HERE Technologies Directors’ Report 2020
HERE International B.V.
for location Message from CEO Edzard Overbeek 3
Company Overview 4
Market Trends 6
Strategy 7
Research and Development 9
2020 Business Overview 11
2020 Financial Overview 18
Corporate Responsibility 22
Inclusion, Diversity and Belonging 26
Privacy and Data Governance 28
Risk Management and Control 30
Business Ethics 37
Corporate Governance 39 HERE Technologies CEO Edzard Overbeek on the 2020 financial year
“2020 will stand out as one of the more unusual years of our lives. The coronavirus pandemic posed challenges to businesses around the world, testing their resilience and strength to resolve. Against a backdrop of extraordinary For 2021, we target a return to strong sales growth. circumstances, HERE Technologies demonstrated However, to fully exploit the opportunities in its own resilience and strength to resolve. front of us over the long-term, we are presently While our sales were adversely impacted by the exploring a wide range of options for raising broader economic uncertainty facing some of additional capital to accelerate the company’s our customers and production stoppages in the growth and value creation. The assessment automotive industry, we succeeded in mitigating includes the possibility of accessing funding the impact thus reducing costs toward profitability through public and private equity markets. during 2020. This was thanks to a series of e!ective countermeasures, which ranged from We are excited about the company’s future. reducing spend on external services to various The broader market trends are in our favor as treasury actions to driving increased e"ciencies location is becoming critically important in many in our operations. new use cases within many industries. We have great products, services and applications, as well We were far from only being ‘on the defensive’. as an industry-leading enterprise-grade platform 2020 was a year in which we further strengthened that is being readied to scale to solve customer our purpose as a business, driving home the problems across many industries. And with our importance of location data and technology. strategic partnerships around the world and a Despite the challenging market conditions, we dedicated force of developers on our platform, won more new business in 2020 than in 2019. we have all the capabilities lined up to accelerate Our Bookings, or the estimated lifetime revenue growth in the years to come. of deals closed within the calendar year, were close to EUR 1.7 billion, a slight increase year on Our most important capability is the many year. This was a fantastic achievement and an talented employees we have working at HERE indication of the healthy demand we have been Technologies, and the deeply rooted passion seeing for our new products and services powered they have in the work they do every day and by the HERE platform. A strong order book and the idea that location data and technologies accelerating growth in our platform business will will have an altogether profound and positive hold us in good stead in the years to come. impact on the world.
The company is well placed to seize new This powerful ecosystem of customers, partners, opportunities resulting from the growth in developers and employees is ready to write the demand for location data and technology. next chapter for our industry.”
3 Company Overview
HERE is a leading location data and “HERE continues to emerge as the world’s leading and most technology platform. We enable global location comprehensive location platform” businesses, consumers, cities and platform governments to turn location data into Location Platforms E!ectiveness Evaluation value quickly, e"ciently and at scale. Scorecard | April 2020
The roots of the company extend back to 1985 when we led the industry by creating a digital map “HERE leads overall and remains a leader in map-making, automotive, database of the Bay Area of California. Today, we openness, and vision“ are headquartered in Amsterdam, the Netherlands, and have a broad global network of operating Location Platform Benchmark Scores | January 2020 branches to serve our customers, partners and developers. HERE employs 8,167 people across 56 countries, and the company is backed by a group “HERE is once again in of leading global brands that share our vision for pole position, widening the enabling an autonomous world for everyone: Audi, gap with Google” BMW, Bosch, Continental, Daimler, Intel, Mitsubishi Omdia Location Platform Index: Mapping Corporation, NTT, and Pioneer. and Navigation | June 2020
4 Presently, we serve more than three million technology, media, telecommunications, developers either directly through our own retail, public sector, finance and insurance, platform or indirectly through third-party manufacturing, accommodation and food ecosystems where we make our location data services, utilities, healthcare, and consumer products, services and applications available. electronics. We support them with everything Our largest industry is the automotive industry, from map customization to location applications, where our map data is used in more than 150 visualization and business analysis, the tracking million vehicles globally. This is followed by of assets and capital goods, and supporting many new industries where location data and vehicles to drive themselves. Location-based technologies are becoming essential in a wide solutions are constantly evolving to meet variety of use cases and we are starting to the needs of innovative customers, partners see more business on our platform in these and industries. industries. We o!er the industry’s largest set of Through a combination of these di!erent location capabilities in one place, including map activities, we enable users to answer and location data, services and applications for location-related questions, solve location-related up to 200 countries. problems, and ultimately realize better Today, HERE serves a growing list of industries real-world outcomes for themselves, their including automotive, transport and logistics, customers and the environment.
countries200 mapped serving48 use cases across vehicles+150m with multiple industries HERE maps on board
countries56 with o"ces, employees8,167 direct356k developers covering all continents + 3m indirect developers
5 Market Trends
Location data and technology intersect industries. Many of these use cases will require with several powerful and growing market a di!erent model for engaging with location trends. These include: data and services. In the automotive industry, our customers are prioritizing the development environmental sustainability, with location of connected, electric and autonomous vehicles data helping to optimize the environmental that will need to interoperate with complex impact of supply chains and changing urban mobility and infrastructure digitization & automation, where real-time solutions. Transportation and logistics customers location data is captured with new will need modern fleet management, supply technologies such as IoT chain visibility and last mile service capabilities that benefit from being part of a broader data pervasive connectivity, where businesses begin ecosystem. We see location playing a similarly to have round-the-clock awareness of their unifying role in use cases emerging across other assets and operations across all locations industries too, including telecommunications, robotics, where precision location data is public sector, retail, and media. needed for drone and robot navigation In fact, in a world that faces the threat of virus safety and convenience, where location pandemics, urban congestion and climate change, contextual awareness promotes safer we believe that location data and technology are driving and movement part of our critical infrastructure – just like energy data privacy and security, where enterprises grids, transport networks and the internet itself. seek ‘trust platforms’ for their proprietary data Modeling and truly understanding a dynamic world requires organizations easy access to Technological advancements will also enhance location data and tooling. This includes being and increase the need for location data and able to e!ectively build solutions in collaboration technology in the coming years, notably the with other organizations in their own and other development of autonomous systems, 5G industries, as well as distribute location assets networks, edge computing, innovative sensing such as data, services and algorithms to a technologies, and advanced analytics and larger ecosystem. visualization.
These industry shi#ts are expected to drive All of this is now possible through our platform, the demand of innovative, next generation where we o!er data and tooling through HERE location-enabled use cases that span across Workspace, HERE Marketplace, and HERE Studio.
