5.1 Consolidated financial statements

Consolidated balance sheet as at 31 December (€ x 1,000)

Consolidated statement of profit or loss (€ x 1,000)

Consolidated statement of comprehensive income (€ x 1,000)

Consolidated statement of cash flows (€ x 1,000)

Consolidated statement of cash flows (€ x 1,000)

Consolidated statement of changes in shareholders’ equity (€ x 1,000)

Movement in own shares concerns the sale of shares held by the company itself to cover employee participation plans, plus or less changes in shareholders’ equity relating to the recognition of liabilities under IFRS 2 regarding these employee participation plans.

Consolidated statement of changes in shareholders’ equity (€ x 1,000)

Dividend per share for the 2023 financial year has been set at €3.20 (€3.00 in 2022).

Accounting policies

Foreign currency

The financial statements are presented in euros, which is Nedap’s functional and presentational currency. Profits/losses and financial positions of consolidated companies in a functional currency other than the euro are converted to euros as follows: assets and liabilities are converted at the exchange rate as at the balance sheet date, and income and costs are converted at the average exchange rate. Exchange differences on participations are added or charged to the statutory reserves via the other comprehensive income.

Transactions in foreign currencies are converted into the functional currency at the exchange rate on the transaction date. Profits and losses arising as a result of the settlement of such transactions are recognised in the statement of profit or loss.

Financial instruments

Regular purchases and sales of financial assets are entered on the transaction date. Financial assets are no longer recognised on the balance sheet when rights to receive cash flows from the financial assets have either expired or been transferred, and the group has transferred virtually all risks and benefits of ownership.

Non-derivative financial instruments

Non-derivative financial instruments are loans receivable, trade and other receivables, cash and cash equivalents, borrowings and trade and other payables, excluding projects in progress. On initial recognition, non-derivative financial instruments are recognised at fair value, with directly attributable transaction costs included on initial recognition. After initial recognition, non-derivative financial instruments (excluding cash and cash equivalents) are recognised at amortised cost less expected credit losses.

Profits or losses ensuing from changes in the measurement of these instruments are recognised in the statement of profit or loss under other operating costs.

Intangible fixed assets

Intangible fixed assets, including capitalised development costs and assets in progress and prepayments, are recognised at historical cost less accumulated amortisation and impairment losses.

Investigation

Costs relating to research activities are recognised in the statement of profit or loss at the time of occurring.

Development

Any development costs for which future economic benefits can reliably be estimated, that can be reliably measured and that were not incurred for the maintenance of an existing product or adaptation to suit new market circumstances are capitalised.

All other development costs are recognised in the statement of profit or loss at the time of occurring. The recognised value of capitalised development costs consists of external and directly attributable internal costs and overheads. Capitalised projects are technically feasible and Nedap intends to implement them. Nedap has access to (or is able to obtain) sufficient technical, financial and other resources to finalise and market the products it has developed.

Government grants

Government grants are credited to the statement of profit or loss when there is reasonable certainty that the government grant will be received and that the group will be able to meet all associated conditions. Pending government grants to which Nedap can lay claim are recognised on the balance sheet under trade and other receivables. If the government grant relates to the purchase, manufacturing or creation of an asset, the government grant is deducted from the asset in question.

Amortisation of intangible fixed assets

Capitalised development costs are amortised on a straight-line basis. The amortisation rate is 20%.

Other

Software & licences acquired are recognised at historical cost less accumulated amortisation and impairments. Amortisation is applied on a straight-line basis over the estimated economic life. The amortisation rate is 20%.

Tangible fixed assets

Tangible fixed assets purchased or manufactured are recognised at historical cost less accumulated depreciation and impairment.

Costs of tangible fixed assets are capitalised as ‘in progress’ under tangible fixed assets when they are not yet ready to be commissioned. As soon as the asset has been completed, it will be included in the asset category that corresponds to the asset. The recognised value of assets manufactured in-house consists of external and directly attributable internal costs and overheads. Tangible fixed assets are classified as ‘assets held for sale’ provided assets are indeed available for immediate sales and are highly likely to be sold. Available-for-sale tangible fixed assets are recognised at book value or lower fair value, less selling costs. Available-for-sale tangible fixed assets are not depreciated.

Depreciation of tangible fixed assets

Depreciation of tangible fixed assets is applied on a straight-line basis over the estimated economic life. Land is not depreciated.

The annual depreciation rates are:

Depreciation rates are evaluated annually and adjusted if necessary.

Leases

Leases are recognised as a right of use and corresponding liability on the date on which the right-of-use asset is available to Nedap.

The lease terms differ per lease. They range from 1-5 years and reflect a term that is shorter than or equal to the useful life of the underlying asset it relates to.

