Supporting the energy transition
Financial-Social-Environmental Annual Report 2021 of Sif Holding N.V.
Highlights 2021
People Planet
4.98 LTIF Gross CO-2 emission
3,669 ton
Net CO-2 emission
0 ton (*)
Participation in projects
resulting in 1,873 MW
renewable energy capacity
Successful deliveries for
Hollandse Kust Zuid
Contract win for Dogger
Bank C and Maasvlakte 2
(2.48 in 2020) (Gross 3,157 ton and net 0 ton
in 2020)
(1,298 MW in 2020) For grid connection in 2022 For manufacturing in
2022-2024
Profit
Contribution EBITDA Dividend proposal ROACE Order book for 2022
€114.2 €39.1 €0.19 43.2% 180
million million per share Kton
€422.5 million
revenues
Adjusted EBITDA
€39.4
million
Pay-out 42% EBIT % of average capital
employed
250 Kton for 2023-2024
(*) Reference is made to section Reporting Criteria for further details.
2021Sif Annual Report
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2021Sif Annual Report
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Table of contents
Highlights 2021
3 Report of the Executive Board
3 > message from the CEO
7 > information about Sif Holding N.V.
13 > sif business overview
22 Operating and financial review
22 > stakeholder dialogue
27 > eU taxonomy
28 > market conditions
31 > resources for our operations
44 Key figures 2014 - 2021
49 Corporate Governance
58 Report of the Supervisory Board
61 Remuneration report
66 Capital resources
66 > equity
67 > debt
69 Risk and risk management
71 > risk matrix
76 > executive Board declaration
78 Financial Statements
140 Other Information
140 > articles of association
related to profit appropriation
140 > corporate information
142 > independent auditor’s report
142 > report on the audit of the financial
statements 2021 included in the
annual report
142 > information in support of our opinion
147 > report on other information
included in the annual report
147 > report on other legal and
regulatory requirements and ESEF
148 > description of responsibilities
regarding the financial statements
150 > assurance report
of the independent auditor
152 ReportingCriteria
153 Glossary and Explanation
of non-IFRS financial measures
155 Appendix: Bridge
from IFRS to Dutch-GAAP
159 > independent auditor’s report
2021Sif Annual Report
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Report of the Executive Board
Message from the CEO
Dear reader,
While in the midst of a humanitarian disaster unfolding in the Ukraine and none of
us able to oversee the magnitude and effects on the economics, supplies and
energy sectors, we look back at what has been an extraordinary year for Sif. Amidst
the raging COVID-19 pandemic, the loyalty and drive of our business partners and
employees enabled us to deliver on our commitments to clients and to publish solid
financial results. In addition, we made important steps on implementing our
strategic plans. During these turbulent times we feel the importance embedded in
our company culture of teamwork, ownership and results orientation while pursuing
our purpose to accelerate the growth of offshore wind power generation as a key
driver of the required energy transition.
Safely deliver on our 2021-2024 order book
In 2021, we produced 188 monopiles and 55 transition pieces or 171 kiloton. We
delivered foundations for potentially 1,873 MW of offshore wind capacity. This brings
our total to 11,457 MW of annually produced electricity, to be provided with
foundations manufactured by Sif.
’During the last two decades, we
provided sufficient foundations for
offshore wind energy to supply
more than 11 million households
with electricity’
2021Sif Annual Report
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It was a year in which we were very concerned about two subjects in particular.
Firstly, in the short term there was confusion about how to curb the ongoing
COVID-19 crisis and, secondly, in the longer term there was much to be done about
how and at what pace Sif needs to adapt its processes and production capacity to
bring about the energy transition that is deemed necessary by everyone. Both major
themes were on Sif's agenda in 2021; the pandemic presented us with challenges to
meet production targets safely and healthily and to deliver the order book. We have
succeeded in this by not only strictly following the measures recommended by the
government but also by implementing very strict restrictions on travelling and by
having test facilities available at our production-sites at an early stage. This all
worked out succesfully thanks to the loyalty and flexibility of our employees and
suppliers. Sickness reports due to contamination and absence due to compliance
with quarantine regulations were limited and our suppliers were able to deliver on
their commitments. All in all, it did not lead to significant loss of production and Sif
did not have to file for any form of governmental support.
‘Strict compliance with
recommended COVID-19 measures
combined with employee and
supplier loyalty, enabled us to
deliver on promises’
Foundations were produced or are in production for appealing projects such as
Hollandse Kust Zuid and Dogger Bank A. This resulted in a contribution of
€114 million and an EBITDA of €39.1 million, in line with our guidance throughout
the year. EBITDA adjusted for expenses that relate to the research into and
preparations for the required adjustment and expansion of our production facilities
and business acquisitions, is reported at €39,4 million. Given the circumstances
a satisfactory performance, resulting in a return on average capital employed of
43,2%. In line with our policy, a dividend of €0.19 per share will be proposed to the
General Meeting of Shareholders.
Our order book is well filled and has projects for the 2022-2024 timeframe. The
projects Dogger Bank A and wind farm Maasvlakte 2 are still in execution while in
parallel preparations are being made for manufacturing Dogger Bank B, Hollandse
Kust Noord and Dogger Bank C. All together these projects will result in
250 foundations representing a weight of 394 Kilotons. Post closing, we entered
exclusive negotiations for a further 36 kiloton. The Dogger Bank projects are
designed with the largest diameters in the history of Sif and are approaching the
boundaries of what is possible with our existing manufacturing facilities. Beyond
2024, we see projects in the market with increased turbine capacities, waterdepths
and soil conditions that require larger diameters. This is developing fully in line with
expectations and that is why we embarked on a strategic analysis of our future
production methodology and facilities in 2021.
Drivers of our strategic plans for 2025 and beyond
Energy transition was the longer-term theme of 2021; how can the world achieve the
environmental objectives set during the various climate conferences? How and at
what pace can the world transform from a fossil fuel-driven economy to more
sustainable solutions? And how can it make up for the shortfall that has already
occurred in this area? As a result of the perceived shortfall, there were upward
quarterly ambition adjustments by individual countries. The interim position results
in a growth ambition in Europe of between 100 and 130 GW offshore wind capacity
by 2030. That is four to five times what has been installed in the past two decades.
At Sif, the energy transition topic has been on the agenda for at least 20 years.
Offshore wind is the core of our business and we can contribute to the necessary
acceleration of the energy transition with our products and services.
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Yttre Stengrund, our first offshore wind project of 2000, has now been
decommissioned. Other projects dating back to that period will shortly come to the
end of their technical and economic lifetime. The replacement and decommissioning
market is therefore also expected to show growth in the period 2025-2030. In our
strategic plans, we have made first steps in anticipation of these developments.
Progress on our expansion plans
Foundations need to become larger and heavier. With the Dogger Bank projects, we
are at the top of what we can handle in the existing factory halls in terms of
dimensions. The characteristics of the projects that we see from 2025 onwards led
to the study we conducted on adapting and expanding our production facilities,
which was almost completed by the close of 2021 and for which we started an
analysis of capex requirements and financing at the start of 2022. We feel confident
today that we can fulfill the conditions precedent and target a Final Investment
Decision by July 2022 for a new facility at our Maasvlakte 2 premises in the
Netherlands, which will enable Sif to manufacture 200 monopiles annually with
a reference throughput capacity of 500 kiloton and diameters up to maximum
11.5 meters. Testing of the new facility is expected to start in the second half of
2024 at the earliest.
Picture: artist impression of envisaged expansion plans
A purpose driven organization
Sif believes that with its products and services it contributes to a better world with
respect for the production factors used for this purpose. The pursued balance
between demand for our products and the availability of the best production factors
will ultimately lead to long term value creation for all stakeholders of the company.
We want to contribute to the availability and affordability of more sustainable energy
by improving and renewing our infrastructure. The production and use of more
sustainably produced energy will contribute to the necessary climate improvement.
In doing so, Sif contributes to four sustainability goals of the United Nations. It is our
objective to cause no or as little damage as possible to our (living) environment,
while maintaining a decent and balanced reward of wages, interest, taxes and
dividend.
Important performance indicators that we use are safety statistics and personnel
attendance figures, CO2 footprint and financial ratios. Some of these indicators also
determine the bonusses awarded to executives and are audited by our auditor EY.
Our key safety indicator – lost time injury frequency (“LTIF”) – is 4.98 which is far
away from our target level of 1.5. Although the severity of incidents has decreased
significantly, our effort to increase a robust safety awareness culture hasn’t paid off
in less incidents yet. Despite the negative effect of the COVID-19 pandemic, our
absenteeism was, at 5.1%, lower compared to the 5.5% of the previous financial
year. For the second consecutive year, we compensated far more CO2 than we
produced at Sif if we take into account the compensation of the wind turbine at the
Maasvlakte 2 site. Owing to high electricity production from that wind turbine,
compensation of CO2 emissions was high and net CO2 emission improved from
-21.5 ton to -59.8 ton per kiloton produced steel. The challenge is to reduce
uncompensated CO2 emissions. With 21.5 ton CO2 per kiloton steel produced the
uncompensated CO2 emission was slightly higher than in 2020 when it was 19.3 ton
CO2 per kiloton steel produced. In addition to the non-financial performance
indicators, we look at financial indicators EBITDA, Contribution and Return on
Average Capital Employed.
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For the first time EY was engaged to give limited assurance on three non-financial
indicators that we use to measure our ESG-progress: 1: the participation of Sif in
projects that will result in renewable energy capacity; 2: on the LTIF indicator for
safety; and 3: on the Gross and Net CO2 footprint in tonnes.
Personnel changes
All the members of the Executive and Supervisory Boards (“Boards”) are appointed
for a term of four years. Executive Board member Leon Verweij was not available for
reappointment in May 2021 and resigned. Leon highly contributed to the
development of Sif as a project-driven, stock-listed company and by entering into
a consultancy arrangement with Leon, we can continue to make use of his
experience with Sif and the industry. Ben Meijer was appointed in May 2021 as
Executive Board member and CFO. The current terms of Peter Visser and Peter Wit
as members of the Supervisory Board will end in 2022. Taking into consideration the
crucial expansion and investment plans we have for the near future and the broad
experience both bring to the Supervisory Board, we propose both members for
reappointment for a next term of four years.
An important step in our strategy was the acquisition of KCI the engineers, which we
completed in March 2021. This brought us a team of skilled and experienced people
with knowledge of design and detail engineering on offshore steel structures.
A valuable extension in the current market which enables us to contribute to
optimised and cost efficient monopile foundation solutions to our customers.
Our agenda for 2022 and outlook
Just before finalising this message the terrible news on the Ukraine war came to the
world. At the moment of writing, the impact and effects of this tragic and brutal war
are unknown, but what we know for sure is that it will disrupt the world, including
offshore wind, in whatever form for a while. Comments and predictions we make in
this report are not taking into account these unknown effects.
Assuring a safe and healthy environment for our employees, contractors and visitors
is and will remain the most important topic in all we do. Lost time injuries and total
recorded lost time injuries therefore are our most important performance indicators.
Within a safe working environment and culture, we expect to bring the projects for
Dogger Bank A, Hollandse Kust Noord and Maasvlakte 2 closer to grid connection
and plan to produce a total of approximately 180 kilotons in 2022. The production
adjustment and expansion plan is high on our 2022 agenda. Final Investment
Decision (“FID”) is foreseen in July 2022. Well before FID we will pursue clarity on
the capital investment amount, on launching customers and on the financing of the
total investment. A capital markets event will be announced once total clarity can be
communicated with our stakeholders.
In closing: it’s even more about people
Like in any other year it once again became clear that it is all about people. For the
craftsmanship and dedication of our employees, for the loyalty of our business
partners, suppliers and customers and for the patience of our shareholders we want
to express our sincere thanks. With confidence we look forward to the exciting
period ahead of us.
Fred van Beers, CEO
Roermond, 17 March 2022
2021Sif Annual Report
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Information about Sif Holding N.V.
Sif Holding N.V. (“Sif”) is a public limited liability company incorporated under Dutch
law (naamloze vennootschap) that has its registered office in Roermond, the
Netherlands and holds office at Mijnheerkensweg 33, 6040 AM Roermond, the
Netherlands. Its telephone number is +31 475 385777 and its website is www.sif-
group.com. The trade register registration number of Sif is 13016026. Sif’s legal
entry identifier (“LEI”) is 724500JOBPD5CLHCK040. Sif is domiciled and
incorporated in the Netherlands under Dutch law.
Vision and mission: supporting energy transition
We have a vision to accelerate the growth of offshore wind power generation as
a key driver to the world’s energy transition. For that purpose, our mission is to be
the best monopile solution provider through innovation, engineering and excellent
manufacturing with commitment to the environment and our employees’ well being,
all as confirmed by our customer.
Core Values
The ‘Sif spirit’ is based on three core values that unite us and that distinguish us
from our competition. 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 critical and
vital component in the supply chain of offshore wind
energy.
That’s why we do the things we do. Together, we think
carefully 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 in 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’s predecessor was founded in 1948 as a metalworking firm. In the 1970’s, the
company focussed on foundations for the oil & gas industry and on pressure
vessels. The growth of the products and the related requirement for transport by
water made the company relocate to its current facilities in Roermond in 1972. From
2000 onwards, Sif capitalised on the growth of offshore wind and became a first
mover in monopiles and transition pieces. Over the last two decades, Sif has evolved
to a leading provider of mission-critical tubular steel foundations to the offshore
energy markets. Today’s project-oriented manufacturing company employs 548 full-
time equivalents at year-end 2021, realizing revenues of €423 million. To support our
main services, we participate in (i) Smulders Sif Steel Foundations B.V. (“SSSF”) for
the supply of monopiles and transition pieces, in (ii) SBR Engineering GmbH for the
development of special purpose welding equipment and in (iii) Twinpark SIF B.V. for
the exploitation of the 13 MW GE Haliade X wind turbine. In 2021, we acquired all
outstanding shares of KCI the engineers to strengthen our inhouse engineering
capabilities. While Sif traditionally serves the Northwestern European markets, we
increasingly consider the offshore wind market a global market.
2021Sif Annual Report
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Sif has two manufacturing facilities equipped with 47 Sif design welding machines
and 8 rollers. The factory in Roermond (owned property since 1972; 10.8 hectares of
which 6.1 hectare buildings; picture on page 9) is specialised in the manufacturing
of cans and cones, transition pieces, pin piles, legs and pile sleeves with wall
thicknesses up to 160mm and diameter up to 9 meter. These facilities are situated
outside the dykes. The factory itself has never been flooded so far, but acces can be
restricted or limited in case of very high water-levels in the rivers. The factory in
Rotterdam (leased land with owned buildings since 2016; 62 hectares of which
20 hectares since 2019) is an assembly and coating facility, where cans and cones
are assembled into monopiles and provided with protective coating. The factory in
Rotterdam is situated on reclaimed land. None of the factories are situated adjacent
to protected land for bio-diversity.
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.
Strategy
Historically a manufacturer of tubular steel pipes for pressure vessels and jacket
foundations, Sif redefined its business in early 2000 to focus on offshore wind and
manufactured its first monopiles in the year 2000 for the Yttre Stengrund wind farm.
Global energy demand continues to rise, fueled by population and welfare growth.
Over two decades, the diameter size of the monopiles more than four-folded to
enable the turbines to more than seven-fold in capacity. The dimensional growth of
the foundations has strongly contributed to the decrease in Levelized Cost of
Energy, the repeal of government subsidies and the growth of offshore wind
production. Offshore wind energy can now compete with any alternative source of
energy. Sif’s aim is to contribute to a further increase and sustainable production of
robust and affordable energy through offshore wind as a key driver to the world’s
energy transition.
Initially building its business model on ‘build-to-print’ manufacturing, Sif is now
moving towards ‘total solutions partnerships’ offering engineering, manufacturing of
extremely large unique monopiles and marshalling services for installation and
decommissioning of offshore wind equipment. It takes a long term view to
acknowledge and prepare for these trends. Sif is undertaking the following short-
and longer term activities with a view to expanding and enforcing this niche position:
Optimizing its fabrication assets. On the back of expected growth of demand for
offshore wind energy, demand for more and larger monopiles is foreseen from
2025. Sif is planning for adjustment and expansion of production facilities to
meet this demand and produce an annual 200 monopiles with diameters up to
initially ø 11.5 meter (with a step-up option to ø 15 meter) and a total annual
volume up to 500 kilotons.
a.
Developing design engineering. Early involvement with engineering know-how
leads to solutions of enhanced qualtity for clients and designed-to-manufacture
solutions for Sif;
b.
Developing integrated transition piece alternatives. Limitation of offshore
installation activities results in safer projects at lower risks and expenses. Single-
piece foundations limit the amount of weather-sensitive offshore installation
activities.
c.
Growing logistic and marshalling services for installation and decommissioning
of offshore wind farms. With offshore equipment and parts increasing in size,
demand for onshore preparations and pre-assembly increases. Locations close
to the wind farm sites limit the sailing-time and therefore transportation
expenses and risks.
d.
Strengthening competences for an EPC (Engineering-Procurement-Construction)
role;
e.
Promoting circular solutions for offshore foundations. Early-day wind farms are
reaching the end of their technical or economical lifetime. It is expected that
within the next five to ten years, demand for replacement will grow, including for
removal of depreciated wind farm parts like foundations.
f.
2021Sif Annual Report
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Key success factors
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.
2021Sif Annual Report
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SWOT analysis
STRENGTHS WEAKNESSES
INTERNAL History and long-term view>
Attractive market segment>
Innovative technology>
Track record and reputation>
Skilled and experienced craftsmen and inhouse
engineering services
>
Strategic location MV2>
Financial strength>
Single product/market company>
Workforce composition (age, location) and
labour shortage
>
Dependent on governmental policies>
Volatility due to size of projects>
Large, strong clients>
EXTERNAL
OPPORTUNITIES STRATEGY STRATEGY
Pressure for climate change>
Maturing and growing market>
Geographic expansion to USA and Asia>
Expansion in adjacent services to clients>
Co-makership for steel plates>
Use engineering skills and core technology for
development towards total solutions provider
>
Use strategic location of MV2 to serve clients
with new products and services
>
Build on business partner relationships for full
circular products and services
>
Strengthen leadership role through diversification
and circular production
>
Build on reputation as tier-one employer in
industry of the future
>
Product development: floating wind farms, TP-
less design and decommissioning
>
THREATS STRATEGY STRATEGY
Geopolitical instability>
Political planning of new wind farms>
Local content requirements>
Shortage of raw materials and skilled labour>
New entrants>
Competing clean energy sources>
Pricing-pressure to decrease LCOE>
Build on track record and reputation>
Total solutions provider based on technological
and geographical position and engineering
capacity
>
Optimize production- and cost efficiency>
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 co-maker
relationships with key suppliers while having
access to alternative sourcing for raw materials
>
2021Sif Annual Report
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Our objectives and performance
Objective Measurement Target 2021 2021 Target 2022 Target 2025
1 People: A safe and healthy
work place and permanent
education
LTIF: Lost Time Injury Frequency <1.5 4.98 <1.5 <1
Sick-leave < 5.0% 5.1% <4.5% <4%
Training expenses in thousands € 400 € 460 € 500 ND
2 Production facilities &
innovation: technological
and market leadership
Participation in projects that will result in
renewable energy capacity
Not specified 1,873 MW Not specified Not specified
Expansion plan for state-of-the-art
production facilities
Technological design
complete
Technological design
complete and
marketing plan
FID and start of
construction
New factory up and
running
Involved in design engineering of
foundations to improve EPC position
Add engineering
skills and capacity
Finalized Acquisition
KCI the engineers
Not specified EPC- Projects in order
book
Develop integrated transition piece
alternatives
Certify scaled model
for Skybox
Model certified Full scale certificate 50% of order book TP-
less
3 Circular production:
Sustainable use of natural
resources and limiting waste
% Recycling of manufacturing-waste 100% 97% 100% 100%
Reduction of natural & propane gas
consumption
< 2.0 and <2.4 cubic
meters/ton
respectively
2.8 and 3.1 cubic
meters/ton
respectively; replaced
4 gastorches by
induction
tbd tbd
Reduction of gross and net CO2
emission
no target for gross,
zero for net
3.7 kton gross CO2,
zero for net
Gross tbd, zero for
net
Gross tbd, zero for net
4 Communications:
Competitive position outside
Europe
Related to market awards trends Invitations for US-
tenders
First foundations for
Japan delivered
Book non-EU project Plan for non-EU
expansion
Discount on financial
expenses
CO2 emission and safety performance 0.05% discount on
banking fees
Not achieved 0.05% discount on
banking fees
0.05% discount on
banking fees
2021Sif Annual Report
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5 Financial: Financial
continuity
Healthy financial position; Sound
financial ratios. Banking covenant: Total
debt/EBITDA (ex-IFRS 16)
<2.5 0 <2.5 ND
Banking covenant: Solvency; Equity/Total
assets (ex IFRS 16)
>35% after dividend 47.8% >35% ND
Healthy working capital Neutral working
capital
-65.8 Neutral Neutral
Good ROACE EBIT/average equity+loans-cash and excl
lease commitments
ND 43.2% ND ND
Attractive return to
shareholders
Return to shareholders 25-40% of net
earnings
€0.19/share = 42% of
earnings
25-40% of net
earnings
25-40% of net earnings
2021Sif Annual Report
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Sif business overview
Products
Offshore foundations
Sif designs and manufactures foundations for the offshore energy industry. These
foundations mainly consist of monopiles, transition pieces and pin piles. Pin piles
are used to anchor foundations. The monopile consists of a large tubular structure,
typically with conical sections to reduce the diameter from the bottom to the top.
Monopiles are customized based on the specific needs of a customer with respect
to the design of the product. There is a range of foundations for offshore energy
projects as is illustrated on the next visual.
2021Sif Annual Report
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The selection of a foundation depends on a number of factors, including water
depth, wind- and wave impact and the composition of the seabed. Of the different
types, the monopile is the only one solely used for offshore wind installations. The
monopile has an estimated market share in Europe of more than 80% and
approximately 70% worldwide, simply because it provides the best value for money.
It can be used in water depths up to 60 meters. Other foundations serve both wind-
and oil & gas markets. 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 deepwater solutions.
Monopile foundations are often combined with a transition piece. Sif manufactures
the primary steel for these transition pieces. Where the monopile is uniquely
designed and manufactured for its position in a wind farm, transition pieces are
standardized. After installation of the monopile, the transition piece is installed on
top of the monopile and includes secondary steel components like boatlandings,
ladders and switchboards. More recent designs are based on transition piece-less
solutions whereby the secondary steel items are directly installed on the monopile.
2021Sif Annual Report
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The supply chain for offshore foundations and more in
particular for monopiles, includes the design of the
monopiles on the basis of site-survey information, iron
ore mining, steel manufacturing, flange manufacturing,
detail-engineering, rolling and welding of steel for
monopile and transition piece manufacturing, outfitting
of transition pieces or transition-piece-less monopiles
with platforms, boat landings, switch-boards, and the
blasting and coating of completed foundations after
which the completed foundations are transported to
the wind farm location to be installed.
Sif’s core competences are the detail engineering, the
serial rolling, automated welding and coating of the
extremely thick steel plates to create unique tubular
offshore foundations (monopiles and transition
pieces) and foundation components (jacket legs, pin
piles and pile sleeves). An overview of Sif’s
manufacturing steps is reflected on the pages 15 and
16. Design, iron ore mining, steel and flange
manufacturing, outfitting of transition pieces and
transition piece-less monopiles and coating of
completed products are competences of Sif’s
business partners (suppliers, joint venture partners or
subcontractors).
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Engineering
In 2021, Sif acquired KCI the engineers. The purpose of the acquisition was to
enforce the detail engineering capacity of Sif and to service clients with engineering
skills. KCI the engineers is an established brand in offshore and maritime
engineering and services clients in the energy and leisure sector.
Marshalling
With marshalling activities, Sif is, on the one hand, anticipating on the trend in
growth of dimensions of offshore installations and the demand from clients to have
assembly hubs close to the sail out location and the wind farm. On the other hand,
Sif is anticipating on the decommissioning market that will open up when wind
farms come to the end of their lifetime, which is expected five to ten years from
now. Sif started marshalling activities in 2019. Clients are serviced with space and
(manned) equipment to assemble and sail-out their products or, for
decommissioning activities, to land their depreciated products and dismantle them
for recycling or scrapping. For this purpose, Sif expanded their space in Maasvlakte
2 by the lease of an additional 20 hectare in 2019.
