Annual report of theN.V. Nederlandsche

Apparatenfabriek“Nedap”on its

financial year 2013

Verslag van deN.V. Nederlandsche

Apparatenfabriek“Nedap”over het

boekjaar 2013

3 eightyfourth

Contents

06 Report of the Supervisory Board 10 ProfileoftheSupervisoryBoard

10 DetailsoftheSupervisoryBoard

12 Report of the Board of Management

30 Financial statements

68 Statement pursuant to Section 5:25c(2c) of the Financial Supervision Act

70 Other information 70 Independentauditor’sreport

72 ProvisionsoftheArticlesofAssociationconcerningtheappropriationofprofit

73 Appropriationofprofit

73 Branches

74 Miscellaneous 74 Five-yearsummary

76 Companiesandmanagement

78 Corporate Governance 95 Informationonthecompanystructureandcontrolpursuantto

theDecreeonsection10oftheTakeoverDirective

99 ProvisionsoftheArticlesofAssociationconcerningSpecialRights

100 ProvisionsoftheArticlesofAssociationconcerningApprovalofResolutions

bytheBoardofManagementinaccordancewithArticle20

4

Report of the Supervisory

Board

To the shareholders

WehavepleasureinpresentingyouwiththeReport

oftheSupervisoryBoardfortheyear2013-ayear

whentherewasapauseinthegrowthinrevenue

seeninrecentyears.Althoughsomemarketgroups

enjoyedgoodgrowthin2013,revenuefellmore

thanexpectedatothers.Despitefiercecompetition,

mostmarketgroupshavesubstantialopportunities

forgrowthandsoitisessentialthatweinvestin

strongpropositionsandthefurtherprofessionalism

oftheorganisationinordertobenefitfromthem.

Thisvitalinvestmentdid,however,depressprofits

in2013.

Financial statements

Thefinancialstatementshavebeenaudited

byKPMGAccountantsN.V.,whoseunqualified

IndependentAuditor’sReportisincludedinthe

Otherinformation.Atourrequest,theauditorhas

issuedamoreextensivereportthisyear,tailored

specificallytoNedap.

Asinpreviousyears,thefinalauditmeeting

betweenKPMGAccountantsN.V.andtheBoardof

Managementwasalsoattendedbyadelegationof

theSupervisoryBoard.TheIndependentAuditor’s

Reportandthe2013AnnualReportasdrawnup

bytheBoardofManagement,consistingofthe

ReportoftheBoardofManagement,theFinancial

Statements,theOtherinformation,Miscellaneous

andCorporateGovernance,werediscussedby

thefullSupervisoryBoardwiththeBoardof

Managementandtheauditor.Asshownbyits

comprehensivereport,theauditordidnothaveany

materialcomments.

Wereceivedtenregularfinancialreportsfrom

theBoardofManagementduringtheyear,which

wediscussedatlengthduringourmeetings.

Wealsoreceivedalotofinformationabout

thestateofthemarketgroups’businessfrom

presentationsgivenbymarketgroupleadersand

sitevisits.Onthisbasis,weareconfidentthat

thereportfor2013providesasoundbasisfor

meetingouraccountabilityobligationsinrespect

ofoursupervisionoftheactionsoftheBoardof

Management.Wethereforerecommendthatyou

adoptthe2013FinancialStatementsaspresented.

Dividend

In2013,Nedap’srevenueincreasedfrom€171.9

millionto€173.7millionandtheprofitaftertaxes

cameto€9.8million(2012:€13.5million).This

resultedinearningspershareof€1.46compared

to€2.01for2012.

Nedap’sdividendpolicyisguidedbystrategyand

long-termpolicyandistopayouttheentireprofit

toshareholderslessanyadditionstoreserves

thataredeemednecessaryforthecontinuityof

Nedap’sorganicgrowthandtomaintainsolvency

of45%inthemediumterm.Theaimistomaintain

asconsistentalineindividendsaspossible

and,inthecircumstances,afairdividendforthe

shareholders.

Expressedasapercentageoftotalassets,with

equitydeterminedexcludingthedividendpayable,

thesolvencyratiofellfrom38.9%to36.6%

in2013.IgnoringtheeffectsofInternational

AccountingStandard19,thesolvencyratiowould

haverisenfrom39.2%to41.0%.Byprohibiting

thecorridormethodforpensions,IAS19willlead

togreatervolatilityinequityfrom2013.Asthe

applicationofIAS19doesnotaffectcashflows,

thisIFRSobligationisignoredwhencalculating

solvency.TheBoardofManagementexpectsto

achievethedesiredlevelofasolvencyratioof

45%inthemediumterm.

Withthisinmind,inaccordancewithArticle45

(1)ofthearticlesofassociation,theBoardof

ManagementandtheSupervisoryBoardhave

decidedthat€2.4millionshouldbeaddedto

thereserves,leaving€7.4millionavailableasa

dividend.Thedividendpershareistherefore

5

€1.10(2012:€1.51).Althoughsolvencyhasnot

yetreachedthedesiredlevel,inouropinionan

unchangedpayoutratioof75%oftheprofittothe

shareholdersisappropriate.

Meetings and activities

Duringtheyear,theSupervisoryBoardmetsix

times.Allofthemeetingswereattendedbythe

entireSupervisoryBoard.

Onemeetingwasdevotedalmostentirelyto

progressonthecompany’sstrategyingeneraland

thatofcertainmarketgroupsinparticular.Nedap’s

operationalandfinancialtargetswerediscussedin

thiscontext.Themarketgroupleadersexplained

theirstrategiesatlength.Thishelpedtoprovide

uswithgoodinsightintothedifferentmarkets,

thecompetitivepositionofthevariousmarket

groups,thedevelopmentoftheorganisation,the

strategicobjectivesandtherelatedconditions

andopportunitiesandthreatsofindividualmarket

groupsandofNedapasawhole.

Riskmanagementisanimportantpartofgood

managementandessentialtosecuringNedap’s

continuityandsothevariousriskswerediscussed

indetailbytheSupervisoryBoardandwiththe

BoardofManagement.Therearesomesignificant

areasforattentionrelatingspecificallytoNedap:

- OneofthebiggestriskfactorsforNedap

istheabilitytoattractandretaintheright

staff.Nedap’scompetitivestrengthislargely

determinedbythetalent,commitmentand

personalentrepreneurshipofitsemployees.

Accordingly,alotofattentionisdevotedto

therecruitmentofnewtalent,thefurther

developmentoftheexistingtalentwithinthe

organisationandthebetterutilisationoftalent

withinNedap.PeopleExcellence,partofthe

long-termRoadtoExcellenceprogramme,

deliveredclearresultsduringthepastyear.

PeopleExcellencewillcontinuetorequirethe

organisation’sattentionin2014.

- Technicalriskshavealsoincreased.New

productsarebeinglaunchedfasterandona

larger,sometimesglobal,scale.Ifthereisa

problemwithaproduct,theconsequencesare

greaterthaninthepast.

- Internationalcustomersareincreasinglyasking

Nedaptotakefinalresponsibilityforrolling

outoverallprojects.Asaresult,legaland

operationalrisksarealsoincreasing.

- Itisdifficulttomakeaccuratesalesforecasts

forlarge-scaleprojectsandwhennewproducts

arelaunchedonthemarketandso,onoccasion,

thestockofcomponentsissometimestoo

largeandsometimestoosmall.Theapproach

tothisisbeingtightenedfurtheraspartof

DevelopmentExcellence,SupportExcellence

andOperationalExcellence,sothattheserisks

arebeingincreasinglywellmanaged.

TheBoardofManagementmadechangesinvarious

managerialpositions,whicharenowheldbypeople

whoareabletobringaboutmajordevelopmentof

themarketgroups.Furthermore,greaterattention

willbegivenduringthecurrentfinancialyearto

fillingexistingandfuturevacanciesinkeypositions

atNedapthroughbothinternaltrainingand

externalrecruitment.

Duringtheyear,theSupervisoryBoardaddressed

recurringsubjectssuchasthebudgetandperiodic

financialreportsinwhichactualperformance

iscomparedwiththebudget.Thedesignand

effectivenessoftheinternalriskmanagement

systemwerediscussedwiththeBoardof

Managementandtheauditor.Nomajorchanges

areanticipatedinthisrespect.Partlyinviewofthe

company’slimitedsize,wehavedecidedtogether

withtheBoardofManagementthatNedapdoesnot

needaninternalauditor.

Nedapisinclosecontactwithitsgroupcompanies

intheNetherlandsandabroad.Almostallofthem

aremanagedfromthemarketgroupsinGroenlo

6

Report of the Supervisory Board

andtheyareoftenledbycurrentorformer

employeesofNedapN.V.

GroupControllinginGroenlomonitorstheirrisks.

AlmostallgroupcompaniesusethesameICT

infrastructureasNedapN.V.

Onceagainin2013,wecloselymonitored

economicdevelopmentsandtheirpossible

consequencesforNedapinordertotakeprompt

action.

Asinpreviousyears,theSupervisoryBoard,

togetherwiththeBoardofManagement,evaluated

theauditfirmandtheauditoraswellasthe

co-operationwiththem.TheSupervisoryBoard

believesthattheauditorprovideditwithall

relevantinformationtocarryoutitssupervisory

duties.Theauditorfoundnoirregularitiesin

thereporting.TheSupervisoryBoardissatisfied

thattheauditorisindependentandthatthis

independenceisnotatrisk.Theauditorperforms

noworkforthecompanyotherthantheannual

audit.

On1July2013,MrE.J.L.vanLeeuwentookoverthe

NedapauditfromMrG.J.MvanHengstum.Aspart

ofthemandatoryauditorrotation,theSupervisory

BoardandtheBoardofManagementwillexplore

theoptionsforengaginganotherauditfirm.KPMG

AccountantscaninprincipleremainasNedap’s

auditoruntilthefinancialyear2016.

OneoftheSupervisoryBoard’smeetingswasheld

attheparticipatinginterestNedapFranceS.A.S.

inParis.Thedirectorofthissalesofficeprovided

insightintorelevantdevelopmentsinthemarket

segmentsthatareimportanttoNedapFrance.

WediscussedandapprovedNedap’scorporate

socialresponsibilitypolicy,forwhichtheBoardof

Managementhasfinalresponsibility.Sustainable

businesspracticesareamajorpriorityforNedap

andareembeddedinourwayofworkingasa

matterofcourse.AlmostallofNedap’sproducts

andservicesofferasolutiontoasociallyrelevant

problem.ItwouldbeinappropriateforNedapto

linkspecificquantitativeobjectivestothisasit

wouldleadmainlytoclericalwork.

Weheldmeetings,someofwhichwerenot

attendedbytheBoardofManagement,todiscuss

ourownperformanceandthatoftheBoardof

Management,bothcollectivelyandindividually,

andthevariableremunerationtobeawardedto

theBoardofManagement.Thesediscussionswere

conductedinanopenandcriticalmanner.The

workingrelationshipbetweentheSupervisory

BoardandtheBoardofManagementisagoodone.

OurconclusionisthattheSupervisoryBoardand

theBoardofManagementhaveperformedwell

individuallyandcollectively.

Inadditiontothescheduledmeetings,weheldtwo

conferencecallsonfillingthevacancythataroseon

MsBahlmann’sresignationasasupervisorydirector

andontheNedapAdditionalParticipationPlan

(NAPP).

Outsideofthemeetings,individualmembersof

theSupervisoryBoardallmadevariousvisitsto

Nedap,partlyinconnectionwiththeirspecificareas

ofresponsibility.Thisfitsinwiththeproactive

approachfavouredbytheSupervisoryBoardandits

individualmembers.

Thefindingsarereportedbacktothefull

SupervisoryBoard.Discussionswithemployeesof

Nedapanditssubsidiaries,includingmarketgroup

leaders,directorsofsubsidiariesandtheWorks

Councilareimportantforusasawaytodeepenour

connectionwithandinsightintodevelopmentsat

Nedap.Nonethelessthegoodinsightswegained

inthatwaywehavedecidedtofurtherintensify

informalcontactsbetweentheSupervisoryBoard

andthemarketgroupleadersandcontrollersto

discussnotjustfinancialperformancebutalso

7

markettrendsandopportunities,thecompetitive

position,staffingissues,themedium-termvision,

risksandactionpoints.

Inthepastyear,itbecameclearfromthemannerin

whichtheSupervisoryBoardperformeditsduties

thattheSupervisoryBoardasawholeandits

individualmemberswereabletodevotesufficient

timeandattentiontothecompany’saffairs.There

isagooddistributionofareasofresponsibilityand

wecomplementeachothersufficientlyinourrole

ofadvisingthecompany.

PartlygivenNedap’slimitedsize,theSupervisory

Boardcontinuestotaketheviewthatthecreation

offormalcommitteeswithintheBoardisneither

necessarynordesirable,particularlynowthat

theSupervisoryBoardhasadoptedaproactive

approachbasedonspecialkeyareas.Thefull

SupervisoryBoardisthereforedesignatedto

performthedutiesoftheAudit,Remuneration,

andSelectionandAppointmentCommittees.Any

decisionsaremadejointlybythefullSupervisory

Board.

ThechairmanoftheSupervisoryBoardandthe

managingdirectorareinregularcontacttodiscuss

thecompany’sperformanceandanyissuesthat

requirespecialattention.Thebilateralcontacts

oftheSupervisoryBoardwithshareholderswere

alsodiscussed.TheBoardofManagementandthe

SupervisoryBoardarecommittedtomaintaining

goodrelationswiththecompany’sshareholders.

Boththecompanyandshareholderscantakethe

initiativetogetintocontactwiththeother.Theaim

ofthesediscussionsistoprovideamorecomplete

pictureofdevelopmentswithinNedap.Thesetalks

arealwaysbasedoninformationthathasalready

beenpublished.Duringthetalkswithshareholders,

thecompanyisrepresentedbyamemberofthe

ManagementBoard.

Membership of the Supervisory Board

AttheGeneralMeetingofShareholderson16

April2013,wewerecompelledtobidfarewell

toourvice-chairman,DrJ.P.Bahlmann.Much

hashappenedinthesixteenyearssinceher

appointmenton29May1997andMsBahlmann

hasbeenanextremelycommittedsupervisory

director.Duringhertermofoffice,therelationship

betweenthesupervisorydirectors,theBoard

ofManagementandthebusinesshasmoved

significantlytowardsmoreopennessand

transparency.Managementchangesdemanded

greateffortbytheSupervisoryBoardand,in

particular,itschairmanandvice-chairman.Ms

Bahlmannkeptcloselyintouchinaconstructive

waywiththecompany’scultureandstrategyand

this,alongwithherinvolvement,wideknowledge

andexperience,meantalottotheSupervisory

Board.Shewasanexcellentsupervisorydirector

anditwasagreatpleasureworkingwithher.We

wishtothankherforherworkandeverythingshe

hasdonefortheSupervisoryBoardandNedap.

TheSupervisoryBoardandtheBoardof

Managementmetseveraltimes,bothforscheduled

andunscheduledmeetings,todiscussthe

successionofMsBahlmann.TheSupervisoryBoard

alsodiscusseditscompositionwhentheBoardof

Managementwasnotpresent.

OnthenominationoftheSupervisoryBoard,the

GeneralMeetingofShareholdersappointed

DrJ.M.L.vanEngelenasamemberofthe

SupervisoryBoardonaccountofhisbroad

managementexperience,wide-rangingexpertise

inindustrialproductdevelopment,marketing

andproductstrategy,financialexpertiseandhis

extendednetworkatinstitutesofknowledge.We

areverypleasedtowelcomehimasamemberof

theSupervisoryBoard.

8

Report of the Supervisory Board

Atthesameshareholders’meeting,MrM.C.

Westermannwasreappointedonournomination

asamemberoftheSupervisoryBoard.Mr

Westermannhaswidemanagementexperience,

anenterprisingspirit,commercialfocus,broad

expertiseinICTandafeelingforinnovation.

TheSupervisoryBoardbelievesithasagood

balanceofskills,relevantknowledgeand

experienceandcanfulfilitsstatutorydutyto

superviseandadvisetheBoardofManagement

inaneffectivemanner.Allmembersofthe

SupervisoryBoardmeettherequirementsofthe

CorporateGovernanceCodewithrespecttotheir

independence(bestpracticeprovisionIII.2.1)and

expertise.

Remuneration

BoardofManagement

Thedetailsoftheremunerationpolicyforthe

BoardofManagementaredescribedinthe

CorporateGovernancesectionofthisreport.The

compositionoftheremunerationisstatedinthe

financialstatementsunder‘BoardofManagement’s

remuneration’.

Atthebeginningofthereportingperiod,the

SupervisoryBoardheldameetingwithonly

theremunerationpolicyandremunerationof

themembersoftheBoardofManagementand

SupervisoryBoardontheagenda.Itwasalso

attendedbyanindependentadvisorengagedby

theSupervisoryBoardwhowasfirstinvolvedwith

theremunerationoftheBoardofManagement

andsupervisorydirectorsin2009.Atthat

time,theremunerationlevelwassetbelowthe

medianofajointlydefinedbenchmark.Itwas

agreedthatthepolicywouldbeevaluatedafter

afewyearsandsoweengagedtheadvisorto

againpresentabenchmarkfortheBoardof

Management’sremuneration.Thebenchmark

involvedacomparisonwithapeergroupofsimilar

companies,anumberofcompaniesofsimilar

sizeintheAEXsmall-capindexandtheadvisor’s

owndata.Theadvisor’sreportconfirmedthatthe

BoardofManagement’sremuneration,especially

thelong-termvariableremuneration,wasstillwell

belowthemedian.Afterseriousdebateandusing

theresultsofthesurvey,theSupervisoryBoard

drewuptheproposalsubmittedtotheGeneral

MeetingofShareholderson16April2013.The

proposalwastochangethevariableincomeofthe

BoardofManagementbyincreasingthepayoutfor

performanceattargetfrom30%to60%andthe

relatedmaximumof50%offixedannualincome

to90%andtoendtheexisting20%structural

differencebetweentheincomeoftheCFOandthat

oftheCEO.

ThesechangesareconsistentwithNedap’s

uniquecharacterandreflectdevelopmentsat

othercompaniesandinsocietymorebroadly.

TheGeneralMeetingofShareholderson16April

2013agreedtotheproposedchangesinthe

remunerationpolicy,bringingtheremunerationof

theBoardofManagementintolinewiththemarket

Thetargetsforthevariablepartofthe

remunerationofthemembersoftheBoardof

Managementweredeterminedinthereporting

period.Atleast50%ofthevariableremuneration

oftheBoardofManagementhasalong-termnature

asitsmembershavetoinvest50%oftheirvariable

remunerationintheNedapemployeeparticipation

plan,i.e.indepositaryreceiptswhichhavea

lock-upperiodoffouryears.Sincetheemployee

participationplanwassetup,bothmembersofthe

BoardofManagementhaveinvestedalloftheir

variableremunerationintheplan.

Aspartofthecurrentremunerationpolicy,the

SupervisoryBoardsetthefixedannualincome

oftheCEOat€355,600andthatoftheCFOat

€271,500from1January2013.Whensetting

theoverallremuneration,theSupervisoryBoard

analysedvariousscenariosandtookintoaccount

9

suchfactorsasthedevelopmentofrevenueand

profits,theadvancementofNedap’sinterestsinthe

mediumandlongtermandtheneedtoensurea

balancedremunerationstructurewithinNedap.

Supervisory directors

TheremunerationoftheSupervisoryDirectors

issetoutinthefinancialstatementsunder

‘SupervisoryBoard’sremuneration’.Inview

ofdevelopmentsinthemarketandsociety,

includingtheheavierresponsibilitiesandduties

ofsupervisorydirectors,aproposalwasputtothe

GeneralMeetingofShareholderson16April2013

tosettheannualremunerationofthesupervisory

directorsasfollows:

Chairman:€40,000;

Othersupervisorydirectors:€30,000.

Thisproposalwasdrawnupwiththeassistanceof

anexternaladvisor.Theremunerationwasadopted

bytheshareholdersasproposed.

Finally,wewouldliketoexpressourappreciation

totheBoardofManagementandemployeesfor

theirinvolvementandeffortsinthepastyear.

Thankstotheirhardworkandloyalty,Nedaphas

createdasoundbasisforbenefittingfromfuture.

Wewouldalsoliketothanktheshareholders

fortheirinterestinNedapandtheirtrustinthe

company.

Groenlo,11February2014

TheSupervisoryBoard:

G.F. Kolff, chairman

M.C. Westermann, vice-chairman

J.M.L. van Engelen

D.W.J. Theyse

10

Report of the Supervisory Board

Profile of the Supervisory Board

Nedapisamedium-sizedcompanywhoselong-

termpolicyaimstocreatesustainableaddedvalue

forcustomers,employeesandshareholdersthrough

organicgrowthinrevenueandprofits,withacentral

rolefordiversificationandinnovationbasedonthe

company’sexpertise.

TheSupervisoryBoardhastotakeaccountofthese

basicprincipleswhensupervisingtheBoardof

Management;itmustalsosupporttheBoardof

Managementwithadvice.

Tothisend,theSupervisoryBoardmusthavea

balancedmembershipcombiningmanagement

experienceandwide-rangingknowledgein

thefieldsoffinance,technologyandindustrial

marketingwithanaffinityandfeelingfor:

– entrepreneurship;

– hands-onmanagementinaflatorganisation

whichisbasedondistinctiveness;

– anorganisationinwhichsales,development

andproductionoperateasoneunit;

– workingmethodsthatfocusonresponsibility;

– acreativeprocessofinnovation;

– developmentsinsociety.

Ingeneral,theSupervisoryBoardshouldadopta

criticalattitudetowardstheBoardofManagement.

Itsmembersmustbeindependentofthecompany

andofeachotheranddisplaycomplementary

qualities.TheSupervisoryBoardaimsforamixed

membershipthatreflectsthesocietyinwhich

Nedapoperates.

TheBoardwillnotstructurallyhavemorethanfive

members.

Details of the Supervisory Board

At11February2013

G.F. Kolff (65), chairman, male

Widemanagementexperience,in-depthknowledge

oftechnology,financialexpertise,abilityto

translatetechnologyintosolutionsandmarket

opportunities,experiencewithandunderstanding

ofNedap’s‘addedvaluemodel’andsolid

communicationskills.

Nationality : Dutch

Profession/most

recentposition : CEO of Shtandart TT B.V.

Otherrelevantpositions : none

Initialappointment : 17 April 2012

Currenttermofoffice : 2012-2016

SupervisoryBoardmemberships: Paques Holding B.V. (chairman)

Smits Bouwgroep B.V. (SBB)

D.W.J. Theyse (45), female

Thoroughfinancialknowledge,management

experienceandup-to-dateandpracticalknowledge

andexperiencewithlistedcompaniesandthe

relatedregulatoryenvironment.

Nationality : Dutch

Profession/principalposition : F. van Lanschot Bankiers N.V.

Head of Corporate Banking

Property

Otherrelevantpositions : none

Initialappointment : 29 April 2010

Currenttermofoffice : 2010-2014

SupervisoryBoardmemberships: none

11

M.C. Westermann MBA (61), vice-chairman, male

Widemanagementexperience,enterprisingspirit,

commercialfocus,broadexpertiseinICT,feelingfor

innovation.

Nationality : Dutch

Profession/principalposition : Director of Motek B.V.

Otherrelevantpositions : none

Initialappointment : 12 May 2009

Currenttermofoffice : 2013-2017

SupervisoryBoardmemberships: Berenschot

Dr J.M.L. van Engelen (54), male

Widemanagementexperience,wide-ranging

expertiseinindustrialproductdevelopment,

marketingandproductstrategy,financialexpertise

andaboardnetworkatinstitutesofknowledge.

Nationality : Dutch

Profession/principalposition : Professor of Business &

Economics at the University of

Groningen

Otherrelevantpositions : Professor of Design Engineering

at the Faculty of Industrial

Design Engineering of the Delft

University of Technology

Member of the Advisory Board

of the Research School ICS

(Interuniversity Center for

Social Science Theory and

Methodology)

Initialappointment : 16 april 2013

Currenttermofoffice : 2013-2017

SupervisoryBoardmemberships: Unigarant N.V./UVM

Verzekeringsmaatschappij N.V.

Reis- en Rechtshulp N.V.

Drents Museum Assen

Member of the Board of

Supervisions of the Open

Universiteit in the Netherlands

Pensioenfonds Horeca en

Catering

12

Report of the Board of

Management

2013 in brief

Afterundergoingstronggrowthinthepreceding

years,revenuepausedforbreathin2013.In

viewoftheopportunitiesandchallengesthat

fundamentalshiftsinvariousmarketspresentto

us,wecontinuedtomakesubstantialinvestments

inpropositionsandtheorganisationalstructurein

theyearunderreview.Thisonceagainsignificantly

improvedourgrowthopportunitiesinthelonger

term,butunfortunatelyalsodampenedourprofits

fortheyear2013.

Nedap’srevenuefor2013workedoutat

€173.7million,1%higherthanin2012(€171.9

million).TheAVI,EnergySystems,Healthcareand

Retailmarketgroupsshowedmarkedgrowth.

IncomefromtheLightControlsandSecurity

Managementmarketgroupsremainedatvirtually

thesamelevelasin2012.TheLibrarySolutions

andLivestockManagementmarketgroupslost

groundcomparedtothepreviousyear.Thequality

ofincomeimprovedfurtherin2013.Theadded

value,expressedasapercentageofrevenue,rose

inthereportingperiodto68.4%(2012:67.8%).

Asaresultofthepolicytocontinueinvestingin

propositionsandtheorganisationalstructure,costs

rosefasterthantheaddedvalue,pushingprofits

downfrom€13.5million(2012)to€9.8million.

Earningspersharestoodat€1.46relativeto

€2.01for2012.TheapplicationofthenewIAS

19standard(EmployeeBenefits)causedyear-

endsolvencytodeclineto36.6%(2012:38.9%).

Withouttheapplicationofthisnewstandard,

however,year-endsolvencywas40.7%.Asthe

applicationofIAS19hasnoeffectoncashflows

andbecauseweexpectthatoursolvencytarget

of45%(withouttakingaccountofIAS19)canbe

achievedinthemediumterm,wearemaintaining

apay-outpercentageof75%.Thisleadstoa

dividendpershareof€1.10.Thedividendfor2012

amountedto€1.51.

Supervisory Board and Board of Management

AttheGeneralMeetingofShareholderson16April

2013,DrJ.P.Bahlmannretiredasamember(and

vice-Chairman)oftheSupervisoryBoard.After

servingonthecompany’sSupervisoryBoardfor

16years,MsBahlmannwasnolongeravailablefor

reappointment.InthisperiodMsBahlmannfocused

inparticularonthedevelopmentofNedap’s

corporateculture,whichisanessentialmainstay

underpinningourcompetitiveness.Withgreat

understandingandfeelingfortheorganisation,

sheinvariablymanagedtostriketherightbalance

betweenpreservingcorecomponentsofthis

cultureandcreatingroomfortheassimilationof

newinsightsonpersonaldevelopment,leadership

andgovernance.Wethereforeextendourheartfelt

thankstoMsBahlmannforherunstintingeffortsas

amemberandvice-ChairmanoftheSupervisory

Boardandforhervaluableinputduringthe

fundamentaltransitionthatNedapunderwentin

thepastyears.

UponthenominationoftheSupervisoryBoard,

theGeneralMeetingofShareholdersappointedDr

J.M.L.vanEngelenasamemberoftheSupervisory

Boardonaccountofhisbroadexecutiveexperience

indiverseorganisations,hiswide-rangingexpertise

inindustrialproductdevelopment,marketing

andproductstrategy,hisfinancialsavvyandhis

extensivenetworkatinstitutesofknowledge.

Inaccordancewiththeretirementschedule,MrM.C.

WestermannretiredfromtheSupervisoryBoard

attheGeneralMeetingofShareholdersandwas

reappointedatthesamemeetingforaperiodof

fouryears.

Market and strategy

Thefundamentalshiftsinthemarketsinwhich

Nedapoperatescontinuedunabatedin2013.

Growingtransparency,forinstance,ismaking

itincreasinglyeasyforcustomerstocompare

products.Theconvergenceoflocalmarketsintoa

13

singleglobalmarketmeansthatregionalleaders

canbesuddenlyreducedtoirrelevance.Andthe

rapidriseofnewtechnologiescanrenderentire

productlinesobsoleteovernight.