6 Strategy
Enabling tomorrow’s key location use buy, sell and share data, services and algorithms. cases o!ers significant value creation Our goal is to foster a rich location data and potential. We estimate the annual spend technology ecosystem that removes the friction for the total addressable market for enterprises face in acquiring and monetizing location data products, services and location assets, assisting them in everything applications will be approximately EUR from data preparation and privacy compliance 25 billion by 2025. We are positioning the to licensing and matchmaking. We believe that company to benefit from the accelerating our approach, designed to drive collaboration business opportunities within this large between organizations across industries, and growing addressable market. will enable us and our users to capitalize on these market trends. To capture the potential of these market shi#ts, HERE has been investing in building a highly Through a combination of these di!erent activities, scalable, industrial-grade and multi-layered we enable users to answer location-related location data platform. The HERE platform is questions, solve location-related problems, and architected to capture and process massive ultimately realize better real-world outcomes for amounts of wide-ranging real-time location themselves, their customers and the environment. data that are critical for a variety of demanding use cases, many of which require increasingly high definition, three-dimensional and real-time location data. Our goal is to foster a rich location data and technology ecosystem Developers are encouraged to bring their own that removes the friction data and use algorithms and pipelines to convert enterprises face in acquiring and it into standard data formats that our platform monetizing location assets. recognizes and can work with. HERE also provides a data marketplace that enables users to easily
7 Accordingly, we have shaped our platform around openness, privacy and flexibility. This is reflected To further meet users' needs, in the freedom a!orded to users in various we have designed the HERE aspects of sourcing, processing and using location platform for the highest levels data. With our platform, organizations can develop of data security and privacy. new or use pre-built workflows to move through the key stages of the development process. These workflows are geared to help users:
Create automated and real-time private maps licensing access to data and services, users can also try and buy with pay-as-you-go and self-serve Access and customize location services for consumption models. To scale our platform, we routing, search and more are expanding the possibilities for users to fulfill Visualize complex location datasets and their business needs in a self-serve capacity. generate insights and solutions However, we also o!er consulting, professional and technical services o!erings to ensure Buy and sell location assets customers have di!erent options to create value When performing these tasks, users can bring their from their location data. own and third-party data and tooling as well as To further meet users’ needs, we have designed enjoy wide scope in customizing HERE’s standard the HERE platform for the highest levels of data location services to their needs, making them security and privacy. At HERE, the proper use of more relevant and contextual to their business. information, data and the handling of personal We are now also enabling users to leverage our information is a central element in building global industrial mapmaking tools and systems trusted relationships with our customers and to create their own private maps based on their partners. Our data governance model is designed own and/or third-party location data sets. Being for transparency, traceability, accountability, and able to develop private layers and maps and control of data. To be able to leverage the power connect them to the HERE industry reference map of data, HERE is investing in data visualization is becoming a critical requirement for businesses, and analytics capabilities to ensure that privacy enabling them to get greater visibility into their and data governance are ingrained in all relevant operations and build di!erentiation into their processes and operations. The platform also services and applications. o!ers a suite of location privacy services to Openness and flexibility are also reflected in help organizations manage their privacy risks, the wide variety of business and consumption including blockchain-based consent management models available to our users. Aside from existing technology and tools for anonymizing data.
8 Research and Development
Our Development function houses our services to our customers. Development work on development team and our cross functional the HERE platform, including HERE Marketplace, research center. It is the central function where our secure, neutral and scalable marketplace so#tware development work is done, both for enabling simplified exchange of location-based specific products within Development, as well data, also accounted for a significant part of as for products, services and applications our R&D expenses. outside the function. A significant part of our investment in R&D was on developing our HERE has a focused R&D strategy of which a automated mapmaking capabilities, including large part of our outlay goes into the continual our ‘self-healing’ HERE HD Live Map service for development of our location technologies automated cars and related cloud technologies and platform, including our capabilities for through which we can ensure an e!ective map creation, visualization and analytics, and over-the-air delivery of the map and location privacy management.
9 Our research function follows a lean startup HERE’s aim for innovation leadership requires agile innovation structure organized around a an environment to experiment with new small set of ‘big plays’ linked to our technology technologies and ways of working, a greater strategy. Through partnerships in R&D we have tolerance for risk and a longer-term horizon access to some of the leaders in AI/ML with our with protection from immediate customer North Star being to ‘understand location’, with five deliverables. Our Development function provides initial focus areas: such an environment through fundamental research and incubation and early-stage Understand and represent location context product development. We engage in several Understand movement and mobility research projects covering topics that have the potential to deliver step-changes to either HERE Understand next-generation location services capabilities, new breakthroughs in the HERE and applications portfolio or the optimization in cost structure Understand cognition-inspired of existing HERE investments across the stack navigation and control from content creation through products, services and applications. We also lead several Understand special computing, including early-stage product development projects that Augmented and Virtual Reality mature technologies from internal and external Our research in these areas has resulted in research and open-source so#tware from their applied research by implementing this use of AI initial concepts and algorithms to more complete and machine learning into commercial solutions and scalable so#tware components that can be like map automation, tra"c analyses and adopted and further developed by our business optimization of enterprise resource planning. and core groups. For many years, we have been investing in AI and machine learning with the aim of opening up new approaches that fundamentally change how location information is gathered, represented and We are investing in AI and machine utilized. We have applied many outcomes in AI/ML learning with the aim of opening up to structurally automate key processes and have new approaches that fundamentally now one of the largest AI/ML engineering teams change how location information is around location within HERE. To further accelerate gathered, represented and utilized. our leading position we have established in Vienna the Institute of Advanced Research in Artificial Intelligence (IARAI) in cooperation with the two world-leading Austrian AI practitioners.
10 2020 Business Overview As part of its ongoing transformation as a Science and Engineering (CSSE) at John Hopkins platform company, HERE embarked on 2020 as University and DXY, an online platform run by our Year of Focus with a goal of accelerating key members of the Chinese medical community, initiatives with precision. The focus has always people were able to see the spread of the virus in been to create an environment and culture real-time. Location data and innovation from HERE where interacting with customers, partners, also helped governments in Italy, Spain and Brazil and developers is integral to our longevity respond to the pandemic. and success. Despite the challenging and Beyond helping map and monitor the virus extraordinary circumstances brought on by the spread, HERE also sought to help organizations COVID-19 pandemic, we made progress against impacted by the disruption. HERE developed HERE key execution targets. Early on, we launched a WeGo Deliver, a free application o!ered to small comprehensive business continuity plan with the retailers and restaurants to help them transition goal of sustaining business-critical operations from physical to online retail during lockdowns. and ensuring the health and safety of our For example, The Salvation Army in San Francisco employees and their families. Our teams were was able to get 5,000 meals out to seniors and able to switch to remote working, using an array disabled adults with contactless deliveries for of digital tools to stay connected and productive. the Thanksgiving holiday by using HERE WeGo While undoubtedly disruptive, the unique Deliver. In the United Kingdom, HERE WeGo situation brought out the best qualities in our Deliver was used to get free school meals out employees and provided ample examples of our to pupils who needed them. A huge community values in action. e!ort in Northumberland, in North East England, This was evident especially as we played our part sent 4,000 free school meals out to students who in the global response to the public health crisis. needed them during a week-long school break. For example, HERE mapping helped organizations The organization was able to reach so many pupils and communities globally to manage and contain thanks in part to its use of HERE WeGo Deliver. the virus. Using data from the Center for Systems
11 New products
In 2020, we continued to invest in driving products, services and application that leverage innovation. HERE maintained its pace of execution our own platform capabilities to meet the needs by launching several new commercial data of our customers. These included:
HERE Navigation On Demand, a HERE Geodata Models, which helps the So#tware-as-a-Service (SaaS) based o!ering telecommunications industry to e"ciently for the automotive industry that enables plan and deploy 5G networks while reducing vehicle manufacturers to remotely configure network planning operational expenses and monitor the deployed navigation solution, HERE Public Transit API, which improves the making it possible to update and upgrade the experience of using public transit in more than experience anytime (including a#ter the sale 2,500 cities worldwide by finding the most of the vehicle) and add an ecosystem with intelligent way to get to a destination additional value onto this solution HERE Intermodal Routing API, which informs HERE Last Mile, a solution that enables a commuter how long it takes to drive to the companies to plan optimal routes in train station or suggests an e"cient transfer to near-real time based on travel time, fuel public transport costs & road tolls The addition of neutral server capabilities to High Definition Global Navigation Satellite the HERE Marketplace to enable safe, secure System (HD GNSS) positioning, a cloud-based and privacy-compliant third-party access to car solution that enables mass market devices to sensor data for service development achieve sub-meter accuracy across the globe
12 Customers and partnerships
HERE has more than 1,000 customers in di!erent In 2020, HERE announced several new and industries globally. Alongside supporting expanded collaborations that help extend the several major automotive OEM brands, the benefits of HERE location data and technology company counts numerous blue-chip enterprises to new customers and industries. These and fast growing technology companies included the following: among its customers.
