TKH Group N.V.

Interim / Quarterly Report • Aug 19, 2014

Press release

TKH Group N.V. (TKH) Results first half 2014

TKH books sharp rise in profit

Highlights second quarter 2014

• Turnover rises by 13.5% to € 342.7 million, almost entirely organic.
• Turnover growth driven primarily by Industrial Solutions (+27.8%).
• Order intake Industrial Solutions stays at high level.
• EBITA up by 42.5%, driven mainly by Industrial Solutions.
• Efficiency programmes 2013 contribute to results improvement at Building Solutions.
• Significant improvement of ROS to 9.8%.
• Net profit before amortisation up by 68.4%, due in part to lower tax burden and lower financial expenses.

Highlights first half 2014

• Turnover rises by 11.9% to € 657.1 million, organic rise 12.8%.
• Gross margin increases to 41.8% from 40.9% thanks to improved product mix.
• EBITA up by 41.0% due to organic turnover growth, strongly improved efficiency and effective cost control.

Outlook

Outlook for the full year 2014: a net profit before amortisation and one-off income and expenses attributable to shareholders of between € 75 and € 82 million (2013: € 55.9 million).

(in mln. € unless otherwise stated)	Q2 2014	Q2 2013	Change in %
Turnover	342.7	301,9	+ 13.5
EBITA	33.6	23.5	+ 42.5
Net profit before amortisation and one off income and expenses attributable to 1) shareholders	21.5	12.8	+ 68.4
Net profit	20.0	11.4	+ 75.3
ROS	9.8%	7.8%

Key figures second quarter

1) Net profit before amortisation of intangible fixed assets related to acquisitions (after tax).

Key figures first half

(in mln. € unless otherwise stated)	H1	H1
	2014	2013	Change
			in %
Turnover	657.1	587.1	+ 11.9
EBITA	60.2	42.7	+ 41.0
Net profit before amortisation and one off
income and expenses attributable to	37.1	22.9	+ 62.2
shareholders 1)
Net profit	33.5	19.4	+ 73.3
Net earnings per ordinary share attributable to
shareholders (in €)	0.83	0.46	+ 80.4
Solvency	40.8%	40.6%
ROS	9.2%	7.3%
ROCE	17.5%	15.9%

1) Net profit before amortisation of intangible fixed assets related to acquisitions (after tax).

Alexander van der Lof, CEO of technology company TKH: "The strong improvement in profit and the continued increase in order intake in the second quarter confirm that TKH is in an excellent strategic position. Our customers are taking a noticeable interest in the innovations within our four core technologies. The connection of TKH's core technologies and our proposition as one-stop shop for those combined technologies in particular puts TKH in a unique position. The demand from clients for complete systems is fully in line with TKH's vertical market approach. We offer our clients distinctive technologies that make those clients more secure and more efficient. The high level of organic growth we have realised proves that we are a strong international player with excellent prospects for continued organic growth that will be driven primarily by the vertical growth markets we have identified. We also expect profit in the second half of the year to exceed the figure for the first half".

Financial developments in the second quarter

Turnover rose almost entirely organic, by 13.5% to € 342.7 million in the second quarter (Q2 2013: € 301.9 million). The strongest rise in turnover was seen at Industrial Solutions, where turnover came in 27.8% higher. The biggest rise in turnover was in the segment tyre manufacturing systems, due to the strong increase in order intake noted since the second half of 2012. The order intake was again at a high level in the second quarter of this year. Turnover at Building Solutions came in 2.8% higher, acquisitions in this segment lifted turnover by 1.2%. However, turnover at Telecom Solutions fell by 0.9% due to falling demand in the segment copper network systems.

TKH's gross margin improved to 41.8% in the second quarter of 2014, compared with 40.6% in the second quarter of 2013, thanks to a better product mix.

Operating costs as a percentage of turnover fell to 32.1% in the second quarter of 2014, from 32.8% in the second quarter of 2013. The operating result before amortisation of intangible assets (EBITA) rose by 42.5% to € 33.6 million in the second quarter of 2014, from € 23.5 million in the second quarter of 2013. Industrial Solutions booked the strongest increase in EBITA. The main driver of this increase was the strong rise in turnover and improved efficiency in the manufacturing systems segment. EBITA at Telecom Solutions came in lower, although this was compared to

the exceptionally strong second quarter of 2013. EBITA was higher at Building Solutions, largely due to the efficiency measures TKH has taken and the focus on the company's vertical growth markets.

