Annual Report • Mar 3, 2016
Annual Report
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| 4 | History | 3 |
|---|---|---|
| 6 | Highlights of 2015 | |
| 7 | Five-year overview | |
| 9 | Message from the CEO | |
| 11 | Who we are and what we do | |
| 25 | Sustainability | |
| 31 | Share information | |
| 32 | Management Board | |
| 33 | Supervisory Board | |
| 35 | Report of the Management Board | |
| 45 | Report of the Supervisory Board | |
| 49 | Policies | |
| 53 | Consolidated financial statements | |
| 89 | Company balance sheet and income statement | |
| 98 | Independent auditor's report | |
| 106 | List of acronyms and abbreviations | |
| 107 | Explanation of some concepts and ratios | |
| 108 | Contact details |
1908
Acomo's predecessor, N.V. Rubber Cultuur Maatschappij Amsterdam (RCMA), listed on the Amsterdam Stock Exchange
RCMA is subject to a reverse take-over by Catz International resulting in a fresh start as an international commodity trading house
1908 - late fifties
RCMA operates mainly in rubber and palm oil plantations in Indonesia
Acomo, short for Amsterdam Commodities N.V.
6 |
| 2015 | 2014 | 2013 | 2012 | 2011 | |
|---|---|---|---|---|---|
| Consolidated figures (in € millions) | |||||
| Sales | 681.6 | 618.9 | 584.4 | 593.1 | 571.0 |
| Gross margin | 110.0 | 101.8 | 91.9 | 87.6 | 83.4 |
| EBITDA | 51.4 | 51.4 | 43.7 | 43.9 | 38.4 |
| EBIT | 47.1 | 47.4 | 40.2 | 41.1 | 40.8 |
| Financial result | (3.0) | (2.8) | (2.6) | (2.7) | (2.6) |
| Corporate income tax | (11.8) | (11.5) | (10.2) | (11.4) | (11.4) |
| Net profit | 32.3 | 33.1 | 27.4 | 27.0 | 26.2 |
| Impact of specific one-off items on net profit | 0.9 | 0.3 | (1.7) | (0.6) | (0.6) |
| Net working capital | 87.4 | 81.9 | 69.8 | 68.6 | 65.8 |
| Shareholders' equity (before final dividend) | 168.3 | 151.9 | 130.8 | 121.1 | 111.4 |
| Total assets | 348.9 | 337.2 | 277.2 | 265.8 | 276.3 |
| Ratios | |||||
| Solvency | 48.2% | 45.1% | 47.2% | 45.6% | 40.3% |
| Return on equity (ROE) | 20.1% | 23.4% | 21.7% | 23.2% | 25.4% |
| Return on net capital employed (RONCE) | 18.1% | 20.9% | 19.9% | 20.2% | 21.3% |
| RONCE operating companies (excluding goodwill) | 23.3% | 27.1% | 25.9% | 26.3% | 28.5% |
| Dividend pay-out ratio | 74.2% | 78.8% | 65.6% | 60.2% | 57.5% |
| Net debt/total equity | 0.64 | 0.61 | 0.58 | 0.63 | 0.89 |
| Key performance indicators (in €) | |||||
| Earnings per share | 1.352 | 1.396 | 1.174 | 1.163 | 1.130 |
| Dividend per share (2015: proposed) | 1.00 | 1.10 | 0.77 | 0.70 | 0.65 |
| Equity per share at year-end | 7.016 | 6.392 | 5.560 | 5.210 | 4.793 |
| Share price at year-end | 23.20 | 19.01 | 16.55 | 13.90 | 10.34 |
| Share price high | 25.83 | 19.01 | 16.95 | 14.35 | 11.34 |
| Share price low | 18.85 | 16.19 | 13.90 | 10.00 | 8.71 |
| Price/earnings ratio at year-end | 17.2 | 13.6 | 14.1 | 12.0 | 9.2 |
| Market capitalization per 31 December (in millions) | 556.6 | 451.8 | 389.4 | 323.1 | 240.4 |
| Net cash flow from operating activities (in millions) | 31.8 | 37.2 | 26.4 | 27.8 | 17.2 |
| Number of shares outstanding (in thousands) | |||||
| Average | 23 858 | 23 679 | 23 333 | 23 248 | 23 150 |
| At year-end | 23 991 | 23 767 | 23 532 | 23 248 | 23 248 |
| Diluted | 24 187 | 24 044 | 23 911 | 23 650 | 23 523 |
| Exchange rates | |||||
| US dollar at year-end | 0.921 | 0.826 | 0.725 | 0.758 | 0.772 |
| % change | 11.4% | 14.0% | -4.3% | -1.8% | 2.3% |
| Average US dollar | 0.901 | 0.753 | 0.753 | 0.778 | 0.718 |
| % change | 19.7% | 0.0% | -3.2% | 8.4% | -6.0% |
| 7
Working together with Rawther: their processing and sterilization of raw spices adds to the Catz International product range.
| A M S T E R DA M CO M M O D I T I E S N.V. ANNUAL REPORT 2015
In 2015, Acomo has shown that it is able to maintain the level of achievement of previous strong years. The figures we present in this Annual Report 2015 are testament to the stability of our organization and the robustness of our business model.
The year 2015 has shown a robust and solid result which was more or less similar to the 2014 result. It gives me confidence for the future and shows me that the teams can deliver in difficult market environments. Looking at the key performance indicators we closed with a solid net profit of € 32.3 million. Acomo delivered € 1.35 earnings per share, we increased our equity per share from € 6.39 to € 7.02 and we achieved a return on net capital employed of 18.1%. This enabled us to maintain our dividend at € 1.00 per share, excluding a special dividend of € 0.10 per share. All in all a good year for you, our shareholders.
As CEO, I am proud of the people of Acomo, whose unrelenting commitment within the group companies has made it possible to deliver a solid year for our shareholders, for our customers and suppliers, and for all other stakeholders. There is no doubt that we are on the right track, achieving steady growth through a focus on quality and effective risk management. The inspiration for our commitment is deeply rooted in Acomo's familial culture of entrepreneurship. We understand that our success partly depends on the success of our partners and we therefore cherish our relationships that benefit our partners as much as ourselves. Hence the theme of this annual report: going further together.
Looking at the results of our separate product segments, we see Spices and Nuts maintaining its high results through a combination of strict risk management and excellent position-taking. In its 159th year of existence, Catz International produced the best result in its history and I congratulate the Catz family with this incredible result. King Nuts & Raaphorst equaled its record performance of 2014 such that the Spices and Nuts segment contributed 60% to the total profit of the Group. Tea is slowly reaping the benefits of its focus on the quality of earnings and here too we see positive developments in results with a higher net profit. The challenge is now to keep increasing these results in the years to come. In Food Ingredients, we are seeing the leverage on the investments in Ruddervoorde, Belgium. Increased production capacity is enabling us to meet the growth in demand. Growth has been picking up in pace such that we achieved an increased net result. In 2015, we fully integrated Tefco in Snick EuroIngredients and Tefco will cease to exist in 2016.
Edible Seeds experienced a difficult year in challenging market circumstances. In North America we experienced lower gross margins mainly due to lower commodity prices across the board and especially for sunflower seeds. This combined with a non-existent winter in the fourth quarter made the year a challenging one for Red River Commodities. Focusing on factors that are within our control, we have made investments in quality and efficiencies in our US facilities in 2015 that will lead to improvements in quality, cost efficiency, food safety and sustainable production. The results for sunflower seeds in the European countries were disappointing in the first half of the year. There was more reason for optimism in the second half of the year, as the market stabilized somewhat in Europe. Poppy and other seeds performed satisfactorily.
Our business also saw further reinforcements in the fields of IT and risk management systems. Further implementations of new technology ensure that we will stay prepared to act efficiently and effectively in the interests of our stakeholders. The pace of market developments is continuously increasing, but state-of-the-art technology and a strong, flexible business model enable Acomo to maintain its market position.
In terms of sustainable business and corporate responsibility, we developed a uniform Code of Conduct. This builds on Acomo's long history and family culture that help us understand that there is more to life than short-term gains. We make our contribution to the future of the planet by upholding our company values and working together with our partners in the chain. I am convinced that the principles of sustainability must have and do have a significant role in the business models of each and every one of our operating companies.
Klaas Huitema, former Managing Director of Catz International, passed away on 15 October 2015. Throughout his career, he has shown inspirational leadership and his contribution to the continued success of Catz International has been invaluable. As CEO of Acomo I have personally experienced, albeit too short, his support and involvement, and I'm sure that many share the same experience. Klaas Huitema will be missed.
One final development in 2015 that deserves to be mentioned here is the resignation of our CFO, Jan ten Kate. I'm very grateful for Jan's loyal support and for his immense contribution to the success of Acomo. He was succeeded as CFO by Allard Goldschmeding, who I will gladly introduce to the shareholders at the general meeting on 26 April 2016.
I am proud of the results of our product segments and on the way we have achieved those results through collaborations within the Group and with our customers and partners. And I'm proud of the long-standing colleagues and the talented young people who choose to work with us. I would like to thank them for their hard work and the Supervisory Board for their continuous support and advice.
In 2016, Catz International celebrates 160 years in business, a remarkable achievement in today's world and a token of the sustainability of its business model. Catz International and the Acomo Group as a whole will continue to go further together with our stakeholders and pursue strategic value for the long term. We have a strong foundation that we can build on and we are confident about this new year of business.
I will be happy to further explain Acomo's results and expectations in this Annual Report 2015 and at the general meeting of shareholders in Rotterdam on 26 April 2016. I am pleased to invite you to that meeting, also on behalf of our new CFO, Allard Goldschmeding.
Erik Rietkerk, Chief Executive Officer
Klaas Huitema, former Managing Director of Catz International, passed away on 15 October 2015, aged 82.
Klaas was a man of tradition (people addressed him as 'sir', never as 'Klaas') but also a business leader who could think outside of the box. When prices of nutmeg and mace dropped dramatically in the early eighties, he was able to bring farmers and traders together to agree on an export limitation that brought the market back to health. He led the acquisition by Catz International of the smaller, but listed N.V. Rubber Cultuur
Maatschappij Amsterdam. Next, the buyer became a subsidiary of the acquired firm, paving the way for the group structure of the firm now known as Acomo. He joined Catz International at the age of 19. He spent his formative years in Indonesia as a trader in spices. In 1960 he came to the Rotterdam office, where he led the trade with Indonesia, China, Malaysia and the Caribbean. In 1978 he was appointed Managing Director. His entire working life was spent in service of Catz International and he stayed involved with the company till the very last.
Amsterdam Commodities N.V. ('Acomo' or 'the Company') is the holding company of an international group of companies active in the worldwide sourcing, processing, trading, packaging and distribution of natural food products and ingredients for the food and beverage industry (together 'Acomo Group' or 'the Group'). The product range comprises more than 500 main products including spices, nuts, dried fruits, tea, seeds (especially sunflower seeds) and natural food ingredients. The Group is active in more than 90 countries and employs close to 600 people.
Acomo is a public limited liability company listed on the Amsterdam stock exchange (Euronext Amsterdam). The activities of the Group are being carried out by the group companies in four segments:
Catz International B.V. Rotterdam, the Netherlands Ho Chi Min, Vietnam
Tovano B.V. Maasdijk, the Netherlands
King Nuts B.V. Bodegraven, the Netherlands
Red River Commodities Inc. Fargo, USA
Red River-van Eck B.V. Zevenbergen, the Netherlands
Red River Bulgaria EOOD Varna, Bulgaria
SIGCO Warenhandelsgesellschaft mbH Hamburg, Germany
All group companies are 100% subsidiaries.
Van Rees Group B.V. Rotterdam, the Netherlands
with offices in: Blantyre, Malawi; Cairo, Egypt; Colombo, Sri Lanka; Coonoor, India*; Dubai, UAE; Hanoi, Vietnam; Jakarta, Indonesia; London, UK; Mombasa, Kenya; Moscow, Russia; Rotterdam, the Netherlands; Toronto, Canada
* since February 2016
Snick EuroIngredients N.V. Ruddervoorde, Belgium
TEFCO EuroIngredients B.V. Rotterdam, the Netherlands
We are working together with our suppliers to provide our customers pesticide-free teas for a safe consumer experience.
| A M S T E R DA M CO M M O D I T I E S N.V. ANNUAL REPORT 2015
12 |
The group companies source, process, trade, pack and distribute natural food products and ingredients. In these activities the companies strive to add value in each part of the food value chain. We supply peace of mind by bridging the specific needs of multiple stakeholders. Retail
Our role in the value chain is strengthened as we bridge the specific needs of our customers, allowing them to fully focus on their core activities. We support our trading activities with specific value-adding services such as storage, blending, cleaning, processing, packaging and distribution. Health & Safety Health & Safety Health & Safety Health & Safety Supplier
In our sourcing activities, we constantly maintain contact with growing areas and regularly visit the production centres. This enables us to maintain high quality standards and also to keep buyers fully informed of market developments and product availability. We make use of innovative techniques to develop new products in collaboration with our suppliers. In sunflowers seeds, for instance, we supply growers with innovative hybrids of confectionary seeds. We give growers peace of mind by contracting to buy all harvested raw sunflower seeds. We also bridge the entry to the market for small producers by opening our sales and marketing network for them. Working conditions and fostering talent Consumers Health & Safety Health & Safety Supplier Health & Safety Health & Safety Health & Safety Health & Safety Supplier Working conditions and fostering talent Consumers
At multiple destinations, we store our customers' products and provide vendor managed inventory solutions. This allows us to ensure the quality of our products, to secure the proper and timely execution of contracts under all circumstances, to reduce price volatility and to reduce the working capital needs of our customers. In collaboration with our customers we also develop new products and customized (functional) blends that are tailor-made according to their specifications. To ensure the high quality and safety of our products we not only maintain extensive communication with farmers and our suppliers, but we also apply rigorous quality control programmes, work with certified partners and continuously invest in our facilities and highly qualified staff. By bridging the distance between origin and destination of our products we always supply high-quality products, on time and in spec. Grower Working conditions and fostering talent Consumers
food and beverage industries around the world. We help our customers by delivering on time and according to specifications regardless of price volatility.
14 | We are committed to supplying peace of mind to all our partners. Entrepreneurship, modesty, long-term growth, reliability and passion for our products are important values within the companies of the Acomo Group and in their relationships with shareholders, customers, suppliers and other partners. These values are important cornerstones in the way we conduct our business. Together with our partners we are continuously exploring new opportunities for improvement and growth. The lead factors are reliability and contract security. Acomo's keys to success are its worldwide sourcing capabilities, absolute reliability of contracts, effective risk management, operational excellence and socially responsible entrepreneurship.
Risk management is an integral part of the responsibility of every trader and manager. Our risk management tools help us to be successful in extremely volatile markets.
Our experienced trading teams have the market intelligence and the capabilities to connect supply and demand. They create new opportunities for further growth.
By focusing on responsible entrepreneurship we work together with our partners on sustainable business opportunities which help to create more sustainable supply chains.
Worldwide sourcing capabilities
up to two centuries we have built a global network that ensures we can source the right quality and quantities for our customers every time.
This assurance and our proven reliability have resulted in strong and long-standing business relationships around the globe that are based on mutual respect and trust.
Absolute reliability of contracts We ensure our partners that a contract is a contract.
Our mission is to achieve long-term sustainable growth of shareholders' value through consistent growth of earnings per share, allowing for continued high dividend pay-outs representing above-market dividend returns.
We pursue growth of the earnings per share by maximizing opportunities in the international sourcing, trading, processing, packaging and distribution of niche food commodities, ingredients and semi-finished products for the food and beverage industries.
Acomo actively pursues a two-tier policy to achieve long-term sustainable growth:
Our operational and financial selection criteria are strict because we do not want to compromise the high profitability of the existing activities and the other achievements and values of the Group.
Among the financial objectives of the Company and its subsidiaries are:
These objectives are applied and monitored throughout the Group.
Acomo is the holding company of the Group. It holds the shares in and has legal control over the Group's subsidiaries. Acomo has been listed on Euronext Amsterdam since 1908. The holding company is intentionally kept small, flexible and cost-efficient. Today the holding company employs eight FTEs.
The holding company's main tasks are:
The subsidiaries are the operating companies of the Group. They perform trading and processing activities in their own name and for their own account. To a great extent, they operate autonomously under the responsibility of their own management and financial control. Specific trading and financial guidelines and risk limits are in place per operating company, per product and per activity and the large subsidiaries are supervised by their own supervisory boards, which may include members of the Supervisory Board and/or Management Board of the Company.
The operating companies are divided into four product segments, which are presented on the following pages.
King Nuts & Raaphorst supplies weekly open markets in the Netherlands and entrepreneurs like this one in the Markthal in Rotterdam. These channels put the firm in a strong market position.
| A M S T E R DA M CO M M O D I T I E S N.V. ANNUAL REPORT 2015
Catz International is a leading trading house and supplier of spices, nuts, coconut products, dehydrated vegetables and dried fruit. Founded in 1856, the company uses its experience and market knowledge to recognize and anticipate on market opportunities. Catz International's expert traders visit the growing areas regularly and are in daily contact with all the major growing areas and suppliers. These contacts enable them to keep buyers fully informed of market developments and to be conversant with the different product qualities.
Catz International uses its experience and market knowledge to take advantage of market opportunities when deemed appropriate. Active in over 80 countries in the world, Catz International makes the largest contribution to the Group in terms of sales and profit.
King Nuts & Raaphorst is an established name in the world of nuts, dried fruit, rice crackers and superfoods. Since 1981 the company has been importing its products from around the world to supply customers in Europe and beyond. Products with added value are packaged to suit buyers' needs. King Nuts & Raaphorst supplies products in bulk packaging. With a storage capacity of 5,000 pallets in its factory warehouses, the company has the necessary in-house scope and space to ensure fast and consistent quality. Products are transported on a daily basis by the company's own vehicle fleet as well as by external carriers.
King Nuts & Raaphorst imports its products in bulk. Nuts are processed in self-owned and third-party production facilities. These are tested for quality at every stage of the process. Qualified employees operating state-of-the-art equipment guarantee a consistent top result.
Tovano is specialized in shelled and unshelled nuts, dried fruits, seeds, chocolate, rice crackers and snack products. Quality, food safety and flexibility in packaging and presentation are key factors of its business proposition.
Tovano's history covers more than six decades. It has earned the company a worldwide network of trusted suppliers and a good reputation. Tovano is well-known for being a reliable partner that imposes high standards in food safety. Furthermore, the company is able to tailor its products to each customer's requirements and wishes. As retail organizations, fruit and vegetable exporters, industrial food-processing companies, wholesalers and traders all have experienced at first hand.
We source and distribute spices, nuts, dried fruits and dehydrated vegetables to and from over 80 countries all over the world. With a global network of partners we maintain constant contact with growers and producers to keep up with market developments.
We have our own exclusive, specially developed sunflower hybrids that we share with growers in regions around the globe.
Red River Commodities specializes mainly in confectionary sunflower seeds, both in-shell and kernels, for the snack industry and retail chains that sell wild bird food products. It operates from five different sites, with headquarters in Fargo, North Dakota, USA. With production facilities in a variety of geographical areas in the Midwest, from north to south, Red River Commodities does not depend on the growing conditions of any single location. This has earned the company a solid reputation and a leadership position. The processing facilities for cleaning, sorting, grinding, custom roasting and packaging are located in Fargo and Horace, North Dakota, in Colby, Kansas, and in Lubbock, Texas. From there, products for human consumption and wild bird food are shipped across the US and exported outside the US.
Red River Commodities' customers can be found in the snack industry, retail industry and in retail chains that sell wild bird food products. Its subsidiary SunGold Foods is active in roasting, salting and flavouring sunflower, soybean and other specialty products. The company also provides contract packaging for customers in a peanut- and tree-nut-free environment. The company also produces and sells SunButter®, a healthy alternative to peanut butter, made from specially roasted sunflower seeds. SunButter® is completely peanut-, treenut- and gluten-free. Packed with nutrition, SunButter® is an excellent choice for people with peanut allergies. It is distributed through US school systems, retailers and through internet-based sales.
Red River-van Eck, located in Zevenbergen, the Netherlands, is specialized in the processing and distribution of mainly poppy seeds to the confectionary, spice and bakery industries. It has achieved its leading position in the industry through entrepreneurship, reliability and commitment to its customers. With more than 125 years of experience, Red River-van Eck knows where to find the right products to satisfy its customers. It sources all over the globe, never compromising on quality, and works closely with its sister company Red River Commodities.
Red River Bulgaria in Varna oversees and coordinates its growing confectionary sunflower activities in Southeast Europe. Here, contract farmers grow confectionary sunflower seeds, which are cleaned, sorted and packaged by third parties for sales in Europe, the Mediterranean Rim and the Middle East.
SIGCO Warenhandel, located in Hamburg, Germany, is mainly active in the German market in the trade and distribution of edible seeds such as poppy seeds, sunflower seeds, sesame seeds and pumpkin seeds. Quality and contract performance have contributed to the fact that SIGCO Warenhandel is considered one of the leading suppliers of companies in the German baking and confectionary industry, where significant quantities of edible seeds are processed. Known for its first-class products and personal approach, SIGCO Warenhandel is seen as a reliable business partner. At origin, the company ensures that the quality and contract performance are guaranteed.
We source, produce, package and distribute sunflower seeds, poppy seeds and other specialty seeds for human and wildlife consumption. All our seed companies do so while maintaining a high standard through rigorous quality programmes.
In our Tea segment, we have rolled out a tailor-made ERP solution to create a single platform to share information throughout the global supply chain. This has enhanced communication and transparency, and facilitates better risk management.
| A M S T E R DA M CO M M O D I T I E S N.V. ANNUAL REPORT 2015
Van Rees Group has been active as a global tea trader since 1819. It acts as an international supplier and processor of tea with a global network of twelve offices in tea-producing and tea-consuming countries. Its product and market expertise are rooted throughout the organization. They form the basis for all commercial activities. Supplying both private and public sectors has earned Van Rees Group recognition in the tea industry as a true world market leader.
Van Rees Group has extensive knowledge of and experience with almost all the tea markets in the world. As a result, it can meet all its customers' demands in terms of colour, taste, smell, leaf form and colour under the milk. Together with customers new products are developed at the specification of customers and at attractive costs.
In the tea-producing countries India, Indonesia, Kenya, Malawi, Sri Lanka and Vietnam, Van Rees Group offices have exclusive representations that visit local weekly tea auctions and local tea estates. The group supplies tea from any origin to both private and public sectors in many tea-consuming countries. Sales offices in Cairo, Dubai, London, Moscow, Rotterdam, Toronto, as well as in the countries where sourcing offices are located, deal with customers' requirements every day. Blending facilities are located in Colombo, Dongen, Jakarta and Mombasa. The blending facilities operate to customer specifications.
