Annual Report (ESEF) • May 25, 2022
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Download Source FileUntitled THE POWER OF TEAMWORK Annual Report 2021/2022 The theme of this year’s annual report is adding value by teamwork. Teamwork is one of our core values and a fundamental driver approach our markets, how we work together internally across Holland Colours, and it provides the foundation for a co-design-, collaboration-based, outside-in approach to customer innovation. Teamwork is a mindset, a process and a goal. Throughout this report, we spotlight the three key areas for teamwork at Holland Colours: marketplace, internally and with clients. Internal teamwork 78 Teamwork and our markets 72 Teamwork and our client 57 In ve editorials we highlight the three key areas for teamwork at Holland Colours: marketplace, internal teamwork and collaboration and co-design with clients and distributors. Teamwork and our client 21 APPROACHING THE MARKET AS ONE TEAM Teamwork and our client 6 UNDERSTANDING THE PROCESS AS WELL AS THE PRODUCT WORKING TOGETHER TO OPTIMIZE PRODUCT, COMMERCIAL AND OPERATIONAL PERFORMANCE WORKING TOGETHER INTERNALLY AND EXTERNALLY ALL FOR ONE AND ONE FOR ALL CONTENTS SpecialsIntroduction by the CEO 5 About Holland Colours 8 Our Heritage 9 Our Products 10 Our Solutions 11 Our Markets / Our Mission 12 Our Core Values 13 Employee participation: the togetherness you get when everyone is a co-owner 15 Report of the Board of Management 16 Board of Management 17 Strategic Update 19 Financial Key Figures 23 Product Innovation 29 Corporate Social Responsibility 29 Risk Management 30 Corporate Social Responsibility 42 Corporate Governance 52 Report of the Supervisory Board 59 Remuneration Report 66 Employee Participation 70 Five-Year Summary 74 Investor Relations 75 Financial Statements 80 Other Information 121 Independent Auditor’s Report 122 Contact 136 HOLLAND COLOURS ANNUAL REPORT 2021/2022 4 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSABOUT DEAR SHAREHOLDERS, EMPLOYEES, CLIENTS AND BUSINESS PARTNERS, The second year of COVID-19 again underlined the value of teamwork and reminded us that, in an increasingly complex and challenging world, our ability to work together will continue to be an advantage. We looked after each other and jumped in to help out when this was needed to overcome challenges and roadblocks. We organized ourselves to both support our clients and each other. I am immensely proud of what I have seen. A GOOD RESULT We continued to invest in growth and process improvements to safeguard our raw material prices. We maintained our service and kept our clients supplied. with the previous year, the ROS (Return on Sales) increased to € 13.6 million, BUILDING A STRONGER ORGANIZATION Over the last year, we have taken a number of steps to strengthen our organization. We have reviewed our business risks and developed a Risk Matrix that maps our risks and scores them on how important they are to us. Further, following the incident described in the paragraph ‘Risk-related events 2021/2022’ in the Risk Management section, we reviewed and emphasized the importance of our Code of Conduct. INTRODUCTION BY THE CEO We will also introduce an Ethical Compass to help our employees take moral considerations into account around risk-sensitive integrity issues. Typical themes will include fraud, bribery and corruption, psychological and physical safety and cybersecurity. Finally in 2021/2022, we established a new baseline for measuring our CO 2 emission going forward, and we continue our program of process and IT improvements. GO FAR TOGETHER As we move out of the global pandemic phase of COVID-19, teamwork will continue to be as important to our success as ever. We have a lot to do together. This includes rolling out our people development program, called Better Together Dialogues, company-wide, with our operational process improvements. Using our new communication tools, we want to build collaboration between groups and teams across the organization and support cross-border thinking. And we need to work on implementing our sustainability vision. Despite the ongoing economic, political and other instabilities, we should know by now that with teamwork in our DNA, we can do and achieve anything. There’s a good African proverb that applies here: If you want to go fast, go alone; but if you want to go far, go together. Thank you to all our employees and stakeholders for and so working on the success of Holland Colours. Coen Vinke CEO 5 HOLLAND COLOURS ANNUAL REPORT 2021/2022 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORT FINANCIAL STATEMENTSINTRODUCTION BY THE CEO ABOUT TEAMWORK AND OUR CLIENT OTTO Chemie stands for uncompromising quality, the highest level of expertise and innovative solutions for sealing, bonding, casting and coating. Holland Colours supports the company with the rst of these – sealing. THE PROCESS AS WELL AS THE PRODUCT HOLLAND COLOURS ANNUAL REPORT 2021/2022 66 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSREMUNERATION REPORTMANAGEMENT BOARD REPORT OTTO’s Christian von Malotki and Nikolaus Auer work closely with Holland Colours in a relationship whose roots go back to the mid-1990s. The way we work together has evolved from supplier and customer to team players. HIGH-END DEMANDS Holland Colours makes color-matched liquid pastes that OTTO operates at the top of the market. “We have a couple of hundred standard colors, and we make tailormade colors based on samples from the client,” says Mr. Auer. It is a huge market in which architects, builders and designers are always looking for something fresh and in which the quality of the color match is crucial. Recognizing this, OTTO switched in 2020 to very high quality color match. “To do this needed more knowledge about color pastes from our side, and more knowledge about our processes from the HCA side. So we started having more frequent technical meetings,” explains Mr. von Malotki. UNDERSTANDING PRODUCTION NEEDS These technical meetings – three to four a year, sometimes more, at both OTTO and Holland Colours – are an opportunity to go deeper into possible issues and to develop the best custom product. Mr. Auer: “Holland Colours supplies us with really well into our processes. This is very important, and Holland Mr. von Malotki adds: “The understanding HCA has of the demands on our production side and the understanding of the HCA technical department is very good. If we have a problem, have to explain the problem once. HCA’s understanding is on a very high level, which makes our partnership very good.” MUTUAL BENEFITS From the Holland Colours perspective, working with a high-end client like OTTO pushes us to go further because it sets the bar for us even higher. The result is extensive collaboration from which helping ourselves and our other customers. “We have a very intensive cooperation,” says Mr. Auer. “I would say it goes beyond the usual supplier-customer relationship because we work very closely on innovation, new projects and processes. This is a key reason for us to work with Holland Colours. Both sides really understand pastes. Holland Colours understands color pastes and we understand sealant pastes. We learn from each products better. We come together with our knowledge.” The result is a strong sense of feeling supported: “We notice a very with complications,” says Mr. Auer. NOT ‘A’ SUPPLIER BUT ‘THE’ PARTNER The impact of the relationship between OTTO and Holland Colours rests on mutual trust and close teamwork. The contact between us is always open, always friendly, always constructive and focused on quality. As a company, we want to be part of the growth of OTTO, and the only way to do that is not to be ‘a’ supplier to OTTO Chemie, but to be ‘the’ partner to OTTO Chemie. And that involves spending time with each other and learning together. “We learn from each other. We use methods to understand our products better. We come together with our knowledge” HOLLAND COLOURS ANNUAL REPORT 2021/2022 7 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT ABOUT HOLLAND COLOURS 43 YEARS of color formulation experience One global team of over 400 EMPLOYEES SINCE 1979 NETWORK OF 100 suppliers, distributors and agents As a company, we set out to deliver customer peace of mind through superior product performance, world-leading product stewardship, and outstanding technical service. Our experts co-design color and functional solutions with our customers, develop solutions to support recycling, and actively contribute to creating a more sustainable industry overall. GLOBAL SUPPLIER of plastic colorants and additives 2 BILLION KG of plastic products colored by Holland Colours each year OUR PROFILE HOLLAND COLOURS ANNUAL REPORT 2021/2022 8 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSABOUT More than 40 years ago, the founders of Holland Colours set to work in an old paper factory in Apeldoorn, the Netherlands. A small but ambitious team, they had an idea that would ultimately disrupt the world of colors – and earn them the description ‘pioneers.’ Today, we are one global team of over 400 colleagues with dierent experiences and from various backgrounds. But we all share the same core values, passion for color, commitment to our customers and pride in our company. Holland Colours NV Apeldoorn, the Netherlands Surabaya, Indonesia Shanghai, China Richmond, Indiana United States Szolnok, Hungary Toronto, Canada Tultitlán, Mexico 1979 1990 2022 1990 1992 1995 Holland Colours Asia Holland Colours Americas Holland Colours EMEIA Gillingham, United Kingdom Jakarta Sales Production/Sales Representative Oce HOLLAND COLOURS ANNUAL REPORT 2021/2022 9 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSABOUT HOLCOBATCH ® Microbeads and an eco-friendly carrier, with a low melting point and support for ultra-low dosing. Holcobatch is typically used for light color applications and delivers the highest coloring homogeneity. Use for transparent applications. HOLCOLEX This liquid colorant based on water and glycol is designed for use with waterborne systems. Use for waterborne paints and coatings, adhesives, liquid soaps, windshield wash and antifreeze. HOLCOPRILL Cylindrical granulates, based on a natural carrier and showing a low melting point. Holcoprill is highly concentrated and is designed for use at high dosing levels. Use for transparent and opaque applications. HOLCOSIL Liquid colorants for silicone sealants, comprising three applications covering building and construction, injection molding silicone rubbers and extrusion and hot press molding of silicone rubber. HOLCOPEARL ® Round granulates, based on a polymeric carrier and suitable for low dosing. Holcopearl is a great colorant for and PET. Use for transparent and highly opaque applications. A recent development is Holcopearl 'micro'. HOLCOMER A plastic packaging additive that protects dairy products from The Holcomer family provides superior opacity for UHT milk packaging. We also 2 versions. OUR PRODUCTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 10 HOLLAND COLOURS ANNUAL REPORT 2021/2022 10 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSABOUT TINTMASK Making recycled PET more re-usable TASTEGUARD Protecting the taste of premium water FASTHEAT Optimal energy usage SORT Enhancing the recyclability of your product HOLCOBATCH® CLASSIC Less energy during processing MARKIT Color solutions for laser marking NATURAL COLLECTION Made from renewable resources HOLCOMER THERMOSTRETCH Low TiO 2 concept for better recyclability How we contribute to a sustainable industry OUR SOLUTIONS Plastics are essential Strong, lightweight and moldable, plastics are used in thousands of products that add comfort, convenience and safety to our daily lives. Plastic helps to prevent food waste with excellent sealing and enhanced durability and is widely used instead of wood by the building & construction industry. Adding color to plastic and coatings creates emotion, aects behavior, aids identication and supports safety, depending on the purpose and application. Together with our customers, we co-design sustainable colorants and additives that are ecient, eective and esthetic. HOLLAND COLOURS ANNUAL REPORT 2021/2022 11 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSABOUT Building & construction building & construction industry. Today, our presence in that industry covers a wide range of products and applications where good dispersion is a key factor. Packaging We entered the packaging market later, but today it is a fast-growing part of our business and another showcase for our expertise. There are various trends at play in this market. These include thinner-wall bottles, improved food safety and a growing interest in bio-based and recyclable packaging solutions. We partner with small, medium and large customers to produce packaging for water, carbonated soft drinks, fruit juices, dairy, beer, wine, detergents, pharmaceutical and personal care products. With our wide market experience and strong technology knowledge base, Holland Colours is well-equipped to support the evolution of this market going forward. Coatings & sealants The third arm of our business is the coatings & sealants market. This is an important part of our business portfolio, and this will continue to be so in the future. We provide solvent and water-based product solutions to a wide range of customers and applications. OUR MARKETS OUR MISSION Our mission is two-fold: TO BE RECOGNIZED AS A CONTRIBUTOR TO THE DEVELOPMENT OF A SUSTAINABLE INDUSTRY TO BE OUR CUSTOMERS’ CO-DESIGNER OF COLOR AND FUNCTIONAL SOLUTIONS 12 HOLLAND COLOURS ANNUAL REPORT 2021/2022 SUPERVISORY BOARD REPORT REMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR FIVE-YEAR SUMMARY & INVESTOR RELATIONSEMPLOYEE PARTICIPATIONABOUT FRAMEWORK FOR SUCCESS Our ve core values underpin everything we do as a company. They are part of our DNA and determine how we behave and what we are like as people and as an organization. The values are based on the insight that as the market for colorants becomes more competitive, and good products become the rule rather than the exception, successful companies will need to nd additional ways to dierentiate themselves. Pro-activeness We make things happen instead of waiting for them to happen to us. Responsibility At Holland Colours, we are committed to our company, our colleagues, our society and our environment. Teamwork The theme of this year’s annual report is adding value by teamwork, which is one our ve core values. We work together to achieve one common goal. For us this means: INTERNAL I support you and you support me to achieve our personal and common business goals. We help each other to learn new things and to take the business forward. This helps us to innovate across our markets, run our business better and to push our sustainability agenda. EXTERNAL We work outside in. We team up early with clients, suppliers and others in the value chain so we can share our ideas and work-in- progress. This enables us to commercialize faster, build a stronger business case for our clients and ourselves, to co-design custom- made and innovative solutions, to deliver world-leading product stewardship support and to provide outstanding service. Competence We have the skills and expertise to do things well. Accountability We can be trusted that we take responsibility for what we do (and do not do). HOLLAND COLOURS ANNUAL REPORT 2021/2022 1313 FIVE-YEAR SUMMARY & INVESTOR RELATIONS FINANCIAL STATEMENTSEMPLOYEE PARTICIPATIONREMUNERATION REPORTSUPERVISORY BOARD REPORTGOVERNANCECSRMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO OUR DIFFERENTIATORS We develop existing and new customer relationships into design partnerships. Our employees are co-owners of the company and we are proud to provide the highest levels of service to our customers. We continuously build our competence and strengthen our innovation capabilities. We do not compromise on regulatory compliance, and we maintain the highest quality standards. HOLLAND COLOURS ANNUAL REPORT 2021/2022 14 SUPERVISORY BOARD REPORTCSR GOVERNANCEMANAGEMENT BOARD REPORT INTRODUCTION BY THE CEO FIVE-YEAR SUMMARY & INVESTOR RELATIONSEMPLOYEE PARTICIPATIONREMUNERATION REPORT FINANCIAL STATEMENTSABOUT Plenty of companies oer their employees shares in the business. Typically, it’s seen as an employee benet: a chance to share in the prots. We don’t just do that at Holland Colours. We go further. Here’s what that means to us. It’s true that every permanent employee gets a free share in Holland Pigments, the investment company that holds a controlling stake in Holland Colours. And it’s shares. And that every employee can buy more shares in Holland Because when you receive a share in our business, you also become a co-owner with a voice in a unique workplace culture based on shared values, togetherness and solidarity with each other. (You can read more about the practical working of employee participation in our story on page 70.) EMPLOYEE PARTICIPATION DRIVES OUR SUCCESS As a company, we absolutely believe that employee participation is essential to our success. This belief goes back to 1979, when our founders, having experienced what it was like to work for an organization that placed its employees second, decided to set up their own business. In building a company that would be innovative, client-focused and responsible, they believed that every employee should be a co-owner. They felt it was the right thing to do, a better way to run a business, and the key to ensuring the independence and continuity of Holland Colours. Today employee co-ownership is based on three principles: 1. Everyone participates via employee shareholding for both social and business reasons. 3. People and our impact on them is central, both inside and outside the company. These principles are in line with our core values (Accountability, Competence, Pro-Activeness, Teamwork and Responsibility) and shape what it feels like to work at Holland Colours in all kinds of ways. This includes recognizing and rewarding everyone’s contribution to our success and building engagement. It includes viewing entrepreneurship as fun and something to be encouraged. It also includes recognizing that being human in our dealings with each other builds loyalty and the willingness to go the extra mile. A CULTURE BASED ON CONNECTION, COLLABORATION AND SUSTAINABILITY ownership model that is uniquely in tune with today’s world in which people are increasingly seeking connection, togetherness, responsibility and sustainability in their work. In surveys and discussions, formal and informal, colleagues tell us they feel proud to work for Holland Colours and that doing so gives them a sense of purpose. They love that everyone is included, that everyone’s ideas are taken seriously and that everyone can say what they think. This in turn supports the independence and continuity of the company and enables us to continue to make the right – balanced – sustainable organization, to lead the way in driving innovation, to prioritize our clients’ interests and to meet their needs with innovative sustainable solutions. Thanks to employee participation, Holland Colours is a great place to do great things. EMPLOYEE PARTICIPATION The togetherness you get when everyone is a co-owner HOLLAND COLOURS ANNUAL REPORT 2021/2022 15 SUPERVISORY BOARD REPORTCSR GOVERNANCEMANAGEMENT BOARD REPORTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSFIVE-YEAR SUMMARY & INVESTOR RELATIONSEMPLOYEE PARTICIPATIONREMUNERATION REPORTABOUT REPORT OF THE BOARD OF HOLLAND COLOURS ANNUAL REPORT 2021/2022 16 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT CFO ad interim 1962, Dutch Joined Holland Colours NV January 7, 2022 Eelco van Hamersveld CTO 1969, Dutch Joined Holland Colours NV December 1, 2017 Appointment to position Coen Vinke CEO 1963, Dutch Joined Holland Colours NV Appointment to position HOLLAND COLOURS ANNUAL REPORT 2021/2022 17 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT A STRONG FINANCIAL YEAR Despite the continuing challenge of COVID-19 to people and economies around the world, struggled with the same problems as other manufacturing companies – logistics and supply chain issues; the rising price of many raw materials; increasing energy costs – our people continued to show their commitment to doing what needed to be done to deliver for our clients and justify the trust they place in us. Overall, our focus on investing in our future and protecting our margins, along with our geographic, product and market mix, enabled us to manage our business successfully. Even though travel and client contact remained at arm’s length, and despite continuing to work in ‘bubbles’ or from home, we continued to serve our clients well. A lot of this was due to teamwork, which is the theme of this year’s Annual Report and which you can read more about elsewhere. In this section of the Annual Report, we look we faced and highlight the steps we took and are taking to secure our growth ambitions over the longer term. LIVING WITH COVID-19 Last year was the second year of COVID-19. Unfortunately, things did not return to normal. The good news was that we felt we could cope with the situation and that the organization teams, working from home, hygiene measures – from the previous year, and those worked well. Even so, a certain mental fatigue started to set it in. There was a lot of pressure on our systems and on our people. Both the Board of Management and our leadership teams in the in this kind of situation. There was some frustration, which we understand. At the same time, we saw a lot of camaraderie and a continued willingness to help each other. That sense of togetherness is something we want to build on going forward. COVID-19 continued to make it hard for us to interact with clients, and we saw that most customers were primarily focused on maintaining production and meeting demand. They had little time or desire to think about what is new or next. This had the knock-on as a driver for their business growth. However, the long term trend is clear, and we will continue to work on claiming a strong position in sustainability both in the way we work and through the products we develop for the market. Sustainability is integral to our growth strategy and represents a major opportunity and a challenge for Holland Colours. MAINTAINING SUPPLIES AND MARGINS our clients supplied. We have dual sources for most products and, as a ‘recipe’ business, time and intensive collaboration with the client and internally. That adds pressure. And with the shortages and rising prices of raw materials, we were forced to pass on price increases, which is not something we found easy to do. We protected our margins and and as a hedge against future increases. OPPORTUNITIES INTRODUCTION HOLLAND COLOURS ANNUAL REPORT 2021/2022 18 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT RESPONDING TO THE SITUATION IN UKRAINE condemned the violence and its impact on the people of Ukraine. We also decided to halt all market and business development in Russia and Belarus, but to continue to supply existing clients in line with EU sanctions. We continue to monitor the situation closely and will follow the applicable international laws and regulations regarding sanctions. GROWING TOGETHER 2023 Our Growing Together 2023 full year of COVID-19, we suspended its implementation while we got a clearer idea of the pandemic’s impact on our business. This decision was later reversed and so we will The pause in 2020/2021 does however mean that implementation of our current strategy is running slightly behind our original plan. That said, the Growing Together 2023 strategy was always intended to continue beyond 2023, becoming a continuous improvement program. In that sense, the delay is an issue of timing rather than deadlines, and the main two elements of Growing Together 2023 – growth and excellence – will continue beyond 2023. Apart from safety and innovation we achieved our strategic goals and overall objectives for 2021/2022. For more information about safety, see the section on Corporate Social Responsibility. For information about innovation, see Product Innovation on page 29. Strategy 2023 Our strategic goals: • Protecting and extending global market positions in packaging • Protecting and extending global market positions in building & construction • Extending market positions in coatings & sealants, primarily in EMEIA Our overall objectives: • Zero accidents • Continued revenue growth • • • • HOLLAND COLOURS ANNUAL REPORT 2021/2022 19 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT DELIVERING GROWTH growth goals for packaging, building & construction and coatings & sealants in 2021/2022. See the next section, Financial Key Figures, for more information. Despite the challenge of not been able to visit clients, we still succeeded in gaining share at key clients and acquiring new customers. And general market demand in our strategic business segments – especially in North America and EMEIA – was strong and supported the revenue growth. DELIVERING EXCELLENCE On the excellence front, along with aiming for zero accidents (see the Corporate Social Responsibility section of this report for more information), our focus is on core business processes. The aim is to optimize our innovation, commercial, operational and people This also includes updating our IT infrastructure and data management systems. Innovation working, Holcopearl for PVC in Asia. More will follow. Overall, we have shifted to a transparent setup in which everyone can see what current and potential projects we And just as importantly, other people can now share their innovation ideas as well and know that the process will ensure they are taken seriously. Commercial With the innovation project well underway, we began working on our commercial processes – Lead to Cash. We have completed the discovery and development phases and have begun implementing improvements. We are supplementing good intuition with data and analysis because, as we grow bigger, it becomes harder to oversee everything that is going on. The result of these initiatives will be to sharpen our client service proposition. We are bringing more structure to our business consolidation and acquisition processes. clear KPIs, and we have a new CRM package on order. All these steps will help to drive customer satisfaction and revenue growth. Operational We will begin work on the third excellence project – the Source-to-Ship operational process improvement – in 2022/2023. People 2019. Following a small pilot with management in 2019/2020, last year we selected, of the project. This begins in 2022/2023. The goal with the Better Together Dialogues is to support a personal discussion about each employee’s opportunities and challenges, and to learn from each other. This will enable us to make the best possible use of the ambitions and talents of all our people in achieving our strategy. is excellent, and on the strategy front, our people overwhelmingly said they understood HOLLAND COLOURS ANNUAL REPORT 2021/2022 20 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT TEAMWORK AND OUR CLIENT Alex Xiong, owner of Moyan, set up his colorant distribution company in Shanghai in 2016 specically to work with Holland Colours. Mr. Xiong saw that the Chinese market for milk packaging was shifting from cartons to PET. High-end brands in particular were looking to dierentiate themselves, and PET bottles oered a way to stand out in Chinese stores. Holland Colours, too, had been looking to enter the Chinese dairy market with our Holcomer light barrier products. When a mutual contact introduced us to each other, we saw an opportunity for both of us. THE MARKET AS ONE TEAM HOLLAND COLOURS ANNUAL REPORT 2021/2022 2121 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Mr. Xiong already knew Holland Colours and felt that our market for PET packaging. Key in his eyes was that Holland Colours is a global company and a leader in light barrier technology for PET. A light barrier helps to protect whatever is inside the bottle especially important for plastic milk bottles. Ever since the been a hot topic in the Chinese dairy industry. Regulations are now tight and dairy producers are very careful when developing new products and packaging. In this context, global companies are BEYOND A TRUST-BASED RELATIONSHIP “HCA was the obvious choice as it was one of the few companies operating in this high-end niche market,” Mr. Xiong explains. “It is also a global company. It is an issue of trust and HCA is a leading partner with a global reputation.” Trust is central to his relationship with Holland Colours, Mr. Xiong says: “The relationship is more than that of a supplier and client. Even more than a partner, because we develop the whole market and win business together. We treat each other with respect, trust, and go to the client as one team. The advantage for me is that it helps to convince the client if HCA comes too. It is teamwork and I am very proud of this cooperation.” HCA provides technology support and provides the dairy industry with insights on performance improvement opportunities in terms of process optimization and quality enhancement. This partnership is positive for both. SIMPLE STRUCTURE, STABLE TEAM Another key reason for the strong teamwork is the stability of the team on the Holland Colours side. “HCA is global but has a simple organizational structure. It is simple to deal with,” says Mr. Xiong, who describes his contacts within the company as friends. “The same people every time, unlike other companies. I also like how HCA does business with respect for the business partner, no matter how big you are. I am relatively small compared with the multinational distributors. Other companies would tend to treat me as a small supplier and with less respect.” Of course, as well as our successes together as a team, we also have challenges. “When companies in China want something, they want it tomorrow, or today. It is complicated, because clients in China want to work with a global partner, but they also want the speed of a local suppler, and HCA can struggle with this,” he says. “We have to go to Indonesia or Europe for help, and that takes situations. MORE JOINT DEVELOPMENT with the current situation, but also I want to do more joint development for other applications. I want us to expand beyond Holcomer and so I hope for more focus from HCA on China.” Clearly, the partnership is solid. As a distributor and importer, Moyan provides the logistical support to its dairy clients while Holland Colours takes care of the technology. Mr. Xiong: “The COVID-19 pandemic showed our relationship is strong enough that we have continued to work well together even when we can’t meet face to face.” “We are developing the PET market and winning business together. We treat each other with respect, trust and go to the client as one team” HOLLAND COLOURS ANNUAL REPORT 2021/2022 2222 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCE INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORTABOUT 2020/20212021/2022 Revenue In million euros 15.1% 96.0 110.5 2020/20212021/2022 Operating Result In million euros 9.7% 12.4 13.6 2021/2022 2020/2021 2021/2022 2020/2021 2021/2022 2020/2021 2021/2022 2020/2021 2021/2022 2020/2021 2021/2022 2020/2021 Return on Sales Return on Investment Earnings per Share Innovation Index Solvency 12.3% 34.2% €11.83 7.9% 23.5% 72.5% 12.9% 32.6% €11.00 12.9% 20.4% 73.6% 2020/20212021/2022 Net Result In million euros 6.3% 9.6 10.2 HOLLAND COLOURS ANNUAL REPORT 2021/2022 23 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT FINANCIAL PERFORMANCE 2021/2022 2020/2021 Change Revenue 110.5 96.0 Operating result 13.6 Net result 10.2 9.6 previous year (€ 96.0 million). This included a positive impact (€ 0.25 million) arising from the translation from USD to EUR. prices within all focus segments were higher compared to the previous year. Revenue in volumes and higher average sales prices. previous year. This decrease was mainly due to increasing raw material prices. year, primarily due to increased labor costs. In addition, travel, consultancy and software costs were also higher than the previous year. because of the impact last year of a non-recurring tax exempt income in the US. After revaluing deferred tax assets in line with the adjusted tax regime in the Netherlands and the ‘innovation box’ incentive program, the ETR was below the legally applicable rate in substantiation of this. year (€ 11.00 per share). Developments by division EMEIA The EMEIA division registered a strong performance, and all segments were up on the HOLLAND COLOURS ANNUAL REPORT 2021/2022 24 EMEIA in EUR millions Americas in USD millions Asia in USD millions 2021/2022 2020/2021 2021/2022 2020/2021 2021/2022 2020/2021 Revenue third-party 37.9 16.6 17.2 