Thanks to lower financial expenses, a lower tax burden and a higher operating result, net profit before amortisation and one-off income and expenses attributable to shareholders came in 68.4% higher.

ROS rose to 9.8%, compared with 7.8% in the year-earlier period.

Financial developments in the first half

Turnover in the first half was up by 11.9% at € 657.1 million (H1 2013: € 587.1 million). Acquisitions accounted for 0.4% of total turnover. The drop in raw materials prices had a negative impact of 1.3% on turnover. Turnover increased organically by 12.8% in the first half.

Industrial Solutions' share of total turnover increased to 50.9% in the first half of 2014, compared with 45.2% in the first half of 2013. Building Solutions' share of total turnover fell to 36.8% from 41.1% due to the strong growth at Industrial Solutions. Telecom Solutions' share fell to 12.3% from 13.6%.

The gross margin rose to 41.8% in the first half of 2014, from 40.9% in the first half of 2013, thanks to an improved product mix.

Operating costs (excluding one–off expenses) as a percentage of turnover fell to 32.7% in the first half of 2014, from 33.6% in the first half of 2013. This was due to higher capacity utilisation at TKH's production locations and the efficiency programmes implemented in the second half of 2013.

At € 10.1 million, depreciation came in higher than in the first half of 2013 (€ 9.7 million) due to higher investment levels in recent years.

The operating result before the amortisation of intangible assets (EBITA) came in 41.0% higher at € 60.2 million in the first half of 2014, compared with € 42.7 million in the first half of 2013. EBITA at Industrial Solutions was up 74.3% compared to the first half of 2013, largely due to higher turnover and improved efficiency and capacity utilisation at TKH's production locations. At Building Solutions, EBITA rose by 9.7% to € 18.3 million in the first half of 2014, from € 16.7 million in the first half of 2013. Telecom Solutions saw its EBITA decrease by 19.1%.

ROS rose to 9.2% in the first half of 2014, from 7.3% in the year-earlier period.

Amortisation charges were up by € 1.0 million at € 12.9 million (H1 2013: € 12.0 million), largely due to investments in R&D.

Financial expenses fell by € 2.3 million to € 4.8 million in the first half of 2014. This improvement was the result of lower interest expenses following the renewal of TKH's credit facility as per October 2013, the expiration of interest rate swaps and favourable currency effects of € 0.5 million compared with the first half of 2013. The lower interest expenses were offset by lower income from participations, the income from which was positively affected by currency effects in 2013.

The tax rate fell to 21.5% in the first half of 2014, from 23.0% in the first half of 2013. In 2014, TKH renewed a significant agreement with the Dutch tax authority on the innovation box facility, which will now run to year-end 2018.

Net profit before amortisation and one-off income and expenses attributable to shareholders came in at € 37.1 million in the first half of 2014 (H1 2013: € 22.9 million). Net profit for the first half of 2014 rose to € 33.5 million (H1 2013: € 19.4 million), an increase of 73.3%.

TKH's net bank debt, calculated in accordance with the banking covenants, increased by € 37.7 million from year-end 2013 to € 223.3 million. This increase is related to higher working capital utilisation, due to seasonal influences, and dividend payments. Solvency came in at 40.8% (H1 2013: 40.6%). The Net debt/EBITDA-ratio came in at 1.6 and the interest coverage ratio at 14.6, well within the financial ratios TKH has agreed with its banks. The working capital rose to 15.8% of turnover, compared with 15.5% as per 30 June 2013.

As per 30 June, TKH had a total of 4,918 permanent employees (FTEs) (end-June 2013: 4,683). In addition, TKH had a total of 452 temporary employees as per 30 June 2014 (end-June 2013: 305).

