Annual Report (ESEF) • Mar 29, 2024
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Download Source FileLotus Bakeries Annual Report 2023 OUR MISSION IS TO CREATE SMALL MOMENTS OF JOY AND HAPPINESS. WE DO THAT BY OFFERING A VERSATILE RANGE OF BRANDED SNACKS WITH SUPERIOR TASTE EXPERIENCE. TO EVERY CONSUMER. FOR EVERY OCCASION. IN EVERY COUNTRY. Jan Boone – CEO Jan Vander Stichele – Non-Executive Chairman of the Board of Directors 4 - Lotus Bakeries navigating growth Dear reader, In this annual report, we are eager to elucidate the strategy, milestones, challenges, and initiatives that define 2023 for our Lotus Bakeries Group. Looking back over the past year, we take pride and enthusiasm in the steps we have taken and are pleased to offer you an open window into our journey in this report. As you delve into the content, you will find that throughout 2023, our strategic growth ambition and our Environmental Social Governance (ESG) vision have been of utmost importance, as they are increasingly intertwined and mutually reinforcing. This synergy is reflected in the structure of the annual report, which consists of three main sections: a corporate chapter, a financial chapter, and a comprehensive ESG compilation along with the Global Reporting Initiative (GRI) report. 2023 was a meaningful year, in which more than one milestone was reached. For the first time in history, Lotus Bakeries achieved a revenue milestone of more than one billion euro. 2023 also marked the implementation of our Biscoff growth model, the outcome of which confirmed our ambition to be present in consumers’ favourite indulgence moments around the world and confirmed our confidence to take our fair share in the cookie category in every country. This successfull implementation was complemented by the robuust performance of our Natural Foods healthy snacking business, driven by its continued internationalisation, its strong performance in the UK and its focus on innovation. Additionally, our Local Heroes business played a central role in our Group’s success, leveraging its strong position in local home markets, renowned brands and remarkable products. After a few turbulent years due to the pandemic, geopolitical tensions, and inflationary pressure, today we look ahead with optimism. We start the new year in more calm waters and look forward to continuing structural, good cooperation with our customers. We would like to extend our heartfelt gratitude to everyone who contributes daily to our mission of creating small moments of joy and happiness by offering a diverse range of branded snacks with a superior taste experience, reaching every consumer, for every occasion, in every country. On behalf of the entire Executive Committee and the Board of Directors, we end this message with confidence, as in 2023 strong foundations were further strenghtened and we continue to believe in a bright future for the company based on our elaborated strategy. Enjoy reading! Jan Boone Jan Vander Stichele CEO Non-Executive Chairman of the Board of Directors Lotus Bakeries - 5 Navigating growth Jan Boone – CEO Lotus Bakeries 6 - Lotus Bakeries THE CEO’S REFLECTION, OUTLOOK AND VISION A WORD OF GRATITUDE Before eagerly anticipating what 2024 holds, I find it important to reflect on our journey. Looking back at the past year, I find great happiness in our Group’s achievements. What stands out is our TOP values: the team spirit, open dialogue and passion demonstrated by all Lotus Bakeries employees in 2023. We are a family business with over 90 years of history, and a long-term vision. We wish to share the pride of our achievements and gratitude with all our employees, who are the foundation of our Group’s growth. A VALUED ESG VISION This pride and gratitude is aligned with the Social pillar of our Environmental Social Governance (ESG) vision, confirming the value Lotus Bakeries dedicates to this pillar. Building a culture is only possible when people unite. Therefore, fostering a social environment within our company is paramount. We want our people to feel at home and connected while at work, understanding that disconnection outside work is crucial. Of course, the Environmental and Governance pillars of our ESG vision are equally important. Amongst other actions, a new ESG Director was appointed in 2023, and efforts to reduce our carbon footprint and increase the recyclability of our product packaging continued. The streamlined governance model further integrates the focus on ESG within our operations. You can find full details on our ESG chapter of this annual report. a record Reflecting on last year, 2023 began with a major challenge as we faced inflationary times, leading us to raise prices worldwide to maintain our margin and profitability. Thanks to the dedicated commitment of our international teams, we successfully implemented the price increase, achieving record sales of EUR 1.063 billion and sales increase of 21%, the strongest growth figures ever for Lotus Bakeries. Lotus Bakeries - 7 The CEO’s reflection, outlook and vision BISCOFF® PROVES ITSELF ONCE AGAIN Biscoff® continued its strong performance with revenue reaching EUR 500 million and a sales increase of 20%. Our strategic review that examined Biscoff’s growth model led to several changes, including a focus on positioning the cookie and spread within a wide range of consumption moments. In addition, investments in digital marketing and a clearer, more modern rebranding support Biscoff’s ambitions to become the cookie number three in the world. GROWING NATURAL FOODS BRANDS In 2023, our Natural Foods brands grew exponentially, with revenue of EUR 220 million, now accounting for 24% of Lotus Bakeries’ revenue in branded goods. The construction of nākd®’s first ever in-house production site in South Africa and the launch of nākd Protein Bars were significant milestones. In the United States, BEAR® continued to grow steadily in a consumer market increasingly aware of the impact of food on health. INNOVATIVE LOCAL HEROES In our domestic market Belgium, we launched the new Lotus® Cake Donut, rejuvenating the waffles and pastries category. And in the Netherlands, we relaunched the Peijnenburg® product line with an increased focus on the version without added sugars. LOOKING AHEAD Lotus Bakeries continues to invest in marketing, commercial operations, in-store activities and e-commerce as we embark on the 2024 journey and beyond. Our commitment is evident in the resources allocated to our three strategic pillars: Lotus® Biscoff®, Lotus™ Natural Foods and Lotus® Local Heroes. In 2023, we strengthened our marketing organisation under the leadership of CMO Lotus Bakeries and CEO Natural Foods, Isabelle Maes. Using a strong data-driven approach, the newly appointed revenue growth management team will help shape the product range, pricing, distribution and promotions for Lotus Biscoff and Lotus Natural Foods. Furthermore, we are setting up phased digital channels in several major markets to support the brand awareness and household penetration of these brands. 8 - Lotus Bakeries In addition, we are committed to invest in our third strategic pillar, Lotus Local Heroes, through initiatives such as the relaunch of Peijnenburg® in the Netherlands and the introduction of the innovative Lotus® Cake Donut in Belgium. These efforts are supported by major commercial initiatives and tailored digital campaigns aimed at engaging our younger target group. Meanwhile, operationally, our focus remains on the development of our Biscoff® plant in Thailand, which will be a major project in the new year. We know that for Biscoff the greatest potential can be found in the top consumer markets, which is where we want to achieve our fair market share. So, we aim to pursuing bigger and bigger success in these international markets. Our ambition remains the same; we want Biscoff to become the world’s third largest cookie brand. However, the more global our business becomes, the more local we need to think, and in many areas. For example, it is strategically important for us to buy locally. Reducing transport not only has a positive impact on price, but also, of course, on our carbon footprint. In 2023, we have continued to work hard to reduce it and we will continue to do so. It starts with a responsible sourcing policy, but we are also making a broader effort regarding efficient logisitics, and we continue to work on the technical recyclability of our packaging. It is still our goal to market only packaging that is 100% technically recyclable by end 2025. We can only achieve the presumed growth by retaining our current employees – with their commitment and passion – and by recruiting new talent. We are creating a unique story, and we can only do that by bringing together top talent. In this context, our well-being charter calls for connecting (at work), disconnecting (after work) and discussing mental health. This charter is a signal that we believe it is important for our employees to feel good within the company. As a family business, sustainable growth is important. So focussing on the well-being of our people contributes to this belief. It is thanks to their dedication, their enthusiasm and their passion for what we do, that we are able to achieve these great results year after year. As for me, we are not just looking forward to 2024, but are confidently looking beyond the 2024 horizon to the potential of the distant future! Lotus Bakeries - 9 The CEO’s reflection, outlook and vision 10 - Lotus Bakeries Navigating growth 5 The CEO’s reflection, outlook and vision 7 Highlights 2023 14 Key figures 2023 20 Contents Lotus Bakeries - 11 01 02 03 OUR STRATEGY Our sustainability programme Care for Today, Respect for Tomorrow OUR ORGANISATION Lotus® Biscoff® 28 Lotus™ Natural Foods 44 Lotus® Local Heroes 54 Our sustainability ambition 66 Our materiality 72 Our sustainability in action 82 EU Taxonomy 148 Limited Assurance Report 152 Group structure and day-to-day management 158 Our worldwide presence 166 12 - Lotus Bakeries 04 05 06 REPORT OF THE BOARD OF DIRECTORS STOCK MARKET AND SHAREHOLDERS’ INFORMATION FINANCIAL STATEMENTS Activities in 2023 176 Financial information 179 Prospects for 2024 180 Results and proposal for appropriation of results 182 Corporate Governance Declaration 183 Enterprise Risk Management 206 External audit 211 Consolidated statement of financial position 220 Consolidated statement of profit or loss and statement of comprehensive income 221 Condensed five-year consolidated financial statements 222 Stock market and shareholders’ information 214 Contents Lotus Bakeries - 13 Contents Highlights 2023 Publication of 2022 Annual Results Lotus Bakeries’ revenue is up by a record EUR 127.2 million to EUR 877.5 million. Startup of second Biscoff® sandwich cookie production line In Lembeke, Belgium, the second Biscoff® sandwich cookie line enables the internationalisation and distribution of this hero product to be scaled up. January February 14 - Lotus Bakeries Lotus Bakeries signs the SBTi’s Business Ambition We are committed to limiting global warming to 1.5°C above pre-industrial levels and becoming net-zero by 2050. Royal State visit to South Africa As a participant of the Belgian delegation, our CEO and Managing Director South Africa had the chance to showcase our company’s investments and contribution to the growth and development of the local economy, and to discuss our ambitious plans within the region with the Royal Family and all the political and business leaders present. March Lotus Bakeries - 15 Highlights 2023 May June New Biscoff® Growth Model A deep-dive and update into the Lotus® Biscoff® strategy was completed to further commit to the ambition to become the #3 cookie in the world. Traditional Thai ceremony for good fortune for our new Biscoff® plant, currently under construction in Chon Buri, Thailand The ceremony was graced with prayers and offerings to the Buddhist monks, as well as lighting candles and incense. A symbolic first pile was driven into the ground and blessed with holy water. Appointment of a new independent director The shareholders of Lotus Bakeries appointed Eagli BV, represented by Noelle Goris, as an independent director of the company. April Launch of N kd® Protein Bar With this new protein bar, nākd® is broadening the product offering raw bars with even more added benefits. 16 - Lotus Bakeries Introduction of new Lotus® Biscoff® Branding The Biscoff® logo is restyled with a confident, contemporary look. BEAR® launches Fruit Splits BEAR® kicks off the back-to- school season with the launch of a new Fruit Splits range in the UK, broadening the product offering to older children. Lotus Bakeries reaches a new Milestone of half a billion EUR in sales at half-year Strong performance of all three strategic pillars of Lotus® Biscoff®, Lotus™ Natural Foods and Lotus® Local Heroes contributing to an overall revenue growth of 20%. July August Lotus Bakeries - 17 Highlights 2023 Relaunch of Peijnenburg® in the Netherlands The focus of this relaunch is to reposition Peijnenburg® to a healthy, accessible in-between snack. The hero product is the significantly improved gingerbread with no added sugars, while still retaining the unique Peijnenburg taste. 100% of all packaging of our waffle range is now technically recyclable Lotus Bakeries is committed to designing all its brands packaging to be technically recyclable by end 2025. Biscoff® Cookies’ packaging was already fully technically recyclable in 2022, and we are proud that 100% of all packaging of our waffle range is now also recyclable! September October 18 - Lotus Bakeries Launch of the Lotus® Cake Donuts in Belgium With these Cake Donuts, Lotus Bakeries is seeking to bring a tasty product with a big dose of fun to the market. Lotus Bakeries exceeds the EUR 1 BILLION revenue milestone And a revenue milestone of EUR 500 million for the Group’s largest strategic pillar Lotus® Biscoff®. Forest Plantation Project in partnership with the Colruyt Group With this project, it is the Colruyt Group’s ambition to plant over 10,000 hectares of forest containing 12 million trees in the Democratic Republic of Congo. We believe that our partnership in this project strengthens our joint determination to both reduce and compensate carbon emission. November december Image by Christian Crauwels Lotus Bakeries - 19 Highlights 2023 REVENUE: 1,063.0 €M (2022: 877.5 €M) Rebit: 173.0 €M (2022: 140.2 €M) NET RESULT 129.3 €M (2022: 103.3 €M) NET FINANCIAL DEBT 120.5 €M (2022: 153.6 €M) GROSS DIVIDEND 58.0 € (2022: 45.0 €) 100% 100% Lotus Bakeries’ Palm Oil Policy endorsed by palm oil suppliers 1 External quality certification 2,984 12 Employees (2,698 in 2022) Production facilities in 6 countries 23 50+ Offices in 17 countries Countries with commercial partners 99.9% 94.2% Code of conduct signed by the current employees 2 Code of conduct signed by key suppliers 3 Key figures 2023 + 21.1% + 23.4% + 25.2% + 28.9% 2 An internal employee is an employee who is connected to Lotus Bakeries with an employment contract, either of unlimited duration or of limited duration. 3 Key suppliers are all of our suppliers of end products (external production), raw materials, packaging and machinery, with whom Lotus Bakeries has entered into a written contract. 1 Palm oil producers who have signed up to the Lotus Bakeries palm oil policy or have their own palm oil policy in force that includes at least equal standards and who supply ingredients or raw materials containing at least 50% palm oil. 20 - Lotus Bakeries All employees Board of Directors Leadership Team 5 In 2023, a total of about 555 tonnes of packaging was saved 98% of all Lotus Bakeries packaging is recyclable 4 Gender diversity 70% 30% 56% 44% 49% 51% 4 The recyclability rate is the average technical recyclability of the packaging of all Lotus Bakeries brands at the end of 2023. It takes into account consumer packaging, distribution packaging and transport packaging. The technical recyclability rate is determined per packaging component on the basis of state-of-the-art design guidelines for recyclability (Ceflex, Recyclass). The average technical recyclability is a weight average, based on the packaging weight of each packaging component. 100% of our owned sites have earned the CO 2 -neutral label 5 The group comprising the Executive Committee, the General Managers and the Corporate Directors. Men Women Lotus Bakeries - 21 Key Figures 2023 01 OUR STRATEGY Lotus® Biscoff® 28 Lotus™ Natural Foods 44 Lotus® Local Heroes 54 22 - Lotus Bakeries Lotus Bakeries - 23 Share of Revenue 1 2023 Growth Historic CAGR Strategic Ambition Build Lotus Biscoff to the cookie number three in the world Accelerate growth of Lotus Natural Foods through internationalisation, innovation and acquisitions 2 20% 54% 25% 24% 16% (2013-2023) 17% (2015-2023) Lotus™ Natural Foods Lotus®Biscoff® our 3 strategic pillars 1 FY 2023 branded revenue 2 Acquisition adjusted organic growth 24 - Lotus Bakeries GENERAL STRATEGY Lotus Bakeries’ story starts with a caramelised cookie, made with nothing but natural ingredients, named after the flower symbolising purity, Lotus. Today, Lotus Bakeries is a global food company with dozens of snacks that brighten every day. With “offering the perfect snack for every occasion” as the foundation of our mission, we focus on unique, universally loved snacks tailored for everyone. From that well-earned afternoon treat to that extra energy snack on the go. By combining sharp long-term thinking with quick short-term decision-making, intrinsic to a listed family company, Lotus Bakeries is building brands for future generations. With its Biscoff® cookies and spread, the Natural Foods snacks nākd®, BEAR®, TREK® and Kiddylicious®, and our Local Heroes such as our waffles, our company is committed to having the perfect snack for every single occasion, creating a moment of pure joy for consumers. Lotus Bakeries aspires to be a part in consumers’ daily lives, across age groups and across the world’s borders. We have a clear strategy in mind to climb to the top of global brands and achieve sustainable growth. Building brands is at the heart of this. Lotus Bakeries operates globally in the snack segment, with brands such as: Lotus, Lotus Biscoff, nākd, TREK, BEAR, Kiddylicious, Peter’s Yard®, Dinosaurus®, Peijnenburg® and Annas®. Each of these brands has its own DNA and target audience, which require the right focus and attention. That’s why we have designed our strategy using three pillars: Lotus Biscoff, Lotus Natural Foods and Lotus Local Heroes. Secure market leadership and strong cash flow 15% 22% 3% (2013-2023) Lotus® Local Heroes Our strategy Lotus Bakeries - 25 MISSION Our mission is to create small moments of joy and happiness. We do that by offering a versatile range of branded snacks with superior taste experience. To every consumer. For every occasion. In every country. SUPERIOR Each of our products offers a unique taste experience. We never compromise on taste! BRANDED We focus on developing brands, globally and locally. Our products are recognisable due to strong brand ownership. SUSTAINABLE We focus on sustain able growth and are committed to maximi sing opportunities for future generations. JOYFUL With our brands, we aim to bring a (small) moment of pleasure and happiness to the lives of our consumers. OMNIPRESENT We strive to offer every consumer worldwide a snack for every occasion. 26 - Lotus Bakeries VISION Realising sustainable profitable growth by offering a versatile range of branded snacks for every consumption occasion, while maximising opportunities for generations to come via our programme CARE FOR TODAY, RESPECT FOR TOMORROW LOTUS® BISCOFF® Globalisation of Lotus® Biscoff® products with Lotus® Biscoff® – ultimately – at the top of global brands. LOTUS TM NATURAL FOODS Investment in a strong healthy snacking business, both in our home market, the United Kingdom, and internationally. lotus® local heroes Development of strong market positions in our home markets by continuous investments in our broad range. > Read more on page 66. Our strategy Lotus Bakeries - 27 54% Share of Revenue 1 20% 2023 Growth 16% (2013-2023) Historic CAGR Strategic Ambition Build Lotus Biscoff to the cookie number three in the world 1 FY 2023 branded revenue 28 - Lotus Bakeries Lotus® Biscoff® Strategy The globalisation of Lotus® Biscoff® is the first pillar of our strategy. Biscoff has a highly universally loved flavour, with a subtle caramelised touch and a crunchy bite. Biscoff is appreciated across the globe, which is quite unique in the food industry. That is why we have tremendous faith in the universal success of the Biscoff cookie and the Biscoff spread. Our ambition for Biscoff is high, we want Biscoff to become the number three cookie in the world. It is our mission to bring our unique Biscoff taste to people’s favourite indulgent moments across the globe. Biscoff is now enjoyed in more than 60 countries. In the last few years, we achieved strong growth in big consumer markets, including the United States, the United Kingdom, China, South Korea, Germany, Spain, Italy, Canada, Japan and Australia. This success supports our ambition of globalisation. The geographical expansion of Lotus Biscoff is the primary pillar of growth, with plenty of further potential. To support Biscoff’s continued internationalisation, a third plant is under construction in Thailand in addition to existing production facilities in Lembeke in Belgium, and in Mebane in the United States. To support the commercialisation of Biscoff Lotus Bakeries has 23 sales offices and agencies, and works with commercial partners in around 50 countries. In order to take into account the universal appeal of the Biscoff cookie and spread, we have sharpened our growth strategy. The classic cookie, the sandwich cookie and the spread are our hero products, and making our heroes bigger should be the single-minded focus for all. They also have a unique halo effect; people consuming the Biscoff cookies are more likely to buy the Biscoff spread and the other way around. Historically people enter the Biscoff brand via the cookies, but more and more youngsters get to know Biscoff via the spread. Our strategy Lotus Bakeries - 29 We will activate these products in every possible way, with a format appropriate to each country. We will also use cross-communication to maximise the halo effect and the cross-pollination between these three products, with the ice cream and chocolate acting as amplifiers. We will continue to position Biscoff as the cookie to enjoy with a cup of coffee, including out-of-home and on airlines. Additionally, we will also activate additional demand spaces such as emphasizing its appeal as a snack, encouraging the use of Biscoff spread on morning toast, and leveraging Brand 7 Brand 6 Brand 9 Brand 10 Brand 8 Brand 4 Brand 3 Brand 2 Brand 1 Biscoff® cookies rise to 5th place in the top 10 global ‘Cookie Ranking 1 ’ Biscoff® cookies are once again the strongest riser in the top ten of the global ‘Cookie Ranking 1 ’ and rose from sixth to the fifth place. The ambition for Biscoff® to become the cookie number three in the world in the longer term rings truer than ever before. during special occasions like Christmas, Ramadan or Diwali. By working together in partnership, with big Consumer Packaged Goods (CPG) companies or impactful influencers, we will amplify the communication around Biscoff even more! A data-driven digital-first strategy and a strong focus on e-commerce will further accelerate Biscoff’s international growth. 2021 2022 TODAY 1 Source: External data (sweet biscuits category, mono cookie concepts); Biscoff retail sales value based on internal calculations. 30 - Lotus Bakeries SPEAKING Biscoff® Growth Model updated after strategy exercise Isabelle Maes CMO and CEO Natural Foods In early 2023, Lotus Bakeries conducted another strategy exercise for Biscoff® in collaboration with consulting firm Bain & Company. Our current growth strategy has definitely been strong, but the world around us has evolved and we have evolved too, becoming a global player in more categories. LEGITIMATE AMBITION TO HAVE OUR FAIR SHARE IN THE COOKIE CATEGORY ACROSS THE GLOBE In a large consumer survey in 28 countries, Bain & Company surveyed consumers about awareness of our brand and product, and what it means to them. In many countries, Biscoff® already occupies a solid position. Our brand and product awareness are high. Consumers know Biscoff, and have a lot of enthusiasm about it. A few words always come up: unique, flavour and crunchy. For a cookie to be this highly appreciated in all the countries where we are present is unique, since there are not so many global cookie brands. It is often a category driven by specific local customs and preferences. There are only a few brands that can crack this, and Biscoff is clearly one of them. CMO and CEO Natural Foods Isabelle Maes: “The outcome of the strategy exercise confirmed our ambition: we want to have consumers around the world love Biscoff and we want to earn our fair share in the global cookie market. What makes Biscoff special is its unique flavour and its crunchy texture, which have universal appeal.” THE NEW BISCOFF® GROWTH MODEL CMO and CEO Natural Foods Isabelle Maes: “We want the Biscoff® cookie to be the number three cookie in the world. It’s our mission to be present in consumers’ favourite indulgent moments across the globe with the unique Biscoff taste experience. Biscoff’s new strategic growth model has given us the confidence to achieve our ambitions, which are centred on four key pillars.” Biscoff Heroes The classic Biscoff cookie, the Biscoff Sandwich Cookie and the Biscoff spread are our heroes, and our number one priority should be to increase the household penetration of these heroes. Focus is what characterises Lotus Bakeries. And our focus is on household penetration for our heroes. We will keep activating these three products in every possible way, with a wide range of formats matching the local market where we offer these products. “It’s our mission to be present in consumers’ favourite indulgent moments across the globe with the unique Biscoff taste experience.” - Isabelle Maes Our strategy Lotus Bakeries - 31 The Halo Effect Consumers who buy the Biscoff cookie are 4,5 times more likely to buy the Biscoff spread than those who do not buy the cookie. The same is true the other way round. The categories reinforce each other in a unique halo-effect that we should take advantage of more; by activating both cookie and spread on the same displays, in media campaigns, etc. “Traditionally, Lotus Bakeries has always separated the activation of the Biscoff cookie and the Biscoff spread, also in terms of marketing. Now that we know they enhance each other, we have decided to activate them together, for example in media or online communication, but also at the point of sale,” explains CMO and CEO Natural Foods Isabelle Maes. This halo effect also extends to the Biscoff ice cream and the Biscoff chocolate. Both the ice cream and chocolate amplify the unique Biscoff flavour and will help us in our ambition to sell more Biscoff. Thanks to cross-communication – with one creative idea, one website, one identity – we will make sure that our unique taste experience will give us even more global recognition and acclaim, contributing to our ambition to become the number three cookie in the world. Expanding Demand Spaces While the activation of Biscoff as the perfect coffee companion remains very important, there are many other occasions where people can enjoy Biscoff. Examples of these additional demand spaces include the Sandwich Cookie as the ideal treat to share with others, the Biscoff cookie as the perfect snack on the go, and the spread as the ideal ingredient to make a delicious cheesecake with the kids or on toast in the morning. Biscoff can also be used for special occasions such as Christmas, Ramadan or Diwali. Amplifiers – Activating Partnerships Focusing on the right partnerships with global FMCG brands will help build awareness of Biscoff. We will focus on fewer collaborations, but true partnerships to ensure consistent messaging and a true ‘Biscoff’ taste. We are very proud of our collaborations with Häagen-Dazs and KitKat. But partnerships with impactful influencers and with quick service restaurant chains, can also serve the same purpose. Social media knows no boundaries, so it makes sense to look beyond our national borders for partnerships. The key is to have enough Biscoff flavour in any offering that is launched in partnership with our Biscoff brand. INTERNATIONALISATION STRATEGY Knowing that Biscoff® is universally loved, and that our heroes are also heroes to our retailers, gives us the confidence to take our fair share of the cookie category in every country. Cookies are a global category, consumed all over the world, but the same cannot be said for spread. To ensure that our strategy is appropriate for the markets we want to penetrate, we have grouped all countries into “dual hero” countries, “cookie first” countries and “tailored scale” countries. In so-called dual hero countries, we activate both the cookie and the spread because we know we can make both of them huge. These countries have sufficient per capita consumption for cookies and spread which confirms the potential. Countries where the per capita consumption for spread is lower (e.g. because there is no habit in that country to eat sweet spreads on bread) we refer to as cookie first countries. There, we are committing 100% to the cookie, while at the same time supporting the spread as an amplifier to promote the Biscoff cookie. 32 - Lotus Bakeries Isabelle Maes – CMO Lotus Bakeries and CEO Natural Foods Our strategy Lotus Bakeries - 33 The third category consists of countries where we feel we need to adapt our strategy to specific characteristics of that country. These are called tailored scale countries. A customised look and feel or a different packaging format here could help make Biscoff big in those countries too. DIGITAL TRANSFORMATION AND BISCOFF ACADEMY Finally, under the umbrella of digital first, we are opting to focus fully on digital media as key enabler. We will create global campaigns, which we roll out in different countries, so that we once again create the same message and experience. This will be supported, among other things, by the rebranding of Biscoff® in 2023 with Lotus as an endorser. Finally, the new central Biscoff Academy ensures that all centrally accumulated know-how about the brand is systematically shared with the entire Biscoff community worldwide. strategic intent activation levers biscoff academy 34 - Lotus Bakeries price & promo cpg taste partnerships Marketing & media capabilities Growing market share at healthy margins at every stage Data Management, monitoring & tracking Revenue Growth Management our updated strategy Bring the unique Biscoff taste experience to people’s favourite indulgent moments around the world heroes demand spaces haloes amplifiers range Distribution & visibility marketing & media (digital first) away-from-home (afh) experience priority supporting Our strategy Lotus Bakeries - 35 A new look for Biscoff® In 2023, the rebranding of Biscoff® was introduced. This is a further step in the ambition to build a strong global cookie brand; already in 2013, Biscoff has been gradually introduced as a brand on all packaging worldwide. This has been a huge success and has contributed to a consistent and internationally recognised brand in the more than 60 countries where the products are sold. The new visual identity highlights Biscoff as a brand, supported by the Lotus® brand name, which carries recognition as well as quality and trust. This modified brand architecture is combined with a new style, ensuring strong visibility on shop shelves and a contemporary and powerful look. The brand personality incorporated in the design reflects optimism, self-confidence and accessibility. A unique font was developed for Biscoff to reinforce the brand personality. The font is simple and modern, with an attractive design that reflects Biscoff’s confident personality. The first packages in the new design were introduced in several markets starting in late July. The implementation of the new design will be carried out systematically across the different brand carriers. 36 - Lotus Bakeries Our strategy Lotus Bakeries - 37 SPEAKING Ambitious capacity expansion for Biscoff® Ignace Heyman Coo Rogier Verkarre Operations Director Belgium 1,000 fewer shipping containers annually Historically, all Biscoff® products were manufactured in Lembeke (Belgium) and sold worldwide. This changed in 2019 with the start-up of the plant in the United States. Now, Lotus Bakeries is taking the strategy of producing locally one step further. “After the site in Mebane in the United States, the construction of our third Biscoff site in Thailand is now in full swing. This plant will produce for the Asia-Pacific region, a region where Biscoff continues to grow very well and that accounts for about one-sixth of our global sales.” The reasons for starting local production in major markets are diverse. “Firstly, it gives us more flexibility to respond more quickly to sales opportunities. Simply because the products are delivered much faster. As a result the products are also fresher.” Ignace explains. “Another advantage is that we require much less sea container transport. For example, by having a facility in the United States we are able to send 1,000 fewer containers across the ocean every year. That is an important step forward, both ecologically and economically. Even though transport will be organised between the plant in Thailand and the local markets in Asia, we will save about 15,000 kilometres per container there too. Lastly, dispersed production across different sites and across continents ensures more business continuity.” In the past years, the production capacity for Biscoff® has been significantly expanded. While additional production lines were being put into service in Belgium and the United States, production efficiency is being further increased, and a new plant is rising in Thailand. All of this is related to the rapidly growing demand for Biscoff worldwide and it is also in line with Lotus Bakeries’ ecological ambitions. “Biscoff sales continue to rise internationally,” says COO Ignace Heyman. “In numbers, we’re talking about an average yearly growth over the past 10 years of around 16%. To keep up with increasing demand, it is necessary to continue investing in expanding our production capacity.” 