A strategic partnership with Verizon to explore to deploy augmented reality (AR) location cutting-edge applications of Verizon’s 5G Ultra applications and services Wideband network and multi-access edge A strategic technology and commercial compute (MEC) platform, 5G Edge, coupled partnership with APCOA PARKING to develop with HERE location, data technology and and commercialize digital parking services and autonomous vehicle expertise HD indoor maps of parking facilities in Europe A strategic partnership with Mitsubishi A partnership with INRIX to o!er a complete Corporation (MC) that involves deploying HERE parking solution that includes on-street technology in several projects to address and o!-street parking availability, dynamic customer needs in transportation and logistics rates and indoor mapping to HERE and other industries, with a focus on the automotive customers Asia-Pacific region A partnership with what3words that enables A collaboration with Bose Corporation to jointly OEMs using HERE Technologies to include enable their respective developer communities what3words as an in-car navigation feature
HERE also welcomed several more organizations to the HERE Marketplace, including:
ZENRIN, which is providing map and Roadcloud, the connected vehicle data location data for Japan platform, which is making available road friction estimates, road condition data AccuWeather, which is providing and weather data weather-related information useful for a variety of use cases Daimler, which is providing access to car sensor data via the HERE Marketplace’s built Global Weather Corporation (GWC), which in neutral server is providing its RoadWX® road weather data service, a segment-level forecast of INRIX, which is providing tra"c analytics data road surface conditions (dry, near dry, wet, snow/ice and slush)
13 Organizational Changes
In 2020 we also took a significant organizational – either through horizontalizing and integrating step to increase focus by aligning further with our resources directly into existing functions, or customer-centric operating model. We simplified consolidating and centralizing capabilities into our set-up in a more nimble and flexible existing corporate functions. We made several organization. We identified where capabilities can changes to our operating model, including: be best leveraged more e"ciently and e!ectively
Bringing all of the company’s product Creating a Data function. As part of this change, management activities for Applications, we brought our data and associated functions Content and Platform together into one into the same group in a focused organization. elevated and unified Product function Previously our map data and content as well as units responsible for data sourcing, quality, Bringing the engineering teams together in data privacy and protection, data management one Development function. All engineers, and governance and other areas has resided in product owners and architects residing in various functions throughout the company Automotive, Transport & Logistics (T&L), and Technology Media Telecoms (TMT) tribes in Applications moved over
14 These organizational changes had an impact on to maximize and mobilize talent to ensure people teams and roles throughout our organization. have the right skills today and in the future. Where roles were eliminated, we acted as a responsible employer. Restructuring programs To emphasize HERE’s commitment to developing were set up to o!er transition support to find and nurturing talent we enhanced our current opportunities within and outside the company. performance management process, to drive Our total headcount declined during the year employee-manager partnership to be more from 8,846 employees to 8,167 employees. transparent, objective and forward looking. This decline was intended and part of the The result is the new Talent Development organizational changes to right-source thus Process (TDP). The goal of TDP is to create a recognizing even greater e"ciencies while creating high-performance, agile and resilient organization further speed and agility into our day-to-day that achieves HERE’s strategic and operational operating processes. goals and objectives. TDP allows People Leaders and employees to proactively partner to drive HERE is committed to attracting and retaining faster innovation, achieve high performance and talent. This is crucial to maintaining our fast pace identify essential skills and capabilities to be of innovation and essential to our long-term developed for employees’ and HERE’s continued success as a company. We have an active growth. This year provided an opportunity to recruitment program in place that identifies and further this commitment due to the COVID-19 approaches the world’s top talent and onboard pandemic. As employees transitioned to a remote when and where needed. The talent base within working environment engagement became even HERE Technologies is deep and across all more important. An Employee Assistance Program functions which creates a culture of innovation was put in place to provide global resources which and an alignment with our ambitions as a included confidential counseling and referral company. With a highly dynamic and competitive services to manage daily and work life challenges. business environment, where talent needs, Employees have the ability to set up home o"ces skill demands and the external environment to better manage their work. As a result of this are constantly evolving, personal development commitment, the employee engagement score has continues to be a core theme. At HERE, our aim is increased year over year.
15 New investors
During 2020, we welcomed two new investors to investors, HERE will have a springboard to further the company. Mitsubishi Corporation (MC) and accelerate growth in the Asia Pacific region and Nippon Telegraph and Telephone Corporation Japan. Prior to it becoming a shareholder of HERE, (NTT) of Japan acquired a joint 30% ownership HERE had already been working with MC in a stake in the company. HERE’s broadened strategic partnership in several areas, including shareholder structure supports the company’s middle and last mile logistics, tackling urban ambitions to accelerate growth in new industries tra"c congestion, and location-based advertising. and markets. In particular, with new Japanese
Performance O!ce
In every part of the world, the entire year was As a business we realized e"ciency gains and dominated by COVID-19 and it a!ected how we introduced other measures to stabilize our overall lived, interacted with each other, and worked. position and improve our liquidity position in Businesses and industries had to adapt to a new parallel. We seized the opportunity to take a situation overnight, and many struggled to stay closer look at our organization and have initiated afloat. At HERE, as with many other companies, many projects that are helping us to remove there was an intense period at the start of the ine"ciencies within the company to further drive year when we had to introduce, develop and our Operating Model and e!ectiveness. communicate our management measures. In a very short time, we moved to a work from home policy and had to adapt our ways of working.
16 To remove those overlaps thus creating a more Other steps to help secure our financial e"cient operating model, we shi#ted roles to stability were: low-cost countries where possible, reduced our Cancellation of all travel leased facilities in certain regions and streamlined our legal entity structures where available. Pausing all hiring of employees
Rescoping of the Go-To-Market (GTM) activities
In addition, we investigated the di!erent state aid Many employees participated in a global voluntary and stimulus programs in the di!erent countries employee contribution program, “ALL4HERE”, and applied for those programs where possible designed to benefit colleagues, save jobs and aid given HERE’s legal and tax structure. in the protection of HERE’s future. Contributions consisted of voluntary part-time work, give back of In the Netherlands we applied for the so-called vacation days and voluntary salary reductions. NOW measure (“Tijdelijke Noodmaatregel These measures e!ectively showed our ability Overbrugging voor behoud van Werkgelegenheid”), to manage our cash during uncertain times. a program focused on saving jobs by The measures also further contributed to the compensating wages costs. continuity of the business and resulted in an In Germany we applied for ‘Kurzarbeit” or overall increase in our profitability of 40% ‘short-time work’, a program in which employees from the prior year which is a remarkable have a temporary reduction of working hours accomplishment in any year. and the German government compensates those employees for the wages lost due to their temporary reduction of work. It applied to the majority of our employees in Germany and on average they had a 20% reduction in working We seized the opportunity to take a hours for a period of two months. closer look at our organization. We In the U.S., we benefited from the “Coronavirus have initiated many projects that Aid, Relief, and Economic Security Act” that was are helping us to remove overlaps enacted in March 2020. We were able to recognize within the company to further drive income tax benefits from multiple provisions our Operating Model and e!ciency. of the Act. In addition, we suspended the company’s matching of contributions made by our employees in the United States to their “401(k)”, an employer-sponsored defined contribution pension program.
