Dear shareholder,
We are pleased to present MKB Nedsense's Annual Report 2023.
This annual report covers MKB Nedsense's developments during the 2023 financial year.
We continue to focus on creating long term shareholder value.
MKB Nedsense focuses on SMEs with an enterprise value between €1m and €10m. We are convinced that good opportunities will arise in this SME segment.
It is our intention to grow the portfolio in 2024. Peter Paul de Vries
MKB Nedsense N.V. PO Box 26
1400 AA Bussum www.mkbnedsense.nl
Board of Directors
P.P.F. de Vries
Supervisory Board
G.P. Hettinga
D. van Dam
The management report covers the 2023 financial year. MKB Nedsense reports as an investment entity and uses the consolidation exemption in accordance with IFRS-10.
As an investment company, MKB Nedsense focuses on investing in SMEs and supporting their growth ambitions. MKB Nedsense focuses on investing and participating in companies with a value of up to approximately €10 million. This will in principle be based on a lower limit of €F1 million.
When assessing potential investments in a company, we use the following criteria:
range of €1-10 million;
Whether a company meets the above described criteria is assessed by the management and - in its supervisory function - the Supervisory Board. This includes consideration of the sector in which the company operates.
MKB Nedsense has been reporting as an 'investment entity' in accordance with the IFRS 10 'consolidation exemption' since 2017. This means that the results of the various majority interests are not consolidated. The investments and majority interests are valued and presented at fair value.
There is also an exit strategy for the investments. In the explanatory report, figures of the controlling interests are presented. The figures of the relevant entities have not been fully audited in the context of these financial statements.
MKB Nedsense has various funding sources available to make investments, acquire companies or take stakes:
MKB Nedsense will consider paying a dividend if the results allow it to do so. This decision, and the amount of any proposed dividend, will depend, among other things, on the financial and operational results, cash flow, as well as on MKB Nedsense's balance sheet position and whether the available funds should be used for repayment or investments.
In 2022, MKB Nedsense had an extended financial year running from 31 December 2021 until including 31 December 2022. The 2023 figures in this annual report are compared with the figures for the previous financial year 2022.
In this report, we report on the 100% owned companies that are part of MKB Nedsense's portfolio: GNS Brinkman and Axess. These two companies employed around 40 employees on an FTE basis at the end of 2023. The total turnover for 2023 of these two companies is €7.4 million with an operating profit (EBITDA) of €0.4 million. In addition MKB Nedsense owns smaller stakes in Almunda Professionals and TIB-TEC. During 2023, no new investments in SME-companies were made.
GNS Brinkman, based in Zaandam, is active in the development and production of burglar and fire- resistant solutions, such as roll-up grilles, roll-up doors and fire doors. GNS Brinkman also provides service, repair and maintenance (SRO) on these products.
GNS Brinkman was formed from a merger of the companies GNS and Brinkman. GNS was formed in 2007 from a merger between Gorter Branddeuren (1837), NRF (the Nederlandse Rolluiken Fabriek, 1967) and Slaets (1850). Brinkman was formed in 1920.
GNS Brinkman's main sales markets are non- residential construction, the industrial sector, super markets and other chain stores, particularly in the Randstad region and North Brabant. About 10% of turnover comes from exports to Belgium, Germany and Denmark. There are also modest exports to other European countries. The market is characterised by production and installation orders on a project basis. GNS Brinkman distinguishes itself from the competition through its innovative customised solutions. In addition, GNS Brinkman focuses on increasing its presence in the SRO market to create a more stable revenue base.
Partly due to these steps, GNS Brinkman managed to achieve a small positive operating result (ebitda) of 0.2 million euros in the 2023 financial year on turnover of 4.8 million euros. This is slightly lower than 2022. As key growth opportunities, GNS Brinkman's management sees accelerating product innovations, expanding the SRO department and more actively offering fire safety consultancy.
Axess is an international manufacturer of five types of lifts and is based in Zaandam. It outsources the installation of the lifts at customers' premises. In addition, the lift manufacturer provides repairs, maintenance and periodic checks of around 450 lifts installed by Axess. Axess is a specialist in platform lifts which, unlike conventional lifts, do not require a lift shaft. This makes them relatively easy and cheap to install. Axess installs lifts mainly in the market segments of education (schools and BSOs), healthcare (GPs and care homes), housing (apartment buildings and private homes) and retail (supermarkets and other shops).
Axess also offers professional lifts for industry. Axess responds to the ageing trend with various products. Besides residential lifts, Axess also offers so-called disabled lifts. This is a lift type specifically developed to bridge small heights in locations where the construction of platform or standard lifts is not necessary or not possible. Axess generates part of its sales abroad. For 2023, Axess posted a turnover of €2.6 million and achieved an operating profit of €0.15 million.
MKB Nedsense acquired a minority stake in Almunda Professionals NV in July 2021. Almunda Professionals is a listed holding company with a focus on deploying professionals for consultancy and support of companies and organisations in specific sectors. Almunda Professionals N.V. aims for a combination of organic growth and
acquisitions. Almunda Professionals has three activities:
In 2021, MKB Nedsense made an investment in TIB- TEC, a Swiss-based hydrogen start-up commercialising a proprietary technology that enables the production and use of green hydrogen. During 2023 TIB-TEC didn’t achieve a listing on the Swiss stock exchange: BX Swiss stock exchange. The investment, €1.8 million, has been paid partly (one-third) in cash and partly (two- thirds) in new MKB Nedsense shares. TIB-TEC is still developing its promising hydrogen technology, the listing is again delayed until 2024. MKB Nedsense has certain guarantees from the company and major shareholder, among which the unfolding of the initial transaction. In 2024, MKB Nedsense will activily pursue the possibilities to maximize the value for MKB Nedsense while lowering the exposure.
MKB Nedsense achieved a net profit of €0.2 million positive in the 2023 financial year (2022: €0.1 million). The income from its investment portfolio (equity and loans) decreased during 2023. This was offset by the low holding company costs and a release of a provision for audit costs.
MKB Nedsense's equity increased from €9.05m (2022) to €9.20m in 2023. MKB Nedsense's net asset value increased from 9.0 to 9.2 euro cents per share in the past financial year. Earnings per share for 2023 were 0.2 eurocents (2022: 0,1 eurocents).
No major transactions took place during the financial year. In the current situation, the Management Board and Supervisory Board propose to pass the 2023 dividend.
The Supervisory Board's report covers the 2023 financial year.
The Supervisory Board supervised the management conducted by the Board both in and outside meetings. The Management Board prepared and submitted to the Supervisory Board the Financial Statements for the financial year 2023.
Due to the capacity problem in the Dutch PIE audit market, MKB Nedsense did not contract an audit firm to audit the 2023 accounts. This Annual Report has therefore not been audited by an auditor.
Focus areas for the Supervisory Board in the past financial year included the operational improvement of the existing activities, the implementation of the strategy, acquisition opportunities, compliance with laws and regulations, as well as keeping cost levels low. The Supervisory Board discusses the long term value creating strategy and associated risks on a regular basis. In addition the special market conditions and the consequences of high inflation were discussed.
With respect to the investment strategy attention was paid to, among other things, its implementation and feasibility and the opportunities and risks for the company. In that context, investments and divestments were discussed, as well as the exit strategy and the financing structure. The further professionalisation of the organisation was also discussed, as well as the appointment of management. Attention was also paid to filling the vacant auditor position after accon avm terminated its PIE licence.
On January 8th 2024 MKB Nedsense announced it had selected CFA to audit the 2024 annual report. We will ask the shareholders’ meeting for the approval of their appointment.
MKB Nedsense evaluated the new Corporate Governance Code during 2023. The company largely complied with the best practice provisions of the new Corporate Governance Code. More information on this subject is provided in chapter 6 'Corporate Governance'.
The Supervisory Board met in 2023 one time in the absence of the Management Board. This included discussion of the performance of the Executive Board and its own performance.
Supervisory Board
G.P. Hettinga
D. van Dam
There are no significant events after the balance sheet date.
The Executive Board and Supervisory Board of MKB Nedsense take their responsibilities for risk management and the risk management and control systems implemented for this purpose within the organisation seriously.
-control within the organisation seriously. MKB Nedsense attaches importance to good risk management and control and ensures its further development and optimisation. The board is of the opinion that the internal risk management and control systems provide a reasonable degree of certainty that the financial reporting does not contain any material misstatements and that these systems worked properly during the year under review. We have no indications that these systems will not work properly in the current year.
Specifically, the following risks are identified for MKB Nedsense:
The strategy adopted by MKB Nedsense is inextricably linked to risk-taking. The main risks here are cyclical conditions, consumer spending and the labour market. Investing to create value growth for share holders is an essential part of MKB Nedsense's strategy. Adverse economic conditions may result in MKB Nedsense or its portfolio companies perform less than expected. MKB Nedsense will regularly review its portfolio for strategic risks. This involves testing activities against the return and growth criteria set for them and their impact on MKB Nedsense's risk profile. Spreading risk is not an end in itself. In addition, any downturn in the financial markets and any resurgence of the debt crisis may have repercussions on the economic climate in the Netherlands and abroad, which may affect MKB Nedsense's activities or limit its access to external capital.