Operating result 3.7 2.0 3.9 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Building & construction and coatings & sealants The building & construction market was especially strong, resulting in solid demand for our Holcobatch, Holcoprill and Holcopearl products. The sealants market, too, was also very strong compared with the previous year, with volumes and value both up. Packaging In the packaging market we, like the whole of the industry, felt the impact of new EU food contact legislation – the 15 th contact recipes. The 15 th Amendment has implications for the formulation of our product that we are currently working to solve. Without this, our packaging business in the EMEIA division would have had an even better year. Regional developments development in Russia and Belarus because of the situation in Ukraine. We decided that we are willing to continue supply to existing clients in those countries in line with EU sanctions. We continue to monitor the situation closely and will follow all EU sanction rules if and as they evolve. AMERICAS Building & construction leading position in this market in the US and Canada is based on true partnership with large client groups. They value our service, and we collaborate intensively in new product development. Unfortunately, there was little development time available last year due to the very high overall demand. Machine availability for testing was limited and some of our co-development projects slowed considerably as a result. On the positive side, our clients were extremely busy, resulting in high demand for our products. Packaging We also saw strong demand in the packaging market, and dairy in particular. This was driven by the introduction of new long-life energy drinks that use packaging made with Holcomer. Markets in Mexico and South America, also mainly packaging, were more or less ISO certication Our site in Richmond, Indiana, in the USA, became ISO 9001:2015 registered in 2021/2022, and joins all our other manufacturing sites in holding this registration. ASIA USD 17.2 million to USD 16.6 million. The overall gross margin percentage decreased from Our Asia division saw slightly stronger results in our home market of Indonesia. Packaging peak. However, we remain the market leader in UHT dairy packaging in China. Our Asian export markets were largely stagnant due to COVID-19, while continuing restrictions on HOLLAND COLOURS ANNUAL REPORT 2021/2022 25 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Non-compliant payments One important event was a report by the management of the Asia division of potentially irregular payments to employees of clients. For more details, see the paragraph on ‘Risk-related events 2021/2022’ in the Risk Management section,’ and the Audit Committee section in the Report of the Supervisory Board. First result of innovation process beyond the key client and worked with marketing on a communications plan. Overall, it was a great example of teamwork. It also underlines the opportunities we have to expand our traditional focus from meeting single client needs to meeting those of the wider market. Representative Oce in China explore new niche segments in China. INVESTMENTS Holland Colours made a number of investments in our divisions in 2021/2022 to improve We would like to highlight the following ones in particular: New production equipment for EMEIA In the EMEIA division, we approved an investment of € 5.1 million to install new production technology with automatic feeding and a packaging line. The new line will further increase production capacity in response to market demand for Holcopearl, both colored and white. The new line, in Apeldoorn, will support faster production. It will also reduce the need for manual handling thanks to its automated packaging module and integrated raw Also last year, we commissioned a replacement capacity for Apeldoorn and we invested in modernizing production equipment at our plant in Szolnok. Scaling up Holcopearl in Americas In the Americas division, an investment in specialized equipment to make Holcopearl at manufacturing scale was completed and production begun. Previously, we only produced this at laboratory scale. Holcopearl’s dark colors create new opportunities for us in the North American building & construction markets. Production and environmental investments in Asia In the Asia division, the additional equipment we purchased in 2020/2021 was set up and is now coming into operation at our plant in Surabaya. We also began to invest in further tightening our environmental compliance there. And in response to the rising water levels Overall, we invested € 3.3 million in 2021/2022. HOLLAND COLOURS ANNUAL REPORT 2021/2022 26 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT CASH FLOW inventories as a result of building up raw material stocks and increasing raw material prices. There were no changes in the company’s funding. Except for the liabilities related to IFRS 16, the company remains loan free. FINANCIAL REPORTING PROCESS operating procedures and data accuracy. Each month, the controllers of the various forward-looking data on revenue and margin development. The cost and operating working capital trends are compared to budget targets and prior-year actuals. Financial and business performance are discussed in a monthly business review call with each divisional management team. The consolidated results and summary comments are subsequently sent to the Supervisory Board. by local auditors and then shared with the group. This local for global approach improves HOLLAND COLOURS ANNUAL REPORT 2021/2022 27 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT The Board of Management consists of a CEO, CFO and CTO. Each member has a clear set of responsibilities and decisions are taken at either the divisional or Board of Management level. There was one change in the composition of the Board of Management. This came with This decision was taken in close consultation with the company and partly on her initiative. We thank Ms. van Dinteren for her work for the company. The CFO position is currently experienced as a CFO and has worked previously on an interim basis for Holland Colours. at group level. reporting and risk management. We are also improving business intelligence and moving to dashboarding, balanced scorecards and making increasing use of leading KPIs to measure what we do and how we do it, next to lagging indicators. On the marketing front, the goal is to increase our use of ‘inbound marketing'. This technology-based approach involves creating relevant and targeted content that helps our target groups to identify good solutions for their challenges and then come to us to learn more about how we can help. On the communication front, the goal is to implement an improved content strategy. There are four drivers. 1) To demonstrate our unique DNA and distinctiveness to existing and new clients and important stakeholders. 2) To improve our employer branding and attract new employees. 3) To increase employee pride and involve employees even more in the realization of the strategy. We have developed a new internal communication program to involve, connect and inform all employees in a better way. HOLLAND COLOURS ANNUAL REPORT 2021/2022 28 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT INNOVATION PROGRAM Our innovation excellence program has succeeded in optimizing our product development the client’s setup. The innovation program further includes a rolling launch calendar covering the coming six months. INNOVATION INDEX We maintain an innovation index. This rolling list measures the percentage of current-year reasons for this. First, one of the big contributors to our innovation index exited the list as impact on innovation, making it virtually impossible for us to visit clients to perform co-development innovation and testing. In response, we are increasing our investments in innovation, strongly connected to sustainability, to regain our momentum here. CORPORATE SOCIAL RESPONSIBILITY organizational topics. These are safety, sustainability – our people, our products and our processes – and product stewardship. Starting next year, we intend to produce a separate Corporate Social Responsibility report. As a stepping stone to this, we have given the topic Our innovation model is based on co-designing color and functional solutions with our clients. Within this, we are placing a growing emphasis on the sustainability and circularity of plastics. We are also moving to a more market-driven approach. An increasing number of our solutions are based on open innovation with clients, suppliers, research institutions, educational institutions and application partners. Together, we develop next-generation iterations of existing products and breakthrough sustainable and circularity solutions. MARKET OPPORTUNITIES traditionally, to focus our innovation on incremental improvements to our naturally sustainable pigment-encapsulating material. Increasingly though, our markets are changing due to growing client and consumer demand for more sustainable products made with more sustainable processes. This is creating opportunities for us to take bigger strides forward. For instance, we are now approached by start-ups and recyclers whose mission is to reduce, reuse or reclaim plastics. They want our technical knowhow to help them meet their sustainability and circularity criteria. Maybe they want to make a product and composition. We can help by innovating products that meet that circular demand. We continued to invest in innovation for the packaging, building & construction and the coatings & sealants markets in 2021/2022. These programs are progressing to plan. We did, however, feel the impact of COVID-19. This played out in two ways. First, clients tended to focus more on meeting their immediate production needs rather than possible innovation. Second, the restrictions on travel made it harder for us to develop and pilot innovations with our clients. Overall though, the opportunities continue to be there. Packaging is the most visible example, but opportunities exist in every market where coloring recycled materials, improving recyclability, reducing coloring costs, extending product life reducing weight and other related challenges exist. PRODUCT INNOVATION HOLLAND COLOURS ANNUAL REPORT 2021/2022 29 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT stay close to our proven core technologies and products while responding to and anticipating new market trends and innovations. Chief among these is sustainability and circularity. This represents a trend, an innovation driver and a business opportunity for Holland Colours. driven by in-house product innovation and/or third-party partnerships. Another aspect is to foster business opportunities in neighboring product areas and market segments. This way, we can both enter new markets and extend our knowhow in Here, as elsewhere, our company culture is an important driver for the successful implementation of this strategy. Holland Colours is a partly employee-owned company with direct and informal reporting lines and a strong focus on diversity. Our teamwork- based and caring culture enables us to meet client needs with technological and production capabilities that are global in terms of scale and holistic in terms of approach. In 2021/2022, the Board of Management paid extensive attention to assessing key risks that could impact the realization of the company’s strategic objectives. The Board assessed control measures and actions that must be taken to 1), manage these risks should they Working closely with the Audit Committee and the Supervisory Board, we carefully assessed our risks and developed a corporate Risk Matrix. The most important risks are summarized below, including the net risks after mitigation actions have been taken. Our divisions, working in close cooperation with our central functions, are responsible for The directors and controllers of our divisions have signed a statement concerning and internal audits. As a company, we also regularly evaluate our insurance cover, the premiums we pay and the policy excess that applies. HOLLAND COLOURS RISK AREAS Risk Severity Risk Likelihood Risk Level Intolerable * Extreme Tolerable *** Probable *** High *** Undesirable ** Possible ** Medium ** Acceptable * Improbable * Low * HOLLAND COLOURS ANNUAL REPORT 2021/2022 30 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Gross Net Risk Severity Risk Likelihood Risk Level Risk Level Strategic Size of our current strategic segments plus competitive rivalry ** ** ** ** Cybersecurity ** *** *** ** Business agility ** *** ** Compliance Laws and regulations ** *** ** Ethics ** *** ** Financial Liquidity * * * * Other Financial (Currency, interest rates, capital structure) *** ** *** * Operational Safety *** *** Supply *** ** Intellectual property *** * Human resources ** *** *** *** Quality ** * ** * We dierentiate between gross and net risk level. Net risks remain after mitigation steps have been taken. HOLLAND COLOURS ANNUAL REPORT 2021/2022 31 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Gross Net Risk Severity Risk Likelihood Risk Level Risk Level Society ** *** *** Sustainability Process ** *** *** * Product ** *** *** ** Fraud Product pricing ** *** *** ** Authorization matrix ** *** *** ** ** *** *** * Agency commissions ** *** *** ** HOLLAND COLOURS ANNUAL REPORT 2021/2022 32 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Strategic Gross Net Risk Severity Risk Likelihood Risk Level Risk Level Size of our current strategic segments plus competitive rivalry ** ** ** ** Cybersecurity ** *** *** ** Business Agility ** *** ** SIZE OF OUR CURRENT STRATEGIC SEGMENTS PLUS COMPETITIVE RIVALRY Sustainability and recycling increase the reuse of polymers. This could reduce the need for color concentrates but is also an opportunity for functional additives. We closely monitor developments in our core segments and explore opportunities for innovations in other niche segments. Overall, our global presence and strong relationships with key players in both the packaging and building & construction industries continue to drive the development of our product portfolio. To protect our technology, we apply for patents where feasible. The risk that we lack scale or are seen as lacking scale continues to receive full management attention and we are focused on developing the right products and technologies. Our divisional sales and technology teams, in conjunction with our Managers, play a central role in mapping our path ahead. We also closely track the dynamics in what is a competitive landscape. We see, for example, that global players are separating their colorants businesses, acquiring compounders or teaming up with others. And in North America in particular, we see some trends towards concentration in our client base. These trends present both challenges and opportunities for smaller players like us that have a global reach serving niche markets based on a service-oriented approach. For instance, there is a trend towards the standardization of technology and machinery among convertors in the packaging industry. Brand owners in this segment are also having a growing impact. As these are global trends, we manage this segment of our business on a global basis where it relates to strategy and product innovation. One of the risks of being a relatively small player with a global reach is that we could end up stretching our resources too thinly over the globe, while at the same time failing to be risk and we remain closely connected to local developments. In the North American region, In EMEIA and Asia, we have dedicated sales representatives in the various countries, in the model and its elements and make changes where needed. HOLLAND COLOURS ANNUAL REPORT 2021/2022 33 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT CYBERSECURITY Cybercrime risk is increasing and becoming more severe. We regularly train personnel with respect to cybercrime. We also perform penetration tests through an external partner on a regular basis. We have insurance coverage for cybercrime. BUSINESS AGILITY This covers the risk that the company and our employees will be unable to adapt rapidly digitalization and new software will increase performance levels, professional behavior and process orientation. HOLLAND COLOURS ANNUAL REPORT 2021/2022 34 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Compliance Gross Net Risk Severity Risk Likelihood Risk Level Risk Level Laws and regulations ** *** ** Ethics ** *** ** manage ever-changing local and international compliance requirements. LAWS AND REGULATIONS Without an internal control department or compliance department, there is no independent body to control the business and fraud risks. Employees are co-owners of the company and as such responsible behavior can be expected from them. Nonetheless, our Code of Conduct needs to be actively monitored and communicated. In our risk assessment processes, we focus on strictly managing the introduction of new raw materials and on product and production compliance. In the packaging segment, we are subject to audits and reviews by our clients, which helps to keep us close to and aligned with their requirements, and to comply with international regulations related to the use and application of materials. From a preventative perspective, we partner closely with our key clients to interpret new regulations. We achieve this by reformulating products and/or changing our internal operations where needed. The latter may also be prompted by client audits (mainly in packaging). All our manufacturing sites are ISO-registered and subject to regular audits, including, since this year, our site in Richmond, Indiana, as well. When it comes to incidents, we take a similarly structured approach to learning from them. Our complaints registration and handling system has achieved outstanding scores for its structure and content in multiple ISO audits. Complaints are discussed promptly by a Quality Assurance team consisting of Sales, Operations, Technical and Quality Management, with follow-up on the elimination of root causes. Product compliance and complaints management are an agenda item at divisional management team meetings, while product liability risk is covered in the agreements with clients and suppliers and insured through third parties. ETHICS distributors. We want not only our employees but also our business partners to show Competence, Responsibility and Teamwork) of Holland Colours and our Code of Conduct provide a strong basis for the culture of the company. In order to manage our risk exposure we will introduce an Ethical Compass in 2022/2023. HOLLAND COLOURS ANNUAL REPORT 2021/2022 35 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Financial Gross Net Risk Severity Risk Likelihood Risk Level Risk Level Liquidity * * * * Other Financial (Currency, interest rates, capital structure) *** ** *** * LIQUIDITY The risk that we do not have enough cash to pay our employees and suppliers. OTHER FINANCIAL (CURRENCY, INTEREST RATES, CAPITAL STRUCTURE) CNY, MXN, CAD and HUF. We have both revenues and expenses in all currencies, so some an acceptable risk. health. The risks that are part of our regular business operations (such as currency and credit risks) are listed in the Financial Risk Management section of the Financial Statements. a standby credit line for ad hoc needs. HOLLAND COLOURS ANNUAL REPORT 2021/2022 36 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Operational Gross Net Risk Severity Risk Likelihood Risk Level Risk Level Safety *** *** Supply *** ** Intellectual property *** * Human resources ** *** *** *** Quality ** * ** * SAFETY Health and safety risks are inherent to our operation given that we are a company with internal logistics. We work according to a Safety Ladder concept that addresses all aspects related to safe behavior. The Safety Ladder methodology has been introduced globally, although it is still less well known outside Europe. Local practices and regulations also form L1 and L2 incidents. Learnings from near misses are shared between the divisions. Information about a healthy lifestyle and good ergonomics are shared with employees and we have programs in place that contribute to the well-being of our employees. Continued training in health, safety and, in particular, awareness and behavior are in place. SUPPLY Any inability to secure raw materials on time disrupts our production process and means INTELLECTUAL PROPERTY This is the risk that our IP is used by our competitors. Our IP is registered. The recipes are production environments that are not part of Holland Colours. HUMAN RESOURCES Our workforce is aging. In western countries (sites in Europe and USA), labor markets are tight. There are fewer people interested in and/or available for jobs in operations. We are paying increased attention to ergonomics and investing in training and automation to make these jobs more attractive. QUALITY Quality control reduces the risk that our products will be recalled due to production errors. applications (e.g. food contact). We have incorporated the scale-up phase as an integral part of projects that relate to new product innovation. All global projects are subject to extensive review by our Chief phase of a product development project. Coordination between the project leader and HOLLAND COLOURS ANNUAL REPORT 2021/2022 37 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Society Gross Net Risk Severity Risk Likelihood Risk Level Risk Level ** *** *** GLOBAL ECONOMY AND POLITICS We have a large geographical footprint and we operate in a lot of areas that are not or project management (especially given the high number we currently have running). We monitor the risks and act upon them. It is highly unlikely that political and economic region. As a result, we changed our policy related to doing business in the region and developments but decided that we are willing to continue to supply existing products to existing customers under the prevailing EU sanctions. The company will continue to monitor the situation closely. Sustainability Gross Net Risk Severity Risk Likelihood Risk Level Risk Level Process ** *** *** * Product ** *** *** ** HOLLAND COLOURS ANNUAL REPORT 2021/2022 38 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT PROCESS AND PRODUCT We have established ambitious goals for 2030. The risk is that we experience delays in achieving these goals. We have made sustainability an integral part of our strategy and this topic is high on our agenda with a roadmap being put in place. The divisions are developing concrete actions and we are in the process of hiring a sustainability manager. Fraud Gross Net Risk Severity Risk Likelihood Risk Level Risk Level Product pricing ** *** *** ** Authorization matrix ** *** *** ** ** *** *** * Agency commissions ** *** *** ** The risk of the possibility of the company being subject to fraudulent activity. The company PRODUCT PRICING We have a process in place for authorizing product pricing. There is no formal control in place regarding adherence to the procedure. However, it is under control because of the regular analyses we run of our margins during end-of-month procedures. AUTHORIZATION MATRIX year. GIFTS FROM/TO RELATIONS Our Code of Conduct includes rules related to these gifts. In general, any potential gifts from suppliers or business partners (especially those received around Christmas) are collected centrally and distributed among all employees. AGENCY COMMISSIONS In some markets, Holland Colours works with distributors or agents. Two years ago, all Holland Colours agents signed the Code of Conduct that applies to them. For new agents, this Code of Conduct is an integral part of their contract. Every year, we will evaluate and register whether a controversial situation has occurred in the context of the Code of Conduct, and how it has been dealt with. All Holland Colours distributors have received the Code of Conduct and an accompanying letter in which we ask them to act in accordance with it. HOLLAND COLOURS ANNUAL REPORT 2021/2022 39 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Risk-related events in 2021/2022 2021/2022 saw two events related to our risk management policies. PAYMENTS THAT DID NOT COMPLY WITH THE CODE OF CONDUCT Risk Matrix and the Code of Conduct it appeared that irregular payments were made to employees of customers. Upon this report group management ordered these payments to be stopped immediately and formed a steering committee within Holland Colours to investigate this matter. The committee consisted of the chair of the Audit Committee and the head of the legal conclusions of this investigation were reported to the Audit Committee in March 2022 and have been communicated externally in a press release dated March 10, 2022. The investigation found evidence of payments made to employees of a limited number of customers over a period of at least eight years. Total payments varied between were accounted for in the accounts of PT Holland Colours Asia, but certain administrative aspects were not done properly. Although these payments themselves do not violate Indonesian law, they do not comply with the Holland Colours Code of Conduct. Warning letters were sent to the employees directly. Following this incident, the Board of Management sent a letter dated March 31, 2022, to all legal representatives of all group companies to remind them of the importance of compliance with the Code of Conduct, the Purchase Code, the Whistle blower Policy and the Agent/Distributor code. Awareness is considered a key element and we are acting to remind people of this. We will also train them accordingly, to emphasize its importance. In addition, the Board of Management informed the employees of the company about the following planned remediation actions: • The introduction of an Ethical Compass to emphasize the importance of integrity to employees. This will help them to take moral considerations into account around risk-sensitive integrity issues. Typical themes will include fraud, bribery and corruption, psychological and physical safety and cybersecurity. We intend to launch the Ethical Compass in the second half of 2022/2023. • The introduction of a Due Diligence process to monitor compliance with local laws and regulations per division/subsidiary. • The introduction of an ABAC policy (Anti-Bribery Anti-Corruption) and Dawn Raid Manual. • Changing the current whistle blower policy based on the new legislation following the bill as result of European Directive 2019/1937 The Whistleblowing Directive. • The fact that the CEO also acts as our Compliance Officer and in this role, he actively monitors adherence to the Code of Conduct on behalf of the Board of Management in conjunction with all legal representatives of the company and local management. Another action has been to set up the Risk Matrix mentioned earlier in this section. matrix includes risks related to compliance with laws, regulations and our policies and codes. The Board of Management will discuss these with the statutory board of each subsidiary company on a half-yearly basis. THE SITUATION IN UKRAINE As mentioned elsewhere, Ukraine, Russia and Belarus form only a modest part of our operations there. We have publicly condemned the violence and its impact on the people of Ukraine. We have further decided to halt all market and business development in Russia and Belarus, but to continue to supply existing clients in line with EU sanctions. We continue to monitor the situation closely and will follow the applicable international laws and regulations regarding sanctions. HOLLAND COLOURS ANNUAL REPORT 2021/2022 40 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT Holland Colours traditionally does not include forward-looking statements in our Annual circumstances and potential impact of COVID-19. However, with the situation around COVID-19 currently less severe, and having learned, to a degree at least, to cope with its impact, we are reverting to our previous approach. Obviously, we will continue to monitor the COVID-19 situation and its wider consequences closely, as we will the situation in Ukraine. Clearly, there continues to be a very high degree of uncertainty about current events and what these will mean for the global economy, for our clients and so for our business going forward. In accordance with provision 1.4.3 of the Code and Section 5:25c of the Dutch Financial Supervision Act, the Board of Management declares that, to the best of its knowledge: • The Report of the Board of Management as included in this Annual Report provides sufficient insights into any deficiencies in the effectiveness of Holland Colours’ internal risk management and control systems; • The aforementioned systems provide reasonable assurance that Holland Colours’ Financial Statements contain no material errors; • The Report of the Board of Management lists those material risks and uncertainties that are relevant to the expectation regarding Holland Colours' continuity for a period of twelve months following the preparation of the Report of the Board of Management; • The Financial Statements as included in this Annual Report provide a true and fair view of the assets, liabilities, financial position and profit for the financial year of Holland Colours and the group companies included in the consolidation; and • The Report of the Board of Management as included in this Annual Report provides a true and fair view of the situation on the balance sheet date, business development during the financial year of Holland Colours, and of its affiliated group companies included in the Financial Statements. The Report of the Board of Management describes the material risks to which Holland Colours is exposed. Apeldoorn, May 25, 2022 Board of Management Coen Vinke (CEO) Eelco van Hamersveld (CTO) OUTLOOK 2022/2023 DECLARATION OF THE HOLLAND COLOURS ANNUAL REPORT 2021/2022 41 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT CORPORATE SOCIAL RESPONSIBILITY HOLLAND COLOURS ANNUAL REPORT 2021/2022 42 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR Corporate Social Responsibility (CSR) is central to our organization, to our position in the market and the way we want to work. Because of this, we include three key organizational and operational areas under our CSR umbrella. These are safety, sustainability and product stewardship. Next year, we intend to produce a separate Corporate Social Responsibility report. As a stepping stone to this, and to underline the importance of CSR as a driver for our business, we have given the topic its own section in this year’s Annual Report. Safety We are determined to provide a safe and healthy working environment for our people. accidents. We therefore train and encourage our employees to report incidents, accidents and near misses, to learn from them and to improve our processes, procedures and behavior when these do occur. • An L1 accident is a lost-time injury; • An L2 accident is one that requires external medical treatment (rather than first aid), or which leads to restricted duties for the person involved; • An L3 incident is one that requires first aid or involves damage to material or in which smoke or fire are involved; • The numbers of accidents (L1 and L2) fell by one in 2021/2022 versus the previous year, on safety to ensure a safe workplace. Safety 2021/2022 2020/2021 L1 : Lost time 5 7 L2 : Restricted Duty / Medical Treatment 2 1 L3 : First Aid, Material or Fire 55 37 166 17 THE SAFETY CULTURE LADDER Our main goal, zero accidents, underlines the need for the program we introduced in 2020/2021 – the Safety Culture Ladder. This program aims to change our attitude and behavior regarding safety by encouraging each of us to signal potential accident or injury risk factors. To be proactive and to take preventative measures. This goes beyond simply following the rules. The program has been embraced by all divisions, though its initial rollout was slowed by COVID-19. In 2021/2022, we did better in terms of managing safety, but this has not yet fed through to our overall safety performance. However, the number of near miss reports went up. This can be seen as positive because it indicates that there is a greater general awareness around safety. In 2021/2022, every division had an active safety audit team, and all divisions moved up the ladder compared with their 2020/2021 baseline assessment, getting closer to fully completing step 3. There is more focus on avoidance through reporting near misses and more focus on anticipation versus reacting. The Board of Management has also given a clear signal to the organization regarding our safety targets. At the start of 2021/2022, the Board of Management set a rule requiring the organization to report all L1 and all HOLLAND COLOURS ANNUAL REPORT 2021/2022 43 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR Aiming for zero accidents We are determined to provide a safe and healthy working environment. We therefore aim for zero accidents. We continuously train our people and work to create the right conditions so each of us can do our best every day. As part of this, we encourage everyone to report not only accidents and incidents but near misses as well. Near misses are things we see or experience that are or could be dangerous, but which thankfully have not led to an accident. Therefore, the more near misses we report, the fewer incidents and accidents there will be as it means we can act to prevent them. 44 HOLLAND COLOURS ANNUAL REPORT 2021/2022 SUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO CSR FIVE-YEAR SUMMARY & INVESTOR RELATIONS FINANCIAL STATEMENTS THE SAFETY CULTURE LADDER 5 4 3 2 1 The goal of the Safety Culture Ladder is to support the organization in embedding a consciously proactive attitude to safety. This means both following the rules and actively thinking about, spotting and agging safety risks as people do their work. This approach to safety is all to do with attitude, behavior and culture. Do people feel they can raise what they see as an unsafe situation? Do they recognize potentially unsafe situations? Is safety discussed regularly and do employees feel heard on safety issues? The ladder was developed for the construction industry, which employs a lot of onsite contractors. The fth step is therefore less applicable to Holland Colours. Our goal is to achieve step four: Proactive. Pathological The company’s attitude is that it doesn’t have accidents so doesn’t need to invest in safety. Reactive The company generally only tightens safety after something has gone wrong and employees do not generally feel responsible for their own or their colleagues’ safety. Calculating The company pays attention to health and safety and has clear safety rules, but safety is seen mostly as a senior management task. Progressive Safety is a standard part of contractors’ operational processes as well, and safety is ingrained in the thinking and behavior of all employees. Proactive Safety is a top priority and is treated proactively within the company’s operations. Along with structural investments in raising safety awareness, employees are encouraged to raise unsafe behavior with each other. HOLLAND COLOURS ANNUAL REPORT 2021/2022 45 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR Sustainability Part of our mission is ‘to be recognized as a contributor to a sustainable industry.’ This involves working as a co-design partner to create solutions that support our clients in their sustainability goals. Through this, we contribute to the creation of a sustainable society. In 2020/2021, Holland Colours communicated a new sustainability vision and framework as part of our Responsibility core value. The vision that emerged is ambitious: “We envision a colorful world in which we are the winning sustainable solution.” As an ongoing work- in-progress, the framework underpins how we want to approach the three central sustainability topics for Holland Colours: our people, our products and our processes. The sustainability framework provides a tool for evaluating and making product, process, people, technology and other decisions. It also provides a guide for the choices and impact each of us at Holland Colours chooses to make, from big things to small. And it acts as an umbrella for the numerous community outreach programs our divisions operate in the US, Asia and Europe. IN OUR DNA BUT MORE RELEVANT THAN EVER Sustainability has always been a feature of our pigment encapsulation technology as it is based on a natural resource. This puts us in a strong position to respond to our clients’ growing expectations in this area. They increasingly expect our products, and by extension theirs, to be sustainable, whether that means renewable, recyclable or circular. The impact of these changes is most obvious in the use of colorants and additives for packaging. However, we see the same trend in building & construction and in coating, sealant and adhesive applications. Addressing sustainability issues and circular economy requirements is going to be a key issue for the ongoing continuity of Holland Colours. OUR FOCUS Within sustainability, we concentrate on three broad areas: our people, our products and our processes. This focus is derived from a selection of the United Nations Sustainability relevant to Holland Colours internally, to our clients, to brand owners and to our value 9. Innovation and infrastructure; 12. Responsible production and consumption; and 17. Partnership. “Sustainability at Holland Colours covers three areas: our people, our products and our processes” HOLLAND COLOURS ANNUAL REPORT 2021/2022 46 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR FOCUS AREAS Based on the selected SDGs, we dened three focus areas: We invest at least 2% per year of our personnel expenses in responsible care for our employees. This investment is used to deliver training, for individual and team development and/or as time that can be spent on local social aid activities. By 2030, we will have reduced the CO 2 impact of our operational activities by between 30% and 50%. We will structurally increase our annual investment in innovation. By 2030, 90% of our revenue will be based on products that contribute to sustainability. We protect the safety, health and welfare of HCA employees and oer development opportunities to all. Given our geographical spread, we consider it important to employ nationally. We service our customers with products that are produced regionally, and we design our processes to support the sustainable use of energy and raw materials. Together with our customers and partners, we co-create sustainable solutions and develop products that enable recycling, the reduction of food waste and the reduction of energy consumption. WE ENVISION A COLORFUL WORLD IN WHICH WEARE THE WINNING SUSTAINABLE SOLUTION Our ProcessesOur People Our Products HOLLAND COLOURS ANNUAL REPORT 2021/2022 47 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR 2020/20212021/2022 Energy Consumption In gigajoule 3% 2020/20212021/2022 Materials In tons 8.8% 2020/20212021/2022 Emissions CO 2 equiv-g 4.1% 2021/2022 2020/2021 2021/2022 2020/2021 2021/2022 2020/2021 2021/2022 2020/2021 Water consumption In m 3 Waste In tons New hires by gender In total Diversity & Equal Opportunities 11,371 921 36 5216 23 11,874 1,008 18 3315 24 47,970 49,399 15,892 14,608 511 490 + = 20 25 Employees Management HOLLAND COLOURS ANNUAL REPORT 2021/2022 48 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR A NEW BASELINE AND ACTION PLAN In 2021, we began establishing the foundations for our future sustainability measures. This includes conducting a new baseline measurement to assess how environmentally friendly we are now. In addition, we have begun creating awareness about sustainability internally by communicating about sustainability, our vision and our goals and so stimulating the internal conversation. Later this year, we will develop a ‘One HCA’ global action plan. This will be made by all employees. They will be able to contribute and be involved in reaching our goals. And from 2023 onwards, we will use this to share, improve and optimize what we do. OUR PEOPLE As a company, we continuously train our people and work to create the right conditions for each of us to give our best every day. We are strong supporters of training on the job, with external training and education available as needed. As well as skills-based training supporting wider personal development based on competencies training (knowledge and behaviors that enable someone to be more widely successful within Holland Colours). This transition is driven by changing business needs and by the need to attract new talent who see self-development and personal growth as key criteria when choosing an employer. As a company, we are going to become more digital and more data-driven. With uncertainty increasing, the world in which we operate is becoming more complex. We therefore need to prepare ourselves for what is coming and to attract the next generation of Holland Colours employees. Building our competencies will enable us to learn and act faster as an organization and for each of us to behave more proactively. Better Together Dialogues Part of our transition involves teaching ourselves to become a learning organization that delivers higher performance. In 2020/2021, we conducted a small-scale pilot to provide competencies-related feedback to around 50 employees. The pilot, called the development and employability into our HR processes. Last year, we expanded the selected an IT tool to support the process and trained our leaders. The idea behind the Better Together Dialogues is to support a personal discussion about each employee’s opportunities and challenges, and to learn from each other. By doing so, their own needs, ambitions and work-life situation. The reaction has been positive, with people enthusiastic about the idea of having open, goals-oriented career discussions. The next step is to hold these conversations across the company. Even though they are still in an early phase, the Better Together Dialogues have already triggered an increase in people taking steps to develop – for example, by requesting coaching. Social outreach for training and development and social action programs. This money is used to fund structural development activities, such as leadership training for the Better Together training. Turning to the social aspects of our people commitment, March this year saw our employees rally round to help the people of Ukraine. They sent clothes and other goods from Apeldoorn to our factory in Hungary, where they were handed to the local authorities and the Red Cross for distribution. In addition, our employees around the world raised money to help Ukrainian refugees. Holland Colours and Holland Pigments also made donations. HOLLAND COLOURS ANNUAL REPORT 2021/2022 49 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR OUR PRODUCTS Sustainability is moving from a nice-to-have extra to a key driver for innovation in our industry. That trend weakened a little because of the impact of COVID-19, as clients focused on meeting their immediate production needs, but this has not changed the underlying direction in which our industry is going. The whole materials market is facing a fundamental shift from fossil fuels to sustainable alternatives, and from use-once consumerism to reuse and full circularity. Logistics, economies of scale, the location and availability of raw materials and the unpredictability of geopolitics are also factors in this trend. This shift will form part of the focus of our next strategic review and the strategy that emerges from this. As mentioned, 2021/2022 was in some ways a standstill year in terms of sustainable product introductions and product innovation. The impossibility of traveling to monitor pilot trials, for example, and our clients’ understandable focus on meeting immediate production and market needs were limiting factors. However, we continued to build our understanding and awareness of where we stand. We worked to get a more detailed insight into where our client needs lie. We continued to reach out to our suppliers to learn more about how they develop their products and to explain to them, where necessary, about the need to consider the sustainability impact of their products on what we make and innovate. OUR PROCESSES Measured against our current baseline measurement from 2015, we have reduced our CO 2 trend of recent years. In part this was because we traveled less, but it was also the result The table shows the overall progress we have made over the last few years. For this, we have measured and tracked our CO 2 2 /kg by 2030, compared with the baseline of 2015. The results in 2021/2022 show that steps we have As new standards for measuring and reporting impact have been introduced, we have Corporate Accounting and Reporting Standard, the Corporate Value Chain (Scope 3) standard and the Product Life Cycle Standard of the World Resources Institute (WRI). 2015/2016 2016/2017 2017/2018 2018/2019 2019/2020 2020/2021 2021/2022 CO 2 equiv-g 622 557 511 0 0 HOLLAND COLOURS ANNUAL REPORT 2021/2022 50 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR Electricity is the biggest factor in our CO 2 green electricity supplies, for example, we will be able to reduce our footprint further. We also see opportunities to reduce our footprint by translating sustainability best practices between our production sites. Product Stewardship Our Product Stewardship team is recognized as a trustworthy source of information not only by our clients and suppliers, but also by brand owners as well. The team also represents a key pillar in our commitment to sustainability. The team provides product health and safety declarations to clients and translates external regulations into internal advice on how we should prepare to comply with them. In 2020/2021, the team took a lead in informing our clients and the wider market about the plans by the European Union to ban the use of titanium dioxide (TiO2) in PET bottles. The team followed the development of the regulations and interacted with suppliers on how to implement them in their product development, product statements and client communications. In the end, the ban, whose six-month phase-out period began in communications and awareness-raising actions have been highly appreciated by the market. Last year, we again demonstrated our product stewardship credentials by acting promptly and openly to inform our clients of the impact of the EU’s 15 th Amendment changes on PET packaging. Many of our clients were unaware of the new amendment or its potential impact, and they appreciated the fact we informed them openly and honestly. We are currently working to reformulate our products in line with the revised rules on food contact materials. HOLLAND COLOURS ANNUAL REPORT 2021/2022 51 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSCSR Holland Colours is a limited liability company with common shares publicly listed on the Euronext Amsterdam stock exchange. The company’s management structure complies with Dutch law and has a two-tier structure consisting of a Board of Management and a Supervisory Board. Holland Colours promotes responsible behavior towards society and the environment, while at the same time taking into account the interests of its various stakeholders: employees, shareholders, other capital providers, customers and suppliers. The Board of Management and Supervisory Board are ultimately accountable for giving due consideration to the interests of all parties involved, focusing on the continuity of the company and long-term value creation for relevant stakeholders, both at present and in the longer term, and are held accountable for the performance of their duties by the internal control framework play an important role in this process. For a description of these systems, please refer to the section on Risk Management. Holland Colours is incorporated and based in the Netherlands. As a result, our governance structure is based on the requirements under Dutch legislation and the company’s Articles exposure of our business, we conduct our operations in accordance with internationally creation and engagement are key components of the Holland Colours culture and way of doing business. They are embedded in our core values. Holland Colours endorses the available at www.mccg.nl. Board. In addition, the Diversity Policy and a Policy on Bilateral Contacts with shareholders have been updated, and the Articles of Association of Holland Colours have been aligned with the Code. The statutory responsibility resides with the Board of Management. This consists of the a non-statutory interim CFO. They convene every two weeks with a formal agenda and a list of action items and decisions made. The Board of Management holds regular meetings with the divisional management teams for monthly business reviews and quarterly updates approval by the Board of Management. Cost budgets are approved as part of the annual budget review. During the extraordinary circumstances related to COVID-19, the Board of Management and divisional managers participated in regularly digital meetings to discuss, align and act on the actual situation, and the Supervisory Board was kept informed. implementing the company’s strategy as well as its day-to-day operational management. The members of the Board of Management attend the periodic meetings of the Supervisory Board as well as incidental update calls. The CEO is the main contact for the Supervisory Board. ANNUAL GENERAL MEETING OF SHAREHOLDERS statements, the dividend proposal, the discharge of their duties performed by the members of the Supervisory Board and the Board of Management, and the adoption of the remuneration policy of the Board of Management and the Supervisory Board. procedure for attendance and voting at the meeting are published in advance and posted HOLLAND COLOURS ANNUAL REPORT 2021/2022 52 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSGOVERNANCE on the corporate website. Matters proposed for consideration, approval or adoption are dealt with as separate agenda items and explained in writing in advance of the meeting. These proposals include, where applicable: • Adoption of the financial statements; • Dividend proposal; • Discharge of their liability for the duties performed by the members of the Supervisory Board and the Board of Management; • Appointment and reappointment of members of the Board of Management and the Supervisory Board; • Remuneration policy of the Board of Management and the Supervisory Board; • Appointment of the auditor; • Other important matters, such as major acquisitions or the sale or demerger of a substantial part of the company, as required by law or under the Articles of Association; • Authorization of the Board of Management to issue new shares; • Amendments to the Articles of Association. The company provides options to its shareholders for voting by proxy. Holding shares in the company on the registration date determines the right to exercise voting rights and one vote’ principle and by an absolute majority of votes, unless the law or the company’s Articles of Association stipulate otherwise. substantiated and must be submitted in writing, or electronically, to the company at least made available on the company’s corporate website within three months of the meeting after the meeting date. DIVERSITY POLICY its Board of Management and Supervisory Board. The objective of the Diversity Policy is to enrich the Board of Management’s perspective, improve performance, increase member value and enhance the probability of achievement of Holland Colours’ goals and objectives. The policy is designed to promote diversity, including in terms of nationality, age, gender, education and professional background. One out of four members of the Supervisory Board is female. Until February 2022, the Board of Management consisted of one woman and two men. Following the departure of Tanja van Dinteren, the Board of Management temporarily consists of two men. Further information about the composition of the Board of Management and the Supervisory Board can be found in the reports of the Board of COMMITTEES There are two committees of the Supervisory Board: the Audit Committee and the Remuneration Committee. Audit Committee The Audit Committee assists and advises the Supervisory Board in its responsibility experts. Remuneration Committee The Remuneration Committee (‘RemCo’) assists and advises the Supervisory Board on matters relating to the selection and appointment of the members of the Board of Management and Supervisory Board. The RemCo also monitors and evaluates the remuneration policy for the Board of Management. The RemCo consists of HOLLAND COLOURS ANNUAL REPORT 2021/2022 53 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSGOVERNANCE ANTI-TAKEOVER PROVISIONS AND CONTROL has a majority shareholder, Holland Pigments BV, in which the collective employees have BILATERAL CONTACTS The company fully endorses the importance of a transparent and balanced provision of relevant to shareholders, doing so equally and simultaneously, with due consideration of the exceptions provided for under applicable law. All this is set out in Holland Colours’ policy on bilateral contacts with shareholders. The full text of the policy is available on www.hollandcolours.com. CODE OF CONDUCT in a fair and ethical way, complying with local rules and regulations, and treating our employees and business partners with respect. It provides guidelines for preventing unfair competition and corruption or bribery and states the conditions for a safe and healthy work environment. To emphasize the importance of this, Holland Colours has drawn up an Anti-Bribery and Anti-Corruption policy for all Holland Colours entities and employees. Holland Colours will also set up an Ethical Compass to emphasize the importance of integrity to employees. This compass will help them to take moral considerations into account around themes involving risk-sensitive integrity issues. Typical themes include fraud, bribery and corruption, psychological and physical safety, and cybersecurity. In addition, Holland Colours will introduce employee training with respect to ethical behavior and set up a due diligence process for all subsidiaries to screen for compliance issues, including anti-bribery and anti-corruption policies. Holland Colours has a global whistleblower policy, while adherence to the company core values is part of the annual employee performance review cycle. we maintain our unique employee participation model and culture. The Supervisory Board and the Board of Management endorse the principles of Corporate apply to internationally operating listed Dutch companies. explanatory notes, is available on www.hollandcolours.com. The deviations from the Code relate to the subjects outlined below. BOARD OF MANAGEMENT The Code states that the main elements of the contracts of the company’s Board of Management members must be published without delay once the contract has been concluded. As we do not want to single out this type of information, Holland Colours continues to publish this information as an integral part of the Annual Report. The remuneration policy for the Board of Management for the year under review was formulated by the Remuneration Committee. It is further described in the Remuneration the provisions governing options do not apply. HOLLAND COLOURS ANNUAL REPORT 2021/2022 54 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSGOVERNANCE SUPERVISORY BOARD MEMBERS As long as Holland Pigments BV holds an interest of at least one-third of the company’s issued share capital, it is entitled to nominate one member of the Supervisory Board. The Supervisory Board has established a Remuneration Committee and an Audit of the Audit Committee. This is on account of his expertise. The duties of the selection and appointment process are performed by all members of the Supervisory Board. INTERNAL AUDIT FUNCTION The internal audit function assesses the design and operation of the internal controls annually if it is necessary to establish an internal audit department and includes the conclusions in the report of the Supervisory Board. COMPANY SECRETARY CONFLICTS OF INTEREST As Holland Pigments BV is a majority shareholder in Holland Colours, with all employees of Holland Colours having shares in Holland Pigments, any transactions between approval by the Supervisory Board. SHAREHOLDER POWERS For practical reasons and because of the costs involved, the provision stipulating the option for shareholders to follow meetings with investors and analysts and presentations and press conferences in real time is not observed. All relevant information is immediately published on the company’s website. There have been no substantial changes to the Code is published on the company website. Any future substantial changes will be of the Supervisory Board. The acquisition price must be between the amount equal to the Amsterdam. for the Supervisory Board, regulations of the Audit Committee and the Remuneration Committee, the Diversity Policy and the Policy on Bilateral Contacts with shareholders, the Remuneration Policy of the Board of Management, the Remuneration Policy of the Supervisory Board, the company’s Articles of Association, the Whistleblower Policy, of Shareholders. HOLLAND COLOURS ANNUAL REPORT 2021/2022 55 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSGOVERNANCE Prevention of Insider Trading In compliance with the Dutch Financial Supervision Act, Holland Colours has adopted internal regulations regarding investments in the company’s shares, share ownership and preventing the abuse of insider information. Moreover, the duty of disclosure and the incorporated into these internal regulations where applicable. These internal regulations apply to the Supervisory Board, the Board of Management and local managers and a circle of employees, as well as to a number of advisors. regulations and liaises with the Netherlands Authority for the Financial Markets (AFM). Interests of Members of the Supervisory Board and the Board of Management At March 31, 2022, the Supervisory Board members and the members of the Board of Management owned the following shareholdings, which are held as long-term investments: In Holland Colours NV In Holland Pigments BV March 31, 2022 Supervisory Board Roland Zoomers Aukje Doornbos Jorrit Klaus Board of Management Coen Vinke Eelco van Hamersveld March 31, 2021 Supervisory Board Roland Zoomers Aukje Doornbos Jorrit Klaus Board of Management Coen Vinke Tanja van Dinteren Eelco van Hamersveld HOLLAND COLOURS ANNUAL REPORT 2021/2022 56 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSGOVERNANCE TEAMWORK AND OUR CLIENT Our client manufactures and distributes products for the building and construction markets in the US and Canada. Its solutions are popular with both industry professionals and homeowners, and the company is known for its color palette of timeless classics and on-trend options. OPTIMIZE PRODUCT, COMMERCIAL AND OPERATIONAL PERFORMANCE HOLLAND COLOURS ANNUAL REPORT 2021/2022 57 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSGOVERNANCE A PARTNER FOR CURRENT AND FUTURE NEEDS Holland Colours co-designs many of the colorants that this client uses to create their beautifully colored products, and we work closely with their product management and purchasing teams. On the purchasing side, we produce to order and hold inventory to be released when the client requires. We also monitor their stock levels, so they can reorder in time and so avoid any problems. On the product side, we help our client to develop new color options and enhance the weathering performance of their building products, which is critical. Process improvements, such as increasing colorant utilization, reducing the letdown ratio and optimizing the processability, are also important to this customer. “I see really good performance in the products coming out of our plant,” says our client, “and the Holland Colours people are very good to work with. They are responsive, open to discussions, they will investigate technologies, help us with open-ended technology questions ......, so there are a lot of reasons why we keep working with them and coming back.” OVERCOMING SUPPLY CHAIN CHALLENGES As with every customer, reliability is the number one supplier requirement. “Our demand has gone way up because of COVID-19, while the supply chain has gotten tighter for everyone.” And despite some challenges in the last few months, they feel Holland Colours has helped them to try to make the best of the situation: “They go the extra mile to make sure we do have product. They know how important it is to us.” Another quality our client values is that we think with them about performance issues. “Holland Colours is very good about working with us as we look at alternative chemicals to increase performance,” the client says. “They are also open to talking about trends and developments, and they will ask if a technology might be appropriate for us and what would that mean.” WORKING TOGETHER TO RAISE PRODUCT PERFORMANCE “We don’t just buy colorants,” the client continues, “we buy colorants to incorporate into products. Any help Holland Colours can provide to support us in our broader performance attributes is good. As a color house, they have done a great job. The opportunity in the future is to continue to think about technologies that impact color but are also helpful for us from a performance perspective. There’s more going on than meets the eye. Our products need to be engineered well and we rely on Holland Colours to help us engineer the solution.” “There’s more going on than meets the eye. Our products need to be engineered well and we rely on Holland Colours to help us engineer the solution” HOLLAND COLOURS ANNUAL REPORT 2021/2022 58 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSGOVERNANCE REPORT OF THE SUPERVISORY BOARD HOLLAND COLOURS ANNUAL REPORT 2021/2022 59 FIVE-YEAR SUMMARY & INVESTOR RELATIONSCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSSUPERVISORY BOARD REPORT SUPERVISORY BOARD Roland Zoomers Chairman 1950, Dutch Date of initial appointment July 9, 2015 Term of oce 2019 – 2023 (second term) Additional positions • Director Mandaat Investments BV • Member Supervisory Board Aukje Doornbos Member 1979, Dutch Date of initial appointment July 9, 2015 Term of oce 2019 – 2023 (second term) Additional positions • Managing Director Covestro Netherlands Jorrit Klaus Member 1969, Dutch Date of initial appointment October 26, 2017 Term of oce 2021 – 2025 (second term) Additional positions • Managing Director Synres BV Deputy Chairman Date of initial appointment Term of oce Additional positions • Board Member Holland Pigments BV • Chairman Stichting Administratie- kantoor ’s-Heerenhove Heerde • • Board Member Peerwith BV HOLLAND COLOURS ANNUAL REPORT 2021/2022 60 FIVE-YEAR SUMMARY & INVESTOR RELATIONSCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSSUPERVISORY BOARD REPORT With the COVID-19 pandemic continuing to impact the global economy, 2021/2022 again posed challenges for the Holland Colours organization and its people. However, the experience again conrmed that the company and its employees are able to adapt well to changes outside their immediate control. We saw this in the way people worked together successfully even when they were working from home or in bubbles. We saw it in the way new and long-serving employees successfully blended as a team to continue putting the client rst. We saw this in the way teams maintained strong client relationships, despite being unable to meet face to face. And we saw this in the skilled way people managed production and logistics to ensure that Holland Colours maintained its reputation as a partner that its clients can rely on. these very challenging and disrupting times. This is a compliment to everyone who works locations will be able to rise to the serious challenges the world continues to face. COMPOSITION OF THE SUPERVISORY BOARD and has extensive knowledge of the company. Holland Pigments BV therefore proposes to The Supervisory Board has four members, which we believe to be in proportion to the size of the company. The board has two sub-committees – the Audit Committee and the The size of the board does raise one issue: our non-alignment with current Dutch guidelines and planned future law on diversity and female representation in senior management. At present, we have one woman on the Supervisory Board, representing we do not want to increase the size of the Supervisory Board, we have decided to maintain the current balance. COMPOSITION OF THE BOARD OF MANAGEMENT There was one change in the composition of the Board of Management during the past decided, partly on her initiative, that she would resign as CFO as of February 1, 2022. previously for Holland Colours on an interim basis. Finally, the initial four-year term of employment of the CEO and CTO expire at this year’s renewal of both contracts for a further period of four years. BOARD MEETINGS AND CONTACTS with the COVID-19 rules applicable at each particular time. We discussed the impact of strategic programs such as the Business Process and IT program and sustainability. In addition, the Supervisory Board held several meetings at which the Board of Management was not present. The topics of these meetings included an evaluation of the company’s strategic development, remuneration policy, risk matrix and relationships with Holland Pigments and other large shareholders. HOLLAND