Annual Report (ESEF) • Mar 11, 2025
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Download Source File| in thousands of euros | Smart Vision systems | Smart Manufacturing systems | Smart Connectivity systems | Older than 365 days | 31-12-2023 | Other and eliminations | Total | ||
|---|---|---|---|---|---|---|---|---|---|
| EBITDA by discount rate | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | Total 2024 | 2023 | |
| in thousands of euros (unless stated otherwise) | Book value | 357,210 | 61,814 | 7,258 | 6,491 | 3,370 | 2,958 | 6,573 | 445,674 |
| in thousands of euros | Notes | Average contract rate | in thousands of euros | Fair value |
|---|---|---|---|---|
| Borrowings reported under | 2024 | 2023 | 2024 | 2023 |
| Cash and bank balances as included in the cash flow statement | 18 | Wages and salaries | Weighted average number of (depositary receipts of) shares (x 1,000) | 63,978 |
| Expected credit loss rate | 2024 | 2023 | 2024 | 2023 |
|---|---|---|---|---|
| -141.1 | -129.9 | -46.4 | 0.1% | 542,965 |
| Book value | Adjustments | Fair value | Book value | Adjustments | Fair value |
|---|---|---|---|---|---|
| Cash and bank balances | as included in the cash flow statement | 18 | Wages and salaries | Weighted average number of (depositary receipts of) shares (x 1,000) | 63,978 |
| Book value | Adjustments | Fair value | Book value | Adjustments | Fair value |
|---|---|---|---|---|---|
| Cash and bank balances | as included in the cash flow statement | 18 | Wages and salaries | Weighted average number of (depositary receipts of) shares (x 1,000) | 63,978 |
2024
2023
1,751
1,954
2,297
2,274
119
95
6,289
6,465
| Assets | Liabilities | Total |
|---|---|---|
| 822,900 | 404,627 | 2,156,406 |
2024
2023
1,576
1,096
Profile 3
Message from the CEO * 4
Highlights 2024 * 6
Technology company TKH 9
The world around us 24
Long-term value creation 28
Financial performance 31
Developments per technology segment 33
Acquisitions, divestments, and investments 36
Outlook 37
Sustainability performance 39
Members of the Executive Board * 47
Members of the Supervisory Board 48
56
66
68
79
80
*
84
99
123
139
148
157
205
215
215
216
217
Stichting Administratiekantoor TKH Group
228
Stichting Continuïteit TKH
229
230
232
The paragraphs marked with a * belong to the Management Report as defined in Title 9, Dutch Civil Code 2.
Contents on the sustainability statement
We create innovative leading technologies for high growth markets.
TKH Group N.V. (TKH) is a leading technology company. We specialize in the creation of innovative, client-centric technology systems that drive success in automation, digitalization, and electrification. By integrating hardware, software, and customer-focused insight, our smart technologies provide unique answers to customers' challenges. In doing so, we work to make the world better by creating ever more efficient and more sustainable systems.
With more than 7,000 employees, TKH pursues sustainable growth in a culture of entrepreneurship, working closely with customers to create one-stop-shop, plug-and-play innovations combined with software and Artificial Intelligence for Smart Vision, Smart Manufacturing, and Smart Connectivity technology.
Strategic progress has once again been a high priority. Important milestones were achieved that have strengthened the foundation for growth. Further focus was created by divestments and acquisitions within the core activities, in line with our objectives.
The Smart Manufacturing activities achieved a record year in terms of turnover and results, supported by the excellent performance of the tire building systems segment. With a ROS realization of 19.1%, the target of 19% for 2025 was exceeded. A remarkable performance was achieved by the excellently organized growth in production output and the associated programs for production and cost efficiency.
High added value of these activities confirmed that our strategy to continue investing in our sales organization and product development was the right choice. Partly due to the increased scale, the realization of our ROS objective came into view.
Investments in software and AI strengthened our technology propositions. This is also due to the scale of the development team that has been created for this in recent years, which develops algorithms that are leading.
In terms of important milestones achieved, the opening of the new subsea cable factory in Eemshaven in September 2024 was a clear highlight. This completed the realization of our €200 million strategic capex program. The order intake of over €300 million for this strategic investment, with state-of-the-art production and our unique dry-design cable technology, provides a good basis for a high occupancy rate and an excellent return in line with our objectives.
The start-up of the new factory was delayed by some challenges with regard to fine-tuning of the production processes. Good progress was made during the last months of the year, but as announced in November 2024, the desired output will only be achieved in the course of the first half of 2025.
A clear setback were the market developments within the outdoor fibre optic Telecom segment. The market within Europe deteriorated abruptly as investments were reversed due to higher interest rates. This had a major impact on volumes, which led to the decision to concentrate production on one production location with lower production costs and to allocate the production location in the Netherlands for expansion opportunities for the energy transition and the required capacity expansions.
in multiple applications. One recent example is Foreign Object Detection for Tire Building Machines, an advanced algorithm designed to detect foreign objects in tread material using high resolution cameras. Deep Neural Networks (DNNs) represent another success story that you will find described in the cases section of this annual report. Developed in partnership with the University of Graz, DNNs use network algorithms and adaptive artificial intelligence to eliminate ambient noise from the voice signals in intercom systems.
to gain further market share and expand our addressable market. In addition, a combination of cost optimiza-
tions, optimized integrations and commercial excellence programs will add to further margin expansion. As part
of our strong focus on Automation and Electrification, we will implement a matching divestment program, using
the proceeds to further build our core technologies, while returning any excess cash to shareholders.
ESG continued to be a high priority in our activities. We made good progress against ESG goals, in particular
increasing investments to reduce our carbon footprint in relation to scopes 1 and 2. We also further increased
the proportion of women in our executive and senior management teams, to 21.6% in 2024. Together with
our customers, we create innovative and client-centric technology systems, to provide answers to sustainability
challenges. In doing so, we add value to make the world better by creating more efficient and more sustainable
systems and contributing to the United Nations’ Sustainable Development Goals (SDGs). The percentage
of turnover related to the SDGs increased to 71.6%.
Under the CSRD (Corporate Sustainability Reporting Directive of the European Union), companies in scope
will be required to report on sustainability issues in their management report for the 2024 financial year and to
obtain an assurance conclusion on this report. However, the implementation of CSRD in Dutch law has been
delayed. Although there is not yet a formal statutory requirement to report in accordance with the CSRD due
to the delayed implementation, TKH prepared its sustainability statements 2024 based on the CSRD on
a voluntary basis. At the same time, we obtained a voluntary assurance on the sustainability statements.
This confirms our focus on sustainability and further integration of sustainability in our own operations, and
value chains.
Once again, we can say that the passion of our people makes the difference in achieving exceptional perfor-
mances. These performances did not all translate into the intended return in 2024. However, they do offer pros-
pects for a strong further development of TKH, linked to our strategic choices.
We would like to thank our stakeholders for their trust and cooperation, which have been instrumental in
achieving our current results and laying a solid foundation for further value creation in the years ahead.
On behalf of the Executive Board,
| Europe (other) | €594 million |
|---|---|
| Asia | €369 million |
| The Netherlands | €413 million |
| North America | €251 million |
| Other | €86 million |
| Total Turnover | €1,713m |
51.9% Added value
8.6
11.9%
15.2%
71.6%
7.8
€203.9m
€1.50
21.6%
0.7
Record high order book of €1,135m per December 31, 2024
The added value increased further from 49.8% to 51.9%, which is an important confirmation of the strategic development of our portfolio and technology leadership.
The Smart Vision activities faced headwinds in the first nine months; by focusing strongly on acquiring new customers, winning larger projects and at the same time introducing new technologies, a record ROS of 22% was achieved in the fourth quarter.
The Smart Manufacturing activities achieved a record year in terms of turnover and results, supported by the excellent performance of the Tire Building systems segment; with a ROS realization of 19.1%, the target of 19% for 2025 was exceeded.
The Smart Connectivity activities were strongly impacted by the deterioration of the fibre optic market as well as the ramp-up of the new inter-array cable facility in Eemshaven leading to a ROS of 4.9%; the perspective of the investment in Eemshaven was confirmed by a record high order intake of €336m for subsea.
Sustainability statements aligned with CSRD on voluntary basis, including voluntary assurance on the sustainability statements.
High-priority investments resulted in 70.3% reduction of CO2e footprint (scopes 1 and 2).
Diversity ratio increased to 21.6% (females in executive and senior management teams).
Employee satisfaction rate all-time high at 7.8.
71.6% of turnover linked to SDGs.
Net investment in property, plant and equipment of €98.7m, of which €49m related to the Strategic Investment Program.
As part of our strategy to focus on our proprietary technologies, two non-core entities within Smart Manufacturing systems, together accounting for €56m of turnover in 2023, were divested:
Acquisition of three companies with proprietary technologies which complement our portfolio:
Focus on Automation and Electrification by leveraging our existing footprint and by deploying proprietary technologies.
Further optimize our operations through integrations and divestments.
Using proceeds to further build on our core technologies in Automation and Electrification, while we aim to return excess cash to shareholders through dividends and/or share buybacks.
Making the world a better place by unlocking the potential of our differentiated technologies.
We are aspirational
Making the world a better place by unlocking the potential of our differentiated technologies.
We develop class-leading technologies tailored to the needs of our customers. By making their operations ever more efficient, we aspire to be the strategic partner they trust to deliver long-term value that benefits people, the planet, and future generations.
We specialize in the creation of innovative, customer-centric technology systems for high-growth markets, where growth is driven by the megatrends automation, digitalization, and electrification.
We operate mainly in growth markets, where our differentiated technologies, integrated one-stop-shop, plug-and-play systems or high-quality service levels enable us to build leading positions. We operate globally, with our growth primarily focused in Europe, North America, and Asia.
Our Smart Technologies create unique answers to our customers’ challenges, helping them to work smarter, more successfully, and more sustainably. In doing so, we work to make the world better by creating more efficient and more sustainable systems.
We work with a decentralized business model, coupled with our entrepreneurial, customer-focused culture. Our short lines of communication enabling our operating companies to respond swiftly and effectively to geopolitical and social developments that affect the challenges our customers face.
We operate in a socially responsible manner, continuously seeking to strengthen our contribution to a sustainable society. Socially responsible business practices with a strong environmental awareness are at the heart of everything we do. More than 70% of our turnover relates to at least one UN Sustainable Development Goal. Our portfolio of Smart Technologies supports our customers in meeting their sustainability targets. And we continue to integrate sustainability policies into the business decision-making processes.
We have segmented our Smart Technologies into three core market segments, Smart Vision, Smart Manufacturing, and Smart Connectivity systems.
| €2 billion | in 2025 | |
|---|---|---|
| Return on sales (ROS) | 17% | in 2025 |
| Return on capital employed (ROCE) | 22-25% | in 2025 |
| Carbon footprint (CO2 emissions) | 100% carbon neutral own operations by 2030 (scopes 1 and 2) – reduction of CO2 footprint compared to reference year 2019 | |
| Diversity | 25% | Female executive and senior management by 2030 |
| Accident rate (LTIFR) | < 1.0 |
Over the long-term, we constantly search for ever more efficient technologies, guided by an unwavering focus on real-world requirements. By helping our customers respond quickly and effectively to changing market trends, we deliver the differentiation that provides a true competitive advantage. Our approach to sustainable innovation is shaped by customer purpose, driven by research, and scaled up by AI. With over 750 forward-thinking minds dedicated to R&D, our journey to better is powered by in-house hardware and software development, shaped by digital transformation, and characterized by unique smart technology systems.
Our competitive strength lies in our customer focus, geographic spread, high-quality innovative and proprietary technologies, and distinctive technological capabilities. This strength allows us to respond quickly and swiftly to changing customer patterns, the accelerating technological developments, and the increasing need for sustainable solutions and the consolidation of (industrial) sectors.
At TKH, we develop our technologies in a sustainable and socially responsible manner, using the expertise of our talented people. We conduct our business with honesty, integrity, accountability, and transparency.
The commitment to go beyond the norm.
With the vision to open new possibilities and unlock sustainable value for our stakeholders.
The freedom to make great things happen.
that sets us and our customers apart.
The ambition to deliver sustainable success
More than an innovator, we are a long-term partner.
The vision to help our customers thrive
| Smart Connectivity systems | 35% |
|---|---|
| Smart Vision systems | 37% |
| Smart Manufacturing systems | 28% |
Turnover per technology segment
As a leading innovator in machine vision systems, our technologies represent the eyes, the ears and the brains of automated systems. Our advanced security vision systems, meanwhile, empower our clients to effectively monitor, manage, and control public spaces, urban environments and infrastructure. Vision technology accounts for about 85% of the turnover of the Smart Vision systems segment.
TKH is the global leader in 3D scanning and inspection. 3D machine vision sensors directly digitize the shape of objects, without the need for additional lighting or calibration, allowing for increased accuracy, repeatability, and robustness of the application. Our 3D smart sensor technologies help factories to achieve 100% inspection, reduce waste by optimizing processes, and improve efficiency by simplifying automation.
Our security vision systems, combined with advanced communication technologies, help customers to effectively manage and control urban infrastructure; implement intelligent traffic systems; maintain the highest levels of cybersecurity; and support mission critical security and communication systems.
Our cutting edge 2D and 3D machine vision systems sit at the heart of modern automation. In addition to providing premium hardware, our solutions include advanced integrated software with Artificial Intelligence based Machine Learning capabilities, to address the most difficult processing and automation challenges.
Our industry-leading 2D vision technologies optimize a wide range of processes and systems across a variety of applications including quality inspection, operation, and object monitoring. We offer systems that cover the full breadth of 2D vision technologies, including area scan, line scan, high-speed, SWIR, UV and polarized imaging, while the addition of embedded and PC based software enable turnkey vision solutions.
We are the automation experts. We create value for our customers by empowering them to optimize and further automate processes, reduce inventories, and increase flexibility. Combining engineering expertise, advanced in-house software, proprietary technologies, innovative control and analytical functions, our advanced automated manufacturing systems help the world to work more safely and more efficiently.
The world is becoming ever more connected, ever more digitalized, ever more quickly. As a leading supplier of highly innovative, purpose-specific connectivity solutions, TKH focuses on energy distribution, data and
Our proprietary care system, Indivion, is an innovative, highly automated, pouch-based medicine packing machine. It significantly boosts efficiency and reduces waste in the medicine distribution sector. Our industrial automation systems, meanwhile, increase automation and efficiency across industries as varied as food, metal and chemistry, and pharmaceuticals.
TKH supplies medium and high voltage cables for the transmission and distribution of on-shore and off-shore energy. We provide affordable, efficient, and sustainable cable solutions to network operators, utilities, industry, and energy companies. And our high-quality cables connect bio power plants, wind farms, and substations to the grid. We also offer a complete range of value adding services covering every step from the engineering process to the operational phase.
We lead the way in fibre optic connectivity for data and communication networks. Our advanced robotics and software engineering in fibre-to-the home (FttH) solutions differentiate us from the competition. Our solution-focused approach provides customers with a full range of flexible, compatible innovative products, reducing overall project costs and public disruption.
We also offer a broad range of other connectivity systems, including CEDD and specialty cables.
With our decentralized operating model, we strive for a high level of entrepreneurship and a winning culture. We stimulate and incentivize group synergies, enabling our operating companies in delivering innovative and unique smart technology solutions to customers at attractive cost levels.
| Smart Connectivity systems | Smart Vision systems | Smart Manufacturing systems |
|---|---|---|
| Customers | Operating companies | Governance & support functions |
Our growth strategy is built around our core technologies, creating highly differentiated, customer-centric technologies that drive sustainable long-term value. Through constant innovation, we develop leading positions across our chosen markets in which growth is accelerated by the megatrends automation, digitalization, and electrification. We aim to maintain and expand our share in these markets by leveraging and scaling up innovation, investing in the smart element of our technologies, and actively optimizing our portfolio.
Increase our market share by unlocking the full potential of our innovative technologies and capitalizing on market growth driven by relevant megatrends.
Deliver a strong performance against our sustainability/ESG targets, especially CO2 neutrality by 2030 (scopes 1 and 2), and further develop a sustainable portfolio based on SDG principles.
Focus on translating organic growth into an added value conversion ratio of > 35%. Translate the increase in gross margin into a further increase in results with greater focus on return and cost ratio as a percentage of added value.
Capitalize on our technology leadership by leveraging and accelerating growth from innovations and using the R&D pipeline. Bring key innovations to maturity with targeted profitability and limit the number of new “start-up” projects.
Accelerate growth by acquiring companies with a total turnover of €100 – €150 million turnover.
Exit activities that offer limited potential for value creation, such as those with limited strategic fit or low ROS and organic growth potential.
Strengthen and expand TKH’s branding and transition to an efficient external communication structure.
Our comprehensive range of 2D and 3D vision products and services places us in a unique position to offer a ‘one-stop-shop’ and capture the market’s full potential. We aim to drive growth by continually investing in R&D, AI innovation and sales operations.
Machine vision represents the eyes, ears, and the intelligence of automation. We will continue to play a critical role in the search for ever higher levels of production automation to boost productivity, safety, and accuracy. Our R&D investments and AI-driven innovations will underpin growth in our systems approach to supporting customers.
between our opco’s, by using local presence, network and know-how, which will enlarge our geographical presence.
Our undisputed leadership in the tire building machines industry puts us in a strong position to benefit from trends such as onshoring by tire builders, and the quest for flexible, highly automated, sustainable tire manufacturing. We will expand our range of markets by introducing new innovations, driven by R&D and a focus on digital leadership.
We will also continue to grow our spares and services business.
Offshore wind parks are crucial to meeting global electrification goals. Having expanded the capacity with our state-of-the-art Eemshaven facility, the unique features our inter-array cables offer will allow us to grow our market share in this rapidly growing market with high barriers to entry. TKH is ready to support the energy transition.
We have strengthened our position as the leading full service energy cable supplier in the Netherlands by expanding our production capacity for medium and high voltage cables. TKH is ready to support the energy transition.
Our integrated systems approach for data and communication networks in the fibre optic cable market in selected countries in Europe allows us to capture the growth in the roll-out of the fibre optic cable network.
Smart Vison systems
Smart Manufacturing systems
We defined five strategic pillars as the core foundation, incorporating our Accelerate 2025 strategic program and targets, to drive sustainable long term value.
A strong, diverse workforce of talented people come together in an inspiring, safe, and rewarding environment. Working in close partnership with our customers, we share the passion and the drive to make great things happen.
We continuously accelerate and scale the innovations that differentiates us from our competitors. With over 750 employees active within R&D and software development, we have registered more than 1,400 patents to date.
We believe in the power of partnership. We work exceptionally closely with our customers, creating detailed R&D road maps that result in technologies that answer their challenges, and even accelerating the time-to-market for selected systems.
Integrate sustainability into our decision-making processes, having defined clear targets on key ESG topics. In this way, we support our customers in achieving their sustainability ambitions.
We maintain healthy balance sheet ratios, operate asset light and seek to generate a strong cash flow from our operating activities. This allows us to invest in growth, R&D, and sustainable innovation. In doing so, we create ongoing value for our stakeholders.
A key component of our strategy is a strong, diverse workforce of talented people, with the passion and drive to make things happen. Working together with talented and qualified people is vital to achieving our mission of creating best-in-class Smart Technologies.
We want to ensure that we have an attractive and safe workplace. Being an attractive and responsible employer is an important commitment that we take seriously. TKH offers an inspiring, safe, healthy and rewarding environment for all our employees, and we are constantly striving to improve. We strongly believe that the diversity of our workforce will further strengthen the success of our defined strategy. Therefore, one of our priorities is to promote and safeguard diversity within our organization. In addition, we continue to build on our strong employer brand to keep attracting the right talents and fill vacancies rapidly, especially in times of labor shortages.
| % of female members in executive and senior management teams | > 25% by 2030 | 21.6% |
|---|---|---|
| Accident rate (LTIFR) | < 1.0 | 0.7 |
| Illness rate | < 4.0% | 3.97% |
| Employee satisfaction score | > 7.5 | 7.8 |
TKH exists to create sustainable, purposeful innovation over the long-term. Investing in innovative technologies is vital to maintaining our position as a leading technology company and maximizing sustainable value for our stakeholders and the world around us.
Our ambition is to generate over 10% of turnover through innovations introduced in the previous two years. TKH generated €301 million turnover in 2024 from innovations across our three core technology segments (17.6%). As a result, a significant share of our technology portfolio is constantly in the early stages of the product life-cycle, an essential strategic foundation for securing future growth.
In 2024, we spent €80.7 million on R&D activities (2023: €77.2 million) with over 750 people dedicated to R&D and software development. We have registered more than 1,400 patents to date. Around 30% of our technology is driven by software developed by our own in-house engineers. By accelerating and scaling our innovations, we continue to strengthen our leading position and power growth. With our AI center of excellence, we develop state of the art algorithms and applying them to real-world R&D challenges across the group. Our Artificial Intelligence focuses on Computer Vision, Audio AI, Natural Language Processing (NLP), and Machine Optimization.
We believe in the power of partnership. We work exceptionally closely with our customers, creating detailed R&D road maps that result in technologies that answer their challenges, and even accelerating the time-to-market for selected systems.
We continually search for ever more efficient technologies, guided by an unwavering focus on real-world requirements. By helping our customers respond quickly and effectively to changing market trends, we deliver the differentiation that provides a true competitive advantage. High-quality technologies, solutions, and corresponding services are essential to our commercial impact. Customer interests play a central role in the way we conduct and implement operational activities and developments.
We measure, monitor, and evaluate customer loyalty and appreciation through customer satisfaction surveys. Based on the outcomes, we can take specific actions to better serve our customers. Our average customer satisfaction survey score for 2024 is 8.6 (2023: 8.6), which is above the benchmark score of 7.8. Through training and skills management, standardization of processes, and further improvement of our availability, information systems, and 24-hour service, we aim to provide an even better customer experience.
| Objective | Realization 2024 |
|---|---|
| Innovations | At least 10% of turnover generated by portfolio introduced in the prior two years |
| 17.6% | |
| Sustainable innovations with contribution to SDGs | At least 70% of turnover linked to SDGs |
| 71.6% | |
| Customer satisfaction score | > 7.8 |
| 8.6 |
Scarcer human resources and rising labor costs are driving demand for automation and ‘hands-off, eyes-off’ manufacturing. The journey towards less waste and lower energy consumption is being powered by advanced smart manufacturing technologies. And electrification requires growth in renewable energies. Together with our customers, we are creating smart, efficient, customer-centric systems that answer these challenges and help to shape a sustainable future.
As we integrate sustainability into our product portfolio, our operations, and our supply chains, we are not only turning responsibility into reality. We are also helping our customers to meet their own sustainability ambitions. TKH has a strong sustainable portfolio and has selected six Sustainable Development Goals (SDGs) to guide our approach to sustainability. Two of these focus on our internal operations and business practices, while the remaining four focus on our innovative product portfolio. TKH’s innovative products make a significant contribution to the SDGs: approximately 70% of our portfolio’s total turnover is linked to one of the SDGs that we have defined as relevant.
our reputation. Our focus areas are climate change, circular economy, safe & attractive workplace, and responsible business operations.
We maintain healthy balance sheet ratios, operate asset light and seek to generate a strong cash flow from our operating activities. This allows us to invest in growth, R&D, and sustainable innovation. In doing so, we create ongoing value for our stakeholders.
We aim to achieve an annual increase in earnings per share, and a debt leverage ratio of no more than 2.0. Generated cash will be reinvested in businesses with above-average growth potential and/or distributed to shareholders. Structural surpluses of cash can be used for share buyback programs, dividends, and/or strategic investments with an attractive return on investment.
TKH will expand through organic growth and acquisitions, with a geographic focus on Europe, North America, and Asia. Acquisitions will focus on structurally healthy companies that strengthen our portfolio of proprietary technologies or enhance our sales network. We are targeting additional turnover of €100 million to €150 million through acquisitions, while continuing to manage our portfolio to reduce activities with lower margins and growth potential and limited overlap with our core technologies.
By focusing on higher-margin activities, organic growth combined with cost efficiency, acquisitions, and divestments, we want to be well positioned to take full advantage of the expected market growth and value potential of TKH. Our 2025 target for our ROS is above 17%. The range for the 2025 ROCE target is 22%–25%. Market headwinds and geopolitical uncertainties prevent us from attaining our full potential within the timeframe we had set ourself.
| Carbon footprint (CO2e emissions) | 100% carbon neutrality in own operations by 2030 (scopes 1 and 2) – reduction of CO2 footprint compared to reference year (2019) | 70.3% |
|---|---|---|
| % waste of most relevant raw materials, compared to total relevant material consumption | < 5% waste | 5.4% |
| Tier-1 copper suppliers certified by The Copper Mark | > 80% | 59.0% |
| Turnover | > €2 billion by 2025 | €1.7 billion |
|---|---|---|
| Return On Sales (ROS) | > 17% by 2025 | 11.9% |
| Return On Capital Employed (ROCE) | 22% – 25% by 2025 | 15.2% |
| Net debt / EBITDA | < 2.0 annual target | 2.0 |
Underlining the strong foundation and value potential of TKH, and building on our strategic pillars, we launched our Accelerate 2025 strategic program in November 2021, introducing renewed targets for 2025.
In addition, TKH unveiled the technology-focused segmentation, centered on Smart Technologies: Smart Vision systems, Smart Manufacturing systems and Smart Connectivity systems. Accelerate 2025 includes actions to boost turnover and ROS by unlocking the full potential of our innovative technologies in the high-growth markets in which we operate. By leveraging our current market positions and the megatrends of automation, digitalization, and electrification, TKH is well positioned to take full advantage of the expected market growth. In addition, we increased our focus on sustainability in our strategy, with strong ambitions and sustainability targets.
The Accelerate 2025 strategic program and targets are included in our strategic pillars.
1 Represents contribution to ROS improvement, based on reference ROS of 12%.
With our Accelerate 2025 strategy we have created strong foundations with leading positions in markets such as tire building machines, machine vision for factory automation, integrated security systems and energy cable systems. We have expanded our production capacity in this area and have developed state-of-the-art technologies with distinctive USPs. In the next strategic phase, we will focus on our activities which bring the best value creation potential, given our market leading positions and proprietary technologies on the back of the global trends.
Within Automation, we will focus on production automation, inspection and security as core activities. In Electrification, we will build on our significantly expanded production capacity for offshore and onshore connectivity and capitalize on the substantial value creation opportunities. Our R&D competences, innovations, smart software, and AI will remain cornerstones to accelerate growth.
Organizational optimization and integration will drive further cost efficiencies in our operations. We will continue to divest non-core business activities that are not related to Automation or Electrification. This includes our Digitalization activities within Smart Connectivity systems.
The proceeds of the divestments will be used to further build on our core technologies in Automation and Electrification, while we aim to return excess cash to shareholders through dividends and/or share buybacks.
| Areas | Bandwidth | expected turnover | ROS target |
|---|---|---|---|
| Organic Growth | > € 300 mln | > 2.5% | Scale effect - due to organic growth - on opex and cost of goods sold, productivity, and yield improvement programs. |
| Innovations | > € 200 mln | > 2.0% | Acceleration of our innovations in terms of turnover, benefit from learning curve and economies of scale, capital light future innovations. |
| Acquisitions | + € 100 - € 150 mln | Acquisitions that strengthen our portfolio of proprietary technologies in the area of software, and/or strengthen our sales network. | |
| Portfolio Management | - € 150 - € 200 mln | > 0.5% | Divestments that do not contribute towards achieving our long-term strategy and targets. |
TKH operates in a dynamic environment. Trends and developments provide important input for defining our strategy. TKH has identified a number of relevant megatrends that are driving our growth and shaping our strategy and innovations.
Fibre-to-the Home (FttH) solutions, differentiating TKH from competitors.
Market leader in the high-end industrial automation market and high-end medical market.
Our stakeholders are those groups and individuals who directly or indirectly influence the activities of TKH and our operating companies.
TKH recognizes and acknowledges the importance of having a meaningful dialogue with its stakeholders about sustainability and the company’s strategy including business model and value chain (stakeholder dialogue).
Meaningful stakeholder dialogue is characterized by two-way communication and depends on the good faith of participants on the sides of both TKH and the stakeholders. TKH uses various methods and channels to engage in dialogue with its stakeholders, depending on
| GRI topic 2023 | CSRD topic 2024 | Reference annual report 2024 |
|---|---|---|
| Environmental | Responsible production | Pollution of air, soil, and water, and water consumption page 111-112 |
| Resource efficiency (incl. waste & circularity) | Resource inflows, waste, and waste recycling page 115-118 | |
| Climate change & CO2 footprint | GHG emissions, energy efficiency and consumption |
Sustainable innovation
Child / forced labor, and health and safety (workers in the value chain)
Sustainable employment
Health and safety, diversity
Health and safety
Health and safety, diversity
Page 42
Diversity
Integrity, compliance & human rights
Corporate culture, corruption and bribery
Management of relationships with suppliers
Privacy (cybersecurity), AI and algorithm ethics
Page 43-44
While most of the material sustainability topics under the CSRD are in line with the materiality analysis based on the reporting requirements of the GRI from the prior year, we have identified AI and algorithm ethics as an additional sustainability topic that requires attention because of more strategic focus on AI applications in the past year.
Furthermore, we have now identified water consumption, pollution of air, soil, and water, and working conditions and other work-related rights in the value chain as a distinct topic, which was previously included under respectively responsible production and responsible procurement. The GRI topics employee satisfaction, personal development opportunities and tax were included as of less importance in the materiality matrix, and not identified as material under the CSRD assessment. More information on the material CSRD topics can be found in the Sustainability statements.
The nature, purpose, and frequency of the interaction. More information on stakeholder dialogues including channels of engagement and key engagement topics can be found in the section Interests and views of stakeholders in the sustainability statements.
TKH’s value creation process is dynamic and ongoing. It aims to use our business processes to respond to the needs of our stakeholders and to identify at an early stage any opportunities or risks driven by economic, geopolitical, environmental, sustainability, social, and technological trends.
Using detailed R&D road maps, we focus on our customers’ developments within our smart technology segments and, by effectively integrating our technologies with software, we create unique, innovative, and comprehensive systems suitable for multiple applications that improve efficiency and connectivity.
We employ operational management models that have been incorporated into an operational excellence program. In doing so, we aim to achieve optimal performance of our operational processes.
offering a favorable return on investment (ROI) and sustainable product portfolio. The composition of products constitutes the basis for optimal recycling. The return of materials, components and products to the appropriate value chain gives rise to a sustainable business model.
During the product development we use methods and processes which make allowances for environmental aspects, such as energy savings and recycling. We also expect our suppliers to act in a sustainable way.
We focus on organizing efficient, just-in-time logistical services for our customers, supported by one-stop-shop solutions and strong inventories.
TKH’s core technologies are combined to create innovative, comprehensive systems to meet customer demand and enhance our market opportunities. The sustainability of our innovative product portfolio is crucial.
R&D road map and technology and software development for a high-quality, innovative smart technology portfolio, including investment in R&D for recyclable materials and alternative components.
Integrated technologies and software that create innovative, sustainable, and comprehensive systems, both capitalizing on market trends and ensuring efficiency and connectivity for customers.
For each decision we take in our business, we consider its potential environmental impact. TKH enters into active dialogue with its strategic suppliers to improve the sustainability of their products and processes.
Equity and loans to invest in proprietary technologies, our employees, and the growth of our business.
Talented and skilled employees who reflect a diverse society. Providing a safe and inspiring workplace with opportunities for professional development.
Close cooperation with stakeholders based on honesty, integrity, and openness. Contributing to and investing in the society around us.
Make the world better by creating more efficient and more sustainable systems
LMI’s AI-powered anomaly detector sets the stage for advanced inspection solutions.
This solution leverages traditional and AI-based tools within the GoPxL software framework, enabling users to train and deploy defect detection models directly on GoMax hardware without relying on additional cloud or external resources. The Anomaly Detector sets the stage for advanced inspection solutions based on LMI’s IoT-enabled vision inspection software platform. It addresses the growing demand for advanced inspection and defect detection solutions across industries such as automotive, food, building materials, tires, and more. It empowers manufacturers to address evolving challenges in defect detection, improve production quality, and reduce costs. With its AI-driven capabilities and seamless integration with LMI’s Gocator and GoMax hardware, the Anomaly Detector is a critical tool for industries aiming to stay competitive in a rapidly changing manufacturing landscape.
The Anomaly Detector provides significant advantages over traditional inspection methods:
Turnover reached €1,712.7 million in 2024, a decrease of 7.3% (2023: €1,847.5 million), a large part of which was caused by divestments. Adjusted for acquisitions, divestments and currency effects, turnover decreased organically by 1.2%. Acquisitions accounted for +0.7% and divestments accounted for -6.8% of turnover. Of the three segments, Smart Manufacturing systems recorded turnover growth in 2024.
Machines delivered to Asia, while turnover in North America grew to 15% (2023: 13%). The turnover share of the other geographical regions grew to 5% (2023: 4%). The order intake in 2024 amounted to €1,911.4 million (2023: €1,834.8 million), resulting in an order book at year-end of €1,135.0 million (2023 €970.1 million). The order book at Smart Connectivity systems reached a record level of €493.6 million (2023: €214.8 million), driven by a number of large orders for inter-array cables. The order book at Smart Vision systems increased from €124.0 million at year-end 2023 to €139.9 million at year-end 2024. The order book at Smart Manufacturing systems decreased from €631.3 million at year-end 2023 to €501.5 at year-end 2024. The divestments of HE Systems and EKB Groep accounted for €40.0 million of the order decline in Smart Manufacturing systems.
The added value increased to 51.9% in 2024 (2023: 49.8%). All segments reported an increase in added value. Most notably Smart Connectivity systems’ added value went from 41.8% in 2023 to 44.0% in 2024. The increase in added value was mainly attributable to the elimination of EU anti-dumping duties on fibre optic cables, a change in product mix, and the impact of acquisitions and divestments.
Operating expenses (excluding one-off income and expenses, amortization and impairments) increased by 0.3% compared to last year. Acquisitions and divestments had a net impact of -3.1%. Operating expenses were impacted by the start-up and ramp-up of capacity related to strategic investments, as well as by payroll increases. Currency effects had a limited impact.
As a result, EBITA excluding one-off income and expenses decreased organically by 7.5% to €203.9 million in 2024, from €237.0 million in 2023. ROS decreased to 11.9% (2023: 12.8%). Inflationary effects, destocking at customers and start-up costs of our new factories all had a dampening effect on ROS. The ROS at Smart Manufacturing systems increased markedly to 19.1% (2023: 15.8%), driven by high-capacity utilization, implemented efficiency improvements, and the catch-up effects from the delivery of previously stored machines in the course of 2024.
In 2024, one-off expenses on EBITA-level amounted to €4.0 million (2023: one-off expenses of €2.0 million) mainly due to the €15 million cost-saving measures implemented in H2 2024. These included reorganization costs in Smart Vision systems for the integration in 2D Vision, restructuring costs in Smart Connectivity systems.
| EBITA before one-off income and expenses (in € mln) | ROS (in %) |
|---|---|
| 2020 | |
| 2021 | |
| 2022 | |
| 2023 | |
| 2024 |
EBITA and ROS Development
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| 225 | |||||||||
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| 175 | |||||||||
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due to the centralization of fibre optic cable production in Poland, and acquisition and divestment costs.
Amortization increased to €60.8 million (2023: €56.9 million) due to the higher amortization of capitalized R&D, as a result of increased investments in previous years and higher amortization of purchase price allocations due to acquisitions. Impairments amounted to €8.5 million (2023: €3.7 million) for mainly underutilized right-of-use and fibre optics network related assets.
Net financial expenses increased to €29.3 million (2023: €22.1 million) due to the combination of higher debt levels and higher interest rates. The results from associates and subsidiaries amounted to €24.5 million (2023: €51.5 million) and includes the one-off profits from the divestments of HE System Electronic and EKB Groep of €24.6 million (2023: divestment of CCG and TKH France of €54.0 million).
Europe (other) 35
Asia 21
North America 15
Other 5
2024
The normalized effective tax rate was stable at 24.4% in 2024 compared to 24.6% in 2023. TKH benefitted from R&D tax facilities in several countries.
Net profit before amortization of intangible non-current assets related to acquisitions and one-off income and expenses attributable to shareholders decreased by 24.2% to €98.9 million (2023: €130.5 million). Net profit decreased to €99.5 million (2023: €165.8 million).
Earnings per share before amortization, one-off income and expenses amounted to €2.48 (2023: €3.21). Ordinary earnings per share were €2.50 (2023: €4.07).
Net bank debt according to bank covenants increased by €26.8 million from year-end 2023 to €496.0 million at year-end 2024. The main items affecting the debt level include the net investments in property, plant, and equipment of €98.7 million (€49 million of which is related to the strategic investment program), acquisitions (net €38.6 million), investments in intangible assets (€61.7 million), and dividends paid (€67.9 million).
Divestments amounted to €60.3 million in 2024, including the €24.2 million one-off profit. At year-end 2024, €18.2 million assets were held for sale (year-end 2023: €18.0 million), related to the intended divestment of the test and measurement system activities, Dewetron.
Cash flow from operating activities amounted to €196.2 million (2022: €152.9 million), an improvement due to a decrease in working capital in 2024 compared to an increase a year earlier. Working capital stood at 17.9% of turnover (2023: 16.7%). The net debt/EBITDA ratio, calculated according to TKH’s bank covenant, was 2.0, well within the financial ratio agreed with our banks. Solvency improved to 39.9% (2023: 39.3%).
| 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| 400 | 350 | 300 | 250 | 200 |
| 150 | 100 | 50 | 0 |
35
30
25
20
15
10
5
0
At year-end 2024, TKH employed a total of 6,640 FTEs (2023: 6,899), 351 of which were temporary employees (2023: 434 FTEs).
| in € million unless otherwise stated | FY 2024 | FY 2023 | Δ in % | Organic Δ in % |
|---|---|---|---|---|
| Turnover | 489.6 | 500.5 | -2.2% | -4.4% |
| Added value | 60.6% 58.9% | 60.6% 58.9% | 60.6% 58.9% | 60.6% 58.9% |
| EBITA excluding one-off income and expenses | 77.7 | 85.9 | -9.5% | -12.8% |
| ROS | 15.9% | 17.2% | ||
| Order book | 139.9 | 124.0 | +12.8% | |
| ROCE | 13.3% | 15.6% |
Due to higher operating expenses combined with lower turnover growth, EBITA excluding one-off income and expenses decreased to €77.7 million (-12.8% organically) and ROS reached 15.9%.
85% of Smart Vision systems’ turnover
In line with expectations, both Security Vision and Machine Vision posted a record Q4 2024 on the back of a strong order intake delivery and the delivery of some larger secured orders. In 2024, Security Vision’s turnover declined slightly, mainly due to the comparison with a strong 2023. In Machine Vision, 3D Vision recorded a decline in turnover due to weak market circumstances in solar and battery business. The return of the wood market and the contribution from Liberty Robotics, which was acquired in the second half of 2024, were not sufficient to offset this impact. 2D Vision recorded growth during the year as it benefitted from implemented customer excellence programs, and expansion into new end markets such as defense. In both 2D and 3D Machine Vision, further innovations accelerated by AI were brought to the market. Machine Vision also saw its share of customized solutions increase.
During the year, steps were taken to consolidate the organization of TKH's 2D brands and to strengthen the supply chain, which, together with the implementation of cost-saving measures, resulted in one-off expenses of €2.5 million. These steps will benefit the results of 2D Vision from 2025 onwards. With the return of the wood market, new markets and solutions with Liberty Robotics, and a successful penetration into India, we expect the results for 3D Vision to have bottomed out in 2024 and to start growing. The growth in the order book is largely due to a number of larger security and parking automation projects in Security Vision and to some extent in 2D Machine Vision.
| in € million unless otherwise stated | FY 2024 | FY 2023 | Δ in % | Organic Δ in % |
|---|---|---|---|---|
| Turnover | 608.8 | 573.6 | +6.2% | +11.1% |
| Added value | 51.5% 50.5% | 51.5% 50.5% | 51.5% 50.5% | 51.5% 50.5% |
| EBITA excluding one-off income and expenses | 116.1 | 90.6 | +28.1% | +31.1% |
| ROS | 19.1% | 15.8% | ||
| Order book | 501.5 | 631.3 | -20.6% | -15.2% |
| ROCE | 88.1% | 66.0% |
The number of false positives. The lower order intake in 2024, both for passenger and truck tire machines was mainly related to a decline in demand at Tier 1 customers, whereas order intake from Tier 2 and 3 customers remained at similarly high levels compared to previous years. The drivers for tire building systems remain very strong, as the need for more flexibility in production, increased sustainability demands, and the need for higher levels of automation will fuel future demand for more advanced tire building production.
During the year, the divestments of HE System Electronic and EKB Groep were closed and Dewetron was reclassified to “Held for sale.” New orders were received for the Indivion, strengthening our position in the Nordics region.
Smart Manufacturing systems turnover grew strongly during the year, although growth slowed down in the second half of 2024, in line with expectations, partly explained by the strong H2 2023. Adjusted for currency effects and divestments, turnover in 2024 grew organically by 11.1%. During 2024, HE System Electronic (2023 turnover €20.7 million) and EKB Groep (2023 turnover €35.5 million) were divested. The order book at €501.5 million decreased by -20.6% (-15.2% organically) compared to its record level of €631.3 million on December 31, 2023. The added value increased further to 51.5% (from 50.5% previously), due to a combination of product mix and price increases being passed on to customers. EBITA excluding one-off income and expenses was up 31.1% organically at €116.1 million, as the implemented efficiency improvements continued to pay off, in combination with the high-capacity utilization at Tire Building systems. As a result, the ROS expanded to 19.1% (2023: 15.8%), with ROS reaching 20.3% in Q4 2024.
83% of Smart Manufacturing systems’ turnover Tire Building systems benefitted from a very strong year in 2024, driven by a record order book and the catch-up effect of deliveries, following the easing of earlier supply chain constraints. Together with the efficiency improvements implemented during the year, this led to a strong operational performance. The production facilities in Poland were further expanded in the first half of 2024. The order for a UNIXX system booked at the beginning of 2024 is scheduled for delivery and installation in the second half of 2025, with further strong market interest. The revolutionary UNIXX technology, implemented in newly released tire component production machines such.
| in € million unless otherwise stated | FY 2024 | FY 2023 | Δ in % | Organic Δ in % |
|---|---|---|---|---|
| Turnover | 631.9 | 800.5 | -21.1% | -9.2% |
| Added value | 44.0% 41.8% | 44.0% 41.8% | 44.0% 41.8% | 44.0% 41.8% |
| EBITA excluding one-off income and expenses1 | 30.9 | 81.1 | -61.9% | -42.9% |
| ROS | 4.9% | 10.1% | ||
| Order book | 493.6 | 214.8 | 129.8% | |
| ROCE | 5.2% | 16.6% |
inter-array cable orders, including the €200 million turnkey inter-array cable project with Inch Cape, which includes the survey, engineering, manufacturing, testing, supply and installation of the inter-array cables. Added value as a percentage of turnover increased to 44.0% from 41.8% in 2023, mainly due to a shift in product mix, elimination of anti-dumping duties on fibre cables and the divestment. EBITA excluding one-off income and expenses decreased organically by 42.9% to €30.9 million, impacted by lower volumes, start-up and ramp up costs of the new Eemshaven factory, and low levels of utilization in inter-array and fibre optic cables. ROS decreased to 4.9%.
48% of Smart Connectivity systems turnover
TKH has invested significantly in additional capacity in offshore wind inter-array cables, and high and medium voltage onshore energy cable in anticipation of substantial market growth in the coming years. The €150 million strategic investment into Electrification is now completed, and the ramp-up of serial production at the new Eemshaven plant for inter-array offshore wind cables, which was initially postponed, is expected to commence shortly. In the past months, the issues in what is considered the most critical production processes have been solved. The remaining production stages are less complex and have already been successfully completed for shorter lengths. To meet the demand for inter-array cables, it was decided to continue the production of inter-array wind cables at the Lochem plant. The demand for onshore energy cables in the Netherlands remained weak due to destocking by utility companies. We made good progress in positioning our high- and medium-voltage cables outside the Netherlands in Europe. Our sales funnel for inter-array cables remains high with more than >10,000 km up until 2030. In anticipation of the planned growth and driven by the large order intake, we expanded our staff. The aforementioned limitations to our turnover growth in inter-array, high- and medium-voltage cables, combined with higher start-up and ramp-up costs impacted the EBITA excluding one-off income and expenses in 2024.
29% of Smart Connectivity systems turnover
Digitalization continued to be impacted by a deteriorating market for fibre optic cables in Europe, due to low levels of investment in the rollout of European fibre networks, a strong destocking effect, as well as pricing pressure due to high inventory levels in the Chinese market. The elimination of EU anti-dumping duties could not compensate for the low utilization rate and ramp-up costs of our new factory in Poland. In 2024 we decided to close the fibre optic cable production in the Netherlands and consolidate production in Poland, which will reduce our operating expenses from Q2 2025 onwards.
23% of Smart Connectivity systems turnover
TKH’s specialized and customized connectivity systems for the machine-building and robotics industries continued to be impacted by the weak German economy.
Acquisitions are an important part of TKH’s strategy and contributes to our long-term value creation by strengthening our business proposition.
We focus on acquiring structurally healthy companies that allow us to build our portfolio of proprietary technologies, or expand our geographic sales network within Europe, North America, and Asia. We aim to acquire a turnover of €100 million to €150 million in total within the medium term, at the same time as we manage our portfolio to reduce activities with lower margins and growth potential, or limited strategic overlap that do not contribute toward our long-term targets.
both flight and ground crew. JCAII’s software is currently deployed across many airports as well as airlines. JCAII will be able to take advantage of as well as accelerate the growth of the advanced TKH CEDD connectivity technology especially in the North American market.
TKH acquired Comark Srl in July 2024, an Italian company specialized in laser-based volumetric vehicle measurement and classification for tolling and free-flow tolling applications. With this acquisition, TKH can further drive the optimization of traffic flows through innovative and AI-driven products, with new high-performance and high-added value solutions.
In August 2024, we strengthened our position in the 3D Vision market with the acquisition of the US-based company Liberty Robotics. Liberty Robotics has established itself as a key player in automation for the automotive sector, its systems enabling precise end-of-arm robotic guidance for applications including part handling and the application of coatings and sealers. Liberty Robotics’ guidance systems complement TKH’s advanced 3D vision sensor technology and global market presence.
We also made good progress with our divestment program. The divestment HE System Electronic GmbH was closed end of May 2024 and led to an one-off net profit of €14.2 million. The divestment of the EKB Groep B.V. was closed in August 2024 and led to an one-off net profit of €11.5 million. In October 2024, we divested our 12.5% interest in the associate Shin-Etsu (Jiangsu) Optical Preform Co. Ltd. At balance sheet date, an active program is in place to divest certain activities in our Smart Manufacturing segment related to test and measurement systems; accordingly, the associated assets and liabilities have been reclassified to assets and liabilities held for sale. Barring unforeseen circumstances, a transaction is expected within the upcoming 12 months.
| 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| in million € | in million € | in million € | in million € | in million € |
| 325 | 300 | 275 | 250 | 225 |
| 200 | 175 | 150 | 125 | 100 |
| 75 | 50 | 25 | 0 |
| 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| in million € | in million € | in million € | in million € | in million € |
| 90 | 80 | 70 | 60 | 50 |
| 40 | 30 | 20 | 10 | 0 |
| 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|
| in % | in % | in % | in % | in % |
| 5.0 | 4.5 | 4.0 | 3.5 | 3.0 |
| 2.5 | 2.0 | 1.5 |
In 2024, the net investment in property, plant and equipment, excluding right-of-use assets, totaled €88.8 million (2023: €179.4 million). In 2022, we launched our Strategic Investment Program to further increase our global production capacity to respond to the increased market demand in the fields of automation, digitization, and electrification. The execution of these expansions started in the second half of 2022 and were completed in 2024.
Out of the total amount of €200 million allocated for strategic investments, €49 million has been spent in 2024 (2023: €124 million). In total, we expect these investments to generate an additional €250 - €300 million annual turnover in the coming years, the majority of which will be realized by Smart Connectivity systems.
In 2024, €61.7 million was invested in intangible assets and goodwill (2023: €53.1 million). The most important investments related to the ongoing development of our technologies:
The investments above do not only relate to hardware development, but more and more also the development of smart software based on artificial intelligence. In addition, there are investments in software including ERP of €10.4 million and patents and licenses of €2.4 million.
TKH has made strong progress in its strategic positioning with the completion of the €200 million strategic investment program, which will start to pay off in 2025. This, combined with the strong order book, will position us well for 2025. The first quarter of 2025 will be weak due to seasonality, the ramp-up of the Eemshaven plant, and continued weakness in the fibre optic cable market. For the full year, we expect turnover and EBITA excluding one-off income and expenses growth to return in Smart Vision systems, driven by the stronger order book, expected market share growth in new markets, and the implemented cost-saving measures. In Smart Manufacturing systems, turnover and EBITA excluding one-off income and expenses are expected to decrease organically due to the lower order intake in 2024 and the comparison with a very strong 2024, which benefitted from catch-up effects. In Smart Connectivity systems, we expect the new production capacity and the high order intake in 2024 to contribute to significant turnover and EBITA excluding one-off income and expenses growth in Smart Connectivity systems.
Barring unforeseen circumstances, on balance we anticipate organic growth in turnover and EBITA excluding one-off income and expenses in 2025. TKH will provide a more specific outlook for the full year of 2025 at the presentation of its interim results in August 2025.
The offshore wind market is evolving rapidly, driven by the growing demand for renewable energy and electrification. In this challenging environment TKF is at the forefront of innovative inter-array cable solutions that on the one hand have a major impact to prepare the world for a sustainable future and on the other hand preserving the environment with TKF’s unique and sustainable cable design.
The inter-array Subsea cable solutions from TKF are composed of durable materials compared to classic subsea. The robust design results in longer operational lifetime and without lead and bitumen, there is no risk of leaching chemicals or metals in the marine environment. A high carbon footprint reduction is achieved based on increased recyclability (in and out), opportunities for low carbon and recycled materials and fossil free powered production at our recently completed state-of-the-art factory in Eemshaven.
38TKH Group Annual Report 2024
We aim to create long-term value for our stakeholders by creating Smart Technologies for a more efficient and sustainable world. We aim to do that by sustainable innovation, which is part of our DNA and key for our business, in combination with a focus on strategic areas of sustainability, which are increasingly integrated in our operations and supply chain.
Sustainability is a key element in our product portfolio and enables our customers to improve their sustainability performance. The world is facing a shortage of human resources and rising labor costs, driving the demand for automation and “hands-off, eyes-off” manufacturing. The need to reduce carbon footprints by reducing waste and energy consumption in manufacturing is driving the need for advanced smart technologies. In addition, electrification requires more (renewable) energy generation. Together with our customers, we create innovative and client-centric technology systems, to provide answers to these challenges. In doing so, we add value to make the world better by creating more efficient and more sustainable systems and contributing to the United Nations’ Sustainable Development Goals (SDGs).
| annual target | 2024 | 2023 |
|---|---|---|
| Turnover from innovations (in million) | €301.4 | €297.5 |
| Innovation as percentage of turnover | 17.6% | 16.1% |
| Turnover linked to SDGs | 71.6% | 70.2% |
| Number of live patents | 1,422 | 1,400 |
| Total R&D spend (in million) | €80.7 | €77.2 |
| R&D capitalized (in million) | €46.5 | €41.8 |
| R&D capitalized as percentage of total R&D spend | 57.5% | 54.2% |
Integrating sustainability into our operations and value chain. As we continue to expand our operations, integrating sustainability enables us to minimize energy use, GHG emissions, and waste. We want to ensure that we have an attractive and safe workplace. Raw materials are becoming scarce due to the increasing demand, which is why we aim for a sustainable supply chain. We want to do business in a responsible way by focusing on integrated governance and transparent sustainability reporting. We want that sustainability to be integrated throughout our business and value chain.
As part of the Accelerate 2025 strategic program, we continue to focus on sustainability in our strategy, with strong ambitions and non-financial targets for the coming years. We have a clear focus on the material ESG matters where TKH has the greatest impact on, with the aim of reducing the negative impact and/or increasing the positive impact of:
In 2024, our net carbon footprint for scopes 1 and 2 decreased by 70.3% compared with the reference year, 2019 (2023: reduction of 64.3% compared to 2019). We did not purchase any carbon offsets, except for purchased green certificates.