Markets
Sif serves the global offshore wind energy markets and contributes to the global
energy transition.
Market trends and developments
Following decades of discussion and ignorance, the world has meanwhile generally
accepted that the climate is changing, largely influenced by the use of non-
sustainable energy sources like coal, oil and gas. In 2020, 83.1% of the world’s
energy consumption came from exhausting fossil energy sources (31.2% oil, 27.2%
coal and 24.7% gas) and 16.9% came from renewable energy sources (6.9% hydro,
4.3% nuclear and 5.7% wind & solar) (Source: BP statistical review of world energy
2021). World leaders have agreed that a net zero emission should be pursued by
2050, amongst others by changing this energy mix, to maximize heating of the earth
to 1.5C. Initiatives were amongst others announced in Europe, by way of the
European Green Deal. The Green Deal program sets out priorities for 2019-2024 that
should enable a net reduction of greenhouse gas of 55% by 2030 compared to
1990 and a net zero exhaust of greenhouse gas by 2050. In the USA, the Biden
administration announced to cut greenhouse gas emissions with 50-52% by
2030 compared with 2005 levels and a longer term goal of net zero emissions by
2050.
IRENA has estimated that wind contribution of 21% by 2030 and 35% by 2050 is
needed to achieve the targets for these respective years (Source: International
Renewable Energy Agency IRENA; Future of Wind, October 2019). The European
Green Deal is looking at at least 300 GW European offshore wind capacity to achieve
the target for 2050. The USA has set a target offshore wind production capacity of
30 GW by 2030 at the latest. On a global scale, targets in 2021 increased to 244 GW
by 2030. This will result in a four fold growth by 2030 compared to 2021, when
global grid-connected offshore wind power increased by 61% from 34 GW to 55GW
(source: Wood Mackenzie; 2021 in review for the offshore wind sector, January
2022). Despite tender activity hitting a record year with 18 GW awarded in 2021,
realization of growth ambitions requires a drastic acceleration of project leadtimes.
The projects that were grid-connected in 2021 took on average six years from
announcement to completion with leadtimes in Europe being considerably longer.
2021Sif Annual Report
19
‘With 55 GW installed capacity at
the end of 2021 and 244 GW
targeted for 2030 in the EU,
project leadtimes need to speed-
up to achieve the ambitions of
more than quadrupling offshore
wind capacity’
It is expected that from 2022, 80-85% of offshore wind farms in Europe will be based
on monopile foundations. Globally this is approximately 70% since wind farms
outside Europe often need to be installed on jackets due to less favourable soil and
weather conditions or because they are planned in deeper waters. In the period
2022-2030, the majority of all wind farms will be equipped with 10MW+ turbines
with the majority of wind farms after 2025 using turbines of 15 MW and larger.
Based on these assumptions and specific projects in the pipeline, it is expected that
the market demand for monopiles in Europe and East Coast of the USA will
gradually increase from approximately 800 units in 2024 to 900 in 2028. For the
period following 2028, projects are not specific enough to project a reliable demand-
forecast. This is the reason that the below monopile demand graph shows
a downward trend from 2028.
MONOPILE DEMAND
(IN number of foundations)
1,000
900
800
700
600
500
400
300
200
100
0
monopiles
jackets
gravity based
floating
2022 2023 2024 2025 2026 2027 2028 2029 2030
601
859
1,078
1,184
1,204
1,226
1,256
1,227
1,121
These developments will command the entire supply chain to adjust their products
and equipment to the next level turbine dimensions; installation vessels need to
adjust loading and installation capacity; manufacturers of foundations need to
adjust their production facilities to enable the manufacturing of larger and heavier
foundations. From 2025 untill 2030, the vast majority of monopiles in Europe will be
in the 9 to 11.5 meters diameter range. In the USA, diameter sizes are typically
slightly larger due to more difficult soil and stronger requirements to withstand the
hurricane season. Monopiles above 11.5 meters are therefore more common in the
USA in the future.
2021Sif Annual Report
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Clients
Clients for both foundations and marshalling activities 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 and Van Oord. Our
geographic focus is on projects in Northwestern Europe, with a growing interest in
Northeast American initiatives. Most of Sif’s projects are for clients in Europe and
most relate to the manufacturing of monopiles for contract partners in the offshore
wind industry:
AMOUNTS IN EUR '000 2021
The Netherlands 270,701
All foreign countries:
European Union (EU) 4,733
Rest of the world 147,107
Total revenue 422,541
AMOUNTS IN EUR '000 Wind Marshalling Other Total
2021 2021 2021 2021
- Revenue from construction contracts 411,055 3,344 4,097 418,496
- Operational lease income - 2,455 1,590 4,045
Total revenue 411,055 5,799 5,687 422,541
Business partners
Sif has strategic partnerships with AG der Dillinger Hüttenwerke (“Dillinger”) in
Germany for steel plates, Euskal Forging AG in Spain for steel flanges, Eiffage
Smulders in Belgium for steel applications to transition pieces and Van Ginkel Groep
in the Netherlands for blasting and coating.
Monopiles are composed of large and heavy steel plates up to 42 ton each that are
mostly manufactured and supplied by Dillinger in Saarland Germany. Almost all
installed wind farms are still in use and are expected to reach the end of their
lifetime from five to ten years from now. At the end of their long service lives, steel
products become scrap and thus an important feed material for the production of
new steel. Application orientated recycling assures infinite reuse. Sif and Dillinger are
preparing for the recycling of steel after decommissioning of wind farms.
All blasting and coating is executed and supervised by staff of Van Ginkel in Sif’s
facilities at Maasvlakte 2 in Rotterdam, complying to Sif’s safety, quality and
environmental standards.
Competition
In 2021, Sif manufactured its 2,200
th
monopile. Sif (the Netherlands), EEW Special
Pipe Constructions GmbH (Germany) and Steelwind Nordenham GmbH (Germany)
are the main industrial manufacturers of monopile foundations that have a longer
manufacturing history and that built a combined market share of almost 90% over
the past ten years with a total annual production capacity of approximately
500 monopiles. In addition, Bladt Industries A/S (Denmark) has limited monopile
production capacity and according to Wood-Mackenzie, had a market share of
approximately 10% over the past ten years (Source: Wood-Mackenzie Global
offshore wind power foundation & substation order and supply chain engine room:
Q2 2021).
‘Sif has manufactured its 2,200th
monopile in 2021 and has built
a marketshare of close to 40% in
monopiles’
2021Sif Annual Report
21
Haizea and Windar/Navantia in Spain, EEW-Orsted in New Jersey, USA and SeAH in
the United Kingdom announced initiatives for investing in monopile manufacturing
plants. Haizea has announced a first order for large monopiles early 2022, EEW and
SeAH both indicated that their new plants are scheduled for first production in
2023 and 2026 respectively. They both announced a first order in 2020 and
2021 respectively. All monopile foundations, also for projects outside Europe (USA,
Taiwan, Japan), are initially fabricated or prefabricated in Europe after which they
are shipped to and possibly assembled at their destination.
2021Sif Annual Report
22
Operating and Financial Review
With products and services geared at growth of offshore wind energy production, Sif
contributes to a more sustainable world. Since 2021, Sif has reported on its
environmental, social, financial and governance performance in a more combined
and integrated way. In this section of the annual report, we explain what human,
societal and natural capital Sif employs and what Sif’s views and policies are on the
deployment of these sources. We also report on how Sif engages with its various
stakeholders to ensure alignment between Sif’s ambitions and their needs. These
entail: employees, shareholders, suppliers, customers and partners and end users
such as governments, local communities and civil society.
The application of financial capital is explained in pages 66 through to 68.
Stakeholder dialogue
The delivery of products and services in line with Sif’s mission and values, requires
alignment of all Sif’s stakeholders. In case of alignment on processes and
procedures, the end product will be satisfactory to serve purpose. Sif considers
dialogue essential to establish and maintain effective working procedures and
policies that have the support of the different parties in the total chain. Sif also is
convinced that dialogue results in content and stimulates innovation.
2021Sif Annual Report
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Internal stakeholders Employees Employees are based in our Dutch Roermond and Maasvlakte 2 Rotterdam locations and in the KCI the engineers
office in Schiedam. 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 during working hours. We use
screens, toolbox meetings, frequently scheduled information sessions for all employees and cascade-
communications. The emphasize here is on the ‘why?’ to support our management in answering questions from their
teams.
Sif rolled out a corporate culture program to align employees on vision, mission, core values and targets of the
company. This will be supported by a revised Code of Conduct in 2022. Sif used to conduct annual employee
satisfaction surveys until a few years ago and will reinitiate these in 2022 to get feedback on amongst others this
culture program.
In 2020 a PsychoSocial Workload (PSW) survey was done in addition to the annual Medical Preventive Examination
(MPE).
Considering that almost 50% of our workforce are non-Dutch; English, German and Dutch are our languages of
communication. With respect to certain shopfloor positions, we apply the master-student principle of 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 or video webcasts of results presentations), at AGMs,
capital markets days or shopvisits which we organize on a regular basis for our (potential) shareholders. Following
the release of our annual and interim results we hold one-on-one meetings with investors and potential investors,
preferably in person and in recent times often through videocalls. 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. This
includes amongst others a blackout period of 4 weeks before scheduled quarterly results presentations or updates.
The COVID-19-outbreak has caused a shift from vis à vis to virtual meetings with investors from 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 2021, we appealed for the temporary emergency law that applied in the Netherlands in view of the COVID-19
pandemic. This law made it possible to organize virtual shareholders meetings. We organized a video webcast with
possibilities for shareholders to vote in advance and to ask questions both in advance and live through electronic
media. In 2021, we had 20 participants in the AGM.
2021Sif Annual Report
24
External stakeholders Customers On average, Sif has between 2 and 6 projects in execution in any year. It often takes between 3 and 6 years from
initiation of a project to completion. This implies we have close and long relationships with our clients, who often buy
our products and services on the basis of co-development. We often engage with our clients on a person-to-person
basis and we meet clients and potential clients at trade shows or other events. COVID-19 restrictions prevented this in
2021. 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.
In 2021 Sif started sending out customer satisfaction surveys to customers, with whom we recently signed a
contract. The first two surveys related to the projects Dogger Bank A, B and C & Ballast Nedam for Maasvlakte 2. For
completion of the surveys, we use “Questback”, a survey tool and feedback platform.
A template has been made, which we customize to the specifics of each customer or new project. General feedback is
the high trustworthyness and quality of Sif’s products and services. Room to improve is in Sif’s flexibility. Not all
projects are equal in size or complexity. This could according to responding clients be better reflected in Sif’s attitude
in contract negotiations.
With a view on the longer term, we engaged with our clients to discuss their plans to increase turbine capacity. The
increase that we see results in demand for bigger foundations and require Sif to invest in adjustment or expansion of
production skills and facilities. To get a clear view, we also engaged with other parties in the supply chain that need to
adjust or increase size: installation companies for their vessels and equipment, flange suppliers, steel manufacturers
etc.
Labour markets Labour 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 COVID-19 measures. Sif applies the master-student principle for training rolling and welding
specialists. We are developing a labour market communications campaign to strengthen Sif’s position as an
employer.
2021Sif Annual Report
25
External stakeholders Suppliers In order of size, Sif’s main suppliers are for steel plates, flanges, corrosion protection, temporary personnel, logistics,
welding equipment and materials. For these suppliers we use approved vendor lists.
We strive to maintain close personal relationships with these suppliers given their importance in facilitating our
innovations and growth. We do complete assessment forms on an annual basis but it was determined in 2021 that
supplier assessment at Sif was not a dynamic process. This has resulted in an altered vendor questionnaire which is
still work in progress since it lacks certain sustainability and financial assessments.
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 issue regulations
and initiate projects for wind energy and sometimes subsidize innovations or projects. We communicate through
media and at networking events. Tuning of developments with the various parties in the supply-chain can improve
efficiency and be beneficial to the required energy transition. Companies that are involved in the design and
manufacturing of foundations have joined forces in the Offshore Wind Foundations Alliance to pursue a level playing
field and standardization of certification processes related to the foundations of offshore wind turbines. The Offshore
Wind Foundations Alliance is an interlocutor for the European Union as well as for EU member states.
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 entails 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.
2021Sif Annual Report
26
Analysts Financial, industry and sustainability analysts closely track Sif, our competition and our markets. Observing blackout
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, amongst others, CDP, ISS and MSCI. Aggregated
results of these ESG surveys are reflected on website under ESG.
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.
2021Sif Annual Report
27
We seek to minimize risk and take advantage of the opportunity around energy
transition, thereby transforming the capital inputs into value and positive impact. We
especially try to have a positive impact through our engagement in relation to the
Sustainable Development Goals (“SDGs”). We engage with all 17 SDGs, especially
on the four shown in the visual later in this paragraph. We will explain how we
contributed to these four SDG’s of the United Nations by serving our markets and
applying our resources within the contraints and principles of our Code of Conduct.
The level of success determines the added value of the company to various
stakeholders over a longer period.
EU taxonomy
Introduction
In pursuit of a 55% reduction in greenhouse gas emissions in the European Union
(“EU”) by 2030 from 1990 levels and the objective of becoming climate neutral by
2050, the EU has issued laws and regulations as an element of the European Green
Deal. Part hereof are the EU Taxonomy and Transparency Regulations that entered
effect in January 2022 and March 2021 respectively. The EU Taxonomy Regulation
provides that listed entities with more than 500 employees, amongst which Sif, that
are required to publish non financial information under the Non Financial Reporting
Directive (“NFRD”) should disclose information to the public on how and to what
extent their activities are associated with environmentally sustainable economic
activities as defined under the EU Taxonomy legislation. Related to this EU
Taxonomy Regulation, the European Commission published a list of economic
activities that contribute to the achievement of the 2050 target. The information
relates to eligible revenues, eligible capex and eligible opex. For revenues, connection
is found with the definition for revenues in the annual accounts reported under
revenues from construction contracts, revenues from marshalling activities and
revenues from engineering. For capex and opex, connection is found with the
definitions for capex (the proportion of the capital expenditure of an activity that is
either already taxonomy aligned or is part of a credible plan to extend or reach
taxonomy-alignment. Capex provides a dynamic and forward looking view of Sif’s
plans to transform their business-activities) and opex (the proportion of the
operating expenditure associated with taxonomy aligned activities or to the capex
plan. The operating expenditure covers direct, non-capitalised costs relating to
research and development, renovation measures, short term lease, maintenance and
other direct expenditures relating to the day-to-day servicing of assets of property,
plant and equipment that are necessary to ensure the continued and effective use of
such assets) in the taxonomy.
The EU Taxonomy and Transparancy Regulations have only recently been
implemented and leave room for interpretation. Sif intends to analyse possible
unclarities and refinements to the interpretations now followed.
Eligibility assessment
Sif has five types of activities, as are explained in more detail elsewhere in this
annual report:
The production of monopiles, transition pieces and pin piles for the offshore wind
market. This activity is entirely mapped to NACE code C25.11 “Manufacture of
metal structures and parts of structures”. The activity is EU taxonomy eligible;
>
Marshalling and logistics services to clients for their offshore wind installation
activities. This activity is mapped to NACE code H52.22 “Service activities
incidental to water transportation”, which includes “operation of terminal
facilities such as harbours and piers”. These activities are not related to the
activities of Sif and thus these activities are not eligible. The marshalling
activities of Sif relate to availability of space and services to offshore contractors
who operate an onshore hub for preparation of their offshore installation
activities. These activities are not reflected in the EU taxonomy;
>
Engineering services for renewable energy, oil and gas and leisure, which is
mapped to NACE code M71.12 “Engineering activities and related technical
consultancy”. In relation to engineering services for the renewable energy
market, the engineering services enable the economic activities of Sif’s
customers to meet the criteria for substantial contribution to climate change
mitigation. The operators of wind farms and installation vessels are applying the
results of the engineering service in their contribution to renewable energy
technologies. The engineering activities of Sif for these clients are therefore
eligible. The engineering activities related to the oil and gas and leisure market
are not enabling Sif’s customers to meet the criteria for substantial contribution
to climate change mitigation. These engineering services are therefore not
eligible;
>
2021Sif Annual Report
28
Renting out the wind turbine generator until the certification period is completed
and ownership of the wind turbine generator is transferred to Sif. These renting
activities of Sif are not EU taxonomy eligible.
>
Based on article 8(2) of the EU Taxonomy Regulation, the portion of turnover, capital
expenditure (capex) and operating expenditure (opex) that relates to assets or
processes associated with economic activities that qualify as environmentally
sustainable is as reflected in the table below.
turnover capex opex
Taxonomy eligible activities 98% 55% 93%
Taxonomy non-eligible activities 2% 45% 7%
Total €1,000 422,541 15,624 10,603
Reference to FS Note 7 Note 15,16,32
A full reconciliation was made to the total reported sales, capex and opex
information to avoid double counting in the allocation of the numerators.
Market conditions
Growing demand AAGR 28.9% pa
On the back of increasing ambitions of different countries for energy transition,
expectations for demand for offshore wind production units have increased also in
2021. Industry analysts at WoodMackenzie now expect a global average annual
growth rate (“AAGR”) of 28.9% for the 2020-2030 period (source: WoodMackenzie;
Global Wind Power Market Outlook Update Q4 2021 dated 24 November 2021). The
growth in demand is driven by climate related intercountry 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.’
Demand for offshore wind energy is directly related to the levelized cost of electricity
(“LCOE”). Despite the increasing costs of ever bigger wind turbine generators,
foundations and installation vessels, LCOE for offshore wind electricity is expected
to drop significantly by an estimated 53% towards 2025 compared to the 2014 level
(source: Wood Mackenzie Global offshore wind revenue dynamics 2021,
30 November 2021). Cost reductions from optimized production processes and
design efficiencies have increased demand for offshore wind, leading to further
industrialisation of not only wind turbines but also foundations, installation and other
elements. Furthermore, interest rates have been and are expected to remain fairly
low while technical advancements allowed turbines to grow more rapidly than
experts previously predicted. These increased turbine sizes are also viewed as
a critical driver for LCOE reduction. Over the past 20 years, turbine sizes have
increased almost seven-fold:
2021Sif Annual Report
29
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 gridconnection. We
have seen confirmation of the expected growth in our tender activity and in our order
book additions in 2021 that now stretches into 2024.
Product development; efficiency is key
In 2021 Sif worked on the projects Hollandse Kust Zuid (the Netherlands) and
Dogger Bank A (United Kingdom). Total production in 2021 included approximately
171 Kton or 188 monopiles and primary steel for 55 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
15 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 above 15 MW for
the period beyond 2024 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 expertise in the field of production
technology and logistics and for strategic market developments (supply/demand/
pricing). Following completion of these studies with positive outcome, Sif invited
financial advisors to assist in preparing a financing strategy. Starting points for the
new and adjusted facilities are a production volume of 500 kiloton per year,
manufacturing of 200 monopiles per year, maximum diameter of 11.5 meters
initially with a step-up option to 15 meters. Part of the financing to be provided by
launching customers.
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
or the transition piece-less designed monopile where savings are realized in steel
costs and in installation time at sea which is shortened drastically. 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 dynamic positioning installation
vessels. It is a new application of slip joint technology.
2021Sif Annual Report
30
‘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 Hollandse Kust Zuid project where
Sif has optimized the design-to-production process by applying design engineering.
To expand engineering services for earlier involvement in the design process, Sif
expressed its intention to acquire KCI the engineers late 2020. This engineering
company with 50 FTe’s has extensive know-how of offshore structures in various
parts of the world. The acquisition was completed in March 2021.
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
2021 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.’
Contract wins in 2021 included Dogger Bank C (87 foundations and transition
pieces, 130 Kton).
Our contribution to energy transition
Sif launched the monopile at the beginning of this millennium and has now
produced over 2,200 of the approximately 5,500 installed monopiles in Europe. In
early days, a monopile served as the foundation for a turbine with 2 MW capacity.
Last year monopiles were manufactured that aim to carry 14 MW turbines. If we
multiply the number of monopiles produced with the turbine capacities that were or
are installed thereon, Sif has thusfar contributed to a capacity of almost 12,000 MW
of clean, sustainable wind energy. In 2021 Sif completed 210 monopiles to serve as
foundations for 1,873 MW installed offshore wind capacity. A monopile is included in
the calculation for installed energy capacity when the monopile has its completion
certificate after production. This is different from the basis we use for financial
reporting the number of produced monopiles, which is based on percentage of
completion (“POC”) of projects. Reference is made to the definition in the reporting
criteria in this annual report. Besides this contribution to the displacement of
CO2-emitting energy, Sif has also examined its own CO2-footprint.
2021Sif Annual Report
31
Resources for our operations
Our efforts, targets and the application of our resources for contribution to a more
sustainable world are more specifically aimed at numbers 7, 9, 12 and 13 of the
17 SDG’s that the United Nations have identified in their Global Compact strategy.
We contribute to Climate Action (SDG 13) and for that purpose cooperate with
others for Industry, Innovation and Infrastructure (SDG 9), we cooperate for
Affordable and Clean Energy (SDG 7) and we cooperate for Responsible
Consumption and Production (SDG 12).
From 2023 Sif manufactures on a zero safety-incident basis and contributes
to SDG’s 9 and 12;
By the end of 2021 Sif employed 548 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.
From 2025 Sif's need for power is fully based on 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 by simply pricing and trading the exhaust, but to actually reduce it.
In 2021 the gross carbon dioxide emission by Sif was 3,669 tons or 21.5 ton per
kiloton of processed steel (3,157 tons or 19.3 ton per kiloton in 2020). In 2022, 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. In 2021 the first four induction machines were installed. In
2022 remaining gastorches will be replaced by induction machines for all
circumferential welding to reduce consumption of natural gas and propane gas
by 20% and
>
Heavy transport vehicles (trucks, SPMT) will be fueled by bio diesel and
alternatives will be explored for shipping. The use of diesel (for transportation)
and natural gas (for heating) are responsible for 94% of our CO2 exhaust.
>
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 25-to-30-year lifetime of a wind farm, the first ones will
become redundant or economically depreciated in five to seven 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 two meters below the mud-line), cleaning of the
preservation and re-use of the steel. And therefore, circularity requires a supply-chain
approach. With main supplier Dillinger, Sif has embarked on a plan for circular and
CO2 neutral production of steel for monopiles. This plan is aimed at full CO2 neutral
production of steel by 2045 whereby in the period 2030-2045 securization of
sufficient supply of green energy and green hydrogen is foreseen and complete
conversion to CO2 neutral production will be established.
2021Sif Annual Report
32
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.
Sif now produces 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
accelerating maritime shipping's decarbonization with the development and
deployment of commercially viable deep sea zero emission vessels by
2030 (www.globalmaritimeforum.org).
Sif considers the development of sustainable business management of prime
importance for the continuity of the business, the well being of its employees and of
other stakeholders. Sif follows a strategy on sustainability with measurable targets
for the period 2022-2025 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 and by disclosing to and through Carbon Disclosure Project (CDP),
MSCI and ISS.
In our business we use the following resources:
Human resources
In 2020, Sif has embarked on a company culture program that prepares the
employees for the future. 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.
Health and 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.
in 2021, the onboarding program was expanded to facilitate broader HSE-training
opportunities. Following onboarding, every new employee (permanent as well as
temporary) receives a login for the Sif-academy. He/she is obliged to follow
safety-instructions through the Sif-academy;
>
once started at Sif, permanent employees maintain their 24/7-access-login for
various e-learnings. These e-learnings include information on COVID-19 and on
working from home but also include training of skills, leadership and
communications;
>
our manufacturing staff follows safety and first-aid training and job-related
training such as hoisting and lifting, forklift truck, electrical etc. and
>
to improve and maintain the well being of our staff, an absenteeism process with
coaching is in place. Related to COVID-19 and the impact on mental health of
measures to prevent infection, additional measures were introduced to
safeguard well being.
