Annual Report 2021 1
Annual Report 2021
Annual Report 2021 2
The Group is comprised of 136 companies with 47 manufacturing and
89 assembly operations and marketing organizations in more than
100 countries.
Hunter Douglas employs about 23,000 people with sales in 2021 of
USD 4.6 bln.
Operating style
Professionally led by entrepreneurial managers who run our business
as their own.
Focused on innovation
Decentralized organization structure
- Global network of specialized companies
- Guiding principle ‘Maximum accountability with
minimum interference’
Strong brands
- Hunter Douglas® in North America, Latin America
and Asia, and for architectural products worldwide
- Luxaflex® for residential window coverings in
Europe and Australia
- Levolor® in North America
- Hillarys® in the United Kingdom
Contents
Financial highlights
Two-year summary 2
Directors’ Report
Directors’ Report 4
Culture 5
Research and Development 5
Manufacturing & Customization 5
Global, Multi-Channel Distribution 6
Consumer Marketing 6
Retail Development 7
Community Engagement 7
Window Coverings 8
Architectural Products 9
Corporate Governance 10
Risk Management 11
Objectives 11
Sensitivity to External Factors 11
Worldwide sales 12
Financial Information by Region 13
Financial statements 15
Additional information
Independent auditor’s report 54
Five-year summary 63
Operating companies 64
Directors and Officers 66
Annual Report 2021 3
Financial highlights
Two
-
year summary
USD millions
EUR per common share
Notes
2021
2020
Notes
2021
2020
Net sales
4.607
3.637
Earnings before interest, tax, depreciation and amortization
(EBITDA)
(before other income/expense
and non
-
recurring expenses
)
4
888
531
2
21,59
13,34
Income from operations
(before other income/expense
and non
-
recurring expenses
)
732
378
Net profit from operations
(before other income/expense
and non
-
recurring expenses
)
560
305
2
13,60
7,68
Other income/expense and non
-
recurring expense
s
5
73
-
189
Net profit from operations
(after other income/expense)
633
116
2
15,38
2,92
Total net profit
1
633
116
2
15,38
2,92
Operating cash flow
697
479
2
17,11
12,05
Investments in tangible fixed assets
86
73
Depreciation tangible fixed assets
128
128
Net assets employed
4
2.670
2.337
Shareholders' equity attributable to equity shareholders
2.558
1.925
3
64
,
66
45,31
Return on equity
28,2%
6,2%
RONAE
(Income from operations/net assets employed)
4
29,2%
14,9%
Employees (at year
-
end)
23.398
22.871
1 Net profit attributable to equity shareholders
2 Based on the average number of shares outstanding during the affected year
3 Based on the number of shares
outstanding at year
-
end
4 Refer to note 29 in the consolidated financial statements
5 Refer to note 4 in the consolidated financial statements
Annual Report 2021 4
Directors’ report
To our shareholders
2021 was a year of record sales and profits. Sales increased by
26.7% to USD 4.607 bln and profits to USD 651 mln (per share
€ 15.82).
Sales were:
29% higher in Europe
31% higher in North America
20% higher in Latin America
43% higher in Asia
22% higher in Australia
Earnings before interest, tax, depreciation and amortization –
EBITDA (before other income/expense): were USD 840 mln, 65.3%
higher than USD 531 mln in 2020.
Other income/expense: were USD 86 mln positive compared with
USD 189 mln negative in 2020.
Capital Expenditures: in 2021 were USD 86 mln compared with
USD 73 mln in 2020.
Operating cash flow in 2021 was USD 697 mln compared with
USD 479 mln in 2020.
Return on Net Assets Employed (RONAE): before other
income/expense was 29.2% and on Equity 28.9%.
Financing: All borrowings are covered by committed long-term
facilities.
Europe:
Had higher sales and profits. The recovery of our window covering
products business that started in the second half of 2020 for most of
the countries that we operate in, continued in 2021.
North America:
Had higher sales and profits. We experienced sales growth across all
of our channels.
Latin America:
Had higher sales and profits
Asia:
Had higher sales and profits
Australia & New Zealand:
Had higher sales and profits.
Dividend:
No dividend will be proposed.
Acquisition by 3G
On December 30, 2021, Hunter Douglas N.V. and 3G Capital, a
global investment firm and private partnership, announced that Ralph
Sonnenberg, the controlling shareholder of Hunter Douglas N.V., had
entered into a definitive agreement to transfer a controlling interest in
the Company to 3G Capital based on a value of EUR 175 per
Ordinary Share. On February 25, 2022, that transaction was
completed.
As a part of the transaction, all business activities from Hunter
Douglas N.V. have been sold to Hunter Douglas Holding B.V., a
newly established company in The Netherlands, indirectly held
through Hunter Douglas B.V. by 3G Capital (75%). Ralph
Sonnenberg has transferred this a 75% interest in Hunter Douglas
B.V. to 3G Capital through a Block Trade, with the Sonnenberg
Family continuing to own 25% of Hunter Douglas B.V.
Statutory buy-out proceedings for all remaining outstanding shares in
Hunter Douglas N.V. will commence in accordance with applicable
Curaçao law and Hunter Douglas' articles of association. In these
proceedings, the position will be taken that the price of Hunter
Douglas shares will be the same as pursuant to the Block Trade for
each Ordinary Share, being EUR 175, and EUR 0.43 for each
Preferred Share. The funds required to pay remaining outstanding
shareholders have been secured and are restricted only for the use of
payments to the remaining third party minority shareholders in Hunter
Douglas N.V. The Company expects to finalize the buy-out
proceedings in the second half of 2022 and intends to liquidate the
Company afterwards.
Presently Hunter Douglas N.V.’s balance sheet mainly consists of a
receivable of EUR 6.096 bln on Hunter Douglas Holding B.V. and
equity.
Hunter Douglas Holding B.V. in 2022
After the closing of the previously discussed transaction, including the
asset transfer, the business activities of Hunter Douglas are being
continued in a new company called Hunter Douglas Holing B.V. This
entity is indirectly held by Hunter Douglas B.V., with 3G Capital (75%)
and the Sonnenberg Family (25%) as its shareholders.
Hunter Douglas Holding B.V. is in a strong solvency position with
healthy free cash flow and significant equity capital invested by 3G
Capital and the Sonnenberg Family. The transaction established the
Company with a strong liquidity position of cash on balance sheet as
well as access to a USD 750 million revolver, currently undrawn.
Outlook
Hunter Douglas Holding B.V. is in a strong position in term of brands,
products, distribution and finances.
Annual Report 2021 5
Our Strength
Culture
“Business is people” is our core
guiding principle. We consider
our culture of professional entre
preneurship a key competitive
advantage, that drives our organization.
We are a decentralized federation of specialized companies,
run by
people who manage our companies
as their own. This
enables fast
decision making with organizations that respond
quickly to fast changing
design trends. Many of our businesses
today are still run by their
founding entrepreneurs.
We run these businesses with a minimum of staff based on a
second
core principle of “minimum interference, maximum
accountability”.
We believe in strong brands,
global product platforms and local
management.
We provide our entrepreneurial managers with a network of like-
minded companies and colleagues who
support their
development plans.
We pride ourselves on the long tenure and success of our in-
house entrepreneurs, and our ability to invest with a long-term
focus.
We excel at rewarding talent with
long-term entrepreneurial
incentives.
We encourage the application of our
key principles in all our
companies,
with organizational structures that
maximize front-line
decision-making
ability and accountability.
We encourage the rapid advancement
of young talent to
entrepreneurial roles in our business.
Research and Development
Hunter Douglas was founded on a tradition of bringing
breakthrough products to market. Today, we lead
the industry in
our ability to success-
fully develop and establish completely
new product concepts.
Our unparalleled scale and vertical
integration enable us to
innovate products end-to-end, from materials to
equipment
design, from component
engineering to automated custom
assembly, from industrial design to
installation friendly
components.
We are pioneers in forming fabrics
into unique designs that can
trap air
for superior insulation, softly diffuse
incoming light, and
provide privacy
while preserving outside views.
We foster a highly collaborative
culture among our team of over
300
engineers located in R&D centres
around the world where
we excel
at design for manufacturability and customization.
Our top priorities are achieving the right balance of form and
function, managing the quality of light entering the window,
combined with the safety
and ease of operation of our products.
Manufacturing & Customization
About 75 years ago Hunter Douglas
pioneered the aluminium
venetian blind with a unique continuous casting
and aluminium
fabrication process.
Today we apply that willingness and ability to completely
innovate the manufacturing process to all aspects
of our
operations.
We concentrate production of our
principal materials in highly
specialized
global plants, while 87 fabricators located in our key
markets ensure
quick and efficient delivery of localized
product
ranges.
Make-to-order manufacturing of premium blinds is a highly
complex
undertaking. We offer the leading
range of operating
solutions fitting the very diverse range of window conditions
around the world. We also offer a wide range of materials and
colors
to meet local consumer tastes. We do this around the
world, custom made
for standard delivery in 5 days.
Our key manufacturing and assembly
processes are developed
in-house,
and we are leaders in the supply of assembly
equipment and technology
to fabricating customers around the
world.
Annual Report 2021 6
Global, Multi-Channel Distribution
Another core strength of Hunter Douglas is our ability to service a
variety of market opportunities using a portfolio of product designs,
brands, and distribution channels most relevant to key consumer
segments.
Around the world, consumers share a similar passion for
innovative window treatments yet individual consumer style and
shopping preferences as well as regional home and window
construction details can vary dramatically.
Hunter Douglas satisfies these needs through distinct channel
strategies informed by our local market knowledge, adaptation of
globalized product designs and marketed through a portfolio of
leading consumer brands.
Specialty Retail
The industry’s most premium products are marketed under the
leading HUNTER DOUGLAS® and LUXAFLEX® brand names,
sold through our network of around 10,000 aligned independent
specialty dealers around the world. These retailers serve as
strategic partners for Hunter Douglas and provide the ultimate in
customized, high-end window treatment design services for the
most demanding consumers.
We also service a wide range of specialty dealers through our
network of trade brands, targeting more price oriented
consumers.
Shop-at-Home
Many consumers appreciate the convenience of an in-home
consultation experience. Hunter Douglas provides shop-at-home
designers the products, tools and sales support to build their
business and wow their clients.
Independent Fabrication
Hunter Douglas supplies a worldwide network of several thousand
independent and 87 company-owned fabricators who sell,
assemble, and distribute our products via their own networks of
local window covering dealers.
Home Centers
The home center channel allows our company to bring its portfolio
of window treatments to a more DIY oriented segment of home
décor shoppers. Hunter Douglas accomplishes this through a
portfolio of brands, including the American industry’s best-known
mainstream window treatment brand, LEVOLOR®.
Ecommerce
Online shopping is a highly relevant path-to-purchase for many
consumers. Hunter Douglas connects with those consumers with a
portfolio of unique product brands and designs, specifically crafted
to the online shopping community and the associated ecommerce
resale partners.
Consumer Marketing
As the global market leader, Hunter Douglas aims for the highest
level of customer satisfaction throughout the process of selecting,
purchasing and living with our products.
Our focus is on building brands with a reputation for great design
and out- standing quality. We actively support our consumer
brands with industry leading advertising, generally focused on
building demand for our new and proprietary products.
We are increasingly focused on supporting our retail partners
with
direct response marketing capabilities,
including digital
marketing and online lead generation.
Our diverse marketing programs
are delivered through many
global channels including;
Brand
awareness through Radio,
Television, Video and
Magazine
Advertizing Campaigns.
In
spiring websites with interactive
tools that show how our
products
look in a room or a window,
helping consumers pre-
select products before visiting our retailers’
showrooms.
Demand generation through digital
marketing – reaching
consumers
through search engine marketing
and targeted
social media programs.
Innovative tools to support our
architectural clients with technical
information on light control, motorization and climate control.
Annual Report 2021 7
Retail Development
Hunter Douglas created the industry’s first global Retail Alliance
Program.
Approximately 90% of our branded products are sold through our
Retail Alliance programs.
We offer a very attractive business model for retailers, with turn
key support including sales and marketing programs; advertizing
and promotional campaigns; sampling, displays and signage;
product education and business-building programs; technical
service and store management systems. Our products require
minimal retail floor space and offer a very high return per square
foot of display.
Creating an attractive retail environment is critical for consumers
to experience our products. Many of our products and features are
completely new to consumers with unique form, function and
control options. We help dealers present these products in
inspiring and informative settings.
Our training programs help our retailers skilfully demonstrate our
products to consumers and select the best product solutions for
each window.
Most of our retail dealers offer shop-at-home consultations to help
the consumer make their final product selection in the home, as
well as taking final measurements. We support our dealers with
specialized tools and technology to aid this process.
Proper installation of our products is key to lifetime performance
and customer satisfaction. We have extensive training and
specialized tools to assist the thousands of professional Hunter
Douglas installers around the world.
Community Engagement
We actively support the communities in which we live, work and do
business. Decisions of which causes to support and the form that
support takes, are made local by our management teams in each
country.
We have a 30-year partnership with Habitat for Humanity, whose
goal is to eliminate poverty housing and home- lessness from the
world, and to make decent shelter a matter of conscience and
action. We have donated close to 300,000 window coverings to
low-income families, and our employees have invested thousands
of hours of their “sweat-equity” helping to build hundreds of these
homes.
We participate in disaster relief efforts that provide critical
assistance in times of tragedy. With the support of our employees
and customers, we make substantial donations to organizations
aiding in the recovery and relief of those impacted by disasters.
We donate window coverings to hospitals, research centres and
healthcare facilities around the world to help create a more
comfortable and comforting environment for patients.
Through our 3form® brand, our Full Circle program supports
environmental and economic initiatives including education, skills
training and microfinance initiatives that help create sustainable
communities who collaborate with 3form® to develop highly
regarded handcrafted materials.
Our GreenScreen Sea-Tex™ yarns are made from trash collected
by the Waterkeeper Alliance, an international group with 300
chapters in 35 countries. The local Waterkeeper Alliance chapters
manage beach clean-up events and almost 100% of the plastic
shoreline trash they collect is used to make GreenScreen Sea-
Tex™ yarns.
Annual Report 2021 8
Window Coverings
Our strength is our ability to develop and market innovative products,
targeted primarily at upscale consumers. Our success is based upon
trusted brand names recognized around the world: HunterDouglas®,
Luxaflex®, Levolor® and Hillarys®.
Our proprietary fabric shades are consistently recognized for
excellence in design, styling, features, quality and breadth of
selection: Duette® Honeycomb Shades, Silhouette® and Pirouette®
Shades, Luminette® Privacy Sheers, Vignette® and Modern Roman
Shades. Our latest innovation – Sonnette™ Cellular Roller Shades -
combine the clean lines of a standard roller shade with the innovative
design of our original energy-efficient honeycomb shades.
In addition to our proprietary design innovations, we offer a fully
integrated and premium line of traditional window covering styles.
These include venetian and vertical blinds, roman, roller, pleated and
woven wood shades, wood and alternative wood blinds and custom
shutters, exterior venetian blinds, sun screen blinds, shutters and
awnings.
Our products are designed to offer a range of light control and privacy
options with a broad selection of fabrics and materials from sheer to
room darkening to opaque. The innovative design of our products can
deflect and redirect sunlight precisely. Our specially engineered
translucent fabrics diffuse harsh sunlight and draw it deeper into the
room – dispersing the light to help illuminate homes naturally and
reduce the need for artificial light.
We customize each window covering to the individual consumer’s
specific needs and typically deliver the manufactured product within a
week of ordering.
Our proprietary operating systems make our window treatments easy
to use with reliable performance, convenience and improved safety
features - as communicated to our customers via our “Designed with
Safety in Mind” logo.
Our innovations include the award-winning LiteRise® and
SmartCord® lift systems as well as the revolutionary PowerView®
Motorization system. PowerView® is an advanced home automation
system that allows Hunter Douglas’ window treatments to be
conveniently operated via a smart phone, tablet or remote control
based on personalized settings.
The system automatically moves the shades throughout the home to
the desired positions at pre-set times. PowerView® also integrates
with popular third-party whole-home automation systems.
Annual Report 2021 9
Architectural Products
At Hunter Douglas, we are continuously developing product solutions
that improve building performance and indoor environmental quality,
while helping to reduce energy consumption. We focus on high-
performance architectural materials with proprietary characteristics in
design, comfort and sustainability for both interior and exterior
applications.
Our strength is our ability to develop customizable product systems
with reliable installation and design flexibility with minimal custom
engineering. Our success is based on giving architects a high degree
of technical and design assistance in applying our products. We
collaborate with architects and owners to realize their design
objectives while also meeting functional needs such as light control,
energy efficiency, and acoustics.
