Annual Report (ESEF) • Apr 12, 2022
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Download Source FileUntitled 1 2 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION INTRODUCTION Ebusco at a glance 3 Key gures 5 Message from the CEO 6 Shareholder Information 8 Strategy 9 MANAGEMENT BOARD REPORT Composition of the Management Board 12 Operational review 13 Financial review 16 Outlook 20 Our responsibility 23 Risk Management and Internal Control 32 Management Statement 46 GOVERNANCE Corporate governance 49 Composition of the Supervisory Board 56 Report of the Supervisory Board 57 Remuneration report 61 The chapters marked with a * are part of the report of the Management Board as dened in Title 9, Dutch Civil Code 2. FINANCIAL STATEMENTS Consolidated statement of prot or loss and other comprehensive income 66 Consolidated statement of nancial position 67 Consolidated statement of changes in equity 68 Consolidated statement of cash ows 69 Notes to the consolidated nancial statements 70 COMPANY FINANCIAL STATEMENTS Company statement of prot or loss 109 Company statement of nancial position 110 Notes to the company nancial statements 111 OTHER INFORMATION Provisions of the Articles of Association relating to prot appropriation 118 Independent auditor’s report 119 Four year overview 126 Non-IFRS measures 127 Organisation Ebusco 131 CONTENT 2 ANNUAL REPORT EBUSCO 2021 3 3 EBUSCO – MADE TO MOVE Ebusco is a developer, manufacturer, and distributor of zero-emission buses and charging systems as well as a supplier of ancillary products and services to the electric vehicle ecosystem. As an innovative frontrunner in the development of electric buses, Ebusco contributes to a better living environment by driving the transition to zero-emission public transportation. Ebusco’s buses currently operate in multiple coun- tries in Europe, including in major cities such as Amsterdam, Frankfurt and Munich. Ebusco was founded in 2012 and had a workforce of almost 340 employees as at 31 December 2021. The company is headquartered in Deurne, the Netherlands and has, next to its production facilities in Deurne, a third-party facility in Xiamen, China. Ebusco has a global expansion roadmap and growth strategy in place to capture opportunities across geographies. Since 22 October 2021 Ebusco is listed on Euronext Amsterdam. There are Ebusco buses on the road in the Nether- lands, Belgium, France, Germany, Norway, Switzer- land and Denmark and the company intends to ex- pand its presence in both its existing markets and beyond, including European countries and North America. DELIVERING COMPLETE ECOSYSTEMS Ebusco’s offering comprises the entire electric vehicle ecosystem in which its zero-emission buses operate, including Energy Storage Systems, charging infra - structure, depots, service and maintenance and local energy supply and grid alignment. Electrical buses Industry leading EV buses with real-road experience and game changing new model. Charging Complete package with small-sized chargers. Design and installation of charging infrastructure. Storage Energy storage solutions (ESS) and Mobile Energy Containers (MEC). Local storage of energy to reduce grid connection. Grid alignment Smart charging infrastructure, energy storage and grid balancing solutions to organise the energy ecosystem of the future. After sales Digital, real-time eet management system. Full-service or exible maintenance contracts and efcient spare parts supply chain. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION As at 31 December 2021 cumulative VISION Driving the transition to sustainable public transport MISSION To contribute to a better environment by enabling safe,sustainable, emission-free and affordable transportation ecosystems FACTS • OPERATING IN 7 COUNTRIES • BUSES SUPPLIED >350 • KILOMETERS DRIVEN >39 MILLION • KILOGRAMS OF CO 2 SAVED >35 MILLION 4 4 AN INDUSTRY PIONEER Ebusco, founded nearly a decade ago on the strong belief that electric transport is the future, is an in- dustry pioneer with a distinct rst mover advantage. Its rst bus in 2013, the Ebusco 1.0, was a proof- of-concept which played a vital role in testing and further development to arrive at the Ebusco 2.0. As a result of continued advancements in technology and production capabilities, the product portfo- lio of Ebusco further evolved. The Ebusco 2.2 was released in 2017. It was the rst bus with a body and chassis made of high strength stainless steel, re- sulting in signicant weight reduction, and boasted a single-charge range of up to 350 kilometres while carrying 90 passengers. 2010 2012 2013 2014 2016 2018 2019 2020 2021 Laying the foundation for Ebusco Peter Bijvelds initiates EV work 1st European type approval for electric buses Ebusco formally founded In Helsinki, Finland First bus on the road In the Ebusco 2. Capacity of over 90 passengers By using composite material Started lightweight technology development With the Ebusco 2.2 achieved Up to 575km range First 3.0 prototype Delivery Ebusco 3.0 First Ebusco chargers delivered Over 300 buses in operation First MEC prototype 90 PAX 3.0 575KM 3.0 2.2 300KM ON A SINGLE CHARGE UP TO 575 KM WEIGHT REDUCTION 27% LIGHTER EXTENDED LIFESPAN 25 YEARS FEWER MOVING PARTS REDUCED MAINTENANCE PROPRIETARY AEROSPACE TECHNOLOGY SPACIOUS DESIGN BATTERY TECHNOLOGY COBALT FREE, RECYCLABILITY AND REUSABILITY EBUSCO 3.0 In 2019 Ebusco launched a prototype of its next generation Ebusco 3.0 bus. The Ebusco 3.0 is a revolutionary model in the industry and a testament to Ebusco’s ability to innovate. It has a lightweight composite body based on aerospace technology. This composite material is signicantly lighter and stronger, giving the bus a substantially longer, single- charge, range of up to 575 kilometres and a longer estimated average life span. In December 2021, EU vehicle-type approval was obtained and the rst Ebusco 3.0 was delivered to the customer in 2021. The Ebusco 3.0 was awarded with the JEC Compo- sites Innovation award and the Dutch Automotive Innovation award in 2021. Ebusco is strongly com- mitted to staying ahead of the curve and retaining its technology leadership by continuing to invest in research and development. Ebusco currently has the Ebusco 2.2 and the Ebusco 3.0 buses in production. TIMELINE EBUSCO 3.0 - GAME CHANGER IN THE INDUSTRY ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION ALL BATTERIES IN FULLY FLAT FLOOR IPO Opening factory Deurne 0 350km range 5 KEY FIGURES 5 400 300 200 100 0 2018 2019 2020 2021 NUMBER OF EMPLOYEES AT YEAR-END ORDERS RECEIVED # BUSESUNDERLYING EBITDA (IN THOUSANDS OF EURO)REVENUE (IN THOUSANDS OF EURO) ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 100,000 80,000 60,000 40,000 20,000 0 2018 2019 2020 2021 250 200 150 100 50 0 2018 2019 2020 2021 * including temporary staff * This is a non-IFRS measure. For further information about the non-IFRS measures, and the reasons why we believe they are important for an understanding of the performance of our company, please refer to our commentary on non-IFRS measures as of page 127. 30,000 20,000 10,000 0 -10,000 -30,000 2018 2019 2020 2021 -20,000 24,265 99,994 48,924 21,357 27,135 8,775 3,218 (20,546) 339 169 120 63 191 39 102 240 6 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 6 ‘ I am proud of the ongoing improvements we are pursuing’ PETER BIJVELDS FOUNDER CEO It is with great pleasure to present you with our rst annual report as a listed com- pany. 2021 was an exciting year for Ebusco. We achieved a number of important milestones; both in our operations and as an organisation. And by developing and expanding our business, we are also increasing our impact. R ecent developments made even more clear how much the energy transition is needed, and we are proud to play our part in this with our zero-emission buses. I look back on this extraordinary year with pride, although, next to its many highlights, the year was also still marked by the consequences of Covid-19 pandemic. Major breakthrough moments included gaining EU road approval for the Ebusco 3.0 and the rst deli - very of this revolutionary bus. We built the rst pro- totype with its lightweight composite body based on aerospace technology in 2019. And two years later the bus is already in operation in Munich. This year we designed and set up our blueprint facility in Deurne for the production of the Ebusco 3.0. This new factory, opened by His Majesty King Willem-Alexander of the Netherlands, will have a production capacity of 500 buses, servicing our need for upscaling. Winning both the JEC Composites Innovation Award in June and the Dutch Automotive Innovation Award in September was a great recognition of how innovative our game changing Ebusco 3.0 model is. While rolling out and ramping up our Ebusco 3.0 eet, we continue to be successful earning a reputation and building a road track record with our Ebusco 2.2. We installed a eet of zero-emission buses in the greater Amsterdam region in the past year, the se- cond largest eet in Europe. The buses are performing beyond expectations. I am proud of the ongoing im - provements we are pursuing, including with respect to the battery performance and the weight of the 2.2 bus, highlighting our constant drive for innovation. We won numerous orders for the Ebusco 2.2 bus in 2021. Noteworthy is the key strategic order we won just before the end of the year: a major order for 90 buses from the Berliner Verkehrsbetriebe. This so- lidies our presence in major cities in Germany, a market with huge potential for us. It goes without saying that the IPO of Ebusco on Euronext Amsterdam made last year anything but ordinary. Our growth story and the drive to transiti- on to zero-emission transportation resonated well with the investor community, as evidenced by our MESSAGE FROM THE CEO ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 7 ‘ Ebusco can really have an impact and live up to its mission of contributing to a better living environment around the world’ We have seen the order intake and tender activity increasing since the second half of 2021, and saw this upward trend accelerating in the rst quarter of 2022. However, supply chain disruptions are likely to continue into 2022, also due to the current geopo- litical situation. Nevertheless, based on the current order book, ongoing tender activity and anticipated deliveries in 2022, we expect a sharp increase in revenue in 2022 compared to 2021. We are committed to delivering on our international expansion strategy while creating value for all our stakeholders. We will continue to engage with rele- vant parties and participate in tender processes in our target markets. This will go hand in hand with an upscaling of Ebusco’s manufacturing capabilities. This past year was also a year of fast growth from an organisational point of view, with the number of employees rising from 169 on 1 January to 339 at year-end. Despite this strong growth, we ensure that our organisation remains at and decisive while nur- turing our unique entrepreneurial culture. I am proud of the passionate drive of our people, committed to contributing to the objectives we have set as a com- pany. If it wasn’t for their unrelenting commitment and hard work, Ebusco would not be where we are today. And we owe them a huge debt of gratitude for that. I also would like to thank our other stakeholders, business partners and shareholders, both new and existing, for the trust they place in Ebusco. successful IPO in a volatile market. Excited by our international ambitions, we have attracted a strong and diverse group of shareholders. The proceeds from the IPO allow us to pursue our international expansion ambitions and accelerate growth. The electrication of bus eets has great momentum, driven by governments and global cli- mate change goals, treaties and agreements, inclu- ding at the recent COP26 UN Climate Change Con- ference in Glasgow, as well as by structural market factors including the growing population and incre- asing urbanisation. Being well capitalised allows us to seize the current opportunities. By executing our international growth plan, Ebusco can really have an impact and live up to its mission of contributing to a better living environment around the world, both now and in the future. I am very proud of the whole Ebusco team for these great achievements. Despite the heavy impact the pandemic still has on the public transport sector as reected in the lower order intake in 2020 and the rst half of 2021, we continued to work hard on exe- cuting our growth strategy and even accelerated our innovation programme. The related supply chain dis- ruptions had a clear impact on the delivery schedule of our buses, shifting many shipments to 2022. This is reected in the 2021 results as revenue sharply declined from €100.0 million in 2020 to €24.3 mil- lion in 2021. This had a clear impact on the prota- bility in 2021 and resulted in a negative underlying EBITDA of €20.5 million. 8 8 SHAREHOLDER INFORMATION GENERAL Ebusco Holding N.V. is listed on the ofcial market of Euronext Amsterdam (EBUS.AS) since 22 October 2021. On 31 December 2021, the number of issued ordinary Ebusco Holding N.V. shares amounted to 59,039,380. THE SHARE IN 2021 Highest share price €31.30 Lowest share price €21.65 Share price as at 31 December €27.00 Market Capitalisation as at 31 December €1.6 billion MAJOR SHAREHOLDERS Under the requirements for disclosing control and participation interests, any holdings in a compa- ny’s issued share capital of 3% or more must be reported to the Dutch Authority for the Financial Markets (AFM). As far as Ebusco is aware and on the basis of the AFM register of substantial holdings, the following investors held a holding of 3% or more in Ebusco on the date of this report. Shareholders Participation in % Date of last report ING Groep N.V. 20.95 October 2021 P.H.A.M. Bijvelds 35.37 October 2021 Teslin Participaties Coöperatief U.A. 5.11 October 2021 VDVI B.V. 23.64 October 2021 DIVIDEND POLICY Ebusco does not intend to declare or pay dividends for the nancial year ending 31 December 2021 or in the medium term. The company anticipates that for the foreseeable future it will retain all its future earnings for use in the development of its business, its inter - national expansion strategy and for general corporate purposes. INVESTOR RELATIONS Ebusco is committed to maintaining an open and constructive dialogue with its current and potential shareholders (jointly the Investors) and analysts. Conversations with investors and analysts, both in (annual or extraordinary) general meetings and on a bilateral basis outside of such general meetings (e.g. investor calls, road shows, broker conferences etc.), form an integral part of this dialogue. Ebusco aims to keep the investors and analysts updated by informing them equally, simultaneously, clearly and accurately about Ebusco’s strategy, performance and other matters and developments that could be relevant to Investors’ decisions either via meetings, presentations, conference calls etc. as referred to in best practice provision 4.2.3 of the Dutch Corporate Governance Code or otherwise. The company website www.ebusco.com provides rele- vant information (press releases, nancial data) for investors. Ebusco observes a closed period during which no discussions are held with investors and analysts. This pertains to a period of 45 calendar days prior to the publication of the yearly results and 30 calendar days prior to the publication of half yearly results. Furthermore the closed period is 10 calendar days prior to the publication of pre-scheduled trading updates. PREVENTION MISUSE OF INSIDER INFORMATION Ebusco has rules governing the reporting of trans- actions involving Ebusco Holding N.V. securities by its Supervisory Board, Management Board and other appointed persons, including staff, the management and a number of permanent advisors. The Insider Trading Policy is published on the corporate website www.ebusco.com. Ebusco has also appointed the corporate secretary as compliance ofcer. The compliance ofcer is responsible for supervising compliance with the rules and regulations, and communication with the AFM. FINANCIAL CALENDAR 2022 Annual General Meeting 25 May 2022 Half year results 2022 11 August 2022 Q3 trading update 11 October 2022 * The shares are held by Peter Bijvelds Holding Erp B.V., which shares are held by Stichting Administratiekantoor Peter Bijvelds Holding Erp B.V., for the benet and account of P.H.A.M. Bijvelds. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 9 9 STRATEGY Ebusco is a developer, manufacturer, and distributor of zero-emission buses and charging systems as well as a supplier of ancillary services to the electric vehicle ecosystem. It is Ebusco’s mission to contribute to a better environment by enabling safe, sustainable, emission-free and affordable transportation eco- systems. Ebusco’s ambition is to expand its operations world- wide. Ebusco’s offering of zero-emission buses compri - ses the Ebusco 2.2, launched in 2017, and the revolutio- nary Ebusco 3.0 model. The rst delivery of the Ebusco 3.0 to Stadtwerke Munich took place in December 2021. Ebusco has a comprehensive international roll-out plan in place to execute its expansion strategy to rapidly capture market share in its target markets. The roll-out plan includes a sales and marketing strategy tailored for each target market, capital efcient upscaling and geographic diversication of Ebusco’s manufacturing capacity. The company’s production set-up in Deurne, where currently the Ebusco 3.0 is exclusively manufac - tured, functions as a blueprint for the capital efcient production roll-out across multiple geographies. In addition to its electric bus proposition, Ebusco is focused on perfecting and expanding its offerings across the electric vehicle ecosystem in which its ze - ro-emission buses operate, including Energy Storage Systems, charging infrastructure, depots, service and maintenance and local energy supply and grid align - ment. Ebusco also sees longer-term potential to lever- age its existing technology to seize new opportunities in adjacent sectors. The different pillars of Ebusco’s strategy are elaborated on below. GLOBAL EXPANSION ROADMAP IN PLACE TO CAPTURE OPPORTUNITIES ACROSS GEOGRAPHIES Ebusco’s comprehensive international roll-out plan underpins its international expansion strategy. This strategy includes a well-dened sales and marketing strategy, tailored for each target market, and capital efcient upscaling and geographic diversication of the company’s manufacturing capacity. Furthermore, it provides for standardisation of processes to war - rant reliability, and the required internal systems and human resources needed for successful execution. This international roll-out plan is key to the compa - ny’s ability to rapidly capture market share in its tar- get markets. In addition to the European market, the company’s target markets include North America (the United States and Canada) and APAC countries Aus - tralia, New Zealand, Japan, Singapore as well as the Gulf Cooperation Council (GCC) regions. WELL-DEFINED SALES AND MARKETING STRATEGY TAILORED FOR EACH TARGET MARKET When entering new target countries, Ebusco starts with hiring a well-connected senior sales director and subsequently the hiring of account managers and tender support staff. The company’s sales and marketing strategy aims to build solid relationships with Public Transport Autho - rities (PTAs) and Public Transport Operators (PTOs). Ebusco engages with PTAs and PTOs by participating in tender bids, providing customised turnkey solu - tions and transferring knowledge to key institutions and decision-makers to establish itself as a stakehol - der in the local public transit system and accelerate the transition to electric buses in each target market. Ebusco’s turnkey solutions minimise operational risk for the customer while maximising reliability, and helping governments and other public transit stakeholders achieve their sustainability targets. Ebusco is committed to robust (after-sales) support, which is believed to be a strong differentiator in its value proposition. CAPITAL EFFICIENT UPSCALING AND GEOGRAPHIC DIVERSIFICATION OF ENHANCED MANUFACTURING CAPACITY Ebusco’s production facility in Deurne will serve as a blueprint for a capital efcient increase in manu- facturing capacity across multiple geographies as contemplated by the international roll-out plan. The Ebusco 3.0 is currently manufactured and assem- bled exclusively at the company’s facility in Deurne, with capacity now quickly ramping up. The rst deli- veries of Ebusco 3.0 buses to customers took place in December 2021. To expand its production of the Ebusco 3.0 buses in, the international roll-out plan includes a production framework, consisting of three types of manufac - turing and/or assembly facilities. To manufactu- re the Ebusco 3.0, the company aims to set up at least one Original Equipment Manufacturer (OEM) Plant on each continent in which it plans to sell buses, supported by Complete Knock-Down (CKD) plants, geographically spread over relevant regi - ons where needed. Ebusco will set up Pre-Delivery ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 10 Inspection facilities (PDI) in selected countries to es- tablish the local presence needed to full local con- tent requirements and to tailor Ebusco’s services to local customer requirements. The production engineering team focuses on desig- ning and planning the plants and facilities to be built, and equipment to be installed, in the most efcient and scalable manner. RELIABLE PROCESSES, PROCEDURES, IT SYSTEMS AND HUMAN RESOURCES TO FACILITATE INTERNATIONAL ROLL-OUT PLAN Ebusco’s centre of excellence, coordinated from its head ofce in Deurne, is a systematic initiative to develop reliable processes and procedures that can be replicated to ensure processes and procedures are standardised and effective. The company has also recently improved, and continues to further develop, its IT landscape to accommodate the changing ope - rational requirements arising from its rapid growth. To recruit and onboard the adequately skilled personnel needed to implement the international roll-out, Ebusco has created a human resources deployment plan. EXPANSION INTO ADJACENT MARKETS SERVING THE ELECTRIC VEHICLE ECOSYSTEM In addition to bus production, sales and after-sales support services, Ebusco focuses on expanding its offerings across the electric vehicle ecosystem in which its buses operate, including Energy Storage Systems (ESS), charging infrastructure, depots, af- ter sales and local energy supply and grid alignment. Ebusco has developed Mobile Energy Containers. These containers can be used in hybrid electric barges, providing a fully green alternative requiring signicantly less fuel and emitting signicantly less CO2 than conventional diesel-powered barges. Ebusco aims to accelerate the development and commercialisation of new solutions and strengthen customer relationships to diversify revenue oppor- tunities from smart charging infrastructure, energy storage and grid balancing solutions and heavy-du- ty batteries (for use in shipping vehicles). Ebusco believes that these initiatives could also be used in the longer term to position the company to leverage existing technology to seize new opportunities in ad- jacent sectors such as coaches, bus rapid transport and autonomous driving and secure a local partner to penetrate the Chinese market for buses, ESS and charging infrastructure. MEDIUM-TERM OBJECTIVES Based on the execution of the strategy above Ebus- co has established the following aspirational opera- tional and nancial medium-term objectives: • Manufacturing of over 3,000 zero-emission buses per year; • More than €1.5 billion in revenue; and • An EBITDA margin of more than 35%. The company is seeking to achieve each of the me- dium-term objectives towards the end of the medi- um-term period when it has fully ramped up its in- ternational roll-out. Key drivers for the company to achieve its medi- um-term objectives include (i) ongoing investment in the strength of its customer relationships, which is expected to lead to an acceleration of the growth of orders, (ii) disciplined execution of the company’s international roll-out plan, (iii) obtaining funding for capital expenditure anticipated by the company to fully implement the remainder of its international expansion strategy, (iv) the use of the the compa- ny’s operational leverage and scale advantages to drive margin expansion and (v) further expansion of the company’s competitive leadership through con- tinued innovation. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 10 11 11 MANAGEMENT BOARD REPORT CONTENT Composition of the Management Board 12 Operational review 13 Financial review 16 Outlook 20 Our responsibility 23 Risk Management and Internal Control 32 Management Statement 46 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 12 12 COMPOSITION OF THE MANAGEMENT BOARD PETER BIJVELDS (1978) Founder/CEO – current term expires in 2025 Peter Bijvelds established Ebusco in 2012. Peter Bijvelds has over 20 years of experi- ence in the automotive sector. He has in-depth knowledge of the (public) transport market and its constituents, strong expertise across the full electric bus value chain and a strong track record of driving growth and innovation in the Company. PAUL VAN BEERS (1965) CFO – current term expires in 2023 Paul van Beers is CFO of Ebusco since 2016. He holds various degrees, including Accountancy, Environmental Accounting and Business Valuation. Before joining Ebusco, Paul worked in various management positions in the nancial sector, as well as in the automotive industry. His experience spans more than 20 years in M&A and corporate nance. BOB FLEUREN (1978) COO – current term expires in 2024 Bob Fleuren has experience in leading international operations in large-scale organisations, including at aerospace company Fokker and the Ministry of Defence. He became COO at Ebusco in April 2021, after being involved with Ebusco for a num- ber of years as the founder of Pondus, Ebusco’s subsidiary responsible for developing the lightweight composite body parts for Ebusco’s zero-emission buses. Bob Fleuren holds a Major rtd. in Airforce Electronics from the Royal Military Academy in Breda. Furthermore he holds a Master in Marketing & Supply Chain Management from the Open University, the Netherlands. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 13 ANNUAL REPORT EBUSCO 2021 INTRODUCTION 2021 was an exciting and dynamic year for Ebusco with major milestones achie- ved in the development, production and commercialisation of our buses. These included obtaining EU vehicle-type approval for our revolutionary Ebusco 3.0 bus, opening our new production hall in the Dutch municipality of Deurne and securing numerous new orders for our zero-emission buses across Europe. The Ebusco buses maintained their excellent track record on the road in 2021 with a high uptime, clearly beyond expectations and above the industry average. The IPO on Euronext Amsterdam clearly marked a key milestone in the history of Ebusco. The proceeds of the listing will allow the company to effectively imple- ment its international expansion strategy and seize the current momentum of the rapid electrication of transit bus eets around the globe. REVENUE AND ORDER BOOK Global economic conditions became unfavourable in the course of 2020 due to the outbreak of the corona - virus and the resulting pandemic, a situation which continued in 2021. This led to a signicant drop in demand for public transport services, which in turn led to a decrease in tender activities and inherently fewer orders for new buses in 2020 and the rst half of 2021. Ebusco produced and shipped fewer buses compared to 2020, resulting in less revenue in the year ending on 31 December 2021. In addition, supply chain disruptions impacted Ebusco’s ability to produ - ce and ship its zero-emission buses, leading to delays in deliveries and higher costs, consequently impac - ting performance in 2021. Driven by the strong under- lying trend and demand for zero-emission solutions, Ebusco’s order book nevertheless grew considerably in the course of 2021. Ebusco received orders for 240 buses in 2021. INNOVATION AND PRODUCT DEVELOPMENT 2021 was an important year in the development of the next generation Ebusco 3.0. This bus is a real game changer in the industry with its lightweight composite body based on aerospace technology. The composite material is signicantly lighter and stronger, giving the bus a substantially longer, single charge range of up to 575 kilometres and a longer estimated average lifespan. The low energy con- sumption of the Ebusco 3.0 means in most cases that intermediate charging during the day is no lon- ger necessary. This makes a signicant difference in terms of charging infrastructure costs and charging time and is also benecial to the battery life. In November 2021 Ebusco obtained EU vehicle-type approval for its revolutionary Ebusco 3.0 bus. This certication means that the Ebusco 3.0 meets all EU safety, environmental and production requirements and therefore gets road release and can be registe- red in all EU member states. After the rst order in 2018, various new orders for the Ebusco 3.0 were added to the order book in 2021. In December 2021 the rst two Ebusco 3.0 buses were delivered and put into operation in Munich, Germany. The Ebusco 3.0 composite body was developed by an integrated team consisting of engineers with aerospace expertise from Pondus and Ebusco engi- neers specialised in designing buses. The team de- veloped the body using composite bre technology. The Pondus engineers’ expertise in the aerospace domain enabled the team to considerably decrease the weight of the bus’ bodywork, resulting in range improvement, cost reductions and mass optimisati- on. To secure the composite and aerospace enginee- ring capabilities, Ebusco acquired 80% of the shares in Pondus in 2021, increasing its shareholding to 100%. The acquisition also improves the integration capabilities relating to the production and assembly of composite body parts. The innovative capabilities of the Ebusco 3.0 were also recognised by international industry experts. Ebusco-Pondus won the JEC Composites Innovati- on Award in the category Automotive & Road Trans- portation - Structural with the Ebusco 3.0 series of city and regional buses. The Innovation Awards are a recognition by the worldwide composites industry of the most innovative composites application. In No- vember Ebusco also won the prestigious Automotive Innovation Award in the Netherlands for the revoluti- onary Ebusco 3.0 bus. A s part of Ebusco’s vision to contribute to a better living environment Ebusco Energy B.V. was formed with the goal of developing, producing and selling zero-emissi - on charging infrastructure and energy storage systems (ESS). In doing so Ebusco is extending its zero-emission OPERATIONAL REVIEW INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 14 ANNUAL REPORT EBUSCO 2021 offering by producing portable energy storage system containers for use on inland ships and barges as well as other potential applications. In January 2022 Ebusco acquired 40% of the share capital of Zero Emission Ser - vices B.V. (ZES), a provider of all-in concepts for emis- sion-free inland shipping. Ebusco’s solutions can be perfectly integrated into the ZES concept. ORDERS AND DELIVERY OF BUSES In 2021, in addition to 2.2 buses throughout Europe, Ebusco also delivered the rst Ebusco 3.0 buses. They were delivered to a German customer, Munich’s municipal utilities company Stadtwerke Munich. Close long-standing relationships with its customer base – mainly Public Transport Authorities (PTAs) and Public Transport Operators (PTOs) – are cruci- al for Ebusco. By investing in these relationships, Ebusco secured multiple repeat orders from existing customers in 2021, including Nobina and Transdev. In 2021 Ebusco entered the Danish market with an order from Nordic public transport operator Nobina for 13 electric buses to operate in the capital Co- penhagen. Nobina subsequently placed three repeat orders for a total of 66 Ebusco 2.2 buses as well as charging infrastructure for various regions in Den- mark. The rst order for 13 buses was delivered be- fore the end of 2021. In July 2021 Ebusco signed a ve-year international framework agreement with European public transport operator Transdev for the delivery of electric buses. Under the agreement Ebusco will be eligible to be - come a primary supplier to Transdev in France, Ger- many and the Netherlands. Transdev Nederland was also the rst customer to place an order for Ebusco 3.0 buses in the Netherlands. The company ordered 39 buses which will be operated in the Gooi and Vecht region in the Netherlands. These buses are planned to be delivered and go into operation in 2022. Ebusco expanded its presence in the strategical- ly important market of Germany with a number of new orders from both existing and new customers. The biggest order in the German market in 2021 was a contract with Berliner Verkehrsbetriebe (a new customer) for 90 Ebusco 2.2 buses. The contract includes an option for another 60 buses. Furthermo- re, the rst German order for 18-metre Ebusco 2.2 buses was signed in 2021 with new customer Infra Fürth Verkehr GmbH. These buses will operate in the Fürth region in Bavaria. ROLL-OUT PLAN AND INTERNATIONAL EXPANSION STRATEGY In 2021 the majority of Ebusco’s sales and marke- ting activities were conducted from its largest sales ofce in the Netherlands that services most of the European operations. Ebusco also has two dedi- cated salespeople in Germany and a sales director and a number of support staff in France. Furthermo- re, Ebusco has sales staff in Australia and a sales director in China. In late 2021 Ebusco hired a sales director for North America as well as a sales director for the Middle-East region. Ebusco frequently participates in international tra- de shows where it often features as a presenter. In 2021 many conferences were cancelled due to the pandemic but Ebusco did participate at the OV Expo in Houten (the Netherlands), the Transport 2021 tra- de show in Herning (Denmark) and the American Public Transport Association Mobility Conference, the largest public transport conference in the United States last year. The latter conference was an impor- tant opportunity for Ebusco to develop relationships and promote the brand in the United States. The new hall for the production of the Ebusco 3.0 in Deurne was ofcially opened by His Majesty King Willem-Alexander of the Netherlands at the end of October. The hall is expected to have a producti- on capacity of 500 emission-free buses per year. Furthermore, over time the production hall will serve as a blueprint for the roll-out of international produc- tion of the Ebusco 3.0 buses. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 15 ANNUAL REPORT EBUSCO 2021 15 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION CASE 15 On 22 October 2021 CEO Peter Bijvelds sounded the gong at Beursplein 5 to celebrate the Initial Public Offering of Ebusco. The IPO was a major milestone for the company. The proceeds will allow Ebusco to fund its growth strategy and the international roll out of the Ebusco 3.0. SOUNDING THE GONG At beursplein 5 CEO PETER BIJVELDS 16 16 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION FINANCIAL REVIEW RESULTS OF OPERATIONS The following table summarises the company’s nancial performance for the years ended 31 December 2020 and 2021. Year ended 31 December (€ thousands) 2021 2020 Revenue 24,265 99,994 Cost of materials (23,045) (60,337) Gross prot 1,220 39,657 Employee benet expenses (23,106) (9,745) Amortisation and depreciation expenses (5,331) (3,359) Other operating expenses (12,354) (2,777) Operating expenses (40,791) (15,881) Operating result (EBIT) (39,571) 23,776 Finance expenses, net (4,240) (1,289) Share of result of an associate 7,427 (112) Result before tax (36,384) 22,375 Income tax credit/(expense) 9,587 (5,716) Result for the year (26,797) 16,659 Operating result (EBIT) (39,571) 23,776 Non-recurring items 13,694 - Underlying EBIT (25,877) 23,776 Amortisation and depreciation expenses 5,331 3,359 Underlying EBITDA (20,546) 27,135 * This is a non-IFRS measure. For further information about the non-IFRS measures, and the reasons why we believe they are important for an understanding of the performance of our company, please refer to our commentary on non-IFRS measures as of page 127. 17 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION COMPARISON OF THE YEARS ENDED 31 DECEMBER 2020 AND 2021 REVENUE The lower order intake in 2020 and the rst half of 2021, combined with the delay in bus deliveries due to supply chain disruptions both due to the Covid-19 pan - demic, had a clear impact on revenue in full year 2021, which came in at €24.3 million. A signicant decrease compared to the full year revenue of €100.0 million achieved in 2020. Revenue was clearly higher in the second half of the year than in the rst six months of 2021. Revenue recognition is typically geared towards the second half of the year as the company often ma - kes deliveries at the start of a concession period, and these typically start at the beginning of the summer or winter. The following table shows revenue per region for the years ended December 31, 2020 and 2021. Year ended 31 December (€ thousands) 2021 2020 DACH 1 9,722 9,446 Nordics 2 8,418 75 Benelux 6,035 90,153 Rest of the World (RoW) 90 320 Total revenue 24,265 99,994 1 DACH is an acronym for Germany (D), Austria (A) and Switzerland (CH). 2 Nordics is an acronym for Denmark, Sweden, Norway and Finland. REVENUE BY GEOGRAPHY Ebusco’s revenue decreased in all regions in 2021 except for the Nordics due to the continued impact of the outbreak of the corona virus in these regions. Only revenue in the Nordics region increased to €8.4 million in 2021, due to a new customer. GROSS PROFIT Gross prot decreased by €38.4 million or almost 97%, from €39.7 million in 2020 to €1.2 million in 2021. Ebusco’s cost of materials includes parts and other components, cost of work contracted out (relating primarily to the company’s third-party supplier that assembles the Ebusco 2.2 at a manufacturing facility in Xiamen, China) and other external costs, including transportation costs, import duties, and spare parts. Supply chain disruption led to an increase in the costs of raw material and transportation while adverse cur - rency movements (Yuan vs. Euro) also had an impact. Furthermore, the cost of materials includes a one-off expense related to the replacement of the climate control systems pursuant to a settlement agreement with a customer (€3.9 million). Given the limited num - ber of deliveries, the different product mix and service costs related to deliveries in previous years adversely impacted the gross prot margin. Consequently, the gross prot as percentage of revenue decreased from 39.7% in 2020 to 5.0% in 2021. EMPLOYEE BENEFIT EXPENSES Employee benet expenses increased by €13.4 milli- on or 138%, from €9.7 million in 2020 to €23.1 million in 2021, partly due to the consolidation of Pondus (€0.9 million) and non-recurring expenses related to the settlement of an existing success fee agreement with the CFO (€5.0 million). Excluding non-recurring items, the increase was pri- marily due to an increase in headcount. The average number of full-time employees increased by 86% from 122 FTEs (including contractors) in 2020 to 227 FTEs (including contractors) in 2021 and an increase in tem - porary staff. AMORTISATION AND DEPRECIATION For 2021, amortisation of €2.5 million increased by €0.6 million or 37% compared to the prior year when it was €1.9 million. The increase mainly relates to the amortisation of software (€0.5 million) following the go-live of the company’s newly implemented After Sa - les and inventory management system as of January 2021. The increase in amortisation of development assets of €0.2 million mainly relates to the develop - ment of the Ebusco 3.0 bus which was capitalised in December 2020 and the acquisition and consolidation of Pondus (€0.1 million). Depreciation increased by €1.3 million or 82% from €1.5 million in 2020 to €2.8 million in 2021, partly due to the acquisition and consolidation of Pondus (€0.3 million). Depreciation of property, plant and equipment increased by €0.6 million to €0.8 million in 2021 mainly following investments in equipment and ofce inven - tory in 2020 and 2021. Depreciation of right-of-use assets increased by €0.6 million to €1.1 million in 2021, mainly as a result of the extension of the rental agree - ment of the ofce- and production facility in Deurne. OTHER OPERATING EXPENSES The following table summarises Ebusco’s other ope- rating expenses for the periods indicated. Year ended 31 December (€ thousands) 2021 2020 General expenses 8,176 1,188 Distribution expenses 1,449 303 Marketing expenses 552 551 Facility expenses 450 142 Ofce expenses 136 108 Other expenses 1,591 485 Total other operating expenses 12,354 2,777 Other operating expenses increased by €9.6 million or 343%, from €2.8 million in 2020 to €12.4 million in 2021, partly due to the acquisition and consolidation of Pondus (€0.3 million) and non-recurring expenses re - lated to the IPO (€4.8 million) and a legal dispute with a customer (€0.2 million). Excluding non-recurring items, the increase is mainly the result of higher insurance expenses and accoun - ting, audit, legal and advisory fees, partly driven by the listing on Euronext and additional sales ofces in Fran - ce, North America and China. Facility and ofce expenses increased due to incre - ased rented space and number of employees in Deur- ne to facilitate growth and the set-up of the in-house production of the Ebusco 3.0. Facility expenses include costs for utilities, insurance, and other non-rent related expenses associated with Ebusco’s facilities. Ofce 18 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION expenses include telecom expenses, ofce supplies, and subscriptions. Other expenses increased by €1.1 million to €1.6 milli- on in 2021, mainly due to higher IT expenses. Other ex- penses consist of various expenses that are incurred as part of the company’s daily operations, including IT expenses. OPERATING RESULT AND UNDERLYING EBIT Operating result decreased by €63.4 million from €23.8 million prot in 2020 to €39.6 million loss in 2021, partly due to the acquisition and consolidati - on of Pondus (€1.7 million loss) and non-recurring expenses of €13.7 million related to the settlement of an existing success fee agreement (€5.0 million), expenses related to the replacement of the climate control systems pursuant to a settlement agreement with a customer (€3.9 million) and expenses related to the IPO (€4.8 million). Underlying EBIT decreased by €49.7 million from €23.8 million prot in 2020 to €25.9 million loss in 2021, mainly due to lower reve - nue following the continued impact of the Covid-19 pandemic, a lower gross prot margin due to the sa - les mix and higher cost of goods sold partly caused by disruptions in the supply chain, and higher opera - ting expenses to prepare Ebusco for future growth . FINANCE EXPENSES, NET Finance expenses, net increased by €2.9 million, or 223%, from €1.3 million in 2020 to €4.2 million in 2021, partly due to the acquisition and consolidation of Pondus (€0.2 million). The increase was primarily Ebusco Holding N.V. established a Dutch scal unity for corporate income tax purposes as from 1 Decem- ber 2021; all Dutch subsidiaries have joined the scal unity except for Pondus Operations B.V. as the com- pany’s shareholding in this entity is only 90% and Gr8 Technologies B.V. The effective tax rate increased to 26.3% in 2021 compared to 25.5% in 2020. The higher effective tax rate is mainly the result of non-deductible expense items (2021: 2.0%; 2020: 0.6%) and changes in tax rates (2021: 0.6%; 2020: 0.5%). RESULT FOR THE YEAR Result for the year decreased by €43.5 million, from €16.7 million prot in the year ended 31 December 2020 to €26.8 million loss in the year ended 31 De- cember 2021. This decrease was primarily driven by the revenue decrease as a result of the continued impact of the Covid-19 outbreak, an increase in employee benets and other operating expenses to prepare Ebusco’s operations for future growth and non-recurring expenses of €13.7 million. EARNINGS PER SHARE Earnings per share decreased from €0.37 per sha- re in 2020 to €(0.56) per share in 2021. The average number of shares outstanding amounted to 47.5 million (2020: 45.0 million). At year end 2021 59.0 million shares were outstanding (2020: 45.0 million). due to the increase of interest and similar expenses on loans and borrowings and lease liabilities of €1.7 million and a negative impact from foreign currency exchange rate results, including gains and losses on derivates of €1.2 million. The increase in interest and similar expenses is mainly driven by the increase in loans and borrowings during 2020 and 2021 due to the cumulative preference shares (€10.0 million) issued in July 2020 and cancelled at the moment of the IPO and the Mezzanine facility entered into in April 2021 (€32.5 million) to fund the business and the acquisition of Pondus. Loans and borrowings were largely repaid subsequent to the IPO in October 2021, and the €80.0 million credit facility agreement was terminated in December 2021. SHARE OF RESULT OF AN ASSOCIATE Share of result of an associate increased by €7.5 mil- lion to €7.4 million in 2021 from €0.1 million loss in 2020. The increase is the result of remeasurement of the carrying amount of Ebusco’s 20% shareholding in Pondus against fair value at the acquisition date of the additional 60% share in Pondus in April 2021. INCOME TAX In 2021, the income tax credit amounted to €9.6 mil- lion (2020: income tax expense of €5.7 million). The income tax credit largely refers to the operations of Ebusco Holding N.V. and Ebusco B.V.; both entities will be able to partly offset the scal losses incurred against scal prots realised in 2020, reducing the current income tax payable to zero as per 31 Decem- ber 2021. LIQUIDITY AND CAPITAL RESOURCES OVERVIEW The company’s primary source of liquidity during the period under review were the cash ows generated from nancing. Ebusco’s primary use of liquidity is for the day-to-day operation of its business relating to the production and assembly of buses, capital ex - penditures and other investments as further detailed below. CASH FLOWS The following table presents a summary of the com- pany’s cash ows for the periods indicated, which have been extracted from the Financial Statements . Year ended 31 December (€ thousands) 2021 2020 Net cash ows from operating activities (19,390) (11,427) Net cash ows from investment activities (27,284) (3,994) Net cash ows from nancing activities 227,734 39,473 (Decrease)/Increase in cash and cash equivalents 181,060 24,052 Exchange gains/(losses) on cash and cash equivalents 1 - Cash and cash equivalents at the start of the period 26,862 2,810 Cash and cash equivalents at the end of the period 207,923 26,862 19 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION CASH FLOWS FROM OPERATING ACTIVITIES Net cash outow from operating activities for 2021 was €19.4 million, an increase of €8.0 million or 70% from net cash outow of €11.4 million for 2020. Prot/(loss) before tax decreased from a net gain of €22.4 million in 2020 to a net loss of €36.4 million in 2021. This decrease was more than offset by move - ments in net working capital including a decrease in construction contracts offset by an increase in trade receivables, partly as a result of delayed collection of outstanding accounts receivables from customers, and an increase of inventories. CASH FLOWS FROM INVESTING ACTIVITIES Net cash outow from investing activities for 2021 was €27.3 million, an increase of €23.3 million from net cash outow of €4.0 million for 2020. This incre - ase in cash outow was due mainly to the cash con- sideration paid upon acquisition of the additional 60% share in Pondus in April 2021 of €22.3 million. Further reference is made to comment below on ‘Capital ex - penditure’. CASH FLOWS FROM FINANCING ACTIVITIES Net cash inow from nancing activities for 2021 was €227.7 million, an increase of €188.3 million compared to 2020. This increase in net cash inow was largely due to the net proceeds from the issuance of share capital and listing on Euronext in the October 2021 of €316.1 million to fund future growth, international ex - pansion and increase of manufacturing capacity. The cash inow from the IPO proceeds has partly been used for the net repayment of loans and borrowings of €64.0 million (2020 net inow from loans and borro - wings: €40.9 million) and repayment of a convertible loan (€0.8 million). Furthermore, a cash consideration has been paid upon acquisition of the remaining 20% share respectively non-controlling interst in Pondus in October 2021 of €20.0 million. Payment of principal portion of lease liabilities increased by €0.8 million to €1.2 million in 2021 mainly due to expansion of of - ce- and production facility space rented in Deurne, the Netherlands. FREE CASH FLOW Free cash ow for 2021 was negative €25.6 million, a decrease of €9.7 million compared to 2020. The decrease was driven by cash outw from investing activities (€27.3 million), largely offset by investment in subsidiaries (€22.3 million). NET WORKING CAPITAL Ebusco calculates net working capital as inventories, including contract assets, plus trade receivables mi - nus trade payables and contract liabilities. As of 31 December 2021, the net working capital amounted to €41.3 million (31 December 2020: €58.5 million). The decrease in net working capital of €17.2 million is largely driven by the decrease in contract assets of €46.5 million, partly offset by in - creased trade receivables (€14.7 million) and inven- tories (€18.7 million). Capital expenditure increased from €3.8 million in 2020 to €5.0 million in 2021 and included investments in equipment related to the set-up of the blueprint facility in Deurne and invest - ments in the transportation of demo and prototype buses respectively . CONTRACT ASSETS The decrease of the net working capital is mainly caused by the decrease of contract assets. The com - pany recognises a contract asset for services per- formed for a customer to which Ebusco has a right to receive consideration. Contract assets represent the work in progress assets for the production of zero-emission buses. The company reclassies con - tract assets to trade receivables when performance obligations are satised and the right to conside - ration becomes unconditional. Contract assets are related to work in progress assets for zero-emission buses in production. Contract assets as at 31 December 2021 amounted to €13.5 million, a decrease of €46.5 million or 78%, from contract assets of €60.0 million as at 31 De - cember 2020. This decrease was partly due to com- pletion of the work-in-progress contracts and recog- nition of the earned consideration as unconditional in trade receivables. CAPITAL EXPENDITURE Year ended 31 December (€ thousands) 2021 2020 Investments in property, plant and equipment 4,164 1,386 Investment in intangible assets 796 2,451 Capital expenditure 4,960 3,837 I nvestments in property, plant and equipment in- creased by €2.8 million from €1.4 million in 2020 to €4.2 million in 2021, mainly including investments in equipment related to the set-up of the blueprint fa - cility in Deurne for the manufacturing of the Ebusco 3.0 and investments in the transportation of demo and prototype buses respectively. Investments in in - tangible assets decreased by €1.7 million from €2.5 million in 2020 to €0.8 million in 2021, mainly rela - ting to software and the development of heavy-du- ty-batteries for use in shipping vehicles. NET (CASH)/DEBT Ebusco’s net debt position, excluding lease liabilities, of €31.2 million as at 31 December 2020 turned into a net cash position of €207.2 million as at 31 Decem - ber 2021, mainly due to the net proceeds from the issuance of shares following the IPO in October 2021 of €316.1 million. The net proceeds from the issuance of shares have partly been used to repay loans and borrowings including the €80.0 million credit facility agreement, the €32.5 million mezzanine facility dra - wn in April 2021, the cumulative preference shares of €10.0 million, and the contingent consideration pa - yable related to the acquisition of 60% of the shares in Pondus of €5.75 million. In addition, net proceeds were used to acquire the remaining 20% non-control - ling interest in Pondus for an amount of €20.0 million in cash. The following table presents the company’s net (cash)/debt (including and excluding lease liabilities) as per 31 December 2020 and 2021. 