A Window of Opportunity Annual Report 2021

Annual Report 2021

We see multiple windows of opportunity before us. A chance to create a sustainable future for our children and the generations that follow. Are you with us?

Chapter 3
01 02 03 04 05

Annual Report 2021

Index

2021 at a glance
1.1 Message from the Chairman and CEO
1.2 Key Figures 2021
1.3 Milestones 2021
Report of the Board of Directors
2.1 Who we are
2.2 Mission
2.3 Products and Innovations
2.4 Risk and Governance
2.4.1 Internal Control and Risk Management
2.4.2 Corporate Governance Statement
2.5 Sustainability
2.5.1 The World We Operate in
2.5.2 Sustainability Strategy
2.5.3 People
2.5.4 Planet
2.5.5 Community
2.6 Financial Performance
2.6.1 Deceuninck Consolidated
2.6.2 Financial Statements and Notes
2.6.3 Deceuninck NV
2.6.4 External Auditor’s Report
2.6.5 Management Responsibility Statement

Deceuninck Shares
Addresses
Glossary
GRI Index

Annual Report 2021

1. 2021 at a glance

1.1 Message from the Chairman and CEO

Interview with our former Chairman, Marcel Klepsch, our former CEO and new Chairman, Francis Van Eeckhout and our new CEO, Bruno Humblet

Marcel, your name is associated with Deceuninck since more than 10 years, rst as independent director and later as Chairman of the Board. How did you see the company evolve?

Marcel: I came on board in the middle of the nancial crisis, when the global economy was severely impacted. During that period, Deceuninck has proven to be a very resilient company. Management acted with a lot of agility implementing the required restructuring, including the closure of factories and raising the required capital to strengthen its nancial structure. The entry of new share- holders in 2014 gave the company extra nancial strength allowing it to do targeted investments to further develop the global growth plan, improve brand awareness and, very importantly, to develop the recycling technology to drive sustainability. During the recent pandemic, Deceuninck showed once more its resilience. In this crisis also, management re- acted fast and decisively, resulting in strong protable growth when the economy started to pick up. Over the past few years, it has become clear to me that we are operating in a very stable and growing market. All new building and renovation projects require high quality windows and doors. Our products and technologies deliver the best results in terms of insulation, which becomes increasingly important to help meet the climate objectives.

Francis, under your leadership Deceuninck acceler- ated its global expansion while improving its prota- bility.

Francis: In order to grow as a business, it was necessary to improve protability rst. This was more dicult than I expected. Certain structures are fairly xed and dicult to change in the short term, but I think I can say that, over the past 5 years, we have been successful in spite of the turbulent times. Protability has evolved nicely in recent years and our debt has reduced to a comfortable level. That created room to invest, which we did: in our brand, in our recycling activities, in growth of both geographi- cally in — amongst others — Emerging Markets and via a renewed product range in the mature markets.

Is the return of those investments visible already in the 2021 gures?

Francis: I am very satised with the 2021 gures: despite COVID-19, we achieved very good results for the second year in a row. Despite the disrupted supply of raw materi- als, we managed to achieve a volume growth of 13%. This is indeed the result of focused eorts. In order to avoid production interruptions caused by a lack of raw materials, we were forced to accept higher purchase prices month by month, which forced us to raise our selling prices several times. On top, we saw ination in our labor costs, transport costs and energy prices. With some delay, we largely succeeded in passing on those higher costs. That enabled us to limit the impact on the prot in euro, but we did see a dilution in the prot margin. Apart from the numbers, I regret to say that we did not always succeed in meeting our delivery deadlines to our customers, due to the exceptionally strong demand combined with raw material scarcity. This impact was seen across the whole sector, but we are working hard across all our plants globally to improve the delivery performance.

Because of the fall of the Turkish lira, a lot of attention was probably also paid to the Turkish business?

Francis: Turkey is a country with short-term volatility but long-term proven strong growth potential. In the long run, the growth trend in turnover and prot remains intact. Thanks to our state-of-the-art factories, strong market position, strong local management and solid local brands, we manage to absorb a lot of this volatility. In ad- dition, with every crisis in Turkey, we gain market share as smaller competitors with weaker balance sheets regress. I am proud of the results we achieve in that region.

And how do you assess the results of the other regions?

Francis: In Europe, we see a solid growth with protabili- ty that is much more robust than in the past. The region is also on schedule with the commercial roll-out of Elegant. Everywhere this new series is launched, customers and architects are thrilled about its look and feel. Thanks to its sleek design, no one can tell the dierence from alumi- num proles.

Francis Van Eeckhout, former CEO and new Chairman

“Protability has evolved nicely in recent years and our debt has reduced to a comfortable level. That created room to invest, which we did: in our brand, in our recycling activities, in growth of both Emerging Markets and via a renewed product range in the mature markets.”

In the US, demand exceeds supply. The labor shortage aected us also in 2021. We have enough machines, but are struggling to nd enough people to man them.

Bruno, you have been a Board member since 2020 and you are Deceuninck’s new CEO since 1st January. Have you been able to settle in yet? Where will you put your main focus?

Bruno: Deceuninck is a great company that oers many opportunities. Over the past few months, I have had the opportunity to visit dierent locations and to meet the local teams. Our motivated people, all over the world, are proud of their work, our products, our mission. They live our values: Candor, Top Performance and Entrepreneur- ship. By working together, we can achieve our objective to build a sustainable home creating value for all our stakeholders, our people, our customers, the society we operate in and our shareholders. I also rmly believe in our sustainability discourse: in the coming years, we will drastically reduce the carbon emis- sions resulting from our own activities. We are currently nalizing concrete plans and setting challenging targets to reduce our environmental impact. Thanks to our investments in recycling, we will also be able to incor- porate more and more recycled PVC in our products. As recycling PVC requires 90% less energy than producing new PVC, this will further signicantly reduce emissions. Finally, our products have superior insulation values and will therefore play an important role in the renovation wave that will come to meet the global climate objectives. As Francis mentioned, an important point of attention in the short term is the shortening of delivery times to our customers. The availability of materials and labor will remain a problem, but we are optimizing to handle those impacts better. Finally, we will remain focused on ensuring we drive protable growth in order to be able to further invest in sustainable growth. In the given circumstances, our gross operating margin of 11.7% is a very good result, but in the longer term, we must dare to aim higher.

Marcel Klepsch, former Chairman

“During the recent pandemic, Deceuninck showed once more its resilience. In this crisis also, management reacted fast and decisive, resulting in strong protable growth when the economy started to pick up.”

1.2 Key Figures 2021

KEY FIGURES* (IN € MILLION)

	2019	2020	2021	EVOLUTION 2020-2021
Consolidated Income Statement
Sales	633.8	642.2	838.1	31%
Adjusted Ebitda	60.6	86.0	97.7	14%
Ebit	11.2	45.9	54.3	18%
Net Prot	(14.7)	25.6	37.2	45%
Consolidated Balance Sheet
Equity	233.1	246.3	258.9	5%
Net Debt	140.2	55.5	61.9	12%
Total Assets	589.7	599.4	675.1	13%
Capital Expenditure	35.5	23.5	43.6	85%
Working Capital	94.5	74.2	84.3	14%
Capital Employed	416.3	347.4	354.9	2%
Ratios
Net Prot On Sales	(2.3%)	4.0%	4.4%	-
Adjusted Ebitda / Sales	9.6%	13.4%	11.7%	-
Net Debt / Adjusted Ebitda	2.31	0.64	0.63	-
Ebit / Capital Employed	2.7%	13.2%	15.3%	-
Headcount
Total Full Time Equivalents (Fte)	3,754	3,660	3,709	-

KEY FIGURES PER SHARE

	2019	2020	2021
Number of shares as at 31 December	136,732,506	136,795,123	138,040,929
Market capitalisation as at 31 December (in € million)	280.3	264.0	463.8
Net prot per share as at 31 December (in €)	(0.11)	0.19	0.27
Book value per share (in €)	1.70	1.80	1.88
Gross dividend per share (in €)	-	0.05	0.06
Share price at 31 December (in €)	2.05	1.93	3.36

Definitions: See glossary

2021 at a glance

Annual Report 2021

SALES (IN € MILLION)

SALES 2020 PER REGION (IN € MILLION)

	2019	2020	2021
SALES	633.8	642.2	838.1

Key Figures 2021

	2021	2021	2021
INVESTMENTS (IN € MILLION)	633.8	642.2	838.1
SALES PER REGION (IN € MILLION)	60.6	86.0	97.7
ADJUSTED EBITDA (IN € MILLION)	140.2	55.5	61.9
NET DEBT (IN € MILLION)	35.5	23.5	43.6

	2021	2021	2021
Turkey & Emerging Markets	159.6	165.3	183.2
Europe	243.5	317.3	411.4
North America

Mission: Building a Sustainable Home

ReliabilitySustainabilityInnovation

Awards 2021

Polish IRBS Award for Thermofibra
Austrian “Innovation” and “Sustainability” Recognition Awards for Elegant
Awards for Elegant

Latest Innovations

Phoenix / Eos / Zenith
ISO14001 certified in production facilities Belgium, Turkey and UK

Our reporting framework

Global Reporting Initiative (GRI)

Some of our Sustainability Achievements

23,500 tonnes recycled in our recycling factory
15% recycled materials in our products
32,500 tCO₂e emissions avoided through the use of own PVC recyclate
Commitment to the Science Based Targets Initiative
VinylPlus Product Label for Elegant, Elegant Thermofibra, Zendow, Zendow#neo and Twinson in Europe

1.3 Milestones 2021

January
Deceuninck welcomes Serge Piceu as new CFO Group.

February
Deceuninck Belgium partners up with #DASGENIAAL, a partnership between 18 international companies and local organizations with one common goal: to make youngsters passionate about science, technology, engineering, mathematics, production and design (“STEM”).
Deceuninck Australia moves to its new 5,500m² Melbourne warehouse. It is the largest PVC supplier warehouse in Australia and services Deceuninck fabricators across Australia and New Zealand.

April
Deceuninck auction of the Deceuninck-Quick Step riders’ jerseys brought in € 9,733.78, which was donated to the Belgian association Kom Op Tegen Kanker.
Deceuninck’s ThermoFibra technology receives the Polish IRBS award.

April Milestones

June
Deceuninck Germany wins two recognition awards at the Vienna Window Convention in the categories “Innovation” and “Sustainability” with the Elegant window range.

June Milestones

August
Deceuninck Russia announces the appointment of Evgeny Pchelintsev as its new General Manager.

September
Deceuninck announces a leadership transition starting 1 January 2022: Bruno Humblet is appointed as new CEO Group, Marcel Klepsch steps down as Chairman and remains independent director and Francis Van Eeckhout is appointed as Executive Chairman.
Deceuninck welcomes Paul Van Oyen as new independent director.

October
Deceuninck Turkey receives the rst Passive House Component Certication for PVC Windows in Turkey with the Winsa-Revotech window range from the German Passive House Institute.

November
Deceuninck announces the sponsorship deal with the ProTeam Alpecin-Fenix as of 2022.
Deceuninck Poland is awarded a triple distinction at the prestigious Building Creator 2021 nals in Warsaw.
Deceuninck Germany wins the Training Company Award of the District of Straubing- Bogen for companies that excel in training and apprenticeships.

November Milestones

December
Deceuninck NV is committing to set science- based emissions reduction targets in line with the SBTi Criteria and Recommendations, to submit them to the SBTi for validation and to publish its approved targets within a maximum of 24 months.
Deceuninck renews and extends the VinylPlus ® Product Label for the product families Elegant, Elegant Thermobra, Zendow, Zendow #neo and Twinson in Europe.

SUSTAINABILITY MILESTONES

We believe that great people deliver great results. Our ambition is to attract and retain talent by encouraging our people to learn and develop themselves, by investing in enhancing their health and safety and by protecting their fundamental rights.

Sustainability Milestones

“Deceuninck Group understands the value of the HR function on the business’ ability to reach its objectives.”
Lytia Watson
VP of HR
Deceuninck North America

2. Report of the Board of Directors

2.1 Who we are

How the story began

1937
The origins of the Group go back to 1937. Benari Deceuninck, father of Roger Deceuninck, started a small company in Beveren-Roeselare to manufacture all kinds of buttons, buckles, combs, etc. from plastic sheets.

1960s
In the 1960s, the Group chose to explore a new direction in plastic production by extruding PVC granules for the manufacture of proles for the building industry.

1970s
After the successful introduction of the products in the neighbouring countries of France, the Netherlands and the United Kingdom in the early 1970s, the rst commercial subsidiary was established in France with local storage capacity and local oces. This was soon followed by a subsidiary in the United Kingdom and in Spain.

1980s
As local demand boomed in the mid-1980s, particularly in France and the UK, Deceuninck decided to start producing locally and created two new production sites: one in Roye (France) and one in Calne (United Kingdom).
On 11 June 1985, Deceuninck was listed on the Brussels Stock Exchange. During the second half of the 1980s, Deceuninck mainly focused on the vertical integration of its processes, including the start of the printing and coating activities, followed by the start of the compounding activities in the early 1990s in Diksmuide (Belgium).

1990s
In the mid-1990s, Deceuninck set up sales oces and local warehouses in Poland and the Czech Republic. This was quickly followed by the start of extrusion activities in Poznan (Poland) in 1995.
The rst steps in the US market were made with the acquisition of Acro Extrusions in Wilmington, Delaware in 1995. The acquisition of American Dayton Technologies from the Alcoa Group in Monroe, Ohio followed in 1997, giving Deceuninck a leading position in the American market for non- integrated PVC window systems.

2000s
At the beginning of the 21st century, Deceuninck decided to acquire Ege Prol. Turkey had become the second largest market for PVC windows in Europe. In June 2003, the German company Thyssen Polymer was acquired from the Thyssen Krupp Group. At that time, the company was half the size of Deceuninck and had a major extrusion plant in Germany and two production plants in the United States. At the end of 2004, the Group acquired the company Winsa. Thanks to its presence in Turkey, Deceuninck was able to benet not only from the growth of the local Turkish market, but also from the success of its Turkish subsidiaries in developing sales in the Middle East, the Maghreb countries in North Africa and in Asia.
Deceuninck was one of the pioneers in introducing wood composite products to Western Europe. The product line for terraces and facades uses a specic PVC-based formula under the Twinson brand name. At the end of 2008, the global nancial crisis had an impact on global construction activities, forcing Deceuninck in the rst half of 2009 to further adapt its business activities to the new economic reality. Indirect personnel was cut back signicantly worldwide, and in all branches direct personnel was brought in line with the volume. In September 2009, Deceuninck implemented a nancial restructuring.

2010-today
Early 2011, Deceuninck launched its new vision "Building a Sustainable Home" based on the pillars Innovation - Ecology - Design and linked to the Group’s three core values: Candor, Top Performance and Entrepreneurship. From 2010 onwards, the Group further expanded in the Emerging Markets of Asia, Africa and Latin- America. In 2014, the Turkish listed company Pimas was acquired. On the site of its existing compounding plant in Diksmuide, the Group built a high-tech recycling plant. The recycling line aims to process the increasing ow of rst-generation windows in a qualitative manner. The line is equipped with the most modern recycling techniques that can also recycle glass bre. The line has been fully operational since December 2018. In 2017, the Group launched Decalu and Tunal, expanding the product range with aluminum windows and doors, ventilation and sun protection, next to the IQ Aluminum line that already existed in Turkey. In 2019, the Group announced its One Europe strategy under one global brand, Deceuninck. In the same year, Deceuninck's latest window series Elegant won the prestigious Red Dot Award. Elegant is Deceuninck’s ultimate window concept. It is 100% recyclable and the best performing steelless window and door solution available. It is the rst of many window designs powered by Deceuninck’s new universal platform iCOR. Despite the COVID-19 pandemic, the Group was able to resume its protable growth track with results reaching their highest levels ever.