Developments per solutions segment

Telecom Solutions

Profile

Telecom Solutions develops, produces and supplies systems ranging from basic outdoor infrastructure for telecom and CATV networks through to indoor home networking applications. The focus of the business is on the delivery of completely worry-free systems for its clients, thanks to the system guarantees it provides. Around 40% of the portfolio consists of hub-to-hub optical fibre and copper cable systems. The remaining 60%, consisting of components and systems in the field of connectivity and peripherals, is deployed primarily in the network hubs.

Key figures Telecom Solutions

(in mln € unless otherwise stated)

	H1 2014	H1 2013	Change in %
Turnover	80.5	80.1	+ 0.5
EBITA	6.7	8.3	- 19.1
ROS	8.3%	10.3%

Turnover in the Telecom Solutions segment increased slightly by 0.5% to € 80.5 million despite a strong decline in the sub-segment copper network systems. Turnover in optical fibre network systems improved, partly on the back of projects in China, Poland and Germany.

EBITA was down € 1.6 million as a result of margin pressure due to overcapacity and the acquisition of a number of strategic projects. ROS dropped to 8.3%, from 10.3%.

Indoor telecom systems - home networking-systems, broadband connectivity, IPTV software solutions – turnover share 4.2%

Turnover in this segment was up 11.5% due to an expansion of the product portfolio and a slight increase in consumer spending in the European market.

Fibre network systems - optical fibre, optical fibre cables, connectivity systems and components, active peripherals – turnover share 6.8%

Turnover in the segment was up 8.5%. Growth was driven primarily by China, Poland and Germany. The acquisition of some strategic optical fibre projects pressured the margin, but these projects offer TKH the perspective of higher growth levels. Overcapacity at a number of manufacturers resulted in a slight decline in sales prices. The expected increase in demand in China will reduce this overcapacity. TKH started an investment to further increase the efficiency of its optical fibre production capacity in China and expects to complete this project at the end of the first quarter of 2015.

Copper network systems – copper cable, connectivity systems and components, active peripherals – turnover share 1.3%

Turnover in this segment declined by 41.9% in line with the higher priority for and higher investments in optical fibre networks and 4G networks. As from 1 January 2015, this sub-segment will be combined with the indoor telecom systems segment due to its limited scope.

Building Solutions

Profile

Building Solutions develops, produces and delivers solutions in the field of efficient electro-technical technology, ranging from applications within buildings to technical systems which, linked to software, provide efficiency solutions for the care and security sectors. TKH's know-how in this segment is focused on vision technology and connectivity systems combined with efficiency solutions to reduce the throughput-time for the realisation of installations within buildings and industrial automation. In addition, TKH's focus in this segment is on intelligent video, intercom and access monitoring systems for a number of specific sectors, including elderly care, parking, marine, oil & gas, tunnels and security for buildings and work sites.

Key figures Building Solutions

(in mln. € unless otherwise stated)

	H1 2014	H1 2013	Change in %
Turnover	242.3	241.5	+ 0.3
EBITA	18.3	16.7	+ 9.7
ROS	7.5%	6.9%

Turnover within the Building Solutions segment was up 0.3% at € 242.3 million. Acquisitions boosted growth by 0.9%. Lower raw materials prices had a negative impact of 1.7% on turnover. Organic growth came in at 1.1% in the first half of the year.

EBITA increased to € 18.3 million. The result improved on the back of the efficiency programmes launched in 2013 and the growth realised. ROS rose to 7.5% in the first half of 2014, from 6.9% in the same period of 2013.

Building technologies – energy-saving light and light switch systems, energy management systems, care systems, structured cabling systems – turnover share 6.8%

Turnover was up 0.8% in this segment. The second quarter was stronger compared to the first quarter, due to new key contracts in the vertical growth markets Tunnel & Infra and Parking. The focus on integrated solutions in specific markets is bearing fruit. There is still a reluctance to invest in the Dutch healthcare sector due to government changes in healthcare policy.

Vision & Security systems – Vision technology, systems for CCTV, video/audio analysis and detection, intercom, access control and registration, central control room integration – turnover share 18.1%

Turnover in this segment rose 5.9%, largely thanks to the vision technology companies. Turnover and order intake improved in China, Germany and France. The increasing internationalisation of the roll-out of the security portfolio is also contributing to the growth. This compensated for the reluctance to invest we are seeing in the building and construction sector in the Benelux.