38 - Lotus Bakeries Ignace Heyman – COO and Rogier Verkarre – Operations Director Belgium Our strategy Lotus Bakeries - 39 Focus on capacity and talent in Lembeke The Lembeke site, commissioned additional production lines last year. “It concerns additional capacity for the Biscoff® Sandwich Cookie, a highly popular and high-growth innovation,” explains Operations Director Belgium Rogier Verkarre. “The capacity of the spread line was also increased. In addition to this equipment capacity, we also added a lot of shifts, accounting for an increase of about 50 employees in a year’s time. Whereas production used to be limited during weekends, we now operate most of our lines full-time, which means they are operational 24 hours a day, 7 days a week. By further optimising our planning, we also made more production hours available, maximising the use of our current facilities. In short, we are not just adding production lines, we are making better use of that capacity as a whole.” Retention and recruitment of new employees also received a lot of attention in Lembeke last year. “Attracting people and making sure they feel good within our company is something we invest in every day,” Rogier says. “This involves both office and plant workers. Finding and retaining the right people is more important than ever. This also benefits production capacity.” Three production sites, same expertise The project of the new, third plant in Thailand, which is scheduled to be operational at the latest in the first half of 2026, is being managed by a strong team of expats and local employees with a wide range of expertise. “We purposely chose a very well-situated location there, in an area labelled by the Thai government as an economic hot spot and where lots of investments are made in the infrastructure,” Ignace explains. “The new plant is located in less than an hour from one of the world’s largest seaports, which is also ecologically and economically interesting.” The new plant will employ around 150 people a year after opening. “The employees in Lembeke have tremendous know-how and expertise. We want to achieve that same level in the United States and Thailand. We are working towards this by setting up a global structure where we share what we learn and exchange best practices across sites. As a part of this process, we temporarily assign employees to other sites for training and to facilitate the exchange of information. The great thing is that our staff have so much pride and motivation to do so. They personally want to do their part, and we are very grateful for that,” Ignace comments. 40 - Lotus Bakeries In Thailand, one notable difference from Belgium is that Biscoff® is not yet a well-known brand, and Lotus Bakeries is not a well-known employer. This entails a different focus in terms of employer branding, Ignace adds. “With the brand Lotus, we reach 70% of families in Belgium every year. In Thailand, we have yet to establish this. We are making every effort to show that we are a reliable employer that cares for its people, where working is pleasant and safe, but also where people are able to flourish. This will go hand in hand with the brand’s distribution in stores.” Energy-saving measures from the start The new site in Thailand will be equipped with solar panels on the roof. Additional plans have also been made in Belgium in this regard. “We are significantly expanding our total area of solar panels on all sites. Because it is our business philosophy to take maximum steps to do so. Our ambition extends far beyond what the law requires,” Rogier concludes. “The employees in Lembeke have tremendous know-how and expertise. We want to achieve that same level in the United States and Thailand. We are working towards this by setting up a global structure where we share what we learn and exchange best practices across sites.” - Ignace Heyman Our strategy Lotus Bakeries - 41 24% Share of Revenue 1 25% 2023 Growth 17% (2013-2023) Historic CAGR Strategic Ambition Accelerate growth of Lotus Natural Foods through internationalisation, innovation and acquisitions 2 1 FY 2023 branded revenue 2 Acquisition adjusted organic growth 44 - Lotus Bakeries Lotus™ Natural Foods Strategy The internationalisation of our Lotus™ Natural Foods brands forms the second pillar of our strategy. Lotus Bakeries wants to offer the perfect snack for every moment and for every consumer around the world. More responsible, healthier snacks therefore have a clear role to play in our offering. Our ESG ambitions underline this. Since 2015, we have been investing in the natural and healthy snacks category, focusing on strong brands, such as nākd®, BEAR®, TREK® and Kiddylicious® and, since 2022, the sourdough crackers of Peter’s Yard®. In the United Kingdom, the home market of these brands, our ambition is to maintain our category leadership and grow the categories. We do this on the one hand by activating our hero products, both at the point of sale and through targeted digital marketing. On the other hand, we have an ambitious innovation programme that will help to expand the categories further. In addition, we are fully committed to accelerated international growth for the Natural Foods brands outside the UK as one of our main growth pillars. Today, around 33% of revenue in these brands is generated outside the home market. That is why, back in 2020, we already centralised all international operations for these brands at the Lotus Natural Foods international headquarters in Baar, Switzerland. This created a multitude of synergies in terms of strategy, development and protection of international brands, but also helped us optimise supply chain and sales strategies. The appointment of CMO and CEO Natural Foods Isabelle Maes and an overarching marketing approach for Biscoff® and the Natural Foods brands since 2023 creates further synergies in terms of digital and data- driven marketing, which is helping to accelerate the internationalisation of the Natural Foods brands. In addition, the central E-commerce Acceleration Team and the regional Amazon teams are also contributing to the global growth of Lotus Natural Foods. 17% (2013-2023) Historic CAGR Our strategy Lotus Bakeries - 45 SPEAKING Lotus™ Natural Foods expand its production footprint in South Africa Donald Matheson Managing Director Lotus Manufacturing South Africa Saskia De Paepe Corporate Director Finance & Supply Chain Natural Foods Elena Bayod R&D Director Gareth Dunne Managing Director Natural Balance Foods As of 2024, nākd® bars will also be produced in-house by Lotus Bakeries in Wolseley. The new nākd® production facility, adjacent to the existing BEAR® production site, underscores Lotus Bakeries’ dedication to fostering local production and making a positive impact on the surrounding communities. This expansion positions the South African site as the second-largest production site for Lotus Bakeries, in terms of employees, contributing significantly to the local economy and employment opportunities. In early January 2024, the very first nākd® bars produced inhouse by Lotus Bakeries rolled off the production line in Wolseley, South Africa. A milestone the site had been meticulously preparing for over the past few years, having previously focused solely on the production of the BEAR® Fruit Rolls. “We started in 2019 with around 280 employees” explains Donald Matheson, Managing Director Lotus Manufacturing South Africa. “Since then, we have more than doubled production of the fruit rolls and invested in packaging capacity. In 2024, the nākd bars will be added. Nākd is one of Lotus TM Natural Foods’ brands, and was until recently fully produced by a co-manufacturer in the UK. Sales have grown strongly in recent years, especially thanks to the internationalisation of the brand. We wanted to be able to ensure sufficient production capacity to accommodate that strong growth.” South Africa was chosen as the first in-house production site for nākd given the good experience of BEAR production in recent years. “The experience of our employees in the plant that manufactures and packages BEAR for transport around the world is very extensive,” explains Corporate Director Finance & Supply Chain Natural Foods Saskia De Paepe. “This gives us great confidence that this can be duplicated for the production of nākd bars. Moreover, two years ago we had purchased a piece of land adjacent to the BEAR plant. So we had the space. Bringing the production of nākd to South Africa was therefore a win-win. Furthermore, it also made sense from a risk management perspective to produce on two continents.” The co-manufacturer in the UK will also continue to produce nākd for the local market. “ “We are proud to be the preferred employer for many people and take that responsibility very seriously. Wolseley has a population of about 14,000. When you realise that every person we employ supports about eight people, our social impact is pretty great.” - Donald Matheson 46 - Lotus Bakeries R&D Director Elena Bayod continues. “What both products have in common is that they use pure ingredients. For BEAR we mainly use apples and pears, which are locally sourced from the surrounding Ceres Valley. However the production process is different; for BEAR the fruit pulp is heated at a low temperature, after which the fruit rolls are cut, rolled and packed on site. The production of nākd consist of cold-pressing dried fruits and nuts together into a bar, and this process is much more automated.” The UK remains our largest market and is growing, so it makes sense that the co-manufacturer focusses on this market. Whereas the Wolseley plant will produce international volumes,” Saskia adds. Vision becomes a reality The production of nākd® in South Africa is carried out in a completely separate building from the BEAR® plant, since both products have very different allergenic status. “There are also manufacturing differences,” Elena Bayod – R&D Director, Saskia De Paepe – Corporate Director Finance & Supply Chain NF, Gareth Dunne – Managing Director NBF and Donald Matheson – Managing Director Lotus Manufacturing South Africa Our strategy Lotus Bakeries - 47 Donald nods in agreement. “It was exciting to produce nākd ourselves for the first time: in a plant 6,000 miles from the co-manufacturer, by people who had never done this before, and with machinery we still had to get used to. A historic moment was the day the Executive Committee confirmed to us that the taste and the texture of the nākd bars were right, and we got the GO to start production. The vision we had, became a reality.” “We even managed to improve the bars further in several areas,” Elena adds. “For instance, they now have a better and more controlled shape, and we made big changes in terms of packaging. A metallised film improves shelf life and reduces the risk of drying out. We also paid a lot of attention to make the packaging optimal for international transport, which loads efficiently and reduces the chance of product damage during transport.” Self-sufficient in water and electricity A lot of employees were involved in making this ambitious project a success, says Gareth Dunne, Managing Director Natural Balance Foods. “From Lembeke to the UK to South Africa, from Quality to R&D team and from logistics to production teams, it is impressive how well everyone worked together at all levels and in all regions. Employees from various departments put their expertise to work to ensure that we achieved a quality product within the scheduled timeframe. And this was in a country that poses specific challenges, for example in terms of electricity.” Lotus Bakeries has this covered too: the Wolseley plant has one of the largest solar panel installations in the region, combined with a battery solution that will ensure the site can produce its own electricity for up to 16 hours. “For BEAR®, this makes us 100% self-sufficient, and this is also partially the case for nākd®. We also have our own water supply with a filtration system, so we can work independently of local supply,” Gareth adds. At the same time, Lotus Bakeries also permanently invests in ecological optimisation and strives to minimise its ecological footprint by limiting emissions as much as possible. For nākd, pallets are now double-stacked to make sure that containers are more effectively loaded before they depart for distribution. “Moreover, we procure the secondary ingredients for nākd locally in South Africa. The main ingredients (dates and cashews) still come from our usual suppliers, but they don’t travel a greater distance in the process than if they had to go to the UK,” Saskia explains. BEAR ® also keeps growing Meanwhile, Lotus Bakeries was not idle in terms of BEAR® production either. Though Fruit Rolls were initially produced in South Africa and packaged in the UK, over the past few years, thanks to strong growth, a packaging line was also added in the US and three packing lines in South Africa, which makes it possible to distribute from there all over the world. Growth was so strong that a fourth flow wrapper was added in Wolseley in 2023 that is operational since January 2024. Production capacity was also expanded with an additional oven to support international growth. Not surprisingly, over 650 people are now employed at the Wolseley plants. “As an employer, Lotus Bakeries occupies an important role in the community,” says Donald. “We are proud to be the preferred employer for many people and take that responsibility very seriously. Wolseley has a population of about 14,000. When you realise that every person we employ supports about eight people, our social impact is pretty great. Our local employees are very proud, driven, hard workers. They are willing to go the extra mile to get results. So it was very gratifying that the Belgian King and Queen selected us as one of the five ambassador projects that were allowed to present themselves during their visit to the country. It was a wonderful experience to be able to show what we have achieved. Their visit was an important milestone for Lotus Bakeries in South Africa.” 48 - Lotus Bakeries Our strategy Lotus Bakeries - 49 SPEAKING n kd® expands range: protein bars with 100% natural ingredients Salome Altwegg Global Brand Manager n kd® & TREK® Joanna Agnew UK Marketing Director UFF & NBF Lotus Bakeries believes it is important to offer a balanced range to consumers. In this context, we are constantly pushing for innovation and closely monitoring trends in the market. Last year we launched the brand new nākd® Protein Bar, a natural addition to the existing range. Consumers are more conscious than ever about what they eat. They are choosing snacks that taste good, but at the same time they are aware of how they affect their physical performance and well-being. Salome Altwegg, Global Brand Manager nākd® & TREK® explains: “From spreads to beverages to breakfast cereals and snack bars, across all categories, we see that consumers are looking for products with protein. In the bars category, protein bars are the fastest growing segment. That growth is expected to accelerate over the next four years.” Up until a decade ago, protein bars were mainly used by extreme sporters, but ever since the pandemic a much wider audience has been buying them. In the UK alone, high-protein variants added 25 million pounds 1 of revenue to the snack bar market. On the one hand, this is due to increased consumer demand, but at the same time the category has seen a lot of innovation and a greater focus on taste, texture and responsible ingredients. And that is exactly where the new nākd protein bar has a key role to play. The nākd Protein Bar still has the same great taste and texture and the simple, pure ingredients that consumers love, but with the benefit of additional, plant-based protein. This version was launched in the UK in May 2023, followed by Ireland, Switzerland, the Netherlands and Spain at the end of 2023. 1 RI 31/12/2022 & Globalnewswire 2022 “Our protein comes from natural ingredients such as peanuts and peanut flour. And at the same time, we don’t compromise on taste at all.” – Joanna Agnew 50 - Lotus Bakeries UK Marketing Director UFF & NBF Joanna Agnew: “nākd was a perfect fit to respond to the increased demand for bars with benefits. No other brand in the UK does it like nākd: with a bar made from 100% natural ingredients such as raw fruit and nuts, that are cold pressed and with no added sugars. Our protein comes from natural ingredients such as peanuts and peanut flour. And at the same time, we don’t compromise on taste at all. In May 2023, we launched the protein version of the nākd bar in three flavours: Cocoa Hazelnut, Peanut Butter and Caramel in the UK, and quickly achieved strong distribution with retailers. So far, the new protein bars have been an integral part of the nākd growth in 2023, demonstrating the love for this brand and the importance of remaining relevant to today’s consumers.” Joanna Agnew – UK Marketing Director UFF & NBF Salome Altwegg – Global Brand Manager nākd® & TREK® Our strategy Lotus Bakeries - 51 52 - Lotus Bakeries Our strategy Lotus Bakeries - 53 22% Share of Revenue 1 3% Historic CAGR Strategic Ambition Secure market leadership and strong cash flow 15% 2023 Growth (2013-2023) 1 FY 2023 branded revenue 54 - Lotus Bakeries Lotus® Local Heroes Strategy The Lotus® Local Heroes are Lotus Bakeries’ third strategic pillar. These include a wide range of local brands and products – waffles, cakes, gingerbread and cookies – that play an important role in their home market of Belgium, France, the Netherlands or Sweden. The level of confidence in our Local Heroes is high. It is no coincidence that, when making acquisitions, Lotus Bakeries has always focused on companies with a strong brand, exceptional products and a strong position in their home market. We firmly believe that we can reinforce this success by focusing on these local strongholds. We are reinforcing their already strong market positions by continuing to invest in these brands on an ongoing basis, thereby strengthening Lotus Bakeries’ market leadership in the associated sub-segments. Our strategy Lotus Bakeries - 55 SPEAKING In the autumn of 2023, Lotus Bakeries in Belgium launched the biggest innovation of recent years in the pastries category: the Lotus® Cake Donut. With this unique product in three popular flavour versions, Lotus Bakeries is rejuvenating the more traditional category and making it more dynamic. And both retailers and consumers clearly like the taste of that. “The Sweet Cookie and Bakery market in Belgium is split into two categories: on the one hand, there are the crunchy cookies, and on the other, everything that falls into the category of pastry and waffles,” Marketing Director Cindy Goeteyn explains. “Being the market leader, Lotus Bakeries wanted to rejuvenate the latter category and make it more dynamic. We were convinced that the new Cake Donut would be the perfect product for this, because donuts are very popular among young people.” Pinkylicious, Chocomania and Zebra Kiss The Lotus® Cake Donut, however, is not a deep-fried donut, but a donut made of fluffy cake with a topping in three flavours with eye- catching names. “We have created flavours, colours and decorations inspired by the favourite versions of traditional donuts available at the bakery shop,” continues General Manager Belgium John Van de Par. Cake Donut rejuvenates waffles and pastries market Cindy Goeteyn Marketing Director John Van de Par General Manager Belgium “Their catchy names resonate with a younger audience: the strawberry variant Pinkylicious is fun and stands out, Chocomania is the favourite of young and old, and Zebra Kiss – with a sugar icing glaze – is a nod to our well-known Zebra pastry. More colours may be added in the future. That’s the fun part of the Cake Donut: the product is perfectly suited to respond to seasonal themes.” As always, quality was paramount in the creation of this innovation. “Flavour and quality always take priority. From cake to topping to decoration: everything had to be top notch,” John continues. “The Cake Donut proved to be a challenging project: we were producing a new product on a new line. The cake was new, but so was the coating, the decorative vermicelli, and there were tight deadlines. We have the good cooperation between R&D, marketing and the employees at our plant in Oostakker to thank for the fact that we managed to make it a success. This was a great project for them. They can be proud of what rolls off the belt now.” Strong marketing support Retailers were thrilled immediately after the launch. “After the first orders, purchasers told us that they wanted to place additional orders and urged us to produce enough. And consumers are fan as well; the fact that the “We have the good cooperation between R&D, marketing and the employees at our plant in Oostakker to thank for the fact that we managed to make it a success. This was a great project for them. They can be proud of what rolls off the belt now.” – John Van de Par 56 - Lotus Bakeries John Van de Par – General Manager Belgium and Cindy Goeteyn – Marketing Director Belgium Cake Donut is airy and not sticky is something that people especially enjoy,” says Cindy. To boost this innovation, 2024 will pretty much be all about the promotion of the Cake Donut. For one thing, the product was given a prominent role in the script of the TV show Milo, which aired in January and features Belgian pop sensation Camille Dhont in the lead role. “We are also participating with product placement and have commissioned a billboard before and after each episode. In addition, we are organising strong digital campaigns starring Camille Dhont, in line with the younger target group. The product is actually perfect for that: the donut is the most Instagrammed product among young people for good reason.” Our strategy Lotus Bakeries - 57 In the autumn of 2023, the famous gingerbread by Peijnenburg®– a Lotus® Local Hero in the Netherlands – got a complete relaunch. With an improved recipe, a sustainable, modern packaging and, above all, up-to-date positioning, today’s gingerbread surprises young and old as a responsible snack for every moment. “The gingerbread category has been going through a rough patch for a while,” explains Jeroen Harks, General Manager of Lotus Bakeries in the Netherlands. “There are several explanations for this. First of all, consumers are much more health-conscious today. However, they do not always perceive gingerbread as a healthy breakfast option, which is incorrect. And on top of that, far fewer people eat breakfast in the traditional sense nowadays than, say, ten years ago. As a result, gingerbread is not considered by consumers as much as it used to be.” SPEAKING Tasty, healthy and accessible: Peijnenburg®’s gingerbread more relevant than ever Jeroen Harks General Manager of Lotus Bakeries in the Netherlands David Jiscoot Marketing Director On the other hand, however, Peijnenburg®’s gingerbread is not only an icon in the Netherlands, but also has exactly the product characteristics consumers are looking for today. “People today want to enjoy healthy food more consciously, and are also more price-conscious than ever. Peijnenburg scores well in all those areas,” Jeroen continues. “We had already been named the most responsible snack. We know from consumer tests that people like our product. So the question was: how do we highlight those relevant product features of our icon in the present day?” “People today want to enjoy healthy food more consciously, and are also more price-conscious than ever. Peijnenburg scores well in all those areas.” – Jeroen Harks 58 - Lotus Bakeries Jeroen Harks — General Manager the Netherlands and David Jiscoot — Marketing Director the Netherlands Our strategy Lotus Bakeries - 59 Healthy options take the lead A comprehensive study of the market found that Peijnenburg®’s gingerbread possesses relevant characteristics to today’s age: as a healthy, tasty and affordable snack for every moment. So the Peijnenburg range was completely relaunched at the beginning of October 2023 with the new positioning. “We didn’t change anything about the iconic identity, we just started using it more,” continues Marketing Director David Jiscoot. “We future- proofed the strengths by making some clear, fundamental choices. So, together with our bakers, we revamped the recipes: the Peijnenburg Naturel without added sugars variant was given a new recipe that makes the gingerbread just as delicious as the version with sugar. We also added a wholegrain version, which earned a Nutri-Score A. We also adapted the design of the packaging to make it even easier for consumers to choose gingerbread without added sugars. The new packaging not only has a high-quality appearance, but it is also suited to today’s environmental requirements due to its 100% technical recyclability.” In all the efforts for the relaunch, the no-added-sugar version was put forward as the key player in the range. “We also gave a more important, prominent role to smaller and individual packaging. This acts as a barrier- breaker for consumers, in terms of price and quantity. This aligns with what today’s young consumers are seeking and, at the same time it supports the positioning as a responsible snack. And yet it’s still very much identifiably Peijnenburg.” 150 million fewer sugar cubes Also at the point of sale, Peijnenburg® Naturel without added sugar was clearly promoted as the hero product and this version was given the most shelf space. A development that was also fully welcomed by retailers. “Peijnenburg is simply addressing very relevant themes,” Jeroen continues. “Retailers also have a sugar reduction target. So we really connected with their strategy. As a result, the relaunch was consistently well received. This again underlines the relevance of this product. The initial results are encouraging and confirm the choices we’re making.” The relaunch is just the first step, because the ambitions of the Dutch Local Heroes brand are big. “We want to future-proof Peijnenburg for the longer term,” says Jeroen. “One of the goals we have set is to use at least 150 million fewer sugar cubes for our production by 2027. That’s a lot. It underlines that we are taking a clear role in society. Also, in the background, we are constantly talking to nutritional experts to fine-tune the accuracy of our message and our developments. This ensures that our story is also backed by the support of experts. In short: for us, after 140 years, the pride of the past is the relevant choice today.” 60 - Lotus Bakeries Our strategy Lotus Bakeries - 61 62 - Lotus Bakeries Our strategy Lotus Bakeries - 63 02 Our sustainability programme Care for Today, Respect for Tomorrow Our sustainability ambition 66 Our materiality 72 Our sustainability in action 82 EU Taxonomy 148 Limited Assurance Report 152 64 - Lotus Bakeries Lotus Bakeries - 65 Lotus Bakeries aims to achieve sustainable, profitable growth by providing consumers around the world with a diverse range of branded snacks for every occasion. As part of this ambition, we aspire to create value in a sustainable way, not only today, but also for the future generations to come. The range of sustainability matters that are material to our company have been captured in the programme ‘Care for Today, Respect for Tomorrow’. This programme continues to apply, while some significant refinements were applied in 2023 following an extensive double materiality exercise aimed at further strengthening our ambitions. The double materiality exercise strengthened our focus on risks related to environmental and social welfare, giving the Company today an even better view of the specific topics on which we want to work in the coming years. To implement that focused yet challenging strategy and achieve our ambitions, we have also scrutinised our ESG governance structures, steered by the Executive Committee, who in 2023 appointed a new ESG Director and now reports on sustainability matters to the Audit & Sustainability Committee, via the Executive Committee. Jan Boone, CEO: “When referring to ESG, the focus is often on conducting business in the interest of, and with respect for the environment. Our company takes many steps to protect our environment. The more global our business becomes, the more we need to think locally in many areas. It is strategically important for us to source locally and close to our production sites. Reducing transport not only has a positive impact on price, but also, of course, on our carbon footprint. We further continue the work on our product packaging and aim to achieve 100% technical recyclability by 2025. OUR SUSTAINABILITY AMBITION However, it is important to recognise that ESG is not just about the environment. The ‘S’ in Social deserves equal attention and consideration. As a family-owned business, we strive to achieve profitable growth that goes hand-in-hand with fostering a healthy community of people around the world. We can only achieve this growth by retaining our current employees – with their commitment and passion – and by attracting new talent. Our focus on employee well-being contributes to this belief.” At Lotus Bakeries, we consider it important to report in a clear way on our ESG initiatives. Therefore, we continue this year with a separate ESG-compilation and a Global Reporting Initiative (GRI) report. We are well on our way to preparing for the future disclosure requirements in accordance with the Corporate Sustainability Reporting Directive (CSRD). In this context, we have elaborated our existing materiality assessment and have carried out a comprehensive double materiality assessment. Lotus Bakeries has responded to sustainability challenges in the past which are still solid foundations to build our onward sustainability journey. In 2023, again significant steps have been taken on our sustainability matters. 66 - Lotus Bakeries governance Employees Environment Community ESG highlights 2023 • Implementing the new ESG Governance Structure • Performing a Double Materiality Assessment • Getting ready for CSRD & ESRS compliant reporting • Promoting employee well-being • Obtaining ISO 45001 certification for Lotus Bakeries South Africa Manufacturing • Issuing an Anti-Discrimination & Anti-Harassment Policy • Committing to set science-based reduction targets through SBTi • Calculating our baseline of CO 2 e emission in Scope 1, 2 and 3 for the base year 2023 • Achieving 98% technical recyclability of our branded packaging • Installing a Human Rights Policy • Setting up a Whistleblowing Line & Policy Our sustainability programme Lotus Bakeries - 67 ESG GOVERNANCE The Executive Committee (‘EXCO’) is responsible for the sustainability strategy and objectives for Lotus Bakeries. In 2023, the EXCO has appointed an ESG Director, corporate director and member of the Leadership Team, reporting to the CFO. The ESG Director has to progressively develop the sustainability strategy and ensure compliance with new sustainability regulations. The integration of the sustainability strategy into the organisation is steered by the ESG Director and implemented by the ESG workstreams, which are owned by the business or relevant corporate departments. The workstream leaders are responsible for the delivery of the sustainability targets. The Group Sustainability Steerco, which meets at least once a month, provides oversight of ESG projects and monitors progress. The EXCO presents Lotus Bakeries’ sustainability strategy to the Audit & Sustainability Committee. The Board of Directors has broadened the mandate of the Audit Committee with ESG matters and renamed it to the Audit & Sustainability Committee by decision of November 24, 2023. For further details, reference is made to chapter 4 of this annual report. 