Marketsarebecomingmoreturbulentandmore

unforgiving.Missingoutonasingletechnological

opportunityorofferingapropositionthatfails

tocatchonwithcustomerscancauseadrastic

deteriorationinmarketposition.Whatismore,the

commercialandfinancialconsequencesoffailingto

retainastrongmarketpositionarebecomingmore

andmoresevere.Duetohyper-informedcustomers

andongoingmarketconvergence,anever-larger

sliceofthemarketisbeingdominatedbyasteadily

decliningnumberofleadingplayers.Thesearethe

partieswhogeneratesufficientprofittoaffordvital

investmentsinnewgenerationsofpropositionsand

thusextendtheirleadoverthecompetition.

Theleadingpositionsinthemarketsoftomorrow

arebeingdividedtoday.Agoodmarketpositionin

thepastisnoguaranteewhatsoeverforadominant

roleinthefledglingmarketsthatarecurrently

springingup.Theupshotforusisthatwemust

constantlyanddrasticallyraisethedemandswe

makeofourpropositions,whilealsopressingahead

withtheglobalisationandprofessionalisationof

ourorganisation.Thishaspromptedourdecision

tocontinueinvestinginourpropositionsaswell

asinourorganisationalstructurein2013,witha

deliberatefocusonlong-termgrowth,evenatthe

expenseofshort-termresults.

Withmarketsbecomingmorefickleand

unpredictable,weconsideritmorevitalthanever

toremainactiveinourbroadlydiversifiedand

robustportfolioofmarkets.Anexclusivefocuson

asinglelucrativemarketmayofferadvantagesin

theshortterm,butalsoposesathreatinthelonger

termasanunforeseendeteriorationinthismarket

couldlandthecompanyindeeptrouble.Only

sufficientdiversificationofouractivitieswillenable

ustoabsorbsetbacksinspecificmarketsandthus

preventthecompany’scontinuitybeingputin

jeopardy.

Intheyearunderreviewthemarketgroupstook

majorstepstowardsthefurtherdevelopmentof

existingandnewpropositions.Aproduct’stechnical

specifications,thoughobviouslyveryimportant,

areonlyoneaspectofthetotalproposition.Other

keyaspectsaredesign,easeofuseandmarketing.

Butelementssuchasavailability,speedofdelivery,

warrantiesandeaseofinstallationarealsokey

considerationsinthecustomer’spurchasing

decision.

Morethanbefore,weseektobuildourpropositions

inclosecooperationwithkeycustomers.This

enablesustoidentifyessentialcomponents

ofapropositionatanearlystage.Tomakethe

discussionwiththemarketasusefulaspossible,

ourexistingideasandviewsmustconsistently

bechallenged,andwemustbecomeincreasingly

sensitivetothefirstsignalsofchangesinmarkets.

Onegoodexampleofthisshiftfromproduct-based

thinkingtoproposition-basedthinkingoccurred

inthepastyearswithintheLightControlsmarket

group.Untilrecently,wedevelopedandproduced

lampdriverequipmentforHigh-IntensityDischarge

(HID)lightingunderthenameLuxon.Thistypeof

lightingisprincipallyappliedinlargebuildingswith

highceilings,suchasconferencecentres,logistics

centresandBigBoxretailers.Theadvantageofour

electronicLuxonlampdriversisthattheyaremore

energy-efficientandremotelydimmable.

Afterourinitiallimitedsuccesswiththesaleof

Luxonlampdriverstolampmanufacturers,we

decidedtolaunchabrand-newpropositioninthe

lightingmarket:LuxonLive®.Thisproposition

providesacomprehensivesolutionthatenables

playerssuchasretailchainsandconference

buildingmanagerstocontrolandreducetheir

lightingcosts.Thecoreofthispropositionstill

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Report of the Board of Management

consistsoftheLuxonlampdriverequipment,but

ithasnowbeenexpandedwithourownrange

oflightfittingsaswellasasoftwareservicethat

givesourcustomersconstantinsightintothe

qualityandcostsoftheirlighting.Whenfaults

occur,techniciansareimmediatelycalledoutto

remedytheproblem.Thespeedwithwhichfaults

areresolvedisrecorded,sothatourcustomerscan

checkwhethertheagreedservicelevelsarebeing

met.Inthereportingperiodweimplementedthe

firstsuccessfulLuxonLiveinstallationsinvarious

countriesincludingCanada,theUS,theUKand

Germany.

ThankstotheLuxonLiveproposition,theLight

Controlsmarketgrouphassecuredanentirely

differentpositioninthevaluechain.Itnowdeals

directlywithlargeendcustomersandistherefore

betterabletocommunicatetheuniquefeatures

ofitsproposition.Asecondmajoradvantageis

thatcustomerexperiencesarefedbackmuch

moredirectly,whichhelpstoacceleratefurther

improvementstotheproposition.

Thedevelopmentofasuccessfulproposition

ishighlytime-andenergy-consumingfor

individualmarketgroups.Inordertospeedup

thisdevelopmentprocess,ourmarketgroupsare

makingincreasinglyintensiveuseofeachother’s

knowledgeandexperience,notonlyintechnology,

butalsoinmarketing,projectmanagement,

distribution,supportandtraining.Inthisway,

investmentsmadebyindividualmarketgroups

produceNedap-widebenefits.Onekeycompetitive

strengthofNedapisbasedonthecombination

ofabroadcompany-wideportfolioofmarket

opportunitiesandtheintensivemarketfocusin

eachmarketgroup.Bymakingsmartuseofthe

potentialofeachmarketgroup,weareregularly

abletolaunchnewpropositionsbothfasterand

cheaperthanourcompetitors.

Thequickerpaceatwhichchangesinpropositions

andmarketsaretakingplacehasanimpacton

ourriskprofile.Riskisthechanceofunwelcome

eventsoccurring,withexponentiallysevere

consequences.Thefurtherprofessionalisationof

ourorganisationhasmitigatedtheriskoferrors,but

thepotentialcostoferrorsthatdooccurisrising.

Newdevelopmentscanbeadoptedindouble-

quicktimebymarkets.Asaresult,productsare

soldandusedaroundtheworldatayoungerstage

ofdevelopment.Designflawsorproductionerrors

thereforehavemuchgreaterconsequencesthan

before.Onetellingexampleisthemodificationwe

neededtomakelastyeartoourPowerRouterat

customersallovertheworld.

Butitisnotonlytechnicalrisksthataregrowing.

Withcontractsbecomingeverlargerandmore

globalinscale,theproject,certificationandlegal

risksarealsoamountingconcern.Managing

theseriskswillbeacrucialissueinthefutureand

mustbetakenonboardasanintegralpartofthe

developmentofnewpropositions.

Employees and organisation

Totakeupleadingpositionsinmarkets,thetell-

talesignsofchangingmarketconditionsmustbe

pickedupsoonerandsooner,andtheflexibility

ofourorganisationmustbeconstantlyincreased.

Classicorganisationalmodels,basedoncommand

andcontrol,failtoprovideanswerstothisnew

realityandarebeingsupersededbynewmodels.

Foryearsnow,Nedaphasbeenmovingtowardsa

muchmore‘distributedgovernancemodel’,where

responsibilityisbornebymanymorepeople.

Inordertorespondadequatelytofundamental

marketchanges,wemustcontinuouslyremainin

theforefrontwiththefurtherdevelopmentofour

governancemodel.

Ourcorporatecultureisaimedatenabling

everyonewithinourcompanytomakeresponsible

decisionsindependently.Toachievethis,three

basicconditionsmustbemet.Inthefirstplace,

itisessentialforeveryonetounderstandwhat

15

Nedap’sbasicprinciplesare.Theseinclude

pursuingsustainablegrowthofouraddedvalueper

employee,maintainingastrongandbroadportfolio

ofmarketopportunities,andcontinuouslyworking

onpersonalrelevancefortheorganisation.Over

thepastyearswehaveworkedhardtomakemany

ofthesebasicprinciplesmoreexplicit,toarticulate

theminclearertermsandtosharethemwiththe

entireorganisation.Secondly,internaltransparency

isvital.Wherepossiblewithintheparametersof

regulatorycompliance,wewanttogiveeveryone

aclearpictureofouractivitiesandperformance.

Thankstoinvestmentsinmodernmedia,thespeed

anddegreeofdetailwithwhichinformationis

madeinternallyavailablehasmuchimproved.Our

experienceisthatbetterinformationleadstobetter

decisions.Finally,peoplemustbegivenliberty

tomakerealdecisionsand,ofcourse,trulytake

responsibility.Wehaveseenthatwhenpeopleare

askedtotrulytakeresponsibilityfortheirdecisions

andfortheconsequencesoftheirchoices,they

learnmuchfasterandthequalityoftheirdecisions

improvesrapidly.

Toworksuccessfullywithinthisgovernancemodel,

ouremployeesmustmeetever-higherdemands.

Alongsidespecialistknowledge,everyoneis

expectedtohaveabroaderperspective.Everyone

mustunderstandtheimpactoftheirpersonal

actionsongroupobjectives.Theroleofmanagers

withinNedapisalsoundergoingafundamental

shiftawayfromsupervisinganddecision-making

towardsselecting,developingandinspiringnew

andestablishedtalent.Leadersareexpectedto

provideacoherentfuturevisionfortheirgroup,

sothattheemployeesintheirgroupcanbetter

determinehowthey,asindividuals,cancontribute

tothecollectivesuccessoftheorganisation.

Toreadyourselvesfortheshiftsweforeseeinour

markets,weembarkedontheRoadtoExcellence

programmein2012.Thecentralobjectiveofthis

programmeisthefurtherprofessionalisationof

thevariousprocesseswithinourcompanyinorder

toincreasethescalabilityoftheorganisation.The

scalabilityofanorganisationdeterminestheextent

towhichitisabletogrowrevenuewithoutrequiring

asimultaneousincreaseinheadcount.In2013we

continuedworkinghardonthepreviouslyinitiated

OperationalExcellenceandPeopleExcellence

components.Majorprogresshasbeenmade

throughoutNedaptowardsthesimplificationand

streamliningoftheoperationalorder-to-delivery

processes.Afteraninitialpeakinthemiddleofthe

reportingperiod,stocklevelswerebroughtunder

controlandreduced,leadtimeswereconsiderably

shortened,andconstanteffortsweremadeto

improveprocurementconditions.

ThefirstphaseofPeopleExcellencewasaimed

attherecruitmentoftoptalent.Thankstosuch

activitiesasourpartnershipwithLowlands,the

EntrepreneurshipMasterclassandnumerous

otheractivitiesatuniversitiesandcolleges,we

managedtoenhanceourappealtorealtoptalents.

Attheendof2013westartedthenextphaseof

PeopleExcellence,whichaimstofurtherraisethe

performanceoftalentedpeoplealreadywithin

ourranks.Inadditiontoorganisinginduction

andtrainingprogrammes,feedbackonpersonal

performancewillbeintensified.Moreattention

willalsobedevotedtoachievingbetteralignment

betweenpersonalgrowthobjectivesandthe

objectivesofthemarketgroupandNedap.

Inthereportingperiodwealsolaunchedthe

DevelopmentExcellenceprogramme.Byinvolving

moredisciplinesinproductdevelopmentat

anearlierstageandmakingmoreuseofpeer

review,wecangreatlyimprovethequalityofour

designsandtailornewpropositionsmoreclosely

tothedemandsofthemarket.Duringthedesign

process,alotofattentionisdevotedtothecritical

assessmentofappliedcomponents.Thishasa

positiveeffectonthecostprice,deliverytimeand

engineerabilityofnewproducts.Inviewofthelead

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Report of the Board of Management

timeofdevelopmentprocesses,itwillbesome

timebeforetheeffectsofthispartoftheRoadto

Excellenceprogrammebecomeclearlyvisible.

AspartoftheSupportExcellenceprogramme,

goodprogresswasmadein2013withthefurther

professionalisationofourprojectmanagement

withinNedap.Projectresponsibilityincreasingly

formsanessentialpartofpropositions.Lastyear,

therefore,weinvestedinthedevelopmentofour

ownprojectmanagementmethodologiesthatsuit

thespecificcharacteroftheprojectsinthevarious

markets.Wealsopressedaheadwiththefurther

developmentandformalisationofourBusiness

Partnerprogrammesandmadegoodprogress

withnewtechnologiesfortrainingcustomersand

businesspartnersintheuseandinstallationofour

products.

Implementingorganisationalimprovementsinthe

frameworkoftheRoadtoExcellenceprogramme,

whilstalsocontinuingtocarryoutournormal

day-to-dayactivities,requiresgreateffortand

perseverancefromallemployeesinvolved.

Fortunately,theimprovementsachievedsofar

provideallthemotivationweneedtocontinue

workinghardonthisprogrammeintheyearsahead.

In2014theRoadtoExcellenceprogrammewill

beexpandedwithMarketingExcellenceandSales

Excellence.

Nedap’scompetitivestrengthstems,firstand

foremost,fromthetalentanddedicationofour

employeesandthewayweworktogether.To

remainsuccessfulintheongoingbattleforleading

positionsinnewmarkets,werealisethatitis

necessarytoconstantlysethigherstandardsfor

ourselvesandourworkingmethods.Thecontinuous

drivetokeepimprovingyourselfandtoremain

personallyrelevantfortheorganisationdemands

agreatdealfromouremployees.Wearetherefore

extremelygratefultotheemployeesfortheir

contributionstothefurtherdevelopmentofthe

business.Althoughtheresultslaggedsomewhat

behindin2013,wehaveeveryconfidenceinour

jointcapabilitytotransposethetalentwithinour

companyintoconcretecommercialandfinancial

successesinthecomingyears.

Attheendof2013thecompany’spermanent

workforceconsistedof744employees,35more

thanthe709employeesattheendof2012.During

2013theaveragenumberofemployeeswas742

comparedto702inthepreviousyear.At41,the

averageagewasstable.Theabsenteeismrate,

excludingmaternityleave,roseintheyearunder

reviewto2.6%(2011:2.2%).

Asnotedearlier,Nedapmakeshighdemandsof

employeesintermsoftraining,experienceand

personality.Wehavefoundthatinrecenttimes

therequirementsforleadershipappointments

inparticularhavebecomealotmoreexacting.

Peoplewhomeetthesedemandsareextremely

hardtofind.Ifweweretoperformanadditional

selectionongenderorbackgroundinorderto

meetastatutoryratio,wewouldnothaveenough

candidates.Thisisessentiallywhywedonotmeet

thetargetratioofatleast30%womeninexecutive

positionsasrequiredbythelawonabalanced

participationofmenandwomeninexecutive

andnon-executivepositionsthattookeffecton

1January2013.Itisnotrealisticeithertoexpect

changesinthisrespectatNedapinthenearfuture.

In2013theaddedvalueperemployeefellfrom

€166,000(2012)to€160,000.Althoughtotal

addedvalueroseslightlyduring2013,thiswas

insufficienttokeeppacewiththegrowthin

headcount.Astheinvestmentsintheorganisation

arepartlyaimedatimprovingourscalability,we

foreseethattheexpectedrevenuegrowthwill

leadtohigheraddedvalueperemployeeoverthe

comingyears.

17

Witheffectfrom1April2013NedapN.V.has

signedanewone-yearcollectivelabouragreement

withthetradeunions,includingasalaryincrease

of1.5%effectivefromthatdate.Inaddition,all

employeesreceivedsevenNedapdepositary

receipts.Thesearesubjecttotheconditionslaid

downintheNedapemployeeparticipationplan.

TheNedapAdditionalParticipationPlan(NAPP)was

launchedon1January2013.TheNAPPoperates

alongsidetheexistingemployeeparticipation

planthatenablesemployeestousetheirannual

shareinprofitstopurchaseNedapdepositary

receipts.Undertheexistingparticipationplan,these

depositaryreceiptsarelockedupforaperiodof

fouryears.Inadditiontoa10%discountonthe

purchasepriceofthedepositaryreceipt,onebonus

depositaryreceiptisawarded,subjecttoconditions,

afterfouryearsforeveryfourdepositaryreceipts.

Theholderofthedepositaryreceiptisdirectly

entitledtothefulldividendpershare.

TheNAPPoffersemployeestheopportunityto

shareinprofitsiftheprofitbeforetaxesrisesmore

than5%peryear.Profitbeforetaxesin2012

(€16.313million)istheinitialreferencepoint.

Aftereachfinancialyear,itwillbeestablished

whethertheprofitbeforetaxeshasexceededthe

aforementionedthresholdvalueforthatyear.Ifthis

isthecase,aprofitpoolwillbecreatedbysharing

theprofitabovethethresholdvaluebetween

employeesandshareholders.Oftheprofitbefore

taxesabovethethresholdvalue,40%ispaidinto

theprofitpoolfortheemployees.Ifanyexceptional

circumstancesoccurinagivenyear,duetoe.g.

extraordinaryincomeorexpenses,acquisitions

orachangeinthedividendpolicy,theBoardof

Managementcanalwaysuseadifferentcalculation

methodtodeterminetheprofitpool.

Thedistributionoftheprofitpooltoemployees

takesplaceonthebasisofprofit-sharingrights

accruedbyemployeesonanindividualbasis.In

viewofprofitdevelopmentatNedap,noprofitwill

bedistributedundertheNAPPinthefinancialyear

2013.

ExpectationsarethatStichting

MedewerkerparticipatieNedapwilleventuallybuild

upashareofseveralpercentagesinthecompany’s

totalsharecapital.Attheendof2013,theStichting

held69,328Nedapshares,forwhichithadissued

depositaryreceipts.Thatisabout1.0%ofthe

issuedsharecapital.

Everyyear,theroleoftheWorksCouncilasthe

directrepresentativeoftheNedapemployees

gainsinsignificance.Thankstotheuniquenature

oftheNedapculture,theWorksCouncilmembers

areable–moresothantheircounterpartsinlarger

nationalrepresentativebodies–toraiseissueswith

theBoardofManagement,takingaccountofall

specificaspectsthatareatworkwithinNedap.Time

andagain,wefindthattheopenandconstructive

dialoguebetweenmanagementandemployees

enablesustomakedecisionsthatstrikeagood

balancebetweentheinterestsoftheemployees

andthebusiness.Wethereforethankthemembers

oftheWorksCouncilfortheirhardworkand

inputinthepastyear,andaredelightedwiththe

relationshipofmutualtrustthatwehavemanaged

tobuildtogether.

Market groups

AVI

2013wasasuccessfulyearfortheAVImarket

group(AutomaticVehicleIdentification,products

forvehicleanddriveridentificationaswellas

wirelessparkingsystems).Robustrevenuegrowth

wasachievedinvirtuallyallinternationalmarkets.

Overthepastyearsthemarketgrouphasmanaged

tobuildapowerfulproductlineforlong-distance

recognition,withaclearanddistinctivepositioning

foreachoftheconstituentproducts.Partlythanks

tothecomprehensivenessofthisproposition,

therobustTRANSITmicro-wavereader,thecost-

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Report of the Board of Management

effectiveuPASSreaderandthecompactANPR

Accesslicencenumberrecognitioncameraall

generatedhighersalesthanever.

ThemarketfortheSENSITsystemforwireless

parkingdetectionappearstobereachingmaturity.

Manycitieshavestartedupmobilityinitiatives

aspartoftheir‘SmartCity’concepts.Sensor

technologyforparkingdetectionisaneffective

wayofimprovingtrafficflowsinthisconnection.

Nedapsensorshavenowbeeninstalledinvarious

citiesondifferentcontinents.Theinformationfrom

thesesensorsisusedtoguidevehicleoperators

moreeasilyandquicklytovacantparkingspaces.

Asaresult,scarceparkingspaceisusedmore

efficientlyandthenumberoftrafficmovementsto

findaparkingspaceisreduced.Thisdevelopment

isexpectedtocontinue,withtheSENSITsystem

makingastructuralcontributiontowardsthemarket

group’srevenuegrowthinthecomingyears.

In2013wecontinuedtointroduceouruPASS

Accessreadertothesecuritysystemsmarket.With

itscompactformat,appealingdesignandreading

distanceoftwometresbasedonbattery-freecards,

thisUHFreaderisanidealcardreaderforsettings

wherepeopleneedcomfortable,rapidandhands-

freeaccess,suchashospitals,cleanroomsand

logisticscentres.Theproductwaswell-receivedin

themarketandthefirstprojectswerecarriedout

in2013.Thisproductisexpectedtogiverevenuea

furtherimpulsein2014.

ThenumberofprojectsintheNetherlandsfor

urbanvehicleaccesscontrolsystemswasrelatively

limitedintheausterityyearof2013.Income

fromthisactivitywasthereforelowerthaninthe

previousyear.However,internationaldemandfor

suchsolutionsisexpectedtogrowfurtherinthe

comingyears.

Owingtothebroaderportfolioofproductsand

markets,thenameAutomaticVehicleIdentification

(AVI)nolongercoversthemarketgroup’srangeof

activities.Themarketgrouphasthereforebeen

renamedNedapIdentificationSystemswitheffect

fromthenewfinancialyear.Inspecificmarkets

forparkingdetectionandurbanaccesscontrol

systems,themarketgroupwilloperateunderthe

NedapMobilitySolutionslabel.

Althoughproject-basedrevenuecanshow

fluctuationsintheshortterm,themarketgroupis

confidentthatongoingpropositiondevelopment

andintensivemarketingaimedatpromising

marketswillleadtosolidrevenuegrowthinthe

comingyears.

Energy Systems

Despitedifficultmarketconditionsintheyear

underreview,theEnergySystemsmarketgroup

(systemsfortheindependentandeffective

generation,storageandconsumptionofelectricity)

managedtopostrevenuegrowthwiththe

PowerRouter.Newlawsandregulationsimposed

restrictionsonsalesinBelgiumandtheUK.

Moreover,allinstalledPowerRoutersaroundthe

worldneededtobemodifiedinthefirsthalfof

2013,ahugeoperationthatputastrongdamper

onrevenuegrowth.Despitethesesetbacks,we

managedtoachieverobustrevenuegrowthin

Germany,themostimportantmarketforsolar

energy.

Thesteadydeclineinsolarpanelpricesaswell

asgeneroussubsidyschemeshaveprompteda

growingnumberofbusinessesandhouseholdsto

investinsolarinstallationsinthepastfewyears.

Thestrongadvanceofsolarpowerisbeginning

tohaveadisruptiveeffectinmoreandmore

countries.Thesharplyincreasedsubsidiesfor

solarinstallationsareincreasinglythesubjectof

criticaldebate,particularlynowthatthephysical

processingoftheabundantsupplyofpoweron

sunnydaysisalsoamountingproblem.Asaresult,

thesubsidyschemesforsolarpanelsareexpected

19

tobesharplyreinedinoverthecomingyears.In

addition,networkoperatorswillsetincreasingly

stringentdemandsinordertocurbtheunlimited

feed-inofelectricityintothenetwork.

Nedapisrespondingtothesedevelopments

withthePowerRouterSolarBattery,aSelf-Use

propositionenablingthestorageofsurplusself-

generatedenergyforlateruse.Besidesreducing

theloadontheelectricitynetwork,thisalso

preventsself-generatorsfromhavingtofeedtheir

surplusenergyintothenetworkatsteadilyfalling

subsidisedratesandthenrepurchasetheenergyat

ahigherrate.

WiththispropositionNedaphasnowachieved

adefinitebreakthroughinGermany.Despitethe

drasticdecreaseinnewsolarpowerinstallations,

thesegmentforSelf-Useinstallationshasactually

growninGermany.TheNedapPowerRouterisseen

asthetechnologicallymostcomprehensivesolution

withanattractiveprice,andhasthusmanagedto

becomethemarketleaderinthissegment.This

leadingpositionisconfirmedbythefactthatthe

majorbatterysuppliershaveregisteredforour

BatteryAcceptanceProgramme,wherewetesttheir

batteriesandcertifytheconnectorwiththePower

Router.ApartfrominGermany,wealsoseepositive

marketdevelopmentsinItalyandAustralia.

NedapinitiallyoptedtoservetheGermanmarket

throughdistributors.However,manyofthese

companieshaverunintodifficultiesduetothe

slumpinthesolarenergymarket.Anotherproblem

wasthatalotofthesecompaniesprovedtobe

unabletosuccessfullymarketanewconceptsuch

asthePowerRoutertocustomers.Toovercome

theseobstacles,theCertifiedInstallerProgramme

waslaunchedlastyearintheGermanmarket.The

aimistoforgedirectrelationswiththeinstallers,

astheseareoftenthepeoplewhodetermine

whattypeofinstallationisactuallyplaced.Nedap

nowtrainsandcertifieslargegroupsofinstallers

everymonth.TheseCertifiedInstallersforman

expertnetworkthatisabletosellandsupportthe

PowerRouteronthebasisofastrongknowledge

position.Byoperatingclosertothemarket,we

havealsoobtainedamuchbetterpictureofhow

wecancreateauniquesellingpropositionwiththe

PowerRouter.

WiththeNedapPowerRouterwearewell-

positionedtobenefitfromtheexpectedgrowth

indistributedpowerstoragesystems.However,

regulatorychangesandadjustmentstosubsidy

programmescanhaveashort-termdisruptiveeffect

onthedevelopmentofthismarket.Nevertheless,

wearecountingonfurthergrowthin2014.

Healthcare

During2013revenueoftheHealthcaremarket

group(automationofadministrativedutiesof

healthcareprofessionalstocreatemoretime

forcare)showedanotherincrease.Facedwith

uncertaintiesaboutregulationsandfinance,a

growingnumberofhealthcareinstitutionsare

seekingtoruleoutallriskswhenselectingtheir

administrativesystems.Thisexplainstheirgrowing

preferenceforthetried-and-testedsolutionsof

marketleaderNedap.

Oneparticularlygratifyingdevelopmentisthat

customerswhoalreadyusepartsoftheNedap

solutionareincreasinglypartingwayswiththeir

oldthird-partysoftwareandswitchingoverentirely

toNedap.TheElectronicClientFilethatNedap

developedinthepastyears,forinstance,isbeing

adoptedbyagrowingnumberofinstitutions.In

addition,agrowingnumberoforganisationsin

relatedmarkets,suchashealthcareformentally

handicappedpeople,areoptingforNedap’s

services.

Healthcareinstitutionsneedtoadapttheir

organisationtocopewiththechangingconditions

inthehealthcaremarket.Thisalsohasimplications

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Report of the Board of Management

forthesupportthatNedapcanprovide.Employees

ofhealthcareinstitutionsincreasinglyworkin

smallindependentteams,whichcallsforother

formsofcommunicationandsupportthanthe

oldset-up.WithsolutionssuchasONSmessages,

Nedapfacilitatestherequiredcommunication,

knowledgesharingandinformationprovision

betweenemployeeswithinorganisations,viaa

mobiletelephoneortablet,onaclosedsocial

platform.Theself-rosteringsolutiondevelopedby

Healthcarerespondstothegrowingdemandfor

aninnovativesolutionformakingrosterswithin

changinghealthcareorganisations.Inthecoming

years,Nedapwillcontinuetoinvestinnewand

innovativesolutionsforhealthcareorganisationsin

arapidlychangingmarketinordertokeepadding

thevalueofitsservices.

OwingtotheirgrowingdependenceonNedap,

customersarealsosettinghighstandardsfor

therobustnessandreliabilityofthesoftware.To

continuemeetingthesedemands,substantial

investmentsweremadein2013intheinnovation

ofthebasicsoftwarearchitecture.Theseefforts

donotleaddirectlytonewfunctionalities,butare

essentialtoliveuptothehighexpectationsour

customershaveofNedap.Withtheseinvestments,

themarketgroupisconfidentthatitisreadyto

fulfilNedap’sgrowingroleforitscustomers.

Despitethedeclineinthenumberofagencystaff

intheNetherlandsduringtheyear,Pep®(digital

timesheetsforownemployeesandagencystaff)

wasabletoachievefurthergrowth.Overthepast

years,theagencymarkethasdevelopedintoa

commoditymarket,wheretemporaryemployment

agenciesareinterchangeableincertainrespects

andmarginsareundergreatpressure.Agencies

mustbeasleanandmeanaspossibletoremain

profitablewithfallingmargins.Someagencieswill

inevitablyopttocreatemorevaluebymovingup

thechainandofferingHRservicesalongsidetheir

existingstaffmatchingandpayrollingservices.With

itssimpletimesheetsolution,Pepisrespondingto

currentdevelopmentsinthemarketandforesees

furthergrowthfromtheseactivitiesinthecoming

year.

Library Solutions

In2013theLibrarySolutionsmarketgroup(RFID

systemsforlibraries)successfullyrepositioned

itselffromaprojectorganisationtoatechnology

provider.WiththeLibrixproductline,themarket

groupoffersapowerfulproductportfoliofor

libraries.Projectpartiesacrosstheworldcanfitthe

Librixproductsintolocalprojectsaccordingtotheir

ownwishes.