>
2021Sif Annual Report
33
We have been recording LTIF for many years. This was 4.98 per million hours
worked in 2021 (2.48 in 2020). Next to LTIF we record 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 19.94 per million hours worked in 2021 (9.93 in 2020) and
relates to in total 20 incidents of which five resulted in lost time, two in restricted
work and 13 required medical treatment. Most incidents that resulted in injuries
relate to hands and fingers and were incurred during vertical transportation and
hoisting. 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. Both performance indicators LTIF and
TRIF ended well below the target and extra efforts are required to reach the
2023 targets for safe operations. The emphasis in these efforts lies in cultural
aspects that should result in better safety awareness, especially where we are
manufacturing to the limits of our production facilities. Ergonomics and further
automation in the production halls should help to reduce the number of incidents
from 2023. This result underpins the need for evaluation hereof. Rebalancing the mix
of our permanent and flexible staff is part of the improvement plan.
In 2021 absence for illness decreased to 5.10% (5.50% in 2020), which is just above
our 2021 target. A contributor to the absence rate were people reporting ill due to
COVID-19. This resulted in a marginal increase in short absenteeism. The majority of
the absenteeism however still relates to absenteeism between six weeks and one
year. 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 labour vitality, lowered risk of sick leave
and a better and safer working place.
The ‘Corona Crisis Response Team’ (management team, HSE manager,
communications manager, Chairman of the Works Council) stayed on duty in 2021.
Measures as advised by the government were implemented and, together with
testing facilities on the job, allowed operations at Sif to largely continue. People got
used to the new working methods and production more or less normalized
throughout 2021.
SAFETY STATISTICS
2021 2020 2019 2018 2017 2016 2015 2014
LTI 5 3 3 1 2 3 6 6
TRI 20 15 22 16 21 14 10 19
LTIF (per mln hours worked) 4.98 2.48 2.75 1.12 1.71 2.83 7.19 8.03
TRIF (per mln hours worked) 19.94 9.93 19.1 15.59 15.65 9.4 12 17.4
Sickness leave % 5.10 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
2021 2020 2019 2018 2017 2016 2015 2014
44
5
46
3
37
3
39
1
31
2
14
3
10
6
19
6
2021Sif Annual Report
34
Analysis shows that for the years 2017 to 2019 a different approach was taken to
the number of hours worked. At that time the registered number was increased by
15% to compensate for subcontractors that did not register their hours but had
a presence at Sif’s locations. We have corrected the results for these years in the
table above. A correction was also applied to the 2019 and 2020 numbers for
a timingwise wrongly registered incident. This also has been corrected in the table
above.
An annual amount of €500,000 is budgeted for training and 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.
‘Annually, more than €1,300 per
employee is budgeted for job-
related training and personal
development’
To be able to absorb the volatility inherent to the 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.
Anticipating the expected supply-demand imbalance from 2022 in combination with
shortage of skilled technical labour, Sif has started to rebalance the workforce in
favor of more permanent jobs. This has resulted in a shift from flexible to
permanent. In 2021, based on year- end, our flexible staff was 32.8% compared to
55.2% at year-end 2020. At the end of 2021, the total workforce was 548 FTEs (full
time equivalents) compared to 569 FTE at the end of 2020. Of our flexible workforce,
99% are male factory workers (blue collar). Of our permanent workforce, 91% is
male.
‘The volatile nature of Sif’s
business until 2020 required
a relatively high percentage of
flexible workforce; the coming
years the orderflow tends to
stabilize allowing for a larger share
of permanent workforce.’
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-labour are limited.
To support their health and well being, all employees have access to
a physiotherapist and are offered an annual medical checkup.
2021Sif Annual Report
35
Staff distribution: flexible - permanent
(IN %)
32.8
67.2
Flexible
Permanent
All Sif’s employees are remunerated on the basis of one of the largest collective
labour agreements in the Dutch metal industry (CAO metaal en techniek). Collective
labour 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 labour 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
salary based on fair working hour regulations and assure fair employment
conditions according to the applicable legislation.
Employee participation
Sif’s employees are represented by the Works Council that is consulted on intended
business economic, strategic or organizational decisions by the Executive Board.
Furthermore 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 labour 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 Sif’s
general business progress is discussed take place on 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 Executive Board is preparing and how it will involve the Works Council in the
decisionmaking. In 2021 the Works Council was amongst others consulted on the
working from home policy of the company, on the appointment of a financial advisor
in relation to expansion plans, on the appointment of a prevention officer, the use of
mobiles for private purpose, the nomination of an Executive Board member and CFO
and the intended acquisition of KCI the engineers.
Following elections in May 2021, The Works Council has nine members. Six
members are employed at the Roermond location, three in Rotterdam. Five
members of the Works Council were re-elected.
In 2021 the Works Council had 5 consultation meetings with the Executive Board.
During three of these meetings the Executive Board presented and explained the
strategy and the operations plan. Furthermore, the Health Safety and Environmental
policies of Sif, the job evaluation system and the sick leave policy were presented
and discussed. The CFO explained the annual 2020 results and the interim
2021 results in June and September 2021 respectively. The Supervisory Board
member representing the Works Council, Caroline van den Bosch, attended one
regular Works Council consultation meeting in 2021 in person. She furthermore
participated in one extra meeting on expansion plans and in two TEAMS discussions
with the chair of the Works Council and the CEO.
The Executive Board 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 the Boards.
2021Sif Annual Report
36
Diversity
Diversity is reflected in the distribution over gender, age, nationality/race and
education/experience.
The Supervisory Board Profile as published on the Sif’s website on the Corporate
Governance page defines the required expertise, experience and competences of the
Supervisory Board members. The Supervisory Board profile matches the profiles of
the individual Supervisory Board members. In 2022 a diversity policy will be
presented to the Supervisory Board for approval. This diversity policy includes
provisions for the Executive Board and permanent staff and is based on a best
candidate for the job basis. In case of equal capabilities, preference is given to
female candidates. In the year under review, Sif had two Executive Board members
and five Supervisory Board members. One Supervisory Board member (20%) is
female. The management team of Sif has five members, Executive Board members
included. Of the five members, one was female in 2021 (20%).
A more balanced gender representation will be pursued when filling positions, both
in the Executive and Supervisory Boards as in staff positions. The nature of the
industry Sif is operating in combined with the geographical location of Sif and the
presence of high tech and industrial companies in the region make the competition
for female members for the Executive Board, the Supervisory Board and the
management team, but also for (technical) other staff positions, fierce.
Gender distribution of permanent staff
(IN %)
91.4
8.6
Male
Female
The majority of Sif’s workforce, on the workfloor but also in project management
and support staff, needs technical skills and education. About 10% of the women in
college opt for a technical secondary education. The proportion of women in MBO
(secondary education) is higher with approximately 20%. In higher professional
education it was also close to 20% and in university education between 35% and
40% of the total number of students. The education council found that gender
segregation in technology is declining but that it is still reflected in the working
environment.
In addition to gender, Sif pursues more balance in distribution to 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.
2021Sif Annual Report
37
Staff distribution: nationalities
(IN %)
59.3
11.2
7.8
15.1
6.6
Dutch
German
Portugese
Polish
Other
age distribution of permanent staff
(IN %)
2.4
35.1
55.1
7.4
18-25
26-40
41-60
61+
2021Sif Annual Report
38
‘Wind is our main energy solution,
green steel our ambition for the
main raw material used for plates
and flanges’
Natural resources
Improvement of our environment is our market. Our products are geared towards
the energy transition to limit climate change effects. Limitation of effects of our
operations on our environment is high on our agenda and implies that we aim
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 fossil resources with sustainably generated electricity;
>
to reduce the amount of waste. The products Sif uses the most during the
manufacturing process are shown below;
>
to reduce the amount of incidents with environmental impact or to limit or take
away the impact of these to zero damage;
>
to fully compensate for the energy we consumed during the production process
by either replacing it by renewable energy (pre heating by induction instead gas)
or by compensating it by renewable energy.
>
MATERIALS USED DURING PRODUCTION
2021 2020 2019 2018 2017 2016
Steel (Kton) 171 164 185 138 232 191
Welding powder (ton) 1,600 1,639 1,870 1,517 2,540 2,103
Welding wire (ton) 1,462 1,435 1,656 1,456 2,302 1,944
SIF ENVIRONMENTAL FOOTPRINT BASED ON 2016 = 100
PER KILOTON 2021 2020 2019 2018 2017
Steel plates (Kton) 171 164 185 138 232
Welding powder (ton) 9.36 9.99 10.11 10.99 10.95
Welding wire (ton) 8.55 8.75 8.95 10.55 9.90
Natural Gas m
3
2,826 2,239 2,861 4,465 3,328
Propane m
3
3,109 2,684 2,791 2,341 1,561
Electricity (Mwh) 101.3 103.4 104.8 109.5 89.7
Water m
3
59.3 40.8 42.2 56.7 16.0
Scrap metal (ton) 22.87 33.00 31.47 38.13 35.72
Oxygen m
3
10.5 8.7 9.7 10.0 9.6
Water consumption per kton produced increased by 45% in 2021 from 40.8 cubic
meter per kiloton in 2020 to 59.3 cubic meter per kiloton. Water consumption at the
Roermond factory decreased. The drastical increase of water consumption at
Maasvlakte 2 relates to a client-request to clean all monopiles before load-out.
In 2021 ten environmental incidents (four incidents in 2020) were reported. Most
incidents related to oil spills from heavy load transport vehicles (‘SPMT’s’) and were
isolated and salvaged. They mostly relate to leaking hydraulic systems (hoses or
links) caused by tyre punctures. To prevent this, mitigating actions are being
implemented.
In 2021 Sif used 68,974,932 Megajoule energy (55,958,452 Megajoule in 2020) in its
production process. The change relates to the colder wintermonths at the start of
2021 requiring more gas for pre-heating and for extended coating activities.
2021Sif Annual Report
39
SIF CO2 FOOTPRINT
2021 2020 2019 2018 2017 2016
Production Kton 171 164 185 138 232 191
Gross CO2 emission 3,669 3,157 4,392 5,865 16,643 9,849
Net CO2 emission 0 - 3,990 2,536 16,643 9,849
Gross kg per Kton 21.5 19.3 23.7 42.4 71.7 51.6
Gross CO2 emission for 3,551 ton (97%) relates to fuel consumtion for heating,
machinery and transport (scope 1). This was 3,313 ton or 96% in 2020. The
remaining 118 ton or 3% relates to business travel (scope 3). This was 138 ton or
4% in 2020.
The gross CO2 emission is compensated to zero by the wind energy as generated in
2021 by the Wind Turbine Generator on Sif’s premises, owned by Sif. Sif cancelled
the related Guarantees of Origin.
Environmental management systems are in accordance with ISO 14001. The
facilities in Roermond comply with EU Directive 2010/75/EU (on industrial
emissions).
Financial performance
To assess and monitor Sif’s underlying financial performance, the Company’s
management team uses certain non-IFRS financial indicators, such as contribution
and EBITDA (reference is made to the Glossary in this 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 IFRS 16 effects. This mainly relates to the landlease at Maasvlakte 2.
2021Sif Annual Report
40
ACTIVITY LEVELS AND PROFITABILITY
AMOUNTS IN EUR '000 2021 2020
Wind Marshalling Other Total Wind Marshalling Other Total
- Revenue from contracts
with customers
411,055 3,344 4,097 418,496 316,671 3,122 10,337 330,130
- Operational lease income - 2,455 1,590 4,045 - 3,627 1,676 5,303
Total revenue 411,055 5,799 5,687 422,541 316,671 6,749 12,013 335,433
Segment contribution 106,752 2,108 5,370 114,230 92,503 1,780 7,309 101,592
Gross profit 66,998 2,051 1,730 70,779 57,413 1,780 3,919 63,112
Indirect personnel expenses (20,208) (20,888)
Depreciation and impairment (21,712) (20,348)
Facilities, housing &
maintenance
(4,127) (5,125)
Selling expenses (632) (1,018)
General expenses (8,096) (4,325)
Net finance costs (2,336) (2,398)
Other income 1,345 0
Joint ventures 82 (61)
Total profit before tax 15,095 8,949
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 non euro countries. 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, total contribution and contribution per kiloton 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 many cases this is not applicable.
2021Sif Annual Report
41
In 2021, contribution (revenue minus the cost of raw materials, subcontracted work,
other external charges and logistic and other project related expenses) of
€114.230 million was 12% higher then in 2020. Of total contribution, €2.108 million
was generated by marshalling activities (€1.780 million in 2020) and €3.238 million
was generated by engineering activites (nil in 2020). Contribution per Kton
throughput, corrected for marshalling and engineering activities, increased to
€637/ton (2020: €609/ton), positively impacted by a higher margin on
subcontracted work.
‘At 4.3% higher kiloton production
and 12.4% higher contribution,
contribution per ton increased by
more than 4% to € 637 per ton in
2021.’
After direct personnel expenses, overhead and production & general manufacturing
expenses this resulted in gross profit of €70.8 million (16.8% of total revenues)
compared to €63.1 million (18.8% of total revenues) in 2020. Included in production
and general manufacturing expenses are, amongst others, maintenance of
machinery, gas consumption, energy consumption, support materials and inventory
of critical spareparts. The 18.9% higher direct personnel relate to the 4.3% higher
production output and the acquisition of KCI the engineers. Production and general
manufacturing expenses more or less levelled at the previous year’s amount. Sif did
not apply for subsidies or other COVID-19 pandemic related government- or lender
support and will repay the €0.3 million support that was applied for and received by
KCI the engineers B.V. after the acquisition. EBITDA in 2021 arrived at €39.1 million
compared to €31.8 million in 2020. EBITDA 2021 is impacted by a gain on bargain
purchase of €1.3 million relating to the acquisition of KCI the engineers B.V. In 2021,
Sif incurred expenses that directly relate to the adjustment and expansion project for
production facilities and business acquisitions. If reported EBITDA of €39.1 is
adjusted for these results, it amounts to €39.4 million. The IFRS 16 impact on
EBITDA is + €5.7 million (€6.6 million in 2020).
RESULTS FROM OPERATIONS
X € 1,000 2021 2020
Revenues 422,541 335,433
Raw materials -160,311 -130,437
Subcontracted -126,090 -82,510
Logistics and other project related -21,910 -20,894
Contribution 114,230 101,592
Direct personnel -32,213 -27,091
Production, general manufacturing -11,238 -11,389
Gross profit 70,779 63,112
Indirect personnel -20,208 -20,888
Facilities, housing -4,127 -5,125
SG&A -8,728 -5,343
Other income 1,345 0
EBITDA 39,061 31,756
Depreciation & amortization -21,712 -20,348
Operating result (EBIT) 17,349 11,408
Net financing expenses -2,336 -2,398
Share in profit of joint ventures 82 -61
Income tax -3,208 -1,376
Profit after tax 11,887 7,573
Non-controlling interests 297 302
Profit after tax attributable to the Equity Holders of
Sif Holding N.V.
11,590 7,271
2021Sif Annual Report
42
Profit and 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 and flanges that for
almost 100% are purchased in Spain. The value of shaping the steel plates into cans
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 €270.7 million were realized in the
Netherlands, €4.7 million in other EU countries and €147.1 million in the rest of the
world (€82 million, €108 million and €145 million respectively in 2020).
Work in the Netherlands is done by employees who are either 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 2021, this amounted
to €3.2 million (€1.4 million in 2020). 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 €0,5 million in 2021. Sif’s effective tax burden in
2021 was 21.3% compared to 15.4% in 2020. Sif does not use tax-haven
constructions.
Depreciation and amortization
In 2021, Sif invested € 12.8 million in tangible and intangible fixed assets (€5 million
in 2020). 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 IFRS 16 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 IFRS 16 in comparison to Dutch GAAP is approximately € 5.7 million on EBITDA in
2021. The effect on net debt amounts to approximately € 105,7 million (which
includes a remeasurement of € 53,7 million in 2021). Due to IFRS 16 depreciation
increased by approximately € 5.5 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 -€ 65.8 million at the
end of 2021 compared to -€2.9 million at the end of 2020. 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 2021 amounted to € 73.2 million compared to
€ 2.6 million at the end of 2020. Despite the fact that Sif did not use financial
instruments in the year 2021, Sif may use financial instruments to reduce risks
related to currency or interest rate volatility if required. Sif applies a non speculative
approach in this respect.
CASH FLOW SUMMARY
X € 1,000 2021 2020 2019 2018 2017 2016
Net cash from operating
activities
91,230 34,336 30,853 5,548 53,886 52,887
Net cash from investing
activities
-11,493 -4,927 -14,485 -3,218 -27,587 -67,962
Net cash from financing
activities
-9,181 -28,343 -15,294 -2,701 -25,726 -13,354
Cash and cash
equivalents at year end
73,201 2,645 1.579 505 877 304
2021Sif Annual Report
43
Net debt, Solvency
Net debt at the end of 2021 was -€ 73.2 million on an ex-IFRS 16 basis and
€ 32.5 million under IFRS 16 reporting. The difference is largely determined by the
lease of land at Maasvlakte 2 Rotterdam, lease commitments which are amortised
on the balance sheet. At the end of 2021 total equity (paid-in capital + retained
earnings + non-controlling interests) amounted to €104.1 million on a ex-IFRS
16 balance sheet total of €217.6 million (solvency of 47.8%) compared to
€94.9 million on a balance sheet total of €175 million (solvency of 50%) at the end
of 2020. When determined on IFRS 16 basis total equity amounted to € 103.1 million
which gives a solvency of 32.1% on a balance sheet total of €321.2 million.
Financial Outlook
The order book at the date of signature of this annual report with 430 Kton signed
orders and exclusive positions extends well into 2024 with utilization at 85% of
offshore wind capacity based on 24/5 working weeks. Also, beyond 2024 market
conditions look favorable. The drive for larger capacity per unit will eventually lead to
investments in the period 2022-2024 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 final investment decision by mid 2022,
leaving geo political developments and escalations of the war in Ukraine aside.
Annual maintenance capex will be €10-15 million and annual depreciation close to
€21 million.
2021Sif Annual Report
44
Key figures 2014 – 2021
X € 1,000 2021 2020 2019 2018 2017 2016 2015 2014 Definition of non-IFRS measures
Revenue 422,541 335,433 325,600 235,140 327,180 400,318 321,343 262,523 Total revenue from contracts with
customers and operating lease income
Contribution 114,230 101,592 101,517 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 39,061 31,756 26,371 12,550 54,592 58,616 55,252 45,741 Earnings before net finance costs, tax,
depreciation and amortization and
share of profit of joint ventures
EBITDA (ex IFRS 16) 33,474 25,189 22,038 12,550 54,592 58,616 55,252 45,741 EBITDA excluding IFRS 16 impact
EBIT 17,349 11,408 9,164 -1,132 41,439 49,932 48,266 38,350 Earnings before net finance costs and
tax
Net earnings 11,590 7,271 5,488 -2,051 30,760 37,365 35,628 27,995 Profit attributable to the shareholders
Net cash from operating
activities
91,230 34,336 30,853 5,548 53,886 52,887 25,421 33,570
Net cash from investing
activities
-11,493 -4,927 -14,485 -3,218 -27,587 -67,962 -16,421 -39,523
Net increase/(decrease) in
cash and cash equivalents
70,556 1,066 1,074 -372 573 -28,429 3,740 -10,954
Depreciation and
amortization
-21,712 -20,348 17,207 13,682 13,153 8,684 6,986 7,391
Net debt 32,482 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) -73,201 -2,645 21,293 30,377 25,107 41,969 26,894 11,434 Net debt excluding lease liabilties
Net working capital -65,800 -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.
2021Sif Annual Report
45
Key figures 2014 – 2021
2021 2020 2019 2018 2017 2016 2015 2014 Definition of non-IFRS measures
IN KTON
Production 171 164 185 138 232 191 150 133
PER SHARE X €
Earnings 0.45 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 0.19 0.12 0 0.10 0.30 0.37 0.94 1.28 2021 subject to AGM approval
Number of shares issued
(x1,000)
25,501 25,501 25,501 25,501 25,501 25,501 25,501 25,501
RATIOS %
ROACE 43.2 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 32.1 39.0 35.6 43.6 45.6 34.8 16.2 43.6 Total equity/balance sheet total
Solvency (ex IFRS 16) 47.7 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 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) 47.7 50.0 47.2 n/a n/a n/a n/a n/a
NON-FINANCIAL KPI'S
LTIF per mln manhours 4.98 2.48 2.75 1.12 1.71 2.83 7.19 8.03
Sickness leave % 5.10 5.50 6.59 7.24 4.46 4.00 4.02 4.77
Gross CO2 footprint in
tonnes
3,669 3,157 4,392 5,866 16,643 9,849 naf naf
Net CO2 footprint in tonnes 0 0 3,990 2,432 16,643 9,849 naf naf
Participation in projects that
will result in renewable
energy capacity
1,873 1,298 naf naf naf naf naf naf
naf = not accounted for, n/a = not applicable
Numbers and graphs for 2021 are IFRS16 based unless explicitely stated otherwise.
2021Sif Annual Report
46
LTIF
(PER MLN MANHOURES)
10
8
6
4
2
0
2021 2020 2019 2018 2017 2016 2015 2014
4.98
2.48
2.75
1.12
1.71
2.83
7.19
8.03
CONTRIBUTION
(IN € 1,000)
140,000
112,000
84,000
56,000
28,000
0
2021 2020 2019 2018 2017 2016 2015 2014
114,230
101,592
101,517
74,336
135,634
129,480
100,536
83,594
CO2 footprint in ton (reference is made to section
Reporting Criteria for further details)
18,000
15,000
12,000
9,000
6,000
3,000
0
gross net
2021 2020 2019 2018 2017 2016
3669
3157
4392
5865
16642
9849
EBITDA
(IN € 1,000)
60,000
48,000
36,000
24,000
12,000
0
2021 2020 2019 2018 2017 2016 2015 2014
39,061
31,756
26,371
12,550
54,592
58,616
55,252
45,741
Participation in projects that will result
in renewable energy capacity (IN MW)
2,000
1,600
1,200
800
400
0
2021 2020
1,873
1,298
NET EARNINGS
(IN € 1,000)
40,000
32,000
24,000
16,000
8,000
0
2021 2020 2019 2018 2017 2016 2015 2014
11,590
7,271
5,488
-2,051
30,760
37,365
35,628
27,995
2021Sif Annual Report
47
PRODUCTION
(IN KTON)
250
200
150
100
50
0
2021 2020 2019 2018 2017 2016 2015 2014
171
164
185
138
232
191
150
133
EARNINGS PER SHARE
(IN €)
1.50
1.20
0.90
0.60
0.30
0.00
2021 2020 2019 2018 2017 2016 2015 2014
0.45
0.29
0.22
-0.08
1.21
1.47
1.40
1.10
CONTRIBUTION PER TON
900
750
600
450
300
150
0
contribution/ton production Kton2
q1 2021 q1 2020 q1 2019 q1 2018 q1 2017
70
60
50
40
30
20
10
0
EBIT
(IN € 1,000)
60,000
48,000
36,000
24,000
12,000
0
2021 2020 2019 2018 2017 2016 2015 2014
17,349
11,408
9,164
-1,132
41,439
49,932
48,266
38,350
NET WORKING CAPITAL
(IN € 1,000)
24,000
16,000
8,000
0
-8,000
-16,000
-24,000
-32,000
-40,000
-48,000
-56,000
-64,000
-72,000
2021 2020 2019 2018 2017 2016 2015 2014
-65,800 -2,900
4,300
14,200
7,100
8,300
19,300
-5,000
RETURN ON AVERAGE CAPITAL EMPLOYED
(IN %)
80
70
60
50
40
30
20
10
0
2021 2020 2019 2018 2017 2016 2015 2014
43.2
18.9
8.3
-0.9
35.7
57.0
75.2
64.9
2021Sif Annual Report
48
TOTAL DEBT EX-IFRS 16
(IN € 1,000)
48,000
36,000
24,000
12,000
0
-12,000
-24,000
-36,000
-48,000
-60,000
-72,000
-84,000
2021 2020 2019 2018 2017 2016 2015 2014
-73,201 -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
2021 2020 2019 2018 2017 2016 2015 2014
548
569
658
429
615
620
483
323
TRIF
(PER MLN MANHOURES)
20
18
16
14
12
10
8
6
4
2
0
2021 2020 2019 2018 2017 2016 2015 2014
19.94
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
2021 2020 2019 2018 2017 2016 2015 2014
5.10
5.50
6.59
7.24
4.46
4.00
4.02
4.77
2021Sif Annual Report
49
Corporate governance
Group structure and organization
Sif Holding N.V. is a public company whose shares are listed on the Euronext
Amsterdam stock exchange. Egeria Group AG (Switzerland) (“Egeria”) is holding
a 49.38% interest in Sif (source: filing with Autoriteit Financiële Markten (“AFM”)
dated 31 October 2019). According to a statement of a public notary, Mr Robert
Deen qualifies as the only Ultimate Beneficial Owner (“UBO”) of Egeria Industrial AG.