68 - Lotus Bakeries board of directors group sustainability steerco Audit & Sustainability Committee exco esg workstreams Our sustainability programme Lotus Bakeries - 69 “The next and obvious step in the development of our ESG policy was the appointment of ESG Director Sabien Dejonckheere. The ESG Director will develop and define the sustainability strategy for the Lotus Bakeries Group in close collaboration with the EXCO, the leadership team and the area management teams. She will embed and integrate the strategy throughout the whole organisation. She will take the initiative to create even more ESG awareness by involving employees in this journey and making optimal use of best practices. In addition, she will provide structure to all the different local projects and responsibilities. ESG has also been given its proper place in our organisation by expanding the Audit Committee in the Board of Directors into an Audit and Sustainability Committee. From now on, the Committee will also advise the Board of Directors on sustainability policy and reporting.” – CFO, Mike Cuvelier 70 - Lotus Bakeries “As a family business, Lotus Bakeries has been focused on sustainable policies for generations. It is an integral part of what we do. We want to see a healthy Lotus Bakeries, today and tomorrow, so that future generations can enjoy it too. On the one hand, we have been working on a balanced, sustainable product range since long by developing the right portion sizes and, from 2015, by acquiring the Natural Foods brands. Our TOP values – which stand for Team, Open Dialogue and Passion – have been an important dimension of our corporate culture for many years and show our commitment to the well-being of our employees. We also made a commitment to use only recyclable packaging for our branded products by end 2025. As you can see, driving growth in a sustainable way has always been and will always be part of our Lotus DNA.” – ESG Director, Sabien Dejonckheere Our sustainability programme Lotus Bakeries - 71 Lotus Bakeries has its sustainability programme ‘Care for Today, Respect for Tomorrow’ since long. In the past, to determine our sustainability priorities, we regularly conducted a ‘single’ materiality assessment. As today’s world is changing rapidly, we are faced with a range of new challenges in the business and along the value chain. We interact with many parties, so it is essential to get a full understanding of the impact of our operations and snacks on the world. In order to confirm or reconsider the priorities of our sustainability programme, Lotus Bakeries in 2023 performed a broad and in-depth assessment using the double materiality lens, reviewing a list of topics from both a financial and an impact materiality perspective. We engaged with a large number of stakeholders on these topics. The outcome will serve as the basis to select our strategic ESG platforms within the ‘Care for Today, Respect for Tomorrow’ programme, as well as guide us on which ESRS standards to report on for the upcoming CSRD reporting. This assessment will provide strategic guidance on sustainability matters, and how to integrate this with our ambition: offering a versatile range of branded snacks for every consumption occasion to consumers worldwide. OUR MATERIALITY Financial materiality / outside-in Impact of the environment or society on our organisation Impact materiality / inside-out Impact of our organisation on the environment or society Sustainability topics material from financial materiality persprective. Sustainability topics material from impact materiality perspective. what is double materiality? Double materiality 72 - Lotus Bakeries OUR value chain We develop, create and offer a versatile range of snacks that meets the needs of consumers for the global market. In order to do so, we strive to cooperate with our partners along the value chain to create our branded snacks in the most sustainable way possible. sourcing transport transport retail and AWAY-FROM-HOME consumption end-of-life production Sourcing: We source high-quality raw materials such as wheat flour, sugar, palm oil, chocolate and others to create our products and packaging materials to protect them. We source related goods and services such as distribution, logistics, production equipment. Transport: Raw and packaging materials are transported to our production sites. The greater part of our raw materials is sourced on the same continent where we operate as we strive to keep the distance as short as possible. Production: We transform raw materials into unique and great tasting snacks. We do so at our own production site as well as for some of our brands jointly with our co-manufacturers. We take care to use the precious natural resources efficiently in a safe working environment. upstream downstream Retail and away-from-home: We aim to make our range of branded snacks accessible for everyone. Our products are sold by our partners through retail channels (brick&mortar and online) and through away- from-home channels. Consumption: We provide snacks for different consumption moments and needs. Everything we launch has to uphold the highest quality and food safety standards. We pack our most popular snacks in different formats fitting different household sizes in order to combat food waste. On top, everything has to taste delicious, because we know that this will keep consumers coming back to our product range. End-of-life: We aim to contribute to a circular economy via our technical recyclable packaging and we encourage consumers to sort correctly by providing clear sorting advice. Our sustainability programme Lotus Bakeries - 73 THE MATERIALITY ASSESSMENT: A 4-STEPS APPROACH Lotus Bakeries performed a double materiality assessment in 2023, which was approached as follows: Starting point was the sustainability priorities from Lotus Bakeries’ existing materiality assessment, enriched with the requirements of the upcoming CSRD, including nearly 100 ESRS topics and sub-topics. Based on desk research and workshops with stakeholders and experts, 22 relevant topics were identified as most relevant for Lotus Bakeries to engage on with other actors in the value chain. This step included engagement through dialogues and interviews to ensure completeness of the selected themes, followed by an online survey to obtain a prioritisation on the 22 key topics from both a financial and impact materiality perspective. The ranking of the topics was analysed based on the complete set of responses as well as per cluster of stakeholders to identify potential topics that would matter more to a certain stakeholder group. The threshold at which a topic is considered material is locked at 7 or higher on a 9-point scale. The topics with material impact were assessed on their actual or potential impact, the severity (scale, scope and irremediable character) and the likelihood of occurring. The topics with financial materiality were assessed in terms of risk and opportunity and cross-checked with Lotus Bakeries’ enterprise risk management process aimed at identifying, assessing and prioritising risks to ensure one comprehensive and integrated approach. assessment longlist shortlist We engaged with: Employees Audit & Sustainability Committee Suppliers of raw material and packaging Retail and away-from-home customers Consumers Representatives of farmers Bankers Investors Research institutions stakeholder engagement 74 - Lotus Bakeries Double materiality Financial materiality Impact materiality Double materiality Care for Today, Respect for Tomorrow double materiality assessment as base for the sustainability strategy Our sustainability programme Lotus Bakeries - 75 Water stewardship Addressing water-stress by developing means to reduce, reuse and reserve water at our own operations and in engagement with our suppliers. Biodiversity Developing measures to protect and preserve biodiversity, including efforts to protect ecosystems at our own sites and ways to promote sustainable agriculture at our suppliers. A reduced pollination could lead to reduced availability of crops. 5 6 Circular economy Contributing to a circular economy by continuously improving our manufacturing efficiency with continued efforts on reduc- ing waste and developing further initiatives on water usage, on top of the initiatives to reduce our environmental impact (GHG). Product packaging Addressing packaging sustainability by reducing what we use, increasing recyclability, and using as much as recycled packaging for packaging not in contact with the food. 7 8 Sustainable sourcing Ensuring the sustainable sourcing of key ingredients, such as palm oil, chocolate, sugar, and wheat, and other sensitive ingredients to minimise environmental impact including deforestation or habitat destruction. Addressing ethical practices throughout the supply chain to minimise social impact, including labour conditions, fair trade, and human rights. Pollution Pollution is the introduction of harmful materials into the environment, often generated by human activities such as the disposal of waste, including plastic waste, or the runoff produced by factories and economic activities, such as the use of pes- ticides in agriculture. These pollutants can damage the quality of air, water and land. 4 3 Carbon reduction Reducing direct greenhouse gas emissions in our manufacturing, fleet, transport and our full supply chain to contribute to the race towards net zero and helping to limit global warming to 1.5 degrees Celsius above pre-industrial levels. Energy usage Reducing the energy consumption or replacing fossil fuel related energy with renewable energy in our manufacturing sites and across our full supply chain to reduce indirect greenhouse gas emissions coming from energy generation. 2 1 Community engagement Prosperity for all by contributing positively to the areas in which Lotus Bakeries operates. This entails initiatives such as The Foundation for Education, as well as local involvement in the communities where we have operations. Food safety and quality Ensuring the safety and quality of products, including compliance with food safety standards and certifications and traceability. 5 6 Responsible marketing practices Providing clear information on product ingredients and nutritional value. Efforts to educate consumers and promote healthy dietary habits. Ensuring responsible and ethical marketing and advertising practices. Balanced portfolio Providing a balanced portfolio of snacks ranging from delicious Biscoff® cookies over bars fitting the better-for-you platform, on to snacks for babies and toddlers. Accessible for all at every moment. 7 8 Taste experience The ability to create snacks that deliver a memorable experience, for all around the globe. 9 Talent development Training and upgrading the capabilities, skills and competencies of employees based on the strategic needs of the organisation, employee performance and career devel- opment review. Learning and development comes in many shapes and sizes, including on-the-job, online courses or in-person training. Diversity and inclusion A diverse and inclusive workplace to make everyone feel equally involved, regardless of who they are or what they do for the business. Diversity can entail amongst other diversity in race, gender, sexual orientation, age, religion, national origin and disability. 4 3 Safety and health Promoting a strong safety culture and providing the right working conditions at the workplace to safeguard every employee against health issues related to the workplace. Employee well-being Promoting a TOP-culture (Transparency, Open Dialogue, Passion) to ensure employees feel good about their job on a mental, physical and emotional level. This includes both, moments of connection and engagement at work as well as finding moments to disconnect. 2 1 Prevent business interruption Developing plans to prevent and mitigate major and long operational interruptions in our factories caused by fire, floods, tropical storms, or other unusual events. 5 Financially sound company Long-term financial stability and the capacity to withstand market-related or financial headwinds. Cyber security Protecting the data and information assets and implementing security measures to prevent cyber-attacks. 4 3 Corporate governance Conducting business operations in accordance with internationally accepted principles and practices, ensuring a robust risk management system and incorporating sustainability practices. Long term strategy The Company’s ability to deliver sustain- able growth, increase the value of the Company’s portfolio, in combination with profitability. 2 1 THE MATERIALITY MATRIX The double materiality assessment shows which of the 22 topics can have a material financial impact on the Group and which topics we as a company can have a material impact on. 76 - Lotus Bakeries below 5: low materiality 5 to 7: medium materiality 7 to 9: high materiality Double materiality matrix environment governance social 3 4 5 6 7 8 4 5 6 7 8 Financial materiality Single materiality: impact materiality Single materiality: financial materiality Impact materiality 5 5 6 4 7 1 7 8 2 3 6 8 9 1 2 4 3 1 3 2 5 4 Double materiality: financial & impact materiality Our sustainability programme Lotus Bakeries - 77 • Food safety and quality • Energy usage • Carbon reduction • Sustainable sourcing • Corporate governance Five topics with double materiality As such, Lotus Bakeries has identified five topics with double materiality, i.e. the impact of our organisation on the environment or society (“Impact Materiality”) and the impact of society or the environment on our organisation (“Financial Materiality”). There are three topics with mainly impact materiality (safety & health of employees; product packaging; employee well-being) and six topics with mainly financial materiality (financially sound company; balanced portfolio; long-term strategy; preventing business interruptions, cyber security; taste experience). The double materiality assessment was performed in the Audit & Sustainability Committee on 24 November 2023 and the outcome thereof, the double materiality matrix, was approved by the Board of Directors on 4 March 2024. When we analyse the scores of the multiple stakeholder groups, we see a fairly consistent pattern: the same material topics emerge across all these groups. This gives us confidence that we have identified the right material topics for Lotus Bakeries that matter to us and our stakeholders. The qualitative conversations with external stakeholders have moreover indicated that water stewardship is considered important in the wider food and agriculture sector, but there is a recognition that water usage in our operations is more limited. This explains why water stewardship did not come forward as material for Lotus Bakeries. However, we feel it is important to report on our water balance and our water management and refer to page 102. The topics identified as a result of the double materiality exercise serve as the basis for selecting the proper ESRS standards from the CSRD regulations. The topics that are material are linked to the following ESRS standards: ESRS E1: Climate change (Energy usage, carbon reduction) ESRS E5: Resource use and circularity (Product packaging and sustainable sourcing) ESRS S1: Own workforce (Safety and health of employees and Employee well-being) ESRS S4: End consumer and customer (Food safety and quality, Balanced portfolio and taste experience) ESRS G1: Corporate governance (financially sound company, long- term strategy, cybersecurity and preventing business interruptions) In the course of 2024, Lotus Bakeries will further assess - within each of these ESRS standards - which datapoints are relevant to include in future progress reporting. PROGRESSIVE EVOLUTION OF OUR SUSTAINABILITY STRATEGY While our framework ‘Care for Today, Respect for Tomorrow’ is a robust foundation, our sustainability strategy will be screened using the fresh insights of the double materiality exercise. Lotus Bakeries will progressively evolve its sustainability strategy, focusing on both double and single material priorities for the Group. The ESG governance bodies will play a crucial role in crystallising the ESG strategy throughout 2024, providing guidance in setting targets and developing clear roadmaps for the environmental and social aspects of our sustainability programme. 78 - Lotus Bakeries We acknowledge that there will be challenges on our sustainability journey. There are global challenges such as the inflaming geopolitical tensions that could expose economies to disruption in sourcing raw materials, but also the devastating effects of climate change puts a stronger pressure on companies to gear up in their decarbonisation journey. For Lotus Bakeries, there are several concrete challenges. Exploring the electrification of gas ovens will entail a comprehensive investigation in the production of our cookie and bakery snacks, as we will always want to preserve our unique great taste. Realising decarbonization in our Scope 3, especially relating to raw materials such as palm oil and chocolate will require a thorough approach as the challenges are complex because the risk of deforestation is closely linked to farmer poverty and there is no straightforward solution. We will need to work closely with our suppliers on these matters. Packaging remains challenging, as on the one hand it is needed to guarantee the highest food quality and safety and to combat food waste. On the other hand, it is currently technically impossible to fully close the cycle, and for food safety reasons, it is not allowed to use mechanically recycled material that comes in contact with food. Lastly, as a fast growing company, our impact on people working directly and indirectly for the Group will continue to increase and it remains our first and foremost challenge to ensure safety and well-being of all our people. As a global company, Lotus Bakeries faces many cultural, regulatory and language barriers to overcome in order to safeguard essential social welfare guardrails throughout our operations and our value chain. Balanced Portfolio of Great Taste Nevertheless Lotus Bakeries remains steadfast in its sustainability ambition and has identified several strategic areas of exploration.The first one is to have a Balanced Portfolio of Great Taste. We aim to meet the needs of all end-consumers in a balanced way, at all times. We will make sure that our range is balanced on several levels; there will be a diverse range of products (from Biscoff® cookies to pastries to the cold- pressed nākd® bars with only natural ingredients, to the BEAR® fruit rolls), for multiple target groups (from babies to toddlers to children and adults) and for different consumption moments and needs. Everything we launch has to uphold the highest quality and food safety standards. On top, everything has to taste delicious, because we know that this will keep consumers coming back to our product range. One Lotus Family A second strategic priority is our One Lotus Family. This concerns the health, safety and well-being of our employees. The good policies that we are already implementing for our employees today will be continued in the future. In this context, the Executive Committee signed the Well-being & Disconnection Charter in 2023 1 , which is a strong statement about just how much we value the well-being of our employees. In addition, we will also follow up on matters such as training, diversity, onboarding new employees and safety. In doing so, we also want to pay attention to employees in our value chain, both upstream and downstream. Sustainable Sourcing The latter is also a key focus within our third strategic priority, namely Sustainable Sourcing, which has a number of dimensions and touches on both social and environmental factors with our suppliers. For example, last year we developed the Human Rights Policy, both for our own employees and for those from our value chain. The second dimension focuses on environmentally friendly choices within that value chain to aid in our pathway of decarbonisation. In this context, we are reaching out to our front-line suppliers to dedicate even more time and attention to selecting sustainable raw materials. We are also preparing for the new EU Deforestation Regulation which comes into force as from 2025. Climate Change A final area of attention is Climate Change. We will contribute to this by focusing on various components. This includes our packaging strategy and commitment to use only recyclable packaging for our branded products by end 2025, as well as all initiatives aimed at reducing our carbon footprint. In 2024, a roadmap will be set up to reduce our carbon footprint, which may include opportunities to electrify our gas ovens, to audit our energy balance, to greening our fleet, and to evaluate the CO 2 emissions of the suppliers that Lotus Bakeries works with. 1 Lotus Bakeries, Annual Report 2023, page 116. Our sustainability programme Lotus Bakeries - 79 SPEAKING Lotus Bakeries prepares for European Green Deal & csrd Mike Cuvelier cfo Sabien Dejonckheere ESG Director Respect for the environment, people and society is in Lotus Bakeries’ DNA. In the past, we summed this up in our programme Care for Today, Respect for Tomorrow. Under the new ESG regulations, that programme remains a powerful statement. By integrating the underlying philosophy within our entire business operations, we are preparing for the European Green Deal and the resulting Corporate Sustainability Reporting Directive (CSRD). We have been making our ESG initiatives available to our stakeholders for a number of years in an ESG compilation report. The new European CSRD regulation requires companies to elaborate and harmonise ESG reporting as from 2024 through a set of reporting standards in order to increase the comparability between companies. CFO Mike Cuvelier: “To prepare for this, we carried out a readiness scan in 2023, revealing our level of preparedness for reporting in accordance with datapoints that are requested by new European legislation. In addition, as part of the double materiality assessment, we explored the topics that European legislation put forward for companies to assess in terms of materiality from both, a financial and an impact perspective. The previous materiality assessment 1 , which was prepared solely from a financial perspective, was updated and supplemented with the impact materiality. The double materiality assessment includes all Group entities that are consolidated, thus including organisations from outside Europe as well.” ESG Director Sabien Dejonckheere: “In total, Europe put forward close to 100 topics and subtopics. We first narrowed down this longlist to a smaller number through desk research, and then discussed them with experts in focus groups. Not all of these are priorities for Lotus Bakeries. For example, our water audit shows that the topic “water and marine resources” is not a priority as we don’t use a lot of water in our organisation. On the other hand, our workforce is a big priority, as we employ more than 2,900 people. This is why we ultimately ended up with a reduced but relevant set of 22 topics for our Company, which we then shared with stakeholders for a qualitative discussion and quantitative scoring.” As a result of this double materiality assessment, it became clear on the one hand, which topics could have a material financial impact on the Group and on the other, which topics we as a company could have a material impact on. This also helps us to determine exactly which priorities we will continue to focus on as a company. We will report on those priorities for the 2024 reporting period in line with the CSRD. 1 Lotus Bakeries, Annual Report 2022, page 79. 80 - Lotus Bakeries “We will also be looking at what information is already available for reporting, and the datapoints for which we need to do some additional preparation”, Sabien continues. “Together with Corporate Finance, which already has very robust reporting processes, a data warehouse will be set up to make this possible. Since the underlying thinking and approach of the finance department is similar to that of ESG reporting, the internal expertise we have already developed is priceless.” 1 Lotus Bakeries, Annual Report 2022, page 79. Mike Cuvelier – CFO and Sabien Dejonckheere – ESG Director For some time now, Lotus Bakeries had opted to voluntarily provide limited assurance for a limited set of figures. As of the reporting period 2024, such assurance will be provided for the entire assessment, as required by law. Our sustainability programme Lotus Bakeries - 81 Our sustainability in action Our ‘Care for Today, Respect for Tomorrow’ framework, is aimed at doing sustainable business, not only today, but also for the future generations to come. Our sustainability strategy in 2023 is still centred around three pillars: ‘our environment’, ‘our employees’ and ‘our community’. With regard to the environment , we are actively combatting global warming. In all our activities, we strive to source sustainably and to reduce our environmental footprint. For our employees , we have a recruitment policy that aims to attract a diverse and talented group of people who share our TOP values. We are committed to long-term employment and provide our employees with a pleasant, challenging, inspiring and safe working environment. Finally, regarding community , we actively undertake our social responsibility by ensuring sound business practices throughout our organisation. We also contribute to the prospects of future generations by supporting educational projects through our Foundation for Education. PROGRESS REPORTING 2023 Operational Key Performance Indicators (KPIs), such as waste, utilities usage and accident frequency, as well as Human Resources (HR) KPIs, are tracked on a monthly basis using a comprehensive monitoring and registration system. Meanwhile, additional metrics like emissions and packaging recyclability are presently assessed annually at each production site. A thorough assessment of our emissions across Scope 1, 2, and 3 categories are performed in collaboration with CO 2 logic - South Pole Group. Starting in 2024, KPIs identified through the double materiality assessment will undergo more frequent monitoring, occurring at least quarterly. This enhanced monitoring will be facilitated through our Enterprise Resource Planning (ERP) system. With this report, Lotus Bakeries aims to communicate about its achievements and progress within the established sustainability strategy for 2023. Sustainability indicators Each of the three pillars contains a set of sustainability indicators. A selection of indicators has been validated by PwC Bedrijfsrevisoren BV. The validation was performed in accordance with the International Standard on Assurance Engagements (ISAE) 3000, a model developed to provide assurance on non-financial data. The assurance indicators are marked throughout the text by . The assurance report on the attested indicators for the reporting period ending December 31, 2023, can be found on page 152 of this annual report. The three pillars of our sustainability strategy For the assurance report on the attested indicators for the year as per December 31, 2021 and 2022, please refer to page 138 of the 2021 annual report and page 140 of the 2022 annual report. 82 - Lotus Bakeries Lotus Bakeries uses the Sustainable Development Goals (SDGs) of the United Nations as a framework and guide in determining its sustainability strategy, its priorities and its action plans. The SDGs were adopted by the General Meeting of the United Nations in 2015 and consist of 17 goals to be achieved by 2030. Global Reporting Initiative We have been publishing a Global Reporting Initiative (GRI) report since 2021. This GRI report will be published on our website: https://www.lotusbakeries.com/reporting-disclosure In the future, this GRI report will become an integral part of reporting requirements established by the Corporate Sustainability Reporting Directive (CSRD) and the related European Sustainability Reporting Standards (ESRS). UNITED NATIONS Global Compact In March 2021, Lotus Bakeries was accepted as a member of the United Nations (UN) Global Compact. The UN Global Compact is a global sustainability initiative for businesses set up by the United Nations. As a result, Lotus Bakeries is committed to upholding the Ten Principles 1 of the United Nations in the area of human rights, working conditions, environment and anti-corruption and to ensure they form part of its strategy, culture and daily activities. Our participation in the UN Global Compact also means that we renew our commitment annually and report on the progress of our efforts to implement the Ten Principles. The renewed commitment and progress report for 2023 will be available on the UN Global Compact website. 1 Businesses must support and respect the internationally proclaimed human rights; Businesses must ensure they are not complicit in human rights abuses; Businesses must uphold freedom of association and the right to collective bargaining; The elimination of all forms of forced or compulsory labour; The effective abolition of child labour; The elimination of discrimination in respect of employment and occupation; The supporting of a precautionary approach to environmental challenges; Undertaking initiatives to promote greater environmental responsibility; Encouraging the development and diffusion of environmentally friendly technologies; Businesses should work against all forms of corruption, including extortion and bribery. External certifications and evaluations To help us meet and demonstrate our commitments, we also hold a number of key certifications and memberships, and are assessed by independent organisations. For a full overview of certifications, we refer to page 144. Our sustainability programme Lotus Bakeries - 83 ENVIRONMENT: AMBITION 2023 & ACHIEVEMENTS In recognition of the pressing challenges presented by climate change to both our environment and human well-being, Lotus Bakeries is committed to taking action. Our Group is determined to join the battle against global warming and minimise our impact on the environment in all aspects of our operations. The main focus areas where we aim to achieve zero ecological impact are: Sustainable sourcing Sustainable packaging reducing our Carbon footprint • Committed to set science-based reduction targets through SBTi • Calculating our baseline of CO 2 e emissions in Scope 1, 2 and 3 for the base year 2023 • Achieving 98% technical recyclability of our branded packaging highlights 84 - Lotus Bakeries 1 Total Scope 1 and 2 emissions relating to our owned sites amount to 40,377 tonnes CO 2 e. 2 Market-based / 3 Total GHG emissions in Tonnes per €mio of revenue / 4 This concerns residual waste, production waste, grease, paper and cardboard at our owned sites. The increase of waste per kg produced is largely driven by the start-up of new production lines and innovations in our product range with a related increase in trials and set-up for new products. / 5 The Recyclability Rate is the average technical recyclability of the packaging of all Lotus Bakeries brands by the end of 2023. It takes into account consumer packaging, distribution packaging and transport packaging. The technical recyclability rate is determined per packaging component on the basis of the state-of-the-art design guidelines for recyclability (Ceflex, Recyclass). The average technical recyclability is a weighted average, based on the packaging weight of each packaging component./ 6 Palm oil suppliers who have signed up to the Lotus Bakeries palm oil policy or have their own palm oil policy in force that includes at least equal standards and who supply ingredients or raw materials containing at least 50% palm oil, and in so far these products represent more than 5% in any recipe. Sustainable PACKAGING UNIT 2023 2022 2021 Packaging to product ratio g/kg product 162 166 179 Reduction of plastic tonnes/year 103 62 22 Reduction of glass tonnes/year 155 1,120 Reduction of cardboard tonnes/year 249 526 SKUs with 100% recycable packaging % 86 81 73 Packaging of all Lotus Bakeries brands that is recycable 5 % 98 97 97 Use of recycled cardboard % 79 80 75 Use of cardboard with the 'sustainable managed forest guarantee' % 77 78 76 Sustainable sourcing UNIT 2023 2022 2021 Key palm oil suppliers who endorsed the principles of Lotus Bakeries Palm Oil Policy 6 % 100 90 90 Our production sites which process palm oil and have achieved the RSPO certificate % 100 100 100 Our Lotus® Biscoff® chocolate products with the Rainforest Alliance quality mark % 100 100 100 Our eggs that are sourced cage-free % 100 100 100 CARBON FOOTPRINT UNIT 2023 2022 2021 % of owned sites that have earned the CO 2 -neutral label % 100 100 100 Total GHG emissions Tonnes CO 2 e 557,275 GHG emissions - scope 1 1 Tonnes CO 2 e 27,825 GHG emissions - scope 2 2 Tonnes CO 2 e 12,648 GHG emissions - scope 3 Tonnes CO 2 e 516,802 GHG emissions intensity 3 Tonnes CO 2 e/mEUR 524.3 Energy consumption kWh/tonne 1,119 1,074 1,064 kg of waste per tonne generated 4 kg/tonne 72 60 63 Our sustainability programme Lotus Bakeries - 85 reducing our carbon footprint Baseline of our carbon footprint In 2023, Lotus Bakeries committed to the Science Based Targets initiative (SBTi) and its reduction target standards to reach net-zero by 2050. Upon joining the SBTi, we meticulously established our 2023 baseline, employing the Greenhouse Gas Protocol as our guiding methodology, in collaboration with CO 2 logic - South Pole Group. This comprehensive approach involved a thorough assessment of our emissions across Scope 1, 2, and 3 categories. As a food company, we are participating in the Food, Land and Agriculture (FLAG) segment within SBTi, which means our commitment extends upstream to the farmer’s level to analyse our Scope 3. We assessed the following: Scope 1 emissions: Stationary combustion of fossil-fuel related sources in our own operations Mobile combustion of fossil-fuel related sources in our own operations Fugitive emissions from our own operations Process emissions (baking powder) in our own operations Scope 2 emissions: Indirect emissions associated with purchased electricity, heat and steam in our own Lotus Bakeries operations Scope 3 emissions: Purchased goods and service (including effects of Direct Land Use Change and Land Management) Capital goods Upstream transportation and distribution Waste generated in operations Business travel Employee commuting Upstream leased assets Investments Downstream transportation and distribution End of life treatment of sold products Our total Greenhouse Gas (GHG) emissions (Scope 1, 2 and 3) reached 557,275 tonnes of CO 2 equivalent in 2023. 