COLOURS ANNUAL REPORT 2021/2022 61 FIVE-YEAR SUMMARY & INVESTOR RELATIONSCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSSUPERVISORY BOARD REPORT DEVELOPMENTS AND STRATEGY developments, the demand for Holland Colours’ products remained very strong in all areas operational costs in line with its planned ongoing investments in longer term strategic programs, such as those involving improvements in IT and other systems, and in new production technologies. Continuing investment A major concern throughout the year was the availability of the raw materials on which with these issues required extremely close and constant monitoring and the application of to continuously improve production processes and develop new products. Likewise, the new, state-of-the-art IT systems in which the company is investing will be essential. These systems support more advanced business processes and will therefore enable the over them. The Supervisory Board recognizes the need to develop these important programs and supports the company in doing so. Because of this, the Supervisory Board accepts the increase in operating costs related to this in the coming years. At the same time, this makes it even more crucial that Holland Colours focuses on realizing its very Risk Matrix The Supervisory Board and Board of Management held extensive discussions over the identifying possible risk factors, especially new or emerging ones, assessing their potential impact on the organization and identifying the steps the company can take to minimize their potential impact. This was a more extensive exercise than the regular annual reviews emphasis on sustainability, political and fraud risks since the last major update. Fraud/Code of Conduct Fraud is an issue Holland Colours’ management and the Supervisory Board take very seriously. Last year, the Board of Management was informed by local management of some payments at Holland Colours Asia that, while permissible under local rules, were in more information. Russia/Ukraine In March 2022, Holland Colours announced it had halted all new business developments in sanctions, Holland Colours decided that it is willing to continue to sell to existing clients. Ukraine. The main clients are in the building & construction and food packaging industries. mineral water bottles. Holland Colours will continue to follow the situation closely and remain fully in line with EU sanctions. Focus on sustainability On a happier note, the Supervisory Board is pleased to see that the steps the company took in 2020/2021 to approach sustainability as a strategic business opportunity were sustainability of its organization and products. The trend towards recyclable plastics is irreversible and it is both good business and good for the planet for Holland Colours to contribute to this wherever it can. HOLLAND COLOURS ANNUAL REPORT 2021/2022 62 FIVE-YEAR SUMMARY & INVESTOR RELATIONSCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSSUPERVISORY BOARD REPORT Move to ‘one company’ Companies that operate in global markets are greatly strengthened when organizations operate as one group. This can involve a greater role for the center, but there are also examples of companies where a local location takes the lead in coordinating and working worldwide. In this light it is good to see that Holland Colours is increasingly adopting a ‘one company’ mindset and way of working. Examples include improving IT through a location by location rollout, the global and local sustainability programs and the global employee survey. This move to one company with shared processes and local production, sales and distribution centers will, the Supervisory Board believes, enable Holland Colours to pool its resources and skills, move more quickly in response to changing client demands, and so punch above its weight in an increasingly competitive market. RISK MANAGEMENT As with the company’s strategy, COVID-19 dominated the discussions with the Board of and fraud risks within Holland Colours. One thought-provoking conclusion to emerge from the COVID-19 pandemic was to remind us that risk extends beyond our own organization. We naturally tend to consider risks and risk management in terms of our own operational environment. But, as COVID-19 has of control. The good news is that COVID-19 has proven that Holland Colours’ conservative As in other years, but with arguably more rigor because of the exceptional uncertainties, the Board of Management and Supervisory Board considered the company’s exposure to major accounts and clients. Please refer to the Risk Management section in the report of the Board of Management for a complete overview, including risk-mitigating measures. subsequently, with the full Supervisory Board in the presence of the Board of Management and the auditor. PwC Accountants has issued a management letter and Board Report on improvement, which are being implemented. PERFORMANCE EVALUATION While many Supervisory Board meetings were held virtually last year, because of COVID-19, the board did meet in person to evaluate its own performance and priorities. We also discussed the performance of the Board of Management and progress in implementing a fuller explanation of the changes that will be introduced. ALLOCATION OF DUTIES The allocation of duties and procedures in the Supervisory Board are set out in the a member of the Supervisory Board and a schedule of retirement from the board are Code stipulates that a diversity policy must be in place, and this will continue to be considered for future appointments, with quality remaining the most important criterion. who is the Supervisory Board member proposed by Holland Pigments BV. AUDIT COMMITTEE Last year, Holland Colours NV was informed by the local management of PT Holland Colours Asia about potential irregular payments. They were instructed to stop these payments at once. The Audit Committee of the Supervisory Board played an important role in coordinating an investigation by outside legal counsel into these commission payments in Indonesia. HOLLAND COLOURS ANNUAL REPORT 2021/2022 63 FIVE-YEAR SUMMARY & INVESTOR RELATIONSCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSSUPERVISORY BOARD REPORT The investigation has found evidence of payments made to employees of a small number a period of eight years and adding up to a total sum of approximately USD 16,000 to USD 75,000 per year. The payments were recorded in PT Holland Colours Asia’s accounts, but the administration was not done correctly. The payments themselves did not violate Indonesian law. Following the discovery and investigation, the company has prepared and partly executed a remediation plan to make sure that similar incidents do not occur again. For more details regarding the remediation actions and plans reference is made to the Risk Management section and the paragraph headed ‘Risk-related events 2021/2022’ of the Report of the Board of Management. The Supervisory Board fully supports these measures. Separately, the Audit Committee monitored the execution of the plans to update Holland Colours’ IT systems, especially regarding data management and information management to support improved business analysis. The Audit Committee further company’s tax position and policy. REMUNERATION COMMITTEE of the new Long-Term Incentive Plan that will form part of the variable remuneration of advice. You can read more about this in the Remuneration Report but, in brief, the move aims to stimulate long-term value creation in innovation and sustainability. The introduction of a Long-Term Incentive Plan alters the way the current Short-Term Incentives plan operates. However, the total variable remuneration that may be paid – up to three times the monthly salary – remains the same. The Supervisory Board will each year. The current variable bonus scheme will apply for 2021/2022. In addition to this bonus, plan applies to all the group’s employees and is linked to the return on investment of Holland Colours NV and the net operating result of the division of the employee concerned. salary. Where applicable, variable pay for the previous year is paid in July of the following year. We believe that the remuneration of the Board of Management is in line with Dutch market conditions. The details of the remuneration of the Board of Management and the statements, Related Parties. ANNUAL REPORT AND DIVIDEND PROPOSAL Board of Management and the external auditor. both meet the requirements of transparency and form a sound basis for the Supervisory HOLLAND COLOURS ANNUAL REPORT 2021/2022 64 FIVE-YEAR SUMMARY & INVESTOR RELATIONSCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSSUPERVISORY BOARD REPORT Thankfully, the COVID-19 pandemic seems to have had less of an impact over the past plus shortages of important raw materials and general political and economic instability While Holland Colours has shown that it can successfully manage its margins despite sudden changes in trading conditions, the outlook remains highly uncertain. On the other earnings, resulting in a dividend payment of € 5.91 per share. discharge from liability to the members of the Board of Management and the Supervisory The members of the Supervisory Board have signed the Financial Statements and have accordingly discharged their statutory obligation pursuant to Section 101, subsection 2 of Book 2 of the Dutch Civil Code. ACKNOWLEDGEMENTS The Supervisory Board would like to express its appreciation of the work done by the management and employees of Holland Colours during another challenging year. The company’s resilience, adaptability and people’s willingness to work as a team and go all Holland Colours’ clients, suppliers, shareholders and employees for their continued support and trust in the company. Apeldoorn, May 25, 2022 Supervisory Board Roland Zoomers, Chairman Aukje Doornbos Jorrit Klaus HOLLAND COLOURS ANNUAL REPORT 2021/2022 65 FIVE-YEAR SUMMARY & INVESTOR RELATIONSCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSSUPERVISORY BOARD REPORT REMUNERATION REPORT Remuneration of the Board of Management top management who will enable Holland Colours to achieve its strategic and operational goals. Their remuneration is guided by the Remuneration Committee. This advises the Supervisory Board on the formulation of the remuneration policy and on the level of the individual remuneration of the Board of Management. Dutch Law incorporates the EU Shareholders’ Rights Directive and the company’s Remuneration Policy is in line with this legislation (Article 2:135a DCC). The Remuneration Policy is evaluated at least once every four years. For more information about Holland Colours’ Remuneration Policy, please visit the corporate website. This remuneration report referred to in Book 2: 135b DCC for 2021/2022 will be put REMUNERATION FRAMEWORK The remuneration policy is intended to encourage enterprising behavior. At the same time, it must also be in reasonable proportion to the remuneration of the other management personnel. Holland Colours’ remuneration policy is appropriate to its identity and strategy and is result-oriented and straightforward in its application. It also takes account of the social context, the corporate governance structure and the interests of Holland Colours shares, Holland Colours does not provide for long-term variable remuneration in the form share price is not an element in the remuneration policy. The company does however long-term achievements. See later in this report for a fuller explanation of the changes. Holland Colours benchmarks the salaries of the company’s senior management with the level compared to companies of similar size, international scope and complexity and located in the same geographical area. The salaries of our employees are reviewed annually, and we conduct a job evaluation and rating process. In adopting this approach, Holland Colours ensures fair pay compared to other comparable companies. In 2021/2022, the internal pay ratio was 9.91 (2020/2021: 10.65) based on the annual total remuneration of the CEO and the average total remuneration of all other full-time employees, as reported in accordance with IFRS, excluding discretionary elements. 2021/2022 consisted of: • • Pension based on a defined contribution system; • Other employment benefits (reimbursement of specific expenses or contribution and a company car): – Variable remuneration: in cash for short-term achievements (one year); Claw-back and ultimate remedial provisions are subject to the Dutch Civil Code. Members of the Board of Management have a change-of-control arrangement and in the case of an early termination of their contract they are covered by a severance provision of Code. Holland Colours does not provide any personal loans, guarantees or advance payments to the members of the Board of Management. The Supervisory Board sets year. HOLLAND COLOURS ANNUAL REPORT 2021/2022 66 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSREMUNERATION REPORT on Investments for Holland Colours. The basis is the monthly gross compensation excluding holiday allowance, to a maximum remuneration of one and a half months, shares of Holland Pigments. SCENARIO ANALYSES The Supervisory Board and the Remuneration Committee use scenario analyses in the formulation and establishment of the remuneration of the Board of Management as stated Management’s variable remuneration. The Remuneration Committee evaluates the total remuneration of the Board of Management each year to ensure that the package INDIVIDUAL REMUNERATION OF THE BOARD OF MANAGEMENT (amounts x € 1,000 unless stated otherwise) Board of Management Fixed remuneration Non-recurring remuneration Variable remuneration Total remuneration Base salary Pension plan Non-recurring payment Variable Proportion of variable remuneration (in %) Coen Vinke CEO 27 92 20 Tanja van Dinteren CFO 200 17 96 1 357 12 Eelco van Hamersveld CTO 193 20 77 290 27 Total 727 64 96 213 1,100 19 1 Included for 10 months HOLLAND COLOURS ANNUAL REPORT 2021/2022 67 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR GOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSREMUNERATION REPORT EMPLOYEE PARTICIPATION CHANGES IN THE REMUNERATION PER MEMBER OF THE BOARD OF MANAGEMENT AND COMPANY PERFORMANCE (amounts x € 1,000 unless stated otherwise) Annual change Fixed and variable 2021/22 20/21 > 21/22 19/20 > 20/21 18/19 > 19/20 17/18 > 18/19 Board of Management remuneration Coen Vinke (CEO) (1) (2) 1 – Tanja van Dinteren (CFO) 357 129 – – – Eelco van Hamersveld (CTO) 290 27 29 – Company performance EBITDA 13,677 10,672 EPS (in € x 1) 12 11 9 7 7 Average remuneration on a full-time equivalent basis of employees (2) 3 Number of employees of the group 1 Included for 11 months Introduction of a Long-Term Incentive Plan in 2022/2023 The move to include a long-term incentive element in the payment to the Board of By encouraging the establishment of long-term incentives, the Code aims to stimulate longer is also possible, and performance payments can be made at the end of the period or at milestone points en route. As Holland Colours has always thought long-term, this change aligns how the Board members are rewarded with the existing commitment to shareholder value, innovation and improving sustainability. A key thing to note is that under the new Long-Term Incentive plan, the maximum amounts that can be paid as an incentive (short and long term) to members of the Board of Management will not change. What will change is the basis on which those incentive and if so, how much. The mechanism for doing this is a so-called incentive multiplier. targets for the Board of Management each year. These targets will be based on the overall strategic group objectives for that year. In addition, the Supervisory Board has set long term environmental and sustainability goals, like CO 2 reduction and innovation. The progress HOLLAND COLOURS ANNUAL REPORT 2021/2022 68 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSREMUNERATION REPORT Request for adoption remuneration of the Supervisory Board in accordance with this proposal and that it will remuneration policy as well as the date and outcome of the policy vote will be made public policy will remain in force and the Supervisory Board will submit a new proposal at the CHANGES IN THE INDIVIDUAL REMUNERATION OF THE SUPERVISORY BOARD OVER THE LAST 5 YEARS (amounts x € 1,000) Annual change 2021/22 20/21 > 21/22 19/20 > 20/21 18/19 > 19/20 17/18 > 18/19 Roland Zoomers – – – – 26 – – – – Aukje Doornbos 26 – – – – Jorrit Klaus 26 – – – – Total 116 – – – – and assessed per topic by the Remuneration Committee for each individual Board of Management member on behalf of the Supervisory Board. The achievement of the per topic by the Remuneration Committee on behalf of the Supervisory Board. A full explanation of the new Long-Term Incentive components, its relation to Short-Term Incentives and Board of Management remuneration as a whole, can be found in the Remuneration Policy available at www.hollandcolours.com. REMUNERATION OF THE SUPERVISORY BOARD The Dutch Act implementing the revised Shareholders Directive also includes a requirement to establish a remuneration policy for the Supervisory Board. The remuneration of the members of the Supervisory Board encourages them to perform their time spent and the responsibilities relating to their position. A remuneration benchmark is evaluated on a regular basis to establish whether the remuneration of the members of the Supervisory Board is still appropriate or requires adjustment. The remuneration does not include the award of shares or options on shares. Holland Colours does not provide any personal loans, guarantees or advance payments to the members of the Supervisory Board. The last adjustment of the remuneration of the Supervisory Board was in 2013. As a result, the level of remuneration has fallen to less than the targeted median-level benchmark of comparable peers. The Supervisory Board therefore proposes to adjust the remuneration for the chair and € 32,000 for each other member of the Supervisory Board. HOLLAND COLOURS ANNUAL REPORT 2021/2022 69 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR GOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSREMUNERATION REPORT EMPLOYEE PARTICIPATION Employee participation is central to the way we manage our company and is the foundation of our success. You can read more about the culture it supports in our story on page 15. Here we are going to look at how co-ownership works. Every permanent employee of Holland Colours owns shares (at least one) in Holland Pigments BV, are the majority shareholders, and they are committed to actively supporting the employee-shareholder model. The goal of Holland Pigments and the four majority shareholders is to promote the stability, continuity and independence of Holland Colours, including eective employee participation within the Holland Colours Group. To do this, the four main and ensuring those shares remain within Holland Pigments. They also sell shares to employees if there are not enough available from other employee-shareholders to meet demand. Holland Pigments holds the majority (50.52%) of the shares in Holland Colours. The Holland Colours shares are traded on the Euronext Amsterdam stock exchange. Holland Pigments is managed by a one-tier board (Holland Colours itself has a two-tier board – Management Board and Supervisory Board), made up of a chairperson (rotates each year), four non-executive members and an executive director. The collective shareholding of our employees is represented by a non-executive Holland Pigments Board member who works for Holland Colours. This person is elected by the company’s employees every four years. The non-executive board member for employee-shareholders and the executive director of Holland Pigments are jointly responsible for managing the employee- shareholder model properly. To help with this, each Holland Colours site elects and member for employee-shareholders and the executive director of Holland Pigments visit the various Holland Colours sites regularly to discuss employee participation. This structure helps to underpin the independence and continuity of the company. It also supports and enables the unique co-ownership culture that makes working at Holland Colours unlike working anywhere else. EMPLOYEE PARTICIPATION IN PRACTICE Every permanent employee owns part of Holland Colours HOLLAND COLOURS ANNUAL REPORT 2021/2022 70 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR REMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSEMPLOYEE PARTICIPATION “Employee Participation drives our success” HOLLAND COLOURS ANNUAL REPORT 2021/2022 71 ABOUTINTRODUCTION BY THE CEO FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR REMUNERATION REPORTGOVERNANCE FINANCIAL STATEMENTSMANAGEMENT BOARD REPORT EMPLOYEE PARTICIPATION TEAMWORK AND OUR MARKETS Holland Colours doesn’t make end products. We don’t make packaging. We don’t manufacture building materials. We don’t produce coatings or sealants. Instead we make the concentrates of colorants and additives that add beauty and functionality to other company’s end products. We also create concentrates of additives that make plastic products easier to manufacture, more sustainable and which give them multiple lives. INTERNALLY AND EXTERNALLY HOLLAND COLOURS ANNUAL REPORT 2021/2022 72 CSR GOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO REMUNERATION REPORT FINANCIAL STATEMENTSFIVE-YEAR SUMMARY & INVESTOR RELATIONSEMPLOYEE PARTICIPATIONSUPERVISORY BOARD REPORT Strictly speaking, we are a supplier, but Holland Colours has always acted as a team player and co-designer with our clients. However, where in the past teamwork focused primarily on creating tailor-made solutions for individual clients, today we also aim to team up with the marketplace as a whole. BIG CHALLENGES, BIG OPPORTUNITIES The reason is simple: the marketplace is changing. Today’s opportunities and challenges are bigger and wider than one company. Sustainability and circularity are clear examples. to work together as a value chain to meet upcoming regulations, to innovate and to ensure that the plastic waste we create is worth recycling or upcycling. That it has value. Regulation is another example. In a globalized world, the strictest health and safety rules tend to become the model for the world. Brand owners adopt these requirements and implement them globally at a pace that is often faster than regional authorities require. Holland Colours supports brand owners in this global transition through our innovative portfolio and global footprint. Holland Colours’ commercial and technology teams in packaging, building & construction and sealants & coatings play a central role in helping our company to understand and support the trends and drivers in the market, the value chain and among key decision makers. They also help our clients to understand changes in the market. For example, when the EU was talking about limiting the amount of titanium dioxide in plastic bottles, we set up seminars to share what we knew about the proposals and their likely impact had they come into force. We are also a member of industry associations like Petcore, NAPCOR and VinylPlus, and we are joining industry consortia like InReP, to contribute to plastics recycling. We also work with universities and institutes. MORE MARKET PULL, LESS TECHNOLOGY PUSH On a more day to day level, the whole company aims to operate as a team to meet client needs. This approach to innovation works in two directions. Initially, Holland Colours used its technical and our clients – technology push based on internal ideas. Today, the company’s strategy is to work outside-in as well. This means identifying unmet market needs and then feeding those ideas to our product development teams so they can look for potential solutions – market pull based on market-focused teamwork. Our teams perform market assessments and connect within our value chain, from raw material manufacturers to brand-owners. This allows us to work on the right product development projects. In both cases, we look to team up early with clients, suppliers and others in the value chain. This enables us to share our ideas and work-in-progress, and so move faster to commercialization. It helps us to stay on track and build an ultimately winning business case for our clients and for Holland Colours. THINK GLOBAL AND LOCAL share knowledge and replicate technologies between our locations in EMEIA (Europe, Middle East, India and Africa) the Americas and Asia. In this way, we ensure that our teams are aligned and that everyone knows what is happening elsewhere in the world, internally and externally. “Holland Colours’ commercial and technology teams help us to understand and support the trends and drivers in the market, the value chain and among key decision makers” HOLLAND COLOURS ANNUAL REPORT 2021/2022 73 FIVE-YEAR SUMMARY & INVESTOR RELATIONSCSR REMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSEMPLOYEE PARTICIPATIONSUPERVISORY BOARD REPORT FIVE-YEAR SUMMARY IN MILLIONS OF EUROS, UNLESS STATED OTHERWISE 2021/22 2020/21 2019/20 2018/19 2017/18 Income statement Revenue 110.5 96.0 101.5 90.9 Operating result before depreciaton and amortisation (EBITDA) 17.0 15.5 13.7 10.7 10.2 Depreciation of property, plant, equipment and intangibles (3.3) (3.1) (2.9) (1.9) (2.0) Operating result 13.6 Interest (0.1) (0.1) (0.1) (0.1) – Income tax (3.3) (2.3) (2.2) Result of discontinued operations – – (0.0) (0.2) (0.1) Net result 10.2 9.6 7.9 6.1 5.9 Statement of nancial position Total assets 79.6 63.2 50.2 Total equity 50.6 36.7 Interest-bearing debt – – – – –- Working capital 1 26.0 19.6 21.3 17.2 Invested capital 2 39.9 36.6 32.6 Cash 17.0 16.6 7.7 5.3 2021/22 2020/21 2019/20 2018/19 2017/18 Statement of cash ows 7.7 3.3 Investments (3.3) (2.0) (2.9) (2.5) Dividend (3.9) (3.0) (2.9) (2.6) 3 0.3 (0.5) 0.2 0.3 9.0 0.2 2.1 (2.2) Revenue per division EMEIA 53.2 Americas (in USD) 37.9 36.1 Asia (in USD) 16.6 17.2 17.2 Ratios Return on Sales (ROS) Solvency Return on Investment (ROI) 5 Market capitalisation as at March, 31 106.7 65.7 76.6 Number of shares outstanding Inventories + trade accounts receivable -/- trade accounts payable 2 Property, plant & equipment, intangible assets, other investments -/- non interest bearing current liabilities 3 5 HOLLAND COLOURS ANNUAL REPORT 2021/2022 74 CSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSFIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT INVESTOR RELATIONS circumstances caused by COVID-19, we would like to adhere to this baseline. We therefore Publications The interim results (for the period April to September) are published in October and the full-year results (from April to March) are published by the end of May/beginning of June. Company non-public information is published in the form of press releases which are also posted on our website and social media. Liquidity Provision makes no use of a liquidity provision and sponsored research services. We assessed the pros and cons of these services at the end of calendar year 2020 and decided to continue without. Share Ownership Shares traded on Euronext Amsterdam Holland Pigments BV 1 Registered shares Total 860,351 the registers of the AFM (Netherlands Authority for the Financial Markets) based on the Decree on the Disclosure of Major Holdings and Capital Interests in Issuing Institutions in accordance with the Netherlands Financial Supervision Act. Disclosures % Date Holland Pigments BV 1 50.03 April 2, 2012 6.97 ELNED Holding BV 5.00 P. Chr. Van Leeuwen Beheer BV 5.06 August 7, 2019 Axxion S.A. January 21, 2022 1 of the shares in Holland Colours NV. HOLLAND COLOURS ANNUAL REPORT 2021/2022 75 CSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSFIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT SHARE PRICES – HOLLAND COLOURS VERSUS ASCX April 1, 2021 = 100 60 80 100 120 140 160 180 200 220 04 05 06 07 08 09 10 11 12 01 02 03 Holland Colours NV ASCX Index 2021 2022 Key data per share In euros, unless stated otherwise 2021/2022 2020/2021 2019/2020 2018/2019 2017/2018 Net result 11.00 9.09 Final dividend 5.91 5.50 0.00 3.52 3.39 Interim dividend 0.00 0.00 0.00 0.00 Equity Highest share price 199.00 125.00 111.00 Lowest share price 121.00 76.00 66.25 Number of shares outstanding SHARE PRICES – HOLLAND COLOURS In euros HOLLAND COLOURS ANNUAL REPORT 2021/2022 76 90 40 140 190 240 04 05 06 07 08 09 10 11 12 01 02 03 2021 2022 90 40 140 190 240 04 05 06 07 08 09 10 11 12 01 02 03 2021 2022 90 40 140 190 240 04 05 06 07 08 09 10 11 12 01 02 03 2021 2022 CSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTSFIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT Publications (presented to AFM) October 22, 2021 Publication of interim results 2021/2022 January 6, 2022 Holland Colours announces resignation of CFO March 10, 2022 Holland Colours strengthens compliance with its Code of Conduct Key dates (indicative) October 21, 2022 Publication of interim results 2022/2023 HOLLAND COLOURS ANNUAL REPORT 2021/2022 77 CSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSFIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT INTERNAL TEAMWORK Teamwork was one of the reasons the founders decided to set up Holland Colours in the rst place. Having previously worked for a big corporate owner, they wanted to build a business in which employees were involved and where collective responsibility and commitment were central. A business in which people worked together, helped each other and did what was needed to develop the best product or to meet a challenging deadline. ALL FOR ONE AND ONE FOR ALL HOLLAND COLOURS ANNUAL REPORT 2021/2022 7878 SUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSFIVE-YEAR SUMMARY & INVESTOR RELATIONS It worked and today, teamwork is one of our core values and very much the basis for our other business drivers: responsibility, proactiveness, competence and accountability. Teamwork is central to our success today, just as it always has been. It is helping us to innovate across our markets and to push our sustainability agenda. At the same time, it also means that we are there for each other when colleagues are having a hard time, or when the business faces economic headwinds. EVERYONE BENEFITS WHEN EVERYONE IS INVOLVED People who connect with this way of working feel an extra commitment to their colleagues and our clients. This is reinforced by our employee-participation model. Everyone is involved in what is happening across the company, and not only in their own As a company, we have no written rules about teamwork. Instead, you see a colleague helping someone else or being helped, and you follow the example. It’s also part of people’s DNA. We don’t run courses on teamwork. However, we do select and hire people who are down to earth and willing to roll their sleeves up to get something done. We tell managers that we have an entrepreneurial mindset, so you might also have to do things that are not your immediate area of responsibility. Enjoy that and you CAMARADERIE BENEFITS OUR CLIENTS The result is a workplace in which everyone is genuinely interested in each other. For a lot of people, their colleagues are like family and social activities are an important part of working at Holland Colours. Even during the height of the COVID-19 pandemic, we found ways to maintain the social side – by sharing photos of our regularly come together to celebrate personal anniversaries, company milestones and just for the fun of it. This camaraderie adds real value for our clients. It makes us more aligned around meeting client needs and it supports collaboration and co-design between the client and our sales and technology teams. Just as we do internally, we like to build long and strong relationships with our clients. Many of our products begin as collaborative projects and we are always willing to share our knowledge to help the client improve or optimize a production process. Basically, if a client is involved, everyone joins in and works together to develop a product solution or deliver an improvement to a production process. SHIFTING TO A GLOBAL TEAMWORK MINDSET Teamwork is also driving the changes we are making to become one organization. Investments in global IT business processes and company-wide programs in HR, safety and others will help us to work together as one team globally. By taking steps to structure and optimize the way we work together, we will be in a better position to choose where, how and when we can add the most value for our clients. This will also ensure that we preserve what’s unique about HCA in the future. Teamwork is the future of Holland Colours, just as it always has local organizations and more emphasis on acting as one – but the essence will remain the same. Teamwork. But on a bigger scale. “We have no written rules about teamwork. Instead, you