2.2 Mission

2.3 Products and Innovations

2.4 Risk and Governance

2.5 Sustainability

2.6 Financial Performance# Products and Innovations

We ensure a comfortable, clean and healthy living environment thanks to our special solutions for sun protection, shutters and ventilation. Full home protection is possible thanks to our roller shutter platform. Controlled airflow is assured thanks to our surface-mounted high-tech window ventilation systems: a constant flow of fresh air guaranteed.

Multi-material window, door and building solutions

Roof finishing and cladding

Aesthetic elegance and durability are the two main requirements that our roof finishing and cladding solutions also fully meet. Our claddings are available in Twinson wood composite, aluminum and PVC for the highest durability. The list of benefits is endless: our cladding solutions offer excellent weather resistance, are lightweight and easy to install. They are also rot-resistant and fully recyclable.

Outdoor living

We continue to invest in high-quality wood composite materials and technologies. The result: the natural look of wood and the easy maintenance of PVC. The Twinson range offers both hollow and solid terrace boards, in various colors and textures. Our wood composite decking solutions are slip and crack resistant. All materials are fully recyclable and, due to their natural look, fit perfectly into the surrounding environment.

Elegant

The Elegant range is Deceuninck’s ultimate window concept. It is 100% recyclable and the best performing steel-less window and door solution available. It is the first of many window designs powered by Deceuninck’s new universal platform iCOR. This modular approach allows for process standardization, resulting in a substantial complexity reduction. The remarkable technology of ThermoFibrA replaces the steel reinforcement in window and door profiles by structural glass fibres. Elegant’s design and 100% recyclability have already been internationally awarded with a German Innovation Award, German Design Award and Red Dot Award.

eos Window System

Deceuninck North America’s innovative eos window system leads the way in residential, replacement markets. This product line has seen unprecedented growth in 2021 with homeowners looking to improve the energy efficiency, aesthetics and safety of their homes. It is designed to outperform Energy Star requirements.

Patio Door (ADA sill)

The eos patio door system is a versatile, high-performing product used in residential and light commercial remodeling and new construction applications. It was enhanced in 2021, with the design of a new sill that meets the most recent Americans with Disabilities (ADA) standards.

Innovations Zenith and Slim Slide

Deceuninck Turkey’s Zenith features a unique and intelligent design which provides significant thermal properties on the window. The Slim Slide concept was developed and used in a new sliding frame without sill, in order to ease access for people with disabilities.

– “The Elegant range for windows and doors, based on the uniquely developed iCOR principle, is the result of our putting our core product design values into practice.”

Cutting-edge thinking has always been in our DNA, but we want to take it a step further. We develop our products and use our know-how so as to combine design and efficiency with superior insulation, contributing to both increasing comfort standards and global warming objectives. The award-winning Elegant platform is the perfect illustration of what the future has got in store.

Risk framework

Taking calculated risks is an integral part of operational management. The purpose of risk management is to identify and to manage the risks. The Group selected the ISO 31000 standard as framework for its risk management system. The following steps can be distinguished within this framework:

Establishing the context
In order to detect risks, it is important to have a clear understanding of the context in which the Group operates. On the one hand, there is the ever-changing external context which includes our social, cultural, political, legal, legislative, financial, technological, economical, natural and competitive environment. On the other hand, there is the internal context in which the objectives of Deceuninck as a Group, as well as the objectives of each individual entity, need to be defined.
Risk assessment
- Risk identification
  Risk identification is the first step within the risk assessment process. The risks that might have an impact on the achievement of objectives are identified in various brainstorming sessions, and subsequently summarized in the Risk Register.
- Risk analysis
  Risk analysis is the process that seeks to identify the possibility that the risk will occur and what the possible impact will be on achieving the objectives. For this, we consider the impact on the core objectives i.e. people, planet, quality, service and cost.
- Risk evaluation
  Risks are evaluated and ranked on the basis of the likelihood that they will occur and the impact they will have. The outcome of this is summarized in a Risk Matrix.
- Risk treatment
  The risk management process is a continuous effort and the different phases continuously have to be reviewed and monitored. Internal Audit maintains the Risk Register and Risk Matrix for all risks which are relevant at Group and regional level, as well as a list of actions which have been agreed to treat these Risks. Actions are assigned to cross regional teams and overseen by an Executive Team member. These are reviewed twice a year by the Executive Management, to ensure completeness of the Risk Register and to ensure that agreed actions are implemented. Once a year, there is a similar review with the Audit Committee of the Board, typically during a dedicated risk management session or as a separate agenda item during the scheduled meetings of the Audit Committee. Internal Audit applies a risk-based internal audit approach which aims to identify potential new risks during their audits at legal entity level. This helps to ensure completeness.

Risks can be treated in four possible ways:

To avoid the risk completely by changing or stopping the activity
To act so as to reduce the probability (prevention) or to lower the impact (protection)
To transfer the risk through insurance or through other contracts with third parties
To accept the risk without further action.

Main features of the Group’s internal control and risk management systems

The most important features of the Group’s internal control and risk management system, including financial reporting, can be summarized as follows:

Defining targets for permanent follow-up of operating priorities as well as operational and financial performance of the Group and the individual companies
Continuously analyzing historical financial results and regularly updating mid-term financial forecasts. Follow up of exchange rate risks and mitigating actions.
Defining the company’s policies and procedures for compliance with applicable laws and regulations
Defining procedures clarifying authorization levels and segregation of duties, reviewed for compliance by the internal audit department.
Ensuring business continuity and access control of IT systems.
Discussing internal audit reports with the Internal Auditor and, if required, further consultation for additional information and clarification as well as taking measures in order to implement and be compliant with the recommendations.
Constantly monitoring raw material prices.
Requesting confirmation from local management teams to ensure that they comply with applicable laws and regulations and internal procedures of the company.
Monitoring and regularly discussing litigations that could be of material significance with the legal department.

Risk structure

Two dimensions

The Group structures its risks along two dimensions: operational and generic risks. The operational dimension is split into the following categories: innovation, operations, sales, sourcing, inventory, logistics, people, finance, ICT and legal risks. The generic dimension is split into economic, political, regulatory, climate change and reputational risks.

Risk rating

The risks listed below were scored as part of the risk assessment exercise and were scored highest amongst all risks included in the Risk Register.

Establishing the context
Monitoring & Review
Communication & Consultation
Risk Identification
Risk Analysis
Risk Evaluation
Risk Treatment
Risk Assessment

More detailed explanation of the risk categories

Economic climate

As most companies, the Group is exposed to the risks of an economic recession, the volatility on the credit and capital market and the economic and financial situation in general. These factors have a negative influence on product demand.# Risk and Governance

The Group primarily manufactures window profiles destined for the residential construction sector and related products. Consequently, our future results will mainly depend on the evolution of these markets. Against this background the current financial and economic situation has a considerable impact on the economy in general and influences all markets in which we operate. The Group cannot predict how the markets will evolve in the short term. Although the authorities of some geographical markets in which we operate have taken policy measures to stimulate economic growth, the Group cannot guarantee that these measures will suffice in order to achieve this effect. Also, the measures that were taken can be withdrawn or adjusted.

The markets in which the Group operates are subject to strong competition. We compete with other companies based on different factors, such as quality and service: (i) knowledge of and access to new technologies and new production processes, (ii) the ability to launch new products that offer improved functionality or that are less expensive than the existing range, (iii) completeness of the solutions that are offered, (iv) reputation and vision, (v) geographical presence, (vi) distribution network and (vii) prices. Furthermore, competition can increase by consolidation or by new competitors offering similar products that enter the market. Strong competition can cause market overcapacity and price pressure. In addition, contracting parties, customers or other parties that operate in the Group’s market can change their operational model in a manner that influences our activities. In other words, the Group’s success depends on its capacity to maintain competitiveness as the market structure changes. Although the Group was able to do so by adjusting to the market structure changes, future changes could have a considerable impact on its activities, operating profit or financial position.

The activities, operating profit and financial position of the Group fluctuate according to the general economic climate. The decision whether or not to buy capital goods, which would enable the Group’s customers to integrate its products, entails a high level of investment. Such a decision on investment can among other things be associated with the general economic climate. The decision by end users of our products to invest in real estate can also be associated with the general economic climate and credit access. The renovation market is less sensitive to economic fluctuations than new construction.

Operations

The Group’s compound factories are considered to be a critical infrastructure that deliver compound to most of the Group’s extrusion factories. They are situated in a limited number of countries (Germany, Belgium, Poland, the United States, Russia and Turkey). Although no considerable problems arose in the past, an activity interruption at one of the compound factories could substantially interrupt the production process of the extrusion facilities, as it is difficult to ship compounds under commercially attractive conditions. Such unavailability could substantially influence our activities, operating profit and financial position. Furthermore, sudden and significant increases in customer demand can result in deteriorating service levels due to product availability problems. In such case, where delivery lead times are increasing it is key to have the actual cost price of the products reflected in the sales price. As such, regular price increases to reflect rising raw materials prices are vital to prevent margin erosion.

Sourcing

Future profitability of the Group is partly determined by changes regarding the purchase prices of raw materials (especially PVC resins and additives), components, capital goods, salaries and other corporate services, as well as by sales prices the Group can charge for its products and services. For most of these components there are no hedging possibilities. If the increase of raw material prices is substantial and long-lasting, experience shows that charging higher raw material prices to the market takes about 3 to 6 months’ time, with large differences between sales territories.

People

The success of the Group will depend to a large extent on its ability to attract and retain skilled staff and managers who have a thorough knowledge of and are familiar with its markets, technology and products. The Group is active in a competitive labor market and therefore no assurance can be given that it will be able to retain its key personnel. If we fail to attract or retain skilled persons, this could have a material adverse effect on the Group’s business or results of operations.

Finance

As an international operating Group with production plants and sales organizations in the Americas, Europe and Turkey it is evident that FX risks are inherent to the business. FX positions are closely monitored and risks are reduced where possible.

IT

IT risks are becoming more and more important. Security breaches as well as disruptions of IT infrastructure have a direct impact on the continuity of business operations. Therefore, cyber security and IT infrastructure are top priorities for the IT department in order to safeguard corporate information and IT infrastructure.

Legal

Intellectual Property

The Group relies on a combination of trademarks, trade names, trade secrets, patents and knowhow to define and protect its intellectual property rights of its products and operational processes. It is of the utmost importance that the Group is able to continue to use its intellectual property and to sufficiently protect all valuable intellectual property by acting against violations of its intellectual property rights, by maintaining trade secrets and by using the available legal means such as trademarks, patents and design registrations. Although there are no important disputes, the company cannot exclude judicial procedures in order to protect its rights. In case the above-mentioned methods cannot sufficiently protect the Group’s intellectual property rights in its most important markets or in case the protection is no longer valid, third parties (competitors included) could commercialize its innovations or products or use its knowhow, which could affect our activities and/or operating results. We cannot guarantee that all trademarks and patents that are applied for will be approved in the future, nor can we exclude the risk that certain of our trademark and patent registrations will expire should we not succeed in extending such trademark and patent registrations. In certain geographical markets, it might be more difficult for the Group to obtain property rights.

The Group’s success will partially depend on its ability to exercise its activities without infringing third parties’ property rights, or without unlawfully appropriating those rights. Although there are currently no important claims against the Group regarding the violation of intellectual property rights, the Group cannot guarantee that it will not (unintentionally) infringe third parties’ patents from time to time. The Group might be obliged to spend a lot of time and efforts or might incur judicial costs should the company have to deal with legal claims on intellectual property rights, irrespective of their justifiability. If the Group indeed infringes or has infringed patents or other intellectual property rights of third parties, it can be subject to substantial insurance claims that could impact the Group’s cash flow, activities, financial situation or operating results. The Group might also be required to put a halt to the development, use or sales of the product or process concerned. It might also need to obtain a license in order to be able to use the disputed rights, which is not available at commercially reasonable conditions or not available at all. To reduce probability of such a violation, management implemented a process to continuously examine possible infringements of patents and intellectual property rights.

Product liability

The Group’s activities are subject to possible product liability risks that are characteristic to the production and distribution of its products. Product liability can also apply to new products that will be manufactured or distributed in the future. A possible insufficiency of the product liability insurance to cover product liability claims could substantially influence the company’s activities, financial situation and operating results. Furthermore, defense against such claims can exert considerable pressure on the management, considerable damages can be claimed or the Group’s reputation can be influenced negatively, even if the company’s defense against such claims regarding the products they put on the market is successful.

Compliance

Violations of applicable laws and regulations, as well as of the Group’s Code of Conduct, by employees of the Group can have a material adverse effect on the Group’s business or financial position.

Category / Business area	Risk description
Operations	Failure key projects (e.g. SAP) for various reasons resulting in poor overall quality or service
Operations	Product availability
Operations	Time to market for new innovations
Operations	High volatility in customer demand
Operations	Business continuity (e.g. breakdown of critical infrastructure, incl. Policy, BCP, BIA, disaster recovery)
Sourcing	Shortage of raw and/or recyclable material
Sourcing	Raw material price fluctuation
Sourcing	Inability to push through increases in raw material prices / transport / labor costs
People	Availability of skilled workers
People	Shortage of people
People	Employee fluctuation / attrition
Finance	FX risks
IT	Breakdown of critical IT infrastructure
IT	IT security breach (e.g. cyber security, data protection, etc.)
Legal	Non-compliance with rules and regulations (antitrust custom and trade, etc.)

Environmental Requirements

Within an international company, individual employee actions can lead to non-compliance. This can have a negative impact on the image of the company, on the activities and on the value of the share. Despite internal training and the Group’s Code of Conduct (dealing with a.o. human rights, anti-bribery, anti-corruption), the Group cannot avoid that some employees would commit individual breaches of applicable laws and regulations or the Group’s Code of Conduct.

Environmental requirements. The Group operates in markets with different strict and evolving environmental requirements. Compounding and storage of hazardous industrial products always involves an environmental risk. Although the Group has taken all necessary measures to mitigate this risk and no significant problems have occurred in the past, environmental liability cannot be excluded, especially as environmental legislation and regulations can provide for a system of strict liability by which the Group becomes liable, regardless of whether the Group has been negligent or has committed any other offense. Failure to comply with existing or future environmental legislation and regulations may result in criminal or administrative penalties, which could have a material adverse effect on the Group’s business results.

Annual Report 2021
64 Report of the Board of Directors
65 Who we are
Annual Report 2021
66 Report of the Board of Directors

“The real story is not only about my career with the company, but about being and feeling part of the Deceuninck family.”
Elena Marica
Plant and Supply Chain Manager
Deceuninck Romania

67 Annual Report 2021
68 Report of the Board of Directors

Deceuninck complies with the Belgian Corporate Governance Code 2020 (the “Code”). The Board subscribes to the principles of corporate governance and transparency as set out in the Code and applies the Code as reference code. In its Corporate Governance Charter (together with the appendices, the “Charter”), the Company sets out the main aspects of its governance policy, such as its governance structure, the terms of reference of the Board and its committees, the general meeting, conflict of interest regime and measures to prevent market abuse. The internal regulations are included as an annex to the Charter. The Charter should be read in addition to the provisions applicable to the Company and on which it is based, in particular (i) its Articles of Association, (ii) the Belgian Code on Companies and Associations (the “BCA”), and (iii) the Code. The application of Deceuninck’s corporate governance policy in 2021 is further set out in this Corporate Governance Statement. The aim of the Board is to comply as much as possible with the principles of the Code. However, Deceuninck deviates from the Code as follows:

Corporate Governance Statement

Setting the scene

Principle	Explain
2.10 and 2.13	The Board believes that having at any time a plan for succession of the CEO is difficult to achieve given the complexity of the business and the industry. The Board believes that having at any time a list of candidates for succession of all board members is difficult to achieve. Such list should have candidates available with a variety of competences to comply with the requirements of diversity within the Board.
7.6	The non-executive Board members may receive subscription rights upon approval by the General Meeting. For that reason, it was decided not to implement the principle of remunerating the non-executive Board members partly in shares.
7.9	Although it was decided not to set a minimum threshold, the members of the Executive Management are recommended to hold shares in the Company.
9.2	The Board decides not to apply this principle; instead, there are exit interviews with directors leaving the Board and Board evaluation in general.