17 2020 Financial Overview
Year ended December 31 EURm 2020 2019 Change %
Net automotive sales 610 796 -23.4%
Net non-automotive sales 247 317 -22.1%
Total net sales 857 1,113 -23.0%
Cost of sales (183) (226) -19.0%
Gross profit 674 887 -24.0%
Research and development expenses (508) (752) -32.4%
Selling, general and administrative expenses (309) (391) -20.9%
Other expenses, net (6) (52) -88.5%
Operating income (149) (308) 51.6%
Financial expenses, net (54) (34) 58.9%
Income before tax (203) (342) 40.6%
Income tax expense (13) (19) -31.6%
Net income for the year (216) (361) 40.2%
18 Sales/Gross Profit
In 2020, HERE’s net sales were EUR 857 million, a booked in our automotive business and drove a decrease of 23% compared to EUR 1,113 million 23% decrease in overall automotive revenue from in 2019. Our sales are primarily derived from the prior year. the licensing of our digital location content to HERE’s cost of sales were EUR 183 million in 2020, customers. Net sales in our automotive segment a 19% decrease from EUR 226 million in 2019. were EUR 610 million (2019: EUR 796 million) and Our cost of sales consist of costs to deliver our in our non-automotive segment EUR 247 million data to our customers, partners and developers (2019: EUR 317 million). in a physical format as well as to provide access Overall sales fell from the prior year as the via our cloud-based platform. In addition, they pandemic impacted our contracted revenue consist of royalties to be paid to third party data volumes and the ability of our sales force to call providers. There is a continuing declining trend in on customers in the traditional sense. Automotive distributing our products in physical formats. sales were further negatively impacted by a slowdown in automobile production, primarily due to the shutdown of factories around the world for several weeks in the early part of the pandemic. net sales cost of sales This led to a reduction in the map license fees we
Operating Expenses
Our total operating expenses were EUR 823 million Research and development expenses include in 2020 (2019: EUR 1,195 million). Our operating the costs of developing our digital map content expenses consist of costs to develop and sell database, HERE HD Live Map, our platform, and current and future products, services and so#tware and services to support our customers applications as well as general and administrative across the automotive and non-automotive costs. The COVID-19 pandemic brought about segments. HERE was able to maintain this focus opportunities to make lasting positive changes while being more e"cient. HERE invested EUR 508 in our organization. We implemented a series million in selected R&D programs during 2020. of e!ective countermeasures to strengthen Operating expenses included EUR 154 million our operating model, reduce costs, and 2020 (2019: EUR 175 million) of amortization costs drive e"ciencies where possible, including related to intangible assets acquired as part of the renegotiating more favorable contracts and acquisition of the HERE Group. discontinuing third party spend. Organizational changes were also made throughout the Financial expenses were up 58.9% due in part to organization that led to the company reducing an increase in interest expense associated with headcount from 8,846 in 2019 to 8,167 in 2020, a the incremental loans and the unrealized foreign 7.7% decrease. All of these measures contributed exchange loss from the revaluation of monetary to an improved bottom line from the previous assets and liabilities. year despite lower sales. Impressively, HERE saw a 40% increase in profitability compared to the prior year. operating expenses research and development expenses
19 Cash Flows from Operations
EURm 2020 2019
Net cash from operating activities (163) (104)
Net cash used in investing activities (74) (48)
Net cash provided by financing activities 253 99
E"ect of movements in exchange rates on cash held (7) 2
Increase (decrease) in cash and cash equivalents 9 (51)
Cash used in operating activities was EUR 163 Cash provided by financing activities was EUR 253 million in 2020 (2019: 104 million). The year on year million in 2020. HERE had debt of EUR 493 million trend is driven primarily by an overall reduction on its balance sheet at December 31, 2020. HERE in sales due to the pandemic. HERE implemented Group has access to a revolving credit facility cost-saving measures and increased e"ciencies totaling EUR 150 million. As of December 31, to reduce the overall impact of a 23% reduction 2020, EUR 108 million has been borrowed against in sales from the prior year. This included this facility. The debt imposes covenants on the renegotiating supplier contracts or in some cases HERE Group. Due to the impact of COVID-19 on halting spend all together, suspending employee HERE’s financial results, the banks in showing travel, to name a few. support of HERE waived some of the tests in exchange for which HERE accepted a minimum Cash used in investing activities primarily liquidity covenant for Q3 2020 and Q4 2020 consisted of capitalized development costs and testing. HERE has complied with the non-waived the purchase of property, plant and equipment and the new liquidity covenants during the 2020 and other intangible assets. The capitalized reporting period. In relation to this refinancing, development costs were EUR 59 million in 2020 HERE International B.V.’s shareholders agreed to (2019: EUR 20 million) related to development contribute additional capital of EUR 71 million in of embedded in-car so#tware solutions and January 2020, and EUR 87 million in November platform solutions. At December 31, 2020, the 2020 to reduce outstanding debts. The scheduled balance of capitalized development costs totals November 2020 contribution was replaced with EUR 93 million. We have continued to invest in a contribution in an equal amount as part of the property and equipment to meet the demands of Mitsubishi Corporation and Nippon Telegraph and growing our business by providing the necessary Telephone Corporation share purchase and was infrastructure. Capital expenditures were EUR 40 received in May 2020. million in 2020 (2019: EUR 47 million).
20 HERE International B.V. entered into a Bookings, or the estimated lifetime revenue of subordinated shareholder loan agreement in April deals closed within the calendar year, reached 2020 with There Holding B.V. and Intel Holdings EUR 1,691 million in 2020, compared to EUR B.V. to provide liquidity support. The HERE 1,671 million in 2019. While overall bookings Group borrowed EUR 125 million, received in increased only 1%, we recorded an increase of three tranches: EUR 60 million in May 2020, EUR 17% in non-automotive bookings which further 40 million in June 2020, and EUR 25 million in supports our strategy to diversify our customer August 2020. The loan is payable at the earlier base outside of our automotive business. That we of July 31, 2023 and the date falling six months generated a year-on-year increase in bookings is a a#ter all outstanding balances on its main testament to the strength and competitiveness of debt agreement are repaid in full. This overall our platform, products and services, as well as the liquidity support shows the strong support and e!orts of our flexible and resourceful sales team. belief the shareholders have in HERE and our Travel restrictions during the pandemic meant long-term future. that our sales personnel and engineers were largely unable to interact with customers face to HERE’s owners and banking partners showed the face in the traditional sense, instead relying on confidence to support HERE during the challenges virtual meetings. created by the COVID-19 pandemic by providing additional funding and contractual adjustments.
At December 31, 2020, HERE’s total equity was EUR 1,277 million. "That we generated a year-on-year increase in bookings is a testament Our Management Team and Supervisory Board to the strength and competitiveness track several key performance indicators to of our platform, products and regularly measure the performance, development services, as well as the e"orts of our and position of HERE. Alongside financial flexible and resourceful sales team." performance indicators, they also track non-financial KPIs including monthly active developers and customer NPS to help continue to develop the value proposition of our products.
21 Corporate Responsibility
At HERE, we seek to contribute to a better world Corporate responsibility is also how we express through the lens of location. Our goal is to build a our culture. We are a global company with a digital representation of the physical reality that naturally diverse employee base and a strong, improves the way everyone and everything lives, responsible and social conscious ethos. We are moves, and interacts – from cities, to systems, to better when we bring together more voices, businesses, to advanced vehicles. Utilizing data, more experiences and more perspectives. insights and location intelligence to catalyze Together, we can heighten opportunity. We raise change and improve and refine performance is the bar for social expectations – and we do what we do. Corporate responsibility at HERE is that together. Corporate responsibility at HERE simply the turning of our ambition for innovation brings out our best. and improvement inward – to focus on how we The core values of HERE encapsulate who we are bring about these changes and, as we do so, to and what we seek to achieve. elevate our societal impact.