Netherlands must be electric, resulting in a share of electric cars of 34.8% of the total lease car fleet. From 2024, all new lease cars within the group must be electric, with only a few exceptions. Additionally, we are investing in the essential charging infrastructure and continuously expanding our network of electric vehicle charging stations, conveniently including those within our employee and visitor parking areas.
| Target | 2024 | 2023 | ||
|---|---|---|---|---|
| Environmental | ||||
| CO2 footprint | 100% carbon neutrality in own operations by 2030 (scopes 1 & 2) – reduction of CO2 footprint compared to reference year (2019) | 70.3% | 64.3% | |
| % production-related waste of most relevant raw materials | < 5% waste | 5.4% | 5.2% | |
| % recycling of most relevant raw materials | > 80% recycling | 75.2% | 87.3% | |
| Social | ||||
| Diversity: % of female members in executive and senior management teams | > 25% by 2030 | 21.6% | 19.2% | |
| Accident rate (LTIFR) | < 1.0 | 0.7 | 0.8 | |
| Illness rate | < 4.0% | 3.97% | 3.85% | |
| Employee satisfaction score | > 7.5 | 7.8 | 7.8 | |
| Customer satisfaction score | Average score above benchmark (7.8) | 8.6 | 8.6 | |
| Code of Supply signed by suppliers | > 90% strategic suppliers signed up | 89.4% | 91.9% | |
| Governance | ||||
| Responsible business | Code of Conduct signed by employees | > 95% | 98.9% | 96.5% |
Our scope 2 emissions were further reduced as a result of a higher share of renewable energy, resulting from a shift to renewable energy sources and self-generated energy through solar panels installed on our buildings and properties, combined with purchased green certificates which was the main contributor in the reduction of scope 2 emissions. The share of renewable energy consumption in the total energy consumption increased from 55.5% in 2023 to 61.9% in 2024.
Total waste from the most relevant raw materials used in cable production (copper, aluminum, and plastics), compared to total relevant material consumption, was 5.4% in the year under review, compared with 5.2% in the previous year, and close to the target set for a maximum of 5% waste compared with total consumption of materials. The increase is mainly the result of our start-up activities, for example our new subsea cable production facility in Eemshaven. The start-up of new activities and production site results in more waste, e.g. as a result of testing and commissioning of machines.
In 2024, we expanded our waste reporting by adding more material streams and by including all of our operating companies. Reference is made to the sustainability statements chapter E5 circular economy, containing overviews of resource inflows, waste, and waste treatment per material.
companies for conversion into new raw materials. Mainly due to the product mix, we increased the use of plastics, which resulted in more plastic waste. As a result, the total recycling percentage decreased.
The percentage of own workers who are covered by health and safety management system based on recognized standards is 51.6%. This is calculated based on the total own workers and includes both production sites and office locations. In 2024, 100% of our own workforce at our production sites was covered by the ISO 45001 standard as health and safety management system. Fortunately, we neither had any fatality nor any case of recordable work-related ill health to report on, as in the two previous years (target: 0). The number of recordable work-related accidents for own workforce was 114. The LTIFR for 2024 decreased slightly to 0.7 compared to the previous year (2023: 0.8) and is below the target of <1.0. TKH defines its Lost Time Injury Frequency Rate (LTIFR) as the number of incidents resulting in at least one day’s absence from work without the possibility of any replacement work, per million hours worked. In 2024, the illness rate was 3.97%, which is slightly above the previous year’s level (2023: 3.85%) and slightly below the target of a maximum of 4.0%. Flu-related illnesses had the greatest impact on the small increase of the illness rate.
We have a long history of conducting employee satisfaction surveys within a four-year cycle combined with “are we on track” surveys during this cycle. The surveys provide important information regarding the motivation, satisfaction, and expectations of our employees. Follow-up surveys also measure the effects of improvements made in response to the findings. We carry out these surveys in collaboration with a specialized third-party research agency. Some operating companies have carried out a satisfaction survey focusing on (company) specific topics. Based on the results of the survey, we evaluate where we need to amend our working methods, policies and develop a robust action plan. The employee satisfaction score in 2024 was 7.8, reflecting surveys from 2021-2024 among 4,788 employees, representing 72% of the number of employees (headcount) as of December 31, 2024. The employee satisfaction score is equal compared to 2023 (7.8) but increased compared to the previous years, demonstrating the effectiveness of the measures and action plans implemented.
We measure, monitor, and evaluate customers through customer satisfaction surveys on a four-year cycle. Our average customer satisfaction survey score for 2024 is 8.6 (2023: 8.6). Through training and skills management, standardization of processes, and further improvement of our availability, information systems, and 24-hour service, we aim to provide an even better customer experience.
We expect our suppliers to adopt a zero-tolerance policy on issues that are material to us. Our principles and requirements are set out in a Code of Supply, which covers Environmental, Social and Governance topics such as human rights, the environmental impact (e.g. policies, environmental management systems, pollution prevention etc.), occupational health and safety, compliance with law and regulations including corruption and bribery, and ethical behavior. This set of environment, social and governance topics are part of the selection criteria of suppliers. In case criteria are not met by the supplier, the business relationship will be reconsidered. We oblige our strategic suppliers (supplier with an annual purchase volume of more than € 1 million must) to sign the Code of Supply, followed by a desktop assessment and on-site assessment. The Code of Supply has been signed by 89.4% (2023: 91.9%) of the total number of suppliers in scope. The annual target of 90% has not been achieved, partly due to a longer than expected lead time for new suppliers to sign the code. We are in close contact with the suppliers, and we are establishing clear rules to eliminate such delays as soon as possible.
We continuously improve and increasingly integrate sustainability in our operations and value chains. In 2024, this resulted in an improved score of relevant ESG ratings, reflecting our sustainability performance and commitment.
The following ESG ratings are available for TKH Group:
Our employees are encouraged to develop in the direction of their choice. Education and training are an indispensable part of maintaining our knowledge base. We provide training budgets to further develop our employees’ skills and enhance their employability. We organize internal training, with the help of external experts so that it is as close as possible to TKH’s normal practice. New employees go through introduction programs, including product training.
In collaboration with Nyenrode Business University in Breukelen, the Netherlands, a Management Development (MD) program has been developed for those identified as having high potential for accelerated career advancement. Candidates are nominated by the management teams of the operating companies based on predetermined selection criteria. The Executive Board plays a proactive role in the MD program. In 2023, we launched a new MD program. In this 2023-2024 MD program, selected candidates gain in-depth knowledge of topics such as strategy and leadership, business development and value creation, business processes and sustainability, and also work on business cases to put this into practice.
In 2024, significantly more hours were spent on training and other courses than in the years before 2023. Fewer COVID-19 restrictions meant that more training courses could be held, in addition to virtual training. In addition, the number of FTEs increased in 2023 and 2024, resulting in more training hours. Our new production facilities, in particular, require training and education before operators can begin. On average, we spent 42 hours in training per FTE in 2024 (2023: 42 hours per FTE). In 2024, we further scaled up awareness and training programs on ESG material themes (e.g. the Corporate Sustainability Reporting Directive), including health and safety, IT security, and sanctions, among other topics.
In our recruitment, we are committed to providing a suitable work environment for people with a disability and/or disadvantage in the labor market. Disability is an umbrella term that covers illnesses/disorders, activity limitations, and participation restrictions. An illness/disorder is a problem in the function or structure of the body. An activity limitation is a difficulty encountered by an individual in executing a task or action. A participation restriction is a problem experienced by an individual in a range of everyday situations that results in a disadvantage in the labor market. TKH creates work experience opportunities for the long-term unemployed or people returning to the labor market. Workers from sheltered employment are used to performing repetitive work. In the year under review, the number of employees with a disadvantage in the labor market was 125 FTEs (2023: 108 FTEs). Since 2022, TKH has been PSO certified (“prestatieladder socialer ondernemen”). This certificate is a quality mark that proves our organization has an above-average level of social entrepreneurship and focuses on the employment of vulnerable groups in the labor market. We have a proven record of contributing to an inclusive society. By participating in the PSO, organizations around TKH are also encouraged to do business in a more socially responsible way.
TKH and its companies are neither involved in political activities in the respective countries or regions, nor do they try to influence political decision-making by paying financial or in-kind political contributions to any potential beneficiary. The same applies for direct lobbying activities in which neither TKH nor its companies are involved.
Some operating companies are members of local industry or trade associations, business coalitions, and other organizations that are dedicated to important industry-related topics, or work on standardization.
Tax is an integral part of our business strategy. The tax strategy is regularly discussed with and signed off by the Executive Board. Bodies such as the OECD provide guidelines on international tax matters, which TKH follows. This is reflected, for example, in TKH’s tax position, which shows that taxes are paid where there is significant economic activity and value creation. For TKH, this is one of the relevant elements in the context of a fair-share tax contribution. Our tax policy is aligned with our organizational values.
TKH focuses on compliance with applicable tax laws, regulations, and ethical standards in the countries in which we operate, and we pay our taxes in accordance with the letter and the spirit of tax laws and regulations. TKH’s tax department is guided by TKH’s values, does not engage in aggressive tax planning (including tax havens as defined by the OECD), and seeks to limit tax risks. The tax department has global responsibility for the tax position of TKH Group, particularly in relation to corporate income tax, restructuring, and transfer pricing. In carrying out this task, the long-term considerations and interests of TKH’s various stakeholders are taken into account.
Tax systems around the world and their application are becoming increasingly complex. To keep abreast of these developments and comply with them, we provide our tax department with continuous training, and internal training modules are regularly organized for selected departments of the various TKH operating companies, focusing on technical and other tax issues, including tax dilemmas.
We continuously invest in technologies to improve data management, and thus the overall quality of direct and indirect tax compliance, control, and reporting. We strongly believe in the benefits that technology can offer to in providing earlier access to tax-relevant data, particularly as the legal and regulatory environment is rapidly evolving and tax authorities are increasingly embracing digitalization. In recent years, the Tax Function has evolved from a manually-oriented function to a more data-driven, digitally-enabled one.
We strive to build strong, mutually respectful relationships with the tax authorities based on transparency and trust. We therefore believe in an open and constructive dialogue, both with the Dutch tax authorities and those in other countries. Our relationship with the authorities is based on trust, mutual understanding, and transparency. In this context, it provides an opportunity to discuss potential tax uncertainties and keep each other informed of developments and their tax implications, thereby giving companies more certainty about their tax position, improving the quality of tax returns and ensuring that double taxation is avoided.
As of 2024, TKH has been selected for Individual Customer Management, which is being applied to the hundred largest and most complex organizations in the Netherlands, such as multinationals and listed companies. In the course of 2024, Individual Customer Management has been given further content and context. In this respect, TKH actively cooperates with the Dutch Tax and Customs Administration to share the potential tax impact of new initiatives with them, and, if necessary, to embed them in a ruling. This ensures that the tax classification of new initiatives is in line with TKH’s tax policy and meets the expectations of the Dutch Tax and Customs Administration. It also ensures that activities are taxed only once at a generally accepted tax rate where the business is conducted.
During the period under review, no reportable arrangements were disclosed.
TKH is within the scope of the OECD Pillar Two model rules. Pillar Two legislation has been enacted in the Netherlands effective as from 31 December 2023 for financial years starting on or after this date (e.g. financial year 2024). Under the legislation, the group is liable to pay a top-up tax for the difference between their (GloBE) effective tax rate per jurisdiction and the 15% minimum rate. TKH has assessed the impact of Pillar Two on its financial position, whereby the initial focus is on the Transitional CbCR Safe Harbour rules. The Transitional CbCR Safe Harbour rules are a short-term measure to exclude a group’s operations in lower-risk countries from the compliance obligation of preparing full Pillar Two.
| Amounts in thousands of euros | The Netherlands | Europe (other) | Asia | North America | Other countries |
|---|---|---|---|---|---|
| Amortization PP |
| Aggregated revenues realized by the companies in the region without elimination of intercompany transactions | 1,080,706 | 620,617 | 250,607 | 180,027 | 26,433 | 0 | 2,158,390 |
|---|---|---|---|---|---|---|---|
| Result on ordinary activities before tax | 39,034 | 55,761 | 19,208 | 15,343 | 11,123 | -16,937 | 123,532 |
| Property, plant and equipment | 323,767 | 116,465 | 27,170 | 6,563 | 13,164 | -963 | 486,166 |
| Number of own FTE | 2,189 | 2,575 | 875 | 552 | 98 | 0 | 6,289 |
| Income taxes (paid)/received | |||||||
| Income tax to be (paid)/received at 1 January 2024 | -704 | -4,108 | -2,725 | -50 | -1,101 | 0 | -8,688 |
| Income taxes paid | -11,894 | -20,513 | -4,950 | -6,329 | -760 | 0 | -44,446 |
| Income tax to be (paid)/received at 31 December 2024 | 2,098 | 3,807 | -1,877 | 4,363 | -1,268 | 0 | 7,123 |
1 Amortization of intangible non-current assets from acquisitions.
Calculations. Based on this assessment, there are two jurisdictions that will likely have an effective tax rate lower than 15% and consequently fall out of the Transitional CbCR Safe Harbour rules. Based on a more detailed assessment it has been determined that this is not likely to lead to any top-up tax.
During 2024, Commend introduced Deep Neural Networks, to significantly perfect speech intelligibly and optimize the signal processing of its intercom terminal series. Developed together with the University of Art and Design Graz, these deep neural networks are highly efficient network algorithms for adaptive Artificial Intelligence, ensuring that the voice signal in intercom systems is perfectly cleaned of ambient noise and echoes during transmission. Any residual noise is almost completely suppressed. The neural network can react with high precision to the many different challenges of everyday life - for example different voices, ambient noises and situations.
The result is an unprecedentedly clear, intelligible sound profile that corresponds to transmission in a noiseless environment. In emergency situations such as an accident on the highway or in a production hall, every second counts. If background noise or echo effects distort the spoken word or make it completely unintelligible, in the worst case lives are at stake.
machine learning algorithms. Using countless hours of audio data, they are systematically 'taught' the desired recognition capability.
At the 2024 international security trade fair "ICS West" in Las Vegas, the US Security Industry Association honored the neural network product with the prestigious "Best in Communication and Networking Solutions" award.
Alexander van der Lof started his career in 1985 at TKH subsidiary B.V. Twentsche Kabelfabriek (TKF), where he held various management positions, including Commercial Director. In addition to his career at TKF, Mr. Van der Lof was Company Secretary of TKH Group for a number of years. In 1998, Mr. Van der Lof became a member of the Executive Board of TKH Group and Chief Financial Officer (CFO). Since 2001, he has been Chairman of the Executive Board and Chief Executive Officer (CEO) of TKH Group.
| J.M.A. (Alexander) Van Der Lof MBA | Chairman of the Executive Board, CEO | Dutch nationality, male, 1958 | Term 2001-present |
|---|---|---|---|
| E.D.H. (Elling) De Lange MBA | Member of the Executive Board, CFO | Dutch nationality, male, 1965 |
Member of the Executive Board
Dutch nationality, male, 1966
Elling de Lange joined TKH in 1998, having previously been a member of the Board of C&C Partners in Poland. In 2002, he was appointed Financial Director of the Chinese cable production companies TFO and ZTC, and in 2003 he took the position of CEO. Since 2006, Mr. De Lange has also been responsible for the Dutch and Chinese cable production companies. Mr. De Lange has been a member of the Executive Board and Chief Financial Officer (CFO) of TKH Group since 2008. Prior to joining TKH Group, he held various international management positions at Ballast Nedam.
Chairman
Dutch nationality, male, 1957
Chairman of the Selection and Nomination Committee
Member of the Audit Committee
and COO, SHV Energy
• COO and Member of the Management Board, DSM Sinochem Pharmaceuticals
Member
Dutch nationality, female, 1969
• 2024 first appointment
• 2028 end of term
Member of the Selection and Nomination Committee
• Managing Director Capgemini, the Netherlands
• Member of Sociaal Economische Raad (SER)
• Figurehead Topsector ICT
• Supervisory Board Member SIDN
The Supervisory Board oversees the way the Executive Board defines and implements TKH’s strategy to achieve the identified objectives of the company and its affiliated companies. In doing so, the Supervisory Board is provided with financial, commercial, operational, sustainability, and governance information, thereby focusing on the interests of all the company’s stakeholders.
The Supervisory Board advises the Executive Board and oversees the Executive Board's relationship with all stakeholders, including shareholders. The members of the Executive Board are appointed by the General Meeting of Shareholders on a binding recommendation drawn up by the Supervisory Board. The Supervisory Board is governed by by-laws, which include rules covering such matters as its working method, tasks, decision-making, and competencies.
The Supervisory Board is composed in such a way that the knowledge, experience, and understanding of current and anticipated future developments at TKH including financial and sustainability, as well as the markets, products/technologies and activities relevant to the company, are well represented by its members. Each member of the Supervisory Board possesses specific expertise required to fulfill his or her supervisory role.
The Board’s effectiveness is determined by the team’s composition in terms of knowledge, experience and competencies, as well as the cooperation between its members. In addition to contributing to the regular plenary discussions, each member of the Supervisory Board has his or her specific own focus area related to TKH’s activities and end markets. Continuity in the composition and operation of the Supervisory Board is invaluable, given its overall responsibility for the governance of the various strategic interests aimed at sustainable long-term value creation.
In accordance with the Dutch Corporate Governance Code (the “Code”), the Supervisory Board applies a maximum term of office of 12 years. In addition, as part of the annual (self-) evaluation and prior to each reappointment, an assessment is made to determine whether the profile of the overall composition of the Supervisory Board is “up-to-date,” and whether the expertise, competencies, and contribution of the member in question are still suitable.
An introduction program is being used for new members of the Supervisory Board, which considers the expertise and knowledge that the member brings to the Supervisory Board. The introduction program focuses on the general strategy, financial and sustainability reporting, and the organizational structure and activities of TKH, supported by site visits at selected operating companies.
The Supervisory Board values diversity in its composition in terms of age, gender, background, expertise, professional experience, and nationality, considering statutory requirements. These elements are also included in the profile drawn up by the Supervisory Board for any new members.
from the top left to the right
| Mr. Oosterveer | Mrs. Gorter |
|---|---|
| Mr. Kroon | Mrs. Schöningh |
| Mrs. Peek |
| Supervisory Board member | Strategy and business | International TKH products and technologies | Human Capital | Financial and internal controls | Governance (incl. business ethics, legal) | Sustainability (incl. CSRD reporting) |
|---|---|---|---|---|---|---|
| Mr. Oosterveer | VV | |||||
| Mr. Kroon | VV |
Has sufficient/advanced knowledge, skills and experience in the area and can make a balanced judgement on the matter.
Is in addition considered an expert in relation to previous or current roles.
In 2024, five regular meetings were held and three additional meetings, which were all also attended by the Executive Board. The Supervisory Board meetings were well attended in 2024. In addition to the regular meetings, exceeds the quota stipulated in Dutch company law of a balanced distribution of seats of at least 1/3 female and 1/3 male members, insofar as these seats are allocated to natural persons. The Board strongly supports the view that diversity contributes to objective and sound decision-making, whereby diversity is not only considered important in terms of gender but also in terms of expertise, competencies, and background. The composition of the Supervisory Board is such that its members can act critically and independently of one another, of the Executive Board, and of any individual interests. In the opinion of the Supervisory Board, all members meet the independence requirements stipulated in best-practice provisions 2.1.7 up to 2.1.9 of the Code.
The composition of the Board and its committees have changed in the past year. At the AGM 2024, Mrs. Schöningh was reappointed for a further period of four years. In addition, Mrs. W.A.A. Peek was appointed as a new member of the Supervisory Board for a period of four years.
During the company visit, the Supervisory Board was informed about technological and project developments, market and customer developments, operational challenges and opportunities, and other company-specific developments. Specific attention was paid to Artificial Intelligence (AI) and the opportunities of applying AI to further innovate the existing product portfolio. This was demonstrated during the tour of the facility by showing the value of the AI application ‘Foreign Object Detection’ on the VMI MAXX tire building machine. This in-line, high speed detection system utilizes a high-resolution camera to detect foreign objects in tread material which subsequently allows an AI algorithm to analyze the images in real-time ensuring extremely high levels of accuracy and minimizing the number of false-positive alarms, resulting in optimized levels of productivity, lower scrap rates, and minimized usage of energy and raw materials. This innovative solution is the result of successful cooperation between the operating companies VMI, Chromasens, LMI, TKH AI and TKH Technology Poland.
During the tour, special attention was also paid to other important topics such as health and safety. The Supervisory Board greatly values these company visits and the opportunity to meet with local management and employees, to provide a deeper and more comprehensive understanding of local capabilities and culture.
Recurring agenda items include topics such as business review and financial results and developments, the progress of the Accelerate 2025 strategic program including the valuation of TKH, investments and divestments, technological, organizational, and market developments, as well as sustainability, which are discussed at each regular meeting. In 2024, specific attention was paid to the implementation of the CSRD, the divestments of EKB Groep and HE System Electronic, and the acquisition.
Five closed meetings took place, attended only by the Supervisory Board members. During the year under review, there were no subjects on the agenda that could have potentially given rise to conflicts of interest. The 2023 annual financial statements were discussed in the presence of the external auditor. In preparation for the Supervisory Board meetings, as well as to discuss other relevant matters during the year, the chairman of the Supervisory Board maintained regular contact with the chairman of the Executive Board.
location of a TKH operating company. Such visit allows the Supervisory Board to meet with local management and employees and to gain a better understanding on the status and progress of TKH’s activities, technological developments, and organizational capacity. The Board is updated on local developments and possible challenges and opportunities faced by local management. These visits include presentations and guided tours of the facility, whereby particular attention is paid to the local company and safety culture.
In 2024, the Supervisory Board has visited the TKH operating company VMI in Epe, the Netherlands. During
TKH’s strategy, financial position, and results. Specific attention was paid to the opportunity for expanding TKH’s scope in projects by providing engineering, installation, termination and testing services, in addition to the traditional supply of the cables only. The content of the press releases concerning the annual and half-year results, and the Q1 and Q3 Market Update was discussed with the full Supervisory Board prior to publication. Finally, during several meetings specific attention was paid to the valuation of TKH and the opportunities to further unlock the full potential of the company.
Each regular meeting was used to discuss the progress of strategic initiatives and business developments, including the order book, the competitive environment in which TKH operates, potential business risks, and how these risks are managed. The Board was furthermore also frequently updated on the progress of specific innovation projects as well as the progress on large capital investments. This strategic capital expenditure program of approximately €200 million will increase TKH’s production capacity to respond to the higher market demand for automation, digitalization, and electrification. In September 2024, the state-of-the-art production facility to produce inter-array offshore cables in Eemshaven, the Netherlands, was opened. Throughout the year, a “deep dive” presentation was provided by the Executive Board regarding TKH’s approach to digitalization whereby more insight was gained into the proposition of digitalization within TKH’s portfolio, as well as to digitalization opportunities related to internal processes including ERP systems, knowledge sharing, and shared infrastructure to further enhance collaboration within the TKH group.
In the year under review, three additional meetings were held. In one of the meetings the press release concerning the Market Update Q3 was discussed. Another meeting was fully dedicated to the sustainability strategy. The third additional meeting was fully focused on an assessment and validation of the Company’s strategy. With the strategic investment program completed, and a large part of our commodity-based portfolio divested, the strategy has been discussed in light of further value creation. More information is included in the section Strategy update: Focus and Optimization.
The Supervisory Board met five times in the absence of the Executive Board. The most important topics of discussion were:
The Supervisory Board supervises and advises the Executive Board based on agenda items that recur at every meeting, and on specific subjects relevant for discussion at any given time.
| Quarter | Topics |
|---|---|
| Q1 | Business review |
| Q2 | Financial results and press release |
| Q3 | Progress of strategic program – valuation of TKH |
| Q4 | Investments and divestments |
| Sustainability | |
| Supervisory Board committees | |
| Explanation of audit report | |
| AGM preparation/dividend proposal | |
| Remuneration Policy | |
| Acquisition of JCAI | |
| Acquisition of Comark | |
| Acquisition of Liberty Robotics | |
| Divestment of HE System Electronic | |
| Divestment of EKB Groep | |
| Business review |
TKH has an entrepreneurial culture with a focus on technological development and a proactive approach to the market. Given its decentralized organizational structure, responsibilities are delegated deep within the organization but governed by centralized oversight and a general (compliance) framework. The Executive Board leads by example and provides guidance on norms and values, including rules and other guidance. To validate the effectiveness of both the structure and the culture, the Supervisory Board uses annual as well as individual company visits to gain insights through discussions with and presentations by local management. Consultation with the Central Works Council is another important part of the assessment of the company culture.
In 2024, special attention was paid to the implementation of action plans to increase the proportion of females in executive and senior management teams. In addition, the safety performance and actions for further improvements were discussed to ensure that safety will continue to be seen as one of the organization’s top priorities, demonstrated through increased safety awareness in the organization and enabling employees to take personal responsibility for safety.
The Supervisory Board is regularly updated on the progress of sustainability initiatives and developments. Last year, considerable attention was paid to the implementation of the EU Corporate Sustainability Reporting Directive (CSRD), including several deep dive sessions discussing the implementation of the CSRD, the challenges and opportunities for TKH, as well as the importance of the double materiality assessment. It is anticipated that the further implementation will include additional in-depth discussions with the Executive Board regarding the impacts, risks and opportunities as well as the challenges and ambitions related to reducing negative impacts of the material topics.
Progress on the defined key non-financial KPIs was discussed, including the progress made toward the target of CO2e neutrality (scopes 1 and 2) by 2030 and diversity of the own workforce. The Supervisory Board is convinced that ESG has become more relevant strategically and needs to be further integrated within TKH’s processes and structures and its therefore commendable that TKH made the choice to adhere to the ESRS reporting requirements earlier than being required by Dutch legislation, starting with this year’s annual report.
The Supervisory Board maintains annual contact with the Central Works Council about TKH’s strategy and topics of interest to the individual Works Councils. These topics include staff continuity and employability, safety, and cooperation between operating companies. In the context of the Central Works Council’s (strengthened) right of recommendation, when there are vacancies in the Supervisory Board, a dialogue is initiated with a view to obtain input for reappointment of existing members or appointing new members. The members of the Supervisory Board have great respect for the professionalism.
with which the Central Works Council deals with important issues and offers sound advice. The Board regards consultation with the Central Works Council as being open, constructive, and valuable. For the Supervisory Board, consultation with the Central Works Council is also an important element in assessing and validating the culture within TKH’s organizations.
The Supervisory Board of TKH has three committees: the Selection and Nomination Committee, the Remuneration Committee, and the Audit Committee. The committees all have their own set of rules governing their conduct.
The Remuneration Committee consists of Mrs. A.M.H. Schöningh (chairman), Mrs. C.W. Gorter, and Mr. J.M. Kroon (as from the AGM 2024). The Remuneration Committee held two formal meetings in 2024. The Remuneration Committee also had frequent (virtual) contact during the past year. The achievement of the Executive Board’s targets was assessed, based on which the committee presented a proposal for a decision on the remuneration of the Executive Board to the Supervisory Board during a closed meeting. The targets for the Executive Board for the financial year 2025 have also been discussed and defined.
In 2023, the Remuneration Committee conducted a thorough review of the Remuneration Policy. The review focused, among other things, on the remuneration structure, KPIs, long-term value creation including sustainability, and the composition of the reference group. In addition, relevant legislative and regulatory developments such as the CSRD and the (in 2022) revised Dutch Corporate Governance Code was assessed. The review also included current market practice, societal trends and expectations, and developments in corporate governance. Based on the outcome of this review, the Remuneration Committee developed a draft Remuneration Policy 2024, which was submitted to the AGM 2024 for approval. The 2024 Remuneration Policy for the members of the Executive Board and the Supervisory Board were adopted by the AGM with 98.8% and 100.0% respectively. More information can be found in the Remuneration report section.
The Remuneration Committee reported the most important findings of each of its meetings and consultations to the Supervisory Board.
The Audit Committee consists of Mrs. C.W. Gorter (chairman), Mr. J.M. Kroon, and Mr. P.W.B. Oosterveer. Mrs. Gorter also chairs the committee as an expert in the preparation and audit of the financial statements. The Audit Committee held four regular meetings in 2024, and two additional meetings. The Audit Committee meetings were held in the presence of the external auditor EY, as well as the CFO, the Director Internal Audit, the Manager Internal Audit, and the Director of Finance & Control of TKH. The newly appointed external auditor for the financial year 2025 (Deloitte) was also present as an observer, in the context of the transition.
TKH’s Tax Director was present at two meetings to explain national and international tax developments and specific tax matters of importance to TKH, such as the application of the Dutch innovation box scheme, Pillar Two, tax compliance including the Tax Control Framework and risk management issues. The Audit Committee discussed the audit plan, on the basis of which the audit activities have been carried out, with the external auditor. The scope and materiality of the audit plan, as well as the key risks in the annual reporting that the external auditor has identified in the audit plan, were also discussed. During the year under review, the external auditor’s audit approach and performance was reevaluated in consultation with the Audit Committee.
internal audit activities. The company’s internal risk management and control system is an ongoing point of attention for the Audit Committee. Other topics discussed within the committee’s remit included impairment analyses and the impact of changes in the International Financial Reporting Standards (IFRS) on the income statement and balance sheet including disclosures (financial statements). Due to the relevance of IT & Security to both the day-to-day operations and TKH’s business model in the context of software development and R&D, this topic is given high priority at every Audit Committee meeting.
required for Dutch stock listed companies in 2025 after being embedded in the Dutch Corporate Governance Code. The other additional meeting was devoted to the audit transition plan of the external audit for the 2025 financial year (Deloitte).
In the year under review, there was a discussion of the key audit matters identified by the external auditor as having the greatest impact on the audit approach and activities during the audit. The key audit matters identified include the recognition of revenue over time and the related valuation of contract assets and contract liabilities, and the valuation of capitalized development costs related to innovation projects in development. Specific accounting issues in the audit include the valuation of goodwill, non-compliance with laws and regulations, specifically (commission) payments to third-party agents and non-routine transactions in high-risk countries, the valuation and disclosure of acquisitions and divestments, the valuation of a specific right of use asset, and the valuation of inventory at one of the operating companies.
In addition, the audit by the external auditor included other areas of audit emphasis related to the CSRD reporting, tax assessments, tax pillar II, and assets held for sale.
In the year under review, increased attention was devoted to developments in non-financial information, including the implementation of the CSRD and related ESRS. The outcome of the double materiality assessment was discussed, as well as the structure and content of the sustainability statements and risk management chapter 2024. Internal Audit developed and conducted review activities focusing on selected non-financial KPIs. This was also in preparation for the audit of non-financial KPIs by the external auditor. TKH has received limited assurance on the sustainability statements 2024. During the reporting year, further attention was also paid to supply chain management, cost inflation of (raw) materials and labor, the impact of interest rate volatility and a possible recession, and the influence of global economic and geopolitical developments on the execution of TKH’s strategy, financial position, and results.
Forensic expertise is used in the development of the audit plan as well as in performing audit activities to gain a clearer picture of the possible risks of fraud and review internal control measures, also given the increased attention being paid to fraud and corruption in society. The Audit Committee discussed the company’s fraud risk assessment, including inherent fraud risks, identified significant risks, and other risks and attention areas. The risk mitigating measures were also discussed, both at TKH group level and at operating company level.
The external auditor explained the interim update letter with findings in reporting, and administrative organization and internal control, where relevant to the audit of the financial statements. The main topics discussed were the valuation of development costs concerning two specific assets, a tax assessment received at one of the operating companies, tax pillar II legislation, the (completion of the) capital expenditures related to the new factory in Eemshaven, the acquisition and processing of the acquisitions of JCAI, Liberty Robotics and Comark, the divestment and processing of HE System Electronic, Shin-Etsu (Jiangsu) Optical Preform Co. Ltd. and EKB Groep, and the valuation of inventories at one of the subsidiaries. In addition, IT control measures and cyber-security, fraud and non-compliance management, the financial statements filing process related to ESEF reporting, and findings at operating companies that needed to be followed up were discussed. The external auditor also updated its audit plan to reflect recent developments, including the reassessment of materiality levels and scoping. Finally, relevant observations concerning the sustainability reporting were discussed.
doing so, it considers the Executive Board’s observations. The Audit Committee then submits a proposal to the Supervisory Board for commissioning and the Supervisory Board subsequently proposes appointment of the external by the general meeting to audit TKH’s financial statements.
In accordance with best practice provision 1.7.4 of the Code, the Audit Committee held a meeting with the external auditor in 2024 without the presence of the Executive Board. It was established that the external auditor was independent of TKH.
The Audit Committee reported the most important findings of its meetings to the Supervisory Board.
Evaluation covered the Board's composition, independence, expertise, and team effectiveness, as well as the quality of information provision, the role of the chairman, and relations with the Executive Board. Based on the evaluation, it was concluded that the Supervisory Board as a whole, as well as its individual members, functioned well. This honest and open relationship is characterized by mutual respect. The members complement each other sufficiently in their advisory and supervisory role toward the company and cover a wide range of relevant expertise. The available and desired expertise and knowledge within the Board was also discussed. It was established that there is a good working relationship between the Supervisory Board and the Executive Board, and that they are also sufficiently critical of each another.
| Meeting | Supervisory Board | Audit Committee | Remuneration Committee | Selection and Nomination Committee |
|---|---|---|---|---|
| P.W.B. Oosterveer (chairman) | 8/8 | 6/6 | 2/2 | 2/2 |
| J.M. Kroon1 | 7/8 | 6/6 | 2/2 | |
| C.W. Gorter | 8/8 | 6/6 | 2/2 | |
| A.M.H. Schöningh | 8/8 | 2/2 | ||
| W.A.A. Peek2 | 5/5 | |||
| R.L. van Iperen2 | 3/3 |
1 Mr. Kroon was member of the Selection and Nomination Committee until September 30th.
2 Mrs. Peek has been appointed as member of the Supervisory Board at the AGM 2024 (May 7, 2024). Mr. Van Iperen was member of the Supervisory Board until the AGM 2024.
Communication from the Executive Board to the Supervisory Board takes place in an open, professional, and constructive manner so Supervisory Board members have a strong understanding of strategic and operational issues. It was also established that no member of the Executive Board has more than two “demanding” supervisory positions as defined in the Dutch Management and Supervision Act. The Supervisory Board has no indication of any kind of conflict of interest between the company and members of the Executive Board. The chairman of the Supervisory Board discussed the findings with the chairman of the Executive Board.
During the closed meetings, the points in the Code’s best-practice provision regarding the independence of the Supervisory Board (2.1.7), its individual members (2.1.8), and the chairman (2.1.9) were also assessed. It was concluded that all members of the Supervisory Board are independent.
The report of the Executive Board and the 2024 financial statements were submitted to the Supervisory Board in accordance with the provisions in Article 31 of the Articles of Association. The financial statements were submitted for audit to EY Accountants B.V., which subsequently issued an unqualified auditor’s report on the financial statements based on the audit.
The Supervisory Board discussed the financial statements with the Executive Board in the presence of the external auditor, and subsequently approved the financial statements on March 3, 2025. The Supervisory Board submits the financial statements for the 2024 financial year to the AGM and recommends adopting the financial statements. The Supervisory Board believes that the financial statements constitute a sound basis for the account given by the Executive Board of its management and by the Supervisory Board of its supervision of the management. The Supervisory Board also proposes that the proposed appropriation of profits be approved and that the Executive Board be discharged in respect of the policies pursued and the Supervisory Board in respect of the supervision exercised.
Haaksbergen, March 3, 2025
On behalf of the Supervisory Board,
P.W.B. Oosterveer, chairman
This Remuneration Report describes the implementation of the Remuneration Policy for the members of the Executive Board and the Supervisory Board.
On behalf of the Remuneration Committee, I am pleased to present the 2024 Remuneration Report, which provides a summary of the remuneration policies for the Executive Board and the Supervisory Board and an explanation about how they were applied in 2024. The aim of the Remuneration Policy is to provide remuneration in line with the market in order to attract, motivate, and retain qualified Executive Board members of the publicly listed company, taking into account the Company’s size, strategy, and unique characteristics. TKH aims to be an attractive employer and a sound investment for its Shareholders, with a focus on sustainable long-term value creation.
law, the Dutch Corporate Governance Code, and other relevant national and international developments. The Remuneration Committee was assisted by an external consultant. This process was guided by the following principles:
We have engaged in active dialogue with the Workers Council as well as with governance organizations, proxy advisors and major shareholders on the envisaged changes, all supported by an external advisor. The feedback received has been taken into account in the 2024 Remuneration Policy. The key changes in the 2024 Remuneration Policy compared to the 2020 Remuneration Policy, in addition to general textual improvements, are as follows:
The revised Renumeration Policies were proposed by the Supervisory Board for adoption by the 2024 General Meeting of Shareholders, with effect from January 1, 2024. The Renumeration Policy for the members of the Executive Board and the Supervisory Board were adopted by the AGM with 98.8% and 100.0% respectively.
I would like to thank our shareholders and other stakeholders for their engagement and for sharing their views on the executive remuneration.
A.M.H. Schöningh
Chair of the Remuneration Committee
The remuneration payable to the members of the Executive Board consist of the following:
| Total remuneration | Basic salary (TRI) | Total regular income. Attracts, engages, and retains Executive Board members to deliver on TKH's strategic objectives. |
|---|---|---|
| Short-Term Incentive (STI) | An annual performance bonus. Contributes to TKH’s short-term financial and non-financial performance objectives of TKH. | |
| Long-Term incentive (LTI) | Incentive in the form of a share plan aligning the objectives of the Executive Board member with the long-term growth strategy and stakeholders' interests of TKH. | |
| Pension | A pension commitment including the right to benefits in the event of poor health or disability, and a widows’ and orphans’ pension in the event of death. | |
| Other compensation elements | Business allowances in accordance with what is generally accepted within the TKH organization. |
Policy aims to create sustainable long-term value for the Company and the sustainability of the Company as a whole in order to achieve its strategic, financial, and operational objectives. The Remuneration Policy is aligned with the business strategy through the establishment of specific short-term and long-term objectives that link the remuneration of each Executive Board member to the success of the Company. The size of the LTI (Long-Term Incentive) in the total compensation package and the fact that the members of the Executive Board must invest for their own account in the same number of shares as are granted to them within the framework of the LTI including a holding period of three years are important factors in ensuring the long-term value creation and continuity of the Company. Furthermore, personal objectives under the Short-Term Incentive (STI) are linked to and aligned with the identity, values, and mission of the Company.
The Remuneration Policy was designed in the context of national and international market trends, statutory requirements, corporate governance best practice, the societal context around remuneration, and the interests of the Company’s Shareholders and other stakeholders. The compensation package is periodically reviewed against market trends using information provided by external experts. The compensation package is designed to support both the short-term and long-term objectives of the company. Based on the objectives set, the Remuneration Committee performs scenario analyses regarding the Short-Term Incentive (STI) and Long-Term Incentive (LTI) to be awarded. The Company believes it is important to reward the achievement of growth targets, and the remuneration structure is designed to ensure that Executive Board members are not encouraged to take inappropriate risks.
To attract qualified individuals to the Executive Board and retain the current members of the Executive Board for the long term, TKH Group takes into account external reference data when determining appropriate levels of remuneration. A specific reference group (peer group) for the employment market has been defined for this purpose. The reference group consists of an equal mix of Dutch publicly listed companies and international (largely European) sector-specific companies that are comparable to the Company in terms of size, complexity, and international scope. The Remuneration Committee, supported by external experts, regularly reviews this reference group to ensure that the composition remains appropriate.
Members of the Executive Board receive shares based on the achievement of targets, on the condition that they personally invest in the same number of shares as they receive under the LTI plan.
propose to the General Meeting a remuneration package at an appropriate level that reflects the specific context and requirements of the Company and the skills and capabilities of the individual Executive Board members. As such, external market data will be used to support rather than drive decision-making. The Remuneration Committee evaluates the external market data and recommends adjustments, if necessary, to the Supervisory Board for approval. The reference point is the median of total direct remuneration compared to the peer group.
The annual targets for the STI and LTI relate to TKH’s business plan as reflected in the financial and non-financial targets of the Accelerate 2025 strategic program. Each year, the Supervisory Board sets the performance criteria, their respective weightings and specific targets for the year in question in line with the TKH Group’s strategy, taking into account both financial and non-financial factors as well as personal objectives. This enables the Supervisory Board to respond in an agile way to changing business needs and/or strategy adjustments in a changing environment. In doing so, the Supervisory Board takes the following into account:
| Turnover | > €2 billion |
|---|---|
| ROCE | 22-25% |
| ROS | > 17% |
| Net Debt/EBITDA | < 2.0 |
| Carbon neutral own operations | 100% scope 1 and 2 by 2030 |
| Diversity | > 25% Female executive and senior management by 2030 |
| Employee satisfaction | > 7.5 |
| Accident rate (LITFR) | < 1.0 |
The Remuneration Committee regularly reviews the base salaries of the members of the Executive Board. Based on the recommendation of the Remuneration Committee, the Supervisory Board determines the adjustment (if any), taking into account, among other things, the collective labor agreement for the large metal industry (FME) and the development of base salaries within the reference group. As a result, the base salaries have been increased by 3.5% with effect from January 1, 2024.
The performance bonus is capped at 60% of the base salary (TRI). Achievement of threshold will result in a bonus of 8% of the base salary (TRI). For below threshold performance, the bonus is 0% of the base salary (TRI).
The performance bonus is based on the following performance criteria:
The STI for members of the Executive Board based on achievement of the 2024 targets is presented in the table below. Payment of the variable remuneration to members of the Executive Board is subject to the condition that the targets upon which the performance bonus is based or the circumstances under which the bonus was originally determined, are accurate.
1 The calculated turnover and EBITA are normalized for acquisitions and divestments, for both target and performance.
Turnover (20% weighting) and EBITA (50% weighting) have been defined as financial performance criteria for 2024. The calculated turnover and EBITA are normalized for acquisitions and divestments, for both target and performance.
| STI 2024 | Bandwith payout level | Targets | Performance | KPI | Weight | Threshold | On-target | Maximum | Performance payout | Actual payout | % of TRI |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Turnover (in millions) | 20% | 0% | 20% | 30% | € 1,538 | € 1,810 | € 1,900 | € 1,675 | 7.6% | 3.0% | |
| EBITA (in millions) | 50% | 0% | 50% | 75% | € 199.1 | € 234.0 | € 245.9 | € 205.3 | 5.3% | 2.1% | |
| Financial performance | 1 | 70% | 0% | 70% | 105% | 12.9% | 5.2% | ||||
| Sustainability performance | 20% | 0% | 20% | 30% | 20.0% | 8.0% | |||||
| Personal performance | 10% | 0% | 10% | 15% | 3.3% | 1.3% | |||||
| Total performance | 100% | 0% | 100% | 150% | 36.2% | 14.5% |
TKH achieved a normalized turnover of €1,675.3 million and a normalized EBITA of €205.3 million in 2024. The performance, normalized for acquisition and divestments, resulted in a performance pay-out of 7.6% for turnover and 5.3% for EBITA.
For 2024, the following two sustainability targets have been defined:
The personal targets defined for 2024 are related to specific business issues and are not disclosed in detail due to (commercially) sensitive information. The achievement of the personal targets in 2024 results in an overall average performance ratio of 3.3%, consisting of the following performance ratios for each member of the Executive Board:
The performance percentages times 40% generates the actual payout percentage of TRI. This resulted in award payouts in €1,000 (STI) of the following values for:
| Name | Performance Percentage | Payout (€1,000) |
|---|---|---|
| J.M.A. van der Lof MBA | 42.8% x 40% x TRI | 135 |
| E.D.H. de Lange MBA | 32.8% x 40% x TRI | 78 |
| H.J. Voortman MSc | 32.8% x 40% x TRI | 75 |
An annual long-term variable compensation plan is in place that provides for share awards linked to long-term targets. This aligns the interests of the members of the Executive Board with those of the Shareholders.
The share plan has two components:
Subject to the determination of the Remuneration Committee and approval of the Supervisory Board, the share plan enables members of the Executive Board to acquire shares free of charge in return for which the members of the Executive Board are required to invest for their own account in the same number of shares for the price quoted on the stock exchange at that moment. It is also important that the interests of the Executive Board of TKH Group are aligned with those of long-term Shareholders. As members of the Executive Board are required to purchase the same number of shares under the LTI as they have been granted free shares, each member of the Executive Board invests a substantial amount in TKH Group shares. This ensures that risks are carefully managed and that the entrepreneurial spirit for long-term value creation is maintained. The shares in question are to be held as a long-term investment and may not be transferred for a period of three years after their respective allocation. This applies both to shares purchased for no consideration and to shares purchased by members of the Executive Board.
The Supervisory Board has adopted share ownership guidelines that specify the minimum ownership requirements for members of the Executive Board. The share ownership requirement is at least four times the base salary (TRI). Newly appointed members of the Executive Board are subject to a “phase-in” rule, whereby the minimum share ownership is reached after a maximum of eight years.
The financial targets (40%) are set annually and are based on long-term strategic objectives such as ROS (Return on Sales) and ROCE (Return On Capital Employed) and other relevant financial objectives. The sustainability targets (20%) are also set annually and are based on strategic sustainability targets. The performance of the share price (40%) over the last three years compared to the AMX index, which is relevant for the company, may lead to an allocation of shares.
The amount of the long-term bonus is based on the achievement of targets and is determined by a system of multipliers:
Accelerate 2025 strategic program with targets on carbon footprint reduction and diversity in terms of percentage of females in executive and senior management positions.
The following multipliers were achieved for each KPI based on actual overall performance against the performance ranges.
These multipliers for each KPI resulted in a total multiplier for the LTI of 0.65 (ABC), based on a weight of 80%, which meant that 0.65 x 80% x the standard award of 50% was granted.
This resulted in award payouts in €1,000 of the following net values for:
The corresponding gross values are listed in the table showing “total remuneration” in section 6 of this Remuneration Report. The number of certificates of shares associated with the net award will be calculated based on the average closing price over the three trading days following the time of publication of the annual figures. The awarded shares as well as the individually purchased shares in accordance with the LTI plan are included in the Executive Board share ownership table. Members of the Executive Board receive shares on the condition that they personally invest in the same number of shares as they receive under the LTI plan.
| Bandwith payout level | Targets | Performance | KPI | Weight | Threshold multiplier | On-target multiplier | Maximum multiplier |
|---|---|---|---|---|---|---|---|
| Threshold | 0% | On-target | 100% | Maximum | 150% | ||
| Performance Weight | Multiplier/payout % | Threshold | On-target | Maximum | Threshold | 0% | 0.78 |
| ROS | 20% | 11.7% | 12.7% | 13.7% | 12.3% | 20% | 0.78 |
| ROCE | 20% | 17.4% | 18.4% | 19.4% | 15.0% | 0% | 0.00 |
| B Sustainability | 20% | 0.50 | 1.00 | 1.50 | 20% | 1.50 | |
| CO2 |
10%
64.3%
67.3%
70.3%
70.3%
10%
1.50
10%
19.2%
20.0%
20.8%
21.6%
10%
1.50
40%
0.50
1.00
1.80
0.50
1.00
1.80
| 0.78 | |
|---|---|
| 40% | 0.56 |
100%
Performance multiplier: ABC
80%
0.65
26%
1 The calculated ROS and ROCE are normalized for acquisitions and divestments, for both target and performance.
Balance at 1/1
Awarded shares
Individually purchased shares
Disposal (at least 3 years in portfolio)
Balance
The Remuneration Committee ensures that the pensions of Executive Board members are in line with generally accepted standards and ensures that they are consistent with the pension plans offered for similar positions. In addition, the pension provisions include a right to benefits in case of ill health or disability and a widow’s and orphan’s pension in case of death on terms similar to those applicable to members of the collective pension fund. The associated costs, up to the maximum allowed under tax law, are included in pension costs. The pension compensation refers to any portion exceeding the maximum allowed under tax law (2024: €137,800).
The members of the Executive Board are entitled to certain business allowances in accordance with what is generally customary and accepted within the TKH organization, which are limited to an expense allowance, car, (mobile) phone, and insurance. Additional governance-related activities are not subject to any additional conditions or remuneration. No option rights are awarded to members of the Executive Board.
The table below lists the various gross remuneration components and relative percentages of fixed and variable remuneration of the members of the Executive Board.
| Total remuneration Executive Board | Basic salary (TRI) | Variable income (STI) 1 | Share plan (LTI) 1 | Pension | Pension compensation | Total | Variable share in the total | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in €1,000 unless stated otherwise) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||
| J.M.A. van der Lof MBA | 789 | 763 | 135 | 317 | 353 | 1,135 | 57 | 50 | 251 | 222 | 1,585 | 2,487 | 30.8% | 58.4% |
| E.D.H. de Lange MBA | 593 | 573 | 78 | 238 | 265 | 852 | 27 | 23 | 80 | 79 | 1,043 | 1,764 | 32.9% | 61.8% |
| H.J. Voortman MSc | 571 | 552 | 75 | 230 | 256 | 821 | 27 | 23 | 77 | 75 | 1,006 | 1,700 | 32.9% | 61.8% |
| Total remuneration | 1,953 | 1,887 | 288 | 785 | 874 | 2,808 | 111 | 95 | 408 | 376 | 3,634 | 5,951 | 32.0% | 60.4% |
In formulating the Remuneration Policy for the Executive Board, one of the factors the Supervisory Board takes into account is the organization’s pay ratio. The Supervisory Board believes that there should always be a reasonable balance between the remuneration of the members of the Executive Board and the remuneration of the other employees. The internal pay ratio is understood to mean the ratio between the total annual remuneration of the CEO on the one hand, and, on the other hand, the average annual remuneration of the employees of the company and group companies whose financial data are consolidated by the company, where:
dance with the applicable rules under IFRS.
Achieved in the previous financial year and paid out in the following financial year.
The pay ratio for 2020 is significantly lower due to the lower value of STI and LTI as part of the remuneration. This led to a significant reduction in remuneration in 2020 and, consequently, to a relatively low pay ratio for 2020. The pay ratio for 2022 is lower compared to 2021 due to the lower value of LTI, mainly as a result of a lower multiplier for the relative stock price development. The pay ratio for 2024 is 26.6 and significantly lower compared to 2023, due to the lower value of STI and LTI as part of the remuneration.
The table below shows a five-year comparison of the changes in the remuneration of the Executive Board and the company’s performance.
| Comparative information on Remuneration and Company performance | (in €1,000 unless stated otherwise) |
|---|---|
| 2024 | |
| 2023 | |
| 2022 | |
| 2021 | |
| 2020 |
| J.M.A. van der Lof MBA | 1,278 | 2,215 | 1,658 | 2,237 | 902 |
|---|---|---|---|---|---|
| E.D.H. de Lange MBA | 936 | 1,663 | 1,244 | 1,678 | 676 |
| H.J. Voortman MSc | 902 | 1,603 | 1,127 | 1,523 | 614 |
| ROS | 12.7% | 12.8% | 12.9% | 12.4% | 10.5% |
|---|---|---|---|---|---|
| EBITA | 204 | 237 | 235 | 190 | 129 |
| CO2e reduction (vs. 2019) | 70.3% | 64.3% | 42.7% | 29.8% | |
| CO2e reduction (vs. 2015) | 5.8% | 5.8% | 5.8% | 5.8% | |
| Illness rate of employees | 3.97% | 3.85% | 4.04% | 3.56% | 3.51% |
| Average remuneration per FTE | 60 | 58 | 57 | 55 | 50 |
| CEO pay ratio | 26.6 | 43.0 | 33.7 | 45.3 | 22.4 |
Dutch publicly listed companies and international (largely European) sector-specific companies that are comparable to the Company in terms of size, complexity, and international scope. The Remuneration Committee, supported by external experts, regularly reviews this reference group to ensure that its composition remains appropriate.
Although the external market data provides a useful reference point, it is ultimately the responsibility of the Remuneration Committee and the Supervisory Board to determine and propose to the Annual General Meeting a remuneration package at an appropriate level that reflects the specific context and requirements of the Company and the skills and capabilities of the individual Supervisory Board members. As such, external market data will be used to support rather than drive decision-making.
The Remuneration Committee evaluates the external market data and recommends adjustments, if necessary, to the Supervisory Board for approval.
The individual remuneration of the members of the Supervisory Board is determined by the General Meeting on a recommendation by the Supervisory Board. The remuneration for the members of the Supervisory Board is set at a level which is considered appropriate to attract individuals with the necessary international experience and the ability to make an important contribution to the Company’s affairs. The remuneration is determined taking into account the level of responsibility of each Supervisory Board member and the remuneration paid by other companies of similar size and complexity.
Indexation of the remuneration for the Supervisory Board takes place annually.
The remuneration of Supervisory Board members needs to be at a reasonable level compared to the terms of employment and average income of the employees in the company, as well as in relation to the pay ratios that apply within the company. The compensation of a member of the Supervisory Board does not depend on the Company's results and reflects the time spent and the responsibilities of the position. All Supervisory Board members receive a fixed base remuneration to compensate them for the services they provide as members of the Supervisory Board. The Chairman of the Supervisory Board receives a higher remuneration for his services. Additional remuneration is also paid for membership of Supervisory Board committees. If circumstances require members of the Supervisory Board to perform substantially more than their normal activities, they will receive a remuneration of €1,000 for each part of a day, up to a maximum of €2,000 per day.