69 Risk and Governance
Annual Report 2021
70 Report of the Board of Directors

In 2020, the Board adopted the one-tier board structure as the new governance structure of the Company. This structure consists of the Board, which is authorized to perform all acts that are necessary or useful for the realization of the object of the Company, except for those for which the General Meeting is authorized by law. At least once every five years, the Board will evaluate whether the chosen governance structure is still suitable, and if not, it will propose a new governance structure to the General Meeting. The Board established an Audit Committee and a Remuneration and Nomination Committee, which have an advisory, supervisory and preparatory role for certain decisions the Board must make. The authority to make decisions rests with the Board as a whole. The Board also established a management committee consisting of the CEO, the CFO, the General Counsel and the COO (the “DirCo”). The members of the DirCo were delegated the day-to-day management of the Company in accordance with article 7:121 BCA. Together with the three regional CEO’s, they are the Executive Management of the Company. Finally, the Board granted a special power of attorney to the new CEO in its Board meeting of 16 December 2021, to be published in the Annexes to the Belgian Official Gazette.

Governance Structure

71 Risk and Governance

Composition of the Board

The Board currently consists of seven Directors. One member is Executive Director (“CEO”) and four members are Independent Directors in accordance with the Code. Two Directors were appointed on the recommendation of important shareholders.

Function	Name	Membership committees	Latest renewal mandate	Mandate expiry
Executive Director	CEO Humblebee Partners BV, represented by Bruno Humblet		AGM 2021	AGM 2025
Non-Executive Directors	Executive Chairman Beneconsult BV represented by Francis Van Eeckhout	Audit Committee (member) Remuneration and Nomination Committee (Chairman)	AGM 2019	AGM 2023
Independent Director	Marcel Klepsch SAS represented by Marcel Klepsch	Remuneration and Nomination Committee (member) Audit Committee (member)	AGM 2021	AGM 2025
Vice Chairwoman	Venture Consult BV represented by Benedikte Boone	Remuneration and Nomination Committee (member)	AGM 2019	AGM 2023
Vice Chairman
Independent Director	Homeport Investment Management BV, represented by Wim Hendrix	Audit Committee (Chairman)	AGM 2018	AGM 2022
Independent Director	Alchemy Partners BV, represented by Anouk Lagae	Remuneration and Nomination Committee (member)	AGM 2021	AGM 2025
Independent Director	Paul Van Oyen	Remuneration and Nomination Committee (member)	Coopted by the Board on 14/09/2021	AGM 2022

Annual Report 2021
72 Report of the Board of Directors

Changes in the composition of the Board and its Committees in 2021

At the Annual General Meeting of 2021, Marcel Klepsch SAS, represented by Marcel Klepsch, and Alchemy Partners BV, represented by Anouk Lagae, were reappointed as Independent Directors until the AGM of 2025. At the same meeting, Humblebee Partners BV, represented by Bruno Humblet, was appointed as Independent Director until the AGM of 2025 and the cooptation and appointment until the AGM of 2025 of Venture Consult BV, represented by Benedikte Boone, was confirmed. The mandate of Momentum BV, represented by Chris Lebeer, as Independent Director came to an end at the Annual General Meeting of 2021. On September 14, 2021, the Board coopted Paul Van Oyen as Independent Director until the Annual General Meeting of 2022, where his appointment will be officially submitted to the shareholders. Evedec BV, represented by Ms. Evelyn Deceuninck, resigned as Director on 13 September 2021.

Changes in the composition of the Board and its Committees in 2022

On 6 September 2021, Deceuninck announced a leadership transition that became effective January 1, 2022. Marcel Klepsch, representative of Marcel Klepsch SAS, announced his intention to step down as Chairman of the Board at the end of 2021. The Board appointed Francis Van Eeckhout, representative of Beneconsult BV, as Executive Chairman (Non-Executive Director) as of 1 January 2022. At the same time, Bruno Humblet, representative of HumbleBee Partners BV, was appointed as the new CEO of the Group, taking over the responsibilities from Mr. Van Eeckhout as of 1 January 2022. In his role as Executive Chairman, Beneconsult BV, represented by Francis Van Eeckhout, will be assigned the following specific projects: aluminum and recycling business. The Board carefully considered the implications of appointing its former CEO as the new Chairman. The Board was convinced that the required autonomy of the new CEO would not be hampered. The reappointment of Homeport Investment Management BV, represented by Wim Hendrix, will be submitted for approval to the Annual General Meeting of 2022.

Other Deceuninck’s honorary Directors are † Pierre Alain Baron De Smedt, Arnold Deceuninck and Willy Deceuninck. The Secretary of the Board is Ann Bataillie, representative of Bakor BV, General Counsel.

73 Risk and Governance# Annual Report 2021

74 Report of the Board of Directors

Resumes of the Members of the Board

Beneconsult BV, represented by Francis Van Eeckhout (1968), Executive Chairman
* Education: Master of Commercial Engineering (KUL 1990)
* Professional experience: 1994-2011: managing director of Van Eeckhout NV (concrete), VVM NV (cement)
* Current other mandates: Independent board member of Pollet Watergroup; Chairman of Cemminerals NV

Humblebee Partners BV, represented by Bruno Humblet (1965), CEO
* Education: Master in Commercial Engineering (1988 Solvay Business School – VUB)
* Professional experience: CEO Bridon Bekaert Ropes Group Ltd (UK); CFO Bekaert NV; Executive Vice President Latin America Bekaert NV; Executive Vice President Window Film Division Bekaert NV; Director Treasury EMEA and Global Cash Pool Procter & Gamble Inc.; Director Internal Audit Procter & Gamble Inc.;
* Current other mandates: Executive Chairman Mankind (Belgium), Board member Schréder

75 Risk and Governance

Marcel Klepsch SAS, represented by Marcel Klepsch (1951), Independent Director
* Education: Master of Commercial Engineering (University of Antwerp)
* Professional experience: 2009: Chief Restructuring Ocer at Deceuninck NV, former member of the board of directors of Nybron Flooring International Switzerland, Chief Executive Ocer at Ilford Imaging, member of the DirCo at Vickers Plc, Chief Financial Ocer of BTR Power Drives and Chairman of the board of directors of Pack2Pack and Chairman of the board of Volution in the UK; Management Advisory Board of Tower Brook in London and Chairman of GSE Group in France
* Current other mandates: none

Venture Consult BV, represented by Benedikte Boone (1971), Vice Chairwoman, Non-Executive Director
* Education: Master of Applied Economic Sciences (KUL 1994)
* Professional experience: she has held positions at Creyf’s Interim and Avasco Industries
* Current other mandates: member of the board of directors at Lotus Bakeries since 2012, director in various family companies (Bene Invest BV, Holve NV and Harpis NV)

Annual Report 2021

76 Report of the Board of Directors

Homeport Investment Management BV, represented by Wim Hendrix (1967), Vice Chairman, Independent Director
* Education: Master of Commercial Engineering (KU Leuven 1990), Master of Business Administration (Washington University St. Louis, Missouri, USA 1993), Master Wealth Management (Wharton Business School, Pennsylvania, USA 2011)
* Professional experience: Gamma België NV, Siemens NV, Begos, Corelio, Homeport Investment Management
* Current other mandates: Chairman of the Board at XIX-Invest NV; Board Member at Capricorn Sustainable Chemistry Fund

Alchemy Partners BV, represented by Anouk Lagae (1975), Independent Director
* Education: Master in Business and Engineering (Solvay Management School), Kellogg School of Management, Northwestern University in Chicago, USA
* Professional experience: Coca Cola (Brussels, London and Sydney), Unilever (Brussels), Business Unit President, Core Europe at Duvel Moortgat
* Current other mandates: CEO Accent Belgium, Member of the Advisory Board of Make Sense

77 Risk and Governance

Paul Van Oyen (1961), Independent Director
* Education: Master Geology/Mineralogy (KUL 1982), Business Administration (KUL 1990), Strategic R&D Management (INSEAD 1998), Strategy and Execution (London Business School 2015)
* Professional experience: CEO and Managing Director of Etex Group (2015-2021)
* Current other mandates: none

Annual Report 2021

78 Report of the Board of Directors

Composition of the Committees

General
The Board has set up specialized Committees to deal with specic matters and to give advice to the Board. The Committees have an advisory role. The ultimate decision- making responsibility lies with the Board.

Audit Committee
The current Audit Committee consists of three members, all of which are Non-Executive Directors. Two members of the Audit Committee are considered independent as set out in the Code:
* Homeport Investment Management BV, represented by Wim Hendrix, Chairman
* Marcel Klepsch SAS, represented by Marcel Klepsch
* Beneconsult BV, represented by Francis Van Eeckhout

The Audit Committee members as a whole have competence relevant to the sector in which Deceuninck is operating and at least one member has competence in accounting and auditing. The CEO is invited to the meetings of the Audit Committee.

Remuneration and Nomination Committee
The current Remuneration and Nomination Committee consists of ve members, all of which are Non-Executive Directors. Three members of the Remuneration and Nomination Committee are considered independent as set out in the Code:
* Beneconsult BV, represented by Francis Van Eeckhout, Chairman
* Marcel Klepsch SAS, represented by Marcel Klepsch
* Venture Consult BV, represented by Benedikte Boone
* Alchemy Partners BV, represented by Anouk Lagae
* Paul Van Oyen

Taking into account their education and professional experience, the members have the necessary expertise in the eld of remuneration policy. The CEO is invited to the meetings of the Remuneration and Nomination Committee.

79 Risk and Governance

Activity Report of the Board and Committee meetings in 2021

Board
The Board convened seven times, mainly discussing the following topics:
* managing the COVID-19 pandemic: monitoring, taking the necessary measures, mitigating impact
* approval of sustainability report
* approval of budget 2022
* issuance of new Subscription Rights Plan 2021
* proposal of new members of the Board and leadership transition 2022
* long-term strategy,
* monitoring innovation projects and the technology strategy,
* monitoring and deciding on investment and divestment opportunities,
* approval of investment les,
* monitoring of the business plans of the various regions,
* nancial reporting,
* continuous monitoring of the debt and liquidity situation of the Group,
* monitoring the organizational structure of the Group and the management succession planning,
* preparation of the statutory and consolidated nancial statements and annual report,
* governance, risk and compliance
* remuneration and long-term incentives for the new CEO and members of the Executive Management
* preparation of the Annual General Meeting
* the assignments of the Executive Chairman

Audit Committee
The Audit Committee convened eight times. It assisted the Board in the execution of its responsibilities in the broadest sense and it mainly dealt with the following topics:
* providing advice with respect to the appointment of the internal auditor;
* monitoring of audit activities, along with the systematic verication of signed missions by the statutory auditor;
* assessing the reliability of nancial information;
* supervising the internal audit system;
* assessing the internal control and the risk management systems, and
* controlling of the accounts and monitoring the budget.

Remuneration and Nomination Committee
The Remuneration and Nomination Committee convened three times, mainly dealing with the following topics:
* the transition of leadership: appointment of a new CEO and Executive Chairman
* the remuneration policy and the remuneration of the Directors and the DirCo;
* the policy with regard to the appointment of Directors and members of the DirCo;
* the structure and composition of the Committees;
* the resignation and appointment of members of the Board;
* the revision of the structure and composition of the DirCo.

Annual Report 2021

80 Report of the Board of Directors

	Board	Audit Committee	Remuneration and Nomination Committee	TOTAL meetings held in 2021
Beneconsult BV, represented by Francis Van Eeckhout	7	-	-	7
Marcel Klepsch SAS, represented by Marcel Klepsch	7	8	3	7
Venture Consult BV, represented by Benedikte Boone	7	-	3	7
Homeport Investment Management BV, represented by Wim Hendrix	7	8	-	7
Evedec. BV, represented by Evelyn Deceuninck (until 13/09/2021)	5	-	(until 13/09/2021)	5
Alchemy Partners BV, represented by Anouk Lagae	7	-	2	7
Momentum BV, represented by Chris Lebeer (until 27/04/2021)	3	-	-	3
HumbleBee Partners BV, represented by Bruno Humblet	7	8	-	7
Paul Van Oyen (as of 14/09/2021)	2	-	(as of 14/09/2021)	2

Furthermore, the Board also took note of the reports and proposed resolutions of the Audit Committee and the Remuneration and Nomination Committee and, when necessary, made decisions based on the recommendations of these Committees.

Beneconsult BV, represented by Francis Van Eeckhout, attended the meetings of the Remuneration and Nomination Committee except when the appointment and remuneration of Venture Consult BV, represented by Benedikte Boone, and of himself were discussed.

Main features of the evaluation process of the Board, its Committees and the Directors

The Board is responsible for a regular evaluation of its own performance with a view to constantly improving the management of the Group. To this end, the Board, led by its Chairman, carries out an evaluation of its scope, composition, activities and interaction with the DirCo, preferably every three years. The Board also assesses the functioning of the Committees and the individual Directors.

The evaluation process has four objectives:
* to assess the functioning and activities of the Board and of the relevant Committees;
* to check whether important issues are thoroughly prepared and discussed;
* to evaluate the actual contribution of the Board; and
* to assess the current composition of the Board or the Committees in light of the desired composition of the Board or the Committees.

On the basis of the results of the evaluation, the Chairman provides the Board with a report describing the weaknesses and strengths and, if necessary, proposes the appointment of a new Director or the non-renewal of a Director’s mandate to the Remuneration and Nomination Committee. The planned performance evaluation in 2020 was postponed until 2022 due to COVID-19.

81 Risk and Governance# Annual Report 2021

Report of the Board of Directors

Risk and Governance

The Executive Management

Current composition

The Executive Management of Deceuninck consists of the DirCo and the regional CEO’s. The DirCo consists of the following members:

The DirCo supports the CEO in the day-to-day operational management of the Group and the execution of its responsibilities in accordance with the values, strategies, policies, plans and budgets that are determined by the Board. The members of the DirCo were delegated the day-to-day management of the Company in accordance with article 7:121 BCA. The other members of the Executive Management, who have an advisory role, are:

Name	Function
HumbleBee Partners BV, represented by Bruno Humblet	CEO Group, Chairman of the DirCo
Emveco BV, represented by Serge Piceu	CFO Group
Value Coaching BV, represented by Luc Vankemmelbeke	COO Group (started on 1 February 2022)
Bakor BV, represented by Ann Bataillie	General Counsel and HR Director

Group Secretary of the Board

Name	Function
Ergun Cicekci	CEO Turkey & Emerging Markets
Déve Consulting BV, represented by Stijn Vermeulen	CEO Europe
Joren Knockaert	CEO USA

Diversity policy

Criteria

Deceuninck aims for both diversity and complementarity in the composition of the Board and the DirCo. The diversity criteria relate to gender, age, educational/ professional background, geographical provenance, (international) experience and expertise/know-how, taking into account the rules and generally accepted principles of non-discrimination.