22 Be Bold Be True
Act with eagerness and fearlessness to deliver Engage our customers, partners, developers and game-changing products, services and solutions one another with trust, integrity and respect that make the world better
Learn Fast Give Back
Be responsive and flexible to outrun the Embrace the responsibility to safeguard the ever-evolving pace of emerging technologies environment and give back to society, starting with the places where we work and live
Win Together
One team united; made greater by the sum of our knowledge, experience, passion and talent
HERE has actively helped enable our customers Our Corporate Responsibility program is built and partners to navigate through a challenging on three pillars that form the foundation of year demonstrated by an array of initiatives our program: Responsible Operations, Social leveraging our expertise, mapping technology Innovation, and Give Back. and entrepreneurial spirit for the betterment of communities and societies around the globe.
Responsible Operations
HERE is consistently elevating internal processes partners with access to grievance mechanisms to international and national laws and standards; with a clear policy of non-retaliation, while operating ethically as a company and driving promising the prompt investigation and remedy ethical considerations across our supply chain; of any human rights violations. It also protects continually improving our environmental impact; underrepresented groups of people from and protecting human rights. harassment and discrimination through zero tolerance policies. In 2020, HERE announced the introduction of a Global Human Rights Policy focused on We all have a responsibility to preserve the ensuring respect for the fundamental human environment and the well-being of those rights, freedoms and standards of treatment that around us. At HERE, this focus is central to our belong to all people. mission, important to our customers, partners Key highlights of the policy include a commitment and developers and other key stakeholders, by HERE to train employees on international and critical to securing our future. It is how human rights standards and what that means we do business. in practice. It provides employees and business
23 Our environmental commitments are rooted in This approach met or exceeded safety guidelines and built on a dedication to sustainable behaviors in the countries where we operate. across our workforce. Employees are encouraged We created a COVID-19 task force of employees to participate in environmental awareness from key support functions across our workforce behavior change campaigns and volunteer with the objective of safeguarding employees during days of action, such as Earth Day. All HERE and ensuring leadership had up-to-date employees, contractors and partners uphold information for decision making. Employees our environmental management guidelines as could take equipment home to ensure they outlined in the HERE Code of Conduct and verify had a comfortable and ergonomic workstation. their understanding on an annual basis. An internal website was created as a source giving employees information on o"ce status, HERE tracks significant environmental impacts protocols and other key data to ensure they were of our business and identifies metrics to reduce kept informed. our carbon footprint. Our priorities include reducing energy and water usage across business When o"ces in low-risk countries did reopen, locations as well as mileage from employee it was only a#ter extensive preparation to travel and fleets. We are constantly seeking ensure a clean, safe and socially distanced work out innovative solutions to help decrease our environment. In instances where an employee environmental impact, including green building at a work location became infected, the site was certifications. For all new facilities, our goal is to temporarily closed and deep cleaned before lease and operate at Leadership in Energy and reopening with contact tracing initiated. Environmental Design (LEED) Gold standard levels. By adapting to a remote work environment, HERE The health and safety of HERE employees is our significantly reduced greenhouse gas emissions number one priority. We were proactive in closing during 2020 and prioritized the well-being of our work locations in March and limiting travel for our employees, while continuing to deliver employees during the COVID-19 pandemic in 2020. for our customers.
Environmental Impact
Tons CO2 2020 2019
Air travel 807 10,469
O"ce power 1,856 4,794
Hosted data centers 1,077 1,462
O"ce cooling 417 1,212
24 Social Innovation
Location technologies are now part of our critical HERE focused support on humanitarian aid infrastructure and have the ability to help address specifically in response to COVID-19, as well as on global crises such as pandemics, humanitarian environmental and educational causes. By helping disasters and climate change. We believe people who need it most, we deliver real change organizations should have easy and flexible access for the enhancement of our communities and to this infrastructure. That is why HERE o!ers an our world. HERE developed multiple applications open platform for organizations and nonprofits and solutions to help mitigate the greatest global to make maps and develop applications. HERE public health crisis of our lifetimes. This included harnesses the power of location technologies, the Tech for good: mapping for a virus, Tech for good: potential of our employees, and the profits our HERE WeGo Deliver, and Tech for good: Locating business to give back to society. This is how we the best care. drive positive change around the world. In 2020,
Give Back
Giving back is at the heart of the supportive and HERE employees spend thousands of hours sustainable culture at HERE. By harnessing the volunteering and, in the midst of the global power of our place in the market, the generosity of pandemic, found ways to creatively address the our employees, and the revenues of our business, needs of local and global communities and to HERE is able to positively impact our communities continue to #GiveBack in our new normal. and improve society. In Leon, Mexico, employees organized a virtual discussion on environmental conservation for Our leadership and employees support Earth Day 2020. In Greece, HERE employees organizations that serve people who need collected food and dental health supplies for a help most, and we deliver real change for the local children’s charity. betterment of our communities and drive positive change around the world. Led by the HERE India People Engagement (HIPE) team, 750 HERE Mumbai employees joined the In 2020, HERE employees shared their expertise Behind the Mask virtual Give Back campaign. to promote technical education around the world, During this two-week event, employees shared took part in volunteer events and fundraising stories, videos, podcasts, and pictures of hope, campaigns, gave in-kind donations and hosted courage and acts of kindness to stay connected gi#t drives. Since beginning our partnership and inspire each other during a challenging time. with the ‘Rise Against Hunger’ campaign in With a trending hashtag #BehindTheMask reaching December 2017, our employees have packed over social media audiences the campaign reached one million meals. 3,000 employees and impacted over 15,000 people.
25 Inclusion, Diversity and Belonging
HERE is for everybody. HERE is a place where all in the last three years. During 2020, HERE was also employees can be their authentic selves. We strive recognized as a Top 10 Best Workplace for Women to build a culture that embraces inclusion, in India and was named a 2020 Best Place to Work diversity, and belonging. We believe it’s essential for LGBTQ Equality in the US and Mexico. Despite to celebrate diverse perspectives, backgrounds the COVID-19 pandemic, HERE was recognized and experiences and harness them to drive with these top honors and employee engagement progress through innovation. At HERE, we want scores are at a high. We believe this is a reflection everyone to feel they belong and are part of our of the focus that HERE has placed on driving company, our mission and each other. awareness among HERE people around the important of inclusion, diversity and belonging, as Our employee engagement survey shows a well as our e!orts to increase representation of positive sentiment on inclusion, diversity, and diversity at all levels of our organization. belonging at HERE – increasing from 80% to 86%
26 HERE’s Employee Resource Groups (ERGs) enable opportunities, championing issues and communities and their allies to connect, be exploring new business ideas inspired and to grow. These employees share a Vamos – dedicated to the representation common interest and take part in activities that and advancement of people with LatinX and support HERE values, culture, and business goals. Hispanic heritage Women’s Initiative Network (WIN) – formed in 2016 in the Chicago o"ce to promote gender Recognizing their connections, our ERGs supported equality and support the career development one another during International Women’s Day of our female and non-binary employees through awareness and highlighting women in all communities; through Pride Week with our Unity & Power – supports Black and African first-every intersectional panel; and through culture, communities, and talent our Hispanic Heritage month activities with HERE Pride – provides a forum for LGBTQ+ Afro-LatinX discussions. Connection and belonging employees, o!ering professional development were ever-present for our employees.