The policy aims to provide a competitive compensation package to attract, motivate, and retain qualified Supervisory Board members for a publicly listed company, taking into account the Company's size, strategy, and unique characteristics. The policy was designed in the context of national and international market trends, statutory requirements, corporate governance best practice, the societal context around remuneration, and the interests of the Company’s Shareholders and other stakeholders. The compensation package is periodically reviewed against market trends using information provided by external experts.
The overriding principle of the Company’s Remuneration Policy is to ensure fairness and transparency. The remuneration structure is designed to encourage Supervisory Board members to perform their role adequately and does not depend on the financial results of the Company. The Supervisory Board acknowledges its responsibility to be aligned with the identity, mission, and core values of the Company. In this context, it has been decided to have only a fixed remuneration income and no variable remuneration to be able to have an independent and objective role regarding the implementation of the Company's strategy, targets, long-term value creation, and sustainability.
Supervisory Board members do not receive any performance or equity-related compensation. Supervisory Board members do not accrue any pension rights with the Company.
The table on the right lists the total remuneration paid to individual members of the Supervisory Board.
| Total remuneration Supervisory Board | Regular remuneration | Remuneration membership committees | Total 2024 | Total 2023 |
|---|---|---|---|---|
| (x €1,000) |
| P.W.B. Oosterveer, chairman | 67 | 21 | 88 | 62 |
|---|---|---|---|---|
| J.M. Kroon | 51 | 14 | 65 | 63 |
| C.W. Gorter | 51 | 19 | 70 | 68 |
| A.M.H. Schöningh | 51 | 7 | 58 | 56 |
| W.A.A. Peek | 1 | 34 | 3 | 37 |
| R.L. van Iperen | 2 | 17 | 17 | 75 |
| Total remuneration | 270 | 65 | 335 | 324 |
1 As of May 2024.
2 Up to and including May 2024.
As amounts are expressed in thousands of euros, totals may not add up precisely due to rounding.
| Chairman of the Supervisory Board | €67,481 |
|---|---|
| Member of the Supervisory Board | €50,611 |
| Chairman of the Audit Committee | €11,247 |
| Member of the Audit Committee | €7,873 |
| Chairman of the Remuneration Committee / Selection and Appointment Committee | €8,998 |
| Member of the Remuneration Committee / Selection and Appointment Committee | €6,748 |
The current members of the Supervisory Board do not own any (depository receipts for) shares in TKH.
| 2024 | 2023 | 2022 | 2021 | 2020 | ||
|---|---|---|---|---|---|---|
| P.W.B. Oosterveer, chairman | 1 | 88 | 62 | 36 | ||
| J.M. Kroon MBA | 65 | 63 | 60 | 58 | 58 | |
| C.W. Gorter | 70 | 68 | 64 | 60 | 58 | |
| A.M.H. Schöningh | 2 | 58 | 56 | 52 | 51 | 34 |
| W.A.A. Peek | 3 | 37 | ||||
| R.L. van Iperen | 4 | 17 | 75 | 69 | 53 | 53 |
| A.J.P. De Proft | 5 | 23 | 68 | 68 | ||
| P.P.F.C. Houben | 6 | 23 | 55 | |||
| Total remuneration | 335 | 324 | 304 | 313 | 326 |
1 As of May 2022.
2 As of May 2020.
3 As of May 2024.
4 Up to and including May 2024.
5 Up to and including May 2022.
TKH Group N.V., a public limited liability company under Dutch law, applies the two-tier board regime. The management of the company is delegated to the Executive Board under the supervision of the Supervisory Board. The general powers of the Executive Board derive from legislation and regulations, and are laid down in TKH's articles of association. The Executive Board and the Supervisory Board are responsible for the Corporate Governance structure of TKH and compliance with the Dutch Corporate Governance Code (“Code”). TKH applies the principles and best practice provisions of the Code and attaches great value to the Code. In a few cases, TKH deviates from the Code; the reasons for each of these deviations are described below.
There is a share plan for the Executive Board, but no share option scheme. The share plan involves a financial contribution by the Executive Board as the individual members have to purchase the same number of shares at their own costs as they are awarded within the framework of the share plan. Because this involves a financial contribution from Executive Board members, it has been determined that the shares must be held for at least three years. Additionally, as this scheme requires a private investment obligation of the individual members of the Executive Board, the Supervisory Board believes that it is reasonable and fair to adhere to a term of three years, and not a term of five years.
TKH has an Internal Audit function, but the position of this department has not been fulfilled completely independently in accordance with the Code. The Internal Audit team has been expanded in early 2024, which will further strengthen its independent position. According to best practice provision 1.3.2 of the Code, the functioning of the internal audit function should be assessed at least every five years by an independent third party. The evaluation of the Internal Audit function is conducted internally on a yearly basis. The external evaluation is scheduled for 2025.
issued capital, request the Executive Board or Super-
visory Board in writing to do so, specifying the items to be discussed. With regard to invoking a response time concerning proposals for fundamental strategy changes, TKH has applied the legal provision in Article 2:114b of the Dutch Civil Code with regard to a 250-day reflection period, above the 180 days specified in the Code. The basic principle here is to ensure that the operation and effectiveness of the measures that companies can take to respond adequately to proposals for fundamental strategy changes are safeguarded.
receipts at a General Meeting specified in the proxy, to the exclusion of TKH Trust Foundation Office. The authorization is unrestricted and is therefore not subject to any exchangeability limit. TKH Trust Foundation Office is not required by law (article 2:118a of the Dutch Civil Code) to grant the proxy, and may withdraw a proxy that has been given if a) a hostile public offer is announced or made (or is expected to be made), b) one or more persons possess at least 25% of the depositary receipts and/or shares, or c) in the opinion of TKH Trust Foundation Office, the voting right of a holder of a depositary receipt is fundamentally in conflict with the interest of the company.
In the event of one of these scenarios, TKH Trust Foundation Office must notify the holders of depositary receipts and explain the reasons behind their actions. The company considers the issue of depositary receipts for shares as an important measure to protect the interests of shareholders, holders of depositary receipts and other stakeholders. This means that the company’s intellectual property and its commercial interests are protected, which is also important for sustainable long-term value creation for our stakeholders. Although the Code states that the issue of depositary receipts is not intended to be used as a protective measure, TKH expressly chooses to take this form of protective measure and acts in accordance with the applicable law in Article 2:118a of the Dutch Civil Code. This is in derogation of the principle of the Code.
The Executive Board is responsible for complying with all relevant primary and secondary legislation and for managing the risks associated with the company’s activities through the implementation of appropriate internal risk management, control, and auditing systems. This involves surveying and analyzing the risks related to the company’s strategy and activities, establishing the risk appetite, and defining the necessary measures to manage and monitor the risks. The Executive Board is accountable to the Supervisory Board for setting up effective and well-functioning internal risk management and control systems.
TKH has embedded its risk management policy in all levels of the organization. This involves using risk management and control systems that contain the following key components:
Analyze and evaluate the strategic, operational, financial, and compliance risks for its operating companies.
Which is issued every quarter or more frequently if necessary. It features “high-lights” and “low-lights”, and (potential) risks per business segment. It also contains related short- and medium-term action points for discussion between the Executive Board and management of the operating companies.
TKH’s risk management policy reflects the organization’s size and decentralized structure. The components of this risk management policy are assessed by Internal Audit, focusing only on continuing operations. The main risks of:
| ICF & TCF | Manuals | Reporting | Analysis | Internal Audit | Finance & Control | Legal | Tax | Compliance Officer | Sustainability | Supervisory Board | Audit Committee |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Reporting and discussion on Risks and Mitigation | Strategic scorecard | Highlights & Lowlights | Reporting | Deep dives | Company visits | ||||||
| Executive Board | Reporting and discussion on Risks and Mitigation | Budgets Reporting Meetings | Operating Companies / Cluster Management |
An open, transparent culture with sufficient critical capacity is a prerequisite for an organization to properly manage risks, responsibilities, and competencies. TKH considers a suitable risk management model to be an important tool for creating sustainable long-term value. A continuous focus on risk awareness is a key element of TKH’s culture. The pursuit of a balanced risk profile is embedded in this culture through short lines of communication and is supported by closely monitoring agreed objectives through a comprehensive Key Performance Indicator (KPI) dashboard.
Employees are expected to be aware of the core values underlying our actions and our risk profile and to feel responsible for the (potential) risks they take. They are also expected to adhere to the principles of TKH’s culture and to act in accordance with TKH’s Code of Conduct. At the same time, we are committed to ensuring a safe work environment in which our employees can excel, regardless of their background, gender, or position. The Code of Conduct is fundamental to everything we do and describes how we act as a company and within the company, how we make decisions, and how we deal with different dilemmas. We have established a procedure that enables employees to report any suspicion of conduct that is unlawful or violates the Code of Conduct, including behavior related to sexual harassment, gender inequality, and abuse of power. Reports are reviewed and investigated by the local Confidential Officer and/or the Group Compliance Officer. If deemed necessary, disciplinary and mitigating measures are taken. External parties can also report to the Group Compliance Officer.
Embedding the Internal Control Framework in our operating companies and on further standardizing controls within the operating companies.
For operating companies whose size, technology, and risks, such as privacy and reputation, are important in the context of implementing the TKH strategy, IT & Security risks have been identified and recommendations have been made to further mitigate these risks. These risks and their follow-up are frequently discussed with the Executive Board and the Audit Committee. In 2024, we have carried out specific assessments on the implementation of the EU NIS2 Directive.
Several small and non-material security incidents occurred during the year under review. However, we experienced one larger incident due to a successful ransomware attack at one of our operating companies, which impacted access to operating systems for two weeks but without material impact. The incidents reinforce the need to remain vigilant to IT Security risks.
and the related ESRS (European Sustainability Reporting Standards). Although there is not yet a formal statutory requirement to report in accordance with the CSRD due to the delayed transposition, TKH prepared its sustainability statements 2024 based on the CSRD on a voluntary basis. At the same time, we obtained a voluntary assurance on the sustainability statements. The CSRD requires companies to report on quantitative and qualitative datapoints on sustainability topics assessed as material. This led to the extension of the existing non-financial KPIs and reporting through our reporting system Cognos. In addition, information has been collected manually, for example related to certain scope 3 emission categories. Because this is the first year of CSRD reporting and data collection for certain datapoints, partly manually, and due to the complexity and higher degree of judgements and estimations, changes in the assumptions and estimates could result in for example different GHG emissions than those recorded in the sustainability statements in this annual report 2024.
In the year under review, Internal Audit performed reviews on selected non-financial reporting KPIs and operating companies and identified areas for improvement and optimization. No material deficiencies were identified. In 2025, we will continue to develop the review activities related to non-financial information, with the ambition to include all CSRD-related quantitative datapoints in the scope of internal audit over time.
In the year under review, we started the implementation of the risk management statement (VOR) which is required for Dutch stock listed companies in 2025 as part of the Dutch Corporate Governance Code. We also performed specific internal audits on the implementation of the Tax Control Framework related to VAT at selected operating companies in the Netherlands. Finally, we also paid specific attention to the application of the sanction regulation.
The risk connectivity matrix shows the most important risks for TKH. We divided them into four categories: strategic risks, operational risks, financial and reporting risks, and compliance risks. For each risk, we then assess its potential impact on the organization and the probability that this risk will occur. The impact includes financial and non-financial factors such as reputation. The table also includes the risk trend and risk appetite. The risk trend is the risk development compared to the previous year. The risk appetite represents the risk (amount) we are willing to accept in pursuit of our strategic objectives. In addition, a link has been made with the material sustainability topics as identified through the double materiality assessment performed under the CSRD. More detailed information on the material sustainability-related impacts, risks and opportunities is included in the sustainability statements.
It is the duty of the Executive Board to weigh the business opportunities against the expectations and interests of stakeholders. Decisions to change or refine our business models are made by the Executive Board in accordance with TKH’s risk appetite. A balance is explicitly sought between acceptable risk, on the one hand, and entrepreneurship conducted in the context of long-term value creation, on the other hand.
In addition to the key risks included in the risk connectivity matrix, we have identified other risks that are also included in TKH’s internal risk management system. These include, among other things, the following risks:
| Risk area | Risk category and topics | Risk description | Material sustainability topic (CSRD) | Risk trend | Risk appetite |
|---|---|---|---|---|---|
| Strategic | 1. Market & Geopolitics | • Market / geopolitics developments • Conflicts / wars • Protectionism / import duties |
Sustainable innovation
GHG emissions, energy efficiency and consumption (climate change mitigation)
- Resource inflows, waste, and waste recycling
- Pollution of air, soil, and water
- Water consumption
Scarcity of well-qualified personnel and inability to retain qualified personnel. Health and safety incidents can cause risks for employees and lead to business stagnation. Inability to reach (young) potential employees can result in shortage of staff. A non-diverse workforce can result in limited perspectives, skills, and experiences, which can lead to decreased creativity, innovation, and problem-solving within TKH.
Important raw materials such as copper, aluminum and plastics, and technical (electronical) components have long delivery times or are unavailable or only available in limited quantities. Limited availability of (green) energy could result in (potential) shortages of energy and higher price levels. Failing to address relevant human rights related risks in the value chain (Smart Connectivity systems) can result in regulatory fines, legal penalties, and reputational damage.
Risk of projects not being delivered according to specification, agreements, time schedule, and planned margins. Expanded scope in projects towards turnkey structures increases contract value and risk exposure due to the extension of scope, for example by including besides the supply the engineering, termination and testing, and installation (e.g. inter-array cable contracts).
Volatility of currencies, which can put pressure on profit margins.
Volatility of interest rates, which can put pressure on net result.
Inflation of costs, including (volatility of) raw material prices, components and labor costs, which can put pressure on profit margins.
Risk that TKH’s financial reporting contains material errors, and that new reporting requirements cannot be met timely and accurately. Inadequate disclosure of environmental, social, and governance (ESG) factors in accordance with the CSRD may lead to reputational damage and regulatory scrutiny. These can impact stakeholder trust and business resilience.
Damage (including reputation) due to violation of legislation and regulations including export and sanction regulations, unfair competition, fraud, corruption, and bribery.
The impact of global economic and geopolitical developments and conflicts (such as the Russia-Ukraine war) on the implementation of the strategy and the financial position and results of TKH. Economic and political confrontations between world powers (trade tariffs/barriers, protectionism, availability and price of energy), the erosion of trade agreements, and the impact of (global) inflation as well as a potential recession may impact TKH’s turnover and results.
Insufficient technological development, innovation and application of AI can threaten TKH’s long-term value creation. These risks may emerge in the following areas:
Our specific risk mitigation measures:
Failure to successfully integrate acquired companies or execute divestments of business activities can result in lower-than-expected profit contributions and the risk of impairment. Changing M&A market circumstances (e.g. interest rate developments) may impact (the timing of) our divestment and growth strategy program.
Our specific risk mitigation measures:
The potential impact of climate change and other material sustainability topics such as CO2 emissions, climate change, availability of resources and waste management,
Pollution, and water consumption/availability on our strategy, business model, and reputation. Unsustainable business operations have an adverse effect on the environment and on the (future) business. Future implementation of CO2 tax/pricing could mean an increase in operational and compliance costs. Non-compliance with ESG and material CSRD topics, including pollution and water management, and not meeting ESG and defined CSRD targets and ambitions, can impact our operations, access to markets/customers, and reputation.
IT & Security concerns the risk of a breach of data availability, confidentiality, and integrity (including IP). This also includes cyberattacks that compromise data (including IP) to disrupt business operations and infrastructure. This could lead to damage for the organization and/or customers. The following elements are important in this respect:
A shortage of highly qualified personnel and the inability to retain qualified personnel can impact the (progress of the) of TKH’s strategy. Health and safety incidents can create risks for employees and cause business to stagnate. Inability to reach young potential employees can lead to staff shortages. A non-diverse workforce can result in limited perspectives, skills, and experiences, which can lead to decreased creativity, innovation, and problem-solving within TKH.
A situation where important raw materials such as copper, aluminum, steel and plastics, and technical (electronic) components have long delivery times, are unavailable or only available in limited quantities, as well as the limited availability of energy and price increases related to raw materials and energy can put pressure on profit margins. Failing to address relevant human rights related risks in the value chain (Smart Connectivity systems) can result in regulatory fines, legal penalties, and reputational damage.
Our specific risk mitigation measures:
Inadequate project management can result in the risk that projects will not be delivered to specification, on time, to budget and within agreed margins. Expanded scope in projects towards turnkey structures increases contract value and risk exposure due to the extension of scope, for example by including besides the supply the engineering, termination and testing, and installation (e.g. inter-array cable contracts).
Our specific risk mitigation measures:
Currency volatility, which can put pressure on profit margins.
•Time differences between the settlement of forward transactions and sales and purchase contracts are managed by using foreign currency bank accounts or by rolling over forward contracts.
Interest rate volatility, which can put pressure on the net result.
Our specific risk mitigation measures:
Cost inflation including (volatility of) raw material prices, components, energy, and labor costs can put pressure on profit margins.
Our specific risk mitigation measures:
Specific risk-mitigating measures for raw material prices related to copper and aluminum:
Risk that TKH’s financial reporting contains material errors, and that new reporting requirements cannot be met timely and accurately. Inadequate disclosure of environmental, social, and governance (ESG) factors in accordance with the CSRD may lead to reputational damage and regulatory scrutiny. These can impact stakeholder trust and business resilience.
These reporting risks mainly relate to the following material items in the financial and sustainability statements:
Different interpretations of the CSRD and ESRS requirements could result in different outcomes and reporting.
Failure to comply with laws and regulations – including internal guidelines – can result in damage. Examples include:
The use of banks prescribed by TKH unless another bank is required locally because only a local bank can provide the required service.
- Controller meetings and the international management meeting will address the issues of sanctions, fraud, corruption, payment frameworks, and bribery by means of theory and case studies.
TKH is exposed to tax risks that could result in double taxation, penalties, and interest payments. The source of the risks could arise from local tax rules and regulations as well as international and EU regulatory frameworks (amongst others European ATAD directives, DAC initiatives, country-by-country reporting and Pillar Two). These include, but are not limited to, transfer pricing risks on internal cross-border deliveries of goods and services, tax risks related to acquisitions and divestments, tax risks related to permanent establishments, tax risks related to tax loss, interest and tax credits carried forward, and potential changes in tax laws that could result in higher tax expenses and payments. These risks can have a significant impact on (local) financial tax results, which, in turn, could adversely affect TKH’s financial position and results.
Our specific risk mitigation measures:
For the most important risks, we have, where possible, quantified the impact on the result and financial position of TKH should these risks occur. A sensitivity analysis is also included. The financial statements, including note 20, outline TKH’s objectives and policy regarding the use of financial instruments for risk management, also in the context of hedging risks associated with all major types of transactions to which TKH is exposed, related to capital, liquidity, interest, currency, credit, and price risks.
| Risk | Change | Impact on assumptions | Relates to risk |
|---|---|---|---|
| Turnover | 1% | €8.9 million EBITA | No adjustment of operating costs. 1, 2, 3, 9, 11 |
| Raw material price copper | 10% | €1.8 million EBITA | No derivatives to hedge price risks. 11 |
| Gross margin | 1% | €17.1 million EBITA | No adjustments of operating costs. 1, 2, 3, 8, 9, 11 |
| Operating costs | 1% | €7.6 million EBITA | No adjustment of turnover/gross margin. Operational and financial risks |
| Currencies – financial |
| 10% | €14.4 million | Result before tax | All other variables remain constant. |
|---|---|---|---|
| 10% | €38.2 million | Group equity | All other variables remain constant. |
| 1% | €5.1 million | Result before tax | Net bank debt including deduction of interest rate swaps held at variable interest rates. |
| 1% | €4.3 million | Group equity | Based on concluded interest rate swaps. |
The Executive Board is responsible for the design and effectiveness of the internal risk management and control systems. The purpose of these systems is to identify and effectively manage the most significant risks to which the company is exposed.
and the expectations for the 2025 reporting year, the Executive Board has assessed the company’s going concern assumption. Current market conditions and business plans for 2025 have been taken into account. The Executive Board has also assessed the key strategic, operational, sustainability, financial, reporting, and compliance risks, as well as the design and effectiveness of the internal risk management and control systems, as described in the Risk Management and Sustainability Statements section of this annual report.
The effectiveness and performance of the internal risk management and control systems are discussed each year with the Audit Committee and the Supervisory Board. Taking into account the aforementioned risks and measures designed to manage them, and in accordance with the best practice provision 1.4.3 of the Dutch Corporate Governance Code, the Executive Board confirms that to the best of its knowledge:
In view of the above, the Executive Board confirms that it is in compliance with best practice provision 1.4.2 of the Dutch Corporate Governance Code. It should be noted that the above does not imply that the internal risk management and control systems provide certainty as to the achievement of operational, sustainability, and financial business objectives, nor can they completely prevent all misstatements, inaccuracies, errors or losses, incidents, fraud, or non-compliance with rules and regulations.
With reference to Section 5.25c(2c) of the Financial Supervision Act (Wft), the Executive Board declares that to the best of its knowledge:
Haaksbergen, the Netherlands, March 3, 2025
J.M.A. van der Lof MBA, Chief Executive Officer
E.D.H. de Lange MBA, Chief Financial Officer
TKH’s (depositary receipts of) shares have been listed on the Euronext Amsterdam stock exchange since 1953, under the ticker symbol TWEKA and are included in the mid-cap index (AMX). Options on TKH shares are listed on NYSE Liffe, the European derivatives business of Euronext (ticker symbol: TKG). TKH shares are also included in the Euronext Next 150 Index, and the Euronext Tech Leaders segment.
| 2024 | 2023 | |
|---|---|---|
| Ordinary shares (nominal value € 0.25 each) | 42,198,429 | 42,198,429 |
| of which depositary receipts | 42,069,736 | 42,077,884 |
| of which registered shares | 128,693 | 120,545 |
| Priority shares (nominal value € 1.00 each) | 4,000 | 4,000 |
| Total shares issued | 42,202,429 | 42,202,429 |
| of which held by the company | 2,325,349 | 2,400,483 |
The number of depositary receipts of shares has decreased by 8,148 compared to December 31, 2023 due to the conversion of 8,148 depositary receipts of shares into ordinary shares. At the end of 2024, the company held 2,325,349 of its own depositary receipts of shares. The company may acquire depositary receipts of shares in its own capital for purposes such as employee share, option plans, and share buyback programs.
The ordinary shares, with the exception of the registered shares of the company, have been transferred by notarial deed to Stichting Administratiekantoor TKH Group (“Stichting Administratiekantoor”), which issues depositary receipts for the shares to the ultimate investors. Stichting Administratiekantoor is the party entitled to the ordinary shares and also exercises the voting right, unless it has granted power of attorney to the holders of the depositary receipts. The holders of depositary receipts are entitled to receive power of attorney to vote for the shares corresponding to the depositary receipts they own. Stichting Administratiekantoor remains entitled to vote for the shares for which the holders of depositary receipts are not present or represented at the Annual General Meeting of Shareholders. The aforementioned power of attorney may be limited, excluded or revoked by the Board of Stichting Administratiekantoor in various situations specified by law (see also Corporate Governance section). In such cases, Stichting Administratiekantoor may (again) decide to exercise the voting right for all shares for which depositary receipts have been issued. The relationship between Stichting Administratiekantoor and the holders of depositary receipts for shares is governed by administrative conditions. The depositary receipts can be exchanged for ordinary shares for a maximum of 1% of the total issued capital in the form of ordinary shares. This total includes both indirectly and directly held shares. The 1% rule does not apply to the transfer of ordinary shares to the company itself. Except as described under “Other information”, the 4,000 priority shares do not carry any special rights.
The company has granted Stichting Continuïteit TKH an option to acquire preference shares up to a maximum of 50% of the sum of the other outstanding shares at the time that the preference shares are issued or up to 100% of the sum of the other outstanding shares at the time the preference shares are issued if the restriction on the cancellation option lapses, which will occur if and when the Executive Board of the company so decides and files a declaration to that effect with the Chamber of Commerce. Stichting Continuïteit TKH has not acquired any cumulative preference shares in TKH in 2024. Further information on the capital structure of TKH is included in note 7 to the company’s financial statements. This information is incorporated by reference in the management report.
The following key figures per (depositary receipt of) share apply in relation to the listing on Euronext Amsterdam.
| Trading information | 2024 | 2023 |
|---|---|---|
| Annual turnover of shares | 21,030,162 | 20,161,005 |
| Highest price | €44.78 | €49.10 |
| Lowest price | €30.18 | €33.64 |
| Closing price | €33.32 | €39.50 |
| Net earnings per share | €2.50 | €4.07 |
| Dividend | €1.50 | €1.70 |
| Price-earnings ratio as at the end of the financial year | 13.3 | 9.7 |
| Dividend yield on closing price | 4.5% | 4.3% |
| Market capitalization at end of financial year (in millions) | €1,329 | €1,572 |
| Mandatory disclosing party | Interest | Date of last disclosure |
|---|---|---|
| HAL Trust (HAL Investments B.V.) | 5.17% | February 3, 2025 |
| Goldman Sachs Group Inc. | 3.11% | January 28, 2025 |
| Lucerne Capital Management, LLC | 5.70% | January 25, 2025 |
| FMR LLC | 5.08% | May 31, 2024 |
| Janus Henderson Group plc | 5.01% | March 21, 2024 |
| TKH Group N.V. | 5.00% | November 24, 2023 |
| AllianceBernstein L.P. | 3.03% | January 20, 2022 |
| Vinke Amsterdam B.V. | 5.84% | May 28, 2020 |
| Teslin Participaties Coöperatief U.A. | 5.01% | July 6, 2017 |
| ASR Nederland NV | 5.11% | October 6, 2008 |
TKH’s investor relation activities are designed to ensure that current and potential shareholders, analysts, and other stakeholders are provided with timely, complete, and consistent information. TKH’s investor relations activities focus on helping the market understand our business, our strategy, our markets, and our financial and sustainability performance. TKH is committed to transparent reporting.
We communicate through our half-year and full-year earnings releases and presentations, market updates, quarterly analyst calls, the annual report, and other information published on our investor relations website.
We host live webcast presentations of our half-year and full-year results, conference call of our third quarter market update, hold the Annual General Meeting of Shareholders, and have frequent contact with major and other shareholders, interested institutional investors, and analysts through roadshows, conferences, company visits, investor days and one-on-one discussions. TKH’s activities comply with the applicable regulations and guidelines of Euronext Amsterdam and the Dutch Authority for the Financial Markets (“AFM”), the Dutch financial markets regulator.
For further information, please contact Jacqueline Lenterman, Director of Investor Relations and Corporate Communications at +31(0)535732900, [email protected].
More information about TKH and its operating companies is available on our website at www.tkhgroup.com.
| Date | Event |
|---|---|
| May 13, 2025 | Market Update Q1 2025 |
| May 15, 2025 | General Meeting of Shareholders |
| May 19, 2025 | Ex-dividend date |
| May 20, 2025 | Dividend record date |
| May 23, 2025 | Payment of dividend |
| August 12, 2025 | Publication interim results 2025 |
| September 25, 2025 | Capital Markets Day |
| November 11, 2025 | Market Update Q3 2025 |
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83 Annual Report 2024 TKH Group
| E2-IRO-1 | Pollution-related IROs | 111 |
|---|---|---|
| E2-1 | Policies | 111-112 |
| E2-2 | Actions | 112 |
| E2-3 | Targets | 112 |
| E2-4 | Pollution metrics | 112 |
| E3-IRO-1 | Water and marine resources IROs | 113 |
|---|---|---|
| E3-1 | Policies | 113-114 |
| E3-2 | Actions | 114 |
| E3-3 | Targets | 114 |
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such as estimation or extrapolation in our value chain, is clearly marked as such. Data like this includes a level of estimation uncertainty. This applies to certain categories of the scope 3 emissions, for which the data has been collected manually (category 1, 4, 9, 11 and 12). The sustainability statements contains value chain information related to scope 3 GHG emissions (ESRS E1 climate change), ESRS S2 workers in the value chain, and ESRS S4 customers and end-users.
No relevant pieces of information were omitted for reasons related to classified and sensitive information and information on intellectual property. TKH did not use any exemptions provided under Article 19a and 29a of Directive 2013/34 of the European Parliament and of the Council of the European Union in the preparation of its sustainability statements. The basis of preparation, the resulting level of accuracy, the estimation of outcome uncertainty and, where applicable, planned actions to improve the accuracy and outcome uncertainty of sustainability information in future annual reports are disclosed for each material topic in the relevant section of the sustainability statements.
2024 is the first CSRD reporting year and the framework and implementation guidance are still in development. Different interpretations of the CSRD and ESRS requirements could result in different outcomes and reporting in the next reporting year.
The time horizons considered in these sustainability statements align with those applied in the financial statements. Short-term is the reporting period in our financial statements, one year; medium-term is from the end of the short-term up to five years; long-term is defined as more than five years.
All sustainability data from our operating companies, except for scope 3 GHG emissions, are reported on a quarterly basis in our financial and sustainability reporting tool Cognos, according to our Sustainability Reporting Manual that include definitions, (reporting) procedures and calculation methods. The sustainability data from our operating companies are tracked and reported to measure progress against our sustainability targets.
The KPIs are based on activity data as much as possible, which in turn are based mostly on meter readings, invoices, and data provided by suppliers. However, the preparation of the sustainability statements requires management to make judgments, estimates and assumptions that affect amounts reported. The estimates and underlying assumptions are reviewed on a frequent basis. The calculation of the scope 3 emissions have a higher degree of judgement and complexity for which changes in the assumptions and estimates could result in different results than those recorded in the sustainability statements in this annual report 2024. Data on GHG emissions are based on measurements and estimates at both TKH group and operating company level. The emissions figures reported are TKH’s best estimate. The basis of preparation is data submitted by our operating companies, which is validated and consolidated by TKH Group’s sustainability team. In 2024, we extended our scope 3 GHG emissions dashboard by adding category 1 purchased goods and services.
Under the CSRD (Corporate Sustainability Reporting Directive of the European Union), companies in scope will be required to report on sustainability issues in their management report for the 2024 financial year and to obtain an assurance conclusion on this report. However, the implementation of CSRD in Dutch law has been delayed. Although there is not yet a formal statutory requirement to report in accordance with the CSRD due to the delayed implementation, TKH prepared its sustainability statements 2024 based on the CSRD on a voluntary basis. At the same time, we obtained a voluntary assurance on the sustainability statements.
The CSRD requires companies to report their sustainability statements based on the ESRS (European Sustainability Reporting Standards), providing the framework and methodology for reporting. All material datapoints are reported on, other than those subject to phase-in or are voluntary. The EU Taxonomy is also included.
companies are reported from the date of acquisition in accordance with the CSRD. In 2024, the following companies are acquired and added to the sustainability reporting: JCAI, Comark, and Liberty Robotics. VMI has opened a new location in India, and this has been added as well. In 2024, TKH divested the companies EKB Groep and HE System Electronic. The sustainability reporting of these companies are included until divestment.
category 4 upstream transport, category 9 downstream transport, category 11 use of sold products, and category 12 end-of-life treatment. This emissions data has been collected through the end of the year, via a manual process. For the calculations of our scope 3 emissions, we make use of a high-level of estimations. The following estimations are most relevant:
The life-time of our sold products is partly estimated and based on the average portfolio of the operating company in question (scope 3 category 11 emissions).
Energy consumption of our sold products is partly estimated based on the average portfolio of the operating company in question (scope 3 category 11 emissions).
In case the exact treatment of our products at their end of life (scope 3 category 12) is unknown, we assume the most conservative and/or polluting outcome of a treatment (in most cases incineration).
Replacing industry average data to calculate the scope 3 emissions attributed to our suppliers and customers with supplier and customer specific carbon footprint data is a key driver to improve our data quality. The use of estimations are in more detail disclosed in the respective paragraphs, for estimation used for the GHG emissions reference is made to the Climate change section. Other metrics containing estimates are disclosed in more detail in the respective paragraphs. Part of the inventory of pollution to air, soil, and water, based on the list of pollutants and related threshold values specified in Annex II of Regulation (EC) No 166/2006, is based on estimates and own calculations, resulting in uncertainty about the outcome. More information is included in chapter Pollution E2.
In 2024, we implemented several changes in the preparation and presentation compared with previous periods, as we changed the format of the sustainability statements to align with the CSRD requirements. As a result, several metrics have been added versus the previous reporting year to disclose the metrics and targets required under the CSRD. This also improves the comparability and understandability of the sustainability information provided.
Reporting errors in prior periods are restated in the current reporting period. Where this is the case, we indicate this through an explanatory footnote. For 2024, we did not identify any material reporting errors which resulted in a restatement.
Some disclosures are incorporated by reference. Wherever we incorporate information by reference (to other parts of the management report), this is clearly indicated. The following is a list of the ESRS disclosure requirements and specific datapoints incorporated by reference to other parts of the annual report.
| # | Datapoint | Incorporation by reference |
|---|---|---|
| ESRS2.GOV-1 | The role of the administrative, management, and supervisory bodies, composition of the Executive and Supervisory Board | - Members of the Executive Board, page 47 |
| - Members of the Supervisory Board, page 48 | ||
| ESRS2.GOV-3 | Integration of sustainability-related performance in incentive schemes | - Sustainability performance described in Remuneration Report, page 59 and 61 |
| - Page 59: Sustainability performance (20%) paragraph with LTIFR and employee satisfaction performance | ||
| - Page 59: sustainability performance in STI 2024 table | ||
| - Page 61: Targets and performance 2024 paragraph with performance multiplier B on CO2 footprint reduction and diversity | ||
| - Page 61: B Sustainability in LTI 2024 table | ||
| ESRS2.21 | Information about member's experience relevant to sectors, products and geographic locations of undertaking | - Members of the Executive Board, page 47 |
| - Members of the Supervisory Board, page 48 | ||
| - Report of the Supervisory Board, page 50 table Supervisory Board competences and skills | ||
| ESRS2.23 | Sustainability-related expertise that the bodies directly possess or can leverage, and how those skills and expertise relate to material IROs | - Members of the Executive Board, page 47 |
| - Members of the Supervisory Board, page 48 | ||
| - Report of the Supervisory Board, page 50 table Supervisory Board competences and skills | ||
| ESRS2.38 | Elements of strategy that relate to or impact sustainability matters, its business model and its value chain | For background information on our value chain refer to Long-term value creation, pages 28-29 |
| 2024 | 2023 | |||
|---|---|---|---|---|
| malefemale total | Supervisory Board (non-executive members) | 2 | 3 | 5 |
| Diversity percentage | 40.0% | 60.0% | 100.0% | |
| 2023 | 60.0% | 40.0% | 100.0% | |
| Diversity target Supervisory Board | 33.3% | 33.3% | 33.3% | 33.3% |
| Independent board members percentage | 100% | 100% | 100% | 100% |
| Executive Board (executive members) | 3 | 0 | 3 | 3 |
| Diversity percentage | 100.0% | 0.0% | 100.0% | |
| 2023 | 100.0% | 0.0% | 100.0% | |
| Diversity target Executive Board | 33.3% | 33.3% | 33.3% | 33.3% |
The Executive Board discusses the sustainability strategy, implementation of policies, KPIs and progress with the various operating companies at least once a quarter. This is based on financial and non-financial reports, with the latter covering all material sustainability matters. Thus, sustainability management is integrated into our regular risk management processes and controls.
The Supervisory Board oversees the way the Executive Board defines and implements TKH’s policies and strategy to achieve the identified objectives of the company and its affiliated companies. The Supervisory Board also monitors whether the interests of the various stakeholders have been sufficiently considered. In doing so, the Supervisory Board is provided with financial, commercial, operational, sustainability, and governance information, thereby focusing on the interests of the company’s stakeholders. Sustainability is on the agenda of the Supervisory Board meetings on a quarterly basis. The Audit Committee of the Supervisory Board is responsible for overseeing sustainability reporting. The responsibilities are formalized in the rules of procedure for the Supervisory Board and its committees.
The Executive Board – the overall ownership of sustainability is with the CEO – is responsible for strategic risk management and for identifying the impacts, risks and opportunities using the double materiality analysis. The Executive Board is responsible for all assessments of and changes to sustainability aspects in the company strategy and business model. The Executive Board is also responsible for approving targets and sustainability-related policies. This also includes the monitoring of the performance of each operating company through the quarterly reporting cycle.
The Executive Board is informed about sustainability matters during each Management Board meeting, and quarterly through our internal sustainability reporting. This includes communication regarding our annual reporting, IRO identification from the DMA, reporting requirements based on IROs, and our quarterly sustainability.
meetings. The Director Sustainability is a member of the Management Board. Each month the Executive Board receives an update of the Director Sustainability and evaluate the progress made within the sustainability program. Each quarter the Executive Board receives an update on the performance of sustainability-related KPI’s. The Director Sustainability is in close cooperation with other functions, such as finance & control, and with TKH’s Internal Audit Department in relation to the auditing of sustainability matters during the internal audits. TKH's Internal Audit Department carries out sustainability internal audits on the processes to be carried out and the accuracy of the data as a permanent part of its work program. All internal audit reports are shared with the Executive Board once they are completed, the material findings are reported to and discussed with the Audit Committee during the Audit Committee meetings.
support within the TKH Group and makes implementation of the sustainability strategy and related operational processes more efficient and effective.
Information about representation of employees and other workers is included in the section Engaging with our workforce.
Members of the Supervisory Board do not receive variable remuneration, or incentives based on financial or sustainability-related performance of TKH. The variable remuneration for the Executive Board members consist of a short-term incentive (STI) in the form of a bonus, and a long-term incentive (LTI) in the form of a share plan.
Variable remuneration is an essential part of the remuneration package for Executive Board members in terms of rewarding short-term results in line with strategic objectives. The STI is based on annual financial and sustainability-related performance measures including personal targets. On the recommendation of the Remuneration Committee, the Supervisory Board sets the targets and criteria for earning a performance bonus in advance of the reporting year. Once the reporting year has ended, the size of the performance bonus is determined by the Supervisory Board, based on the results achieved and the criteria set.
In 2024, the following sustainability topics were part of the STI targets:
The long-term variable remuneration aims to align the interests of the Executive Board members with the long-term interests of TKH’s shareholders. For that purpose, a share plan was enacted that provides for a long-term incentive. Under the share plan, members of the Executive Board receive shares based on the achievement of targets. Members of the Executive Board receive shares on the condition that they personally invest in the same number of shares as they receive under the LTI plan. By personally investing in the same number of shares as they are awarded under the LTI, each member of the Executive Board invests a significant amount of money in a way that prudently manages risk but still encourages an entrepreneurial spirit to create long-term value. As a result, the interests of the Executive Board and the shareholders remain aligned.
In 2024, the following sustainability topics were part of the LTI targets:
A more detailed description of the key characteristics of the incentive schemes is included in the section Remuneration Report, on pages 59-61.
The following sections (Environmental information, Social information, and Governance information) indicate the policies and action plans we have in place to manage each material topic. Overall, we have policies and action plans in place for the material topics of our own operations, although we identified opportunities to improve. A need remains to gain further insight into which resources we allocate to the execution of our strategy regarding our material topics and how we track our progress.
information, and Governance information contain short descriptions of the definitions of the datapoints disclosed. At least once a year the Executive Board and the Supervisory Board will be informed by the Director Sustainability about the material impacts, risks and opportunities, the implementation of due diligence, and the results and effectiveness of policies, actions plans and the adopted targets. The Executive Board and the Supervisory Board will then evaluate and determine how they will oversee the strategy, risk management process and important decisions that need to be made, based on the defined material impact, risks and opportunities. The metrics included in the sustainability statements are not validated by an external body other than assurance provider. The targets are applicable to all operating companies, unless stated otherwise in the specific disclosure.
The general risk management and internal control structure is included in the Risk management section. In addition to risk assessment, TKH’s Internal Control Framework (ICF) based on the COSO 2017 framework includes a structured process for identifying and managing opportunities. These are evaluated based on their strategic, operational, financial, compliance, and sustainability impact. Risks are assessed on its potential impact on the organization and the probability that this risk will occur. The impact includes financial and non-financial factors such as reputation. The risk appetite is also taken into account, representing.
The due diligence process performed to determine our material impacts, risks and opportunities are included in the section Impact, risk and opportunity management. Reference to the information provided in our sustainability statements about our current sustainability due diligence process and performance is included in the table below. We currently have limited detailed policies and action plans in place for topics related to the value chain. We will prepare an action plan in 2025 with the purpose to manage the identified value chain related IROs going forward.
Tracking the effectiveness of these efforts and communicating Environmental, Social, and Governance information.
89 Annual Report 2024 TKH Group
processes and definitions used by TKH have been formalized in our Sustainability Reporting Manual, which provides guidance on how to collect, consolidate, and report data. The data has been reviewed for plausibility and progress by the responsible company officers using the financial reporting model. The data has been validated by TKH’s sustainability department on group level, and analysis have been done. For most of the reported datapoints differences greater than 10% compared with the previous year have been investigated. As the sustainability reporting scope has increased in 2024, we have established a wider range of internal controls deemed appropriate and adequate following an ongoing evaluation of the risks related to data accuracy and completeness.
In addition, TKH's Internal Audit Department carries out internal audits on the processes to be carried out and the accuracy of the data as a permanent part of its work program. All internal audit reports are shared with the Executive Board, the material findings are reported to and discussed with the Audit Committee. External expertise is sought for specific and complex sustainability issues, for example related to the calculation of scope 3 emissions.
In the year under review, Internal Audit performed reviews on selected non-financial reporting KPIs and operating companies and identified areas for improvement and optimization. No material deficiencies were identified. The 2024 findings included non-material topics such as minor reconciliation differences in sustainability reporting including documentation, and consistency in way of working regarding sustainability reporting, partly as a result of the decentralized organizational structure. In 2025, we will continue to develop the review activities related to non-financial information, with the ambition to include all CSRD-related quantitative datapoints in the scope of internal audit over time.
Identified risks are prioritized based on impact and likelihood amongst others, following TKH’s risk management approach. We currently have limited detailed policies and action plans in place for topics related to the value chain. We will prepare an action plan in 2025 with the purpose to manage the identified value chain related IROs going forward.
More information on the process to identify, assess, and prioritize sustainability-related material impacts, risks, and opportunities is included in the section Process to identify, assess, and prioritize material impacts, risks, and opportunities.
For a general description of our strategy, business model, and key markets served, see section Strategy and performance. Details of the business model and value chain, including the inputs and approach to gathering, developing and securing those inputs, the outputs, and the outcomes in terms of current and expected benefits for customers, investors and other stakeholders are included in the section Long-term value creation.
TKH manufactures computer, electronic and optical products, as well as electrical equipment and machinery, which are classified under the NACE Code C26 Manufacture of computer, electronic and optical products, C27 Manufacture of electrical equipment, and C28 Manufacture of machinery and equipment. These activities are activities in high climate impact sectors, based on the sectors that are listed in Sections A to H and Section L of Annex I to Regulation (EC) No 1893/2006 of the European Parliament and of the Council (as defined in Commission Delegated Regulation (EU) 2022/1288).
TKH has offices and production sites in 34 countries and serves customers in over 90 countries. TKH’s operations are grouped into three business segments: Smart Vision systems, Smart Manufacturing systems, and Smart Connectivity systems.
| NACE | 2024 | 2023 |
|---|---|---|
| Smart Vision systems | €489.6 | €500.5 |
| Smart Manufacturing systems | €608.8 | €573.6 |
| Smart Connectivity systems | €631.9 | €800.5 |
| Other and eliminations | €-17.6 | €-17.6 |
| Total turnover | €1,712.7 | €1,847.5 |
Sustainability is a strategic priority and our operating companies have implemented relevant ISO environmental standards. By integrating sustainability into every aspect of our business, we are minimizing energy use, GHG emissions, waste, and raw materials.
We create a healthy work culture where people and their safety always come first. We empower our employees to take the initiative, respecting and valuing every individual equally regardless of age, sex, race, religion.
25% of female members in executive and senior management teams by 2030
7.5 Employee satisfaction score
90% strategic suppliers assessed
| Year | Smart Vision systems | Smart Manufacturing systems | Smart Connectivity systems | Other | Total employees |
|---|---|---|---|---|---|
| 2024 | 2,241 | 1,822 | 2,438 | 164 | 6,665 |
| 2023 | 2,203 | 2,036 | 2,426 | 104 | 6,769 |
More information per business segment is included in note 22 in formation by segment in the financial statements.
TKH’s strategic program Accelerate 2025 includes actions to increase turnover and ROS by unlocking the full potential of our innovative technologies in the high-growth markets in which we operate. By leveraging our current market positions and the megatrends of automation, digitalization, and electrification, TKH is well positioned to take full advantage of the expected market growth.
In addition, we prioritized sustainability in our strategy, actions, and targets, driven to improve our performance on sustainability. TKH will further improve its strategic resilience through by addressing material impacts and risks while capitalizing on opportunities. This will be achieved through:
human rights, corruption/bribery and the environment. This includes topics such as human rights and working conditions of value chain workers, availability of renewable technologies to realize GHG emissions reduction targets for scope 1 and 2, resource shortages and diversity, and availability and collaboration in the value chain e.g. related to decarbonation of scope 3 GHG emissions and human rights. Sustainability-related challenges are disclosed in more detail in the respective paragraphs.
In 2024, the strategy and the business model of TKH were not amended. As part of the execution of the Accelerate 2025 strategy, TKH acquired the companies Liberty Robotics and JCAI. In addition, the companies EKB Groep and HE System Electronic were divested. The strategic investment program of €200 million was completed in 2024.
TKH’s 2D and 3D Machine Vision technology systems are used to improve quality inspections, operations, and object monitoring in numerous industries, such as consumer electronics, factory automation, logistics, the wood industry, intelligent transport systems (ITS), and medical and life sciences. Meanwhile, our Security Vision systems, combined with advanced communication technologies, enable customers to efficiently manage and control the urban environment. They also improve efficiency, safety and security in various markets, such as infrastructure and building security. Within this segment, there is no significant dependency on key-suppliers or customers, as there are diverse material inputs and substitutable suppliers, and different market segments and customers served.
At TKH, we leverage our unique expertise to create superior manufacturing systems, capitalizing on our deep understanding of the automation production processes in different industries. Our systems and machines contribute to highly efficient manufacturing and processing. Our Smart Manufacturing systems serve industries ranging from tire production for cars and trucks to factory automation and medicine distribution. Our Tire Building systems represent a share of about 83% of turnover within the Smart Manufacturing systems segment. Within this segment there is no major dependency on specific key customers, as a wide range of customers are served. There is a dependency on one particular supplier, because customers prescribe this supplier as their factory automation system.
| Raw materials | Stainless steel, steel and aluminum |
|---|---|
| Production Technology segment | |
| Consumers (B2B) | Transport |
| Upstream | Own operations |
| Downstream | Electrical OEMs |
| Mechanical OEMs | Mechanical Outsourcing (producing based on drawings) |
| Other suppliers | Assembly |
| Poland | China |
| Germany | Netherlands |
| Tire makers | Semi-finished products |
| Finished goods to be add supplement | Tire Building systems |
| R&D department software | R&D Suppliers |
| R&D department software | 2D Machine vision systems |
| 3D Machine vision systems | Security Vision systems |
| Other systems | Materials hardware |
| R&D | Production Technology segment |
| Consumers (B2B) | Transport |
| Suppliers | Assembly |
| Electronics mainly purchased through ERM partners | Optics |
Upstream
Own Operations
Downstream
dependency on specific key customers, as a wide range of market segments and customers are served. There is a dependency on suppliers of raw materials (copper and aluminium), due to the limited numbers of global suppliers.
TKH recognizes and acknowledges the importance of having a meaningful dialogue with its stakeholders about sustainability and the company’s strategy including business model and value chain. Meaningful stakeholder dialogue is characterized by two-way communication and depends on the good faith of participants on the sides of both TKH and the stakeholders. TKH’s Stakeholder Engagement Policy has been published on our website, and serves to include the interests of relevant stakeholders in defining and further developing the sustainability strategy. This requires effective consultation and engagement with our stakeholders, in which context we strive to optimally serve their interests and build lasting relationships with them. This policy provides guidelines and principles to maintain and strengthen these relationships. The CEO is responsible for implementation of the policy. The policy defines our key stakeholders being our employees, shareholders, customers, suppliers, analysts, banks, public bodies and other stakeholders including sectoral organizations and NGOs. If the (central) works council of the company is considered a participant in a stakeholders dialogue, the chair of the works council will be invited to participate in such dialogue in case the stakeholder dialogue will be held in groups. This is also the case when the stakeholder dialogue with the works council has already taken place in regular contacts between the Executive Board and the works council (and the Supervisory Board).
TKH uses various methods and channels to engage in dialogue with its stakeholders, depending on the nature, purpose, and frequency of the interaction. The Executive Board decides whether a stakeholder dialogue will be held with more stakeholders at the same time (collectively) or through (one or more) year-round bilateral contacts between the company and a specific stakeholder/representative of a group of stakeholders (individually). The main outcomes of the stakeholder dialogues are discussed with the Executive and Supervisory Board.
We consulted with representatives from these key stakeholder groups on sustainability-related impacts, risks and opportunities. We prioritize the input from stakeholders, based on frequency (how often specific issues are mentioned by multiple stakeholders), severity (the potential magnitude of the impact on our stakeholders or business, and the alignment (how these issues align with our long-term strategic goals and regulatory requirements). The views of these stakeholders shape our strategic decision-making process. We incorporate feedback on specific areas of our business into our planning, actions, targets, policies and disclosures.
| Netherlands | •Haaksbergen | •Lochem | •Eemshaven |
|---|---|---|---|
| Fibre optic cable systems | Energy cable systems | Industrial and other systems | Production Technology segment |
| Consumers (B2B) | Transport | Transport | Own operations |
| Downstream | Preform suppliers (e.g. Shin - Etsu) | Aluminium suppliers | Plastics suppliers |
| Copper suppliers | Metal suppliers | Other suppliers | China |
| •Fibre optics | Telecom and network companies | Offshore and onshore utility companies | Industrial customers and |
| Stakeholder | Relevance and Purpose | Engagement Channels | Key Engagement Topics | Supportive to Our Strategy |
|---|---|---|---|---|
| Employees | • Crucially important for the success of TKH. • The company’s ambassadors. • Most important “authorized capital”. • Good employment practices. • Development opportunities and a good package of primary and secondary employment benefits. • A safe and healthy working environment. | • Internet and intranet. • Staff magazine. • Employee satisfaction survey. • Staff meetings. • Conferences and seminars. • Webinars. |
Group. This ensures we do not miss possible IROs, taking into account TKH Group’s various and globally dispersed (production) sites, the complex and diverse supply chains as well as the broad customer base in several end markets. All these 67 sustainability topics and the related IROs were evaluated and prioritized based on their respective nature (impact, risk or opportunity) by considering both the impact and financial materiality.
The impact materiality is defined as follow:
Positive and negative impacts have been assessed for actual and potential impacts, where for potential impacts the likelihood is assessed.
In determining the financial size and likelihood we used our existing risk management model, based on a five-point scale. The EBITA used to determine the financial size is based on the EBITA of the most recent full reporting year at the time of the execution of the DMA.
| Potential size category | Financial size in % of EBITA |
|---|---|
| 1. Very low | <5% |
| 2. Low | between 5% and 10% |
| 3. Medium | between 10% and 20% |
| 4. High | between 20% and 40% |
| 5. Critical | >40% |
TKH identified material sustainability topics by following the double materiality approach (impact materiality/financial materiality - DMA) brought forward by the European Sustainability Reporting Standards (ESRS). The following steps were taken from the start of the DMA project to the sign-off of material sustainability topics:
In performing this assessment, we used the list of sustainability matters covered in the topical ESRS provided in application requirement 16 of ESRS 1. Based on these sustainability matters we defined a comprehensive longlist of 130 potentially relevant sustainability topics. This longlist was narrowed down to a shortlist of 67 sustainability topics by scoping out sustainability topics which are not relevant due to the nature of our business and value chain (for example animal welfare and invasive alien species). For each of the 67 sustainability topics on the shortlist we assessed the impacts, risks, and opportunities (IROs) in the short, medium and long-term, as well as their respective materiality. The assessment on the IROs was enriched by including the business segments and value chains perspectives and experiences from across TKH.
| Potential size category | Likelihood in % |
|---|---|
| 1. Rare | <20% |
| 2. Unlikely | between 20% and 40% |
| 3. Possible | between 40% and 60% |
| 4. Likely | between 60% and 80% |
| 5. Almost certain | >80% |
| Scale | Scope | Irremediable character |
|---|---|---|
| 1. Very low | 1. Operating company | 1. Very low (immediately) |
| 2. Low | 2. Local | 2. Low (0-1 year) |
| 3. Medium | 3. Country | 3. Medium (1-5 years) |
| 4. High | 4. Regional | 4. High (5-20 years) |
| 5. Critical | 5. Global | 5. Critical (>20 years) |
The outcome of the DMA has been validated at the group level by leveraging internal expertise, industry reports, and specialist insights. This was followed by an assessment at the business segment level to ensure that key value chain topics are adequately addressed in the respective segments.