Contracts can contain both lease and non-lease components. Nedap attributes the contract fee to the lease and non-lease components based on their relative autonomous prices.

Nedap has opted to treat lease and non-lease components as separate items. Non-lease components are mainly service-related services.

Assets and liabilities ensuing from a lease and recognised as lease components are initially measured at present value. After initial measurement at cost less any depreciation and any accumulated impairment losses, the rights of use are, after initial recognition, corrected for any revaluation of the lease liability as a result of reassessments or lease modifications.

Lease liabilities include the net present value of the fixed lease payments and variable lease payments based on an index or price, initially measured using the index or price as it is on the lease commencement date.

Lease payments made under reasonably certain options for extension of the lease are also included in the measurement of the liability. In determining the lease term, the management factors in all information and circumstances that constitute economic incentives to exercise an extension option.

If any improvements made to the asset are expected to lead to significant residual value, it is generally reasonably certain that Nedap will choose to extend the lease. Otherwise, Nedap takes other factors into account, such as past lease terms and the costs and business disruptions that would be inevitable when replacing the leased asset.

Lease payments are factored in based on the imputed rate of interest in the lease. If that rate cannot be determined easily, which is generally the case for leases at Nedap, the lessee’s incremental borrowing rate of interest is used, i.e. the rate at which the individual would have to pay interest to borrow the funds needed to acquire a similar-value right-of-use asset in a comparable economic environment with comparable conditions and guarantees.

Nedap is subject to possible future increases of variable lease payments based on an index or rate, which are not recognised in the lease liability until they become effective. When adjustments to lease payments based on an index or rate become effective, the lease liability is reassessed and adjusted to the right-of-use.

Lease payments are split up into right-of-use and financing costs. The financing costs are charged to the profit or loss for the lease period to generate a constant periodical interest rate for the remaining balance of the liability for each applicable period. Rights-of-use are measured at cost, which is made up of:

• The amount of the first measurement of lease liabilities;

• All lease payments made on or before the commencement date, less lease benefits received;

• Any initial direct costs; and

• Acceptable restoration costs;

• Right-of-use assets are generally depreciated on a straight-line basis over the lease term or the asset’s service life, whichever is the shortest period. If Nedap is reasonably certain that it will exercise a purchase option, the right of use is depreciated over the useful life of the underlying asset;

• Payments under short-term leases and all leases for low-value assets are recognised in the statement of profit or loss as a cost;

• Short-term leases are leases with a lease term of 12 months or less. Low-value assets are assets with a new-for-old value of under €5,000.

Deferred tax assets

Deferred tax assets relate to losses brought forward and temporary differences between the book value of assets and liabilities and the tax book values of these items. The liability method has been used for calculating deferred tax assets and liabilities. Deferred tax assets are calculated, for each fiscal entity, at the tax rates that are expected to apply when they are realised. Deferred tax assets are only recognised if it is likely that these can be realised. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset tax assets and liabilities and they relate to taxes levied by the tax authorities on the same taxable entity or on various tax entities, but are intended to settle offset current tax liabilities and assets or will realise their tax liabilities and assets simultaneously.

Inventories

Inventories are recognised at either cost or net realisable value, whichever is lower. Cost is determined based on the First-In-First-Out method (FIFO). Net realisable value is the estimated selling price less costs to be incurred. The cost of products in progress and Nedap-manufactured finished goods includes direct manufacturing costs, plus a mark-up for indirect manufacturing and purchasing costs. Inventories are revalued downward based on expected realisable value, provided this is lower than cost. These downward revaluations are applied based on age, sales projections or expected usage - or a combination of the above.

Cash and cash equivalents

Cash and cash equivalents may include deposits held with banks that are available on demand, other short-term investments that are very liquid and have an original term of three months or shorter, and which can be converted immediately to specific cash amounts, while also involving negligible exposure to the risk of changes in value, as well as bank overdrafts or current-account receivables. Cash balances and current-account receivables are recognised under cash and cash equivalents in current assets, while bank overdrafts are recognised as bank overdrafts under current liabilities on the balance sheet.

Impairment of assets

The book value of assets is reviewed mid-year and at year-end for any indication of impairment. If indications of impairment are found, impairment is recognised based on realisable value, which is either the direct realisable value or value in use, whichever is the highest. Impairment is recognised in the statement of profit or loss. If information or circumstances arise in a subsequent period that show that the value of the asset has increased, causing the impairment to fully or partially cease to apply, the impairment is revoked.

The book value of the asset is raised to the revised realisable value, albeit never beyond the book value that would have been recognised if impairment had not taken place. The increase is incorporated directly into the statement of profit or loss. Assets both in use and not yet in use are involved in determining impairment.