Today, Van Rees Group is one of the largest cross-border tea traders in the world.
Van Rees Group is very active in the area of sustainability. It works with growers and customers to establish sustainable supply chains for consumers.
As from February 2016, Van Rees Group also has an operation in South India through the acquisition of the business of Container Tea & Commodities by the newly established subsidiary Container Tea – Van Rees Trading Private Limited. This acquisition marks Van Rees Group's first step into India and will bring certified tea grown by a number of excellent estates to multi-national clients.
With a global network and offices around the world we have extensive knowledge of and experience with all the main tea markets. Van Rees Group is one of the largest cross-border tea traders in the world.
Further growth potential in Food Ingredients was achieved through the introduction of new blending facilities in Ruddervoorde.
| A M S T E R DA M CO M M O D I T I E S N.V. ANNUAL REPORT 2015
Snick EuroIngredients manufactures ingredients and supplies them to food producers, especially producers of savoury foods and food products. Its products are natural flavouring ingredients, raw materials, semi-finished flavourings, and wet or dry compounds and blends. The company has been active since 1993. With decades of experience and a team of highly motivated food technologists, it helps clients to select and develop the best suitable flavours and blends. Clients may also use its professional kitchen and pilot plant, all for the creation of unique and innovative concepts. Most of Snick EuroIngredients' applications can be found in sauces, soups, meat and fish preparations, mayonnaise and desserts. In the sweet product range it further provides a wide range of products for the bakery, confectionary, dairy and beverage industries.
In 2015, Tefco EuroIngredients was merged with Snick EuroIngredients. For some time, the two companies had been operating under one management team and with a single strategic direction for the Benelux countries. Now a single Snick EuroIngredients proposition fully covers the Benelux.
Tefco EuroIngredients' contribution to the new Benelux-wide Snick EuroIngredients operation consists of ingredients for manufacturers of bakery products, savoury snacks and meals, confectionary, beverages, animal food and nutritional supplement – a wide range of products, mainly from European producers.
The Food Ingredients segment is active in flavours, functional additives and specialties. In flavours, we provide meat flavours such as poultry and veal, vegetable flavours such as carrot, onion and tomato, cheese flavours, yeast extracts, spices and herbal blends. In functional additives we provide system solutions such as natural colourings, texturizers and sweeteners. And in specialties we provide products such as a vegetarian Worchester sauce.
We produce and distribute natural food ingredients as single ingredients or functional blends to the food and beverage industry. Our applications are found in sauces, soups, meat and fish preparations and desserts.
We use innovative moisture sensors to improve yields and quality while saving resources such as water. Together with our partners we aim to reduce the environmental footprint of the products we sell.
| A M S T E R DA M CO M M O D I T I E S N.V. ANNUAL REPORT 2015
The Group sources, trades and distributes over 500 agricultural commodities from and to more than 90 countries. Our role in the supply chain enables us to build bridges between customers and suppliers all over the world. With our knowledge and experience we can provide access to the world market, which helps our growers and suppliers to sell their production. At the same time we source high-quality and safe products from all over the world and deliver them to our customers when needed, regardless of price volatilities. We at Acomo understand that a balance between profit, people and natural resources is the only way to achieve sustainable development and long-term growth. Sustainable development asks for innovative ways of doing business: entrepreneurship as well as increased and innovative collaboration with existing and new partners.
As we are an international group of companies in various supply chains there are many different stakeholders who have an impact on or are impacted by our business. Our main stakeholders are our employees, customers, suppliers, shareholders, governments, research institutions and NGOs. We team up with our partners to address challenges and opportunities in our pursuit of sustainable development. Together we go further, we continuously seek new opportunities for improvement and growth. As a trading house, we recognize that there are limits to the direct influence we can have on social and environmental opportunities and challenges. The dialogue with our stakeholders enables us to work together on practical solutions for challenges that can't be solved by a single organization.
Corporate social responsibility (CSR) is on the agenda at all levels of the organization. The Management Board and Supervisory Board agreed upon the CSR framework and the project Road to sustainable growth. In 2015 we continued this project in which we have been conducting extensive research, including many conversations with internal and external stakeholders. This has helped us understand the developments in our segments, the challenges and opportunities and also the role the companies in the Group can have in creating more sustainable supply chains.
Based on our research we have identified three material CSR topics: health and safety, environmental footprint and working conditions and fostering talent. We focus on opportunities both in the supply chain and in our own operations, which enables us to deliver responsible high-quality products to our customers.
These CSR topics are, to varying extents, relevant for all companies in the Group, where they require a tailored approach. Because of differences in business models, size and presence in the supply chain, the operating companies focus on their individual challenges and opportunities. The management of each company in the Group is responsible for the development and implementation of CSR activities in their own operations. Acomo supports the operating companies in this process. All Acomo companies work together with their partners and take responsibility to bridge the need for a healthy planet. Distribution Trading Retail
Healthy and safe products are and have always been a top priority for all the companies in the Group. We are committed to providing safe products to our customers.
Food safety does not start in our facilities, but with the seeds and the cultivation methods at the farms that grow the products we trade and distribute. We work closely with our suppliers to ensure that the products we buy are safe and compliant with relevant regulations. Especially the use of chemicals and pesticides is a growing problem for many of our agricultural commodities. We work together with our suppliers and other partners to address this complex issue.
... The field teams of the Edible Seeds segment have many years of experience in working together with sunflower farmers across the US. This has made it possible to provide farmers with training and advice about pesticides and fertilizer use, which contributes to better yields, quality and food safety of the products. ...
... Pesticides pose significant issues in the Asian tea industry. Excessive use of pesticides and chemicals at estate level is not only a risk for product safety, but also for the environment and the health of workers at the estate. Van Rees Group is working with various smallholder farmer groups in Vietnam to grow, harvest and process tea that is safe for consumption and compliant with regulations. Through the local tea association and IDH, awareness of the risks related to pesticide use has increased. Farmers are trained by agro teams to reduce pesticide usage. Through its local processing partner, Van Rees Group is increasing production capacity close to farmers to be able to process tea that is compliant with EU standards. ...
With strict control policies in all our facilities we minimize food safety risks for our customers. Our facilities are certified according to standards such as FSSC22000, HACCP and SQF. Together with suppliers and customers we work on product innovations that lead to healthier alternatives and products that are safe for people with allergies.
... Snick EuroIngredients produces and distributes natural flavouring ingredients and blends. The research and development department develops unique, tailor-made products that contain less salt, fat and sugar without compromising on taste. ...
We focus on efficiency and innovative technologies to save natural resources and lower the environmental impact of the products we sell.
Soil quality, water availability and the right weather conditions are essential for growing the agricultural products we source. We don't own farms or estates, but we work with our partners in the supply chain to improve quality and yields. If our suppliers are able to improve production per hectare while reducing the amount of resources used, this will reduce the environmental footprint. With many of our suppliers we have long-standing relationships with mutual understanding of the importance of long-term availability of fertile soils.
... In 2015, Red River Commodities and several of its Texas farmers installed soil moisture sensors. The data from these sensors provides information that leads to more efficient use of water. The farmers who installed the sensors reduced their water usage by a minimum of 15%. This reduction is expected to increase once the farmers become more familiar with the sensors and the data. ... Health & Safety Health & Safety
The environmental footprint of the Acomo companies is relatively small, but we always try to improve when it comes to reducing our footprint. We found that our main direct environmental impact comes from energy usage and waste in our processing facilities. We continuously search for new ways to save energy and find new uses for the residual products that would otherwise be considered as waste. This past year we started measurements and created baselines in our own processing facilities. These baselines help us to even better understand our impact on the environment, to identify saving opportunities and to improve communication about improvements. In the coming years we will work on further energy and waste reductions and continue our measurements. Grower Working conditions and fostering talent Consumers
... Various energy-saving initiatives have been implemented in our Van Rees Group facilities. The tea blending facility in Colombo, Sri Lanka, made adjustments on the roof at the beginning of 2015 to make more efficient use of daylight coming into the facility. Van Rees Group in Dongen, the Netherlands, introduced a more energy-efficient compressor. ...
7.1 kg waste per tonne produced product*
* Included are production facilities where electricity usage and waste are significant. Data from King Nuts & Raaphorst (only electricity data included), Red River Commodities, Red River-van Eck, Van Rees Dongen, Van Rees Colombo and Snick EuroIngredients is included.
We employ close to 600 people and the products we trade provide a livelihood for many more (smallholder) farmers and their workers. We work together with our partners to create value for all actors involved. Health & Safety Health & Safety Supplier
The products we source originate from around the world. It goes without saying that different origins face different opportunities and challenges regarding working conditions and fostering talent. Some products come from rural areas of emerging markets where poverty, lack of education and sanitation are major challenges, which increases the risk of child labour and poor working conditions. These are complex issues, which we as traders can address only indirectly and to a limited extent. Therefore we work together with our suppliers, customers, NGOs, governments and other partners to tackle these challenges.
... In 2015 Van Rees Group joined the Malawi Tea 2020 Revitalization Programme in which it works together with tea producers, tea packers, IDH, ETP, certification bodies and retailers. In this programme, twenty organizations work together to achieve a competitive and profitable Malawian tea industry in which workers earn a living wage and smallholders earn a living income. As a bridge between producers and tea brands, Van Rees Group provides access to markets and focuses on improving incomes by supporting producers in their efforts to achieve better yields and quality. ... Footprint Distribution Trading
Acomo is an international group of companies with offices all over the world. A talented and motivated workforce is essential for achieving our goals. We seek to attract, develop, reward and retain competent and motivated individuals. All companies in the Acomo Group promote a culture that is built on mutual respect and is free of harassment and discrimination. Everyone in the Acomo Group is responsible for creating a healthy, inspiring and challenging work environment where talent can grow.
In addition to Acomo's CSR efforts at the corporate level, employees of Catz International are active through the Catz Charity Foundation. This foundation was established after the deadly tsunami in 2004, with the objective to channel individual initiatives of Catz International employees and other partners. The foundation continues to focus on smallscale projects with reliable partners and minimal overhead costs to ensure that as much as possible of what is donated reaches those who need it.
The Catz Charity Foundation supports several local organizations with financial and material donations. Many of the projects help young people develop skills that enable them to build a future and become self-supporting.
In 2015 the foundation supported the following organizations:
The Catz Charity Foundation welcomes and appreciates your support and donations to help improve lives in communities in need. For more information please visit www.catz.nl. For donations please transfer your funds to: IBAN NL79ABNA0439501385, ABN AMRO Bank.
Together with local partners the Catz Charity Foundation supports small-scale projects that help to develop talent and improve the living conditions of local communities.
| A M S T E R DA M CO M M O D I T I E S N.V. ANNUAL REPORT 2015
30 |
Acomo shares have been listed on Euronext Amsterdam since 1908 (ISIN code NL0000313286). The shares | 31 were included in the AScX index on 21 March 2011.
We aim to maintain the Group's traditionally strong dividend policy. This policy implies that a substantial share of the annual net profit is paid out to the shareholders in cash every year. The pay-out ratio is subject to the realized free available cash flow and solvency and also depends on investment opportunities of the Group.
| Per ordinary share (in €) | 2015 | 2014 | 2013 | 2012 | 2011 |
|---|---|---|---|---|---|
| Net profit (basic) | 1.352 | 1.396 | 1.174 | 1.163 | 1.130 |
| Dividend in cash (2015: proposed) | 1.00 | 1.10 | 0.77 | 0.70 | 0.65 |
| Shareholders' equity at year-end | 7.016 | 6.392 | 5.560 | 5.210 | 4.793 |
| Share price - closing prices | |||||
| Year-end | 23.20 | 19.01 | 16.55 | 13.90 | 10.34 |
| High | 25.83 | 19.01 | 16.95 | 14.35 | 11.34 |
| Low | 18.85 | 16.19 | 13.90 | 10.00 | 8.71 |
| Price/earnings ratio at year-end | 17.2 | 13.6 | 14.1 | 12.0 | 9.2 |
Shareholders holding 3% or more (latest information based on total issued shares as at 31 December 2015):
| Mont Cervin Sarl. | 15.28% |
|---|---|
| Mawer Investment Management | 12.68% |
| Red Wood Trust | 9.62% |
| Monolith Investment Management B.V. | 5.03% |
| Todlin N.V. | 5.00% |
| 47.61% | |
| Other | 52.39% |
| Total | 100.00% |
The number of issued shares in 2015, 2014 and 2013 were as follows:
| 2015 | 2014 | 2013 | |
|---|---|---|---|
| At year-end | 23 990 826 | 23 766 701 | 23 531 676 |
| Weighted average | 23 857 654 | 23 679 378 | 23 332 788 |
| Fully diluted at year-end | 24 187 346 | 24 044 418 | 23 910 588 |
| Fully diluted weighted average | 24 115 882 | 23 977 503 | 23 780 093 |
In 2015, the total number of Acomo shares traded was 4.7 million, on average 18,210 per day. This represented 19.54% of the number of issued shares. The market capitalization at year-end amounted to € 556.6 million (2014: € 451.8 million, + 23.2%). The average traded share price in 2015 was € 22.69 (2014: € 17.45 + 30.0%).
The Company consists of a small management team. The CEO and the CFO together make up the Management Board of the Company. The CEO also acts as Company Secretary as described in the Dutch Corporate Governance Code ('the Code').
The task of the Management Board is to manage the Company, which includes the responsibility for the performance of the Group, the implementation of the Company's role, objectives and strategy, within the risk profile relating to the strategy and taking into account corporate social responsibility aspects which are relevant for the Company.
Any form and appearance of a conflict of interest between the Company and the Management Board members is avoided. Decisions to enter into transactions involving potentially conflicting interests on the part of Management Board members who are of (material) significance to the Company and/or the respective Management Board members require the approval of the Supervisory Board.
The Company's Articles of Association and the Code of Conduct for the Management Board include most of the Code's principles and best practice provisions insofar as they apply to a two-person Management Board. The Code of Conduct is published on the Company's website www.acomo.nl/corporate-governance.
As of 1 August 2015, Mr J. ten Kate resigned from his position as CFO at Acomo. Acomo's new CFO, Mr A. Goldschmeding, joined the Company as per 1 December 2015 and has been nominated for appointment as statutory director in the upcoming annual general meeting.
E. Rietkerk (1960), Dutch Chief Executive Officer, appointed on 7 May 2013
A. Goldschmeding (1964), Dutch Chief Financial Officer, to be appointed, 26 April 2016
The composition of the Supervisory Board of the Company is aimed at its proper functioning in the specific corporate governance structure of the Group, particularly taking into account the close working relations between the Supervisory Board and the Management Board of the Company and the managements of its subsidiaries. In this perspective, experience and expertise in the areas in which the Group is active are the most important criteria. Experience in international business and proven managerial skills, preferably in purchasing, marketing, processing and distribution of food commodities, mergers and acquisitions, CSR and strategy are required. Specific expertise in financial, economic and (Dutch) social matters needs to be present, as well as affinity with international trade and customer focus. In the manner of its composition, the Supervisory Board seeks to group a variety of experts who complement each other and provide a good balance of ages and genders. A conscious attempt is made to appoint several members who are still fully active, particularly in the business community.
The Supervisory Board shall, to the maximum possible extent, take the above guidelines into account when considering appointments to the Board. Resigning members are eligible for re-appointment, for a period of six years each time. Considering the value of expertise and long-term experience with the activities of the Group, there is no limitation with regard to the maximum number of terms of Supervisory Board members. The Company adheres to the best practice rules of the Code and the Act on Corporate Management and Supervision (Wet Bestuur en Toezicht) with regard to the maximum number of Supervisory Board mandates a Supervisory Board member may hold and with other incompatibilities regarding the appointment of candidates as member of the Supervisory Board. The Code of Conduct is published on the Company's website www.acomo.nl/corporate-governance.
B. Stuivinga, Chairman (1956), Dutch Member of the Supervisory Board since 2002, re-appointed in 2010, resigning in 2016 Tax lawyer and attorney-at-law
Y. Gottesman (1952), British Member of the Supervisory Board since 2002, re-appointed in 2012, resigning in 2018 Private investor
J. Niessen (1963), Dutch Member of the Supervisory Board since 2011, resigning in 2017 Private investor
M. Groothuis (1970), Dutch Member of the Supervisory Board since 2013, resigning in 2019 Private investor
Taking allergen-free a step further: sunflower seeds for SunButter® are now roasted on-site at the Fargo facility. Thanks to the new roaster from Proctor.
We present to you the activities of the Acomo Group in 2015 and the consolidated financial statements for the year | 35 ended 31 December 2015.
Consolidated sales reached € 681.6 million in 2015, an increase of 10.1% compared to last year (2014: € 618.9 million). Net profit reached a solid € 32.3 million, slightly below the record of 2014 (€ 33.1 million, -2.5%).
The results for the year 2015 reflect the very strong performance in the segment Spices and Nuts, with Catz International bringing in its best result in its 159-years history. The segment Food Ingredients performed better than in 2014 and the companies within our Tea segment realized an improved and solid result. The companies within our Edible Seeds segment had a difficult year both in Europe and the US, due to record harvests, low prices and quality issues in Bulgaria.
In terms of our continuous investments for a sustainable future of our group companies, we further rolled out Van Rees Group's ERP system in two additional countries. We expect to finalize the roll-out in 2016, when the ERP system will have been implemented in all major locations. Further, we invested in three relatively large projects in the North American edible seed operations. We built an extension to the Red River Commodities office in Fargo, North Dakota, in order to insource staff that was previously located at other sites than our own offices. We invested in a new roaster for SunButter® to ensure a completely allergen-free facility, the optimal production environment for a safe consumer product. Finally, we replaced an outdated process control system in the processing facility in Colby, Kansas, to safeguard our production environment and increase efficiency.
We expanded the credit facilities with our banks at no additional costs and agreed a maximum of € 30.0 million extra for our working capital facilities. This proves again our excellent relationship with our partner banks.
Acomo participated in two career days at leading universities in the Netherlands, thereby bringing the Group closer to talented young people. We will continue these activities with the assistance of our operating companies.
On 1 September 2015, the third vesting (25%) occurred of options granted to selected employees in 2010. In 2015, 224,125 options were executed and 50,000 new options were issued. As at 31 December 2015, 25,000 vested options were still exercisable and 395,500 options were non-vested.
The 2015 results include a number of one-off items, mainly consisting of the partial release of a contingent purchase consideration and a tax gain. In total, these items had a positive impact on the 2015 net result of € 0.9 million (2014: + € 0.3 million).
36 | The US dollar strengthened substantially versus the euro in 2015 compared to 2014. The average annual euro/US dollar exchange rate in 2015 was 1.1102 (2014: 1.3285). The FX rates contributed positively to sales (+ € 53.0 million) and net profit (+ € 2.6 million). The 2015 year-end exchange rate of 1.0862 is evidence of the significantly stronger US dollar against the euro when compared to the 2014 year-end rate of 1.2100. As per 31 December 2015, currency effects led to an increase in total assets (+ € 16.5 million).
The year 2015 did not deliver a lot of respite in the general economic and political environment. There was a significant correction on the world markets in commodities such as oil and metals. This had an effect on some of our commodities, mostly in North America and in particular in the Edible Seeds segment. Prices for agricultural commodities like corn, millet and soy were hit by large price decreases, which had a downward influence on prices for confectionary seeds and also affected price levels of other ingredients of our wild bird food business. Most of our products however were less affected by this global correction. Selected commodities like pepper, nuts and tea saw upward tendencies during the year and significant volatility. In response to the volatility of our markets and the price increases and decreases we focused even more intensely on risk management. We put even more stress on credit limits and performance risks, and the Group as a whole performed well in these areas.
Looking at crops, we saw the first signs of El Niño effects in different product groups. Drought in the Far East started to influence prices and markets were taking forward views of anticipated shortages or abundances. An extreme example was the excellent yield in confectionary sunflower seeds in almost all regions of the world. Our trading teams made mostly good choices in their positions and performed well.
Geopolitical developments in the world caused severe strain on oil-dependent economies where currency volatility increased. In some countries this culminated in severe devaluations, which in turn led to an increase in risk and a decrease in local demand for imported goods. Unrest in Ukraine and the Middle East caused a serious drop in demand from these regions for products like spices, nuts, confectionary seeds and tea.
The European and American economies showed further signs of strengthening, which was more apparent in the US than in Europe. Quantitative easing made for low interest rates, which is conducive to our type of business. We saw economic growth in food in Europe and the US and we grew with this development. The slowdown in developing countries did not greatly affect our business, as our current presence in emerging regions is relatively small. We expect the economies in the US and Europe to remain on a fragile path of recovery, although we have not turned the corner yet.
Catz International performed extremely well, booking its best ever results. Sales were up significantly on 2014 due to higher average prices for various larger product groups as well as bigger volumes. Catz International remained the largest contributor to the Group's net profit. Catz International faced very volatile market conditions for many of its product groups. This volatility was particularly apparent in its spices, desiccated coconut and nuts business. Catz International again proved the value of its knowledge, experience and execution skills and was able to take advantage of its strong balance sheet.
Tovano, active in packed nuts and dried fruits, had a solid year and reached a record turnover. Profit levels were satisfactory.
King Nuts & Raaphorst, active in nuts and rice crackers, was able to maintain its market shares and margins in 2015, resulting in a net profit equal to its 2014 record year. The combination of the stronger US dollar and very high prices for certain nuts resulted in difficult trading conditions. King Nuts & Raaphorst maintained its strong position on the domestic market and increased exports compared with 2014. King Nuts & Raaphorst proved it is the market leader in the Netherlands in nuts and associated products. The management team continues to deliver excellent results.
Red River Commodities which is active in sourcing, processing and distributing edible seeds (mainly sunflower), experienced a difficult year in challenging circumstances. The global harvest for sunflower seeds was abundant and put severe pressure on the margins of the Red River Commodities' business. This, combined with a strong US dollar, made raw seed exports very challenging. Political unrest in the Middle East and war in Syria and Iraq also had an impact on demand. In 2015, price levels for confectionary sunflower seeds were significantly below 2014 with downward pressure delivered by other commodities that are used in wild bird food mixes. This resulted in lower sales and a significantly lower gross margin for Red River Commodities as a whole. SunGold sales and net profit were higher than in 2014. The main reasons included increased sales of in-shell sunflower seeds and increased volumes of alternative products such as roasted chickpeas and soybeans. Sales of SunButter®, an allergen-free substitute for peanut butter, grew in 2015. Higher costs in personnel and increased marketing efforts lowered net profit compared to 2014.
Red River-van Eck made good use of trading opportunities in the poppy seeds market and realized strong results in poppy and other baking seeds. The company's sunflower seed activities in Southeast Europe were hit by market oversupply and quality issues with the 2014 crop, for which provisions were taken in 2015. This resulted in a net loss for Red River-van Eck. In response to this, the current Bulgarian sunflower activities will be wound down.