For our Smart Connectivity segment, we conducted an in-depth evaluation due to the heightened risk of adverse impacts on workers in the value chain. In this process, we:
reputational risks, and potential regulatory compliance costs, while also considering opportunities for enhanced worker welfare programs and stronger supplier relationships.
Integrated findings into risk management by aligning our assessment with scenario analyses and stakeholder consultations, ensuring that business decisions reflect identified connections.
Monitored ongoing developments through engagement with industry bodies, regulatory frameworks, and supply chain monitoring to track evolving risks and opportunities.
ability topics. More information on stakeholder engagement is included in the Interests and views of stakeholders section.
The DMA process was initiated in 2023, and formally finalized in 2024. We will update the DMA on an annual basis, including engaging with relevant stakeholders, but will monitor for significant updates on an ongoing basis. We will also assess how we can improve the DMA process further, to mitigate the risks that sustainability topics have been wrongly classified as non-material.
There is a risk that an internal or external stakeholder does not have sufficient in-depth knowledge of the ESRS, which could lead to incorrect input or interpretations. Training programs on ESRS and sustainability topics are important in this sense. At the same time, this is the first year of reporting under the ESRS framework which is still in development by providing additional implementation guidance. This entails the risk that we have interpreted certain ESRS requirements differently than intended.
The DMA resulted in 13 material sustainability topics, which are grouped into the ESRS categories Environmental, Social, and Governance in the graph and table on the next page, including the reference to the ESRS topical standard, the IROs, and the value chain boundary.
The material sustainability topics includes two company specific topics: sustainable innovation and AI and algorithm ethics. While most of the material sustainability topics are in line with the materiality analysis based on the reporting requirements of the GRI from the prior year, we have identified AI and algorithm ethics as an additional sustainability topic that requires attention because of changes in the execution of our strategy over the past year. Furthermore, we have now identified water use, compliance with environmental regulations, and human rights in the value chain as a distinct topic, which was previously included under respectively responsible production and responsible procurement.
| Environmental | Social | Governance |
|---|---|---|
| Climate change mitigation | Diversity | Corporate culture |
| Pollution of air, soil, and water | Health and safety | Corruption and bribery |
| Water consumption | Child / forced labor, and health and safety (workers in the value chain) | Management of relationships with suppliers |
| Resource inflows, waste, and waste recycling | Privacy (cybersecurity) | AI and algorithm ethics |
| Sustainable innovation |
Potential negative impacts related to our cable production sites:
| Reasonably expected time horizons | Upstream | Own operations | Downstream | |
|---|---|---|---|---|
| Short-term, Medium-term, Long-term | Short-term, Medium-term, Long-term | Short-term, Medium-term, Long-term | Short-term, Medium-term, Long-term | |
| Climate change mitigation | Pollution of air, soil, and water | Water consumption | Resource inflows, waste, and waste recycling | Sustainable innovation |
| Upstream | Own operations | Downstream |
|---|---|---|
| Short-term, Medium-term, Long-term | Short-term, Medium-term, Long-term | Medium-term, Long-term |
| Short-term, Medium-term |
| Reasonably expected time horizons | Upstream | Own operations | Downstream |
|---|---|---|---|
| Short-term | Short-term | Short-term | Short-term |
| Medium-term | Medium-term | Medium-term | Medium-term |
| Long-term | Long-term | Long-term | Long-term |
| Sub-topic | Upstream | Own operations | Downstream |
|---|---|---|---|
| Impacts | GHG emissions, energy efficiency and consumption (climate change mitigation) | * * * | • Emissions contributes to global warming and climate change, and have an actual negative impact on the environment. |
| Risks | • Inability to reduce our carbon footprint through energy efficiency improvements and renewable energy sources, leading to missed reduction targets or increased costs to meet targets. | • GHG emissions may be subject to carbon | |
| Opportunities |
Pricing mechanisms, which can increase operating costs and reduce profitability. Our approach to determining our material impacts, risks and opportunities is described in the General information section. Climate mitigation is important; we are committed to minimizing our consumption and related impacts to the extent possible (scope 1 and 2). Our assessment showed both GHG emissions, as well as energy efficiency and consumption, to be assessed as material topics for TKH – the former for our full value chain and the latter for our own operations. As part of the DMA and related analysis, we have considered the climate-related physical risks and climate-related transition events listed in the climate change application requirements. We also assessed our impact on climate change through our GHG emissions. In 2024, we completed our scope 3 emissions inventory and started assessing our ambitions and identifying decarbonization levers for scope 3. We are currently working on the detailed plans for implementation in the coming years.
TKH's production processes rely on energy and material inputs, leading to GHG emissions that contribute to climate change. TKH's cable portfolio is a key component in technologies that support the transition to a net-zero economy, including renewable energy development. With our vision and tire building systems, we improve the sustainability performance of our customers. Reducing the energy consumption of our products during their use phase, improving recyclability of our products and increased production output by using our technologies at customers sites reduces the environmental impact. As we continue to expand our activities, integrating sustainability enables us to minimize energy use and GHG emissions. Our operating production companies have implemented the ISO standards that share common ground with sustainability goals, including the ISO 14001 environmental management system and the EN-16247 energy audit system, which is related to the European Energy Efficiency Directive.
| Regulatory risks | Future implementation of CO2 taxation/pricing will mean higher operational and compliance costs |
|---|---|
| Technology risks | High investment costs to bring technology up to a level where it can meet the demand for products and services that can offer reduced emissions |
| Market demand and market change risks | Failure to meet the expectations of key stakeholders, including customers and investors, in relation to information on how we are addressing the challenges of climate change |
| Resource scarcity | Increasing volatility in the price and availability of (raw) materials/resources |
In 2021, as part of our Capital Markets Days (CMD) targets, we announced ambition to reduce our GHG emissions for our own operations (scopes 1 and 2) with 100% by 2030 (carbon neutral). We take 2019 as our baseline, which represents TKH’s activities prior to COVID-19.
The focus on sustainability performance including climate change is also reflected in the remuneration of the Executive Board. The main goals related to sustainability aspects are included in the short-term incentive (STI) as well as the long-term incentive (LTI) performance targets. The STI includes targets for employee satisfaction and safety performance. The LTI contains targets on diversity and CO2 reduction, both related to the progress towards our 2030 targets.
A detailed breakdown of the targets, including the 2024 performance, is included in the General information on page 87 and the Remuneration report on pages 59-61.
We have integrated environmental policies per operating company as part of the health and safety policy focusing on various environmental-related topics such as climate and energy, waste, transportation and supply chain. They also address our (local) compliance with environmental laws and continuous improvement of practices. We are in the process of considering an environmental policy that involves the whole group.
We recognize the importance of such an analysis and plan to expand our assessment in the coming years to align with best practices and regulatory expectations.
Due to the locations of our (production) facilities, the physical (acute) risk is considered less relevant for TKH. However, physical (acute) climate change risks are part of the assessment when making business decisions, for example when changing locations or expanding our facilities or activities. We have also assessed the exposure of our strategic suppliers (suppliers with an annual purchase volume above €1 million) to any material first-order and second-order physical climate change impacts. This assessment includes impacts indirectly caused by the physical effects of climate change, such as a significant economic crisis due to physical damage to business, or human migration due to flooding.
TKH is not excluded from any EU Paris-aligned benchmarks as we do not meet any of the exclusion criteria stated in Article 12.1 (d) to (g) of Commission Delegated Regulation (EU) 2020/1818.
In 2024, we further developed the existing transition plan, including by further developing the scope 3 GHG emissions inventory and targets. Our transition plan has been defined based on the following steps.
We developed unified guidelines for all companies to calculate their scope 1, 2, and 3 GHG emissions according to the GHG protocol. The guidelines are included in our Sustainability Reporting Manual as well as in our Cognos system used for sustainability reporting.
Based on the reported carbon footprint by each operating company, we have identified the (group of) operating companies and business segments with the highest emissions. These are Smart Manufacturing systems (VMI – tire building machines) and Smart Connectivity systems (TKF - cable production company) due to their size and global footprint. In the roadmap for achieving the reduction targets, these operating companies are prioritized.
We benchmarked our carbon footprint with best practices and investigated peers’ decarbonization initiatives. We also evaluated emission reduction potential of taken or planned actions, as per information collected in the as-is analysis.
We collected external and internal views on our reduction ambitions. Also we identified emission reduction initiatives by assessing our product portfolio to determine potential portfolio shifts, and by assessing technology to determine feasible options to reduce emissions in our value chain.
We created business cases for prioritized decarbonization initiatives. We still need to develop recommendations for additional decarbonization initiatives to close the gap and reach the target for scope 3 emission. Based on the information available, we formulated our decarbonization strategy.
We assessed possible scenarios based on identified emission reduction initiatives. We agreed upon the target setting for scope 1 and 2 aligned with SBTi (science-based target initiative). For this we used the near-term SBTi tool, aligning with the Paris Agreement and 1.5˚C scenario. We will consider to engage with SBTi for commitments and target approval.
The transition plan has been approved by the Executive and Supervisory Board. The CEO is responsible for the implementation of the transition plan, supported by the Director Sustainability. We analyzed the consequences of our defined strategy for our organization (e.g. finance, personnel capacity, procedures). We designed mechanisms to enable or accelerate organization implementation, such as awareness campaigns and integrating sustainability into our annual strategic plan and budget process. Progress of the implementation is monitored through the quarterly sustainability reporting. This ensures that the transition plan is embedded and aligned with TKHs’ overall business strategy and financial planning.
In 2021, as part of our CMD targets, we announced an ambition to reduce our carbon emissions for our own operations (scopes 1 and 2) by 100% by 2030. This is a carbon neutral market-based target, also taking into consideration GHG removals or carbon credits, if any. We take 2019 as our baseline, which represents TKH’s activities prior to COVID-19. Because these CMD targets are more ambitious than the SBTI-aligned targets, they are also aligned with the Paris Agreement and 1.5˚C scenario.
In 2024, we aligned our near-term reduction targets with SBTi, resulting in a 2030 carbon reduction target for scope 1 and 2 of 42.0%. The SBTi-aligned net-term carbon reduction targets by 2030 are based on net-zero science-based targets, meaning excluding carbon credits and including neutralization. The SBTi-aligned carbon reduction targets are calculated based on the SBTi GHG emissions reduction targets scope 1 and 2.
| Reduction target | Target year | Base year | |
|---|---|---|---|
| Scope 1 and 2 – SBTi-aligned | 42.0% | 2030 | 2023 |
| Scope 1 and 2 – CMD carbon neutral market-based target | 100.0% | 2030 | 2019 |
| Terms used | Definition |
|---|---|
| Greenhouse Gas (GHG) Protocol | The Greenhouse Gas (GHG) Protocol is a comprehensive global standardized framework to help measure and manage GHG emissions from private and public sector operations, value chains, and mitigation actions. The SBTi’s criteria and recommendations, including the Corporate Net-Zero Standard, rely on the accounting frameworks developed by the GHG Protocol. |
| Carbon | Carbon dioxide (CO2 - by far the biggest contributor to climate change). |
| Near-term science-based targets | Near-term science-based targets outline GHG emissions reduction over the coming 5 to 10 years that are in line with what climate science deems necessary to limit warming to 1.5°C above pre-industrial levels. |
| Net-zero science-based targets | SBTi-aligned net-zero targets include both near- and long-term science-based targets. They are |
Neutralization refers to measures that companies take to counterbalance the climate impact of GHG emissions which are impossible to avoid after their net-zero target date. Neutralization involves permanent removal and storage methods of CO2 from the atmosphere. In order to achieve net-zero, once companies have achieved their long-term target, they must neutralize any residual emissions (usually less than 10% of base year emissions) using permanent carbon removals and storage.
An adjustment applied by SBTi target-setting tools to calculate the ambition of near-term scope 1 and 2 absolute and intensity targets that do not use the most recent reporting year as the base year.
Net-zero emissions are achieved when human-caused GHG emissions are balanced by removing the same quantity of emissions from the atmosphere over a specified period of time. Net-zero GHG emissions must be achieved at the global level to stabilize temperature increase at 1.5°C.
Carbon neutral is generally used when counting the use of carbon offsets (i.e. investing in projects that remove carbon from the atmosphere to counterbalance some or all GHG emissions). Carbon neutral does not necessarily mean that direct emission reductions have taken place. Carbon neutrality claims also do not necessarily include GHGs other than carbon dioxide.
We have developed a decarbonization strategy (see waterfall chart on the next page) to assess and align our actions with our ambition of reducing our carbon footprint in our own operations by 100% by 2030 (carbon neutral). In the decarbonization strategy towards 2030 we assumed a 15% increase in our scope 1 and 2 emissions due to activity growth.
The first key decarbonization lever is electrification. This represents 17.1% of the reduction. We aim to replace 100% of our fleet with electric cars by 2030. In the coming years we also scheduled several replacements of gas using (heating) systems by electric (heat) pumps. The second key decarbonization lever is energy efficiency by reducing the amount of energy we consume. This represents 11.7% of the reduction. The third key decarbonization lever is renewable energy, representing 49.0% of the reduction. The share of self-generated renewable electricity will increase in the coming years due to investments done and planned related to solar panels on our buildings and parking places.
In cross-sector (absolute contraction methodology) emission reduction factor and the base year 2023. The near-term reduction target includes a forward looking ambition (FLA) adjustment, which enables companies to count early emission reductions towards achieving their near-term SBTs, while at the same time prevents companies from setting targets that have already been achieved.
In 2024, we completed our scope 3 emissions inventory and started assessing our ambitions and identifying levers for scope 3. We are currently working on the detailed plans for implementation in the coming years. Preferences and demand, and new technologies are part of the GHG emissions in the coming years and therefore also part of the reduction target. We have assumed that this will result in a 15% increase in our GHG scope 1 and 2 emissions. The impact of acquisitions and divestments in 2024 on the emissions inventory of the base year 2023 is considered to be non-significant because they relate to non-production sites. Influences from external factors in the base year, such as temperature anomalies, are considered to be non-material.
| GHG emission category | Description |
|---|---|
| 1 Electrification | Scope 1 Electrify the organization fleet, and change of energy sources to electricity (reducing gas consumption). |
| 2 Energy efficiency | Scope 1 and 2 Reduce energy consumption by using technologies with lowest possible energy consumption. |
| 3 Renewable energy | Scope 2 Increase share of renewable energy and self-generated renewable electricity by installing solar installations. |
| 4 Business model innovation | Scope 3 Transitioning from a product-based model to a service-based model, resulting in less emissions from the production and use of sold products. |
| 5 Product and service design | Scope 3 Design products and services with sustainability as a priority to lower emissions throughout their lifecycle. |
| 6 Supply chain and circularity (supplier engagement) | Scope 3 Collaborate with suppliers to enhance their environmental performance by setting joint emission reduction targets, providing training and resources, and establishing supplier sustainability programs. Prioritize sourcing from suppliers with lower carbon footprints and choose sustainable materials and products by incorporating carbon reduction criteria into procurement decisions. |
| 7 Customer engagement | Scope 3 Educate and involve customers to encourage the sustainable use of sold products by offering recycling incentives and providing guidance on reducing carbon footprints (to reduce emissions associated with product use and disposal). |
Adopt operational policies on waste management by implementing waste reduction and recycling programs.
Reduce emissions from transportation from suppliers (purchased goods) and to customers (sold products) by using other ways of transportation.
Adopt operational policies on business travel and employee commuting by promoting remote work to cut down on commuting emissions, and encouraging the use of public transport.
In addition, the share of renewable energy will increase by purchasing renewable energy and green certificates. The planned actions are expected to further decarbonize our scope 1 and 2 footprint by 77.8% over the period 2025-2030. Compared to the base year 2023, we expect to decarbonize our scope 1 and 2 emissions by 79.6% (period 2023-2030), which is above the SBTi-aligned reduction target of 42.0%. The remaining expected reduction of 20.4%, to realize our carbon neutral ambition by 2030, will be further investigated in 2025 and included in our decarbonization strategy. The realization of the target is partly dependent on available and affordable low-carbon technologies and green certificates until 2030. This might be a challenge for some countries in which we operate.
Replacing gas-based systems with electric heat pumps in older buildings presents challenges and may lead to locked-in emissions. Green certificates for gas will be used where possible for the residual emissions and any remaining emissions in 2030 would have to be offset.
In 2024, we completed our scope 3 emissions inventory. The boundaries and definitions for scope 3 emissions are aligned with the GHG protocol. The main contributors in our scope 3 emissions are the emissions resulting from the purchase of raw materials and products used to manufacture our products (category 1), and the emissions occurring during the use phase of our products (category 11).
Using our products during their lifetime results in direct and indirect emissions. Direct emissions are resulting from products that directly consume energy (electricity) during use, for example our vision systems or tire building machines. Our cables, for example energy and communication.
| Base year 2023 | Reduction realized | 2024 |
|---|---|---|
| Activity growth | 2025-2030 | Target year 2030 |
| 16,000 | 14,000 | 12,000 |
| 10,000 | 8,000 | 6,000 |
| 4,000 | 2,000 | 0 |
| 2,217 | -79.6% | expected reduction based on current plans |
| 2030 carbon neutral market-based target (CMD target) | Carbon emissions reduction scope 1 and 2 | -42.0% |
| 14,781 | -2,532 | -1,725 |
| -7,242 | 20.4% | reduction to be planned |
| 3,013 | -2,487 | reductions planned in own operations |
Therefore, these emissions resulting from energy losses are considered as indirect emissions within category 11 of scope 3, and included in the scope 3 category 11 emissions inventory according to the GHG protocol.
When it comes to reducing carbon emissions across our value chain (scope 3), we have identified seven key levers that should help us achieve our ambition. Collaboration Electrification, energy efficiency, and renewable energy.
We regularly monitor the identified potential for energy savings to ensure our progress and compliance with improvement plans. Energy-saving measures that already have been implemented include replacing conventional lighting with LED lighting, replacing central-heating boilers with energy-efficient models, replacing LPG forklifts with electric models, and using cation cables, together with accessories, to transport electricity between two locations. During this transport, part of the energy is lost, as the passage of the electric current through the conductor produces heat, known as the Joule effect. This energy loss is not related to a direct consumption of energy by the cable, but due to the inherent resistivity of the conductive material when electricity is transmitted through the conductor.
emission during their use phase. Lastly, we identified decarbonization opportunities related to waste management, upstream and downstream transportation, and travel although the contribution of these categories are of less impact compared to the other decarbonization levers. In 2025, we will work further on the implementation of our decarbonization strategy for scope 3 and expected decarbonization opportunities by developing detailed plans per decarbonization lever.
The following key actions per decarbonization lever are planned.
105Annual Report 2024 TKH Group conveniently including those within our employee and visitor parking areas.
in the total energy consumption increased from 55.5% in 2023 to 61.9% in 2024.
We use product life-cycle assessments as input for sustainable product innovations, including circularity. For example, our operating company VMI achieved a remarkable milestone by conducting a comprehensive Life Cycle Assessment for their MAXX tire building machine. This accomplishment marked a pioneering effort in the tire manufacturing industry, as VMI became the first manufacturer to undertake such an analysis specifically for tire building machines. This cradle-to-grave analysis examined the entire lifecycle of the machine, emphasizing aspects under VMI’s control.
EcoDesign is a crucial approach that VMI values, and VMI provides training on it to their lead engineers. This training equips engineers with the knowledge and tools to seamlessly incorporate environmental considerations into the product development process, leading to a more sustainable product and therefore lower scope 3 emissions. EcoDesign essentially means finding a balance between environmental and economic factors. It’s about making sure that environmental concerns are a fundamental part of every step in developing a product.
This approach aims to create products that have the least possible negative impact on the environment throughout their entire life cycle, from the initial idea to when they’re no longer in use. During the training, engineers focus on a strategy called life cycle design using a tool called the LIDS wheel. This strategy encourages engineers to think about a product’s entire life cycle, including how it’s made, how it’s used, how it’s maintained, and what happens to it when it’s no longer needed. By embracing EcoDesign principles and using the LIDS wheel, VMI’s lead engineers are better equipped to develop products that not only work well and make economic sense but also contribute positively to environmental sustainability.
This commitment not only benefits VMI but also aligns with global efforts to make products that have a smaller impact on the environment. In addition, transitioning from a product-based model to a service-based model will result in less emissions from the production and use of sold products.
We actively engage with our suppliers to share our ambitions and encourage these key stakeholders to do the same. Key impact areas for suppliers are: increasing process efficiency; moving to renewable energy; and reducing the use of fossil materials and fuels. We also see more intensive collaboration with suppliers on developing new innovative solutions as a key driver towards reducing our full value chain carbon footprint.
We held in-depth discussions with selected key suppliers on how their plans can support our ambition and how we can collaborate to close any gaps. In 2024, one of our suppliers introduced a first-of-its-kind circular jacketing solution for low- and medium-voltage cables that marks a significant milestone in sustainable development for the wire and cable industry. This fully formulated natural medium-density polyethylene (MDPE) jacketing compound contains 50% post-consumer recyclate, reducing CO2 emissions during production by an estimated 0.2 kg per kg of compounded polymer – a 13% decrease compared to its virgin equivalent.
Electric forklifts, monitoring and reducing energy peaks, and investing in energy from sustainable sources, such as solar panels. With a total of 64,000 m² of office and factory space in Haaksbergen, 3,251 lighting fixtures have been replaced by LED. The total effect of replacing these 3,251 fixtures on electricity consumption was calculated at an annual saving of 1,840 MWh at the end of the project. By constantly improving our production processes and procedures, and continuing to explore new, energy-efficient solutions, and investigating the opportunities to invest in self-generated electricity, we aim to address the energy factor wherever possible. By doing so, we are attempting to minimize both CO2 emissions and energy costs.
Many of our customers are setting targets for decarbonization themselves, moving to renewable electricity and cleaner sources of powering their processes. This is increasingly leading to a lower carbon footprint during the use phase of our products. Through customer engagements, we aim to align customers decarbonization targets with our ambitions.
This lever focuses on reducing the end-of-life impact of the materials in our products. This can mainly be achieved by increasing the amount of renewable materials, which can be done through applying recycled materials, among others. In 2024, our operating company TKF introduced the green label, by announcing the Green YMvK: the first green installation cable. This cable consist of 100% recycled copper and bio-based plastics for minimal environmental impact. During the research we looked at the reuse of used raw materials, without making concessions to the quality and especially the user-friendliness of the cable. The packaging was also included in this. For example, this cable is supplied on 100 meter rings or on reels, where the reels are made of 100% recycled material and the rings are provided with a foil that consists of 50% recycled material and that is fully recyclable.
We actively engage with our transportation service providers to share our ambitions. For example, our operating company TKF has worked with one of their transportation service providers for over two years to achieve zero-emission transport. Currently, 80% of TKF’s transport in the Netherlands runs on 100% HVO (Hydrotreated Vegetable Oil), including the cranes. Additionally, since last spring, all our transport forklifts have been 100% electric. We are now taking it a step further by introducing new electric trucks.
Recognizing our global presence and the necessity of travel for meetings and maintenance at customer sites, we actively promote alternatives such as telephone and video conferences whenever feasible. This approach allows us to reduce the environmental footprint associated with travel while still ensuring effective communication with our customers on a global scale. At one of our operating companies, we use shuttle buses to make our company accessible via public transportation, contributing to sustainability by reducing individual car usage and promoting eco-friendly commuting options. Additionally, we provide bicycles for employees, further encouraging sustainable transportation choices and reducing the environmental impact of daily commutes.
No capital expenditures (capex) have been made related to coal, oil or gas-related economic activities. There have not been any site-related investments in 2024 with locked-in GHG emissions that might impede our emission-related targets, based on our assessment as per end of 2024. Locked-in GHG emissions of our products could inhibit our scope 3 GHG emissions reduction. For a quantitative assessment of our potential locked-in GHG emissions associated with purchased foods and use of sold products, please refer to the GHG metrics section below.
For climate mitigation and adaption, the current expenditures are included in the EU taxonomy reporting (see Appendix). In the coming 5 years, we planned investments to support the implementation of our transition plan with regard to scope 1 and 2 GHG emissions. Identified investments in the form of capex amounts to €3.6 million and are mainly related to replacements of gas systems with electric heat pumps, installation of solar and photovoltaic panels, and other investments to reduce energy consumption. We identified €2.7 million additional operating expenses (opex) in the coming 5 years to implement sustainability related programs. This is calculated based on the identified additional opex for 2025 times the 5 years period. The additional opex are related to the hire of additional employees for sustainability functions at operating companies, supply chain programs, trainings, replacement of cars, purchase of green certificates, implementation of a leadership and development program for females, and other programs.
The GHG emissions are prepared on a consolidated basis. The scope of the consolidation is equal to the scope of consolidation for the financial statements. The companies in which TKH has a minority ownership stake are not included in the sustainability statements, because we have no operational control over them. The GHG inventory boundaries for scope 1, 2, and 3 are based on the GHG protocol. The turnover to calculate the energy intensity rate and the GHG emissions intensity reconciles with the total turnover included in note 22 of the financial statements. The total turnover included in the financial statements is based on the requirements in accounting standard IFRS 15.
We have not used contractual instruments for the sale and purchase of energy bundled with attributes about the energy generation or for unbundled energy attribute claims. The percentage of scope 1 GHG emissions from regulated emission trading schemes is zero.
in ton CO2-equivalent unless otherwise stated
| 2024 | 2023 | movement% | 2030 | % target / base year | |||
|---|---|---|---|---|---|---|---|
| Scope 1 GHG emissions | Gross scope 1 | 5,049 | 6,285 | -1,237 | -19.7% | 3,645 | 42.0% |
| Scope 2 GHG emissions | Gross scope 2 (location-based) | 54,794 | 55,677 | -883 | -1.6% | ||
| Gross scope 2 (market-based) | 7,245 | 8,496 | -1,251 | -14.7% | 4,928 | 42.0% | |
| Total scope 1 and 2 GHG emissions (location-based) | 59,843 | 61,962 | -2,119 | -3.4% | |||
| Total scope 1 and 2 GHG emissions (market-based) | 12,294 | 14,781 | -2,487 | -16.8% | 8,573 | 42.0% |
in ton CO2-equivalent unless otherwise stated
| 2024 | % of total | ||
|---|---|---|---|
| Significant scope 3 GHG emissions | Cat. 1 – purchased goods and services | 420,168 | 12.8% |
| Cat. 2 – capital goods | 19,843 | 0.6% | |
| Cat. 3 - fuel- and energy-related activities | 11,330 | 0.3% | |
| Cat. 4 - upstream transportation and distribution | 4,805 | 0.1% | |
| Cat. 5 - waste generated in operations | 5,246 | 0.2% | |
| Cat. 6 - business travel | 4,941 | 0.2% | |
| Cat. 7 - employee commuting | 10,237 | 0.3% | |
| Cat. 9 - downstream transportation | 4,282 | 0.1% | |
| Cat. 11 - use of sold products | 2,731,018 | 83.1% | |
| Cat. 12 - end-of-life treatment of sold products | 74,436 | 2.3% | |
| Total gross scope 3 GHG emissions | 3,286,306 | 100.0% |
in ton CO2-equivalent unless otherwise stated
| 2024 | |
|---|---|
| Total GHG emissions | |
| Total GHG emissions (location-based) | 3,346,149 |
| Total GHG emissions (market-based) | 3,298,600 |
| GHG emissions intensity (location-based) | 1,954 |
| GHG emissions intensity (market-based) | 1,926 |
Our scope 1 emissions derive from fuel for leased and owned cars, fuel for buildings, and gas for building heating. Scope 1 emissions decreased by 19.7% compared to previous year, mainly driven by a reduction of our gas consumption and electrification of our fleet. Emissions from gas consumption reduced by 27.3% due to energy efficiency, and an impact from divestments. The share of electric cars in the total fleet increased from 26.1% in 2023 to 34.8% in 2024, on balance resulting in an emission reduction of 11.2% compared to previous year. The basis for scope 1 emissions is activity data, which in turn are based mostly on meter readings, invoices, and data provided by suppliers. All conversion factors are reviewed annually and updated if necessary. For scope 1, TKH calculates the energy use and the related CO2 emissions, using conversion factors from co2emis-siefactoren.nl. TKH uses tank-to-wheel emission factors.
Combination of factors, such as an impact of divestments, and the shift from cable production activities from China to Poland resulting is on balance less energy consumption. Due to the nature of the reporting, the location-based method does not take investments in renewable energy into consideration. Scope 2 market-based emissions decreased by 14.7% as a result of increased purchased renewable energy (20.8%) and self-generated renewable energy (43.8%) compared to the previous year. Electricity consumption covered by green certificates was on a similar level as 2023.
Emissions are calculated by using the country-specific conversion factors for electricity for the energy grid. This method reflects the energy mix within the specific country of consumption and does not consider any purchase of renewable energy or credits. To calculate GHG emissions, the EcoInvent 3.11 database has been used.
Scope 3 emissions are the indirect GHG emissions attributed to an organization’s value chain. Scope 3 comprises 15 categories. The main development during the year was the completion of the scope 3 GHG emissions calculation, by adding the categories purchased goods and services (1), capital goods (2), transportation (4 and 9), employee commuting (7), use phase (11), and end-of-life treatment of sold products (12). In addition, the collection of waste data for waste generated in own operations (5) has been extended. With these additions, we cover approximately 97% of our value chain emissions. Category 1 and 11 accounted for approximately 96% of the total scope 3 emissions.
GHG emissions associated with the purchase of services are calculated as the direct cost associated with a specific type, multiplied by a matching emission factor from Exiobase (2019).
The GHG emissions associated with the purchase of goods are calculated as follows. 56.2% of the reported emissions is based on the asset tool 2024v2.2. of CE Delft. The asset tool values are based on EcoInvent 3.9.1 processes, the used LCIA method is IPCC 2021 GWP100 V1.02. 33.1% of the reported emissions is based on the average-date method. The GHG emissions are calculated using material weight per material type, multiplied by a matching emission factor from the EcoInvent 3.11 database.
GHG emissions associated with the additions to tangible assets, are calculated as the amount of capitalized cost per type of investment (land, buildings, machinery installations, and other equipment), multiplied by a matching spend-based emission factor from Exiobase (2019).
GHG emissions related to fuel- and energy-related activities not accounted for in scope 1 or scope 2, comprise indirect emissions associated with the production of purchased fuels, gas and electricity. The GHG emissions are calculated using the country emission factors from the EcoInvent 3.11 database multiplied by the scope 2 (electricity) consumption, and the emission factors from co2emissiefactoren.nl for the others.
The GHG emissions associated with the upstream transportation are calculated as follows. 18.3% of the reported emissions is based on the asset tool 2024v2.2. of CE Delft. The asset tool values are based on EcoInvent 3.9.1 processes.
| Year | 2024 | 2023 | 2019 base year |
|---|---|---|---|
| Gross scope 1 GHG emissions | 5,049 | 6,285 | 8,642 |
| Gross scope 2 GHG emissions (market-based) | 7,245 | 8,496 | 32,773 |
| Total Scope 1 and 2 GHG emissions (market-based) | 12,294 | 14,781 | 41,415 |
| Carbon footprint reduction scope 1 and 2 compared to base year (market-based) | -70.3% | -64.3% |
based on EcoInvent 3.9.1 processes, the used LCIA method is IPCC 2021 GWP100 V1.02.
46.3% of the reported emissions is based on the average-date method. The GHG emissions are calculated using distance, weight, and method of transportation per shipment (road, rail, water, and air), multiplied by a matching emission factor from the Defra 2024 database. In case the exact distance cannot be derived from our systems, we have assumed the distance between the capitals of the countries. In case the exact weight cannot be derived from our systems, we have assumed an estimated weight per material based on the total weight.
35.4% of the reported emissions is based on the spend-based method. The transportation costs per operating company has been corrected for inflation in the relevant country of spend using inflation rates from IMF2024, and converted from local currency to EUR, multiplied by the corresponding spend-based emission factor from Exiobase (2019).
refers to the emissions resulting from the disposal and treatment of waste produced by a company’s operations. The GHG emissions are calculated using actual waste data per operating company. The following material categories are used: copper, plastics (PVC, XLPE, PE), other plastics, steel, aluminium, wood, paper and board, electronics, hazardous materials, and other materials. For each category the waste treatment has been reported being recycling, incineration, landfill or unknown. In case the waste treatment is uncertain, the treatment is reported under unknown. This means that the highest waste treatment emission factor is used for that particular material category. We applied the assumption that the majority of copper, aluminium, and steel waste will be recycled. The GHG emissions are calculated using the material-specific emission factors from the EcoInvent 3.11 database multiplied by the weight of waste per material. For the category other materials we used the median of the emission factors applied for the other material categories.
GHG emissions associated with the business travel activities are calculated as the amount of kms per travel category (air short-haul, air medium-haul, air long-haul, rail, bus, and car) multiplied by the travel-specific emission factors from the EcoInvent 3.11 database.
GHG emissions related to employee commuting are linked to the indirect emissions generated from the transportation of employees between their homes and their place of work. The emissions are calculated as the amount of kms per commuting category (car, public transport, and other) multiplied by the commuting-specific emission factors from the EcoInvent 3.11 database. Emissions have been calculated based on a combination of activity data and estimations. Estimations are for example based on answers to a survey with questions regarding the means of transportation and type, and average weekly days spent working in the office. These average commuting weeks have then been multiplied by the number of employees of the particular operating company.
The GHG emissions associated with the downstream transportation are calculated as follows. 16.9% of the reported emissions is based on the asset tool 2024v2.2. of CE Delft. The asset tool values are based on EcoInvent 3.9.1 processes, the used LCIA method is IPCC 2021 GWP100 V1.02. 81.2% of the reported emissions is based on the average-date method. The GHG emissions are calculated using distance, weight, and method of transportation per shipment (road, rail, water, and air), multiplied by a matching emission factor from the Defra 2024 database. In case the exact distance cannot be derived from our systems, we have assumed the distance between the capitals of the countries. In case the exact weight cannot be derived from our systems, we have assumed an estimated weight per material based on the total weight. 1.9% of the reported emissions is based on the spend-based method. The transportation costs per operating company has been corrected for inflation in the relevant country of spend using inflation rates from IMF2024, and converted from local currency to EUR, multiplied by the corresponding spend-based emission factor from Exiobase (2019).
conductor. Therefore, these emissions resulting from energy losses are considered as indirect emissions within category 11 of scope 3. The GHG emissions are calculated as follows.
75.4% of the reported emissions is based on the asset tool 2024v2.2. of CE Delft. The asset tool values are based on EcoInvent 3.9.1 processes, the used LCIA method is IPCC 2021 GWP100 V1.02.
24.6% of the reported emissions is based on the average-date method. The GHG emissions are calculated using the number of products sold, the estimated energy use per product or group of products, and the expected lifetime, multiplied by the country-specific emission factors from the EcoInvent 3.11 database. We assumed that the area in which the use phase takes place is equal to our customer’s location. In case the exact energy usage of our product cannot be derived from our systems or other sources, we used estimates or general available sources.
Refers to the emissions resulting from the disposal and treatment of our product at the end of their lifetime. The GHG emissions are calculated as follows.
92.0% of the reported emissions is based on the asset tool 2024v2.2. of CE Delft. The asset tool values are based on EcoInvent 3.9.1 processes, the used LCIA method is IPCC 2021 GWP100 V1.02.
0.3% of the reported emissions have been based on LCA data obtained from suppliers.
7.7% of the reported emissions are calculated using material weight data per operating company. The following material categories are used: copper, plastics, other plastics, steel, aluminium, wood, paper and board, electronics, lenses, fibre, hazardous materials, and other materials. For each category the waste treatment has been reported being recycling, incineration, landfill or unknown. In case the waste treatment is uncertain, the treatment is reported under unknown. This means that the highest waste treatment emission factor is used for that particular material category. We applied the assumption that copper, aluminium, and steel waste will be 100% recycled. The GHG emissions are calculated using the material-specific emission factors from the EcoInvent 3.11 database multiplied by the weight per material. For the category other materials we used the median of the emission factors applied for the other material categories.
The other scope 3 categories are considered as not-applicable for TKH, because we have limited activities connected to these categories.
| Energy Source | 2024 | 2023 | Movement % | |
|---|---|---|---|---|
| Fuel consumption from coal and coal products | 1,276 | 1,105 | 171 | 15.5% |
| Fuel consumption from natural gas | 16,710 | 20,147 | -3,437 | -17.1% |
| Consumption of purchased or acquired electricity, heat, steam, and cooling from fossil sources | 15,837 | 20,876 | -5,042 | -24.1% |
| Total fossil energy consumption | 33,823 | 42,131 | -8,308 | -19.7% |
| Share of fossil energy consumption in total energy consumption (%) | 37.7% | 44.5% | -6.8% | |
| Consumption from nuclear sources | 336 | 0 | 336 | |
| Share of consumption from nuclear sources in total energy consumption (%) | 0.4% | 0.0% | 0.4% | |
| Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources | 53,852 | 51,449 | 2,403 | 4.7% |
| Consumption of self-generated non-fuel renewable energy | 1,658 | 1,153 | 505 | 43.8% |
| Total renewable energy consumption | 55,510 | 52,602 | 2,908 | 5.5% |
| Share of renewable energy consumption in total energy consumption (%) | 61.9% | 55.5% | 6.4% | |
| Total energy consumption | 89,668 | 94,733 | -5,065 | -5.3% |
| Energy intensity rate (for high climate impact sectors) in MWh/turnover in million € | 52.4 | 51.3 | 1.1 | 2.1% |
| Material IROs | Sub-topic | Upstream | Own operations | Downstream |
|---|---|---|---|---|
| Impacts | Risks | Opportunities | ||
| Pollution of air, soil, and water | * | Smart Connectivity systems | ||
| Potential negative impacts related to our cable production sites: | ||||
| • Pollution caused by spills in the soil of toxic/polluting materials as a result of accidents during cable production. | ||||
| • Emissions into the atmosphere as a result of cable production activities (e.g. Nitrogen oxides (NOX), sulphur oxides (SOX)). | ||||
| • Pollution of water in the proximity of TKH |
Our products, including parts and materials from suppliers, are subject to regulation by various government and regulatory agencies, e.g., Restriction of Hazardous Substances (RoHS) and Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) and other (local) regulations regarding pollutions. Since part of our raw materials are delivered to us in the form of pellets, TKH actively recognizes the potential risks of environmental pollution and contamination by pellet loss. In addition, pollution could occur by spills in the soil of toxic/polluting materials as a result of accidents during cable production. Cable production results into emissions into the atmosphere, for example Nitrogen oxides (NOX) and sulphur oxides (SOX). Pollution of water in the proximity of TKH cable production sites also could occur, as a results of release of pollutants into process water.
All operating companies to whom the Health, Safety & Environment (HSE) policy is relevant have established and implemented it, including a clear commitment to preventing pollution and minimizing health risks. Stakeholders are not directly involved in policy and target setting. We are actively exploring the development of a comprehensive pollution policy that applies to the entire group, further strengthening our environmental commitments. To proactively identify and mitigate pollution-related risks, we conduct structured screenings of our site locations and business activities. These assessments evaluate both actual and potential pollution-related impacts within our operations. The methodologies, assumptions, and tools used in this process includes ISO 14001-certified environmental management systems at all production locations. Each relevant operating company (mostly cable production companies) has established internal awareness programs and procedural safeguards to minimize pellet loss and prevent contamination.
clear response procedures to minimize the impact of incidents on people and the environment. This update aligns with our broader risk management framework and reinforces our commitment to safety, sustainability, and operational resilience.
We defined the following actions for 2025:
significant capex. The opex are also not significant, since these initiatives are embedded in ongoing environmental management efforts. Targets are determined by the Executive Board. Tracking effectiveness is part of our quarterly sustainability reporting. In cases where no quantitative measures are available we report on progress based on qualitative information. The ambitions and annual targets set are included in the relevant tables.
In line with the HSE policy’s commitment to preventing pollution and minimizing health risks, we monitor emissions from our cable production processes. In this way, we can measure reductions in emissions by gradually introducing new methods and/or products, particularly for cable degassing, isolation and printing operations. The inventory of pollution to air, soil, and water, is based on the list of pollutants and related threshold values specified in Annex II of Regulation (EC) No 166/2006. For part of the pollutants, we have determined on the basis of (laboratory) measurement reports and reports from external sources that the listed threshold values have not been exceeded in 2024.
We used estimates for the pollutants which are not measured through (laboratory) measurements reports provided by external parties. These estimates are calculated by internal technical engineers and the health, safety and environmental department. Information used in the calculation is based on available internal information, e.g. related to chemicals used in the production process, internal registration of pollution and losses of pollutants, impact of filter systems used, and the impact of suspended particles, amongst other things. Based on this, we concluded that the listed threshold values have not been exceeded in 2024. Due to the use of estimates and own calculations, there is uncertainty in the outcome of the assessment. We will further optimize the process in 2025, including by having measurements carried out by external experts for the remaining relevant pollutants in order to further substantiate that the listed thresholds for the relevant pollutants are not exceeded. While we are in the optimization the emissions inventory, no target has been defined yet.
We record all environmental incidents, breaches, and fines, with voluntary targets of zero environmental breaches and fines related to our own operations. The target is based on compliance. An environment incident is an incident having environmental impact. An environmental breach occurs when there is a failure to comply with an environmental legislative obligation, e.g. breaches or non-compliances.
| annual target | 2024 | |
|---|---|---|
| Number of environmental incidents | 0 | 5 |
| Fines for environmental breaches (in €) | €0 | €0 |
| Number of environmental breaches | 0 | 0 |
| Upstream | Own operations | Downstream |
|---|---|---|
| Impacts | Water consumption | * |
| •The consumption and quality of water resources have an actual negative impact on the environment, as well as on communities that depend on those resources. | •Interruption of production sites due to unavailability of water. |
assets and activities using specific methodologies or tools to identify impacts, risks and opportunities in our own operations and its upstream and downstream value chain, other than by assessing the business description, portfolio and asset base per operating company. We have not conducted specific consultations with potential affected communities, other than through our stakeholder engagement process.
The significance of water use lies not only in its direct impact on the operating costs of a business, but more essentially, on the broader environmental implications. Importantly, careful and intentional management of water use demonstrates the commitment to sustainable operations. At TKH, we acknowledge the inherent water use of our operations. Being active with manufacturing companies in the cable production industry, we rely on water for our production processes. Water is essential for cooling and serves both drinking and sanitary purposes at our factories and offices. Therefore, water has proven to be material in this report’s materiality analysis.
At TKH, our water policy focuses on reducing our operational impact on water consumption and quality. Interests of key stakeholders in setting the policy are not considered specifically. Water-related considerations are not a direct factor in product and service design across our business segments. Our primary focus is on operational water efficiency, compliance with environmental standards, and responsible water management within our production facilities. We commit to transparently disclose relevant water management indicators in line with global reporting standards, including CDP Water and ISO 14001 Environmental Management. We measure and monitor the water risk and stress, applying internationally accepted methodologies and mitigate risks through efficient water management, conservation and protection. Our established processes are integrated into the functions that are responsible for daily adherence to our policies. Environmental topics are continuously addressed through our ISO 14001 certifications.
We also ensure adequate water, sanitation, and hygiene facilities at all workplaces globally. We raise awareness of water related environmental impacts and possible actions that can be taken to reduce them. We reduce water consumption by using efficient equipment or technology, and minimize water consumption by reusing water and we promote industrial closed-loop water processes. We concentrate our water consumption reduction efforts at our sites in water scarce areas. ISO norms such as 14001, which are already established in our production companies, help us understand and manage these valuable resources better. Annually, we perform an assessment of our operational sites to address potential water-related risks. We utilize publicly accessible tools such as the Aqueduct Water Risk Atlas by WRI and WWF Water Risk Filter to define and respond to these risks. We have no policies or practices adopted related to sustainable oceans and seas, because this subtopic is not material for TKH. Prevention and abatement of water
| Policy name | Key contents |
|---|---|
| Water policy | • Describes how we strive to reduce our impact related to water, defining goals, implementing actions, and monitoring results. • Applicable for all operating companies. • Not based on a specific framework or guidelines. • Managing director of the operating company is responsible for implementation. • Provided to managing directors and available for all functions having access to the reporting system Cognos. |
Pollution is considered to be not-material and not part of the water policy.
We have not identified any material targets relevant to disclose. We have the ambition to keep the average water consumption per headcount on the same level as the previous reporting year, to monitor water consumption and to identify measures.
At this stage, specific mitigation actions have not yet been fully implemented due to the need for a comprehensive feasibility study on the technical, financial, and regulatory aspects of water sourcing and operational flexibility. Additionally, in 2025, we will assess the cost-effectiveness and long-term sustainability of potential solutions to ensure alignment with broader strategic objectives.
| 2024 | 2023 | |
|---|---|---|
| Water consumption (in m3) | 116,821 | 153,948 |
| Water consumption in areas of high-water stress (in m3) | 27,021 | 26,339 |
| Water recycled and reused (in m3) | 10,840 | 13,670 |
| Water stored (in m3) | 0 | 0 |
| Changes in water storage (in m3) | 0 | 0 |
| Water intensity ratio | 68.2 | 83.3 |
The water intensity ratio is calculated based on the total water consumption (in m3) divided by the total turnover, with the total turnover included in note 22 of the financial statements. Reported water consumption is sourced from direct measurements from water meters and water invoices which are stored locally at the operating companies.
The total water consumption in 2024 was 116,821 m3, a 24.1% decrease compared to 2023. This decrease is mainly the result of the closing of cable production activities in China, and the shift from fibre cable production activities from China and the Netherlands to Poland.
For our cable production activities we assumed that water is not stored but reused, because part of the water withdrawal is used in a closed system. For the cooling of our extrusion lines we have a central cooling system where water is evaporated via a condenser. The cooling water is pumped from there to the factory to cool the lines. In 2024, we improved our estimation on water reuse. Based on meter reading of the pumps, we calculated that water is pumped around 154 times before the water has completely evaporated. We calculated this by dividing the flow rate of the circulation pump (the amount of water that flows through a certain point on the pump per unit of time) by the flow rate of the water supply (the amount of water that flows through a certain point on the water supply per unit of time). The water recycled and reused of 10,840 m3 for 2024 represents the (one-time) water withdrawal which is then used in the closed system (and reused approximately 154 times).
Going forward, we will continue our efforts to maintain our ISO 14001 certification, and promote responsible environmental behavior both internally and in dialogue with business partners.
One of our production sites is located in China, an area experiencing extremely high-water stress. We have identified a material risk of business interruption due to potential water shortages. In response, we have assessed risk exposure and anticipated potential losses. As part of our 2025 action plan, we will strengthen our disclosure on water-related risks and implement the following mitigation measures for relevant operating companies:
for example collaboration with environmental experts or water resource specialists. These measures will be integrated into our broader sustainability strategy, ensuring transparency, financial planning, and long-term water resilience across our operations.
The consumption in areas of high-water stress is based on an assessment via Aqueduct Water Risk Atlas (wri.org).
Resource inflows, waste, and waste recycling
TKH is dependent on resource inflows, limited availability of resource inflows such as copper and other (raw) materials could affect the company in a negative way.
•Waste can pose financial risks for due to its impact on resource efficiency, operational costs, and environmental compliance.
Our approach to determining our material impacts, risks and opportunities is described in the General information section. For circular economy, the material topics identified are resource inflows, waste, and waste recycling. The material topics applies to our own operations. We have not screened our assets and activities using specific methodologies or tools to identify impacts, risks and opportunities in our own operations and its upstream and downstream value chain, we rely on analysis of the business description, portfolio and asset base per operating company. We have not conducted specific consultations with potential affected communities, other than through our stakeholder engagement process.
The main raw materials used by TKH are copper, aluminum, and plastics, being part of the supply chain of Smart Connectivity systems. Within Smart Manufacturing systems the main materials used are steel and electronics. Lastly, within Smart Vision systems the main materials used are steel, aluminium, and electronics. Other materials used are mainly packaging materials (wood, paper and board, plastic foils). The majority of the waste is classified as non-hazardous (2024: 96.6% of total waste). More information on our value chain is included in the section Strategy, business model and value chain.
Companies that generate waste and fail to implement effective waste management practices may face regulatory fines, legal liabilities, and reputational damage. On the other hand, implementing sustainable waste management practices, such as reducing waste production, recycling, and repurposing, can improve resource efficiency, reduce operational costs, and enhance the company's reputation. By considering waste as a potential source of financial risks and opportunities, TKH adopted more sustainable waste practices, to reduce our environmental impact, and increase our financial stability.
As a strategic priority, sustainability is firmly embedded in our day-to-day operations, and sustainability initiatives are being integrated into our organization. Integrating sustainability enables us to minimize waste. Raw materials are becoming scarce due to the increasing demand. As a company, we want to take responsibility for our incoming products, which is why we are aiming for a sustainable supply chain.
Sustainable business practices also include the sustainable management of resources. Our Operational Excellence Program focuses on production efficiency, so we never lose sight of issues such as reducing energy consumption and the use of raw materials. At all our manufacturing sites, we aim to select raw materials and other materials that have little or no environmental impact from the design stage.
Efficient management of materials and raw materials is important because of the consumption of valuable metals such as copper and aluminum, which are essential components of the cable production process, and because of the waste that is inevitably generated. Our ambition is to eliminate waste to the extent that it has the least impact on the environment. This also helps us to avoid unnecessary costs.
We have adopted the following two approaches to this:
practices and regulatory requirements. These include:
The Executive Board of TKH is accountable for implementing current and future policies related to resource use and the circular economy. The Internal Audit Department is responsible for overseeing policy execution, and ensuring compliance with environmental regulations. The Managing Directors of each operating company are responsible for local execution, ensuring alignment with TKH’s environmental objectives. TKH integrates globally recognized environmental management and sustainability standards into its operations to ensure alignment with industry best.
We have health, safety and environmental (HSE) policies at operating company level. These HSE policies do not explicitly include measures to reduce virgin material, increase recycled content, and promote sustainable sourcing.
This structured approach ensures that TKH’s circular economy strategy remains relevant, effective, and aligned with external expectations while fostering collaboration across the value chain.
TKH ensures that practices and policies on resource use and circular economy are and will be accessible and communicated effectively to both internal and external stakeholders through multiple channels:
The main (raw) materials used by TKH are copper, aluminum, steel, plastics, and electronics which results in respective waste streams. Other materials are mainly related to packaging materials, and consists of wood, paper and board, plastic foils and other materials.
In addition to price and quality, we consider sustainability criteria when selecting raw materials and other materials. Partnerships in the value chain also play a role in the successful introduction of sustainable product innovations. By working closely with our partners in the value chain, we will achieve the innovations needed to meet this goal. Sustainable cable composition is a high priority for cable manufacturing companies, and we continue to look for innovative manufacturing techniques and ways to improve efficiency in the value chain. We are engaged in discussions throughout the value chain on how to make processes and products more sustainable, so we can use resources more effectively.
A key example is that approximately 23% of purchased copper is from secondary reused or recycled sources, which means that 23% of the copper we purchase contains recycled content. This is calculated based on information provided by suppliers, and public available information on recycled content.
Our resource inflow is calculated based on recorded purchases in the reporting year. To determine the weight of the materials, we used the weight recorded on the purchase orders, purchase invoices, or transportation documents. In case a weight could not be obtained, the weight is
| Policy name | Key contents |
|---|---|
estimated based on the estimated share of the material in the total weight of the product. To avoid double counting, intercompany shipments are not included, ensuring only external material purchases are accounted for.
Due to the importance of the materials, and their contribution to the total waste resulting from our own operations, we focus mainly on the raw materials copper, aluminium and plastics used to produce our products, covering our cable production activities. Our internal targets are not aligned with ESRS metrics, and are focusing on the total waste from the most relevant raw materials used in cable production (copper, aluminum, and plastics) compared to total relevant material consumption, and the percentage of recycling of this waste. More information is included in the section Sustainability performance.
