TKH N : FY2023 Analyst Presentation

TKH Group NV

FY 2023 Results - Analyst Presentation

March 5, 2024

IMPORTANT INFORMATION - DISCLAIMER

Cautionary note regarding forward looking statements

Statements included in this presentation release that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements. These statements are only predictions and are not guarantees. Actual events or the results of our operations could differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements are typically identified by the use of terms such as "may", "will", "should", "expect", "could", "intend", "plan", "anticipate", "estimate", "believe", "continue", "predict", "potential" or the negative of such terms and other comparable terminology.

The forward-looking statements are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements.

FY 2023 Analyst Presentation - March 5, 2024

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Key Messages

DELIVERING ON OUTLOOK

• EBITA of € 237.0 million
• Smart Manufacturing systems performed exceptionally strong in Q4 2023
• Continued destocking and other headwinds within Smart Vision and Smart Connectivity systems
• Substantial increase in Added Value - Reflection of TKH's pricing power and strategic position
• ROS Q4 - 14.3%
• Good progress made in realization of ESG targets including improved ratings
• 70% of turnover linked to SDGs

• • 200M STRATEGIC INVESTMENT
    PROGRAM NEARING COMPLETION
• Production of type-testinter-array cables started in new plant in Eemshaven, to be operational during course of Q2 2024
• Expansion of medium and high voltage cable capacity in Lochem operational in phases from Q3 2023
• New fibre optic and specialty cable plants in Poland operational, Tire Building systems expansion in Poland fully operational
• 200 additional personnel for roll-out of strategic investment program

PROGRESSING ON OUR STRATEGIC

POSITIONING

• Investments into AI, with set-up of hub in Amsterdam, and into digital transformation
• Machine Vision one-stop-shop and solutions
• Continuing high order intake tire building - UNNIX system high interest confirmed
• High voltage supplier of TenneT - Framework agreement inter-array Vattenfall - Additional inter-array orders in the pipeline
• Two major divestments, total one-off net profit of € 54.8 million - Acceleration of divestments announced towards high end bandwidth
• Acquisition of machine vision software company Euresys

FY 2023 Analyst Presentation - March 5, 2024

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Returned € 117.6m cash to shareholders: € 67.6m in dividends and € 50.0m in share buybacks

Q4 2023: Strong Performance Smart Manufacturing systems

FY 2023 Analyst Presentation - March 5, 2024

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				Highlights Q4 2023
	Turnover € 441.4m			EBITA* € 62.9m			ROS* 14.3%
	Q4 2022: € 465.7m			Q4 2022*: € 64.0m			Q4 2022: 13.7%
	+ 1.2% organically **			+ 6.7% organically**

• EBITA & ROS excluding one-off income and expenses (one-off expenses in Q4 2023 amounted to € 2.8 million, Q4 2022: one-off income of € 1.0 million)
• Adjusted for acquisitions, divestments, and currency effects

TKH delivers well on Outlook

FY 2023 Analyst Presentation - March 5, 2024

				Highlights FY 2023
	Turnover € 1,847.5m			EBITA* € 237.0m			ROS* 12.8%			Adjusted net profit**
	2022: € 1,816.6m			2022: € 234.8m			2022: 12.9%			€ 130.5m
	+ 3.2% organically***			+ 3.0% organically***						2022: € 143.6m
										- 9.1%

ROCE 19.8%	Order book € 970.1m	Innovations 16.1%	Net debt € 469.2m
2022: 23.2%	Dec 31, 2022: € 971.9m	2022: 20.6%	Dec 31, 2022: € 307.2m

As percentage of turnover

• EBITA & ROS excluding one-off income and expenses (one-off net expenses in 2023 amounted to € 2.0 million, 2022: one-off income of € 10.4 million)
• Net profit before amortization of intangible non-current assets related to acquisitions (after tax) and one-off income and expenses attributable to shareholders. Amortization of intangible non- current assets related to acquisitions (after taxes) in 2023 of € 12.3 million (2022: € 12.6 million)
• Adjusted for acquisitions, divestments, and currency effects

5

Added Value increased across all segments

SMART VISION	SMART MANUFACTURING	SMART CONNECTIVITY

TOTAL

- 1.8%*

+ 17.1%*

- 1.5%*

+ 3.2%*

58.5%	58.9%

50.5%

49.9%

37.8%

41.8%

AV	47.2%	49.8%
&

TURNOVER & AV

EBITA** & ROS

499.7 500.5

2 0 2 22 0 2 3

- 12.1%*

19.1%

17.2%

95.5 85.9

2 0 2 22 0 2 3

						573.6
	491.2
	2 0 2 2	2 0 2 3
		+ 31.8%*
	14.1%				15.8%
	69.1			90.6
	2 0 2 2	2 0 2 3