In the first half of the year, we strengthened the organisation in the fields of R&D, production and commerce to create a basis for above-average growth in the years to come.

Connectivity systems – specialty cable (systems) for shipping, rail, infrastructure, wind energy, as well as installation and energy cable for niche markets – turnover share 11.9%

Turnover in this segment dropped by 7.2% due to a decline in market volume in the building and construction sector. Lower raw materials prices had a negative impact of 4.9%. In addition, energy and network companies maintained a lower level of investments. Despite fierce competition, TKH was able to improve its margin thanks to the efficiency programmes TKH implemented and the focus on growth markets such as Tunnel & Infra and Marine, Oil & Gas.

Industrial Solutions

Profile

Industrial Solutions develops, produces and delivers solutions ranging from specialty cable, plug and play cable systems to integrated systems for the production of car and truck tyres. The company's know-how in the automation of production processes and improvements in the reliability of production systems gives TKH the differentiating potential to respond to the increasing desire to outsource the construction of production systems or modules in a number of specialised industrial sectors, such as tyre manufacturing, robotics, medical and machine construction industries.

Key figures Industrial Solutions

(in mln. € unless otherwise stated)

	H1 2014	H1 2013	Change in %
Turnover	334.3	265.5	+ 25.9
EBITA	41.1	23.6	+ 74.3
ROS	12.3%	8.9%

Turnover in the Industrial Solutions segment rose by 25.9% to € 334.3 million. Raw materials prices had a negative impact of 1.2% on turnover. Organic turnover growth came in at 27.1%. Turnover corrected for lower raw materials prices increased by 3.8% in connectivity systems. Turnover in manufacturing systems was up 46.5% and is in line with the growth in order intake.

EBITA came in 74.3% higher at € 41.1 million. This substantial increase in EBITA was due to higher turnover, greater efficiency and an improved distribution of the capacity utilisation across the available production locations.

Connectivity systems – specialty cable systems and modules for the medical, robot, automotive and machine building industries – turnover share 18.5%

Turnover in this segment was up 3.8%, corrected for the negative impact of raw materials prices of 2.8% on turnover. Improved market conditions had a positive impact on order intake in the second quarter. The trend of outsourcing more complete modules and systems continued in the period under review. In response to this trend, TKH is investing in an integrated solution based on vision and connectivity technology. TKH also received the first orders for the newly-developed drag chain portfolio for the industrial market.

Manufacturing systems – advanced manufacturing systems for the production of car and truck tyres, can washers, test equipment, product handling systems for the medical industry, machine operating systems – turnover share 32.4%

Turnover in this segment was up 46.5%. Investments in new technology and production capacity translated into a considerable growth in order intake and turnover, with order intake in excess of € 200 million in the first half of 2014. TKH continued to increase its market share in the top five tyre manufacturers in the industry and the order intake outside that top five also increased. The improved capacity utilisation at the various production locations led to a higher margin.

Developments after 30 June 2014

As announced on 11 July 2014, TKH has increased its interest in Augusta Technologies AG to around 91%. On that basis, TKH has launched a merger-squeeze-out procedure to acquire the remaining shares in the company, which are currently held by minority shareholders.

TKH aims to further accelerate the cooperation between the vision technology companies within the TKH Group and Augusta, to enable the roll-out of a joint strategy in this field.

TKH financed this in July acquired additional interest in Augusta from credit facilities already at its disposal.

Outlook

The outlook for the second half of the year in the market segments in which TKH is active is generally positive, despite the continued fragility of general economic conditions and geopolitical situation.

In the Telecom Solutions segment, we expect a further increase in investments in optical fibre networks. Turnover in copper networks will continue to decline as a result of the shift in investments towards optical fibre networks. We expect the result in the second half of 2014 in this segment to be in line with the result for the first half of the year.

In the Building Solutions segment, we expect the investment levels in the building and construction sector to remain low. At the same time, the vertical growth markets offer sufficient perspective for continued growth and higher margins. On balance, we expect the result in the second half of the year to be higher than in the first six months of 2014.