Sif is subject to the Full Large Company Regime (‘Volledig Structuurregime’) as is
required by Dutch law and has a two-tier board structure. The Executive Board is
responsible for the management of Sif and consists of two Executive Board
members, one appointed CEO and one appointed CFO. The Supervisory Board
supervises and advises the Executive Board and is composed of five Supervisory
Board members. The day-to-day operations are managed by the management team
that, in addition to the CEO and CFO, has a CCO, a COO and a HR-director. Most
important rights 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 Sif, the approval of the remuneration
policy, the appointment of Supervisory Board members, the remuneration of
Supervisory Board members, profit allocation, amendments to Sif’s articles of
association, adoption of the annual accounts, discharge of Executive and
Supervisory Board members and appointment of an auditor.
Sif endorses the principles of the Dutch Corporate Governance Code 2016 (“Code”)
and applies virtually all the best practice provisions of the Code. Non-compliance is
explained on page 54 of this annual report and on the Sif website under the
Corporate Governance parapraph.
Sif has subsidiaries as reflected in the organization chart in the next column
(together referred to as “Sif Group”). Sif Netherlands B.V. (the Netherlands) is
engaged in the manufacture and trade of pipes, pipe structures and components for
offshore wind farms. Twinpark Sif B.V. (the Netherlands) and Sif Property B.V. (the
Netherlands) are both financial holdings. Twinpark is a joint venture with Pondera
Consult and GE Renewable Energy to test and, in a later stage, exploit a 13 MW wind
turbine on Sif’s premises at Maasvlakte 2. Sif Property is the owner of Sif’s real
estate property. KCI the engineers B.V. (the Netherlands) operates a consulting
engineering firm in the field of renewable energy and oil & gas. Zonnepanelen
Maasvlakte B.V. (the Netherlands) has the purpose to invest in renewable energy, in
particular, but not limited to, investing and operating in solar panels. Sif has a 50%
interest in SBR Engineering GmbH (Germany) and in Smulders Sif Steel Foundations
B.V., a joint venture focussed on project management in the offshore wind industry.
SIF GROUP LEGAL ORGANIZATION STRUCTURE
Board responsibilities
The powers of the Executive Board are set out in Sif’s 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 Executive Board Rules are published on Sif’s
website on the Corporate Governance page.
2021Sif Annual Report
50
The Supervisory Board primarily supervises the implementation of the strategy for
long term value creation and advises the Executive Board in the day-to-day
management. In performing this task, the Supervisory Board serves the interests of
all Sif’s stakeholders; owners, clients, employees, suppliers and society. The
Supervisory Board rules that define these duties, roles and responsibilities of the
Supervisory Board are published on the Corporate Governance page of Sif’s website.
These rules imply 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 the Executive Board and Supervisory Board members.
The Supervisory Board, in accordance with Article 10 of the Supervisory Board rules,
can install Supervisory Board committees. The committees all have their own set of
rules defining their conduct namely: the Audit Committee rules and Remuneration
Committee rules, which are both published on Sif’s website on the Corporate
Governance page. 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 Sif’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 remuneration report.
The Audit Committee Rules define the duties, roles and responsibilities of the Audit
Committee and include supervising the effectiveness of the internal risk
management 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.
Appointment and resignation of Executive Board and Supervisory Board
members
The rules governing the appointment and resignation of members of the Boards are
included in Sif’s articles of association. To summarize these rules: Supervisory
Board members are appointed by the General Meeting of Shareholders with certain
rights of (enforced) recommendation for the Supervisory Board, the largest
shareholder of Sif and Sif’s works council (“Works Council”). Both the General
Meeting of Shareholders and the Works Council can object to candidates nominated
by the Supervisory Board but these objections may be ignored. Executive Board
members are appointed by the Supervisory Board following notification of the
General Meeting of Shareholders of a proposed appointment. The Supervisory Board
may at any time suspend or dismiss any member of the Executive Board provided
that the General Meeting of Shareholders has been consulted about a proposed
dismissal. Appointments for members of the Boards are generally for a period of
four years. The Supervisory Board elects an Executive Board member to be the CEO.
The Supervisory Board may dismiss the CEO, provided that the CEO so dismissed
shall subsequently continue his term of office as an Executive Board member
without having the title of 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 Sif’s website.
2021Sif Annual Report
51
The aim of Sif’s Remuneration policy is to attract, motivate and retain qualified
managers with relevant experience. The remuneration 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 Sif’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 share units. To
ensure market competitiveness of remuneration, Sif offers a remuneration package
around the median level of the market with a peergroup defined by 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 base 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 Sif
(one calendar year). Maximum 60% of fixed base salary for CEO with 73%
dependent upon achievement of financial targets and 27% dependent on
personal targets. Maximum 50% of fixed base salary for CFO with 72%
dependent on financial targets and 28% on personal targets. Financial targets
may include EBIT or (adjusted) EBITDA, contribution and ROACE. Personal
targets differ for each Executive Board member and include safety and 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 base
salary;
c.
A long-term incentive Plan (“LTIP”). Based on discretionary award of
performance share units (“PSU”), granted annualy to a maximum pay-out of
20% of fixed base salary annually with a three-year vesting period, conditional
upon continued employment and shareprice performance. Settlement is in
principle in cash with an option to settle in shares and a discretionary authority
of the Supervisory Board to moderate the LTIP bonus by 30%. 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 period;
d.
Executive Board members are engaged by means of a services agreement, the
term of which is set at four years.
e.
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. Sif
has no actual or potential anti-takeover measures or change-of-control clauses in
place. Sif and Egeria have entered into a relationship agreement. The main elements
of this agreement relate to the composition of the Supervisory Board and the
Supervisory Board committees. The relationship 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 Relationship
Agreement will terminate once Egeria ceases to hold at least 20% of the shares in
Sif. There were no related party transactions in 2021.
2021Sif Annual Report
52
Dividends
The dividend policy stipulates that Sif will pay a regular dividend in line with the
medium-term to long-term financial performance of Sif, with the aim of gradually
increasing the dividend per share. The policy states that Sif will pay out 25% to 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 Sif’s reserves to finance
future investments or other spending of Sif or to improve liquidity or for other
purposes. The achievement of this reservation and dividend policy is, however,
subject to certain legal limitations and Sif’s liquidity position. Dividends may be
distributed in cash, in stock or in a combination of cash and stock as an optional
dividend.
Non-Compliance with the code
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 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 after
completion of the adjustment and expansion plans, Sif will bring its Supervisory
Board in line with its diversity policy.
>
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 Sif’s 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.
>
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 that 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. We did not
define a KPI related to corruption and bribery given the limited number of clients and
contracts in any year and given the limited number of suppliers. Hence, we do not
report on the result of such. As we see a growing geographical market, we are in the
process of completing a policy on anti corruption and bribery which will be in effect
from the second half of this year.
2021Sif Annual Report
53
Fair dealing also implies that insider trading regulations are observed. New
employees are instructed on this when hired. In 2021, Sif incurred no legal or other
expenses that relate to a possible violation of these principles.
Sif has joined the Offshore Wind Foundation Alliance (“OWFA”;
www.offshorewindfoundations.eu), 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 to avoid 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. Sif’s production facilities are all in the Netherlands. The Sif
business environment is mainly Northwestern 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’. Due to the above, we did not define a KPI related to human rights and
hence do not report on the result of such. If in the future we have indications that
this is deemed necessary we will reconsider this.
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 and 10 to 13 of the Code of
Conduct deal with environmental impact, the obligation of record keeping of all
financial transactions. Efficient and legitimate use of Sif’s property & resources,
e-mail and Internet usage for professional purposes only is pursued and use of
corporate opportunities for personal benefits are prohibited.
Our whistleblower 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
2021 and no violations of the Code of Conduct were assessed. Programs to further
embed the Code of Conduct in the organisation are part of the Sif 2.0 program and
were continued in 2021.
Composition of the Executive Board
The members of the Executive Board of Sif Holding NV are:
Fred van Beers (born 1962, male, Dutch nationality, right on the first picture on page
54). CEO. He was appointed to the Executive Board in September 2018 and entered
into a services agreement for a period of four years ending at closing of the Annual
General Meeting of Shareholders in 2023. Fred van Beers worked as a business unit
manager at aluminium manufacturing company Alcoa (1989-1994) and ship
propeller manufacturing company LIPS (1995-2002) 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).
Fred van Beers holds a degree in marine engineering.
Ben Meijer (born 1976, male, Dutch nationality, left on the first picture on page 54).
CFO. He was appointed to the Executive Board in May 2021 and entered into
a services agreement for a period of four years ending at closing of the Annual
General Meeting of Shareholders in 2025. Following four years of financial
consultancy at First Dutch Capital (2000-2004), Ben Meijer held several financial
positions (financial analyst, business controller and group controller) at Stahl Group
(2005-2019). Before joining Sif, he worked two years as concern controller at
Broadview (2019-2021), a HAL Investments subsidiary. Ben Meijer holds a master’s
degree in Business Administration from Tilburg University and an Executive master’s
degree in Finance and Control (RC) from TIAS school for Business and Society in
Tilburg.
2021Sif Annual Report
54
Composition of the management team
The day-to-day business is managed by Sif’s management team. In addition to the
CEO and CFO, the management team members are:
Joost Heemskerk (born 1977, male, Dutch nationality) is Sif’s Chief Commercial
Officer (CCO) since June 2020. Joost Heemskerk holds a Master’s degree in civil/
offshore engineering from Delft University of Technology. Over the last 15 years he
has held various positions within engineering, project management, commercial and
strategy consulting, and general management in the global offshore oil and gas,
offshore wind and marine renewables markets. He has worked for companies such
as 2-B Energy, Bain & Company and, most recently, SBM Offshore.
Frank Kevenaar (born 1963, male, Dutch nationality) is Sif’s Chief Operating Officer
(COO) since April 2019. After gaining his bachelor degrees in engineering and
business administration, Frank Kevenaar gained experience in the international
automotive and maritime industry. He has held various management positions at
Wärtsilä, Brabant Components and Stork, and has extensive knowledge and
expertise in the field of production and engineering.
Caspar Kramers (born 1968, male, Dutch nationality) will be Sif’s Chief Human
Resource Officer (CHRO) as of 1 April 2022. After gaining his masters degree in
human resource studies from Tilburg University, Caspar gained experience in
organizational development, talent management and cultural change at amongst
others Sabic, Watts Water Technologies and, most recently, at Signify and DS Smith.
Composition of the Supervisory Board
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.
2021Sif Annual Report
55
The composition of the Supervisory Board:
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 board member 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 first appointed a member of the Executive
Board of Boskalis and lateron an 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 Mariner Master’s 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).
Vice-chairman. 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 to the
Supervisory Board in May 2018 for a four year period. Peter Wit will resign as
a Supervisory Board member and be available for reappointment at closing of the
Annual General Meeting of Shareholders in 2022. Peter Wit is currently CFO at Iqip
N.V. (offshore equipment) and before that (2018-2021) was COO of 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.
2021Sif Annual Report
56
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 to the Supervisory Board in
February 2016 for a four year period. Caroline van den Bosch was 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) and is booster for NL2025 and mentor for
NLGroeit. 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 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 B2B-
marketing. He was first appointed to the Supervisory Board in February 2016 for
a four year period. Peter Gerretse was 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 to the Supervisory Board on an interim basis as of
1 November 2017 for the period until closing of the 2018 Annual General Meeting of
Shareholders. Upon nomination of Sif’s largest shareholder Egeria, Peter Visser was
appointed to the Supervisory Board on 3 May 2018 for a four year period. Peter
Visser will resign and be available for reappointment at closing of the Annual General
Meeting of Shareholders in 2022. 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, Peter Visser 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.
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 published on Sif’s website on the
Corporate Governance page.
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
2021Sif Annual Report
57
Dutch law (section 142b of Book 2 of the Dutch Civil Code) 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%). In line with its diversity policy, Sif will
pursue that with the 2023 change in composition of the Supervisory Board, the
gender balance will be brought in line with the representation as foreseen by Dutch
law. Transitional provisions in Dutch law command that this is applied by 2023 at
the latest. Considering the transitional period that Sif is going through, it is preferred
to have continuity in management and therefore to uphold the current composition
of the Supervisory Board for the moment.
ROTATION SCHEDULE SUPERVISORY BOARD
2022 2023 2024 2025 2026
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 from one another, the Executive Board and any
particular interests. Other than the circumstances described below, there were no
circumstances that may lead to a (potential) conflict of interest with Supervisory
Board members as set out in articles 2.7.3-2.7.4 of the Code in 2021.
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
2021.
Peter Visser, as a Supervisory Board member and as a board member of 49.4%
shareholder Egeria Group AG, is potentially in a conflicting position. Whether this
situation can lead to a conflict-of-interest situation is evaluated at every Supervisory
Board meeting and before each agenda item. On one occasion in 2021, this resulted
in a withdrawal by Peter Visser from discussions under one agenda item. Peter
Visser left the Supervisory Board meeting when this agenda item was tabled for
discussion. Furthermore, Peter Visser did not participate in Supervisory Board
member- discussions and decisions that took place from January 2022 on the
financing of the possible expansion and adjustment of production facilities.
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.
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 Sif 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 2021.
2021Sif Annual Report
58
Supervisory Board report
The Supervisory Board’s organization and activities
As a standard, the Supervisory Board convenes six times per calendar year. Four of
these meetings are organized around the scheduled releases of results and quarterly
trading updates. The other two meetings are organized to discuss Sif’s strategy and
to approve the budget. Certain agenda items for these meetings are prepared by the
Audit Committee and the Remuneration Committee. The Supervisory Board did not
install a Selection & Nomination Committee since nominations and appointments
are considered full board subjects for preparation and decision making. The
members of the two Supervisory Board committees are as tabled below:
COMPOSITION OF SUPERVISORY BOARD COMMITTEES
Audit Committee Remuneration Committee
André Goedée
Caroline van den Bosch Member
Peter Gerretse Chair
Peter Visser Member Member
Peter Wit Chair
Remuneration Committee
The remuneration committee convened three times in 2021, everytime in the
presence of the CEO. All the members of the remuneration committee attended the
meeting. On the agenda were the remuneration report for 2021 and the performance
indicators for variable remuneration. The Remuneration Committee also discussed
the Long-Term Incentive plan (“LTIP”) and the idea to expand the group of
participants under the LTIP to all the members of the management team.
Audit Committee
In 2021, 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 2021. 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.
Supervisory Board
The Supervisory Board conducted 10 conference calls to discuss monthly progress
and results and convened on 10 occasions in 2021 for Supervisory Board meetings
that were partially attended in person and partially through MS Teams. Three
Supervisory Board meetings were held to discuss Sif’s strategy in general and more
in particular the consequences of the trend in the market to apply turbines with
higher capacity and the impact this has on the size and weight of the foundations.
The research project into the effects of this trend for Sif received the internal
working title ‘P11’ and was the sole subject of five Supervisory Board meetings
subsequent to these more general strategy meetings. These Supervisory Board
meetings were mostly attended by the entire management team. Except for two
Supervisory Board members, each missing out on one meeting, all the members
attended all the Supervisory Board meetings. One Supervisory Board meeting was
convened to discuss the budget for 2022 and one meeting to prepare for the AGM in
2021. The remaining Supervisory Board meetings had financial reporting on the
agenda and several other items such as commercial and operational progress, risks,
IT security and implementation, staffing and business development.
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.
During the General Meeting of Shareholders on 14 May 2020, Ernst & Young
Accountants LLP were appointed external auditor for the reporting years 2021 and
2022. Ernst & Young Accountants LLP audited the 2021 financial statements and
explained their findings during a meeting of the Supervisory Board. Other topics
discussed during the same meeting included the reports of the Executive Board and
the Supervisory Board in respect of 2021.
2021Sif Annual Report
59
Also in 2021, the Supervisory Board discussed its own performance and its profile.
None of the Executive Board members attended the discussions on these subjects.
The Supervisory Board concluded that the management of Sif is due to take some
important strategic decisions in the course of 2022. Continuity of management is of
prime importance this period. It was therefore decided to nominate the two
resigning Supervisory Board members Peter Visser and Peter Wit for a next term of
four years. Except for the above items on the agenda, all other items on agendas for
Supervisory Board meetings were attended by the Executive Board, an observer
representing Egeria and a secretary. On two occasions, the auditor attended part of
the Supervisory Board meeting.
During last year’s self-assessment of the Supervisory Board, it was concluded that
improvement potential for functioning was 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. By planning
more meetings with specific themes and by stimulating one-on-one discussions
amongst Supervisory Board members and with individual Executive Board members,
communications have improved.
The Supervisory Board enjoys a good working relationship with the Executive Board,
the management team and the Works Council.
None of the Supervisory Board members holds more than two supervisory positions
as referred to in the Dutch Management and Supervision of Legal Entities 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 further kind of conflict of
interest between Sif and Supervisory Board members.
Financial accountability and dividends
The report of the Executive Board and the 2021 financial statements were submitted
to the Supervisory Board in accordance with the provisions of Article 30 of Sif’s
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 17 March 2022. The Supervisory Board will submit the financial
statements for the 2021 financial year to the Annual General Meeting of
Shareholders on 12 May 2022 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
from liability for the policy pursued and that the Supervisory Board should be
discharged from liability for the supervision conducted. Profit attributable to the
shareholder for 2021 amounted to € 11,6 million. The Supervisory Board has
approved the proposal by the Executive Board to retain approximately 60% or
€ 6.8 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 € 0.19 per share
(€ 4.8 million in total, 42%) for the year 2021 will be proposed to the Annual General
Meeting of Shareholders in May 2022.
Acknowledgements
The members of the Supervisory Board have signed the financial statements in
compliance with their statutory obligations pursuant to section 2:101, subsection
2 of the Dutch Civil Code.
With a well-filled ordebook for the midterm, Sif can face the longer-term challenges
with confidence. A solid analysis was made of the required technology, skills and
factory lay-out to be able to manufacture monopiles of the future and best serve our
clients. While writing this annual report, we are in de midst of the analysis of the
financial impact and requirements of our plans to expand our capacity to 500 kiloton
and at the same produce at least 200 monopiles per year. Getting to a firm capex-
amount, contracting at least one launching customer and designing a sound
financing plan should lead to a Final Investment Decision early July 2022.
2021Sif Annual Report
60
With 171 Kton production, 2021 was a decent year from a utilization perspective,
especially taking COVID-19 hurdles into consideration. Owing to a sound pricing
environment, solid execution and tight cost-control, adjusted EBITDA for the full year
with €39.4 million ended markedly higher than our guidance.
It is positive to see the maintained high level of loyalty and involvement that Sif
employees have demonstrated, also in 2021. They smoothly adapted to the stringent
policies and working-procedures relating to COVID-19. With that, they 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. We also wish to thank all our
stakeholders for the confidence they have shown in the company.
Roermond, the Netherlands, 17 March 2022
André Goedée (Chairman)
Peter Wit
Caroline van den Bosch
Peter Gerretse
Peter Visser
2021Sif Annual Report
61
Remuneration report
As referred to in section 2:135b of the Dutch Civil Code and in principle 3.4 of the
Dutch Corporate Governance Code, this remuneration report is based on Sif’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 page of the website of Sif. An
outline of the Remuneration policy is included in the Governance-paragraph of this
annual report on page 52-53.
The remuneration policy is instrumental to the realization of Sif’s strategy and to
longer term value creation for all the stakeholders of Sif. For the 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
the selection of a peergroup including seven listed and seven 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).
Based on the 2021 remuneration, Sif takes a median position in the peergroup for
Executive Board remuneration.
Sif’s 2021 Annual General Meeting of Shareholders was held on 12 May 2021. The
2020 remuneration report was supported by the shareholders. We engaged with
stakeholders such as shareholders and proxy solicitation firms to further understand
the feedback we received. This helped us in the creation of this remuneration report
for 2021. Especially where it concerns the predetermined target levels and the
performance on individual key performance indicators (“KPI”) by individual
members of the Executive Board.
The following overview summarizes the salaries and performance related bonusses
and other remuneration elements of the Executive Board. The 2021 remuneration is
based on the remuneration policy as approved by the Annual General Meeting of
Shareholders in 2020. The outcome on both the annual incentive (“STI”) and the
long-term incentive (“LTI”) reflects the actual performance. No discretion was
applied on those outcomes. Nor were targets adjusted during 2021. The adoption of
non-financial 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 STI-
LTI-balance on which the Works Council advised when presenting the remuneration
policy to the Annual General Meeting of Shareholders for approval, these support the
ambition to create long-term value. Scenarios have been analyzed and taken into
consideration when designing the remuneration policy.
2021Sif Annual Report
62
Executive Board remuneration
Fred van Beers Leon Verweij Ben Meijer
Type of recompense In €, excluding VAT 2021 2020 2021 2020 2021
Base salary 382,398 376,747 104,821 282,874 138,730
Employer´s pension contributions 22,706 21,281 24,491 41,312 12,428
Pension compensation 34,230 48,596 17,150 40,368 9,768
Annual bonus (accrual) 224,330 95,893 49,688 98,841 59,273
LTIP (accrual) 139,714 - 51,724 25,724 7,234
Termination fee - - 143,559 - -
Other benefits (car lease, travel expenses and relocation expenses) 45,082 40,992 14,028 38,037 23,718
Social security and other payments 10,004 10,182 3,851 10,182 5,800
Total remuneration 858,464 593,691 409,312 537,338 256,951
Paid annual bonus in the year, earned over the previous year 192,117 80,370 117,431 78,573 -
Paid vested LTIP - - 51,724 25,724 -
Total actual paid variable remuneration 192,117 80,370 169,155 104,297 -
The remuneration package includes the following elements:
Base salary
The Supervisory Board determines the base salary and may, at its discretion, apply
an increase. The fixed base salary for Executive Board members increased with the
cost-of-living index in 2021. This implies a 1,5% 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 2021 short term incentive for the Executive Board members is based, are derived
from the audited financial statements. The bonus for 2021 will be paid in cash in
2022 as soon as the audited annual accounts are approved by the Supervisory
Board for presentation to the Annual General Meeting of Shareholders. The annual
bonus is based on financial performance indicators for at least 60% as outlined in
the remuneration policy.
2021Sif Annual Report
63
max score 2021 score bonus payable
target actual
For CEO
Contribution € mln 14.7% 103.068 110.992 11.4%
EBIT € mln 14.7% 13.148 18.449 14.7% 40.8%
ROACE % 14.7% 12.28 43.22 14.7%
acquisition KCI 4.0% 4.0%
ESG/Safety LTIF 4.0% <1.5 4.98 0.0% 12.0%
ESG/Induction pre-heating 4.0% 4.0%
progress production expansion 4.0% 4.0%
Total 52.8%
For CFO
Contribution in € mln 12.0% 103.068 110.992 9.6%
EBIT in € mln 12.0% 13.148 18.449 12.0% 33.6%
ROACE in % 12.0% 12.28 43.22 12.0%
business controls 4.0% 4.0%
financials business case for expansion plan 5.0% 5.0% 9.0%
upgrade AX to M365 5.0% 0.0%
Total 42.6%
At target, the short term incentive is 40% of the fixed base salary for the CEO and
35% for the CFO. The maximum short term incentive is 60% or 50% of the fixed base
salary for CEO and CFO respectively. For 2021 the payable bonus percentages for
Executive Board members are 52.8% for the CEO and 42.6% for the CFO. In the
previous year, the payable bonus percentage for the annual bonus was 51.0% of
fixed base salary for the CEO and 41.5% of fixed base salary for the 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.
Sif may contribute for 100% to the pension premiums or reimburse the Executive
Board member with an equal amount if he/she decides to refrain from participation
in Sif’s pension arrangement. The pension contribution covers the maximum
pension amount, the pension compensation covers the excedent arrangements with
or without director-contribution.