see a colleague helping someone else or being helped, and you follow the example” HOLLAND COLOURS ANNUAL REPORT 2021/2022 79 CSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUTINTRODUCTION BY THE CEO FINANCIAL STATEMENTSFIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORT FINANCIAL STATEMENTS FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 80 HOLLAND COLOURS ANNUAL REPORT 2021/2022 80 Consolidated Income Statement 82 Consolidated Statement of Comprehensive Income 83 Consolidated Balance Sheet 84 Consolidated Statement of Changes in Equity 85 Consolidated Cash Flow Statement 86 Notes to the Consolidated Financial Statements 87 1. General Information 87 2. Impact Covid-19 and the situation in Ukraine on the Financial Statements 87 3. Summary of Accounting Principles 88 4. Financial Risk Management 95 5. Cash Flow Statement 96 6. Segment Information 96 7. Revenue 98 8. Personnel Expenses 98 9. Other Operating Expenses 98 10. Finance Income and Expense 99 11. Income Tax 99 12. Intangible Assets 100 13. Property, Plant and Equipment 101 14. Right-of-Use Assets 102 15. Deferred Income Tax Assets and Liabilities 102 16. Inventory 103 17. Trade and Other Receivables 104 18. Cash and Cash Equivalents 105 19. Share Capital 105 20. Other Reserves 105 21. Earnings per Share 105 22. Non-Controlling Interest 106 23. Credit Facility 106 24. Lease Liabilities 106 25. EmployeeBenetObligations 107 26. Trade and Other Liabilities 108 Other Disclosures 109 27. Contingent Assets and Liabilities 109 28. Related Parties 109 29. Other Disclosures 111 Company Income Statement 112 Company Balance Sheet 113 Notes to the Company Financial Statements 114 30. General Information 114 31. Summary of Accounting Principles 114 32. Subsidiaries 114 33. Personnel Expenses 114 34. Income Tax 114 35. Intangible Assets 115 36. Property, Plant and Equipment 116 37. Right-of-Use Assets 117 38. Financial Non-Current Assets 117 39. Equity 118 40. Credit Facility 118 41. Lease Liabilities 118 42. EmployeeBenetObligations 119 43. Audit Fees 119 44. Other Disclosures 120 Other Information 121 StatutoryProvisionsregardingtheAppropriationofProts 121 Independent Auditor’s Report 122 CONTENTS FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 81 In thousands of euros Note April 1, 2021/March 31, 2022 April 1, 2020/March 31, 2021 Revenue 7 110,465 96,029 Cost of Materials (58,827) (49,781) Direct Contribution Margin 51,638 46,248 Personnel Expenses 8 (22,370) (19,939) Amortization and Impairments 12 (87) (124) Depreciation and Impairments 13/14 (3,325) (2,935) Other Operating Expenses 9 (12,226) (10,834) Total Operating Expenses (38,008) (33,832) Operating Result 13,630 12,416 Finance Income 10 94 22 Finance Expense 10 (180) (97) Finance Income and Expense (86) (75) Result Before Income Tax 13,544 12,341 Income Tax 11 (3,301) (2,762) Net Result from Continued Operations 10,243 9,579 Attributable to: • Shareholders of the Company 10,179 9,471 • Non-Controlling Interest 22 64 108 10,243 9,579 Earnings per Share in euros Average Number of Shares Issued 21 860,351 860,351 Earnings per Share from Continued Operations 11.83 11.00 Earnings per Share from Total Net Result 11.83 11.00 CONSOLIDATED INCOME STATEMENT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2022 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 82 Notes1to29areanintegralpartoftheseconsolidatednancialstatements. In thousands of euros Note April 1, 2021/March 31, 2022 April 1, 2020/March 31, 2021 Net Result 10,243 9,579 Items that will not be reclassied to the Income Statement ActuarialResultsonEmployeeBenets,afterTax 25 82 (8) Other Comprehensive Income that could in future be classied to the Income Statement ForeignCurrencyTranslationDierences 20 1,558 (2,134) Other Comprehensive Income 1,640 (2,142) Total Comprehensive Income 11,883 7,437 Attributable to: • Shareholders of the Company 11,804 7,329 • Non-Controlling Interest 79 108 11,883 7,437 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED MARCH 31, 2022 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 83 Notes1to29areanintegralpartoftheseconsolidatednancialstatements. CONSOLIDATED In thousands of euros Note March 31, 2022 March 31, 2021 Non-Current Assets Intangible Assets 12 69 156 Property, Plant and Equipment 13 20,817 19,354 Right-of-Use Assets 14 1,247 1,616 Deferred Tax Assets 15 1,415 1,319 Long-Term Receivables – 60 23,548 22,505 Current Assets Inventory 16 20,598 12,604 Trade and Other Receivables 17 18,145 16,647 Income Tax Receivables 366 331 Cash and Cash Equivalents 18 16,959 16,638 56,068 46,220 Total Assets 79,616 68,725 In thousands of euros Note March 31, 2022 March 31, 2021 Equity Share Capital 19 1,953 1,953 Share Premium Reserve 1,219 1,219 Other Reserves 20 (18) (1,633) Retained Earnings 54,176 48,719 Equity Attributable to Shareholders of the Company 21 57,330 50,258 Non-Controlling Interest 22 420 341 Total Equity 57,750 50,599 Non-Current Liabilities Lease Liabilities 24 744 956 Employee Benet Obligations 25 1,105 1,093 Deferred Tax Liabilities 15 273 189 2,122 2,238 Current Liabilities Lease Liabilities 24 535 643 Trade and Other Liabilities 26 17,392 13,615 Income Tax Liabilities 1,729 1,546 Employee Benet Obligations 25 88 84 19,744 15,888 Total Equity and Liabilities 79,616 68,725 BALANCE SHEET AS OF MARCH 31, 2022 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 84 Notes 1 to 29 are an integral part of these consolidated nancial statements. In thousands of euros Equity attributable to Shareholders of the Company Share Capital Share Premium Reserve Legal Reserve for Currency Translation Legal Reserve for Hedge Legal Reserve for Intangible Assets Retained Earnings Total Non- Controlling Interest Total Equity As at March 31, 2020 1,953 1,219 735 (353) 226 43,064 46,844 233 47,077 Net Result for the Financial Year – – – – – 9,471 9,471 108 9,579 Other Comprehensive Income – – (2,134) – – (8) (2,142) – (2,142) Total Comprehensive Income – – (2,134) – – 9,463 7,329 108 7,437 Transfer of Reserve for Intangible Assets – – – – (107) 107 – – – Dividends Paid – – – – – (3,915) (3,915) – (3,915) As at March 31, 2021 1,953 1,219 (1,399) (353) 119 48,719 50,258 341 50,599 Net Result for the Financial Year – – – – – 10,179 10,179 64 10,243 Other Comprehensive Income – – 1,543 – – 82 1,625 15 1,640 Total Comprehensive Income – – 1,543 – – 10,261 11,804 79 11,883 Transfer of Reserve for Intangible Assets – – – – 72 (72) – – – Dividends Paid – – – – – (4,732) (4,732) – (4,732) As at March 31, 2022 1,953 1,219 144 (353) 191 54,176 57,330 420 57,750 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED MARCH 31, 2022 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 85 Notes 1 to 29 are an integral part of these consolidated nancial statements. In thousands of euros Note April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Capital Expenditures in Intangible Assets 12 – – Disposal of Property, Plant and Equipment 12 26 – Capital Expenditures in Property, Plant and Equipment 13 (3,346) (1,953) Cash Flow used in Investment Activities (3,320) (1,953) Dividends Paid (4,732) (3,915) Cash Flow used in Financing Activities (4,732) (3,915) ExchangeRateandTranslationDierences on Cash and Cash Equivalents 362 318 Net Cash Flow 321 8,972 Cash and Cash Equivalents as at April 1 16,638 7,666 Cash and Cash Equivalents as at March 31 16,959 16,638 Net Cash Flow 18 321 8,972 In thousands of euros Note April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Operating Result 13,630 12,416 Adjustments for: • Amortization of Intangible Assets and Impairments 12 87 124 • Depreciation of Property, Plant and Equipment and Impairments 13 2,314 2,310 • Depreciation of Right-of-Use Assets 14 1,008 625 • IFRS 16: reversal of lease costs (921) – • Changes in Provisions 25 (17) 44 • Exchange Rate Differences 253 20 Cash Flow generated from Operating Activities before changes in Working Capital, Tax and Interest 16,354 15,539 Changes in Working Capital (5,715) 1,066 Income Tax Paid (2,594) (2,008) Interest Received 94 22 Interest Paid (128) (97) Cash Flow generated from Operating Activities 8,011 14,522 CONSOLIDATED CASH FLOW STATEMENT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2022 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 86 Notes1to29areanintegralpartoftheseconsolidatednancialstatements. 1. GeneralInformation Holland Colours NV (‘the company’) is a listed limited liability company (‘Naamloze Vennootschap’) under DutchlawwithitsregisteredoceinApeldoorn, the Netherlands. The company and its subsidiaries (‘the Group’), manufacture, distribute and sell color concentrates. As of the balance sheet date, the Holland Colours Group operates through eight of its own facilities and a network of agents and distributors. Shares of the company are listed on the Euronext stock exchange in Amsterdam. Since April 2, 2012, just over 50% of the shares in Holland Colours NV have been held by the Dutch-based investment company Holland Pigments BV, in which, along with others, all employees of Holland Colours participate. The employees collectively hold approximately 25% of the shares in Holland Pigments BV. Participations held in Holland Pigments by former directors (who are also major shareholders in Holland Pigments) are excluded from this number. TheGroup’snancialyearcommencesonApril1and closes on March 31 of the following year. TheconsolidatedIFRSnancialstatementsofthe companycomprisethenancialstatementsof the company and its subsidiaries. On May 25, 2022, the Board of Management authorized thenancialstatementsforissue.Thenancialstatements as presented in this report are subject to adoption by the Annual General Meeting of Shareholders on July 7, 2022. 2. ImpactCovid-19andthe situation in Ukraine on the Financial Statements COVID-19 As in the previous year, Holland Colours monitored the COVID-19 situation in the organization, the conclusion being that it has become less anxious about it over time. COVID-19 made it hard for us to interact with customers, and we saw that most companies were primarily focused on maintaining production and meeting demand, and less focused on what is new or next. Covid-19 had a limited impact on the company’s revenues and it has not impacted our going-concern assumption. Holland Colours has a strong balance sheet, a solid cash positionandgeneratespositiveoperationalcashows. Asmentionedearlier,Covid-19hadalimitedeectonour businessandnancialperformance.Wemonitoredclosely our customers and working capital and saw no indications/ reasons to take any actions. The impact of the pandemic on the Financial Statements has been considered for each of the relevant notes, and additional disclosures have been provided if COVID-19 hadamaterialimpactonaspecicFinancialStatements section.Inour2021/2022gures,allCOVID-19related impacts have been treated as normal results from operations. THE SITUATION IN UKRAINE The situation in Ukraine had no material impact on the company’s results for the year. Ukraine, Russia and Belarus form only a modest part of our business (around 4% of total Holland Colours group revenues), and we have no own operations there. We have decided to halt all market and business development in Russia and Belarus, but to continue to supply existing clients in line with EU sanctions. We continue to monitor the situation closely and will follow the applicable international laws and regulations regarding sanctions. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF EUROS, UNLESS STATED OTHERWISE FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 87 3. SummaryofAccountingPrinciples GENERAL TheconsolidatednancialstatementsarepreparedinaccordancewithInternational Financial Reporting Standards (IFRS) as adopted by the European Union and with Title 9 Book 2 of the Dutch Civil Code. Theconsolidatednancialstatementsarepresentedinthousandsofeuros,roundedto the nearest thousand, unless stated otherwise. Theconsolidatednancialstatementsarepreparedonthebasisofhistoricalcost. The accounting policies as detailed below are applied consistently for all periods presented intheseconsolidatednancialstatements. OPERATING SEGMENTS We determine and present operating segments based on the information that is used by the Board of Management. The segmentation is divisional, based on the regions in which theGroupoperates.Inturn,theseregionsreecttheGroup’smanagementandinternal reporting structure. Segmentation based on markets in which the Group operates requires signicantlymoreprotallocation.Thisisbecauseseveralproductsaresoldinmorethan onemarket,whichmakesthecostforaccountingineective. IFRS CHANGES BelowarethechangesintheIFRSstandardsthathavebeenissuedandbecameeective as of January 1, 2021. These changes do not have a material impact on the Group. IFRS Topic Eective date IFRS 16 Leases: COVID-19 related rent concessions – extension of the practical expedient. Annual periods beginning on or after April 1, 2021. IFRS 7, IFRS 4 and IFRS 16 Amendments to interest Rate Benchmark Reform – Phase 2. Annual periods beginning on or after January 1, 2021. NewstandardsthatbecomeeectiveforHollandColoursafterthe2021/2022nancial year are not included with early adoption. The IFRS standards shown in the table below will becomeeectiveforHollandColoursafterMarch31,2022.Theimpactofthesechanges on the Group is expected to be limited. IFRS Topic Eective date IFRS 3, IAS 16, IAS 37, IFRS 1, IFRS 9, IAS 41 and IFRS 16 A number of narrow-scope amendments to IFRS 3, IAS 16, IAS 37 and some annual improvements on IFRS 1, IFRS 9, IAS 41 and IFRS 16. Annual periods beginning on or after January 1, 2022. IAS 1 Presentationofnancialstatementson classicationofliabilities. Annual periods beginning on or after January 1, 2023. IAS 12 Amendment to deferred tax related to assets and liabilities arising from a single transaction. Annual periods beginning on or after January 1, 2023. IFRS 17 Insurance contracts. Annual periods beginning on or after January 1, 2023. USE OF ESTIMATES ThepreparationofthenancialstatementsincompliancewithIFRSrequiresmanagement tomakejudgments,estimatesandassumptionsthataectamountsreportedinthenancial statements. The estimates and assumptions are based on experience and various other factors that are believed to be reasonable under the circumstances and are used to judge the carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of estimates are included in the period in which they are revised. The most important estimates are stated under the relevant policies and relate to impairment analysis of Property, Plant and Equipment, the valuation of Inventories and the incremental borrowing rate and/or the renewal options of the Lease Liabilities. CONSOLIDATION TheconsolidatednancialstatementsincludetheaccountsofHollandColoursNVandits subsidiaries. Subsidiaries are companies over which Holland Colours NV has control because it is exposed to, or has rights to, variable returns from its involvement with the subsidiaryandhastheabilitytoaectreturnsthroughitspoweroverthesubsidiary. Non-controlling interests in equity and in results are presented separately. NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 88 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS Theconsolidatednancialstatementsincludethenancial data of the following companies: Legal structure including capital interest and division structure Division Subsidiaries Interest Consolidated EMEIA Holland Colours Europe BV, the Netherlands, Apeldoorn 100% 100% EMEIA Holland Colours UK Ltd, United Kingdom, Gillingham 100% 100% EMEIA Holland Colours Hungária Kft, Hungary, Szolnok 100% 100% Americas Holland Colours Canada Inc., Canada, Toronto 100% 100% Americas Holland Colours Americas Inc., United States, Richmond Indiana 100% 100% Americas Holland Colours Mexicana SA de CV, Mexico, Tultitlán 100% 100% Asia PT Holland Colours Asia, Indonesia, Surabaya 99% 100% Asia PT Holco Indo Jaya, Indonesia, Surabaya** 88% 100% * Holland Pigments BV holds 1% of the legal ownership of PT Holland Colours Asia, in Indonesia. Economic ownership resides with Holland Colours NV. ** PT Holland Colours Asia holds 36% of the legal and economic ownership of PT Holco Indo Jaya, in Indonesia, and Holland Colours NV holds 52% of the legal and economic ownership. There were no changes to the consolidated Group comparedwiththe2021/2022nancialyear. Holland Colours NV and PT Holland Colours Asia jointly own 88% of the shares in PT Holco Indo Jaya, and the Italy-based Gaypa Srl holds the remaining 12% (12% in 2020/2021). The results of PT Holco Indo Jaya areconsolidatedonanintegralbasisintheguresfor the Group. The non-controlling interest is recognized separately in the results and equity of the Group. Intheconsolidatednancialstatements,allintercompany receivables, payables and deliveries are fully eliminated, as are the related and not yet realized results. Unrealized losses are eliminated in the same way as unrealized protsunlessthereisanindicationofimpairment. FOREIGN CURRENCY Transactionsincludedinthenancialstatementsofeach of the Group's subsidiaries are measured using the currency of the primary economic environment in which the subsidiary operates. Transactions in foreign currency are translated to the functional currency using the foreign exchange rate at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the exchange rate at the balance sheet date. Foreign exchange dierencesresultingfromtranslationintothefunctional currency are recognized in the Income Statement. Assets and liabilities of Group companies with a functional currency other than the euro are translated using the foreign exchange rate at the balance sheet date. The Income Statement for these Group companies is translated at the average exchange rate during the nancialyear.Foreignexchangeratedierencesare recognized in unrealized results and the foreign currency translation reserve. On sale or termination of an operation outside the Eurozone, the amount concerned is transferred from Equity to the Income Statement as part of the gain or loss on sale or termination. The principal exchange rates against the euro used in preparing the balance sheet and the statement of income are: Exchange Rates Used in EUR Balance Sheet Income Statement March 31, 2022 March 31, 2021 2021/ 2022 2020/ 2021 US dollar 1.11 1.17 1.16 1.17 British pound 0.85 0.85 0.85 0.89 Canadian dollar 1.39 1.48 1.46 1.54 Mexican peso 22.09 24.11 23.61 25.25 REVENUE RECOGNITION Revenues from contracts with customers are recognized by identifying the contract and its performance obligations as well as determination and allocation of the transaction price to these performance obligations. Revenues are recognized for each performance obligation when the control of goods or service have been transferred from Holland Colours to the customer at a point in time based on the contract. This is normally when the goods have arrived at the customer. The revenue is measured at the fair value of the transaction price received. This means the revenue is recognized net of rebates, discounts and similar allowances and net of sales tax. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 89 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS Grants Government grants related to costs (which include grants related to COVID-19) are deducted from the relevant costs to be compensated in the same period. Government grants to compensate for the cost of an asset are deducted from the cost of the related asset. Finance Income and Expense Finance Income and Expense include the income and expenses on lent and borrowed funds and interest charges on lease payments. Finance Income and Expense is recognized in the Income Statement under Finance Income and Expense if no hedge accounting is applied. Income Tax Income Tax Expenses compromises both current and deferredtax,includingtheeectsofchangesintaxrates. The tax amount is calculated on the basis of the tax rates and tax legislation as applicable on the reporting date in the countries in which the Group operates and generates income subject to taxation. Current income tax relating to items recognized directly in Equity is recognized in Equity and not in the Income Statement. Uncertain tax positions mayexistduetointerpretationdierencesofapplicable tax regulations. Current tax receivables and liabilities for the current period are measured at the amount expected to be reclaimed from or paid to the tax authorities. Earnings per Share Earnings per ordinary share are calculated as the Net Result attributable to holders of ordinary shares, divided by the weighted average number of outstanding shares in the period concerned. PRINCIPLES FOR THE VALUATION OF ASSETS AND LIABILITIES General The valuation principles are primarily based on valuation of the assets and liabilities at historical cost. Osetting Financial Instruments FinancialAssetsandLiabilitiesareosetinthe consolidated balance sheet only in situations of an actual legallyenforceablerighttoosettheamountsrecognized, and only if it is the intention to settle these amounts on a net basis or simultaneously. Intangible Assets Costs of Development Activities are capitalized if the product or process is technically and commercially feasible,theGrouphassucientresourcestocomplete its development, and it is expected that the product or process will generate future gains. The capitalized expenses comprise direct labor cost and a surcharge for overhead costs, to the extent that these are attributable to the project. All other research and development costs are stated as an expense in the Income Statement at the time they are incurred. Capitalized Development Costs are valued at cost, less accumulated amortization and impairments, if applicable. Amortization costs are charged to the Income Statement overtheirestimatedusefullife,whichistypicallyveyears. Intangible Assets are assessed for impairment if there are events or indications that an intangible asset might be subject to a loss in value. The amortization period and method for an intangible asset with a measurable useful life are assessed, at the very least, at the end of each nancialyear.Changesintheexpectedusefullifeofan asset or in its expected pattern of future economic benetsareaccountedforbychangingtheamortization period or method and are treated as changes in accounting estimates. Other Intangible Assets The Other Intangible Assets consist of the costs of computer software and licenses, plus the external costs related to their implementation and commissioning. Other Intangible Assets are measured at historical cost; that is, the acquisition price or production cost less cumulative amortization and any applicable impairments. Amortization Amortization of Intangible Assets is charged to the Income Statement according to the straight-line method. The basis applied is the estimated useful life of each component within an item that falls into the Development Costs and Other Intangible Assets category. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 90 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS The estimated useful life is as follows: Development Costs 5 years Other 3-5 years Property, Plant and Equipment Property, Plant and Equipment are stated at cost less accumulated depreciation, based on the estimated useful life of the assets concerned and impairment losses. The costs of assets produced in-house comprise material costs, direct labor cost and an appropriate portion of the directly attributable overhead costs. Finance costs are added to the costs of Property, Plant and Equipment if these meet the conditions for recognition in the balance sheet.IfsignicantpartsofProperty,PlantandEquipment must be replaced at regular intervals, the Group recognizes these as separate assets with their own useful life and depreciation method. All other repair and maintenance costs are recognized in the Income Statement at the time they occur. Property, Plant and Equipment are assessed for impairment if there are events or indications that an item may have lost value. The depreciation period and method for Property, Plant and Equipment with a measurable useful life is assessed, at the very least, at the end of each nancialyear.Changesintheexpectedusefullifeof an asset, or in its expected pattern of future economic benets,areaccountedforbyadjustingeither the depreciation period or method. These are treated as changes in accounting estimate. Financial Non-Current Assets Loans and receivables for which the maturity date is more than 12 months after the balance sheet date are presented as Financial Non-Current Assets. On initial recognition, these are measured at fair value less directly attributable transaction costs. After initial recognition, interest-bearing loans are valued at amortized cost using theeectiveinterestratemethod,lessanyimpairment. Gains or losses arising from changes in the amortized cost are accounted for in the Income Statement under Finance Expense. Right-of-Use Assets We assess at inception whether a contract is, or contains, a lease. A contract is or contains a lease if the contract conveystherighttocontroltheuseofanidentiedasset for a period of time in exchange for a consideration. Leases are recognized as Right-of-Use Assets on the balance sheet under Non-Current Assets. The related lease liability is recognized as an obligation on the balance sheet under Non-Current Liabilities and Current Liabilities. The Group applies judgement in evaluating the term of lifetime of a lease. A judgement has to be made whether it is reasonably certain to exercise an option to renew or terminate a lease. The non-cancelable term of the lease is then determined based on these judgements. If the Group expects that the expiry date of the current contract will not in fact be the actual end date, the lease obligation is determined to include extension periods. The Group uses the practical expedients to apply a single incremental borrowing rate per portfolio of leases. Leases of low-value objects and non-lease components are excluded for buildings. Non-lease components do not apply to vehicle fuel costs, because fuel costs do not form part of the lease term. The Group uses the implicit interest rate when available. If not, the Group uses an Incremental Borrowing Rate (IBR) to measure the lease liabilities. The IBR is the rate of interest that the Group would have to pay to borrow the necessary funds, over a similar term and with a similar security, to obtain an asset of similar value to the Right-of-Use Asset in a similar economic environment.TheIBRthereforereectswhattheGroup ‘would have to pay.‘ This necessitates estimating when no observable rates are available or when rates need to be adjustedtoreectthetermsandconditionsofthelease. The Group estimates the IBR based on observable inputs (such as market interest rates) and is required to make certainentityspecicestimates.Forthisnancialyearthe weighted average IBR is 4.1%. Right-of-Use Assets are depreciated using the straight-line method over the lifetime of the object, in line with the duration of the contract. The net present value of the obligation is calculated using the applicable discount rate for object and country. The periodical payments to the lessor, based on the lease contract, can be considered as repayments of the obligation. The depreciations costs are charged as Depreciation and Amortization, the service costs as Other Operating Expenses and the interest expenses as Finance Expense to the Income Statement. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 91 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS lease and rental agreements included in the standard for LeaseandRentalObligationsareclassiedas Right-of-Use Assets. Property, Plant and Equipment acquired by means of leases or rentals are, at the moment of capitalization, measured using the then net present value of the lease payments. The depreciation period for Right-of-UseAssetsreectsthedurationoftheunderlying lease or rental contract. The depreciation method is straight-line. The depreciation period and method for Right-of-Use Assets is assessed, at the very least, at the end of each nancialyear.Changesintheexpectedusefullifeof an asset or in its expected pattern of future economic benetsareaccountedforbyadjustingeitherthe depreciation period or method. These are treated as changes in accounting estimate. Low-value leases, below € 5,000 per underlying asset, are not recognized in the Right-of-Use Assets and Lease Liabilities. Lease payments on the lease of low-value assets are recognized as expensed on a straight-line basis over the lease term and recognized as general and administrativeexpensesinthestatementofprotorloss. Low-value leases are not recognized in the balance sheet. Depreciation Depreciation is charged to the Income Statement according to the straight-line method on the basis of the estimated useful life of each component of items of Property, Plant and Equipment. Depreciation is not applied to land. The estimated useful life is as follows: Buildings 25-40 years Machinery and Equipment 10 years Other Non-Current Assets 3-5 years Right-of-Use Assets 1-10 years The remaining useful life, residual value and depreciation method are assessed on an annual basis. Impairment of Non-Current Assets An asset is impaired if its realizable value is less than its carrying amount. Non-current assets are assessed on an annual basis for indications of impairment per location. If there are such indications, or events, the realizable value of the asset concerned is estimated based on either its directly realizable value or its value in use to the company. The impairment test is primarily based oncashowforecastsofveyears.Elementsconsidered todetermineifadierentapproachwouldbemore appropriate are, among others, high growth/emerging economies, geographical expansion opportunities and theintroductionofnewproductlines.Thecashow forecastiscalculatedwiththeexpectedfreecashow and discounted to the present value using a weighted average cost of capital of 8% for the Group. Sensitivity tests are performed for growth assumptions, scenario- basedadjustmentstothefreecashowforecastandfor the weighted average cost of capital. An impairment loss is reversed if there is a change to the estimates used. The reversal is done to the extent that the carrying amount of the asset does not exceed the carrying amount that would have been the case if no impairment had been recognized – so after deduction of the then applicable depreciation. Deferred Income Tax A receivable is recognized for deferred tax positions, or a provision is formed for this, using the balance sheet methodfortemporarydierencesbetweenthecarrying amountofassetsandliabilitiesfornancialreporting purposes and the carrying amount of these items for tax purposes. The carrying amount of Deferred Tax Assets is assessed at reporting date and reduced if and when it is unlikely thatsucienttaxableprotwillbeavailabletoabsorb thesetemporarydierencesand/orchangesincurredto the assessment base (such as a change in the corporate tax rate). Deferred Tax Assets not recorded are reassessed at reporting date and recorded when deemed realizablebasedonexpectedfuturetaxableprots. Deferred Tax Assets and Liabilities are valued at the tax rates and under the tax law that has been substantially enacted at the balance sheet date and which are expected to apply in the period in which the asset is realized or the liability is settled. Under certain circumstances, current and deferred tax isrecognizedoutsideprotorlosseitherinOther Comprehensive Income or directly, in Equity, depending on the item the tax relates to. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 92 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS The estimated selling price is based on actual selling prices and the recent sales history information per product. Aging of products is tracked and based on and in line with the aging management estimates of the risk of obsolescence and this is used to adjust the valuation of the inventory accordingly. Trade and Other Receivables Trade and Other Receivables are recognized initially at fair value and subsequently at amortized cost. A provision for non-collectability is established based on expected credit loss. The Group measures the expected credit losses allowance for its trade receivables for the whole lifetime of the receivables(simpliedapproach).Tomeasurethe expected credit losses, trade receivables have been grouped based on shared credit risk characteristics. Ifthesedierencesaresubstantial,theyaregrouped based on days past due and security, when applicable. The expected loss rates are based on the historical paymentprolesofsalesofthelastveyearsandthe corresponding historical credit losses experienced within thisperiod.Thehistoricallossratesareadjustedtoreect current and forward-looking information when these wouldaecttheabilityofcustomerstosettlethe receivables. Management assesses forward looking informationinrelationtothespecicmarketinwhich itoperates.Baddebtsarewrittenoentirelyonce the inability to collect has been established with certainty. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure to make the contractual payments for a period longer than the local applicable payment term, or a trade debtor has nancialdiculties,oratradedebtorisunabletoengage in a repayment plan with the Group. Cash and Cash Equivalents Cash and Cash Equivalents comprises cash balances and short-term deposits that are available on call. Cash andCashEquivalentsarenancialinstrumentsthatare classiedasmeasuredatamortizedcost. Dividends Dividends payable to shareholders are recognized as aliabilitytoshareholdersoncetheproposedprot appropriation has been approved by the Annual General Meeting of Shareholders. Employee Benet Obligations Holland Colours Group has a number of pension plans in accordance with local conditions and practices. The voluntarily pension plans of the subsidiaries are in line with local legislation and regulation and are included in thenancialstatementsasdenedcontributionplans. These involve the payment of predetermined premiums to an insurance company. The terms of these pension plans mean that Holland Colours Group has no legal or factual obligation to pay additional premiums if the insurance companyhasinsucientmeanstofundcurrentorfuture pensions. DeferredTaxAssetsandLiabilitiesareosetif,andonlyif, thereisalegallyrecognizedrighttosetocurrenttax assets and liabilities, and the Deferred Tax Assets and Liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity, or dierenttaxableentitieswhichintendtosettlecurrenttax liabilities and assets on a net basis, or to realize the assets and settle the liabilities simultaneously, in each future periodinwhichsignicantamountsofdeferredtax liabilities or assets are expected to be settled or recovered. There is a degree of uncertainty around the correct interpretation of complex tax regulations and the amount andtimingoffuturetaxableprots. Given the huge diversity of international business relations, discrepancies between the assumptions made and the actual outcomes, or future changes in such assumptions, this could lead to future changes in the tax payments and returns already recognized. Inventories Inventories are measured at the lower of cost and net realizable value. The cost price for inventories is based on theFIFOprinciple(rstin,rstout).FinishedGoodsis valued at production cost including costs of raw materials and a surcharge to direct and indirect production costs. This valuation is based on normal capacity, or at realizable value if lower. The net realizable value compromises the estimated selling price in the normal course of the business, less the estimated cost for completion and estimated costs necessary to make the sale. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 93 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS Other Employee Benets The termination of the pre-pension plan (including the transitional arrangement) for employees in the Netherlands hasledtotheoriginallyagreedconditionalnancingofpast service years being converted into an annual payment of the same amount. This is also conditional. The most important conditions for this payment are that an employee must still be in the company’s service at the time of the annualpaymentandthattheGroup’snancialresultsare assessedbytheBoardofManagementasbeingsucient to cover this payment. The Group has included a provision for this future liability, which will end in September 2037. Any revaluation of this future liability is recognized in the protandlossaccount. The Group has also included a provision for other long- termobligationsregardingEmployeeBenets.These include jubilee payments, which are earned by employees for their service in the current and previous reporting periods. The obligations are calculated partly on the basis of actuarial principles and based on a discount rate of (0.6%) (2020/2021 (0.6%)) in accordance with the IBoxx Index Government bonds. They are recognized under Non- Current Liabilities. The expenses are reported in the Income Statement under Personnel Expenses. All assumptions are reassessed at balance sheet date. Provisions A provision is recognized in the balance sheet when there is a present obligation (legal or constructive) for the Group as a result of a past event and it is probable that an outowofeconomicbenetswillberequiredtosettlethis obligation and a reliable estimate can be made of the amount of the obligation. Provisions for restructuring of activities are recognized when a detailed and formal restructuring plan has been approved, and the restructuring has either commenced or has been announced publicly. We do not provide for future operating costs. Lease Liabilities The obligation arising from lease and rental agreements is classiedasLeaseLiabilitiesonthebalancesheet.Lease Liabilities that run longer than 12 months are recognized under Non-Current Liabilities. Lease Liabilities shorter than 12 months are recognized under Current Liabilities. The estimated value of the liability is the calculated net present value of the remaining periodical payments as included in the contract. Applicable discount rates have been determined for each object and country of the lease portfolio for the calculation of the net present value. Trade and Other Payables Trade and Other Payables are recognized initially at fair value and subsequently measured at amortized cost. Determination of Fair Value Certain accounting policies as well as disclosures by the Grouprequirefairvalueassessmentsofnancialand non-nancialassetsandliabilities.Furtherinformationon the principles used in these assessments is provided in thenotesrelatingtothespecicassetorliability. Long-Term Receivables Long-termReceivablesatxedandvariableinterestrates are assessed by the Group on the basis of factors such as the applicable interest rate and the borrower’s individual creditworthiness. When necessary, a provision is formed for losses expected on these receivables on the basis of this assessment. As at March 31, 2022, the carrying amount of these receivables did not vary materially from their fair value. Trade and Other Receivables The fair value of Trade Debtors and Other Receivables is estimatedasthenetpresentvalueoffuturecashows, based on market interest rates as at the reporting date. This fair value is determined for informative purposes. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 94 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 4. FinancialRiskManagement As part of the normal conduct of its business, the Group is exposedtoavarietyofnancialriskssuchascurrencyrisk, credit risk, liquidity risk, interest risk and capital risk. In terms of risk management policy, it is recognized that thenancialmarketsarevolatileandthattheaimshould betolimitthepotentialnegativeeectsofthisonthe Group’snancialresultsasmuchaspossible.TheBoard of Management is responsible for managing the risks associated with our activities and the establishment and adequate functioning of appropriate risk management and control systems. CURRENCY RISK The reporting currency of the Group is the euro. Being a global operation, the Group is exposed to a variety of foreign currencies. Currency risk arises from engaging in commercial transactions in non-functional currencies (mainlyUSD).HollandColoursaimstolimittheeectof transaction-related exchange-rate exposure on the Group by preferring to invoice in the functional currency of the supplying entity, which in most cases is regional. Currency hedging on outstanding AR or projected sales is not in place. The Group participates in several foreign subsidiaries of which the net equity is mainly USD nominated. This is subject to currency translation risk in the consolidation process. The impact varies over the years and is complicated to mitigate due to the long-term uctuationsintheEUR-USDrate.Thisriskismonitored but not hedged. Thetablebelowshowsthesensitivityofthenetresultaftertaxandtheequity(includingtranslationeects) to the US dollar with all other variables kept constant: 2021/2022 2020/2021 Increase EUR-USD 10% Decrease EUR-USD 10% Increase EUR-USD 10% Decrease EUR-USD 10% Net Result (544) 634 (813) 674 Equity (2,847) 3,627 (2,479) 3,052 Inrelativeterms,thevariouscurrenciesaectedtheGroup’snetsalesandexpensesasfollows: Revenue Expenses 2021/2022 2020/2021 2021/2022 2020/2021 Euro 47% 46% 41% 43% USdollar 37% 39% 32% 43% Other 16% 15% 27% 14% Total 100% 100% 100% 100% There is no insurance for credit risk in place. The cash transactionsareexecutedwithcreditworthynancial institutions. LIQUIDITY RISK Liquidity risk is the risk that Holland Colours is unable to meet its obligations when they are due. Holland Colours’ policy with regard to liquidity risk is to ensure to the best ofitsabilitythatsucientcommittedcreditfacilitiesare available to meet its payment obligations in time, in both normal and exceptional situations. The Trade and Other liabilities all fall due within one year. CREDIT RISK CreditriskistheriskofnanciallossbytheGroupinthe event a customer fails to meet their contractual obligations. Credit risk mainly arises from receivables from customers. Holland Colours follows an active policy to minimize credit risk. This policy includes strict internal guidelines regarding overdue payments, the use of sales information systems, the consultation of external sources and, where necessary, requesting security for payment. Due to its distribution over a large number of customers and geographical areas, there isnosignicantconcentrationofcreditrisk. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 95 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS TheGroupaimstomaintainexibilityinfundingby keeping credit lines available at a number of well-known nancialinstitutions.Onthebasisofcashowforecasting models, the Group tests whether the available credit facilities will cover the expected credit need. Based on the analysis, the Group believes that the current expected creditneediscoveredsuciently. INTEREST RATE RISK Attheendofthescalyear,therewerenocurrentor non-currentborrowings.AstheGrouphasnosignicant interest-bearing assets and liabilities, the direct impact of changes in the market rates to the Group’s income and operatingcashowislimited. CAPITAL RISK The policy of the Group regarding the capital structure of the company is based on the solvency ratio. The solvency ratio remains above 60% and is calculated by equity/total assets. Inaddition,theGroupaimstonanceitsactivitieswith equity. FAIR VALUE OF FINANCIAL INSTRUMENTS The Group applies the following hierarchy for determining anddisclosingthefairvalueofnancialinstrumentsby valuation technique: • Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities; • Level 2: Valuation techniques whereby the lowest-level input as significant for valuation at fair value is directly or indirectly observable; • Level 3: Valuation techniques whereby the lowest level input as significant for valuation at fair value is not observable. Changes in the fair value of the above-mentioned Financial Instruments, if accounted for at fair value, are recognized in the Income Statement unless hedge accounting is applied. The fair value of Financial Instruments is calculated on the basis of the net present value of the expected future cash owsbyvirtueofrepaymentandinterestpayments.The calculation is not based on observable market data. Trade and Other Receivables, Payables to Suppliers, Credit Institutions and Other Debt due to expire within one year areincludedinthenancialstatementsatamortizedcost. Theamortizedcostisconsideredtobeareectionoffair value due to the short duration. 5. CashFlowStatement Thecashowstatementispreparedusingtheindirect method.Cashowsinforeigncurrenciesaretranslated at transaction date. 6. SegmentInformation The Group is divided into geographical segments for management as well as business purposes. The segment informationcontainedinthenancialstatementsis therefore presented based on the organizational structure of the Group. In this, the three operating units each represent a region and the holding, under ‘Other‘ represents General Management, Innovation and Technology and other central functions. The Board of Management monitors the operating result of the geographic segments to facilitate the decision- making process in relation to the allocation of resources and the performance evaluation. The operating result of the segments is determined and based on the same accounting principles as the operating result shown in theconsolidatednancialstatements. The funding of the Group, including loan structure and dividend policy as well as the current income tax, deferred incometaxandcertainnancialassetsandliabilitiesare also not allocated to the segments since these items are supervised at Group level. Transfer prices for transactions and services between the operating segments are set on an arm’s-length basis. Revenue in the Netherlands accounted for 53% (2020/2021: 52%) and the USA accounted for 24% (2020/2021: 24%) of total revenue. There are no other signicantrevenueconcentrationsinspeciccountries. TheGroupcompaniesintheidentiedsegmentsareto some extent dependent on certain large customers. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 96 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS Segments 2021/2022 EMEIA Americas Asia Other Adjustments/ Elimi nations Total Revenue 58,489 37,622 14,354 – – 110,465 Intersegmental Transactions 1,195 38 – – (1,233) – Revenue including Intersegmental Transactions 59,684 37,660 14,354 – (1,233) 110,465 Depreciation, Amortization and Impairments (1,256) (722) (382) (254) (798) (3,412) Operating Result from Continued Operations 5,813 3,901 1,923 1,992 – 13,629 Financial Income – – – – 94 94 Financial Expense – – – – (86) (86) Tax – – – – (3,301) (3,301) Net Result – – – – 10,243 10,243 Non-Current Assets 10,853 6,318 4,251 59,572 57,447 23,547 Current Assets 26,543 18,461 10,032 2,178 (1,145) 56,069 Liabilities 17,005 3,996 3,087 4,016 (6,239) 21,866 Total Investments 2,141 809 324 74 (3) 3,345 Average Number of Employees (in FTE) 205 95 129 19 – 448 Segments 2020/2021 EMEIA Americas Asia Other Adjustments/ Elimi nations Total Revenue 48,929 32,236 14,864 – – 96,029 Intersegmental Transactions 902 29 – – (931) – Revenue including Intersegmental Transactions 49,831 32,265 14,864 – (931) 96,029 Depreciation, Amortization and Impairments (1,242) (707) (349) (313) (448) (3,059) Operating Result from Continued Operations 3,676 3,745 3,805 1,190 – 12,416 Financial Income – – – – 22 22 Financial Expense – – – – (97) (97) Tax – – – – (2,762) (2,762) Net Result – – – – 9,579 9,579 Non-Current Assets 10,024 5,940 3,822 52,093 (49,375) 22,505 Current Assets 20,230 16,264 7,516 2,134 76 46,220 Liabilities 14,182 3,781 2,291 3,297 (5,425) 18,126 Total Investments 1,388 406 159 1 – 1,954 Average Number of Employees (in FTE) 208 101 112 15 – 436 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 97 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 7. Revenue The table below shows the breakdown of Revenue per market segment. April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Building & Construction 52,310 42,632 Packaging 32,930 31,663 Coatings, Sealants & Adhesives 15,021 12,593 Other 10,204 9,141 Total Revenue 110,465 96,029 8. PersonnelExpenses The table below shows the breakdown for Personnel Expenses. April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Wages and Salaries (19,157) (16,987) Social Security (1,949) (1,943) Pension Costs (1,264) (1,009) Personnel Expenses (22,370) (19,939) Forthisnancialyear,anaccrualforprotsharingof€2,255isincluded(2020/2021: € 1,708). This is included under Wages and Salaries. All employees in the Group are eligible fortheprot-sharingplan.PaymentsdependontheGroup’sROIandtheoperatingresult of the division in which the individual employee works. The remuneration of the Board of Management and the Supervisory Board is shown inNote28:RelatedParties.Thepensioncostsrelatetodenedcontributionplans. Wagesandsalariesinthisnancialyearinclude€90ofgovernmentgrants (2020/2021: € 1,083, including € 1million COVID-19 assistance in the USA). Inthisnancialyear,theaveragenumberofemployeeswas448FTEs (2020/2021: 436 FTEs). 9. OtherOperatingExpenses The table below shows the main components of the Other Operating Expenses. April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Other Personnel (2,496) (2,610) Travel and Accommodation (939) (639) Maintenance (1,471) (1,288) Energy (1,446) (1,089) Consulting (2,414) (1,971) Materials (1,488) (1,154) Insurance (616) (560) Other Costs (1,356) (1,523) Other Operating Expenses (12,226) (10,834) FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 98 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 10. FinanceIncomeandExpense April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Finance Income 94 22 Finance Expense (180) (97) Finance Income and Expense (86) (75) 11. IncomeTax ThemaincomponentsoftheTaxchargeinthisnancialyearareshowninthetablebelow. April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Consolidated Income Statement Corporate Income Tax due this year: • Current Income Tax (3,329) (2,855) • Tax Incentive Programs, including Innovation Box 140 117 • Other Taxes, including Applied Withholding Tax (124) (107) Deferred Tax: • In relation to the existence and reversal of temporary differences 12 83 Income Tax recognized in the Consolidated Income Statement (3,301) (2,762) The Corporate Income Tax as recognized in the consolidated income statement amounted to € 3,301 versus € 2,762 the previous year. The deferred tax asset position increased by € 12 (this increased the previous year by € 83). The increase mainly related to the change intarisintheNetherlands.Pleasealsorefertonote15. The Other Taxes mainly relates to local applied Withholding Taxes on dividends and royalties paid to the company by the operating entities in Indonesia, Canada and Mexico. These accumulated charges are gradually applied against the Dutch corporate income tax. CalculationofeectivetaxratestartingatstatutorytaxrateintheNetherlands: April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Result before Income Tax 13,732 12,341 At the 25% rate applicable in the Netherlands (25.0%) (3,433) (25.0%) (3,085) Eectofdierenttaxratesincountries in which the Group operates 0.0% – 0.0% – Tax exempt income COVID-19 assistance 0.8% 104 2.0% 252 Adjustments of Tax recorded in previous years (0.4%) (51) 0.3% 32 Expenses not tax-deductible (0.4%) (61) (0.7%) (84) Tax incentive programs 1.0% 140 0.9% 117 Otherdierences 0.0% – 0.0% 6 (24.0%) 3,301 (22.5%) (2,762) FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 99 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 12. IntangibleAssets Development Costs Other Assets under Construction Total As at March 31, 2020 Cost 1,922 504 28 2,454 Accumulated Amortization (1,696) (478) – (2,174) Carrying Amount 226 26 28 280 Change in Asset Value Capital Expenditures – – – – Carrying Amount of Disposals Transfer – 28 (28) – Impairments Amortization (107) (17) – (124) ExchangeRateDierences – – – – Balance (107) 11 (28) (124) As at March 31, 2021 Cost 1,922 532 – 2,454 Accumulated Amortization (1,803) (495) – (2,298) Carrying Amount 119 37 – 156 Change in Asset Value Capital Expenditures – – – – Transfer – – – – Amortization (71) (16) – (87) ExchangeRateDierences – – – – Balance (71) (16) – (87) As at March 31, 2022 Cost 1,922 532 – 2,454 Accumulated Amortization (1,874) (511) – (2,385) Carrying Amount 48 21 – 69 The company’s total expenses for research and developmentwere€2,007inthenancialyear (2020/2021: € 2,390). The expenses are included under Personnel Expenses, Depreciation, Amortization and Other Operating Expenses. Due to the development structure of the research and technology department, the Group does not comply with all the criteria for capitalizing development costs in line with IAS 38,57. The amortization amounting to € 87 (2020/2021: € 124) is recognized under Amortization and Impairments in the consolidated Income Statement. Therewerenoimpairmentsinthisnancialyearinrelation to the capitalized development costs (2020/2021: nil). The Other Intangible Assets consist of the purchase price of computer software and licenses, as well as the external costs related to their implementation and commissioning. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 100 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 13. Property, Plant and Equipment Land and Buildings Machinery and Equipment Other Assets under Construction Total As at March 31, 2020 Cost 24,736 30,248 4,972 680 60,636 Accumulated Depreciation (14,795) (21,178) (4,265) – (40,238) Carrying Amount 9,941 9,070 707 680 20,398 Change in Asset Value Capital Expenditures 1,334 443 115 61 1,953 Transfer Assets under Construction 44 186 123 (353) – Transfer Cost between Categories 206 (206) – – – Transfer Cccumulated Depreciation between Categories (130) 130 – – – Disposal Cost Price (164) (883) (304) – (1,351) Disposal Accumulated Depreciation 128 779 303 – 1,210 Depreciation (682) (1,371) (257) – (2,310) ExchangeRateDierences (384) (144) (19) 1 (546 Balance 352 (1,066) (39) (291) (1,044) As at March 31, 2021 Cost 25,353 29,116 4,701 389 59,559 Accumulated Depreciation (15,060) (21,112) (4,033) – (40,205) Carrying Amount 10,293 8,004 668 389 19,354 Change in Asset Value Capital Expenditures 303 1,326 154 1,563 3,346 Transfer Assets under Construction 138 1,109 74 (1,321) – Disposal Accumulated Depreciation – (8) (19) – (26) Depreciation (676) (1,410) (228) – (2,314) ExchangeRateDierences 222 177 19 39 456 Balance (13) 1,194 0 281 1,463 As at March 31, 2022 Cost 26,016 31,720 4,930 670 63,335 Accumulated Depreciation (15,736) (22,522) (4,261) – (42,519) Carrying Amount 10,280 9,198 668 670 20,817 The capital expenditures include nil (2020/2021: nil) of capitalized Personnel Expenses. No impairments were occurred in thisnancialyear(2020/2021:nil),whilethe asset count led to Disposals. The Group has provided collateral to a maximum of € 789 (2020/2021: € 724) in the form of mortgage rights on buildings in Indonesia. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 101 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 14. Right-of-UseAssets The table below shows the movement of Right-of-Use Assets. These Assets consist of capitalized lease and rental contracts. Land and Buildings Machinery and Equipment Vehicles Other Total As at April 1, 2020 584 158 683 – 1,425 Change in Asset Value New Contracts 128 76 612 – 816 Depreciation (152) (62) (411) – (625) Other Adjustments – (63) 63 – – Balance (24) (49) 264 – 191 As at March 31, 2021 Carrying Amount 560 109 947 – 1,616 Change in Asset Value New Contracts 150 48 441 – 639 Depreciation (336) (59) (405) – (800) Other adjustments – – (208) – (208) Transfer – – – – – Balance (186) (11) (172) – (396) As at March 31, 2022 Carrying Amount 374 98 775 – 1,247 15. DeferredIncomeTaxAssetsandLiabilities DeferredIncomeTaxresultingfromtemporarydierencesbetweenthescaland commercial value of assets and liabilities is accounted for in the nominal tax rate applicable inthecountryconcerned,butonlyifitislikelytoberealizedfromfuturetaxableprots. This likelihood assessment is based on projections of the future taxable results of the relevant entities in the Group. These projections are partly based on approved budgets. The Deferred Tax Assets and Liabilities stated in the balance sheet can be attributed to the following items: April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Assets Liabilities Assets Liabilities Property, Plant and Equipment 301 250 297 189 Financial Non-Current Assets 203 – 219 – Inventories 173 – 151 – Other Receivables 238 – 245 – EmployeeBenets 351 – 342 – Other Assets/Liabilities 149 23 65 – Tax Loss Carry-Forward – – – – Balance of Assets and Liabilities 1,415 273 1,319 189 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 102 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Current 30 14 Non-Current 1,112 1,116 Deferred Tax Assets and Liabilities 1,142 1,130 Change in Net Deferred Tax April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Opening Balance 1,130 1,047 Recognized in Income Statement 12 83 Deferred Tax Assets and Liabilities 1,142 1,130 The deferred tax asset position increased by € 12 (2020/2021: € 83) due to changes in taris. 16. Inventory April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Raw Materials 13,639 7,173 Finished Goods 6,959 5,431 Inventory 20,598 12,604 The Income Statement includes an amount of € 54,594 (2020/2021: € 46,429) under the direct selling cost and raw materials for usage of inventory goods. At March 31, 2022, the provision for obsolete inventory amounted to € 1,016 (March 31, 2021: € 1,010). Movements in the provision for obsolete inventory are shown below. April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Opening Balance (1,010) (1,013) Additions to the Provision (89) (319) Withdrawals/Releases 114 299 ExchangeRateDierences (31) 23 Closing Balance (1,016) (1,010) Impairments charged to the provision relates to sales from inventory where provided for, or to disposal of obsolete inventory. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 103 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 17. TradeandOtherReceivables April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Trade Debtors 15,934 14,703 Tax-Related Receivables 830 907 Prepaid Items 1,381 1,037 Trade and Other Receivables 18,145 16,647 The Tax-Related Receivables relates to a VAT claim in Indonesia. The Group expects to receivetheclaiminfullinthenextnancialyear.TheagingspecicationofTradeDebtors is shown in the table below. March 31, 2022 March 31, 2021 Not yet due 14,665 13,589 Overdue 0-30 days 994 940 Overdue 31-60 days 238 84 Overdue 61-365 days (16) 38 Overdue 366 days or more 53 52 Total 15,934 14,703 Trade Debtors by Currency March 31, 2022 March 31, 2021 Euro 8,371 8,121 US dollar 6,124 5,198 British pound 530 420 Other Currencies 909 964 Total 15,934 14,703 Trade and Other Receivables with less than one year to maturity are recognized initially at fair value and subsequently at amortized cost. Additions to the Provision for Doubtful Debts are included in the Income Statement under Other Operating Expenses. The table below shows movements in the Provision for Doubtful Debts. April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Opening Balance (161) (191) Additions to the Provision 27 58 Releases from the Provision – – Write-oofTradeDebtors (26) (27) ExchangeRateDierences 4 (1) Closing Balance (156) (161) The table below shows the percentages used for expected credit losses on trade receivables. March 31, 2022 March 31, 2021 Not overdue 0.25% 0.26% 1 – 30 days overdue 1.00% 1.00% 31 – 60 days overdue 2.50% 2.50% 91 – 365 days overdue 5.00% 5.00% > 365 days overdue 100.00% 100.00% FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 104 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 18. CashandCashEquivalents March 31, 2022 March 31, 2021 Bank Balances 16,955 16,633 Cash Balances 4 5 Total 16,959 16,638 The Cash and Cash Equivalents are freely available to the company. The credit risk on Cash and Cash Equivalents is limited as the counterparties are generally banks with high credit ratings from international credit-rating agencies. 19. ShareCapital ISSUED SHARE CAPITAL The registered capital of Holland Colours NV is € 6,810 divided into 3,000,000 ordinary shares with a face value of € 2.27 per share. Of this registered total, an amount of 860,351 shares are issued and fully paid up. The total issued share capital is € 1,953. There were no changestotheissuedcapitalineitherthe2021/2022orthe2020/2021nancialyear. SHARE PREMIUM RESERVE The Share Premium Reserve of € 1,219 is available for distribution to shareholders and is unchangedrelativetothelastnancialyear. 20. OtherReserves LEGAL RESERVE FOR FOREIGN CURRENCY TRANSLATION TheForeignCurrencyTranslationReserverelatestoallexchange-ratedierencesthat originatefromthetranslationofthenancialstatementsofthesubsidiarieswithafunctional currency other than the euro. This only applies to the non-monetary accounts. These translation results are directly allocated to Equity via Other Comprehensive Income. This practice was initiated on April 1, 2004, in accordance with the exception allowed in IFRS 1. LEGAL RESERVE FOR HEDGE Hedge accounting is applied to the net investment hedge of a USD 2.5 million loan that was redeemed as of March 2016. Hedge accounting results are included in Other Comprehensive Income until the net investment is sold. At that time, the results are recognized in the Income Statement. The net investment reserve is reduced by Deferred Taxes. LEGAL RESERVE FOR INTANGIBLE ASSETS Astatutoryreservefordevelopmentcostsisformedinthecompanynancialstatements, althoughnotspecicallyrequiredunderIFRS.ThisstatutoryreserveisformedwithinEquity tomaintainalignmentwithEquityinthecompanynancialstatements.Theabove- mentioned reserves may not be distributed freely to shareholders. Negative amounts reduce the amount available for distribution and positive amounts are non-distributable. 21. EarningsperShare Earningspershareallocatedtoshareholders(ordinaryanddiluted)inthisnancialyear amounted to € 11.83 (2020/2021: € 11.00). The calculation of the earnings per share at March 31, 2022 is based on the net result attributable to shareholders of € 10,179 (2020/2021:€9,471)andtheaveragenumberofsharesissuedinthisnancialyearof 860,351. The total number of issued shares did not change compared to March 31, 2021. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 105 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 22. Non-ControllingInterest This concerns a non-controlling interest at March 31, 2022 of 12% in the net asset value of PT Holco Indo Jaya (2020/2021: 12%). 23. CreditFacility The company does not have any long-term debt positions outstanding (March 31, 2021: also nil). Short-term funding needs are covered with access to current account credit facilities of € 7,899 per balance sheet date (March 31, 2021: € € 7,937 ). These facilities are provided by various international and local banks and have no expiration date. The amount drawn was nil at the March 31 balance sheet date for both 2022 and 2021. ThebankagreementsandcollateralprovidedinrelationtotheGroup’snancingis limited to mortgage rights on real estate in Indonesia with a maximum value of €789 (March 31, 2021: € 724). 24. LeaseLiabilities The Group recognized Lease Liabilities on the balance sheet. The table below shows the movement and breakdown of Non-Current and Current Lease Liabilities. April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Opening Balance 1,599 1,444 Lease Payments (679) (660) New Contracts 585 815 Other Adjustments (226) – Closing Balance 1,279 1,599 April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Non-Current Lease Liabilities 677 956 Current Lease Liabilities 601 643 Total 1,279 1,599 Maturityanalysis–contractualundiscountedcashows: March 31, 2022 March 31, 2021 Less than 1 year 640 75 Between 1 and 5 years 679 1,618 Longer than 5 years 2 – Total 1,321 1,693 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 106 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 25. EmployeeBenetObligations PRE-PENSION PLAN IN THE NETHERLANDS The pre-pension plan in the Netherlands relates to the obligation to issue a conditional annual payment. AsexplainedinNote3,theoriginallyagreedconditionalnancingofpastserviceyearsinthe pre-pension plan has been converted into an equivalent annual payment. This is also conditional. At March 31, 2022, the resulting liability amounted to € 236. On March 31, 2021, the liability was € 299. LEGAL LIABILITY ON TERMINATION OF EMPLOYMENT – INDONESIA This mainly relates to the legal liability to make a payout should the employment of Indonesian personnel be terminated. As of the reporting date, the primary actuarial assumptions were: March 31, 2022 March 31, 2021 Discount Rate 6.8% 7.0% Expected Return Fund Capital Expenditures 6.8% 7.0% Future Salary Increases 6.0% 6.0% Average Remaining Period of Employment 7.20 8.00 Assumptions relating to future mortality rates are based on published statistical data and mortality tables. The mortality table used is the TMI 2011 (2020/2021: TMI 2011) table with a correction factor varying for age and gender. The total expected long-term Return on Investment amounts to 6.8 % (March 31, 2021: 7.0%). OTHER EMPLOYEE BENEFITS TheOtherEmployeeBenetsitemalsoincludesaprovisionforfuturejubileepaymentsof € 332 (March 31, 2021: € 285) and other future payments of € 57 (March 31, 2021: € 11). MovementsintheEmployeeBenetObligationsareshowninthetablebelow. Pre- pension Plan the Netherlands Statutory Termination Employment Plan Indonesia Other Employee Benets Total As at March 31, 2020 392 537 292 1,221 Additions – 102 2 104 Withdrawals/Releases (93) (24) – (117) ExchangeRateDierences – (32) 1 (31) As at March 31, 2021 299 583 295 1,177 Additions – 200 134 324 Withdrawals/Releases (63) (223) (39) (325) ExchangeRateDierences – 9 – 9 As at March 31, 2022 236 569 389 1.194 Of this total, the following amounts have been accounted for under current liabilities: Pre- pension Plan the Netherlands Statutory Termination Employment Plan Indonesia Other Employee Benets Total As at March 31, 2022 39 – 49 88 As at March 31, 2021 21 – 63 84 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 107 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 26. TradeandOtherLiabilities March 31, 2022 March 31, 2021 Trade Creditors 10,458 7,739 Payables Regarding Other Taxes 371 505 Other Liabilities and Accruals 6,563 5,371 Trade and Other Liabilities 17,392 13,615 The Payables regarding Other Taxes relates mainly to sales tax. TheOtherLiabilitiesandAccrualsalsoincludesaprotsharetobepaidtoemployees of € 2,225 (March 31, 2021: € 2,048). FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 108 27. ContingentAssetsandLiabilities CAPITAL COMMITMENTS The Group had entered into capital commitments regarding Property, Plant and Equipment as at balance sheet date of € 2,089 (March 31, 2021: € 1,025). PURCHASE CONTRACTS The total commitment resulting from raw material purchase contracts was € 4,820 (March 31, 2021: € 2,977). 