20 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION (€ thousands) 31 December 2021 31 December 2020 Debts to credit institutions 215 41,788 Loan from RVO - 5,436 Cumulative preference shares (including dividend) - 10,400 Debts to other related parties 463 441 Sub-total loans and borrowings 678 58,065 Lease liabilities 8,382 1,782 Cash and cash equivalents (207,923) (26,862) Net (cash)/debt including lease liabilities (198,863) 32,985 Lease liabilities (8,382) (1,782) Net (cash)/debt excluding lease liabilities (207,245) 31,203 Prior to the IPO, Ebusco primarily required borrowings for letters of credit issued in connection with the pro - duction and assembly of buses in China and funding of net working capital. Due to the fact that the IPO tur - ned the net debt position into a net cash position as at 31 December 2021, the company decided to terminate the €80.0 million credit facility agreement effectively in December 2021, and not to make use of letters of credit for funding purposes going forward. EQUITY Total equity increased by €275.9 million to €303.9 mil- lion as at 31 December 2021, mainly due to the net pro- ceeds from shares issued following the IPO of €315.5 million, partly offset by the net loss for the year of €26.8 million, the acquisition of the 20% non-controlling interest of €(12.5) million against share premium and repayment of the convertible loan of €(0.8) million. CAPITAL EMPLOYED Capital employed increased by €269.4 million from €42.3 million as at 31 December 2020 to €311.7 mil - lion as at 31 December 2021 mainly as a result of the proceeds from shares issued following the IPO and subsequent partial usage. DIVIDEND POLICY AND PROPOSED DISTRIBUTION Pursuant to article 31 of the articles of associati- on of the company, the Management Board, with the approval of the Supervisory Board, may decide that prots or losses realised during a nancial year are fully or partially appropriated to increase and/ or decrease from reserves (article 31.1). The prots remaining shall be put at the disposal of the General Meeting. The Management Board, with the approval of the Supervisory Board, shall make a proposal for that purpose. A proposal to pay a dividend shall be dealt with as a separate agenda item at the General Meeting of Shareholders (article 31.2). The company does not intend to declare or pay divi- dends for the nancial year ending 31 December 2021 or in the medium term. The company anticipates that for the foreseeable future it will retain all its future earnings for use in the development of its business, its international expansion and growth strategy to create shareholder value, to maintain a healthy - nancial structure and for general corporate purposes. The net loss for 2021 of €26.8 million will be deduc- ted from the retained earnings. OUTLOOK Based on the current order book, ongoing tender acti- vity and anticipated deliveries in 2022, management expects a sharp increase in revenue in 2022 compa - red to 2021. However, Ebusco is not immune to the ongoing geopolitical uncertainty as a result of the invasion of Ukraine and the continued strain on the global supply chain, both of which are key external risks we need to navigate. In view of our international roll out and growth stra- tegy, capital expenditures are expected to ramp up signicantly to increase the manufacturing capacity of our 3.0 buses. Furthermore, we expect a further in - crease of our workforce to facilitate the roll-out plan. The Management Board has identied four key stra - tegic priorities for the remainder of the year which should ready the company further for the expected signicant growth going forward. 1. Controlled expansion of our production capacity 2. Further optimisation of our supply chain 3. Expansion of our engineering capacity to meet client demand 4. Further grow our existing solid order portfolio in 2022 and beyond 20 21 ANNUAL REPORT EBUSCO 2021 21 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION CASE 21 The benets of composite materials are clear and com- pelling. Weighing about one-fth as much as steel, carbon-ber composites are as good or better in terms of stiffness and strength. It is not only extremely light - weight, also its durability is impressive. Composites are able to withstand impacts that would normally destroy steel and are less likely to crack under fatigue. And it can be moulded into a variety of complex shapes. So it isn’t difcult to see the potential, the trick is how to apply it for usage under operational circumstances. WHERE AEROSPACE meets Automotive While the use of composite material is already widely adopted for years in the aerospace industry, its ap- plication in the automotive industry is still rather in its infancy. Bob Fleuren, COO of Ebusco and founder of Pondus and back then working in the aerospace industry, was convinced that the use of composites could be a game changer in the automotive industry. Having the quest of becoming ‘greener’ in mind, Bob and his team of aerospace engineers started Pondus, with the goal to develop composite solutions for the public transport industry. In 2016 Ebusco and Pondus started to collaborate. A multi-disciplinary team, including engineering experts in the elds of automotive, aerospace and electronics developed the unique and (partly) proprietary composite monocoque. To nally arrive at the Ebusco 3.0, the rst electric bus with a full composite body - work. And it indeed proofs to be a gamechanger in the industry. Bob Fleuren: “Making the full bodywork of composite materials, as we have done in the Ebusco 3.0, is quite an achievement. It requires a great deal of expertise, complex engineering and deep understanding of com - posite manufacturing processes. But it begins at the start of the design process. It needs to be part of the overall design, and in order to obtain the full benets of using composites, an integrated and “clean sheet” approach is the key to success. We combined the tech - nical expertise of our team of former aerospace engi- neers with an ‘out or the box’ entrepreneurial mindset.” 22 ANNUAL REPORT EBUSCO 2021 22 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION Thanks to its composite bodywork, the Ebusco 3.0 is signicantly lighter compared to other electric buses. This brings additional possibilities, making the bus even lighter, such as using only a single tyre at the back of the vehicle, rather than the usual double tyres. The design also allows for placing the battery pack in the oor, which makes the bus considera- bly more stable and saves space so the passenger capacity can be increased. Just a few examples of how the use of composites drives further impro- vements and sustainability benets, with an even lower total cost of ownership. The Ebusco 3.0 also stands out in terms of range, which is approximate- ly 55% longer than the next best competitor, and the expec ted lifespan of the bus is longer due to the great durability credentials of composites. In addition to the convincing product characteristics, using composites also has clear benets in the pro- duction process. Bob Fleuren: “The production pro- cess of our revolutionary composite monocoque is easily scalable, for instance by adding braiding ma- chines and moulds, and easy to move. If we need to set up a new facility anywhere in the world, we can so to speak start tomorrow.” In 2021 Ebusco fully acquired Pondus. Being awarded with the JEC Innovation Award for composite materi - als in 2021 was a great acknowledgment for the Ebus- co team. Bob Fleuren: “It is great to get this appreci- ation from the industry. An even greater recognition is the commercial success, and the great real-road performance the Ebusco 3.0 is now showing under operation of our rst customer Stadtwerke Munich.” 22 COMPOSITE INSIDE CASE 23 ESG STRATEGY Sustainability is at the heart of our business propo- sition and Ebusco has the ambition to further step up its environmental, social and governance (ESG) efforts throughout its operations. We believe that doing business sustainably is a driver for creating long-term success. Accordingly, we have the ambiti- on to become a best-in-class ESG company. Ebusco’s ESG strategy will be dened in more de- tail in the coming year, including setting objectives and milestones. These key performance indicators (KPI’s) will be fully embedded in business plans and reected in performance targets. A materiality ana- lysis will be conducted, based on input from both internal and external stakeholders. Progress will be monitored by integrating ESG reporting in overall management reporting. Our ESG strategy will be linked to the Sustainable Development Goals (SDGs) set by the United Nations, in particular: OUR RESPONSIBILITY OUR COMMITMENT At Ebusco our commitment to sustainability is embedded in our mission sta- tement: “To contribute to a better environment by enabling safe, sustainable, emission-free and affordable transportation ecosystems.” Corporate social responsibility is a fundamental, strategic pillar for the company. Ebusco wants to play a leading, innovative and guiding role in the energy transition in public transportation all around the world. We are intrinsically motivated to run our business ethically in every aspect of our operations. Ebusco demands that its employees be true sustainability ambassadors with a circular mindset who fully contribute to the company’s sustainability goals. Ebusco’s energy storage systems, charging infra- structure and grid-balancing solutions contribute to the energy transition in public transport AFFORDABLE AND CLEAN ENERGY OUR CONTRIBUTION TO THE SDGs GOOD HEALTH AND WELL-BEING Ebusco’s zero-emission buses contribute to cleaner air in cities Ebusco is determined to develop innovative, sustainable solutions and technologies, and to apply these in other sectors as well INDUSTRY, INNOVATION AND INFRASTRUCTURE Ebusco provides cities and municipalities with environmentally friendly public transport options SUSTAINABLE CITIES AND COMMUNITIES 23 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 24 OUR STAKEHOLDERS Integrating social and environmental factors into our decision-making to ensure long-term success requires balancing both the short-term and long- term interests of our stakeholders. To this end Ebus- co pursues an active dialogue with its stakeholders, being customers (Public Transport Authorities (PTA) and Public Transport Operators (PTO)), employees, investors, business partners and local communities. Engaging with our stakeholders is fundamental to the way we do business. Ebusco ensures frequent interac - tion with all stakeholders through its regular business operations. Market consultations are conducted and knowledge is shared with market authorities (PTAs) and PTOs. Furthermore, PTOs are supported in tender procedures to strengthen their collective position. An active internal communications policy is pursued in which Ebusco uses (online) tools, newsletters and video messages, as well as regular town halls. Ebus- co engages with its business partners through open and transparent lines of communication. Since our IPO in October 2021, we have initiated an active Investor Relations programme to engage with our shareholders and existing and potential inves- tors. Ebusco will host analyst meetings to present the annual and semi-annual results and maintain an ongoing dialogue with analysts throughout the year. Meetings are arranged with institutional investors – both proactively and on request – to discuss the company’s strategy and performance. Furthermore, Ebusco participates in investor conferences and will host site visits to provide investors with greater in- sight into the business. In 2022 Ebusco will initiate targeted dialogue sessi- ons with all its stakeholders. These sessions are ai- med at identifying topics considered most important to the different stakeholder groups and on which Ebusco has or can have an impact. This will provide input to dene Ebusco’s materiality matrix as part of its overall ESG strategy. OUR CONTRIBUTION TO OUR STAKEHOLDERS TO OUR CUSTOMERS We enable our customers to provide reliable and clean public trans- port solutions. We build solid, long-lasting partnerships with our business partners that are essential to our success. TO OUR BUSINESS PARTNERS Ebusco strives to generate value for its shareholders. TO OUR SHAREHOLDERS Our products and services contribute to cleaner, quieter and safer cities and environments for citizens, drivers, passengers and other road users, ultimately benetting the health of everyone in the world now and in the future. Furthermore, Ebusco contributes to the energy transition and as such helps to ght climate change. TO SOCIETY TO OUR EMPLOYEES Our almost 340 employees are our most important asset. Ebusco aims to provide an inspiring, safe and healthy work environment where they can thrive as well as competitive employment terms and benets. ANNUAL REPORT EBUSCO 2021 24 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 25 OUR ROAD TO ZERO; CONTRIBUTING TO A BETTER ENVIRONMENT continuing to invest in research and development. Our dedicated engineering and product development teams are continuously driving innovation, often geared at further improving the ESG prole of our offering. For example, the application of aerospace technology in the Ebusco 3.0 resulted in signicant wins in the safety, performance and comfort of our buses as well as a meaningful reduction in weight. This leads to a substantial reduction in energy use and consequently an increase in the range of the bus along with a much longer average lifespan. These strong distinguishing features all contribute to a higher ESG performance and to a compelling com- mercial proposition as they all result in a lower total cost of ownership (TCO). CONNECTIVITY Years of extensive real-road experience have gene- rated a wealth of data that Ebusco uses to improve the operational performance and reliability of its buses. Enhanced vehicle and battery performance analytics generate data that drive bus operations, manufacturing and process innovation. What’s more, they are instrumental in further reducing the environmental footprint of our entire portfolio of pro- ducts. INNOVATION Ebusco substantially invests in innovation, as reec- ted in the fact that 29% of our FTEs work in enginee- OUR ZERO-EMISSION BUSES Our most direct contribution to a better environment is through our core business: enabling safe, sustai- nable, emission-free and affordable transportation ecosystems. We make clean, silent and emissi- on-free transport accessible to everyone. Furthermore, Ebusco contributes to a more sus- tainable energy sector through the delivery of fully turnkey electrication solutions, including energy storage systems. The Ebusco systems can store energy that is sustainably generated and thus help reduce the need to generate energy (as energy will be sufcient, also at peak times). On 31 December 2021 there were over 350 Ebusco buses in operation which have driven over 39 million kilometres cumulative, leading to a reduction in CO2 emissions of more than 35 million kilograms. In addition to the direct contribution our zero-emission buses make towards to a better environment, we aim to run our business in a sustainable way. It is Ebusco’s goal to become fully carbon-neutral in the future by making use of renewable energy and by being self-suf - cient through the use of solar power and storage. PRODUCT DEVELOPMENT Ebusco is strongly committed to staying ahead of the curve and retaining its technology leadership by ring. All innovations contribute to a further reduction in the environmental impact of our buses and/or the continuous improvement of the health and safety of our employees and customers, bus passengers and the community at large. A clear example of how in- novations contribute to reducing our environmental impact is the development of stationary energy sto- rage systems (ESS), by reusing batteries that have nished their life on an electric bus. PRODUCTION AND PROCUREMENT Ebusco has a manufacturing facility in Deurne, the Netherlands, where the Ebusco 3.0 bus is manufac - tured and assembled, and a third-party facility in Xiamen, China, at which the Ebusco 2.2 is assembled. The buses assembled in China are shipped to Deur - ne for post-production activities and pre-delivery in- spection. Both the Deurne and Xiamen facilities are high-end plants that comply with European quality standards and are ISO 9001 and ISO 14001 certied. Ebusco currently sources much of its supplies from Europe to be compliant with ‘buy local’ regulations or priorities applicable to the procurement policies of many PTAs, PTOs or other customers. The carbon footprint from the shipment of the 2.2 buses from China to the Netherlands is signicant. However, Ebusco has a comprehensive international roll-out plan in place to upscale its manufacturing capaci- ty of its 3.0 buses. The company aims to set up at ANNUAL REPORT EBUSCO 2021 25 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION least one manufacturing plant on each continent. This will minimise transportation movements. The production set-up in Deurne functions as a blueprint for the roll-out of manufacturing across multiple geographies. Ebusco instils a manufacturing culture of continuo- us improvement and leveraging best practices in quality control and worker safety across its facilities. Furthermore, we constantly aim to reduce the car- bon footprint of our production facilities. CLEAN AND SAFE BATTERIES Ebusco uses lithium ferro phosphate (LFP) batteries in its buses. These batteries do not contain cobalt and are therefore much safer, cleaner, more ethical and economic than batteries that do. Furthermore, we are working with our suppliers and specialists in the supply chain to provide a second life for our bus batteries in stationary energy storage systems or through controlled recycling to minimise their impact on the environment. The composite materials used in the Ebusco 3.0 bus have a lifespan of up to 25 years (signicantly longer than conventional materials) and can also be reused, for example as raw materials for road rein- forcement. 26 USE AND CONTROL OF HAZARDOUS MATERIALS AND PROCESSES The prime strategy of Ebusco is to exclude all ha- zardous materials and substances from its proces- ses and products. Where this is not possible, design solutions, materials, substances and processes are selected that have a minimal impact on the environ- ment. This means that all relevant materials are within the permissible boundaries set by applicable EU legislation such as the REACH regulation and the RoHS directive, and appropriate measures are taken to prevent impact on the environment. In the supplier contracts various clauses are inclu- ded with regard to safety, health, and environmental impact. For example, contracts state that the sup- plier is responsible for checking that its products meet EU (European Union) safety, health, and en- vironmental protection requirements. protection re- quirements and that products delivered by supplier shall be free of any known conict minerals from “Covered Countries”, as dened by the Securities and Exchange Commission (“SEC”). SUPPLY CHAIN RESPONSIBILITY Ebusco continuously works on making its supply chain and logistics operations more sustainable. We hold ourselves to the highest standards in terms of responsible business practice and acknowledge our responsibility to maintain these standards throughout the entire supply chain. In order to be able to do so we aim that all our suppliers and partners adhere to these sustainability standards throughout the entire supply chain. Our list of requirements includes areas such as the energy used by suppliers, business ethics and di - versity, human rights, care for environmental manage- ment, working conditions and responsible sourcing. SUPPLIER ASSESSMENT Ebusco aims to work with suppliers who adopt a proactive stance on environmental practices and processes. We support them in developing environ- mentally friendly products and implementing sus- tainable production processes. The suppliers we work with have an EHS (Environmental, Health & Sa- fety) policy in place and established systems such as a QMS (Quality Management System) to monitor their environmental performance. Ebusco instils a manufacturing culture of continuo- us improvement and leveraging best practices in quality control and worker safety across its facilities. Furthermore, we constantly aim to reduce the car- bon footprint of our production facilities. LFP batteries – safe and environmentally friendly CASE Battery capacity, stability and safety are crucial factors for a successful implementation of electric buses. Ebusco uses the LFP (lithium ferro phosp - hate) technology for the batteries used in its buses that is renowned for its high level of safety and its high-quality. The LFP batteries do not contain cobalt, are much cleaner compared with alternative batteries and therefore support Ebusco’s mission to contribute to a better living environment. Moreover, these bat - teries are also safer as they can sustain high tem- peratures, which minimises re risks. Furthermo- re, LFP batteries are more stable and controllable. For safety reasons, the buses have battery moni - toring in place. Ebusco has partnerships with two of the largest LFP battery manufacturers in the world. The long lasting relationships with the bat - tery suppliers have resulted in batteries with a lon- ger life-cycle, higher density and improved safety. The LFP batteries Ebusco uses are ‘reusable’ as they can serve as ‘second life batteries’. Once the capacity of the battery falls below what is needed for use in buses, these batteries can serve as sta - tionary energy storage systems. Cobalt free Recyclability and reusesability of 97% Limited risk of thermal instability Max temperature rising period per sec LPF 6.6 0 C NMC 153.9 0 C ANNUAL REPORT EBUSCO 2021 26 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 27 Ebusco aspires to be an employer that provides an inspiring, entrepreneurial environment where peo- ple can grow, each and every day. An environment where people are given room to seize opportunities, both in their personal and professional development. Our people are our most valuable asset and crucial to staying at the forefront of our industry. While Ebusco has grown signicantly in recent years, our organi- sation with its open and entrepreneurial culture has remained at and agile. CORE VALUES We have clearly dened core values that set out our culture and guide us in the way we act and work together. Everyone in the company is responsible for living up to these values. The Code of Conduct, which incorporates these core values, is a point of attention during the introductory training of new employees. Cultural training is currently being deve- loped and will become available to all staff in 2022. PEOPLE IN NUMBERS At the end of the year under review Ebusco had a to- tal staff base of 339 employees (309 FTE). This was an increase of 170 employees (164 FTE) compared to year-end 2020. This number includes temporary staff. CORE VALUES Employees are determined to take the step to transform and in this they are a winning team. They like to deviate from the established order and in doing so they are creative. PASSION FOR DISRUPTION INTEGRITY, TRUST AND EMPOWERMENT Employees are always honest and fair and have trust in Ebusco and in each other. Employees make every effort to understand Ebusco’s customers’ current and future needs. Based on this understanding they anticipate and provide advice that ts the needs of Ebusco’s customers and their customers’ customers FUTURE CUSTOMER-MINDED RESPECT AND ESTEEM FOR PEOPLE Employees treat people politely, with dignity and respect. They know and acknowledge each other’s strengths and realise that they work better together as opposed to acting on their own. Employees steer clear of the blame game. Instead, they learn from their experiences, share their knowledge and are always receptive to new ideas. CONSTANT INNOVATION EMPLOYEES DIVERSITY On the payroll Temporary Woman Man We have clearly dened core values that set out our culture and guide the way we act and work together. Everyone in the company is responsible for living up to these values. EBUSCO, MADE TO MOVE PEOPLE; CONTRIBUTING TO OUR PEOPLE AND SOCIETY ANNUAL REPORT EBUSCO 2021 27 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION DATA DATA ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION TALENT DEVELOPMENT Ebusco considers lifelong learning a necessity to both current and future employees. The company provides employees with ample training and development opportunities. All employees are encouraged to take responsibility and to develop their skills and talents. Ebusco conducts career development evaluations on a yearly basis and one-on-one feedback sessions take place throughout the year to track employee de - velopment. The portal used to track performance ma- nagement links corporate objectives to objectives for each individual discipline within the company. These objectives are translated into individual objectives for each Ebusco employee. In this way every Ebus - co employee knows how they are contributing to the overall corporate objectives. This promotes a sense of ownership throughout the organisation. Career development at Ebusco is based on skills and competencies rather than rigid job descriptions. At Ebusco the goal is to ll management positions through internal succession, with in-house promo- tions widely preferred to hiring externally. Over half of all employees under the age of 35 made a career step in the past year. TRAINING As an innovative frontrunner, Ebusco needs to ensu- re that its employees are equipped with the skills to match. To do so we are constantly making signicant investments to increase the technological, innovative and personal skills of our employees. On-the-job trai - ning is the most important method and coaching by a more senior colleague is another key instrument to help people develop. Ebusco is currently setting up young potential and leadership programmes. RECRUITMENT Ebusco is a fast-growing company. We operate in a high-tech environment and look for talent in a tight market. As challenging as this may be, our recruit- ment activities paid off as we were able to hire 151 new employees on a contract this past year and an additional 110 people joined Ebusco as temporary staff in 2021. The retention rate in 2021 was 87%. Ebusco has started up a project with Brainport and the workplace-learning service (Leerwerkloket) to retrain people from other professions. After retrai- ning successfully, they are offered a job at Ebusco. COLLABORATIONS Ebusco works in close cooperation with universities and colleges as well as institutes for intermediate vocational education. On average 10 students do an internship at Ebusco every six months. They provi- de a great source of future talent and the internship programmes position Ebusco as an attractive em- ployer among students. The company collaborates with the following universities and institutions: • Fontys University of Applied Sciences and Eindho- ven University of Technology. • The Automotive Centre of Expertise (ACE). This in- stitution cooperates closely with the automotive industry and three Dutch universities of applied 28 AGE CATEGORIES DISTRIBUTION BY JOB PROFILE 15-19 30-39 50-59 20-29 40-49 60-70 Aftersales Operations Supply Chain Engineering Shared Services Marketing & Sales 29 EBUSCO family day To further strengthen the employee engagement, Ebusco organises an annual family day to also show our employees’ partners and children what Ebusco is all about. The family day held on 2 October 2021 was a great success, close to 150 employees joined the festivities, together with their families. A Corona QR code was required for participation. CASE sciences (Fontys, Hogeschool of Arnhem and Nij- megen (HAN) and Hogeschool Rotterdam). • In addition, Ebusco has entered into a partner- ship with Summa Automotive vocational school in Eindhoven. Ebusco also collaborates with universities outside the Netherlands, including in Australia and Canada. HEALTH AND SAFETY IN THE WORKPLACE Health and safety are key priorities in executing the ESG agenda. This relates not only to safety throughout the production process and the health and safety of employees, but also to the health and safety of the world at large. SAFETY IN THE WORKPLACE Ebusco has a safety policy in place to ensure a safe and healthy workplace. The company’s safety per- formance indicators include the number of reported accidents and incidents and the Lost Time Injury Frequency Rate (LTIFR). The performance indicators are measured and acted upon and will also be imple- mented at all our (future) facilities. Ebusco provides training sessions on awareness, technical training and emergency response courses with the aim of maintaining and creating a safe environment. The- re have been no incidents at Ebusco that resulted in any lost time in 2021. COVID-19 With the outbreak of the Covid-19 pandemic the focus on the health and safety of our employees and all other stakeholders increased further. Strict operating procedures and regulations were imple- mented to continue safe and responsible produc- tion practices, and instant measures were taken to facilitate digital collaboration for the ofce staff. Signicant efforts were put in place to maintain safe operations for those needing to work on-site. WELLBEING We are committed to creating the right conditions for our employees to reach their full potential. The staff at the HR department is highly involved in the well- being of the company’s employees and employee satisfaction was once again high on the agenda. We intend to conduct employee satisfaction studies from 2022 onwards. Feedback sessions are held at the end of an employee’s trial period and evaluation sessions are planned when a contract with an employee ends. In the year under review the average rate of ab- senteeism among Ebusco’s employees was 2.45% (2020: 3.01%). DIVERSITY AND INCLUSIVITY Ebusco prides itself on the diversity of its employees. The company is resolved to offer equal opportunities in every aspect of employment and does not tolerate any form of discrimination whatsoever on the grounds of race, skin colour, religion or belief, gender, sexu- al orientation, civil status, national origin, disability or age. Ebusco offers a safe and pleasant working environment. Employees are expected to contribute to this working environment by not engaging in any form of undesirable behaviour such as sexual ha- rassment, aggression or violence, discrimination, ANNUAL REPORT EBUSCO 2021 29 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION Important recognition by industry experts CASE The innovative capabilities of Ebusco were recogni- sed by international industry experts as Ebusco won two important innovation awards in 2021. Ebusco-Pondus won the JEC Composites Innovati- on Award in the category Automotive & Road Trans- portation - Structural with the Ebusco 3.0 series of city and regional buses. The Innovation Awards are a recognition by the worldwide composites indus - try of the most innovative composites application. Ebusco was awarded the Innovation Award for ap - plying composite for the full body work of the Ebus- co 3.0 bus, marking an important step forward in the transition to sustainable public transport. Ebusco also won the prestigious Automotive Inno- vation Award in the Netherlands for the revolutio- nary Ebusco 3.0 bus. According to the jury report, the Ebusco 3.0 was awarded with the prize because of its innovative composite body. 30 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION is being developed as well as an autonomous driver assistance support system to further improve the safety of our buses. These autonomous functions will be introduced in four phases, with the nal pha- se being completely automated bus transport. Ebusco has a Safety Board in place which receives safety incident reports, identies issues and reme- diates them. If there is a safety issue on one of the buses, the Safety Board immediately acts upon it. The safety issues are categorised into two catego- ries: Immediate safety threat and major incident with potential impact on safety. In the year under re- view one incident was reported in the rst category and four incidents in the second category. There has been no impact on the safety of passengers or dri- vers from these incidents. All required actions have been taken immediately. The CTO is the chair of the Safety Board. CONTRIBUTING TO SOCIETY DEVELOPING EXPERTISE With the objective to further advancing the expertise and knowledge in the eld of automotive engineering and zero-emission transportation, Ebusco’s CTO is developing a curriculum for the TU Delft on Advanced Systems Engineering. stalking, bullying, abuse of power, insults or slander. With respect to gender equality, there are 87% male and 13% female employees at Ebusco. Furthermore, Ebusco employees represent 14 nationalities. When hiring new staff Ebusco also looks at people further removed from the labour market. The com- pany is in touch with the Dutch Employee Insurance Agency (UWV) and municipalities about contributing to the reintegration of people on occupational disa- bility benets. In 2021 Ebusco hired three people with limited employment prospects. SAFETY FOR OUR CUSTOMERS Safety is at the core of our product development and design. Ebusco uses LFP (lithium ferro phosphate) batteries in its buses, batteries that are renowned for its high level of safety. Furthermore, the buses have battery monitoring in place to ensure safe operations and reliable performance. Ebusco has installed the bat- tery pack of the Ebusco 3.0 in the oor, which provi- des greater road stability. Ebusco installs a camera system in its buses which increases safety for road users, bus drivers and pas- sengers. In addition, a reliable driver assist system 31 DOING BUSINESS ETHICALLY anti-corruption policies and procedures. Respect for human rights is embedded in our Code of Conduct and as an employer we make every effort to create a positive, transparent working environment that is free from discrimination, harassment and intimi- dation; one that guarantees that every employee has equal opportunities. Certain areas of our supply chain may pose a higher risk to violations of labour rights due to their location. We mitigate this risk by performing supplier due diligence in which we iden- tify potential supply-chain risks, and before awar- ding a contract we undertake due diligence studies where we see risk. Furthermore, Ebusco uses LFP batteries which are cobalt-free. Cobalt is re-prone and mining of cobalt is exposed to human rights violations. The batteries Ebusco uses in its buses have many advantages from an environmental, safety and ethical point of view. Our policies and principles are also embedded in our Chinese operations. We have Ebusco staff on the ground supervising not only the operational acti- vities but also compliance with our business ethics. Furthermore, Ebusco proactively invests in the con- tinuous improvement of health and safety aspects of its Chinese suppliers. Ebusco values doing business ethically and in a transparent manner. Our Code of Conduct sets the framework for our business ethics and the expecta- tions we have of everyone involved in our operations. It is important to Ebusco that every employee un- derstands, complies with and conveys our shared standards and values, and the company refers all employees to the Code of Conduct to create and maintain awareness of these. Employees are en- couraged to report any violation of the standards or practices laid down in the Code of Conduct to their direct supervisor or a senior executive. This can also be done anonymously in accordance with the Whis- tle-blower Policy posted on the company’s website. Certain principles laid down in our Code of Conduct stipulate that the company shall compete honestly and fairly. Ebusco’s policy is geared at complying with all applicable legislation and regulations with respect to competition and monopolies. Furthermore, the Code of Conduct stipulates the non-acceptance of gifts of any type. Accordingly, we forbid and condemn any form of bribery or corrup- tion. Employees are informed about and trained on ANNUAL REPORT EBUSCO 2021 31 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 32 32 ANNUAL REPORT EBUSCO 2021 RISK MANAGEMENT GOVERNANCE In conducting our business, we face many risks that may interfere with our busi- ness objectives. It is important to understand the nature, likelihood and potential impact of these risks. The company sees adequate risk management as an integral element of good business practice. The Management Board is responsible for the organisation, implementation and functioning of the internal risk management and control systems that are geared to Ebusco’s business activities. The Manage- ment Board is aware that risk management and control systems cannot provide an absolute guarantee with respect to achieving the business objectives and preven- ting signicant errors, losses, fraud or the violation of laws or regulations. The scope of the Supervisory Board’s supervision includes the design and operation of the internal risk management and control systems as well as the monitoring of the effectiveness of the internal control system. The Audit Committee supports the Supervisory Board in the performance of this super- vision. The Management Board and the Supervisory Board consider effective risk management to be a critical success factor achieving the company’s mid- and long-term objectives. RISK PROFILE AND RISK APPETITE Ebusco’s approach to risk management is aimed at nding the right balance between maximizing the business opportunities while at the same time ma- naging the risks involved. The most important risks have been identied and clustered into four catego- ries: strategic risks, operational risks, nancial and reporting risks and compliance risks. RISK MANAGEMENT AND INTERNAL CONTROL BUSINESS RISKS Events that may prevent the organisation from achieving its business objectives PROCESS RISKS A minimum standard of internal control will secure the safeguard of our assets and reputation and ensures reliable information STRATEGIC OPERATIONAL COMPLIANCE FINANCIAL REPORTING Are we doing the right things? Are we doing the things right? Do we have accurate (nancial) reporting? Do we comply with laws and regulations? INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 33 ANNUAL REPORT EBUSCO 2021 The company is prepared to accept risks associated with doing business in the continuously changing market environment in a responsible and well-consi - dered way, as well as in line with the interests of its internal and external stakeholders. It is the duty of the Management Board to weigh the business opportunities against the expectations and interests of employees, shareholders, nancial insti - tutions, supervisors and other strategic stakeholders. Decisions regarding changes or ne-tuning of our business models are taken by the Management Board in accordance with the risk appetite of the compa - ny. Considering strategic risks, a balance is explicitly sought between acceptable risk on the one hand and the entrepreneurship conducted in the context of long- term value creation on the other hand. Operational risks must be kept under control as well as possible, and the company will review the effectiveness and ef - ciency of its operational processes for this purpose. Next, nancial and reporting risk needs to be control - led as well to avoid errors in our nancial reporting. The risk appetite in terms of compliance is ‘to avoid’, me - aning that all laws and regulations must be adhered to. RISK MANAGEMENT SYSTEM Ebusco’s risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls, to monitor risks and adherence to limits and to assess the effec - tiveness of the internal controls. Risk management policies and systems are reviewed to reect changes in market conditions and our activities. The internal control processes support management to identify and address risks in a timely and consistent way. Our risk management provides reasonable assuran - ce that the risks we face are properly evaluated and mitigated, and that management is provided with the information necessary to make informed decisions in a timely manner. The following elements form part of Ebusco’s risk management system: QUALITY CONTROLS The company has adopted an integrated, end-to-end approach to quality control, meaning that the compa - ny performs multiple quality inspections during both the production and the pre delivery inspection (PDI) phase, and the company continuously provides feed - back of the outcome of quality checks to its develop- ment and engineering teams to increase quality in the design and production process. The company has strategies to identify and correct any defects at each of the design, supplier development, production, and eld performance stages for Ebusco’s zero-emission buses. MANAGEMENT INFORMATION SYSTEMS The heart of our internal risk management and con- trol system on our periodic performance is formed by our reporting cycle and management information systems. Our midterm plan and objectives form the basis on which our yearly budget is made. This annual budget is a bottom-up approach and the result of a diligent process. The actual performance in all its de - tail is monitored carefully and all deviating risks and opportunities are evaluated and acted upon. POLICIES Ebusco has a Code of Conduct that has been deter- mined by the Management Board and approved by the Supervisory Board. The Code of Conduct applies to all Ebusco employees and is published on the corporate website. In addition, Ebusco has a Whistle-blower po - licy that has been published on the corporate website and ensures that possible violations of existing policy and procedures can be reported without any negative consequences for the person reporting the violation. INTERNAL AUDIT The company has appointed an internal auditor as specied in best practice provision 1.3.1 of the Dutch Corporate Governance Code. The company appointed an audit rm for fullling the internal audit function. The objective for 2022 is to develop, implement and deploy an integrated Risk & Control framework, as agreed upon with the Management Board and Super - visory Board. DEVELOPMENTS IN 2021 AND EARLY 2022 The Covid-19 pandemic has impacted economic, go- vernment and social activity across the world since early 2020. In response to the pandemic, government regulations aimed at shifting social behaviours to li - mit or close non-essential transportation, business activities, government functions and person-to-per - son interactions, resulting in employees working from home. In some instances where these restrictions have been eased, governments have followed with actual or contemplated returns to stringent restric - tions on gatherings or commerce or with reduced forms of restrictions that still limit transportation, business activities and other person-to-person in - teractions. These trends have resulted in limited de- mand for public transport, which in turn has resulted in a reduced amount of income generated by Public Transport Authorities (PTAs) and Public Transport Operators (PTOs) who responded by offering fewer re - quests for tenders, bids or quotations for new buses in the rst half of 2021. Ebusco has in the past and continues to experience supply chain disruptions and supply shortages as a result of the prolonged Covid-19 pandemic. The Com - pany is taking pro-active steps to manage the risk of further impact from the supply chain disruptions by rebuilding its safety stock, shipping components by air rather than ships (where this is an option and feasible from a cost perspective), designing alterna - tive replacement parts, installing certain components at its headquarters in Deurne instead of its third-par - ty assembly partner in China and by using exchange parts. Due to the slowdown in customer activity and orders during 2020 and early 2021, as well as some disruption to production and deliveries due to supply chain challenges, in each case as a result of Covid-19, the company’s revenue was signicantly impacted in 2021. Compared to 2020, revenue was down approxi - mately 75%, mainly driven by a slow-down in orders due to Covid-19 combined with the global supply chain shortages. Ebusco has experienced further delays in bus pro - duction and shipments in 2021 and anticipates that INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION Global population growth and urbanisa- tion especially in developing countries is predicted to fuel demand for public transportation. Macroeconomic factors Covid-19 revived the demand for indivi- dual mobility and delayed tenders – No signicant long-term impact on bus de- mand expected. Covid-19 impact Transit infrastructure investments were and are being implemented globally to p ush decarbonisation as well as economic development. Transit infrastructure investments Regulators expected to increase push for electric buses in both Europe and the US. Neutral outlook for China as penetration already high. Emission regulations To reach emission targets, cities around the world are driving the electrication of their bus eets. City restrictions and targets Subsidies for electric buses have been introduced in Europe and North America, with continued increases in investment. Purchase and tax incentives Operators prefer environmentally friendly solutions as long as basic range and ca- pacity requirements are met and TCO is comparable to other solutions. Customer preferences The performance of BE buses as well as their cost position is constantly impro- ving – TCO better than diesel buses in many cases. Performance and TCO improvements KEY DRIVERS AND TRENDS IMPACT MAGNITUDE COMMENTS GENERALREGULATIONSTECHNOLOGY & CUSTOMERS positive impact neutral impact negative impact high impact low impact ANNUAL REPORT EBUSCO 2021 FOCUS IN 2022 AND BEYOND In order to bring the organisation to the next level of sound risk management and internal control, Ebusco will, together with external advisors, assess the current and desired state of risk management and control. We will further build and formalise the risk management framework and implement additional processes, whi - le at the same time stimulating the business to make internal control part of day-to-day activities. The plan - ned implementation of an ERP system will strengthen the company’s control framework. The operational focus for 2022 will concentrate on the scale-up of the manufacturing of the Ebusco 3.0. The manufacturing facility in Deurne will serve as a blue - print for a capital efcient increase in manufacturing capacity across multiple geographies. The future glo - bal manufacturing set-up allows for a high degree of standardisation with only selected production phases taking place locally, while the bulk of manufacturing is centralised in a smaller set of larger facilities. Beyond 2021, Ebusco has identied and addressed the following market trends, including the associa- ted risks: it may continue to do so into 2022 taking into con- sideration the geopolitical situation in Ukraine and Russia. The geopolitical situation due to the conict between Ukraine and Russia could further impact (current) supply chain, which might result in delayed revenues from 2022 into 2023. We do not work with suppliers that are in Russia, Ukraine or Belarus, nor do we have commercial activities in this region. We continue to closely monitor our procurement activities and any potential future impact if the geopolitical tension worsens and persists and will take mitigating measu - res if required. Next to supply chain disruptions, the conict bet - ween Ukraine and Russia could result in higher ina- tion than anticipated before, leading to higher costs. Furthermore, volatility in currency might increase, which could impact our performance adversely. Although we cannot rule out that this conict will af - fect our business in due course, we do not see any direct impact on our operations at this moment. INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 34 GENERALREGULATIONSTECHNOLOGY & CUSTOMERS ANNUAL REPORT EBUSCO 2021 key driver for the electrication of the bus power- train in countries around the world, especially in Eu- rope and North America. • Emission regulations: Numerous countries have signed the Paris Agreement, which lays out pu- blic policy initiatives for signatory governments worldwide to limit global warming and reduce greenhouse gas emissions. These resolutions for governments to address global climate change also place pressure on them to switch from inter- nal combustion engine to zero-emission buses; • City restrictions and targets: To reach emission targets, many cities around the world are driving the electrication of their bus eets; • Purchase and tax incentives: In addition to the regulatory frameworks and city-led initiatives dis - cussed above, many countries also offer incentive and tax benet schemes to subsidise and promote the purchase and use of BE buses. For example, in Sweden, subsidies are granted via premiums of up to 20% of the purchase price of electric buses, subject to such premium not being higher than the price difference with a comparable diesel bus. Si - milarly, in Amsterdam, Netherlands electric buses are subsidized up to €40,000 per bus. In Germany, a federal funding scheme is in place for up to 80% of the additional investment costs or expenses of electric buses, compared to diesel buses, including the required investment in associated charging in - frastructure. The government of Denmark has set a similar investment, investing DKK 75 million to - wards accelerating the transition to green buses (including biogas, bio diesel, electricity or hydro - gen) and a tax exemption for commercial charging. TECHNOLOGY & CUSTOMERS • Customer preferences: The regulatory ‘push’ as described above, but also the increasing preferen- ce of PTAs, PTOs and the underlying end-custo- mers for environmentally friendly transportation solutions drive PTOs and PTAs to procure fully electric transit solutions; • Performance and Total Cost of Ownership (TCO) im- provements: Over the last ve to six years, BE buses have improved signicantly with regard to range, recharging speed and weight, which is the result of rapid technology developments and strong industri - alisation efforts by OEMs (Original Equipment Manu- facturer). RISK APPETITE Our risk appetite depends on the nature of the risk, the likelihood and the potential impact on our busi - ness. Ebusco’s risk appetite, the level of risk Ebus- co is willing to accept to achieve its objectives, may vary based on specic risks and is divided into ve levels: very low, low, medium, high and very high. Our approach is geared toward mitigating the risks to the levels dened in our risk appetite. RISK OVERVIEW – OUR KEY RISKS The following is a summary of key risks that, alone or in combination with other events or circumstances, could have a material adverse effect on the compa - ny’s business, nancial condition, results of operati- ons or prospects. Although management believes that the risks and uncertainties described below are the most material risks, they are not the only ones Ebusco may face. All of these risk factors and events are con - tingencies which may or may not occur. The company may face a number of these risks described below si - multaneously and some risks described below may be interdependent. In making the selection, the company has considered circumstances such as the probabili - ty of the risk materialising on the basis of the current state of affairs, the potential impact which the ma - terialisation of the risk could have on the company’s business, nancial condition, results of operations or prospects, and the attention that management would, on the basis of current expectations, have to devote to these risks if they were to materialize: GENERAL • Macroeconomic factors: Macroeconomic trends such as ongoing global population growth and urbanisation, especially in developing countries, are expected to drive growth in the overall transit and battery electric (BE) transit bus market. Next, geopolitical trends could delay or slow-down the growth in this market; • Covid-19 impact: Although the Covid-19 crisis has revived the demand for individual mobility and delayed tenders by PTAs and PTOs, over the long term there is no signicant long-term impact on bus demand expected from this crisis. With the in- creasing vaccination of populations and growing population and urbanisation discussed above, management expects that the adverse impact of Covid-19 on the use of public transportation and the tender activity of the Company’s existing and new clients will dissolve over time. In addition, the global pandemic has led to supply