Implementation

The Remuneration and Nomination Committee nominates one or more candidates for appointment as member of the Board, considering the needs of Deceuninck, the appointment procedures and selection criteria of the Board. Board members are appointed by the General Meeting, to whom the relevant resumes are disclosed. Other than that, Deceuninck does not provide detailed information about diversity criteria and objectives to its shareholders. The members of the DirCo are appointed by the Board on the proposal of and after consultation with the CEO and the Remuneration and Nomination Committee.

Results

Gender: Deceuninck complies with the rules on gender diversity in the composition of the Board and the DirCo. In accordance with the Law of 28 July 2011, at least one-third of the Board’s members must be of a different gender than the other members. On 31 December 2021, two women and five men sat on the Board, while the DirCo consisted of one female and two male members.
Age: The age of the Board members ranges between 46 and 70 years of age. The youngest DirCo member is 46 years and the oldest member is 63 years of age.
Educational/professional background: The members of the Board and the DirCo have various backgrounds, in (a.o.) economics, law, engineering, geology, marketing, finance, IT, people, business administration.
Geographical provenance: Currently, one member of the Board has the Dutch nationality; the other members are Belgian citizens. One Board member lives in France. The DirCo consists of Belgian citizens.
(international) Experience: Most of the Board and DirCo members have studied and/or worked abroad.
Expertise/know-how: Given their educational and/or professional backgrounds, the expertise and know-how of the Board and DirCo members fulfils Deceuninck’s aim for diversity and complementarity.

Transactions between the Company and its Directors, not covered by the legal provisions governing conflicts of interest

Deceuninck’s policy regarding transactions and other contractual relations between the Company (including its affiliated companies) and its Directors, not covered by the conflict of interest rules set out in articles 7:96 and 7:97 BCA is incorporated in the Charter. The Charter provides that every transaction between the Company (or any of its subsidiaries) with any Director must be approved in advance by the Board, whether or not such a transaction is subject to applicable legal rules. Such a transaction can only take place based on terms in accordance with market practices.

Remuneration Report

Remuneration policy

The Company’s remuneration policy for 2021 was approved by the shareholders at the Annual General Meeting of 27 April 2021. It is published on the Company’s website. For 2022, an amended remuneration policy will be submitted to the shareholders for approval at the Annual General Meeting of 26 April 2022. The proposed changes will be:

To amend the targets for short-term variable remuneration of the members of the Executive Management as follows:

For 2022, the evaluation criteria for the CEO and the other members of the Dirco are as follows: REBITDA Group (40%), Adjusted Free Cash Flow Group (40%) and non-financial criteria (20%). For the other members of the Executive Management: REBITDA Group (10%), REBITDA Region (30%), Adjusted Free Cash Flow Group (10%), Adjusted Free Cash Flow Region (30%) and non-financial criteria (20%). The non-financial criteria relate to the contribution to greater sustainability and to the Executive Management members' living the Group's values Candor, Top Performance and Entrepreneurship. The short-term variable remuneration amounts in principle to 40% of the annual fixed remuneration for the members of the Executive Management (excl. CEO) and 75% of the annual fixed remuneration for the CEO. This percentage may be exceeded in terms of company performance, but should not exceed 50% (for members of the Executive Management) or 93.75% (for the CEO). The variable remuneration related to the business objectives is only awarded if 90% or more of the predetermined financial targets have been achieved.

To add the terms and conditions for deviation of the remuneration policy during the financial year, in accordance with the BCA.

Total remuneration of the Non-Executive Directors in 2021 (including former members)

Non-Executive Directors receive a fixed amount as remuneration for the execution of their mandate and a fixed amount for each Board meeting attended, limited to a maximum amount. The amount of remuneration is different for the Chairman, the Vice-Chairman and the other Non-Executive Directors. If the Non-Executive Directors are also members of a Committee, their remuneration will be increased by a fixed amount per meeting of the relevant Committee. If Directors are assigned special tasks and projects, they may receive an appropriate remuneration. Performance-based remuneration such as bonuses and fringe benefits are excluded. No termination compensation or compensation for pension expenses are provided for Non-Executive Directors. The fixed allowance for the Audit Committee was raised to € 2,000 for the Chairman of the Audit Committee. The other fixed remuneration remained unchanged in 2021.

	Min/year	Max/year
FIXED REMUNERATION (€)
Chairman	40,000	80,000
Vice-Chair(wo)man	30,000	60,000
Director	20,000	40,000
ATTENDANCE FEE (€)
Chairman
Board of Directors	3,000
Audit Committee	2,000
Remuneration and Nomination Committee	1,000
Member
Board of Directors	1,500
Audit Committee	1,000
Remuneration and Nomination Committee	1,000

The total remuneration (gross) paid to the non-executive members of the Board in the financial year 2021 amounted to € 422,153.88. In deviation of the Code, Non-Executive Directors may receive subscription rights upon approval of the General Meeting. The Annual General Meeting of 2021 approved the granting of subscription rights under the Warrant Plan 2021 to the Non-Executive Directors as follows: 30,000 to the Chairman and 15,000 to each of the Non- Executive Directors (with the exception of the future CEO and the coopted Non-Executive Director). The price of the subscription rights under Warrant Plan 2021 amounts to € 3.07. The subscription rights were to be accepted by 15 February 2022. The exercise period runs from 2025 until 2031 (each year in May and September). In 2025, 1/3 of the subscription rights will vest, in 2026: 2/3 and in 2027: 3/3. In 2021, no subscription rights were exercised by Board members. In 2021, nor the Company nor any affiliated Company of the Group granted any loans to any of the Directors, nor are there any outstanding repayments owed by the Directors to the Company or any affiliated Company of the Group. The member of the DirCo who also sat on the Board as Executive Director, Beneconsult BV, represented by Francis Van Eeckhout, did not receive a fixed remuneration nor any attendance fees.

Name	Board	Audit Committee	Remuneration and Nomination Committee	Fixed remuneration	Variable remuneration	Total gross remuneration	Proportion fixed/variable
Marcel Klepsch SAS, represented by Marcel Klepsch	€ 21,000	€ 8,000	€ 3,000	€ 40,000	€ 72,000	100% fixed	0% variable
Homeport Investment Management BV, represented by Wim Hendrix	€ 10,500	€ 16,000		€ 30,000	€ 56,500	100% fixed	0% variable
Venture Consult BV, represented by Benedikte Boone	€ 10,500		€ 3,000	€ 30,000	€ 43,500	100% fixed	0% variable
Evedec.

Total remuneration of the members of the DirCo and the other members of the Executive Management in 2021 (including former members)

Main principles

The total remuneration of the Executive Management consists of the following elements: the fixed remuneration, the short-term variable remuneration and the long-term variable remuneration. The remuneration package aims to be competitive and is aligned with the role and responsibilities of each Executive Management member, in a globally operating industrial group.

Fixed remuneration
The fixed remuneration is determined according to their individual responsibilities and skills. It is awarded independently of any result. Part of this fixed remuneration may be used, at the discretion of the management member, for pension or insurance contributions.
Short-term variable remuneration
In order to align the interests of the Company and its shareholders with the interests of the management members, part of the remuneration package is linked to Company performance with objectives related to the annual business plan. For 2021, the evaluation criteria for the former CEO and the other members of the Dirco were as follows: REBITDA Group (60%), Adjusted Free Cash Flow Group (35%) and non-financial criteria (5%). For the other members of the Executive Management: REBITDA Group (15%), REBITDA Region (45%), Adjusted Free Cash Flow Group (10%), Adjusted Free Cash Flow Region (25%) and non-financial criteria (5%). The non-financial criteria differ per region and relate to their contribution to greater sustainability. For Europe, North America and Russia, this was the use of recycled material (with the understanding that the objectives differ per region). Turkey and Emerging Markets were measured by reducing total waste (not PVC) per ton of profiles produced.

The short-term variable remuneration in 2021 amounts in principle to 40% of the annual fixed remuneration for the members of the Executive Management (excl. CEO) and 75% of the annual fixed remuneration for the former CEO. This percentage may be exceeded in terms of company performance, but should not exceed 50% (for members of the Executive Management) or 93.75% (for the former CEO). The variable remuneration related to the business objectives is only awarded if 85% or more of the predetermined financial targets have been achieved. The basis for the variable remuneration is the remuneration earned during the financial year. Payment is made in February of the following year. There is no spread over time of the variable remuneration. The Extraordinary General Meeting of December 16, 2011 decided that the Company is not bound by the restrictions regarding the spread over time of the variable remuneration of the directors, the CEO and the other members of the Executive Management.

Long term variable incentive
Stock options and warrants
The Company also offers options and/or warrants on shares of the Company. The purpose of this kind of remuneration is to motivate and retain employees who (can) have a significant impact on the Company results in the medium-term. When granting options and/or warrants, due account is taken of the strategic impact of the function that the employee performs and his/her future (growth) potential. The underlying philosophy is to raise Deceuninck’s value to the maximum extent in the long term, by linking the interests of the warrant holders to those of shareholders, and to strengthen the long-term vision of the management. In this context, the exercise period of an option and warrant is max. 10 years. The stock options and warrants can only be exercised the 3rd year following the year in which the options and warrants were offered. If they are not exercised at the end of the exercise period, they are, ipso facto, reduced to zero, and lose all value. One third of the warrants/options are each time released for exercise in the fourth, in the fifth and in the sixth calendar year after the year in which the granting has been made up to the end of the term. In the event of involuntary dismissal (except in case of termination of contract for cause), the accepted and exercisable stock options/ warrants can only be exercised during the first exercise period following the date of the termination of contract. The options/ warrants that are not exercisable shall be cancelled. In the event of involuntary dismissal for cause, the unexercised, accepted stock options and warrants are cancelled, whether or not they were exercisable. These terms and conditions relating to the acquisition and exercise of options and warrants in the event of voluntary or involuntary dismissal can be applied without prejudice to the competence of the Board to make changes to these stipulations to the advantage of the beneficiary, based on objective and relevant criteria. If the employment agreement ends due to legal retirement or end of career, the warrants/ options shall remain exercisable. The shares that may be acquired in connection with the exercise of the options/warrants are listed on Euronext Brussels; they are of the same type and have the same rights as the existing ordinary Deceuninck shares.

Members of the DirCo

In 2021, the former CEO received a fixed remuneration of € 551,250 and a variable remuneration of € 247,884 (45%). The CFO received a fixed remuneration of € 264,000 and a variable remuneration of € 63,314 (24%). The General Counsel received a fixed remuneration of € 273,941 and a variable remuneration of € 65,699 (24%). The remuneration package awarded to the members of the DirCo does not include a long-term cash bonus. The fixed remuneration is an aggregate amount, part of which can be contributed for pension plans or for insurance, at the sole discretion of the members of the DirCo. The Remuneration and Nomination Committee evaluated the achievement of the 2021 objectives for the members of the DirCo and proposed to the Board to pay a short-term variable remuneration based on the 2021 performance criteria that were met.

Given the fact the current members of the DirCo act through a management company, no company car is provided. The total amount of the remuneration of the members of the DirCo is in accordance with the Company’s remuneration policy and contributes to the strategic objectives of the Company.

Other members of the Executive Management

The other members of the Executive Management together received a fixed remuneration of € 898,854 and a variable remuneration of € 201,462 (22%). The remuneration package awarded to the other members of the Executive Management does not include a long-term cash bonus. The fixed remuneration is an aggregate amount, part of which can be contributed for pension plans or for insurance, at the sole discretion of the other members of the Executive Management. The Remuneration and Nomination Committee evaluated the achievement of the 2021 objectives for the members of the Executive Management and proposed to the Board to pay a short-term variable remuneration based on the 2021 performance criteria that were met. No company car is provided to the other members of the Executive Management. The total amount of the remuneration of the other members of the Executive Management is in accordance with the Company’s remuneration policy and contributes to the strategic objectives of the Company.

Shares, stock options and other rights to acquire Deceuninck shares that were granted, exercised or that have lapsed during 2021

Stock options

The Extraordinary General Meeting of October 2006 approved a stock option plan on existing shares under which the Board is authorized to allocate 75,000 options on existing shares each year. In 2021, no stock options were granted to the members of the Executive Management, no stock options were exercised, and 1,000 stock options lapsed.

Subscription rights

On 29 October 2020, the Board approved a new subscription rights plan (“Warrant Plan 2020”) of 1,500,000 subscription rights. On 23 December 2020, 350,000 subscription rights of Warrant Plan 2020 were offered to the former CEO and 60,000 subscription rights were offered to each of the General Counsel, CEO Europe, CEO Turkey and CEO USA. The price of the subscription rights amounts to € 1.78. The subscription rights were all accepted by 16 February 2021. The exercise period runs from 2024 until 2030 (each year in May and September). In 2024, 1/3 of the subscription rights will vest, in 2025 another 1/3 and in 2026 another 1/3. On 29 June 2021, the Board approved a new subscription rights plan (“Warrant Plan 2021”) of 3,000,000 subscription rights. On 16 December 2021, 350,000 subscription rights of Warrant Plan 2021 were offered to the former CEO, 50,000 subscription rights were offered to the new CEO and 60,000 subscription rights were offered to each of the CFO, General Counsel, CEO Europe, CEO Turkey and CEO USA. The price of the subscription rights amounts to € 3.07. The subscription rights were to be accepted by 15 February 2022. The exercise period runs from 2025 until 2031 (each year in May and September).In 2025, 1/3 of the subscription rights will vest, in 2026 another 1/3 and in 2027 another 1/3. In 2021, the following members of the Executive Management exercised subscription rights:

Ann Bataillie
May 2021: 27,500 @ € 1.79
27,500 @ € 1.76
Sept 2021: 38,330 @ € 2.4

Ergun Cicekci
May 2021: 27,500 @ € 1.79
18,334 @ € 1.76
9,167 @ € 1.17

Annual Report 2021
96
Report of the Board of Directors

Right of recovery
Although the Board is entitled to introduce recovery clauses, the stipulations of the agreements between the Company and the CEO and the members of the Executive Management currently do not contain such clauses.

Severance payments paid in 2021
No severance payments were paid in 2021.

Evolution of remuneration:

Year	Total annual CEO remuneration	Total annual Executive Management remuneration (excl. CEO)	Total annual Non-Executive Director Remuneration	Average staff remuneration (FTE)	Sales	EBITDA
2016	€ 646,934	€ 2,521,475 (8 members)	€ 259,500	€ 44,958	€ 670.9m	€ 65.1m (REBITDA)
2017	€ 460,080	€ 2,046,940 (7 members)	€ 263,500	€ 47,102	€ 687.2m	€ 66.7m (REBITDA)
2018	€ 923,185	€ 2,147,577 (7 members)	€ 253,500	€ 45,985	€ 674.2m	€ 72.4m (Adj.)
2019	€ 525,000	€ 598,570 (2 DirCo members)	€ 267,000	€ 47,090	€ 633.8m	€ 60.6m (Adj.)
2020	€ 965,781	€ 821,038 (2 DirCo members)	€ 296,833	€ 48,417	€ 642.2m	€ 86m (Adj.)
2021	€ 799,134	€ 666,954 (2 DirCo members)	€ 422,153.88	€ 49,027	€ 838.1m	€ 97.7m (Adj.)

Pay ratio
The pay ratio between the highest remuneration in the Executive Management (CEO remuneration) and the lowest remuneration of the staff members is 25.36.

97
Risk and Governance

General
Each Director and each member of the DirCo are encouraged to arrange their personal and business interests so that there is no direct or indirect conflict of interest with the Company. Deceuninck has no knowledge of any potential conflict of interest affecting the members of the Board and the DirCo between any of their duties to the Company and their private and/or other duties.