86 - Lotus Bakeries The main contributors to our Scope 3 CO 2 e emissions are raw materials and, to a lesser extent, transport and packaging. Important ingredients in this respect are vegetable oils, wheat flour, sugar and chocolate, which represent together more than 75% of the CO 2 e emissions coming from raw materials. For palm oil and chocolate, which are ingredients known for their high CO 2 -intensity, we have already partnerships through RSPO Palm oil and Rainforest Alliance. We are reinforced in our belief that sustainable sourcing is important and we will continue to build on these partnerships. We refer to page 101 of this annual report. During 2024, we will develop a roadmap with concrete initiatives to reduce our carbon footprint. This step is critical as we work towards submitting for SBTi validation in 2024, for validation by March 2025. CO 2 e emissions per scope Scope 1: 27,825 tonnes CO 2 e Scope 2: 12,648 tonnes CO 2 e Scope 3: 516,802 tonnes CO 2 e Furthermore, we acknowledge the challenges that we are facing in determining our decarbonisation roadmap. Therefore, it is of utmost importance that our roadmap is well-considered and well-founded, so that aspiring targets can be defined in line with our sustainability strategy and ambitions. Reliant on technological development and referring to page 86, the “Net Zero by 2050” target requires the Group to assess the need and timing of both CAPEX and OPEX investments. We also refer to the EU taxonomy disclosure presented on page 148 of the Annual Report. Carbon Footprint 557,275 T CO 2 e Scope 1 Scope 2 Scope 3 - Raw Materials Scope 3 - Transport Scope 3 - Packaging Scope 3 - Other 60% 9% 7% 17% 5% 2% Our sustainability programme Lotus Bakeries - 87 Decarbonisation initiatives undertaken in 2023 Lotus Bakeries’ owned sites are carbon neutral. This has been the case since 2015 and remains so in 2023. All our scope 1 and 2 emissions of our owned sites are offset with certificates. To have a meaningful impact we also actively proceed with the implementation of decarbonisation projects to reduce the amount of GHG. In 2023, Lotus Bakeries structured its decarbonisation initiatives around three segments: own operations, sustainable logistics and sustainable sourcing. Own operations (scope 1 and 2) Energy efficiency In Lotus Bakeries Manufacturing South Africa, an important investment was allocated to further increase the plant’s solar capacity and install solar power batteries. Utilizing renewable energy will strongly reduce the future output of the plant’s CO 2 e emissions. In Belgium, energy-saving measures were implemented for the compressed air systems used in our production facilities for processing and cleaning. We implemented a phased installation of ergonomically shaped air blow guns, which are more robust, effective and energy efficient. Additionally, a study on leakage detection and mapping of standby consumption resulted in further reduction of air consumption, and consequently, energy consumption. Another initiative involved a preparatory study to establish a detailed e-monitoring system across all our Belgian plants. This system will enable Lotus Bakeries to obtain detailed insights on energy usage throughout the production cycle of a product and provide ideas to optimise energy usage. In the context of scope 2 emissions, it was identified that a diverse mix of energy sources is utilised. In 2023, 4% comes from renewable energy sources. We aim to further increase the use of renewable energy as part of our pathway to decarbonise. 88 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 89 Use of refrigerants Lotus Bakeries also investigated its cooling systems and infrastructure. While refrigerants work well to keep things cool, some have a drawback in the sense that they emit greenhouse gas. We screened the sites in Geldrop and Sint-Johannesga (the Netherlands) and Oostakker (Belgium) and initiated a renewal process of the cooling installations and refrigerants in 2023. This renewal operation is labour intensive, and the execution thereof will run into early 2024. In our new plant in Thailand we have opted for water-cooled cooling towers. In hot climate, year in year out, it is far more effective and energy friendly to use water cooling. Green employee mobility We aim to go to a 100% green fleet in Europe in the future. The largest fleet is located in Belgium. Employees in Belgium can only choose a fully electric vehicle as their company car. To support this transition, electric charging stations have been provided. In 2023, 50% of the Belgian fleet were electric cars vs. 15% the previous year. In the Netherlands we offer a choice between electric and plug-in hybrid cars until 2026, after that date, we will offer only full electric cars in the fleet. In 2023, 43% of the Dutch fleet were electric cars vs. 28% the previous year. Furthermore, there is a bicycle leasing scheme in place for Lotus Bakeries employees in Belgium. About 200 of our employees have opted for this benefit. Transition to more sustainable logistics (scope 3) Reduction of container transport through local production and optimised packaging solutions. Since 2019, Lotus Bakeries has chosen to spread its production sites across different continents. The production sites in Lembeke (Belgium), Mebane (USA) and Chonburi (Thailand) are not only economically advantageous but also ecologically beneficial for reducing container transport overseas. Our Biscoff plant in Mebane, for instance, has already contributed to a yearly reduction of 1,000 containers. Furthermore, with our third plant in Thailand, which is currently under construction, we anticipate saving about 15,000 kilometres per container. In Australia, we have changed our packaging for Lotus® Biscoff® spread from glass jars to PET jars. PET jars are commonly used in the Australian market and are able to preserve the taste and quality very well. But since they are lighter in weight, the pallets can be stacked higher. As a consequence, we ship fewer pallets which leads to a reduction in transport. This contributes to the reduction of carbon emissions. On a yearly basis, this means a reduction of 20 containers for one market for one product. 90 - Lotus Bakeries Electrification of truck transport in Belgium In collaboration with one of our clients and one of our logistic providers in Belgium, Lotus Bakeries has tested the potential electrification of its truck transport. Together, we decided to initiate the electrification of heavy road trucks, starting with two electric trucks in 2024. This pilot programme is aimed at garnering valuable insights into the viability of this green transport mode and will allow us to be ready for further expansion in the coming years. Our sustainability programme Lotus Bakeries - 91 Compensation of emissions within the value chain In our roadmap we aim to decarbonise as much as possible. To become hundred percent net-zero we will need to capture the remaining part via carbon removal credits. To prepare for this carbon capturing Lotus Bakeries has joined the Colruyt Group’s collaborative tree project in the Democratic Republic of Congo in November: the planting of 10,000 hectares of forest, which equates to over 12 million trees. It is foreseen to obtain Gold Standard verification on this project. Lotus Bakeries is convinced that only through collaboration with like- minded partners, we can effectively reduce emissions across the entire value chain. Image by Christian Crauwels 92 - Lotus Bakeries 1. We only want to offer our consumers products of the highest product quality and with a superior taste experience. 2. That is why we must protect our products: packaging allows us to combat food waste and guarantee food safety. 3. We aim to make our packaging as sustainable as possible and are committed to reducing our packaging carbon footprint. In this context, Lotus Bakeries has formulated a packaging strategy that focuses on the reduction of packaging, using innovative design and investment in circularity. LOTUS BAKERIES’ VISION On PACKAGING SUSTAINABLE PACKAGING Our ambition: 100% recyclable packaging by end 2025 By the end of 2025, Lotus Bakeries aims to market only 100% technically recyclable packaging for all our brands. The ideal packaging also contains as little packaging material as possible, while optimising the use of recycled materials. This must be achieved without compromising the quality, taste and freshness of our products. Protecting our products and providing the right format for each type of household will at the same time contribute to the fight against food waste. Innovative packaging designs and circularity remain top priorities. Our sustainability programme Lotus Bakeries - 93 Reduce what we use In 2023, Lotus Bakeries continued to reduce the amount of packaging material put on the market. A total of 555 tonnes of packaging was saved. The further we get in this process, the more challenging the processability of these materials within our production plants becomes. It is thus a fine balance between reduction and processability. Improvements have been made in primary, secondary and tertiary packaging. Primary packaging Finding optimisations to the packaging for consumer units is embedded in the procurement activities on a daily basis, but also tackled in specific reduction projects. For the Suzy® sugar and vanilla waffle product, the thickness of the bundle packs has been reduced, which saves two tonnes of plastic per year. For Kiddylicious®, we switched to a recyclable and thinner mono- material wrap for several products 1 . This saves 35 tonnes of plastic on an annual basis. For Urban Fruits®, the sharing pack formats have been standardised which led to a reduction of one tonne of plastic and six tonnes of cardboard. Furthermore, the uniform packaging facilitates more efficient stacking on transport pallets, resulting in a 20% reduction in the number of pallets we transport. Needless to say, any savings in terms of materials will also invariably contribute to reduced transport and carbon emissions. Secondary packaging After focusing heavily on primary consumer packaging in recent years, we took a close look at our secondary packaging. We scanned the entire range and looked for improvement areas with a clear impact. The rebranding of Biscoff® was the ideal opportunity to implement those changes right away. One major improvement has been to shorten the flaps on the sides of the cardboard boxes for the 250g packages of Biscoff cookies and the Biscoff sandwich cookies. The boxes now have a small opening on the side, with great sustainability benefits: Around 117 tonnes of material is saved annually The trucks supplying us have to travel roughly 2,000 km less per year because of efficient stacking on pallet level Carbon emissions are significantly reduced because of reduced material use and optimised transport. Based on this project, we also set up new guidelines on how to design boxes in the future: shorter flaps are now standard, ensuring optimal and future-proof design. Tertiary packaging After finishing a successful pilot to reduce the amount of plastic used for stretch film wrapped around baked goods pallets, the findings were implemented in 2023 for pallets in our production plants in Lembeke, Eeklo and Courcelles. This results in an annual reduction of 10 tonnes of plastic. 1 Smoothie Melts, Crispy Tiddlers, Fruit Wriggles and Fruity Drops 94 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 95 DESIGN FOR TOMORROW As part of our commitment to launch fully technically recyclable packaging for all our brands by the end of 2025, we achieved a score of 98% technical recyclability by the end of 2023. The last percentages tend to be the most challenging ones, as improvements become more complex on a technical and operational level. Still, in 2023 we were once again able to make important improvement across all our strategic pillars. Biscoff® While our Biscoff® cookie range was already at 100% technical recyclability in 2022, there were still some actions to take for Biscoff® spread and Biscoff® chocolate. The non-recyclable multi-material for the cover film of the catering cups was replaced by a mono-material, which is technically recyclable. With regard to Biscoff® chocolate, we removed the carbon black from the tray of the end-of-year collection, as it prevented the tray from being sorted and therefore recycled. Natural Foods Within the Natural Foods brands, nākd® and TREK® were already 100% technically recyclable. Peter’s Yard®, which was added to the range in 2023, already had technically recyclable packaging as well. In 2023, efforts were focused on Urban Fruit® and Kiddylicious®. By replacing the multi-material for the Coconut Chips packaging of Urban Fruit with a mono-material this year, this range now also achieves a score of 100%. The biggest efforts in 2023 went into the Kiddylicious, a large and diverse packaging range. The project to make this range technically recyclable was initiated in 2020, but the switches for some major products 1 took place over the past year. By the end of 2024, Lotus Bakeries aims to have switched completely to 100% technically recyclable packaging for this brand. 1 Smoothie Melts, Crispy Tiddlers, Fruit Wriggles and Fruity Drops 96 - Lotus Bakeries Local Heroes The packaging of many of the Local Heroes brands has historically been technically recyclable. Some products in the pastry and waffles range still needed some adaptations to increase their recyclability. Lotus® crispy waffles, Le Glazik® palets and galettes packaging all used a PVdC coating, which kept the products crispy, but made the packaging non-recyclable. Over the past year we found an alternative that allowed us to remove the coating while maintaining quality. All that remains for the Lotus® Local Heroes is the quatre-quart butter cake, a product for which the right moisture balance is essential. This makes finding a fully recyclable solution complex. There is a test in progress, and Lotus Bakeries hopes to switch to more sustainable packaging for this product as well in 2024. While 2025 is just around the corner, 2023 has proven to be a fruitful year for increasing the recyclability score of Lotus Bakeries with a focus on the products shown below. The road to 100% is clear and will be further implemented in 2024 and 2025. Our sustainability programme Lotus Bakeries - 97 Aim for circularity Lotus Bakeries’ sustainable packaging strategy also contributes to a circular economy. In the process, we always seek to ensure that products are sorted and recycled to subsequently use the recycled material. In order to close the cycle as much as possible, there are some focus points which are tackled in our ‘Aim for circularity’ pillar. 98 - Lotus Bakeries Although it would be ideal, it is currently technically impossible to fully close the cycle, since there will always be a loss of material during the process; as a result, an input of new material will always be necessary. For this, we will use as many sustainable sources as possible, for example certified cardboard fibres through certification by FSC, PEFC or SFI. Lotus Bakeries does not currently have a target of achieving 100% FSC, PEFC or SFI certification. Lotus Bakeries has the ambition to increase the use of certified carboard fibres and proactively inquires about the availability and price for certified fibres during tender procedures. To encourage consumers as much as possible to sort packaging correctly, we updated all the recycling information during the Biscoff® rebranding. Now all packaging that is recyclable in the country where it is marketed, carries the ‘Recycle Me’-logo. If not, the packaging will show the Tidy Man, urging consumers to dispose of it properly in the right bin. What happens to the waste then varies worldwide. Lotus Bakeries contributes to this through various networks and initiatives. For example, in the UK, we are a member of the Flexible Plastic Fund, which through the FlexCollect project, aims to develop guidelines for municipalities to collect flexible plastics at the kerbside. Furthermore, we are a member of CEFLEX, and part of a CEFLEX working group, helping to develop guidelines for brand owners on optimal packaging design for sortability and recyclability in mind. Recycled material use is crucial to close the cycle. In 2023, our cardboard consisted of 79% recycled cardboard, while for glass we are using 58% recycled glass. In terms of plastic, we use 30% recycled plastic for the shrink wrap around the trays of our spread, but the challenge is greater for plastic that comes into direct food contact. Although 98% our branded product packaging was technical recyclable by the end of 2023, the percentage of recycled plastic used represents only 1% of the total amount of plastic used for the packaging of branded products. The low percentage is directly linked to food safety. Mechanically recycled plastic is not permitted to come into contact with food. Chemically recycled plastic offers a solution for this, but at present this is only made available on a limited scale. It is to date not yet possible to close the cycle and reuse our recyclable packaging as recycled content in food packaging. Finally, we also need to consider the packaging taxes. Extended Producer Responsibility systems have been in place since the 1990s. Recently, additional taxes on packaging such as plastic tax and litter tax have been introduced in several countries such as UK, Spain, Netherlands following the European Green Deal. Our “Reduce what we use” and “Design for tomorrow” pillars help in minimizing this, as most taxes are based on packaging weight and recyclability. Where we cannot minimise any further, we make a financial contribution in order to create a social impact. In that way, we hope to contribute to significant improvements in the recycling infrastructure. Our sustainability programme Lotus Bakeries - 99 SUSTAINABLE sourcing Lotus Bakeries’ carbon footprint analysis confirmed that the main contributors to our CO 2 e emissions are in Scope 3 and more specifically raw materials and crops, with transport and packaging contributing to a lesser extent. This reinforces our belief that sustainable sourcing is critical. Not only does it support communities and improve the social welfare of workers in the value chain, but it also plays a vital role in addressing global warming. To maintain this commitment, we will continue to engage with our suppliers. Palm oil and cocoa are particularly significant for decarbonization, and we already have partnerships through RSPO Palm Oil and the Rainforest Alliance certificate for our Biscoff chocolate. We plan to build on these partnerships and increase our efforts further. Lotus Bakeries is therefore committed to minimising deforestation and improving livelihoods through the sustainable sourcing of its raw materials and crops sustainably. 100 - Lotus Bakeries Palm oil RSPO certificate Lotus Bakeries has been member of RSPO since 2011. It is important to Lotus Bakeries that the palm oil it uses in its products has been produced sustainably and does not contribute to deforestation or the destruction of vulnerable areas. Lotus Bakeries therefore selects its key palm oil suppliers carefully on the basis of the NDPE principle (No Deforestation, No Peat, No Exploitation) in its purchasing standards. That is why Lotus Bakeries only buys RSPO certified palm. In 2023, Lotus Bakeries was a member of the RSPO (Roundtable on Sustainable Palm Oil) and the Belgian Alliance for Sustainable Palm Oil, and was committed to purchasing only sustainable palm oil. Moreover, all Lotus Bakeries’ sites that use or purchase palm oil also have an RSPO certificate. Palm Oil Policy: investment in sustainable agriculture and reforestation In addition, Lotus Bakeries requires its key palm oil suppliers to also invest in a number of projects to, among other things, rejuvenate forests and help farmers switch to sustainable cultivation. Lotus Bakeries has endorsed this in its palm oil policy. At the end of 2023, 100% of key palm oil suppliers 1 had endorsed the principles of Lotus Bakeries’ Palm Oil Policy. The full text of the sustainable palm oil policy is available on our website https://www.lotusbakeries.com/governance-practices-and-policies 1 Key palm oil suppliers are those who supply products containing more than 50% palm oil and in which the ingredient makes up 5% or more of the recipes, or have their own palm oil policy in force that includes at least equal standards. Cocoa Rainforest Alliance 100% of the cocoa butter and cocoa mass used in our Lotus® Biscoff® chocolate has been certified by the Rainforest Alliance. The Enkhuizer and Peijnenburg products with chocolate were originally UTZ certified but are Rainforest Alliance certified since the transition from UTZ to Rainforest Alliance. Soy IP certificate The soybean flour in the Lotus® Biscoff® products is IP certified (‘Identity Preserved’). This means that the soy flour we use in our products can be traced to the sustainable plantation from which this raw material originates. Moreover, it is sourced from a region not identified as being subject to deforestation. Eggs Barn eggs Animal welfare is important to us and is in our case focused on the origin of the eggs. We use barn eggs in small amounts in our bakery products. As of January 2012, 100% of our eggs come from cage-free hens. Cage-free refers to farm environments where chickens who produce eggs live in open indoor spaces. Overall, cage-free represents an increased quality of life for hens as compared with those held in cages. Our sustainability programme Lotus Bakeries - 101 Pulp- and paper-based packaging Lotus Bakeries footprint analysis shows we have 7% of GHG emissions associated with our packaging in 2023. Today, 77% of wood pulp and paper-based packaging of our brands are FSC, PEFC, or SFI-certified with the guarantee that the products come from sustainably managed forests. This preserves biological diversity and combats deforestation. Read more about our packaging policy on page 93. Local sourcing to decarbonise our transport 9% of Lotus Bakeries carbon footprint comes from transport. We therefore purchase our raw materials and packaging materials locally as far as possible. This means we purchase the greater part of our raw materials on the same continent where we operate our production facilities and strive to keep the distance between grower and our production site as short as possible. WATER MANAGEMENT Climate change and droughts are becoming more frequent. Industrialisation often puts additional pressure on water availability. Although water use is not considered a material topic for Lotus Bakeries as the amount we use is limited, we consider it our duty to manage water efficiently. The actions we take to minimise our water footprint are the following: Monitoring As part of its internal operational reporting, Lotus Bakeries reports on its water consumption. It has been among the standard KPIs that all production facilities report regularly. Based on these reported figures, Lotus Bakeries monitors carefully evolutions in water usage across the various facilities. The water withdrawal 1 in Lotus Bakeries production sites is 117,203 m 3 water. Sustainable water collection For future infrastructure initiatives we will always look into using the most efficient water management systems. The ‘House of Biscoff’ in Belgium is equipped with technology for sustainable water management. This includes a rainwater collection system and a well water filtration system. This well water filtration system makes it easier for water to seep into the ground, ensuring more even and improved wetting. This contributes to a good groundwater balance. Two initiatives in our new plant in Thailand are worthwhile mentioning. We foresee the construction of a storm water pond, acting as a buffer in case of heavy showers in rain season. In dry season this water will be used for watering the plants and trees in the green zone on the site. Additionally, we plan also the construction of an underground rain water reservoir. This rain water will be used for the sanitary facilities. 1 Water withdrawal describes the total amount of water withdrawn from a surface water or ground- water source. 102 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 103 EMPLOYEES: AMBITION 2023 & ACHIEVEMENTS We believe in the power of our people to drive performance. We want to contribute to the employee well-being via offering an attractive and inspiring workplace that promotes health and safety, diversity, employee satisfaction, development, and equal opportunity for all. We aim to build one Lotus family based on our TOP-culture (Team, Open Dialogue and Passion). To support the acceleration of our growth we focus on attracting, developing and retaining diverse talent. • Promoting employee well-being • Installing an anti-discrimination and anti-harassment policy • Obtaining ISO 45001 certification for Lotus Bakeries South Africa Manufacturing highlights well-being safety one lotus family 104 - Lotus Bakeries GEOGRAPHICAL distribution 1 Unit of measure 2023 2022 2021 Belgium # 1,458 752 M I 706 F 1,378 703 M I 675 F 1,233 597 M I 636 F % 52 M I 48 F 51 M I 49 F 48 M I 52 F South Africa # 669 276 M I 393 F 518 221 M I 297 F 443 191 M I 252 F % 41 M I 59 F 43 M I 57 F 43 M I 57 F The Netherlands # 213 122 M I 91 F 222 122 M I 100 F 229 129 M I 100 F % 57 M I 43 F 55 M I 45 F 56 M I 44 F United Kingdom # 126 45 M I 81 F 119 46 M I 73 F 120 50 M I 70 F % 36 M I 64 F 39 M I 61 F 42 M I 58 F France # 140 73 M I 67 F 142 76 M I 66 F 139 72 M I 67 F % 52 M I 48 F 54 M I 46 F 52 M I 48 F United States # 196 115 M I 81 F 156 89 M I 67 F 92 49 M I 43 F % 59 M I 41 F 57 M I 43 F 53 M I 47 F China # 32 13 M I 19 F 33 14 M I 19 F 28 14 M I 14 F % 41 M I 59 F 42 M I 58 F 50 M I 50 F South Korea # 21 11 M I 10 F 19 9 M I 10 F 19 8 M I 11 F % 52 M I 48 F 47 M I 53 F 42 M I 58 F Sweden # 31 24 M I 7 F 27 19 M I 8 F 23 18 M I 5 F % 77 M I 23 F 70 M I 30 F 78 M I 22 F Other (AT, AU, CH, CZ, DE, ES, HK, IT, JP, TH) # 98 38 M I 60 F 84 33 M I 51 F 72 35 M I 37 F % 39 M I 61 F 39 M I 61 F 49 M I 51 F TOTAL # 2,984 1,469 M I 1,515 F 2,698 1,332 M I 1,366 F 2,398 1,163 M I 1,235 F % 49 M I 51 F 49 M I 51 F 48 M I 52 F Of which permanent employees at December 31 # 2,746 Of which temporary employees at December 31 # 238 1 The scope of the KPI includes our internal employees and the members of the leadership team working through a management company. Internal employees are employees who are connected to Lotus Bakeries with an employment contract, either of unlimited duration or of limited duration. 2 The group comprises the Executive Committee, the General Managers and the Corporate Directors. GENDER DIVERSITY 1 Unit of measure 2023 2022 2021 Board of Directors % 70 M | 30 F 70 M | 30 F 70 M | 30 F Leadership Team 2 % 56 M | 44 F 55 M | 45 F 54 M | 46 F All employees % 49 M | 51 F 49 M | 51 F 48 M | 52 F Our sustainability programme Lotus Bakeries - 105 A CULTURE OF TEAM, OPEN DIALOGUE AND PASSION WORKING ENVIRONMENTS Diversity policy and inclusion Guided by our TOP-values, diversity is to be cherished. We value diversity amongst our employees and those with whom they collaborate. We are steadfast in our commitment to providing a workplace that ensures equal opportunities and is free from discrimination and harassment. Our company does not tolerate any form of discrimination or harassment directed at employees or candidates based on race, colour, gender, sex, sexual orientation, age, religion, national origin, political opinion, disability or any other protected class. We firmly believe in treating all individuals fairly, as articulated in our Code of Conduct under Principle II: respect for people in line with ILO conventions. To strengthen this guiding principle, a Group anti-harassment and anti- discrimination policy was developed and rolled-out to increase awareness and understanding of workplace harassment, violence and discrimination among our employees. The policy is particularly designed to provide managers with a framework to identify, prevent and manage allegations of harassment and discrimination at work. This Group policy acts as an overarching statement within which all local offices can continue and expand their existing initiatives. The full Anti-harassment and anti-discrimination Policy is available on our website https://www.lotusbakeries.com/governance-practices-and- policies TOP-values are our guiding compass Team spirit: each link in the process is equally important, from marketing through to production and packaging. It is essential to work as a well-oiled team. We work together every day to make Lotus Bakeries a success, in an inspiring working environment. Open dialogue : a listening, open attitude, proactive communication and respectful feedback are priorities in dealings with and between employees. This is put into practice via regular departmental meetings, use of internal communication platforms and promotion of two-way communication between employees. Passion: our employees’ commitment is evident on a daily basis in the workplace. It is reflected in their justified pride in our products and in our company. Investing in our employees benefits the whole company. 106 - Lotus Bakeries Starting with our recruitment policy, Lotus Bakeries creates a foundation to attract a diverse and talented group of people. Attention to diversity, as well as equal opportunities, are key parts of this strategy, in which we aim to select candidates with the best range of skills and competences for the role. We also look at the knowledge and experience available in the existing teams and how this matches with the desired competences, knowledge and/or experience of the candidate. In this way we continue to maintain a diverse group of employees, with balanced gender diversity across all employees. We see a nice balance of 49% men and 51% women within the Lotus Bakeries Group. When we take a closer look at the Leadership team 1 the split is 56% men, 44% women and the Board of Directors is 70% men, 30% women. Additionally, we see a high level of diversity in age categories in Lotus Bakeries, and associated experience. This is similar to previous year. 1 The group comprising the Executive Committee, the General Managers and the Corporate Directors. 18-29 30-39 40-49 50-59 60+ 825 28% 902 30% 609 20% 543 18% 105 4% Age diversity Gender diversity All employees Board of Directors Leadership Team 1 70% 30% 56% 44% 49% 51% Men Women Lotus Bakeries is committed to equal pay for equal work, regardless of gender, race, ethnicity or other factors unrelated to performance. To fulfil this commitment, we benchmark and set pay ranges based on market data and consider various factors such as an employee’s role and experience, job location and performance. Our sustainability programme Lotus Bakeries - 107 Why to join the Lotus Bakeries Family United by passion We might have hundreds of different jobs, but we are all passionately working towards the same goal: to create small moments of joy all over the world. We can only achieve this together, as every one of us makes an impact in his or her own way. Knowing that our work makes people smile is what makes us proud. Happiness made by people We can only bring happiness to the world when we do it with a smile on our face as well. That is why, at Lotus Bakeries, it’s all about our people. We believe that their talent is the driving force behind our growth, which is why we tailor our employees’ work to their personal skills as much as possible. Through accessible leadership and well-defined ambitions, we help them to become their best self. Our team is a unique combination of talented and authentic people. Together, we spread our homemade happiness all over the world. Co-write a unique story There is only one company like us. We are an international player with sky-high ambitions, yet still a family business: open-minded, inclusive and small enough for your personal impact to be seen and heard. We are professional and personal, solid and adventurous. This exciting duality is reflected in our brands as well. Lotus® Biscoff®, Lotus™ Natural Foods and our Lotus® Local Heroes offer both the healthy and indulgent, the global and local. Once you’ve had a taste of this one-of-a-kind combination, you’ll never get enough. 108 - Lotus Bakeries One of the initiatives to facilitate recruitment is our international career site www.lotusbakeriesjobs.com . This website strengthens our employer identity as a global food company with dozens of products that brighten every day. It also provides a complete overview of all career opportunities within the Group worldwide. Through testimonials of employees and pictures of our offices and locations, potential candidates can moreover get a glimpse of our unique culture. When selecting new employees, we communicate the full selection process clearly and transparently. The applicant’s professional competences, relevant experience and TOP values are paramount. During the selection process, applicants meet with several Lotus Bakeries employees to gain a good understanding of our company values and culture. Via the various touchpoints, candidates have several opportunities to ask questions or gather more information. For all office workers, the selection also includes objective testing, or an external assessment tailored to the position for which the candidate is applying. By including this objective element into our selection process, we reduce the chance of subjective assessment. Our recruitment is an intensive process where we consciously invest a lot of time to ensure the optimal fit between the future employee and Lotus Bakeries. TO SUPPORT THE ACCELERATION OF OUR GROWTH WE ATTRACT TALENTED PEOPLE Recruitment policy Scarcity in the labour market poses a challenge that we actively address. To attract talented employees with the optimal fit, Lotus Bakeries has defined clear value propositions that allow us to seek the best match between the future employee and Lotus Bakeries in complete transparency: Our sustainability programme Lotus Bakeries - 109 Onboarding Creating an optimal employee experience starts during the employee onboarding process. Therefore we have ensured that our global career site connects seamlessly with our intranet site: MyLotus, the global HR platform in which all HR data from different countries is centralised and available in real time. The need for scanning contractual documents & policies, as well as emailing back and forth with candidates is eliminated, as the full onboarding process is managed through our global HR platform. 18-29 30-39 40-49 50-59 60+ 161 35% 150 33% 84 18% 30 7% 32 7% Total leavers per age group in 2023 18-29 30-39 40-49 50-59 60+ 314 43% 249 34% 113 15% 53 7% 5 1% Total new starters per age group in 2023 Upon joining, Lotus Bakeries aims for thorough onboarding, in which new Lotus employees are immersed in the company, the products, brands and the culture. Special induction days are organised for new employees. From the management level onwards, new employees from around the world are invited to the ‘Group Wide Onboarding days’ that are organised in Belgium. During an intense two-day programme, they receive more information about the strategy, the different brands, the organisational structure and the different departments. A tour of the Lembeke plant is the icing on the cake. In the case of acquisitions, we ensure that all employees are quickly integrated into the Lotus Bakeries Group. 