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Ruben Wegman

Foreword from our CEO

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Foreword Ruben Wegman (CEO)

The year 2021 was a positive year for Nedap, despite the ongoing challenging times as a result of the pandemic. Total revenue was up 9% in 2021, with all business units contributing to this revenue growth. We are very pleased with this development, despite component shortages and other disruptions in the supply chain slowing down growth. Revenue from software subscriptions was up 16% in the 2021 financial year and meanwhile represents 28% of total revenue.

Resilience in challenging times
The pandemic continued to have a major impact on our markets and operations last year. In the financial year before last, the start of the pandemic stifled demand and forced us to put a lot of time and effort into absorbing the effects of that.

Proud of the efforts, personal entrepreneurship and sense of responsibility of our people.

In early 2021, things turned around. Demand for our products and solutions picked up, while at the same time the pandemic wreaked havoc in our supply chain. Where the challenge in 2020 was to prevent inventory levels from spiralling out of control, the focus
shifted radically to finding components in time to be able to keep producing our devices. On top of that, constantly changing restrictions imposed by the Dutch government to stem the spread of COVID-19 forced us on several occasions to change the way we work, while we had already been relying on our employees’ resilience and perseverance for several months. All of this turned 2021 into an intense year for us all.

We are very proud of the efforts, the personal entrepreneurship, and the great sense of responsibility our people have shown. We have given a lot of attention to colleagues’ well-being and created greater scope for them to organise their own day-to-day activities. Not least to allow them to strike a lasting balance between responsibilities at home and at work, but also for us to be able to hit deadlines in the short term without losing sight of employability. Thanks to open communication about day-to-day affairs and mutual expectations, bottlenecks were detected early and appropriate measures could be taken. As a result, we were able to keep employee absence to a minimum. We have also launched several inspiring initiatives aimed at securing the continuity of our services. One such initiative is the new procurement escalation team, which stepped in whenever component shortages caused problems.

As a team that brings together all the expertise, experience, and contacts available across the organisation, they managed to achieve the impossible time and time again, finding the right or alternative components in unexpected places all over the world. Thanks to close collaboration between our buyers and developers, product designs could be modified in double-quick time to be able to slot in alternative parts. This also involved shoulder-to-shoulder collaboration with production and logistics partners. Despite the challenging conditions, work to further strengthen Nedap’s competitive position and our organisation’s strength continued unabated throughout the year.

Step Up! strategic plan
In March 2021, we presented the new Step Up! strategic plan. The idea behind this plan is to accelerate Nedap’s growth by better harnessing the potential available across the organisation. We intend to make that happen by implementing a new way of working, one where entrepreneurship and market focus at the individual business units and in the propositions are combined with the strength of the Nedap organisation as a whole. The new phase-based approach to individual propositions with a create, scale, and core phase has improved insight into what is needed in terms of targets, management, and priorities.

In 2021, we further built our distinguishing capacity.

Combined with a Nedap-wide perspective, this enables us to make more keenly targeted choices for individual propositions. We have decided, for example, to step up investment in growth at Healthcare, in our dairy farming solutions at Livestock Management, and in iD Cloud growth. For the Luxon and SENSIT propositions, the decision went the other way. These propositions will gradually be phased out. At the same time, targeted investments were made in the further development and marketing of propositions such as UV drivers, RF anti-shoplifting systems, and our long-range identification products, which returned concrete commercial successes. Along with the Step Up! plan, new financial targets for 2025 were also unveiled. We are on track for annual high-single-digit organic revenue growth with an operating margin that is rising towards the 15% level and returns on invested capital that are outgrowing profitability.

One key part of the Step Up! plan is our sustainability policy. After consulting a broad group of stakeholders and in line with our strategic principles, we have set out and shared our sustainability perspective, giving us a valuable foundation from which various initiatives have meanwhile been launched across our company, with concrete targets. This creates greater clarity and transparency for all stakeholders of what Nedap has been doing in this area in the past and what our ambitions are for the coming years.

This integrated sustainability perspective is also an essential element of the strategic stories of individual business units and propositions.

Progress
In 2021, work on further reinforcing that what sets us apart in various markets has continued, and we racked up a number of high-profile commercial successes. With the successful implementation of Nedap Ons® at two major mental healthcare facilities, the Healthcare business unit
has set itself up for further growth over the coming years. At Identification Systems, the rationalised product strategy for long-range identification products has created greater market traction, which delivered fine revenue growth. The Light Controls business unit saw its revenue grow on the back of an uptick in demand for UV lamps. In the dairy farming industry, the adoption rate of smart sensors to monitor individual cows’ health and behaviour
is growing. Our Livestock Management business unit managed to further extend its leading position in this market worldwide.

We foresee further revenue growth in 2022.

More and more dairy farmers see the benefits our products offer when it comes to quality and functionality. Many years of investing in our RFID solution for shops are now starting to bear fruit. After landing several leading retailers as new customers in Europe and North America, iD Cloud is now the world’s largest and most rapidly growing RFID platform in the retail market. The Security Management business unit continued to steadily enhance the excellent reputation of the AEOS access control platform, completing several large-scale and complex projects and adding new leading parties to their client portfolio. With their Flux proposition, the Staffing Solutions business unit taps into growing demand for solutions for time tracking and the scheduling of both permanent staff and flexible workers, all in one single system. Production and logistics companies in particular have a need for this kind of functionality.

Aside from all of that, great strides were made in centralising our company’s internal support processes. With the entire organisation now using the same accounting system, it has become

a lot easier to roll out best practices across Nedap and fully automate process steps. This freed up capacity that was subsequently used to gain valuable insights to support the decision-making process in developing and marketing propositions and setting priorities for improvement projects.

Outlook

Given the progress made in 2021, with a refined vision of our targets, management and priorities for each proposition and the reinforcement of our organisational strength, we are confident about the future. Although the supply chain disruptions and an increased challenge in finding new talented employees will create uncertainty, we foresee further revenue growth in 2022, unexpected circumstances notwithstanding.

Ruben Wegman, CEO
17 February 2022

© 2022 Nedap N.V. All rights reserved

Disclaimer. This online annual report is a non-official copy of our original and official 2021 annual report. The independent auditor (PwC) has not certified this copy as being a true copy of the official version, neither are they under an obligation to do so. Therefore, the audit certificate does not relate to this copy, but solely to the official version. In the event of any inconsistencies in the interpretation, the official annual report shall prevail. No rights can be derived from this version. The audited and approved version is available in ‘Annual report 2021 - ESEF package’ on https://nedap.com/investors/publications/.

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