The high order intake in Industrial Solutions is expected to keep turnover in the second half of the year in that segment at the same high level as in the first half. Worldwide economic uncertainties make it difficult to forecast the development of order intake in the coming quarters. At this time, the outlook for order intake is positive. We expect the result in the second half of the year to be at least in line with the result recorded in the first half of 2014.

On balance and barring unforeseen circumstances, for the full year 2014 TKH expects to book a net profit before amortisation and one-off income and expenses attributable to shareholders of between € 75 million and € 82 million.

Haaksbergen, 19 August 2014

Executive Board

For additional information: J.M.A. (Alexander) van der Lof, Chairman of the Executive Board tel. +31 (0)53 5732903 website: www.tkhgroup.com

Agenda

6 November 2014 Trading update Q3 2014 10 March 2015 Publication full year results 2014 6 May 2015 Trading update Q1 2015 7 May 2015 General Meeting of Shareholders 2015 18 August 2015 Publication interim reults 2015 5 November 2015 Trading update Q3 2015

Profile

Technology company TKH Group NV (TKH) is an internationally active group of companies specialising in the creation and delivery of innovative Telecom, Building and Industrial Solutions.

The TKH core technologies – vision & security, communications, connectivity and manufacturing systems – are interlinked to form complete systems and solutions in the solutions segments and associated vertical markets. TKH's goal is to use this interlinked approach to realise far-reaching synergies between the company's various business units.

Telecom Solutions develops, produces and supplies systems ranging from outdoor infrastructure for telecom and CATV networks through to indoor home networking applications. TKH Telecom Solutions operates in three distinct sub-segments: optical fibre networks, copper networks and indoor telecom systems.

Building Solutions develops, produces and supplies solutions in the field of vision & security, communications and connectivity technology that range from applications in buildings and the built environment through to integrated systems that, linked to software, provide efficiency solutions for sectors such as the construction, healthcare, parking, ship building, oil and gas, traffic and security sectors. Building Solutions operates in three distinct sub-segments: building technologies, vision & security systems and connectivity systems.

Industrial Solutions develops, produces and supplies solutions ranging from specialty cable, "plug and play" cable systems through to integrated systems for the production of car and truck tyres. The core technologies in this segment are vision technology, connectivity and system integration. Industrial Solutions operates in two distinct subsegments: connectivity systems and manufacturing systems.

TKH aspires strong market positions – based mainly on own proprietary technologies and services – with a strong regional and international positioning. TKH and its various operating companies are active worldwide. Growth is concentrated in North West and Central and Eastern Europe and Asia. In 2013, TKH booked turnover of € 1.2 billion with a workforce of 4,802 employees.

Consolidated Profit and Loss account

in thousands of euros

	1	st half year 2014	st half year 2013 1
Net-turnover 1) Other operating income		656,288 792		586,257 891
Total turnover		657,080		587,148
Cost of raw materials, consumables, trade products and subcontracted work Personnel expenses Deprecation Amortisation Other operating expenses	382,128 144,288 10,131 12,932 60,287		347,123 130,009 9,650 11,975 57,648
Total operating expenses		609,766		556,405
Operating result		47,314		30,743
Financial expenses		-4,842		-7,186
Change in value of provisions for earn-out and put options minority shareholders		0		379
Share in result of associates		262		1,215
Result before tax		42,734		25,151
Tax on profit		9,201		5,796
Net result		33,533		19,355
Attributable to: Shareholders of the company Minority interest		31,460 2,073		17,316 2,039
		33,533		19,355
Earnings per share Weighted average number of shares (x 1,000)		38,106		37,777
Weighted average number of shares for the purpose of Diluted earnings per share (x 1,000)		38,278		37,875
Ordinary earnings per share before amortisation (in €) Ordinary earnings per share (in €) Diluted earnings per share (in €)		0.97 0.83 0.82		0.62 0.46 0.46

1) Inclusive changes in inventory of finished goods, work in progress and construction contracts of € 100.3 million (H1 2013: -/- € 25.5 million).