Directors’ conflicts of interest
The conflict of interest settlement procedure of article 7:96 of the BCA was applied once in 2021. On 29 June 2021, the Board convened to approve a new subscription rights plan (“Warrant Plan 2021”). Before the meeting, Beneconsult BV, represented by Francis Van Eeckhout, informed the Board of his potential patrimonial interest as an Executive Director conflicting with the agenda of the Board, as he would be a beneficiary of the new Warrant Plan 2021. The executive Director left the meeting and did not deliberate nor decide on the approval of the new Warrant Plan 2021. Also the statutory auditor was informed of this potential patrimonial conflict of interest.

In accordance with the legal provisions, this annual report contains an extract of the board minutes (translated from Dutch for information purposes):

“Before starting the discussion on this point, the private company “BENECONSULT”, with permanent representative Mr. VAN EECKHOUT Francis, both aforementioned, being the executive director of the Company, represented as foreseen, announces that in on its grounds, a conflict of interest of a proprietary nature may exist with regard to the decisions that the board of directors will take with a view to approving the “Warrant Plan 2021”, as it is also a beneficiary thereof. The board of directors has taken note of this conflict of interest and of the fact that this was also reported by the director concerned to the statutory auditor of the company. In accordance with Article 7:96 of the Companies and Associations Code, the director concerned, represented as foreseen, cannot participate in the deliberations of the board of directors on these transactions or decisions, nor in the voting in that regard. As a result, the director concerned, represented as foreseen, did not participate in the deliberations or the vote.

The grounds for justification regarding the aforementioned conflict of interest are:

The initiative taken by the board of directors on the proposal of the remuneration and nomination committee to launch the Warrant Plan 2021 aims to encourage certain employees of the Company and its subsidiaries, who will be invited to participate to this Warrant Plan 2021, to contribute to the growth of the Deceuninck Group and to promote their loyalty towards the Deceuninck Group. It is important for the Company to issue a new subscription rights plan. After all, the Company believes that the work, initiative and entrepreneurial spirit of each of the beneficiaries of the Warrant Plan makes an important contribution to the development of the Company’s activities and results. It therefore wishes to give the beneficiaries the opportunity to acquire (additional) shares of the Company at a predetermined subscription price, so that they can participate financially in the added value and growth of the Company. After all, the experience of the past years has shown that stock options, subscription rights and participation in the shareholding of the employees are an important element of motivation and commitment towards the company. After all, the aim of such a plan is to promote the long-term commitment and motivation of staff members, so that their commitment contributes to the realization of growth and, if necessary, of restructuring. The Company intends to continue to grant subscription rights to shares annually. The offering of these new subscription rights will not constitute a waiver on the part of the beneficiaries of previous options and / or subscription rights on shares accepted by them. As such, the proposed issue is in the interests of the Company and the board of directors considers the cancellation of the preferential subscription right of the existing shareholders to be justified.

The proprietary consequences are the following:

The proprietary consequences for the company arising from the fact to grant subscription rights to the executive director are minimal, taking into account on the one hand the total number of securities to which this transaction relates and on the other hand the fact that the exercise price of the subscription rights is based on the current market price of the shares. The board of directors declares that no conflict of interest exists for the other directors of the Company, being the non-executive directors of the Company, as the “Warrant Plan 2021” provides that the possible grant of the subscription rights created on their behalf will be the result of a decision to be taken by the general meeting of the Company.”

External audit
PwC Bedrijfsrevisoren BV with its registered office at Culliganlaan 5, 1831 Diegem (Machelen), with enterprise number 0429.501.944, represented by Lien Winne, was appointed as the Company’s statutory auditor in 2020 for a period of three years, until the closing of the Annual General Meeting of 2023.

Annual Report 2021
98
Report of the Board of Directors

Transactions between related parties
The conflict of interest settlement procedure of article 7:97 of the BCA was not applied in 2021.

100
Report of the Board of Directors

Article 34 of the Belgian Royal Decree of 14 November 2007

Capital structure on 31 December 2021
The share capital (€ 54,441,352.14) was fully paid up and was represented by 138,040,929 shares without nominal value.

Restrictions on transferring securities as laid down by law or the Articles of Association
The Company offers stock options and subscription rights on shares of the Company. Stock options and subscription rights are assigned personally and are not transferable, except in case of decease of the holder.

Holders of any securities with special control rights
None

Systems of control of any employee share scheme where the control rights are not exercised directly by the employees
None

Restrictions on exercising voting rights as laid down by law or the Articles of Association
The voting rights attached to the shares held by Deceuninck and its direct and indirect subsidiaries are suspended. At 31 December 2021, these rights were suspended for 69,769 shares (0.05% of the shares in circulation at that time).

Shareholder agreements known to Deceuninck NV that could restrict the transfer of securities and/or the exercise of voting rights
None

Rules governing the appointment and replacement of Board members and the amendment of the Articles of Association of Deceuninck NV
The members of the Board are appointed by the General Meeting. Their initial term of office lasts maximum four years (based on the Charter) but can be renewed. The Remuneration and Nomination Committee presents one or more candidates, considering the needs of the Company and the nomination and selection criteria established by the Board. In the composition of the Board an appropriate balance is sought, based on (a.o.) gender, skills, experience and knowledge (see above “Diversity Policy”). The age limit for Directors is 75 years at the time of the (re)appointment. In principle, a Director’s mandate ends after the Annual General Meeting, at which moment his or her mandate can be considered ended. The amendment of Deceuninck’s Articles of Association is to be executed in accordance with legal provisions of the BCA.

101
Risk and Governance

Powers of the Board with regard to the issue and repurchase of treasury shares
At the Extraordinary General Meeting of 28 April 2020, it was decided to grant the Board the authority to acquire treasury shares, by purchase or exchange, directly or by intervention of a person who acts in his own name but at the expense of the Company at a minimum price of € 1.00 and at a maximum price of the average share price of the 30 days prior to the decision of the Board raised by 30%, provided that by doing so, not for a moment the Company possesses treasury shares whose nominal value is higher than 20% of the Company’s subscribed capital.No preceding decision by the General Meeting is necessary in case the acquisition of shares occurs in order to offer them to the Company’s staff. Furthermore, the Board is authorized to sell these shares without being bound to above-mentioned price and time limitations. This authorization is valid for a period of five years starting on 15 May 2020 and can be renewed in accordance with article 7:215 of the BCA. During the financial year 2021, no treasury shares were purchased.

At the Extraordinary General Meeting of 28 April 2020, it was also decided to grant the Board the authority to acquire or sell treasury shares, profit-sharing bonds or certificates which relate to these bonds, according to articles 7:215 and the following of the BCA, when the acquisition or alienation is necessary to avoid threatening serious damages to the Company. This authorization is valid for a period of three years as from its publication in the Annexes to the Belgian Official Gazette and can be renewed in accordance with article 7:215 of the BCA.

Authorised capital

The Board is authorized, for a period of 5 years starting from 15 May 2020, to increase the Company’s issued capital on one or several occasions to a maximum amount of € 53,925,310.12. This capital increase can take place in conformity with the conditions determined by the Board by a cash contribution, a contribution in kind, an incorporation of the reserves or share premiums, with or without the issuance of new shares, as well as by issuing debt securities that can be converted to shares on one or several occasions, debt securities with subscription rights or subscription rights that whether or not are linked to other stocks.

However, the capital increase as decided by the Board cannot be reimbursed by shares without indication of nominal value issued below accountable par value of the old shares. The Extraordinary General Meeting of 28 April 2020 authorized the Board, for a period of 3 years, under the conditions and within the limitations of article 7:202 of the BCA, to use the authorised capital in case of notification by the Financial Services and Markets Authority (FSMA) of a public takeover bid on the Company’s shares.

The Board determines the data and conditions of the instructed capital increases in application of the foregoing, including the possible payment of issue premiums. If the foregoing occurs (including for the issuance of convertible debt securities or subscription rights), the Board determines, in accordance with articles 7:191 and following of the BCA, the term and other conditions concerning the exercise of the shareholder’s preferential rights as assigned by the law.

Furthermore, it can, in accordance with articles 7:191 and following of the BCA, in the Company’s interest and under the conditions determined by law, limit or cancel the shareholder’s preferential rights in favour of one person or several people that are selected, no matter whether or not these people are part of the Company’s or its subsidiaries’ staff.

If an issue premium is paid as a consequence of a capital increase, it is transferred by right to an unavailable account named “issue premiums” which can only be used under the conditions required for the capital decrease. It can, however, always be added to the instructed capital; this decision can be taken by the Board as stated above.

Furthermore, said Extraordinary General Meeting of the Company authorized the Board, considering the coordination of the Articles of Association, as soon as the authorized capital or a part of it is converted into instructed capital, to amend the relevant article of the Articles of Association.

In 2021, there were no capital increases within the authorized capital, other than two confirmatory capital increases within the framework of the authorized capital as a result of the exercise of subscription rights (on 3 June 2021 and on 4 October 2021), resulting in an authorised capital of € 53,409,268.

Signicant agreements to which Deceuninck NV is a party and which take eect, alter or terminate upon a change of control of Deceuninck NV following a public takeover bid

The 2015 issuance of bonds with a 7-year duration (maturity 8 December 2022) and a gross coupon of 3.75%, for the maximum amount of € 100,000,000.
The € 60,000,000 Sustainability Linked Revolving Facility Agreement of 9 July 2019 for Deceuninck NV, with KBC Bank NV (as Coordinating Bookrunning Mandated Lead Arranger) and ING Belgium NV/ SA and Commerzbank Aktiengesellschaft, Filiale Luxemburg (as Bookrunning Mandated Lead Arrangers) and Belfius Bank NV/SA (as Mandated Lead Arranger) and with ING Bank NV (as Facility Agent)

Agreements between Deceuninck NV and its Directors or employees providing for compensation if the directors resign or are made redundant, or if employees are made redundant, without valid reason following a public takeover bid

None

Risk and Governance

Shareholder structure

Every shareholder holding a minimum of 3% of the voting rights needs to comply with the law of 2 May 2007 in respect of the notication of signicant investments, the Royal Decree of 14 February 2008 and the BCA. The involved parties need to submit a notication to the Financials Services and Markets Authority (FSMA) and to the Company.

In application of the Law of 2 May 2007, the latest report of participations that have been received shows the following breakdown of shareholders on 31 December 2021:

Shareholders	Number of shares	Percentage
Gramo BV¹	24,043,470	17.42
Holve NV	16,067,809	11.64
H.P. Participaties Comm.V.	10,400,000	7.53
Frank Deceuninck	7,092,237	5.14
Treasury shares	69,769	0.05
Others	80,367,644	58.22
Total	138,040,929	100.00

¹ Holding controlled by Francis Van Eeckhout

2.5 Sustainability

Increasing shortage of raw materials and climate change are the drivers of our circular economy commitment. Recycling PVC, designing 100% recyclable products and investing in the collection of end-of-life products will help us reducing CO emissions and will increase our independence from virgin raw materials.

2.5.1 The World We Operate in

Climate Change

The European Union wants to be climate neutral by 2050 (European Green Deal). As a consequence, companies are increasingly being expected to take effects on carbon emissions into consideration, while using energy, water and affecting biodiversity. These effects are increasingly being regulated. On the climate adaptation side, climate change already impacts the type of housing in some regions (ex. stilt and movable houses) and, due to increasing physical effects of climate change, will increasingly do so in the future.

Impact on Our Business

Our products with a superior quality and long lifespan ensure energy savings thanks to their optimal thermal insulation characteristics. Because we recycle PVC we save potential CO emissions by avoiding to source virgin raw material. Carbon reduction targets in alignment with the Science Based Targets.

Increasing shortages of raw materials

The world has been confronted with unprecedented shortages of raw materials which led to record high prices in many sectors, amongst which also ours. In combination with a high market demand, these effects have also affected our production and logistics and remain a critical point of attention in the future.

Impact on Our Business

Investments in our own recycling facility and collection of end-of-life products.

Reputation of Plastics

Plastics have come under fire in the societal debate because too much plastic waste ends up in the environment. All too often however, no distinction is made between single used plastics and more durable use of plastics in products such as the ones we produce.

Impact on Our Business

More proactive communication on the positive characteristics of our products and our efforts to invest in a circular economy.

Environmental, Health and Safety Impacts of Products

We see rising expectations of policy makers and consumers regarding the environmental performance of products and exposure to potentially harmful chemical substances in products. Simultaneously, they expect more transparency and information on these subjects. A risk-based approach towards exposure to potential hazardous substances during use which ensures that our products can be safely used.

Impact on Our Business

Investments in systems and procedures to track environmental performance of products during production and their lifetime.

Talent Attraction and Retention

Companies face increased competition to attract and retain a skilled workforce. Answering the pressure on the labor market, it is not only important to attract more people, but also to attract a more diverse range of talents. The need for on-the-job training increases in the fast-moving working environment.

Impact on Our Business

HR focus on employee engagement and an employee training programme which focuses on a welcome package and on-the-job training. A diverse workforce with gender equality as an essential part of our DNA.

Demography and Urbanisation

Global population growth leads to an increasing demand for housing.# Annual Report 2021

Report of the Board of Directors

Sustainability

Our Stakeholders

The impact of these trends has created a strategic imperative to address the expectations of a broad range of stakeholders in creating long-term value. Achieving our aspiration of building a sustainable home cannot be done without considering the interests and expectations of our stakeholders.

Stakeholder Expectations	Interactions	Actions
Employees	Health, safety and well-being	Annual performance review
	Career development	Deceuninck Intranet
	Employee rights and benefits	Code of Conduct for Employees
		Safety training and awareness programs
		Talent management
		Remuneration benchmarks
		Teambuilding activities
		Diversity policy
Customers	Qualitative products	Customer service
	Service and technical support	Preferred Partnerships
	Information sharing	Customer training programs
	Data security	Commercial fairs
	Solid financial performance	Develop and manufacture products that meet the highest quality standards
	Circular product solutions	Customer delivery service and dedicated technical support teams
		Digital transformation
		Data availability on product circularity
Investors	Economic growth	Information sharing
	Risk management	ESG performance and transparency
		Annual General Meeting
		Investor road shows
		Press releases
		Dedicated webpage
		Solid financial performance
		Integrated reporting
		Climate reduction strategy and CDP reporting
Suppliers	Fair trade	Daily contacts in the field
	Shared growth and innovation	Deceuninck Group trainings
	Sustainable product offering	Supplier Code of Conduct
		Supplier audits
		Partnerships (ex: to reduce carbon emissions linked to raw materials)
Local Community and Neighbors	Local recruitment	Local recruitment campaigns
	Local environment protection	Charity events
	Charity	Social and other media
Regulator, Governments, Experts	Compliance with regulations	Participation in working groups and consultative bodies
	Knowledge and experience sharing	Ad-hoc dialogue with local government
	Health and environmental performance of our products	Cooperation with experts on R&D projects
	Climate change	Building a compliance culture with policies, trainings and awareness programs
	Corporate governance	Communicate how our products contribute to the Green Deal objectives
		Climate reduction strategy

The Group cares about their needs and keeps an open dialogue. In May 2021 we have organized interviews with a selection of key stakeholders in our Belgian market. The input we received served our sustainability strategy. It is our intention to intensify the stakeholder interaction on sustainability in 2022, focusing at first instance on stakeholders in Belgium.