Statutory reserves

These non-distributable reserves are formed for the amount of development costs capitalised on the balance sheet, for exchange differences for participations, to the extent that there is a positive balance, and for the share in participations which cannot be freely obtained. Statutory reserves have also been included in the consolidated statement of changes in shareholders’ equity to ensure reconciliation with the shareholders’ equity as recognised in the company financial statements.

Share-based remuneration

Nedap operates two plans that give employees the option to invest in Nedap depositary receipts through Stichting Medewerkerparticipatie Nedap (subsequently referred to as ‘the Stichting’): the Employee participation plan (the ‘Plan’) and the Nedap Additional Participation Plan (the ‘NAPP’).

The value of these plans is recognised as cost in the statement of profit or loss, while the amount charged to the profit/loss is recognised in the shareholders’ equity, to the extent that share-based remuneration is settled through equity instruments of the legal entity. The part settled in cash and cash equivalents is recognised under liabilities. The total amount to recognise as cost is the fair value of the depositary receipts awarded without factoring in performance-related conditions. Over the period that such performance is delivered, the total amount to recognise as cost is charged to the profit/loss on a straight-line basis.

Since 2010, the Plan has offered Nedap N.V. employees the option to use part or all of their annual share in the profits to purchase Nedap depositary receipts. Besides the option to invest the amount of their share in the profits in the Stichting in exchange for depositary receipts, Nedap’s Board of Directors and business unit leaders are required to invest at least 50% of their variable remuneration in Nedap depositary receipts. As a result, at least 50% of variable remuneration is of a long-term nature.

After purchase, depositary receipts will be the unconditional property of the holder and they cannot be sold for a period of four years. The holder of the depositary receipt is immediately entitled to the full dividend per share. Besides the purchase discount, a bonus depositary receipt is awarded for every four depository receipts after four years, provided certain conditions are met. Bonus depositary receipts entitle the holder to dividend from the moment they are awarded.

The value of the bonus depositary receipts has been derived from the Nedap share price on the Euronext Amsterdam stock exchange. This value is corrected for the dividends expected during the period of four years during which the depositary receipts are locked up.

Defined-contribution pension plan

Since 1 January 2015, Nedap has had a defined-contribution pension plan for its employees. Liabilities are recognised as a cost in the statement of profit or loss in the period to which they relate. Administration of the scheme has been commissioned to a Premium Pension Institution (PPI). Nedap has no other liabilities relating to the extent of the target pension or indexations other than the contributions payable.

Deferred tax liabilities

Deferred tax liabilities arise from temporary differences between the book value of assets and liabilities and the tax book values of these items. The liability method has been used for calculating deferred tax assets and liabilities. Deferred tax liabilities are calculated, for each fiscal entity, at the tax rates that are expected to apply when they are settled. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset tax assets and liabilities and they relate to taxes levied by the tax authorities on the same taxable entity or on various tax entities but are intended to settle offset current tax liabilities and assets or will realise their tax liabilities and assets simultaneously.

Provisions

Provisions for legal claims, service guarantees and obligations to repair are recognised when Nedap has incurred a legal or constructive obligation as a result of events in the past, it is likely that a disbursement of resources will be required to settle the obligation, and the amount can be estimated reliably. Provisions will not be made for future operating losses. Provisions are measured at the present value of the management’s best estimate of the expenditure needed to settle the current obligation at the end of the reporting period, using a discount rate that is in line with current market rates.

Guarantee provision

The guarantee provision is for claims made by customers under agreed guarantees. The term during which a customer can exercise this right varies between products. The measurement is determined based on estimated costs that are expected to ensue from current warranty obligations as at the balance sheet date. Aside from that, the provision may contain specific guarantee commitments.

Restructuring provision

A restructuring provision is recognised as soon as Nedap has approved a detailed and formal restructuring plan, and a start has been made on the restructuring or when it has been announced publicly. A provision is not made for future operating losses.

Anniversary benefits provision

Nedap’s liability under other long-term employee benefits, the 12.5-year, 25-year and 40-year employment anniversary, concerns the amount of entitlements accrued by employees in exchange for their services over the reporting period and preceding periods.

These entitlements are discounted to determine the present value. Revaluations are incorporated into the profit/loss for the period in which they occur.

Revenue

Revenue is based on transaction prices allocated to individual performance obligations, being either a distinct good or service or a series of distinct goods or services that are largely the same and showing the same pattern of transfer to a customer. Revenue from sales of goods and software related to these goods is recognised in the profit/loss upon transfer of the right of disposal of the goods or software by Nedap.