Sun-Control Solutions
Hunter Douglas is at the forefront of the emerging field of
architectural solar-control products, offering an unparalleled breadth
of solutions and expertise to manage heat and light inside and outside
the windowed wall, reducing the need for artificial lighting, cooling and
heating. With world-class engineering, versatility, durability and style,
Hunter Douglas is at the forefront of advanced motorization
technology for sun control.
Suspended Ceilings
Luxalon® metal and wood ceiling systems enable a wide variety of
designs and applications, including curved and specialty shapes. Our
revolutionary Techstyle® acoustical panels deliver superior noise
reduction; a clean, monolithic look; and easy access to the plenum.
Our latest innovation “HeartFelt®” is a Cradle to Cradle modular felt
ceiling system with outstanding acoustics and a unique appearance
that has sustain- ability at its core.
Translucent Architectural Solutions
3form® is the leading manufacturer of decorative translucent resin
and glass. Architects and interior designers can play with color,
shape, texture, and transparency in a wide range of interior and
exterior applications, including back-lit wall features, partitions, ceiling
elements, horizontal surfaces, canopies, building accents and
signage. Through its LightArt® division, 3form® designs a range of
custom lighting fixtures based on these materials.
Terracotta façades
NBK® brand is a pioneering manufacturer of terracotta façades.
NBK® is the market and quality leader in size, flatness, and design
options for large terracotta panels. The unique design and
performance of NBK® solutions can be seen in some of the world’s
most visually dynamic buildings.
QuadroClad Façade Systems
Our QuadroClad® ventilated façade system features lightweight
skins fused to a honeycomb aluminium core that provides extreme
strength and flatness. Engineered to deliver both outstanding
performance and aesthetics in even the most severe environmental
conditions.
Through our global network of specialized manufacturing facilities, we
deliver a broad, consistent range of solutions that can be adapted to
local design requirements.
Annual Report 2021 10
Corporate Governance
Hunter Douglas N.V. has its statutory seat in Curaçao and is therefore
not subject to the Netherlands Corporate Governance Code.
However, Hunter Douglas adheres to good Corporate Governance
and follows many of these recommendations as far as practical.
Corporate structure
Board of Directors
Hunter Douglas has a one-tier corporate structure. Under its Charter
the Board of Directors is responsible for the overall management and
control of the Company. The Board is appointed by the shareholders.
The Board has four regular meetings per year and additional
meetings as required.
Independence
The Board has four members, which are all independent. It acts
collectively by majority resolution.
Functions
The Board reviews the overall strategy, financial objectives, financing,
budgets, acquisitions, divestments, capital expenditures, currency
hedging, results and other risks in the Company’s business.
Audit and Compensation Committees
The Board has an Audit and a Compensation Committee, whose
members are independent.
The Audit Committee reviews the Company’s accounts, internal
controls and meets with the Company’s external Auditors at least
once a year.
Officers
The Board annually appoints the Officers of the Company ie the
Executive Chairman, Co-Presidents & CEOs and the Regional
Presidents and Staff Vice Presidents.
Financial reporting
To the best of our knowledge, and in accordance with the applicable
reporting principles, the consolidated financial statements give a true
and fair view of the assets, liabilities, financial position and profit or
loss of the Group. The annual report includes a fair review of the
development and performance of the business and the position of the
Group, together with a description of the principal opportunities and
risks associated with the expected development of the Group.
Internal Controls
The Company has the following key internal controls.
Conflicts of Interest Policy
The Company has a ‘Conflicts of Interest Policy’ applicable to all key
employees which covers relations with customers, suppliers and
other third parties.
Insider Trading Policy
The Company has an ‘Insider Trading Policy’, as prescribed by the
Authority Financial Markets (‘AFM’), restricting trading in the
Company’s shares by Directors, Officers, key employees and related
persons.
Internal Audit Function
Hunter Douglas’ principal Operating Companies have an Internal
Audit Program.
Authority limits
Every Manager, including the Regional Presidents, has clearly
defined Authority Limits.
Whistleblower Policy
Hunter Douglas has a ‘Whistleblower’ Policy in each Company.
Compensation
Compensation of Directors and Officers is reviewed by the
Compensation Committee of the Board. The Company also follows
the ‘best practices’ as far as practical.
Loans
Loans to Directors, Officers or other employees bear market interest.
There is no forgiveness of principal or interest.
Investor Relations
Hunter Douglas has an Investor Relations Website, regularly issues
press releases and holds analysts’ and investor meetings.
Annual Report 2021 11
Risk Management
For risk management objectives and policies in relation to the
financial instruments reference is made to note 25 of the financial
statements.
Objectives
The Company’s objectives are to:
- Expand its Window Coverings and Architectural Products
businesses at a growth rate exceeding that of the market
while continuing to be the best Company in the industry;
- Develop and introduce innovative new products;
- Seek acquisitions that add to the Company’s organic
growth by expanding product lines or distribution and that
meet its return targets;
- Have an efficient decentralized entrepreneurial
organization, based on the principle of ‘maximum
accountability with minimum interference’.
Sensitivity to External Factors
The Company’s results are sensitive to external factors of which the
following are most influential:
- Overall economic activity and particularly consumer
confidence which affects demand for consumer durables.
Our decentralized entrepreneurial organization manages
these market risks as effectively as possible;
- Prices for raw materials, in particular: aluminium, steel,
fabric, synthetics and other oil based products.
Changes in material prices for our window covering and
architectural products are normally passed on in our
product prices;
- Exchange rates: rates of non US dollar currencies can
affect the Company’s results. Hunter Douglas’ policy is to
selectively hedge transactional earnings exposures and
generally not to hedge balance sheet exposures.
The company has a low risk appetite to the above mentioned factors.
The present situation in Ukraine has no material impact on the
results.
Subsequent events
See paragraph Acquisition by 3G.
Rotterdam, 10 June 2022 Board of Directors
Annual Report 2021 12
Worldwide sales
Financial information by region
USD millions
North
Latin
Europe
America
America
Asia
Australia
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Net sales
Window
Coverings
1,700
1,357
2,270
1,733
81
65
79
58
162
138
4,292
3,351
Architectural Products
80
69
98
101
46
41
91
75
315
286
Total*
1,780
1,426
2,368
1,834
127
106
170
133
162
138
4,607
3,637
Net
assets employed
1,067
973
1,295
1,052
112
80
97
126
99
106
2,670
2,337
of which
Non
-
current assets*
940
1,056
1,185
858
42
41
67
75
71
77
2,305
2,107
Additions to tangible
fixed
assets
32
24
49
45
2
2
2
2
1
1
86
74
Depreciation tangible
fixed assets
51
46
60
66
4
5
8
7
5
4
128
128
Employees per year
-
end**
7,396
7,366
12,859
12,320
1,079
1,058
1,523
1,577
541
550
23,398
22,871
(*) Net sales in the Netherlands were 198 (2020: 161) and non
-
current assets 65 (2020: 65).
(**) Of which 22,310 (2020: 21,756) employed outside the Netherlands.
Relative distribution of employees per
business segment per area is in line with net sales per area.
Annual Report 2021 13
Financial information by Region
Europe
Higher sales and profits
Window covering products
The recovery of our window covering products business that started in the second half of 2020 for most countries that we operate in, continued
in 2021. In 2021 we have seen double digit sales growth in almost all window covering product channels that we operate in. Also the improved
market conditions in the UK in 2021, after being negatively impacted in 2020 due to COVID related restrictions, contributed to the overall sales
growth. Especially our Shop @ Home business in the UK and Scandinavia performed well after COVID restrictions being lifted.
Our online business performed well against a high comparable of 2020, but was also in 2021 in some countries supported by COVID related
restrictions. The acquisition of Topjaloezieën in the Netherlands and Cortinadecor in Spain further strengthened our footprint in the fast growing
online market.
Our Duette® product range and exterior sunscreen fabrics benefitted from the higher demand driven by the increased attention to products that
improve in-home climate control and save energy consumption.
Inflationary pressures on input costs were mostly offset by additional price increases throughout the year, supporting the overall sales growth
number. The supply chain challenges remained but due to adequate inventory management and our strong relationship with our suppliers, were
adequately managed resulting into limited supply disruptions.
The restructuring of our manufacturing activities in 2020 resulted into improved manufacturing efficiencies, which contributed to overall gross
margins improvement.
The high sales growth combined with improved gross profit and adequate spend control, further supported by the acquisitions, resulted into
record profits.
Architectural products
Our strategy to focus our architectural products business on ceiling and terracotta façade products have paid off well in 2021. After the sales
decline in 2020 driven by the product rationalization combined with a delay of some of the projects, the business returned back to growth in
2021. Especially our Heartfelt® business continued its high sales growth. In addition, we were able to improve overall margins whilst continuing
to lower our operational expenses, which resulted into further improvement of bottom line results.
North America
Higher sales and profits
2021 was another strong year for North America, with sales growth of 28% over the prior year with organic growth of 23% driving the majority of
this growth. We experienced sales growth across all of our channels. It appears that North American consumers continued to prioritize their
homes as a key area of importance in their spending plans.
While the results were strong, the year presented a continuation of supply chain and logistics constraints. Many of our suppliers struggled to
keep up with our needs and were constrained by material and commodity shortages. These supply chain issues affected our ability to maintain
our historically high levels of customer service. In addition, transportation disruptions and delays exacerbated these issues. We believe that
these supply constraints will continue throughout 2022 but will ease in the year’s second half.
Our supply chain was also affected by cost inflation across a wide variety of commodity categories. We continue to work with our suppliers to
optimize our resource base and have implemented price increases to offset these cost pressures.
Our motorization and automation product offerings continued to grow across our brands which helped us achieve last year’s strong sales growth
momentum. Automated window coverings play an essential role in the smart home evolution, driving changes in the way people live in and
enjoy their homes.
In 2021, we continued our partnership with Habitat for Humanity and supported Memorial Sloan Kettering, Cleveland Clinic, and various local
outreach programs in the communities where we operate our factories and offices across North America.
Latin America
Higher sales and profits
Our window covering business had significantly higher sales and profits. Higher sales under improved margins and slightly lower expenses boosted
operational and total profits. Our exclusive Hunter Douglas dealer network continued to reach a high-end clientele, in part through interior
designers, delivering an excellent service.
In the mass merchant channel, where we sell stock window coverings in Colombia, Mexico and Panama under the regional Reggia® brand, we
experienced higher sales but flat results. Our strength continues to be the good service and local support to our main customers.
Our architectural products business had higher sales and significantly higher profits. Our strategy continues to be focused on building local
manufacturing capabilities to improve our competitive position, while complementing our offer with innovative products from our Chilean operation.
Annual Report 2021 14
Asia
Higher sales and profits
Our architectural products business recovered and achieved higher sales and profits, as projects that stalled during the pandemic in the previous
year were revived. Our NBK business had a good turnaround. India had strong sales and profits.
Our WCP business also recovered with higher sales and profits. Commercial project business in China showed a strong recovery in sales and
profits. Our residential business also had higher sales and profits as we continued to focus on designer driven business and store merchandising
upgrades.
Australia
Higher sales and profits
Australia and New Zealand delivered sales and profit growth across most channels and brands despite the challenges associated with stricter
COVID restrictions, supply chain disruptions and inflationary pressures on input costs.
The strategy to shift the product mix to higher average sale products Magnatrack, Silhouette®, Duette®, Pirouette®, polysatin shutters and
LumiShade® was strongly supported by the Luxaflex® Alliance Retailers. This combined with a two fold improvement in the recently launched
curtain product range and an increase in online business support to fabricators and trade brand retailers was key to the improved sales, margin
and profits.
Management changes at Vertilux, our commercial business unit, yielded better control of expenses and margin and our e-commerce business
continued along its growth path as online activity increased.
Our Shop at Home Victory business was hardest hit with some 130 days lost due to lockdowns, adversely impacting sales, however, strong
control of expenses and margin ensured a profitable result.
Annual Report 2021 15
Consolidated statement of income for the year
USD
Amounts in millions
Notes
2021
2020
Net sales
3
Cost of sales
4
-
-
Gross profit
Selling and marketing expense
3
-
-
General and administrative expense
3
-
-
Income from operations before other
income/expense
Other income
4
Other expense
4
-
-
Income from operations (EBIT)
Share of the profit of associates
10
Finance costs
4
-
-
Income before taxes
Taxes on income
20
-
-
Net profit for the year
Net profit attributable to non
-
controlling interest
Net profit attributable to equity shareholders
Earnings per share
21
-
Basic, profit for the year attributable to
ordinary equity holders of the parent
-
Diluted, profit for the year attributable to ordinary equity holders of the parent
Annual Report 2021 16
Consolidated statement of comprehensive income for the year
USD
Amounts in
millions
Notes
2021
2020
Net profit for the year
Other comprehensive income
Other comprehensive income that may be reclassified to
profit or loss in subsequent periods
Currency translation differences
-
Tax
effect on other comprehensive income
20
-
Net other comprehensive income/(loss) that may be reclassified to
profit or loss in subsequent periods
-
Other comprehensive income that will not be reclassified to
profit or loss
in subsequent periods
Actuarial gains (losses)
22
-
Tax effect on other comprehensive income
20
-
Net other comprehensive income/(loss) that will not be reclassified to
profit or loss in subsequent periods
-
Total comprehensive income for the year, net of tax
Attributable to non
-
controlling interest
-
Attributable to equity shareholders
Annual Report 2021 17
Consolidated cash flow statement for the year
USD
Amounts in millions
Notes
2021
2020
Net profit
Adjustments for:
Depreciation tangible fixed assets
8
Depreciation right
-
of
-
use tangible fixed assets
9
Amortization patents & trademarks
7
Increase (decrease)
provisions
-
Adjustments of put/call options over non
-
controlling interest
18
-
Non
-
cash items:
-
surplus value Select Blinds
10
-
-
valuation pension fund
22
-
gain on sale tangible fixed assets
8
-
-
all other
-
-
Operating cash flow before working capital changes
Changes in working capital:
-
(increase) decrease trade and other receivables and prepayments
-
-
(increase) decrease inventories
-
-
increase trade and
other payables
Operating cash flow
Net cash from operations
Cash flow from investing activities
Investments subsidiaries, net of cash acquired
5
-
-
Investments in tangible fixed assets
8
-
-
Divestment tangible fixed assets
8
Investments in intangible fixed assets
7
-
(Increase) decrease other financial non
-
current assets
10
-
Net cash from investing activities
-
-
Cash flow from
financing activities
Proceeds from interest
-
bearing loans and borrowings
17
Repayment of interest
-
bearing loans and borrowings
17
-
-
Acquisition of non
-
controlling interests
19
-
Payment of lease liabilities
-
-
Net cash from financing activities
-
-
Net increase in cash and cash equivalents
Change in cash and cash equivalents
Balance at 1 January
Net increase in cash and cash equivalents
Exchange difference cash and cash equivalents
-
Balance at 31 December
14
Income tax paid 147 (2020: 60 ), interest paid 8 (2020: 12 ) and interest received 1 (2020: 1 ) are included in net cash from operations.
The accounting policies and explanatory notes on pages 21 through 49 form an integral part of the financial statements.
Annual Report 2021 18
Consolidated balance sheet as per 31 December
USD
Amounts in millions
Notes
2021
2020
Non
-
current assets
Intangible fixed assets
7
Tangible fixed assets
8
Right
-
of
-
use tangible fixed assets
9
Deferred income tax assets
20
Other financial non
-
current assets
10
Total non
-
current assets
Current assets
Inventories
11
Trade and other receivables
12
Prepaid income tax
Prepayments
13
Currency derivatives
26
Cash and short
-
term deposits
14
Total current assets
TOTAL ASSETS
The accounting policies and explanatory notes on pages 21 through 49 form an integral part of the financial statements.
Annual Report 2021 19
Consolidated balance sheet as per December 31
USD
Amounts in millions
Note
s
2021
2020
Equity attributable to equity shareholders
Issued capital
15
Share premium
Foreign currency translation
-244
Legal reserve for capitalized development cost
Revaluation reserve
-275
Retained earnings
Total equity attributable to equity shareholders of the parent
Non
-
controlling interest
16
Total equity
Non
-
current liabilities
Interest
-
bearing loans and borrowings
17
Preferred shares
17
Lease liabilities
9
Provisions
18
Deferred income tax liabilities
20
Total non
-
current liabilities
Current liabilities
Trade and other payables
19
Lease
liabilities
9
Income tax payable
Restructuring provisions
Interest
-
bearing loans and borrowings
17
Total current liabilities
TOTAL LIABILITIES
TOTAL SHAREHOLDERS' EQUITY AND
LIABILITIES
The accounting policies and explanatory notes on pages 21 through 49 form an integral part of the financial statements.