110 - Lotus Bakeries We also have a ‘Young Graduate Programme’. This is an intensive two- year programme designed specifically for graduated master’s or MBA students who enter in a function-specific domain. To guarantee a smooth onboarding and good career management inside Lotus Bakeries we have implemented a bespoke learning & development track for young graduates. Through various training sessions they acquire specific skills & competencies which will enable them to be successful in the role. Our young graduates get day-to-day coaching from their manager. Thanks to the mentorship programme, they also get input and reflection from a senior employee outside of their function area of expertise, providing them with a broader view of the company. This mentor moreover acts as a sounding board and can offer impartial advice and support related to career development and ambitions. To broaden their perspective and knowledge, the young graduates furthermore get assigned a cross- departmental project of strategic importance. Their mission is to tackle a specific business challenge and prepare a recommendation to EXCO. As part of the onboarding track, each new office employee will also be asked to complete a survey after several months of service and will be offered a follow-up interview by HR. In this survey the employee is questioned about the recruitment and onboarding process, they are polled about how the first few months have gone in the position, about how the job and the organisation meet expectations and how the collaboration with the manager and with colleagues is going. In countries with a large workforce in the factories, such as Belgium, a bespoke survey is provided. The goal of the survey is to gain insights into how the employee has settled in and to identify areas for improvement. Our sustainability programme Lotus Bakeries - 111 Once part of the Lotus Bakeries family, it is important to retain these engaged and motivated TOP talents. We aim to empower our employees to reach their fullest potential and secure employment for our permanent workforce via several means. Fostering feedback and performance We invest in a culture of open feedback and two-way communication because we believe this increases engagement, motivation and performance. The performance process for all office workers is fully integrated into the Global HR platform MyLotus . The operational workers, use a non-digitalised system, where the feedback conversation happens with team leaders. In MyLotus feedback exchange between manager and employee is encouraged several times a year, instead of having one annual review. This process provides ongoing opportunities to give and receive feedback, and our employees are encouraged more frequently to reflect on their career path. By gaining more insight into the employees’ strong assets, areas for improvement and ambitions, the right development and, if needed, guidance can be offered. All office employees are invited at least yearly to participate in performance and career reviews. All feedback is documented through our Global HR platform. The platform foresees a written preparation from both the manager and employee, and encourages a digital feedback request from various relevant stakeholders, which allows for a broad and objective assessment of the past year. Employee learning and talent development In the performance review process, our employees are encouraged to work with their direct manager to develop an appropriate and individual development plan. Lotus Bakeries applies the 70-20-10 learning model 1 . This may include on the job learning to get to know the organisation for newcomers as well as providing stretched assignments, special projects or cross-functional collaborations for employees who have been in their role for some time. Formal external training opportunities, accessible to all employees annually, address both hard skills for specific technical needs and soft skills aimed at enhancing interpersonal abilities. EMPOWERING OUR EMPLOYEES Unit of measure 2023 Employees invited for performance and career development reviews (office employees) % 100 Total number of training hours # 43,848 Average number of training hours per employee # 15 Number of new young graduates # 10 Internal mobility rate % 17 Employees as at December 31 covered by collective bargaining agreements % 74 1 70% practical experience on the job – 20% feedback and coaching – 10% formal training. 112 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 113 Our training courses cover different topics such as project management, negotiation skills, people management skills, priority management, presentation skills, as well as the effective usage of MS Office tools. Collaboration and team dynamics are fostered during Insights Discovery workshops. Next to these programmes we offer internal trainings around legal topics, safety trainings, HR workshops, as well as dedicated technical trainings for our blue collar workers in our plant in Lembeke. In today’s society it is important to continuously improve digital skills. Therefore, we offer training on the usage of SharePoint as well as on cybersecurity. Last year, close to 90% of PC users followed training to identify data hacks or phishing activities. In 2023, the total investment in training activities was on average 15h per employee. International connectivity and mobility We believe that an open feedback culture and investing in our employees’ development are effective enablers of internal mobility. In this way we strive to keep talent in-house. In 2023 our internal mobility rate for white collar and staff is 17%. When we recruit new talents, we typically assess the cultural fit and match with the required skills & competencies. Equally important, we also screen for potential as we believe that we don’t recruit employees for a position, but we select them for a long-term career in the company. As Lotus Bakeries continues to grow internationally, our internal mobility extends beyond functional domains. We also provide our employees with the opportunity to relocate to another country in the Group. Similar to any other instance of internal mobility, we will always strive to find the optimal match between the individual’s aspirations and the company’s ambitions. In 2023, our employee turnover amounts to 16%. About 13% can be attributed to voluntary turnover, of which 3% of this voluntary turnover can be attributed to natural causes such as the end of fixed term employment contracts, health reasons or retirement. This results into a voluntary turnover rate of approximately 10%. Collective organisation and social dialogue As a Group, we believe in an organisation that collaborates with all employees, the representation of employees, employee organisations and external social stakeholders. Currently, employees are covered by collective bargaining agreements on company, sector and national level in Belgium, South Africa, the Netherlands, France, Sweden, Spain, Italy and Austria. This amounts to approximately 74% of our employee population worldwide being covered by collective bargaining agreement. We remain committed to respecting our employees’ right to freedom of association, to join trade unions and to collective bargaining. Our primary measure in this respect is to hold regular meetings with the work councils and maintain the social dialogue. In our European countries where we have significant employment, 100% of employees are covered by workers’ representatives. 1 We are convinced that good collaboration contributes to our success. 1 European countries with significant employment include Belgium, The Netherlands, France, Sweden. 114 - Lotus Bakeries We are steadfast in our commitment to ensuring that all our employees and contractors have a pleasant working environment and can return home mentally healthy at the end of the day. The Executive Committee of Lotus Bakeries has signed a well-being charter in 2023, firmly emphasizing the importance hereof. This well- being charter is actively implemented across all of our offices and plants. Our CEO, Jan Boone, opened 2024 and addressed the Lotus Bakeries community as follows: “For us as a family business, growth, profitability, and ambitions are important. Yet, we pursue these objectives hand-in-hand with fostering a healthy community of people. Our commitment to well-being, as outlined in the well-being charter, that we’ve shared together with EXCO, is a true statement. We genuinely care about how you feel within our company. The charter highlights three key principles: Connect (at work)- Disconnect (outside of work)- Communicate openly about mental well-being. I firmly believe in the power of bringing people together. Building a culture is only possible when people unite. Creativity, in my opinion, flourishes in a collaborative environment. Enjoying your work and having open conversations with colleagues, not only about your job but also about personal matters, are essential aspects. Fostering a social environment within our company is paramount. This is also the reason why we’ve invested in creating appealing and pleasant working environments. This commitment extends to our locations worldwide: we want you to feel at home wherever you are. And when you leave here, it’s time for your private life, time to relax and focus on personal well-being that matters. We are a family business with over 90 years of history, and a long-term vision. We aim to share the pride of our achievements, together, with all our employees.” WELL-BEING AT WORK 2023 Employees entitled to take family-related leave 100% Employees entitled that took family-related leave 15% Female 10% Male 5% Our sustainability programme Lotus Bakeries - 115 Well-being & Disconnection Charter highlights importance of wellness and unplugging Our company’s strength lies in healthy, happy employees. Their physical and mental well-being is paramount, which is why the Executive Committee signed the Well-being & Disconnection Charter in autumn 2023 – a clear statement that our local branches translated into concrete initiatives. In today’s workplace, there are a myriad of challenges. From the ever- accelerating pace of change, to being connected everywhere all the time, and non-stop virtual meetings, to the blurring of the line between work and private life since we all work flexible hours. In this fast-paced, perpetually connected world, we at Lotus Bakeries wanted to clearly underline the importance of well-being and disconnecting. That’s why we launched the Well-being & Disconnection Charter in October, which is based on three pillars. CONNECTING AT WORK First of all, we are emphasising that Lotus Bakeries values connection at work . We strongly believe in the power of face-to-face meetings, and in the unique energy that is created when people come together. By physically seeing each other in the office, we feel a greater and deeper connection to our company’s values and to each other. It’s the only way that we can be fully creative, and it will ultimately lead to better results. In addition, working in the office makes it easier to draw the line between work and private life. DISCONNECTING AFTER WORK Furthermore, we believe it is at least as important to disconnect outside the office walls and office hours . Whether it is by going for a walk in nature, a hobby, by spending time with loved ones or just taking a moment to yourself, this too ensures that our employees can bring the best version of themselves to work, think creatively and use their fullest potential. By regularly stepping out of action mode, we can return with a fresh mind, renewed energy and passion for what we do. TALKING OPENLY ABOUT MENTAL WELL-BEING Finally, the charter stresses the importance of mental well-being . We need to be able to openly discuss how our employees feel mentally, and we need to do this safely and with zero judgement. That is why we encourage an open dialogue about mental well-being in our teams. Being able to talk about it openly helps us create a healthier, more inclusive, and productive working environment for everyone. And, where necessary, to be able to take additional initiatives to support mental well-being in our company. Moreover, it will allow employees to be a source of inspiration to each other, exchanging ideas and tips to find a healthy balance that will benefit their mental well-being. 116 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 117 THE NETHERLANDS: WORK-LIFE BALANCE FIRST FRANCE: HEALTH, SPORT AND WELL-BEING ON THE AGENDA HR Director the Netherlands, Claire de la Court A vision of well-being is part of our strategic plan. And we are taking responsibility to achieve it. It shows just how important sustainability is to us, in the broadest possible sense. Our employees are at the heart of that sustainability. They play a key role in our organisation. With the charter, we are projecting this to present and future talents. We are glad that the Group has a vision which allows people to work from home. The youngest generations in particular consider this an important condition. At the same time, we also underline the importance of spending time together with colleagues in the Netherlands, because that’s when you inspire, motivate and bring out the best in each other. Agreements have been made on this, including by making it a priority for certain meetings to always take place face- to-face. Work-life balance is also high on the agenda. We encourage our colleagues to use their holiday hours. We work hard when we need to, but we also need to make time to relax. In the Netherlands, we also offer several types of family-friendly programmes to support employees, such as parental and partner leave, for both mothers and fathers. This is being used a lot and so we need to accommodate this, but it is wonderful that this is possible because it also creates a better gender balance. HR Business Partner LBF, Madeleine Du Château At the end of September 2023, we also organised Sports Week in France, which kicked off with a healthy breakfast at all sites, and every day a new sport on the agenda to discover. The entire week was all about health, sport and well-being. We will continue this in 2024. From now on, we will offer two opportunities for exercise during lunch each week. On Tuesdays there is badminton, on Fridays yoga. Also, for employees who do shift work, there will be workshops on nutrition and good sleep habits for shift work. 118 - Lotus Bakeries UNITED KINGDOM: TALKING ABOUT MENTAL HEALTH HR Manager UK, Helen Gibbons In the UK, 2023 saw a lot of well-being initiatives as part of Mental Health Awareness Week, which put anxiety front and centre as a topic. We organised a lunch where colleagues were informed about what exactly anxiety is, how you notice it in yourself or a colleague, and some common coping mechanisms that people use to deal with it. We used the lunch as a stepping stone for our managers to discuss the topic with their employees afterwards. Communicating about mental well-being proves to be very effective. In this respect, Lotus Bakeries scores well in the UK: an engagement survey shows that 8.5 in 10 employees feel they can talk openly with their manager. In 2024, we will continue to move forward in the same vein, including by organising focus groups to discuss certain topics in even greater depth. We want to give people a sounding board about mental health. To this end, we will invest in training so that there are several people across the organisation skilled in this area. Work-life balance To promote well-being, Lotus Bakeries also offers other means to employees to balance their time at work and their time at home within the limits of business organisation and local legislation. For one, Lotus Bakeries has a flexible working policy where employees can work from home depending on their role in the organisation. We offer all our employees across the world the right to take family-related leave such as parental leave and carers’ leave. In 2023, 15% of employees took family-related leave, 10% being female employees and 5% being male employees. Cultivating a positive workplace Lotus Bakeries has invested in creating a beautiful and attractive work environment. Social spaces are designed for employees to have lunch and catch up together. The offices feature spacious and bright open spaces, along with large and small meeting rooms for our employees to use, and a cosy lunch area to connect. We also provide ergonomic facilities, such as standing desks to encourage working standing up and provide screening and advice to improve the ergonomic sitting posture at the desk. A lot of attention has been paid to fitness and sports at all Lotus Bakeries locations, with varied initiatives depending on the site. For example, the ‘House of Biscoff’ in Belgium and the offices in the United States and Sweden have a gym with showers. Other locations offer sport activities through options of signing up to a bicycle lease programme, participating in weekly boot camps or joining cycling or walking sessions. This approach creates a more pleasing working environment that promotes employee satisfaction and well-being. Our sustainability programme Lotus Bakeries - 119 Occupational health and safety is vital to our business. Within our working environment, we undertake measures to minimise the risk of workplace accidents, to ensure a safe and secure workplace. Promoting a safe working environment For our Lotus Manufacturing South Africa (LMSA) site we have become fully accredited with ISO 45001. This is the world’s international standard for occupational health and safety, issued to protect employees and visitors from work-related accidents and diseases. ISO 45001 certification was developed to mitigate any factors that can cause employees and businesses irreparable harm. As we employ close to 650 people in LMSA this gives us a tremendous peace of mind that we are doing the right thing for our employees. The Netherlands, the Geldrop and Enkhuizen production sites have the occupational health and safety vignette from VBZ (Vereniging voor Bakkerij en Zoetwaren industrie). A recurring audit is performed by two external members of the VBZ, which includes interviews with our employees, and the results are subsequently reported. As part of our continuous improvement on safety, we performed in all the plants in Belgium a thorough safety audit with an external organization, supported by observations on the work floor and interviews of factory workers. An internal safety activation plan centered around Safety Awareness & Management (SAM) has been developed. The new internal safety communication campaign will go live in 2024. Our Safety Policy Our commitment to occupational health and safety is driven by our policy and systems. Our first focus is to prevent accidents by minimizing safety risks in the following four areas. Occupational health Personal safety Process safety Rolling material safety We take the following steps to develop effective risk prevention strategies in our own sites. HEALTH AND SAFETY Unit of measure 1 2023 2022 2021 Amount of occupational fatalities # 0 0 0 Total occupational accidents per average headcount % 2.6 3.2 2.3 Total occupational accidents involving absence from work # 75 85 52 Rate of recordable work-related accidents for own employees #/1mio hrs 18.6 26.9 15.3 1 The scope of the KPI’s includes our internal employees. 120 - Lotus Bakeries Risk assessment In all our sites new machinery and equipment are designed to the latest safety standards and undergo an extensive safety inspection trough the Site Acceptance Test by our own safety officers. We follow a clear procedure for hazard identification. Machinery is adjusted as needed to meet our high safety standards. To identify risks related to behaviour we use safety inspections and feedback tools to detect and report unsafe situations. For example in South Africa, a health and safety questionnaire is completed each quarter, after which the existing risk assessments are evaluated and the existing procedures are tightened up. Developing guidelines and procedures Strict occupational safety laws apply in all the countries in which Lotus Bakeries operates. Clear safety procedures and operating guidelines are created based on the risk assessment at each production site or office. These procedures are translated into work instructions for each workstation. We provide adapted work clothing to our employees and contractors to contribute to a safe work situation. Raising awareness and safety training There is a safety training programme where we regularly focus on awareness and prevention. Safety in the workplace is a fixed part of the onboarding programmes of new employees who start work in the factory. Regular training sessions are given to teach people how to bring up the importance of safety to other colleagues or address and prevent dangerous situations. Each site has a clear procedure in case an emergency occurs. Yearly training of the emergency procedure takes place. Our sustainability programme Lotus Bakeries - 121 Monitoring via reporting Management monitors health and safety performance. All the sites measure and report monthly on the number of accidents at work with absence. Accidents are screened to improve our risk control strategies. Safety beyond our own operations For the construction of our new plant in Thailand, we paid great attention to the contractors policy on health and safety precautions. The contractor has to ensure that medical staff, first aid facilities, sick bay and ambulance service are available at all times at the site of the works, and that suitable arrangements are made for all necessary welfare and hygiene requirements. We also ask our contractor to appoint an accident prevention officer at the site of the works, responsible for maintaining safety and protection against accidents. There are daily safety exercises and weekly safety walks. No fatalities occurred in 2023. The number of accidents at work decreased in 2023 down to 75 incidents. The continued promotion of safe behaviour, the in depth analysis of each incident and using the learnings of these to raise awareness to employees helps to promote a safety culture and realise a decrease versus last year. There was one exceptional case: in the plant in South Africa, Lotus Bakeries provides commuting services with mini-vans to the employees. One mini-van had an accident leading to 9 injured employees that were absent from work. If we isolate this exceptional case, we would have decreased the number of incidents even further down to 66 compared to previous year. In 2023, there are five production or distribution sites that had no work accidents. 122 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 123 COMMUNITY: 2023 AMBITIONS & ACHIEVEMENTS Ethical business practices Foundation for Education product safety product development We care for today’s and tomorrow’s generations and all stakeholders involved in our value chain. Responsible business conduct addressing todays and future complex challenges allows us to stick to our mission: providing superior tasting snacks, to everyone, every day, everywhere. We want to contribute to consumer well-being by providing the right and balanced portfolio at the highest quality. Plus, we contribute to the prospects of future generations by supporting education projects. The ambitions of Lotus Bakeries within the community pillar are therefore focused on four domains: • Installing a Human Rights Policy • Setting up a Whistleblowing Line & Policy highlights 124 - Lotus Bakeries 1 The scope of the KPI includes our internal employees and the members of the leadership team working through a management company. Internal employees are employees who are connected to Lotus Bakeries with an employment contract, either of unlimited duration or of limited duration. 2 Key suppliers are all of our suppliers of end products (external production), raw materials, packaging and machinery, with whom Lotus Bakeries has entered into a written contract. 3 Palm oil suppliers who have signed up to the Lotus Bakeries palm oil policy or have their own palm oil policy in force that includes at least equal standards and who supply ingredients or raw materials containing at least 50% palm oil, and in so far these products represent more than 5% in any recipe. Priorities Unit of measure 2023 2022 2021 Internal employees 1 who have signed the Code of Conduct % 99.9 99.9 99.8 Key supplier 2 which have signed the Code of Conduct % 94.2 90.5 90.1 Key palm oil suppliers 3 who endorsed the principles of Lotus Bakeries Palm Oil Policy % 100.0 90.0 90.0 Product Safety Unit of measure 2023 2022 2021 Lotus Bakeries production sites where our products are produced with external quality certification (BRC, IFS) % 100.0 100.0 100.0 Our sustainability programme Lotus Bakeries - 125 Lotus Bakeries actively assumes its social responsibility. We guarantee ethical business practices throughout the organisation. Upholding business integrity and human rights is fundamental to building trust with our partners, communities and stakeholders, as pointed out in our Human Rights Policy. Our guiding principle is to abide by all international human rights standards, including, but not limited to, the UN Universal Declaration of Human Rights and the UN Guiding Principles on Business & Human Rights. Where local law and international standards are higher, Lotus Bakeries will follow the higher standard. Every individual deserves respect, dignity, and equal treatment. To emphasise this belief, we have extensively communicated the principles set out in our Code of Conduct as well as the Human Rights Policy, to all employees via our intranet system. We encourage our employees to respect the dignity and human rights of colleagues and all other people they come into contact with in the course of their work. ETHICAL BUSINESS PRACTICES AND RESPECT FOR HUMAN RIGHTS 126 - Lotus Bakeries Ethical business practices in our own organisation The Code of Conduct was approved by the Board of Directors on 2 April 2020 and was implemented in 2020. As of 2021, every new employee who is recruited must sign this. This Code forms an integral part of the employment contract. In September 2023, the Code of Conduct was updated to reflect Lotus Bakeries’ new whistleblowing line, encouraging our employees to speak up in case they encounter any conduct that concerns them, or that seems to violate Lotus Bakeries’ Code of Conduct, our policies or applicable laws and regulations. Our Code of Conduct Lotus Bakeries expects all its employees to act with integrity, honesty and fairness and in full compliance with the applicable laws, rules and regulations. It has developed a Code of Conduct containing six main principles that its employees must respect at all times. These principles are further elaborated on in separate more detailed policies and procedures: 1. Transparency: Lotus Bakeries aims for clear and accurate communication with its customers, suppliers, consumers and business partners and encourages open communication with all its stakeholders. Lotus Bakeries also refrains from non-conforming, dishonest, fraudulent or misleading marketing practices. New in 2023 Biscoff® Trademark Guidelines were created and published to help professionals incorporating Biscoff® spread and cookies into their recipes. The guidelines aim to provide a clear understanding of how to leverage the Biscoff® brand while ensuring the integrity of our brands and trademarks. The use of Biscoff® products in the preparation of recipes does not automatically entitle someone to use the Biscoff® trademark such as logos, design, look & feel and trade dress in your communication. However, Lotus Bakeries has authorised certain ways of use in its Trademark Guidelines to inform professionals transparently how to include the Biscoff® brand name to benefit from its power and recognition. These Guidelines apply worldwide. 2. Respect for fellow human beings: Lotus Bakeries is responsible for a safe working environment and places great importance on integrity and respect for fellow human beings. Respecting human rights and labour regulations, including the freedom of association of employees and combating child labour, are important objectives. All personal data is treated with respect at all times and in accordance with the relevant rules and regulations. The full Biscoff® Trademark Guidelines are available on the Biscoff website: https://www.lotusbiscoff.com/en-gb/foodprofessionals/ trademark The full Code of Conduct is available in 11 different languages on our website: https://www.lotusbakeries.com/governance-practices-and- policies Our sustainability programme Lotus Bakeries - 127 New in 2023 Lotus Bakeries developed and rolled-out a human rights policy in 2023, which applies to all our operations and to all full-time, part- time, and temporary colleagues who are directly employed by Lotus Bakeries, including our directors and officers. The policy also extends to any subsidiaries or joint ventures where Lotus has a majority interest or management control. It is important to note that our responsible sourcing policies and procedures specifically outline our expectations for our suppliers, vendors, agents, and contractors. In terms of human rights, Lotus Bakeries imposes its Supplier Code of Conduct on its suppliers of packaging, raw materials, equipment and finished products. We believe that it is not only our responsibility to ensure that our own operations uphold human rights, but also that of those in our supply chain. A Group anti-harassment and anti-discrimination policy was developed and rolled-out. Reference is made to page 106 of this annual report. 2023 saw the implementation of several new regulations on data protection and cybersecurity in China, with a particular focus on cross- border data transfer and personal information protection. On the other side of the world, in California, US, the California Consumer Privacy Act entered into force on 1 January 2023. Since Lotus Bakeries has sales offices in both locations, we updated our global Data Protection manual to reflect local requirements and implemented several measures in order to fully comply with the local legal framework. 3. Trading fairly & ensuring compliance: Lotus Bakeries ensures fair competition, respect for export regulations and the prevention of insider trading. New in 2023 In view of the geopolitical turmoil, Lotus Bakeries has heightened its awareness of tightened export regulations. This approach ensures ongoing compliance with all applicable export laws and regulations in an ever-changing and evolving global landscape. In 2023, all new employees in the marketing, sales and purchasing departments were invited to an initial two-and-a-half-hour interactive workshop at which eight issues were explained using real case studies, with a success rate of 75% to complete the training programme. All employees – existing and new – of the specified departments were moreover invited to two competition quizzes. The participation and success rates were as follows: June 2023 excluding US: 89% participation, 85.6% passed successfully. June 2023 US specific quiz: 100% participation, 76.4% passed successfully October 2023 including US: 97% participation, 62.9% passed successfully Lotus Bakeries will continue its efforts to increase awareness and understanding of competition law within its organisation. The full Human Rights Policy as well as our Modern Slavery Statement are available on our website: https://www.lotusbakeries.com/governance-practices-and- policies Reference is moreover made to the Dealing Code which is available on our website and an important part of our continued attention for the prevention of insider trading: https://www.lotusbakeries.com/governance-practices-and- policies 128 - Lotus Bakeries 4. Combating corruption: Lotus Bakeries maintains a zero-tolerance policy towards bribery and corruption, overseeing a clear process for managing conflicts of interest and keeping accurate accounts and records, including rigorous reporting and bookkeeping. New in 2023 Lotus Bakeries issued a new whistleblowing line which can be accessed by anyone on our website ( https://www.lotusbakeries.com/ governance-practices-and-policies ) and through which anonymous reporting is possible, confidentiality is assured, and accurate follow-up of the legal obligations is guaranteed. Such whistleblowing line will further improve the detection of any potential misconduct throughout the value chain. Lotus Bakeries has taken further steps as part of its continuous improvement process for corporate books across all of its entities, further streamlining the timing, stakeholder management and automation of the annual reports and annual shareholder meeting in all of its entities. Where applicable, it has moreover made requisite board amendments and updates of the articles of association or bylaws of entities in view of the evolution of the Group in recent years. 5. Securing information: Lotus Bakeries does all it can to protect its own confidential information and the confidential information of third parties. New in 2023 Last year, Lotus Bakeries successfully executed 34,933 phishing simulations within our user community, boasting an impressively low fail rate of 2.3%. In tandem with these efforts, we remain committed to enhancing security awareness through targeted training programmes for new hires and the strategic deployment of phishing campaigns. Looking ahead to 2024, our overarching objective is to elevate our security maturity, steering towards a zero-trust strategy. This entails further implementing rigorous authentication, authorization, and continuous validation processes for all users, applications, and devices. To realise this strategy, we are focusing on key initiatives such as maintaining an accurate inventory of assets and software, fortifying security protocols for remote work scenarios, and bolstering safeguards for accessing our production lines. Concurrently, we remain dedicated to substantial investments in detection capabilities. In alignment with our commitment to robust security practices, we are taking steps in 2024 to ensure compliance with the NIS 2.0 EUR Directive. Our initial move involves the implementation of a comprehensive security risk framework, laying the foundation for a resilient and compliant security infrastructure. To facilitate confidential negotiations while protecting our crown jewels, Lotus Bakeries has completely revised and strengthened its confidentiality agreements and introduced a more flexible modus operandi. 