Our waste is calculated based on recorded waste in the reporting year. To determine the weight and treatment method of the waste, we used the weight and treatment method recorded on reports of external recycling and waste processing companies. In case a weight could not be obtained, the weight is estimated based on the estimated share of the material in the total weight of the product. In case the treatment method could not be obtained, we have assumed that the waste is incinerated. To avoid double counting, intercompany shipments are excluded.
| in ton | 2024 |
|---|---|
| Overall total weight of materials used | 84,022 |
| Percentage of biological materials that is sustainably sourced | 0% |
| Weight of secondary reused or recycled components, secondary intermediary products and secondary materials | 3,488 |
| Percentage of secondary reused or recycled components, secondary intermediary products and secondary materials | 4.2% |
| in ton | 2024 | % of total |
|---|---|---|
| Total waste | 11,509 | 100.0% |
| Copper | 2,265 | 19.7% |
| Aluminum | 1,339 | 11.6% |
| Steel | 479 | 4.2% |
| Plastics (e.g. PVC, XLPE, PE) | 2,235 | 19.4% |
| Wood | 2,122 | 18.4% |
| Paper and board | 824 | 7.2% |
| Electronics | 9 | 0.1% |
| Other plastics (e.g. foils, packaging) | 161 | 1.4% |
| Hazardous materials | 394 | 3.4% |
| Other materials | 1,682 | 14.6% |
| in ton | Percentage | |
|---|---|---|
| Hazardous waste disposal | 394 | |
| Incineration | 381 | 96.7% |
| Landfill | 1 | 0.3% |
| Recycling | 8 | 2.0% |
| Other disposal operations | 4 | 1.0% |
| in ton | Percentage | |
|---|---|---|
| Non-hazardous waste disposal | 11,115 | |
| Incineration | 2,279 | 20.5% |
| Landfill | 951 | 8.6% |
| Recycling | 6,839 | 61.5% |
| Other disposal operations | 1,046 | 9.4% |
4,663
Approximately 55% of the waste is related to our main raw materials copper, aluminium, steel, and plastics. Our operational excellence programs are focused on right-first-time production to reduce waste in our own operations. TKH does not have radioactive waste.
Our copper suppliers reprocess pure copper waste into fully usable copper. This means that copper waste is 100% recycled. This also applies to aluminum and steel. Plastics that have become unusable during the cable production process, but are suitable for recycling, are offered to waste processing companies for conversion into new raw materials.
same applies to the plastics used in insulation and sheathing material.
Since 2023, our cable production company TKF participates in the International Responsible Business Conduct (IRBC) agreement for the Renewable Energy Sector. While the renewable energy sector has achieved great progress on environmental and societal issues, including climate change, there are still numerous obstacles to overcome.
As a prominent player in the cable production and telecom industry in the Netherlands, TKF understands the vital importance of sustainable practices and responsible behavior in an ever-evolving world. TKF has a responsibility as a supplier of subsea cables for offshore wind energy to bring the industry expertise to the forefront and acknowledge the hurdles faced by our company and many others involved in the renewable energy value chain.
By participating in this agreement, TKF is committed to collaborating with our stakeholders, as well as all others participating in the renewable energy agreement. We aim to identify and mitigate our own (including suppliers) risks and impacts on both society and the environment. We are also in continuous conversation with our main copper suppliers regarding a responsible supply chain. Our largest supplier in terms of purchase volume is part of The Copper Mark industry initiative. The Copper Mark is an initiative that requires a review of the sustainability standards at copper production sites including mines, smelters, and refineries. The Copper Mark covers the 32 sustainability criteria set out in the Responsible Minerals Initiative’s (RMI) Risk Readiness Assessment and incorporates all major environmental, social and governance issues, such as child labor and occupational safety. The Copper Mark is also aligned with the United Nations Sustainable Development Goals (SDGs).
In the year under review, TKF received several certificates for validation of raw material passports. The raw material passport was created a few years ago and makes it possible to clearly calculate the degree of circularity of a raw material and the CO2 emissions. This certification validates the circularity data in raw material passports. Our ambition is to have raw material passports available for all our cable portfolio.
We defined the following actions for 2025:
|Value chain boundary|Material IROs| | |
|---|---|---|---|
|Sub-topic|Upstream|Own operations|Downstream|
|Impacts|Risks|Opportunities| |
|Sustainable innovation|- Sustainable innovation and technology are actually making a positive contribution to the achievement of the SDGs by promoting sustainable production and consumption, and addressing environmental challenges at customers. This can help create a more sustainable world.
- Insufficient technological development and innovation can threaten TKH’s long-term value creation.
- Customer’s need for
| | |
offers TKH opportunities for growth and value creation.
The Sustainable Development Goals (SDGs), developed by the United Nations, are a blueprint for achieving a better and more sustainable future. TKH recognizes their importance and aims to contribute to the SDGs through its business operations and innovative product portfolio, in line with its long-term value creation process.
To make an effective and targeted contribution through the SDGs, we focus on areas where we believe we can have the greatest impact and make the most direct contribution. Sustainability is a key element in our product portfolio and enables our customers to improve their sustainability performance. In this context, we are focusing on four SDGs. Sustainability is increasingly integrated in our operations and supply chain, with two other SDGs we focus on internal operations and business practices.
Our approach to determining our material impacts, risks and opportunities is described in the General information section. The material topic only applies to our own operations.
Sustainable innovation is an entity-specific material topic, because innovation is key to TKH’s success and supported by the outcomes of the DMA process. Our sustainable innovations and technologies contribute to the achievement of the SDGs by promoting sustainable production and consumption, and addressing environmental challenges for customers. This helps creating a more sustainable world.
Investing in innovative technologies is vital to maintaining our position as a leading technology company and maximizing sustainable value for our stakeholders and the world around us. Innovation and customer focus are key to keeping us at the forefront of creating best-in-class and innovative technologies and responding quickly and effectively to changing market trends.
Insufficient technological development and innovation can threaten TKH’s long-term value creation. These risks may emerge in the following areas:
TKH’s technologies and solutions support the care process, resulting in greater efficiency and reliability in the healthcare sector, for home care, professional care, and pharmaceutical companies.
With its Connectivity technologies, TKH is developing innovative cable systems that contribute to the energy transition and the use of sustainable energy sources, including offshore wind farms. In this way, we contribute to Europe’s energy reduction targets.
TKH’s Connectivity technology plays a fundamental role in the distribution of green energy, such as wind power. Our innovative subsea cable concept, for example, connects wind turbines in offshore wind farms and is characterized by high performance, risk reduction, installation efficiency, and sustainable composition. With the trend towards electrification, there is a considerable need to upgrade and expand power grids; TKH’s power cable systems offer a solution to alleviate this enormous demand.
TKH has a strong reputation as an innovator in the tire building, robotics, and mechanical engineering industries. We pioneer technologies and innovations to capitalize on the pillars of “Industry 4.0”, and the demand for increased productivity, and improved product quality and production processes. Our technology also makes infrastructure safer and more available.
TKH’s Connectivity, Vision and Security technologies make it possible to build sustainable infrastructure that meets strict safety and efficiency standards. Our innovative vision and manufacturing systems also enable our customers to make products more efficiently, reliably and flexibly. Our Vision technology is used for inspection, quality, product, and process control in amongst others industrial automation, battery inspection, consumer electronics, and scientific research. TKH leverages its unique expertise and deep understanding of the automation of production processes for controlling and monitoring industrial processes, as well as comprehensive manufacturing systems for car and truck tire production.
SDG 3: good health and well-being
SDG 7: affordable and clean energy
By combining communications and Security technology to develop innovative, comprehensive solutions for the built environment, we help to improve the efficiency, safety, and security of the systems used in and around cities.
TKH’s technologies and resulting solutions contribute to making cities safer. Our Security technology enables the built environment to be monitored and controlled with alarm systems, mission-critical communication systems, access and recording systems, and evacuation systems. Mobility security solutions focus on vehicle tracking, video analytics for public transport and security solutions on toll roads. In addition, TKH technologies improve efficiency, safety, and security in multi-story car parks, football stadiums, schools, and financial institutions.
Through our business operations, TKH focuses on responsible operations and production, and on reducing our negative impact on the environment as much as possible. All our production companies are certified in accordance with the ISO 14001 environmental management system and work according to the LEAN principle to eliminate waste in the production process.
TKH’s sustainability policy is designed to ensure that we continuously improve our environmental performance and minimize the negative impact of our operations on the environment. All of the raw materials used by TKH production companies are selected, to the greatest extent possible, to have little or no harmful effect on the environment from the initial design stage. TKH’s production environment focuses on eliminating waste as much as possible, and sets targets for reducing waste and recycling raw materials. We regularly discuss sustainability opportunities and our Code of Supply with our suppliers.
Through knowledge sharing and our strong R&D focus, we offer a distinctive and innovative portfolio of high value-added products. Healthy balance sheet ratios and a solid operating cash flow also support TKH’s growth strategy. Through good employment practices, we offer our employees a vibrant and safe working environment with ample development opportunities. We have set KPIs and targets on health and safety as well as employee satisfaction.
TKH is committed to providing a safe and inspiring work environment for our employees. We offer our employees the training and resources they need to perform their activities and develop their skills effectively. By sharing knowledge, TKH further develops its sustainable portfolio in response to market needs. Through our operational excellence programs, which systematically focus on both customer value and on making the best possible use of our people’s knowledge and skills, we excel in our business operations.
To measure how effective our practices are in increasing positive outcomes for the environment and related financial effects, we set a target on turnover resulting from our innovations. Our target is to generate more than 10% of our turnover from products that have been introduced in the prior two years. As a result, a major part of our technology portfolio is always in the early stages of the product life cycle, which is an essential strategic foundation for securing future growth. With the various strategy programs implemented in the past decade including acquisitions, we strengthen our portfolio of proprietary technologies. To reflect the current position in the transformation of TKH towards a technology company, we adjusted the innovation target in 2024 (from 15% in 2023 to 10% in 2024).
We do not engage directly with stakeholders in setting targets related to sustainable innovation.
€301 million turnover in 2024 from innovations across our three business segments. The percentage of turnover generated from innovations was 17.6%, well above our target of 10%. Investing in R&D and accelerating and scaling innovations are vital for future growth, and for maintaining and expanding our leadership positions in the niche markets in which we operate. In 2024, we spent €80.7 million on R&D activities (2023: €77.2 million).
TKH has a strong sustainable portfolio and has selected six Sustainable Development Goals (SDGs) to guide our approach to sustainability. Two of these focus on our internal operations and business practices, while the remaining four focus on our innovative product portfolio. TKH’s innovative products make a significant contribution to the SDGs. Our target is to have at least 70% of our turnover linked to SDGs. In 2024, 71.6% of our portfolio’s total turnover is linked to the SDGs that we have defined as relevant. In this way, we support our customers in achieving their sustainability goals and simultaneously provide a clear direction for our own company’s sustainable development.
To measure the result of our innovations, we also monitor the number of live patents. We also use patents to secure our value proposition. In addition to investing in our own technology development, we also invest in partnerships for specific specialisms and speed up the time-to-market for selected technology systems. Lastly, via acquisitions we aim to strengthen market position and/or product portfolio. We have 1,422 live patents in 2024. Continually accelerating and scaling our innovations is essential to maintaining our leading position and driving growth.
Turnover from innovations is based on the turnover in the reporting year from new products launched in the current and previous two reporting years. Innovation as percentage of turnover is calculated based on the turnover from innovations divided by the total turnover, with the total turnover included in note 22 of the financial statements. TKH positions itself as an innovative technology company. This measure provides useful information of the ability of TKH to bring innovations to the market and translate these into turnover. Turnover linked to SDGs is calculated by allocating TKH’s portfolio based on internal reporting of turnover in the reporting year by end-market combined with portfolio information included in quarterly reports of operating companies, divided by the total turnover, with the total turnover included in note 22 of the financial statements. This measure provides useful information about the ability of TKH to bring portfolio to the market which is connected to one of the SDGs.
| annual target | 2024 | 2023 |
|---|---|---|
| Turnover from innovations (in million) | €301.4 | €297.5 |
| Innovation as percentage of turnover | 17.6% | 16.1% |
| Turnover linked to SDGs (percentage) | 71.6% | 70.2% |
| Number of live patents | 1,422 | 1,400 |
| Total R&D spend (in million) | €80.7 | €77.2 |
| R&D capitalized (in million) | €46.5 | €41.8 |
| R&D capitalized as percentage of total R&D spend | 57.5% | 54.2% |
We defined the following actions for 2025:
| Value chain boundary | Material IROs | |||
|---|---|---|---|---|
| Sub-topic | Upstream | Own operations | Downstream | |
| Impacts | Risks | Opportunities | ||
| Diversity | A lack of diversity could have a potential negative impact on the overall health, wellbeing, and performance of our own workforce. | A lack of diversity could have a potential negative impact on the overall health, wellbeing, and performance of our own workforce. |
A lack of diversity can result in employees feeling not valued, respected, and supported, resulting in negative reputation, impacting performance of employees and organization and therefore costs.
Health and safety incidents have an actual negative impact on the health and safety of our own workforce.
Health and safety incidents can increase the risk of illness, injury and death, leading to lower morale, increased absenteeism and decreased productivity.
TKH has a decentralized structure with an open business culture and a high level of entrepreneurship with short lines of communication. Our organization is also characterized by delegated authority, trust, and transparency. A key component of our strategy is a strong, diverse workforce of talented people, with the passion and drive to make things happen. Working together with talented and qualified people is vital to achieving our mission of creating best-in-class Smart Technologies. We strongly believe that the diversity of our workforce will further strengthen the success of our defined strategy. Therefore, one of our priorities is to promote and safeguard diversity within our organization.
We also want to ensure that we have an attractive and safe workplace. Being an attractive and responsible employer is an important commitment that we take seriously. TKH offers an inspiring, safe, and healthy working environment for our workforce, and we are constantly striving to improve. It must always be our key priority to make sure that all our employees return home safe and sound at the end of each workday.
The contributions of our workforce are essential to our achievements. A lack of diversity can result in employees feeling not valued, respected, and supported, resulting in negative reputation, impacting performance of employees and organization and therefore costs. Health and safety incidents can negatively impact employees by increasing their risk of illness, injury and death, leading to lower morale, increased absenteeism and decreased productivity.
Our own workforce consist of employees and non-employees. Employees are on the payroll based on an employment relationship according to national law or practice, and consists of permanent and temporary hires with a contract for an indeterminate or a limited period for full-time or part-time work, including employees with a non-guaranteed hours contract. Non-employees are not on the payroll and consist of interns/stagiaires, and other temporary workers hired for a short duration mostly from employment agencies (e.g. in Dutch “uitzendkrachten”, self-employed people).
Identified potential material negative impacts on the overall health and wellbeing of our own workforce applies to all own workforce and are not related to individual incidents. Our policies to manage material impacts, risks and opportunities applies therefore to all own workforce.
vulnerable. No material impacts on workers that may arise from transition plans for reducing negative impacts on environment and achieving greener and climate-neutral operations were identified. There are no material positive impacts.
TKH has a strict policy of equal treatment for all employees regardless of race, nationality, ethnic background, color, age, religion, gender, sexual orientation, political opinion or disability. Through our Code of Conduct we ensure discrimination is prevented, mitigated and acted upon once detected. Violations can be reported though our internal procedures. We have established a process for recruiting new employees based on an appropriate profile for the function. We do not differentiate between male and female employees’ base salaries and apply market-based remuneration. There may be differences between countries depending on local market practices and tax and social security structure. We have a remuneration policy based on the requirements of the job, and the experience and skills of the individual.
In our recruitment, we are committed to providing a suitable work environment for people with a disability and/or disadvantage in the labor market. Disability is an umbrella term that covers illnesses/disorders, activity limitations, and participation restrictions. An illness/disorder is a problem in the function or structure of the body. An activity limitation is a difficulty encountered by an individual in executing a task or action. A participation restriction is a problem experienced by an individual in a range of everyday situations that results in a disadvantage in the labor market. TKH creates work experience opportunities for the long-term unemployed or people returning to the labor market. Since 2022, TKH has been PSO certified (“prestatieladder socialer ondernemen”). This certificate is a quality mark that proves our organization has an above-average level of social entrepreneurship and focuses on the employment of vulnerable groups in the labor market. We have a proven record of contributing to an inclusive society. By participating in the PSO, organizations around TKH are also encouraged to do business in a more socially responsible way.
We gain insight into the perspectives of our own workforce included the people who may be particularly vulnerable to impacts via direct engagements, meetings with works councils, employee satisfaction surveys, and yearly performance reviews.
The Executive Board maintains direct contact with employees in all parts of the organization, for example by attending employee presentations, participating in project meetings, or taking part in informal gatherings. In addition, at least one regular Supervisory Board meeting is held annually at the location of a TKH operating company. Such a company visit allows the Supervisory Board to meet with local management and employees and to gain a better understanding of TKH’s activities, technological developments, and organizational capacity. The Supervisory Board is updated on local developments and possible challenges faced by local management. Company visits, presentations, demonstrations, and guided tours are always part of the program. Particular attention is also paid to the local company culture.
The interests of the employees are represented at the level of the operating companies by the local Works Councils, and at the TKH group level by the Central Works Council. These councils ensure ongoing employee representation under the terms of the Works Councils Act (Wet op de Ondernemingsraden).
| Olaf Karsten (VMI) | chairman |
|---|---|
| Gerard Roolvink (TKF) | secretary |
| Jan Jaap Derksen (VMI) | |
| Maurice Fliescher (Intronics) | |
| Onno Verkerk (TKH Security) | |
| André van Loon (TKF) |
Council held three informal meetings. From the Executive Board, the CEO was present as the function and most senior role within TKH that has operational responsibility for ensuring that engagement happens and that results inform TKH's approach. Topics discussed included the results and organizational developments, progress on the strategic program including acquisitions and divestments, the budget, and TKH’s annual report including the performance on non-financial KPIs compared to the targets. This includes sustainability-related matters such as diversity, and health and safety. An annual Works Council day is held on a regular basis to strengthen the ties between the various Works Councils of the Dutch operating companies and to promote the exchange of knowledge and experience. TKH considers consultation with the Central Works Council and other Works Councils to be important and places great value on an open dialogue. We believe that an active approach to employee representation helps us to remain vigilant.
channels to raise concerns
It is very important to measure good employment practices and the effectiveness of engagement with our own workforce. Important aspects are assessed through employee satisfaction surveys and employee performance reviews. The surveys and review meetings provide important information regarding the motivation, satisfaction, and expectations of our employees. Identified areas for improvement are included in the HR plans at the concerning operating company.
We have a long history of conducting employee satisfaction surveys within a four-year cycle combined with “are we on track” surveys during this cycle. The surveys provide important information regarding the motivation, satisfaction, and expectations of our employees. Follow-up surveys also measure the effects of improvements made in response to the findings. We carry out these surveys in collaboration with a specialized third-party research agency. Some operating companies have carried out a satisfaction survey focusing on (company) specific topics. Based on the results of the survey, we evaluate where we need to amend our working methods, policies and develop a robust action plan. The employee satisfaction score in 2024 was 7.8, reflecting surveys from 2021-2024 among 4,788 employees, representing 72% of the number of employees (headcount) as of December 31, 2024. The employee satisfaction score is equal compared to 2023 (7.8) but increased compared to the previous years, demonstrating the effectiveness of the measures and action plans implemented.
Yearly performance interviews are conducted to discuss performance and opportunities for further development, as well as possible improvement for the organization and expectation of our employees. In 2024, 63% of all employees received a performance review (2023: 76%). This is not 100% because not all of the employees are eligible for performance review, for example because they just have been hired and the one-year period has not yet passed.
TKH is committed to an open culture in which employees can openly discuss any concerns, problems or abuses. Employees are encouraged to report matters to their (direct) manager or supervisor. Employees can report in confidence and the employee shall suffer no detriment from making such a report. In addition, we established a Whistleblower Procedure for a clear course of action for employees who wish to raise issues or concerns such as a possible criminal offense or violation of the law, giving or receiving a bribe, disclosure of confidential information, dishonesty or unethical behavior (such as discrimination, (sexual) harassment, bullying, etc.), and tax-related issues. TKH has implemented specific measures to ensure that any form of retaliation is prevented, and it remains vigilant in safeguarding whistleblower anonymity and protection. Reports are reviewed and investigated by the local confidential officer and/or the Group Compliance Officer. Depending on the topic, an external researcher may be involved.
| Code of Conduct | • Describes how we act as a company, how we make ethical decisions, and how we deal with different dilemmas within our company. • Applicable for all operating companies. • Managing director of the operating company is responsible for implementation. • OECD Guidelines is used as a reference framework, in addition to the guidelines provided in the UN Global Compact. • Published on our website and should be read and signed by each employee. |
|---|---|
| Whistleblower procedure | • Procedure to raise issues or concerns such as a possible criminal offense or violation of the law, a violation of TKH's internal policies and/or procedures, giving or receiving a bribe, disclosure of confidential information, dishonesty or unethical behavior, etc. • Applicable for all employees and third parties. • Managing director of the operating company is responsible for implementation. • Based on the EU Whistleblower Directive 2019/1937. • Provided to managing directors, confidential officers, and available for all functions having access to the reporting system Cognos. |
appointed to ensure independence and objectivity. If deemed necessary, disciplinary and corrective measures are taken. We track and monitor the issues raised by ensuring all received reports are recorded, investigated, and closed. We track the effectiveness of the procedure via engagement with our own workforce, including via employee surveys, and performance reviews. TKH promotes awareness of the whistleblower procedure through internal training and various communication channels such as shared folders. In case of violations or incidents, possibilities to remediate the impact on own workforce are investigated and implemented. Existing policies are also reviewed as well as other measures to prevent this in the future. More information is included in Business conduct policies and corporate culture.
(head count), during 2024 is 6,795. Total number of full-time equivalent (FTE) is 6,492, and reconciles with the FTE number in note 22 of the financial statements. Total number of employees who have left TKH in 2024 is 826. Percentage of employee turnover is 12.4%. This is calculated based on the number of employees who left TKH in 2024 divided by the number of employees at December 31, 2024.
| 2024 | 2023 | |
|---|---|---|
| Male | 5,095 | 5,154 |
| Female | 1,569 | 1,615 |
| Other | 1 | 0 |
| Total | 6,665 | 6,769 |
| Male | Female | Other | Total | |
|---|---|---|---|---|
| Permanent employees | 4,476 | 1,358 | 5,834 | |
| Temporary employees | 535 | 170 | 705 | |
| Non-guaranteed hours | 84 | 41 | 1 | 126 |
| Total | 5,095 | 1,569 | 1 | 6,665 |
| 2024 | 2023 | ||
|---|---|---|---|
| Netherlands | 2,375 | 2,458 | |
| Germany | 1,153 | ||
| Europe (other) | 1,475 | 2,830 | |
| Asia | 848 | 883 | |
| North America | 565 | 498 | |
| Other | 249 | 100 | |
| Total | 6,665 | 6,769 |
The total number of employees decreased slightly from 6,769 end of 2023 to 6,665 end of 2024. This is caused by, on the one hand, divestments and relocation of production activities from China and the Netherlands to Poland, and on the other hand, the scaling up of activities resulting from our strategic investment program (for example the new subsea factory in Eemshaven).
To measure effectiveness of diversity initiatives, we monitor KPIs and have set an ambitious diversity target in 2021 to increase the proportion of female employees in executive and senior management roles to at least 25% by 2030. This target was determined based on the 2020 diversity figure of 16.8%, benchmarking with other technical companies, and engagement with various stakeholders.
Operating companies are responsible for improving the gender balance within their own organizations, and progress is closely monitored by the Executive Board.
The executive and senior management positions (top management) are defined as follows:
Managers who are members of the operating company’s management team and responsible for specific business units or departments (e.g. finance, human resources, sales, marketing, legal, R&D, QHSE, supply chain and operations).
To recruit new (female) talent, TKH maintains close contact with business schools and universities. We are in contact with educational institutions that provide job-specific or management training courses. We offer internships, graduation projects, and short courses to attract potential talent at an early stage. In addition, we use targeted programs to attract more (female) students with limited or lower levels of education – such as those in vocational training – to give them an opportunity to improve their skills in practice, and to interest them in a possible job in our organization.
Recruitment of this kind is a high-priority area. There is an increasing shortage of qualified (female) personnel, especially in technical and technological positions. It will become more challenging to fill such positions in the coming years. However, we have seen that the positioning of our operating companies under the TKH brand has had a positive effect in attracting new employees. Employer branding is increasingly being used to reach and interest future talent. When recruiting external (female) candidates, we are increasingly using referral recruitment, i.e. asking our current employees to recommend new colleagues. By recruiting in this way, we have a higher chance of finding a match, as our employees can make a good assessment of a potential candidate’s suitability for the position and fit with the organization. When capacity became available due to reduced demand or other constraints, employees were (in some cases temporarily) reassigned to fill other positions, where possible.
In 2024, the proportion of women in our total workforce decreased slightly to 23.6% (2023: 23.9%). The male-to-female ratio was relatively high due to the technical and technological nature of our work and the labor market supply. However, women are increasingly choosing technical and technology-related careers, so we can continue to target and recruit more women for the positions in our organization. In 2024, the proportion of female executive and senior management employees increased to 21.6% from 19.2% in 2023. In the year under review, we expanded our diversity program, which will continue in 2025 to meet our ambitious target of 25% by 2030. We initiated specific programs to recruit women, including a trainee program for young women. Through this program, female employees have the opportunity to work in different (technical and technological) positions.
A diverse workforce can bring a variety of perspectives, skills, and experiences, which can lead to increased creativity, innovation, and problem-solving within TKH. Diversity can also contribute to a more inclusive and equitable workplace, where all employees feel valued, respected, and supported. At the same time, there could be a potential negative impact on the overall health and wellbeing of our own workforce in case this topic is not managed properly. To advance the positive impacts and manage potential negative impacts we create an open culture in which employees can openly discuss any concerns, problems or abuses.
Also, we integrated diversity in our HR policies, amongst other things concerning recruitment, development and retention of women. TKH is an international group of companies with a workforce of many nationalities. In such an international environment, we take a broad view of diversity. The diversity practices at TKH focuses on a variety of abilities, skills, and nationalities, and we employ a mix of men and women and age distribution. The current age structure results in a manageable level of staff turnover due to retirement.
| Function | 2024 | 2023 | |||||
|---|---|---|---|---|---|---|---|
| male | female | other | male | female | total | ||
| Supervisory Board | 2 | 3 | 3 | 2 | |||
| Percentage | 40.0% | 60.0% | 100.0% | 60.0% | 40.0% | 100.0% | |
| Target % Supervisory Board | 33.3% | 33.3% | |||||
| Executive Board | 3 | 0 | 3 | 0 | |||
| Percentage | 100.0% | 0.0% | 100.0% | 100.0% | 0.0% | 100.0% | |
| Target % Executive Board | 33.3% | 33.3% | |||||
| Management Board | 5 | 1 | 5 | 1 | |||
| Percentage | 83.3% | 16.7% | 100.0% | 83.3% | 16.7% | 100.0% | |
| Target % Management Board | 33.3% | 33.3% | |||||
| Executive and senior management | 279 | 77 | 356 | 282 | 67 | 349 | |
| Percentage | 78.4% | 21.6% | 100.0% | 80.8% | 19.2% | 100.0% | |
| Target % executive/senior management by 2030 | 25.0% | 25.0% | |||||
| Total | 5,095 | 1,569 | 1 | 6,665 | 5,154 | 1,615 | 6,769 |
| Percentage | 76.4% | 23.6% | 0.0% | 100.0% | 76.1% | 23.9% | 100.0% |
Combined with a specific development program to further develop their other skills including management skills and personal development. We have also established specific working groups to promote women within our organizations. In this way, we aim to increase the inflow and throughput of female employees within our organizations. The Executive Board, Management Board and Supervisory Board aim for diversity in their composition in terms of age, gender, background, expertise, occupational experience, and nationality, taking into account the statutory requirements. In terms of gender diversity, the Supervisory Board has a balanced composition of at least 1/3 female members and at least 1/3 male members. The Executive Board consists of three members, all of whom are male. The Management Board consists of six members, of which five are male and one female. TKH will strive to ensure that new appointments to the Executive Board, Management Board, and Supervisory Board are made with the aim of having at least 1/3 female members and at least 1/3 male members.
| Age Group | 2024 | 2023 | ||||
|---|---|---|---|---|---|---|
| male | female | other | male | female | total | |
| Under 30 years old | 820 | 232 | 1 | 820 | 209 | 1,029 |
| Percentage of employees under 30 years old | 16.1% | 14.8% | 15.8% | 15.9% | 12.9% | |
| Between 30 and 50 years old | 2,730 | 894 | 2,779 | 949 | ||
| Percentage of employees 30 and 50 years old | 53.6% | 57.0% | 53.9% | 58.8% | ||
| Over 50 years old | 1,545 | 443 | 1,555 | 457 | ||
| Percentage of employees over 50 years old | 30.3% | 28.2% | 30.2% | 28.3% | ||
| Total | 5,095 | 1,569 | 1 | 5,154 | 1,615 | 6,769 |
We defined the following actions for 2025:
Actions related to our own workforce are revisited every year and integrated in the activities at operating company level. Due to the nature of the actions, the resources needed for these actions are opex-related and do not require any significant capex. The opex are also not significant, since these initiatives are an integral part of our day-to-day expenses and HR activities.
A lack of health and safety measures can negatively impact employees by increasing their risk of illness, injury and death, leading to lower morale, increased absenteeism and decreased productivity. Safety management, including awareness and performance, is therefore a top priority within TKH, and preventing accidents and promoting a professional safety culture are an important part of this.
We achieve the latter by being transparent about accidents and near-misses, so employees are more aware of potentially risky situations and can react quickly.
work environment, including physical conditions, working hours, workload, ergonomics, psychosocial factors, and clear work instructions on machine safety. Strict measures are taken to ensure that employees comply with requirements such as wearing safety shoes and protective clothing. We also encourage employees to alert each other to situations that could lead to dangerous incidents. Our primary goal with our health and safety policy is to prevent health problems and work-related accidents.
Safety is crucial for our operating production companies. Due to the nature of their work, the TKH’s manufacturing companies are certified under the ISO 45001 standard. This ISO standard covers requirements for an occupational health and safety (OH&S) management system, which means that OH&S risks can be managed and performance improved. To make safety demonstrable, we focus on specific, measurable performance targets for safety indicators, including work-related injuries with lost time and ill health. We aim to identify, assess, and take appropriate preventive measures against risks. We continued to focus on health and safety (awareness) programs at our production facilities. Regular risk assessments are conducted to identify potential safety risks. In some cases, this resulted in the relocation of machinery or material storage to eliminate the risk. For certain activities with a higher safety risk, the employee concerned must first complete a special safety course. As part of an ongoing safety learning program, safety questions are asked on a weekly basis. The aim is to increase attention for and awareness of important health and safety topics.
We are firmly committed to achieving a zero recordable accident result and our goal is to create a culture of safety that is ingrained in everything we do. For this reason, we deeply analyze each accident and share the lessons learned across the group to avoid similar incidents from happening in other places. Besides, we actively encourage each employee to speak up should one see or experience something that is unsafe or could be improved.
The percentage of own workers who are covered by health and safety management system based on recognized standards is 51.6%. This is calculated based on the total own workers and includes both production sites and office locations. In 2024, 100% of our own workforce at our production sites was covered by the ISO 45001 standard as health and safety management system.
Occurrences and are never extrapolated or estimated. Despite a range of measures and an open safety culture, there is an inherent risk of under-reporting accidents, because of self-reporting of accidents (in most cases). Reported hours are measured, calculated, or estimated. The absolute number of serious accidents reported covers all employees on TKH’s payroll, excluding employees of third-party contractors. The LTIFR is reported at group level and not specified by region or gender.
The fact that accidents have occurred confirms the need for continuous training and focus on safety issues in both our own organization and that of our suppliers. In 2024, our cable production company TKF obtained the Safety Culture Ladder certification (level 3) in addition to the ISO 45001 certification. This will further support the implementation and monitoring of health and safety measurements, to mitigate the risk of incidents resulting in work-related injuries.
We have defined the following actions to further improve health and safety:
Actions related to our own workforce are revisited every year and integrated in the activities at operating company level. Due to the nature of the actions, the resources needed for these actions are opex related and do not require any significant capex. The opex are also not significant, since these initiatives are an integral part of our day-to-day expenses and HR activities.
Targets are determined by the Executive Board. Tracking effectiveness is part of our quarterly sustainability reporting including health and safety metrics. In cases where no quantitative measures are available we report on progress based on qualitative information. The ambitions and annual targets set are included in the tables.
| Annual Target | 2024 |
|---|---|
| Percentage of own workers who are covered by health and safety management system | 51.6% |
| Number of fatalities as result of work-related injuries and work-related ill health | 0 |
| Number of fatalities as result of work-related injuries and work-related ill health of other workers working on undertaking's sites | 0 |
| Number of recordable work-related accidents | 114 |
| Rate of recordable work-related accidents | 9.6 |
| Lost time injury frequency rate (LTIFR) – no replacement work possible (TKH KPI) | < 1.0 |
| 0.7 |
| Sub-topic | Upstream | Own operations | Downstream |
|---|---|---|---|
| Impacts | Working conditions and other work-related rights (child / forced labor, and health and safety) | * | Smart Connectivity systems |
| Risks | Bad working conditions, incidents, and violations of work-related rights, could have a potential negative impact on the overall health and wellbeing of workers in the value chain (copper mines). | ||
| Opportunities |
Suppliers in the upstream copper value chain who do not respect working conditions and labor rights, can pose a reputational risk, which could lead to financial losses.
Implemented a code of supply, we perform desktop reviews and on-site assessments at tier-1 suppliers, and we measure effectiveness through targets and KPIs. We do not have a specific policy for workers in the value chain. There are no mechanisms and processes on monitoring compliance with the UNGC, ILO Declaration and OECD Guidelines described in our current policies, nor are the measures to remedy any negative impact on human rights.
We will review whether it is necessary to develop a supplement to existing policies.
Through the signing of our Code of Supply, we request our tier-1 suppliers to respect and comply with the fundamental rights granted to all employees under applicable national statute. Furthermore, we expect our tier-1 suppliers to fully recognize the labor standards issued by the International Labor Organization (ILO), taking into due account the applicable laws and regulations in different countries and at different sites. This includes, but is not limited to, the following subjects:
While we are active with a wide range of technology portfolio in different business segments, geographical areas with suppliers worldwide, TKH has an indirect impact on workers in its value chain. A worker in the value chain is an individual performing work in the value chain of TKH who are or can be materially impacted by TKH, regardless of the existence or nature of any contractual relationship with TKH. This includes all workers who are not part of TKH’s own workforce.
A lack of attention to health and safety can negatively impact workers in the value chain by exposing them to dangerous conditions and increasing the risk of injury or illness. To manage potential negative impacts we...
Our suppliers are expected to take all the necessary actions to ensure consumer safety. Supplier will ensure that their products will not be made of hazardous substance as defined in EU Directive Restriction of Hazardous Substances.
| Policy name | Key contents |
|---|---|
| Code of Supply | • Describes how we expect our strategic suppliers to act, including criteria on environmental, social and governance topics. • Applicable for all suppliers. • Managing director of the operating company is responsible for implementation. • Based on labor standards issued by the International Labor Organization (ILO). |
•Published on our website and should be read and signed by each strategic supplier (annual purchase volume >€1 million).
human rights, environmental aspects and our leverage. The assessment takes also into account the tier-2 and tier-3 suppliers. For the latter part, we are dependent on the information publicly available or provided by the tier-1 suppliers. Human rights risks are classified into three categories using the Human Rights Guidance Tool for the financial sector, based on EIRIS analysis of the human rights (ethical investment research services). Environmental aspects are mainly focused on GHG emissions. Based on our relative share in the purchased volume, we assess the leverage we have. The combined scores on human rights, environmental aspects and our leverage result in a risk classification of the supplier. We will monitor the classification on an annual basis. We will engage with suppliers classified as high risk to manage.
| Tier-3 | Tier-2 | Tier-1 | |
|---|---|---|---|
| Mining | |||
| Recycling | |||
| Smelting and refining | Semi-fabrication | Product manufacture | Cables |
Value chain of copper
Copper is an important raw material for our cable production companies which are part of the business segment Smart Connectivity systems. Copper is a global industry, from the mines of South America to refineries in Asia. Copper's supply chain has several inherent risks including health and safety (working conditions) and child/forced labor (work-related rights). We are at the end of the value chain, with tier-1-2-3 suppliers in the upstream value chain. We purchase semi-fabricated copper products such as copper wires from our tier-1 suppliers. Our tier-2 suppliers are companies smelting and refining copper purchased from tier-3 suppliers being the copper mining companies.
In 2024, we implemented a classification system for our tier-1 suppliers at our largest cable production site through a comprehensive risk assessment focusing on the identified potential risks. In addition, we monitor whether our suppliers are certified for the Copper Mark, the leading international recognized assurance framework for a responsible supply chain in copper production.
We do not engage directly with workers in the value chain. Consequently, they are also not directly involved in target setting. We manage relationships with suppliers via meetings, and we perform desktop assessment and on-site supplier assessments on our strategic suppliers to obtain information on the working conditions of value chain workers. The purchase departments within our operating companies have the operational responsibility for ensuring that engagement happens, under supervision of the managing director. A full description of how we manage supplier relationships is included in the Management of relationship with suppliers section and in the paragraph Due diligence process below. The human rights section of these supplier assessments include questions on child labor, forced and compulsory labor, working hours, minimum wages, freedom of association, discrimination and harassment.
TKH. A Whistleblower Procedure is established for a clear course of action for employees or third parties (employees) who wish to raise issues or concerns such as a possible criminal offense or violation of the law, giving or receiving a bribe, disclosure of confidential information, dishonesty or unethical behavior (such as discrimination, (sexual) harassment, bullying, etc.), etc. TKH is committed to protecting workers in the value chain from retaliation.
human rights issues and incidents have been reported.
We do not specifically assess whether our workers in the value chain are aware of the complaint procedure. TKH trusts these structures and processes as a way to raise concerns/needs, and have them addressed.
We also engage with value chain partners through the International Responsible Business Conduct (IRBC) agreement for the Renewable Energy Sector. In particular, we focus on copper suppliers classified as high risk based on our risk assessments. We are in direct contact with these tier-1 suppliers, focusing on reducing the identified risks and implementation of action plans.
We have implemented proactive measures to mitigate harm of workers in the value chain. As part of the onboarding process of new suppliers we perform a high-level pre-screening, followed by direct suppliers engagement via our Code of Supply and assessments.
We oblige our strategic suppliers to sign the Code of Supply, followed by a desktop assessment and on-site assessment based on our self-assessment checklist. Strategic suppliers are suppliers with an annual purchase volume of more than €1 million (in the reporting year).
| annual target | 2024 |
|---|---|
| % of strategic suppliers that signed the Code of Supply | 89.4% |
| % of strategic suppliers that signed the Code of Supply and received a desktop assessment | 54.7% |
| % of strategic suppliers that signed the Code of Supply and received an on-site assessment | 31.7% |
The assessments carried out with suppliers have not revealed any material violations of human rights. In case of violations, the business relation with the supplier will be reconsidered.
More information is included in the Management of relationship with suppliers section.
Since 2023, our cable production company TKF participated in the International Responsible Business Conduct (IRBC) agreement for the Renewable Energy Sector. While the renewable energy sector has achieved great progress on environmental and societal issues, including climate change, there are still numerous obstacles to overcome. As a prominent player in the cable production and telecom industry in the Netherlands, TKF understands the vital importance of sustainable practices and responsible behavior in an ever-evolving world. TKF has a responsibility as a supplier of subsea cables for offshore wind energy to bring the industry expertise to the forefront and acknowledge the hurdles faced by our company and many others involved in the renewable energy value chain. By participating in this agreement TKF is committed to collaborating with our stakeholders, as well as all others participating in the renewable energy agreement. We aim to identify and mitigate our own (including suppliers) risks and impacts on both society and the environment.
We are also in continuous conversation with our main copper suppliers regarding a responsible supply chain. This is important because through our tier-1 suppliers we source raw materials from around the world. The countries of origin for the copper supply includes regions that could pose risks regarding compliance with human rights related sustainability standards. Therefore, TKH values long-term business relationships with companies in the copper supply chain. This strategy is crucial for fulfilling the growing global demand for responsibly produced copper. Primary raw materials such as copper will also be needed in the future to satisfy the growing needs for metals for the green transition.
Environmental, social and governance issues, such as child labor and occupational safety. The Copper Mark is also aligned with the United Nations Sustainable Development Goals (SDGs). Our target is to have at least 80% of our copper suppliers certified by The Copper Mark by 2030. In 2024 in total 59.0% of our tier-1 suppliers (based on purchased kg) were certified by The Copper Mark.
We defined the following actions for 2025:
Guidelines described in our current policies.
| target | 2030 | 2024 |
|---|---|---|
| % of tier-1 copper suppliers certified by The Copper Mark (based on purchased kg) | > 80% | 59.0% |
| % of tier-1 copper supplier assessed (2024 risk management assessment – based on purchased kg) | 100% | 78.2% |
Actions related to workers in the value chain are revisited every year and integrated in the activities at operating company level. Due to the nature of the actions, the resources needed for these actions are opex-related and do not require any significant capex. The opex are also not significant, since these initiatives are an integral part of our day-to-day expenses and procurement activities.
| Upstream | Own operations | Downstream |
|---|---|---|
| Impacts | Risks | Opportunities |
| Privacy (cybersecurity) | * | * |
| Data leaks or cyber incidents involving GDPR-sensitive data, and loss of business sensitive information, have an actual negative impact on the right of data protection. | • | |
| Privacy can be a financial risk. If customer data is not adequately protected it could lead to violation of laws, fines and penalties and loss of trust. |
different business segments, and geographical areas with customers worldwide. All sales transactions are business-to-business. As a result, we have an indirect impact on consumers and end-users. Consumers and end-users are individuals who acquire, consume and ultimately use or are intended to ultimately use a particular product or service for personal use, either for themselves or for others.
Based on our double materiality assessment the topic privacy (cybersecurity) is identified as material. Data leaks or cyber incidents involving GDPR-sensitive data, and loss of business sensitive information, have an actual negative impact on the right of data protection. TKH depends on consumers' trust in the security systems of its operating companies, such as intercoms, (surveillance) cameras, and vision systems. A perceived risk of data leaks could lead to decreased sales, contract terminations, or reputational damage. Additionally, privacy concerns may result in stricter regulatory requirements, impacting product design and compliance costs.
Data protection is also relevant for our products that store customer data, related to the aforementioned portfolio and customer production data stored in our tire building machines and vision systems. Privacy and cybersecurity covers both the privacy and security of our products and services sold to our customers and the cybersecurity of our organization developing and producing these products and services. If customer data is not adequately protected it could lead to violation of laws, fines and penalties and loss of trust. There are no material positive impacts.
We do not have a specific policy for consumers and/or end-users. Consequently, they are also not directly involved in target setting. There are no mechanisms and processes on monitoring compliance with the UNGC, ILO Declaration and OECD Guidelines described in our current policies, nor are the measures to remedy any negative impact on human rights. We will review whether it is necessary to develop a specific policy for consumers and/or end-users.
We have included provisions regarding the respect and protection of human rights in our Code of Conduct. Our Code of Conduct is based on the UN Guiding Principles on Business and Human Rights, to not tolerate any violation of human rights. We use the OECD Guidelines and ILO Declaration on Fundamental Principles and Rights at Work as a reference framework.
Cybersecurity concerns the risk of a breach of data availability, confidentiality, and integrity (including IP). This also includes cyberattacks that compromise data (including IP) to disrupt business operations and infrastructure. Important elements in this respect are our decentralized IT landscape, the use of multiple ERP systems, the continuity of production sites, the protection of developed technologies (IP protection) and data protection legislation, including GDPR.
To manage potential negative impacts we implemented an IT and Security policy, and we perform IT audits and penetration testing and we measure effectiveness though targets and KPIs. We guide our operating companies to implement cybersecurity measures.
Processes and effective controls and to create a safe and honest culture, without material incidents.
In 2024, we placed increasing emphasis on the risk of ransomware and our resilience should such an event occur, as well as the EU NIS2 Directive, which is partly implemented into national law by EU Member States in 2024. The topic is a recurring item on the agenda in meetings of the Executive Board and Audit Committee meetings. As a result, this topic continues to receive the attention it deserves. IT & Security is part of the immediate focus area of the Internal Audit team.
Related privacy controls. An internal privacy policy has also been drawn up and implemented in the organization. Internal Audit, in collaboration with the internal Legal Advisor (who is also the Data Privacy Officer), ensures the proper application of GDPR legislation within the organization. Collectively, these policies and procedures reflect our strong commitment to respect the human rights of both consumers and end-users.
| Policy name | Key contents |
|---|---|
| Code of Conduct | • Describes how we act as a company, how we make ethical decisions, and how we deal with different dilemmas within our company. • Applicable for all operating companies. • Managing director of the operating company is responsible for implementation. • OECD Guidelines is used as reference framework, in addition to the guidelines provided in the UN Global Compact. • Published on our website and should be read and signed by each employee. |
| IT security policy | • Guidance on IT controls and information security, including security breach/incident reporting, intellectual property protection, amongst other things. • Applicable for all operating companies. • Managing director of the operating company is responsible for implementation. • Based on ISO 27001:2022 controls. • Provided to managing directors and the IT and security responsible of each operating company. |
| Privacy policy | • Describes how we act as a company on privacy-related topics, and how we want to protect personal employee data within our company. • Applicable for all operating companies. • Managing director of the operating company is responsible for implementation. • Based on the EU General Data Protection Regulation (GDPR). • Provided to managing directors and available for all functions having access to the reporting system Cognos. |
High-quality technologies, solutions, and corresponding services are essential to our commercial impact. Customer interests play a central role in the way we conduct and implement operational activities and developments. We collaborate closely with our customers to get insights and knowledge of the consumers and end-users to understand their needs and if there is a risk for material impact on them. We measure, monitor, and evaluate customers through customer satisfaction surveys on a four-year cycle. The survey contains predefined topics, but also provides the opportunity for customers to raise any other concerns for example related to privacy or data protection. Based on the outcomes, we can take specific action to better serve our customers. Through training and skills management, standardization of processes, and further improvement of our availability, information systems, and 24-hour service, we aim to provide an even better customer experience. The managing director of the operating company is responsible for executing the survey, and the implementation of defined actions.
procedures. The number of received complaints and number of complaints settled within five working days are KPIs and quarterly reported as part of the sustainability reporting. Reports received by TKH are reviewed and investigated by the Group Compliance Officer. Depending on the topic, an external researcher may be appointed to ensure independence and objectivity. If deemed necessary, disciplinary and corrective measures are taken.
We do not specifically assess that our consumers and/or end-users are aware of and trust these structures or processes as a way to raise their concerns or needs and have them addressed. More information is included in the section Business conduct.
However, concerning potential impacts, citizens can contact the data controller (our customers) to invoke their GDPR rights and, if applicable, we will conform to the request. In the event of a project experiencing system failure or downtime, we have established procedures to manage and mitigate such issues. We act immediately to stop the incident, and we will communicate with the customer and keep the client updated regarding the reestablishment of normal operations. The consumers and end-users do not influence the management of this. However, engagement with the affected consumers and end-users happens via the customers, who will provide them with the necessary information.
The engagements have not revealed any material violations of human rights. In case of violations, the business relation will be reconsidered. In addition, possibilities to remediate the impact on consumers and end-users will be investigated and implemented. Existing policies will also be reviewed as well as other measures to prevent this in the future. More information is included in Business conduct policies and corporate culture.
We continuously train our employees to detect phishing attempts sent by email. We do so by sending fake phishing emails to employees on a regular basis, to raise awareness and train detection skills. If they miss the signs of phishing and slip, they are informed what signs in the fake phishing email they should have noticed.
Several small and non-material security incidents occurred at our own operations during the year under review. However, we experienced one larger incident due to a successful ransomware attack at one of our operating companies, which impacted access to operating systems for two weeks but without material impact. These incidents reinforce the need to remain vigilant to IT Security risks. Consumer and end-user topics are also addressed on a continuous basis through ISO 27001, as part of our operating companies are ISO 27001 certified. The ISO 27001 provides security requirements which mitigates the risk of cybersecurity incidents and their potential impact. In 2025, we will update our IT security policy and continue with internal audits to identify improvements. Further information about IT security is included in the Risk management section.
We measure, monitor, and evaluate customers through customer satisfaction surveys on a four-year cycle. Our average customer satisfaction survey score for 2024 is 8.6 (2023: 8.6). The customer satisfaction score reported (maximum score of 10) is based on the outcome of the most recent customer satisfaction surveys conducted by an external research company. Each year, a number of operating companies conduct the survey. A survey reflects the customer base of the respective operating company. The customer satisfaction score reported in 2024 reflects surveys from the period 2021-2024 and is based on the weighted average of the responses from all customers in this period.
Through training and skills management, standardization of processes, and further improvement of our availability, information systems, and 24-hour service, we aim to provide an even better customer experience.
| Annual Target | 2024 | 2023 | ||
|---|---|---|---|---|
| Number of reported cybersecurity incidents within own operations with direct financial impact on TKH of > €100k | 0 | 1 | 0 | |
| Customer satisfaction survey score > 7.8 | 8.6 | 8.6 |
We defined the following actions for 2025:
sales, or whether wider industry or collaborative action with other relevant parties is required. Actions related to consumers are revisited every year and integrated in the activities at operating company level. Due to the nature of the actions, the resources needed for these actions are opex-related and do not require any significant capex. The opex are also not significant, since these initiatives are an integral part of our day-to-day expenses and sales activities.
The ambitions and annual targets set are included in the tables. Targets are determined by the Executive Board. Tracking effectiveness is part of our quarterly sustainability reporting. In cases where no quantitative measures are available we report on progress based on qualitative information.
As a global technology company with decentralized operations in more than 30 countries, and interaction with a large number of business partners including suppliers, TKH depends on transparency, trust, ethical business conduct and compliance throughout its organization and value chains. Compliance with applicable laws and regulations and TKH’s policies, procedures and guidelines can help mitigate a range of risks, including those associated with fraud, corruption (i.e. abuse of entrusted power for private gain), bribery (i.e. dishonestly persuading someone to act in your favor by giving them a gift of money or another inducement), unfair competition, export violations, sanctions, human rights including child labor, IT security, health and safety, environment, data privacy, and financial and sustainability reporting requirements. Failure to comply with applicable regulations and expectations for responsible business conduct can result in loss of license to operate and could expose TKH to investigations, criminal and civil sanctions such as fines and penalties, and materially impact financial results. The defined targets are based on compliance, therefore key stakeholders are not directly involved in target setting. The company has procedures in place related to fraud, bribery, or material non-compliance issues, specifically relating to accounting, internal controls, or auditing matters. Fraud and non-compliance is also an attention point during the Audit Committee meetings and the audit by the external auditor.
our risk profile, and to take responsibility for any potential risks. They are also expected to act in accordance with TKH’s Code of Conduct. This Code of Conduct is fundamental to everything we do and describes how we act as a company, how we make ethical decisions, and how we deal with different dilemmas within our company.
Additional policies have been implemented in relation to the principles included in the Code of Conduct, including:
More information can be found in the Risk management section.
We have a Code of Conduct in place to ensure that every employee acts in accordance with TKH’s guidelines. The Code of Conduct uses the OECD Guidelines as a reference framework, in addition to the guidelines provided in the UN Global Compact endorsed by TKH. Our Code of Conduct defines the way we live our core principles every day. It covers various topics related to principles of honesty, integrity and transparency, management of those relationships could jeopardize adequate inflow of important (raw) materials. Global economic, market and geopolitical developments could influence the execution of the strategy and the financial position and results of TKH. Examples are the Russia-Ukraine war and economic and political confrontations between world powers (trade tariffs, availability and price of energy), the erosion of trade agreements, and the impact of (global) inflation. In this context, monitoring of (dependency) of suppliers is also of importance.
More information on human rights in the value chain can be found in the Social information section.
The Executive Board, led by the CEO, holds ultimate responsibility for defining, implementing, and monitoring business conduct policies across the organization. This includes ensuring governance policies are aligned with strategic objectives, regulatory requirements, and ethical business practices.
To ensure effective oversight of business conduct, TKH has established clear procedures and accountability mechanisms, covering:
The Supervisory Board ensures that the Executive Board not only monitors governance and sustainability but actively enforces ethical business practices and compliance frameworks, intervening when necessary to uphold integrity standards. Beyond overseeing sustainability reporting, the Audit Committee ensures continuous improvement of governance policies, monitors the effectiveness of governance policies and internal controls, and assesses compliance with business conduct requirements to safeguard ethical integrity.
Both boards have expertise in corporate governance, risk management, compliance, and sustainability, ensuring effective oversight of business conduct. Members possess backgrounds in finance, legal, ESG compliance, and general business ethics, supporting informed decision-making and strategic alignment with regulatory and ethical standards.
TKH conducts its business according to the principles of honesty, integrity, accountability, and transparency. We are committed to complying with relevant laws and regulations that are enforced. These core values define the culture and behaviors that we’re committed to embedding throughout TKH. All employees are expected to be aware of the core values underlying our actions.
| annual target | 2024 | 2023 | |
|---|---|---|---|
| % of total employees that signed the Code of Conduct | 100.0% | 98.9% | 96.5% |
including anti-bribery and anti-corruption, honest business conduct, conflicts of interest, health and safety and human rights. Clear guidelines, operational control, and a zero-tolerance policy regarding matters of principle, such as fraud, bribery, and corruption, ensure that work is carried out in accordance with the appropriate principles and agreements.