SIGCO Warenhandel made a positive contribution to the 2015 Group net profit. The integration of SIGCO Warenhandel was completed in 2015 and the company is now ready for future growth.
Van Rees Group performed well in difficult market conditions. Through its worldwide network of 12 offices, Van Rees Group is an important supplier to tea importers in the Mediterranean region, Eastern Europe and the Middle East. Many of these markets faced adverse political and economic developments, resulting in logistical and currency challenges. A focus on the quality of earnings resulted in lower volumes in some areas. However, a focus on risk management and working capital management resulted in an increase in net profit. In 2015, Van Rees Group rolled out its new ERP system in North America and Kenya and this process will be continued in 2016.
The Group's natural food ingredients activities developed positively in 2015. Tefco EuroIngredients and Snick EuroIngredients were merged into one organization for the Benelux market, with a unified strategy and customer sales approach. As a result the office in the Netherlands was closed and inventories were centralized in Ruddervoorde, Belgium. All activities were also migrated into the Snick EuroIngredients IT system. The consolidation process will be completed during 2016.
Condensed consolidated balance sheets for the years ended 31 December 2015, 2014 and 2013 are presented below:
| 31 December | |||
|---|---|---|---|
| Condensed consolidated balance sheet (in € thousands) | 2015 | 2014 | 2013 |
| Short-term investments | |||
| Inventories | 163 147 | 164 537 | 129 117 |
| Trade receivables | 75 150 | 68 819 | 60 686 |
| Trade creditors | (37 538) | (51 212) | (32 808) |
| Other assets and liabilities, working capital related, net | (15 552) | (16 208) | (15 735) |
| Cash and cash equivalents | 1 384 | 1 558 | 1 381 |
| Bank overdrafts | (98 260) | (82 497) | (60 045) |
| Other assets and liabilities, net | (489) | (2 838) | (12 583) |
| Total, net | 87 842 | 82 159 | 70 013 |
| Long-term investments | |||
| Intangible assets | 60 436 | 56 816 | 47 174 |
| Property, plant and equipment | 42 091 | 38 014 | 35 409 |
| Provisions | (14 181) | (14 714) | (12 762) |
| Total, net | 88 346 | 80 116 | 69 821 |
| Total investments | 176 188 | 162 275 | 139 834 |
| Long-term financing | |||
| Shareholders' equity | 168 320 | 151 920 | 130 834 |
| Bank borrowings | 7 868 | 10 355 | 9 000 |
| Total | 176 188 | 162 275 | 139 834 |
The effect of higher price levels at year-end, specifically in the Spices and Nuts segment, and the strong year-end euro/US dollar exchange rate, partly offset by active working capital management, led to an increase in the Group's total balance sheet.
Total assets as at 31 December 2015 amounted to € 348.9 million (year-end 2014: € 337.2 million, + 3.5%). In 2015, the main financial developments reflected in the consolidated balance sheet were:
Solvency as per 31 December 2015 was 48.2% (year-end 2014: 45.1%), which significantly exceeds the minimum solvency levels required by Acomo's financial policy.
Condensed consolidated income statements for the years 2015, 2014 and 2013 are presented below:
| Condensed consolidated income statement (in € thousands) | 2015 | 2014 | 2013 |
|---|---|---|---|
| Sales | 681 584 | 618 871 | 584 423 |
| Cost of goods sold | (571 566) | (517 028) | (492 530) |
| Gross profit | 110 018 | 101 843 | 91 893 |
| Operating cost excluding specific items | (63 680) | (55 055) | (49 417) |
| Operating income (EBIT) | 46 338 | 47 788 | 42 476 |
| Financial income and expenses | (3 091) | (2 598) | (2 609) |
| Corporate income tax | (11 920) | (11 429) | (10 740) |
| Net profit from recurring operations | 31 327 | 32 761 | 29 127 |
| Specific non-recurring items, net | 924 | 303 | (1 742) |
| Net profit | 32 251 | 33 064 | 27 385 |
The main items (excluding the foreign exchange effects of an, on average, stronger US dollar) were:
Condensed consolidated cash flows for the years 2015, 2014 and 2013 are presented below:
| Condensed consolidated cash flows (in € thousands) | 2015 | 2014 | 2013 |
|---|---|---|---|
| Cash realized | |||
| Profit before tax adjusted for non-cash items | 45 267 | 49 538 | 45 534 |
| Change in inventories, trade receivables and creditors | (15 640) | (10 350) | (12 858) |
| Higher/(lower) working capital financing | 11 135 | 14 933 | 7 279 |
| Capital expenditures | (4 829) | (2 658) | (7 140) |
| Acquisition subsidiaries | - | (4 685) | - |
| Other cash movements short-term components | 2 130 | (2 741) | 168 |
| Net cash from operations | 38 063 | 44 037 | 32 983 |
| Payments to financers and authorities | |||
| Dividends paid to shareholders | (26 190) | (23 690) | (16 740) |
| Repayments on long-term bank loans | (2 768) | (11 717) | (6 641) |
| New long-term bank loans | - | 3 888 | 2 497 |
| Proceeds from issuance of new shares | 1 723 | 1 748 | 2 058 |
| Payment of interest and taxes | (11 049) | (14 161) | (13 733) |
| Total payments | (38 284) | (43 932) | (32 559) |
| Remaining net cash movement | (221) | 105 | 424 |
| Banks at 1 January | 1 558 | 1 381 | 999 |
| Other cash movements | 47 | 72 | (42) |
| Banks at 31 December | 1 384 | 1 558 | 1 381 |
The main cash flow items (excluding the foreign exchange effects of a stronger US dollar at year-end) were:
Total borrowings outstanding at the end of 2015 amounted to € 108.3 million (2014: € 94.5 million) including long-term debts of € 7.9 million (2014: € 10.4 million). Long-term debt is repayable in three years on average. Total short-term bank liabilities amounted to € 100.5 million (2014: € 84.2 million), mainly being bank overdrafts for € 98.3 million and € 2.7 million relating to the short-term part of long-term borrowings repayable in 2015.
All operating companies are required to hedge foreign exchange risks related to transactions against their functional currency. The consolidated accounts of Acomo are prepared in euros. The Group comprises of several operating companies (Red River Commodities and Van Rees Group) that use the US dollar as their functional currency. The results of these subsidiaries are consolidated in the Group's 2015 results against the average euro/US dollar rate of the year, being 1.1102 (2014: 1.3285). This positively contributed to sales (+ € 53.0 million) and net profit (+ € 2.6 million).
The future development of the euro/US dollar rate can have a positive or negative impact on the consolidated results reported in euro. The assets and liabilities of Red River Commodities and Van Rees Group are translated in euro at year-end rate for consolidation purposes, being 1.0862 at 31 December 2015 (1.2100 at 31 December 2014, affecting total consolidated assets of these companies by + 4.7%). Variations in the year-end rates on the net investment values of US dollar subsidiaries, after taking into account related long-term borrowings in US dollar, are accounted for directly in equity through the currency translation reserve and will impact total consolidated assets and net shareholders' equity.
On 7 February 2014, Acomo signed new bank facilities for a total of € 250.0 million, to be utilized for working capital financing including acquisitions. The facilities have a three-year term with options for an additional two years and for an increase of 30% of the total amounts.
The Group's working capital credit facilities including cash positions amounted in total to € 229.1 million (2014: € 223.2 million). Short-term financing available to the Company on 31 December 2015 amounted to € 130.8 million compared to € 140.7 million one year earlier.
| 31 December | |||
|---|---|---|---|
| Financing position (in € thousands) | 2015 | 2014 | 2013 |
| Cash and cash equivalents | 1 384 | 1 558 | 1 381 |
| Working capital financing lines | 227 674 | 221 618 | 144 404 |
| Total financing capacity | 229 058 | 223 176 | 145 785 |
| Overdrafts used | (98 261) | (82 497) | (59 387) |
| Total available working capital financing | 130 797 | 140 679 | 86 398 |
| 41
42 | Working capital credit facilities are managed by treasury at Group level and/or at subsidiary level. These overdrafts are mostly borrowing-based and are secured by either positive or negative pledges on stocks and trade receivables. Financial covenants are linked to a minimum solvency of the Group (30% or 25% minimum on various semi-annual reporting dates) and an interest coverage ratio of 4 to 1. At 31 December 2015, the Company and its subsidiaries were in full compliance with all bank covenants. Acomo pools cash from subsidiaries to the extent legally and economically feasible. Cash not pooled remains available for local operational needs.
As of 1 December 2015, Allard Goldschmeding (50) joined Acomo in the position of CFO. Mr Goldschmeding succeeds former CFO Jan ten Kate, who left in August 2015.
In September 2010, Acomo introduced a share option plan aimed at rewarding and retaining key managers and personnel of Acomo and its subsidiaries. The total number of options that can be allocated under the plan amounts to 1,200,000 options on newly to be issued Acomo shares. On 1 September 2010, 1,070,000 options were granted to 35 participants in the plan. The options vest over a period of six years. The first vesting started on 1 September 2013. The exercise price of the options is € 7.39 per share. In 2013, 100,000 options were issued with an exercise price of € 13.90 per share. In 2014, 40,000 options were issued with an exercise price of € 17.00 per share. In 2015, 50,000 options were issued with an exercise price of € 22.46 per share.
On 1 September 2015, 182,125 options vested. In 2015, 157,125 vested options were exercised leaving 25,000 vested options to be exercised. At year-end 2015, the total number of non-vested options was 395,500.
Acomo has aligned its corporate governance policies with the principles and best practice rules of the Code Frijns except on matters for which the Company has substantive grounds to deviate from the standard recommendations. We refer to pages 50 and 51 of this report and to the website of the Company for further details. During the year, there were no transactions or issues giving rise to a (possible) conflict of interest between Management, members of the Supervisory Board and the Company.
In their daily business operations, Acomo and its subsidiaries incur general business as well as specific trading and financial risks. Enterprise risk management is a Company-wide activity. The Management Board has the ultimate responsibility to manage and control the risks associated with the activities and the strategy of the Company, to achieve the Group's objectives, to ensure compliance with corporate governance policies and the law in general and to ensure accurate financial reporting. The Supervisory Board supervises the Management Board on these subjects.
The risk approach and appetite are determined by the nature of the risk. The main risks relate to strategic and operational risks. We refer to pages 49 and 50 of this report and to Note 3 to the annual accounts for further details. This enumeration is not exhaustive, nor does it provide any guarantee against future losses or failure.
With respect to the strategic risks, the Company is focused on monitoring the developments and reflecting the implications in day-to-day operations. Given the global spread of our activities and the nature of our business, the strategic risks are real, yet extremely difficult to predict. The Company is however committed to delivering attractive financial returns and is therefore willing to accept risks in this area.
Regarding the operational risks, the Company seeks to minimize downside risks where possible by gaining market insight, training, policies and procedures. Each risk is mitigated where possible by targeted actions.
Within the Group, all managers and traders are responsible for risk management as an integral part of their day-to-day activities and decisions. The effectiveness is strengthened by a high level of individual and collective sense of responsibility, which is a crucial component of the Company's culture. The policies and procedures further support the appropriate actions and decisions. These measures are aimed at providing a reasonable level of assurance that the significant risks are identified and, as much as possible, mitigated.
The environment in which the Group does its business is dynamic, complex and subject to constant change. The Management Board is of the opinion that, given these circumstances, internal risk management is functioning properly within the Group, providing reasonable assurance on the accuracy of the financial reporting.
Management and the Supervisory Board propose a dividend of € 1.00 per share (2014: € 1.00, excluding a special dividend of € 0.10). This represents a pay-out of 74.2% of earnings per share. Taking into account the interim dividend of € 0.40 per share paid in August 2015, the final 2015 dividend would therefore amount to € 0.60 per share, payable in cash.
Acomo's Management Board hereby declares that, to the best of its knowledge:
The operating companies, employees and our suppliers have delivered again during 2015. Through their efforts, enthusiasm and commitment, the Group has been able to show its strength in challenging markets, to further strengthen positions and to achieve progress on various fronts. The Management Board thanks them all for their efforts.
Rotterdam, 3 March 2016
E. Rietkerk, Chief Executive Officer
Alongside our product-focused core activities, we continuously work at further refining support systems such as IT structures and risk management.
| A M S T E R DA M CO M M O D I T I E S N.V. ANNUAL REPORT 2015 | AMSTERDAM COMMODITIES N.V. ANNUAL REPORT 2015
The task of the Supervisory Board is to supervise the Management Board and the general course of affairs of Acomo. The Supervisory Board supports the Management Board with advice. In the fulfilment of its task, the Supervisory Board looks in the first place to the interests of the Group, taking into consideration the fair interests of all parties concerned.
The supervision of the Supervisory Board includes the following aspects:
The rules regarding Supervisory Board meetings, decision-making and working procedures can be found in the Articles of Association and the Supervisory Board's Rules of Conduct. Both documents are published on the Company's website: www.acomo.nl/corporate-governance.
The desired profile of members of the Supervisory Board is described in the Statement and is summarized in this annual report. The Statement includes the required declarations with respect to the independence of the individual members of the Supervisory Board.
No Supervisory Board member was up for rotation in 2015. For the rotation scheme please refer to page 33.
2015 was another challenging and successful year. The world in which the Company operates keeps changing rapidly, external developments have their effects on the Group every day and food safety rules and regulations are strengthened further.
The Supervisory Board worked intensively with the CEO, Erik Rietkerk, and (until his resignation as per 1 August 2015) the CFO, Jan ten Kate. Jan ten Kate has accomplished a lot for the financial foundation of Acomo and for that we are very grateful. After a due and diligent process we were pleased to find a good successor in the person of Allard Goldschmeding. He started per 1 December 2015.
We are also pleased that the Company was able to maintain its high performance level in 2015, especially bearing in mind the challenging economic business environment.
The Supervisory Board convened regularly in 2015: six times in formal meetings and much more often informally. Most meetings were held in the presence of the CEO of Acomo, Erik Rietkerk, as well as the CFO, Jan ten Kate (until his resignation). During separate meetings, the functioning of the Supervisory Board and/or the Management Board was discussed. The external auditor PricewaterhouseCoopers Accountants N.V. (hereafter 'PwC') joined the meetings when deemed appropriate. During these meetings we reviewed, among other things, the activities and the financial situation of the Company and its subsidiaries, the risk control and management systems, the Company's strategy and allocation of resources, the diversification of the Group, acquisition opportunities and the corporate governance structure. Acomo's corporate governance structure is described in the Corporate Governance Statement ('the Statement'), which is published on the Company's website: www.acomo.nl/corporate-governance.
Through their participation in the supervisory boards at subsidiary level, the Supervisory Board members work actively with the Management Board members and the management of the group companies, together addressing a broad range of subjects such as strategy, human resources, management succession planning, remuneration, risk
46 | profile of the activities, analysis and follow-up of major capital investments, financing and bank relations, IT systems, and so on. These Board activities include regular visits to the principal locations where the Group is active and in-depth discussions with local managements.
Every year, the Supervisory Board evaluates its functioning as a whole as well as that of its individual members, the functioning of the auditor, and the functioning of the Management Board as a whole and of its individual members. This review is held outside the presence of the Management Board members and is held through collective and individual discussions between the Chairman of the Board and its members. In the opinion of the Supervisory Board, the functioning of the Supervisory Board as a whole as well as of its individual members, the functioning of the Management Board as a whole as well as of its individual members, and the functioning of the auditor were satisfactory in the light of the current structure, size and strategy of the Company with a view to discharging the Management Board of their duties for the financial year 2015.
Klaas Huitema, the former Managing Director of Catz International B.V., passed away in October 2015. He was with the company from 1952 to 2000. Klaas Huitema was a unique person, who made a critical contribution to the successful start of Catz International as a global player. We remember him with great respect.
The Company aligns its corporate governance policy with the principles and best practice rules of the Code Frijns and the related recommendations of the Monitoring Commission Dutch Corporate Governance Code, except on matters for which the Company has substantive grounds to deviate from the standard recommendation. The Company's corporate governance policy and deviations from the Dutch Corporate Governance Code are described in the Statement, as summarized on pages 50 and 51 of this annual report.
The Supervisory Board permanently reviews and evaluates the Company's corporate governance in view of the Company's own development and of Dutch and international social and legal developments. Notwithstanding the significant growth of the Company, especially since 2011, the original choices and principles underlying Acomo's corporate governance policies are still deemed sound and well-adapted to the Company's culture, strategy and activities. The existing corporate governance as described in the Statement has therefore been confirmed in general.
Apart from the appointment of a new CFO, there were no significant changes in the management of the Company and its subsidiaries in 2015.
The remuneration policy of the Company is described in the Statement and in this annual report. There were no changes in the remuneration of the members of the Supervisory Board in 2015.
The profit share 2015 granted to the CEO is directly related to the actual earnings per share in 2015 whereas the bonus of the CFO is related to achieving personal targets and objectives and by agreement.
It is the Company's long-standing policy that the Company does not extend loans or other similar instruments to the members of the Management Board and Supervisory Board or to its personnel.
In 2010, an option plan was introduced with the objective of the long-term retention of key traders and management in the Company. The principal terms and conditions of the option plan, including details about the facts, are described in Note 17 of the annual report.
In the annual general meeting held on 29 April 2015, PwC was reappointed as external auditor. The findings of their audit were discussed with the Supervisory Board.
The existing whistle blower rules are regularly brought to the attention of the management and employees of the Group, and we guarantee the full protection of a whistle blower for substantiated disclosures.
No matters with respect to the so-called whistle blower rules were brought to the attention of the Management Board and/or the Supervisory Board in 2015. Furthermore, no matters of conflict of interest between individual Supervisory Board and Management Board members and the Company have arisen.
We present to you the annual report for the financial year 2015 as well as the report of the Management Board. The Supervisory Board has approved the Annual Accounts 2015. The accounts have been audited by PwC. We refer to their independent auditor's report on pages 98 to 105.
We propose to the general meeting of shareholders:
The Management Board, the management teams and employees have delivered again in 2015. Through their efforts, the strength of the Group in challenging markets was proved again, positions were further strengthened and progress was made on various fronts. The Supervisory Board thanks them all for their efforts.
Rotterdam, 3 March 2016
B. Stuivinga, Chairman M. Groothuis Y. Gottesman J. Niessen
Agreeing on credit limits is an important part of the way we manage risks for our partners and stakeholders.
As a business, we are subject to taxation in the many countries in which we operate. We understand that the tax we pay in different parts of the world is part of our wider economic and social impact. We act in accordance with all applicable laws, always aim to comply with the spirit as well as the letter of the law.
We believe public trust in tax systems for companies is essential and do not use contrived or abnormal tax structures that are intended for tax avoidance. We pay an appropriate amount of tax according to where value is created within the normal course of commercial activity. Any transfer pricing is always calculated using the 'arm's-length' principle. We do not use so-called tax havens for tax avoidance.
Within our organization, the Management Board and Supervisory Board of Acomo share the final responsibility for managing and controlling business risks, achieving the Group's (financial) objectives and ensuring compliance with the corporate governance policy and the law in general. They are also responsible for a financial information system which ensures that a reasonable degree of assurance is provided concerning the accuracy and completeness of the financial information. Risk management of the daily (trading) activities and decisions is an integral part of the responsibility of every trader and manager. The effectiveness hereof is further strengthened by the strong sense of individual and collective responsibility which is embedded within the Group's corporate culture.
Risk management within the Group is carried out on the basis of procedures which have been approved by the Company Management Board and Supervisory Board. The Group's overall risk management focuses primarily on the unpredictability of commodity and financial markets and is aimed at minimizing the potential impact of negative market developments on the Group's financial position and results. Identifying, evaluating and hedging risks are primarily done by the operating companies of the Group. The Management Board and the managements of the operating companies apply procedures which cover specific risk areas including exchange rate risks related to foreign currencies, interest rate risks, credit risks, the use of financial instruments such as derivatives and liquidity management. The most important risks arising from the trading activities and the Group's risk management and control systems are described in the Company's annual report. This description is not exhaustive and risk management and control systems do not offer an absolute guarantee against future losses or mistakes.
The daily risk management is further strengthened by a system of internal reporting about and monitoring of the activities, trading and financial positions and results. These measures and procedures are intended to give a reasonable degree of assurance to the effect that significant risks are identified and controlled as much as possible in accordance with the applicable laws and regulations.
Acomo and its subsidiaries encounter both general business risks and specific market and financial risks in their daily activities. Acomo identifies the following main risks relating to our strategy and takes actions to manage these risks as well as possible.
Each of the risks mentioned on page 50 individually can have a significant impact on the annual net profit of the Company and its subsidiaries. It is not possible to quantify the effect of each individual risk on the consolidated or statutory results.
The Company's own risks relate to the performance of its subsidiaries, the exchange rate risks associated with investments expressed in foreign currency and the risk related to the successful implementation of the Group strategy. In addition, the Company guarantees loans of subsidiaries and has filed liability disclaimers at the Trade Register of the Chamber of Commerce for some of its Dutch subsidiaries.
In recent years the Group has been successful in managing the various risks inherent to its trading activities. Nonetheless it is not possible to guarantee that past results will be continued in the future.
Nor can it be guaranteed that the activities will not be (materially) affected by one or more of the risk factors described below.
| Risk category | Risk appetite | Risks | Mitigating actions |
|---|---|---|---|
| Strategic risks |
Moderate | • Risks related to execution of strategy, Focus on Food • Competition may put pressure on market share, volumes and prices which could have an adverse effect |
• Diversification of the product range and of the industries which are being supplied |
| Operational risks |
Low to moderate |
• Agricultural developments, including weather conditions, harvests, long-term planting cycles and so on, which affect the availability, quantity and quality of the products • Price volatility, both long-term and short-term, of the various commodities, depending on supply and demand. Price volatility, in terms of both scale and speed, and either long-term or short-term, has a direct impact on the value of the subsidiaries' product positions (long or short) • Counterparty risk and price fluctuations also affect the behaviour of contract counterparties, particularly with regard to the correct execution of signed, but not yet delivered contracts • Economic cycles in purchasing countries, which can impact the demand for our products • Currency fluctuations, particularly fluctuations of the US dollar, in which most of the world's commodities are traded • Logistical factors, both the availability and cost of transport and storage capacity • Food safety aspects and recall risks with regard to imported and delivered products • Availability of experienced and professional traders and other staff |
• Up-to-date and complete market information • Diversification of the purchases across many countries of origin and reliable suppliers • Diversification of the product range • Diversification of the industries which are being supplied • Research of the solvency and/or the credit risk of customers • Credit limit management • Hedging contracts, such as commodity future contracts (if available), currency exchange contracts and interest rate derivatives • Long-term contracts with suppliers, customers and shipping companies • Traceability of the products and extensive, state-of-the-art laboratory testing (internal and external) in order to ensure food safety; all our subsidiaries are HACCP certified, and also have various other certifications related to their specific activities • Human resources and remuneration policies aimed at rewarding talent, responsibility and success • Trading guidelines for each company and daily internal control on these, aimed at limiting risks with regard to position taking (overall and per product) and with regard to countries, suppliers and customers |
| Financial risks |
Low | • Availability of financing and interest rate developments. |
• Maintaining headroom under committed revolving credit facilities |
| Compliance risks |
Low | • Increased regulations on companies and activities like food safety • Political and economic developments in producing countries, usually tropical countries, which can affect both the availability of products and the reliability of supply |
• Monitoring and adaping to relevant (changes in) rules and regulations • Maintaining a dialogue with authorities • Implementing a Group-wide Code of Conduct |
The Statement describes, among other things, the structure of the Company, the strategy and financial objectives, the risk profile of the activities and the risk management and control systems, the human resources and remuneration policies and the profile of the Supervisory Board members. The Statement is not a repetition of the best practices of the Code, but describes the specific corporate governance policies of the Company. Starting point is that the best practices apply, except when the Company is of the opinion that it has substantive grounds to deviate from the standard guideline. These exceptions are listed and briefly motivated below.