Materiality Analysis

The Group has a clear commitment to act with respect for people, society and the environment. Sustainability is an integral part of our business model and thus our sustainability strategy is an integral part of our corporate strategy. To deliver our sustainability ambition and to have our voice in the market, a solid financial performance and substantial market share is key. People, Planet and Community are the three main pillars of our sustainability strategy. We have defined an overall mission statement for each pillar and linked it to the most relevant material topics. The material topics for our business have been defined taking into consideration the following input information: the global trends, analysis of the sustainability frameworks, the expectations of our stakeholders, our risk assessment and a peer review.

The sustainability frameworks which served as inspiration to define the material topics are: "UN Sustainable Development Goals" (SDG’s), "Sustainability Accounting Standards Board" (SASB), and the "Global Reporting Initiative" (GRI).

We have defined how the material topics contribute to the United Nations Sustainable Development Goals. The SDGs consist of 17 global goals to reach by 2030. Our approach is to focus on the — 11 — goals where we can have the most impact. In addition, SDG 17 (global partnerships for sustainable development) is to us an overarching aim to reach our ambition.

The main change compared to the materiality analysis of 2020 consists of a stronger emphasis on climate change. During 2022 and in line with our reporting framework GRI we will engage with our stakeholders to further assess the significance and priorities of the material topics we have identified, including the targets and performance. We will also assess the 'double materiality' consideration in our materiality exercise in preparation of the upcoming CSRD (Corporate Sustainability Reporting Directive).

People
Our Mission
We build a sustainable ‘home’ for our people, based on our core values. We create the conditions for a good working environment and an inclusive workplace. Our people are active in training and personal development.

Our Priorities
Employment
Talent management
Health & safety
Diversity
Related UN SDG's

Planet
Our Mission
We help to build an energy efficient home. We create long lasting, low maintenance building products with top insulating properties. Our products are created with the lowest ecological footprint and can be fully recycled at end-of-life. We invest in lowering the ecological footprint of our operations.

Our Priorities
Materials and recycling
Product design and lifecycle management
Energy management
Water management
Waste management
Greenhouse gas emissions

Related UN SDG's

Community
Our Mission
We deliver added value to our customers and end-consumers through our solutions and services. We offer top performance in quality and service through trusted customer partnerships. We uphold the highest health and safety product standards. Our employees and suppliers respect ethical working standards.

Our Priorities
Health & safety of the end-user
Business ethics
Human rights in the supply chain
Community engagement

Related UN SDG's

Governance

The Executive Management determines strategy, approves targets and monitors execution

Our governance system is based on a clear definition of roles and responsibilities between the following actors.

The Board oversees and approves the sustainability commitments. Environmental, social and community related risks and opportunities are an integral part of the risk management process and are reviewed by the Audit Committee.
The Executive Management determines the strategy, approves the targets and monitors the execution. The CEO has executive responsibility over the sustainability related performance, which showcases the strategic imperative of sustainability.
In 2021, we have appointed a sustainability manager with the clear task to further define and deploy our sustainability strategy. The sustainability manager serves as a single point of contact on sustainability topics and coordinates the integration of sustainability into the organisation. Ultimately, sustainability should be embedded in every employees’ role and responsibility. During 2022, we aim to further develop the sustainability governance and management system with, amongst others, a roadmap to enhance the integration of sustainability in every entity of our organisation.

EU Taxonomy

The EU Action Plan on Financing Sustainable Growth led to the creation of the ‘EU Taxonomy’, a classification system for sustainable economic activities. Through transparency the EU Taxonomy wants to contribute to the redirection of resources towards the European Green Deal. It is in essence a classification system that defines which activities are environmentally sustainable (“green”) and how to calculate the “greenness” of a company’s turnover, CAPEX and OPEX.

The EU Taxonomy encompasses a step-by-step analysis. In line with legal requirements, the Group is currently reporting the first step: the eligibility on the basis of the Taxonomy Climate Delegated Act. From 2022 onwards, we will expand the Taxonomy assessment to the alignment with the Climate Delegated Act with a more detailed analysis of the Technical Screening, the Do No Significant Harm and the Minimal Social Safeguard criteria, as well as the other environmental objectives of the EU Taxonomy.

The Board of Directors oversees & approves the sustainability commitments
The Sustainability Manager defines and deploys the sustainability strategy together with the business
Since 2021

Governance System

Reporting Framework and Scope

The report is drafted with reference to the GRI Standards. Building a sustainable home is a continuous journey. We are committed to continuously improve our reporting. During 2022-23, we will review our targets, KPI’s, data collection and risk assessment in the context of the upcoming CSRD (Corporate Sustainability Reporting Directive) taking effect in 2024 and the European standard for sustainability reporting which will be published in 2022.

Eligibility analysis of activities of the Group that are contributing substantially to Climate Change Mitigation for the EU Taxonomy:

Deceuninck activity	Taxonomy Eligible activity	Climate Change Mitigation
Sorting and processing of separately collected waste streams from post-consumer windows and doors into secondary raw materials involving a mechanical transformation process.	Macro sector 5. Water Supply; sewerage, waste management and remediation activities	Activity: 5.9.

Report of the Board of Directors

Material recovery from non-hazardous waste

Eligibility analysis	Total (million €)	Proportion of Taxonomy eligible economic activities (%)	Proportion of Taxonomy non- eligible economic activities (%)
Turnover	838.1	4.6%	95.4%
Capex	43.6	4.1%	95.9%
Opex	132.3	4.9%	95.1%

Turnover includes the intra- and intercompany sales of recycled PVC of our recycling plant in Diksmuide (Belgium). The proportion is a calculation of the recycled volume versus the total volume sold. Capex and Opex numbers are related to the recycling activities of the recycling plant.

Deceuninck activity

Taxonomy

Non-eligible activity

Climate Change Mitigation

Manufacture of the windows and doors at the best available techniques for energy efficient equipment for buildings and their key components

Macro sector: 3. Manufacture
Activity: 3.5 Manufacture of energy efficiency equipment for buildings

Our activities are non-eligible with the Taxonomy activities, due to the Technical Screening Criteria, more specifically the U-values (Uwindow/door) not being in line with the U-values we as a system house apply (Uframe). We understand that the indicated U-values are meant to apply to full windows, whereas U-values for window components have not been defined. We are willing to further analyse if the available U-values can be updated to the Taxonomy required U-values, but at the moment this has not proven possible. As a consequence, financial numbers are not available. This analysis can alter over time, when the European Commission provides more guidance or updated U-values.

Results for People (with the exception of Employment) are provided for Europe, Turkey (i.e. without Emerging Markets) and North America. Results for Planet are provided for Europe, Turkey, North America and Colombia. Numbers for the reference years 2020 and 2019 are provided when data tracking has proven feasible. Because we have adopted some new KPI’s and calculation methods in 2021, comparability with previous years is not always possible as yet.

Sustainability

2.5.3 People

Employment

	2021	2020	2019
Number of employees	3,709	3,660	3,754
New employee hires	1,577	1,153	481
Employee turnover rate	39.7%	30.9%	-
Temporary employees	173	-	-

Talent Management

	2021
Percentage of white-collar employees who received a formal, automated performance review	70%

The Group turnover rate is strongly influenced by the general market circumstances in the U.S. We aim at creating a culture of excellence by establishing a tangible link between learning, performance and compensation, succession planning and knowledge transfer, by arranging for and providing training that supports strategic organizational objectives and by fostering a culture of continuous improvement that values organizational learning. New joiners and long-time employees, technicians and sales people… everyone should receive tailor-made trainings throughout his or her career at the Group. We organise technical trainings, safety trainings and language trainings. In terms of personal development, we encourage internal and international mobility, enabling employees to move to other countries to pursue their ambitions within the Group. In 2022, we will evaluate the performance review process and tools.

External recognitions:

Deceuninck Germany won the Training Company Award of the District of Straubing-Bogen for companies that excel in training and apprenticeships
Deceuninck UK was awarded the Investors In People (IIP) Silver accreditation in recognition of the measures it has implemented to further reward and support the workforce.

Data availability note: although our employees do follow trainings, we do not structurally track the training hours in a comparable way across the Group. We will track and report the average hours of training per employee as from 2022.

Health & Safety

	2021	2020	2019
High-consequence work-related injuries
Number:	1	0	0
Rate:	0.16	0	-
Work-related injuries
Number:	110	87	-
Rate:	17.4	14.4	-
Number of lost days	1,808	1,260	2,044
Number of fatalities	0	0	0

“Our people are the driver of our activities. We believe that great people deliver great results.”

Building a sustainable home can only be done in a healthy and safe working environment. Our success is measured by our ability to offer a healthy and safe workplace and embed a safety culture in our workforce. By investing in prevention, training and making available the necessary monitoring and reporting tools, we get closer to achieving our aspirational goal of zero accidents.

Our EHS management system includes a clear governance structure on regional and site level, coordinated by EHS managers and with management involvement in the regular EHS and management meetings to review preventive and corrective actions and define targets. In addition, Deceuninck Turkey applies the ISO 45001 Occupational Health and safety management system and in our US plants the Federal & State Occupational Safety & Health Administration Standards are applied. Risk assessment is a central element of our EHS management system. Potential risks are assessed annually. A risk assessment report contains risks and their corrective and preventive actions, linked to for example electricity, chemicals, moving parts of machines, loading and unloading of hazardous products or ergonomics. Every employee should take the necessary precautions to prevent an accident, injury or unsafe situation by reporting unsafe or unhealthy situations and taking steps to correct them immediately. EHS managers on site-level give safety training to all workers and contractors. New, temporary and intern workers receive an EHS training during the initial phase of their employment. Other elements of the EHS management system are: periodic training of emergency situations, controls of electricity risks, subcontractors work permits, occupational hygiene, ambient measurements (noise, dust, lightning, VOC). Accidents that caused injuries in 2021 were saw cut- related accidents, forklift-related accidents and accidents due to slipping. Several actions have been taken in 2021 and will be taken in 2022 to eliminate these hazards and minimize risks: adapation and replacement of machinery, training to operators and temporary workers, specific monitoring, an awareness campaign, safety lights on forklifts and an automatic forklift slowdown project. Apart from our aspirational target of zero accidents, every site has specific targets linked to frequency and severity rate.

In 2021 as well, the Group had to deal with the COVID-19 pandemic. The main focus was the protection of our employees’ health and wellbeing and the prevention of outbreaks in our production facilities. Thanks to a swift and strict management approach and a large number of mandatory preventive rules and measures, our employees were able to continue to work safely, both from their homes as from their workplace.

“In 2021 as well, we had to deal with the COVID-19 pandemic. The main focus was the protection of our employees’ health and wellbeing and the prevention of outbreaks.”

Diversity

We respect cultural differences. We believe that diversity of people and ideas provides the Group with a business advantage. An inclusive workplace also gives access to the labour market to its fullest extent. We value and respect the unique character and contribution of each person. Treating each other with dignity, respect and fairness is the foundation of good business. Discriminating against any employee or person with whom we do business on the basis of age, race, colour, religion, gender, disability, national origin, sexual orientation is not permitted. The recruitment, remuneration, application of employment conditions, training, promotion and career development of our employees are based on professional qualifications only. We have a zero-tolerance policy against discrimination and harassment. Today, employees can confidentially report any Code of Conduct violation through an internal procedure. In 2022, the internal whistleblower procedure is enhanced via an online tool. Every occurrence is investigated and a remediation procedure is foreseen, if applicable. Our ambition is to increase diversity in terms of age (meaning having employees represented in all age categories), gender and nationality. We also invest in the inclusion of our diverse workforce, for example by offering language and culture trainings.

Data availability note: we do not track amount of nationalities on Group level.

	2021	2020
Percentage of employees per gender
Women	14%	16%
Men	86%	84%
Percentage of employees per age group
Under 30 years old	22%	-
30-50 years old	58%	-
Over 50 years old	20%	-

“At Deceuninck, I feel I can always be myself.# Sustainability

Annual Report 2021

The warehouse is a place where work is to be done, but also a place where we can have a laugh.” Axeli Vancraynest Warehouse Operative Maintenance Deceuninck Belgium 121

Report of the Board of Directors

It is a strategic priority of the Group to keep employees engaged and connected to our company and each other. We understand that a good employee engagement is an enabler to a good working culture, reduction of turnover, increase of productivity and better relations with stakeholders. An employee survey is a means to measure and monitor employee satisfaction and take targeted action where needed. In 2021, we did not organize a survey in every region within every part of the Group. However, we aim to increase the frequency of employee surveys as of 2022. Engagement includes information exchange and negotiations with labor unions. 31% of our employees worldwide are represented by independent trade union representations or collective bargaining agreements, these employees are located in Europe. In Turkey, regular meetings are held with employees, especially blue-collar representatives, to discuss and find solutions for diverse issues. When employees or their close family members encounter exceptional, serious economic and/or health difficulties, we support them by providing the necessary assistance. In Belgium, we organized an employee survey mid- 2021, which allowed us to be up to date on the impact of COVID-19 on employee engagement. The key take-aways were that on average we are performing in line with the benchmark against other companies, our employees have a lot of variety in their work and feel secure about their job, we should improve internal communications and take the workload into consideration.

Sustainability Ambition

We understand that we have an impact on the environment in which we operate. Our planet gives us food, fresh air, clean water, etc., but the strain on natural resources has a negative impact. The world continues to experience increasing concentrations of greenhouse gases, extreme weather conditions, rising sea levels and waste landfilling. As we affect climate change through our operations and products, and climate change might affect our business continuity, we have a responsibility to minimize the environmental impact of our operations. Historically, our focus has primarily been on designing and developing innovative products with high insulation levels, in order to reduce energy loss and minimize carbon footprint in the use-phase, in combination with major investments in recycling. In the coming months and years, we will combine this focus with a carbon reduction strategy linked to the production processes (energy efficiency and renewable energy) and the sourcing of raw materials. We accelerate towards a circular market for our building products, by carefully managing how we source materials, how we design products, how we produce, how we deliver our products to our clients and how — and how much — they are recycled at the end of their long lifetimes.

2.5.4 Planet

We operate in markets with different strict and evolving environmental requirements. The compound and storage of hazardous industrial materials involves an environmental risk, especially as environmental legislation and regulations change over time. Failure to comply with existing or future environmental legislation and regulations may result in criminal or administrative penalties, which could have a material adverse effect on our financial results and operations.

Results and Targets

Our Recycling Activities

	2021	2020	2019
Weight of waste handled (tonnes)	23,500	22,000	20,000
Weight of PVC material recycled (tonnes)	17,400	14,000	12,000

Annual Report 2021

We invest in embedding the principles of a circular economy as the heartbeat of all our operations, through advanced recycling technologies of additional collection schemes. Our sector leadership in circular economy is clear by the investment in the state-of-the art recycling plant in Diksmuide (Belgium). Centrally located in Europe, we supply recycled PVC to our extrusion plants with the lowest possible transportation impact. Recycling post-industrial materials of our own production facilities and customers is what we have been doing since 2012. All our facilities grind their scrap materials as much as possible locally and re-used it on the production site. As such, we avoid transport to Diksmuide or other local recyclers. A circular economy goes further than recycling post- industrial waste and closes the loop of post-consumer PVC profiles, coming from demolition or renovation works. By increasing the post-consumer PVC share, Deceuninck strives to further increase the recycling volumes.

We expect the inflow of PVC to increase significantly over the coming years, because the EU Green Deal results in more renovation projects which will lead to more PVC materials becoming available for recycling. We directly contribute to preventing this PVC from going to incineration or landfill.
We continue our strategy of cooperation with partners, such as waste management companies, container parks, demolition companies, window fabricators. We are continuously looking to set up new strategic partnerships to ensure the inflow.
The high-tech fully automated line enables an optimal sorting of the materials and as such to process old PVC profiles at superior efficiency and quality. Quality is a key requirement to be able to use the post- consumer materials 1 on 1 in the production of new profiles.

