Annual Report
& Accounts 2021
2021 highlights
Management reporting measures
Statutory reporting measures
Financial highlights
Revenue
€2,957m
2020: €2,815m
Revenue 4.9% higher (+5.6% at constant
currency or +220bps above global light vehicle
production decrease)
Adjusted EBIT
€213m
2020: €173m
Adjusted EBIT margin of 7.2% (2020: 6.2%)
Adjusted Net Income
€58m
2020: €14m
Adjusted Basic EPS (€ cents)
11.2c
2020: 2.6c
Adjusted Free Cash Flow
€117m
2020: €148m
Overview
2021 highlights and
What we do and Our purpose
Strategic report
04 Chair’s statement
08
Chief Executive
Officer’s statement
12 Our history
14 Our market and products
26 Our strategy
28 Key performance indicators
30 Our business model
Section 172 and
32
stakeholder engagement
36 Our approach to sustainability
48
57 Principal risks and uncertainties
61 Compliance statements
Chief Financial Officer’s statement
61 Going concern statement
61 Viability statement
63 Non-financial
information statement
64 Task Force on Climate-related
Financial Disclosures (TCFD)
Operating Profit
€127m
2020: €176m Operating Loss
Operating margin of 4.3% (2020: (6.3%))
2021 results again demonstrated the
operational strength of our business
in a volatile year with EBIT margin
growth and Free Cash Flow generation
returning to pre-COVID-19 levels
Please see page 56 for definitions
of the non-IFRS measures.
Profit for the year
€16m
2020: €252m Loss
Basic EPS (€ cents)
2.8c
2020: (48.9)c
Dividend per share
3.39c
2020: 6.74c
Corporate governance
70 Governance at a glance
73 Governance structure
74
Chairman’s introduction
to governance
76 Board of Directors
84 Nomination Committee report
86 Audit & Risk Committee report
92 Directors’ Remuneration report
92
Statement by the Chair of the
Remuneration Committee
104 Annual report
on remuneration
115 ESG Steering Committee report
116 Directors’ report and Statement
of Directors’ responsibilities
119 Statement of Directors’
responsibilities in respect of the
financial statements
Financial statements
124 Independent auditors’ report to the
members of TI Fluid Systems plc
130 Consolidated Income Statement
131 Consolidated Statement of
Comprehensive Income
132 Consolidated Balance Sheet
133 Consolidated Statement of
Changes in Equity
134 Consolidated Statement of
Cash Flows
135 Notes to the Group
Financial Statements
195 Company Balance Sheet
196 Company Statement of Changes
in Equity
197 Notes to the Company
Financial Statements
206 Group Financial Record
Shareholder information
208 Shareholder information
What we do and Our purpose
Our purpose is to partner with
our OEM customers to develop
technology and deliver innovative
products which enable our
customers to make greener
vehicles that help keep our
environment clean and make
our world a better place to live.
We design and manufacture
award-winning, industry-leading
automotive fluid systems in a
sustainable manner for OEMs
across the globe, operating out
of 104 manufacturing locations
in 29 countries.
1
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview What we do and Our purpose
continued
Strategic report:
Take the Turn T3
2
2
TI Fluid Systems plc
TI Fluid Systems plc
Annual Report and Accounts 2021
Annual Report and Accounts 2021
A busi Chief Executive Officer’s
statement
Page 8
Our approach to
sustainability
Page 36
3
TI Fluid Systems plc
Annual Report and Accounts 2021
A busiShareholder informationFinancial statementsCorporate governanceStrategic reportOverview Chair’s statement
Dear Shareholder,
As announced in January 2022, I have decided to step down
and retire following the Annual General Meeting to be held
on 18 May 2022. So, this will be my last report to you as
Chair of the Board.
The Board and I are delighted that Tim Cobbold, our current
Senior Independent Director and Remuneration Committee
Chair, will be taking over the Chair role when I retire.
Tim knows the business extremely well and is exceptionally
qualified to lead the Board and the Company. More on
his background and experience can be seen in my Chair’s
Introduction to Corporate Governance on pages 74-75 and
in the Nomination Committee report on pages 84-85.
It has been an honour to serve this great Company over the
last five years. During that time, I have seen TI Fluid Systems
list on the London Stock Exchange, significantly reduce its
debt, develop a resilient business model and strategy, and
put in place a highly capable, independent Board and an
experienced management team. As a result, the Group has
not only successfully managed through many recent changes
and challenges with impressive results but is now well
positioned to continue to grow and progress as it capitalises
on recovering volumes and the increasing electrification of
the automotive market.
Our response to COVID-19
In 2021, as in 2020, our response to the COVID-19 global
pandemic has continued to focus on the safety of our
workforce. The use of masks, social distancing, screening,
and quarantine procedures at our plants as well as working
from home and hybrid work models for office-based
personnel has allowed the Group to operate and manage
our business in a manner that protects our employees, our
customers, our suppliers and our communities. I would
like to personally thank our entire global organisation,
comprised of more than 25,600 employees, for their shared
sacrifice, dedication, patience, perseverance, and excellent
performance through this prolonged period of challenges.
Financial resilience
The Group performed well overall in 2021 and delivered
sales outperformance relative to the market and margin
progression over 2020 despite supply chain disruptions
and order volatility.
More information on our financial position can be viewed
in the Chief Financial Officer’s report on pages 48-56.
4
TI Fluid Systems plc
Annual Report and Accounts 2021
Governance and stakeholder engagement
The Board remains committed to strong governance.
Adherence to the highest standards of compliance, corporate
governance, sustainability, and financial integrity together
with the Group’s business model and strategy are the
foundations for long-term growth and success.
Our strong and sound relationships with a wide range of
stakeholders, cultivated over many years and decades,
have allowed us to successfully navigate another difficult
year. Our people, customers, suppliers, and communities
have continued to effectively work together to manage and
sustain our business through the many ongoing operational
difficulties arising from the COVID-19 pandemic. Importantly,
members of the Board of Directors have engaged directly
with our shareholders, management, and wider workforce
throughout the year.
We continue to place particular emphasis on engaging
with our shareholders in order to provide them with a clear
understanding and insight into how we strategically manage
our business.
In addition to regular calls with shareholders in connection
with the release of our trading updates and financial results,
we hosted a virtual capital markets day in April 2021 for both
analysts and investors that included an in-depth review of
our electrification strategy together with a showcase of our
products and technology.
Tim Cobbold, Chair of the Remuneration Committee,
consulted with shareholders following the 2021 AGM
regarding implementation of our Remuneration Policy.
More information on that consultation and results, can be
found in the Statement by the chair of the remuneration
committee on pages 92-99.
John Smith, our designated Non-Executive Director for
workforce engagement, has continued to attend and take
part in All Employee meetings and reviewed the results of
our employee surveys. We are pleased with the positive
feedback from workforce surveys, particularly with respect to
the Group’s strategy and focus on sustainability and learning.
The Board also conducted an externally facilitated evaluation
process that, this year, was extended to include the feedback
from the Company’s executive management.
More information about how we, as a Board, have sought to
exercise our duties under Section 172 of the Companies Act
2006 can be found on pages 32-35.
Focus on environmental and social matters
As a business, TI Fluid Systems is playing a key role in the
decarbonisation of the automotive industry. Our technology
and products are helping to address several climate,
environmental and social issues by enabling our customers to
make greener vehicles that help keep our environment clean
and make our world a better place to live.
At the same time, we also clearly recognise that operating
our business in a sustainable and responsible manner is just
as important as our advanced and innovative products and
financial results. So, without losing our focus on generating
profit for our shareholders, the Group is also undertaking
several initiatives to meet environmental and social goals.
“ It has been an honour to serve
this great Company over the
last five years. During that time,
I have seen TI Fluid Systems list
on the London Stock Exchange,
significantly reduce its debt,
develop a resilient strategy, and
put in place a highly capable,
independent Board and an
experienced management team.
The Group has successfully
managed through many recent
changes and challenges with
impressive results and is now
well positioned to continue
to grow and progress as it
capitalises on recovering
production volumes and the
increasing electrification of
the automotive market.”
Manfred Wennemer
Chair
5
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Chair’s statement
continued
The Board is committed to our sustainability mission and
appreciates the guidance of the ESG Steering Committee,
chaired by Elaine Sarsynski, that was established in
2021 to provide long-term vision and oversight of our
sustainability strategy.
This year, under the guidance of the ESG Steering
Committee, the Company revised and published our updated
targets to reduce our Scope 1 and Scope 2 CO2(e) emissions
and has started to implement conservation and renewable
energy programmes to make those objectives a reality.
This coming year, the Group will also begin to measure and
incorporate Scope 3 emissions into our plans. Of course,
we will continue to evaluate our greenhouse gas reduction
programme to ensure that our objectives and efforts remain
appropriate as the world improves its collective understanding
of what action is required to respond to climate change.
Regarding social matters, the Group updated and enhanced
its safety policy, procedures and processes and updated
its human rights policy. We also introduced and rolled out
a new learning platform to support education and career
development for all our employees. Other initiatives and
educational programmes to promote ethics, diversity and
inclusion within our organisation are also underway.
To further demonstrate our environmental and social
commitment, we have publicly disclosed a wide range of
environmental, safety, water and risk management data
through CDP (formerly the Carbon Disclosure Project), an
international non-governmental organisation. In addition, we
continue to incorporate environmental and social performance
targets as a significant element of our long-term incentive
programme for Executive Directors and senior management,
as described in more detail in the Remuneration report on
pages 93-98.
Our sustainability activities are described in more detail in
Our approach to sustainability on pages 36-47.
Executive management changes
Hans Dieltjens became our new Chief Executive Officer in
October 2021. Hans joined the Group in 1996 and served for
many years as Executive Vice President of the FTDS division
and, most recently, as Chief Operating Officer. Hans has an
extensive understanding of the Group’s products, technology,
people, operations, and customers. He has played a key
role in the continuing development and refinement of our
electrification strategy. As a leader, he is committed to
the Company’s core values, including a renewed focus on
sustainability. His first Chief Executive Officer’s report can
be found on pages 8-11.
The Board has also supported several additions to the
executive management of the Group with the appointment
of Stephanie Jett as Chief Commercial Officer, Johannes
Helmich as Chief Technology Officer and Mark Sullivan
as Chief Operating Officer. These important additions
to an already experienced and capable executive team
will further strengthen the Company’s ability to execute
both our electrification strategy and deliver on our
near-term objectives.
The Board believes that Hans is the right leader to guide
the Group through its next chapter with the support of the
entire management team.
6
TI Fluid Systems plc
Annual Report and Accounts 2021
Tim Cobbold appointed new
Chair in May 2022
Tim's experience
Tim joined the Board in November 2019 and has over
30 years of experience in a variety of sectors with
more than 10 years as Chief Executive Officer of
FTSE-listed organisations.
Selection process
A special Chair Succession Committee of the Board,
consisting of three Independent Non-Executive
Directors, was established to identify a successor Chair.
Working with Spencer Stuart, the Committee assessed
Tim's qualifications and concluded that Tim was ideally
suited to serve as Chair given his experience and
knowledge of the Group. Based on the Committee's
recommendation, the Board appointed Tim to serve
as Chair following the AGM on 18 May 2022.
Read more in the Chair's Introduction
to Corporate Governance on
pages 74-75 and the Compliance
Statements on pages 61-63
Outlook
The negative impact of COVID-19 to our industry, our
Company and our people has been significant and,
unfortunately, continued beyond 2020 and through 2021.
Rising geopolitical tensions around the world also have the
potential to create significant business disruptions. Russia's
tragic military invasion of Ukraine does not have a direct
material impact on the Group, but the resulting production
and supply chain disruptions are effecting the entire
automotive industry.
On behalf of the Board, I would like to say that I am proud
of the way that TI Fluid Systems responded to the prolonged
production downturn and operational disruptions. Despite the
challenges, the business achieved strong results under the
circumstances. Again, my sincere thanks to all our employees
around the globe for their considerable efforts
and contributions to the success of our Company.
While many uncertainties and challenges remain in 2022,
we are confident that our business model and strategy,
particularly regarding electrification, is sound and that the
Group is well positioned to be successful as global production
volumes recover and hybrid and battery electric vehicles
continue to gain market share.
Finally, I would like to thank our shareholders. I am grateful
both for the continued support and engagement that we
have received during 2021 and for the confidence of our new
shareholders who have decided to join TI Fluid Systems on its
journey forward.
Manfred Wennemer
Chair
14 March 2022
Board and Committee changes
During the year, the Board appointed Tim Cobbold, Senior
Independent Director, to serve as Chair of the Remuneration
Committee following Andrea Dunstan’s decision to step
down. His Statement of the chair of the remuneration
committee can be found on pages 92-99.
In August 2021, Julie Baddeley was appointed as an
independent Non-Executive Director and has brought
extensive experience and knowledge to our Board,
particularly with respect to remuneration, governance,
and climate change, all of which will further strengthen
and enhance the capabilities of our Board.
In December 2021, Jeffrey Vanneste, independent
Non-Executive Director and current Chair of the Audit
& Risk Committee, indicated his intention to step down
following the upcoming AGM but has agreed to stand for
re-election if requested by the Board in order to provide
the Company with additional time for an orderly transition
to a new Audit & Risk Chair.
The Nomination Committee is in the process of recruiting
additional independent non-executive directors to ensure
that the Board maintains a broad mix of market knowledge
and relevant experience. Also, necessary changes to
the composition of the Remuneration, Audit & Risk and
Nomination Committees, as well as the Senior Independent
Director, are under consideration and are expected to be
put in place at or just following the upcoming AGM.
The Nomination Committee report can be found on pages
84-85 and biographies of the Board are shown on
pages 76-77.
Dividend
Based on the overall strength of the Group’s financial position
and prospects, the Board approved and declared an interim
dividend of 6.74 Euro cents per share (5.91 pence per
ordinary share), amounting to approximately €35.0 million,
that was paid on 19 February 2021. Considering the amount
of that dividend and the nominal amount of Adjusted Net
Income for the 2020 financial year, the Board decided not to
recommend a final year 2020 dividend. However, in respect
of the first half 2021 results, an interim 2021 dividend of
1.93 Euro cents per ordinary share (1.66 pence per ordinary
share), was paid on 30 September 2021 amounting to
approximately €10.0 million.
The Board remains committed to its stated annual dividend
policy (30% Adjusted Net Income) paid on an interim and
final basis for each financial year. As such, we propose to
pay a final dividend in respect of 2021 of 1.46 Euro cents per
share, amounting to approximately €7.5 million in line with the
annual dividend policy. Subject to shareholder approval at the
Annual General Meeting on 18 May 2022, the final dividend
will be paid on 23 June 2022 to shareholders on the register
on 27 May 2022, the dividend record date.
7
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview “ In a world that is rapidly
changing, the Group is
strategically positioned to
actively support, and lead,
vehicle electrification and the
increasing sustainability of
the automotive industry by
supplying advanced products
that enable our customers to
make greener vehicles while, at
the same time, operating our
business in an environmentally
and socially responsible manner
for the benefit of all of our
stakeholders”.
Hans Dieltjens
Chief Executive Officer and President
8
TI Fluid Systems plc
Annual Report and Accounts 2021
A A A A
Chief Executive Officer’s statement
Dear Shareholder,
I am pleased and proud to give my first report as the CEO
of TI Fluid Systems and it is especially meaningful given that
2022 is our Company’s historic centennial year. I have been
a part of TI Fluid Systems for nearly 25 years and feel very
privileged to have the opportunity to lead this great Company
at such a pivotal time.
Continuing impact of the COVID-19 pandemic
The COVID-19 pandemic that began to quickly spread
around the globe in early 2020 has, unfortunately, continued
throughout 2021. The pandemic created persistent supply
chain disruptions and shortages together with cost inflation,
all of which continue to create difficulties for our business and
the entire automotive industry.
Unfortunately, as I write this statement, the entire world
is reacting to Russia's terrible military invasion of Ukraine.
We are profoundly shocked and saddened by the events
unfolding in Ukraine and our thoughts are with all those
affected. While we do not have any facilities in Ukraine, we
do have two facilities in St. Petersburg and Tolyatti, Russia.
Production at those facilities is being suspended in an orderly
manner. While our operations in Russia do not represent a
material portion of our global business, we are monitoring
the situation closely for any potential wider impacts resulting
from the conflict on the Group, such as inflationary cost
increases and disruptions to wider supply chains and
vehicle production.
Over the longer term, the automotive industry must play
a key role in addressing climate change and is doing so by
accelerating the transition to electric vehicles and striving
to produce those vehicles and their components in a
sustainable way. This transformation is happening faster
than many would have imagined. The Group’s technology,
products, engineering capabilities, customer relationships
and global footprint, built over the last 100 years, put us in an
ideal strategic position to be a leader in this new era for the
automotive industry. The Company is now going to Take the
Turn so that our next century will be even more successful
than our past.
While we plan and prepare for the future, I am happy to report
strong performance in 2021 despite the ongoing impact of
the COVID-19 pandemic. Our results, achieved in the face
of lower production volumes, global supply disruptions,
labour shortages, rising costs, and volatile customer orders,
demonstrate the resilience of our business and our ability
to successfully manage through difficult market conditions,
all supported by the hard work and dedication of our most
important asset, our people.
2021 performance
Global light vehicle production volume increased from 2020
by 3.4%, albeit this still remains some 13.3% below 2019
levels. The Group delivered revenue of €2.96 billion (+5.6% at
constant currency), a 2.2% (220 basis points) outperformance
of global light vehicle production growth. Including the impact
of currency translation, revenue increased by 4.9%.
Against this backdrop, we continued to generate
robust results which compared well with our sector.
Adjusted EBITDA was €353 million (11.9% margin) and
Adjusted EBIT €213 million (7.2% margin). Profit for the year
was €16 million (2020: €252 million loss) and Adjusted Free
Cash Flow amounted to €117 million.
The Group also continued its restructuring initiatives
that started in 2020 by downsizing or closing certain
manufacturing plants and optimising fixed costs.
Maintaining our financial performance with consistent
margins and positive cash flow in the face of the prevailing
market conditions demonstrated the strength and resilience
of our strategy, business model and management focus.
9
TI Fluid Systems plc
Annual Report and Accounts 2021
The increasing availability of vaccines, testing and therapeutic
treatments is encouraging, and we are optimistic that
COVID-19 will become more manageable with less impact
on people and businesses. However, with new variants and
transmission surges, it is uncertain when conditions might
return to normal.
Health and safety
At all times, the Group prioritises the health of our
employees. At the beginning of the COVID-19 pandemic
in 2020, the Group moved swiftly to implement a range
of safety protocols at our locations around the world,
including the use of masks, social distancing, enhanced
cleaning, screening, and quarantine procedures. In addition,
travel was, and continues to be, limited and remote work
and hybrid work arrangements have been put in place.
We have encouraged vaccination for all employees through
education and messaging and have also provided paid
time off for vaccinations and coordinated with local health
authorities to host vaccine clinics at or near many of our
manufacturing locations.
As a result of these health and safety actions, the Group was
able to protect our workforce while maintaining operations
and avoiding any significant disruptions to our customers
in 2021.
Microchip and other shortages
The COVID-19 pandemic has precipitated a number of
material shortages and supply chain disruptions. The most
notable for the automotive industry being the microchip
shortage that started in 2020 and continued throughout 2021.
For the most part, the Group is impacted only indirectly by
these shortages. For example, when our OEM customers
are unable to obtain microchips (or components that include
microchips), they slow, reduce, or suspend their vehicle
production and, in turn, adjust orders (releases) for our
products, sometimes at short notice. Lower production
volumes reduced our revenues and margins. Order volatility
compounded the problem by creating supply chain difficulties
and driving extra costs and working capital.
The lagging impact of these shortages and disruptions is
reflected in 2021 light vehicle production volume which was
only marginally higher than 2020 (by 3.4%) and was 14.5%
lower in the second half of 2021 compared to the second
half of 2020. By comparison, light vehicle production volume
in 2021 was 13.3% lower than 2019 (before COVID-19 and
the shortages).
Production volume forecasts for 2022 and 2023 reflect the
general industry expectation that the supply of microchips
and other key materials will gradually stabilise and improve
throughout 2022, especially during the second half of the
year. Nonetheless, significant uncertainty remains with
cautious messaging from key microchip manufacturers and
potential impacts of the Russia-Ukraine conflict.
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Chief Executive Officer’s statement
continued
Take the Turn T3
The Group has further refined its strategy, referred
to as Take the Turn or T3, to reflect three main pillars
that we believe will combine to drive sustainable
growth: Technology (Electrification), Transformation
(Sustainability) and Talent (Learning).
Technology
At the heart of our Take the Turn strategy is product
development and application engineering to support the
electrification of the automotive industry. To meet the
unique requirements of HEVs and BEVs, the Group is
capitalising on its extensive knowledge of fluid components,
lighter weight materials, systems architecture and
manufacturing processes to provide our OEM customers
with advanced designs and products, especially thermal
management systems, that are efficient and economical.
Our OEM customers have all introduced ambitious plans
to launch a record number of hybrid electric vehicle (HEV)
and battery electric vehicle (BEV) programmes in the next
several years. HEVs and BEVs are forecast to become a
significant portion of the global light vehicle market – from
13.2% of total production volume in 2021 (10 million units) to
47.3% in 2028 (48.2 million units) according to IHS Markit’s
recent production forecast by propulsion system (issued in
January 2022).
The introduction of HEVs and BEVs will result in a gradual
decline in revenues from our ICE products. However, that
decline will be offset by a significant opportunity to increase
the Group's revenue on HEVs and BEVs, especially thermal
products to manage the heating and cooling of EV batteries.
Our engineering and capital investment efforts are being
re-allocated accordingly, balancing our manufacturing
footprint and resources in order to build a long-term
sustainable business.
In 2021, the Group was awarded BEV business with
€1 billion of expected lifetime revenue, representing 30%
of our total 2021 awards and increasing our share of the
EV market.
Our products are present in over 37% of the BEV vehicles
for nameplates launched during 2021. We are also pleased
that, in the last two years, HEV programmes represent
19% of our bookings (based on expected lifetime revenue).
Of particular note, and to provide a good example of our
EV progress, in the first quarter of 2021, we launched
production of thermal fluid management lines and hoses on
Mercedes newly introduced EQS and C Class BEV models.
Also, in Q4 2021, we launched the production of heat pump
AC lines on small and mid-range BEVs for Stellantis.
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TI Fluid Systems plc
Annual Report and Accounts 2021
Transformation
Climate change is a significant issue, and the need to
decarbonise our industry is crucial. The Group is committed
to being an automotive industry leader to reduce greenhouse
gas emissions and build a more sustainable future. While it
is key that our technology and advanced products support
the automotive industry’s transition to cleaner and greener
electric vehicles with lightweight, energy efficient system
solutions, we recognise that we must also transform our
business in line with new standards and expectations of
environmental responsibility in order to deliver sustainable
value to our stakeholders – investors, customers, suppliers,
employers and the communities where we operate.
The Group has begun a number of initiatives to reduce our
CO2(e) emissions and impact on the environment, including
energy conservation programmes, increased use of energy
from renewable sources, water reduction, and waste
elimination. All of these initiatives will be driven by data,
clear targets and enhanced reporting. Although we are at the
beginning of our transformational journey, I am very proud
of the commitment and enthusiasm shown by the entire
organisation as we embrace our sustainability mission.
Talent
At the core of our T3 strategy is the talent of our entire
workforce. The Group’s success is directly linked to our
ability to recruit, retain, motivate, educate, and develop a
diverse and talented workforce ready for the new electrified
future. In 2021, we introduced our 'Fluid Learning' online
learning platform that provides every salaried employee
with access to a variety of relevant educational and
developmental tools to improve their skills and ability
to be a valuable and enthusiastic participant in our
collaborative organisation.
This year we again engaged directly with our workforce
though our Global Employee Engagement Survey. We
were pleased to see that our engagement levels have not
diminished, despite the prolonged work from home due to
COVID-19. We learned the importance that our employees
place on work-life balance and implemented a Group-
wide hybrid work model that provides many employees
the opportunity to work from home 40% of the time.
We continue to evaluate the effectiveness of this hybrid
work model and will make enhancements where possible.
We are also progressing our diversity initiatives, including
inclusivity education and assessment for top management,
regional diversity committees, programmes to increase
gender diversity, and mentoring programmes for women.
I am pleased that we continued to increase the gender
diversity of our senior executive team.
The Group has also sharpened its focus on safety for the
wider workforce with enhanced procedures, reporting,
audits, and education together with the expansion of our
ISO 45001 safety management scheme which will cover
every manufacturing location within the next few years.
I could not be more proud of, and impressed by, the Group’s
more than 25,600 employees everywhere around the
world for their outstanding personal commitment in 2021.
The entire executive leadership team and I continue to strive
to ensure that all of our employees are happy, engaged, and
proud to work for TI Fluid Systems.
Cost increases
Many raw materials used by the Group experienced
extraordinary price increases in 2021. Similarly, transportation
and energy costs rose sharply. Wages in most countries also
increased due to labour shortages and rising cost of living.
The Group is seeking recovery from customers through
ongoing commercial discussions. Such discussions are
complex and take time. These recoveries will, in most
cases, significantly trail the initial cost impact.
Climate Change
The recently published World Economic Forum 2022 Global
Risks Report highlights climate change as the top risk
concern for global world economic leaders. The COP26
Conference held in November 2021 resulting in adoption of
the Glasgow Climate Pact by nearly 200 countries which
recognises the global climate emergency and expressing
'alarm and utmost concern that human activities have caused
around 1.1°C of global warming to date and that impacts
are already being felt in every region.' The Glasgow Climate
Pact stresses the urgency of action 'in this critical decade'
and calls on all countries to present stronger national climate
action plans next year given that, despite many pledges
and commitments, scientists expect a global temperature
increase of 1.8°C by the end of the century with significant
negative impacts.
The Group is taking climate change impacts very seriously
and has performed various analysis of the potential impacts
on our business. We have moved quickly to adapt our
business planning and processes to ensure that the risks
and opportunities driven by climate change are incorporated
as we position the Group for future growth and success.
Our Take the Turn strategy, T3, addresses the transitional
risks and opportunities associated with vehicle electrification
as well as the need to operate our business in a more
sustainable manner to address climate change.
Leadership changes
In addition to my appointment as CEO, the Company also
expanded its executive team in 2021.
Stephanie Jett joined as Chief Commercial Officer, Johannes
Helmich as Chief Technology Officer and Mark Sullivan as
Chief Operating Officer.
These talented additions to our already strong executive
group will help reinforce and support our Take the Turn
strategy and facilitate better coordination with our customers,
cross divisional know-how and technology transfer, and the
balancing of resources.
Looking ahead
We expect 2022 to be a year of stabilisation with many of the
challenges in 2021 gradually diminishing. Although the timing
and degree of any recovery is uncertain, especially given
the unknown impact of the Russian invasion of Ukraine, IHS
Markit forecasts that global light vehicle production will return
to 2019 production levels in 2023.
With the benefit of prior restructurings, cost containment
initiatives and management focus, I am confident the
Group can continue to deliver steady performance and then
capitalise on the recovery, when it comes.
In the longer term, the Group is well positioned to increase
its BEV market share with revenue growth outperforming
vehicle production increases and consistent cash generation
and margins.
I am honoured to lead the Group as, together, we celebrate
our 100-year anniversary and Take the Turn towards an
exciting future.
Hans Dieltjens
Chief Executive Officer and President
14 March 2022
Our strategy
Pages 26-27
11
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Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview A history of supporting a changing world
The Bundy Corporation is founded
in Detroit, Michigan, USA.
1922
First contract from Ford Motor
Company for unfabricated gas
lines on the Model T
First production site on Bellevue
Avenue in Detroit, Michigan
Harry Warren Bundy invented the
double-walled steel tube “sweated”
together with solder
1929
“Bundyweld” invented, which
enhanced torsion and bending qualities,
increased resistance to corrosion and
improved fatigue strength of tubes
1946
Company president Wendell
Anderson, Jr. featured in the Nov.
4, 1946 issue of TIME magazine for
introducing an incentive wage plan in
a union plant
1962
First facility opened in Spain
as ARMCO
1966
Bundy adapted “b” trademark 1966
1967
American Stock Exchange listed
Bundy (BNY) on March 20, 1967
1984
Bundy began to sell completely
pre-assembled tubing bundles
encompassing both fuel lines and
brake lines on a given vehicle
1985
First facility opened in China
1922
1936
Bundy entered into licensing
agreement with ARMCO International
Corporation with locations in England
and France
1941-1945
Bundy converted operations to total
war production Detroit produced
$30 billion of military hardware, 20% of
the total production for World War II
12
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Annual Report and Accounts 2021
1970
United States Congress passed
Clean Air Act; vehicle horsepower
reduced to address emission controls
1988
TI Group plc
acquired Bundy
1997
Bundy supplied the brake and fuel
lines for the Thrust SSC (Super Sonic
Car) that broke the land speed record
at 714.44 mph (1,149.30 km/h) on
25 September 1997
1975
Tube production started by Bundy in
South Africa
1976
New York Stock Exchange listed
Bundy common stock for first time
on December 9, 1976
1980
Bundy introduced the new Z-Coat
process on Bundyweld
and Electricweld
tubing for GM’s new front-wheel
drive vehicles
2019
TI Automotive rebrands as TI
Fluid Systems
2020
Successful transition to the emerging
BEV market by supplying thermal
lines and battery chiller lines for the
new Ford Mustang Mach-E BEV as
well as the launch of various thermal
coolant assemblies and sole supply
of the cabin comfort CO2 based heat
pump valve unit for Volkswagen’s
ID.3 and ID.4 BEVs
2021
Hans Dieltjens appointed as Chief
Executive Officer and President
TI acquires 100% of Hanil operations
in Korea
2022
2022
TI celebrates its centennial and looks
to the future of electrification and
sustainability with T3 strategy
1999
TI Group acquired Walbro Corporation
(USA) Creation of TI Group
Automotive Systems
2001
TI Automotive Ltd. formed as an
independent company in England
TI Automotive is first to market with
its ‘ship in a bottle’ self-contained fuel
tank that packages the fuel pump and
fuel-level sensor inside the tank and
meets the future LEV II evaporative
emissions standards 2005
2003
TI Automotive acquired Pierburg Fuel
Pumps (Germany) 2003
2008
William L. Kozyra, Jr. appointed as
Chief Executive Officer and President
2010
Automotive News PACE Award for
Dual Channel Single Stage (DCSS)
fuel pump
TI Automotive rebranded itself with a
new logo
2014
TI Automotive won
Automotive News PACE
Award for Tank Advanced
Process Technology (TAPT)
2009
Automotive News PACE award for
PZEV Fuel Tank
2016
TI Automotive moved corporate
offices to Auburn Hills, Michigan,
USA.
2017
TI Fluid Systems plc, the
parent company of the TI
Automotive Group,
is admitted to the London Stock
Exchange; ticker symbol TIFS.
2010
TI Automotive won largest new
business award in history of the
company to be the global supplier
of fuel tank systems for several
Mercedes-Benz model lines
13
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Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Our market
Market share
Supplier of brake and fuel lines globally
30%
#1 market position globally in brake and fuel lines
No.1
Number of 20 top-selling nameplates in China
10
Number of the 20 top-selling nameplates in
North America
12
Number of the 20 top-selling nameplates in Europe
19
Global capacity
Manufacturing locations
104
Employees
25,600
Revenue by division
Fluid carrying systems
54%
Fuel tank and delivery systems
46%
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Annual Report and Accounts 2021
Our market strengths
Leading
technology
Strong
relationships
Technology leader in highly engineered automotive fluid
systems
– Award-winning product innovations and technologies
aligned with automotive industry megatrends of emissions
reduction, fuel efficiency and electrification
– Working closely with customers on design and
engineering capabilities to maximise product development
– Extensive knowledge of materials and manufacturing
processes together with optimal level of
vertical integration
Strong customer relationships and global
optimised footprint
– Highly diversified customer base
– Facilities in every major automotive manufacturing market
– Footprint includes regional manufacturing centres and
assembly locations in close proximity to customers which
provide logistics competitiveness and customer service
– Significant amount of revenue generated from global
OEM platforms (i.e. platforms produced in three or
more regions)
– Industry recognised innovation awards for plastic fuel tank
technologies, e.g. pressurised fuel tanks for hybrid electric
vehicles (HEVs)
– Well positioned through the global manufacturing footprint
to cost-effectively expand fluid handling content, business
and infrastructure to OEMs transitioning to the EV market
– Successfully secured design, engineering and supply of
– Locations predominantly managed by local
thermal management products for battery electric vehicles
(BEVs) with high volume global leading OEMs with a
combination of traditional and lightweight materials
– Well positioned for growth in thermal management
systems for EVs with global multi-layer nylon
line capabilities
staff with strong stakeholder relationships and
performance responsibility
of BEVs produced in 2021 have TIFS content
30%
48%
awards won in 2021 were on HEV and BEV platforms
15
TI Fluid Systems plc
Annual Report and Accounts 2021
14.2%
10.3%
10.3%
9.8%
8.7%
Revenue by customer
Volkswagen
Hyundai
Mercedes-Benz
Stellantis
Toyota
Renault-Nissan
6.8%
Ford
6.3%
BMW
4.7%
General Motors
4.3%
Great Wall
2.5%
Geely
2.2%
Other OEM
19.9%
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview
Our market
continued
Our market strengths
Significant
growth
potential
Long-term
performance
Significant growth opportunities aligned with
electrification including our strength in
thermal management
– Opportunity to increase content per vehicle in growing
HEV and BEV markets compared to our content on more
traditional internal combustion engine (ICE) vehicles
– Ability to use existing brake line, fuel tank and thermal
management technology for HEVs
– Potential addressable market increases significantly
with BEV market development as this typically requires
battery, chassis, electric motor and electronics thermal
management (heating and cooling) in addition to traditional
passenger cabin comfort lines
– The Group is well positioned for growth in thermal
management for HEVs and BEVs due to:
– Existing expertise to design and engineer
performance-critical components and modules to meet
customer specifications using in-house ‘know-how’
– Introduction of nylon as a lightweight solution to thermal
requirements that can operate at high temperatures,
providing significant weight-saving advantage
– Existing nylon extrusion and quick-connectors
Global market leader with strong market positions
and above-market revenue performance
– Customer, platform, regional and product diversity
– Leading supplier of brake and fuel lines, with
approximately 30% share of the global brake and fuel line
market and #1 market position globally
– Leading supplier of plastic fuel tanks, with approximately
16% of the global plastic fuel tank market
– Embedded, long-term global customer relationships and
strong close engineering collaboration provide business
award opportunities
– Products typically single-sourced for life of programme
– Competitive global manufacturing footprint with flexible
cost structure and approximately 70% of employees
located in low-cost countries
Management team with solid automotive experience and
long track record of strong revenue growth, profitability
and cash flow generation
– History of achieving leading financial metrics:
– Revenue growth above global vehicle production
(market outperformance)
capabilities and capacity in each region, optimising
costs and reducing supply chain risk and carbon
emissions related to transport
– Adjusted EBITDA, Adjusted EBIT, Adjusted Net Income
– Adjusted Free Cash Flow
– Strong industry reputation for technology innovation and
– Long-standing customer relationships and viewed
product quality
as a trusted and strategic partner to the OEMs
– Ability to produce from existing and efficient
manufacturing locations close to customers
– Financial discipline in quoting new contracts and
capital allocation
– Continuous focus on business improvement efficiencies
– BEV awards during 2021 accounted for €1 billion
and managing fixed costs
of lifetime revenue.
– Continuing to collaborate with key customers on design
and engineering for HEVs, and BEVs, thanks to our close
relationships in every region
€1bn
Revenue awards won in 2021 on BEV platforms only
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Annual Report and Accounts 2021
– Flexible organisation responding fast to challenging
situations like COVID 19 and the microchip shortage crisis
€2,957m
Total 2021 Revenue
Revenue by region
EU and Africa
North America
€713.6m
China
€672.4m
South Korea
€254.7m
Other Asia Pacific
€131.0m
Latin America
€46.5m
€1,138.4m
Our current market is resilient
1.5% Historical CAGR
4% CAGR
56.3
54.5 57.1 58.6 61.6 64.2 66.8 70.6 67.5 59.4 74.3 76.9 81.5 84.7 87.4 88.8 93.1
95.1
94.2
89.0
74.6 77.1 84.1 91.0
95.8
98.5
98.6
99.9
101.4
2000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2022
2023
2024 2025
2026
2027
2028
Rest of world
Other APAC
China
Japan/Korea
Europe
North America
Source: IHS Markit, February 2022 and Company estimates
By region
(2021 light vehicle production)
Europe (including Middle East and Africa)
17.9m
North America
13.0m
Asia Pacific
43.6m
Latin America
2.6m
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Potential for increase in addressable market
HEV was 13% of the global light vehicle
production market in 2021
13%
BEV was 6% of the global light vehicle
production market in 2021
6%
HEV is forecast to be 35% of the global light
vehicle production market by 2028
35%
BEV is forecast to be 30% of the global light
vehicle production market by 2028
30%
According to IHS Markit, February 2022.
Global light vehicle production 2000-2028 From 2021 to 2028, Hybrid Electric Vehicles (HEVs) CAGR expected to be 19% and Battery Electric Vehicles (BEVs) CAGR expected to be 29%.Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview
Increasing use by OEMs of highly reliable suppliers with
strong technical capabilities
– OEMs increasingly require global suppliers with a long-
term track record of providing high-quality products,
particularly for performance-critical components, such as
fluid storage, carrying and delivery systems and thermal
management products and systems
– As a result of more stringent regulatory requirements
and rapidly changing consumer preferences, OEMs must
continue to innovate and are therefore becoming more
reliant on suppliers who can introduce new products
and technologies which meet design and validation
requirements in a short period of time
– The Group has award-winning technologies and products
aligned with automotive megatrends, including new
product offerings designed for hybrid electric vehicle
(HEV) and battery electric vehicle (BEV) applications
More stringent regulatory requirements to reduce
emissions and increase fuel economy
– OEMs are required to reduce exhaust and evaporative
emissions and improve fuel economy in order to meet
increasingly stringent regulatory requirements in every
major market
– The relevant authorities in the United States, the European
Union, China, India, Japan, South Korea and Brazil amongst
others, have all instituted regulations requiring significant
emissions reductions and more stringent fuel economy
targets over time
– OEMs have accelerated their electrification plans, with
30% of vehicles manufactured by 2028 expected to
be BEVs
Our market
continued
Long-term growth drivers
Growth in emerging economies
– According to IHS Markit, global light vehicle production
grew at a compound annual growth rate (CAGR) of 1.5%
from 2000 to 2021, notwithstanding the volume decline
during the 2008-2009 global economic downturn and the
COVID pandemic in 2020-2021. It is forecast to grow at a
CAGR of 4.0% from 2021 to 2028
– Prior to 2000, the more developed markets of North
America, Western Europe, South Korea and Japan
accounted for a substantial majority of global production.
However, since 2000, global light vehicle production
growth has largely been driven by emerging markets and,
in particular, China, where production volume grew at a
CAGR of 12.2% between 2000 and 2021
– According to IHS Markit, approximately 32.2% of global
vehicle production in 2021 was generated in China, with
growth expected to continue in the long term
– The more developed markets of North America, Western
Europe, South Korea and Japan are expected to grow
at a CAGR of 3.4% with an increase of approximately
8.9 million units from 2021 to 2028, while emerging
markets are forecast to grow at a CAGR of 4.4% with
an increase of 15.3 million units during the same period
– The Group has significant presence in the world’s
largest vehicle market, China, where it has wholly
owned operations and makes up 23% of the Group’s
2021 revenue
Global platform standardisation
– Many OEMs are standardising vehicle platforms globally
in an effort to reduce costs and become more competitive
– By maximising the number of nameplates that can be
produced on each platform and minimising differences in
platforms between regions, OEMs can reduce design and
development costs
– IHS Markit projects that vehicle platforms that are
produced in two or more regions will increase from 72% of
global production in 2021 to 77% in 2028, while platforms
manufactured in one region will reduce from 28% of global
production to 23% in the same period
– Accordingly, global design, manufacturing and supply chain
capabilities are significant factors for certain OEMs when
awarding contracts to suppliers
– The Group is already benefiting from this platform
globalisation trend. In 2021, the Group tracked 84% of its
total revenue by individual platform, of which approximately
90% was from global platforms produced in two or
more regions
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Annual Report and Accounts 2021
Market driver
in 2021:
Fuel efficiency
Weight reduction
Governments globally have increased requirements
on OEMs to increase fuel economy across their fleet
of vehicles. Heavier vehicles use more fuel and emit
more CO2 into the environment. As a result, there is a
growing trend among OEMs to reduce vehicle weight
through use of lighter components.
The Group is a beneficiary of this trend, particularly in
China where the Group’s plastic fuel tanks offer a lighter
weight and anti-corrosive solution to steel tanks. In
2021, 26.4% of China’s fuel tanks were still made
of steel, providing a continued growth opportunity.
The Group is also using its nylon capability to assist
OEMs to reduce vehicle weight to improve fuel
efficiency and, in the case of HEVs and BEVs, battery
range. Nylon provides significant weight reduction
(between 30% to 60%) compared to rubber and
aluminium-based.
19
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Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Our market
continued
Market driver
in 2021:
Electrification
of vehicles
Electrification
To address fuel economy requirements, OEMs are
increasingly adopting alternative powertrain and
propulsion technologies, including HEVs and BEVs.
IHS Markit projects CAGRs of 19.4% and 29.4% in
global HEV and BEV production, respectively, between
2021 and 2028 and that HEVs and BEVs will constitute
approximately 35% and 30%, respectively, of global
vehicle production volume by 2028.
Electrification offers a significant content growth
opportunity for the Group.
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TI Fluid Systems plc
Annual Report and Accounts 2021
Electrification
– To address fuel economy requirements, OEMs are
increasingly adopting alternative powertrain and
propulsion technologies, including HEVs and BEVs
– IHS Markit projects CAGRs of 19.4% and 29.4% in global
HEV and BEV production, respectively, between 2021
and 2028 and that HEVs and BEVs will constitute
approximately 35% and 30%, respectively, of global
vehicle production volume by 2028
– Electrification offers a significant content growth
opportunity for the Group as the Content per Vehicle
for HEVs and BEVs exceeds that provided by ICEs
Hybrid Electric Vehicle (HEV)
– Traditional vehicles with internal combustion engines
(ICE) typically have two main thermal management loops.
HEVs generally contain traditional ICE fluid systems
and can also have additional fluid handling systems to
manage electrification-related component temperatures
including advanced thermal management systems for
the chassis, power electronics, electric motor drive and
battery systems. As a result, HEVs may have up to six
thermal loops
– HEV thermal management systems typically include
fluid lines and tubes, pumps, quick connectors, sensors
and valves
– In addition to increased thermal management
requirements, the Group produces fuel tank systems
for HEVs that can accommodate increased fuel vapour
pressure which builds up during the period when the
internal combustion engine is not operating and is not
available to purge the fuel vapour
Battery Electric Vehicle (BEV)
– BEVs are expected to have additional thermal
management loops. Based on recent platform launches,
we expect significantly higher line and tubing content
than traditional ICEs, depending on vehicle size and
system design
– As thermal components and systems in BEVs may not
be exposed to the same heat generated by ICEs, the
systems may utilise different materials, such as nylon, to
help optimise system weight, temperature and pressure
– Nylon lines have an approximate 30% to 60% weight
advantage as compared to rubber and aluminium lines.
Therefore, the use of nylon lines would reduce vehicle
weight and help to extend battery life (required for
extended driving range) of EVs. The Group has existing
material ‘know-how’ in nylon and aims to utilise its
existing industrialised capacity to support nylon usage
Autonomous Electric Vehicle (AEV)
– Autonomous vehicles increase the requirement of
thermal lines, as more electronic components
require cooling
Long-term growth drivers
Exhaust emissions
– In an effort to address climate change, governments
have adopted requirements, focused on reducing
exhaust emissions from automobiles, including, in some
jurisdictions, a phase out of sales of new ICE vehicles over
an extended period of time. Certain developed markets
have mandated CO2 emission reductions, with emerging
markets increasingly following a similar trend
– OEMs have sought to introduce higher-pressure fuel
systems and turbochargers in order to improve the
efficiency of the combustion reaction in an engine to
achieve lower exhaust emissions
– The Group’s product offering includes products which
optimise the efficiency of the internal combustion
engine process including GDI fuel rails, fuel pumps and
turbocharger engine lines
– For example, the Group designs, engineers and
manufactures efficient fuel pumps so an ICE vehicle will
burn less fuel and, as a result, reduce the level of CO2
emitted into the environment
Evaporative emissions
– Evaporation of fuel while stored in the fuel tank has
historically been a source of hydrocarbon emissions
resulting from permeation through the walls and various
other components on the tank
– Regulations have been enacted that require OEMs to
reduce these evaporative emissions from automotive
fuel systems
– For example, in California, USA, low emissions vehicle
(LEV) standards dictate the evaporative emissions
thresholds that OEMs are required to achieve.
LEV II standards, which came into effect in 2004, lowered
emissions thresholds by approximately 75% and new LEV
III standards, which are expected to be gradually phased
in over the next decade through to the 2025 model year,
are expected to require a reduction of 30% in emission
thresholds from 2010 levels
– Similarly, the European Union has established an emissions
target for 2021 that will require an emissions reduction of
27% from 2015 levels. In addition, China has introduced its
Beijing-6 evaporative emissions targets which are similar to
California’s LEV II standards
– The Group has specific technology in fuel tanks to reduce
evaporative emissions. The six-layer structure includes a
barrier layer which captures the hydrocarbons inside the
wall of the fuel tank and prevents them from being emitted
into the environment
– The Group is the only supplier with a fully integrated
design, development, manufacturing and supply capability
for the fuel tank system. The FTDS division made up 46%
of the Group’s revenue in 2021
Weight reduction
– Governments globally have increased requirements
on OEMs to increase fuel economy across their fleet
of vehicles
– Heavier vehicles use more fuel and emit more CO2 into the
environment. As a result, there is a growing trend among
OEMs to reduce vehicle weight through the replacement
of metal components with lighter plastic components
– The Group is a beneficiary of this trend, particularly in
China where the Group’s plastic fuel tanks offer a lighter
weight and anti-corrosive solution to steel tanks. In 2021,
26.4% of China’s fuel tanks were still made of steel,
providing a continued growth opportunity
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Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Our market
continued
Market driver
in 2021:
Innovative
products
22
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Annual Report and Accounts 2021
Battery electric vehicles
Thermal management systems for BEVs will include
pumps, quick connectors, sensors and valves.
The Group is well positioned to continue capturing
additional content opportunity as the market for
BEVs grows.
23
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Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Our innovative products
Responding to market
and environmental needs
Internal combustion engine vehicle (ICE)
Hybrid electric vehicle (HEV)
2
1
8
9
10
6
2
1
8
9
11
3
4
4
5
3
Our innovative and versatile products
Fluid carrying systems
The FCS division manufactures brake and fuel
lines and thermal management fluid systems,
including thermal management products.
1 Under-Hood Thermal
Rubber Lines
2 AC Cabin Climate
Control Lines
3 Brake and Fuel
Bundle Assembly
4 Brake Line
Bundle Assembly
Fuel tank and delivery systems
The FTDS division manufactures plastic fuel
tanks, plastic filler pipes and electric fuel
pumps and modules.
8 Brushless Fuel Pump Module
w/Electronics
9 Plastic Fuel Filler Pipe &
Emissions Vent Line
24
TI Fluid Systems plc
Annual Report and Accounts 2021
Our innovative and versatile products
Traditional
TI products
for ICE
vehicles
TI products
for HEVs
TI thermal
products
for BEVs
TI products
for AEVs
Battery electric vehicle (BEV)
Autonomous electric vehicle (AEV)
6
4
2
6
4
2
1
5
1
3
3
5
7
5 Chassis Thermal
Plastic Manifolds
6 Battery Thermal Plastic Lines
and Connectors
7 Autonomous Vehicle
Thermal Plastic Lines
10 ICE Plastic Fuel
Tank Assembly
11 HEV Pressure Resistant Fuel
Tank Assembly
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Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Our strategy
Our purpose is to develop
technology and deliver
innovative products in
a sustainable manner to
enable our OEM customers
to make greener vehicles and
help keep our environment
clean and make our world
a better place to live.
Our strategic objective is to
leverage our position as a
leading global supplier of
automotive fluid systems to
provide advanced technology
products that support the
world’s transition to greener
vehicles and, thereby, deliver
revenue that outperforms
global light vehicle production
along with strong profitability
and cash flow generation.
Objective 1
Objective 2
Use our strength in key products to
drive the Group’s market
share position
Capitalise on the Group’s global
scale, footprint and position to
ensure balanced customer
platforms supporting regional
and product diversification
– Extend the Group’s strong leadership
positions in brake and fuel lines and
plastic fuel tanks
– Leverage technology, OEM
relationships and competitive global
footprint to drive organic business
growth in thermal with leading
products targeted for global platforms
– To mitigate the impact of regional
market cyclicality and customer
concentration, we strive to maintain
a balanced level of customer,
platform, regional and fluid handling
product diversification
– Leverage the industry trend of
increasing standardisation of OEM
platforms through the depth and
scale of operations
– Reduce supply disruption risks and
environmental impacts with vertical
integration where appropriate
– Decentralised business model with
locally based nationals in regions
and countries, including China, with
profit and cash flow responsibility
as well as strong regional
customer relationship
No.1
No.3
Supplier of brake and fuel lines globally
Supplier of plastic fuel tanks globally
Manufacturing locations
104
29
Countries
Our progress this year:
– #1 supplier position of brake and fuel
Our progress this year:
– Regional diversity with 38% of
lines in all key regions globally
– #3 supplier position of plastic fuel
tanks globally
– Trending towards >20% market share
in the HEV fuel tank market
– Successfully launched one of the
biggest thermal product programmes
awarded by Mercedes for global
EV platforms.
– Ongoing collaboration with key
OEMs for the design and engineering
of thermal products for EVs
– Projects are across different regions
including China
– Booked significant new business
awards in all regions. €1 billion
bookings in products for BEV
during 2021
revenue in Europe, 36% in Asia,
24% in North America and 2% in
Latin America
– Balanced and diversified customer
portfolio with no single customer
representing more than 16% of
2021 revenue
– Long-standing relationships
with OEMs
– Reputation for developing high-
quality products including brake
and fuel lines, plastic fuel tanks and
thermal management systems
– Many existing and planned
collaborative design and engineering
opportunities with OEMs in new
technologies for HEVs and BEVs
– Establishing relationships with
new OEM entrants, specifically
for EV programmes
Read more in Our business model
Pages 30-31
Read more in Our market and products
Pages 14-25
“ We are Taking the Turn to
electrification by leveraging
the Group’s position as a
leading global supplier.”
Hans Dieltjens
Chief Executive Officer and President
26
TI Fluid Systems plc
Annual Report and Accounts 2021
Objective 3
Objective 4
Objective 5
Strengthen the Group’s position as
an advanced technology leader in
fluid systems to address industry
shift to greener vehicles to make
the environment cleaner
Increase the sustainability of the
Group by conserving energy and
resources, reducing greenhouse gas
emissions, building a culture
embracing safety and social
responsibility and maintaining the
highest level of ethical standards
and compliance
– Continue to invest in R&D to develop
– Take active actions to reduce
emissions in our production processes
– Increase consumption of
renewable energies
– Talent development and retention
– Embrace culture of social
responsibility, diversity and inclusion
products that facilitate OEMs
meeting regulated emissions
and fuel economy requirements
– Pursue content expansion in the
electric market, where advanced
thermal management systems and
pressure resistant fuel tanks have
the potential to increase the Group’s
fluid handling content
– Leverage our existing nylon and
lightweight ‘know-how’ and
manufacturing capabilities to target
key OEMs with thermal management
system requirements for HEVs
and BEVs
– Continue advancing our market
position in pressure resistant fuel
tanks for the increasing HEV market
Deliver strong growth, profitability
and cash flow generation
– Leadership in technology, global
manufacturing footprint and
competitive cost structure supporting
growth in revenue, Adjusted EBIT
and Cash Flow generation
– Continue to prioritise variable
and fixed cost management and
capital allocation
– Continue to adjust costs in line with
OEM production volume fluctuations
– Selectively invest capital in projects
that offer attractive rates of return
2021
Focus on products that facilitate OEMs
meeting emission reduction and fuel
economy requirements
37.5%
Published target for reduction of Scope
1 and 2 CO2(e) emissions by 2039
compared to 2019
€117m
Adjusted Free Cash Flow generation
Our progress this year:
– Continued to focus on our
advanced technology development
centres and regional application
engineering centres
– Ongoing design, development
and supply of advanced systems
and components on a global basis
to OEMs
– Emphasis on products that facilitate
OEMs meeting emission reduction
and fuel economy requirements, e.g.
pressurised fuel tanks and thermal
management products
– Developed lightweight nylon thermal
products to support industry move
to BEVs
Our progress this year:
– Published ESG and Sustainability
pages on our website
– Updated and published our CO2(e)
emission reduction targets
– Updated our Environmental, Health
& Safety and Human Rights policies
– Established energy conservation
targets for all manufacturing facilities
– Increased use of electricity from
renewable sources
– Published CO2(e) emissions, safety,
water and risk management data on
CDP platform
– Added 30 plants to our ISO 45001
Occupational Health and Safety
Management Systems
– Added 8 plants to our ISO 14001
Environmental Management Systems
to cover all manufacturing locations
by 2022
– Established regional Diversity &
Inclusion Committees
Our progress this year:
– Revenue outperformance of 2.2%
on a constant currency basis and
Adjusted EBIT of €213 million in 2021
– Delivered Adjusted Free Cash Flow
of €117 million in 2021
– Successfully managed fixed costs and
profitability despite an unprecedented
global health pandemic and
significantly lower global light vehicle
production volumes in 2021
– Successfully managed significant
cost and cash preservation activities
in order to continue delivering strong
margins and free cash flow despite
historic volume decline
– Continued to demonstrate the
successful execution of the Group’s
electrification strategy with the
launch of products on Volkswagen’s
ID.3 and ID.4 battery electric vehicles
and continued wins in BEV and HEV
across all main production regions
– Conducted inclusion assessment for
– Strengthening our culture of
top management
continuous improvement and
results orientation
Read more in Our market and products
Pages 14-25
Read more in Our Approach to
sustainability report Pages 36-47
Read more in Key performance
indicators Pages 28-29
27
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Key performance indicators
Financial and non-financial
Revenue €m
Adjusted EBITDA €m
Adjusted EBIT €m
2018
2019
2020
2021
3,473
2018
3,411
2019
2,815
2,957
2020
2021
484
2018
498
2019
374
340
331
353
2020
2021
173
213
Definition
Defined as revenue excluding the
effects of currency translation.
Definition
Defined as profit or loss before tax for
the period before exceptional items,
net finance expense, share of profits or
losses of associates, foreign exchange
gains or losses and depreciation,
amortisation & impairments of tangible
and intangible assets adjusted for
net restructuring charges, associate
dividends received and the impact of
any business acquisitions or disposals.
Definition
Adjusted EBIT is defined as Adjusted
EBITDA less depreciation, amortisation
and non-exceptional impairment on
tangible and intangible assets net
of depreciation and amortisation
on purchase price accounting.
2021 performance
– In 2021, global light vehicle production
grew by 3.4% to 77.1 million vehicles
– We delivered revenue of €3.0 billion
(5.6% growth at constant currency)
compared to the prior year
– 220 bps revenue outperformance at
constant currency
Link to Strategy
– Objective 1 – Use our strength in
key products to drive the Group’s
market share
2021 performance
– Adjusted EBITDA was €353 million
2021 performance
– Adjusted EBIT was €213 million
in 2021
– Adjusted EBITDA margin was 11.9%
in 2021, a 10 bps increase from the
prior year
in 2021
– Adjusted EBIT margin of 7.2% was
100 bps increase from the prior year
Link to Strategy
– Objective 5 – Deliver strong growth,
profitability and cash flow generation
Link to Strategy
– Objective 5 – Deliver strong growth,
profitability and cash flow generation
28
TI Fluid Systems plc
Annual Report and Accounts 2021
Adjusted Basic EPS € cents
Adjusted free cash flow €m
Customer satisfaction PPM
2018
2019
2020
2.6
2021
11.2
29.9
2018
28.9
2019
2020
2021
146
148
180
117
2018
2019
2020
2021
5.9
3.8
7.7
5.0
Definition
Defined as Adjusted Net Income
divided by the weighted average
number of shares in the year.
Adjusted Net Income is defined as
Profit or Loss for the period attributable
to the ordinary shareholders before
exceptional items adjusted to reflect
associate dividends received and
eliminate the impact of net restructuring
charges, foreign exchange gains or
losses and the impact of any business
acquisitions or disposals.
2021 performance
– Adjusted EPS was 11.23 Euro cents
in 2021, representing an Increase of
8.59 Euro cents over the prior year
Definition
Defined as cash generated from
operating activities, less cash used by
investing activities, cash movements in
financial assets at fair value through the
profit and loss, cash payments related
to IPO costs, net cash flows relating to
restructuring, settlement of derivatives
and the impact of any business
acquisitions or disposals.
Definition
Defined as the quantity of
non-conforming pieces rejected
by external customers versus pieces
sold, measured in parts per million.
2021 performance
– Adjusted Free Cash Flow was
€117 million in 2021, representing a
decrease of 21% over the prior year
reflecting a return to normalised
cash returns
2021 performance
– The global external quality rating
for 2021 year end was 5.0 ppm.
This result is 29% lower than our
benchmark global target of 7 ppm
Link to Strategy
– Objective 5 – Deliver strong growth,
profitability and cash flow generation
Link to Strategy
– Objective 5 – Deliver strong growth,
profitability and cash flow generation
Link to Strategy
– Objective 1 – Use our strength in
key products to drive the Group’s
market share
29
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Our business model
We design and manufacture award-winning,
industry-leading automotive fluid systems for
OEM customers across the globe, operating
out of 104 manufacturing locations in
29 countries
manufacturing locations
104
WHAT WE DO
HOW WE CREATE VALUE
Design and development
– Our advanced engineering team develops new products
and technologies that respond to new market trends
and needs, with a recent focus on the unique thermal
management requirements for HEVs and BEVs
– We provide our customers with innovative components
and system solutions that are critical to performance,
reduce emissions, and enhance quality
– Our application engineering teams work closely with our
customers to providing necessary flexibility to introduce
design changes and adjustments throughout the vehicle
design and launch phases
– We have approximately 1,200 issued and pending patents
worldwide (650 in our Fluid Carrying Systems division
and 550 in our Fuel Tank & Delivery Systems division)
– Our metal tubes, used mainly in brake applications,
are the market leader and meet the requirements of all
OEM customers
– Our plastic tubes and connectors provide solutions for
multiple thermal applications and allow our customers
to migrate away from heavier metal products
– Our award-winning plastic tank designs meet the
high-pressure requirements for HEVs
Manufacturing
– Our competitive global footprint with regional
manufacturing and small final assembly facilities located
near our OEM customer plants has been established to
deliver quality products, efficient manufacturing, optimised
capital allocation and optimised logistics
– We are able to deploy reliable and uniform manufacturing
processes and equipment in all global regions to support
the increasing transition to global platforms by our
OEM customers
– We are able to align our manufacturing footprint with the
needs of our OEM customers.
– Our increasing vertical Integration in each region reduces
transportation and the risk of supply chain disruptions
We are market leaders
– We have a 100-year heritage in the automotive industry
and now supply performance-critical products to nearly
every OEM In the world for light vehicles of every style
and type
– Our highly engineered, advanced products, long-term
customer relationships and global footprint, including
China, combine to make the Group highly competitive
while delivering strong financial returns
– We are the #1 supplier of brake and fuel lines in all
key regions globally and #3 supplier of plastic fuel
tanks globally
We have a global workforce
– We employ 25,600 people globally at our technical centres,
corporate offices and manufacturing plants
– We have 10,600 employees in Europe and Africa, 6,300 in
North America and 8,700 in Asia Pacific and Latin America
– Our diverse and decentralised workforce and management
provides us first-hand understanding of local markets and
customer needs
– We maintain effective relationships with our OEM
customers through their headquarters, technology centres
and assembly plants
We have long-standing relationships with suppliers
– We purchase raw materials, including resin, steel and
aluminium, as well as sub-components from suppliers
located around the world
– We pursue strategic sourcing based on price, quality,
reliability of supply, technology and logistics efficiency
– In some instances, certain suppliers are directed and
mandated by our OEM customers
30
TI Fluid Systems plc
Annual Report and Accounts 2021
supplier of brake and fuel
supplier of plastic fuel tanks globally
No.1
No.3
HOW WE CREATE VALUE
THE VALUE WE CREATE
– We invest in technology and innovation
– We have award-winning technologies and products aligned
with automotive megatrends, including new product
offerings for HEV and BEV applications
– We are increasing our investment in technology and
Customers
– We provide value to our OEM customers through our
leading product technology, strong manufacturing and
quality capabilities, and efficient global footprint
– Our performance-critical products support our OEM
innovation, including the build out of E-Technology Centres
in each region to showcase our capabilities to support
vehicle electrification
customers to reduce automobile emissions and increase
fuel efficiency, including through alternate HEV and
BEV powertrains
– We continue to protect our intellectual property in all
– We efficiently and effectively support our customers
major markets
We have a wide and diverse customer base
– Our products are sold to all major global OEMs for a wide
range of light vehicle platforms and brands, reducing our
“mix” risks
– We have long-standing customer relationships with
through our global footprint, supplying products locally
with consistent manufacturing processes and quality
while reducing the risk and environmental impact of long
logistics chains
Employees
– We seek to ensure that our workforce of 25,600
purchasing, engineering and management teams at our
OEM customers and are seen as a trusted strategic partner
people located in 29 countries is skilled, motivated and
competitively compensated
– We collaborate with our OEM customers on the design
and engineering of new systems and products, particularly
for HEV, and BEV applications and, most recently, also
AEVs, providing us with a comprehensive view of the
changing market landscape
We are committed to sustainability
– We are developing products that support the electrification
of the automotive industry and contribute to a
cleaner environment
– We have set science-based targets to reduce our Scope 1
and 2 CO2 (e) emissions by 37.5% by 2039 on an absolute
basis compared to 2019
– We are committed to compliance and conducting our
business in an ethical manner and aligned with the highest
standards of social and environmental responsibility
– We have policies and programmes in place to provide
a safe and inclusive work environment and to promote
ethical conduct and culture of compliance
– We have established diversity and inclusion committees
in each region to help shape initiatives and further engage
our employees
– We strive to provide our employees at all levels with
opportunities for professional development and personal
programmes through our training, education and
learning programmes
Suppliers
– We work to build strong, collaborative relationships with
our suppliers, including cooperative development activities
– We assist our suppliers to meet best-in-class quality levels
and improve their manufacturing efficiency
– We support our suppliers to meet the high standards
of business ethics and compliance expected by us and
our customers
Shareholders
– We aim to generate long-term sustainable shareholder
returns through the execution of our business strategy
– Our dividend policy targets 30% of Adjusted Net Income
– Our annual and long-term incentive plans include
performance criteria to align management with the
interests of our shareholders
31
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Stakeholder engagement
How we engage with and consider our key stakeholders
Stakeholder
Engagement
Outcomes and actions
Shareholders
In addition to the significant interest held by funds
managed by Bain Capital (the ‘Bain Shareholders’), our
shares are held by both institutional and retail investors
with a range of investment styles based throughout
the world
Why we engage
– Quality of governance
– Effectiveness of the Board and management
– Growth potential and profitability
– Share price appreciation
– Dividends
Employees
We have a global workforce made up of 25,600 employees
and contractors, including approximately 4,100 salaried
employees, that work in 29 countries
Why we engage
– Good communications improves motivation, morale
and productivity
– Fosters retention and reduces employee turnover
– Identify issues and solutions quickly
– Identify needs for resources and support
– Executive Directors, supported by our investor
– Regular updates to the entire Board by Executive Directors and
relations team, had numerous one-on-one
and group meetings and calls, engaging with
shareholders representing over 80% of our
current shareholders (by shareholding value)
brokers on share performance, shareholder register and shareholder
views and sentiment
– Considering investor feedback and the long-term impact to the
Company and its stakeholders, the Board reviewed our capital
– The Company held its second Capital Markets
allocation strategy, resulting in continued debt reduction, strategic
Day in April 2021 on a virtual basis to provide an
in-depth review of our business model, strategy
for 2021
capital expenditure and a return to the Company’s dividend policy
and product portfolio to all shareholders
– The Board continued to review the development, and monitor
– Our Remuneration Chair communicated with all of
implementation, of the Company’s strategy, with particular emphasis
our top 20 shareholders, also meeting with many,
on product development for HEV and BEV platforms, in order to
to gain their input on our remuneration practices
promote the sustainability and viability of the business
and policies
– Review of trading updates and results announcements resulted in
– The two Non-Executive Directors who represent
additional information and reporting on strategic progress
the Bain Shareholders attend and actively
– Compliance with the Relationship Agreement in place with the Bain
participate in our Board meetings
Shareholders, which ensures the relationship is at arm’s length
– All shareholders are kept informed of the
– Decision to not propose a final dividend for 2020 but to pay an interim
performance of the business on a regular basis
dividend in February 2021 (see Dividend Note 14 on page 161)
through trading updates in January, May and
November, half and full year announcements
– Changes to the manner by which the Company implements our
remuneration policy based on shareholder feedback
in August and March, and our full annual report
– Changes to our LTIP metrics to better align with shareholder
in April
interests, including ROCE and ESG performance targets
– Adding a sustainability section to our website and reporting our
various sustainability data through CDP
– Making Investor Q&A available on our website
– Conducted an Employee Engagement and Culture
– Conducted diversity training and assessment for the
Survey in North America (see page 10 for more
Top 300 management to identify areas to improve leadership skills
information on the survey process and results)
– Regular review of injury and turnover data with the Board to ensure
– Held 'all employee' meetings and calls throughout
focus and support for safety training and protocols and competitive
the year to provide updates on COVID-19
response, financial performance, leadership
changes, and strategic objectives,
workforce remuneration
– The Board continues to direct and support management to finds
ways of improving diversity and inclusion throughout the organisation
– Our designated Non-Executive Director for
– Supported implementation of work from home and hybrid work
workforce engagement attended an 'all employee'
arrangements for office personnel
meeting and reviewed our survey results,
– Reviewed succession planning throughout the organisation
employee feedback and whistleblower reports
– Approved the creation of new COO, CTO and CCO executive
– Held several top management meetings to review
positions and the hiring of experienced candidates for those roles to
our Take the Turn strategy, including review and
provide the organisation with additional leadership and capabilities
incorporation of management input and ideas on
– Approved and adopted an updated Health and Safety Policy
our technology and products, sustainability and
– Approved and adopted an updated Human Rights Policy
learning initiatives
Section 172 and stakeholder engagement
Engaging with, and considering the interests
of, our stakeholders is crucial for the long-term
success and sustainability of our business
Section 172(1) statement
The Board recognises that considering our stakeholders
in key business decisions is crucial and will allow for the
long-term sustainability of the Group. Board Directors are
bound by their duties under the Companies Act 2006 (the
Act) to promote the success of the Group for the benefit of
members as a whole. Section 172 requires that Directors act
in the way they consider, in good faith, would be most likely
to promote the success of the Group for the benefit of its
stakeholders as a whole. Our shareholders together with our
customers, employees, suppliers and community represent
our key stakeholders. Engaging with, and giving consideration
to, these stakeholders is central to our corporate purpose and
strategy to achieve the long-term success and sustainability
of our business. In doing so the Directors consider the likely
consequences of any decision in the long term; the interests
of employees; the need to foster sound relationships
with suppliers and customers and others; the impact of
our operations on the community and the environment;
the desirability of maintaining of our reputation for high
standards of business conduct; and the need to act fairly.
Throughout the year, the Board’s decision-making is required
to take into consideration the interests of these wider
stakeholders within the framework set out in Section 172(1)
of the Companies Act 2006. The following table summarises
how our Directors have, and how the Group as a whole, has
engaged with, and considered the interests of, stakeholders
and some of the outcomes and actions arising from such
engagement and consideration.