Consolidated statement of comprehensive income

in thousands of euros

	st half year 2014 1		st half year 2013 1
Net result		33,533		19,355
Items that will not be reclassified subsequently to profit or loss
Actuarial gains / (losses)	2,201		711
Revaluation of property	-272		0
	1,929		711
Items that may be reclassified subsequently to profit or loss
Currency translation differences	726		1,255
Effective part of changes in fair value of cash flow hedges (after tax)	-502		2,500
Revaluation of available-for-sale financial assets	10		355
	234		4,110
Other comprehensive income		2,163		4,821
Total comprehensive income for the period		35,696		24,176
Attributable to:
Shareholders of the company		33,343		22,414
Minority interest		2,353		1,762
Comprehensive income for the period		35,696		24,176

Consolidated balance sheet

in thousands of euros

	30-06-2014		31-12-2013
Assets
Non-current assets
Intangible non-current assets	351,419		349,125
Tangible non-current assets	189,256		188,523
Investment property	10,081		10,103
Financial non-current assets	17,730		17,795
Deferred tax assets	12,351		12,550
Total non-current assets		580,837		578,096
Current assets
Inventories	195,120		185,447
Receivables	189,864		152,532
Construction contracts for third parties	81,096		78,272
Current income tax	1,785		3,364
Cash and cash equivalents	65,257		79,613
Total current assets		533,122		499,228
Total assets		1,113,959		1,077,324
Equity and liabilities
Group Equity
Shareholders' equity	392,009		377,577
Minority interest	62,218		61,398
Total group equity		454,227		438,975
Non-current liabilities
Non-current liabilities	269,738		258,558
Deferred tax liabilities	55,270		59,850
Provision for pensions	14,744		18,852
Other provisions	24,598		24,727
Total non-current liabilities		364,350		361,987
Current liabilities
Borrowings	27,542		15,242
Trade payables and other payables	213,210		213,471
Construction contract for third parties	40,107		38,735
Current income tax liabilities	7,095		717
Provisions Total current liabilities	7,428	295,382	8,197	276,362
Total equity and liabilities		1,113,959		1,077,324

Consolidated cash flow statement

in thousands of euros

	st half 1 year 2014	st half 1 year 2013
Cash flow from operating activities
Operating result	47,314	30,743
Depreciation, amortisation and impairment	23,064	21,625
Share and option schemes not resulting in a cash flow	1,307	1,553
Changes in provisions	-1,958	-2,053
Changes in working capital	-48,520	-31,761
Cash flow from operations	21,207	20,107
Interest paid	-4,894	-6,731
Income taxes paid	-7,990	-7,235
Net cash flow from operating activities (A)	8,323	6,141
Cash flow from investing activities
Dividends received from non-consolidated associates	262	511
Purchase of tangible non-current assts	-10,940	-9,264
Disposals less purchases of investment property	-4	0
Acquisition of subsidiaries	-5,502	-3,272
Investments in intangible non-current assets	-8,666	-4,223
Investments in other financial fixed assets	10	0
Net cash flow form investing activities (B)	-24,840	-16,248
Cash flow from financing activities
Dividends paid	-19,964	-19,711
Sold less purchased shares for share and option schemes	-1,787	-1,986
Proceeds from long-term debts	11,180	0
Repayments of long-term debts	0	-5,250
Change in borrowings	12,300	39,773
Net cash flow from financing activities (C )	1,729	12,826
Net increase/(decrease) in cash and cash equivalents
(A+B+C)	-14,788	2,719
Exchange differences	432	-218
Change in cash and cash equivalents	-14,356	2,501
Cash and cash equivalents at 1 January	79,613	66,465
Cash and cash equivalents at 30 June	65,257	68,966