The culture of Acomo has always been open and transparent. Being a listed company, Acomo stands for the following fundamental principles ensuring that the original objectives of the Code are met, in particular with regard to the control and decision powers of the shareholders:
The tasks and powers of the General Meeting, the Supervisory Board and the Management Board have been defined | 51 in such a way that a well-balanced allocation has been achieved with respect to the control and influence of the Company's individual bodies. By doing so, Acomo has ensured as much as possible that, when essential decisions are made, the interests of all of the company's stakeholders are taken into account and that the decision-making process can always be conducted in a prudent manner. In this structure, Acomo has not taken any formal measures to protect itself against a takeover of control.
Exceptions from the application of the Dutch Corporate Governance Code are as follows:
The Dutch law on Management and Supervision, which took effect on 1 January 2013, includes provisions for a wellbalanced gender diversity in the Management Board and Supervisory Board, for which purpose a target has been set for at least 30% for both genders. By the end of 2015, 100% of the Management Board and 75% of the Supervisory Board of Acomo were male.
In 2015, Allard Goldschmeding (50) joined Acomo in the position of CFO. Mr Goldschmeding succeeds former CFO Jan ten Kate, who left in August 2015. The Supervisory Board remained unchanged, so that the gender diversity has remained unchanged. In the future we will try to realize balanced gender diversity. It is essential in this context that the quality of potential candidates is foremost.
Considering the size of the Group, there is no audit committee; consequently the Supervisory Board performs its tasks, whereas the Wet Toezicht Effectenverkeer prescribes specific tasks to be performed by an Audit Committee.
The human resources and remuneration policy of the Company is described in the Statement published on the website: www.acomo.nl/corporate-governance. The information relative to the remunerations of directors and the members of the Supervisory Board is disclosed in Note 1.8 of the Company balance sheet and income statement.
The Supervisory Board is responsible for appointing the Company's statutory directors (subject to the General Meeting's approval) and setting their remuneration. The Company's Management Board consists of two directors and therefore the Company has not had the need to develop a general remuneration policy. Also, the Supervisory Board's annual remuneration report is relatively brief in the absence of material changes year on year.
The level and structure of remunerations within the Group are such that people with the required expertise and qualifications can be recruited and retained. In determining the individual remunerations, the effect on the remuneration levels within the Group is taken into account. The total remuneration consists generally of a fixed element and a variable element linked to the annual profit before taxes of the respective entity. Fixed salaries are in line with market salaries. Managers, traders and other personnel of the subsidiaries can earn, in general, an annual profit-sharing compensation based on a fixed percentage of 10% to 15% of the profit before taxes of the (trading) company in which they are employed. This remuneration structure is fairly common in international commodity trading firms. The absence of explicit long-term remuneration criteria is explained by the fast and very short-term cycle of the trading activities.
The remuneration of the Management Board also consists of a fixed and a variable element based on objective targets which are evaluated each year by the Supervisory Board. Evaluation criteria include the level of the annual net profit of the Group, the sustainable growth of the earnings per share and the achievement of the Group strategy.
This clear and simple remuneration structure has significantly contributed to the success of the Group because it strongly focuses on profitability and the related management of the risks and costs related to the activities. All employees are therefore highly committed to the success of the Group. In practice, the absence of any form of subjective profit-sharing calculation has proven to contribute in maintaining the family culture of Acomo.
Over the past 20 years we have had very low personnel rotation. In return, Acomo expects 100% loyalty, honesty, dedication and a high degree of professionalism from all its employees. The management has always been very loyal and the Group's track record in terms of retaining key employees is excellent.
At the general meeting of 27 May 2010, the shareholders approved a share option plan aimed at retaining key managers and employees of the Company and its subsidiaries, including members of the Management Board. The terms and conditions for the allocation and the exercise of share options correspond to the best practice guidelines of the Code and are disclosed in this annual report.
The Company does not grant free shares to members of the Management or Supervisory Board. Members of the Management and Supervisory Board may purchase Acomo shares at Euronext Amsterdam, subject to strict compliance with the Company's rules to prevent the use of insider knowledge published on the website of the Company. The purchase, ownership and disposal of Acomo shares must be published in conformity with the law.
The number of shares owned by each member of the Management and the Supervisory Board are disclosed in this annual report.
The Company has not granted any options, shares or any other profit-related securities to members of the Supervisory Board as part of their remuneration. The Company does not provide loans or guarantees or similar instruments to Supervisory or Management Board members. The need to reclaim variable remuneration awarded on the basis of incorrect financial information has never arisen.
Consolidated balance sheet as at 31 December Consolidated statement of income Statement of comprehensive income Consolidated statement of cash flows Statement of changes in equity
Notes to the consolidated financial statements
54 |
| 31 December | |||
|---|---|---|---|
| (before profit appropriation) | Note | 2015 | 2014 |
| Assets Non-current assets |
|||
| Intangible assets | 6 | 60 435 864 | 56 816 266 |
| Property, plant and equipment | 7 | 42 090 695 | 38 013 727 |
| Other investments in companies | 8 | - | 73 941 |
| Deferred tax assets | 19 | 470 013 | 214 987 |
| Total non-current assets | 102 996 572 | 95 118 921 | |
| Current assets | |||
| Inventories | 10 | 163 146 530 | 164 536 668 |
| Trade receivables | 11 | 75 150 414 | 68 818 813 |
| Other receivables | 12 | 4 626 766 | 2 817 512 |
| Derivative financial instruments | 13 | 1 613 365 | 4 312 400 |
| Cash and cash equivalents | 14 | 1 384 267 | 1 557 998 |
| Total current assets | 245 921 342 | 242 043 391 | |
| Total assets | 348 917 914 | 337 162 312 | |
| Equity and liabilities | |||
| Equity | |||
| Share capital | 15 | 10 795 871 | 10 695 015 |
| Share premium reserve | 15 | 50 571 413 | 48 949 325 |
| Other reserves | 16 | 13 268 264 | 4 652 236 |
| Retained earnings | 61 433 516 | 54 558 633 | |
| Net profit for the year | 32 250 746 | 33 064 454 | |
| Total shareholders' equity | 168 319 810 | 151 919 663 | |
| Non-current liabilities and provisions | |||
| Bank borrowings | 18 | 7 868 463 | 10 355 456 |
| Deferred tax liabilities | 19 | 11 059 705 | 7 434 703 |
| Retirement benefit obligations | 20 | 1 908 144 | 1 912 715 |
| Other provisions | 21 | 1 212 859 | 5 366 188 |
| Total non-current liabilities | 22 049 171 | 25 069 062 | |
| Current liabilities | |||
| Bank borrowings | 18 | 100 476 353 | 84 171 640 |
| Trade creditors | 37 538 189 | 51 211 933 | |
| Tax liabilities | 1 136 644 | 5 118 052 | |
| Derivative financial instruments | 13 | 1 149 668 | 1 213 420 |
| Other current liabilities and accrued expenses | 18 248 079 | 18 458 542 | |
| Total current liabilities | 158 548 933 | 160 173 587 | |
| Total liabilities | 180 598 104 | 185 242 649 | |
| Total equity and liabilities | 348 917 914 | 337 162 312 | |
In 2015, software was reclassed to Intangible assets. The 2014 figures are restated accordingly.
| Note | 2015 | 2014 | |
|---|---|---|---|
| Sales | 681 584 023 | 618 871 184 | |
| Cost of goods sold | (571 566 426) | (517 027 783) | |
| Gross profit | 110 017 597 | 101 843 401 | |
| Personnel costs | 22 | (38 680 757) | (32 390 465) |
| General costs | 23 | (19 917 155) | (18 085 946) |
| Depreciation and impairment charges | (4 298 071) | (4 002 349) | |
| Total costs | (62 895 983) | (54 478 760) | |
| Operating income | 47 121 614 | 47 364 641 | |
| Interest income | 24 | 23 362 | 30 879 |
| Interest expense | 24 | (2 840 925) | (2 803 549) |
| Other financial income and expenses | 24 | (273 010) | (16 924) |
| Profit before income tax | 44 031 041 | 44 575 047 | |
| Corporate income tax | 25 | (11 780 295) | (11 510 593) |
| Net profit | 32 250 746 | 33 064 454 | |
| Profit attributable to shareholders of the Company | 32 250 746 | 33 064 454 | |
| Earnings per share | |||
| Basic | 26 | 1.352 | 1.396 |
| Diluted | 26 | 1.337 | 1.385 |
| 56 | 2015 | 2014 | |
|---|---|---|---|
| Net profit | 32 250 746 | 33 064 454 | |
| Other comprehensive income (OCI) | |||
| OCI to be reclassified to profit or loss in subsequent periods | |||
| Movement currency translation reserves on equity, net | 5 264 874 | 5 499 463 | |
| Movement currency translation differences on goodwill | 3 515 537 | 3 778 137 | |
| Movement on cash flow hedges | (378 944) | 914 850 | |
| OCI to be reclassified to profit or loss in subsequent periods | 8 401 467 | 10 192 450 | |
| OCI not to be reclassified to profit or loss in subsequent periods | |||
| Remeasurement gains/(losses) on defined benefit plans | 137 931 | (364 860) | |
| OCI not to be reclassified to profit or loss in subsequent periods | 137 931 | (364 860) | |
| Total other comprehensive income | 8 539 398 | 9 827 590 | |
| Total comprehensive income | 40 790 144 | 42 892 044 | |
| Total comprehensive income attributable to shareholders of the parent |
40 790 144 | 42 892 044 | |
Items in the statement above are disclosed net of income tax. The income tax relating to each component of other comprehensive income is disclosed in Note 25.
| Note | 2015 | 2014 | |
|---|---|---|---|
| Cash flow from operating activities | |||
| Profit before income tax | 44 031 041 | 44 575 047 | |
| Adjustments for: | |||
| • Depreciation and impairment charges | 4 298 071 | 4 002 349 | |
| • Net increase/(decrease) in provisions | (5 920 302) | (2 033 584) | |
| • Interest income | 24 | (23 362) | (30 879) |
| • Interest expense | 24 | 2 840 925 | 2 803 549 |
| • Cost share option plan and other | 40 128 | 221 047 | |
| Cash flow from operating activities | 45 266 501 | 49 537 529 | |
| Changes in working capital and related financing | |||
| • Inventories | 10 568 792 | (24 507 489) | |
| • Trade and other receivables | (4 139 675) | (1 890 182) | |
| • Derivatives | 2 130 024 | (2 740 712) | |
| • Trade and other payables | (22 068 602) | 16 047 386 | |
| • Borrowings short-term | 11 134 706 | 14 932 898 | |
| Total (increase)/decrease in working capital and related financing, net | (2 374 755) | 1 841 901 | |
| Cash generated from operations | 42 891 746 | 51 379 430 | |
| Interest paid | (2 335 799) | (2 104 973) | |
| Income tax paid | (8 739 496) | (12 089 604) | |
| Net cash generated from operating activities | 31 816 451 | 37 184 853 | |
| Cash flow from investing activities | |||
| Investments in property, plant and equipment | (4 581 107) | (2 390 657) | |
| Investments in intangible assets | (248 376) | (267 802) | |
| Acquisition of subsidiaries | - | (4 685 255) | |
| Interest received | 26 412 | 33 879 | |
| Net cash used for investing activities | (4 803 071) | (7 309 835) | |
| Cash flow from financing activities | |||
| Proceeds from new long-term borrowings | - | 3 888 234 | |
| Proceeds from new shares issued | 15 | 1 722 944 | 1 748 193 |
| Repayments of long-term borrowings | (2 768 003) | (11 716 936) | |
| Dividends paid to shareholders | (26 189 571) | (23 689 726) | |
| Net cash used for financing activities | (27 234 630) | (29 770 235) | |
| Net increase/(decrease) in cash and cash equivalents | (221 250) | 104 783 | |
| Cash and cash equivalents at the beginning of the year | 1 557 998 | 1 381 426 | |
| Exchange gains/(losses) on cash and cash equivalents | 47 519 | 71 789 | |
| Cash and cash equivalents at the end of the year | 1 384 267 | 1 557 998 |
| Attributable to owners of the Company | |||||||
|---|---|---|---|---|---|---|---|
| Note | Share capital |
Share premium reserve |
Other reserves |
Retained earnings |
Net profit for the year |
Total equity |
|
| Balance at 1 January 2014 | 10 589 254 | 47 306 893 | (5 310 776) | 50 863 851 | 27 384 508 | 130 833 730 | |
| Net profit 2014 | - | - | - | - | 33 064 454 | 33 064 454 | |
| Other comprehensive income 2014 | - | - | 9 827 590 | - | - | 9 827 590 | |
| Total comprehensive income 2014 | - | - | 9 827 590 | - | 33 064 454 | 42 892 044 | |
| Appropriation of net profit | - | - | - | 27 384 508 | (27 384 508) | - | |
| New shares issued | 15 | 105 761 | 1 645 506 | - | - | - | 1 751 267 |
| Transaction costs for issued | |||||||
| share capital | 15 | - | (3 074) | - | - | - | (3 074) |
| Employee share option scheme: | |||||||
| • Value of employee services | 16 | - | - | 180 563 | - | - | 180 563 |
| • Tax credit share option scheme | 16 | - | - | (45 141) | - (14 210 896) |
- - |
(45 141) (14 210 896) |
| Dividends relating to 2013, final | - | - | - | ||||
| Dividends relating to 2014, interim | - | - | - | (9 478 830) | - | (9 478 830) | |
| Transactions with shareholders | 105 761 | 1 642 432 | 135 422 | 3 694 782 | (27 384 508) | (21 806 111) | |
| Balance at 31 December 2014 | 10 695 015 | 48 949 325 | 4 652 236 | 54 558 633 | 33 064 454 | 151 919 663 | |
| Net profit 2015 | - | - | - | - | 32 250 746 | 32 250 746 | |
| Other comprehensive income 2015 | - | - | 8 539 398 | - | - | 8 539 398 | |
| Total comprehensive income 2015 | - | - | 8 539 398 | - | 32 250 746 | 40 790 144 | |
| Appropriation of net profit | - | - | - | 33 064 454 | (33 064 454) | - | |
| New shares issued | 15 | 100 856 | 1 622 088 | - | - | - | 1 722 944 |
| Employee share option scheme: | |||||||
| • Value of employee services | 16 | - | - | 102 173 | - | - | 102 173 |
| • Tax credit share option scheme | 16 | - | - | (25 543) | - | - | (25 543) |
| Dividends relating to 2014, final | - | - | - | (16 666 091) | - | (16 666 091) | |
| Dividends relating to 2015, interim | - | - | - | (9 523 480) | - | (9 523 480) | |
| Transactions with shareholders | 100 856 | 1 622 088 | 76 630 | 6 874 883 | (33 064 454) | (24 389 997) | |
| Balance at 31 December 2015 | 10 795 871 | 50 571 413 | 13 268 264 | 61 433 516 | 32 250 746 | 168 319 810 |
Amsterdam Commodities N.V. ('Acomo' or 'the Company') and its subsidiaries (together 'the Group') are an international group of companies active in the sourcing, processing, trading, packaging and distribution of natural food products and ingredients for the food and beverage industry. The Group's product portfolio broadly encompasses spices, dried fruits, nuts, tea, edible seeds and food ingredients. Acomo is a public limited liability company listed at the Amsterdam stock exchange (Euronext Amsterdam). The address of its registered office is Beursplein 37, 3011 AA Rotterdam. These financial statements have been approved by the Management Board and the Supervisory Board on 3 March 2016.
The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
The consolidated financial statements of Acomo have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as adopted by the European Union. The consolidated financial statements are presented in euros unless stated otherwise and have been prepared on a historical cost basis except derivative financial instruments which are stated at their fair value. The areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.
Profit is determined as the difference between net sales and all expenses (including interest and other financial income) relating to the reporting period. Costs are determined in accordance with the accounting policies applied to the balance sheet. Profit is realized in the year in which the sales are recognized. Losses are taken upon recognition. Other income and expenses are allocated to the periods to which they relate.
Pursuant to Section 402 of Book 2 of the Dutch Civil Code, the Company financial statements contain an abbreviated profit and loss account.
No new standards and/or amendments have been adopted by the Group for the first time for the financial year 2015.
There has been no early implementation of new standards, amendments to existing standards, new IFRS standards or IFRIC interpretations the application of which is mandatory for the financial years commencing after 1 January 2015. The following new standards, interpretations and amendments could potentially be relevant to the Group:
IFRS 9, 'Financial instruments', addresses the classification, measurement and recognition of financial assets and financial liabilities and represents a major overhaul of hedge accounting. The Group is yet to assess IFRS 9's full impact and intends to adopt IFRS 9 no later than the accounting period beginning on or after 1 January 2016.
IFRS 15, 'Revenue from contracts with customers', deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity's contract with customers. The Group is yet to assess IFRS 15's full impact and intends to adopt IFRS 15 no later than the accounting period beginning on or after 1 January 2017.
There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.
Subsidiaries are all those entities over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date that control is transferred to the Company until the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are expenses as incurred.
Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealized losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
In the 2015 consolidated financial statements, the Company and the following subsidiaries are included:
| • Catz International B.V., Rotterdam, the Netherlands | 100% |
|---|---|
| - Tovano B.V., Maasdijk, the Netherlands | 100% |
| • Acomo Food Ingredients Holding B.V., Rotterdam, the Netherlands | 100% |
| - TEFCO EuroIngredients B.V., Rotterdam, the Netherlands | 100% |
| - Snick EuroIngredients N.V., Ruddervoorde, Belgium | 100% |
| • Acomo Investments B.V., Rotterdam, the Netherlands | 100% |
| • Acomo Seeds Holding B.V., Rotterdam, the Netherlands | 100% |
| • Red River Commodities Group: | |
| - Red River Commodities Inc., Fargo, North Dakota, USA | 100% |
| - Red River Commodities International Inc., Fargo, North Dakota, USA | 100% |
| - SunGold Foods Inc., Fargo, North Dakota, USA | 100% |
| - SunButter LLC, Fargo, North Dakota, USA | 100% |
| - Red River-van Eck B.V., Zevenbergen, the Netherlands | 100% |
| - Red River Bulgaria EOOD, Varna, Bulgaria | 100% |
| • Van Rees Group: | |
| - Van Rees Group B.V., Rotterdam, the Netherlands | 100% |
| - Van Rees B.V., Rotterdam, the Netherlands | 100% |
| - Van Rees North America Inc., Toronto, Canada | 100% |
| - Van Rees UK Ltd., London, United Kingdom | 100% |
| - Van Rees Kenya Ltd., Mombasa, Kenya | 100% |
| - Van Rees Middle East Ltd., Dubai, United Emirates | 100% |
| - Van Rees Ceylon B.V., Rotterdam, the Netherlands | 100% |
| - P.T. Van Rees Indonesia, Jakarta, Indonesia | 100% |
| - Van Rees LLC, Moscow, Russia | 100% |
| - Van Rees Ceylon Ltd., Colombo, Sri Lanka | 100% |
| • King Nuts & Raaphorst: | |
| - King Nuts Holding B.V., Bodegraven, the Netherlands | 100% |
| - King Nuts B.V., Bodegraven, the Netherlands | 100% |
| • SIGCO Warenhandelsgesellschaft mbH, Hamburg, Germany | 100% |
In addition several intermediate holding entities and dormant legal entities are included in the consolidation. The full list of subsidiaries is filed at the Trade Register of the Chamber of Commerce in Rotterdam.
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognized at cost. The Group's investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition, if any.
The Group's share of its associates' post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movements in reserves is recognized in OCI. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.
Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the value of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Operating segments are reported in a manner consistent with the internal reporting provided to the Acomo Management Board. The Management Board is responsible for the allocation of the available resources, the assessment of the operational results and strategic decisions.
Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('the functional currency'). The consolidated financial statements are presented in euros, the Company's functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. Translation differences on non-monetary financial assets are included in OCI.
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings designated as hedges of such investments, are taken to OCI. When a foreign operation is partially disposed of or sold, exchange differences that were recorded in equity are recognized in the income statement as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. The resulting changes are recognized in OCI.
Goodwill represents the excess of the considerations transferred of an acquisition over the fair value of the Group's share of the net identifiable assets of the acquired subsidiary at the date of acquisition. For the purpose of impairment testing, goodwill is allocated to cash-generating units (CGUs), being the parts of the business segments benefiting from the business combination in which the goodwill arose. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.
Goodwill is not amortized, but goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstance indicate a potential impairment. The carrying value of the CGU containing the goodwill is compared to the recoverable amount, which is the higher of value in use and fair value less costs of disposal. Any impairment is recognized immediately as an expense and is not subsequently reversed.
Costs associated with maintaining computer software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets.
Directly attributable costs that are capitalized as part of the software product include employee costs directly related thereto. Other development expenditures that do not meet these criteria are recognized as an expense as incurred. Computer software development costs recognized as assets are amortized over their estimated useful lives of three to ten years.
Other intangible assets include order backlog. Intangible assets that are acquired through acquired companies are initially valued at fair value. This fair value is subsequently treated as deemed cost. These identifiable intangibles are then systematically amortized over the estimated useful life.
Land and buildings are stated at cost less accumulated depreciation on buildings. All other property, plant and equipment is stated at cost less accumulated depreciation based on the estimated useful life of the assets concerned and impairment losses, if any. Such cost includes the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met.
Subsequent investments are included in the asset's carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognized. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The difference between opening and closing balance of assets under construction normally consists of additions and reclassifications to other categories of property, plant and equipment.