The results from the operations of the companies in which MKB Nedsense invests may be disappointing, partly due to increasing operating costs or other unforeseen circumstances. The operations of GNS Brinkman and Axess, for example, are partly dependent on the construction industry, presence of technical staff and the necessary approvals to operate. The companies have relatively high fixed costs in the form of labour costs. Therefore, an unforeseen increase in the labour costs of one of the companies or participations, for example as a result of new collective bargaining agreements, or a drop in turnover, could have a negative effect on the results of the companies in which MKB Nedsense invests.
MKB Nedsense may also invest in listed companies. These investments are cautioned on the basis of fair value, which usually follows the share price. A fall in the share price may therefore negatively affect the value of these investments. If the value of these investments decreases, this will have a direct impact on the result and/or equity. There is a risk that investments will not achieve the desired result as a result.
MKB Nedsense is listed on the official market of Euronext Amsterdam and therefore has to comply with the applicable laws and regulations. If these regulations change, this may result in additional costs for MKB Nedsense. The lack of PIE-auditors can also be identified as a risk.
The organisation relies heavily on a few key people, including at least the director. Furthermore, business operations are partly carried out by individuals of major shareholder Value8.
In a process for an acquisition, MKB Nedsense makes hypotheses, assumptions and considerations regarding possible future events. Actual developments may differ significantly from these. Also, errors of judgement in the due diligence process and contract negotiations may lead to losses and/or reputational damage for MKB Nedsense. MKB Nedsense tries to minimise this risk by carrying out acquisitions as carefully as possible. Where necessary, MKB Nedsense enlists the help of external advisors, who support the company in identifying the risks and advise MKB Nedsense on how to minimise them by (among other things) contractual means.
MKB Nedsense may be held liable for its actions. Although MKB Nedsense is not aware of any material or imminent litigation at the time of publication of this Annual Report, MKB Nedsense may be held liable for any failure of service or other potential damages. Such liability proceedings can generally involve high costs. When companies are sold, guarantees are given to a greater or lesser extent regarding the accuracy of the information provided. In addition Legal and compliance risk concerns recording, protecting, and enforcing recording relevant intellectual property rights, including trademark registrations, patents, and domain names.
Liquidity risk is the risk of having insufficient funds to meet immediate obligations. If MKB Nedsense takes on new obligations, this could lead to higher liquidity risk. Regarding future liquidity demands, MKB Nedsense may depend on the willingness of major shareholders (including, to a significant extent, Value8) to provide funds. The available liquidity is held with a Dutch major bank with an A rating.
A change in tax laws or regulations, case law or positions of the tax authorities in the Netherlands may negatively affect MKB Nedsense's (future) results.
Most of MKB Nedsense's activities are conducted in euros. MKB Nedsense does not currently use financial instruments to hedge currency risks.
Pursuing the objectives is inextricably linked to taking (controlled) risks. The willingness to take risks is proportional to the size and life stage of the (future) activities, as well as the expected return. MKB Nedsense has a very low risk appetite in the context of compliance and reputation. MKB Nedsense has set itself the goal of designing the organisation in such a way that decisive entrepreneurship goes hand in hand with effective risk management.
During the financial year, the Executive Board and Supervisory Board continuously analysed and assessed the effective operation of existing risk management and control systems, using the formal processes, reports and evaluations available for this purpose. It was concluded that the internal risk management system functioned properly in the year under review and that no irresponsible risks were taken.
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MKB Nedsense has an Executive Board and a Supervisory Board, the so-called two-tier management structure. Below are the outlines of the current structure.
The Executive Board manages the company in consultation with the Supervisory Board. The Executive Board accounts for its actions to the Supervisory Board and to the General Meeting of Shareholders. The Executive Board is conducted by Mr De Vries. The Supervisory Board supervises the general affairs of MKB Nedsense and the policy of the Executive Board. In discharging their duties, the com- missionaries are guided by the company's interests. The Management Board shall provide the Supervisory Board in good time with the information and documents necessary for the performance of its duties. The Supervisory Board members are appointed by the General Meeting of Shareholders.
The Supervisory Board will continuously review whether the changing activities of MKB Nedsense should affect the composition of the Executive Board and the Supervisory Board. In doing so, if a vacancy arises, preference will be given to a female candidate in case of equal suitability. Currently, there are no female members on the Executive Board or the Supervisory Board. At present, MKB Nedsense does not yet comply with the requirement in the Act on Management & Supervision of as balanced a distribution of seats between men and women as possible. In the future, MKB Nedsense will expressly consider the importance of a balanced composition.
The company considers relevant social aspects of business. When acquiring new portfolio companies, the company will include social aspects, such as sustainability and social aspects, in the decision-making process to achieve shareholder value growth.
MKB Nedsense is a public limited liability company listed on Euronext Amsterdam. MKB Nedsense has 40,600,000 ordinary shares and 59,400,000 A shares outstanding at 31 December 2023 as well as at the date of the financial statements. A shares have the same rights as ordinary shares and are convertible into ordinary shares at the holder's request.
No shares have been issued to which special profit rights are attached. In respect of none of the issued shares, there is a restriction on voting rights, a time limit for exercising voting rights and/or issue of depositary receipts for shares with the cooperation of MKB Nedsense. According to the AFM's register and company register, as at the date of the financial statements, there are four shareholders with a real interest greater than 3 per cent. Actual interests may differ within the range:
There are no significant agreements to which the company is a party that are created, amended or dissolved under the condition of a change of control of the company after a public offer is made. The company also has no agreements with any director or employee that provide for a payment on termination of employment following a public offer for the company's shares.
The following are the relevant provisions of the Articles of Association, to the extent they are not mentioned elsewhere in these Financial Statements.
Article 17.1 of MKB Nedsense's articles of association states that MKB Nedsense is managed by a board consisting of one or more directors. Under Article 25.1, there is a Supervisory Board consisting of one or more persons. Furthermore, Article 18.1 states that the General Meeting of Shareholders (AGM) appoints the Directors from a nomination to be made by the Supervisory Board. Pursuant to article 19.1, the AGM may suspend or dismiss a Director at any time. Pursuant to Article 27.1, the AGM may suspend or dismiss any member of the Supervisory Board at any time.
Changing the rights of MKB Nedsense shareholders requires an amendment to the articles of association. A Board resolution on a proposal to amend the Articles of Association is subject to the approval of the Supervisory Board pursuant to Article 23.2.
Shares are issued in accordance with Article 7 of the Articles of Association pursuant to a resolution of the Management Board, if and insofar as the Management Board is designated for that purpose by the AGM. The Management Board resolution is subject to the approval of the Supervisory Board.
When shares are issued, each shareholder has a pre-emptive right in proportion to the aggregate amount of his shares, subject to the provisions of the law. The pre-emptive right may, each time for a single issue, be limited or excluded by the body authorised to issue. Acquisition other than for no consideration can only take place if and insofar as the General Meeting has authorised the Management Board to do so.
Pursuant to Article 7.2, the following applies: The designation of the Executive Board as the issuing body may be determined by resolution of the AGM for not more than two years at a time.
The resolution of the AGM to that effect can only be taken on a proposal of the Executive Board that is subject to the approval of the Supervisory Board. Such designation shall determine the number of shares that may be issued. A designation made by resolution of the AGM cannot be withdrawn, unless stipulated otherwise in the designation.
Pursuant to Article 12.5, the following applies. Acquisition of own shares other than for no consideration can only take place if the AGM has authorised the Executive Board to do so.
This authorisation is valid for a maximum of 18 months. The AGM must specify in the authorisation how many shares or depositary receipts therefor may be acquired, how they may be acquired and between which limits the price must lie. The resolution to repurchase shares requires the prior approval of the Supervisory Board.
At the AGM held on 29 June 2023 the shareholders' meeting authorised the board to issue 20 per cent of the issued shares for a period of 18 months and to limit or exclude the pre-emptive right thereof.
The board is also authorised to repurchase shares during the statutory maximum period of 18 months from 29 June 2023, subject to the law and the articles of association. The maximum number of shares that can be repurchased is 20 per cent of the issued share capital.
Pursuant to Article 1 Decision Article 10 Takeover Directive, MKB Nedsense explains below:
The capital structure is listed in chapter 6.3 'Legal structure'.
MKB Nedsense has restrictions on transfer of shares, voting rights, deadlines for exercising voting rights and issuance. Furthermore, MKB Nedsense is not aware of any agreement between shareholders regarding the restriction of transfer or voting rights.
The substantial holdings, to the extent known to MKB Nedsense, are listed in section 6.3.
There are no special control rights attached to shares. There are no mechanisms for controlling a scheme that grants rights to employees.