Revenue from software subscriptions (licences) and services is recognised for each service or on a straight-line basis over the term of the contract. Licences involve the granting of a right of access to Nedap’s software as it is during the entire term of the licence. If service contracts are invoiced in advance, these amounts are recognised on the balance sheet as amounts received in advance under ‘trade and other payables’.

Commitments to accept returns of or issue refunds for products and/or services are limited to those products and/or services for which Nedap has issued a warranty and subject to all warranty conditions being met.

Nedap does not have any material costs for the acquisition of contracts with customers and rarely groups products and/or services together in contracts. Delivery obligations under contracts that Nedap enters into with its customers consist mainly of agreements on the customer’s right to acquire products and/or services at the agreed price. Nedap’s associated liability to provide these products and/or services is calculated upon fulfilment of this obligation.

Wherever separate, identifiable obligations exist for which a customer cannot be charged separately, revenue has been recognised in proportion to the fulfilment of these obligations. Price agreements between Nedap and its customers are, however, largely based on separately identifiable products and/or services, which are calculated and recognised as revenue on the date of delivery.

Financing income and costs

Financing income and costs are interest received from third parties and interest paid to third parties and similar costs. Financing income and costs are recognised in the statement of profit or loss using the effective interest method.

Taxation

Taxation on profit for the financial year comprises taxes payable and receivable for the reporting period and the movement in deferred taxation. Taxation on profit is recognised in the statement of profit or loss, unless it relates to items recognised directly in shareholders’ equity, in which case the related taxation is also recognised in shareholders’ equity. Taxation payable or offsettable over the reporting period consists of income tax on the taxable profit/loss, as calculated based on tax rates set by law, and corrections to taxation paid for previous financial years.

Statement of cash flows

The statement of cash flows is prepared using the indirect method. Cash flows in foreign currencies are converted at the exchange rates on the date of the cash flow or at average rates. Interest paid and received is included in cash flow from operating activities, while dividend paid to and received from shareholders is incorporated into cash flow from financing activities.

Segmentation

Nedap’s long-term policy focuses on creating solutions with sustainable meaning for customers, employees and shareholders. The company wishes to achieve this through growth in revenue and profits, based on the culture of expertise, creativity and entrepreneurship that it has built up over the past decades.

Achieving this objective not only requires know-how of technology and market conditions, but also an increasing degree of knowledge of the customer’s business processes and applications that our solution is ultimately used in. The focus of activities on a customer or group of customers (business unit) is a significant condition for creating a genuinely distinctive and sustainable solution for our customers and their users, and thus also having sustainable meaning for our employees and shareholders. The technologies used in such solutions are closely related, so the business units often draw on each other’s technological know-how, products, systems, production resources and market and user experience. This applies for all of Nedap’s activities and business units. This exchange of know-how and resources, without financial settlement, is an ongoing and informal process and, therefore, a vital part of the entrepreneurial culture.

IFRS 8 requires the financial statements to present segment information that is in accordance with the internal information used by the directors to assess performance and allocate resources. Nedap N.V.’s Board of Directors assesses the company’s overall and each business unit’s profit/loss and the performance of the business units mainly on the basis of its own observations, day-to-day communications with the business units and development and market prospects. Based on this, decisions are made, staff are allocated, and resources are made available. Nedap does not have separate segments as referred to in IFRS 8. The geographical distribution of tangible fixed assets, intangible fixed assets and revenue, and the breakdown of revenue into categories are disclosed in the financial statements as required by IFRS 8.

Notes

General

Nedap N.V. is a public limited company under Dutch law, having its registered office under the articles of association at Parallelweg 2, 7141 DC in Groenlo, Netherlands, registered in the Chamber of Commerce’s trade register under number 08013836. The company’s 2023 consolidated financial statements cover the company and its subsidiaries, who together form the group, referred to below as Nedap. The financial year coincides with the calendar year. Nedap develops and supplies smart technological solutions for socially relevant themes, including sufficient food, clean drinking water, security and healthcare. On 21 February 2024, the financial statements were approved for publication by both the Supervisory Board and the Board of Directors. The financial statements will be submitted to the annual general meeting for adoption on 11 April 2024. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with Title 9 of Book 2 of the Dutch Civil Code.

Going concern

The accounting policies used in preparing these financial statements are based on a going concern assumption for the company. Over the year, and at the year-end closing in particular, there was additional focus on the collectability of accounts receivable, the measurement of inventories, and asset impairments. The company was able to post a profit for 2023. Given that the financial position is stable in terms of results and equity, and the outlook is positive, the going concern assumption was applied in preparing the financial statements.

Rounding

Unless specified otherwise, all amounts recognised in the financial statements and explanatory notes are rounded to the nearest thousand currency units.