For depreciation, the straight-line method is used. The useful life and residual value are reviewed periodically through the life of an asset to ensure that it reflects current circumstances. Depreciation will be applied to property, plant and equipment as soon as the assets are ready for their intended use. The useful lives of the following categories are used for depreciation purposes:
| Buildings | 20-30 years |
|---|---|
| Building improvements | 5-10 years |
| Machinery and equipment | 5-15 years |
| Vehicles | 3-5 years |
| Furniture, fittings and equipment | 3-8 years |
An asset's carrying amount is written down immediately to its recoverable amount if the asset's carrying amount | 63 exceeds its estimated recoverable amount (Note 2.8). Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognized in the income statement.
Assets that have an indefinite useful life – for example goodwill – are not subject to amortization and are tested annually for impairments or when impairment triggers arise. Assets that are subject to amortization are also reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). An impairment loss will be reversed if there is a change in the estimates used to determine the recoverable amount of the assets since the last impairment loss was recognized. The net book amount of the asset will be increased to its recoverable amount. Goodwill is never subject to reversion of impairment losses recognized.
The Group uses derivative financial instruments such as forward currency contracts to hedge its risks associated with foreign currency risk. Such derivative financial instruments are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss, except for the effective portion of cash flow hedges, which is recognized in OCI and later reclassified to profit or loss when the hedged item affects profit or loss.
For the purpose of hedge accounting, hedges are classified as cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction or the foreign currency risk in an unrecognized firm commitment transaction (cash flow hedge).
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. Hedges that are expected to be highly effective in achieving offsetting changes in cash flows are assessed on an ongoing basis to determine if they actually have been highly effective throughout the financial reporting periods for which they were designated. Hedges which meet the strict criteria for hedge accounting are accounted for as follows:
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out (FIFO) method. The cost of finished goods and semi-finished products comprises raw materials, direct labour, other direct costs and related production overheads (based on normal operating capacity), but excludes borrowing costs. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.
Trade receivables are amounts due from customers for goods sold in the ordinary course of business. Trade receivables and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables and other short-term monetary liabilities are initially recognized at fair value and subsequently carried at amortized cost using the effective interest method. If payment is due within one year or less, they are classified as current liabilities. If not, they are presented as non-current liabilities.
Cash and cash equivalents include cash at banks and on hand and short-term highly liquid investments with an original maturity of three months or less. Bank overdrafts are shown within Borrowings in current liabilities in the consolidated balance sheet.
Ordinary issued shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are charged to the share premium reserve as a deduction, net of tax, from the proceeds.
Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the period of the borrowings using the effective interest method. Fees paid in connection to new loan facilities are recognized as transaction costs of the loan.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.
Income tax comprises current and deferred tax. Income tax is recognized in the statement of income except to the extent that it relates to items recognized directly within equity or in OCI. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively. Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the balance sheet date in the countries where the Company and its subsidiaries operate and generate taxable income, and any adjustment to tax payable in respect of previous years.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases | 65 of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill; deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except for deferred income tax liability where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax liabilities for withholding taxes are recognized for subsidiaries in situations where the income is to be paid out as dividend in the foreseeable future to the extent that these withholding taxes are not expected to be refundable or deductible. Changes in tax rates are reflected in the period when the change has been enacted or substantially enacted by the reporting date.
Group companies operate various pension schemes. The schemes are generally funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has one defined benefit plan and various defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognized as personnel expenses when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
A defined benefit plan typically defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding net interest (not applicable to the Group) and the return on plan assets (excluding net interest), are recognized immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods.
Past service costs are recognized in income on the earlier of the date of the plan amendment or curtailment, and the date that the Group recognizes restructuring-related costs. Net interest is calculated by applying the discount rate to the net defined benefit liability or asset.
Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. The Group recognizes a liability and an expense for bonuses and profit sharing, based on a percentage (generally 10% - 15%) of the profit before tax of the respective subsidiary. The Group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.
On 1 September 2010, the Group introduced an equity-settled share-based compensation plan, under which the entity receives services from employees as consideration for equity instruments (options) of the Company.
The fair value of the employee services received in exchange for the grant of the options is recognized as an expense in the income statement, with a corresponding adjustment to equity. The total amount to be expensed is determined by reference to the fair value of the options granted as measured at the date of grant.
Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognizes the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to equity.
When the options are exercised, the Company issues new shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
Provisions are recognized when the Group has a legal or constructive obligation as result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.
Revenue is measured at the fair value of the consideration received or receivable for the sale of goods and services in the ordinary course of the Group's activities. Revenue is shown net of value-added tax, returns, rebates and discounts and after eliminating sales within the Group. The Group recognizes revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the entity and when specific criteria have been met for each of the Group's activities as described below.
Sales of goods are recognized when a Group entity has delivered products to the customer, the customer has full discretion over the channel and price to sell the products, and there is no unfulfilled obligation that could affect the customer's acceptance of the products. Delivery normally does not occur until the products have been shipped to the specified location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed or the Group has objective evidence that all criteria for acceptance have been satisfied. Sales are recorded based on the prices specified in the sales contracts.
Interest income is recognized using the effective interest method. When a loan or receivable is impaired, the Group reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans and receivables is recognized using the original effective interest rate.
Dividend income is recognized when the right to receive payment has been established, which is generally when shareholders approve the dividend.
Cost of goods sold is recorded in the same period in which the sales are recognized.
Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of income on a straight-line basis over the period of the lease.
Dividend distribution to the Company's shareholders is recognized as a liability in the Company's financial statements in the period in which the dividends are approved by the Company's shareholders.
The statement of cash flows is prepared using the indirect method. Cash flows in foreign currencies are translated into euros using the weighted average rates of exchange for the periods involved.
The Group operates in international commodity trading and is exposed to a variety of market and financial risks (including foreign exchange risk, interest rate risk and price risk), credit risks and liquidity risks. The Group's overall risk management focuses on the unpredictability of commodity and financial markets and seeks to minimize potential adverse effects on the Group's financial performance. The Group uses derivative financial instruments to hedge certain foreign currency risk exposures.
Risk management is carried out under policies approved by the Management Board and Supervisory Board. Risks are identified, evaluated and hedged in close cooperation with the Group's operating units. The Management Board and the management of the operating companies apply policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and investment of excess liquidity. We refer to the Management Board report and our Corporate Governance Statement for a further explanation on risk management.
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from current and future commercial transactions, current and future costs, recognized assets and liabilities and net investments in foreign operations. The Management Board has set up a policy to require group companies to manage their foreign exchange risk against their functional currency. The group companies are required to hedge their foreign exchange risk exposure arising from sales and purchase transactions within the respective company in accordance with Group policies. To manage their foreign exchange risk arising from future commercial transactions and recognized assets and liabilities, entities in the Group use forward contracts, transacted with external banks and net borrowings in foreign currencies. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity's functional currency.
The Group's risk management policy is to hedge between 90% and 100% of contracted cash flows (mainly export sales and purchases of inventory) in each major foreign currency for the subsequent 12 months. Approximately 95% (2014: 95%) of contracted sales and purchases in each major currency qualify as 'highly probable' transactions for hedge accounting purposes.
68 | The Group has certain investments in foreign operations whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group's foreign operations is managed primarily through borrowings denominated in the relevant foreign currencies.
For the year 2015, if the average US dollar currency applied had weakened/strengthened by 5% against the euro with all other variables held constant, net profit for the year would have been approximately € 0.5 million higher/lower (2014: € 0.6 million), mainly as a result of foreign exchange results on translation of US-dollar-denominated income from the Van Rees Group tea business and Red River Commodities seeds business. On 31 December 2015, the total impact on shareholders' equity of a 5% US dollar increase/decrease relating to equity of subsidiaries with a US dollar functional currency would have been approximately € 2.6 million (2014: € 2.6 million). Similarly, total assets would have increased/decreased by approximately € 7.3 million (2014: € 6.1 million) in case of the euro/US dollar rate being 5% higher/lower than the rate at 31 December 2015 that has been used. The Group's exposure to foreign currency changes for all other currencies is not material.
The Company's results are sensitive to commodity market price movements. In order to manage the effects of price movements of commodities, the group companies apply trading guidelines internally determined and maximum positions per product group and overall positions. From a financing point of view, headroom available within bank facilities is closely monitored in order to be able to finance increased working capital requirements when commodity prices increase.
The Group's interest rate risk arises from long-term borrowings and working capital financing. Borrowings and working capital financing contracted at variable interest rates expose the Group to cash flow interest rate risk which is partially offset by cash held at variable interest rates. Borrowings issued at fixed interest rates expose the Group to fair value interest rate risk.
During 2015 and 2014, the Group's borrowings at variable interest rates were denominated in euro and US dollar. The Group analyzes its interest rate exposure on a dynamic basis. Scenarios are simulated taking into consideration refinancing, renewal of existing positions, alternative financing and hedging. Based on these scenarios, the Group calculates the impact on profit and loss of a defined interest rate shift. For each simulation, the same interest rate shift is used for all currencies. The scenarios are run only for liabilities that represent the major interest-bearing positions.
A sensitivity analysis has been made based on the exposure to interest rates for the bank borrowings and current financial bank liabilities at the balance sheet date. If interest rates had been 0.5% or 50 basis points higher/lower and all other variables were held constant, the Group's result before tax for the year ended 31 December 2015 would have been approximately € 467,000 (2014: € 432,000) lower/higher respectively.
Credit risk is managed at the subsidiary level. Each local subsidiary is responsible for managing and analyzing the credit risk for each of their customers before standard payment and delivery terms and conditions are offered. Credit risk arises from derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. Risk control assesses the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal or external ratings in accordance with limits set by management of the operating companies. The utilization of credit limits is regularly monitored. See Note 11 for further disclosure on credit risk. Management does not expect any undisclosed material losses from non-performance by these counterparties.
Cash flow forecasting is performed in the operating entities of the Group and aggregated by Group treasury. Group treasury monitors rolling forecasts of the Group's liquidity requirements and calculates ratios to ensure it has sufficient funds to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities (Note 18) at all times, so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group's debt financing plans, planned capital expenditures, covenant compliance, compliance with internal balance sheet ratio targets and, if applicable, external
regulatory or legal requirements – for example, currency restrictions. Surplus cash held by the operating entities over | 69 and above balances required for working capital purposes are transferred to Group treasury. Group treasury invests surplus cash in interest bearing current accounts at first class banks.
The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to ensure the continued financing of the trading activities, to provide adequate long-term returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The Company monitors capital on the basis of the solvency ratio. This ratio is calculated as total equity plus subordinated debt divided by total assets. During 2015, the Company's objective, which was unchanged from 2014, was to maintain the solvency ratio at a minimum of 30% and preferably around 40%. The solvency ratios at 31 December 2015 and 2014 were as follows:
| 31 December | |||
|---|---|---|---|
| Solvency | 2015 | 2014 | |
| Total shareholders' equity | 168 319 810 | 151 919 663 | |
| Total assets | 348 917 914 | 337 162 312 | |
| Solvency ratio | 48.2% | 45.1% |
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.8. The recoverable amounts of CGUs have been determined based on value-in-use calculations. These calculations require the use of estimates (Note 6).
The Group is subject to income taxes in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is inherently uncertain. The Group recognizes liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made. Additional information is disclosed in Note 19 and Note 25.
The present value of the pension obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for pensions include the discount rate, future salary increases, mortality rates and future pension increases. The mortality rate is based on publicly available mortality tables for the specific countries.
70 | Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.
The Group determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Group considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating the terms of the related pension obligation. Additional information is disclosed in Note 20.
Provisions are made for write-down of inventories to net realizable value based on management's estimates of available market information. Where management has determined that the net realizable value is lower than the initial value, inventories are written down. Additional information is disclosed in Note 10.
Provisions are made for doubtful debts based on management's estimates of the prospects of recovering the debt. Where management has determined that recovering is doubtful, the amount is provided for. Additional information is disclosed in Note 11.
The Group is party to various legal proceedings, generally incidental, to its business. In connection with these proceedings and claims, management evaluated, based on the relevant facts and legal principles, the likelihood of an unfavourable outcome and whether the amount of the loss could be reasonably estimated. Subjective judgments were required in these evaluations, including judgments regarding the validity of asserted claims and the likely outcome of legal and administrative proceedings. The outcome of these proceedings, however, is subject to a number of factors beyond the Group's control, most notably the uncertainty associated with predicting decisions by courts and administrative agencies.
The Management Board in its role as chief operating decision-maker has determined the operating segments based on the reports used to make management decisions. The Management Board considers the business from a product perspective. Geographically, the Management Board considers the performance of wholesale in the Netherlands, other countries in Europe, the US and other areas. The following reporting segments are identified:
The Management Board assesses the performance of the reporting segments based on a measure of adjusted profit before tax. This measurement basis excludes the effects of non-recurring expenditures from the operating segments such as restructuring costs, legal expenses and goodwill impairments when the impairment is the result of an isolated, non-recurring event. The segment information for the reportable segments for the year ended 31 December 2015 and 31 December 2014 is as follows:
| Holdings | ||||||
|---|---|---|---|---|---|---|
| Spices | Edible | Food | and | |||
| 2015 (in thousands) | and Nuts | Seeds | Tea | Ingredients | intra group | Total |
| Sales | 347 528 | 189 141 | 128 593 | 21 945 | (5 623) | 681 584 |
| Operating expenses | (321 355) | (174 194) | (121 066) | (18 760) | 4 428 | (630 947) |
| EBITDA | 26 173 | 14 947 | 7 527 | 3 185 | (1 195) | 50 637 |
| Depreciation | (230) | (3 131) | (412) | (463) | (62) | (4 298) |
| Interest income/(expense), net | (835) | (2 458) | (744) | (102) | 1 047 | (3 092) |
| Income tax expense | (6 277) | (3 027) | (1 802) | (930) | 116 | (11 920) |
| Non-recurring results, net of tax | - | - | - | 140 | 784 | 924 |
| Net result | 18 831 | 6 331 | 4 569 | 1 830 | 690 | 32 251 |
| Total assets | 117 126 | 115 328 | 48 503 | 13 642 | 54 319 | 348 918 |
| Total liabilities | 86 997 | 81 018 | 26 505 | 8 741 | (22 663) | 180 598 |
| Holdings | |||||
|---|---|---|---|---|---|
| Spices | Edible | Food | and | ||
| and Nuts | Seeds | Tea | Ingredients | intra group | Total |
| 307 398 | 158 674 | 135 654 | 22 911 | (5 766) | 618 871 |
| (284 050) | (138 643) | (129 303) | (20 246) | 4 161 | (568 081) |
| 23 348 | 20 031 | 6 351 | 2 665 | (1 605) | 50 790 |
| (266) | (2 915) | (324) | (435) | (62) | (4 002) |
| (713) | (1 593) | (1 013) | (99) | 820 | (2 598) |
| (5 592) | (4 411) | (1 518) | (713) | 805 | (11 429) |
| - | - | 244 | - | 59 | 303 |
| 16 777 | 11 112 | 3 740 | 1 418 | 17 | 33 064 |
| 113 630 | 107 076 | 52 043 | 11 905 | 52 508 | 337 162 |
| 85 395 | 70 394 | 31 729 | 7 415 | (9 690) | 185 243 |
The amounts with respect to total assets are measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment and the physical location of the asset. Intersegment sales are eliminated upon consolidation and reflected in the Holdings and intra group column.
Sales per geography are as follows:
| Sales (in millions) | NL | EU other | US | Other | Total |
|---|---|---|---|---|---|
| 2015 | 108.9 | 325.0 | 179.2 | 68.5 | 681.6 |
| 2014 | 93.9 | 275.0 | 169.4 | 80.6 | 618.9 |
| 71
| Intangible assets | Goodwill | Software | Other | Total |
|---|---|---|---|---|
| At 1 January 2014 | ||||
| Cost or valuation | 46 477 064 | 1 332 677 | - | 47 809 741 |
| Accumulated depreciation | - | (636 172) | - | (636 172) |
| Net book amount | 46 477 064 | 696 505 | - | 47 173 569 |
| 2014 | ||||
| Opening net book amount | 46 477 064 | 696 505 | - | 47 173 569 |
| Additions | 5 634 361 | 267 802 | 403 000 | 6 418 284 |
| Amortization | - | (165 193) | (357 000) | (553 724) |
| Exchange differences | 3 778 137 | 81 590 | - | 3 859 727 |
| Closing net book amount | 55 889 562 | 880 704 | 46 000 | 56 816 266 |
| At 31 December 2014 | ||||
| Cost or valuation | 55 889 562 | 1 713 601 | 403 000 | 58 006 163 |
| Accumulated depreciation | - | (832 897) | (357 000) | (1 189 897) |
| Net book amount | 55 889 562 | 880 704 | 46 000 | 56 816 266 |
| 2015 | ||||
| Opening net book amount | 55 889 562 | 880 704 | 46 000 | 56 816 266 |
| Additions | - | 248 376 | - | 248 376 |
| Amortization | - | (183 822) | (46 000) | (229 822) |
| Exchange differences | 3 515 537 | 85 507 | - | 3 601 044 |
| Closing net book amount | 59 405 099 | 1 030 765 | - | 60 435 864 |
| At 31 December 2015 | ||||
| Cost or valuation | 59 405 099 | 2 081 789 | - | 61 486 888 |
| Accumulated depreciation | - | (1 051 024) | - | (1 051 024) |
| Net book amount | 59 405 099 | 1 030 765 | - | 60 435 864 |
Goodwill is not amortized and is tested for impairment, at least annually. Goodwill relates to the goodwill paid for the acquisition of Tefco EuroIngredients in 2006, Snick EuroIngredients in 2009, Van Rees Group, Red River Commodities and King Nuts & Raaphorst in 2010 and SIGCO Warenhandel in 2014 and is allocated to the segments expected to benefit from synergies from the combination.
An operating segment-level summary of the goodwill allocation is presented below.
| 31 December | |||
|---|---|---|---|
| Goodwill | 2015 | 2014 | |
| Spices and Nuts | 15 305 566 | 15 305 566 | |
| Edible Seeds | 29 342 935 | 26 917 215 | |
| Tea | 10 651 681 | 9 561 864 | |
| Food Ingredients | 4 104 917 | 4 104 917 | |
| Total goodwill | 59 405 099 | 55 889 562 |
For the purpose of the annual impairment testing, goodwill is allocated to the Group's CGUs identified at the level of operating segments.
The goodwill impairment test is based on the management judgment that the possible net realizable value of the acquired businesses will not be less than the sum of the goodwill amount plus the net assets of the acquired company.
Given the nature of Acomo being a group of trading companies, the recoverable amounts of all CGUs have been determined based on two different valuation methods, the discounted cash flow (DCF) method and multiple analysis:
Cash flows beyond the five-year period are extrapolated taking into account a long-term average growth rate.
The discount rates used are pre-tax and reflect specific risks relating to the relevant parts of the business.
The key assumptions used for value-in-use calculations in 2015 are as follows:
| Assumptions | Spices and Nuts |
Edible Seeds |
Tea | Food Ingredients |
|---|---|---|---|---|
| Average future growth rates 2016 - 2020 | 2.25% | 2.5% | 2.25% | 7.8% |
| Long-term average growth rate (after 5 years) |
2.0% | 2.0% | 1.5% | 2.5% |
| Discount rate, pre-tax, average | 8.58% | 9.51% | 9.34% | 8.32% |
After conducting impairment tests on all CGUs within the Group, no impairment was deemed necessary since the discounted future cash flows from the CGUs exceeded the value of the carrying amount including goodwill for each CGU.
It is inherent in the method of computation used that a change in the assumptions may lead to a different conclusion on the impairment required. If the discount rate is assumed to be one percentage point higher than assumed in the individual impairment tests, no impairment would have been required. The impairment tests performed separately would also not indicate any impairment if the future cash flows were set 10% lower than assumed.
In 2015, software was reclassed from Property, plant and equipment. The 2014 figures are restated accordingly.
Other intangible assets consist of intangible assets which arose from acquisitions. The total amount related to forward profits existent at the date of acquisition, which have been amortized completely in 2015.
The movements in Property, plant and equipment are as follows:
| Furniture, | |||||
|---|---|---|---|---|---|
| Property, plant and equipment | Land and buildings |
Vehicles and machinery |
fittings and equipment |
Assets under construction |
Total |
| At 1 January 2014 | |||||
| Cost or valuation | 18 200 201 | 17 412 051 | 1 616 626 | 4 602 435 | 41 831 313 |
| Accumulated depreciation | (1 830 387) | (3 529 863) | (1 062 250) | - | (6 422 500) |
| Net book amount | 16 369 814 | 13 882 188 | 554 376 | 4 602 435 | 35 408 813 |
| 2014 | |||||
| Opening net book amount | 16 369 814 | 13 882 188 | 554 376 | 4 602 435 | 35 408 813 |
| Acquisition subsidiaries | - | - | 12 377 | - | 12 377 |
| Investments | 381 745 | 1 923 217 | 33 652 | 61 272 | 2 399 886 |
| Disposals | (18 896) | (46 437) | (1 115) | - | (66 448) |
| Depreciation charge | (937 494) | (2 519 378) | (299 947) | - | (3 756 819) |
| Assets taken into operation | 3 317 242 | 783 411 | 520 818 | (4 621 471) | - |
| Exchange differences | 2 164 996 | 1 559 325 | 266 560 | 25 037 | 4 015 918 |
| Closing net book amount | 21 277 407 | 15 582 326 | 1 086 721 | 67 273 | 38 013 727 |
| At 31 December 2014 | |||||
| Cost or valuation | 25 458 185 | 23 653 270 | 2 262 348 | 67 273 | 51 441 076 |
| Accumulated depreciation | (4 180 778) | (8 070 944) | (1 175 626) | - | (13 427 348) |
| Net book amount | 21 277 407 | 15 582 326 | 1 086 721 | 67 273 | 38 013 727 |
| 2015 | |||||
| Opening net book amount | 21 277 407 | 15 582 326 | 1 086 721 | 67 273 | 38 013 727 |
| Investments | 1 175 700 | 4 333 952 | 165 009 | 11 882 | 5 686 543 |
| Disposals | - | (787 743) | (44 635) | - | (832 378) |
| Depreciation charge | (1 085 435) | (2 987 543) | (308 509) | - | (4 381 487) |
| Assets taken into operation | - | 73 320 | - | (73 320) | - |
| Exchange differences | 1 931 594 | 1 608 709 | 57 678 | 6 309 | 3 604 290 |
| Closing net book amount | 23 299 266 | 17 823 021 | 956 264 | 12 144 | 42 090 695 |
| At 31 December 2015 | |||||
| Cost or valuation | 30 325 951 | 31 263 981 | 2 041 764 | 12 144 | 63 643 840 |
| Accumulated depreciation | (7 026 685) | (13 440 960) | (1 085 500) | - | (21 553 145) |
| Net book amount | 23 299 266 | 17 823 021 | 956 264 | 12 144 | 42 090 695 |
In 2015, software was reclassed to Intangible assets. The 2014 figures are restated accordingly. The 2015 depreciation charge of € 4.4 million (2014: € 3.9 million) has been recorded in Depreciation and impairment charges. Investments include replacements for machines and equipment which are disposed as a result of a fire. The investments are paid by the insurer.