Appointment and dismissal of members of the Supervisory Board and Executive Board With regard to the appointment and dismissal of members of the Supervisory Board and the Executive Board, reference is made to section 6.1 of the financial statements. With regard to the amendment of the Articles of Association, reference is made to section 6.4 of the financial statements.
Section 6.1 of the financial statements explains the powers of the Executive Board, including the powers to issue and acquire shares.
The company has no general protective measures against a takeover of control of the company, such as certification of shares, priority shares or protective preference shares. There are no significant agreements to which the company is a party that are created, amended or dissolved under the condition of a change of control of the company after a public offer is made. The company also has no agreements with any director or employee that provide for a payment on termination of employment following a public offer for the company's shares.
MBK Nedsense attaches great importance to sound and transparent corporate governance and strives for clear communication about this with all stakeholders. The relevant social aspects of doing business are taken into account. MBK Nedsense has implemented the Dutch Corporate Governance Code. MBK Nedsense endorses the principles of this Code. Any substantial change in the company's corporate governance structure and compliance with the Code will be submitted to the General Meeting of Shareholders for discussion under a separate agenda item. For the detailed application of the revised Code, please refer to the corporate governance document on the website.
MBK Nedsense has chosen to deviate from the best practice provisions on a very limited number of points, as these are not (yet) desirable due to MBK Nedsense's size or from cost considerations. The best practice provisions with which MBK Nedsense does not yet (fully) comply are listed below. The deviations are related to the current phase of the company.
Given the size of the company, MBK Nedsense does not currently have an internal audit department. MKB Nedsense has made alternative safeguards to enhance the control systems.
The Code states that the number of supervisory board members who are not independent in accordance with should collectively amount to less than half of the total number of supervisory directors including the chairman. The chairman - as one of the two boardmembers - is currently given the characteristics of MKB Nedsense not independent as he is also board member of the majority shareholder.
Given the size of the company, MBK Nedsense does not currently have a 'company secretary'.
Given the size of the company, not all presentations to (institutional) investors or analysts will yet be available simultaneously via webcast.
This statement is included pursuant to Article 2a of the 'Decree on additional requirements for annual reports dated 1 January 2010' (hereinafter the 'Decree'). For the statements contained in this declaration as referred to in Articles 3, 3a and 3b of the Decree, reference is made to the relevant references in these Financial Statements (more specifically: Chapter 5 and Chapter 6 of the Financial Statements). The following communications should be considered to be inserted and repeated here:
Compliance with principles and best practice provisions Code are listed in section 6.7 'Corporate Governance Code'.
The main features of MKB Nedsense's management and control system are listed in chapter 5 'Risk factors'.
The functioning of the shareholders' meeting and the main powers and rights of MKB Nedsense shareholders and how they can be exercised are set out in section 6.6 'Takeover directive'.
The composition and functioning of the Executive Board and Supervisory Board are reported in section 6.1 'Executive Board and Supervisory Board'.
The information referred to in the Article 10 Takeover Directive Decree (Article 3b Adoption Decree) are listed in section 6.6 'Takeover Directive'.
The basic principle of the company's remuneration policy is that remuneration should be in line with the market. The remuneration policy for the board of MKB Nedsense is adopted by the General Meeting of Shareholders. Following the sale of the operational activities, the remuneration policy has been simplified. The actual remuneration for the Management Board is set by the Supervisory Board, the remuneration of the Supervisory Board is set by the General Meeting of Shareholders. The remuneration of the Supervisory Board is independent of the result achieved by the company.
A new remuneration policy was approved at the shareholders' meeting on 6 April 2016. As the company is engaged in operational activities, it was appropriate to change the remuneration policy. In this context, the remuneration for members of the Executive Board was set at
€15,000 on an annual basis. It is expected that remuneration will be adjusted when new directors are appointed.
The Supervisory Board considers the current remuneration policy appropriate to the identity, mission and values of MKB Nedsense, with the remuneration ratios within the company and its subsidiary being appropriate to the content and responsibility of the various activities performed. The remuneration policy contributes to social support and the creation of sustainable value for its shareholders.
Also given the company's limited size, the Executive Board received very limited remuneration. From 6 April 2016, a remuneration of €15,000 per member of the Executive Board applied. There is no result-dependent remuneration or remuneration in shares or share options for members of the Executive Board. Any severance payments will comply with the Code and therefore not exceed once the annual salary.
On 6 April 2016, the shareholders' meeting set a remuneration of €10,000 per Supervisory Board member and €12,000 for the chairman. During 2023, the Supervisory Board consisted of two members. There is no result-dependent remuneration or remuneration in shares or share options for the Supervisory Board members.
Drs P.P.F. de Vries (1967, Dutch nationality) is also a major shareholder and chairman of the board of Value8 and has extensive experience in the field of listed companies. Before founding Value8, Mr De Vries was - for eighteen years (October 1989- October 2007) associated with the Dutch Investors' Association (VEB). The last twelve years he was managing director of VEB. During 2002- 2003, he was a core member of the Tabaksblat Committee. Mr De Vries studied Business Economics at Erasmus University Rotterdam (1985- 1991). He was further chairman of the pan- European organisation of shareholders' associations Euroshareholders (2005- 2010), member of the Market Participants Panel of the pan-European stock market supervisory organisation CESR (2003-2010). Mr De Vries is a member of the Committee of Recommendation of the Juliana Children's Hospital Foundation. In addition to his position as CEO of Value8 and MKB Nedsense, Mr De Vries is a director of Cumulex NV and a supervisory board member of IEX Group N.V., Almunda Professionals N.V. and Morefield Group N.V.
Drs. G.P. Hettinga (1977, Dutch nationality) is also a director of Value8. Mr Hettinga completed his studies in Business Administration of the Financial Sector at VU University Amsterdam in 2001. In the period from June 2001 to September 2008, he worked as an economist at the Dutch Investors' Association (VEB). In 2007, he was appointed chief economist at the VEB. Mr Hettinga gained extensive and relevant experience and knowledge, including in the field of analysing listed companies, corporate governance, investor relations, internet and takeover bids. Mr Hettinga was a supervisory director at EDCC N.V. (2009-2011), Lavide Holding
N.V. (2013-2014), Novisource N.V. (2013-2014) and
N.V. Dico International (2011-2015). In addition to his position at Value8, Mr Hettinga is a supervisory director of IEX Group N.V. and Portan N.V. and a member of the board of Cumulex N.V.
Derek van Dam (1971, Dutch nationality) is an expert on stock market issues and investor relations. Mr van Dam is currently active as a primary school teacher. Before he was a business developer at Stibbe. Mr van Dam was also active on an interim basis as investor relations manager at Grontmij and SnowWorld. Before that (2000- 2012), he worked at Royal Bank of Scotland (RBS) as Vice President Equity Capital Markets / Corporate Actions and ABN AMRO Rothschild which was acquired by RBS in 2007. Mr Van Dam's experience includes extensive experience in stock market-related matters such as IPOs, issues and shareholder meetings. Mr Van Dam graduated from HEAO Business Economics in 1995, after which he joined Zwitserleven and ING.
Organ | Person | Appointment | Appointed for |
Board of Directors | P.P.F de Vries | 2020 | 4 years |
Supervisory Board | G.P. Hettinga | 2020 | 4 years |
Supervisory Board | D. van Dam | 2020 | 4 years |
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The annual figures, as included in this report, give a true and fair view of the assets, liabilities, financial position and result for the financial year of MKB Nedsense.
The financial statements give a true and fair view of the situation on the balance sheet date, the course of business during the financial year of MKB Nedsense and its affiliated companies, the details of which are included in the financial statements. The financial statements describe the material risks faced by MKB Nedsense.