Annual Report 2021 20
Consolidated statement of changes in equity for the year
Amounts in
millions
Attributable to equity shareholders of the parent
Legal reserve
Foreign
for capitalized
Non
-
Issued
Share
currency
development
Revaluation
Retained
controlling
Total
capital
premium
translation
costs
reserve
earnings
Total
interest
Equity
At 1 January 2020
-
Net
profit
Other comprehensive income (expense)
-
Total comprehensive income (expense)
Transfer from legal reserve
-
At 31 December 2020
-
Net profit
Other comprehensive income (expense)
-
0
-
Total comprehensive income (expense)
0
-
Transfer from legal reserve
-
-
At 31
December 2021
-
The accounting policies and explanatory notes on pages 21 through 49 form an integral part of the financial statements.
Annual Report 2021 21
Notes to consolidated financial
statements
1. Corporate information
The consolidated financial statements of
31 December 2021 were authorized for
issue on 10 June 2022. These financial
statements will be adopted by the Annual
General Meeting of Shareholders on 30
September 2022.
Hunter Douglas N.V is incorporated in
traded at Amsterdam (HDG) and Frankfurt
(HUD); the preferred shares are traded at
Amsterdam (HUNDP).
Hunter Douglas N.V. is registered at the
Chamber of Commerce number
24117994.
The principal activities of the Company are
described in note 3.
2. Summary of significant accounting
policies
Basis of presentation
The consolidated financial statements
have been prepared on a historical cost
basis, except for derivative financial
instruments, which have been measured
at fair value. The consolidated financial
statements are presented in U.S. dollars
and all values are rounded to the nearest
million except when otherwise indicated.
Statement of compliance
The consolidated financial statements of
Hunter Douglas N.V. and all its
subsidiaries have been prepared in
accordance with International Financial
Reporting Standards as adopted by the
European Union and International
Financial Reporting Standards as issued
by the IASB and title 9 of Book 2 of the
Civil Code.
In accordance with Article 2:402 of the
Civil Code, an abbreviated version of the
income statement is presented in the
Company’s financial statements.
Basis of consolidation
The consolidated financial statements
comprise the financial statements of
Hunter Douglas N.V. and its subsidiaries
as at 31 December each year. The
financial statements of subsidiaries are
prepared for the same reporting year as
the parent Company, using consistent
accounting policies.
All intercompany balances and
transactions, including unrealized profits
arising from intra-group transactions, have
been eliminated upon consolidation.
Subsidiaries are consolidated from the
date on which control is transferred to the
Group and cease to be consolidated from
the date on which control is transferred out
of the Group, in which case the
consolidated financial statements include
the results for the part of the reporting
year during which Hunter Douglas N.V.
had control. 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)
- Exposure, or rights, to variable returns
from its involvement with the investee
- The ability to use its power over the
investee to affect its returns.
Acquisitions have been included in the
consolidated financial statements using
the acquisition accounting method. The
purchase method of accounting involves
allocating the costs of the business
combination to the fair value of the assets
acquired and liabilities assumed at the
date of acquisition.
Accordingly, the consolidated financial
statements include the results from the
new acquisitions from the date of their
acquisition.
Non-controlling interest represents the
portion of profit or loss and net assets in
some Latin American subsidiaries not held
by Hunter Douglas N.V. and are presented
separately in the statement of income and
within equity in the consolidated balance
sheet, separately from shareholders’
equity.
The consolidated financial statements
have been prepared on a non-going
concern basis because Hunter Douglas
N.V. has ceased its business activities as
a result of the asset transfer in February
2022, following the acquisition of a
majority stake in the shares in Hunter
Douglas N.V. by 3G Capital. The asset
transfer has been disclosed in more detail
in note 27 Events after balance sheet
date.
Hunter Douglas N.V. remains solvent at
the date when the financial statements are
authorized for issue. The asset transfer is
an event subsequent to year-end that is
non-adjusting. All of the divestment
transactions have been executed at the
time of preparation of these financial
statements. After finalizing these
transactions as well as buy-out
proceedings of the remaining minority
shareholders in Hunter Douglas N.V., the
Company will go in a voluntary solvent
winddown, which is supported by the
projections and results of the divestments
that show that the Company is able to fulfil
all its commitments. Reference is also
made to Note 27 Events after balance
sheet date.
Considering most accounting standards
are written from a going-concern
assumption perspective, the Company has
assessed how it can best provide a true
and fair view to the financial statement
user (as defined in IAS 1) and has chosen
to stay as close as possible to the
guidelines used in prior years (going
concern) and only deviated from the
IFRS 5 guidance with respect to the
classification, measurement and
presentation of assets held for sale and
discontinued operations.
Foreign currency translation
The consolidated financial statements are
presented in US dollars, which is the
Parent company’s presentation and
functional currency. Each entity in the
Group determines its own functional
currency and items included in the
financial statements of each entity are
measured using that functional currency.
Transactions in foreign currencies are
initially recorded at the functional currency
rate on the date of the transaction.
Monetary assets and liabilities
denominated in foreign currencies are
retranslated at the functional currency rate
of exchange on the balance sheet dates.
All differences are taken to the income
statement with the exception of
differences on foreign currency borrowings
that provide a hedge against a net
investment in a foreign entity. These are
taken directly to other comprehensive
income until the disposal of the net
investment, at which time they are
recognized in the income statement. Tax
charges and credits attributable to
exchange differences on those borrowings
are also recognized in other
comprehensive income. Non-monetary
items that are measured in terms of
historical cost in a foreign currency are
translated using the exchange rates as 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 the fair value
was determined.
As at the reporting date, the assets and
liabilities of the subsidiaries are translated
into the presentation currency of the
Company (US dollar) at the rate of
exchange on the balance sheet date and
their income statements are translated at
the weighted average exchange rates for
the year. The exchange differences arising
on the translation are taken directly to a
separate component of equity. On
disposal of a foreign entity, the deferred
cumulative amount recognized in other
comprehensive income relating to that
particular foreign operation is recognized
in the income statement.
Intangible assets
Intangible assets with finite lives are
Annual Report 2021 22
amortized over the useful economic life
and assessed for impairment whenever
there is an indication that the intangible
asset may be impaired. The amortization
period and the amortization method for an
intangible asset with a finite useful life is
reviewed at least at each financial year-
end. Changes in the expected useful life
or the expected pattern of consumption of
future economic benefits embodied in the
asset is accounted for by changing the
amortization period or method, as
appropriate, and treated as changes in
accounting estimates. The amortization
expense on intangible assets with finite
lives is recognized in the income
statement in the expense category
consistent with the function of the
intangible asset.
Business Combinations and Goodwill
Business Combinations are accounted for
using the acquisition accounting method.
This involves recognizing identifiable
assets (including previously unrecognized
intangible assets) and liabilities (including
contingent liabilities and excluding future
restructuring) of the acquired business at
fair value. Goodwill on acquisition is
initially measured at cost being the excess
of the cost of the business combination
over the acquirer’s interest in the net fair
value of the identifiable assets, liabilities
and contingent liabilities. Following initial
recognition, goodwill is measured at cost
less any accumulated impairment losses.
Goodwill is reviewed for impairment
annually or more frequently if events or
changes in circumstances indicate that the
carrying value may be impaired.
If the acquirer’s interest in the net fair
value of the identifiable assets and
liabilities and contingent liabilities is higher
than the cost of the business combination,
the difference is recognized as a gain in
the income statement.
As at the acquisition date, any goodwill
acquired is allocated to each of the cash-
generating units expected to benefit from
the combination’s synergies. Impairment is
determined by assessing the recoverable
amount of the cash-generating unit, to
which the goodwill relates. Where the
recoverable amount of the cash-
generating unit is less than the carrying
amount, an impairment loss is recognized.
Where goodwill forms part of a cash-
generating unit and part of the operation
within that unit is disposed of, the goodwill
associated with the operation disposed of
is included in the carrying amount of the
operation when determining the gain or
loss on disposal of the operation. Goodwill
disposed of in this circumstance is
measured on the basis of the relative
values of the operation disposed of and
the portion of the cash-generating unit
retained. Non-controlling interests in the
acquiree are measured at the
proportionate share of the acquiree’s
identifiable net assets. For each business
combination, the Company 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. Acquisitions of non-
controlling interests are accounted for as
transactions with owners in their capacity
as owners and therefore no goodwill is
recognized.
Adjustments to non-controlling interests
arising from transactions that do not
involve the loss of control are based on a
proportionate amount of the net assets of
the subsidiary.
In case of the finalization of a purchase
price allocation in the following year of the
acquisition certain balances, which were
based on a provisional assessment of
their fair value, will be adjusted in line with
IFRS 3.45.
Tangible fixed assets
Tangible fixed assets are carried at cost
less accumulated depreciation and any
accumulated impairment in value. Fixed
assets are depreciated over the expected
useful lives, using the straight-line method.
An indication of the expected useful life is
as follows:
Buildings 20 – 40 years
Machinery & equipment 5 – 10 years
Other tangible fixed assets 3 – 10 years
Land is not depreciated
The carrying values of tangible fixed
assets are reviewed for impairment when
events or changes in circumstances
indicate that the carrying value may not be
recoverable. If any such indication exists
and where the carrying values exceed the
estimated recoverable amounts, the
assets of cash-generating units are written
down to their recoverable amount.
Other financial non-current assets
Other financial non-current assets are
recorded at amortized costs. Investments
in unconsolidated associates are recorded
at equity value.
Inventories
Inventories are valued at the lower of
production cost and net realizable value.
Costs incurred in bringing each product to
its present location and conditions are
accounted for as follows:
- Raw materials are stated principally at
the lower of cost (first-in/first-out) or
net realizable value;
- Finished goods and work-in-progress
are stated at cost of direct materials
and labor and a proportion of
manufacturing overheads based on
normal operating capacity.
Net realizable 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.
Trade and other receivables
Trade receivables, which generally have
30-60 day terms, are recognized and
carried at amortized cost amount less an
allowance for impairment. Under IFRS 9, a
forward-looking expected credit loss
model must be applied when assessing
impairment. In making impairment
assessments, the Company applies the
standard simplified approach to estimate
the lifetime expected credit losses and
considers its historical credit loss
experience, adjusted for forward-looking
factors specific to the nature of the
Company ’s receivables and economic
environment. If any such evidence exists,
an impairment allowance is recognized.
Financial assets
Financial assets are classified, at initial
recognition, as subsequently measured at
amortized 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
assets’ 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
a fair value, through profit or loss,
including transaction costs.
Derecognition of financial instruments
A financial asset(or, where applicable, a
part of a financial asset or part of a group
of similar financial assets) is primarily
derecognized (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.
A financial liability is derecognized when
the obligation under the liability is
discharged or cancelled or expires.
Cash and cash equivalents
Cash and short-term deposits in the
balance sheet comprise cash at bank and
in hand and short-term deposits with an
original maturity of less than three months.
Annual Report 2021 23
For the purpose of the consolidated cash
flow statement, cash and cash equivalents
consist of cash and cash equivalents as
defined above.
Offsetting of financial instruments
Financial assets 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 recognized amounts and there is an
intention to settle on a net basis to realize
the assets and settle the liabilities
simultaneously.
Interest-bearing loans and borrowings
All loans and borrowings are initially
recognized at cost, being the fair value of
the consideration received net of issue
costs associated with the borrowing. After
initial recognition, interest-bearing loans
and borrowings are subsequently
measured at amortized cost using the
effective interest method. Amortized cost
is calculated by taking into account any
issue costs, and any discount or premium
on settlement. Gains and losses are
recognized in net profit or loss when the
liabilities are derecognized, as well as
through the amortization process.
IAS 23 requires capitalization of borrowing
costs that are directly attributable to the
acquisition, construction or production of a
qualifying asset.
Provisions
Provisions are recognized when the
Company has a present obligation (legal
or constructive) as a result of a past event.
Restructuring provisions are recognized
only when the Group has a constructive
obligation, which is when:
(i) there is a detailed formal plan that
identifies the business or part of the
business concerned, the location and
number of employees affected, the
detailed estimate of the associated costs,
and the timeline; and
(ii) the employees affected have been
notified of the plan’s main features.
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. Where the
Company 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 any provision is
presented in the income statement net of
any reimbursement. If the effect of the
time value of money is material, provisions
are determined by discounting the
expected future cash flows at a pre-tax
rate that reflects current market
assessments of the time value of money
and, where appropriate, the risks specific
to the liability. Where discounting is used,
the increase in the provision due to the
passage of time is recognized as a
borrowing cost.
Pensions and other post-employment
benefits
The Company operates two defined
benefit pension schemes, all of which
require contributions to be made to
separately administered funds.
The cost of providing benefits under the
plans is determined separately for each
plan using the projected unit credit
actuarial valuation method. Actuarial gains
and losses for the defined benefit plans
are recognized in full in the period in which
they occur in other comprehensive
income. Such actuarial gains and losses
are also immediately recognized in
retained earnings and are not reclassified
to profit or loss in subsequent periods.
The defined benefit asset or liability
comprises the present value of the defined
benefit obligation less the fair value of plan
assets out of which the obligations are to
be settled. Plan assets are assets that are
held by a long-term employee benefit fund
or qualifying insurance policies. Plan
assets are not available to the creditors of
the Company, nor can they be paid
directly to the Company. Fair value is
based on market price information and, in
the case of quoted securities, it is the
published bid price. The value of any
defined benefit asset recognized is
restricted to the present value of any
economic benefits available in the form of
refunds from the plan or reductions in the
future contributions to the plan.
The Company also operates a number of
defined contribution pension plans. The
cost of providing contributions under the
plans is charged to the income statement
in the period to which the contributions
relate.
Put-call option agreement
A put/call option, which provides the right
to acquire the remaining shareholding in a
company, is initially recognized as a
financial asset or liability at its fair value of
the underlying redemption amount, with
any subsequent changes in its fair value
recognized in profit or loss (see note 4, 5
and 18). The fair value is calculated based
on the estimated future profits of a
company.
Treasury shares
Own equity instruments which are
reacquired (treasury shares) are deducted
from equity. No gain or loss is recognized
in the income statement on the purchase,
sale, issue or cancellation of the
Company’s own equity instruments.
Leases
The Company 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. No rent
concessions were received because of
COVID-19.
The Company applies a single recognition
and measurement approach for all leases,
except for short-term leases and leases of
low-value assets. The Company
recognizes lease liabilities to make lease
payments and right-of-use assets
representing the right to use the
underlying assets.
The Company recognizes 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
recognized, 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, as
follows:
Land & buildings 3-50 years
Machinery & equipment 3-5 years
Other 3-5 years
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. See also the policy about
tangible fixed assets.
At the commencement date of the lease,
the Company recognizes 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 Company and
payments of penalties for terminating the
lease, if the lease term reflects the
Company exercising the option to
terminate. Non-lease components, such
as maintenance services, have been
combined with the lease components, in
accordance with IFRS 16.15.
In calculating the present value of lease
payments, the Company uses its
incremental borrowing rate at the lease
Annual Report 2021 24
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 Company’s lease liabilities are
reported separately.
The Company 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 recognized as
expense on a straight-line basis over the
lease term. All lease liabilities with an
initial contract value equal or less than
USD 5,000 have been threatened as low-
value assets
Net sales
Net sales are recognized when control
over a product is transferred to a
customer. This is usually when the product
is send to the customer. Revenue is
measured at the transaction price which is
based on the amount of consideration that
the Company expects to receive in
exchange for transferring the promised
goods to the customer net of freight,
returns, allowances and sales tax. Cost of
sales are recorded in the same period as
sales are recognized. Other revenues and
expenses are recorded in the period in
which they originate.
Research and development
Research costs are expensed as incurred.
Development costs are capitalized if it is
probable that the expected future
economic benefits that are attributable to
the asset will flow to the entity; and the
cost of the asset can be measured
reliably.