2021Sif Annual Report
64
LTIP
The long-term equity-based incentive is granted in performance share units (“PSU”).
Under the long-term incentive plan 4,623 PSUs with value of €76,464 were
conditionally awarded to CEO (7,055 in 2020 with value of €70,374) and 2,780 PSUs
with value of €45,981 were conditionally awarded to CFO Ben Meijer (5,297 in
2020 with value of €56,572 to CFO Leon Verweij). Vesting of performance shares
conditional upon employment after a period of 3 years. The 2018-awards under this
LTIP vested in 2021. The pay-out on vested LTIP-arrangements to CFO was
€51,724 in 2021.
Severance payment
Executive Board members are entitled to contractual severance payments or
termination fees 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. A termination fee of €143,559 was paid to CFO Leon Verweij in 2021.
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 8.8 (7.6 in
2020). 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 8 to the financial statements. This results in total gross expenses of
€29,604 thousand for 356 FTEs (€25,073 thousand for 313 FTEs in 2020) when
excluding Executive Board members or €83,156 (€80,358 in 2020) per Sif employee
based on the average number of employees for the year under review. The
comparable expenses for Executive Board members include fixed base salary,
employer’s pension contributions, pension compensation, annual bonus and social
security and other payments as reported in Note 33 to the financial statements. The
pay ratio also includes LTIP value at the vesting date. This results in total gross
expenses of €1,298,348 for two FTE (€1,052,000 for two FTE in 2020) or
€649,174 (€526,000 in 2020) per Executive Board member. Herewith, the pay ratio
is within the bandwith of 6.8–8.9 that the Works Council advised to observe when
commenting on the proposed remuneration policy in 2020.
The 2020 Remuneration report was discussed in the Annual General Meeting of
shareholders 2021 and presented for an advisory vote. Of the shares voted for
(79.44% of shares issued), 98.58% voted in favor. A question from shareholder VEB
related to the score of both Executive Board members (compared to the
predetermined target level) on each of the five distinct criteria for the annual bonus.
In response to that question, the Chairman referred to page 35 of the 2020 annual
report. The VEB then called on Sif to provide additional information on the
implementation of the remuneration policy in order to better align with the
Shareholders' Directive (“EU Directive 2017/828 (Shareholder Rights Directive II”)
and the associated guidelines. In this year’s remuneration report, Sif has indicated
what KPI’s applied to which Executive Board member and how each Executive
Board member performed on these KPI’s.
Remuneration and company performance
2021 2020 2019 2018 2017
Executive
Remuneration (in €)
Fred van Beers 858,464 593,691 629,091 231,677
Ben Meijer
1
256,951
Jan Bruggenthijs
2
766,327 1,343,678
Leon Verweij
3
409,312 537,338 456,883 609,853 290,482
Pay ratio 8.8 7.6 8.2 8.5 7.6
Company
performance
indicators
Contribution/ton* 637 609 542 539 585
EBITDA 39,061 31,756 26,371 13,258 57,118
Net debt (ex-IFRS 16)
year-end
-73,201 -2,645 21,293 30,377 25,107
1. Chief Financial Officer as of 12 May 2021.
2. Chief Executive Officer as of September 2014 until 3 May 2018.
3. Chief Financial Officer until 12 May 2021
ex marshalling and engineering revenues*
2021Sif Annual Report
65
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 in Sif as part of their remuneration.
SUPERVISORY BOARD REMUNERATION
Remuneration
in €
1
2021 2020 2019 2018 2017 2016
André Goedée 70,000 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 45,000 40,000
Caroline van den Bosch 45,000 45,000 45,000 45,000 45,000 40,000
Peter Wit
3
45,000 45,000 45,000 30,000
Peter Visser 45,000 45,000 45,000 45,000 7,500
Alexander van Wassenaer
4
37,500 45,000
Total remuneration 250,000 250,000 250,000 255,000 265,000 247,500
excluding VAT and expenses
1
resigned 3 May 2018
2
appointed 3 May 2018
3
resigned 23 October 2017
4
2021Sif Annual Report
66
Capital Resources
Sif applies financial resources that are provided by its equity owners (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 minimal working capital requirements.
Equity
Sif Holding N.V. shares (SIFG.AS) have been listed on the Euronext Amsterdam
stock exchange since May 2016 with ISIN code NL011660485. Sif’s authorized
share capital is €25 million, divided into 125 million ordinary shares with par value of
€0.20 At the end of 2021, 25,501,356 ordinary shares had been issued with a par
value of € 0.20 each. All the shares bear equal voting rights and are entitled to
dividend paid out of Sif’s profit reserves (known as the ‘one share one vote’
principle). At the end of 2021 market capitalization amounted to € 312 million
(€ 422 million at the end of 2020). 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 Nederland is listed in the shareholders’ register held by
the Company. The LEI code of 13016026 Sif Holding N.V. is
724500J0BPD5CLHCK040.
SHARE INFORMATION
2021 2020 2019 2018 2017 2016
Closing price at year-end in € 12.24 16.54 12.50 11.66 17.41 15.48
Highest price during the year in € 19.08 17.16 14.72 19.50 25.35 15.97
Lowest price during the year in € 11.18 7.50 8.72 11.02 15.37 13.15
Average daily trading in number of
shares
24,912 44,915 40,766 30,660 80,429 37,020
Market capitalization at year-end in
€ 1,000,000
312 422 319 297 444 395
Earnings per share in € 0.45 0.29 0.22 -0.08 1.21 1.47
Dividend per share in € 0.19 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 25,501
Total dividend in € 1,000 4,845 3,060 0 2,550 7,690 9,341
Ownership
The free float in Sif shares is approximately 40% of the issued shares as at
31 December 2021. The following holdings were disclosed pursuant to the Decree
on the 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 6.08% 20 May 2021
Moneta Asset Management 5.00% 18 May 2020
The Vanguard Group <3.00% 18 November 2019
Egeria Group 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). The 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.
2021Sif Annual Report
67
Authorization to acquire and issue shares
Acquisition and issue of Sif shares is exclusively decided upon by The General
Meeting of Shareholders. The General Meeting of Shareholders has authorized the
Executive Board to acquire and to issue shares and/or to limit or exclude legal pre-
emption rights. On 12 May 2021, 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 12 November 2022). The
authorization is limited to a maximum of 5% of the issued share capital of Sif as at
12 May 2021 plus, in the case of and related to acquisitions, mergers, unravelling of
mergers and strategic alliances, an additional 5% of the issued share capital of Sif as
at 12 May 2021.
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 12 November
2022) 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 12 May 2021.
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 on the Corporate Governance.
Debt
Sif has had debt and guarantee facilities in 2021 with a banking consortium
comprising ABN AMRO, Euler-Hermes, ING, Rabobank and Tokio Marine with
31 March 2022 as expiry date. Early 2021 Sif and the banking consortium agreed on
an extension of the facilities by two years, therefor now expiring on 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. In 2021 these sustainability
targets were not met for safety. Therefore, no discount applied.
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%
*adjusted for IFRS 16 effects
The debt facilities are subject to covenant ratios that are based on results and
balance sheet corrected for IFRS 16 effects and that are reflected in above table.
Leverage amounted to 0.00 (0.00 in 2020), with covenant at 2.5. Solvency was
47,8% as at 31 December 2021 (50,0% as at 31 December 2020), with covenant at
35%.
2021Sif Annual Report
68
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 Q3 2020 Q1 2021
2021Sif Annual Report
69
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 (fraud)risk
management and control measures in place within Sif, and considering its 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 an
organizational structure that includes good governance and appropriate checks and
balances.
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. 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.
In 2021, the COVID-19 pandemic and measures to prevent spreading, made it
a challenge to conduct site-audits both for clients and certification institutions at Sif
and for Sif at suppliers. Audits were often conducted online. In 2021 clients carried
out three audits at Sif’s location Roermond and six at Maasvlakte 2. Sif carried out
seven audits at suppliers and subcontractors. Certification institutions carried out
nine audits in the context of ISO 3834-2, 9001, 14001, 45001, VCA, DNVGL-SE and
DNV-CP certification. Certification in conformance with ISO 3834-2 is linked to ISO
9001 and has been subject to surveillance audits in 2021. 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. In 2021 Sif
initiated internal auditing of processes and process-risks.
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 whistleblower 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 manhours, 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.
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70
The key component to sound risk management is Sif’s corporate culture. Sif’s
values are codified in a Code of Conduct and have been translated into standards
through the formulation of policies like the insider trading policy, a diversity policy,
a bribery policy and good leadership that promotes the drive for innovation, the
acquisition and transfer of knowledge and that safeguards a rewarding, non-
discriminatory and inclusive working environment where employees are encouraged
to speak out under protection of the whistleblower policy.
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.
2021Sif Annual Report
71
Risk matrix
The outbreak of a worldwide pandemic nor the outbreak of the war in Ukraine was
anticipated in the risk-matrix of Sif. Other risks in the Sif Risk matrix may have
emerged or may have become more imminent during the year under review. This
mainly concerned the volatility that results from ever increasing products and
projects and the emergence of new competition. The size of the majority of the
products and projects on the market makes it more challenging to optimize factory
utilization. In 2021, the impact of the Hollandse Kuist Zuid and, to an even larger
extent, the Dogger Bank A project underpinned this. Sif was able to smoothen this
impact by extended project preparation and scenario testing.
2021Sif Annual Report
72
Important mitigation tools to smoothen capacity utilization are innovation, product
development and inhouse detail engineering. In 2021 innovation initiatives included,
amongst others, participation in design projects for floaters and the further
development of the ‘Skybox’ concept.
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 2021 Measures to mitigate strategic risk Risk appetite Status
Dependending on Northwest European
and on emerging other markets can
disrupt the business.
Where these risks materialized in 2018-
2019 with the Seamaid, Vineyard and
Saint Nazaire projects, the last two
years were not impacted by similar
events.
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 may 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
production facilities in The Netherlands.
Dependence on limited number of
products may affect utilization,
revenues and earnings.
In 2021 Sif manufactured foundations
for two projects: Hollandse Kust Zuid
and Dogger Bank A.
Developing new products and add-on services to limit
dependence on limited number of products/projects.
Started marshalling activities in 2019 and completed
acquisition of KCI the engineers in 2021 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 a certain flexible
workforce to achieve the flexibility required to deal
with volatility.
Safeguard balance between permanent and
flexible workforce and include critical positions
in permanent workforce (instead of flexible).
Sif could be affected by increasing
competition from new and existing
industry participantes and face
pressure on pricing of Sif’s products.
Announcements by Haizea, SeAH and
EEW to start monopile production in
Spain UK and USA from 2023 and
2026 respectively.
Promote customer loyalty and render best-in-class
services. Maintain investments in innovation, capacity
and size of products.
Current market can absorb new manufacturers
of monopiles to restore healthy demand-supply
balance. Sif decided to start feasibility study
for new facilities.
2021Sif Annual Report
73
Legal and Regulatory Materialized 2021 Measures to mitigate legal and regulatory risk Risk appetite Status
Any reputational damage to offshore
wind may result in customers
withdrawing orders or a decrease in
demand for Sif’s products.
none Authorization matrix. Control and assurance.
Company culture.
Zero incidents
Fraud or other violation of values in
Code of Conduct may cause
reputational damage and exclusion
from projects.
none E-learning and speak-up culture. Implementation of
value-related policies such as anti-corruption and
bribery policy. Control measures as 4-eye principles
No violations of company values.
Sif operates in a highly regulated
environment with far-in-advance
planning and interest groups that may
feel threatened from new projects
(shipping, fishing, environmental).
none Innovations to take away concerns of interest groups.
Sif may become responsible for
products provided by parties not
selected by itself.
none Quality control and assurance, contracting principles
and insurance.
Zero defects to finished products.
IT-cyber-security. none 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.
Protection of privacy and access to client and
competitor sensitive as well as to shareprice
sensitive information is key.
Inspection criteria may be unclear or
not sufficiently standardized.
Rework on audited projects. Strive for standardized quality criteria. Zero defects.
2021Sif Annual Report
74
Financial risk Materialized 2021 Measures to mitigate financial risk Risk appetite Status
Inadequate reporting process. none Strengthening project management and control
function and implemented ERP system (AX).
Timely and reliable monthly financial reporting
(monthly reporting latest on 15
th
day
subsequent to end of month).
Availability of or fluctuations in the
prices of materials or of other sources
of energy could materially and
adversely impact the cost
competitiveness of Sif’s products
Steel and energy prices showed
volatility in 2021 but especially post
closing of 2021.
Pass-through costs for key materials (steel). Only tender with pass through costs for steel.
Sif is exposed to interest rate risk,
which could reduce Sif’s profits and
materially and adversely affect its
financial results.
Sif could be subject to unexpected
needs for liquidity and debt financing,
which could be exacerbated by factors
beyond its control, including adverse
capital and credit market conditions.
none Pursuing a credit policy, maintaining solvency and
healthy cash levels and following treasury policy
guidelines as explained in Note 26 to the Financial
Statements 2021 paragraphs ‘credit risk’, ‘liquidity
risk’ and ‘market risk’ respectively.
Zero breaches of banking covenants or
covenant holidays when needed.
Changes to global economic or
geopolitical conditions.
Economy standstill due to pandemic or
boycott of trading for geopololitical
reasons.
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.
Apply multi-sourcing policies for procurement.
2021Sif Annual Report
75
Operational risk Materialized 2021 Measures to mitigate operational risk Risk appetite Status
Sif is dependent on a limited number of
key suppliers and partners and is
subject to suppliers’ and partners’
credit and supply chain risks which may
affect timely delivery and quality of raw
materials and components and
therewith disrupt Sif’s production.
Continuation of COVID-19. Maintain and develop the strong relationship with key
suppliers and clients based on mutual interest.
Develop good relationships with suppliers and clients.
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.
Deviations or delays in relation to
projects may have a material adverse
effect on Sif’s revenue, earnings and
cash-flow.
None 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.
none Transferring working methods and techniques from
experienced Roermond-staff to Maasvlakte2.
Scaling up in-house detail engineering capabilities.
Uninterrupted production flow. Acquisition of
KCI the engineers.
Limited availability of skilled and
experienced staff may cause delays or
deficiencies.
Tight labour market in Western Europe
for technical personnel (welders and
rollers) has impacted growth of payroll-
based expertise.
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.
Production site in Roermond almost
flooded.
Work on a sustainable high water protection program
together with government bodies and industry
partners.
Flooding of facilities once every 50 years.
Risk of acts of war or terrorism may
jeopardize Sif’s production facilities and
materials and energy supplies
None in 2021 but Russian-Ukrainian
war 2022 may lead affect steel and gas
supplies
Explore alternative sourcing areas for steel and energy No disruptions in commitments to clients
2021Sif Annual Report
76
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: ‘Financial
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 and
its affiliated group companies included in the consolidation;
4.
The report of the Executive Board as included in this annual report provides
a true and fair view of the situation on the balance sheet date, the business
development during the financial year of Sif and of its affiliated group companies
included in the financial statements. The report of the Executive Board describes
the material risk to which Sif is exposed;
5.
The report of the Executive Board states those material risks and uncertainties
that, to the best of the Executive Board’s knowledge, are relevant to the
expectation of Sif’s continuity for the period of 12 months after the preparation
of the report.
6.
Roermond, 17 March 2022
Fred van Beers (CEO)
Ben Meijer (CFO)
FINANCIAL CALENDAR 2022
14 April AGM record date
10 May Deadline for registration or voting for AGM
12 May Release of Q1 2022 trading update
12 May Annual General Meeting of Shareholders
16 May Quotation ex-dividend
17 May Dividend record date
19 May Payment of net dividend to Financial Intermediaries for distribution
to shareholders
26 August Publication of 2022 interim results
4 November Publication of Q3 2022 trading update
2021Sif Annual Report
77
2021Sif Annual Report
78
Sif Annual Report 2021
79 Consolidated statement of profit or loss for the year ended
31 December 2021
80 Consolidated statement of financial position as at 31 December 2021
(before appropriation of result)
81 Consolidated statement of changes in equity for the year ended
31 December 2021
82 Consolidated cash flow statement for the year ended
31 December 2021
83 Consolidated cash flow statement for the year ended
31 December 2021 (continued)
84 Notes to the consolidated financial statements for the year ended
31 December 2021
133 Separate statement of profit or loss for the year ended
31 December 2021
134 Separate statement of financial position as at 31 December 2021
(before profit appropriation)
135 Notes to the separate financial statements for the year ended
31 December 2021
2021Sif Annual Report
79
Consolidated statement of profit or loss
for the year ended 31 December 2021
AMOUNTS IN EUR '000 Notes 2021 2020
Revenue from contracts with customers 418,496 330,130
Operating lease income 4,045 5,303
Total revenue 7 422,541 335,433
Raw materials 160,311 130,437
Subcontracted work and other external charges 126,090 82,510
Logistic and other project related expenses 21,910 20,894
Direct personnel expenses 8 32,213 27,091
Production and general manufacturing expenses 11,238 11,389
Indirect personnel expenses 8 20,208 20,888
Depreciation and amortization 21,712 20,348
Facilities, housing and maintenance 4,127 5,125
Selling expenses 9 632 1,018
General expenses 10 8,096 4,325
Operating profit 16,004 11,408
Impairment (losses) / reversals on financial assets 16 (2 )
Finance costs 11 (2,352 ) (2,396 )
Finance costs and impairment losses (2,336 ) (2,398 )
Other income 6, 17 1,345 0
Share of profit of joint ventures 12, 18 82 (61 )
Profit before tax 15,095 8,949
Income tax expense 13 3,208 1,376
Profit after tax 11,887 7,573
Attributable to:
Non-controlling interests 23 297 302
Equity holders of Sif Holding N.V. 11,590 7,271
Profit after tax 11,887 7,573
Earnings per share 14
Number of ordinary shares outstanding 25,501,356 25,501,356
Basic/diluted earnings per share (EUR) 0.45 0.29
2021Sif Annual Report
80
Consolidated statement of financial position as at 31 December 2021
(before appropriation of result)
AMOUNTS IN EUR '000 Notes 31-Dec-2021 31-Dec-2020
Assets
Intangible fixed assets 15 477 1,265
Property, plant and equipment 16 107,612 110,340
Right-of-use assets 32 104,598 51,902
Investment property 17 425 400
Investments in joint ventures 18 115 33
Deferred tax assets 13 748 349
Total non-current assets 213,975 164,289
Inventories 19 612 375
Contract assets 20 12,944 29,555
Trade receivables 21 17,927 43,661
VAT receivable 50 -
Other current financial assets - 15
Prepayments 2,472 1,307
Cash and cash equivalents 22 73,201 2,645
Total current assets 107,206 77,558
Total assets 321,181 241,847
AMOUNTS IN EUR '000 Notes 31-Dec-2021 31-Dec-2020
Equity
Share capital 23 5,100 5,100
Additional paid-in capital 23 1,059 1,059
Retained earnings 84,527 80,316
Result for the year 11,590 7,271
Equity attributable to
shareholder 102,276 93,746
Non-controlling interests 821 524
Total equity 103,097 94,270
Liabilities
Lease Liabilities - non-current 25, 32 100,573 50,139
Employee benefits - non-current 27 416 273
Other non-current liabilities 29 1,407 1,484
Total non-current liabilities 102,396 51,896
Lease Liabilities - current 25, 32 5,110 4,625
Trade payables 62,082 63,438
Contract Liabilities 20 37,713 14,319
Employee benefits - current 27 2,460 2,042
Wage tax and social security 791 1,557
VAT payable - 5,482
CIT payable 2,081 498
Other current liabilities 29 5,451 3,720
Total current liabilities 115,688 95,681
Total liabilities 218,084 147,577
Total equity and liabilities 321,181 241,847
2021Sif Annual Report
81
Consolidated statement of changes in equity for the year ended 31 December 2021
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 2021 5,100 1,059 80,316 7,271 93,746 524 94,270
Appropriation of result - - 7,271 (7,271 ) - - -
Total comprehensive income
Profit for the year - - - 11,590 11,590 297 11,887
Total comprehensive income - - - 11,590 11,590 297 11,887
Transactions with owners of the Company
Dividend distributions - - (3,060 ) - (3,060 ) - (3,060 )
Total transactions with owners of the
Company - - (3,060 ) - (3,060 ) - (3,060 )
Balance as at 31 December 2021 5,100 1,059 84,527 11,590 102,276 821 103,097
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 at 31 December 2020 5,100 1,059 80,316 7,271 93,746 524 94,270
2021Sif Annual Report
82
Consolidated cash flow statement for the year ended 31 December 2021
AMOUNTS IN EUR '000 Notes 2021 2020
Cash flows from operating activities
Profit before tax 15,095 8,949
Adjustments for:
Depreciation and amortization of Property, Plant and Equipment and Intangible
assets 15, 16 16,524 15,051
Depreciation of right-of-use assets 32 5,189 5,297
Fair value adjustments on investment property 17 (25 ) -
Unrealised changes in joint ventures 18 (82 ) 61
Gain on bargain purchase 6 (1,320 ) -
Impairment (losses) / reversals on financial assets (16 ) 2
Net finance costs 2,352 2,396
Changes in net working capital
o Inventories 19 (237 ) (63 )
o Contract assets and liabilities 20 40,386 (19,516 )
o Trade receivables 21 26,637 1,579
o Prepayments (605 ) (1,007 )
o Trade payables (1,720 ) 18,716
Total changes in net working capital 64,461 (291 )
VAT payable and receivable (5,542 ) 3,751
Initial direct costs on operating lease contracts (2,095 ) -
Other financial assets 859 5
Employee benefits 198 (362 )
Wage tax and social security (1,000 ) 1,240
Other liabilities (1,291 ) (2,232 )
Government grants received 29 841 133
Income taxes received / (paid) (1,971 ) 1,330
Interest received / (paid) (947 ) (994 )
Net cash from operating activities 91,230 34,336
2021Sif Annual Report
83
Consolidated cash flow statement for the year ended 31 December 2021 (continued)
AMOUNTS IN EUR '000 2021 2020
Cash flows from investing activities
Purchase of intangible fixed assets 15 (100 ) (277 )
Purchase of property, plant and equipment 16 (10,826 ) (4,650 )
Acquisition of subsidiaries 6 (567 ) -
Net cash from (used in) investing activities (11,493 ) (4,927 )
Cash flows from financing activities
Movements in revolving credit facility 25 (174 ) (22,698 )
Payment of lease liabilities 32 (5,947 ) (5,645 )
Dividends paid 23 (3,060 ) -
Net cash from (used in) financing activities (9,181 ) (28,343 )
Net increase / (decrease) in cash and cash equivalents 70,556 1,066
Cash and cash equivalents at 1 January 2,645 1,579
Cash and cash equivalents at 31 December 73,201 2,645
2021Sif Annual Report
84
Notes to the consolidated financial statements for the year ended 31 December 2021
Reporting entity1
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 31. 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
2021, were authorised for issue in accordance with a resolution of the Executive
Board on 17 March 2022.
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 has 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 concern2.1
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 almost fully contracted until halfway 2024 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.
Reference is made to note 36 for our assessment of the events after balance sheet
date related to the war in Ukraine.
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.
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.
COVID-19 did not impact the Group’s orderbook and order intake and the impact on
the Group’s operations has been limited. Furthermore, the Group has been able to
extent the financing arrangements until 31 March 2024 during the pandemic.
Therefore, the Group considers there to be no significant impact on liquidity risk,
impairment risks and the risk for onerous contracts.
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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.
Management estimates and judgements2.2
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.
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 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 7 Operating segments).
Leases
The Group rents warehouse/factory equipment 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 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 2031).
Extension options or cancellation 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).
As a result of the progress of expansion plans as described in the Report of the
Executive Board, the Group concluded that the estimate with respect to the early
termination option in the lease contracts needs to change accordingly. After
finalization of the market study performed (finalized end of September 2021) and
taking into account the results from the underlying business plans, the Group
concluded end of October 2021 that it is reasonably certain that the option to early
terminate the lease contacts at 1 July 2031 will not be exercised. Consequently the
lease terms of the lease contracts of the plots are extended to 30 June 2041.
Therefore 1 November 2021 is taken as the moment of the significant event to
change the estimate.