Consolidated statement of changes in group equity

in thousands of euros	Sha re c apit al	Sha re p rem ium	Leg al re ser ves	Rev res alua erv tion es	rev Inve res alua stm erv tion ent e	Tra res nsla erv tion e	Cas hflo w h res edg erv e e	Oth er r ese rve s	Una ppr opr pro iate fit d	Tot al	Min ority inte res t	Tot al g equ rou ity p
Balance at 1 January 2013	9,579	12,121	15,166	32,080	3,655	3,005		-6,756 267,175		28,404 364,429		60,394 424,823
Net result									17,316	17,316	2,039	19,355
Total other comprehensive income				0	355	1,532	2,500	711		5,098	-277	4,821
Total comprehensive income	0	0	0	0	355	1,532	2,500	711	17,316	22,414	1,762	24,176
Appropriation profit last year								28,404	-28,404	0		0
Dividends	8 1	-81						-18,037		-18,037		-18,037
Dividends to minority shareholders								-386		-386	-1,288	-1,674
Acquisition of minority shareholders								-303		-303	-483	-786
Share and option schemes (IFRS 2)								1,553		1,553		1,553
Purchased shares for share- and option schemes								-4,934		-4,934		-4,934
Sold shares for share- and option schemes								2,948		2,948		2,948
Change in legal reserve for participations for
which economic ownership is acquired, but
not legal ownership			2 6					-26		0		0
Capitalised development costs			2,909					-2,909		0		0
Balance at 30 June 2013	9,660	12,040	18,101	32,080	4,010	4,537		-4,256 274,196		17,316 367,684		60,385 428,069
Balance at 1 January 2014	9,660	12,040	22,006	25,762	3,892	-477		-4,057 271,519		37,232 377,577		61,398 438,975
Net result									31,460	31,460	2,073	33,533
Total other comprehensive income				-272	1 0	475	-502	2,172		1,883	280	2,163
Total comprehensive income	0	0	0	-272	1 0	475	-502	2,172	31,460	33,343	2,353	35,696
Appropriation profit last year								37,232	-37,232	0		0
Dividends	8 5	-85						-18,120		-18,120		-18,120
Dividends to minority shareholders								-311		-311	-1,533	-1,844
Share and option schemes (IFRS 2)								1,307		1,307		1,307
Purchased shares for share- and option
schemes								-3,778		-3,778		-3,778
Sold shares for share- and option schemes Change in legal reserve for participations for								1,991		1,991		1,991
which economic ownership is acquired, but
not legal ownership			-490					490		0		0
Capitalised development costs			1,295					-1,295		0		0
Balance at 30 June 2014	9,745	11,955	22,811	25,490	3,902	-2		-4,559 291,207		31,460 392,009		62,218 454,227

Notes to the interim financial report

1. Accounting principles for financial reporting

The interim financial report has been prepared in accordance with IAS 34 Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2013. The accounting principles applied for the valuation of assets and liabilities and the determination of result are the same as those applied in the consolidated financial statements as at and for the year ended 31 December 2013.

2. Judgments

The preparation of the condensed consolidated interim financial statements 2014 requires from management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The key sources of estimation uncertainly were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2013.

3. Statutory capital

The number of outstanding (depositary receipts of) shares as per 31 December 2013 was the equivalent of 37,989,437. As a result of the exercise of options rights and share schemes, a balance of 6,097 (depositary receipts of) shares were delivered and sold in the first half of 2014. In addition, a stock dividend of 341,376 (depositary receipt of) shares was paid out from the share premium reserve. As a result, the number of (depositary receipts of) shares outstanding with third parties as per 30 June 2014 was 38,336,910.

4. Dividend

At the General Meeting of Shareholders 2014 the dividend over 2013 was declared at € 0,75 per (depositary receipts of) ordinary share. The dividend was proposed at the option of shareholders in cash or as stock dividend. The dividend on the priority shares was declared at € 0.05 per share. The total amount in dividends paid in the first half of 2014 was € 18,120,266 and this amount was charged to the other reserves. For stock dividend an amount of € 85,344 was charged against the premium reserve.

5. Segmented information

	Telecom		Building		Industrial		Not
	Solutions		Solutions		Solutions		Attributable		Total
	H1 2014	H1 2013	H1 2014	H1 2013	H1 2014	H1 2013	H1 2014	H1 2013	H1 2014	H1 2013
st half year Turnover 1	80,480	80,080	242,347	241,528	334,253	265,540	0	0	657,080	587,148
Segment EBITA 1)	6,701	8,287	18,269	16,655	41,087	23,576	-5,811	-5,802	60,246	42,716
Amortisation	-432	-487	-9,055	-8,543	-3,346	-2,859	-99	-84	-12,932	-11,973
Segment operating result	6,269	7,800	9,214	8,112	37,741	20,717	-5,910	-5,886	47,314	30,743
Financial income and expenses									-4,842	-7,186
Share of result in associates									262	1,215
Change in value of provisions for earn-out and put options minority shareholders									0	379
Tax on profit									-9,201	-5,796
Net result									33,533	19,355