chain issues, resulting in a delay of orders and, subsequently, delay of revenues; • Transit infrastructure investments: Public bus transit is generally in focus of governments around the world, since change to bus transit infrastructure is often easier to implement com- pared to infrastructure via rail systems, including train, light-rail or subway systems. Globally there are multiple support plans to push decarbonisati- on through transit infrastructure investments. REGULATIONS Regulations and various incentive schemes are a INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 35 RISK APPETITE VERY LOW LOW MEDIUM HIGH VERY HIGH Behaviour towards risk Averse Prudent Balanced Considerable Seeking Strategic Operational Financial & reporting Compliance 36 RISK AREA RISK RISK DESCRIPTION RISK TREND RISK APPETITE LIKELIHOOD IMPACT Strategic Intense and increasing competition The company faces intense and increasing competition in the transit bus market and may not be able to compete successfully against new and established competitors, which could materially adversely affect the company’s business, revenue growth and market share. Pandemics The company has been and may continue to be impacted by macroeconomic and other conditions resulting from the Covid-19 pandemic, including by disruptions to its supply chain and production, which could materially adversely affect the company’s business, nancial condition, results of operations or prospects. Macro-economical and geopolitical environment Geopolitical and macroeconomical changes and disruptions could materially adversely affect the company’s business, nancial condition, results of operations or prospects. Third-party suppliers The company’s business and protability may be materially adversely affected by increases in costs, disruptions, failure or non-perfor- mance of the company’s third-party suppliers. Supply chain disruptions The company’s business and protability may be materially adversely affected by supply chain disruptions or supply shortages. Alternative technologies Developments or advances in alternative technologies, including but not limited to hydrogen, or improvements in the internal combustion engine, may materially adversely affect the demand for the company’s zero-emission buses, result in additional expenses for the company or affect the competitiveness of the total cost of ownership of the company’s zero-emission buses compared to its competitors and the company’s business, nancial condition, results of operations or prospects could be materially adversely affected. Operational Scale-up production The company’s ability to scale its production on the timetable anticipated and operate plants is still evolving and may lead to increased costs, delays and/or reduced production of its zero-emission buses that may materially adversely affect the company’s international expansion strategy and its ability to operate its business, nancial condition, results of operations or prospects. ‘Buy quality’ regulations In order to compete effectively the company sources a number of the components in its zero-emission buses in a manner to comply with applicable “buy quality” regulations which could lead to additional expenses or may become increasingly difcult to manage as the company expands its operations internationally. Investments The company spends a signicant amount on research and development and invests time and resources into strategic partnerships and collaborations with its suppliers. If the company fails to make the right investment decisions in its technologies and services, strategic part - nerships or collaborations with suppliers, its business, nancial condition, results of operations or prospects could be materially adversely affected. Retain, attract and hire highly skilled personnel The company’s success depends, in part, on its ability to retain, attract and hire highly skilled personnel. If the company is unable to retain, attract or hire highly skilled personnel, its ability to compete may be harmed. IT & Security Risk of breach of data and cyber attacks. Financial and reporting Currencies Volatility of currencies which put pressure on prot margins. Ination Increased and structural ination might undermine the real value of cash ows made from an investment. Reporting Risk that Ebusco’s reporting contains material errors. Compliance Legal & regulatory Damage (including reputation) due to violation of legislation and regulations including export and sanctions regulations, unfair competition, fraud, corruption and bribery. Tax Damage (including reputation) due to violation of tax legislations and regulations. increased equal very low low medium 36 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION decreased high very high 37 ANNUAL REPORT EBUSCO 2021 Ebusco expects competition for battery electric and other zero-emission buses to intensify as suppliers put more focus on this segment given expected in - creases in demand and increasing regulatory support for zero-emission and alternative fuel buses or other forms of transport and as new entrants enter the tran - sit bus market, particularly those that target the bat- tery electric bus segment. This could lead to increased price competition in the battery electric bus segment. Since price is one of the factors that make up the to - tal cost of ownership, if the company’s competitors lower their prices, this could lead to them having a more competitive total cost of ownership compared to Ebusco’s total cost of ownership for its zero-emission buses, which could harm the company’s business, de - creasing its competitive advantage and/or resulting in fewer of Ebusco’s buses sold, as well as its operating results, or prospects as the company could feel pres - sure to decrease the price of its zero-emission buses, reducing its overall protability. Other factors affecting competition include product quality and features, environmental impact, innovati - on and development time, reliability, safety, fuel eco- nomy, and customer service as each of these factors are often part of the considerations that PTAs, PTOs or other customers use to evaluate which and what type of bus to purchase. While the Management Board believes that Ebusco currently has a competitive ad - vantage in relation to the total cost of ownership of a transit bus with its newest zero-emission bus, the Ebusco 3.0 (due largely to the Ebusco 3.0’s lightweight composite body technology), pricing, fuel economy and maintenance costs are also factors that impact a bus’s total cost of ownership. Existing and potential competitors may be able to develop buses and provide services that drive down the total cost of ownership of their transit buses due to their price, features, en - vironmental impact or innovation. Alternatively, they may be able to develop products or services that are better able to compete on the basis of other factors that are equal or superior to those offered by Ebusco or which achieve greater market acceptance. Howe - ver, while Ebusco’s existing and potential customers often use the total cost of ownership to make purcha - sing decisions, other customers, particularly those in markets, such as Latin America, without as much access to nance or with less favourable nance opti - ons, may place more importance on the price of a bus, which could hinder the company’s ability to expand or compete in these markets. Furthermore, PTAs or PTOs may favour local competitors, irrespective of total cost of ownership and some of Ebusco’s competitors may aggressively discount their products and services in order to compete on price and gain market share, which could result in pricing pressures, reduced prot margins, lost market share, or a failure to grow mar - ket share by Ebusco. This could impact the company’s STRATEGIC RISKS INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION INTENSE AND INCREASING COMPETITION Both the transit bus market generally and the batte- ry electric bus segment of this market in particular are highly competitive, and Ebusco competes for sales with suppliers of internal combustion engine buses, battery electric buses, and other forms of ze- ro-emission buses (meaning road vehicles that emit no pollution from its exhaust), like hydrogen fuel cell powered buses. Many of the company’s current and potential competitors are traditional automobi- le and bus suppliers with strong brand recognition, loyal customer bases, longer operating histories with established track records of service and gre- ater nancial, marketing and other resources than the company has and these competitors may be able to devote greater resources to the design, de- velopment, manufacturing, assembly, distribution, promotion, sale and support of their battery electric bus segment. Moreover, Ebusco’s competitors that also produce diesel-hybrid and compressed natural gas vehicles may have an advantage with existing and prospective customers that are interested in exploring diesel alternatives without committing to zero-emission vehicles or that wish to pursue a gra- dual zero-emission or electrication strategy with the same supplier. Additionally, many of these com- petitors have more experience with the procurement process of PTAs. 37 38 ANNUAL REPORT EBUSCO 2021 vaccines and accompanying government vaccinati- on programmes have proven positive signs towards recovery, it is difcult to predict the extent of the impact of the Covid-19 pandemic, and whether more stringent restrictions on commerce or non-essential interactions will be imposed, including as a result of new strains or variants of the virus. Ebusco’s third-party suppliers have temporarily had to suspend operations for short periods of time as a result of measures implemented by governments in response to the Covid-19 pandemic which have cau - sed disruptions and delays to the company’s produc- tion and delivery schedules. Its suppliers have also experienced challenges ramping up and re-establis - hing production capacity in connection with the pro- longed Covid-19 impact, resulting in prolonged supply chain challenges for the company. Curre ntly, there is a global semiconductor shorta- ge as a result of reduced production following the closure of manufacturing facilities during the initial phase of lockdowns imposed by governments across the world in response to the Covid-19 pandemic, and the markedly increased demand for semiconductors by the consumer electronics industry during the pan - demic. The company recently experienced shortages from its existing semiconductor supplier and was re - quired to switch to another supplier. While Ebusco has a sufcient supply of semiconductors for its antici - pated production volumes in the near term, it may be unable to maintain its arrangements with suppliers or to obtain the volume of semiconductors it will need in the future should the global shortage for semicon - ductors continue or other supply shortages ensue. While Ebusco has not yet experienced any cancella- tion of existing orders, the Covid-19 pandemic has resulted in cancelled or delayed tender processes, reducing opportunities for the company to generate new orders. If there is lower demand for public trans- portation in the future, and a corresponding decre- ase in zero-emission bus purchases, the company’s business, nancial condition, results of operations or prospects could be materially adversely affected. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this strategic risk: • The health and safety of our employees is and will remain our key priority. Necessary and effective preventive measures have been taken to support the well-being of all of our employees; • Increase in stock of critical bus components; • Strong nancial position which enables Ebusco to quickly respond to downturn in activities. This in - cludes the availability of (surplus) cash and focus on working capital. MACRO-ECONOMIC AND GEOPOLITICAL CHANGES Ebusco’s results of operations can be impacted by ge- opolitical changes and economic cycles globally and in its key markets. Unfavorable geopolitical changes such as the absence of, or below-trend, global po - pulation growth and urbanisation, a decrease in real gross domestic product (GDP), government austerity measures, high unemployment rates or constrained credit markets tend to impact levels of end user de - mand for public transit and spending on public transit, which in turn leads to reduced spending by govern - ments and Ebusco’s customers on public transport. Barring the foreseen any unforeseen circumstances related to the conict surrounding Ukraine and Rus- sia, we could be faced with sustained disruption of our global supply chain. The factors described above, or other factors which may impact conditions relevant to Ebusco’s business environment, are difcult to predict and may have a material adverse impact on Ebusco’s business, nancial condition and operating results. They can also make it more difcult to budget and make reliable nancial forecasts. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this strategic risk: • Ebusco monitors economic, political and general societal changes and, where necessary, develops response strategies to such events, including the conict between Ukraine and Russia and pandemi - cs (e.g. Covid-19); • We closely monitor our procurement activities and any potential future impact if the geopolitical ten - sion worsens and persists and will take mitigating measures if required. • Increasing geographical spread of activities; • Strategic partnerships to ensure an efcient and effective global supply chain; ability to compete successfully and may materially adversely affect Ebusco’s business, nancial conditi - on, operating results or prospects. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this strategic risk: • Protect technology related to lightweight casco’s; • Explore and develop other market and product segments (e.g. Energy Storage Systems and auto- nomous driving); • Access to sufcient funds to take on new invest- ment opportunities. PANDEMICS The Covid-19 pandemic has impacted worldwide economic activity since early 2020. Government re- gulations and shifting social behaviors have limited or closed non-essential transportation, government functions, business activities and person-to-person interactions and resulted in many employees wor- king from home. In some cases, the relaxation of such trends has been followed by actual or contem- plated returns to stringent restrictions on gatherings or commerce, including in parts of Europe, where the Ebusco’s primary operations are currently located. These trends have resulted in a reduced number of travelers. Ebusco has continued to see an impact on orders and tender opportunities during 2021 compared to 2019 and 2020 as a result of uncertainty relating to public transit needs as a result of Covid-19. While the INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 39 • Ebusco is in the process of optimising its integra- ted supply chain organisation, supplier base and manufacturing footprint from a global perspective, to enable agile responses to large and rapid shifts in demand and supply globally. THIRD-PARTY SUPPLIERS Ebusco’s zero-emission buses contain numerous com- ponents that are purchased from a limited number of third-party suppliers, including the company’s lithium iron phosphate (LFP) batteries. Ebusco also relies on a third-party supplier in China for the assembly of its existing zero-emission buses and a supplier in Europe for the carbon bre for its composite body. This could expose the company to potential third-party risks of price increases, disruptions, failure to deliver compo - nents as specied, non-performance or other factors beyond the company’s third-party suppliers’ control. The unavailability of any component or supplier at ac - ceptable prices or at all could result in manufacturing or assembly delays and product design changes, and Ebusco may incur penalties from its customers. As there are a limited number of third-party suppliers for a number of the components used by Ebusco in its ze - ro-emission buses, should the demand for production increase across the market, third-party suppliers may be unable to meet the needs of customers, including Ebusco. In addition, as the company increases its volu - me of zero-emission buses, its supply needs will incre- ase and could become increasingly difcult to meet. With respect to the batteries purchased by Ebusco for its products, the batteries have been customised and adapted to Ebusco’s bus design. Ebusco’s electrical systems and software have also been customised for each of their batteries. As a result, if the company were required to replace either or both of its third-party bat - tery suppliers, Ebusco may have to incur a substantial amount of expense to nd a new battery supplier and update other components or systems of its zero-emis - sion buses to work with a different battery. This could also lead to signicant delays in delivering Ebusco’s products as related components are redesigned or modied. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this strategic risk: • Increase in stock of critical bus components; • Strategic partnerships to ensure an efcient and effective global supply chain; • Batteries are sourced from two major, qualied sup - pliers. SUPPLY CHAIN DISRUPTIONS Ebusco is exposed to the risk of supply disruptions and shortages, including due to epidemics or pandemics of diseases, geopolitical factors, governmental chan - ges, nancial distress experienced by suppliers, power outages, production difculties of suppliers, natural or man-made disasters and restrictions, tariffs or other unforeseen circumstances. Ebusco has in the past and continues to experience supply chain disrupti - ons and supply shortages as a result of the prolonged Covid-19 pandemic, Further supply chain disruptions and/or shortages can directly impact the company’s ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION ability to produce and/or ship its zero-emission buses, which in turn could have a material adverse effect on the company’s business, nancial condition, results of operations or prospects. In order to optimise the development, manufacturing and assembly of its zero-emission buses, Ebusco must manage its supply chain with third parties for its bus components and technology as well as the deli - very of the zero-emission buses. In some instances, such as delays due to extended shipping routes due to blockages in traditional routes, disruption in the sup - ply chain can be caused by factors outside of the con- trol of Ebusco or its third-party suppliers. Fragmen- tation in the supply chain and/or any changes in the regulatory laws or political situation in the countries that the company or its third-party suppliers operate in or must transport its products or supplies to or from could further complicate supply chain disruption risks and result in delays in deliveries. Where a third-party supplier is unable to deliver com - ponents as specied, Ebusco may be unable to ob- tain such components in a timely manner and such supply chain disruption may cause the company to experience delays in completing an order, thereby in - curring penalties. If the amount Ebusco is required to pay in penalties exceeds the cost of components that caused the delay or exceeds the amount of the order, Ebusco could incur a loss under the relevant contract. In addition, where a third party is unable to deliver components as specied, the company may be forced to recall or remedy malfunctioned components, which could subject Ebusco to reputational harm and additi - onal expenses. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this strategic risk: • Increase in stock of critical bus components. Fu- rthermore, the company is making balanced in- vestments in both global and local supply chains to reduce dependencies and lead times and to meet local market requirements; • Strategic partnerships to ensure an efcient and effective global supply chain; • T he company is taking pro-active steps to mana- ge the risk of further impact from the supply chain disruptions by rebuilding its safety stock, shipping components by air rather than ships (where this is an option and feasible from a cost perspective), designing alternative replacement parts, installing certain components at its headquarters in Deurne instead of its third-party assembly partner in China and by using exchange parts. ALTERNATIVE TECHNOLOGIES Ebusco may be unable to keep up with the changes in zero-emission technology or other alternative fuel sources and, as a result, its competitiveness may suf - fer. Developments or advances in alternative techno- logies, such as hydrogen fuel cells, advanced diesel, ethanol, or compressed natural gas, or improvements in the fuel economy of the internal combustion engi - ne or other technological advances that would make such alternative technologies more competitive 40 against or attractive than Ebusco’s zero-emission buses, could result in the company’s competitors ha - ving zero-emission or other buses with a lower total cost of ownership than those of the company’s ze - ro-emission buses, which could materially adversely affect Ebusco’s business or prospects. Even if Ebusco is able to keep pace with changes in technology and develop new products and servi- ces, the company is subject to the risk that its prior models, products, services and designs will become obsolete more quickly than expected, resulting in a lower return on investments made in research and development of Ebusco’s products or, in some ca- ses, the company may be required to write off any materials or components already purchased that can no longer be used due to changing technolo- gies. Inability of Ebusco to keep pace with changes in technology or early obsoletion of its existing tech- nology would affect the total cost of ownership of its zero-emission buses as the total time that Ebus- co’s zero-emission buses are used by clients may be materially adversely affected (which impacts the total cost of ownership) or it could increase the maintenance costs if the company can upgrade the technology (which would also increase the total cost of ownership, unless such upgrades were provided at the Company’s own expense). Any failure of the company to successfully react to changes in exis- ting technologies, any adverse impact on demand for Ebusco’s products as a result of alternative technologies, or to manage expenses arising from developments or advances in alternative techno- logies, could impact the total cost of ownership for Ebusco’s zero-emission buses, materially harm its competitive position and growth prospects and may have a material adverse effect on the company’s business, nancial condition, results of operations or prospects. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this strategic risk: • Ebusco is strongly committed to staying ahead of the curve and retaining its technology leadership by continuing to invest in research and develop - ment; • Ebusco’s experience with heavy-duty batteries and battery management systems has allowed it to develop Energy Storage Systems (ESS) products that have attractive applications for tasks of high energy demand and for a wide range of applicati - ons where energy needs to be temporarily stored; • There are partnerships in place with several uni - versities and technology institutes that are focu- sed on innovation, while other key alliances inclu- de the company’s close working relationships with PTOs. OPERATIONAL RISKS SCALE-UP PRODUCTION Ebusco plans to signicantly increase manufactu- ring, production and assembly capacity in a short amount of time to meet Ebusco’s expected inter- national expansion plan and the production of its Ebusco 3.0 buses on time for the delivery dates to customers. The company’s ability to achieve its ma- nufacturing and assembly plant expansion plans will depend upon many factors, including obtaining additional nancing to complete its international ex- pansion strategy beyond 2023. Ebusco’s international expansion strategy and pro- duction of its Ebusco 3.0 will also depend on its abili- ty to execute its plans to assemble the Ebusco 3.0 at plants in various jurisdictions and deploy maintenan - ce and other services for these vehicles. Currently, nearly all of Ebusco’s production of its zero-emission buses is through its third-party suppliers. However, the company already started to assemble its Ebusco 3.0 buses at its own plant in Deurne, the Netherlands, enabling the company to support its scale-up efforts in existing and its international expansion markets, such as Australia, the United States and China. For example, at the end of 2021, Ebusco started to as - semble, market and serve its Ebusco 3.0 in the Netherlands. Ebusco also currently has a sales and marketing ofce in the United States and Australia but intends to expand its assembly operations in Aus- ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION tralia for the APAC region during 2022. Ebusco also intends to introduce a Complete Knock Down (CKD) plant in the United States in the short-term, to manu - facture its Ebusco 3.0 buses for the US and Canadian markets by 2023. It also plans to introduce an OEM in the medium-term. Ebusco’s establishment and reliance on its own plants will be subject to risks, including that the company: • may not be able to nd skilled labourers and other plant managers required to operate plants in the desired locations or jurisdictions; • may require a larger than anticipated factory footprint, which would increase Ebusco’s costs of setting up plants and signicantly delay producti- on of its zero-emission buses to be assembled at such plants; • may not be able to reach its rate of production targets within its plants; • may not be able to identify properties meeting the requirements for its plants with respect to size, shape, power supply and strength of constructi- on, which could increase its costs of setting up the plants and signicantly delay production of its zero-emission buses to be assembled at such plants; • may not be able to build the expected number of plants, which could reduce its production capa- 41 city and have a material adverse impact on its international expansion strategy and its ability to offer zero-emission buses that meet “buy local” requirements; • may experience changes in its manufacturing and assembly technology that may result in ad- ditional expense for Ebusco and could have a ma- terial adverse effect on the company’s business, nancial condition, results of operations or pros- pects; and • may experience higher local wages and supplier costs than expected, resulting in higher operating costs and reducing its ability to be protable. Any inability to scale up its production, or delays in scaling up its production, could materially adversely affect the company’s ability to operate its business and delay production of its vehicles. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this operatio- nal risk: • Access to sufcient funds to take on new invest- ment opportunities; • Ebusco’s scale-up of its OEM production facility in Deurne is expected to grow its production ca- pacity from 250 buses per year for each of the four phases of manufacturing and assembly to a capacity of 500 buses per year for each of the four phases of manufacturing and assembly. This scale-up is expected to be completed before the year ended 31 December 2022; • A detailed scale-up timetable has been develo ped. As part of its research and development invest- ments, Ebusco has formed strategic partnerships with private and public institutions and some of the- se arrangements are evidenced by memorandums of understanding, non-binding letters of intent, or early-stage agreements that are used for design and development purposes, which could be termina- ted or may not materialise into next-stage contracts or long-term contract partnership arrangements or otherwise result in innovation. If Ebusco is unable to maintain such arrangements and agreements, con- tribute to innovation through these arrangements and agreements or if such arrangements and agree- ments contain other restrictions from or limitations on developing zero-emission buses and other rele- vant technology with other strategic partners, the company could be negatively impacted. Furthermore, Ebusco’s research and development efforts, its strategic partnerships and collaborati- on with its suppliers help the company to develop competitive technology. For example, Ebusco’s long-range electric batteries, designed for overnight charging, are a key component of its zero-emission buses that the Management Board believes provides the company with a competitive advantage. These batteries include many individual battery cells that function together to create Ebusco’s long-range electric batteries. With the research and develop- ment efforts of Ebusco and its strategic partner- ships and suppliers, the company is able to develop battery cells and various related components to continue to develop the range of its buses or charge ‘BUY QUALITY’ REGULATIONS Ebusco currently sources much of its supplies for its zero-emission buses from Europe to be compliant with “buy local” regulations or priorities applicable to the procurement policies of many PTAs, PTOs or other customers. Ebusco currently contemplates continuing to use European components in its ze- ro-emission buses that will be assembled in its plants to be opened in Australia, the United States and China. To the extent necessary to be competitive in these markets, or to comply with any applicable regulations, the company may need to adapt some of its components to meet “buy local” requirements. This could lead to additional expense for Ebusco as a local component may be more expensive or could lead to an increase of costs due to any additional de- sign adaption required to integrate the component with the other components of the bus and any rela- ted assembly costs, which may impact the compa- ny’s ability to compete successfully. In addition, changing a component to a locally sourced component may also require a change in bus design and/or additional regulatory approvals. It is also possible that in Ebusco’s existing or interna- tional expansion markets its competitors may ma- nufacture or assemble comparable or competitive products in more cost-effective jurisdictions or use components manufactured in more cost-effective jurisdictions and import their buses at lower prices to the geographic markets in which Ebusco sells or intends to sell its zero-emission buses. This compe- tition could cause the company to lose market share or compel the company to reduce prices to remain competitive, which could result in reduced sales, revenue and protability and impact the total cost of ownership of Ebusco’s zero-emission buses. This could impact the company’s ability to compete suc- cessfully and may materially adversely affect Ebus- co’s business, nancial condition, operating results or prospects. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this operati- onal risk: • Ebusco intends to construct local CKD (Complete Knock Down) plants. By doing so, the buses pro- duced locally will qualify under applicable ‘buy local’ regulations. INVESTMENTS Electrication of commercial vehicles like Ebusco’s zero-emission buses is a relatively new eld and one which continues to evolve. As more companies in- vest in the transit bus market, alternative modes of transportation or adjacent markets, and new tech- nologies are developed, Ebusco and its technolo- gies may be unable to keep up with such advances and, as a result, the company’s competitiveness may suffer. Since technologies change, Ebusco has spent and expects to continue to spend signicant resources in ongoing research and development, including by upgrading or adapting its products and services, collaborating on research and forming strategic partnerships with research institutions, in- dustrial partners and suppliers. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION efciency and maintain the competitive advantage that the Management Board believes its batteries provide. Should Ebusco fail to maintain its research and development efforts or fail to maintain the rela- tionships with its strategic partners or suppliers, the company’s competitive advantage could be materi- ally and adversely affected. Ebusco invests a signicant amount of resources internally and in collaboration with its third-party battery suppliers and strategic partners to redu- ce the total cost of ownership of its buses, provide longer range zero-emission buses and provide pro- ducts or services Ebusco believes will enhances its competitiveness. However, the company’s re- search and development efforts may not be suf- cient or could involve substantial costs and delays and prove ineffective investments. Ebusco has in- vested a signicant amount of time and resources to develop its lightweight composite body design for the Ebusco 3.0 and its overnight charging sys- tem for its zero-emission buses but these may not appeal to, be purchased or adopted by customers at the rates anticipated. If Ebusco’s existing tech- nologies are not widely purchased or adopted, or if the company selects and invests in technological innovations, standards or features that are not wi- dely purchased or adopted by customers within the transit bus market in the future, Ebusco may not recover its investments in these technologies and may be at a competitive disadvantage. Furthermore, while the company uses non-disclosure agreements and other means to protect trade secrets and intel- lectual property developed with strategic partners, collaborators or suppliers, should these inadequa- tely protect any technology developed or should any of these third parties use knowledge gained in these partnerships to prepare similar technology, the com- pany could lose important technology or competitive advantages which could materially and adversely affect Ebusco’s business, nancial condition, re- sults of operations or prospects. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this operati- onal risk: • Access to sufcient funds to take on new invest- ment opportunities; • Attract, hire and retain highly skilled research and development personnel. RETAIN, ATTRACT AND HIRE HIGHLY SKILLED PERSONNEL Ebusco’s success depends, in part, on its continuing ability to identify, hire, attract, train, develop and re- tain other highly skilled personnel, such as compo- site engineers, electrical engineers, industrial engi- neers, automotive engineers, production employees, and tender and sales personnel. Since Ebusco is one of the early producers of zero-emission buses within Europe, the company has a number of experienced employees who have worked on the development of Ebusco’s technology for several years. If such employees were to begin working for a competitor, Ebusco could nd it difcult and costly to enforce agreements in place that are intended to protect the intellectual property used by the company and prevent it from being used by a competitor. Further- more, as the demand for zero-emission vehicles like Ebusco’s electric buses continues to increase, the competition for experienced employees with skill sets needed for the company’s business increa- ses. It may be increasingly difcult to hire new em- ployees since a number of skilled personnel sought by Ebusco may be subject to non-compete agree- ments with their past employers, which could make it more difcult to hire new employees or may lead to delays in hiring. Ebusco has in the past and may in the future raise the wages or salaries of its workers to compete for talent, which could negatively impact the company’s margins. Ebusco’s future success also depends on its ability to identify, hire, attract and train new employees, particularly where Ebusco may establish new plants or other operations as part of its international expan- sion strategy, as well as to support that strategy. In particular, to compete successfully in the compe- titive tender process, the company needs to have sufcient numbers of tender and sales personnel who are able to negotiate with various PTOs and secure tenders for Ebusco. The company’s ability to compete for tenders has in the past been adversely affected by a shortage of such personnel, and Ebus- co is actively recruiting additional personnel to ll these roles. Should Ebusco be unable to attract, hire and retain such personnel, its ability to successful- ly compete in the tender process may be adversely affected. 42 43 43 Any failure of Ebusco to attract, hire and retain other key employees and highly skilled personnel, may have a material adverse effect on the company’s business, nancial condition, results of operations or prospects. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this operati- onal risk: • Annual performance and talent management programs; • Cooperation programs with universities; • Retention programs for key personnel (e.g. shared based compensation); • Use good reputation and ESG philosophy to at- tract and retain talented employees. IT & SECURITY IT & Security concerns the risk of breach of data availability, condentiality and integrity (including Intellectual Property ‘IP’). This also includes cyber-at - tacks (e.g. ransomware attack) that violate data to disrupt the business operations and infrastructure. We rely on the accuracy, availability and security of our information technology systems. Despite the measures that we have implemented, including those related to cybersecurity, our systems could be brea - ched or damaged by computer viruses and systems attacks, natural or man-made incidents, disasters or unauthorized physical or electronic access. We are experiencing an increasing number of cy- berattacks on our information technology systems as well as the information technology systems of our suppliers, customers and other service providers, whose systems we do not control. These attacks include malicious software (malware), attempts to gain unauthorized access to data, and other elec- tronic security breaches of our information tech- nology systems. They also include the information technology systems of our suppliers, customers and other service providers that have led and could lead, for us, our customers, suppliers or other business partners - including R&D partners - to disruptions in critical systems, unauthorized release, misappropri- ation, corruption or loss of data or condential infor- mation (including condential information relating to our customers, employees and suppliers). Further, we depend on our employees and the employees of our suppliers to appropriately handle condential and sensitive data and deploy our IT resources in a safe and secure manner that does not expose our network systems to security breaches or the loss of data. However, there is always a risk that inadvertent disclosure or actions or internal malfeasance by our employees or those of our suppliers could result in a loss of data or a breach or interruption of our IT systems. In addition, any system failure, accident or security breach could result in business disruption, theft of our intellectual property, unauthorized access to, or disclosure of, customer, personnel, supplier or other condential information, corruption of our data or of our systems, reputational damage or litigation. Furthermore, computer viruses or other malware may harm our systems and software and could be inadvertently transmitted to our customers’ sys- tems and operations, which could result in loss of customers, litigation, government investigation and proceedings that could expose us to civil or crimi- nal liabilities and signicant management attention and resources to remedy the damages that result. We may also be required to incur signicant costs to protect against or repair the damage caused by these disruptions or security breaches in the future, including, for example, rebuilding internal systems, implementing additional threat protection measu- res, providing modications to our products and services, defending against litigation, responding to regulatory inquiries or actions, paying dama- ges, or taking other remedial steps with respect to third parties. Further, remediation efforts may not be successful and could result in interruptions, de- lays or cessation of service, unfavorable publicity, damage to our reputation, customer allegations of breach-of-contract, possible litigation, and loss of existing or potential customers that may impede our sales or other critical functions. Cybersecurity threats are constantly evolving. We remain potentially vulnerable to additional known or yet unknown threats, as in some instances, we, our customers, and our suppliers may be unaware of an incident or its magnitude and effects. We also face the risk that we expose our customers to cyberse- curity attacks through the systems we deliver to our customers, including in the form of malware or other types of attacks as described above, which could ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION harm our customers. Furthermore, the Covid-19 pandemic has increased the level of remote working within our organisation, which increases the risks of cybersecurity incidents. Moreover, the conict bet- ween Ukraine and Russia has further increased the risk of cyber attacks. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this operatio- nal risk: • Information security function and policy to imple- ment controls to ensure authorized use of informa- tion; • Signicant increase of information security invest - ments and security roadmap to increase security of processes and systems; • Increasing technical protective measures; • Periodic penetration testing; • Implementation of security monitoring services for detection of, and response to, cyber threats to our systems; • Increasing information security awareness through training and newsletters. 44 44 FINANCIAL AND REPORTING RISKS Ebusco also experiences transactional effects of exchange rate uctuations as it enters into a sale or purchase transaction in a currency other than its functional currency. Ebusco’s largest transactional exposure arises in situations where the compa- ny has a mismatch between its earnings and any foreign currency and its costs that are denominated in that currency. As the Ebusco continues to expand in new markets under its international roll-out plan, these foreign exchange rate uctuation effects are expected to become more pronounced and will continue to af- fect the company’s results of operations and nan- cial position. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this nancial and reporting risk: • Treasury department that establishes currency risk management, including responsibilities, au- thorizations and reports. Liquidity is monitored by the Treasury department, which tracks the actual cash ow for the company on both a short- and longer-term basis; • Ebusco has a hedging program in place to antici- pate net exposure of foreign currencies resulting from purchases in China. INFLATION Ebusco is exposed to ination for costs of goods and materials, transport and wages as a result of sup- ply shortages which may impact our protability. Currently, supply chain constraints have resulted in higher-than-normal ination. The conict between Ukraine and Russia has signicantly increased the risk on high ination. Any unforeseen high ination may have a material adverse impact on Ebusco’s business, nancial condition and operating results. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this nancial and reporting risk: • Strategic partnerships to ensure an efcient and effective global supply chain; • Ebusco monitors economic, political and general societal changes and, where necessary, develops response strategies to such events; • We closely monitor our procurement activities and any potential future impact if the geopolitical tension worsens and persists and will take miti- gating measures if required. REPORTING Accurate reporting and disclosures provide internal and external stakeholders with signicant informa- tion for a better understanding of Ebusco’s business. Failures in reporting and/or disclosure notes, could create market uncertainty regarding the reliability of the information (including nancial data) presented and could have a negative impact on the price of Ebusco shares. In addition, the reliability of revenue and expenditure data is key for steering the business and for managing top-line and bottom-line growth. The long lifecycle of bus sales, from order acceptan- ce to accepted delivery by the customer, together with the complexity of the accounting rules for when revenue can be recognised in the accounts, presents a challenge in terms of ensuring consistent and cor- rect application of the accounting rules. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this nancial and reporting risk: • Ebusco’s Accounting guidelines set the stan- dard for accurate reporting. Key components of our guidelines are our accounting principles and checklist; • Continuous training and education of our Finance department. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION CURRENCIES A portion of the company’s operations, assets, lia- bilities, revenue and expenses are denominated in currencies other than the euro. Ebusco’s predomina- te exposures are currently in Chinese yuan. Changes in the exchange rates between these currencies the- refore affect the company’s operations and nan- cial position, as a result of transactional exchange rate effects. The company is particularly exposed to such effects with respect to its cost of sales and the Chinese yuan. Ebusco uses hedging instruments to decrease the risk of foreign adverse exchange rate uctuation. Ebusco experiences translational effects of exchan- ge rate uctuation because its nancial results are measured in the currency of the primary economic environment in which it operates, its functional cur- rency. Ebusco prepares its consolidated nancial statements in euros and derives its revenue and/ or incurs costs in several different currencies. As a result, uctuations in the foreign currency exchange rates may increase or decrease the euro value of the company’s non-euro assets, liabilities, revenue and costs, even if their value has not changed in their lo- cal currency. Ebusco is particularly exposed to such effects with respect to its cost of sales and the Chi- nese yuan. 45 45 COMPLIANCE RISKS consequences for the position of the reporter, if it conforms to the procedure drawn up for this purpose. TAX Ebusco is exposed to tax risks which could result in double taxation, penalties and interest payments. The source of the risks could originate from local tax rules and regulations as well as international and EU regulatory frameworks. These include transfer pricing risks on internal cross-border deliveries of goods and services, as well as tax risks relating to changes in the transfer pricing model. Furthermore, Ebusco is exposed to tax risks related to tax losses, interest and tax credits carried forward, and poten- tial changes in tax law that could result in higher tax expenses and payments. The risks may have a signi- cant impact on local nancial tax results, which, in turn, could adversely affect Ebusco’s nancial con- dition and operating results. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this compli- ance risk: • Make use of external (tax) advisors for specialised subjects; • Rollout of a Tax Control Framework; • Rollout on International transfer pricing policy; • Develop good relations with tax authorities based on mutual respect, transparency and trust. LEGAL & REGULATORY Non-compliance due to violation of legislation and regulations and internal guidelines can result in damage (Including to reputation). In recent years, Ebusco has grown signicantly in terms of sales, operations, employees and our business infrastruc- ture. Consequently, the complexity of complying with rules and regulations has increased. Changes in regulations that apply to our business can increase compliance costs and the risk of non-compliance. Furthermore, additional regulati- ons could impact or limit our ability to sell buses in specic jurisdictions. Risk response: Ebusco has put in place the following risk mitigation measures to cope with this compli- ance risk: • Internal Audit department to perform internal au- dits; • By means of Ebusco’s code of conduct, all our employees are aware of how they should do busi- ness honestly and by signing this have agreed to act accordingly; • In all layers of our company compliance with inter- nal guidelines relating to integrity and behavior is strictly monitored and enforced (zero tolerance); • Employees ca n report suspicions abuses through a whistleblower policy. Such notications have no ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 46 46 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION MANAGEMENT STATEMENT The Management Board is responsible for the design and effectiveness of the inter- nal systems for risk management and control. The purpose of these systems is to identify and effectively manage the signicant risks to which the company is expo- sed. However, they can never provide an absolute guarantee that the company will achieve its objectives and cannot entirely prevent major errors or losses, incidents or fraud or actions in breach of laws and regulations. The management Board has assessed the strate- gic, operational, nancial and reporting risks and compliance risks, as well as the design and effecti- veness of the internal risk management and control systems as described in the section on ‘Risk Ma- nagement’. During the year under review, the company has wor- ked on the further development and implementation an Internal Risk & Control Framework. The Manage- ment Board appointed an audit rm to establish the Internal Audit function. The Management Board is responsible for the esta- blishment and adequate functioning of a system of governance, risk management and internal controls in the company. This key responsibility has led to the development and implementation on an Internal Risk & Control Framework. This is expected to be im- plemented in 2022. Once implemented, the Manage- ment Board will report on internal risk management and control systems to the Supervisory Board and its Audit Committee. The Supervisory Board has reviewed and approved Ebusco’s 2021 nancial statements as prepared by the Management Board. The Audit Committee reviews and approves the au- dits planned for the nancial year. Furthermore, the Audit Committe monitors compliance with European and Dutch independence rules on permitted servi- ces provided. The external auditor attends all Audit Committee meetings. The external auditor’s ndings are discus- sed at these meetings. The Audit Committee reports to the Supervisory Board on the topics discussed, including the independent auditor’s report with re- gards to the audit of the nancial statements as well as the content of the annual report. Furthermore, the external auditor may attend the Supervisory Board meeting in which the annual external audit report is discussed. The external auditor may also attend Supervisory Board meetings in which the quarterly nancial results are discussed. The Audit Committee is informed without delay in case irregularities would be discovered in the con- tent of the audit of the nancial reports. The role of the Internal Audit function is to assess and test the Risk & Control framework and, next, to assess the systems of internal controls by perfor- ming independent procedures such as risk-based IT audits, operational audits and compliance audits. The Internal Audit function reports directly to the Au- dit Committee and Management Board. Based on the nancial results for the 2021 nanci- al year, the nancial position of the company and the prospects for the year 2022, and considering current market conditions, the Management Board has assessed the company’s assumptions of going concern. 