Bussum, 30 April 2024
P.P.F. de Vries
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fair value of equity interests
7. | Other data | 47 | ||
7.1 | Statutory provisions on profit appropriation | 47 | ||
7.2 | Amendment of articles of association | 47 | ||
26 | 7.3 | Audit report | 47 | |
1. Statement of Financial Position (x €1.000) | ||
31-12-2023 | 31-12-2022 | |
ASSETS | ||
Fixed assets | ||
Private equity investments 6.1 | 1,320 | 1,430 |
Loans to private equity investments 6.1 | 3,835 | 3,842 |
TOTAL FIXED ASSETS | 5,155 | 5,272 |
Current assets | ||
Listed investments 6.2 | 2,175 | 2,019 |
Loans to related parties 6.3 | 2,238 | 2,179 |
Receivables and accruals 6.4 | - | - |
Cash and cash equivalents 6.5 | 17 | 1 |
TOTAL CURRENT ASSETS | 4,430 | 4,199 |
TOTAL ASSETS | 9,585 | 9,469 |
31-12-2023 | 31-12-2022 | |
LIABILITIES | ||
Equity | ||
Share capital 6.6 | 1,000 | 1,000 |
Share premium | 46,823 | 46,823 |
Other reserves | - 38,871 | - 38,871 |
Result for the year | 93 | 93 |
Total equity attributable to shareholders of the company | 9,203 | 9,045 |
Current liabilities | ||
Trade and other payables 6.7 Posts | 382 | 424 |
Total current liabilities | 382 | 424 |
Total liabilities | 382 | 424 |
Total equity and liabilities | 9,585 | 9,469 |
22
(x €1.000)
2023 | 2022 | ||
OPERATING INCOME | |||
Fair value changes private equity investments | 6.13 | - 110 | - 238 |
Fair value changes listed investments | 6.2 | 62 | 181 |
Interest loans to private equity investments | 6.14 | 168 | 158 |
Credit loss loans granted | 6.14 | - 189 | - |
Dividends listed investments | 6.2 | 93 | 83 |
Total operating income | 25 | 185 | |
OPERATIONAL COSTS | |||
Wages, salaries and social charges | 6.15 | 37 | 37 |
Other operating expenses (income) | 6.16 | - 37 | 113 |
Total operating expenses | - | 150 | |
OPERATIONAL RESULT | 25 | 58 | |
FINANCE INCOME (EXPENSE) | |||
Financial benefits | 6.17 | 134 | 59 |
Financial charges | 6.17 | - 1 | - 1 |
Net finance income (expense) | 133 | 58 | |
Result before tax | 158 | 93 | |
Income taxes | 6.18 | - | - |
Result after tax | 158 | 93 | |
Attributable to: | |||
Shareholders of the company | 158 | 93 | |
Result for the year | 158 | 93 | |
Earnings per share attributable to shareholders | 6.5 | 0.00 | 0.00 |
Earnings per share attributable to shareholders | 0.00 | 0.00 | |
Statement of comprehensive income | |||
Result for the year | 158 | 93 | |
Total realised and unrealised net results for the period under review | 158 | 93 | |
Attributable to: | |||
Shareholders of the company | 158 | 93 | |
Total result for the year | 158 | 93 |
(x €1.000)
Share capital
Share Premium
Other reserves
Result Total
Position as at 30 December 2021 | 1.000 | 46,823 | - 38,995 | 124 | 8,952 |
MUTATIONS Profit allocation 2021 | - | - | 124 | - 124 | - |
Realised result 2022 | - | - | - | 93 | 93 |
Position as at 31 December 2022 | 1,000 | 46,823 | - 38,871 | 93 | 9,045 |
MUTATIONS Profit allocation 2022 | - | - | 93 | - 93 | - |
Realised result 2023 | - | - | - | 158 | 158 |
Position as at 31 December 2023 | 1,000 | 46,823 | - 38,778 | 158 | 9,203 |
(x €1.000)
2023 | 2022 | ||
Net profit | 2 | 158 | 93 |
Depreciation and amortisation | - | - | |
158 | 93 | ||
Adjustments for: | |||
Net finance income (expense) | 6.17 | - | - |
Interest loans receivable | 6.17 | - 134 | - 59 |
Income taxes | 6.18 | - | - |
Dividends | - 94 | - 83 | |
Selling private equity investments | - | - | |
Fair value changes private equity investments | 6.1/6.13 | 110 | 238 |
Fair value changes listed investments | 6.2 | - 62 | - 181 |
Interest loans to private equity investments | 6.1/6.14 | - 168 | - 158 |
Private equity investments | 6.1 | - | - |
Credit loss loans receivable | 6.3 | 189 | - |
Movements in receivables and prepayments and accrued income | 6.4 | - | 10 |
Changes in trade and other payables | 6.7 | - 42 | 82 |
Cash flow from operating activities | - 43 | - 58 | |
CASH FLOW FROM FINANCING ACTIVITIES | |||
Loans provided | - 16 | - 166 | |
Repayment of loans receivable | 75 | 182 | |
Repayment of loans | - | - | |
Cash flow from financing activities | 59 | 16 | |
Net change in cash and cash equivalents | 16 | - 42 | |
Cash and cash equivalents at 31 December 2021 / 2022 | 1 | 1 | 43 |
Cash and cash equivalents on 31 December 2023 / 2022 | 1 | 17 | 1 |
Presented in the Statement of Financial Position: | |||
Cash and cash equivalents | 1 | 17 | 1 |
26
MKB Nedsense N.V. (MKB Nedsense) has its registered office in the Netherlands in Amsterdam and holds offices in Bussum at Brediusweg 33. MKB Nedsense qualifies as an investment company under IFRS, with MKB Nedsense's investments valued at fair value. MKB Nedsense's financial year 2022 differs from the calendar year and runs from
31 December 2021 until including 31 December 2022. In the preparation of this annual report, figures for financial year 2023 are compared with the previous financial year 2022, taken from the 2022 annual report. The board has prepared the annual report 30 April 2024. The annual report will be submitted to the Annual General Meeting for information.
The main activities of the company are participating in, financing and lending funds to natural persons and/or legal entities and providing guarantees and/or other securities to third parties for its own obligations and/or for obligations for companies in its investment portfolio. The shares of MKB Nedsense N.V. are listed on the official market of Euronext Amsterdam.
MKB Nedsense supports MKBs in achieving their growth objectives. MKB Nedsense provides venture capital to finance that growth. As a listed investment company, MKB Nedsense makes diversified investing in the MKB segment accessible to private and institutional investors. Investments are made on the basis of clear investment criteria, with an emphasis on a positive contribution (directly or indirectly) to social and economic prosperity.
The objective is to create long-term shareholder value. This objective is pursued with a mitigated risk profile, thanks to diversification of activities and a conservative financing structure.
MKB Nedsense expects to have a greater chance of organic growth and value creation in sectors that have the prospect of higher than GDP growth.
International Financial Reporting Standards The annual report of MKB Nedsense N.V. for the period from 31 December 2022 up to and including
31 December 2023 has been prepared in accordance with International Financial Reporting Standards as accepted for use within the European Union (EU-IFRS) and with Title 9 Book 2 of the Dutch Civil Code. The accounting policies applied by MKB Nedsense N.V. are in accordance with IFRS effective as of 31 December 2022 and pronouncements of the International Financial Reporting Interpretation Committee (IFRIC).
MKB Nedsense applied the following new and amended IFRS standards and IFRIC interpretations relevant to the company in 2023, where applicable.
Application of these amended standards ('IFRS 3 Business Combinations - Reference to the Conceptual Framework Amendments', 'IAS 16 Property, Plant & Equipment - Proceeds before Intended Use Amendments', 'IAS 37 Provisions, Contingent Liabilities, Contingent Assets - Onerous Contracts - Cost of Fulfilling a Contract' and 'IFRS 1, IFRS 9, IFRS 16, IAS 41 - Annual Improvements 2018- 2020') and interpretations do not have a material effect on MKB Nedsense's equity and results of operations and disclosures in the financial statements.
The following standards and interpretations were issued on the date of publication of the financial statements but, not yet effective on the financial statements for the year 2023. Listed below are only those standards for which MKB Nedsense has a reasonable expectation that, when amended in the future, they will have an impact on MKB Nedsense’s disclosures, financial position, or results. MKB Nedsense will apply these standards and interpretations as soon as they are effective:
statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows. The application of this standard is not expected to have an impact on the annual accounts of MKB Nedsense.
In addition to those mentioned above, standards/amendments and interpretations have been proposed by the IASB, but are not expected to have a material impact on MKB Nedsense's financial position and results of operations
There are no additional IFRSs or IFRIC changes effective as of 1 January 2022 that have a material impact on MKB Nedsense.
The financial statements are in euros and all amounts are rounded to the nearest thousand, except per share amounts, unless otherwise stated. The financial statements have been prepared on a historical cost basis, except that investments in private equity investments (unlisted interests), investments in listed companies and financial instruments are measured at fair value. Value adjustments are recognised through the income statement.
Loans receivable are measured at amortised cost in accordance with IFRS 9.
The preparation of financial statements in conformity with EU-IFRS requires management to make judgements, estimates and assumptions that affect the reported values of assets and liabilities and of income and expenses. The estimates and underlying assumptions are based on experience and other factors, which are considered reasonable. The outcomes of the estimates form the basis for the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual outcomes may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to estimates are recognised in the period in which the estimate is revised if the revision affects only that period. Revisions in the reporting period and future periods are made if the revision also affects future periods. More specifically for MKB Nedsense, estimates and assumptions affect in particular the valuation of private equity investments (investments in unlisted companies) and financial instruments (loans and options).
The accounting policies set out below have been applied consistently. The financial statements have been prepared on a going-concern basis.
MKB Nedsense qualifies as an investment company. Based on this qualification, MKB Nedsense uses the consolidation exemption for investment companies (IFRS 10-31).
Within the MKB Nedsense group, there are no group companies that are not themselves investment companies but which engage in
investment-related activities (IFRS 10-32). De facto, this means that MKB Nedsense does not consolidate group companies. De facto there is a single balance sheet, income statement and cash flow statement. Also, MKB Nedsense has defined and laid down its exit policy. Based on its qualification as an investment company, MKB Nedsense values all participations at fair value through profit or loss.