The movements in other investments in companies (both dormant companies and minority participations) are as follows:
| Other investments in companies | 2015 | 2014 |
|---|---|---|
| At 1 January | 73 941 | 256 651 |
| Impairment | (73 941) | (80 337) |
| Liquidation of dormant companies | - | (102 373) |
| At 31 December | - | 73 941 |
| Derivatives | |||
|---|---|---|---|
| Loans and | used for | ||
| Assets | receivables | hedging | Total |
| 31 December 2015 | |||
| Derivative financial instruments | - | 1 613 365 | 1 613 365 |
| Trade and other receivables excluding prepayments | 78 971 760 | - | 78 971 760 |
| Cash and cash equivalents | 1 384 267 | - | 1 384 267 |
| Total | 80 356 027 | 1 613 365 | 81 969 392 |
| Other financial | Derivatives | ||
| liabilities at | used for | ||
| Liabilities | amortized cost | hedging | Total |
| 31 December 2015 | |||
| Borrowings | 7 868 463 | - | 7 868 463 |
| Bank overdrafts - short-term | 100 476 353 | - | 100 476 353 |
| Derivative financial instruments | - | 1 149 668 | 1 149 668 |
| Trade and other payables | 55 786 268 | - | 55 786 268 |
| Total | 164 131 084 | 1 149 668 | 165 280 752 |
| Assets | Loans and receivables |
Derivatives used for hedging |
Total |
|---|---|---|---|
| 31 December 2014 | |||
| Derivative financial instruments | - | 4 312 400 | 4 312 400 |
| Trade and other receivables excluding prepayments | 70 399 389 | - | 70 399 389 |
| Cash and cash equivalents | 1 557 998 | - | 1 557 998 |
| Total | 71 957 387 | 4 312 400 | 76 269 787 |
| Liabilities | Other financial liabilities at amortized cost |
Derivatives used for hedging |
Total |
|---|---|---|---|
| 31 December 2014 | |||
| Borrowings | 10 355 456 | - | 10 355 456 |
| Bank overdrafts - short-term | 84 171 640 | - | 84 171 640 |
| Derivative financial instruments | - | 1 213 420 | 1 213 420 |
| Trade and other payables | 69 670 475 | - | 69 670 475 |
| Total | 164 197 571 | 1 213 420 | 165 410 991 |
The fair values of the financial assets and liabilities do not materially differ from the book value due to the absence of interest related components, the absence of long-term fixed interest rates and the accounting policies used.
| 31 December | ||
|---|---|---|
| Inventories | 2015 | 2014 |
| Raw materials | 37 444 483 | 33 620 657 |
| Semi-finished products | 1 331 154 | 4 295 938 |
| Finished goods | 124 370 893 | 126 620 073 |
| Total inventories | 163 146 530 | 164 536 668 |
The cost of inventories recognized as expense and included in Cost of goods sold amounted to € 541.4 million (2014: € 484.9 million). As at 31 December 2015, the provision for write-down of inventories to net realizable value amounts to € 4.2 million (2014: € 2.6 million).
As at 31 December 2015, inventories with a book value of € 147.0 million have been pledged as a security for certain bank overdrafts.
| 31 December | ||
|---|---|---|
| Trade receivables | 2015 | 2014 |
| Trade receivables | 76 749 488 | 70 239 755 |
| Less: provision for impairment | (1 599 074) | (1 420 942) |
| Total trade receivables, net | 75 150 414 | 68 818 813 |
As at 31 December 2015, trade receivables were impaired for the total amount of € 1.6 million (2014: € 1.4 million). The individually (partly or fully) impaired receivables mainly relate to customers in the ordinary line of business which are in unexpectedly difficult economic and financial situations.
As at 31 December 2015, trade receivables of approximately € 3.3 million were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default.
The ageing analysis of these trade receivables based on due date is as follows:
| 31 December | ||
|---|---|---|
| Ageing receivables - due dates | 2015 | 2014 |
| Up to 1 month | 71 891 716 | 65 333 082 |
| 1-2 months | 3 025 563 | 1 612 786 |
| 2-3 months | 292 794 | 1 138 092 |
| Over 3 months | 1 539 415 | 2 155 795 |
| Total trade receivables, gross | 76 749 488 | 70 239 755 |
The carrying amounts of the Group's trade receivables are denominated in the following currencies:
| 31 December | ||
|---|---|---|
| Trade receivables - currency | 2015 | 2014 |
| Denominated in euros | 30 629 114 | 25 976 850 |
| Denominated in US dollars | 44 692 221 | 43 185 199 |
| Denominated in UK pounds | 1 076 094 | 547 326 |
| Denominated in other currencies | 352 059 | 530 380 |
| Total trade receivables, gross | 76 749 488 | 70 239 755 |
Movements in the provisions for impairment of trade receivables are as follows: | 77
| Provision trade receivables | 2015 | 2014 |
|---|---|---|
| At 1 January | 1 420 942 | 1 361 415 |
| Write-offs | (84 356) | (254 297) |
| Unused reversed to the income statement | (446 683) | (569 030) |
| Charged to the income statement | 615 430 | 775 743 |
| Exchange differences | 93 741 | 107 111 |
| At 31 December | 1 599 074 | 1 420 942 |
The creation and release of provisions for impaired receivables have been included in Cost of goods sold in the income statement. Overdue receivables are generally fully written off when there is no expectation of recovering additional cash. The other classes within trade and other receivables do not contain material impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group does not hold any collateral as security. In general, delivery terms dictate that full title of ownership can be withdrawn for unpaid deliveries. As at 31 December 2015, trade receivables with a book value of € 51.2 million have been pledged as a security for certain bank overdrafts.
| 31 December | ||
|---|---|---|
| Other receivables | 2015 | 2014 |
| Prepayments | 805 420 | 1 236 936 |
| Tax and social securities | 2 368 316 | 1 038 413 |
| Other receivables | 1 453 030 | 542 163 |
| Total other receivables | 4 626 766 | 2 817 512 |
All other receivables are due within one year from the end of the reporting period.
| 31 December 2015 | 31 December 2014 | |||
|---|---|---|---|---|
| Derivatives | Assets | Liabilities | Assets | Liabilities |
| Cash flow hedges – forex contracts | 1 613 365 | 1 149 668 | 4 312 400 | 1 213 420 |
| Total derivatives | 1 613 365 | 1 149 668 | 4 312 400 | 1 213 420 |
Foreign exchange contracts relate for more than 95% to forward US dollar sales and purchases with a term of less than 12 months and relate to hedged items with a maturity of less than 12 months. Consequently, the net value of these derivatives is classified as a current asset or liability. The forex contracts are so-called Level-2 derivatives with banks which values are derived directly from foreign exchange rates and interest rate levels. The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the consolidated balance sheet.
The total notional principal amounts of the outstanding forward foreign exchange contracts on 31 December 2015 were \$ 73.2 million bought and \$ 44.8 million sold resulting in a total net amount of \$ 28.4 million (2014: \$ 9.9 million) and £ 2.2 million sold (2014: £ nil million). Gains and losses recognized in the hedge reserve in equity (Note 16) on forward foreign exchange contracts as at 31 December 2015 are recognized in the income statement in the period or periods during which the hedged forecast transaction affects the income statement.
Cash and cash equivalents consist almost entirely of cash held at bank accounts.
The total authorized number of ordinary shares is 66.7 million shares (2014: 66.7 million shares) with a par value of € 0.45 per share (2014: € 0.45 per share). All issued 24.0 million shares (31 December 2014: 23.8 million) are fully paid. The movements during 2014 and 2015 were as follows:
| Share capital and | Number of | Share premium |
|||
|---|---|---|---|---|---|
| share premium reserve | shares | Share capital | reserve | Total | |
| At 1 January 2014 | 23 531 676 | 10 589 254 | 47 306 893 | 57 896 147 | |
| New shares issued | 235 025 | 105 761 | 1 645 506 | 1 751 267 | |
| Transaction costs for issued share capital | - | - | (3 074) | (3 074) | |
| At 31 December 2014 | 23 766 701 | 10 695 015 | 48 949 325 | 59 644 340 | |
| New shares issued | 224 125 | 100 856 | 1 622 088 | 1 722 944 | |
| At 31 December 2015 | 23 990 826 | 10 795 871 | 50 571 413 | 61 367 284 |
During the year, the issued share capital was increased by € 100,856 due to issuance of 224,125 new ordinary shares of € 0.45 each as part of the share-based payment (Note 17). The shares issued have the same rights as existing shares issued.
| Currency translation |
Share | Hedge | Other | ||
|---|---|---|---|---|---|
| Other reserves | reserve | option plan | reserve | reserves | Total |
| At 1 January 2014 | (5 246 057) | 347 086 | (222 775) | (189 030) | (5 310 776) |
| Cash flow hedges | - | - | 914 850 | - | 914 850 |
| Employee share option scheme: | |||||
| • Value of employee services | - | 180 563 | - | - | 180 563 |
| • Tax credit, 25% | - | (45 141) | - | - | (45 141) |
| Currency translation adjustments (CTA) | 5 499 463 | - | - | - | 5 499 463 |
| CTA on goodwill | 3 778 137 | - | - | - | 3 778 137 |
| Remeasurement gains/(losses) on defined benefit plans |
- | - | - | (364 860) | (364 860) |
| At 31 December 2014 | 4 031 543 | 482 508 | 692 075 | (553 890) | 4 652 236 |
| Cash flow hedges | - | - | (378 944) | - | (378 944) |
| Employee share option scheme: | |||||
| • Value of employee services | - | 102 173 | - | - | 102 173 |
| • Tax credit, 25% | - | (25 543) | - | - | (25 543) |
| Currency translation adjustments (CTA) | 5 264 874 | - | - | - | 5 264 874 |
| CTA on goodwill | 3 515 537 | - | - | - | 3 515 537 |
| Remeasurement gains/(losses) on | |||||
| defined benefit plans | - | - | - | 137 931 | 137 931 |
| At 31 December 2015 | 12 811 954 | 559 138 | 313 131 | (415 959) | 13 268 264 |
Pursuant to Dutch law, limitations exist relating to the distribution of shareholders' equity of € 23.9 million (2014: € 14.7 million). Such limitations relate to share capital as well as to legal reserves required by Dutch law included under other reserves.
Share options are granted to management and to selected employees. The exercise price of the options granted in 2010 is equal to the conversion price of the convertible bonds issued in June 2010, i.e. € 7.39 per share. The exercise price of the 100,000 options granted to management in 2013 is € 13.90 per share. The exercise price of the 40,000 options granted to management in 2014 is € 17.00 per share. The exercise price of the 50,000 options granted to management in 2015 is € 22.46 per share. All options vest in a six-year period with the first vesting taking place around the third anniversary of the options granted. The vesting and exercise of the options is conditional on the continued employment in the Group. The options have a contractual option term of seven years and expire on respectively 1 September 2017, 8 May 2020, 1 December 2021 and 1 December 2022. The Group has no legal or constructive obligation to repurchase or settle the options in cash.
During 2015, 50,000 new options were issued to management and for 16,500 shares the vesting date was moved forward from 2016 to 2015. A total of 42,000 options vested in 2014 were exercised in 2015. A total of 201,500 options vested and 182,125 vested options were exercised. In total leaving 25,000 vested options exercisable. Share options outstanding at the end of the year have the following vesting dates, exercise prices and fair values:
| Share-based payment | Exercise price | 31 December | |||
|---|---|---|---|---|---|
| Vesting date | Expiry date | per option in € | 2015 | 2014 | |
| 1 September 2014 | 1 September 2017 | 7.39 | 5 625 | 47 625 | |
| 1 September 2015 | 1 September 2017 | 7.39 | 19 375 | 185 000 | |
| 1 September 2016 | 1 September 2017 | 7.39 | 205 500 | 222 000 | |
| 8 May 2016 | 8 May 2020 | 13.90 | 30 000 | 30 000 | |
| 8 May 2017 | 8 May 2020 | 13.90 | 15 000 | 15 000 | |
| 8 May 2018 | 8 May 2020 | 13.90 | 25 000 | 25 000 | |
| 8 May 2019 | 8 May 2020 | 13.90 | 30 000 | 30 000 | |
| 1 December 2017 | 1 December 2021 | 17.00 | 12 000 | 12 000 | |
| 1 December 2018 | 1 December 2021 | 17.00 | 6 000 | 6 000 | |
| 1 December 2019 | 1 December 2021 | 17.00 | 10 000 | 10 000 | |
| 1 December 2020 | 1 December 2021 | 17.00 | 12 000 | 12 000 | |
| 1 September 2018 | 1 December 2022 | 22.46 | 15 000 | - | |
| 1 September 2019 | 1 December 2022 | 22.46 | 7 500 | - | |
| 1 September 2020 | 1 December 2022 | 22.46 | 12 500 | - | |
| 1 September 2021 | 1 December 2022 | 22.46 | 15 000 | - | |
| Total | 420 500 | 594 625 |
The weighted average fair value of options granted in 2010 determined by using the Black-Scholes valuation model was € 0.58 per option. The significant inputs into the model were: share price € 8.25, volatility of 19.0%, dividend yield of 8.2%, annual risk-free rate of 2.63%. The volatility measured at the standard deviation of continuously compound share returns is based on statistical analysis of the Acomo share.
The weighted average fair value of options granted in 2013 determined by using the Black-Scholes valuation model was € 2.31 per option. The significant inputs into the model were: share price € 16.34, volatility of 18.0%, dividend yield of 4.4%, annual risk-free rate of 1.90%. The volatility measured at the standard deviation of continuously compound share returns is based on statistical analysis of the Acomo share.
The weighted average fair value of options granted in 2014 determined by using the Black-Scholes valuation model was € 1.96 per option. The significant inputs into the model were: share price € 18.64, volatility of 22.5%, dividend yield of 5.0%, annual risk-free rate of 0.30%. The volatility measured at the standard deviation of continuously compound share returns is based on statistical analysis of the Acomo share, measured over a historic period equal to expected life.
The weighted average fair value of options granted in 2015 determined by using the Black-Scholes valuation model was € 1.87 per option. The significant inputs into the model were: share price € 22.46, volatility of 22.5%, dividend
80 | yield of 5.1%, annual risk-free rate of - 0.1%. The volatility measured at the standard deviation of continuously compound share returns is based on statistical analysis of the Acomo share, measured over a historic period equal to expected life.
For all options granted, an estimated term of six years was applied.
| 31 December | |||
|---|---|---|---|
| Bank borrowings | 2015 | 2014 | |
| Non-current | |||
| Bank borrowings | 7 868 463 | 10 355 456 | |
| Current | |||
| Bank overdrafts | 98 260 517 | 82 497 018 | |
| Bank borrowings short-term part | 2 678 231 | 2 444 781 | |
| Less: related bank costs | (462 395) | (770 159) | |
| Total | 100 476 353 | 84 171 640 | |
| Total bank borrowings | 108 344 816 | 94 527 096 |
The carrying amounts of bank borrowings approximate their fair value due to the interest rates being variable. The working capital financing lines are secured through a mix of positive pledges and negative pledges on inventories and trade receivables.
On 31 December 2015, the Group had secured three long-term bank borrowings:
Bank borrowings are secured by pledges on fixed assets of the relating group companies up to € 10 million.
The carrying amounts of the Group's bank borrowings are denominated in the following currencies:
| 31 December | ||
|---|---|---|
| Non-current bank borrowings | 2015 | 2014 |
| Denominated in euros | 5 916 768 | 7 034 386 |
| Denominated in US dollars | 1 951 695 | 3 321 070 |
| Total non-current bank borrowings | 7 868 463 | 10 355 456 |
The maturity of bank borrowings is as follows:
| 31 December | ||
|---|---|---|
| Contractual repayments | 2015 | 2014 |
| 2015 | - | 2 444 781 |
| 2016 | 2 678 231 | 2 479 782 |
| 2017 | 2 864 462 | 2 077 023 |
| 2018 | 912 767 | 930 118 |
| After 2018 | 4 091 235 | 4 868 533 |
| Total contractual repayments | 10 546 695 | 12 800 237 |
Total interest liabilities based on current interest rates, contractual terms and average 2015 working capital financial | 81 levels are approximately € 1.9 million for 2016 and approximately € 7.6 million in total for the years 2017-2020.
On 31 December 2015, the Group had the following bank overdrafts:
For these bank overdrafts, financial covenants were agreed being an interest cover ratio that must exceed 4.0 and minimum solvency that must exceed 25% or 30% at various measurement dates in the periods up until 31 December 2016. The interest cover ratio 2015 exceeded 23.0 and total solvency as calculated in line with the bank agreement exceeded 48%.
| Available | ||||
|---|---|---|---|---|
| Working capital overdraft facilities | Total lines | Outstanding | Undrawn | in € |
| € 200 000 000 RCF | 200 000 000 | 87 914 819 | 112 085 181 | 112 085 181 |
| Local US dollar lines | 33 589 000 | 10 266 378 | 23 322 622 | 21 471 757 |
| Local euro lines | 1 551 500 | 768 951 | 782 549 | 782 549 |
| Local UK pound lines | 1 000 000 | 92 201 | 907 799 | 1 231 732 |
| Total in euro equivalent | ||||
| Total | 233 831 736 | 98 260 517 | 135 571 219 | 135 571 219 |
The used and undrawn part of bank overdrafts at 31 December 2015 is as follows:
As at balance sheet date, the Group had issued short-term letters of credit in favour of third parties in the amount of \$ 0.2 million (2014: \$ 2.2 million).
| 31 December | |||
|---|---|---|---|
| Deferred income tax position | 2015 | 2014 | |
| Deferred tax assets | 470 013 | 214 987 | |
| Deferred tax liabilities | (11 059 705) | (7 434 703) | |
| Deferred tax liabilities, net | (10 589 692) | (7 219 716) |
The movement in the total deferred income tax position is as follows:
| Total deferred income tax position | 2015 | 2014 |
|---|---|---|
| At 1 January | (7 219 716) | (7 255 342) |
| Recognized in OCI | 56 072 | (110 285) |
| Recognized in income | (2 634 355) | 983 826 |
| Currency translation effects | (524 547) | (593 576) |
| Acquisition subsidiaries | - | (130 076) |
| Other movements | (267 146) | (114 263) |
| At 31 December | (10 589 692) | (7 219 716) |
| Movements 2015 | 1 January 2015 |
Recognized in OCI |
Recognized in income |
Currency translation effects |
Other movements |
31 December 2015 |
|---|---|---|---|---|---|---|
| Intangible assets | (14 847) | - | 503 436 | - | - | 488 589 |
| Property, plant and equipment |
(6 196 889) | - | (90 233) | (675 555) | (24 449) | (6 987 126) |
| Inventories | (1 147 317) | (52 602) | (2 868 689) | 79 352 | 97 526 | (3 891 730) |
| Current assets and liabilities, net |
424 838 | 179 730 | (41 426) | 63 351 | 6 297 | 632 790 |
| Pension provisions | 644 569 | (71 056) | 10 097 | 68 866 | 644 | 653 120 |
| Other provisions | (737 530) | - | (224 481) | (60 561) | (347 164) | (1 369 736) |
| Long-term debt | (192 540) | - | 76 941 | - | - | (115 599) |
| Total | (7 219 716) | 56 072 | (2 634 355) | (524 547) | (267 146) | (10 589 692) |
| Movements 2014 | 1 January 2014 |
Recognized in OCI |
Recognized in income |
Currency translation effects |
Acquisition subsidiaries |
Other movements |
31 December 2014 |
|---|---|---|---|---|---|---|---|
| Intangible assets | - | - | 115 229 | - | (130 076) | - | (14 847) |
| Property, plant and equipment |
(5 786 763) | - | 336 778 | (750 193) | - | 3 289 | (6 196 889) |
| Inventories | (1 607 637) | (75 864) | 516 702 | 46 926 | - | (27 444) | (1 147 317) |
| Current assets and liabilities, net |
495 401 | (205 333) | 149 320 | 61 638 | - | (76 188) | 424 838 |
| Pension provisions | 595 259 | 170 912 | (198 838) | 78 670 | - | (1 434) | 644 569 |
| Other provisions | (941 071) | - | 214 374 | (30 617) | - | 19 784 | (737 530) |
| Long-term debt | (10 531) | - | (149 739) | - | - | (32 270) | (192 540) |
| Total | (7 255 342) | (110 285) | 983 826 | (593 576) | (130 076) | (114 263) | (7 219 716) |
An amount of € 6.5 million (2014: € 6.1 million) is expected to be recovered within 12 months.
Deferred tax assets and liabilities relate to the balance sheet captions as follows:
| 31 December 2015 | 31 December 2014 | |||||
|---|---|---|---|---|---|---|
| Assets | Liabilities | Net | Assets | Liabilities | Net | |
| Intangible assets | 488 589 | - | 488 589 | - | (14 847) | (14 847) |
| Property, plant and equipment | - | (6 987 126) | (6 987 126) | - | (6 196 889) | (6 196 889) |
| Inventories | 601 569 | (4 493 300) | (3 891 731) | 403 268 | (1 550 585) | (1 147 317) |
| Current assets and liabilities, net | 674 873 | (42 083) | 632 790 | 654 822 | (229 984) | 424 838 |
| Pension provisions | 653 121 | - | 653 121 | 644 569 | - | 644 569 |
| Other provisions | - | (1 369 736) | (1 369 736) | 11 434 | (748 964) | (737 530) |
| Long-term debt | - | (115 599) | (115 599) | - | (192 540) | (192 540) |
| Total | 2 418 152 | (13 007 844) | (10 589 692) | 1 714 093 | (8 933 809) | (7 219 716) |
| Set-off | (1 948 139) | 1 948 139 | - | (1 499 106) | 1 499 106 | - |
| Net position | 470 013 | (11 059 705) | (10 589 692) | 214 987 | (7 434 703) | (7 219 716) |
As at 31 December 2015 deferred income tax liabilities of € 0.4 million (2014: € 0.6 million) have not been recognized for withholding tax and other taxes that would be payable on the unremitted earnings of certain subsidiaries. Such amounts are permanently reinvested. Unremitted earnings totalled € 2.9 million at 31 December 2015
(2014: € 5.2 million).