Gender diversity is an area where we are striving experience and the availability of suitable to make improvements with women making up candidates, play a role in the achievement of our 34% of the population at HERE. Women make up diversity targets. 21% of the managers and supervisors, and 23% of the company o"cers, executives and senior management. As of February 2021, women account for 12.5% of the Supervisory Board. of34% the HERE The composition of the Supervisory Board has employees are women a strong mix of backgrounds and experience, supporting a diverse view on a wide range of topics. At all times, the composition of the Supervisory Board is such that the members are able to act critically and independently of one 23%of the senior leadership another. We note that various pragmatic reasons roles are hold by women such as other relevant selection criteria, including
27 Privacy and Data Governance
How HERE approaches information and data and while at the same time taking into account the handles consumers’ personal information is a privacy expectations of users and respecting data central element in building trusted relationships protection rights. To be able to leverage the power with our customers, partners and developers. of data, which may also involve personal data, Fundamentally, HERE has no vested interest HERE is investing in data analytics capabilities. in forcing consumers to use particular brands At the same time, we are working to ensure that of device, OS platforms nor in using their privacy and data governance are ingrained in personal data to target them for advertising. all relevant processes and operations from the Additionally, we are open and transparent about very beginning. Our data strategy must coexist our own privacy policy and practices, which are within the bounds of the personal comfort of continuously improved and developed. the provider of the data, which means being transparent and thoughtful about our use of data, What drives us to leverage the power of data is as well as providing the user with the means to in being able to deliver new benefits to people exercise their fundamental right of privacy and and businesses – such as helping to enable building data protection practices as part of increased driver and passenger safety through the processing operations. HERE believes that greater vehicle automation, better urban mobility this approach to privacy and data governance through better tra"c management, and more positions it well to be the guardian of a trusted, environmentally-friendly transportation solutions, location cloud ecosystem.
28 The HERE Privacy Program, founded on GDPR, partners and employees in our ability to continued to expand in 2020 by proactively incorporate privacy into our culture, establishing incorporating changes arising out from the data privacy as a competitive di!erentiator California Consumer Privacy Act (CCPA) and for HERE. To further assist in building trusted the Lei Geral de Proteção de Dados (LGPD) in relationships with our customers, as part of Brazil. HERE continues to proactively manage our product portfolio planning, we are looking the Privacy Program to anticipate changes and into o!ering targeted privacy solutions to our navigate through regulatory requirements. We are customers going forward. Our long-term research looking forward to incorporating other upcoming and development work involves the exploration jurisdictions as well as standards frameworks, of ‘privacy-as-a-service’ concepts for potential including ISO27701. development. Such concepts would be designed to enable people to enjoy seamless, uninterrupted From an employment context, transitioning to a services – through the use of user-friendly settings remote work environment required us to analyze or other relevant management interfaces, even and provide guidance on employment privacy automated ones – to grant consent or manage practices in remote work context during the times related preferences. We believe that people of the pandemic. should be able to maintain control over what With respect to privacy, our goal is to continue personal data is shared, at a granular level, with to build trust and confidence in our customers, each requesting entity.
29 Risk Management and Control
Risk management
HERE has a systematic and structured approach to events that may a!ect HERE, resulting in a risk management across business operations and deviation from HERE objectives. The Supervisory processes, laid down in its Global Enterprise Risk Board together with the Management Board shall Management Policy. Enterprise Risk Management agree to the risk appetite of HERE by means of (ERM) is a group-wide framework applied to HERE specific Supervisory Board approvals on (amongst strategy planning, long range plans and annual others) HERE’s Strategic Execution Plans, Long business planning, as well as operational decision Term Plans, Annual Plans, Incentive Plans, making. The goal is to capitalize on opportunities Acquisitions, External Financing Agreements, and treat risks that may prevent achievement Management Board nominations and the like of HERE’s performance objectives. HERE defines as stipulated in the Shareholders’ Agreement risk as: “the possibility that an event will occur relating to HERE International B.V. and its Articles and adversely a!ect the achievement of HERE of Association. objectives”. ERM is designed to identify potential
30 HERE’s ERM shall: improve operational e!ectiveness, incident management, and loss prevention
drive risk mitigation and exploitation of comply with relevant legal & regulatory opportunities based on informed decisions requirements and international norms
encourage proactive management and increase build/contribute to customer and stakeholder the likelihood of achieving objectives confidence and trust
Risks are managed through the components of documented according the QMS guidelines into Risk Assessment, Risk Treatment, Risk Monitoring respective repositories. and Risk Communication/ reporting. Business units and functions are required to document HERE does not rank the individual risks identified in specific standards and guidelines that defines our Directors’ report, as we are of the opinion that how the Risk management has been applied in doing so defies the purpose of a comprehensive the context of each business unit and functions. risk assessment and it would be arbitrary by nature Risk management processes are part of HERE since all risks mentioned have relevance for us quality management systems (“QMS”), hence and our business.
Risk factors
Our business faces various risks and uncertainties. Some of the more relevant risks are described These risks, either individually or together, could below. Although we have a good understanding adversely a!ect our business, sales, profitability, of potential risks, there may always be unknown results of operations, financial condition, costs, risks and certain risks currently classified as not expenses, liquidity, bank covenants, market share, material that could become material in the future. brand and reputation from time to time. It is important to understand the nature of these risks and the impact they may have.
31 Risks that arise externally and could impact our ability to execute our strategy, include:
Our business net sales are derived from sales o!ering in the future or new more e"cient to the automotive and other industries, making or a!ordable ways of map content creation it dependent on overall developments in may be introduced which may disrupt our those industries. To mitigate this, HERE builds own business model. Our Research and and maintains trading relationships across a Development function actively searches for broad spectrum of customers, partners and ways in which to translate our customer developers ranging from centrally managed preferences into new technologies for multinational companies through to small incorporation into future products, while our customers accessing our e-commerce portal. innovation management process deploys COVID-19 showed that we were able to remain tools, technologies and resources to convert successful in the non-automotive industry strategies into projects and plans, develop despite the decline in the automotive industry. products and relevant communication, and This is evidenced by the 2020 bookings of successfully roll out new products to our EUR 1,691 million which will secure revenues customers; and the prices our customers into the future are willing to pay for our products may decline. This price risk is, however, Some o!erings we currently provide may be mitigated because of long term contractual no longer competitive, or another participant commitments with customers, especially in may provide a more competitive new our automotive business
Additionally, our business is exposed to various risks and uncertainties a"ecting our e"ectiveness and e!ciency of our operations, including the following:
Headwinds may arise that would impact our that resources are prioritized towards those execution of our business plans e!ectively, products and markets that have the greatest leading to lower profitability. Our plans include long-term potential for HERE. We regularly making HERE a key player in new and upcoming review our ways of working and organization location-based services, such as augmented structures to ensure that we drive speed and reality, new vehicle so#tware systems, and simplicity through our business to remain agile autonomous driving systems. In addition, and responsive to marketplace trends HERE strives to be deeply integrated in vehicle driver assistance systems. Our competitiveness The performance of the parties we partner may be adversely a!ected if we are unable to and collaborate with may not meet our e!ectively collate, process and analyze data, expectations. The performance of third-party such as end-user behavioral data or sensor outsourced providers is kept under constant data, and to derive intelligence from that review, with potential disruption limited data, which could be used to enhance our to the time and cost required to install product o!ering. To mitigate these impacts, alternative providers our business plans are designed to ensure