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This change in estimate results in a remeasurement of the right of use assets and
lease liabilities with respect to the lease contracts. The total remeasurement
amounts to EUR 53,7 million for both the right of use assets and the lease liabilities,
without an impact on profit and loss. As part of the remeasurement the Group
revised the discount rate to a lower percentage, mainly reflecting the decline in the
overall yield curves. The extension of the lease term (ceteris paribus) results in
a decrease in the subsequent annual depreciation expenses of the right of use
assets and an increase in the annual interest expenses on the lease liabilities. This is
largely offset by the impact of the decrease in the discount rate, which results in the
fact that depreciation expenses and interest expenses subsequent to the
remeasurement have not materially changed as compared to the situation before
the remeasurement.
As a consequence of the revised estimate with respect to the lease term of the
leased plots, the Group has reassessed the estimated useful lives of the leasehold
improvements on the plots. In line with the extension of the lease terms to 30 June
2041, the Group has extended the useful lives of the leasehold improvements to that
same date. This change in estimate is applied prospectively as per 1 November
2021, and results in a decrease in depreciation expenses of EUR 1,2 million per year.
The impact on the 2021 profit and loss amounts to EUR 0,2 million.
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.
Significant accounting policies3
The Group has consistently applied the following accounting policies to all periods
presented in these consolidated financial statements.
Basis of consolidation3.1
Subsidiaries
The consolidated financial statements comprise the financial statements of the
Group and its subsidiaries as at 31 December 2021. 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.
Business combinations
Business combinations are accounted for using the acquisition method. The cost of
an acquisition is measured as the aggregate of the consideration transferred, which
is measured at acquisition date fair value, and the amount of any non-controlling
interests in the acquiree. For each business combination, the Group elects whether
to measure the non-controlling interests in the acquiree at fair value or at the
proportionate share of the acquiree’s identifiable net assets. Acquisition-related
costs are expensed as incurred and included in general expenses.
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The Group determines that it has acquired a business when the acquired set of
activities and assets include an input and a substantive process that together
significantly contribute to the ability to create outputs. The acquired process is
considered substantive if it is critical to the ability to continue producing outputs,
and the inputs acquired include an organised workforce with the necessary skills,
knowledge, or experience to perform that process or it significantly contributes to
the ability to continue producing outputs and is considered unique or scarce or
cannot be replaced without significant cost, effort, or delay in the ability to continue
producing outputs.
When the Group acquires a business, it assesses the financial assets and liabilities
assumed for appropriate classification and designation in accordance with the
contractual terms, economic circumstances and pertinent conditions as at the
acquisition date.
If the fair value of the net assets acquired is in excess of the aggregate
consideration transferred, the Group re-assesses whether it has correctly identified
all of the assets acquired and all of the liabilities assumed and reviews the
procedures used to measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of net assets acquired
over the aggregate consideration transferred, then the gain is recognised in profit or
loss.
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.
Summary of 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. In addition, with the acquisition of
KCI The Engineers B.V., the Group is also involved in the engineering of solutions for
renewables market, the oil & gas market and other equipment. 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.
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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.
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. Storage of goods is not considered
a performance obligation, as it is not a promise in the contract. Only when the
customer requires additional storage of goods (in addition to the initially agreed
schedules), this is assessed in light of the guidance for contract modifications.
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. In case the
Group determined that the estimates of variable consideration are constrained, the
transaction price is adjusted accordingly. The main variable consideration that can
be applicable to the contracts of the Group is related to liquidated damages, which
are performance penalties in the contract in case agreed milestones are not met.
Based on facts and circumstances in relation to the respective project, the Group
assesses to what extend it is highly probable that a significant revenue reversal will
not occur in future periods once the uncertainty related to the variable consideration
is resolved. Other forms of variable considerations are relatively limited, as the Group
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. The Group uses the input method to measure
progress over time, based on labour hours spent. The actual hours spent in relation
to the total expected hours to the satisfaction of that performance obligation is
considered a reliable measure to recognize revenue over time.
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.
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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 (initial direct costs). In accordance
with IFRS 15 and 16, 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 of these costs as contract costs in case of an IFRS 15 contract:
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.
In case the initial direct costs related to an operational lease contact for which the
Group acts as the (intermediate) lessor, the initial direct costs incurred in obtaining
an operating lease are added to the carrying amount of the underlying asset and
recognised as an expense over the lease term on the same basis as the lease
income.
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.
Government grants
Government grants are recognised where there is reasonable assurance that the
grant will be received and all attached conditions will be complied with. When the
grant relates to an expense item, it is recognised as income on a systematic basis
over the periods that the related costs, for which it is intended to compensate, are
expensed. When the grant relates to an asset, it is recognised as income in equal
amounts over the expected useful life of the related asset.
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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.
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.
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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.
>
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.
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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
Software
Software is 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.
Research and development costs
Research costs are expensed as incurred. Development expenditures on an
individual project are recognised as an intangible asset when the Group can
demonstrate:
The technical feasibility of completing the intangible asset so that the asset will
be available for use or sale
>
Its intention to complete and its ability and intention to use or sell the asset>
How the asset will generate future economic benefits>
The availability of resources to complete the asset>
The ability to measure reliably the expenditure during development>
Following initial recognition of the development expenditure as an asset, the asset is
carried at cost less any accumulated amortisation and accumulated impairment
losses. Amortisation of the asset begins when development is complete, and the
asset is available for use. It is amortised over the period of expected future benefit.
Amortisation is recorded in depreciation and amortization costs. During the period of
development, the asset is tested for impairment annually.
A summary of the policies applied to the Group’s intangible assets is, as follows:
> Software: 3 years
> Development costs: Determined per project, standard
assumption 5 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.
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.
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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 note 2.
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).
Reference is made to ‘Management estimates and judgments’ in Note 2 with
respect to our assessment of the lease terms.
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.
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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.
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.
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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
>
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.
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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.
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.
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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.
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.
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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 2021. The Group has
not early adopted any other standard, interpretation or amendment that has been
issued but is not yet effective.
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 provide temporary reliefs which address the financial reporting
effects when an interbank offered rate (IBOR) is replaced with an alternative nearly
risk-free interest rate (RFR). The amendments include the following practical
expedients:
A practical expedient to require contractual changes, or changes to cash flows
that are directly required by the reform, to be treated as changes to a floating
interest rate, equivalent to a movement in a market rate of interest
>
Permit changes required by IBOR reform to be made to hedge designations and
hedge documentation without the hedging relationship being discontinued
>
Provide temporary relief to entities from having to meet the separately
identifiable requirement when an RFR instrument is designated as a hedge of
a risk component
>
These amendments had no impact on the consolidated financial statements of the
Group. The Group intends to use the practical expedients in future periods if they
become applicable.
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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
>
After an exposure draft of the Board in November 2021, the Board proposed to defer
the effective date to no earlier than 1 January 2024 (from 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 1 Presentation of Financial Statements and IFRS
Practice Statement 2: Disclosure of Accounting policies, effective 1 January
2023*
The amendments provide guidance on the application of materiality judgements to
accounting policy disclosures. The amendments to IAS 1 replace the requirement to
disclose ‘significant’ accounting policies with a requirement to disclose ‘material’
accounting policies.
Guidance and illustrative examples are added in the Practice Statement to assist in
the application of the materiality concept when making judgements about
accounting policy disclosures.
The amendments to IAS 1 will be effective for annual periods starting on or after
1 January 2023. The group is currently assessing the impact of these amendments
on the Group’s consolidated financial statements.
Amendments to IAS 8 Accounting policies, Changes in Accounting
Estimates and Errors: Definition of Accounting Estimates, effective
1 January 2023*
The amendments introduce a new definition of accounting estimates. Accounting
estimates are defined as “monetary amounts in financial statements that are
subject to measurement uncertainty”.
The amendments clarify what changes in accounting estimates are and how these
differ from changes in accounting policies and corrections of errors.
The amendments become effective for annual reporting periods beginning on or
after 1 January 2023, with earlier application permitted. The group is currently
assessing the impact of these amendments on the Group’s 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.
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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.
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.
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.
Annual Improvements Cycle - 2018-2020
The IASB issued the 2018-2020 cycle improvements to its standards and
interpretations. These improvements include:
2021Sif Annual Report
102
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.
>
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Bussiness Combinations6
Aqcuisition of KCI The Engineers B.V.
On 15 March 2021, the Group acquired 100% of the shares of KCI The Engineers
B.V. (hereafter “KCI”), an unlisted company based in the Netherlands involved in the
engineering of solutions for renewables market, the oil & gas market and other
equipment. The acquisition results in a stronger knowledge base of design
engineering competences for the Group, focused on both bottom fixed foundations
and substations and future alternatives such as floating foundations.
The acquisition has been accounted for using the acquisition method. The
consolidated financial statements include the results of KCI for the nine and a half
month period from the acquisition date.
The final fair values of the identifiable assets and liabilities of KCI as at the date of
acquisition were:
AMOUNTS IN EUR '000
Fair value
recognized on
acquisition
Assets
Property, plant and equipment 198
Right-of-use assets 211
Deferred tax assets 53
Contract assets 381
Trade receivables 887
Cash and cash equivalents 873
Other current financial assets 844
Other assets 713
Total assets 4,160
Liabilities
Lease liabilities 211
Trade payables 336
Other liabilities 853
Total liabilities 1,400
Total identified net assets at fair value 2,760
Gain on bargain purchase on acquisition 1,320
Purchase consideration transferred 1,440
Analysis of cash flows on acquisition: 0
Net cash acquired with the subsidiary (included in cash flows
from investing activities) 873
Cash paid (1,440)
Net cash flow on acquisition (567)
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At the date of the acquisition, the fair value of the trade receivables was EUR
0.9 million, which equals the carrying amount. As the outstanding receivables were
collected shortly after acquisition date, the discounting of cash collection and
adjustment of credit risks have no material impact.
The fair value of the remaining part of working capital is assessed to be in line with
carrying amount, due to the short-term character of the positions. No contracts have
been identified which are materially favorable or unfavorable.
The Group measured the acquired lease liabilities using the present value of the
remaining lease payments at the date of acquisition. The right-of-use assets were
measured at an amount equal to the lease liabilities.
From the date of acquisition, KCI has contributed EUR 3.7 million of revenue and
a loss of EUR 1.2 million to the net profit before tax of the Group. If the acquisition
had taken place at the beginning of the year, KCI would have contributed EUR
5.2 million of revenue (consolidated EUR 424.0 million) and a net loss before tax of
EUR 1.5 million (consolidated EUR 14.8 million profit before tax).
The gain on bargain purchase of EUR 1.3 million is primarily attributed to the more
challenging market conditions of KCI’s existing business and the investments the
Group is planning to make KCI to further develop its knowledge of offshore wind
foundations to realise synergies. The gain on bargain purchase is presented as part
of ‘Other income’ in the profit or loss statement.
Acquisition related costs of EUR 0.2 million have been expensed and are included in
General expenses in the statement of profit or loss and are part of operating cash
flows in the statement of cash flows.
Operating segments7
For management purposes, the Group is organised into divisions based on its
products and services and has three operating segments:
Wind, which produces and delivers monopiles, transition pieces or other
foundation components for the off-shore wind 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 2021 2020
Wind Marshalling Other Total Wind Marshalling Other Total
- Revenue from contracts
with customers 411,055 3,344 4,097 418,496 316,671 3,122 10,337 330,130
- Operational lease income - 2,455 1,590 4,045 - 3,627 1,676 5,303
Total revenue 411,055 5,799 5,687 422,541 316,671 6,749 12,013 335,433
Segment contribution 106,752 2,108 5,370 114,230 92,503 1,780 7,309 101,592
Gross profit 66,998 2,051 1,730 70,779 57,413 1,780 3,919 63,112
Indirect personnel
expenses (20,208) (20,888)
Depreciation and
impairment (21,712) (20,348)
Facilities, housing &
maintenance (4,127) (5,125)
Selling expenses (632) (1,018)
General expenses (8,096) (4,325)
Net finance costs (2,336) (2,398)
Other income 1,345 0
Joint ventures 82 (61)
Total profit before tax 15,095 8,949
The segment 'Other' in 2020 includes the segment Oil & Gas (revenue EUR
10,3 million, Gross profit EUR 1,9 million). As the size of the segment in 2021 is very
limited (revenue and gross profit EUR 0,3 million) and not a key target segment, Oil
& Gas is not identified as a separte reporting segment anymore as from 2021.
The segment 'Other' in 2021 includes the newly acquired engineering business
(revenue EUR 3,7 million, gross profit EUR 0,2 million). Given the limited size, which
is not expected to become a significant part of total business, the engineering
business is not considered a seperate reporting segment.
The depreciation and impairment expenses includes an amount of EUR 1,6 million
(2020: EUR 1,5 million), which is related to the capitalised ground lease expenses
(under IFRS 16) for the logistical area of the Marshalling segment.
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Geographical information
The Wind, 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. As the Brexit is formally in place as per 31 December 2020, revenue with
contract partners in the UK is classified outside the EU in both 2021 and 2020. In
presenting the following information, segment revenue has been based on the
geographical location of contract partners.
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 2021 2020
The Netherlands 270,701 81,637
All foreign countries:
European Union (EU) 4,733 108,393
Rest of the world 147,107 145,403
Total revenue from contracts with
customers 422,541 335,433
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 three customers of the Group’s Wind segment represented
approximately EUR 403 million (2020: four customers representing EUR 292 million)
of the Group’s total revenues. In 2021 the largest customer represented a revenue of
approximately EUR 154 million, the second customer approximately EUR 140 million,
the third customer approximately EUR 106 million. 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.
Personnel expenses8
AMOUNTS IN EUR '000 2021 2020
Wages and salaries 24,627 20,542
Hired staff and temporary workers 17,330 18,241
Compensation/grants received (85) (57)
Social security contributions 3,094 2,938
Pension expenses 3,266 2,724
Other employee benefit expenses 4,189 3,591
52,421 47,979
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.
2021Sif Annual Report
107
The pension fund coverage ratio of the PMT industry fund at 31 December
2021 amounted to 106,1 % (2020: 95,4%). The 2021 pension premium has remained
at a level similar to the 2020 premiums. The Group’s participation in the industry
pension fund is less than 0.05 % (2020: 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
3,3 million in 2022, of which approximately EUR 3,0 million to PMT industry fund.
2021Sif Annual Report
108
Number of employees
The average number of employees employed by the Group in 2021 amounts to
358 FTE (2020: 315 FTE), which includes 42 FTE for KCI (on average 53 FTE are
employed at KCI, which are included as from acquisition date). The table below
provides an overview of the average number of FTE split per functional area. All
employees are based in the Netherlands.
2021 2020
Production and distribution 167 165
Innovation and maintenance 34 34
Logistic services 23 25
Planning and engineering 51 17
Quality and safety 11 10
Sales 14 12
Management 5 6
Purchasing and warehousing 15 14
Administrative 10 7
Other 28 25
358 315
Selling expenses9
AMOUNTS IN EUR '000 2021 2020
Travel and representation 149 98
Promotional and advertising costs 263 174
Tender expenses 31 537
Other selling expenses 189 209
632 1,018
The tender expenses in 2020 related to some larger tenders which required external
engineering services.
General expenses10
AMOUNTS IN EUR '000 2021 2020
Consultancy fees 3,316 1,158
Insurances 2,036 1,826
Software, license fees 1,582 840
Office expenses 472 438
Other general expenses 690 63
8,096 4,325
The general expenses have increased in 2021 as compared to 2020, mainly due to
consultancy fees related to the expansion plans (reference is made to ‘Management
estimates and judgements’ for more information regarding these plans) and
investments in cloud software solutions.
Net finance costs11
AMOUNTS IN EUR '000 2021 2020
Interest on loans and borrowings (221) (235)
Borrowing cost finance facility (328) (329)
Interest expense on lease liabilities (1,071) (1,072)
Other finance costs (732) (760)
Finance costs (2,352) (2,396)
Net finance costs recognised in profit or
loss (2,352) (2,396)
2021Sif Annual Report
109
Share of profit of an associate and joint ventures12
For the year 2021 the result of the Group from joint ventures was EUR 82 positive
(2020: EUR 61 negative ). The amount consists of EUR 11 positive related to SBR
Engineering GmbH (2020: EUR 14 negative) and EUR 71 positive from Smulders Sif
Steel Foundations B.V. (2020: EUR 47 negative ) (see note 18).
Income tax expense13
Income tax recognised in profit or loss
AMOUNTS IN EUR '000 2021 2020
Current year income tax charge 3,158 2,016
Movement in tax balances (94) (168)
Prior year adjustment 144 (472)
Tax expense recognized in statement of
profit & loss 3,208 1,376
The prior year adjustments relate mainly to adjustments to 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.
2021Sif Annual Report
110
Movement in deferred tax balances
AMOUNTS IN EUR '000
Net balance at
1 January
Reclass from
current tax
Recognised in
profit or loss
Net balance at
31 December
2021
Intangible fixed assets - - (25) (25)
Property, plant and equipment (77) - (5) (82)
Right of use assets and lease liabilities 410 305 82 797
Investment property 10 - - 10
Accounts receivable 6 - (4) 2
Employee benefits - - 46 46
Tax assets (liabilities) after netting 349 305 94 748
AMOUNTS IN EUR '000
Net balance at
1 January
Reclass from
current tax
Recognised in
profit or loss
Net balance at
31 December
2020
Property, plant and equipment (79) - 2 (77)
Right of use assets and lease liabilities 244 - 166 410
Investment property 10 - - 10
Accounts receivable 6 - - 6
Tax assets (liabilities) after netting 181 - 168 349
Unrecognised deferred tax assets and liabilities
At 31 December 2021 and 31 December 2020, the Group has recognised all deferred
tax assets applicable to the Group.
2021Sif Annual Report
111
Reconciliation of effective tax rate
% 2021 2020
Tax using the Company’s domestic tax rate 24.6 24.7
Adjustment in tax rates due to correction tax
incentives prior year 1.0 (5.2)
Reduction in tax rates due to tax incentives (3.6) (4.3)
Gain on bargain purchase (1.0) -
Participation Exemption (0.1) (0.2)
Non tax deductible expenses 0.4 0.4
Effective tax rate 21.3 15.4
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 results are partly
related to previous years. The gain on bargain purchase relates to the gain resulting
from the acquisition of KCI The Engineers B.V. Reference is made to note 6 for
further information.
Earnings per share14
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
2021 2020
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 5,1 million, consisting of
25,501,356 shares with a nominal value of EUR 0.20 (20 eurocents per share).
2021Sif Annual Report
112
Intangible assets15
Reconciliation of the carrying amount
AMOUNTS IN EUR '000 Software Capitalised R&D Total
Cost
Balance at 1 January 2020 1,765 - 1,765
Additions 277 - 277
Disposals - - -
Balance at 31 December
2020 2,042 - 2,042
Balance at 1 January 2021 2,042 - 2,042
Additions - 100 100
Disposals - - -
Balance at 31 December
2021 2,042 100 2,142
Accumulated depreciation
Balance at 1 January 2020 (156) - (156)
Depreciation (621) - (621)
Disposals - - -
Balance at 31 December
2020 (777) - (777)
Balance at 1 January 2021 (777) - (777)
Depreciation (888) - (888)
Disposals - - -
Balance at 31 December
2021 (1,665) - (1,665)
Carrying amounts
At 31 December 2020 1,265 - 1,265
At 31 December 2021 377 100 477
The carrying amount of capitalized R&D per year end relates to assets under
construction (2020: Nil).
2021Sif Annual Report
113
Property, plant and equipment16
Reconciliation of the carrying amount
AMOUNTS IN EUR '000
Land and
buildings
Plant and
equipment
Other fixed
assets Total
Cost
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
Balance at 1 January 2021 131,330 101,169 3,107 235,606
Additions 4,731 7,777 201 12,709
Acquired in business combination - - 198 198
Disposals - - - -
Balance at 31 December 2021 136,061 108,946 3,506 248,513
Accumulated depreciation
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)
Balance at 1 January 2021 (54,781) (68,129) (2,356) (125,266)
Depreciation (6,552) (8,733) (350) (15,635)
Disposals - - - -
Balance at 31 December 2021 (61,333) (76,862) (2,706) (140,901)
Carrying amounts
At 31 December 2020 76,549 33,040 751 110,340
At 31 December 2021 74,728 32,084 800 107,612
2021Sif Annual Report
114
At 31 December 2021 and 2020 all directly owned property, plant and equipment
was collateralized as part of the financing agreements in place (see note 25).
Investment property17
Reconciliation of the carrying amount
AMOUNTS IN EUR '000 2021 2020
Balance at 1 January 400 400
Additions - -
Revaluation 25 -
Balance at 31 December 425 400
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 32.
Fair value as of 31 December 2021 is estimated at EUR 425 (2020: EUR 400)
determined by external, independent property valuators, having appropriate
recognised professional qualifications and recent experience in the location and
category of the property. The fair value measurement has been categorised as
a Level 3 fair value based on the inputs to the valuation technique used. The
revaluation gain has been presented as part of ‘Other income’ in the profit or loss
statement.
Investment in joint ventures18
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 2021 the Group’s interest in the joint venture
amounts EUR 44 (2020: EUR 33).
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 2021 the Group’s interest in
the joint venture amounts EUR 71 (2020: EUR 0).
AMOUNTS IN EUR '000 2021 2020
Balance at 1 January 33 94
Additions - -
Result for the year 82 (61)
Dividends paid - -
Balance at 31 December 115 33
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 2020 and settled in 2021. The amount of the loan
agreement is classified as current financial assets EUR 0 (2020: EUR 15).
2021Sif Annual Report
115
Inventories19
AMOUNTS IN EUR '000 2021 2020
Raw materials and consumables 612 375
612 375
During 2021 and 2020 no inventories were written down to the lower of net
realisable value and no provision has been recognised.
Contract assets and liabilities20
AMOUNTS IN EUR '000 2021 2020
Contract assets 12,944 29,555
Contract liabilities (37,713) (14,319)
(24,769) 15,236
Expenses incurred including realized profit to
date 831,510 398,277
Invoiced terms (856,279) (383,041)
(24,769) 15,236
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 0,7 million at 31 December
2021 (2020: EUR 1,0 million). The revenues recognized in the reporting period that
was included in the contract liability balance at the beginning of the period amounts
EUR 13,3 million (2020: EUR 15,9 million).
The classification of a project as contract asset or liability can vary over time,
depending on the timing of significant (progress)payments by customers and
material purchases of the Group.
Both the contract assets and liabilities predominantly have durations shorter than
12 months and are therefore considered to be current.
2021Sif Annual Report
116
Trade receivables21
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
2021 an amount of EUR 1,3 million of the trade receivables were provided for (2020:
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
9 for impairment costs due to expected credit loss (IFRS 9) has been reported
(2020: EUR 24). The movements related to expected credit loss over the period are
considered to be immaterial.
At year end approximately EUR nihil of the total open balance refers to related
parties (2020: EUR 32 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 26.
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 2021 17,927 17,151 39 64 5 - 668
31 December 2020 43,661 42,845 10 4 460 - 342
2021Sif Annual Report
117
Cash and cash equivalents22
AMOUNTS IN EUR '000 2021 2020
Cash 7 7
Bank balances 73,194 2,638
Cash and cash equivalents 73,201 2,645
The balance of the cash and cash equivalents are freely accessible and available to
the Group and no restrictions apply.
Capital and reserves23
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 2021 2020
Number of ordinary shares dividend eligible 25,501,356 25,501,356
Rounded dividend per ordinary share 0.12 -
Dividends declared and settled during the
year 3,060 -
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 2022 the proposed dividend pay-out per share (to be approved by the
shareholder) in a cash dividend amounts to €0,19 per share.
Partly-owned subsidiaries24
The Group holds 60% interest in Twinpark Sif B.V., an entity involved in the
development and manufacturing of a windmill. The summarised financial
information of these subsidiaries is provided below. This information is based on
amounts before intercompany eliminations.