28. RelatedParties IDENTITY OF RELATED PARTIES The related parties can be divided into the relations between the Group and its subsidiary companies, the members of the Board of Management, Supervisory Board and the holding company Holland Pigments BV. REMUNERATION OF KEY OFFICERS OF THE GROUP ThekeyocersarethemembersoftheBoardofManagement. REMUNERATION POLICY The remuneration policy for the Board of Management, which consists of the Chief ExecutiveOcer,ChiefFinancialOcerandChiefTechnologyOcer,issetbythe Supervisory Board. A separate Remuneration Committee is in place. Holland Colours strives to pay remuneration in line with the market for a company of its size, and in proportiontoitsoverallsalarystructure.Theremunerationpackageconsistsofaxed elementandavariableelement.Fixedsalariesareadjustedannuallyinlinewithination. The variable payment for the Board of Management consists of a bonus plan based on achievingnancialandnon-nancialtargets.Thebonusisuptothreetimesthemonthly salary in the event that 100% of the targets are achieved. The Board of Management also participatesintheprot-sharingplan,underwhichHollandColourspaysupto1.5months’ salary.FortheBoardofManagement,theprot-sharingplandependsontheROIrealized by Holland Colours whereby 75% of this part of the bonus is paid in shares of Holland Pigments.Basedontheresultsforthe2021/2022nancialyear,theBoardofManagement will receive such a payment. For 2021/2022, the Board of Management partly achieved the bonus targets. An accrual for payout has been made. Thecompanydoesnotoeranoptionplan. The Group does not provide any personal loans, guarantees or advance payments to the members of the Board of Management or the Supervisory Board. ThecontractswiththeChiefExecutiveOcer,theChiefFinancialOcerandtheChief TechnologyOcerspecifyatermofappointmentoffouryearsandaseverancepayment which is in accordance with the recommendations of the Dutch Corporate Governance Code. OTHER DISCLOSURES IN THOUSANDS OF EUROS, UNLESS STATED OTHERWISE FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 109 NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS The breakdown of the remuneration for the Board of Management and Supervisory Board is listed in the table below. Board of Management Coen Vinke Tanja van Dinteren Eelco van Hamersveld Total 2021/2022 2020/2021 2021/2022 2020/2021 1 2021/2022 2020/2021 2021/2022 2020/2021 Fixed Salary 334 329 200 162 193 190 727 681 Pension Expenses 27 26 17 10 20 20 64 56 Variable Element 92 99 44 56 77 53 213 208 Non-Recurring Payment – – 96 – – – – – 453 454 357 228 290 263 1,100 945 Transactions with Key Ocers Otherthantheregularremuneration,notransactionswithkeyocerstookplaceduring thenancialyear. Other Interests of Members of the Board of Management Notransactionswereeectuatedduringthenancialyearwithpartiesinwhichanyof the Supervisory Board Members, Members of the Board of Management or their partners have an interest. Supervisory Board 2021/2022 2020/2021 Roland Zoomers 38 38 Gert-Hein de Heer 26 26 Aukje Doornbos 26 26 Jorrit Klaus 26 26 Total 116 116 The Annual General Meeting of Shareholders determines the remuneration of theSupervisoryBoardMembers.Thexedremunerationisintendedtobeinlinewith the market given the size of the company. Holland Pigments BV At the balance sheet date, the Dutch based investment company Holland Pigments BV held 434,644 (March 31, 2021: 434,054) shares in Holland Colours NV. Within Holland Pigments BV, employees collectively held approximately 25% of the shares of Holland Pigments BV. The costs incurred by Holland Pigments BV in connection to activities relating to the employee participation are partly reimbursed by Holland Colours NV, please refer to page 70 for a further description of the activities of Holland Pigments. An amount of €98wasaccordinglypaidtoHollandPigmentsBVinthe2020/2021nancialyear (2020/2021: € 91). At the balance sheet date, there was no outstanding material position with Holland Pigments BV. Receivables from and payables to Holland Pigments BV are not covered by commercial collateral, are non-interest-bearing and are settled in cash. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 110 1 Included for 10 months. NOTES TO THECONSOLIDATED FINANCIAL STATEMENTS 29. OtherDisclosures PROFIT-SHARING PLAN HollandColoursGroupoperatesaprot-sharingplanforitsemployees.Theplanis the same for all Group employees and may, depending on the ROI and operating result of the division, result in a payment of up to 1.5 months’ salary. Depending on the position of the individual employee, 25% to 75% of this payment is made in Holland Pigments BV shares, in recognition of the employee participation model. Settlement to the employees takesplaceafterthenancialstatementshavebeenadoptedbytheAnnualGeneral Meeting of Shareholders of Holland Colours. The applicable shares in Holland Pigments BV are purchased for the employee at the last calculated price of Holland Pigments BV shares. Theremainderoftheprot-sharingpaymentispaidincashtotheemployeesby Holland Colours NV after the relevant statutory deductions have been made. Aprot-sharingpaymentisapplicabletotheemployeesonthebasisoftheresultsinthe 2021/2022nancialyear. ThesharesheldbyHollandPigmentsBVinHollandColoursNVarespeciedbelow. 2021/2022 2020/2021 Number of Shares in Holland Colours NV held by Holland Pigments BV Situation at April 1 434,054 434,048 Purchased by Holland Pigments BV 590 6 Situation at March 31 434,644 434,054 In euros Share Price of Holland Colours NV at Balance Sheet Date 156.50 124.00 Value 68,021,786 53,822,696 EMPLOYEE NUMBERS Duringthe2021/2022nancialyear,thecompanyemployedanaverageof448FTEs (2020/2021: 436 FTEs). Of these, 128 FTEs (2020/2021: 137 FTEs) were employed in the Netherlands. SUBSEQUENT EVENTS Per April 1, 2022, Gaypa Srl has sold their shares (12.1%) in PT Holco Indo Jaya to Holland Colours NV. The estimated purchase price (consideration) of EUR 420 was based on the net equity value of the company at balance sheet date. According to the Sales and PurchaseAgreement,nalsettlementwillbebasedonthestatutoryaccountsofthe company, which are expected end of June 2022. Given the timing and circumstances, the initial accounting for business combinations has not been completed. No material goodwill or bad will is expected from this acquisition. Initial accounting for this business combination including purchase price allocation will take placeinnancialyear2022/2023. After Gaypa Srl has transferred its share to Holland Colours NV, the Shareholder Composition of Holco Indo Jaya will be as follows: • Holland Colours NV: 63.8% • PT Holland Colours Asia: 36.2% FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 111 COMPANY INCOME STATEMENT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2022 In thousands of euros Note April 1, 2021/March 31, 2022 April 1, 2020/March 31, 2021 Management Fees 9,639 7,130 Personnel Expenses 33 (3,524) (2,859) Amortization 35 (86) (123) Depreciation 36/37 (182) (189) Other Costs (3,514) (2,731) Operating Result 2,333 1,228 Interest Income 65 93 Interest Expenses (40) (28) Result before Tax 2,358 1,293 Income Tax 34 (553) (360) Result Subsidiaries 38 8,373 8,538 Net Result 10,178 9,471 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 112 COMPANY In thousands of euros Note March 31, 2022 March 31, 2021 Non-Current Assets Intangible Assets 35 68 154 Property, Plant and Equipment 36 1,185 1,161 Right-of-Use Assets 37 223 271 Financial Non-Current Assets 38 57,692 49,834 59,168 51,420 Current Assets Receivables from Group Companies 448 596 Other Receivables and Prepayments 172 188 Cash and Cash Equivalents 1,617 1,523 2,237 2,307 Total Assets 61,405 53,727 In thousands of euros Note March 31, 2022 March 31, 2021 Equity Share Capital 39 1,953 1,953 Share Premium Reserve 39 1,219 1,219 Statutory Reserves 39 (18) (1,633) Retained Earnings 39 43,998 39,248 Result for the Year 39 10,178 9,471 Total Equity 57,330 50,258 Non-Current Liabilities Lease Liabilities 41 134 193 EmployeeBenetObligations 42 24 21 158 214 Current Liabilities Payables to Group Companies 170 172 Lease Liabilities 41 118 147 Income Tax Liabilities 1,539 1,230 Other Liabilities and Accrued Income 2,090 1,706 3,917 3,255 Total Equity and Liabilities 61,405 53,727 BALANCE SHEET AS OF MARCH 31, 2022 BEFORE PROPOSED PROFIT APPROPRIATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 113 30. GeneralInformation ThecompanynancialstatementsarepartofthenancialstatementsofHollandColoursNV and are prepared in accordance with the legal requirements of Title 9, Book 2 of the Dutch Civil Code. Holland Colours NV applies the same accounting policies to the company nancialstatementsasthoseusedintheconsolidatednancialstatements.Thisisdone under the possibility given in Article 2:362, paragraph 8 of the Dutch Civil Code to apply. The only exception relates to the accounting standards relating to participations in Group companies. Investments in consolidated subsidiaries are measured at net asset value. The2021/2022companynancialstatementswerepresentedtotheSupervisoryBoardto beapprovedforpublicationonMay25,2022.Thenancialstatementswillbepresented to the Annual General Meeting of Shareholders for adoption on July 7, 2022. 31. SummaryofAccountingPrinciples Theaccountingpoliciesusedforthecompanynancialstatementsarethesameasthose usedfortheconsolidatednancialstatements.Unlessotherstandardsarestated, thereaderisreferredtothestandardsstatedintheconsolidatednancialstatements. 32. Subsidiaries INVESTMENTS IN SUBSIDIARIES Investments in subsidiaries and other companies over which the company has a controlling interest or exercises central management are measured at net asset value. The net asset value is based on the measurement of assets, provisions and liabilities, andthedeterminationofnetprotinaccordancewiththeaccountingpoliciesusedin theconsolidatednancialstatements. 33. PersonnelExpenses April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Wages and Salaries (3,115) (2,536) Social Security (200) (161) Pension Costs (209) (162) Total Personnel Expenses (3,524) (2,859) Theaveragenumberofemployeesinthecompanyinthisnancialyearwas19FTEs (2020/2021: 15 FTEs). For an explanation of the remuneration of management, please refertoNote28,RelatedParties,oftheconsolidatednancialstatements. 34. IncomeTax April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Current Tax Current Year (594) (511) Prior Years (72) (14) Deferred Tax 113 165 Total Income Tax (553) (360) NOTES TO THE COMPANY FINANCIAL STATEMENTS IN THOUSANDS OF EUROS, UNLESS STATED OTHERWISE FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 114 NOTES TO THE COMPANY FINANCIAL STATEMENTS 35. IntangibleAssets Development Costs Other Assets under Construction Total As at March 31, 2020 Cost 1,922 93 28 2,043 Accumulated Amortization (1,696) (70) – (1,766) Carrying Amount 226 23 28 277 Change in Asset Value Capital Expenditures – – – – Carrying Amount of Disposed Assets – – – – Amortization of Disposed Assets Amortization (107) (16) – (123) Balance (107) 12 (28) (123) As at March 31, 2021 Cost 1,922 121 – 2,043 Accumulated Amortization (1,803) (86) – (1,889) Carrying Amount 119 35 – 154 Change in Asset Value Capital Expenditures – – – – Transfer – – – – Amortization (71) (15) – (86) Balance (71) (15) – (86) As at March 31, 2022 Cost 1,922 121 – 2,043 Accumulated Amortization (1,874) (101) – (1,975) Carrying Amount 48 20 – 68 The company’s total expenses for research and developmentwere€1,542inthenancialyear (2020/2021: € 1,734). Of this amount nil (2020/2021: nil) is capitalized, whereas the remainder is reported under Other Income and Expenses after Tax in the company nancialstatements. The costs of Amortization and Impairments of € 86 (2020/2021: € 123) are included in the Amortization iteminthecompanynancialstatements. The Other Intangible Assets consist of the costs of computer software and licenses, and the external costs related to their implementation and commissioning. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 115 NOTES TO THE COMPANY FINANCIAL STATEMENTS 36. Property, Plant and Equipment Land and Buildings Machinery and Equipment Other Capital Assets Assets under Construction Total As at March 31, 2020 Cost 3,102 206 269 32 3,609 Accumulated Depreciation (2,024) (130) (213) – (2,367) Carrying Amount 1,078 76 56 32 1,242 Change in Asset Value Capital Expenditures – – – 1 1 Transfer Assets under Construction 32 – – (32) – Carrying Amount of Disposals – – – – – Transfer Cost between Categories 206 (206) – – – Transfer Accumulated Depreciation between Categories (130) 130 – – – Depreciation (42) – (40) – (82) Balance 66 (76) (40) (31) (81) As at March 31, 2021 Cost 3,340 – 269 1 3,610 Accumulated Depreciation (2,196) – (253) – (2,449) Carrying Amount 1,144 – 16 1 1,161 Change in Asset Value Capital Expenditures – – – 74 74 Transfer Assets under Construction 74 – – (74) – Depreciation (44) – (6) – (50) Balance 30 – (6) – 24 As at March 31, 2022 Cost 3,414 – 269 1 3,684 Accumulated Depreciation (2,240) – (259) – (2,499) Carrying Amount 1,174 – 10 1 1,185 The costs of Depreciation and Impairments of € 50 (2020/2021: € 82) are included in the Depreciation item inthecompanynancialstatements. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 116 NOTES TO THE COMPANY FINANCIAL STATEMENTS 37. Right-of-UseAssets The table below shows the movement of Right-of-Use Assets. These assets consist of capitalized lease contracts. Vehicles Total As at April 1, 2020 194 194 Change in Asset Value New Contracts 184 184 Depreciation (107) (107) Balance 77 77 As at March 31, 2021 Carrying Amount 271 271 Change in Asset Value New Contracts 83 83 Depreciation (131) (131) Balance (48) (48) As at March 31, 2022 Carrying Amount 223 223 38. FinancialNon-CurrentAssets TheFinancialNon-CurrentAssetscanbespeciedasfollows: March 31, 2022 March 31, 2021 Investments in Subsidiaries 50,280 42,329 Loans to Group companies and Deferred Tax Assets 7,412 7,505 Financial Non-Current Assets 57,692 49,834 The table below shows movements in the investments in subsidiaries. April 1, 2021/ March 31, 2022 April 1, 2020/ March 31, 2021 Opening Balance 42,329 38,221 Movements: • Result from Subsidiaries 8,373 8,538 • Change in Equity – (8) • Dividends Declared (1,692) (2,288) • Currency Translations 1,270 (2,134) Closing Balance 50,280 42,329 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 117 NOTES TO THE COMPANY FINANCIAL STATEMENTS Movements in the Loans to Group companies and Deferred Tax Assets are shown below. Deferred Tax Assets Loans to Group companies Total As at March 31, 2020 740 – 740 Additions 75 6,950 7,025 Withdrawals – (260) (260) As at March 31, 2021 815 6,690 7,505 Additions 20 400 420 Withdrawals (117) (396) (513) As at March 31, 2022 718 6,694 7,412 39. Equity ForaclaricationontheShareCapitalandSharePremium,aswellasthemovementof the Foreign Currency Translation Reserve, Hedge Reserves and Other Reserves, please refer to the Statement of Equity and to Notes 19 and 20 of the consolidated balance sheet, astherearenodierencesbetweencompanyEquityandconsolidatedEquity. PROPOSAL FOR THE APPROPRIATION OF PROFIT In compliance with Article 21 of the Articles of Association and the Dividend Policy as discussed in the Annual General Meeting of Shareholders of last year and set out on page75underInvestorRelations,itisproposedtoappropriatethetotalnetprotto theotherreserves.Theproposalforappropriationofprothasnotbeenincluded in the balance sheet. 40. CreditFacility The company has an available credit facility in the Netherlands of € 7,000 (March 31, 2021: € 7,000). Per end of March 2022, the company has not used this credit facility and no collaterals have been provided. 41. LeaseLiabilities The company recognized Lease Liabilities on the balance sheet. The table below shows the movement and breakdown of Non-Current and Current Lease Liabilities. April 1, 20201 March 31, 2022 April 1, 2020/ March 31, 2021 Opening Balance 340 199 Lease Payments (171) (43) New Contracts 83 184 Closing Balance 252 340 April 1, 20201 March 31, 2022 April 1, 2020/ March 31, 2021 Non-Current Lease Liabilities 134 193 Current Lease Liabilities 118 147 Total 252 340 FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 118 NOTES TO THE COMPANY FINANCIAL STATEMENTS Maturityanalysis–contractualundiscountedcashows: March 31, 2022 March 31, 2021 Less than 1 year 122 19 Between 1 and 5 years 140 330 Longer than 5 years – – Total 262 349 42. EmployeeBenetObligations Thisemployeebenetprovisionrelatestotheobligationtoissueaconditionalannual payment. TheliabilitiesregardingemployeebenetsalsoincludetheitemOtherEmployeeBenets. This relates to a provision for future jubilee payments of € 11 (March 31, 2021: € 12). MovementsintheEmployeeBenetObligationswereasfollows: Pre-pension Plan the Netherlands Other Employee Benets Total As at March 31, 2020 73 7 80 Additions – 9 9 Withdrawals (43) (4) (47) As at March 31, 2021 30 12 42 Additions 14 5 19 Withdrawals (11) (6) (17) As at March 31, 2022 33 11 44 The following amounts have been accounted for as current under Other Liabilities and Accrued Income: Pre-pension Plan the Netherlands Other Employee Benets Total As at March 31, 2022 19 5 24 As at March 31, 2021 16 5 21 43. AuditFees The fees listed below relate to the procedures applied to the company and its consolidated group entities by the independent auditor, PricewaterhouseCoopers, as referred to in Section 1, subsection 1 of the Audit Firms Supervision Act (‘Wet toezicht accountantsorganisaties-Wta’)foreign-basednetwerkrms,includingtheirtaxservices and advisory groups. 2021/2022 2020/2021 Audit of the Financial Statements 416 292 Other Audit Services – – Tax Services – – Other Non-Audit Services – – Audit Fees 416 292 The total costs of PricewaterhouseCoopers Accountants NV for their procedures in the Netherlands amount to € 271 (previous year: € 208). The remaining € 145 (previous year: € 84) were charged to the company by other PwC network entities. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 119 NOTES TO THE COMPANY FINANCIAL STATEMENTS 44. OtherDisclosures WRITTEN GUARANTEE Holland Colours NV has given a guarantee for its subsidiary Holland Colours Europe BV in accordance with Section 403, Title 9, Book 2 of the Dutch Civil Code, and according to Section 479A of the Companies Act on behalf of its subsidiary Holland Colours UK Ltd. Holland Colours NV has not issued any other written guarantee as security for the payment obligations of foreign companies. FISCAL UNITY The company forms a tax unity together with Holland Colours Europe BV with regard to income tax and sales tax. Both the company and its subsidiary are jointly and severally liable for tax payable by all companies that are part of the tax entity. SUBSEQUENT EVENTS Per April 1, 2022, Gaypa Srl has sold their shares (12.1%) in PT Holco Indo Jaya to Holland Colours NV. The estimated purchase price (consideration) of € 420 was based on the net equity value of the company at balance sheet date. According to the Sales and Purchase Agreement,nalsettlementwillbebasedonthestatutoryaccountsofthecompany,which are expected in end of June 2022. Given the timing and circumstances, the initial accounting for business combinations has not been completed. No material goodwill or bad will is expected from this acquisition. Initial accounting for this business combination including purchase price allocation will take placeinnancialyear2022/2023. After Gaypa Srl has transferred its share to Holland Colours NV, the Shareholder Composition of Holco Indo Jaya will be as follows: • Holland Colours NV: 63.8 % • PT Holland Colours Asia: 36.2 % Apeldoorn, May 25, 2022 Board of Management Supervisory Board Coen Vinke Roland Zoomers Eelco van Hamersveld Gert-Hein de Heer Aukje Doornbos Jorrit Klaus FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 120 Statutory Provisions regarding the Appropriation ofProts REGARDING THE APPROPRIATION OF PROFITS, THE ARTICLES OF ASSOCIATION STATE THE FOLLOWING: Article 21 Fromtheprotestablishedintheapprovednancialstatements,reservesareformedas determined by the Board of Management with the approval of the Supervisory Board. Theprotremainingafterthetransfertothereservesanddistributionasstatedin paragraph 1 is at the disposal of the Annual General Meeting of Shareholders, with due regard to the provisions of Section 105, Book 2 of the Dutch Civil Code. The Board of Management, with the approval of the Supervisory Board, is authorized to decide on the distribution of an interim dividend with due regard to the provisions of Article 105 Book 2 of the Dutch Civil Code. The dividend will be made payable within one month after it has been set, in the manner and at the place determined by the Board of Management.Claimsforprotdistributionexpireafteraperiodofveyearsfromthedate on which the dividends were made payable. A resolution regarding the disposal of any reserve may be adopted by the Annual General Meeting of Shareholders with due regard to the legal and statutory provisions. OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 121 HOLLAND COLOURS ANNUAL REPORT 2021/2022 121 Independent Auditor’s Report To: the general meeting and the supervisory board of Holland Colours N.V. REPORT ON THE FINANCIAL STATEMENTS 2021/2022 Our opinion In our opinion: • theconsolidatednancialstatementsofHolland Colours N.V. together with its subsidiaries (‘the Group’) giveatrueandfairviewofthenancialpositionofthe Group as at 31 March 2022 and of its result and cash owsfortheyearthenendedinaccordancewith International Financial Reporting Standards as adopted by the European Union (‘EU-IFRS’) and with Part 9 of Book 2 of the Dutch Civil Code; • thecompanynancialstatementsofHollandColours N.V. (‘the Company’) give a true and fair view of the nancialpositionoftheCompanyasat31March2022 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code. What we have audited Wehaveauditedtheaccompanyingnancialstatements 2021/2022 of Holland Colours N.V., Apeldoorn. The nancialstatementsincludetheconsolidatednancial statementsoftheGroupandthecompanynancial statements. Theconsolidatednancialstatementscomprise: • the consolidated balance sheet as at March 31, 2022; • thefollowingstatementsfornancialyearended March 31, 2022: the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidatedcashowstatement;and • thenotestotheconsolidatednancialstatements, comprisingsignicantaccountingpoliciesandother explanatory information. Thecompanynancialstatementscomprise: • the company balance sheet as at March 31, 2022; • thecompanyincomestatementforthenancialyear ended March 31, 2022; • thenotestothecompanynancialstatements, comprising the accounting policies applied and other explanatory information. Thenancialreportingframeworkappliedinthe preparationofthenancialstatementsisEU-IFRSandthe relevant provisions of Part 9 of Book 2 of the Dutch Civil CodefortheconsolidatednancialstatementsandPart9 of Book 2 of the Dutch Civil Code for the company nancialstatements. The basis for our opinion We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. We have further described our responsibilities under those standards in the section ‘Our responsibilities for the audit ofthenancialstatements’ofourreport. We believe that the audit evidence we have obtained is sucientandappropriatetoprovideabasisforour opinion. Independence We are independent of Holland Colours N.V. in accordance withtheEuropeanUnionRegulationonspecic requirements regarding statutory audit of public-interest entities, the ‘Wet toezicht accountantsorganisaties’ (Wta, Auditrmssupervisionact),the‘Verordeninginzakede onafhankelijkheid van accountants bij assurance- opdrachten’ (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (VGBA, Dutch Code of Ethics). Our audit approach We designed our audit procedures in the context of our auditofthenancialstatementsasawhole.Ourcomments and observations regarding individual key audit matters, our audit approach regarding fraud risks and our audit approach regarding going concern should be read in this context and not as a separate opinion or conclusion on these matters. Overview and context Holland Colours N.V. manufactures, distributes, and sells solid and liquid colour and additive concentrates. The Group is comprised of several components and we considered the scope and approach of our audit as set out OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 122 HOLLAND COLOURS ANNUAL REPORT 2021/2022 122 in the section ‘The scope of our Group audit.’ We paid specicattentiontotheareasoffocusdrivenbythe operations of the Group, as set out below. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the nancialstatements.Inparticular,weconsideredwherethe Board of Management made important judgements, for example,inrespectofsignicantaccountingestimatesthat involved making assumptions and considering future events that are inherently uncertain. In these considerations, we paid attention to, amongst others, the assumptions underlying the physical and transition climate-related risks. Innote3ofthenancialstatements,theCompany describes the areas of judgement in applying accounting policies and the key sources of estimation uncertainty. Given the estimation uncertainty, magnitude and the related inherent risks of material misstatement in the valuation of inventory, we considered this to be a key audit matter as set out in the section ‘Key audit matters’ of this report.Furthermore,weidentiedrevenuerecognitionas a key audit matter because of the various price agreements and terms and conditions for delivery of the product to customers. HollandColoursN.V.assessedthepossibleeectsof climatechangeonitsnancialposition,refertoannual report section ‘Corporate Social Responsibility’ (page 65-73) and ‘Risk Management’ (page 39). We discussed Holland Colours N.V.’s assessment and governance thereof with the Board of Management and evaluated the potential impact onthenancialpositionincludingunderlyingassumptions and estimates. Management also assessed the impact of the armed conictinUkraineonitsnancialposition.Inthereportof theBoardofManagement,managementreectsonthe risks and continues to monitor sanctions and the impact on the business. We discussed Holland Colours N.V.’s assessment, including underlying assumptions and estimates, with management and evaluated the potential impactonthenancialposition.Thepossibleimpactof sanctions is not considered to impact the key audit matters in 2021/2022. We ensured that the audit teams at both Group and component level included the appropriate skills and competences that are needed for the audit of an international manufacturing company. To increase the quality of the audit, we also included IT specialists in our team,who,workingcentrally,performedspeciedaudit proceduresonITandreportedthendingstothe component teams. The outline of our audit approach was as follows: Materiality Audit scope Key audit matters Materiality • Overall materiality: € 1,000,000 Audit scope • TheGroupconsistsofthreesignicantcomponents:HollandColoursEuropeB.V.,Holland ColoursAmericasInc,andPTHollandColoursAsiainIndonesia,andsixothernon-signicant components. • AttheheadoceinApeldoorn,theNetherlands,thePwCgroupengagementteamaudited Holland Colours N.V. and Holland Colours Europe B.V., and instructed the component auditors inIndonesiaandtheUSAtoperformanauditonthecompletesetofnancialinformation. • The PwC group engagement team instructed the component auditor in Hungary to perform speciedauditproceduresforgrouppurposes.Thisconsistedofattendinginventorycounts in Hungary. • Audit coverage: 90% of consolidated revenue, 92% of consolidated total assets and 90% ofconsolidatedprotbeforeincometax. Key audit matters • Revenue recognition • Assumptions in the valuation of inventory OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 123 Materiality Thescopeofourauditwasinuencedbytheapplication of materiality, which is further explained in the section ‘Ourresponsibilitiesfortheauditofthenancial statements’. Based on our professional judgement we determined certain quantitative thresholds for materiality, including theoverallmaterialityforthenancialstatementsasa whole as set out in the table below. These, together with qualitative considerations, helped us to determine the nature, timing and extent of our audit procedures on the individualnancialstatementlineitemsanddisclosures andtoevaluatetheeectofidentiedmisstatements, bothindividuallyandinaggregate,onthenancial statements as a whole and on our opinion. OTHER INFORMATION Overall group materiality € 1,000,000 (2020/2021: € 800,000). Basis for determining materiality We used our professional judgement to determine overall materiality. As a basis for our judgement, we used 0.9% of net revenue from continuing operations rounded to € 1,000,000. Rationale for benchmark applied We used revenue as the primary benchmark, a generally accepted auditing practice, basedonouranalysisofthecommoninformationneedsoftheusersofthenancial statements. From a stakeholder’s perspective, the long-term horizon and sustainable growtharereectedthroughtheconsiderationofrevenue.TheGrouphasastrategic focus on extending global market positions and the focus on revenue therefore makes revenueinitselfanimportantmetricforthenancialperformanceoftheGroup. Component materiality Based on our judgement, we allocate materiality to each component in our audit scope. The materiality allocated to the components is lower than our overall Group materiality. The range of materiality allocated across components was between € 480,000 and € 999,000. We also take misstatements and/or possible misstatements into account which, in our judgement, are material for qualitative reasons. We agreed with the Supervisory Board that we would reporttothemanymisstatementidentiedduringour audit above € 50,000 (2020/2021: € 40,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. The scope of our Group audit Holland Colours N.V. is the parent company of a group of entities.Thenancialinformationofthisgroupisincluded intheconsolidatednancialstatementsofHolland Colours N.V. We tailored the scope of our audit to ensure that we, in aggregate,providesucientcoverageofthenancial statements for us to be able to give an opinion on the nancialstatementsasawhole,takingintoaccountthe management structure of the Group, the nature of FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 124 operations of its components, the accounting processes and controls, and the markets in which the components of the Group operate. In establishing the overall Group audit strategy and plan, we determined the type of work required to be performed at component level by the Group engagement team and by each component auditor. Theauditprimarilyfocusedonthesignicantcomponents of the Group: Holland Colours N.V. (company only), Holland Colours Europe B.V., Holland Colours Americas Inc.,andPTHollandColoursAsia.Duetotheirsignicance withintheGroup,anauditofthecompletesetofnancial information was performed on these components. In total, in performing these procedures, we achieved the followingcoverageonthenanciallineitems: Revenue 90% Total assets 92% Prot before tax 90% For those remaining components we performed, among other things, analytical procedures to corroborate our assessmentthattherewerenosignicantrisksofmaterial misstatements within those components. The Group engagement team performed the audit work for Group entities Holland Colours N.V. and Holland Colours Europe B.V. For the components Holland Colours Americas Inc. and PT Holland Colours