We realize that our recycling activities have an environmental impact, although the positive impacts are much larger than the negative impacts. Our recycling factory is fully part of our carbon reduction strategy. Our recycling activities are independently audited by EuCertPlast. This certification aims at environmentally optimal plastics recycling processes. As such, we contribute to the Recovinyl and Vinyl Plus 2030 European recycling objectives. For the waste fractions for which we have not found a circular solution yet, we set up pilot projects with universities and other partners to investigate how we can valorise those materials flows. Deceuninck committed in 2020 with other industrial partners and University of Ghent in the ‘PoCoWaste’ project to further reduce the waste of the recycling process and, upcycle and reuse significant volumes as new raw material for PVC applications.

The Group recycled 23,500 tonnes of post-industrial and post-consumer rigid PVC waste in 2021, resulting in 17,400 tonnes of high-quality raw material we use one-on-one in our production facilities. Unfortunately, we did not reach our ambitious target of 30,000 tonnes input recycled material in 2021. Investments in additional capacity were planned to be operational during the year, but due to the global supply chain crisis resulting in increasing lead times on machinery, we were not able to increase capacity as planned. In 2022, we will keep investing in our recycling activities to be upgraded towards a capacity of 27,750 tonnes per year making us one of the largest u-PVC recyclers of Western-Europe. We are confident we will reach this target in 2022 if no major disruptions take place. The ongoing focus on the existing waste fractions will result in a growing yield, which enables us to process more recycled raw material with the same inflow.

“Our vision on circularity: we design products which are 100% recyclable, we recycle in a closed loop system at superior eciency and we manufacture long-lasting, low-maintenance products with less virgin material.”

17,400 tonnes Use of recycled PVC in production in 2021

32,500 tCO₂e avoided = annual CO₂ emissions of 4,400 Europeans

Annual Report 2021

Product design to be 100% recyclable is one of the key principles of our circular economy commitment. PVC is a valuable material that can be recycled up to 10 times without losing its mechanical characteristics. Installed for around 35 years, it has a potential lifecycle of up to 350 years. In the design process of our new window systems, the use of recycled materials is a one of the main design criteria used by our R&D teams. Our design teams apply the Design for Recycling guidelines of EPPA, the European Trade Association of PVC Window System Suppliers. The guidelines were updated in 2021 with the spirit to be converted into a European Standard at a later stage. The quality of the recycled material to ensure the quality of the end-product is paramount. Therefore, we invest in fully automated recycling processes that eliminate other waste streams from the PVC fraction. Our recycling activities are complemented with investments in co- extrusion production lines that combine virgin with recycled PVC in our product manufacturing. All recycled materials we use comply with the applicant quality certifications. In 2021, on average 14.9% recycled PVC material was used in production. Calculated against the total virgin material used, this is a combination of post-consumer waste — mainly sourced from our own recycling plant — and post-industrial waste, partly originating from our own production, partly from our customers. Deceuninck North America is certified for the recycled content in window lineals via the external certification agency GreenCircle. As such, we are the only North American PVC window lineal supplier. Our GreenCircle product certification covers claims for recycled content, in accordance with US criteria for recycled content of building products.# Sustainability

Product Design and Lifecycle Management

	2021	2020	2019
Share of recyclable products	100%	100%	100%
Share of recycled input PVC materials used	14.9%	13.3%	10.6%

“Product design to be 100% recyclable is one of the key principles of our circular economy commitment.”

The Elegant product range for windows and doors contains high levels of recycled content, between 15% and 30%. Phoenix is the newest addition to the Elegant product range, available since January 2022 in the BENELUX. Phoenix windows and doors profiles consist of 100% recycled material — so far, our strongest circular product achievement. The Phoenix range scores as highly in terms of shape retention, resistance and thermal insulation values as our other profiles. The minimalist 'Infinity' design from the Elegant window range was selected for the design of the Phoenix range. This ensures a contemporary look for the circular window and door profiles.

Breakdown of materials used in production

Raw materials (tonnes)

Material	2021
PVC resin	200,000
Calcium carbonate	23,000
Impact modifier	7,000
Titaan dioxide	7,000
Decorative foil	2,000

Reinforcement materials (tonnes)

Material	2021
Steel	21,000
Fiberglass	1,000
Steel wire	600

“The new Phoenix range makes optimal use of recovery and recycling, and thus represents the rebirth of old materials. Like a phoenix rising from its own ashes, we process windows and doors that have reached the end of their lives into new, 100% recycled profiles.”

PVC building products are lightweight, require low maintenance and provide superior insulation. Our PVC products save energy and reduce CO₂ emissions. Studies show that 40% of fossil fuels in Europe are used for heating buildings, which represents 36% of energy-related greenhouse gas emissions. The Group’s mission is to reduce the energy and carbon share of heating or cooling buildings. We are continuously developing PVC and composite products that help reduce the energy that escapes from buildings through windows and walls. PVC and PVC composite products are the most economical solution for insulation. The use of new PVC windows at least halves energy consumption, assuming that a 30-year-old window is replaced leading the house to comply with passive house standards.

National building codes are gradually introducing stricter insulation and ventilations targets to meet insulation legislation, for example the Energy Performance of Buildings Directive in the EU which introduces Energy performance certificates (EPCs) for buildings and regulations to ensure that from the end of the decade only nearly zero energy buildings (NZEBs) are built. We design products with optimal insulation values. Our design teams constantly innovate on building products with improved energy performance at an even lower weight.

Thermal properties of windows and doors are calculated according to parameters of thermal transmission of PVC frame (Uf) and glazing (Ug). For us, as system owner, the critical parameter is the Uf, which is determined during the design phase. Based on this, we have several Passive House Components Certifications: in the EU for the Zendow#neo, Elegant Infinity and Elegant ThermoFibra Infinity systems (climate zone warm). Deceuninck Turkey received the first Passive House Component Certification for PVC Windows in Turkey with the Winsa-Revotech window range from the German Passive House Institute.

Environmental Product Declarations (EPD) present the results of a life cycle assessment (LCA) carried out on a product to quantify its environmental impacts. EPDs are prepared according to strict rules defined by the EPD Programme Operators. The EPDs which EPPA (European Trade Association of PVC Window System Suppliers) published for double-glazed windows and triple-glazed PVC windows, summarize the environmental impact of PVC window profile systems available on the EU market. Deceuninck is participating in the working group that is currently revising the EPD’s which will be compliant with ISO 14025 and EN 15804+A2. The EPDs will be published in the first half of 2022. We are currently finalizing EPDs for the French market, and work has also been initiated to update the EPD on Twinson massive decking profile. Establishing an EPD for the complete Twinson product range (terrace and claddings) is foreseen in 2022.

In 2021, Deceuninck renewed its VinylPlus product label. The voluntary label is the sustainability quality mark for PVC building and construction profiles. It was put into place by VinylPlus, BRE and the Natural Step and was originated to make it easier for customers and markets to choose the most sustainable, high-performance PVC products. The external audit certifies the policies, processes, products and performance on the following criteria:

Responsible Sourcing – traceability of raw materials
Controlled Loop Management – reduce waste and increase use of recycled material
Organo-chlorine Emissions – PVC sourced from ECVM chartered suppliers
Sustainable use of additives – cadmium and leadfree products, additives used contribute to lower ecological footprint
Energy and climate stability – energy efficiency improvement and use of renewable energies above national legal requirements

The VinylPlus label is applicable for our product ranges Elegant, Elegant Thermofibra, Zendow, Zendow#neo and Twinson in Europe. The label gives evidence that our products and processes are applying to the highest quality, performance and sustainability standards.

² European Commission: A Renovation Wave for Europe – greening our buildings, creating jobs, improving lives (2020)
³ QKE/EPPA Environmental Product Declaration (2017)

PVC recycling

	Virgin PVC	Recycled PVC	Energy saving	CO₂ emissions avoided per ton recycled PVC
Energy consumption	90%	up to	90% less energy than producing virgin PVC	2 tonnes of CO₂e emissions avoided per ton recycled PVC

Energy Management

As part of our commitment to sustainability and climate change mitigation, we strive to continuously improve the environmental performance of our operations, with efficient use of energy and renewable energy as key parts of this. Energy efficient production processes as well as sourcing and producing renewable energy have an impact on the carbon footprint directly. It also is an opportunity for the optimization of manufacturing processes and energy cost reduction.

Energy consumption is continuously monitored at all sites. The bigger contributors are additionally encouraged to develop energy efficiency projects. This is logically the case for our extrusion plants, which amount for the highest use of electricity due to the production characteristics. In 2021, several energy efficiency projects were executed: renewal of pumps and motors, insulation of buildings, LED relighting, power savings through water cooling, etc. We also started a more systematic energy efficiency analysis on Group level based on detection of energy flows and evaluation of the potential of energy efficiency, focused at energy-consuming equipment (extrusion systems, injection moulding machines, laminating machines, compound mixing, heating, cooling and compressed air supply), forklifts and lighting in production and warehousing.

Our production facility in Bogen is ISO 50001 certified. The energy management system specifies the requirements for establishing, implementing, maintaining and improving an energy management system. Our production sites in Belgium, Turkey and the United Kingdom are ISO 14001 certified. The Plan-Do- Check-Act approach of ISO 14001 results in continuous improvements of the environment performance based on procedures and instructions. The two Belgian sites are part of the energy efficiency covenant ‘EBO’. The share of renewables in the energy mix can mainly be attributed to the trigeneration power system (combined heat and power) in one of the Turkish plants. 1% of the total consumption is produced by PV panels, located on our plants in Belgium, Turkey and Germany. We intend to actively pursue an increase in the share of renewables in our purchased energy mix in the coming years. We will do so starting with sourcing of renewable energy through Renewable Energy Certificates (REC) as well as with increasing our own production of renewables. As of 2022, the increased focus on energy efficiency will lead to a decrease of energy consumption per processed kg and a shift from use of natural gas and fuel oil to (green) electricity.

“In 2021, we started a more systematic energy efficiency analysis based on detection of energy flows and evaluation of the potential of energy efficiency.”

	2021	2020	2019
Total electricity consumption (MWh)	186,386	173,413	169,619
Total natural gas consumption (MWh)	94,074	87,626	82,210
Total fuel oil consumption (MWh)	5,580	4,170	7,461
Total energy consumption (MWh)	286,041	265,209	259,303
Energy intensity (MWh/tonnes)	1.25	1.28	1.32
Percentage of electricity use from renewable sources	16%	17%	16%

Water Management

Responsible water management is another aspect of our efforts to make our production processes more environmentally friendly. Water is becoming a more valuable commodity due to physical effect of climate change and overuse. Water is an inherent part of extrusion processes, as it is used to cool the PVC material upon completion of extrusion. We therefore must use it responsibly, especially in water stress regions.

	2021	2020	2019
Total water withdrawal (m³)	230,514	216,927	239,426
Water intensity: total water withdrawal/production volume (m³/tonnes)	1.01	1.05	1.15
Total water withdrawal per subcategory (m³)
Rainwater	17,684	-	-
Groundwater and surface water	30,140	-	-
Drinking water	182,690	-	-

Report of the Board of Directors

In line with our dedication to a circular economy, an effective waste management in our operations is a key priority for Deceuninck. Reducing waste streams is not only good for the environment but also for business, as fewer raw materials are required to produce. We have a waste management policy and processes in place by which we monitor and assess waste streams, minimize waste volumes and seek to close the loop for the remaining waste fractions originating from our production processes.

The waste management hierarchy, central to our waste management approach, prioritizes waste prevention, followed by recovery operations that divert waste from being sent to disposal:

We check if we can reduce or eliminate the waste stream.
We focus on the re-use of waste streams as raw material in our own production.
We process it with a third party in most environmental neutral way, which means in order of priority: recycling / incineration with energy recovery / incineration without energy recovery.
We avoid and eliminate landfilling.

In 2021, several projects were initiated to avoid and re-use waste streams. For example, some packaging waste management 2021 2020 2019

	2021	2020	2019
Total volume of waste (kg)	14,136,121	14,545,714	13,044,574
Waste intensity	61.7	70.3	63.1

recycled materials have been removed from the pallets. Deceuninck engages in the voluntary initiative Operation Clean Sweep where we pledge to prevent resin pellet, flake and powder loss.

Our dedication for waste management continues in 2022. Several projects are in the pipeline in line with the waste hierarchy mentioned above. We keep focusing on re-use of raw materials on-site, we will actively monitor and assess waste treatment methods at the waste processors with which we cooperate and we continue efforts to reduce packaging materials.

We monitor our water consumption, we are implementing measures to reduce water usage by investing in filtration systems and water reuse, we avoid the use of drinking water and maximise the use of rainwater. We also take preventive water treatment measures against soil and ground water contamination. At the recycling plant in Diksmuide, investments in a rain water well and a water treatment installation to enable reuse of process water back in the recycling process was done in 2021. This has led to 40% less drinking water use in 2021 in the plant. Following our sustainability strategy, in the coming years, we will intensify the organization’s management approach on responsible water use, notably reuse of wastewater in extrusion processes, focused on the plants located in water stress regions.

Sustainability

Our ambition: save 2.3 million old windows from landfill or incineration.

Following our ambition expressed in the Annual Report 2020, we have calculated the carbon footprint of the Group in 2021. The results have proven insightful for the analysis of where our direct and indirect impacts, linked to operations and the supply chain, lay. The greenhouse gas emissions reported are carbon dioxide (CO2) and Hydrofluorocarbons (HFCs). To calculate their impact on climate change, greenhouse gas emissions are converted to the CO2 equivalent using the Global Warming Potential, following the Greenhouse Gas Protocol Corporate Accounting and Reporting Standard.

Unsurprisingly, the impact of the indirect emissions in the supply chain is very large, as two main feedstocks are needed to manufacture PVC (polyvinylchloride): chlorine and ethylene. The ethylene is mainly derived from non-renewable fossil fuels, either crude oil or natural gas (and also shale gas). Even though worldwide, PVC uses less than 1% of fossil fuels consumed, it largely influences our total carbon emissions. Raw materials (Scope 3) contribute to 88% of our total carbon footprint, of which 71% is due to virgin PVC resin. The other biggest contributors are Steel, Impact Modifier and Calcium Carbonate. The second largest contributor comes from the energy consumption in our operations (11%), Scope 1 and 2 emissions together. The use of electricity accounts for the largest share (9%), followed by natural gas use (2%). Other contributors to energy consumption is fuel oil. Energy needs increased due to increased production. Logistics (6%) represent the third main source of CO2e emissions, largely influenced by road transportation and to a lesser extent by sea freight.

Carbon Management

	2021	2020	2019
tCO2e emissions Scope 1	20,887	19,875	19,148
tCO2e emissions Scope 2 (location based)	55,602	53,155	54,679
tCO2e emissions Scope 2 (Market based)	54,659	52,720	54,146
tCO2e emissions Scope 3	570,418	510,072	470,903
Total tCO2e emissions	645,964	582,668	544,197
Carbon emissions Intensity Scope 1 & 2	2.82	2.82	2.76
CDP score	D	-	-

Company cars, commuting and business travel all together represent < 1% of our climate impact. The same counts for waste, with the following breakdown (from high to low): plastics, residual, metals, wood. Fluctuations per site directly reflects the quantities of raw materials processed. Monroe (US) and our two Turkish plants are the plants with the biggest climate impact which represent together 50% of our total footprint.

Emissions have increased by 11% between 2021 and 2020 and by 4% between 2019 and 2020. These increases are linked to the increases in processed raw materials. Production and related activities have been impacted by COVID-19 in 2020 and much less in 2021. The increase in carbon emissions is especially high in the Scope 3 emissions.