Lastyearwedevotedalotofattentiontothe

possibilityofintegratingourproductsintoexisting

settings.Thismakesitincreasinglyeasyfor

partnerstouseNedapproductsintheirprojects.

Inthepastyears,forinstance,librarieswereset

upwithourtechnologicalcorecomponentsin

Scandinavia,Asia,LatinAmericaandNorthAmerica.

InCanada,thefirstlibrarygroupswereequipped

withintelligentbookshelvesforreturningbooks.

Inaddition,webolsteredourexistingmarket

leadershippositioninFrancebytheroll-outofRFID

systemsinthelibrariesofMarseille.Unfortunately,

thesenewinitiativeswereinsufficienttoentirely

offsetthelossofproject-basedturnover.

Thankstothewindingdownofproject-based

activitiesandthemarketgroup’sclearnew

positioning,theteamcannowfullyfocusonthe

furtherdevelopmentandworldwidemarketing

ofanindustry-leadingportfoliooftechnological

corecomponents.Asaconsequence,theproduct

portfoliowillbeexpandedin2014withflexible

sortingsolutions,smartreadersandcore

componentsforintelligentbookshelvesthatcanbe

usedflexiblybylocalprojectparties.

Nedapdistinguishesitselfinthismarketwitha

fulllineofpurpose-designedRFIDproductsfor

21

libraries.Basedonthestrongexpansionofthe

numberofinternationalpartners,themarket

groupseesgoodopportunitiesforstrengthening

itscurrentmarketpositionandachievingrenewed

growth.

Light Controls

AfteryearsofgrowththeLightControlsmarket

group(powerelectronicsandcontrolsystemsfor

thelightingindustry)managedtoachievevirtually

thesamerevenuein2013asin2012.

TheUVdisinfectionsegmentsawafallinthe

numberofwatertreatmentprojects,whichhad

anegativeeffectontherevenuefromourlamp

drivers.Wehadalsoanticipatedfurthergrowth

inoursolutionsforballastwatertreatment

onseagoingvessels.Owingtothepersistent

uncertaintiesabouttheinternationaltreatyforthe

controlandmanagementofships’ballastwaterand

sediments(legislationofInternationalMaritime

Organisation),itremainsextremelydifficultto

securereasonablyreliableprojecttimelinesfrom

ourcustomerswhoareactiveinthismarket.

However,weremainpositiveaboutourlonger-term

growthopportunitiesinthissegment.

IntheUVcuringsegment,weseeagrowing

interestinourelectroniclampdriverequipment.

ThisisusedforthegenerationofUVlightforthe

acceleratedcuringofindustrialinks,coatingsand

glues.Alongsideanextremelystringentcheck

onthequantityandqualityoftheUVlight,our

productsalsoenablesubstantialenergysavings.

Duringtheyearunderreview,alotofworkwent

intothedevelopmentofanewtypeoflampdriver

forthegenerationofmicrowavesforUVlight.This,

inturn,pavesthewayfornewUVlightapplications.

Withthisfurtherreinforcementofourproduct

portfolio,wearelookingforwardtohealthygrowth

inthissegmentinthecomingyears.

Afterthesurgeinrevenuein2012thankstoalarge

projectinSanDiego,revenuefromourQLinduction

lightingdeclinedin2013asexpected.Duetothe

enormousmarketingoffensiveforLEDlightingand

theadventofLED-basedstreetlighting,moreand

morecustomersareoptingforLEDtechnology.

Forthisreason,despitetheactualadvantagesof

QLtechnology,wedonotanticipategrowthinthis

productlineinthecomingyears.

Theupwardtrendinourincomefromour

explosion-prooflightingsystemsforindustrial

andoffshoreapplicationswasfurthersustainedin

2013.Theexpectationsforthecomingyearsalso

remainpositive.

In2013themarketgrouptookmajorsteps

towardsthefurtherreinforcementoftheLuxon®

proposition.Wenowofferaready-madesolution

enablingcustomerswithdistributioncentres,

hangars,large-scaleproductionareas,largestores

orconferencecentrestoachieveimmediateand

significantsavingsontheirenergycosts.Agrowing

numberofcustomersarealsobecomingawareof

thevalueofimprovedlightqualityandthemore

flexibleuseoftheirlightingsystems.

Wenowalsofrequentlyhavedirectcontact

withtheendcustomers.Besidesgivingusa

betteropportunitytoexplainthedemonstrable

advantagesofoursystems,thesecontactsalso

providedvaluableinputregardingthewishes

andrequirementsoftheusersofoursystems

inthereportingperiod,thushelpingustomake

substantialimprovementstoourpropositionin

theyearunderreview.Customersareincreasingly

entrustingNedapwiththefullrevampingof

lightingsystemsattheirsites.Inthepastyearwe

thereforealsoputalotofeffortintodevelopingour

ownprojectapproachandfindingsuitableproject

partners.Theaimistoguaranteethequalityofour

projectimplementation,withouthavingtobuilda

full-scopeprojectorganisation.

22

Report of the Board of Management

InviewofthegrowthofthesalesactivitiesinNorth

America,wedecidedtosetupourownsubsidiary

thereunderthenameNedapInc.in2013.For

manycustomersintheUS,thepresenceofourown

branchintheUnitedStatesisapreconditionfor

doingbusinesswithus.

In2013theLightControlsmarketgroup

strengtheneditspositioninthevariouslighting

segments.Nowthatwehaveconvincingly

demonstratedtheadvantagesofoursystemswith

pilotprojectsinagrowingnumberofcountries,the

marketgroupisalsocountingonhandsomegrowth

inthecomingyears.

Livestock Management (formerly Agri)

Afterthejumpinrevenueintheprevious

year,theLivestockManagementmarketgroup

(automationoflivestockmanagementprocesses

basedonindividualanimalidentification,which

helplivestockfarmerstooptimisetheirbusiness

processesandimprovethewell-beingofhumans

andanimals)tookastepbackin2013.Highfeed

costsin2012andQ12013aswellasalongwinter

inthenorthernhemisphereresultedinalower

levelofinvestmentindairyfarming.Afterthe

investmentwaveinsow-friendlyhousingtocomply

withtheEU’smandatorywelfareregulationsin

2012,revenueinthepigfarmingsectorreturned

tonormallevels.SinceQ22013,feedcosts

havedecreasedsignificantlyandbothmilkand

meatpriceshaverisen.Asaresult,theincomeof

livestockfarmershasincreasedsignificantlyand

investmentplansarebackontheagenda.

Economiesofscalearetheorderofthedayin

thedairyfarmingsector.Globaldemandfordairy

produceisrisingsteadilyyearonyear,while

thenumberofproductionfarmsisconstantly

decreasing.Thedisappearanceofthemilkquota

inEuropein2015willgiveanextraimpulseto

theincreasesinthescaleofdairyfarms.This

trendtowardslargerfarmswithlowerproduction

costswillspurasteadilygrowingdemandfor

automationinthecomingyears.Withitsbroad

rangeofproducts,NedapLivestockManagement

iswell-placedtocapitaliseonthistrend.Ourdairy

farmingsolutionsmakeitpossibletoachievecost

savings,whilesafeguardingtheindividualanimal’s

well-being.

Thenewgenerationofheatdetectionsystems,

the“SmarttagNeck”,isequippedwithadvanced

accelerationsensorsthatgiveadetailedpictureof

themovementsofeachindividualanimal.Besides

enablingreliableheatdetection–andtherefore

optimalinseminationtiming–thisalsoprovides

agoodunderstandingofcows’eatinghabitsand

hencethehealthoftheanimals.Thisinformation

allowsthedairyfarmertoidentifyandremedy

healthproblemsatanearlystage,whichrepresents

animportantsteptowardssustainabledairy

farming.

Thankstotheapplicationofadvancedtechnologies,

oursystemsareincreasinglyeasytoinstall

anduse.Asaresult,ourproductsarenolonger

broughttomarketviamanufacturersofmilking

parloursystems.Agrowingnumberoflivestock

improvementcorporationsaroundtheworldhave

nowembracedtheNedapproductandmadeit

anessentialpartoftheirownproposition.Asall

systemsarelinkedtotheInternet,supportcostsare

significantlyreducedandawealthofinformation

isunlocked.Inviewofthedemonstrablyattractive

paybacktimeofoursolutions,wearecountingon

furthergrowthinthissegment.Totakeadvantage

ofthisgrowthpotential,wearenowalsoactivein

thedairyfarmingsectorfromourbranchinChina.

OurpresenceinShanghaimakesusbetterableto

providecommercialandtechnicalsupporttoour

existingandnewcustomersinthisregion.During

theyearunderreview,wealsobecameactivein

Pakistan,thefourth-largestmilkproducerinthe

world.

23

Thetrendtowardsanimal-friendlierproduction

inthepigfarmingsectorisgainingmomentum

aroundtheworld.Thisispartlybecauselarge

foodprocessorsandfastfoodchainsareplacing

highdemandsonpigfarmers.Butitisalsodue

tothegoodproductionresultsoftheseanimal-

friendlysystems.TheEuropeanpigfarmingsector

hasalreadymademajorstridesforwardsinthis

respectinthepastyears.NowNedapisalsoseeing

anincreaseinrevenuefromitsgrouphousing

systemsforsowsinAsiaaswellasSouthandNorth

America.Bybroadeningitsproductrange,Nedap

hasbecomeamoreattractivepartnerforthesector.

Inadditiontothesowfarmingsegment,wehave

alsoenteredthepigbreedingandfinishingpig

segments.Lastyear,installationsincorporating

newproductsforthesepigfarmingsegments

weredeliveredinEuropeandAsia.Thenew“Pig

PerformanceTestingSystem”waswell-received

inChinaandalargenumberofnewprojectswere

successfullycompletedin2013.

Themarketgroupisinvestingheavilyinthe

developmentofnewproductsfortheautomation

ofprimarylivestockfarmingprocesses.Withthese

labour-savingproducts,individualanimalscan

becloselytrackedintermsoffeeding,milking,

reproductionandhealth.Thenewgeneration

ofSmarttagsgivesaccesstolargequantitiesof

detailedinformationaboutanimalbehaviour.Based

onthisinformation,weexpecttobeabletooffer

livestockfarmersvaluablenewfunctionalitiesin

thenearfuture.In2014,forinstance,powerful

marketinginstrumentswillbeusedtomarketthe

“CowPositioningSystem”and“FarrowingPen

Feeding”systemsasstrongpropositions.

Amajorfocusofoureffortsduringtheyearunder

reviewwasthetechnologicalrevampingofour

productsandthefurtherprofessionalisationofour

technicalandcommercialsupport.Thisprompted

alargenumberofnewpartnerstooptforNedap,

resultinginafurtherreinforcementofthemarket

group’smarketposition.Weexpectthemarketsin

whichweoperatetobecomeincreasinglyvolatile.

Smallimbalancesinthesupplyanddemandfor

milkandmeatproductsaswellasrapidlychanging

feedcostscanhaveamajorimpactonalivestock

farmer’sincome.Althoughinvestmentsinstall

automationwillonlyincreaseinthelongterm,

thesevariablefactorscan,intheshortterm,cause

strongfluctuationsinthesector’swillingnessto

investand,accordingly,alsointhemarketgroup’s

revenuegrowth.Giventhecurrentmarketsituation,

however,themarketgrouplooksforwardtothe

year2014withconfidenceandexpectsanincrease

inrevenue.

Retail

Despitecontinuingpressureonrevenuesinthe

retailmarket,theRetailmarketgroup(security,

managementandinformationsystemsforretail)

onceagainmanagedtoachievesplendidrevenue

growthin2013.BylaunchingnewRFIDproducts

andunlockingnewmarkets,themarketgroup

furtherreinforceditsmarketposition.

Themarginbetweensuccessandbankruptcyinthe

retailmarketisrazorthin.Thedecisionwhether

ornottowritedownordiscountretailstockscan

bethedifferencebetweenprofitorloss.Stocking

thewrongsizesorcoloursinevitablyleadstoloss

ofrevenue.Alwayshavingthecorrectquantity

ofthecorrectarticlesinstockismorecrucial

thanever.MoreandmoreretailersseethatRFID

(RadioFrequencyIdentification)canbecrucial

inprovidingaccurateandtimelyinsightinto

availablestocks.WithStore!D®,Nedapoffersan

appealingpropositionthatiscarefullytailoredto

thedemandsoftheretailmarket.Alotofattention

wasdevotedtotranslatingtherathercomplex

identificationtechnologyintoproducts,sothat

storeclerksreceivesimpleandintuitivesupportin

theperformanceoftheirday-to-dayactivitiesas

wellasacompletereal-timepictureofthestock

flowsinthestores.

24

Report of the Board of Management

WithStore!D,Nedaphasmanagedtowinthetwo

largestRFIDprojectsinEurope.AFrenchsports

retailerwithoutletsallovertheworldawarded

NedapthecontractforupgradingitstraditionalRF

anti-theftsystemstocombinedsystemswithRFID.

Adler,aGermanfashionchain,optedforNedap

Store!Dreadersfortrackingitsgoodsflowsfrom

thestorewarehousetotheshopfloor,check-out

andexit.Thankstothepracticalsuccessatthese

tworetailers,moreandmorestorechainsarenow

invitingNedaptohelpthemaddressandresolve

theirlogisticalchallenges.Thedevelopmentof

ourRFIDpropositioncostalotofeffort,butithas

openedupexcellentgrowthprospects.

Attheendof2013Nedapmanagedtorenewthe

existingcontractwithH&Mforseveralyears.Inthe

pastyearsNedaphasproventoH&Mthatitisable

todeliverworldwideprojectswithsmartanti-theft

systems,remotelymanagedaccesscontrolsystems

andburglaryalarms(Cube®)withoutanyproblems.

CubeisaStoreOperationsPlatformforretailers

withmultiplestores.Cubeenablesretailerstokeep

trackoftheentireoperationalperformanceofeach

individualstoreanywhereintheworld.Information

onthenumberofvisitors,deploymentofstaff,and

useofdoorsandstoragecabinetsisautomatically

collectedandclearlypresented.Bygainingabetter

understandingoftheirdailyperformance,retailers

cantakeappropriateactiontoreducecostsand

raiserevenues.Retailersparticularlyappreciatethe

feedbacktheyreceivefromCubeonwhetherstores

areactuallymeetingtheirtargets.

Withthe!Sense-productlinetheRetailmarket

groupnowoffersanexcellentsolutionfor

supermarketsandhypermarkets.Theavailability

ofreal-timeinformationisvitalinthissegment.

Incidentsmustbeinstantlyreportedsothat

securityguards,aidedbycameraimagessentto

theirmobiletelephone,canimmediatelytake

appropriateaction.Similarly,fluctuationsinthe

numberofvisitorsmustalsobeimmediately

reportedtoensurethatthecorrectnumberof

check-outpointsareopenatalltimes.Another

importantadvantageof!Senseisthatithas

beenspecificallydesignedtoallowtheproblem-

freeimplementationoflargeinstallationsina

shortspaceoftime.Thefirstlargeandcomplex

installationswerecompletedin2013.

In2013alotofenergywasputintotheexpansion

ofoursalesandinstallationnetwork.New

partnershipswereformedinUkraine,Chile,

Colombia,Argentina,Vietnam,Indonesiaand

Australia.Afterthesuccessfulimplementation

ofthefirstinstallationsforinternational,non-US

customersintheUnitedStates,wewerealsoable

tointerestthefirstUSretailersinourproductsand

thefirstpilotprojectsarenowoperational.

Thankstotheinvestmentsinpropositionsand

theorganisationalstructureoverthepastyears,

Nedaphasbecomeanincreasinglyimportant

partyinstoretechnologyforrapidlyexpanding

internationalretailers.Moreandmoreretailers

believethatNedapsolutionscanmaketheirstores

demonstrablysaferandmoreprofitable.Themarket

groupthereforeexpectstocontinuetogrowits

revenueoverthecomingyears.

Security Management

TheSecurityManagementmarketgroup,which

deliverssystemsforaccesscontrol,registration,

payments,fireandintrusionalarms,surveillance,

lockermanagementandbiometrics,postedmodest

revenuegrowthin2013.IntheNetherlands,the

difficultmarketconditionsintheconstruction

sectorareputtingabrakeongrowthinearnings.

Inaddition,theplannedfurtherwindingdownof

activitiesintheschoolmarketdampenedrevenue.

Bycontrast,revenuesshowedamuchmorepositive

developmentinGermany,Switzerland,Austria,

BelgiumandFrance.

25

Duringtheyearunderreviewattentionwas

devotedtotheGlobalClientProgramme,ourown

projectmethodologyforthesuccessfulworldwide

implementationoflarge-scaleinternationalsecurity

projects.Thisprogrammehascaughtonwithlarge

internationalenterprisesseekingasinglestandard

securitysolutionthatcanbeusedalloverthe

world.Accordingly,thenumberofcountrieswhere

wecarriedoutprojectsforourcustomersincreased

veryrapidlylastyear.Thailand,Pakistan,Colombia,

Peru,BrazilandthePhilippinesareonlyafew

examplesofcountrieswhereprojectshavebeenor

arebeingimplemented.Thisprogrammecombines

theadvantagesofacentralstandardapproach

withthecostbenefitsofimplementationbylocal

partners.Inaddition,thestructuredapproachwith

accompanyingagreementsgivesbettercontrolof

projectrisks.Wethereforeexpectsteadyrevenue

growthinthissegment.

Allovertheworldweseeagrowinginterestingood

lockermanagementsolutions.Thetrendtowards

moreflexibleuseofofficespacehasmadethe

safestorageofpersonalbelongingsanimportant

issue.Withtheseamlessintegrationofourlocker

managementsystemwiththeAEOSplatform,we

offeranappealingsolutionforthesebusinesses

andinstitutions.

Thefurtherexpansionofthefunctionalityof

theAEOSsecurityplatformishelpingustowin

moreandmorenewcustomers.Thefirstprojects

basedentirelyonthenewintrusiondetection

functionalityhavenowbeencarriedout.Moreover,

agrowingnumberofcustomersareorderingthe

newvideofunctionalityontheAEOSplatform.With

thecontinuingdevelopmentofnewfunctionalities,

AEOSoffersagrowingnumberofcustomersa

uniquefullysoftware-baseddistributedsolutionfor

complexsecurityintegrationissues.Moreandmore

ofourbusinesspartnersarethereforeswitching

overentirelytoAEOSwhenplanninganddesigning

customerprojects.

Inthereportingperiodthemarketgroupmadean

importantfurtherimprovementtothesecuritylevel

oftheAEOSplatform.Withitsnew“end-to-end”

securitysystem,Nedaphassucceededinmeeting

theextremelystringentsecuritystandardsthat

militaryandgovernmentinstitutessetwithrespect

tocriticalITsystems.Nowthatwehavesucceeded

intranslatingtheseexactingdemandsintoan

out-of-the-boxsolution,weexpectthatthesenew

requirementswillincreasinglyformanessential

partoftenderprocedures.

OursubsidiaryNsecureB.V.isbecomingsteadily

moresuccessfulwithitsinnovativeSafetyand

Securityservices.Besidestheremotemonitoring

oftheeffectivenessofsecuritysystems,thereis

alotofinterestinitsautomatedsafetyservices.

Thesehelpbusinessestocheckwhetherall

personsonsitemeetallrelevanttrainingand

certificationrequirements,andalsoprovide

digitalsafetytrainingfornewpeople.Checksto

ensurecompliancewithallsafetyregulationsare

becomingincreasinglystringent,particularlyin

thepetrochemicalindustry,duringindustrialplant

shutdownsandlargeconstructionprojects.Onthe

strengthofitsservices,Nsecurehasmanagedto

securealeadingpositioninthismarket.

Thankstoitsongoinginvestmentsinproduct

innovation,marketingandthecommercial

organisation,themarketgroupisalsoconstantly

strengtheningitscompetitiveness.Themarket

groupisthereforecountingonfurthergrowthin

revenuefor2014.

CIMPL

CIMPL(ConstructioninMetalandPlastic)

manufacturescomponentsforNedapproducts.

Theinvestmentsininnovationandautomationof

thepastyearshaveledtoafurtherimprovement

oftheplasticsproductionprocess.Duringthepast

year,theactivitiesofthemetaldepartmentcame

undercriticalreview.Insteadofusingagencystaff

26

Report of the Board of Management

toabsorbpeaksinworkload,workisincreasingly

beingoutsourced.Thebigchallengefacingthis

groupinthecomingyearsistofindasustainable

balancebetweenin-houseproductioninorderto

preservevaluableknowledgeandtheoutsourcing

ofworktoanetworkofreliablepartners.

Inventi

In2013InventiB.V.inNeedesawafurtherincrease

initslevelofactivities.InventiB.V.isawholly

ownedNedapsubsidiarythatisentirelydedicated

tothescalableproductionoffullydeveloped

Nedapproductsatacompetitivecostprice.With

InventiB.V.Nedapisassuredoftheservicesofa

reliableproductioncompany,sothatimportant

knowledgeaboutproductionprocessesand

componentpricesremainsavailablewithinthe

organisation.

WithintheframeworkoftheDevelopment

Excellenceprogramme,Inventihasthecrucialrole

oflookingcriticallyatthefirstprototypesofnew

productsinordertoassesstheengineerability

ofthedesignaswellasthepurchasepriceand

availabilityofcomponents.Byfarthelargestpartof

theultimatecostpriceofaproductisdetermined

inthisfirstdesignphase.Theimprovementsthatwe

havebroughtaboutinthisareawillinduecourse

haveapositiveeffectonthecompetitivenessofthe

differentNedapproducts.

Intheyearunderreviewwecontinuedtowork

steadilyonprocessimprovements.Inanumber

ofproductionlineswemanagedtoachievea

drasticincreaseinthemachineryutilisationrate

aswellasreducetheproductmanufacturing

timesbyhalf.Bybringingaboutsuchfar-reaching

improvementswhilesimultaneouslyprovidinga

fastandhigh-qualityresponsetotheproduction

requirementsofthemarketgroups,weinevitably

placedgreatdemandsontheemployeesofthe

Inventiorganisationin2013.AtInventi,too,the

mainchallengeforthecomingyearswillbetofind

asustainablebalancebetweenin-houseproduction

andtheuseofexternalproductionfacilities.

Financial performance

Totalrevenuein2013cameto€173.7million,1%

higherthanin2012(€171.9million).Therevenue

fromservices(subscriptionsandmaintenance

contracts)increasedfurtherintheyearunder

reviewto€21.0million(2012:€18.0million),

whichis12.1%ofthetotalrevenue(2012:10.5%).

Addedvalue(incomelesscostofmaterials,plus

orlessmovementsininventories),expressedasa

percentageofrevenue,rosefrom67.8%(2012)to

68.4%.

‘Subcontractingandotherexternalcosts’roseby

€1.2millioncomparedto2012.Greater

expenditureonproductdevelopmentaswellason

increasingthescalabilityoftheorganisationwas

responsibleforthisrise.Intheyearunderreview,

thenumberofemployeesroseby35to744at

yearend.Onaverage,therewere40employees

morethanin2012.Thisincreaseinheadcountas

wellastheadjustmentstothecollectivelabour

agreement,higherseverancepaymentsandhigher

pensioncostscausedthesalariesandsocial

securitychargestoincreaseby€4.0million.

Normalamortisationanddepreciationcharges

wereup€0.8millioncomparedto2012.Noassets

wereimpaired.Capitalisationofassetsdeveloped

in-housewasdownby€0.9millionintotalon

2012.Thisitemmainlyconcernsnewdevelopment

projects.

Operatingprofitfor2013cameto€11.8million

(2012:€16.4million),whichis6.8%ofrevenue

(2012:9.5%).Netfinancingexpenseswere€0.6

million,almostthesamelevelasthepreviousyear

duetoavirtuallyunchangedcreditrequirement

andaverageinterestrate.Theshareofprofitof

associatesrosebyover€0.1millionon2012.

TheeffectivetaxrateoftheNedapGroup

(excludingtheassociate)was18.6%in2013

(2012:17.9%),thanksinparttotheapplicationof

thespecialtaxcreditforinnovations(knownasthe

27

‘InnovationBox’).Thenominalcorporateincome

taxrateintheNetherlandsis25%.Bymaking

useoftheInnovationBox,businessescanreduce

theirbasictaxableincomesothatincomefrom

innovationistaxedatalowerrate.Theagreement

withtheTaxandCustomsAdministrationisvalid

until31December2015.

Thesedevelopmentsresultedinaprofitaftertaxes

for2013of€9.8million(2012:€13.5million),

whichis5.6%ofrevenue(2012:7.9%).

In2013additionstoproperty,plantandequipment

stoodat€10.1million,nearly€2.2millionhigher

thanthedepreciationcharges.Thisexcessis

mainlyduetothepurchaseofanadjacentplot

oflandplusbuildingsinGroenlo.Thepurchase

willallowtheshort-termrealisationofplanned

expansionstoaccommodatethelargernumber

ofstaff.Investmentsinintangibleassets,mainly

developmentprojects,amountedto€1.7million,

whileamortisationchargescameto€2.1million.

Inventoriesdecreasedby€1.0millionand

amountedto14.9%ofrevenueattheendofthe

yearunderreview(year-end2012:15.6%).Trade

andotherreceivableswere€1.7millionlowerat

theendoftheyear.Theaveragecredittermoftrade

receivables,measuredinweeks,increasedhowever

from7.4in2012to7.9in2013.

Owingtominormovementsinnon-currentassets

(increase)andcurrentassets(decrease),totalassets

remainedvirtuallyunchanged.However,solvency

(equityexcludingdistributabledividendandnon-

controllinginterests,expressedasapercentage

oftotalassets)declinedfrom38.9%to36.6%.

Thisdecreasewasattributabletotheadjustment

ofthefinancialstatementstothenewIAS19R

(IFRS)standardforemployeebenefits.Duetothis

mandatoryadjustment,equityfellby€5.5million

atyear-end2013andby€4.6millionatyear-

end2012.DisregardingthisIFRSobligation,the

solvencyratioattheendoftheyearamountedto

41.0%(year-end2012:39.2%).

Thecashflowfromoperatingactivitieswas

sufficientin2013tofinancetheinvestmentsin

property,plantandequipmentandintangible

assets,aswellastopayalmost75%ofthe

dividendfor2012.Onbalance,thebankdebt

increasedby€2.6million.Thecreditfacilitiesat

theendof2013were€45.9million,ofwhich

€37.1millionwasused.Cashandcashequivalents

stoodat€3.5million.

Nedap’spolicyistoadequatelycontrolany

possiblerisksarisingfromfinancialinstruments.

Nedapmakeslimiteduseoffinancialderivatives.

Thefinancialriskmanagementpolicyandthe

risksareexplainedinthenotestothefinancial

statements.

Outlook

OurfocusatNedapisonmovingmarketswith

technologythatmatters.Achievingthismeans

motivatingouremployeestoremainloyaltoour

companybygivingthemtheguidance,scopeand

opportunitiestheyneedtotranslateknowledge

ofmarketsandtechnologyintoappealingand

sustainablepropositions.Thesepropositions

areouranswertorelevantissuessuchas:how

canweprovidetheworld’sgrowingpopulation

withsufficientfood,howcanwemakemoretime

availableforhands-oncare,andhowcanweapply

moresolarenergyinarobustmanner.

Developingandmarketinginnovativepropositions

isnotwithoutrisk.Technologicalobstacles,

marketsthatdevelopinunforeseendirections

orstronger-than-expectedpriceerosionareonly

afewexamplesoftheproblemsweencounter.

Thecontinuingdiversificationofourportfolioof

technologiesisoftheutmostimportanceinorder

topreventtheserisksfromjeopardisingNedap’s

continuity.

28

Report of the Board of Management

ThisNedap-wideportfolioofknowledgeand

experienceoffersmarketgroupsasolidfoundation

forbuildingtheirmarket-specificpropositions.

Thecross-fertilisationbetweenthemarketgroups

leadstoastrongaccelerationinthetranslation

oftechnologicalandmarketopportunitiesinto

concretecommercialresults,anessentialpartof

ourcompetitivestrength.

Thankstoourinvestmentsininnovationand

commerce,thedistinctivenessofourpropositions

hasincreasedfurtherinthepastyearsandwehave

reinforcedourpositionsinourdiversemarkets.

Onthestrengthofalltheseefforts,wecanlook

tothefuturewithconfidenceandforeseehealthy

growthinthelongerterm.Ourexpectationfor2014

isthat–barringunforeseencircumstances–Nedap

willachievefurtherrevenuegrowth.