32
TI Fluid Systems plc
Annual Report and Accounts 2021
Stakeholder engagement
How we engage with and consider our key stakeholders
Stakeholder
Shareholders
In addition to the significant interest held by funds
managed by Bain Capital (the ‘Bain Shareholders’), our
shares are held by both institutional and retail investors
with a range of investment styles based throughout
the world
Why we engage
– Quality of governance
– Effectiveness of the Board and management
– Growth potential and profitability
– Share price appreciation
– Dividends
Employees
We have a global workforce made up of 25,600 employees
and contractors, including approximately 4,100 salaried
employees, that work in 29 countries
Why we engage
and productivity
– Good communications improves motivation, morale
– Fosters retention and reduces employee turnover
– Identify issues and solutions quickly
– Identify needs for resources and support
Engagement
Outcomes and actions
– Executive Directors, supported by our investor
– Regular updates to the entire Board by Executive Directors and
relations team, had numerous one-on-one
and group meetings and calls, engaging with
shareholders representing over 80% of our
current shareholders (by shareholding value)
– The Company held its second Capital Markets
Day in April 2021 on a virtual basis to provide an
in-depth review of our business model, strategy
and product portfolio to all shareholders
brokers on share performance, shareholder register and shareholder
views and sentiment
– Considering investor feedback and the long-term impact to the
Company and its stakeholders, the Board reviewed our capital
allocation strategy, resulting in continued debt reduction, strategic
capital expenditure and a return to the Company’s dividend policy
for 2021
– The Board continued to review the development, and monitor
– Our Remuneration Chair communicated with all of
our top 20 shareholders, also meeting with many,
to gain their input on our remuneration practices
and policies
implementation, of the Company’s strategy, with particular emphasis
on product development for HEV and BEV platforms, in order to
promote the sustainability and viability of the business
– Review of trading updates and results announcements resulted in
– The two Non-Executive Directors who represent
additional information and reporting on strategic progress
the Bain Shareholders attend and actively
participate in our Board meetings
– All shareholders are kept informed of the
performance of the business on a regular basis
through trading updates in January, May and
November, half and full year announcements
in August and March, and our full annual report
in April
– Compliance with the Relationship Agreement in place with the Bain
Shareholders, which ensures the relationship is at arm’s length
– Decision to not propose a final dividend for 2020 but to pay an interim
dividend in February 2021 (see Dividend Note 14 on page 161)
– Changes to the manner by which the Company implements our
remuneration policy based on shareholder feedback
– Changes to our LTIP metrics to better align with shareholder
interests, including ROCE and ESG performance targets
– Adding a sustainability section to our website and reporting our
various sustainability data through CDP
– Making Investor Q&A available on our website
– Conducted an Employee Engagement and Culture
Survey in North America (see page 10 for more
information on the survey process and results)
– Held 'all employee' meetings and calls throughout
the year to provide updates on COVID-19
response, financial performance, leadership
changes, and strategic objectives,
– Conducted diversity training and assessment for the
Top 300 management to identify areas to improve leadership skills
– Regular review of injury and turnover data with the Board to ensure
focus and support for safety training and protocols and competitive
workforce remuneration
– The Board continues to direct and support management to finds
ways of improving diversity and inclusion throughout the organisation
– Our designated Non-Executive Director for
– Supported implementation of work from home and hybrid work
workforce engagement attended an 'all employee'
meeting and reviewed our survey results,
employee feedback and whistleblower reports
– Held several top management meetings to review
our Take the Turn strategy, including review and
incorporation of management input and ideas on
our technology and products, sustainability and
learning initiatives
arrangements for office personnel
– Reviewed succession planning throughout the organisation
– Approved the creation of new COO, CTO and CCO executive
positions and the hiring of experienced candidates for those roles to
provide the organisation with additional leadership and capabilities
– Approved and adopted an updated Health and Safety Policy
– Approved and adopted an updated Human Rights Policy
33
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Section 172 and stakeholder engagement
continued
34
TI Fluid Systems plc
Annual Report and Accounts 2021
Stakeholders
Engagement
Outcomes and actions
Customers
Our primary customers are multinational and local
automotive OEMs (original equipment manufacturers)
Why we engage
– Drive revenue growth and business success
– Identify sourcing opportunities
– Align product and technology development with
customer needs
– Effectively and efficiently address any supply or
quality issues
– We have extensive and regular contact with our
– The Board receives regular updates from the Executive Directors
OEM customers at all organisational levels and
and other senior management on commercial matters and customer
in all regions regarding sourcing, commercial
matters, product performance and quality,
relationships, including new business awards and strategic
development programmes
programme launches and the development and
– Our corporate purpose and business strategy has been established
planning of new products
and is monitored by the Board
– With respect to significant commercial matters
– The Board reviews and approves major capital investment and
and strategic initiatives, our
Executive Vice Presidents, CCO and CEO
product development strategy to promote manufacturing footprint
and technology alignment with our customers, including supporting
communicate directly with senior executives at
new business and development activities focused on HEV and
our customers
BEV platforms
– Annual budget and medium-term plan approved by the
Board incorporates our strategic growth with our customers,
including through medium-term product development and
technology alignment
– Approved restructuring plans that align with customer manufacturing
footprint and promote efficient supply arrangements
– Support implementation of a range of greenhouse gas reduction
initiatives in line with expectations and similar programmes of our
OEM customers
– Approved the creation of the new CCO position to better coordinate
and enhance customer relationships
– Approved the creation of the new CTO position to ensure our
advanced engineering and R&D is effectively managed and aligned
with customer needs
– Strong executive recruitment to support implementation of our
customer-focused strategy: new Chief Operating Officer, Chief
Technology Officer and Chief Commercial Officer
Community
As a global company, our community encompasses
our wider society and environment as well as the local
communities in 29 countries around the world where
we operate
Why we engage
– Promote our reputation as a responsible and
ethical business
– Attract, motivate and retain employees
– Conserve resources and reduce our impact on the
environment to ensure a sustainable business
– Consistent with our Core Values, each of
our facilities around the world seeks to be a
responsible member of its local community
– Strive to consistently operate our business in
a manner that minimises our impact on the
– ESG Steering Committee provided oversight and guidance for
numerous initiatives to reduce our greenhouse gas emissions,
improve sustainability reporting and disclosure, manage water use,
and reduce waste
– Developed and launched production of advanced products, such
environment through energy efficiency, waste
as thermal systems and high pressure fuel tanks, for BEV and HEV
reduction and conservation of resources
platforms that contribute to a cleaner world
– Expansion of our EHS group has improved our
– Recognised by the London Stock Exchange with the Green Economy
processes to measure, report and assess our
Mark in recognition of the positive environmental impact our product
greenhouse gas emissions and the environmental
technologies have by helping make cars greener
impact that our operations have on the
– Approved and adopted an updated Environmental Policy
wider community
– Our Code of Business Conduct includes policies
and principles to promote our reputation in
our community for high standards of business
conduct, including anti-corruption, anti-bribery,
fair competition (anti-trust), and positive work
environment and inclusion (anti-discrimination and
anti-harassment)
Suppliers
Our suppliers are located around the world and provide us
with raw materials, including resin, steel and aluminium, as
well as sub-components
Why we engage
– To build strong, collaborative and strategic relationships
in order to obtain competitive pricing, quality, reliability of
supply, and logistics efficiency
– To ensure we have access to advanced materials and
components that meet our technical requirements
– To ensure responsible sourcing and ethical business
practices and conduct by our supply base
– Our purchasing organisation has extensive and
– Coordinated closely with suppliers to manage supply shortages and
regular contact with our suppliers regarding
specific quoting and sourcing opportunities,
disruptions to ensure continued production
– Addressed requests for price increases in a fair and
delivery logistics and quality controls and testing
consistent manner
– Our engineering organisation works closely
– Managed supplier payments consistent with contractual terms to
with suppliers on development activities,
avoid negative impact on our supply base
validation testing and cost reduction initiatives
– Ongoing coordination with key suppliers to develop and engineer
(value engineering)
their materials and components in order to allow, in turn, the Group to
– We communicate our compliance expectations
provide products and systems that meet the requirements for HEVs
and how to do business with us through our
Global Supplier Requirements Manual, our
dedicated Supplier Portal on our website and our
purchasing terms and conditions
and BEVs
Stakeholders
Customers
Our primary customers are multinational and local
automotive OEMs (original equipment manufacturers)
Why we engage
– Drive revenue growth and business success
– Identify sourcing opportunities
– Align product and technology development with
– Effectively and efficiently address any supply or
customer needs
quality issues
Engagement
Outcomes and actions
– We have extensive and regular contact with our
OEM customers at all organisational levels and
in all regions regarding sourcing, commercial
matters, product performance and quality,
programme launches and the development and
planning of new products
– The Board receives regular updates from the Executive Directors
and other senior management on commercial matters and customer
relationships, including new business awards and strategic
development programmes
– Our corporate purpose and business strategy has been established
and is monitored by the Board
– With respect to significant commercial matters
– The Board reviews and approves major capital investment and
and strategic initiatives, our
Executive Vice Presidents, CCO and CEO
communicate directly with senior executives at
our customers
product development strategy to promote manufacturing footprint
and technology alignment with our customers, including supporting
new business and development activities focused on HEV and
BEV platforms
– Annual budget and medium-term plan approved by the
Board incorporates our strategic growth with our customers,
including through medium-term product development and
technology alignment
– Approved restructuring plans that align with customer manufacturing
footprint and promote efficient supply arrangements
– Support implementation of a range of greenhouse gas reduction
initiatives in line with expectations and similar programmes of our
OEM customers
– Approved the creation of the new CCO position to better coordinate
and enhance customer relationships
– Approved the creation of the new CTO position to ensure our
advanced engineering and R&D is effectively managed and aligned
with customer needs
– Strong executive recruitment to support implementation of our
customer-focused strategy: new Chief Operating Officer, Chief
Technology Officer and Chief Commercial Officer
– ESG Steering Committee provided oversight and guidance for
numerous initiatives to reduce our greenhouse gas emissions,
improve sustainability reporting and disclosure, manage water use,
and reduce waste
– Developed and launched production of advanced products, such
as thermal systems and high pressure fuel tanks, for BEV and HEV
platforms that contribute to a cleaner world
– Recognised by the London Stock Exchange with the Green Economy
Mark in recognition of the positive environmental impact our product
technologies have by helping make cars greener
– Approved and adopted an updated Environmental Policy
– Coordinated closely with suppliers to manage supply shortages and
disruptions to ensure continued production
– Addressed requests for price increases in a fair and
consistent manner
– Managed supplier payments consistent with contractual terms to
avoid negative impact on our supply base
– Ongoing coordination with key suppliers to develop and engineer
their materials and components in order to allow, in turn, the Group to
provide products and systems that meet the requirements for HEVs
and BEVs
Community
As a global company, our community encompasses
our wider society and environment as well as the local
communities in 29 countries around the world where
we operate
Why we engage
ethical business
– Promote our reputation as a responsible and
– Attract, motivate and retain employees
– Conserve resources and reduce our impact on the
environment to ensure a sustainable business
Suppliers
Our suppliers are located around the world and provide us
with raw materials, including resin, steel and aluminium, as
well as sub-components
Why we engage
– To build strong, collaborative and strategic relationships
in order to obtain competitive pricing, quality, reliability of
supply, and logistics efficiency
– To ensure we have access to advanced materials and
components that meet our technical requirements
– To ensure responsible sourcing and ethical business
practices and conduct by our supply base
– Consistent with our Core Values, each of
our facilities around the world seeks to be a
responsible member of its local community
– Strive to consistently operate our business in
a manner that minimises our impact on the
environment through energy efficiency, waste
reduction and conservation of resources
– Expansion of our EHS group has improved our
processes to measure, report and assess our
greenhouse gas emissions and the environmental
impact that our operations have on the
wider community
– Our Code of Business Conduct includes policies
and principles to promote our reputation in
our community for high standards of business
conduct, including anti-corruption, anti-bribery,
fair competition (anti-trust), and positive work
environment and inclusion (anti-discrimination and
anti-harassment)
– Our purchasing organisation has extensive and
regular contact with our suppliers regarding
specific quoting and sourcing opportunities,
delivery logistics and quality controls and testing
– Our engineering organisation works closely
with suppliers on development activities,
validation testing and cost reduction initiatives
(value engineering)
– We communicate our compliance expectations
and how to do business with us through our
Global Supplier Requirements Manual, our
dedicated Supplier Portal on our website and our
purchasing terms and conditions
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Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Our approach to sustainability
“ Our mission is to be a
responsible and sustainable
business that creates value
for all of our stakeholders.”
Elaine Sarsynski
Chair, ESG Steering Committee
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A A A Overview
As a global market leader in automotive fluid systems, the
Group’s purpose is to partner with our OEM customers to
develop technology and deliver innovative products which
enable our customers to make greener vehicles that help
keep our environment clean and make our world a better
place to live.
For almost 100 years, the Group has provided advanced fluid
handling and thermal management solutions that enable our
customers to make increasingly efficient internal combustion
vehicles. As the automotive industry seeks to address climate
change by transitioning to electric vehicles (EVs), we are
using our expertise and technologies to support electrification
by supplying our customers with fluid handling products
specifically designed to meet the requirements of hybrid
electric vehicles (HEVs) and battery electric vehicles (BEVs),
contributing to a greener and cleaner environment and
making the world a better place to live.
In addition to our technology and products that support EVs,
the Group is focused on operating all aspects of its business
in a more environmentally and socially responsible manner.
We strive to reduce our own impact on the environment by
reducing our CO2(e) emissions (through energy efficiency
and renewable energy sourcing), conserving water and
eliminating waste. We conduct our business in an ethical and
compliant manner, with a diverse and inclusive workforce,
in accordance with our Core Values and Code of Business
Conduct. We invest in our local communities through the
creation of employment and advancement opportunities as
well as many charitable and outreach activities.
The Group’s purpose and sustainability focus aligns with
many UN Sustainable Development Goals, including:
3: Good Health and Well-Being
5: Gender Equality
6: Clean Water and Sanitation
7: Affordable and Clean Energy
12: Responsible Consumption and Production
13: Climate Action
14: Life Below Water
ESG oversight and management
The Board of Directors recognises that sustainability is
essential to the Group’s long-term success and that sound
environmental, social and governance (ESG) practices are
fundamental and necessary to a sustainable business.
To assist the Board in its oversight of ESG matters for
the Group, the ESG Steering Committee was formed in
early 2021. The ESG Steering Committee is charged with
recommending the overarching sustainability vision and
strategy to the Board, together with annual plans and targets
for ESG matters, as well as supporting management to
prioritise sustainability within the Group’s overall corporate
strategy. The ESG Steering Committee seeks to solicit
and understand the views of the Group’s stakeholders,
including employees, investors, suppliers, customers, and
local communities to inform the Group’s long-term strategic
decisions and identify the relevant sustainability priorities that
most significantly impact the Group and its stakeholders, its
reputation and public interest role.
The Group’s Corporate Environmental, Health and Safety
(EHS) organisation reports through the Chief Legal Officer
and ESG Director to the CEO. The Corporate EHS team
works closely with regional managing directors to develop
and implement standardised management systems and
procedures to reduce risks to our people, the environment,
and our facilities. The Corporate EHS management team
issues regular bulletins and holds monthly calls in all regions
to discuss current EHS issues facing the organisation and
conducts education and training to drive consistent safety
procedures and practices at all plants. The EHS group is
also responsible for collecting data related to safety, energy
consumption, waste generation, and water consumption that
is used to set the Group’s sustainability goals.
The Group’s global Human Resources (HR) organisation
reports through the Chief HR Officer to the CEO. The HR
organisation is primarily responsible for implementing our
Diversity and Inclusion (D&I) programme, working with local
and regional HR teams.
We remain committed to strengthening our ESG programme
in order to deliver a sustainable business for the benefit of all
our stakeholders.
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continued
Environmental
Our products
As the automotive industry seeks to address climate change
by transitioning to electric vehicles (EVs), the Group is using
its expertise and technologies to develop and supply our
customers with fluid handling products specifically designed
to meet the requirements of hybrid electric vehicles (HEVs)
and battery electric vehicles (BEVs), contributing to a greener
and cleaner environment and making the world a better place
to live.
The Company has been awarded the London Stock
Exchange’s Green Economy Mark in recognition of the
positive environmental impact our product technologies
have by helping make cars greener. We are proud that our
technology and products support the green economy.
For more information on our technology and products, see
Our strategy on pages 26-27.
Our operations
Introduction
We have a variety of procedures and policies in place to
monitor the impact of our operations on the environment.
We have put systems in place to collect and verify energy
data and calculate CO2(e) emissions for all our manufacturing
locations. In the past several years we have continued to
improve the manner and method by which we collect and
verify waste generation and water consumption data across
all our global locations.
As part of our longstanding approach to efficient
manufacturing operations, we have already taken basic steps
to reduce energy waste at our facilities, such as shifting to
LED lighting, eliminating compressed air leaks, balancing
heating and cooling systems, installing automatic shutoff
controls, and using variable motors wherever possible.
We are now actively assessing further conservation actions
to reduce our use of energy.
CO2(e) Emissions Reduction Goal
Working with the ESG Steering Committee, the Group’s
CO2(e) emissions reduction targets were updated in 2021.
The Group’s target is a 37.5% reduction by 2039 of our Scope
1 and 2 emissions compared to 2019 measured levels on a
like-for-like basis. The following interim milestones have been
established to track progress towards the target by 2039:
– 2029 – reduce Scope 1 and 2 emissions by 16% compared
to 2019
– 2034 – reduce Scope 1 and 2 emissions by 26% compared
to 2019
– 2039 – reduce Scope 1 and 2 emissions by 37.5%
compared to 2019
Importantly, this updated reduction target is based on
absolute contraction consistent with the “Well Below
2 Degree” scenario and in support of UN Sustainable
Development Goal 13 – Climate Action. This absolute
contraction approach means that we will compare the
Group’s actual mass of emissions in 2039 to the baseline
year of 2019, without adjustment for expected growth and
increased production levels between 2019 and 2039. In 2019,
the Group emitted 307,083 tonnes of CO2(e) Scope 1 and
2 combined emissions. As such, our goal is to achieve a
maximum annual emission mass of 191,927 tonnes by 2039.
The ESG Steering Committee will continue to review the
Group’s CO2(e) emissions reduction targets in light of current
science and community expectations. Specifically, in the
coming year, we will consider our current Scope 1 and
Scope 2 targets in light of the Glasgow Climate Pact that
was adopted at the COP26 Conference in November 2021
which urges more ambitious plans to cut emissions by 2030
in order to keep global temperature rise to 1.5°C. In addition,
we are actively assessing software platforms to measure
our Scope 3 emissions in 2022 so that we can then more
formally engage our largest suppliers to assess their plans
and progress on emissions reductions. Consistent with, and
as an extension of, our review of our CO2(e) emissions and
corresponding reduction targets, we ultimately aspire to
establish plans and timeline to become carbon-neutral across
our entire value chain.
Using this baseline data, we have established CO2(e)
emissions reduction targets as well as water conservation
goals. We are also in the process of setting waste
elimination objectives.
In order to achieve our CO2(e) emissions reduction goal, a
number of energy initiatives are in process to increase our
use of renewable-sourced electricity and make operational
and process changes to conserve electricity.
In 2021 we made a broad range of climate-related information
and data available to the public both on our own website and
through the widely recognised CDP platform. The Group
expects to continue to use our website, CDP and other third-
party services to report our sustainability progress, including
our environmental targets, in a transparent manner.
Environmental management system
The corporate Environmental, Health and Safety (EHS) team
continues to manage the Group’s ISO 14001 environmental
management system in order to promote consistent
environmental compliance at all global facilities. This system
has resulted in a better understanding and compliance with
environmental regulations and requirements across the globe.
The vast majority of the Group’s plants globally are currently
certified to the ISO 14001 Environmental Management
System. In 2021, we initiated our plan to expand our ISO
14001 system and expect to complete certification of all
remaining manufacturing locations in 2022.
Energy consumption and CO2(e) emissions data
The Group’s Global and UK Scope 1 and 2 emissions
are described in the graphs below. Scope 1 estimates
include emissions from fossil fuel used on premises.
Scope 2 estimates are emissions from purchased electricity.
Emissions for 2019-2021 have been calculated using UL Pure
Credit 360 software. Calculations are transparently shown
in the system and produce results in accordance with the
methods in the GHG Protocol. The Group implemented this
software between 2018 and 2019 and the software utilises
the UK government GHG Conversion Factors for Company
Reporting for fuel conversions.
The Group’s reduction target was updated in 2021 and,
as such, comparison to that target cannot yet be made.
We anticipate providing commentary and information related
to our emissions reduction compared to our target next year.
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Annual Report and Accounts 2021
It is also important to note that part of our strategy is
purchasing renewable energy to reduce our greenhouse gas
emissions. We have already taken a significant step in the UK
with our largest plant using 100% wind generated electricity
in 2021.
Energy consumption
We have a global energy monitoring programme which we
use to calculate our CO2(e) greenhouse gas emissions based
on consumption data. This programme is used to accurately
report both Scope 1 and Scope 2 energy consumption
and associated GHG emissions. Ultimately, we will see
our energy efficiency projects resulting in reduced energy
consumption and a shrinking of our carbon footprint.
Greenhouse Gas Emissions
Global: Scope 1 and 2 emissions (CO2(e)T)*
2019
39,170
2019
2020
30,680
2020
2021
34,619
2021
267,913
235,947
230,266
UK electricity consumption (kWh)
2019
2020
2021
5,647,611
6,091,522
Renewable
Non-renewable
Over the past three years we have significantly increased the
amount of renewable electricity purchased in the UK. In 2021
over 94% of the energy purchased for our locations in the UK
was from renewable energy. The increase in consumption
seen from 2020 to 2021 is primarily due to our locations
being shut down for approximately two months in 2020 due
to COVID-19.
The Group's global electricity consumption is provided in the
graph below.
Global electricity consumption* (kWh)
Scope 1
Scope 2 market
7,581,432
*2019 and 2020 global Scope 1 and 2 emissions was adjusted from prior
reporting on account of minor corrections made as part of our continued
efforts to improve validation and reconciliation of data.
UK Total: Scope 1 and 2 emissions (CO2(e)T)
Our UK emissions have decreased by over 94% from our
baseline 2019 year. This decrease in emissions is principally
driven by our largest energy consuming plant transitioning
to purchasing 100% renewable electricity and our other UK
locations migrating to renewable electricity in Q4 of 2021.
UK Total: Scope 1 and 2 emissions (CO2(e)T)
2019
2019
233.56
2019
2020
2020
195.48
3,023.53
2,789.97
1,665.96
2019
2020
2021
526,434,728
2020
1,470.48
457,404,458
2021
328.06
485,717,373
2021
214.54
2021
113.52
Total
Scope 1
Scope 2
The Group’s intensity factor is shown below and is based
on total carbon dioxide equivalent emissions divided by
revenue for the corresponding year. The increase from
2019 to 2020 in our CO2(e) intensity factor is a direct result
of the temporary facility shutdowns due to the COVID-19
pandemic. During these shutdowns, plants were still using
some baseline level of electricity and/or fuel for heat and/
or air conditioning to protect our facilities and equipment.
This baseline use of electricity and/or fuel coupled with lower
sales volumes slightly increased our intensity factor.
Intensity factor (CO2(e)T per million Euro revenue)
2019
2020
2021
90.03
94.72
89.61
*2019 and 2020 global electricity consumption was adjusted from prior
reporting on account of minor corrections made as part of our continued
efforts to improve validation and reconciliation of data.
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Annual Report and Accounts 2021
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continued
Water Conservation Goals
Water is a critical natural resource, and the Group strives to
use water in an efficient and responsible way.
In 2020, the first year that we had systems in place to
measure our water use, the Group used approximately
896,165 cubic metres of water.
We are implementing a strategy to reduce the use of water
and increase our conservation efforts particularly in areas
that have water scarcity issues. In 2021, the following water
conservation targets were established for the Group to be
achieved by 2030:
– FCS Process Plants: 25% reduction from 2020 baseline
(3.00% annual reduction)
– FCS Thermal Plants: 10% reduction from 2020 baseline
(1.25% annual reduction)
– FCS Systems, FTDS Pump & FTDS Tank Plants: Change
to 100% low flow fixtures by 2030
Given that 2020 production volumes were lower due to the
impacts of COVID-19, we may adjust our baseline in the
future to be more representative of our production levels.
Water consumption
The water that we use in our operations is obtained through
local municipal water systems or private commercial sources.
We do not directly withdraw water from rivers, streams,
lakes, or ponds.
After being used for industrial activities, such as non-contact
cooling, we discharge the vast majority of our water to local
sewer and wastewater treatment systems. A small number
of our facilities treat wastewater before it is released to the
local sewer systems or surface water body, in order to meet
applicable effluent specifications.
The graphic below shows the total volume of water in cubic
metres consumed by divisional unit (type of plant).
GLOBAL: Divisional Unit breakdown consumption in m3
2020
2020
83,035
2021
2021
107,490
FCS
FTDS
797,758
871,543
The target for water conservation was issued in 2021
and, as such, comparison to that target cannot yet be
made. Next year we anticipate providing commentary and
information related to water conservation compared to the
divisional targets.
The graphic below shows the total volume of water in cubic
metres withdrawn as well as a breakdown by source.
GLOBAL: Total water withdrawal by source in m3
2020
2021
888,388
988,177
TI is committed to preventing significant environmental
releases to the ground surface, subsurface, or surface water,
thus protecting ground and surface water resources in the
communities that we operate and live in.
Our TCFD
Disclosures
Page 64-68
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TI Fluid Systems plc
Annual Report and Accounts 2021
Environmental
case study:
Waste reduction
Marysville, Michigan
We are now recognising zero solid waste and near-
zero wastewater generated by this new process.
Compared to prior technology, a 35% reduction in
chemical consumption and a 60% reduction in rinsing
water significantly reduce resource consumption, a
30% reduction in the required electrical energy load
yields a notable reduction in CO2 (e) emissions.
The Group continues to work diligently in the
specification and commissioning of state of the
art technologies when making asset purchases.
This strategic approach has resulted in a reduction
of energy and water consumption as well as
waste generation.
The recent installation of cutting-edge tube coating
technology in our facility in Marysville, Michigan, USA,
exemplifies our deliberate commitment to established
ESG Initiatives. This significant, critical investment not
only improves product quality for our OEM customers,
but it provides measurable reductions in the areas
most critical to our environment.
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Our approach to sustainability
continued
Environmental
case study:
MIGreenPower
renewable energy
programme
The MIGreenPower initiative is one of the largest
voluntary renewable energy programmes in the
United States. It enables customers of DTE Energy
in Michigan to attribute a greater percentage of their
electricity usage to DTE’s wind and solar projects in
Michigan, contributing towards a cleaner future for all.
As part of its wider strategy to reduce its global
carbon footprint by investing in green energy and
other sustainable solutions. The Group has committed
to purchasing 100% renewable power for three
manufacturing locations, two test centers, and its
corporate offices in Michigan. Its contract with DTE
will begin in January 2024, with approximately 19% of
its electricity use in North America being attributed to
DTE’s renewable energy projects.
Over the course of a year, the Group will use an
estimated 22 million kWh of renewable energy
under the MIGreenPower initiative. This will have a
significant impact on our greenhouse gas emissions –
reducing our annual CO2(e) emission by 15,600 metric
tonnes which is equivalent to eliminating more than
7.8 million kg (17.2 million pounds) of burned coal.
The Group joins an impressive roster of more than
44,000 residential and 450 business subscribers
to MIGreenPower, including prominent automotive
players such as Ford Motor Company and General
Motors. Since the programme’s launch in 2017,
MIGreenPower subscribers have supported
the transition to clean energy and improving
the environment.
Hans Dieltjens, President and CEO, said, “In addition
to the many improvements TI Fluid Systems is making
through its lightweight and energy efficient product
lines we supply to our automotive customers, we
have made a firm commitment to decarbonising our
manufacturing and support business, reducing global
greenhouse gas emissions and investing in green
energy. Working with a renewable energy pioneer like
DTE Energy, we can make significant strides towards
our goals in North America, while also supporting
community projects in Michigan. I look forward to
seeing the positive benefits our enrollment will have in
the coming years with all of TI Fluid Systems facilities
in Michigan powered 100% by green energy.”
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TI Fluid Systems plc
Annual Report and Accounts 2021
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TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Our approach to sustainability
continued
Social
Introduction
Our strength and success as a global tier one automotive
supplier depends on the talent and motivation of our
workforce. We seek to recruit and retain employees with
a range of backgrounds and perspectives who share our
passion for learning and innovation and are aligned with our
Core Values that promote building collaborative customer
relationships and making a positive contribution to our larger
communities. We are committed to diversity, inclusion, and
ethical business practices. Our people are considered for
employment, training, career development and promotion
on the basis of their abilities without regard to age, gender,
sexual orientation, religion or ethnic origin.
Safety
Consistent with our Core Values and focus on our employees,
we continue to develop and improve all aspects of our global
safety programme.
The Safety Steering Committee consists of the Chief
Executive Officer, Chief Operations Officer, Chief Legal
Officer, Vice President of HR, the Divisional Executive Vice
Presidents, and the Global EHS Director. The Committee
is responsible for providing the architecture and direction
for the Group’s safety policies, procedures, and standards.
This Committee also determines our safety KPIs and collects
data to monitor the Group’s safety performance.
The EHS organisation is responsible for managing
the implementation of the Group’s safety policies and
procedures, including holding monthly virtual safety reviews
in each region and overseeing the Group’s ISO 45001
Occupational Health and Safety Management System.
The ISO 45001 systems supports consistent safety practices,
compliance, and data transparency and is subject to an annual
third-party audit and certification. The Group currently has
42 plants certified under the ISO 45001 system, including
29 plants that were added in a corporate certification
programme in 2021. We have training and plans in place to
expand the ISO 45001 to all our remaining plants by the end
of 2024.
At a local level, each plant is required to have a safety
committee that is comprised of the plant manager, at
least one other senior manager as well as operators and
supervisors working on the plant floor. The mandates of
local safety committees vary depending on the plant but,
generally, include hazard identification and assessments,
accident investigations, safety audits, safety training, and
recommending personnel protective equipment.
Safety data reporting
In 2020, the Group began measuring lost time injury
frequency (LTIF) at each plant, by region and on a global
consolidated basis and believes that LTIF is the most
appropriate indicator of the overall effectiveness of our
safety programme. LTIF is calculated in accordance with
guidance issued by the UK Health and Safety Executive
(http://www.hse.gov.uk/statistics/). The Group’s global LTIF
for the period 2019 to 2021 is shown below. We are pleased
that our LTIF has decreased from 2019 and believe this
reduction has been driven, in part, by our strict COVID-19
protocols and regular safety meetings with EHS plant teams.
The slight increase in LTIF from 2020 to 2021 is primarily
driven by our initiative to have more accurate and timely
safety reporting by our Asia Pacific plants. The Group’s LTIF
compares very favourably to industrial benchmarks.
We report safety statistics to the Board at every meeting,
including all potentially life-threatening incidents and
consolidated LTIF for the Group. This same information with a
detailed breakdown of injury by plant and open injury reports
is provided to each regional Managing Director on a monthly
basis to ensure that safety remains a top priority, including
accurate reporting. We are in the process of implementing
new safety incident reporting software that will allow for
easier reporting of incidents, injuries, near misses, and
hazard observations.
GLOBAL – Lost Time Injury Frequency
(Lost time incidents ÷ hours worked) x 1m hours
2019
2020
2021
2.87
1.67
1.75
Human rights
TI Fluid Systems is committed to conducting business in an
ethical and professional manner at all times. The foundation
for our Human Rights Policy is respect for the fundamental
and essential human rights of our employees, customers,
suppliers and other stakeholders. Our Human Rights Policy
aligns with internationally recognised human rights standards,
including the United Nations Guiding Principles on Business
and Human Right and the International Labour Organization
Declaration on Fundamental Principles and Rights at Work.
This Human Rights Policy is intended to serve as
a supplement to our Code of Business Conduct.
Our management team works to eliminate or reduce the risk
of human rights violations in all areas of our business across
all global locations. We recognise the diverse racial, social and
economic conditions where we operate and seek to uniformly
apply our Human Rights Policy and Code of Business
Conduct at all of our global locations. Consistent with our
commitment to fundamental human rights, we seek to
maintain the highest standards and values across all global
locations while, of course, fully complying with any specific
human rights regulations applicable in the jurisdictions where
we operate.
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Social case study:
Diversity and
social responsibility
award
Montornès, Spain
The Group's manufacturing facility in Montornès has
won the fifth edition of the Lismivo Award celebrating
diversity and social responsibility. The award
ceremony took place in November 2021 in Can
Saurina (Montornès), Spain. The award is an initiative
of the Lismivo Network, coordinated by the County
Council, and distinguishes companies with a work
centre in the county that are committed to the labour
integration of people with functional diversity and
corporate social responsibility.
special employment centres into account, as well
as collaborations with organisations that find work
for people with functional diversity, and also looks
at internships. On top of this, the awards consider
other aspects of corporate social responsibility, such
as obtaining electricity from suppliers that guarantee
a low environmental impact on production, utilising
low-emission vehicles, using an EMAS or ISO 14001
certified environmental management system, and
generating energy independently.
The Lismivo Awards, which are presented annually,
establish the percentage of recruitment of people
with disabilities, with the awards broken down into
the following criteria: age range, percentage of
indefinite and full-time contracts, contracts for people
with a diverse background with special difficulties,
and the recruitment of women that have a degree of
disability equal to or greater than 33%. The awards
also takes the purchase of products or services from
Patrícia Rodríguez, who has been Human Resources
Director for 9 years, collected the award. "Achieving
this award, with the difficulties of the last two years, is
a recognition of the work of our Department of Human
Resources, and characterises the value we give to
the people in the company," said Rodríguez. "We
promote social inclusion and take on the challenge of
reconciling business needs with social needs."
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continued
Social case study:
Women's
mentoring
programme
The Women’s Network Mentoring Programme
provides opportunities for women across the
organisation to accelerate their careers and navigate
the Group’s culture through meaningful connections
with organisational leaders. The programme helps to
build effectiveness in new talent quickly, providing
visibility and improving promotion which ultimately
leads to increased productivity and retention of
female employees. The programme participants learn
important aspects of our culture, processes, and tools
to be effective in their roles while the mentors build
network connections across the organisation and
increase depth of expertise. Skip level communication
is improved as well as the opportunity for cross
functional interaction and understanding the
motivational factors of our employees.
The programme pairs women employees with women
senior executives based on surveys identifying
elements such as background and experience,
expertise and interests, and a visual personality
survey. The pairs met at least once a month and
tracked milestones within the MentorCliq software.
“The career mentoring helped me to find new goals
and has significantly increased my ability to progress
achieving these targets." K. Goldbeck, Programme
Manager, Rastatt
The Group is committed to developing and fostering a
true “Learning Organisation”. This programme is one
of many others we are working on that helps to deliver
our goals and drive diversity and inclusivity within
our culture.
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Diversity and inclusion
We are committed to treating individuals with respect and
to building and maintaining a positive culture that values
and promotes ethical business practices, compliance,
diversity and inclusion. We welcome employees with diverse
perspectives who share our vision of a world marked by
knowledge and compassion.
The Company does not discriminate on the grounds of
gender, age, ethnicity, sexual orientation, religion or belief,
disability, gender reassignment, marital or civil partnership
status, pregnancy or maternity, race, colour, nationality,
political affiliation, socio-economic or veteran status.
Our people are considered for employment, training, career
development and promotion on the basis of their abilities,
aptitudes and merit, regardless of age, gender, sexual
orientation, religion or ethnic origin. These messages are
re-enforced by our Core Values.
To ensure that our practices are consistent with our policy,
we conduct an annual gender pay equity analysis on a
country-by-country basis for each job code within the
organisation. In the few instances where we identified a gap
between average male and female salaries of 10% or more,
we investigated and determined that the differences were
due to non-gender issues, such as years of service, location,
or the application of union or tariff pay rules.
We seek to ensure that our people benefit from effective
communications and engagement, with regular all
employee meetings and divisional departmental meetings.
We also encourage our management teams to hold regular
informal update meetings to keep our employees informed
and engaged.
Inclusion is the foundation to our Diversity and Inclusion (D&I)
programme. With this in mind, the Group engaged a third
party advisor to help shape our D&I initiatives and conduct
inclusivity assessments of our top 300 managers which
were completed in 2021. Also in 2021, the Group further
progressed its D&I programme by establishing regional D&I
Committees in Asia, the Americas, and Europe. Regional D&I
committees continue to review and implement D&I initiatives.
In 2022, we plan to conduct further diversity and inclusion
training and are also in the process of developing gender
diversity targets.
In 2021, the Group had approximately 4,129 staff employees
that received an annual salary (not compensated on an
hourly basis). Our gender split in 2021 across these salaried
employees was 2.31:1 (Male:Female) as shown in the
table below.
Gender split table
2021 update
CEO
Executive
Committee
Direct Reports
to Executive
Committee
Other Salaried
Grand total
Percent
Men
100%
88%
M
1
7
Percent
Women
0%
Grand
total
1
13%
8
F
0
1
34
2847
2889
76%
11
70% 1237
1249
70%
24%
45
30% 4084
4138
30%
Ratio of men to women: 2.31
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TI Fluid Systems plc
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Communities
We operate in 29 countries worldwide. Our people and all
of our operations are encouraged to develop a local strategy
to make positive contributions to their communities through
participation in local community and charitable events.
In 2021, our employees around the globe participated in and
contributed to many community and charitable projects and
programmes. Unfortunately, we were unable to participate
in these types of events to the same degree as in prior years
due to ongoing COVID-19 restrictions.
For 2022, we are in the process of establishing a scholarship
programme in several countries to support and provide
opportunities for students to pursue their STEM studies
at colleges and universities in countries where TI has
significant operations. In addition, we will seek to align our
community engagement activities with our environmental
and sustainability objectives.
Our suppliers
We are actively seeking ways to partner with our supply base
to promote and extend appropriate sustainability measures.
We published updated Environmental, Health and Safety,
and Human Rights policies in 2021. These three policies
have been shared with the supply base through our supplier
portal. Our contractual terms with suppliers address several
key compliance issues by prohibiting child and forced labour,
bribery, and anti-competitive practices.
In 2022 the Group will more formally engage our largest
suppliers to assess their progress on sustainability.
We are actively assessing software platforms to measure our
Scope 3 CO2(e) emissions in 2022.
In addition, we are also exploring putting in place systems
that will provide the ability to assess multiple sustainability
criteria across our supply base, including energy consumption
and greenhouse gas emissions, water consumption,
product end-of-life, employee health and safety, child labour,
forced labour, human trafficking, diversity, corruption,
anti-competitive practices, environmental practices and
social practices.
Governance
Read more about our governance structure and processes in
our Governance report on pages 70-119
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Chief Financial Officer’s statement
“ In the face of global challenges,
we continue to deliver value
through proactive financial
management.”
Ron Hundzinski
Chief Financial Officer
48
TI Fluid Systems plc
Annual Report and Accounts 2021
We are pleased to report another year of successful business
performance through further headwinds in the global light
vehicle production volume environment which saw the
industry impacted by logistics and supply chain disruptions
including microchip supply shortages. In 2021, we continued
to deliver revenue growth outperforming the growth in
global light vehicle production, progressed our margin
recovery efforts and maintained cash generation despite
working capital challenges. We have seen the benefits of
our action and restructuring plans to protect the business
and ensure the Group is positioned for an even stronger and
more competitive future. Our balance sheet remains strong,
and our liquidity position is very healthy with the in-year
refinancing actions delivering a more balanced maturity
profile to our external borrowing.
Global light vehicle production remains the principal driver
of the Group’s performance. In 2021, global light vehicle
production increased to 77.1 million vehicles or by 3.4%
compared to the prior year, with all the increase in the first
half of the year. The accelerated post-COVID-19 recovery
seen in the first half of 2021 year was partially offset by the
impact of significant second half customer production volume
volatility as adjustments were made in response to microchip
shortages and other supply chain disruptions.
Despite these challenges, revenue increased by
€157.0 million, or 5.6% year over year on a constant currency
basis, to €2,956.6 million, outperforming global light vehicle
production by 220 bps in the year. If we include the negative
currency impact of €14.9 million, reported revenue increased
by €142.1 million, or 4.9% year over year.
We generated Adjusted EBIT of €212.6 million with a
margin of 7.2%, an increase of 100 bps from the prior year.
The increase in margin is directly related to the conversion of
higher sales, as well as lower fixed costs in the period as we
continue to focus on cost management to address short term
market conditions. On an 'as reported' basis, we achieved
an operating profit of €126.8 million, up €303.1 million from
the prior year operating loss of €176.3 million which included
an exceptional impairment charge of €304.6 million. This is
discussed in more detail in the Operating Profit, Adjusted
EBITDA and Adjusted EBIT section of this report.
Adjusted Net Income rose by €44.6 million to €58.3 million,
compared to €13.7 million in the prior year. The reported profit
for the year was €16.0 million compared to €252.2 million
loss in 2020. Basic EPS was 2.76 Euro cents (2020: (48.88)
Euro cents) and Adjusted Basic EPS was 11.23 Euro cents,
an increase from 2.64 Euro cents in 2020.
Despite the adverse impact on working capital management
from the volatile production environment the Group delivered
a respectable Adjusted Free Cash Flow of €117.3 million
(2020: €148.2 million). With financing net cash outflows
amounting to €122.5 million (2020: €51.6 million) including
€45.0 million (2020: €nil) in respect of dividend payments
and a favourable currency impact of €24.3 million
(2020: €36.5 million unfavourable), year end net debt was
€600.3 million (2020: €590.0 million), inclusive of cash
balances of €499.1 million (2020: €485.8 million).
2021
2,956.6
As reported
2020
2,814.5
Change
142.1
4.9%
303.1
10.6%
268.2
51.64
(176.3)
(6.3%)
(252.2)
(48.88)
126.8
4.3%
16.0
2.76
3.39
6.74
(3.35)
Table 1: Key performance measures €m
Revenue
% Change at constant / actual currency
Adjusted EBITDA
Margin
Adjusted EBIT / Operating Profit or (Loss)
Margin
Adjusted Net Income / Profit or (Loss)
for the year
Earnings per share (€ cents)
Adjusted Free Cash Flow **
Dividend (€ cents)
Management basis*
2021
2,956.6
2020
2,814.5
352.9
11.9%
212.6
7.2%
58.3
11.23
117.3
3.39
330.9
11.8%
173.3
6.2%
13.7
2.64
148.2
6.74
Change
142.1
5.6%
22.0
0.1%
39.3
1.0%
44.6
8.59
(30.9)
(3.35)
*Management basis metrics are non – IFRS measures as defined on page 56
**No equivalent GAAP measure – see table 8a for reconciliation to statutory cash flow items
49
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Chief Financial Officer’s statement
continued
Automotive markets
Global light vehicle production volumes increased by 3.4% in 2021 to 77.1 million vehicles as shown in table 2 – with the
strong recovery in the first half of the year hampered by supply chain disruptions in the second half of the year.
Table 2: Global light vehicle production volumes: millions of units
Europe, including Middle East and Africa
Asia Pacific
North America
Latin America
Total global volumes
Source: IHS Markit, February 2022 and Company estimates
Change percentages calculated using unrounded data
Revenue
Our revenue in each of the regions and by segment is included in table 3.
Table 3: Revenue by region and by segment €m
2021
17.9
43.6
13.0
2.6
77.1
% Change
-2.3%
6.4%
0.2%
16.1%
3.4%
2021
2,956.6
2020
2,814.5
Change
142.1
% Change
4.9%
1,138.4
1,058.1
713.6
46.5
1,077.5
982.5
714.7
39.8
1,603.5
1,353.1
1,526.9
1,287.6
60.9
75.6
(1.1)
6.7
76.6
65.5
5.7%
7.7%
(0.2)%
16.8%
5.0%
5.1%
% Change
at constant
currency
5.6%
5.6%
6.2%
3.5%
29.3%
6.0%
5.3%
FCS revenue increased by €91.0 million, or 6.0% at constant
currency from the prior year to €1,603.5 million, giving
an outperformance of 260 bps when compared to global
light vehicle production volume growth. The strong FCS
revenue increase is driven by successful launches of thermal
programmes in Europe and Asia Pacific.
FTDS revenue at constant currency increased by 5.3%
to €1,353.1 million, outperforming global light vehicle
production growth by 190 bps, primarily driven by new
business launches in Europe and North America. Asia Pacific
outperformance slowed down due to the timing of
programme ramp downs and disruptions resulting from
microchip shortages.
Revenue increased by 4.9% to €2,956.6 million at reported
rates due to a net adverse currency exchange rate impact of
€14.9 million compared with the prior year. This was mostly
due to weakening of the US dollar and Korean Won against
the Euro, partially offset by the strengthening of other key
currencies in countries where the Group has manufacturing
operations. Table 4 sets out the movement in exchange rates
most relevant to our operations.
Total Group Revenue
By Region
Europe and Africa
Asia Pacific
North America
Latin America
By segment
Fluid Carrying Systems ('FCS')
Fuel Tank and Delivery Systems ('FTDS')
Group revenue in 2021 was €2,956.6 million, an increase
of 5.6% year over year at constant currency. In comparison,
global light vehicle production volume increased by 3.4%
in the year, resulting in a 220 bps outperformance primarily
driven by our materialising electrification strategy.
In Europe and Africa, revenue at constant currency increased
by 5.6% year over year compared to a light vehicle production
volume change of -2.3%, giving an outperformance of 790
bps. This outperformance was driven by the successful
launch of new HEV/BEV programmes for both FTDS and
FCS, as well as full trading in 2021 compared to 2020 when
the region experienced wide-ranging factory shutdowns.
In Asia Pacific, revenue at constant currency increased by
6.2% year over year compared to light vehicle production
volume increase of 6.4%, for a slight underperformance of
20 bps. This underperformance was driven by the timing of
programme ramp downs in FTDS and customer production
volatilities which offset the benefit of new programme
launches in FCS.
In North America, revenue at constant currency increased
by 3.5% year over year compared to light vehicle production
volume increase of 0.2%, reflecting an outperformance of
330 bps. Outperformance in this region was mainly driven
by strong growth in FTDS due to new business launches and
ramp ups, partially offset by the ramp down of powertrain
programmes. FTDS outperformed the market in that region
by 910 bps.
50
TI Fluid Systems plc
Annual Report and Accounts 2021
Table 4: Exchange rates
Key Euro exchange rates
US dollar
Chinese renminbi
South Korean won
2021 Average
1.182
7.628
1,354
2020 Average
1.141
7.869
1,344
% Change
3.6%
(3.1)%
0.7%
31 December
2021 Year End
1.137
7.228
1,352
31 December
2020 Year End
1.224
7.988
1,331
% Change
(7.1)%
(9.5)%
1.6%
Operating profit, Adjusted EBITDA* and Adjusted EBIT*
We use several financial measures to manage our business, including Adjusted EBITDA and Adjusted EBIT, which are non-IFRS
measures, but are measures of profitability that have been used consistently by the Group and give insight into the operating
performance of the business. The metrics are also used in certain of our compensation plans and to communicate to our
investors. Table 5 shows a reconciliation between the reported measure, operating profit, Adjusted EBITDA and Adjusted EBIT.
Table 5: Calculation of Adjusted EBITDA* and Adjusted EBIT* €m
2021
126.8
92.0
29.8
70.2
(0.9)
–
317.9
6.9
–
26.8
0.9
0.4
352.9
(92.0)
(29.8)
(70.2)
10.6
41.1
212.6
2020
(176.3)
104.6
31.9
76.7
(3.5)
304.6
338.0
(27.2)
0.5
16.1
3.5
–
330.9
(104.6)
(31.9)
(76.7)
12.9
42.7
173.3
In December 2021 the Group sold its 20% associate stake
in SeAH for €15.5 million. The impact of the disposal, which
is not a trading item, was a pre-tax loss of €0.2 million.
The disposal incurred a tax charge of €3.1 million.
Adjusted EBITDA was €352.9 million (2020: €330.9 million)
and Adjusted EBITDA margin was 11.9% (2020: 11.8%) with
the increase mainly attributable to the increase of operating
profit due to the conversion on higher revenue. Our operating
costs have been impacted by challenges in the supply chain
relating to pricing pressure, inflation of input costs for metals
and resin, and the adverse impact of non-flexed labour costs
due to production level volatility. These cost increases have
been offset by the benefits of the restructuring programme.
In 2021 we have managed to weather this storm and deliver
margin growth compared to the prior year.
Operating profit / (loss)
Depreciation and impairment of PP&E
Depreciation and impairment of right-of-use assets
Amortisation and impairment of intangible assets
Share of loss of associate
Exceptional impairment
EBITDA
Net foreign exchange losses / (gains)
Dividend received from associate
Net restructuring costs
Share of loss of associate
Other reconciling adjustments
Adjusted EBITDA
Less:
Depreciation and impairment of PP&E
Depreciation and impairment of right-of-use assets
Amortisation and impairment of intangible assets
Add back:
Depreciation uplift arising on purchase accounting
Amortisation uplift arising on purchase accounting
Adjusted EBIT
*See Non-IFRS measures on page 56
The operating profit of €126.8 million (2020: €176.3 million
loss) represents a significant increase on the prior year
principally as there was no repeat of the 2020 exceptional
impairment charge of €304.6 million which was recognised
following a full impairment review triggered by the significant
change in projected volumes and forecast cash flows
projected at that time. Our 2021 full impairment review
(see Note 18) indicated no further impairment charges
were necessary. Operating profit before exceptional
items was €126.8 million, €1.5 million lower than last year
(2020: €128.3 million) where the operating gains from higher
revenues, were more than offset by the impact of the net
foreign exchange gains/losses which moved from a gain of
€27.2 million in the prior year, to a loss of €6.9 million in 2021.
The restructuring programme started in 2020 continued to be
implemented in 2021, and in this regard we incurred further
restructuring charges of €26.8 million related to permanent
headcount reductions across all our businesses and the
planned closure and downsizing of manufacturing plants
in Europe, North America and Latin America. At the end of
2021 there was a restructuring provision of €15.8 million
(2020: €11.0 million).
51
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Chief Financial Officer’s statement
continued
Adjusted EBIT was €212.6 million (2020: €173.3 million)
and Adjusted EBIT margin was 7.2% (2020: 6.2%), mainly
reflecting the benefit of lower depreciation and amortisation
charges in the year as a result of the large impairment
recognised in the prior year. During the year there were
programme specific impairment charges of €2.0 million
(2020: €9.2 million).
By segment, FCS Adjusted EBIT grew by €20.7 million
to €117.9 million (2020: €97.2 million) with Adjusted EBIT
margin of 7.4% (2020: 6.4%). The year over year margin
growth reflects the strong rebound from COVID-19 impacts,
particularly in Europe and Asia Pacific.
FTDS Adjusted EBIT increased by €18.6 million to
€94.7 million (2020: €76.1 million) with Adjusted EBIT margin
of 7.0% (2020: 5.9%). The increase in margin reflects the
conversion of higher revenues in 2021.
As a direct consequence of unwinding the Group’s
hedging programme in March 2020 to release 'in the
money' contractual positions to cash, the Group has borne
the translation impact on unhedged non-Euro currency
inter-company loan positions. This is the primary constituent
of the €6.9 million foreign exchange loss arising in the year,
which was primarily incurred in the first half of the year.
The refinancing completed in April 2021 sought to rebalance
the currency split of the external borrowings to reduce the
unhedged exposures.
Net finance expense
Net finance expense, before exceptional items for the year
was €60.0 million, a decrease of €14.0 million from the prior
year. The decrease was mainly due to fair value net losses
on financial instruments and derivatives that were incurred
in 2020, and reduced interest expense due to lower interest
rates from our refinancing carried out in April 2021. As a result
of the refinancing, an exceptional expense of €11.8 million
associated with a non-cash capitalised fee write-off has been
incurred. The expected annualised saving of the reduced
interest expense as a result of the refinancing in April 2021
is expected to be approximately €9.0 million.
Taxation
The Group income tax charge, before exceptional items,
is €40.9 million, up €12.8 million over 2020. This higher
income tax charge results in an increase in the Effective
Tax Rate to 62.0% (2020: 55.3%) on Group Profit Before
Tax of €65.9 million. Adjusting for the one-off effect of
the 2021 €3.1 million tax charge related to the disposal of
the associate investment and the impact of accounting for
associates on an after tax basis, the 2021 Effective Tax
Rate is 56.4% (2020: 51.7%). The unusually high effective
tax rate is reflective of the mix effect of the increase in the
level of profits generating a tax charge and an increase in the
level of losses where no deferred tax asset is recognised.
The effective tax rate for those entities which are ordinarily
subject to tax or where deferred tax assets are recognised
is broadly consistent year on year, 26.3% (2020: 22.4%).
The level of losses not subject to a tax charge was
€46.9 million (2020: 38.6 million). More detail is available
in Note 12.
The 2021 Adjusted Effective Tax Rate is 36.7%
(2020: 42.6%). The Adjusted Effective Tax Rate, as shown
in table 6, adjusts for the impact of the UK accounting loss
of €42.5 million (2020 €26.4 million) on which no tax benefit
is recognised and the prior year tax benefit movements of
€2.4 million (2020: €6.3 million). The decreased Adjusted
Effective Tax Rate of 36.7% reflects the adjusted income tax
charge of €40.2 million on adjusted Group Profit Before Tax
of €109.5 million.
The 2020 exceptional impairment charge of €304.6 million
has an associated deferred tax credit of €29.7 million, an
effective tax rate of 9.8%. The lower effective tax rate is
due to the fact that the majority of the impairment is related
to goodwill that does not carry a deferred tax balance and
therefore this portion of the impairment is not tax effected.
For 2021, the Group is reporting an exceptional US
refinancing charge of €11.8 million with a corporate
tax benefit of €1.8 million and a deferred tax benefit
of €1.0 million which results in an exceptional effective
tax rate of 23.7% (the US 2021 effective tax rate).
Table 6: Calculation of Effective and Adjusted Effective Tax rates for 2021 and 2020* €m
As reported
Add back:
Disposal of associate investment impact
Share of associate loss
UK accounting loss**
Prior year deferred tax benefit / charge
Prior year corporate tax benefit
Adjusted
2021
2020
Profit before
tax
65.9
Tax charge
(40.9)
Tax rate
62.0%
Profit before
tax
50.8
Tax charge
(28.1)
Tax rate
55.3%
0.2
0.9
67.0
42.5
109.5
3.1
–
(37.8)
–
0.3
(2.7)
(40.2)
56.4%
–
3.5
54.3
26.4
36.7%
80.7
–
–
(28.1)
–
(0.7)
(5.6)
(34.4)
51.7%
42.6%
*See Non-IFRS measures on page 56
**UK accounting loss is not tax effected due to the UK historical tax loss position
Adjusted Net Income* and profit for the year
Adjusted Net Income is a component of the Adjusted Basic EPS calculation and is also used to guide our dividend policy
calculation. The calculation of Adjusted Net Income is shown in table 7a.
52
TI Fluid Systems plc
Annual Report and Accounts 2021
Table 7a: Adjusted Net Income* €m
Adjusted EBITDA (see table 5)
Less:
Net finance expense before exceptional items
Income tax expense before exceptional items
Depreciation and impairment of PP&E
Depreciation and impairment of right-of-use assets
Amortisation and impairment of intangible assets
Non-controlling interests’ share of profit
Adjusted Net Income
Table 7b: Reconciliation of profit for the year to Adjusted Net Income* €m
Profit /(loss) for the year
Less:
Non-controlling interests’ share of profit
Net foreign exchange losses/ (gains)
Exceptional deferred tax credit
Add back:
Exceptional finance expenses
Exceptional asset impairment cost
Net restructuring costs
Associate loss less dividend received
Other reconciling items
Adjusted Net Income
*See Non-IFRS measures on page 56
2021
352.9
(60.0)
(40.9)
(92.0)
(29.8)
(70.2)
(1.7)
58.3
2021
16.0
(1.7)
6.9
(2.8)
11.8
–
26.8
0.9
0.4
58.3
2020
330.9
(74.0)
(28.1)
(104.6)
(31.9)
(76.7)
(1.9)
13.7
2020
(252.2)
(1.9)
(27.2)
(29.7)
–
304.6
16.1
4.0
—
13.7
Adjusted Net Income was €58.3 million in 2021, a significant
increase from €13.7 million in 2020, primarily driven by the
flow through of higher revenues in the year.
Basic EPS and Adjusted Basic EPS*
On a statutory basis, Basic Earnings per Share ('EPS') was
2.76 Euro cents for the year (2020: (48.88) Euro cents),
reflecting the significantly improved profit for the year.
Adjusted Basic EPS was 11.23 Euro cents per share for the
year (2020: 2.64 Euro cents per share) reflecting the increase
in Adjusted Net Income as noted above.
The Board has decided to recommend a final dividend
of 1.46 Euro cents per share amounting to €7.5 million.
This final dividend together with the 2021 interim dividend
of 1.93 Euro cents per share paid in September 2021,
makes a total dividend for 2021 of 3.39 Euro cents per share
totalling €17.5 million. The total dividend is 30% of Adjusted
net income. Subject to shareholder approval at the Annual
General Meeting on 18 May 2022, the final dividend will be
paid on 23 June 2022 to those on the register on 27 May
2022, the Dividend Record Date and will be converted to
Sterling at a fixed rate on the same date.
*See Non-IFRS measures on page 56
Dividend
The Company’s dividend policy is to target an annual dividend
of approximately 30% of Adjusted Net Income, one third
payable following half year results and two thirds following
the Group’s final results.
The Board paid a dividend of 6.74 Euro cents per share,
amounting to €35.0 million on 19 February 2021.
This dividend payment was not considered in determining
the proposed final dividend.
The Group continues to remain confident in its
business model, cost flexibility, strong cash generation,
experienced management team, and successful transition
to electrification.
53
TI Fluid Systems plc
Annual Report and Accounts 2021
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview
2021
215.1
(103.6)
111.5
–
(15.5)
–
21.3
117.3
2021
352.9
(47.5)
(54.1)
(88.2)
(35.4)
(9.3)
(4.6)
(2.3)
111.5
–
(15.5)
–
21.3
117.3
2020
257.6
(95.4)
162.2
(16.6)
–
(10.4)
13.0
148.2
2020
330.9
(54.1)
(59.7)
(82.1)
(30.1)
63.0
(9.1)
3.4
162.2
(16.6)
–
(10.4)
13.0
148.2
Chief Financial Officer’s statement
continued
Cash flow performance
The Group uses Adjusted Free Cash Flow as its primary operating measure of cash flow performance.
Table 8a: Adjusted Free Cash Flow* €m
Net cash generated from operating activities
Net cash used by investing activities
Free Cash Flow*
Deduct:
Cash received on settlement of derivatives
Proceeds from the sale of associate
Restructuring proceeds on sale of facilities
Add back: Net restructuring cash spend
Adjusted Free Cash Flow
Table 8b: Reconciliation of Adjusted EBITDA to Adjusted Free Cash Flow* €m
Adjusted EBITDA
Less:
Net cash interest paid
Cash taxes paid
Payment for property, plant and equipment
Payment for intangible assets
Movement in working capital
Movement in retirement benefit obligations
Movement in provisions and other
Free Cash Flow*
Deduct:
Cash received on settlement of derivatives
Proceeds from the sale of associate
Restructuring proceeds on sale of facilities
Add back: Net restructuring cash spend
Adjusted Free Cash Flow
*See Non-IFRS measures on page 56
54
TI Fluid Systems plc
Annual Report and Accounts 2021
In 2021, we generated Adjusted Free Cash Flow of
€117.3 million (2020: €148.2 million). The Adjusted EBITDA
generated by the Group was used to fund investment in
capital equipment and intangibles. There was a €11.4 million
increase in property, plant and equipment and intangibles
expenditure showing a return to pre-COVID-19 capital
expenditure levels. Tax cash payments were €5.6 million
higher primarily due to higher taxable profits. The outflow
from working capital of €9.3 million was driven by the
increase in working capital balances due to the recovery of
activity levels compared to last year and higher inventory
levels attributable to production level volatility. The net cash
outflow on restructuring was €21.3 million, predominantly
severance payments (2020: €13.0 million). In 2020
€16.6 million was received from foreign exchange hedges
which were closed out in March 2020, and €10.4 million
was received from the sale of facilities as part of our
restructuring action.
Free cash flows of €111.5 million (2020: €162.2 million)
were offset by cash outflows from financing of €122.5 million
(2020: €51.6 million), resulting in a reported decrease
in cash and cash equivalents of €11.0 million (2020:
increase of €110.6 million). Financing outflows include the
net impact of the 2021 refinancing and other borrowing
repayments of €22.1 million (2020: €19.0 million), and
€31.6 million (2020: €28.6 million) lease principal repayments.
In December 2021 the Associate holding in SeAH FS
Co. Ltd was sold for €15.5 million; the proceeds of this
transaction are excluded from the calculation of Adjusted Free
Cash Flow. Further details of the sale are included in note 19.
The 2021 total dividend cash outflow amounted to
€45.0 million (2020: €nil).
Retirement benefits
We operate funded and unfunded defined benefit schemes
across multiple jurisdictions with the largest being the US
pension and retiree healthcare schemes, which represent
52% of our net unfunded position at 31 December 2021
(2020: 54%). We also have funded schemes in the UK and
Canada 1% (2020: 2%) and Germany 20% (2020: 18%).
While all our major plans are closed to new entrants, a few
allow for future accrual. Our schemes are subject to periodic
actuarial valuations. Our net unfunded position decreased
by €32.6 million from December 2020 to €128.1 million at
31 December 2021 due primarily to discount rates differential
year-on-year and overall pension investment performance.
Net debt* and net leverage*
Net debt, a non-IFRS measure, as at 31 December 2021
was €600.3 million, a slight increase of €10.3 million from
the prior year end with amortising payments, additional fees
capitalised in association with the refinancing transaction,
offset by adverse foreign exchange movements of
€28.7 million. On 16 April 2021, the Group successfully
completed the issue of a €600.0 million unsecured bond.
The proceeds were used to pay down the existing term
loans; in addition the term loan interest rates were lowered,
and the maturity dates extended from December 2024 to
December 2026. These facilities also include an additional
$225.0 million revolving credit facility with an undrawn
amount of $223.1 million (€196.2 million) at 31 December
2021. Full details of these changes are given in Note 27.
These changes resulted in incremental costs of €9.1 million
which were capitalised, as well as reduced interest costs,
the annual impact of which is estimated at €9.0 million.
Issuance fees and discounts of €24.6 million on the loans
are carried forward for future amortisation.
The Group’s net leverage ratio, also a non-IFRS measure,
was 1.7 times Adjusted EBITDA as at 31 December 2021
(31 December 2020: 1.8 times); the decrease reflects the
higher Adjusted EBITDA.
The Group excludes IFRS 16 lease liabilities from its net debt
and net leverage ratio. If the IFRS 16 lease liabilities were to
be included, the Group’s net debt would be €750.2 million
(31 December 2020: € 741.0 million) and net leverage
ratio would be 2.1 times Adjusted EBITDA (31 December
2020: 2.2 times).
Liquidity
Our principal sources of liquidity have historically been
cash generated from operating activities and amounts
available under our credit facilities, that currently consist of
a revolving facility under our cash flow credit agreement of
$225.0 million (€197.9 million). The refinancing completed
in April 2021 maintains existing levels of liquidity, lowered
our cost of debt and extended debt maturities to December
2026. Total available liquidity (cash plus available facilities)
on 31 December 2021 was €695.3 million (31 December
2020: €666.5 million).
*See Non-IFRS measures on page 56
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Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Chief Financial Officer’s statement
continued
Outlook
While annual global light vehicle production volumes are
forecast to return to pre-COVID levels by the end of 2023,
we expect industry production volumes to remain uncertain
and volatile in the near term given the geopolitical conflicts
and macro-economic environment. Assuming no material
and prolonged impact to the market and our business, we
continue to expect our 2022 revenue to outperform global
light vehicle production volume while delivering resilient
margins and Cash Flow.
Non-IFRS measures
In addition to the results reported under IFRS, we use
certain non-IFRS financial measures to monitor and measure
performance of our business and operations and the
profitability of our Divisions. Such measures are also utilised
by the Board as targets in determining compensation of
certain executives and key members of management, as
well as in our communications with investors. In particular,
we use Adjusted EBIT, Adjusted EBITDA, Adjusted Net
Income, Adjusted Basic EPS, Adjusted Free Cash Flow and
Adjusted Effective Tax Rate. These non-IFRS measures are
not recognised measurements of financial performance or
liquidity under IFRS, and should be viewed as supplemental
and not replacements or substitutes for any IFRS measures.
EBITDA is defined as profit or loss before tax, net finance
expense, depreciation, amortisation and impairment of
tangible and intangible assets, and associate share of profits
or losses.
Adjusted Free Cash Flow is defined as Free Cash Flow
adjusted for cash movements in financial assets at fair value
through the profit or loss, cash payments related to IPO
costs, net cash flows relating to restructuring, settlement
of derivatives and the impact of any business acquisitions
or disposals. The restructuring cash adjustment is made
to align the treatment of restructuring with the other
adjusted measures.
Adjusted Income Tax before Exceptional items is defined
as income tax before exceptional items adjusted for the
tax impact of prior year tax provisions and adjustments,
and tax arising on the impact of any business acquisitions
or disposals.
Adjusted Profit before Income Tax is defined as profit before
income tax adjusted for UK losses, share of associate loss,
and the impact of any business acquisitions or disposals.
Adjusted Effective Tax Rate is defined as adjusted income tax
before exceptional items as a percentage of adjusted profit
before income tax.
Net debt is defined as the total of current and non-current
borrowings excluding lease liabilities, net of cash and cash
equivalents and financial assets at fair value through the profit
and loss.
Net leverage is defined as net debt divided by last 12 months'
Adjusted EBITDA.
Adjusted EBITDA is defined as EBITDA adjusted for
exceptional operating costs, net foreign exchange gains/
(losses), net restructuring charges, associate share of profits
or losses, associate dividends received and the impact of any
business acquisitions or disposals.
Ronald Hundzinski
Chief Financial Officer
14 March 2022
Adjusted EBIT is defined as Adjusted EBITDA less
depreciation, amortisation and non-exceptional impairment
on tangible and intangible assets net of depreciation and
amortisation on purchase price accounting.
Constant currency refers to the statement of prior year
results at current exchange rates to eliminate fluctuations in
translation rates and achieve a like-for-like comparison.
Revenue outperformance is defined as the growth in revenue
at constant currency compared to the growth in global light
vehicle production volumes.
Operating profit margin is defined as operating profit
expressed as a percentage of revenue.
Adjusted Net Income is defined as Profit or Loss for the year
attributable to the ordinary shareholders before exceptional
items adjusted to reflect associate dividends received and
eliminate the impact of net restructuring charges, foreign
exchange gains or losses and the impact of any business
acquisitions or disposals.
Adjusted Basic EPS is defined as Adjusted Net Income
divided by the weighted average number of shares in issue
in the year.
Free Cash Flow is defined as the total of net cash
generated from operating activities and net cash used by
investing activities.
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Principal risks and uncertainties
Strategic developments and market volatilities dominate
our risk landscape
The Board is responsible for the Group’s system of risk
management and internal controls. The Audit & Risk
Committee supports the Board by advising on the Group’s
overall risk appetite, tolerance and strategy, current risk
exposures and future risk strategy.
A review of the Group’s risk management framework
used to assess and manage business-critical risks was
presented to the Audit & Risk Committee in March 2022.
Our 2022 risk assessment focussed on a management
review process involving senior executive management
from both divisional and corporate functions. The Board and
the Audit & Risk Committee were satisfied that a balanced
and robust assessment of the Group’s principal risks had
been undertaken.
The Group’s global operations remain exposed to a number
of risks which could, either on their own, or in combination
with others, have an adverse impact on the Group’s results,
strategy, business performance and reputation which, in turn,
could impact upon shareholder returns. The following section
highlights the major risks that may affect the Group’s ability
to deliver the strategy, as set out on pages 26-27.
The management and mitigation activities described below
will help to reduce the impact or likelihood of the major
risk occurring, although the Board recognises it will not be
possible to eliminate these risks entirely. The Board also
recognises there could be risks that may be unknown or that
may be judged to be insignificant at present, but may later
prove to be significant.
The impact of the COVID-19 pandemic over the last two
years has dramatically demonstrated that the world is
more volatile than ever before, and this volatility continues
to provide many operating performance challenges for us
and the automotive industry generally. Disruption to our
customers’ production activity levels, the efficiency and
operations of the automotive market supply chain and the
availability of resources, both human and material, remain
significant challenges. Nonetheless, we believe that the
continuing impact of COVID-19 into 2022 will not introduce
new risks beyond those risks that we have already identified.
In addition to those existing challenges the Group is
now faced with a period of significant inflationary pricing
pressure across all aspects of our operations. Furthermore,
as described in our TCFD commentary on pages 64-68,
climate change, while not currently expected to create
fundamentally new risks to our business, is certainly driving
the pace and potential severity of many of the principal risks
that are already being managed. Specifically, climate change
is increasing our technology and product development
risk as the rate of vehicle electrification accelerates across
the industry and broadening our business continuity risk
as we seek to transition to lower carbon, more efficient
manufacturing operations and address physical risks to
our facilities. As we respond by actioning our Take the
Turn (T3) strategy, our technological agility to develop and
adapt our product offerings to meet the EV requirements
of our customers will come under heightened pressure.
Vehicle electrification also has a significant human capital
aspect to it – the need to reskill and recruit engineering
resource better and more able to support necessary product
development. Continual regulatory change is now a business
constant that arises across all aspects of the environmental,
social and governance spectrum.
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The importance of certain constituent elements of our
risk profile, e.g. raw material sourcing and pricing, product
offering, financial resilience, and operational leverage,
continue to take on heightened relevance. However, we
currently believe that none have heightened into strategic
long-term risks.
Developing risks
The Board recognises that an essential part of risk
management is the ability to monitor and respond to new
and emerging risks.
As the Board has continued to review and refine the Group's
approach to vehicle electrification, operational sustainability
and talent development – all of which are embodied in the
Take the Turn (T3) strategy – it has been conscious of any
new strategic risks that may need to be factored into its
consideration, including, but not limited to, the technological
obsolescence risk associated with the Group's ICE product
lines (i.e., fuel tanks, fuel pumps, and fuel lines), the need
for rapid product portfolio changes along with securing new
product capabilities and the challenges of securing the right
talent and skills mix across the organisation. If the Group
chooses to address the need to enhance the Group's product
capabilities other than organically then this may necessitate
additional resources and expertise and would naturally come
with management and value delivery risk.
The Board remains acutely aware of the changing market
dynamics that will continue to arise from climate change and
the growing demand for BEVs. The Board feels that the T3
strategy will position the Group well to respond positively
to these market changes. However, it is recognised that
increased frequency of future climate-related risk events
(severe storms, floods, rising sea levels) and the transition
to a low carbon economy may also adversely impact asset
values and financial performance over time and as such will
continue to be monitored and mitigated where practical to
do so.
Currently widening geopolitical fractures may result in global
business disruptions. Competition and political tension
between the United States and China is increasing whilst
there are political tensions within Europe. Russia’s recent
tragic military invasion of Ukraine further demonstrates
the fragility of international relations and the consequential
adverse impact on the automotive supply chain and world
financial markets. Therefore, potential exists for these
geopolitical tensions to lead to significant disruptions in how
the automotive sector operates and does business and hence
create risk for the Group.
On reflection, the Board continues to believe that the
current year risk assessment has been sufficiently robust and
confirms that are no new distinct risks that are material to
the Group at the date of this report.
The Board expects executive management to enhance its
current enterprise risk assessment processes from 2022
onwards to be supportive to the strategic change agenda
and continuing volatile operational risk landscape.
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview
Principal risks and uncertainties
continued
Principal risks
Global light vehicle production volumes
Description
The Group has 104 manufacturing locations in 29 countries
on five continents and a substantial amount of its revenue
is closely linked to the economic cycle, the general
macroeconomic environment and the trends in product
offerings from the vehicle manufacturers.
Impact
Historically, there has been close correlation between
economic growth and global light vehicle production
volumes. The cost structure of the business, operating
across manufacturing facilities in 104 locations, means
that a large reduction in revenue will have an impact on
profitability. The transition from ICEs as the predominant
vehicle powertrain towards HEVs and BEVs will continue
to necessitate changes in our product portfolio offering.
Controls and mitigation
– The Group’s presence in 29 countries supplying a wide
range of customers acts as a hedge to neutralise localised
economic volatility
– The Group has an extensive manufacturing presence in
emerging and other low cost markets which currently
have relatively low rates of light vehicle penetration
per head of population and are believed to have strong
growth potential
– Although the Group’s products are primarily for light
vehicles, it operates across both a broad geographic
footprint and a diversified range of vehicle platforms,
brands and models
– A proportion of the Group’s workforce in a number of
local markets are employed on temporary contracts,
which provides some flexibility in the cost base
– The Group monitors closely and responds to any changes
in customer demand on a local or Group-wide basis.
Active development of new and enhanced products to
response to the transition to full electrification remains
a major focus. More detail is given in the Product
Development and changes in technology section below
Product quality
Description
The Group’s business is based on the repeatable supply
and delivery of components and parts to an agreed
specification and time.
Impact
Failure to meet customer requirements or specifications
can have financial consequences, such as the loss of a
customer, warranty claims and product liability, and cause
long-term damage to the Group’s reputation.
Controls and mitigation
– The Group operates rigorous quality control systems
designed to ensure a high-quality standard for all
products, including testing and validation during the
design and production phases
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– The Group collaborates with key customers to evaluate
and improve quality control standards and to confirm
the compliance of its manufacturing processes with
customers’ quality standards
– Quality systems and processes operated at local
manufacturing level are subject to oversight by divisional
quality teams
– Where necessary, the Group’s manufacturing facilities
maintain relevant industry accreditations, such as
TS 16949
– The Group monitors the field performance of its products
in order to seek to continuously improve product quality
Competition and customer pricing pressure
Description
This risk encompasses a number of identified global trends
in the markets in which the Group operates. The Group
operates in a dynamic competitive environment and faces
competition from other manufacturers and suppliers of
automotive components in each of the market segments
in which it operates. The Group may be subject to pressure
from customers to reduce costs on current contracts.
Impact
The Group’s customers face constant pressure to lower
their selling and production costs to be competitive against
their peers and may require reductions in the selling price
of the Group’s systems and components over the term
of a vehicle platform or model. Commercial activity by
competitors, or changes in their products or technologies,
could impact upon the Group’s market share and
profitability. The environment for bidding and securing new
contract awards from OEM customers is competitive with
the increasing need to balance the economics of recovering
current inflationary impacts with securing increased
penetration on new BEV business.
Controls and mitigation
– The Group seeks to offset pricing pressure by achieving
improved operating efficiencies and cost reductions
– A growing trend by customers to standardise and globalise
vehicle platforms has the potential to minimise the
Group’s exposure to the cancellation of any single vehicle
platform or model
– The Group has a strong reputation and industry-leading
technology which supports its status as a key supplier to
its customers
– The Group engages in extensive and regular dialogue and
has strong commercial and engineering relationships with
key customers
– The Group uses market intelligence and competitor
analysis to support its market activities and inform
investment decisions
– Across the Group there is an emphasis on research
and development and improving the technical content
of products
– The Group also leverages a robust screening process to
evaluate new business proposals
– The Group is considered to be a top supplier or strategic
supplier by many of its OEM customers
Business continuity
Description
The Group’s business is based upon reliable, high-volume
manufacturing across all its locations in order to supply
products to customers, often on a just-in-time basis.
Business continuity encompasses a number of areas of
risk to the Group, including fire, flood and other casualties,
equipment breakdown, key supplier failure, exposure to
price fluctuations of key raw materials, maintaining stable
labour relations, and ensuring the reliability of the Group’s
business management systems and IT infrastructure.