47 47 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION The effectiveness and functioning of the internal risk management and control systems have been discussed with the Audit Committee and the Super- visory Board. Taking into account the aforementio- ned risks and the measures designed to manage them, and in accordance with the best practice provision 1.4.3. of the Dutch Corporate Governance Code, the Management Board declares that to the best of its knowledge: • the Management Board report provides sufcient insights in the effectiveness of the internal risk management and control systems and into any failings thereof; • the aforementioned systems provide reasonable assurance that the nancial reporting does not contain any material inaccuracies; • there is a reasonable expectation that Ebusco will be able to continue its operations and meet its lia- bilities for at least twelve months after the date of this report. Based on the current state of affairs, it is justied that the nancial reporting is prepared on a going concern basis; and • the section on risk management in the Manage- ment Board report states those material risks and uncertainties that are relevant to the expectation of the company’s continuity for the period of twel- ve months after the preparation of the Manage- ment Board report. With reference to Section 5:25c paragraph 2, sub c of the Financial Markets Supervision Act (Wet op het nancieel toezicht), the Management Board decla- res that to the best of its knowledge: • The nancial statements provide a fair view of the assets, liabilities, nancial position and prot or loss of Ebusco and of the companies included in the consolidation taken as a whole. • The Management Board report provides a fair view of the situation on 31 December 2021 and of the developments during 2021 of Ebusco and of its afliated companies whose information has been included in the consolidated nancial sta- tements; and that the Management Board report describes the material risks and uncertainties that Ebusco faces. Deurne, the Netherlands, 11 April 2022 Management Board P.H.A.M. Bijvelds, Chief Executive Ofcer P. van Beers, Chief Financial Ofcer B.H.M.J. Fleuren, Chief Operational Ofcer 47 48 48 GOVERNANCE CONTENT Corporate governance 49 Composition of the Supervisory Board 56 Report of the Supervisory Board 57 Remuneration report 61 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 49 49 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION CORPORATE GOVERNANCE Draft: 2 December 2021 INTRODUCTION Ebusco is a public limited liability company (naamloze vennootschap) under the laws of the Netherlands. The company is domiciled in the Netherlands and has its registered seat in Deurne, the Netherlands. Ebusco is listed on the Euronext Amsterdam, tic- ker EBUS:AS. It has a two-tier board structure, with a Management Board and a Supervisory Board. The com- pany’s highest authority is the General Meeting of Sha- reholders, which is convened at least once a year. As responsible corporate citizen, Ebusco acknowled - ges the importance of good corporate governance and open and transparent communications with all its sta - keholders. CAPITAL STRUCTURE The company’s authorised share capital amounts to €2,200,000, divided into 220,000,000 ordinary shares with a nominal value of €0.01. The issued capital of the company was €590,393.80 on 31 December 2021, con - sisting of 59,039,380 ordinary shares. Each ordinary share carries one vote. A shareholder may cast their vote in person, by proxy or electronical- ly at the General Meeting of Shareholders. Ebusco has not issued any shares to which special rights of control are attached and there are no restrictions on the voting rights attached to the shares in Ebusco. All ordinary shares have equal entitlement to the prots and general reserves attributable to the shareholders. Ebusco does not cooperate with the issuance of depo - sitory receipts for its shares, nor does the company ap- ply any restrictions on the transfer of its shares, with the exception of certain shares held by shareholders, Board members and other members of the Management Team which are subject to lock-up restrictions as imposed concurrent with the listing in October 2021. Barring these lock-up arrangements, the company is to the best of its knowledge not aware of any agreement between share - holders of the company which could result in a possible restriction on the transfer of shares or voting rights. All resolutions of the General Meeting of Shareholders are passed with an absolute majority of the votes cast, unless a larger majority is required by law or pursuant to the company’s Articles of Association. The articles of association of the company do not inclu - de specic provisions with respect to so called protec- tion measures in case of a take-over bid. The company has not entered into agreements pursu - ant to which a change of control would have an effect. All operational agreements have been concluded by a participation company, in most cases Ebusco B.V., and the IPO did not have any legal effect on any of the agreements as concluded by Ebusco B.V. or another operating company of the Ebusco Group. The shareholders of the company prior to IPO, each having an interest of 10% or more, entered into a coo - peration agreement. Pursuant to this agreement, each single shareholder having at least 10% of the outstan - ding shares is entitled to nominate a candidate for the Supervisory Board. The management service agreements between Ebusco Holding N.V. and each of the members of the board do not provide for a payment, either in cash or otherwise, in the event of the conclusion of an offer on all or part of the shares in the company or a subsidiary. ISSUANCE OR ACQUISITION OF SHARES A remuneration scheme is in place under which mem- bers of the Management Board and Management Team are entitled to receive rights to acquire shares in the capital of the company. The Supervisory Board has set the material terms which must be met in order for the respective members of the Management Board and Management Team to receive these rights. Considering that most material terms are subject to certain nan - cial goals, the granting of these rights is subject to the approval by the General Meeting of Shareholders of the annual accounts for the year under review . Currently the company does not have an Employee Stock Option Plan in place. The Members of the Board are entitled to shares pursuant to the Long Term Incen - tive (LTI) bonus scheme. The actual number of shares to be allocated to each of the individual members of the board will be determined in 2023 with respect to the performances as achieved in 2022. It has been decided that no shares or options on shares pursuant to the LTI will be allocated based upon the achievements in 2021. The company is entitled to acquire its own fully paid-up shares, or depository receipts for shares, with due ob - servance of the relevant legal and statutory provisions. Acquisition of own shares is only permitted if the Gene- ral Meeting of Shareholders has authorised the Manage- ment Board to do so. Such authorisation will be valid for a period not exceeding 18 months. The General Meeting 50 of Shareholders must determine in the resolution the number of shares or depository receipts for shares which the Management Board may acquire for valuable consi - deration, the manner in which they may be acquired and the limits within which the price must be set. In addition, the approval of the Supervisory Board is required for any such acquisition. The company may, without authorisa - tion by the General Meeting of Shareholders, acquire its own shares for the purpose of transferring such shares to employees of the company or of a group company un - der a scheme applicable to such employees. SHAREHOLDERS’ MEETINGS General Meetings of the Shareholders are convened by the Management Board or the Supervisory Board. A legal term of at least 42 calendar days applies between the convocation date and the actual date of the meeting. A meeting must be convened by posting the notice and relevant materials required for consideration and de - cisions by the shareholders on the company’s website. At least one General Meeting of Shareholders is to be held within six months following the close of the nan- cial year of the company. Other General Meetings of Shareholders will be held whenever and as often as the Management Board or the Supervisory Board deems necessary. General Meetings of Shareholders will also be held if the Management Board or Supervisory Board is requested to that effect in writing by one or more shareholders individually or jointly representing one tenth or more of the company’s issued capital, specifying in detail the subjects to be discussed, unless such request is unreasonable. If neither the Ma - nagement Board nor the Supervisory Board have taken the necessary steps to ensure that a General Meeting can be held within eight (8) weeks of receiving such request, the requesting shareholder(s) may seek authorization from a judge of the court to convene a General Meeting. Each shareholder, either in person or by written proxy, is entitled to attend, speak and vote at a General Meeting of Shareholders. Those shareholders who individually or jointly represent at least three percent (3%) of the com - pany’s issued share capital may request that items be added to the agenda of the General Meeting of Sharehol - ders. Such a request is granted if it is received in writing at least 60 days before the meeting, stating the reasons for said request. Each share carries one vote. The company cannot vote on shares that it holds in its own capital. The Management Board and Supervisory Board must en - sure that the General Meeting of Shareholders is adequa- tely provided with all information required for a sharehol- der to decide and vote on the subject matter presented. The draft minutes of the General Meeting of Sharehol - ders must be published on the company’s website within three months of the date of the meeting. Shareholders are invited to submit comments to the draft minutes within this three-month period. After this period the Chair and Secretary of the General Meeting of Shareholders will formally adopt and subsequently sign the minutes, ta - king into consideration any comments received. MANAGEMENT BOARD RESPONSIBILITIES AND REPORTING LINE The Management Board is the executive body entrusted with the management of the company and responsible for ensuring its continuity under the supervision of the Supervisory Board. The Management Board’s respon - sibilities include setting the company’s management agenda, developing a view on long-term value creati - on, enhancing the performance of the company, deve- loping a strategy, identifying, analysing and managing the risks associated with the company’s strategy and activities, and establishing and implementing internal procedures which safeguard that all relevant informa - tion is made known to the Management Board and the Supervisory Board in a timely manner. In fullling their responsibilities, the members of the Management Board must act in the interest of the com - pany and pay specic attention to the relevant interests of the company’s employees, shareholders, lenders, customers, suppliers and other stakeholders. The Management Board reports to the Supervisory Board and the General Meeting of Shareholders. COMPOSITION, DIVISION OF DUTIES AND REMUNERATION The number of members of the Management Board is determined by the Supervisory Board in consultation with the Management Board. At the time of the initial public offering, the number of members of the Manage - ment Board was set at three. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION The members of the Management Board are appointed by the General Meeting of Shareholders. The Supervisory Board will nominate one or more candidates for a vacant position for the approval of the General Meeting of Sha - reholders. In turn, the General Meeting of Shareholders may resolve to appoint someone other than the per - son(s) nominated by the Supervisory Board, provided an absolute majority of the votes cast representing at least one-third of the outstanding capital. If a proposal to ap - point a person not nominated by the Supervisory Board is supported by an absolute majority of the votes cast, but this majority does not represent at least one-third of the outstanding capital of the company, a new meeting can be convened in which the resolution can be adopted by an absolute majority of the votes cast, irrespective of the percentage of the company’s issued capital present or represented at that meeting. Any new member of the Management Board is appoin - ted for a maximum period of four years per term. Mem- bers of the Management Board may be reappointed for a term of no more than four years at a time, which reappointment should be arranged in a timely fashion. The company’s diversity policy, as drawn up by the Su - pervisory Board, will be considered in the event of an appointment or reappointment. The Articles of Association of the company stipula- te that a member of the Management Board may be suspended or dismissed by the General Meeting of Shareholders. A resolution of the General Meeting of Shareholders to suspend or remove a member of the Management Board other than pursuant to a proposal 51 by the Supervisory Board requires an absolute majority of the votes cast representing at least one-third of the company’s issued capital. If a resolution as referred to in the previous sentence is supported by an absolute ma - jority of the votes cast, but this majority does not repre- sent at least one-third of the company’s issued capital, a new meeting can be convened in which the resolution can be adopted by an absolute majority of the votes cast, irrespective of the percentage of the Company’s issued capital represented at the meeting. A member of the Management Board may be suspended by the Supervisory Board. A suspension by the Super - visory Board may be reversed by the General Meeting of Shareholders. As of 7 October 2021, the Management Board comprises of the following individuals: Name Position End of Term P.H.A.M. Bijvelds CEO 2025 AGM P. van Beers CFO 2023 AGM B.H.M.J. Fleuren COO 2024 AGM The Management Board is collectively responsible for all actions of each individual member of the Management Board. The division of duties within the Management Board as well as the Management Board’s operating procedures are set out in the company’s Articles of Association and the Management Board By-laws. The Articles of Association and the Management Board By- laws are published on the company’s website. The Remuneration Policy and based thereon, the remu- neration and terms and conditions of the members of the Management Board have been established by the General Meeting of Shareholders prior to the company being listed. Since the date of the initial public offering, the Supervisory Board has reviewed the remuneration and other terms and conditions for each member of the Managing Board. Any remuneration or amendment the - reto as established by the Supervisory Board will be in compliance with the company’s Remuneration Policy. Any amendment thereto will require a resolution of the General Meeting of Shareholders by an absolute majo - rity of the votes cast. At least every four (4) years, the Remuneration Policy will be submitted to the General Meeting of Shareholders for approval. SUPERVISORY BOARD RESPONSIBILITIES AND REPORTING LINE The Supervisory Board supervises the Management Board’s management of the company, the company’s general course of affairs and its afliated business. The Supervisory Board is accountable for these matters to the General Meeting of Shareholders. The Supervisory Board also provides advice to the Management Board. In perfor - ming their duties, the members of the Supervisory Board are required to focus on the effectiveness of the compa - ny’s internal risk management and control systems as well as the integrity and quality of the company’s nanci - al reporting. In the fullment of their duties, the members of the Supervisory Board must act in the interest of the company and pay specic attention to the relevant inte - rests of the company’s employees, shareholders, lenders, customers, suppliers and other stakeholders. The Supervisory Board monitors the internal control structure and procedures and the assessment of the risks faced by the company and its subsidiaries. In 2021 the company enhanced its internal control systems and procedures. It is envisaged that the internal control sys - tems and procedures will be fully implemented in the course of 2022. Further details are provided in “Riskma - nagement” on page 32. In accordance with the Supervisory Board By-laws, the Supervisory Board is responsible for decision-making in dealing with transactions (1) which constitute an exis - ting or potential conicts of interest between an indivi- dual member of the Management Board, or an individual member of the Supervisory Board on one hand, and the company on the other hand, or (2) which are between the company and a shareholder having at least one per - cent (1%) of the outstanding issued capital. Both type of transactions are qualied as related party transactions pursuant to the provisions of the Dutch Financial Super - vision Act (Wet op het nancieel toezicht) and EU-IFRS. Said regulations also state the requirement of market conformity of these transactions. Concurrent and im - mediately following the listing, certain payments (and repayments) were made, as disclosed in the prospec - tus for the initial public offering, related to repayments of outstanding loans to shareholders, the payment of a success fee and the payment of the purchase conside - ration for the Pondus acquisition. These transactions are explained in detail in explanatory notes 5, 7, 20 and 24 to the Financial Statements. At the end of the nan - cial year, the company decided to repay all outstanding credit facilities with the banks, including ING, which bank is also a shareholder of the company having an interest exceeding one percent (1%) of the outstanding issued capital, and subsequently, the repayment of the outstanding loans to ING qualied as a related party transaction. This transaction was properly discussed and subsequently approved by the Supervisory Board. Apart from these payments (and repayments), no other related party transactions occurred in the course of the 2021 nancial year. The Supervisory Board reports to the General Meeting of Shareholders. COMPOSITION, DIVISION OF DUTIES AND REMUNERATION In accordance with the Company’s Articles of Associati- on, the Supervisory Board consists of at least three na- tural persons who are appointed by the General Meeting of Shareholders. The actual number of members is es - tablished by the Supervisory Board. On 26 October 2021, being the date at which Ebusco became a public limited liability company, the Supervisory Board comprised ve members. The Supervisory Board is composed in such a way that its members can operate independently and be critical of each other, the Management Board and any interest group, even if a member of the Supervisory Board is no - minated by an individual shareholder who is authorised to nominate a member of the Supervisory Board without instruction or consultation. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 52 Two members of the Supervisory Board are qualied as independent within the meaning of best practice pro - vision 2.1.8. of the Dutch Corporate Governance Code. Three members of the Supervisory Board were nomina - ted by a respective shareholder authorised to nominate a candidate for appointment by the General Meeting of Shareholders. These three members are considered to not be independent within the meaning of the Dutch Corporate Governance Code. A pre-IPO shareholder holding at least ten percent (10%) of the outstanding is - sued capital has the right to nominate a candidate for the Supervisory Board. Any nomination should in itself qualify taking into consideration the composition of the Supervisory Board and its committees, the company’s diversity policy, the prole for a specic position within the Supervisory Board and any other criteria deemed re - levant by the Supervisory Board at any time. The members of the Supervisory Board are appointed by the General Meeting of Shareholders. The Super- visory Board nominates one or more candidates for each vacant position. Each nomination for appointment or proposal for reappointment of a member must be supported on sufcient grounds, and in the event of a reappointment the performance and operation of the member up for reappointment must also be taken into consideration. The Articles of Association and Super - visory Board By-laws stipulate that a member can be appointed for a term not exceeding four years and reap - pointed once for a similar term. After this period a mem- ber can be reappointed once more, albeit for a term not exceeding two years, as well as for one subsequent term not exceeding two years. A resolution of the General Meeting of Shareholders to appoint a Supervisory Board member other than in ac - cordance with a nomination by the Supervisory Board requires a majority of the votes cast representing at least one-third of the company’s issued capital. If a proposal to appoint a person not nominated by the Su - pervisory Board is supported by an absolute majority of the votes cast, but this majority does not represent at least one-third of the company’s issued capital, a new meeting can be convened in which the resolution can be adopted by an absolute majority of the votes cast, irrespective of the percentage of the company’s issued capital represented at the meeting. Supervisory Board members may be suspended or re - moved by the General Meeting of Shareholders at any time. A resolution of the General Meeting of Sharehol - ders to suspend or remove a Supervisory Board member other than pursuant to a proposal by the Supervisory Board requires an absolute majority of the votes cast representing at least one-third of the company’s issued capital. If a resolution as referred to in the previous sen - tence is supported by an absolute majority of the votes cast, but this majority does not represent at least one- third of the company’s issued capital, a new meeting can be convened in which the resolution can be adopted by an absolute majority of the votes cast, irrespective of the percentage of the company’s issued capital repre - sented. Any suspension may be extended one or more times but may not last longer than three months in the aggregate. If, at the end of that period, no decision has been taken on termination of the suspension or on re - moval, the suspension is lifted. The Supervisory Board members will retire their mem - bership in accordance with a rotation plan drawn up by the Supervisory Board. From 26 October 2021 the Supervisory Board comprised the following individuals: Name Position End of Term Derk Haank Chair 2025 AGM Jeroen Drost Vice-chair/Nomination Committee chair 2024 AGM Carin Gorter Member/Audit Committee chair 2024 AGM Ruud Spoor Member 2025 AGM Roelf de Boer Member/Remuneration Committee chair 2023 AGM The members of the Supervisory Board are remunera- ted in accordance with the Remuneration Policy. The Remuneration Policy is approved by the General Meet - ing of Shareholders. It can be amended by the General Meeting of Shareholders upon a proposal from the Su - pervisory Board. The Remuneration Policy is published on the company’s website. SUPERVISORY BOARD COMMITTEES The Supervisory Board has established three commit- tees, being • the Audit Committee; • the Nomination Committee; and • the Remuneration Committee. THE AUDIT COMMITTEE The function of the Audit Committee is to assist in the ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION decision-making of the Supervisory Board. According to its charter, the Audit Committee undertakes prepara - tory work for the Supervisory Board’s decision-making regarding the supervision of the integrity and quality of the company’s nancial reporting and the effectiveness of the Company’s internal risk management and control systems. The Audit Committee is specically responsible for: a monitoring the nancial reporting process and drafting proposals to safeguard the integrity of the process; b monitoring the effectiveness of the internal control system, the internal audit system (if applicable) and the risk management system in relation to the com - pany’s nancial reporting; c monitoring the statutory audit of the nancial state - ments; d reviewing and monitoring the independence of the external auditors or audit rm, in particular the provi - sion of additional services to the company; e adopting a procedure for the selection of the external auditor and the nomination for appointment of the external auditor with respect to the statutory audit of the nancial statements; and f performing preparatory work for the Supervisory Board’s decision-making regarding the supervision of the integrity and quality of the company’s nancial reporting and the effectiveness of the company’s in - ternal risk management and control systems. From 26 October 2021, the Audit Committee consists of Carin Gorter (chair) and Ruud Spoor (member). 53 THE NOMINATION COMMITTEE The purpose of this committee is to assist in the de ci- sion-making of the Supervisory Board. According to its charter, the Nomination Committee undertakes prepa - ratory work for the Supervisory Board’s decision-making regarding the selection and appointment of members of the Management Board and Supervisory Board. The Nomination Committee is specically responsible for: a drafting selection criteria and appointment procedu - res for members of the Management Board and Su- pervisory Board; b assessing at least once a year the size and compositi - on of the Management Board and Supervisory Board; c making proposals for the Supervisory Board prole; d assessing at least once a year the functioning of each individual member of the Management Board and Supervisory Board, and reporting their ndings to the Supervisory Board; e drafting a plan for the succession of members of the Management Board and Supervisory Board aimed at retaining a balance in the requisite expertise, experi - ence and diversity; f making proposals for the appointment (and reap - pointment) of members of the Management Board and Supervisory Board; g supervising the policy of the Management Board on the selection criteria and appointment procedures for senior management; and h performing preparatory work for the Supervisory Board’s decision-making regarding (i) the acceptan - ce by a member of the Management Board of mem- bership to the Supervisory Board or to the position of non-executive director of a listed company and (ii) with regard to any conict of interest that may arise from Supervisory Board members accepting ancillary positions. From 26 October 2021, the Nomination Committee con - sists of Jeroen Drost (chair) and Derk Haank (member). THE REMUNERATION COMMITTEE The purpose of this committee is to assist in the deci- sion-making of the Supervisory Board. According to the Remuneration Committee’s charter, the Remuneration Committee undertakes preparatory work for the Super - visory Board’s decision-making regarding the remune- ration policy. The Remuneration Committee is specically responsi - ble for: a submitting a clear and understandable proposal to the Supervisory Board for the remuneration policy to be pursued for the members of the Management Board; b making proposals concerning the remuneration of the individual members of the Management Board in accordance with the remuneration policy; c preparing the company’s remuneration report, and d making proposals to the Supervisory Board for the remuneration of the individual members of the Super - visory Board. From 26 October 2021, the Remuneration Committee con- sists of Roelf de Boer (chair) and Derk Haank (member). CORPORATE GOVERNANCE In the year under review the company was a private company with limited liability under Dutch law until 26 October 2021. In the course of preparing the company for its listing on the Euronext Amsterdam stock exchan - ge, all of the company’s procedures were revised and amended in order to comply with the Governance Code as best as possible within the framework of the existing modus operandi, as was the case within the company up to the listing. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION With respect to the 2021 nancial year, Ebusco is re- porting on compliance with the Governance Code as if it were fully applicable in 2021. Ebusco fully endorses the core principles of the Governance Code and is commit - ted to fully complying with the Governance Code’s best practices where possible within the organisation. Ho - wever, in consideration of the company’s own interests and the interests of its stakeholders, we deviate from a limited number of best practice provisions, as specied and explained below. Best Practice Provision Non-compliance Measures to address non-compliance 1.6.3: assignment of external auditor by Supervisory Board The external auditor was appointed by the share- holders prior to the establishment of the Supervi- sory Board on 26 October 2021. With respect to the audit of the 2024 scal year, the Company will act in accordance with best practice provision 1.6.3 2.1.6: composition of Supervisory Board in compliance with the “Act on a more balanced ratio of men and women on management and supervi - sory boards” (Wet even- wichtige verhouding man/ vrouw in bestuur en raad van commissarissen) The present composition of the Supervisory Board is not in compliance with the Act on a more balanced ratio of men and women on management and supervisory board, effective from 1 January 2022. Whilst composing the Supervisory Board, the need to attract members with a strong professional background and t was deemed of paramount importance above achieving a balanced ratio of men to women The nomination committee shall take the Act on balanced ratio men/women in the Supervisory Board in consideration in order to comply with the growth criterium of said Act in the medium-term future. 54 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 2.1.7 ii: majority of Supervisory Board is independent T he composition of the Supervisory Board is not in compliance with best practice provision 2.1.7 (ii) that requires that more than half of the Supervisory Board members is independent as dened in the Governance Code. Under the existing Relationship Agreement, each of the current shareholders holding ten percent (10%) or more in the total outstanding issued capital has the right to nominate a candi - date for the Supervisory Board. Three shareholders qualify, each of whom has made use of the right to nominate, meaning that three of the ve members of the Supervisory Board are not independent within the context of the Governance Code. The nomination right of a shareholder having at least 10% of the outstanding capital will cease once the shareholder’s interest falls below that threshold. This is, however, outside the company’s control. the installation of the audit committee. The appoint- ment of the auditor was done without a tender and selection process as is appropriate for listed compa - nies. However, the company will arrange for a tender and subsequent selection of an auditor for the nan - cial year 2024, which will be put to vote at the General Meeting of Shareholders in 2023. The external auditor may be questioned by shareholders and people repre - senting a shareholder at the General Meeting of Share- holders on matters regarding its independent auditor’s report. The external auditor is therefore obliged to at - tend, and allowed to address, the General Meeting of Shareholders. CORPORATE GOVERNANCE STATEMENT The Governance Code requires companies to publish a statement concerning their approach to corporate governance and compliance with the Dutch Corpora - te Governance Code. This is referred to in Article 2a of the Decree on additional requirements for board reports (‘Besluit inhoud bestuursverslag’), as last amended on 29 August 2017. The information requi - red to be included in this Corporate Governance Sta- tement as described in articles 3, 3a and 3b of the Decree can be found in this annual report under the Corporate Governance and Shareholder Information chapters. Deurne, the Netherlands, 11 April 2022 P.H.A.M. Bijvelds, Chief Executive Ofcer P. van Beers, Chief Financial Ofcer B.H.M.J. Fleuren, Chief Operating Ofcer DIVERSITY POLICY Ebusco has a Diversity Policy in place, the purpose of which is to ensure that the composition of the Super - visory Board and Management Board is diverse within the meaning of the policy. The purpose of the Diversity Policy is to achieve that the composition of the Super - visory Board, Management Board and the employees of the company as a whole is as diverse as possible, taking into consideration a variety of non-discrimina - tory factors. The Diversity Policy is aimed not only at achieving a balance in terms of gender but also in a more general sense in terms of skills, experience, background, nati - onality, age, ethnicity, sexual orientation, religious be- liefs, physical ability and other characteristics. With respect to the Supervisory Board, the Act on a more balanced ratio of men and women on manage- ment and supervisory boards” (Wet evenwichtige verhouding man/vrouw in het bestuur en de raad van commissarissen), stipulates that any vacancy should be lled by a member of the sex not already equally re - presented. In case of Ebusco that means that the rst two new members of the Supervisory Board have to be woman. With respect to the Management Board it is noted that the present composition is not yet balanced in terms of men/women. Ebusco strives to improve the gender balance in the Management Board. The Nomination Committee shall take this into consideration when pro - posing a candidate member of the Management Board. The composition of all managers in Ebusco is reaso - nably divers. EXTERNAL AUDITOR For the 2021 and 2022 nancial years, Ernst & Young Accountants LLP was appointed as the company’s ex - ternal auditor by the General Meeting of Shareholders prior to the listing of the company and consequently 54 55 55 CASE 55 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION The new hall for the production of the Ebusco 3.0 in Deurne was ofcially opened by His Majesty King Willem-Alexander of the Nether- lands on 28 October 2021. The hall is expected to have a production capacity of 500 emission-free buses per year by the end of 2022. Furthermore over time the hall will serve as a blueprint for the roll- out of international production of the Ebusco 3.0 buses. Amid great interest from Ebusco employees, guests and the press, His Majesty the King ofcially opened the new factory hall by putting the Ebusco 3.0 bus on the charger. OFFICIAL OPENING new production hall Deurne HIS MAYESTY KING WILLEM ALEXANDER 56 56 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION COMPOSITION OF THE SUPERVISORY BOARD DERK HAANK Chair, member of the Nomination Committee, member of the Remuneration Committee Derk Haank was CEO of Springer Nature, a world- wide publishing rm of scientic journals. Prior to that he was CEO of academic publishing com - pany Elsevier and a board member of Reed El- sevier (both predecessors of publicly listed RELX Group) and CEO of publishing company Misset. He currently is the chair of the supervisory board of navigation technology developer TomTom and a non-executive board member at photo product supplier Albelli. Derk Haank holds a bachelor’s degree in Eco- nomics and a master’s degree in Business Administration, both from the University of Am- sterdam in the Netherlands. JEROEN DROST Vice-chair, chair of the Nomination Committee Jeroen Drost is the CEO of Dutch trading com- pany SHV Holdings, in which role he also sits on several boards of SHV-related companies. He started his career at ABN AMRO where he held various positions in the Netherlands and inter - nationally. Subsequently he was CEO of Dutch commercial bank NIBC and CEO of investment rm NPM Capital. He currently is a member of the general management of VNO-NCW, the lar - gest employers’ organisation in the Netherlands. Jeroen Drost holds a bachelor’s degree in Economics and a master’s degree in Business Economics, both from the Erasmus University in Rotterdam in the Netherlands. CARIN GORTER Member, chair of the Audit Committee Carin Gorter started her career at a predecessor of accountancy rm EY Nederland. Subsequently she held various management positions at Rabo - bank and ABN AMRO. She currently holds various supervisory board positions including, technology rm TKH Group, gym chain Basic-Fit (both Dutch listed companies), legal and nancial services provider DAS Holding and Dutch insurance com - pany TVM Verzekeringen. Furthermore, she is ex- ternal Audit Committee member of the Ministry of Justice and Security and Supervisory Board member of Nederlandse Transplantatie Stichting. Carin Gorter holds a master’s degree in Business Economics and a postgraduate degree in Ac - countancy, both from the University of Groningen in the Netherlands. RUUD SPOOR Member, member of the Audit Committee Ruud Spoor is CEO of Trackwise Investment Ma- nagement, a Dutch investment management and consultancy rm. His 40 years of experi- ence in banking and nance include ten years in private equity. He started his career at ABN AMRO and subsequently held positions at va- rious investment and consultancy rms. Ruud Spoor holds a degree in Commercial Eco- nomics from the Rotterdam University of Ap- plied Sciences in the Netherlands. ROELF DE BOER Member, chair of the Remuneration Committee Roelf de Boer started his career as an ofcer in the Royal Netherlands Marine Reserve Corps, and subsequently held various positions in the port and transport industry, amongst others at Royal Nedlloyd Group. Furthermore, he held va - rious public and semi-public positions including as minister of Transport, Public Works and Water Management of the Netherlands and president of the Rotterdam Chamber of Commerce. Roelf de Boer is currently chair of the Supervisory Board of logistics services provider Verbrugge International. 57 GENERAL The listing on the Euronext Amsterdam stock exchange on 22 October 2021 marked the beginning of an important new era for Ebusco. The listing resulted in Ebusco having signicant funds to accelerate its long-term growth strategy. the various company policies and the overall interests of the entire Ebusco group, the enterprises associated with it and its various stakeholders. COMPOSITION, INDEPENDENCE AND EDUCATION The Supervisory Board consists of knowledgeable in- dividuals with outstanding reputations and experience in supervisory roles who actively support the Manage - ment Board, providing it with guidance and advice. The Supervisory Board prole is aligned with the prole and strategy of Ebusco, with a balanced distribution of specic expertise in relation to its business activities, strategy and long-term goals. Ebusco aims to have a balanced Supervisory Board. Ebusco realises that it currently does not meet the ge - nder diversity targets for the Supervisory Board. Diver- sity, including in terms of gender, is an important con- sideration in the selection process for the appointment and reappointment of members of the Supervisory ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION SUPERVISORY BOARD COMPOSITION Name Nationality Financial expertise Number of supervisory board positions held Derk Haank (male, 1953) Dutch 2 Jeroen Drost (male, 1961) Dutch yes 3 Carin Gorter (female, 1963) Dutch yes 5 Ruud Spoor (male, 1958) Dutch yes 1 Roelf de Boer (male, 1949) Dutch 1 Name First appointment Term expiration Ebusco Supervisory Board Committee Independent Derk Haank 26 October 2021 AGM 2025 Nom ination Committee, Remuneration Committee Yes Jeroen Drost 26 October 2021 AGM 2024 Nomination Committee (chair) Carin Gorter 26 October 2021 AGM 2024 Audit Committee (chair) Yes Ruud Spoor 26 October 2021 AGM 2025 Audit Committee Roelf de Boer 26 October 2021 AGM 2023, no reappointment Remuneration Committee (chair) * Number of current supervisory board positions at listed and large entities, including Ebusco. REPORT OF THE SUPERVISORY BOARD In 2021 the efforts and dedication of the manage- ment and all Ebusco employees culminated not only in the successful listing but also in a strong and sus - tainable operational performance in line with expec- tations. To crown it all off, the new production hall for the lightweight composite zero-emission Ebusco 3.0 in Deurne was ofcially opened by His Majesty King Willem-Alexander of the Netherlands. This report provides an overview of the approach and activities undertaken by the Supervisory Board in the year under review. In addition to supervising the general course of affairs, an important part of the Supervisory Board’s activities was focused on ensuring Ebusco’s successful listing and an appropriate governance structure. In carrying out its duties, the Supervisory Board is guided by the Dutch Civil Code, the Dutch Cor - porate Governance Code, the company’s Articles of As- sociation, the Management Board By-laws, insofar spe- cic tasks and duties are designated to the Supervisory Board, the Supervisory Board By-laws, the charters of the respective committees of the Supervisory Board, Board. The objective is that at least one third (1/3) of the total number of members of the Supervisory Board is female. At present this is one fth (1/5th), and sub - sequently, if and when a vacancy arises in the coming years, the Supervisory Board will take into account the Supervisory Board prole and the Governance Code in order to ensure the Supervisory Board is brought further in line with the diversity requirements of the Governance Code as well as the gender diversity requirements for company boards, as applicable from 1 January 2022. The members of the Supervisory Board attended induc - tion sessions aimed at informing them about Ebusco’s strategy, nancial reporting, risk and audit, HR, marke - ting, legal and governance-related affairs. All members of the Supervisory Board visited the operational sites in Deurne to gain a deeper knowledge and understanding of the company’s operations, opportunities and challenges. 58 Supervisory Board members Carin Gorter and Derk Haank are considered independent members of the Supervisory Board, as dened in best practice provi- sion 2.1.8 of the Dutch Corporate Governance Code. Pursuant to the existing Relationship Agreement en- tered into on the date of listing of Ebusco, all share- holders having ten percent (10%) or more of the total outstanding shares in the company have the right to nominate a candidate for the Supervisory Board. Consequently, three (3) shareholders nominated a member of the Supervisory Board, thus the majority of the Supervisory Board is not qualied as indepen- dent as dened in best practise provision 2.1.8 of the Dutch Governance Code. Hence Ebusco does not comply with best practice provision 2.1.7 ii. The Supervisory Board strongly believes the overri- ding principle for its composition is that its members make a valuable contribution in terms of experien- ce and knowledge. In the opinion of the Supervisory Board, its size and composition meet the speci- cations laid down in the Supervisory Board prole, notwithstanding the above factors. The Supervisory Board prole forms an integral part of the Supervisory Board by-laws. None of the Supervisory Board members were gran- ted, nor do they own, any Ebusco shares or options on shares since their respective dates of appoint- ment up to and including 31 December 2021. SUPERVISORY BOARD MEETINGS IN 2021 Prior to the listing of Ebusco, the proposed Supervisory Board members met once in an informal setting. Once appointed, the Supervisory Board held one meeting physically and one meeting via video conferencing in 2021. All Supervisory Board members were present at both meetings. The entire Management Board was pre - sent during this meeting. In addition, the chairman of the Supervisory Board was in regular and informal con - tact with the CEO and the chairman of the Audit Com- mittee stayed in regular informal contact with the CFO. All face-to-face meetings took place at the compa- ny’s head ofce in Deurne, the Netherlands. No Supervisory Board member was absent from any of the meetings. All members were able to devote sufcient time to the affairs of Ebusco, also outsi- de of meetings. Recurring topics at the Supervisory Board meetings included: • CEO and CFO updates • Market and business updates • Risk reports • Legal updates, including compliance and gover- nance-related matters Topics that were discussed in more detail during these meetings: • Expansion strategy • Outlook • Risk and control framework • Related Party Transactions • ESG related topics ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION The meetings addressed routine commercial, nan- cial and operational matters, and focused on the im- plementation of the strategy. The Supervisory Board paid particular attention to the Related Party Trans- actions. The Supervisory Board approved all policies of the company which became applicable concur- rent with the listing, including regulations governing the Management Board and Supervisory Board. In view of the fact that Ebusco has only been listed since October 2021 and that both the Management Board and the Supervisory Board were only then in- stalled, there was no need for the Supervisory Board to review its own composition and performance and that of its three committees. The Supervisory Board will perform a self-assessment in 2022 and report on it in the 2022 report of the Supervisory Board. The same goes for the evaluation of the performance of the Management Board. ACTIVITIES OF THE SUPERVISORY BOARD COMMITTEES There are three committees that support the Super- visory Board: the Audit Committee, the Nomination Committee and the Remuneration Committee. Each committee addresses relevant topics and the chairman of the committee reports to the Supervisory Board on the discussions held within the committee and its main recommendations to the Supervisory Board as a whole. AUDIT COMMITTEE The Audit Committee consists of two members, Carin Gorter (chair) and Ruud Spoor. The Audit Committee h as the appropriate level of knowledge and experien- ce in terms of nancial administration and accoun- ting for listed companies. The committee’s main role is to assist the Supervisory Board in monitoring the systems of internal control, the quality and integrity of the nancial reporting process, and the content of the nancial statements and reports; as well as in assessing and mitigating the company’s business and nancial risks. The charter of the Audit Committee is available on the company’s corporate website. The Audit Committee met once in 2021 since its installation in October 2021. The meeting was at- tended by both members of the Committee and two members of the Management Board, namely the CEO and CFO. The meeting was attended by the exter- nal auditor. In addition to the ofcial meeting, both members of the Audit Committee had regular con- tact with the CFO and the Finance Director, mainly in order to prepare for the Audit Committee meeting. The items and topics on the agenda of the Audit Committee included: • Interim results • Revenue recognition Ebusco 3.0 (position paper) • Accounting of Pondus acquisition • Accounting policies • 2021 external audit plan of the external auditor, including engagement conditions and audit policy for non-audit services and auditor independence • Cash and treasury management 59 • IT and cybersecurity • Tax-related issues • Budget for 2022 • Risk and control framework • Compliance framework • Appointment Internal Auditor • Appointment External Auditor The Supervisory Board oversees management’s monitoring of compliance using the company’s risk management policies and procedures and reviews the adequacy of the risk management framework in terms of risks faced by the company. The further strengthening and development of the internal risk framework is a key point on the agenda of the Audit Committee. As part of these discussions, the audit committee obtained a clear picture of steps that have been taken to strengthen the IT security. The Audit Committee has been informed by the Manage- ment Board about the internal control framework and has been actively involved in the creation of the outsourced internal audit function. The audit committee is aware that following the Ini- tial Public Offering an auditor selection procedure should be started as soon as possible, as required by the mandatory auditor rotation legislation. In view of the rapid growth that Ebusco has experienced to date and the time and efforts management and the audit committee are expected to devote to the auditor ro- tation to safeguard a thorough tender process and an effective and efcient auditor transition while not disrupting the rapid growth that is anticipated in the foreseeable future, the audit committee considers it appropriate to commence an auditor selection pro- cess at the end of 2022 which will be nalised before the Annual General Meeting of Shareholders in 2023. In that meeting the proposed and recommended ex- ternal auditor will be presented for appointment by the Annual General Meeting of Shareholders for the nancial year starting 1 January 2024. NOMINATION COMMITTEE The Nomination Committee consists of two mem- bers: Jeroen Drost (chairman), and Derk Haank. The main responsibility of the committee is to assist the Supervisory Board and Management Board with the selection and appointment (and reappointment) procedures for members of the Supervisory Board and the Management Board. The charter of the Nomination Committee is availa- ble on the company’s corporate website. The Supervisory Board reviewed its relationship with the Management Board and it concluded that the re- lationship allows for open, in-depth discussions. The Supervisory Board emphasized the importance of obtaining the required information in a timely man- ner and the Management Board acknowledged this. Finally, the Nomination Committee observed that there is at present no vacancy. In the event of a va- cancy in the Supervisory Board, it will, based upon the Diversity Policy as well as recent legalisation concerning the composition of Management Boards ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION and Supervisory Boards, do its utmost to arrange that a woman is appointed as member of the Super- visory Board. REMUNERATION COMMITTEE The Remuneration Committee consists of two mem- bers: Roelf de Boer (chairman) and Derk Haank. The main responsibility of the committee is to assist the Supervisory Board and Management Board in the es- tablishment of an appropriate remuneration scheme for members of the Supervisory Board, members of the Management Board and, if so desired by the Management Board, members of the Management Team or other key gures within the organisation. Following its installation, the Remuneration Com- mittee met once in an informal setting and held one formal meeting in 2021. Both members were pre- sent at both meetings. The main topics of discussion were: • Assessment of the remuneration policy in place • Performance and individual remuneration of the Management Board members • Performance targets for 2022 • Share retention assignments for the Management Board members and key managers • Performance of senior management and succes- sion planning The charter of the Remuneration Committee is available on the company’s corporate website. OVERVIEW OF ATTENDANCE OF MEETINGS IN 2021 Derk Haank Jeroen Drost Carin Gorter Ruud Spoor Roelf de Boer SB meeting 100% 100% 100% 100% 100% Audit Committee 100% 100% Remuneration Committee 100% 100% Nomination Committee n/a n/a * The Nomination Committee did not convene in 2021. 