Hunter Douglas N : 2021 Annual Report 834.4 KB

Hunter Douglas is the world market leader in window coverings and a major manufacturer of architectural products

The Group is comprised of 136 companies with 47 manufacturing and 89 assembly operations and marketing organizations in more than 100 countries.

Hunter Douglas employs about 23,000 people with sales in 2021 of USD 4.6 bln.

Operating style

Professionally led by entrepreneurial managers who run our business as their own.

Focused on innovation

Decentralized organization structure

• Global network of specialized companies
• Guiding principle 'Maximum accountability with minimum interference'

Strong brands

• Hunter Douglas® in North America, Latin America and Asia, and for architectural products worldwide
• Luxaflex® for residential window coverings in Europe and Australia
• Levolor® in North America
• Hillarys® in the United Kingdom

Contents

Directors' report

To our shareholders

2021 was a year of record sales and profits. Sales increased by 26.7% to USD 4.607 bln and profits to USD 651 mln (per share

• 15.82).

Sales were:

29% higher in Europe

31% higher in North America

20% higher in Latin America

43% higher in Asia

22% higher in Australia

Earnings before interest, tax, depreciation and amortization - EBITDA (before other income/expense): were USD 840 mln, 65.3% higher than USD 531 mln in 2020.

Other income/expense: were USD 86 mln positive compared with USD 189 mln negative in 2020.

Capital Expenditures: in 2021 were USD 86 mln compared with USD 73 mln in 2020.

Operating cash flow in 2021 was USD 697 mln compared with USD 479 mln in 2020.

Return on Net Assets Employed (RONAE): before other income/expense was 29.2% and on Equity 28.9%.

Financing: All borrowings are covered by committed long-term facilities.

Europe:

Had higher sales and profits. The recovery of our window covering products business that started in the second half of 2020 for most of the countries that we operate in, continued in 2021.

North America:

Had higher sales and profits. We experienced sales growth across all of our channels.

Latin America:

Had higher sales and profits

Asia:

Had higher sales and profits

Australia & New Zealand:

Had higher sales and profits.

Dividend:

No dividend will be proposed.

Acquisition by 3G

On December 30, 2021, Hunter Douglas N.V. and 3G Capital, a global investment firm and private partnership, announced that Ralph Sonnenberg, the controlling shareholder of Hunter Douglas N.V., had entered into a definitive agreement to transfer a controlling interest in the Company to 3G Capital based on a value of EUR 175 per Ordinary Share. On February 25, 2022, that transaction was completed.

As a part of the transaction, all business activities from Hunter Douglas N.V. have been sold to Hunter Douglas Holding B.V., a newly established company in The Netherlands, indirectly held through Hunter Douglas B.V. by 3G Capital (75%). Ralph Sonnenberg has transferred this a 75% interest in Hunter Douglas B.V. to 3G Capital through a Block Trade, with the Sonnenberg Family continuing to own 25% of Hunter Douglas B.V.

Statutory buy-out proceedings for all remaining outstanding shares in Hunter Douglas N.V. will commence in accordance with applicable Curaçao law and Hunter Douglas' articles of association. In these proceedings, the position will be taken that the price of Hunter Douglas shares will be the same as pursuant to the Block Trade for each Ordinary Share, being EUR 175, and EUR 0.43 for each Preferred Share. The funds required to pay remaining outstanding shareholders have been secured and are restricted only for the use of payments to the remaining third party minority shareholders in Hunter Douglas N.V. The Company expects to finalize the buy-out proceedings in the second half of 2022 and intends to liquidate the Company afterwards.

Presently Hunter Douglas N.V.'s balance sheet mainly consists of a receivable of EUR 6.096 bln on Hunter Douglas Holding B.V. and equity.

Hunter Douglas Holding B.V. in 2022

After the closing of the previously discussed transaction, including the asset transfer, the business activities of Hunter Douglas are being continued in a new company called Hunter Douglas Holing B.V. This entity is indirectly held by Hunter Douglas B.V., with 3G Capital (75%) and the Sonnenberg Family (25%) as its shareholders.

Hunter Douglas Holding B.V. is in a strong solvency position with healthy free cash flow and significant equity capital invested by 3G Capital and the Sonnenberg Family. The transaction established the Company with a strong liquidity position of cash on balance sheet as well as access to a USD 750 million revolver, currently undrawn.

Outlook

Hunter Douglas Holding B.V. is in a strong position in term of brands, products, distribution and finances.

Our Strength

Culture

"Business is people" is our core guiding principle. We consider our culture of professional entrepreneurship a key competitive advantage, that drives our organization.

We are a decentralized federation of specialized companies, run by people who manage our companies as their own. This enables fast decision making with organizations that respond quickly to fast changing design trends. Many of our businesses today are still run by their founding entrepreneurs.

We run these businesses with a minimum of staff based on a second core principle of "minimum interference, maximum accountability."

We believe in strong brands, global product platforms and local management.

We provide our entrepreneurial managers with a network of like- minded companies and colleagues who support their development plans.

We pride ourselves on the long tenure and success of our in- house entrepreneurs, and our ability to invest with a long-term focus.

We excel at rewarding talent with long-term entrepreneurial incentives.

We encourage the application of our key principles in all our companies, with organizational structures that maximize front-linedecision-making ability and accountability.

We encourage the rapid advancement of young talent to entrepreneurial roles in our business.

Research and Development

Hunter Douglas was founded on a tradition of bringing breakthrough products to market. Today, we lead the industry in our ability to success- fully develop and establish completely new product concepts.

Our unparalleled scale and vertical integration enable us to innovate products end-to-end, from materials to equipment design, from component engineering to automated custom assembly, from industrial design to installation friendly components.

We are pioneers in forming fabrics into unique designs that can trap air for superior insulation, softly diffuse incoming light, and provide privacy while preserving outside views.

We foster a highly collaborative culture among our team of over 300 engineers located in R&D centres around the world where we excel at design for manufacturability and customization.

Our top priorities are achieving the right balance of form and function, managing the quality of light entering the window, combined with the safety and ease of operation of our products.

Manufacturing & Customization

About 75 years ago Hunter Douglas pioneered the aluminium venetian blind with a unique continuous casting and aluminium fabrication process.

Today we apply that willingness and ability to completely innovate the manufacturing process to all aspects of our operations.

We concentrate production of our principal materials in highly specialized global plants, while 87 fabricators located in our key markets ensure quick and efficient delivery of localized product ranges.

Make-to-order manufacturing of premium blinds is a highly complex undertaking. We offer the leading range of operating solutions fitting the very diverse range of window conditions around the world. We also offer a wide range of materials and colors to meet local consumer tastes. We do this around the world, custom made for standard delivery in 5 days.

Our key manufacturing and assembly processes are developed in-house, and we are leaders in the supply of assembly equipment and technology to fabricating customers around the world.