a specific contract that has not yet been approved).
1.
The costs generate or enhance resources of the entity that will be used in
satisfying (or in continuing to satisfy) performance obligations in the future.
2.
The costs are expected to be recovered.3.
Contract balances
Contract assets
Contract assets represent the gross amount expected to be collected from
customers for contract work performed to date. The contract assets are measured
as costs incurred plus profits recognised to date less progress billings and
recognised losses. Contract assets are subject to impairment assessment. Refer to
accounting policies on impairment of financial assets.
Trade receivables
A receivable is recognised if an amount of consideration that is unconditional is due
from the customer (i.e., only the passage of time is required before payment of the
consideration is due). Refer to accounting policies of financial assets.
Contract liabilities
A contract liability is recognised if a payment is received or a payment is due
(whichever is earlier) from a customer before the Group transfers the related goods
or services. Contract liabilities are recognised as revenue when the Group performs
under the contract (i.e., transfers control of the related goods or services to the
customer).
Furthermore, the Group provides warranty bonds for completed contracts. The
estimated bond costs for the duration of the warranty bonds are recorded as part of
the contract liabilities, and is revised periodically.
Employee benefits
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid if the Group has
a present legal or constructive obligation to pay this amount as a result of past
service provided by the employee and the obligation can be estimated reliably. Wage
tax deductions (WBSO) are recognised in profit or loss over the periods in which the
Group recognises the related costs which the grants are intended to compensate.
Post-employment benefit plan
The Group has a defined benefit scheme for which premiums are payable to an
industry pension fund (Bedrijfstakpensioenfonds) that is separately managed: the
Pensioenfonds Metaal en Techniek (PMT). This pension scheme is administered
together with those of other legal entities. The pension obligation is based on the
duration of the participation in the plan and their salary levels. The related
obligations are covered by the periodical premiums to the industry pension fund. The
associated businesses are not obliged to compensate any deficits in the pension
funds, nor are they entitled to any surpluses. Furthermore, the structure of the
administration does not allow for providing the required information to the Group for
accounting for the pension scheme as a defined benefit scheme in accordance with
IAS 19. As such, this pension scheme has been accounted for as a defined
contribution scheme in the financial statements.
Obligations for contributions to the industry pension fund are expensed as the
related service is provided. Prepaid contributions are recognised as an asset to the
extent that a cash refund or a reduction in future payments is available.
Other long-term employee benefits
The Group’s net obligation in respect of long-term employee benefits is the amount
of future benefit that employees have earned in return for their service in the current
and prior periods. That benefit is discounted to determine its present value.
Remeasurements are recognised in profit or loss in the period in which they arise.
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Cash-settled stock compensation plans are initially measured at the fair value of the
liability which is expensed on a straight-line basis over the 3-year vesting period. The
liability is remeasured at each balance sheet date to its fair value, reflected by the
share price at balance sheet date, with any changes recognized immediately through
profit and loss. All stock compensation expenses are based on the number of units
that are expected to vest (based on performance conditions), the estimates of
which are revised at each balance sheet date.
Finance income and finance costs
The Group’s finance income and finance costs include:
interest income;>
interest expense; and>
the foreign currency gain or loss on financial assets and financial liabilities.>
Interest income or expense is recognised using the effective interest method.
Foreign currency transactions
Transactions in foreign currencies are initially recorded by the Group’s entities at
their respective functional currency spot rates at the date the transaction first
qualifies for recognition. Monetary assets and liabilities denominated in foreign
currencies are translated at the functional currency spot rates of exchange at the
reporting date. Differences arising on settlement or translation of monetary items
are recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates at the dates of the initial
transactions. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value is determined.
The gain or loss arising on translation of non-monetary items measured at fair value
is treated in line with the recognition of the gain or loss on the change in fair value of
the item.
On consolidation, the assets and liabilities of foreign operations are translated into
euros at the rate of exchange prevailing at the reporting date and their statements of
profit or loss are translated at exchange rates prevailing at the dates of the
transactions. The exchange differences arising on translation for consolidation are
recognised in OCI. On disposal of a foreign operation, the component of OCI relating
to that particular foreign operation is realised in profit or loss.
Taxes
Current tax
Current tax comprises the expected tax payable or receivable on the taxable income
or loss for the year and any adjustment to tax payable or receivable in respect of
previous years. It is measured using tax rates enacted or substantively enacted at
the reporting date in the countries where the Group operates and generates taxable
income.
Income tax expense comprises current and deferred tax. Income taxes are
recognised in profit or loss except to the extent that they relate to items recognised
directly in equity or in other comprehensive income. Management periodically
evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and establishes provisions
where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and
their tax bases, except for:
deferred tax liabilities arising from the initial recognition of goodwill or assets or
liabilities in a transaction that is not a business combination and, at the time of
the transaction, affects neither accounting nor taxable profit or loss and;
>
temporary differences related to investments in subsidiaries, associates and joint
arrangements to the extent that the Group is able to control the timing of the
reversal of the temporary differences and it is probable that they will not reverse
in the foreseeable future.
>
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Deferred tax assets are recognised for all deductible unused tax losses, tax credits
and unused deductible temporary differences to the extent that it is probable that
future taxable profits will be available against which they can be utilised. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it
is no longer probable that the related tax benefit will be realised. Such reductions are
reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and
recognised to the extent that it has become probable that future taxable profits will
be available against which they can be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the year when the asset is realised or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively enacted at the
reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside
profit or loss. Deferred tax items are recognised in correlation to the underlying
transaction either in other comprehensive income (OCI) or directly in equity.
The Group 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.
Value added tax
Expenses and assets are recognised net of the amount of value added tax, except
when the value added tax incurred on a purchase of assets or services is not
recoverable from the taxation authority, in which case, the value added tax is
recognised as part of the cost of acquisition of the asset or as part of the expense
item, as applicable.
The net amount of value added tax recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the statement of financial
position.
Intangible assets
Intangible assets (software) are recognised at cost less accumulated amortisation
and accumulated impairment. Amortization is based on the estimated useful lives of
the assets concerned and assessed for impairment whenever there is an indication
that the intangible asset may be impaired. Amortization methods, useful lives and
residual values are reviewed at each reporting date and adjusted if appropriate.
The estimated useful lives of intangible assets for current and comparative periods
are as follows:
Software 3 years>
Property, plant and equipment
Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment losses, if any. Such cost includes the cost
of replacing part of the plant and equipment and borrowing costs for long-term
construction projects if the recognition criteria are met. When significant parts of
plant and equipment are required to be replaced at intervals, the Group depreciates
them separately based on their specific useful lives. Likewise, when a major
renovation or overhaul is performed, its cost is recognised in the carrying amount of
the plant and equipment as a replacement if the recognition criteria are satisfied. All
other repair and maintenance costs are recognised in profit or loss as incurred.
If significant parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items (major components) of property,
plant and equipment.
Subsequent expenditure
Subsequent expenditure is capitalised only when it is probable that the future
economic benefits associated with the expenditure will flow to the Group.
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Depreciation
Depreciation is calculated using the cost of items of property, plant and equipment
less their estimated residual values using the straight-line method over their
estimated useful lives, and is recognised in profit or loss. Land is not depreciated.
Assets which are under construction are capitalised under property, plant or
equipment whereby depreciation will start when the asset is available for use.
The estimated useful lives of property, plant and equipment for current and
comparative periods are as follows:
> Buildings: 6 – 20 years
> Plant and equipment: 5 – 20 years
> Other fixed assets: 5 – 10 years
Depreciation methods, useful lives and residual values are reviewed at each
reporting date and adjusted if appropriate.
Derecognition
An item of property, plant and equipment and any significant part initially recognised
is derecognised upon disposal (i.e., at the date the recipient obtains control) or when
no future economic benefits are expected from its use or disposal. Any gain or loss
arising on derecognition of the asset (calculated as the difference between the net
disposal proceeds and the carrying amount of the asset) is included in the
statement of profit or loss when the asset is derecognised.
Investment property
Investment property is initially measured at cost. Subsequent to initial recognition,
investment properties are stated at fair value, which reflects market conditions at
the reporting date. Gains or losses arising from changes in the fair values of
investment properties are included in profit or loss in the period in which they arise,
including the corresponding tax effect.
Investment properties are derecognised either when they have been disposed of (i.e.,
at the date the recipient obtains control) or when they are permanently withdrawn
from use and no future economic benefit is expected from their disposal. Any gain
or loss on disposal of an investment property (calculated as the difference between
the net proceeds from disposal and the carrying amount of the item) is recognised
in profit or loss in the period of derecognition.
Leases
The Group assesses at contract inception whether a contract is, or contains, a lease.
That is, if the contract conveys the right to control the use of an identified asset for
a period of time in exchange for consideration.
Group as a lessee
The Group applies a single recognition and measurement approach for all leases,
except for short-term leases and leases of low-value assets. The Group recognises
lease liabilities to make lease payments and right-of-use assets representing the
right to use the underlying assets.
Right-of-use assets
The Group recognises right-of-use assets at the commencement date of the lease
(i.e., the date the underlying asset is available for use). Right-of-use assets are
measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets
includes the amount of lease liabilities recognised, initial direct costs incurred, and
lease payments made at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated on a straight-line basis over
the shorter of the lease term and the estimated useful lives of the assets. For the
estimated useful live of the assets reference is made to the respective section
above.
If ownership of the leased asset transfers to the Group at the end of the lease term
or the cost reflects the exercise of a purchase option, depreciation is calculated
using the estimated useful life of the asset.
The right-of-use assets are also subject to impairment. Refer to the accounting
policies in section “Impairment of non-financial assets”.
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Lease liabilities
At the commencement date of the lease, the Group recognises lease liabilities
measured at the present value of lease payments to be made over the lease term.
The lease payments include fixed payments (including in-substance fixed payments)
less any lease incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual value guarantees.
The lease payments also include the exercise price of a purchase option reasonably
certain to be exercised by the Group and payments of penalties for terminating the
lease, if the lease term reflects the Group exercising the option to terminate. Variable
lease payments that do not depend on an index or a rate are recognised as
expenses (unless they are incurred to produce inventories) in the period in which the
event or condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group uses its incremental
borrowing rate at the lease commencement date because the interest rate implicit in
the lease is not readily determinable. After the commencement date, the amount of
lease liabilities is increased to reflect the accretion of interest and reduced for the
lease payments made. In addition, the carrying amount of lease liabilities is
remeasured if there is a modification, a change in the lease term, a change in the
lease payments (e.g., changes to future payments resulting from a change in an
index or rate used to determine such lease payments) or a change in the
assessment of an option to purchase the underlying asset.
The payment part of lease liabilities is separately shown in cash flow statement
under financing activities. The interest part is shown as part of the interest paid. The
Group‘s lease liabilities are separately shown in the balance sheet.
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to its short-term
leases of machinery and equipment (i.e., those leases that have a lease term of
12 months or less from the commencement date and do not contain a purchase
option). It also applies the lease of low value assets recognition exemption to leases
of office equipment that are considered to be low value. Lease payments on short-
term leases and leases of low value assets are recognised as expense on a straight-
line basis over the lease term.
Significant judgement in determining the lease term of contracts with renewal options
The Group determines the lease term as the non-cancellable term of the lease,
together with any periods covered by an option to extend the lease if it is reasonably
certain to be exercised, or any periods covered by an option to terminate the lease, if
it is reasonably certain not to be exercised. The Group applies judgement in
evaluating whether it is reasonably certain to exercise the option to terminate or
extend the lease. That is, it considers all relevant factors that create an economic
incentive for it to exercise the renewal. After the commencement date, the Group
reassesses the lease term if there is a significant event or change in circumstances
that is within its control and affects its ability to exercise (or not to exercise) the
option to renew or to terminate (e.g., a change in business strategy).
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and rewards
incidental to ownership of an asset are classified as operating leases. Rental income
arising is accounted for on a straight-line basis over the lease terms and is included
in revenue in the statement of profit or loss due to its operating nature. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised over the lease term on the
same basis as rental income. Rents are recognized as revenue in the period in which
they are earned.
Investments in joint ventures
A joint venture is a type of joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require the unanimous
consent of the parties sharing control. The considerations made in determining
significant influence or joint control are similar to those necessary to determine
control over subsidiaries. The Group’s investments in its joint ventures are
accounted for using the equity method. Under the equity method, the investment in
a joint venture is initially recognised at cost. The carrying amount of the investment
is adjusted to recognise changes in the Group’s share of net assets of the joint
ventures since the acquisition date.
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The statement of profit or loss reflects the Group’s share of the results of operations
of the associate or joint venture. In addition, when there has been a change
recognised directly in the equity of the associate or joint venture, the Group
recognises its share of any changes, when applicable, in the statement of changes
in equity. Unrealised gains and losses resulting from transactions between the
Group and the associate or joint venture are eliminated to the extent of the interest
in the associate or joint venture.
Non-controlling interests
Non-controlling interest is defined as the equity in a subsidiary non attributable,
directly or indirectly, to a parent. For each business combination, in which the
company holds less than 100% of the equity interests in the acquiree, the company
recognizes an amount for the non-controlling interest in the acquiree in equity.
Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of
inventories is based on the first-in first-out principle. Net realisable value is the
estimated selling price in the ordinary course of business, less estimated costs of
completion and the estimated costs necessary to make the sale.
Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at
banks and in hand, which are subject to an insignificant risk of changes in value.
Because of the short term nature of the instrument, the Group recognises the
current account at its contractual par amount. Similar to trade receivables, the
current account involves one single cash flow which is the repayment of the
principal. Therefore, the cash flows resulting from the receivables meet the SPPI test
of payments of principal and interest despite the interest component being zero.
The Group holds the current account in order to collect contractual cash flows. The
current account is therefore classified as measured at amortised cost.
Financial assets
IFRS 9 sets out requirements for recognising and measuring financial assets,
financial liabilities and some contracts to buy or sell non-financial items.
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at
amortised cost, fair value through other comprehensive income (OCI), and fair value
through profit or loss.
The classification of financial assets at initial recognition depends on the financial
asset’s contractual cash flow characteristics and the Group’s business model for
managing them. With the exception of trade receivables that do not contain
a significant financing component or for which the Group has applied the practical
expedient, the Group initially measures a financial asset at its fair value plus, in the
case of a financial asset not at fair value through profit or loss, transaction costs.
Trade receivables that do not contain a significant financing component or for which
the Group has applied the practical expedient are measured at the transaction price
determined under IFRS 15.
In order for a financial asset to be classified and measured at amortised cost or fair
value through OCI, it needs to give rise to cash flows that are ‘solely payments of
principal and interest (SPPI)’ on the principal amount outstanding. This assessment
is referred to as the SPPI test and is performed at an instrument level. The Group’s
business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether
cash flows will result from collecting contractual cash flows, selling the financial
assets, or both.
Subsequent measurement
Financial assets at amortised cost are the most relevant to the Group. The Group
measures financial assets at amortised cost if both of the following conditions are
met:
The financial asset is held within a business model with the objective to hold
financial assets in order to collect contractual cash flows, and
>
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The contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount
outstanding
>
Financial assets at amortised cost are subsequently measured using the effective
interest (EIR) method and are subject to impairment. Gains and losses are
recognised in profit or loss when the asset is derecognised, modified or impaired.
The Group’s financial assets at amortised cost includes trade receivables, assets
contracts with customers and a loan to an associate.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group
of similar financial assets) is derecognised (i.e., removed from the Group’s
consolidated statement of financial position) when:
the rights to receive cash flows from the asset have expired;>
or
the Group 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) the
Group has transferred substantially all the risks and rewards of the asset, or (b)
the Group has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset.
>
Impairment
The Group recognises 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 the Group expects to receive, discounted at an
approximation of the original effective interest rate.
For trade receivables and contract assets, the Group applies a simplified approach in
calculating ECLs, as these positions do not contain a significant financing
component. Therefore, the Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime ECLs at each reporting date. The
Group has established a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors such as macro economic
information and the loss given default, specific to the debtors and the economic
environment.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair
value through profit or loss, loans and borrowings, payables, or as derivatives
designated as hedging instruments in an effective hedge, as appropriate. 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.
The Group’s financial liabilities include trade and other payables, loans and
borrowings including bank overdrafts, and derivative financial instruments, if any.
Subsequent measurement
For purposes of subsequent measurement, financial liabilities are classified in two
categories:
Financial liabilities at fair value through profit or loss>
Financial liabilities at amortized cost (loans and borrowings)>
Financial liabilities at amortized cost (loans and borrowings) is the category most
relevant to the Group. After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the EIR method. Gains and
losses are recognised in profit or loss when the liabilities are derecognised as well
as through the EIR amortisation process. Amortised cost is calculated by taking into
account any discount or premium on acquisition and fees or costs that are an
integral part of the EIR. The EIR amortisation is included as finance costs in the
statement of profit or loss.
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Derecognition
A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expires. 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 recognised 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 consolidated statement of financial position if there is a currently enforceable
legal right to offset the recognised amounts and there is an intention to settle on
a net basis, to realise the assets and settle the liabilities simultaneously.
Derivative financial instruments
The Group may use interest rate swaps and foreign currency contracts to hedge its
interest-rate and foreign currency risk exposures arising from project and financing
activities. In accordance with its treasury policy, the Group does not hold derivatives
for trading purposes. Interest-rate swaps and foreign currency contracts are
measured at fair value.
The fair value of interest-rate swaps is calculated as the present value of the
estimated future cash flows. The fair value of forward currency contracts is
determined using the forward foreign exchange rates as at the closing date.
Fair Value measurement
Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement
date. The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising the use
of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorised within the fair value hierarchy, described as follows,
based on the lowest level input that is significant to the fair value measurement as
a whole:
Level 1: quoted prices (unadjusted) in active markets for identical assets or
liabilities.
>
Level 2: Valuation techniques for which the lowest level input that is significant
to the fair value measurement is directly or indirectly observable
>
Level 3: Valuation techniques for which the lowest level input that is significant
to the fair value measurement is unobservable.
>
For assets and liabilities that are recognised in the financial statements at fair value
on a recurring basis, the Group determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a whole) at the end of
each reporting period.
Share capital
Cash dividend and non-cash distribution to the shareholder
The Company recognises a liability to make cash or non-cash distributions to the
shareholders when the distribution is authorised and the distribution is no longer at
the discretion of the Company. As per the corporate laws in the Netherlands,
a distribution is authorised when it is approved by the shareholders. A corresponding
amount is recognised directly in equity.
Non-cash distributions are measured at the fair value of the assets to be distributed
with fair value remeasurement recognised directly in equity. Upon distribution of
non-cash assets, any difference between the carrying amount of the liability and the
carrying amount of the assets distributed is recognised in the statement of profit or
loss.
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Provisions
Provisions are recognized when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of resources
embodying economic benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation. When the Group expects
some or all of a provision to be reimbursed, for example, under an insurance
contract, the reimbursement is recognized as a separate asset, but only when the
reimbursement is virtually certain. The expense relating to a provision is presented in
the statement of profit or loss net of any reimbursement.
If the effect of the time value of money is material, provisions are discounted using
a current pre-tax rate that reflects, when appropriate, the risks specific to the liability.
When discounting is used, the increase in the provision due to the passage of time is
recognized as a finance cost.
Onerous contracts
If the Group has a contract that is onerous, the present obligation under the contract
is recognized and measured as a provision. However, before a separate provision for
an onerous contract is established, the Group recognizes any impairment loss that
has occurred on assets dedicated to that contract. An onerous contract is a contract
under which the unavoidable costs (i.e., the costs that the Group cannot avoid
because it has the contract) of meeting the obligations under the contract exceed
the economic benefits expected to be received under it. The unavoidable costs
under a contract reflect the least net cost of exiting from the contract, which is the
lower of the cost of fulfilling it and any compensation or penalties arising from
failure to fulfil it. The cost of fulfilling a contract comprises the costs that relate
directly to the contract (i.e., both incremental costs and an allocation of costs
directly related to contract activities).
Impairment of non-financial assets
Each reporting date, the Group assesses whether there is any indication that the
Group’s assets have been impaired. If any indication exists, an estimate is made of
the recoverable amount of the asset concerned. An impairment is only recognized
when the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. Any impairments are recognized in the statement of profit or
loss under depreciation and impairment expenses.
The recoverable amount of an asset or cash-generating unit is the higher of the
value in use and the fair value less costs of disposal. The recoverable amount is
calculated for each asset individually, unless that asset does not generate any cash
flows that are largely independent from those of other assets or groups of assets.
The calculation of the value in use is based on a discounting of the estimated future
cash flows, using a discount rate that reflects the current market assessments of
the time value of money and the specific risks associated with the asset. For the
calculation of fair value minus cost of disposal use is made of an appropriate
valuation model.
A previously recognized impairment loss is only reversed if the assumptions used to
determine the asset’s recoverable amount have changed since the most recent
impairment loss. The reversal is limited so that the carrying amount of the asset
does not exceed its recoverable amount, nor exceed the carrying amount that would
have been determined, net of depreciation, had no impairment loss been recognised
for the asset in prior years.
Changes in accounting policies and disclosures4
New and amended standards and interpretations
The Group applied for the first-time certain standards and amendments, which are
effective for annual periods beginning on or after 1 January 2020. The Group has
not early adopted any other standard, interpretation or amendment that has been
issued but is not yet effective.
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Amendments to IFRS 3: Definition of a Business
The amendment to IFRS 3 Business Combinations clarifies that to be considered
a business, an integrated set of activities and assets must include, at a minimum, an
input and a substantive process that, together, significantly contribute to the ability
to create output. Furthermore, it clarifies that a business can exist without including
all of the inputs and processes needed to create outputs. These amendments had
no impact on the consolidated financial statements of the Group, but may impact
future periods should the Group enter into any business combinations.
Amendments to IFRS 9 Financial Instruments, IFRS 7 Financial
Instruments: Disclosures and IAS 39 Financial Instruments: Recognition
and measurement - Interest Rate Benchmark Reform
The amendments to IFRS 9 and IAS 39 Financial Instruments: Recognition and
Measurement provide a number of reliefs, which apply to all hedging relationships
that are directly affected by interest rate benchmark reform. A hedging relationship
is affected if the reform gives rise to uncertainties about the timing and or amount
of benchmark-based cash flows of the hedged item or the hedging instrument.
The effective date of the amendments is for annual periods beginning on or after
1 January 2020. The requirements must be applied retrospectively. However, any
hedge relationships that have previously been de-designated cannot be reinstated
upon application, nor can any hedge relationships be designated with the benefit of
hindsight.
These amendments had no impact on the consolidated financial statements of the
Group as it does not have any interest rate hedge relationships.
Amendments to IFRS 16 Leases – Covid-19 related rent concessions
The amendments provide relief to lessees from applying IFRS 16 guidance on lease
modification accounting for rent concessions arising as a direct consequence of the
Covid-19 pandemic. As a practical expedient, a lessee may elect not to assess
whether a Covid-19 related rent concession from a lessor is a lease modification.
A lessee that makes this election accounts for any change in lease payments
resulting from the Covid-19 related rent concession the same way it would account
for the change under IFRS 16, if the change were not a lease modification.
The amendment applies to annual reporting periods beginning on or after 1 June
2020. Earlier application is permitted, including in financial statements not yet
authorised for issue at 28 May 2020.
As the Group has not received any rent concessions, these amendments have no
impact on the Group’s consolidated financial statements.
Amendments to IAS 1 Presentation of Financial Statements and IAS
8 Accounting Policies, Changes in Accounting Estimates and Errors
– Definition of material
The amendments provide a new definition of material that states, “information is
material if omitting, misstating or obscuring it could reasonably be expected to
influence decisions that the primary users of general purpose financial statements
make on the basis of those financial statements, which provide financial information
about a specific reporting entity.” The amendments clarify that materiality will
depend on the nature or magnitude of information, either individually or in
combination with other information, in the context of the financial statements.
A misstatement of information is material if it could reasonably be expected to
influence decisions made by the primary users. These amendments had no impact
on the consolidated financial statements of, nor is there expected to be any future
impact to the Group.
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Standards issued but not yet effective5
The new and amended standards and interpretations that are issued, but not yet
effective, up to the date of issuance of the Group’s financial statements are
disclosed below. The Group intends to adopt these new and amended standards
and interpretations, if applicable, when they become effective.
The amendments marked with an (*) have not been endorsed by the EU per the date
of these financial statements.
Amendments to IAS 1 Presentation of Financial Statements – Classification
of Liabilities as Current or Non-current*
In January 2020, the IASB issued amendments to paragraphs 69 to 76 of IAS 1 to
specify the requirements for classifying liabilities as current or non-current. The
amendments clarify:
What is meant by a right to defer settlement>
That a right to defer must exist at the end of the reporting period>
That classification is unaffected by the likelihood that an entity will exercise its
deferral right
>
That only if an embedded derivative in a convertible liability is itself an equity
instrument would the terms of a liability not impact its classification
>
Companies are required to apply the amendments for annual periods beginning on
or after 1 January 2023. The amendments must be applied retrospectively in
accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors. Earlier application is permitted. Since the Group’s current practice is in line
with the amendments, the Group does not expect any effect on its consolidated
financial statements.
Amendments to IAS 16 Property, plant and equipment – Proceeds before
intended use*
The amendments prohibits entities deducting from the cost of an item of property,
plant and equipment, any proceeds from selling items produced while bringing that
asset to the location and condition necessary for it to be capable of operating in the
manner intended by management. Instead, an entity recognises the proceeds from
selling such items, and the costs of producing those items, in profit or loss.
Companies are required to apply the amendment to annual reporting periods
beginning on or after 1 January 2022. The amendment must be applied
retrospectively but only to items of property, plant and equipment that are brought
to the location and condition necessary for them to be capable of operating in the
manner intended by management on or after the beginning of the earliest period
presented in the financial statements in which the entity first applies the
amendments. Earlier application is permitted.
The amendments are not expected to have a material impact on the Group.
Per the date of these financial statements this amendment has not been endorsed
by the EU.
Amendments to IAS 37 Provisions, contingent liabilities and contingent
assets – onerous contracts—cost of fulfilling a contract*
The amendments specify which costs an entity needs to include when assessing
whether a contract is onerous or loss-making. The amendments apply a “directly
related cost approach”. The costs that relate directly to a contract to provide goods
or services include both incremental costs and an allocation of costs directly related
to contract activities. General and administrative costs do not relate directly to
a contract and are excluded unless they are explicitly chargeable to the counterparty
under the contract.