Estimates

IFRS-compliant reporting requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported value of assets, liabilities, income and costs. The estimates and underlying assumptions are based on past experience and various other factors which are considered fair under the circumstances. The results constitute the basis for judgements on the book value of assets and liabilities that cannot be simply derived from other sources. The actual results may differ from these estimates. The estimates and underlying assumptions are under constant review. Revisions to estimates are recognised in the period in which the estimate is revised if the revision only has consequences for that period, or in the revision period and future periods if the revision has consequences for both the reporting period and future periods. The most critical estimate relates to the capitalisation of development costs, which is detailed below. Further estimates relate primarily to measurement of tangible and intangible fixed assets, employee benefits, deferred tax assets, provisions and inventories. For details of these other estimates, please refer to the relevant accounting policies as specified in these financial statements.

Development costs are, as per the criteria of IAS 38, capitalised if all of the following conditions are met: 1) the development costs were incurred for propositions that are new for Nedap and creating a user-ready product is technically feasible, 2) Nedap has the intention to prepare this product for use, 3) the costs involved can be calculated reliably, and 4) the proposition is likely to have market potential and yield future economic benefits.

The main estimation element in this respect is the realisable economic benefits. It is inherent to innovative products that it can take many years for a proposition to become successful and for it to be possible to establish with the required level of certainty that the targeted economic benefits are indeed realisable. Given the combination of the above conditions, Nedap capitalises development costs only to a limited degree. On top of that, the development costs recognised relate mainly to maintenance, upgrades, and further development of existing propositions in Nedap’s case, and less so to the actual development of new propositions.

For further details, please refer to the principles on the recognition of intangible fixed assets and Note 1 to these financial statements.

Changes to the presentation of comparative figures

From the date on which Nedap loses control, discontinued operations are deconsolidated on the balance sheet to assets and debts of discontinued operations. Deconsolidation is also applied in the statement of profit or loss and the statement of cash flows on the date on which all IFRS 5 criteria are met.

On 31 May 2023, Nedap Beveiligingstechniek B.V (NBT), was sold to Solid Systems Group B.V. This transaction was executed without the realisation of a financial gain on the sale of the shares that Nedap held in NBT.

The result after taxation up to 31 May 2023 amounted to €81 (2022 up to 31 December: €179).

Comparison to last year

Where necessary, comparative figures have been adjusted for comparison purposes.

Consolidation

The financial data of Nedap N.V. and of the subsidiaries listed above (jointly referred to as Nedap) have been consolidated in full if the requirements of IFRS 10 are met. Balance sheet positions and transactions between consolidated companies and unrealised result on such transactions are eliminated when preparing the consolidated financial statements. The unrealised profit/loss of consolidated companies on transactions with non-consolidated companies is eliminated in proportion to Nedap’s interest in that participation.

Credit risk

Credit risk is the risk of financial losses for Nedap due to non-compliance with payment obligations on the part of a customer or counterparty. Credit risks arise in particular on receivables from customers. Nedap reduces this risk by insuring trade receivables against non-payment where possible. The risk of non-payment then lies largely with the credit insurance company. If possible, security is requested from trade debtors who cannot be insured. If necessary, a provision for doubtful debts is formed. The Group assesses its receivables without credit risk insurance on an individual basis, while the expected credit loss model has been applied for those receivables without credit risk insurance that have not been remeasured downward.

When it comes to banks and financial institutions, cash and cash equivalents are held only with parties with at least an ‘A’ rating awarded by an independent ratings agency.

Liquidity risk

Liquidity risk is the risk that Nedap cannot meet its financial obligations when they become due. Nedap reduces this risk by maintaining sufficient access to capital. In this respect, an ample credit facility running through to April 2026 has been taken out, whereby the total facilities of €44 million (including temporary facilities of €5 million in the period from April to September) are not subject to covenants.

Currency risk

Nedap reduces the currency risk by restricting the size of transactions in foreign currencies and, if necessary, hedging these risks. For the most important foreign currency – the US dollar – an internal hedging system is used, which means that payments in US dollars are made using US dollars available elsewhere in the company. In 2023, the US dollar was, after the euro, the currency used for most transactions. The US dollar was also the currency with the highest net transaction value in 2023 (2% of revenue), whereby most US dollar transactions were purchases. A hypothetical change of 10% in the US dollar exchange rate would have pushed the profit for the financial year up or down by €0.6 million.

Interest rate risk

A change of 100 basis points in interest rate on the loans specified in Note 8 would affect the profit for the financial year by €0.1 million (€0.1 million in 2022).

Market risk

Nedap reduces its market risk by operating in different geographical markets and areas of application with different products.