MKB Nedsense's presentation currency is the euro. It is equal to the functional currency. Transactions in foreign currencies are recognised at the exchange rates prevailing on the transaction date. Monetary assets and liabilities in foreign currencies are translated at the closing rate on the balance sheet date. Gains and losses arising from foreign currency transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. Non-monetary items measured at fair value in a foreign currency are translated at the exchange rate prevailing at the date the fair value is determined.
MKB Nedsense recognises the following financial asset categories:
MKB Nedsense follows the International Private Equity and Venture Capital Valuation Guidelines (IPEV Guidelines), which are explained below.
The private equity investments are measured at fair value with recognition of fair value movements through profit or loss. These are equity instruments that belong to the group's investment portfolio. After initial recognition, the unrealised changes in value resulting from periodic revaluation are recognised in the income statement. Loans to portfolio companies (loans to private equity investments) are classified under non-current assets or current assets depending on the maturity of the loan. Presentation is made under non-current assets, except when the maturity date is less than 12 months from the balance sheet date, in which case classification as current assets is made.
Loans to portfolio companies are financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition, these financial fixed assets are measured at amortised cost using the effective interest method and less any impairment for uncollectibility.
Other non-current receivables are recognised initially at fair value and subsequently at amortised cost, using the effective interest method and net of a provision for uncollectability where appropriate.
Realised gains or losses on investments are calculated as the difference between the purchase price and the carrying amount at the beginning of the reporting period plus investments of the interest at the time of sale. All purchases and sales of financial assets according to standard market conventions are recognised at settlement date.
Purchases or sales of financial assets under standard market conventions are purchases and sales of an asset under a contract whose terms require delivery of the asset within the time limits generally prescribed or agreed in the relevant market.
Regarding methods to be used to determine fair values, MKB Nedsense follows the International Private Equity and Ventures Capital Valuation Guidelines.
Private equity investments in the company's investment portfolio include majority stakes in unlisted companies or minority stakes where the company has significant influence. In these investments, there is an intention to dispose of the stake in a period of between three and five years.
As these investments relate to unlisted companies (therefore not liquid), these interests are classified as a non-current asset. Private equity investments are recognised on a fair value basis with recognition of fair value changes through income. Given the underlying characteristics of the private equity investments in the investment portfolio (unlisted large, medium-sized and small MKBs), fair value is determined based on the price of a recent transaction or using a DCF calculation (IFRS Level 3).
In exceptional cases, the multiplier method (IFRS Level 3) used, otherwise only if the underlying characteristic of the investment justifies applying a multiplier method. For investments in which no future cash flows are expected anymore, except for the settlement of the company to be liquidated, the fair value is determined using the Net Assets method (IFRS Level 3).
Selecting appropriate valuation method for the investments
When initially accounting for a private equity investment, the transaction price, including transaction costs, is used as the fair value of the investment. Specific factors, related to the transaction, are considered to assess whether the transaction price is representative of fair value:
The length of the period during which the most recent transaction price is still representative of the fair value measurement depends on the specific circumstances of the underlying private equity investment. In stable market conditions with few changes within the company and/or external market conditions, the length of the period in which the recent transaction price can be used is longer than in a period of rapid change. MKB Nedsense applies the price of a recent transaction for up to one year after that transaction.
Under the DCF method, the current fair value is determined by calculating the net present value of the future cash flows of the underlying business (enterprise value). The cash flows and terminal value relate to the underlying business of the company being valued.
A fair value measurement using an IFRS Level 3 DCF analysis is prepared under the condition that there is uncertainty about cash flows arising from
working with estimates rather than known amounts. Cash flow projections are based on reasonable and supportable assumptions representative of management's best estimates of economic conditions over the remaining useful life of the asset and cash flow projections, as well as the most current and authorised budgets of (local) management.
In the DCF analysis, projected cash flows and terminal value are discounted made at the weighted average cost rate. Where possible, MKB Nedsense uses external input variables for the components determining the weighted average cost rate (risk-free interest rate, equity to debt ratio in the sector and cyclical sensitivity).
The market risk premium and enterprise risk premium are determined using benchmark information, which is common in the market in relation to the specific characteristics of the equity investment being valued. More specifically for the enterprise risk premium, elements such as customer dependency, supplier dependency, management dependency, spread of activities, entry barriers, track record and flexibility are considered.
The enterprise value derived from the DCF is adjusted for the following elements to arrive at the equity value (base valuation):
provisions, claims, dividends payable);
and joint ventures).
The multiple valuation technique is appropriate in exceptional cases for the primary valuation of a private equity investment in the investment portfolio. The multiple method is applied if there is a mature company with an identifiable stream of recurring revenue and relatively stable cash flows. In addition, it must be possible to compile a representative peer group. Given the composition of the private equity investment portfolio (large companies, medium-sized companies and small MKBs), compiling a representative peer group is
complex. For that reason, the multiple method is only used in exceptional cases for the primary valuation. However, the multiple method is used within MKB Nedsense as an additional check on the values resulting from the DCF calculations.
Depending on a company's stage of development, sector and geographical location, MKB Nedsense uses an EBITDA/EBITA multiplier or a revenue multiplier. In the multiple valuation technique, MKB Nedsense considers the following elements: application of an appropriate multiple, taking into account the size, risk and growth expectations of the underlying equity investment to determine enterprise value;
and joint ventures);
For companies with mature recurring revenue with relatively stable cash flows, using an EBITDA multiple is most appropriate. For companies that already generate mature business but do not yet generate stable consistent profits, a revenue multiple is an appropriate multiple to determine enterprise value. The turnover multiple method is based on the assumption that a normalised level of profit can be generated based on the level of turnover. This valuation technique is applicable to companies that are running losses, with the assumption that these losses are temporary and that a normalised level of 'recurring' profit can be established. A valuation based on a turnover multiple can be achieved by using adjusted historical turnover figures combined with a forecast of turnover based on which a sustainable profit margin can be realised.
MKB Nedsense uses multiples derived from current market multiples that reflect the fair value of comparable listed companies or based on comparable current market transactions.
Generally, the fair value of MKB Nedsense's private equity investments will be based on multiples of comparable listed companies.
The fair value measurement takes into account the impact of the liquidity of the interest held. Unlisted private equity interests are less liquid than listed companies. MKB Nedsense applies a liquidity discount with regard to the valuation of unlisted interests derived from multiples of listed interests. The final discount percentage also depends on the size and specific risk of the underlying company.
Under the Net Assets method, the private equity investment is valued at visible net asset value where the assets and liabilities of the equity investment are valued at fair value. This valuation technique is suitable for private equity investments where the value is particularly dependent on the underlying assets rather than income. In specific cases, MKB Nedsense also uses the Net Assets method for equity investments that make a loss and or realise only a marginal profit where, from an investment perspective, a higher value can be realised by liquidating the underlying business, or when there are certain guarantees on a liquidation value.
Specific considerations Indicative bids Indicative bids are not used separately, but are used as supporting information for valuation
based on another valuation method.
Listed investments include listed group companies and listed non-controlling interests (associates and investments). Listed group companies are not consolidated under IFRS 10-31 and measured at fair value with fair value changes recognised through profit or loss. Associates classified under listed investments are measured at fair value with fair value changes recognised through profit or loss on the basis of IAS 28-18.
Investments classified under listed investments are classified as held for trading and are measured at fair value with fair value changes recognised through profit or loss under IFRS 9.
Initially, listed investments are accounted for at cost. After initial recognition, unrealised changes in value resulting from periodic revaluation are recognised in the income statement.
Realised gains or losses on investments are calculated as the difference between the sale price and the carrying amount of the investment at the time of sale.
Determination of fair value
With regard to methods to be used to determine fair values, Value8 follows the International Private Equity and Ventures Capital Valuation Guidelines.
a | Listed investments
The listed investments in MKB Nedsense's portfolio are traded on the regulated market. A feature of a regulated market is that the closing prices of the listed investments are both available and representative of the fair value of the listed investments. In accordance with IFRS 13-B34, listed investments in an active market are valued at the closing price on the valuation date. In principle, for investments in listed companies in an inactive market, the closing price on the balance sheet date is initially used if there are frequent transactions during the reporting year. If there are no frequent transactions during the year under review in an inactive market, a discount is applied to the share price on the balance sheet date.
The discount applied is verified by a DCF calculation or multiple analysis used as supporting information. If there are shares held in a listed investment that are not exchangeable (letter shares), a discount is applied to the share price on the balance sheet date for illiquidity reasons.
Active and inactive market
An active market is one that meets the following criteria:
there can normally be found buyers and sellers at any time (there are frequent market transactions);
An inactive market is one where the market is not well developed. A market is not well-developed if there are no frequent transactions during the reporting period.
b | Private equity investments
Private equity investments in the company's investment portfolio include unlisted associates and unlisted investments ('available for sale'). With these investments, there is an intention to dispose of the interest in due course. As these investments relate to unlisted companies (therefore not liquid), these interests are classified as a non-current asset. Private equity investments are recognised on a fair value basis with recognition of fair value changes through income. Given the underlying characteristics of the private equity investments in the investment portfolio (unlisted large, medium and small enterprises), fair value is determined based on the price of a recent transaction (IFRS Level 3) or using a DCF calculation (IFRS Level 3). In exceptional cases, the multiplier method (IFRS Level 3) is used, incidentally only if the underlying characteristic of the investment justifies applying a multiplier method. For investments in which no future cash flows are expected, except for the settlement of the company to be liquidated, the fair value is determined using the Net assets method (IFRS Level 3).