In addition, the Group is exposed to risks from accidents
and incidents arising from health and safety failures.
Impact
A loss of production capability at a facility could lead to
an inability to supply customers, reduce volumes and/
or increase claims made against the business. In periods
of high demand or in the event of supplier difficulties,
availability of raw materials may be constrained which
could interrupt production or result in price increases, all
of which could have an impact on the profitability of the
Group’s operations. In certain circumstances the loss of a
supplier, or supplier quality failing, could lead to an inability
to obtain materials and sub-components necessary to
supply products in a timely or efficient manner. As our
product portfolio pivots in response to the electrification
trend the capability and capacity of our current supply base
to respond may heighten risk.
The loss of systems capability at a Group facility, as a result
of IT failure or cyber-attack, could impact the Group’s ability
to operate one or more plants and supply its customers.
Injuries arising from health and safety incidents could result
in lost time, reduce employee morale and possible changes
in working practices. Serious incidents can also have a
detrimental impact on the Group’s reputation.
Controls and mitigation
– The Group continues to expand its business continuity
planning (‘BCP’) to enhance the localised continuity
planning strategy operated at each facility
– The Group’s global network of facilities provides a degree
of backup capacity
– The Group maintains a scheduled programme of
maintenance and inspection of all equipment
– The wide geographic spread of operations, purchasing and
supply chain functions allows the Group to use a range of
techniques to address potential supply disruption, such as
long-term purchase contracts, dual sourcing and ongoing
research and development into alternative materials
and solutions
– In certain markets the Group uses preferred suppliers for
key components and materials
– The Group maintains casualty, property and business
interruption insurance
– The Group participates in a number of works councils
and other represented employee forums and seeks
to establish and maintain good relationships with its
employees and unions
– The Group’s decentralised IT systems worldwide provide
some resilience against the loss of production or systems
capability to the Group as a whole
– IT has a disruption recovery plan for the organisation
– The Group has an embedded health and safety culture
and operates a global health and safety policy, with
local health and safety operations in place in each
manufacturing facility
– In 2020 our health and safety protocols were enhanced
in response to COVID-19 such as to facilitate safe
return to our operating facilities when permitted. Our IT
infrastructure has been able to support the seamless
operation of our worldwide office and administrative
functions when remote working has been in place
– Health and safety performance is monitored regularly by
each division and by the Group
Product development and changes in technology
Description
The automotive industry is subject to changes in
technology and the Group’s products are subject to
changes in regulatory requirements to reduce emissions
and increase fuel economy. Operating across numerous
markets and territories requires compliance with a wide
variety of regulations. Changes in consumer demand, e.g.
the popularity of a particular vehicle type, model, platform
or technology such as HEVs and BEVs, may also impact on
demand for the Group’s products. In addition, the Group’s
products have performance-critical applications and have
high levels of technical content and know-how.
Impact
Failure to keep up with changes in technology in the light
vehicle automotive industry or in competitive technologies
may render certain existing products obsolete or less
attractive as well as damage the Group’s market position
and reputational strength. Failure to comply with all relevant
regulatory requirements could affect the Group’s reputation
and/or its ability to operate in certain markets or territories.
Changing environmental regulations could affect demand for
certain products. The Group’s technologies and intellectual
property rights need to be kept current through continuous
improvement and research and development and are
susceptible to theft, infringement, loss and/or replication
by competitors.
Controls and mitigation
– The Group is engaged in continued investment in
alternative engineering solutions and the development of
more advanced designs and innovative products to ensure
compliance with changes to environmental regulations
and customer demand
– The Group has developed and is actioning an engineering
skills transition plan to ensure our engineering resource
has the necessary skills to support an enhanced electric
vehicle product offering
– The Group has an international network of technical
centres which focus on research and development
– The Group seeks to maintain close relationships and
– The Group continues to assess and strengthen its cyber
technical partnerships with key customers
security programme. The Group has continued to expand
its systems penetration testing and data security audits
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Principal risks and uncertainties
continued
Principal risks
– The Group has established regional application centres
Key personnel dependencies
Description
The future success of the Group is dependent upon the
continued services of key personnel and the acquisition of
new talent to address skills gap as our end markets and
product offerings change over time. Succession and change
management planning is a routine consideration given some
of the Group’s key global positions at all levels, including
business unit, division and Group.
Impact
The Group competes globally to attract and retain
personnel in a number of key roles. A lack of new talent
with new skills, the inability to retain and develop existing
talent, replace retiring senior management or effectively
manage leadership transitions could hinder the Group’s
operations and strategy delivery. A loss of key personnel,
with associated intellectual property and know-how, could
disrupt our business and strategy. In a number of local
markets the Group may experience a shortage of skilled
and experienced personnel for certain key roles.
Global social trends and events may focus current and
potential employees on the desirability of our businesses
as a place of employment.
Controls and mitigation
– The Group applies bespoke terms and conditions of
employment for key personnel where appropriate
– The Group has in place incentive arrangements, including
bonuses, pensions and long-term incentive plans
– The Group continues to enhance its activities to
further embrace equality and diversity across its
operations. Culture awareness training is ongoing across
our organisation
– A new, skills focussed, training and development initiative
is being rolled out across the Group in 2022
– The Group operates established recruitment and
development programmes
– Succession plans continue to be reviewed for relevant
key positions
which focus on application engineering worldwide
– Both Group and divisional management monitor and
assess relevant regulatory requirements and the likelihood
and impact of any changes
– The Group’s products, materials and processes are
continually developed and enhanced through research and
development and technical input
– The Group actively registers, manages and enforces its
intellectual property rights
– The Group operates in the automotive industry where
performance-critical technology evolves and is adopted
in a deliberate and measured manner
Operating globally and regulatory compliance
Description
The Group has operations globally, with manufacturing
facilities in 29 countries across five continents. The markets
in which the Group operates are covered by a range of
different regulatory systems and complex compliance
requirements and may also be subject to cycles, structural
change and other external factors, such as changes in
tariffs, customs arrangements and other regulations.
In addition, operating across a number of territories
exposes the Group to currency exchange rate variations.
Impact
A substantial downturn in one or more key markets
could have a material adverse impact on the Group’s
profitability, cash flow and carrying value of its assets.
Significant changes to the different regulatory systems and
compliance requirements in and between the countries and
regions in which the Group operates may have a negative
impact on the Group’s operations in a particular country
or market. The accelerating pace of change towards full
electrification of vehicles is expected to continue to bring
tightening legislative requirements. High foreign exchange
volatility may increase financing costs.
Controls and mitigation
– The Group’s international footprint provides some
protection against a downturn in particular territories
or regions
– The markets and any changes to the regulatory
environment in which the Group operates, including tariffs
and trade policies, are continually monitored and assessed
– Changes to the Group’s investment strategy and
cross-border relocation might result from a significant
change in the regulatory environment in a particular
country or region
– The Board is actively monitoring the opportunities and
threats posed by climate change, via the ESG Steering
Committee, to both the Group’s product offering and its
operations and proactively refocusing development and
engineering work in this area
– The Group’s treasury policy covers, inter alia, the use of
currency contracts, investment hedging policy and regular
reporting of foreign exchange exposure
– Focus throughout the Group on adherence to our Code
of Business Conduct (‘COBC’), including ongoing training
and review of policies and procedures
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Compliance statements
Going concern
The Directors have reviewed the likely performance of the
Group for the period to end of 2023 by reference to an
outlook using the approved Budget and Medium Term Plan as
a base case scenario (volumes used: 2022 80.0 million units,
2023 89.1 million units). The volumes used were reduced
from externally available data to anticipate a slower recovery
to normalised production volumes in light of the microchip
supply issue facing the industry. A severe but plausible
downside scenario, mindful of developing geopolitical
tensions and hostilities, was produced comprising a 10%
reduction in global light vehicle production volumes (volumes
used: 2022 72.0 million units, 2023 80.0 million units), a 5%
annual reduction in operating margin due to increased costs,
a 0.5% annual sales price reduction and also a €25 million
annual supply chain disruption. These scenarios reflect the
principal risks facing the business which are the movement
in global light vehicle production volumes, cost pressures
(commodities and energy costs), customer price reduction
pressures and the impact of a significant disruption in the
supply chain. A reverse stress test was performed as part
of the Viability review, and indicates there would need to
be a catastrophic reduction in volumes to use all the cash.
The current banking facilities were also considered and
specifically the available headroom under the downside
scenario and also their availability during the review period
as well as any associated covenants. The downside model
showed the availability of significant liquidity headroom
without use of the revolving credit facility. The only covenant
measure that exists is a leverage ratio which must be
below 3.8x Adjusted EBITDA when the revolving facility is
drawn over 35%, there were no covenant breaches in the
review period.
The Directors have concluded after reviewing the future
funding requirements for the Group over the period to
the end of 2023 by reference to the headroom on the
committed banking facilities and the expected performance
of the Group, that it is appropriate for the financial
statements to be prepared on a going concern basis with no
material uncertainties.
Viability statement
In accordance with paragraph 31 of the UK Corporate
Governance Code 2018, the Directors have assessed the
viability of the Group over a period to 31 December 2026
which aligns to the internal planning horizon and to the same
data set used in the Impairment Review. The Directors’
assessment has been made with reference to the Group’s
current position and prospects, the Group’s existing
committed finance facilities, the Group’s strategy, business
model and the potential impact of the principal risks and how
these are managed, as detailed in this Strategic report.
The Group has a formalised process of budgeting, reporting
and review along with procedures to forecast its profitability,
capital position, funding requirement and cash flows.
These plans provide information to the Directors which is
used to ensure the adequacy of resources available to the
Group to meet its strategic business objectives, both in the
short and long term. The plans for the period commencing on
1 January 2022 were reviewed and approved by the Board on
7 December 2021 and this formed the base case model to
which downside scenarios were applied.
In making their assessment the Directors’ have used a
combination of scenarios and stress tests to the Group’s
financial projections to 31 December 2026 which model
the impact the principal risks likely to have a significant
financial impact. The severe but plausible downside
scenario assumed:
– 10% lower annual global production volumes compared
to the current global light vehicle production forecasts –
volumes used: 2022 72.0 million units, 2023 80.1 million
units, 2024 84.8 million units, 2025 86.2 million units,
2026 86.2 million units (Risk: Global Light Vehicle
production volumes)
– 5% operating margin reduction caused by increased
costs due to increased commodity pricing and costs
associated with purchasing energy to meet our carbon
reduction commitments (Risk: Competitor and Customer
Pricing Pressure)
– 0.5% sales price reduction (Risk: Competitor and Customer
Pricing Pressure)
– €25 million annual supply chain disruption
(Risk: Business Continuity)
The combination of the above was felt appropriate to capture
any sustained impact arising from current geopolitical
tensions and hostilities. The other principal risks were not
considered to have a significant sustained financial impact.
The impact of this scenario would be to reduce available
liquidity by €777 million at the end of the review period
compared to the base case which showed €1,235 million
available liquidity. Actual available liquidity on 31 December
2021 was €695 million. The Directors also considered the
beneficial impact arising from potential further remediation
actions, but these were not factored into the downside
calculations. The only covenant measure that exists is a
leverage ratio which must be below 3.8x Adjusted EBITDA
when the revolving facility is drawn over 35% which was not
breached in the severe but plausible downside model as no
use was required of the revolving facility.
A reverse stress test was also performed to determine the
level of global light vehicle production which would extinguish
all cash. It was found that a reduction of 31% for each year
compared to the base case (volumes used: 2022 55.1 million
units, 2023 61.3 million units, 2024 64.9 million units, 2025
66.0 million units, 2026 65.9 million) for the five years under
review, excluding any mitigating actions would be required
to use all the Group’s cash without utilising the $225 million
revolving credit facility. This contrasts with the 2020 global
light vehicle production drop of 16.1% compared to 2019
– the Directors do not believe that a sustained 31% drop is
likely and therefore do not regard this as a probable outcome.
As described in note 27 on page 178-181, the Group
successfully refinanced its borrowings on 16 April 2021 by
issuing an eight year unsecured bond which was used to
repay portions of the USD and EUR secured term loans.
At the same time the $225 million revolving credit facility
and the USD and EUR term loans were repriced and the
maturities extended by two years from 2024 to 2026.
This transaction served to diversify, stagger and extend the
average maturity from four years to seven years and lower
the weighted average cost of debt to 3.6% from 4.5%.
These facilities are in place until 2026 and it is assumed they
will be renewed.
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continued
The prospects of the Group in the timescale of the review are
likely to be influenced by its ability to adapt to the speed at
which its customers migrate to vehicle electrification. In the
medium term the Group is well placed to pick up considerable
business on the Hybrid Electric vehicles with high content
from high pressure tanks in addition to the traditional brake
and fuel line products. The Group has also demonstrated its
ability to supply its thermal product knowledge to full electric
vehicles and the management are preparing to leverage its
technology, products, engineering capabilities, customer
relationships and global footprint, built over the last 100 years
to put it in an ideal strategic position to quickly adapt, grow
and be a leader in this new era for the automotive industry.
The adverse impact on the Group’s performance and
management’s response to the business downturn caused
by the COVID-19 pandemic and the extended secondary
impacts caused by microchip shortages on the industry
are discussed in the CEO's statement on pages 8-11 and
in the CFO's statement on pages 48-56. The longer-term
risks associated with climate change on the business are
considered to be outside the time horizon of this review, but
are modelled in the impairment review in note 18. The base
case already includes additional capital expenditure related
to carbon reduction projects and also additional costs arising
from increasing energy costs.
Considering the Group’s current financial position, the
geographic spread of its operations, its established customer
relationships, its principal risks, headroom under the
committed banking facilities and the Board’s assessment
of the Group’s future, the Directors have a reasonable
expectation that the Group will be viable and able to continue
in operation meeting its liabilities as they fall due over the
period to 31 December 2026.
The Strategic report, which has been prepared in accordance
with the requirements of the Companies Act 2006, has been
approved by the Board and signed on its behalf by
Matthew Paroly
Company Secretary
14 March 2022
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Non-financial information statement
Under the Non-financial Reporting Requirements of the Companies Act 2006, the Group is required to disclose additional
non-financial information in certain specified categories. The table below highlights how we have met the requirements and
where to locate the information.
Reporting requirement
Non-financial information
Pages
Business model
The Group uses non-financial information in all aspects of its business, from development
of its business model and strategy to reviewing and measuring principal risks and the
performance of the business. Our key non-financial performance indicator is customer
satisfaction (PPM) which measures our product quality and, indirectly, customer satisfaction.
Our business model
Our strategy
Key performance indicators
Principal risks and uncertainties
Audit & Risk Committee report
Environmental
matters
Our business strategy places a focus on developing and supplying leading technology
products to help our customers make more environmentally-friendly vehicles. In addition, our
own impact on the environment, including our greenhouse gas emissions, is being measured
and reduction initiatives are underway. We also seek to ensure responsible sourcing through
our Global Supplier Requirements Manual as well as our purchasing terms and conditions,
which can be found on our website.
Business model: Contribution to environmentally-friendly products
Energy consumption
Water conservation
Employees
We value our workforce. We are strongly committed to the engagement, development and
recognition of our employees and seek to provide a positive culture together with an inclusive
work environment. We have programmes to protect their health and safety.
Business practices
and social matters
Business Model: Employee skills and motivation
Principal risks and uncertainties: Succession of key personnel
Code of Business Conduct
Core Values
Corporate responsibility:
– Employment policies, culture, diversity and employee engagement
– Health and safety programmes
Talent in the workforce
The Group continues to develop and strengthen its culture of compliance and has articulated
to all employees that each employee is expected to conduct business in an ethical and legal
manner consistent with our Core Values and in strict accordance with our Code of Business
Conduct (COBC). The Group conducts regular training on our COBC which includes elements
related to anti-trust and anti-bribery (including the UK Bribery Act). We take the protection of
human rights seriously and have zero tolerance for the use of slave and child labour. We also
seek to make a positive impact in the many local communities where we operate through
local charitable and outreach activities.
Business model: Compliance with laws and regulations
Principal risks and uncertainties: Operating globally and regulatory compliance
Sustainability report:
– Code of Business Conduct
– Ethics and Compliance
– Community involvement
– Whistleblowing
Details of the Group’s Tax Strategy as well as our policy regarding Slavery and Human
Trafficking can be found on our website
30-31
26-27
28-29
57-60
86-91
30-31
39
40
31
60
37
37
44
44
10
44-45
31
60
44
44
47
82
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Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Climate-Related Risks, Opportunities,
and Financial Impacts
Background and Framework
The final report of the Taskforce on
Climate-Related Financial Disclosures (TCFD)
issued in June 2017 provided the following
introductory context with respect to the
issue of climate change:
“It is widely recognised that continued
emission of greenhouse gases will cause
further warming of the Earth and that
warming above 2° Celsius (2°C), relative
to the pre-industrial period, could lead
to catastrophic economic and social
consequences. As evidence of the growing
recognition of the risks posed by climate
change, in December 2015, nearly 200
governments agreed to strengthen the global
response to the threat of climate change by
“holding the increase in the global average
temperature to well below 2°C above pre-
industrial levels and to pursue efforts to limit
the temperature increase to 1.5°C above pre
industrial levels,” referred to as the Paris
Agreement. The large scale and long-term
nature of the problem makes it uniquely
challenging, especially in the context of
economic decision making. Moreover, the
current understanding of the potential
financial risks posed by climate change –
to companies, investors, and the financial
system as a whole – is still at an early stage.”
In the nearly five years since the TCFD report was issued,
the world – governments, investors, and industry – has come
to realise that urgent and impactful collective response to
climate change is now needed to achieve the goal of the
Paris Agreement. Automotive OEMs in every major market
have announced ambitious plans to address climate change
through the electrification of the vehicle fleet and significant
decarbonisation of their own manufacturing operations and
supply bases. In addition to public announcements and press
coverage, the Group’s commercial and engineering teams
are in regular contact with our OEM customers and, over
the last several years, we have seen firsthand the growing
investment, activity and definition around both powertrain
electrification and supplier sustainability in the form of
advanced development activities and quoting packages for
BEV and HEV programmes as well as business awards that
include supplier commitments to reduce greenhouse gas
emissions. Likewise, investors, regulators, and consumers
have clearly communicated the expectation that all
businesses must take demonstrable actions to improve
environmental sustainability as well as climate-related
analysis and disclosures.
As a global supplier and leader in the automotive industry,
TI-Fluid Systems is committed to support vehicle
electrification with its advanced products and to reduce
CO2(e) emissions from its operations. The financial impact of
climate change on the Group can be viewed as falling into the
following three broad categories of risks and opportunities:
– Vehicle Electrification. The Group will have market
and technology risks and opportunities as our OEM
customers shift to a lower carbon economy by increasing
the electrification of vehicles (i.e., HEVs and BEVs
replacing ICEs).
– Sustainability Transition. The Group will have
operational risks and opportunities as it strives to
manufacture its products in a more environmentally
responsible and sustainable manner.
– Direct Climate Impact. The Group will have physical risks
and opportunities from climate change, such as flooding,
sea level rise, and changing water availability and quality,
that could affect some of the Group’s global locations.
In keeping with the disclosure framework recommended by
the TCFD, the following discussion of climate related financial
impact will be organized around four elements: strategy and
financial planning, governance, risk management, and metrics
and targets.
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Strategy and financial planning
The impacts of climate-related risks and opportunities on
the Group’s strategy, business, and financial planning
Vehicle Electrification
The automotive industry is responding to climate change
primarily through the electrification of vehicle powertrains.
Over the next decade, HEV and BEV platforms are forecasted
to grow dramatically while ICE platforms will decline.
This change in the market is the largest risk and the largest
opportunity for the Group.
Electrification is at the heart of the Group’s strategy.
We recognize the risk of a declining addressable market
for our FTDS division due to the reduction of ICE products
and the opportunity of an increasing addressable market
our thermal products due to the increased content in EVs.
See Our strategy on pages 26-27 for more information.
The Group has modelled the potential financial impact of
the expected change in mix between ICE, HEV and BEV
platforms over the medium- and long-term.
Our analysis is based on current business awards, IHS Markit
forecasted production volumes and mix through 2028, and
management estimates, supported by third party analysis,
for longer term production volumes and mix. The model
also uses management estimates of contribution margin,
fixed cost, research and development expenditure, capital
expenditure and working capital. With respect to our FTDS
division, management has modelled the rate of decline for
ICE and HEV products after 2026 under two potential climate
change scenarios: (i) a base case scenario reflecting the
current commitment from the COP21 Paris Agreement to
limit global temperature increases over the next century to
2°C and (i) a downside scenario reflecting the risk of a 4°C
global temperature rise trajectory and associated acceleration
in global climate change mitigations. With respect to the FCS
division, a conventional single-scenario positive long-term
expected growth rate was used to reflect the increased rate
of BEV adoption and the related opportunity for sales growth
in thermal management and other BEV-specific product
offerings. We expect to expand and refine our scenario
analysis for both FTDS and FCS in the coming years.
A gradual decline in ICE and HEV platforms is expected after
2028 as BEVs represent a rapidly increasing share of the
market. During this transition time, the FTDS division will
optimize the usage of its current investment base for ICE
and HEV products and new capex will be limited to support
our customers in specific ICE and HEV projects, with special
focus on Asia where our plastic fuel tank business continues
to grow as the market converts from metal to plastic tanks.
FTDS technical and staff resources will be gradually deployed
to our FCS thermal business. Our FTDS manufacturing
footprint will be also assessed with available capacity
expected to be used to support FCS thermal business
growth opportunities.
According to our modeling, both of the Group’s divisions
(FTDS and FCS) are expected to continue to have revenue
growth in the short and medium term (5 years) with
outperformance of production volume in line with past
performance. In the long-term (6-15 years) the Group expects
a gradual and steady reduction of FTDS revenues that will be
offset by increasing FCS revenues from our existing thermal
products for BEV platforms.
Revenue expansion from new thermal products and systems,
including opportunities for M&A for adjacent thermal
products, have not been taken into consideration in the model
and would create further revenue growth opportunities.
We expect to further refine our modeling in further years.
Further details of how climate-change has been considered
in our impairment testing model are set out in the Note 18 to
Financial Statements on pages 167-172.
Sustainability Transition
In response to climate-related regulatory requirements
and the expectations of our stakeholders, including our
customers, investors, and employees, the Group must strive
to manufacture our products in a more environmentally
responsible and sustainable manner.
The Group will need to make operational changes and
investments to support reduced CO2(e) emissions, more
efficient use of water and the elimination of waste.
In addition, the Group will need to comply with enhanced
disclosure and, potentially, increased regulation and taxes
related to energy and CO2(e) emissions. Over time, the
Group may recognize lower energy and operational costs
from conservation and efficiency investments as well
as reputational benefits with our customers, investors,
employees and communities from decarbonisation.
The Group has incorporated this necessary transformation
to more sustainable operations into its strategy. We will
not just make products for a “greener world” but will
transform business processes and operations to become
a more sustainable and socially responsible organisation.
For more information see Our approach to sustainability on
pages 36-47.
Costs to support our sustainability initiatives have been
incorporated in our financial planning and forecasted cash
flows. These costs include capital expenditure to improve
efficiencies in the production process as well as reducing the
Group's carbon footprint, and additional budget for increasing
the mix of renewable energy within the Group's electricity
consumption. Our current sustainability initiatives, including
our CO2(e) emissions reduction targets, and related financial
analysis and planning are based on a base case scenario
reflecting the current commitment from the COP21 Paris
Agreement to limit global temperature increases over the
next century to 2°C. In coming years, we expect to expand
our analysis to include a downside scenario reflecting the risk
of a 4°C global temperature rise trajectory and associated
acceleration in global climate change mitigations.
See Note 18 to Financial Statements on pages 167-172 for
more information.
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Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview TCFD Disclosure
continued
Direct Impacts
The Group may have potential physical risks from climate
change, such as flooding, sea level rise, and changing
water availability and quality, which could affect the
Group’s locations and operations and the need to re-locate
several facilities.
The Group has assessed, and will continue to assess, all of
its manufacturing locations under both a 2°C and 4°C global
temperature rise. At this time, no short- or medium- term
physical risks have been identified. Several long-term impact
have been identified.
See Climate-related physical risks on pages 64-66 for
more information.
Where we have identified long-term risks, we expect that
our existing business processes will be sufficient to mitigate
and manage the risks. For example, we will locate new
manufacturing facilities (or re-locate existing facilities) through
our property leases acquisition and renewal procedures
which are being updated to incorporate climate-related
issues. Of course, as our understanding of the longer term
impacts of climate change are better understood, we will
continue to further assess our risks and refine our financial
planning as appropriate.
Governance
The Group’s governance around climate-related risks
and opportunities
Board of Directors
The Board of Directors, directly and through its committees,
provides significant governance and oversight of climate
related matters.
Over the course of several years, the Board has reviewed,
refined, and approved the Group’s strategy to address
vehicle electrification driven by climate change. The Board
provides ongoing oversight and receives regular updates from
executive management on relevant metrics in order to assess
execution of the strategy and whether any changes to the
strategy are needed, including engineering and commercial
resources, product portfolio and technology roadmap, EV
business awards and opportunities and the status of the
inorganic process.
The ESG Steering Committee of the Board provides guidance
and oversight on all elements of the Group’s sustainability
programme, including the scope of environmental
initiatives to address the sustainability transition driven
by climate change. The ESG Steering Committee meets
regularly with Senior Management throughout the year
and reports to the Board on its activities and sustainability
progress by the Group. In particular, the ESG Steering
Committee will continue to review the Group’s CO2(e)
emissions reduction targets in light of current science and
community expectations.
The Remuneration Committee of the Board, with input from
the ESG Steering Committee, establishes performance
targets for the Company’s Annual Bonus and Long Term
Incentive Plans that align with both the Group’s electrification
strategy and its sustainability transition in order to align
Senior Management with interests of the Group’s wider
stakeholders. The Remuneration Committee regularly reports
to the Board on its activities. See Remuneration report on
pages 96-98 for more information.
In addition, the Board reviews and approves the Group’s
annual budget and medium-term plan to ensure that the
financial and human resources needed to implement the
Group’s electrification strategy and environmental initiatives
are properly contemplated and included in budgets and
business planning.
Management
Within the Group’s management organisation, the Executive
Committee (CEO and other C-level Executives and EVPs)
together with the Global EHS Director and VP – Investor
Relations & Corporate Finance are primarily responsible for
identifying and assessing climate-related impacts and leading
implementation of the Group’s electrification strategy and
sustainability transition.
Several cross functional teams, led by the Global EHS
Director, have been established to manage specific
aspects of the Group’s environmental initiatives, including
arrangements to increase the Group’s use of renewable-
sourced electricity and identifying capex and other energy
conservation projects to reduce the level of the Group’s
CO2(e)emissions. The Global EHS Director, with support
from the Group‘s risk management team, is responsible for
assessing potential direct physical climate-related impacts.
Budgeting and action plans relating to the Group’s
electrification strategy and environmental initiatives are
communicated to the entire organisation in a top-down
manner and incorporated into the annual budget and medium
term plan through the Group’s finance organisation. Over the
next several years, we expect to conduct more quantitative
analysis in order to present a more detailed model of potential
financial (budget) impacts.
Risk Management
The processes used by the organisation to identify, assess,
and manage climate-related risks
Generally. The Group does not have a separate process
to identify and assess climate-related risks per se. At this
stage, climate related risks appear to be included within
already identified and assessed risk categories: production
volume, technology change, regulation, manufacturing
costs/efficiency, and business continuity. In other words,
climate change appears to be increasing the pace and
intensity of previously identified risks rather than presenting
fundamentally new or different risks to our business.
For more information on our process to identify and
assess risks, see Our Principal Risks on pages 57-60.
Vehicle Electrification. We identify, assess, and manage
the impact of vehicle electrification through our existing
commercial, engineering and purchase processes. For the
medium term we work closely with our OEM customers
through our commercial and engineering organisations
to understand their fluid system requirements and to
identify advanced engineering and quoting opportunities
for upcoming vehicle programmes. For the long-term,
we not only utilize planning and development information
from our OEM customers but also reference production
volume forecasts from IHS Markit and other industry
sources. All quoting and pricing arrangements go through
our screening process to ensure that business awards meet
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expected financial metrics. Necessary capital investments
must, depending on magnitude, be approved by various
levels of management and, in certain cases, the Board
of Directors.
Sustainability Transition. Environmental initiatives to
progress our sustainability transition are identified, assessed
and managed by cross functional teams, led by the Global
EHS Director, who work with division management,
including regional and plant-level management, within our
existing facilities, manufacturing engineering and capital
expenditure processes. The Group’s actions with respect to
the sustainability transition are currently based on well below
a 2°C scenario but would be expected to have to accelerate
(with increased costs) to meet a 1.5°C scenario.
Direct Climate Impact. To identify and assess direct
physical impacts of climate change, we modelled both a
2°C and 4°C global temperature increase. We used the
Intergovernmental Panel on Climate Change IPCC Interactive
Atlas to help predict when temperatures would reach 2°C and
4°C respectively. We did this by taking the median date using
the 34 models available for the 2°C scenario and 20 models
for the 4°C scenario. We estimated the 2°C change to occur
in 2040 and the 4°C degree change to occur in 2068.
We then evaluated weather-related conditions (wind/storm,
hail, tornado, wildfire, and lightning hazards) for the short-
and medium-term in collaboration with our global insurance
broker. We also modelled the overall risk to water quality
for our locations using the Aqueduct Water Atlas Risk and
sea level risk and associated predictions for annual coastal
flooding using sea level rise and coastal flooding maps from
Climate Central.
– Weather Risks: None of our locations are expected to
have an increased impact from climate-related weather
conditions in the short term. We would expect long term
trends to increase sever weather events. This has not been
evaluated, but we are continuing to look at methodology to
improve this evaluation.
– Water Risk: Of our current 129 locations, 30 are expected,
in the long-term, to experience high or extremely high
overall water quality risk. One location is currently
experiencing difficulty in procuring water. We have
now established water conservation targets for all
locations globally.
– Flooding Risks: we identified 12 plants and 2 offices that
would expect to experience annual coastal flooding in 2°C
scenario and an addition 3 plants and 1 office that would
be expected to experience annual coastal flooding in 4°C
scenario. Of those plant locations, all but 3 are in areas
that are currently planning, building, or have in place, sea
level rise defense measures. The 3 unprotected plant sites
may need to be relocated in the next 10-15 years which
is not considered to be a material impact on operations or
represent a material cost and could be accomplished as
part of our normal facilities and restructuring processes.
All office locations are situated in large urban settings likely
to be protected.
Read more in Our Approach to sustainability
on page 36-47
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Metrics and Targets
The metrics and targets used to assess and manage
relevant climate-related risks and opportunities
Metrics
Vehicle Electrification. The Group tracks its annual revenue,
as well as expected lifetime revenue for new business
awards, by location, division, country, and region as well
as vehicle programme/platform type (ICE, HEV and BEV)
in order to monitor progress with respect to our vehicle
electrification strategy.
Sustainability Transition. In 2021, the Group tracked the
following metrics to assess risks and opportunities in line
with our sustainability transition:
– Scope 1 CO2(e) emissions by location, division, country,
and region.
– Scope 2 CO2(e) emissions by location, division, country,
and region.
– Energy consumption including fuel and purchased or
acquired electricity.
– Energy generated at our locations.
– Water withdrawals, discharges, and consumption.
– Waste generated at our sites.
We also monitor and review our ISS QualityScores as well as
our rating reports from by CDP and EcoVadis.
Scope 3 CO2(e) emissions are relevant to our business, but
we have not yet had systems in place to collect and calculate
that data. We are assessing third party software and expect
to begin collecting Scope 3 data in 2022 for a portion of our
supply base. Consistent with the GHG Protocol, we will
augment this data with estimations to develop a Scope 3
emission next year.
See Our Approach to sustainability on pages 36-47 for
more information.
Direct Climate Impact. Given the relatively gradual and long-
term nature of direct climate impact on our manufacturing
facilities (weather, water and flooding), we do not currently
have applicable metrics as these risks would be expected
to be handled as part of our normal footprint and facility
management processes.
Targets
Vehicle Electrification. The Group has established annual
booking targets for HEV and BEV programmes which
have been incorporated into the Annual Bonus Plan as
performance criteria. See Remuneration report on
pages 96-98 for more information.
Sustainability Transition. In 2021, the Group updated its
targets for the absolute reduction of Scope 1 and Scope 2
CO2(e) emissions and also established water conservation
objectives. See Our Approach to sustainability on
pages 36-47 for more information.
Direct Climate Impact. Given the relatively gradual and long-
term nature of direct climate impact on our manufacturing
facilities (weather, water and flooding), we do not currently
have applicable targets as these risks would be expected
to be handled as part of our normal footprint and facility
management processes.
Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview TCFD Disclosure
continued
In accordance with Listing Rule 9.8.6 R(8), the table below maps the Company’s climate-related financial disclosures in the
foregoing section to the specific Recommendations and Recommended Disclosures of the Task Force on Climate-Related
Financial Disclosure.
The Company’s disclosures are consistent with the TCFD Recommendations and Recommended Disclosures except in the
two instances noted below (with the reasons for not including such disclosures, steps being taken to make the disclosures in
the future and expected timeframe to make the disclosures as set forth in the referenced pages).
TCFD Recommended Disclosures
Reference Pages
Compliance
Governance
Describe the board’s oversight of climate-related
risks and opportunities
See Governance – Board of
Directors on pages 76-77
Full Compliance
Describe management’s role in assessing and
managing climate-related risks and opportunities
See Governance –
Management on page 66
Full Compliance
Strategy
Describe the climate-related risks and opportunities
the organisation has identified over the short,
medium and long term
See Background and
Framework and Strategy
and Financial Planning on
pages 64-66
Full Compliance
Describe the impact of climate-related risks and
opportunities on the organisations business, strategy,
and financial planning
See Strategy and Financial
Planning on pages 65-66
Full Compliance
Describe the resilience of the organisation’s strategy,
taking into consideration different climate-related
scenarios, including a 2°C or lower scenario
See Strategy and Financial
Planning on pages 65-66
Risk management Describe the organisation’s processes for identifying
and assessing climate-related risks
See Risk Management
on pages 66-67
Compliance
except only one
scenario used
for Sustainability
transition with
additional
scenarios to be
used in coming
years
Full Compliance
Describe the organisation’s processes for managing
climate-related risks
See Risk Management
on pages 66-67
Full Compliance
Describe how processes for managing climate-related
risks are integrated into the organisations overall
risk management
See Risk Management
on pages 66-67
Full Compliance
Metrics and
targets
Disclose the metrics used by the organisation to
assess climate-related risks and opportunities in line
with its strategy and risk management process
See Metrics and Targets
on page 67
Full Compliance
Disclose Scope 1, Scope 2, and, if appropriate,
Scope 3 greenhouse gas (GHG) emissions, and the
related risks
See Metrics and Targets on
page 67 and Our Approach
to sustainability on page 36
Compliance
except Scope
3 GHG to
be initially
measured in
2022
Describe the targets used by the organisation to
manage climate-related risks and opportunities
and performance against targets
See Metrics and Targets
on page 67
Full Compliance
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Shareholder informationFinancial statementsCorporate governanceStrategic reportOverview Governance
Strong governance
drives performance
70
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A busi Nomination Committee
report
Audit & Risk Committee
report
Pages 84-85
Pages 86-91
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Annual Report and Accounts 2021
A busiOverviewStrategic reportCorporate governanceFinancial statementsShareholder information Corporate Governance at a glance
6
Board geographical split
German
Belgian
British
American
1
1
2
6
2
1
Meeting attendance
100%
Board composition
Board meeting attendance
Board gender balance
Male – 7
70%
Female – 3
30%
Board independence
Executive Directors
Non-Executive Directors
2
6
Manfred Wennemer
William L. Kozyra (resigned 1 October 2021)
Hans Dieltjens
Ronald Hundzinski
Julie Baddeley
Tim Cobbold
Andrea Dunstan (resigned 13 May 2021)
Susan Levine
Elaine Sarsynski
John Smith
Stephen Thomas
Jeffrey Vanneste
6/6
4/4
2/2
6/6
3/3
6/6
2/2
6/6
6/6
6/6
6/6
6/6
Non-Executive Directors including Non-Executive Chair who was independent
on appointment and continues to exercise objective judgement in line with
the role
The table above shows the Directors’ attendance at meetings of the Board
and Committee(s) of which they were members and they were eligible to
attend in the period from 1 January 2021 to 31 December 2021.
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The Governance structure
The Board
Leadership, strategy and development; controls and values.
Manfred Wennemer
Independent Non-Executive Chair
Julie Baddeley
Independent Non-Executive Director
John Smith
Independent Non-Executive Director
Hans Dieltjens
Chief Executive Officer and President
Tim Cobbold
Senior Independent Director
Stephen Thomas
Non-Executive Director
Ronald Hundzinski
Chief Financial Officer
Susan Levine
Non-Executive Director
Jeffrey Vanneste
Independent Non-Executive Director
Elaine Sarsynski
Independent Non-Executive Director
Nomination Committee
Audit & Risk Committee
Remuneration Committee
ESG Steering Committee
Manfred Wennemer
Chair
Jeffrey Vanneste
Chair
Tim Cobbold
Chair
Elaine Sarsynski
Chair
Tim Cobbold
Stephen Thomas
Members
Elaine Sarsynski
John Smith
Members
John Smith
Jeffrey Vanneste
Members
Key responsibilities
Evaluating the size,
structure and composition
of the Board
Key responsibilities
Reviewing and monitoring
the integrity of the
financial statements
Key responsibilities
Setting the Remuneration
Policy for all Executive
Directors and the Chair
Assisting the Board in
relation to the composition
of the Board, including
evaluating the balance
of skills, knowledge,
experience and diversity
Consideration of
succession planning
Ensuring effective systems
of internal controls, internal
audit and risk management
are maintained
Advising on the
appointment of the external
auditors and monitoring
non-audit work undertaken
by the external auditor
Determine remuneration
packages, including
bonuses and awards, for
Executive Directors and
Senior Management in
consultation with the Chair
and Chief Executive Officer,
as appropriate
Julie Baddeley
Hans Dieltjens
Ronald Hundzinski
Members
Key responsibilities
Recommending the
overarching Environmental,
Social and Governance
(ESG) vision and strategy
road map to the Board
in order to ensure that
sustainability priorities
are met.
Monitors the Group’s
corporate responsibility,
sustainability
and stakeholder
engagement activities
More information
Nomination Committee
report on pages 84-85
More information
Audit & Risk Committee
report on pages 86-91
More information
Remuneration Committee
report on pages 92-114
More information
ESG Steering Committee
report on pages 115
For the year ended 31 December 2021, the Company has applied all the main provisions of the UK Governance Code and has complied with all of the provisions.
Further details can be found in the Nomination Committee report on pages 84-85 and the Directors’ report on pages 116-118
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Chair’s introduction to Corporate Governance
Dear Shareholder,
On behalf of the Board, I am pleased to present the Group’s
Corporate Governance report for 2021. As the automotive
industry accelerates the transition to electrification and
sustainability and continues to manage the impacts of
COVID-19, governance remains a top priority for the Board
and executive leadership in order to promote the strategic
development and sustainable success of the Group. I can
confirm that the Group is currently in full compliance with
the recommended governance principles and practices set
forth in the UK Corporate Governance Code 2018 (the ‘UK
Governance Code’) issued by the Financial Reporting Council
(FRC), and associated guidance are available on the FRC
website at www.frc.org.uk.
Corporate Governance
The Group recognises the importance of effective Corporate
Governance in supporting the long-term success and
sustainability of our business. Our robust governance
framework not only satisfies the provisions of the UK
Governance Code but also supports the effective operation of
our business enabling us to deliver our strategy. This section
of the Annual Report covers our governance arrangements,
the operation of the Board and its Committees, and describes
how the Board discharged its collective responsibilities over
the past year. The Board’s decision-making reflects the
balancing of stakeholder interests throughout the year and
how we have engaged is explained in our Section 172(1)
statement on pages 32-35.
Shareholder Engagement
In leading the Group, the Board has actively engaged with
our shareholders on many matters including sustainability
and remuneration. Setting the tone for the organisation,
including the culture, values and behaviours, is viewed
as a vital responsibility of the Board. Added focus on our
Purpose, page 1, has helped the Board and Group continue
to be aligned with the business strategies outlined in the
Strategic report on pages 26-27. We recognise that sound
Corporate Governance enables informed, clear and consistent
management and decision-making from the Board and the
entire management team which, in turn, promotes effective
stewardship to ensure the delivery of our strategic objectives
and sustained success.
While the restrictions on travel and meeting sizes imposed
around the world has affected plans for increasing our face-
to-face stakeholder engagement and site visits in the year,
finding new ways of working and interactions within the
Company and with stakeholders more broadly has brought
benefits. The Executive Directors have engaged in numerous
virtual meetings with investors, employees, customers and
stakeholders more generally. In addition, our Remuneration
Committee Chair has met and written to a number of key
shareholders regarding our Remuneration plans following the
AGM voting results to ensure our approach is understood.
The Board recommends that investors regularly review
our website for trading updates, press releases and virtual
Q&A sessions.
Manfred Wennemer
Chair
2022 focus areas
– Monitor the Group’s response to the continuing
impacts of COVID-19 prioritising the health, safety
and well-being of employees
– Induction of the new independent non-Executive
Chair, Tim Cobbold and new NED Julie Baddeley
– Review the effectiveness of the new Chief Executive
Officer and the expanded Executive Committee
– Enhance shareholder engagement by holding an
in-person Capital Markets Event
“ At TI Fluid Systems we recognise the
importance of effective oversight of our
Corporate Governance Framework and
that it supports the successful delivery
of our strategy.”
Read more in the Nomination Committee report
on pages 84-85
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Annual Report and Accounts 2021
Overall the results of the Board effectiveness review were
very positive with progress identified in several key areas
compared to 2021. The evaluation also highlighted a number
of ongoing priorities for the Board which we look forward to
progressing in 2022.
The Group has an exciting future and we have a strong and
committed team to make the most of the opportunities
that lie ahead. The challenges presented by the COVID-19
pandemic have provided further confidence in our corporate
governance structure. Our resilience was demonstrated as
necessary decisions were taken to deliver a comprehensive
set of measures including cost reduction and cash
management allowing the business to manage through a
difficult market environment. More detail can be found in the
Chief Financial Officer’s report on pages 48-56.
Engagement by Chairs
As always, I and all of our Committee Chairs are available
for engagement and may be reached through me at
chairman@tifs.com.
Chair Transition
A focus for the first half of 2022, will be the handover of the
Chair’s responsibility to my successor, Tim Cobbold. I am
sure that Tim will prove to be a valued, respected and a highly
effective Chair. I hand over with every confidence in Tim’s
future success.
I have greatly enjoyed my role and seeing the Group develop
a sound strategy to position it for long-term success as the
automotive industry transforms itself for a sustainable future.
I would like to thank you for your support over the years.
Manfred Wennemer
Chair
The Directors’ and Corporate Governance reports which
follow this introduction further explain how we are
approaching important governance issues.
Board and Committee composition
We have a qualified and capable Board comprised of
Directors with a broad range of relevant skills, independence,
experience and diversity. Full biographies of each of the
Directors in place on 31 December 2021 are set out on
pages 76-77.
As I discussed in greater detail in my Chair’s statement, our
Board composition is undergoing changes. The Nomination
Committee was supported by Spencer Stuart, recruitment
consultants, in facilitating a robust and transparent procedure
following Andrea Dunstan’s decision to step down from the
Board in May 2021, and the appointment of Julie Baddeley
who joined us in August 2021. The Nomination Committee
is also seeking to find suitable candidates to replace Jeff
Vanneste and myself when we step down. Our focus on
Board succession and composition has been discussed at
both Nomination Committee and Board meetings.
To assist the Board in its oversight functions, the Audit
& Risk, Nomination, Remuneration and ESG Steering
Committees have met and carried out their areas of
responsibility as noted on page 73. The Directors’ time
commitments are in line with the key institutional investor
and investor body guidelines.
Your Board and its Committees have responded to rapidly
changing circumstances and new challenges this year
by working closely with management, reviewing trading
updates, analysing revised forecasts and understanding
supply chain issues.
Ongoing Board and Committee evaluation
I am pleased to report the Board and its Committees are
operating effectively. That said, and as noted previously, the
Board and its Committee performance has been kept under
ongoing review. In 2021, we re-engaged our external advisor,
Lintstock, to conduct a review of the Board’s effectiveness
in keeping with the recommendation of the UK Governance
Code that externally facilitated reviews be completed at least
every three years. We asked Lintstock to conduct the review
again this year to help us follow-up on areas for development
identified in prior evaluations and to consider additional areas
of Board performance with reference to relevant external
guidance and best practice. More details can be found in the
Directors’ Report on pages 116-118.
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Board of directors
Manfred Wennemer
Hans Dieltjens
Ronald Hundzinski
Independent Non-Executive Chair
Appointment: September 2016
Nationality: German
Chief Executive Officer and President
Appointment: October 2021
Nationality: Belgium
Chief Financial Officer
Appointment: January 2020
Nationality: United States of America
Skills and experience
Manfred was appointed as Non-
Executive Chair of TI Fluid Systems
in October 2017, having been
appointed to the Board in September
2016. He has held a number of
positions at Continental, including Chief
Executive Officer and Chairman of
ContiTech. Manfred is Chairman of the
Supervisory Board of Jost Werke.
He is also Chairman of the Shareholder
Committee of Hella KGaA Hueck and
a member of the Supervisory Board
of PIAB International.
Manfred has decided not to stand for
re-election at the 2022 AGM.
Skills and experience
Hans was appointed as Chief
Executive Officer and President of
TI Fluid Systems in October 2021.
Hans joined TI Fluid Systems in 1996
where he gained broad commercial
and operational experience through his
divisional leadership positions. Hans
led the Global Fuel Tank and Delivery
Systems Division in developing and
manufacturing products that enhance
vehicle performance and safety while
exceeding strict emissions regulations
to preserve the environment.
In October 2021, Hans was appointed
to the role of Chief Operating Officer
and President.
Skills and experience
Ronald was appointed as Chief
Financial Officer of TI Fluid Systems in
January 2020. Ronald was previously
Executive Vice President – Finance at
Tenneco, Inc. During the past 35 years,
Ronald held a variety of leadership
positions in finance at Emerson
Electric, GKN, Meridian Automotive
and BorgWarner. Ronald served as
Chief Financial Officer and Executive
Vice President of BorgWarner from
2012 to 2018 and is a Non-Executive
Director of Gentherm.
Committee membership
Nomination Committee (Chair)
Committee membership
ESG Steering Committee
Committee membership
ESG Steering Committee
Julie Baddeley
Tim Cobbold
Susan Levine
Independent Non-Executive Director
Appointment: August 2021
Nationality: United Kingdom
Independent Non-Executive Director
Appointment: November 2019
Nationality: United Kingdom
Non-Executive Director
Appointment: December 2019
Nationality: United States of America
Skills and experience
Julie was appointed as an
Independent Non-Executive Director
of TI Fluid Systems in August
2021. Julie is currently the Senior
Independent Director and Chair of the
Remuneration Committee at Marshall
of Cambridge (Holdings) Ltd. as well as
Chair of the Remuneration Committee
at Ebiquity Plc. She also chairs Chapter
Zero, a network established under
the auspices of the World Economic
Forum, and is a By-Fellow at Hughes
Hall College (Cambridge) and Co-
Director of the Hughes Hall Centre for
Climate Change Engagement.
Skills and experience
Tim was appointed as the Senior
Independent Director of TI Fluid
Systems in November 2019. Tim is
a qualified Chartered Accountant and
has a degree in Engineering from
Imperial College, London, Tim was
formerly Chief Executive Officer of
Chloride Group plc, De La Rue plc
and UBM plc. He served as a Non-
Executive Director of Drax Group plc
for nine years until September 2019
and is currently a Non-Executive
Director at Rotork plc following his
appointment in 2018.
Tim has agreed to become Chair
following the AGM on 18 May 2022.
Skills and experience
Susan was appointed as a
Non- Executive Director of TI
Fluid Systems in December 2019.
Susan joined Bain Capital in 2006 and
has been a Managing Director since
2018. Prior to joining Bain Capital,
Susan was a Manager at Bain &
Company. Susan is a Non-Executive
Director at Diversey. She serves on
the Boards of the Massachusetts
Society for the Prevention of Cruelty
to Children, The Fessenden School,
3Point Foundation and the Board
of Governors for the Georgetown
University Alumni Association.
She is also on the Board of Directors
Academy, a non-profit which provides
corporate governance and training
for future board members from
diverse backgrounds.
Committee membership
ESG Committee
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Committee membership
Nomination Committee
Remuneration Committee (Chair)
Elaine Sarsynski
John Smith
Stephen Thomas
Independent Non-Executive Director
Appointment: August 2018
Nationality: United States of America
Independent Non-Executive Director
Appointment: October 2017
Nationality: United States of America
Non-Executive Director
Appointment: July 2015
Nationality: United States of America
Skills and experience
Elaine was appointed as a Non-
Executive Director of TI Fluid
Systems in August 2018. Elaine is
currently a Non-Executive Director
of Horace Mann Educators
Corporation. Elaine is also a Non-
Executive Director of Horizon
Technology Finance Corporation and
is a member of its Audit Committee
and Chair of its Nominating and
Corporate Governance Committee.
Elaine was previously President of
MassMutual Retirement Services and
Chairwoman, CEO and President of
MassMutual International.
Skills and experience
John was appointed as an Independent
Non-Executive Director of TI Fluid
Systems in October 2017. John has over
48 years of experience in the automotive
industry, including 42 years working
with General Motors in developing
new technologies. John held a range of
senior positions with General Motors,
most recently as Group Vice President,
Corporate Planning & Alliances. John is
principal of Eagle Advisors and is also a
Non-Executive Director of American Axle
& Manufacturing Holdings, serving on
its Audit Committee and as Chair of its
Technology Committee.
Skills and experience
Stephen was appointed as a Director of
TI Fluid Systems in July 2015 and was
formally appointed as a Non-Executive
Director of the Company in October
2017. Stephen joined Bain Capital
in 2007 and has been a Managing
Director since 2015. Prior to joining
Bain Capital, Stephen was a Manager
at Bain & Company. Stephen is a Non-
Executive Director of American Trailer
Works, FXI and US LBM.
Committee membership
Audit Committee
ESG Steering Committee (Chair)
Committee membership
Remuneration Committee
Audit Committee
Committee membership
Nomination Committee
Jeffrey Vanneste
Matthew Paroly
Independent Non-Executive Director
Appointment: October 2017
Nationality: United States of America
Company Secretary
Appointment: July 2014
Nationality: United States of America
Skills and experience
Matthew was appointed as Chief Legal
Officer and Company Secretary of TI
Fluid Systems in July 2014. Matthew
has more than 30 years of experience
in private law practice and in-house
executive and legal positions with both
public and private companies. Prior
to joining TI Fluid Systems, Matthew
worked with several automotive
suppliers and manufacturers,
including Nexteer Automotive, Fisker
Automotive, Meridian Automotive
Systems and Delphi Corporation.
Matthew is a member of the State Bar
of Michigan. In 2021, Matthew was
appointed ESG Director.
Skills and experience
Jeff was appointed as an Independent
Non-Executive Director of TI Fluid
Systems in October 2017. Jeff was
Senior Vice President, Chief Financial
Officer and a member of the Executive
Council of Lear Corporation for more
than seven years until October 2019
when he transitioned to a non-
executive advisory role before retiring
at the end of February 2020. Prior to
joining Lear, Jeff was Executive Vice
President and Chief Financial Officer for
International Automotive Components
Group. Jeff qualified as an accountant
with Coopers & Lybrand (currently,
PricewaterhouseCoopers LLP).
Jeff intends to step down after the
2022 AGM but has agreed to stand for
re-election if requested by the Board
in order to provide the Company with
additional time for an orderly transition.
Committee membership
Remuneration Committee Audit
Committee (Chair)
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Nomination Committee
Audit Committee
Remuneration Committee
ESG Steering Committee
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Corporate Governance Report
A summary of the main matters reserved for decision by the Board is set out below:
Strategy and management
– Oversight of the Group’s operations
– Approval of the long-term objectives and commercial
strategy review
– Approval of the annual financial budget and four-year
Medium Term Plan
Remuneration
– Determine the Remuneration Policy for Directors, Chief
Executive Officer and other senior executives
– Determine the remuneration of the Non-Executive Directors
– Introduction of new share incentive plans or major changes
to existing plans
– Review of performance in light of the Group’s strategic
– Approval of new incentive plans to be put to shareholders
aims, objectives, business plan and budgets
for approval
Corporate structure and share capital
– Changes to the Group’s capital structure
– Major changes to the Group’s corporate structure
– Significant changes to the Group’s management and
control structure
– Issues of public debt by the Company
Delegation of authority
– Approval of the written division of responsibilities
between the Chair and the Chief Executive Officer
– Establishing Board Committees, approving their
terms of reference and receiving reports from the
Board Committees
Financial reporting and controls
– Approval of financial statements
– Setting the Company’s dividend policy
– Approval of significant changes in accounting policy
Corporate governance
– Review the Group’s overall Corporate
Governance structure
– Determining the independence of Non-Executive Directors
– Undertaking a formal and rigorous review of the Board’s
performance, that of its Committees and individual
Directors and the division of responsibilities
– Consider the balance of interests between shareholders,
employees, customers and the community
Internal controls
– Ensuring maintenance of a sound system of internal control
Policies
– Approval of policies, including the Code of Business
and risk management
– Approval of the Group’s compliance policies
Conduct, as well as the Anti-Corruption, Diversity and
Inclusion, Health & Safety, Environmental, Modern Slavery,
Group Dealing and Tax Strategy policies
Contracts
– Approval of major capital projects
– Approval of larger-scale non-standard contracts
– Approval of acquisitions and joint ventures
Other areas
– Making of political donations
– Approve the overall levels of insurance for the Group
– Appointment of external auditors
– –Shareholder engagement and general meetings
– Annual budgets and financial expenditure and
commitments above levels set by the Board
Board membership
– Changes to the structure, size and composition of
the Board
– Appointments to the Board, including selection and
appointment of the Chair, Chief Executive Officer, Senior
Independent Director and Company Secretary
– Membership and chairs of Board Committees
– Approval of the continuation in office of Directors,
including Executive Directors
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Annual Report and Accounts 2021
The Board generally meets five times a year, with additional
ad-hoc meetings called as and when circumstances require.
There is an annual calendar of agenda items to ensure that all
matters are given due consideration and are reviewed at the
appropriate time in the financial year.
In the period from 1 January 2021 to 31 December 2021
there were six Board meetings. In addition, in the same
period, there were five meetings of the Audit & Risk
Committee, five meetings of the Remuneration Committee
and four meetings of the Nomination Committee.
The table below shows the Directors’ attendance at meetings
of the Board and Committee(s) of which they were members
and they were eligible to attend in the period from 1 January
2021 to 31 December 2021:
The role and structure of the Board
The Board is responsible for the leadership and oversight
of the Group and has overall authority for the management
of the Group’s business, strategy and culture. The Board is
also responsible for ensuring the maintenance of a sound
system of internal controls and risk management (including
operational, financial and compliance controls) and for
reviewing the overall effectiveness of systems in place
as well as for the approval of any changes to the capital,
corporate and/or management structure of the Group.
The Board operates in accordance with the Company’s
Articles of Association and the Board’s written ‘Delegation
of Authority’ which were approved by the Board in
July 2015 and updated in October 2017. The Board has
established a number of Committees, as set out on page 73.
Each Committee has its own terms of reference which are
reviewed at least annually.
The Board currently consists of ten members: the
Independent Non-Executive Chair, the Senior Independent
Director, four other Independent Non-Executive Directors,
two Executive Directors and two Non-Executive Directors
(who are nominees of the Bain Shareholders under the
relationship agreement discussed on page 82).
Directors’ attendance at meetings of the Board and Committee(s)
Manfred Wennemer
William L. Kozyra (resigned 1 October 2021)
Hans Dieltjens
Ronald Hundzinski
Julie Baddeley
Tim Cobbold
Andrea Dunstan (resigned 13 May 2021)
Susan Levine
Elaine Sarsynski
John Smith
Stephen Thomas
Jeffrey Vanneste
Board
6/6
4/4
2/2
6/6
3/3
6/6
2/2
6/6
6/6
6/6
6/6
6/6
Audit & Risk
–
–
–
–
–
–
–
–
5/5
5/5
–
5/5
Remuneration
–
–
–
–
–
2/2
3/3
–
–
5/5
–
5/5
Nomination
4/4
–
–
–
–
4/4
–
–
–
–
4/4
–
ESG Steering
–
3/3
1/1
4/4
1/1
–
–
–
4/4
–
–
–
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Corporate Governance Report
continued
A summary of the key areas of responsibility of the Chair and Chief Executive Officer are set out below:
Manfred Wennemer
Chair
Hans Dieltjens
Chief Executive
Responsibilities
– Responsibility for the leadership and effective running
Responsibilities
– Responsible for running the business of the Company
of the Board and chairing its meetings
– Ensuring the Board as a whole plays a full
and constructive part in the development and
determination of the Group’s strategy and overall
commercial objectives
– Setting the agenda for and frequency of meetings
of the Board and ensuring the Board receives
accurate, timely and clear information on which to
base decisions
– Ensuring that adequate time is available for the Board
to consider all agenda items
– Promoting a culture of openness and debate and
facilitate the effective contribution and active
engagement of all Directors
– Ensuring there is effective communication between
the Group and its shareholders and that the Board
understands the views of major investors in the Group
– Promoting the highest standards of integrity, probity
and corporate governance
– Ensuring constructive relations between the Non-
Executive and Executive Directors
and its subsidiaries
– Proposing and developing the Group’s strategy and
overall commercial objectives
– Regularly reviewing the Group’s operational
performance, cost control and operating efficiencies
and recommending to the Board the annual budget
and financial plans for the Group
– Reporting to the Chair and the Board on the progress
of the strategy, the Group’s performance and
operational matters
– Maintaining a dialogue with the Chair and the Board
on important and strategic issues facing the Group
– Providing a structure for the timely and accurate
disclosure of information
– Ensuring the Board’s strategies, objectives
and decisions are implemented in a timely and
effective manner
– Developing senior talent and succession planning
– Progressing in conjunction with the Chief Financial
Officer and, where relevant, the Chair, the Company’s
communication programme with its shareholders
– Regularly considering the Board’s succession planning
– Ensuring effective communication with shareholders,
and composition
– Ensuring that the performance of the Board, its
Committees and individual Directors are formally and
rigorously evaluated at least once a year
– Providing an independent perspective and
constructive challenge
employees and other stakeholders, in order to
understand their concerns and communicate issues to
the Board
– Promoting and conducting the affairs of the Group
with the highest standards of integrity, probity and
Corporate Governance
– Safeguarding the reputation of the Group and
managing the Group’s risk profile
– Maintaining strong relationships with OEM customers
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All Directors are expected to attend all meetings of the Board
and any Committees of which they are a member and are
expected to devote sufficient time to the Company’s affairs
to fulfil their duties as Directors.
Key Board roles and responsibilities
There is a clear division of responsibilities between the
Chair and the Chief Executive Officer which is written and
approved by the Board. The roles of the Chair and Chief
Executive Officer are separately held and the role of each is
clear and distinct. The division of responsibilities between
the Chair and Chief Executive Officer is set out in written
terms of reference which were adopted by the Board on
24 October 2017.
Board evaluation
The Nomination Committee initiated an externally facilitated
annual review of the effectiveness of the Board and
Committees in December 2021. This was undertaken
by the third-party advisory firm, Lintstock (who have no
connection with the Group, and are considered by the
Board to be independent). The review was additional to the
UK Governance Code recommendation requiring external
reviews to be undertaken at least every three years.
The review was designed to follow-up on areas for
development identified in last year’s internal evaluation
and to consider additional areas of Board and Committee
performance with reference to relevant external guidance
and best practice.
More details of the outcome of this review can
be found in the Nominations Committee report
on pages 84-85.
Senior Independent Director
The UK Corporate Governance Code recommends that the
Board of Directors of a company with a premium listing on
the Official List should appoint one of the Non-Executive
Directors to be the Senior Independent Director to act as
a sounding board for the Chair and to support him in the
delivery of his objectives. The Senior Independent Director
is also responsible for leading the Non-Executive Directors
in monitoring and evaluating the performance of the Chair
and being available to shareholders if they have any concerns
which contact through the normal channels of the Chair,
the Chief Executive Officer or the Chief Financial Officer
has failed to resolve or for which such communication
is inappropriate. Tim Cobbold continues to serve as the
Company’s Senior Independent Non-Executive Director until
AGM and his successor will be announced in due course.
The Audit & Risk Committee
The Audit & Risk Committee is comprised of three
Independent Non-Executive Directors. The Audit & Risk
Committee Chair is Jeffrey Vanneste who intends not to
stand at the AGM but has agreed to stand for re-election if
requested by the Board in order to provide the Company with
additional time for an orderly transition. His successor will be
announced in due course.
The main roles and responsibilities of the Audit & Risk
Committee are set out in written terms of reference and are
available on the Company’s website.
Details of the Audit & Risk Committee’s activities can be
found in the Audit & Risk Committee report on pages 86-91.
The Remuneration Committee
The Remuneration Committee is comprised of three
Independent Non-Executive Directors. The Remuneration
Committee Chair is Tim Cobbold and his successor will be
announced in due course.
The main roles and responsibilities of the Remuneration
Committee are set out in written terms of reference and are
available on the Company’s website.
Details of the Remuneration Committee’s activities can be
found in the Remuneration Committee report on
pages 92-114.
The Nomination Committee
The Nomination Committee is comprised of the Independent
Chair, the Senior Independent Director and a Non-Executive
Director. The Nomination Committee Chair is Manfred
Wennemer who has decided not to stand at the AGM.
His successor will be announced in due course.
The main roles and responsibilities of the Nomination
Committee are set out in written terms of reference and are
available on the Company’s website.
Details of the Nomination Committee’s activities can be
found in the Nomination Committee report on pages 84-85.
The ESG Steering Committee
The ESG Steering Committee is comprised of two
Independent Non-Executive Directors and the two
Executive Directors. The ESG Steering Committee Chair is
Elaine Sarsynski.
The main roles and responsibilities of the ESG Steering
Committee are set out in written terms of reference and are
available on the Company’s website.
Details of the ESG Steering Committee’s activities can be
found in the ESG Steering Committee report on page 115.
Balance and independence
In accordance with Principle K of the Corporate Governance
Code, the Board and its Committees have a combination
of skills, experience and knowledge of the Group. The size,
composition and length of service of the Board is kept
under review by the Nomination Committee to ensure an
appropriate balance of skills and experience is maintained.
The Code recommends, in the case of a FTSE 350 company,
that at least half the Board of Directors (excluding the Chair)
should comprise ‘independent’ Non-Executive Directors.
The Board satisfies that recommendation and comprises the
Non-Executive Chair, who is considered to be independent,
two Executive Directors and seven Non-Executive
Directors, of whom five are considered to be independent.
The five Non-Executive Directors that are considered to
be independent in character and judgement, and free of
any business or other relationship which could materially
influence their judgement, are Julie Baddeley, Tim Cobbold,
Elaine Sarsynski, John Smith and Jeffrey Vanneste.
As the Board composition changes over time and when
evaluating candidates for Board membership, candidates are
considered on merit, taking account of their relevant skills and
experience as well as recognising the benefits of diversity
including gender, nationality, ethnicity and age.
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continued
Disclosure of relationship agreement with Bain
Details of substantial shareholdings in the Company’s
ordinary share capital are set out in the Directors’ report on
pages 116-118.
On 25 October 2017, the Company entered into a relationship
agreement with its largest shareholders, the funds managed
by Bain Capital and BC Omega Holdco, Ltd. (the ‘Bain
Shareholders’). The principal purpose of the relationship
agreement is to ensure that following the Company’s
Admission and Listing, the Company is able to carry on its
business independently of the Bain Shareholders and that
transactions and relationships between the Company and
the Bain Shareholders are conducted at arm’s length and
on normal commercial terms. The Board confirms that the
Company and, so far as it is aware, Bain Capital, BC Omega
Holdco, Ltd. and the Bain Shareholders have complied with
all of their respective undertakings and obligations set forth in
the relationship agreement.
Under the relationship agreement, the Bain Shareholders
have a right to nominate for appointment to the Board: (a)
two Directors for so long as the Bain Shareholders and
their associates’ shareholding in the Company is equal to
or more than 25%; and (b) one Director for so long as the
Bain Shareholders and their associates’ shareholding in the
Company is equal to more than 10% but less than 25%.
The terms of the appointment of these Directors under the
relationship agreement does not specify the amount of time
they are expected to devote to the Company’s business.
However, it is estimated they will commit a minimum of one
day per month which is calculated based on the time required
to prepare for attending Board and Committee meetings, and
additional duties such as attendance at the Annual General
Meeting and meetings with shareholders.
Length of appointment
Non-Executive Directors are appointed for terms of three
years, subject to the particular Director being re-elected by
shareholders, for up to the normal maximum of three terms
(nine years).
Conflicts of interest
The Company’s Articles of Association set out the policy for
dealing with Directors’ conflicts of interest and are in line with
the Companies Act 2006. The Board has a formal system in
place for Directors to declare conflicts of interest and for such
conflicts to be considered for authorisation.
Diversity
The Company’s Diversity and Inclusion Policy confirms
that the Company does not discriminate on the grounds of
gender, age, ethnicity, sexual orientation, religion or belief,
disability, gender reassignment, marital or civil partnership
status, pregnancy or maternity, race, colour, nationality,
political affiliation, socio-economic or veteran status.
The policy notes the Company strives to make progress on
diversity, equity and inclusion in its workforce and treats
all associates with dignity and respect, and on a fair and
equitable basis.
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Training and development
In preparation for admission, all Directors received an
induction briefing from the Company’s legal advisers on
the duties and responsibilities as Directors of a publicly
quoted company. In addition, upon their appointment, all
Directors receive an induction programme arranged by the
Company Secretary, including plant visits to Germany and
meetings with key members of senior management in order
to familiarise themselves with the Group. Specific training
on Directors’ Duties and the new Corporate Governance
requirements has been provided to new Board members by
our legal advisers and refresher training was provided in 2021.
Information and support
To enable the Board to function effectively and to assist the
Directors in discharging their responsibilities, full and timely
access is given to all relevant information to the Board. In the
case of Board meetings this consists of a formal agenda and
a comprehensive set of papers including regular business
progress reports. An established procedure is in place to
ensure that such information is provided to Directors in a
timely manner in advance of meetings. Specific business-
related presentations are given by senior management
when appropriate.
The Company Secretary works closely with the Chair,
the Chief Executive Officer and the chairs of the Board
Committees to ensure that Board procedures, including
setting agendas and the timely distribution of papers, are
complied with and that there are good communications flows
between the Board and its Committees, and between senior
management and Non-Executive Directors. The Company
Secretary is also available to all Directors to provide advice
and support, including facilitating induction programmes.
All Directors are able to take independent professional advice
at the Company’s expense in the furtherance of their duties
where considered necessary.
Election or re-election of Directors
At the forthcoming Annual General Meeting on 18 May 2022
all the current Directors, apart from Manfred Wennemer
and, possibly, Jeff Vanneste, will be offering themselves for
re-election and Julie Baddeley will be offering herself for
election as she was appointed by the Board during the year.
Whistleblowing
The Company has established procedures by which
employees may, in confidence, raise concerns relating to
fraud, non-compliance or other illegal or unethical conduct
in the workplace. The Whistleblowing Policy applies to
all employees of the Group. The Audit & Risk Committee
is responsible for monitoring the Group’s whistleblowing
arrangements and the policy is reviewed periodically by the
Board. A new external provider has been engaged to provide
a confidential approach with additional features and which is
available globally.
Shareholder engagement
Prior to the IPO, the Company’s shareholders comprised
funds managed by Bain Capital and a number of members
of management. As a result of the IPO, a larger shareholder
base has developed. Investor relations activity and a review
of the shareholder register are regular items in the Board
information pack.
18 May 2022
Annual General Meeting
The Company’s Annual General Meeting (AGM) will
take place on 18 May 2022
The Executive Directors regularly meet with a large
number of investors and have active discussions with
shareholders and investors, both on an individual basis
and through roadshow events. The Company aims to
maintain a constructive dialogue with key stakeholders,
including institutional investors, to discuss issues relating
to the performance of the Group, including strategy and
new developments. The annual Capital Markets Event was
held in April 2021 virtually. The Company has an investor
relations website which is publicly available and provides
relevant information to both institutional investors and
private shareholders, including performance updates and
announcements by the Company.
Annual General Meeting
The Company’s Annual General Meeting (AGM) will take
place on 18 May 2022. A separate notice convening the AGM
is being sent out with this Annual Report and Accounts.
Separate votes are held for each proposed resolution.
All Directors attend the meeting. Details of the resolutions
to be proposed and an explanation of the items of special
business can be found in the circular that contains the notice
convening the AGM and it will be available on our website
with the proxy voting card for all shareholders.
Directors’ duties – compliance with Section 172 of the
Companies Act 2006
In accordance with the requirements of Section 172 of
the Companies Act 2006, the Board seeks to promote the
success of the Company for the benefit of its members
as a whole and in doing so have regard for the interests of
stakeholders including customers, employees, suppliers,
regulators and the wider society in which it operates.
A summary of considerations undertaken by the Board in
accordance with Section 172 is set forth
on pages 32-35.
Approved by order of the Board
Manfred Wennemer
Chair
14 March 2022
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Manfred Wennemer
Nomination Committee Chair
Nomination committee at a glance
Committee membership
Manfred Wennemer (Chair)
Tim Cobbold
Stephen Thomas
Committee areas of focus
– Board composition
– Board appointments
– Board effectiveness
Meetings
attended
4/4
4/4
4/4
Committee highlights
– Support the nomination for appointment/
re-appointment of Directors standing at the
AGM 2021
– Nominate the appointment of Julie Baddeley as a new
independent non-executive director
– Nominate the appointment of Hans Dieltjens as
successor CEO
– Expand the Group’s Executive Committee
Read more in Board of Directors
on pages 76-77
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Dear Shareholder,
On behalf of the Board, I am pleased to present the
Nomination Committee’s report for the year ended
31 December 2021 which will be my last report to you
as Chair of the Nominations Committee and the Board.
My successor as Chair of this Committee will be announced
in due course and I hope I can introduce my successor to you
at the AGM on 18 May 2022.
Board Composition
During the year, the Committee undertook a thorough
review of the Board’s composition, placing strong focus on
succession planning and training development across all
levels of leadership to ensure we have the strongest team
to deliver the Group’s purpose and strategy. The Committee
leads the process for nominations to the Board, making
recommendations based on achieving the appropriate size,
mix of skills, knowledge, and experience to drive the strategic
objectives of the business, aided by the results of the annual
Board and Committee effectiveness process.
The Committee is confident that the Directors that comprise
our Board, possess the necessary experience, perspective,
diversity and skills to lead the Group. The Board will continue
to engage with the business by focusing on product and
technology strategy and sustainability supported by the ESG
Steering Committee.
Terms of reference
The Committee reviewed its activities over the last
12 months against its terms of reference and confirmed
that it had fully discharged its responsibilities in line with
its remit. It has met formally twice. The Chair briefs the
Board on key discussions and ensures that the papers and
reports presented to the Committee are made available to all
Non-executive Directors. The current Terms of Reference of
the Nomination Committee, approved in October 2017 and
confirmed as appropriate each subsequent year, are available
to view on the Company’s website.
Board appointments and inductions
Appointing a new Chief Executive Officer, following
engagement with the Board and an outside advisor, Spencer
Stuart (who have no connection with the Group, and are
considered by the Board to be independent), we were
pleased with the results of this process which validated the
appointment of Hans Dieltjens on 18 October 2021. He has
the experience, credentials and credibility in the automotive
space that make him the right choice to be the next CEO of
the Group.