Groenlo,11February2014

TheBoardofManagement:

R.M.Wegman

G.J.M.Ezendam

30

Financial statements

2013 2012Assets noteNon-current assetsProperty,plantandequipment 1 48,001 45,836Intangibleassets 1 10,530 10,884Investmentinassociate 2 2,961 2,425Loans 3 251 341Deferredtaxassets 4 871 481Employeebenefitspensions – 227*

62,614 60,194Current assetsInventories 5 25,811 26,810Incometaxreceivable 4 28Tradeandotherreceivables 6 34,267 36,013Cashandcashequivalents 7 3,486 2,933

63,568 65,784

126,182 125,978

Equity and liabilitiesEquitySharecapital 8 669 669Statutoryreserves 10,701 11,057Reserves 32,407 33,923*

43,777 45,649

Undistributedprofitattributabletoshareholders 9,792 13,480

53,569 59,129

Non-controllinginterests 130 129Undistributedprofitattributabletonon-controllinginterests 15 25

145 154

53,714 59,283Non-current liabilitiesBorrowings 9 16,391 16,609Derivativefinancialinstruments 10 246 335Employeebenefitspensions 11 6,805 –Employeebenefitsother 12 – 264Deferredtaxliabilities 13 2,212 4,198*

25,654 21,406Current liabilitiesBorrowings 9 217 268Bankoverdrafts 14 20,531 17,366Employeebenefitsother 12 285 540Provisions 15 738 3,456Incometaxpayable 1,552 444Taxesandsocialsecuritycharges 2,757 2,984Tradeandotherpayables 16 20,734 20,231

46,814 45,289

Total liabilities 72,468 66,695

126,182 125,978

* Restated in connection with change in accounting policy on pensions (IAS 19R)

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

31

2013 2012*

note

Revenue 17 173,696 171,874

Costofmaterials 54,518 55,539Movementininventoriesoffinishedgoodsandworkinprogress 320 –/– 208Subcontractingandotherexternalcosts 47,704 46,490Salaries 42,626 39,639Socialsecuritycharges 18 8,612 7,584Depreciation,amortisationandimpairment 19 10,016 9,204Non-currentassetsmanufacturedin-house –/– 1,851 –/– 2,756

Total operating expenses 161,945 155,492

Operating profit 11,751 16,382

Financingincome 70 112Financingexpenses –/– 749 –/– 715Valuemovementsinderivativefinancialinstruments 90 –/–50

Net financing expenses –/– 589 –/– 653

Shareofprofitofassociate 20 723 584(aftertaxes)

Profit before taxes 11,885 16,313Taxes 21 2,078 2,808

Profit after taxes 9,807 13,505

ProfitattributabletoshareholdersofNedapN.V. 9,792 13,480Profitattributabletonon-controllinginterests 22 15 25

Profit after taxes 9,807 13,505

Averagenumberofsharesinissue 8 6,692,920 6,692,920

Earningsperordinaryshare(in€) 1.46 2.01Dilutedearningsperordinaryshare(in€) 1.46 2.01

* Effect of change in accounting policy on pensions (IAS 19R) is not material.

Consolidated income statement (€ x 1,000)

32

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

2013 2012

Profit after taxes 9,807 13,505

Other comprehensive income

ItemsthatmaynotbereclassifiedtoprofitorlossRevaluationofdefined-benefitpensionobligation –/– 5,487 –/– 4,569

ItemsthatmaybereclassifiedtoprofitorlossonsubsequentrecognitionExchangegainsandlosses –/– 2 9

Other comprehensive income for the period after tax –/– 5,489 –/– 4,560

Total comprehensive income for the period 4,318 8,945

AttributabletoshareholdersofNedapN.V. 4,303 8,920Attributabletonon-controllinginterests 15 25

Total comprehensive income 4,318 8,945

33

Consolidated cash flow statement (€ x 1,000)

2013 2012

Cash flow from operating activitiesProfitaftertaxes 9,807 13,505

Adjustmentsfor:Depreciation,amortisationandimpairment 10,016 9,204Bookprofitonsaleofproperty,plantandequipment –/– 37 –/– 69Shareofprofitofassociate –/– 723 –/– 584Exchangegainsandlossesonparticipatinginterests 20 14Netfinancingexpenses 589 653Incometaxes 2,078 2,808Non-cashitems – 1,300

11,943 13,326

Movementsintradeandotherreceivables 1,729 –/– 3,177Movementsininventories 999 1,332Movementsintaxesandsocialsecuritycharges –/– 227 –/– 56Movementsintradeandotherpayables 579 2,127Movementsinemployeebenefits –/– 803 –/– 1,946Movementsinprovisions –/– 2,718 –/– 141

–/– 441 –/– 1,861

Interestpaid –/– 741 –/– 867Interestreceived 87 118Incometaxpaid –/– 1,493 –/– 889

–/– 2,147 –/– 1,638

19,162 23,332Cash flow from investing activitiesAcquisitionsofproperty,plantandequipment –/– 10,393 –/– 8,251Acquisitionsofintangibleassets –/– 1,971 –/– 2,757Proceedsfromsaleofproperty,plantandequipment 491 271Dividendreceivedfromassociate 187 1,030

–/– 11,686 –/– 9,707Cash flow from financing activitiesLong-termborrowingsdrawn – 51Long-termborrowingsrepaid –/– 269 –/– 341Loansgranted 90 –/– 341Dividendpaidtonon-controllinginterests –/– 24 –/– 1DividendpaidtoshareholdersofNedapN.V. –/– 10,106 –/– 8,232Netissueandrepurchaseofshares 243 –/– 345

–/– 10,066 –/– 9,209

Movements in cash and cash equivalents and banks –/– 2,590 4,416

Cashandcashequivalentsandbanksat1January –/– 14,433 –/– 18,844Exchangegainsandlossesoncashandcashequivalentsandbanks –/– 22 –/– 5

Cashandcashequivalentsandbanksat31December –/– 17,045 –/– 14,433

34

Financial statements

profit equity attributable attributable share statutory toshare- toshare- non-controlling total capital reserves reserves holders holders interests equity

Balanceat1Jan.2012 669 10,029 36,359 10,979 58,036 130 58,166Changeinaccountingpolicy 750 750 750

Balanceat1Jan.2012* 669 10,029 37,109 10,979 58,786 130 58,916

Dividend –/– 8,232 –/– 8,232 –/– 1 –/– 8,233Appropriationofprofit 1,019 1,728 –/– 2,747 – –Movementinshares –/– 345 –/– 345 –/– 345Movementinpensionobligation –/– 4,569 –/– 4,569 –/– 4,569Profitfortheyear 13,480 13,480 25 13,505Exchangegainsandlosses 9 9 9

Balanceat31Dec.2012* 669 11,057 33,923 13,480 59,129 154 59,283

Dividend –/–10,106 –/–10,106 –/– 24 –/–10,130Appropriationofprofit –/– 354 3,728 –/– 3,374 – –Movementinshares 243 243 243Movementinpensionobligation –/– 5,487 –/– 5,487 –/– 5,487Profitfortheyear 9,792 9,792 15 9,807Exchangegainsandlosses –/– 2 –/– 2 –/– 2

Balanceat31Dec.2013 669 10,701 32,407 9,792 53,569 145 53,714

Atyearend,thecompanyrepurchased24,527(2012:33,420)treasurysharesthathaveyettobetransferredtoemployeesundertheemployeeparticipationplan.

Thestatutoryreserveswereasfollows:

2013 2012

Capitaliseddevelopmentcosts 10,211 10,714Profitofsubsidiariesnotfreelydistributable 597 448Exchangegainsandlosses –/– 107 –/– 105

Total 10,701 11,057

* Restated in connection with change in accounting policy on pensions (IAS 19R).

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

36

Financial statements

Accounting Policies

General

N.V.NederlandscheApparatenfabriek“Nedap”is

registeredinGroenlo,theNetherlands.The2013

consolidatedfinancialstatementscomprisethe

companyanditssubsidiaries,whotogetherform

theGroup,referredtobelowasNedap.

Nedapisamanufacturerofintelligenttechnological

solutionsrelatingtosocially-relevantthemes,

includingsufficientfood,cleandrinkingwater,

renewableenergy,securityandhealthcare.

TheSupervisoryBoardandtheBoardof

Managementapprovedthefinancialstatements

forpublicationon11February2014.Thefinancial

statementswillbesubmittedtothegeneral

meetingofshareholderson3April2014for

adoption.

Theconsolidatedfinancialstatementshavebeen

preparedinaccordancewithInternationalFinancial

ReportingStandards(IFRS)asadoptedbythe

EuropeanUnionandwithPart9ofBook2ofthe

NetherlandsCivilCode.

Thefinancialstatementsarebasedonhistorical

costunlessstatedotherwisebelow.IFRS-

compliantreportingrequiresmanagementto

makejudgements,estimatesandassumptionsthat

affecttheapplicationofaccountingpoliciesand

thereportedvalueofassets,liabilities,income

andexpenses.Theestimatesandunderlying

assumptionsarebasedonpastexperienceand

variousotherfactorswhichinthecircumstancesare

consideredfair.Theresultingoutcomesconstitute

thebasisforjudgementsonthecarryingamounts

ofassetsandliabilitiesthatcannotbesimply

derivedfromothersources.Theactualoutcomes

maydifferfromtheseestimates.Theestimatesand

underlyingassumptionsareunderconstantreview.

Revisionstoestimatesarerecognisedintheperiod

inwhichtheestimateisrevisediftherevision

onlyhasconsequencesforthatperiodorinthe

revisionperiodandfutureperiodsiftherevision

hasconsequencesforboththereportingperiod

andfutureperiods.Estimatesrelateprimarilyto

tangibleandintangibleassets,employeebenefits

andprovisions.

Change in accounting policy

FollowingtheintroductionofIAS19R,ithasnot

beenpossiblesince1January2013toapplythe

corridormethodwhendeterminingthenetpension

obligation.Thecorridormeantthatnotallgains

andlossesonthenetpensionobligationhadtobe

recognisedimmediatelywithinprofitorloss.Under

thenewstandard,allthesegainsandlosseshaveto

berecognisedimmediatelyinothercomprehensive

incomeandthroughequity.Thismandatorychange

decreasedequityby€5.5millionat31December

2013andby€4.6millionat31December

2012.Theeffectonearningsisnotmaterial.The

comparativefiguressince1January2012have

beenrestated.

Basis for consolidation

ThefinancialdataofN.V.Nederlandsche

Apparatenfabriek“Nedap”andofthesubsidiaries

listedbelow(jointlyreferredtoasNedap),

overwhichithasacontrollinginfluence,are

consolidatedinfull.Non-controllinginterestsin

equityandtheresultaredisclosedseparately.

TheconsolidationalsoincludestheStichting

MedewerkerparticipatieNedap.

The49.7%associateNedapFranceS.A.S.,

Eragny-sur-Oise,Franceisnotincludedinthe

consolidatedfinancialstatements.Therearenormal

commercialtransactionswiththisassociatewhich

areconductedonarm’slengthtermsthatare

comparabletothosegoverningtransactionswith

thirdparties.

Notes to the consolidated financial statements (€ x 1,000, unless stated otherwise)

37

Intra-groupbalances,transactionsbetween

thesecompaniesandunrealisedprofitsonsuch

transactionsareeliminatedwhenpreparingthe

consolidatedfinancialstatements.Unrealised

profitsonNedap’stransactionswiththeassociate

areeliminatedinproportiontoNedap’sinterestin

thatassociate.

Foreign currency

Thefinancialstatementsarepresentedineuros,

whichisNedap’sfunctionalandpresentational

currency.Resultsandfinancialpositionsof

consolidatedenterprisesdenominatedafunctional

currencyotherthantheeuroaretranslatedinto

euros:assetsandliabilitiesaretranslatedat

theexchangeraterulingatthereportingdate,

incomeandexpensesaretranslatedattheaverage

exchangerate.Translationgainsandlosseson

participatinginterestsaretakentothestatutory

reserves.

Transactionsdenominatedinforeigncurrencies

aretranslatedintothefunctionalcurrencyat

theexchangeraterulingonthetransactiondate.

Gainsandlossesarisingonthesettlementof

suchtransactionsarerecognisedintheincome

statement.

Financial instruments

Non-derivative financial instruments

Non-derivativefinancialinstrumentsaretrade

andotherreceivables,cashandcashequivalents,

borrowings,tradeandotherpayables,excluding

projectsinprogress.Non-derivativefinancial

instrumentsareinitiallyrecognisedatfairvalue

includingdirectlyattributabletransactioncostsand

subsequentlymeasuredatamortisedcostlessany

impairmentlosses.

Derivative financial instruments

Nedapusesinterestrateswapstohedgeinterest

raterisks.Interestrateswapsarerecognisedatfair

value.Valuationgainsandlossesarerecognised

intheincomestatementasaseparateiteminnet

financingexpenses.Nedapdoesnotusehedge

accounting.

Property, plant and equipment

Property,plantandequipmentiscarriedat

historicalcostlessaccumulateddepreciation

andimpairment.Therecognisedvalueofassets

manufacturedin-houseconsistsofexternaland

directlyattributableinternalcostsandoverheads.

Depreciation of property, plant and equipment

Depreciationisappliedonastraight-linebasis

overtheestimatedeconomiclife.Landisnot

depreciated.

NedapBeveiligingstechniekB.V.,Groenekan,theNetherlands 90% holding

NsecureB.V.,Barendrecht,theNetherlands 100% holding

InventiB.V.,Neede,theNetherlands 100% holding

NedapDeutschlandGmbH,Meerbusch,Germany 100% holding

NedapGreatBritainLtd.,Theale,Reading,UK 100% holding

NedapIberiaS.A.,Alpedrete(Madrid),Spain 90% holding

SappersIberiaS.L.,Alpedrete(Madrid),Spain 100% holdingofNedapIberiaS.A.

NedapAsiaLtd.,HongKong 100% holding

NedapChinaLtd.,Shanghai,China 100% holdingofNedapAsiaLtd.

NedapFZE,Dubai,UnitedArabEmirates 100% holding

NedapInc.,Atkinson,NewHampshire,USA 100% holding

38

Financial statements

Theannualdepreciationratesare:

Buildings 3%to10%

Machinery 13%or18%

Plant 7%or10%

Otherproperty 20%

Depreciationratesareevaluatedannuallyand

adjustedifnecessary.

Intangible assets

Research

Expenditureonresearchactivitiesisrecognisedin

theincomestatementwhenincurred.

Development

Developmentexpenditureforwhichfuture

economicbenefitscanbeestimated,thatcanbe

reliablymeasuredandthatwasnotincurredforthe

maintenanceofanexistingproductoradaptation

tonewmarketcircumstancesiscapitalised.

Developmentexpenditurebackedbycustomer

ordersisalsocapitalised.

Allotherdevelopmentexpenditureisrecognised

intheincomestatement.Capitaliseddevelopment

expenditureconsistsofexternalanddirectly

attributableinternalcostsandoverheads.

Thecapitalisedprojectsaretechnicallyfeasibleand

Nedapintendstoimplementthem.Thecompany

hasaccessto(orisabletoobtain)sufficient

technical,financialandotherresourcestofinalise

andmarkettheproductsithasdeveloped.Toa

largeextent,thecapitalisedprojectsareforlighting

andenergysystems.Otherprojectsforapplications

incattlefarmingandsecuritysystemshavealso

beencapitalised.

Capitaliseddevelopmentexpenditureischiefly

amortisedonthebasisofunitssold.

Other

Otherintangibleassetsarecarriedathistorical

costlessaccumulatedamortisation.Amortisationis

appliedonastraight-linebasisovertheestimated

economiclife.

Associate

ParticipatinginterestsoverwhichNedapexercises

significantinfluencebutnotcontroloverfinancial

andoperationalpoliciesarerecognisedusingthe

equitymethodestablishedusingtheaccounting

policiesintheconsolidatedfinancialstatements.

Deferred tax assets

Deferredtaxassetsrelatetolossesbroughtforward

andtemporarydifferencesbetweenthecarrying

amountsofassetsandliabilitiesandthetaxbases

oftheseitems.Deferredtaxassetsaremeasured,

foreachfiscalentity,atthetaxratesthatare

expectedtoapplywhentheyarerealised.

Impairment

Carryingamountsarereviewedforanyindicationof

impairmentinmid-yearandatthereportingdate.

Ifthisisthecase,theassetisrevaluedtorealisable

value,whichisthehigherofthedirectandindirect

recoverableamount.Impairmentisrecognisedin

theincomestatement.If,inasubsequentperiod,an

excessiveimpairmentprovestohavebeenapplied,

theasset’scarryingamountisincreasedtothe

reassessedrealisablevalue,butnohigherthanthe

carryingamountthatwouldhavebeenrecognised

hadtheimpairmentnotbeenrecognised.The

increaseistakendirecttotheincomestatement.

Assetsinuseandthosenotinusearereviewedfor

impairment.

Inventories

Inventoriesarerecognisedatthelowerofcost

andnetrealisablevalue.Costisestablishedusing

thefirst-in-first-outmethod(FIFO).Netrealisable

valueistheestimatedsellingpricelessestimated

coststobeincurred.Thecostofworkinprogress

39

andfinishedgoodsincludesdirectmanufacturing

costsplusamark-upforindirectmanufacturingand

purchasingcosts.Thevaluationofinventoriestakes

theriskofobsolescenceintoaccount.

Statutory reserves

Thesenon-distributablereservesareformedforthe

amountofdevelopmentcostscapitalisedonthe

balancesheet,forexchangegainsandlosseson

subsidiariesandfortheshareinsubsidiarieswhich

cannotbefreelyobtained.Statutoryreserveshave

alsobeenincludedintheconsolidatedstatement

ofchangesinequitytoensurereconciliationwith

theequityasrecognisedinthecompanyfinancial

statements.

Non-controlling interests

Thenon-controllinginterestsarerecognisedatthe

sharethattheminorityshareholdersholdinthe

equityoftheconsolidatedcompanyconcerned.

Provision for employee benefits (pension and early

retirement scheme)

Defined-contribution pension scheme

Nedaphasadefined-contributionschemefora

smallnumberofemployees.Obligationsaretaken

asanexpenseintheincomestatementinthe

periodtowhichtheyrelate.

Defined-benefit pension scheme

Nedaphasadefined-benefitschemeforthe

majorityofitsemployeesintheNetherlands.

Thisschemeprovidesfortheaccrualofapension

onthebasisofindexedaveragepayandaterm

lifeinsuranceforthesurvivingdependant’s

pension.Theimplementationoftheschemehas

beenentrustedtoaninsuranceproviderwhohas

guaranteedthedefinedbenefits.Amaximumof

25%oftheassetsareinvestedinequityfunds,the

remainderisinvestedinfixed-incomesecurities.

Thenetobligationisdeterminedbycalculating

thepresentvalueofthedefinedbenefitsand

deductingthefairvalueoftheassetsfromit.The

discountrateisthereturnatthereportingdateon

goodqualitybondswhosetermapproximatesthe

termofNedap’sobligations.Thecalculationsare

performedbyauthorisedactuariesaccordingtothe

‘projectedunitcredit’method.

Pensioncostrecognisedthroughprofitorlosseach

yearcomprisestheannualaccrualofentitlements

(servicecosts),interestexpenseontheobligations,

expectedreturnonplanassetsandotherexpenses.

Thediscountrate,setatthestartoftheyear,for

determiningthereturnonplanassets,isequalto

therateusedtocalculateinterestonthedefined

benefitliability.

Differencesbetweentheestimatedandactual

movementsandchangesinassumptionsare

recognisedimmediatelyinothercomprehensive

incomeandthroughequity.

Early retirement scheme

Thisprovisionwasformedonthegroundsofthe

earlyretirementschemeincludedinthecollective

labouragreement.Thisschemeisonlyopento

employeeswhowerebornbefore1January1950

andwhohaveindicatedthattheywishtocontinue

makinguseofit.Fromtheageof62untiltheageof

65,employeesreceive80%oftheirfinalincome,

takingaccountoftheincreaseinthecostofliving.

Theprovisioniscalculatedactuarially.

Deferred tax liabilities

Deferredtaxliabilitiesarisefromtemporary

differencesbetweenthecarryingamountsofassets

andliabilitiesandthetaxbasesoftheseitems.

Deferredtaxliabilitiesaremeasured,foreachfiscal

entity,atthetaxratesthatareexpectedtoapply

whentheyaresettled.

40

Financial statements

Provisions

Thewarrantyprovisionisforclaimsmadeby

customersunderagreedguarantees.Theterm

duringwhichacustomercanexercisethis

rightvariesbetweenproducts.Theprovisionis

recognisedonthebasisofexpenditureduringthe

yearunderreviewandtheprevioustwoyears.The

provisionsareofashort-termnature.

Revenue

Revenueisthefairvalueoftheconsideration

receivedorreceivablefromthesaleofgoodsorthe

provisionofservicestothirdpartiesarisingfrom

Nedap’snormaloperations.Revenueexcludestaxes

leviedonsalesanddiscountsgranted.

Revenuefromthesaleofgoodsisrecognisedin

theresultwhenthesignificantrisksandrewardsof

ownershipofthegoodshavebeentransferredto

thebuyer.RevenuefromgoodsinstalledbyNedap

itselfisrecognisedintheresultinproportion

tothestageofcompletionoftheinstallationon

thereportingdate.Thestageofcompletionis

determinedfromtheproportionofcostsincurred

tothetotalexpectedcosts.

Revenuefromservicesisrecognisedforeach

serviceoronastraight-linebasisovertheterm

ofthecontract.Ifservicecontractsarebilledin

advance,theseamountsarerecognisedinthe

balancesheetasamountsreceivedinadvancein

‘tradeandotherpayables’.

Subsidiesaredeductedfromotherexternalcosts

duringtheperiodtowhichtheyrelate.

Financing income and expenses

Financingincomeandexpensesareinterestand

similaritemsreceivedfromandpaidtothird

partiesandgainsandlossesoninterestrateswaps.

Financingincomeandexpensesarerecognisedin

theincomestatementusingtheeffectiveinterest

method.

Taxes

Taxesonprofitforthefinancialyearcomprise

taxespayableandreceivableforthereporting

periodandthemovementindeferredtaxes.Taxes

onprofitarerecognisedintheincomestatement

unlesstheyrelatetoitemstakendirectlytoequity,

inwhichcasetherelatedtaxisalsorecognised

inequity.Taxespayableandreceivableinthe

reportingperiodconsistofincometaxesonthe

taxableresult,whicharecalculatedonthebasisof

statutorytaxratesandtaxadjustmentsrelatingto

earlierfinancialyears.

Cash flow statement

Thecashflowstatementispreparedusingthe

indirectmethod.Cashflowsdenominatedinforeign

currenciesaretranslatedattheexchangerates

rulingonthedateofthecashfloworataverage

rates.Interestpaidandreceivedisincludedinthe

cashflowfromoperatingactivitiesanddividends

paidtoshareholdersareincludedinthecashflow

fromfinancingactivities.

Financial risk management

Nedaphasaproper,effectivecontrolsystemwhose

aimsincludeidentifyingandlimitingrisks.The

CorporateGovernancesectionsetsouttherisks

andtheriskcontrols.

Theuseoffinancialinstrumentsinvolvesthe

followingrisks:

Credit risk

CreditriskistheriskofafinanciallossbyNedapif

acustomerorcounterpartyinafinancialinstrument

failstocomplywithitsobligations.Creditrisksarise

inparticularonreceivablesfromcustomers.Nedap

reducesthisriskbyinsuringtradereceivables

wherepossible.Theriskofnon-paymentthen

lieslargelywiththecreditinsurancecompany.If

possible,securityisrequestedfromtradedebtors

whichcannotbeinsured.Ifnecessary,aprovision

fordoubtfuldebtsisformed.

41

Liquidity risk

LiquidityriskistheriskthatNedapcannotmeet

itsfinancialobligationswhentheyfalldue.Nedap

reducesthisriskbyaimingforasolvencyratio

ofabout45%,whichgivesittheabilitytodraw

temporaryadditionalcapitalifnecessary.The

maximumoverdraftis€29.3million,ofwhich

€20.5millionhadbeendrawnat31December

2013.Cashandcashequivalentsstoodat€3.5

million.

Market risk

MarketriskistheriskthatNedap’sincomeis

adverselyaffectedbychangesinmarketprices,

suchasexchangerates,andinterestrates.

Exchange rate risk

Nedapreducestheexchangerateriskbyrestricting

thesizeoftransactionsinforeigncurrenciesand,

ifnecessary,hedgingtheserisks.Theprincipal

foreigncurrencyistheUSdollar.Nettransactions

inUSdollars(onbalance,expense)werenomore

than3%ofrevenue(2012:2%).Nettransactionsin

othercurrencieswerenomorethan1%each.

Interest rate risk

Achangeof100basispointsininterestrateswould

affecttheprofitforthefinancialyearby€0.3

million(2012:€0.3million).

Capital management

Toremaindoingbusinessinawaythatstrengthens

it,Nedapusesanoperatingprofitofatleast10%

ofrevenueandareturnonequityof15%-20%

asfinancialstandards.Theinnovativenatureof

thegroupandoftenproject-orientednatureofits

orders,meansasolvencyratioofabout45%,based

onorganicgrowth,andnotcountingdividends

payableandnon-controllinginterestsinequity,is

desirable.

Since2010,NedapN.V.’semployeeshavebeen

abletoparticipateinthecompanythrough

StichtingMedewerkerparticipatieNedap.

Employeesmayusetheirprofitsharetoacquire

depositaryreceiptsforNedapshares.TheBoardof

Managementmustcontributeatleast50%oftheir

variableannualincomeaftertaxtothisStichting

inexchangefordepositaryreceipts.Nedaphasnot

grantedtheSupervisoryBoardanyrightstoacquire

Nedapshares.

AlimitedamountofthereservesofNedapIberia

S.A.arenotfreelydistributable.UnderPart9of

Book2oftheNetherlandsCivilCode,Nedapisalso

requiredtomaintainastatutoryreserveforcertain

componentsoftheDutchcompanies.

TherewerenootherchangesinNedap’scapital

managementstrategyduringtheyear.Thecompany

anditssubsidiariesarenotsubjecttoexternal

capitalrequirementsexceptasdisclosedinthese

financialstatements.

Segmentation

Nedap’slong-termpolicyfocusesoncreating

solutionswithsustainablemeaningforcustomers,

employeesandshareholders.Itwishestoachieve

thisthroughorganicgrowthinrevenueandprofit

basedonacultureorientedontheexpertise,

creativityandentrepreneurialismthatthecompany

hasbuiltupinthepastdecades.

Achievingthisobjectivenotonlyrequiresknow-

howoftechnologyandmarketconditionsbutan

increasingdegreeofknowledgeofthecustomer’s

businessprocessesandapplicationsthatour

solutionfinallygoesinto.Thefocusofactivitieson

acustomerorgroupofcustomers(marketgroup)

isasignificantconditionforcreatingagenuinely

distinctivepositioninthemarketandsustainable

solutionsforourcustomersandtheirusers,and

thusalsohavingsustainablemeaningforour

employeesandshareholders.

42

Financial statements

Thetechnologiesusedforsolutionsareclosely

relatedandthemarketgroupsmakealotofuse

ofeachother’stechnologicalknow-how,products,

systems,productionresourcesandmarketanduser

experience.ThisappliesforallofNedap’sactivities

andmarketgroups.Thisexchangeofknow-how

andresources,withoutfinancialsettlement,isan

ongoingandinformalprocessand,therefore,avital

partoftheentrepreneurialculture.

IFRS8requiresthefinancialstatementstopresent

segmentinformationthatisinaccordancewith

theinternalinformationusedbythedirectorsto

assessperformanceandallocateresources.Nedap’s

BoardofManagementassessesthecompany’s

overallresultandtheperformanceofthemarket

groupsmainlyonthebasisofitsownobservations,

day-to-daycommunicationswiththemarketgroups

anddevelopmentandmarketprospects.Decisions

aretaken,staffaredeployedandresourcesare

allocatedonthisbasis.Thisisnon-financial

information.Nedapdoesnothaveseparate

segmentsasmeantbyIFRS8.Thegeographical

distributionofproperty,plantandequipment,

intangibleassetsandrevenuesandthebreakdown

ofrevenuesintocategoriesaredisclosedinthe

financialstatementsasrequiredbyIFRS8.

New standards and interpretations not yet adopted

Anumberofnewstandardsandamendmentsto

standardsandinterpretationsonlycameintoforce

after1January2013.Theyhavenotbeenapplied

intheseconsolidatedfinancialstatements.The

standardsrelevanttoNedapareexplainedbelow.

Asinprioryears,Nedaphasnotadoptedthese

standardsearly.