32 We may fail to retain, motivate, develop and The outbreak of COVID-19 in 2020 continues recruit appropriately skilled employees. to impact the global economy and markets. To mitigate, we have targeted programs which It is uncertain how these events will continue include the Talent Development Process (TDP) to develop and what the exact impact will be to attract and retain top talent and we actively on HERE’s operations, financial performance, monitor our performance in retaining talent bank covenants, and liquidity. HERE’s largest within HERE. We have policies and procedures customer group, the automotive industry, designed to ensure the health and safety of our saw sales and production slow significantly employees and to deal with major incidents during certain parts of 2020. Consequently, including business continuity and disaster HERE has seen some negative impact on recovery. During the COVID-19 pandemic the its operations, financial performance, bank health and safety of our employees was top covenants, and liquidity. To mitigate this priority. We e!ectively communicated with our impact, HERE implemented a program that workforce and sought feedback. We quickly included internal cost reductions, such as adapted to a remote work environment employee compensation cuts and travel and continue to consider our long-term suspension, used undrawn credit facilities, strategy in this regard obtained waiver relief from some of the 2020 bank covenants, and received additional We may be subject to IT issues or cybersecurity financial support from its owners in the form breaches, resulting, for instance, in disruptions of a subordinated shareholder loan. In January in online service continuity, privacy breaches 2021, HERE also successfully renegotiated and security of data. To mitigate, the hardware its 2021 bank covenants. As a result of these that runs and manages core operating data mitigation e!orts, HERE has successfully is fully backed up with separate contingency minimized the negative financial impact of the systems to provide real-time back-up outbreak to HERE’s financial stability in 2020. operations should they ever be required. However, given the unprecedented nature of In addition, we maintain a global system for COVID-19, material uncertainty still exists about the control and reporting of access to our how this event will continue to develop and critical IT systems which is supported by an what the potential future impact will be on annual program of reviewing of access controls HERE’s operations, financial performance, bank covenants, and liquidity
33 Risks related to law, legislation and taxes include:
Our products, services and business models portfolio to protect against hazard risks which depend on Intellectual Property Rights (IPR) cannot be internally managed e"ciently and in technologies that we have developed as where insurance markets o!er acceptable well as technologies that are licensed to us terms and conditions by certain third parties. Evaluating the rights HERE products and services will increasingly related to the technologies we use or intend depend on the use of a broad range of types to use is increasingly challenging, and we may of data, including in some instances personally face claims of alleged infringement of third identifiable information. Regulations governing parties’ IPR. The use of these technologies the collection, storage and use of data may may also result in increased licensing costs restrict the ability of HERE or its customers for us, restrictions on our ability to use certain to carry out or develop their respective technologies in our products and/or costly and businesses. Such regulations could grow more time-consuming litigation. HERE has an active restrictive over time. Regulatory infractions IP protection program that protects HERE's could generate penalties and other costs and innovation with patents and trade secrets as give rise to reputational damage. Further, appropriate. HERE's patent assets can be used HERE products and services, or the products both assertively and defensively when others and services of customers who use HERE infringe our rights and when HERE is accused services, may become the target of cyber of infringement. HERE also negotiates contracts attacks. Responding to such problems could with its vendors to ensure that it has freedom be costly and give rise to adverse publicity. of action when acquiring rights to use third We have established procedures to ensure party assets in our products company-wide adherence to the provisions of HERE products and services may generate the EU’s General Data Protection Regulations product liability and warranty claims and (GDPR) and other applicable data protection associated adverse publicity. Warranty claims laws. We have standardized ways of hosting may cause field actions and serial damage and information on our public website and have may generate the risk of recall of products. processes in place to monitor compliance with Responding to such claims could be costly. appropriate privacy laws and regulations, and We maintain an appropriate insurance with our own policies
34 We have operations in a number of countries the countries in which we operate. Our legal and, as a result, could face complex tax, team also applies full attention to smart privacy, trade compliance, or other local management of disputes and litigation using regulatory issues and tax or other regulatory both internal and external resources disputes and could be obligated to pay additional taxes or penalties in various Our actual or anticipated performance, among jurisdictions, or be subject to restricted activity other factors, could reduce our ability to utilize in certain jurisdictions. Our legal specialists our deferred tax assets. We monitor proposed are heavily involved in monitoring and changes in taxation legislation and ensure reviewing our practices to provide reasonable these are taken into account when we consider assurance that we remain aware of and in line our future business plans with all relevant laws and legal obligations in
Risks impacting our financial position and reporting include:
Our net sales, costs and results of operations due from customers. Our accounts receivable are a!ected by exchange rate fluctuations, do not include any major concentrations particularly between the euro, which is our of credit risk by customer. The top three reporting currency, and the US dollar as well as customers account for approximately 20.0%, other currencies. Foreign currency transaction 8.6% and 4.8% of HERE’s accounts receivable at risk is managed in accordance with the December 31, 2020 (2019: 13.7%, 7.9% and 4.9%). HERE Treasury Policy. HERE’s Treasury Policy HERE is primarily only subject to financial addresses Treasury Risks deriving from the credit risk with respect to the balance of cash HERE Strategy in combination with the business and cash equivalents held with its banks. and financial environment HERE operates in. In 2020, very close to 100% of our cash at bank The main focus areas are Corporate Finance, is held with multiple banks of investment Cash & Liquidity Management, Fx – and Interest grade credit rating Rate Risk Management. HERE Treasury has Liquidity risk, or financial distress or the mandate to use plain vanilla derivative extraordinarily high financing costs arise from instruments to address Fx and Interest Rate a shortage of liquid funds in a situation where risks. As per December 31 2020, no financial outstanding debt needs to be refinanced derivatives were outstanding or where business conditions unexpectedly Credit risk arises from credit exposures to deteriorate and require financing. We have customers related to outstanding receivables, access to a revolving line of credit to satisfy as well as financial institutions related to our liquidity needs and assess our liquidity cash and cash equivalents. Credit exposure is requirements monthly measured as the total of accounts receivable
35 HERE acknowledges the importance of internal control framework. In addition HERE’s internal controls and risk management systems. Under the audit function performs audits at di!erent o"ce supervision of its Chief Financial O"cer, HERE’s sites around the world and reports its findings to Accounting team conducts an annual evaluation a) the Chief Financial O"cer and b) HERE’s Audit of the e!ectiveness of HERE’s internal control Committee (consisting of Qualified Shareholder over financial reporting based upon its internal representatives).
36 Business Ethics
HERE applies high ethical business standards which we operate. Our commitment to ‘do the at every opportunity. Pursuing our business right thing’ is underpinned by the HERE Code of objectives, we aim to be a responsible partner Conduct. As an independent company, we fully in society, acting with integrity towards our intend to maintain our already strong reputation employees, customers, business partners and as a company that acts with integrity and engages shareholders, as well as the wider community in in ethical business practices.
37 HERE is active in nearly every country in the and commitment to societal concerns world, and we will sometimes encounter ethical within our sphere of impact. We protect challenges and environments in which standards human rights. We protect privacy. We seek are not as high as within HERE. In every instance, to leverage our purchasing power to drive it is important that we do not compromise our social and environmental progress throughout core principles. our supply chain.
Our customers and the communities in which The HERE Code of Conduct is published on our we operate expect HERE to be a reliable, intranet site and employees are obliged to take a ethical business. Our Code of Conduct drives Code of Conduct training every year. If employees the requirements we have established for become aware of a breach of our business ethics, our employees to ensure a responsible work they are urged to report them to the HERE Ethics environment and ethical business practices. & Compliance Committee including via a secured link on our intranet site. Our process reassures We are committed to responsible operations employees that they can report a breach without across our business and supply chain. We work fear for repercussions. to ensure that HERE is elevating attention
38 Corporate Governance
HERE has an experienced Management Team rights licensing, consumer services, operations that brings diverse experience from map making and many other areas. The Management Team technology, platform technology, application is responsible for the strategic and operative so#tware, finance, sales, intellectual property management of HERE.