In conjunction with our CEO change, the Group expanded
its Executive Committee to nine members to further
implementation of its strategy with the appointments of
Stephanie Jett as Chief Commercial Officer, Johannes
Helmich as Chief Technology Officer and Mark Sullivan,
who succeeded Hans Dieltjens as Chief Operating Officer.
The Executive Committee structure can be seen on
our website.
A new independent non-Executive Director, Julie Baddeley,
took up her position in August 2021, making an important
addition to our skill set with her sustainability knowledge and
Board experience. Her biography can be found on page 76.
Selection process for Chair of the Board
A special Chair Succession Committee of the Board,
consisting of three Independent Non-Executive Directors,
expertise. They will continue to be reviewed to monitor
proper alignment of individual Director’s strengths and
utilisation of their skills.
Annual Board and Committee evaluation
The Committee initiated an externally facilitated annual
review of the effectiveness of the Board and Committees
in December 2021. This was undertaken by the third-party
advisory firm, Lintstock (who have no connection with the
Group, and are considered by the Board to be independent).
The review was additional to the UK Governance Code
recommendation requiring external reviews to be undertaken
at least every three years.
The review was designed to follow-up on areas for
development identified in prior evaluations and to consider
additional areas of Board and Committee performance with
reference to relevant external guidance and best practice.
Overall, the results of the Board effectiveness review were
very positive with progress identified in several key areas
since 2020. The evaluation also highlighted a number of
ongoing priorities for the Board which we look forward to
progressing in 2022. An online confidential questionnaire was
developed by Lintstock with collaboration with the Company
Secretary to review the effectiveness and performance of the
Board in conjunction with the Code principles. The following
areas of focus were highlighted:
– Increasing the Board’s diversity, particularly its ethnic
diversity, was prioritised
– Maintaining appropriate understanding of new
UK regulations
– Restarting plants visits and other engagement with the
business once COVID-19 restrictions are lifted
– Increasing oversight of risk management processes
and plans
Focus in 2022
The Nomination Committee plans to consider the areas listed
below during the year ahead:
– review of the skills and independence of each of the Non-
Executive Directors
– promote Board and Executive leadership
– management diversity
– recruit additional Non-Executive Directors to ensure the
Board maintains a broad mix of market knowledge and
relevant experience
– further review and development of succession planning
– track action to enhance areas of focus highlighted by the
Board effectiveness process
As a Committee, we believe that our succession planning at
both the Board and Executive levels has well positioned the
Group for future success.
Manfred Wennemer
Nomination Committee Chair
14 March 2022
was established to identify a successor Chair. Working with
Spencer Stuart, the Committee assessed Tim’s qualifications
and concluded that Tim was ideally suited to serve as Chair
given his experience and knowledge of the Group. Based on
the Committee’s recommendation, the Board appointed Tim
to serve as Chair following the AGM on 18 May 2022.
Diversity
The Committee recognises the importance of diversity
and remains committed to having a diverse Board. We are
pleased that women now comprise 30% of our Board.
We are committed to increasing the number of women on
the Board in 2022. We are also committed to adding at least
one ethnically diverse Director to the Board before then end
of 2024.
Of course, diversity does not apply only to the Board but
extends to the senior leadership team and beyond. As such,
we are committed to support management to achieve a
broader, more diverse senior leadership team while ensuring
that promotions and appointments are made on merit and
there is an appropriate balance of skills and experience at
all levels of the organisation. To that end, widened search
criteria were used to encourage a diverse set of candidates
for senior leadership positions comprised of both internal and
external candidates.
Women represented approximately 30% of the Group’s total
salaried workforce and 11% of the Executive Committee
together with the CEO. 11 senior managers who report to the
Executive Committee are women.
Board independence
The 2018 Corporate Governance Code requires that at
least half the Board, excluding the Chair, should consist
of Non-Executive Directors determined by the Board to
be independent. Throughout the year the Board has been
fully compliant on independence. At 31 December 2021,
the Board was comprised of ten Directors, including the
Independent Non-Executive Chair, the Senior Independent
Director, four other Independent Non-Executive Directors,
two Executive Directors and two Non-Executive Directors.
The terms and conditions of appointment of Non-Executive
Directors are available for inspection at the Company’s
registered office during normal business hours and at
the AGM.
Board time commitment
Each Director is aware of the need to allocate sufficient
time to the Company to discharge his/her responsibilities
effectively and the Committee reviews this annually.
In addition to time spent at Board and Committee meetings,
the Directors participate in several Company-related events;
details are set out on page 33.
Committee memberships
The Nomination Committee is currently comprised of
the Independent Chair, Manfred Wennemer, the Senior
Independent Director, Tim Cobbold and Stephen Thomas, a
Non-Executive Director. Details of the skills and experience
of the Committee members can be found in their biographies
on pages 76-77. The Board will assess the most appropriate
Committee membership to allow the Committee to
operate effectively.
The other three Board Committees (Remuneration, Audit
& Risk and ESG Steering) have members with the relevant
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Jeffrey Vanneste
Audit & Risk Committee Chair
Audit & Risk committee at a glance
Committee membership
Jeffrey Vanneste (Chair)
John Smith
Elaine Sarsynski
Meetings
attended
5/5
5/5
5/5
Committee areas of focus
– Quality and integrity of external financial reporting
– Risk management process assessment
– Effectiveness and performance of internal and
external audit
Committee highlights
– Sponsored the pivoting of the internal audit function
focus to effectiveness of internal controls over
financial reporting
– Initial impact and gap analysis assessment of possible
UK Governance changes and regulations
– Deep dive reviews of the Group insurance programme
and Risk, Compliance and Reporting for the Group
tax function
– Reviewed current status of Information
Technology General Controls and proposed
enhancement programme
Read more Principal risks and uncertainties
on pages 57-60
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Dear Shareholder,
I am pleased to present my final report as Chair of the
Audit & Risk Committee which outlines the Committee’s
composition, main responsibilities, and key areas of focus
during the year. 2021 was a year that saw the Committee,
in addition to usual agenda matters, get deeper insights
into Group Tax compliance and planning, spend time
assessing the operation and construct of current groupwide
Insurance programme as well as considering management’s
preliminary assessments on the potential impacts of the
UK government’s proposals on “Restoring trust in audit and
corporate governance”.
The core responsibility of the Committee continues to
be to provide an independent oversight in relation to the
integrity of financial reporting, the extent and effectiveness
of internal financial controls and assurance processes, the
monitoring of key risk management systems and processes
and assessment of the effectiveness and independence of
the Group’s external auditors. This report covers the activities
of the Committee throughout 2021 and up to the date of
this report.
The terms of reference of the Audit & Risk Committee are
available to view on the Company’s website.
Membership of the Audit & Risk Committee
The Audit & Risk Committee comprises Independent Non-
Executive Directors of the Company as set out in the table
below. Brief biographical information on the members of the
Audit & Risk Committee are listed on pages 76-77 including
details of experience and competence relevant to the sector.
The Company Secretary, who is also Chief Legal Officer, acts
as Secretary to the Committee.
The Audit & Risk Committee is ordinarily scheduled to meet
5 times through the annual cycle and its agenda is linked
to both the Group’s external reporting timetable and the
internal financial cycle. The Audit & Risk Committee invites
the Chief Executive Officer and President, the Chief Financial
Officer, the Group Controller and Vice President Risk and
other senior finance personnel, together with other senior
representatives of the external and internal auditors, to
attend certain meetings. In 2021 the newly appointed Chief
Operating Officer also attended the Committee meetings
prior to his appointment as Chief Executive Officer in October
2021. The Committee, when necessary, will meet in private
with the internal and external auditors without management
present as part of the overall meeting structure. All other
members of the Board have an open invitation to attend the
meetings. As the Chair of the Committee, I had a number
of private discussions with the lead external audit partner
during 2021.
In 2021, consideration of the 2020 Post-Close Trading
Statement was covered by a Group Board meeting in January
2021 rather than by the Committee. The consideration of the
2021 Post-Close Trading Statement was carried out by the
Committee in January 2022. Following the 2021 year-end,
the Committee met to review matters relating to the Group’s
2021 Annual Report.
The role of the Audit & Risk Committee
The primary function of the Audit & Risk Committee, which
has remained consistent with prior years, is to assist the
Board in discharging its responsibilities with regard to the
quality and integrity of financial reporting, risk management
assessment and the performance and effectiveness of both
external and internal audit, including:
– reviewing and monitoring the integrity of the Group’s annual
and interim financial statements
– advising on the appointment of the external auditors
and overseeing the Group’s relationship with its
external auditors
– reviewing the scope and effectiveness of the external
audit process
– reviewing the independence and objectivity of the
external auditors
– reviewing and monitoring the extent of the non-audit work
undertaken by the Group’s external auditors
– making recommendations to the Board on
accounting policies
– reviewing correspondence received and proposed
responses to communications received from relevant UK
regulatory bodies
– reviewing the effectiveness of the Group’s internal control
and risk management programmes
– monitoring the activities and effectiveness of the Group’s
internal audit function
– receiving reports from the Group’s internal and
external auditors
– making recommendations to the Board for a resolution
to be put to the shareholders for the appointment of the
external auditors, approval of their remuneration and terms
of their engagement
– reviewing the adequacy and effectiveness of the
whistleblowing and anti-bribery policy and procedures
Enhanced Committee activities in 2021
In 2021 the Committee had two specific meetings with
management in addition to the standard cycle.
At a meeting led by the Group Tax Director we had an
in-depth review of the tax landscape that faces the Group
across all material tax areas, covering aspects of tax
accounting, tax compliance and tax planning. In addition, we
debated the Group’s current tax risk appetite, the interplay
between certain operational structures in the group and
their intersection with available tax regimes, the tax audit
environment, and the on-going level of tax reform across the
major jurisdictions that the Group operates in. Time was also
spent horizon scanning where we discussed the potential
evolution of tax authorities focus on environmental matters
as a source of incremental revenue for national governments
as the challenges of climate change are tackled globally.
The Committee was pleased to hear that Group is seen as
a low-risk corporate, in the major territories, and has a good
and uncontroversial tax audit record with no material adverse
tax settlements.
The Committee welcomed the opportunity to gain a more
detailed appreciation of one element of the Group’s overall
risk management approach when it received a presentation
from management and the Group’s, newly appointed,
insurance broker on the mechanics and operation of the
global Insurance programme put in place in 2021 through
the annual renewal. Risk areas that received particular focus
and discussion were Business Continuity (including property)
risk, Cyber Security coverage and Directors & Officers
liability coverage. An area briefly considered was the future
possibilities for Product Recall Insurance and the potential
use of an Insurance Captive operating model. The Committee
was pleased to hear that both topics would be the subject of
feasibility studies in 2022.
The effectiveness of UK external audit provision and
enhancing the UK Corporate Governance environment has
been subject to many recent reviews culminating in the
publication of the UK Government’s consultation “Restoring
trust in audit and corporate governance”. During 2021 the
Committee has received 2 briefings from management on
the overall consultation proposals, the potential impacts
on the Board and the governance mechanics of the Group
and the likely change programme that could be put in place.
A significant element of these discussions has been on the
possible impacts of operating within a regime necessitating
a more formalised level of reporting on Internal controls over
financial reporting. Whilst we await the final government
response to the feedback that was received on the
consultation Group management have already undertaken
steps to facilitate whatever transition may ultimately be
necessary. These steps include an initial controls compliance
gap analysis, including controls over information technology
systems, with the assessment being made assuming that
COSO internal controls framework would be used and that
reporting requirements similar to the US SOX regime will
be needed. Internal financial controls refresher training has
been provided to the finance community by the internal
audit function with participation mandated and, with the
Committee’s full approval, the focus of the Group’s internal
audit function has been pivoted to focus, almost entirely,
on internal controls over financial reporting. An enhanced
fraud risk assessment and assurance programme is already
under development which the Committee will monitor
through 2022. As for most public limited companies in the
UK the forthcoming likely governance regime changes will
necessitate a robust and considered response from the
Group and the Committee is re-assured that the Board has
approved incremental investment, talent, and IT systems, in
risk and compliance to meet new requirements as they arise.
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Oversight of financial reporting
The Committee acts in an oversight role in respect of the
Annual Report and other announcements with financial
content, all of which are prepared by management.
The Committee received reports on the Annual and Interim
financial statements from management and the external
auditor. The Auditor’s report including a summary of key
audit matters is set out on pages 122-129.
– discussed audit reports with the external auditors which
highlighted key accounting matters and significant
judgements in respect of each set of financial statements
– reviewed and discussed reports to support management’s
assessment of the going concern judgement and
the viability statement set out on page 61 including
management’s extension of the length of time (now
5 years) the viability statement is considered
In line with its standing terms of reference the Committee,
over the last 12 months, has:
– considered the significant accounting judgements and
critical estimates made by management in preparing
the Interim and Annual financial statements and agreed
their appropriateness
– examined key points of disclosure and presentation to
ensure the adequacy, clarity and completeness of the
financial statements including ensuring that historical
reporting and disclosure commitments given to the
Financial Reporting Council in 2020 have been maintained
– reviewed the content of the proposed news releases issued
in conjunction with half year and full year results as well
as reviewing, on behalf of the Board, the quarterly Trading
Updates issued in May 2021, November 2021 and January
2022, respectively
Throughout 2021 the Committee has continued to be mindful
of the potential threats to financial reporting integrity posed
by the impact of the global pandemic on the organisation.
The Committee enquired and sought to understand the
impact on resources levels in finance and non-finance and the
necessary changes to working protocols arising from remote
working, restructuring actions and COVID-19 levels across
the organisation’s sites. Additionally, the Committee has
sought re-assurances from the external auditor that remote
working continued to be factored into the external audit and
review processes at both the half year and full year, including,
but not limited to, accessing original documentation and
meeting and sign-off procedures with management.
Significant accounting matters
The issues and judgements considered below were identified by the Committee as significant to the preparation of the 2021
Financial Statements
Key accounting judgement
Work undertaken
Goodwill and intangible assets impairment
All cash-generating units (‘CGUs’) containing goodwill
and intangible assets are tested for impairment annually.
The determination of CGUs and the recoverable amount
requires judgement by management in both identifying
and valuing the relevant CGUs.
Key judgements and estimates are involved in completion
of impairment reviews including cash flow forecasts,
discount rates and long-term growth rates. A change in these
assumptions can result in a material change in the valuation
of the assets.
Continued uncertainty about future automotive volumes,
supply chain capacity and resilience, the impact of
electrification trends including the rate of change, the extent
and effectiveness of ongoing restructuring actions and
possible strategic and operational impacts of climate change
developments all necessitated judgement and estimation.
Having recognised a material exceptional impairment charge
in 2020, improvements in market conditions, forecast
volumes and cash flow projections since then all necessitate
consideration of the possibility of non-goodwill impairment
charge reversals in determining the full year results.
As part of the annual impairment review, we considered
a summary report from management explaining the
methodology, assumptions, the results of the impairment
test and comparative analysis with the impairment review
conducted at the 2020 full year.
We specifically reviewed the discount and growth rates
used to calculate expected future cash flows at their present
value ensuring appropriate consideration of inherent risk
and geography had been factored in. Furthermore, we
discussed the underlying future cash flow assumptions in the
impairment assessments, understanding the changes from
the half year.
Additionally, our review considered the disclosures of key
estimates and judgements in the financial statements
along with the extent and appropriateness of sensitivities
performed by management including potential climate
change impacts and the extent of disclosures made.
Specifically, our review challenged how management
were comfortable that current projected cash flows did not
represent a sufficiently sustained and prolonged position
to warrant impairment reversals in some CGUs that had
originally been recognised in 2020.
The impairment reviews were also an area of focus for
PricewaterhouseCoopers LLP and we considered their
extensive work in this area.
We were satisfied with the approach taken by management
and concluded that the judgements and estimates used in the
impairment assessment were reasonable and the conclusion
of no further impairment or a reversal in 2021 was appropriate.
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Key accounting judgement
Work undertaken
Deferred tax asset recognition and provision for
uncertain tax positions
The Group has a wide geographic footprint and is subject to
tax laws in many jurisdictions.
Provisions are made for uncertain tax positions which
involve judgement and estimates by management as to the
likelihood of their realisation.
Recognition of deferred tax assets also involves
judgement as to their realisation, including whether
there will be sufficient taxable profits in future periods to
support recognition.
We reviewed summary reports from management in respect
of estimates of tax exposures to assess the reasonableness
of the Group’s tax provisions. Information provided has
included specialist tax advice in applicable jurisdictions and
updates on specific ongoing audits.
The recognition of deferred tax assets was reviewed
including the Company’s assessment of the availability
of future profits to support recoverability including the
impact of continued future volume and trading uncertainties
and consistency of forecasts with the impairment work.
We ensured that a measured approach to recognition of
deferred tax assets was taken by management in 2021 and
importantly, that there was consistency between financial
projections used for deferred tax asset recognition and those
underpinning the group impairment review.
PricewaterhouseCoopers LLP also reported to the
Committee its findings in this area which have been
reviewed and considered.
The Committee was satisfied with the judgements,
estimates and that disclosures were reasonable
and appropriate.
Warranty provisions
The Group is subject to warranty claims in the event
that its products fail to perform as per specifications.
Warranty provisions are made to cover potential exposures
that relate to specific customer claims.
We considered the judgements made by management
in assessing the likelihood and quantification of material
exposures. This included:
– understanding the nature of the specific claims
or exposure,
Key judgements are made in calculating the provision and
these are dependent on the customer, complexity of the
issue and the negotiation process. The outcome of claims
is often difficult to predict and quantify.
– assessing correspondence with and reactions of customers
and regulators (e.g. NHSTA)
– considering the impact of recall actions taken by customers
– probing management’s evaluation of the likelihood and
quantum of exposure and the status of negotiations with
the customer
We obtained the external auditor’s views in relation to the
appropriateness of the approach taken by management.
Taking into account the evidence presented and explanations
given by management, we concluded that the judgements
taken in respect of warranty matters were reasonable
and appropriate.
The Committee is satisfied that the judgements made are reasonable and appropriate disclosures have been included in the
Financial Statements.
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Other financial reporting matters
Presentation of financial statements
The Board continues to use adjusted results as the measure
of ongoing performance of the Group and its Divisions.
This approach necessitates the exclusion of certain items
of income or charge that are felt to distort comparability
of performance. In considering the presentation of the
2021 financial statements the Committee re-assessed the
appropriateness of the non-IFRS measures used by the
Group and considered the extent and clarity of explanation
supporting the use of these measures. The Committee
was satisfied that the 2021 Annual Report disclosures were
appropriate and a satisfactory balance between non-IFRS
measures and statutory measures had been maintained.
New accounting standards
No new accounting standards were adopted in 2021.
However, the Parent Company adopted Financial Reporting
Standard 101 in the year.
External auditors
The Audit & Risk Committee are very aware that the
effectiveness and independence of the external auditor is
central to ensuring the integrity of the Group’s published
financial information.
During 2021, the Committee’s engagement with the external
auditor has mainly focused on:
– the review and approval of PricewaterhouseCoopers LLP’s
2021 audit plan, terms of engagement and fee for the audit
of the 2021 financial statements
– review of the independence, objectivity and effectiveness
of PricewaterhouseCoopers LLP
– concluding a recommendation to the Board to reappoint
PricewaterhouseCoopers LLP
– satisfying ourselves that the level of non-audit services
provided by PricewaterhouseCoopers LLP was compliant
with external regulation and internal policies
– understanding the regulatory changes impacting the 2021
external audit and the consequential fee implications of the
extensive increase in work required
The Committee approved the proposed external annual
audit plan and its scope at its meeting in November 2021.
Our consideration of the plan involved an assessment of
the size of entities covered and the level of risk associated
with those entities. The Committee was satisfied that
the proposed risk-based approach was appropriate and
commensurate with the Group’s risk appetite in respect of
external audit assurance. The key audit matters identified
by PricewaterhouseCoopers LLP are set out in its report
on pages 88-89 and were reviewed by the Committee in
approving the 2021 audit scope and plan.
presented in April 2021, from the annual PwC Year-end
audit questionnaire
In summary, the Committee considers both
PricewaterhouseCoopers LLP and its audit processes to
be effective. PricewaterhouseCoopers LLP have a good
understanding of the Group and its businesses including the
financial reporting and control challenges facing the Group.
This understanding is accompanied by robust challenge of the
significant judgements made by management.
Auditor independence and non-audit services
In order to ensure the external auditors’ independence, the
Committee annually reviews the Company’s relationship with
its auditors and assesses the level of controls and procedures
in place to ensure the required level of independence and that
the Company has an objective and professional relationship
with PricewaterhouseCoopers LLP.
The Committee has received confirmation from
PricewaterhouseCoopers LLP that they remained
independent and objective within the context of applicable
professional standards throughout 2021 and the duration
of the 2021 audit appointment. Committee received
explanations of the historical technical independence
breach relating to unremunerated accounting preparation
services provided to the Group’s Canadian pension scheme.
The Committee felt this breach was trivial and had no bearing
on their overall conclusion.
In order to safeguard auditor independence the Committee
has adopted a formal policy governing the engagement of the
external auditor. This policy effectively limits the use of the
external auditor to work that is specifically required by law
or regulations to be carried out by the statutory auditor and
is of an assurance nature only. All other non-audit services
are considered on a case-by-case basis in light of prevailing
regulations and ethical standards.
Any proposed non-audit service engagement has to be
approved by the Group Controller & VP Risk on behalf
of the Committee. Approval is only given if it is within
acceptable financial parameters and confirmation has
been received from PricewaterhouseCoopers LLP that the
service does not contravene regulatory independence and
ethical requirements. All non-audit service engagements
with fees in excess of €0.2 million have to be approved by
the Committee Chair before commencement. The only
significant engagement of the external auditors for non-audit
services during 2021 was in connection with the Group’s
2021 Refinancing programmes; PricewaterhouseCoopers
LLP fees for this project were €0.3 million. Details of all fees
due to PricewaterhouseCoopers LLP in 2021 can be found in
Note 33 on page 194 of the Financial Statements.
In its annual assessment of the effectiveness of
PricewaterhouseCoopers LLP, the Committee had regard
to a number of factors which include but are not limited to:
– their feedback and insights on the Group’s business,
internal control systems and attitude towards control
– the planning process and final audit plan for the 2021
financial statements
– the quality of reporting to the Committee
– their performance during the 2021 half-year review process,
– insight provided to the Committee about the UK
Government audit effectiveness and corporate governance
consultation and anticipated outcomes
– feedback from senior management on the quality
of engagement with them including the output,
Having considered all factors the Committee has
concluded that PricewaterhouseCoopers LLP remain
appropriately independent.
Taking all matters of effectiveness, independence and
objectivity into consideration, the Committee has concluded
that it was appropriate to recommend to the Board of
Directors the reappointment of PricewaterhouseCoopers LLP
as the Company’s auditors for 2022.
The Company confirms that it complied with the provisions
of the Competition and Markets Authority’s Statutory Audit
Services for Large Companies Market Investigation Order
2014 for the financial year under review.
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– discussed with the external auditor their findings and
perspectives on the Group’s internal control framework
The Board has overall responsibility for the Group’s risk
appetite and ensuring there is an effective risk management
framework. The Board has delegated responsibility for review
of the risk management programme and effectiveness
of internal controls to the Audit & Risk Committee.
Further information on the Group’s the risks and uncertainties
which are judged to have the most significant impact on the
Group’s long-term performance and prospects are set out on
pages 57-60.
The Audit & Risk Committee has reviewed management’s
assessment of the Group’s principal risks, the impact on the
prospects for the Group and the mitigating actions, and the
Board has confirmed that a robust assessment of the Group’s
principal risks had been undertaken. This assessment also
included a discussion of emerging risks potentially facing
the Group.
Other matters
During the year the Committee:
– received an overview report on the Group’s Insurance 2021
renewal pricing
– reviewed and approved the Parent Profit and Loss Account
for the year on behalf of the Board pursuant to compliance
with s408 Companies Act 2006
– received update briefings on the implementation of the
new Group-wide financial reporting system that went live
in 2021
– reviewed the details of the Group’s 2021 refinancing
exercise, which included a new €600m Euro Bond, and
approved the accounting treatments arising from the
refinancing programme in particular the exceptional item
disclosure treatment of irrecoverable unamortised fees
relating to existing borrowings
– received the 2021 review report on the Group’s cyber
security arrangements
– reviewed the details of a North American pension annuity
transaction, a continuation of the Group’s on-going
de-risking activities in relation to pension and other
related obligations
Departure
As my tenure with the Group approaches its end, I would
like to thank my Board and Committee colleagues and
the numerous members of management I have had the
pleasure of engaging with, for their support over the last
4 1/2 years. Whilst there are many challenges ahead in a
changing governance environment, I am confident the TI Fluid
Systems team will face them with the required tenacity and
commitment and my successor, as Chair of the Audit & Risk
Committee, will be well supported going forward.
Jeffrey Vanneste
Audit & Risk Committee Chair
14 March 2022
Internal control and risk management
The Group continued in 2021 to refine its processes
and controls globally to reflect changes to its internal
control framework.
The Group’s system of internal controls, along with its design
and operating effectiveness, is subject to review by the
Audit & Risk Committee, in addition to review by the internal
and external auditors. Control deficiencies identified are
followed up with action plans that are reviewed by the Audit
& Risk Committee. The Board has established policies and
procedures, including delegations of authority, which have
been communicated across the Group.
Internal Audit plays an important role in assessing the
effectiveness of internal controls by a programme of reviews
of key business risks across the Group. The Group has a
dedicated Internal Audit function, and a formal audit plan is
in place to address the key risks across the Group. The Audit
& Risk Committee considers and approves the internal audit
plan, which is based on an assessment of the key risks faced
by the Group. Progress in respect of the plan is monitored
throughout the year and care is taken to ensure that the
Internal Audit function has sufficient resource to complete
the plan. The audit plan may be reviewed during the year
as a result of the ongoing assessment of the key risks or in
response to the needs of the Group. The Director of Internal
Audit reports ultimately to the Chair of the Audit & Risk
Committee, although they report on a day-to-day basis to the
Chief Financial Officer. A report on completed internal audits
is presented to the Committee and, where appropriate, action
plans are reviewed.
As noted earlier 2021 has seen a pivotal change in the focus
of the Internal Audit function in preparation for the anticipated
increase in regulatory focus on the quality and effectiveness
of internal controls over financial reporting. Whilst in its
formative stages initial audit findings have been that, whilst
the risk of material error remains low, improvement actions
in terms of documentation and review standards will
be needed.
The system of internal controls is designed to manage,
rather than eliminate the risk of failure to achieve business
objectives and we can only provide reasonable and not
absolute assurance against material misstatement or loss.
The Board has established a clear organisational structure
with defined authority levels. The day-to-day running of the
Group’s business is delegated to the Executive Directors of
the Group.
In executing the Committee’s remit for monitoring
the financial reporting process and for reviewing the
effectiveness of the Group’s system of internal controls,
the Committee undertook the following review work:
– considered reports from Internal Audit on the outcomes
of the 2021 Plan with particular focus on the quantum
of deficiencies identified and the timeliness of
remediation activities
– reviewed with the Head of Information Technology the
initial assessment and gap analysis relating to the existence
and strength of information technology general controls
– discussed the status and actions relating to control issues
raised via the Group’s whistleblowing hotline
– monitored the feedback from special project reviews
performed by Internal Audit
– reviewed and approved the proposed Internal Audit plan
for 2022
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Statement by the chair of the Remuneration Committee
Dear Shareholders,
Over the past year, I was pleased to be able to continue the
good work of my predecessor Andrea Dunstan and the rest
of the Committee when I became Chair following the AGM
in May 2021. My sense is that over the past couple of years
we have made good progress in developing our remuneration
approach and policy in ways that both address the
expectations of shareholders and society more widely whilst
attracting, retaining and incentivising a high-performance
management team.
2021 proved to be another exceptional year with the ongoing
impact of the COVID-19 pandemic which continued to
provide significant challenges for all those (and their families)
connected with the business. Throughout the year, health
and safety have remained the overriding priorities for the
business. COVID-19 challenges were compounded by the
extraordinary supply chain issues that developed and grew
in significance through 2021 (and will continue into 2022).
Whilst these supply issues were commonplace in many
industries, they were particularly acute in the automotive
industry and had a significant impact on the operating
performance of the business. Despite these challenges, the
business reinforced its transition towards electrification with
its “Take The Turn” strategy, detailing the path to benefit
from the opportunities related to the automotive industry’s
transformation towards hybrid electric (HEV) and battery
electric (BEV) vehicles. The Committee was mindful of
these realities as it considered all aspects of remuneration
throughout the year.
At the AGM in May 2021, both the new Remuneration
Policy and the 2020 Remuneration Report were approved
by shareholders. However, it was clear that a significant
minority of the non-Bain shareholders had concerns over the
Company’s approach to Executive Remuneration. This was
of serious concern to the Committee, mindful that in the
ordinary course, the expectation is that Bain will progressively
reduce their holding and that if concerns went unaddressed,
this could lead to a majority of shareholders voting against the
Company’s remuneration approach. In the Committee’s view,
were that to happen, it would have the potential to materially
damage the long-term interests of all stakeholders in the
business. As a result, a significant effort was made to consult
widely with shareholders during the year. I am pleased to
say that following this consultation, I am now confident that
the Committee has a much-improved understanding of the
concerns of the “non-Bain” shareholders and, as a result,
has made some significant changes to how the approved
Remuneration Policy will be implemented in the future.
More details on the consultation and the changes made as a
result are provided later in this letter. During the consultation,
it also became apparent that we could have explained the
rationale for the remuneration approach more effectively,
so the following sections of the letter aims to do just that.
Explanation and Rationale for TI Fluid Systems’
Remuneration Approach
The Committee’s approach to executive remuneration at
TI Fluid Systems is based upon a sensitive appreciation of
the industry context in which the business operates, the
strategy of the business, the arrangements in place for the
wider workforce, and an understanding of the remuneration
expectations of shareholders and society more widely.
Tim Cobbold
Remuneration Committee Chair
Remuneration Committee at a glance
Committee membership
Tom Cobbold (Chair)
John Smith
Jeffrey Vanneste
Meetings
attended
5/5
5/5
5/5
Committee areas of focus
– Shareholder outreach
– Revamping measures to align with strategy
– Review of wider workforce alignment
Committee highlights
– Alignment with shareholder expectations and
wider workforce
– Incentive measures aligned with business strategy in
both ABP and LTIP
– Major step forward in prioritising sustainability
initiatives in remuneration plan design
Read more Directors’ report
on pages 116-118
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It is the central task of the executive team to leverage the
Company’s existing market-leading position to maximise the
current business, including optimising the performance of
the ICE specific part of the business whilst simultaneously
investing in new innovative products, skills, and technologies
to transition the business to a market leadership position to
support HEV and BEV vehicles. This, whilst respecting the
Company’s sustainability commitments, is the Company’s
Take the Turn strategy.
Implementation of the strategy is underway with
approximately 47% of the Company’s new business bookings
relating to electrified vehicles, which includes all forms of
Battery Electric Vehicles (BEVs) and Hybrid Electric Vehicles
(HEVs), over the past two years. The Company’s Take the
Turn strategy focuses mainly on the importance of fully
electric BEVs and Plug-in Hybrid Electric Vehicles (PHEV),
the latter being the version of hybrid vehicles that offer the
greatest impact to reducing emissions with much of the
content necessary to produce BEVs. The business is now in
the critical period to secure the early wave of major BEV and
PHEV platforms which will deliver revenue and margin over
the next decade as they come into production.
In the Remuneration Committee’s view, the approach to
remuneration should align with this crystal-clear strategic
imperative and incentivise the management team to deliver
on the very significant opportunities it presents whilst also
maximising current business performance.
Automotive Tier 1 Talent Pool
As a global Tier 1 supplier, TI Fluid Systems’ customers
expect the same performance, capability, experience,
strength, and quality of the Company and management as
they do of all their other Tier 1 suppliers, the majority of which
are much larger businesses (Robert Bosch, Continental, ZF
etc.). Consequently, when recruiting (and retaining) senior
management, the Company draws from the same automotive
management pool as these larger businesses. In addition, like
TI Fluid Systems, all of these businesses have a significant
US presence and so, given the global nature of the industry,
the automotive management pool is heavily influenced by
US remuneration levels.
Accordingly, the Remuneration Committee has decided,
particularly on quantum, that the business must be in a
position to attract and retain high-quality individuals from
this automotive management pool. The Committee is
conscious that TI Fluid Systems is the only Tier 1 automotive
supplier listed on the UK market, therefore this remuneration
approach, particularly on quantum, is likely to mean that
TI Fluid Systems may be an outlier in the UK market,
in particular, when compared to FTSE 250 companies
with a similar market capitalisation. It is the Committee’s
strongly held view that although this presents difficulties
in comparison with others in the FTSE250, it is appropriate
for this business and it makes sense for all stakeholders in
the business.
Shareholder & Societal Expectations
The Remuneration Committee recognises that, accelerated
by the pandemic, society is changing and that the way the
appropriateness of remuneration, especially for Executive
Directors and senior management, is judged has become
more demanding. However, the Committee also appreciates
that whilst being conscious of societal developments, it has
the responsibility to objectively establish what it believes is
the proper remuneration structure for all stakeholders, given
the industry in which the business operates and its position
in that industry, even if that results in a position that is an
outlier compared with UK-listed businesses with which its
arrangements are usually compared.
The Committee also accepts that the environment in which
we justify our remuneration practices is becoming more
challenging, thus remuneration arrangements will be viewed
more through the lens of equity with the wider workforce
and shareholder experience than previously. The Committee
understands that equity and fairness matter in the same way
that business performance matters.
Industry Context
TI Fluid Systems is a Tier 1 (direct) automotive supplier
to nearly all automotive manufacturers across the world.
As we are all aware, the automotive industry is undergoing
seismic changes as the climate change imperative drives a
switch away from vehicles powered by internal combustion
engines (ICE) towards hybrid electric (HEV) and battery
electric vehicles (BEV). It is difficult to exaggerate the degree
of change this requires of the automotive industry and its
stakeholders and the consequential impact this is having on
the automotive supply chain, in particularly Tier 1 suppliers
like TI Fluid Systems.
In the Board’s view, the nature, significance, complexity, and
magnitude of the change in the automotive market places
a premium on building, retaining, and incentivising a high
quality, globally experienced, performance-focused, and
‘automotive savvy’ management team to lead the business at
this time of exceptional change.
The Remuneration Committee believes that the approach to
the remuneration of the Executive Directors, the Executive
Committee and the wider senior management group (approx.
300 leading employees) should reflect the demand for talent
that this industry context demands.
Strategic & Business Context
“Take the Turn” Strategy
For TI Fluid Systems, the change in the automotive
market is particularly impactful because although today
a significant proportion of the Company’s revenues and
profits are generated from systems designed, engineered,
and manufactured specifically for cars powered by ICEs,
the extraordinary change in the market offers the Company
very significant new opportunities. These opportunities are
expected to be more than sufficient to offset the progressive
reduction in ICE-related business because the fluid handling
system requirements of both HEV and BEV vehicles are likely
to be greater than the corresponding ICE vehicles they will
replace. This is largely because Hybrid and Battery Electric
Vehicles utilise large batteries, power-electronics and
electrical drives which require a vast amount of cooling and
heating to optimise performance. The Company’s current and
developing thermal management systems technology and
manufacturing capability are well suited meet the expanding
thermal needs of Hybrid and Battery Electric Vehicles.
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Statement by the chair of the remuneration committee
continued
Transition – Maximising today and delivering tomorrow
As TI Fluid Systems and the automotive industry are going
through a period of change, there is inevitably a need to
manage carefully the transition from ICE vehicles to HEV
and BEV vehicles. The executive leadership of the business
needs to make sure that short-term performance is
maximised whilst at the same time future opportunities are
secured with ongoing investment to lay the foundation for
a long-term market-leading position in a growing HEV/BEV
automotive world.
The Remuneration Committee has considered this carefully,
conscious that both the structure of incentives and the design
of the measures and targets should reflect the need to
incentivise both the short term and the longer-term strategic
priorities of the business.
Sustainability – TI Fluid Systems playing its part
TI Fluid Systems’ underlying purpose helps the global effort
to address climate change. The business’ strategy is to use
its skills, products, and technologies to positively affect the
transition to electric vehicles and this is, without doubt, the
most significant contribution the Company can make to a
greener future.
However, the business recognises that, notwithstanding
the purity of the strategy, how this is achieved matters too.
The business has undertaken to reduce its Scope 1 & 2 CO2
equivalent emissions by 37.5% by 2039 (on an absolute
basis compared to 2019 baseline) which is consistent with
the Paris Agreement and the Well Below 2 Degree scenario.
In addition, the business will soon begin the process of
collecting Scope 3 emissions data and expects to be in a
position later in the year to begin to seek to reduce those
emissions as well.
As an engineering and manufacturing leader the business
recognises that there remains much to do to improve
diversity in the business at all levels of the organisation
and programmes are in place to do so. The Remuneration
Committee feels it is important that the design of incentives
reflect this sustainability imperative and that the focus for
sustainability related incentives should be long term and
wherever possible quantitative.
Wider Workforce Context
TI Fluid Systems employs approximately 25,600 people in
29 countries, in over 104 manufacturing facilities across the
world. The overriding approach to remuneration is that it is
fair and equitable. In a business as geographically dispersed
and with such a wide range of skills and experience, finding
the equitable approach to remuneration, which can be heavily
influenced by local laws, regulations, customs, and practices,
is not straightforward. To achieve this, experience has shown
that for most aspects of remuneration, equity within the local
(country) context is the most appropriate approach. However,
a Group level policy-driven approach is applied in key areas,
as detailed below.
Normal Pay Reviews
The general principle is that all employees, including
Executive Directors, normally receive pay reviews annually,
in line with the workforce in the country in which they are
based. The Chair and Non-Executive Directors normally
receive fee reviews in line with the wider workforce in the
United Kingdom. Pay reviews are on occasion delayed
pending clarity on business performance, but when this
occurs, they are delayed across the business. Pay increases
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in excess of this general principle do occur when related to
performance, promotion, increased qualifications, collective
bargaining, and legal requirements. The Committee’s
approach is that Executive Directors (and the Executive
Committee) are not normally treated more favourably than
anyone else in the organisation, both in terms of timing
and degree.
Annual Bonus Plans
The performance culture in the business is strong as
it reflects the demands of the automotive industry.
Approximately 300 senior leaders who have an influence
or oversight of key areas of the business are eligible for
participation in the same Annual Bonus Plan as Executive
Directors. This ensures that key decision makers and
influencers are aligned and have the opportunity to benefit
from the success of the Company. Local Variable Bonus
plans, which operate annually, are in place in a significant
number of production plants covering many of the c20,000
production employees. Variable Bonus Plans are linked to
performance at individual sites/factories aligning participants
with factors they can directly influence. The merits or
otherwise of extending Variable Bonus Plan participation
further is being reviewed by management.
Long Term Incentive Plans – LTIPs
Approximately 65 individuals participate in the LTIP, with
Conditional Share Awards granted on the basis of time and/
or performance over a period of three years. The Committee
believes, to best align with shareholders’ interests and
to properly incentivise the execution of the Company’s
strategy, Executive Directors’ Conditional Share Awards are
based exclusively on performance conditions. Other LTIP
participants (below the Executive Directors) may have a
portion of their Conditional Share Award based on continued
employment (i.e. time only) through the performance period.
This helps to ensures a level of outcome considering the
greater volatility and demand for talent expected at a time
of significant change in the industry. This LTIP strategy has
certainly helped with the retention of key talent through
the COVID-19 and chip shortage periods (which will have
an adverse impact on the inflight performance based
Conditional Share Awards) and, more importantly, will assist
in ensuring a stable executive team to deliver the Take the
Turn strategy. Going forward, the Committee intends to
continue with this strategy which has proved successful in
motivating both retention and performance through a period
of industry transition.
Rationalisation of Facilities
It is a “business as usual” (and necessary) activity for the
sizeable operating portfolio of the business to be refined and
reshaped on an ongoing basis. Many, but not all, facilities are
established to supply specific parts to specific vehicles, often
on a just-in-time basis, over a number of years. Consequently,
if the vehicle ceases to be produced or the business is lost
when the vehicle is redesigned, action must be taken. As the
progressive switch away from ICE vehicles to HEV/BEV
vehicles in the industry takes place, the operating portfolio
will be under ongoing review. The Committee is very aware
of the impact on employees when a facility is closed or
downsized and maintains oversight of the terms offered to
satisfy itself that people are treated fairly and consistently
across the business.
The Remuneration Committee recognises its obligations to
maintain oversight over remuneration in the business as a
whole and is confident that it has sufficient information on
the wider workforce to make informed decisions concerning
the remuneration of the Executive Directors and the
Executive Committee.
Shareholder Consultation in 2021
Following the AGM in May 2021, the votes in favour of the
Remuneration Policy and Remuneration Report were 75.34%
and 76.18%, respectively. Given this outturn, and as required
by the Code, the company consulted with shareholders to
better understand the reasons for their voting decisions.
Consultation Process
The consultation was sincere and began in June 2021,
shortly after my appointment as Chair of the Committee.
Invitations to meet were sent to the Top 20 “non-Bain”
shareholders, and I met with many of them in the period
through to September 2021. The Remuneration Committee
considered their concerns at the Remuneration Committee
meeting in October 2021, and potential responses
to the feedback from shareholders were considered.
During October and November, these potential responses
were evaluated further, and in December 2021, the
Committee approved in principle significant revisions to
the way the remuneration policy was to be implemented.
I then wrote to the same shareholders in December 2021
to explain the Remuneration Committee’s decisions in
order to give shareholders the opportunity to comment on
them. The revised arrangements described in this report
reflect the decisions made in principle by the Committee
in December 2021 which were approved formally at the
Remuneration Committee meetings in February and March
2022 with some small modifications following shareholder
comments. I consider this to have been a detailed and sincere
consultation process in line with my commitment to maintain
an open dialogue with shareholders and the requirement
under the Code.
Results of the Consultation
As is not uncommon, there were a range of views expressed
by shareholders with concerns and ideas about various
elements of the Company’s remuneration arrangements.
However, notwithstanding the way votes were cast, it
became clear during the consultation that the concerns
expressed by shareholders were not centred on the
Remuneration Policy itself (other than the overall quantum of
variable pay). Shareholders recognised that significant steps
had been taken to bring the Policy in line with best practices
in many areas. The concerns expressed were focused much
more on the implementation of the Policy.
There were three specific elements in the implementation
of the Remuneration Policy that were common among those
shareholders that had concerns (while many shareholders
were content). Below I summarise these concerns and
the steps the Committee and Management have taken to
adequately address those concerns.
Quantum
Shareholder Concern
The overall incentive quantum was considered high
relative to other FTSE 250 companies, though there was
acknowledgement that pay is below comparable US-listed
companies. The use of an ‘outperformance’ element on
the LTIP was also highlighted as an unusual feature in the
UK-listed environment. Shareholders were interested to know
the remuneration arrangements for the new CEO and those
related to the departure of the previous CEO.
Response to Concern
In responding to this concern, the Committee has taken steps
to reduce the overall quantum of pay whilst retaining a level
of reward and incentive commensurate with the needs of the
business as explained earlier.
– Hans Dieltjens, the new CEO’s, contractual salary has been
set at €809k (€1=$1.18), 16% lower than his predecessor.
– In addition, in view of the difficult business environment
during 2020 and through 2021, the new CEO contractually
agreed that his salary in 2021 and 2022 would be set at a
discount (to his contractual salary) of 11%, at €720k in 2021,
and nearly 6%, at €764k in 2022 (€1=$1.18), 25% and 21%
respectively below his predecessor. Shareholders should
note that as a result of unwinding the discount to the
CEO’s salary in 2022 and 2023, the salary he receives
may effectively increase at a greater rate than the general
increases for the wider workforce. This reflects that the
CEO has voluntarily agreed to discount his contractually
agreed salary until 2023. For the avoidance of doubt the
CEO will not be eligible for any increase in base salary
above his contractually agreed salary of €809k until
1 January 2024.
– In addition, whilst the new CEO’s annual bonus opportunity
and LTIP award will remain at 300% of salary (in line with
his predecessor), the LTIP “Outperformance” award of
100% of salary has been removed and will no longer be
offered to the current CEO.
These reductions follow similar reductions made on the
appointment of Ronald Hundzinski (CFO) where base salary
was reduced 8% and ABP maximum opportunity was
reduced from 300% to 250%, and the outperformance
measure of the LTIP was eliminated, compared to
his predecessor.
Both the multiplicative/compounding nature of base salary
changes and the reductions in variable pay opportunity
outlined above represent a significant reduction in
maximum overall quantum for both Executive Directors,
compared with their predecessors, directly addressing the
shareholder concern.
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Statement by the chair of the remuneration committee
continued
Pay for performance
Shareholder Concern
Whilst shareholders supported the Committee’s use of
discretion to reduce the formulaic bonus outturns for FY20,
there was, nevertheless, a perceived disconnect between
pay levels and Company performance in 2020.
Response to Concern
The concerns expressed by shareholders centred on the
Annual Bonus payout in 2020 and to some degree reflected
the remuneration decisions made during the ‘COVID-19’ year.
The Committee understands this and will continue to take a
rigorous approach to setting stretching performance targets,
as it did for the 2021 ABP and 2021 LTIP. Ultimately the
relationship between pay and performance can only be
properly assessed at the end of each financial year, and the
Committee undertakes a detailed review of outturn related to
performance (and the outturns for the wider workforce).
– The Annual Bonus outturn in 2021 at 37.4% of maximum
for the Executive Directors is significantly below that of
the prior year, even though the Company’s adjusted EBIT
margin was better than in 2020. Full details are provided on
page 105.
– The 2019 LTIP, which matures in 2022 on the basis
of performance in the three years to December 2021,
delivered a return of 13.4% of maximum, reflecting the
overall market challenges the Company (and many other
businesses) faced in 2020 and 2021. As an aide-memoire,
the 2018 LTIP lapsed in full, reflecting the extraordinary
market challenges in 2020 particularly.
Notwithstanding the concerns caused by the 2020 Annual
Bonus Outturn, the evidence supports a good alignment
between the performance of the business and the rewards
awarded to the Executive Directors, which the Committee
is committed to maintaining.
Performance Measures
Shareholder Concern
Shareholders expressed a clear dislike of the use of
a cash flow measure in both the ABP and the LTIP
and were interested in how the Committee intends to
reflect sustainability imperatives in future incentives.
Shareholders were also keen that the remuneration
framework aligns more appropriately with the business’
strategy.
Response to Concern
The Remuneration Committee’s approach to remuneration
in the business has been fully explained earlier in this
letter so that shareholders may be able to better relate
the remuneration framework to the business’ strategy.
The Committee has also revised the performance measures
to be used in 2022 (and expected to be used beyond 2022)
for both the ABP and the LTIP to align them more closely
with the strategy and expectations of shareholders.
– Annual Bonus:
– 50% of the opportunity will be based on BEV/PHEV
bookings in line with the Company’s Take the Turn
Strategy – this has been increased by 25% points from
2021 to reflect their strategic importance.
– 50% of the opportunity will be split equally between
Adjusted EBIT margin and Adjusted Free Cash Flow,
reflecting the importance of maximising current
performance and managing profitability and cash through
the period of transition.
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– LTIP:
– 50% of the opportunity will be based on Adjusted
Return on Capital Employed (ROCE). This measure
was selected as the management of returns on capital,
through the industry transition to electric vehicles, is seen
as critical to the successful deployment of the strategy.
It complements the significant proportion of the annual
bonus aligned to BEV/PHEV bookings by rewarding
an ongoing, long-term attention to margin through
the transition and beyond. The calculation of ROCE is
explained on page 112.
– 25% of the opportunity will be based on relative TSR
with performance compared to an automotive comparator
group, replacing the comparison to the FTSE 250
(excl Investment Trusts) that has been used hitherto.
This automotive comparator group is defined on page 113.
The Committee, bearing in mind that the business’ regular
reporting of performance versus the automotive build (per
IHS) is valued by shareholders, made this change as it
increases alignment to both the business strategy and to
what shareholders value whilst retaining the alignment to
the shareholder experience that relative TSR provides.
– 25% of the opportunity will be based on two sustainability
measures as follows:
– 15% will be based on Scope 1 and 2 CO2(e) emissions
reduction from 2019 baseline expressed quantitatively
with the targets prospectively announced (see
Remuneration in 2022 below) and
– 10% will based on the Company’s relative Social
Quality Score determined and assessed independently
by ISS.
This decision to allocate a significant portion of the long-
term incentive to sustainability favouring the quantitative
environmental measure and the quasi-quantitative Social
measure was made in collaboration and with the approval
of the Group’s ESG Steering Committee. The inclusion of
Scope 1 & 2 emissions reduction is in line with specific long-
term public commitments made to many of our customers
and therefore is well aligned to the business imperative.
The Committee is aware that 25% of the long-term incentive
allocated to sustainability is at the “high end” of expectations
but felt this was appropriate because it aligns directly with
the overall role of TI Fluid Systems in helping the automotive
business through the transition away from fossil fuels.
The Committee was insistent, however, that the measures
used should be quantitative and/or independently assured to
provide confidence that genuine progress had been delivered
and that the targets were suitable challenging.
Conclusion of the Consultation
The decisions taken by the Committee in light of the
consultation have resulted in a significant revision to the way
the remuneration policy is implemented, however, they have
also been made in the knowledge that the arrangements
will mean that TI Fluid Systems will remain an outlier in the
UK listed market for a business of its size. The Committee
strongly believes that the arrangements are the right ones
for all stakeholders, and I very much hope that shareholders
will be able to support the Committee. The Remuneration
Report this year includes enhanced disclosures and greater
context for the remuneration structures and outturns to help
shareholders provide that support.
Remuneration Outcomes in 2021
The business ended 2020 in a financially robust position,
having reconfirmed its dividend policy and announced a
resumption in dividend payments to shareholders. That said,
as the business entered the second quarter of 2021, there
remained considerable uncertainty from the ongoing
pandemic and the signs of emerging supply chain issues
as demand recovered. As we are all aware, the concerns
proved justified, and 2021 turned out to be in many ways as
difficult a year as 2020 had been. This reality affected the
performance of the business which, though much improved
over 2020, remained below the 2019 level and so impacted
the remuneration outturns for the Executive Directors, senior
management, and the wider workforce.
Annual Salary Reviews
Given the extraordinary market environment in 2020, the
Company opted to provide one general pay increase to its
employees covering both 2020 and 2021. This increase was
applied to all employees including the former Chief Executive
Officer in December 2020 and the Chief Financial Officer in
January 2021.
Annual Bonus
The Annual Bonus targets for Executive Directors in 2021
were based upon adjusted EBIT margin (35% weighting),
Adjusted Free Cash Flow (40%), and Thermal bookings
(25%). The targets were set in March 2021, and no
adjustments were made to these targets.
The adjusted EBIT margin for the year of 7.0% was 0.9%
points higher than achieved in 2020 (at budgeted FX rates),
reflecting significant improvement over the year despite
increased COVID-19 and supply challenges. Adjusted free
cash flow was €109m, €32m lower than in 2020, resulting
in no payout for the measure as the achieved level was
below Threshold. Thermal booking performance, which
was strong through the year and exceeded €1.2bn, was
approximately 37% higher than the prior year. These results
yielded a ABP award of 12.4%, 0% and 25% for adjusted
EBIT margin, adjusted free cash flow and Thermal bookings
respectively and 37.4% of maximum for the overall ABP
award. In approving this level of payout, the Committee noted
that at this level;
– The outturn demonstrates a robust alignment of pay and
performance. The award level of 37.4% of maximum
compared with the 75% in respect of 2020, despite a
stronger adjusted EBIT performance.
– The payout for the Executive Committee will be in line with
that of the Executive Directors while awards for all other
ABP participants will be based on the award level for the
Executive Directors but subject to merit based adjustments
arising from an assessment of personal performance.
– That for the considerable number of employees eligible for
variable pay awards, their payout will be in the range 15%
– 100% of maximum with an average 59% of maximum,
ahead of the award to Executive Directors.
As a result, the bonus for 2021 for William Kozyra, Hans
Dieltjens and Ronald Hundzinski will pay out at 37.4% of
maximum (apportioned for the time in office). These 2021
ABP awards amount to less than one-time base salary,
yielding a payment in cash, with no portion deferred to
shares, in line with the Remuneration Policy.
LTIPs
The 2019 LTIP award, which vests in 2022, is 80%
based on growth (CAGR) in adjusted earnings per share
(EPS) in the period 2019 -2021, and 20% based on total
relative shareholder return (TSR) over the three years to
December 2021.
Largely due to automotive production volume shortfalls,
COVID-19 and supply chain issues, there was no growth in
adjusted EPS in the period so there was no vesting related
to this portion of the LTIP. Relative TSR performance in the
period was below the upper quartile resulting in 67% of this
element vesting. As a result, 13.4% of the award vested for
the Executive Directors and other members of the senior
management team.
Overall
The Committee carefully considered the extent to which
the overall remuneration outturn for Executive Directors,
taking the Salary Review, Annual Bonus Plan, and 2019 LTIP
outturns together, reflected the substantive performance
of the business and both the shareholder and employee
experience in the year. The Committee was satisfied that the
overall outcome was fair, appropriate, and proportionate, and
in line with the pay culture and approach at TI Fluid Systems.
Full details of the targets and performance against those
targets for both the Annual Bonus Plan and the 2019 LTIP
are set out on pages 105-107.
CEO retirement
During the year, the Committee has also considered the
remuneration arrangements for the outgoing CEO, Bill Kozyra.
It was decided he should be treated as a good leaver given
the planned and managed approach to succession to which
he proactively contributed and, in particular, the extensive
and constructive period of handover to Hans Dieltjens.
The terms of his departure, which were wholly in line with
his contract, approved at the time the business was floated,
include the non-time proration (but subject to performance
conditions) of his outstanding LTIP awards. The Committee
is aware that this is not acceptable under current practices
and this term was not replicated in the new CEO’s contract,
but the Committee felt that it was legally obliged to respect
the contractual term, conscious it had been approved by
shareholders at the time of the IPO.
Remuneration in 2022
As is detailed comprehensively above, the structure of
remuneration in 2022 has been revised to reflect the
concerns expressed by shareholders.
Annual Salary Reviews
Given the very significant supply-related issues that are
currently affecting the automotive industry, all salary
increases have been deferred until 1 April 2022. This
applies to everyone in the Company including the Chair,
Non-Executive Directors, Executive Directors, and the
Executive Committee. Any increases required by law or
contractually committed will be respected. The contractually
agreed reduction in salary discount for Hans Dieltjens was
applied on 1 January 2022. Salary/fee increases to be made
for the Directors, including the Chair, in 2022, are in line with
the wider workforce.
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Wider Workforce Matters
The pay culture in TI Fluid Systems emphasizes equity in
the performance-driven environment which is a prerequisite
to be successful in the industry in which it operates and to
meet the demands of the customers it serves. To manage
the potential tensions between equity and performance
and to establish organisational fairness, clear standards on
pay are established in each of the countries in which the
business operates. These standards, which are subject to
ongoing review by the Remuneration Committee as part
of its oversight of remuneration across the business, aims
to ensure that pay levels are fair, legal, and competitive in
the countries in which employees are based. This approach
helps ensures equity most effectively whilst allowing a
performance-driven environment to prosper. It also ensures
that rates of pay align with government mandates on low
pay. Furthermore the lowest wage rate paid in each country
is above the government published living wage or estimated
living wage where an official living wage is not available.
It reflects well on the senior executive management of the
business that there is both leadership from and commitment
to this approach from Hans Dieltjens, Ronald Hundzinski, and
the rest of the Executive Committee, who I know are keen to
see TI Fluid Systems develop in this area.
The Committee reviews remuneration outcomes, particularly
those for the significant proportion of people who participate
in variable pay plans linked to performance. These reviews
help ensure there is equity across the organisation in terms
of the level of opportunity as well as providing a framework
against which potential variable pay outturns for the senior
personnel, including those that are the Committee’s direct
responsibility, specifically Executive Directors, can be
assessed for equity.
During the year, the Committee has broadened and
deepened the nature of its review of pay across the
organisation, particularly with regard to discriminatory factors.
Whilst the Committee has seen no evidence of deliberate
or wilful discrimination, the Committee’s reviews have
established cases where further investigation is warranted to
properly understand underlying trends and potential causes
as well as to identify corresponding remedial actions as
necessary. This increased focus will continue into 2022, and
more details will be provided in the Remuneration Report
in 2023.
Overall, the Committee’s remuneration related decisions
have been taken in reflection of the wider workforce and the
Committee is satisfied that they are fair and equitable.
Statement by the chair of the remuneration committee
continued
Annual Bonus
The maximum opportunity for Hans Dieltjens and Ronald
Hundzinski will be at 300% and 250% of base respectively.
Performance will be assessed against three measures as
detailed below with, for all three measures, 30% of the
opportunity payable for threshold performance and 50%
for target.
– 50% of the opportunity is based on BEV/PHEV
bookings with targets set requiring outperformance
versus the market growth for BEV/PHEV platforms.
Appropriate processes and measures are in place to ensure
that the booked margins are in line with the strategic plan.
– 25% of the opportunity is based on Adjusted EBIT Margin
with targets based on the plan for the year, but set at a level
that requires significant year on year growth.
– 25% of the opportunity is based on Adjusted Free Cash
Flow with targets based on the plan for the year, but set at
a level that requires significant year on year growth.
In accordance with the Remuneration Policy, any payout to
the Executive Directors in excess of 100% of base salary
will be deferred in shares if shareholding guidelines have not
been met. If the guidelines have been met, no bonus will be
deferred in shares.
Executive Directors will be invited to participate and must
agree in writing to all the conditions pertaining to the Annual
Bonus Plan, including those relating to the post-cessation of
employment shareholding arrangements that will apply to any
bonus deferred in shares.
LTIPs
The maximum opportunity for Hans Dieltjens and Ronald
Hundzinski will be 300% of base. The outperformance
opportunity, which has historically been afforded to the
CEO has been removed. As explained earlier as a result of
the shareholder consultation, the structure of the 2021 LTIP
performance measures and conditions has been revised as
follows. For all three measures, 25% of the opportunity is
payable for threshold performance.
– 50% of the opportunity is based on growth in the three
year average Adjusted Return on Capital Employed with
performance assessed against the latest long-term plan for
the business, with targets set at a level requiring double
digit growth (CAGR) in adjusted EBIT over the period.
The definition of Adjusted Return on Capital Employed
(ROCE) is outlined on page 112.
– 25% of the opportunity is based on Sustainability
Performance split between Scope 1 and 2 CO2(e) emission
reduction from 2019 (15% of opportunity) and improvement
in relative ISS Social Score (10% of opportunity).
– 25% of the opportunity is based on relative TSR – in line
with market standards for this measure, the maximum
outturn will be achieved if TSR is in the upper quartile
compared with a high quality automotive peer group (versus
prior year’s comparison to the FTSE250) the composition of
which is provided on page 113.
These Awards will be made in the normal course following
the publication of the results and will be made subject to
Executive Directors agreeing in writing to all the conditions
under which awards are made, including the post-cessation
of employment shareholding arrangements that will apply to
these awards.
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Remuneration Adviser
During the year, we continued to work with Deloitte LLP
as our adviser on remuneration matters. The Committee
reviewed the performance of Deloitte during the year
and were satisfied with the support and advice provided,
particularly in assisting with the response to the
shareholder consultation.
Ongoing Engagement with Shareholders
Since assuming the role of Chair of the Remuneration
Committee, I have been keen to maintain a high level of
engagement with shareholders. As recorded above, we
consulted extensively with our major (non-Bain) shareholders
in response to the voting outturns on remuneration matters
at the AGM in May 2021.
It is my intention that this higher level of engagement
continues to maintain an ongoing and transparent dialogue
with our major shareholders. The inherent challenge with
such consultations is that shareholders have differing
opinions on specific aspects of remuneration, especially at
a time that executive remuneration has never been under
greater scrutiny. Nevertheless, all these opinions are valuable
and combined with the feedback from the proxy agencies, do
inform the Committee’s decision-making. Together with the
rest of the Committee, I seek to navigate a path that delivers
remuneration approaches that we are sure are right for the
business in the long-term and are recognised and supported
as such by a significant majority of our shareholders.
So, I am grateful to shareholders for contributing to these
consultations and trust they recognise our willingness to both
listen to and act on the views they express.
Committee Composition
Andrea Dunstan resigned as a director and Chair of the
Remuneration Committee at the AGM in May 2021 upon
which I succeeded her as Chair of the Committee.
There were no other changes to the Committee during the
year however, it was announced on 25 January 2022 that
Manfred Wennemer will be stepping down as Chairman of
the Board at the AGM in May 2022 and that I will replace him.
Additionally, on 6 December 2021, it was announced that
Jeff Vanneste intended to step down from the Board, and the
Committees on which he serves, including the Remuneration
Committee, at the AGM in May 2022 although he has
agreed to stand for re-election if requested by the Board in
order to provide the Company with additional time for an
orderly transition.
As a result of these changes, before the AGM in May 2022, a
new Chair of the Remuneration Committee and an additional
independent non-Executive director will be appointed to
the Committee.
Although this level of change is not ideal, I am confident that
once the changes have been made, the Committee will have
an improved experience base upon which to draw and be
even better placed to fulfil its duties.
Committee Performance
In accordance with good governance, the Committee
evaluated its performance during 2021. It is pleasing to report
that the Committee is regarded as operating effectively
and to a high level despite the challenging nature of the
Committee’s work this year. As is usual, we did identify some
opportunities for improvement which we will pursue during
2022. The Committee also reviewed its performance against
its Terms of Reference and concluded that it had fulfilled
them during the year and that the Terms remained applicable.
Tim Cobbold
Chair of the Remuneration Committee
14 March 2022
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Statement by the chair of the remuneration committee
continued
Implementation of remuneration policy
Remuneration in brief
The table below summarises the Director’s Remuneration Policy, the remuneration outcomes in respect to 2021, and the
implementation of the Policy for 2022.
Element and Overview of Policy
Outcomes in respect to 2021
Implementation for 2022
Base Salary
Set at a level that is market competitive
to attract and retain executives and
at a level that reflects an individual’s
experience, role, competency, and
performance.
A 5% increase in annual base pay, which
was in line with the range of increases
awarded to the US workforce, was
approved for the CFO and implemented
on 1 January 2021. No base pay increase
was awarded to the CEO during the year.
A 3% increase in annual base pay,
which was in line with the range of
increases awarded to the US workforce,
was approved for the CFO and will be
implemented on 1 April 2022.
The CEO will not receive an inflationary
salary increase and has volunteered that
his full salary of €809k will be reduced
by c.6% to €764k for 2022.
Hans Dieltjens was appointed as
CEO on 1 October 2021 with a base
pay of €809k. For 2021 Mr. Dieltjens
volunteered to reduce this by 11% to
€720k.
Annualised salaries for 2021 were
as follows:
Executive Director
William Kozyra
Hans Dieltjens
Ronald Hundzinski
€1 = $1.18
2021
€000
962
720
534
Increase
In Salary
Nil
Nil
5%
Benefits
Provide benefits packages in line with
practices relative to the Company’s
wider workforce and the Company’s
comparator group in the country in
which the Executive Director resides.
Access to health insurance, vehicle, and
perquisite allowance.
No change for 2022. Benefits remain in
line with the Remuneration Policy.
Pension
Normal matching defined contribution
retirement savings plan.
Total matching contribution up to the
401k tax deferral limit, resulting in
Company matching contributions in
respect to services as an Executive
Director as follows:
No substantial changes for 2022.
Pensions remain in line with the
Remuneration Policy and in line with
the wider workforce in the US, which
are below typical pension provisions
in Europe.
Executive Director
William Kozyra
Hans Dieltjens
Ronald Hundzinski
€1 = $1.18
Amount
€000
11
3
11
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Annual Report and Accounts 2021
Element and Overview of Policy
Outcomes in respect to 2021
Implementation for 2022
Annual Bonus Plan (ABP)
Annual incentive of up to 300% of
base pay based on financial and
strategic targets measured over a
one-year period.
Until shareholding guidelines are met,
the Committee may use its discretion
to pay up to the first 100% of salary in
cash, with any element above 100% of
salary deferred into ordinary shares and
subject to a holding period of two years.
Maximum opportunity for the CEO
and CFO of 300% and 250% of base
pay respectively.
Maximum opportunity for the CEO
and CFO of 300% and 250% of base
pay respectively.
Following the end of the financial
year, the Committee considered
management’s performance relative
to the measures and targets set
in the 2021 ABP. Despite industry
automotive build volumes, which were
far below expectations, management’s
performance achieved solid results,
particularly in regard to Adjusted EBIT
Margin, which was better than the prior
year and somewhat lower adjusted free
cash flow versus prior year, with similar
revenue levels.
Following this review, the Committee
determined that Executive Directors
would receive a 2021 ABP awards of
37.4% of maximum, with further details
outlining specific below and on pages
105-106:
Reflecting this transitional time in the
automotive industry, with its accelerated
shift to electric vehicle propulsion
systems, the strategic element of the
Company’s 2022 ABP has an increased
weight of 50% (up from 25% in the prior
year) while both Adjusted EBIT Margin
and Adjusted Free Cash Flow measures
are equally weighted at 25%.
The Company’s Strategic Initiative in
2022 relates to the achievement of new
business wins in customer BEV and
PHEV related platforms, which will set
the foundation for long-term success as
the automotive industry continues its
seismic transformation.
The table below summarizes the
measures and weightings of the
Company’s ABP in 2022:
Measure
Adj. EBIT Margin
Adj. Free Cash
Flow
Strategic Initiative
Total
Weight Achievement
12.4%
35%
40%
25%
100%
0%
25%
37.4%
Measure
Adj. EBIT Margin
Adj. Free Cash Flow
PHEV/BEV Bookings
Total
Weight
25%
25%
50%
100%
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continued
Element and Overview of Policy
Outcomes in respect to 2021
Implementation for 2022
Long Term Incentive Plan (LTIP)
Annual share award of up to 300%
of base pay. Vesting is subject to
performance conditions measured over
a three-year period; with an opportunity
to earn up to a further 33% of the
maximum award for outperformance
(up to 400% of base salary in total).
Awards are subject to a post-vesting
holding period of two years.
In 2021, a grant of conditional shares
was made to the Executive Directors
as follows:
In 2022, the Committee intends to make
conditional share grants of 300% of
salary for both the CEO and CFO.
Executive Director
William Kozyra
Hans Dieltjens
Ronald Hundzinski
Position % of Salary
CEO 300%(1)
CEO 300%(2)
300%
CFO
The current CEO, Mr. Dieltjens, has
voluntarily forfeited LTIP grants for
outperformance valued at 1x base
salary in an effort to recognise the
UK remuneration environment.
The performance conditions under the
2021 LTIP are as follows:
Performance measures for the 2022
LTIP are intended to be:
Measure
Adj. Free Cash Flow
Sustainability Performance (3)
Relative TSR Rank vs
FTSE250
Total
Weight
60%
20%
20%
100%
(1) The then CEO, Mr. Kozyra, was granted
an additional 1x base salary for significant
outperformance of the Adjusted Free Cash
Flow measure.
(2) Mr. Dieltjens’ annualised award of 300% of
salary was prorated in respect to his services
as CEO.
(3) Sustainability Performance will be measured
against relative improvement on Environmental
“E” and Social “S” scoring as measured by ISS
against a benchmark.
Measure
Adj. Return on Capital
Employed
Sustainability: ISS Social
Score (1)
Sustainability: CO2(e)
Emission improvement (2)
Relative TSR Rank vs
auto peers (3)
Total
Weight
50%
10%
15%
25%
100%
(1) Sustainability Social performance will be
measured against relative improvement on
Social “S” scoring as measured by ISS against
a benchmark.
(2) CO2 equivalent emission improvement will be
measured against 2019 levels.
(3) Relative TSR Rank will be measured against
automotive peers described on page 113.
Shareholder Guidelines
Executive Directors are required to build
up and hold a shareholding equal to
500% of base and 400% of base for the
CEO and CFO, respectively.
The following table outlines the
shareholding levels of Executive
Directors as of 31 December 2021:
Shareholding guidelines will
apply in accordance with the
Remuneration Policy.
Executive Director
William Kozyra
Hans Dieltjens
Ronald Hundzinski
Ownership
guideline as
a percent of
salary
Shares
owned as a
percent of
salary
500% 2,565%
479%
500%
341%
400%
The full Remuneration Policy, approved on 13 May 2021 at the 2021 Annual General Meeting, can be found in the 2020 Annual
Report on our website at www.tifluidsystems.com in the Investor Relations section, under Reports and Presentations.
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UK corporate governance code and shareholder consultation
During the review of the Remuneration Policy, the Remuneration Committee considered a wide range of factors, including the
views of guidance from UK proxy bodies and institutional shareholders and the provisions of the UK Corporate Governance
Code. The following table summarises how the Remuneration Policy and its operation addresses the factors set out in the UK
Corporate Governance.
Factor
Clarity
Simplicity
Risk
Predictability
Proportionality
Source of
consideration
Details
UK Corporate
Governance Code
The Remuneration Committee is mindful of operating a Remuneration Policy
that is transparent and clear for both shareholders and participants.
UK Corporate
Governance Code
We operate a standard UK incentive structure which is appropriately aligned
to our strategy and which has been designed to avoid complexity.
UK Corporate
Governance Code
Performance measures and targets are aligned with the Group’s strategy
with appropriate regard to the risk appetite of the Group. In addition, our
Policy has a number of features to mitigate excessive risk-taking, including
LTIP holding periods, recovery provisions, and significant shareholding
guidelines which extend post-departure.
UK Corporate
Governance Code
Our Remuneration Policy provides four illustrations of the application of the
Policy. Payments are directly aligned to the performance of the Group and
the Executive Directors.
UK Corporate
Governance Code
Targets under the ABP and LTIP reflect the Group’s strategic priorities
and have been set at an appropriate level so that full payout requires
exceptional performance.
Alignment to Culture
UK Corporate
Governance Code
The Remuneration Policy has been designed to support a high-performance
culture with an appropriate reward for superior performance.
In addition to considering the UK Governance Code the Committee, as outlined in the Chair’s letter, took into account
shareholder concerns and ideas in developing and explaining remuneration practices for 2022. These include the areas of
quantum, pay for performance and performance measures.