The Internal Audit team plays an important role in monitoring the effectiveness of the Code of Conduct. It works closely with TKH’s Compliance Officer and Legal Advisor.
| Code of Conduct | • Describes how we act as a company, how we make ethical decisions, and how we deal with different dilemmas within our company. • Applicable for all operating companies. • Managing director of the operating company is responsible for implementation. • OECD Guidelines is used as a reference framework, in addition to the UN Global Compact guidelines. • Published on our website and should be read and signed by each employee. |
|---|---|
| Whistleblower procedure | • Procedure to raise issues or concerns such as a possible criminal offense or violation of the law, a violation of TKH's internal policies and/or procedures, giving or receiving a bribe, disclosure of confidential information, dishonesty or unethical behavior, etc. • Applicable for all employees and third parties. • Managing director of the operating company is responsible for implementation. • Based on the EU Whistleblower Directive 2019/1937. • Provided to managing directors, confidential officers, and available for all functions having access to the reporting system Cognos. |
| Internal Control Framework | • Describes how we act as a company, how we make ethical decisions, and how we deal with different dilemmas within our company. • Applicable for all operating companies, except for companies classified as small (< 20 FTEs). • Managing director of the operating company is responsible for implementation. • Based on the COSO 2017 framework. • ICF per process (e.g. sales, procurement) is included in reporting forms in the reporting system Cognos, and available for all functions having access to the reporting system Cognos. |
| Code of Supply | • Describes how we expect our strategic suppliers to act, including criteria on ESG topics. • Applicable for all suppliers. • Managing director of the operating company is responsible for implementation. • Based on labor standards issued by the International Labor Organization (ILO). • Published on our website and should be read and signed by each strategic supplier (annual purchase volume > €1 million). |
| Internal control procedures | • Guidance on specific internal control procedures, addressing adequate segregation of duties, adequate security of valuable and moveable assets, monthly reviews of operating performance and reporting to TKH, amongst other things. • Applicable for all operating companies. • Managing director of the operating company is responsible for implementation. • Based on general internal control standards and the COSO 2017 framework. • Provided to managing directors and available for all functions having access to the reporting system Cognos. |
| IT and security policy | • Guidance on IT controls and information security, including security breach/incident reporting, intellectual property protection, amongst other things. • Applicable for all operating companies. • Managing director of the operating company is responsible for implementation. • Based on ISO 27001:2022 controls. • Provided to managing directors and the IT and security responsible of each operating company. |
| Financial Reporting Manual | • Guidance on financial reporting, addressing accounting principles and valuation methods for balance sheet and profit and loss accounts, including guidance on the reporting through our financial reporting system Cognos. • Applicable for all operating companies. • Managing director of the operating company is responsible for implementation. • Based on IFRS. • Provided to managing directors and available for all functions having access to the reporting system Cognos. |
|---|---|
| Sustainability Reporting Manual | • Guidance on non-financial (sustainability) reporting, addressing accounting principles and estimation methods for defined KPIs connected to the identified material sustainability topics, including guidance on the reporting through our reporting system Cognos. • Applicable for all operating companies. • Managing director of the operating company is responsible for implementation. • Based on the CSRD and ESRS. • Provided to managing directors, the sustainability responsible of each operating company, and available for all functions having access to the reporting system Cognos. |
| Internal reports and whistleblower procedure |
TKH is committed to an culture where employees can openly discuss any concerns, problems, or (suspected) violations of the Code of Conduct. Employees can report misconducts or (suspected) violations though an internal reporting procedure. Depending on the situation, the report can be done to the direct supervisor, HR or local management.
In addition, a whistleblower procedure provides for a clear course of action for employees who wish to raise issues or concerns such as a possible criminal offense or violation of the law, a violation of TKH's internal policies and/or procedures, giving or receiving a bribe, disclosure of confidential information, dishonesty or unethical behavior (such as discrimination, (sexual) harassment, bullying, etc.), and tax-related issues. To strengthen the organization's commitment to ethical practices, an updated whistleblower procedure will be implemented in 2025 combined with a new online platform through which (anonymous) reports can be submitted. This new online platform will replace existing (local) systems and reporting channels. In addition, a new training program will be introduced for staff receiving and managing whistleblower reports (confidential officers), including any measures ensuring they are adequately prepared. TKH promotes awareness of the whistleblower procedure through internal training and various communication channels. In addition, this topic is part of the employee satisfaction surveys to foster a transparent culture.
TKH is committed to protecting whistleblowers from retaliation. Reports made in accordance with the established procedure will not negatively affect the whistleblower’s position within the company. Additionally, TKH has implemented specific measures to ensure that any form of retaliation is prevented, and it remains vigilant in safeguarding whistleblower anonymity and protection. Reports are reviewed and investigated by the local confidential officer and/or the Group Compliance Officer. Depending on the topic, an external researcher may be appointed to ensure independence and objectivity. If deemed necessary, disciplinary and corrective measures are taken. External parties can also report to the Group Compliance Officer.
In 2024, no report was received through the whistleblower procedure (annual target is receiving all reportable cases). TKH received one report in 2023 which has been carefully investigated in 2024 by an external researcher specialized in the relevant research topic. The investigation into the facts and circumstances that led to the report in 2023 shows that there was no indication for a suspicion of wrongdoing as referred to in the TKH whistleblower procedure.
In 2024, three violations of the Code of Conduct were reported through the internal reporting procedure. These incidents are not related to bribery or corruption. As a result, the employees involved were dismissed after various conversations and measures to improve their behavior and to ensure that they would act in accordance with the Code of Conduct. We believe it is important to promote an open and transparent culture and to measure these issues in employee satisfaction surveys. Actions related to the procedure are part of our annual business plan and are revisited every year. Due to the nature of the actions, the resources needed for these actions are opex related and do not require any.
| annual target | 2024 | 2023 |
|---|---|---|
| Number of reports through internal reporting procedure | 3 | 2 |
| Number of reports through whistleblower procedure | 0 | 1 |
We defined the following actions for 2025:
Actions related to business conduct are revisited every year and integrated in the activities at operating company level. Due to the nature of the actions, the resources needed for these actions are opex related and do not require any significant capex. The opex are also not significant, since these initiatives are an integral part of our day-to-day expenses and (HR) activities.
available we report on progress based on qualitative information.
We are committed to conducting our business fairly, transparently and with integrity, while applying high ethical and legal standards. We do not approve any form of corruption and bribery including any other form of unethical business practice. We have a Code of Conduct in place, covering various topics including anti-corruption and anti-bribery. TKH endorsed the ten principles of the Global Compact of the United Nations in the areas of human rights, labor, environment and anti-corruption which are aligned with the United Nations Convention against Corruption. We are committed to not only avoid bribery, extortion and other forms of corruption, but to proactively develop policies and concrete programs to address corruption internally and within our most important supply chains.
As part of our TKH Manual we have a set of internal guidelines and procedures related to anti-corruption or anti-bribery, focusing on internal control measures, management responsibilities, and authorization requirements. In addition, we have internal guidelines and checklists on compliance with sanctions and export regulations for transactions with customers. Through the TKH Code of Supply, our strategic suppliers are aware that they should follow our business ethics and confirm this by signing this Code of Supply. Compliance with this code is verified during supplier audits. As described under business conduct policies, any violation of our anti-corruption or anti-bribery rules and procedures can be reported through our whistleblower or internal reporting procedure and is investigated by the Group Compliance Officer and/or an independent team, separate from the chain of management. Each report is submitted to the Executive and Supervisory Board through the Audit Committee.
TKH has embedded its risk management policy at all levels of the organization. This involves an Internal Control Framework (ICF) which is used to analyze and evaluate the strategic, operational including sustainability, financial, and compliance risks for its operating companies (including potential corruption and bribery risks). TKH’s risk management policy reflects the organization’s size and decentralized structure. The implementation of the components of this risk management policy are assessed and monitored by Internal Audit. An open, transparent culture with sufficient critical capacity is a prerequisite for an organization to properly manage risks, responsibilities, and competencies. TKH considers a suitable risk management model to be an important tool for creating sustainable long-term value. A continuous focus on risk awareness is a key element of TKH’s culture. The pursuit of a balanced risk profile is embedded in this culture through short lines of communication and is supported by closely monitoring agreed objectives through a comprehensive Key Performance Indicator (KPI) dashboard.
More information can be found in the Risk management and the Management of relationship with suppliers section. The company’s internal risk management and control system is also an ongoing focus for the Audit Committee of the Supervisory Board. Topics such as non-compliance with laws and regulations, specifically (commission) payments to third-party agents and non-routine transactions in high-risk countries, are frequently discussed. At least once a year the Audit Committee discusses the company’s fraud risk assessment, including inherent fraud risks, identified significant risks, and other risks and attention areas including corruption and bribery. Internal Audit performs audit activities to gain a clearer picture of the possible risks of fraud, non-compliance, corruption, bribery, and review internal control measures related to these risks. Fraud and non-compliance is also an attention point during the audit by the external auditor. Based on internal fraud risk assessments performed, we determined a potential and inherent corruption/fraud risk in the value chain of our business segment Smart Manufacturing systems due to the use of third-party agents towards part of our end customers. To mitigate the risk, we implemented various measures such as governing the working relationship with agents and intermediaries by guidelines and template contracts. We also train our third-party agents to ensure that every agent acts in accordance with TKH’s guidelines.
We defined the following actions for 2025:
Actions related to anti-corruption and anti-bribery are revisited every year and integrated in the activities at operating company level. Due to the nature of the actions, the resources needed for these actions are opex related and do not require any significant capex. The opex are also not significant, since these initiatives are an integral part of our day-to-day expenses and (HR) activities.
We expect our suppliers to adopt a zero-tolerance policy on issues that are material to us. Our principles and requirements are set out in a Code of Supply, which covers Environmental, Social and Governance topics such as human rights, the environmental impact (e.g. policies, environmental management systems, pollution prevention etc.), occupational health and safety, compliance with law and regulations including corruption and bribery, and ethical behavior. This set of environment, social and governance topics are part of the selection criteria of suppliers. In case criteria are not met by the supplier, the business relationship will be reconsidered.
We oblige our strategic suppliers (supplier with an annual purchase volume of more than € 1 million must) to sign the Code of Supply, followed by a desktop assessment and on-site assessment.
As part of our internal training program we organized several physical and online meetings to address important topics related to fraud, corruption, and bribery. We specifically focus on functions at-risks of corruption and bribery, which include procurement, sales, legal, financial administration and senior and executive management. The yearly training program addresses topics such as sanctions regulation, the procedure to be followed in that respect, definition of fraud and the fraud triangle, definition of corruption and bribery including examples, and the internal payment framework, by means of theory and case studies. In addition, our operating companies implemented company specific training programs focusing on the most relevant corruption and bribery risks for their business, for example related to commission payments to third-party agents (Smart Manufacturing systems). In 2025, we will launch a new training program for functions at-risks of corruption and bribery, to help our employees to act in line with our anti-corruption and anti-bribery rules and procedures.
To enhance governance competencies, board members participate in regular training on various topics. In 2023-2024, deep-dive sessions covered double materiality, cybersecurity, and sustainability regulations.
| Target | 2025 | 2024 |
|---|---|---|
| % of headcount at-risk covered by anti-corruption and anti-bribery training | > 90% | 27.5% |
In 2024, no confirmed incidents of corruption or bribery were reported as well as by no convictions for violation of such laws (annual target: no incidents or fines). In addition, there are no instances of employees being dismissed or disciplined for corrupt practices during the year. Any incident of corruption or bribery is assessed to determine if additional internal control measures or other actions are needed. Each incident is investigated by the Group Compliance Officer. Depending on the topic, an external researcher may be appointed to ensure independence and objectivity. If deemed necessary, disciplinary and corrective measures are taken. Each incident is reported to the Executive and Supervisory Board through the Audit Committee. Although we concluded that no action was necessary due to the absence of any known corruption cases, we will launch a new training program in 2025 to further enhance awareness.
| Annual Target | 2024 |
|---|---|
| Number of convictions for violation of anti-corruption and anti-bribery laws | 0 |
| Amount of fines for convictions for violation of anti-corruption and anti-bribery laws | €0 |
| annual target | 2024 | ||
|---|---|---|---|
| % of strategic suppliers that signed the Code of Supply | > 90% | 89.4% | |
| % of strategic suppliers that signed the Code of Supply and received a desktop assessment | 54.7% | ||
| % of strategic suppliers that signed the Code of Supply and received an on-site assessment | 31.7% |
The Code of Supply has been signed by 89.4% (2023: 91.9%) of the total number of suppliers in scope. The annual target of 90% has not been achieved, partly due to a longer than expected lead time for new suppliers to sign the code. We are in close contact with the suppliers, and we are establishing clear rules to eliminate such delays as soon as possible.
We have included provisions regarding the respect and protection of human rights in both our Code of Conduct and our Code of Supply. Our policy does not tolerate any violation of human rights. We use the OECD Guidelines as a reference framework to enable us to adequately identify potential risks. These OECD Guidelines refer to the Universal Declaration of Human Rights, which states that all parties in society, including companies, have an obligation to respect and protect human rights. In addition, the guidelines provided in the UN Global Compact are endorsed by TKH.
As part of the assessment we carry out with suppliers as part of our Code of Supply, we ask suppliers about their human rights record and discuss possible areas such as discrimination, the right to social security, and the risk of child labor in the value chain. The assessments carried out with suppliers have not revealed any violations of human rights. In case of violations, the business relationship will be reconsidered. Privacy is an important human rights principle. People must be able to live in freedom without everyone knowing everything. The Dutch Privacy Act, including the EU Regulation (EU GDPR) gives people more rights – and organizations more obligations – to handle personal data carefully. Internal Audit covers human rights as part of its auditing activities and asks our managers about their compliance with human rights and whether any potential human rights conflicts could arise, especially in the value chain in which we operate.
Optimizing (regional) portfolio and local manufacturing footprint also contributes in lowering supplier risks. A situation where important raw materials such as copper, aluminum, steel and plastics, and technical (electronic) components have long delivery times, are unavailable or only available in limited quantities, as well as price increases related to raw materials can put pressure on our profit margins. To mitigate these risks, we increase our inventory of critical raw materials and components where applicable. At the same time, we try to redesign products as much as possible to increase the use of alternative materials and components with better availability/pricing, in addition to the use of alternative suppliers. Lastly, we developed cooperation programs between operating companies to discuss developments, trends, and risks and to leverage buying power and knowledge within the group and business segments.
We defined the following actions for 2025:
Actions related to management of relationship with suppliers are revisited every year and integrated in the activities at operating company level. Due to the nature of the actions, the resources needed for these actions are opex related and do not require any significant capex. The opex are also not significant, since these initiatives are an integral part of our day-to-day expenses and procurement activities.
This Policy applies to all employees and to all (independent) contractors who perform services for TKH. Interests of key stakeholders in setting the policy are not considered specifically, as the policy is based on the EU AI Act 2024/1689 and the TKH IT security policy.
| Value Chain Boundary | Material IROs | ||
|---|---|---|---|
| Sub-topic | Upstream | Own operations | Downstream |
| Impacts | AI and algorithm ethics | ||
| Risks | • Unjustified actions, bias, discrimination or breach of privacy due to the use of AI systems could have a potential negative impact on people. • Insufficient adequate use of AI tools can lead to leakage of business sensitive information. | ||
| Opportunities |
such as intellectual property.
•Non-compliance with AI algorithm could lead to violation of laws, fines and penalties, reputational damage, and loss of trust.
AI and algorithm ethics is an entity-specific material topic, because AI is an important part of TKH’s business strategy and R&D roadmap, and supported by the outcomes of the DMA process.
Artificial intelligence (AI) is not just about efficiency and streamlining laborious tasks. Thanks to machine learning and deep learning, AI applications can learn from data and results in near real-time, analyzing new information from many sources and adapting accordingly, with a level of accuracy that’s invaluable to business. This ability to self-learn and self-optimize means AI continually compounds the business benefits it generates. In this way, AI helps our businesses to adapt at speed, with a regular stream of insights to drive innovation and competitive advantage in a world of constant disruption. When scaled, AI can become a key enabler of our strategic priorities.
At the same time, the use of AI systems must not go beyond what is necessary to achieve a legitimate aim. Therefore, risk assessment should be used to classify AI algorithm systems to prevent harms which may result from such uses, such as unjustified actions, bias, discrimination or breach of privacy (AI ethics). Non-compliance with AI algorithm could lead to violation of laws, fines and penalties, reputational damage, and loss of trust. In addition, the use of AI tools within our own operations could lead to leakage of business sensitive information such as intellectual property.
The input of confidential or sensitive information into an AI Tool could result in the disclosure of such information to third parties, and, similarly, input of personal identifiable information can lead to breaches of privacy laws. Therefore, in order to mitigate these risks we developed an AI Tools policy in 2024. The purpose of this policy is to establish guidelines for the appropriate and ethical use of AI within TKH, including the use of Generative AI and Algorithmic AI tools, to ensure that AI technology is used to enhance productivity, efficiency, and decision-making while complying with applicable law and respecting
| Policy name | Key contents |
|---|---|
| AI Tools policy | • Provides guidelines for the appropriate and ethical use of AI within TKH, including the use of Generative AI and Algorithmic AI tools. |
| • Applicable for all employees and contractors. | |
| • Managing director of the operating company is responsible for implementation. | |
| • Based on the EU AI Act 2024/1689 and the TKH IT security policy. | |
| • Published on our intranet, and distributed to all managing directors of our operating companies, and their management teams. |
when using AI Tools. A (suspected) violation can be reported through the internal reporting procedure. Implementation at operating companies will also be monitored by internal audit. Violations of the policy may result in disciplinary action for employees or, in case of an (independent) contractor, to termination of the contract.
explicitly banned or listed as high-risk are largely left unregulated.
The EU AI Act entered into force on August 1, 2024. The law will become applicable in number of milestone dates, starting in February 2025 (Prohibited Systems) and finalizing in August 2026. TKH started the process of implementation by establishing an AI Ethics committee in the second half of 2024. The committee includes persons with legal, AI and compliance knowledge and is responsible for developing policies and supervising the risk assessments performed by the operating companies.
A self-assessment procedure has been developed, through which each AI system needs to be assessed by, amongst other things, classifying the AI system, the scope and the general purpose. This procedure will be further implemented in 2025. Since we have not yet classified our AI systems, no target has been defined yet. Our ambition is to have no AI system classified as unacceptable and to have a complete algorithms register in 2025. The classification of AI systems contributes to the insight in compliance with the AI Act, and can also be compared with other companies using AI systems.
We defined the following actions for 2025:
Actions related to AI are revisited every year and integrated in the activities at operating company level having AI tools or developing AI systems. Due to the nature of the actions, the resources needed for these actions are opex related and do not require any significant capex. The opex are also not significant, since these initiatives are an integral part of our day-to-day expenses and AI activities.
Substantially contribute to one or more of the following six environmental objectives, while not significantly harming any of the others. There are six environmental objectives under the EU Taxonomy:
The Delegated Acts adopted under the EU Taxonomy Regulation provide technical screening criteria that must also be met to conclude on taxonomy alignment, while also doing no significant harm to the remaining objectives and meeting minimum standards on human rights and labor standards. For an economic activity to be considered environmentally sustainable under the EU Taxonomy, it must be determined whether it is taxonomy eligible and whether it is taxonomy aligned, and the proportion in the total turnover, capex and opex.
Based on our assessment we concluded that only a very limited proportion of our turnover-generating activities should be included. The Taxonomy-eligible but not Taxonomy-aligned turnover was 0.3% in 2024 and related to 8.1 data processing, hosting, and related activities. Because we do not meet the requirements of the EU Directive on Data Centre Energy Efficiency the technical screening criteria are not met. As a result this activity is considered to be eligible but not aligned. The remaining turnover is non-eligible (99.7%). The turnover is calculated based on the “total turnover” according to the consolidated statement of profit and loss. The total value of TKH’s turnover amounts to €1,712.7 million.
We also assessed our capital expenditure. The reportable Taxonomy-eligible but not aligned capital expenditures in 2024 were 6.4% of the total capital expenditure in 2024 and related to:
| 6.5 Transport by motorbikes, passenger cars and light commercial vehicles | (1.2%) |
|---|---|
| 7.7 Acquisition and ownership of buildings | (4.4%) |
| 8.1 data processing, hosting, and related activities | (0.8%) |
Because we do not meet the requirements, the technical screening criteria are not met. As a result, this activity is considered to be eligible but not aligned. The remaining capex is non-eligible (93.6%). The capital expenditure was determined based on the 2024 additions to property, plant and equipment, intangible assets, and additions to right-of-use assets, excluding any re-assessments and excluding goodwill (refer to note 3 intangible assets and goodwill, note 4 property, plant and equipment, and note 5 right-of-use assets of the financial statements). The total value of TKH’s capex amounts to €167.7 million.
The Taxonomy-eligible but not aligned operational expenditures in 2024 were 8.4% and related to 7.7 Acquisition and ownership of buildings. Not eligible operational expenditures were 91.6%. Operating expenses per the EU Taxonomy definition covers direct non-capitalized costs that relate to research and development, building renovation measures, short-term leases, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plants, and equipment. This differs from the definition of operating expenses in our financial statements. We used the following general ledger accounts in the operational expenditures assessment: R&D expenses, building maintenance, repair/maintenance, short-term leases, low-value leases, cost of machinery, cost of warehousing and furniture, and cost of manufacturing and housing. These costs are included in the other operating expenses (refer to note 25 of the financial statements). The total value of TKH’s opex amounts to €50.3 million.
| Economic activities | Code | Absolute turnover | Proportion of turnover, 2024 | Climate change mitigation | Climate change adaption | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems |
|---|---|---|---|---|---|---|---|---|---|
| We have no economic activities related to nuclear energy and fossil gas. | We have no economic activities related to nuclear energy and fossil gas. | We have no economic activities related to nuclear energy and fossil gas. | We have no economic activities related to nuclear energy and fossil gas. | We have no economic activities related to nuclear energy and fossil gas. | We have no economic activities related to nuclear energy and fossil gas. | We have no economic activities related to nuclear energy and fossil gas. | We have no economic activities related to nuclear energy and fossil gas. | We have no economic activities related to nuclear energy and fossil gas. | We have no economic activities related to nuclear energy and fossil gas. |
| Category enabling activity | Category transitional activity | € million | % |
|---|---|---|---|
| Y;N;N/ELY;N;N/ELY;N;N/EL | Y;N;N/ELY;N;N/EL | Y;N;N/EL | Y/NY/NY/N |
| Y/NY/N | Y/NY/N | % | E |
| T | |||
| A. T | axonomy eligible activities | ||
| A.1 Environmentally sustainable activities (Taxonomy-aligned) | Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) | Of which enabling | Of which transitional |
| A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) | •Data processing, hosting and related activities | 8.1 | 5 |
| 0.3% N N/ELN/EL N/ELN/EL N/EL0.3% | Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) | 5 | |
| 0.3% | Turnover of Taxonomy-eligible activities (A.1 + A.2) | 5 | 0.3% |
| B. Taxonomy non-eligible activities | Turnover of Taxonomy non-eligible activities (B) | 1,708 | 99.7% |
| Total (A+B) | 1,713 | 100.0% | 100.0% |
| Substantial contribution criteria | Do no significant harm criteria | Economic activities | Code | Absolute capex | Proportion of capex, 2024 |
|---|---|---|---|---|---|
| Climate change | mitigation | Climate change | adaption | Water and marine | resources |
| Circular economy | Pollution | Biodiversity and | ecosystems | Minimum safeguards | Proportion of Taxonomy-aligned (A.1) or -eligible (A.2) capex, 2023 |
| Category enabling activity | Category transitional activity | € million | % | ||
| Y;N;N/ELY;N;N/ELY;N;N/EL | Y;N;N/ELY;N;N/EL | Y;N;N/EL | Y/NY/NY/N | ||
| Y/NY/N | Y/NY/N | % | E | ||
| T | |||||
| A. T | axonomy eligible activities | ||||
| A.1 Environmentally sustainable activities (Taxonomy-aligned) | Capex of environmentally sustainable activities (Taxonomy-aligned) (A.1) | Of which enabling | Of which transitional | ||
| A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) | •Transport by motorbikes, passenger cars and light commercial vehicles | 6.5 | 2 | ||
| 1.2%N N/EL N/ELN/ELN/EL N/EL0.0% | •Acquisition and ownership of buildings | 7.7 | |||
| 7 | 4.4%N N/ELN/EL N/ELN/EL N/EL0.0% | •Data processing, hosting and related activities | |||
| 8.1 | 1 | 0.8% N N/ELN/EL N/ELN/EL N/EL0.5% | Capex of Taxonomy-eligible but not environmentally sustainable activities |
| (not Taxonomy-aligned activities) | (A.2) | 10 | 6.4% | 0.5% |
|---|---|---|---|---|
| Capex of Taxonomy-eligible activities (A.1 + A.2) | 10 | 6.4% | 0.5% | |
| B. Taxonomy non-eligible activities | Capex of Taxonomy non-eligible activities (B) | 158 | 93.6% | 99.5% |
| Total (A+B) | 168 | 100.0% | 100.0% |
| 1. | The undertaking carries out, funds or has exposures to research, development, demonstration and deployment of innovative electricity generation facilities that produce energy from nuclear processes with minimal waste from the fuel cycle | YES/NO | NO |
|---|---|---|---|
| 2. | The undertaking carries out, funds or has exposures to construction and safe operation of new nuclear installations to produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production, as well as their safety upgrades, using best available technologies. | YES/NO | NO |
| 3. | The undertaking carries out, funds or has exposures to safe operation of existing nuclear installations that produce electricity or process heat, including for the purposes of district heating or industrial processes such as hydrogen production from nuclear energy, as well as their safety upgrades. | YES/NO | NO |
4.
The undertaking carries out, funds or has exposures to construction or operation of electricity generation facilities that produce electricity using fossil gaseous fuels.
YES/NO
NO
NO
NO
| Substantial contribution criteria | Do no significant harm criteria | Economic activities | Code | Absolute opex | Proportion of opex, 2024 | Climate change mitigation | Climate change adaption | Water and marine resources | Circular economy | Pollution | Biodiversity and ecosystems | Minimum safeguards | Proportion of Taxonomy-aligned (A.1) or -eligible (A.2) opex, 2023 | Category enabling activity | Category transitional activity |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| A.1 Environmentally sustainable activities (Taxonomy-aligned) | Opex of environmentally sustainable activities (Taxonomy-aligned) (A.1) | Of which enabling | Of which transitional | A.2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) | • Acquisition and ownership of buildings | 7.7 | 4 | 8.4% | N | N/EL | N/EL | N/EL | N/EL | 0.0% | |
| • Data processing, hosting and related activities | 8.1 | 0 | 0.0% | N | N/EL | N/EL | N/EL | N/EL | 0.0% | ||||||
| Opex of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) | 0 | 0.0% | 0.0% | Opex of Taxonomy-eligible activities (A.1 + A.2) | 4 | 8.4% | 0.0% | ||||||||
| B. Taxonomy non-eligible activities | Opex of Taxonomy non-eligible activities (B) | 46 | 91.6% | 100.0% | Total (A+B) | 50 | 100.0% | 100.0% |
The table below outlines the datapoints derived from other EU legislation as listed in ESRS 2 Appendix B. It indicates where these datapoints can be found in our report and identifies which data points are assessed as not-material or not-relevant.
not-material: information not material to reporting
not-relevant: information not relevant to our own operations or value chain
| Disclosure Requirement and related datapoint | SFDR (1) reference | Pillar 3 (2) reference | Benchmark Regulation (3) reference | EU Climate Law (4) reference pages/reference |
|---|---|---|---|---|
| ESRS 2 GOV-1 | Board's gender diversity paragraph 21 (d) | Indicator number 13 of Table #1 of Annex 1 | Commission Delegated Regulation (EU) 2020/1816 (5) |
Percentage of board members who are independent paragraph 21 (e)
Delegated Regulation (EU) 2020/1816, Annex II
Statement on due diligence paragraph 30
Indicator number 10
Table #3 of Annex 1
Involvement in activities related to fossil fuel activities paragraph 40 (d) i
Indicators number 4
Table #1 of Annex 1
Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 (6)
Delegated Regulation (EU) 2020/1816, Annex II
Involvement in activities related to chemical production paragraph 40 (d) ii
Indicator number 9
Table #2 of Annex 1
Delegated Regulation (EU) 2020/1816, Annex II
Involvement in activities related to controversial weapons paragraph 40 (d) iii
Indicator number 14
Table #1 of Annex 1
Delegated Regulation (EU) 2020/1818 (7), Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II
Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv
Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II
Transition plan to reach climate neutrality by 2050 paragraph 14
Regulation (EU) 2021/1119, Article 2(1)
Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g)
Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453
Credit quality of exposures by sector, emissions and residual maturity
Delegated Regulation (EU) 2020/1818, Article 12.1 (d) to (g), and Article 12.2
GHG emission reduction targets paragraph 34
Indicator number 4
Table #2 of Annex 1
Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453
alignment metrics
| Disclosure Requirement and related datapoint | SFDR (1) reference | Pillar 3 (2) reference | Benchmark Regulation (3) reference | EU Climate Law (4) reference | pages/reference |
|---|---|---|---|---|---|
| ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) | paragraph 38 | Indicator number 5 | Table #1 and Indicator n. 5 Table #2 of Annex 1 | 110 | |
| ESRS E1-5 Energy consumption and mix | paragraph 37 | Indicator number 5 | Table #1 of Annex 1 | 110 | |
| ESRS E1-5 Energy intensity associated with activities in high climate impact sectors | paragraphs 40 to 43 | Indicator number 6 | Table #1 of Annex 1 | 110 |
paragraph 44
Indicators number 1 and 2
Table #1 of Annex 1
Article 449a; Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453
Template 1: Banking book – Climate change transition risk: Credit quality of exposures by sector, emissions and residual maturity
Delegated Regulation (EU) 2020/1818, Article 5(1), 6 and 8(1)
107
paragraphs 53 to 55
Indicators number 3
Table #1 of Annex 1
Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453
Template 3: Banking book – Climate change transition risk: alignment metrics
Delegated Regulation (EU) 2020/1818, Article 8(1)
107
paragraph 56
Regulation (EU) 2021/1119, Article 2(1)
not-relevant
paragraph 66
Delegated Regulation (EU) 2020/1818, Annex II Delegated Regulation (EU) 2020/1816, Annex II
not-relevant
paragraph 66 (a)
paragraph 66 (c).
Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453
paragraphs 46 and 47; Template 5: Banking book - Climate change physical risk: Exposures subject to physical risk.
not-relevant
paragraph 67 (c).
Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453
paragraph 34; Template 2: Banking book - Climate change transition risk: Loans collateralised by immovable property - Energy efficiency of the collateral
not-relevant
paragraph 69
Delegated Regulation (EU) 2020/1818, Annex II
| Disclosure Requirement and related datapoint | SFDR (1) reference | Pillar 3 (2) reference | Benchmark Regulation (3) reference | EU Climate Law (4) reference | pages/reference |
|---|---|---|---|---|---|
| ESRS E2-4 | Amount of each pollutant listed in Annex II of the E-PRTR Regulation (European Pollutant Release and Transfer Register) emitted to air, water and soil, paragraph 28 | Indicator number 8 | Table #1 of Annex 1 | Indicator number 2 | Table #2 of Annex 1 |
| Indicator number 1 | Table #2 of Annex 1 | Indicator number 3 | Table #2 of Annex 1 | 111-112 | 111-112 |
| ESRS E3-1 | Water and marine resources | Water and marine resources | Water and marine resources | Water and marine resources | Water and marine resources |
Table #2 of Annex 1
113-114
ESRS E3-1
Dedicated policy paragraph
13
Table 2 of Annex 1
113-114
ESRS E3-1
Sustainable oceans and seas paragraph
14
Table #2 of Annex 1
not-relevant
ESRS E3-4
Total water recycled and reused paragraph
28 (c)
Table #2 of Annex 1
114
ESRS E3-4
Total water consumption in m3 per net revenue on own operations paragraph
29
Table #2 of Annex 1
114
ESRS 2- IRO 1 - E4
paragraph 16 (a) i
Indicator number 7
Table #2 of Annex 1
not-relevant
ESRS 2- IRO 1 - E4
paragraph 16 (b)
Table #2 of Annex 1
not-relevant
ESRS E4-2
paragraph 24 (c)
Table #2 of Annex 1
not-relevant
ESRS E4-2
Policies to address deforestation paragraph
24 (d)
Table #2 of Annex 1
117
ESRS E5-5
Non-recycled waste paragraph
37 (d)
Table #1 of Annex 1
117
ESRS E5-5
Hazardous waste and radioactive waste paragraph
39
Table #3 of Annex I
not-relevant
ESRS 2- SBM3 - S1
Risk of incidents of forced labour paragraph
14 (f)
Table #3 of Annex I
not-relevant
ESRS 2- SBM3 - S1
Risk of incidents of child labour paragraph
14 (g)
| Disclosure Requirement and related datapoint | SFDR (1) reference | Pillar 3 (2) reference | Benchmark Regulation (3) reference | EU Climate Law (4) reference | pages/reference |
|---|---|---|---|---|---|
| ESRS S1-1 Human rights policy commitments paragraph 20 | Indicator number 9 | Table #3 and Indicator number 11 Table #1 of Annex I | 123-126 | ||
| ESRS S1-1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 21 | Delegated Regulation (EU) 2020/1816, Annex II | 123-126 | |||
| ESRS S1-1 processes and measures for preventing trafficking in human beings paragraph 22 |
123-126
ESRS S1-1 workplace accident prevention policy or management system paragraph 23
129
SRS S1-3 grievance/complaints handling mechanisms paragraph 32 (c)
124-125
ESRS S1-14 Number of fatalities and number and rate of work-related accidents paragraph 88 (b) and (c)
Delegated Regulation (EU) 2020/1816, Annex II
130
ESRS S1-14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e)
phased-in
ESRS S1-16 Unadjusted gender pay gap paragraph 97 (a)
Delegated Regulation (EU) 2020/1816, Annex II
not-material
ESRS S1-16 Excessive CEO pay ratio paragraph 97 (b)
not-material
ESRS S1-17 Incidents of discrimination paragraph 103 (a)
not-material
ESRS S1-17 Non-respect of UNGPs on Business and Human Rights and OECD paragraph 104 (a)
Delegated Regulation (EU) 2020/1816, Annex II
Delegated Regulation (EU) 2020/1818 Art 12 (1)
not-material
ESRS 2- SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b)
131-134
ESRS S2-1 Human rights policy commitments paragraph 17
131-133
ESRS S2-1 Policies related to value chain workers paragraph 18
131-133
ESRS S2-1 Non-respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19
Delegated Regulation (EU) 2020/1816, Annex II
Delegated Regulation (EU) 2020/1818, Art 12 (1)
| Disclosure Requirement and related datapoint | SFDR (1) reference | Pillar 3 (2) reference | Benchmark Regulation (3) reference | EU Climate Law (4) reference | pages/reference |
|---|---|---|---|---|---|
| ESRS S2-1 | Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 19 | Delegated Regulation (EU) 2020/1816, Annex II | 131-134 | ||
| ESRS S2-4 | Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36 | Indicator number 14 | Table #3 of Annex 1 | 131-134 | |
| ESRS S3-1 | Human rights policy commitments paragraph 16 | Indicator number 9 |
not-material
ESRS S3-1
non-respect of UNGPs on Business and Human Rights, ILO principles or and OECD guidelines paragraph 17
Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1)
not-material
ESRS S3-4
Human rights issues and incidents paragraph 36
not-material
ESRS S4-1 Policies related to consumers and end-users paragraph 16
135-136
ESRS S4-1 Non-respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17
Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1)
135-136
Human rights issues and incidents paragraph 35
137
United Nations Convention against Corruption paragraph 10 (b)
139-142
Protection of whistle-blowers paragraph 10 (d)
142
Fines for violation of anti-corruption and anti-bribery laws paragraph 24 (a)
Delegated Regulation (EU) 2020/1816, Annex II)
144
Standards of anti-corruption and anti-bribery paragraph 24 (b)
143-144
amending the implementing technical standards laid down in Implementing Regulation (EU) 2021/637 as regards the disclosure of environmental, social and governance risks (OJ L 324,19.12.2022, p.1.).
supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks (OJ L 406, 3.12.2020, p. 17).
In 2024, VMI introduced Foreign Object Detection on the VMI MAXX tire building machines, the first Artificial Intelligence application within the MAXX machine. This in-line, high speed detection system utilizes a PIXXEL camera to detect foreign objects on tread material. As foreign objects might lead to scrap and ultimately potential failure of tires, they need to be detected before building a tire, to prevent negative impact for both tire manufacturers as well as end customers.
A superfast AI algorithm analyzes images in real-time which ensures extremely high levels of accuracy, resulting in optimized levels of productivity, whilst minimizing the usage of energy and raw materials. Ultimately, this new feature will contribute to lower scrap rates and increased safety of tires.
VMI’s Foreign Object Detection is a seamless collaboration between different TKH entities, including TKH Artificial Intelligence, TKH Technology and TKH Vision’s Solution Center.
158
159
160
161
162
163
| Notes | 2024 | 2023 |
|---|---|---|
| Total turnover | 1,712,735 | 1,847,532 |
| Raw materials, consumables, trade products and subcontracted work | 824,229 | 928,220 |
| Personnel expenses | 477,618 | 478,467 |
| Other operating expenses | 158,965 | 156,968 |
| Depreciation and result on divestment of property, plant and equipment | 52,003 | 48,828 |
| Amortization | 60,808 | 56,860 |
| Impairments | 8,504 | 3,720 |
| Total operating expenses | 1,582,127 | 1,673,063 |
|---|---|---|
| Operating result | 130,608 | 174,469 |
| Financial income | 30 | 30 |
| 1,351 | 1,316 | |
| Financial expenses | 30 | 30 |
| -30,669 | -23,440 | |
| Exchange differences | 30 | 30 |
| -2,962 | -750 | |
| Share in result of associates | 6 | 6 |
| 249 | -3,309 | |
| Result on sale of associates and subsidiaries | 34 | 34 |
| 24,221 | 54,802 | |
| Fair value changes of financial liability for earn-out and put options of shareholders of non-controlling interests | 14 | 14 |
| 733 | -146 | |
| Result before tax | 123,531 | 202,942 |
| Tax on result | 31 | 31 |
| 24,000 | 37,180 | |
| Net result | 99,531 | 165,762 |
| Attributable to: | ||
| Shareholders of the company | 99,561 | 165,704 |
| Non-controlling interests | -30 | 58 |
| 99,531 | 165,762 | |
| Earnings per share attributable to shareholders | 32 | 32 |
| Ordinary earnings per share (in €) | 2.50 | 4.07 |
| Diluted earnings per share (in €) | 2.50 | 4.07 |
| Ordinary earnings per share before amortization (in €) | 1 | 1 |
| 2.83 | 4.38 | |
| Ordinary earnings per share before amortization and one-off income and expenses (in €) | 1 | 1 |
| 2.48 | 3.21 |
| Notes | 2024 | 2023 |
|---|---|---|
| Net result | 99,531 | 165,762 |
| Items that may be reclassified subsequently to profit or loss (net of tax) | ||
| Currency translation differences | 12,587 | -6,350 |
| Currency translation differences in associates | 19 | -532 |
| Effective part of changes in fair value of cash flow hedges (after tax) | -1,391 | 3,718 |
| 11,215 | -3,164 | |
| Items that will not be reclassified subsequently to profit or loss (net of tax) | ||
| Actuarial gains/(losses) | 16 | -234 |
| 151 | -234 | |
| 151 | ||
| Other comprehensive income (net of tax) | 10,981 | -3,013 |
| Comprehensive income for the period (net of tax) | 110,512 | 162,749 |
| Shareholders of the company | 110,552 | 162,769 |
|---|---|---|
| Non-controlling interests | -40 | -20 |
| Total comprehensive income for the period (net of tax) | 110,512 | 162,749 |
| in thousands of euros | Notes | 31-12-2024 | 31-12-2023 |
|---|---|---|---|
| Assets | |||
| Non-current assets | |||
| Intangible assets and goodwill | 3 | 611,082 | 565,696 |
| Property, plant and equipment | 4 | 486,166 | 436,019 |
| Right-of-use assets | 5 | 78,006 | 84,012 |
| Associates |
| Other receivables | 8 | 29,738 | 35,987 |
|---|---|---|---|
| Deferred tax assets | 15 | 16,949 | 15,824 |
| Total non-current assets | 1,222,783 | 1,138,290 |
| Inventories | 7 | 398,563 | 403,259 | |
|---|---|---|---|---|
| Trade and other receivables | 8 | 250,044 | 243,622 | |
| Contract assets | 9 | 165,861 | 217,123 | |
| Contract costs | 9 | 10,325 | 8,014 | |
| Current income tax | 12,939 | 2,603 | ||
| Cash and cash equivalents | 1 | 10 | 125,629 | 93,697 |
| Total current assets | 963,361 | 968,318 |
| 34 | 27,197 | 21,171 | |
|---|---|---|---|
| Total assets | 2,213,341 | 2,127,779 |
| Shareholders' equity | 11 | 882,979 | 835,565 |
|---|---|---|---|
| Non-controlling interests | 12 | 108 | 148 |
| Total group equity | 883,087 | 835,713 |
| Interest-bearing loans and borrowings | 17 | 620,085 | 572,368 |
|---|---|---|---|
| Deferred tax liabilities | 15 | 58,985 | 57,722 |
| Retirement benefit obligation | 16 | 3,070 | 3,679 |
| Other non-current financial liabilities | 14 | 3,825 | 1,033 |
| Provisions | 13 | 13,093 | 12,740 |
| Total non-current liabilities | 699,058 | 647,542 |
| Interest-bearing loans and borrowings | 1 | 18 | 90,270 | 75,864 |
|---|---|---|---|---|
| Trade payables and other payables | 19 | 327,684 | 357,245 | |
| Contract liabilities | 9 | 176,645 | 176,130 | |
| Current income tax liabilities | 5,815 | 11,290 | ||
| Other financial liabilities | 14 | 1,939 | 1,639 | |
| Provisions | 13 | 19,824 | 19,209 | |
| Total current liabilities | 622,177 | 641,377 |
| 34 | 9,019 | 3,147 | |
|---|---|---|---|
| Total equity and liabilities | 2,213,341 | 2,127,779 |
| in thousands of euros | Share capital | Share premium | Legal reserve | Translation reserve | Cash flow hedge reserve | Retained earnings | Unappropriated profit | Total shareholders' equity | Non-controlling interests | Total group |
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 1 January 2023 | 10,554 | 85,021 | 102,115 | 16,772 | -4,243 | 439,471 | 137,083 | 786,773 | 168 | 786,941 |
|---|---|---|---|---|---|---|---|---|---|---|
| Net result | 165,704 | 165,704 | 58 | 165,762 | ||||||
| Other comprehensive income | -6,804 | 3,718 | 151 | -2,935 | -78 | -3,013 | ||||
| Total comprehensive income | 0 | 0 | 0 | -6,804 | 3,718 | 151 | 165,704 | 162,769 | -201 | 62,749 |
| Appropriation profit last year | 137,083 | -137,083 | 0 | 0 | ||||||
| Dividends | -67,696 | -67,696 | -67,696 | |||||||
| Share and option schemes | 4,997 | 4,997 | 4,997 | |||||||
| Purchased shares for share buy-back program | -50,004 | -50,004 | -50,004 | |||||||
| Purchased shares for share and option schemes | -8,545 | -8,545 | -8,545 | |||||||
| Sold shares for share and option schemes | 7,271 | 7,271 | 7,271 | |||||||
| Change in legal reserve for participations | 7,329 | -7,329 | 0 | 0 | ||||||
| Capitalized development costs | 5,717 | -5,717 | 0 | 0 | ||||||
| Balance at 31 December 2023 | 10,554 | 85,021 | 115,161 | 9,968 | -525 | 449,682 | 165,704 | 835,565 | 148 | 835,713 |
| Net result | 99,561 | 99,561 | -30 | 99,531 | ||||||
| Other comprehensive income | 12,616 | -1,391 | -234 | 10,991 | -10 | 10,981 | ||||
| Total comprehensive income | 0 | 0 | 0 | 12,616 | -1,391 | -234 | 99,561 | 110,552 | -40 | 110,512 |
| Appropriation profit last year | 165,704 | -165,704 | 0 | 0 | ||||||
| Dividends | -67,884 | -67,884 | -67,884 | |||||||
| Share and option schemes | 3,827 | 3,827 | 3,827 | |||||||
| Purchased shares for share and option schemes | -2,108 | -2,108 | -2,108 | |||||||
| Sold shares for share and option schemes | 3,027 | 3,027 | 3,027 | |||||||
| Change in legal reserve for participations | -2,046 | 2,046 | 0 | 0 | ||||||
| Capitalized development costs | 7,283 | -7,283 | 0 | 0 | ||||||
| Balance at 31 December 2024 | 10,554 | 85,021 | 120,398 | 22,584 | -1,916 | 546,777 | 99,561 | 882,979 | 108 | 883,087 |
| Notes | 2024 | 2023 |
|---|---|---|
| Cash flow from operating activities | ||
| Operating result | 130,608 | 174,469 |
| Depreciation, amortization and impairment | 121,652 | 109,494 |
| Share and option schemes not resulting in a cash flow | 3,827 | 4,997 |
| Result on disposals | -337 | -85 |
| Changes in provisions | -14 | -124 |
| Changes in working capital | 13,910 | -71,338 |
| Cash flow from operations | 269,646 | 217,413 |
| Interest received | 1,351 | 1,317 |
| Interest paid | -29,490 | -21,792 |
| Income taxes paid | -45,296 | -44,063 |
| Net cash flow from operating activities (A) | 196,211 | 152,875 |
| Cash flow from investing activities | ||
| Investments in intangible assets | -61,696 | -53,128 |
| Purchases of property, plant and equipment | -100,714 | -177,761 |
| 2024 | 2023 |
|---|---|
| 1,992 | 705 |
60
-90
-139
6
-27,624
34
-38,640
-42,913
34
60,259
130,460
-138,829
-170,400
| Dividends paid | -67,884 | -67,696 | |
|---|---|---|---|
| Settlement of financial liabilities regarding put options of non-controlling interests and earn-out | 14 | -447 | -1,379 |
| Purchased shares for share buy-back program | -50,004 | ||
| Purchased shares for share and option schemes | -2,108 | -8,545 | |
| Sold shares for share and option schemes | 3,027 | 7,271 | |
| Payment of lease liabilities | -16,005 | -16,537 | |
| Proceeds from long term debts | 44,086 | 397,050 | |
| Repayments on long-term debts | -335,000 | ||
| (Repayments)/proceeds from other long-term debts | -631 | -1,005 | |
| Change in short-term borrowings | 18 | -22,992 | 86,628 |
-62,954
10,783
-5,572
-6,742
256
-2,351
-5,316
-9,093
69,294
78,387
10
63,978
69,294
General
Technology firm TKH Group N.V. has been incorporated and domiciled in Haaksbergen, the Netherlands. TKH Group N.V. has its registered office and factual seat at Spinnerstraat 15, 7481 KJ in Haaksbergen in the Netherlands and is registered in the trade register under number 06045666.
The consolidated financial statements of TKH Group N.V. (hereafter ’TKH’) have been drawn up in accordance with the International Financial Reporting Standards (‘IFRS’) adopted by the European Commission and applicable on the accounting period that begun on 1 January 2024. The company financial statements are part of the financial statements of TKH. The financial statements have been prepared based on the historical cost basis, except for the valuation at fair value of derivatives and share-based payments. All transactions in financial instruments are recognized at transaction date. To the extent that alternative performance measures are used these are explained in the glossary, which is included in the ‘Other information’.
Going concern
Comparative figures may have been reclassified for comparability purposes. If considered to be material, the relevant disclosure has been added to the applicable note.
As from 1 January 2024 the following amendments of standards and new interpretations are effective:
The adoption of the amendments and improvements did not have material impact on the financial statements. Regarding additional disclosures regarding Supplier Finance Arrangements reference is made to note 19.
TKH has not opted for an early adoption of the following new standards, amendments to standards and new IFRIC interpretations, which are mandatory for accounting periods that begin on or after 1 January 2025:
TKH expects that the adoption of the other new standards and amendments in future periods will not have a material impact on its financial statements. IFRS 18 might have implications regarding the presentation, classification and disclosures relating to the statement of profit and loss. This will be further assessed in the upcoming period.
The consolidated financial statements include the annual accounts of all subsidiaries over which TKH has or can exercise control. Control is achieved when TKH is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the subsidiary. An overview of consolidated entities is included in the 'Other information'. If facts and circumstances indicate that there are changes to one or more of the three elements of control, TKH re-assesses whether or not it controls a subsidiary. Consolidation of a subsidiary begins when TKH obtains control over the subsidiary and ceases when TKH loses control of the subsidiary.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If TKH loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resulting gain or loss is recognized in the statement profit and loss.
TKH is organized along the lines of our three technologies: Smart Vision systems, Smart Manufacturing systems and Smart Connectivity systems. The internal and external segment reporting as follows this structure. For these segments, discrete financial information is available that the Executive Board, the highest operational decision-makers, evaluates regularly. The Executive Board decides on the allocation of resources and reviews the performance of the three segments. These performances are reviewed and reported to the level of operating result. The accounting principles that are applied to these consolidated financial statements also apply to the business segments. The transaction prices for deliveries between segments are determined on an arm’s length basis. The results, assets and liabilities of a segment include both items directly linked to that segment as items that can reasonably and consistently be allocated to that segment. Besides the information about the operating segments, selective information by geographic region is disclosed. In the overview of ‘Consolidated entities’, as part of the ‘Other information’, is shown in which of the segments the different subsidiaries operate.
The consolidated financial statements are presented in euros, which is also the functional currency of the holding. Transactions in foreign currencies are translated into the respective functional currencies of the entities of the group, at the prevailing exchange rate at transaction date. In foreign currency denominated monetary assets and liabilities at the balance sheet date are translated at the exchange rate prevailing at that date. The result of the conversion occurring exchange differences on monetary items, are recorded in the statement of profit and loss. Assets and liabilities of foreign subsidiaries with a functional currency other than the euro are translated at the exchange rates prevailing at the balance sheet date. The profit and loss accounts of foreign subsidiaries are translated using the weighted average monthly exchange rates over the year under review. Goodwill and fair value adjustments related to the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rates at the balance sheet date. The exchange differences arising from the translation are recognized through OCI as a separate item in equity. Exchange differences recorded through OCI are reclassified to the statement of profit and loss as part of the result on disposal in the period in which the related entities are disposed of.
Acquisitions of subsidiaries are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date at fair value and the amount of any non-controlling interests in the acquiree, in exchange for control of the acquiree. Acquisition related costs are recognized in the statement of profit and loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognized at their fair value, except that:
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the net amounts of the identifiable assets acquired and the liabilities assumed at acquisition date. If the amount is negative, a badwill (bargain purchase gain) is recognized immediately as benefit in the statement of profit and loss.
Goodwill is capitalized and allocated to cash-generating units. Goodwill is not amortized. Instead, it is tested at least annually for impairment. Any impairment loss is recognized in the statement of profit and loss as soon as it occurs and is not reversed in subsequent periods. On sale of a subsidiary, the goodwill is included in the determination of the profit or loss on a disposal.
Expenditure for research is charged to the profit and loss when incurred. Expenditure for development is capitalized if the following conditions are met:
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. Property, plant and equipment are depreciated from the date they are ready for their intended use. Depending on the type of asset, a residual value of 0 to 10% is taken into account. The expected useful life is as follows:
Land is not depreciated. Other equipment includes furniture, IT-hardware and transport equipment.
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
For new agreements, TKH considers whether the contract is or contains a lease. A lease is defined as a contract or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration. To apply this definition, TKH assesses whether the contract meets three important criteria, namely:
At commencement date of the lease, TKH recognizes an asset and a lease liability in the balance sheet. The right of use is valued at cost, which consists of the initial valuation of the lease obligation, any initial direct costs incurred by TKH, an estimate of any costs for dismantling and removing the asset at the end of the lease, and all lease payments made before the commencement date of the lease (after deduction of received incentives).
The Right-of-use assets are amortized on a straight-line basis from the commencement date of the lease to the first of the end of the useful life of the right of use or the end of the lease period or over the useful life if the underlying asset is (expected) to be acquired. TKH assesses the asset for impairment when such indicators exist.
On the commencement date, TKH values the lease obligation at the present value of the lease payments unpaid on that date, discounted using the interest rate implicit in the lease if it is readily available or the incremental borrowing rate. Lease payments that are included in the measurement of the lease obligation consist of fixed payments, variable payments based on changes in an index or price, amounts that are expected to be paid under a residual value guarantee and payments that arise from extension options that are reasonably certain to be exercised. After the initial valuation, the obligation is lowered for payments and increased for interest. The obligation is determined again in the event of changes in underlying provisions.
When the lease obligation is remeasured, the corresponding adjustment is reflected in the asset or in the result if the asset has already been reduced to zero.