Companies are required to apply the amendments to annual reporting period
beginning on or after 1 January 2022. Earlier application is permitted. An entity shall
apply the amendments to contracts for which it has not yet fulfilled all its obligations
at the beginning of the annual reporting period in which it first applies the
amendments (the date of initial application). The entity shall not restate
comparative information.
The Group will apply these amendments to contracts for which it has not yet fulfilled
all its obligations at the beginning of the annual reporting period in which it first
applies the amendments. Based on the fact that the Group currently would not have
onerous contracts when applying the amendment, the amendments are not
expected to have a material impact on the Group.
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94
Amendments to IFRS 3 Business combinations – References to the
conceptual framework*
The amendments replaced the reference to an old version of the IASB’s Conceptual
Framework (the 1989 Framework) with a reference to the current version issued in
March 2018 (the Conceptual Framework). The amendments further added an
exception to the recognition principle in IFRS 3. That is, for liabilities and contingent
liabilities that would be within the scope of IAS 37 or IFRIC 21, if incurred separately,
an acquirer would apply IAS 37 or IFRIC 21, respectively, instead of the Conceptual
Framework, to identify the obligations it has assumed in a business combination.
The amendment further added an explicit statement in the standard that an acquirer
cannot recognise contingent assets acquired in a business combination.
Companies are required to apply the amendments business acquisitions on or after
the beginning of annual reporting period beginning on or after 1 January 2022.
Earlier application is permitted if at the same time or earlier an entity also applies all
the amendments made by Amendments to References to the Conceptual
Framework in IFRS Standards, issued in March 2018.
Since the Group’s current practice is in line with the amendments, the amendments
is expected to have no impact on the Group’s consolidated financial statements.
Amendments to IFRS 9 Financial Instruments, IFRS 7 Financial
Instruments: Disclosures, IAS 39 Financial Instruments: Recognition and
measurement, IFRS 4 Insurance contracts and IFRS 16 Leases- Interest Rate
Benchmark Reform – Phase 2, effective 1 January 2021*
The amendments to IFRS 9, IFRS 7, IAS 39, IFRS 4 and IFRS 16 provide a number of
reliefs, which apply to all hedging relationships that are directly affected by interest
rate benchmark reform. A hedging relationship is affected if the reform gives rise to
uncertainties about the timing and or amount of benchmark-based cash flows of the
hedged item or the hedging instrument. The amendments also provide a relief for
contractual modifications or changes to cash flows that are directly required by the
reform and is required to be applied by entities applying IFRS 4 that are using the
exemption from IFRS 9 and for IFRS 16 lease modifications required by the IBOR
reform. The amendments provide temporary relief to entities from having to meet
the separately identifiable requirement when an nearly risk-free rate (RFR)
instrument is designated as a hedge of a risk component.
The effective date of the amendments is for annual periods beginning on or after
1 January 2021. The requirements must be applied retrospectively. Hedging
relationships must be reinstated once an entity first applies the amendments if the
hedging relationship was discontinued solely due to changes required by IBOR
reform and it would not have been discontinued if the phase two amendments had
been applied at that time. An entity is not required to restate prior periods.
The Group is currently assessing the impact of these amendments.
Annual Improvements Cycle - 2018-2020*
The IASB issued the 2018-2020 cycle improvements to its standards and
interpretations. These improvements include:
2020Sif Annual Report
95
IFRS 9 Financial instruments – The amendment clarifies the fees that an entity
includes when assessing whether the terms of a new or modified financial
liability are substantially different from the terms of the original financial liability.
These fees include only those paid or received between the borrower and the
lender, including fees paid or received by either the borrower or lender on the
other’s behalf. An entity applies the amendment to financial liabilities that are
modified or exchanged on or after the beginning of the annual reporting period in
which the entity first applies the amendment. An entity applies the amendments
for annual reporting periods beginning on or after 1 January 2022. An entity shall
apply the amendments to financial liabilities that are modified or exchanged on
or after the beginning of the annual reporting period in which the entity first
applies the amendment. Early application is permitted. The Group is currently
assessing the possible impact of this amendment.
>
Illustrative Examples accompanying IFRS 16 Leases – The amendment removes
the illustration of payments from the lessor relating to leasehold improvements
in Illustrative Example 13 accompanying IFRS 16. This removes potential
confusion regarding the treatment of lease incentives when applying IFRS 16.
These amendments will have no impact on the consolidated financial
statements of the Group.
>
Operating segments6
For management purposes, the Group is organised into divisions based on its
products and services and has four operating segments:
Wind, which produces and delivers monopiles, transition pieces or other
foundation components for the off-shore wind industry;
>
Oil and Gas, which produces and delivers piles, pile sleeves, pin-piles etcetera for
application in the oil and gas industry;
>
Marshalling, which includes renting-out of logistical area and facilities and the
delivery of logistical services to customers, mainly in the off-shore wind industry
>
Other.>
These divisions offer different products and services, and require different
technology and target different markets.
Information related to each operating segment is set out below.
Segment contribution constitutes the difference between revenue from contracts
with customers and cost of sales. Cost of sales includes the costs of raw materials,
subcontracted work and other external charges as well as logistic and other project
related expenses. The gross profit is determined by segment contribution subtracted
by costs relating to direct personnel expenses and production and general
manufacturing expenses.
Finance income, finance costs, indirect personnel expenses, depreciation and
amortization, facilities, housing and maintenance, selling expenses, general
expenses and other income/expenses are not allocated to individual segments as
these are managed on an overall group basis. Costs of sales like raw materials,
subcontracted work and other charges and logistic and other project related
expenses depend on underlying contract with customers. Gross profit is used to
measure performance because management believes that this information is the
most relevant in evaluating the results of the respective segments relative to other
entities that operate in the same industries. Total assets, which are located in the
Netherlands, are not allocated to individual segments as these are managed on an
overall group basis.
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Information about operating segments
AMOUNTS IN EUR '000 2020 2019
Wind Oil & Gas Marshalling Other Total Wind Oil & Gas Marshalling Other Total
Revenue from contracts
with customers:
- Revenue from
construction contracts 316,671 10,273 3,122 64 330,130 310,511 9,653 1,116 1,330 322,610
- Operational lease income - - 3,627 1,676 5,303 - - 1,478 1,512 2,990
Total revenue from
contracts with customers 316,671 10,273 6,749 1,740 335,433 310,511 9,653 2,594 2,842 325,600
Segment contribution 92,503 5,199 1,780 2,110 101,592 91,360 6,012 1,144 3,001 101,517
Gross profit 57,413 1,889 1,780 2,030 63,112 51,330 1,936 287 3,254 56,807
Indirect personnel
expenses (20,888) (19,275)
Depreciation and
impairment (20,348) (17,207)
Facilities, housing &
maintenance (5,125) (5,372)
Selling expenses (1,018) (994)
General expenses (4,325) (4,795)
Net finance costs (2,398) (2,689)
Joint ventures (61) 53
Total profit before tax 8,949 6,528
Geographical information
The Wind, Oil and Gas, Marshalling and Other segments are managed centrally. No
segment assets or liabilities are applicable as the manufacturing facilities and sales
offices operate solely from the Netherlands.
The geographic information below analyses the Group’s revenue by the country of
domicile of contract partners, the European Union (EU) and other countries outside
the EU and Europe. As the Brexit is formally in place as per 31 December 2020,
revenue with contract partners in the UK is classified in Europe outside the EU. In
presenting the following information, segment revenue has been based on the
geographical location of contract partners.
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The Group did not adjust the promised amount of consideration for the effects of
a significant financing component, as at contract inception the period between when
the entity transfers a promised (series of) goods or service to a customer and when
the customer pays for that (series of) goods or service will be one year or less.
Payment terms within the Group’s contracts are normally in line with project
milestones, which are usually similar to the satisfaction over time of the
performance obligations.
AMOUNTS IN EUR '000 2020 2019
The Netherlands 81,637 193,536
All foreign countries:
European Union (EU) 108,393 126,105
Rest of the world 145,403 5,959
Total revenue from contracts with
customers 335,433 325,600
Transaction price allocated to the remaining performance
obligations
The revenue from contracts with customers expected to be recognized in the future
related to performance obligations that are unsatisfied (or partly unsatisfied) at the
reporting date, are expected to be satisfied within one year after reporting date.
Major customers
Revenues from four customers of the Group’s Wind segment represented
approximately EUR 292 million (2019: three customers EUR 252 million) of the
Group’s total revenues. In 2020 the largest customer represented a revenue of
approximately EUR 104 million, the second customer approximately EUR 91 million,
the third customer approximately EUR 54 million and the fourth customer
approximately EUR 43 million. In 2019 the largest customer represented a revenue
of approximately EUR 116 million, the second customer approximately EUR
75 million and the third customer approximately EUR 61 million.
Personnel expenses7
AMOUNTS IN EUR '000 2020 2019
Wages and salaries 20,542 19,576
Hired staff and temporary workers 18,241 20,576
Compensation/grants received (57) (100)
Social security contributions 2,938 2,895
Pension expenses 2,724 2,499
Other employee benefit expenses 3,591 4,161
47,979 49,607
Pension expenses
Obligations for contributions to the industry pension fund are expensed as the
related service is provided. Prepaid contributions are recognised as an asset to the
extent that a cash refund or a reduction in future payments is available.
The pension fund coverage ratio of the PMT industry fund at 31 December
2020 amounted to 95,4% (2019: 98.8%). The 2020 pension premium has remained
at a level similar to the 2019 premiums. The Group’s participation in the industry
pension fund is less than 0.05 % (2019: less than 0.05%) based on number of active
participants in the plan. The Group expects to incur costs for pension contributions
of approximately EUR 2,9 million in 2021.
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Number of employees
The average number of employees employed by the Group in 2020 amounts to
315 FTE (2019: 295 FTE). The table below provides an overview of the average
number of FTE split per functional area. All employees are based in the Netherlands.
2020 2019
Production and distribution 165 171
Innovation and maintenance 34 26
Logistic services 25 18
Planning and engineering 17 13
Quality and safety 10 11
Sales 12 12
Management 6 6
Purchasing and warehousing 14 9
Administrative 7 7
Other 25 22
315 295
Selling expenses8
AMOUNTS IN EUR '000 2020 2019
Travel and representation 98 333
Promotional and advertising costs 174 316
Tender expenses 537 33
Other selling expenses 209 312
1,018 994
The tender expenses increased as some larger tenders during 2020 required
external engineering services.
General expenses9
AMOUNTS IN EUR '000 2020 2019
Consultancy fees 1,158 1,075
Insurances 1,826 1,789
Software, license fees 840 789
Office expenses 438 430
Other general expenses 63 712
4,325 4,795
The 2019 specification was restated to reflect the 2020 presentation.
Net finance costs10
AMOUNTS IN EUR '000 2020 2019
Interest on loans and borrowings (235) (470)
Borrowing cost finance facility (329) (478)
Interest expense on lease liabilities (1,072) (877)
Other finance costs (760) (842)
Finance costs (2,396) (2,667)
Net finance costs recognised in profit or
loss (2,396) (2,667)
Share of profit of an associate and joint ventures11
For the year 2020 the result of the Group from joint ventures was EUR 61 negative
(2019: EUR 53 positive). The amount consists of EUR 14 negative related to SBR
Engineering GmbH (2019: EUR 8 positive) and EUR 47 negative from Smulders Sif
Steel Foundations B.V. (2019: EUR 45 positive) (see note 17).
2020Sif Annual Report
99
Income tax expense12
Income tax recognised in profit or loss
AMOUNTS IN EUR '000 2020 2019
Current year income tax charge 2,016 1,741
Movement in tax balances (168) (262)
Prior year adjustment (472) (661)
Tax expense recognized in statement of
profit & loss 1,376 818
The prior year adjustment relates to a gain from the application of the innovation
box, since a new agreement has been reached with the tax authorities.
The Group believes that its accruals for tax liabilities are adequate for all open tax
years based on its assessment of many factors, including interpretations of tax law
and prior experience.
2020Sif Annual Report
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Movement in deferred tax balances
AMOUNTS IN EUR '000
Net balance at
1 January
Recognised in
profit or loss
Net balance at
31 December
Deferred tax
assets and
liabilities
2020
Property, plant and equipment (73) 2 (71) (71)
Right of use assets and lease liabilities 244 166 410 410
Investment property 10 - 10 10
Tax assets (liabilities) after netting 181 168 349 349
AMOUNTS IN EUR '000
Net balance at
1 January
Recognised in
profit or loss
Net balance at
31 December
Deferred tax
assets and
liabilities
2019
Property, plant and equipment (90) 17 (73) (73)
Right of use assets and lease liabilities - 244 244 244
Investment property 10 - 10 10
Tax assets (liabilities) after netting (80) 261 181 181
Unrecognised deferred tax assets and liabilities
At 31 December 2020 and 31 December 2019, the Group has recognised all deferred
tax assets and liabilities applicable to the Group.