Income tax
Current tax assets and liabilities for the
current and prior years are measured at
the amount expected to be recovered from
or paid to the taxation authorities. The tax
rates and tax laws used to compute the
amount are those that are enacted or
substantively enacted at the balance sheet
date. 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 income tax is provided, using the
liability method, on all temporary
differences at the balance sheet date
between the tax basis of assets and
liabilities and their carrying amounts for
financial reporting purposes. Deferred
income tax liabilities are recognized for all
taxable temporary differences such as the
value of inventories, fixed assets and
provisions for tax purposes which differ
from the value used for financial reporting
purposes, except where the deferred
income tax liability arises from the initial
recognition of goodwill or the initial
recognition of an asset or liability in a
transaction that is not a business
combination and, at the time of the
transaction, affects neither the accounting
profit nor taxable profit or loss; and in
respect of taxable temporary differences
associated with investments in
subsidiaries, associates and interests in
joint ventures, except where the timing of
the reversal of the temporary differences
can be controlled and it is probable that
the temporary differences will not reverse
in the foreseeable future.
Deferred income tax assets are
recognized for all deductible temporary
differences, carry-forward of unused tax
assets and unused tax losses, to the
extent that it is probable that taxable profit
will be available against which the
deductible temporary differences, and the
carry-forward of unused tax assets and
unused tax losses can be utilized, except
where the deferred income tax asset
relating to the deductible temporary
difference arises from the initial
recognition of an asset or liability in a
transaction that is not a business
combination and, at the time of the
transaction, affects neither the accounting
profit nor taxable profit or loss; and in
respect of deductible temporary
differences associated with investments in
subsidiaries, associates and interests in
joint ventures, deferred tax assets are only
recognized to the extent that it is probable
that the temporary differences will reverse
in the foreseeable future and taxable profit
will be available against which the
temporary differences can be utilized.
The carrying amount of deferred income
tax assets is reviewed at each balance
sheet date and reduced to the extent that
it is no longer probable that sufficient
taxable profit will be available to allow all
or part of the deferred income tax asset to
be utilized.
Deferred income tax assets and liabilities
are measured at the tax rates that are
expected to apply to the year when the
asset is realized or the liability is settled,
based on tax rates (and tax laws) that
have been enacted or substantively
enacted at the balance sheet date.
Income taxes relating to items recognized
directly in equity or other comprehensive
income are recognized in equity or other
comprehensive income and not in the
income statement.
Sales tax
Revenues, expenses and assets are
recognized net of the amount of sales tax
except:
- where the sales tax incurred on a
purchase of goods and services is not
recoverable from the taxation
authority, in which case the sales tax
is recognized as part of the cost of
acquisition of the asset or as part of
the expense item as applicable; and
- receivables and payables are stated
with the amount of sales tax included.
The net amount of sales tax recoverable
from, or payable to, the taxation authority
is included as part of receivables or
payables in the balance sheet.
Derivative financial instruments
The Company uses derivative financial
instruments such as foreign currency
contracts, interest rate swaps and metals
futures to hedge its risks associated with
interest rate, metal commodities and
foreign currency fluctuations. Such
derivative financial instruments are stated
at fair value. Derivatives are carried as
assets when the fair value is positive and
as liabilities when the fair value is
negative. The fair value of a financial
instrument is the amount for which an
asset could be exchanged, or a liability
settled, between knowledgeable, willing
parties in an arm’s length transaction. Fair
values are determined from listed market
prices, price quotations from banks or
from pricing models. Any gains or losses
arising from changes in fair value on
derivatives are taken directly to the
income statement. No hedge accounting is
applied for hedges, except for net
investments.
Foreign currency differences arising on
the retranslation of a financial liability
designated as a hedge of a net investment
in a foreign operation are recognized
directly as a separate component of
equity, to the extent that the hedge is
effective. To the extent that the hedge is
ineffective, such differences are
recognized in the statement of income.
Significant events in the period and
accounting judgements and estimates
Impact of COVID-19 on the financial
statements
The COVID-19 pandemic had an
immaterial impact on the consolidated
financial statements of the Group as of 31
December 2021 and no subsidy was
received.
Annual Report 2021 25
The Group has taken the situation into
account in its estimates, notably those
related to the non-current and current
assets valuation. The valuation of the non-
current and current assets has not been
adjusted as of 31 December 2021 as a
result of the COVID-19 outbreak.
Impact of climate related matters on the
financial statements
The impact of climate changes has been
considered and has an immaterial impact
on the accounting judgements and
estimates in the consolidated financial
statements.
Impact of the current situation in
Ukraine
The impact of the current situation in
Ukraine has been considered and has an
immaterial impact on the accounting
judgements and estimates in the
consolidated financial statements.
Significant accounting estimate and
judgements
The preparation of financial statements
requires management to make estimates
and assumptions that affect amounts
reported in the consolidated financial
statements in order to conform to IFRS.
These estimates and assumptions affect
the reported amounts of assets and
liabilities, the disclosure of contingent
liabilities at the date of the consolidated
financial statements, and the reported
amounts of revenues and expenses during
the reporting period. We evaluate these
estimates and judgements on an ongoing
basis and base our estimates on
experience, current and expected future
conditions, third-party evaluations and
various other assumptions that we believe
are reasonable under the circumstances.
The results of these estimates form the
basis for making judgements about the
carrying values of assets and liabilities as
well as identifying and assessing the
accounting treatment with respect to
commitments and contingencies. Actual
results could differ from the estimates and
assumptions.
Estimates significantly impact goodwill and
other intangibles acquired, impairments,
provisions for put/call options, liabilities
from employee benefit plans, and tax and
other contingencies. The fair values of
acquired identifiable intangibles are based
on an assessment of future cash flows.
Refer to Note 5 for further information
regarding the fair values of intangibles
acquired. Impairment analyses of
goodwill are performed annually and
whenever a triggering event has occurred
to determine whether the carrying value
exceeds the recoverable amount. These
analyses are based on estimates of future
cash flows.
Impairment exists when the carrying value
of an asset or cash generating unit
exceeds its recoverable amount, which is
the higher of its fair value less costs of
disposal and its value in use. The fair
value less costs of disposal calculation is
based on available data from binding
sales transactions, conducted at arm’s
length, for similar assets or observable
market prices less incremental costs of
disposing of the asset. The value in use
calculation is based on a DCF model.
These estimates are most relevant to
goodwill recognized by the Group. The
key assumptions used to determine the
recoverable amount for the different CGUs
are disclosed and further explained in
Note 6.
The provision for put/call options relates to
options for minority shares in consolidated
subsidiaries that have been accounted for
as 100% acquired. The options have
variable exercise prices based on
forecasted results of the subsidiaries
against a multiple up to maturity date and
are valued as such in the provision. The
forecasted results have an element of
uncertainty as they relate to the future
performance of the related subsidiaries.
Refer to Note 18 for further information.
Assumptions used to determine pension
liabilities include the interest rate and
discount rate. Refer to Note 22 for further
disclosure on the key assumptions.
In various countries the Company has
taken standpoints regarding its tax
position which may at any time be
challenged by the tax authorities because
the authorities in question interpret the law
differently. In determining the probability of
realization of deferred tax assets and
liabilities these uncertainties are taken into
account. Refer to Note 20 for further
information.
Reclassification
The Group re-assessed its accounting for
outward freight deductions. The Group
had previously presented these as a
deduction of net sales. In 2021, the Group
elected to reclassify these deductions to
cost of sales, as the Group believes this
provides better insight in the actual size of
the business. The comparative figures
have been adjusted for the
reclassification. The impact on the 2020
sales and cost of sales is USD 94 million
(increase).
New and amended standards and
interpretations effective as from 2021
Several amendments apply for the first
time in 2021, but do not have a material
impact on the consolidated financial
statements of the Company. The Group
has not early adopted any standards,
interpretations or amendments that have
been issued but are not yet effective.
The nature and the impact of each of the
following new standards, amendments
and/or interpretations are described below:
- Interest Rate Benchmark Reform –
Phase 2: Amendments to IFRS 9, IAS
9, IAS 39, IFRS 7, IFRS 4 and IFRS 16.
- COVID-19 Related Rent Concessions
beyond 30 June 2021 Amendments to
IFRS 16.
These amendments did not have a
material impact on the consolidated
financial statements of the Company.
IFRS accounting standards issued but
not yet effective
A number of amendments to existing
standards have been published and are
mandatory for the Company beginning on
or after 1 January 2022, or later periods,
and the Company has not early-adopted
them. The changes to those standards are
not expected to have a material impact on
the Company’s consolidated financial
statements.
Annual Report 2021 26
3. Segment information
The Company has determined its reportable segments based on its internal reporting practices and on how the Company’s management
evaluates the performance of operations and allocates resources. The segments are organized and managed separately according to the
nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves
different markets. The window coverings segment relates to sales and manufacturing of window coverings for commercial and residential use.
The architectural products segment relates to sales and manufacturing of architectural products mainly for commercial use. Management
monitors the operating results of its business segments separately for the purpose of making decisions about resource allocation and
performance assessment. Segment performance is evaluated based on net profit and is measured consistently with net profit in the
consolidated financial statements. Transfer prices between business segments are set on an arm’s length basis in a manner similar to
transactions with third parties. The Company’s geographical segments are determined by the location of the Company’s assets and operations.
Financial information by region
USD
millions
North
Latin
Europe
America
America
Asia
Australia
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Net sales
Window Coverings
1,700
1,357
2,270
1,733
81
65
79
58
162
138
4,292
3,351
Architectural Products
80
69
98
101
46
41
91
75
315
286
Total*
1,780
1,426
2,368
1,834
127
106
170
133
162
138
4,607
3,637
Net assets employed
1,067
973
1,295
1,052
112
80
97
126
99
106
2,670
2,337
of which
Non
-
current assets*
940
1,056
1,185
858
42
41
67
75
71
77
2,305
2,107
Additions to tangible
fixed assets
32
24
49
45
2
2
2
2
1
1
86
74
Depreciation tangible
fixed assets
51
46
60
66
4
5
8
7
5
4
128
128
Employees per year
-
end**
7,396
7,366
12,859
12,320
1,079
1,058
1,523
1,577
541
550
23,398
22,871
(*) Net sales in the Netherlands were 198 (2020: 161) and non
-
current assets 65 (2020: 65).
(**) Of which 22,310 (2020: 21,756) employed outside the Netherlands.
Relative distribution of employees per business segment per area is in line with
net sales per area.
Annual Report 2021 27
Business segments
The following table presents revenue and income information and certain asset and liability information regarding the Company’s business
segments for the years ended 31 December 2021 and 2020.
Window
Architectural
Amounts in millions
Coverings
Products
Total
2021
2020
2021
2020
2021
2020
Revenue
Sales to external customers
4.292
3.351
315
286
4.607
3.637
Segment revenue
4.292
3.351
315
286
4.607
3.637
Total gross profit
1.807
1.294
93
98
1.900
1.392
Selling and marketing expense
-
694
-
627
-
58
-
65
-
752
-
692
General and administrative expense
-
386
-
355
-
43
-
32
-
429
-
387
Income from operations
before other income/expense
727
312
-
8
1
719
313
Other income
114
6
114
6
Other expense
-
28
-
130
-
28
-
130
Income from operations (EBIT)
813
188
-
8
1
805
189
Share of the profit of associates
15
11
15
11
Finance costs
-
9
-
10
-
1
-
9
-
11
Income before taxes
819
189
-
8
0
811
189
Taxes on
income
-
180
-
73
2
-
178
-
73
Net profit for the year
639
116
-
6
0
633
116
Net profit attributable to non
-
controlling interest
0
0
Net profit attributable to
equity shareholders
639
116
-
6
0
633
116
Assets and liabilities
Segment assets
3.647
3.166
313
277
3.960
3.443
Investment in an associate
31
36
1
32
36
Total assets
3.678
3.202
314
277
3.992
3.479
Segment liabilities
1.298
1.401
136
152
1.434
1.553
Total liabilities
1.298
1.401
136
152
1.434
1.553
Net assets employed
2.513
2.181
157
156
2.670
2.337
Other segment information
Additions tangible fixed assets
81
67
5
6
86
73
Depreciation
tangible fixed assets
113
112
15
16
128
128
Intangibles
1.379
1.388
25
30
1.404
1.418
Amortization patents and trademarks
25
22
3
3
28
25
Non
-
recurring expenses
12
51
1
14
13
65
Annual Report 2021 28
4. Revenues and expenses
Amounts in millions
2021
2020
Finance costs
Bank loans and overdraft
3
5
Lease liabilities
3
3
Other loans (including non
-
cumulative
redeemable preference shares)
3
3
Total finance costs
9
11
Other
income
This relates to the surplus value over agreed purchase prices (also refer to note 10)
114
6
Other expense
This relates to adjustments of put/call options over the non
-
controlling interest
28
130
Non
-
recurring expenses are
included
in the consolidated income statement as follows:
Cost of sales
10
52
Selling and marketing expense
6
General and administrative expense
3
7
13
65
Non
-
recurring expenses mainly relate to the reduction of employees
caused by
changes of the business per company
Depreciation, amortization and costs of inventories included
in consolidated income statement
Included in cost of sales:
Depreciation of tangible fixed assets
66
74
Employee benefits expense
467
459
Costs of inventories recognized as an expense
2.174
1.712
2.707
2.245
Included in selling and marketing expense:
Depreciation of tangible fixed assets
13
15
Employee benefits expense
414
308
Included in general and
administrative expense:
Depreciation of tangible fixed assets
49
39
Employee benefits expense
313
251
Amortization other intangibles
28
25
Employee benefits expense
Wages and salaries
981
823
Social security costs
168
161
Pension costs
45
34
Employee benefits expense included in other expense
8
34
1.202
1.052
Research costs
Research costs consist of 53 (2020: 44) charged directly to
general and administrative expense in the income statement.
Annual Report 2021 29
5. Business combination
In 2021 Hunter Douglas acquired 3 small businesses in the window covering segment with total additional sales in 2021 of USD 15 million and
no material results.
In 2020 Hunter Douglas acquired 3 small businesses in the window covering segment with total additional sales in 2020 of USD 45 million and
no material results.
The fair value of the identifiable assets and liabilities of these companies determined as at the date of acquisition are:
Recognized on acquisitions
2021
2020
Total
Total
Amounts in millions
Window covering
Window covering
Inventories
1
2
Trade and other receivables
1
7
Cash and short
-
term deposits
2
11
Trade and other payables
-
5
-
12
Tangible fixed assets
2
Intangible fixed assets
13
1
Fair value of net assets
12
11
Goodwill arising on acquisitions
24
22
Total consideration
36
33
Consideration
Cash paid
29
17
Fair value adjustment
7
6
Deferred consideration
10
36
33
Cash outflow on acquisitions:
Cash paid
-
29
-
17
Net cash acquired with acquisitions
2
11
-
27
-
6
The goodwill of 24 (2020: 22) includes 7 (2020: 6) fair value adjustment recognized in the consolidated statement of income. These fair value
adjustments relate to acquisitions at an upfront agreed price where the fair value of the acquired business exceeded the consideration
transferred. The Company recognized the resulting gain in profit or loss.
Goodwill arising on acquisitions mainly relates to the increase in market share as well as the assembled workforce and are not tax deductible in
the future.
The reason of the fair value adjustment is the result of the difference between the agreed purchase price and the fair value of the shares.
6. Impairment testing of indefinitely lived goodwill
The carrying amount of goodwill is allocated to the cash-generating units within the window coverings or architectural products segment.
The recoverable amount of the units is based on value-in-use calculations. Those calculations use cash flow projections based on the budget for
the coming year extrapolated with no growth to determine the termination value. A pre-tax Weighted Average Cost of Capital (WACC) was used
of 10.6% for the US, 9.7% for the UK and 9.5% for the rest of the world (2020: 10.2% overall) as a basis to discount the projected cash flows.
Per unit local market conditions are accounted for in determining next year’s budget. The budgets are founded on achieved results in the
preceding years and expectations on local industry developments going forward.
With regard to the assessment of value in use, management believes that, considering the assumptions used, that no reasonably possible
change in any of the above key variables would result in an impairment. For Hillarys’ impairment testing of goodwill, a forecast for a longer
period up to 2025 and an estimated industry growth rate up to 2027 is used to calculate the value in use. After this period, a long-term growth
rate of 0.8% is applied to extrapolate the projections for subsequent years. The transaction price of the acquisition by 3G Capital did not result in
the identification of any impairment indicators.