2021Sif Annual Report
118
Summarised statement of profit or loss:
AMOUNTS IN EUR '000 2021 2020
Operating lease income 1,480 1,480
Depreciation and amortization 359 360
Other operating expenses 123 126
Finance costs 41 13
Profit before tax 957 981
Income tax 215 228
Profit after tax 742 753
Attributable to non-controlling interests 297 302
Dividends paid to non-controlling interests - -
Summarised statement of financial position as at 31 December:
AMOUNTS IN EUR '000 2021 2020
Property, plant and equipment 6,467 6,826
Trade receivables 487 448
Cash and cash equivalents 3,561 2,277
Trade and other payables (8,139) (7,917)
Interest-bearing loans and borrowings (325) (325)
Total equity 2,051 1,309
Attributable to:
Equity holders of parent 1,229 785
Non-controlling interest 821 524
Summarised cash flow information for year ended 31 December:
AMOUNTS IN EUR '000 2021 2020
Operating 1,304 1,314
Investing - -
Financing (21) (13)
Net increase in cash and cash equivalents 1,283 1,301
Loans and borrowings25
The company has the following financing arrangements:
AMOUNTS IN EUR '000 2021 2020
Lease liabilities - non-current 100,573 50,139
Lease liabilities - current 5,110 4,625
Total Loan and borrowings 105,683 54,764
The prepaid transaction costs of the revolving credit facility are presented as part of
prepayments.
Reference is made to note 32 for further information on the lease liabilities, and the
related increase.
2021Sif Annual Report
119
The movement in financing arrangements can be specified as follows:
AMOUNTS IN EUR '000 2021 2020
Balance at 1 January 54,938 82,606
Financing costs (174) (736)
Net value of loans and borrowings 54,764 81,870
Lease liabilities 50,919 (4,233)
Amortisation financing costs 174 562
Movements in revolving credit facility (174) (23,435)
Balance at 31 December 105,683 54,938
Financing costs - (174)
Net value of loans and borrowings 105,683 54,764
Information about the Group’s exposure to interest rate, foreign currency and
liquidity risk is included in note 26. 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. 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. Per 1 February 2021 the financing arrangement has
been extended by two years to 31 March 2024. As per year-end 2021 an amount of
EUR nihil is outstanding (2020: EUR 0,2 million).
2021Sif Annual Report
120
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
2021
Carrying amount
2021
Fair value
2020
Carrying amount
2020
Revolving Credit Facility EUR
Euribor +
supplement 2024 - - 174 174
Total interest-bearing loans and
borrowings - - 174 174
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 31 March 2024. The interest as per 31 December 2021 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.
>
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.
At year-end 2021 the Group met the applicable covenants, and the Group expects to
meet the covenants during 2022.
Financial instruments26
Financial risk management
The Group has exposure to the following risks arising from financial instruments:
credit risk;>
liquidity risk;>
market risk.>
2021Sif Annual Report
121
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 21.
Cash and cash equivalents
The Group held cash and cash equivalents of EUR 73.2 million at 31 December
2021 (2020: EUR 2,6 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.
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:
2021Sif Annual Report
122
AMOUNTS IN EUR '000 Carrying amount
Total nominal
amount
3 months
or less
3-12
months 1 - 2 years 2 - 5 years
More than
5 years
31 December 2021
Non-derivative financial liabilities
Lease liabilities 105,683 (115,148) (1,564) (4,485) (6,014) (11,920) (91,165)
Trade payables 62,082 (62,082) (62,082) - - - -
167,765 (177,230) (63,646) (4,485) (6,014) (11,920) (91,165)
AMOUNTS IN EUR '000 Carrying amount
Total nominal
amount
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) 0 - (174) 0
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)
As disclosed in note 25, 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.
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 2021, the Group uses no derivatives to manage market risks (2020:
none). All such, potential transactions would be carried out within treasury policy
guidelines.
2021Sif Annual Report
123
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 2021 2020
Variabele rate instruments
Revolving credit facility - (174)
- (174)
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 2021
Variable rate instruments - -
Net impact - -
31 December 2020
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 steel. However, as this risk is
fully transferred to the customers of the Group, no risk remains for the Group.
Employee benefits27
AMOUNTS IN EUR '000 2021 2020
Jubilee provision 436 339
Accrual for employee bonuses 1,007 918
Accrual for employee vacation days
outstanding 987 790
Personnel expenses payable 446 268
Total employee benefits liabilities 2,876 2,315
Non-current 416 273
Current 2,460 2,042
2,876 2,315
2021Sif Annual Report
124
The movement in the jubilee provision can be specified as follows:
AMOUNTS IN EUR '000 2021 2020
Balance at 1 January 339 340
Additions 162 59
Used (65) (60)
Balance at 31 December 436 339
Share based payments28
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 2021 the outstanding liability with regard to the PSU plan was
€ 0,2 million (2020: € 0,2 million). During 2021 a number of 3.100 PSUs are vested
and exercised (2020: 2.464), 10.872 PSUs are forfeited (2020: nil) and 10.337 PSUs
are awarded (2020: 16.830). At 31 December 2021 a number of 29.295 PSUs are
outstanding (2020: 32.930 PSUs), which vest on average 20 months after reporting
date.
Other current and non-current liablities29
The Group’s current liabilities mainly consist of operational expenses to be paid. In
addition, EUR 0,3 million is included related to grants received by KCI related to the
‘Noodmaatregel Overbrugging Werkgelegenheid’ (NOW). These grants are applied
for by KCI as part of the former group, around the moment of acquisition by the
Company. As the Company has no need to be supported by these government
grants, the Company will reimburse the grants to the government.
The non-current part mainly consist of the non-current part of the premiums to be
paid for bank guarantees (EUR 1,3 million, 2020: EUR 1,4 million).
The other current liabilities include mainly liabilities for invoices to be received.
Capital management30
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 (excluding the
impact of IFRS 16). At year-end 2021, the solvency ratio was 47,8% (2020: 50,0%).
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 25.
2021Sif Annual Report
125
List of subsidiaries31
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
Zonnepanelen Maasvlakte
B.V.
Rotterdam 100
KCI The Engineers B.V.
2
Schiedam 100
1 – Legally the Group holds 59,4% of the shares, but 60% in result appropriation.
2 – Acquired per 15 March 2021.
No further changes are applicable in investments in subsidiaries.
2021Sif Annual Report
126
Leases32
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 25 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 2031).
Right-of-use assets
AMOUNTS IN EUR '000 Right-of-use
Cost
Balance at 1 January 2020 61,001
Additions 722
Remeasurement (90)
Disposals -
Balance at 31 December 2020 61,633
Balance at 1 January 2021 61,633
Acquired in business combination 211
Additions 2,406
Remeasurement 55,268
Disposals (39)
Balance at 31 December 2021 119,479
Accumulated depreciation
Balance at 1 January 2020 (4,434)
Depreciation (5,297)
Disposals -
Balance at 31 December 2020 (9,731)
Balance at 1 January 2021 (9,731)
Depreciation (5,189)
Disposals 39
Balance at 31 December 2021 (14,881)
Carrying amounts
At 31 December 2020 51,902
At 31 December 2021 104,598
2021Sif Annual Report
127
Lease liabilities
AMOUNTS IN EUR '000
Balance at 1 January 2020 58,997
Additions 722
Remeasurement (90)
Lease payments (5,938)
Financing costs 1,073
Balance at 31 December 2020 54,764
Balance at 1 January 2021 54,764
Acquired in business combination 211
Additions 311
Remeasurement 55,268
Lease payments (5,943)
Financing costs 1,071
Balance at 31 December 2021 105,683
Carrying amounts
At 31 December 2020 54,764
At 31 December 2021 105,683
Of the total carrying value per year-end 2021 an amount of EUR 5,1 million is
classified current (2020: EUR 4,6 million).
The additions in right-of-use assets include initial direct costs on operational lease
contracts in the Marshalling segment of EUR 2,1 million (2020: EUR nil).
The Group had total cash outflows for leases of EUR 6,0 million in 2021 (2020: EUR
5,9 million). The Group also had non-cash additions to right-of-use assets and lease
liabilities of EUR 0,3 million in 2021 (2020: EUR 0,6 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.
Reference is made to the section ‘Management estimates and judgements’ for the
details on the estimate relating to the lease term.
Group as a lessor
The Group leases out its investment property (see note 17), 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 2021 EUR
1,5 million (2020: EUR 1,5 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 two years. The lease income from these operational lease contracts
amounts for the year 2021 EUR 3,2 million (2020: EUR 3,6 million).
Future minimum rental receivable
At 31 December, the future minimum rental receivables under non-cancellable leases
are as follows:
AMOUNTS IN EUR '000 2021 2020
Less than 1 year 9,744 1,417
Between 1 and 5 years 2,239 11,121
More than 5 years - -
11,983 12,538
The future rental receivable relates mainly to operating lease agreements with
customers in the operating segment Marshalling.
2021Sif Annual Report
128
Off-balance sheet commitments33
Commitments for the purchase of property, plant and equipment
and raw materials
At 31 December 2021, the Group’s commitments for the purchase of property, plant
and equipment amounts to EUR 1.1 million (2020: EUR 0,3 million). The
commitments for raw materials amounts to EUR 287,9 million (2020: EUR
30,5 million) and commitments for subcontracting amounts to EUR 16,8 million
(2020: EUR 91,6 million).
Guarantee facilities
At 31 December guarantee facilities of the Group can be specified as follows:
Type 31 December 2021 31 December 2020
AMOUNTS IN EUR '000 Total facility Used Total facility Used
Euler Hermes S.A. / Tokio Marine Europe S.A. General 130,000 127,929 130,000 117,930
Coöperatieve Rabobank U.A. General 40,000 11,255 40,000 24,219
ING Bank N.V. General 40,000 33,623 40,000 7,979
ABN AMRO Bank N.V. General 40,000 27,589 40,000 17,017
Coöperatieve Rabobank U.A. Project 3,604 3,604 8,459 8,459
ING Bank N.V. Project 3,604 3,604 8,459 8,459
Total 257,208 207,604 266,918 184,063
The Group is jointly and severally liable for all amounts to which Euler Hermes, Tokio
Marine, Coöperatieve Rabobank U.A., ING Bank N.V. and ABN Amro Bank N.V. 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.
Fiscal unity
For corporate income tax purposes, the Company is the parent of a fiscal unity that
contains the Dutch wholly-owned group companies. The Company is therefore
jointly and severally liable for the corporate income tax liabilities of the tax unity. KCI
The Engineers B.V. has joined this fiscal unity as from 1 September 2021.
2021Sif Annual Report
129
Related parties34
Transactions with joint ventures
During the year, the Group received invoices for work performed by SBR Engineering
GmbH for a total amount of EUR 180 (2020: EUR 167). Furthermore the Group sent
invoices to Smulders Sif Steel Foundations B.V. for project related work performed
for a total amount of EUR 3.2 million (2020: EUR 35 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:
2021 2020
G.G.P.M. van Beers 16,500 16,500
Balance at 31 December 16,500 16,500
The remuneration (including expenses) of the Supervisory Board members can be
specified as follows:
AMOUNTS IN EUR 2021 2020
A. Goedée
1
70,000 70,000
P.J. Gerretse
2
45,792 45,404
C.A.J. van den Bosch
2
45,639 45,531
P.E. Visser
3
45,000 45,000
P.E. Wit
4
45,000 45,000
251,431 250,935
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.
2021Sif Annual Report
130
COMPENSATION OF THE CURRENT EXECUTIVE BOARD MEMBERS
G.G.P.M. van Beers L.A.M. Verweij * B.J. Meijer **
AMOUNTS IN EUR 2021 2020 2021 2020 2021 2020
Base salary 382,398 376,747 104,821 282,874 138,730 -
Employer´s pension contributions 22,706 21,281 24,491 41,312 12,428 -
Pension compensation 34,230 48,596 17,150 40,368 9,768 -
Annual bonus (accrual) 224,330 95,893 49,688 98,841 59,273 -
LTIP (accrual) 139,714 - 51,724 25,724 7,234 -
Termination fee - - 143,559 - - -
Other benefits (car lease, travel expenses and relocation
expenses) 45,082 40,992 14,028 38,037 23,718 -
Social security and other payments 10,004 10,182 3,851 10,182 5,800 -
Total remuneration 858,464 593,691 409,312 537,338 256,951 -
Paid annual bonus in the year, earned over the previous year 192,117 80,370 117,431 78,573 - -
Paid vested LTIP - - 51,724 25,724 - -
Total actual paid variable remuneration 192,117 80,370 169,155 104,297 - -
* Chief Financial Officer of the Group untill 12 May 2021
** Chief Financial Officer of the Group as of 12 May 2021
2021Sif Annual Report
131
Service fees paid to external auditors35
The total service fees of external auditors related to the financial year can be
specified as follows:
Ernst & Young Accountants
LLP Other
AMOUNTS IN EUR ’000 2021 2020 2021 2020
Audit of financial
statements 302 260 - -
Other assurance
services 73 28 8 -
Total 375 288 8 -
2021Sif Annual Report
132
Events after the reporting period36
The current conflict between Russia and Ukraine could impact the global economy
as a whole, and as a result we and the market we are operating in, face greater risks
due to the international nature of the offshore wind industry, including the countries
where we, our customers or our suppliers operate. The current impact is not
completely foreseen but could result in potential issues, such as:
instability of foreign governments, including the threat of war, military conflict
(including the military conflict between Russia and the Ukraine), civil unrest,
regime changes, mass migration and terrorist attacks;
>
changes in, or uncertainty about, laws, regulations and policies affecting trade
and investments including the imposition of trade and travel restrictions,
government sanctions, local practices which favor local companies and
constraints on investments.
>
We have no direct business with Ukraine nor Russia or Belarus, but we might see an
indirect impact on our business, including price increases and inflation, as well as
impact on our suppliers going forward. We remain alert for any impact on our
business in the future. Currently, there is no material uncertainty with respect to the
going concern evaluation
2021Sif Annual Report
133
Separate statement of profit or loss for the year ended 31 December 2021
AMOUNTS IN EUR ’000 Notes 2021 2020
Management fee 40 1,942 1,635
Total revenue 1,942 1,635
Indirect personnel expenses 41 1,929 1,669
General expenses (124) 468
Operating profit 137 (502)
Finance costs (555) (480)
Net finance costs (555) (480)
Profit before tax (418) (982)
Income tax expense 42 783 1,094
Result of participation in subsidiaries 44 11,214 7,173
Result of participation in joint ventures 11 (14)
Profit after tax 11,590 7,271
2021Sif Annual Report
134
Separate statement of financial position as at 31 December 2021 (before profit appropriation)
AMOUNTS IN EUR ’000 Notes 31-Dec-2021 31-Dec-2020
Assets
Investments in subsidiaries and
joint ventures 45 154,697 140,640
Other non-current financial assets
- intercompany 195 195
Total non-current assets 154,892 140,835
Other current financial assets 0 15
VAT receivables 243 178
Prepayments 580 443
Cash and cash equivalents 228 193
Total current assets 1,051 829
Total assets 155,943 141,664
AMOUNTS IN EUR ’000 31-Dec-2021 31-Dec-2020
Equity
Share capital 5,100 5,100
Additional paid-in capital 1,059 1,059
Retained earnings 84,527 80,316
Result for the year 11,590 7,271
Total equity 46 102,276 93,746
Liabilities
Trade payables 186 202
Intercompany accounts 47 50,224 47,035
Employee benefits -
current 263 282
Wage tax and social
security 60 113
CIT payable 2,463 100
Other current liabilities 471 186
Total current liabilities 53,667 47,918
Total liabilities 53,667 47,918
Total equity and liabilities 155,943 141,664
2021Sif Annual Report
135
Notes to the separate financial statements for the year ended 31 December 2021
Reporting entity37
Sif Holding N.V. (the ‘Company’) is a public limited liability company domiciled in the
Netherlands. The Company’s registered office is at Mijnheerkensweg 33, Roermond.
The company is registered with the Netherlands Chamber of Commerce Business
Register under number 13016026.
Basis of preparation38
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 policies39
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.
Taxes
The company is jointly and severally liable for the tax liabilities of the Dutch group
companies forming part of the fiscal unity.
Management fee40
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.
Personnel expenses41
Number of employees
The average number of employees employed by the Company in 2021 amounts to
2 FTE (2020: 2 FTE), which are the members of the Executive
Income tax42
Reconciliation of effective tax rate
% 2021 2020
Tax using the Group’s tax rate 24.8 24.7
Participation Exemption (26.0) (29.0)
Adjustment in tax rates due to correction tax
incentives prior year 1.3 (7.6)
Reduction in tax rates due to tax incentives (5.1) (6.2)
Gain on bargain purchase (3.1) -
Non tax deductible expenses 0.7 0.4
Effective tax rate (7.2) (17.7)
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 results are partly
related to previous years. The gain on bargain purchase relates to the gain resulting
from the acquisition of KCI The Engineers B.V. Reference is made to note 6 for
further information.
2021Sif Annual Report
136
List of subsidiaries and joint ventures43
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
KCI The Engineers B.V.
2
Schiedam 100
1 – Legally the Group holds 59,4% of the shares, but 60% in result appropriation.
2 – Acquired per 15 March 2021
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. KCI The Engineers B.V. was acquired by
the Group on 15 March 2021. See note 6 for further details. 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.
Result of participation in subsidiaries44
AMOUNTS IN EUR ’000 2021 2020
Result in Sif Netherlands B.V. 17,322 11,376
Result in Sif Property B.V. (5,561) (4,659)
Result in Sif Japan K.K. 6 5
Result in KCI the Engineers B.V. * (998) -
Twinpark Sif B.V. 445 451
Result of participation in subsidiaries 11,214 7,173
* Result from 15 March 2021 to 31 December 2021
Investments in subsidiaries and joint ventures45
AMOUNTS IN EUR ’000 2021 2020
Sif Netherlands B.V. 168,008 150,686
Sif Property B.V. (16,430) (10,869)
Sif Japan K.K. 83 5
SBR Engineering GmbH 44 33
KCI the Engineers B.V. 1,762 0
Twinpark Sif B.V. 1,230 785
Investments in subsidiaries and joint
ventures 154,697 140,640
The movement in the investment value of subsidiaries and joint ventures relates to
the result for the year 2021 and the acquisition of KCI.
2021Sif Annual Report
137
Equity46
Below the statement of changes in equity for the year ended 31 December 2021:
AMOUNTS IN EUR '000 Share capital
Additional paid-
in capital
Retained
earnings
Result for the
year Total
Balance as at 1 January 2021 5,100 1,059 80,316 7,271 93,746
Appropriation of result - - 7,271 (7,271) -
Total comprehensive income
Profit for the year - - - 11,590 11,590
Total comprehensive income - - - 11,590 11,590
Transactions with owners of the Company
Dividend distributions - - (3,060) - (3,060)
Total transactions with owners of the Company - - (3,060) - (3,060)
Balance as at 31 December 2021 5,100 1,059 84,527 11,590 102,276
Balance as at 1 January 2020 5,100 1,059 74,828 5,488 86,475
Appropriation of result - - 5,488 (5,488) -
Total comprehensive income
Profit for the year - - - 7,271 7,271
Total comprehensive income - - - 7,271 7,271
Balance at 31 December 2020 5,100 1,059 80,316 7,271 93,746
2021Sif Annual Report
138
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.
No differences are identified in the capital and paid-in capital for tax purposes.
Dividends
The following dividends were declared and settled by the Company during the year:
AMOUNTS IN EUR '000 2021 2020
Number of ordinary shares dividend eligible 25,501,356 25,501,356
Rounded dividend per ordinary share 0.12 -
Dividends declared and settled during the
year 3,060 -
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 2022 the proposed dividend pay-out per share (to be approved by the
shareholder) in a cash dividend amounts to €0,19 per share.
Intercompany accounts47
AMOUNTS IN EUR ’000 2021 2020
Intercompany payables (current liabilities) (50,224) (47,035)
(50,224) (47,035)
Intercompany account Sif Netherlands B.V. (42,889) (41,743)
Intercompany account Sif Property B.V. (7,141) (5,292)
(50,224) (47,035)
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.
2021Sif Annual Report
139
Related parties48
Transactions with subsidiaries
During the year several transactions between Sif Holding N.V., Sif Netherlands B.V.,
Sif Property B.V. and KCI the Engineers 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 43.3 million (2020: EUR 41,7 million) and a liability to Sif
Property B.V. of approximately EUR 7,1 million (2020: EUR 5,3 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 180 (2020: EUR 167).
Transactions with key management personnel
Reference is made to note 34 of the consolidated financial statements for the
overview of Executive Board remuneration. The annual bonus is based on pre-
defined KPI’s that may differ for each Executive Board member. Reference is made
to the Remuneration Report for further details.
Events after the reporting period49
The current conflict between Russia and Ukraine could impact the global economy
as a whole, and as a result we and the market we are operating in, face greater risks
due to the international nature of the offshore wind industry, including the countries
where we, our customers or our suppliers operate. The current impact is not
completely foreseen but could result in potential issues, such as:
instability of foreign governments, including the threat of war, military conflict
(including the military conflict between Russia and the Ukraine), civil unrest,
regime changes, mass migration and terrorist attacks;
>
changes in, or uncertainty about, laws, regulations and policies affecting trade
and investments including the imposition of trade and travel restrictions,
government sanctions, local practices which favor local companies and
constraints on investments.
>
We have no direct business with Ukraine nor Russia or Belarus, but we might see an
indirect impact on our business, including price increases and inflation, as well as
impact on our suppliers going forward. We remain alert for any impact on our
business in the future. Currently, there is no material uncertainty with respect to the
going concern evaluation
2021Sif Annual Report
140
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
Sif Holding N.V.
Tel. +31 475 385777
e-mail: info@sif-group.com
Trade register
Chamber of Commerce
Roermond, the Netherlands
Number 13016026
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
2021Sif Annual Report
141
2021Sif Annual Report
142
Independent auditor’s report
To: the shareholders and Supervisory Board of Sif Holding N.V.
Report on the audit of the financial statements 2021 included in
the annual report
Our opinion
We have audited the financial statements 2021 of Sif Holding N.V., based in
Roermond, the Netherlands. 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 2021 and of its
result and its cash flows for 2021 in accordance with International Financial
Reporting Standards as adopted by the European Union (EU-IFRS) and with Part
9 of Book 2 of the Dutch Civil Code.
>
The accompanying separate financial statements give a true and fair view of the
financial position of Sif Holding N.V. as at 31 December 2021 and of its result for
2021 in accordance with Part 9 of Book 2 of the Dutch Civil Code.
>
The consolidated financial statements comprise:
The consolidated statement of financial position as at 31 December 2021.>
The following statements for the year ended 31 December 2021: the
consolidated statements of profit or loss, and changes in equity and 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 31 December 2021.>
The separate statement of profit or loss for the year ended 31 December 2021.>
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.
We are independent of Sif Holding N.V. (the company or the group) in accordance
with the EU Regulation on specific requirements regarding statutory audit of public-
interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit firms
supervision act), the Verordening inzake de onafhankelijkheid van 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.
Information in support of our opinion
We designed our audit procedures in the context of our audit of the financial
statements as a whole and in forming our opinion thereon. The following
information in support of our opinion and any findings were addressed in this
context, and we do not provide a separate opinion or conclusion on these matters.
Our understanding of the business
Sif Holding N.V. is primarily involved in engineering and manufacturing of foundation
piles for offshore wind farms and metal structures, parts of metal structures, pipes,
pipe structures, and components for the offshore industry. 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 of the group and
our risk assessment.
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We start by determining materiality and identifying and assessing the risks of
material misstatement of the financial statements, whether due to fraud or error in
order to design audit 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.
Materiality
Materiality € 1.800.000 (2020: € 1.800.000)
Benchmark
applied
Around 1,6% of contribution (2020: 1,75%)
Explanation Consistent with last year, we selected contribution to
benchmark materiality as in our professional judgment,
contribution is a key performance indicator and users of
the financial statements focus on earnings based
measures. Contribution is calculated as the total revenue
minus the costs of raw materials, subcontracted work and
other external charges and logistics and other project
related expenses, as disclosed in the ‘Key figures 2014-
2021’.
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 group 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.
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. On this basis, we selected group entities for which an audit or review had
to be carried out on the complete set of financial information or specific items.
Our group audit mainly focused on significant group entities, for which the majority
of transactions is initiated, recorded, processed and reported within one
organization. For all entities of the Sif group, except for KCI the Engineers B.V. and
Sif Japan K.K., we performed the audit on the complete financial information (full
scope). For KCI the Engineers B.V. and Sif Japan K.K., we performed analytical
procedures (desktop review) to corroborate our assessment that there are no
significant risks of material misstatement. The audit has been performed by one
audit team.
In total these procedures represent 99% of the group’s total assets, 99% of pre-tax
income and 99% of revenues.