2020Sif Annual Report
101
Reconciliation of effective tax rate
% 2020 2019
Tax using the Company’s domestic tax rate 24.7 24.6
Reduction in tax rates due to tax incentives
prior year (5.2) (10.2)
Reduction in tax rates due to tax incentives (4.3) (2.0)
Participation Exemption (0.2) (0.2)
Non tax deductible expenses 0.4 0.3
Effective tax rate 15.4 12.5
The reductions in tax rates due to tax incentives mentioned in above table relates to
a expected gain from the application of the innovation box. These gains are partly
related to previous years and partly to the year 2020.
Earnings per share13
Basic and diluted earnings per share
The calculation of basic and diluted earnings per share has been based on the profit
attributable to the ordinary shareholders of the company and the weighted-average
number of ordinary shares outstanding.
Weighted-average number of ordinary shares
2020 2019
Issued ordinary shares at 1 January 25,501,356 25,501,356
Issued ordinary shares at 31 December 25,501,356 25,501,356
Weighted average number of ordinary
shares at 31 December 25,501,356 25,501,356
The issued share capital of the Company amounted to EUR 5,100, consisting of
25,501,356 shares with a nominal value of EUR 0.20 (20 eurocents per share).
2020Sif Annual Report
102
Intangible assets14
Reconciliation of the carrying amount
AMOUNTS IN EUR '000 Software
Cost
Balance at 1 January 2019 1,347
Additions 418
Disposals -
Balance at 31 December 2019 1,765
Balance at 1 January 2020 1,765
Additions 277
Disposals -
Balance at 31 December 2020 2,042
Accumulated depreciation
Balance at 1 January 2019 (117)
Depreciation (39)
Disposals -
Balance at 31 December 2019 (156)
Balance at 1 January 2020 (156)
Depreciation (621)
Disposals -
Balance at 31 December 2020 (777)
Carrying amounts
At 31 December 2019 1,609
At 31 December 2020 1,265
The carrying amount per year end does not contain assets under construction
(2019: EUR 1,6 million).
2020Sif Annual Report
103
Property, plant and equipment15
Reconciliation of the carrying amount
AMOUNTS IN EUR '000
Land and
buildings
Plant and
equipment
Other fixed
assets Total
Cost
Balance at 1 January 2019 123,621 83,086 2,765 209,472
Additions 6,760 13,910 153 20,823
Disposals - - - -
Balance at 31 December 2019 130,381 96,996 2,918 230,295
Balance at 1 January 2020 130,381 96,996 2,918 230,295
Additions 949 4,173 189 5,311
Disposals - - - -
Balance at 31 December 2020 131,330 101,169 3,107 235,606
Accumulated depreciation
Balance at 1 January 2019 (43,564) (52,834) (1,703) (98,101)
Depreciation (5,197) (7,233) (305) (12,735)
Disposals - - - -
Balance at 31 December 2019 (48,761) (60,067) (2,008) (110,836)
Balance at 1 January 2020 (48,761) (60,067) (2,008) (110,836)
Depreciation (6,020) (8,062) (348) (14,430)
Disposals - - - -
Balance at 31 December 2020 (54,781) (68,129) (2,356) (125,266)
Carrying amounts
At 31 December 2019 81,620 36,929 910 119,459
At 31 December 2020 76,549 33,040 751 110,340
At 31 December 2020 and 2019 all directly owned property, plant and equipment
was collateralized as part of the financing agreements in place (see note 23).
2020Sif Annual Report
104
Investment property16
Reconciliation of the carrying amount
AMOUNTS IN EUR '000 2020 2019
Balance at 1 January 400 400
Additions - -
Revaluation - -
Balance at 31 December 400 400
Investment property comprises a commercial property that is leased to a third party.
The lease contains annual rents indexed to consumer prices. Subsequent renewals
are negotiated with the lessee. No contingent rents are charged. Further information
about this lease is included in note 30.
Fair value as of 31 December 2020 is estimated at EUR 400 (2019: EUR 400)
determined by external, independent property valuators, having appropriate
recognised professional qualifications and recent experience in the location and
category of the property. Based on recent market conditions the movement in fair
value is deemed immaterial. The fair value measurement has been categorised as
a Level 3 fair value based on the inputs to the valuation technique used.
Investment in joint ventures17
The Group has a 50% interest in SBR Engineering GmbH, a joint venture consisting
of engineering capacity of experienced workforce. The Group’s interest in SBR
Engineering GmbH is accounted for using the equity method in the consolidated
financial statements. As per year-end 2020 the Group’s interest in the joint venture
amounts EUR 33 (2019: EUR 46).
The Group has a 50% interest in Smulders Sif Steel Foundations B.V., a joint venture
focused on project management in the offshore winds industry. The Group’s interest
in Smulders Sif Steel Foundations B.V. is accounted for using the equity method in
the consolidated financial statements. As per year-end 2020 the Group’s interest in
the joint venture amounts EUR 0 (2019: EUR 48).
AMOUNTS IN EUR '000 2020 2019
Balance at 1 January 94 41
Additions - -
Result for the year (61) 53
Dividends paid - -
Balance at 31 December 33 94
The Group entered during 2016 into a loan agreement with the joint venture for the
amount of EUR 15, for which the last instalment is repaid in 2020. An additional loan
of EUR 15 was provided during 2019. The amount of the loan agreement is
classified as current financial assets (EUR 15).
2020Sif Annual Report
105
Inventories18
AMOUNTS IN EUR '000 2020 2019
Raw materials and consumables 375 312
375 312
During 2020 and 2019 no inventories were written down to the lower of net
realisable value and no provision has been recognised.
Contract assets and liabilities19
AMOUNTS IN EUR '000 2020 2019
Contract assets 29,555 13,345
Contract liabilities (14,319) (17,625)
15,236 (4,280)
Expenses incurred including realized profit to
date 398,277 386,056
Invoiced terms (383,041) (390,336)
15,236 (4,280)
Management periodically reviews the valuation of contract assets and liabilities
based on project agreements, project results to date and estimates of project
expenses to be incurred. Each period end management assesses the status of the
projects and takes into consideration all aspects in order to finalize the projects in
line with contractual agreements and relating contingencies, such as potential
upward or downward adjustment in the projected estimates, and accounts for them
accordingly. Due to changes in estimates, fluctuations in the anticipated project
result can occur over the contract term.
The contract assets concern all projects in progress for which the incurred
expenses, including realized profit and project losses to date (if any), exceed the
terms invoiced to customers. The impairment costs due to expected credit loss
(IFRS 9) are not material.
Contract liabilities concern the balances of all projects in progress for which the
invoiced terms exceed expenses incurred plus recorded profit minus project losses,
if any. In addition, the estimated bond costs for completed contracts which are
expected to be incurred within 12 months after balance sheet date are recorded as
part of the contract liabilities, which amount to EUR 1,0 million at 31 December
2020 (2019: EUR 1,7 million). The revenues recognized in the reporting period that
was included in the contract liability balance at the beginning of the period amounts
EUR 15,9 million.
Both the contract assets and liabilities predominantly have durations shorter than
12 months and are therefore considered to be current.
2020Sif Annual Report
106
Trade receivables20
All trade and other receivables mature within 12 months. Trade receivables are non-
interest bearing and are generally on terms of 30 to 60 days. At 31 December
2020 an amount of EUR 1.3 million of the trade receivables were provided for (2019:
EUR 1.3 million). From one period end to the other significant movement in the
outstanding amounts depending on the date of invoice can occur. Based on an
individual impairment analysis of trade receivables, an impairment of EUR 1.3 million
deemed necessary for unrecoverable receivables. In addition, an amount of EUR
24 for impairment costs due to expected credit loss (IFRS 9) has been reported
(2019: EUR 22). The movements related to expected credit loss over the period are
considered to be immaterial.
At year end approximately EUR 32 of the total open balance refers to related parties
(2019: EUR 12 million).
Credit and market risks, and impairment losses
Information about the Group’s exposure to credit and market risks, and impairment
losses for trade and other receivables, excluding contract assets in progress, is
included in note 25.
As at 31 December, the ageing (without the provided trade receivables) analysis of
trade receivables is as follows:
AMOUNTS IN EUR '000 Total
Not
past due
<30 days
past due
30 – 60 days
past due
61 – 90 days
past due
91 – 120 days
past due
> 120 days
past due
31 December 2020 43,661 42,845 10 4 460 - 342
31 December 2019 45,242 44,337 557 - - 6 342
2020Sif Annual Report
107
Cash and cash equivalents21
AMOUNTS IN EUR '000 2020 2019
Cash 7 7
Bank balances 2,638 1,572
Cash and cash equivalents 2,645 1,579
The balance of the cash and cash equivalents are freely accessible and available to
the Group and no restrictions apply.
Capital and reserves22
Share capital
On 14 January 2016, the authorised capital of the Group was increased to EUR
25 million, consisting of 125,000,000 shares with a nominal value of EUR
0.20 (20 eurocents) per share. The issued shares were converted into
25,501,356 shares, each having a nominal value of EUR 0.20 (20 eurocents per
share). All ordinary shares rank equally with regard to the Company’s residual
assets.
Additional paid-in capital
The additional paid-in capital results from contributions in kind by the shareholder in
relation to the issuance of loans as the transaction costs related to the issuance of
additional loans were not passed on by the shareholder.
Dividends
The following dividends were declared and settled by the Company during the year:
AMOUNTS IN EUR '000 2020 2019
Number of ordinary shares dividend eligible 25,501,356 25,501,356
Rounded dividend per ordinary share - 0.10
Dividends declared and settled during the
year - 2,550
Sif’s dividend policy is a payout of dividend in line with Sif’s medium to long-term
financial performance and targets, with the aim of increasing dividends-per-share
over time. For 2020 the proposed dividend pay-out per share (to be approved by the
shareholder) in a cash dividend amounts to €0,12 per share.
In 2018 the Group acquired a 60% interest in Twinpark Sif B.V., an entity involved in
the development and manufacturing of a windmill. In 2020 the amount of profit of
Twinpark Sif B.V. is EUR 752. The non controlling interest is 40% of this amount,
EUR 302.
As the non – controlling interest in Twinpark Sif B.V. is considered to be immaterial,
the Group decided not to disclose all requirements as included in IFRS 12.12.
Loans and borrowings23
The company has the following financing arrangements:
AMOUNTS IN EUR '000 2020 2019
Revolving credit facility - non-current - 22,872
Lease liabilities - non-current 50,139 54,255
Lease liabilities - current 4,625 4,743
Total Loan and borrowings 54,764 81,870
2020Sif Annual Report
108
The revolving credit facility is presented net with the prepaid transaction costs.
The movement in financing arrangements can be specified as follows:
AMOUNTS IN EUR '000 2020 2019
Balance at 1 January 82,606 31,079
Financing costs (736) (197)
Net value of loans and borrowings 81,870 30,882
Lease liabilities (4,233) 58,998
Additions financing costs - (1,019)
Amortisation financing costs 562 479
Movements in revolving credit facility (23,435) (7,470)
Balance at 31 December 54,938 82,606
Financing costs (174) (736)
Net value of loans and borrowings 54,764 81,870
Information about the Group’s exposure to interest rate, foreign currency and
liquidity risk is included in note 25. From the above movements the amortization
financing costs are non-cash.
As per 22 February 2019, the Group refinanced its 90 million revolving credit facility
into a EUR 100 million revolving credit facility. Given the nature of this funding, the
entire facility is presented as non-current loans and borrowings. The EUR 100 million
revolving credit facility is funded on Euribor + supplement and will expire on
22 February 2022, with two one-year extension options. As per year-end 2020 an
amount of EUR 0,2 million is outstanding (2019: EUR 23 million). Early 2021 the
first extension option has been exercised. Reference is made to note 34 for further
details.
2020Sif Annual Report
109
Terms and repayment schedule
The terms and conditions of outstanding loans are as follows:
AMOUNTS IN EUR '000
Cur-
rency Nominal interest rate (%)
Year of
maturity
Fair value
2020
Carrying amount
2020
Fair value
2019
Carrying amount
2019
Revolving Credit Facility EUR
Euribor +
supplement 2022 174 174 22,872 22,872
Total interest-bearing loans and
borrowings 174 174 22,872 22,872
The supplement to the Euribor interest rate of the revolving credit facility depends on
the leverage ratio as defined in the loan agreement and ranges between 150 and
225 bps. The revolving credit facilities are collateralized by the following items:
Current assets (inventory and contract assets net position);>
Trade receivables;>
Intercompany receivables;>
Credit balances;>
Receivables from hedging activities;>
Receivables from insurance contracts;>
Shares in Sif Netherlands B.V. and Sif Property B.V. by Sif Holding N.V.;>
Non-current assets.>
Loan covenants
As per year-end the Group has one revolving credit facility which has to be repaid in
full on 22 February 2022. In December 2020 a request for an extension by two years
(until 31 March 2024) has been submitted, but no formal confirmation has been
received per 31 December 2020. Early 2021 the first extension option has been
exercised. Reference is made to note 34 for further details. The interest as per
31 December 2020 is based on EURIBOR plus a supplement that depends on the
leverage per quarter.
The following financial ratios have to be met:
Solvency shall not be less than 35% in respect of any relevant period within the
facility period; and
>
a leverage ratio (the ratio of total debt on the last day of the relevant period to
EBITDA in respect to that relevant period) which shall not exceed 2.50x.
>
At year-end 2020 the Company met the applicable covenants.
The application of IFRS 16 in 2019, had no impact on the existing and new loan
covenants, for which IFRS 16 is contractually not taken into consideration.