At least annually, the company reviews its tangible and intangible non-current assets to determine whether there are indications that those assets have suffered an impairment loss. If there is any such indication the recoverable value of the asset is estimated to determine the extent of the impairment loss. If the asset does not generate cash itself, the company determines the recoverable value of the smallest cash-generating unit to which the asset belongs. The recoverable amount is the fair value less cost of disposal or the value in use, whichever is higher. The value in use is based on the estimated future cash flows that 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 asset. If the recoverable amount of an asset is less than its carrying amount, the asset is written down to its recoverable amount. An impairment loss is recognized immediately in the statement of profit and loss. When an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, with the exception of goodwill, but never higher than the carrying amount that would have been determined when no impairment loss has been recognized. The increase is recognized immediately in the statement of profit and loss.
The share in the profit or loss of the associate is recognized in the statement of profit and loss, provided that it would not result in negative carrying value of the associate, unless TKH is obliged to partially or completely compensate losses. The share in the associate is determined based on TKH’s share in the net assets of the associate, including the paid goodwill at acquisition and less any impairment loss. Dividend from associates is recognized when the shareholders’ right to receive payments has been established. Receipt of dividends reduces investments in associates.
Inventories are stated at the lower of cost and net recoverable amount. The net recoverable amount is the estimated sales price in normal course of business less estimated cost of completion and selling expenses. The cost of raw materials and consumables is based on the average purchase price and cost incurred in bringing the inventories to their present location and condition. The cost of semi-manufactured and finished products comprise the direct materials and direct labor costs as well as a surcharge for the attributable production costs.
A contract asset is the right to consideration in exchange for products or services transferred to the customer. If TKH performs by transferring products or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration. Upon completion of the performance obligation and acceptance by the customer, the amount recognized as contract assets is reclassified to trade receivables.
Capitalized contract costs are systematically amortized over the transfer period of the related products or services to the customer.
A contract liability is the obligation to deliver products or services to a customer for which TKH has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before products or services are delivered to the customer, a contract liability is recognized. Contract liabilities are recognized as revenue when TKH performs under the contract.
A financial instrument is any contract that gives rise to a financial asset for an entity and a financial liability or equity instrument for another entity. Financial assets and financial liabilities are recognized in the balance sheet when TKH becomes a party in a contract. Financial assets and financial liabilities are initially recognized at fair value. Transaction costs that are directly attributable to the acquisition or issuance of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value with recognition of changes in value in the profit and loss) are added to or deducted from the fair value of the financial assets or financial liabilities upon initial recognition. Transaction costs that are directly attributable to the acquisition of financial assets or financial liabilities at fair value with recognition of value changes in the profit and loss are recognized immediately in the profit and loss. An exception to this relates to trade receivables, which are valued at the transaction price determined under IFRS 15.
Financial assets are at initial recognition classified in one of three groups for the subsequent measurement:
The classification of a financial asset on initial recognition depends on the contractual cash flow characteristics and the business model of TKH to manage it. A financial asset can only be classified and valued at amortized cost or fair value through OCI if it generates cash flows that consist solely of repayment of principal and interest ('SPPI') on the outstanding principal. This assessment is called the SPPI test and is performed at instrument level. The business model refers to the way in which TKH manages its financial assets to generate cash flows. The business model determines whether cash flows arise from the collection of contractual cash flows, the sale of financial assets or both. Purchases or sales of financial assets that require delivery of assets established by regulation or convention in the market place (regular way trades) are recognized on the trade date, the date that TKH commits to purchase or sell the asset. Financial assets at amortized cost are then measured using the effective interest method ("EIR") and tested for impairment. Gains and losses are recognized in the income statement when the asset is no longer recognized, adjusted or written off. The financial assets at amortized cost mainly comprise trade receivables.
A financial asset is derecognized when:
obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) TKH has transferred substantially all the risks and rewards of the asset, or (b) TKH has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
When TKH has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, TKH continues to recognize the transferred asset to the extent of its continuing involvement. In that case, TKH also recognizes an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that TKH has retained. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that TKH could be required to repay.
TKH recognizes an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that TKH expects to receive, discounted at an approximation of the original effective interest rate. ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default. A financial asset is written off when there is no reasonable expectation to recover the contractual cash flows.
For trade receivables and contract assets, TKH applies a simplified approach in calculating ECLs. Therefore, TKH does not track changes in credit risk, but instead recognizes a loss allowance based on lifetime ECLs at each reporting date. TKH has established a provision matrix that is based on its historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. A further explanation is included in note 20.
Financial liabilities are classified, at initial recognition, as
All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. TKH’s financial liabilities include trade and other payables, loans and borrowings including bank overdrafts and derivative financial instruments. The measurement of financial liabilities depends on their classification.
This is the category most relevant to TKH. After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortized cost using the EIR method. The EIR method is a method for calculating the amortized cost of a financial liability and for allocating interest expenses over the relevant period. The effective interest rate is the rate that discounts the estimated future cash payments (including any fees paid or received that are an integral part of the effective interest rate and transaction costs) over the expected life of the financial liability to the amortized cost of a financial liability. Gains and losses are recognized in the statement of profit and loss when the liabilities are no longer recognized. In addition, the EIR amortization is included in the statement of profit and loss as financing costs.
The other current liabilities are initially recognized at fair value and subsequently at amortized cost, which is generally equal to the nominal value.
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if there is a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize the assets and settle the liabilities simultaneously.
Derivative financial assets and financial liabilities (‘derivatives’) are recognized in the balance sheet when TKH concludes a contract for such an instrument. Derivatives are stated at fair value on the contract date and are then measured at the prevailing fair value at subsequent reporting dates. Changes in the fair value of derivatives that are designated and effective as hedges of future cash flows are recognized directly in the OCI and accounted for as a separate item in equity. The ineffective portion is recognized immediately in the statement of profit and loss. If the cash flow from an existing commitment or an expected future transaction results in the recognition of an asset or liability, at the time the asset or liability is recognized the associated gains or losses on the hedging instrument that had previously been recognized in the OCI are included in the valuation of the asset or the liability. For hedges that do not result in the recognition of an asset or a liability, the gains or losses recognized in the OCI are recognized in the statement of profit and loss in the same period as the underlying hedged transaction is recognized in the statement of profit and loss. Changes in the fair value of derivatives that do not qualify for hedge accounting are recognized immediately in the statement of profit and loss. Hedge accounting is discontinued when the hedge instrument expires, is sold, exercised or no longer qualifies for hedging. The cumulative gains or losses on that hedging instrument recognized up to that time in equity are recognized in the statement of profit and loss when the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the cumulative gains or losses recognized in the OCI are transferred to the statement of profit and loss.
Assets and liabilities are classified as held for sale if their carrying amount will be realized primarily through a sales transaction rather than through continued use. The reclassification takes place when the assets and liabilities are available for immediate sale and the sale is within one year. Assets and liabilities held for sale are stated at book value or lower fair value less costs to sell. Non-current assets held for sale are not depreciated. Selling costs are the incremental costs that can be directly attributed to the sale of an asset, excluding any financing costs and income tax. Said classification only takes place if the sale is very likely, in its current condition the assets are immediately available for sale and the sale is expected to be completed within one year. When these criteria are no longer met, TKH ceases to classify the assets and liabilities as held for sale. These assets and liabilities will then be measured at the lower of (a) Its carrying amount before the asset was classified as held for sale or for distribution, adjusted for any depreciation, amortisation or revaluations that would have been recognised had the asset (or disposal group) not been so classified and (b) Its recoverable amount at the date of the subsequent decision not to sell or distribute.
A group of assets being disposed of qualifies as a ‘discontinued operation’ if it is (part of) an entity that is either disposed of or classified as held for sale, and:
presented as a single amount in the line 'Result after tax from discontinued operations' in the profit and loss account. All other notes to the financial statements include amounts for continuing operations, unless otherwise indicated.
Provisions are recognized when (a) TKH has a present obligation (legal or constructive) as a result of a past event, (b) it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and (c) a reliable estimate can be made of the amount of the obligation. Provisions are recognized based on the expected expenditure required to settle the obligation. Long-term provisions, with the exception of the provision for deferred tax, are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, an increase in the provision as a finance cost is recognized due to the passage of time.
Premiums for defined contribution plans are recognized as expense in the period to which they relate.
The defined benefit plans are calculated according to the ‘Projected Unit Credit Method’, with actuarial calculations being made at balance sheet date. This method takes into account future salary increases as a result of the career opportunities of employees and general wage developments including inflation adjustment. The discount rate is the yield rate at the balance sheet date on high quality corporate bonds with a term that approaches the term of the obligations of TKH. Actuarial gains and losses are directly accounted for in the OCI, which will not be reclassified subsequently to the statement of profit and loss. If the calculation results in a potential asset, the recognition of the asset is limited to the present value of any economic benefits available in the form of future refunds from the plans or reduced future pension contributions (‘asset ceiling’). This is evaluated per pension scheme. In the calculation of the present value of economic benefits any minimum funding obligations that apply are taken into account. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset. Net interest on defined benefit obligations are accounted for as interest expense as part of the financial expenses. When pension entitlements are changed under a pension plan, the change in pension entitlements related to past service or the gain or loss on that change is recognized directly in the statement of profit and loss. Pension costs, including pension costs on past service and the impact of settlements and curtailments are recognized as personnel costs.
The net liability for jubilee bonuses is the amount of future benefits that relate to services from employees during the financial year or previous periods. The liabilities are discounted to its present value taking into account estimated dismissal chances and salary increases.
The provision warranty obligations is recognized for the estimated costs that are expected to arise from active warranty obligations in respect of goods and services at balance sheet date. The costs arising from warranty claims are charged against the provision.
A loss-making contract is a contract in which the unavoidable costs (i.e., the costs that TKH can not avoid because it has the contract) to meet the obligations under the contract exceed the economic benefits that are expected to be received. The unavoidable costs under a contract reflect the lowest net costs of terminating the contract, the performance of the contract and any compensation or penalties arising from non-compliance. For a loss-making contract with customers, a provision is recognized and valued insofar as the unavoidable costs for completing the contracts are higher than the contract price.
This provision relates to costs in connection with the restructuring of operations and is formed if effectively or legally a commitment for TKH has arisen. A provision is formed if a plan has been formalized as at balance sheet date and either the legitimate expectation has arisen with the people involved that the restructuring will be implemented, or that a start has been made with implementing the restructuring plan.
Unless stated otherwise, the other provisions are valued at the nominal value of the expenditure that are estimated to be necessary to settle the respective obligations.
of deferred tax assets is reviewed at each reporting 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 tax asset to be utilized. Unrecognized deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered. In assessing the recoverability of deferred tax assets, TKH relies on the same forecast assumptions used elsewhere in the financial statements and in other management reports.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in 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 reporting date. Changes in deferred tax are recognized immediately in the statement of profit and loss, with the exception of deferred tax that relates to items that are recognized in the OCI or directly in equity.
TKH offsets deferred tax assets and deferred tax liabilities if and only if it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
The turnover includes the net turnover, as well as other revenues. Net turnover is the revenue from products and services delivered to third parties during the year under the deduction of discounts, bonuses and stock returns. Revenue is measured on the basis of the consideration set out in a contract with a customer. Products are regularly sold with volume discounts based on total sales over a period of one year. Revenues from these sales are recognized on the basis of the price specified in the contract, after deduction of the estimated volume discounts. Revenue is only recognized to the extent that it is highly probable that a reversal will not take place. A refund liability, included in the other current liabilities, is recognized for expected volume discounts payable to customers in connection with sales made until the end of the reporting period. There is no financing element applicable because the sales take place with a relatively short credit term, which is consistent with market practice.
The obligation to repair or replace defective products under the standard warranty conditions is recognized as a warranty provision. In addition, TKH offers to a limited extent an extended warranty that is sold together with products and systems. Two performance obligations can be distinguished in such contracts, namely the delivery of products and services and the service-type warranty. Using the relative stand-alone sales price method, a portion of the transaction price is allocated to the service-type warranty and recognized as a contract liability. Revenue is recognized on a straight-line basis over the period in which the service-type warranty is granted based on the time elapsed.
Vision technology represents about 85% of the turnover of the Smart Vision systems segment and consists of 2D & 3D machine Vision and Security Vision technology. The technologies are combined with software to create smart technologies and one-stop-shop solutions with plug-and-play integrated systems.
Our Machine Vision technology systems improve quality inspection, operation, and object monitoring within various industries such as consumer electronics, factory automation, ITS, medical and life sciences.
The customers to manage and control the urban environment efficiently. Simultaneously, the technologies improve sustainability factors, safety and security in various markets such as Infrastructure, Parking and Building security.
A large part of the revenue in Smart Vision systems is accounted for when the products are transferred to the customer in accordance with the delivery conditions of the sales contract and there is no unfulfilled obligation that could affect the customer's acceptance. A receivable is recognized at that moment because the consideration has become unconditional and only the passage of time is required before the payment is due. To a lesser degree also the following revenue streams exist:
Smart Manufacturing systems
for which recognition is already described at Smart Vision systems. Examples are tire building, medicine distribution and industrial automation systems.
In contrast to Smart Vision systems, for the tire building activities the installation is regarded as an integral part of the performance obligation to the customer, because on-site systems are constructed, configured and tested by employees.
The remainder of the revenue relates to standardized products and is accounted for when the products are transferred to the customer in accordance with the delivery conditions of the sales contract and there is no unfulfilled obligation that could affect the customer's acceptance.
Agents are used, who earn a sales commission on the revenue collected. These incremental costs for obtaining a contract are directly related to the sales that were realized in a certain period. The sales commissions, mostly paid before start of the contract, are capitalized as contract costs and amortized over the expected contract period.
TKH makes advanced Connectivity systems and engineers complete Smart Connectivity systems with a unique integrated system approach and sustainability proposition. Energy and Digitalization represent about 48% and 29% turnover share of the Smart Connectivity systems segment.
Our connectivity systems are developed for on-shore and off-shore energy distribution. Our Fibre Optic connectivity systems are manufactured for data and communication networks. In addition, TKH produces specialized cable systems for diverse industrial automation applications in high-tech environments, such as the industrial, marine & offshore and medical sectors.
Our advanced connectivity technology for contactless energy and data distribution (CEDD) for airfield ground lighting systems is a connectivity system consisting of both hardware components and software, to further improve the efficiency and safety of specific airfield applications.
The majority of revenue relates to standardized products and are accounted for in a similar way as described above. Customer-specific products and systems for which there is no enforceable right to payment for the work that has already been performed, are also recognized as revenue in the same way.
The cost of production and other expenses directly related to ordinary operational activities, which underlie the turnover, are stated as operating expenses.
Government subsidies are recognized when there is reasonable assurance that the grant will be received and all conditions will be met. Government subsidies are recognized in the statement of profit and loss in the same period as the expenses to which they relate. The subsidy is deducted from the related costs. Grants related to fixed assets are deducted from these assets and credited to the profit and loss account over the expected useful life of the asset concerned.
TKH has a stock option and a share scheme, which both qualify as share-based payments:
Financial income and expenses comprise the interest received from or paid to third parties relating to the year under review. Interest is recognized according to the effective interest method. The interest income and the interest expenses on bank accounts that belong to one and the same interest compensation system are set off. The interest balance of the interest combination is stated under interest income or interest expenses. Financial expenses related to the construction of property, plant and equipment have been recognized as part of the asset. Translation differences on sale and purchase transactions are classified under financial income and expenses.
Tax is calculated on the result before tax, taking into account the prevailing tax rates and tax legislation in the different countries. Tax is accounted for in the statement of profit and loss, unless it relates to items directly recognized in the OCI, in which case taxes are also accounted for in the OCI. In addition to the tax directly payable or receivable for the reporting year, the item also includes the changes in the deferred tax assets and liabilities and adjustments to tax assessments from previous years.
This item comprises the share of third parties in the results and equity of subsidiaries according to TKH’s accounting principles.
The cash flow statement has been drawn up using the indirect method. With this method, the operating result is adjusted for items in the statement of profit and loss that have no impact on receipts and payments in the year under review and changes in items in the balance sheet and statement of profit and loss whose income and expenses are not considered to belong to the operational activities. The cash position in the cash flow statement consists of cash and cash equivalents less short-term borrowings included in cash pools as this is part of the daily cash management.
Cash flows in foreign currencies are converted at an average exchange rate. Exchange differences with respect to cash and cash equivalents are presented separately in the cash flow statement. Income taxes, paid and received interest are included in the cash flow from operating activities. Received dividends are included in the cash flow from investment activities, while paid dividends are included in the cash flow from financing activities.
In preparing the consolidated financial statements management has made judgments, estimates and assumptions. These judgments, estimates and assumptions affect the reported amounts of assets and liabilities, revenues and expenses and disclosed contingent assets and liabilities at the date of the financial statements. The actual outcome can vary from these judgments, estimates and assumptions. All assumptions, expectations and forecasts used as a basis for judgments in the consolidated financial statements are as good as possible a reflection of the forecast of TKH. Management is of the opinion that a reasonable basis exists for the assumptions, expectations and forecasts. Judgments are related to known and unknown risks, uncertainties and other factors that can lead to future results and performances that significantly vary from those forecasted. Significant judgments, estimates and assumptions are described hereafter.
Level 1: Price quotations on active markets for identical assets and liabilities.
Level 2: Other inputs than quoted prices included in level 1, that are either directly or indirectly observable for the asset or liability. TKH makes use of derivatives valuation reports of financial institutions. These valuations are checked with interest rates, interest curves and exchange rates that are regularly published.
Level 3: Calculations that use input variables that have a significant effect on the fair value and that are not based on available market quotations. Here TKH may use valuations by independent appraisers.
The following table shows the hierarchy and carrying amounts of the assets and financial instruments that are recognized in the balance sheet at fair values:
The fair value of the financial assets measured at fair value with recognition of the change in value through the statement of profit and loss is calculated on the basis of expected cash flows discounted at the estimated market interest rate. Credit risks are taken into account in this market interest rate. TKH has concluded derivatives with various financial institutions with an investment grade rating. Interest rate swaps, forward exchange contracts and forward contracts on commodities are valued based on present value calculations using market data, such as the credit quality of counterparties, base spreads, spot and forward prices, yield curves and forward curves. More information about the assumptions for the determination of the fair value is included in the relevant explanatory notes.
Note 20 contains information about these risks.
Information about impairment testing is included in note 3. TKH regularly invests in R&D (capitalized development costs), production facilities and new, innovative processes with the aim of developing a distinctive product portfolio. Particularly where TKH still has a small market position, the degree of management estimates with regard to learning curve developments, capacity utilization and development of returns is higher. On the other hand, management involvement is larger. TKH has valued tax deductible losses, whereby the entity concerned has incurred a loss in the current and/or previous financial year. In these cases, the recognition and measurement of these deductible losses are based on financial forecasts supported by a profitable order book. It should be noted that these deductible losses often originate from the start-up period of new activities and/or innovations.
be significantly higher than in other projects due to the lack of historical experience figures and the learning curve that needs to be going through.
In the financial statements, financial liabilities are recognized for obligations related to earn-out agreements and put options granted to shareholders of non-controlling interests. The financial liabilities for earn-out and put options are based on estimates of future operating results and are derived from business plans of the companies concerned.
The other provisions relate amongst others to onerous contracts, warranty liabilities, claims, jubilee arrangements and restructuring liability. These provisions are based on estimates and available information. With regard to onerous contracts with customers, reference is made to the previous paragraph 'contracts with customers'. With regard to the restructuring liability further reference is made to note 13.
When TKH has the option of renewing a lease, management uses its judgment to determine whether it is reasonably certain that an option would be exercised. Management takes into account all the facts and circumstances, including their past experience and any costs that will be incurred to change the asset if no extension option is taken, to determine the lease term.
Global economical and geopolitical developments and conflicts (such as the Russia-Ukraine war), economic and political confrontations between world powers (trade tariffs/barriers, protectionism, availability and price of energy), the erosion of trade agreements, climate change and the impact of (global) inflation as well as a potential recession can impact TKH’s turnover and results. Reference is made to the paragraph ‘Risk management’ as included in the Management report for further disclosures on these risks. These risks have been weighed in making judgements and applying estimates, amongst other valuation of customer contracts, impairment analysis and determining the useful live of our assets.
The potential impact of climate change on our strategy and our business model has received a great deal of attention in the year under review. We extensively analyzed the potential climate-related transition risks to our operations posed by climate change, and how these climate-related transition risks could be turned into opportunities, for instance through innovations in climate adaptation or climate-change mitigation. Our climate risk and opportunity assessment follows the TCFD framework, integrating key risk categories into our sustainability strategy.
TKH has considered the impact of climate change on the estimates and judgements used in preparing the financial statements. The following items were considered:
The impairments of development costs relate to discontinued R&D projects due to unfavorable technological and/or market developments. Goodwill is allocated to reporting segments, which are considered as cash generating units (‘CGU’) for goodwill impairment testing purposes. Impairment is assessed at this level. The goodwill is allocated as follows:
The recoverable amount of the cash generating units, in which goodwill has been reported, is based on the value in use. The value in use is based on estimated future cash flows. These forecasts are derived from the internal business plans, which are drawn up annually and have a horizon of five years. These business plans contain financial budgets and have been prepared by local management and are approved by the Executive Board. Cash flows after the financial budget period have been extrapolated, taken into account an annual growth of 2.0% (2023: 2.0%). The future cash flows are discounted at the discount rate shown in the table, which is based on the risk profile of the CGU. Based on the assumptions, the impairment test did not lead to impairments at year-end 2024. Inherent to the applied calculation methodology, a change in the assumptions can lead to a different conclusion regarding impairment. For all CGU’s a sensitivity analysis was performed, in which:
the discount rate increases by 1%, or
Other parameters remain constant. The amounts relate to the impact on the recoverable amount based on the sensitivity analysis. This sensitivity analysis does not take any cost savings into account in order to maintain profitability.
The purchases in ‘Operating assets in progress’ relate for a large part to our new plant for inter-array cable in Eemshaven, which is expected to be commissioned in 2025. In 2024, an amount of €8.4 million (2023: €5.0 million) was capitalized relating to borrowing costs. The These scenarios do not lead to an impairment in any of the CGUs in connection with the available headroom between the recoverable amounts and the carrying amounts.
The market capitalization of TKH amounted to €1.329 million on December 31, 2024 and was significantly higher than the book value of the net assets of TKH.
TKH has lease contracts for various land and buildings, vehicles and other equipment used in its activities. Land and building lease agreements generally have a duration of between 3 and 28 years, while vehicles and other equipment generally have a duration of between 3 and 5 years.
The impairments relate to the vacancy of rented buildings in our Smart Vision segment, as a result of a too low occupancy and a slowdown in revenue growth from rented buildings. For the methodology applied, reference is made to the accounting policies and disclosures regarding impairment calculations.
In 2024, the costs related to variable lease payments that were not included in the lease obligation amounted to €3.6 million (2023: €3.2 million). The costs of leasing assets with a low value amounted to €0.2 million (2023: €0.2 million) and the costs of leases with a term of less than one year amounted to €2.2 million (2023: €1.7 million).
There are no leases with a residual value guarantee and as at December 31, there are no obligations with regard to lease agreements that have not yet been started. See note 18 for the lease liability.
179 Annual Report 2024 TKH Group
The 12.5% interest in the associate Shin-Etsu (Jiangsu) Optical Preform Co. Ltd. has been divested in 2024. Reference is made to note 34 for further disclosures.
The overview below shows the summarized financial information of the associates on the basis of the most recent available information, where the financial data are included based on the share of interest in these companies. Note that the turnover and net result 2023 for SCS Wagram Holding only apply for the period after 1 October 2023.
The amounts above are expected to be settled within 12 months. The receivables are mainly held according to a 'held-to-collect' business model. For the other part TKH applies non-recourse factoring that transfers the ownership of the trade receivables and the associated risks to a factoring company. At the end of 2024 receivables with an amount of €43.3 million are sold to a factoring company (2023: €40.9 million) and were subsequently derecognized. The trade receivables are non-interest bearing and generally have a payment term between 14 and 90 days. Credit risk is further described in note 20.
materials, consumables and finished goods (2023: €776.8 million). A part of inventories is valued at lower net recoverable amount. The book value of these written-down inventories is €62.7 million (2023: €53.3 million). The total write-down on inventories, based on aging analysis and sales statistics, in 2024 recognized in the statement of profit and loss is €3.7 million (2023: €9.6 million).
The following table provides information on receivables, capitalized contract costs, contract assets and contract liabilities from contracts with customers.
The contract assets mainly relate to the rights of TKH to consideration for work performed, but which have not yet been invoiced on balance sheet date. The contract assets are reclassified to receivables when the rights become unconditional. The contract liabilities mainly relate to the advance payment received from customers, of which the revenues are recognized at the performance of the contracted work. A large part of the contract assets and liabilities relates to the segment Smart Manufacturing systems.
The changes in the balance of contract assets and liabilities during the financial year are as follows:
(2023: €4.8 million), which is included in the statement of profit and loss under raw materials, consumables, trading products and outsourced work. There was no impairment in the financial year in respect of the capitalized contract costs.
The restitution obligations for agreed customer volume discounts are mostly annual bonuses based on revenue tables. The accrual is calculated based on historical figures, revenue already realized and the outstanding order book.
The following table shows the expected future revenue with respect to contractual performance obligations that have not yet (or partially) been satisfied at balance sheet date.
Cash and cash equivalents consist of cash and bank balances and deposits that are direct available on demand.
The group equity is disclosed in the Consolidated statement of changes in group equity and in note 8 of the company-only financial statements.
The long-term provisions have been discounted. The increase of the provision in the year as a result of expiration of time and adjustment of the discount rate is not significant. The short-term provisions have not been discounted since the effect is not material. The short-term part of the provision is mainly related to reorganizations and warranties. The term of the other provisions is as follows:
The breakdown and movement of the other provisions is as follows:
The provision for warranties is related to warranties on delivered products and services under the standard warranty conditions. The purpose of the provision is to cover costs arising if products and services supplied do not meet the agreed specifications and quality requirements under normal conditions of use. The provision is based on judgments by using historical warranty data relating to comparable products and services and known warranty claims at balance sheet date. In general the recorded liabilities are expected to arise in the next one to three years.
The provision for employee liabilities mainly relates to defined jubilee arrangements and is in general long-term.
The provision for onerous contracts mainly relates to contracts with customers, from which the revenue is recognized over a period of time. This mainly concerns contracts in the segment Smart Manufacturing systems, which relate to new technologies and sometimes in combination with newly acquired customers. Because of the strategic importance of these contracts for the future revenue and profit development of TKH, these have been accepted with a negative or a limited margin at order acceptance. The duration of a project under such a contract is normally shorter than one year, but for larger framework agreements, subprojects can be executed and concluded in different years. Additions and releases to this provision are mostly presented as costs of ‘Raw materials, consumables, trade products and subcontracted work’.
The provision mainly relates to the costs to restore leased assets to its original condition as required by the terms and conditions of that specific lease. The provision is valued at the best estimate of the future expenditure that would be required to restore the assets. This is a long-term provision, which has been discounted at a rate of 4.66%.
The other items also relate to reorganizations, claims, matters of dispute, guarantees which are expected to be claimed and other contractual obligations. The restructuring provision relates mainly to the lay-off of employees and the remaining term is less than 1 year. The recognized provisions have been based on the best estimate, made on the basis of currently available information and will mainly have a term no longer than one year. There is no asset recognized for expected compensation fees from third parties in relation to the reported provisions.
The movement of the financial liabilities is as follows:
For several acquisitions, contractual arrangements have been made about earn-out payments, when certain targets are realized. The liability for earn-out payments has been determined on the basis of fair value of the expected future cash outflows.
TKH has option rights on several non-controlling interests held by local management of subsidiaries of TKH. Besides, TKH has a liability to buy these shares when local management decides to offer these shares. A financial liability has been recognized for this obligation.
On the balance sheet date, the following option rights and liabilities are outstanding:
The deferred tax assets and liabilities relate to the following items of which the movements are also shown:
The subsidiaries neither have any taxable temporary difference nor any tax planning opportunities available that could partly support the recognition of these losses as deferred tax assets. On this basis, TKH has determined that it cannot recognize deferred tax assets on the tax losses carried forward. The unrecognized unused tax losses represent a value of €16.9 million at the end of 2024 (2023: €14.6 million) based on the applicable tax rates.
TKH has valued tax deductible losses, whereby the entity concerned has incurred a loss in the current and/or previous financial year. In these cases, the recognition and measurement of these deductible losses are based on financial forecasts supported by a profitable order book. It should be noted that these deductible losses often originate from the start-up period of new activities and/or innovations.
Certain deferred tax assets and liabilities have been offset in accordance with the applicable principles in IFRS. The deferred tax assets and liabilities are recognized in the balance sheet as follows:
TKH's pension plans in the Netherlands differ per subsidiary. The pension scheme of a number of subsidiaries has been placed with the industry pension fund PME and PMT respectively. As of January 1, 2020, the employees of the other Dutch subsidiaries have a so-called individual defined contribution scheme, which is managed by Nationale-Nederlanden. The employees of the foreign subsidiaries are members of industry or state-managed pension plans. The subsidiaries are only required to pay a certain percentage of the salary costs to the concerning industry or state managed pension plans. These pension schemes classify as defined contribution plan. The pension schemes in the Netherlands, to the extent not already covered by the industry pension schemes, are recognized as a defined contribution scheme in the financial statements.
The total pension expense recognized in 2024 related to the defined contribution plans amounts to €21.6 million (2023: €20.7 million). The industry pension plans are included in this pension expense. TKH expects for 2025 a pension expense of €21.4 million for all defined contribution plans, of which about €14.2 million relates to industry pension schemes.
In the Netherlands 1,938 employees of TKH participate in the multi-employer union plans of ‘Pensioenfonds van de Metalektro’ (‘PME’) and 'Pensioenfonds Metaal & Techniek' ('PMT') in accordance with the collective bargaining agreements applicable for the industry in which the TKH companies operate. These collective bargaining agreements have no expiration date.
PME covers approximately 1,500 companies and 350,000 participants and PMT approximately 34,000 companies and 1,300,000 participants. The pension rights of each employee are based upon the employee’s average salary during employment (depending on coverage ratio). TKH’s contribution to the multi-employer union plans are far less than 5% of the total contribution to the plans. The pension funds are subject to regulation by Dutch governmental authorities. By law (the Dutch Pension Act), a multi-employer union plan must be monitored against specific criteria, including the coverage ratio of the plan assets to its obligations.
The actual coverage ratio is calculated by dividing the plan assets by the total sum of pension liabilities. The coverage ratio is the average coverage ratio over the past 12 months. There are no additional contribution requirements for participating companies to prevent indexation cuts or lowering of pensions. The schemes qualify as defined benefit plans because the companies bear the risk that in the negotiation of the level of pension contributions after 2024 the social partners take the amount of a surplus or a deficit in the industry pension fund as part of the negotiations. As a result, future premiums may be somewhat related to deficits or surpluses that relate to pension entitlements accrued in the past. This concerns shortages or surpluses of current and former employees of TKH but also of other companies.
In addition, there is no consistent and reliable basis for allocating the pension liability, assets and costs to individual companies participating in the industry pension scheme. TKH therefore classifies the multi-employer plans as if it were defined contribution plans (in line with IAS19.34), reference is made to the paragraph above. TKH’s net periodic pension cost for the multi-employer plan over a financial period is equal to the required contribution for that period.
There are some individual defined benefit plans abroad for a small number of participants. These defined benefits are accrued in the subsidiaries and are not covered by plan assets. The duration of the defined benefit obligations of these arrangements will be, on average, 10 years at December 31, 2024. Furthermore, there is legislation for the Austrian employees obligating to pay a onetime compensation at the end of the employment for employees working for the subsidiary before January 1, 2003. The amount of compensation depends on the years of service and the average salary in the last 3 years of service. The actuarial calculations for the pension schemes are performed by actuaries.
At year-end 2024, €63.3 million of the cash and cash equivalents forms part of cash and interest pools (2023: €24.5 million). The interest on the borrowings is variable and based on Euribor or SOFR. The credit margins differ per credit institution, duration and country and vary from 1.0% to 1.7% (2023: 1.0% to 1.5%). The material subsidiaries are guarantor for the obtained financing from credit institutions. No special securities were provided. The discount rate used for lease liabilities differ per right-of-use asset, duration and country with a weighted average of 3.3%. The obligations arising from leasing are guaranteed by the lessor's property right on the leased assets. See note 20 for more details on the capital and liquidity risk.
The overview below shows the changes in the interest-bearing liabilities arising from financing activities:
The withdrawals and repayments of cash pools relate to changes in cash pools presented under cash and cash equivalents (note 10).
The other payables and accruals relate to, among others, personnel bonuses to be paid, commissions, holidays and holiday allowances as well as accruals for invoices to be received.
At the end of 2024, a number of suppliers made use of supply chain finance (reversed factoring) for a total of €39.4 million (2023: €44.1 million), which is recognized as trade payables and under the bank covenants with the banks not regarded as financial indebtedness. Of this amount about 93% was already paid by finance providers towards suppliers at the end of 2024.
The main financial risks faced by TKH relate to the capital and liquidity risk, interest risk, currency risk, credit risk and price risk. TKH’s financial policy is aimed at minimizing the effects of fluctuations in currency exchange and interest rates on its results in the short-term and following market rates in the long-term. TKH uses derivatives to manage the financial risks relating to the business operations and does not undertake speculative positions. Financial risks and the control by management of these risks are disclosed in the chapter 'Risk management' in the annual report.
External financing is contracted by the holding for the entire TKH Group. On February 13, 2023, TKH signed a new sustainability-linked €625 million multicurrency committed credit facility, consisting of a revolving credit facility (“RCF”) of €500 million and a term loan of €125 million. The revolving credit facility of €500 million has a remaining maturity of 4.1 years, which has been extended in January 2025 to a termination date of February 13, 2030. The term loan of €125 million has a remaining maturity of 1.1 years. A sustainability-linked adjustment will provide for a maximum discount or premium of 2.5 basis points on the credit margin.
committed credit facilities of €85 million (2023: €130 million) and unsued available uncommitted credit facilities for a total of €93 million (2023: €142 million). The available credit facilities are reduced for the outstanding bank guarantees. The maximum credit facility per subsidiary is determined centrally.
In the credit facility the following financial covenant is agreed, which is tested on a quarterly basis:
The debt leverage ratio is calculated excluding the impact of IFRS 16 Leases. Furthermore, it has been agreed with the banks that in the calculation of the debt leverage ratio acquisitions may be consolidated pro forma for 12 months. TKH uses internally a debt leverage ratio up to 2.0. TKH operates within the banks’ required covenant at the end of 2024 and has no indication that it will have difficulty complying with this convenant in the 12 months after reporting date.
| Year | Financial Liabilities | Repayment Period |
|---|---|---|
| 2024 | €85 million | Short-term |
| 2024 | €93 million | Long-term |
| Amount | Book Value |
|---|---|
| €85 million | €85 million |
| €93 million | €93 million |
The following table provides an overview of the liquidity risk for the financial liabilities of TKH at the end of 2023 based on agreed repayment periods:
| Liquidity Risk Overview | Liquidity Risk Overview |
|---|---|
| Financial Liabilities | Agreed Repayment Periods |
| Interest Rate Swap | Net Settled |
| Commodity Derivatives | Net Settled |
| Currency Contracts | Gross Settled |
The interest risk policy aims at minimizing the interest rate risks associated with the financing of the company and thus at the same time optimizing the net interest costs. Long-term financing has been obtained with a floating-rate and will partly be fixed by means of interest rate swaps, whereby TKH aims to fix 40-70% of the interest associated with the borrowing. During the past period of strong interest rates movements, TKH has chosen to hedge the interest rate risk below this mentioned bandwidth.
The following table provides an overview of the, for hedging purposes, agreed interest rate swaps:
| Interest Rate Swaps Overview | Interest Rate Swaps Overview |
|---|---|
| Type | Details |
| Cash Flow Hedge Accounting | Applied to all interest rate swaps mentioned above |
| Material Ineffectiveness | No material ineffectiveness in relation to these hedges |
The following sensitivity analysis of borrowings, bank credits and cash and related interest rate swaps to interest rate movements assumes an immediate 1% change in interest rates for all currencies and maturities, with all other variables held constant. A raise of the interest rates with 1% would result in:
It is TKH’s general policy to hedge currency risks on purchases if these risks cannot be charged to the market. Purchase transactions in foreign currencies are hedged when the sales prices are already fixed in case of material transactions. Sales transactions in foreign currencies are fully hedged in case of material transactions. The main currencies that cause this exposure are the USD and CNY. Foreign currency forward contracts are applied to minimize the exposure of fluctuations in the currency rates. These contracts mainly have a term to maturity of less than one year. In addition to the currency risk on the purchase and sale transactions, there is a currency risk resulting from the translation of net investments in TKH subsidiaries denominated in functional currencies other than euros. The main currencies that cause this exposure are the USD and CNY. These risks are partially hedged by financing some of these investments in local currency. The remaining risk is not hedged.
| Currency | Monetary Assets | Monetary Liabilities |
|---|---|---|
| USD | ||
| CNY |
On balance sheet date, TKH has entered into foreign currency forward contracts:
Time differences between the settlement of the forward contracts and the sale and purchase contracts are anticipated by the use of foreign currency bank accounts or the rollover of forward contracts. The translation risk on financial instruments, when the euro will decrease with 10% compared to all other currencies, with all other variables held constant, would be expected to have an influence of €14.4 million negative on the result before tax (2023: €10.4 million negative). The foreign currency forward contracts are taken into account in this calculation. The impact of a decrease of the euro on the shareholders' equity is larger because of the net investments in foreign subsidiaries with another functional currency. The impact of this is approximately €38.2 million positive (2023: €33.3 million positive). An increase of the euro with 10% will have the opposite influence, namely a positive influence of €14.4 million on the result before tax and a negative influence of €38.2 million on equity.
An important raw material for TKH is copper and aluminium. The price risk of copper and aluminium is limited by a continuously monitoring of sales prices against the development of the purchase price where price changes are passed on to customers. Important raw materials such as copper, aluminum, steel and PVC are purchased with forward delivery contracts, to reduce the price risk on the sale of finished products, provided that:
On balance sheet date TKH has entered into the following derivatives for raw materials:
A decrease of the copper price with 10% would have a negative impact of approximately €1.8 million on the result (2023: €1.8 million negative) if all other factors and conditions remain the same. This is caused by the free stock, for which price risk is not hedged, which will then be sold at a lower price.
An impairment analysis is performed at each balance sheet date, whereby the expected credit losses are calculated using a provision matrix. The percentages in the provision matrix are initially based on historical losses for various customer segments (geographic region, customer type, rating and coverage by, for example, credit insurance). The historical credit risk percentages in the matrix are then adjusted with forward-looking information. If the predicted economic conditions are expected to deteriorate, which may lead to an increase in the number of defaults, the historical credit risk rates will be adjusted. On each reporting date, the historical observed credit risk percentages are updated and changes in estimates are analyzed. The assessment of the correlation between historical observed credit risk percentages, predicted economic conditions and expected credit losses is a management estimate. The actual future credit losses may differ. Below is shown the age of the trade receivables, contract assets and the expected credit losses.
There are no significant overdue account receivables that are not largely covered by credit insurances or payment guarantees or for which no provision has been recognized.
Framework agreements have been concluded with some suppliers for the availability of some important raw materials. There are no long-term purchase obligations.
guarantees issued to customers relating to constructions contracts. The related advance payments received from customers are presented as part of contract liabilities.
TKH and its subsidiaries are involved in a number of legal proceedings. According to the information currently available and legal advice received, TKH expects any adverse effects from the outcome of these legal proceedings to be adequately covered by other provisions or insurance.
193Annual Report 2024 TKH Group
The management structure and segment reporting of TKH is organized along the lines of our three technologies: Smart Vision systems, Smart Manufacturing systems and Smart Connectivity systems. In the overview of ‘Consolidated entities’, as part of the ‘Other information’, is shown in which of the segments the different subsidiaries operate.
EBITDA and EBITA are excluding one-off income and expenses. Reference is made to note 32 for a further detail on the one-off income and expenses.
The geographic split of turnover is based on the customer-location.
Added value is calculated by deducting ‘Raw materials, consumables, trade products and subcontracted work’ from ‘Total turnover’.
TKH has no individual customers representing 10% or more of the consolidated turnover.
Executive Board
No option rights are granted to the members of the Executive Board and the Supervisory Board.
The movement and balance of the outstanding option rights granted to the other option beneficiaries are as follows:
Stock option scheme settled in equity instruments
Option rights to (depositary receipts of) ordinary shares of TKH are granted to the management of the subsidiaries. The rights can never be exercised until after the publication of the company’s annual results three calendar years following the year in which the rights were granted, and have an exercise period of two years. Partly to avoid abuse of inside knowledge, the conditions for participation have been laid down in an internal regulation and have been accepted in writing by the participants.
The price on the date at which the share options were exercised during the financial year was €37.82. The options were granted during the financial year on March 5, 2024. The estimated fair value of the options granted in 2024 is €2,968,291.
The fair value was determined on the basis of a binomial valuation model with the following assumptions:
The current restrictions on the exercise of the options, the chances that employees will leave the company and possible personal considerations of option holders have been taken into account for the expected expiry period of the options. TKH has a reported total charge of €3,284,237 (2023: €3,250,187) for these share-based payments which will be settled in equity instruments.
Other operating expenses include overhead, selling, accommodation and manufacturing expenses.
The total operating expenses over the financial year include the following items:
197 Annual Report 2024 TKH Group
The taxes that are included directly in the statement of other comprehensive income are shown below.
The effective tax rate increased somewhat compared to last year. The following elements are worth noting:
more than offset by the restriction of interest deductibility in the Netherlands, based on the so-called earning stripping rules, for which only partly a deferred tax asset was recognized.
TKH is within the scope of the OECD Pillar Two model rules. Pillar Two legislation has been enacted in the Netherlands effective as from 31 December 2023 for financial years starting on or after this date (e.g. financial year 2024). Under the legislation, the group is liable to pay a top-up tax for the difference between their (GloBE) effective tax rate per jurisdiction and the 15% minimum rate. TKH has assessed the impact of Pillar Two on its financial position, whereby the initial focus is on the Transitional CbCR Safe Harbour rules. The Transitional CbCR Safe Harbour rules are a short-term measure to exclude a group’s operations in lower-risk countries from the compliance obligation of preparing full Pillar Two calculations.
Based on this assessment, there are two jurisdictions that will likely have an effective tax rate lower than 15% and consequently fall out of the Transitional CbCR Safe Harbour rules. The reason that both countries fall out of the Transitional CbCR Safe Harbour rules is the tax benefit arising from the recognition of loss compensation. In case a country falls out of the Transitional CbCR Safe Harbour rules, the next question is whether there would be any top-up tax liability due. Considering that the underlying reason for falling out of the Transitional CbCR Safe Harbour rules in is entirely attributable to the recognition of a previously unrecognized DTA with respect to tax losses, this is likely not to lead to any top-up tax under the detailed Pillar Two calculations. Since these unrecognized tax losses were disclosed in the financial statements before FY2024, any deferred taxes attributable to the recognition of these, are effectively disregarded in the detailed Pillar Two calculations. Consequently, the recognition of previously unrecognized DTAs relating to tax losses should not lead to any top-up taxation and therefore no detailed Pillar Two calculation is deemed necessary. Based on the abovementioned, TKH has not booked any current tax expenses related to Pillar Two in the 2024 financial statements.
The remuneration payable to the members of the Executive Board comprises a basic salary (TRI), pension and a variable element, comprising an annual performance bonus (STI) and a long-term bonus (LTI) scheme entailing a share scheme. The remuneration of the Supervisory Board consists of a fixed remuneration and a remuneration for participation in a committee. The various remuneration components are explained below, as well as the amount charged to the legal entity and its subsidiary or group companies.
The breakdown of the remuneration per person and according to the various remuneration components is included in the remuneration report that is part of the annual report.
Shareholdings of members of the Executive Board and the Supervisory Board
During 2024 TKH acquired the following companies:
On January 24, 2024, TKH acquired 100% of the shares in JCAI Inc. JCAI offers state-of-the-art guidance software and equipment that provides airports with the tools needed to ensure the aircraft is directed automatically over the tarmac, allowing for maximization of throughput, whilst balancing safety. JCAI’s software is currently deployed across many airports as well as airlines. JCAI will be able to take advantage of as well as accelerate the growth of the advanced TKH CEDD connectivity technology especially in the North American market. JCAI is based in Toronto, Canada, employs 35 people and realized an annual turnover in 2023 of CAD 13.7 million with 25% of turnover derived from recurring software sales and an EBITA and ROS at a minimum in line with our Smart Connectivity segment. For 2024 turnover is lower and EBITA is negative due to a lack of equipment projects, the acquisition is expected to have a positive effect on TKH’s earnings per share from 2025 onwards.
Comark is based in Udine, Italy and realized a turnover of €2.8 million in 2023 and an EBITA and ROS at a minimum in line with our Smart Vision segment. The turnover and EBITA are pro-rata in line with 2023 and the acquisition already had a positive effect on TKH’s earnings per share in 2024.
On August 2, 2024, TKH acquired Liberty Robotics Inc., a state-of-the-art 3D vision guidance systems provider for robotic applications. Liberty Robotics is headquartered in Ann Arbor, Michigan, and has 32 employees, of whom 70% are in R&D. Liberty Robotics’ turnover amounted to US$7 million in 2023 and an EBITA and ROS at a minimum in line with our Smart Vision segment. Liberty Robotics has a strong foothold in the North American market and besides automotive, also services the material handling/packaging and logistics industries which complements our 3D Vision portfolio. Liberty Robotics is expected to profit from our global sales network. The turnover and EBITA are pro-rata in line with 2023 and the acquisition already had a positive effect on TKH’s earnings per share in 2024.
TKH Group Annual Report 2024
The purchase price, net asset valuation and preliminary fair value adjustments are as follows:
On May 15, 2024, TKH Group N.V. announced the divestment of HE System Electronic GmbH (“HE”) to Magna International Inc. HE, which is part of TKH’s Smart Manufacturing systems, employs a total of 118 FTEs and has operations in Germany. In 2023, turnover at HE amounted to €20.7 million and EBITA of €1.9 million. Closing of the transaction has taken place at the end of May 2024, from which date HE has no longer been consolidated in TKH Group’s results. The sales agreement includes a guarantee and contingent consideration, which is based on specific customer-contract developments in the coming three years and can potentially have a positive or negative impact on the presented result of this divestment. Currently this consideration is valued at a net amount of nil. The divestment of HE has resulted in a one-off net profit contribution of €14.2 million.
In July 2024, TKH reached an agreement on the sale of its 100% share in EKB Groep B.V. The transaction was closed in August 2024, from which date EKB has no longer been consolidated in TKH Group’s results. The turnover of EKB, part of TKH’s Smart Manufacturing segment, totaled €35.5 million in 2023 with an EBITA of €2.6 million and 199 FTE. EKB operates mainly in The Netherlands. The divestment of EKB has resulted in a one-off net profit contribution of €11.5 million.
At the end of September 2023 TKH announced that the divestment of its TKH France activities to private equity group Argos Wityu has been closed. The activities will be continued by a newly established company under the name SCS Wagram Holding, in which TKH acquired a minority interest of 40%. The cash outflow from acquisition of associates of €27.6 million as mentioned in the cashflow statement 2023 is related to this acquisition of a minority interest. The transaction results in a one-off net profit contribution of about €20 million for TKH in 2023. Following the closing of this divestment, TKH France will no longer be consolidated in TKH Group’s results. In 2023 until end of September, the turnover of TKH France totaled €95.8 million with a recurring EBITA of €12.9 million and 180 FTEs.
In December 2023, TKH has sold its 100% share in Isolectra Communications Technology Sdn Bhd, located in Malaysia. The company generated around €1 million turnover in 2023. The divestment generated a small loss.
As part of the Strategic program Accelerate 2025 TKH has decided in 2024 to start an active program to sell certain activities within Smart Manufacturing Systems related to test and measurement systems. The amount of allocated goodwill has been based on applying the relative value method. Besides working capital, capitalized R&D is also an important part of this value. Barring unforeseen circumstances, a sale is highly probable within the upcoming 12 months. TKH expects an one-off net profit upon sale.
The balance per end of 2023 relates to HE System Electronic, for which reference is made to ‘Divestments’ above.
There were no material non-cash transactions, besides lease transactions as mentioned in note 5.
The service fees paid to the external auditor EY, recognized as other operating expenses, can be specified as follows:
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| Notes | 2024 | 2023 |
|---|---|---|
| Net turnover | 14,744 | 13,231 |
| Wages and salaries | 11,941 | 13,340 |
| Social insurance contributions | 1,765 | 1,366 |
| Depreciation and result on divestment of property, plant and equipment | 544 | 302 |
| Other operating expenses | 11,944 | 10,916 |
| Total operating expenses | 26,194 | 25,924 |
| Operating result | -11,450 | -12,693 |
| Financial income | 4,405 | 4,084 |
| Financial expenses | -20,840 | -15,595 |
| Exchange differences | -248 | 11 |
| Change in value of financial liability for earn-out and put-options of holders of non-controlling interests | 575 | -96 |
| Result before tax | -27,558 | -24,289 |
| Tax on result | -5,953 | -3,802 |
| Company result | 21,605 | -20,487 |
|---|---|---|
| Share in result of participations | 121,166 | 186,191 |
| Net result | 99,561 | 165,704 |
| Assets | Notes | 2024 | 2023 |
|---|---|---|---|
| Non-current assets | |||
| Intangible assets and goodwill | 2 | 232,793 | 211,145 |
| Property, plant and equipment | 3 | 1,375 | 595 |
| Right-of-use assets | 4 | 2,377 | 2,525 |
| Financial non-current assets | 5 | 1,047,530 | 945,677 |
| Deferred tax assets | 6 | 907 | 858 |
| Total non-current assets | 1,284,982 | 1,160,800 |
|---|---|---|
| Current assets | ||
| Receivables on subsidiaries | 85,501 | 122,669 |
| Other receivables | 17,394 | 11,986 |
| Cash and cash equivalents | 468 | 2,116 |
| Total current assets | 103,363 | 136,771 |
| Total assets | 1,388,345 | 1,297,571 |
| Shareholders' equity | ||
|---|---|---|
| Share capital | 10,554 | 10,554 |
| Share premium | 85,021 | 85,021 |
| Legal reserve | 120,398 | 115,161 |
| Translation reserve | 22,584 | 9,968 |
| Cash flow hedge reserve | -1,916 | -525 |
| Retained earnings | 546,777 | 449,682 |
| Unappropriated profit | 99,561 | 165,704 |
| Total shareholders' equity | 882,979 | 835,565 |
| Provisions | ||
| Deferred tax liabilities | 981 | 879 |
| Other financial liabilities | 3,106 | 0 |
| Provisions | 158,689 | 46,378 |
| Total provisions | 62,776 | 47,257 |
| Non-current liabilities | ||
| Interest-bearing loans and borrowings | 2,212 | 2,325 |
| Total non-current liabilities | 2,212 | 2,325 |
| Current liabilities | ||
| Interest-bearing loans and borrowings | 223 | 23,916 |
| Payables to group companies | 431,981 | 379,640 |
| Other financial liabilities | 1,660 | 1,484 |
| Other current liabilities | 6,514 | 7,384 |
| Total current liabilities | 440,378 | 412,424 |
| Total equity and liabilities | 1,388,345 | 1,297,571 |
The company financial statements of TKH Group N.V. (TKH) are prepared in accordance with Part 9, Book 2 of the Dutch Civil Code. For setting the principles for the recognition and measurement of assets and liabilities and determination of the result for its separate financial statements, TKH makes use of the option provided in Article 2:362 sub 8 of the Dutch Civil Code. This means that the principles for the recognition and measurement of assets and liabilities and determination of the result for the separate financial statements of TKH are the same as those for the consolidated financial statements. For a description of these accounting principles, reference is made to the accounting principles of the consolidated financial statements.