By performing the procedures mentioned above, together with additional procedures
at group level, 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.
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Teaming and use of specialists
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 wind industry. We
included specialists in the areas of IT audit, forensics, sustainability and income tax
and have made use of our own experts in the areas of valuations.
Our focus on climate risks and the energy transition
Climate objectives will be high on the public agenda in the next decades. Issues
such as CO2 reduction impact financial reporting, as these issues entail risks for the
business operation, the valuation of assets ('stranded assets') and provisions or the
sustainability of the business model and access to financial markets of companies
with a larger CO2 footprint.
As part of our audit of the financial statements, we evaluated the extent to which
climate-related risks and the possible effects of the energy transition are taken into
account in estimates and significant assumptions. Furthermore, we read the
management report and considered whether there is any material inconsistency
between the non-financial information in the Operating and Financial Review section
and the financial statements.
Our audit procedures to address the assessed climate-related risks and the possible
effects of the energy transition did not result in a key audit matter.
Our focus on fraud and non-compliance with laws and regulations
Our responsibility
Although we are not responsible for preventing fraud or non-compliance and we
cannot be expected to detect non-compliance with all laws and regulations, it is our
responsibility to obtain reasonable assurance that the financial statements, taken as
a whole, are free from material misstatement, whether caused by fraud or error.
Our audit response related to fraud risks
We identify and assess the risks of material misstatements of the financial
statements due to fraud. During our audit we obtained an understanding of the
company and its environment and the components of the system of internal control,
including the risk assessment process and the executive board’s process for
responding to the risks of fraud and monitoring the system of internal control and
how the supervisory board exercises oversight, as well as the outcomes. We refer to
the section Risk and risk-management of the management report for executive
board’s (fraud) risk assessment.
We evaluated the design and relevant aspects of the system of internal control and
in particular the fraud risk assessment, as well as the code of conduct and whistle
blower procedures. We evaluated the design and the implementation of internal
controls designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with
respect to financial reporting fraud, misappropriation of assets and bribery and
corruption in co-operation with our forensic specialists. We evaluated whether these
factors indicate that a risk of material misstatement due fraud is present.
We incorporated elements of unpredictability in our audit. We also considered the
outcome of our other audit procedures and evaluated whether any findings were
indicative of fraud or non-compliance.
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As in all of our audits, we addressed the risks related to management override of
controls and when identifying and assessing fraud risks we presumed that there are
risks of fraud in revenue recognition. These risks did however not require significant
auditor’s attention in addition to the following fraud risk identified during our audit:
Valuation of contract assets and liabilities (including management override / revenue
recognition)
Fraud risk In our audit approach we considered that the fraud risk related
to management override of controls and the presumed risk of
revenue recognition would primarily impact the valuation of
contract assets and liabilities and the related revenue
recognition. Judgments and assumptions in this area
represent a risk of material misstatement due to fraud.
Our audit
approach
We described the audit procedures responsive to the fraud risk
as aforementioned in the description of our audit approach for
the key audit matter “Valuation of contract assets and
liabilities (including management override and revenue
recognition)”.
We considered available information and made enquiries of relevant executives,
directors and the supervisory board.
The fraud risk we identified, enquires and other available information did not lead to
specific indications for fraud or suspected fraud potentially materially impacting the
view of the financial statements.
Our audit response related to risks of non-compliance with laws and regulations
We assessed factors related to the risks of non-compliance with laws and
regulations that could reasonably be expected to have a material effect on the
financial statements from our general industry experience, through discussions with
the executive board, reading minutes and performing substantive tests of details of
classes of transactions, account balances or disclosures.
We also inspected the lawyers’ letter 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.
Our audit response related to going concern
As disclosed in section ‘Going concern’ in Note 2 of the financial statements and the
‘Executive Board declaration’ in the Operating and financial review section of the
management report, the executive board 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 twelve months. We discussed and evaluated the specific
assessment with the executive board exercising professional judgment and
maintaining professional skepticism. We considered whether the executive board’s
going concern assessment, based on our knowledge and understanding obtained
through our audit of the financial statements or otherwise, contains all events or
conditions that may cast significant doubt on the company’s ability to continue as
a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion.
Based on our procedures performed, we did not identify serious doubts on the
company’s ability to continue as a going concern for the next twelve months. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s
report. However, future events or conditions may cause a company to cease to
continue as a going concern.
Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of
most significance in our audit of the financial statements. We have communicated
the key audit matter to the supervisory board. The key audit matter is not
a comprehensive reflection of all matters discussed.
In comparison with previous year, our key audit matters did not change.
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146
Valuation of contract assets and liabilities (including revenue recognition)
Risk Revenues from construction 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 variable considerations and
potential adjustments in the projected estimates.
The progress towards complete satisfaction of the performance obligation over time is measured based on the actual hours incurred compared
with the total estimated hours needed to complete the project. As circumstances and related significant assumptions by management change over
time, fluctuations in the anticipated project result may occur.
Revenue recognition based on satisfied performance obligations over time requires management to make a number of estimates and assumptions
surrounding e.g. total expected labour hours, total estimated costs of completion, potential liquidated damages and (any) claims/contingencies. We
considered the potential risk of management override of controls in connection with revenue recognition. The valuation of contract assets and
liabilities (including revenue recognition) is therefore considered to be a key audit matter.
Reference is made to Note 2, 3, 7 and 20 of the consolidated financial statements for the significant accounting policies and disclosures on revenue
recognition.
Our audit
approach
Our audit procedures included, amongst others, evaluating the appropriateness of the company’s accounting policies related to the valuation of
contract assets and liabilities including revenue recognition according to IFRS 15 “Revenue from contracts with customers” and whether the
accounting policies have been applied consistently or whether changes, if any, are appropriate in the circumstances. In addition, we evaluated the
design and implementation of internal controls related to the completeness, accuracy and timing of the revenue recognized.
Furthermore, our audit procedures include among others: assessing contractual arrangements and reconciling total contract revenues to signed
contracts, testing management’s estimates of costs to fulfil a contract, total expected labour hours, the proper allocation of costs and actual labour
hours to projects and the assessment of potential liquidated damages. 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.
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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Report on other information included in the annual report
The annual report contains other information in addition to the financial statements
and our auditor’s report thereon.
Based on the following procedures performed, we conclude that the other
information:
Is consistent with the financial statements and does not contain material
misstatements
>
Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code
for the management report and the other information as required by Part 9 of
Book 2 of the Dutch Civil Code and as required by Sections 2:135b and
2:145 subsection 2 of the Dutch Civil Code for the remuneration report.
>
We have read the other information. Based on our knowledge and understanding
obtained through our audit of the financial statements or otherwise, we have
considered whether the other information contains material misstatements. By
performing these procedures, we comply with the requirements of Part 9 of Book
2 and Section 2:135b sub-Section 7 of the Dutch Civil Code and the Dutch Standard
720. The scope of the procedures performed is substantially less than the scope of
those performed in our audit of the financial statements.
The executive board is responsible for the preparation of the other information,
including the management report in accordance with Part 9 of Book 2 of the Dutch
Civil Code and other information required by Part 9 of Book 2 of the Dutch Civil
Code. The executive board and the supervisory board are responsible for ensuring
that the remuneration report is drawn up and published in accordance with
Sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements and ESEF
Engagement
We were engaged by the supervisory 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.
European Single Electronic Reporting Format (ESEF)
Sif Holding N.V. has prepared the annual report in ESEF. The requirements for this
are set out in the Delegated Regulation (EU) 2019/815 with regard to regulatory
technical standards on the specification of a single electronic reporting format
(hereinafter: the RTS on ESEF).
In our opinion, the annual report, prepared in the XHTML format, including the
partially marked-up consolidated financial statements, as included in the reporting
package by Sif Holding N.V., complies in all material respects with the RTS on ESEF.
The executive board is responsible for preparing the annual report, including the
financial statements, in accordance with the RTS on ESEF, whereby the executive
board combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the
annual report in this reporting package complies with the RTS on ESEF.
Our procedures, taking into account Alert 43 of the NBA (the Netherlands Institute of
Chartered Accountants), included amongst others:
obtaining an understanding of the company’s financial reporting process,
including the preparation of the reporting package
>
obtaining the reporting package and performing validations to determine whether
the reporting package containing the Inline XBRL instance document and the
XBRL extension taxonomy files, has been prepared in accordance with the
technical specifications as included in the RTS on ESEF
>
examining the information related to the consolidated financial statements in the
reporting package to determine whether all required mark-ups have been applied
and whether these are in accordance with the RTS on ESEF.
>
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Description of responsibilities regarding the financial statements
Responsibilities of the executive board and the supervisory board
for the financial statements
The executive board is responsible for the preparation and fair presentation of the
financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch
Civil Code. Furthermore, the executive board is responsible for such internal control
as the executive board determines is necessary to enable the preparation of the
financial statements that are free from material misstatement, whether due to fraud
or error.
As part of the preparation of the financial statements, the executive board is
responsible for assessing the company’s ability to continue as a going concern.
Based on the financial reporting frameworks mentioned, the executive board should
prepare the financial statements using the going concern basis of accounting unless
the executive board either intends to liquidate the company or to cease operations,
or has no realistic alternative but to do so. The executive board should disclose
events and circumstances that may cast significant doubt on the company’s ability
to continue as a going concern in the financial statements.
The supervisory board is responsible for overseeing the company’s financial
reporting process.
Our responsibilities for the audit of the financial statements
Our objective is to plan and perform the audit engagement in a manner that allows
us to obtain sufficient and 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 ‘Information in support of
our opinion’ section above includes an informative summary of our responsibilities
and the work performed as the basis for our opinion.
Our audit further included among others:
Performing audit procedures responsive to the risks identified, and obtaining
audit evidence that is sufficient and appropriate to provide a basis for our
opinion
>
Obtaining an understanding of internal control relevant to the audit in order to
design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the company’s
internal control
>
Evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
executive board
>
Evaluating the overall presentation, structure and content of the financial
statements, including the disclosures
>
Evaluating whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation
>
Communication
We communicate with the supervisory board regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant findings in internal control that we identify during our audit.
In this respect we also submit an additional report to the audit committee of the
supervisory board in 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.
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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, 17 March 2022
Ernst & Young Accountants LLP
J.R. Frentz
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Assurance report of the independent auditor
To: the shareholders and supervisory board of Sif Holding N.V.
Our conclusion
We have performed a limited assurance engagement on selected indicators in the
annual report for the year 2021 of Sif Holding N.V. at Roermond.
Based on our procedures performed and the evidence obtained, nothing has come to
our attention that causes us to believe that the selected indicators are not prepared,
in all material respects, in accordance with the reporting criteria as included in the
‘Reporting criteria’ section of our report.
The selected indicators are as follows and included on the following pages of the
annual report:
- Lost Time Injury Frequency (LTIF) (p.46)
- Carbon footprint (p.46)
- Involvement in projects that will result in installed renewable energy capacity
(wind) in MW (p.46)
Basis for our conclusion
We have conducted our limited assurance engagement on the selected indicators in
accordance with Dutch law, including Dutch Standard 3000A ‘’Assurance-
opdrachten anders dan opdrachten tot controle of beoordeling van historische
financiële informatie (attest-opdrachten)’’ (Assurance engagements other than
audits or reviews of historical financial information (attestation engagements)). Our
responsibilities under this standard are further described in the ‘Our responsibilities
for the assurance engagement on the selected indicators’ 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. This
includes that we do not perform any activities that could result in a conflict of
interest with our independent assurance engagement. Furthermore, we have
complied with the “Verordening gedrags- en beroepsregels accountants” (VGBA,
Dutch Code of Ethics).
We believe that the assurance evidence we have obtained is sufficient and
appropriate to provide a basis for our conclusion.
Reporting criteria
The selected indicators need to be read and understood together with the reporting
criteria. Sif Holding N.V. is solely responsible for selecting and applying these
reporting criteria, taking into account applicable law and regulations related to
reporting.
The reporting criteria used for the preparation of the selected indicators are the
reporting criteria developed by Sif Holding N.V. and are disclosed in section
Reporting criteria the annual report.
The absence of an established practice on which to draw, to evaluate and measure
the selected indicators allows for different, but acceptable, measurement techniques
and can affect comparability between entities and over time.
Unassured corresponding information
No assurance engagement has been performed on the selected indicators for the
period 2014 up to 2020. Consequently, the corresponding selected indicators and
thereto related disclosures for the period 2014 up to 2020 is not assured.
Limitations to the scope of our assurance engagement
Our assurance engagement is restricted to the selected indicators. We have not
performed assurance procedures on any other information as included in the annual
report in light of this engagement.
The selected indicators include prospective information such as ambitions, strategy,
plans, expectations and estimates. Inherent to prospective information, the actual
future results are uncertain. We do not provide any assurance on the assumptions
and achievability of prospective information in the selected indicators.
Our conclusion is not modified in respect to these matters.
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151
Responsibilities of the management board and the supervisory board for
the selected indicators
The management board is responsible for the preparation of reliable and adequate
selected indicators in accordance with the reporting criteria as included in the
‘Reporting criteria’ section of our report. In this context, the management board is
responsible for the identification of the intended users and the criteria being
applicable for their purposes. The choices made by the management board
regarding the scope of the selected indicators and the reporting policy are
summarized in section ‘Reporting Criteria’ of the annual report.
Furthermore, the management board is responsible for such internal control as it
determines is necessary to enable the preparation of the selected indicators that are
free from material misstatement, whether due to fraud or errors.
The supervisory board is responsible for overseeing the reporting process of Sif
Holding N.V.
Our responsibilities for the assurance engagement on the selected
indicators
Our responsibility is to plan and perform our limited assurance engagement in
a manner that allows us to obtain sufficient and appropriate assurance evidence for
our conclusion.
Procedures performed to obtain a limited level of assurance are aimed to determine
the plausibility of information and vary in nature and timing from, and are less in
extent, than for a reasonable assurance engagement. The level of assurance
obtained in a limited assurance engagement is therefore substantially less than the
assurance obtained in a reasonable assurance engagement.
We apply the “Nadere voorschriften kwaliteitssystemen” (NVKS, Regulations for
Quality management systems) and accordingly maintain a comprehensive system
of quality control including documented policies and procedures regarding
compliance with ethical requirements, professional standards and applicable legal
and regulatory requirements.
The procedures of our limited assurance engagement included amongst others:
Performing an analysis of the external environment and obtaining an
understanding of the sector, insight into relevant social themes and issues,
relevant laws and regulations and the characteristics of the company as far as
relevant to the selected indicators
>
Evaluating the appropriateness of the reporting criteria used, their consistent
application and related disclosures on the selected indicators. This includes the
evaluation of the reasonableness of estimates made by the management board
>
Obtaining an understanding of the reporting processes for the selected
indicators, including obtaining a general understanding of internal control
relevant to our assurance engagement
>
Identifying areas of the selected indicators with a higher risk of misleading or
unbalanced information or material misstatements, whether due to fraud or
errors. Designing and performing further assurance procedures aimed at
determining the plausibility of the selected indicators responsive to this risk
analysis. These further assurance procedures consisted amongst others of:
>
Interviewing relevant staff and management at corporate and business level
responsible for the strategy, policy and results relating to the selected
indicators
>
Interviewing relevant staff responsible for providing the information for,
carrying out internal control procedures on, and consolidating the data in the
selected indicators
>
Obtaining assurance information that the selected indicators reconcile with
underlying records of the company
>
Reviewing, on a limited test basis, relevant internal and external
documentation
>
Performing an analytical review of the data and trends>
Evaluating the consistency of the selected indicators with the information in the
annual report which is not included in the scope of our assurance engagement
>
Eindhoven, 17 March 2022
Ernst & Young Accountants LLP
A.B.E. Laan
2021Sif Annual Report
152
Reporting Criteria
Lost Time Injury
Frequency (LTIF)
Sif defines its Lost Time Injury Frequency (LTIF) as the number
of Sif’s permanent and flexible employees involved in reported
injuries leading to absence from work (more than 1 lost working
day, excluding the day of the injury) per million exposure hours.
Reportable injuries are based on actual occurrences and are never
extrapolated or estimated. Despite all measures and an open
safety culture there is an inherent risk of incomplete accident
reporting.
Sif is partially dependent on information provided by the person
involved in an accident. The exposure hours are registered actual
hours in our system. The LTIF KPI refers to all reported cases.
CO2 footprint Sif reports its greenhouse gas emissions as CO2 equivalent,
considering other greenhouse gasses than CO2. Sif calculates
CO2 emissions using conversion factors from
CO2emissiefactoren.nl. Sif uses well-to-wheel emission factors.
All conversion factors are reviewed annually and updated if
necessary.
Sif’s reporting scope includes its direct CO2 emissions (scope 1
emissions, from Sif’s own sources), indirect CO2 emissions from
the generation of purchased electricity consumed by Sif (scope 2
emissions) and other GHG emissions related to activities not
owned or controlled by SiF (scope 3 emission) for employee
travel-.
Activity data, mostly based on meter readings, invoices and data
provided by suppliers, are used to calculate Sif’s footprint. Where
complete and accurate data are not available, SIf uses
calculations or estimations using reliable methods and input data.
The gross CO2 emission is compensated to zero by the wind
energy as generated by the Wind Turbine Generator on Sif’s
premises. Sif owns the related Guarantees of Origin.
Participation in
projects that will
result in installed
renewable energy
capacity
Sif reports its participation in projects that will result in installed
renewable energy capacity in number of megawatts (MW) of
wind turbine generator capacity that will be installed on a
monopile completed by Sif.
Sif measures completed monopiles by the number of monopiles
with a completion certificate after production. The future installed
renewable energy capacity per monopile is the estimated capacity
of the wind turbine generator that will be installed on the
respective monopile in MW. This estimated capacity is
determined by the nameplate capacity (the intended full-load
sustained output) of the respective wind farm and actual capacity
may deviate from this.
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153
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 or Adjusted EBITDA provide useful
information to investors on the development of the company’s
business. EBITDA or 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
Adjusted EBITDA EBITDA corrected for incidental expenses or income
The company discloses EBITDA or 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 or Adjusted EBITDA provide useful
information to investors on the development of the company’s
business. EBITDA or 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 2021 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.
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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.
Order book The total of signed contracts and contracts under exclusive
negotiations.
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’.
Sif Holding N.V. The entity whose shares are listed on the stock exchange.
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Appendix: Bridge from IFRS to Dutch-GAAP
Consolidated statement of profit or loss for the year ended 31 December 2021 (Bridge from IFRS to Dutch-GAAP)
AMOUNTS IN EUR '000 IFRS Differences Dutch GAAP*
2021 2021
Revenue from contracts with customers 418,496 - 418,496
Operating lease income 4,045 - 4,045
Total revenue 422,541 - 422,541
Raw materials 160,311 - 160,311
Subcontracted work and other external
charges 126,090 - 126,090
Logistic and other project related expenses 21,910 - 21,910
Direct personnel expenses 32,213 - 32,213
Production and general manufacturing
expenses 11,238 98 11,336
Indirect personnel expenses 20,208 - 20,208
Depreciation and amortization 21,712 (5,020) 16,692
Facilities, housing and maintenance 4,127 5,673 9,800
Selling expenses 632 - 632
General expenses 8,096 (184) 7,912
Operating profit 16,004 (567) 15,437
Impairment losses on financial assets 16 (16) -
Finance costs (2,352) 1,071 (1,281)
Finance costs and impairment losses (2,336) 1,055 (1,281)
Other income 1,345 (253) 1,092
Share of profit of joint ventures 82 - 82
Profit before tax 15,095 235 15,330
Income tax expense 3,208 (60) 3,148
Non-controlling interests - 297 297
Profit after tax 11,887 (2) 11,885
Reference is made to note Basis of preparation, as disclosed hereafter*
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156
Consolidated statement of financial position as at 31 December 2021 (before appropriation of result / Bridge from IFRS to Dutch-GAAP)
AMOUNTS IN EUR '000 31-Dec-2021 Differences 31-Dec-2021
IFRS Dutch GAAP*
Assets
Intangible fixed assets 477 - 477
Property, plant and
equipment 107,612 - 107,612
Right-of-use assets 104,598 (104,598) -
Investment property 425 - 425
Investments in joint
ventures 115 - 115
Deferred tax assets 748 (260) 488
Total non-current assets 213,975 (104,858) 109,117
Inventories 612 - 612
Contract assets 12,944 1,348 14,292
Trade receivables 17,927 755 18,682
VAT receivables 50 - 50
Prepayments 2,472 9 2,481
Cash and cash equivalents 73,201 - 73,201
Total current assets 107,206 2,112 109,318
Total assets 321,181 (102,746) 218,435
Reference is made to note Basis of preparation, as disclosed hereafter*
AMOUNTS IN EUR '000 31-Dec-2021 Differences 31-Dec-2021
IFRS Dutch GAAP*
Equity
Share capital 5,100 - 5,100
Additional paid-in capital 1,059 - 1,059
Retained earnings 84,527 641 85,168
Result for the year 11,590 175 11,765
Equity attributable to
shareholder 102,276 816 103,092
Non-controlling interests 821 - 821
Total equity 103,097 816 103,913
Liabilities
Lease Liabilities 100,573 (100,573) -
Employee benefits 416 - 416
Other non-current liabilities 1,407 2,044 3,451
Total non-current
liabilities 102,396 (98,529) 3,867
Lease Liabilities 5,110 (5,110) -
Trade payables 62,082 - 62,082
Contract Liabilities 37,713 - 37,713
Employee benefits 2,460 - 2,460
Wage tax and social sec. 791 - 791
CIT payable 2,081 - 2,081
Other current liabilities 5,451 77 5,528
Total current liabilities 115,688 (5,033) 110,655
Total liabilities 218,084 (103,562) 114,522
Total equity and liabilities 321,181 (102,746) 218,435
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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 2021. 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 5,020 and
production and general manufacturing EUR 98, facilities, housing and maintenance
EUR 5,673 and general expenses EUR 185. In addition, financing costs EUR
1,071 and a deferred tax asset of EUR 748 is adjusted in the column difference. The
off-balance reporting of operational leases resulted in a difference of EUR
104,598 for the right of use assets, EUR 100,573 lower non-current lease liabilities,
respectively EUR 2,044 and EUR 77 higher lease incentive as part of the other non-
current and other current liabilities and EUR 5,110 lower current lease liability.
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158
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.
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.
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159
Independent auditor’s report
To: the executive board of Sif Holding N.V.
Our opinion
We have audited the ‘Appendix’: Bridge from IFRS to Dutch-GAAP (hereafter: ‘the
Bridge’) for the year ended 31 December 2021 of Sif Holding N.V. based
in Roermond, the Netherlands.
In our opinion the accompanying Bridge for the year ended 31 December 2021 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 of
Preparation’ of the notes to the Bridge.
The Bridge comprises:
The Consolidated statement of profit or loss for the year ended 31 December
2021 (Bridge from IFRS to Dutch-GAAP)
1.
Consolidated statement of financial position as at 31 December 2021 (before
appropriation of result / Bridge from IFRS to Dutch-GAAP)
2.
Notes to the bridge from IFRS to Dutch GAAP accounting principles3.
Reference is made to page 142 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 and restriction on use
We draw attention to note ‘Basis of Preparation’ of the Bridge, which describes 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. The Bridge reflects the main
differences in accounting, as compared to the statutory (consolidated) financial
statements of Sif Holding N.V. for the year ended 31 December 2021. As a result, the
Bridge may not be suitable for another purpose. Therefore, our auditor's report is
intended solely for Sif Holding N.V. and external parties that would like to compare
the financial position and results on a deviating accounting standard than
International Financial Reporting Standards as adopted by the European Union (EU-
IFRS). 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.
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160
Responsibilities of the executive board and the supervisory board for the Bridge
The executive board 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, the
executive board is responsible for such internal control as the executive board
determines is necessary to enable the preparation of the Bridge that 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.
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 the 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
scepticism 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.
>
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. On this basis, we selected group entities for which an audit or review had
to be carried out on the complete set of financial information or specific items.
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, 17 March 2022
Ernst & Young Accountants LLP
J.R. Frentz
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161
2021Sif Annual Report
Sif Holding N.V.
Mijnheerkensweg 33
6040 AM Roermond
The Netherlands
Telephone: +31 475 385777
E- mail: info@sif-group.com