2020Sif Annual Report
110
Provisions24
The balance for provisions is as follows:
AMOUNTS IN EUR ’000
2020 2019
At 1 January - 263
Utilized - (263)
At 31 December - -
During 2018, loss making contracts have been identified by management. Per year
end 2018 the total amount of expected loss was recognised in the profit and loss
and utilised in 2019, as a result of which the provision per 31 December 2019 was
EUR 0. No new loss making contracts have been identified by management.
Financial instruments25
Financial risk management
The Group has exposure to the following risks arising from financial instruments:
credit risk;>
liquidity risk;>
market risk.>
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under
a financial instrument or customer contract, leading to a financial loss. The Group is
exposed to credit risk from its operating activities (primarily trade receivables) and
from its financing activities, including deposits with banks and financial institutions,
foreign exchange transactions and other financial instruments.
The carrying amount of financial assets represents the maximum credit exposure.
Contract assets and Trade and other receivables
The Group’s exposure to credit risk is mainly influenced by the individual customer
characteristics. In addition, management considers general factors that may
influence the credit risk of its customer base, including the default risk of the
industry and the countries in which customers operate.
The Group has established a credit policy under which each new customer is
analysed individually for creditworthiness before the Group’s standard payment and
delivery terms and conditions are offered. Management believes that the unimpaired
amounts that are past due by more than 30 days are still collectible in full, based on
historic payment behaviour and extensive analysis of customer credit risk, including
underlying customers’ credit ratings if they are available. Only an impairment for
contract assets and trade and other receivables based on expected credit loss has
been accounted for in accordance with IFRS 9.
For further information related to the collectability of trade receivables, reference is
made to note 20.
Cash and cash equivalents
The Group held cash and cash equivalents of EUR 2.6 million at 31 December
2020 (2019: EUR 1,6 million). The cash and cash equivalents are held with bank and
financial institution counterparties, which are at least rated A- based on rating
agency ratings.
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the
obligations associated with its financial liabilities that are settled by delivering cash
or another financial asset. The Group’s approach to managing liquidity is to ensure,
as far as possible, that it will have sufficient liquidity to meet its liabilities when they
are due, under the normal course of business, and within the covenants as agreed
with the banks and financial institutions.
2020Sif Annual Report
111
The Group aims to maintain the minimal level of its cash and cash equivalents at an
amount in excess of expected cash outflows on financial liabilities (other than trade
payables) over the next 60 days. The Group also monitors the level of expected cash
inflows on trade and other receivables together with expected cash outflows on
trade and other payables.
Exposure to liquidity risk
The following are the remaining contractual maturities of financial liabilities at the
reporting date. The amounts are gross and undiscounted:
AMOUNTS IN EUR '000 Carrying amount Total
3 months
or less
3-12
months 1 - 2 years 2 - 5 years
More than
5 years
31 December 2020
Non-derivative financial liabilities
Revolving credit facility 177 (177) (3) - - (174) -
Lease liabilities 54,764 (60,400) (1,383) (4,230) (5,693) (17,321) (31,773)
Trade payables 63,438 (63,438) (63,438) - - - -
118,379 (124,015) (64,824) (4,230) (5,693) (17,495) (31,773)
AMOUNTS IN EUR '000 Carrying amount Total
3 months
or less
3-12
months 1 - 2 years 2 - 5 years
More than
5 years
31 December 2019
Non-derivative financial liabilities
Revolving credit facility 23,912 (23,912) (365) (675) - (22,872) -
Lease liabilities 58,998 (65,658) (1,487) (4,318) (5,609) (17,010) (37,234)
Trade payables 37,733 (37,733) (37,733) - - - -
120,643 (127,303) (39,585) (4,993) (5,609) (39,882) (37,234)
As disclosed in note 23, the Group has a revolving credit facility within the finance
facility that contains loan covenants. A future breach of covenants may require the
Group to repay the loan earlier than indicated in the table above.
2020Sif Annual Report
112
Market risk
Market risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market prices. Market risk
comprises three types of risk: interest rate risk, currency risk and other price risk,
such as commodity risk. Financial instruments affected by market risk include loans
and borrowings, deposits, debt and equity investments and derivative financial
instruments. The objective of market risk management is to manage and control
market risk exposures within acceptable parameters, while optimising the return.
As per year-end 2020, the Group uses no derivatives to manage market risks (2019:
none). All such, potential transactions would be carried out within treasury policy
guidelines.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Group’s
exposure to the risk of changes in market interest rates relates primarily to the
Group’s long-term debt obligations with floating interest rates. The interest rate
profile of the Group’s interest-bearing financial instruments as reported to
management of the Group is as follows:
AMOUNTS IN EUR '000 2020 2019
Variabele rate instruments
Revolving credit facility (174) 22,872
Balance at 31 December (174) 22,872
The Group has performed a cash flow sensitivity analysis for variable rate
instruments. A reasonable possible change of 50 basis points in interest rates at the
reporting date would have increased (decreased) profit or loss before tax by the
amounts shown below. A sensitivity analyses on equity has not been prepared since
the impact on equity will be equal to the increase (decrease) on the sensitivity
analysis of profit or loss before tax (excluding tax effect).This analysis assumes that
all other variables remain constant.
AMOUNTS IN EUR '000
50 basis points
increase
50 basis points
decrease
31 December 2020
Variable rate instruments - -
Net impact - -
31 December 2019
Variable rate instruments 116 (116)
Net impact 116 (116)
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an
exposure will fluctuate because of changes in foreign exchange rates. The Group is
exposed to currency risk to the extent that there is a mismatch between the
currencies in which sales, purchases and borrowings are denominated and the
respective functional currencies of Group companies. The functional currency of
Group companies is the Euro. The currency in which transactions are primarily
denominated is also the Euro. The currency risk is limited since the Group almost
fully conducts its sales, purchases and borrowings in its functional currency and
closes hedge contracts at the time of entering into contracts in foreign currencies.
Commodity price risk
The Group is affected by the price volatility of mainly steal. However, as this risk is
fully transferred to the customers of the Group, no risk remains for the Group.
2020Sif Annual Report
113
Employee benefits26
AMOUNTS IN EUR '000 2020 2019
Jubilee provision 339 340
Accrual for employee bonuses 918 507
Accrual for employee vacation days
outstanding 790 794
Personnel expenses payable 268 1,036
Total employee benefits liabilities 2,315 2,677
Non-current 273 287
Current 2,042 2,390
2,315 2,677
The movement in the jubilee provision can be specified as follows:
AMOUNTS IN EUR '000 2020 2019
Balance at 1 January 340 315
Additions 59 63
Used (60) (38)
Balance at 31 December 339 340
Other current and non-current liablities27
The Group’s current liabilities mainly consist of operational expenses to be paid. The
non-current part mainly consist of the non-current part of the premiums to be paid
for bank guarantees (EUR 1,4 million, 2019: EUR 1,0 million). In 2019 the current
part also consisted of the payment obligation for the windmill in Twinpark (EUR
6,3 million), which is settled during 2020.
The other current liabilities include mainly liabilities for invoices to be received.
Capital management28
The Group’s objectives when managing capital are to safeguard the Group’s ability
to continue as a going concern in order to provide returns for shareholders and
benefits for other stakeholders as well as to maintain an optimal capital structure to
continue to be able to qualify for large commercial tenders while optimizing the
overall cost of capital. In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
The Group aims for a financing structure that ensures continuing operations and
minimises cost of capital. For this, flexibility and access to the financial markets are
important conditions. The Group monitors its financing structure using a solvency
ratio. Solvency is calculated as total equity divided by total assets. At year-end 2020,
the solvency ratio was 39,0% (2019: 35,5%).
In addition, the loan covenants are closely monitored to ensure that these remain
within agreed thresholds. The current loan covenants include the solvency and
leverage ratio for which reference is made to note 23.
List of subsidiaries29
Included in the consolidated financial statements are the following subsidiaries:
Name Location Share in issued capital %
Sif Property B.V. Roermond 100
Sif Netherlands B.V. Roermond 100
Sif Japan K.K. Tokyo 95
Twinpark Sif BV
1
Roermond 59,4
1
– Legally the Group holds 59,4% of the shares, but 60% in result appropriation.
As per 3 June 2020 Sif Japan K.K. has been incorporated. Sif Japan K.K. is involved
in sales and market development in Japan. No further changes are applicable in
investments in subsidiaries.
2020Sif Annual Report
114
Leases30
Group as lessee
The Group has lease contracts for various items of plant, machinery, vehicles and
other equipment used in its operations. Leases of plant and machinery generally
have lease terms between 3 and 15 years, while motor vehicles and other equipment
generally have lease terms between 3 and 5 years. The Group’s obligations under its
leases are secured by the lessor’s title to the leased assets. Generally, the Group is
restricted from assigning and subleasing the leased assets and some contracts
require the Group to maintain certain financial ratios. There are several lease
contracts that include extension and termination options and variable lease
payments, which are further discussed below.
The Group also has certain leases of machinery with lease terms of 12 months or
less and leases of office equipment with low value. The Group applies the ‘short-
term lease’ and ‘lease of low-value assets’ recognition exemptions for these leases.
As of September 2015, the Group entered into a lease agreement with Havenbedrijf
Rotterdam N.V. for the lease of two plots in the Rotterdam harbor. The lease of plot
A started at 1 September 2015 and will end on 1 July 2041 (cancellable as per
1 July 2031), the lease of plot B started at 1 July 2017 and will end on 1 July
2041 (cancellable as per 1 July 2021 and as per 1 July 2031). As of July 2019, the
Group entered into a lease agreement with Havenbedrijf Rotterdam N.V. for plot C.
The lease for plot C started on 30
th
July 2019 and will end on 1 July 2041 (also
cancellable as per 1 July 2021 and as per 1 July 2031).
Right-of-use assets
AMOUNTS IN EUR '000 Right-of-use
Cost
Balance at 1 January 2019 37,268
Additions 23,733
Disposals -
Balance at 31 December 2019 61,001
Balance at 1 January 2020 61,001
Additions 722
Modifications (90)
Disposals -
Balance at 31 December 2020 61,633
Accumulated depreciation
Balance at 1 January 2019 -
Depreciation (4,434)
Disposals -
Balance at 31 December 2019 (4,434)
Balance at 1 January 2020 (4,434)
Depreciation (5,297)
Disposals -
Balance at 31 December 2020 (9,731)
Carrying amounts
At 31 December 2019 56,567
At 31 December 2020 51,902
2020Sif Annual Report
115
Lease liabilities
AMOUNTS IN EUR '000
Balance at 1 January 2019 38,717
Additions 23,737
Lease payments (4,334)
Financing costs 877
Balance at 31 December 2019 58,997
Balance at 1 January 2020 58,997
Additions 722
Modifications (90)
Lease payments (5,938)
Financing costs 1,073
Balance at 31 December 2020 54,764
Carrying amounts
At 31 December 2019 58,997
At 31 December 2020 54,764
Of the total carrying value per year-end 2020 an amount of EUR 4,6 million is
classified current (2019: EUR 4,7 million).
The Group had total cash outflows for leases of EUR 5,9 million in 2020 (2019: EUR
4,3 million). The Group also had non-cash additions to right-of-use assets and lease
liabilities of EUR 0,6 million in 2020 (2019: EUR 23,7 million).
The Group has several lease contracts that include extension and termination
options. These options are negotiated by management to provide flexibility in
managing the leased-asset portfolio and align with the Group’s business needs.
Management exercises significant judgement in determining whether these
extension and termination options are reasonably certain to be exercised.
Mainly due to the market expectations in the Offshore segment, management
expects that leasing the sites in the Rotterdam Harbour until mid-2031 is realistic. In
this sector, however, given the impact of political choices, it is difficult to look ahead
for more than 10 years.
Group as a lessor
The Group leases out its investment property (see note 16) a Wind Turbine
Generator located at Maasvlakte 2 and some antenna locations for telecom
providers. The lease income from operational leases amounts for the year 2020 EUR
1,5 million (2019: EUR 0,8 million) and does not include variable payments.
Furthermore, as part of its contracts with customers in the Marshalling segment, the
Group leases out part of the leased plots in the Rotterdam harbor and some other
minor assets. These leases classify as operational sub-leases, and have terms of
less than one year. The lease income from these operational lease contracts
amounts for the year 2020 EUR 3,6 million (2019: EUR 1,5 million).
Future minimum rental receivable
At 31 December, the future minimum rental receivables under non-cancellable leases
are as follows:
AMOUNTS IN EUR '000 2020 2019
Less than 1 year 1,417 1,493
Between 1 and 5 years 11,121 740
More than 5 years - -
12,538 2,233
The increase in the future rental receivable relates to operating lease agreements
with customers in the operating segment Marshalling.
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Off-balance sheet commitments31
Commitments for the purchase of property, plant and equipment
and raw materials
At 31 December 2020, the Group’s commitments for the purchase of property, plant
and equipment amounts to EUR 0,3 million (2019: EUR 2,4 million). The
commitments for raw materials amounts to EUR 30,5 million (2019: EUR
17,5 million) and commitments for subcontracting amounts to EUR 91,6 million
(2019: EUR 6,6 million).