Capital management

Nedap strives for a conservative financing structure reflected by a solvency ratio of at least 50% and net debt/EBITDA of a maximum of 1.5. Temporary deviation from this target figure is possible for strategic reasons. In 2023, these ratios were 61% and 0.1 respectively (60% and -0.1 in 2022).

Standards and interpretations implemented for the first time

Certain new standards and interpretations that have been published are not compulsory for the reporting period ending 31 December 2023. The Group has not proceeded to the early application of these standards and interpretations. These standards and interpretations are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

1. Intangible fixed assets (€ x 1,000)

The majority of the 2023 investment in intangible fixed assets in progress relates to the acquisition of the Medikit software in Q4 2023. Intangible fixed assets in progress and prepayments include a €1,971 (2022: €915) investment relating to intangible fixed assets developed in-house.

To a great extent, the capitalised development costs are for detection and inventory management systems.

2. Tangible fixed assets (€ x 1,000)

*Moulds, dies, measuring and testing equipment, furniture and fittings, computer systems and vehicles.

At year-end 2023, €1,276 of the book value of ‘Right-of-use assets‘ related to premises and €423 to other fixed equipment. Depreciation totalled €789 and €247 respectively in 2023. Currency translation differences are ignored, given their small significance. Tangible fixed assets are insured at new-for-old value. A right of mortgage on immovable property amounting to €18.9 million (€18.9 million in 2022) has been granted as security for bank debts. The useful life of assets measured as ‘Right-of-use assets’ is in all cases at least equal to the period of the remaining lease payments.

For further explanation of leases, see also note 9. Liabilities entered into stood at €4.8 million (€1.9 million in 2022) at year-end. Impairment is explained under ‘Impairment of assets’.

Geographical information on the book value of tangible fixed assets and intangible fixed assets:

3. Deferred tax assets and liabilities (€ x 1,000)

These receivables relate to the losses brought forward and deferred taxation. The offsettable profit/loss relates to deferred tax assets at two subsidiaries.

For the most part, these losses can be carried forward indefinitely.

At 31 December 2023, there were no temporary differences, uncompensated tax losses or unused tax credits for which no deferred tax assets had been recognised.

4. Inventories (€ x 1,000)

A total amount of €3.3 million (€3.2 million in 2022) of inventories has been written down to a lower realisable value.

Costs of write-down of inventory, which are recognised in materials and outsourced work, amounted to €1.6 million in 2023 (€1.1 million in 2022).

5. Trade and other receivables (€ x 1,000)

Of the trade and other receivables, €0.4 million (€0.4 million in 2022) has a term of over 1 year.

Of the trade receivables, 92% (94% in 2022) are either not yet due or in the first month after the agreed payment date.

Of the remaining 8% (6% in 2022), 5% (4% in 2022) are a maximum of 90 days overdue and 3% (2% in 2022) are over 90 days overdue.

In the case of the latter 3% of trade receivables, the receivables covered by credit insurance have been handed over to Nedap’s credit insurer for collection.

In 2023, the average credit term for trade accounts receivable was: 6.5 weeks (6.7 weeks in 2022). Nedap has insured the credit risk in its trade receivables wherever possible. The companies that cover the insurance risk are rated by global rating agencies with an A-rating, or better. A total of 91% of the trade receivable balance is covered (89% in 2022), with a pay-out of 90% (90% in 2022). The total amount of uncovered credit risk is €2,667 (2022: €3,791).

The expected credit loss model has been applied for those receivables without credit risk insurance that have not been remeasured downward. The expected credit loss percentage is based on historical credit losses over the past 12 months.

6. Cash and cash equivalents (€ x 1,000)

Cash and cash equivalents are available on demand.

7. Shareholders’ equity attributable to shareholders (€ x 1,000)

The company’s authorised share capital consists of 15,611,000 ordinary shares and 15,611,000 preference shares, all with a nominal value of €0.10 each. 6,692,920 ordinary shares have been issued and paid up.

The average number of outstanding shares in 2023 was 6,546,636 (6,512,369 in 2022).

At year-end 2023, 6,554,003 shares were outstanding (6,519,965 in 2022).

At year-end 2023, the company held 138,917 (172,955 in 2022) of its own shares that are expected to be transferred to employees under the employee participation plans.

8. Borrowings (€ x 1,000)

The fair value of the borrowings is not materially different from their amortised cost.

The financing agreement with the bank for the Standby Roll-Over loan will expire on 1 April 2026. Security has been provided in the form of a right of mortgage (€18.9 million, not including 40% for interest and costs) and a pledge of all fixtures and fittings, inventories and trade receivables (€92 million as of 31 December 2023). The pledge includes security for bank overdrafts (see note 12).
The General Terms and Conditions and the General Provisions for Credit Provision (for business clients) of ABN AMRO Bank N.V. apply to the agreement.