Valuation methods
The price of a recent transaction (valuation of private equity investments). When initially accounting for a private equity investment, the transaction price, excluding transaction costs, is used as the fair value of the investment (IFRS 9 - 5.1.1). Specific factors, related to the transaction, are considered to assess whether the transaction price is representative of fair value:
The length of the period during which the most recent transaction price is still representative of the fair value measurement depends on the specific circumstances of the underlying private equity investment. In stable market conditions with few changes within the company and/or external market conditions, the length of the period in which the recent transaction price can be used is longer than in a period of rapid change. Value8 applies the price of a recent transaction for up to one year after that transaction.
Available market prices (valuation of listed investments)
For listed interests, the closing price on the valuation date is used to determine the fair value of the investment. A precondition is that there is an active market.
The specific elements MKB Nedsense considers in the analysis to determine whether there is an active market are:
If MKB Nedsense concludes that there is an inactive market, MKB Nedsense uses the share price as an indication of fair value, using an additional valuation method (supporting valuation by means of a DCF calculation) to determine the discount at which an acceptable fair value is determined.
Regarding a possible discount to the share price (IFRS Level 2 valuation or IFRS Level 3 valuation derived from share price), the relevance of the objectively observable input variable (de facto closing price of the identical or comparable share) is first evaluated. If relatively low volumes in relation to outstanding shares (potentially) lead to the conclusion that there is an inactive market, MKB Nedsense determines whether frequent transactions take place during the reporting period. If this is the case, the share price is qualified as a reliable indicator for a fair value valuation of identical financial instruments.
With respect to non-identical but comparable financial instruments (lettered unlisted shares of listed investments), the closing price of the comparable financial instrument is used as the basic input variable for fair value measurement. A markdown is applied to this basic input variable depending on the following:
20 per cent, with the cut-off percentage decreasing as the lock-up period decreases.
Within the defined bandwidth, the actual exit percentage is used on an estimation basis. The starting point here is a representative exit price between market participants in the current market.
Trade and other receivables are recognised initially at fair value and subsequently at amortised cost using the effective interest method and net of the provision for bad debts. A provision for bad debts is recognised when it is assumed that a receivable or part of a receivable will not be collected. The amount of the provision is determined as the difference between the carrying amount of the receivable and the present value of estimated future cash flows. The addition to the provision is recognised in other operating expenses in the income statement.
Cash and cash equivalents consist of cash and bank balances and other demand deposits. Bank overdrafts are included in current liabilities. Cash is measured at face value.
MKB Nedsense's ordinary shares are classified as equity. The purchase price of repurchased shares is deducted from other reserves until these shares are cancelled or reissued. The dividend payable to holders of ordinary shares is recognised as a liability when the Annual General Meeting approves the dividend proposal.
Provisions are determined based on estimates of future cash outflows from legally enforceable or constructive obligations as a result of a past event of uncertain size or timing of settlement, which are related to the business activities and for which a reliable estimate can be made.
Other non-current liabilities are measured on initial recognition at fair value less any directly attributable transaction costs. After initial recognition, these liabilities are measured at amortised cost using the effective interest method.
Trade and other payables are initially recognised at fair value and subsequently at amortised cost.
MKB Nedsense has no long-term employee benefits.
Revenues and expenses are recognised in the year to which they relate.
Operating income consists mainly of fair value changes in private equity investments and listed investments and realised transaction results on private equity investments and listed investments.
Lease contracts where a major part of the advantages and disadvantages associated with ownership do not lie with the company are accounted for as operating leases. Operating lease obligations are recognised in profit or loss on a straight-line basis over the term of the contract. Lease contracts whereby the company acts as lessee and the advantages and disadvantages associated with ownership lie with the company are accounted for as financial leases. Benefits from financial leases are recognised in the income statement on a straight-line basis in proportion to the term of the contract. MKB Nedsense has no contracts that classify as financial leases.
Finance income and costs are allocated to the period to which they relate. Interest income is recognised on a time proportion basis using the effective interest method.
Income tax comprises current and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in the consolidated statement of comprehensive income. In the latter case, the related tax is also recognised directly in the consolidated statement of comprehensive income. Tax due and recoverable for the reporting period consists of income tax on taxable profit, which is calculated using the applicable tax rates. This takes into account exempt profit components and non- deductible amounts, as well as adjustments to tax for previous financial years.
Deferred taxes are recognised for temporary differences between the tax values of assets and liabilities and their carrying amounts in the financial statements. If a deferral would arise on initial recognition in the financial statements of an asset or liability arising from a transaction that affects neither the commercial nor the taxable result, it is not recognised. Deferred taxes are calculated based on enacted tax rates and laws that apply or have been enacted materially by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is paid. Deferred tax assets for tax loss carryforwards are capitalised only to the extent that it is probable that
offsetting can take place against profits to be realised in future years. Deferred tax assets and liabilities with the same term and with the same tax entity are netted on the balance sheet, to the extent a legal right to offset exists.
Earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the year. To arrive at diluted earnings per share, ordinary shares that would have been outstanding if the financial equity instruments - convertible bonds or stock options - had been converted into ordinary shares are also included.
The cash flow statement is prepared using the indirect method. Receipts and payments relating to taxes are included under net cash flow from operating activities. Dividends paid are included under cash flow from financing activities.
36
MKB Nedsense finances companies in the investment portfolio with a loan where appropriate. MKB Nedsense monitors the fair value of private equity investments based on the total asset value of the underlying private equity investment.
31-12-2023 IFRS Level | 31-12-2022 IFRS level | ||||||||
Private equity | Equity | Loans | Total | Equity | Equity | Loans | Total | Equity | |
investments | investment | investment | investment | investment | |||||
Axess Group | 61 | 1,823 | 1,884 | 3 | 61 | 1,738 | 1,799 | 3 | |
GNS Brinkman | 343 | 1,650 | 1,993 | 3 | 365 | 1,587 | 1,952 | 3 | |
Other private equity investments | 916 | 362 | 1,278 | 3 | 1,004 | 517 | 1,521 | 3 | |
1,320 | 3,835 | 5,155 | 1,430 | 3,842 | 5,272 | ||||
Loans to have been valued based on IFRS Level 1 systematics. Other private equity investments consists of the investments in Value8 Tech Services, Value8 Tech Group and TIB-TEC.
The movements in private equity investments (the equity holdings) are as follows:
Private equity investments | Balance | Investments | Other | Revaluation | Balance |
31-12-2022 | changes | 31-12-2023 | |||
Axess Group | 61 | - | - | - | 61 |
GNS Brinkman | 365 | - | - | - 22 | 343 |
Other private equity investments | 1,004 | - | - | - 88 | 916 |
1,430 | - | - | - 110 | 1,320 |
The movements in loans to private equity investments are as follows:
Loans to private equity | Balance | Investments | Divestments | Other | Interest | Balance |
31-12-2022 | changes | 31-12-2023 | ||||
Axess Group | 1,738 | - | - | - | 85 | 1,823 |
GNS Brinkman | 1,587 | - | - | - | 63 | 1,650 |
Other private equity investments | 517 | 16 | - | - 191 | 20 | 362 |
3,842 | 167 | - | - 191 | 168 | 3,835 |
The loans have an indefinite maturity, however, can be changed by borrower without any penalty.
Based on the characteristics, the loans have a semi- permanent financing character. Accordingly, the loans are classified under fixed assets. The average interest rate is 4%. In accordance with IFRS 9, provisions are formed on loans granted on the basis of the assessed risk profile and collateral provided.
The valuations of the private equity investments are almost all based on a DCF-calculation (Level 3 valuation). The DCF calculations are based on a general MKB Nedsense DCF valuation model. The assumptions from the MKB Nedsense DCF valuation model used in the DCF calculations are shown below.
The risk-free interest rate used (equity cost rate) is 3.0% and is based on an average forward rate used by Dutch companies following an annual survey by Fernandez and Acin (survey April 2023). Also last financial year a risk-free interest rate of 3.0% has been applied. The market risk premium used is 5.6% and is also based on the annual survey by Fernandez and Acin (2022: 6.2%).
The firm-specific risk (cost of equity) was determined using an analysis of weighted identified risk factors (in the range between 0 per cent and 9.19 per cent) and an illiquidity premium of 2 per cent. Firm-specific risk (alpha) was treated as a component of the 'unlevered' cost of equity. The 'unlevered' cost of equity has been 'delivered' using the capital ratios and the cost of debt (cost of equity 'levered').