848.6 800.5

2 0 2 22 0 2 3

- 0.1%*

10.3%10.1%

87.3 81.1

2 0 2 22 0 2 3

TURNOVER	1,816.6	1,847.5
	2 0 2 2	2 0 2 3
		+ 3.0%*
& ROS	12.9%	12.8%
EBITA**	234.8	237.0
	2 0 2 2	2 0 2 3

Analyst Presentation - March 5, 2024

HIGHLIGHTS

• Turnover Security Vision achieved growth during the year
• Machine Vision experienced large impact from destocking and weaker market demand
• Cost levels and capacity kept at higher turnover levels

• Exceptionally strong Q4 - easing of supply chain constraints led to completion and delivery of large inventory of incomplete machines
• Orderbook remains strong
• Order for UNIXX system booked in Q1 2024

• After strong H1, onshore cable impacted by Dutch utility companies' destocking
• The offshore cable capacity underutilized in H2 due to order postponement
• Digitalization impacted by doubling of the EU anti-dumping duties in August
• Transition of fibre cable production from China to new plant in Poland temporarily impacted output and cost levels

	• Added value expansion due to price
HIGHLIGHTS	increase to cover cost inflation, change in
product mix and the impact of divestments.
• ROS impacted by supply chain issues in H1
Start-up expenses & new hires strategic
investment program
• Underutilization of capacity due to
	destocking in Smart Vision and Smart
	Connectivity

FY 2023

6

• Adjusted for acquisitions, divestments and currency effects
• EBITA excluding one-off income and expenses

Accelerate 2025: Assumptions for ROS Targets

FY 2023 Analyst Presentation - March 5, 2024

Headwinds2021 Assumptions

SMART VISION

=

ROS

ROS

Acquisitions

Organic Growth

ROS

target 22%

• Megatrend: Automation
• One-stop-shoppositioning & USP's
• High single digit organic growth
• Investments into software & AI
• High added value of 60%
• ROS growth: scale & efficiency
• Strategically fitting acquisitions

	2023	2022	2021
Turnover	+ 0.2%	+ 16.3%	+ 9.4%
EBITA	- 10.1%	+ 29.5%	+ 18.9%
ROS	17.2%	19.1%	17.2%

• Destocking end customers
• Challenging market circumstances
• Underutilization - High costs

SMART MANUFACTURING

ROS	ROS
	Divestments
Organic Growth

ROS

target 18%

• Megatrend: Automation
• Portfolio expansion
• High single digit organic growth
• ROS growth through:
• • Business normalization
  • Divestments
  • Scale & efficiency

	2023	2022	2021
Turnover	+ 16.8%	+ 17.2%	+ 19.9%
EBITA	+ 31.2%	+ 16.3%	+ 43.5%
ROS	15.8%	14.1%	14.2%

Structural inflationary pressure & high interest rates

• Supply chain constraints
• High levels of inefficiencies

SMART CONNECTIVITY

ROS	ROS
Organic Growth	Strategic
Investment Plan

ROS

target 15%

• Megatrend: Digitalization & Electrification
• High single digit organic growth
• ROS growth through:
• • Strategic investment program
  • Operational leverage
  • No anti-dumping duties

	2023	2022	2021
Turnover	- 5.7%	+ 22.6%	+ 22.4%
EBITA	- 7.1%	+ 19.3%	+ 61.9%
ROS	10.1%	10.3%	10.6%

• Destocking Dutch utility companies
• Project delays offshore wind
• Anti-dumpingduties

2025 Targets:

Turnover: ≥ € 2bn

ROS: 17%

If headwinds continue:

17% ROS target may take longer to realize

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Our sustainable value chain

Our Focus on SDGs

70% of turnover linked to SDGs

Energy transition

Energy cables

Subsea cables

Automation

Tire building systems Specialty cables for robotics & mechanical engineering

Sustainable

Communities

Mobility inspection

systems

Parking guidance

Connectivity systems

Digitalization

Fibre Optic Cables

CO2e FOOTPRINT REDUCTION (scope 1 & 2)

Compared to 2019

Target 100% neutrality by 2030

64.3%

2022 42.7%

2021 29.8%

DIVERSITY

Female Executive and Senior Management

Target > 25% by 2030

19.2%

2022 18.4%

2021 17.7%

How we do it

non-financial KPIs

% WASTE

Target< 5% waste

5.2%

2022 5.3%

2021 5.2%

ILLNESS RATE

Target < 4.0%

3.85%

2022 4.04%

2021 3.56%

How we are rated

rating agencies

SATISFACTION SCORE

Customers

Target Average score above benchmark (7.8)

8.6

2022 8.6

2021 8.4

SATISFACTION SCORE

Employees

Target > 7.5

7.8	B
2022 7.6
2021 7.4

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FINANCIAL

PERFORMANCE

FY 2023

Geographical distribution of turnover

FY 2023 Analyst Presentation - March 5, 2024

	2023	2022
Netherlands	24.6%	24.7%
Europe (other)	38.8%	44.1%
Asia	19.1%	14.8%
North America	13.0%	12.7%
Other	4.5%	3.7%

Smart Vision systems

Smart Manufacturing systems

Smart Connectivity systems

10

NETHER-

LANDS

EUROPE

(OTHER)

NORTH

AMERICA

ASIA

OTHER