IFRS10introducesanewapproachtodetermining

whetherassociates(forNedap,theFrench

participatinginterestNedapFranceS.A.S.)have

tobeconsolidated,byreferencetoauniform

modelforascertainingifcontrolisexercised

overanassociate.Nedaphasperformedaninitial

assessmentanddoesnotbelievethatthenew

standardaffectsthetreatmentofNedapFrance

S.A.S.,whereitdoesnothavecontrol.Afurther

assessmentwillbeperformedin2014.

IFRS11addressesthetreatmentof‘joint

arrangements’relatingtoparticipatinginterests.

Nedapdoesnotbelievethatthisamendedstandard

willaffectitsfinancialstatements.

Thepossibleeffectofotherstandardsand

interpretationsonNedap’sfinancialstatementsis

regardedaslimited.Thechangestodisclosuresin

thefinancialstatementsarisingfromamendments

tootherstandards,whichareexpectedtobeminor,

willbeassessedin2014.

44

Financial statements

year-end 2011:cost 39,381 29,598 53,768 1,039 123,786 15,873

amortisation,depreciationandimpairment 16,017 22,737 40,009 78,763 6,007

carryingamount 23,364 6,861 13,759 1,039 45,023 9,866

movements in 2012:additions 1,112 2,067 4,198 1,103 8,480 2,757completedassetsunderconstruction 1,039 –/– 1,039 –netdisposals –/–202 –/– 202amortisationanddepreciation –/– 1,391 –/– 1,750 –/– 4,324 –/– 7,465 –/– 1,739impairment

netmovements –/– 279 317 711 64 813 1,018

year-end 2012:cost 40,492 31,239 57,711 1,103 130,545 18,266

amortisation,depreciationandimpairment 17,407 24,061 43,241 84,709 7,382

carryingamount 23,085 7,178 14,470 1,103 45,836 10,884

movements in 2013:additions 2,436 1,222 5,117 1,536 10,311 1,971completedassetsunderconstruction 1,342 –/– 1,103 239 –/– 239netdisposals –/– 455 –/– 455amortisationanddepreciation –/– 1,471 –/– 1,821 –/– 4,638 –/– 7,930 –/– 2,086impairment

netmovements 965 –/– 599 1,366 433 2,165 –/– 354

year-end 2013::cost 42,928 31,283 58,389 1,536 134,136 16,354

amortisation,depreciationandimpairment 18,878 24,704 42,553 86,135 5,824

carryingamount 24,050 6,579 15,836 1,536 48,001 10,530

*moulds,dies,measuringandtestingequipment,furnitureandfittings,computersystemsandvehicles.

Foreigncurrencytranslationgainsandlossesareignored,giventheirsmallamount.

Property,plantandequipmentareinsuredatnew-for-oldvalue.

Amortgageof€20.0million(2012:€20.2million)hasbeengrantedonimmovablepropertyassecurityforallamountsowedtothebank.

Thelandcoversatotalareaof68,000m2,ofwhichabout5,000m2isstillavailableforbuilding.

Obligationsenteredintoattheendofthefinancialyearwere€0.2million(2012:€0.8million).

1. Property, plant and equipment and intangible assets

landandbuildings

plantandmachinery

otherequipment*

underconstruction

andprepayments

totalproperty,plantandequipment

intangibleassets

45

Geographicalinformationonthecarryingamountofproperty,plantandequipmentandintangibleassets:

2013 2012

Netherlands 54,337 52,451Germany 1,507 1,511Spain 1,677 1,741restofEurope 629 758othercountries 381 259

total 58,531 56,720

2. Investment in associate

ThisisNedapFranceS.A.S.,Eragny-sur-Oise,France.

2013 2012

netassetvalueat1January 2,425 2,871profitaftertaxes 723 584dividendreceived –/– 249 –/– 1,143othermovements 62 113

netassetvalueat31December 2,961 2,425

Keyfiguresoftheassociate,on100%basis

revenue 23,687 22,846expenses 22,233 21,668profitaftertaxes 1,454 1,178totalassetsat31December 14,325 14,837totalliabilitiesat31December 8,367 9,957

Transactionswithassociate:salesofgoodsandservicestoassociate 8,379 8,448

3. Loans 2013 2012

balanceat1January 341 –movements –/– 90 341

balanceat31December 251 341

Theloanshavebeengrantedtobusinesspartners.

46

Financial statements

4. Deferred tax assets 2013 2012

balanceat1January 481 489movements 390 –/– 8

balanceat31December 871 481

Theseareassetsofanumberofsubsidiariesandrelatetolossreliefandtemporarydifferencesbetweenthecarryingamountsandtaxbasesofassetsandliabilities.Certainlossescanbecarriedforwardindefinitelyandothersfor15years.At31December2013,therewerenotemporarydifferences,unrelievedtaxlossesorunusedtaxcreditsavailableforwhichnodeferredtaxassetshadbeenrecognised.

5 Inventories 2013 2012

rawmaterialsandcomponents 9,483 10,266workinprogress 1,236 1,274finishedgoods 15,092 15,270

total 25,811 26,810

6. Trade and other receivables 2013 2012

tradereceivables 27,573 28,669amountsowedbyassociate 1,760 2,546otherreceivables,prepaymentsandaccruedincome 4,934 4,798

total 34,267 36,013

€0.3millionofthetradeandotherreceivableshadatermofmorethanoneyear(2012:€0.3million).

Movementsinprovisionfortradereceivablesthataredeemeduncollectible:

2013 2012

balanceat1January 174 118withdrawals –/– 5 –/– 41additions – 97

balanceat31December 169 174

47

Theaveragecredittermfortradereceivableswas8weeksin2013(2012:7weeks).

Wherepossible,Nedapinsuresthecreditriskinitsreceivables,withapayoutof90%(2012:90%).PleaseseetheFinancialRiskManagementsectionforariskassessment.

7. Cash and cash equivalents 2013 2012

cash 21 12banks 3,465 2,921

total 3,486 2,933

Cashandcashequivalentsareavailableondemand.

8. Share capitalThecompany’sauthorisedsharecapitalconsistsof15,600,000ordinarysharesof€0.10nominalvalueeachand15,600,000preferencesharesof€0.10nominalvalueeach.6,692,920ordinaryshareshavebeenissued.

9. Borrowings 2013 2012

Typeofborrowing Nominalinterestrate Maturitydate

Standbyroll-over Euribor+2.6% 2015 14,000 14,000Bankloan Euribor+0.5% 2021 1,875 1,975Annuityloan Euribor+0.8% 2021 696 814Bankloan 8.3% 2014 37 88

Balanceat31December 16,608 16,877

Repaymentsduewithin1year 217 268

Repaymentsduebetween1and5years 14,732 14,757Repaymentsdueafter5years 1,659 1,852

Thefairvalueoftheborrowingsisnotmateriallydifferentfromtheiramortisedcost.

ThefinancingagreementwiththebankfortheStandbyroll-overloanexpireson1November2015anddoesnotcontainanycovenants.Securityisintheformofamortgageandapledgeoftradereceivables.

48

Financial statements

10. Derivative financial instrumentsTheriskofinterestratefluctuationsonpartoftheborrowings(€1.9million)hasbeenhedgedusinginterestrateswaps,whicharerecognisedatfairvalue.Valuationgainsandlossesarerecognisedintheincomestatementinnetfinancingexpenses.At31December2013theweightedaveragematurityofthederivativefinancialinstrumentswas5years.Theweightedaverageeffectiveinterestratewas4.2%.

2013 2012

balanceat1January 335 285valuationmovements –/– 89 50

balanceat31December 246 335

11. Employee benefits, pensions 2013 2012

fairvalueofplanassets 79,659 79,793presentvalueofobligations 86,464 79,566

surplusordeficit(-/-)infund –/– 6,805 227

Movementsinplanassets:

balanceat1January 79,793 69,837contributionspaid 3,991 3,736benefitspaid –/– 1,300 –/– 1,125expectedreturnonplanassets 2,626 2,983actuarialgainsandlosses –/– 5,451 4,362

balanceat31December 79,659 79,793

Theplanassetsconsistof:

equities 18,467 14,860fixed-incomesecurities 61,912 64,652currentaccount –/– 720 281

79,659 79,793

Movementsinobligations:

balanceat1January 79,566 64,680servicecosts 2,750 2,049interest 3,042 3,000benefitspaid –/– 1,300 –/– 1,125contributionspaidbymembers 540 508actuarialgainsandlosses 1,866 10,454

balanceat31December 86,464 79,566

49

Costsrecognisedassocialsecuritychargesintheincomestatement:

servicecosts 2,750 2,049interestcostsonobligations 3,042 3,000expectedreturnonplanassets –/– 2,626 –/– 2,983

total 3,166 2,066

Differencesbetweentheestimatedandactualmovementsandchangesinassumptionsarerecogniseddirectlyinothercomprehensiveincome.

lower/(–/–)higherreturnonplanassets 5,451 –/– 4,362actuariallossarisingfromfinancialassumptions 1,683 10,545experienceadjustment 182 –/– 1,091

7,316 5,092deferredtaxes –/– 1,829 –/– 1,273

total 5,487 3,819

Historicalinformation:

2013 2012 2011 2010

fairvalueofplanassets 79,659 79,793 69,837 56,879presentvalueofobligations 86,464 79,566 64,680 53,080

surplusordeficit(–/–)infund –/– 6,805 227 5,157 3,799

Principalactuarialassumptionsformeasuringthepensionplanatthereportingdate:

2013 2012

discountrateforpensionentitlementsat31December 3.60% 3.70%expectedreturnonplanassets 3.60% 3.70%annualsalaryincreaseforindexationofentitlements 2.00% 2.00%annualincreaseforbuilt-inoffset 2.00% 2.00%payrisesforpromotionontopoftheindexation 1.50% 1.50%

Certainotheractuarialassumptionsareused,includingtheGeneratietafel2014(-1/-1)(2012:Generatietafel2013(-1/-1)).

Achangeof0.5%inthediscountrateisexpectedtoaffectthepresentvalueoftheobligationsbyabout10%.Achangeof0.5%insalaryincreasesisexpectedtoaffectthepresentvalueoftheobligationsbyabout4%.

50

Financial statements

Nomorethan25%oftheassetsareinvestedinequities;theremainderisinfixed-incomesecurities.Inconsultationwiththepensionadministrator,whichguaranteesthepensionobligations,thefixed-incomeportfolioismadeupofunitsinfixed-incomeinvestmentfundsofacompanyassociatedwiththepensionadministrator.Thechoiceoffundsdependsonthedurationoftheobligations.Investmentinequitiesisthroughunitsinfundsofthesamecompanyassociatedwiththepensionadministrator.Thesefundsarenon-listed.

Theactualreturnontheplanassetswas-2.6%(2012:11.5%).

Theagreementwiththepensionadministratorexpiresattheendof2014andincorporatessurplusinterestsharingandafulldistributionoftheactuarialgainsandlosses.Thepensionadministratorcontinuestobeaguarantorforthepensionbenefits.

Nedapexpectstopaycontributionsof€4.2millionin2014.

12. Employee benefits, otherThisisaprovisionforearlyretiremententitlements.

2013 2012

totalpresentvalueofobligations 285 804ofwhich,ofacurrentnature 285 540

Movementsinobligations:

balanceat1January 804 1,588servicecostsandinterest 54 83benefitspaid –/– 573 –/– 867

balanceat31December 285 804

Servicecostsandinterestareincludedintheincomestatement

Historicalinformation: 2013 2012 2011 2010

presentvalueoftheobligations 285 804 1,588 2,320

Principalactuarialassumptionsatthereportingdate:

2013 2012

discountrateforearlyretiremententitlementsat31December – 2.20%annualsalaryincreaseforindexationofentitlements 2.25% 2.00%

Nedapexpectstopay€0.3millioninbenefitsin2014.

51

13. Deferred tax liabilities 2013 2012

property,plantandequipment 1,581 2,007intangibleassets 2,553 2,678inventories 138 153receivables –/– 295 –/– 155provisions –/– 1,765 –/– 485

balanceat31December 2,212 4,198

Movementsindeferredtaxliabilities:

balanceat1January 4,198 4,799takentotheresult(net) –/– 157 672takentoothercomprehensiveincome –/– 1,829 –/– 1,273

balanceat31December 2,212 4,198

Thedeferredtaxliabilitieshaveapredominantlylong-termnature.

14. Bank overdraftsThemaximumcurrentaccountoverdraftunderthefacilityis€29.3million(2012:€29.3million).

52

Financial statements

15. Provisions 2013 2012

Warrantyprovision

balanceat1January 3,456 797withdrawals –/– 4,359 –/– 1,444additions 1,641 1,303

738 656

replacementprovision – 2,800

balanceat31December 738 3,456

Theprovisionshaveapredominantlyshort-termnature.

16. Trade and other payables 2013 2012

tradepayables 7,150 7,513liabilitiesonaccountofinvestments 268 352prepayments 2,903 2,332payabletoassociate – 8otherpayables,accrualsanddeferredincome 10,413 10,026

total 20,734 20,231

Oftradeandotherpayables,€0.6millionhadatermofmorethanoneyear(2012:€0.7million).

Off-balance sheet obligationsLong-termfinancialobligationsofgroupcompanies:(in€xmillion) > 1 year and > 5 years and < 1 year < 5 years < 10 years

2013:buildingrental 0.9 1.7 0.1operatingleasesforvehicles 0.7 1.0 –operatingleasesforICT 0.2 0.8 –

2012:buildingrental 0.9 1.8 0.4operatingleasesforvehicles 0.6 0.9 –operatingleasesforICT 0.2 – –

Guaranteesissuedbygroupcompaniesinrelationtobuildingrentalwere€0.1million(2012:€0.1million)andotherguaranteeswere€0.2million(2012:€0.3million).

53

Nedapleasesvariousbusinesspremises.Theleasesusuallyhaveatermof5yearswitharenewaloption.Rentsarerevisedannually.Thereisalsoaleasing,maintenanceandmanagementcontractforhardwareandsoftware,whichexpiresattheendof2017.Thecostsarefixedperuserforthefullperiodofthecontract.Threegroupcompaniesleasetheirvehicles.

Duringtheyear,€2.1million(2012€2.3million)wasrecognisedforoperatingleasesintheincomestatement.

SomecustomershavesubmittedclaimsinrespectofwhattheyargueisNedap’snon-compliancewithcontractualobligations.Nedapbelievesthatithasmettherequirementsandwillrespondappropriately.Nedapdoesnotexpecttheclaimstohavefinancialconsequences.

Related partiesNedap’srelatedpartiesaretheassociate,NedapFranceS.A.S.,StichtingPreferenteAandelenNedapandthemembersoftheSupervisoryBoardandtheBoardofManagement.Therewerenotransactionswithrelatedpartiesduringtheyearunderreviewexceptaspresentedinthefinancialstatements.Transactionsareonarm’slengthterms.

17. Revenue 2013 2012

products,systemsandinstallations 152,743 153,839services 20,953 18,035

total 173,696 171,874

ServicescomprisemainlysubscriptionsandmaintenancecontractsforHealthcare,RetailandSecurityManagement.

Geographicalsalesareas:

Netherlands 50,028 52,738Germany 32,482 29,400restofEurope 59,304 57,132NorthAmerica 18,041 18,991othercountries 13,841 13,613

total 173,696 171,874

Largecustomers:

Nocustomerrepresentssalesinexcessof10%oftotalrevenue.

54

Financial statements

Cost of research and development 2013 2012

totalcosts 19,464 16,352depreciation/amortisationandimpairment 2,086 1,739capitalisedcosts –/– 1,971 –/– 2,757subsidies –/– 886 –/– 948

total 18,693 14,386

Average number of employees 2013 2012

Netherlands 640 607otherEU 67 67Asia 31 28USA 4 –

total 742 702

18. Social security charges 2013 2012

earlyretirement/retirementcharges,definedbenefitschemes 3,220 2,149pensioncharges,definedcontributionschemes 59 73othersocialsecuritycharges 5,333 5,362

total 8,612 7,584

Board of Management’s remuneration basic variable pension

income remuneration costs total

2013R.M.Wegman 375 133 45 553G.J.M.Ezendam 283 102 29 414

2012R.M.Wegman 337 166 36 539G.J.M.Ezendam 267 133 24 424

TheBoardofManagement’sremunerationexcludesthenon-recurring16%crisislevyforwhichanadditional€54isduetobepaidtothetaxauthoritiesforMrWegmanand€40forMrEzendam.

DetailsoftheremunerationpolicyaresetoutintheCorporateGovernancesection.On31December2013,MrWegmanheld10,853depositaryreceiptsforsharesinthecompany(2012:8,114)andMrEzendamheld8,669(2012:6,478).

55

Supervisory Board’s remunerationTotalfixedremunerationwas€130(2012:€103).

2013 2012

G.F.Kolff(from17April2012) 40 27J.M.L.vanEngelen(from16April2013) 21 –D.W.J.Theyse 30 22M.C.Westermann 30 22J.P.Bahlmann(to16April2013) 9 22A.vanderVelden(to17April2013) – 10

19. Amortisation and depreciation 2013 2012

developmentcosts 2,086 1,739buildings 1,471 1,391plantandmachinery 1,821 1,750otherequipment 4,638 4,324

total 10,016 9,204

20. Share of profit of associateThisistheshareofprofitofNedapFranceS.A.S.,Eragny-sur-Oise,France.

56

Financial statements

21. Taxes 2013 2012

profitbeforetaxes,excludingassociate 11,162 15,729

incometax 2,619 2,128deferredtax –/– 541 680

totalincometax 2,078 2,808

Reconciliationofeffectivetaxrate:

2013 2012

IncometaxbasedontheDutchtaxrate 2,791 25.0% 3,932 25.0%changeindomestictaxrate –/– 23 –/– 0.2% –/– 30 –/– 0.2%effectoftaxrateonnon-residentsubsidiaries –/– 28 –/– 0.3% –/– 89 –/– 0.6%non-deductibleexpenses 71 0.6% 75 0.5%fiscalincentiveschemes –/– 753 –/– 6.7% –/– 1,070 –/– 6.8%prior-yearadjustment 20 0.2% –/– 10 0.0%

total 2,078 18.6% 2,808 17.9%

22. Profit attributable to non-controlling interestsTheportionofthenetresultofsubsidiariesattributabletominorityshareholders.

58

Financial statements

2013 2012

Assets noteNon-current assetsProperty,plantandequipment 1 33,726 33,222Intangibleassets 1 10,211 10,714Financialassets 2 13,494 13,374*Loans 3 251 341Employeebenefits – 1,062*

57,682 58,713Current assetsInventories 4 10,657 15,709Tradeandotherreceivables 5 38,831 34,004Cashandcashequivalents 6 533 405

50,021 50,118

107,703 108,831

Equity and liabilities

Equity 7Sharecapital 669 669Statutoryreserves 10,701 11,057Reserves 32,407 33,923*

43,777 45,649

Resultfortheyear 9,792 13,480

53,569 59,129

Provisions 8 8,534 8,617*

Non-current liabilities 9 14,000 14,000

Current liabilities 10 31,600 27,085

Total liabilities 54,134 49,702

107,703 108,831

Income statement of Nedap N.V.(€x1,000) 2013 2012

Netprofitofassociates 2,987 2,286Othernetresults 6,805 11,194

Profitattributabletoshareholders 9,792 13,480

* Restated in connection with change in accounting policy on pensions (IAS 19R).

Balance sheet of Nedap N.V. at 31 December (€ x 1,000)

59

Accounting policies

PursuanttoSection362(8)ofBook2oftheNetherlandsCivil

Code,Nedapmakesuseoftheoptiontopreparecompany

financialstatementsinaccordancewiththeaccounting

policiesusedfortheconsolidatedfinancialstatementsand

inaccordancewithPart9ofBook2oftheNetherlandsCivil

Code.Byusingthisoption,thereconciliationbetweenthe

consolidatedequityandtheequityinthecompanyfinancial

statementsismaintained.

UseismadeoftheoptionpursuanttoSection402ofBook2

oftheNetherlandsCivilCodetopublishanabridgedseparate

companyincomestatement.

Theconsolidatedfinancialstatementshavebeenpreparedin

accordancewithInternationalFinancialReportingStandards

(IFRS)asadoptedbytheEuropeanUnion.Pleaseseethe

notesontheaccountingpoliciesfortheconsolidated

financialstatementsforadescriptionoftheaccounting

policiesrelatingtothesestandards.

FinancialassetsincludetheNedapgroup’ssubsidiariesand

associateswheresignificantinfluencecanbeexercised

overthecommercialandfinancialpolicy.Thesubsidiaries

andassociatesarerecognisedusingtheequitymethod

establishedusingtheaccountingpoliciesintheconsolidated

financialstatements.Associateswithanequitydeficitare

carriedatnil.Theequitydeficitisdeductedfromamounts

receivablefromtheseassociates.Theequityofsubsidiariesis

increasedbythevalueofloansgrantedtothemmeasuredat

amortisedcost.

Notes to the financial statements of Nedap N.V.(€ x 1,000, unless stated otherwise)

60

Financial statements

year-end 2011:cost 31,911 26,499 47,578 1,039 107,027 14,841

amortisation,depreciationandimpairment 14,943 20,968 36,988 72,899 5,191

carryingamount 16,968 5,531 10,590 1,039 34,128 9,650

movements in 2012:additions 127 1,021 2,876 1,103 5,127 2,650completedassetsunderconstruction 1,039 –/–1,039 –netdisposals –/–183 –/–183amortisationanddepreciation –/– 1,079 –/– 1,463 –/– 3,307 –/– 5,849 –/–1,586impairment netmovements –/–952 –/–442 425 64 –/–905 1,064

year-end 2012:cost 32,038 27,094 50,368 1,103 110,603 17,127

amortisation,depreciationandimpairment 16,022 22,005 39,354 77,381 6,413

carryingamount 16,016 5,089 11,014 1,103 33,222 10,714

movements in 2013:additions 2,263 698 3,105 1,536 7,602 1,734completedassetsunderconstruction 1,342 –/– 1,103 239 –/–239netdisposals –/– 1,072 –/–702 –/– 1,774amortisationanddepreciation –/– 1,127 –/– 1,020 –/– 3,416 –/– 5,563 –/– 1,998impairment

netmovements 1,136 –/– 1,394 329 433 504 –/–503

year-end 2013:cost 34,301 23,163 48,632 1,536 107,632 14,978amortisation,depreciationandimpairment 17,149 19,468 37,289 73,906 4,767

carryingamount 17,152 3,695 11,343 1,536 33,726 10,211

*moulds,dies,measuringandtestingequipment,furnitureandfittings,computersystemsandvehicles.

1. Property, plant and equipment and intangible assets

landandbuildings

plantandmachinery

otherequipment*

underconstruction

andprepayments

totalproperty,plantandequipment

intangibleassets

61

Property,plantandequipmentareinsuredatnew-for-oldvalue.

Amortgageof€16.4million(2012:€16.4million)hasbeengrantedonimmovablepropertyassecurityforallamountsowedtothebank.

Thelandcoversatotalareaof61,000m2,ofwhichabout5,000m2isstillavailableforbuilding.

Obligationsenteredintoattheendofthefinancialyearwere€0.2million(2012:€0.6million).

2. Financial assets 2013 2012

Subsidiaries:

valueat1January 10,949 9,780profit 2,243 1,662profitdistribution –/– 1,709 –/–922movementinamountsowedbysubsidiaries 419 1,234foreignexchangegainsandlosses –/– 2 9othermovements –/– 358 –/–20

valueat31December 11,542 11,743

newloansgrantedtosubsidiaries – 350loanrepaymentsbysubsidiaries –/– 1,009 –/–1,144

totalvalueat31December 10,533 10,949

Totalloansgrantedtosubsidiariesat31December2013:€4.5million(2012:€5.5million).Suretyof€1.7millionhasbeenprovidedonimmovablepropertyinrelationtotheaboveloans.

Associate:

valueat1January 2,425 2,871profit 723 584profitdistribution –/– 249 –/–1,143othermovements 62 113

valueat31December 2,961 2,425

totalfinancialassetsat31December 13,494 13,374

62

Financial statements

3. Loans 2013 2012

balanceat1January 341 –movements –/– 90 341

balanceat31December 251 341

Theloanshavebeengrantedtobusinesspartners.

4. Inventories 2013 2012

rawmaterialsandcomponents 2,321 6,596workinprogress 417 553finishedgoods 7,919 8,560

total 10,657 15,709

5. Trade and other receivables 2013 2012

tradereceivables 14,425 16,697amountsowedbysubsidiariesandassociate 21,321 14,232otherreceivables,prepaymentsandaccruedincome 3,085 3,075

total 38,831 34,004

Oftradeandotherreceivables,€0.2millionhadatermoflongerthanoneyear(2012:€0.1million).

6.Cash and cash equivalents 2013 2012

cash 15 7banks 518 398

total 533 405

Cashandcashequivalentsareavailableondemand.

7. EquityPleaseseetheconsolidatedstatementofchangesinequity.

63

8. Provisions 2013 2012

employeebenefits,pensions 5,413 –employeebenefits,other 285 804deferredtaxliabilities 2,212 4,456warranty 624 557replacement – 2,800

total 8,534 8,617

Employee benefits, pensions 2013 2012

fairvalueofplanassets 74,550 75,016presentvalueofobligations 79,963 73,954

surplusordeficit(–/–)inthefund –/– 5,413 1,062

Movementsinplanassets:

balanceat1January 75,016 66,945contributionspaid 3,613 3,341benefitspaid –/– 1,300 –/–1,125expectedreturnonplanassets 2,454 2,860actuarialgainsandlosses –/– 5,233 2,995

balanceat31December 74,550 75,016

Theplanassetsconsistof:

equities 17,283 13,970fixed-incomesecurities 57,941 60,781currentaccount –/– 674 265

74,550 75,016

Movementsinobligations:

balanceat1January 73,954 61,060servicecosts 2,377 1,811interest 2,818 2,823benefitspaid –/– 1,300 –/–1,125contributionspaidbymembers 471 443actuarialgainsandlosses 1,643 8,942

balanceat31December 79,963 73,954

64

Financial statements

Historicalinformation: 2013 2012 2011 2010

fairvalueofplanassets 74,550 75,016 66,945 54,223presentvalueofobligations 79,963 73,954 61,060 50,007

surplusordeficit(–/–)inthefund –/– 5,413 1,062 5,885 4,216

Pleaseseethenotestotheconsolidatedfinancialstatementsfortheprincipalactuarialassumptionsformeasuringthepensionplan.

Employee benefits, otherPleaseseethenotestotheconsolidatedfinancialstatements.

65

Deferred tax liabilities 2013 2012

property,plantandequipment 1,581 2,007intangibleassets 2,553 2,678inventories 138 153receivables –/– 295 –/–232provisions –/– 1,765 –/–150

total 2,212 4,456

Movementsindeferredtaxliabilities:

balanceat1January 4,456 4,728takentotheprofit(net) –/– 525 666takentoothercomprehensiveincome –/– 1,719 –/– 938

balanceat31December 2,212 4,456

Thedeferredtaxliabilitieshaveapredominantlylong-termnature.

Warranty provision 2013 2012

balanceat1January 557 688withdrawals –/– 1,445 –/–1,366additions 1,512 1,235

balanceat31December 624 557

Thewarrantyprovisionhasapredominantlyshort-termnature.

9. Non-current liabilities 2013 2012

borrowings 14,000 14,000

66

Financial statements

BorrowingsThisisacreditfacilitywithaceilingof€14.0millionendingon1November2015,underwhichamountsofatleast€0.5millioncanbewithdrawnforatermofnolessthan1monthandnomorethan12months.TheinterestrateisEuriborplus2.6%.

10. Current liabilities 2013 2012

bankoverdrafts 18,457 13,649taxesandsocialsecuritycharges 2,552 1,725tradeandotherpayables,accrualsanddeferredincome 10,591 11,711

total 31,600 27,085

€0.5millionofthetradeandotherpayableshadatermlongerthanoneyear(2012:€0.5million).

Bank overdraftsThemaximumcurrentaccountoverdraftunderthefacilityis€25million(2012:€25million).

Trade and other payables 2013 2012

tradepayables 2,668 3,641liabilitiesonaccountofinvestments 236 316prepayments 849 894otherpayables,accrualsanddeferredincome 6,838 6,860

total 10,591 11,711

67

Off-balance sheet obligationsBankguaranteesof€1.7millionhavebeenissuedforgroupcompanies.

NedapN.V.andInventiB.V.formafiscalunityforcorporateincometaxpurposesandsoeachcompanyisjointlyandseverallyliableforthepaymentofthecorporateincometaxdue.

NedapN.V.hasassumedjointandseveralliabilityforthedebtsarisingfromthejuristicactsofInventiB.V.pursuanttoSection403ofBook2oftheNetherlandsCivilCode.