Annual Report 2021 30
7. Intangible fixed assets
Amounts in millions
Goodwill
Patents & Trademarks
Total
2021
2020
2021
2020
2021
2020
At
1 January
1,241
1,195
177
201
1,418
1,396
Acquisitions
24
23
13
37
23
Additions
1
0
1
Transfer
-
15
*
0
-
15
Amortization
-
28
-
25
-
28
-
25
Exchange
-
23
37
1
-
23
38
At 31 December
1,242
1,241
162
177
1,404
1,418
At 1 January
Cost
1,241
1,195
340
339
1,581
1,534
Accumulated amortization
-
163
-
138
-
163
-
138
Net carrying amount
1,241
1,195
177
201
1,418
1,396
At 31 December
Cost
1,242
1,241
353
340
1,595
1,581
Accumulated amortization
-
191
-
163
-
191
-
163
Net carrying amount
1,242
1,241
162
177
1,404
1,418
* The transfer in 2020 relates to the deconsolidation of 247 Home Furnishings Ltd. of which Hunter Douglas had to give up control pursuant to
an initial enforcement order by the Competition and Market Authority (CMA) in 2020.
Goodwill is not amortized but is subject to annual impairment testing (see note 6). Any impairment on goodwill is recorded in profit or loss
through other expenses (see Note 4). Patents and trademarks are amortized between 10 and 20 years.
For the 2020 acquisitions the fair value amounts were provisional. These have been finalized in 2021 without changes to the provisional
amounts.
The carrying amount of goodwill of 1,242 (2020: 1,241) exists mainly of goodwill paid for the following 4 (2020: 4) cash generating units:
- The pleated blind systems distribution in Europe (WCP segment) is mainly handled by Benthin and Blöcker in Germany and Thomas
Sanderson in the UK.
For those companies, acquired in the past, the Company has per balance sheet date an amount of 20 (2020: 20) for goodwill.
- As the US window covering business is very much integrated, we see this business as one cash generating unit. For these
companies, acquired in this segment, the Company has per balance sheet date an amount of 489 (2020: 439) for goodwill.
- The acquired online retailer business has per balance sheet date an amount of 191 (2020: 167) for goodwill.
- The acquired Hillarys business has per balance sheet date an amount of 359 (2020: 363) for goodwill.
Annual Report 2021 31
8. Tangible fixed assets
Land &
Machinery &
Other fixed
Amounts in millions
Buildings
Equipment
assets
Total
2021
2020
2021
2020
2021
2020
2021
2020
At 1 January
203
198
259
284
24
24
486
506
Additions
9
24
74
48
3
1
86
73
Acquisitions
1
1
0
2
Disposals
-
9
-
8
-
2
-
11
-
1
-
12
-
19
Depreciation charge for the year
-
14
-
17
-
70
-
71
-
2
-
2
-
86
-
90
Exchange
-
6
6
-
6
8
-
12
14
At 31 December, net of accumulated depreciation
183
203
255
259
24
24
462
486
At 1
January
Cost
497
470
1,185
1,121
68
59
1,750
1,650
Accumulated depreciation
-
294
-
272
-
926
-
837
-
44
-
35
-
1,264
-
1,144
Net carrying amount
203
198
259
284
24
24
486
506
At 31 December
Cost
468
497
1,189
1,185
63
68
1,720
1,750
Accumulated depreciation
-
285
-
294
-
934
-
926
-
39
-
44
-
1,258
-
1,264
Net carrying amount
183
203
255
259
24
24
462
486
Included in tangible fixed assets at 31 December 2021 is an amount of 69 (2020: 39) relating to expenditure in construction.
Annual Report 2021 32
9. Right-of-use tangible fixed assets
Right
-
of
-
use tangible fixed assets
Land &
Machinery &
Other
Lease
Amounts in millions
Buildings
Equipment
fixed assets
Total
liabilities*
At 1 January 2020
126
3
16
145
151
Additions
33
1
7
41
41
Disposals
-
17
-
1
-
18
-
17
Depreciation expense
-
30
-
2
-
6
-
38
Interest expense
0
3
Payments
0
-
41
Exchange
4
1
5
4
At 31 December 2020
116
3
16
135
141
Additions
34
9
43
43
Disposals
-
3
-
1
-
4
-
5
Depreciation expense
-
32
-
1
-
9
-
42
Interest expense
0
3
Payments
0
-
39
Exchange
-
3
-
1
-
4
-
2
At 31 December 2021
112
2
14
128
14
1
* Excluding short
-
term leases and leases of low
-
value assets
The Company 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 10 years, while motor vehicles and other equipment generally have lease terms
between 3 and 5 years. The Company’s obligations under its leases are secured by the lessor’s title to the leased assets. Generally, the
Company is restricted from assigning and subleasing the leased assets.
The Company also has certain leases of office equipment with low value. The Company applies the ‘lease of low-value assets’ recognition
exemptions for these leases. The lease expense for low-value assets for 2021 were not material.
The Company does not have leases with a lease terms of 12 months or less for which the company applied the ‘short-term lease’ recognition
exemptions for these leases.
The Company had total cash outflows for leases of 39 in 2021 (2020: 41). The Company has agreed into a lease agreement during 2021 for a
nominal value of 5, which has not yet commenced per 31 December 2021.
Annual Report 2021 33
10. Other financial non-current assets
Receivables
from key
Other
Option
Investments
management
long
-
term
Select
in
Amounts in millions
employees
receivables
Blinds
associates
Other
Total
At 1 January 2020
1
32
9
14
56
Additions
7
2
9
Transfer*
20
20
Deductions
-
1
-
8
-
7
-
16
At 31 December 2020
0
24
0
36
9
69
Additions
128
114
15
4
261
Transfer*
-
12
-
12
Deductions
-
7
-
7
At 31 December 2021
0
152
114
32
13
311
The investments in associates are mainly Select Blinds USA (49.9%) and Canada (30%).
The results of the investments in associates have been included in the consolidated statement of income in the line Share of the profit of
associates.
The Group did not recognize material expected credit losses on its Other financial non-current assets as these are considered to be low credit
risk investments.
* On 7 July 2021 the U.K. Competition and Markets Authority (CMA) required a divestiture of 51% of the company’s 100% owned 247 Home
Furnishings, U.K. (for a price of GBP 10.8 million).
The transfer in 2020 relates to the deconsolidation of 247 Home Furnishings of which Hunter Douglas had to give up control pursuant to the
initial enforcement order by the CMA.
On 7 October 2021 Hunter Douglas acquired another 3.75% in Select Blinds, U.S.A., to bring its ownership from 30% to 49.9%, after the buy-
out of a minority shareholder by Select Blinds.
The additions of USD 128 million to Other long-term receivables consist mainly of the following loans provided by Hunter Douglas on 07 October
2021:
- A loan of USD 96 million to Select Blinds U.S.A. to buy-out a former shareholder who owned 35% of the company
- A loan of USD 26.4 million to a present shareholder of the company.
These loans are presented as cash flow from investing activities in the consolidated cash flow statement.
The Select Blind option represents the surplus value over the agreed purchase price of Select U.S.A. (50.1%) and Select Canada (70%).
The fair value of these options is estimated by an external specialist using Monte Carlo simulations in a risk-neutral framework (income
approach), using EBITDA forecasts prepared by management as input. This is classified as a level 3 fair value measurement under IFRS 13.
The addition in 2021 represents an increase in fair value, which is recognized through profit/loss in Other income.
The following key assumptions are applied in estimated the fair value of these options:
Select USA (fair value USD 96,6 million)
EBITDA risk premium
11,1%
EBITDA volatility
37,0%
Equity volatility
45,0%
Select Canada (fair value USD 17,0 million)
EBITDA risk premium
11,8%
EBITDA volatility
35,0%
Equity volatility
35,0%
Annual Report 2021 34
11. Inventories
Amounts in millions
2021
2020
Raw materials (at cost)
489
417
Work
-
in
-
progress (at cost)
33
31
Finished goods:
-
At cost
364
327
-
Provision
-
176
-
171
710
604
12. Trade and other receivables (current)
Amounts in millions
2021
2020
Trade receivables
407
407
Financial institutions
13
14
Other receivables
2
Short
-
term advances
11
6
431
429
Trade receivables are non-interest bearing and are generally on 30-60 day terms.
As at 31 December 2021, trade receivables at nominal value of 37 (2020: 42) were impaired and fully provided for and relate to the trade
receivables that are past due.
Movements in the provision for impairment of trade receivables were as follows:
Amounts in millions
2021
2020
At 1 January
42
24
Additions
6
25
Utilized
-
10
-
8
Exchange
-
1
1
At 31 December
37
42
As at 31 December 2021 the ageing of trade receivables is as follows:
Amounts in millions
Not due
Past due
Total
<30 days
30
-
60
days
60
-
90 days
90
-
120 days
>120 days
Gross
444
343
45
16
17
23
Allowance
-
37
-
18
-
1
-
2
-
3
-
13
407
325
44
14
14
10
Annual Report 2021 35
As at 31 December 2020 the ageing of trade receivables is as follows:
Amounts in millions
Not due
Past due
Total
<30 days
30
-
60 days
60
-
90 days
90
-
120 days
>120 days
Gross
449
337
50
15
21
26
Allowance
-
42
-
12
-
4
-
1
-
10
-
15
407
325
46
14
11
11
The company has 369 (2020: 371) of not yet due trade receivables.
Financial institutions
Amounts in millions
2021
2020
Deposits
13
14
13
14
Annual Report 2021 36
13. Prepayments
Amounts in millions
2021
2020
Prepaid expenses
107
85
Prepaid taxes (no income tax)
23
12
Other
9
8
139
105
The net amount of sales tax receivable and sales tax payable is non-interest bearing and is remitted to the appropriate taxation authorities on a
monthly basis.
14. Cash and short-term deposits
Cash at bank and in hand earns interest at floating rates based on market conditions. Short-term deposits are made for varying periods of
between one day and 3 months depending on the immediate cash requirements of the Company, and earn interest at the respective short-term
deposit rates. At 31 December 2021 the fair value of cash and cash equivalents is 250 (2020: 47).
For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise the following at 31 December:
Amounts in millions
2021
2020
Cash at bank and in hand
14
1
45
Short
-
term deposits
109
2
25
0
47
Funds in certain countries in which the Company operates are subject to varying exchange regulations. No material restrictions exist for
transfers of a current nature, such as dividends from subsidiaries. A few countries have more severe restrictions on remittances of a capital
nature, which are immaterial to the Company.
15. Issued capital and reserves
2021
2020
Numbers x 1,000
Ordinary
Ordinary
shares
shares
€ 0.24 each
€ 0.24 each
Issued and fully paid
-
in
At 1 January
34,790
34,790
At 31 December
34,790
34,790
The Sonnenberg Family owns at year-end 2021 30,559,366 (2020: 29,176,579) common shares of Hunter Douglas N.V. representing 87.84%
(2020: 83.87%) of the common shares of the Company.
Share premium: under present Dutch Law, substantially all share premium may be distributed as stock dividend free from Dutch dividend
withholding tax.
The foreign currency translation reserve, revaluation reserve and reserve for capitalized development costs are legal reserves and when
negative/positive, the retained earnings cannot be distributed for this amount.
Retained earnings: this reserve is freely distributable.
There are no external capital requirements.
Annual Report 2021 37
16. Non-controlling interest
Amounts in millions
2021
2020
Other
1
0
1
17. Interest-bearing loans and borrowings
Interest
Maturity
2021
2020
Amounts in
millions
Currency
rate
date
Current
Bank overdraft
Various
*
N/A
4
42
Bergson Beheer
EUR
Various
*
2022
28
Short
-
term bank loans
Various
*
N/A
14
16
46
58
Non
-
current
Svenska
Handelsbanken
EUR
Various
*
2022
122
Management Blinds 2go
GBP
Various
*
2026
29
29
122
Preferred shares
Preferred shares
EUR
Various
*
N/A
10
10
* Mostly at Interbank rates plus a margin
Average life of long-term loan is 4.5 years (2020: 1.89 years); the loan is at variable rates of interest. All loans are unsecured.
Hunter Douglas N.V.’s Articles of Association fix the annual dividend on each preferred share at a percentage of the par value. This percentage
amounts to 2.25% per annum over the European Central Bank’s deposit rate on the last working day of May of the affected year.
The decrease in interest bearing loans and borrowings of 106, offset by 12 exchange differences, is caused by positive cash flow from
operations
18. Provisions
Other
Amounts in millions
Pensions
Employee
Put / Call
(note 22)
Benefits
Options
Other
Total
At 1 January
88
23
87
30
228
Additions from income statement
3
28
9
16
56
Contributions
16
16
Actuarial gain
-
40
-
40
Transfer to other payables (current)
0
Utilized
-
15
-
8
-
24
-
47
Exchange
-
3
-
3
At 31 December
67
36
85
22
210
Non
-
current 2021
67
36
85
22
210
Non
-
current 2020
88
23
87
30
228
The provision for put/call options relates to options for minority shares in consolidated subsidiaries that have been accounted for as 100% acquired.
The maturity of these options is presented in the liquidity risk table in Note 26. The options mature between 2023 and 2029. The options have
variable exercise prices based on forecasted results of the subsidiaries against a multiple up to maturity date and are valued as such in the
provision. The forecasted results have an element of uncertainty as they relate to the future performance of the related subsidiaries. The liability
is measured at fair value through profit/loss and the fair value measurement is classified as a level 3 fair value measurement under IFRS 13.
Management does not consider the effect of reasonably possible alternative assumptions on the fair value to be material.
Annual Report 2021 38
19. Trade and other payables (current)
Amounts in millions
2021
2020
Trade payables
226
184
Accrued wages, social charges and other
compensation
207
175
Other payables and accrued expenses
274
237
Commissions, discounts and allowances
39
35
Put / Call options
155
Other
141
93
887
879
Terms and conditions of the above financial liabilities:
Trade payables are non-interest-bearing and are normally settled on 45-day terms.
Other payables are non-interest-bearing and have an average term of 6 months.
On 21 March 2021 the company exercised the put/call option for the remaining shares (35%) of Blinds2go, the U.K. internet business at a price
of GBP 115 million (USD 156 million).
Annual Report 2021 39
20. Income tax
Amounts in millions
2021
2020
Consolidated income statement
Current income tax
Current income tax charge
148
65
Adjustments in respect of current income tax of previous years
2
-
2
Deferred income tax
Relating to origination and reversal of temporary differences and
recognition of tax losses
28
10
178
73
A reconciliation of income tax expense applicable to accounting profit before income tax at the
statutory income tax rate to income tax expense at the Company's effective income tax rate for the years
ended 31 December 2021 and 2020 is as
follows:
2021
2020
Accounting profit before income tax
811
189
At Dutch statutory income tax rate of 25% (2020: 25%)
203
47
Tax losses not recognized in prior years
-
1
Tax losses not recognized in the year
1
2
Adjustments to previous years
-
9
5
Impact different tax rates per country
-
14
-
8
Non
-
taxable income
5
Non
-
deduct
i
ble expenses put/call options
28
Permanent differences
-
11
6
Effect of NL tax rate change on DTA
-
10
Other
3
4
At
effective income tax rate of 21.95% (2020: 38.6%)
178
73
Income tax expense reported in consolidated income statement
178
73
Deferred tax assets have been only recognized to the extent that it is probable that the temporary differences will reverse in the foreseeable
future and taxable profits will be available, against which the temporary differences can be utilized.
The Company has unused tax losses of 36 (2020: 41), of which 10 expires within 5 years and the remaining 26 has no expiry date. The unused
tax losses are available for offset against future taxable profits of the companies in which the losses arose.
Annual Report 2021 40
Consolidated
Consolidated
Via
Balance Sheet
Income Statement
O.C.I.
Amounts in millions
2021
2020
2021
2020
2021
2020
Deferred income tax assets
Losses available for offset against
future taxable income
23
24
-
1
-
9
Temporary valuation differences:
Tangible fixed assets
7
2
5
-
1
Inventories
2
2
-
2
Pensions
16
20
5
-
12
-
9
7
Trademarks
59
68
-
9
15
Other
18
31
-
23
12
10
-
5
125
147
Deferred income tax liabilities
Temporary valuation differences
on IP from Hillarys acquisition
7
6
-
1
3
on
IP from 3 Day Blinds acquisition
9
9
on Select Blinds USA option
23
-
23
Other
12
31
19
-
16
51
46
Deferred income tax income (expense)
-
28
-
10
1
2
Annual Report 2021 41
21. Earnings per share
Basic earnings per share amounts are calculated by dividing net profit for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options).
The income and share data used in the basic and diluted earnings per share computations is as follows:
Amounts in millions
2021
2020
Net profit attributable to equity shareholders
6
33
116
Numbers x 1,000
Weighted average number of ordinary shares for basic earnings per
share
34,790
34,790
22. Employee benefits
Pension plans
Defined benefit plans
Employee pension plans have been established in many countries in accordance with the legal requirements, customs and the local situation in
the countries involved. The minority of employees in the United Kingdom and North America are covered by defined benefit plans. The defined
benefit plan in North America is based on average wage earned, in the United Kingdom is the defined benefit plan based on last wage earned.