The cost of debt after tax is determined on the basis of the financing capacity of the respective company and on observations of comparable companies within the investment portfolio. In addition, the tax deductibility of interest expenses based on the nominal tax rate ('tax shield') is taken into account.
Regarding capital ratios, for the purpose of
determining the discount rate, the average capital ratio was determined based on a weighted average capital structure of comparable companies in a selected industry (Damodaran database).
The WACC resulting from the previous method is used in the calculation of the fair value of the specific company.
All DCF valuations distinguish between a forecast period and a 'residual value'. The residual value is calculated based on the 'perpetuity approach'. The cash flow from the last forecast year is treated with a 'terminal growth rate' of 2.0%. The enterprise value is calculated by summing the present value of the free cash flows in the forecast period with the present value of the residual value.
Shareholder value is calculated by reducing the enterprise value by net debt items, such as loans from shareholders and financial institutions, provisions, deferred tax liability and MKB Nedsense financing. This amount is then settled with the value of any non-operating assets and cash-like items, such as excess cash.
The valuation at 31 December 2023 is based on a DCF (IFRS Level 3) analysis performed.
Cash flow forecasts are based on reasonable and substantiated assumptions made by local management. In preparing the forecasts, numerical analyses of realised margins and sales trends have been used. Forecast 2024 assumes 27% higher sales than realised sales 2023. The budgeted growth is based on the well-filled order book, taking into account the effects of nitrogen issueds in the construction sector. 2024 forecasted sales increased by 4.9% against 2023. The forecast period is five years. With regard to revenue projections over the forecast years up to and including 2028, an average revenue growth of 7.9% per year from realised sales in 2023 has been assumed (3.1% compared to 2022). The forecasted gross margin of 40% is based on the realised 2023 gross margin of 42%. The forecast of 2024 to 2028 assumes an average increase of 5,4% per year in staff costs. From 2024 to 2028, operating expenses remain constant compared to 2023.
The fair value of Axess Group was determined using the general MKB Nedsense DCF valuation methodology. The Axess Group-specific valuation used the following determinants: Debt/Equity ratio of 62.7%, company-specific risk (alpha) of 6.2% and a cost of debt of 6.9%. Based on the general MKB
Sales growth -1% | WACC +1% | |
Axess Group | - 156 | - 130 |
GNS Brinkman | - 470 | - 77 |
Sales growth +1% | WACC -1% | |
Axess Group | 160 | 155 |
GNS Brinkman | 450 | 90 |
Nedsense DCF valuation methodology, a WACC of 14.24% was used as a resultant in the valuation.
Cash flow projections are based on reasonable and substantiated assumptions made by local management. In preparing the forecasts, numerical analyses of realised margins and sales trends have been used.
Forecast 2024 assumes 9% higher sales than realised sales 2023. The budgeted growth is based on the well-filled order book. The forecast period is five years. With regard to sales projections for the forecast years 2024 to 2028, an average sales increase of 3.7% annually compared to the 2023 realisation has been assumed. The forecast gross margin is assumed to change from 49% realised in 2023 to 50% on average in the years thereafter. The forecast through 2028 assumes an average increase in staff costs of 4.8% per year compared to 2023. Regarding operational costs, an average cost increase of 3.8% per year compared to 2023 has been assumed.
The fair value of GNS Brinkman was determined using the general MKB Nedsense DCF valuation methodology. The GNS Brinkman specific valuation used the following determinants: Debt/Equity ratio of 62.7%, company-specific risk (alpha) of 6.2% and a cost of debt of 6.9%. Based on the general MKB Nedsense DCF valuation methodology, a WACC of 14.27% was used as the resultant in the valuation.
The DCF valuation models include certain input variables relating to revenue growth and WACC. Sensitivities related to these input variables are shown below.
If the models had used an annual 1 percentage point lower/higher revenue growth or a 1 percentage point higher/ lower WACC, assuming an unchanged cost structure and unchanged investment level, the calculations would have led to the following possible additional value changes:
For the valuation of the other private equity investments, the Net Assets method was used in combination with the transaction value related to the terms of the acquisition in October 2021. Accordingly, in these specific situations, the valuation method is a representative method for determining fair value.
Private equity investments | City/country | Sharehol | ding in % |
31-12-2023 | 30-12-2022 | ||
GNS Brinkman B.V. | Amsterdam, the Netherlands | 100% | 100% |
Get Up Group B.V. | Bussum, the Netherlands | 100% | 100% |
GNS Group B.V. | Amsterdam, the Netherlands | 100% | 100% |
Other private equity investment | |||
Value8 Tech Group N.V. | Amsterdam, the Netherlands | 100% | 100% |
Value8 Tech Services B.V. | Amsterdam, the Netherlands | 100% | 100% |
The statement in accordance with Article 2:379 of the Dutch Civil Code has been filed with the Chamber of Commerce.
Listed investments | Balance 31-12-2022 | Investments | Divestments | Fair value Changes | Balance 31-12-2023 |
Almunda Professionals N.V. | 2,019 | 94 | - | 62 | 2,175 |
2,019 | 94 | - | 62 | 2,175 |
Loans to related parties | Balance 31-12-2022 | Investments | Divestments | Interest | Balance 31-12-2023 |
Value8 N.V. | 2,179 | - | - 75 | 134 | 2,238 |
2,179 | - | - 75 | 134 | 2,238 |
For further explanation, please refer to note 6.11
All receivables and accruals have a maturity of less than one year. The maximum credit risk consists of the carrying amount of receivables and accruals recognised as at the reporting date.
The balance of cash and cash equivalents is at free disposal. The maximum credit risk consists of the carrying amount of cash and cash equivalents recognised as at the reporting date.
The authorised share capital is 100 million ordinary (listed) shares with a par value of €0.01 and 69 million A shares (unlisted shares) with a par value of 1 eurocent.
At the end of 2023, the issued capital was
€1,000 consisting of 59.4 million A-shares and 40.6 B-shares, both of 1 eurocent par value.
The capital managed by the board, equity, is maintained as much as possible by pursuing the most efficient cost structure. It also actively seeks activities to contribute to the company in order to grow its capital.
The calculation of earnings per share for 2023 is based on the profit attributable to shareholders of
€158 (2022: €93) and an average number of outstanding shares of 100 million shares (2022: 100 million shares).
Earnings per share for 2023 is €0.00 (2022: €0.00).
Other liabilities | 31-12-2023 | 31-12-2022 |
Creditors | 14 | - |
Accrued liabilities | 368 | 424 |
382 | 424 |
Other payables and accruals have a maturity of less than one year.
Fair value determination for private equity investments has been done on the basis of a so- called DCF analysis (Level 3 valuation). In exceptional cases, for non-material holdings and entities without operating cash flow, the net-asset value is considered representative of fair value (Level 3 valuation).
Loans receivable are non-current financial assets with fixed or determinable market payments that are not valued in an active market. After initial recognition at cost (fair value at initial recognition), the loans are measured at amortised cost less any impairment losses where there are doubts about the collectability of the loan. Due to fixed or determinable market-based loan terms, the amortised cost of the loans equals fair value.
For a further specification of the valuation of the private equity investments and the loans receivable, please refer to the relevant balance sheet item.
MKB Nedsense has no contingent liabilities as of 31 December 2023 besides the above warrants.
MKB Nedsense - like any business - is exposed to risk. The increasing complexity of society and of the investment projects in which MKB Nedsense is involved, as well as changing laws and regulations, compel significant risk awareness. Risk management is the process of identifying, evaluating, controlling and communicating risks from an integrated and organisation-wide perspective. It is a continuous process simply because timeliness and taking action in changing circumstances demand it of us.
This chapter describes the risks faced by MKB Nedsense as an investment company as well as the operational and financial risks associated with MKB Nedsense's investment activities.
The company is convinced that risk management is a necessary part of sound management and the development of a sustainable business. Through its risk management and through an appropriate balance between risks and returns, the company aims to maximise business success and shareholder value. Optimal risk management should also contribute to achieving strategic objectives optimising operational business processes in terms of effectiveness and efficiency; increasing the reliability of financial reporting; monitoring operations in accordance with regulations, laws and codes of conduct.
The following is the description of the risk factors considered most important to which the company is subject. The order of the risks described below is arbitrary.
The fluctuations in the economic cycle, as well as all other risks to which MKB Nedsense's portfolio companies are subject, have a potential impact on the results of the private equity investments and therefore also on the valuation of the private equity investments on MKB Nedsense's balance sheet. Because MKB Nedsense has a highly differentiated portfolio spread across various investments with activities in various sectors, the impact of fluctuations in the economic cycle tends to be very different.
Difficult economic conditions may adversely affect not only the valuation of MKB Nedsense's existing portfolio, but also the quantity and quality of available new investment opportunities, exit opportunities for existing investments and, as a result, cash generation. It follows that MKB Nedsense's revenues, earnings and cash flow are subject to a variety of elements and may also fluctuate significantly. As a result, MKB Nedsense cannot guarantee that it can implement its dividend policy under all circumstances.
