D'Ieteren : Annual Report 2021 - Financial and Directors’ Report 2021

DIeteren Group

Financial and Directors' Report 2021

Financial and Directors' Report 2021

Content

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DECLARATION BY RESPONSIBLE PERSONS 2021 FULL-YEAR RESULTS

CONSOLIDATED FINANCIAL STATEMENTS 2021

25

26

27

28

29

Consolidated Statement of Profit or Loss Consolidated Statement of Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows

31

94

Notes to the Consolidated Financial Statements Statutory Auditor's Report

102

Summarized Statutory Financial Statements 2021

106

CORPORATE GOVERNANCE STATEMENT

106

110

Composition and functioning of the Board, executive management and control bodies Diversity

111

Remuneration Report

113

133

Internal controls and risk management systems Capital information

135

DISCLOSURE OF NON-FINANCIAL INFORMATION

135

D'Ieteren Group

143

- EU taxonomy

145

- TCFD

147

157

D'Ieteren Automotive Belron

170

183

Moleskine D'Ieteren Immo

193

195

198

Additional notes and methodology Independent limited assurance report GRI Content Index

210

SHARE INFORMATION

Content of the Consolidated Directors' Report *

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EVOLUTION OF THE SITUATION, ACTIVITIES AND RESULTS OF THE COMPANY

• 106 CORPORATE GOVERNANCE STATEMENT

• 106 Composition and Functioning of the Board and Executive Management Bodies

• 110 Derogations to the 2021 Corporate Governance Code

• 110 Diversity policy

• 48, 111

Remuneration Report

• 113 Internal controls and risk management systems

• 133 Capital information

  134 134 71

  • • Disclosure of significant shareholdings

  • • Elements that can have an influence in case of a takeover bid

  • • Equity

• 135 DISCLOSURE OF NON-FINANCIAL INFORMATION

• 66 FINANCIAL RISK MANAGEMENT

• 80 SERVICES PROVIDED BY THE STATUTORY AUDITOR

• 82 SUBSEQUENT EVENTS

* The topics of Article 3:32 of the company code, defining the content of the management report, that are not applicable for D'Ieteren Group, have not been included in this summary.

Declaration by Responsible Persons

Statement on the true and fair view of the consolidated financial statements and the fair overview of the management report.

Nicolas D'Ieteren, Chairman of the of the Board of Directors, and Olivier Périer, Deputy Chairman of the Board of Directors, certify, on behalf and for the account of D'Ieteren Group SA/NV, that, to the best of their knowledge, the consolidated financial statements which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union, give a true and fair view of the equity, financial position and financial performance of D'Ieteren Group SA/NV and the entities included in the consolidation as a whole, and the management report includes a fair overview of the development and performance of the business and the position of D'Ieteren Group SA/NV, and the entities included in the consolidation, together with a description of the principal risks and uncertainties which they are exposed to.

2021 Full-Year results

Record results driven by a strong performance of all our businesses and the first contribution from TVH

1. D'Ieteren Group

Full-year 2021 highlights

D'Ieteren Group's results showed significant growth in 2021 driven by strong performance of all the businesses. The Group's key performance indicator (KPI) - the adjusted consolidated profit before tax, Group's share1 - came in at €493.4m, up by 52.0% compared to 2020. On a comparable basis, the KPI grew by 50.6% YoY, in line with the guidance of 'at least 45% growth'.

• - Belron's adjusted profit before tax, Group's share1 gained 47.0% YoY reflecting positive top-line trends and a strong FY operating margin of 17.5% despite the additional costs related to the transformation programme and some pressure in the supply chain and employment market in the US in the second half of the year.

• - D'Ieteren Automotive managed to post an 11.6% growth in adjusted profit before tax, Group's share1 in a very difficult environment whe-reby the Belgian new car market2 was down by 11.2% mainly due to the shortage of semiconductor components. D'Ieteren Automotive managed to slightly increase sales, thanks to a positive price / mix effect.

• - TVH was included for the first time in the fourth quarter of 2021, and, supported by robust sales growth of c. 19.5%, accounted for €17.0m of adjusted profit before tax, Group's share1.

• - Moleskine's performance was still impacted by Covid-19 disruptions, but sales grew by 18.9% and the adjusted profit before tax, Group's share1 ended the year in positive territory at €1.8m.

• - Corporate & Unallocated (including corporate and real estate activities) reported an adjusted profit before tax, Group's share1 of €4.7m in 2021 compared to -€5.3m in 2020. D'Ieteren Group ends 2021 with a net cash position of €1,087.5m (or €782.8m excluding €304.7m of inter-segment loans).