The retirement benefit positions are as follows:
| 31 December | |||
|---|---|---|---|
| Balance sheet obligations | 2015 | 2014 | |
| Pension benefits - defined benefit plans | 1 835 970 | 1 815 818 | |
| Pension benefits - defined contribution plans | 72 174 | 96 897 | |
| Liability in the balance sheet | 1 908 144 | 1 912 715 |
| 31 December | ||
|---|---|---|
| Income statement charges | 2015 | 2014 |
| Pension costs - defined benefit plans (Note 22) | 77 434 | (434 585) |
| Pension costs - defined contribution plans (Note 22) | 1 398 377 | 1 004 942 |
| Pension cost in the income statement | 1 475 811 | 570 357 |
Since the acquisition of Van Rees Group and Red River Commodities Group, the Group has operated defined benefit pension plans in the Netherlands and the US, based on employee pensionable remuneration and length of service. The Van Rees Group plan was changed in 2014 into a defined contribution plan. The pension plan in the US was closed in 2008, both for changes in salaries and for new entrants, and therefore serves as a pension fund for existing and former employees of Red River Commodities Group that were eligible up to mid-2008. The remaining defined benefit plan in the US is externally funded. Plan assets are held in trusts and at the insurance company, governed by local regulations and practice in each country. In addition, some relatively limited selected pension agreements have been arranged within the Group.
The amounts recognized in the balance sheet are determined as follows:
| 31 December | |||
|---|---|---|---|
| Net pension liability | 2015 | 2014 | |
| Present value of funded obligations | 4 938 446 | 4 716 045 | |
| Fair value of plan assets | (3 102 476) | (2 900 227) | |
| Deficit of funded plans | 1 835 970 | 1 815 818 | |
| Other pension liabilities | 72 174 | 96 897 | |
| Total net pension liability | 1 908 144 | 1 912 715 |
The movement in the defined benefit obligations over the year is as follows:
| Actuarial pension obligations | 2015 | 2014 |
|---|---|---|
| At 1 January | 4 716 045 | 8 335 255 |
| Provision | - | 406 121 |
| Interest cost | 200 108 | 165 006 |
| Effect change to defined contribution scheme | - | (4 937 245) |
| Actuarial (gains)/losses | (328 035) | 943 198 |
| Benefits paid | (180 372) | (357 224) |
| Release provision through income | - | (15 055) |
| Release provision through OCI | - | (406 473) |
| Settlements | - | 64 692 |
| Reclassification to other accruals | - | (45 486) |
| Exchange differences | 530 700 | 563 256 |
| At 31 December | 4 938 446 | 4 716 045 |
Actuarial results mainly consist of changes in financial assumptions.
| Value plan assets | 2015 | 2014 |
|---|---|---|
| At 1 January | 2 900 227 | 7 085 288 |
| Expected return on plan assets | 122 674 | 129 845 |
| Actuarial gains/(losses) | (119 048) | 34 043 |
| Effect change to defined contribution scheme | - | (4 417 862) |
| Employer contributions | 51 214 | 66 245 |
| Benefits paid | (180 372) | (357 224) |
| Exchange differences | 327 781 | 359 892 |
| At 31 December | 3 102 476 | 2 900 227 |
The amounts recognized in the income statement are as follows:
| Pension costs | 2015 | 2014 |
|---|---|---|
| Interest cost | 200 108 | 165 006 |
| Return on plan assets | (122 674) | (129 845) |
| Settlement result | - | 64 692 |
| Release provisions upon change of plan | - | (534 438) |
| Total pension costs, included in personnel costs (Note 22) | 77 434 | (434 585) |
The principal actuarial assumptions were as follows:
| Actuarial assumptions | 31 December 2015 | 31 December 2014 |
|---|---|---|
| Discount rate | 4.34 % | 3.95 % |
Assumptions regarding future mortality experience are set based on actuarial advice in accordance with published statistics and experience in each territory. Average remaining life expectancy applicable for the US pension plan is 35 years.
Taking into account the closed status of the US pension plan, the main sensitivity of the overall pension liability to changes in the weighted principal assumptions is linked to the discount rate used. Actuarial calculations indicate that a 1% increase in the discount rate used would affect the total liability with approximately 15%.
Total contributions expected to be paid during 2016 are estimated at US dollar 84,837.
| 31 December | |||||
|---|---|---|---|---|---|
| Historical data | 2015 | 2014 | 2013 | 2012 | |
| Defined benefit obligations | 4 938 446 | 4 716 045 | 8 335 255 | 8 477 913 | |
| Fair values of plan assets | (3 102 476) | (2 900 227) | (7 085 288) | (6 566 890) | |
| Deficit in the plans in accordance with IAS 19R | 1 835 970 | 1 815 818 | 1 249 967 | 1 911 023 |
Other pension liabilities mainly refer to provisions for retirement benefits by law (gratuity) in various countries including Kenya and Sri Lanka.
| Other provisions | Legal | Other | Total |
|---|---|---|---|
| At 1 January 2015 | 1 003 037 | 4 363 151 | 5 366 188 |
| Charged to the income statement | (558 304) | (2 498 539) | (3 056 843) |
| Used during the year | (329 239) | (819 500) | (1 148 739) |
| Exchange differences | 25 261 | 26 992 | 52 253 |
| At 31 December 2015 | 140 755 | 1 072 104 | 1 212 859 |
| Analysis of total other provisions | |||
| Non-current | 20 000 | - | 20 000 |
| Current | 120 755 | 1 072 104 | 1 192 859 |
| Total other provisions | 140 755 | 1 072 104 | 1 212 859 |
The amounts represent a provision for certain claims brought against the Group by third parties, the outcome of which is uncertain. The provision charge is recognized in profit or loss within General cost. In management's opinion, taken into account all known facts and circumstances on 31 December 2015 and after taking appropriate legal advice, the outcome of these legal claims will not give rise to any significant loss beyond the amounts provided at 31 December 2015.
Other provisions mainly relate to short positions outstanding at year-end of which contract prices of goods to be delivered were lower than the market price of the goods at year-end and to other onerous trading contracts. In prior year € 1.6 million related to the unpaid part of the purchase consideration for acquisitions was included, of which € 0.8 million was paid in 2015 and € 0.8 million was released to the income statement.
| 2015 | 2014 |
|---|---|
| 32 825 786 | 28 154 446 |
| 3 346 203 | 2 538 887 |
| 1 398 377 | 1 004 942 |
| 77 434 | (434 585) |
| 102 173 | 180 563 |
| 930 784 | 946 212 |
| 38 680 757 | 32 390 465 |
On a full-time equivalent basis the total number of employees was:
| Number of employees | 2015 | 2014 |
|---|---|---|
| Average number | 586 | 571 |
| Number at 31 December | 593 | 577 |
| General costs | 2015 | 2014 |
|---|---|---|
| Indirect sales costs | 1 780 299 | 1 592 024 |
| Other production costs | 9 345 494 | 8 136 682 |
| Other general costs | 8 791 362 | 8 357 240 |
| Total general costs | 19 917 155 | 18 085 946 |
Indirect sales costs and other production costs are costs which are not directly linked to sales transactions.
| 2015 | 2014 |
|---|---|
| 23 362 | 30 879 |
| (2 378 530) | (2 330 228) |
| (462 395) | (473 321) |
| (2 817 563) | (2 772 670) |
| 2 411 | (20 967) |
| (275 421) | 4 043 |
| (273 010) | (16 924) |
| (3 090 573) | (2 789 594) |
| 2015 | 2014 |
|---|---|
| 8 856 970 | 13 131 982 |
| 225 854 | (352 556) |
| 63 116 | (285 007) |
| 9 145 940 | 12 494 419 |
| 2 634 355 | (983 826) |
| 11 780 295 | 11 510 593 |
The effective tax rate on the Group's profit differs from the theoretical amount that would arise using the weighted average tax rate applicable to profits of the consolidated entities as follows:
| Corporate income tax expense | 2015 | 2014 |
|---|---|---|
| Tax calculated at domestic tax rates applicable to profits in the respective countries |
12 558 446 | 12 557 898 |
| Tax effect of: | ||
| • Non-taxable amounts and tax allowances | (366 633) | (197 383) |
| • Non-deductible expenses | 150 101 | 190 626 |
| • Adjustments previous years | 63 116 | (285 007) |
| • Provisions (releases, net) | 225 854 | (352 556) |
| • Effect of changes in tax rates | - | (235 110) |
| • Other items | (850 589) | (167 875) |
| Total corporate income tax expense | 11 780 295 | 11 510 593 |
| Average effective tax rate | 26.8% | 25.8% |
The weighted average applicable theoretical corporate income tax rate was 27.6% (2014: 28.2%). The decrease is mainly caused by a change in the country mix of the Group's source of profits in countries with a relatively higher tax rate, particularly the US, Canada and African countries and by local tax initiatives to support economic growth.
The tax (charge)/credit relating to components of OCI is as follows: | 87
| 2015 | 2014 | |||||
|---|---|---|---|---|---|---|
| Tax components OCI | Before tax | Tax credit | After tax | Before tax | Tax credit | After tax |
| Cash flow hedges | (505 259) | 126 315 | (378 944) | 1 219 800 | (304 950) | 914 850 |
| Currency translation adjustments (CTA) |
5 264 874 | - | 5 264 874 | 5 499 463 | - | 5 499 463 |
| CTA on goodwill | 3 515 537 | - | 3 515 537 | 3 778 137 | - | 3 778 137 |
| Remeasurement gains/(losses) on defined benefit plans |
183 908 | (45 977) | 137 931 | (486 480) | 121 620 | (364 860) |
| Total tax components OCI | 8 459 060 | 80 338 | 8 539 398 | 10 010 920 | (183 330) | 9 827 590 |
Basic earnings per share are calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. For the share options, a calculation is made to determine the number of shares that could have been issued at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options. The number of shares calculated as above is compared with the number of shares that will be issued assuming the exercise of all issued share options. The excess number of shares is used for calculating diluted earnings per share.
| Earnings used to calculate (diluted) earnings per share | 2015 | 2014 |
|---|---|---|
| Net profit | 32 250 746 | 33 064 454 |
| SOP cost, net | 76 629 | 135 422 |
| Basis for diluted profit | 32 327 375 | 33 199 876 |
| 31 December | |||
|---|---|---|---|
| Number of shares, weighted and dilutive | 2015 | 2014 | |
| Weighted average number of ordinary shares issued | |||
| Issued at 1 January | 23 766 701 | 23 531 676 | |
| Add: new shares issued, weighted part | 90 953 | 147 702 | |
| Total number of shares issued, weighted | 23 857 654 | 23 679 378 | |
| Add: new shares issued, unweighted part | 133 172 | 87 323 | |
| Total number of shares issued | 23 990 826 | 23 766 701 | |
| Share options deferred dilution effect | 196 520 | 277 717 | |
| Total number of shares, dilutive | 24 187 346 | 24 044 418 |
It is proposed to distribute a final dividend of € 0.60 per share. Together with the 2015 interim dividend of € 0.40 per share paid in August 2015, this brings the total 2015 dividend to € 1.00 per share.
The total number of issued shares is 23,990,826. The 2015 interim dividend amounted to € 9,523,480, implying that the proposed dividend would lead to a total dividend 2015 of € 23,917,976 (total 2014: € 26,123,921, - 8.4%). These financial statements do not reflect a liability for this final dividend payable of € 14,394,496.
The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business. Besides the contingent liabilities provided for (Note 21), the company is from time to time involved in liability disputes. Under certain circumstances, we or our customers, may be required to recall or withdraw products. This could result in significant losses. We maintain product recall and general liability insurance levels that we believe to be adequate. However, we cannot assure the Group will not incur liability claims which are not covered by insurance policies. These claims could potentially have a material adverse effect on the financial position of the company. Besides the legal provision (Note 21), the company cannot reasonably predict potential financial losses to the company arising from other disputes and/or claims.
Capital expenditures contracted for at the end of the reporting period were not material.
The Group leases various offices and warehouses under non-cancelable operating lease agreements. The lease terms generally are between five and ten years, and the majority of lease agreements are renewable at the end of the lease period at market rate. The Group is required to give a six-month notice for the termination of these agreements. Operational lease expenses included in 2015 consolidated income statement amounted to € 2.3 million (2014: € 2.2 million). The future aggregate minimum lease payments under non-cancelable operating leases are as follows:
| 31 December | ||
|---|---|---|
| Lease payment liabilities (in thousands) | 2015 | 2014 |
| Within 1 year | 2 087 | 2 346 |
| Later than 1 year and no later than 5 years | 4 025 | 3 605 |
| Later than 5 years | 2 346 | 1 627 |
| Total | 8 458 | 7 578 |
On 11 July 2014, the Company acquired 100% of the shares of SIGCO Warenhandel based in Hamburg, Germany, active in the German market in trade and distribution of edible seeds. The purchase price allocation was finalized in 2015. The total purchase consideration was partly released in 2015 (Note 21).
Key management personnel disclosures are included in Note 1.8 of the Company-only financial statements.
Company balance sheet as at 31 December
Company income statement
Notes to the Company balance sheet
| 31 December | |||
|---|---|---|---|
| (before profit appropriation) | Note | 2015 | 2014 |
| Assets | |||
| Non-current assets | |||
| Intangible assets | 1.1 | 53 786 410 | 50 255 201 |
| Property, plant and equipment | 14 619 | 89 998 | |
| Investment in subsidiaries and affiliates | 1.2 | 113 610 962 | 103 339 154 |
| Total non-current assets | 167 411 991 | 153 684 353 | |
| Current assets | |||
| Amounts due from Group subsidiaries | - | 488 417 | |
| Other receivables and prepayments | 1.3 | 8 313 329 | 4 206 333 |
| Cash and cash equivalents | 88 | 15 493 | |
| Total current assets | 8 313 417 | 4 710 243 | |
| Total assets | 175 725 408 | 158 394 596 | |
| Equity and liabilities | |||
| Equity | |||
| Share capital | 10 795 871 | 10 695 015 | |
| Share premium reserve | 50 571 413 | 48 949 325 | |
| Legal reserves | 12 811 954 | 4 031 543 | |
| Other reserves | 61 889 826 | 55 179 326 | |
| Net profit for the year | 32 250 746 | 33 064 454 | |
| Total equity | 1.4 | 168 319 810 | 151 919 663 |
| Provisions | |||
| Provisions for deferred income tax liabilities | 1.3 | 5 200 613 | 2 155 828 |
| Provisions for other liabilities and charges | - | 135 738 | |
| Total provisions | 5 200 613 | 2 291 566 | |
| Current liabilities | |||
| Bank borrowings | 423 931 | 2 177 949 | |
| Amounts owed to Group subsidiaries | - | 50 411 | |
| Tax liabilities | - | 40 434 | |
| Other liabilities and accrued expenses | 1 781 054 | 1 914 573 | |
| Total current liabilities | 2 204 985 | 4 183 367 | |
| Total equity and liabilities | 175 725 408 | 158 394 596 |
| 2015 | 2014 | 91 | ||
|---|---|---|---|---|
| Result subsidiaries and affiliates | 1.2 | 33 495 511 | 33 774 612 | |
| Result Acomo before tax | (1 661 707) | (1 723 373) | ||
| 31 833 804 | 32 051 239 | |||
| Corporate income tax Acomo | 416 942 | 1 013 215 | ||
| Net profit | 32 250 746 | 33 064 454 |
The Company financial statements of Acomo are prepared in accordance with generally accepted accounting principles in the Netherlands (Dutch GAAP) and compliant with the requirements included in Part 9 of Book 2 of the Dutch Civil Code.
The Company prepares its consolidated financial statements according to International Financial Reporting Standards (IFRS) as adopted by the European Union. Use has been made of the possibility to apply the accounting policies used for the consolidated financial statements to the financial statements of the Company. The accounting policies as described in the notes to the consolidated financial statements also apply to the Company financial statements unless indicated otherwise. The Company income statement has been drawn up using the exemption of article 402 of Part 9, Book 2 of the Dutch Civil Code.
In accordance with section 2:362, subsection 8 of the Dutch Civil Code, all subsidiaries are valued at net asset value, in accordance with the accounting principles applied in the consolidated accounts.
Intangible assets relate to the goodwill paid for the acquisition of Tefco EuroIngredients in 2006, Snick EuroIngredients in 2009, Van Rees Group, Red River Commodities and King Nuts & Raaphorst in 2010 and SIGCO Warenhandel in 2014. Details on goodwill are given in Note 6 to the consolidated financial statements.
| Investments in subsidiaries and affiliates | 2015 | 2014 |
|---|---|---|
| At 1 January | 103 339 154 | 88 976 370 |
| Net profit for the year | 33 495 511 | 33 774 612 |
| Share premium contribution | 5 847 053 | - |
| Dividends paid out | (34 094 617) | (26 995 363) |
| Currency translation differences | 5 264 874 | 5 499 463 |
| Pension movements through OCI | 137 931 | (364 860) |
| Internal restructurings | - | 1 534 082 |
| Other equity movements | (378 944) | 914 850 |
| At 31 December | 113 610 962 | 103 339 154 |
Acomo and its Dutch subsidiaries form a fiscal unity for corporate income tax purposes. In accordance with standard conditions, the Company, along with the respective subsidiaries that are part of the fiscal unity, are wholly and severally liable for taxation payable by the fiscal unity. Corporate income tax expense on results of subsidiaries is reported as part of Results subsidiaries and affiliates.
Other receivables and prepayments mainly comprises prepaid income taxes 2015, which will be charged to the relevant subsidiaries in 2016. The deferred tax liabilities are primarily related to temporary differences of assets in Dutch subsidiaries that are part of the fiscal unity of which the Company is the head.
| Note | Attributable to owners of the parent | ||||||
|---|---|---|---|---|---|---|---|
| Share capital |
Share premium reserve |
Legal reserves |
Other reserves |
Net profit for the year |
Total equity |
||
| Balance at 1 January 2014 | 10 589 254 | 47 306 893 | (5 246 057) | 50 799 132 | 27 384 508 | 130 833 730 | |
| Net profit 2014 | - | - | - | - | 33 064 454 | 33 064 454 | |
| Dividends relating to 2013, final | - | - | - | (14 210 896) | - | (14 210 896) | |
| Dividends relating to 2014, interim | - | - | - | (9 478 830) | - | (9 478 830) | |
| Currency translation adjustments (CTA) | 1.2 | - | - | 5 499 463 | - | - | 5 499 463 |
| CTA on goodwill | - | - | 3 778 137 | - | - | 3 778 137 | |
| Appropriation of net profit | - | - | - | 27 384 508 | (27 384 508) | - | |
| New shares issued | 105 761 | 1 642 432 | - | - | - | 1 748 193 | |
| Employee share option scheme effects | - | - | - | 135 422 | - | 135 422 | |
| Change in cash flow hedges | - | - | - | 914 850 | - | 914 850 | |
| Remeasurement gains/(losses) on defined benefit plans |
- | - | - | (364 860) | - | (364 860) | |
| Balance at 31 December 2014 | 10 695 015 | 48 949 325 | 4 031 543 | 55 179 326 | 33 064 454 | 151 919 663 | |
| Net profit 2015 | - | - | - | - | 32 250 746 | 32 250 746 | |
| Dividends relating to 2014, final | - | - | - | (16 666 091) | - | (16 666 091) | |
| Dividends relating to 2015, interim | - | - | - | (9 523 480) | - | (9 523 480) | |
| Currency translation adjustments (CTA) | 1.2 | - | - | 5 264 874 | - | - | 5 264 874 |
| CTA on goodwill | - | - | 3 515 537 | - | - | 3 515 537 | |
| Appropriation of net profit | - | - | - | 33 064 454 | (33 064 454) | - | |
| New shares issued | 100 856 | 1 622 088 | - | - | - | 1 722 944 | |
| Employee share option scheme effects | - | - | - | 76 630 | - | 76 630 | |
| Change in cash flow hedges | - | - | - | (378 944) | - | (378 944) | |
| Remeasurement gains/(losses) on defined benefit plans |
- | - | - | 137 931 | - | 137 931 | |
| Balance at 31 December 2015 | 10 795 871 | 50 571 413 | 12 811 954 | 61 889 826 | 32 250 746 | 168 319 810 |
The total authorized number of ordinary shares is 66.7 million shares with a par value of € 0.45 per share. As at 31 December 2015, 24.0 million (2014: 23.8 million) shares were issued and fully paid. The issued share capital increased in 2015 by 224,125 shares (2014: 235,025) as a result of employees exercising their vested option under the employee share option scheme.
During 2015, the average number of employees employed by the Company was eight full-time equivalents (2014: eight), at year-end eight (2014: eight). All employees are positioned in the Netherlands.
The following amounts were paid to the Group auditor PwC as audit fees and included in other operating expenses.
| Fees audit firms | 2015 | 2014 |
|---|---|---|
| Statutory audit fees | 238 620 | 181 000 |
| Audit fees outside the Netherlands | 158 932 | 134 000 |
| Total fees audit firms | 397 552 | 315 000 |
The 2015 statutory audit fees include additional billing for the audit of the financial year 2014.
Contingent liabilities are not expected to give rise to any material loss and include guarantees given for Group companies. The Company has issued joint and several liability undertakings, some as defined in Article 403, Book 2 of the Dutch Civil Code, for almost all Dutch Group companies in the Netherlands. These written undertakings have been filed with the Trade Register of the Chamber of Commerce in the respective seat the Group company concerned has its registered office. The Company is the head of a fiscal unity that includes the Dutch wholly-owned Group companies. The Company is therefore jointly and severally liable for the tax liabilities of the fiscal unity as a whole.
Remuneration of the members of the Management Board is determined in accordance with the remuneration policy as disclosed in the Report of the Supervisory Board. Mr A. Goldschmeding was appointed as CFO per 1 December 2015 and has been nominated for appointment as statutory director in the upcoming annual general meeting. As of 1 Augustus 2015 Mr J. ten Kate resigned from his position as CFO, he remained available until 31 January 2016.
Key management includes the Management Board, consisting of Mr E. Rietkerk being statutory director of the Company and Mr A. Goldschmeding, and the Supervisory Board, consisting of Mr B. Stuivinga, Mrs M. Groothuis, Mr Y. Gottesman and Mr J. Niessen.
| Base salary | Profit share | Bonus | Pension costs | |
|---|---|---|---|---|
| E. Rietkerk (CEO) | 306 000 | 311 100 | - | 45 900 |
| A. Goldschmeding (CFO) | 22 917 | - | 11 458 | 2 083 |
| Total current members | 328 917 | 311 100 | 11 458 | 47 983 |
| J. ten Kate (CFO) (resigned) | 241 116 | - | 361 674 | 53 581 |
| Total former member | 241 116 | - | 361 674 | 53 581 |
The 2015 remuneration to members of the Management Board is shown below:
Mr Rietkerk and Mr Goldschmeding can earn a profit share based on the profit development of the Group or a bonus when achieving specific targets in their respective roles as CEO and CFO of the Group. The profit share and bonus shown are related to the performance in 2015 and will be paid out in 2016.