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continued
Annual report on remuneration
Directors remunerations (audited results) / single figure table
The table below sets out a single figure for the total remuneration received by each Executive and Non-Executive Director
(apportioned for time in office) for the year ended 31 December 2021 and the prior year:
Executive directors
€000s
Basic Salary (1)
Taxable Benefits
(1)(2)
Annual
Bonus (1)(3)
LTIP (1)(4)
Pension (1)
Other (1)(5)(6)
Total (1)
Fixed Pay (1)
Variable Pay (1)
2021 2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
William Kozyra (7)(9)
Hans Dieltjens (7)(9)
718 930
183
n/a
Ronald
Hundzinski (8)(9)
534 509
49
4
41
64
n/a
810 2,165
481
202
n/a
12
–
n/a
37
499
953
–
–
11
3
11
11
n/a
7
2
8
2,077
3,177
786 1,012
1,291 2,165
n/a
406
n/a
192
n/a
214
n/a
6
1,128
724
2,213
2,230
596
560
1,617 1,670
Non-executive directors
€000s
Fees (1)(10)
Taxable
Benefits
Annual
Bonus
LTIP
Pension
Other
Total (1)
Fixed Pay (1)
Variable Pay
2021 2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Manfred Wennemer
381 344
Tim Cobbold
John Smith
Jeffrey Vanneste
Elaine Sarsynski
Julia Baddeley (11)
Andrea Dunstan (12)
Stephen Thomas (13)
Susan Levine (13)
144
116
116
116
48
43
–
–
134
108
108
108
n/a
108
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
–
–
–
381
144
116
116
116
48
43
–
–
344
134
108
108
108
n/a
108
–
–
381
144
116
116
116
48
43
–
–
344
134
108
108
108
n/a
108
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
–
–
–
(1)
Figures in the table above are in respect to services for the time as an Executive Director or Non-Executive Director in 2021 and converted at the following
exchange rates: €1 = $1.18 and €1 = £0.86, except as otherwise noted
(2) Taxable benefits include perquisite allowance, car allowance, life insurance and tax assistance in accordance with the Remuneration Policy
(3) Hans Dieltjens’ total bonus in respect of 2021, including amounts in respect of his previous role, was less than 100% of his base salary. Therefore, in-line
(4)
(5)
with the Remuneration Policy the entire amount was paid in cash
The value of the LTIP for 2021, which had a three-year performance period ending 31 December 2021, is apportioned for W Kozyra and H Dieltjens for their
time as an Executive Director. The value is estimated as the number of shares earned (157,042 for W Kozyra and 3,908 for H Dieltjens) multiplied by an
assumed share price of £2.48, based on the average share price over the final quarter of the 2021 financial year. The value in the LTIP column for 2021 also
includes payment of dividend equivalents, also apportioned for W Kozyra (€28,231) and H Dieltjens (€703) for their time as an Executive Director. The values
in the LTIP column for 2021 will also be re-stated in next year’s Single Figure Table for the share price on 29 April 2022, as it will be known by that time
The value of medical coverage for 2021 in respect to services for the time as an Executive Director was €7k for CEO W Kozyra, €2k for CEO H Dieltjens,
and €10k for CFO R Hundzinski. The value of medical coverage for 2020 was €8k for both Executive Directors
(6) On joining the Group, in line with the Remuneration Policy, Ronald Hundzinski received buyout awards to compensate him for forfeited incentives awarded
to him by his former employer. A restricted share award of 815,674 company shares was granted on 27 March 2020 to compensate him for forfeited
restricted share awards. The award vests, subject to continued employment, in accordance with the original time frame: 361,635 shares on 27 March 2020,
361,635 shares on 5 February 2021 and 92,404 shares on 5 February 2022. The award which vested in 2021 (361,635) was valued on 5 February 2021 at
the closing share price of £2.658 with a face value of £961,226. The award which vested in 2020 (361,635) was valued on 17 March 2020 at the closing
share price of £1.366 with a face value of £493,993. The €724k under R Hundzinski in 2020 consists for €504k of buyout shares €212k of buyout cash
(7) As announced on 21 September 2021, Hans Dieltjens was appointed the Group’s new CFO effective 1 October 2021 succeeding William Kozyra
(8) As announced on 18 November 2019, Ronald Hundzinski was appointed the Group’s new CFO effective 6 January 2020
(9) The Company has advanced, and paid directly to HMRC, PAYE obligations of €55,150, €63,555 and €1,572 (€1 = £0.86) for Mr. Kozyra, Mr. Hundzinski &
Mr. Dieltjens which will be reimbursed to the Company by HMRC directly or by the Executive Director to the extent foreign tax credits used in their local tax
filings provide a benefit over and above their normal local tax obligations
(10) As part of the fixed cost savings initiatives implemented in response to COVID-19 the Non-Executive Directors fees in 2020 were temporarily reduced by
10% from May to September 2020 inclusive
(11) As announced on 4 August 2021, Julie Baddeley was appointed an Independent Non-Executive Director, joining the Company on 3 August 2021
(12) As announced on 11 March 2021, Andrea Dunstan resigned as an Independent Non-Executive Director at the AGM in May 2021
(13) Stephen Thomas and Susan Levine represent funds managed by Bain Capital, the Company’s largest shareholder, and are not remunerated and receive no
payment from the Company with respect to their qualifying services as Non-Executive Directors
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TI Fluid Systems plc
Annual Report and Accounts 2021
Compensation attributed to share price growth
The 2018 LTIP lapsed in full, while the 2019 LTIP vested at 13.4% of maximum. In calculating share price growth, the
average share price over the final quarter of the 2021 financial year (£2.48) was used. Using the average share price over
the final quarter of the 2021, it is estimated that the share price would have appreciated by approximately 29%. As a result,
approximately €131k of William Kozyra’s LTIP single figure would be attributable to share price appreciation and €3k of
Hans Dieltjens’ LTIP single figure would be attributable to share price appreciation.
Executive director remuneration detail
Base Salary (audited)
Base salaries are typically reviewed and eligible for adjustments once per year. Considering the extraordinary circumstances
in 2020, a base pay increase was provided to the wider workforce and CEO in December 2020 to cover performance in
2020 and 2021. The CFO, who began employment in January 2020 at a reduced salary compared to his predecessor, did
not participate in the December 2020 pay review but became eligible for pay review after his first year of service in January
2021. Considering his extraordinary performance during the year and consistent with the pay practice of the wider workforce
the CFO received a 5% increase on 1 January 2021, which is within the range of pay increases provided to other US
based employees.
Hans Dieltjens was appointed as CEO on 1 October 2021, at which time his base salary was set at €809k, which is 16% lower
than Mr. Kozyra, his predecessor. Considering the economic environment, Mr. Dieltjens agreed to discount his pay by 11%
(€720k annualised) in 2021 and by 5.7% (€764k) in 2022.
The table below outlines Executive Director annualised base salaries:
Executive Director
William Kozyra (retired 1 October 2021)
Hans Dieltjens (appointed CEO 1 October 2021)
Ronald Hundzinski
€1 = $1.18
2021
€000
962
809
Discounted to 720
534
2020
€000
962
N/A
508
Increase
In Salary
Nil
Nil
5%
Pension (audited)
Executive Directors have a nominal matching defined contribution retirement savings plan consistent with the retirement
savings plan offered to all staff employees in the United States. For 2021, the total matching contribution resulted in
contributions of €11,059 for Mr. Kozyra, CEO until 1 October 2021, €2,765 for Mr. Dieltjens appointed as CEO on 1 October
2021, and €11,059 for Mr. Hundzinski.
€1 = $1.18
Annual Bonus for 2021 Performance (audited)
Unfortunately, the COVID-19 pandemic persisted through 2021, negatively impacting automotive production volumes and
material and labour supply at the same time that government assistance programmes scaled back. The Company was
additionally challenged by customers modifying supply demands frequently causing misalignment with inventories and
production needs. Despite these challenges, management was able to increase Adjusted EBIT margin by 90 bps on a similar
level of revenue to the prior year. This positive achievement resulted in a 2021 ABP award of 37.4% of maximum. The table
below outlines the 2021 ABP measures and performance outcomes:
Measure
Adjusted EBIT Margin
Adjusted Free Cash Flow
Thermal Business Wins (2)
Total Achievement of Maximum
Weighting
35%
40%
25%
Threshold
30% of max
6.5%
€140M
€500M
Target
50% of max
8.5%
€155M
€650M
Maximum
100% of max
10.5%
€175M
€800M
Actual
Performance (1)
7.0%
€109M
€1.2B
Achievement
12.4%
0.0%
25.0%
37.4%
(1) Actual performance calculated using constant exchange rates consistent with exchange rates used in setting targets.
(2)
Thermal Business Wins measure was set to achieve automotive platforms contracts for thermal management components resulting in lifetime sales of
€500M, €650M and €800M at Threshold, Target, and Maximum, respectively.
The Company achieved €1.2bn of lifetime sales bookings (37% higher than prior year) related the thermal management
products such as coolant or heat pump components relevant to electric vehicle platforms which aligns with the Company’s
Take the Turn Strategy. This strong booking performance is key to the long-term success of the business.
105
TI Fluid Systems plc
Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Statement by the chair of the remuneration committee
continued
Considering the level of achievement of 2021 ABP performance measures, the follow table outlines the Executive
Directors 2021 ABP awards:
Executive Director
William Kozyra
Prorated to retirement date of 1 October 2021
Hans Dieltjens
Prorated to appointment date of 1 October 2021
Ronald Hundzinski
2021 Annual Bonus Awards
%
Achievement of
Maximum
Total Award
€000
Shareholding
Requirement
Met
Value paid in
Cash(1)
Value deferred
in Shares
37.4%
37.4%
37.4%
€810
€202
€499
Yes
No
No
€810
€202
€499
Nil
Nil
Nil
(1) The annual bonuses received by Hans Dieltjens and Ronald Hundzinski were less than 100% of salary and therefore, in-line with the Remuneration Policy,
the entire amount has been paid in cash
€1 = $1.18
LTIP Grants in 2021, awards granted during the year (audited)
The Remuneration Policy provides for Long-Term Conditional Share Grants of 300% of base salary, with the potential to
increase to 400% of base salary with outperformance.
In 2021, Mr. Kozyra received a maximum grant (with outperformance) of 400% of base salary, Mr. Dieltjens received a
maximum grant of 300% of base salary prorated on the date of his appointment to CEO, and Mr. Hundzinski (the CFO)
received a maximum grant of 300% of base salary. The following table sets out the performance conditions which will
be assessed over a three-year performance period (2021 to 2023):
Measure
Basic LTIP
Number of Conditional Share Units Granted
(% of base pay)
Weight
Threshold
Maximum
B. Kozyra
H. Dieltjens (1)
R. Hundzinski
Adjusted Cumulative Free
Cash Flow
60%
Sustainability Performance
20%
Relative TSR ranks vs
FTSE250
20%
€500M
Vests 20% of
Max
10%
Improvement
Vests 25% of
Max
50th
Percentile
Vests 25% of
Max
515,389
(180% of
base)
96,445
(180% of
base)
285,931
(180% of
base)
€620M
20%
Improvement
171,797
(60% of base)
32,148
(60% of base)
95,310
(60% of base)
75th
Percentile
171,797
(60% of base)
32,148
(60% of base)
95,310
(60% of base)
Outperformance Plan
Adjusted Cumulative Free
Cash Flow
Shares Awarded
Face Value at Grant (000)(2)
100%
N/A
€675M
286,327
(100% of
base)
1,145,310
€3,771
N/A
160,741
€529
N/A
476,551
€1,569
(1) Mr. Dieltjens’ award is prorated in respect to his time as CEO.
(2) The face value of each award is calculated using the closing share price (£2.8315) prior to the date of grant on 17 March 2021, which was also the
used to determine the number of shares awarded. (€1 = £0.86)
In line with the Remuneration Policy, vesting will occur on a straight-line basis from Threshold to Maximum, and a holding
period of two years will apply post vesting, subject to a two year hold maximum post-termination.
106
TI Fluid Systems plc
Annual Report and Accounts 2021
2019 LTIP Vesting (audited)
The Company’s 2019 plan concluded in 2021. Due to the general market dynamics related to COVID-19, supplier shortages,
and automotive industry production volumes, the Company’s growth targets set in 2019 were not achieved leading to zero
vesting on the 2019 EPS performance measure. The Company’s performance on their relative TSR measure was below the
upper quartile resulting in 67% of this element vesting. As a result, 13.4% of the award to the Executive Directors and other
members of the senior management team vested.
The table below outlines the details of the Company’s 2019 LTIP and vesting outcomes:
Measure
Basic LTIP
Adjusted basic EPS CAGR
Weight
Threshold
Maximum
Outcomes
80%
4%
Vests 20% of max
50th Percentile
10%
Relative TSR ranks vs FTSE250
20%
Vests 25% of max 75th Percentile
Outperformance Plan
Adjusted basic EPS CAGR
100%
Total
NA
12%
<0%
No vesting
64th Percentile
13.4% achieved
<0%
No vesting
13.4%
Payments to past Directors (audited)
As announced in February 2021, William Kozyra retired as CEO on 1 October after 13+ years with the Company. Mr. Kozyra’s
contract was in place when the business was floated in 2017.
– Mr. Kozyra received salary and benefits until the date of cessation and will receive tax assistance in respect of the 2020 and
2021 tax years.
– Following an orderly transition with his successor, Mr. Kozyra was treated as a ‘good leaver’ for the purposes of his
outstanding incentives. He remains eligible for a pro-rata annual bonus in respect of FY21, which will be paid at the
normal time. If Mr. Kozyra continues to meet his shareholding guideline his bonus will be delivered in cash, in line with the
Remuneration Policy. Mr. Kozyra’s outstanding deferred bonus awards will subsist and be released at the normal time.
The malus and clawback provisions in the Policy will continue to apply.
As disclosed in the approved Remuneration Policy, Mr. Kozyra’s employment agreement included a term whereby his
outstanding LTIP awards would not be subject to time proration on his retirement. Shareholders should note that this has
not been replicated in his successor’s contract, as the Committee is fully aware that it would not be acceptable under current
Remuneration practices. The Committee, recognising that the retiring CEO’s contract was established pre-IPO, took the
view it should honour contractual obligations for the prior CEO while not repeating this specific contractual term with his
successor. Therefore, the outstanding LTIP awards for Mr. Kozyra will subsist to their normal dates subject to the achievement
of performance conditions but without being prorated for time. Mr. Kozyra’s LTIP awards will be subject to a two-year holding
period, and all vested shares will be released on the earlier of the end of the holding period or the second anniversary of
departure, in line with the post-employment shareholding guidelines.
As a continuation of the transition of leadership from Mr. Kozyra to Mr. Dieltjens, the former CEO was engaged as an advisor
during the last quarter of the year on a day rate basis with fees totaling €78,898 (€1 = $1.18).
Payments for loss of office
During the year, the Company has not made any payments to past Directors for loss of office.
107
TI Fluid Systems plc
Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Statement by the chair of the remuneration committee
continued
Statement of Directors’ shareholdings and share interests (audited)
Interests of the Executive and Non-Executive Directors in the share capital of the Company as of 31 December 2021 are
shown in the table below:
Current
Shareholding
(1)
Beneficially
Owned
Deferred
shares not
subject to
performance
conditions
LTIP interests
subject to
performance
conditions
Options
vested but not
exercised
Shareholding
requirements
as a % of base
salary
Shareholding
Requirement
met? (2)
Options
Unvested
Executive
Directors
William Kozyra
Hans Dieltjens
Ronald
Hundzinski (3)
Non–Executive
Directors
Manfred
Wennemer
Tim Cobbold
John Smith
Jeffrey
Vanneste
Elaine
Sarsynski
Julia Baddeley
Andrea
Dunstan
Stephen
Thomas (4)
Susan
Levine (4)
7,684,327
1,075,083
7,029,622
1,075,083
654,705
–
4,977,955
1,436,131
567,205
384,780
182,425
1,319,812
190,785
–
100,493
190,785
–
100,493
58,887
58,887
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500%
500%
400%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Yes
No
No
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
(1) No share movement between year end and the date of publication, except the vesting of 92,404 deferred shares on 5 February 2022 relating to the buyout
award of R Hundzinski as set out in footnote (3) below
(2) Shareholding requirement measured by multiplying the current shareholding amount on 31 December by the average closing share price over the calendar
year, then dividing by the annualised base salary on 31 December. There was no change in Mr. Kozyra’s shareholding between the date of his departure and
the end of the year
(3) On joining the Group, in line with the Remuneration Policy, Ronald Hundzinski received buyout awards to compensate him for forfeited incentives awarded
to him by his former employer. A restricted share award of 815,674 company shares was granted on 27 March 2020 to compensate him for forfeited
restricted share awards. The award vests, subject to continued employment, in accordance with the original time frame: 361,635 shares on 27 March 2020,
361,635 shares on 5 February 2021 and 92,404 shares on 5 February 2022
(4) Stephen Thomas and Susan Levine represent funds managed by Bain Capital, the Company’s largest shareholder, and are not remunerated and receive no
payment from the Company with respect to their qualifying services as Non-Executive Directors
108
TI Fluid Systems plc
Annual Report and Accounts 2021
Total Shareholder Return
The chart shows the Company’s Total Shareholder Return (‘TSR’) relative to the FTSE 250 Index as well as a set of
automotive peers. The FTSE 250 Index was chosen as we are a constituent of the FTSE 250. In addition, we have shown
the performance for the following set of automotive peers to provide a relevant sector comparison.
Adient plc
American Axle & Manufacturing Holdings, Inc.
Autoliv Inc.
BorgWarner Inc.
Brembo S.p.A.
Continental AG
Cooper-Standard Holdings Inc.
Dana Incorporated
ElringKlinger AG
Lear Corporation
NORMA Group SE
Schaeffler AG
Tenneco Inc.
Valeo SA
The chart shows the total return to investors since the Company listed on the London Stock Exchange on 25 October 2017.
140
120
100
80
60
40
20
0
25 October
2017
31 December
2017
31 December
2018
31 December
2019
31 December
2020
31 December
2021
TI Fluid Systems
FTSE 250
Auto peers
Historical CEO payouts
The following table sets out details of the CEO’s single figure and incentive payouts for the last five financial years
(apportioned for time in office):
Year
2021
2021
2020
2019
2018
2017
CEO
Hans Dieltjens
William Kozyra
William Kozyra
William Kozyra
William Kozyra
William Kozyra
CEO single figure of
total remuneration
€000
406
2,077
3,177
2,637
2,578
8,117
Annual bonus
award
(% of maximum)
37.4%
37.4%
75%
60%
60%
Not applicable
Long Term
Incentive vesting
(% of maximum)
13.4%
13.4%
0%
0%
0%
Not applicable
See notes under single figure table.
Mr. Kozyra was CEO until 1 October 2021 at which time Hans Dieltjens became CEO.
109
TI Fluid Systems plc
Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Statement by the chair of the remuneration committee
continued
Pay ratio data
The following table sets out pay ratio data in respect of the CEO’s total remuneration compared to the 25th percentile, median
and 75th percentile of UK employees.
Year
2021
2020
2019
Method
Option A
Option A
Option A
Employee
Chief Executive Officer
UK Employee at 25th Percentile
UK Employee at Median
UK Employee at 75th percentile
25th Percentile pay ratio
95:1
145:1
93:1
Median pay ratio
69:1
84:1
77:1
75th percentile pay ratio
40:1
54:1
47:1
2021 Single Figure
Remuneration
€000
2,483
26
36
62
Salary component
€000
901
18
35
58
The CEO’s figures have been calculated as William Kozyra’s remuneration for the period he served as CEO to 1 October 2021 and Hans Dieltjens’ remuneration
for the period from 1 October 2021 through 31 December 2021.
Supporting information for reporting
The Regulations provide flexibility to adopt one of three methods of calculation and we have chosen Option A to calculate
the CEO Pay Ratio as it is the most statistically accurate manner to calculate the ratios and the recommended approach.
Employees included in the pay ratio calculation were active employees on 31 December 2021. The total pay and benefits of
employees identified at the 25th, 50th, and 75th percentiles were used to calculate the pay ratios to be consistent with the
calculation of the CEO’s remuneration for the purposes of the Single Total Figure of Remuneration (‘STFR’), found on
page 104. Total pay and benefits for the UK comparison employees include base salary, bonus, pension benefits, taxable
benefits, and any share-based remuneration. Total pay and benefits were annualised to convert to full-time equivalent
employee pay and benefits.
Factors influencing our CEO pay ratio
Our CEO pay ratio data compares the CEO’s remuneration to selected UK employees, as required by the regulations. Our
UK workforce represents approximately 1% of our total employee population and is largely made up of production-related
employees in the manufacturing industry. These employees have different eligibility to variable incentives than our
US-based CEO. Taking this into account, the Committee considers that the CEO pay ratios are appropriately aligned with our
remuneration principles and are consistent with the relative roles and responsibilities. A significant proportion of the CEO’s
remuneration is delivered in variable pay in line with our remuneration structure supporting our high-performance culture
with an appropriate reward for superior performance. As a result, the pay ratios are likely to fluctuate in line with performance
depending on the outcome of incentive plans each year.
The pay ratios for 2021 were lower than 2020 mainly reflecting the lower outcome (37.4% of maximum) on the CEOs’
bonuses for 2021, in addition to the reduced overall quantum of pay for the new CEO. The pay ratios for 2020 increased
compared to 2019 primarily reflecting that the CEO received an annual bonus (75% of maximum) in respect of performance
for 2020.
While the Company complies with all UK remuneration structure standards, we believe it is difficult to deduce relevant
comparative information from this pay ratio calculation, as we compare a US-based CEO against UK-based employees as
required by the Companies Act 2006.
110
TI Fluid Systems plc
Annual Report and Accounts 2021
Percentage change in the remuneration of the Directors compared with employees
2020 to 2021
Avg.
Employee
(1)
William
Kozyra (2)
Hans
Dieltjens (2)
Ronald
Hundzinski
(3)
Manfred
Wennemer
Tim
Cobbold
John
Smith
Jeffrey
Vanneste
Elaine
Sarsynski
Julie
Baddeley
Andrea
Dunstan
Stephen
Thomas (4)
Susan
Levine (4)
Salary/Fees (5)
4.0%
–
Bonus (6)
Benefits (7)
–62.6% -50.1%
–
-1.0%
n/a
n/a
n/a
5.0%
3.0%
–47.6%
10.7%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
n/a
n/a
n/a
–
–
–
–
–
–
–
–
–
2019 to 2020
Avg.
Employee
(1)
William
Kozyra (2)
Hans
Dieltjens (2)
Ronald
Hundzinski
(3)
Manfred
Wennemer
Tim
Cobbold
John
Smith
Jeffrey
Vanneste
Elaine
Sarsynski
Julie
Baddeley
Andrea
Dunstan
Stephen
Thomas (4)
Susan
Levine (4)
Salary/Fees (5)
5.2%
5.0%
Bonus (6)
Benefits (7)
66.7% 31.3%
–
22.1%
n/a
n/a
n/a
n/a
n/a
n/a
–4.2% –4.2% –4.2% –4.2% –4.2%
–
–
–
–
–
–
–
–
–
–
n/a
n/a
n/a
–4.2%
–
–
–
–
–
–
–
–
(1) Theoretical assumptions for ‘average employee’ were made as there are no employees of the PLC entity for comparison purposes
(2) As announced on 21 September 2021, Hans Dieltjens was appointed the Group’s new CFO effective 1 October 2021 succeeding William Kozyra
(3) As announced on 18 November 2019, Ronald Hundzinski was appointed the Group’s new CFO effective 6 January 2020
(4)
Stephen Thomas and Susan Levine represent funds managed by Bain Capital, the Company’s largest shareholder, and are not remunerated and receive no
payment from the Company with respect to their qualifying services as Non-Executive Directors
(5) The percentage change calculation is based on annualised Salary/Fees
(6) The percentage change in the average employee’s bonus has been calculated based on the change in the average payout as a percentage of maximum
(7)
for each year. Note that the figure for 2019 to 2020 disclosed last year was calculated using an alternative approach and has been updated for consistency
The percentage change calculation is based on annualised Benefits with year-on-year change for 2019 to 2020 resulting primarily from Mr. Kozyra not
utilising the tax return support benefit in 2019
As there are no employees in the Parent PLC entity to be used as the ‘average employee’ for comparison, our voluntary
disclosure is based on the following assumptions. Base salary comparator group is all employees globally. Annual bonus
comparator group is all ABP eligible employees. The percentage change in annual bonus is based on the best available
estimates at the time of publication. During 2021, the Company engaged with employees through all employee meetings and
engagement surveys during which employees were able to comment and provide feedback on our approach pay practices.
Furthermore, at local levels ongoing discussions are held with representatives of employees (i.e. Works Councils and Unions)
on a variety of matters including pay.
Relative importance of spend on pay
The table below sets out the relative importance of spend on pay in the 2021 and 2020 financial periods. All figures provided
are taken from the relevant Company’s accounts.
Profit distribution by way of dividend
Overall spend on pay including Executive Directors
Disbursements from profits in financial
year €M
2021
45.0
734.9
2020
0.0
709.7
% change from the
prior year
–
3.6%
111
TI Fluid Systems plc
Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Statement by the chair of the remuneration committee
continued
Implementation of remuneration policy for executive directors in 2022
The following section summarises how remuneration arrangements will be operated from 1 January 2022 onwards.
Base salary
As outlined earlier in this report, the Company has elected to provide a general base pay increase in April 2022 for the wider
workforce and executive directors. Ronald Hundzinski will receive a 3% base pay increase commensurate with performance
and in line with the range of pay increases for the US workforce. For 2022, Hans Dieltjens has volunteered that his salary will
be set at €764k which represents a 5.7% discount relative to his full salary.
The table below sets out the annualised base salary of the Chief Executive Officer and Chief Financial Officer in 2022 and the
comparison with the annual salary received in 2021.
Executive Director
Hans Dieltjens
Ronald Hundzinski
€1 = $1.18
2022
000
€809
Discounted by
5.7% to €764
€550
2021
000
€809
Discounted by
11.0% to €720
€534
Increase in base
salary
Nil
3.0%
Benefits and pension
No changes in benefit and pension schemes. Please refer to the Remuneration Policy for details.
Annual bonus plan (‘ABP’)
The maximum opportunity for the year ending 31 December 2022 for the CEO and CFO will be 300% and 250% of salary,
respectively.
Consistent with the new Remuneration Policy, if the Executive Director has not achieved the shareholding guideline, any
awards under the ABP will consist of a cash payment of up to 100% of base salary with the remainder of the bonus (if any)
deferred into an award of shares to be held for two years which will also be subject to malus and clawback provisions as
detailed in the Policy.
The Remuneration Committee has revised the performance measures to be used in the 2022 ABP to align them more closely
with the strategy and expectations of shareholders:
– 50% of the opportunity will be based on the BEV/PHEV bookings in line with the Company’s Take the Turn Strategy.
This has been increased by 25% points from 2021 to reflect their strategic importance. Specific targets will not be disclosed
because the Remuneration Committee considers forward-looking targets to be commercially sensitive. However, the
Committee intends to disclose these retrospectively in next year’s Remuneration report to the extent that they do not remain
commercially sensitive.
– The remaining 50% will be split equally between Adjusted EBIT margin and Adjusted Free Cash Flow reflecting the
importance of maximising current performance and managing profitability and cash through the period of transition.
Long-Term Incentive Plan (‘LTIP’)
It is intended that the Executive Directors will receive an LTIP grant in 2022 of 300% of salary. As mentioned previously
in this report the Remuneration Committee and CEO have reviewed the operation of the Remuneration Policy and agreed
that the outperformance element available under the policy will not be applied in 2021 and for the foreseeable future of
Mr. Dieltjens tenure as CEO. This compromise, on the part of Mr. Dieltjens, was made in effort to recognise shareholders
concerns over incentive quantum.
50% will be based on Adjusted Return on Capital Employed (ROCE), replacing Adjusted Free Cash Flow. This measure was
selected as management of returns on capital, through the industry transition to electric vehicles, is seen as critical to a
successful deployment of the strategy. It complements the significant proportion of the annual bonus aligned to BEV/PHEV
bookings by rewarding an ongoing, long-term attention to margin through the transition and beyond.
ROCE shall be calculated by averaging, over the performance period, Income divided by Investments for each year of the
performance period, where Income is defined as adjusted Earnings Before Interest and Taxes and Investment is defined
as invested capital (including goodwill) adjusted down for purchase price allocation (PPA). Investment does not include
borrowings and debt like items net of cash, derivatives, tax assets/liabilities. The Committee will determine to what extent any
acquisitions not contemplated when setting the target should be included in the calculation.
25% will be based on relative TSR. For 2022 the Remuneration Committee has determined that TSR will be measured against
a set of automotive peers whose performance is subject to the same economic factors as TI Fluid Systems. These peers have
been defined as:
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TI Fluid Systems plc
Annual Report and Accounts 2021
Adient plc
American Axle & Manufacturing Holdings, Inc.
Autoliv Inc.
BorgWarner Inc.
Brembo S.p.A.
Continental AG
Cooper-Standard Holdings Inc.
Dana Incorporated
ElringKlinger AG
Lear Corporation
NORMA Group SE
Schaeffler AG
Tenneco Inc.
Valeo SA
The remaining 25% (up 5% points) will be based on two sustainability measures. 15% will be based on Scope 1 and 2
CO2(e) emissions reduction from 2019 baseline expressed quantitatively and 10% based on the Company’s relative Social
Quality Score by ISS.
The following table sets out the performance measures applicable to grants:
Measure
Adj. Return on Capital Employed
Sustainability: ISS Social Score (1)
Sustainability: CO2 Emission improvement (2)
Relative TSR Rank vs auto peers (3)
Total
Threshold
Vests at 25%
of Max
16%
4
6.5
Maximum
Vests at 100%
of Max
20%
2
9.5
Median Upper Quartile
Weight
50%
10%
15%
25%
100%
(1) Social performance will be measured against relative improvement on Social “S” performance as measured by ISS against a benchmark
(2) CO2 equivalent emission improvement will be measured against 2019 levels
(3) Relative TSR Rank will be measured against automotive peers described above
All measures are assessed over a three-year performance period (2022 to 2024).
Implementation of non-executive director remuneration policy in 2022
Chairman and Non-Executive Director fees
Consistent with the wider workforce in the UK, non-executive directors fee arrangements will increase by 3% in April 2022.
The Company operates an all-inclusive non-executive director fee which includes any additional fees for responsibilities
on committees. The table below outlines non-executive fees for 2022 and 2021, with the expectation that directors will
participate in various committees.
Executive Director
Chairman
Senior Independent Director (SID)
Non-Executive Director (NED)
2022
000
£338
£128
£103
2021
000
£328
£124
£100
Remuneration Committee
Membership: The Remuneration Committee consists of three Non-Executive Directors: Tim Cobbold, John Smith, and Jeffrey
Vanneste. There were 5 formal meetings of the Committee during the year.
The Board considers each Committee member to be independent in accordance with the UK Corporate Governance Code
(the ‘Code’). The Chairman of the Board, Chief Executive and/or other persons may also attend meetings of the Committee by
invitation but will not be present when matters relating to their own remuneration are discussed.
Role of the Remuneration Committee
The Remuneration Committee’s responsibilities are set out in its Terms of Reference which are available to shareholders on
request and on the Company’s website. Its role includes:
– setting the Remuneration Policy for all Executive Directors of the Company, the Chairman of the Board and
senior management
– within the terms of the Remuneration Policy and in consultation with the Chairman of the Board and/or Chief Executive
Officer, as appropriate, determine the total individual remuneration package of each Executive Director and the Chairman
including bonuses, incentive payments, and share options or other share awards
– approve the design of, and determine targets for, the ABP and LTIP and approve total annual payments made under
such schemes
– ensure that contractual terms on termination, and any payments made, are fair to the individual and Company, that failure is
not rewarded, and that the duty to mitigate loss is fully recognised
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Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Statement by the chair of the remuneration committee
continued
In carrying out its duties, the Remuneration Committee considers any legal and regulatory requirements, including the UK
Corporate Governance Code and the UK Listing Rules. Determining the fees of the Non-Executive Directors is a matter for the
Executive Directors and the Chairman.
Advisers to the Committee
The Committee receives advice and guidance on Executive Directors’ remuneration from the Chief Human Resources &
Communications Officer and the Company Secretary in respect of the UK Corporate Governance Code and share schemes.
The Company Secretary acts as Secretary to the Committee and ensures that the Remuneration Committee fulfils its
duties under its terms of reference and provides regular updates to the Remuneration Committee on relevant regulatory
developments in the UK.
Following a competitive tender process in 2018, the Committee appointed Deloitte LLP as its independent advisers.
Deloitte is a founding member of the Remuneration Consultants Group and operates under the code of conduct in relation to
executive remuneration consulting in the UK. The Committee is satisfied that the advice received from Deloitte is objective
and independent.
Total fees for the year in relation to executive remuneration consulting were £57,808, based on time and materials. In the year,
Deloitte also provided advice in relation to share schemes and employment taxes.
Statement of shareholder voting
The voting outcomes in respect of the Directors’ Remuneration report at the 2021 AGM and the Directors’ Remuneration
Policy at the 2021 AGM were as follows:
Resolution
Directors Remuneration Report
(2021 AGM)
Directors Remuneration Policy
(2021 AGM)
Votes For
% For
Votes Against
% Against
Total Votes Cast
Votes withheld
372,715,911
76.18% 116,565,413
23.82% 489,281,324
368,648,750
75.34% 120,632,574
24.66% 489,281,324
1,625
1,625
Approval
This report was approved by the Board of Directors, on the recommendation of the Remuneration Committee, on 1 March
2022 and signed on its behalf by:
Tim Cobbold
Chair of the Remuneration Committee
14 March 2022
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TI Fluid Systems plc
Annual Report and Accounts 2021
Dear Shareholder,
On behalf of the Board, I am pleased to present the first ESG
Steering Committee report for the year ended 31 December
2021. The Committee was established to support the Board
to fulfil their oversight responsibilities for Environmental,
Social and Governance (“ESG”) matters. The Terms of
Reference are available on our website.
As a leader in the automotive industry, we recognise the part
the Group plays in the global community.
We are committed to operating our business in a more
environmentally responsible and sustainable manner in order
to provide long-term success for all of our stakeholders.
We are focused on the enhanced measurement and reporting
of our carbon footprint, including Scope 3, and establishing
appropriate CO2 (e) emissions reduction and water
conservation targets. We are also instituting more robust
safety procedures to protect our workforce and developing
initiatives to promote further diversity within our organisation.
Environmental and Social performance is now a part of the
wider management team’s strategic objectives for 2022 and
beyond. sustainability targets have also been included as a
performance element of our Long-Term Incentive Plan for
Executive Directors and Senior Management. The alignment
of our purpose and strategy using our remuneration will
ensure we will continue to develop and supply products
to support hybrid and battery electric vehicles in the most
sustainable way. Hans Dieltjens and Ron Hundzinski are
members of the Committee and colleagues from different
areas of the business attend the meetings and support
the discussions. I regularly report to the Board on key
sustainability issues considered by the Committee, and
Matt Paroly, Chief Legal Officer, has been appointed as
the Group’s ESG Director to act as a liaison between the
Committee, Senior Management and the wider workforce.
We are very pleased with the Company’s work this year to
build a more sustainable business. We will continue to review
measures and targets to gauge our progress and ensure
accountability at all levels of our organisation.
I look forward to updating you on our continuing
sustainability journey.
Elaine Sarsynski
ESG Steering Committee Chair
14 March 2022
ESG Steering Committee report
Elaine Sarsynski,
ESG Steering Committee Chair
ESG Steering Committee at a glance
Committee membership
Elaine Sarsynski (Chair)
Julie Baddeley
Hans Dieltjens
William Kozyra
Ronald Hundzinski
Meetings
attended
4/4
1/1
1/1
3/3
4/4
2021 highlights
– Agreed on Terms of Reference to provide oversight of
the Group’s sustainability strategy
– Populated and launched sustainability pages on
our website
– Supported enhanced public reporting via CDP
– Reviewed sustainability metrics for 2022 LTIP awards
– Updated Health and Safety and Environmental policies
– Progressed data collection for water, energy
and waste
Focus for 2022
– Explore increased renewable energy options
– Address measurement of Scope 3 greenhouse
gas emissions
– Evaluate sustainability strategies of peer group
companies to help inform our thinking
– Review CO2 (e) emissions reduction targets and
benchmark to our automotive peers
Read more in Our Approach to sustainability
on pages 36-47
115
TI Fluid Systems plc
Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Directors’ Report
Matthew Paroly
Company Secretary
The Directors present their Annual Report and the
audited financial statements for the Group for the
year ended 31 December 2021. The Directors’ report
comprises pages 116-118 and the sections of the
Annual Report incorporated by reference as set out
below, which taken together contain the information
to be included in the Annual Report, where applicable,
under Listing Rule 9.8.4.
Future developments of our business and
the Group (Our strategy)
Section 172(1) statement
Non-Financial Information statement
Corporate Governance report
Board membership
Directors’ long-term incentives
Issued Share Capital
Dividends
Employee equality, diversity and
involvement
Information to the independent auditor
Post balance sheet events
Subsidiaries
Pages
26-27
32-35
63
70-119
76-77
106
108
116
118
118
194
199-203
116
TI Fluid Systems plc
Annual Report and Accounts 2021
General information
The Company was incorporated and registered in England
and Wales on 22 January 2015 as a limited company with
the name Omega Holdco II Limited and with registered
number 09402231. It is domiciled in England and Wales.
On 27 September 2016, the Company changed its name to TI
Fluid Systems Limited and on 18 October 2017 the Company
was re-registered as a public company limited by shares with
the name TI Fluid Systems plc. The Company is premium
listed on the London Stock Exchange (TIFS). The Company’s
registered address is 4650 Kingsgate, Oxford Business Park
South, Cascade Way, Oxford OX4 2SU.
Subsidiaries
The Company’s subsidiary undertakings, including its operating
and non-operating subsidiaries, are listed on pages 199-203.
Articles of Association
The Company’s Articles of Association are available on
request to the Company Secretary at the registered address.
Unless expressly specified to the contrary in the Articles,
the Articles may be amended by a special resolution of the
Company’s shareholders.
Issued share capital
On 31 December 2021, the Company had 520,269,141
ordinary shares of 1 pence each in issue. There were no
ordinary shares held in Treasury, no restrictions on transfer of
issued shares and no shares hold special rights regarding the
control of the company. All of the issued ordinary shares carry
voting rights of one vote per share. Details of the changes in
issued share capital during the year are shown in Note 7 on
page 204.
Voting
Subject to any special terms as to voting upon which any
shares may be issued or may for the time being be held
and to any other provisions of the Articles of Association
of the Company (‘the Articles’), on a show of hands every
member who is present in person or by proxy or represented
by a corporate representative at a general meeting of the
Company has one vote. On a poll, every member who is
present in person or by proxy or represented by a corporate
representative has one vote for every share of which he or
she is the holder. In the case of joint holders of a share the
vote of the senior who tenders a vote, whether in person
or by proxy, is accepted to the exclusion of the votes of
the other joint holders and, for this purpose, seniority is
determined by the order in which the names stand in the
register in respect of the joint holding.
Results and dividends
The results for the year are set out in the consolidated
statement of comprehensive income on page 131.
Two dividends were paid in 2021 totalling 8.67 Euro cents
per share. The Group paid a dividend of 6.74 Euro cents
per share, amounting to €35.0 million, on 19 February 2021
based on the overall strength of the Group’s financial position
and prospects at that time. The 2021 interim dividend of 1.93
Euro cents per ordinary share (1.66 pence per ordinary share),
was paid on 30 September 2021 amounting to €10.0 million.
Employee Benefit Trust
Equiniti Trust (Jersey) Limited, as a Trustee of the TI Fluid
Systems Employee Benefit Trust holds 3,931,173 being
0.76% of the issued share capital of the Company at
31 December 2021 on trust for the benefit of the employees
of the Company. The voting rights in relation to these shares
are exercised by the Trustee and the Trustee is obliged to
waive all dividends on the shares unless requested to do
otherwise by the Company in writing.
Directors and Directors’ interests
The Directors who served the Company during 2021 and
at the date of this report are listed on pages 76-77, which
include brief biographical details. Their remuneration and
interests in the share capital of the Company are set out in
the Report on Directors’ Remuneration on page 104.
Directors’ indemnity
The Company’s Articles of Association provide, subject to
the provision of UK legislation, an indemnity for Directors
and officers of the Company and the Group in respect of
liabilities they may incur in the discharge of their duties or in
the exercise of their powers, including any liability relating to
the defence of any proceedings brought against them which
relate to anything done or omitted, or alleged to have been
done or omitted, by them as officers or employees of the
Company and the Group.
The Company has adopted best practice guidelines and
the 2018 UK Corporate Governance Code. Executive and
Non-Executive Directors, apart from Manfred Wennemer and
Jeff Vanneste who have decided to not seek re-election, will
offer themselves for re-election at the 2022 Annual General
Meeting. The rules for appointment and replacement of
Directors are contained in the Company’s Articles. They include
that the number of Directors must not be less than two or
more than 15 in number and the Board may appoint any person
to be a Director. Any Director so appointed by the Board shall
hold office only until the next general meeting and shall then
be eligible for election. Details of the Directors’ interest in the
shares of the Company are shown in the Report on Directors’
Remuneration on pages 108.
Substantial shareholdings
At 31 December 2021, the following interests in 3% or more
of the Company’s ordinary share capital had been notified to
the Company:
Shareholder
Number of
shares
Percentage
held (%)
BC Omega Holdco Ltd
Liontrust Asset Management
EQMC Europe Development
Capital Fund
191,064,632
42,206,820
36.72
8.11
25,129,204
4.83
At 14 March 2022, the following interests in 3% or more of
the Company’s ordinary share capital had been notified to
the Company:
Shareholder
Number of
shares
Percentage
held (%)
BC Omega Holdco Ltd
Liontrust Asset Management
EQMC Europe Development
Capital Fund
191,064,632
42,206,820
36.72
8.11
25,129,204
4.83
Change of Control
The Company has in place a number of agreements with
advisers, financial institutions and customers which contain
certain termination rights which would have an effect on a
change of control. The Directors believe these agreements to
be commercially sensitive and that their disclosure would be
seriously prejudicial to the Company; accordingly, they do not
intend to disclose specific details of these. In addition, all of
the Company’s share schemes contain provisions which, in
the event of a change of control, would result in outstanding
options and awards becoming exercisable, subject to the
rules of the relevant schemes. There are no agreements
between the Company and its Directors or employees
providing for compensation for loss of office or employment
that occurs because of a takeover bid.
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TI Fluid Systems plc
Annual Report and Accounts 2021
Directors’ and officers’ liability insurance cover is in place in
respect of all the Company’s Directors.
Directors’ powers
As set out in the Company’s Articles of Association, the
business of the Company is managed by the Board who
may exercise all powers of the Company. The Directors
were granted authority at the last Annual General Meeting
held in 2021 to allot relevant securities up to a nominal
amount of £1,734,230. At this year’s Annual General
Meeting, shareholders will be asked to grant an authority
to allot relevant securities up to the same nominal amount
of £1,734,230, such authority to apply until the end of next
year’s Annual General Meeting (or, if earlier, until the close of
business on 16 August 2023).
Special resolutions will also be proposed to renew the
Directors’ power to make non-pre-emptive issues for
cash up to a nominal amount of £260,135 being 5% of the
Company’s issued ordinary share capital at 4 April 2022.
This authorisation will expire on the earlier of the conclusion
of the Annual General Meeting of the Company for 2022
(or, if earlier, until the close of business on 16 August 2023).
This disapplication authority is in line with institutional
shareholder guidance, and in particular with the Pre-emption
Group’s Statement of Principles (the ‘Pre-emption
Principles’). The Pre-emption Principles were revised in 2015
to allow the authority for an issue of shares otherwise than
in connection with a pre-emptive offer to be increased from
5% to 10% of the Company’s issued ordinary share capital,
provided that the Company confirms that it intends to use the
additional 5% authority only in connection with an acquisition
or specified capital investment. The Directors have no
present intention of exercising either authority.
The Company was also authorised at the Annual General
Meeting held in 2021 to make market purchases of up to
52,026,914 ordinary shares being 10% of the Company’s
issued ordinary share capital at 5 April 2021 and sets
the minimum and maximum prices which may be paid.
This authorisation will expire on the earlier of the conclusion
of the Annual General Meeting of the Company for 2022 (or,
if earlier, until the close of business on 16 August 2023).
Our people
The Group’s policy is to consider all job applications on a
fair basis free from discrimination in relation to age, sex,
race, ethnicity, religion, sexual orientation or disability not
related to job performance. Every consideration is given to
applications for employment from disabled persons, where
the requirements of the job may be adequately covered
by a disabled person. Where existing employees become
disabled, it is the Group’s policy wherever practicable to
provide continuing employment under normal terms and
conditions and to provide training and career development
wherever appropriate.
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Directors’ Report
continued
The Group places considerable value on the involvement of
its employees and encourages the development of employee
involvement in each of its operating companies through
formal and informal meetings. It is the Group’s policy to
ensure that all employees are made aware of significant
matters affecting the performance of the Group through the
operation of employee forums, information bulletins, informal
meetings, team briefings, internal newsletters and the
Group’s website and intranet.
Diversity
Details of diversity can be found in the Nomination
Committee report on pages 84-85 in terms of the Board
and senior leadership team balance and their independence.
Employee diversity information and our Core Values details
are in the Our Approach to sustainability report on
pages 36-47.
Suppliers, Customer and Others
As set out in the Large Company Regulations, Schedule
7, Part 4, paragraph 11B, the Directors confirm that they
have regard to the need to foster the company’s business
relationships with suppliers, customers and others, and the
effect of that regard, including on the principal decisions
taken by the company during the financial year. Details can be
found as to how the Board fulfils this duty can be found in the
Section 172(1) statement on pages 32-35 and throughout the
Strategic Report located on pages 4-68.
Research and Development
The Company’s primary activities in the field of research
and development are engineering, prototyping, validation
and testing activities related to products and product
enhancements, with emphasis on HEV and BEV applications.
Details of the activities can be found in Note 1.6 on page
139 and expenditure in Note 5.2 on page 153 in the Group
Financial Statements.
Key performance indicators
Details of the Group’s key performance indicators can be
found on pages 28-29.
Principal risks and uncertainties
Details of the principal risks and uncertainties faced by the
Group can be found in the Strategic Report on pages 57-60.
Disclosure Statements
In line with the Corporate Governance Code 2018 the
disclosure statements have been prepared and collated on
pages 61-63.
– Section 172(1) statement summarising the key areas
of disclosure in this Annual Report required by the
Non-Financial Directive can be found on page 32-35.
The Board of Directors of TI Fluid Systems plc consider,
both individually and together, that they have acted in the
way they judge to be in good faith and would be most likely
to promote the success of the Company for the benefit
of its members as a whole. The Board decision-making
process takes into regard the stakeholders and matters set
out in Section 172(1) (a-f) of the Act in the decisions taken
during the year ended 31 December 2021
– Non-Financial Information Statement can be found on
page 63
– Greenhouse gas emissions disclosure can be found in the
Our Approach to sustainability on pages 36-47
– Task Force on Climate-related Financial Disclosures (TCFD)
can be found on pages 64-68
Financial and business reporting
When reporting externally, the Board aims to present
a fair, balanced and understandable assessment of the
Group’s position and prospects. During the year, the Board,
or Committees of the Board, have been satisfied that
appropriate procedures are in place to enable it to state that
this annual report, taken as a whole, is fair balanced and
understandable and provides the information necessary
for shareholders to assess the Company’s position and
performance, business model and strategy. A statement of
this responsibility, together with additional responsibilities
of the Directors in respect of the preparation of the Annual
Report, is set out on page 119.
Going concern and viability statements disclosures
We agree with the basis of the assessments and the
disclosures included on pages 61-62.
Independent Auditors
The Auditors, PricewaterhouseCoopers LLP, have indicated
their willingness under section 489 of the Companies Act
2006 to continue in office and a resolution that they be
re-appointed will be proposed at the Annual General Meeting.
Financial instruments
An explanation of the Group’s treasury policies and existing
financial instruments are set out in Note 1.10.3 on page 142
and Note 3 on pages 150-151 of the financial statements.
Details of how we use hedging to manage foreign currency
and interest rate risks can be found in Note 3.3 in Group
Financial Statements on pages 150-151.
Each of the persons who is a Director at the date of approval
of this Annual Report confirms that:
– in so far as the Director is aware, there is no relevant audit
information of which the Company’s Auditor is unaware; and
– the Director has taken all the steps necessary to be aware
of any relevant audit information and to establish that the
Company’s Auditor is aware of that information
Annual General Meeting
A separate notice convening the Annual General Meeting of
the Company to be held on 18 May 2022 will be sent out to
shareholders with this Annual Report and Accounts and will
also be available on our website.
This confirmation is given and should be interpreted in
accordance with the provisions of s.418 of the Companies
Act 2006.
By order of the Board
Corporate Governance
The Company’s statement on Corporate Governance can be
found in the Corporate Governance report on pages 78-83.
The Corporate Governance report forms part of this Directors’
report and is incorporated into it by cross reference.
Matthew Paroly
Company Secretary
14 March 2022
118
TI Fluid Systems plc
Annual Report and Accounts 2021
Statement of Directors’ responsibilities in respect of the financial statements
Statement of Directors’ responsibilities in respect of the
financial statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable
law and regulations.
The Directors are also responsible for safeguarding the
assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of fraud
and other irregularities.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group financial statements
in accordance with international accounting standards
in conformity with the requirements of the Companies
Act 2006. Additionally, the Financial Conduct Authority’s
Disclosure Guidance and Transparency Rules require the
Directors to prepare the Group financial statements in
accordance with international financial reporting standards
adopted by the UK Endorsement Board.
The Directors have also chosen to prepare the Parent
Company financial statements in accordance with United
Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law),
including Financial Reporting Standard (FRS) 101 Reduced
Disclosure Framework.
Under company law, Directors must not approve the financial
statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and Company and
of the profit or loss of the Group for that period.
In preparing the financial statements, the Directors are
required to:
– select suitable accounting policies and then apply
them consistently;
– state whether applicable UK-adopted international
accounting standards have been followed for the group
financial statements and United Kingdom Accounting
Standards, comprising FRS 101 have been followed
for the company financial statements, subject to any
material departures disclosed and explained in the
financial statements;
– make judgements and accounting estimates that are
reasonable and prudent; and
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s and Company’s transactions and disclose with
reasonable accuracy at any time the financial position of the
Group and Company and enable them to ensure that the
financial statements and the Directors’ Remuneration report
comply with the Companies Act 2006.
The Directors are responsible for the maintenance and
integrity of the Company’s website. Legislation in the United
Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in
other jurisdictions.
Directors’ confirmations
The Directors consider that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders
to assess the Group’s and Company’s position and
performance, business model and strategy.
Each of the Directors, whose names and functions are listed
in the Board of Directors section of this report confirm that,
to the best of their knowledge:
– the Group and Company financial statements, which have
been prepared in accordance with the relevant financial
reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit of the Group and profit
of the Company
– the Strategic Review includes a fair review of the
development and performance of the business and the
position of the Group and Company, together with a
description of the principal risks and uncertainties that
it faces
This responsibility statement was approved by the Board of
Directors on 14 March 2022 and is signed on its behalf:
– prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
By order of the Board
Hans Dieltjens
Chief Executive Officer and President
Ronald Hundzinski
Chief Financial Officer
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A busi 124 Independent auditors’ report to the members
of TI Fluid Systems plc
130 Consolidated Income Statement
131 Consolidated Statement of
Comprehensive Income
132 Consolidated Balance Sheet
133 Consolidated Statement of Changes in Equity
134 Consolidated Statement of Cash Flows
135 Notes to the Group Financial Statements
195 Company Balance Sheet
196 Company Statement of Changes in Equity
197 Notes to the Company Financial Statements
206 Group Financial Record
208 Shareholder information
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We confirm that based on our assessment of this breach, the
nature and scope of the service and the subsequent actions
taken, the provision of this service has not compromised
our professional judgement or integrity and as such believe
that an objective, reasonable and informed third party in
possession of these facts would conclude that our integrity
and objectivity has not been impaired and accordingly we
remain independent for the purposes of the audit.
Other than the matter referred to above, to the best of our
knowledge and belief, we declare that non-audit services
prohibited by the FRC’s Ethical Standard were not provided.
Other than those disclosed in Note 33 to the financial
statements, we have provided no non-audit services to
the company or its controlled undertakings in the period
under audit.
Our audit approach
Context
There is significant interest from stakeholders including
members about how climate change will affect the group’s
businesses and future financial performance. The group’s
strategy and TCFD disclosures as set out within the Strategic
Report describe management’s view of how climate change
could impact the group’s businesses. This includes the
related risks, opportunities and commitments including the
reduction of Scope 1 and 2 emissions by 37.5% compared to
2019 by 2039.
In planning our audit, we considered the impact of climate
change risks and opportunities to the group and the financial
statements. In doing this, we made enquiries of management
to understand how it assessed the impact of physical and
transitional climate risks and the related opportunities.
The future financial impacts are clearly uncertain given
the timeframe involved and their dependency on how
Governments, global markets and society respond to the
issue of climate change. Accordingly, financial statements
cannot capture all possible future outcomes as these are
not yet known. We discussed with management and the
Audit & Risk Committee that the estimated impacts of
climate change will need to be frequently reassessed and the
associated disclosures should continue to evolve as the group
further develops its response to the impacts identified.
Using our knowledge of the businesses and with assistance
from our internal climate and valuation experts, we assessed
how the group has considered the impact of climate
change risks and opportunities on the financial statements.
The goodwill, tangible and intangible assets impairment
assessment is a key area of the financial statements where
climate change was evaluated to have a significant potential
impact. This has been incorporated into the corresponding
key audit matter below.
Report on the audit of the financial statements
Opinion
In our opinion:
– TI Fluid Systems plc’s Group Financial Statements and
Company Financial Statements (the “financial statements”)
give a true and fair view of the state of the group’s and
of the company’s affairs as at 31 December 2021 and of
the group’s profit and the group’s cash flows for the year
then ended;
– the Group Financial Statements have been properly
prepared in accordance with UK-adopted international
accounting standards;
– the Company Financial Statements have been properly
prepared in accordance with United Kingdom Generally
Accepted Accounting Practice (United Kingdom Accounting
Standards, comprising FRS 101 “Reduced Disclosure
Framework”, and applicable law); and
– the financial statements have been prepared in accordance
with the requirements of the Companies Act 2006.
We have audited the financial statements, included within
the Annual Report & Accounts (the “Annual Report”), which
comprise: the Consolidated and Company Balance Sheets as
at 31 December 2021; the Consolidated Income Statement,
the Consolidated Statement of Comprehensive Income,
the Consolidated and Company Statements of Changes in
Equity, and the Consolidated Statement of Cash Flows for the
year then ended; and the Notes to the Group and Company
Financial Statements, which include a description of the
significant accounting policies.
Our opinion is consistent with our reporting to the Audit &
Risk Committee.
Basis for opinion
We conducted our audit in accordance with International
Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the group in accordance
with the ethical requirements that are relevant to our audit
of the financial statements in the UK, which includes the
FRC’s Ethical Standard, as applicable to listed public interest
entities, and we have fulfilled our other ethical responsibilities
in accordance with these requirements.
During the period, we identified that in previous periods,
the PwC team in Canada was involved in supporting the
preparation of the local statutory financial statements.
This team was involved in administrative preparation
of the local statutory financial statements and was
not involved in any management decision-making or
bookkeeping. This service does not form part of the group
audit and is limited to local statutory financial statements.
Administrative preparation of statutory financial statements
is a prohibited service under the FRC’s Ethical Standard, and
therefore upon identifying the breach, the team immediately
ceased providing the service and no such services were
provided in the current period.
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Overview
Audit scope
– Following our assessment of the risks of material
misstatement of the Group Financial Statements we
identified 19 components (2020: 17 components) where
we performed a full scope audit of their complete financial
information, either due to their size or risk characteristics.
These components are located in Belgium, Brazil, China,
Czech Republic, Germany, Korea, Mexico, Poland, Spain
and Turkey.
– There is one financially significant component within the
group located in China.
– We also identified a further six components (2020: nine
components) where we performed targeted specified
procedures based on risk and materiality on the financial
information. These components are located in the U.S.A.
This is supplemented by analytical procedures on the
components that are not in scope.
– In addition the group audit team in the UK audited
the company and performed audit procedures on the
consolidation and accounting areas that are centralised.
These areas include goodwill, tangible and intangible assets
impairment assessment, specific aspects of warranty
provisioning and accounting for customer settlements,
corporate taxation accounting, defined benefit pension
obligation accounting, refinancing transactions and certain
treasury balances and transactions.
– This scope of work provided coverage of 74% (2020: 76%)
of revenue and 72% (2020: 76%) of net assets.
– As part of the supervision process, the group engagement
team has performed remote reviews for all components,
which included meetings on approach and conclusions with
the component teams and review of their audit files and
final deliverables.
Key audit matters
– Goodwill, tangible and intangible assets impairment
assessment (group)
– Carrying value of the company’s investments in
subsidiaries (company)
Materiality
– Overall group materiality: €6.8 million (2020: €7.9 million)
based on 5% of a four year average of profit before tax,
adjusted for exceptional items.
– Overall company materiality: €8.9 million
(2020: €8.7 million) based on 1% of net assets.
– Performance materiality: €5.1 million (2020: €5.9 million)
(group) and €6.7 million (2020: €6.5 million) (company).
The scope of our audit
As part of designing our audit, we determined materiality
and assessed the risks of material misstatement in the
financial statements.
Key audit matters
Key audit matters are those matters that, in the auditors’
professional judgement, were of most significance in the
audit of the financial statements of the current period and
include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team.
These matters, and any comments we make on the results of
our procedures thereon, were addressed in the context of our
audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion
on these matters.
This is not a complete list of all risks identified by our audit.
Carrying value of the company’s investments in subsidiaries
is a new key audit matter this year. Warranty provisioning,
deferred tax asset recognition and provisioning for uncertain
tax positions and impact of COVID-19, which were key audit
matters last year, are no longer included.
During the year, payments have been made to settle certain
immaterial long standing warranty matters in line with the
amounts provided resulting in a reduction in the number of
open matters and the related provision. Those warranty
claims that remain outstanding are not likely to result in a
material misstatement. The level of judgement, estimation
uncertainty and hence the likelihood of a material
misstatement is lower than the prior year. Given the
magnitude of the open items and amounts claimed by
customers, we did not consider warranty provisioning to
be a key audit matter in the current year.
The level of judgement and estimation uncertainty inherent
within the provisioning for uncertain tax positions (UTPs)
and recognition of deferred tax assets (DTAs) has reduced
compared to the prior year. Given the low magnitude of
individual potential tax exposures, the tax exposure in total
and the expected recovery of the deferred tax asset, a
material error is deemed to be unlikely. Consequently, we
believe the likelihood of a material misstatement has reduced
and hence did not consider deferred tax asset recognition
and provisioning for uncertain tax positions to be a key audit
matter in the current year.
We have captured the enduring impact of COVID-19, where
applicable, separately in the individual key audit matters
below. Otherwise, the key audit matters below are consistent
with last year.
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Key audit matter
Goodwill, tangible and intangible assets impairment
assessment (group)
Refer to the Audit & Risk Committee report, Note 1
(Summary of Significant Accounting Policies), Note 15
(Intangible Assets), Note 16 (Property, Plant and Equipment),
Note 17 (Leases) and Note 18 (Impairments) to the
Group Financial Statements. The group holds goodwill of
€564.3 million (2020: €535.9 million), intangible assets
of €320.5 million (2020: €347.9 million), property, plant
and equipment of €595.4 million (2020: 590.8 million) and
right-of-use assets of €125.2 million (2020: €124.9 million)
as at 31 December 2021.
All Cash Generating Units (CGUs) containing goodwill must
be tested for impairment annually and also when there
are indicators of impairment. The determination of the
recoverable amount requires judgement by management
in valuing the relevant CGUs through value in use models
utilising discounted cash flow calculations.
There are judgements and estimates involved in
management’s impairment assessment including cash flow
forecasts, discount rates and long term growth rates.
Global light vehicle volumes have started to recover in 2021
which has had a positive impact on the group’s sales volumes
and medium term outlook. However, there continues to be
a level of uncertainty in the pace of recovery and volume
outlook not least due to the continued impact of supply
chain disruption.
Climate change impact on the business and in particular
the related trend towards vehicle electrification is a key
consideration where management enhanced their approach.
Management has employed the services of an expert
organisation to support their views on the impact climate
change will have on future volumes and mix which has been
factored into the impairment model.
The FCS business is considered more stable and the model
is therefore based on a single set of cash flows for CGUs in
that division.
The FTDS business is considered to be adversely impacted
by the industry’s increasing transition to fully electric
powered vehicles. The key assumption related to future cash
flows is impacted by the assumed pace of this transition.
Management reflected this uncertainty by probability
weighting a base case and downside scenario in the model
for CGUs within this division. Management also made
assumptions with regards to the recovery of climate change
related costs, including cost increases arising from the effects
of decarbonisation and carbon taxes, and the operating
margin into the future.
Management’s annual impairment assessment as at
31 December 2021 has resulted in neither an additional
impairment nor a reversal of previously recognised
impairments. The assessment has concluded that the
headroom in the FCS EU, FCS NA, FTDS NA and FTDS EU
CGUs is at a level where reasonably possible changes in
key assumptions would lead to the corresponding carrying
amounts exceeding recoverable amounts. In view of this
management has included sensitivity disclosures within the
financial statements.
How our audit addressed the key audit matter
We assessed management’s impairment assessment
and focused our audit on challenging key judgements and
estimates. Procedures we performed included:
– confirming that the CGUs are the lowest level at
which management monitors performance for internal
purposes and that it is consistent with the way in which
the group’s results are reported internally, as evidenced
by our inspection of reporting to divisional, group and
executive management;
– verifying the accuracy of the underlying calculations in the
model and agreeing the base case cash flow forecasts to
the latest medium term plan approved by the Board;
– evaluating the appropriateness of forecast cash flows by
understanding management’s process for forecasting,
examining support for forecast cash flows and assessing
CGU specific cash flow assumptions such as testing the
exclusion of cash flows dependent on enhancing capital
expenditure in future periods;
– discussing with commercial management the expected
future business performance including the impact of climate
change to corroborate finance management’s explanations;
– on a sample basis, obtaining evidence in the form of award
documentation from customers for future business;
– establishing that the benefit from restructuring activities
has been considered in the forecast cash flows only if
the restructuring activities have been implemented at the
year end;
– evaluating management’s forecasting accuracy by
comparing previous periods outturns with forecasts made
as part of the Board approved medium term plans;
– validating the source of third party industry volume data
for the period to 2026 which management used to prepare
their plans, assessing the credibility of the source including
comparison to alternative sources of market information
and evaluating the appropriateness of the adjustment
management made to external volume data;
– agreeing management’s calculation of negative growth
rates for FTDS CGUs to the market projections the group
has received from its expert engaged to predict the pace of
vehicle electrification, including in the period post 2026;
– challenging management’s assumptions with regards to the
recovery of climate change related costs and the operating
margin into the future for the FTDS CGUs;
– establishing that the medium term plan cash flows include
incremental costs associated with the group’s commitment
to achieve published 2039 emissions reductions;
– evaluating management’s assessment of the FTDS
base case and downside volume scenarios by reference
to their expert’s advice on the predicted pace of
vehicle electrification;
– challenging the relative probabilities assigned to the
operating cash flows arising from the two scenarios
prepared, including performing sensitivity analyses;
– engaging our valuation experts to assess the appropriateness
of discount rates and long term growth rates considering the
risks specific to the geographies and relevant industry of the
CGUs being assessed for impairment;
– evaluating management’s sensitivity analyses to ascertain
the impact of reasonably possible changes in key
assumptions; and
– assessing the appropriateness of the related disclosures in
the financial statements.
Based on this work, we consider that the carrying value
of goodwill, tangible and intangible assets are materially
correct and we believe that the disclosures in the financial
statements are appropriate.
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Key audit matter
Carrying value of the company’s investments in
subsidiaries (company)
Refer to Note 1 (Summary of Significant Accounting Policies)
and Note 4 (Investments in Subsidiaries) to the Company
Financial Statements. Investments in subsidiaries of
€912.5 million (2020: €905.7 million) are accounted for at cost
less provision for impairment in the Company Balance Sheet
as at 31 December 2021.
The investments of the company are subject to an annual
review to identify the existence of any indicators of
impairment. Should indicators be identified, the carrying value
is subject to an impairment assessment with any resulting
diminution of the carrying value recognised in the Income
Statement. Management’s review identified no indicators
of impairment.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we
performed enough work to be able to give an opinion on
the financial statements as a whole, taking into account the
structure of the group and the company, the accounting
processes and controls, and the industry in which
they operate.
Our approach to scoping was designed to achieve adequate
coverage across the consolidated financial statement line
items whilst addressing any location specific risks of material
misstatement. The group operates two divisions, being Fluid
Carrying Systems (FCS) and Fluid Tank Delivery Systems
(FTDS) across four geographical territories of Europe and
Africa, North America, Asia Pacific and Latin America.
Each division consists of a large number of components
spread across multiple countries. Overall, the group has
117 reporting components across 29 countries. We identified
one individually financially significant component within the
group. We have performed full scope audits on the financial
information of 19 components (2020: 17 components) and
targeted specified procedures based on risk and materiality
on the financial information of six components (2020:
nine components). This is supplemented by analytical
procedures on the remaining components that are not in
scope. The group audit team in the UK performed audit
procedures on the consolidation and accounting areas that
are centralised, including goodwill, tangible and intangible
assets impairment assessment, specific aspects of warranty
provisioning and accounting for customer settlements,
corporate taxation accounting, defined benefit pension
obligation accounting, refinancing transactions and certain
treasury balances and transactions. This scope of work
provided coverage of 74% (2020: 76%) of revenue and 72%
(2020: 76%) of net assets.
How our audit addressed the key audit matter
We evaluated management’s determination of whether
there were any indicators of impairment. Our procedures,
in addition to the above key audit matter, included:
– comparing the carrying value of investment with the market
capitalisation of the group at 31 December 2021; and
– comparing the carrying value of investment with the
carrying amount of investees’ net assets.
We also considered whether other evidence gathered
during the course of our work identified the existence of an
impairment indicator. We agree with management that there
have been no such indicators of impairment and as such it is
appropriate that the carrying value has not been subject to an
impairment assessment.
The coverage for both the current and prior year is sufficient
and in compliance with the applicable auditing standards.
Our audit involves full scope audits of components in
Belgium, Brazil, China, Czech Republic, Germany, Korea,
Mexico, Poland, Spain and Turkey and targeted specified
procedures for the components in the U.S.A. Our specified
procedures for components in the U.S.A covered all
relevant financial statement line item assertions for all
material balances. We issued formal written instructions
to all component auditors setting out the audit work to
be performed by each of them and maintained regular
communication with the component auditors throughout
the audit cycle. Certain component teams have been able to
visit the locations in person where it has been safe to do so.
Others have adopted a hybrid or remote model of working.
Due to the travel restrictions and challenges caused by
COVID-19, we continued to interact with the component audit
and local finance teams on a remote basis. Our interaction
with component audit and local finance team’s included
remotely attending internal clearance meetings for all
components and remotely attending external clearance
meetings for all material and significant components. We also
attended regular video conference calls with component audit
teams to assess progress and discuss specific accounting
and auditing matters. We have reviewed and assessed any
matters reported to us by component teams. Our work
has included review of selected audit working papers for all
components with a particular focus on significant risks for
material components. The group audit team has performed
the audit of the parent company.
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Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect
of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for
benchmark applied
Financial statements - group
€6.8 million (2020: €7.9 million)
5% of a four year average of profit before tax, adjusted for
exceptional items
Profit before tax adjusted for exceptional items is a generally
accepted auditing benchmark for profit orientated businesses.
Adjusting for exceptional items provides a consistent year on
year basis for determining materiality. From 2020 the effects of
the COVID-19 pandemic introduced volatility that has impacted
this benchmark. In response to this we have applied the group’s
four year average profit before tax and exceptional items as
a basis to determine our 2021 materiality (2020: three year
average profit before tax and exceptional items) as opposed
to the in year profit before tax and exceptional items. We have
taken this judgement having considered that the results for
the current year are likely reflecting a short-term downturn in
profitability due to the enduring impact of the pandemic and
related supply chain disruption rather than a permanent change
in the profitability of the business.
Financial statements - company
€8.9 million (2020:
€8.7 million)
1% of net assets
As there is no trading
activity within the parent
company, net assets were
considered an appropriate
benchmark. The higher
company materiality level
was used for the purposes
of testing balances not
relevant to the group audit,
such as investments in
subsidiary undertakings and
intercompany balances.
For each component in the scope of our group audit, we
allocated a materiality that is less than our overall group
materiality. The range of materiality allocated across
components was between €450,000 and €5,103,000.
We use performance materiality to reduce to an appropriately
low level the probability that the aggregate of uncorrected
and undetected misstatements exceeds overall materiality.
Specifically, we use performance materiality in determining
the scope of our audit and the nature and extent of our testing
of account balances, classes of transactions and disclosures,
for example in determining sample sizes. Our performance
materiality was 75% (2020: 75%) of overall materiality,
amounting to €5.1 million (2020: €5.9 million) for the Group
Financial Statements and €6.7 million (2020: €6.5 million) for
the Company Financial Statements.
In determining the performance materiality, we considered
a number of factors - the history of misstatements, risk
assessment and aggregation risk and the effectiveness of
controls - and concluded that an amount at the upper end of
our normal range was appropriate.
We agreed with the Audit & Risk Committee that we would
report to them misstatements identified during our audit
above €0.35 million (group audit) (2020: €0.40 million) and
€0.4 million (company audit) (2020: €0.4 million) as well
as misstatements below those amounts that, in our view,
warranted reporting for qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group’s
and the company’s ability to continue to adopt the going
concern basis of accounting included:
– understanding and evaluating of the internal
governance processes around management’s going
concern assessment;
– agreeing the underlying cash flow projections to
management approved forecasts, assessing how these
forecasts are compiled and assessing the historical
accuracy of management’s forecasts;
– understanding and evaluating the key assumptions within
management’s forecasts;
– considering liquidity and available facilities by reference to
documents supporting those arrangements;
– assessing whether the severe but plausible scenario testing
performed by management appropriately considered the
principal risks facing the business;
– a stand back assessment of the group’s liquidity and
consideration of all the evidence obtained; and
– assessing the adequacy of disclosures in the Going
concern statement in the Annual Report and found these
appropriately reflect the key areas identified.
Based on the work we have performed, we have not
identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast
significant doubt on the group’s and the company’s ability to
continue as a going concern for a period of at least twelve
months from when the financial statements are authorised
for issue.
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In auditing the financial statements, we have concluded that
the directors’ use of the going concern basis of accounting in
the preparation of the financial statements is appropriate.
However, because not all future events or conditions can be
predicted, this conclusion is not a guarantee as to the group’s
and the company’s ability to continue as a going concern.
In relation to the directors’ reporting on how they have
applied the UK Corporate Governance Code, we have nothing
material to add or draw attention to in relation to the directors’
statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors
with respect to going concern are described in the relevant
sections of this report.
Reporting on other information
The other information comprises all of the information in the
Annual Report other than the financial statements and our
auditors’ report thereon. The directors are responsible for
the other information, which includes reporting based on the
Task Force on Climate-related Financial Disclosures (TCFD)
recommendations. Our opinion on the financial statements
does not cover the other information and, accordingly, we
do not express an audit opinion or, except to the extent
otherwise explicitly stated in this report, any form of
assurance thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to
be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to
perform procedures to conclude whether there is a material
misstatement of the financial statements or a material
misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material
misstatement of this other information, we are required
to report that fact. We have nothing to report based on
these responsibilities.
With respect to the Strategic report and Directors’ Report,
we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on our work undertaken in the course of the audit,
the Companies Act 2006 requires us also to report certain
opinions and matters as described below.
Strategic report and Directors’ Report
In our opinion, based on the work undertaken in the course
of the audit, the information given in the Strategic report and
Directors’ Report, for the year ended 31 December 2021
is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and
company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the
Strategic report and Directors’ Report.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report
to be audited has been properly prepared in accordance with
the Companies Act 2006.
Corporate governance statement
The Listing Rules require us to review the directors’
statements in relation to going concern, longer-term viability
and that part of the corporate governance statement relating
to the company’s compliance with the provisions of the
UK Corporate Governance Code specified for our review.
Our additional responsibilities with respect to the corporate
governance statement as other information are described in
the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we
have concluded that each of the following elements of
the corporate governance statement, included within the
Strategic report and Corporate governance sections of the
Annual Report, is materially consistent with the financial
statements and our knowledge obtained during the audit,
and we have nothing material to add or draw attention to in
relation to:
– The directors’ confirmation that they have carried out a
robust assessment of the emerging and principal risks;
– The disclosures in the Annual Report that describe those
principal risks, what procedures are in place to identify
emerging risks and an explanation of how these are being
managed or mitigated;
– The directors’ statement in the financial statements about
whether they considered it appropriate to adopt the going
concern basis of accounting in preparing them, and their
identification of any material uncertainties to the group’s
and company’s ability to continue to do so over a period
of at least twelve months from the date of approval of the
financial statements;
– The directors’ explanation as to their assessment of
the group’s and company’s prospects, the period this
assessment covers and why the period is appropriate; and
– The directors’ statement as to whether they have a
reasonable expectation that the group and the company
will be able to continue in operation and meet its liabilities
as they fall due over the period of its assessment, including
any related disclosures drawing attention to any necessary
qualifications or assumptions.