• - All the businesses contributed to a strong adjusted free cash-flow6 generation thanks to the solid operational results, with notably significant cash generation of €422.9m at Belron (100%), €108.4m at D'Ieteren Automotive, and almost €16m at Moleskine.

• - The Board of Directors proposes a gross ordinary dividend of €2.10 per share related to the financial year 2021 (versus €1.35 in 2020) and has decided to reactivate the share buy-back programme before the Summer 2022.

Note that 2020 figures have been restated to reflect the IFRS® Interpretations Commiee (IFRIC) final agenda decisions on cloud computing arrangements issued in March 2019 and April 2021. Refer to note 1 (p. 31) for more information on the restatement of comparative information.

Outlook 2022

For 2022, assuming no further escalation in geopolitical tensions nor new Covid-related restrictions, D'Ieteren Group expects its adjusted consolidated profit before tax, Group's share1 to grow by at least 25% compared to the comparable 2021 result. This improvement is expected to be driven by the full-year contribution from TVH (versus only the fourth quarter in 2021) and a continued solid growth from all businesses.

It assumes a 50.01% stake in Belron in 2022 and in 2021 (comparable figure: €474m), and average exchange rates that are in line with the rates that prevailed at the end of 2021.

We expect the following financial performance from our porolio companies:

Belron

• - Low double-digit organic sales growth due to volumes and price / mix and increased ADAS recalibration penetration and VAPS contribution.

• - Adjusted operating result1 growth slightly above organic sales growth driven by top-line development despite the expected impact of c.€80m from costs related to the transformation plan.

• - Adjusted free cash-flow6 is expected to remain high, comparable to 2021, with beer operational results being offset by increased capital expenditures, namely in ADAS equipment and in the footprint, and a slightly negative working capital oulow.

TVH

- Top-line growth is expected to remain double digit and Adjusted operating result1 is expected to land above €230m.

D'Ieteren Automotive

• - Strong order backlog to be translated into deliveries over time once supply chain issues are solved. However, production volumes on certain models are expected to be negatively impacted by the war between Russia and Ukraine.

• - Taking this into account, adjusted operating result1 is expected to grow by around 15% driven by some volume recovery and continued costs control, more than offseing a negative mix effect and further investments in new mobility.

• - Free cash-flow before acquisitions is expected in decline vs. 2021 due to increased working capital requirements, and the payment related to the two retail site closures. Free cash-flow6 should however remain positive.

Moleskine

• - Sales are expected to get closer to pre-Covid levels, hence to grow by at least 25% YoY.

• - Adjusted operating result1 should more than double compared to the €12.3m achieved in 2021.

Key developments

• - All activities developed or initiated the development of a carbon emissions reduction plan in line with the SBTi. As new joiner, TVH has commied to the same pathway and will start with the calculation of its carbon emissions baseline (2021).

• - On April 1st, 2021, Belron has issued new term loans maturing in 2028, the proceeds of which were used, along with available cash reserves, to finance a distribution to shareholders and repay existing loans.

• - On July, 9th, 2021, D'Ieteren Group has announced the acquisition of a 40% stake in TVH, a leading global independent distributor for aſtermarket parts for material handling, construction & industrial, and agricultural equipment. The operation was closed on October 1st, 2021.

• - Also in July, CD&R has announced having agreed to sell part of its stake in Belron to new shareholders, Hellman & Friedman, GIC and BlackRock Private Equity Partners, in a transaction that values the company at an Enterprise Value of €21bn. The transaction closed mid-December 2021. Following the closing of the transaction, Belron's Board of Directors has agreed to reward c.25,000 employees with a one-off cash bonus and restricted share units ('RSUs') to thank them for their loyal contribution to the company's success. Importantly, this reward has no economic impact on D'Ieteren Group, and doesn't imply any dilution to the fully diluted stake of 50.01%, as the RSUs and cash component were already currently held separately on behalf of Belron employees. A donation has also been made to Belron Ronnie Lubner Charitable Foundation, a charity set up by the founders of Belron.

• - At the end of September, D'Ieteren Centers management has announced its intention to close two structurally loss-making sites in Brussels and Drogenbos.

• - On December 15th, D'Ieteren Automotive secured new sustainability-linked loans maturing in 2026, used to refinance the inter-segment loan and for general corporate purposes.

• - On February 14th, 2022, D'Ieteren Group announced being in exclusive discussion to acquire Parts Holding Europe (PHE), a Western European leader in spare parts distribution and services for cars and trucks.

• - On April 28th, 2022, D'Ieteren Group will hold an Investor Day in Brussels. This will be the opportunity for the management teams of D'Ieteren Group's businesses to present their mid-term strategic ambitions and the perspectives in their respective markets.