Audit feesThisitemrelatestothetotalfeeforservicesprovidedbyKPMGAccountantsN.V.

2013 2012

auditofthefinancialstatements 137 136otherservices 3 4

total 140 140

Groenlo,11February2014

TheBoardofManagement TheSupervisoryBoard

R.M.Wegman G.F.Kolff,chairmanG.J.M.Ezendam M.C.Westermann,vice-chairman J.M.L.vanEngelen D.W.J.Theyse

68

Financial statements

Tothebestofourknowledge,

1 thefinancialstatements(includingtheOther

informationpursuanttoSection392ofBook2ofthe

NetherlandsCivilCode)giveatrueandfairviewof

theassets,liabilities,financialpositionandprofitor

lossofNedapN.V.andtheundertakingsincludedin

theconsolidationtakenasawhole;and

2 thereportoftheBoardofManagementincludesa

fairreviewofthepositionat31December2013and

thedevelopmentandperformanceofthebusiness

duringthefinancialyear2013ofNedapN.V.andthe

undertakingsincludedintheconsolidationtakenasa

wholeandthe2013reportdescribestherisksfacing

NedapN.V.

Groenlo,11February2014

TheBoardofManagement:

R.M.Wegman

G.J.M.Ezendam

Statement pursuant to Section 5:25c(2c) of the Financial Supervision Act

70

Other Information

Report on the audit of the financial statements

Opinion with respect to the consolidated financial

statements

Inouropinion,theconsolidatedfinancial

statementsgiveatrueandfairviewofthefinancial

positionofN.V.NederlandscheApparatenfabriek

“Nedap”asat31December2013andofitsresult

anditscashflowsfortheyearthenendedin

accordancewithInternationalFinancialReporting

StandardsasadoptedbytheEuropeanUnion(EU-

IFRS)andwithPart9ofBook2oftheNetherlands

CivilCode.

Opinion with respect to the company financial

statements

Inouropinion,thecompanyfinancialstatements

giveatrueandfairviewofthefinancialpositionof

N.V.NederlandscheApparatenfabriek“Nedap”as

at31December2013andofitsresultfortheyear

thenendedinaccordancewithPart9ofBook2of

theNetherlandsCivilCode.

Our engagement

Wehaveauditedthe2013financialstatements

ofN.V.NederlandscheApparatenfabriek“Nedap”,

Groenlo(“theCompany”).Thefinancialstatements

includetheconsolidatedfinancialstatementsand

thecompanyfinancialstatements.Theconsolidated

financialstatementscomprisetheconsolidated

balancesheetasat31December2013,the

consolidatedincomestatement,theconsolidated

statementofcomprehensiveincome,the

consolidatedstatementofchangesinequity,the

consolidatedcashflowstatementandthenotes,

comprisingasummaryofsignificantaccounting

policiesandotherexplanatoryinformation.The

companyfinancialstatementscomprisethe

companybalancesheetasat31December2013,

thecompanyincomestatementandthenotes,

comprisingasummaryoftheaccountingpolicies

andotherexplanatoryinformation.

Basis for our opinion

WeconductedourauditinaccordancewithDutch

law,includingDutchStandardsonAuditing.Our

responsibilitiesunderthosestandardsarefurther

describedinthesectionOurresponsibilityforthe

auditofthefinancialstatementsofourreport.

WeareindependentoftheCompanywithinthe

meaningoftherelevantDutchethicalrequirements

asincludedinthe“Verordeningopdegedrags-

enberoepsregelsaccountants”(VGBA)andthe

“Verordeninginzakedeonafhankelijkheidvan

accountants”(ViO)andhavefulfilledourother

responsibilitiesunderthoseethicalrequirements.

Webelievethattheauditevidencewehave

obtainedissufficientandappropriatetoprovidea

basisforouropinion.

Key audit matters

Keyauditmattersarethosemattersthat,inour

professionaljudgment,wereofmostsignificance

inourauditofthefinancialstatements.Key

auditmattersareselectedfromthematters

communicatedwiththeBoardofManagement

andtheSupervisoryBoardbutarenotintended

torepresentallmattersthatwerediscussedwith

them.

Ourauditproceduresrelatingtothesematterswere

designedinthecontextofourauditofthefinancial

statementsasawhole.Ouropiniononthefinancial

statementsisnotmodifiedwithrespecttoanyof

thekeyauditmattersdescribedbelowandwedo

notexpressanopinionontheseindividualmatters.

Sensitivities with respect to the valuation of

intangible assets

Thevaluationofintangibleassetswassignificant

toourauditasitrequiresestimatesthatareto

someextentcomplexandsubjectiveandbasedon

assumptions.Assessingthevaluationofintangible

assetsatthereportingdaterequiressomeextentof

professionaljudgement,inparticularontheissue

ofwhetherthecriteriaforcapitalisationhavebeen

Independent auditor’s report

71

met(seetheaccountingpoliciesforintangible

assetsinthefinancialstatementsfordetailsof

thesecriteria)andtoestimatetherecoveryperiod

andrelatedamortisationmethod.Some40%of

thecarryingamountofcapitaliseddevelopment

projectsrelatestoEnergySystems.

WeassessedtheprocessthattheCompanyusesto

determinewhichdevelopmentprojectsqualifyfor

capitalisation.Weassessedtheinternalcontrolsfor

capitaliseddevelopmentprojectswithasignificant

carryingamount,discussedwithstaffinthemarket

groupsandperformedauditproceduresoncapital

expenditureandamortisation.Wealsoevaluated

management’sassessmentofthecapitalisation

criteriaandestimatesofrecoverability,amongst

othersbasedinpartonbudgets,businesscases,

historicaldataandinformationandinterviews

withthestaffreferredtoaboveandtheBoardof

Management.

Scope of our group audit

Weplannedourauditusingarisk-basedapproach.

Weconsideredbothqualitativeandquantitative

factorswhenselectingtheindividualgroupentities

andassociateswherewerequestlocalauditors

toperformauditproceduresforus.Thegroup

auditteamevaluatesthelocalauditors’planning,

findingsandconclusionstoestablishwhether

wecanrelyontheirwork.Inaddition,wehave

arotatingprogrammeofsitevisitstoassessthe

qualityofthelocalauditsassupportforourability

torelyontheworkofthelocalauditors.

Going concern

TheCompany’sfinancialstatementshavebeen

preparedonthegoingconcernbasisofaccounting.

Theuseofthisbasisofaccountingisappropriate

unlesstheBoardofManagementeitherintends

toliquidatetheCompanyorceaseoperationsor

hasnorealisticalternativebuttodoso.Aspartof

ourauditofthefinancialstatements,weconcur

withtheBoardofManagement’suseofthegoing

concernbasisofaccountingwhenpreparingthe

financialstatements.

TheBoardofManagementhasnotidentifieda

materialuncertaintythatmaycastsignificantdoubt

ontheCompany’sabilitytocontinueasagoing

concernandaccordinglynoneisdisclosedinthe

financialstatements.Basedonourauditofthe

financialstatements,wealsohavenotidentified

suchamaterialuncertainty.However,neither

theBoardofManagementnortheauditorcan

guaranteetheCompany’sabilitytocontinueasa

goingconcern.

Responsibilities of the Board of Management and

the Supervisory Board for the financial statements

TheBoardofManagementisresponsiblefor

thepreparationandfairpresentationofthese

financialstatementsinaccordancewithEU-IFRS

andwithPart9ofBook2oftheNetherlands

CivilCodeandforthepreparationoftheannual

reportinaccordancewithPart9ofBook2ofthe

NetherlandsCivilCode.TheBoardofManagement

isalsoresponsibleforsuchinternalcontrolasit

determinesisnecessarytoenablethepreparation

offinancialstatementsthatarefreefrommaterial

misstatement,whetherduetofraudorerror.The

SupervisoryBoardisresponsibleforoverseeingthe

Company’sfinancialreportingprocess.

Our responsibility for the audit of the financial

statements

Theobjectivesofourauditaretoobtainreasonable

assuranceaboutwhetherthefinancialstatements

asawholearefreefrommaterialmisstatement,

whetherduetofraudorerror,andtoissue

anauditor’sreportthatincludesouropinion.

Reasonableassuranceisahighlevelofassurance,

butisnotaguarantee,thatanauditconductedin

accordancewithDutchStandardsonAuditingwill

alwaysdetectamaterialmisstatementwhenit

exists.Misstatementscanarisefromfraudorerror

andareconsideredmaterialif,individuallyorin

72

Other InformationProvisions of the Articles of Association concerning the appropriation of profit in accordance with Article 45

aggregate,theycouldreasonablybeexpectedto

influencetheeconomicdecisionsofuserstakenon

thebasisofthesefinancialstatements.

AspartofanauditinaccordancewithDutch

StandardsonAuditing,weexerciseprofessional

judgementandmaintainprofessionalscepticism

throughouttheplanningandperformanceofthe

audit.Wealso:

• identifyandassesstherisksofmaterial

misstatementofthefinancialstatements,whether

duetofraudorerror,designandperformaudit

proceduresresponsivetothoserisksandobtain

auditevidencethatissufficientandappropriate

toprovideabasisforouropinion.Theriskofnot

detectingamaterialmisstatementresultingfrom

fraudishigherthanforoneresultingfromerror,

asfraudmayinvolvecollusion,forgery,intentional

omissions,misrepresentationsortheoverrideof

internalcontrol.

• obtainanunderstandingofinternalcontrol

relevanttotheauditinordertodesign

auditproceduresthatareappropriateinthe

circumstancesbutnotforthepurposeofexpressing

anopinionontheeffectivenessoftheCompany’s

internalcontrol.

• evaluatetheappropriatenessofaccounting

policiesusedandthereasonablenessofaccounting

estimatesandrelateddisclosuresmadebythe

BoardofManagement.

• evaluatetheoverallpresentation,structureand

contentofthefinancialstatements,includingthe

disclosures,andwhetherthefinancialstatements

representtheunderlyingtransactionsandeventsin

amannerthatachievesatrueandfairview.

• obtainsufficientappropriateauditevidence

regardingthefinancialinformationofthecompany

andbusinessactivitieswithinthecompanyto

expressanopiniononthefinancialstatements.

Weareresponsibleforthedirection,supervision

andperformanceoftheaudit.Weremainsolely

responsibleforourauditopinion.

Wearerequiredtocommunicatewiththe

SupervisoryBoardregarding,amongothermatters,

theplannedscopeandtimingoftheauditand

significantauditfindings,includinganysignificant

deficienciesininternalcontrol,thatweidentify

duringouraudit.

WearealsorequiredtoprovidetheSupervisory

Boardwithastatementthatwehavecomplied

withrelevantethicalrequirementsregarding

independenceandtocommunicatetoit

allrelationshipsandothermattersthat

mayreasonablybethoughttobearonour

independenceand,whereapplicable,related

safeguards.

Report on the annual report and other information

PursuanttothelegalrequirementsinPart9of

Book2oftheNetherlandsCivilCoderegardingour

responsibilitytoreportontheannualreportand

theotherinformation:

• wehavenodeficienciestoreportasaresult

ofourexaminationofwhethertheannualreport,

totheextentwecanassess,hasbeenpreparedin

accordancewithPart9ofBook2ofthisCodeand

whethertheotherinformationasrequiredbyPart9

ofBook2hasbeenannexed.

• wereportthattheannualreport,totheextent

wecanassess,isconsistentwiththefinancial

statements.

11February2014

KPMGAccountantsN.V.

E.J.L.vanLeeuwen

73

Paragraph1:

Theportionofprofit-thepositivebalanceinthe

incomestatement-tobeallocatedtothereserves

shallbedeterminedeachyearbytheBoardof

ManagementandtheSupervisoryBoard.

Paragraph2:

Adividendshallbepaidonthepreferenceshares

fromtheprofitremainingaftertheallocationtothe

reservesasreferredtointhepreviousparagraph,

equivalenttoapercentageequaltothesumof

theweightedaveragesofthedepositinterest

rateoftheEuropeanCentralBank-weighted

bythenumberofdaysforwhichthedividendis

paid-plusthreepercent(3%).Thedividendon

preferencesharesshallbecalculatedonthe

paid-upportionofthenominalamount.If,inany

year,theprofitisinsufficienttopaythedividendon

thepreferencesharespursuanttothefirstsentence

ofthisclause,theshortfallshallasfaraspossible

bepaidoutofthefreelydistributableportionof

equity.

Paragraph3:

Anyremainingprofitshallbedistributedasa

dividendonordinaryshares.

Paragraph5:

Ifalossisincurredinanyyear,nodividendshall

bedistributedforthatyear.Dividendsmaynotbe

distributedinsubsequentyearsuntilthelosshas

beenextinguishedbyprofits.TheGeneralMeeting

mayhoweverresolve,uponajointproposalofthe

SupervisoryBoardandtheBoardofManagement,

toextinguishsuchalossbychargingittothe

distributablepartofequity.

Appropriation of profit

€x1,000

Profitattributabletoshareholders 9,792

Otherreserves 2,430

Dividendpayable

ontheordinaryshares 7,362

Branches

Naamlozevennootschap'Nederlandsche

ApparatenfabriekNedap',Vilvoorde,Belgium

(tradingname:NedapBelgië).

74

Miscellaneous

2013 2012 2011 2010 2009

Operations€x1,000

Revenue 173,696 171,874 152,345 133,558 115,191

Salariesandsocialsecuritycharges 51,238 47,223 43,729 40,186 38,443

Operatingprofit 11,751 16,382 13,885 10,621 1,981-as%ofrevenue 6.8 9.5 9.1 8.0 1.7

Netfinancingexpenses 589 653 934 800 1,084

Profitaftertaxes 9,807 13,505 10,989 8,765 1,114-as%ofequity1) 21.2 27.5 21.7 18.5 2.4-as%ofrevenue 5.6 7.9 7.2 6.6 1.0

Depreciation/amortisation 10,016 9,204 8,063 7,857 7,563

Cashflow2) 19,823 22,709 19,052 16,622 8,677

Addedvalueperemployee3) 160 166 152 143 121

Profit appropriation€x1,000

Profitdistributabletoshareholders 7,362 10,106 8,232 6,559 937Retainedprofit 2,430 3,374 2,747 2,159 120Profitattributabletonon-controllinginterests 15 25 10 47 57

Per share van € 0.10 4)

in€

Cashflow 2.96 3.39 2.85 2.48 1.30Earningsattributabletoshareholders 1.46 2.01 1.64 1.30 0.16Dividend 1.10 1.51 1.23 0.98 0.14

Highestprice 33.66 29.64 25.70 24.59 19.24Lowestprice 27.65 19.77 18.17 16.69 14.50Priceatyear-end 30.00 29.30 20.01 24.00 17.30Price/earningsratioyear-end 21 15 12 18 –

Number of employees

Atyear-end 744 709 684 652 601Averageduringtheyear 742 702 673 632 652

Five-year summary

75

2013 2012 2011 2010 2009

Financing€x1,000

Sharecapital 669 669 669 669 669Reserves 43,108 44,980* 47,138* 44,450* 45,429

Equityexcludingundistributedprofit 43,777 45,649 47,807 45,119 46,098

Undistributedprofitattributabletoshareholders 9,792 13,480 10,979 8,718 1,057Non-controllinginterests 130 129 120 129 149Undistributedprofitattributabletonon-controllinginterests 15 25 10 47 57

Equity 53,714 59,283 58,916 54,013 47,361

Non-currentliabilities 25,654 21,406* 22,986* 22,694* 22,437

Currentliabilities 46,814 45,289 45,340 36,964 33,677

Total 126,182 125,978 127,242 113,671 103,475

Equity1)as%oftotalassets 36.6 38.9 39.7 41.6 44.7

Utilisation of capital€x1,000

Non-currentassets 62,614 60,194* 63,406* 57,647* 57,725*

Inventories 25,811 26,810 28,142 21,635 18,718Tradeandotherreceivables 34,271 36,041 32,360 30,022 23,671Cashandcashequivalents 3,486 2,933 3,334 4,367 3,361

Currentassets 63,568 65,784 63,836 56,024 45,750

Total 126,182 125,978 127,242 113,671 103,475

Additionstonon-currentassets 12,282 11,237 12,434 9,038 8,087

Inventoriesas%ofrevenue 14.9 15.6 18.5 16.2 16.2

Averagecredittermsfortradereceivablesinweeks 8 7 8 7 8

1) equity is exclusive of dividend payable and non-controlling interests

2) cash flow represents profit after taxes plus depreciation and amortisation

3) added value per employee is total revenue and movements in inventories less the cost of

materials divided by the average number of employees

4) 6,692,920 shares are in issue.

* Restated in connection with a change in the pension accounting principles (IAS 19R)

76

Miscellaneous

(At11February2014)

N.V. Nederlandsche R.M.Wegman(47)

Apparatenfabriek “Nedap’’ G.J.M.Ezendam(61)

Parallelweg2

7141DCGroenlo

TheNetherlands

Market groups

EnergySystems W.D.Klunder(35)

Healthcare G.J.W.Droppers(44)

IdentificationSystems M.C.Mijwaart(40)

LibrarySolutions W.D.Klunder(35)

LightControls J.Somsen(49)

LivestockManagement A.B.M.Verstege(51)

Retail R.Schuurman(44)

SecurityManagement R.M.Wegman(47),interim

CIMPL P.G.M.Oostendorp(50)

Inventi A.G.M.Scharenborg(58)

M.G.M.Hoitink-teWoerd(42)

Nedap Belgium T.Elferink(30)

Maria-Theresialaan2.0.1

1800Vilvoorde

Belgium

Nedap Beveiligingstechniek B.V. E.Groeskamp(52)

Groenekanseweg24A

3737AGGroenekan

TheNetherlands

Inventi B.V. R.M.Wegman(47)

Industrieweg20

7161BXNeede

TheNetherlands

Nsecure B.V. J.vanDriel(53)

Lübeck1

2993LKBarendrecht

TheNetherlands

Nedap France S.A.S. C.Paijens(54)

8-10Chemind’Andrésy A.Sot(58)

95610EragnysurOise

France

Companies and management

77

Nedap Deutschland GmbH I.A.C.vanBalveren(47)

Otto-Hahn-Strasse3

40670Meerbusch

Germany

Nedap Great Britain Ltd. E.Groeskamp(52)

1310WatersideArlington

BusinessPark

RG74SAThealeReading

Berkshire

GreatBritain

Nedap Iberia S.A. A.CarmonaBadillo(54)

AvenidadelosLlanos18

28430AlpedreteMadrid

Spain

Nedap China Ltd. H.D.Kranenberg(54)

Room2507,LongemontYesTower

No.369KaixuanRoad

200051Shanghai

China

Nedap Asia Ltd. H.D.Kranenberg(54)

AustinPlaza

15F,Units3&4No83,AustinRoad

Kowloon

HongKong

Nedap FZE J.B.F.vanderWillik(30)

DSOHeadQuarters,D-205

DubaiSiliconOasis

Dubai

UnitedArabEmirates

Nedap Inc. G.J.M.Ezendam(61)

14AIndustrialWay

NH03811Atkinson

USA

78

Corporate Governance

Nedap

Nedaphasanopen,innovativeandcreative

cultureorientedtowardsdevelopmentand

entrepreneurship.

Nedapisamanufacturerofintelligenttechnological

solutionsrelatingtosociallyrelevantthemes,

includingsufficientfood,cleandrinkingwater,

sustainableenergy,securityandhealthcare.

Itconcentratesonmarketsegmentswhereits

technologicalknow-how,marketknowledgeand

knowledgeofthecustomer’sbusinessprocesscan

createaddedvalueforthecustomer.Thesemarket

segmentsareapproachedthroughthecompany’s

ownsaleschannelsaswellasthroughthirdparties.

Thecompanyisorganisedintomarketgroups.

Eachgroupdevelopsanddeliverssolutionsand

possessesknowledgeinthefieldsoftechnology,

marketsandcustomerbusinessprocesses.Staff

arechallengedtodisplayentrepreneurship,take

responsibilityanddeveloptheirtalents.

Thetechnologiesusedforthevarioussolutions

arecloselyrelatedsothatthemarketgroupsuse

andshareeachother’stechnologicalknow-how,

products,systemsandmarketexperience.

Particularattentionisdevotedtocreatingdistinctive

valueintheproductsandsystemstobesold,aswell

astheassociatedservices.Theprofessionalisation

andinternationalisationofsalesarealsohigh

priorities.

ThemainsalesmarketisstillEurope,butsales

outsideEurope,includingtheUnitedStatesand

Asia,aredeveloping.

Tocontinueoperatinginamannerthatmakes

Nedapstrong,itpursuesanoperatingprofitofat

least10%ofrevenueandareturnonequityof

15%-20%asfinancialnorms.Thedividendpolicy,

whichresultsfromthefinancialpolicy,istopayout

theentireprofittoshareholderslessanyadditions

toreservesthatarenecessarytomaintainsolvency

attherequiredlevel.Theinnovativenatureof

Nedapandoftenproject-orientednatureofits

orders,meansasolvencyratioofabout45%,based

onorganicgrowth,notincludingundistributed

profitsinequity,isdesirable.

Long-term policy

Nedap’slong-termpolicyisaimedatcreating

sustainableaddedvalueforcustomers,staff

andshareholders.Itwantstoachievethis

throughorganicgrowthinrevenueandprofit

withdiversificationandinnovation,basedon

thecompany’sexpertise,playingacentralrole.

Diversificationintodifferentmarketsegmentsnot

onlyopensupnewgrowthopportunities,butalso

makesthecompanylessdependentoneconomic

trendswithinasinglemarket.Innovationisthebasis

fordeliveringaddedvaluetothecustomer:the

customer’sperceptionofwhatthesolutionisworth

incomparisonwithwhatcompetitorsoffer.Nedap

consequentlypresentsitselfinadistinctmanner

withinthevariousmarkets.

Thedistinctivestrengthofthesolutionsoffered

byNedapenablesthecompanytooccupyitsown

placeinagivenmarketandensuresthatitneed

notcompeteexclusivelyonthebasisofprice.

Theaddedvalueperemployeeindicatesthe

extenttowhichcustomersacceptthedistinctive

strengthofNedap’ssolutionsandthusreflectsthe

inventivenessandeffectivenessoftheorganisation.

Growthinaddedvalue(revenueminusmaterials)

andaddedvalueperemployeearethereforekey

priorities.

Responsibilities

Aspecialattitudemustbeembeddedthroughout

theentireorganisationinordertosustain

thecompany’suniquecharacterandpolicy.

Diversificationandinnovationaredelicateprocesses

whereprematureactioncanbejustasharmfulas

79

lateintervention.Forthe staffthismeansbeing

receptivetonewresponsibilitiesandworking

methodsandfeelingcomfortableinaconstant

processofchange.FortheBoard of Management

thismeanspursuingentrepreneurship,seeingnew

developmentsinthemarketandtechnologyand

makingsurethatinnovationisrealised.

FortheSupervisory Boardthismeansstimulating

theBoardofManagementinthisinnovationprocess

andcarryingoutadequatesupervisionwhilegiving

theBoardofManagementsufficientscopefor

responsibleentrepreneurship.Thechosenpolicy

requiresexcellentrelationsamongtheSupervisory

Board,theBoardofManagementandstaffinorder

toensurethatnewproductideasandmarketing

strategiescanbediscussedatanearlystageand

thatsuccessesandsetbacksarepromptlyand

franklyevaluated,withoutleadingtoablurringof

responsibilities.Inthisrespect,Nedaphasputin

placeaworkingenvironmentinwhichthevarious

elementsof‘governance’aremutuallyreinforcing.

Risk and Risk Management

Risksareanintegralpartofentrepreneurship.The

trickistolimittheserisksasfaraspossiblewithout

impedingthecompany’sentrepreneurialdrive.

The‘ManagementSystem’atNedap,asdescribed

elsewhereinthisreport,formstheproceduralbasis

foridentifyingrisksasearlyaspossibleandtaking

measureswherenecessary.TheControllingGroenlo

Departmentplaysaleadingroleinthisrespect.The

risksatNedapcanbebroadlydividedintorisksthat

areinherentinentrepreneurshipandrisksthatarise

frombreachesofcompanyorsocialstandardsand

regulations,suchasfraud.

Entrepreneurial risks

Revenue and expenses

Nedap’sentrepreneurialandproject-basednature

meansthatitsrevenuevariesannually.Dueto

thehighaddedvalue(inpercentageterms)ofthe

company’srevenue(revenueminusmaterials),

fluctuationsinrevenuewillgeneratemorethan

proportionatepercentagevariancesintheresult.

Newproductsandsystemsandtheproject-based

natureoftherevenue,combinedwithrelatively

shortprojectleadanddeliverytimes,makeit

difficulttoestimatefuturerevenue.

Variousinternalandexternalfactorscanalsohave

bothanegativeandpositiveimpactonrevenue.

Importantfactorsinthisrespectaredelaysduring

technicaland/ormarketdevelopment,start-up

problemswithnewproducts,intensifiedprice

competition,exchangerates(mainlytheUS

dollar),governmentdecisionsandmacroeconomic

developments.However,Nedaphasabroad

productportfolio.Ithasdevelopedproductsfor

highlydiversemarkets,includingretail,healthcare,

energy,livestockfarming,libraries,accesscontrol,

watertreatmentandlighting.Thediversification

policymakesNedaplesssensitivetoeconomic

developmentsinonemarket.

ThemarketsinwhichNedapisactiveareset

toundergoradicalchangeinthecomingyears

undertheimpactofincreasingtransparencyand

convergence.Themarketswillbelargerinscale,

moreinternationalincharacterandmorefiercely

competitive.Newonlineapplicationsinparticular

areleadingtoimprovedtransparency,whichmakes

iteasierforcustomerstocomparecompeting

propositionsaroundtheworld.Atthesametime,

theintroductionofnewtechnologiesmeansthat

existingproductscanabruptlybecomelessrelevant.

Newproductdevelopmentscanalsobeadopted

atlightningspeedbymarketsallovertheworld.

Initialimperfectionsinproductscanthereforelead

tolargerlossesfor,andcorrespondingclaimsfrom,

endusers.Nedaptakesgreatcaretoguaranteethe

qualityandsafetyofitsproducts,usingstandards

thatarepartlybasedonlawsandregulationsaswell

astestandcontrolsystems.

80

Corporate Governance

Butitisnotonlytechnicalrisksthatareincreasing.

Themuchlargerscaleofprojects,manyofwhich

areimplementedatlocationsaroundtheworld,is

alsogivingrisetomuchgreaterproject,certification

andlegalrisks.Managingtheseriskswillbecome

increasinglyimportantinthefutureandwill

consistentlybetakenonboardasanintegralpartof

thedevelopmentofnewpropositions.

Delaysduringthetechnicaland/ormarket

developmentofnewproductscanalsoleadto

substantiallyhighercosts.Asexternalincreasesin

rawmaterialandcommoditycostscannotalways

berechargedtocustomers,marginscancome

underpressure.Rapideconomicobsolescenceof

components,theabortionofproductlaunchesand

thesooner-than-expectedendingofproductlife

cyclescannecessitatesubstantialwrite-downson

inventories.Nedap’sRoadtoExcellenceprogramme

waspartlysetuptomitigatetheserisks.

Risksarisingfromcustomerinsolvencyarereduced

whereverpossiblewithcreditinsurance.Controlling

inGroenlocontinuouslymonitorsthecurrency

marketsandassessestowhatextentcurrencyrisks

canandmustbehedgedinspecificsituations.

Besidesmakingmanymarketsmorefiercely

competitive,theaforementionedchangesarealso

spurringaradicalrealignmentofmarketpositions.

Thegapbetweenwinnersandloserswillalso

wideninthisuncompromisingstrugglefornew

marketpositions.Theloserswhofailtokeepup

withdevelopmentscanseetheirmarketsvanish

overnight,whilethewinnerswillbeconfrontedwith

surgingdemandthatwillneedtobeeffectively

managed.

Inthecomingyears,therefore,Nedapmustcontinue

investinginthequalityofitspropositionsandinthe

scalabilityofitsorganisationinordertorespond

adequatelytothegrowingdemandforitsproducts

andservices.Nedap’ssolidfinancialpolicyalso

offersthecompanyscopeformakingthemost

sensiblestrategicdecisionsforitslong-termfuture.

Staff

Nedap’scompetitivestrengthderiveslargelyfrom

thetalent,dedicatedeffortsandenterprisingspirit

ofourstaff.OneofthelargestriskfactorsforNedap

thereforeremainstheabilitytoattractandretain

therightpeople.Accordingly,alotofattentionis

devotedtotherecruitmentofnewtalent,thefurther

developmentofthetalentthatisalreadyavailable

withintheorganisationandthebetterutilisationof

talent.