Guarantee facilities
At 31 December guarantee facilities of the Group can be specified as follows:
Type 31 December 2020 31 December 2019
AMOUNTS IN EUR '000 Total facility Used Total facility Used
Euler Hermes S.A. / Tokio Marine Europe S.A. General 130,000 117,930 130,000 54,838
Coöperatieve Rabobank U.A. General 40,000 24,219 40,000 13,642
ING Bank N.V. General 40,000 7,979 40,000 10,440
ABN AMRO Bank N.V. General 40,000 17,017 40,000 12,322
Nationale Borg Maatschappij Project - - 2,405 2,405
Coöperatieve Rabobank U.A. Project 8,459 8,459 16,034 16,034
ING Bank N.V. Project 8,459 8,459 8,459 8,459
Total 266,918 184,063 276,898 118,140
The Group is jointly and severally liable for all amounts to which Euler Hermes, Tokio
Marine, Coöperatieve Rabobank U.A., ING Bank N.V., ABN Amro Bank N.V. and
Nationale Borg Maatschappij have a right to claim in relation to the above
mentioned guarantees. The former shareholder is also jointly and severally liable for
all amounts of the pending guarantees which have been provided before 12 May
2016.
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Related parties32
Transactions with joint ventures
During the year, the Group received invoices for work performed by SBR Engineering
GmbH for a total amount of EUR 167 (2019: EUR 145). Furthermore the Group sent
invoices to Smulders Sif Steel Foundations B.V. for project related work performed
for a total amount of EUR 35 million (2019: EUR 67 million).
Transactions with companies with which Supervisory Board
members are involved as a shareholder
During the year there are no transactions with companies with which Supervisory
Board members are involved as a shareholder.
Transactions with key management personnel
The members of the Supervisory Board and the Executive Board are considered key
management personnel.
The number of shares purchased by directors as per year-end can be specified as
follows:
2020 2019
G.G.P.M. van Beers 16,500 10,000
Balance at 31 December 16,500 10,000
The remuneration (including expenses) of the Supervisory Board members can be
specified as follows:
AMOUNTS IN EUR 2020 2019
A. Goedée
1
70,000 70,000
P.J. Gerretse
2
45,404 46,646
C.A.J. van den Bosch
2
45,531 47,375
P.E. Visser
3
45,000 45,000
P.E. Wit
4
45,000 45,000
250,935 254,021
Member of the supervisory board as of 14 January 2016.
1.
Member of the supervisory board as of 12 February 2016.
2.
Member of the supervisory board on an ad interim basis as of 1 November 2017.
3.
Member of the supervisory board as of 3 May 2018.
4.
2020Sif Annual Report
118
The remuneration of the current Executive Board members can be specified as
follows:
COMPENSATION OF THE CURRENT EXECUTIVE BOARD MEMBERS
G.G.P.M. van Beers L.A.M. Verweij
AMOUNTS IN EUR 2020 2019 2020 2019
Base salary 376,747 367,200 282,874 275,706
Employer´s pension
contributions 21,281 22,662 41,312 39,615
Pension compensation 48,596 47,315 40,368 48,196
Annual bonus (accrual) 95,893 131,694 98,841 37,760
LTIP - - 25,724 -
Other benefits (car
lease, travel expenses
and relocation
expenses) 40,992 49,225 38,037 44,611
Social security and
other payments 10,182 10,995 10,182 10,995
Total remuneration 593,691 629,091 537,338 456,883
Paid annual bonus in
the year, earned over
the previous year 80,370 49,863 78,573 135,624
Paid vested LTIP - - 25,724 -
Total actual paid
variable remuneration 80,370 49,863 104,297 135,624
The Company has a share based compensation plan (Performance Share Unit
(PSU)) for members of the Executive Board as part of their remuneration. Under this
plan executive management are entitled to receive a cash payment equal to the
value of the number of PSUs that have vested. The PSUs are paid out after the
completion of a three-year vesting period, contingent on the approval from the
Supervisory Board.
At 31 December 2020 the outstanding liability with regard to the PSU plan was
€ 0,2 million (2019: € 0,1 million). During 2020 a number of 2.464 PSUs are vested
and exercised and 16.830 PSUs are awarded. At 31 December 2020 a number of
32.930 PSUs are outstanding (2019: 18.564 PSUs), which vest on average
22 months after reporting date.
Service fees paid to external auditors33
The total service fees of external auditors related to the financial year can be
specified as follows:
Ernst & Young Accountants
LLP Other EY firms
AMOUNTS IN EUR ’000 2020 2019 2020 2019
Audit of financial
statements 288 279 - -
Other assurance
services - 10 - -
Total 288 289 - -
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119
Events after the reporting period34
On 1 February 2021 the Group was informed that all Lenders under the financing
arrangement confirmed the extension of the termination date by two years to
31 March 2024.
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120
Separate statement of profit or loss for the year ended 31 December 2020
AMOUNTS IN EUR ’000 Notes 2020 2019
Management fee 38 1,635 1,604
Total revenue 1,635 1,604
Indirect personnel expenses 1,669 1,604
General expenses 468 407
Operating profit (502) (407)
Finance costs (480) (480)
Net finance costs (480) (480)
Profit before tax (982) (887)
Income tax expense 1,094 1,013
Result of participation in subsidiaries 39 7,173 5,354
Result of participation in joint ventures (14) 8
Profit after tax 7,271 5,488
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Separate statement of financial position as at 31 December 2020 (before profit appropriation)
AMOUNTS IN EUR ’000 Notes 31-Dec-2020 31-Dec-2019
Assets
Investments in subsidiaries and
joint ventures 40 140,640 133,481
Other non-current financial assets
- intercompany 195 196
Total non-current assets 140,835 133,677
Other current financial assets 15 20
VAT receivables 178 185
CIT receivables - 1,260
Prepayments 443 759
Cash and cash equivalents 193 259
Total current assets 829 2,483
Total assets 141,664 136,160
AMOUNTS IN EUR ’000 31-Dec-2020 31-Dec-2019
Equity
Share capital 5,100 5,100
Additional paid-in capital 1,059 1,059
Retained earnings 80,316 74,828
Result for the year 7,271 5,488
Total equity 42 93,746 86,475
Liabilities
Trade payables 202 284
Intercompany accounts 41 47,035 48,877
Employee benefits -
current 282 342
Wage tax and social
security 113 31
CIT payable 100 -
Other current liabilities 186 151
Total current liabilities 47,918 49,685
Total liabilities 47,918 49,685
Total equity and liabilities 141,664 136,160
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122
Notes to the separate financial statements for the year ended 31 December 2020
Basis of preparation35
The separate financial statements (before profit appropriation) of Sif Holding N.V.
have been prepared in accordance with the provisions of Part 9, Book 2, of the
Netherlands Civil Code. The Company uses the option of Article 362.8 of Part 9,
Book 2, of the Netherlands Civil Code to prepare the separate financial statements,
using the same accounting policies as those used for the consolidated financial
statements (we refer to note 3). The separate financial statements have therefore
been prepared in accordance with the measurement and recognition requirements
of the International Financial Reporting Standards as adopted by the European
Union (EU-IFRS). Investments in subsidiaries are accounted for using the equity
value. The separate financial statements are presented in EUR (‘000), which is also
the Company’s functional currency, if not stated otherwise.
Significant accounting policies36
The Group has consistently applied the accounting policies to all periods presented
in these separate financial statements. For the principles of valuation of assets and
liabilities and for the determination of the result, reference is made to the notes of
the consolidated financial statements.
List of subsidiaries and joint ventures37
Included in the separate financial statements are the following entities:
Name Location Share in issued
capital %
Sif Property B.V. Roermond 100
Sif Netherlands B.V. Roermond 100
Sif Japan K.K. Tokyo 95
Twinpark Sif B.V.
1
Roermond 59,4
SBR Engineering GmbH Siegen-Netphen 50
1
– Legally the Group holds 59,4% of the shares, but 60% in result appropriation.
As per 3 June 2020 Sif Japan K.K. has been incorporated. Sif Japan K.K. is involved
in sales and market development in Japan. No further changes are applicable in
investments in subsidiaries.
Sif Holding N.V. issued a guarantee as mentioned in Article 403, Part 9, Book 2 of the
Netherlands Civil Code for its subsidiaries Sif Property B.V. and Sif Netherlands B.V.
Furthermore Sif issued a parent company guarantee on behalf of Twinpark Sif BV.
Management fee38
The management fee contains the settlement of charges between Sif Holding N.V.
and Sif Netherlands B.V. The management fee also includes compensation of the
Executive Board and Supervisory Board.
Result of participation in subsidiaries39
AMOUNTS IN EUR ’000 2020 2019
Result in Sif Netherlands B.V. 11,376 10,021
Result in Sif Property B.V. (4,659) (5,001)
Result in Sif Japan K.K. 5 -
Twinpark Sif B.V. 451 334
Result of participation in subsidiaries 7,173 5,354
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123
Investments in subsidiaries and joint ventures40
AMOUNTS IN EUR ’000 2020 2019
Sif Netherlands B.V. 150,686 139,310
Sif Property B.V. (10,869) (6,209)
Sif Japan K.K. 5 -
SBR Engineering GmbH 33 46
Twinpark Sif B.V. 785 334
Investments in subsidiaries and joint
ventures 140,640 133,481
The movement in the investment value of subsidiaries and joint ventures relates to
the result for the year 2020.
Intercompany accounts41
AMOUNTS IN EUR ’000 2020 2019
Intercompany payables (current liabilities) (47,035) (48,877)
(47,035) (48,877)
Intercompany account Sif Netherlands B.V. (41,743) (46,780)
Intercompany account Sif Property B.V. (5,292) (2,097)
(47,035) (48,877)
The intercompany accounts are free of interest and are frequently settled.
Amounts due from group companies
Amounts due from group companies are stated initially at fair value and
subsequently at amortised cost. Amortised cost is determined using the effective
interest rate. The company recognise a credit loss for financial assets (such as
a loan) based on an expected credit loss (ECL) which will occur in the coming
twelve months or — after a significant decrease in credit quality or when the
simplified model can be used — based on the entire remaining loan term. For
intercompany receivables the ECL would be applicable as well, however this could
cause differences between equity in the consolidated and separate financial
statements. For this reason, the company elected to eliminate these differences
through the respective receivable account in the separate financial statements.
Equity42
The statement of changes in equity and disclosure to that statement are included in
the consolidated financial statements.
The appropriation of the 2020 profit is at the free disposal of the General Meeting of
Shareholders and has not been recorded in the financial statements.
2020Sif Annual Report
124
Related parties43
Transactions with subsidiaries
During the year several transactions between Sif Holding N.V., Sif Netherlands B.V.
and Sif Property B.V. took place. These transactions include compensation of the
Executive Board and Supervisory Board. Transactions between Sif Holding N.V. and
its subsidiaries takes place through the intercompany accounts. As per year-end the
intercompany accounts amount to a liability to Sif Netherlands B.V. of approximately
EUR 41,7 million (2019: EUR 46,8 million) and a liability to Sif Property B.V. of
approximately EUR 5,3 million (2019: EUR 2,1 million).
Transactions with joint ventures
During the year, the Group received invoices for work performed by SBR Engineering
GmbH for a total amount of EUR 167 (2019: EUR 145).
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125
Other Information
Articles of association related to profit appropriation
Article 34
34.1 Subject to Article 32.1, the profits shown in the Company's annual accounts
in respect of a financial year shall be appropriated as follows, and in the
following order of priority:
a. the Executive Board shall determine with the approval of the Supervisory
Board which part of the profits shall be added to the Company's reserves;
and
b. subject Article 29, any remaining profits shall be at the disposal of the
General Meeting for distribution to the shareholders.
34.2 Without prejudice to Article 32.1, a distribution of profits shall be made after
the adoption of the annual accounts that show that such distribution is
allowed.
34.3 The Executive Board may resolve with the approval of the Supervisory Board
to make interim distributions, provided that it appears from interim accounts
to be prepared in accordance with Section 2:105(4) DCC that the
requirement referred to in Article 32.1 has been met.
Corporate information
Corporate office
Tel. +31 475 385777
e-mail: info@sif-group.com
Trade register
Chamber of Commerce
Roermond, the Netherlands
Number 13027369
Legal form / Principal place of business
Shareholder, clearing and settlement agent
Euroclear Nederland
Herengracht 459-469
1017 BS Amsterdam
The Netherlands
Listing and payment agent
ABN AMRO Bank NV
Gustav Mahlerlaan 10
1082 PP Amsterdam
The Netherlands
2020Sif Annual Report
126
2020Sif Annual Report
127
Independent auditor’s report
To: the shareholders and supervisory board of Sif Holding N.V.
Report on the audit of the financial statements 2020 included in the integrated annual report
Our opinion
We have audited the financial statements 2020 of Sif Holding N.V., based in Roermond. The financial statements comprise the consolidated and the separate financial
statements.
In our opinion:
the accompanying consolidated financial statements give a true and fair view of the financial position of Sif Holding N.V. as at 31 December 2020 and of its result and its
cash flows for 2020 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch
Civil Code.
>
The accompanying separate financial statements give a true and fair view of the financial position of Sif Holding N.V. as at December 31, 2020 and of its result for 2020 in
accordance with Part 9 of Book 2 of the Dutch Civil Code.