In addition, the valuation of unlisted private equity valuations under IFRS may also depend on a number of market-related elements (including via comparison with a listed peer group). However, the volatility of these market developments does not necessarily reflect the performance of the investment in question. This means that the unrealised revaluations on the non-listed MKB Nedsense portfolio and, as such, MKB Nedsense's result may also be determined to a significant extent by market developments.
MKB Nedsense operates in a competitive market characterised by both local and
international private equity players and by a rapidly changing competitive landscape. The success of MKB Nedsense is largely determined by its ability to hold its own in a highly competitive and differentiating position.
MKB Nedsense's portfolio consists of private equity investments that are unlisted and, as a result, less liquid. The realisation of unrealised revaluations on private investments is uncertain, can take quite some time and is sometimes legally or contractually restricted during certain periods (lock-up, standstill, closed period). It also depends, among other things, on the development of the results of the investment in question, on the business cycle in general, on the availability of buyers and financing. As such, the illiquidity of its assets poses a risk to MKB Nedsense's results and cash flow generation. The focus in managing liquidity risk is on the net financing headroom, consisting of free available cash and available credit facilities, in relation to financial liabilities.
MKB Nedsense has a number of funding sources at its disposal for this purpose, including dividend payments by companies from the investment portfolio, repayment of debts by companies from the investment portfolio to MKB Nedsense, interest payments on loans granted by MKB Nedsense to private equity investments, full or partial sale of investments, issuance of ordinary shares or preference shares, raising (re)financing by MKB Nedsense and/or (re)financing of companies in the investment portfolio. As a result, the Executive Board considers the liquidity risk to be limited.
Credit risk is the risk of financial loss to MKB Nedsense if a customer or counterparty to a financial instrument fails to meet the contractual obligations entered into. The exposure to credit risk of MKB Nedsense is mainly determined by the individual characteristics of individual debtors. In respect of financial instruments measured at fair value, credit risk is discounted in the fair value measurement.
Loans granted are granted to parties with initial creditworthiness checks. Write-downs were made on the loans in the past. Adequate provisions are expected to be recognised on the loans recognised as at the reporting date.
Cash and cash equivalents are held with credit institutions with at least a credit rating of A.
The other asset items under loans and receivables are recognised at amortised cost which, given the short maturity, are almost equal to the nominal value.
MKB Nedsense relies significantly on the experience, commitment, reputation, deal-making skills and network of its director to achieve its objectives. Human capital is a very important asset for the company. Therefore, the director's departure may have a negative impact on MKB Nedsense's operations and results.
At MKB Nedsense, equity qualifies as capital. The company aims to use the majority of the retained reserves for investments in the context of organic growth and acquisitions. The company is not subject to external requirements around the capital to be held. In the context of financing growth, MKB Nedsense expects to maintain a relatively low pay-out ratio in the coming years, with the aim of at least maintaining any dividend.
As related parties of MKB Nedsense can be distinguished: the companies that are part of MKB Nedsense's investment portfolio, the members of the Supervisory Board and the members of the Executive Board and Value8. 3L Capital Holding
B.V. also qualifies as a related party.
Transactions with companies in the investment portfolio are conducted at arm's length on terms comparable to transactions with third parties. At year-end 2020, MKB Nedsense provided a short- term loan with a principle amount of €2,300 to Value8 with an interest rate of 3% plus twelve- month Euribor. In 2023 €75 was repaid by Value8 (2022: €182) and interest credited. In addition, there is a receivable from Value8 of €129 (see note 6.3) at year-end 2023 (2022: €123).
This concerns a current account relationship where Value8 ensures repayment if necessary for the ongoing obligation and implementation of MKB Nedsense's strategy. The interest rate is 1.25% per quarter.
The remuneration of the members of the Supervisory Board is independent of the company's results. The number of Supervisory Board members at the end of 2023 is 2 (2022: 2).
Supervisory Board | 2023 | 2022 |
Gerben Hettinga | 12 | 12 |
Derek van Dam | 10 | 10 |
22 | 22 | |
Board of Directors | 2023 | 2022 |
Peter Paul de Vries | 15 | 15 |
15 | 15 |
Within MKB Nedsense, 'key' personnel consist of the Executive Board and the Supervisory Board. For the remuneration policy, please refer to chapter 7 of the annual report.
Other comments
According to the AFM register and company register, the following notifications of an interest of more than 3% in the company's share capital were known as of the date of the annual report:
There are no subsequent events relevant to the financial statements.
Fair value changes private equity investments and non-current receivable | 2023 s | 2022 |
Axess Group | - | - 121 |
GNS Brinkman | - 22 | 161 |
Other private equity investments | - 88 | - 278 |
Other non-current receivables | - | - |
- 110 | - 238 |
Fair value movements relate to revaluations made on the value of private equity interests and expected effects from earn-out agreements.
Interest loans to private equity investments | 2023 | 2022 |
Axess Group | 85 | 81 |
GNS Brinkman | 63 | 61 |
Other private equity investments | 20 | 16 |
Total interest loans to private equity investments | 168 | 158 |
Wages, salaries and social charges | 2023 | 2022 |
Wages and salaries | 37 | 37 |
Social charges | - | - |
Other personnel costs | - | - |
37 | 37 |
During financial year 2023, an average of 0 employees were employed within the company on a full-time basis (2022: 0). Salaries relate to remuneration for the Executive Board and Supervisory Board (see section 6.11).
Other operating expenses | 2023 | 2022 |
Consultancy fees | 0 | 12 |
General operating expenses | * - 37 | 101 |
- 37 | 113 |
* uncertainty regarding some operating expense accruals (e.g. audit fees) have been cleared during 2023, resulting in release of prior year(s) accruals.
Financial income and expenses | 2023 | 2022 |
Financial income | ||
Interest loans to related parties | 134 | 59 |
Total financial income | 134 | 59 |
Financial expenses | ||
Bank charges & interest | 1 | 1 |
Total financial income | 133 | 58 |
Taxes reported as a percentage of results before tax are 0% (2022: 0%). The reconciliation between income tax as reported in the income statement based on the effective tax rates and tax expense based on the local domestic tax rate is as follows:
2023 | 2022 | |||
Result before tax | 158 | 93 | ||
Corporation tax based on domestic rate | - 15% | 24 | - 15% | 14 |
Prior-year adjustments | - | - | - | - |
Impact non-taxed results | 15% | - 24 | 15% | - 14 |
Effect of offsets within fiscal unity | - | - | - | - |
0% | - | 0 % | - |
MKB Nedsense formed a fiscal unity for corporate income tax purposes with Value8 Tech Group N.V., Value8 Tech Services B.V., GNS Brinkman B.V., Axess B.V., Get Up Group B.V., GNS Group B.V., Brinkman Rolluiken B.V, GNS Brinkman B.V. and GNS Property B.V. until ultimo December 2019. As a result, the company is jointly and severally liable for the corporate income tax of the combination as a whole. MKB Nedsense has extended its financial year 2019/20 so that the financial year covers the period of 1 January 2019 up to and including 30 December 2020. Due to the extension of the financial year, the fiscal unity has been terminated.
By 1 January 2023 the fiscal unity has been restored.
At the end of 2023, the amount of tax loss carry forwards of MKB Nedsense N.V. is €1,038 (2022:
€1,038). The full amount is available for carry forward service. No amounts relating to taxes were recognised directly in equity in the 2023 financial year.
In the reporting year 2023, a cost has been recognised based on an estimate of the fees of the PIE auditor to be appointed. MKB Nedsense has chosen CFA for the audit of 2024, to be appointed at a shareholders’meeting. If and when possible MKB Nedsense will still be open for the possibility to audit the 2023 figures. At present, it is not fully clear what the costs will be.
Bussum, 30 April 2024
Board of Directors
Peter Paul de Vries
Supervisory Board Gerben Hettinga (chairman) Derek van Dam
2023 | 2022 | |
Examination of financial statements | 30 | 30 |
Other control assignments | - | - |
Consulting services | - | - |
30 | 30 |
The Executive and Supervisory Boards propose that no dividend be paid for the 2023 financial year.
Article 38 of the articles of association reads as follows:
The company extended the statutory financial year at the end of 2019. Due to this statutory amendment, the 2019/20 financial year ran from 1 January 2019 to 30 December 2020.
Accon avm reported to surrender its PIE licence in March 2019, as a result, the company started a process to find a replacement PIE auditor. Since 2019, MKB Nedsense has made every effort to contract one of the remaining PIE auditor. MKB Nedsense has also raised the general issue of unavailability of PIE auditors with AFM , Euronext Amsterdam, the Ministry of Finance and the professional body of auditors (NBA). Although these parties recognised some or all of these issues, this has not led to a process with a structural or temporary solution. The finance minister has therefore proposed legislation to oblige audit firms to audit public-interest entities (PIE’s). As MKB Nedsense faces the de facto impossibility (force majeure) of contracting an auditor, the 2023 financial statements do not include an auditor's report. For the financial year 2024 MKB Nedsense is planning to propose CFA as auditor to the shareholders’ meeting.
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