Both current and former members have received options as part of the long-term share-based option plan. At year-end | 95 Mr Rietkerk held 100,000 (2014: 100,000) unvested share options which were granted in 2013 with a strike price of € 13.90 per share, for which € 35,495 (2014: € 49,347) was charged to the statement of income in 2015.
At year-end Mr Goldschmeding held 50,000 share options which were granted in 2015 with a strike price of € 22.46 per share, for which € 1,979 was charged to the statement of income in 2015.
At year-end Mr Ten Kate held 22,500 (2014: 52,500) share options which were granted in 2010 with a strike price of € 7.39 per share, for which € 2,940 (2014: € 4,587) was charged to the statement of income in 2015. Mr Ten Kate exercised 30,000 options in 2015. For further information see Note 17.
In 2015, the total remuneration of the Management Board amounted to € 1,355,829. The total remuneration 2014 amounted to € 1,387,577.
The 2015 Supervisory Board member remuneration amounted to € 46,000 for the Chairman and € 34,500 for each member. Mr Stuivinga, Chairman of the Supervisory Board, and Mr Gottesman, member of the Supervisory Board, both received € 10,000 as remuneration for being a member of the Supervisory Board of Catz International.
In 2015, the total remuneration of the Supervisory Board amounted to € 169,500 (2014: € 169,500).
On 31 December 2015, the following Board members directly or indirectly owned Acomo shares: Mr Stuivinga (40,595) and Mr Niessen (3,665,008). No loans, advances or guarantees have been granted to the members of the Management Board or the Supervisory Board. No share options have been granted to members of the Supervisory Board.
Rotterdam, 3 March 2016
| A M S T E R DA M CO M M O D I T I E S N.V. ANNUAL REPORT 2015
------ Looking further to the future of our business, we recognize the need for continuity in personnel. Young talent is coming into the organization thanks to Career Days organized together with leading Dutch universities.
In accordance with the resolution of the general meeting held on 29 April 2015, the profit for 2014 has been appropriated in conformity with the proposed appropriation of profit stated in the 2014 financial statements.
The net profit for 2015 attributable to the shareholders amounting to € 32,250,746 shall be available in accordance with Article 17 of the Company's Articles of Association.
The Management Board proposes to distribute a final dividend of € 0.60 per share. Together with the 2015 interim dividend of € 0.40 per share paid in August 2015, this brings the total 2015 dividend to € 1.00 per share.
The residual profit shall be added to reserves.
On 2 February 2016 Acomo announced the first step into the Indian market via Van Rees Group. A newly established Van Rees Group subsidiary has acquired the assets of Container Tea & Commodities, which is based in Coonoor, India.
In our opinion:
We have audited the accompanying financial statements 2015 of Amsterdam Commodities N.V., Rotterdam ('the company' or 'Acomo'). The financial statements include the consolidated financial statements of Amsterdam Commodities N.V. and its subsidiaries (together: 'the Group') and the company financial statements.
The consolidated financial statements comprise:
The company financial statements comprise:
The financial reporting framework that has been applied in the preparation of the financial statements is EU-IFRS and the relevant provisions of Part 9 of Book 2 of the Dutch Civil Code for the consolidated financial statements and Part 9 of Book 2 of the Dutch Civil Code for the company financial statements.
We conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the 'Our responsibilities for the audit of the financial statements' section of our report.
We are independent of Amsterdam Commodities N.V. in accordance with the 'Verordening inzake de onafhankelijkheid van accountants bij assuranceopdrachten' (ViO) and other relevant independence requirements in the Netherlands. Furthermore, we have complied with the 'Verordening gedrags- en beroepsregels accountants' (VGBA).
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
During 2015 a number of (external) events were important to Acomo's financial results. The price level of food commodities varied strongly, resulting in prices for certain segments (e.g. tea) to increase and prices for other segments (e.g. edible seeds) to decrease. The Euro/US Dollar rate strengthened significantly compared to 2014. Also, the results of the in 2014 acquired entity SIGCO Warenhandelsgesellschaft mbH have been consolidated for a full year in the 2015 results, as set out in the report of the Management Board. These events affected our audit in determining materiality ('materiality' section), our scoping procedures ('the scope of our Group audit' section) and needed specific attention. We explain how we addressed these events in our audit procedures in the 'key audit matters' section of our report.
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In particular, we looked at where the Management Board made subjective judgments, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the Management Board that may represent a risk of material misstatement due to fraud.
We ensured that the audit teams both at Group and at component levels included the appropriate skills and competences which are needed for the audit of a commodity trading Group as Acomo. We therefore included specialists in the areas of IT and valuations in our team.
• Overall materiality: € 2.2 million which represents 5% of profit before tax.
The scope of our audit is influenced by the application of materiality which is further explained in the section 'Our responsibility for the audit of the financial statements'.
We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and to evaluate the effect of identified misstatements on our opinion. Based on our professional judgment, we determined materiality for the financial statements as a whole as follows:
| Overall Group materiality | € 2.2 million (2014: € 2.0 million). |
|---|---|
| How we determined it | 5% of profit before tax. |
| Rationale for benchmark | We have applied this benchmark, a generally accepted auditing practice, based on |
| applied | our analysis of the common information needs of users of the financial |
| statements. Also, information provided to key management is based on profit | |
| before tax. On this basis we believe that profit before tax is an important metric | |
| for the financial performance of the company. | |
| Component materiality | To each component in our audit scope, we, based on our judgment, allocate |
| materiality that is less than our overall Group materiality. The range of materiality | |
| allocated across components was between € 350 thousand and € 2 million. |
We also take misstatements and/or possible misstatements into account that, in our judgment, are material for qualitative reasons.
We agreed with the Supervisory Board that we would report to them misstatements identified during our audit above € 110,000 (2014: € 100,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Amsterdam Commodities N.V., collectively with its subsidiaries, is an international Group of entities. The financial information of this Group is included in the consolidated financial statements of Amsterdam Commodities N.V. The Group audit scoping is included in the below table:
| Significant | Visited by Group | ||
|---|---|---|---|
| Entity | component | engagement team | Scoping |
| Catz International B.V. | ü | ü | Full scope audit |
| Red River Commodities Inc. | ü | ü | Full scope audit |
| Acomo N.V. | ü | ü | Full scope audit |
| Van Rees Group B.V., including subsidiaries: | ü | ü | Full scope audit |
| • Van Rees B.V. | ü | Full scope audit | |
| • Van Rees Kenya | Full scope audit | ||
| • Van Rees Ceylon Ltd | ü | Full scope audit | |
| • Van Rees North America Inc | Specified audit procedures | ||
| Snick BVBA | ü | Full scope audit | |
| King Nuts B.V. | ü | Specified audit procedures | |
| SIGCO Warenhandelsgesellschaft mbH | ü | Specified audit procedures |
In total, in performing these procedures, we achieved the following coverage based on our full scope audit and specified audit procedures scoping on the financial line items of Acomo:
| Revenue | 86% |
|---|---|
| Total assets | 92% |
| Profit before tax | 90% |
None of the remaining components for which no full scope audit or specified audit procedures have been performed | 101 represented more than 3% of total Group profit before tax, total Group revenue or total Group assets. For those remaining components we performed, amongst others, analytical procedures to corroborate our assessment that there were no significant risks of material misstatements within those components.
In determining our scoping we considered the following factors of Acomo's structure to be relevant:
Our Group audit is aligned with the decentralized structure of Acomo.
Where the work was performed by component auditors, we determined the level of involvement we needed to have in their audit work to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the consolidated financial statements as a whole. The Group engagement team visits the component teams on a rotational basis.
We used component auditors from other PwC network firms who are familiar with the local laws and regulations in each of the locations to perform this audit work. We issued specific instructions to these audit teams. These instructions included the Group audit team's risk analysis, materiality and audit approach on similar processes. We determined the level of involvement in the audit work at those entities in order to be able to conclude whether sufficient appropriate audit evidence had been obtained as a basis for our opinion on the consolidated financial statements as a whole. During the year we had regular individual calls with all (international) component teams in which we discussed, amongst others, recent developments at the respective Acomo subsidiary, the scope of our audit, the reports of the component teams, the findings following their procedures, the need for any support or information from Group level and other matters which could be of relevance for the consolidated financial statements.
In the Netherlands, the audits of all entities are performed under direct responsibility of senior members of the Group audit team and we have visited all significant and smaller components in 2015, as set out in the scoping paragraph.
The Group consolidation, financial statement disclosures and a number of items are audited by the Group audit team. These include, but are not limited to goodwill impairment testing, derivative financial instruments, hedge accounting, tax accounting, segmentation and share based payments. The Group audit team also performed (limited) analytical review procedures on smaller entities of Acomo.
By performing the procedures above at the components, combined with additional procedures at Group level, we have obtained sufficient and appropriate audit evidence regarding the financial information of the Group as a whole to provide a basis for our opinion on the consolidated financial statements.
Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the financial statements. We have communicated the key audit matters to the Supervisory Board, however they are not a comprehensive reflection of all matters that were identified by our audit and that we discussed. We described the key audit matters and included a summary of the audit procedures we performed on those matters.
In previous years' Independent Auditor's Report we included a key audit matter in relation to the SIGCO Warenhandelsgesellschaft mbH acquisition which occurred in 2014. In absence of acquisitions we consider this matter not a key audit matter for the 2015 audit.
The key audit matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon. We do not provide a separate opinion on these matters or on specific elements of the financial statements. Any comments we make on the results of our procedures should be read in this context.
It is the core business of Acomo to accept managed risks by taking positions in different types of commodities and contracts in different currencies. This is to a great extent, done autonomously under the responsibility of local management with separate financial and operational systems. The Group has issued specific trading and financial guidelines and risk limits per operating company, per product and per category, which are monitored by the Acomo Management Board to mitigate the risk of management override of controls (e.g. monthly review of trading positions).
Certain operating entities use derivative financial instruments to hedge risks associated with foreign currency risk (mainly Euro/US Dollar exposures). Acomo's approach in relation to foreign exchange risk is disclosed in note 3.1.1. to the financial statements.
The price and foreign currency volatilities of the commodity markets have a direct impact on the value of the subsidiaries' economic trading positions and could therefore result in inventory write-downs to net realisable value and/or losses on onerous contracts.
In addition, since Acomo's subsidiaries are trading in non-quoted commodities, the valuation of inventories and onerous contract provisions requires judgment. We therefore consider this a key audit matter.
In our audit we performed procedures which allowed us to rely, to the extent possible, on internal controls on subsidiary and Group level. We performed, amongst others, procedures designed to identify risks around proper segregation of duties for the trading activities between the front office and back office, authorization of trading transactions and proper accounting of these transactions in the financial and operational systems.
As part of our audits of the subsidiaries we have tested the existence of specific trading and financial guidelines and risk limits per operating company.
At subsidiary level we also substantively tested management's analysis of the valuation of inventories and the economic trading positions with contracts and market prices. For inventories we substantively tested their existence by obtaining third party warehouse confirmations, attending inventory counts on all significant locations, testing the inventory pricing, valuation and calculation and authorisation of onerous contract provisions.
At the Group level, we assessed the company's hedge policies for commodities future contracts and hedging policies of their foreign exchange risk exposure.
For the effects of price movements we assessed the company's trading guidelines, positions per product group and overall positions.
We tested the fair value recognition of foreign currency derivatives based on market data and we investigated, where applicable, whether the effectiveness of the hedge accounting strategies is supported by effectiveness testing documentation with the help of PwC financial instruments specialists at subsidiary level.
Trade receivable balances were significant to the Group as they represent 22% of the consolidated balance sheet (note 11 to the financial statements). The collectability of trade receivables is a key element of Acomo's working capital management, which is managed on an ongoing basis by local management. Acomo Group management supports subsidiaries in setting credit limits for customers and approve such limits above certain thresholds where applicable.
Given the nature of the businesses and requirements of both suppliers and customers, various shipping terms are in place which impact the timing of revenue recognition.
Given the magnitude and judgment involved in the timing of revenue recognition and the collectability assessment of trade receivables, existence and collectability of trade receivables and revenue recognition was a key audit matter.
Acomo has recorded goodwill of EUR 59.4 million in regard to the acquisitions of SIGCO Warenhandelsgesellschaft mbH, Tefco EuroIngredients B.V., Snick EuroIngredients BVBA, Van Rees Group B.V., Red River Commodities Inc. and King Nuts B.V. The individual goodwill amounts have been allocated to the cash generating unit expected to benefit from synergies from the combination.
Given its magnitude and the significant judgment involved in the annual impairment test, this is considered a key audit matter in our audit. The assumptions and sensitivities in the annual impairment test are disclosed in note 6 to the financial statements. The impairment test is significant to our audit, because the assessment process is complex and requires management judgment about, inter alia, expected future market conditions. These assumptions are based on internal (e.g. budgets) and external market data (e.g. country specific interest rates and inflation percentages). As included in note 6 of the financial statements management concluded that no impairment was deemed necessary since the discounted future cash flows from the CGU's exceeded the value of the carrying amount for each CGU.
At subsidiary level we performed audit procedures on existence of trade receivables, which include but are not limited to control testing on sales transactions and tracing back to shipping documents, sending trade receivable confirmations and subsequent receipt testing of bank payments. Assessing the valuation of trade receivables requires judgment and we have challenged the assumptions used to calculate the trade receivables impairment amount, notably through detailed analyses of ageing of receivables, assessment of significant overdue individual trade receivables and assessing specific local risks, combined with legal documentation, where applicable.
We have tested management's timing of revenue and inventory recognition based on the shipping terms agreed with customers and suppliers. We reviewed shipping terms at all components in our audit scope. Also, we have tested management's cut-off testing procedures and have independently selected samples to test cut-off of revenue and purchase transactions through verification of shipping documents and invoices at subsidiary level.
We have engaged a PwC valuation specialist to assist us in the evaluation of the (key) assumptions used in the impairment analysis, in particular the estimated average future growth rates 2016-2020, long-term growth rates and the discount rate.
We validated the (key) assumptions as disclosed in note 6 to the financial statements where possible with external data.
We also tested management's sensitivity analyses around key assumptions; average future growth rates 2016-2020, longterm average growth rate and discount rate applied for the various CGU's and challenged management on the outcomes of the assessment.
Furthermore, we assessed the adequacy of the company's disclosures concerning goodwill.
The Management Board is responsible for:
As part of the preparation of the financial statements, the Management Board is responsible for assessing the company's ability to continue as a going concern. Based on the financial reporting frameworks mentioned, the Management Board should prepare the financial statements using the going concern basis of accounting unless the Management Board either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so. The Management Board should disclose events and circumstances that may cast significant doubt on the company's ability to continue as a going concern in the financial statements.
The Supervisory Board is responsible for overseeing the company's financial reporting process.
Our responsibility is to plan and perform an audit engagement to obtain sufficient and appropriate audit evidence to provide a basis for our opinion. Our audit opinion aims to provide reasonable assurance about whether the financial statements are free from material misstatement. Reasonable assurance is a high but not absolute level of assurance which makes it possible that we may not detect all misstatements. Misstatements may arise due to fraud or error. They are considered to be material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.
A more detailed description of our responsibilities is set out in the appendix to our report.
Pursuant to the legal requirements of Part 9 of Book 2 of the Dutch Civil Code (concerning our obligation to report about the Management Board report and other information):
We were appointed as auditors of Amsterdam Commodities N.V. on 29 April 2015 by the Supervisory Board following the passing of a resolution by the shareholders at the annual meeting held on 29 April 2015 by shareholders representing a total period of uninterrupted engagement appointment of 2 years.
Amsterdam, 3 March 2016 PricewaterhouseCoopers Accountants N.V.
Original has been signed by J. van Meijel RA
In addition to what is included in our auditor's report we have further set out in this appendix our responsibilities for the audit of the accompanying financial statements and explained what an audit involves.
We have exercised professional judgment and have maintained professional scepticism throughout the audit in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error. Our audit consisted, among others of:
Considering our ultimate responsibility for the opinion on the company's consolidated financial statements we are responsible for the direction, supervision and performance of the Group audit. In this context, we have determined the nature and extent of the audit procedures for components of the Group to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole. Determining factors are the geographic structure of the Group, the significance and/or risk profile of Group entities or activities, the accounting processes and controls, and the industry in which the Group operates. On this basis, we selected Group entities for which an audit or review of financial information or specific balances was considered necessary.
We communicate with the Supervisory Board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We provide the Supervisory Board with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the Supervisory Board, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, not communicating the matter is in the public interest.
AFM Dutch Authority for the Financial Markets
| 106 | |||
|---|---|---|---|
| AGM | Annual General Meeting |
|---|---|
| AScX | Amsterdam Small Cap Index |
| CAGR | Compound annual growth rate |
| CEO | Chief executive officer |
| CFO | Chief financial officer |
| CGU | Cash-generating unit |
| CSR | Corporate social responsibility |
| CTA | Currency translation adjustments |
| DCF | Discounted cash flow |
| EBIT | Earnings before interest and taxes (operating income) |
| EBITDA | Earnings before interest, taxes, depreciation and amortization |
| ERP | Enterprise resource planning |
| ETP | Ethical Tea Partnership |
| FIFO | First in, first out |
| FSSC | Food Safety System Certification |
| FTE | Full-time equivalent |
| FX rate | Foreign exchange rate |
| GAAP | Generally accepted accounting principles |
| HACCP | Hazard analysis and critical control points |
| IAS | International accounting standard |
| ICR | Interest cover ratio |
| IDH | IDH, The Sustainable Trade Initiative |
| IFRIC | International Financial Reporting Interpretations Committee |
| IFRS | International Financial Reporting Standards |
| IR | Investor relations |
| ISIN | International securities identification number |
| NGO | Non-governmental organization |
| OCI | Other comprehensive income |
| PBT | Profit before tax |
| PR | Public relations |
| PwC | PricewaterhouseCoopers Accountants N.V. |
| RCF | Revolving credit facility |
| ROE | Return on equity |
| RONCE | Return on net capital employed |
| SOP | Share option plan |
| SQF | Safe quality food |
| The Code | Dutch Corporate Governance Code |
| The Statement | Corporate Governance Statement |
| TSR | Total shareholder return |
| WACC | Weighted average cost of capital |
This rate is calculated as the value at the end of the period divided by the value at the beginning of the period, compounded to the respective period.
The dividend pay-out ratio is calculated as the sum of the interim and (proposed) final dividend for the year as a percentage of the net profit for the year.
The earnings per share are calculated as the total net profit for the period divided by the (weighted) average number of ordinary shares outstanding.
The equity per share reflects the company's equity allocated to each outstanding share of common stock and is calculated by dividing the total shareholders' equity by the total number of ordinary shares outstanding at year-end.
The interest cover ratio is calculated by dividing the normalized EBITDA by the total of the interest expenses minus interest income.
Market capitalization reflects the total market value of all the company's outstanding shares and is calculated by multiplying the total shares issued by the share price at period-end.
Net capital employed consists of the total assets minus cash and banks, provisions, trade creditors and other liabilities.
This ratio is calculated by dividing the net debt by the total shareholders' equity.
In this annual report, items with a specific non-recurring character are presented as one-off items.
The price/earnings ratio is calculated by dividing the share price at year-end by the earnings per share.
Return on equity is the amount of net profit returned as a percentage of the (weighted) average shareholders' equity.
Return on net capital employed measures a company's profitability and the efficiency with which its capital is employed. This indicator reflects the EBIT as a percentage of the average net capital employed.
Solvency reflects the total shareholders' equity as a percentage of the total assets.
The total shareholders' return shows the performance of the company's shares over time using the change in share price at year-end and the total dividend paid during the year, divided by the year-end share price of prior year.
E.P. Rietkerk (Erik), Chief Executive Officer WTC, Beursplein 37, 10th floor P.O. Box 30156, 3001 DD Rotterdam, the Netherlands Tel. +31 10 405 11 95, fax +31 10 405 50 94 www.acomo.nl, E-mail: [email protected]
Chamber of Commerce No. 24.191.858
H.C. Moerman (Henk), Managing Director Blaak 22 P.O. Box 180, 3000 AD Rotterdam, the Netherlands Tel. +31 10 411 34 40, fax +31 10 411 89 13 www.catz.nl E-mail: [email protected]
J. Klijn (Jaap), Managing Director Spanjeweg 4 P.O. Box 1044, 2410 CA Bodegraven, the Netherlands Tel. +31 172 63 22 22, fax +31 172 63 22 33 www.kingnuts-raaphorst.com E-mail: [email protected]
A.J.W. van Noort (Toon), Director Transportweg 47, 2676 LM Maasdijk, the Netherlands Tel. +31 174 52 83 33, fax +31 174 52 80 01 www.tovano.nl E-mail: [email protected]
Red River Commodities Inc. R.A. Majkrzak (Bob), President & CEO 501, 42nd Street NW P.O. Box 3022, Fargo, North Dakota 58102, USA Tel. +1 701 28 22 600, fax +1 701 28 25 325 www.redriv.com E-mail: [email protected]
A.L. van Eck (Anton), Managing Director Huizersdijk 11 P.O. Box 14, 4760 AA Zevenbergen, the Netherlands Tel. +31 168 32 35 55, fax +31 168 32 52 94 www.rr-ve.com E-mail: [email protected]
L. Reinecke (Lars), Managing Director Dammtorstraße 21b, 20354 Hamburg, Germany Tel. +49 40 351 03 90 www.sigco.de E-mail: [email protected]
M.W.H. Obbink (Maarten), Managing Director Wijnhaven 65D P.O. Box 914, 3000 AX Rotterdam, the Netherlands Tel. +31 10 402 17 50, fax +31 10 413 68 81 www.vanrees.com E-mail: [email protected]
Ph.H. Snick (Philippe), Managing Director De Leiteweg 13, 8020 Ruddervoorde, Belgium Tel. +32 50 36 16 85, fax +32 50 37 22 07 www.snick.be E-mail: [email protected]
The Acomo Group sources, processes, trades, packages and distributes natural food products and ingredients for the food and beverage industry in more than 90 countries across the world. In these activities the companies strive to add value in each part of the food value chain.
The activities of our operating companies are bundled in four product segments: Spices and Nuts, Edible Seeds, Tea and Food Ingredients. Each segment has its own role in its own specific value chain, thereby bridging the specific needs of suppliers and customers.
2010 2011 Our global presence and long-standing history put us in a position to recognize the needs of our stakeholders and to find solutions to bridge those needs. All companies within the Acomo Group strive to add value and to realize sustainable profits that give all our stakeholders peace of mind.
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