>
The consolidated financial statements comprise:
The consolidated statement of financial position as at 31 December 2020>
The following statements for 2020: the consolidated statement of profit or loss, the consolidated statement of changes in equity, the consolidated cash flow statement.>
The notes comprising a summary of the significant accounting policies and other explanatory information.>
The separate financial statements comprise:
The separate statement of financial position as at December 31, 2020>
The separate statement of profit or loss for 2020>
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 responsibilities under those standards are further described in the “Our
responsibilities for the audit of the financial statements” section of our report.
2020Sif Annual Report
128
We are independent of Sif Holding N.V. in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities, the Wet toezicht
accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for
Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with
the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our audit approach
Our understanding of the business
Sif Holding N.V. is primarily involved in the manufacturing of metal structures, parts of metal structures, pipes, pipe structures, components for the offshore industry and
foundation piles for offshore wind farms. The group is structured in components and we tailored our audit approach accordingly. We paid specific attention in our audit to
a number of areas driven by the operations and our risk assessment.
We start by determining materiality and identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud, non-compliance with
laws and regulations or error in order to design audit procedures responsive to those risks and to obtain audit evidence that is sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
In 2020, we were forced to perform our procedures to a greater extent remotely due to the Covid-19 measures. Given the ‘intelligent lockdown’ within the Netherlands, we
have been able to visit the two manufacturing locations around year-end to perform counts and we have been able to have limited meetings at the Sif headquarters. We have
been able to obtain sufficient audit evidence that is sufficient and appropriate to provide a basis for our opinion.
Materiality
Materiality € 1.800.000 (2019: € 1.800.000)
Benchmark applied Around 1,75% of contribution margin
Explanation Consistent with last year, we selected contribution margin to benchmark materiality as in our professional judgment, contribution margin
is a key performance indicator and users of the financial statements primarily focus on earnings based measures. The contribution
margin is calculated by the total revenues from contracts with customers minus the expenses for raw materials, subcontracted work and
other external charges and logistic and other project related expenses.
2020Sif Annual Report
129
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 € 90.000, 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 audit
Sif Holding N.V. is at the head of a group of entities. The financial information of this group is included in the consolidated financial statements of Sif Holding N.V.
Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined
the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. The audit
has been performed by one audit team and all components were included. We have been able to obtain sufficient and appropriate audit evidence about the group’s financial
information to provide an opinion about the consolidated financial statements.
Teaming, use of specialists and internal audit
We ensured that the audit team included the appropriate skills and competences which are needed for the audit of a listed client in the offshore industry. We included
specialists in the areas of IT audit, forensics and income tax.
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 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.
Non-compliance with laws and regulations may result in fines, litigation or other consequences for the company that may have a material effect on the financial statements.
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130
Our audit response related to fraud risks
In order to identify and assess the risks of material misstatements of the financial statements due to fraud, we obtained an understanding of the entity and its environment,
including the entity’s internal control relevant to the audit and in order to design audit procedures that are appropriate in the circumstances. As in all of our audits, we
addressed the risk of management override of internal control. We do not audit internal control per se for the purpose of expressing an opinion on the effectiveness of the
company’s internal control.
We considered available information and made enquiries of relevant executives, directors and the supervisory board. As part of our process of identifying fraud risks, we
evaluated fraud risk factors with respect to financial reporting fraud and misappropriation of assets in close co-operation with our forensic specialists. In our risk assessment
we considered the potential impact of performance based bonus schemes which the company has in place. Furthermore, we consider whether the COVID 19 pandemic gives
rise to specific fraud risk factors.
We evaluated the design and the implementation of internal controls that mitigate fraud risks. In addition, we performed procedures to evaluate key accounting estimates for
management bias in particular relating to important judgment areas and significant accounting estimates as disclosed in Note 2 to the financial statements. We have also
used data analysis to identify and address high-risk journal entries.
We incorporated elements of unpredictability in our audit. We considered the outcome of our other audit procedures and evaluated whether any findings were indicative of
fraud or non-compliance. If so, we reevaluate our assessment of fraud risk and its resulting impact on our audit procedures.
Our audit response related to risks of non-compliance with laws and regulations
We assessed factors related to the risks of non-compliance with laws and regulations that could reasonably be expected to have a material effect on the financial statements
from our general industry experience, through discussions with the management board, reading minutes and performing substantive tests of details of classes of
transactions, account balances or disclosures.
We also inspected lawyers’ letters and correspondence with regulatory authorities and remained alert to any indication of (suspected) non-compliance throughout the audit.
Finally we obtained written representations that all known instances of non-compliance with laws and regulations have been disclosed to us.
Going concern
We performed the following procedures in order to identify and assess the risks of going concern and to conclude on the appropriateness of management’s use of the going
concern basis of accounting. Management made a specific assessment of the company’s ability to continue as a going concern and to continue its operations for at least the
next 12 months. We discussed and evaluated the assessment with management exercising professional judgment and maintaining professional skepticism, and specifically
focusing on the process followed by management to make the assessment, management bias that could represent a risk, the impact of current events and conditions have
on the company’s operations and forecasted cash flows, with a focus on whether the company will have sufficient liquidity to continue to meet its obligations as they fall due.
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131
We consider based on the audit evidence obtained, whether a material uncertainty exists related to 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.
Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to
continue as a going concern.
General audit procedures
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>
Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management>
Evaluating the overall presentation, structure and content of the financial statements, including the disclosures>
Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation>
Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements. We have communicated the key
audit matters to the supervisory board. The key audit matters are not a comprehensive reflection of all matters discussed.
The key audit matter related to IFRS 16 which was included in our last year’s auditor’s report, is not considered a key audit matter for this year as this was mainly related to
the implementation of this new accounting standard. After the initial recognition of IFRS 16, no significant new leases and/or changes occurred in 2020.
These matters were addressed in the context of our audit of the financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion
on these matters.
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132
Valuation of contract assets and liabilities (including revenue recognition)
Risk Revenues from contracts with customers and direct costs in relation to contract assets and liabilities are recognized over time. At
each reporting date management assesses the progress towards the complete satisfaction of the performance obligations taking
into consideration all aspects in order to finalize the projects in line with contractual agreements and relating contingencies, such as
potential upward or downward adjustments in the projected estimates.
As circumstances change over time, fluctuations in the anticipated project result may occur over the duration of the contract and
updated measures of progress to reflect any changes in the outcome of the performance obligation are accounted for. The progress
towards the complete satisfaction is assessed based on the actual hours incurred compared with the estimated hours needed to
complete the project.
Revenue recognition based on satisfied performance obligations over time requires management to make a number of estimates and
assumptions surrounding e.g. the expected profitability of the project, the estimated degree of completion and the total costs.
Changes in these estimates or assumptions could lead to changes in the revenues recognized in a given period. The significant
assumptions developed by management include: estimated labour hours, total estimated costs of completion and (any)
claims/contingencies. Therefore we considered valuation of contract assets and liabilities (including revenue recognition) a key audit
matter.
Reference is made to Note 2, 3, 6 and 19 of the consolidated financial statements for the significant accounting policies and
disclosures on revenue recognition.
Our audit approach We have assessed the appropriateness of the Company’s revenue recognition accounting policies and assessed compliance with EU-
IFRS accounting policies (IFRS 15).
Our audit procedures performed address the risk identified and include among others: assessing contractual arrangements and
reconciling total contract revenues to signed contracts, testing management’s estimates of costs to fulfil a contract, estimated hours
and the proper allocation of costs and actual hours to projects. We also performed counts at the production sites as per year-end to
observe the progress towards the complete satisfaction of the performance obligation and performed procedures on management’s
assessment of expected profitability or losses on the projects and any claims/contingencies on projects.
Furthermore, we performed a look back analysis to challenge prior years estimates and to validate whether assumptions and
estimates made by management in prior periods supports the actual results of significant estimates. We also evaluated the
adequacy of the disclosures provided by the Company in Note 2, 3, 6 and 19.
Key observations We evaluated that the Company’s revenue recognition accounting policies were appropriately applied and disclosed in the financial
statements. Furthermore, we have assessed that the revenue recognized including the related direct cost and the accompanying
management assumptions and estimates are within an acceptable range.
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133
Report on other information included in the annual report
In addition to the financial statements and our auditor’s report thereon, the annual report contains other information that consists of:
The Report of the Executive Board>
The Report of the Supervisory Board>
Key figures and highlights>
Risk and Risk management>
Social, Environmental and Governance policy and MD&A of progress in 2020>
Other information as required by Part 9 of Book 2 of the Dutch Civil Code>
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 and Sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code>
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.
Management is responsible for the preparation of the other information, including the management board report in accordance with Part 9 of Book 2 of the Dutch Civil Code,
other information required by Part 9 of Book 2 of the Dutch Civil Code and the remuneration report in accordance with Sections 2:135b and 2:145 subsection 2 of the Dutch
Civil Code.
Report on other legal and regulatory requirements and ESEF
Engagement
We were engaged by the supervisory board and executive board as auditor of Sif Holding N.V. as of the audit for the year 2007 and have operated as statutory auditor ever
since that date. The company became an EU – public interest entity in 2016.
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.
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134
European Single Electronic Reporting Format
Sif Holding N.V. has prepared the annual report in the European single electronic reporting format (ESEF). The requirements for this format are set out in the Commission
Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specification of a single electronic reporting format (hereinafter: the RTS on ESEF).
In our opinion, the Integrated Annual Report, prepared in the XHTML format, including the partially marked-up consolidated financial statements, as included in the reporting
package by Sif Holding N.V., has been prepared in all material respects in accordance with the RTS on ESEF.
Management is responsible for preparing the Integrated Annual Report, including the financial statements, in accordance with RTS on ESEF, whereby management 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 is prepared in accordance with the RTS on ESEF.
Our procedures, taking into account Alert 43 of the NBA (the Netherlands Institute of Chartered Accountants), included amongst others:
obtaining an understanding of the Sif Holding N.V.’s financial reporting process, including the preparation of the reporting package>
obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance and the XBRL extension
taxonomy files has been prepared in accordance with the technical specifications as included in the RTS on ESEF
>
examining the information related to the consolidated financial statements in the reporting package to determine whether all required mark-ups have been applied and
whether these are in accordance with the RTS on ESEF.
>
Description of responsibilities for the financial statements
Responsibilities of management and the supervisory board for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code.
Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free
from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial
reporting frameworks mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to
liquidate the company or to cease operations, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast significant
doubt on the company’s ability to continue as a going concern in the financial statements.
The supervisory board is responsible for overseeing the company’s financial reporting process.
2020Sif Annual Report
135
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.
Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the
effect of identified misstatements on our opinion.
We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical
requirements and independence requirements. The Our audit approach section above includes an informative summary of our responsibilities and the work performed as the
basis for our opinion.
Communication
We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any
significant findings in internal control that we identify during our audit.
In this respect we also submit an additional report to the audit committee in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory
audit of public-interest 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.
Eindhoven, March 11, 2021
Ernst & Young Accountants LLP
Signed by J.R. Frentz
2020Sif Annual Report
136
Glossary and Explanation of non-IFRS financial measures
Contribution Total revenue from contracts with customers minus cost of raw
materials, subcontracted work and other external charges and
logistic and other project related expenses.
EBITDA Earnings before net finance costs, tax, depreciation and
amortization.
The company discloses EBITDA and Adjusted EBITDA as
supplemental non-IFRS financial measures, as the company
believes these are meaningful measures to evaluate the
performance of the company’s business activities over time.
The company understands that these measures are used by
analysts, rating agencies and investors in assessing the
company’s performance. The company also believes that the
presentation of EBITDA and Adjusted EBITDA provide useful
information to investors on the development of the company’s
business. EBITDA and Adjusted EBITDA are also used by the
company as key financial measures to assess the operating
performance of the operations.
Net earnings Profit attributable to the shareholders
Earnings per share Profit attributable to the shareholders divided by the average
number of shares outstanding during the year under review
IPO Initial Public Offering (of shares).
Net debt Loans and borrowings minus cash and cash equivalents.
Net debt is presented to express the financial strength of the
company. The company understands that this measure is used
by analysts, rating agencies and investors in assessing the
company’s performance
Normalized
EBITDA
EBITDA corrected for incidental IPO related expenses or income
The company discloses EBITDA and Adjusted EBITDA as
supplemental non-IFRS financial measures, as the company
believes these are meaningful measures to evaluate the
performance of the company’s business activities over time.
The company understands that these measures are used by
analysts, rating agencies and investors in assessing the
company’s performance. The company also believes that the
presentation of EBITDA and Adjusted EBITDA provide useful
information to investors on the development of the company’s
business. EBITDA and Adjusted EBITDA are also used by the
company as key financial measures to assess the operating
performance of the operations.
Solvency Equity/balance sheet total
EPIC Engineering procurement installation and commissioning: A
contractform including the engineering, the procurement, the
installation and the commissioning of a building or other form of
construction.
Executive Board Board of executive directors responsible for the day-to-day
business at Sif. In 2019 comprised of CEO and CFO.
IEA International energy agency.
Kton Kilotons: A weight measurement used in the steel industry. One
Kiloton equals one million kilograms.
2020Sif Annual Report
137
Working capital Inventories plus contract assets plus trade receivables plus
current prepayments minus trade payables and contract
liabilities)
The company discloses working capital as a supplemental non-
IFRS financial measure, as the company believes it is a
meaningful measure to evaluate the company’s ability to
maintain a solid balance between growth, profitability and
liquidity. Working capital is broadly analyzed and reviewed by
analysts and investors in assessing the company’s
performance. This measure serves as a metric for how
efficiently a company is operating and how financially stable it is
in the short term. It is an important measure of a company’s
ability to pay off short-term expenses or debts.