2021 FINANCIAL STATEMENTS The Audit Committee reviewed and discussed the Management Board report and nancial statements for the 2021 nancial year. The nancial statements for 2021 were audited and provided with an unqua- lied independent auditor’s report by Ernst & Young Accountants LLP (see the independent auditor’s re- port in other information pursuant to 2:392 Dutch Civil Code) and were extensively discussed by the Audit Committee in the presence of the Management Board and the independent auditor in March 2022. Following this discussion, the entire Supervisory Board discussed the nancial statements with the Management Board in the presence of the auditors. The Supervisory Board is of the opinion that the 2021 nancial statements meet all requirements for cor- rectness and transparency. The 2021 nancial sta- tements are endorsed by all Management Board and Supervisory Board members and are included in this Annual Report. The Supervisory Board recommends that the General Meeting of Shareholders, to be held on 25 May 2022, adopt the 2021 nancial state- ments. In addition, it recommends that the members of the Management Board and Supervisory Board be discharged from liability for their respective ma- nagement and supervisory activities performed in 2021. GRATITUDE The past year was an exceptional year, with the lis- ting on Euronext Amsterdam being a major milesto- ne. Moreover, the ofcial opening of the production plant in Deurne for the Ebusco 3.0 buses by His Majesty King Willem-Alexander, and the progress Ebusco made in strengthening its leading position throughout Europe as a manufacturer of zero-emis- sion buses for public transport were important de- velopments. The Supervisory Board wishes to thank Ebusco’s shareholders for their trust in the company in the past year. More importantly, the Supervisory Board would also like to thank all Ebusco employees, under the inspiring leadership of the Management Board, for their great efforts and dedication to ma- king this past year such a resounding success. Deurne, the Netherlands, 11 April 2022 Derk Haank on behalf of the Supervisory Board ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 60 61 REMUNERATION REPORT This report was prepared by the Management Board and the Remuneration Com- mittee of the Supervisory Board. The Remuneration Committee makes recommen- dations to the Supervisory Board regarding the remuneration policy, as adopted by the General Meeting, for the Management Board and how to apply this policy to the remuneration of the individual Management Board members. This remuneration report combines the require- ments which the Remuneration Committee must adhere to when preparing a remuneration report in line with the Dutch Corporate Governance Code with the requirements which the Management Board must comply with in the preparation of a remune- ration report in line with Book 2 of the Dutch Civil Code. This remuneration report is published on the company’s corporate website as part of the annual report and will be submitted to the Annual General Meeting of Shareholders (AGM) on 25 May 2022 for an advisory vote. There have been no previous votes by the AGM on the company’s remuneration policy or previous remuneration reports that can be taken into account. This remuneration report is based on the current remuneration policy that was approved by the General Meeting of Shareholders on 17 Oc- tober 2021, prior to the company’s public listing on Euronext, and became effective immediately there- after. Any subsequent amendments are subject to the approval of the General Meeting of Shareholders. Consistent with the best practice principles of the Code, the rst part of this remuneration report des - cribes the remuneration policy for the members of the Management Board, while the second part sets out how the remuneration policy was implemented in 2021. The report concludes with the details of the re - muneration policy of the Supervisory Board and how this remuneration policy was implemented in 2021. REMUNERATION POLICY The remuneration policy aims to attract, retain and reward highly qualied executives with the required background, skills and experience needed for a com - pany the size and complexity of Ebusco. The policy is transparent and aligns the interests of the company’s shareholders and other stakeholders. Pursuant to the remuneration policy, the remuneration packages of the members of the Management Board consist of xed and variable components. The variable remu - neration is linked to predetermined, assessable and inuenceable targets, which are predominantly of a long term nature. The remuneration policy is in keeping with the entrepreneurial culture of Ebusco and aims to achieve a good balance between xed and variable income, whereby the base compensation is relatively low and the variable compensation, provided that tar - gets have been achieved, relatively high. The rationale behind this balance is that the company is primarily fo - cused on achieving growth at this time, which should be compensated fairly. In this context, the members of the Board are incentivised and motivated to focus on and achieve the projected growth of the company. The remuneration of the Management Board con- sists of ve elements: • Fixed compensation - annual base salary • Short-term incentive - annual cash bonus plan • Long-term incentive – annual performance share plan • Pension allowance and other benets • Severance payments PEER GROUP In 2021, in anticipation of the listing, the company commissioned an expert audit rm, not being the auditor of the company, to provide an advice on the remuneration of the Management Board and Super - visory Board within the framework of the proposed remuneration policy. Based on this external advice Ebusco decided to set a base salary level around the median gure of the base salaries of the companies comprising the AScX Index whilst the annual cash bo - nus (STI) and performance share bonus (LTI) would be based upon the upper 25 percentile of the AScX Index companies. These compensation levels were conside - red to be consistent with the characteristics of Ebusco as well as in line with Ebusco’s growth perspective. FIXED REMUNERATION The annual base salary of the members of the Management Board is a xed compensation set by the Supervisory Board that takes into consideration a variety of factors. Based on the peer group bench - mark, the xed compensation of the members of the Management Board was adjusted on 17 October 2021. As a result, the annual base salary was set at €387,000 for the CEO and at €275,000 for both the CFO and COO, in line with the remuneration policy. VARIABLE REMUNERATION SHORT-TERM INCENTIVE (STI) The STI is an annual cash bonus. The objective is to incentivize strong nancial and personal performan - ce, in line with Ebusco’s strategy and annually dened targets. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 62 The bonus for the members of the Management Board may vary from 0% to 50% of the annual xed base salary, with 30% being applicable when targets are achieved, for both nancial and non-nancial personal targets. The payout at threshold level is 15%, and 50% in the event of outperformance, to be determined for each separate target. These bonus percentages are at the high end of the upper 25 per- centile of the AScX companies. The underlying ratio- nale is to reward the growth of Ebusco. Targets are set annually by the Supervisory Board ba- sed on the budget and with a view to the company’s strategic ambitions. Financial targets are linked to the Ebusco 3.0 international roll-out plan and compri - se 70% of the bonus, while non-nancial or individual targets determine the remaining 30%. These individual targets are related to the denition and implementation of new strategic projects or products within the compa - ny, with a focus on sustainable long-term growth. A performance zone is set for each of the nancial targets, with no bonus below the threshold level and the maximum bonus when the performance exceeds the upper end of the performance zone, in accordan- ce with the following parameters: Ebusco STI plan Financial target Realisation Payout % of base salary Threshold 60% of roll-out plan target 15% At Target 70% of roll-out plan target 30% Outperformance 100% of roll-out plan target 50% appropriate, the Remuneration Committee may apply at its discretion a performance incentive zone between 0% and 150% of the at-target value of the award depen - ding on the long-term and sustainable performance achieved during the performance period. Furthermore, the Remuneration Committee has the discretion to in - troduce a non-nancial target as an underpin to ensure sustained long-term performance (e.g. relating to ESG). Where required to ensure an appropriate reection of performance, the Supervisory Board may at its discre - tion amend the level of vesting of performance share units, with the understanding that the award may not be increased in excess of the performance incentive zone. Any such discretionary amendment which would result in an increase in payout of more than 25% is subject to prior approval by the General Meeting of Shareholders. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION The Supervisory Board may change the exact per- centages and targets from time to time. It was decided that no STI would be granted over 2021 in view of the fact that the period during which the company was listed was effectively two months. LONG-TERM INCENTIVE (LTI) The purpose of the long-term incentive plan is to align the interests of the company, shareholders and the Management Board for the medium and long term, to foster and reward sustainable performance and to provide an incentive for long-term commitment, thus promoting Management Board retention. Under the company’s long-term incentive plan members of the Management Board may be awarded conditional performance share units from the 2022 nancial year onwards. For all members of the Management Board the at-target value of the award may amount to 100% of their annual xed base salary in the respective year. Awards of performance share units will vest at the end of a three-year performance period subject to (i) the achievement of predetermined revenue growth targets consistent with the creation of long-term company value; and (ii) the continued service as a Management Board member with the company. When considered Ebusco LTI Plan Financial measures: Ebusco 3.0 international roll-out plan, 3-year performance period Vesting percentage Threshold <60% achievement of roll-out plan 0% At target 70% achievement of roll-out plan 100% Outperformance 100% achievement of roll-out plan 150% LTI vesting based on a linear payout between 0%-150% according to the above performance incentive zone stipulate a notice period of six months and include a severance payment of six months of xed base salary in the event of involuntary termination. No severance payment will be made in the event of se- rious imputable or negligent behaviour. This is com- pliant with the best practice provision of the Dutch Corporate Governance Code on severance pay. CLAW-BACK AND ULTIMUM REMEDIUM PROVISION Variable remuneration may be adjusted or recovered from a member of the Management Board, in accor- dance with the relevant provisions in the Dutch Civil Code, as amended from time to time. PENSION ALLOWANCE AND OTHER BENEFITS The members of the board have been granted a pen- sion allowance of an amount which is equal to ap- proximately 16% of their base salary, excluding any allowances and bonus payments. Other benets include a holiday allowance of 8% of the base salary and 25 days of paid vacation per calendar year. Furthermore, the members of the Management Board receive a car allowance or company car in ac - cordance with the company’s car policy. Apart from these benets, no other benets are granted. SEVERANCE PAYMENT The service agreements with the Management Board 63 MANAGEMENT BOARD REMUNERATION IN 2021 The total remuneration of each individual member of the Management Board in 2021 is as follows: in EUR Fixed Base Salary Holiday Allowance Pension Allowance Car Extraordinary Compensation STI LTI Repaid Remuneration Fixed Compensation as % of Total Variable Compensation As % of Total CEO 267,914 0 12,024 6,663 0 0 0 0 100.00% 0% CFO 295,880 0 8,588 11,028 5,000,000 0 0 0 100.00% 0% COO 182,516 0 18,069 11,961 0 0 0 0 100.00% 0% FIXED COMPENSATION Prior to Ebusco’s listing, the service agreements in place at the time with each of the respective Management Board members were terminated and new service agreements were concluded and came into effect. Therefore all three members of the Ma - nagement Board are included in the payroll admi- nistration of the company as from 17 October 2021. The xed base salary for 2021 consists of both pay - ments under the terminated service agreements and payments under the new service agreements. When drawing up the remuneration policy and de- termining the remuneration of the members of the Management Board, the Supervisory Board conside- red possible outcomes of the variable remuneration elements and how they may affect the remuneration of the members of the Management Board. These scenario analyses were considered when dening the structure of the policy. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION The Remuneration Committee also reviewed whether the remuneration policy is still suitable for the level and size of the company, and more specically, if the remuneration level is in line with the market. In 2021, the Remuneration Committee concluded that the remuneration of the members of the Manage- ment Board was in line with market practices and within the boundaries of the remuneration policy. The Supervisory Board does not expect any signi- cant modications to the remuneration policy during the rst three years after the company’s listing. In determining the remuneration of the Management Board, the Supervisory Board also considers the im - pact of the overall remuneration of the Management Board on the pay differential within Ebusco. In line with the Code Ebusco considered the internal pay ratios within the organisation when formulating the remune - ration policy and also when determining the remunera- tion of individual members of the Management Board. The Supervisory Board has the authority to make dis- cretionary adjustments to the outcome of variable remuneration, if the outcome is deemed to be unfair. In that case, the Supervisory Board can deviate from the policies set out above, when the members of the Supervisory Board consider this necessary or desira- ble in specic individual cases. VARIABLE REMUNERATION Considering that the company was effectively listed for two months in 2021, it was decided that no STI and LTI would be granted over 2021. REPAID REMUNERATION The Supervisory Board had no reasons to believe that any compensation paid over the year 2021 should be repaid in whole or in part based upon the grounds as stipulated in article 2:383 Dutch Civil Code. EXTRAORDINARY COMPENSATION CFO Paul van Beers negotiated that PBE Support B.V., a company wholly owned by him and through which he performed his services to Ebusco, would receive a success fee upon completion of, inter alia, an IPO. The shareholders of Ebusco and Paul van Beers agreed that as settlement of this success fee agreement, PBE Support B.V. would receive an one-time total amount of €5.0 million out of the proceeds of the IPO with the requirement to reinvest the cash consideration (net of income tax) into shares of Ebusco. This has been dis - closed in the prospectus at listing and is reiterated in this report for transparency purposes. PAY RATIO With a view to transparency and clarity Ebusco calculated the internal pay ratios based on the re- muneration included in the consolidated nancial statements. Ebusco’s CEO pay ratio is calculated as the total CEO remuneration divided by the average remuneration of all employees. For the purposes of this calculation, all remuneration elements are in- cluded in the total remuneration for the CEO based 64 on the information provided in note 7.1 - Remunera- tion of members of the Management Board. Average employee remuneration is based on total employee benet expenses excluding temporary employees and excluding benet expenses of the Management Board and Supervisory Board as disclosed in note 7 - Employee benets expense, and the total average number of employees in FTEs as also disclosed in note 7, Employee benets expense. Consequently, Ebusco’s calculated CEO pay ratio in 2021 was 4.7 (2020: 4.6). These internal pay ratios are closely monitored by the Remuneration Commit- tee. Apart from the absence of STIs and LTIs in 2021, an important observation is that the company has a relatively young workforce, resulting in a relatively low median employee remuneration level. HISTORICAL PERSPECTIVE The following table summarises the remuneration of the members of the Management Board and accom- panying pay ratios in previous years. Information prior to 2018 is not available as the company’s books were not audited at that time. REMUNERATION OF THE MANAGEMENT BOARD IN 2022 It is expected that the base salary remuneration of the members of the Management Board will not be incre - ased for the 2022 nancial year. With regard to the va- riable remuneration components, targets will be set for the STI as well as the LTI which may be granted in 2022. SUPERVISORY BOARD REMUNERATION 2021 The remuneration of the members of the Supervisory Board consists of xed annual fees for their role as Supervisory Board members. In addition, the chairman and members of the Nomination Committee, Audit Committee and Remuneration Committee receive a xed annual fee for these roles. Ebusco does not grant variable remuneration, shares or options to members of the Supervisory Board. As per 31 December 2021, the members of the Supervisory Board have no loans outstanding with Ebusco, and no guarantees or ad - vance payments have been granted to members of the Supervisory Board. Ebusco pays company-related travel and accommodation expenses related to meet - ings. The remuneration policy of the members of the Supervisory Board is considered to be market conform. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION ANNUAL FEES PER FUNCTION IN THE SUPERVISORY BOARD (IN EUR) Function Remuneration Chairman 50,000 Member 40,000 ANNUAL FEES PER FUNCTION IN SUPERVISORY BOARD COMMITTEES (IN EUR) Function Remuneration Audit Committee - Chairman 10,000 Audit Committee - Member 7,000 Nomination Committee - Chairman 7,000 Nomination Committee - Member 4,000 Remuneration Committee - Chairman 7,000 Remuneration Committee - Member 4,000 FEES OF SUPERVISORY BOARD MEMBERS IN 2021 (IN EUR) Function Remuneration Derk Haank 14,500 Carin Gorter 12,500 Jeroen Drost 11,750 Roelf de Boer 11,750 Ruud Spoor 11,750 * No comparable gures in absence of a Supervisory Board prior to listing on Euronext. Fee quoted is excluding reimbursement of costs. Remuneration in book year 2021 is limited to the fourth quarter. Remuneration Management Board (in EUR) 2021 2020 2019 2018 Total remuneration CEO 286,602 281,689 240,000 190,000 Total remuneration CFO 5,315,497 316,477 215,000 261,000 Total remuneration COO 212,546 - - - Ebusco performance (all in EUR million) Revenue 24.3 100.0 48.9 21.4 Underlying EBITDA (20.5) 27.1 8.8 3.2 Free cash ow (25.6) (15.9) (5.5) 1.0 Pay ratio Pay ratio CEO 4.7 4.6 3.9 3.4 Average total remuneration Ebusco employees 60,452 60,868 61,072 55,831 * The average total remuneration of Ebusco employees is excluding the total remuneration of the Management Board and Supervisory Board. 65 ANNUAL REPORT EBUSCO 2021 65 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION FINANCIAL STATEMENTS CONTENT Consolidated statement of prot or loss and other comprehensive income 66 Consolidated statement of nancial position 67 Consolidated statement of changes in equity 68 Consolidated statement of cash ows 69 Notes to the consolidated nancial statements 70 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 66 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Result for the year (26,797) 16,659 Other comprehensive income Other comprehensive income that may be reclassied to prot or loss in subsequent periods Exchange differences on translation of foreign operations (6) - Net gain/(loss) on cash ow hedges 1,444 (639) Tax effect of changes in cash ow hedges (361) 160 Net change in costs of hedging 40 64 Tax effect of changes in cost of hedging (10) (17) Other comprehensive income/(loss) 1,107 (432) Total comprehensive income/(loss) for the year (25,690) 16,227 Total comprehensive income/(loss) for the year attributable to Equity holders of the Group (25,281) 16,227 Non-controlling interests (409) - Basic earnings per share (in euros) for result attributable to shareholders of the Group 11 (0.56) 0.37 Diluted earnings per share (in euros) for result attributable to shareholders of the Group 11 (0.56) 0.37 In thousands of euro, unless stated otherwise Note 2021 2020 Revenue 6.1 24,265 99,994 Costof materials 6.2 (23,045) (60,337) Employee benet expenses 7 (23,106) (9,745) Amortisation and depreciation expenses 12, 13, 21 (5,331) (3,359) Other operating expenses 8 (12,354) (2,777) Operating expenses (63,836) (76,218) Operating result (39,571) 23,776 Finance expenses, net 9 (4,240) (1,289) Share of result of an associate 5 7,427 (112) Result before tax (36,384) 22,375 Income tax credit/(expense) 10 9,587 (5,716) Result for the year (26,797) 16,659 Result for the year attributable to Equity holders of the Group (26,388) 16,659 Non-controlling interests (409) - Note 2021 2020 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 67 CONSOLIDATED STATEMENT OF FINANCIAL POSITION In thousands of euro Notes As at 31 December 2021 As at 31 December 2020 Assets Non-current assets Property, plant and equipment 12 6,978 3,090 Right-of-use assets 21 8,046 1,428 Intangible assets 13 46,199 4,443 Deferred tax assets 10 7,139 909 Investments in associates 5 - 23 Non-current nancial assets 14 205 305 68,567 10,198 Current assets Inventories 15 22,330 3,640 Trade receivables 16 16,598 1,863 Receivables from related parties 24 24 505 Contract assets 6 13,450 59,989 Other current assets 17 3,823 1,402 Cash and cash equivalents 18 207,923 26,862 264,148 94,261 Total assets 332,715 104,459 Equity Share capital 590 24 Share premium 314,767 12,630 Reserves 9,207 2,904 Retained earnings (20,553) 12,484 Equity attributable to equity holders of the Group 19.1 304,011 28,042 Non-controlling interests 19.2 (63) - Total Equity 19 303,948 28,042 Liabilities Non-current liabilities Loans and borrowings 20 463 12,877 Provisions 22 - 141 Non-current lease liabilities 21 7,250 1,238 7,713 14,256 Current liabilities Loans and borrowings 20 215 45,188 Provisions 22 1,130 - Trade payables 23 10,883 6,762 Payables to related parties 24 534 - Contract liabilities 6 174 190 Other current liabilities 23 6,977 3,332 Current lease liabilities 21 1,132 544 Income tax payable 10 9 6,145 21,054 62,161 Total liabilities 28,767 76,417 Total equity and liabilities 332,715 104,459 Notes As at 31 December 2021 As at 31 December 2020 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 68 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY In thousands of euro Equity attributable to Equity holders of the Group Non-controlling interests Total Equity Notes Share capital Share premium Translation reserve Cash ow hedge reserve Cost of hedging reserve Other reserves Retained Earnings Total Equity attributable to Equity holders of the Group Balance as at 1 January 2020 24 12,630 - 171 (71) 3,691 (4,508) 11,937 - 11,937 Result for the year - - - - - - 16,659 16,659 - 16,659 Other comprehensive income 10, 28 - - - (479) 47 - - (432) - (432) Total comprehensive income for the year - - - (479) 47 - 16,659 16,227 - 16,227 Transfer to/from legal reserve 19 - - - - - (333) 333 - - - Transfer of cash ow hedge reserve - - - (122) - - - (122) - (122) Balance as at 31 December 2020 24 12,630 - (430) (24) 3,358 12,484 28,042 - 28,042 68 Balance as at 1 January 2021 24 12,630 - (430) (24) 3,358 12,484 28,042 - 28,042 Result for the year - - - - - - (26,388) (26,388) (409) (26,797) Other comprehensive income 10, 28 - - (6) 1,083 30 - - 1,107 - 1,107 Total comprehensive income for the year - - (6) 1,083 30 - (26,388) (25,281) (409) (25,690) Shares issued 19 566 322,365 - - - - - 322,931 - 322,931 Share issuance expenses 19 - (7,422) - - - - - (7,422) - (7,422) Repayment convertible loan 19 - - - - - - (800) (800) - (800) Transfer to/from legal reserve 19 - - - - - 5,849 (5,849) - - - Transfer of cash ow hedge reserve - - - (653) - - - (653) - (653) Acquisition of 60% share in associate 5 - - - - - - - - 7,536 7,536 Acquisition of 20% non-controlling interest 5 - (12,806) - - - - - (12,806) (7,190) (19,996) Balance as at 31 December 2021 590 314,767 (6) - 6 9,207 (20,553) 304,011 (63) 303,948 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 69 CONSOLIDATED STATEMENT OF CASH FLOWS Cash ows from investment activities Investments in property, plant and equipment 12 (4,137) (1,362) Proceeds from sale of property, plant and equipment 12 1 16 Investments in intangible assets 13 (795) (2,452) Investments in nancial assets 14 (9) (196) Investments in subsidiaries 5 (22,344) - Net cash ows from investment activities (27,284) (3,994) Cash ows from nancing activities Acquisition of non-controlling interest 5 (19,996) - Net proceeds from issuance of share capital 19 316,118 - Repayment of convertible loan (800) - Repayments of borrowings 20 (105,517) (2,600) Proceeds from borrowings 20 41,500 43,525 Payment of principal portion of lease liabilities 21 (1,244) (457) Interest paid 20 (2,327) (995) Net cash ows from nancing activities 227,734 39,473 (Decrease)/Increase in cash and cash equivalents 181,060 24,052 Exchange losses/gains on cash, cash equivalents 9 1 - Cash and cash equivalents at 1 January 18 26,862 2,810 Cash and cash equivalents at 31 December 18 207,923 26,862 Notes 2021 2020 In thousands of euro Notes 2021 2020 Cash ows from operating activities Prot/(Loss) before tax (36,384) 22,375 Non-cash adjustments: Depreciation of property, plant and equipment and right-of-use assets 12, 21 2,787 1,503 Amortisation of intangible assets 13 2,544 1,856 Gain/(Loss) on disposal of property, plant and equipment 12 (1) 1 Additions to/(releases from) provisions 22 3,935 60 Finance expenses, net 9 4,240 1,289 Share of results of an associate 5, 24 (7,427) 112 Movements in working capital: Inventories 15 (18,690) (953) Receivables and other current assets 16, 17 (17,595) 10,225 Contract assets/liabilities 6 46,809 (53,093) Payables and other current liabilities 23 3,796 5,198 Cash generated from operations (15,986) (11,427) Payment from provisions 22 (2,946) - Income tax paid 10 (458) - Net cash ows from operating activities (19,390) (11,427) ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS solidation. When the Group loses control over a subsidiary, it derecognises the related assets (including good- will), liabilities, and other components of equity, while any resulting gain or loss is recognised in prot or loss. An acquisition of a business under common control is accounted for by applying the pooling of interest method. Under the pooling of interest method assets, liabilities and reserves of two businesses are combined and recor- ded at carrying value. NOTE - BASIS OF CONSOLIDATION The following table provides an overview of the consolidated subsidiaries which the Parent controls as at 31 December: Entity Registered office Date of incorporation Ownership interest (%) 31 December 2021 Ownership interest (%) 31 December 2020 Ebusco B.V. Deurne, Netherlands 3 September 2012 100% 100% Ebusco Energy B.V. Deurne, Netherlands 18 July 2019 100% 100% Ebusco Manufacturing B.V. Deurne, Netherlands 15 July 2020 100% 100% Pondus Holding B.V. 1 Deurne, Netherlands 16 March 2017 100% - Pondus Operations B.V. 1 Deurne, Netherlands 16 March 2017 90% - Pondus R&D B.V. 1 Deurne, Netherlands 16 March 2017 100% - Ebusco Deutschland GmbH Emmerich am Rhein, Germany 13 June 2016 100% 100% Ebusco Norway A/S Dal, Norway 2 February 2017 100% 100% Ebusco Australia Pty Ltd Tasmania, Australia 18 July 2019 100% 100% Ebusco France SAS Paris, France 9 November 2020 100% 100% Ebusco North America LLC Delaware, United States 19 August 2021 100% - Ebusco New Energy (Xiamen) Co Ltd Xiamen, China 17 September 2021 100% - Gr8 Technologies B.V. 2 Amsterdam, Netherlands 1 December 2017 100% - 1 Consolidated as of 19 April 2021 2 Consolidated as of 18 October 2021 1. CORPORATE INFORMATION Ebusco Holding N.V. is registered at the Chamber of Commerce in the Netherlands under number 75407922. Ebusco Holding N.V. is the ultimate parent company of the group of legal entities (together, “the Group”). The Group is a developer, manufacturer and distributor of zero-emission buses and charging systems, as well as a supplier of ancillary services to the electric vehicle ecosystem. Ebusco Holding N.V. (or ‘the parent’ respectively ‘the Company’), formerly Ebusco Holding B.V., has been conver - ted from a private limited liability company (‘besloten vennootschap’) into a public limited company (‘naamloze vennootschap’) in view of the IPO of the Ebusco Group, effective as of 22 October 2021. As from that date, the ordinary shares of Ebusco Holding N.V. are listed on Euronext Amsterdam. The Parent has its headquarters and registered ofce located at Vuurijzer 23, 5753 SV Deurne, The Netherlands. 2. BASIS OF CONSOLIDATION ACCOUNTING POLICY – BASIS OF CONSOLIDATION The consolidated nancial statements comprise the nancial statements of the Parent and its subsidiaries (or ‘group companies’) as at 31 December 2021 with comparative information for the year ended 31 Decem- ber 2020. Subsidiaries are fully consolidated from the date the Group acquires control and ceases when the Group loses control of the subsidiary. The Group controls an investee if, and only if, the Group has: • Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee); • Exposure, or rights, to variable returns from its involvement with the investee; • The ability to use its power over the investee to affect its returns. The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. All intra-group assets and liabilities, equity, income and expenses and cash ows relating to transactions between members of the Group are eliminated in full on con - ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 71 3. BASIS OF PREPARATION The consolidated nancial statements of the Group have been prepared in accordance with International Fi- nancial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and en- dorsed by the European Union (EU) and with the statutory provisions of Part 9, Book 2 of the Dutch Civil Code. The nancial statements were signed and authorised for issuance by the Supervisory Board and Management Board on 11 April 2022 and will be submitted for adoption to the General Meeting of Shareholders on 25 May 2022. The consolidated nancial statements have been prepared on a historical cost basis, except where otherwise indicated. All amounts are stated in thousands of EUR, unless otherwise stated. The consolidated nancial statements are prepared on a going concern basis. PRESENTATION STATEMENT OF PROFIT OR LOSS The 2020 ‘Employee benet expenses’ and ‘Other operating expenses’ comparative numbers have been brought inline with the current year presentation: • other employee related expenses in the amount of €4,459 have been reclassied from ‘Other operating expenses’ to ‘Employee benet expenses’. This reclassication includes temporary and other staff expenses, car expenses and management fees charged by the members of the Management Board; • additions to/(releases) from the provision for doubtful debts in the amount of €579 have been reclassied from ‘Marketing expenses (included in Other operating expenses)’ to ‘General expenses (included in Other operating expenses)’. COVID-19 IMPACT ON BUSINESS The Covid-19 pandemic has impacted economic, government and social activity across the world since early 2020. In response to the pandemic, government regulations aimed at shifting social behaviours to limit or close non-es - sential transportation, business activities, government functions and person-to-person interactions, resulting in employees working from home. In some instances where these restrictions have been eased, governments have followed with actual or contemplated returns to stringent restrictions on gatherings or commerce or with reduced forms of restrictions that still limit transportation, business activities and other person-to-person interactions. These trends have resulted in limited demand for public transport, which in turn has resulted in a reduced amount of income generated by Public Transport Authorities (PTAs) and Public Transport Operators (PTOs) who responded by offering fewer requests for tenders, bids or quotations for new buses in 2020 and the rst half of 2021. Despite the ongoing impact of Covid-19, the Group experienced an increase in orders for its zero-emission bus- es. Overall, the Group received more secured orders for its zero-emissions buses in 2021 compared to 2020. The Group continued to see an impact on orders and tender opportunities during the rst half of 2021 as a result of the continued uncertainty related to public transit needs in the face of Covid-19 and the related regulatory responses, but its order book has strengthened in the course of 2021, mainly throughout the second half of the year. Furthermore, the Group has a promising opportunities pipeline. Due to the slowdown in customer activity and orders during 2020 and early 2021, as well as some disruption to production and deliveries due to supply chain challenges, in each case as a result of Covid-19, the Group’s rev - enue was signicantly impacted in 2021. Compared to 2020, revenue was down by approximately 76%, mainly driven by a slow-down in orders due to Covid-19 combined with the global supply chain shortages. Customer orders have continued to be subdued in the rst half of 2021 as a result of Covid-19, the effect of which on the Group’s revenues has been compounded by further supply chain disruptions that have reected reduced production capacity at certain suppliers of the Group which scaled back production in response to Covid-19. As a result, the Group has experienced further delays in bus production and shipments in 2021 and anticipates that it may continue to do so into 2022. The Group has in the past and continues to experience supply chain disruptions and supply shortages as a result of the prolonged Covid-19 pandemic. The Company is taking pro-active steps to manage the risk of further impact from the supply chain disruptions by building its safety stock, shipping components by air rather than sea (where this is an option and cost effective), designing alternative replacement parts, installing certain components at its headquarters in Deurne instead of its third-party assembly partner in China and by using exchange parts. The Group continues to closely monitor the development of the Covid-19 outbreak by analyzing the risks which the pandemic imposes for its nancial results, position and cash ows and implementing mitigating actions promptly. Further information and considerations regarding areas of signicant judgments and estimates have been in- cluded below. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 72 LIQUIDITY AND RISK MANAGEMENT At a very early stage of the Covid-19 outbreak, the Group identied a broad range of mitigating actions to preserve liquidity and continuity of the development and assembly process. These measures included, among others, savings in selling expenses, travel costs and procurement costs, applying for subsidies and concluding a capital increase of the shareholders. This will continue to be a focus point of the organisation in the coming years. The Group has also implemented a range of measures to safeguard cash ow, including working capital man- agement and the curtailment of uncommitted and non-essential capital expenditure. The company obtained cash via the Initial Public Offering (‘IPO’) in October 2021 and repaid various components of loans and borrowings (reference is made to Note 20 of the consolidated nancial statements). GOING CONCERN The Covid-19 pandemic has introduced new elements of uncertainty to the environment in which the Group op- erates and the effects of the pandemic are constantly being monitored by the Group’s executive management. It is currently unclear what impact the virus will have on the spending patterns of the Group’s customers and on consumer condence in general. The prospects for the Group in the years ahead are good, given the need of cities and municipalities to provide environmentally friendly public transportation to their inhabitants. In determining the appropriate basis for preparing the nancial statements for the year ended 31 December 2021 and in light of the above, the Management Board considered the Group as a going concern: • by evaluating the nancial forecasts over a time horizon of – to a minimum – one year after the date of these nancial statements; • by analyzing, in particular, besides general macroeconomic trends and geopolitical events, order intake, order portfolio, cashow, economics, working capital and sales forecast in the context of the current Covid-19 pan - demic such as additional impact from (potential) supply chain disruptions; and • taking into account the positive liquidity position as per 31 December 2021 following the IPO. COVID-19 ON ACCOUNTING POLICIES INTANGIBLE ASSETS Despite the changes in the economic environment, the Group’s review of its intangible assets including good- will did not lead to identication and recognition of any impairments. INVENTORIES The Group’s inventories are stated at the lower of cost or net realisable value. In determining the appropriate level of valuation allowance, certain businesses and markets impacted by Covid-19 were considered. In addi- tion, current and potential excess inventory levels were analysed, incorporating revised expectations of future demand for these items. As a result of these procedures, the allowance for obsolescence increased to €523 as at 31 December 2021 (31 December 2020: €233). TRADE RECEIVABLES According to its accounting policy, the Group calculates the lifetime expected credit loss for trade receivables utilising the simplied expected credit loss approach in the form of a provision matrix based on historic inputs to determine the expected losses. The Group has taken into account historical and forward-looking information that might have an impact on the way the trade receivables will be settled in the future, including the Covid-19 impact. The Group’s expected credit loss allowance as of 31 December 2021 (€514) decreased compared to its allowance as of 31 December 2020 (€638), mainly due to settlement of a claim from a specic customer (€600) and an addition to the provision for specic risks identied as per 31 December 2021 (€523). The Group is still pursuing collection of the receivables concerned. GOVERNMENT SUPPORT In response to Covid-19, many governments provided support through incentives, changed tax policies aimed at deferring tax lings and payments. The Group has been granted €1.3 million of wages relief in cash in connection with the “NOW 1.0” program from the Dutch government. The Group also received and applied payment deferrals on their loan from the Dutch government related to innovation (RVO loan; refer to Note 20). The Group has not benetted from any rent concessions in relation to its leases. DEFERRED TAXES The Group recorded a net deferred tax asset of €7,139 as at 31 December 2021 (31 December 2020 €909). The deferred tax asset mainly relates to tax losses carried forward. The Group has assessed whether it will benet from the net deferred tax asset and expects that utilisation (ultimately) will not be affected by the deferral or delay of orders due to the pandemic based on the expectation that sufcient taxable prots will be generated before the tax losses carried forward will expire (2021 tax losses will expire after six years). ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 73 ACCOUNTING POLICY – FUNCTIONAL AND PRESENTATION CURRENCY The Group’s consolidated nancial statements are presented in euros, which is also the Parent’s functional currency. The nancial statements of entities that have a functional currency different from that of the Parent (“foreign operations”) are translated into euros as follows: Group companies: • Foreign currency differences resulting from translation of subsidiaries are recognised in other comprehensive income. Transactions and balances: • Assets, equity and liabilities - at the closing rate at the date of the statement of nancial position. • Income and expenses - at the average rate of the period (as this is considered a reasonable approximation of the actual rates prevailing at the transaction dates). 4. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGEMENTS The below table is a summary of the Group’s signicant accounting policies, estimates, and judgments. The table makes reference to the notes these topics are disclosed. Accounting Policies Signicant Accounting Estimates or Judgements What it is Accounting policies considered relevant for understanding the nancial state- ments or required to be disclosed by law or IFRS. These accounting policies involve a higher degree of judgement or complexity. The estimates applied are more likely to be materially adjusted due to inaccurate esti- mates and/or assumptions applied Where? Provided per note to the nancial statements. The notes are organised into the following sections: Key disclosures: In relation to its strategy the Group’s management considers the following disclosures, based on the determination of operating prot, as key in understanding its nancial performance or position. These disclosures provide a break- down of individual line items in the nancial statements that users of the nancial statements consider most relevant. Notes: 5 Acquisitions 6 Revenue, cost of materials and segment reporting 7 Employee benet expenses 10 Income taxes 13 Intangible assets 22 Provisions Description: 5 Acquisition 60% and remaining 20% of the voting shares in Pondus Holding B.V. 6 Percentage of completion of customer contracts 7 Share based payments and other compensation 10 Valuation deferred tax asset regarding tax losses carried forward 13 Annual goodwill impairment testing / Assumptions regarding cuseful life of intangible assets 22 Provision for warranties and disputes Other disclosures: Information on items required to be disclosed to be compliant with IFRS IASB and other legal requirements. Notes: 9, 11, 14-21, 23-29 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 74 STANDARDS ISSUED NOT YET ADOPTED New standards, amendments and/or interpretations to existing IFRS standards became effective in 2021. These new standards, amendments and interpretations, as far as they are relevant to the Group, have no impact on the valuation and classication of assets and liabilities of the Group, nor on its income statement or cash ows. The Group has not applied the following new and revised IFRS’s that have been issued, but are not yet effective: • Annual Improvements to IFRS Standards 2018–2020 (applicable for annual periods beginning on or after 1 January 2022, but not yet endorsed in the EU) • Amendments to IAS 1 Presentation of Financial Statements: Classication of Liabilities as Current or Non-current - Deferral of Effective Date (applicable for annual periods beginning on or after 1 January 2023, but not yet endorsed in the EU); • Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Denition of Accounting Estimates (applicable for annual periods beginning on or after 1 January 2023, but not yet endorsed in the EU) Annual Improvements to IFRS Standards 2018–2020 (applicable for annual periods beginning on or after January 1, 2022, but not yet endorsed in the EU); • Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (applicable for annual periods beginning on or after 1 January 2023, but not yet endorsed in the EU); • Annual Improvements to IFRS Standards 2018–2020 (applicable for annual periods beginning on or after 1 January 2022, but not yet endorsed in the EU) • The IFRS 17 Insurance Contracts standard (applicable for annual periods beginning on or after 1 January 2023), is not relevant to the Group and therefore will not be detailed further in these nancial statements. The impact of the adoption of the above new standards is still being determined, but not expected to be mate- rial on the consolidated nancial statements. The Group plans to adopt these standards on their respective dates. 5. ACQUISITIONS Acquisition of 60% of the voting shares of Pondus Holding B.V. On 19 April 2021, the Group acquired 60% of the voting shares of its associate Pondus Holding B.V. (Pondus), raising its total shareholding of Pondus Holding to 80% and upon the acquisition date the Group gained control of Pondus. Pondus Holding B.V. is the parent company of Pondus Operations B.V. (90% ownership) and Pondus R&D B.V. (100% ownership). Pondus is involved in the research and production of lightweight composite materials suitable for use in constructing electric zero-emission buses. Pondus’ principal place of business is the Netherlands. The Group acquired Pondus for the purpose of using proprietary technology to develop and manufacture lightweight carrying structures and parts for use in the Group’s buses. The considerations included the following: • €16.6 million (the initial purchase price) paid by the Purchaser on completion of the acquisition; • €5.0 million (the deferred purchase price) of contingent consideration paid by the Purchaser upon the initial public offering (“IPO”) in October 2021; • €0.75 million (earn out) of contingent consideration also paid upon the IPO in October 2021. At the acquisition date, the fair value of the contingent consideration was estimated to be €5.8 million. The Group considered the IPO to be a probable event within the next three months; the IPO actually occurred on 22 October 2021. Considering the short period of time, the discounting was negligible. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 75 The purchase price is as follows: Fair value of identiable net assets Non-current assets Property, plant and equipment 1,563 Intangible assets 4,246 Non-current nancial assets 53 Total non-current assets 5,862 Net working capital Receivables from related parties 1,605 Other current assets 26 Trade payables (110) Payables to related parties (1,051) Other current liabilities (351) Total net working capital 119 Non-controlling interest (10% in Pondus Operations) (86) Loans and borrowings (7,909) Cash and cash equivalents 6 Subtotal: Identiable net assets acquired at fair value (2,008) Fair value of non-controlling interest 7,450 Fair value of previously held equity interest 7,450 Fair value of consideration transferred: - Cash 16,600 - Contingent consideration 5,750 Subtotal: Consideration transferred 37,250 Goodwill arising on acquisition 39,258 Goodwill is attributable to the assembled workforce of Pondus, expected synergies, and expected future sales and customers. The goodwill is not deductible for income tax purposes. At the acquisition date, the carrying value of the Group’s 20% interest in Pondus was nihil. Accordingly, the Group recognised a gain of €7.5 million as a result of remeasuring the carrying amount of its ‘Investment in associates’ at fair value. The Group has elected to measure the non-controlling interest in Pondus at fair value; the non-controlling interest is determined based on Pondus’ full amount of goodwill. As a result, the value of the non-controlling interest is €7.5 million. Acquisition of remaining 20% of the voting shares of Pondus Holding B.V. On 18 October 2021, the Group acquired the remaining 20% of the shares in Pondus through the acquisition of 100% of the shares of Gr8 Technologies B.V., owning the remaining 20% of the voting shares of Pondus Holding B.V. The Group acquired the shares of Gr8 Technologies B.V. from its previous shareholders, being two persons (participating for 50% each) afliated to VDVI B.V., one of the existing shareholders of Ebusco Holding N.V. Holding the shares in Pondus Holding B.V. was the only activity of Gr8 Technologies B.V.; Gr8 Technologies B.V. is expected to be liquidated in the rst half of 2022. The net cash outow amounted to €19,996 (being €20,000 less cash acquired). Following the acquisition, the carrying value of the non-controlling interest of €7,190 has been reclassied to the equity of Ebusco Holding N.V., and the difference between the fair value of the consideration paid and the carrying value of the non-controlling interest being €12,806 has been charged against the Company’s share premium. Accordingly, the total cash outow from investments in group companies (net of cash acquired) amounted to €22,344 and cash outow from acquisition of non-controlling interest amounted to €19,996. In 2021, Pondus did not contribute to the Group’s consolidated revenue and contributed a loss of €1,713 to the Group’s consolidated operating result. If the acquisition had occurred on 1 January 2021, the acquired business would not have contributed to consolidated revenue and would have contributed a loss of €2,381 to consolidated operating result. Total transaction costs incurred amount to €85 thousand for both acquisitions. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 76 6. REVENUE, COST OF MATERIALS AND SEGMENT REPORTING The activities of the Group primarily consist of the sale of zero-emission buses and ancillary services and goods, including charging systems, related to the electric vehicle ecosystem. 6.1 ACCOUNTING POLICIES - REVENUE REVENUE FROM CONTRACTS WITH CUSTOMERS In determination of its recognition of revenue, the Group applies the 5-step model in line with IFRS 15. Revenue is recognised if the Group has entered into a contract with a customer in which the performance obligations can be identied, the terms of the transaction are clear, and it is probable that the customer will pay. Revenue is recognised for each contract. If a contract involves several performance obligations, revenue is separately attributed to the performance obligations based on relative stand-alone selling prices. Revenue is recognised over time if the customer simultaneously receives and consumes the benet of the Group’s performance or if the Group produces an asset without alternative use which it is contractually obligated to deliver to the customer and for which the Group has an enforceable right to payment. Revenue is recognised at a point in time if it does not meet the criteria to be satised over time. The Group does not have any contracts with material variable consideration. If a contract contains a signicant nancing component, the Group adjusts the revenue accordingly. This is not done if the time between the fullment of the performance obligation and the payment of the consider- ation is less than one year. If the results from a contract cannot be determined reliably, contract revenue is only recognised to the extent of costs incurred. Expected contract losses are recognised immediately in the statement of prot or loss. In measuring the amount of provisions for losses, the Group proceeds on the basis of the economic benets expected to be received compared with the attributable costs of the contract. The Group has two main types of revenue from contracts: 1. Contracts for the sale of zero-emission buses: the Group sells zero-emission buses and related charging sys- tems customised for each customer. The Group negotiates with each customer according to the needs of the customer and charges a transaction price based on the type and number of buses ordered. Contracts are fullled, on average, within eight to fourteen months. Revenue for sales of zero-emission buses is recognised over time as the Group produces a bus without an alternate use which the Group is contractually obligated to deliver and for which the Group has an enforceable right to payment. The revenue relating to work in progress is recognised in the statement of prot or loss based on percentage of completion of the project. The stage of completion is assessed by reference to the proportion of costs recorded in relation to the total expected costs to the extent that the costs incurred are representative of the progress made in the transfer of goods/services to the client. Inefciencies are disregarded in determining the stage of completion. In-progress contracts are recorded as contract assets. 2. Contracts for charging systems and ancillary services and goods: the Group also sells items and services in addition to its zero-emission buses. These goods and services consist of additional parts for the Group’s buses or represent services, including repair and maintenance services, which support the customer’s use of ze - ro-emission buses sold by the Group. Revenue is recognised either at a point in time or over time based on the nature of the good or service in accordance with the Group’s revenue recognition policy. Typically, spare parts and charging systems are recognised at a point in time whilst services are recognised over time. The Group also offers limited bus leasing arrangements, income from which is recognised in accordance with IFRS 16; refer to Note 21 for leases. The accounting policies regarding trade receivables, contract assets, and contract liabilities are set out in the corresponding notes (refer to Note 16 for trade receivables and below for contract assets and liabilities). TRANSACTION PRICE AND STAND-ALONE SELLING PRICES Transaction prices are determined per individual contract, based on goods and services ordered by each customer. Payment terms vary per contract. The performance obligation that signicantly affects the de- termination of the transaction price is the supply of zero-emission buses. Progress is measured using an input method. The Group measures the progress for the projects based on the input costs consisting of the cost of materials and other costs. The Group assessed that the input method used based on costs incurred to measure its progress towards completion reects proportionately the Group’s progress in satisfying the performance obligation and is a fair reection of the Group’s performance. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 77 CONTRACT ASSETS AND CONTRACT LIABILITIES The Group recognises a contract asset for services or goods transferred to a customer to which the Group has a right to receive consideration. The Group reclassies contract assets to trade receivables when performance obligations are satised and the right to consideration becomes unconditional. The Group recognises a contract liability when a payment is received from a customer or is due before the Group transfers the related goods or services. Contract liabilities are recognised as revenue when the Group performs its obligations. Contract assets and receivables generally have a term of less than 12 months. SIGNIFICANT ESTIMATE: PERCENTAGE OF COMPLETION OF CUSTOMER CONTRACTS In determining the stage of completion, the Group makes a critical estimate of the remaining cost. This esti- mation requires a consistent judgment (forecast) of the nal outcome of the project, including costs to come and variance analyses of divergences compared with earlier assessment dates. Estimates are an inherent part of this assessment and actual future outcome may deviate from the estimated outcome. Historical ex- perience has also shown that estimates are, on the whole, sufciently reliable. Estimates and judgements are made relating to a number of factors when assessing contracts. These primarily include the program of work throughout the contract period and an assessment of future costs after considering any changes in the scope of work. The Group reviews its estimates for its contracts with customers which are recorded under the percentage of completion method and, based on the data available to the Group, may record adjustments to its calculations as appropriate. NOTE – REVENUE FROM CONTRACTS WITH CUSTOMERS The Group earns the majority of its revenue from its single performance obligation of the sale and supply of zero-emission buses. The other primary performance obligations include a sale and supply of zero-emission bus chargers, a guarantee to provide a complete change of batteries, and repair and maintenance services, Performance obligations for other services and goods, including supply of bus charging systems, are ancillary and supportive of the performance obligation of the sale and supply of zero-emission buses. The breakdown of the revenue based on type is presented below: Revenue type 2021 2020 Revenue from zero-emission buses 20,736 97,828 Revenue from charging systems and ancillary services and goods 3,529 2,166 Total 24,265 99,994 Revenue recognised over time relates to contracts regarding the sale of zero-emission buses, support ser- vices and lease (lessor) income which relates to buses leased out to customers (refer to Note 21, Leases). Revenue recognised at a point in time relates to contracts for the sale of charging systems and parts. Transfer of control occurs when the Group has transferred physical possession of the asset and revenue is recognised at that point of time. Revenue recognition 2021 2020 Revenue recognised over time 19,266 98,401 Revenue recognised at point in time 4,999 1,593 Total 24,265 99,994 As at 31 December 2021 the remaining performance obligations amount to €34.9 million (31 December 2020: €6.5 million). The Group estimates 81% (31 December 2020: 65%) of these anticipated revenues are expected to be recognised during the next 12 months. This revenue relates primarily to customer contracts for zero-emission buses. The Group enters into sales contracts which include also a repurchase clause or a buy-back guarantee. The contract obliges the Group to repurchase the asset at a price lower than the original sales price, if requested by the customer. The Group has assessed that there is no signicant economic incentive for the customer to exercise this opti- on, as such, the repurchase clauses are classied as sale contracts with the right of return. Furthermore, the Group has concluded, based on historical data and market information, that the probability of returns being recorded is not materially signicant. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 78 NOTE – CONTRACT ASSETS AND CONTRACT LIABILITIES Contract assets / (liabilities) – 31 December 2021 2020 Contract assets (positive balance of work in progress) 13,450 59,989 Contract liabilities (negative balance of work in progress) (174) (190) Balance of contract assets and liabilities 13,276 59,799 The contract assets balance as per 31 December 2021 is €13.5 million (2020: €60.0 million). Contract assets are measured taking account of expected credit losses in a way similar to the method used for trade and other receivables; no material expected credit losses have been recorded for contract assets for the periods presented. Revenue received in advance (contract liability) as per 31 December 2021 is €174 (2020: €190). The signicant decrease in contract assets in 2021 is primarily due to the decrease in contracts with custo- mers for this period. During 2021 the Group experienced lower demand and orders for its zero-emission buses. Contract assets are related exclusively to work in progress assets for zero-emission buses and the decrease in orders combined with invoicing resulted in a correspondingly lower amount of contract assets. 6.2 COST OF MATERIALS Cost of materials are recognised and presented in the statement of prot or loss. These costs include amounts paid to the supplier for zero-emission bus contracts, costs for parts included in zero-emission bus contracts, transportation costs, and import duties. 6.3 SEGMENT REPORTING ACCOUNTING POLICY – SEGMENT REPORTING An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses. The operating results of each segment are regularly reviewed by the entity’s Chief Operating Decision Maker (“CODM”) in order to make decisions about resources to be allocated to the segment and assess its performance and for which discrete nancial information is available. NOTE – SEGMENT REPORTING The Group has identied the Management Board, which consists of the CEO, CFO and COO, as the CODM. Based on the Group’s business of selling zero-emission buses and ancillary revenue streams from these buses the Group has determined it has a single operating segment. The following table summarizes the Group’s geographical breakdown of its revenue, based on the location of the external customers for the periods indicated: Revenue – Geographical breakdown 2021 2020 DACH 1 9,722 9,446 Nordics 2 8,418 75 Benelux 6,035 90,153 Rest of the World (RoW) 90 320 Total 24,265 99,994 1 DACH is an acronym for Germany (D), Austria (A) and Switzerland (CH). 2 Nordics is an acronym for Denmark, Sweden, Norway and Finland. In 2021, the revenues from external customers attributed to the entity’s country of domicile (the Netherlands) amounted to €4.9 million (2020: €84.6 million). At 31 December 2021 €68.5 million of the non-current assets were in the Netherlands (the country of domicile for the Group) (31 December 2020: €10.2 million). LARGE CUSTOMERS In 2021, one customer generated 31% of total revenue. In 2020, one customer (different one) generated 84% of total revenue. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 79 7. EMPLOYEE BENEFIT EXPENSES AND REMUNERATION KEY MANAGEMENT ACCOUNTING POLICY – EMPLOYEE BENEFIT EXPENSES Employee benets are all forms of consideration given by the Group in exchange for services rendered by employees or for the termination of employment. Short-term employee benets are employee benets (other than termination benets) that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees rendered the related service. Post-employment benets are employee benets (other than termination benets and short-term employee benets) that are payable after the completion of employment. The Company’s new long-term incentive plan referred to as the ‘Performance Share Unit Plan’ will be appli- cable as from 2022. Refer to Note 7.1 for a specication of the remuneration of key management. ACCOUNTING POLICY – PENSIONS The Group has a dened contribution plan (which is capped at an annual pensionable salary of €112).For the dened contribution plan, the Group pays contributions to a public or privately administered pension insurance plan on a mandatory or contractual basis. The Group has no legal or constructive obligations to pay additional contribution if the fund does not hold sufcient assets to pay all employees the benets relating to the employee service in the current and prior periods. The contribution is recognised as employee benet expense when it is due. Prepaid contribution is recognised as an asset to the extent that a cash refund or a reduction in the future payments is available and can be contractually enforced. NOTE – EMPLOYEE BENEFIT EXPENSES AND PENSIONS The table below gives a breakdown of the employee benet expenses recognised in respect of short-term employee benets and post-employment benets: Employee benet expenses 2021 2020 Wages and salaries 8,974 4,187 Social security charges 1,481 884 Pension costs 422 215 Other compensation 1 5,000 - Temporary staff 5,491 3,178 Car expenses 229 117 Management fee 443 598 Other staff expenses 1,066 566 Total 23,106 9,745 1 Reference to Note 7.1: Remuneration key management Wages and salaries include the remuneration of the members of the Management Board (including the CEO and CFO as from 17 October 2021) and the Supervisory Board. The increase in wages and salaries is mainly driven by the increase in average number of full-time employees (see table below). Car expenses relate to short-term rental expenses, fuel, insurance and repairs costs. The management fee includes management fees charged by the CEO and CFO based on service contracts up to 17 October 2021. Other staff expenses include employee costs that are not directly related to salaries and social security char- ges, including travel and related expenses. The average number of full-time employees for the period active within, respectively outside the Netherlands is as follows: Full-time employees 2021 2020 Active within the Netherlands 167 103 Active outside the Netherlands 4 3 Total 171 106 79 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 80 7.1 REMUNERATION KEY MANAGEMENT The Group’s key management consists of the CEO, CFO, COO, CTO, CPO and HR Director per 31 December 2021. Total remuneration for the Group’s key management amounted to €6,183 for 2021 (2020: €1,055). Key management are those persons having authority and responsibility for planning, directing and controlling the activities of the entity (directly or indirectly) including any directors. The table below provides the remuneration of the Management Board for the years ended 31 December 2021 and 2020. 2021 2020 Base salary Pension costs Other compen- sation Other 2 Total Base salary Pension costs Other compen- sation Other 2 Total Peter Bijvelds (CEO) 268 12 - 7 287 240 - - 42 282 Paul van Beers (CFO) 295 9 5,000 11 5,315 312 - - 4 316 Bob Fleuren (COO) 1 183 18 - 12 213 - - - - - Total 746 39 5,000 30 5,815 552 - - 46 598 1 Appointed as COO and member of the Management Board as from 1 April 2021 2 Other expenses include company car expenses, car allowances, commuting allowance (up to October 2021) BASE SALARY All three members of the Management Board are included in the payroll administration of the Company as from 17 October 2021. Accordingly, the service contracts entered into with the CEO and CFO were cancelled as from that date. The COO was transferred from the payroll administration of Ebusco B.V. to the payroll adminis- tration of the Company as from 17 October 2021. PENSIONS The members of the Management Board have been granted a pension allowance equal to an amount of approxi- mately 16% of their xed base salary, excluding any allowances and bonus payments. Other benets include 25 days of paid vacation leave per calendar year. Furthermore, the members of the Management Board receive a car allowance or company car in accordance with the company’s car policy. No other benets are granted. For the period up to 17 October 2021 the COO joined the standard pension plan and had access to an excedent pension plan: an extra pension accrual on top of the standard pension plan. The CEO and CFO did not have access to the pension plans as they were not yet employed by the Group. OTHER COMPENSATION The Group agreed a success fee for certain key management personnel. Under this plan, upon the realisation of a qualifying exit wherein the shareholders sell all of their interest in or otherwise recapitalise the Group (events which could include a strategic sale), those key management personnel who participate in the ar- rangement were eligible for awards. These awards consisted of cash payments and the value of the award is based on the enterprise value of the Group at the time of the exit event. The success fee arrangements were awarded by way of a board resolution on 19 April 2019 to the CEO and on 25 November 2020 to the CFO. Due to the fact that a qualifying exit event, as dened above, was still not likely as at 31 December 2020, the fair value of the liability was assessed to be zero. In preparation for the IPO in October 2021, both the CEO and CFO signed a waiver agreement on 18 October 2021 in respect of the success fee arrangements. Only the CFO received a settlement fee of €5.0 million, with the requirement to re-invest the net proceeds of the settlement in shares of the Company. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 81 7.2 SUPERVISORY BOARD REMUNERATION EXPENSES In euro Fixed Other compensation Total 2021 2020 2021 2020 2021 2020 Derk Haank 1 14,500 - 150 - 14,650 - Carin Gorter 2 12,500 - 300 - 12,800 - Jeroen Drost 3 11,750 - 150 - 11,900 - Ruud Spoor 4 11,750 - - - 11,750 - Roelf de Boer 5 11,750 - 150 - 11,900 - Total 62,250 - 750 - 63,000 - 1 Derk Haank has been appointed as Chair of the Supervisory Board and member of the Nomination and Remuneration Committee 2 Carin Gorter has been appointed as Chair of the Audit Committee and member of the Supervisory Board 3 Jeroen Drost as been appointed as Chair of the Remuneration Committee and member of the Supervisory Board 4 Ruud Spoor has been appointed as member of the Audit Committee and member of the Supervisory Board 5 Roelf de Boer has been appointed as Chair of the Nomination Committee and member of the Supervisory Board It has been agreed that the remuneration of the members of the Supervisory Board would start as from 1 October 2021. Accordingly, the xed compensation relates to the fourth quarter of 2021. 8. OTHER OPERATING EXPENSES ACCOUNTING POLICY – OTHER OPERATING EXPENSES Other operating expenses are recorded on a historical basis and allocated to the reporting period when they occur. NOTE – OTHER OPERATING EXPENSES Other operating expenses comprise general, distribution, marketing and other expenses. Other operating expenses 2021 2020 General expenses 8,176 1,188 Distribution expenses 1,449 303 Marketing expenses 552 551 Facility expenses 450 142 Ofce expenses 136 108 Other expenses 1,591 485 Total other operating expenses 12,354 2,777 General expenses mainly include audit, advisory and insurance fees. In addition, general expenses include listing costs and other fees related to the IPO of €4.8 million and changes to the provision for doubtful debts. Marketing expenses are costs which include marketing and promotional costs and costs associated with making products available for delivery to customers. Facility expenses include costs for utilities, insurance, and other non-rent related expenses associated with the Group’s facilities. Ofce expenses include telecom expenses, ofce supplies, and subscriptions. Other expenses consist of various expenses that are incurred as part of the Group’s daily operations, including IT expenses. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 82 9. FINANCE EXPENSES, NET ACCOUNTING POLICY – FINANCE (INCOME)/EXPENSE The costs are determined on a historical basis and allocated to the reporting period when they occur. NOTE – FINANCE (INCOME)/EXPENSE Finance costs 2021 2020 Foreign currency exchange rate results, including (gains)/losses on derivatives 470 (751) Interest and similar expenses on loans and borrowings 3,642 1,970 Interest on lease liabilities 128 70 Total 4,240 1,289 For a specication of interest and similar expenses on loans and borrowings and leases, reference is made to Note 20: Loans and borrowings respectively Note 21: Leases. 10. INCOME TAX ACCOUNTING POLICY – INCOME TAX CURRENT INCOME TAX Current tax is the expected tax payable/receivable on the taxable income or loss for the year, using applica- ble tax rates at the end of the reporting period, and any adjustment to tax payable/receivable in respect of previous years. DEFERRED INCOME TAX Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for nancial reporting purposes and the amounts used for taxation purposes. Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable prots will be available against which they can be used. Future taxable prots are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufcient to recognise a deferred tax asset in full, then future taxable prots, adjusted for rever - sals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benet will be realised; such reductions are reversed when the probability of future taxable prots improves. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date, and reects uncertainty related to income taxes, if any. The measurement of deferred tax reects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. NOTE – INCOME TAX The major components of income tax expense for the years ended 31 December 2021 and 31 December 2020 are presented below. Income tax expense 2021 2020 Current tax (expense)/benefit: Relating to current year 4,837 (5,693) Adjustment prior year 837 - 5,674 (5,693) Deferred tax (expense)/benefit: Relating to changes in tax rates 224 108 Relating to origination and reversal of temporary differences 211 (134) Relating to tax losses 4,143 3 Relating to limitation interest deduction 146 - Adjustment prior year and others (811) - 3,913 (23) Income tax (expense)/benefit reported in the statement of profit or loss 9,587 (5,716) ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 83 Deferred tax (expense)/benet related to items recognised in OCI during the year 2021 2020 Derivatives (371) 143 Deferred tax charged to OCI (371) 143 The operations of the Group are subject to income taxes in the Netherlands and in the other countries where the Group is conducting a business. Ebusco Holding N.V. established a Dutch scal unity as from 1 December 2021; all Dutch subsidiaries have joined the scal unity except for Pondus Operations B.V. as the Group’s shareholding in this entity is only 90% and Gr8 Technologies B.V. A reconciliation of the statutory income tax rate of the Netherlands to the effective income tax rate is as follows: Effective tax rate 2021 2020 Accounting profit before tax (36,384) 22,375 Domestic income tax rate 25.0% 25.0% Theoretical income tax (expense)/benefit 9,096 (5,594) Tax effect of: Deviating rates (3) - Change in tax rates 224 108 Income tax relief - 17 Non-deductible expenses, tax exempt income and other permanent differences 721 (133) Benefit from previously unrecognised and unused tax losses 3 3 Effect of unrecognised and unused tax losses (467) (55) Other effects including adjustments prior year 13 (62) Total income tax (expense)/benefit 9,587 (5,716) Effective tax rate 26,3% 25.5% The effect of the change in tax rates relates to changes in the enacted income tax rate in the Netherlands. As per 31 December 2021, the enacted income tax rate in the Netherlands increased from 25.0% to 25.8%. Non-deductible expenses, tax exempt income and other permanent differences in 2021 mainly include the tax effect of tax exempt income from associates (including the remeasurement gain on the Group’s 20% investment in Pondus), non-deductible employee benet expenses related to the termination of the success fee agreement of the CFO, non-deductible interest cumulative preference shares and non-deductible adviso- ry fees related to the acquisition of Pondus and other expenses. The effect of unrecognised and unused tax losses in 2021 mainly relates to scal tax losses incurred by Pondus. Prior year adjustments mainly include differences between initial and nal tax assessments and the impact of timing differences materialising in a different year as assumed. The balances and movements for current tax and deferred tax for the years ended 31 December 2021 and 31 December 2020 are presented below: Current income tax liabilities As at 31 December 2021 As at 31 December 2020 Income tax payable 9 6,145 The (net) deferred tax asset position of the Group as per 31 December 2021 mainly relates to tax losses car- ried forward, limitation of interest deduction, right-of-use asset and lease liability positions resulting from the application of IFRS 16, the depreciation pattern of property, plant and equipment and derivative positions resulting from the application of hedge accounting. The (net) deferred tax positions as per 31 December 2020 related to amongst others the amortisation pattern of intangibles and revenue recognition from the applica- tion of IFRS 15 reversed in 2021 (adjustment prior year deferred versus current tax) following the Company’s decision to prepare the income tax return of the Dutch entities for the year 2020 and 2021 in accordance with IFRS (instead of Dutch GAAP). ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 84 Deferred tax assets As at 31 December 202 1 As at 31 December 2020 Intangible assets - 745 Property, plant and equipment 147 95 Right-of-use assets (2,058) (346) Derivatives (89) (82) Contract assets - 62 Lease liabilities 2,164 432 Tax losses carried forward 6,824 - Limitation of interest deduction 151 - Other - 3 Total net deferred tax asset 7,139 909 Changes in deferred tax assets and (liabilities), net 2021 2020 Carrying amount as at 1 January 909 747 Changes: Recognised in income statement 3,913 (22) Recognised in other comprehensive income (371) 143 Recognised against share premium 2,474 - Other 214 41 Balance as at 31 December 7,139 909 The changes in deferred tax positions reected in other comprehensive income are linked to the derivative balances resulting from the application of hedge accounting, whilst the one recognised in the income sta- tement mainly refer to the recognition of tax losses carried forward and (the reversal of (net) deferred tax positions related to) the amortisation pattern of intangible assets and revenue recognition from the adoption of IFRS 15 (see above). The change in the deferred tax position recognised against share premium relates to share issuance expenses directly charged against equity (reference is made to Note 19: Equity). Tax losses carried forward available as at 31 December 2021 amount to €30.0 million (31 December 2020: €0.2 million) of which €26.3 million has been recognised resulting in a deferred tax asset of €6.8 million. The remaining balance of €3.7 million mainly relates to unrecognised tax carried forward losses of Pondus. 11. EARNINGS PER SHARE The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. The calculation for the earnings per share is as follows: • Basic EPS is calculated by dividing the result for the year attributable to ordinary equity holders of the pa- rent by the weighted average number of ordinary shares outstanding during the year. • Diluted EPS is calculated by dividing the result attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average num- ber of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares. NOTE - EARNINGS PER SHARE The Group’s equity structure as per 31 December 2021 consists of 59,039,380 ordinary shares with a nominal value of €0.01. Earnings per share can be specied as follows: Share information 2021 2020 Net profit attributable to ordinary shareholders (in euro thousands) (26,388) 16,659 Weighted average number of ordinary shares for the period 47,502,302 44,999,000 Dilutive number of shares - 48,000 Total number of dilutive ordinary shares 47,502,302 45,047,000 Basic earnings per share (in euro’s) (0.56) 0.37 Dilutive earnings per share (in euro’s) (0.56) 0.37 DILUTIVE NUMBER OF SHARES In order to meet its cash demands in 2016, the Group received an amount of €600. In the contractual agree- ment it is stipulated that the counterparty has the option to convert the deposit of €600 into 2% of equity stake, as ordinary shares. Consequently, the aforementioned instrument has been considered in the calcula- tions of diluted earnings per share as per 31 December 2020. As no interest expense has been associated with ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 85 this arrangement, the dilutive effect has been determined only for the weighted average number of ordinary shares. As the convertible loan was repaid in April 2021, the dilutive number of shares was zero as per 31 December 2021. 12. PROPERTY, PLANT AND EQUIPMENT ACCOUNTING POLICY – PROPERTY, PLANT AND EQUIPMENT All items of property, plant and equipment (“PPE”) are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Items of PPE are depreciated over their useful life on a straight-line basis. Any change in the useful life and depreciation period shall be accounted for as a change in accounting estimates. PPE is tested for impairment whenever events or changes in circumstances occur indicating that the carrying amount may not be reco- verable. PPE includes equipment and ofce inventory, transportation and assets under construction. The estimated useful life of the aforementioned PPE is between 3 and 5 years. Transportation assets, which include buses used for demonstration and engineering purposes, as well as buses which the Group has leased out on an operational basis, have an estimated useful life of between 3 to 10 years. Assets under construction refer to assets which are not available for use yet and therefore not depreciated. The Group has performed an impairment assessment with regard to its property, plant and equipment assets; no indications of impairment have been identied and no impairment has been recorded. For right-of-use assets reference is made to Note 21: Leases. NOTE – PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment Equipment and ofce inventory Transportation Assets under construction Total Balance as of 1 January 2021 Cost 1,448 3,688 560 5,696 Accumulated depreciation (434) (2,172) - (2,606) Net book value 1,014 1,516 560 3,090 Change in net book value: Acquisitions through business combinations 1,519 45 - 1,564 Additions 3,377 7 780 4,164 Transfer to contract assets - (154) - (154) Transfer from assets under construction - 820 (820) - Depreciation (803) (883) - (1,686) Total changes 4,093 (165) (40) 3,888 Balance as of 31 December 2021 Cost 6,578 3,968 520 11,066 Accumulated depreciation (1,471) (2,617) - (4,088) Net book value 5,107 1,351 520 6,978 Balance as of 1 January 2020 Cost 624 3,703 - 4,327 Accumulated depreciation (293) (1,283) - (1,576) Net book value 331 2,420 - 2,751 Change in net book value: Additions 826 - 560 1,386 Disposals (1) (15) - (16) Depreciation (142) (889) - (1,031) Total changes 683 (904) 560 339 Balance as of 31 December 2020 Cost 1,448 3,688 560 5,696 Accumulated depreciation (434) (2,172) - (2,606) Net book value 1,014 1,516 560 3,090 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 86 Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benet being 5 years. During the period of development, the asset is tested for impairment annually. Impair- ment assessments have been performed and no indications of impairment have been identied. Research costs are expensed as incurred. AMORTISATION AND IMPAIRMENT TESTING Goodwill is subject to annual impairment testing, irrespective of whether indications of impairment exist, Goodwill allocated to a cash-generating unit is impaired when its carrying amount of the cash-generating unit exceeds the recoverable amount. The recoverable amount is, in turn, dened as the higher of the fair value less cost of disposal and the value in use; where the value in use is the present value of the future cash ows. Intangible assets with nite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a nite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future eco- nomic benets embodied in the asset are considered to modify the amortisation period or method, as appro- priate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with nite lives is recognised in the statement of prot or loss. SIGNIFICANT ESTIMATE – ESTIMATION USEFUL LIFE OF INTANGIBLE ASSETS The Group has made a signicant estimate of the useful life of Development assets and Software. Uncertain- ty about this estimate could result in signicant changes in the reported amount of amortisation expenses and, subsequently, the result for the year. The estimated useful life of intangible assets is between 3 - 5 years. 13. INTANGIBLE ASSETS ACCOUNTING POLICY – INTANGIBLE ASSETS The intangible assets for the Group consist of goodwill, development assets, software and assets under con- struction. GOODWILL Goodwill represents amounts arising on acquisition of subsidiaries. All business combinations are accounted for by applying the acquisition method as at the acquisition date. Goodwill is measured as the difference between: • the aggregate of the (a) the value of the consideration transferred (generally at fair value), (b) the amount of any non-controlling interest (at fair value) and (c) in a business combination achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree, and • the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not amortised but tested annually for impairment. DEVELOPMENT ASSETS Development assets are internally generated intangible assets. The costs capitalised consist of salaries, ma- terials and services directly attributable to the development activities. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate: • The technical feasibility of completing the intangible asset so that the asset will be available for use or sale • Its intention to complete and its ability and intention to use or sell the asset • How the asset will generate future economic benets • The availability of resources to complete the asset • The ability to measure reliably the expenditure during development ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 87 NOTE – INTANGIBLE ASSETS Intangible assets Goodwill Develop- ment assets Software Assets under construction Total Balance as of 1 January 2021 Cost - 10,417 1,191 - 11,608 Accumulated amortisation - (7,059) (106) - (7,165) Net book value - 3,358 1,085 - 4,443 Change in net book value: Acquisitions through business combinations 39,258 4,246 - - 43,504 Additions - 120 482 194 796 Amortisation - (2,013) (531) - (2,544) Total changes 39,258 2,353 (49) 194 41,756 Balance as of 31 December 2021 Cost 39,258 14,783 1,673 194 55,908 Accumulated amortisation - (9,072) (637) - (9,709) Net book value 39,258 5,711 1,036 194 46,199 Balance as of 1 January 2020 Cost - 8,955 162 40 9,157 Accumulated amortisation - (5,264) (45) - (5,309) Net book value - 3,691 117 40 3,848 Change in net book value: Additions - 1,462 989 - 2,451 Transfer from assets under construction - - 40 (40) - Amortisation - (1,795) (61) - (1,856) Total changes - (333) 968 (40) 595 Balance as of 31 December 2020 Cost - 10,417 1,191 - 11,608 Accumulated amortisation - (7,059) (106) - (7,165) Net book value - 3,358 1,085 - 4,443 Following the acquisition of 60% of the voting shares in Pondus, goodwill has been recognised in the nan- cial statements of Ebusco Holding N.V. As the Group will perform the annual goodwill impairment test with a reference date as per 31 October, and Ebus- co became a listed company on the Euronext after a successful IPO towards the end of October, the Company decided to assess the recoverable amount of the cash-generating unit, being the Ebusco business is total, on a fair value less cost of disposal basis for 2021 annual goodwill impairment testing purposes. Accordingly, the fair value less cost of disposal has been determined using an observable market price being the IPO offer share price of €23.00 per share implying a market capitalisation post listing for Ebusco of approximately €1.3 billion. As the recoverable amount on a fair value less cost of disposal basis is signicantly higher than the carrying amount, no impairment has been identied for 2021. Development assets refer to the design, construction and testing of a chosen alternative for the new low oor bus which is 100% electrically powered. The additions to cost of development reect costs incurred by the Group, except the addition incurred in 2020, which has been sourced from its associate, Pondus Operations B.V. Software mainly refers to the Group’s after sales and inventory management system, acquired from and develo - ped by third party suppliers. The Group has no aggregate amount of R&D expenditures recognised as an expense during the reporting period. The intangible assets which are not yet in use were tested for impairment, no impairment was identied. The Group has performed an impairment assessment with regards to its remaining intangible assets and has not identied impairment indicators. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 88 14. NON-CURRENT FINANCIAL ASSETS ACCOUNTING POLICY – NON-CURRENT FINANCIAL ASSETS Financial assets are initially recognised at fair value and subsequently measured at amortised cost less impair- ments based on the general expected credit loss approach. The Group’s nancial assets consist of long-term deposits. NOTE – NON-CURRENT FINANCIAL ASSETS Non-current nancial assets As at 31 December 2021 As at 31 December 2020 Long-term deposits 205 305 Total 205 305 The Group’s non-current nancial assets consist of long-term deposits. Instead of providing a bank guarantee as security for a 3-year factory warranty, the Group agreed with one customer to keep 5% of the sales invoices as a deposit instead of a bank guarantee. This deposit has a duration of 3 years. Considering the relatively low value of the deposit, the Group estimates the carrying amount is not materially different from its fair value. 15. INVENTORIES ACCOUNTING POLICY – INVENTORIES Inventories are the assets sold in the ordinary course of business. Inventories are measured at the lower of cost and net realisable value. The Group adjusts the valuation of inventory with a provision for inventory that is obsolete or defective. Early 2021, the Group implemented a new operational system, which gave better insights in slow moving trade goods and spare parts. With this new system the Group is able to determine a more accurate allowance for obsoles - cence. The impact compared to the old approach is immaterial. NOTE – INVENTORIES Inventories relate to (raw) materials for production, trade goods ready for sale and spare parts to service ze- ro-emission electric buses sold by the Group. Inventories As at 31 December 2021 As at 31 December 2020 Trade goods for sale and spare parts 22,853 3,873 Inventories, gross 22,853 3,873 Allowance for obsolescence (523) (233) Inventories, net 22,330 3,640 The amount of write down of inventories recognised as an expense during 2021 was €290 (2020: €233). 16. TRADE RECEIVABLES ACCOUNTING POLICY – TRADE RECEIVABLES Trade receivables are classied at amortised cost, initially recognised at transaction price and subsequently measured at amortised cost less impairments based on the simplied expected credit loss (ECL) approach for trade receivables that do not contain a signicant nancing component. Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on individual credit limits which are dened in accordance with this assessment. Outstanding customer receivables and con - tract assets are regularly reviewed. At 31 December 2021, the Group had 6 customers (2020: 3) that owed more than €500,000 each and which accounted for approximately 94% (2020: 80%) of all the receivables outstanding. There were three customers (2020: 0 customers) with balances greater than €1 million accounting for just over 78% (2020: 0%) of the total amounts of trade receivable. The Group applies the simplied expected credit loss approach using a provision matrix based on historic inputs to determine the expected losses. This approach takes into account forward looking information that might have an impact on the way the trade receivables will be settled in the future. The calculation reects the ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 89 probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic condi- tions. Generally, trade receivables are written-off if past due for more than one year and which are not subject to enforcement activity. The maximum exposure to credit risk at the reporting date is the carrying value of each class of nancial assets. The Group evaluates the concentration of risk with respect to trade receivables and contract assets as low, given its customers prole. NOTE – TRADE RECEIVABLES Trade receivables A s at 31 December 2021 As at 31 December 2020 Trade receivables 17,112 2,501 Doubtful debtor provision (514) (638) Net trade debtors 16,598 1,863 In 2020, a provision has been recognised of €600 for a claim made by one of the Group’s customers. This claim has been settled in 2021 for an amount of €650, of which €600 was charged against the doubtful debtor provision and €50 against the statement of prot or loss. In 2021, €389 has been added to the doubtful debtor provision for certain specic trade receivables with an impairment indication. Trade receivables are non-interest bearing and are generally on terms of 30 to 90 days. Due to the short duration of the receivables (average less than 3 months) the fair value approximates the car- rying value. Set out below is the information about the credit risk exposure on the Group’s trade receivables and contract assets using the provision matrix: 31 December 2021 Contract assets Trade receivables - Days past due <30 days 30-60 days 60-90 days >91 days Total Expected credit loss rate 0% 0,5% 0,5% 6% 6% Estimated total gross carrying amount at default 13.450 4.672 4.300 830 7.310 17.112 Expected credit loss - 25 17 52 420 514 31 December 2020 Trade receivables - Days past due Contract assets <30 days 30-60 days 60-90 days >91 days Total Expected credit loss rate 0% 0% 0% 0% 50% Estimated total gross carrying amount at default 59.989 783 383 60 1.275 2.501 Expected credit loss - - - - 638 638 17. OTHER CURRENT ASSETS ACCOUNTING POLICY – OTHER CURRENT ASSETS Other receivables and accrued assets are initially recognised at fair value and subsequently measured at amor- tised cost less impairments based on the simplied expected credit loss approach. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 90 NOTE – OTHER CURRENT ASSETS Other current assets As at 31 December 202 1 As at 31 December 2020 Taxes and social securities 2,898 5 Derivatives 343 331 Other accrued assets 582 1,066 Total other current assets 3,823 1,402 Due to the short duration of the non-derivative current nancial assets the fair value approximates the carrying value. 18. CASH AND CASH EQUIVALENTS ACCOUNTING POLICY – CASH AND CASH EQUIVALENTS The Group considers cash and cash equivalents the cash at bank and in hand, bank balances and deposits with terms of less than three months. Cash is classied at amortised cost, initially recognised at fair value and subsequently measured at amorti- sed cost less impairments based on the general ECL approach. NOTE – CASH AND CASH EQUIVALENTS Cash and cash equivalents A s at 31 December 2021 As at 31 December 2020 Cash at hand 1 1 Cash at bank 207,922 26,861 Total cash and cash equivalents 207,923 26,862 The majority of commercial banks where cash and cash equivalents are held have a credit rating in the A ca- tegories of Moody’s/S&P. No defaults occurred during the year and management does not expect any losses from non-performance by these counterparties. The risk of default of the counterparty is assessed to be low taking into account the credit rating. The resulting expected credit loss is estimated to be insignicant. As per 31 December 2021, an amount of €30.0 million has been blocked and provided as pledge to ING Bank N.V. by Ebusco B.V. as security for the payment or repayment of everything that Ebusco B.V. and Ebusco Manufacturing B.V. may owe to ING Bank N.V. In addition, an amount of €1.8 million has been blocked and provided as pledge to Coöperatieve Rabobank U.A. as coverage for outstanding letter of credit amounts. As per 31 December 2020, an amount of €10.2 million of the bank accounts had been blocked as coverage of outstanding letter of credit amounts. In addition, an amount of €668 of the bank accounts has been blocked as per 31 December 2021 (31 December 2020: €462) as coverage for outstanding bank guarantees. The outstanding bank guarantees include a bank guarantee for the rental agreement of the premises in Deurne as at 31 December 2021 of €132 (31 December 2020: €132). 19. EQUITY 19.1 EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE GROUP ACCOUNTING POLICY – EQUITY Ordinary shares are classied as equity. Incremental costs directly attributable to the issuance of the ordinary shares are netted, net of tax, from the proceeds. A single depository receipt can be exchanged for one ordinary share of the Group. Depository receipts are classied as equity instruments under IFRS. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 91 The Group evaluates its equity instruments, including its preferred shares. Certain instruments contain as- pects which would require their classication as either liabilities or compound instruments which would con- tain both equity and liability components, including whether or not the Group has a contractual obligation to deliver cash or nancial asset to another party. Equity classication is only appropriate if the Group has an unconditional right to avoid delivering cash or other nancial instruments. NOTE – CAPITAL MANAGEMENT For the purpose of the Group’s capital management, capital includes issued capital, share premium and all other equity reserves attributable to the equity holders of the parent. The primary objective of the Group’s capital management is to safeguard the ability to continue as going concern and to provide return for share- holders and benets to other stakeholders. The Group manages its capital structure and makes adjustments in light of changes in economic conditions and the requirements of the nancial covenants, if applicable. To maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. The IPO in October had a signicant positive impact on the nancial position of the Group. With the IPO proceeds, the Group has been able to repay almost all loans and borrowings outstanding before year-end 2021 and will be able to fund the development of its business and medium-term international expansion and growth strategy. Being a listed Company, Ebusco will also have access to the equity market for future nancing needs. NOTE – EQUITY AND CAPITAL MANAGEMENT ISSUED AND PAID IN ORDINARY SHARE CAPITAL The issued and paid in ordinary share capital amounts to €590 as at 31 December 2021 (31 December 2020: €24) and is subdivided into: 59,039,380 ordinary shares with a nominal value of €0,01 (31 December 2020: 18,000 ordinary shares A and 5,999 ordinary shares B both with a nominal value of €1). In 2021 the following changes in the issued and paid in ordinary share capital were made: – Issuance of ordinary shares (May 2021) On 28 May 2021, the Group issued at par value 15,750 ordinary shares A and 5,250 ordinary shares B to its existing shareholders. The shares have been distributed as follows: • 9,450 ordinary shares A to Peter Bijvelds Holding Erp B.V. having a nominal value of €1 and an issue price of €1; • 6,300 ordinary shares A to Van Der Valk Investments B.V. having a nominal value of €1 and an issue price of €1; • 5,250 ordinary shares B to ING Corporate Investments Participaties B.V. having a nominal value of €1 and an issue price of €1. Considering that the par value of the shares is equal to the issue price, no share premium has been recorded. The shares are issued at par and satised at the expense of the general share premium reserve. Accordingly, no cash payments were made. Subsequent to the share issuance, the shareholders have retained the same equity stake in the Group to be specied as follows: Peter Bijvelds Holding Erp B.V. (45%), Van Der Valk Investments B.V. (30%) and ING Corpo- rate Investments Participaties B.V. (25%). – Capital restructuring (October 2021) In preparation for the IPO, the 33,750 ordinary shares A with a nominal value of €1 and 11,249 ordinary sha- res B with a nominal value €1 have been converted into 44,999,000 ordinary shares with a nominal value of €0,01. The conversion resulted in an increase of the issued and paid in ordinary share capital of €405 satis- ed at the expense of the general share premium reserve. – Issuance of ordinary shares – IPO and Over-Allotment option (October/November 2021) Following the listing on Euronext Amsterdam in October 2021, the Group issued 14,040,380 ordinary shares with a nominal value of €0,01 and gross proceeds of €323 million. As a result, issued and paid in ordinary share capital increased by €140 and share premium by €312,265 (net of share issuance costs in the amount of €7,422 net of tax (tax rate: 25%)). ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 92 CUMULATIVE PREFERENCE SHARES As at 31 December 2020, 3 cumulative preference shares with a nominal value of €1 were outstanding. The cumulative preference shares issued in 2020 provided for an exit/liquidation waterfall mechanism, that would ensure the recovery of the original investment amount of €10.0 million for the cumulative preference share holders. Moreover, the holders of preferred shares were entitled to an 8% share of the investment amount, to be paid on an annual basis, based on prots available for distribution. The preference shares issued to each of the 3 shareholders represented a contractual obligation to deliver cash to another entity and therefore have been classied as a liability. The preferences shares including accrued interest have been redeemed in October 2021 from the IPO pro- ceeds for the total amount of €11,065. Reference is made to Note 20: Loans and borrowings. CONVERTIBLE LOAN As per 31 December 2020, the Group’s equity position included an amount of €600 granted by an external investor in 2016. The terms of the loan did not specify any contractual repayments, repayment date or inte- rest to be paid and provided the option of conversion into 2% of Ebusco B.V.’s share capital. Accordingly, the convertible loan qualied as equity instrument. On 11 April 2021, the Group entered into an agreement with the external investor for the settlement of the out- standing arrangement respectively repayment of the convertible loan. To settle the arrangement the Group paid €800 in cash. RESERVES The Group has recorded cash ow and cost of hedging reserves as a result of application of hedge accounting, linked to its foreign currency risk management policy as at 31 December 2021 of €6 (31 December 2020: €(454)). In addition, the Group has recorded a reserve as required by Dutch law in respect of: • capitalised development assets excluding development assets acquired through business combinations (classied as Other reserve) as at 31 December 2021 of €1,757 (31 December 2020: €3,358) as required by Dutch law. • the remeasurement gain of €7,450 in 2021 as a result of remeasuring the carrying amount of its 20% invest - ment in Pondus associates’ at fair value. Reference is made to Note 5: Acquisitions and the Consolidated statement of changes in equity. ACQUISITION NON-CONTROLLING INTEREST IN PONDUS The net cash outow amounted to €19,996 (being €20,000 less cash acquired). Following the acquisition, the difference between the fair value of the consideration paid and the carrying value of the non-controlling interest being €12,806 has been charged against the Company’s share premium. Reference is made to Note 5: Acquisitions and the Consolidated statement of changes in equity. 19.2 NON-CONTROLLING INTERESTS Non-controlling interests included the remaining 20% of the shares in Pondus held by Gr8 Technologies B.V. after the acquisition of 60% of Pondus in April 2021. The fair value of the non-controlling interest was asses- sed at €7,450. On 18 October 2021, the Group acquired the remaining 20% of Pondus through the acquisition of 100% of the shares of Gr8 Technologies B.V. Following the acquisition, the carrying value of the non-controlling interest of €7,190 (including loss for the period of €260) has been reclassied to the equity of Ebusco Holding N.V. The non-controlling interest as at 31 December 2021 of €63 (asset) includes the carrying value of 10% of Pondus Operations B.V. held by minority shareholders. Reference is made to Note 5: Acquisitions and the Consolidated statement of changes in equity. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 93 20. LOANS AND BORROWINGS (LONG-TERM AND SHORT-TERM) ACCOUNTING POLICY – FINANCIAL LIABILITIES (NON-DERIVATIVES) Financial liabilities (non-derivatives) are initially measured at fair value less transaction costs and subse- quently measured at amortised cost. NOTE – FINANCIAL LIABILITIES (NON-DERIVATIVES) Loans and borrowings consist of the following: Loans and borrowings As at 31 December 2021 As at 31 December 2020 Non-current Current Total Non-current Current Total Debt to credit institutions - 215 215 - 41,788 41,788 RVO loan - - - 2,436 3,000 5,436 Cumulative preference shares - - - 10,000 400 10,400 Debts to other related parties 463 - 463 441 - 441 Total 463 215 678 12,877 45,188 58,065 DEBT TO CREDIT INSTITUTIONS The Group had a €80.0 million credit facility agreement as at 31 December 2020, divided in two parts: 1. A multicurrency revolving facility in an aggregate amount equal to €70.0 million to Ebusco B.V., to be utilised by way of letters of credit (“Facility A”), with an (uncommitted) accordion option subject to a condi- tion that the increase of the total commitments as a result of the exercise of the accordion options may not exceed €30.0 million in aggregate; and 2. A revolving credit facility in an aggregate amount equal to €10.0 million to Ebusco B.V. and Ebusco Manu- facturing B.V. (“Facility B” and, together with Facility A, the “Facilities”), to be utilised by way of ancillary facilities (each an “Ancillary Facility”), with all amounts borrowed thereunder to be applied for (a) issuing performance guarantees or performance bonds, with a maximum tenor of 36 months, or (b) towards the general working capital purposes of the borrowers, with an (uncommitted) accordion option subject to a condition that the increase of the total commitments as a result of the exercise of the accordion options may not exceed €30.0 million in aggregate. The borrowers have entered into (i) a €1.0 million Ancillary Facility with ING, (ii) a €1.0 million Ancillary Facility with ABN AMRO Bank N.V. and (iii) a €1.0 million Ancil- lary Facility with Coöperatieve Rabobank U.A. The facility was established on 21 September 2020 for €80.0 million, replacing previous arrangements for €60.0 million in 2019. With the cash generated from the IPO in October 2021, the credit facility agreement has been cancelled with approval of all banks in December 2021. The outstanding balance as at 31 December 2021 of €215 includes a letter of credit entered into with Rabobank. MEZZANINE FACILITY (ING CREDIT AGREEMENT) On 15 April 2021, the Group and ING Corporate Investments Mezzanine Fonds B.V. (as lender) entered into a €32.5 million credit agreement. The loan under the ING Credit Agreement had to be utilised only for the following: • The acquisition of 60% of Pondus by the Company; • Repayment of the existing nancial indebtedness of Pondus; • Financing of the costs involved in the run-up to a potential listing or private placement of shares of the Company; • Financing of initial investments for the realisation of the Group’s roll-out plan; and • Working capital nancing required by the Group and not covered by the Facilities Agreement. The interest rate for the ING Credit Agreement is equal to (i) 3.50% per annum until 15 July 2021, (ii) 4.00% per annum from 15 July 2021 to 15 October 2021 and (iii) 4.50% per annum from 15 October 2021 until the maturity date (15 March 2022). The Company decided to repay this loan including accrued interest from the IPO proceeds in October 2021. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 94 RVO LOAN The RVO (Rijksdienst voor Ondernemend Nederland) loan relates to a loan received from the Dutch govern- ment for the development of new products (Ebusco 2.0, Ebusco 2.1 and related bus types) and bears an inte- rest rate of 7%. Interest is added to the principal amount; the total interest amount is payable at the extended maturity date of 1 June 2022. The Company decided however, to early repay the loan from the IPO proceeds. The following guarantees were provided in relation to the loan from RVO: • Right of pledge on all intangible and tangible xed assets which were nanced by the loan from RVO. • Guarantee to RVO from Peter Bijvelds Holding Erp B.V. in fullling the obligations related to the loan. These guarantees were cancelled after repayment of the RVO loan. DEBT TO SHAREHOLDERS The loan from shareholders as per 1 January 2020 consists of three subordinated loans: one from Bijvelds Car Trading B.V. amounting to €900, one from Van der Valk Investments B.V. amounting to €600 and one from ING Corporate Investment Participaties B.V. amounting to €500. The subordinated loans bear a 7% (annual) interest. Repayment was contractually set for 31 December 2019. However, shareholders mutually agreed to extend the subordinated loans, which were fully repaid to the shareholders in December 2020. In addition, the Group obtained a shareholder loan through the acquisition of 60% of the voting shares in Pondus Holding B.V. in April 2021. VDVI B.V. (formerly Van Der Valk Investments B.V.) granted a subordinated loan of €1,500 to Pondus to ensure repayment of RVO proceeds which were granted to Pondus. The loan bears an interest rate of 12% per year; interest is added to the loan. With the repayment of the RVO proceeds in April 2021 by the Group after the acquisition, the subordinated loan was not required anymore. The Group agreed with VDVI B.V. to repay the net outstanding balance of €534 as per 31 December 2021 early 2022. Reference is made to Note 24: Related party transactions. CUMULATIVE PREFERENCE SHARES Reference is made to Note 19: Equity. DEBTS TO OTHER RELATED PARTIES Debts to other related parties include a payable to BaBoDiDa Ltd. The long-term loan from BaBoDiDa Ltd. bears an interest rate of 5% per year. The interest is added to the loan. No security nor repayment terms have been provided with regards to the loan. CONTINGENT CONSIDERATION The contingent consideration relates to the acquisition of 60% of the voting shares of Pondus Holding B.V. (re- ference is made to Note 5: Acquisitions). At the acquisition date, the fair value of the contingent consideration was estimated to be €5,750. The contingent consideration of €5,750 has been paid in October 2021 from the IPO proceeds. The Group used a discounted cash ow method, with reference to the borrowing rate of the issuer as at end of the reporting period in order to determine the fair value of the borrowings. However, the Group reached the conclusion that the difference between the carrying amount of the loan and their fair value was not material and therefore no fair value adjustment was recorded. The following table sets out the reconciliation from the net cash ows from nancing activities with the nancing positions of loans and borrowings as at 31 December 2021 and 2020. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 95 Debt to credit institu- tions Mezza- nine facility RVO Loan Debt to share- holders Cumula- tive pref- erence shares Debts to other related parties Leases Total Balance as at 1 January 2021 41,788 - 5,436 - 10,400 441 1,782 59,847 Changes from nancing cash ows Proceeds from loans & borrowings 9,000 32,500 - - - - - 41,500 Repayment of loans & borrowings (50,923) (33,168) (11,426) - (10,000) - - (105,517) Payment of lease liabilities - - - - - - (1,244) (1,244) Interest paid (1,262) - - - (1,065) - - (2,327) Total changes from nancing cash ows (43,185) (668) (11,426) - (11,065) - (1,244) (67,588) Other changes Acquisition through business combination - - 5,696 2,213 - - - 7,909 New leases / remeasurements - - - - - - 7,716 7,716 Interest and similar expense 1,612 668 294 (85) 665 22 128 3,304 Transfer to payables to related parties - - - (2,128) - - - (2,128) Total liability-related other changes 1,612 668 5,990 - 665 22 7,844 16,801 Balance as at 31 December 2021 215 - - - - 463 8,382 9,060 Debt to credit institu- tions Mezza- nine facility RVO Loan Debt to share- holders Cumula- tive pref- erence shares Debts to other related parties Leases Total Balance as at 1 January 2020 8,213 - 5,647 2,000 - 420 1,650 17,930 Changes from nancing cash ows Proceeds from loans & borrowings 33,525 - - - 10,000 - - 43,525 Repayment of loans & borrowings - - (600) (2,000) - - - (2,600) Payment of lease liabilities - - - - - - (457) (457) Interest paid (855) - - (140) - - - (995) Total changes from nancing cash ows 32,670 - (600) (2,140) 10,000 - (457) 39,473 Other changes New leases / remeasurements - - - - - - 519 519 Interest expense 905 - 389 140 400 21 70 1,925 Total liability-related other changes 905 - 389 140 400 21 589 2,444 Balance as at 31 December 2020 41,788 - 5,436 - 10,400 441 1,782 59,847 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 96 21. LEASES ACCOUNTING POLICY - LEASES (THE GROUP AS A LESSEE) The Group assesses whether a contract is or contains a lease at the inception of the contract to determine whether an asset is identiable, and the lessee has control to direct its use, and receives all economic bene- ts related to the asset. The Group recognises a right-of-use asset (ROU asset) and a corresponding lease liability with respect to all lease arrangements in which it is a lessee. The lease liability is initially measured by calculating the present value of all future lease payments, discounted by the incremental borrowing rate. All future lease payments are xed in nature with exception of yearly indexations. The interest on the lease liability for each period from the discount rate is recognised in the prot or loss statement for the year. At initial recognition, the ROU asset amounts to the initial lease liability adjusted for any initial direct costs or the expected costs for dismantling. In case of changes in the lease term or other conditions, the Group will reassess the discount rate and the remaining lease payments. The Group shall remeasure the carrying amount of the lease liability to reect a reassessment or lease modication, using a revised discount rate, if any. ROU assets are depreciated on a straight-line basis over the lease term and tested for impairment whenever events or changes in circumstances indicates that the carrying amount may not be recoverable. Interest on lease liability is recognised as an expense in the statement of prot or loss. NOTE – LEASES AS LESSEE Lease liability As at 31 December 2021 As at 31 December 2020 Lease liability (non-current) 7,250 1,238 Lease liability (current) 1,132 544 Total 8,382 1,782 The Group has several lease agreements in which it acts as a lessee. The main lease concerns a contract for ofce and manufacturing space in Deurne, the Netherlands with a lease term of 5 years ending 30 September 2023. This lease contains an extension period of 5 additional years which the Group did not expect to exercise priorly, but expects to exercise as at the end of the current reporting period. Furthermore, additional facility space has been rented in the course of 2021, due to the growth of the business. Both the expectation that the extension option will be exercised and the additional facility space rented resulted in an increase of both the ROU asset and lease liabilities of €7,486. The Group also has lease contracts which consist of cars for company personnel. The lease term for the aforementioned lease contracts is 5 years. No lease contracts for the personnel cars contain an extension option. New car lease contracts and remeasurements resulted in an increase of both the ROU asset and lease liabilities by €233 and €230 respectively. All lease contracts have xed lease payments and are only adjusted for indexation. None of the lease agree- ments contain a termination option. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 97 Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period: Right-of-use assets Land and buildings Cars Total Balance as of 1 January 2021 Cost 1,881 575 2,456 Accumulated depreciation (840) (188) (1,028) Net book value 1,041 387 1,428 Change in net book value: Additions and remeasurements 7,486 233 7,719 Depreciation (954) (147) (1,101) Total changes 6,532 86 6,618 Balance as of 31 December 2021 Cost 9,367 808 10,175 Accumulated depreciation (1,794) (335) (2,129) Net book value 7,573 473 8,046 Balance as of 1 January 2020 Cost 1,629 308 1,937 Accumulated depreciation (477) (78) (555) Net book value 1,152 230 1,382 Change in net book value: Additions and remeasurements 252 267 519 Depreciation (363) (110) (473) Total changes (111) 157 46 Balance as of 31 December 2020 Cost 1,881 575 2,456 Accumulated depreciation (840) (188) (1,028) Net book value 1,041 387 1,428 Set out below are the carrying amounts of lease liabilities (included under interest-bearing loans and borrow- ings) and the movements during the period: Lease liabilities 2021 2020 As at 1 January 1,782 1,650 Additions and remeasurements 7,716 519 Accretion of interest 128 70 Payments (1.244) (457) As at 31 December 8,382 1,782 The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases (less than 12 months) and low-value assets. Short-term (less than 12 months) and small value lease contracts are expensed in the statement of prot or loss and other comprehensive income on a straight-line basis over the lease term. The amount of expense incurred in 2021 is €92 in total (2020: €10). The future cash outows relating to leases that have not yet commenced are disclosed in Note 25: Commit- ments and contingencies (if applicable). For interest expenses on leases where the Group is a lessee, we refer to Note 9: Finance expenses, net. ACCOUNTING POLICY - LEASES (THE GROUP AS A LESSOR) OPERATING LEASES Leases in which the Group does not substantially transfer all the risks and rewards incidental to ownership of an asset, are classied as operating leases. The Group records assets which are leased on an operational basis within Property, Plant and Equipment. Initial direct costs incurred in negotiating and arranging an oper- ating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income. For subsequent measurement of operating leases, the Group recognises lease income from the lease within the statement of prot or loss. Depreciation and possible impairments are consistent with the Group’s policy for similar assets. We refer to the accounting policy for Property, Plant and Equipment. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 98 FINANCE LEASES Leases in which the Group transfers substantially all the risks and rewards incidental to ownership of an asset are classied as nance leases. The Group will recognise at initiation a nance lease receivable at the amount equal to the net investment in the lease. This equals the present value of the future minimum lease payments and the residual value, after any accumulated impairment losses. Initial direct costs are included in the initial measure - ment of the net investment in the lease and reduce the amount of income recognised over the lease term. For subsequent measurement of nance leases, the Group recognises nance income equal to the interest implicit in the lease of the lease receivable, adjusted for any possible impairment. Finance lease income is calculated using the effective interest method. Impairment requirements are applied to nance lease receivables in accordance with the simplied approach as prescribed in IFRS 9. The loss allowance is measured at lifetime expected credit losses. The Group recognises an allowance for expected credit losses for all nancial assets, including nance lease receivables based on lifetime ECLs at each reporting date. NOTE - GROUP AS A LESSOR The Group has entered into operating leases on some of its electric buses. At year-end 2021, the Group has 2 operating lease contracts. The rental income recognised by the Group during the year is presented in the table below. Lease income 2021 2020 Lease income 126 431 Total 126 431 As of 31 December 2021, only one bus is still leased to a customer. When the Group enters into operating lease agreements with its customers, each contract species that the buses must be returned to the Group in working condition and any damage to the bus must be repaired prior to the return of the asset to the Group. Any other risks associated with leasing buses to customers are minimal. Future minimum rentals receivable under non-cancellable operating leases as at 31 December are as follows: Minimum rentals receivable 2021 2020 Within one year 15 - After one year but not more than five years - - More than five years - - Total 15 - 22. PROVISIONS ACCOUNTING POLICY - PROVISIONS Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outow of resources embodying economic benets will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. The expense relating to a provision is presented in the statement of prot or loss net of any reimbursement. PROVISION FOR WARRANTIES Provisions for warranties are recognised when: (a) the Group has a present legal or constructive obligation as a result of past events; (b) it is probable that an outow of resources will be required to settle the obligation; and (c) the amount can be reliably estimated. Assurance-type warranties are not distinct within customer contracts. Service-type warranties are accounted for as separate performance obligations in accordance with IFRS 15 and are recorded as contract liabilities (as appropriate) and recognised as the Group performs its obligation. Provisions related to assurance-type warranties are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reects current market assess- ments of the time value of money and the risks specic to the obligation. The increase in the provision due to passage of time is recognised as interest expense. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 99 NOTE – PROVISIONS Details of the provisions are presented in the table below: Provisions A s at 31 December 202 1 As at 31 December 2020 Provision for disputes 1,130 - Provision for energy costs - 141 Total 1,130 141 PROVISION FOR DISPUTES After complaints of a customer, the Group held the supplier of climate systems liable for the delivery of a non-conforming climate system. Following a court verdict in April 2021 the Group complaints were conrmed by the court and the supplier was determined liable for this issue. Subsequently, the supplier started a temporary injunction opposing to the execution of the verdict. The verdict in the temporary injunction was that the supplier was not dismissed from the original verdict and was ordered to comply within two months. A settlement agreement was reached on 30 July 2021 and subsequently the Group started replacing climate systems on all buses delivered. The Group recognised a provision of €3,939 in total in 2021, of which €2,809 has been used. As per 31 December 2021 the provision amounts to €1,130 to cover remaining costs to be incurred in 2022 as replacement has not been completed yet as per 31 December 2021. Although the Group has a strong legal case which is supported by court it is unclear whether and what amount the supplier has to pay towards the Group. Due to the uncertainty, no receivable as per 31 December 2021 has been recognised in the balance sheet. PROVISION FOR ENERGY COSTS A provision for energy costs invoiced by the landlord of the Deurne office space but disputed by the Group has been booked. The dispute relates to service charges invoiced by the landlord. In May 2021, the Group has reached an agreement with the landlord and settled for an amount of €138. The remaining balance of the provision for energy costs has been released to the statement of prot or loss. SIGNIFICANT ACCOUNTING JUDGEMENT: PROVISION FOR WARRANTIES The Group is unable to reliably estimate warranty expense related to its assurance-type warranties. The production of zero-emission buses is based on new technology for a relatively small customer base for which sufcient historical information regarding warranty expenses is not available, whether from the Group’s expe- rience or based on similar publicly available information from industry peers. The Group does not record a provision for warranty expense. 23. TRADE PAYABLES AND OTHER CURRENT FINANCIAL LIABILITIES ACCOUNTING POLICY - FINANCIAL LIABILITIES (NON-DERIVATIVES) The nancial liabilities (non-derivatives) are initially measured at fair value and subsequently at amortised cost. The fair value of the current nancial liabilities approximates the book value due to its short-term nature. NOTE - FINANCIAL LIABILITIES (INCLUDING DERIVATIVES) The breakdown of the trade creditors and other current liabilities is as follows: Trade payables and other current liabilities As at 31 December 2021 As at 31 December 2020 Trade payables 10,883 6,762 Pension funds liabilities 29 3 Taxes and social securities 741 1,133 Other current liabilities 6,207 2,196 Total 17,860 10,094 Trade payables are non-interest bearing and are normally settled on 30-days terms. Due to the short dura- tion of the payables, the fair value approximates the carrying value. Other current liabilities are non-interest bearing and have an average term of two months. Other current liabilities increased by €4,011 to €6,207 as at 31 December 2021 mainly due to accrued IPO expenses of €3,083. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 100 24. RELATED PARTY TRANSACTIONS ACCOUNTING POLICY – RELATED PARTY TRANSACTIONS A related party is a person or an entity that is related to the reporting entity: • A person or a close member of that person’s family is related to the Group if that person has control, joint control, or signicant inuence over the Group or is a member of its key management personnel; • An entity is related to the Group if, among other circumstances, it is a parent, subsidiary, fellow subsidiary, associate, or joint venture of the Group, or it is controlled, jointly controlled, or signicantly inuenced or managed by a person who is a related party. A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged. The Group discloses the nature of the related party relationship as well as information about the transactions and outstanding balances necessary for understanding of the potential effect of the relationship on the nan- cial statements. These disclosures are made separately for each category of related parties. Key management personnel are those persons having authority and responsibility for planning, directing, and controlling the activities of the Group, directly or indirectly, including any directors (whether executive or otherwise) of the Group. NOTE – RELATED PARTY TRANSACTIONS The Group identies a related party as a person or entity that is related to the Group. These include both people and entities that have, or are subject to, the inuence or control of the Group. Note 3 provides information about the Group’s structure, including details of the subsidiaries and the holding company. Until the IPO, the Group’s shareholders consist of Peter Bijvelds, Van der Valk Investments, and ING. All 3 shareholders remained shareholders after the IPO. Paul van Beers also became shareholder after the IPO following execution of the waiver agreement (reference is made to Note 7.1). The Group engages with its sha- reholders in certain related party transactions disclosed in this and other notes in these nancial statements. The Group holds receivables and payables from its shareholders who represent related parties. Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation. Transactions and balances with related parties can be specied as follows: Entity / person with signicant inuence Year Purchases from related parties Interest owed by/ (to) related parties Amounts owed by related parties Amounts owed to related parties Bijvelds Car Trading B.V. 2021 - - 24 - 2020 - - - - Pondus Operations B.V. 2021 - - - - 2020 - 10 505 - Babobida Ltd. 2021 - (22) - 463 2020 - (23) - 441 VDVI B.V. 2021 - - - 534 2020 - - - - Trimados Holding B.V. 2021 22,344 - - - 2020 - - - - B. van den Nieuwenhuijzen 2021 9.998 - - - 2020 - - - - B.A. van den Nieuwenhuijzen 2021 9.998 - - - 2020 - - - - ING Bank N.V. 2021 - 609 - - 2020 - 995 - 45.800 RECEIVABLES AND PAYABLES FROM RELATED PARTIES As at 31 December 2021, there was an outstanding balance of €24 of receivables from related parties, being Bijvelds Car Trading B.V. As at 31 December 2020 receivables from related parties amounted to €505 being a receivable from Pondus Operations B.V. The latter bears 2% interest and fair value approximates carrying value. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 101 The non-current loans and borrowings include a payable to BaBoDiDa Ltd (related party of shareholder VDVI B.V.). The long-term loan from BaBoDiDa Ltd. bears an interest rate of 5% per year. No security nor repayment terms have been provided with regards to the loan. Payables to related parties as at 31 December 2021 includes an outstanding liability of €534 towards VDVI B.V. which has been repaid in January 2022. The net payable relates to an agreed settlement of 2 positions outstanding as per 31 December 2020 including: • A subordinated loan granted by VDVI B.V. (formerly Van Der Valk Investments B.V.) to the Group in December 2017 of €1.5 million to the Group to ensure repayment of RVO proceeds which were granted to the Group. The loan had an interest rate of 12% per year (added to the loan) and had to be repaid in 10 years; and • A loan provided at the same time by the Group to VDVI B.V. of €1.5 million. Interest amounted 2% per year with an indenite duration. With the repayment of the RVO proceeds in April 2021 by the Group the subordination was not required anymore resulting in a repayment of the net liability in January 2022 of €534. Further reference is made to Note 20. Tridamos Holding B.V. is owned by the COO and sold his 60% share in Pondus Holding B.V. to the Group in April 2021. Reference is made to Note 5: Acquisitions. On 18 October 2021 the Group acquired the remaining 20% of the shares in Pondus Holding B.V. through the acqui- sition of 100% of the shares of Gr8 Technologies B.V., which were owned by B. and B.A. van den Nieuwenhuijzen. The acquisition price of €20.0 million was based on the further manufacturing roll-out of the composite buses and external market data. Both persons were each participating for 50% in Gr8 Technologies B.V. and are related to VDVI B.V. which is one of the existing shareholders of Ebusco Holding N.V. Reference is made to Note 5: Acquisitions. During the normal course of business, the Group engages in transactions with ING, including loan facilities and issuance of letters of credit. All transactions are carried out at arms-length. The interest incurred and paid in 2021 amounts to €609 (2020: €995). As a result of the cash generated from the IPO in October 2021, the credit facility agreement has been cancelled with approval of all banks in December 2021. Reference is made to Note 20: Loans and borrowings. TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL For compensation of key management personnel of the Group reference is made to Note 7. 25. COMMITMENTS AND CONTINGENCIES PURCHASE COMMITMENTS The Group made commitments for the purchasing of electric buses for an amount of €9.4 million at 31 December 2021 (2020: €0 million). OTHER DISPUTES During December 2020, the Group delivered four buses to a customer, generating €2.0 million of revenues. After the transfer of control of the buses, the customer’s facility experienced re damage and the buses were destroyed. The Group asserts that control and ownership of the buses was transferred before the event and the amounts receivable for the delivered buses are owed to the Group. The customer disputes the Group’s assertion and disputes the amount payable to the Group for the buses. The matter is under dispute and the Group plans to pursue collection of the amount receivable. The outcome is neither probable nor estimable and no signicant expected credit loss is recorded. CONTINGENT ASSET In 2021 the Group held a supplier of climate systems liable for the delivery of a non-conforming climate system. Due to uncertainty no receivable as per 31 December 2021 is recognised in the balance sheet. Reference is made to Note 22: Provisions. 26. POLICY NOTE: FINANCIAL INSTRUMENTS AND FAIR VALUE This section relates to all financial assets and financial liabilities of the Group, including financial instru- ments associated with the Group’s hedge accounting. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 102 ACCOUNTING POLICY – FAIR VALUE Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either in the principal market for the asset or liability or, in the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-nancial asset takes into account a market participant’s ability to generate economic benets by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufcient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. All assets and liabilities for which fair value is measured or disclosed in the nancial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is signicant to the fair value measurement as a whole: • Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities; • Level 2 - Valuation techniques for which the lowest level input that is signicant to the fair value measure - ment is directly or indirectly observable; • Level 3 - Valuation techniques for which the lowest level input that is signicant to the fair value measure - ment is unobservable. For assets and liabilities that are recognised in the nancial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisa- tion (based on the lowest level input that is signicant to the fair value measurement as a whole) at the end of each reporting period. ACCOUNTING POLICY: FINANCIAL INSTRUMENTS A nancial instrument is any contract that gives rise to a nancial asset of one entity and a nancial liability or equity instrument of another entity. Derivatives held by the Group are classied and recorded at fair value. All other nancial instruments on the balance sheet are classied and recorded at (amortised) cost. Other nan - cial assets are initially measured at fair value plus transaction costs and subsequently at amortised cost less impairments based on the expected credit loss (“ECL”) approach. Fair value of trade receivables and cash and cash equivalents approximates the carrying amount due to the short duration. Other nancial liabilities are initially measured at fair value less transaction costs and subsequently at amortised cost. Fair value of current nancial liabilities approximates the carrying amount due to the short duration. CLASSIFICATION The Group classies its nancial instruments either at: • Fair value through prot or loss (“FVPL”); or • Amortised cost. The classication of nancial assets is dependent on the business model of the contractual terms of the cash ows and the terms and conditions of the nancial assets. Gains and losses on nancial assets classied and subsequently measured at FVPL shall be recorded in the prot or loss. MEASUREMENT The Group measures nancial assets at initial recognition at fair value plus transaction costs. The transaction costs of nancial assets classied at FVPL are expensed in prot or loss at initial recognition. DEBT INSTRUMENTS Subsequent measurement of debt instruments depends on the classication of the debt instruments by the Group. The Group measures its debt instruments as follows: • Amortised cost: Interest income from these nancial assets is included in nance income using the effec- tive interest rate method. • FVPL: A gain or loss is subsequently measured at FVPL and gains or losses are recognised in prot or loss and presented net within other gains and losses for the period in which it arises. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 103 FINANCIAL LIABILITIES – NOT DERIVATIVES The Group measures its nancial liabilities at amortised cost. IMPAIRMENT The Group assesses on a forward-looking basis the ECL associated with its debt instruments carried at amor- tised cost. The Group implements one ECL approach for nancial assets (the simplied ECL approach). The Group applies the simplied ECL approach to qualifying trade receivables, IFRS 15 contract assets and lease receivables. PERFORMING (NON-CREDIT IMPAIRED) FINANCIAL ASSETS (STAGE 1) Each reporting date, the Group decreases its receivables, by deducting the payments, with an amount that is equal to the payment by the borrower or debtor (minus the interest income, if applicable). When the end of the payment term is reached, the receivable will amount to zero. The simplied ECL approach is applied for trade receivables and contract assets. Therefore, the Group does not track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has established a provision matrix that is based on its historical credit loss experi- ence, adjusted for forward-looking factors specic to the debtors and the economic environment. CREDIT IMPAIRED FINANCIAL ASSETS – (DEFAULT) (STAGE 2 & 3) For purposes of assessing, recognising and reporting credit impaired assets, the Group denes a credit impaired asset as any receivable from a borrower or debtor who is considered unable to pay its credit obliga- tions. The denition of credit impaired by the Group is in line with the Group’s own credit risk approach. The assessment whether a receivable is credit impaired is based on management individual assessment and takes into account quantitative and qualitative measures. Any subsequent changes in lifetime ECL, both with a positive and negative effect, will be recognised immediately in the prot and loss statement of the Group. The Group’s policy focuses exposures to nancial institutions with high quality credit ratings. Therefore, the Group applies the low credit risk simplication, hence all assets are considered to be in stage 1 and a 12-month expected credit loss is applied (e.g. cash). In case the probability of default increases on cash or granted loans, the Group shall, based on management judgement, consider lifetime expected credit losses if deemed necessary. The Group’s policy requires an assessment of the counter party before exposure is taken with respect to “non-trade receivables”. The Group’s assessment requires a credit quality check and limits the exposure to a maximum amount. As a result, the Group applies the low credit risk simplication, hence all assets (not orig- inating from a contract with nancial institutions) are considered to be in stage 1 and a 12-month expected credit loss is applied. In case the probability of default increases on such a nancial instrument, the Group shall, based on management judgement, consider lifetime expected credit losses if deemed necessary. The simplied approach is applied to trade receivables, IFRS 15 contract assets and lease receivables. The Group determines its expected credit losses on trade receivables based on the historical weighted average credit losses on trade receivables that the Group holds, while incorporating any known information which could affect credit losses in the future. These weights are based on the duration of the trade receivables (current number of days outstanding). The Group will use the historical default information of trade debtors in order to attempt to have an unbiased probability weighted amount of the expected credit losses. Expected credit losses are calculated by multiplying the probability of default based on historical data, loss given default and the current lifetime of the trade receivable. This leads to a weighted ECL based on debtors with an outstanding receivable of: • 1-30 days • 31-60 days • 61-90 days • Longer than 90 days This practical application of the lifetime ECL on trade receivables is labeled as the provision matrix by the Group. The provision matrix is used to form the provision for bad debtors and thus impair trade receivables. 27. RISK MANAGEMENT OBJECTIVES AND POLICIES The operations of the Group expose the Group to various nancial risks, including liquidity risk, market risk, and credit risk. The risk management is the responsibility of the Management Board of the Group. The main nancial risks are described below together with the approach taken to assess and mitigate the relevant nancial risk. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 104 Risk type Risk description Risk assessment and mitigation Remaining risk Liquidity risk Liquidity risk is the risk that the Group is not able to pay its short-term liabilities. Immediate liquidity risks for the Group could arise from: • Payments associated with letters of credit to suppliers • Short-term payments on long-term liabilities • Short-term lease payables • Trade and other payables • Other current liabilities The duration of the nancial liabilities of the Group is shown in the table below (as at 31 December 2021 and 31 December 2020). Approximately 73% of the liabilities of the Group are short-term (this amounts to €21.1 million, including income tax payable); the Group’s current assets (maturity shorter than 1 year) amount €264.1 million, including cash and cash equivalents of €207.9 million. Based on this, the Group considers the residual liquidity risk to be low. The remaining risk is limited. Limited Market risks Foreign exchange risk is the part of the market risk that arises due to exposure of the Group to foreign currencies. This exposure arises from the Group’s involvement in foreign operations or trade in foreign currency (buy and sell). The Group has risk management policies and procedures in place for managing its foreign exchange risk. The foreign currencies the Group has exposure to are the Chinese Yuan (Renminbi) (RMB), Norwegian Krone (NOK), Swiss Franc (CHF) and Australian Dollar (AUD) based on: • Sales in NOK, CHF and AUD • Trade and other receivables denominated in NOK, CHF and AUD • Purchases in RMB, NOK, CHF and AUD • Trade and other payables denominated in RMB, NOK, CHF and AUD For its RMB transactions the Group manages its foreign currency risk by hedging transactions that are expected to occur within a maximum 12-month period for hedges of forecasted purchases. The Group’s NOK, CHF and AUD sales are immaterial. The Group accepts the limited remaining risk. Limited Interest rate risk is the part of the market risk that arises due to movements in interest rates. The Group is exposed to changes in interest rates resulting from the following: • Long term liabilities • The interest rate implicit in the lease However, no long-term liabilities have variable interest rates and almost all outstanding balances have been repaid in 2021 from the IPO proceeds. The Group’s cash position, due to its short-term nature, has limited exposure to interest rate risk. The resulting residual interest rate risk is considered to be limited. Limited Credit risk Credit risk for the Group mainly consists of the default of trade debtors and contract assets. The Group reects on the credit risks of trade debtors on a forward-looking basis, based on the simplied ECL approach. Furthermore, the Group determined that the customers (municipalities) of the Group, based on historic performance and entity nature, have a low default probability. The credit risk on other nancial assets is considered to be low. There- fore, the Group accepts the residual remaining credit risks. Limited ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 105 The table below summarises the maturity prole of the Group’s nancial liabilities based on contractual undis- counted payments, including interest and dividend on cumulative preference shares. It has been assumed that the loan from related parties will be repaid after 5 years: As at 31 December 2021 Carrying amount Total Cash- flows 0 to 3 months 3 to 12 months 1 - 5 years More than 5 years Debits to credit institutions 215 215 - 215 - - Loan from related parties 463 591 - - - 591 Lease liabilities 8.382 9,099 364 1,130 6,672 933 Trade creditors 10,883 10,883 10,883 - - - Payables to related parties 534 534 534 - - - Contract liabilities 174 174 174 - - - Other current liabilities 6,977 6,977 2,626 4,351 - - Total 27,628 28,473 14,581 5,696 6,672 1,524 Derivatives (343) (343) (303) (40) - - As at 31 December 2020 Carrying amount Total Cash- flows 0 to 3 months 3 to 12 months 1 - 5 years More than 5 years Debits to credit institutions 41,788 42,491 19,754 22,737 - - Loan from RVO 5,436 5,812 300 2,700 2,812 - Cumulative preference shares 10,400 14,400 - 400 3,200 10,800 Loan from related parties 441 562 - - - 562 Lease liabilities 1,782 1,887 158 488 1,241 - Trade creditors 6,762 6,762 6,762 - - - Contract liabilities 190 190 190 - - - Other current liabilities 3,332 3,332 3,332 - - - Total 70,131 75,436 30,496 26,325 7,253 11,362 Derivatives (331) (331) (331) - - - 28. FINANCIAL INSTRUMENTS - HEDGE ACCOUNTING The Group applies hedge accounting. At the moment of entering into a hedge relationship, this is documented by the Group. By means of a test, the company periodically assesses the effectiveness of the hedge relation- ship. This may be achieved by comparing the critical characteristics of the hedge instrument with those of the covered position or by comparing the change in fair value of the hedge instrument and the covered position. If applicable, the ineffective share of the value adjustment of the currency futures contracts is accounted for in the prot and loss account under nancial income and expenses. USE OF DERIVATIVES The Group is exposed to nancial market risk in the normal course of its business operations. The Group uses derivatives for economic hedging purposes to manage its foreign currency risk. The primary objective of the Group’s hedging activities is to manage the potential year-on-year volatility caused by foreign-currency movements on its net earnings by hedging the anticipated net exposure of foreign currencies resulting from foreign-currency purchases. The objective of economic hedging is to enter into positions with an opposite risk prole to an identied risk exposure to reduce that exposure. The single risk which is being hedged is foreign currency exchange rate risk. This risk is primarily hedged with foreign exchange forwards/swaps. The Group’s hedging activities do not have an effect on timing or amount of forecasted transactions. CASH FLOW HEDGE ACCOUNTING Derivatives that qualify for hedge accounting under IFRS are classied and accounted for in accordance with the nature of the hedged exposure and the type of IFRS hedge accounting model that is applicable. The three models applicable under IFRS are: fair value hedge accounting, cash ow hedge accounting, and hedge accounting of a net investment in a foreign operation. The Group applies cash ow hedge accounting to highly probably future cash ows, namely forecasted purchases in a currency other than the Group’s functional currency (€). The Group enters into foreign exchange forwards and swaps to protect against volatility caused by foreign-cur- rency movements on its net earnings by hedging the anticipated net exposure of foreign currencies resulting from foreign-currency purchases. The Group hedges the net anticipated exposures up to the date on which the forecasted transaction is expected to occur. The amounts and timing of future cash ows are projected based on contractual terms. These projected cash ows form the basis for identifying the notional amount ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 106 subject to foreign currency exchange rate risk that is designated under cash ow hedge accounting. From the derivatives, the Group excludes the forward element and currency basis spreads by only designating the spot element. The Group determines an economic relationship between the cash ows of the hedged item and the hedging instrument based on an evaluation of the qualitative characteristics of these items and the hedged risk. The Group considers whether the critical terms of the hedged item and hedging instrument closely align when assessing the presence of an economic relationship. The Group evaluates whether the cash ows of the hedged item and the hedging instrument respond similarly to the hedged risk, such as changes in the foreign exchange rates. At the moment of entering into a hedge relationship, this is documented by the Group. The Group periodically assesses the effectiveness of the hedge relationship and analysis the identied potential sources of ineffec- tiveness. The Group has identied the following potential sources of ineffectiveness: • Differences in timing of cash ows of the hedged item(s) and hedging instrument(s); • Incidental notional over-hedging; • The lack of collateralization of the derivatives, and the resulting counterparty credit risk; • Difference between hedged on-shore and hedging off-shore foreign currency exchange rate. • The Group assumes that the fair value of the hedging instrument is nil at inception of the hedge. Should the fair value of the hedging instrument not be zero at the inception of the hedge, ineffectiveness may arise. The ineffectiveness portion is accounted for in the consolidated statement of prot or loss under Finance expenses, net. The hedge ratio is the ratio between the amount of hedged item and the amount of hedging instrument. The Group has established a hedge ratio of 1:1 (100%). The Group uses the following derivative nancial instruments in a cash ow hedge accounting relationship: As at 31 December 2021 As at 31 December 2020 Carrying amount hedging instruments 40 331 Notional amount hedging instruments (387) (46,323) As at 31 December 2021, the carrying amount of the derivatives includes one derivative with no hedge desig- nation. The fair value of this contract amounts to €303. The derivatives used for cash ow hedge accounting are included in the statement of nancial position line- item Other current nancial assets respectively liabilities. The average currency exchange rate used in cash ow hedge accounting is for 2021 €/RMB 7.5819 (2020: 7.9718). Cash ow hedging – change in fair value of hedged items Change in value used for calculating hedge ineffectiveness for the period Of which are changes in spot rates (hedged risk) Of which are amortisation of forward element Of which are changes in fair value attribut- able to currency basis spreads As at 31 December 2021 FX 22 1 29 (8) As at 31 December 2020 FX 331 (573) 936 (32) Gains and losses on the effective portions of derivatives (changes in spot rates) designated under cash ow hedge accounting are recognised in Other Comprehensive Income (hedge reserve). Gains and losses attrib- utable to changes in currency basis spread are recognised in a separate component in Other comprehensive income (cost of hedging reserve). The changes in fair value of the forward element of a forward contract and foreign currency basis spread of a nancial instrument, in relation to a transaction-related hedged item ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 107 accumulated in the cost of hedging reserve, are reclassied to prot or loss only when the hedged transaction affects prot or loss, or included as a basis adjustment to the non-nancial hedged item. The following table shows the cash ow hedge accounting impact on prot or loss and comprehensive income, excluding tax impact: Cash ow hedging – impact of hedging instruments on the statement of prot or loss and other comprehensive income Hedging gains (+) or losses (-) (OCI) Hedge ineffective- ness recognised in the statement of prot or loss, gain (+) / loss (-) Amortisation of forward element Amount reclassied from cash ow hedge reserve As at 31 December 2021 FX (8) - - (870) As at 31 December 2020 FX (605) - 936 (163) The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities: Fair value measurement using Fair value measurement hierarchy for assets as at 31 December 2021 and 2020 Date of valuation Total Quoted prices in active markets (Level 1) Signicant observable inputs (Level 2) Signicant unobservable inputs (Level 3) Assets measured at fair value: Foreign exchange forward/swaps contracts - CNH 31 December 2021 343 - 343 - Foreign exchange forward/swaps contracts - CNH 31 December 2020 331 - 331 - There were no transfers between Level 1 and Level 2 during 2021 and 2020. The valuation technique used in the measurement of the Level 2 securities is based on observable market data. The inputs used in the measurement represent FX and interest rate curves. 29. EVENTS AFTER THE BALANCE SHEET DATE Subsequent to 31 December 2021 the following event occurred: Ebusco Energy B.V. acquired 40% of the shares in Zero Emission Services B.V. (ZES) from Engie New Business S.A.S. on 28 January 2022. The transaction is not expected to have a material impact on revenues of Ebusco and its subsidiaries. In April 2022, the Company has signed an uncommitted guarantee and letter of credit facility with two different nancial institutions for €30.0 million, one of these nancial institutions being ING (related party). These credit facilities do not include any nancial covenants. These facilities will enable the Group certain guarantees which are required for specic tenders. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 108 108 COMPANY FINANCIAL STATEMENTS CONTENT Company statement of prot or loss 109 Company statement of nancial position 110 Notes to the company nancial statements 111 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 109 COMPANY STATEMENT OF PROFIT OR LOSS In thousands of euro Notes 2021 2020 Other operating income B 659 628 Total operating income 659 628 Employee benet expenses C (5,778) (598) Amortisation and depreciation expenses (2) - Other operating expenses D (5,933) (6) Total operating expenses (11,713) (604) Operating result (11,054) 24 Finance expenses, net E (576) (10) Result before income tax (11,630) 14 Income tax credit/(expense) F 2,113 (4) Share of result of an associate G 7,427 (112) Result from group companies H (24,298) 16,761 Result after income tax (26,388) 16,659 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 110 COMPANY STATEMENT OF FINANCIAL POSITION Equity Share capital 590 24 Share premium 314,767 12,630 Legal reserves 9,207 2,904 Retained earnings 5,835 (4.175) Net result (26,388) 16,659 Total Equity M 304,011 28,042 Provisions N 3,976 260 Loans and borrowings O - 10,000 Lease liabilities 28 - Non-current liabilities 28 10,000 Loans and borrowings O - 400 Trade payables 372 73 Other current liabilities P 3,981 3 Current lease liabilities 13 - Income tax payable F - 6 Current liabilities 4,366 482 Total liabilities 8,370 10,742 Total equity and liabilities 312,381 38,784 Before appropriation of profit, in thousands of euro Notes As at 31 December 2021 As at 31 December 2020 Assets Right-of-use assets 41 - Intangible assets 48 - Investments in group companies H 44,577 28,512 Investments in associates G - 23 Loans to group companies associates I 23,250 9,750 Deferred tax assets F 4,587 - Non-current assets 72,503 38,285 Receivables from group companies J 73,828 390 Receivables from related parties 24 - Other current assets K 1,192 - Cash and cash equivalents L 164,834 109 Current assets 239,878 499 Total assets 312,381 38,784 Notes As at 31 December 2021 As at 31 December 2020 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 111 NOTES TO THE COMPANY FINANCIAL STATEMENTS A. ACCOUNTING POLICIES FOR THE COMPANY FINANCIAL STATEMENTS The Company nancial statements of Ebusco Holding N.V. (hereafter ‘the Company’) have been prepared in accor- dance with Part 9, Book 2 of the Dutch Civil Code. In accordance with article 362 (8), Book 2 of the Dutch Civil Code, the Company’s nancial statements have been prepared on the basis of the accounting principles for recognition, measurement and determination of prot, as applied in the consolidated nancial statements. These principles also include the classication and presentation of nancial instruments, being equity instruments or nancial liabilities. Ebusco Holding N.V. (or ‘the parent’), formerly Ebusco Holding B.V., has been converted from a private limited liability company (‘besloten vennootschap’) into a public limited company (‘naamloze vennootschap’) in view of the IPO of the Ebusco Group, effective as of 22 October 2021. The ordinary shares of Ebusco Holding N.V. are listed on Euronext Amsterdam. All amounts are presented in euros (EUR x 1,000), unless stated otherwise. The accounting policies used in the preparation of the Company Financial Statements are the same as those used in the preparation of the Consolidated Financial Statements (in accordance with article 362 (8), Part 9 of Book 2 of the Dutch Civil Code). See the notes to the Consolidated Financial Statements. In addition to these accounting policies, the following accounting policy applies to the Company nancial state- ments: • Investments in group companies are presented using the equity method. Goodwill paid upon acquisition of investments in group companies is included in the net equity value of the investment and is not shown sepa - rately on the face of the balance sheet. • The Company recognises a provision which makes use of the option to eliminate intercompany expected credit losses against the book value of loans and receivables to group companies, instead of elimination against the investments in group companies. Loans provided to group companies are stated at amortised cost, less impairment. B. OTHER OPERATING INCOME Other operating income relates to the recharge of the remuneration expenses of the Management Board members to Ebusco B.V. (including management service fees charged by the members of the Management Board to the Company in the period as of 1 October 2019 to 17 October 2021). C. EMPLOYEE BENEFIT EXPENSES Employee benet expenses can be specied as follows: Employee benet expenses 2021 2020 Wages and salaries 692 552 Pension costs 29 - Other compensation expenses 5,000 - Temporary staff 46 - Car expenses 3 - Other staff expenses 8 4 6 Total 5,778 598 All three members of the Management Board are included in the payroll administration of the Company as of 17 October 2021. Accordingly, the management service contracts entered into with the CEO and CFO were cancelled as from that date. The remuneration of members of the Supervisory Board is included in ‘wages and salaries’. The number of persons with an employment contract at 31 December 2021 was 3 (31 December 2020: 0), including all members of the Management Board; all persons have their place of residence in the Netherlands. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 112 The number of persons having a management services contract with the Company at 31 December 2021 was 0 (31 December 2020: 2). Further reference is made to Note 7 of the consolidated nancial statements. D. OTHER OPERATING EXPENSES Other operating expenses mainly consist of insurance expenses, audit and advisory fees, and other expenses associated with the listing of the Company on Euronext Amsterdam. E. FINANCE EXPENSES, NET Finance expenses, net can be specied as follows: Finance expenses, net 2021 2020 Net foreign exchange result (4) - Interest income intercompany (1,210) (390) Financial income (1,214) (390) Interest expense cumulative preference shares 665 400 Interest Mezzanine facility 668 - Interest expense third party 213 - Other finance expenses 244 - Total 1,790 400 Finance expenses, net 576 10 F. INCOME TAX The deferred tax asset recognised in 2021 of €4,587 relates to tax losses carried forward (€17,778 multiplied by the enacted domestic income tax rate of 25.8%). In 2021, IPO expenses in the amount of €9,897 were directly charged against share premium, which resulted in the recognition of a deferred tax asset of €2,474. The income tax credit of €2,113 (2020: €(4)) has been recognised in the statement of prot or loss. G. INVESTMENTS IN ASSOCIATES The Company had a 20% interest in Pondus Holding B.V. and its subsidiaries as at 31 December 2020, and acquired an additional 60% interest in April 2021 and the remaining 20% in October 2021. Accordingly, Pondus Holding B.V. is a 100% subsidiary of the Company as at 31 December 2021. Reference is made to Note 5 of the consolidated nancial statements. H. INVESTMENTS IN GROUP COMPANIES Group companies are all entities (including intermediate holding companies) over which the Company has control. The Company controls an entity when it is exposed, or has rights, to variable returns from its involve- ment with the group company and has the ability to affect those returns through its power over the group company. Group companies are recognised from the date on which control is transferred to the Company or its intermediate holding entities. They are derecognised from the date that control ceases. The Company applies the acquisition method to account for the acquisition of group companies, consis- tent with the approach identied in the consolidated nancial statements. The consideration transferred for the acquisition of a group company or business comprises the fair value of assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identiable assets acquired, and liabilities and contingent liabilities assumed, in an acquisition are initially measured at their fair values at the acquisition date and are subsumed in the net asset value of the investment in consolidated group compa- nies. Goodwill paid upon acquisition of investments in group companies is included in the net equity value of ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 113 the investment and is not shown separately on the face of the balance sheet. Acquisition-related costs are expensed as incurred. Investments in group companies are measured using the equity method. The measurement of the nancial xed assets under the equity method is based on the measurement principles of assets, provisions and liabil- ities, and the determination of prot as applied in the consolidated nancial statements. When group companies have an equity decit they are measured at zero under the equity method, unless the Company has given a liability undertaking or any other guarantee for the consolidated group company. In case of the later, the Company recognises a provision in the statement of nancial position equal to the negative net asset value of the group company. The Company has direct and indirect interests in the group companies listed in Note 2 of the consolidated nancial statements. Set out below are the carrying amounts of the investment in consolidated group companies and the movements during the period: Investments in group companies 2021 2020 As at 1 January 28,512 12,114 Foreign exchange differences (4) - Acquisition through business combinations 36,989 - Result of group companies (24,298) 16,761 Reclassification to provision participations in group companies 3,718 191 Cash flow hedge, net of tax 460 (554) Repayment of convertible loan (800) - As at 31 December 44,577 28,512 I. LOANS TO GROUP COMPANIES Loans to group companies include a contractual right to receive cash from Ebusco B.V. of €17,750 (31 December 2020: €9,750) following the acquisition of 1 preference share issued by Ebusco B.V. on 1 July 2021 for the amount of €9,750 and a subordinated loan on 15 July 2021 for the amount of €8,000. The latter became an ordinary intercompany loan after cancellation of the credit facility agreement in December 2021. Ebusco Holding N.V. is entitled to an 8% share of the investment amount, to be paid on an annual basis, based on prots available for distribution. As the contractual right is classied as a long-term receivable, an interest income accrual has been recognised against the statement of prot or loss of €780 in 2021 (2020: €390). The interest income accrual has been recorded in the current account with Ebusco B.V. In addition, a loan to Pondus Operations B.V. is included of €5,500 as at 31 December 2021 including accrued interest of €245 (interest rate: 7%). The loan to Pondus Operations B.V. has been provided in April 2021 at the time the Company acquired 60% of the voting shares in Pondus Holding B.V. to enable Pondus Operation B.V. to redeem the RVO loan received from the Dutch government. Loans to group companies can be specied as follows: Loans to group companies A s at 31 December 202 1 As at 31 December 2020 Loan receivable from Ebusco B.V. 17,750 9,750 Loan receivable from Pondus Operations B.V. 5,500 - Total 23,250 9,750 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 114 The movement schedule of loans to group companies can be specied as follows: Loans to group companies 2021 2020 As at 1 January 9,750 - Acquisition through business combination 5,255 - New loan receivable 8,000 9,750 Interest 245 - Total 23,250 9,750 J. RECEIVABLES FROM GROUP COMPANIES Receivables from group companies can be specied as follows: Receivables from group companies A s at 31 December 202 1 As at 31 December 2020 Current account Ebusco B.V. 72,713 128 Current account Ebusco Australia Pty Ltd 261 261 Current account Pondus Operations B.V. 703 - Current account Ebusco Manufacturing B.V. 150 - Current account Ebusco Energy B.V. 1 1 Total 73,828 390 K. OTHER CURRENT ASSETS Other current assets as at 31 December 2021 mainly include refundable VAT of €1,150 and prepaid expenses of €42. L. CASH AND CASH EQUIVALENTS Cash and cash equivalents are all freely available to the Company. M. EQUITY For a breakdown of equity attributable to equity holders, see the Consolidated Statement of Changes in Equity and related notes including Note 19 of the consolidated nancial statements. LEGAL RESERVES Based on Dutch law, a legal reserve needs to be established for currency translations, cash ow hedges and capitalised costs of development assets. The legal reserve cannot be used for dividend distribution and is therefore restricted in usage (see paragraph below). Legal reserves As at 31 December 2021 As at 31 December 2020 Foreign exchange differences (6) - Hedge reserves 6 (454) Revaluation reserve 7,450 - Development assets at subsidiaries 1,757 3,358 Total 9,207 2,904 LIMITATIONS IN THE DISTRIBUTION OF SHAREHOLDERS’ EQUITY As at 31 December 2021, pursuant to Dutch law, certain limitations exist relating to the distribution of share- holders’ equity. Such limitations relate to legal reserves required by Dutch law of €9,213 (2020: €3,358). The translation reserve €(6) (31 December 2020: cash ow hedge reserve of €(454)) reduces the distributable amount due to the fact that the reserve is negative. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 115 N. PROVISIONS Provisions have been recognised for the negative net asset value of certain subsidiaries of the Company, which can be specied as follows: Provisions As at 31 December 2021 As at 31 December 2020 Ebusco Australia Ply Ltd 245 245 Ebusco Energy B.V. 1 1 Ebusco Norway A/S - 13 Pondus Holding B.V. 3,730 - Ebusco Manufacturing B.V. - 1 Total 3,976 260 O. LOANS AND BORROWINGS The preference shares issued to each of the three shareholders on 1 July 2020 represent a contractual obli- gation to deliver cash to another entity and are classied as a liability of €10,000. The holders of preferred shares are entitled to an 8% share of the investment amount, to be paid on an annual basis, based on prots available for distribution. As the contractual obligation is classied as a liability, an interest accrual has been recognised against the statement of prot or loss of €665 in 2021 (2020: €400). Following the IPO in October 2021, both the contractual obligation and interest accrual of in total €1,065 were repaid. Reference is made to Note 19 and 20 of the consolidated nancial statements. P. OTHER CURRENT LIABILITIES Other current liabilities as at 31 December 2021 mainly consists of accrued IPO expenses. Q. REMUNERATION Reference is made to Note C to the Company nancial statements and Note 7 to the consolidated nancial statements. R. RELATED PARTIES In addition to Note 24 of the consolidated nancial statements, all companies within the Group are also con- sidered to be related parties of Ebusco Holding N.V. The Group engages with its shareholders Peter Bijvelds, VDVI and ING in certain related party transactions disclosed in Note 7 to the Company nancial statements and Note 19, 20, and 24 to the consolidated nancial statements. S. COMMITMENTS AND CONTINGENCIES Pursuant to the provisions of section 403, Part 9, Book 2 of the Netherlands Civil Code, the Company has assumed joint and several liability for the debts arising out of legal transactions of the following group companies: • Ebusco B.V. • Ebusco Energy B.V. • Ebusco Manufacturing B.V. • Pondus Holding B.V. • Pondus Operations B.V. • Pondus R&D B.V. Further reference is made to Note 25 to the consolidated nancial statements. ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 116 T. DIVIDEND AND APPROPRIATION OF RESULT No dividends have been paid in both 2020 and 2021. As the Company incurred a loss in 2021, it is proposed to the Annual General Meeting of Shareholders to charge the loss attributable to the equity holders of the Group to the retained earnings and not to pay any dividend relating to the nancial year 2021. U. AUDIT FEES The audit fees in the reporting period amount to €1,542 (2020: €136) of which €365 was accounted for through equity. Audit, Other assurance and Other non-audit fees incurred related to the nancial years 2021 and 2020 can be specied as follows: 2021 2020 Total fees in € ‘000 Ernst & Young Accoun- tants LLP EY network firms in the Netherlands Total Ernst & Young Accoun- tants LLP EY network firms in the Netherlands Total Audit services 50 - 50 928 - 928 Other assurance services - - - 625 - 625 Other non-audit services - - - - 1,513 1,513 Total 50 - 50 1,533 1,513 3,046 Fees relating to 2020 are incurred before the Initial Public Offering on 22 October 2021 and mainly relate to the services performed for the Special Purpose Financial Statements 2018-2020 as included in the Prospectus for the Initial Public Offering. V. SUBSEQUENT EVENTS For information regarding subsequent events, reference is made to Note 29 to the consolidated nancial statements. Deurne, 11 April 2022 Management Board P.H.A.M. Bijvelds Chief Executive Ofcer P. van Beers Chief Financial Ofcer B.H.M.J. Fleuren Chief Operating Ofcer 117 117 OTHER INFORMATION CONTENT Provisions of the Articles of Association relating to prot appropriation 118 Independent auditor’s report 119 Four year overview 126 Non-IFRS measures 127 Organisation Ebusco 131 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 118 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION PROVISIONS OF THE ARTICLES OF ASSOCIATION RELATING TO PROFIT APPROPRIATION Pursuant to article 31 of the articles of association of the Company, the Management Board, with the approval of the Supervisory Board, may decide that prots realised during a nancial year are fully or partially appro- priated to increase and/or decrease from reserves (article 31.1). The prots remaining shall be put at the disposal of the General Meeting. The Management Board, with the approval of the Supervisory Board, shall make a proposal for that purpose. A proposal to pay a dividend shall be dealt with as a separate agenda item at the General Meeting of Shareholders (article 31.2). The Company does not intend to declare or pay dividends for the nancial year ending 31 December 2021 or in the medium term. The Company anticipates that for the foreseeable future it will retain all its future earnings for use in the development of its business, its international expansion and growth strategy to create share- holder value, to maintain a healthy nancial structure and for general corporate purposes. The net loss attributable to equity holders of the Group for 2021 of €26.4 million (2020: net prot of €16.7 million) will be deducted from retained earnings. 119 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION INDEPENDENT AUDITOR’S REPORT To: the shareholders and supervisory board of Ebusco Holding N.V. REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS 2021 INCLUDED IN THE ANNUAL REPORT OUR OPINION We have audited the nancial statements 2021 of Ebusco Holding N.V., based in Deurne (the Netherlands). The nancial statements comprise the consolidated and company nancial statements. In our opinion: • The accompanying consolidated nancial statements give a true and fair view of the nancial posi- tion of Ebusco Holding N.V. as at 31 December 2021 and of its result and its cash ows for 2021 in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRS) and with Part 9 of Book 2 of the Dutch Civil Code • The accompanying company nancial statements give a true and fair view of the nancial position of Ebusco Holding N.V. as at 31 December 2021 and of its result for 2021in accordance with Part 9 of Book 2 of the Dutch Civil Code The consolidated nancial statements comprise: • The consolidated statement of nancial position as at 31 December 2021 • The following statements for 2021: the consolidated statement of prot or loss and other comprehensive income, changes in equity and cash ows • The notes comprising a summary of the signicant accounting policies and other explanatory information The company nancial statements comprise: • The company statement of nancial position as at 31 December 2021 • The company statement of prot or loss for 2021 • The notes comprising a summary of the accounting policies and other explanatory information BASIS FOR OUR OPINION We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the Our responsibilities for the audit of the nancial statements section of our report. We are independent of Ebusco Holding N.V. in accordance with the EU Regulation on specic requirements regarding statutory audit of public-interest entities, the “Wet toezicht accountantsorganisaties” (Wta, Audit rms supervision act), the “Verordening inzake de onafhankelijkheid van accountants bij assur- ance-opdrachten” (ViO, Code of Ethics for Professional Accountants, a regulation with respect to indepen- dence) and other relevant independence regulations in the Netherlands. Furthermore we have complied with the “Verordening gedrags- en beroepsregels accountants” (VGBA, Dutch Code of Ethics). We believe the audit evidence we have obtained is sufcient and appropriate to provide a basis for our opinion. 120 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION INFORMATION IN SUPPORT OF OUR OPINION We designed our audit procedures in the context of our audit of the nancial statements as a whole and in forming our opinion thereon. The following information in support of our opinion and any ndings were addressed in this context, and we do not provide a separate opinion or conclusion on these matters. OUR UNDERSTANDING OF THE BUSINESS Ebusco Holding N.V. is publicly listed on Euronext Amsterdam since October 2021. The Company is dedicated to the development, production, and bringing to market of fully electric city and regional buses and the associ - ated ecosystem. We have paid specic attention in our audit to a number of areas driven by the operations of the Company and our risk assessment. We start by determining materiality and identifying and assessing the risks of material misstatement of the nancial statements, whether due to fraud or error in order to design audit procedures responsive to those risks and to obtain audit evidence that is sufcient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. MATERIALITY Materiality €500,000 (2020: €1,100,000). Benchmark applied 1% of a three year average of revenue over the period 2019 to 2021. Explanation Based on our professional judgment, we consider (average) revenue to be the most appropriate basis to deter- mine materiality. We consider (average) revenue to be the most relevant measure as this is a key performance indicator for the company. As revenues have been impacted by the Covid-19 pandemic due to lower order intake and supply chain constraints, we have used the average revenues of the company for the years 2019, 2020 and 2021 as a basis instead of prot before tax as applied last year. We have also taken into account misstatements and/or possible misstatements that in our opinion are mate- rial for the users of the nancial statements for qualitative reasons. We agreed with the supervisory board that misstatements in excess of €25,000, which are identied during the audit, would be reported to them, as well as smaller misstatements that in our view must be reported on qualitative grounds. SCOPE OF THE GROUP AUDIT Ebusco Holding N.V. is at the head of a group of entities. The nancial information of this group is included in the consolidated nancial statements of Ebusco Holding N.V. Because we are ultimately responsible for the opinion, we are also responsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit proce- dures to be carried out for group entities. Decisive were the size and/or the risk prole of the group entities or operations. For the entities Ebusco B.V. and Ebusco Holding N.V. we performed the audit on the complete nancial information (full scope) and the remaining entities were assigned a specic scope, with the focus on cash and cash equivalents and certain expense accounts. The audit has been centrally performed by the audit team in the Netherlands. We have been able to obtain sufcient and appropriate audit evidence about the group’s nancial information to provide an opinion about the consolidated nancial statements. In total these procedures represent 99% of the group’s total assets and 100% of gross revenues. By performing the procedures mentioned above we have been able to obtain sufcient and appropriate audit evidence about the group’s nancial information to provide an opinion about the consolidated nancial statements. TEAMING AND USE OF SPECIALISTS We ensured that the audit team has the appropriate skills and competences which are needed for the audit of a listed client in this industry. We included specialists in the areas of IT audit, forensics, income tax and valuation. OUR FOCUS ON CLIMATE RISKS AND THE ENERGY TRANSITION Climate objectives will be high on the public agenda in the next decades. Issues such as CO 2 reduction impact nancial reporting, as these issues entail risks for the business operation, the valuation of assets (“stranded assets”) and provisions or the sustainability of the business model and access to nancial markets of companies with a larger CO 2 footprint. 121 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION As part of our audit of the nancial statements, we evaluated the extent to which climate-related risks and the possible effects of the energy transition are taken into account in estimates and signi- cant assumptions by Ebusco Holding N.V., especially in the area of impairment of goodwill. Furthermore, we read the management board report and considered whether there is any material inconsistency between the non-nancial information in the Our Responsibility section and the nancial statements. OUR FOCUS ON FRAUD AND NON-COMPLIANCE WITH LAWS AND REGULATIONS OUR RESPONSIBILITY Although we are not responsible for preventing fraud or non-compliance and we cannot be expected to detect non-compliance with all laws and regulations, it is our responsibility to obtain reasonable assur- ance that the nancial statements, taken as a whole, are free from material misstatement, whether caused by fraud or error. OUR AUDIT RESPONSE RELATED TO FRAUD RISKS We identify and assess the risks of material misstatements of the nancial statements due to fraud. During our audit we obtained an understanding of Ebusco Holding N.V. and its environment and the components of the system of internal control, including the risk assessment process and the management board’s process for responding to the risks of fraud and monitoring the system of internal control and how the supervisory board exercises oversight, as well as the outcomes. We refer to section Risk management and internal control of the management board report for manage- ment’s (fraud) risk assessment. We evaluated the design and relevant aspects of the system of internal control and in particular the fraud risk assessment, as well as the code of conduct, whistle blower procedures and incident registration. We evaluated the design and the implementation of internal controls designed to mitigate fraud risks. As part of our process of identifying fraud risks, we evaluated fraud risk factors with respect to nancial reporting fraud, misappropriation of assets and bribery and corruption in close co-operation with our forensic specialists. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present. We incorporated elements of unpredictability in our audit. We also considered the outcome of our other audit procedures and evaluated whether any ndings were indicative of fraud or non-compliance. As in all of our audits, we addressed the risks related to management override of controls and when identi- fying and assessing fraud risks we presumed that there are risks of fraud in revenue recognition. For the risk related to management override of controls we have performed among others procedures to evaluate key accounting estimates for management bias that may represent a risk of material misstatement due to fraud in particular relating to important judgment areas and signicant accounting estimates as disclosed in Note 4 to the nancial statements. We have also used data analysis to identify and address high-risk journal entries. We identied the following fraud risk and performed the following specic procedures: Presumed risks of fraud in revenue recognition Fraud risk When identifying and assessing fraud risks we presume that there are risks of fraud in revenue recognition. Revenue is one of the key performance indicators for Ebusco’s stakeholders, resulting in pressure on the management board to achieve certain revenue levels. We evaluated that overstatement of revenues from the sale of zero-emission buses and inaccurate valuation of contract assets specically by inaccurate determina- tion of percentage of completion of customer contracts in particular give rise to such risks. These revenues are disclosed in note 6.1 of the nancial statements. Our audit approach We describe the audit procedures responsive to the inaccurate revenue recognition and valuation of contract assets specically related to determining the percentage of completion for the sale of zero-emission buses (including the risk of management override of controls) in the description of our audit approach for the key audit matter “Fraud risk related to revenue recognition”. We considered available information and made enquiries of relevant executives, directors (including legal, compliance and human resources) and the supervisory board. The fraud risk we identied, enquiries and other available information did not lead to specic indications for fraud or suspected fraud potentially materially impacting the view of the nancial statements. 122 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION OUR AUDIT RESPONSE RELATED TO RISKS OF NON-COMPLIANCE WITH LAWS AND REGULATIONS We assessed factors related to the risks of non-compliance with laws and regulations that could reason- ably be expected to have a material effect on the nancial statements from our general industry experi- ence, through discussions with the management board, reading minutes and performing substantive tests of details of classes of transactions, account balances or disclosures. We also inspected lawyers’ letters and correspondence with regulatory authorities and remained alert to any indication of (suspected) non-compliance throughout the audit. Finally we obtained written representations that all known instances of non-compliance with laws and regulations have been disclosed to us. OUR AUDIT RESPONSE RELATED TO GOING CONCERN As disclosed in section Going concern in Note 3 to the nancial statements, management made a specic assessment of the company’s ability to continue as a going concern and to continue its operations for at least the next 12 months. We discussed and evaluated the specic assessment with the management board exer- cising professional judgment and maintaining professional skepticism. We considered whether the manage- ment board’s going concern assessment, based on our knowledge and understanding obtained through our audit of the nancial statements or otherwise, contains all events or conditions that may cast signicant doubt on the company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the nancial state- ments or, if such disclosures are inadequate, to modify our opinion. Based on our procedures performed, we did not identify serious doubts on the entity’s ability to continue as a going concern for the next 12 months. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to continue as a going concern. OUR KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most signicance in our audit of the nancial statements. We have communicated the key audit matters to the supervisory board. The key audit matters are not a comprehensive reection of all matters discussed. Fraud risk related to the occurrence of revenue recognition Risk As presented in Note 6 to the consolidated nancial statements, revenue from contracts with customers resulting from the sale and supply of zero-emission buses for the year ended 31 December 2021 amounted to €24.3 million. The revenue recognised is based on estimates and assumptions that require signicant management judgment. At each reporting date management assesses the progress towards the complete satisfaction of the performance obligations taking into account all aspects in order to nalize the projects in line with contractual agreements. Inherent to the nature of estimates and assumptions is that these could be inuenced by the management board and consequently we identied the risk of inappropriate revenue recognition and inaccurate valuation of the contract assets (as mentioned in the section Our audit response related to fraud risks), specically relating to the determination of the percentage of completion. Therefore we consider this a key audit matter. Our audit approach Our audit procedures included, amongst others, assessing the appropriateness of the Company’s accounting policies related to revenue recognition according to IFRS 15 “Revenue from contracts with customers” and whether the accounting policies have been applied consistently or whether changes, if any, are appropriate in the circumstances. In addition, we evaluated the design and implementation of internal controls related to the completeness, accuracy and timing of the revenue recognised. In order to evaluate the signicant judgements and estimates made by management, we read supporting contractual agreements, obtained evidence of transfer of control such as proof of delivery, tested the costs incurred, examined computation of costs progression and assessed the reasonableness of the estimated cost to complete included in the cost-to-cost method for performance obligation recognised over time. In addition, we have also observed the work in progress at year-end. Finally, we have performed back testing procedures over management’s estimate of the progress measure for the 2.2 buses to assess the reasonableness of the assumptions made by management. We evaluated the disclosures in accordance with the requirements of EU-IFRS relevant to accounting esti - mates and whether signicant judgments by management are disclosed and particularly whether disclosures adequately convey the degree of estimation uncertainty and the range of possible outcomes. Key observations We concur with the estimates and assumptions made by management relating to revenue recognition and assessed that the related disclosures is in accordance with IFRS 15. Furthermore, we have assessed that the revenue recognised including the related direct costs and the accompanying management assumptions and estimates are within an acceptable range. 123 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION Acquisition of Pondus and valuation of the related goodwill Risk Ebusco Holding N.V. has acquired 80% of shares in Pondus Holding B.V. in 2021. As part of the Purchase Price Allocation (PPA), the Company has recognised goodwill which amounted to €39.3 million. Consid- ering the nature, assumptions and complex accounting involved in performing the Purchase Price Allo- cation, we have identified a key audit matter in relation to the significant risk with regard to valuation of goodwill. The management board has disclosed the acquisition of Pondus in Note 5 of the financial statements. Our audit approach We audited the accounting for the acquisition of Pondus Holding B.V. As part of our audit procedures we focused on the assumptions and methodologies used by management in performing the PPA. Given the complexity around this topic, we involved our internal valuation specialists to evaluate the valua- tion methodologies used by management and challenged the main assumptions by comparing them to historical trends and external data. A significant amount of the purchase consideration of the Pondus Holding B.V. resulted in the recognition of goodwill. Furthermore, we have reconciled the PPA calculation to underlying source documentation and we have tested whether the accounting applied met the criteria and disclosure requirements of IFRS 3 “Business combinations”. Key observations We consider management’s key assumptions and estimates to be within an acceptable range. We assessed that the disclosures related to the acquisition (Note 5) in the financial statements are appropriate. REPORT ON OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT The annual report contains other information in addition to the nancial statements and our auditor’s report thereon. Based on the following procedures performed, we conclude that the other information: • Is consistent with the nancial statements and does not contain material misstatements • Contains the information as required by Part 9 of Book 2 for the management board report and the other information as required by Part 9 of Book 2 of the Dutch Civil Code and as required by Sections 2:135b and 2:145subsection2 of the Dutch Civil Code for the remuneration report. We have read the other information. Based on our knowledge and understanding obtained through our audit of the nancial statements or otherwise, we have considered whether the other information contains mate - rial misstatements. By performing these procedures, we comply with the requirements of Part 9 of Book 2 and Section 2:135b sub-Section 7 of the Dutch Civil Code and the DutchStandard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the nancial statements. The management board is responsible for the preparation of the other information, including the manage- ment board report in accordance with Part 9 of Book 2 of the Dutch Civil Code and other information required by Part 9 of Book 2 of the Dutch Civil Code. Management and the supervisory board are responsible for ensuring that the remuneration report is drawn up and published in accordance with Sections2:135b and 2:145subsection2 of the Dutch Civil Code. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS AND ESEF ENGAGEMENT We were engaged by the management board as auditor of Ebusco Holding N.V. on 30 October 2020, as of the audit for the year 2019 and have operated as statutory auditor ever since that date. NO PROHIBITED NON-AUDIT SERVICES We have not provided prohibited non-audit services as referred to in Article 5(1) of the EU Regulation on specic requirements regarding statutory audit of public-interest entities. EUROPEAN SINGLE ELECTRONIC REPORTING FORMAT (ESEF) Ebusco Holding N.V. has prepared the annual report in ESEF. The requirements for this are set out in the Dele- gated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specication of a single electronic reporting format (hereinafter: the RTS on ESEF). In our opinion, the annual report, prepared in the XHTML format, including the partially marked-up consol- idated nancial statements, as included in the reporting package by Ebusco Holding N.V., complies in all material respects with the RTS on ESEF. 124 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION The management board is responsible for preparing the annual report, including the nancial statements, in accordance with the RTS on ESEF, whereby management combines the various components into a single reporting package. Our responsibility is to obtain reasonable assurance for our opinion whether the annual report in this reporting package complies with the RTS on ESEF. Our procedures, taking into account Alert 43 of the NBA (the Netherlands Institute of Chartered Accountants), included amongst others: • Obtaining an understanding of the entity’s nancial reporting process, including the preparation of the reporting package • Obtaining the reporting package and performing validations to determine whether the reporting package containing the Inline XBRL instance document and the XBRL extension taxonomy les, has been prepared in accordance with the technical specications as included in the RTS on ESEF • Examining the information related to the consolidated nancial statements in the reporting package to deter- mine whether all required mark-ups have been applied and whether these are in accordance with the RTS on ESEF DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL STATEMENTS RESPONSIBILITIES OF MANAGEMENT AND THE SUPERVISORY BOARD FOR THE FINANCIAL STATEMENTS Management is responsible for the preparation and fair presentation of the nancial statements in accor- dance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the nancial statements that are free from material misstatement, whether due to fraud or error. As part of the preparation of the nancial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the nancial reporting framework mentioned, management should prepare the nancial statements using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. Management should disclose events and circumstances that may cast signicant doubt on the company’s ability to continue as a going concern in the nancial statements. The supervisory board is responsible for overseeing the company’s nancial reporting process. OUR RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objective is to plan and perform the audit engagement in a manner that allows us to obtain sufcient and appropriate audit evidence for our opinion. Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to inuence the economic decisions of users taken on the basis of these nancial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identied misstatements on our opinion. We have exercised professional judgment and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. The Information in support of our opinion section above includes an informative summary of our responsibilities and the work performed as the basis for our opinion. Our audit further included among others: • Performing audit procedures responsive to the risks identied, and obtaining audit evidence that is suf- cient and appropriate to provide a basis for our opinion • Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control • Evaluating the appropriateness of accounting policies used and the reasonableness of accounting esti- mates and related disclosures made by management • Evaluating the overall presentation, structure and content of the nancial statements, including the disclosures • Evaluating whether the nancial statements represent the underlying transactions and events in a manner that achieves fair presentation 125 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION COMMUNICATION We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the audit and signicant audit ndings, including any signicant ndings in internal control that we identify during our audit. In this respect we also submit an additional report to the audit committee of the supervisory board in accordance with Article11 of the EU Regulation on specic requirements regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report. We provide the supervisory board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reason- ably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the supervisory board, we determine the key audit matters: those matters that were of most signicance in the audit of the nancial statements. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest. Eindhoven, 11 April 2022 Ernst & Young Accountants LLP signed by J.C.F. Lemmens 126 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 126 FOUR YEAR OVERVIEW 2021 2020 2019 2018 Results (in thousands of euro) Revenue 24,265 99,994 48,924 21,357 Gross prot 1/2 1,220 39,657 16,785 7,374 Result for the year (26,797) 16,659 3,374 391 Result for the year attributable to Equity holders of the Group (26,388) 16,659 3,374 391 EBITDA 2/3 (34,240) 27,135 8,775 3,218 Underlying EBITDA 2/4 (20,546) 27,135 8,775 3,218 EBIT 2/5 (39,571) 23,776 5,463 821 Underlying EBIT 2/6 (25,877) 23,776 5,463 821 Capital expenditure 2/7 (4,932) (3,814) (418) (1,997) Net cash ow from operating activities (19,390) (11,427) (4,959) 3,121 Net cash ow from investing activities (27,284) (3,994) (194) (2,247) Net cash ow from nancing activities 227,734 39,473 (1,337) 6,693 Free cash ow 2/8 (25,574) (15,878) (5,457) 1,039 Balance sheet (in thousands of euro) Total Assets 332,715 104,459 35,271 31,267 Total Equity 303,948 28,042 11,937 8,748 Net debt, excluding lease liabilities 2/9 (207,245) 31,203 13,470 6,642 Net debt, including lease liabilities 2/10 (198,863) 32,985 15,120 8,421 Net working capital 2/11 41,321 58,540 20,297 5,873 Capital employed 2/12 311,662 42,298 18,239 14,905 Ratios Gross prot as % of revenue 5.0% 39.7% 34.3% 34.5% EBITDA as % of revenue (141.1%) 27.1% 17.9% 15.1% Underlying EBITDA as % of revenue (84.7%) 27.1% 17.9% 15.1% EBIT as % of revenue (163.1%) 23.8% 11.2% 3.8% Underlying EBIT as % of revenue (106.6%) 23.8% 11.2% 3.8% Non-nancial Orders received (# buses) 240 39 191 102 Buses delivered (# buses) 139 103 101 5 km (in millions) driven 13 39 17 Full-time employees per year-end, excluding temporary employees 219 124 89 44 Full-time employees yearly average, excluding temporary employees 171 106 59 34 Full-time employees per year-end, including temporary employees 309 145 105 57 Full-time employees yearly average, including temporary employees 227 122 76 46 Number of shares outstanding (in thousands) At year-end 14 59,039 44,999 44,999 44,999 On average 14 47,502 44,999 44,999 44,999 Per ordinary share Basic earnings per share 14 (0.56) 0.37 0.07 0.01 Highest share price 31.30 - - - Lowest share price 21.85 - - - Share price at year-end 27.00 - - - 2021 2020 2019 2018 Notes: 1 Gross prot is dened as the Group’s top-line earnings, being total revenue, less cost of materials (being the direct costs of goods sold materials, excluding employee expenses). 2 These items are non-IFRS Measures. For further information about these non-IFRS Measures, and the reasons why we believe they are important for an understanding of the performance of our company, please refer to our commentary on non-IFRS Measures as of page 127. 3 EBITDA is dened as operating result plus depreciation and amortisation expenses. 4 Underlying EBITDA is dened as operating result plus depreciation and amortisation expenses, adjusted for one-offs, gains and losses on the sale of assets, restructuring and related charges, and other items considered not to be directly related to the underlying operating performance. 5 EBIT is dened as operating result. 6 Underlying EBIT is dened as operating result adjusted for impairments of non-current assets, gains and losses on the sale of assets, restructuring and related charges, and other items considered not to be directly related to the underlying operating performance. 7 Capital expenditure is dened as the sum of “investments in property, plant and equipment” and “investments in intangible assets” from the Consolidated Statement of Cash Flows. 8 Free cash ow is dened as the sum of net cash from operating and investing activities, excluding the acquisition and disposal of subsidiaries, associates and other equity investments, and dividends from associates; including repayment of lease liabilities. 9 Net debt excluding lease liabilities is dened as the non-current and current loans and borrowings minus cash and cash equivalents. 10 Net debt including lease liabilities is dened as the non-current and current loans and borrowings, including lease liabilities, minus cash and cash equivalents. 11 Net working capital is dened as inventories plus trade receivables and contract assets minus trade payables and contract liabilities. 12 Capital employed is dened as total assets less current liabilities. 13 Data for 2019 and 2018 not available. 14 The number of ordinary shares outstanding in 2018, 2019 and 2020 has been adjusted for the capital restructuring in 2021 in preparation for the Initial Public Offering. 127 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION NON-IFRS MEASURES Certain discussions and analyses set out in this Annual Report include measures which are not dened by IFRS. We believe this information, along with comparable IFRS-measures, is useful to investors and other stakeholders because it provides a basis for measuring our operating performance. The Management Board also uses these measures, along with the most directly comparable IFRS-measures, in evaluating operating performance. GROSS PROFIT Gross Prot is dened as the Group’s top-line earnings, being total revenue, less cost of materials (being the direct costs of goods sold, excluding employee expenses). We believe this measure provides valuable additional information because it allows investors and other stakeholders to analyse the gross margin of our buses sold. In addition, Gross Prot is a key measure used internally to evaluate (sales) performance. Gross prot is calculated as follows (in thousands of euro): 2021 2020 Revenue 24,265 99,994 Cost of materials (23,045) (60,337) Gross prot 1,220 39,657 EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTISATION (EBITDA) EBITDA is Result for the year before net nance costs, income taxes, result from associates and depreci- ation and amortisation. Thus, EBITDA is dened as operating result plus depreciation and amortisation expenses. We believe this measure provides valuable additional information because it allows investors and other stakeholders to analyse the protability between companies and industries by eliminating the effect of non-operating decisions like interest expenses, tax rates and non-cash items like depreciation and amortisa- tion, hence facilitating focus on operating performance. In addition, EBITDA is a key measure used internally to evaluate performance. The reconciliation of Result for the year to EBITDA is as follows (in thousands of euro): 2021 2020 Result for the Year (26,797) 16,659 Amorisation & depreciation expenses 5,331 3,359 Finance expenses (net) 4,240 1,289 Share of result from associates (7,427) 112 Income taxes (9,587) 5,716 EBITDA (34,240) 27,135 UNDERLYING EBITDA Underlying EBITDA is dened as operating result plus depreciation and amortisation expenses, adjusted for one-offs, gains and losses on the sale of assets, restructuring and related charges, and other items consid- ered not to be directly related to the underlying operating performance. The reconciliation of EBITDA to underlying EBITDA is as follows (in thousands of euro): 2021 2020 EBITDA (34,240) 27,135 Euronext listing expenses 4,755 - Extraordinary compensation 5,000 - Climate system expenses 3,939 - Underlying EBITDA (20,546) 27,135 128 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 2021 ONE-OFFS ARE: • Euronext listing expenses recognised in the Consolidated Statement of Prot or Loss and Other Compre- hensive Income. These expenses amounted to €4,755 in 2021; • One-off compensation related to the termination of a success fee agreement with the CFO amounted to €5,000; • Expenses occurred to replace the climate system in buses for one of our customers. Expenses have been recognised in the Consolidated Statement of Prot or Loss and Other Comprehensive Income, whilst poten- tial income, awaiting a settlement or nal court hearing has not been recognised. This has been recognised as a Contingent Asset. Refer the Note 25. These expenses amounted to €3,939 in 2021. EARNINGS BEFORE INTEREST AND TAXES (EBIT) EBIT is Result for the year before net nance costs, income taxes and result from associates. Thus, EBIT is dened as operating result. We believe this measure provides valuable additional information because it allows investors and other stakeholders to analyse the protability between companies and industries by eliminating the effect of non-operating decisions like interest expenses and tax rates. hence facilitating focus on operating performance. The reconciliation of Result for the year to EBIT for the year is as follows (in thousands of euro): 2021 2020 Result for the Year (26,797) 16,659 Finance expenses (net) 4,240 1,289 Share of result from associates (7,427) 112 Income taxes (9,587) 5,716 EBIT (39,571) 23,776 UNDERLYING EBIT Underlying EBIT is dened as operating result adjusted for impairments of non-current assets, gains and losses on the sale of assets, restructuring and related charges, and other items considered not to be directly related to the underlying performance. The reconciliation of EBIT to underlying EBIT is as follows (in thousands of euro): 2021 2020 EBIT (39,571) 23,776 Euronext listing expenses 4,755 - Extraordinary compensation 5,000 - Climate system expenses 3,939 - Underlying EBIT (25,877) 23,776 FREE CASH FLOW Free cash ow is dened as the sum of the cash from operating and investing activities, excluding the acqui- sition and disposal of subsidiaries, associates and other equity investments, and dividends from associates, including repayment of lease liabilities. Free cash ow reects an additional way of assessing our liquidity that we believe is useful to investors and other stakeholders because it represents cash ows that could be used to fund our strategic initiatives, including the scale-up of the manufacturing of the Ebusco 3.0. The reconciliation of the increase in cash and cash equivalents to free cash ow is as follows (in thousands of euro): 2021 2020 Net cash from operating activities (19,390) (11,427) Net cash from investing activities (27,284) (3,994) Payment of principal portion of lease liabilities (1,244) (457) Investment in subsidiaries, associates 22,344 - Free cash ow (25,574) (15,878) NET DEBT, EXCLUDING LEASE LIABILITIES Net debt, excluding lease liabilities is dened as the non-current and current loans and borrowings minus cash and cash equivalents. Our net debt reects our ability to meet our debt obligations if these were due immediately. 129 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION The net debt, excluding lease liabilities is calculated as follows (in thousands of euro): As at 31 December 2021 As at 31 December 2020 Loans and borrowings - non-current 463 12,877 Loans and borrowings - current 215 45,188 Cash and cash equivalents (207,923) (26,862) Net debt excluding lease liabilities (207,245) 31,203 NET DEBT, INCLUDING LEASE LIABILITIES Net debt, including lease liabilities is dened as the non-current and current loans and borrowings, including lease liabilities minus cash and cash equivalents. Our net debt reects our ability to meet our debt obligations if these were due immediately. The net debt, including lease liabilities is calculated as follows (in thousands of euro): As at 31 December 2021 As at 31 December 2020 Loans and borrowings - non-current 463 12,877 Lease liabilities - non-current 7,250 1,238 Loans and borrowings - current 215 45,188 Lease liabilities - current 1,132 544 Cash and cash equivalents (207,923) (26,862) Net debt including lease liabilities (198,863) 32,985 NET WORKING CAPITAL Our net working capital is dened as inventories plus trade receivables and contract assets minus trade payables and contract liabilities. We believe this measure provides valuable additional information to inves- tors and other stakeholders because it represents Ebusco’s liquidity and the short-term nancial health of the company. In addition, net working capital is a key measure used internally to evaluate (short-term) liquidity. Net working capital is calculated as follows (in thousands of euro): As at 31 December 2021 As at 31 December 2020 Inventories 22,330 3,640 Trade receivables 16,598 1,863 Contract assets 13,450 59,989 Trade payables (10,883) (6,762) Contract liabilities (174) (190) Net working capital 41,321 58,540 CAPITAL EMPLOYED Capital employed is dened as total assets less current liabilities. This key gure provides valuable insight into how well the company is investing its money to generate prots. Capital employed is calculated as follows (in thousands of euro): As at 31 December 2021 As at 31 December 2020 Total assets 332,715 104,459 Current liabilities (21,053) (62,161) Capital employed 311,662 42,298 GROSS PROFIT AS % OF REVENUE Gross prot as % of revenue is calculated as follows (gross prot and revenue in thousands of euro): 2021 2020 Gross prot 1,220 39,657 Revenue 24,265 99,994 Gross prot % of revenue 5.0% 39.7% 130 ANNUAL REPORT EBUSCO 2021 INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATIONINTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION EBITDA AS % OF REVENUE EBITDA as % of revenue is calculated as follows (EBITDA and revenue in thousands of euro): 2021 2020 EBITDA (34,240) 27,135 Revenue 24,265 99,994 EBITDA % of revenue (141.1%) 27.1% UNDERLYING EBITDA AS % OF REVENUE Underlying EBITDA as % of revenue is calculated as follows (underlying EBITDA and revenue in thousands of euro): 2021 2020 Underlying EBITDA (20,546) 27,135 Revenue 24,265 99,994 Underlying EBITDA % of revenue (84.7%) 27.1% EBIT AS % OF REVENUE EBIT as % of revenue is calculated as follows (EBIT and revenue in thousands of euro): 2021 2020 EBIT (39,571) 23,776 Revenue 24,265 99,994 EBIT % of revenue (163.1%) 23.8% UNDERLYING EBIT AS % OF REVENUE Underlying EBIT as % of revenue is calculated as follows (underlying EBIT and revenue in thousands of euro): 2021 2020 Underlying EBIT (25,877) 23,776 Revenue 24,265 99,994 Underlying EBIT % of revenue (106.6%) 23.8% ANNUAL REPORT EBUSCO 2021 131 SALES SUPPORT TENDER SUPPORT ENGINEERING PROJECT MANAGEMENT CHINA SUPPLY CHAIN PROCUREMENT HR FINANCE IT CCO COO CPO CFO R&D COMMERCIAL COUNTRY DIRECTORS CEO CTO ENERGY MARKETING ORGANISATION EBUSCO INTRODUCTION MANAGEMENT BOARD REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION 131 132 COLOPHON This annual report is a publication by Ebusco. Ebusco Vuurijzer 23 5753 SV Deurne The Netherlands T +31 (0)88 1100 200 E [email protected] www.ebusco.nl Editing and texts Ebusco Lindner & van Maaren Design and layout Monter, Amsterdam 894500WSIBBFFKHL6B322021-01-012021-12-31894500WSIBBFFKHL6B322020-01-012020-12-31894500WSIBBFFKHL6B322021-12-31894500WSIBBFFKHL6B322020-12-31894500WSIBBFFKHL6B322019-12-31ifrs-full:IssuedCapitalMember894500WSIBBFFKHL6B322020-01-012020-12-31ifrs-full:IssuedCapitalMember894500WSIBBFFKHL6B322020-12-31ifrs-full:IssuedCapitalMember894500WSIBBFFKHL6B322019-12-31ifrs-full:SharePremiumMember894500WSIBBFFKHL6B322020-01-012020-12-31ifrs-full:SharePremiumMember894500WSIBBFFKHL6B322020-12-31ifrs-full:SharePremiumMember894500WSIBBFFKHL6B322019-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500WSIBBFFKHL6B322020-01-012020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500WSIBBFFKHL6B322020-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500WSIBBFFKHL6B322019-12-31ifrs-full:ReserveOfCashFlowHedgesMember894500WSIBBFFKHL6B322020-01-012020-12-31ifrs-full:ReserveOfCashFlowHedgesMember894500WSIBBFFKHL6B322020-12-31ifrs-full:ReserveOfCashFlowHedgesMember894500WSIBBFFKHL6B322019-12-31ifrs-full:ReserveOfChangeInValueOfForeignCurrencyBasisSpreadsMember894500WSIBBFFKHL6B322020-01-012020-12-31ifrs-full:ReserveOfChangeInValueOfForeignCurrencyBasisSpreadsMember894500WSIBBFFKHL6B322020-12-31ifrs-full:ReserveOfChangeInValueOfForeignCurrencyBasisSpreadsMember894500WSIBBFFKHL6B322019-12-31ifrs-full:MiscellaneousOtherReservesMember894500WSIBBFFKHL6B322020-01-012020-12-31ifrs-full:MiscellaneousOtherReservesMember894500WSIBBFFKHL6B322020-12-31ifrs-full:MiscellaneousOtherReservesMember894500WSIBBFFKHL6B322019-12-31ifrs-full:RetainedEarningsMember894500WSIBBFFKHL6B322020-01-012020-12-31ifrs-full:RetainedEarningsMember894500WSIBBFFKHL6B322020-12-31ifrs-full:RetainedEarningsMember894500WSIBBFFKHL6B322019-12-31ifrs-full:EquityAttributableToOwnersOfParentMember894500WSIBBFFKHL6B322020-01-012020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember894500WSIBBFFKHL6B322020-12-31ifrs-full:EquityAttributableToOwnersOfParentMember894500WSIBBFFKHL6B322019-12-31ifrs-full:NoncontrollingInterestsMember894500WSIBBFFKHL6B322020-01-012020-12-31ifrs-full:NoncontrollingInterestsMember894500WSIBBFFKHL6B322020-12-31ifrs-full:NoncontrollingInterestsMember894500WSIBBFFKHL6B322019-12-31894500WSIBBFFKHL6B322021-01-012021-12-31ifrs-full:IssuedCapitalMember894500WSIBBFFKHL6B322021-12-31ifrs-full:IssuedCapitalMember894500WSIBBFFKHL6B322021-01-012021-12-31ifrs-full:SharePremiumMember894500WSIBBFFKHL6B322021-12-31ifrs-full:SharePremiumMember894500WSIBBFFKHL6B322021-01-012021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500WSIBBFFKHL6B322021-12-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember894500WSIBBFFKHL6B322021-01-012021-12-31ifrs-full:ReserveOfCashFlowHedgesMember894500WSIBBFFKHL6B322021-12-31ifrs-full:ReserveOfCashFlowHedgesMember894500WSIBBFFKHL6B322021-01-012021-12-31ifrs-full:ReserveOfChangeInValueOfForeignCurrencyBasisSpreadsMember894500WSIBBFFKHL6B322021-12-31ifrs-full:ReserveOfChangeInValueOfForeignCurrencyBasisSpreadsMember894500WSIBBFFKHL6B322021-01-012021-12-31ifrs-full:MiscellaneousOtherReservesMember894500WSIBBFFKHL6B322021-12-31ifrs-full:MiscellaneousOtherReservesMember894500WSIBBFFKHL6B322021-01-012021-12-31ifrs-full:RetainedEarningsMember894500WSIBBFFKHL6B322021-12-31ifrs-full:RetainedEarningsMember894500WSIBBFFKHL6B322021-01-012021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember894500WSIBBFFKHL6B322021-12-31ifrs-full:EquityAttributableToOwnersOfParentMember894500WSIBBFFKHL6B322021-01-012021-12-31ifrs-full:NoncontrollingInterestsMember894500WSIBBFFKHL6B322021-12-31ifrs-full:NoncontrollingInterestsMemberiso4217:EURiso4217:EURxbrli:shares
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