6. Respect for the environment & responsible sourcing policy: Lotus Bakeries closely monitors the impact of its activities on the environment and constantly strives to reduce its ecological footprint. For specific details regarding our concrete 2023 operations, including our ambitions and achievements for the environment, please refer to page 88 and to the implementation of the Supplier Code of Conduct on page 131 of this annual report. Our sustainability programme Lotus Bakeries - 129 Responsibilities Each employee of Lotus Bakeries has a responsibility to comply with the principles of the Code of Conduct. The responsibility for implementing the Code of Conduct lies with the Compliance Officer, supported by the local HR departments. Whistleblowing All employees of Lotus Bakeries are encouraged to speak up if they encounter any conduct that concerns them, or that seems to violate Lotus Bakeries Code of Conduct, our policies or applicable laws and regulations. Lotus Bakeries Whistleblowing Line allows for anonymous reporting , confidentiality assurance, and accurate follow-up of the legal obligations. Lotus Bakeries greatly values the help of employees and others who identify and speak up about potential concerns that need to be addressed. People who speak up are protected and will not suffer for raising concerns in good faith about suspected misconduct. Lotus Bakeries will not tolerate any form of retaliation against you for speaking up. Lotus Bakeries has developed a Whistleblowing Policy which explains how one can raise concerns about suspected misconduct in confidence and without fear of retaliation. It also describes what to expect from us concerning follow-up and relevant action. All employees have been informed about the Whistleblowing Line and Policy via intranet communication and information sheets featured in all of our production plants. The Whistleblowing Policy has moreover been integrated in the onboarding packs and local HR decks. In 2023, no complaints were received via the Whistleblowing Line. The Group Compliance Department was informed of one complaint from employees regarding an alleged case of discrimination in the course of 2023. This case was investigated locally. No infringements were established. Reporting Where necessary, the Compliance Officer reports to the Board of Directors once a year on the enforcement of the Code of Conduct, covering any breaches and concerns raised, along with action points formulated to prevent repetition. In 2023, the Board of Directors was not informed as no material complaints were received and no infringements were established. Implementation The Code of Conduct has been translated into the official languages of those countries in which Lotus Bakeries has a sales office or a factory. The document is available in eleven languages. The Code of Conduct has been added to the onboarding pack for new employees at all our sites and a presentation is foreseen for the onboarding programmes. The employees of Lotus Bakeries were asked to sign the Code of Conduct and have all received a brief explanation of the six principles it contains. At the end of 2023, 99.9% of employees had signed the Code of Conduct. The Whistleblowing Line and Policy can be found on our website: https://www.lotusbakeries.com/governance-practices-and- policies 130 - Lotus Bakeries Supplier Code of Conduct The principles set out in the Lotus Bakeries’ Code of Conduct are also imposed on our suppliers of packaging, raw materials, equipment and finished products. In 2023, 94.2% of our key suppliers of finished products (external production), raw materials, packaging and equipment with which Lotus Bakeries has concluded a written contract had signed the Supplier Code of Conduct. The principles to which these suppliers must commit can be summarised as follows: 1. Lawful and ethical business practices: Respect for human rights Child labour will not be accepted under any circumstances Treating people with dignity, honesty, fairness and respect Refraining from any form of discrimination, harassment, verbal or physical abuse Implementation of thorough health and safety procedures Compliance with the occupational laws and regulations in the workplace 2. Fair business practices Compliance with the relevant competition laws Use of fair and transparent price mechanisms and other contractual provisions in respect of suppliers Zero tolerance of bribery and corruption Protection of Lotus Bakeries’ confidential information No falsification, smuggling or other related crimes 3. Respect for the environment Obtaining and documenting all necessary environmental permits, licences and registrations. Setting up an environmental management system, including: Processes aimed at waste reduction, lower energy consumption, lower emissions and the prevention of pollution Preservation of biodiversity, including threatened flora and fauna (no deforestation) and focusing on soil protection Respect for water sources and ensuring good water and (waste) water management No use of illegal products and limitation of the use of pesticides and other legal chemicals 4. Traceability The supplier must keep adequate records of its direct suppliers We expect these suppliers to implement the Supplier Code of Conduct and to inform their employees, agents and subcontractors in a careful and transparent manner. Responsibilities The purchasing department is responsible for implementing the Supplier Code of Conduct, supported where necessary by Legal & Compliance. Whistleblowing Suppliers are asked to bring any concerns to the attention of their contact at Lotus Bakeries. Since 2023, they also have the option to report any complaints via the online whistleblowing platform selected by Lotus Bakeries. This platform allows for anonymous reports, ensures confidentiality, and guarantees accurate follow-up of legal obligations. Sustainable sourcing & ethical business practices at our suppliers Our sustainability programme Lotus Bakeries - 131 PRODUCT SAFETY Quality management system The Lotus Bakeries quality policy is an integral part of its strategy aimed at building on strong, reliable brands. The strength of our brands is after all highly dependent on the quality of our products. The quality management system undergoes an assessment by the internal audit team. This happens annually split over five times, linked to different criteria. Corrective and preventive actions are taken as a result. Responsibility The Corporate Quality Assurance department is responsible for auditing the quality of our products under the direction of the Corporate QA Director, who has final responsibility for ensuring that the terms and conditions of Lotus Bakeries’ quality management system are met at all our production sites and in all Lotus Bakeries’ offices. The Area QA Managers have the same responsibilities for their region. Scope of product safety and quality Lotus Bakeries’ quality management system covers the entire value chain, from the purchase of raw materials and packaging, to production, labelling and delivery of the finished products to the customer. External production is also covered by the quality management system. Quality control of suppliers Supplier selection Our suppliers are selected according to predetermined criteria, including the availability of an effective quality and food safety management system, assured by an independent food safety certification body. An effective tracing system forms part of this, so that Lotus Bakeries knows where the raw materials come from at all times. The full text of the quality policy is available on our website: https://www.lotusbakeries.com/policies-reports Monitoring The Supplier Code of Conduct includes an obligation for the supplier to provide documentation that Lotus Bakeries can use as a basis for verifying compliance with the Supplier Code of Conduct. While audits at suppliers have traditionally focused on quality and food safety, Lotus Bakeries is exploring ways to monitor the proper enforcement of other principles in the Code of Conduct. Efforts are being made to integrate these considerations into existing audits. Lotus Bakeries expects suppliers to take corrective actions necessary to address any identified gaps. Implementation The Supplier Code of Conduct was implemented in 2020, is supplied in the language of the contract and is available in eleven languages. In 2020, the suppliers of packaging, raw materials, equipment and finished products with which Lotus Bakeries had a framework contract, were asked to sign the Code of Conduct separately at the time. Since then, this code has been an integral part of the standard contracts with our key suppliers. Moreover, all our general purchase conditions contain a reference to the Supplier Code of Conduct, which is available on our website. In 2023, 94.2% of key suppliers had signed the Code of Conduct. 132 - Lotus Bakeries Specifications In addition, Lotus Bakeries has drawn up specifications with product safety requirements to be met for raw materials and packaging materials that are critical for product safety, such as flour, eggs, fats, margarines, chocolate and printed packaging with direct product contact. Inbound checks The products supplied by our suppliers are also subject to an inbound check. We assess the analysis report supplied by the supplier and check it with regular counter analyses by our own specialist internal laboratories. This inbound check is structurally registered in SAP to keep overview and be able to track. Supplier audits The checks on the suppliers are also supplemented by supplier visits and audits, which are conducted annually on the basis of performance measurements, and this also applies to new suppliers. In 2023, three audits were carried out at suppliers of raw materials and packaging materials. In addition, another four visits took place at our raw material and packaging suppliers. Only on the basis of these detailed performance measurements can we ensure that we continue to work with the best suppliers at all times. Quality assurance of our production processes and finished products Hazard Analysis and Critical Control Points (HACCP) Production processes have been developed for all production sites that are designed to assure the quality and the safety of the products. Detailed HACCP plans (product safety risk studies) for example have been produced. They are updated at least annually or with every major adjustment of the process or machinery. Training Every employee gets the necessary training on HACCP and on the quality process parameters. This kicks off during the onboarding and is followed up by regular repeat trainings. Internal audits Verification takes place on the basis of internal audits. In 2023 there were 63 internal audits with on-site presence. Each production site has been audited at least five times. External audits External certification is a major support in the continuous improvement of both processes and products. Every Lotus Bakeries production site is BRC or IFS certified at end 2023. Quality control Finished products are first examined critically at our production sites in the form of self-assessment by the production department. The quality of our finished products is also assured by analyses in our internal laboratories. The results of these laboratory analyses are reported to management monthly. Products of production partners are assessed in the same way. Quality processes for our production partners (co-manufacturing) Our external production partners are monitored in an identical way by our Corporate Quality Assurance department. There were three physical audits last year, 10 in-person factory visits and 10 in-person quality meetings topped up with 50 digital quality meetings over the past year. The requirements we set for our external production partners are laid down contractually in a clear schedule of requirements. Our sustainability programme Lotus Bakeries - 133 Quality processes for our customers First and foremost, our finished products, both the product itself and the packaging, must comply with the relevant food legislation. The labelling of products and the processing of raw materials and packaging materials by the country of commercialisation according to the regulations are monitored by the Corporate Quality Assurance. We also wish to inform the consumer transparently about verified claims made with regard to the product. In 2021 we worked on a revamped database to manage all this information efficiently and to convert it into product specifications and customer information. This database was put into use in 2022 and the further roll-out for other sites and production partners continued in 2023. We receive, register and handle product complaints systematically and, since 2020, they have been registered in a central database for all the sales offices in the group. The number of complaints and their seriousness are monitored very closely and a monthly report is submitted to management. Annual testing and continuous monitoring of our quality management system Lotus Bakeries has specific product withdrawal and recall procedures. There is a trained crisis management team in each of our sites and sales offices. Each year, the procedures are tested in collaboration with external parties. Learning points are identified and adjusted from the results of this test, and monitoring and action plans are drawn up. In 2023, Lotus Bakeries organised one recall in the Netherlands followed by a thorough risk analysis. The necessary steps were taken in a timely manner and preventive measures were taken immediately to prevent recurrence in the future. The various components of our quality management system are adequately safeguarded thanks to these various steps. where the raw materials come from at all times. 134 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 135 PRODUCT DEVELOPMENT The R&D department is responsible for developing new products, optimizing existing ones, as well as creating packaging solutions, all in alignment with Lotus Bakeries’ strategy and policies. As such, we carefully select our raw materials from approved suppliers that comply with our responsible sourcing policies, as well as make sure that packaging materials comply with our ambition to be 100% recyclable by end 2025. Product development follows a stage-gate process, where ideas, prototypes and products are evaluated against several criteria, including our sustainability and nutritional policies. This results in a high-quality branded snack, which will bring a superior tasting experience to our consumers all over the world, all year around. Our expertise in the field of innovation is complemented with interactions with well-known knowledge institutes and universities, which give us a better view of product-packaging-process interactions and give us new insights into new technologies. NUTRITIONAL POLICY Superior taste experience Lotus Bakeries wants to be able to offer its consumers delicious, high-quality snacks at any time of the day. A superior taste experience is key to this, both in the range of cookies and pastries and in the range of natural snacks. We only use high-quality ingredients and we monitor production and supply chain processes from beginning to end. Ensuring the quality, origin, composition and safety of our products is vital. Our R&D department plays an important part in this: it has the task of developing products with attention to constantly improving quality and taste. Diverse range Lotus Bakeries aims to offer every consumer a quality range of snacks at every moment of consumption. It does this through a portfolio of products with a variety of nutritional compositions. With the acquisition of brands such as nākd®, TREK®, BEAR® and Urban Fruit®, the focus has expanded to fruit and nut-based snacks. Moreover, the takeover of Kiddylicious® has meant an expansion of our range with snacks and meals for little ones. These Natural Foods brands provide the consumer with the option to choose a healthy or healthier alternative to existing snacks in the food category. 136 - Lotus Bakeries No artificial flavours or colours To exclusively offer our consumers healthy and high- quality products, we aim not to use any artificial flavours or colours in our products. We have considered it important as a business to use pure and natural ingredients since our foundation in 1932. Variety in portion sizes It is our ambition to offer consumers responsible snacks. Not just with our range of natural snacks, but also by making several of our top products available in large and small packs, that contain less than 150 Kcal a portion. Clear information & responsible marketing In order to support consumers in their nutritional choices, we believe it is important to give them accurate product information, including the nutritional values. Lotus Bakeries also takes an unequivocal position with regard to responsible advertising towards children. For example, Lotus Bakeries Belgium signed the Belgian Pledge 3.0. The full text of the ‘nutritional policy’ is available on our website: https://www.lotusbakeries.com/policies-reports We believe it is important to provide consumers with information that encourages them to consume responsibly. Our commitment is based on: Encouraging responsible consumption Taking responsibility in communication Responsible consumption Responsible consumption is an important topic in our advertising. To help consumers make the right dietary choices we do not encourage or show excessive consumption in our advertising. We do not exceed recommended portion sizes and do not portray unhealthy or inappropriate consumption of our products. On certain product lines we offer a variety of portion sizes that can fit the lifestyle of different types of households. Responsible communication At Lotus Bakeries we will not communicate to children below 13 years of age. Instead, we see the parents as the gatekeepers of their children’s healthy diet. This applies to media channels such as TV, radio, print, cinema, direct marketing, product placement, apps, outdoor marketing, mobile and in online including social media channels, influencer marketing, and company websites. Our sustainability programme Lotus Bakeries - 137 Lotus Bakeries Foundation for Education Mission: Lotus Bakeries aims to make a substantial contribution to carefully selected education projects aimed at high-quality education for vulnerable or disadvantaged children and young people. At Lotus Bakeries we contribute to the well-being of our fellow human beings by providing support to education. The reason is simple: education is the key to breaking the vicious circle of poverty. Anyone with access to high-quality education can learn a trade and thus also gain access to the labour market, earn an income and support a family, share knowledge and continue to develop. Education is a universal human right to which every child is entitled for good reason. It offers future prospects and helps the child become an independent and self-reliant human-being. Somebody who can contribute to the economy. In this way education is the key to success of the child and society. Our underlying principles are clear: We want to give vulnerable or disadvantaged children and young people in various regions access to high-quality education. We do this by supporting projects aimed at elementary and secondary education, but also aimed at technical skills and out-of-school cultural or sporting activities. We select a limited number of projects to which we can make a substantial contribution. 138 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 139 Lotus Bakeries Child Sponsorships This project was set up in conjunction with Cunina at the school in Reichenau, Underberg, South Africa. Since 2017, the employees of Lotus Bakeries Corporate have been given the opportunity to become sponsors. All sponsored children are offered an education from the first year of primary to the final year of secondary. This is a long-term commitment of 12 years for around 145 children. In 2023, Lotus Bakeries supported eight development projects within the Lotus Bakeries’ Foundation for Education: The Kusasa Project The Kusasa project is an education project in the Western Cape province of South Africa of which Lotus Bakeries has been the main sponsor since 2018. Every year, around 150 children receive quality primary education and are supported in their further development. This increases their prospects of a better future, which also benefits the local community. In terms of educational achievements, 2023 was a remarkable year for The Kusasa Project. The support allowed 60% more classroom hours last year than in other schools in the region. In the fourth group, 24 students graduated from The Kusasa Academy in 2023. Besides regular education, activities included dance classes, 42 excursions and field trips, as well as 50 winter and summer sports activities and, last but not least, cultural clubs where children had an opportunity to discover their passion. The Kusasa Project has always prioritised development needs for young children. In addition to educational goals, The Kusasa Project also makes sure that the children are provided with practical needs and resources that improve their quality of life, such as: acupuncture therapy, eye tests and corrections, eyeglass enhancement, hearing exams and provision of hearing aids. In 2023, some 32 families used social workers, 110 home visits were made and around 126 forms of medical and social assistance were provided to the community. 140 - Lotus Bakeries TAJO Through its support of the Ghent Talent Studio for Young People (TAJO), Lotus Bakeries makes a conscious decision to provide socially vulnerable young people in the Ghent and Kortrijk regions (Belgium) with new opportunities and to fuel their motivation to start studying. At TAJO, young people are introduced to various professions and the corresponding skills and talents via interactive workshops on Saturdays. These workshops are led by experienced guest teachers and at least once a month, the young people get the opportunity to take a look behind the scenes inside inspiring companies. This way, young people can discover for themselves which fields appeal to them and what encourages them to study in a direction that will take them further, both at school and in society. In order to keep the connection going with the young people at TAJO during the summer holidays, TAJO organised activities for all the young people in July and August. The 2023 summer holidays kicked off with an event that focused on connecting and networking. In August, the new TAJO year was collectively launched with a day of experience-focused workshops across different locations such as: the Ghent Bourgoyen, the Technology Park in Zwijnaarde, Doerak farm in Marke and the University of Applied Sciences in West Flanders. City Pirates The City Pirates community football project, which operates in eight locations in Antwerp (Belgium), uses football to give young people an opportunity and to learn skills. The project’s main goal is to give underprivileged young people in the province of Antwerp a chance to get an education, a diploma, and a job. The development of skills in sports is closely associated with the promotion of social skills in which teamwork, perseverance, effort and discipline are key, along with equality, respect and commitment. All of this is focused on creating a stable and balanced future. City Pirates also offers social and financial guidance for parents, after-school activities and homework assistance for children. The organisation currently has 15 professional employees, 215 volunteers and 1,500 players. The first City Pirates team plays in the second amateur class and receives logistical support from Club Brugge KV. City Pirates, in addition to sports activities, also organised events in 2023 focused on social commitment. This was reflected in playground activities, youth outreach, various workshops and events, internship days and a community event. Through these initiatives, the club creates a social platform outside of the soccer field where young people, children, parents and volunteers can collectively work on a better community in the city. Our sustainability programme Lotus Bakeries - 141 Gooikenshoeve VZW Gooikenshoeve (Belgium) was set up to provide psychologically and socially vulnerable young people and young adults from 17 to 25 a worthwhile daytime activity in a small-scale, safe and warm environment. In this way we want to nurture the hope and the ability of our guests to find a way into normal social integration and interaction with themselves and others. Lotus Bakeries is keen to do its bit in this regard. Gammol Gammol is a Belgian non-profit organisation committed to the educational and healthcare needs in Gambia, where the availability of clean water and education are considered essential basic conditions. The main efforts in 2023 were the construction of a fourth school and the provision of clean water in various regions. Due to Gammol, more than 120,000 people in Gambia now have daily access to clean and potable water, which is just one link in the chain that should lead to greater self-reliance. The biggest project started in June 2023, with the construction of the fourth school in Falaa, a southern district of Sanyang in Gambia. This new primary school will include four classrooms, a lounge for teachers and management and sanitary facilities. All of the materials required for the construction of the school are purchased and manufactured locally, which benefits the local economy. In addition to efforts to build schools, Gammol always sets clear expectations for the local communities it supports to ensure quality education. This involves paying attention to what subjects are taught, the appointment of teachers and their responsibilities. This is because the focus of primary education is on language and maths. Gammol’s actions are based on the belief that quality education gives young people a greater chance of breaking out of poverty. Providing quality education is therefore also one of the key goals, aimed at achieving self-reliance. 142 - Lotus Bakeries Entrepreneurs for Entrepreneurs Literacy training for women The ‘Literacy for women as a weapon for their emancipation’ project has been supported by Lotus Bakeries since 2021. The emancipation of women and their social and economic emancipation in the Democratic Republic of the Congo and Benin depend on education. Leuven Coopération and its local partners organise literacy courses for women and girls in these countries. These courses have a direct and significant impact on the emancipation of these women and the image they have of themselves and their families. A future for disadvantaged young people in Walungu thanks to training in sustainable agriculture and the economy With this project, Lotus Bakeries offers support to four technical agricultural schools in the Walangu region in Congo, namely: Maka, Karhagwa, Muku and Ciherano. Unemployment in this region is exceptionally high. Even young people who have completed their education are finding it difficult to find work. The project’s goal is to support young people in their vocational training while also reinforcing their teachers’ technical and entrepreneurial skills. The teachers are trained by experienced partners, with specific emphasis on agriculture and crafts because the Walangu area is predominantly agricultural and most opportunities lie in this sector. This will enable teachers to have sufficient knowledge to prepare young people for self- sustaining work within farming activities after graduation. A total of 486 students are being trained. This education allows them to support their families. In the context of the social professional relevance of agricultural education, the focus is on financing practical matters that are necessary in order to support the courses. For example, in 2023 at the Muku Technical Institute, the rabbit hutch was refurbished and a pig was purchased for the pigsty in Cihirano. The introduction of a new course made it possible to train students in setting up micropropagation to produce healthy banana shoots. Next, a management committee was set up to supervise the schools and optimise their operation by enabling knowledge exchange between the schools and agricultural businesses in the region. Finally, a competition was organised for the graduates to prepare a business plan, with the most promising project receiving partial funding. Graduates starting income-generating activities in circular economy or agroecology will be coached with the purpose of advancing their initiatives while analysing which courses show the most promise for socio- professional integration. Our sustainability programme Lotus Bakeries - 143 EXTERNAL INITIATIVES, COMMITMENTS AND EVALUATIONS To help us achieve and demonstrate our ESG commitments, we have several key memberships and certifications. These focus on people and planet, and align with our sustainability commitments. SBTI The Science Based Targets initiative (SBTi) is a collaboration between CDP, the United Nations Global Compact, World Resources Institute (WRI) and the World Wildlife Fund (WWF). The SBTi is the only global initiative that directly links a company’s carbon-emission targets to the Paris Agreement and associated global efforts, in order to keep the rise in global temperature below 1.5°C. Lotus Bakeries has signed the Business Ambition for 1.5°C Commitment Letter in March 2023. The target and roadmap is currently under development. CEFLEX The Circular Economy for Flexible Packaging (CEFLEX) initiative is a collaboration of over 180 European companies, associations and organisations representing the entire value chain of flexible packaging. The goal of the initiative is to make all flexible packaging in Europe circular. CEFLEX’s ‘Mission Circular’ commits to collection of all flexible packaging and over 80% of the recycled materials channeled into valuable new markets and applications to substitute virgin materials. Lotus Bakeries is an active member of the CEFLEX initiative since 2020 and actively participates in the working groups concerning the development of design guidelines for a circular economy (D4ACE). Furthermore, Lotus Bakeries applies the already existing CEFLEX guidelines to develop recyclable flexible packaging. 144 - Lotus Bakeries Flexible plastic fund The Flexible Plastic Fund is a UK-based collaborative fund of 18 renowned UK consumer goods’ manufacturers giving value to hard- to-recycle flexible plastics. The Flexible Plastic Fund is working with retailers, recyclers, local authorities and manufacturers using flexible plastic packaging to create an efficient system that incentivises high- quality recycling of a material that has historically gone to waste. The Fund is driving towards the long-term ambitions of ensuring flexible plastic recycling is UK based, fully circular and facilitated by household recycling collections. Lotus Bakeries has been a member of the Flexible Plastic Fund since its establishment in 2021 through the brands Lotus Bakeries UK Ltd., Natural Balance Food and Kiddylicious. Lotus Bakeries actively participates in the funder meetings and financially supports the Flexcollect trials to pilot household collections in UK and the retail collections of flexible plastics. RSPO The Roundtable on Sustainable Palm Oil (RSPO) is working to transform the palm oil industry to make it sustainable. It is a global non-profit organization that provides certifications for certified sustainable palm oil. Lotus Bakeries is member of the RSPO and the Belgian Alliance for Sustainable Palm Oil. We select key palm oil suppliers 1 carefully on the basis of the NDPE principle (No Deforestation, No Peat, No Exploitation) in its purchasing standards. All Lotus Bakeries’ sites that use or purchase palm oil also have an RSPO certificate. 1 Key palm oil suppliers are those who supply products containing more than 50% palm oil and in which the ingredient makes up 5% of the recipes. Our sustainability programme Lotus Bakeries - 145 Rainforest Alliance The Rainforest Alliance is an international non-profit organization working at the intersection of business, agriculture, and forests. Being Rainforest Alliance certified means a product respects the three pillars of sustainability: social, economic, and environmental. The cocoa butter and cocoa mass used in our Lotus® Biscoff® chocolate has been certified by the Rainforest Alliance. The Enkhuizer and Peijnenburg products with chocolate were originally UTZ certified but are Rainforest Alliance certified since the transition from UTZ to Rainforest Alliance. SEDEX Sedex, the Supplier Ethical Data Exchange, is a collaborative platform that enables members to collect and share ethical data and identify risks in their supply chains. It’s the world’s largest data platform for supply chain assessment. Lotus Bakeries is Sedex member with plants in Belgium and France. Being a member of the Sedex community supports our commitment to fair labour practices, the well-being of our employees, business ethics and the environment. 