The agreement does not contain any covenants.

9. Lease liabilities (€ x 1,000)

In some cases, Nedap has the option to extend contracts it has entered into, especially those relating to the leasing of company buildings.

Extension is then subject to pre-agreed conditions. There are very few lease liabilities for which, as a result of application of IFRS 16, extension options are measured because it is reasonably certain that Nedap will exercise the option.

10. Employee benefits (€ x 1,000)

Estimated likelihood to stay is related to employee age and the number of years of employment at Nedap.

Of the long-term part of the provision (€1,001), €304 relates to the period from 2025 to 2028 (>1 year <= 5 years).

11. Provisions (€ x 1,000)

The part of the provisions with a term of under 1 year €1,010 (€928 in 2022) is recognised under short-term liabilities. Of the long-term part of the provision, €15 relates to the period after 2029 (> 5 years).

To the extent that guarantee costs cannot be determined for individual products, the guarantee provision is made up of historic guarantee costs per product category and linked to outstanding periods during which customers can still submit guarantee claims.

The guarantee period differs per product category.

Given the short-term nature of the provisions, they were not discounted.

12. Bank overdrafts (€ x 1,000)

The maximum overdraft under the facility is €25.0 million (€25.0 million in 2022).

Every year, over the period from April to September inclusive, an additional facility of €5 million will be available.

The nominal interest rate is based on the 1-month average Euribor with a variable individual markup.

13. Trade and other payables (€ x 1,000)

An amount of €0.3 million (€0.3 million in 2022) of other liabilities and accruals and deferred income relates to payables with a term of over 1 year. Prepayments received at year-end 2022 were recognised as revenue in 2023.

14. Revenue (€ x 1,000)

Software subscriptions (licences) and services consist mainly of subscriptions and maintenance contracts provided by the Healthcare, Retail, Security Management and Staffing Solutions business units.

No customer represents sales in excess of 10% of total revenue.

15. Personnel costs (€ x 1,000)

Social security costs include a government grant of €-861 (€-959 in 2022).

In 2022 pension costs include a refund of pension premiums paid amounting to €-1,464. This concerns Nedap’s share in the profit from premiums paid for life and disability insurance that has meanwhile expired, less claims made on these policies.

The costs of share-based remuneration, recognised in accordance with IFRS 2 consist of:

• A 10% purchase discount that is charged to the result for the financial year in full. Costs of bonus depositary receipts are charged to the profit and loss account over a period of 5 years. Combined, these costs amount to €412 in the financial year (€402 in 2022).

• Costs of remuneration that must be invested in depositary receipts in full (€1,914 NAPP; €1,354 in 2022).

The fair value (in euros) of bonus and NAPP depository receipts awarded in the financial year is €46.78 (€53.54 in 2022).

Costs for which a purchase discount and bonus depositary receipts are recognised under other personnel costs, while other costs are recognised as wages and salaries. Of these costs, an amount of €219 is related to the 2023 financial year (€185 in 2022).

The part of the remuneration payable under the NAPP and employee participation plan that is settled through the legal entity’s equity instruments has been added to the share-based remuneration reserve. For two subsidiaries, it has been decided to not deliver this remuneration in the form of depositary receipts.

For these entities, share-based remuneration will be settled using cash and cash equivalents. This liability has been recognised at fair value under Trade liabilities and other payables.

Remuneration Board of Directors

Basic income and Variable remuneration  are considered short-term benefits, benefits of Employee participation plan qualify as share-based payments and pension costs are post-employment benefits.

The Board of Directors is required to invest at least 50% of their variable remuneration in the Stichting Medewerkerparticipatie Nedap in exchange for Nedap depositary receipts. The depositary receipts are locked up for a period of five years.

The benefits offered by the Employee Participation Plan are the 10% purchase discount on the depositary receipts and entitlement to bonus depositary receipts (after 4 years).

The members of the Board of Directors have used their variable remuneration for the financial year as follows for the purchase of depositary receipts:

Shares and depositary receipts

Nedap has not granted the Supervisory Board any rights to acquire Nedap depositary receipts.

The company has not granted the Board of Directors or Supervisory Board members any loans or guarantees. Further details of the remuneration policy are provided in the Risk & Governance chapter of this report.

Supervisory Board remuneration

The total remuneration for the Board of Directors and the Supervisory Board members (key management personnel) for the year amounts to €2,244 (2022: €2,154)

16. Amortisation (€ x 1,000)

17. Depreciation (€ x 1,000)

18. Other operating costs (€ x 1,000)

The costs of foreign exchange differences recognised in profit or loss amount to €625 (2022: €284).

Other operating costs includes general, housing, indirect manufacturing and selling costs.