Investments in subsidiaries are valued at net asset value. The net asset value is determined on basis of the valuation principles, as described in note 1 of the consolidated financial statements. The net asset value of subsidiaries consists of cost price, exclusive goodwill, the share of TKH in the sum of the assets, liabilities and provisions of the subsidiary, plus the share in the result of the subsidiary since the takeover that is attributed to TKH, less the received dividends.
| in thousands of euros | 2024 | 2023 |
|---|---|---|
| Historical cost at 1 January | 212,835 | 172,957 |
| Accumulated impairment losses | 1,690 | 1,690 |
| Book value at 1 January | 211,145 | 171,267 |
| Acquisitions | 20,638 | 17,866 |
| Transfer within the group | 805 | 21,917 |
| Exchange differences | 205 | 95 |
| Book value at 31 December | 232,793 | 211,145 |
| Accumulated impairment losses | 1,690 | 1,690 |
| Historical cost at 31 December | 234,483 | 212,835 |
The ‘Transfer within the group’ in 2023 relates to an internal goodwill reallocation following the divestment of the TKH France activities.
| in thousands of euros | 2024 | 2023 |
|---|---|---|
| Historical cost at 1 January | 2,783 | 2,482 |
| Accumulated depreciation and impairments | 2,188 | 2,043 |
| Book value at 1 January | 595 | 439 |
| Purchases | 1,020 | 301 |
| Disposals | - | 11 |
| Depreciation | -229 | -145 |
| Book value at 31 December | 1,375 | 595 |
| Accumulated depreciation and impairments | 1,275 | 2,188 |
| Historical cost at 31 December | 2,650 | 2,783 |
| Buildings | Other equipment | Total | ||||
|---|---|---|---|---|---|---|
| in thousands of euros | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 |
| Historical cost at 1 January | 2,461 | 353 | 212 | 2,814 | 212 | |
| Accumulated depreciation and impairments | 83 | 206 | 132 | 289 | 132 | |
| Book value at 1 January | 2,378 | 0 | 147 | 80 | 2,525 | 80 |
| Purchases | 2,461 | 171 | 141 | 171 | 2,602 | |
| Reassessment | -4 | -40 | ||||
| Depreciation | -248 | -83 | -67 | -74 | -315 | -157 |
| Book value at 31 December | 2,126 | 2,378 | 251 | 147 | 2,377 | 2,525 |
| Accumulated depreciation and impairments | 331 | 83 | 273 | 206 | 604 | 289 |
| Historical cost at 31 December | 2,457 | 2,461 | 524 | 353 | 2,981 | 2,814 |
| Subsidiaries | Associates | Total | ||||
|---|---|---|---|---|---|---|
| in thousands of euros | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 |
| Balance at 1 January | 910,460 | 833,809 | 35,217 | 30,763 | 945,677 | 864,572 |
18,675
35,894
27,624
18,675
63,518
-10,909
-105,486
-6,457
-19,219
-17,366
-124,705
26,919
69,882
26,919
69,882
110,619
134,820
174
-3,430
110,793
131,390
-63,064
-68,578
-60
-63,124
-68,578
-1,279
3,815
-1,279
3,815
-76
-76
0
-234
71
-234
71
-134
0
-134
14,908
12,425
14,908
12,425
12,647
-6,058
-10
-521
12,637
-6,579
1,018,666
910,460
28,864
35,217
1,047,530
945,677
The difference between the abovementioned result on subsidiaries and associates and the result as included in the company statement of profit and loss relates to the result on divestment of subsidiaries and associates as disclosed in note 34 of the consolidated financial statements.
The deferred tax assets and liabilities are related to the following items:
in thousands of euros
| Tax write-down of loans | Financial instruments | Total | |
|---|---|---|---|
| Balance at 1 January 2023 | -618 | 814 | -25171 |
| (Charge)/credit to profit or loss | -261 | 69 | -192 |
| Balance at 31 December 2023 | -879 | 883 | -25-21 |
| (Charge)/credit to other comprehensive income | -54 | -54 | |
| (Charge)/credit to profit or loss | -102 | 103 | 1 |
| Balance at 31 December 2024 | -981 | 986 | -79-74 |
Certain deferred tax assets and liabilities are offset in accordance with the principles provided in IFRS. The deferred taxes are recognized in the balance sheet as follows:
| in thousands of euros | ||
|---|---|---|
| 2024 | 2023 | |
| Deferred tax assets stated under non-current assets | 907 | 858 |
| Deferred tax liabilities stated under non-current liabilities | -981 | -879 |
| Deferred taxes | -74 | -21 |
| in thousands of euros | ||
|---|---|---|
| 2024 | 2023 | |
| Taxes and social security premiums | 15,541 | 10,414 |
| Other receivables | 1,853 | 1,572 |
| Other receivables | 17,394 | 11,986 |
For the movement schedule is referred to the consolidated statement of changes in group equity. The company only movement schedule for equity, excluding the movement of the non-controlling interests, is the same.
The number of outstanding (depositary receipts of) shares with third parties as per December 31, 2023 amounted to 39,801.946. Due to the exercise of options rights and share schemes, a balance of 75,134 (depositary receipts of) shares were sold in 2024. As a result, the number of (depositary receipts of) shares outstanding with third parties as per December 31, 2024 was 39,877,080. The amount of own shares held by TKH amounts to 2,325,349 per 31 December 2024, which represents 5.51% (2023: 5.69%) of the total outstanding shares.
entitled to vote for the shares for which the holders of depositary receipts are not present or represented at the meeting. The aforementioned power of attorney may be limited, excluded or revoked by the executive committee of Stichting Administratiekantoor in various situations specified in the law (see also Corporate Governance). In that case Stichting Administratiekantoor may (again) exercise the voting right for all shares for which depositary receipts have been issued. The relationship between Stichting Administratiekantoor and the holders of depositary receipts of shares is governed by the administrative conditions. The protection afforded by the use of depositary receipts is based on the 1% rule. The depositary receipts may be exchanged for ordinary shares but not for more than 1% of the total issued capital in the form of ordinary shares. This total includes shares owned indirectly as well as directly. However, this does not apply to the transfer of ordinary shares to the company itself. Every transfer of preference financing shares, convertible preference financing shares and preference protective shares must be approved by the Executive Board. The Executive Board may only grant its approval with the approval of the Supervisory Board.
Besides from what is mentioned in the ‘Other information’, no special rights are attached to the priority shares.
The share premium reserve is fully exempt from Dutch taxes on distribution.
The legal reserve relates to:
The legal reserve is not available for distribution to the company’s shareholders.
The revaluation reserves are not available for distribution to the company’s shareholders.
The hedging and translation reserves are legal reserves and not available for distribution to the company’s shareholders.
TKH recognizes a liability to pay a dividend when the distribution is no longer at the discretion of the company. A dividend payment is due under Dutch law if approved by the shareholders. At that moment, the amount is recognized directly in equity. At the General Meeting of shareholders in 2024 the dividend for the year 2023 was declared at €1.70 per (depositary receipt of) ordinary share. The dividend was paid in cash. The dividend on the priority shares was declared at €0.05 per share. The total amount of dividends paid in 2024 was €67,883,344 and this amount was charged to the retained earnings.
After December 31, 2024, the Executive Board has proposed a dividend. With regard to Article 33 of the Articles of Association, the Executive Board proposes to the holders of (depositary receipts of) ordinary shares a dividend of €1.50 per (depositary receipt of) ordinary share. The dividend proposal is subject to approval at the annual general meeting and has not been recognized in the balance sheet and does not impact the corporate income tax.
The share-based payments are disclosed in note 24 of the consolidated financial statements.
| in thousands of euros | 2024 | 2023 |
|---|---|---|
| Liability for subsidiaries with negative equity | 58,172 | 45,872 |
| Other long-term provisions | 517 | 506 |
| Total of other long- and short-term provisions | 58,689 | 46,378 |
| in thousands of euros | Earn-out | Put options of holders of non-controlling interests | Total |
|---|---|---|---|
| Balance at 1 January 2024 | 734 | 750 | 1,484 |
| Change in value through the profit and loss account | -161 | -414 | -575 |
| Purchases | 4,267 | 4,267 | 4,267 |
| Payment for acquisitions from previous years | -174 | -227 | -401 |
| Other reclassifications | -9 | -9 | -9 |
| Balance at 31 December 2024 | 4,666 | 100 | 4,766 |
For more details about the financial liabilities see note 14 of the consolidated financial statements.
| in thousands of euros | 2024 | 2023 |
|---|---|---|
| Bank loans reported under non-current liabilities | 2,212 | 2,325 |
223 23,916
-468 -2,116
1,967 24,125
For more details about the facilities, conditions and securities see notes 10, 17, 18 and 20 of the consolidated financial statements.
Under Article 2:403, paragraph 1 sub f of the Dutch Civil Code the company has assumed joint and several liability for debts arising from the legal actions for all Dutch subsidiaries of which TKH owns directly or indirectly 100% of the shares. The declarations to that effect have been deposited for inspection at the office of the Chamber of Commerce in the place where the legal entity for which the guarantee was given has its registered office.
The company is formally a guarantor for a total sum of €12.0 million (2023: €13.8 million) for bank credit and bank guarantee facilities provided to a number of foreign subsidiaries. This facility was called on for a sum of €nill (2023: €nill) at the end of 2024.
The company and the majority of its 100% owned Dutch subsidiaries form a tax group for the corporate income tax. Consequently, the company is liable for the income taxes of these subsidiaries.
The turnover is related to the charged head office costs in the year for services provided to subsidiaries of the company.
The share-based payments and remuneration of key management are included in notes 24 and 33 of the consolidated financial statements. The number of employees amounted to FTE 28 end of 2024. (2023: 26)
| in thousands of euros | Notes | 2024 | 2023 |
|---|---|---|---|
| Current tax | -5,815 | -3,675 | |
| Adjustments for previous years | -137 | -319 | |
| Deferred tax | 6 | -119 | 2 |
| Total tax on result | -5,953 | -3,802 |
The reconciliation of the tax expense in the year with the result before tax is as follow:
| in thousands of euros (unless stated otherwise) | 2024 | 2023 |
|---|---|---|
| Result before tax | -27,558 | -24,289 |
| Tax calculated at the Dutch tax rate | -7,110 25.8% | -6,267 25.8% |
| Correction due to tax effect for: | ||
| Non-deductible expenses | 865 -3.1% | 1,614 -6.6% |
| Other non-deductible costs | 327 -1.2% | 459 -1.9% |
| Adjustments prior year other | 450 -1.9% | |
| Settlement of income tax returns for previous years | -1370.5% | -319 1.3% |
| Taxes on (un)distributed profits of foreign subsidiaries | 102 -0.4% | 261 -1.0% |
| Effective tax rate | -5,953 21.6% | -3,802 15.7% |
Haaksbergen, March 3, 2025
Executive Board
Supervisory Board
J.M.A. van der Lof MBA, chairman
P.W.B. Oosterveer, chairman
E.D.H. de Lange MBA
J.M. Kroon
H.J. Voortman Msc
C.W. Gorter
Since no protection preference and financing preference shares were outstanding or issued, within the meaning of Articles 33.1, 3, 4, 5, 6, paragraphs b and c, 8, 9 and, 12 below, only the articles governing the profit appropriation in relation to the outstanding shares are included here.
Article 33 of the articles of association reads as follows:
distributions referred to above in paragraph 6 of this article, the provisions in paragraph 6 and in paragraph 10 shall not apply in the subsequent financial years until the deficit has been made up. Subject to the approval of the Supervisory Board, the Executive Board is authorised to resolve to distribute an amount equal to the deficit referred to in the previous sentence charged to the reserves.
Of the profit remaining thereafter, the Executive Board shall, subject to the approval of the Supervisory Board, reserve as much as it deems necessary. In so far as the profit is not reserved under application of the previous sentence, it shall be at the disposal of the general meeting, either fully or partially for reservation, or fully or partially for distribution to holders of ordinary shares proportionately to their holding of ordinary shares.
For other provisions of the articles of association, please refer to TKH’s website: www.tkhgroup.com.
| in thousands of euros | |
|---|---|
| Net profit attributable to shareholders | €99,561 |
| Dividend per (depositary receipt of) ordinary share | €1.50 |
| Payment date | May 23, 2025 |
| Dividend for priority shares | €0.05 per share of €1.00 |
A list of all subsidiaries is available at the Chamber of Commerce (the Netherlands). TKH Group N.V. is registered in the Trade Register under No. 06045666. The most important (group of) entities included in the consolidated financial statements of TKH are listed below, including the segment in which they operate. All of the subsidiaries are 100% owned, unless indicated otherwise.
The hereafter mentioned German subsidiaries included in TKH’s consolidated financial statements make use of the exemption in § 264 (3), § 264 (b) HGB to prepare, audit and publish individual annual accounts. TKH Deutschland GmbH is not required to draw up consolidated annual accounts pursuant to § 291 HGB.
Holding GmbH, Lakesight Technologies German Holding GmbH, LMI Technologies GmbH, New Electronic Technology GmbH, Profipatch GmbH, Schneider Intercom GmbH, Sensor to Image GmbH, SVS-Vistek GmbH, Texim Europe GmbH, TKD Immobilien GmbH, TKH Airport Solutions GmbH, TKH Deutschland GmbH, TKH Deutschland Verwaltungs GmbH, TKH Grundstücksverwaltungs B.V. & Co KG, TKH Deutschland Service GmbH, TKH Technologie Deutschland AG.
The listed subsidiaries below based in the UK are controlled and consolidated by the group, where the Directors have taken the exemption from having an audit of its financial statements for the year ended December 31, 2024. This exemption is taken in accordance with the UK Companies Act, S479A.
To: the shareholders and supervisory board of TKH Group N.V.
We have audited the accompanying financial statements for the financial year ended 31 December 2024 of TKH Group N.V., based in Haaksbergen, the Netherlands. The financial statements comprise the consolidated and company financial statements.
In 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 TKH Group N.V. (hereinafter also referred to as the company or the group) in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities, the Wet toezicht accountantsorganisaties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics for professional accountants).
We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for 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.
TKH Group N.V. is an internationally operating technology company and heads a group of operating companies and we have 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.
We determined materiality and identified and assessed 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.
| Materiality | EUR 8.0 million (2023: EUR 9.5 million) |
|---|---|
| Benchmark applied | 4% of earnings before interest, taxes, impairments and amortization (EBITA) (2023: 4% of EBITA) |
| Explanation | We applied earnings before interest, taxes, impairments and amortization (EBITA) as benchmark as in our perception, it is an important and stable performance indicator for the company and the users of the financial statements. We determined materiality consistent with prior financial year. |
We have also taken into account misstatements and/or possible misstatements that in our opinion are material for the users of the financial statements for qualitative reasons.
We agreed with the supervisory board that misstatements in excess of EUR 400,000, which are identified during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds.
TKH Group N.V. is at the head of a group of entities. The financial information of this group is included in the financial statements.
the audit work performed for purposes of the group audit.
We bear the full responsibility for the auditor’s report. Based on our understanding of the group and its environment, the applicable financial framework and the group’s system of internal control, we identified and assessed risks of material misstatement of the financial statements and the significant accounts and disclosures.
Based on this risk assessment, we determined the nature, timing and extent of audit work performed, including the entities within the group (components) at which to perform audit work. For this determination we considered the nature of the relevant events and conditions underlying the identified risks of material misstatements for the financial statements, the association of these risks to components and the materiality or financial size of the components relative to the group.
We communicated the audit work to be performed and identified risks through instructions for component auditors as well as requesting component auditors to communicate matters related to the financial information of the component that is relevant to identifying and assessing risks.
We have performed the audit work for the Dutch operating companies within the scope of the group audit ourselves, as well as centralized audit work, such as goodwill and other intangibles of acquired companies, business combinations, interest bearing loans and valuation of deferred tax assets arising from unused tax losses. Furthermore, we selected 22 components to perform audit work for group reporting purposes. With the exception of four operating companies in Germany, the audit work for the foreign operating companies in scope of our group audit were performed by teams of EY Global member firms.
This resulted in a coverage of 73% of the EBITA, 89% of the over-time revenue and 81% of capitalized development cost.
For the other components, we performed selected other procedures, including analytical procedures and to corroborate that our risk assessment and scoping remained appropriate throughout the audit.
We performed site visits to meet with local management and component teams, observe the component operations, discuss the group risk assessment and the risks of material misstatements for several components assigned a scope. We reviewed and evaluated the adequacy of the deliverables from component auditors and reviewed key working papers for selected components to address the risks of material misstatement. We held planning meetings, key meetings required based on circumstances and we attended closing meetings with local management and component teams for components assigned a scope.
During these meetings and calls, amongst others, the planning, procedures performed based on risk assessments, findings and observations were discussed and any further work deemed necessary by the primary or component team was then performed.
By performing the audit work mentioned above at the entities or business units within the group, together with additional work at group level, we have been able to obtain sufficient and appropriate audit evidence about the group’s financial information to provide an opinion on the financial statements.
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 like TKH Group N.V. We included specialists in the areas of IT audit (including cybersecurity), corporate governance (including remuneration), IFRS accounting, valuation of goodwill and intangible assets of acquired companies, real estate, share based payments, income taxes and forensics.
reported in the section ‘Sustainability Statements’ of the management report how TKH is addressing climate-related and environmental risks.
As part of our audit of the financial statements, we evaluated the extent to which climate-related risks and the effects of the energy transition and the TKH Group N.V.’s commitments and (constructive) obligations, are taken into account in estimates and significant assumptions. Furthermore, we read the management report and considered whether there is any material inconsistency between the non-financial information in section ‘Sustainability Statements’ and ‘Risk Management’ and the financial statements. Based on the audit procedures performed, we do not deem climate-related risks to have a material impact on the financial reporting judgements, estimates or significant assumptions as at 31 December 2024.
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. 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.
We identified and assessed the risks of material misstatements of the financial statements due to fraud. During our audit we obtained an understanding of the company and its environment and the components of the system of internal control, including the risk assessment process and management’s process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises oversight, as well as the outcomes.
We refer to section ‘Risk Management’ of the management report for the executive board’s (fraud) risk assessment and section ‘Report of the Supervisory Board’ in which the supervisory board reflects on this (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, whistle blower procedures and incident registration. We evaluated the design and the implementation of internal controls designed to mitigate fraud risks.
As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to financial reporting fraud, misappropriation of assets and bribery and corruption in close co-operation with our forensic specialists. We evaluated whether these factors indicate that a risk of material misstatement due to 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.
We addressed the risks related to management override of controls, as this risk is present in all organizations. For these risks we have performed procedures among other things to evaluate key accounting estimates for management bias that may represent a risk of material misstatement due to fraud, in particular relating to important judgment areas and significant accounting estimates as disclosed in note 1 ‘Material accounting principles’ to the financial statements.
We have also used data analysis to identify and address high-risk journal entries and evaluated the business rationale (or the lack thereof) of significant extraordinary transactions, including those with related parties.
Fraud risk: We presumed that there are risks of fraud in revenue recognition. We evaluated the pressure and incentive from quantitative targets and expectations from shareholders as revenue is considered one of the key performance indicators. We evaluated that a material misstatement may result from the over-time revenue recognition from contracts with customers in particular, through inappropriate estimations around the percentage of completion, including the cost to come and the expected result of the projects.
We describe the audit procedures responsive to the presumed risk of fraud in revenue recognition in the description of our audit approach for the key audit matter “Over-time revenue recognition, and related valuation of contract assets and contract liabilities”.
We considered available information and made enquiries of relevant executives, directors (including internal audit, head legal affairs, and compliance officer) and the supervisory board.
considered the potential risk from TKH Group N.V.’s interactions with third-party distributors. We refer to section ‘Risk Management’ in the management board report. Our audit approach included the following steps:
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.
Revenue is one of the key performance indicators of the company’s performance and considered a focus of the users of the financial statements. TKH Group N.V. manufactures products, which vary from special cable systems to integrated systems for the manufacturing of car and truck tires, whereby revenues have a fixed contract price and are recognized over-time. This results in the recognition of contract assets and liabilities per reporting date and prompting management to make estimates of the percentage of completion of the projects, as well as the cost to come and the expected result of the projects. This process involves relative complex estimations and requires judgment. Over-time revenue is recognized in all three segments, being Smart Vision systems, Smart Connectivity systems and Smart Manufacturing systems.
As mentioned in the section ‘Our audit response related to fraud risks’ above we identified a fraud risk of accelerating revenues through inappropriate estimations around the percentage of completion, including the cost to come and the expected result of the projects. Given the focus of users of the financial statements and the identified fraud risk, we consider improper revenue recognition a key audit matter. Further reference is made to section ‘Turnover’ in the notes to the consolidated financial statements, and note 22, ‘Information by segment’, to the consolidated financial statements.
Our procedures included, among others, auditing the application of the revenue recognition standard IFRS 15 ‘Revenue from Contracts with Customers’, and whether the accounting policies have been applied consistently. We have obtained and updated our understanding of the revenue recognition process within the different segments and evaluated the company’s controls relevant to revenue recognition. Furthermore, we have conducted the following substantive audit procedures with respect to the identified risks:
As disclosed in section Going concern in note 1 ‘Material accounting principles’ to the financial statements, the financial statements have been prepared on a going concern basis. When preparing the financial statements, the executive board made a specific assessment of the company’s ability to continue as a going concern and to continue its operations for the foreseeable future.
opinion.
Based on our procedures performed, we did not identify material uncertainties about going concern. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to continue as a going concern.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive reflection of all matters discussed. In comparison with previous year, the nature of our key audit matters did not change.
Risk TKH Group N.V. is investing in the development of new technologies. At 31 December 2024, the total carrying value of capitalized product development cost amounted to EUR 143 million. As such, TKH Group N.V. has capitalized a significant amount of product development costs, in accordance with IAS 38 ‘Intangible assets’. Management is required, for projects which are in development, to test these capitalized development costs for impairment at least annually, or more frequently if there is an indication for impairment.
We focused on the development projects related to new innovation projects which are in development as these do not yet generate sales and as such there is a higher level of judgment involved in setting the significant assumptions in determining the value in use to support the carrying value.
We identified a higher risk of overstatement of the capitalized development costs, specifically related to new innovation projects which are in development phase, and given the amounts involved, we consider this a key audit matter.
Further reference is made to section ‘Intangibles assets and goodwill’ in the notes to the consolidated financial statements, and note 3, ‘Intangible assets and goodwill’, to the consolidated financial statements.
Our procedures included, among others, auditing the application of the intangible assets standard IAS 38 ‘Intangible assets’, and whether the accounting policies have been applied consistently. We have obtained and updated our understanding of the impairment process, and evaluated the company’s controls relevant to the impairment process.
Furthermore, we have conducted the following substantive audit procedures with respect to the identified risks:
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:
we comply with the requirements of Part 9 of Book 2 and Section 2:135b sub-Section 7 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements. The executive board is responsible for the preparation of the other information, including the management report in accordance with Part 9 of Book 2 of the Dutch Civil Code and other information required by Part 9 of Book 2 of the Dutch Civil Code. The executive board and the supervisory board are responsible for ensuring that the remuneration report is drawn up and published in accordance with Sections 2:135b and 2:145 sub-section 2 of the Dutch Civil Code.
We were engaged by the general meeting as auditor of TKH Group N.V. on 14 May 2014, as of the audit for the year 2015 and have operated as statutory auditor ever since that date.
We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specific requirements regarding statutory audit of public-interest entities.
TKH Group 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 TKH Group N.V., complies in all material respects with the RTS on ESEF. The executive board is responsible for preparing the annual report, including the financial statements, in accordance with the RTS on ESEF, whereby the executive board combines the various components into a single reporting package.
Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF. We performed our examination in accordance with Dutch law, including Dutch Standard 3950N, “Assurance-opdrachten inzake het voldoen aan de criteria voor het opstellen van een digitaal verantwoordingsdocument” (assurance engagements relating to compliance with criteria for digital reporting). Our examination included amongst others:
The executive board is responsible for the preparation and fair presentation of the financial statements in accordance with EU-IFRSs and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, the executive board is responsible for such internal control as the executive board determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.
As part of the preparation of the financial statements, the executive board is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting framework mentioned, the executive board should prepare the financial statements using the going concern basis of accounting unless the executive board either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
stances that may cast significant doubt on the company’s ability to continue as a going concern in 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 misstatements, whether due to fraud or error 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.
We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identify during our audit. In this respect we also submit an additional report to the audit committee of the supervisory board in accordance with Article 11 of the EU Regulation on specific requirements regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report.
We provide the supervisory board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the supervisory board, we determine the key audit matters: those matters that were of most significance in the audit of the financial statements. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.
Amsterdam, 3 March 2025
EY Accountants B.V.
To: the shareholders and the supervisory board of TKH Group N.V.
We have performed a limited assurance engagement on the consolidated sustainability statement for 2024 of TKH Group N.V., based in Haaksbergen, the Netherlands in section Sustainability statements of the accompanying management report including the information incorporated in the sustainability statement by reference (hereinafter: the sustainability statement).
Based on our procedures performed and the evidence obtained, nothing has come to our attention that causes us to believe that the sustainability statement is not, in all material respects:
to the ESRS; and
Our conclusion has been formed on the basis of the matters outlined in this limited assurance report.
We have performed our limited assurance engagement on the sustainability statement in accordance with Dutch law, including Dutch Standard 3810N, “Assurance-opdrachten inzake duurzaamheidsverslaggeving” (Assurance engagements relating to sustainability reporting), which is a specified Dutch standard that is based on the International Standard on Assurance Engagements (ISAE) 3000 (Revised), “Assurance engagements other than audits or reviews of historical financial information”.
Our assurance engagement was aimed to obtain a limited level of assurance that the sustainability statement is free from material misstatements. The procedures vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.
Our responsibilities in this regard are further described in the section ‘Our responsibilities for the limited assurance engagement on the sustainability statement’ of our report.
We are independent of TKH Group N.V. in accordance with the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. This includes that we do not perform any activities that could result in a conflict of interest with our independent assurance engagement and we are not involved in the preparation of the sustainability statement, as doing so may compromise our independence. Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics for Professional Accountants). The ViO and VGBA are at least as demanding as the International code of ethics for professional accountants (including International independence standards) of the International Ethics Standards Board for Accountants (the IESBA Code) as relevant to limited assurance engagements on sustainability statements of public interest entities in the European Union.
We believe that the assurance evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
We draw attention to section Value chain and sources of estimation, and outcome uncertainty in the sustainability statement that identifies the quantitative metrics and monetary amounts that are subject to a high level of measurement uncertainty and discloses information about the sources of measurement uncertainty and the assumptions, approximations and judgements TKH Group N.V. has made in measuring these in compliance with the ESRS. The comparability of sustainability information between entities and over time may be affected by the lack of historical sustainability information in accordance with the ESRS and by the absence of a uniform practice on which to draw, to evaluate and measure this information. This allows for the application of different, but acceptable, measurement techniques, especially in the initial years.
We draw attention to section Process to identify, assess, and prioritize material impacts, risks, and opportunities in the sustainability statement. This disclosure explains future improvements in the ongoing due diligence and double materiality assessment process, including robust engagement with affected stakeholders. Due diligence is an ongoing practice that responds to and may trigger changes in TKH Group N.V.’s strategy, business model, activities, business relationships, operating, sourcing and selling contexts. The double materiality assessment process requires TKH Group N.V. to make key judgments and use thresholds and may also be impacted in time by sector-specific standards to be adopted. Therefore, the sustainability statement may not include every impact, risk and opportunity or additional entity-specific disclosure that each individual stakeholder (group) may consider important in its own particular assessment. Our conclusion is not modified in respect of these matters.
Sustainability information for Financial Year 2019 up to Financial Year 2023 included in the sustainability statement, has not been part of this limited assurance engagement. Consequently, we do not provide any assurance on the comparative information and thereto related disclosures in the sustainability statement for Financial Year 2019 up to Financial Year 2023. Our conclusion is not modified in respect of this matter.
In reporting forward-looking information in accordance with the ESRS, the executive board describes the underlying assumptions and methods of producing the information, as well as other factors that provide evidence that the forward-looking information reflects the actual plans or decisions made by TKH Group N.V. (actions). Forward-looking information relates to events and actions that have not yet occurred and may never occur. The actual outcome is likely to be different since anticipated events frequently do not occur as expected. We do not provide assurance on the achievability of forward-looking information. Our conclusion is not modified in respect of this matter.
The executive board is responsible for the preparation of the sustainability statement in accordance with the ESRS, including the double materiality assessment process carried out by TKH Group N.V. as the basis for the sustainability statement and disclosure of material impacts, risks and opportunities in accordance with the ESRS. As part of the preparation of the sustainability statement, the executive board is responsible for compliance with the reporting requirements provided for in Article 8 of Regulation (EU) 2020/852 (Taxonomy Regulation). The executive board is also responsible for selecting and applying additional entity-specific disclosures to enable users to understand TKH Group N.V.’s sustainability-related impacts, risks or opportunities and for determining that these additional entity-specific disclosures are suitable in the circumstances and in accordance with the ESRS. Furthermore, the executive board is responsible for such internal control as it determines is necessary to enable the preparation of the sustainability statement that is free from material misstatement, whether due to fraud or error. The supervisory board is responsible for overseeing the sustainability reporting process including the double materiality assessment process carried out by TKH Group N.V.
obtain sufficient and appropriate assurance evidence for our conclusion.
We apply the applicable quality management requirements pursuant to the Nadere voorschriften kwaliteitsmanagement (NVKM, regulations for quality management) and the International Standard on Quality Management (ISQM) 1, and accordingly maintain a comprehensive system of quality management including documented policies and procedures regarding compliance with ethical requirements, professional standards and other relevant legal and regulatory requirements.
Our limited assurance engagement included amongst others:
including the format in which the activities are presented
Amsterdam, 3 March 2025
EY Accountants B.V.
Signed by J. Niewold
The Board of TKH Trust Foundation Office met three times during the financial year. The topics discussed in the meeting on March 21 were the Annual General Meeting of Shareholders (“AGM”) 2024 and the TKH Annual Report 2023. The annual accounts 2023 of TKH Trust Foundation Office have been discussed, approved, and adopted. The retirement schedule was also discussed, which showed that none of the Board members is eligible to resign in 2024.
During the meeting on May 7, the agenda items of the AGM 2024 were discussed. The Board decided on its preliminary voting intentions prior to the actual deliberations of the meeting. Holders of depositary receipts for shares in the capital of the company were given the opportunity to vote independently on the agenda items voted on at the AGM in respect of the shares represented by their depositary receipts and subject to the relevant statutory provisions. Holders of depositary receipts of shares collectively representing 54.8% of the capital entitled to vote requested a proxy from TKH Trust Foundation Office to vote independently on the shares in question by giving voting instructions to TKH Trust Foundation Office. TKH Trust Foundation Office voted for the remaining 37.0% of the capital entitled to vote. The Board of TKH Trust Foundation Office decided to vote in favor of all agenda items for those shares for which no voting instructions were received.
In the meeting of September 20, 2024, the Executive Board of TKH gave an explanation of the published interim figures for 2024. The budget for the next financial year of TKH Trust Foundation Office was also discussed and approved.
The Board of TKH Trust Foundation Office currently consists of three independent members:
The personal details of the members of the Board and the retirement schedule can be found on the TKH Trust Foundation Office website.
Address: Spinnerstraat 15, 7481 KJ Haaksbergen (the Netherlands)
Website: www.stichtingadministratiekantoortkh.com
Email: [email protected]
Haaksbergen, March 31, 2025
TKH Trust Foundation Office
The Board
The Executive Board of TKH Group N.V. and the Board of TKH Trust Foundation Office, jointly and severally, state that they are of the opinion that TKH Trust Foundation Office is a legal entity that is independent of TKH Group N.V. within the meaning of Section 5.71(1)(d) of the Financial Supervision Act.
Haaksbergen, March 31, 2025
TKH Group N.V.
The Executive Board
Haaksbergen, March 31, 2025
TKH Trust Foundation Office
The Board
The purpose of Stichting Continuïteit TKH (“Continuity Foundation”) is to serve the interests of TKH Group N.V. (“TKH”) and all the businesses affiliated with TKH, in such a way that those interests are safeguarded to the greatest possible extent and that any influences which could undermine the independence, continuity, or identity of TKH and its affiliated companies in conflict with those interests are averted to the greatest possible extent, as well as to avoid any activities related to or conductive to the above.
acquire a degree of control that is considered undesirable and is not in the interests of TKH and its affiliated companies, or there is a danger of them doing so, TKH’s Executive and Supervisory Board will be at liberty – among other things – to determine their degree of control, to consider and explore possible alternatives, and to elaborate on these if necessary. The Continuity Foundation did not acquire any cumulative protective preference shares in TKH in 2024.
TKH has also granted the Continuity Foundation the right to initiate an inquiry procedure in the event that the Continuity Foundation believes there are grounds to doubt the policy pursued by TKH and the state of affairs prevailing in TKH, and that in invoking this right it would be acting in the interests of TKH and the businesses associated with it.
The Board of the Continuity Foundation consists of:
Haaksbergen, March 31, 2025
The Executive Board of TKH Group N.V. and the Board of the Continuity Foundation, jointly and severally, state that they are of the opinion that the Continuity Foundation is a legal entity that is independent of TKH Group N.V. within the meaning of Section 5.71(1)(c) of the Financial Supervision Act.
Haaksbergen, March 31, 2025
Haaksbergen, March 31, 2025
| In millions of euros | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|---|
| Turnover | 1,713 | 1,847 | 1,817 | 1,524 | 1,289 | 1,490 | 1,458 | 1,485 | 1,341 | 1,375 |
| Raw materials, consumables, trade products and subcontracted work | 824 | 928 | 959 | 787 | 655 | 771 | 768 | 817 | 710 | 743 |
| Added value | 889 | 919 | 858 | 737 | 634 | 718 | 690 | 668 | 631 | 632 |
| Personnel expenses | 474 | 476 | 435 | 378 | 345 | 369 | 352 | 347 | 331 | 326 |
| Other operating expenses | 159 | 156 | 140 | 124 | 108 | 133 | 137 | 147 | 131 | 133 |
| EBITDA | 256 | 287 | 283 | 235 | 181 | 216 | 201 | 174 | 169 | 173 |
| Depreciation | 3 52 50 48 45 46 45 26 25 22 22 | |||||||||
| EBITA excluding one-off income and expenses | 204 | 237 | 235 | 190 | 136 | 171 | 175 | 149 | 147 | 151 |
| One-off income and expenses | 4 | 2 | -107 | 18 | 4 | 6 | ||||
| EBITA | 200 | 235 | 245 | 190 | 129 | 154 | 171 | 143 | 147 | 151 |
| Impairments | 8 | 4 | 2 | 4 | 5 | 2 | 2 | 1 | 1 | |
| Amortization | 61 | 57 | 55 | 51 | 54 | 50 | 40 | 37 | 33 | 32 |
| Operating result | 131 | 174 | 190 | 137 | 71 | 99 | 129 | 104 | 113 | 118 |
| Financial result | -8 | 29 | -9 | -6 | -14 | -10 | -4 | -7 | -7 |
1
-2
4
1
124
203
181
129
57
89
125
108
107
111
24
37
44
34
15
20
27
20
20
23
100
166
137
95
42
69
98
88
87
88
45
11
1
1
2
100
166
137
95
42
114
109
87
86
86
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | |
|---|---|---|---|---|---|---|---|---|---|---|
| EBITA/Turnover (ROS) | 11.9 | 12.8 | 12.9 | 12.4 | 10.5 | 11.6 | 12.0 | 10.1 | 10.9 | 11.0 |
| Net result before amortization and one-off income and expenses/Group equity | 11.2 | 15.6 | 19.9 | 15.8 | 10.6 | 14.9 | 17.6 | 16.1 | 16.5 | 19.3 |
| EBITA/Average capital employed (ROCE) | 15.2 | 19.8 | 23.2 | 20.5 | 14.0 | 17.4 | 21.3 | 19.7 | 20.1 | 22.1 |
| Net debt/EBITDA ratio | 2.0 | 1.8 | 1.1 | 0.9 | 1.6 | 1.5 | 1.4 | 0.9 | 1.0 | 0.9 |
| Net result before amortization and one-off income and expenses/Turnover | 5.8 | 7.1 | 7.9 | 7.5 | 5.5 | 7.1 | 7.8 | 6.5 | 7.2 | 7.4 |
1 The comparative figures for 2018 have been restated due to discontinued operations.
2 The comparative figures for 2017 have been restated due to retrospective application of IFRS 15 ‘Revenue from contracts with customers’.
3 After restatement as a result of change in accounting principles for land and buildings and prior period restatements for the years 2015 up to 2016.
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Consolidated balance sheet | ||||||||||
| Intangible assets and goodwill | 611 | 566 | 534 | 537 | 577 | 596 | 544 | 392 | 395 | 400 |
| Property, plant and equipment | 486 | 436 | 295 | 222 | 220 | 231 | 246 | 229 | 215 | 196 |
| Right-of-use assets | 78 | 84 | 75 | 69 | 77 | 81 | ||||
| Financial non-current assets | 48 | 53 | 26 | 45 | 42 | 52 | 31 | 28 | 46 | 34 |
| Total non-current assets | 1,223 | 1,138 | 930 | 873 | 916 | 960 | 821 | 649 | 656 | 630 |
| Inventories | 399 | 403 | 386 | 295 | 237 | 239 | 267 | 219 | 207 | 194 |
| Trade and other receivables | 439 | 471 | 459 | 341 | 286 | 300 | 356 | 327 | 295 | 248 |
| Cash and Cash equivalents | 126 | 94 | 185 | 100 | 122 | 79 | 83 | 88 | 88 | 179 |
| Total current assets | 963 | 968 | 1,030 | 736 | 645 | 618 | 706 | 634 | 590 | 621 |
| Assets held for sale | 27 | 21 | 109 | 88 | 5 | 39 | ||||
| Total assets | 2,213 | 2,128 | 2,068 | 1,697 | 1,566 | 1,617 | 1,527 | 1,283 | 1,246 | 1,251 |
| Shareholders' equity | 883 | 836 | 787 | 722 | 662 | 705 | 647 | 594 | 574 | 521 |
| Non-controlling interests | 1 | 9 | 9 | 9 |
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|
| 883 | 836 | 787 | 722 | 662 | 705 | 648 | 603 | 583 | 530 |
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|
| 95 | 93 | 84 | 90 | 86 | 97 | 86 | 69 | 74 | 71 |
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|
| 620 | 572 | 503 | 334 | 410 | 416 | 239 | 187 | 214 | 223 |
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|
| 90 | 76 | 70 | 48 | 57 | 58 | 171 | 57 | 52 | 126 |
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|
| 3 | 4 | 7 | 8 | 9 | 5 | 15 | 23 | 27 |
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|
| 510 | 545 | 587 | 460 | 343 | 319 | 378 | 352 | 300 | 274 |
| 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|
| 9 | 3 | 33 | 37 | 13 |
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 |
|---|---|---|---|---|---|---|---|---|---|
| 2,213 | 2,128 | 2,068 | 1,697 | 1,566 | 1,617 | 1,527 | 1,283 | 1,246 | 1,251 |
| 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Solvency (in %) | 40 | 39 | 38 | 43 | 42 | 44 | 42 | 47 | 47 | 42 |
| Investments in property, plant and equipment | 89 | 179 | 105 | 30 | 28 | 32 | 42 | 41 | 46 | 38 |
| Depreciations of property, plant and equipment | 36 | 33 | 32 | 30 | 30 | 29 | 28 | 24 | 23 | 23 |
| Cash flow from operating activities | 196 | 153 | 116 | 199 | 188 | 182 | 127 | 160 | 103 | 182 |
| Number of shares outstanding and held by third parties at year end (x 1,000) | 39,873 | 39,798 | 41,001 | 41,178 | 41,487 | 41,999 | 42,003 | 42,045 | 42,161 | 41,724 |
| Net result per ordinary share of €0.25 | 2.50 | 4.07 | 3.34 | 2.31 | 1.14 | 2.72 | 2.58 | 2.05 | 2.04 | 2.07 |
| Net profit before amortization and one-off income and expenses from continued operations attributable to shareholders | 2.48 | 3.21 | 3.50 | 2.77 | 1.69 | 2.51 | 2.72 | 2.27 | 2.25 | 2.40 |
| Dividend per share | 1.50 | 1.70 | 1.65 | 1.50 | 1.00 | 1.50 | 1.40 | 1.20 | 1.10 | 1.10 |
| Highest share price | 44.78 | 49.10 | 54.90 | 56.15 | 51.30 | 55.05 | 60.15 | 56.68 | 38.14 | 40.50 |
| Lowest share price | 30.18 | 33.64 | 31.24 | 37.88 | 23.42 | 38.82 | 38.36 | 36.45 | 28.47 | 25.35 |
| Share price at year-end | 33.32 | 39.50 | 37.16 | 55.50 | 39.54 | 49.90 | 40.70 | 52.93 | 37.59 | 37.44 |
1 The comparative figures for 2018 have been restated due to discontinued operations.
2 The comparative figures for 2017 have been restated due to retrospective application of IFRS 15 ‘Revenue from contracts with customers’.
Net profit before amortization of intangible non-current assets related to acquisitions (after tax) and one-off income and expenses attributable to shareholders (summarized as: ‘Adjusted net profit’)
Reference is made to note 32 of the consolidated financial statements for a reconciliation and calculation. TKH deems this measure useful in comparing the performance to other companies in comparable industries.
Capital employed: Group equity plus Interest-bearing loans and borrowings current and non-current, less total lease liabilities and less cash and cash equivalents.
Return on capital employed: is the EBITA for the last 12 months divided by the average of capital employed at the beginning and at the end of the period.
The measure provides useful information to management and investors to evaluate our ability to allocate capital to generate returns.
| in thousands of euros | Notes | 2024 | 2023 |
|---|---|---|---|
| Group equity | 883,087 | 835,713 | |
| Add: Interest-bearing loans and borrowings, non-current | 620,085 | 572,368 | |
| Add: Interest-bearing loans and borrowings, current | 90,270 | 75,864 | |
| Less: Total lease liabilities |
| -87,725 | -87,154 | ||
|---|---|---|---|
| Less: Cash and cash equivalents | -125,629 | -93,697 | |
| Capital employed current year | 1,380,088 | 1,303,094 | |
| Capital employed previous year | 1,303,094 | 1,093,732 | |
| Average capital employed | 1,341,591 | 1,198,413 | |
| EBITA | 22 | 203,916 | 237,033 |
| ROCE | 15.2% | 19.8% |
Net interest bearing debt and Debt leverage ratio (net interesting bearing debt/EBITDA)
Net interest bearing debt: Bank loans reported under non-current liabilities plus lease liabilities plus borrowings reported under current liabilities less cash and cash equivalents.
Debt leverage ratio: Net interest bearing debt according to bank covenants, divided by EBITDA according to bank covenants.
This measure provides insight in the financial solidity of TKH and is a measure of our ability to operate within the covenants set by our banks.
TKH uses alternative performance measures to measure and monitor its financial and operational performance. These measures are used in this Annual Report but are not defined in any law or in the International Financial Reporting Standards (IFRS). As far as non-IFRS financial measures are not used in the financial statements they have not been audited or reviewed by our external auditors.
The measures TKH deems to be relevant and reliable alternative performance measures are included in this chapter of the Annual Report. We consider these measures important supplemental measures of TKHs’ performance and believes that they are widely used in the industries in which TKH operates as a means of evaluating a company’s performance. TKH believes that an understanding of its turnover development, profitability, financial strength and funding requirements is enhanced by reporting the following non-IFRS measures.
Total turnover less the cost of ‘Raw materials, consumables, trade products and subcontracted work’ for products sold and services delivered. Added value is presented as an absolute value, as well as a percentage from turnover.
Reference is made to note 22 of the consolidated financial statements for a reconciliation and calculation. TKH deems this a relevant performance measure as it is an indicator of the pricing power TKH has in its specific markets and the ability to create added value for its customers.
EBITA: Earnings before interest, taxes, impairments, and amortization.
EBITDA: Earnings before interest, taxes, impairments, depreciation, and amortization.
ROS: EBITA excluding one-off income and expenses, divided by total turnover as a percentage.
Reference is made to note 22 of the consolidated financial statements for a reconciliation and calculation.
| in thousands of euros | Notes | 2024 | 2023 |
|---|---|---|---|
| Net interest bearing debt | 18 | 581,768 | 554,146 |
| Less: adjustment according to bank covenants | -85,741 | -84,952 | |
| Net interest bearing debt according to bank covenants | 496,027 | 469,194 | |
| EBITDA | 22 | 255,919 | 285,861 |
| adjustment according to bank covenants | -13,077 | -23,516 | |
| EBITDA according to bank covenants | 242,842 | 262,345 | |
| Debt leverage ratio | 2.0 | 1.8 |
The ‘adjustments according to bank covenants’ mainly relate to the exclusion of lease liabilities from the calculation of the net interest bearing debt and some adjustments in determining EBITDA. All based on specific arrangements as included in the credit facilities with our banks.
This ratio indicates the portion of net profit that is paid out to shareholders: (dividend/net profit before amortization and one-off income and expenses attributable to shareholders) times 100.
| 2024 | 2023 | |
|---|---|---|
| Proposed dividend per share | 1.50 | 1.70 |
| Ordinary earnings per share before amortization and one-off income and expenses (in €) | 2.48 | 3.21 |
| Payout ratio 'Adjusted net profit' | 60.5% | 53.0% |
| 2024 | 2023 | |
|---|---|---|
| Proposed dividend per share | 1.50 | 1.70 |
| Ordinary earnings per share (in €) | 2.50 | 4.07 |
| Payout ratio Net result | 60.0% | 41.7% |
Last 12 months turnover from new products launched in the previous two years, divided by last 12 months turnover. TKH positions itself as an innovative technology company. This measure provides useful information of the ability of TKH to bring innovations to the market and translate these in turnover.
| 2024 | 2023 | |
|---|---|---|
| Turnover from innovations | 300,889 | 297,461 |
| Total Turnover | 1,712,735 | 1,847,532 |
| Turnover from innovations % | 17.6% | 16.1% |
Tax on result divided by Result before tax less the impact of Share in result of associates, Result on sale of associates and subsidiaries and Fair value changes of financial liability for earn-out and put options of shareholders of non-controlling interests. The mentioned elements can hinder the insight in the tax burden TKH incurs as those are non-taxable. Therefore the normalized effective tax rate is deemed a useful measure in reporting our tax burden.
| 2024 | 2023 | |
|---|---|---|
| Result before tax | 123,531 | 202,942 |
| Less: Share in result of associates | -249 | 3,309 |
| Less: Result on sale of associates and subsidiaries | -24,221 | -54,802 |
| Less: Fair value changes of financial liability for earn-out and put options of shareholders of non-controlling interests | -733 | 146 |
| Normalized result before tax | 98,328 | 151,595 |
| Tax on result | 24,000 | 37,180 |
| Normalized effective tax rate | 24.4% | 24.6% |
Income and expense items of such nature, size and/or frequency of occurrence that their disclosure is relevant to explain TKH performance, including impairments, restructuring costs and gains and losses from acquisition and disposal. One-off income and expenses are identified both within the operating result, result of associates, result from divestments and fair value changes of financial liability for earn-out and put options of shareholders of non-controlling interests. One-off income and expenses are excluded when using as a measure to improve insight in the underlying performance of our activities. Reference is made to note 32 of the consolidated financial statements for further details.
| 2024 | 2023 | |
|---|---|---|
| Total Operating expenses | 1,582,127 | 1,673,063 |
| Less: Raw materials, consumables, trade products and subcontracted work | -824,229 | -928,220 |
| Less: One-off income and expenses | -3,996 | -1,983 |
| Less: Amortization | -60,808 | -56,860 |
| Less: Impairments | -8,504 | -3,720 |
| Operating expenses (excluding one-off expenses, amortization and impairments) | 684,590 | 682,280 |
Expected future turnover with respect to contractual performance obligations that have not yet (or partially) been satisfied at balance sheet date. Reference is made to note 9 of the consolidated financial statements for further detail.
The order intake is calculated as follows:
| Smart Vision Systems | Smart Manufacturing Systems | Smart Connectivity Systems | Other & eliminations | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| in thousands of euros (unless stated otherwise) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 |
| Order book at 1 January | 124,035 | 159,173 | 631,285 | 572,989 | 214,784 | 239,744 | 1 | 1 | 970,105 | 971,907 |
| Acquisitions and divestments | 343 | 10,896 | -37,231 | 3,144 | -1 | 0 | -33,745 | 10,896 |
-489,597
-500,526
-608,843
-573,563
-631,900
-800,540
17,605
27,097
-1,712,735
-1,847,532
505,080
454,492
516,295
631,859
907,611
775,580
-17,607
-27,097
1,911,379
1,834,834
139,861
124,035
501,506
631,285
493,638
214,784
-21
1,135,004
970,105
Growth of turnover corrected for the impact of acquisitions, divestments and foreign exchange effects from translating turnover in foreign currencies. The correction for divestments is determined by adjusting ‘Turnover growth’ for the turnover of the previous year period for which the divested company was no longer part of the consolidation in the current year. The correction for acquisitions is determined by adjusting ‘Turnover growth’ for the turnover of the current year period for which the acquired company was not yet part of the consolidation in the previous year. This is used as a measure to improve insight in and comparability of our turnover development which can potentially be hindered by the effects of acquisitions, divestments and foreign exchange effects.
| Notes | Smart Vision SystemsΔ in % | Smart Manufacturing SystemsΔ in % | Smart Connectivity SystemsΔ in % | Other & eliminations | Total | 2024Δ in % | |||
|---|---|---|---|---|---|---|---|---|---|
| Turnover current year | 22 | 489,597 | 608,843 | 631,900 | -17,605 | 1,712,735 | |||
| Turnover previous year | 22 | 500,526 | 573,563 | 800,540 | -27,097 | 1,847,532 | |||
| Turnover growth | -10,929 | -2.2% | 35,280 | 6.2% | -168,640 | -21.1% | 9,492 | -134,797 | -7.3% |
| Impact of acquisitions & divestments | -10,048 | -2.0% | 27,895 | 4.9% | 93,514 | 11.7% | 0 | 111,361 | 6.0% |
| Impact of foreign exchange effects | -1,117 | -0.2% | 506 | 0.1% | 1,161 | 0.1% | 0 | 550 | 0.0% |
| Organic turnover growth | -22,094 | -4.4% | 63,681 | 11.1% | -73,965 | -9.2% | 9,492 | -22,886 | -1.2% |
Growth of EBITA corrected for the impact of acquisitions, divestments and foreign exchange effects from translating EBITA in foreign currencies. The correction for divestments is determined by adjusting ‘EBITA growth’ for the EBITA of the previous year period for which the divested company was no longer part of the consolidation in the current year. The correction for acquisitions is determined by adjusting ‘EBITA growth’ for the EBITA of the current year period for which the acquired company was not yet part of the consolidation in the previous year. This is used as a measure to improve insight in and comparability of our EBITA development which can potentially be hindered by the effects of acquisitions.
Working capital ratio is calculated by dividing working capital by turnover.
| 2024 | 2023 | |
|---|---|---|
| Current assets | 963,361 | 968,318 |
| Less: Cash and cash equivalents | -125,629 | -93,697 |
| Current liabilities | -622,177 | -641,377 |
| Add: Current interest-bearing loans and borrowings | 90,270 | 75,864 |
| Working capital | 305,825 | 309,108 |
| Turnover | 1,712,735 | 1,847,532 |
| Working capital ratio | 17.9% | 16.7% |
| Notes | Smart Vision Systems Δ in % | Smart Manufacturing Systems Δ in % | Smart Connectivity Systems Δ in % | Other & Eliminations | Total | 2024 Δ in % | |||
|---|---|---|---|---|---|---|---|---|---|
| EBITA current year | 77,732 | 116,113 | 30,920 | -20,849 | 203,916 | ||||
| EBITA previous year | 85,886 | 90,636 | 81,132 | -20,621 | 237,033 | ||||
| EBITA growth | -8,154 | -9.5% | 25,477 | 28.1% | -50,212 | -61.9% | -228 | -33,117 | -14.0% |
| Impact of acquisitions & divestments | -2,645 | -3.1% | 2,573 | 2.8% | 15,014 | 18.5% | 0 | 14,942 | 6.3% |
| Impact of foreign exchange effects | -170 | -0.2% | 131 | 0.1% | 393 | 0.5% | 0 | 354 | 0.1% |
| Organic EBITA growth | -10,969 | -12.8% | 28,181 | 31.1% | -34,805 | -42.9% | -228 | -17,821 | -7.5% |
Percentage of the Total group equity relative to the Total equity and liabilities. This percentage is presented to express the financial strength of TKH.
| Notes | 2024 | 2023 |
|---|---|---|
| Total group equity | 883,087 | 835,713 |
| Total equity and liabilities | 2,213,341 | 2,127,779 |
| Solvency | 39.9% | 39.3% |
Total of TKH’s portfolio’s turnover linked to one of the 17 SDGs (Sustainable Developments Goals), adopted by all United Nations Member States in 2015. This is calculated by allocating TKH’s portfolio based on internal reporting of turnover by end-market combined with portfolio information included in quarterly reports of operating companies. This measure provides useful information about the ability of TKH to bring portfolio to the market which is connected to one of the SDGs. Reference is also made to the chapter ‘Sustainability Statements’ which includes a paragraph 'Sustainable Development Goals'.
| Notes | 2024 | 2023 |
|---|---|---|
| Turnover linked to SDGs | 1,226,631 | 1,296,403 |
| Total Turnover | 1,712,735 | 1,847,532 |
| Turnover linked to SDGs % | 71.6% | 70.2% |
Editor and text
TKH Group NV, Haaksbergen
Design
Monter, Amsterdam
Photography
Maarten de Groot (page 4, 47), Dirk Verwoerd (page 37, 38).
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