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TI Fluid Systems plc
continued
Our review of the directors’ statement regarding the longer-
term viability of the group was substantially less in scope
than an audit and only consisted of making inquiries and
considering the directors’ process supporting their statement;
checking that the statement is in alignment with the relevant
provisions of the UK Corporate Governance Code; and
considering whether the statement is consistent with the
financial statements and our knowledge and understanding of
the group and company and their environment obtained in the
course of the audit.
In addition, based on the work undertaken as part of
our audit, we have concluded that each of the following
elements of the corporate governance statement is materially
consistent with the financial statements and our knowledge
obtained during the audit:
– The directors’ statement that they consider the
Annual Report, taken as a whole, is fair, balanced and
understandable, and provides the information necessary
for the members to assess the group’s and company’s
position, performance, business model and strategy;
– The section of the Annual Report that describes the review
of effectiveness of risk management and internal control
systems; and
– The section of the Annual Report describing the work of
the Audit & Risk Committee.
We have nothing to report in respect of our responsibility
to report when the directors’ statement relating to the
company’s compliance with the Code does not properly
disclose a departure from a relevant provision of the Code
specified under the Listing Rules for review by the auditors.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial
statements
As explained more fully in the Statement of Directors’
responsibilities in respect of financial statements, the
directors are responsible for the preparation of the financial
statements in accordance with the applicable framework
and for being satisfied that they give a true and fair view.
The directors are also responsible for such internal control
as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the company’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either
intend to liquidate the group or the company or to cease
operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance
with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material
misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we
identified that the principal risks of non-compliance with laws
and regulations related to the Listing Rules of the UK Financial
Conduct Authority, the UK Corporate Governance Code,
the UK Bribery Act, UK tax legislation and equivalent local
laws and regulations applicable to component teams, and
we considered the extent to which non-compliance might
have a material effect on the financial statements. We also
considered those laws and regulations that have a direct
impact on the financial statements such as the Companies
Act 2006. We evaluated management’s incentives and
opportunities for fraudulent manipulation of the financial
statements (including the risk of override of controls), and
determined that the principal risks were related to fraudulent
journal entries (for example journal entries to increase
revenue) and bias in relation to judgements and estimates,
particularly in the area of goodwill, tangible and intangible
assets impairment assessment. The group engagement team
shared this risk assessment with the component auditors
so that they could include appropriate audit procedures
in response to such risks in their work. Audit procedures
performed by the group engagement team and/or component
auditors included:
– understanding and evaluating the key elements of the
group’s internal control related to estimates;
– validating the support behind the assumptions
and judgements made by management including
challenging against possible alternatives, for example
in relation to goodwill, tangible and intangible assets
impairment assessment;
– identifying and substantively testing higher risk journal
entries, in particular any that increased revenue, that
had unusual account combinations or were posted by
unexpected users;
128
TI Fluid Systems plc
Annual Report and Accounts 2021
– having discussions with and corroborating key assertions
made by finance management with internal audit, the
group’s legal counsel and senior group and divisional
management including views on accounting judgements
and estimates, and considering known or suspected
instances of non-compliance with laws and regulation
and fraud;
– reading the minutes of the Board meetings to identify
any inconsistencies with other information provided
by management;
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to
you if, in our opinion:
– we have not obtained all the information and explanations
we require for our audit; or
– adequate accounting records have not been kept by the
company, or returns adequate for our audit have not been
received from branches not visited by us; or
– certain disclosures of directors’ remuneration specified by
– reviewing internal audit reports in so far as they related to
law are not made; or
the financial statements;
– reviewing legal expense accounts to identify significant
legal spend which may be indicative of serious breaches of
laws and regulations; and
– reviewing component teams’ key working papers for all
in-scope components with a particular focus on the areas
involving estimates.
There are inherent limitations in the audit procedures
described above. We are less likely to become aware of
instances of non-compliance with laws and regulations that
are not closely related to events and transactions reflected
in the financial statements. Also, the risk of not detecting a
material misstatement due to fraud is higher than the risk of
not detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery or intentional
misrepresentations, or through collusion.
Our audit testing might include testing complete populations
of certain transactions and balances, possibly using data
auditing techniques. However, it typically involves selecting
a limited number of items for testing, rather than testing
complete populations. We will often seek to target particular
items for testing based on their size or risk characteristics.
In other cases, we will use audit sampling to enable us to
draw a conclusion about the population from which the
sample is selected.
A further description of our responsibilities for the audit of
the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and
only for the company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for
no other purpose. We do not, in giving these opinions, accept
or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent
in writing.
– the Company Financial Statements and the part of the
Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from
this responsibility.
Appointment
The group in its current form came into existence in 2001 and
we have been its auditor since that year. The period of total
uninterrupted engagement is 21 years, covering the years
ended 31 December 2001 to 31 December 2021. We were
previously the auditors of the group from which this group
was demerged.
The group listed on the London Stock Exchange in October
2017. Prior to the listing, following an audit tender in 2017, we
were re-appointed as auditors by the directors for the year
ended 31 December 2017.
Other matter
In due course, as required by the Financial Conduct Authority
Disclosure Guidance and Transparency Rule 4.1.14R, these
financial statements will form part of the ESEF-prepared
annual financial report filed on the National Storage
Mechanism of the Financial Conduct Authority in accordance
with the ESEF Regulatory Technical Standard (‘ESEF RTS’).
This auditors’ report provides no assurance over whether
the annual financial report will be prepared using the single
electronic format specified in the ESEF RTS.
Andrew Hammond (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Birmingham
14 March 2022
129
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Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Group financial statements
Consolidated Income Statement
For the year ended 31 December
2021
Before
exceptional
item
€m
2,956.6
(2,626.8)
329.8
(93.9)
(105.8)
3.6
Exceptional
item
€m
–
–
–
–
–
–
2021
After
exceptional
item
€m
2,956.6
(2,626.8)
329.8
(93.9)
(105.8)
3.6
2020
Before
exceptional
item
€m
2,814.5
(2,493.1)
321.4
(83.7)
(145.1)
8.5
(6.9)
126.8
3.1
(63.1)
(60.0)
(0.9)
65.9
(40.9)
25.0
23.3
1.7
25.0
–
–
–
(11.8)
(11.8)
–
(11.8)
2.8
(9.0)
(9.0)
(9.0)
(6.9)
126.8
3.1
(74.9)
(71.8)
(0.9)
54.1
(38.1)
16.0
14.3
1.7
16.0
2.76
2.73
Exceptional
item
€m
–
(120.4)
(120.4)
–
(184.2)
–
–
(304.6)
–
–
–
–
(304.6)
29.7
(274.9)
27.2
128.3
3.5
(77.5)
(74.0)
(3.5)
50.8
(28.1)
22.7
20.8
1.9
22.7
274.9
274.9
2020
After
exceptional
item
€m
2,814.5
(2,613.5)
201.0
(83.7)
(329.3)
8.5
27.2
(176.3)
3.5
(77.5)
(74.0)
(3.5)
(253.8)
1.6
(252.2)
(254.1)
1.9
(252.2)
(48.88)
(48.88)
Continuing operations
Revenue
Cost of sales
Gross profit/(loss)
Distribution costs
Administrative expenses
Other income
Net foreign exchange (losses)/
gains
Operating profit/(loss)
Finance income
Finance expense
Net finance expense
Share of loss of associate
Profit/(loss) before
income tax
Income tax (expense)/credit
Profit/(loss) for the year
Profit/(loss) for the year
attributable to:
Owners of the Parent
Company
Non-controlling interests
Total earnings per share
(Euro, cents)
Basic
Diluted
Note
4
5
5
5
10
3
11
11
19
12
25
13
13
130
TI Fluid Systems plc
Annual Report and Accounts 2021
Consolidated Statement of Comprehensive Income
For the year ended 31 December
Profit/(loss) for the year
Other comprehensive income/(expense)
Items that will not be reclassified to profit or loss
– Re-measurements of retirement benefit obligations
– Income tax (expense)/credit on retirement benefit obligations
Items that may be subsequently reclassified to profit or loss
– Currency translation
– Cash flow hedges
– Net investment hedges
Total other comprehensive income/(expense) for the year
Total comprehensive income/(expense) for the year
Attributable to:
– Owners of the Parent Company
– Non-controlling interests
Total comprehensive income/(expense) for the year
Note
29
12
24
24
25
2021
€m
16.0
36.3
(6.8)
29.5
75.1
–
0.9
76.0
105.5
121.5
120.1
1.4
121.5
2020
€m
(252.2)
(21.1)
3.6
(17.5)
(52.4)
13.2
6.9
(32.3)
(49.8)
(302.0)
(303.2)
1.2
(302.0)
131
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Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Consolidated Balance Sheet
As at 31 December
Non-current assets
Intangible assets
Right-of-use assets
Property, plant and equipment
Investments in associates
Deferred income tax assets
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Current income tax assets
Derivative financial instruments
Financial assets at fair value through profit and loss
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Equity attributable to owners of the Parent Company
Non-controlling interests
Total equity
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Deferred income tax liabilities
Retirement benefit obligations
Provisions
Current liabilities
Trade and other payables
Current income tax liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Provisions
Total liabilities
Total equity and liabilities
Note
2021
€m
2020
€m
15
17
16
19
12
21
20
21
12
28
22
22
23
23
24
25
26
27
17
12
29
30
26
12
27
17
28
30
884.8
125.2
595.4
–
70.5
19.2
1,695.1
332.3
520.5
11.4
0.9
0.9
499.1
1,365.1
3,060.2
6.8
2.2
(61.4)
995.9
943.5
0.4
943.9
14.6
1,098.5
119.8
95.8
128.1
2.6
1,459.4
546.1
49.9
1.8
30.1
0.3
28.7
656.9
2,116.3
3,060.2
883.8
124.9
590.8
14.6
62.4
18.9
1,695.4
351.4
534.8
13.7
0.4
0.9
485.8
1,387.0
3,082.4
6.8
2.2
(137.7)
987.7
859.0
25.2
884.2
20.0
1,069.3
122.4
104.3
160.7
4.9
1,481.6
614.1
40.7
7.4
28.6
0.2
25.6
716.6
2,198.2
3,082.4
The Financial Statements on pages 130 to 194 were authorised for issue by the Board of Directors on 14 March 2022 and
were signed on its behalf by:
Hans Dieltjens
Chief Executive Officer and President
Ronald Hundzinski
Chief Financial Officer
132
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Annual Report and Accounts 2021
Consolidated Statement of Changes in Equity
For the period ended 31 December
Balance at 1 January 2021
Profit for the year
Total other comprehensive
income/(expense) for the year
Total comprehensive income
for the year
Decrease in share held by
Non-controlling interests
Purchase of NCI
Share-based expense
Issue of own shares from
Employee Benefit Trust
Vested share awards
Purchase of own shares
Dividends paid
Balance at 31 December 2021
Balance at 1 January 2020
(Loss)/Profit for the year
Other comprehensive expense for
the year
Total comprehensive
(expense)/income
Share-based expense
Dividends paid
Issue of own shares from
Employee Benefit Trust
Purchase of own shares
Balance at 31 December 2020
Note
Ordinary
shares
€m
6.8
–
Share
premium
€m
2.2
–
Other
reserves
€m
(137.7)
–
Retained
earnings
€m
987.7
14.3
Non-
controlling
interests
€m
25.2
1.7
Total
€m
859.0
14.3
Total
equity
€m
884.2
16.0
–
–
–
–
–
–
–
–
–
6.8
–
–
–
–
–
–
–
–
–
2.2
76.3
76.3
–
–
–
–
–
–
–
(61.4)
29.5
105.8
(0.3)
105.5
43.8
120.1
1.4
121.5
26.2
(15.5)
6.8
1.1
(0.9)
(8.3)
(45.0)
995.9
26.2
(15.5)
6.8
1.1
(0.9)
(8.3)
(45.0)
943.5
(26.2)
–
–
–
–
–
–
0.4
–
(15.5)
6.8
1.1
(0.9)
(8.3)
(45.0)
943.9
25
25
7
7
7
7
14
Ordinary
shares
€m
6.8
–
Share
premium
€m
2.2
–
Other
reserves
€m
(106.1)
–
Retained
earnings
€m
1,261.7
(254.1)
Total
€m
1,164.6
(254.1)
Non-
controlling
interests
€m
24.5
1.9
Total
equity
€m
1,189.1
(252.2)
–
–
–
–
–
–
6.8
–
–
–
–
–
–
2.2
(31.6)
(17.5)
(49.1)
(0.7)
(49.8)
(31.6)
–
–
–
–
(137.7)
(271.6)
0.9
–
0.2
(3.5)
987.7
(303.2)
0.9
–
0.2
(3.5)
859.0
1.2
–
(0.5)
–
–
25.2
(302.0)
0.9
(0.5)
0.2
(3.5)
884.2
133
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Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Consolidated Statement of Cash Flows
For the year ended 31 December
Cash flows from operating activities
Cash generated from operations
Interest paid
Income tax paid
Net cash generated from operating activities
Cash flows from investing activities
Payment for property, plant and equipment
Payment for intangible assets
Proceeds from the sale of property, plant and equipment
Proceeds from the sale of associated undertakings
Interest received
Net cash used by investing activities
Cash flows from financing activities
Purchase of own shares
Purchase of non-controlling interests
Proceeds from new borrowings
Fees paid on proceeds from new borrowings
Voluntary repayments of borrowings
Scheduled repayments of borrowings
Lease principal repayments
Dividends paid
Dividends paid to non-controlling interests
Net cash used by financing activities
(Decrease)/Increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Currency translation on cash and cash equivalents
Cash and cash equivalents at the end of the year
Note
31
19
23
25
27.1
27.1
27.1
27.1
17
25
22
22
2021
€m
319.8
(50.6)
(54.1)
215.1
(88.2)
(35.4)
1.4
15.5
3.1
(103.6)
(8.3)
(15.5)
600.0
(15.3)
(600.0)
(6.8)
(31.6)
(45.0)
–
(122.5)
(11.0)
485.8
24.3
499.1
2020
€m
374.4
(57.1)
(59.7)
257.6
(82.1)
(30.1)
13.8
–
3.0
(95.4)
(3.5)
–
213.6
(17.7)
(209.6)
(5.3)
(28.6)
–
(0.5)
(51.6)
110.6
411.7
(36.5)
485.8
134
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Annual Report and Accounts 2021
Notes to the Group Financial Statements
1. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1. Basis of Preparation
The consolidated financial statements for the year-ended 31 December 2021 were prepared in accordance with IFRS in
conformity with the requirements of the Companies Act 2006 and UK-adopted international accounting standards.
These financial statements have been prepared in accordance with international accounting standards in conformity
with the requirements of the Companies Act 2006 (‘IFRS’) and the applicable legal requirements of the Companies
Act 2006. In addition to complying with international accounting standards in conformity with the requirements of the
Companies Act 2006, the consolidated financial statements also comply with UK-adopted international accounting standards
and the Disclosure and Transparency Rules of the Financial Conduct Authority.
The previous annual consolidated financial statements for the year-ended 31 December 2020 were prepared in accordance
with IFRS in conformity with the requirements of the Companies Act 2006 and IFRS adopted pursuant to Regulation (EC) No
1606/2002 as it applied in the European Union (EU). This change in basis of preparation, effective from 1 January 2021, was
required by UK company law for the purposes of financial reporting as a result of the UK’s exit from the EU on 31 January
2020 and the cessation of the transition period on 31 December 2020. This change did not constitute a change in accounting
policy but rather a change in framework which was required to ground the use of IFRS in UK company law. There was no
impact on recognition, measurement or disclosure between the two frameworks in the year reported.
The consolidated financial statements have been prepared under the historical cost convention, except for the fair valuation of
assets and liabilities of subsidiary companies acquired, and financial assets and liabilities at fair value through profit and loss
(‘FVTPL’) (including derivative instruments not in hedged relationships).
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period.
Although these estimates are based on management’s reasonable knowledge, actual results may differ from those estimates.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are critical to the
consolidated financial statements are disclosed in Note 1.4.
1.1.1. Going Concern
The Directors are of the opinion that the Group has adequate resources to continue in operational existence for at least
12 months from the date of approval of its consolidated financial statements. The Group therefore continues to adopt the
going concern basis in preparing its consolidated financial statements. Further information on the Group’s borrowings is given
in Note 27.
Further details of the Going Concern and Viability statements are disclosed in the Compliance statements. See page 61.
1.1.2. Functional and Presentation Currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which each entity operates (the ‘functional currency’). The functional currency of each Group
company has been assessed against the underlying transactions and economic conditions in which it operates.
These financial statements are presented in Euro, which is the Group’s presentation currency. All financial information
presented in Euro has been rounded to the nearest 100,000 except where stated otherwise.
1.1.3. Changes in Accounting Policy and Disclosures
Changes in accounting policies and disclosures are set out below:
1.1.3.1. New and Revised IFRS Affecting Amounts Reported in the Current Year (and/or Prior Years)
There are no standards or IFRS IC interpretations effective in the current year that would be expected to have a material
impact on the Group.
1.1.3.2. New and Revised IFRS in Issue but not yet Effective
A number of new standards, amendments to standards, and interpretations are effective for annual periods beginning on
or after 1 January 2022, or are not yet effective because they have not yet been endorsed by the UK Endorsement Board.
These have not been applied in preparing the consolidated financial statements.
135
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Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Notes to the Group Financial Statements
continued
1. Summary of Significant Accounting Policies continued
The Group has not applied the following new and revised standards that have been issued but are not yet effective or are not
yet endorsed by the UK Endorsement Board:
Amendments to IFRS 3: Reference to
the Conceptual Framework1
Amendments to IAS 16: Property,
Plant and Equipment: Proceeds before
Intended Use1
Amendments to IAS 37: Onerous
Contracts: Cost of Fulfilling a Contract1
Annual Improvements to IFRS
Standards 2018-2020: Amendments to
IFRS 1, IFRS 9, IFRS 16 and IAS 41.
Amendments to IAS 1: Classification of
Liabilities as Current or Non-Current2
IFRS 17 'Insurance Contracts'2
Amendments to IAS 8: Accounting
Policies and Accounting Estimates2
Amendments to IAS 1: Disclosure
Initiative—Accounting Policies2
Amendment to IAS 12: Deferred Tax
Related to Assets and Liabilities Arising
from a Single Transaction2
Updates reference to the Conceptual Framework without significantly changing the
requirements.
Prohibits deducting from the cost of an item of property, plant and equipment any
proceeds from selling items produced while bringing that asset to the location and
condition necessary for it to be capable of operating in the manner intended.
The amendments specify that the ‘cost of fulfilling’ a contract must relate directly
to the contract and can either be incremental costs or an allocation of other direct
costs.
Various minor amendments and clarifications including to clarify which fees an
entity includes when it applies the ‘10 per cent’ test in IFRS 9 in assessing whether
to derecognise a financial liability.
Provides guidance on whether debt and other liabilities with an uncertain
settlement date should be classified as current or non-current.
IFRS 17 replaces IFRS 4 for all entities that issue contracts.
Replaces the definition of accounting estimates and clarifies that a change in
accounting estimate that results from new information or new developments is not
the correction of an error.
Requires that an entity discloses its material accounting policies, instead of its
significant accounting policies.
Clarifies that the initial recognition exemption does not apply to transactions in
which equal amounts of deductible and taxable temporary differences arise on
initial recognition.
1 Effective for the Group’s 2022 financial statements
2 Effective for the Group’s 2023 financial statements
The new and revised standards disclosed above are not expected to have a material impact on the Group. There are no other
standards or IFRS IC interpretations that are not yet effective that would be expected to have a material impact on the Group.
1.2. Consolidation
1.2.1. Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or
has rights to variable returns from, its involvement with the Group and has the ability to affect those returns through its power
over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases.
The Group applies the acquisition method to account for business combinations. The consideration transferred to the former
owners of the acquiree for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred,
and any equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises
any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling
interest’s proportionate share of the recognised amounts of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred in accordance with IFRS 3 ‘Business Combinations’.
Intercompany transactions and balances between Group companies are eliminated. Profits and losses resulting from
intercompany transactions that are recognised in assets are eliminated. Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies adopted by the Group.
A list of subsidiaries and their countries of incorporation is presented in Note 4 of the Parent Company’s financial statements.
The term ‘Group’ means the Company and its consolidated subsidiaries and undertakings.
1.2.2. Associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity
method of accounting, under which the investment is initially recognised at cost, and the carrying amount is increased or
decreased to recognise the investor’s share of the profit or loss of the investee after the date of acquisition. The Group’s
investment in associates includes goodwill identified on acquisition.
136
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1. Summary of Significant Accounting Policies continued
The Group’s share of post-acquisition profit or loss is recognised in the Income Statement, and its share of post-acquisition
movements in Other Comprehensive Income is recognised in the Statement of Other Comprehensive Income, both with a
corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equals
or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further
losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
On 8 December 2021, the Group disposed in full of its only associated undertaking, see Note 19 for further details.
1.3. Foreign Currencies
1.3.1. Foreign Currency Transactions
Transactions in foreign currencies are converted to the respective functional currencies of Group entities at exchange rates
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are
converted to the functional currency at the exchange rate at that date. Non-monetary items that are measured at historical
cost in a foreign currency are converted using the exchange rate at the date of the transaction.
All transactional foreign currency differences are included in the Income Statement.
1.3.2. Foreign Operations
Foreign operations are those subsidiaries whose functional currency is not Euro. For the purposes of consolidation, income
and expenses of foreign operations are translated to Euro at average exchange rates for the year, and assets and liabilities of
foreign operations are translated to Euro at exchange rates at the reporting date. Foreign currency translation differences are
recognised in the Statement of Comprehensive Income.
The average and year-end exchange rates for the Group’s principal currencies were:
Key Euro exchange rates
US dollar
Chinese renminbi
Korean won
2021
Average
1.182
7.628
1,354
31 December
2021
Year End
1.137
7.228
1,352
2020
Average
1.141
7.869
1,344
31 December
2020
Year End
1.224
7.988
1,331
1.4. Critical Accounting Estimates and Judgements
The preparation of financial statements requires the use of accounting estimates and for management to exercise judgement
in applying the Group’s accounting policies. Assumptions and accounting estimates are subject to regular review, governed
by Group-wide policies and controls. Any revisions required to accounting estimates are recognised in the year in which the
revisions are made including all future periods affected.
The judgements and estimates that have the most significant and critical effect on the amounts included in the financial
statements are in relation to post-employment obligations, impairments of assets, and recognition of deferred tax assets and
refinancing of borrowings as described below.
1.4.1. Critical Accounting Estimates
1.4.1.1 Post-employment obligations
Costs and obligations of the Group’s defined benefit plans are calculated on the basis of a range of assumptions, including
discount rates, inflation rates, salary growth and mortality assumptions. Further details, including a sensitivity analysis
illustrating how changes in the principal assumptions would impact the total defined benefit obligation, are included in the
Retirement Benefit Obligations note. See Note 29.5.
1.4.1.2 Impairments of assets
Management have designated the key input assumptions to the Group impairment test as being critical estimates, due to
the significant impact they have on the outcome of the CGU recoverable amount calculation. The key inputs are five-year
forecast operating cash flows, discount rates and long-term expected growth rates. Forecast operating cash flows are
based on the Group’s 2022 budget and 2023-2026 medium-term plan. Estimation is used in forecasting global automotive
production volumes, as well as pricing, operating costs, capital expenditure and working capital assumptions used in arriving
at operating cash flows. CGU discount rates are established using a weighted average cost of capital calculation. This includes
the estimation of certain country specific macroeconomic variables. Long-term expected growth rates are typically based on
country specific inflation adjusted forecast GDP. In the current year, long-term expected growth rates for the FTDS CGUs have
been estimated with reference to a longer-term outlook model, covering the period 2027 - 2035. Further discussion regarding
how these critical estimates have been made and sensitivity analysis of CGU recoverable amounts to changes in these
assumptions can be found in Note 18.
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1.4.2 Critical Accounting Judgements
1.4.2.1 Impairments of assets
Management have applied judgement in establishing two negative growth rate scenarios for the FTDS CGUs and the
associated probability allocation between these two scenarios. This judgement is based on Management’s perceived
likelihood of outcomes, drawing on their industry experience and expertise. Based on the outcome of the 31 December
2021 impairment test, judgement has also been applied by Management in establishing whether there is sufficient evidence
of a significant and prolonged improvement in the forecast profitability of CGUs to support the reversal of any previously
recognised impairment losses. Further discussion on the outcome of this judgement is included within Note 18.
1.4.2.2 Deferred tax assets
Due to the COVID-19 pandemic, global automotive production volumes in the current and prior year have been significantly
impacted and caused trading losses. Recognition of deferred tax assets is based on forecast future taxable income and
therefore involves the exercise of Management’s judgement regarding the future financial performance of particular legal
entities or tax groups in which the deferred tax assets are recognised. Management have looked at short- and medium-term
production volume forecasts to assess the trading profits to support recognition of the assets. The forecasts used are the
same as those used in the impairment test noted in 1.4.2.1 above.
1.4.2.3 Refinancing of borrowings
Management have used judgement in the determination of whether the refinancing of the Group’s borrowings on
16 April 2021 constituted a modification, extinguishment, or partial extinguishment of those borrowings, see Note 27.
Management have determined that the refinancing is a partial extinguishment. The portion of the borrowings which have
been repaid are extinguished, and the issuance discounts and fees associated with the portion repaid of €11.8 million, have
been expensed during the year. The remaining portion of the borrowings are judged to have been modified as the qualitative
characteristics of the remaining borrowings are considered to have been principally unchanged, primarily based on the impact
of the net present value of the remaining cash flows.
Management have also used judgement in determining whether to treat the partial write-off of the previously incurred
issuance discounts and fees, of €11.8 million, associated with reduction of the Group’s term loan balances, as an exceptional
item. Management have made this determination based on the significant size of the fee write-off and the relative infrequency
of the transaction, see Note 9.
1.5. Goodwill
Initial measurement
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the amount of
non-controlling interests over the fair value of net identifiable assets acquired and liabilities assumed. If the total of
consideration transferred, non-controlling interest recognised and previously held interest measured at fair value is less
than the fair value of the net assets of the subsidiary acquired, in the case of a bargain purchase, the difference is
recognised directly in the Income Statement.
Subsequent measurement
Goodwill is measured at cost less accumulated impairment losses. In respect of equity accounted investees, the carrying
amount of goodwill is included in the carrying amount of the investment, and an impairment loss on such an investment is not
allocated to any asset, including goodwill, that forms part of the carrying amount of the equity accounted investee.
Goodwill is not amortised, but is subject to impairment testing which is performed annually or when an impairment trigger
event occurs. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value-in-use and
fair value less costs of disposal.
For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units (‘CGUs’) that are
expected to benefit from the synergies of the combination which generated the goodwill. If the recoverable amount of the
CGU is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of any goodwill
allocated to the CGU and then to the other assets of the CGU pro-rata based on the carrying amount of each asset in the CGU.
CGUs comprise the two operating segments each sub-divided into four geographic territories.
Any impairment loss for goodwill is recognised as an expense in the Income Statement. Impairment losses recognised for
goodwill are not reversed in subsequent periods.
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1.6. Intangible Assets
Research and development
Expenditure on research activities is recognised as an expense in the year in which it is incurred.
Development activities involve a plan or design for the production of new or substantially improved products and processes.
Development expenditure is capitalised where the costs can be measured reliably, the product or process is technically
and commercially feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to
complete the project and to use or sell the development asset. Expenditure capitalised includes the cost of materials, direct
labour, and overhead costs that are directly attributable to preparing the asset for its intended use. Capitalised development
expenditure is measured at cost less accumulated amortisation and impairment charges. Development expenditure, which
does not meet the criteria for recognition as an intangible asset, is recognised in the Income Statement as incurred.
Computer software
Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the
specific software. Costs associated with maintaining computer software programmes are recognised as an expense
as incurred.
Amortisation
Amortisation is recognised in the Income Statement on a straight-line basis over the estimated useful lives of intangible
assets, other than goodwill, from the date that they are available for use. The estimated useful lives for the current year are
as follows:
– Capitalised development expenses
– Computer software and licences
– Technology
– Customer platforms
5-10 years (over the life of the production cycle)
3-6 years
4-8 years
11-25 years
Intangible assets that are under development are not amortised until they are brought into use. They are reviewed for
indications of impairment to ensure that expectations of future economic benefits remain valid. Where there is any indication
to the contrary, capitalisation ceases and costs are expensed.
1.7. Property, Plant and Equipment (‘PP&E’)
PP&E is stated at historical cost, which includes expenses directly attributable to bringing assets into productive use including
finance charges, less accumulated depreciation. Assets acquired as part of the acquisition of the Group are valued at fair value
as part of the acquisition accounting. Land is not depreciated. When major components of an item of PP&E have different
useful lives, they are accounted for as separate items.
Depreciation of PP&E is calculated using the straight-line method, reflecting expected patterns of consumption of the
future economic benefits embodied in the assets, to allocate their cost less residual values over their estimated useful lives,
as follows:
– Land and buildings
(or the period of the lease for improvements in leased buildings, and where the lease period is shorter)
– Plant, machinery and equipment 3-20 years
30-50 years
Depreciation is not charged on assets in the course of construction. Once completed these are transferred to the relevant
category above and depreciated accordingly.
Enhancement expenditure of PP&E items is capitalised only when it is probable that future economic benefits associated with
the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of replaced parts is de-
recognised. All other repairs and maintenance are charged to the Income Statement as incurred.
Gains and losses on disposals of PP&E are determined by comparing the proceeds from disposal with the carrying amount,
and are recognised net within other income in the Income Statement.
Investment grants received against the cost of acquired PP&E assets are included in payables as deferred income and credited
to the Income Statement on a straight-line basis over the useful lives of the relevant assets.
1.8. Impairment of Non-Financial Assets
Assets that are subject to amortisation or depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by
which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair
value less costs of disposal and value-in-use. For the purposes of assessing impairment, assets are grouped at CGU level,
the lowest level for which there are separately identifiable cash flows. Non-financial assets other than goodwill that have
previously been impaired are reviewed for possible reversal of the impairment at each reporting date.
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1.9. Right-of-Use Assets and Lease Liabilities
Right-of-use assets and lease liabilities are created for all leases on the balance sheet, unless the lease term is short, or the
underlying asset has a low value (‘exempt leases’). Short-term leases are leases with a lease term of 12 months or less.
Payments associated with exempt leases are recognised on a straight-line basis as an expense in the income statement.
The Group first applied IFRS 16 ‘Leases’ on 1 January 2019, in accordance with the simplified transition (modified
retrospective) approach permitted in the standard, with the cumulative effect of initially applying the new standard recognised
on that date. All lease liabilities recognised on the balance sheet (‘non-exempt leases’), were initially measured at the present
value of their remaining lease payments, discounted using the Group’s incremental borrowing rates as of 1 January 2019.
All right-of-use assets existing at that date were initially measured at the amount of the lease liability after adjusting for any
prepaid or accrued lease expenses.
Since 1 January 2019, a right-of-use asset and a corresponding lease liability has been recognised for all new non-exempt
leases at the date at which the underlying leased assets are made available for use by the Group discounted using the Group’s
incremental borrowing rate at that date.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
– fixed payments (including in-substance fixed payments), less any lease incentives receivable
– variable lease payments that are based on an index or a rate
– the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
– payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option
Right-of-use assets are measured at cost comprising the following: the amount of the initial measurement of the lease liability,
any lease payments made at or before the commencement date less any lease incentives received, any initial direct costs, and
restoration costs.
In determining the lease term, management considers all facts and circumstances that create an economic incentive to
exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options)
are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). The assessment is
reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within
the Group’s control.
After initial recognition, lease interest payable is charged to the income statement over the lease term so as to produce a
constant periodic rate of interest on the remaining balance of the liability for each period. The right-of- use asset is depreciated
over the shorter of the asset’s useful life and the lease term on a straight-line basis.
The carrying amount of lease liabilities is remeasured when there is a change in the future lease payments due under a lease,
due to a change in the lease term or fixed lease payments under the lease, including changes in the assessment to purchase
the underlying asset. A corresponding adjustment is also made to the right-of-use asset. Lease liabilities are remeasured at the
Group’s incremental borrowing rates at the date of the change, except where changes in lease payments result from a change
in an index or a rate.
1.10. Financial Instruments
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the
acquisition or issue of financial assets and financial liabilities, other than financial assets and financial liabilities at ‘fair value
through profit or loss’ (‘FVTPL’), are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
liabilities at FVTPL are expensed as incurred and presented within financing activities in the statement of cash flows alongside
the financing instruments to which they relate.
1.10.1. Financial Assets
Financial assets are classified into ‘financial assets at amortised cost’ and ‘financial assets at FVTPL’. The classification is
determined at the time of initial recognition and depends on the Group’s business model for managing the financial assets and
whether the contractual cash flows represent solely payments of principal and interest.
Financial assets at amortised cost
Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal
and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income
using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and
presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as
separate line item in the statement of profit or loss. The Group’s financial assets at amortised cost comprise ‘trade and other
receivables excluding prepayments’ and ‘cash and cash equivalents’.
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Financial assets at FVTPL
A financial asset is classified in this category if it does not meet the criteria for recognition as a financial asset at amortised
cost. Derivatives are classified in this category unless they are designated as in hedging relationships. These contracts
are marked to market by re-measuring them to fair value at the end of each reporting period. The resulting gain or loss is
recognised in the Income Statement.
Offsetting financial instruments
Financial assets and liabilities are offset, and the net amount reported in the balance sheet, when there is a legally enforceable
right to offset the recognised amounts, and there is an intention to settle on a net basis, or realise the asset and settle the
liability simultaneously.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses (‘ECL’) on financial assets at amortised cost. The amount
of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the
respective financial instrument.
For trade receivables and contract assets, the Group recognises expected credit losses that will result from all possible
default events over the expected life of a financial instrument, (lifetime ECL). A default on a financial asset occurs when the
counterparty fails to make contractual payments within 180 days of when they fall due. The Group also assesses on a forward-
looking basis the expected credit losses associated with the trade receivables.
For all other financial instruments, the Group recognises lifetime ECL only when there has been a significant increase in credit
risk since initial recognition. If the credit risk on the financial instrument has not increased significantly since initial recognition,
the Group measures the loss allowance for that financial instrument at an amount equal to the portion of lifetime ECL that is
expected to result from default events on the financial instrument that are possible within 12 months after the reporting date.
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring
on the financial instrument at the date of initial recognition. In making this assessment, the Group considers an actual or
expected significant deterioration in the financial instrument’s external credit rating where available; significant deterioration
in external market indicators of credit risk for a particular financial instrument, e.g. a significant increase in the credit spread or
the credit default swap prices for the debtor; indications that any debtor is experiencing significant financial difficulty, default or
delinquency in payments; an increase in the probability that any debtor will enter bankruptcy, or other financial reorganisation;
and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes
in arrears or economic conditions that correlate with defaults.
1.10.2. Financial Liabilities
Financial liabilities are classified as either ‘financial liabilities at amortised cost’ or ‘financial liabilities at FVTPL’.
Financial liabilities are recognised initially on the date at which the Group becomes party to the contractual provisions of
the instrument.
Financial liabilities at amortised cost
The classification of financial liabilities at amortised cost is determined at the time of initial recognition and depends on
the Group’s business model for managing the financial liabilities and whether the contractual cash flows represent solely
payments of principal and interest.
Financial liabilities at amortised cost, including borrowings and trade and other payables excluding deferred income and
lease liabilities, are measured using the effective interest method, which calculates the amortised cost of a financial liability
and allocates interest expense over its term. The effective interest rate discounts estimated cash payments, (including all
issuance discounts and transactions costs) through the expected life of the financial liability, to the net carrying amount on
initial recognition.
Borrowings, including extensions to existing agreements, are recognised initially at fair value, net of discounts and transaction
costs incurred. Borrowings are subsequently carried at amortised cost. Any difference between the net proceeds and the
redemption value is recognised in the Income Statement over the term of the borrowings using the effective interest method.
Interest arising on financial instruments is recognised on an accruals basis.
In assessing whether a debt alteration is to be treated as a modification or an extinguishment and new arrangement, an
evaluation is made of the qualitative factors such as the underlying parties to the transaction and quantitative factors such as
the impact on the net present value of remaining cash flows. A gain or loss is recognised immediately in the income statement
at the date of the extinguishment of a financial liability.
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Financial liabilities at FVTPL
A financial liability is classified in this category if it does not meet the criteria for recognition as a financial liability at amortised
cost. Derivatives are classified in this category unless they are designated as in hedging relationships. The Group enters into
conventional derivative financial instruments to manage its exposure to foreign exchange rate risks, mostly foreign exchange
forward contracts. Further details of derivative financial instruments are disclosed in Notes 3 and 28. Derivatives are initially
recognised at fair value at the date the derivative contracts are entered into, and are subsequently marked to market by re-
measuring to their fair value at the end of each reporting period. Derivatives designated as hedging instruments are accounted
for in accordance with the hedge accounting policy below.
1.10.3. Derivative instruments and hedge accounting.
The Group enters into derivatives to manage its exposure to foreign currency risk. Derivatives are initially recognised at their
fair value on the date the derivative contract is entered into, and are subsequently remeasured at their fair value at each
balance sheet date.
Prior to March 2020, the Group had net investment hedges. In March 2020 these hedges were all terminated. From that date,
gains and losses which had been accumulated in equity are only released to the Income Statement when the foreign operation
to which they related is partially disposed of or sold.
1.11. Inventories
Inventories are valued at the lower of cost, including an appropriate proportion of overheads, and net realisable value, on the
first-in-first-out principle. Net realisable value represents the estimated selling price for inventories less all estimated costs of
completion and costs necessary to make the sale.
Tooling that is being manufactured for an external customer or supplier is reported as an item of inventory until complete, and
represents the gross amount recoverable from the customer in respect of costs incurred, less progress payments received.
For productive material, cost is standard cost, and for non-productive material (including consumables) cost is actual cost.
The standard cost of finished goods and work in progress comprises raw materials, direct labour, other direct costs and related
production overheads all at standard, based on normal operating conditions. Cash discounts, trade discounts and rebates are
deducted from the costs of purchase. Other costs are included only to the extent that they are incurred in bringing inventories
to their present location and condition. Provision is made for slow moving and obsolete inventory.
1.12. Trade and Other Receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business.
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method. The Group recognises expected credit losses that will result from all possible default events over
the expected life of a financial instrument ‘lifetime ECL’ for all trade and other receivables.
1.13. Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits and money market funds with original maturities of three
months or less.
1.14. Share Capital
Ordinary shares of the Company are classified as equity. Costs directly attributable to the issue of ordinary shares are
recognised in equity as a deduction, net of any tax effects from the proceeds.
1.15. Trade and Other Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accrued expenses are recognised when ownership of goods or services has been transferred but not invoiced.
Trade and other payables are recognised at amortised cost.
1.16. Provisions
A provision is recognised if, because of a past event, the Group has a present legal or constructive obligation that can
be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as a
finance expense. Provisions are not recognised for future operating losses.
Product warranties
A product warranty provision is recognised when specific events occur with the underlying product. The provision is based
on contractual considerations, historical warranty data and expected outcomes against their associated probabilities.
Specific claims are provided for reflecting management’s best estimates of potential exposure.
Restructuring
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the
restructuring either has commenced or has been announced publicly.
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Asset retirement obligations
Provisions are recognised for the estimated costs of dismantling and removing PP&E at the end of its operational life.
Provisions for site restoration in respect of contamination and lease dilapidations are made in accordance with applicable
legal requirements.
1.17. Revenue
IFRS 15 ‘Revenue from Contracts with Customers’ establishes a single model to account for revenue arising from contracts
with customers. Revenue in the course of ordinary activities is measured and recognised using the five-step approach outlined
in IFRS 15:
1. Identify the contract with the customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to the performance obligations in the contract
5. Recognise revenue when the entity satisfies the performance obligations
Step 1:
To be recognised as a contract, there must be appropriate approval from both parties and clear identification of each party’s
rights under the agreement. The payment terms should be evident, with collection of consideration probable.
The Group’s customer arrangements take a variety of forms, with typical contractual frameworks comprising: master terms
and conditions, programme award letters, purchase orders and release orders.
For piece part revenue, volume requirements and mutually enforceable terms are established on the customer issuance of a
release order and therefore this is the relevant accounting unit of contract.
Tooling, prototype and development (‘TPD’) requirements are typically specified in a purchase order or equivalent.
Step 2:
The performance obligation within a piece part release order is to manufacture and deliver the specified volume of requested
parts. The performance obligation of a TPD order is to construct or undertake the relevant tooling and development activities.
Where the different obligations are separable, in terms of both capability and within the contractual documentation, they are
accounted for as distinct performance obligations. Further details regarding the nature of goods and services sold is included
in Note 2.
Step 3:
The fair value of consideration receivable is the transaction price specified in the relevant release order or purchase order, net
of returns, discounts, sales taxes and volume rebates.
For piece part revenue, the price is fixed at the given release order (contract) and does not include any element of
variable consideration.
For TPD revenue, where there is any uncertainty over the amount of consideration that will ultimately be recognised, the
transaction price is constrained until such uncertainty is resolved. Amounts invoiced in excess of the transaction price will be
reflected as pricing accruals or revenue deferrals.
Step 4:
The transaction price established in step 3 is allocated to the distinct performance obligations identified in step 2.
Step 5:
Revenue is recognised on satisfaction of the specified performance obligations, consistent with the passing of control of the
goods and services.
For piece part revenue, control is deemed to have passed at the point in time delivery of the parts specified in the applicable
release order is made.
Where consignment arrangements apply, revenue is only recognised when control of the underlying inventory has passed to
the customer.
For TPD activities, control is deemed to have passed once production part approval process (‘PPAP’) or start of production
(‘SOP’) has been achieved, depending on the specific terms of the agreement. Costs incurred up until this point are
recognised as work-in-progress on the balance sheet and reviewed regularly for impairment should their future recovery
become doubtful. Upfront deposits and progress billings are recorded in deferred revenue, until point of recognition.
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Contract Costs
Incremental costs incurred in obtaining a contract are capitalised and amortised over the applicable programme life, with
regular review for impairment.
Other pre-contract costs and costs of fulfilment are expensed as incurred unless future economic benefit is evident, or if
applicable, within the scope of other standards.
Impairment
Contract assets arise where a performance obligation has been satisfied but amounts due have not been fully recognised
within trade receivables. Contract assets are reviewed for impairment in accordance with IFRS 9 Financial Instruments.
1.18 Other Income and Net Foreign Exchange Gains and Losses
Other income includes government grants, gains and losses on disposals of non-current assets, royalty income, income from
insurance claims, other rental income and other miscellaneous items.
Other net foreign exchange gains and losses arise on movements in the fair value of foreign exchange forward contracts and
the revaluation of Group borrowings. A significant portion of the Group’s external borrowings are denominated in US dollars,
and are largely on-lent to subsidiaries in the UK, whose functional currency is the Euro. The net foreign exchange movement
represents the impact of currency movements on such loans, see Note 3.
1.19 Employee Benefits
Short-term benefits
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is
provided. Accrued paid absence such as holiday pay entitlement is charged to the Income Statement as earned. A liability is
recognised for the amount expected to be paid under bonus plans if the Group has a present legal or constructive obligation to
pay this amount because of past service provided by the employee, and the obligation can be estimated reliably.
Defined contribution plan
Payments to a defined contribution retirement benefit plan are recognised as an expense when employees have rendered
service entitling them to the contributions. A defined contribution plan is a post-employment benefit plan under which the
Group may elect to pay discretionary and fixed contributions to a separate trust and has no legal or constructive obligation to
pay further amounts in respect of past service.
Defined benefit plan
A defined benefit plan provides an amount of benefit that an employee will receive at a later date, usually dependent on one
or more factors such as age, periods of service and compensation. Defined benefit arrangements in the Group include funded
and unfunded pension plans, post-employment healthcare, statutory termination indemnities and long-service awards.
The liability recognised in the balance sheet in respect of defined benefit plans is the present value of the defined benefit
obligation (‘DBO’) at the end of the reporting period less the fair value of plan assets. Where the fair value of plan assets
exceeds the present value of the DBO, an asset is recognised only to the extent of future economic benefits accruing to the
Group either as cash refunds or as a reduction in contributions.
The service cost of providing benefits for funded plans accruing during the year and any past service costs are charged as an
operating expense. The interest cost or credit arising from the unwinding of the discount on the net actuarial liability or asset
is recognised in the Income Statement as finance expense or income. Actuarial gains and losses are recognised in other
comprehensive income in the year in which they arise.
The DBO is calculated annually by independent actuaries using the projected unit credit method. The present value of the DBO
is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are
denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of
the related benefit obligation.
Defined benefit plans – funded
The Group operates funded pension plans in the US, Canada and UK. The US plans are subject to annual actuarial review,
whilst the others are formally valued at least triennially. Assets are held in trusts and are separately administered from the
Group’s activities. Assets include readily marketable equities, credit and diversified growth/multi-strategy funds, and qualifying
insurance policies, and are valued at fair value. The Group makes contributions based on actuarial advice sufficient to meet the
liabilities of the plans.
Defined benefit plans – unfunded including healthcare
The Group operates unfunded employment benefit plans in certain countries of which the most significant are post-
employment healthcare in the US, a closed arrangement, and pension plans in Germany. Other liabilities include statutory
termination indemnities and long-service awards.
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1. Summary of Significant Accounting Policies continued
Share-based compensation
The fair value of equity-settled payments to employees is determined at the date of grant using a Monte Carlo simulation
and Black-Scholes option-pricing models. The expense is recognised in the Income Statement on the straight-line basis over
the period that the employees become entitled to the awards. The credit entry relating to the awards is recorded in equity
(Note 7).
The Group reviews the estimate of the number of shares expected to vest at each balance sheet date. The total amount
expensed is determined by reference to the fair value of the options granted, including any market performance and any
non-vesting conditions, and excluding the impact of any service and non-market performance vesting conditions. Non-market
performance and service conditions are included in assumptions about the number of options that are expected to vest.
1.20 Income Tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the
extent that it relates to items recognised in other comprehensive income and equity.
Current tax
Current tax is the expected tax payable or receivable on the taxable profit or loss for the period, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods.
Uncertain tax positions
The Group operates in many jurisdictions and is subject to tax audits which are often complex and can take several years
to conclude. Therefore, the accrual for current tax includes provisions for uncertain tax positions, which require estimates
for each matter and the exercise of judgement in respect of the interpretation of tax laws and the likelihood of challenge to
historic positions. Management uses in-house tax experts, professional advisers and previous experience when assessing tax
risks. Depending on their nature, estimates of interest and penalties are included either in interest payable or in tax liabilities.
As amounts provided for in any year could differ from eventual tax liabilities, subsequent adjustments may arise which have a
material impact on the Group’s tax rate and/or cash tax payments.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the reporting
date in the countries where the Group operates and generates taxable profits. Management periodically evaluates positions
taken in tax returns with respect to situations in which the applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred tax
Deferred income tax is measured using the tax rates and laws that have been enacted or substantively enacted by the
reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income
tax liability is settled. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against
which those deductible temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for
deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities, and when the deferred income tax assets and liabilities relate to income taxes levied by the
same taxation authority, on either the same taxable entity or different taxable entities, where there is an intention to settle
the balances on a net basis.
1.21 Exceptional Items
Exceptional items are defined as those items that, by virtue of their nature, size and expected frequency, warrant separate
additional disclosure in the consolidated financial statements in order to fully understand the underlying performance of the
Group. These may include the costs of closure of locations or income from the disposal of assets on closure of locations,
the costs of significant headcount reductions, costs arising from the acquisition or disposal of businesses including related
contractual management incentive charges, transaction costs of a significant and non-recurring nature, debt-refinancing costs
including early redemption premiums and the release of unamortised transaction costs following voluntary repayments of
borrowings, impairment charges, and the recognition of previously de-recognised deferred tax assets.
1.22 Deferred Income
Deferred income is recorded when consideration for goods or services provided by the Group is received before the revenue
is recognised.
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
1. Summary of Significant Accounting Policies continued
1.23 Climate Change
The Group assesses the potential impact of climate-related risks based on the Taskforce for Climate-related Financial
Disclosure (‘TCFD’) recommendations. These cover both transitional risks such as legal, technological, and market changes,
and physical risks including direct damage to assets and supply chain disruption. In recognition of the importance of climate
change, the Group has established an Environmental, Social and Governance (‘ESG’) Committee. The Group has published
a target to reduce emissions by 37.5% by 2039 and is implementing initiatives to achieve the same, such as moving from
carbon-based fuels to renewable energy alternatives.
Throughout the Group’s medium term planning horizon of five years the impact of achieving the emissions reduction
across both divisions is principally based on different capital expenditure decisions and certain incremental operating
costs. The impact of changes in capital equipment procurement decisions that improve energy efficiency or reduce water
consumption are incorporated into the Group’s medium term plan. Budgets for operational spending are determined taking
into account additional costs that may be required for ESG initiatives, such as increasing the mix of renewable energy within
the Group’s electricity consumption. Such costs will be recognised on an as incurred basis and are also incorporated into the
Group’s medium term planning for both divisions. The Group specifically considers the potential impact on forecast operating
cash flows arising from future changes in climate change regimes in the annual impairment review of goodwill, tangible and
intangible assets. Full details of this assessment are set out in Note 18 where assumptions have been made regarding the full
recovery from customers of incremental costs arising on the decarbonisation of supply chains or imposition of carbon taxes.
In the case of the FTDS division, further transitional risks have been factored into the Group’s annual impairment assessment
by modelling the impact of the market’s transition to electric powered vehicles in the period beyond the Group’s medium
term horizon of five years and the associated impact this may have on the division’s forecast operating cash flows.
Estimation uncertainty arises from the rate of such market transition and therefore the Group has modelled two scenarios
for this division; a base and downside, and applied judgement in the probability weightings attached to these scenarios.
Further discussion on the critical accounting estimates and judgements made in the impairment test can be found in Note 1.4.
2. Segment Reporting
Notes to segment reporting
In accordance with the provisions of IFRS 8 ‘Operating Segments’, the Group’s segment reporting is based on the
management approach with regard to segment identification, under which information regularly provided to the chief
operating decision maker (‘CODM’) for decision-making purposes forms the basis of the disclosure. The Company’s CODM
is the Chief Executive Officer (‘CEO’), Chief Operating Officer and the Chief Financial Officer. The CODM evaluates the
performance of the Company’s segments primarily on the basis of revenue and Adjusted EBITDA, and Adjusted EBIT, both
non-IFRS measures.
Two operating segments have been identified by the Group: Fluid Carrying Systems (‘FCS’) and Fuel Tank and Delivery
Systems (‘FTDS’). Inter-segment revenue is attributable solely to the ordinary business activities of the respective segment
and is conducted on an arm’s-length basis.
Fluid Carrying Systems (‘FCS’)
FCS products include brake and fuel lines and bundles, thermal management fluid systems (including HEV and BEV heating
and cooling lines), powertrain components and quick-connectors. There is a high degree of vertical integration from the
purchase of raw materials, through tube manufacturing to the assembly of finished products.
Fuel Tank and Delivery Systems (‘FTDS’)
FTDS products include plastic fuel tanks, filler pipes, pumps and modules and level sensors.
The Group recognises revenue on a point in time basis, when the performance obligation to manufacture and deliver products
has been satisfied and control of the parts has transferred to the customer. Volume requirements and delivery schedules are
communicated using frequent release orders with many customers utilising electronic delivery interfaces to transmit such
information and self-billing processes to manage their payment obligations. Payment terms are typically between 30 and
60 days from date of invoicing.
Tooling, Prototype and Development (‘TPD’)
Within both segments, further revenue streams are recognised for distinct TPD services chargeable to a customer.
Revenue recognition for such activities occurs at the point in time control of the goods and services is transferred to the
customer. This is typically Production Part Approval Process (‘PPAP’) or Start of Production (‘SOP’), depending on the specific
terms of the agreement, as at this point all agreed upon specifications have been met. Project durations vary depending on the
scope and complexity of requirements. Payment terms are typically 30 to 60 days post-customer acceptance.
Allocation of corporate costs
Corporate costs comprise costs of stewardship of the Group. Costs incurred in administrative services performed at the
corporate level are allocated to divisions in line with utilisation of the services. Where direct allocation is not possible, costs are
allocated based on revenue for the year.
146
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2. Segment Reporting continued
2.1. Revenue, Adjusted EBITDA and Adjusted EBIT by Segment:
Revenue
Profit/ (loss) for the year
Add back:
Income tax expense/(credit) – after exceptional items
Profit/ (loss) before income tax
Net finance expense – after exceptional items
Share of loss of associate
Operating profit/ (loss)
Depreciation and impairment of PP&E
Depreciation and impairment of right-of-use assets
Amortisation and impairment of intangible assets
Share of loss of associate
Exceptional items
*EBITDA
Net foreign exchange losses/ (gains)
Dividend received from associates
Restructuring costs
Share of loss of associate
Other reconciling adjustments
*Adjusted EBITDA
Less:
Depreciation and impairment of PP&E
Depreciation and impairment of right-of-use assets
Amortisation and impairment of intangible assets
Add back:
Depreciation uplift arising on purchase accounting
Amortisation uplift arising on purchase accounting
*Adjusted EBIT
* Non-IFRS alternative performance measure.
Note
2021
€m
2,956.6
16.0
2020
€m
2,814.5
(252.2)
12
11
19
16
17
15
19
9
19
19
16
17
15
16
15
38.1
54.1
71.8
0.9
126.8
92.0
29.8
70.2
(0.9)
–
317.9
6.9
–
26.8
0.9
0.4
352.9
(92.0)
(29.8)
(70.2)
10.6
41.1
212.6
(1.6)
(253.8)
74.0
3.5
(176.3)
104.6
31.9
76.7
(3.5)
304.6
338.0
(27.2)
0.5
16.1
3.5
–
330.9
(104.6)
(31.9)
(76.7)
12.9
42.7
173.3
During 2021 the Group recorded a €0.4 million settlement loss (2020: €2.1 million gain) following annuity and participant
buyout offerings of the Group’s US pension plans (see Note 29).
Restructuring costs of €26.8 million (€15.3 million in FCS and €11.5 million in FTDS) are primarily severance costs related to
the planned headcount reduction and site closures initiated in the prior year.
147
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Notes to the Group Financial Statements
continued
2. Segment Reporting continued
Revenue
– FCS – External
– Inter-segment
– FTDS – External
– Inter-segment
Inter-segment elimination
Total consolidated revenue
Adjusted EBITDA
– FCS
– FTDS
Adjusted EBITDA % of revenue
– FCS
– FTDS
Total
Adjusted EBIT
– FCS
– FTDS
Adjusted EBIT % of revenue
– FCS
– FTDS
Total
2.2. Revenue by Origin: Geography & Customer Concentration
Germany
Spain
Poland
Czech Republic
Belgium
France
Turkey
United Kingdom
Africa
Other
Europe and Africa
China
South Korea
Other
Asia Pacific
US
Mexico
Canada
North America
Latin America
Total
148
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Annual Report and Accounts 2021
2021
€m
2020
€m
1,603.5
63.1
1,666.6
1,353.1
2.5
1,355.6
(65.6)
2,956.6
1,526.9
67.9
1,594.8
1,287.6
3.3
1,290.9
(71.2)
2,814.5
177.1
175.8
352.9
11.0%
13.0%
11.9%
117.9
94.7
212.6
7.4%
7.0%
7.2%
2021
€m
182.1
163.7
139.1
132.2
90.8
99.5
94.9
61.2
37.2
137.7
1,138.4
672.4
254.7
131.0
1,058.1
481.4
219.1
13.1
713.6
46.5
2,956.6
170.8
160.1
330.9
11.2%
12.4%
11.8%
97.2
76.1
173.3
6.4%
5.9%
6.2%
2020
€m
191.7
140.6
133.0
107.1
94.3
90.5
100.0
59.4
24.2
136.7
1,077.5
654.2
217.2
111.1
982.5
499.2
203.4
12.1
714.7
39.8
2,814.5
2. Segment Reporting continued
Three customers account individually for more than 10% of total revenue and collectively contributed 34.8% of total revenue
across both reporting segments in the year (2020: three customers contributed 34.1%). Revenue recognised for these
customers by segment is as follows:
31 December 2021
Revenue
31 December 2020
Revenue
FCS
€m
501.9
FCS
€m
479.8
FTDS
€m
529.7
FTDS
€m
480.1
Total
€m
1,031.6
Total
€m
959.9
2.3. Non-Current Assets
Total non-current assets, other than financial instruments and deferred tax assets, by the location of assets is as follows:
2021
€m
124.4
100.8
87.7
71.9
48.3
43.8
29.6
117.9
624.4
277.1
76.4
11.0
364.5
428.6
163.4
43.7
1,624.6
FTDS
€m
26.1
127.9
234.5
48.7
9.3
446.5
FTDS
€m
24.1
134.2
250.6
49.4
9.1
–
467.4
2020
€m
131.2
101.3
84.9
76.7
52.4
50.7
31.3
82.8
611.3
272.6
71.0
2.3
345.9
411.3
186.9
77.6
1,633.0
Total
€m
564.3
320.5
595.4
125.2
19.2
1,624.6
Total
€m
535.9
347.9
590.8
124.9
18.9
14.6
1,633.0
FCS
€m
538.2
192.6
360.9
76.5
9.9
1,178.1
FCS
€m
511.8
213.7
340.2
75.5
9.8
14.6
1,165.6
Germany
Poland
Czech Republic
Spain
Turkey
Belgium
United Kingdom
Rest of Europe
Europe and Africa
USA
Mexico
Rest of North America
North America
China
South Korea
Rest of World
Total
31 December 2021
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use assets
Non-current trade and other receivables
Total
31 December 2020
Goodwill
Intangible assets
Property, plant and equipment
Right-of-use assets
Non current trade and other receivables
Investments in associates
Total
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
3. Financial Risk Management
The Board of Directors and key management have overall responsibility for the establishment and oversight of the Group’s risk
management policies, which are established to identify and analyse the risks faced by the Group, to set appropriate risk limits
and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group’s activities.
The Group’s capital structure (comprising of debt (Note 27) and equity (Note 23) is regularly monitored to safeguard the
Group’s ability to continue as a going concern and to provide returns for shareholders and value added benefits for other
stakeholders. The overall capital structure of the Group is designed to meet the strategic objectives of the Company and
its shareholders.
The Group tracks compliance with the financial covenant and the negative covenants in all borrowing facilities. The financial
covenant applies only to the revolving credit facility, which is undrawn (other than for letters of credit). In the event that it
is drawn down and the aggregate principal amount of all outstanding revolving credit facilities exceed 35% of the revolving
credit commitments, then a First Lien Net Leverage Ratio of 3.8x must not be exceeded. At 31 December 2021 the First Lien
Net Leverage Ratio was 0.11x (31 December 2020 2.1x). The negative covenants restrict certain additional indebtedness, the
granting of liens, and the placing of investments against specified basket limits. All basket limits allow sufficient headroom to
manage current and expected transactions.
The Group was in full compliance with its financial covenants in respect of its borrowings and committed facilities throughout
each of the years presented. The level of debt is monitored on an actual and projected basis to ensure continued compliance.
The Group has exposure to the following significant risks from its activities:
3.1. Credit Risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its
contractual obligations. The following categories comprise the main credit exposures of the Group:
– trade and other receivables excluding prepayments
– cash and liquid assets
– derivative financial instruments
The credit risk for trade and other receivables excluding prepayments is normally managed by the operating subsidiaries, by
reference to credit rating agencies and historic trading experience with customers. Further details are available in Note 21.
Cash, which is surplus to normal working capital needs, and any approved capital investments in the operating subsidiaries, is
managed by Group Treasury.
The use of derivative financial instruments is governed by Group policies and managed by Group Treasury. In most cases, the
counterparties are investment grade banks.
Guarantees issued by third parties comprise letters of credit and other bank guarantees, nearly all of which are of a standby
nature. Most of the issuing banks are rated investment grade and these ratings are monitored. If any of these banks became
unable to meet their obligations under a guarantee, it is expected that a similar guarantee could be issued by another bank or
alternative security provided to the beneficiary.
3.2. Liquidity Risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due. The Group
has access to various forms of funding and these are considered sufficient to meet anticipated liquidity requirements.
The Directors believe that there is currently no significant risk that the Group will be unable to fund its planned commitments.
Cash flow forecasts of the Group’s liquidity requirements are monitored regularly to ensure there is sufficient cash and
undrawn committed borrowing facilities to meet operational needs of the Group over the medium term. Surplus cash
generated by the operating entities over and above balances required for normal working capital and any approved investment
is managed by Group Treasury.
The contracted maturity of the Group’s financial liabilities are disclosed in Note 28.2.
3.3. Market Risk
Market risk, is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s
income, expenditure or the value of its holdings of financial instruments. The Group enters into derivative contracts, and incurs
financial liabilities, in order to manage market risks.
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Annual Report and Accounts 2021
3. Financial Risk Management continued
3.3.1. Foreign Currency Risk
The Group is exposed to currency risk on revenue, purchases, investments and borrowings that are denominated in a currency
other than the functional currencies of individual Group entities, which are primarily Euro, US dollars, Chinese renminbi and
Korean won. Where possible, business entities sell in prices denominated in the same currency as the majority of their costs,
to produce a natural hedge. At the reporting date, the majority of cash and cash equivalents in the Group were denominated in
Euro, Chinese renminbi and US dollars.
Net foreign exchange losses recognised in the year of €6.9 million (2020: €27.2 million gain) primarily relate to losses on the
Group’s unhedged US dollar denominated intercompany borrowings in Euro functional currency companies. These mainly
arose in the first quarter of the year, following termination of all the Group’s forward foreign exchange contracts designated
in cash flow hedge relationships in 2020, and before the refinancing completed in April 2021 (see Note 27) which sought to
rebalance the currency split of the external borrowings to reduce the unhedged exposures.
The Group also uses forward foreign exchange contracts not designated in hedge relationships to manage
foreign currency exposure. The nominal value of these derivatives as at 31 December 2021 was €166.8 million
(31 December 2020: €62.9 million) and the aggregate fair value was a €0.6 million net receivable (31 December 2020:
a €0.2 million net receivable).
Sensitivity analysis
Following the Group’s refinancing completed in April 2021, the Group’s exposure to a change in exchange rates is insignificant.
3.3.2. Interest Rate Risk
Most of the Group’s interest rate risk arises on its main external borrowing facilities. On 16 April 2021, the Group successfully
executed a refinancing of its external borrowings which reduced its variable rate borrowings, increased its fixed rate
borrowings, extended the maturity of its borrowings and reduced the interest payable on those borrowings, see Note 27 for
more information.
As part of the refinancing, the Group issued €600.0 million of new unsecured Senior Notes bearing a fixed interest rate of
3.75% per annum, and repaid $436.3 million (€367.5 million) of its US dollar term loan and €232.5 million of its Euro term loan
which bore interest at floating rates of respectively, three-month US dollar LIBOR (minimum 0.75%) +3.75% p.a. and three-
month EURIBOR (minimum 0.75%) +3.75% p.a.
As a result of the refinancing, the rates on the term loans were reduced to US-dollar three-month LIBOR (minimum 0.5% p.a.)
+3.25% p.a on the US dollar term loan and three-month EURIBOR (minimum 0.0% p.a.) +3.25% p.a. on the Euro term loan.
The Group also has a revolving credit facility (‘RCF’) of $225.0 million which was undrawn during the year but for which
interest would be payable in a range of US dollar LIBOR +3.0% to US dollar LIBOR +3.75% p.a. (depending on total net
leverage ratio). As part of the refinancing the undrawn fee on this facility was reduced from 0.375% to 0.25% due to the total
net leverage ratio being less than or equal to 3.5:1. In the event the total net leverage ratio is greater than 3.5:1, the undrawn
fee will increase back to 0.375%.
Sensitivity analysis
If interest rates had been 100 bps higher or lower with all other variables held constant, the pre-tax profit or loss on an annual
basis would be, respectively, €3.0 million lower or €nil higher.
Transition to alternative benchmark interest rates
The Group monitors the market and the output from various industry groups managing the transition to alternative benchmark
interest rates, and will look to include changeover language for different instruments and rates when appropriate.
The Group’s most significant transition risk arises from the transition from US dollar LIBOR to the Secured Overnight Financing
Rate (‘SOFR’). During the year, the Group has reduced the risks arising from the transition by refinancing it’s borrowings.
In April 2021, the Group repaid $436.3 million (€367.5 million) of its US dollar term loan which bore interest pre-refinancing at
three-month US-dollar LIBOR (minimum 0.75% p.a.) +3.75% p.a. and issued new unsecured Senior Notes in Euro bearing a
fixed interest rate. The Group’s US dollar term loan agreement was also amended to contain SOFR transition language.
The Group’s Euro term loan borrowings bear interest post-refinancing at three-month EURIBOR (minimum 0.0%) +3.25% p.a.
EURIBOR has already been subject to a reform and is currently not intended to be replaced with an alternative rate. The impact
of the transition to alternative benchmark rates on the Group’s cash and liquid assets is not expected to be significant in the
current low interest-rate environment. The Group has no derivative arrangements impacted by the transition, and no changes
to the interest rate risk management strategy are currently anticipated as a result of the transition.
Other financial matters
In its normal course of business, the Group does not offer supplier financing arrangements and has not engaged any financial
provider to provide these services to parties in the supply chain.
151
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Notes to the Group Financial Statements
continued
4. Revenue
4.1. Geographic analysis: Revenue by origin
Europe and Africa
Asia Pacific
North America
Latin America
4.2. Geographic analysis: Revenue by destination
Europe and Africa
Asia Pacific
North America
Latin America
4.3. Transaction price allocated to started but incomplete performance obligations
Tooling, prototype and development revenue to be recognised within one year
Tooling, prototype and development revenue to be recognised in more than one year
5. Cost of Sales, Distribution Costs and Administrative Expenses
5.1. Total cost of sales, distribution costs and administrative expenses
Cost of sales
Distribution costs
Administrative expenses
Total cost of sales, distribution costs and administrative expenses
2021
€m
1,138.4
1,058.1
713.6
46.5
2,956.6
2021
€m
1,127.2
1,063.2
719.2
47.0
2,956.6
2021
€m
47.9
16.7
64.6
2021
€m
2,626.8
93.9
105.8
2,826.5
2020
€m
1,077.5
982.5
714.7
39.8
2,814.5
2020
€m
1,073.7
982.8
718.4
39.6
2,814.5
2020
€m
78.9
13.5
92.4
2020
€m
2,613.5
83.7
329.3
3,026.5
In 2020 cost of sales and administrative expenses included €120.4 million and €184.2 million, respectively, in relation to
exceptional impairment charges.
The nature of costs included in cost of sales, distribution costs and administrative expenses is as follows:
Materials and other operating costs
Personnel costs
Depreciation, amortisation and impairment charges
Expense relating to short-term and low value leases
Utilities
Repairs and maintenance
Freight inward, including customs duties
Exceptional costs
Total cost of sales, distribution costs and administrative expenses
Personnel costs include share-based costs (Note 7).
Note
6.1
15/16/17
17.3
9
2021
€m
1,754.4
734.9
192.0
6.1
56.4
31.8
50.9
–
2,826.5
2020
€m
1,650.0
709.7
213.2
5.7
54.4
32.0
56.9
304.6
3,026.5
Administrative expenses comprise the costs of the Group’s administration, commercial and finance functions, along with all
other corporate operating costs.
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5. Cost of Sales, Distribution Costs and Administrative Expenses continued
5.2. Research and development expenditure
Research and development expenditure before third-party income, comprised:
Research and development expenses
Capitalised development costs
Total research and development expenditure
6. Personnel Costs and Numbers
6.1. Personnel costs
Wages and salaries (including employee severance amounts)
Social security costs
Share-based costs
Pension and other post-employment costs: defined benefit current service cost
Pension and other post-employment costs: defined benefit settlement gain
Pension and other post-employment costs: defined contribution
Total personnel costs
Note
15.2
Note
7
29.2
29.2
2021
€m
40.1
27.4
67.5
2021
€m
608.8
109.4
6.8
5.9
0.1
3.9
734.9
2020
€m
43.0
24.3
67.3
2020
€m
585.9
111.9
1.1
8.7
(2.2)
4.3
709.7
Wages and salaries costs in the year include employee severance amounts totalling €23.8 million (2020: €18.1 million).
Economic support payments received direct from government authorities amounted to a net €2.7 million and any payroll
support was fully passed on to employees (2020: €32.0 million).
6.2. Transactions with Key Management Personnel
Key management personnel comprise the Board of Directors and key officers who report directly to the Chief Executive
Officer. The total number of key management personnel was 15 (2020: 15).
At no time during 2021 or 2020 were any loans to key management personnel made by the Group.
Compensation of key management personnel
Short-term employee benefits
Post-employment benefits
Share-based costs
Total
2021
€m
8.9
0.1
4.1
13.1
2020
€m
10.8
0.1
0.8
11.7
There was €3.0 million of compensation outstanding at 31 December 2021 (2020: €5.2 million). In addition to salaries, the
Group also provides non-cash benefits to key management personnel and contributes to post-employment pension plans on
their behalf.
6.3. Personnel numbers
Average monthly number of people employed by function
Direct production
Indirect operational
Commercial and administration
Total
2021
12,037
7,181
1,510
20,728
2020
13,089
7,288
1,584
21,961
In addition to the above, the Group employed an average of 4,838 agency and other temporary workers during the year
(2020: 3,731) whose costs were included in other operating costs.
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continued
7. Share-based Compensation
On 24 October 2017, the TI Fluid Systems plc Long Term Incentive Plan was adopted. Under the plan, awards are granted
annually with a three-year vesting period. Vesting is contingent on the attainment of certain performance conditions over the
three-year performance period as well as the continued service of the award holder. The performance conditions applicable to
awards outstanding as at 31 December 2021 are summarised in the below table:
2018/2019 Conditional Share Awards (‘CSAs’)
Tranche
EPS Growth (‘EPS’)
Percentage of award grant
80%
Total Shareholder Return (‘TSR’)
20%
2020 Conditional Share Awards
Tranche
Cumulative Adjusted Free Cash
flow (‘AFC’)
Percentage of award grant
80%
Total Shareholder Return (‘TSR’)
20%
Performance Condition
EPS compound annual growth
rate over performance period
Rank of the Company’s total
shareholder return for the
performance period against the
FTSE 250
Performance Condition Classification
Non-market based
Market based
Performance Condition
Threshold €110 million,
maximum €260 million,
outperformance €285 million
Rank of the Company’s total
shareholder return for the
performance period against the
FTSE 250
Performance Condition Classification
Non-market based
Market based
2020 Restricted Stock Units (‘RSUs’)
The 2020 RSUs have no performance conditions, other than the continued service of the holder throughout the three-year
vesting period.
2021 Conditional Share Awards - Executive Committee
Tranche
Cumulative Adjusted Free Cash
flow ('AFC')
Percentage of award grant
60%
Total Shareholder Return ('TSR')
20%
Environmental & Social ("E&S")
20%
2021 Conditional Share Awards - Other
Tranche
Cumulative Adjusted Free Cash
flow ('AFC')
Environmental & Social ("E&S")
Time-based
Percentage of award grant
40%
10%
50%
Performance Condition
Threshold €500 million,
maximum €620 million,
outperformance €675 million
Rank of the Company’s total
shareholder return for the
performance period against
the FTSE 250
Average ISS Environmental
and Social QualityScores during
the performance period
Performance Condition Classification
Non-market based
Market based
Non-market based
Performance Condition
Threshold €500 million,
maximum €620 million
Average ISS Environmental
and Social QualityScores during
the performance period
Continued service throughout
the performance period
Performance Condition Classification
Non-market based
Non-market based
Non-market based
Certain Executive Directors are entitled to bonus shares of up to 133% of their CSAs, subject to achieving an enhanced target
in relation to the relevant performance condition.
Award holders are entitled to a dividend equivalent payment, in respect of their awards, for all ordinary dividends that are
declared and paid between the award date and the settlement date. These may be paid in cash at the date of vesting, or paid
in the form of additional conditional awards, subject to the same conditions as the original grant.