19. Taxation (€ x 1,000)

The change in the domestic tax rate is caused by a tax rate of 19.0% on the first €200 of taxable profit (15.0% on the first €395 of taxable profit in 2022).

The net tax rate for associates outside the Netherlands is lower than the nominal rate in the Netherlands, which leads to a 0.7% decrease in the effective tax rate.

Non-deductible expenditures are largely costs relating to share-based remuneration.

Besides a small amount for the Energie/Milieu Investerings Aftrek (EIA/MIA, Energy/Environmental Investment Tax Credit) (€-1 (€-7 in 2022)), tax incentive schemes consist of benefits ensuing from application of the Innovation Box tax regime (€-2,020 (€-1,604 in 2022)).

From 2022, deferred tax assets and liabilities are measured at the weighted average rate, factoring in any arrangements under the Innovation Box tax regime. This is based on the fiscal EBIT, where it used to be based on the commercial EBIT, which has resulted in a downward remeasurement in 2022 of deferred taxation.

Net income tax payable for 2022 has been paid. The difference between income tax paid of €4,969 in the statement of cash flows and the payable amount of €5,032 is made up of advances paid in 2022 and previous years, as well as advances paid in 2023 on the profit expected for the financial year.

In 2020, the Dutch tax authorities communicated their opinion that the current transfer pricing method should also have been applied at Nedap Asia Ltd. in 2014 and 2015. According to the Dutch tax authorities, profits generated in Hong Kong should have largely been taxed in the Netherlands, prompting them to issue revised tax assessments for 2014 and 2015.

Nedap has contested these tax assessments by filing an objection. Over recent years, Nedap engaged in multiple discussions with the tax authorities to address this issue, providing further supporting documentation throughout the process. Despite these efforts and the additional information provided, the tax authorities maintain their position that the revised tax assessments were correctly issued. Consequently, in 2022, Nedap initiated a formal request to commence a Mutual Agreement Procedure (MAP) between the Netherlands and Hong Kong tax authorities to determine the jurisdiction of tax obligations.

Nedap is currently awaiting an assessment of this request and a response to it from the tax authorities. Nedap anticipates that the most likely result will be the absence of a cash outflow from the organisation.

Any possible net payments are expected to be limited to interest on overdue tax, as there is a current tax treaty to avoid double taxation between both states and based on the fact that the effective corporate income tax rate in the Netherlands is virtually identical to that used in Hong Kong. These costs, which will amount to between €0.2 million and €0.3 million if the tax authorities turn out to be right, have not been taken into consideration in the results for 2023.

20. Financing liabilities (€ x 1,000)

The long-term loan has a variable rate of interest.

21. Liquidity risk (€ x 1,000)

Other information

Commitments and contingent liabilities

Guarantees issued by group companies in relation to building rental were €0.3 million (€0.4 million in 2022) and other €0.1 million (€0.1 million in 2022).

At year-end 2023, Nedap does not have any multi-year financial liabilities that have not been recognised. With the implementation of IFRS 16, all long-term financial liabilities are recognised on the balance sheet.

Nedap has received claims from several parties regarding Nedap’s alleged failure to meet contractual obligations. Where necessary, provisions have been made, factoring in compensation that can be claimed under insurance policies. Nedap expects these claims to have limited financial consequences for Nedap.

Related parties

Parties related to Nedap are the Stichting Preferente Aandelen Nedap and the members of the Supervisory Board and the Board of Directors. In the financial year, no payment was transferred to Stichting Preferente Aandelen Nedap. There were no other transactions with related parties during the financial year except as presented in the financial statements. Transactions are performed on a commercial basis.

Research and development costs

Government grants relate mainly to tax rebates under the Dutch Research and Development (Promotion) Act (Wbso) on account of R&D activities. Research and development costs mostly relate to maintaining and further developing current products and services. The remaining costs are for research and development in relation to new products or services. Such development costs are only capitalised if the applicable IAS 38 criteria are met.

Stichting Medewerkerparticipatie Nedap

Shares purchased over the period from 2020 to 2023 are still locked up. Of the 217,722 shares held, 86,062 are still in the locked-up period.

The 86,062 locked-up depositary receipts entitle holders to 15,196 bonus depositary receipts (15,597 in 2022).

In 2023, 4,844 bonus depositary receipts were awarded (4,978 in 2022), 215 contingent bonus depositary receipts expired (398 in 2022) and 4,658 contingent bonus depositary receipts were awarded (3,905 in 2022), resulting in 15,196 potentially awardable bonus depositary receipts at year-end 2023 (15,597 in 2022). Stichting Medewerkerparticipatie Nedap holds 3.3% of the total issued share capital.

Profit appropriation