146 - Lotus Bakeries Lotus Bakeries is rated by several independent organisations. We have ratings from the following organisations: Sustainalytics Sustainalytics is a company that rates the sustainability of listed companies based on their environmental, social and corporate governance performance. They measure how exposed a company is to industry-specific ESG risks and how well it deals with the risks. The rating scale is made up of 5 risk levels ranging from severe risk to negligible risk. The assessment by Sustainalytics is 30.2. (latest update, June 2023). We appreciate the feedback and have taken initiatives in the course of 2023 to further improve our ESG performance. CDP CDP, the former Carbon Disclosure Project, runs the global disclosure system to manage environmental impacts. They have broadened the scope of this disclosure, to deforestation and water security. They have built a comprehensive global collection of self-reported data. By scoring business from A to D, they take organisations on a journey from disclosure to awareness up to management on several environmental topics. Lotus Bakeries has a D on Climate Change and B- on Forest. We commit to the feedback and set up action plans to mitigate risks and capitalise on the opportunities that CDP points out. Our sustainability programme Lotus Bakeries - 147 EU Taxonomy Overview of the EU Taxonomy This section contains the EU Taxonomy disclosures required by Article 8 of Regulation 2020/852 (the EU Taxonomy Regulation). Article 9 of the EU Taxonomy Regulation identifies the following six environmental objectives: Climate change mitigation Climate change adaptation The sustainable use and protection of water and marine resources The transition to a circular economy Pollution prevention and control The protection and restoration of biodiversity and ecosystems The EU has published a catalog of economic activities that can be considered for these objectives (the Delegated Regulations). Our view is that our core economic activities related to producing and selling indulgent and natural snacks are not covered by the Delegated Regulations and consequently are not currently considered for Taxonomy purposes. For reporting in 2023, the proportion of Taxonomy-eligible and ‘aligned’ economic activities in turnover, capital expenditure (CapEx) and operating expenditure (OpEx) must be disclosed for the first two environmental objectives. Moreover, the proportion of Taxonomy-eligible economic activities in turnover, CapEx and OpEx must be disclosed for the remaining four environmental objectives. Application of the EU Taxonomy Regulation The amounts used for the calculation of the turnover, CapEx and OpEx ratios are based on the reported data in the consolidated financial statements. As none of our revenue-generating activities are described currently in the Delegated Regulations, our EU Taxonomy-eligible turnover for 2023 is zero. For the same reason, we do not report any CapEx related to assets or processes associated with taxonomy-eligible economic activities or CapEx that is part of a plan to expand taxonomy- eligible economic activities. If and when the specific economic activity ‘manufacturing of food products and beverages’ is added to the future Delegated Regulations, we expect our key performance indicators for Taxonomy-eligible turnover, CapEx and OpEx to increase. 148 - Lotus Bakeries Current other activities and outlook on our potential for Taxonomy-eligibility going forward It is important to note that ‘non-eligible’ under the EU Taxonomy Regulation refers to the fact that the activities at present remain outside the scope of the economic activities for which technical screening criteria have been developed under the current Delegated Regulations. As such non-eligible activities under the EU Taxonomy should not be interpreted as an indication of our sustainability performance or ambition. We will continue to assess our Taxonomy-eligible and aligned activities considering the evolving legal framework of the EU Taxonomy Regulation and to continue to integrate the requirements of the EU Taxonomy in our business model and reporting policies and procedures. In the meantime, we continue to explore ways to reduce our emissions through our commercial strategy and invest in the decarbonisation of our operations and value chain as part of our ambition to achieve net zero by 2050. For a qualitative description of the CapEx and OpEx spent to make our operations more sustainable, we refer to Chapter 2 of our Annual Report. Defining our KPIs The definition of the key performance indicators (KPIs) is determined in accordance with Annex I of the Art. 8 Delegated Act. Turnover KPI The turnover KPI is defined as the proportion of Taxonomy-eligible economic activities in our total turnover (numerator) divided by the net turnover (denominator). The denominator of the turnover KPI is based on our consolidated revenue as presented in our Consolidated Income Statement. With regard to the numerator, we have not identified any Taxonomy- eligible activities as explained above. CapEx KPI The CapEx KPI is defined as Taxonomy-eligible CapEx divided by our total CapEx. Total CapEx (denominator) consists of additions to tangible and intangible assets during the financial year considered before depreciation, amortisation and any re-measurements, including those resulting from revaluations and impairments, for the relevant financial year and excluding fair value changes. The denominator includes also additions to tangible and intangible assets resulting from business combinations and leases. With regard to the numerator, as we have not identified Taxonomy- eligible economic activities, we do not record CapEx related to assets or processes that are associated with Taxonomy-eligible economic activities. Our sustainability programme Lotus Bakeries - 149 OpEx KPI The OpEx KPI is defined as Taxonomy-eligible OpEx divided by our total OpEx. Total OpEx (denominator) includes direct non-capitalised costs that relate to research and development, building renovation measures, short- term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of asset of property, plant and equipment by the undertaking or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such assets. With regard to the numerator, as we have not identified Taxonomy- eligible economic activities, we do not record OpEx related to assets or processes that are associated with Taxonomy-eligible economic activities. Taxonomy KPI’s for the period ending December 31, 2023 As none of our revenue-generating activities are covered by the Delegated Regulations, the share of Taxonomy-eligible turnover in our total turnover is 0%. Consequently, the related CapEx and OpEx are also 0%. We acknowledge that the Commission Delegated Regulation (EU) 2021/2178 of July 6, 2021 (hereafter referred as Regulation) requires to disclose the information referred to in Article 8, paragraphs 1 and 2, of Regulation (EU) 2020/852 as specified in Annex I to the Regulation, presented in a tabular form by using the templates set out in Annex II to the Regulation. However, as most fields would be empty or nil, for the sake of clarity for our readers, we present all required information as in the simplified tabular form hereunder. in million EUR Total Proportion of Taxonomy- eligible (non-aligned) economic activities (in %) Proportion of Taxonomy- aligned economic activities (in %) Proportion of Taxonomy- non-eligible economic activities (in %) Revenue 1,063.0 0% 0% 100% Capital expenditure (CapEx) 86.2 0% 0% 100% Operating expenditure (OpEx) 40.8 0% 0% 100% The detailed information and data-tables in accordance with the EU taxonomy are disclosed in Annexe of the current report. In 2023, the Group has made climate change mitigating CAPEX investments for a total amount of EUR 4.5 million (mainly relating to electric vehicles, charging stations and plant batteries), representing more than 20% of the maintenance CAPEX of the Group. 150 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 151 Limited Assurance Report INDEPENDENT LIMITED ASSURANCE REPORT ON THE SUBJECT MATTER INFORMATION OF THE CARE FOR TODAY SECTION IN THE ANNUAL REPORT 2023 OF LOTUS BAKERIES NV To the Board of Directors of Lotus Bakeries NV This report has been prepared in accordance with the terms of our engagement contract dated 13 December 2023 (the “Agreement”), whereby we have been engaged to issue an independent limited assurance report in connection with a selection of sustainability KPIs included in the Annual Report as of and for the year ended 31 December 2023 of Lotus Bakeries (the “Report”), as listed in the Appendix of this assurance report. The Directors’ responsibility The Directors of Lotus Bakeries NV (“the Company”) are responsible for the preparation and presentation of the selection of sustainability KPIs for the year 2023 included in the Report, as listed in the Appendix of this assurance report (the “Subject Matter Information”), in accordance with the criteria disclosed in the Report (the “Criteria”). This responsibility includes the selection and application of appropriate methods for the preparation of the Subject Matter Information, for ensuring the reliability of the underlying information and for the use of assumptions and estimates for individual sustainability disclosures which are reasonable in the circumstances. Furthermore, the responsibility of the Directors includes the design, implementation and maintenance of systems and processes relevant for the preparation of the Subject Matter Information that is free from material misstatement, whether due to fraud or error. Auditor’s responsibility Our responsibility is to express an independent conclusion about the Subject Matter Information based on the procedures we have performed and the evidence we have obtained. We conducted our work in accordance with the International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial Information” (ISAE 3000), issued by the International Auditing and Assurance Standards Board. This standard requires that we comply with ethical requirements and that we plan and perform the engagement to obtain limited assurance as to whether any matters have come to our attention that cause us to believe that the Subject Matter Information has not been prepared, in all material respects, in accordance with the Criteria. The procedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance 152 - Lotus Bakeries that would have been obtained had a reasonable engagement been performed. The selection of such procedures depends on our professional judgement, including the assessment of the risks of material misstatement of the Subject Matter Information in accordance with the Criteria. The scope of our work comprised the following procedures: assessing and testing the design and functioning of the systems and processes used for data-gathering, collation, consolidation and validation, including the methods used for calculating and estimating the Subject Matter Information as of and for the year ended 31 December 2023 presented in the Report; conducting interviews with responsible officers; reviewing, on a limited test basis, relevant internal and external documentation; performing an analytical review of the data and trends in the information submitted for consolidation; considering the disclosure and presentation of the Subject Matter Information. The scope of our work is limited to assurance over the Subject Matter Information for the year 2023. Our assurance does not extend to information in respect of earlier periods or to any other information included in the Report. Our independence and quality management We have complied with the independence and other ethical requirements in the International Ethics Standards Board for Accountants’ (IESBA) International Code of Ethics for Professional Accountants (IESBA Code) together with the legal Belgian requirements in respect of the auditor independence, particularly in accordance with the rules set down in articles 12, 13, 14, 16, 20, 28 and 29 of the Belgian Act of 7 December 2016 organising the audit profession and its public oversight of registered auditors and with Art. 3:62, 3:63 and 3:64 and 3:65 of the Companies’ and Associations’ Code. Our firm applies International Standard on Quality Management n°1, Quality Management for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance Related Services Engagements, and accordingly, maintains a comprehensive system of quality management including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Our sustainability programme Lotus Bakeries - 153 Our conclusion Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Subject Matter Information within your Annual Report as of and for the year ended 31 December 2023 has not been prepared, in all material respects, in accordance with the Criteria. Other ESG related information The other information comprises all of the ESG related information in the Report other than the Subject Matter Information and our assurance report. The directors are responsible for the other ESG related information. As explained above, our assurance conclusion does not extend to the other ESG related information and, accordingly, we do not express any form of assurance thereon. In connection with our assurance of the Subject Matter Information, our responsibility is to read the other ESG related information and, in doing so, consider whether the other ESG related information is materially inconsistent with the Subject Matter Information or our knowledge obtained during the assurance engagement, or otherwise appears to contain a material misstatement of fact. If we identify an apparent material inconsistency or material misstatement of fact, we are required to perform procedures to conclude whether there is a material misstatement of the Subject Matter Information or a material misstatement of the other information, and to take appropriate actions in the circumstances. * Acting on behalf of Lien Winne BV Other matter - restriction on use and distribution of our report Our report is intended solely for the use of the Company, to whom it is addressed, in connection with their Report as of and for the year ended 31 December 2023 and should not be used for any other purpose. We do not accept or assume and deny any liability or duty of care to any other party to whom this report may be shown or into whose hands it may come. Ghent, 28 March 2024 The statutory auditor PwC Bedrijfsrevisoren BV/PwC Reviseurs d’Entreprises SRL Represented by Lien Winne Bedrijfsrevisor/Réviseur d’entreprises 154 - Lotus Bakeries Environment Sustainable Packaging % of packaging of all Lotus Bakeries brands that is recyclable Carbon footprint % of owned sites that have earned the CO 2 -neutral label Total scope 1 and 2 emissions relating to our owned sites Kg of waste per tonne generated Sustainable sourcing % of our production sites which process palm oil and have achieved the RSPO certificate People Gender diversity % men-% female for Board of Directors, Leadership team and all employees Geographical distribution Total headcount per country and split between men/female (absolute and in %) People Health and safety Total occupational accidents involving absence from work Community Priorities % of internal employees who have signed the Code of Conduct % of key suppliers which have signed the Code of Conduct Key palm oil suppliers who endorsed the principles of Lotus Bakeries Palm Oil Policy Product safety Lotus Bakeries production sites where our products are produced with external quality certification (BRC, IFS) Appendix – Subject Matter Information In section “02 our sustainability programme - care for today, respect for tomorrow”: On page 85: On page 105: On page 120: On page 125: Our sustainability programme Lotus Bakeries - 155 03 OUR ORGANISATION Group structure and day-to-day management 158 Worldwide presence 166 156 - Lotus Bakeries Lotus Bakeries - 157 The Executive Committee (‘EXCO’) determines Lotus Bakeries Group’s strategy and objectives and submits them to the Board of Directors for approval. This strategy is implemented by the country and regional organisations (‘areas’) in the different business units, supported by the various corporate departments. Jan Boone (representative of Mercuur Consult BV) is the CEO of Lotus Bakeries Group since 2011 and leads the members of the EXCO on a day-to-day basis. He started his career in the audit department of PwC. From 2000-2005, he was responsible for corporate controlling, reporting and M&A at the pharmaceutical company Omega Pharma. He was part of the Executive Committee and Board of Directors there. Jan joined Lotus Bakeries as General Manager and Director in May 2005. Jan Boone is Chairman of the Board of Directors of Animalcare Group and sits on the Board of Directors of FC Bruges and Tomorrowland. Isabelle Maes (representative of Valseba BV) is CMO of Lotus Bakeries and CEO Natural Foods within the Group. She began her career as an auditor for PwC. In May 2001, she moved to the Barry Callebaut chocolate company. Having fulfilled various roles and been involved in various projects in Finance and SAP, she was appointed Finance Officer of Barry Callebaut Belgium in 2006. Between 2014 and 2017, Isabelle fulfilled the role of CFO at Lotus Bakeries Group. So as to be able to dedicate herself fully to the internationalisation and growth of the natural snacking segment, she has fulfilled the role of CEO Natural Foods since September 2017 and is CMO of Lotus Bakeries since 2023. Isabelle Maes sits on the Board of Directors of Van de Velde NV. Mike Cuvelier (representative of Cumaco BV) has been CFO of Lotus Bakeries Group since September 2017, with the Finance, HR and ESG departments reporting to him. Mike began his career in 1996 as an auditor for PwC. Between 2000 and 2013 he fulfilled various controlling roles at Bekaert in the United States, Asia and finally was Vice President Control Global Business Platforms in Belgium. From 2013 to 2017, Mike was CFO of the Unilin Group, part of Mohawk Industries. Ignace Heyman (representative of Heycom BV) is COO of Lotus Bakeries Group. He pursued a career in marketing in both Belgium and France, firstly at Procter & Gamble, PAB Benelux (Panzani-Amora- Blédina) and then at Reckitt Benckiser. In 2008, Ignace joined Lotus Bakeries as Marketing Director Belgium, before going on to become Corporate Director Marketing in 2011. From mid-2012 to the end of 2015 he was General Manager France. He has been COO since 2016. William Du Pré has been Corporate Director of Quality, Procurement and R&D since 2016, and is in charge of these corporate departments. William’s career at Lotus Bakeries began in 1982. Over the years, he has occupied a variety of sales roles. He was General Manager Belgium for almost ten years (2007-2015). Group structure and day-to-day management 158 - Lotus Bakeries Mike Cuvelier (CFO) - William Du Pré (Corporate Director Quality, Procurement and R&D) - Ignace Heyman (COO) - Jan Boone (CEO) - Isabelle Maes (CEO Natural Foods & CMO Lotus Bakeries) Our organisation Lotus Bakeries - 159 160 - Lotus Bakeries CMO APPOINTED TO FOSTER INTERNATIONAL GROWTH For the growth of Biscoff® and the Natural Foods brands, Lotus Bakeries intends to invest more than ever in digital and data-driven marketing, making the most of synergies between the brands within the two strategic pillars. To that end, Isabelle Maes has taken on the role of Chief Marketing Officer since early 2023, in addition to her role as CEO Natural Foods. She comprehensively guides the marketing efforts for the two strategic pillars. Alongside the strengthened organisation for the global marketing teams, the European country organisations and responsibilities have been streamlined. Alle European sales offices of Lotus Natural Foods, apart from the UK, are now integrated and report to Ignace Heyman, COO of the Lotus Bakeries Group. These changes are intended to more effectively streamline activities and adapt to the market in which the company operates. SYNERGIES BETWEEN BISCOFF® AND LOTUS™ NATURAL FOODS Today’s marketing is fundamentally different from the past: more digital, more individual, more international and also more data-driven. That was also validated by the strategy exercise we conducted for Biscoff® 1 in partnership with Bain & Company. Lotus Bakeries wants to invest more in data and digital marketing for Biscoff and the Natural Foods brands, and to do so more efficiently, making the most of synergies between these Global Brand teams. Digital, data-driven marketing is more direct and highly targeted, but needs to be followed up very closely because it is constantly evolving and each medium requires a specific approach. We are therefore combining the marketing efforts for both strategic pillars of our company under the leadership of our new CMO Isabelle Maes. This will have the added benefit that the teams will be able to inspire each other and align their processes, and we will achieve a more uniform marketing approach. The experienced Biscoff team uses processes that have long been embedded in the organisation, and can share that expertise. The Natural Foods brands are younger, bringing with them an entrepreneurial spirit that lets them provide fresh perspectives and inspiration. Since our sales teams in many countries commercialise both Biscoff and the Natural Foods brands, it also makes sense from this point of view to look for a more uniform approach where possible, whilst keeping the brand ownership and strategy fit to purpose for both Biscoff and the Natural Foods brands. A good example is our e-commerce approach that is coordinated in an overarching way by a dedicated centralised digital team. Within each area, the General Managers are responsible for implementing the Lotus Bakeries e-commerce strategy. Our organisation Lotus Bakeries - 161 Bart Bauwens General Manager International Distributors Biscoff® Els De Smet General Manager SOF Europe Ronald Drieduite General Manager SOF Asia Jeroen Harks General Manager The Netherlands Leon Broer General Manager International Distributors Lotus TM Natural Foods Gareth Dunne Managing Director NBF General Managers 162 - Lotus Bakeries John Van de Par General Manager Belgium Jean-Philippe Kloutz General Manager France Paul Hunter Managing Director UFF Twan Thorn Managing Director Kiddylicious Margo joris General Manager US Our organisation Lotus Bakeries - 163 Sofie De Letter ICT Director Stéphanie De Lange Group HR Director Saskia De Paepe Corporate Finance & Supply Chain Director Lotus™ Natural Foods Sabien Dejonckheere ESG Director Corporate Directors The corporate services departments advise and support the Group across different areas and report directly to the EXCO. Elena Bayod R&D Director Kathleen Buyst Global Brand Director Lotus® Biscoff® Fouad Elouch Reporting & Consolidation Director Brechtje Haan Corporate Legal, IP & Communication Director 164 - Lotus Bakeries wannes schalembier Corporate Director Finance Biscuits & Bakery Hendrik Van Steendam Global Brand Director Lotus™ Natural Foods Annelies Santens Director Treasury & Risk Management Els Van Parys Programme Manager Strategic Projects Jean-Paul Van Hoydonck Global Director Lotus® Biscoff® Engineering, Planning & Capacity Wouter Verstringe FF 2032 Investment Fund Director Katja Maerschalck Corporate Controlling & Auditing Director Els Rutsaert Corporate QA Director Our organisation Lotus Bakeries - 165 Sales structure Lotus Bakeries has a total of 23 sales offices & agencies 1 , spread across Belgium, France, the Netherlands, the United Kingdom, Spain, Germany, Italy, Sweden, Switzerland, the Czech Republic, Austria, the United States, Hong Kong, China, South Korea, Japan and Australia. Lotus Bakeries has consolidated its Lotus Natural Food sales offices in the United Kingdom in one location in St. Albans, just outside of London. The St. Albans office is now the home of the four Natural Foods Sales offices; Natural Balance Foods (NBF), Urban Fresh Foods (UFF), Kiddylicious® and Peter’s Yard®. In approximately fifty other countries, we work closely with commercial partners. These partnerships are combined into the areas of the International Distributors of Lotus® Biscoff® and the International Distributors of the Natural Foods brands. Production sites Lotus Bakeries has a total of twelve production sites 2 . They are spread across Belgium, France, the Netherlands, Sweden, the United States and South Africa. The thirteenth production site is currently being built in Thailand and will be operational by 2026. We also have our own distribution centre in Lokeren (Belgium). With the exception of TREK®, Kiddylicious® and Peter’s Yard®, all brands 3 are produced in our own production sites. We use a variety of production technologies to ensure the typical characteristics of our extensive product range. We do this by limiting the number of products and technologies at each site and by centralising production processes in specialised plants. OUR WORLDWIDE PRESENCE 1 Sales offices belong to the same sales office when both location and legal ownership are the same. 2 Production sites are considered part of the same production site when both the location and legal ownership are the same. 3 Our nākd products are manufactured partly by a co-manufacturer in the UK and partly at our production facility in South Africa. 166 - Lotus Bakeries Employees (2,698 in 2022) 2,984 Sales Offices in 17 countries 23 Production facilities in 6 countries 12 Countries with commercial partners 50+ Expansions 2023 New sales agencies In 2023, new sales agencies were established in Japan and Australia. Recognising the potential in both markets, the decision was made to establish a direct presence, with our own employees. This move aims to strengthen the collaboration with our distributors in these markets and enhance our knowledge of the local market. Production sites In April 2023, a traditional ceremony was held in Thailand to symbolically drive the first pile into the ground, marking the commencement of construction for the new plant. This Biscoff® production site will mainly produce for the Asia-Pacific region. A team of both local and expatriate employees is committed to making the site operational by the first half of 2026. To ensure adequate production capacity, an investment has been made in 2023 to establish our own nākd production facility alongside the BEAR®’ plant in Wolseley (South Africa). Nākd is one of Lotus TM Natural Foods’ brands, and was still produced entirely by a co-manufacturer in the UK. The new production hall will take on international volumes, while the volume for the UK will continue to be produced by our co-manufacturer. Due to the different production processes of nākd and BEAR, the final products and the precautions related to the allergen status, there are two separated buildings positioned parallel to each other. In Lembeke, Belgium, an additional line for Biscoff Sandwich Cookie was inaugurated and existing production facilities were optimised. . Additionally, in the US, production efficiency was enhanced through capacity expansions in recent years. Our organisation Lotus Bakeries - 167 LOCAL HEROES PRODUCTION SITES Biscoff PRODUCTION SITES natural foods PRODUCTION SITES Mebane Wolseley Our worldwide presence overview PRODUCTION SITES 168 - Lotus Bakeries Wolseley Lembeke Courcelles Oostakker Eeklo Tyresö Comines Briec-de-L’Odét Enkhuizen Geldrop Sintjohannesga Our organisation Lotus Bakeries - 169 sales offices & agencies San Francisco Manchester St. Albans (4) Madrid Tyresö Comines HQ Our worldwide presence overview Sales structure 170 - Lotus Bakeries Lembeke (2) Eeklo Milan Baar Geldrop Düsseldorf Prague Vienna Seoul Tokyo Shanghai Sydney Hong Kong HQ HQ Natural Foods Our organisation Lotus Bakeries - 171 personnel evolution Number of employees by gender 1,469 49% 1,515 51% M F 2018 2019 2020 2021 2022 2023 2,056 1,604 2,155 2,398 2,698 2,984 172 - Lotus Bakeries Number of employees per country Belgium South Africa The Netherlands United States France United Kingdom Switzerland China Sweden South Korea Other 1 Total 1,458 669 213 140 126 196 32 38 31 21 60 2,984 1 Other: Austria, Australia, Czech Republic, Germany, Hong Kong, Italy, Japan, Spain, Switzerland and Thailand Our organisation Lotus Bakeries - 173 04 REPORT OF THE BOARD OF DIRECTORS Activities in 2023 176 Financial information 179 Prospects for 2024 180 Results and proposal for appropriation of results 182 Corporate Governance Declaration 183 Enterprise Risk Management 206 External audit 211 174 - Lotus Bakeries Lotus Bakeries - 175 Activities in 2023 LOTUS BAKERIES EXCEEDS THE EUR 1 BILLION REVENUE MILESTONE In 2023, Lotus Bakeries’ consolidated revenue grew by EUR 185 million to EUR 1,063 million. The revenue growth realised in the first six months kept its high pace to end the year with an impressive sales increase of 21%. The high-quality organic growth in 2023 is driven by strong volume growth and price increases. Consolidated sales include around one percent of negative exchange rate effect. The volume trend in the second half of the year further improved to end with a full year increase of just below 10%. The volume growth is primarily organic, about one percent accounts for the sales relating to the acquisition of Peter’s Yard®. The volume growth of 2023 demonstrates continued momentum and robust demand across the entire product range and across the different geographies. The broad portfolio of branded products was quite resilient against the impact of inflation and consumer spending. All three pillars of Lotus® Biscoff®, Lotus™ Natural Foods and Lotus Local Heroes have realised double-digit growth in 2023. This company-wide contribution to growth reflects the strength of the three pillar strategy and underpins the resilience of the brands. Lotus® Biscoff® , the Group’s largest strategic pillar, grew by 20% in 2023 reaching a new revenue milestone of EUR 500 million. Driven by this strong and international growth, Lotus Biscoff cookies moved up another place in the global Cookie Brands ranking to enter the top 5. The longer term ambition to become the cookie number three in the world with Lotus Biscoff remains more valid than ever. In 2023, double-digit growth was again broad-based across many countries and all continents. This is the case in North America, where both in the US and Canada household penetration for Lotus Biscoff cookies surpassed the 5% milestone. In Europe, significant sales increases were realised in several countries. In these countries where Lotus Bakeries is active already for a number of years with an own sales office, it shows that the strategy and the repeatable model pay off. At the same time, the penetration growth in larger consumer markets like Germany, France, Spain, Italy and the UK confirm the significant potential that Lotus Biscoff still has in many European countries. Also in Asia-Pacific, larger consumer markets like Australia, China and Malaysia performed strong. The household penetration in Australia is worth calling out after it surpassed the 10% mark. In 2023, organic growth of the Lotus™ Natural Foods brands remained strong, reporting a revenue of EUR 220 million. The growth is primarily driven by a double-digit volume increase. All brands contribute to the growth, the strongest growth being noted for the fruitsnack BEAR, driven by strong international growth in US, the Czech Republic and the Netherlands. But also the Trek Flapjacks contribute strongly. Kiddylicious continues its growth trajectory in the UK, and was launched successfully in France in 2023. For nākd, we successfully launched a protein raw bar in the UK, complementing the range. 