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7. Share-based Compensation continued
As the awards are settled in shares of the Company, or cash at the discretion of the Company, they are accounted for as equity
settled awards under IFRS 2 and fair valued at date of grant using the Black-Scholes Option Pricing Model (EPS, AFC, E&S and
time-based tranches) and Monte Carlo simulation (TSR tranche). The fair value is recognised in the Income Statement straight
line over the vesting period, with the anticipated number of awards vesting adjusted for management’s estimate of forfeiture
rate and attainment of non-market-based performance conditions. Achievement of market-based performance conditions is
reflected in the initial fair value of the award.
The weighted average fair value of awards granted in the year was €3.02 (2020: €1.68).
The assumptions used for the grants in the year included a weighted average share price of €3.33 (2020: €1.93), expected
option life of three years (2020: three years), expected volatility of 50.0% (2020: 43.5%) and a weighted average risk-free
interest rate of 0.14% (2020: 0.02%). Awards made to Executive Directors are subject to a two-year holding period post
vesting, for which the valuations have been discounted accordingly.
The expected volatility is based on the historical volatility of the Company’s share price since its admission to trading on
25 October 2017.
The expected volatility of the comparator companies’ share prices and correlation to TIFS is measured over a three-year
period, commensurate with the expected term of the awards.
The risk-free rate of return is based on zero-coupon UK government bond yields corresponding to the expected term.
As award holders are entitled to dividend equivalent compensation during the vesting period, no dividend yield assumption is
required in the valuation of these awards.
The table below provides a reconciliation of awards outstanding:
Outstanding at 1 January 2020
Granted during the year
Forfeited during the year
Outstanding at 31 December 2020
Granted during the year
Vested during the year
Cancelled during the year
Forfeited during the year
Outstanding at 31 December 2021
Number of
awards
11,754,214
7,722,455
(1,527,330)
17,949,339
5,892,871
(390,037)
(178,601)
(4,862,644)
18,410,928
The total share-based cost for the year was €7.2 million, including €0.4 million in relation to employers taxes (2020: €1.1 million
and €0.2 million).
8. Directors’ Remuneration
The Directors’ emoluments, fees, payments for service, compensation for cancelled shares under long-term incentive
schemes and pension benefits are disclosed in the Remuneration Report. See page 92.
9. Exceptional Items
Cost of sales
Administrative expenses
Finance expense
Exceptional expense before income tax
Income tax credit
Exceptional expense after income tax
Note
18
18
11,27
12
2021
€m
–
–
11.8
11.8
(2.8)
9.0
2020
€m
120.4
184.2
–
304.6
(29.7)
274.9
Exceptional finance expenses in the year of €11.8 million (2020: €nil) relates to the expensing to the income statement of
unamortised transaction costs following the voluntary repayment and partial extinguishment of the Group’s Euro and US dollar
term loans. Refer to Notes 11 and 27 for the finance expense, and Note 12 for the associated income tax impact.
In 2020, the exceptional administrative expenses of €184.2 million related to impairments of goodwill made during that year
and the exceptional cost of sales expense of €120.4 million related to impairments of intangible assets, property, plant and
equipment and lease right-of-use assets. Refer to Note 18 for details regarding these impairment charges.
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continued
10. Other Income
Government grants
Insurance claims
Royalty income
Losses on disposal of PP&E, intangible assets and right-of-use assets
Rental income
Loss on disposal of associated undertaking (Note 19)
Other miscellaneous items
Total other income
2021
€m
1.5
0.3
0.1
(0.6)
0.7
(0.2)
1.8
3.6
2020
€m
1.5
0.2
2.2
(0.5)
0.6
–
4.5
8.5
On 8 December 2021, the Group disposed of its investment in its associated undertaking realising a loss on disposal before
tax of €0.2 million. Refer to Note 19 for further details.
In 2020 miscellaneous items included a €2.8 million one-off VAT claim settlement.
11. Finance Income and Expense
Finance income
Interest on short-term deposits, other financial assets and other interest income
Fair value gains on derivatives and foreign exchange contracts not in hedged
relationships
Finance income
Finance expense
Interest payable on term loans including expensed fees
Interest payable on unsecured senior notes including expensed fees
Net interest expense of retirement benefit obligations
Fair value net losses on financial instruments: ineffectiveness
Net interest expense related to specific uncertain tax positions
Interest payable on lease liabilities
Finance expense excluding exceptional items
Unamortised transaction costs expensed on voluntary repayments of borrowings
Exceptional finance expense
Finance expense after exceptional items
Total net finance expense after exceptional items
Fees included in interest payable under the effective interest method
Fees included in interest payable on term loans
Fees included in interest payable on unsecured senior notes
Fees expensed in exceptional finance expense
Fees expensed in respect of term loans
Note
29.2
17.3
9,27.1
9,27.1
Note
27
27
Note
9,27.1
2021
€m
2.6
0.5
3.1
(33.5)
(16.7)
(2.5)
–
(0.6)
(9.8)
(63.1)
(11.8)
(11.8)
(74.9)
(71.8)
2021
€m
(4.4)
(0.8)
2021
€m
(11.8)
2020
€m
2.2
1.3
3.5
(55.9)
–
(4.1)
(7.1)
–
(10.4)
(77.5)
–
–
(77.5)
(74.0)
2020
€m
(8.0)
–
2020
€m
–
Exceptional finance expenses in the year of €11.8 million (2020: €nil) relates to the expensing to the income statement of
unamortised transaction costs following the voluntary repayment and partial extinguishment of the Group’s Euro and US dollar
term loans. Refer to Note 27 for the finance expense, and Note 12 for the associated income tax impact.
In the prior year, the Group terminated all its forward foreign exchange contracts designated in cash flow hedge relationships,
its forward foreign exchange contracts designated in net investment hedges, and all its interest rate swaps. Termination of the
hedges resulted in the recognition of ineffectiveness of €7.1 million.
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12. Income Tax
12.1. Income Tax (Expense)/Credit
Current tax on profit for the year
Exceptional - Current Tax Impact of US Refinancing Costs
Adjustments in respect of prior years
Total current tax expense
Origination and reversal of temporary deferred tax differences
Exceptional - Deferred Tax Impact of US Refinancing Charge
Exceptional - Deferred Tax Impact of Impairment Charge
Total deferred tax benefit/(expense)
Income tax (expense)/benefit - Income Statement
Origination and reversal of temporary deferred tax differences
Income tax (expense)/benefit - Statement of Comprehensive Income
Total income tax (expense)/benefit
2021
€m
(68.1)
1.8
2.7
(63.6)
24.5
1.0
–
25.5
(38.1)
(6.8)
(6.8)
(44.9)
2020
€m
(58.5)
–
5.5
(53.0)
24.9
–
29.7
54.6
1.6
3.6
3.6
5.2
For 2021, the Group is reporting an exceptional US refinancing charge of €11.8 million with a corporate tax benefit of
€1.8 million and a deferred tax benefit of €1.0 million which results in an exceptional effective tax rate of 23.7% (the US 2021
effective tax rate).
For 2020, the Group reported an exceptional impairment charge of €304.6 million with a deferred tax benefit of €29.7 million
which resulted in an exceptional effective tax rate of 9.8%. The low exceptional effective tax rate was due to the fact that the
majority of the impairment was related to goodwill that does not carry a deferred tax balance and therefore this portion of the
impairment was not tax affected.
The table below analyses the constituent elements of the Group income tax charge separately identifying the tax charges
recognised in respect of entities that ordinarily pay tax or where the recognition of deferred tax assets is appropriate, the
impact of entities where the level of tax losses limits the payment of tax or restricts the deferred tax recognition in respect of
the losses, the impact of withholding taxes suffered in the Group, tax charges recognised in respect of unremitted overseas
distributable reserves, and the impact of purchase accounting adjustments.
Results excluding exceptional items
Adjustments:
Disposal of associate investment impact
Share of associate losses
Analysed as:
Tax charges (including deferred tax assets) recognised
Tax losses where no deferred tax assets recognised
Withholding tax and tax on unremitted distributable reserves
Annual amortisation and depreciation of assets with historic purchase
price accounting adjustments
2021
Profit
before tax
€m
65.9
Tax charge
€m
(40.9)
2020
Profit
before tax
€m
50.8
Tax charge
€m
(28.1)
0.2
0.9
67.0
166.7
(46.9)
–
(52.8)
67.0
3.1
–
(37.8)
(43.8)
(0.3)
(6.1)
12.4
(37.8)
–
3.5
54.3
148.5
(38.6)
–
(55.6)
54.3
–
–
(28.1)
(33.2)
(0.2)
(8.5)
13.8
(28.1)
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
12. Income Tax continued
The tax on the Group’s profit/(loss) before tax differs from the theoretical amount that would arise using the UK statutory tax
rate applicable to profits of the consolidated entities as follows:
Profit/(loss) before income tax
Income tax calculated at UK statutory tax
rate of 19% (2020: 19%) applicable to
profits in respective countries
Tax effects of:
Overseas tax rates (excluding associates)
Income not subject to tax
Expenses not deductible for tax purposes -
other & UK non-deductible interest/
expenses
Expenses not deductible for tax purposes -
goodwill impairment
Temporary differences on unremitted
earnings
Specific tax provisions
Unrecognised deferred tax assets
Other taxes
Adjustment in respect of prior years -
current tax adjustments
Adjustment in respect of prior years -
deferred tax adjustments
Impact of changes in tax rate
Double Tax Relief and Other Tax Credits
Income tax (expense)/benefit - Income
Statement
Deferred tax (expense)/credit on re-
measurement of retirement benefit
obligations
Income tax (expense)/credit - Statement
of Comprehensive Income
Total tax (expense)/benefit
2021
Before
exceptional
item
€m
65.9
2021
Exceptional
item
€m
(11.8)
2021 After
exceptional
item
€m
54.1
2020
Before
exceptional
item
€m
50.8
2020
Exceptional
item
€m
(304.6)
2020 After
exceptional
item
€m
(253.8)
(12.5)
(5.9)
7.1
(16.6)
–
0.6
(2.9)
(7.1)
(10.7)
2.7
(0.3)
1.5
3.2
(40.9)
(6.8)
(6.8)
(47.7)
2.2
0.6
–
–
–
–
–
–
–
–
–
–
–
2.8
–
–
2.8
(10.3)
(5.3)
7.1
(9.7)
(5.1)
9.9
57.9
48.2
9.0
–
3.9
9.9
(16.6)
(14.7)
–
(14.7)
–
–
(35.0)
(35.0)
0.6
(2.9)
(7.1)
(10.7)
2.7
(0.3)
1.5
3.2
(3.3)
(2.5)
(4.5)
(8.3)
5.5
0.7
(0.2)
4.1
–
–
(2.2)
–
–
–
–
–
(38.1)
(28.1)
29.7
(6.8)
3.6
(6.8)
(44.9)
3.6
(24.5)
–
–
29.7
(3.3)
(2.5)
(6.7)
(8.3)
5.5
0.7
(0.2)
4.1
1.6
3.6
3.6
5.2
Other taxes comprised various local taxes of €2.2 million (2020: €2.0 million) together with taxes withheld on dividend, interest
and royalty remittances totalling €8.5 million (2020: €6.3 million).
For 2020, the Group reported an exceptional impairment charge of €304.6 million with a deferred tax benefit of €29.7 million.
The majority of the impairment related to goodwill that did not carry a deferred tax balance and therefore this portion of the
impairment had no tax effect and resulted in a material unfavourable permanent tax adjustment.
Factors that may affect future tax charges include the continued non-recognition of deferred tax assets in certain territories
as well as the existence of tax losses in certain territories which could be available to offset future taxable income in certain
territories and for which no deferred tax asset is currently recognised.
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12. Income Tax continued
12.2. Current Income Tax Assets and Liabilities
Current income tax assets
Current income tax liabilities
Net current income tax liabilities
2021
€m
11.4
(49.9)
(38.5)
2020
€m
13.7
(40.7)
(27.0)
Uncertain tax positions
The Group maintains a provision for uncertain tax positions. As at 31 December 2021, the balance was €36.0 million
(2020: €31.9 million). The Group is aware of an increase in global tax audit scrutiny and therefore monitors tax uncertainties in
all geographic regions closely. As each uncertain tax provision is considered more likely than not to materialise, settlement of
the issues that have been provided should not result in a material impact to the effective tax rate. However, in the event that
a favourable conclusion is reached on an uncertain tax position, release of the provision would have a favourable impact on
the Group’s effective tax rate. In the event that a conclusion is reached that exceeds the amount provided for an uncertain tax
position, there would be an unfavourable impact on the Group’s effective tax rate. It is possible that certain tax issues related
to the remaining uncertain tax provisions could settle within the next 12 months although the timing of any settlements are
not certain.
12.3. Deferred Tax Assets and Liabilities
Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities
2021
€m
70.5
(95.8)
(25.3)
2020
€m
62.4
(104.3)
(41.9)
The total deferred tax asset balance as at 31 December 2021 is €70.5 million. It is expected that €31.9 million of the deferred
tax asset will be recovered within the next 12 months and the remaining €38.6 million of the deferred tax asset will be
recovered after 12 months.
The total deferred tax liability balance as at 31 December 2021 is €95.8 million. It is expected that €16.9 million of the deferred
tax liability will be settled within the next 12 months and the remaining €78.9 million of the deferred tax liability will be settled
after 12 months.
12.3.1. Movement on Net Deferred Tax Liabilities
At 1 January
Income statement benefit/(expense)
Exceptional income statement benefit - tax impact of impairment charge
Exceptional income statement benefit - tax impact of US refinancing charge
Tax on remeasurement of retirement benefit obligations
Transfer of uncertain tax position balance from current tax to deferred tax
Transfer of uncertain tax position balance from deferred tax to current tax
Currency translation
At 31 December
2021
€m
(41.9)
24.5
–
1.0
(6.8)
–
0.6
(2.7)
(25.3)
2020
€m
(103.4)
24.9
29.7
–
3.6
(0.7)
–
4.0
(41.9)
Deferred tax assets originating from tax loss carry forwards mainly relate to Germany, France and Spain as at 31 December
2021. Forecasts for Germany, France and Spain are prepared by management on a five-year basis and use external automotive
industry data sources. The forecasts demonstrate several years of continued future profitability and all have consistent
expectations of future financial performance. As a result, management believes that the current tax losses will be utilised.
The aggregate amount of tax liabilities not recognised with respect to temporary differences associated with investment in
subsidiaries, branches and associates, and interests in joint ventures is €nil.
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continued
12. Income Tax continued
12.3.2. Gross Deferred Tax Assets and Liabilities
The analysis of deferred tax assets and liabilities below represents gross amounts before netting of deferred tax assets and
liabilities in certain tax jurisdictions as reflected in the table in 12.3 above.
Assets
Liabilities
Provision
for
pensions
and
employee
benefits
€m
Deferred
interest
deductions
€m
Tax
losses
€m
Tax
credits
€m
Other
specific
provisions
€m
Excess
depreciation
on fixed
assets and
goodwill
€m
Acquisition
related
intangible
assets
€m
Development
intangibles
€m
Loan
fees
€m
Unremitted
earnings
€m
Total
€m
Gross deferred
tax assets and liabilities
At 1 January 2020
Included in the Income
Statement
Exceptional income
statement benefit -
tax impact of
impairment charge
Included in other
comprehensive income
Transfer of uncertain
tax position balance
from current tax to
deferred tax
Currency translation
differences
At 31 December 2020
Included in the Income
Statement
Exceptional income
statement benefit -
tax impact of US
refinancing
Included in other
comprehensive income
Transfer of uncertain
tax position balance
from deferred tax to
current tax
Currency translation
differences
At 31 December 2021
38.2
12.1
8.6
10.9
(0.3)
(10.5)
9.0
8.1
11.1
2.8
–
–
–
–
–
–
–
–
–
–
–
(0.7)
(0.3)
1.3
(0.5)
17.1
(0.6)
17.7
(0.5)
13.4
(3.1)
0.8
8.7
0.2
0.8
–
–
–
–
–
–
–
–
0.6
–
–
–
–
3.6
–
(2.3)
39.2
–
(6.8)
–
1.6
30.9
(60.4)
(20.6)
(74.0)
(2.8)
(26.5) (103.4)
3.6
2.8
10.5
1.1
(2.2) 24.9
25.7
–
–
2.8
(28.3)
3.3
–
–
–
–
–
–
4.0
–
–
–
–
–
–
–
–
29.7
3.6
(0.7)
0.3
(17.5)
2.5
(57.0)
0.2
(1.5)
2.4
4.0
(26.3) (41.9)
1.1
9.9
0.4
2.4
24.5
–
–
–
–
–
–
1.0
–
–
–
–
–
1.0
(6.8)
0.6
0.1
2.2
–
25.8
0.3
18.8
0.9
15.1
(2.2)
(27.2)
(0.6)
(17.0)
(2.9)
(50.0)
(0.1)
(0.2)
0.2
(2.7)
(23.7) (25.3)
12.4. Unrecognised Deferred Tax Assets
Deferred income tax assets are recognised for deductible temporary differences, tax credits and tax losses carried forward to
the extent that the realisation of the related tax benefit through future taxable profits is probable.
At 31 December 2021, the Group did not recognise deferred income tax assets (net of specific tax provisions) of €215.2 million
(2020: €161.0 million).
This is principally represented by gross tax losses in respect of which no deferred income tax asset was recognised (before
the netting of specific provisions) amounting to €673.9 million (2020: €643.2 million) that can be carried forward against future
taxable income. All material tax losses referred to above can be carried forward without time limitation (UK: €623.0 million and
Brazil: €32.7 million). Note that the amount of deferred income tax assets not recognised in respect of the UK had a material
increase from 2020 to 2021, based on restatement of the deferred tax asset from the UK statutory tax rate of 19% to the
increased UK statutory tax rate of 25%.
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13. Earnings Per Share
13.1. Basic and Diluted Earnings Per Share
Basic
Dilutive shares
Diluted
Profit
attributable to
shareholders
(€m)
14.3
–
14.3
2021
Weighted
average
number
of shares
(in millions)
519.1
5.5
524.6
Earnings
Per Share
(€, cents)
2.76
–
2.73
Loss
attributable to
shareholders
(€m)
(254.1)
–
(254.1)
2020
Weighted
average
number
of shares
(in millions)
519.8
2.6
522.4
Earnings
Per Share
(€, cents)
(48.88)
–
(48.88)
In 2020, the dilutive shares attributable to long-term incentives were antidilutive in respect of statutory Loss Per Share.
However, these were dilutive in Adjusted Earnings Per Share as shown in note 13.2.
13.2. Adjusted Earnings Per Share
Adjusted Net Income (€m)
Weighted average number of shares (in millions)
Adjusted Earnings Per Share (€, in cents)
2021
Basic
58.3
519.1
11.23
Diluted
58.3
524.6
11.11
2020
Basic
13.7
519.8
2.64
Diluted
13.7
522.4
2.62
Adjusted Net Income is based on profit for the year attributable to shareholders of €14.3 million (2020: €254.1 million
loss) after adding back exceptional items, associate dividends received and eliminating the impact of net restructuring
charges, foreign exchange gains or losses and the impact of any business acquisitions or disposals, totalling €44.0 million
(2020: €267.8 million).
14. Dividends
The following dividends were declared and paid by the Group:
Amounts recognised as distributions to equity-holders in the year:
Interim dividend of 6.74 Euro cents per share
Interim dividend for the year-ended 31 December 2021 of 1.93 Euro cents per share
Total dividend
2021
€m
35.0
10.0
45.0
2020
€m
–
–
–
On 25 January 2021, the Group announced a one-off interim dividend of €35.0 million at €0.0674 per share which was
paid on 19 February 2021. This dividend is not considered part of the Group’s annual dividend cycle for the year-ended
31 December 2021
The Board has decided to recommend a final dividend of 1.46 Euro cents per share amounting to €7.5 million. Subject to
shareholder approval at the Annual General Meeting on 18 May 2022, the final dividend will be paid on 23 June 2022 to those
on the register on 27 May 2022, the Dividend Record Date, and will be converted to Sterling at a fixed rate on the same date.
The proposed liability has not been recorded as a liability at the balance sheet date in accordance with IAS 10 ‘Events after the
reporting period’.
15. Intangible Assets
Goodwill
Capitalised development expenses, computer software and licences, technology and customer
platforms
Total intangible assets
2021
€m
564.3
320.5
884.8
2020
€m
535.9
347.9
883.8
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continued
15. Intangible Assets continued
15.1. Goodwill
Goodwill is deemed to have an indefinite useful life. It is carried at cost and reviewed annually for impairment.
Cost at 1 January 2021
Currency translation
Cost at 31 December 2021
Accumulated impairment at 1 January 2021
Currency translation
Accumulated impairment at 31 December 2021
Net book value at 31 December 2021
Cost at 1 January 2020
Currency translation
Cost at 31 December 2020
Accumulated impairment at 1 January 2020
Exceptional impairment charge
Currency translation
Accumulated impairment at 31 December 2020
Net book value at 31 December 2020
€m
714.2
33.4
747.6
(178.3)
(5.0)
(183.3)
564.3
€m
739.0
(24.8)
714.2
–
(184.2)
5.9
(178.3)
535.9
15.2. Capitalised Development Expenses, Computer Software and Licences, Technology and Customer Platforms
Intangibles assets are amortised over their useful economic life, which range from 3 to 25 years.
Cost at 1 January 2021
Accumulated amortisation
Net book value at 1 January 2021
Additions
Disposals
Amortisation charge
Currency translation
Net book value at 31 December 2021
Cost at 31 December 2021
Accumulated amortisation
Net book value at 31 December 2021
Capitalised
development
expenses
€m
254.4
(151.5)
102.9
27.4
(0.5)
(25.7)
2.1
106.2
267.2
(161.0)
106.2
Computer
software and
licences
€m
23.3
(12.7)
10.6
1.8
–
(3.4)
0.5
9.5
24.9
(15.4)
9.5
Technology
€m
126.7
(119.8)
6.9
–
–
(2.1)
0.4
5.2
137.8
(132.6)
5.2
Customer
platforms*
€m
455.2
(227.7)
227.5
–
–
(39.0)
11.1
199.6
481.9
(282.3)
199.6
Total
€m
859.6
(511.7)
347.9
29.2
(0.5)
(70.2)
14.1
320.5
911.8
(591.3)
320.5
* Customer platforms includes intangible assets relating to customer platforms, aftermarket customer relationships, trade names and trademarks.
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15. Intangible Assets continued
Cost at 1 January 2020
Accumulated amortisation
Net book value at 1 January 2020
Additions
Disposals
Amortisation charge
Impairments - exceptional charge
Impairments
Currency translation
Net book value at 31 December 2020
Cost at 31 December 2020
Accumulated amortisation
Net book value at 31 December 2020
Capitalised
development
expenses
€m
237.4
(102.2)
135.2
24.3
(0.1)
(26.7)
(21.2)
(5.7)
(2.9)
102.9
254.4
(151.5)
102.9
Computer
software and
licences
€m
16.2
(11.3)
4.9
8.4
–
(1.6)
(0.5)
–
(0.6)
10.6
23.3
(12.7)
10.6
Technology
€m
135.9
(125.5)
10.4
–
–
(2.3)
(0.7)
–
(0.5)
6.9
126.7
(119.8)
6.9
Customer
platforms
€m
474.4
(181.7)
292.7
–
–
(40.4)
(15.2)
–
(9.6)
227.5
455.2
(227.7)
227.5
Total
€m
863.9
(420.7)
443.2
32.7
(0.1)
(71.0)
(37.6)
(5.7)
(13.6)
347.9
859.6
(511.7)
347.9
The above amortisation charges for technology and customer platforms amounting to €41.1 million (2020: €42.7 million) arise
from intangible assets recognised through purchase price accounting. Amortisation charges are included within cost of sales.
As at 31 December 2021, goodwill of €564.3 million (2020: €535.9 million), technology of €5.2 million (2020: €6.9 million)
and customer platforms of €199.6 million (2020: €227.5 million) relate to assets that arose from purchase price allocations
following historic acquisitions.
16. Property, Plant and Equipment
16.1. Movements in Property, Plant and Equipment
Cost
Accumulated depreciation
Net book value at 1 January 2021
Additions
Disposals
Impairments - other charges
Transfers between categories
Depreciation charge
Currency translation
Net book value 31 December 2021
Cost
Accumulated depreciation
Net book value at 31 December 2021
Land and
buildings
€m
162.2
(37.7)
124.5
0.9
0.5
–
2.0
(4.9)
0.7
123.7
169.7
(46.0)
123.7
Plant,
machinery
and
equipment
€m
792.8
(392.1)
400.7
9.2
6.9
(1.9)
75.2
(85.2)
10.5
415.4
875.9
(460.5)
415.4
Assets
in the
course of
construction
€m
76.1
(10.5)
65.6
77.6
(11.1)
–
(77.2)
–
1.4
56.3
66.8
(10.5)
56.3
Total
€m
1,031.1
(440.3)
590.8
87.7
(3.7)
(1.9)
–
(90.1)
12.6
595.4
1,112.4
(517.0)
595.4
Included in land and buildings is a property (Cost: €1.3 million, Net book value €0.7 million) that is let to an external party.
The fair value of this property at 31 December 2021 is €3.5 million (2020: €3.5 million).
As at 31 December 2021, land and buildings of €49.0 million (2020: €48.8 million) and plant, machinery and equipment
of €14.3 million (2020: €24.5 million) relate to asset valuations that arose from purchase price allocations following
historic acquisitions.
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continued
16. Property, Plant and Equipment continued
Cost
Accumulated depreciation
Net book value at 1 January 2020
Additions
Disposals
Impairments - other charges
Impairments - exceptional charge
Transfers between categories
Depreciation charge
Currency translation
Net book value at 31 December 2020
Cost
Accumulated depreciation
Net book value at 31 December 2020
Land and
buildings
€m
175.5
(23.6)
151.9
3.5
(2.6)
–
(13.9)
(1.4)
(7.3)
(5.7)
124.5
162.2
(37.7)
124.5
Plant,
machinery and
equipment
€m
820.2
(346.0)
474.2
51.3
(6.3)
(2.9)
(41.6)
32.9
(94.4)
(12.5)
400.7
792.8
(392.1)
400.7
Assets
in the
course of
construction
€m
88.9
–
88.9
23.6
(1.8)
–
(10.5)
(31.5)
–
(3.1)
65.6
76.1
(10.5)
65.6
Total
€m
1,084.6
(369.6)
715.0
78.4
(10.7)
(2.9)
(66.0)
–
(101.7)
(21.3)
590.8
1,031.1
(440.3)
590.8
16.2. Depreciation Charge
The above depreciation charge includes €10.8 million from plant, machinery and equipment in relation to the fair value uplift
arising from purchase price accounting (2020: €12.9 million, including €2.1 million from land and buildings and €10.8 million
from plant, machinery and equipment).
The total depreciation charge is analysed below:
Cost of Sales
Distribution costs
Administrative expenses
Total depreciation charge
2021
€m
89.0
–
1.1
90.1
2020
€m
100.0
0.4
1.3
101.7
17. Leases
17.1. Leasing Activities
The Group as Lessee
The Group leases various manufacturing facilities, offices, plant and machinery, and cars. Rental contracts are typically
made for fixed initial periods of one to ten years for manufacturing facilities and offices, and two to five years for plant and
machinery, and cars. Many agreements also have extension options, as described below, and contain a range of terms
and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for
borrowing purposes.
Extension options (or periods after termination options) are only included for valuation purposes in the lease term if the lease is
reasonably certain to be extended (or not terminated). Potential future cash outflows of €54.6 million (2020: €52.1 million) have
not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated).
17.2. Amounts recognised in the Balance Sheet
The balance sheet shows the following amounts relating to leases:
Right-of-Use Assets
Non-current liabilities
Lease Liabilities
Current liabilities
Lease Liabilities
Total Lease Liabilities
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2021
€m
125.2
2020
€m
124.9
119.8
122.4
30.1
149.9
28.6
151.0
17. Leases continued
The range of incremental borrowing rates applied to lease liabilities in the year by region was:
Europe and Africa
North America
Asia Pacific
Latin America
2021
Range
2020
Range
3.3% – 23.2% 3.4% – 23.2%
3.4% – 12.6% 3.4% – 12.6%
3.5% – 12.5% 3.5% – 12.5%
7.6% – 47.9% 7.6% – 47.9%
The weighted average incremental borrowing rate applied to the lease liabilities at 31 December 2021 is 6.9% (2020: 6.7%).
The Group believes that any reasonably possible change in the weighted average incremental borrowing rate would not cause
the carrying value of lease liabilities or the lease interest payable charged to the income statement to be materially different.
17.2.1 Right-of-Use Assets
Movements in right-of-use assets in the year are disclosed below:
At 1 January 2021
Additions
Disposals
Remeasurements
Impairments
Depreciation charge
Currency translation
Net book value at 31 December 2021
Cost
Accumulated depreciation
Net book value at 31 December 2021
Land and
buildings
€m
116.3
12.2
(1.4)
7.7
(0.1)
(23.9)
4.8
115.6
197.6
(82.0)
115.6
Plant,
machinery
and
equipment
€m
8.6
5.9
–
0.9
–
(5.8)
–
9.6
20.1
(10.5)
9.6
Total
€m
124.9
18.1
(1.4)
8.6
(0.1)
(29.7)
4.8
125.2
217.7
(92.5)
125.2
The above depreciation charge includes a €0.2 million credit in land and buildings in relation to the fair value uplift arising from
purchase price accounting.
As at 31 December 2021, land and buildings of €0.3 million (2020: €0.6 million) relate to asset valuations that arose from
purchase price allocations following historic acquisitions.
Land and
buildings
€m
149.4
13.7
(0.2)
2.4
(15.9)
(0.6)
(25.3)
(2.0)
(5.2)
116.3
176.4
(60.1)
116.3
Plant,
machinery
and
equipment
€m
12.0
3.6
–
(0.1)
(0.9)
–
(6.0)
–
–
8.6
18.2
(9.6)
8.6
Total
€m
161.4
17.3
(0.2)
2.3
(16.8)
(0.6)
(31.3)
(2.0)
(5.2)
124.9
194.6
(69.7)
124.9
At 1 January 2020
Additions
Disposals
Remeasurements
Exceptional impairments
Impairments
Depreciation charge
Transfers to property, plant and equipment
Currency translation
Net book value at 31 December 2020
Cost
Accumulated depreciation
Net book value at 31 December 2020
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
17. Leases continued
17.2.2 Lease liabilities
Movements in lease liabilities in the year are disclosed below:
At 1 January
Additions
Disposals
Remeasurements
Accrued interest
Repayments
Currency translation
At 31 December
Non-current
Current
At 31 December
The maturity of lease liabilities is:
Less than one year
Between one and three years
Between three and five years
Over five years
Total at 31 December 2021
Less than one year
Between one and three years
Between three and five years
Over five years
Total at 31 December 2020
The currency denomination of lease liabilities is:
Euro
US dollar
Chinese renminbi
Other
Total lease liabilities
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Notes
27.6
11
Total
minimum
lease
payments
€m
38.7
53.3
38.6
55.9
186.5
Total
minimum
lease
payments
€m
37.5
57.3
38.7
54.5
188.0
2021
€m
151.0
18.1
(1.4)
8.5
9.8
(41.4)
5.3
149.9
119.8
30.1
149.9
Interest
€m
8.6
12.4
9.5
6.1
36.6
Interest
€m
8.9
12.4
8.0
7.7
37.0
2021
€m
63.3
51.4
18.2
17.0
149.9
2020
€m
166.7
17.9
(0.3)
2.3
10.4
(39.0)
(7.0)
151.0
122.4
28.6
151.0
Principal
€m
30.1
40.9
29.1
49.8
149.9
Principal
€m
28.6
44.9
30.7
46.8
151.0
2020
€m
69.6
41.6
19.6
20.2
151.0
17. Leases continued
17.3. Amounts recognised in the income and cash flow statements
The statement of profit or loss includes the following amounts relating to leases:
Depreciation charge of right-of-use assets
Exceptional Impairment charge of right-of-use assets
Impairment charge of right-of-use assets
Interest payable on lease liabilities
Expense relating to short-term and low value leases
Notes
18
11
5.1
The total depreciation charge on right-of-use assets in 2021 and 2020 is all reported in cost of sales.
The statement of cash flows includes the following amounts relating to leases:
Cash paid for short-term and low value leases reported within cash generated from operations
Interest paid on lease liabilities reported within interest paid
Lease principal repayments reported separately in cash flows from financing activities
Total cash outflow for leases
2021
€m
29.7
–
0.1
9.8
6.1
2021
€m
6.1
9.8
31.6
47.5
2020
€m
31.3
16.8
0.6
10.4
5.7
2020
€m
5.7
10.4
28.6
44.7
18. Impairments
18.1. Impairment Tests for Goodwill and Intangibles
The purchase of TIFS Holdings Ltd (‘TIFSHL’) on 30 June 2015, which was the previous Parent Company of the Group, and
the consequent fair valuation of assets and liabilities, resulted in total goodwill recognition of €711.1 million and intangibles of
€663.2 million. The purchase of Millennium Industries Corporation on 16 February 2016 resulted in total goodwill recognition
of €57.1 million and intangibles of €72.6 million, included in the FCS-NA CGU.
The intangible assets recognised from acquisitions, as outlined above, included €369.7 million and €57.1 million in relation
to customer platforms arising on the Bain and Millennium acquisitions respectively. These assets reflect the future revenue
expected to arise from customer platforms existing at the date of acquisition, based on platform lives and probabilities
of renewals.
During H1 2020, forecasts for global automotive production volumes in the near and medium term were significantly impacted
by the COVID-19 pandemic, when compared to equivalent forecasts that underpinned the Group’s 2019 annual impairment
assessment, where no impairment was recognised. The scale of this volume deterioration, which was beyond what was
reasonably estimable in early 2020, triggered the Group to perform a full impairment test as at 30 June 2020.
The impairment test for goodwill and intangible assets is conducted at a CGU level, which the Group defines as the
intersection between the two operating segments, FCS and FTDS, and the geographic sub-divisions, North America (‘NA’),
Europe (‘EU’), Asia Pacific (‘AP’) and Latin America (‘LA’).
Before outlining the approach and results of the 2021 annual impairment review, this note will first summarise the outcome
of the interim and full-year impairment assessments made in 2020, as this provides important context for the current
year disclosure.
The results of the H1 2020 impairment test indicated that the carrying values of CGU assets were higher than their recoverable
amounts for six of the CGUs, resulting in the following impairments being recognised at 30 June 2020:
FCS-NA
FCS-EU
FCS-LA
FTDS-NA
FTDS-EU
FTDS-LA
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Recoverable
amount
€m
437.2
421.5
–
68.1
273.2
–
1,200.0
Impairment of
goodwill
€m
71.7
77.7
–
–
34.8
–
184.2
Impairment
of other CGU
assets
€m
–
–
6.3
88.8
22.2
3.1
120.4
Total
exceptional
impairment
charge
€m
71.7
77.7
6.3
88.8
57.0
3.1
304.6
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
18. Impairments continued
The ‘other CGU asset’ impairments of €120.4 million were apportioned across the respective CGU asset categories on a pro
rata basis resulting in the following asset class allocation:
Goodwill
Capitalised development expenses
Computer software and licences
Other intangible assets
Land & buildings
PP&E
Assets in the course of construction
Right-of-use assets
H1 2020
impairment
charge
€m
184.2
21.2
0.5
15.9
13.9
41.6
10.5
16.8
304.6
At 31 December 2020, management performed its annual impairment test.
In H2 2020, automotive production volumes showed signs of stabilisation with actual 2020 global light vehicle production
of 74.6 million units compared with 68.3 million forecast in the H1 2020 impairment model base case scenario. This, in
combination with the execution of internal cost-saving initiatives and restructuring activities resulted in CGU recoverable
amounts in excess of their respective asset carrying values, and therefore no additional impairments were recorded in
H2 2020.
Whilst impairments recorded against goodwill cannot be reversed in a subsequent reporting period, management are
required to monitor external and internal sources of information for indicators that previously recognised impairment losses for
intangible assets, PP&E and leased right-of-use assets may have decreased or no longer exist. This is applicable to FCS-LA,
FTDS-LA, FTDS-NA and FTDS-EU, where asset impairments, other than goodwill, were recorded at H1 2020.
Following this review, management concluded that there was still insufficient evidence to support a significant and prolonged
improvement in the economic performance arising from the underlying CGU assets.
Sensitivity analysis also demonstrated that reasonably possible changes to the estimates made in the H2 2020 impairment
model may result in significant variations in resulting headroom over the short-term, particularly where market interruption
caused by the COVID-19 pandemic persisted. No impairment reversals were therefore recorded as at 31 December 2020.
Goodwill and intangible asset carrying values as at 31 December 2021 were as follows:
FCS
North America
Europe and Africa
Asia Pacific
Latin America
FTDS
North America
Europe and Africa
Asia Pacific
Latin America
2021
2020
Goodwill
€m
Intangibles
€m
Goodwill
€m
Intangibles
€m
150.1
140.7
247.4
–
–
–
26.1
–
564.3
73.1
42.3
77.2
0.1
6.6
76.0
45.2
–
320.5
139.5
140.7
231.6
–
–
–
24.1
–
535.9
80.7
47.1
85.9
–
6.2
81.2
46.8
–
347.9
The intangible assets above include customer platforms arising on the Bain and Millennium acquisitions with carrying values
at 31 December 2021 of €145.8 million and €25.8 million respectively (year-ended 31 December 2020: €168.5 million and
€28.7 million) with remaining useful lives of 4.5 and 5.1 years.
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18. Impairments continued
18.2. 2021 Impairment Test
The estimate of CGU recoverable amounts in the 2021 impairment test are determined based on a value-in-use calculation,
using a discounted cash flow model.
Forecast operating cash flows covering the years 2022-2026 are taken from the Group’s latest budget and medium-term plan
(“MTP”) which utilises November 2021 IHS global light vehicle production forecasts.
In the current year these IHS forecasts have been moderated to capture management’s best assessment of potential
estimation error, particularly in light of the impact global microchip shortages are having on the automotive manufacturing
process. The Group is therefore forecasting based on global automotive production volumes of 80.0 million in 2022, with this
deviation from IHS maintained across the MTP to 2026. This adjustment draws on management’s experience and judgement,
with consideration to historic forecasting inaccuracy retrospectively observed during periods of fluctuating growth/decline in
the market.
Volume forecasts are then further adjusted for product mix, pricing assumptions and market outperformance to establish
forecast sales values. Contribution margin, fixed cost, research and development expenditure, capital expenditure and working
capital management estimates are then applied to arrive at the forecast operating cash flows for inclusion in the model.
In following this approach, management assume that historic cost recovery rates will be maintained in to the future, including
the impact of cost increases arising from the effects of decarbonisation of the supply chain or carbon taxes.
Cash flows resulting from restructuring activities not announced at the reporting date and cash flows that are contingent on
enhanced capital expenditure are excluded from the forecasts. Cash flows from Corporate entities are allocated to CGUs
based on their respective proportion of total Group revenue.
The five-year operating cash flows are then discounted to present value using CGU specific discount rates and combined
with a perpetuity value calculated by applying the long-term expected growth rate to the terminal year cash flow forecast.
The resulting value-in-use is then compared to the carrying value of CGU net assets as at 31 December 2021.
The return to a single base set of 2022-2026 volume forecasts in the current year contrasts with the four-volume scenarios
modelled in H1 2020 and two-volume scenarios modelled in H2 2020. These multiple scenarios were in response to
uncertainty over future sales volume projections caused by the COVID-19 pandemic and associated shocks to customer
demand and supply chains. Management feels there is now sufficient stabilisation in market forecasts to revert to a single
set of 2022-2026 volumes with two FTDS scenarios then captured in the terminal year perpetuity calculations, as further
explained below.
As outlined in Note 1, management have considered the potential impacts of climate change on the impairment assessment.
Cost implications of climate change mitigations have been incorporated into the forecast operating cash flows used in the
impairment model. These include capital investments to reduce the carbon output from the Group’s production processes
and additional budget for increasing the mix of renewable energy within the Group’s electricity consumption, in line with our
commitment to reduce emissions by 37.5% by 2039. As previously noted, other costs arising from the effects of climate
change are assumed to be recovered from customers.
Climate change also poses transitional risks to the products that the Group currently manufacture. This is particularly evident
in the FTDS division, where existing products predominantly cater for internal combustion engine (ICE) vehicle platforms.
The impact of climate change on environmental regimes and automotive market trends has a significant bearing on the rate
of transition to battery electric vehicle (BEV) platforms. In some jurisdictions this transition will be mandated, as governments
announce deadlines for curtailing the production of ICE vehicles, in order to achieve commitments on emissions.
Whilst an increase in hybrid electric vehicle (HEV) production, and their need for higher margin pressurised fuel tanks, offers
mid-term opportunities for the FTDS division, the eventual transition to BEV will result in a declining market for existing FTDS
products. Management’s forecasts suggest the peak in ICE/HEV vehicle production will occur in the mid-to-late 2020s with
BEV platforms subsequently driving future growth in the automotive market.
The risk to future cash flows that can be achieved from the current FTDS technology and asset base has been captured in
the impairment model by applying a negative growth rate to the terminal year perpetuity calculation. As the rate of ICE/HEV
decline post-2026 is highly subjective, management have modelled two potential scenarios:
– Base case scenario: current commitment from the COP21 Paris Agreement to limit global temperature increases over the
next century to 1.5 degrees Celsius.
– Downside scenario: reflecting an acceleration of climate change mitigations and changing customer behaviour.
Management have then applied an 80:20 weighting to these two scenarios to reflect their best assessment of perceived
likelihood of occurrence.
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
18. Impairments continued
As the FCS division is less susceptible to future changes in platform mix that may arise as a result of climate change, a
conventional single-scenario positive long-term expected growth rate is used in the perpetuity calculation.
The 2021 impairment test resulted in positive headroom for all CGUs, demonstrating no additional impairment charges are
required at 31 December 2021. However, the level of headroom observed in FCS-EU, FTDS-NA and FTDS-EU leaves them
sensitive to reasonably possible changes in key input assumptions.
For FTDS-NA and FTDS-EU, where non-goodwill asset impairments were recorded in the prior year, management do not
believe sufficient time has passed since recognising these impairment losses in H1 2020 to evidence a significant and
prolonged improvement in the economic performance arising from the underlying CGU assets. Furthermore, as evidenced in
the below sensitivity analysis, reasonably possible changes to the estimates made in the 2021 impairment model may result in
significant variations in resulting headroom over the short term. Consequently, no impairment reversals have been recorded in
the year.
The low headroom observed in FTDS-NA and FTDS-EU (€2.3 million and €17.7 million) primarily arises due to the use of
negative growth rates in the terminal year perpetuity formula in response to the long-term forecast decline in ICE/HEV
vehicle production.
The FCS-NA and FCS-EU headroom of €29.1 million and €15.3 million is reflective of the transition the division is making in to
the BEV market. Under IAS 36 it is only permissible to include forecast cash flows from products that can be manufactured
using the CGU asset base as at 31 December 2021. Accordingly, for the purposes of the impairment model, a portion of sales
in the later years of the 2022-2026 horizon have been removed, as they are reliant on forecast incremental R&D and capital
investment. As this forecast investment materialises in the form of new CGU assets and the FCS product portfolio evolves,
increasing growth from BEV products will enter into the forecast cash flows used in the impairment model.
The key assumptions used in the value-in-use calculations are:
– forecast operating cash flows
– long-term expected growth rates
– discount rates
Forecast operating cash flows are established as described above, utilising external forecast data from IHS Markit.
Long-term expected growth rates and discount rates are determined with reference to the services of third-party valuation
experts and utilise externally available sources of information, adjusted where relevant for industry specific factors.
Long-term growth rates are based on long-term economic forecasts for growth in the automotive sector in the geographical
regions in which the CGUs operate.
As described above, for FTDS specifically, negative growth rates have been used in the terminal year perpetuity calculation to
capture the impact climate change may have on the rate of market transition to BEVs.
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18. Impairments continued
The negative growth rates for the base case 1.5 degree global warming scenario utilise a long-term forecast prepared by
management in conjunction with external experts covering the period from 2027 to 2035. From this a long-term negative
constant average growth rate (CAGR) has been calculated for each of the CGU geographies, based on a forecast decline
in ICE/HEV volumes to 39.9 million in 2035. The downside global warming scenario then uses a CAGR where the forecast
decline to 2035 is achieved at an accelerated rate. In both scenarios, it is assumed that operating cash flows will reduce in
proportion to revenue.
These negative growth rates are then applied in perpetuity and therefore capture the expected cash generation from ICE/HEV
sales from 2027 onwards.
Discount rates are calculated for each division using a weighted average cost of capital specific to the geographical regions
from which the cash flows are derived.
The range of discount and growth rates used were as follows:
Pre-tax discount rates
North America
Europe and Africa
Asia Pacific
Latin America
Long-term growth rates
North America
Europe and Africa
Asia Pacific
Latin America
2021
FCS
FTDS Base
FTDS Down
2020
FCS
15.25%
15.00%
13.75%
23.75%
2.00%
2.75%
5.00%
4.50%
16.00%
15.25%
16.40%
23.00%
16.00%
15.25%
16.40%
23.00%
(8.30%)
(8.80%)
(5.00%)
NA
(19.70%)
(20.90%)
(11.50%)
NA
15.25%
15.50%
15.50%
26.00%
2.00%
2.75%
5.00%
4.50%
FTDS
16.25%
16.25%
15.75%
24.50%
3.00%
2.50%
4.75%
3.50%
Long-term growth rates are not applicable for FTDS-LA as its valuation is based on forecast cash flows ending in 2022, as the
Group ceases operations in this CGU.
Management consider the input assumptions used in the impairment model to be critical estimates, as there is a significant
risk of a material adjustment to the carrying value of CGU net assets resulting from changes in these assumptions.
Sensitivity analysis
Where management believe a reasonably possible change in assumption could result in the recognition of additional
impairment charges, or in the reversal of previously recognised impairment charges, sensitivity analysis has been performed.
Based on the observed level of headroom in FCS-AP and FTDS-AP, management do not believe a reasonably possible change
in assumptions would impact the carrying value of CGU assets.
Both Latin America CGUs were fully impaired at H1 2020 due to forecast operating losses. Although restructuring activities
were subsequently implemented to mitigate these negative cash flows, uncertainty over the longer-term economic viability
of operations in this region lead management to conclude that it is appropriate to maintain the impairment losses as at
31 December 2021.
Sensitivity analysis has therefore been performed for FCS-NA, FCS-EU, FTDS-NA and FTDS-EU.
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
18. Impairments continued
The following table demonstrates the impact of changes in the long-term expected growth rates and discount rates, in
isolation, for CGUs deemed to be sensitive to such changes.
For FCS-NA and FCS-EU, should a reasonably possible change in input assumption trigger an impairment charge, this would
initially be allocated to the respective goodwill carrying values of €150.1 million and €140.7 million, with any excess then being
prorated across other CGU assets.
FCS-NA
FCS-EU
FTDS-NA
FTDS-EU
H2 assumption
Impact of 100 BPS change
Recoverable
amount
€m
426.3
447.2
Discount
rate
15.25%
15.00%
67.1
16.00%
304.0
15.25%
Long-term
expected
growth rate
2.00%
2.75%
(8.30%) /
(19.70%)
(8.80%) /
(20.90%)
Discount rate
€m
(32.2)
(34.4)
Long-term
expected
growth rate
€m
(20.0)
(21.5)
(3.1)
(12.4)
(1.3)
(4.4)
FCS-NA, FCS-EU, FTDS-NA and FTDS-EU are also sensitive to changes in forecast operating cash flows. Forecast operating
cash flows may be impacted by factors such as reduced demand for products, failure to recover inflationary cost increases and
other potential cost pressures, such as the future imposition of carbon taxes.
The table below outlines the annual percentage reduction to annual forecast operating cash flows (OCF) required for CGU
recoverable amount to equal CGU net assets.
FCS-NA
FCS-EU
FTDS-NA
FTDS-EU
Annual
percentage
reduction in
OCF required
to break even
6.5
3.3
3.2
5.7
Recoverable
amount
€m
426.3
447.2
67.1
304.0
Specific to FTDS, the risks to the division arising from climate change and the associated rate of consumer transition to BEV
vehicles has been captured using two negative perpetuity scenarios.
Assuming 100% weightings to each of these scenarios results in the following hypothetical headroom/(impairment):
FTDS-NA
FTDS-EU
As calculated
€m
2.3
17.7
100%
Base case
€m
4.6
26.0
100%
Downside
€m
(6.9)
(15.8)
This result highlights the sensitivity of the above CGUs to the rate of decline in long-term ICE/HEV sales.
Management believe the rate of decline observed in the downside scenario to be an unlikely outcome, which is reflected in
the assignment of a 20% probability.
To mitigate the risk of future impairments and to achieve optimal allocation of resources, Management will ensure investment
decisions are supported with strong customer demand, enabling capital expenditure to be fully recovered over the underlying
vehicle platform lives.
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19. Investment in Associate
The Group held one associated undertaking, SeAH FS Co., Ltd (‘SeAH FS’). SeAH FS is registered in South Korea and is
engaged in manufacturing and engineering. Its financial year-end is 31 December and its registered address is 180-15 Kebong-
Dong Young, Deoungpo-Gu, Seoul. SeAH FS is a private company, and there is no quoted price available for its shares.
On 8 December 2021, the Group disposed in full of its 20% holding in the issued ordinary shares in the company. The resulting
loss on disposal of the associate is calculated below:
Loss on Disposal of Associate
Sale Proceeds
Carrying Value of the associate at the date of disposal
Profit on disposal of the associate before foreign exchange adjustments
Net investment hedge reclassified to the income statement on the disposal of the investment
Currency translation reclassified to the income statement on disposal of the investment
Loss on disposal of investment in associate before income tax
Taxation on disposal of the investment
Loss on disposal of the associate after income tax
€m
15.5
(13.7)
1.8
(0.9)
(1.1)
(0.2)
(3.1)
(3.3)
The sale proceeds arising from the disposal were KRW21,000 million (€15.5 million). The net investment hedge reclassified
to the income statement on the disposal of the associate relates to the recycling from equity of a portion of a series of
forward foreign exchange contracts to hedge the net investment in the Group’s Korean won investments originally placed in
October 2015.
As a separate transaction, on the same date, the Group also purchased a 27% share of Hanil Tube Corporation which was
owned by SeAH FS. Refer to Note 25 Non-Controlling Interests for more information.
The movements in the investments in the associate in the year were:
Balance at 1 January
Share of loss for the period
Dividends paid
Disposal
Currency translation
Balance at 31 December
2021
€m
14.6
(0.9)
–
(13.7)
–
–
2020
€m
19.2
(3.5)
(0.5)
–
(0.6)
14.6
There were no sales of goods by the Group to SeAH FS in either 2021 or 2020. Purchases of goods by the Group from SeAH
FS in the period until disposal of the Company on 8 December 2021 totalled €7.4 million (2020: €8.1 million).
20. Inventories
Raw materials
Work-in-progress
Finished goods
Tooling under development
Consumables
Total inventories
2021
€m
151.5
40.2
32.3
73.7
34.6
332.3
2020
€m
132.6
37.3
39.6
109.3
32.6
351.4
Consignment inventories from external suppliers held on the Group’s premises at 31 December 2021 amounted to
€25.4 million (2020: €15.9 million) and are excluded from the balances above.
The value of inventories has been assessed on the basis of fair value, in determining that the carrying value is the lower of cost
less any related selling costs and net realisable value.
The cost of inventories recognised as an expense in cost of sales during the year was €1,392.6 million (2020: €1,336.9 million),
including €3.3 million related to write-downs of inventory to net realisable value (2020: €11.0 million).
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
21. Trade and Other Receivables
Trade receivables
Allowance for doubtful debts
Net trade receivables
Prepayments
Contract assets - accrued income
Other receivables
Total net trade and other receivables
Non-current
Current
2021
€m
454.0
(4.9)
449.1
61.4
25.9
3.3
539.7
19.2
520.5
2020
€m
477.7
(4.2)
473.5
57.6
19.6
3.0
553.7
18.9
534.8
Trade receivables disclosed above include amounts that are overdue at the end of the year for which the Group has not
recognised an allowance for doubtful debts because there is still a reasonable expectation of recovering these balances.
21.1. Aged Analysis of Net Trade Receivables
Not overdue
Up to three months overdue
Three to six months overdue
Over six months overdue
Net trade receivables
21.2. Movement in Allowance for Doubtful Debts
At 1 January
Receivables provided for as uncollectible
Amounts written off during the year as uncollectible
Amounts recovered during the year
At 31 December
2021
€m
425.2
20.8
2.5
0.6
449.1
2021
€m
(4.2)
(1.5)
0.2
0.6
(4.9)
2020
€m
456.4
15.7
1.3
0.1
473.5
2020
€m
(3.9)
(1.3)
0.3
0.7
(4.2)
In determining the recoverability of a trade receivable, the Group considers all currently available and forward-looking
information to assess the credit quality of the trade receivable from the date credit was initially granted up to the end
of the reporting period. Receivables provided for as uncollectible and charged to the Income Statement are included in
administrative expenses.
A loss allowance is recognised at an amount equal to the lifetime expected credit losses (‘ECL’) over the life of the contract
‘lifetime ECL’.
21.3. Credit Quality of Receivables
The Group has a large number of customers and considers credit ratings only in respect of major customers from
either Standard & Poor’s or Moody’s. Those customers that have no credit rating are monitored as part of normal credit
control procedures.
Credit rating
A – AAA
B – BBB
Counterparties without external credit rating
Net trade receivables
2021
€m
165.4
164.4
119.3
449.1
2020
€m
155.5
180.5
137.5
473.5
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21. Trade and Other Receivables continued
21.4. Currency Risk of Trade Receivables and Other Receivables
Chinese renminbi
Euro
US dollar
Other currencies
Total net trade receivables and other receivables
21.5. Movement in Accrued Income
At 1 January
Unbilled performance
Transfers to receivables
Impairments through P&L
Other movements
Currency translation
At 31 December
22. Cash and Liquid Assets
Cash at bank and in hand
Cash and cash equivalents in the Balance Sheet
Other deposits
Financial assets at FVTPL
Total cash and liquid assets
2021
€m
155.6
117.7
114.7
64.4
452.4
2021
€m
19.6
11.5
(6.7)
(0.3)
0.7
1.1
25.9
2021
€m
499.1
499.1
0.9
0.9
500.0
2020
€m
166.2
153.9
89.5
66.9
476.5
2020
€m
13.7
9.1
(1.8)
(0.1)
(0.6)
(0.7)
19.6
2020
€m
485.8
485.8
0.9
0.9
486.7
Other deposits of €0.9 million (2020: €0.9 million) include €0.7 million (2020: €0.7 million) pledged to provide a bank guarantee,
as part of a total guarantee of €1.5 million to the Spanish tax authorities in respect of a disputed assessment raised following
a tax audit for the period 2013-2014. The guarantee was cancelled after the balance sheet date and the deposit returned,
following resolution of the dispute.
Financial institution credit rating
A – AA
B – BBB or lower
Cash and cash equivalents in the Balance Sheet
2021
€m
399.5
99.6
499.1
2020
€m
391.0
94.8
485.8
Cash and cash equivalent balances include €2.2 million (2020: €0.8 million) held by subsidiaries as collateral primarily for letters
of credit and foreign exchange facilities.
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
23. Share Capital
Authorised, issued and fully paid-up
At 31 December 2020
At 31 December 2021
Number of
shares
Nominal value
of each share
520,269,141
520,269,141
£0.01
£0.01
Ordinary
shares
€m
5.2
5.2
Ordinary
shares
€m
6.8
6.8
Share
premium
€m
2.2
2.2
Total
€m
9.0
9.0
The Group holds shares in the TI Fluid Systems Employee Benefit Trust (‘EBT’) for the purpose of satisfying awards made to
employees under the TI Fluid Systems plc Long Term Incentive Plan and Deferred Bonus Plan. Such shares are shown as a
deduction to equity in the Statement of Changes in Equity and are not treated as outstanding for the purposes of calculating
earnings per share. Shares held by the EBT do not ordinarily rank for dividend
The movements in ordinary shares held by the EBT in the current and prior year were as follows:
At 1 January 2020
Market purchase
Release to satisfy Deferred Bonus Plan
At 31 December 2020
Release to satisfy Deferred Bonus Plan
Release to satisfy vested conditional share awards
Market purchase
At 31 December 2021
Number of
shares
420,756
1,572,175
(493,024)
1,499,907
(333,427)
(197,603)
2,962,296
3,931,173
€m
–
3.5
(0.2)
3.3
(0.7)
(0.4)
8.3
10.5
The Company is a public limited company which is incorporated and domiciled in England and Wales, with registered
number 09402231.
24. Other Reserves
At 1 January 2021
Net investment hedge: foreign exchange on disposal of overseas operations
Currency translation attributable to owners of the Parent Company
Items that may be subsequently reclassified to profit or loss
At 31 December 2021
Net
investment
hedges
€m
(10.0)
Currency
translation
reserve
€m
(127.7)
0.9
–
0.9
(9.1)
–
75.4
75.4
(52.3)
Forward
contracts
cash flow
hedge
reserve
€m
–
Forward
contracts
cost of
hedging
reserve
€m
(14.2)
11.1
16.2
(11.1)
–
–
–
–
–
–
–
–
(2.0)
–
14.2
–
–
14.2
–
Items that may be subsequently reclassified to profit
or loss
At 1 January 2020
Amount recognised in OCI during the year -
fair value gains/ (losses): effective hedges
Amount recycled from OCI- foreign
exchange remeasurement
Amortisation
Amounts recycled from OCI - interest
Movement in fair value of effective cash
flow hedges
Net investment hedges
Currency translation attributable to owners
of the Parent Company
Items that may be subsequently reclassified
to profit or loss
At 31 December 2020
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Annual Report and Accounts 2021
Net
investment
hedges
€m
(16.9)
Interest rate
swaps
€m
1.0
Hedging
reserve
€m
(30.1)
Currency
translation
reserve
€m
(76.0)
(2.3)
25.0
–
–
–
–
–
6.9
–
6.9
(10.0)
–
–
1.3
(1.0)
–
–
(1.0)
–
–
–
–
–
–
–
(11.1)
(2.0)
1.3
13.2
6.9
–
(51.7)
(51.7)
20.1
(10.0)
(51.7)
(127.7)
(31.6)
(137.7)
Total
€m
(137.7)
0.9
75.4
76.3
(61.4)
Total
€m
(106.1)
25.0
(11.1)
(2.0)
1.3
13.2
6.9
25. Non-Controlling Interests
At 1 January
Share of profit for the year
Currency translation
Total comprehensive income for the year
Reduction in non-controlling interests
Dividends paid
At 31 December
2021
€m
25.2
1.7
(0.3)
1.4
(26.2)
–
0.4
2020
€m
24.5
1.9
(0.7)
1.2
–
(0.5)
25.2
The Group holds a 97% interest in Bundy India Ltd. The Group held a 73% interest in Hanil Tube Corporation, until 8 December
2021 when the Group purchased the remaining 27% for a total consideration in cash of KRW21,000 million (€15.5 million).
There is no contingent consideration applicable to the transaction. Hanil Tube Corporation is located in South Korea.
The difference between the reduction in the non-controlling interests of €26.2 million, above, and the fair value of the
consideration paid of €15.5 million, being €10.7 million, is attributed it to the owners of the parent entity and recognised
directly in retained earnings.
The Group holds a 97% interest in Bundy India Ltd. Non-controlling interests at 31 December 2021 represent the remaining
3% in Bundy India Ltd.
2021
€m
256.7
165.3
85.9
44.3
8.5
0.0
560.7
14.6
546.1
2021
€m
130.8
74.6
(105.4)
(17.7)
–
3.6
85.9
2020
€m
261.2
178.8
130.8
46.1
16.1
1.1
634.1
20.0
614.1
2020
€m
116.2
75.8
(52.7)
(5.0)
(2.2)
(1.3)
130.8
26. Trade and Other Payables
Trade payables
Accrued expenses
Contract liabilities - deferred income
Social security and other taxes
Other payables
Amounts due to associates
Total trade and other payables
Non-current
Current
Accrued expenses include net capital investment grant balances totalling €1.7 million (2020: €1.5 million).
26.1. Movement in Contract Liabilities - Deferred Income
At 1 January
Advance billings
Amounts recognised as revenue
Reversal of prior year deferred income
Other movements
Currency translation
At 31 December
177
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Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
27. Borrowings
Non-current:
Unsecured senior notes
Secured loans:
– Term loans and facilities
– Other secured loans
Total non-current borrowings
Current:
Secured loans:
– Term loans and facilities
Total current borrowings
Total borrowings
Unsecured senior notes
Term loans and facilities
Main borrowing facilities
Other secured loans
Total borrowings
Notes
27.4
27.5
2021
€m
591.7
2020
€m
–
506.8
–
1,098.5
1,069.2
0.1
1,069.3
1.8
1.8
1,100.3
591.7
508.6
1,100.3
–
1,100.3
7.4
7.4
1,076.7
–
1,076.6
1,076.6
0.1
1,076.7
The main borrowing facilities are shown net of issuance discounts and fees of €24.6 million (2020: €25.3 million).
The contracted maturities of borrowings excluding issuance discounts and fees are disclosed in Note 28.2.
Unsecured
senior notes
€m
–
15.9
(15.9)
0.8
600.0
(9.1)
–
–
–
591.7
Term loans
and facilities
€m
1,076.6
29.1
(35.8)
4.4
–
(6.2)
(600.0)
11.8
28.7
508.6
Other loans
€m
0.1
–
(0.1)
–
–
–
–
–
–
–
Main
borrowing
facilities
€m
1,150.7
47.9
(53.1)
8.0
213.6
(17.7)
(209.6)
(63.2)
1,076.6
Other
loans
€m
0.2
–
(0.1)
–
–
–
–
–
0.1
Total
borrowings
€m
1,076.7
45.0
(51.8)
5.2
600.0
(15.3)
(600.0)
11.8
28.7
1,100.3
Total
borrowings
€m
1,150.9
47.9
(53.2)
8.0
213.6
(17.7)
(209.6)
(63.2)
1,076.7
27.1. Movement in Total Borrowings
At 1 January 2021
Accrued interest
Scheduled payments
Fees expensed
New borrowings
Fees on new borrowings
Voluntary repayments of borrowings
Fees expensed on voluntary repayments of borrowings
Currency translation
31 December 2021
At 1 January 2020
Accrued interest
Scheduled payments
Fees expensed
New borrowings
Fees on new borrowings
Voluntary repayments of borrowings
Currency translation
At 31 December 2020
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TI Fluid Systems plc
Annual Report and Accounts 2021
27. Borrowings continued
On 16 April 2021, the Group successfully executed a refinancing of its external borrowings. The key elements of the
transaction were as follows:
– The Group issued €600.0 million new unsecured Senior Notes bearing an interest rate of 3.75% per annum. The maturity
date of the notes is 15 April 2029.
– The Euro term loan of €497.5 million was partly repaid using a portion of the proceeds from the issuance of the unsecured
Senior Notes. €232.5 million was repaid as part of the transaction, reducing the balance outstanding on the loan to
€265.0 million. The remaining balance on the loan was then extended from 16 December 2024 to 16 December 2026.
The rate on the loan was also reduced from three-month EURIBOR (minimum 0.75% p.a.) +3.75% p.a. to three-month
EURIBOR (minimum 0.0% p.a.) +3.25% p.a. As a result of the loan principal reduction the amount repayable per quarter
on the loan has fallen from €1,250,000 a quarter to €662,500 a quarter until the final balance falls due on 16 December 2026.
– The US dollar term loan of $736.3 million was also partly repaid using a portion of the proceeds from the issuance of
the unsecured Senior Notes. $436.3 million (€367.5 million) was repaid as part of the transaction, reducing the balance
outstanding on the loan to $300.0 million. The remaining balance on the loan was then extended from 16 December 2024
to 16 December 2026. The rate on the loan was also reduced from US dollar three-month LIBOR (minimum 0.75% p.a.)
+3.75% p.a. to US-dollar three-month LIBOR (minimum 0.5% p.a.) +3.25% p.a. As a result of the loan reduction the amount
repayable per quarter on the loan has fallen from $1,850,000 a quarter to $750,000 a quarter until the final balance falls due
on 16 December 2026.
– The revolving credit facility (‘RCF’) of $225.0 million was extended from 16 July 2024 to 16 July 2026. The undrawn fee
was also reduced from 0.375% to 0.25% due to the total net leverage ratio being less than or equal to 3.5:1. In the event
the total net leverage ratio is greater than 3.5:1, the undrawn fee will increase back to 0.375%.The amount of the facility
remained unchanged.
The refinancing was treated as a partial extinguishment of the Group’s term loans, and as a result unamortised transaction
costs were released for the Euro and US dollar term loans in proportion to the reduction in the loan principal outstanding.
The costs released were recognised as an exceptional finance expense in the income statement in the year of €11.8 million
being $8.8 million (€7.4 million) for the US dollar term loan and €4.4 million for the Euro term loan.
Directly attributable incremental fees of €15.3 million were capitalised and paid in the year as part of the transaction consisting
of €1.4 million for the Euro term loan, $4.2 million (€3.5 million) for the US dollar term loan, $1.5 million (€1.3 million) for the
RCF and €9.1 million for the unsecured Senior Notes. These will be released to the Income Statement over the remaining term
of the borrowings and RCF facility.
27.2. Currency Denomination of Borrowings
US dollar
Euro
Total borrowings
2021
€m
251.1
849.2
1,100.3
2020
€m
587.9
488.8
1,076.7
The contracted maturities of borrowings excluding issuance discounts and fees are disclosed in Note 28.2.
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continued
27. Borrowings continued
27.4. Main Borrowing Facilities
The main borrowing facilities are comprised of unsecured Senior Notes and a package of secured loans consisting of a Euro
term loan, a US dollar term loan, and a revolving credit facility (which was undrawn during the year except for letters of credit).
The amounts outstanding under the agreements are:
Principal outstanding:
Unsecured senior notes
US term loan
Euro term loan
Total principal outstanding
Issuance discounts and fees
Main borrowings facilities
2021
€m
2020
€m
600.0
261.9
263.0
1,124.9
(24.6)
1,100.3
–
603.1
498.8
1,101.9
(25.3)
1,076.6
Unsecured Senior Notes
The unsecured Senior Notes bear an interest rate of 3.75% per annum and mature on 15 April 2029. Interest on the Notes is
payable semi-annually in arrears on 15 April and 15 October of each year, commencing on 15 October 2021.
Term loan
The principal outstanding of the US term loan in US dollars at 31 December 2021 is $297.8 million (2020: $738.2 million).
Following the Group’s refinancing on 16 April 2021, the interest rate on the loan is US dollar three-month LIBOR (minimum
0.5% p.a.) +3.25% p.a. and the amount repayable per quarter on the loan is $750,000 until the final balance falls due on
16 December 2026.
The rate on the Euro term loan after the Group’s refinancing is three-month EURIBOR (minimum 0.0% p.a.) +3.25% p.a.
and the amount repayable per quarter is €662,500 until the final balance falls due on 16 December 2026.
Revolving Credit Facility
The revolving credit agreement provides a facility of up to $225.0 million. Drawings under this facility bear interest in a range
of US dollar LIBOR +3.0% to US dollar LIBOR +3.75% p.a. depending on the Group’s total net leverage ratio. The facility
is available to be used to issue letters of credit on behalf of TI Group Automotive Systems LLC, a subsidiary undertaking.
The facility was undrawn at 31 December 2021 and 31 December 2020 (except for letters of credit see below). Following the
Group’s refinancing, the revolving credit facility (‘RCF’) expires on 16 July 2026 and the undrawn fee is 0.25%. In the event the
total net leverage ratio is greater than 3.5:1, the undrawn fee will increase back to 0.375%
The net undrawn facilities under the RCF are shown below:
RCF Agreement
Utilisation for letters of credit
Net undrawn revolving credit facility
2021
€m
225.0
(1.9)
223.1
€m
197.9
(1.7)
196.2
2020
€m
225.0
(3.8)
221.2
€m
183.8
(3.1)
180.7
Issuance discounts and fees
All capitalised fees are expensed using the effective interest rate method over the remaining terms of the facilities. As a result
of the refinancing, an additional €15.3 million of fees were capitalised in the year and €11.8 million was recognised as an
exceptional finance expense. Net issuance discounts and fees at 31 December 2021 are €24.6million (2020: €25.3 million).
27.5. Other Secured Loans
A subsidiary in Spain has granted security over certain of its assets in return for credit facilities from its banks. The loan has
total amortisation repayments of €54,000 per annum payable biannually (2020: €54,000) and expires on 15 June 2022.
The balance outstanding at 31 December 2021 is €27,000 (2020: €115,000).
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27. Borrowings continued
27.6. Total Undrawn Borrowing Facilities
Floating rate:
Expiring within one year
Expiring after more than one year
Total at floating rate
Fixed rate:
Expiring within one year
Total at fixed rate
Total at the end of the year
2021
€m
10.8
196.2
207.0
–
–
207.0
2020
€m
4.8
180.7
185.5
3.8
3.8
189.3
27.7. Movements in Net Borrowings and Lease Liabilities
At
1 January
2021
485.8
0.9
(1,076.7)
(590.0)
(151.0)
Cash flows
€m
(11.0)
–
22.1
11.1
31.6
New leases
€m
–
–
–
–
(18.1)
Non-cash changes
Fees
expensed
including
exceptional
fees
€m
–
–
(17.0)
(17.0)
–
Currency
translation
€m
24.3
–
(28.7)
(4.4)
(5.3)
Remeasure-
ment and
disposals
€m
–
–
–
–
(7.1)
At
31 December
2021
€m
499.1
0.9
(1,100.3)
(600.3)
(149.9)
(741.0)
42.7
(18.1)
(17.0)
(9.7)
(7.1)
(750.2)
Cash and cash equivalents
Financial assets at FVTPL
Borrowings
Total net borrowings
Lease liabilities
Net borrowings and lease
liabilities
Non-cash changes
At
1 January 2020
411.7
0.9
(1,150.9)
(738.3)
(166.7)
Cash flows
€m
110.6
–
19.0
129.6
28.6
New leases
€m
–
–
–
–
(17.9)
Fees expensed
€m
–
–
(8.0)
(8.0)
–
Currency
translation
€m
(36.5)
–
63.2
26.7
7.0
Remeasurement
and disposals
€m
–
–
–
–
(2.0)
At
31 December
2020
€m
485.8
0.9
(1,076.7)
(590.0)
(151.0)
(905.0)
158.2
(17.9)
(8.0)
33.7
(2.0)
(741.0)
Cash and cash equivalents
Financial assets at FVTPL
Borrowings
Total net borrowings
Lease liabilities
Net borrowings and
lease liabilities
Cash flows from financing activities arising from changes in financial liabilities are analysed below:
Proceeds from new borrowings
Fees paid on proceeds from new borrowings
Voluntary repayments of borrowings
Scheduled repayments of borrowings
Lease principal repayments
Cash outflows from financing activities arising from changes in financial liabilities
Borrowings cash flows
Lease liabilities cash flows
Cash outflows from financing activities arising from changes in financial liabilities
2021
€m
(600.0)
15.3
600.0
6.8
31.6
53.7
22.1
31.6
53.7
2020
€m
(213.6)
17.7
209.6
5.3
28.6
47.6
19.0
28.6
47.6
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continued
28. Fair Values of Financial Assets and Liabilities
28.1. Financial Instruments by Category
As at 31 December 2021:
Financial assets
Cash and cash equivalents
Financial assets at FVTPL
Trade and other receivables excluding prepayments
Derivative financial instruments:
Forward foreign exchange contracts (cash flow hedges)
Total at 31 December 2021
Financial liabilities
Trade and other payables excluding deferred income
Borrowings: Term loans and facilities
Borrowings: Unsecured senior notes
Lease liabilities
Derivative financial instruments:
Forward foreign exchange contracts (cash flow hedges)
Total at 31 December 2021
As at 31 December 2020:
Financial assets
Cash and cash equivalents
Financial assets at FVTPL
Trade and other receivables excluding prepayments
Derivative financial instruments:
– Forward foreign exchange contracts (cash flow hedges)
Total
Financial liabilities
Trade and other payables excluding deferred income
Borrowings
Lease liabilities
Derivative financial instruments:
– Forward foreign exchange contracts (cash flow hedges)
Total
Assets at
amortised
cost
€m
499.1
–
478.3
Assets at
FVTPL
€m
–
0.9
–
–
977.4
0.9
1.8
Liabilities at
amortised
cost
€m
(474.8)
(508.6)
(604.5)
(149.9)
Liabilities at
FVTPL
€m
–
–
–
–
Total
€m
499.1
0.9
478.3
0.9
979.2
Total
€m
(474.8)
(508.6)
(604.5)
(149.9)
–
(1,737.8)
(0.3)
(0.3)
(0.3)
(1,738.1)
Assets at
amortised
cost
€m
485.8
–
496.1
–
981.9
Assets at
FVTPL
€m
–
0.9
–
0.4
1.3
Total
€m
485.8
0.9
496.1
0.4
983.2
Liabilities at
amortised
cost
€m
(503.3)
(1,076.7)
(151.0)
Liabilities at
FVTPL
€m
–
–
–
Total
€m
(503.3)
(1,076.7)
(151.0)
–
(1,731.0)
(0.2)
(0.2)
(0.2)
(1,731.2)
Fair value estimates of derivatives are based on relevant market information and information about the financial instruments,
which are subjective in nature. The fair value of these financial instruments is estimated by discounting the future cash flows
to net present values using appropriate market rates prevailing at the reporting date, which is a proxy for market price.