The benefits provided by these plans are based on employees’ years of service and compensation levels. The measurement date for defined
benefit plans is 31 December.
Contributions are made by the Company as necessary, to provide assets sufficient to meet the benefits payable to defined benefit pension plan
participants. These contributions are determined based upon various factors, including funded status, legal and tax considerations as well as
local customs. The UK pension plan was frozen as of 1 January 2000. The US pension plan was frozen as of 31 December 2012. No future
benefits accruals and no new participants are allowed.
The following tables summarize the components of the net benefit expense recognized in the consolidated income statement and the funded
status and amounts recognized in the consolidated balance sheet for the UK and US pension plans, as well as the principal assumptions
applied. Other defined benefit pension plans included in the net benefit expense and consolidated balance sheet are not material.
Annual Report 2021 42
The principal assumptions used for the purpose of the actuarial valuation are as follows:
Pension plans
%
US
UK
2021
2020
2021
2020
Discount rate
2.81
2.45
1.90
1.30
Future salary increase
NA
NA
2.80
2.40
Inflation assumption
NA
NA
3.30
2.90
Sensitivity analysis: If the discount rate in the US increases (decreases) with 0.25% the pension provision will decrease (increase) with around
8, for the other plans changes are not expected to have a material effect on equity or profit-and-loss.
The amount recognized in the balance sheet in respect of the Company’s defined benefit retirement plans is as follows:
Pension plans
US
UK
Amounts in millions
2021
2020
2021
2020
Defined benefit obligations
-
230
-
245
-
79
-
87
Fair
value of plan assets
181
185
61
59
Funded status
-
49
-
60
-
18
-
28
Net liability in balance sheet
-
49
-
60
-
18
-
28
The weighted average duration of the defined benefit obligations in the U.S. is 15 years and in the U.K. 18 years.
Amounts recognized in profit or loss in respect of the defined benefit plans are as follows:
Pension plans
US
UK
Amounts in millions
2021
2020
2021
2020
Current service cost
1
1
1
1
Interest cost on benefit obligation
5
9
1
1
Interest return on plan assets
-
4
-
7
-
1
-
1
Net benefit expense
2
3
1
1
Actual return on plan assets
18
16
3
4
Changes in the fair value of the defined benefit obligations are as follows:
Pension plans
US
UK
Amounts in millions
2021
2020
2021
2020
Opening defined benefit
obligations
245
310
87
70
Current service cost and received employee
contributions
1
1
1
1
Interest cost on benefit obligation
5
9
1
1
Benefits paid
-
10
-
13
-
3
-
2
Settlement payments
-
88
Actuarial
(gain) loss
-
11
26
-
5
14
Exchange differences on plans
-
2
3
Closing defined benefit obligations
230
245
79
87
Annual Report 2021 43
Changes in the fair value of the plan assets are as follows:
Pension plans
US
UK
Amounts in millions
2021
2020
2021
2020
Opening fair value of plan assets
185
224
59
56
Interest return on plan assets
4
7
1
1
Contributions
-
17
43
1
1
Benefits paid
-
10
-
13
-
3
-
2
Settlement payments
-
88
Actuarial gain
19
12
4
1
Exchange differences
-
1
2
Closing fair value of plan assets
181
185
61
59
Of which:
Bonds
15
2
2
Equities
95
122
30
38
Other
86
48
29
19
The actual return on plan assets amounts
11,3%
9,5%
5,0%
3,9%
For the next years we expect the contributions to remain at the same level as in 2021.
The plan assets do not include any of the Company’s own financial instruments, nor any property occupied or other assets used by the
Company and exists mainly of hedge funds. The Company expects to contribute approximately 2 to its defined benefit plans in 2022.
Contribution by employer will not materially differ from previous years.
Defined contribution plans
The expense of the defined contribution plans for 2021 amounts to 42 (2020: 31).
23. Commitments and contingencies
Capital commitments
At 31 December 2021, the Company has commitments for capital expenditures of 26 (2020: 14).
Legal claims
Legal claims have been filed against the Company in the course of its normal business. Management together with their legal counsel have only
recognized a provision if it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
Guarantees
Hunter Douglas N.V. has the following contingent liabilities at 31 December 2021:
- The Company is contingently liable for guarantees given mainly for its subsidiaries (guarantees under article 2:403 of Dutch Civil
Code), on which no material losses are expected.
- The Company forms part of a fiscal unity for Dutch corporate income tax purposes, and as such is jointly and severally liable for the
liabilities of the whole fiscal unity.
Annual Report 2021 44
24. Related party disclosure
The consolidated financial statements include the financial statements of Hunter Douglas N.V. and the subsidiaries as listed on page .. and ..
Amounts in millions 2021
2020
Short-term employee benefits 42
24
Total compensation paid to key management employees 42
24
As per year-end loans and advances amounted to key management employees nil (2020: nil).
25. Capital management and risk management objectives and policies
The financing of the Company is based on a conservative capital structure.
The Company has procedures and policies in place to control risks related to financial instruments. These policies and procedures include a
clear segregation of duties between operating, settlement, accounting and controlling of all financial instruments used. The Company‘s senior
management takes an active role in the risk management process. In addition, the geographical spread of the Company’s activities limits the
exposures to concentrations of credit or market risk.
The Company attempts to minimize the counterparty credit risk associated with the financial instruments used by selecting counterparties that it
assumes to be creditworthy, given their high credit ratings.
The Company does not have significant credit risk exposure to any individual customer or counterparty. A substantial part of trade receivables is
covered by securities obtained, credit insurance or letters of credit. Also, the Company has concluded netting arrangements with some
counterparties to offset financial instruments. Given their credit ratings, the remaining credit exposure with these counterparties is not
considered of significance.
The following instruments are used:
a. Interest derivatives
Interest derivatives are used to manage exposure to movements in interest rates and to assume trading positions.
b. Foreign exchange derivatives
Foreign exchange derivatives are used to manage the exposure of currency exchange rate risks resulting from cash flows from
(anticipated) business activities and financing arrangements denominated in foreign currencies and to assume trading positions.
Interest and foreign exchange derivatives are carried at their fair value. The interest and foreign exchange derivatives generally mature within
one year. All changes in the fair value of derivatives are taken directly to the income statement as no hedge accounting is applied.
Interest rate risk
The following table demonstrates the sensitivity to a reasonably possible change in interest rates, with all other variances held constant, of the
Company’s profit before tax (through the impact on floating rate borrowings). The effect on equity excludes the effect on profit before tax which
ends up in equity.
Increase/decr
ease
Effect on
Effect
in basis points
profit before tax
on equity
2021
Euro
50
0
US dollar
50
2020
Euro
50
1
US dollar
50
Annual Report 2021 45
Foreign currency risk
The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating activities (when revenue or
expense is denominated in a foreign currency) and the Group’s net investments in foreign subsidiaries.
As a result of significant operations in Europe, the Company’s balance sheet can be affected significantly by movements in the US dollar / Euro
exchange rates. The Company seeks to mitigate the effect of its structural currency exposure by borrowing in Euros. Between 20% and 50% of
the Company’s investment in non-USD operations will be hedged in this manner.
The following table demonstrates the sensitivity to a reasonably possible change in the Euro exchange rate, with all other variances held
constant, of the Company’s profit before tax (due to changes in the fair value of monetary assets and liabilities) and the Company’s equity (due
to changes in the net investments, excluding the effect on profit before tax which ends up in equity).
Increase/decrease in
Effect on
Effect on
Euro exchange rate
profit before tax
equity
2021
5%
0
14
-
5%
0
-
14
2020
5%
0
22
-
5%
-
1
-
22
Commodity price risk
The Group is affected by the price volatility of certain commodities.
Prices for raw materials, in particular: aluminium, steel, fabric, synthetics and other oil based products.
Changes in material prices for our window covering and architectural products are normally passed on in our product prices.
Credit risk
The Company does not have significant credit risk exposure to any individual customer or counterparty. A substantial part of trade receivables is
covered by securities obtained, credit insurance or letters of credit. Also, the Company has concluded netting arrangements with some
counterparties to offset financial instruments. Given their credit ratings, the remaining credit exposure with these counterparties is not
considered of significance.
26. Financial instruments
2021
2020
Amounts in millions
Face amount
Fair value
Face amount
Fair value
Currency forward
Buy
5
9
1
121
-
5
Sell
-
144
1
-
133
6
-
8
5
2
-
12
1
Currency forwards are in U.S. dollar and are valued at existing forward rates at the balance sheet date.
Annual Report 2021 46
Fair values
Set out below is a comparison by category of carrying amounts and fair values of all the Company’s financial instruments.
The fair value of borrowings has been calculated by discounting the expected future cash flows at prevailing interest rates.
The fair value of other financial assets has been calculated using the market interest rates. For financial
instruments at fair value, the fair value hierarchy is indicated.
Amounts in millions
Carrying amount
Fair value
2021
2020
2021
2020
Financial assets
Non
-
current
Other financial assets
-
amortized cost
165
33
165
33
Option Select Blinds
-
fair value through P&L (level 3)
114
114
279
33
279
33
Current
Trade receivables
-
amortized cost
407
407
407
407
Financial institutions and brokers
-
amortized cost
13
14
13
14
Currency
derivatives
-
fair value through P&L (level 2)
2
1
2
1
Cash and short
-
term deposits
-
amortized cost
250
47
250
47
672
469
672
469
Financial liabilities
Non
-
current
-
amortized cost
Put / Call options
85
87
85
87
Preferred shares
-
floating rate*
10
10
10
10
Other borrowings
-
floating rate*
29
122
29
122
124
219
124
219
Current
Trade payables
-
amortized cost
226
184
226
184
Put / Call options
155
155
Bank overdraft
-
floating rate*
-
amortized cost
4
42
4
42
Short
-
term loans
-
floating rate*
-
amortized cost
42
16
42
16
272
397
272
397
* For interest-bearing loans and borrowings with a floating rate their fair value approximates their carrying value.
Annual Report 2021 47
Liquidity risk
Within
1
-
2
2
-
3
3
-
4
4
-
5
More than
Amounts in millions
1 year
years
years
years
years
5 years
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Trade
payables
226
184
226
184
Other payables
7
2
1
609
7
2
1
609
Lease liabilities
37
38
28
27
20
20
13
14
10
9
42
45
150
153
Put/call options
155
3
1
25
27
57
59
85
242
Floating rate
Bank loans
46
58
122
46
180
Preferred shares
10
10
10
10
1,0
3
0
1,044
28
149
20
20
16
15
35
36
109
114
1,2
3
8
1,378
.
Within
1
-
2
2
-
3
3
-
4
4
-
5
More
than
Amounts in millions
1 year
years
years
years
years
5 years
Total
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Interest
1
2
1
1
3
Assets measured at fair value
2021
2020
Fair value measurement at the end of
Fair value measurement at the end of
Amounts in millions
the reporting period using:
the reporting period using:
Description
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial assets at fair value
through profit and loss
Trading derivatives
2
2
1
1
Option Select Blinds
114
114
Total
0
2
114
116
0
1
0
1
Liabilities measured at fair value
2021
2020
Fair value measurement at the end of
Fair value measurement at the end of
Amounts in millions
the reporting period using:
the reporting period using:
Description
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Financial liabilities at fair value
through profit and loss
Put / Call options
85
85
242
242
Total
0
0
85
85
0
0
242
242
Annual Report 2021 48
27. Events after balance sheet date
Acquisition by 3G
On December 30, 2021, Hunter Douglas N.V. and 3G Capital, a global investment firm and private partnership, announced that Ralph
Sonnenberg, the controlling shareholder of Hunter Douglas N.V., had entered into a definitive agreement to transfer a controlling interest in the
Company to 3G Capital based on a value of EUR 175 per Ordinary Share. On February 25, 2022, that transaction was completed.
As a part of the transaction, all business activities from Hunter Douglas N.V. have been sold to Hunter Douglas Holding B.V., a newly
established company in The Netherlands, indirectly held through Hunter Douglas B.V. by 3G Capital (75%). Ralph Sonnenberg has transferred
this a 75% interest in Hunter Douglas B.V. to 3G Capital through a Block Trade, with the Sonnenberg Family continuing to own 25% of Hunter
Douglas B.V.
Statutory buy-out proceedings for all remaining outstanding shares in Hunter Douglas N.V. will commence in accordance with applicable
Curaçao law and Hunter Douglas' articles of association. In these proceedings, the position will be taken that the price of Hunter Douglas shares
will be the same as pursuant to the Block Trade for each Ordinary Share, being EUR 175, and EUR 0.43 for each Preferred Share. The funds
required to pay remaining outstanding shareholders have been secured and are restricted only for the use of payments to the remaining third
party minority shareholders in Hunter Douglas N.V.
Presently Hunter Douglas N.V.’s balance sheet mainly consists of a receivable of EUR 6.096 bln on Hunter Douglas Holding B.V. and equity.
28. Significant subsidiaries
The consolidated financial statements include the assets and liabilities of more than 200 legal entities.
The subsidiaries as listed below are the most important operational legal entities including the country in which their main operation is located
and the percentage of ownership.
2021
2020
Hunter Douglas Holdings Ltd., Australia
100.0%
100.0%
Hunter Douglas Europe B.V., The Netherlands
100.0%
100.0%
Hillarys
Blinds (Holdings) Ltd., U.K.
98.2
98.2%
Blinds2go Ltd., U.K.
100.0%
65.2%
Levolor Inc., U.S.A.
100.0%
100.0%
3form LLC, U.S.A.
100.0%
100.0%
HD Fabrication Company, U.S.A.
100.0%
100.0%
3 Day Blinds LLC, U.S.A.
100.0%
98.2%
The disclosed subsidiaries represent a total revenue of 2.6 bln (2020: 1.9 bln) and total asset value of 1.2 bln (2020: 1.2 bln).
The principal operating companies are listed on page 64 and 65.
Annual Report 2021 49
29. Alternative performance measures (APM)
Net assets employed (NAE)
This consists of total assets (excl. cash and deferred income tax assets) minus non-interest bearing current liabilities.
Amounts in millions
2021
2020
Total assets
3.992
3.479
Cash
-
250
-
47
Deferred income tax
assets
-
125
-
147
Current liabilities (non
-
interest bearing)
-
947
-
948
Net assets employed
2.670
2.337
Earnings before interest, tax, depreciation and amortization (before other income/expense)
Amounts in millions
2021
2020
Income
from operations (before other income/expense)
719
313
Non
-
recurring
e
xpenses
13
65
Depreciation
128
128
Amortization
28
25
EBITDA (before other income/expense)
888
531
Return on net assets employed (RONAE)
This represents income from operations (before other income/expense) divided by the 2x average net assets employed.
Amounts in millions
2021
2020
Income from operations (before other income/expense)
719
313
Non
-
recurring expenses
13
65
Income from operations (before other income/expense
and non
-
recurring expenses)
732
378
Average net assets employed
2.503
2.464
To facilitate the understanding of the economic and financial performance of the Company, management has identified a number of Alternative
Performance Measures (APM), which are used to identify operational trends and to make investment and resource allocation decisions. To ensure
that the APM are correctly interpreted it is emphasized that these measures are not indicative of the future performance of the Group. The APM
are not part of international reporting standards (IFRS) and are unaudited. They should not be taken as replacements of the measures required
under the reference financial reporting standards.
The APM should be read together with the consolidated financial information. Since they are not based on the reference financial reporting
standards, the APM used by the Company may not be consistent and comparable with those used by other companies or groups. The APM used
by the Company have been consistently calculated and presented for all the reporting periods for which financial information is presented in these
financial statements.
Set out below are the main APM’s identified by the Company:
- Net Assets Employed (NAE)
- Earnings before interest, tax, depreciation and amortization (before other income/expense) (EBITDA)
- Return on Net Assets Employed (RONAE)
Annual Report 2021 50
Company Balance sheet* & Company Statement of income – Hunter Douglas N.V.