Thevalueofdefinedbenefitpensionentitlements

iscalculatedaccordingtoIFRSreportingrules.The

calculationsarebasedoncapitalmarketinterest

ratesandcanthereforeshowstrongannual

fluctuations.Theresultinggainsorlossesmustbe

takendirectlytoequity.Thisincreasesthevolatility

ofsolvency.Nedap’sactualpensionobligation,

however,remainslimitedtothepaymentofthe

annualcontributionsandsinglepremiums.

Financial performance

Tomaintaintheentrepreneurialdrivethatmakes

Nedapstrong,thecompany’sfinancialobjectives

areanoperatingprofitofatleast10%ofrevenue

andareturnonequityof15%to20%.Inview

ofNedap’sinnovativecharacterandthelargely

project-basednatureofitswork,asolvencyratioof

about45%(disregardingIAS19),basedonorganic

growth,isconsidereddesirable.Dividendpayableis

notincludedinequity.Theoperatingprofitfor2013

amountedto6.8%,thereturnonequitywas21.2%

andthesolvencyratiostoodat41.0%.Nedap

expectstoachievethesetobjectivesinthemedium

term.

81

Therisksattachingtotheuseoffinancial

instrumentsaredescribedinthesectiononfinancial

riskmanagementinthefinancialstatements.The

financingagreementwiththebankcontainsno

covenants.Nospecificreportsaresubmittedtothe

bank.

Theaddedvalueofrevenueislargelycreatedin

theNetherlands.Theincometaxexpensetherefore

largelyconsistsofDutchcorporateincometax.

Corporate culture

Nedap’spolicyistargetedatorganicgrowth,which

issubjecttofewerrisksthanacquisition-driven

growth.

Theinformal,enterprisingcorporatecultureisone

ofthekeymainstaysofthesuccessoftheNedap

organisation,butitalsoheightenstherisksinherent

indoingbusiness.Thedailydirectcontactsofthe

BoardofManagementandtheControllingwith

managersandemployeesinGroenlolimitthese

risks.Itisimperativethatemployeesareawareof

therisksandalsoarticulateanddiscusstheserisks

amongstoneanother.Afterall,awarenessofrisks

isthefirststeptowardsmanagingthem.Acareful

considerationofallrisksmustautomaticallyform

partofinformationflowsanddecision-making.

MembersoftheBoardofManagementand

SupervisoryBoardaswellasothermanagers

shouldsetanexample,asthiswillencourage

otherstofollowthesamehighstandards.They

mustcreateaculturewherefulljusticeisdoneto

riskmanagement.Theactionsandbehaviourof

Nedapanditsemployeesmustbecharacterisedby

integrityatalltimes.Thisintegrityisnotbasedon

allmannerofformalrules,butonwhateverynormal

personknowstoberightorwrong.

Closecontactisalsomaintainedwiththegroup

companiesathomeandabroad.Nearlyallgroup

companiesarecontrolledfromthemarketgroups

inGroenlo.Themanagementconsistsof(former)

employeesofNedapN.V.ControllinginGroenloalso

monitorstherisksrelatingtothegroupcompanies.

ThesegroupcompaniesmakeuseofthecentralICT

infrastructure.

TheDutchgroupcompanyNsecureB.V.in

Barendrechtandthe49.7%equityinterestinNedap

FranceS.A.Soperatevirtuallyindependently.Nedap

IberiaS.A.,whichundertakesactivitiesinSpainand

Portugal,operatesunderSpanishmanagementbut

workscloselytogetherwiththemarketgroupsin

Groenlo.

Risks arising from breaches of company or social

standards and regulations, such as fraud

Apartfromsocialcontrol,managersplayan

importantroleinpreventingfraudandotherforms

ofinappropriatebehaviouratNedap.Theymust

settherightexampleand,through‘handson’

management,promoteawarenessofwhatisand

whatisnottolerated.Inaddition,theControlling

GroenloDepartmentcontinuouslyassessesand

monitorstheadministrativeorganisationsand

internalmeasuresofcontrol,devotingextensive

attentiontothepreventionoffraud.Duringthe

annualaudit,theexternalauditorsdiscussthe

internalcontrolmeasuresaimedatpreventing

anddetectingfraudwithvariousofficersinthe

organisationandwiththeSupervisoryBoard.

Nedapensuresthatitsintellectualpropertyis

protectedwhereverpossible,suchaswithpatents.

Thisprovidesnoguarantee,however,thatthird

parties(areableto)infringeitsrights.Anysuch

infringementscanleadtosubstantiallosses.In

addition,Nedaptakesmeasurestoensurethatit

doesnotinfringetherightsofthirdpartiesitself.

82

Corporate Governance

Social aspects of doing business

Nedap’s culture

Corporatesocialresponsibility,orsustainable

business,isanaturalpartofNedapandrootedin

itscorporateculture.Itisalsopartofourcorporate

objective:todevelopandsupplyinnovativeand

sustainablesecurityandelectroniccontrolsolutions

aswellasautomation,managementandinformation

systemsfororganisations.Sustainablebusinessis

thereforeanchoredinallourbusinessprocesses.

Everybusinessdecisioninvolvesweighingupthe

interestsofthevariousstakeholders.Formany

years,thesearchforabalancebetweenfinancial

results,socialinterestsandtheenvironmenthas

beenembeddedinourwayofworkingasamatter

ofcourse.Sustainablebusinessisanongoing

process,notanendinitself.

Ourlong-termpolicyfocusesoncreating

sustainableaddedvalueforcustomers,employees,

shareholdersandsociety.Weareconvincedthat

sustainablebusinessleadstosustainablegrowth

andcreatesvalue.

Developing and supplying sustainable products,

systems and services

AtNedap,quality,safetyandsustainabilityare

notjustemptywords.EveryNedapemployee

isawarethatNedapproductsmustmeetthese

characteristics.Wethereforedevelophigh-quality

products,systemsandservicesforourcustomers

thatimprovetheirfutures(andthoseoftheir

customers),anddeliverthematafairprice.

Productionisconcentratedasfaraspossibleat

oursubsidiary,InventiB.V.,inNeede,wherethe

continualaimistoachievethemostefficient

possibleproductionprocessforhigh-quality

sustainableproducts.Whilemanyothercompanies

haveoutsourcedmanufacturingtolow-wage

countries,wekeepasmuchofthisworkaspossible

intheNetherlands,partlywithaviewtoretaining

employment.

Weworkcloselywithashelteredemployment

servicesowecanofferpeoplewithworklimitations

ameaningfulworkingenvironment.

Sustainabilityisnotjustaboutmanufacturing

sustainableproducts,butinvolvesthesearchfor

new,inventiveproductionmethodsandthedesign

oftherelatedprocesses.Socialresponsibilityin

purchasingisalsoimportant.Wethereforealso

considertheenvironmentalandsocialaspects

ofproductsandcomponentswepurchase.

Environmentalaspectshavetodowiththeimpact

oftheitemortheproductionprocessonthe

environment;socialaspectsincluderespectfor

humanrightsandemploymentrights.

Weobeythelawinthecountrieswhereweoperate,

supportuniversalhumanrightsandapplyhigh

health,safetyandenvironmentalstandards.

Asaninternationalindustrialbusiness,weare

responsibleforprotectingandmonitoringthe

surroundingswhereweoperate.Weaimtominimise

anyadverseenvironmentaleffectsofouractivities

and,ofcourse,‘preventionisbetterthancure’.This

aimappliestothewholeproductionprocessand

theentirelifecycleofaproduct-fromextractionof

rawmaterials,throughmanufacturinganduseofthe

producttofinaldisposal/reuse.

Wefocusonminimisingtheuseofpotentially

dangerouschemicalsinourproducts.Thismeans

that,whereappropriate,wewanttofindwaysto

reduceconsumptionorswitchtomaterialswitha

morefavourableeffectontheenvironment.

Asrawmaterialsaregrowingscarcer,weconsider

itimportanttotryandmakeefficientuseofthose

materialsaswellasintermediategoods.Asaresult,

ourmanufacturingprocessesresultinaslittlewaste

aspossible.Thisnotonlyreducestheadverseeffect

ontheenvironmentbutalsosavescosts.

83

Wearefocusingonfurtherreducingtheamountof

packagingmaterials,reusingpackaging,recycling

materialsandusingenvironmentally-friendly,

sustainablepackagingmaterialsandlightweight

packaging.Thenegativeenvironmentalimpactof

electricitygenerationpromptsustogivepriorityto

reducingconsumption,includingongoingeffortsto

makesubstantialreductionsintheenergyusedby

ourproducts.

BothNedapGroenloandInventiB.V.exclusively

usesustainableelectricity,whichisgenerated

withouttheuseofenvironmentallydamaging

fossilfuelswhileemittingalmostnopollutants.We

continuetosearchfornewtechniquestoreduce

energyconsumption,includinglow-energylighting,

presencesensorsandultrasonichumidification.

Healthy commercial results

Ahealthyfinancialsituationisapreconditionfor

thecompany’scontinuity.ToensurethatNedapcan

continuedoingbusinessinawaythatfostersour

strength,weuseanoperatingprofitofatleast10%

ofrevenueandareturnonequityof15%-20%as

financialstandards.Giventheinnovativenatureof

Nedapasawholeandtheoftenproject-oriented

natureofitsorders,weconsideritdesirableto

maintainasolvencyratioofabout45%,based

onorganicgrowth.Inprinciple,theremainderis

distributedtotheshareholders.

Decision-makingtakesintoaccounttheinterestsof

allstakeholdersandaresponsiblebalanceissought,

andusuallyfound,betweenthecommercialresults,

socialinterestsandtheenvironment.

Employees and social responsibility

Employeesandtheirexpertisearecriticalsuccess

factorsforNedap.Ourbusinessgrowsasour

peoplegrow,soweattachgreatimportancetotheir

professionalandpersonaldevelopment.AtNedap,

wedoallwecantodevelopexistingtalentandto

encouragenewskillsandprofessionalprogress.

Partlyasaresultofthis,weareabletoattractand

keeppeopleofthehighestqualitytohelpfurther

developouractivities.

Ouremployeesareentitledtoworkinsafeand

healthyconditionsinattractivesurroundings.

Giventhatnewideasandnewwaysofthinking

areessentialtoremainingcompetitive,wemust

fosteranenvironmentandmodeofthoughtthat

encouragethespiritofenterpriseandnewideas

inpeopleandteams.Thismeansstimulating‘Yes’

insteadof‘Yesbut...’,‘Whynot’insteadof‘Why’.It

isamentalitythatgetsgoodideastomarketfaster.

Moreover,wekeeppeoplewithbrightideaswithin

ourcompany.

Nedapdoesnothaveahierarchicalstructureand

helpsitspeopledevelopabroad,interestedviewof

theworld.

Weencouragethemtoaskquestions.Wecanoften

findadifferent,betterwayifwechallengeourselves

andourcustomerstolookatthingsfrommorethan

oneperspective.

Nedapandsocietyareinextricablylinked;one

influencestheother.Anumberofimportantaspects

ofthisarementionedbelow.

Human rights

NedaprespectstherightssetoutintheUniversal

DeclarationofHumanRights,whichstatesthat

everypartyinsociety,includingbusinesses,must

observeandsecurehumanrights.

PursuanttotheOECDguideline,Nedapwill

investigatecompanieswithwhichitmaintainsdirect

businessrelationstoestablishhowtheydealwith

humanrights.Avisittothesecompaniesispartof

Nedap’snormalbusinessprocedure.

Thehumanrightsinvestigationwillbecarried

outinamannerthatisappropriateinthelightof

Nedap’ssize,thenatureandcontextofitsactivities

andtheseriousnessoftherisksofunfavourable

84

Corporate Governance

humanrightseffects.Wheneveritbecomesclear

thatabusesoccurinthefieldofhumanrightsor

anyotheraspectmentionedbelow,Nedapwilltake

appropriatemeasuresand,ifnecessary,switchover

toanothersupplier.

Free enterprise

Wesupportfreeenterpriseandfaircompetition.

Weaimtomeettheneedsofourcustomersfaster,

betterandmoreclearlythanourcompetitors.We

competefiercelybutfairly.

Privacy

Weprotecttheconfidentialityofidentifiable

personalinformationregardingcustomers,

employees,businesscontactsandotherindividuals.

Communication

Unlessabsoluteconfidentialityisrequired,weaim

foropen,accurateandtimelycommunication.

Integrity and responsibility

Ethicalandresponsibleconductisimportanttoour

business.Ifwedotherightthing,peopleknowwe

areacompanytheycantrust.Trustisthebasisof

goodinteraction.Integrityandhonestyareessential

inbusinesstransactions:thereisnoroomforbribery

orunethicalpractices,norforconflictsofinterest.

Andyet,integrityandresponsibilitygofurtherthan

that.Theyareaboutdoingthingsintherightway,as

acompanyandasindividuals.

Treating everyone fairly

Wewillneverdiscriminateonthebasisofrace,

ethnicbackground,age,religion,gender,sexual

orientationordisability.Wewantourworkforceto

beareflectionofthesocietyinwhichweoperate.

Allouremployeescanexpectfairandequal

treatmentfromthecompany,irrespectiveoftheir

joborwheretheyarelocated.

Child labour, forced labour and slavery

Childlabourisdefinedasanytypeofworkthat

preventschildrenfromgettinganeducation,

damagestheirphysicaland/orpsychologicalhealth,

restrictstheirdevelopmentorrobsthemoftheir

childhoodorself-respect.Ataminimum,Nedap

complieswiththeregulationsofthecountriesin

whichitoperates.Undernocircumstanceswill

Nedapuseforcedlabour,employchildreninbreach

ofConventions138and182oftheInternational

LabourOrganizationoractinbreachoftheUN

ConventionontheRightsoftheChild.

Exploitation

Exploitationofvulnerableindividualsorgroupswill

notbetoleratedinanycircumstances.

Working conditions

Wagesandbenefitsmustfullymeetlocalstandards,

complywithlocallegislationandbeinlinewith

generalprinciplesofjusticeandfairtreatment.

Relationships

Wewanttodobusinesswithcompaniesthat

subscribetoourethicalvaluesandmeetoursocial

andenvironmentalstandards.

ThebrandingprojectswhatNedapstandsfor:

85

Nedaprealisesintelligent,technologicalsolutions

forsociallyrelevantthemes.Sufficientfoodfora

growingpopulation,cleandrinkingwateracrossthe

worldandsmartsustainableenergynetworksare

justafewexamplesoftheareasinwhichNedapis

active.Nedap’sproductsandservicesallhaveone

thingincommon:theyalwaysofferasolutiontoa

sociallyrelevantproblem.

Sustainableentrepreneurship-oneofthedriversof

innovation-isintegraltoNedap’sstrategywhichis

determinedby,andtheresponsibilityof,theBoard

ofManagement.Specificperformanceobjectiveslet

alonequantitativetargets-formpartofthis.After

all,sustainableentrepreneurshipisacontinuous

processandnotanendinitself.

86

Corporate Governance

Governance

TheSupervisoryBoardandBoardofManagement

ofNedapbelievetheycomplywiththe‘principles

ofgoodcorporategovernance’setoutinthe

DutchCorporateGovernanceCode.The‘best

practice’provisionsarelargelycompliedwith.The

informationrequiredbytheCodeisprovidedin

variousplacesintheAnnualReport.

Readingthe‘bestpractice’provisionsitsoon

becomesapparentthattheseareaimedatlarge

listedcompanies.ThisfocusoftheCodeis

understandablegiventhosecompanies’individual

socialrelevance.Smallercompanies,suchasNedap,

are,however,organisedcompletelydifferentlyfrom

largelistedcompanies.Themanagementismore

intouchwithdailypractice,andsolinesofcontrol

arelessformalandmoredirect.Thenatureand

smallersizeofsuchcompaniesalsomeansthat

thecontrolstructureisusuallylesscomplexand

thedivisionoftaskslessstringent.Moreover,the

supervisoryboardsofsmallercompaniestendto

bemoreinvolvedinthecompanyandconsequently

haveabetterunderstandingofwhatishappening

withinthecompany.This,too,obviouslyimproves

thequalityofsupervisioningeneral.Incaseswhere

thedetailednatureofthe‘bestpractice’provisions

isdesignedtoaddresstypicalgovernanceissues

atlargelistedcompanies,the‘applyorexplain’

ruledoesnotprovideenhancedinsightintothe

applicationofthedesiredprinciplesofsound

corporategovernanceandsupervisionatsmaller

companies.Nevertheless,departuresfromthe

provisionswillbedisclosedandexplainedas

required.

Management and supervision

Nedapfallswithinthe‘statutorytwo-tierboard

system’andsosupervisorydirectorsareappointed

bythegeneralmeetingofshareholdersona

nominationoftheSupervisoryBoard.Inthis

connection,theshareholdersandtheWorksCouncil

arealsogivenanopportunitytorecommend

personsforappointment.

Theprofileforthesizeandcompositionofthe

SupervisoryBoardisdescribedinthe‘Profileofthe

SupervisoryBoard’sectionintheannualreportand

alsoonthecompany’swebsite.Themembershipof

theSupervisoryBoardconformswiththeprofile.

Theprofessionalbackgroundofthemembershas

alsobeenpublished.Themembersareindependent

ofthecompanyandofeachother.Noneofthe

membersholdsmoresupervisorydirectorships

atDutchlistedcompaniesthanspecifiedinthe

Code.TheSupervisoryBoardcurrentlyhasfour

members.InviewofNedap’stransparencyandthe

limitedsizeoftheSupervisoryBoard,thereareno

audit,remunerationorselectionandappointment

committees.Consequently,thefullSupervisory

Boardisdesignatedtoperformthedutiesofthe

auditandothercommittees.Thechairmanof

theSupervisoryBoardoverseesthequalityand

frequencyoftheinformationflowonthecompany’s

financialperformance,marketposition,product

developmentandorganisationalprogress.The

SupervisoryBoardasawholeassessesthefinancial

andotherinformation.

Theremunerationarrangementsmadewiththe

BoardofManagementaresetoutbelow.The

chairmanandamemberoftheSupervisoryBoard

holdannualappraisalinterviewswiththemembers

oftheBoardofManagementonthebasisof

predefinedtargets.ThevariableincomeoftheBoard

ofManagementisdeterminedbytheperformance

ofitsmemberswithrespecttothosetargets.The

maximumvariableremunerationis90%ofthefixed

annualincome.

GiventhesmallsizeoftheSupervisoryBoard,the

experienceofitsmembersandtheneedforflexible

workingprocedures,theBoardhasnotdrawnupany

formalregulations.

87

TheBoardofManagementhastwomembers.The

SupervisoryBoardmembersbelievethatappointing

directorsforfour-yeartermswouldimpede

theproperperformanceoftheirrolewithinthe

company.Thedirectorsareentrustedwiththetask

ofmappingoutthecompany’slong-termstrategy

andtranslatingthatstrategyintoeffectivepolicy.

Four-yearmandatesarenotsufficienttoadequately

fulfilthisroleatacompanylikeNedap.Theannual

appraisalinterviewsalsoenabletheSupervisory

Boardmemberstomonitortheperformanceof

thedirectorsmoreeffectivelythaniftheywere

reappointedonceeveryfouryears.

ThemembersoftheBoardofManagementdonot

holdsupervisoryboardmembershipswithanyother

companies,nordotheyholdanyinterestsinother

companiesthatconflictwiththoseofNedap.Given

Nedap’ssizeandmarketposition,theSupervisory

BoardandtheBoardofManagementseenoneedto

drawup‘regulationsconcerningownershipofand

transactionsinsecuritiesbyboardmembers,other

thansecuritiesissuedbytheirowncompany’.It

hasbeenagreedthattheacquisitionofinterestsin

anothercompanythatmightgiverisetoapotential

conflictofinterestsshallbeavoidedand,incaseof

doubt,shallbediscussedinadvance.Thisapplies

tomembersofboththeSupervisoryBoardandthe

BoardofManagement.

Remuneration policy for the Board of Management

Theaimoftheremunerationpolicyistohavea

compensationpackagefortheBoardofManagement

thatcontributestoattractingandretainingqualified

andexpertdirectors,ensuringandadvancingthe

mediumandlong-terminterestsofthecompany.

ThecompensationpackagefortheBoardof

Managementcomprises:

I Fixed annual income

Fixedannualincomethatisrevisedeachyearat

leastbyapercentageequaltothatofthesalary

increaseprovidedforintheNedap’sCollective

LabourAgreement.

II Variable annual income

Thevariableannualincomedependsonthe

membersoftheBoardofManagementmeeting

targetssetinadvancebytheSupervisoryBoard.

Onethirdofthevariableincomeisdetermined

byfinancialtargets,onethirdbytargetsrelating

tothedevelopmentoftheinternalorganisation

andonethirdbytargetsfocusingontheway

inwhichtheorganisationoperatesinits

environment.60%ofthefixedannualincome

ispaidforperformanceattargetlevel,witha

maximumof90%ofthefixedannualincome.

Eachdirectormustcontributeatleast50%of

hisvariableannualincomeaftertaxtoStichting

MedewerkerparticipatieNedapinexchangefor

depositaryreceipts.Thismeansthatasignificant

partofthevariableincomeisdependentonthe

company’slong-termperformance.

TheSupervisoryBoardmayincreaseordecrease

thevariableincomeifinitsopinionthecalculations

leadtoanunreasonableoutcome.

88

Corporate Governance

Ifvariableremunerationisgrantedonthebasis

ofincorrectinformation,theSupervisoryBoardis

entitledtorecoveritfromthedirectorconcerned.

TheremunerationpackagefortheBoardof

Managementhasbeensettakingintoaccount

internalpayrelationshipsandmarketinformation.

Theremunerationpackageisreviewedregularlyto

ensurethatitisstillcompetitiveandinlinewiththe

weightandcomplexityoftheduties.

ThepensionschemefortheBoardofManagementis

basedonaveragepay,withgeneralsalaryincreases

alsobeingincludedoverpastyearsofservice.

Pensionrightsareaccruedatarateof2%peryear.

Thepensionablesalaryisbasedonthefixedannual

income.

Noarrangementshavebeenmadewiththe

membersoftheBoardofManagementregardinga

periodofnoticeorredundancyscheme.

Noloans,advancesorguaranteeshavebeen

grantedtothedirectors.

Management System

NedaphasanadequateandeffectiveManagement

Systemwhichisdesignedto:

– testactualprogressandperformanceagainstthe

objectives,

– enablemanagementtoretaincontrolover

responsibilitiesdelegatedtoothers,

– managecashandotherflowsrepresentinga

monetaryvaluewithintheorganisation,

– identifyandrestrictrisks,

– preventfraud.

Theinternalinformationandreportingflowsareas

follows:

I Article20oftheArticlesofAssociationofNedap

N.V.specifieswhichBoardofManagement

resolutionsaresubjecttotheapprovalofthe

SupervisoryBoard.

EachyeartheBoardofManagementprovides

theSupervisoryBoardwithanoutlookforthe

comingyearswhich,onthebasisofthethen

availableknowledge,setsoutthecompany

strategyandprovidesabreakdownoffiguresfor

thecomingyear,aswellasforecastingexpected

developmentsfortheforeseeablefuture.

TheBoardofManagementalsoreportsregularly

(tentimesperyear)totheSupervisoryBoard

ontheactualperformanceversusbudget.The

SupervisoryBoardmeetsatleastfivetimesper

year,andmoreoftenasnecessary,todiscuss

thesereports

II Themarketgroupmanagerssetouttheirviews

eachyearinthebudget.Thisincludes,onthe

basisoftheobjective,theplansrelatingto

themarket,R&Defforts,staffingandcapital

investments.

Themarketgroupmanagersalsoreportregularly

(tentimesperyear)totheBoardofManagement

ontheactualperformanceversusthebudget.

Inadditiontothisreportingsystem,aregular

exchangeofinformationtakesplacebetween

theBoardofManagementandmarketgroup.

ThisismadeeasierbythefactthattheBoardof

Managementandthemarketgroupmanagement

arebothbasedinGroenlo.

Inaddition,theBoardofManagementandthe

marketgroupmanagersalsoconsultpriortoany

definitedecision-makingon:

– significantmarket-relateddecisions,

– R&Dprojects,

– staffappointments,

– capitalinvestments.

89

Certainactionsbythemanagementof

subsidiariesarealsosubjecttotheapprovalof

theBoardofManagementofNedap.Inaddition,

abudget(includingincomestatement,balance

sheet,capitalexpenditure,staffing)mustbe

submittedforthecomingyear.Heretooregular

reportsaresubmitted(tentimesayear)tothe

BoardofManagementandthemarketgroup

managementontheactualperformanceversus

budget.

III Internally,ControllinginGroenloplaysaleading

roleintheanalysisthestrategyandthevarious

plansandmonitorstheimplementationversus

settargets.

Thisdepartmentensuresthattheadministrative

organisationanddataprocessingaresufficient

toensuretheuniformandcorrecthandlingof

allfinancialandbusinessmatters.Ithassetup

auniformreportingsystembasedonstandards

(includingexplanatorynotes)thatisdesignedto

supplytheinformationrequiredbytheBoardof

Management.

Thedepartmentalsoensuresthecorrect,

completeandtimelydeliveryofthesereports

(tentimesayear).

TheControllingdepartmentmonitorstherisks,

managesvalueflowswithintheorganisationand

ensuresthatcontractsandstatutoryregulations

arecompliedwith,reportingwherenecessary

totheBoardofManagement.Itassessesthe

variousadministrativeorganisations,also

devotingattentiontothepreventionofpossible

fraud.

Inaddition,theControllingdepartmentassesses

inwhatsituationsandtowhatextentcurrency

riskscanandmustbehedged.

Thepotentialriskarisingfrominsolvent

customersisreducedbymeansofcredit

insurance.

Externalreportingisonthebasisofthe

standardslaiddownbytheInternational

AccountingStandardsBoardandacceptedbythe

EuropeanUnion.

IV Theexternalauditorthenactsasobjective

assessorofthisprocessforthepartsrelevantto

theannualaudit.

TheBoardofManagementstatesthattheinternal

controlsystemasdescribedprovidesareasonable

degreeofassurancethatthefinancialreportingis

freeofmaterialerrorsoranincorrectpresentation

offacts.Thefinancialreportsgiveatrueandfair

viewofthecompany’sfinancialsituationandresults

ofitsactivitiesandtherequirednotes.Theinternal

controlsystemhasoperatedsatisfactorilyduringthe

yearunderreview.

Therewasintensivecontactduringtheyearwith

themanagementofsubsidiariesandmarketgroups

andControllingontransactionsundertakenbythe

companyandondetailedoralandwrittenreports

onrevenue,expensesandprogress.TheBoardof

Managementandmarketgroupsarebasedatthe

sameaddress;informationisexchangeddaily.

Therewerenosignificantchangestothe

ManagementSystemduringtheyearunderreview

andnosignificantchangesareplanned.Nearlythe

entireorganisationusesthesameERPsystem.This

wasdiscussedwiththeSupervisoryBoard.

Despitetheexistenceofriskmanagementsystems,

materialerrors,fraudorunlawfulactionscanstill

takeplace.Thesystemthereforedoesnotprovide

absoluteassurancethattargetswillbeachieved,but

hasbeendevelopedtoobtainreasonableassurance

astotheeffectivenessofcontrolsimplementedto

mitigatefinancialandoperationalrisksinrelationto

organisationalobjectives.

90

Corporate Governance

External communications

Nedappublishesanoverviewofthecompany’s

performanceandprogressatleastfivetimesayear.

InadditiontotheAnnualReport,thereare

first-halfandfull-yearfinancialreports,

supplementedwithtwointerimreportsinthespring

andautumnonrelevantmarketdevelopments,key

eventsandtransactionsandtheireffectsonNedap’s

financialposition,alongwithageneraldescription

ofthefinancialposition.Thesereportsandmuch

moreinformationcanbefoundonthewebsitewww.

nedap.com.

Best practice provisions

Giventhecompany’sinnovative,project-driven

andflexiblestyleofentrepreneurship,Nedaphas

optedtoapplycertainprovisionsoftheCorporate

GovernanceCodeinadifferentway.Allsuch

instancesofnon-standardapplicationareexplained

belowinthesameorderastheCode:

II.1.1 A management board member is appointed

for a maximum period of four years. A

member may be reappointed for a term of

not more than four years at a time.

Giventhelong-termnatureofNedap’s

policy,membersofthecompany’sBoardof

Managementareappointedforanindefinite

periodoftime.Adirector’slengthoftenure

dependsonhisperformancewhichis

reviewedannuallybytheSupervisoryBoard.