LCOE Levelized costs of energy.
LTI Lost Time Incidents.
LTIF Lost Time Injury Frequency.
MAKE MAKE consultants.
Orderbook The total of signed contracts and contracts under exclusive
negotiations.
Pull production
system
The production system whereby sequential activities at hand are
‘pulled through’ the production process by starting production of
the next component at a given work station only when the
previously manufactured component has been used by the next
step in the production. This prevents congestion in the factory
and results in higher output levels through improved efficiency.
It also results in higher job- satisfaction and higher quality and
safety standards resulting in a process of ‘continuous
improvement’.
Production
capacity
The capacity of the plants operated by Sif Group: The theoretical
capacity is 300 Kton for the combined Maasvlakte 2 and
Roermond plants. Actual capacity is between 80 and 90% of
theoretical maximum capacity.
ROACE Earnings before interest and tax as a % of average equity plus
loans and borrowings excluding lease-commitments minus cash
Sif Group The group of companies that together establish the Sif Group:
Also referred to as ‘Company’ or ‘Sif’ (reference is made to the
schedule on page 11 of this annual report).
Sif Holding N.V. The entity whose shares are listed on the stock exchange
(reference is made to the schedule on page 11 of this annual
report).
2020Sif Annual Report
138
Appendix: Bridge from IFRS to Dutch-GAAP
Consolidated statement of profit or loss for the year ended 31 December 2020 (Bridge from IFRS to Dutch-GAAP)
AMOUNTS IN EUR '000 IFRS Differences Dutch GAAP*
2020 2020
Total revenue from contracts with customers 335,433 - 335,433
Raw materials 130,437 - 130,437
Subcontracted work and other external charges 82,510 - 82,510
Logistic and other project related expenses 20,894 - 20,894
Direct personnel expenses 27,091 - 27,091
Production and general manufacturing expenses 11,389 502 11,891
Indirect personnel expenses 20,888 - 20,888
Depreciation and amortization 20,348 (5,297) 15,051
Facilities, housing and maintenance 5,125 5,583 10,708
Selling expenses 1,018 - 1,018
General expenses 4,325 482 4,807
Operating profit 11,408 (1,270) 10,138
Impairment losses on financial assets (2) 2 -
Finance costs (2,396) 1,072 (1,324)
Finance costs and impairment losses (2,398) 1,074 (1,324)
Share of profit of an associate and joint ventures (61) - (61)
Profit before tax 8,949 (196) 8,753
Income tax expense 1,376 (48) 1,328
Non-controlling interests - 302 302
Profit after tax 7,573 (450) 7,123
Reference is made to note Basis of preparation, as disclosed hereafter*
2020Sif Annual Report
139
Consolidated statement of financial position as at 31 December 2020 (before appropriation of result / Bridge from IFRS to Dutch-GAAP)
AMOUNTS IN EUR '000 31-Dec-2020 Differences 31-Dec-2020
IFRS Dutch GAAP*
Assets
Intangible fixed assets 1,265 - 1,265
Property, plant and
equipment 110,340 - 110,340
Right-of-use assets 51,902 (51,902) -
Investment property 400 - 400
Investments in joint
ventures 33 - 33
Deferred tax asset 349 (349) -
Total non-current assets 164,289 (52,251) 112,038
Inventories 375 - 375
Contract assets 29,555 (14,319) 15,236
Trade receivables 43,661 25 43,686
Other financial assets 15 - 15
Prepayments 1,307 - 1,307
Cash and cash equivalents 2,645 - 2,645
Total current assets 77,558 (14,294) 63,264
Total assets 241,847 (66,545) 175,302
Reference is made to note Basis of preparation, as disclosed hereafter*
AMOUNTS IN EUR '000 31-Dec-2020 Differences 31-Dec-2020
IFRS Dutch GAAP*
Equity
Share capital 5,100 - 5,100
Additional paid-in capital 1,059 - 1,059
Retained earnings 80,316 750 81,066
Result for the year 7,271 (148) 7,123
Equity attributable to
shareholder 93,746 602 94,348
Non-controlling interests 524 - 524
Total equity 94,270 602 94,872
Liabilities
Lease Liabilities 50,139 (50,139) -
Employee benefits 273 - 273
Deferred tax liabilities - 67 67
Other non-current liabilities 1,484 1,886 3,370
Total non-current
liabilities 51,896 (48,186) 3,710
Lease Liabilities 4,625 (4,625) -
Trade payables 63,438 - 63,438
Contract Liabilities 14,319 (14,319) -
Employee benefits 2,042 - 2,042
Wage tax and social sec. 1,557 - 1,557
VAT payable 5,482 - 5,482
CIT payable 498 (216) 282
Other current liabilities 3,720 199 3,919
Total current liabilities 95,681 (18,961) 76,720
Total liabilities 147,577 (67,147) 80,430
Total equity and liabilities 241,847 (66,545) 175,302
2020Sif Annual Report
140
Notes to the bridge from IFRS to Dutch GAAP accounting
principles
Basis of preparation
The Bridge from IFRS to Dutch GAAP (‘Bridge’) consist of the consolidated
statement of profit- and loss and the consolidated statement of financial position.
Within both statements a bridge is included from the statutory financial statements
prepared in accordance with International Financial Reporting Standards as adopted
by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code
and statements prepared in accordance with measurement and recognition
principles included in Title 9 of Book 2 of the Netherlands Civil Code and the
accounting policies selected and disclosed below.
The Bridge has been prepared to facilitate comparability of the financial position and
results of Sif Holding N.V. to financial position and results of competitors that are
not preparing their financial statements in accordance with International Financial
Reporting Standards as adopted by the European Union (EU-IFRS) and with Part
9 of Book 2 of the Dutch Civil Code. The Bridge within the statements and the
related notes therefore reflects the main differences in accounting, as compared to
the statutory (consolidated) financial statements of Sif Holding N.V. (the company)
for the year ended 31 December 2020. Users of the Bridge determine whether
and how these are taken into account when evaluating the performance and
financial position of the company.
The Bridge has been prepared in accordance with the measurement and recognition
principles of section 9 of Book 2 of the Netherlands Civil Code, applying the
accounting principles as adopted in the statutory (consolidated) financial
statements, except for the accounting policies stated below and outlined in column
‘Differences’ in the Bridge.
The net equity impact of the Bridge differences of prior year is presented as an
impact on retained earnings.
Leasing
Assessing whether an agreement contains a lease is based on the substance at the
inception date of the agreement. The agreement is regarded as a lease if the
fulfillment of the agreement depends on the use of a specific asset, or on whether
the lease contains the right of use of a specific asset.
The group as lessee
Under finance leases (where all or part of the risks and rewards of ownership of the
lease is transferred to the lessee), at the inception of the lease, the leased asset and
related liability are carried at the fair value of the leased asset at the inception of the
lease or at the present value of the minimum lease payments, whichever is lower.
The leased asset is initially recognized including the initial direct costs incurred by
the lessee. Lease payments are apportioned between the interest expense and
repayment of the remaining balance of the liability, with the remaining balance of the
net liability bearing a constant rate of interest.
The capitalized leased asset is depreciated over the shorter of the term of the lease
and the useful economic life of the property, if there is no reasonable certainty as to
whether ownership of the property is transferred to the lessee at the end of the term
of the lease.
Under operating leases, the lease payments are charged to the income statement on
a straight-line basis over the term of the lease.
As a result of this accounting treatment, a difference is visible in the consolidated
profit or loss statement between depreciation and amortization EUR 5,298 and
production and general manufacturing EUR 502, facilities, housing and maintenance
EUR 5,583 and general expenses EUR 482. In addition, financing costs EUR
1,072 and a deferred tax asset of EUR 349 is adjusted in the column difference. The
off-balance reporting of operational leases resulted in a difference of EUR 51,902 for
the right of use assets, EUR 50,139 lower non-current lease liabilities, respectively
EUR 1,886 and EUR 199 higher lease incentive as part of the other non-current and
other current liabilities and EUR 4,625 lower current lease liability.
2020Sif Annual Report
141
Impairment of financial assets
The group assesses at each balance sheet date whether a financial asset or group
of financial assets is impaired. If there is objective evidence of impairment, the
amount of the impairment loss is determined and recognized in the income
statement for all categories of financial assets carried at amortized cost.
The amount of impairment losses on financial assets carried at (amortized) cost is
calculated as the difference between the carrying amount of the asset and the best
possible estimate of the future cash flows, discounted at the effective rate of
interest of the financial instrument determined on the initial recognition of the
instrument. If the decrease in impairment relates to an objective event occurring
after the impairment was recognized, a previously recognized impairment loss is
reversed to a maximum of the amount required to carry the asset at (amortized
cost) at the time of the reversal if no impairment had taken place. The impairment
loss reversal should be recognized in the income statement. The carrying amount of
the receivables is reduced through the use of an allowance account.
Construction contracts
Revenue is recognized in accordance with the statutory IFRS financial statements.
The total amount of all construction contracts is presented as one total amount to
be presented under assets (positive balance) or liabilities (negative balance) in
accordance with DAS 221.410.
Basis for consolidation
Non-controlling interests are presented separately in the consolidated financial
statements. Non-controlling interests in group companies are part of group equity.
Non-controlling interests in the income statement of group companies are deducted
from result after tax.
2020Sif Annual Report
142
Independent auditor’s report
To: the shareholders and the supervisory board of Sif Holding N.V.
Our opinion
We have audited the Bridge from IFRS to Dutch GAAP (‘Bridge’) for the year
ended 31 December 2020, of Sif Holding N.V. based in Roermond.
In our opinion the enclosed Bridge for the year ended 31 December 2020 of Sif
Holding N.V. is prepared, in all material respects, in accordance with the accounting
policies selected and disclosed by the entity, as set out in section ‘Basis for
Preparation’ of the notes to the Bridge.
The Bridge comprises:
the consolidated statement of profit or loss for the year ended 31 December
2020;
1.
the consolidated statement of financial position as at 31 December 2020;2.
the basis of preparation and the notes comprising of a summary of the
accounting policies and other explanatory information.
3.
Reference is made to page 127 of the annual report for our auditor’s report on the
statutory financial statements of Sif Holding N.V.
Basis for our opinion
We conducted our audit in accordance with Dutch law, including the Dutch
Standards on Auditing. Our responsibilities under those standards are further
described in the 'Our responsibilities for the audit of the Bridge’ section of our report.
We are independent of Sif Holding 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. Furthermore we have
complied with the Verordening gedrags- en beroepsregels accountants (VGBA,
Dutch Code of Ethics).
We believe the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Emphasis of the basis of accounting
We draw attention to note ‘Basis of preparation’ to the Bridge, which describes the
purpose of the Bridge and the basis of accounting. The Bridge has been prepared to
facilitate comparability of the financial position and results of Sif Holding N.V. to the
financial position and results of competitors that are not preparing their financial
statements in accordance with International Financial Reporting Standards as
adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch
Civil Code. As a result, the Bridge may not be suitable for another purpose. Users of
the Bridge determine whether and how these are taken into account when
evaluating the performance and financial position of the company. Our opinion is not
modified in respect of this matter.
Responsibilities of management and the supervisory board for the Bridge
Management is responsible for the preparation of the Bridge in accordance with the
accounting policies selected and disclosed by the entity, as set out in section ‘Basis
of preparation’ of the notes to the Bridge and for determining that the selected
accounting policies are acceptable in the circumstances.
Furthermore, management is responsible for such internal control
as management determines what is necessary to enable the preparation of the
Bridge is free from material misstatement, whether due to fraud or error.
The supervisory board is responsible for overseeing the company's financial
reporting process.
Our responsibilities for the audit of the Bridge
Our objective is to plan and perform the audit engagement in a manner that allows
us to obtain sufficient and appropriate audit evidence for our opinion.
2020Sif Annual Report
143
Our audit has been performed with a high, but not absolute, level of assurance,
which means we may not detect all material errors and fraud during our audit.
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 this Bridge. The materiality
affects the nature, timing and extent of our audit procedures and the evaluation of
the effect of identified misstatements on our opinion.
We have exercised professional judgement and have maintained professional
skepticism throughout the audit, in accordance with Dutch Standards on Auditing,
ethical requirements and independence requirements. Our audit included among
others:
identifying and assessing the risks of material misstatement of the Bridge,
whether due to fraud or error, designing and performing audit procedures
responsive to those risks, and obtaining audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control;
>
obtaining an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the company's
internal control;
>
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by
management;
>
evaluating the overall presentation, structure and content of the Bridge, including
the disclosures; and
>
evaluating whether the Bridge represents the underlying transactions and events
free from material misstatement.
>
We communicate with the supervisory board regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant findings in internal control that we identify during our audit.
Eindhoven, 11 March 2021
Ernst & Young Accountants LLP
Signed by J.R. Frentz
2020Sif Annual Report
144
2020Sif Annual Report
Sif Holding N.V.
Mijnheerkensweg 33
6040 AM Roermond
The Netherlands
Telephone: +31 475 385777
E- mail: info@sif-group.com