USD
Amounts in millions
Notes
2021
2020
ASSETS
Non
-
current assets
Financial fixed assets
-
Investments in subsidiaries
2
3.317
2.731
-
Advances to subsidiaries
3
131
271
-
Other
4
63
73
Total non
-
current assets
3.511
3.075
Current assets
Accounts receivable
51
37
Accounts receivable
-
affiliated companies
203
214
Cash
200
Total current assets
454
251
TOTAL ASSETS
3.965
3.326
SHAREHOLDERS' EQUITY AND
LIABILITIES
Shareholders' equity
Issued capital
5
10
10
Share premium
167
167
Foreign currency translation
-
275
-
244
Legal reserve
36
126
Revaluation reserve
195
Retained earnings
1.792
1.750
Net result for the
year
633
116
Total shareholders' equity
2.558
1.925
Provisions
Provision for pensions
4
Total provisions
0
4
Non
-
current liabilities
Long
-
term loans
-
other
6
10
132
Long
-
term loans
-
affiliated
companies
6
63
321
Total non
-
current liabilities
73
453
Current liabilities
Short
-
term borrowings
29
36
Accounts payable
-
other
8
7
Accounts payable
-
affiliated companies
1.297
901
Total current liabilities
1.334
944
TOTAL SHAREHOLDERS' EQUITY AND
LIABILITIES
3.965
3.326
STATEMENT OF INCOME
Income from subsidiaries and affiliates after taxation
645
145
Other expense, net
-
12
-
29
Net profit
633
116
* Before appropriation of net profit
Annual Report 2021 51
Notes to financial statements
1. Accounting policies
General
The Company’s financial statements have been prepared in accordance with Title 9 of Book 2 of the Dutch Civil Code. As permitted by Article
2:362 paragraph 8 of this code, the Company’s financial statements have been prepared applying the same IFRS accounting policies as used in
the consolidated financial statements in order to maintain consistency between the figures in the consolidated and Company’s financial
statements. In accordance with Article 2:402 of the Civil Code, an abbreviated version of the income statement is presented. The principal
accounting policies adopted are the same as those set out in note 2 to the consolidated financial statements except that investments in
subsidiaries are stated at net asset value as the Company effectively exercises influence of significance over the operational and financial
activities of these investments. The net asset value is determined on the basis of the accounting principles applied by the Company.
For intercompany receivables the expected credit loss (ECL) would be applicable as well. The ECL on intercompany receivables are recognized
in profit and loss, however this could cause differences between equity recognized in the consolidated and separate financial statements. For
this reason, the Company will eliminate these differences (if any) through the respective receivable account by reversing the ECL recognized in
profit and loss.
2. Financial fixed assets
Investment in subsidiaries
Amounts in millions
2021
2020
Beginning of the year
2,731
2,660
Change during the year
Share in results, net
6
45
145
Actuarial gains (losses)
39
-
27
Received dividends
-
286
-
235
Increase, net
2
3
0
105
Exchange differences
-
42
83
Net change
58
6
71
End of year
3,3
17
2,731
3. Financial fixed assets
Advances to subsidiaries
Amounts in millions
2021
2020
Beginning of the year
271
300
Change during the year
Additions
17
Deductions
-
140
-
46
Net change
-
140
-
29
End of year
131
271
Annual Report 2021 52
4. Financial fixed assets
Other non
-
current assets
Amounts in millions
2021
2020
Beginning of the year
73
68
Change during the year
Additions
3
Deductions
-
5
Exchange
-
5
2
Net change
-
10
5
End of year
63
73
Other non-current mainly relate to Dutch deferred income tax assets.
5. Shareholders’ equity
Details are given in note 15 to the consolidated financial statements. In the company balance sheet, a legal revaluation of USD 114 million is
recognized in relation to the unrealized fair value gain on the options for Select Blinds. Further details are given in note 10 to the consolidated
financial statements.
6. Non-current liabilities
Long
-
term loans
-
other
Amounts in millions
2021
2020
Beginning of the year
132
451
Change during the year
Additions
Deductions
-
114
-
359
Exchange
-
8
40
Net
change
-
122
-
319
End of year
10
132
Average life of long-term loans is 0 year (2020: 1.89 years); all loans are at variable rates of interest.
For the conditions in respect of preferred shares: see note 17 in the consolidated financial statements.
Long
-
term loans
-
affiliated companies
Amounts in millions
2021
2020
Beginning of the year
321
295
Change during the year
Additions
Deductions
-
235
Exchange
-
23
26
Net
change
-
258
26
End of year
63
321
Annual Report 2021 53
7. Contingencies
The Company is contingently liable for guarantees given mainly for its subsidiaries, on which no material losses are expected.
The Company forms part of a fiscal unity for Dutch corporate income tax purposes, and as such is jointly and separately liable for the liabilities
of the whole fiscal unity.
8. Employee benefits
Compensation* paid to directors was: R. Sonnenberg nil (2020: nil), J.T. Sherwin 24 (2020: 205) as compensation and all other directors total
142 (2020: 135) as directors fee. No pension contributions were paid.
* Amounts in thousands
9. Remuneration of the auditor
2021
2020
Audit of financial statements
3,2
2,8
Non
-
audit services
1,6
1,0
4,8
3,8
The renumeration for Ernst & Young Accountants LLP in the Netherlands was 0.5 (2020: 0.5) for audit of financial statements and 0.9 (2020: nil)
for non-audit services.
10. Employees
The number of employees at year-end amounts 18 (2020: 18), all employed in the Netherlands.
11. Appropriation of profits
In connection to the acquisition by 3G Capital and the subsequent statutory buy-out proceedings (refer to Note 12), no dividend payments are
proposed.
12. Subsequent events
Acquisition by 3G
On December 30, 2021, Hunter Douglas N.V. and 3G Capital, a global investment firm and private partnership, announced that Ralph
Sonnenberg, the controlling shareholder of Hunter Douglas N.V., had entered into a definitive agreement to transfer a controlling interest in the
Company to 3G Capital based on a value of EUR 175 per Ordinary Share. On February 25, 2022, that transaction was completed.
As a part of the transaction, all business activities from Hunter Douglas N.V. have been sold to Hunter Douglas Holding B.V., a newly
established company in The Netherlands, indirectly held through Hunter Douglas B.V. by 3G Capital (75%). Ralph Sonnenberg has transferred
this a 75% interest in Hunter Douglas B.V. to 3G Capital through a Block Trade, with the Sonnenberg Family continuing to own 25% of Hunter
Douglas B.V.
Statutory buy-out proceedings for all remaining outstanding shares in Hunter Douglas N.V. will commence in accordance with applicable
Curaçao law and Hunter Douglas' articles of association. In these proceedings, the position will be taken that the price of Hunter Douglas shares
will be the same as pursuant to the Block Trade for each Ordinary Share, being EUR 175, and EUR 0.43 for each Preferred Share. The funds
required to pay remaining outstanding shareholders have been secured and are restricted only for the use of payments to the remaining third
party minority shareholders in Hunter Douglas N.V.
Presently Hunter Douglas N.V.’s balance sheet mainly consists of a receivable of EUR 6.096 bln on Hunter Douglas Holding B.V. and equity.
Rotterdam, 10 June 2022
Board of Directors
Annual Report 2021 54
Additional information
1. Independent auditor’s report
To: the shareholders of Hunter Douglas 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 Hunter Douglas N.V. (the Company), based in Curaçao.
The financial statements comprise the consolidated and company financial statements (collectively referred to as the financial statements).
In our opinion:
• The accompanying consolidated financial statements give a true and fair view of the financial position of Hunter Douglas 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 company financial statements give a true and fair view of the financial position of Hunter Douglas 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 balance sheet as per 31 December 2021
• The following statements for 2021: the consolidated statement of income for the year, the consolidated statement of comprehensive income
for the year, consolidated statement of changes in equity for the year and consolidated cash flow statement for the year
The notes comprising a summary of the accounting policies and other explanatory information.
The company financial statements comprise:
• The company balance sheet as per 31 December 2021
• The company statement of income 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 Hunter Douglas N.V. in accordance with 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
We note that the financial statements have been prepared on a non-going concern basis because the Company has ceased its business
activities as a result of an asset transfer in February 2022. We refer to a separate key audit matter on this topic hereafter in our auditor’s
opinion.
Hunter Douglas N.V. operates as a decentralized, global federation of companies that manufacture and market window coverings and
architectural products. The group is structured in, mostly, small and medium-sized components and we tailored our group audit approach
accordingly. We paid specific attention in our audit to a number of areas driven by the operations of the group and our
risk assessment.
Annual Report 2021 55
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 USD 34 million (2020: USD 22 million)
Benchmark applied Approximately 5% of profit before tax, excluding a one-off in other income
Explanation Based on perspectives and expectations of the users of the financial statements in the
context of our understanding of the Company and the environment in which it operates, we
determined the materiality for the financial statements as a whole at USD 34 million. As
Hunter Douglas N.V. is profitable, we consider an earnings based measure to be an
appropriate basis to determine our materiality.
We took into consideration the impact of the announced transaction at shareholder level as
explained in note 2 of the financial statements.
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 audit committee that misstatements in excess of USD 1.7 million, 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
Hunter Douglas 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 34 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. We identified 7 group entities which, in our view, required an audit of their complete
financial information, either due to their overall size or their risk characteristics. Specific scope audit procedures on certain balances and
transactions were performed on 19 group entities. Review scope procedures are performed on 8 group entities. On the remaining entities we
primarily performed risk analytical procedures.
All component audit teams received detailed instructions from the group audit team including key risk areas and the group engagement team
reviewed their deliverables.
In 2021 and the beginning of 2022 we were forced to perform our procedures to a great extent remotely due to the COVID-19 measures. This
limits our observations and increases the risk of missing certain signals. In order to compensate for the limitations related to physical presence
and direct observation, we intensified the contacts with the component teams to ensure that we obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion.
In establishing the overall approach to the audit, we determined the nature of work that is performed centrally, as group auditors, or by component
auditors from Ernst & Young Global member firms or by component auditors not from Ernst & Young Global member firms all operating under our
instructions.
Annual Report 2021 56
We have performed the following procedures:
• We audited the group consolidation, financial disclosures and a number of complex items ourselves at the company’s head office. These
include purchase price allocation, tax accounting, intangible fixed assets and goodwill impairment, pensions and lease accounting.
• The group audit team further performs full scope audit procedures for the Dutch reporting entity Hunter Douglas Europe and other above
mentioned procedures for operating entities based in the Netherlands.
Depending on size and risk for the total group, we had multiple moments of contact with component teams during the planning and
conclusion phases of the audit and sometimes also with local management. We also performed virtual file reviews in many cases and
determined the sufficiency and appropriateness of the work performed for full scope and specific scope audits.
Hunter Douglas North America (US) is the most significant full scope component.
In total these procedures represent 85% of the group’s total assets, 90% of profit before tax and 77% of net sales.
Total assets Profit before tax Net sales
Full scope
Specific scope
Limited scope
Other procedures
By performing the procedures mentioned above at components of the group, 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.
Teaming and use of specialists
We ensured that the audit teams both at group and at component levels included the appropriate skills and competences which are needed for
the audit of a listed client. We involved our own specialists in the areas of IT audit, forensics and income tax and in the areas of purchase price
allocation and goodwill impairment analysis.
Our focus on fraud, 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 relevant to the audit, including the risk
assessment process and management’s process for responding to the risks of fraud and monitoring the system of internal control and how the
board of directors exercises oversight, as well as the outcomes. We refer to Section Risk Management of the board of directors report and Note
25 “Risk Capital management and risk management objectives and policies” of the financial statements for management’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. In
addition, we performed procedures to evaluate key accounting estimates for management bias, in particular relating to important judgment areas
and significant accounting estimates as disclosed in note 2 in the financial statements.
Annual Report 2021 57
We have also used data analytics to identify and address high-risk journal entries. For our audit procedures performed on manual journal entries
in the financial statement close process we refer to the key audit matters “net sales recognition” and “financial statements closing process” in
this audit report for more information.
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 assisted by 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. If so, we reevaluate our assessment of fraud risk and its resulting impact on our audit
procedures.
We identified a fraud risk related to management override of controls resulting in improper revenue recognition at operating company level as a
result of fictitious manual sales entries and/or incorrect cut off to meet sales targets and/or budget incentives. In addition we identified a second
fraud risk related to incorrect/incomplete manual top side journal entries, due to a lack of formalized controls in the financial statement closing
process, high number of adjusting entries, use of many spreadsheets or management override of controls. We refer to the key audit matters “net
sales recognition” and “financial statements closing process” for our audit approach responsive to these fraud risks.
We considered available information and made enquiries of relevant executives, directors (including internal audit, legal, human resources and
area directors) and the audit committee. The fraud risks 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 management board, reading minutes,
inspection of internal audit reports, and performing substantive tests of details of classes of transactions, account balances
or disclosures.
We also inspected lawyers’ letters and correspondence with regulatory authorities and remained alert to any indication of (suspected) non-
compliance throughout the audit. Finally we obtained written representations that all known instances of non-compliance with laws and
regulations have been disclosed to us.
Our audit response related to going concern
For our audit response related to going concern we refer to the separate key audit matter we included in the next paragraph.
Our key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements. We have
communicated the key audit matters to the audit committee. The key audit matters are not a comprehensive reflection of all matters discussed.
In comparison with previous year, we added a key audit matter regarding non-going concern of the Company.
Annual Report 2021 58
Evaluating the appropriateness of accounting policies used in a situation of non
-
going concern
Risk
Management disclosed in note 2 ”Basis of consolidation” to the financial statements that the Company has ceased its
business activities in February 2022, as a result of the asset transfer in February 2022, following the acquisition of an
indirect majority stake in the shares in the Company by 3G Capital, and will go in a voluntary solvent winddown. As a
result and in accordance with IAS 10 “Events after the Reporting Period”, the financial statements for the year ended
31 December 2021 are not prepared using the going concern basis of accounting.
IFRS does not address what basis of accounting should be applied if the going concern basis is no longer
appropriate. Significant judgment is required in determining (1) when an entity is no longer a going concern based on
the facts and circumstances and (2) the recognition, measurement and presentation policies to be applied when
financial statements are not prepared using the going concern basis of accounting, as well as in determining the
relevant accompanying disclosures. The Company evaluated that in order for the financial statements to provide a
true and fair view in accordance with IFRS, the accounting policies should be selected and applied consistent with the
accounting principles used in prior years with the exception of accounting, presentation and disclosures specified in
IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”.
We consider evaluating the appropriateness of accounting policies used, in the situation that the going concern
assumption is not applicable, a key audit matter.
Our audit approach
We verified the facts and circumstances surrounding the Company’s determination that its business activities have
ceased. As part of our audit of the financial statements we have established, inter alia by inspecting the board of
director’s and the shareholders minutes of meetings, the Sale and Purchase Agreements (SPA’s) as well as inquiry
with management, that their conclusion of a situation of non-going concern assumption is adequate. We have verified
that the Company is expected to have sufficient cash to fulfil its obligations until the end of the solvent winddown. We
obtained specific management representations on the company’s plans and intentions and information relevant to the
projections until the date of the winddown of the Company.
Our audit procedures included, amongst others, evaluating the appropriateness of the Company’s accounting policies
in accordance with IFRS in the situation that the going concern assumption is not applicable. In the case of a non-
going concern entity, the recognition and measurement requirements of IFRS must be assessed to determine
whether they provide relevant information that faithfully represents the “non-going concern” circumstances. If they do
not, an entity may apply accounting policies other than those applicable to entities that are going concern.
Finally, we evaluated the adequacy of the disclosures of the Company in this area.
Key observations
Based on our audit procedures performed, we agree with management’s conclusions not to prepare the financial
statements on a going concern basis, and we consider the accounting policies used in this situation appropriate and
adequately disclosed in the financial statements.
Net sales recognition
Risk
The Company has net sales of USD 4.6 billion in 2021.
Net sales are recognized when control over a product is transferred to a customer. Net sales are measured at the
transaction price which is based on the amount of consideration that the Company expects to receive in exchange for
transferring the promised goods to the customer net of freight, returns, allowances and sales tax.
Considering the nature of the business and size of net sales, we have determined that sales recognition at the
operating company level with regard to cut-off and fictitious manual sales entries to meet sales targets and/or budget
incentives, constitutes a fraud risk and is therefore a key audit matter.
The disclosures for net sales recognition is included in the financial statements in note 4.
Annual Report 2021 59
Net sales recognition
Our audit approach
We obtained an understanding of the processes related to net sales recognition in accordance with IFRS 15
“Revenue from Contracts with Customers” at the operating company level and evaluated the design and
implementation of internal control procedures and, when efficient and effective, tested the controls related to the fraud
risks identified.
Our procedures included examining contracts with significant customers, obtaining and evaluating bonus plans and
achievement of relevant KPIs, performing extensive sales cut-off testing, performing analytical procedures over key
revenues streams and comparisons with prior periods and we tested manual journal entries on sales. For our
procedures we made use of data analytics for a large portion of the Company’s net sales.