All derivative items reported are within Level 2 of the fair value hierarchy specified in IFRS 13 ‘Fair Value Measurement’; their
measurement includes inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.
The unsecured Senior Notes are quoted instruments and the fair value is calculated based on the market price. The fair value
of the notes is within Level 1 of the fair value hierarchy specified in IFRS 13 ‘Fair Value Measurement’.
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28. Fair Values of Financial Assets and Liabilities continued
The fair values of other non-derivative amounts are determined in accordance with generally accepted valuation techniques
based on discounted cash flow analysis. It is assumed that by their nature their carrying value approximates their fair value.
These fair values are within Level 2 of the fair value hierarchy specified in IFRS 13 ‘Fair Value Measurement’.
28.2. Contracted Maturities of Financial Liabilities
As at 31 December 2021:
Borrowings excluding issuance discounts and fees
(discounted)
Interest
Undiscounted contracted maturities of borrowings
Lease liabilities (discounted)
Interest
Undiscounted contracted maturities of lease
liabilities
Trade and other payables excluding deferred income
Total undiscounted contracted maturities of financial
liabilities
As at 31 December 2020:
Borrowings excluding issuance discounts and fees
(discounted)
Interest
Undiscounted contracted maturities of borrowings
Lease liabilities (discounted)
Interest
Undiscounted contracted maturities of lease liabilities
Trade and other payables excluding deferred income
Total undiscounted contracted maturities of financial
liabilities
Less than
one year
€m
Between one
and three
years
€m
Between
three and five
years
€m
Over five
years
€m
5.3
41.1
46.4
30.1
8.6
38.7
466.4
10.6
81.5
92.1
40.9
12.4
53.3
8.4
509.0
80.8
589.8
29.1
9.5
38.6
–
600.0
51.6
651.6
49.8
6.1
55.9
–
Total
€m
1,124.9
255.0
1,379.9
149.9
36.6
186.5
474.8
551.5
153.8
628.4
707.5
2,041.2
Less than
one year
€m
Between one
and three
years
€m
Between
three and five
years
€m
Over five
years
€m
11.1
50.1
61.2
28.6
8.9
37.5
491.4
22.1
98.7
120.8
44.9
12.4
57.3
11.9
1,068.7
48.6
1,117.3
30.7
8.0
38.7
–
–
–
–
46.8
7.7
54.5
–
Total
€m
1,101.9
197.4
1,299.3
151.0
37.0
188.0
503.3
590.1
190.0
1,156.0
54.5
1,990.6
29. Retirement Benefit Obligations
29.1. Defined Benefit Arrangements
Pension plans
The Group operates funded defined benefit pension plans in the US, Canada and the UK under broadly similar regulatory
frameworks. All of the plans provide benefits to members in the form of a guaranteed level of pension payable for life.
The level of pensions provided is determined by members’ length of service and, for most of these plans, pensionable
remuneration. Plan assets are held in trusts from which all benefit payments are made. The plans are governed by local
regulations and practice, including the nature of the relationship between their trustees and the Group. Responsibility for
governance of the plans, including investment strategy and schedules of contributions, rests primarily with the trustees, some
of whom who are appointed by the Group and the remainder by the members in accordance with the rules of each plan.
The plan in the US is closed to both new entrants and future accrual. The active members are not required to make
contributions to the plans. Pensions in payment are not subject to inflationary increase. The plan in Canada remains open to
new entrants, and is contributory. Pensions in payment are subject to discretionary inflationary increase. The UK plan is closed
to new entrants but remains open to future accrual. Pensions in payment are subject to annual increase based on the UK Retail
Price Index.
Independent accounting valuations of all major defined benefit scheme assets and liabilities were carried out as at
31 December 2021. The US pension plans are subject to annual actuarial valuation, and were most recently valued by
independent qualified actuaries as at 1 January 2021. The Canadian pension plan is subject to actuarial valuation at least
triennially, and was most recently formally valued as at 30 June 2021. The UK plan is subject to triennial actuarial valuation,
and was most recently formally valued as at 6 April 2018. Employer funding contributions to the US and other funded pension
plans are agreed at each formal valuation, and for the year-ended 31 December 2021 totalled €3.4 million (2020: €7.8 million).
Contributions for the 12 months ended 31 December 2022 are expected to amount to €3.7 million.
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continued
29. Retirement Benefit Obligations continued
In this note the US plans are shown separately as US pensions, and the Canadian and UK plans are aggregated as
other pensions.
Post-employment healthcare
The Group operates post-employment medical benefit schemes in a small number of territories, principally the US where the
scheme was closed to new entrants in 1992. These schemes are unfunded. The US scheme is subject to annual actuarial
valuation, and was most recently valued by independent qualified actuaries as at 1 January 2021. In this note the US scheme is
shown separately as US healthcare, and the other healthcare liabilities are aggregated within other post-employment liabilities.
Other post-employment arrangements
The Group operates certain other pension and retirement plans primarily in Germany, France, Italy, Korea, Poland and
Belgium, where obligations are either partially funded or unfunded. In this note these plans are aggregated within ‘other
post-employment liabilities’.
29.2. Defined Benefit Arrangements in the Primary Financial Statements
The net liability for defined benefit arrangements is as follows:
a. Balance Sheet
Net liability
Present value of retirement benefit obligations
Fair value of plan assets
Asset ceiling
Net liability at 31 December 2021
Net liability
Present value of retirement benefit obligations
Fair value of plan assets
Asset ceiling
Net liability at 31 December 2020
US
pensions
€m
(184.5)
150.7
–
(33.8)
US
pensions
€m
(209.2)
156.9
–
(52.3)
Other
pensions
€m
(117.7)
126.5
(9.3)
(0.5)
Other
pensions
€m
(117.9)
115.4
(3.6)
(6.1)
US
healthcare
€m
(33.4)
–
–
(33.4)
Other post-
employment
liabilities
€m
(88.2)
27.8
–
(60.4)
US
healthcare
€m
(33.8)
–
–
(33.8)
Other post-
employment
liabilities
€m
(95.3)
26.8
–
(68.5)
The present value of retirement benefit obligations by member type is as follows:
Active members
Deferred members
Retirees
Total
The expected payments at 31 December 2021 for retirement benefit obligations are as follows:
2021
€m
134.2
87.5
202.1
423.8
2022
2023
2024
2025
2026
2027 onwards
Total
€m
(423.8)
305.0
(9.3)
(128.1)
Total
€m
(456.2)
299.1
(3.6)
(160.7)
2020
€m
143.5
92.1
220.6
456.2
Payments
expected
€m
20.2
20.9
21.3
21.3
21.4
580.4
The implied weighted average duration at 31 December 2021 of retirement benefit obligations are as follows (in years):
US pensions 12.2 (2020: 12.3), Other pensions 19.5 (2020: 21.8) and US healthcare 8.9 (2020: 9.3).
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29. Retirement Benefit Obligations continued
b. Income Statement
Net income/(expense) recognised in the Income Statement is as follows:
Net (expense)/income
Current service cost
Past service cost
Settlement/curtailment (loss)/gain
Net interest expense
Total expense for the year-ended 31 December 2021
US
pensions
€m
–
–
(0.4)
(1.2)
(1.6)
Other
pensions
€m
(1.6)
–
(0.9)
–
(2.5)
US
healthcare
€m
–
–
–
(0.7)
(0.7)
Other post-
employment
liabilities
€m
(4.3)
0.6
0.6
(0.6)
(3.7)
Annuity and participant buyout offerings of the Group’s US pension plan resulted in a settlement loss of (€0.4) million
(2020: €2.1 million gain).
Restructuring of the Group’s Bramalea Canada facility resulted in a curtailment loss of (€0.9) million (2020: nil).
Net (expense)/income
Current service cost
Settlement/curtailment gain
Net interest (expense)/income
Total expense for the year-ended 31 December 2020
US
pensions
€m
(0.2)
2.1
(2.4)
(0.5)
Other
pensions
€m
(1.3)
–
0.1
(1.2)
US
healthcare
€m
–
–
(1.0)
(1.0)
Other post-
employment
liabilities
€m
(7.2)
0.1
(0.8)
(7.9)
c. Statement of Comprehensive Income
Re-measurements of retirement benefit obligations included in the Statement of Comprehensive Income are as follows:
Income/(expense)
Return on assets excluding amounts recognised in the
Income Statement
Changes in demographic assumptions
Changes in financial assumptions
Experience gains/(losses)
Change in asset ceiling
Total net income for the year-ended
31 December 2021
Income/(expense)
Return on assets excluding amounts recognised in the
Income Statement
Changes in demographic assumptions
Changes in financial assumptions
Experience gains/(losses)
Change in asset ceiling
Total net expense for the year-ended 31 December 2020
US
pensions
€m
Other
pensions
€m
US
healthcare
€m
Other post-
employment
liabilities
€m
13.7
(0.7)
11.0
(1.3)
–
22.7
3.0
1.4
4.9
3.6
(5.3)
7.6
–
(0.2)
0.5
1.3
–
1.6
0.1
–
3.4
0.9
–
4.4
US
pensions
€m
Other
pensions
€m
US
healthcare
€m
Other post-
employment
liabilities
€m
13.0
(0.5)
(22.6)
0.5
–
(9.6)
9.5
(0.3)
(14.7)
(0.3)
1.2
(4.6)
–
–
(4.1)
(0.2)
–
(4.3)
–
0.2
(3.0)
0.2
–
(2.6)
Total
€m
(5.9)
0.6
(0.7)
(2.5)
(8.5)
Total
€m
(8.7)
2.2
(4.1)
(10.6)
Total
€m
16.8
0.5
19.8
4.5
(5.3)
36.3
Total
€m
22.5
(0.6)
(44.4)
0.2
1.2
(21.1)
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continued
29. Retirement Benefit Obligations continued
29.3. Composition of Plan Assets
Plan assets are comprised as follows:
Investment funds: Equities*
Investment funds: Credit*
Investment funds: Diversified growth/multi strategy*
Insurance contracts
Cash and cash equivalents
Plan assets as at 31 December 2021
Investment funds: Equities*
Investment funds: Credit*
Investment funds: Diversified growth/multi strategy*
Insurance contracts
Cash and cash equivalents
Plan assets as at 31 December 2020
US
pensions
€m
83.7
65.7
–
–
1.3
150.7
US
pensions
€m
89.8
62.5
–
–
4.6
156.9
Other
pensions
€m
8.8
41.6
68.2
7.7
0.2
126.5
Other
pensions
€m
8.4
40.4
58.4
7.8
0.4
115.4
Other post-
employment
liabilities
€m
–
–
–
27.6
0.2
27.8
Other post-
employment
liabilities
€m
–
–
–
26.6
0.2
26.8
Total
€m
92.5
107.3
68.2
35.3
1.7
305.0
Total
€m
98.2
102.9
58.4
34.4
5.2
299.1
* 88% and 87% of the assets held by the retirement benefit plans as of 31 December 2021 and 31 December 2020, respectively, are in investment funds
comprised of underlying equity, credit and diversified growth assets with quoted market prices. Investment funds themselves are not considered quoted as
they are pooled, commingled vehicles such as unit trusts and mutual funds, whereby the pension scheme owns units in the fund alongside other investors.
The remaining assets held by the plan are unquoted insurance policies, principal-interest guaranteed insurance contracts and cash and cash equivalents.
29.4. Net Defined Benefit Obligations
Movements in net defined benefit obligations
At 1 January 2021
Current service cost
Past service cost
Settlement/curtailment loss
Net interest (expense)/income
Re-measurements
Employer contributions
Employee contributions
Benefits and administration expenses paid
Settlements/curtailments
Currency translation
At 31 December 2021
Note
29.2b
29.2b
29.2b
29.2b
29.2c
Present value
of obligation
€m
(456.2)
(5.9)
0.6
(0.7)
(8.6)
24.8
–
(0.4)
22.7
24.7
(24.8)
(423.8)
Fair value of
plan assets
€m
299.1
–
–
–
6.1
16.8
7.0
0.4
(19.1)
(24.6)
19.3
305.0
Accounting
surplus
€m
(157.1)
(5.9)
0.6
(0.7)
(2.5)
41.6
7.0
–
3.6
–
(5.4)
(118.8)
Asset ceiling
€m
(3.6)
–
–
–
–
(5.3)
–
–
–
–
(0.4)
(9.3)
Total
€m
(160.7)
(5.9)
0.6
(0.7)
(2.5)
36.3
7.0
–
3.6
–
(5.8)
(128.1)
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Note
29.2b
29.2b
29.2c
Present value
of obligation
€m
(456.8)
(8.7)
(11.2)
(44.8)
–
(0.4)
22.6
13.2
29.9
(456.2)
Fair value of
plan assets
€m
308.1
–
7.1
22.5
11.9
0.4
(18.9)
(11.0)
(21.0)
299.1
Accounting
surplus
€m
(148.7)
(8.7)
(4.1)
(22.3)
11.9
–
3.7
2.2
8.9
(157.1)
Asset ceiling
€m
(5.0)
–
–
1.2
–
–
–
–
0.2
(3.6)
Present value
of obligation
€m
(209.2)
–
(0.4)
(5.0)
9.0
–
10.9
24.6
(14.4)
(184.5)
Fair value of
plan assets
€m
156.9
–
–
3.8
13.7
2.5
(12.8)
(24.6)
11.2
150.7
Present value
of obligation
€m
(222.9)
(0.2)
–
(6.8)
(22.6)
–
11.4
13.1
18.8
(209.2)
Fair value of
plan assets
€m
171.7
–
–
4.4
13.0
6.8
(13.8)
(11.0)
(14.2)
156.9
Total
€m
(153.7)
(8.7)
(4.1)
(21.1)
11.9
–
3.7
2.2
9.1
(160.7)
Total
€m
(52.3)
–
(0.4)
(1.2)
22.7
2.5
(1.9)
–
(3.2)
(33.8)
Total
€m
(51.2)
(0.2)
–
(2.4)
(9.6)
6.8
(2.4)
2.1
4.6
(52.3)
29. Retirement Benefit Obligations continued
Movements in net defined benefit obligations
At 1 January 2020
Current service cost
Net interest (expense)/income
Re-measurements
Employer contributions
Employee contributions
Benefits and administration expenses paid
Settlements
Currency translation
At 31 December 2020
a. US pensions
Movements in net defined benefit obligations
At 1 January 2021
Current service cost
Settlement/curtailment gain
Net interest (expense)/income
Re-measurements
Employer contributions
Benefits and administration expenses paid
Settlement
Currency translation
At 31 December 2021
Movements in net defined benefit obligations
At 1 January 2020
Current service cost
Past service cost
Net interest (expense)/income
Re-measurements
Employer contributions
Benefits and administration expenses paid
Settlement
Currency translation
At 31 December 2020
187
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
29. Retirement Benefit Obligations continued
b. Other pensions
Movements in net defined benefit obligations
At 1 January 2021
Current service cost
Settlement/curtailment cost
Net interest (expense)/income
Re-measurements
Employer contributions
Employee contributions
Benefits and administration expenses paid
Currency translation
At 31 December 2021
Movements in net defined benefit obligations
At 1 January 2020
Current service cost
Past service cost
Net interest (expense)/income
Re-measurements
Employer contributions
Employee contributions
Benefits and administration expenses paid
Currency translation
At 31 December 2020
c. US healthcare and other post-employment liabilities
Movements in net defined benefit obligations
At 1 January 2021
Current service cost
Past service cost
Curtailment gain
Net interest (expense)/income
Re-measurements
Employer contributions
Employee contributions
Benefits paid
Currency translation
At 31 December 2021
Present value
of obligation
€m
(117.9)
(1.6)
(0.9)
(1.9)
9.9
–
(0.3)
3.1
(8.1)
(117.7)
Fair value of
plan assets
€m
115.4
–
–
1.9
3.0
0.9
0.3
(3.3)
8.3
126.5
Present value
of obligation
€m
(107.9)
(1.3)
–
(2.3)
(15.3)
–
(0.3)
2.9
6.3
(117.9)
Fair value of
plan assets
€m
111.9
–
–
2.4
9.5
1.0
0.3
(3.1)
(6.6)
115.4
Present value
of obligation
€m
(95.3)
(4.3)
0.6
0.6
(0.9)
4.3
–
(0.1)
6.8
0.1
(88.2)
Fair value of
plan assets
€m
26.8
–
–
–
0.3
0.1
3.6
0.1
(2.9)
(0.2)
27.8
Accounting
surplus
€m
(2.5)
(1.6)
(0.9)
–
12.9
0.9
–
(0.2)
0.2
8.8
Accounting
surplus
€m
4.0
(1.3)
–
0.1
(5.8)
1.0
–
(0.2)
(0.3)
(2.5)
Asset ceiling
€m
(3.6)
–
–
–
(5.3)
–
–
–
(0.4)
(9.3)
Asset ceiling
€m
(5.0)
–
–
–
1.2
–
–
–
0.2
(3.6)
Total
€m
(68.5)
(4.3)
0.6
0.6
(0.6)
4.4
3.6
–
3.9
(0.1)
(60.4)
US
healthcare
€m
(33.8)
–
–
–
(0.7)
1.6
–
–
1.9
(2.4)
(33.4)
Total
€m
(6.1)
(1.6)
(0.9)
–
7.6
0.9
–
(0.2)
(0.2)
(0.5)
Total
€m
(1.0)
(1.3)
–
0.1
(4.6)
1.0
–
(0.2)
(0.1)
(6.1)
Total
€m
(102.3)
(4.3)
0.6
0.6
(1.3)
6.0
3.6
–
5.8
(2.5)
(93.8)
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29. Retirement Benefit Obligations continued
Movements in net defined benefit obligations
At 1 January 2020
Current service cost
Curtailment gain
Net interest (expense)/income
Re-measurements
Employer contributions
Employee contributions
Benefits paid
Settlements
Currency translation
At 31 December 2020
d. Other post-employment liabilities
Present value
of obligation
€m
(92.0)
(7.2)
–
(1.1)
(2.6)
–
(0.1)
5.8
0.1
1.8
(95.3)
Fair value of
plan assets
€m
24.5
–
–
0.3
–
4.1
0.1
(1.9)
–
(0.3)
26.8
Total
€m
(67.5)
(7.2)
–
(0.8)
(2.6)
4.1
–
3.9
0.1
1.5
(68.5)
Unfunded German pension plans
Statutory retiring indemnities in France, Italy and Korea
Long-service awards in Germany and Poland
Retirement plans in Belgium
Unfunded arrangements under the US and UK pension plans
Other liabilities
Total other post-employment liabilities at 31 December
29.5. Principal Assumptions
The principal assumptions in measuring plan liabilities are as follows:
US Pensions
Discount rate
Mortality assumptions: life expectancy from age 65
Retiring at the end of the current reporting year:
Males
Females
Retiring 20 years after the end of the current reporting year:
Males
Females
US
healthcare
€m
(34.0)
–
–
(1.0)
(4.3)
–
–
2.4
–
3.1
(33.8)
2021
€m
24.3
16.2
10.5
2.1
1.6
5.7
60.4
Total
€m
(101.5)
(7.2)
–
(1.8)
(6.9)
4.1
–
6.3
0.1
4.6
(102.3)
2020
€m
26.9
19.3
12.2
2.9
1.6
5.6
68.5
2021
2.80%
2020
2.40%
23
25
24
25
23
24
24
25
189
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
29. Retirement Benefit Obligations continued
For US pensions, assumptions with regard to life expectancies from retirement at age 65 are based on Pri-2012 collar- and
gender-specific mortality tables, adjusted and generationally projected using Scale MP-2020.
Other pensions
Discount rate
Inflation rate
Salary increases
Benefit increases
Mortality assumptions for other pensions: life expectancy from age 65
Retiring at the end of the current reporting year:
Males
Females
Retiring 20 years after the end of the current reporting year:
Males
Females
US healthcare
Discount rate
Healthcare cost trend: Initial rate
Other post-employment liabilities
Discount rate
Inflation rate
Salary increases
Benefit increases
2021
2.12%
3.49%
3.28%
3.40%
22
24
23
25
2021
2.60%
2.60%
2021
1.80%
1.38%
3.06%
1.97%
2020
1.55%
2.79%
2.90%
3.00%
22
24
23
25
2020
2.15%
6.25%
2020
1.15%
1.29%
2.97%
1.94%
Changes in the principal assumptions would decrease/(increase) the total defined benefit obligation (DBO) as follows:
Decrease/(increase) in DBO
Discount rate
Inflation rate
Salary growth rate
Life expectancy
Healthcare cost trend: Initial rate
2021
2020
Change in
assumption
0.5%
0.5%
0.5%
1 year
0.5%
Increase
€m
26.9
(9.4)
(2.9)
(15.1)
(1.3)
Decrease
€m
(30.2)
8.8
2.9
15.1
1.3
Increase
€m
30.9
(11.1)
(3.7)
(16.3)
(1.4)
Decrease
€m
(36.2)
11.0
3.5
16.4
1.3
The sensitivity analysis above illustrates the change in each major assumption whilst holding all others constant. The methods
of calculating the defined benefit obligation for this purpose are the same as used for calculating the end-of-year position.
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29. Retirement Benefit Obligations continued
29.6. Pension Plans – Risk Analysis
Asset volatility
Changes in bond
yields
Inflation risk
Life expectancy
Plan liabilities are calculated using a discount rate set with reference to corporate bond yields. If plan
assets were to underperform this yield, this would create a deficit. All the funded plans hold a proportion
of equities, which are expected to outperform bonds in the long term, but which are also likely to
experience greater price volatility and therefore risk in the short term. As plans mature, the Group’s
strategy is to reduce the level of investment risk by investing more in assets whose risk profile is a better
match for the liabilities.
A decrease in bond yields has the effect of increasing plan liabilities, although this is partially offset by an
increase in the value of the plans’ bond holdings.
The Group’s pension obligations in Canada, the UK and Germany are inflation linked. Caps on the level
of inflationary increases are in place to protect the plans against above normal inflation. The US pension
obligations are not inflation indexed. The majority of the plan assets are not directly inflation indexed,
meaning that an increase in inflation will tend to increase the deficit.
The majority of the plans’ obligations are to provide benefits for the life of each retired member and his/
her spouse, so increases in life expectancy result in an increase in the plans’ liabilities.
The investments of the funded plans are managed within an asset-liability matching framework that has been developed to
achieve long-term investments that align with the obligations of the plans. One objective is to match assets to the pension
obligations by investing in annuities and long-term fixed interest securities with maturities that match the benefit payments
as they fall due in the appropriate currency. The plans actively monitor how the duration and the expected yield of the
investments match the expected cash outflows arising from the pension obligations. The processes used to manage the risks
have not changed from previous years.
Investments are diversified, such that the failure of any single investment would not have a material impact on the overall level
of assets. A large portion of assets consist of bonds and equities, although the plans also hold investment funds and liability
driven investments. Equities have been shown to offer the best returns over the long term with an acceptable level of risk.
30. Provisions
Movements in provisions are as follows:
At 1 January 2021
Provisions made during the year
Provisions used during the year
Provisions reversed during the year
Currency translation
At 31 December 2021
Total provisions:
Non-current
Current
Total provisions
Product
warranty
€m
14.6
6.6
(6.8)
(3.9)
0.2
10.7
Restructuring
€m
11.0
27.4
(22.2)
(0.6)
0.2
15.8
Other
€m
4.9
–
–
(0.1)
–
4.8
2021
€m
2.6
28.7
31.3
Total
€m
30.5
34.0
(29.0)
(4.6)
0.4
31.3
2020
€m
4.9
25.6
30.5
Product warranty
The majority of product warranty provisions relate to specific customer issues, and are based upon open negotiations and past
customer claims experience. Utilisation of the warranty provision is expected in 2022.
Restructuring
Restructuring provisions comprise planned headcount reductions and similar costs of balancing production capacity with
market requirements. The provision at 31 December 2021 relates to global restructuring initiatives in response to reduced
output following the COVID-19 pandemic. The balance is expected to be fully utilised during 2022 and 2023.
Other provisions
Other provisions at 31 December 2021 comprise provisions for disputed claims for indirect taxes totalling €0.7 million
(2020: €0.7 million) and asset retirement obligations totalling €4.1 million (2020: €4.2 million). Asset retirement obligations
are linked to the useful lives of the underlying assets, with expected utilisation ranging from 2022 to 2025. The indirect tax
provisions are expected to be utilised over the next five years.
191
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
31. Cash Generated from Operations
Profit/(Loss) for the year
Income tax expense before exceptional items
Exceptional income tax credit
Profit/(Loss) before income tax
Adjustments for:
Depreciation, amortisation and impairment charges
Exceptional impairment charges
Losses on disposal of PP&E and intangible assets
Loss on disposal of investment in associate before income tax
Gain on disposal of PP&E in restructuring costs
Share-based expense excluding social security costs
Net finance expense
Unremitted share of loss from associates
Net foreign exchange losses/(gains)
Changes in working capital:
– Inventories
– Trade and other receivables
– Trade and other payables
Change in provisions
Change in retirement benefit obligations
Total
Note
15/16/17
9/18
10
19
7
11
19
2021
€m
16.0
40.9
(2.8)
54.1
192.0
–
0.6
0.2
–
6.8
71.8
0.9
6.9
34.4
39.3
(83.0)
0.4
(4.6)
319.8
2020
€m
(252.2)
28.1
(29.7)
(253.8)
213.2
304.6
0.5
–
(3.4)
0.9
74.0
4.0
(27.2)
–
38.6
24.3
7.8
(9.1)
374.4
The changes in working capital (movements in inventories, trade and other receivables and trade and other payables) reflect a
number of non-cash transactions. The most significant of these arises from movements due to changes in foreign exchange
rates, on translation of the Group’s overseas operations into the Group’s presentation currency, Euro.
32. Commitments and Contingencies
32.1 Capital Commitments
Expenditure on non-current assets authorised and contracted for at the end of the year but not yet incurred is as below:
Intangible assets
Property, plant and equipment
Total
2021
€m
8.1
30.3
38.4
2020
€m
10.4
47.3
57.7
32.1.1 Lease Commitments
a. The Group as lessor
Property that is surplus to the Group’s requirements may be sub-let to third parties. The future aggregate minimum rentals
receivable under non-cancellable operating leases at 31 December 2021 was €0.4 million (2020: €0.3 million). During the year,
a total of €0.7 million of rental income was recognised in the Income Statement (2020: €0.6 million).
b. The Group as lessee
The Group is committed to €2.0 million of future lease payments, not yet commenced as at 31 December 2021
(2020: €4.2 million).
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32. Commitments and Contingencies continued
32.2. Purchase Commitments
As part of its normal business practices, the Group enters into contracts with suppliers for purchases of raw materials,
components and services to facilitate adequate supply of these materials and services. These arrangements may contain fixed
or minimum quantity purchase requirements. These purchase commitments are off-balance sheet agreements to purchase
goods or services that are enforceable and legally binding on the Group.
The table below summarises the contractual purchase commitments as at the end of the year:
Less than one year
Between one year and five years
After five years
Total
2021
€m
73.0
5.4
1.8
80.2
2020
€m
35.5
14.9
4.1
54.5
32.2.1 Contingencies
The Group has contingent liabilities relating to legal and tax proceedings arising in the normal course of business.
Management reviewed known claims and litigation involving the Company and its subsidiaries at the end of the year. Based on
the advice of legal counsel, appropriate provisions have been made to cover the related risks. While the outcome of any
proceedings in progress cannot be predicted, the Company does not believe they will have a material impact on the Group’s
financial position.
32.3. Subsidiary audit exemptions
The following UK subsidiary undertakings are exempt from the requirements of the UK Companies Act 2006, relating to the
audit of individual accounts by virtue of section 479A of the Act.
Name
Omega Acquisition Bidco Ltd
TI Automotive Korean Won Hedgeco Ltd
TI Automotive Korean Won Hedgeco 2 Ltd
TIFS Holdings Limited
TI Automotive Ltd
TI Automotive Euro Holdings Ltd
TI Automotive USA Holdings Limited
TI Group Automotive Systems Ltd
TI Group Automotive Systems (Deeside) Ltd
TI Automotive Holdings Ltd
TI Automotive Czech Holdings (UK) Ltd
TI Automotive German Holdings (UK) Limited
TI Group Automotive Systems (UK) Ltd
TI Automotive (China) Ltd
Hanil Tube Holdings Ltd
TI Automotive Canada Holdings Ltd
Omega Newco Sub I Limited
Omega Newco Sub II limited
TI Automotive Nominees Ltd
TI Automotive Pension Plan Trustee Ltd
Company Number
9402426
9855008
5633329
7060030
4097913
5265489
5265459
581742
3061637
4174232
6241709
6243326
784687
4081361
6258095
5546464
9402268
9402316
4234035
4310096
TI Fluid Systems plc will guarantee all outstanding liabilities that these subsidiaries are subject to as at the financial year-ended
31 December 2021 in accordance with section 479C of the UK Companies Act 2006, as amended by the Companies and
Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012.
In addition, TI Fluid Systems plc will guarantee any contingent and prospective liabilities that these subsidiaries are subject to.
193
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Group Financial Statements
continued
33. Auditors’ Remuneration
Services provided by the Company’s Auditors and its associates
During the year, the Group obtained the following services from PricewaterhouseCoopers LLP, the Company’s Auditors:
Fees payable to the Company’s Auditor and its associates for the audit of the Parent Company
and the Group financial statements
Fees payable to the Company’s Auditor and its associates for the audit of the Company’s
subsidiaries
Other assurance services
Total
2021
€m
2.9
1.0
0.5
4.4
2020
€m
2.6
0.8
0.2
3.6
Other assurance services of €0.5 million (2020: €0.2 million) relate to the review of published half year interim reports, and in
2021 only, refinancing activities.
34. Related Party Transactions and Controlling Parties
34.1. Transactions with Affiliates of the funds managed by Bain Capital
Certain funds managed by Bain Capital, through BC Omega Holdco Ltd, which represent affiliates of and funds advised by
Bain Capital LLC, have been the Group’s ultimate controlling party since incorporation up until 15 April 2021, when it was
announced that approximately 10% of the holding of BC Omega Holdco Ltd was sold, via a placing, reducing its holding in the
ordinary share capital of TI Fluid Systems plc to 44.4%. TI Fluid Systems plc did not receive any proceeds from the placing.
On 10 November 2021, an additional 7.7% of the holding in the Group held by BC Omega Holdco Ltd was sold, via a placing,
reducing its holding in the ordinary share capital of TI Fluid Systems plc to 36.7%.
As a result, at 31 December 2021 there is now no ultimate controlling party of TI Fluid Systems plc.
The Group did not procure products and materials from companies in which the funds managed by Bain Capital, had
investment interests in either the current or prior year, nor did it incur any management charges.
34.2. Transactions with Group Companies
Balances and transactions between Group companies have been eliminated on consolidation, and are not disclosed in this
note except for subsidiaries that are not wholly owned. Transactions with those companies are made on the Group’s standard
terms of trade.
The Group held a 73% interest in Hanil Tube Corporation, until 8 December 2021 when the Group purchased the remaining
27% for a total consideration in cash of KRW21,000 million (€15.5 million). See Note 25 for further details. Hanil Tube
Corporation made sales within the Group during the year up to the point of this transaction of €5.8 million (year-ended
31 December 2020: €6.8 million).
The Group holds 97% of the shares in Bundy India Ltd. At 31 December 2021, Bundy India Ltd had trade and loan receivables
net of payables to other Group undertakings amounting to €0.6 million (2020: €4.1 million net trade and loan payables) and
made sales within the Group during the year of €2.4 million (2020: €6.1 million).
34.3. Transactions with Associate
The Group held one associated undertaking, SeAH FS Co., Ltd (‘SeAH FS’). On 8 December 2021 the Group disposed in full
of its 20% holding in the issued ordinary shares in the company for KRW21,000 million (€15.5 million). Refer to Note 19 for
further details. Purchases from associates in the year up to the point of disposal were €7.4 million (year-ended 31 December
2020: €8.1 million).
35. Events After the Balance Sheet Date
There have been no events after the balance sheet date which require disclosure, or adjustment, to the Group’s year-end
financial position.
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Annual Report and Accounts 2021
Company Financial Statements
Company Balance Sheet
At 31 December
Non-current assets
Investments in subsidiaries
Current assets
Loans due from related parties
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Accumulated profits
Total equity
Current liabilities
Trade and other payables
Loans due to related parties
Total liabilities
Total equity and liabilities
Note
4
5
6
7
7
8
9
2021
€m
912.5
912.5
16.3
0.3
7.3
23.9
936.4
6.8
2.2
886.7
895.7
0.9
39.8
40.7
40.7
936.4
2020
€m
905.7
905.7
16.4
0.1
1.8
18.3
924.0
6.8
2.2
878.7
887.7
0.8
35.5
36.3
36.3
924.0
As permitted by section 408 of the Companies Act 2006 the Company has elected not to present its own Income Statement
for the year. The profit for the year was €54.3 million (2020: €17.1 million).
The financial statements on pages 195 to 205 were authorised for issue by the Board of Directors on 14 March 2022 and were
signed on its behalf by:
Hans Dieltjens
Chief Executive Officer and President
Ronald Hundzinski
Chief Financial Officer
195
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Company Statement of Changes in Equity
For the year ended 31 December
Balance at 1 January 2021
Profit for the year
Share-based expense
Purchase of own shares
Shares issured from Employee Benefit Trust
Vested share awards
Dividends paid
Balance at 31 December 2021
Balance at 1 January 2020
Profit for the year
Share-based expense
Purchase of own shares
Issue of own shares from Employee Benefit Trust
Balance at 31 December 2020
Ordinary
shares
€m
6.8
–
–
–
–
–
–
6.8
Ordinary
shares
€m
6.8
–
–
–
–
6.8
Share
premium
€m
2.2
–
–
–
–
–
–
2.2
Share
premium
€m
2.2
–
–
–
–
2.2
Retained
earnings
€m
878.7
54.3
6.8
(8.3)
1.1
(0.9)
(45.0)
886.7
Retained
earnings
€m
864.0
17.1
0.9
(3.5)
0.2
878.7
Total
equity
€m
887.7
54.3
6.8
(8.3)
1.1
(0.9)
(45.0)
895.7
Total
equity
€m
873.0
17.1
0.9
(3.5)
0.2
887.7
196
TI Fluid Systems plc
Annual Report and Accounts 2021
Notes to the Company Financial Statements
1. Summary of Significant Accounting Policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise stated.
1.1. Basis of Preparation
The financial statements of the Company have been prepared in accordance with Financial Reporting Standard 101 ‘Reduced
Disclosure Framework’ and the UK Companies Act 2006.
Financial Reporting Standard 101 (‘FRS 101’) is a UK standard which sets out a reduced disclosure framework for the
financial reporting requirements and disclosure exemptions of qualifying entities, which otherwise apply the requirements of
International Financial Reporting Standards. The Company has adopted FRS 101 in these financial statements for the first time
to take advantage of the reduced disclosures available as the Company meets the definition of a qualifying entity. The financial
statements in the prior year were prepared in accordance with International Financial Reporting Standards (‘IFRS’) as adopted
by the European Union and consequently no adjustments have arisen as a result of the adoption of FRS 101. This change in
basis of preparation was effective from 1 January 2021.
As permitted by FRS 101, the Company has taken advantage of the disclosure requirement exemptions regarding IAS 7
‘Statement of Cash Flows’ and the requirements of paragraphs 30 and 31 of IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors. Where required, equivalent notes are given in the consolidated financial statements of TI Fluid
Systems plc.
The financial statements have been prepared under the historical cost convention, except for financial assets and liabilities at
fair value through profit or loss (‘FVTPL’).
The preparation of financial statements in conformity with FRS 101 requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period.
Although these estimates are based on management’s reasonable knowledge of the amount, event or actions, actual results
may differ from those estimates.
1.1.1. Going Concern
After making enquiries, the Directors are of the opinion that the Group has adequate resources to continue in operational
existence for at least 12 months from the date of approval of its financial statements. The Company therefore continues to
adopt the going concern basis in preparing its financial statements. See Note 1.1.1 of the consolidated financial statements for
further information.
1.1.2. Functional and Presentation Currency
These financial statements are presented in Euro, which is the Company’s functional currency. All financial information
presented in Euro has been rounded to the nearest 100,000 except where stated otherwise.
1.2. Foreign Currencies
Transactions in foreign currencies are converted to the functional currency at exchange rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are converted to the functional currency
at the exchange rate at that date. Non-monetary items that are measured at historical cost in a foreign currency are converted
using the exchange rate at the date of the transaction.
All transactional foreign currency differences are included in the Income Statement.
The average and year-end exchange rates for the Company’s principal currencies are disclosed in the consolidated
financial statements.
1.3. Investments in Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity
when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity.
Investments in subsidiaries are recorded in the Company’s balance sheet at cost. The investments are subject to a
periodic impairment review, to identify the existence of any indicators of impairment. Should indicators be identified, the
carrying value is subject to an impairment assessment with any resulting diminution of the carrying value recognised in the
Income Statement.
Acquisition-related costs are expensed as incurred in accordance with IFRS 3 ‘Business Combinations’.
1.4. Financial Instruments
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to
the acquisition or issue of financial assets and financial liabilities, other than financial assets and financial liabilities at ‘fair
value through profit or loss’ (‘FVTPL’) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial
liabilities at FVTPL are expensed as incurred.
197
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Company Financial Statements
continued
1. Summary of Significant Accounting Policies continued
1.4.1. Financial Assets
Financial assets are classified into ‘financial assets at amortised cost’ and ‘financial assets at FVTPL’. The classification is
determined at the time of initial recognition and depends on the Company’s business model for managing the financial assets
and whether the contractual cash flows represent solely payments of principal and interest.
Financial assets at amortised cost
Assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal
and interest, are measured at amortised cost. Interest income from these financial assets is included in finance income
using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss.
The Company’s financial assets at amortised cost comprise ‘loans due from related parties’ and ‘cash and cash equivalents’.
Financial assets at FVTPL
A financial asset is classified in this category if it does not meet the criteria for recognition as a financial asset at amortised
cost. Derivatives are classified in this category unless they are designated as in hedging relationships.
Impairment of financial assets
The Company recognises a loss allowance for expected credit losses (‘ECL’) on financial assets at amortised cost. The amount
of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the
respective financial instrument.
For loans due from related parties, the Company recognises expected credit losses that will result from all possible default
events over the expected life of a financial instrument ‘lifetime ECL’. The Company also assesses on a forward-looking basis
the expected credit losses associated with the loans due from related parties.
For all other financial instruments, the Company recognises lifetime ECL only when there has been a significant increase
in credit risk since initial recognition. If the credit risk on the financial instrument has not increased significantly since initial
recognition, the Company measures the loss allowance for that financial instrument at an amount equal to the portion of
lifetime ECL that is expected to result from default events on the financial instrument that are possible within 12 months after
the reporting date.
In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Company
compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring
on the financial instrument at the date of initial recognition. In making this assessment, the Company considers an actual or
expected significant deterioration in the financial instrument’s external credit rating where available; significant deterioration
in external market indicators of credit risk for a particular financial instrument, e.g. a significant increase in the credit spread or
the credit default swap prices for the debtor; indications that any debtor is experiencing significant financial difficulty, default or
delinquency in payments; an increase in the probability that any debtor will enter bankruptcy, or other financial reorganisation;
and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes
in arrears or economic conditions that correlate with defaults.
1.4.2. Financial Liabilities
Financial liabilities are classified as either ‘financial liabilities at amortised cost’ or ‘financial liabilities at FVTPL’.
Financial liabilities are recognised initially on the date at which the Company becomes party to the contractual provisions of
the instrument.
Financial liabilities at amortised cost
The classification of financial liabilities at amortised cost is determined at the time of initial recognition and depends on
the Group’s business model for managing the financial liabilities and whether the contractual cash flows represent solely
payments of principal and interest. Liabilities at amortised cost, including ‘loans due to related parties’ and trade and other
payables, are measured using the effective interest method, which calculates the amortised cost of a financial liability
and allocates interest expense over its term. The effective interest rate discounts estimated cash payments (including
all fees, transaction costs and premiums) through the expected life of the financial liability, to the net carrying amount on
initial recognition.
Financial liabilities at FVTPL
A financial liability is classified in this category if it does not meet the criteria for recognition as a financial liability at amortised
cost. Derivatives are classified in this category unless they are designated as in hedging relationships.
1.5. Trade and Other Payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from
suppliers. Accrued expenses are recognised when ownership of goods or services has been transferred but not invoiced.
Trade and other payables are recognised at amortised cost.
1.6. Cash and Cash Equivalents
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less.
198
TI Fluid Systems plc
Annual Report and Accounts 2021
1. Summary of Significant Accounting Policies continued
1.7. Share Capital
Ordinary shares of the Company are classified as equity. Costs directly attributable to the issue of ordinary shares and share
options are recognised in equity as a deduction, net of any tax effects from the proceeds.
1.8. Taxation
The tax expense for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the
extent that it relates to items recognised in other comprehensive income and equity.
Current tax
Current tax is the expected tax payable or receivable on the taxable profit or loss for the year, using tax rates enacted or
substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous periods.
Deferred tax
Deferred income tax is measured using the tax rates and laws that have been enacted or substantively enacted by the
reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax
liability is settled.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all
deductible temporary differences to the extent that it is probable that taxable profits will be available against which those
deductible temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for
deferred income tax liabilities where the timing of the reversal of the temporary difference is controlled by the Company and
it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the
balances on a net basis.
1.9. Exceptional Items
Exceptional items are defined as those items that, by virtue of their nature, size and expected frequency, warrant separate
additional disclosure in the financial statements in order to fully understand the underlying performance of the Company.
1.10. Dividends
Receivable
Dividends from investments of the Company and dividends receivable by the Company are recognised when the right to
receive payment is established.
Payable
Dividends payable to the Company’s shareholders are recognised in the Statement of Changes in Equity in the period in which
they are approved.
2. Income Statement
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own Income Statement
for the year. The profit for the year was €54.3 million (2020: €17.1 million profit).
3. Directors’ Remuneration
The Company has no employees (2020: nil). Full information on Directors’ remuneration is disclosed in the consolidated
financial statements. Non-Executive Director remuneration costs of €1.0 million (2020: €0.9 million) have been borne by the
Company. All other costs have been met by other subsidiaries of the Group.
199
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Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Company Financial Statements
continued
4. Investments in Subsidiaries
At 1 January
Share-based cost
At 31 December
2021
€m
905.7
6.8
912.5
2020
€m
904.8
0.9
905.7
Investments in subsidiary undertakings are recorded at cost, which was the fair value of the consideration paid.
No impairments have been recorded.
The grant by the Company of share-based awards over its equity instruments to the employees of subsidiary undertakings
in the Group is treated as a capital contribution. The fair value of employee services received in the year of €6.8 million
(2020: €0.9 million) measured by reference to the grant date fair value, is recognised over the vesting period as an increase
to investment in subsidiary undertakings, with a corresponding credit to equity. Refer to Note 7 of the consolidated financial
statements for more information.
The Company’s subsidiary undertakings, including its operating and non-operating subsidiaries, are as follows:
Americas
TI Group Automotive
Systems LLC*
TI Automotive LLC*
Hanil USA LLC*
Hutchings International
Enterprises Inc. (Dormant)
Omega Newco Sub Inc.*
US
US
US
US
US
TI Automotive
Ligonier Corporation*
TI Automotive Canada Inc.* Canada
US
Ownership
interest and
voting rights
held 2021
Ownership
interest and
voting rights
held 2020 Address of registered office
100 %
100 % 2020 Taylor Road, Auburn Hills, MI 48326
100 %
100 %
100 %
100 % 2020 Taylor Road, Auburn Hills, MI 48326
100 % 50 Hanil Drive, Tallassee, Alabama, 36078
100 % 2020 Taylor Road, Auburn Hills, MI 48326
100 %
100 % 1209 Orange Street, City of Wilmington,
New Castle 19801
100 %
100 % 925 North Main Street, Ligonier, IN 46767
100 %
100 % 316 Orenda Road, Bramalea, Ontario, Canada,
L6T 1G3
Mexico
100 %
100 % Mike Allen S/N, Parque Industrial Reynosa
TI Group Automotive
Systems S de RL de CV
TI Automotive Reynosa S de
RL de CV
Mexico
– Seccion Norte, Reynosa, Tamaulipas,
Mexico 88780
100 %
100 % Mike Allen S/N, Parque Industrial Reynosa
– Seccion Norte, Reynosa, Tamaulipas,
Mexico 88780
TI-Hanil Mexico S de RL
de CV
Fabricaciones
Electromecanicas SA de CV
(Dormant)
Marwal de Mexico
SA de CV
TI Brasil Industria e
Comercio Ltda
Bundy Colombia SAS
Mexico
100 %
100 % Mike Allen S/N, Parque Industrial Reynosa
– Seccion Norte, Reynosa, Tamaulipas,
Mexico 88780
Mexico
100 %
100 % Via Jose Lopez Portillo 8-A, Tultitlan, Estado de
Mexico, Mexico 54940
Mexico
Brazil
100 %
100 % Via Jose Lopez Portillo 8-A, Tultitlan,
Estado de Mexico, Mexico 54940
100 %
100 % Rodovia Presidente Dutra, Km 145,7
Colombia
100 %
Sao Jose dos Campos, SP-Brasil CEP 12220-611
100 % Carrera 13A No 6-98 Parque Industrial Montana,
Mosquero, Cundinamarca, 34225
TI Automotive Argentina SA Argentina
100 %
100 % Uruguay 4351, Victoria, San Fernando, Buenos
Aires, Argentina, B1644 HKO
Europe and Africa
Omega Acquisition
Bidco Ltd*
TI Automotive Korean Won
Hedgco Ltd*
TI Automotive Korean Won
Hedgco II Ltd*
UK
UK
UK
200
TI Fluid Systems plc
Annual Report and Accounts 2021
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
4. Investments in Subsidiaries continued
Omega Newco Sub I Ltd
(Dormant)
Omega Newco Sub II Ltd
(Dormant)
TIFS Holdings Ltd*
TI Automotive Ltd*
UK
UK
UK
UK
Ownership
interest and
voting rights
held 2021
100 %
Ownership
interest and
voting rights
held 2020 Address of registered office
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
TI Automotive Holdings Ltd* UK
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
UK
UK
UK
TI Automotive Euro
Holdings Ltd*
TI Automotive USA
Holdings Ltd*
TI Group Automotive
Systems Ltd*
TI Group Automotive
Systems (Deeside) Ltd*
TI Group Automotive
Systems (UK) Ltd*
TI Automotive Canada
Holdings Ltd*
TI Automotive (China) Ltd* UK
UK
UK
UK
TI Automotive Czech
Holdings (UK) Ltd
TI Automotive German
Holdings (UK) Ltd*
Hanil Tube Holdings Ltd
UK
UK
UK
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
TI Automotive Finance plc
UK
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
UK
UK
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
100 %
100 % 4650 Kingsgate, Cascade Way, Oxford Business
Park South, Oxford OX4 2SU
Belgium
100 %
100 % Rue Wérihet 61, B-4020 Wandre (Liège)
Czech Republic
100 %
100 % Belgická 4727/17, Rýnovice, 466 05 Jablonec
nad Nisou
Czech Republic
100 %
100 % Belgická 4727/17, Rýnovice, 466 05 Jablonec
France
France
France
Germany
Germany
Germany
Germany
nad Nisou
100 %
100 % 1, avenue Ampère, Zone Industrielle,
100 %
100 %
51000 Châlons-en Champagne, France
100 % 1, avenue Ampère, Zone Industrielle,
51000 Châlons-en Champagne, France
100 % Z.I. Bld de l’industrie 37530 Nazelles-Negron,
France
100 %
100 % Dischingerstr. 11, 69123 Heidelberg
100 %
100 % Hertzstrasse 24-30, 76275 Ettlingen
100 %
100 % Industriestrasse 3, 34277 Fuldabruck
100 %
100 % Dischingerstr. 11, 69123 Heidelberg
TI Automotive Nominees
Ltd (Dormant)**
TI Automotive Pension Plan
Trustee Ltd (Dormant)**
TI Group Automotive
Systems (Belgium) SA*
TI Automotive AC sro
TI Group Automotive
Systems sro
TI Automotive France
Holdings SAS
TI Automotive Fuel
Systems SAS
TI Group Automotive
Systems SAS
TI Automotive
Holdings GmbH*
TI Automotive (Ettlingen)
GmbH*
TI Automotive (Fuldabruck)
GmbH*
TI Automotive (Heidelberg)
GmbH*
201
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OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Company Financial Statements
continued
4. Investments in Subsidiaries continued
Germany
Germany
Germany
TI Automotive Systems
Germany GmbH*
TI Automotive Engineering
Centre (Heidelberg) GmbH*
TI Automotive Technology
Center GmbH*
TI Automotive (Hungary) Kft Hungary
TI Automotive Italia
Holdings Srl
TI Automotive Cisliano Srl
TI Automotive Brindisi Srl
TI Group Automotive
Systems SpA
TI Poland sp.zo.o*
LLC TI Automotive
Poland
Russia
Italy
Italy
Italy
Italy
Ownership
interest and
voting rights
held 2021
100 %
Ownership
interest and
voting rights
held 2020 Address of registered office
100 % Dischingerstr. 11, 69123 Heidelberg
100 %
100 % Dischingerstr. 11, 69123 Heidelberg
100 %
100 % Lochfeldstraße 31, 76437 Rastatt
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 % H-9027, Györ, Körtefa utca, 6.ép
100 % Via Mosè Bianchi, 71-20149 Milano
100 % Via Abbiategrasso, 20080 Cisliano (MI)
100 % Via Pinan, 2-16012 Busalla (GE)
100 % Via Pinan, 2-16012 Busalla (GE)
100 % Bestwin´ska 143 a, Bielsko-Biala, 43-346, Poland
100 % Russian Federation 188643, Leningradskaya
region, Vsevolozhsk, Vsevolozhskiy prospect, 113
Hanil RUS LLC
Russia
100 %
100 % Russian Federation 188643, Leningradskaya
region, Vsevolozhsk, Vsevolozhskiy prospect, 113
TI-Hanil Slovakia s.r.o.
Slovakia
100 %
100 % Krásno nad Kysucou 2203, 023 02 Krásno nad
Slovakia
TI Automotive Slovakia s.r.o
(Dormant)
TI Automotive proizvodnja
avtomobilskih delov, d.o.o.
TI Automotive Morocco Sarl Morocco
Slovenia
Morocco
South Africa
TI Automotive Thermal
Morocco Sarl
TI Group Automotive
Systems (South Africa)
(Pty) Ltd
TI Automotive Fuel Systems
(South Africa) (Pty) Ltd
TI Automotive Pamplona SL Spain
South Africa
TI Group Automotive
Systems SA
TI Group Automotive
Systems Spain Holdings S.L.
TI Group Automotive
Systems AB
TI Otomotiv Sanayi ve
Ticaret Ltd
Spain
Spain
Sweden
Turkey
Asia Pacific
Bundy Fluid Systems Co Ltd China
China
Bundy Fluid Systems
(Chongqing) Co Ltd
Bundy Fluid Systems
(Shanghai) Co Ltd
TI Automotive (Tianjin)
Co Ltd
TI Automotive Systems
(Changchun) Co Ltd
China
China
China
202
TI Fluid Systems plc
Annual Report and Accounts 2021
100 %
100 % Prilohy 46, Zavar, Slovakia, 91926
Kysucou, Slovakia
100 %
100 % Belokranjska cesta 4, 8000 Novo mesto
100 %
100 % Zone Franche D’Exportation, Ilot 62, lot 2, PL1,
90090, Tangier, Morocco
100 %
100 % Tangier Automotive City, Lot 111 -11bis, Tangier,
Morocco
100 %
100 % 62 Palmgate Crescent, Southgate Business Park,
Umbogintwini, 4026, South Africa
100 %
100 % EW1 Building Zone 1A, Mdubu Road,
100 %
100 %
Sunnyridge, East London 5208, South Africa
100 % Polígono Industrial Comarca 1, calle E, s/n.
31195 Berrioplano (Navarra), Spain
100 % Carretera. San Adrián-La Roca, Km. 15,9,
08170 Montornés del Valles, Barcelona, Spain
100 %
100 % Carretera. San Adrián-La Roca, Km. 15,9,
08170 Montornés del Valles, Barcelona, Spain
100 %
100 % PO Box 904, 531 19 Lidkoping, Sweden
100 %
100 % Nosab Sedir Cad. 203. Sok. No: 6 16140
Nilüfer Bursa
100 %
100 %
100 % No. 57 Longhai Road ETDZ, Qinhuangdao City
100 % Building C1, Zone C, Number 5 Workshop,
Standard Workshop Project Phase 1, Huachao
Industrial Park, Cuiyun Road, Northern New
District, Chongqing
100 %
100 % 34 Bundy Workshop, 409 Hua Jing Road,
100 %
100 %
Waigaoqiao FTZ, Shanghai
100 % No.6 Xiang‘an Road, TEDA Tianjin
100 % 2599 Zi Bo Rd., Economic Technological
Development Zone, Changchun
4. Investments in Subsidiaries continued
TI Automotive Systems
(Shanghai) Co Ltd
TI Fluid Systems
(Chengdu) Ltd
China
China
Wuhan Bundy Fluid Systems
Co Ltd
TI Automotive (Hong Kong)
Holdings Ltd
Bundy India Ltd
China
Hong Kong
India
Ownership
interest and
voting rights
held 2021
100 %
Ownership
interest and
voting rights
held 2020 Address of registered office
100 % Bld 1, Bld 2, No 100 Yin Long Road, Jiading
District, Shanghai
100 %
100 % No 1 Building, Aerospace Sega Science &
Technology Industrial Park, No 889 Wenbai
Avenue, Baihe Subdistrict, Economic &
Technological Development Zone (Longquanyi
District), Chengdu, Sichuan
100 % Wuhan Economic & Technological
Development Zone
100 %
100 %
100 % Suite 1B, 8/F., Sino Plaza, 255-257 Gloucester
Road, Causeway Bay, Hong Kong
97 %
97 % Plot 2 GIDC Industrial Estate, Makarpura, Baroda,
390010, India
Hanil Tube India Private Ltd India
100 %
100 % B-75, SIPCOT Industrial Area, Chennai 600-058,
Tamu Nadu
PT TI Automotive Indonesia Indonesia
100 %
100 % Jl. Cempaka Raya km.37, Jatimulya, Bekasi,
Tambun Selatan, Jawa Barat
TI Automotive Japan Ltd
Japan
Hanil Tube Corporation***
TI Automotive Ltd (Korea)
South Korea
South Korea
100 %
100 %
100 %
100 % 3-29-1 Tsuruya-Cho, Kanagawa-ku, Yokohama-
city, Kanagawa Pref, Japan, 221-0835
73 % 17, Wonjeon-ro, Seo-gu, Incheon, Korea 22744
100 % 708, Baeksuk-Dong, Cheonan City, Chungnam,
330220
TI Automotive (Thailand) Ltd Thailand
100 %
100 % 700/652 Moo 1, Amata Nakorn Industrial
Estate, Tambon PanThong, Amphur PhanThong,
Chonburi, Thailand, 20160
TI Automotive ROH
(Thailand) Ltd
Thailand
100 %
100 % 700/652 Moo 1, Amata Nakorn Industrial
Estate, Tambon PanThong, Amphur PhanThong,
Chonburi, Thailand, 20160
*
Companies identified by an asterisk, together with certain other smaller subsidiaries, are guarantors to the 2015 term loan agreements of TI Group
Automotive Systems LLC.
** Companies that are dormant in the UK and are exempt from preparing individual financial statements by virtue of section 394A of Companies Act 2006.
*** On 8 December 2021, the Company acquired 100% control of Hanil Tube Corporation.
All companies above are incorporated and unless dormant, operate principally in the country indicated. All companies
operate in the global automotive component supply sector. Omega Acquisition Bidco Ltd is the only immediate subsidiary
of the Company.
5. Loans Due from Related Parties
Loans due from related parties
2021
€m
16.3
2020
€m
16.4
Loans due from a related party at 31 December 2021 comprised an amount drawn against Euro-denominated intercompany
facility agreements from a subsidiary undertaking totalling €16.3 million (2020: €16.4 million). The loans are repayable in full on
demand and bore interest at rates from 3.73% to 4.14% (2020: six-month EURIBOR plus a margin of 4.25%) according to the
agreed facility.
6. Trade and Other Receivables
Other receivables
2021
€m
0.3
2020
€m
0.1
The Company has paid directly certain PAYE obligations of the CEO and CFO, which are recoverable in full. Details are
disclosed in the Remuneration Report. See page 104.
203
TI Fluid Systems plc
Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Notes to the Company Financial Statements
continued
7. Issued Share Capital
Authorised, issued and fully paid-up
At 31 December 2020
At 31 December 2021
Number of
shares
520,269,141
520,269,141
Nominal value
of each share
£0.01
£0.01
Ordinary shares
£m
5.2
5.2
Ordinary shares
€m
6.8
6.8
Share premium
€m
2.2
2.2
Total
€m
9.0
9.0
The Company holds shares in the TI Fluid Systems Employee Benefit Trust (‘EBT’) for the purpose of satisfying awards made
to employees under the TI Fluid Systems plc Long Term Incentive Plan and Deferred Bonus Plan. Such shares are shown as
a deduction to equity in the Statement of Changes in Equity and are not treated as outstanding for the purposes of calculating
earnings per share.
The movements in ordinary shares held by the EBT in the current and prior year were as follows:
At 1 January 2020
Market purchase
Release to satisfy Deferred Bonus Plan
At 31 December 2020
Release to satisfy Deferred Bonus Plan
Release to satisfy vested conditional share awards
Market purchase
At 31 December 2021
Number of
shares
420,756
1,572,175
(493,024)
1,499,907
(333,427)
(197,603)
2,962,296
3,931,173
The Company is a public limited company which is incorporated and domiciled in England and Wales, with
registered number 09402231.
8. Trade and Other Payables
Other payables
Accrued expenses
Total trade and other payables
9. Loans Due to Related Parties
Loans due to related parties
2021
€m
0.4
0.5
0.9
2021
€m
39.8
€m
–
3.5
(0.2)
3.3
(0.7)
(0.4)
8.3
10.5
2020
€m
–
0.8
0.8
2020
€m
35.5
Loans due to related parties at 31 December 2021 included amounts drawn against a Euro-denominated intercompany facility
agreement from subsidiary undertakings €24.1 million (2020: €32.0 million). The loans are repayable in full on demand and
therefore have been classified as currently payable. The loans bore interest at six-month EURIBOR plus a margin between
2.75% and 4.25% (2020: 2.75% and 4.25%).
Additionally, at the year-end, a subsidiary undertaking of the Company had loaned funds of €15.7 million to the
Company’s Employee Benefit Trust (EBT) (2020: €3.5 million), which is consolidated in accordance with Note 1.2 of the
consolidated financial statements.
204
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Annual Report and Accounts 2021
10. Contingent Liabilities
The following UK subsidiary undertakings are exempt from the requirements of the UK Companies Act 2006, relating to the
audit of individual accounts by virtue of section 479A of the Act.
Name
Omega Acquisition Bidco Ltd
TI Automotive Korean Won Hedgeco Ltd
TI Automotive Korean Won Hedgeco II Ltd
TIFS Holdings Limited
TI Automotive Ltd
TI Automotive Euro Holdings Ltd
TI Automotive USA Holdings Limited
TI Group Automotive Systems Ltd
TI Group Automotive Systems (Deeside) Ltd
TI Automotive Holdings Ltd
TI Automotive Czech Holdings (UK) Ltd
TI Automotive German Holdings (UK) Limited
TI Group Automotive Systems (UK) Ltd
TI Automotive (China) Ltd
Hanil Tube Holdings Ltd
TI Automotive Canada Holdings Ltd
Omega Newco Sub I Limited
Omega Newco Sub II limited
TI Automotive Nominees Ltd
TI Automotive Pension Plan Trustee Ltd
Company Number
9402426
9855008
5633329
7060030
4097913
5265489
5265459
581742
3061637
4174232
6241709
6243326
784687
4081361
6258095
5546464
9402268
9402316
4234035
4310096
TI Fluid Systems plc will guarantee all outstanding liabilities that these subsidiaries are subject to as at the financial year-ended
31 December 2021 in accordance with section 479C of the UK Companies Act 2006, as amended by the Companies and
Limited Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012.
In addition, TI Fluid Systems plc will guarantee any contingent and prospective liabilities that these subsidiaries are subject to.
11. Events After the Balance Sheet Date
There have been no events after the balance sheet date which require disclosure, or adjustment, to the Company’s year-end
financial position.
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Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information
Group Financial Record
Consolidated Income Statement
For the years ended 31 December
Revenue
Cost of sales
Exceptional items
Gross profit
Distribution costs
Administrative expenses before exceptional items
Exceptional items
Administrative expenses after exceptional items
Other income
Net foreign exchange (losses)/gains
Operating profit/(loss)
Finance income
Finance expense before exceptional items
Exceptional items
Finance expense after exceptional items
Net finance expense after exceptional items
Share of (loss)/profit of associates
Profit/(loss) before income tax
Income tax expense before exceptional items
Exceptional items
Income tax (expense)/credit after exceptional items
Profit/(loss) for the year
Profit/(loss) for the year attributable to:
Owners of the Parent Company
Non-controlling interests
2021
€m
2,956.6
(2,626.8)
–
329.8
(93.9)
(105.8)
–
(105.8)
3.6
(6.9)
126.8
3.1
(63.1)
(11.8)
(74.9)
(71.8)
(0.9)
54.1
(40.9)
2.8
(38.1)
16.0
14.3
1.7
16.0
2020
€m
2,814.5
(2,493.1)
(120.4)
201.0
(83.7)
(145.1)
(184.2)
(329.3)
8.5
27.2
(176.3)
3.5
(77.5)
–
(77.5)
(74.0)
(3.5)
(253.8)
(28.1)
29.7
1.6
(252.2)
(254.1)
1.9
(252.2)
Unaudited
2019
€m
3,411.1
(2,922.7)
–
488.4
(95.0)
(141.7)
–
(141.7)
6.7
0.5
258.9
15.0
(72.5)
–
(72.5)
(57.5)
0.3
201.7
(57.1)
–
(57.1)
144.6
141.6
3.0
144.6
2018
€m
3,472.8
(2,938.2)
–
534.6
(102.4)
(164.5)
–
(164.5)
12.2
1.2
281.1
14.3
(67.0)
(11.8)
(78.8)
(64.5)
0.5
217.1
(77.0)
–
(77.0)
140.1
137.8
2.3
140.1
2017
€m
3,490.9
(2,928.5)
–
562.4
(103.7)
(177.8)
(40.2)
(218.0)
7.7
24.6
273.0
11.2
(100.1)
(26.4)
(126.5)
(115.3)
0.3
158.0
(68.2)
25.4
(42.8)
115.2
112.5
2.7
115.2
206
TI Fluid Systems plc
Annual Report and Accounts 2021
Group Financial Record
Consolidated Balance Sheet
At 31 December
Non-current assets
Intangible assets
Right-of-use assets
Property, plant and equipment
Investments in associates
Derivative financial instruments
Deferred income tax assets
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Current income tax assets
Derivative financial instruments
Financial assets at fair value through profit and loss
Cash and cash equivalents
Total assets
Equity
Share capital
Share premium
Other reserves
Retained earnings
Equity attributable to owners of the Parent Company
Non-controlling interests
Total equity
Non-current liabilities
Trade and other payables
Borrowings
Lease liabilities
Derivative financial instruments
Deferred income tax liabilities
Retirement benefit obligations
Provisions
Current liabilities
Trade and other payables
Current income tax liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Provisions
Total liabilities
Total equity and liabilities
Unaudited
2021
€m
2020
€m
2019
€m
2018
€m
2017
€m
884.8
125.2
595.4
–
–
70.5
19.2
1,695.1
332.3
520.5
11.4
0.9
0.9
499.1
1,365.1
3,060.2
6.8
2.2
(61.4)
995.9
943.5
0.4
943.9
14.6
1,098.5
119.8
–
95.8
128.1
2.6
1,459.4
546.1
49.9
1.8
30.1
0.3
28.7
656.9
2,116.3
3,060.2
883.8
124.9
590.8
14.6
–
62.4
18.9
1,695.4
351.4
534.8
13.7
0.4
0.9
485.8
1,387.0
3,082.4
6.8
2.2
(137.7)
987.7
859.0
25.2
884.2
20.0
1,069.3
122.4
–
104.3
160.7
4.9
1,481.6
614.1
40.7
7.4
28.6
0.2
25.6
716.6
2,198.2
3,082.4
1,182.2
161.4
715.0
19.2
–
25.1
21.6
2,124.5
367.1
574.5
13.7
18.4
0.9
411.7
1,386.3
3,510.8
6.8
2.2
(106.1)
1,261.7
1,164.6
24.5
1,189.1
12.3
1,148.5
138.0
–
128.5
153.7
5.0
1,586.0
611.2
48.7
2.4
28.7
25.4
19.3
735.7
2,321.7
3,510.8
1,229.8
–
706.5
19.6
5.4
34.9
14.8
2,011.0
352.8
578.3
4.4
8.5
1.2
360.1
1,305.3
3,316.3
6.8
1.4
(126.3)
1,175.7
1,057.6
22.5
1,080.1
17.1
1,179.3
–
45.3
141.6
148.2
4.9
1,536.4
608.4
60.2
4.4
–
2.8
24.0
699.8
2,236.2
3,316.3
1,273.9
–
686.8
19.2
8.3
51.0
13.4
2,052.6
329.3
588.3
8.2
5.3
2.9
287.2
1,221.2
3,273.8
6.8
404.3
(130.5)
640.9
921.5
20.3
941.8
17.6
1,178.2
–
72.4
159.8
162.4
5.5
1,595.9
637.6
69.6
3.0
–
3.4
22.5
736.1
2,332.0
3,273.8
The consolidated financial record presents the financial results for those businesses that were part of the Group for the years
ended 31 December 2017 to 31 December 2021 inclusive.
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Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information Shareholder information
Company registered number
09402231
Directors
Manfred Wennemer
Non-Executive Chairman
Hans Dieltjens
Chief Executive Officer and President
Ronald Hundzinski
Chief Financial Officer
Tim Cobbold
Senior Independent Director
Julie Baddeley
Independent Non-Executive Director
Susan Levine
Non-Executive Director
Elaine Sarsynski
Independent Non-Executive Director
John Smith
Independent Non-Executive Director
Stephen Thomas
Non-Executive Director
Jeffrey Vanneste
Independent Non-Executive Director
Company Secretary
Matthew Paroly
Registered office
4650 Kingsgate
Cascade Way
Oxford Business Park South
Oxford OX4 2SU
United Kingdom
www.tifluidsystems.com
Corporate offices
2020 Taylor Road
Auburn Hills
Michigan 48326
United States of America
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TI Fluid Systems plc
Annual Report and Accounts 2021
Independent Auditors
PricewaterhouseCoopers LLP
One Chamberlain Square
Birmingham B3 3AX
www.pwc.co.uk
Bankers
BNP Paribas
10 Harewood Avenue
London
NW1 6AA
www.bnpparibas.co.uk
Legal advisers to the Company
Latham & Watkins (London) LLP
99 Bishopsgate
London EC2M 3XF
www.lw.com
Joint corporate brokers
Goldman Sachs International
Plumtree Court
25 Shoe Lane
London EC4A 4AU
www.goldmansachs.com
J.P. Morgan Cazenove
25 Bank Street
Canary Wharf
London E14 5JP
www.jpmorgan.com
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
www.peelhunt.com
Registrars
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Shareview for shareholders:
0371-384-2030 (UK)
+44 (0)121-415-7047 (Overseas)
www.shareview.co.uk
Corporate calendar
Annual General Meeting
18 May 2022
Announcement of Interim Results
9 August 2022
Announcement of Final Results
15 March 2022
Cautionary statement regarding forward-looking statements
This Annual Report contains certain forward-looking
statements with respect to the financial condition, results
of operations and business of TI Fluid Systems plc (the
‘Company’). The words ‘believe’, ‘expect’, ‘anticipate’,
‘intend’, ‘estimate’, ‘forecast’, ‘project’, ‘will’, ‘may’, ‘should’
and similar expressions identify forward-looking statements.
Others can be identified from the context in which they
are made. By their nature, forward-looking statements
involve risks and uncertainties, and such forward-looking
statements are made only as of the date of this Annual
Report. Accordingly, no assurance can be given that the
forward-looking statements will prove to be accurate and
you are cautioned not to place undue reliance on forward-
looking statements due to the inherent uncertainty therein.
Past performance of the Company cannot be relied on as a
guide to future performance. Nothing in this Annual Report
should be construed as a profit forecast.
209
TI Fluid Systems plc
Annual Report and Accounts 2021
OverviewStrategic reportCorporate governanceFinancial statementsShareholder information The paper used in this report is elemental chlorine
free and is FSC® certified. It is printed to ISO 14001
environmental procedures.
The Forest Stewardship Council® (FSC®) is an international
network which promotes responsible management of the
world’s forests. Forest certification is combined with a
system of product labelling that allows consumers to readily
identify timber-based products from certified sources.
The material in this Report has been Carbon balanced.
Two projects are supported via Carbon Footprint Ltd. Firstly, a
tree planting scheme in the UK which supports a programme
of replanting to offset carbon use. Also, a project to support
biodiversity within the Amazon, called the Portel-Pará REDD
project which is working to prevent unplanned deforestation
in native forests, which has occurred due to logging,
squatting and attempts to implement pastures. The project
is expected to avoid over 22 million tonnes of carbon dioxide
equivalent greenhouse gas emissions over a 40-year period.
This will be achieved by managing the land in the form of a
‘private conservation reserve’, through rigorous monitoring
and enforcement.
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TI Fluid Systems plc
Annual Report and Accounts 2021
Designed by Gather
+44 (0)20 7610 6140
www.gather.london
TI Fluid Systems, Corporate Offices
2020 Taylor Road
Auburn Hills
Michigan 48326
United States of America
Tel: +1 248 296 8000
TI Fluid Systems plc, Registered Office
4650 Kingsgate
Cascade Way
Oxford Business Park South
Oxford OX4 2SU
United Kingdom
Tel: +44 (0) 1865 871820
www.tifluidsystems.com
Incorporated and domiciled in England and Wales
Registered number 09402231