II.1.3 The Company shall, in any event, employ as

instruments of the internal risk management

and control system:

b) code of conduct should be published on

the company’s website;

Nedapanditsstaffactinanhonestand

honourablemanner.Thisintegrityisnot

basedonawholerangeofformalrules,but

onwhatanynormalpersonknowstobe

rightorwrong.Honestyandthecourageand

freedomtoadmitone’smistakesarecrucial

inthisconnection.Staffshouldalwaysput

theinterestsofthecustomerandNedap

firstintheiractions.Againstthisbackground

Nedap’smanagementplaysavitalrolein

keepingeveryoneawareoftheseprinciples.

Ultimately,agoodexamplewillbefollowed.

Awrittencodeofconductwouldnotbe

appropriateforthetypeoforganisationthat

Nedapisandwouldbecontrarytothewayin

whichwedealwithoneanother.

II.1.7 The management board shall ensure

that employees have the possibility

of reporting alleged irregularities of a

general, operational and financial nature

within the company to the chairman of

the management board or to an official

designated by him, without jeopardising

their legal position. Alleged irregularities

concerning the functioning of management

board members shall be reported to the

chairman of the supervisory board.

The arrangements for whistleblowers shall

be posted on the company’s website.

Therelationshipsandopenstructurewithin

theNedaporganisationaresuchthatalleged

irregularitiescanbeexposedwithoutfear

ofrepercussions,regardlessoftherank

orstatusoftheallegedperpetrator.No

separaterulesarenecessaryforthispurpose.

II.2.8 The remuneration in the event of dismissal

may not exceed one year’s salary (the ‘fixed’

remuneration component). If the maximum

of one year’s salary would be manifestly

unreasonable for a management board

member who is dismissed during his first

term of office, such board member shall be

eligible for severance pay not exceeding

twice the annual salary.

AswaspointedoutwithrespecttoII.1.1,

membersofNedap’sBoardofManagement

areappointedforanindefiniteperiod

91

andthereisthereforenosuchthingas

a‘firsttermofoffice’.Intheunfortunate

eventthatadirector’sperformanceproves

unsatisfactory,thentheseverancepaywill

bepartlydeterminedbythenumberofyears

ofserviceatNedap.

II.2.13 The overview referred to in best practice

provision 2.12 shall in any event contain the

following information:

f) a description of the performance

criteria on which the performance-related

component of the variable remuneration

is dependent in so far as disclosure would

not be undesirable because the information

is competition sensitive, and of the

discretionary component of the variable

remuneration that can be fixed by the

supervisory board as it sees fit;

TheremunerationpackagefortheBoardof

Managementcomprisesfixedandvariable

annualincome.Thevariableannualincome

dependsonthemembersoftheBoardof

Managementmeetingtargetssetinadvance

bytheSupervisoryBoard.

Onethirdofthevariableincomeis

determinedbyfinancialtargets,onethird

bytargetsrelatingtothedevelopmentof

theinternalorganisationandonethirdby

targetsfocusingonthewayinwhichthe

organisationoperatesinitsenvironment.As

faraspossible,theSupervisoryBoardwillset

quantifiableobjectivesforthesetargets.No

furtherdetailsofthetargetscanbegivenfor

competitivereasons.

g) a summary and account of the methods

that will be applied in order to determine

whether the performance criteria have been

fulfilled;

Asnofurtherdetailsofthetargetsarebeing

given,itisalsodifficulttogiveasummary

andaccountofthemethodsthatwillbe

appliedinordertodeterminewhetherthe

performancecriteriahavebeenfulfilled.

h) an ex-ante and ex-post account of

the relationship between the chosen

performance criteria and the strategic

objectives applied, and of the relationship

between remuneration and performance.

Astheselectedtargetscannotbesetoutin

greaterdetailthaninf),anaccountofthe

relationshipbetweenthesetargetsandthe

strategicobjectivescannotbegiventothe

extentthatthetargetswouldhavetobe

disclosedforthis.Asignificantproportionof

thevariableincomeisdependantonNedap’s

long-termstrategyandperformancesince

eachdirectormustcontributeatleast50%

oftheirvariableannualincomeaftertaxto

StichtingMedewerkerparticipatieNedap

inexchangefordepositaryreceipts.These

depositaryreceiptsarelockedupforaperiod

offouryears.Withrespecttotherelationship

betweenrewardandperformanceexante

andexpostitisonlypossibletosaythat

60%ofthefixedannualincomeispaidfor

performanceattargetlevel,withamaximum

of90%ofthefixedannualincome.

II.2.14 The main elements of the contract of a

management board member with the

company shall be made public after it has

been concluded, and in any event no later

than the date of the notice calling the

general meeting where the appointment

of the management board member will

be proposed. These elements shall in any

event include [...] performance criteria to be

applied.

AtNedap,membersoftheBoardof

Managementareappointedbythe

SupervisoryBoardafterannouncingthe

proposeddecisiontothegeneralmeeting.

Theperformancecriteriaarenotsetoutin

greaterdetailasexplainedinRemuneration

oftheBoardofManagement.

92

Corporate Governance

III.1.1 The division of duties within the supervisory

board and the procedure of the supervisory

board shall be laid down in terms of

reference. The supervisory board’s terms of

reference shall include a paragraph dealing

with its relations with the management

board, the general meeting and the central

works council or works council. The terms of

reference shall be posted on the company’s

website.

InviewofthenatureoftheCompanyandthe

company-specificworkingproceduresofthe

SupervisoryBoardassetoutintheReportof

theSupervisoryBoardtotheShareholders,

andgivenalsothesizeoftheBoardandthe

desiredflexibility,theSupervisoryBoard

considersitundesirabletolaydownformal

proceduresforitsdealingswiththeBoard

ofManagement,theGeneralMeetingof

ShareholdersandtheWorksCouncil.

III.3.3 After their appointment, all supervisory

board members shall follow an induction

programme, which, in any event, covers

general financial and legal affairs, financial

reporting by the company, any specific

aspects that are unique to the company

and its business activities, and the

responsibilities of a supervisory board

member.

The supervisory board shall conduct an

annual review to identify any aspects

with regard to which the supervisory

board members require further training

or education during their period of

appointment. The company shall play a

facilitating role in this respect.

ThesizeofNedapaswellasits

organisationalsetuparesuchthatnoformal

inductionprogrammeisnecessary.Newly

appointedmembersnaturallyreceivean

appropriateintroduction,includingavisitto

theheadofficeinGroenlo.

III.3.5 A person may be appointed to the

supervisory board for a maximum of three

four-year terms.

TheSupervisoryBoardconsidersthatthe

lengthoftenureofitsmembersshouldbe

determinedbytheirqualityandcontribution

incombinationwiththespecificknowledge

theybringtoNedap.

TheperformanceoftheSupervisoryBoard

anditsmembersareevaluatedannually.

TheArticlesofAssociationstipulatethata

member’stenureshallenduponreaching

theageof72.

III.4.1 The chairman of the supervisory board shall

see to it that:

a) the supervisory board members follow

their induction and education or training

programme;

AspointedoutwithrespecttoIII.3.3,

Nedaphasnoformalinductionprogramme.

Itgoeswithoutsayingthatthechairman

oftheSupervisoryBoardensuresthat

thecompetenciesofthemembersofthe

SupervisoryBoardmatchtheprofileofthe

Boardandthattheyareeffectivelyinducted

intotheCompany.

III.6.5 … The company shall draw up regulations

governing ownership of and transactions in

securities by management or supervisory

board members, other than securities issued

by their ‘own’ company.

Anagreementisinplacewherebyinterests

inothercompaniesinvolvingapotential

conflictofinterestsareavoidedand,in

caseofdoubt,discussedinadvancewith

theSupervisoryBoard.GivenNedap’ssize

andmarketposition,theSupervisoryBoard

seesnoneedtodrawupwrittenregulations

regardingmembersoftheBoardof

Managementholdinganddealinginshares

incompaniesotherthanNedap.

93

IV.1 Principle

............. The Company shall, in so far as

possible, give shareholders the opportunity

to vote by proxy and to communicate with

all other shareholders.

Nedapdoesnothaveaninternational

shareholderbase.Nedapconsidersthat

theinterestitsshareholdershaveinthe

Companyanditscultureisdemonstrated

bytheirpersonalattendanceattheGeneral

MeetingofShareholdersand,ifnecessary,

theirparticipationinthediscussion.Personal

attendanceisparticularlyimportantwhen

mattersofsubstancearebeingdiscussed.

Shareholdersmayvotebyproxy,where

necessary.

IV.1.4 The policy of the Company on additions to

reserves and on dividends (the level and

purpose of the addition to reserves, the

amount of the dividend and the type of

dividend) shall be dealt with and explained

as a separate agenda item at the general

meeting of shareholders.

Nedap’spolicyonadditionstoreserves

anddividendsisdirectlydeterminedbyits

strategyandlong-termpolicyandwillbe

discussedinthatcontext.Thelong-term

policyisaimedatcreatingsustainableadded

valueforcustomers,staffandshareholders.

Thepolicyofadditionstoreservesand

dividendswillbeadiscussionitemonthe

agenda.

IV.1.5 A resolution to pay a dividend shall be

dealt with as a separate agenda item at the

general meeting of shareholders.

AspointedoutwithrespecttoIV.1.4,the

dividendpaymentisdirectlydeterminedby

thestrategyandthelong-termpolicy.The

dividendpaymentwillbeexplicitlyincluded

ontheagendaasaseparateitem.

IV.3.9 …………. and resolutions for the appointment

of management board members [...] shall

be submitted separately to the general

meeting.

AsexplainedinII.2.14directorsare

appointedbytheSupervisoryBoardafter

announcingtheproposeddecisiontothe

generalmeeting.Consequently,formallyno

proposaltoappointdirectorsissubmittedto

thegeneralmeeting.

V.2.1 The external auditor may be questioned by

the general meeting in relation to his report

on the fairness of the financial statements.

The external auditor shall for this purpose

attend and be entitled to address this

meeting.

PursuanttoArticle42(3)oftheArticlesof

Association,Nedap’sauditorreportsonhis

audittotheSupervisoryBoardandtheBoard

ofManagement.Theresultofhisauditis

setoutinastatementcertifyingthatthe

financialstatementsgiveatrueandfairview

ofthefinancialpositionoftheCompanyin

conformitywiththeInternationalAccounting

StandardsBoardandacceptedbythe

EuropeanUnionandPart9,Book2ofthe

NetherlandsCivilCodeandthattheycomply

withthestatutoryprovisionsforfinancial

statementsstipulatedinPart9,Book2

oftheNetherlandsCivilCodeand,tothe

extentofhiscompetence,thattheBoardof

Managementreportisconsistentwiththe

financialstatementsasrequiredby2:391

sub4oftheNetherlandsCivilCode.This

independentauditor’sreportisincludedin

theOtherinformationsection.Theactivities

oftheauditoraredescribedinthe‘Auditor’s

responsibility’sectionoftheIndependent

Auditor’sReport.Thisisself-explanatory.

Independentauditor’sreportsatNedap

areunqualified,andsonoadditional

94

Corporate Governance

clarificationisnecessary.Shouldany

provisosbeincluded,thesewillbedisclosed

andexplainedintheAnnualReportin

conformitywiththeaccountabilityof

theSupervisoryBoardandtheBoardof

Managementvis-à-vistheshareholders.In

theviewoftheSupervisoryBoardandthe

BoardofManagement,thepresenceofthe

externalauditorattheGeneralMeetingof

Shareholdersisthereforeunnecessary.

V.3.1 The external auditor and the audit

committee shall be involved in drawing up

the work schedule of the internal auditor.

They shall also take cognizance of the

findings of the internal auditor.

Inviewofitssize,Nedapdoesnothavean

internalauditor(oranauditcommittee).It

goeswithoutsayingthattheexternalauditor

performstheannualauditwithdueattention

totheexistenceandimplementationof

theinternalauditandcontrolsystem.The

externalauditorattendsthemeetingofthe

SupervisoryBoardatwhichthefinancial

statementsarediscussed.

Chairmanof Boardof

theSupervisoryBoard: Management:

G.F.Kolff R.M.Wegman

G.J.M.Ezendam

95

Information on the company structure and control

pursuant to the Decree on section 10 of the

Takeover Directive

Capital structure

Nedap’sauthorisedsharecapitalconsistsof

15,600,000ordinarysharesof€0.10nominalvalue

eachandpreferencesharesof€0.10nominalvalue

each.Thepreferencesharesareregistered.The

ordinarysharesarebearershares.

Theissuedsharecapitalis€669,292consistingof

6,692,920ordinaryshares.

TheordinarysharesarelistedonNYSEEuronext

Amsterdamandarefreelytradable.Theyare

embodiedina‘globalnote’thatisheldincustody

byNecigefonbehalfoftheshareholders.

Stichting Medewerkerparticipatie Nedap

FollowingthefoundationofStichting

MedewerkerparticipatieNedap(Stichting)in2009,

employeeshavebeenabletoacquiredepositary

receiptsforsharesinNedapsince1January2010.

Thisabilitytobecomeadepositaryreceiptholder

inthecompanyisinlinewiththeenterprisethat

isdemandedoftheemployees.Italsooffers

employeesthepossibilitytobeheardthroughthe

Stichtingatthegeneralmeetingofshareholders

whenfundamentaldecisionsarebeingtakenon

Nedap’sdirectionandfuture.Eachyear,employees

maydecidetouseallorpartoftheirprofitshare

forthis.Thedepositaryreceiptsarelockedupfor

aperiodoffouryears.Inadditiontoapurchase

discountof10%onthedepositaryreceiptprice,

subjecttocertainconditions,onebonusdepositary

receiptisdistributedforeachfourdepositary

receiptsafterfouryears.Thefulldividendoneach

depositaryreceiptisattributedtothedepositary

receiptholder.At31December2013,theStichting

held69,328sharesinNedapforwhichithadissued

depositaryreceiptstoemployees.

Since1973,Nedaphasbeenabletoissue

preferencesharesasananti-takeovermeasure.This

protectioncanbedeployedifathirdpartyintends

togaincontrolofthecompanybyacquiringa

decisiveinterestorotherwiseattemptstoadversely

affectNedap,withoutensuringtheinterestsof

Nedap,itsbusinessandallstakeholdersina

satisfactoryway.

Stichting Preferente Aandelen Nedap

Tothisend,theStichtingPreferenteAandelen

Nedap(‘Stichting’)wassetupin1973.TheStichting

looksaftertheinterestsofNedap,itsbusiness

andallstakeholders,defendingasfaraspossible

againstinfluenceswhichcouldthreatencontinuity,

independenceandidentityinconflictwiththose

interests.

NedaphasgrantedtheStichtingtherighttoacquire

preferenceshares(calloption)underwhich,on

request,itcanacquirepreferencesharesuptoa

maximumequaltothenumberofordinarysharesin

issuelessoneatthetimetheoptionisexercised.

ThecalloptionobligesNedaptoissuethenumber

ofpreferencesharesrequestedbytheStichting

wheneveritmakesthatrequest.Consequently,no

furtherdecisionbyanycorporatebodyofNedapis

required;thedecisionwastakenwhentheoption

wasgrantedtotheStichting.

Ifpreferencesharesareissued,theStichtinghasto

payatleast25%oftheirnominalvalueincash.

ThemembersoftheExecutiveBoardoftheStichting

are:

J.C.M.Hovers,chairman

J.Lock,secretary

A.P.M.vanderVeer-Vergeer

R.P.Voogd

J.P.Bahlmann

96

Corporate Governance

The membership of the Executive Board of the

Stichting is intended to ensure the interests of all

stakeholders in Nedap in decision-making.

The officers of the Stichting and Nedap share the

opinion that Stichting Preferente Aandelen Nedap

and Nedap itself are independent of one another

within the meaning of section 5.71(1c) of the

Financial Supervision Act.

Preference shares take precedence over ordinary

shares for dividend distributions and distributions

of capital paid in on the shares in the event of

Nedap’s liquidation.

Voting rights

Everyshareisentitledtoonevote.Thereareno

restrictionsonvotingrights.Shareholderswho

wishtoattendthegeneralmeetingofshareholders

canannouncethisbythedatesetbytheBoardof

ManagementofNedap,whichcannotbeearlier

thantheseventhdaybeforethegeneralmeeting,

throughtheirbankorbrokerwherethesharesare

administered,byrequestingareceiptwhichactsas

atickettothemeeting.

Disclosure pursuant to Act on the Disclosure of

Major Holdings in Listed Companies

TheNetherlandsAuthorityfortheFinancial

Markets(AFM)publishedtheinformationon

holdingsreportedinconnectionwithcontroland

shareholdingsgivenbelow.

Therearenomaterialtransactionsbetweenlegalor

naturalpersonswhoholdatleast10%oftheshares

February2014 February2013

in% in%

ASRNederlandN.V. 8.20 8.20

CrossOptionsBeheerB.V. 15.11 15.11

DarlinN.V. 5.19 5.19

DecicoB.V. 5.01 5.01

DeltaLloydDeelnemingenFondsN.V. 13.45 13.45

DeltaLloydN.V. 12.60 12.60

KempenOranjeParticipatiesN.V. 7.11 7.11

TKHGroupNV 5.06 5.06

(StichtingPreferente

AandelenNedap(potential)) (100.00) (100.00)

Total 71.73 71.73

inNedapasmeantbyprovisionIII.6.4oftheDutch

CorporateGovernanceCode.

Appointment and dismissal of directors

Nedapisatwo-tiercompanyandsomembersof

theBoardofManagementareappointedbythe

SupervisoryBoard.

TheSupervisoryBoardnotifiesthegeneralmeeting

ofshareholdersoftheproposedappointment.The

SupervisoryBoardwillnotdismissadirectoruntil

thegeneralmeetingofshareholdershasbeenable

todecideontheproposeddismissal.

97

Appointment and dismissal of supervisory directors

Supervisorydirectorsareappointedbythegeneral

meetingofshareholdersonaproposalofthe

SupervisoryBoard,generallyforaperiodoffour

years.Thisproposalismadeonthebasisofaprofile

drawnupbytheSupervisoryBoard.Thegeneral

meetingofshareholdersandtheworkscouncilmay

recommendpeopleassupervisorydirectors.The

workscouncilhasanenhancedrightofnomination

foronememberoftheSupervisoryBoard.

Thegeneralmeetingofshareholdersmayrejecta

nominationbyanabsolutemajorityofthevotescast

representingatleastonethirdoftheissuedcapital.

TheEnterpriseSectionoftheAmsterdamCourtof

Appealmayonapplicationdismissasupervisory

directorforneglectofduty,otherweightyreasons

orsignificantchangesincircumstancessuch

thatcontinuingassupervisorydirectorcannot

reasonablybedemandedofthecompany.The

applicationmaybesubmittedbythecompany,

representedbytheSupervisoryBoard,ora

representativedesignatedbythegeneralmeetingof

shareholdersortheworkscouncil.

Thegeneralmeetingofshareholdersmaypass

aresolutionofnoconfidenceintheentire

SupervisoryBoardbyanabsolutemajorityofthe

votescastrepresentingatleastonethirdofthe

issuedcapital.Sucharesolutionbringsabout

theimmediatedismissalofthemembersofthe

SupervisoryBoard.

Authority of the Board of Management to issue

shares and acquire treasury shares

TheBoardofManagementisonlyauthorisedto

issuesharesifthegeneralmeetingofshareholders

appointsitasthebodyauthorisedtoissueshares.

Thisappointmenthasnotbeenmade.Aresolution

bythegeneralmeetingofshareholdersissue

shares,toappointanotherbodyasthebody

authorisedtoissuesharesorthewithdrawalofa

resolutiontoappointcanonlybepassedonajoint

proposaloftheSupervisoryBoardandtheBoard

ofManagement.Aresolutiontoissuepreference

sharesbyabodyotherthanthegeneralmeeting

ofshareholdersisalwayssubjecttoco-operation

oftheSupervisoryBoardineachspecificcase.

Preferentialrightscanbelimitedorexcludedbythe

bodyappointedtodecideonshareissues.

Nedapmayonlyacquireitsownfullypaidshares

fornoconsideration.Acquisitionotherthanforno

considerationisonlypossibleif:

– theequitylesstheacquisitionpriceisnosmaller

thanthepaidupandcalledupportionofthe

capitalplusthereservesrequiredtobekeptby

lawandthearticlesofassociation;

– thenominalamountofthetreasurysharesisno

morethan50%oftheissuedsharecapital;and

– theGeneralMeetingofShareholdershas

soauthorisedtheBoardofManagement.

Thisauthorityisnotrequiredtoacquirethe

company’sownsharesordepositaryreceiptsfor

themfortransferthemtoemployeesunderan

applicableplan.

Amendment of the articles of association

Nedap’sarticlesofassociationmaybeamendedby

aresolutionofthegeneralmeetingofshareholders

afterpriorapprovalofsuchresolutionbythe

SupervisoryBoardandBoardofManagement.

Restrictive agreements with shareholders

TothebestofNedap’sknowledge,itsshareholders

arenotapartytoanagreementthatcouldleadto

restrictionsontradinginNedapsharesoronvoting

rights.

Significant matters on a take-over bid

Thestandbyroll-overcreditagreement(€14

million)thatNedaphasenteredintowiththebank

includesaprovisionunderwhichthebankcan

demandearlyrepaymentoftheloanifthereisa

significantchangeincontroloverNedap’sactivities.

98

Corporate Governance

Itisnotunusualforotherlong-termalliancesto

whichNedapisapartyalsotoincludethepossibility

ofterminatingtheagreementwithimmediateeffect

intheeventofa‘changeofcontrol’.Theoverall

scopeoftheseclausesisnotregardedassignificant

asmeantbytheDecreeonSection10ofthe

TakeoverDirective.

Nedaphasnotenteredintoagreementswith

directorsorotheremployeesunderwhich

personalrightstocompensationcanbederived

onterminationoftheiremploymentafterthe

settlementofatake-overbidforNedapshares.

99

Provisions of the Articles of Association

concerning Special Rights

TheSupervisoryBoardandtheBoardof

Managementhavebeengrantedcertainspecial

rights,including:

Art.10:

Proposaltoissuenewshares.

Art.11:

Proposaltorestrictorexcludepreferentialrights.

Art.18:

Determinationofthenumberofmembersofthe

BoardofManagement.

TheSupervisoryBoardhasbeengrantedcertain

specialrights,including:

Art.23:

Proposalforthesettingtheremunerationpolicyfor

theBoardofManagement.

Settingtheremunerationandothertermsof

employmentofeachmemberoftheBoardof

Management.

ProposaltoremuneratetheBoardofManagement

intheformofsharesorrightstoacquireshares

Art.24:

SettingthenumberofmembersoftheSupervisory

Board.

TheBoardmustcompriseatleastthreemembers.

Art.25:

NominationforappointmenttotheSupervisory

Board.

100

Corporate Governance

Provisions of the Articles of Association

concerning Approval of Resolutions by the Board

of Management in accordance with Article 20

Paragraph1:

Withoutprejudicetoprovisionselsewhereinthese

ArticlesofAssociation,thefollowingresolutionsby

theBoardofManagementshallbesubjecttothe

approvaloftheSupervisoryBoard:

a. resolutiontoissueoracquiresharesinordebt

instrumentspayablebytheCompanyordebt

instrumentspayablebyalimitedpartnershipor

generalpartnershipinwhichtheCompanyisa

fullyliablepartner;

b. co-operatingwiththeissueofregistered

depositaryreceiptsforshares;

c. applyingforthelistingofthedebtinstruments

ordepositaryreceiptsreferredtoinaandb

onaregulatedmarketormultilateraltrading

facility,asreferredtoinSection1:1oftheAct

onFinancialSupervisionorsystemcomparable

witharegulatedmarketormultilateraltrading

facilityinastatenotbeingaMemberStateor

anapplicationforthewithdrawalofsuchlisting;

d. aresolutiontoenterintoorcancelany

long-termco-operativerelationshipbetween

theCompany,oranydependentCompany,

andanotherlegalentityorCompany,orinits

capacityasafullyliablepartnerinalimited

partnershiporgeneralpartnership,ifsuch

co-operationorcancellationhasasubstantial

impactontheCompany;

e. aresolutiontohavetheCompanyorany

dependentCompanytakeanyinterestinthe

sharecapitalofanotherCompanyworthnoless

thanonefourthoftheCompany’sissuedcapital

plusreservesasreportedintheCompany’s

balancesheetandnotes,oraresolutionto

radicallyincreaseorreduceanysuchinterest;

f. aresolutiontomakeinvestmentsinvolving

anamountofnolessthanonefourthofthe

Company’sissuedcapitalplusreservesas

reportedintheCompany’sbalancesheetand

notes;

g. aproposaltoamendtheArticlesofAssociation;

h. aproposaltodissolvetheCompany;

i. aresolutiontofileapetitioninbankruptcyorto

applyforasuspensionofpayments;

j. aresolutiontoterminatetheemployment

contractsofasubstantialnumberofemployees

oftheCompanyoradependentCompany

simultaneouslyorwithinashortperiodoftime;

k. aresolutiontoimplementradicalchangesin

theworkingconditionsofasubstantialnumber

ofemployeesoftheCompanyoradependent

Company;

l. aproposaltoeffectuateareductioninthe

issuedcapital;

m. aproposaltolegallymergetheCompany

withinthemeaningofPart7ofBook2ofthe

NetherlandsCivilCode.

Paragraph2:

ThefollowingresolutionsbytheBoardof

Managementshallalsobesubjecttotheapproval

oftheSupervisoryBoard:

a. thedeterminationoftheoperationaland

financialobjectivesoftheCompany,the

strategypursuedtoachievetheseobjectives

andtheapplicablestrategicparameters;

b. aresolutiontoappointofficialsasreferredtoin

Article19,paragraph2,and/ortoconfirmation

oftheiradhocstatus;

c. aresolutiontoengageinlegalproceedings,

withtheexceptionoftakingprotective

measuresormeasureswhichbrooknodelay;

d. aresolutiontoacquire,disposeof,orencumber

registeredproperty;

e. aresolutiontoenterintoacontractof

suretyship;

f. aresolutiontoconcludealoanorcredit

agreement;shouldacreditagreementalready

havebeenconcluded,theconsentofthe

SupervisoryBoardshallnotbenecessaryforit

tobeutilised;

101

g. aresolutiontoenterintoamerger,ortoacquire,

windup,ordisposeofaparticipation;

h. aresolutiontofoundorclosedownabranch.

Paragraph3:

TheSupervisoryBoardmaydeterminethata

resolutionasreferredtoinparagraph2abovewill

notrequireitsapprovaliftheinterestinvolved

doesnotexceedavaluetobedeterminedbythe

SupervisoryBoard.

Paragraph4:

TheBoardofManagementrequirestheapproval

oftheGeneralMeetingfordecisionsinvolvinga

significantchangeintheidentityornatureofthe

Companyoritsbusinessundertakings,including:

a. transferofthebusinessundertakingsor

virtuallytheentirebusinessundertakingstoa

thirdparty;

b. thecreationordiscontinuationofa

long-standingco-operativerelationship

betweentheCompanyorasubsidiarywith

anotherlegalentityorCompanyorasafully

liablepartnerinagenerallimitedpartnership

ifsaidco-operationordiscontinuationthereof

hasfar-reachingimplicationsfortheCompany;

c. theacquisitionordisposalbytheCompany

orasubsidiaryofanassociateinthecapital

ofaCompanytothevalueofatleastone

thirdoftheassetsaccordingtothebalance

sheetwithnotesor,iftheCompanyprepares

aconsolidatedbalancesheet,accordingto

theconsolidatedbalancesheetwithnotes,as

statedinthemostrecentlyadoptedfinancial

statementsoftheCompany.

Paragraph5:

TheabsenceoftheapprovaloftheSupervisory

BoardortheGeneralMeetingforadecision

asintendedinthisarticledoesnotimpairthe

representativeauthorityoftheBoardofManagement

oritsmembers,exceptinrelationtoadecisionas

referredtoinparagraph1(l)andparagraph2(a).

Graphicdesign

Studio Kluif

Production

Drukkerij Tesink

Translation

Bosch & Bosch Translations and Copy

T +31(0)544471111

F +31(0)544463475

www.nedap.com

Nedap N.V.

P.O.Box6

NL-7140AAGroenlo

Credits

This is a translation of the original Dutch report.

In the event of any conflict of interpretation,

the Dutch will prevail.

104

Corporate Governance

105

financial year 2014See you in theeighty

fifth

Annual report of theN.V. NederlandscheApparatenfabriek‘Nedap’on it’s

financial year 2012

Annual report of theN.V. NederlandscheApparatenfabriek‘Nedap’on it’s

financial year 2012