1) EBITA: Operating result plus amortisation and impairment of immaterial fixed assets

6. Overview of net profit definitions

in thousands of euros	st half 1 year 2014	st half 1 year 2013
Net profit attributable to shareholders of the company	31,460	17,316
Net profit attributable to minority shareholders	2,073	2,039
Net result	33,533	19,355
Amortisation of acquisition-related intangible non-current assets based
on "purchase price allocations"	7,731	8,219
taxes on the amortisation	-2,109	-2,295
Change in provision for earn-out	0	-379
Net profit before amortisation and exceptional expenses	39,155	24,900
Attributable to minority interest	-2,073	-2,039
Ordinary earnings before amortisation and exceptional expenses
attributable to shareholders of the company	37,082	22,861

7. Acquisitions

During the first half of 2014 TKH acquired the following subsidiary:

Name subsidiary	Country	Legal ownership and control	Consoli dation as from	Activity
GF Messtechnik 1) GmbH	Germany	100.0% 1)	30-6-2014	Vision & Security Systems (Building)

1) Acquisition through Augusta Technologie AG, in which TKH holds an interest of 62,39% as of 30 June 2014.

On 23 June 2014 TKH acquired through its participation Augusta Technologie AG all shares in GF Messtechnik GmBH ("GFM"), located in Berlin (Germany). GFM is a leading provider of SD-measuring systems based on optical surface metrology and will expand the competences of TKH. The portfolio embraces as well 3Dmeasuring systems as 3D-sensors and also the related measurement and application software. The products are applied in the industrial measurement technology such a life science and biometrics.

The profitable company achieved a revenue of € 5.4 million in 2013 with an EBITDA margin of 13%, GFM employs 30 employees.

The purchase amount is paid in cash and contains an earn-out component. The maximum purchase price can amount € 6.3 million. The transaction is accounted for according to the "purchase method of accounting". The goodwill of € 0.1 million has been paid because of synergy and profit expectations. The goodwill is not deductable for income taxes. The expenses related to the acquisition, as there are acquisition- and integration costs are very limited.

8. Contingent liabilities

The contingent liabilities which are not reflected in the balance sheet, as reported in the financial statements for 2013, have not essentially changed in the first half 2014.

9. Events after balance sheet date

As announced on 11 July 2014, TKH has increased its interest in Augusta Technologies AG to around 91%. On that basis, TKH has launched a mergersqueeze-out procedure to acquire the remaining shares in the company, which are currently held by minority shareholders.

TKH aims to further accelerate the cooperation between the vision technology companies within the TKH Group and Augusta, to enable the roll-out of a joint strategy in this field.

TKH financed the acquisition of the additional interest in Augusta from credit facilities already at its disposal.

Except for the acquisition mentioned before, no events of fundamental significance for insight into the financial statements and the preceding period occurred after balance sheet date.

10. Risks

In our Annual Report 2013 we have extensively described certain risk categories and risk factors which could have an (adverse) impact on our financial position and results, Per 30 June the risk categories and risk factors have been reanalyzed and is concluded that these are still applicable,

11. Executive Board declaration

This report contains the interim financial report of TKH Group NV, The interim financial report ended 30 June 2014 consists of the condensed consolidated interim financial statements, the interim director's report and Executive Board declaration, The information in this interim financial report is unaudited, The condensed consolidated interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the consolidated financial statements of TKH for the year ended 31 December 2013,

The Executive Board hereby declares that to the best of their knowledge, the interim financial statements, which have been prepared in accordance with IAS 34 Interim Financial Reporting, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole, and the interim director's report gives a fair review of the information required pursuant to section 5:25d (8)/(9) of the Dutch Financial Markets Supervision Act (Wet op het financieel toezicht),

12. Signature of interim report

Haaksbergen, 19 August 2014

Executive Board J.M.A. van der Lof MBA. chairman E.D.H. de Lange MBA A.E. Dehn

The figures in the interim financial report have not been audited.