CDP is an international not-for-profit organisation which runs a global disclosure system that enables companies, cities, states and regions to measure and manage their environmental impacts and issues ratings. The Group participated to the CDP rating system for the first time in 2021 and received a D-score. We intend to improve our scoring year by year by developing a targeted approach on the key elements targets, strategy, governance and risks.

The Group has committed to set near- and long-term emission reduction targets in line with science-based net-zero of the Science Based Targets initiative (SBTi) and is preparing to submit targets for validation in 2022. Our ambition is to reduce the carbon emissions in Scope 1 & 2 by minimum 42% and in Scope 3 by 25% by 2030, compared to baseline year 2021. By 2050 we are aiming at 90% overall reduction of carbon emissions compared to our baseline year.

The carbon emission reduction plan includes investments in energy efficiencies in infrastructure and equipment in operations, electrification and renewable energy sourcing and production. Targets for Scope 3 emissions will be developed in 2022, linked to cooperation with suppliers to source bio-based PVC, intensifying our own recycling efforts and efficiencies in logistics.

“Responding to the SBTi’s call for corporate climate action illustrates our strong commitment to sustainability. The science-based targets provide a framework for us to evaluate key business decisions from a climate mitigation point of view.”

Jonathan Ortiz
Country Manager Chile
Deceuninck Chile

Report of the Board of Directors

Sustainability

Ambition

We want to be a reliable partner to both our customers and our suppliers. Our daily driver is to produce exquisite, innovative, sustainable and safe window, door and building solutions, while playing an active role in the communities we operate in, upholding the highest ethical business standards and expecting the same from our business partners.

Our activities are subject to possible liability risks related to our products and related to our supply chain (human rights violations, bribery, corruption). Any act of non-compliance can have a negative impact on the reputation of the company, on the activities and on the value of the share. We have taken measures to protect our customers on the one hand and to ensure not only our employees but also our business partners act in accordance with applicable laws, as well as the highest standards of integrity and ethical practice.

Community

Results and Targets

Health and Safety of the End-User

	2021	2020	2019
Number of incidents of non-compliance with health & safety regulations and voluntary labels	0	0	0

potential impacts are an area of growing concern especially in Europe, driven by evolving European legislation. We cooperate in this policy making process by sharing knowledge and experience in the most transparent way.

It is critical for the Group to manufacture window, door and building solutions that ensure top quality over their entire lifetime. Health and safety are essential quality elements, meaning that we do not tolerate that our products harm the end-users during their lifetime. Products must be designed, produced and serviced to the Group’s product standards and should comply with applicable regulations and contractual obligations. Depending on the product group we adopt several quality standards and labels as a guideline for the design and manufacturing.

We provide voluntary quality labels against the applicable standards for all our products in our company labs. The tests cover a range of potential impacts, for example weather and reaction to fire, compliance with REACH and VOC regulation, throughout all product lifecycle stages and are based on national quality standards, such as ATG (Belgium), KOMO (The Netherlands), NF-CSTB (France), RAL (Germany).# Annual Report 2021

Report of the Board of Directors

The assessment is successful only when the product passes on each requirement and the test reports are approved by external certification partners. Our PVC cladding products in Europe are subject to CE marking. PVC profiles are not subject to CE marking, unlike PVC windows and doors. The CE marking of those finished products is provided by the window manufacturer, based on reports provided by Deceuninck. The CE mark signifies that products sold in the European Economic Area have been assessed to meet high safety, health, and environmental protection requirements. It covers seven basic requirements: mechanical resistance and stability, safety in case of fire, hygiene, health and environment (dangerous substances, VOC, …), safety and accessibility in use, protection against noise, energy economy and heat retention, sustainable use of natural resources. The safety and performance of our PVC cladding products are officially stated in a Declaration of Performance, published on our website and directly available to customers. Deceuninck participates in the SCIP database, launched in 2021. This EU database, established under the EU Waste Framework Directive, is intended to support consumers in making safer choices on the articles they buy and support waste managers in identifying Substances of Very High Concern containing products (SVHC) when they are present in a concentration above 0.1% weight by weight (w/w) on the EU market. The PVC profiles containing post-consumer recycled material we put on the market in the EU are consultable in the SCIP database. Lead free test reports for virgin compound are available for every product. In the context of the European REACH legislation, the EU Commission has proposed a ban to use the heavy metal lead in PVC products with a conditional derogation for the recycled rigid PVC. We are, with our industry association EPPA, closely following the discussions at European level. The proposal is currently being discussed by the EU Parliament, next steps will follow in 2022. “Health and safety potential impacts are an area of growing attention especially in Europe, driven by evolving legislation.”

144

Annual Report 2021

Report of the Board of Directors

The elements ‘Responsible use of additives’, ‘Health and safety’ and ‘Material traceability down the supply chain’ are part of the externally audited VinylPlus product label, which has been renewed in 2021 (see above).

Business Ethics

	2021	2020	2019
Rate of new joiners (white collars) who completed the Code of Conduct e-learning	85%	79%	85%
Number of incidents of non-compliance	0	0	0

The policies and procedures for this are set out in our Human Rights Policy and our Code of Conduct for Employees. To make sure that all of our employees have the same understanding of the Code of Conduct principles, an e-learning program was launched in 2017. The aim of the e-learning program is to explain the main principles and rules of the Code of Conduct. It covers topics such as anti-bribery and corruption, ethics, data protection, quality and sustainability. New joiners automatically get to complete the e-learning training as part of the onboarding process. The training is currently only available for white collars. Due to technical issues, it has not yet been rolled out to our blue-collar workers. We plan to extend the training to all employees in 2022. In order to combat fraud and corruption, the Authorized Signatories List (“ASL”) was revisited and rolled out in 2021. For the approval and monitoring of expenses, the Group implemented a workflow based expense note management system. The Group considers respect for business ethics as an integral component of sustainable business behaviour. Our reputation and financial success depend on the conduct of our employees when dealing with business partners, company assets, information, etc. The Group wants to foster a stimulating work environment in which every person is treated fairly. The Group places an emphasis on respect, the need to apply the highest standards of professional behaviour, safety and security and the rejection of all kinds of discrimination.

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Sustainability

Business Ethics in The Supply Chain

	2021	2020
Number of suppliers who signed the Code of Conduct	49	18

Data Protection

	2021	2020
Number of security breaches or loss of data reported	0	0

Being in a production environment, the Group’s main activity is not the processing of personal data. However, in the interest of our company, our employees and our business partners, the Group is committed to do the utmost to protect personal data against unauthorized users and operates in accordance with the applicable rules and legislation. Non-compliance could lead to privacy claims and loss of reputation. Since the entry into force of the General Data Protection Regulation, the Group has implemented the necessary policies and procedures and organized trainings and awareness campaigns through its Intranet, targeting in particular Sales and Marketing and HR departments. In 2021, no security breaches of privacy or loss of data were reported. We expect our suppliers to comply with the same ethical standards as we do with regard to non-discrimination, anti-bribery and anti-corruption and human rights, in particular in high-risk countries. This is fundamental to our long-term future and company reputation. The principles, policies and procedures are set out in the Supplier Code of Conduct and the Human Rights Policy. It includes the commitments expected from suppliers and subcontractors in terms of ethics, human rights, respect for the environment. All suppliers with whom we work must adhere to the ILO Declarations on Fundamental Principles and Rights at Work, take responsibility to the environment, strive for ethical behaviour and take measures to protect personal data. Our European resin suppliers must follow the VinylPlus voluntary commitments and must follow an environmental and health and safety management system. The suppliers’ location is a criterion on which the

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Report of the Board of Directors

supplier is being evaluated in the decision making. In 2022–23, our ambition is to start the preparations to develop a due diligence to identify, prevent and mitigate potential human rights and environmental impacts in our supply chain by conducting a risk and spend analysis. Currently, we focus on getting our new suppliers to sign the Supplier Code of Conduct as part of their new contract. This is integrated in the procurement process. Existing suppliers are screened and, in a first phase, the most important suppliers in terms of ‘spend’ are asked to sign the Supplier Code of Conduct or at least to provide proof of their own internal ethical standards and policies. A high-level risk screening of our suppliers showed that the large majority of the suppliers operate in low-risk countries within the EU.

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Sustainability

Community Engagement

As a Group active in more than 90 countries all over the world, we believe we have a role to play in society. We want to ensure that more people can participate in and benefit from a prospering society regardless of their backgrounds. We therefore support charity projects worldwide, both bigger and smaller ones, hoping to make a difference for each and everyone involved. Apart from the monetary sponsorships, we also support a variety of causes in-kind. We mainly focus on projects in the field of education and health:
* health research initiatives enable scientists to improve the prevention and quality of healthcare.
* education helps children and young people to grow towards independency, opens opportunities on the labour market, and is a key to breaking the vicious circle of poverty.

Project support for health and education:	2021
	€ 42,000

A selection of projects we supported in 2021:

The Deceuninck C3 Compassion for Community and Causes programme in US: sponsorship of Wreaths Across America, local youth baseball, high school football ….
YouthStart: YouthStart stimulates self-confidence among young people seeking opportunities and offers them the opportunity to pursue their ambitions. They provide a qualitative education and the necessary support to become an independent and self-sufficient individual.
De Kouter Kids: The association aims to provide support in the broadest sense to children living in a difficult home situation. De Kouter Kids tries to make sports and culture accessible to those young people. In addition, at the age of 18, they get assistance in their first independent steps in society (e.g. by sponsoring the driver’s license exam).

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The further improvement of profit margins remains a priority in order to be able to further invest in sustainable growth. Global population growth and climate change affect the need and the type of sustainable houses. With our investments in recycling and the superior thermal insulation of our products, we expect the building renovation wave to positively impact our sales in the coming years.

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02
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2.6 Financial Performance

2.6.1 Deceuninck Consolidated

2.6.2 Financial Statements and Notes

2.6.3 Deceuninck NV

2.6.4 External Auditor’s Report

2.6.5 Management Responsibility Statement

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Income statement

Consolidated sales in 2021 increased to a new record of €838.1 million, up 30.5% from €642.2 million in 2020.# 2021 Results

2.6.1 Deceuninck consolidated

Financial Performance

Non-Financial information

Research and Development (R&D)
Events after the balance sheet date
Other circumstances

The non-financial information of the Group is described in the section Sustainability of this annual report. The research and development activities of the Group are described in the section Products and Innovations of this annual report. Please refer to Note 26 of the consolidated financial statements. Besides the circumstances included in the paragraph on risk management, no other circumstances should be disclosed that had a significant influence on the Group’s situation.

Continued strong demand in all regions from the residential construction market resulting in higher volumes and price increases to mitigate the effect of higher raw material costs, inflation and FX have been the main drivers for this increase. The Adj. EBITDA for the year increased to €97.7 million (+13.6% vs 2020), which is the highest number in the history of the company. Higher sales volumes have been the main driver for this record Adj. EBITDA. The Adj. EBITDA-margin decreased from 13.4% in 2020 to 11.7% in 2021, which is still well above the historical performance. The reasons for this margin erosion are diverse. Firstly, there is an (unavoidable) delay of about three months in the pass-through of higher raw material prices into higher selling prices. Secondly, labour shortages and supply chain disruptions have led to inefficiencies in production and logistics. Next, the Adj. EBITDA-margin in H2 2020 was high because of the exceptionally low prices of raw materials purchased in Q2 2020 and reflected in the result of H2 2020. And finally, the pass-through of higher costs into higher selling prices to protect margins in absolute numbers has a dilutive effect on the margin percentage. Adj. EBITDA-items (difference between EBITDA and Adj. EBITDA) amount to €4.9 million (vs €0.6 million in 2020) and include mainly costs related to the transition to the iCOR platform. The financial result improved slightly from €(15.4) million in 2020 to €(14.6) million in 2021 thanks to a lower financial debt resulting in lower interest charges. One-off FX gains in H1 2021 were offset in H2 2021 by higher hedging costs and FX losses related to the sharp devaluation of the Turkish lira in November and December 2021. Despite higher Earnings before Taxes (€39.7 million up 30.1% from €30.5 million in 2020), Income taxes are lower (€2.5 million in 2021 vs €4.9 million in 2020) because of the recognition of additional deferred tax assets. Net profit increased from €25.6 million in 2020 to €37.2 million in 2021 (+45.4%). Consequently, Earnings per Share increased from €0.18 to €0.25. The Board will propose to the General Assembly to pay out a dividend of €0.06 per share (vs €0.05 for the year 2020).

Cash Flow and Balance Sheet
The Net Financial Debt increased from €55.5 million end 2020 to €61.9 million end 2021. Leverage remained unchanged though at 0.6x as the higher debt has been compensated by a higher Adj. EBITDA. This annual report needs to be read together with the audited consolidated financial statements of Deceuninck Group, referred to as the Group, and the notes to the financial statements. These audited consolidated financial statements were authorized by the Board on 22 February 2022.

Negative cash impact from working capital movements in absolute numbers was €+32.7 million, driven by higher sales and higher raw material prices. However, in relative terms, working capital improved from 11.6% on sales end 2020 to 10.1% end 2021. After being low in 2020 (€23.5 million) because of COVID-19, capex increased again in 2021 to €43.6 million. Besides an amount of about €30 million for maintenance and growth, the most important capital expenditure was the purchase of a warehouse in Kartepe (TR) for about €10 million.

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Deceuninck Group: key figures

KEY FIGURES (IN € MILLION)

	2019	2020	2021	EVOLUTION 2020-2021
Consolidated Income Statement (in € million)
Sales	633.8	642.2	838.1	31%
Adjusted Ebitda	60.6	86.0	97.7	14%
Ebit	11.2	45.9	54.3	18%
Net Profit	(14.7)	25.6	37.2	45%
Consolidated Balance Sheet (in € million)
Equity	233.1	246.3	258.9	5%
Net Debt	140.2	55.5	61.9	12%
Total Assets	589.7	599.4	675.1	13%
Capital Expenditure	35.5	23.5	43.6	85%
Working Capital	94.5	74.2	84.3	14%
Capital Employed	416.3	347.4	354.9	2%
Ratios
Net Profit On Sales	(2.3%)	4.0%	4.4%	-
Adjusted Ebitda / Sales	9.6%	13.4%	11.7%	-
Net Debt / Adjusted Ebitda	2.31	0.64	0.63	-
Ebit / Capital Employed	2.7%	13.2%	15.3%	-
Headcount
Total Full Time Equivalents (Fte)	3,754	3,660	3,709	-

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2.6.2 Financial statements and notes

FOR THE 12 MONTH PERIOD ENDED 31 DECEMBER (IN € THOUSAND)

NOTES	2020	2021
Sales	642,189	838,099
Cost of goods sold	(438,639)	(608,440)
Gross profit	203,550	229,658
Marketing, sales and distribution expenses	(110,182)	(128,577)
Research and development expenses	(6,908)	(6,711)
Administrative and general expenses	(42,063)	(43,198)
Other net operating result	4,508	3,106
Share of the result of a joint venture	(3,018)	-
Operating profit (EBIT)	45,887	54,278
Costs related to the derecognition of accounts receivable	(3,887)	(3,545)
Interest income (expense)	(5,889)	(4,862)
Foreign exchange gains (losses)	(4,515)	(5,744)
Other financial income (expense)	(1,092)	(446)
Profit / (loss) before taxes (EBT)	30,505	39,682
Income taxes	(4,927)	(2,503)
Net profit / (loss)	25,578	37,179

THE NET PROFIT / (LOSS) IS ATTRIBUTABLE TO:

(IN € THOUSAND)	2020	2021
Shareholders of the parent company	24,242	33,990
Non-controlling interests	1,336	3,189