39 Management Team
Edzard Overbeek, Werner Buskermolen, Senior Chief Executive O"cer Vice President and Chief Human Resources O"cer
Petra Meiser, Executive Vice President Denise Doyle, Senior Vice President and Chief Financial O"cer and Chief Data O"cer
Jørgen Behrens, Senior Vice President Fred Hessabi, Senior Vice President and Chief Product O"cer and Chief Customer O"cer
Kristina Bohlmann, Senior Giovanni Lanfranchi, Senior Vice Vice President and Head of President Development and Chief Brand Organization Technology O"cer
There is a clear separation between our by a Supervisory Board. The Supervisory Board automotive shareholders’ roles as customers, supervises and advises the Management Board suppliers and investors. In addition, HERE is in the execution of its tasks and responsibilities, continuing to support customers and grow its while the Management Board provides the business in several industries beyond automotive Supervisory Board with all the information, in and is open to other investors who would create writing or otherwise, necessary for the Supervisory an even broader shareholder structure. All this Board to fulfill its duties. The Supervisory Board ensures that HERE’s unequivocal commitment to attaches great importance to its composition, openness and independence is firmly established. independence and diversity.
HERE’s long-term strategy is secured through a governance structure, safeguarded
The Supervisory Board consists of:
two members appointed by the general three members appointed by the general meeting of shareholders of HERE International meeting of shareholders of HERE B.V. upon binding nomination of COCO International B.V. upon binding nomination Tech Holding B.V. of There Holding B.V. three independent members appointed by the general meeting of shareholders of HERE International B.V.
40 In 2020 and 2021 the following changes were made with respect to the composition of the Supervisory Board.
Mr. Pekka Ala-Pietilä is the Chairman Dr. Rainer Feurer, Senior Vice of the Board of packaging company President, Corporate Investments Huhtamäki and learning company at BMW Group. Since joining BMW Sanoma, and a member of the Group in 1998, Dr. Feurer has held Supervisory Board of SAP. He was various strategic planning positions also co-founder and CEO of Blyk and was deeply involved in the Services Oy from 2006–2011. strategic set-up of the BMW Group Between 1985–2005, he held several in China. In 2019 Dr. Feurer became leadership positions at Nokia and responsible for BMW’s equity stakes was previously Chairman of the EU in joint ventures in China, and Commission’s High-Level Expert investments in Mobility, Energy, Group on Artificial Intelligence (AI Digital & Professional Service HLEG). He acts as a mentor for many companies. Dr. Feurer was appointed young future experts and decision on February 18, 2020 as member of makers. Mr. Ala-Pietilä was appointed the Supervisory Board, replacing as Chairman of the HERE Supervisory Dr. Christoph Grote who resigned at Board, e!ective as of March 13, 2021. the same date. Mr. Ala-Pietilä replaced Mr. Rudi Mr. Hiroki Kuriyama, Senior Lamprecht, whose term ended on Executive Vice President of NTT February 17, 2021. Communications Corporation (NTT Mr. Koji Tashiro, General Manager, Com), one of the world’s largest HERE Project O"ce, Mitsubishi telecommunications carriers for Corporation, a role he took on a#ter consumer and global-enterprise Mitsubishi and NTT jointly acquired services. Concurrently, he also serves a 30% ownership stake in HERE. as a Senior Vice President of Nippon Based in Japan and in his second Telegraph and Telephone Corporation stint at MC, Koji previously served (NTT). Mr. Kuriyama was appointed as Group CIO of its Machinery Group as member of the HERE Supervisory and has been in charge of promoting Board on May 29, 2020. company-wide digital strategies since Mr. Doug Davis resigned 2019. Mr. Tashiro was appointed as per May 29, 2020. member of the Supervisory Board on February 5, 2021, replacing Mr. Yutaka Kyoya, who was appointed on May 29, 2020 and resigned per February 5, 2021.
41 Mr. Axel Dewitz is vastly experienced Adine Grate is a well-known and across the automotive industry, respected professional in the currently holding the position of European investment community. EVP and Head of Taxes, Customs She spent 13 years at Investor and M&A at Audi Group. Prior AB where she was an EVP and to this, Mr. Dewitz was Director, Executive Director on the Executive Mergers and Acquisitions at Audi, Board. Ms. Grate has extensive as well as Director, Controlling at investment, strategy and corporate Volkswagen Group Italia. He has a finance expertise and has been successful track record in tax and intimately involved with some of customs management, transactions, Europe’s largest M&A deals of the M&A, board relations, strategy, last 20 years. She has carved out and business development. a reputation as a highly e!ective He was appointed as member of Non-Executive Director, Committee the Supervisory Board on August 18, Chair, Chair and Advisor. Her board 2020. Mr. Dewitz replaced Dr. Stefan experience ranges from large Sommer, who was appointed on FTSE 100 companies to smaller March 13, 2020, and resigned e!ective private equity-backed businesses. as of June 30, 2020. Dr. Sommer She has deep domain knowledge, in replaced Dr. Bernd Martens who particular in TMT (technology/media/ resigned per February 21, 2020. telecom) and financial services. Ms. Grate is currently, amongst other Dr. Neil Hunt is co-founder and Chief things, Board member of G4S Plc and Product O"cer, Vibrant Planet, an advisor to CK Hutchison Holdings. “eco-technology” startup, and is a She is chair of the HERE Audit co-founder of Curai, a healthcare Committee and was appointed as technology startup. Prior to this, HERE Supervisory Board member on Dr. Hunt served nearly 20 years as February 16, 2021. Chief Product O"cer at Netflix. He is a Board Member of Logitech and Sajjad Khan is the Chief Technology Roku, and also holds advisory roles O"cer and a board member with several healthtech and media of Mercedes-Benz Cars. He is startups, Scotiabank digital advisory responsible for driving change in the council, and the University of Durham fields of connectivity, autonomous, (UK) CS advisory board. He was shared and services, and electric. appointed as member of the HERE From 2011 to 2015 he worked for Supervisory Board on July 29, 2020, BMW Group AG, where he ultimately replacing Mr. Uri Levine whose final became Vice President, responsible term expired on July 1, 2020. for the Connected Drive system worldwide. He was appointed as member of the HERE Supervisory Board on March 28, 2019.
42 Supervisory Board committees:
The Supervisory Board, while retaining overall the Nomination and Compensation Committee oversight and responsibility, has installed two (NCC). The AC and NCC advice and support the committees: The Audit Committee (AC) and decision-making of the full Supervisory Board.
Audit Committee (AC) Nomination and Compensation Committee (NCC)
The AC advises and supports the Supervisory The NCC advises and supports the Supervisory Board in overseeing the integrity and quality of Board with the preparation of the selection HERE’s financial reporting and the e!ectiveness criteria, appointment and remuneration of of internal risk management and internal Management Board and EVPs and with the controls. The AC has four members: Ms. Grate set-up of variable remuneration plans for (Chair); Mr. Dewitz; Dr. Feurer; and Mr. Kuriyama. HERE’s employees like bonus and long-term incentive plans, including the corporate
goals and objectives relevant for those plans.
The NCC has three members: Dr. Hunt (Chair);
Mr. Khan; and Mr. Tashiro.
Industry Advisory Board
Promoting industry insights, collaboration The HERE IAB is a regular dialogue focused and innovation. on sharing insights, igniting innovation and promoting collaboration that improves the HERE is dedicated to enabling an autonomous way everyone and everything lives, moves and world for everyone. Given that no company interacts with location data. or individual can solve this alone, we have assembled acclaimed international experts and global thought leaders to create the HERE Industry Advisory Board (IAB).
43 March 25, 2021
E.J.C. Overbeek Chief Executive O"cer / Managing Director
P.M. Meiser Chief Financial O"cer / Managing Director
R.A.J. Houben Managing Director
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About HERE Technologies HERE, a location data and technology platform, moves people, businesses and cities forward by harnessing the power of location. By leveraging our open platform, we empower our customers to achieve better outcomes – from helping a city manage its infrastructure or a business optimize its assets to guiding drivers to their destination safely. To learn more about HERE, including our new generation of cloud-based location platform services, visit 360.here.com and here.com.
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