Finally, we evaluated the adequacy of the disclosures of the Company in this
area
.
Key observations
Based on the audit procedures performed, we did not identify any material misstatements in the net sales recognized
and conclude that the disclosures in the financial statements are adequate.
Financial statements closing process
Risk As part of the consolidation process, the Company uses many spreadsheets to determine and record eliminations
and processes numerous manual adjustments and other consolidation entries, which include IFRS adjustments,
acquisition accounting (including options), accounting for taxes and leases.
The use of many spreadsheets and the numerous manual top side entries are inherently more prone to errors. We
consider this, in combination with the lack of formalized controls due to the limited number of people involved in the
consolidation process, to be also a fraud risk related to management override of controls.
Our audit approach
We designed and performed the following audit procedures to be responsive to this risk:
• We updated our understanding of the consolidation process and evaluated the design and implementation
of the controls related to the fraud risk identified in this area.
• We substantively tested the elimination and consolidation adjustments. We performed testing procedures
on all material manual journal entries recorded, with additional emphasis on entries with a direct impact on
the Company’s results, including adjustments for acquisition accounting (including options), accounting for
taxes and leases. We verified that the adjustments a
re in line with the accounting policies.
Key observations Based on our procedures performed, we concluded that the eliminations, manual entries and other consolidation
entries are materially correct.
Annual Report 2021 60
Valuation of goodwill
Risk At 31 December 2021 the total carrying value of goodwill amounted to USD 1.2 billion.
Goodwill is allocated to (groups of) Cash Generating Units (CGU) within the window coverings or architectural
products segment, which represent the lowest level within the Group at which goodwill is monitored for internal
management purposes in accordance with IAS 36.
Impairment tests are performed by group management annually, or more frequently if impairment indicators are
present, by comparing the carrying amount to the recoverable amount of the CGU to which goodwill is allocated. The
recoverable amount is the higher of the CGU’s fair value less costs of disposal and its value in use. In assessing the
recoverable amount, the pre-tax forecasted future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU.
The assumptions used in the impairment test represent management’s best estimate for the period under
consideration.
Considering the level of uncertainty and subjectivity in the assumptions used in estimating the recoverable amount we
have determined that this area constitutes a significant risk. The Company disclosed the nature and value of the
assumptions used
in the impairment test in note 7.
Our audit approach
We designed and performed the following audit procedures to be responsive to this risk:
• We updated our understanding of the impairment assessment process and evaluated the design and
implementation of controls related to the significant risk identified in this area.
• We validated that the CGUs identified continue to be appropriate in the current year and tested the
allocation of assets and liabilities to each CGU.
• Our focus included evaluating and testing key assumptions used in the valuation, challenging forecasted
future cash flows and we performed sensitivity analyses.
• The forecasted cash flows are an important input for the assessment of the recoverability. We have
reconciled these forecasts for the CGUs to the Group’s 2022 approved budgets. Considering the nature of
the business the 2022 budget is the most reliable forecast for future cash flows and this is extrapolated to
future years.
• We also considered the sales price of the assets transferred in February 2022 as mentioned in our first key
audit matter.
We have involved EY valuation experts to support us in these procedures.
Finally, we reviewed the adequacy of the
disclosures made by the Company in this area.
Key observations The assumptions relating to the impairment model are within acceptable ranges and we agree with management’s
conclusions. Furthermore, we concluded the disclosures in the consolidated financial statements being appropriate and
adequate.
Annual Report 2021 61
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 for the directors’ report and the other information as required by Part 9 of Book 2 of
the Dutch Civil Code
We have read the other information. Based on our knowledge and understanding obtained through our audit of the financial statements or
otherwise, we have considered whether the other information contains material misstatements. By performing these procedures, we comply with
the requirements of Part 9 of Book 2 and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of
those performed in our audit of the financial statements.
Management is responsible for the preparation of the other information, including the management board report in accordance with Part 9 of
Book 2 of the Dutch Civil Code and other information required by Part 9 of Book 2 of the Dutch Civil Code.
Report on other legal and regulatory requirements
Engagement
We were engaged by the audit committee as auditor of Hunter Douglas N.V. as of the audit for the year 2004 and have operated as statutory
auditor ever since that date.
European Single Electronic Reporting Format (ESEF)
Hunter Douglas 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 Hunter Douglas N.V., complies in all material respects with the RTS on ESEF.
Management is responsible for preparing the annual report, including the financial statements, in accordance with the RTS on ESEF, whereby
management combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package 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
Description of responsibilities regarding the financial statements
Responsibilities of management and the audit committee for the financial statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book
2 of the Dutch Civil Code in the situation that the going concern assumption is not applicable. Furthermore, management is responsible for such
internal control as management determines is necessary to enable the preparation of the financial statements that are free from material
misstatement, whether due to fraud or error.
Annual Report 2021 62
The audit committee 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 in the situation that the going concern assumption is not applicable and the
reasonableness of accounting estimates and related disclosures made by management
• Evaluating the overall presentation, structure and content of the financial statements, including the disclosures
• Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation
Communication
We communicate with the audit committee 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.
We provide the audit committee 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 audit committee, 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.
Rotterdam, June 10, 2022
Ernst & Young Accountants LLP
W.P. de Pater
Annual Report 2021 63
2. Appropriation of profits
Hunter Douglas N.V.’s Articles of Association require the general meeting of common and preferred shareholders to determine the value of the
annual common share dividend and the meeting of common shareholders to decide that the dividend will be distributed in cash, or alternatively,
shares.
Hunter Douglas N.V.’s Articles of Association fix the annual dividend on each preferred share at a percentage of the par value. This percentage
amounts to 2.25% per annum over the European Central Bank’s deposit rate on the last working day of May of the affected year. The general
meeting of preferred shareholders is to decide whether such dividend will be distributed in cash, or alternatively, shares.
Five year summary
Millions, except per share data
Notes
2021
2020
2019
2018
2017
Net sales
4.607
3.637
3.805
3.758
3.336
Earnings before interest, tax, depreciation and amortization
(EBITDA)
(before other income/expense and non
-
recurring expenses)
888
531
504
436
391
Income from Operations (before other income/expense and
non
-
recurring
expenses)
732
378
340
326
289
Net profit from operations
(before other income/expense and non
-
recurring expenses)
560
305
273
223
233
Other income/expense and non
-
recurring expenses
73
-
189
5
37
-
20
Net profit from
operations
(after other income/expense)
633
116
278
260
213
Net result investment portfolio
1
6
Total net profit
633
116
278
261
219
Operating cash flow
697
479
546
406
181
Investments in
tangible fixed assets
86
73
125
122
130
Depreciation of tangible fixed assets
128
128
141
91
82
Net assets employed
1
2.670
2.337
2.591
2.368
2.402
Shareholders' equity
2.558
1.925
1.798
1.500
1.378
Per
common share
-
Total net profit
2
18,18
3,34
7,98
7,49
6,28
-
Operating cash flow
2
20,03
13,78
15,69
11,66
5,22
-
Shareholders' equity
3
73,53
55,34
51,69
43,11
39,62
-
Dividend in EUR
2,00
1,85
Average annual
exchange rate EUR/USD
1,18
1,14
1,12
1,18
1,13
Year
-
end exchange rate EUR/USD
1,14
1,22
1,12
1,14
1,20
Average number of outstanding
common shares (thousands)
4
34.790
34.790
34.790
34.790
34.790
Year
-
end number of outstanding
common shares (thousands)
4
34.790
34.790
34.790
34.790
34.790
1 Refer to note 29 in the consolidated financial statements
2 Based on average number of shares outstanding during affected year,
adjusted for stock dividends and treasury shares, where applicable.
3 Based on number of shares outstanding at year
-
end, adjusted for stock dividends and treasury shares, where applicable.
4 Adjusted for stock dividends and treasury shares, where
applicable.
Annual Report 2021 64
Annual Report 2021 65
Hunter Douglas Principal Operating Companies
Europe, Middle East and Africa
www.hunterdouglasgroup.com
Belgium
Copaco, Harelbeke
Hunter Douglas Belgium, Lokeren
Luxaflex Belgium, Bruges
Helioscreen, Lokeren
Bulgaria
Hunter Douglas Bulgaria, Sofia
Croatia
Hunter Douglas Croatia, Zagreb
Czechia
Hunter Douglas Czechia, Prague
Hunter Douglas Kadan, Kadan
Denmark
Debel, Randers (80%)
Luxaflex Scandinavia, Aarhus, Hornum
Sega, Greve
W.H. Produkter, Odense
France
Hunter Douglas, Paris
Luxalon Plafonds France, Bonneuil
Filtersun, La Loupe
Luxaflex France, Tourcoing
Mermet, Veyrins-Thuellin
Stores-Discount, Villeneuve d’Ascq
Tuiss France, Villeneuve d’Ascq
Germany
Benthin, Bremerhaven
Blöcker, Bremen
Hunter Douglas, Düsseldorf,
Bremerhaven, Kassel
Hunter Douglas Architektur-Systeme,
Düsseldorf
NBK, Emmerich
Ireland
T.M. Blinds, Newcastle
Israel
Holis, Afula
Italy
Hunter Douglas Italia, Milan
Tuiss Italy, Milan
Netherlands
Hunter Douglas, Rotterdam
Hunter Douglas Europe, Rotterdam,
Leek, Oudenbosch
Buismetaal IV, Rotterdam
ABZ Zonwering, ‘s-Gravenhage
Artex, Aarle-Rixtel
Asco, Roermond
HCI Holland Coating Industries,
Hoogeveen
Luxaflex Nederland, Hardinxveld-
Giessendam
Luxaflex Outdoor, Eindhoven
Multisol Raambekleding, Nijmegen
Schellekens en Schellekens, Beuningen
Sunway (Benelux), Nieuwegein
Topjaloezieën, Zeewolde (70%)
Tuiss, Rotterdam
Norway
Hunter Douglas Norge, Gjövik, Oslo
HD Solskjerming, Molde
Luxaflex Scandinavia, Oslo
Poland
Akant, Koszalin (70%)
Hunter Douglas Fabrication, Chludowo
Hunter Douglas Polska, Warsaw
Magnum Metal, Zdunska Wola
Tuiss Poland, Koszalin
Portugal
Luxaflex Portugal, Albergaria-a-Velha,
Fajozes
NBK, Figueira da Foz
Romania
Hunter Douglas Romania, Bucharest
TLC Shutters, Alexandria
Russia
Hunter Douglas, Moscow
Serbia
Hunter Douglas, Belgrade
South Africa
Aluvert, Johannesburg (88.26%)
Luxaflex South Africa, Johannesburg
Hunter Douglas Architectural South
Africa, Johannesburg
Spain
Cortinadecor, Alicante
Hunter Douglas España, Llagostera,
Madrid
Louverdrape, Madrid
Sweden
Hunter Douglas Scandinavia, Alingsås,
Hillerstorp
Hunter Douglas Assembly Automation,
Stenungsund
Nibrol, Angered
Luxaflex Scandinavia, Helsingborg,
Anderstorp, Falköping
Tuiss Scandinavia, Helsingborg
Switzerland
Hunter Douglas Management, Lucerne
Hunter Douglas (Schweiz), Root
Turkey
TKIS Blinds, Istanbul
United Arab Emirates
Hunter Douglas Middle East, Dubai
United Kingdom
Apollo Blinds, Glasgow
Blinds2go, Nottingham
Eclipse, Glasgow
Hillarys, Nottingham (98.2%)
Hunter Douglas, Sunninghill,
Luxaflex Stockport, Birmingham
Stevens, Brechin
Turnils, Glasgow
North America
www.hunterdouglas.com
Canada
Hunter Douglas Canada, Brampton (ON)
Levolor, Oakville (ON)
Select Blinds, Saint-Laurent (QC) (30%)
Shade-O-Matic, Brampton (ON)
Turnils, Oakville (ON)
U.S.A.
Hunter Douglas North America, Pearl
River (NY)
Hunter Douglas Window Fashions
Division, Broomfield (CO)
Hunter Douglas Window Designs
Division, Bessemer City (NC)
Hunter Douglas Metals and Distribution
Centre, Tupelo (MS)
Hunter Douglas Plastics and Casting
Centre, Owensboro (KY)
Hunter Douglas Custom Shutter Division,
Tempe (AZ)
Hunter Douglas Horizontal Blinds
Division, Tempe (AZ)
Hunter Douglas Fabrication: Cumberland
(MD), Salt Lake City (UT), West
Sacramento (CA)
3form, Salt Lake City (UT)
Architectural Window Shades, El Monte
(CA)
Carole Fabrics, Augusta (GA)
Comfortex Window Fashions,
Maplewood (NY)
HD Architectural Window Coverings,
Poway (CA)
Custom Brands Group, Cerritos (CA)
Eclipse Shutters, Suwanee (GA)
Flexo Solutions, Appleton (WI)
Kirsch Drapery Hardware, Buford (GA)
Levolor, Atlanta (GA), High Point (NC),
Ogden (UT)
LightArt, Seattle (WA)
Mermet, Cowpens (SC)
Nibrol/Julius Koch USA, Lancaster (SC)
Timber Blinds Manufacturing,
McKinney (TX)
Progressive Screens, Sarasota (FL)
Select Blinds, Meza (AZ) (49.9%)
3 Day Blinds, Irvine (CA)
Turnils, Buford (GA)
Vista Products, Jacksonville (FL)
Annual Report 2021 66
Latin America
www.hunterdouglas.cl
Argentina
Hunter Douglas Argentina, Buenos Aires
Brazil
Hunter Douglas do Brasil (99.78%),
São Paulo, Campinas
Chile
Hunter Douglas Chile (95%), Santiago
Persianas Andina (95%), Santiago
Colombia
Hunter Douglas de Colombia (95%),
Bogotá
Mexico
Hunter Douglas de Mexico, Mexico City
Hunter Douglas Fabrication, Monterrey
ILM, Playas de Rosarito
Levolor, Agua Prieta
Plenimex, S.A. De C.V., Ensenada
Panama
Hunter Douglas Panama, Panama City
Peru
Hunter Douglas Peru, Lima
Venezuela
Hunter Douglas Venezuela, Caracas
Asia
www.hunterdouglas.asia
China
Hunter Douglas Architectural Products,
Shanghai, Beijing, Suzhou, Xian,
Chengdu, Shenzhen,
Hunter Douglas Window Covering
Products, Shanghai, Beijing, Shenzhen
Turnils/Mermet, Shanghai
Hong Kong, SAR
Hunter Douglas China/Hong Kong
India
Hunter Douglas India, Chennai, Mumbai,
New Delhi, Bangalore, Silvassa, Kolkata
Indonesia
Hunter Douglas Indonesia, Jakarta,
Cikarang
Japan
Hunter Douglas Japan, Tokyo, Ibaraki
Tuiss Décor, Tokyo
Korea
Hunter Douglas Korea, Seoul, Gumi City
Malaysia
Hunter Douglas Malaysia, Kuala Lumpur
Turnils-Mermet Asia, Kuala Lumpur
Singapore
Hunter Douglas Singapore, Singapore
Taiwan
Hunter Douglas Taiwan, Taipei
Thailand
Hunter Douglas Thailand, Bangkok
Vietnam
Hunter Douglas Indochina, Ho Chi Minh
City, Hanoi, Danang, Can Tho,
Phnom Penh (Cambodia)
Blaze, Hanoi (49%)
Australia
www.hunterdouglas.com.au
Australia
Hunter Douglas Components, Sydney
Hunter Douglas Blindmaker, Sydney,
Brisbane
Turnils, Sydney
Blinds Online, Melbourne
Blindware, Melbourne
Vertilux, Melbourne
Victory Curtains and Blinds,
Melbourne
New Zealand
New Zealand Window Shades, Auckland
Annual Report 2021 67
Hunter Douglas N.V.
Directors
B.M. Brown
J.M. Fox
A. Ruys
E. Wind
Registered office
Hunter Douglas N.V.
Head office
Hunter Douglas N.V.
Phone: +31-10-486 99 11
Fax : +31-10-485 03 55
E-mail: info@hdnv.nl
Stock listings
Common shares:
> Amsterdam (HDG)
> Frankfurt (HUD)
Preferred shares:
> Amsterdam (HUNDP)
Officers
C. King
L. Reijtenbagh
Depositaries and dividend
disbursements agents
> ABN AMRO BANK: Amsterdam,
Rotterdam - The Netherlands
> ING BANK: Amsterdam, Rotterdam -
The Netherlands