Asia, as well as for the stock count procedures relating to the inventory of Holland Colours Europe B.V. in Hungary, we used component auditors from the PwC network. These auditors are familiar with the local laws and regulations required to perform this audit work. Where component auditors performed the audit, we determined the level of involvement we needed to have in their work to be able to conclude whether we had obtainedsucientandappropriateauditevidenceas abasisforouropinionontheconsolidatednancial statements as a whole. We issued instructions to the component audit teams in our audit scope. These instructions included, amongst others, our risk analysis, materiality, and the scope of the work. We explained to the component audit teams the structure of the Group, the main developments that were relevantforthecomponentauditors,therisksidentied, the materiality levels to be applied, and our global audit approach. We held individual calls with each of the in-scope component audit teams both during the year and upon conclusion of their work. During these calls, we discussedanysignicantaccountingandauditissues identiedbythecomponentauditors,theirreports,the ndingsoftheirproceduresandothermattersthatcould beofrelevancefortheconsolidatednancialstatements. The Group engagement team performed the audit work ontheconsolidation,nancialstatementpreparation (including disclosures) and a number of more complex items. These included lease accounting and the going concern analysis. The group engagement team held virtual meetings with the component audit teams instead of physical visits due to COVID-19 related travel restrictions. For these virtual meetings more time was taken and we remotely reviewed selected working papers of the respectivecomponentauditorsandsucientinvolvement was achieved. The group engagement team perform the audit for the entities Holland Colours N.V. and Holland Colours Europe B.V. on site and held regular meetings with Group management. By performing the procedures outlined above at the components, combined with additional procedures exercised at Group level, we have been able to obtain sucientandappropriateauditevidenceontheGroup’s nancialinformation,asawhole,toprovideabasisfor ouropiniononthenancialstatements. Audit approach fraud risks Weidentiedandassessedtherisksofmaterial misstatementsofthenancialstatementsduetofraud. During our audit we obtained an understanding of the Group and its environment and the components of the internal control system. This included management’s risk assessment process, management’s process for responding to the risks of fraud and monitoring the internal control system and how the Supervisory Board OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 125 exercised oversight. We refer to section ‘Risk Management’ in the report of the Board of Management for management’s fraud risk assessment and section ‘Audit Committee’ of the Supervisory Board report in which the SupervisoryBoardreectsonthisfraudriskassessment. We evaluated the design and relevant aspects of the internal control system and in particular the fraud risk assessment, as well as the code of conduct, whistleblower procedures and incident registration. We evaluated the design and the implementation of internal controls designed to mitigate fraud risks and noted further enhancement and formalisation of controls and proceduresinthenancialyeartoamorematurelevel appropriate for the international footprint and size of the Group. We reported our observations to the Board of Management and the persons charged with governance. DuringthenancialyeartheBoardofManagement was informed by the local management in Indonesia of PT Holland Colours Asia about irregular commission payments to employees of customers. We refer to the section ‘Risk related events 2021/2022’ in paragraph ‘Risk management’ section in the report of the Board of Management and the ‘Audit Committee’ section in the report of the Supervisory Board. Furthermore, we refer to fraud risk 3 below for our audit work and observations regardingthisspecicfraudrisk.Aspartofourprocess of identifying fraud risks, we, in close co-operation with our forensic specialists, evaluated fraud risk factors and specicfraudrisksidentiedwithrespecttonancial reporting on fraud, misappropriation of assets and bribery and corruption. We evaluated whether these factors indicate that a risk of material misstatement due to fraud is present. Weidentiedthefollowingfraudrisksandperformedthe followingspecicprocedures: OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 126 Identied fraud risks Our audit work and observations Fraud risk 1 Management override of controls Management is in a unique position to perpetrate fraud because of management’s ability tomanipulateaccountingrecordsandpreparefraudulentnancialstatementsby overridingcontrolsthatotherwiseappeartobeoperatingeectively. That is why, in all our audits, we pay attention to the risk of management override of controls and in this context, we paid attention to: • The appropriateness of journal entries and other adjustments made in the preparation of the financial statements. • Potential biases in estimates. • Significant transactions, if any, outside the normal course of business. We evaluated the design of the internal control measures mitigating the risk of management override of controls and assessed the internal controls in the processes of generating journal entries,makingsignicantestimatesandbookingofrevenue.Wealsopaidspecicattention that access safeguards in the IT system supports segregation of duties. We assessed whether decienciesincontrolsmaycreateopportunitiesforfraud. We performed journal entry testing procedures based on the following criteria: unexpected account combinations which increases revenue or decreases costs and unexpected users. With respect to journal entries, we also tested transactions outside of the ordinary course of business. In addition, we tested manual consolidation adjustments. With regard to management’s accounting estimates, we evaluated key estimates and judgements for bias, including retrospective reviews of prior year’s estimates. We performed substantive audit proceduresforsignicantestimatessuchasvaluationofinventoryaswellasfornon- signicantestimates. We incorporated elements of unpredictability in our audit. We performed procedures related toagentsforthenon-signicantcomponentMexico. Ourauditproceduresdidnotleadtospecicindicationsoffraudorsuspicionsoffraud except for the matter described under fraud risk 3. OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 127 Identied fraud risks Our audit work and observations Fraud risk 2 The risk of fraudulent nancial reporting due to overstating revenue Given the listed status of Holland Colours N.V., its objective is to meet certain market and shareholder expectations, management bonuses and financial targets for management and based on a presumption that there are risks of fraud in revenue recognition, revenue recognition was subject to the risk of a material misstatement due to fraud. Above matters could lead to pressure on management to overstate revenue by recognising fictitious revenue transactions, affecting the assertion existence/occurrence. In addition to the audit procedures and observations mentioned at the key audit matter ‘Revenue recognition’ we performed the following procedures on the risk of overstating revenue by recognising ctitious revenue transactions, aecting the assertion existence/ occurrence: • We evaluated the design and implementation of the internal control system in the processes related to revenue reporting. • We selected journal entries and consolidation entries based on risk criteria and performed substantive audit procedures in which we also paid attention to significant transactions outside the normal course of business. No such transactions were identified. • We performed audit procedures on credit invoices after year end and on credit invoices during 2021/2022. • We performed substantive audit procedures to establish the accuracy and the occurence of revenue accounting. This involved reconciling a sample of invoices to order confirmations and/or any discount agreements, shipping documents, and bank receipts. • For our work on the existence/occurrence of revenue transactions we leveraged upon the related work performed for account receivable, such as the work on confirmations obtained from debtors. Our audit procedures did not lead to specic indications of fraud or suspicions of fraud with respect to the existence/occurrence of the revenue reported. OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 128 Identied fraud risks Our audit work and observations Fraud risk 3 The risk of bribery and corruption During 2021, the Company received indications that improper payments were made to employees of customers in Indonesia. As a response, the Company instructed external legal counsel to conduct an investigation and report on this matter. Based on the outcome of the investigation the Company prepared a remediation plan. Together with our forensic specialists we have evaluated the investigation with a focus on: • the scope of the investigation; • the expertise and objectivity of the external legal counsel; • the results and conclusion of the investigation; • the remediation actions and plans; and • assessing the impact on the financial statements. We, in conjunction with the component auditor in Indonesia, performed specic audit procedures on the accuracy and completeness of the data used in the investigation. We have evaluated management’s assessment of whether similar payments have occurred in other divisions and components within the Group. The Company has disclosed the results of the investigation in section ‘Risk related events 2021/2022’ in paragraph ‘Risk management’ section in the report of the Board of Management and the ‘Audit Committee’ section in the report of the Supervisory Board. We have obtained sucient appropriate audit evidence that the Company responded appropriately to the signals of improper payments including remedial actions. OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 129 During the audit we remained alert to other indications of fraud. We also considered the outcome of our other audit proceduresandevaluatedwhetheranyndingswere indicative of fraud or non-compliance of laws and regulations.Wheneverweidentiedanyindicationsoffraud, we re-evaluated our fraud risk assessment and its impact on our audit procedures. Audit approach going concern TheBoardofManagementpreparedthenancial statements on the assumption that the entity is a going concern and that it will continue its operations for the foreseeable future. Our procedures to evaluate management’s going concern assessment include, amongst others: • Considering whether management’s going concern assessment includes all relevant information of which we are aware as a result of our audit and considering whether management identified events or conditions that may cast significant doubt on the entity’s ability to continue as a going concern (hereafter: going concern risks); • Evaluating the Company’s existing on-balance and off-balance obligations; • Evaluating management’s current budget including cash flows in comparison with last year; and • Performing inquiries of management as to their knowledge of going concern risks beyond the period of management’s assessment. Our procedures did not result in outcomes contrary to management’s assumptions and judgments used in the application of the going concern assumption. Key audit matters Key audit matters are those matters that, in our professional judgement,wereofmostsignicanceintheauditofthe nancialstatements.Wehavecommunicatedthekeyaudit matters to the Supervisory Board. The key audit matters are notacomprehensivereectionofallmattersidentiedby our audit and that we discussed. In this section, we described the key audit matters and included a summary of the audit procedures we performed on those matters. We addressed the key audit matters in the context of our auditofthenancialstatementsasawhole,andinforming our opinion thereon. We do not provide separate opinions onthesemattersoronspecicelementsofthenancial statements. Any comment or observation we made on the results of our procedures should be read in this context. We have determined the matters described below to be the key audit matters to be communicated in our report. OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 130 Key audit matter Our audit work and observations Revenue recognition The accounting principles for revenue recognition are included in “Summary of accounting principles” (note 3) in the nancial statements. Revenueisrecognisedwhenaperformanceobligationissatisedbytransferringcontrol over a promised good or service. A contract with a customer generally has one performanceobligation,whichissatisedatacertainpointintime. The Group applies price agreements per customer and various terms and conditions for delivery of its products to customers. Given the variety in terms and conditions for delivery, determining the timing of transfer of control of the promised goods is inherently complex andduetothemagnitude,thenumberoftransactionsandtheclientspecicprice agreements, this could potentially lead to materially misstated revenue. Based on the above considerations we considered this area to be a key audit matter. We updated our understanding of the Group’s revenue recognition policies and where relevanttoouraudit,weassessedthedesignandeectivenessoftheinternalcontrol measures related to revenue reporting and in the processes for generating and processing journal entries related to the revenue. Weevaluatedthedesignandtestedtheoperatingeectivenessofthecontrolactivitieson the exception report to ensure the accuracy and existence of revenue recognition. In this exception report, created by the Group, deviations between order prices and invoiced prices andshippedquantitiesandinvoicedquantitieswereidentied,explained,andfollowedup. We obtained the exception report and, together with IT specialists, assessed the reliability ofthereportbyreconcilingtheexceptionreporttothenancialadministration. We reperformed the analysis and evaluated the outcome and the follow-up by the Group. Furthermore, we performed substantive audit procedures to establish the accuracy of revenueaccounting.Thisinvolvedreconcilingasampleofinvoicestoorderconrmations and/or any discount agreements, shipping documents, and bank receipts. Withrespecttothecut-o,weobtainedtheGroup’srevenuerecognitionanalysis.Wethen tested the mathematical accuracy and the reliability of the underlying data by reconciling the analysis to the invoiced revenue in the last period, and the revenue adjustment to the journal entry recorded. In addition, we tested a sample of the sales transactions in the period immediately before and after the Company’s year end. We did this by tracing the information relatedtothedateoftransferofcontroltoshippingdocumentsandclientspeciccontractual terms and conditions. The audit procedures were performed by the Group engagement team or by the component teams in Indonesia and the USA. Ourproceduresdidnotindicatematerialndings. OTHER INFORMATION FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 131 Key audit matter Our audit work and observations Assumptions in the valuation of inventory The Board of Management’s assumptions are included in note 16 of the nancial statements Withavalueof€20,6million(2020/2021:€12,6million),inventoryisoneofthesignicant assets of the Group. Due to its nature, it is subject to market developments that require management judgement. This management judgement especially relates to the valuation ofrawmaterialsthataresubjecttoobsolescenceduetochangingrecipes,andtonished goodsthatareproducedforspecicclients(includingthesurchargeforoverhead).Atyear end,thisisreectedinthevaluationagainstthenetrealisablevalue,throughrecognition of an inventory allowance of € 1 million. Marking products as (partly) obsolescent is based on an inventory report and the assessment whether inventory will be sold, which requires management’s judgement. Inaccuratepricingand/orobsolescenceassessmentmay,giventhesignicantbalance of inventory, result in the inventory being materially misstated. Therefore, we considered this to be a key audit matter. As part of our risk assessment procedures, we performed look-back procedures to assess the qualityofmanagementestimates.Thisinvolvedcomparingtheactualwrite-osinthecurrent nancialyeartotheinventoryallowanceinpreviousyears’nancialstatements. We also performed substantive audit procedures on the calculation of the standard cost prices against which the inventory is initially valued. This included testing a sample of componentsinthestandardcostpriceofnishedgoodsbyreconcilingtherawmaterial component to purchase invoices. In addition, we tested the surcharge for overhead by performing analytical procedures. Here, we compared our expectation with the actual surcharge for overhead included in the inventory valuation as of 31 March 2022. Furthermore,weperformedanoverallanalysisofprice-andeciencyvariancesrecorded duringtheyeartotesttheaccuracyofthecostingmethodusedfornishedgoods. We tested the reliability of the inventory ageing report together with IT specialists. This report is used by management to assess the ageing of the inventory. We challenged the Group’s assumptions related to the valuation per ageing category based onactualwrite-osandtheactualdevelopmentsininventoryageing.Wereviewedrevenue on product level for negative margins, which could indicate a lower market value, and discussed developments in the product portfolio and pricing. Ourproceduresdidnotindicatematerialndingswithrespecttoestimatesandjudgements in the valuation of inventory. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 132 REPORT ON THE OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT The annual report contains other information. This includes all information in the annual report in addition to the nancialstatementsandourauditor’sreportthereon. Based on the procedures performed as set out below, we conclude that the other information: • is consistent with the financial statements and does not contain material misstatements; • contains all the information regarding the directors’ report and the other information that is required by Part 9 of Book 2 and regarding the remuneration report required by the sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code. We have read the other information. Based on our knowledge and the understanding obtained in our audit of thenancialstatementsorotherwise,wehaveconsidered whether the other information contains material misstatements. By performing our procedures, we comply with the requirements of Part 9 of Book 2 and section 2:135b subsection 7 of the Dutch Civil Code and the Dutch Standard 720. The scope of such procedures was substantially less than the scope of those procedures performedinourauditofthenancialstatements. The Board of Management is responsible for the preparation of the other information, including the directors’ report and the other information in accordance with Part 9 of Book 2 of the Dutch Civil Code. The Board of Management and the Supervisory Board are responsible for ensuring that the remuneration report is drawn up and published in accordance with sections 2:135b and 2:145 subsection 2 of the Dutch Civil Code. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS AND ESEF Our appointment We were appointed as auditors of Holland Colours N.V. on 10 July 2014 by the Supervisory Board. This followed the passing of a resolution by the shareholders at the annual general meeting held on 10 July 2014. Our appointment has been renewed annually by shareholders and now represents a total period of uninterrupted engagement of 8 years. European Single Electronic Format (ESEF) Holland Colours N.V. has prepared the annual report, includingthenancialstatements,inESEF. The requirements for this format are set out in the Commission Delegated Regulation (EU) 2019/815 with regard to regulatory technical standards on the specicationofasingleelectronicreportingformat (these requirements are hereinafter referred to as: the RTS on ESEF). In our opinion, the annual report prepared in XHTML format, including the partially tagged consolidated nancialstatementsasincludedinthereportingpackage by Holland Colours N.V., has been prepared in all material respects in accordance with the RTS on ESEF. The Board of Management is responsible for preparing theannualreport,includingthenancialstatements,in accordance with the RTS on ESEF, whereby the Board of 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 is in accordance with the RTS on ESEF. Our procedures, taking into account Alert 43 of the NBA (Royal Netherlands Institute of Chartered Accountants), included amongst others: • Obtaining an understanding of the entity’s financial reporting process, including the preparation of the reporting package. • Obtaining the reporting package and performing validations to determine whether the reporting package, containing the Inline XBRL instance document and the XBRL extension taxonomy files, has been prepared, in all material respects, in accordance with the technical specifications as included in the RTS on ESEF. • Examining the information related to the consolidated financial statements in the reporting package to determine whether all required taggings have been applied and whether these are in accordance with the RTS on ESEF. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 133 No prohibited non-audit services To the best of our knowledge and belief, we have not provided prohibited non-audit services as referred to inarticle5(1)oftheEuropeanRegulationonspecic requirements regarding statutory audit of public-interest entities. Services rendered In addition to the audit, we have provided no services to the Company or its controlled entities for the period to which our statutory audit relates. RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS AND THE AUDIT Responsibilities of the Board of Management and the Supervisory Board for the nancial statements The Board of Management is responsible for: • the preparation and fair presentation of the financial statements in accordance with EU-IFRS and Part 9 of Book 2 of the Dutch Civil Code; and for • such internal control as the Board of Management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error. Aspartofthepreparationofthenancialstatements, the Board of Management is responsible for assessing the Company’s ability to continue as a going concern. Basedonthenancialreportingframeworksmentioned, theBoardofManagementshouldpreparethenancial statements using the going-concern basis of accounting unless the Board of Management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so. The Board of Managementshoulddiscloseinthenancialstatements anyeventandcircumstancesthatmaycastsignicant doubt on the Company’s ability to continue as a going concern. The Supervisory Board is responsible for overseeing the Company’snancialreportingprocess. Our responsibilities for the audit of the nancial statements Our responsibility is to plan and perform an audit engagementinamannerthatallowsustoobtainsucient and appropriate audit evidence to provide a basis for our opinion. Our objectives are to obtain reasonable assuranceaboutwhetherthenancialstatementsasa whole are free from material misstatement, whether due to fraud or error and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high but not absolute level of assurance, which makes it possible that we may not detect all material misstatements. Misstatements may arise due to fraud or error. They are considered material if, individually or in the aggregate, theycouldreasonablybeexpectedtoinuencethe economic decisions of users taken on the basis of the nancialstatements. Materialityaectsthenature,timingandextentofour auditproceduresandtheevaluationoftheeectof identiedmisstatementsonouropinion. A more detailed description of our responsibilities is set out in the appendix to our report. Utrecht, 25 May 2022 PricewaterhouseCoopers Accountants N.V. Original signed by W.F.J. Vermeulen RA FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 134 Appendix to our auditor’s report on thenancialstatements2021/2022 of Holland Colours N.V. In addition to what is included in our auditor’s report, we have further set out in this appendix our responsibilities fortheauditofthenancialstatementsandexplained what an audit involves. THE AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS We have exercised professional judgement and have maintained professional scepticism throughout the audit in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit consisted, among other things of the following: • Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the intentional override of internal control. • 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 estimates and related disclosures made by the Board of Management. • Concluding on the appropriateness of the Board of Management’s use of the going-concern basis of accounting, and based on the audit evidence obtained, concluding whether a material uncertainty exists related to events and/or conditions that may cast significant 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 financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report and are made in the context of our opinion on the financial statements as a whole. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluating the overall presentation, structure and content of the financial statements, including the disclosures, and evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Considering our ultimate responsibility for the opinion on theconsolidatednancialstatements,weareresponsible for the direction, supervision and performance of the Group audit. In this context, we have determined the nature and extent of the audit procedures for components of the Group to ensure that we performed enoughworktobeabletogiveanopiniononthenancial statements as a whole. Determining factors are the geographicstructureoftheGroup,thesignicanceand/or riskproleofgroupentitiesoractivities,theaccounting processes and controls, and the industry in which the Group operates. On this basis, we selected group entities forwhichanauditorreviewofnancialinformationor specicbalanceswasconsiderednecessary. We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of theauditandsignicantauditndings,includingany signicantdecienciesininternalcontrolthatweidentify during our audit. In this respect, we also issue an additional report to the audit committee in accordance witharticle11oftheEURegulationonspecic requirements regarding statutory audit of public-interest entities. The information included in this additional report is consistent with our audit opinion in this auditor’s report. We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related actions taken to eliminate threats or safeguards applied. From the matters communicated with the Supervisory Board, we determine those matters that were of most signicanceintheauditofthenancialstatementsofthe current period and are therefore the key audit matters. 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. FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 135 CONTACT HOLLAND COLOURS NV Halvemaanweg 1 7323 RW Apeldoorn P.O. Box 720 7300 AS Apeldoorn The Netherlands T (31) 55-368 0700 E [email protected] Chamber of Commerce 08036180 HOLLAND COLOURS EUROPE BV Halvemaanweg 1 7323 RW Apeldoorn P.O. Box 720 7300 AS Apeldoorn The Netherlands T (31) 55-368 0700 E [email protected] HOLLAND COLOURS UK LTD Unit 16/17/18, Sabre Court Valentine Close, Gillingham Business Park Gillingham, Kent ME8 0RW United Kingdom T (44) 1634-388 727 E [email protected] HOLLAND COLOURS HUNGARIA KFT Déri Miksa körút 2 P.O. Box 8 5000 Szolnok Hungary T (36) 56-420 644 E [email protected] HOLLAND COLOURS AMERICAS INC 1501 Progress Drive Richmond, Indiana, 47374 USA T (1) 765-935 0329 Toll-free (1) 800-723-0329 E [email protected] HOLLAND COLOURS CANADA INC 200 Consumers Rd, Suite 303 Toronto, Ontario M2J 4R4 Canada T (1) 416-449 4344 Toll-free (1) 800-361 3967 E [email protected] HOLLAND COLOURS MEXICANA SA DE CV Tezosomoc #4 (Bodega 3) Col. Recursos Hidráulicos Tultitlán, Edo de México México CP 54913 T 52 (55) 58-94-36-41 E [email protected] PT HOLLAND COLOURS ASIA - SURABAYA Jl. Berbek Industri II/2 (Surabaya Industrial Estate Rungkut) Sidoarjo 61256-East Java Indonesia T (62) 31-849 3939 E [email protected] Export department Surabaya: T (62) 31-841 1 801 E [email protected] PT HOLLAND COLOURS ASIA – JAKARTA Kawasan Industri dan Pergudangan TAMAN TEKNO BSD Blok E3 no. 45 Kecamatan SETU, Tangerang Selatan, Banten 15314-West Java Indonesia T (62) 21-75681088 E [email protected] PT HOLCO INDO JAYA Jl. Berbek Industri IV No 1 (Surabaya Industrial Estate Rungkut) Sidoarjo 61256-East Java Indonesia T (62) 31-849 3939 E [email protected] REPRESENTATIVE OFFICE CHINA Room 908, Eco City 1788, No. 1788 West Nanjing Road, Jing’an District Shanghai 20040 China T (86) 13022112583 (60) 162222684 E [email protected] FIVE-YEAR SUMMARY & INVESTOR RELATIONSSUPERVISORY BOARD REPORTCSR EMPLOYEE PARTICIPATIONREMUNERATION REPORTGOVERNANCEMANAGEMENT BOARD REPORTABOUT INTRODUCTION BY THE CEO FINANCIAL STATEMENTS HOLLAND COLOURS ANNUAL REPORT 2021/2022 136 FIND OUT MORE Contact our sales people about purchasing quantities and deliveries or our technical experts for questions about our technology and its implementation: AMERICAS: [email protected] | +1 765-935 0329 / toll-free: +1 800 723 0329 ASIA: [email protected] | +62 31 849 3939 EMEIA: [email protected] | +31 (0)55 36 80 700 www.hollandcolours.com 7245003GZ2696Y0W1X572021-04-012022-03-317245003GZ2696Y0W1X572020-04-012021-03-317245003GZ2696Y0W1X572022-03-317245003GZ2696Y0W1X572021-03-317245003GZ2696Y0W1X572020-03-31ifrs-full:IssuedCapitalMember7245003GZ2696Y0W1X572020-03-31ifrs-full:SharePremiumMember7245003GZ2696Y0W1X572020-03-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245003GZ2696Y0W1X572020-03-31ifrs-full:ReserveOfCashFlowHedgesMember7245003GZ2696Y0W1X572020-03-31HOL:ReserveOfIntangibleAssetsMember7245003GZ2696Y0W1X572020-03-31ifrs-full:RetainedEarningsMember7245003GZ2696Y0W1X572020-03-31ifrs-full:EquityAttributableToOwnersOfParentMember7245003GZ2696Y0W1X572020-03-31ifrs-full:NoncontrollingInterestsMember7245003GZ2696Y0W1X572020-03-317245003GZ2696Y0W1X572020-04-012021-03-31ifrs-full:IssuedCapitalMember7245003GZ2696Y0W1X572021-03-31ifrs-full:IssuedCapitalMember7245003GZ2696Y0W1X572020-04-012021-03-31ifrs-full:SharePremiumMember7245003GZ2696Y0W1X572021-03-31ifrs-full:SharePremiumMember7245003GZ2696Y0W1X572020-04-012021-03-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245003GZ2696Y0W1X572021-03-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245003GZ2696Y0W1X572020-04-012021-03-31ifrs-full:ReserveOfCashFlowHedgesMember7245003GZ2696Y0W1X572021-03-31ifrs-full:ReserveOfCashFlowHedgesMember7245003GZ2696Y0W1X572020-04-012021-03-31HOL:ReserveOfIntangibleAssetsMember7245003GZ2696Y0W1X572021-03-31HOL:ReserveOfIntangibleAssetsMember7245003GZ2696Y0W1X572020-04-012021-03-31ifrs-full:RetainedEarningsMember7245003GZ2696Y0W1X572021-03-31ifrs-full:RetainedEarningsMember7245003GZ2696Y0W1X572020-04-012021-03-31ifrs-full:EquityAttributableToOwnersOfParentMember7245003GZ2696Y0W1X572021-03-31ifrs-full:EquityAttributableToOwnersOfParentMember7245003GZ2696Y0W1X572020-04-012021-03-31ifrs-full:NoncontrollingInterestsMember7245003GZ2696Y0W1X572021-03-31ifrs-full:NoncontrollingInterestsMember7245003GZ2696Y0W1X572021-04-012022-03-31ifrs-full:IssuedCapitalMember7245003GZ2696Y0W1X572022-03-31ifrs-full:IssuedCapitalMember7245003GZ2696Y0W1X572021-04-012022-03-31ifrs-full:SharePremiumMember7245003GZ2696Y0W1X572022-03-31ifrs-full:SharePremiumMember7245003GZ2696Y0W1X572021-04-012022-03-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245003GZ2696Y0W1X572022-03-31ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember7245003GZ2696Y0W1X572021-04-012022-03-31ifrs-full:ReserveOfCashFlowHedgesMember7245003GZ2696Y0W1X572022-03-31ifrs-full:ReserveOfCashFlowHedgesMember7245003GZ2696Y0W1X572021-04-012022-03-31HOL:ReserveOfIntangibleAssetsMember7245003GZ2696Y0W1X572022-03-31HOL:ReserveOfIntangibleAssetsMember7245003GZ2696Y0W1X572021-04-012022-03-31ifrs-full:RetainedEarningsMember7245003GZ2696Y0W1X572022-03-31ifrs-full:RetainedEarningsMember7245003GZ2696Y0W1X572021-04-012022-03-31ifrs-full:EquityAttributableToOwnersOfParentMember7245003GZ2696Y0W1X572022-03-31ifrs-full:EquityAttributableToOwnersOfParentMember7245003GZ2696Y0W1X572021-04-012022-03-31ifrs-full:NoncontrollingInterestsMember7245003GZ2696Y0W1X572022-03-31ifrs-full:NoncontrollingInterestsMemberiso4217:EURxbrli:sharesiso4217:EURxbrli:shares
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