176 - Lotus Bakeries Lotus™ Natural Foods builds further on its strategic growth poles with a focus on accelerated international growth on the one hand and maintaining market leadership, combined with strong innovation in the UK, on the other. In the UK, the Lotus Natural Foods brands achieved double-digit growth and Lotus Natural Foods’ international activities outside the UK grew by more than 35% and already represent one third of total Lotus Natural Foods sales. The sales growth of BEAR in the US is an important contributor to the international growth of Lotus Natural Foods. Since its launch in the US in 2018, BEAR has developed into a leading brand in the Kids Fruit Snacking category. The third pillar of the Lotus Bakeries strategy is to focus on the ‘ local heroes ’ in the home markets Belgium, France, the Netherlands and Sweden. The pillar is strategically important and offers market leadership positions with a diversified assortment of products and generates strong cash flows. After flat sales in 2022, Lotus Local Heroes connects again with growth in 2023. The 15% sales increase is driven by both price increases and restoring a broader range of products with almost all retailers. Moreover, increased capacity for Dinosaurus® cookies and Waffles allowed solid volume growth for both concepts. The Lotus Cake Donut innovation was introduced in the Pastry category in Belgium and France. Also towards the end of 2023, the Peijnenburg® range in the Netherlands progressed towards improved recipes, updated designs and an increased focus on the no-sugar-added variant. EVOLUTION OF revenue IN €M 2023 2022 2021 2020 2019 750.3 877.5 1,063.0 663.3 612.7 Report of the Board of Directors Lotus Bakeries - 177 STATUS OF THE INVESTMENT PROGRAMME Lotus® Biscoff® With Lotus® Biscoff® plants in Europe (Lembeke), the US (Mebane) and Thailand (Chonburi), the future production footprint will be more balanced and in line with the geographical sales distribution. The three production facilities will supply Europe & Middle-East, the Americas and Asia-Pacific respectively with the freshest possible products in the most cost and eco- effective way possible. Incremental investments in Lembeke and Mebane will be executed in the coming periods to balance global and regional demand evolution. Lotus Bakeries is currently investing in Thailand (Chonburi) in a new greenfield production facility for Lotus Biscoff to further support its growth ambition in the Asia-Pacific region. The land was purchased in November 2022 and the project team has now completed the land levelling and groundworks. The building construction is ongoing. In parallel, local sourcing options for raw materials and packaging are being developed. Trustworthy and long term supply partners have been identified and will be strategically important for sustainable and quality operations in Thailand. According to the current timescale, the project is on track for a first line to be operational in the first half of 2026 at the latest. Investments in South Africa for the production of B ear ® and nākd® The strong performance of the BEAR® factory and the agility of the operations were the main drivers in the decision to extend the Wolseley factory with an additional production facility for the production of the nākd® raw bars. In the second half of 2023, the team has again proven its capabilities by commissioning the new plant in the shortest possible timeframe. This allowed the first commercial production to take place already in January 2024. An official opening ceremony took place in February 2024 in the presence of the CEO Jan Boone, the Belgian Ambassador and Consul General in South Africa and South African officials. The new plant in South Africa will produce the international demand for nākd bars. INVESTMENTS IN €M 2023 2022 2021 2020 2019 65.7 153.0 89.0 48.0 95.6 178 - Lotus Bakeries INVESTMENTS IN €M 2023 2022 2021 2020 2019 65.7 153.0 89.0 48.0 95.6 Financial information PROFITABILITY AND EVOLUTION OF COSTS The recurring operating result REBIT (EUR 173 million or 16.3% on revenue) and the recurring operating cash flow REBITDA (EUR 208 million or 19.5% on revenue) increased respectively by EUR 33 and EUR 38 million. A sales increase of 21% is the result of close to 10% volume increase on the one hand and double-digit price increases on the other. These responsible price advances were necessary to offset cost increases across all cost components and protect margins. In addition, the volume growth contributes to commercial and operational margins and allows for continued investments in people and assets. The pace of media investments stepped up moderately in the second half of the year supporting the brands globally. Ocean freight costs showed a clear decrease. The non-recurring income and expenses of EUR -2.5 million relates mainly to costs in preparation of the new plant in Thailand. These start-up costs for the project will increase towards the commissioning of the plant in 2026. The financial result of EUR -2.5 million consists mainly of interest expenses. Prior year financial result included a positive impact of realised and unrealised exchange rate results on balance sheet positions in foreign currencies. The tax expense amounts to EUR 39 million or 23% of the profit before tax. The effective tax rate is in line with prior year. Net result increases by EUR 26 million and amounts to EUR 129 million or 12.2% on revenue. Earnings Per Share (EPS) increased by 25% to EUR 159 per share. Recurring net result amounts to EUR 131 million or 12.4% on revenue. The recurring net result is the reported net result for the period excluding non- recurring income and expenses. Over the past 12 months Lotus Bakeries has generated a new record operating cash flow (REBITDA) of EUR 208 million. Investments over the past 24 months were EUR 242 million. Continued strong cash flow generation, combined with disciplined investments in maintenance capex and control on working capital, reduced the net financial debt at the end of 2023 to a ratio of net financial debt/REBITDA of 0.6. Maintenance capex represents less than 2% of sales. SIGNIFICANT EVENTS AFTER December 31, 2023 No significant events have occurred since December 31, 2023 which have a material impact on the 2023 financial statements. Report of the Board of Directors Lotus Bakeries - 179 Prospects for 2024 The year 2023 will be remembered in Lotus Bakeries history as the year that the one billion euro revenue milestone was reached. This has been achieved thanks to another record sales growth of more than EUR 185 million. A strong performance was recorded for the strategic pillars of Lotus® Biscoff® and Lotus™ Natural Foods. The year 2023 will also go down in history as the year that Lotus Biscoff achieved the half a billion euro revenue milestone. Lotus Biscoff cookies moved up another place in the top ten of the global Cookie Brands ranking entering the top 5. The ambition to become the cookie number three in the world is still a longer term ambition but remains more valid than ever. Growth and internationalisation of Lotus Biscoff and Lotus Natural Foods continue to be the strategic priorities. In order to sustain this growth in the coming years, both Lotus Biscoff and Lotus Natural Foods’ in-store activation and media investments will be crucial. To realise at least mid- single digit volume growth for Lotus Biscoff, brand awareness will be continuously nurtured and the household penetration will be fed via the aforementioned investments. The disciplined spending level of recent years will be increased in targeted growth markets. Geopolitical uncertainty and volatility on global commodity markets remain at the forefront. Short term predictions are difficult to make in this rapidly changing environment. The strategic pillars remain well positioned to withstand the challenges. Capital allocation will continue to be focused on capacity expansion to support the organic growth and internationalisation of Lotus Biscoff and Lotus Natural Foods. The greenfield project in Thailand remains on track. Total capital expenditures for 2024 and 2025 combined are forecasted in the range of EUR 200 million. On top of that, opportunities to invest via the corporate venture fund FF2032 also remain a priority and provide the seeds for more long-term future growth. 180 - Lotus Bakeries “I am extremely proud to announce that we reached this EUR 1 billion revenue milestone in 2023! I want to call out foremost a special thank you to all 2,984 people at Lotus Bakeries who made this possible. This is a team effort from all of us, working together every day, across boundaries of departments, brands and countries. People make the difference, and that is why it’s important to continue investing in and focusing on the Social component of ESG. We seek attention for the well- being of our people, aiming for them to be motivated and safe, providing opportunities for professional and personal development, and to spend their time working together in well- equipped offices, and to enjoy good working conditions in the plants. Ultimately, we believe that fostering physical gatherings among our Lotus Bakeries’ people cultivates the unique Lotus Bakeries culture of Teamwork, Open dialogue and Passion. We are convinced that the achievement of the EUR 1 billion milestone stems from this unique TOP culture. We firmly believe in the effectiveness of our strategy and hold a positive view about the future prospects of Lotus Bakeries and its aspirations.” Jan Boone – CEO Lotus Bakeries Report of the Board of Directors Lotus Bakeries - 181 Results and proposal for appropriation of results Consolidated The consolidated net profit for 2023 amounted to EUR 129.3 million as compared to EUR 103.3 million in 2022. Statutory The 2023 results for the parent company Lotus Bakeries NV are as follows: The Board of Directors proposed to appropriate the profit as follows: in eur Profit for the financial year 27,807,069.09 Profit for the year available for appropriation 27,807,069.09 in eur Allocation to legal reserves 0 Transfer from reserves -19,771,684.91 Distribution of a gross dividend 1 47,328,754.00 Distribution of emoluments to directors 250,000.00 TOTAL 27,807,069.09 1 The dividends on the purchased Lotus Bakeries shares will be paid to Lotus Bakeries NV and, as a consequence, will not be suspended. The Board of Directors will propose at the Ordinary Shareholders Meeting of 14 May 2024 that a gross dividend of EUR 58 per share for 2023 be paid compared to EUR 45 per share in 2022. This maintains the dividend policy of recent years, whereby at least one third of the recurring net result is paid out. dividend growth (in eur) 2023 2022 2021 2020 2019 2018 40.0 45.0 58.0 35.5 32.0 29.0 182 - Lotus Bakeries Corporate Governance Declaration Lotus Bakeries adopts the Corporate Governance Code 2020 as a reference code, in accordance with Article 3:6(2) of the CAC and the Royal Decree of 12 May 2019 laying down the corporate governance code to be complied with by listed companies. Lotus Bakeries’ Corporate Governance Charter, which outlines our corporate governance policy and the internal rules of procedure of the Board of Directors, the Committees and the Executive Committee, was discussed by the Board of Directors and approved on 2 April 2020. More information about our Corporate Governance Charter can be found on our website: https://www. lotusbakeries.com/governance-practices-and-policies In this annual report, we report factual applications of the Corporate Governance Charter. Adoption of Corporate Governance Code 2020 As set out below, Lotus Bakeries follows all principles contained in the Corporate Governance Code 2020, except for the following two provisions: The Ordinary General Meeting of Shareholders of 18 May 2021 reappointed Benoit Graulich BV as independent director, since all of the specific independence criteria of Article 3.5 of the Belgian Corporate Governance Code 2020 were fulfilled but one, i.e. the criterion that a director must have held the position of non-executive director for no longer than 12 years. This was not considered to detract from the independence of Benoit Graulich (and Benoit Graulich BV), who in carrying out his duties as director always demonstrates an independent and critical attitude and has confirmed that he has no relationship whatsoever with the Company, the executive management, the reference shareholder or other shareholders owning more than 10% of the shares which could jeopardise his independence. Article 7.12 concerning the possibility of clawing back variable remuneration paid to the members of the executive management or withholding the payment of variable remuneration. The Board of Directors is not convinced of the enforceability of a claw-back clause in employment contracts or service agreements with management companies, which cannot be amended unilaterally. Nor does it see the need for such a claw-back clause since, according to the remuneration policy, the variable remuneration is allocated solely on the basis of verified, audited and published results. Governance structure The Board of Directors chose to consolidate its current single-tier governance model as referred to in Article 7:85 et seq of the CAC, since the functioning of the Board is highly effective and transparent. The powers relating to day-to-day management versus supervision/ control are clearly defined, the Board is kept thoroughly informed at all times by the CEO and the EXCO and all necessary decisions are approved and/or ratified. Share capital and shares Share capital The share capital of Lotus Bakeries NV amounts to EUR 3,591,183.65. Notices with respect to Art. 34 of the Royal Decree of November 14, 2007 - anti-takeover measures The Board of Directors of Lotus Bakeries NV was authorised by the Extraordinary General Meeting of 12 May 2023 to increase issued capital one or more times up to a maximum amount of four million seven hundred and eighty-eight thousand two hundred and forty-four euros and eighty-seven cents (EUR 4,788,244.87). This authorisation was granted for a period of three years starting on the date of the publication of the resolution of the Extraordinary General Meeting of 12 May 2023 in the Supplements to the Belgian Official Journal. Report of the Board of Directors Lotus Bakeries - 183 Within the limits of the aforementioned authorised capital, the Board of Directors of Lotus Bakeries NV was furthermore authorised by the Extraordinary General Meeting of 12 May 2023, within a period of three years commencing with the Extraordinary General Meeting of Shareholders of 12 May 2023, following notification from the Financial Services and Markets Authority of a public takeover bid for the Company’s stock, to increase the Company’s capital subject to fulfilment of the legal requirements. Shares Since the beginning of January 2002, Lotus Bakeries NV shares have been listed on the continuous trading market of Euronext (Brussels). Previously, the shares were listed on the spot market. As of December 31, 2023, there were 816,013 shares of Lotus Bakeries NV, in registered or dematerialised form. Share options In the context of the Lotus Bakeries NV share option scheme, 618 new share options were issued in 2023. As at December 31, 2023 the total number of unexercised share options was 3,121. Purchase of treasury shares The Extraordinary General Meeting of 8 May 2020 authorised the Board of Directors of Lotus Bakeries NV for an unlimited period of time as follows regarding the buying and selling of treasury shares: To dispose of shares, profit-sharing certificates or other certificates acquired by the Company, whether via the stock exchange or otherwise, through sale, exchange, contribution, conversion of bonds or any other form of transfer (whether or not for consideration), to offer them to the staff, to offer them to one or more specified persons other than staff, or to otherwise exercise control over them, always in accordance with the legal provisions, or to cancel these shares or profit-sharing certificates, without requiring further approval or other intervention of the General Meeting of Shareholders and without any time restrictions. The Extraordinary General Meeting of 12 May 2023 authorised the Board of Directors of Lotus Bakeries NV as follows regarding the buying and selling of treasury shares: For a period of three years, within legal limits, whether via the stock exchange or otherwise, whether directly or indirectly, whether by purchase or exchange, whether by contribution or any other form of acquisition, to acquire shares, profit-sharing certificates or certificates related thereto, with as compensation the average closing share price of the Company over the last thirty calendar days prior to the date of purchase, reduced by twenty percent as a minimum price and increased by ten percent as a maximum price. This authorisation applies also to the acquisition of shares of the Company, carried out, directly or indirectly, by direct subsidiaries of the Company within the meaning of Article 7:221 CAC. To acquire, whether via the stock exchange or otherwise, whether directly or indirectly, the Company’s stock, when such acquisition is necessary to prevent the Company from suffering serious imminent damage. This authorisation is granted for a period of three years. 479 treasury shares were purchased over the course of 2023. The total number of treasury shares in the portfolio at the end of the financial year is 4,313 shares. They represent an accounting par value of EUR 18,980.1 or 0.53% of the issued share capital. Granted in 2019 2020 2021 2022 2023 Number granted 1,199 962 660 792 618 Number exercised (911) (50) (33) - - Number expired (50) (40) (26) - - Available options 238 872 601 792 618 184 - Lotus Bakeries Shareholders and shareholders structure The shareholding structure of Lotus Bakeries NV on December 31, 2023: 1 Stichting Administratiekantoor van Aandelen Lotus Bakeries is not controlled. The interest of Stichting Administratiekantoor van Aandelen Lotus Bakeries in Lotus Bakeries NV appears in the transparency notification that Lotus Bakeries NV received on September 29, 2021 * . 2 The voting rights attached to the shares held by Lotus Bakeries NV have been suspended. The dividends have not been suspended and will be distributed to Lotus Bakeries NV. * Pursuant to article 6 of the Law of May 2, 2007 on disclosure of participating interests. No. of shares No. of voting rights % of shares % of voting rights Stichting Administratiekantoor van Aandelen Lotus Bakeries 1 408,007 816,014 50% 65.03% Lotus Bakeries NV 2 4,313 4,313 0.53% 0.34% Publicly held 403,693 434,540 49.47% 34.63% Total 816,013 1,254,867 100% 100% Communication according to Article 14(1) of the Law of May 2, 2007 on disclosure of major holdings Lotus Bakeries NV did not receive a transparency notification in 2023. Communication according to Article 74(7) of the Law of April 1, 2007 on public takeover bids Lotus Bakeries NV is not aware of any updates to any communication according to article 74 of the Law of 1 April 2007. Report of the Board of Directors Lotus Bakeries - 185 BOARD of Directors and Committees of the Board of Directors Board of Directors Composition On May 12, 2023, the Ordinary General Meeting accepted the resignation of Sastraco BV, represented by its permanent representative Sabine Sagaert, as well as the appointment of Eagli BV, represented by its permanent representative, Noelle Goris, as independent director. Furthermore, on May 12, 2023, the Ordinary General Meeting of Shareholders noted the end of the directorship of Lema NV, represented by its permanent representative Michel Moortgat, and proceeded to confirm the appointment of Lema BV, represented by its permanent representative Michel Moortgat, as an independent director of Lotus Bakeries NV. As a result of a demerger which took place on June 8, 2022, Lema NV had been dissolved without liquidation and this management mandate had been cancelled. In light of this, the Board of Directors had decided to provisionally fill the vacancy in accordance with Article 13 of the Articles of Association of Lotus Bakeries NV and Lema BV (represented by its permanent representative Michel Moortgat) had been co-opted as director. The appointment of Lema BV is final since May 12, 2023. The current composition of the Board of Directors: Managing director, CEO: Mercuur Consult BV , represented by its permanent representative Jan Boone Current term of office ends: 2025 General Meeting Non-executive directors: Vasticom BV , represented by its permanent representative Jan Vander Stichele (non-executive Chairman of the Board of Directors) Current term of office ends: 2025 General Meeting Beneconsult BV , represented by its permanent representative Benedikte Boone Current term of office ends: 2024 General Meeting PMF NV , represented by its permanent representative Emanuel Boone Current term of office ends: 2026 General Meeting Concellent NV , represented by its permanent representative Sofie Boone Current term of office ends: 2024 General Meeting Anton Stevens Current term of office ends: 2025 General Meeting Independent directors: Palumi BV , represented by its permanent representative Peter Bossaert Current term of office ends: 2025 General Meeting Benoit Graulich BV , represented by its permanent representative Benoit Graulich Current term of office ends: 2025 General Meeting Lema BV , represented by its permanent representative Michel Moortgat Current term of office ends: 2026 General Meeting Eagli BV , represented by its permanent representative Noelle Goris Current term of office ends: 2027 General Meeting Secretary: • Brechtje Haan 186 - Lotus Bakeries Benedikte Boone Non-Executive Director Master’s degree in Applied Economics (KU Leuven) She has held positions at Creyf’s Interim and Avasco Industries Director in various family companies (Bene Invest BV, Holve NV and Harpis NV) and also director at Deceuninck NV Member of the Board of Directors at Lotus Bakeries since 2012 Jan Boone CEO / Managing Director Master’s degree in Applied Economics (KU Leuven); Master in Audit (UMH) Started his career in the Audit department of PwC Between 2000 and 2005 Head of Corporate Controlling, member of the Executive Committee and Board of Directors at Omega Pharma Since 2005, active at Lotus Bakeries as Managing Director and since 2011 as CEO Since 2011, member of the Board of Directors at Club Bruges Since 2017, President of the Board of Directors of Animal Care, a listed company in the veterinary sector Since 2023, member of the Board of Directors of Tomorrowland Since 2005, member of the Board of Directors at Lotus Bakeries and Managing Director since 2011 Emanuel Boone Non-Executive Director Master’s degree in Bioengineering (KU Leuven) 2003-2012 technical and operational positions at several breweries (Heineken/Alken-Maes and Van Steenberge) Since 2012, business and process consultant for multiple breweries and maltster Since 2022, director at Herbafrost NV Member of the Board of Directors at Lotus Bakeries since 2022 Sofie Boone Non-Executive Director Master’s degree in Pharmaceutical Sciences (KU Leuven), postgraduate degree in Business Economics (Vlekho) and Business Management for pharmacists (Vlerick Business School) 1996 – 2001: deputy pharmacist and titular pharmacist Since 2002, owner and titular pharmacist of Boone pharmacy in Tervuren Since 1999, active as volunteer departmental pharmacist at the Red Cross Tervuren Member of the Board of Directors at Lotus Bakeries since 2016 Peter Bossaert Independent Director Commercial engineer (University of Antwerp) 1989 - 1997: various marketing and sales roles at Unilever and Campina Between 1989 and 2018 active at Medialaan (today DPG Media), from 2012 as CEO Between 2018 and 2023 CEO at KBVB Since 2023, chairman at International Food Services Member of the Board of Directors at Lotus Bakeries since 2017 Report of the Board of Directors Lotus Bakeries - 187 Noelle Goris Independent Director Master’s degree in Law (KU Leuven), Master in Business Administration (Solvay Business School Brussels) Built up an international career in sales & marketing which started at Procter & Gamble in 1997, where she was Managing Director Greater Europe Distributor Operations between 2014 and 2016 Joined Coty, as General Manager Travel Retail (2018-2020) & Export Europe (2016-2020) Since 2020 she is VP Global Travel Retail, Apac & Distribution Markets, and member of the Management Board at la Prairie Group established in Zürich, part of the Beiersdorf Group Since 2020, member of the Advisory Board at Hello Hossy Member of the Board of Directors at Lotus Bakeries since 2023 Benoit Graulich Independent Director Master’s degrees in Law, Business and Finance (KU Leuven) Began his professional career at PwC and then at Paribas Bank/Artesia Bank. In 2000 he became a partner at EY. Currently he is a managing partner at Bencis Capital Partners Various directorships at Cofinimmo and FF2032, among other organisations Member of the Board of Directors, Audit Committee and Remuneration and Nomination Committee at Lotus Bakeries since 2009 Michel Moortgat Independent Director Master’s degree in Business and Finance (Ichec Brussels) and MBA (Vlerick Business School) Since 1991, active at Duvel Moortgat and since 1998 as CEO Member of the Board of Directors and Chairman of the Audit Committee at Lotus Bakeries since 2018 Anton Stevens Non-executive Director Master’s degree in Law (UGent) and in Notarial law (UGent) Member of the Board of Directors at Lotus Bakeries since 2002 Jan Vander Stichele Non-executive Director, non-executive Chairman of the Board of Directors Master’s degree in Civil Engineering (KU Leuven) and Candidate degree in Applied Economics (KU Leuven) Between 1990 and 1996, technical director of the Verlipack Group Between 1996 and 2016, active in the Lotus Bakeries Group as General Manager Lotus Bakeries France, thereafter as General Manager Operations and between 2011 and 2016 as Executive Director Member of the Board of Directors of Frigilunch (since 01/2019), OLV Ziekenhuis Aalst (hospital) (since 09/2019) B.I.G. (since 10/2019), Ardo Group (since 01/2021) and Connect+ (since 06/2021) Since 2014, Chairman of the Board of Directors at Fost Plus and Flanders’ FOOD Member of the Board of Directors, the Audit Committee and the Remuneration and Nomination Committee at Lotus Bakeries since 2005 188 - Lotus Bakeries Activities of the Board of Directors The Board of Directors met six times in 2023. All directors were present at all meetings. Within the Board of Directors, the following matters were discussed in detail: Investment budget and global budget Financial results Growth plans and –strategy Reporting: financial and sustainability Sales results and channels Organisational changes Evolution of prices and availability of raw materials and packaging Evolution of labour costs Price negotiations with customers Results at 31/12 and 30/06 and proposed press release Extraordinary and General Meeting,amongst which: Agenda (Re)appointments Dividend proposal Capex investments and expansions of capacity: Europe, Belgium Americas, United States Asia, Thailand Africa, South Africa Product developments and innovations Reports and recommendations from the Committees Expansion of Audit Committee into Audit & Sustainability Committee Early 2024, the Board of Directors moreover discussed and approved the Double Materiality Matrix set out on page 76 and 77 of this annual report. Over the course of 2023, there was one incident within the Board of Directors which led to the application of the conflict of interest procedure as set out in Articles 7:96 and 7:97 CAC. At the Board of Directors meeting of 20 May 2023, and before proceeding to the deliberation and decision-making, Lema BV, represented by Mr. Michel Moortgat, declared to have a conflict of interest in the co-option of Lema BV, dis- cussed under agenda item 4.d - agenda of the General Meeting, being a proprietary interest in the management fee paid to Lema BV. Lema BV therefore abstained from voting on this item. Audit & Sustainability Committee In 2023, the mandate of the Audit Committee was broadened with ESG matters by decision of the Board of Director of November 24, 2023. Since then, the committee is named Audit & Sustainability Committee. The Audit & Sustainability Committee consists of two independent directors and one non-executive director. The two independent directors are Lema BV, represented by its permanent representative Michel Moortgat (Chairman) and Benoit Graulich BV, represented by its permanent representative Benoit Graulich. The non-executive director is Vasticom BV, represented by its permanent representative Jan Vander Stichele. All members have accounting and audit experience. In 2023, the Audit & Sustainability Committee met three times. All directors were present at all meetings. The Auditor participated in all three meetings, at which he presented his findings to the Audit & Sustainability Committee. The subjects examined were: Discussion of report and internal controls / recommendations of the Statutory Auditor Discussion of annual and interim results Risk management – priorities and evolutions Audit plan 2023 ESG: double materiality Report of the Board of Directors Lotus Bakeries - 189 Remuneration and Nomination Committee The Remuneration and Nomination Committee consists of two independent directors and one non-executive director. The independent directors are Benoit Graulich BV, represented by its permanent representative Benoit Graulich (Chairman) and Palumi BV, represented by its permanent representative Peter Bossaert. The non-executive director is Vasticom BV, represented by its permanent representative Jan Vander Stichele. All members have both HR management and remuneration policy experience. The Committee met twice in 2023, with all members present. The subjects examined were: Remuneration policy and its application Remuneration of CEO and Executive Committee Nomination of Eagli BV as independent director Evaluation of the Board of Directors and its Committees The operation of the Board of Directors and of the Committees is evaluated every three years. The evaluation of the effectiveness of the Board of Directors is undertaken by the Board itself under the leadership of its Chairman. This evaluation covers the size of the Board, the general functioning of the Board of Directors, the way meetings are prepared, the contribution of each individual director to the work of the Board, the presence and involvement of each individual director at meetings and decision-making, the composition of the Board of Directors and the interaction with the Executive Committee. This assessment makes it possible to constantly optimise the management of Lotus Bakeries. Where appropriate, based on this review, and eventually in consultation with external experts, the Remuneration and Nomination Committee presents a report on the strengths and weaknesses of the Board of Directors and, where necessary, a proposal for the appointment of a new director or the non-prolongation of a directorship. The non-executive directors evaluate annually the interaction of the Board of Directors and the Executive Committee and when appropriate, submit proposals for improving cooperation. The CEO and the Remuneration and Nomination Committee also together evaluate annually the operation and performance of the Executive Committee. The CEO is not present at his own evaluation. 190 - Lotus Bakeries Executive Committee Composition of the Executive Committee: Jan Boone, permanent representative of Mercuur Consult BV, CEO Isabelle Maes, permanent representative of Valseba BV, CMO & CEO Natural Foods Mike Cuvelier, permanent representative of Cumaco BV, CFO Ignace Heyman, permanent representative of Heycom BV, COO William Du Pré, Corporate Director Quality, Procurement and R&D The members of the Executive Committee are appointed by the Remuneration and Nomination Committee. The Executive Committee held 19 official meetings in 2023. All members were present at all meetings. Diversity policy Lotus Bakeries ensures the presence on the Board of Directors, the Committees and the Executive Committee of critical members with specialist knowledge of the various areas relevant to Lotus Bakeries. Certain diversity criteria are imposed by law and are naturally adopted by Lotus Bakeries. Moreover, skills, competencies and diversity are paramount in the selection of members of the Committees, the Executive Committee, and in the selection of candidates for the Board of Directors proposed to the General Meeting. First and foremost, Lotus Bakeries fulfils the diversity criteria regarding the number of independent directors and the number of directors of a different gender. In this respect, Lotus Bakeries declares that the composition of its Board complies with the requirement for at least one third of directors to be of a different gender than that of the other members. The aforementioned obligation is contained in Art. 7:86 CAC. It also wishes to point out in this connection that the abovementioned independent directors fulfil the independence criteria of Article 7:87 of the CAC and the Corporate Governance Code 2020, except for Benoit Graulich BV, for whom all of the specific independence criteria of Article 3.5 of the Belgian Corporate Governance Code 2020 were fulfilled but one, i.e. the criterion that a director must have held the position of non-executive director for no longer than 12 years. Reference is made to page 183 of this annual report. Report of the Board of Directors Lotus Bakeries - 191 Besides these diversity criteria enshrined in law, Lotus Bakeries also aims for diversity in knowledge and experience and, when selecting candidates, performs a thorough assessment based on competencies which would additionally benefit the company in view of the existing competencies among the members of the Board of Directors. In defining the appointment procedure and selection criteria for candidates for the Board, the following principles are always applied: The candidate must be expert in a field pertaining to the Company’s activities; The competencies, knowledge and/or experience which the candidate possesses must complement the competencies already present in the Board; In the interests of diversity on the Board, the Board shall consider different nominations, taking into account diversity in terms of gender, age and background, for example; Each candidate must have sufficient availability to fulfil his/her obligations properly, while non-executive directors must hold no more than five directorships in listed companies. The results of this policy are illustrated in the CVs described above. This means Lotus Bakeries has a balanced Board of Directors in which the majority shareholder, the independent directors and the executive board are sufficiently represented. Some diversity parameters within the Board of Directors: Board of Directors Gender diversity 4 7 6 3 independent men Various academic backgrounds: 10x different dependent women 192 - Lotus Bakeries Moreover, the Remuneration and Nomination Committee selects the members of the Executive Committee on the basis of knowledge, competencies, experience, background and skills and aims for diversity in these areas so as to have all knowledge in house to manage Lotus Bakeries with a team specialising in all relevant areas. Within the Executive Committee, there is currently a good balance between members with a financial background and members with a marketing and/or sales background. A good proportion of members with a long history in the company and members with a fresh view of matters is also ensured. Some diversity parameters within the EXCO : More information about the diversity policy and diversity ratios within Lotus Bakeries can be found on pages 191-192 of this Annual Report. SENIORITY LEVEL WITHIN LOTUS BAKERIES Gender diversity 2 3 < 10 years Various academic backgrounds: 3 out of 5 > 10 years Investor relations Lotus Bakeries aims for transparent communication about financial and non-financial results to all of its shareholders. This information is communicated to existing and potential shareholders on various platforms. For example, Lotus Bakeries publishes an “investor relations” presentation every six months, the most recent of which was published on 5 February 2024. It also organises analyst presentations, which can be consulted by interested parties on the Lotus Bakeries website. More information about our investor relations can be found on our website: https://www.lotusbakeries.com/ir-presentation 80% 20% men women Report of the Board of Directors Lotus Bakeries - 193 Remuneration report Introduction The purpose of the 2023 remuneration report is to provide transparent information about the specific remuneration policy adopted by Lotus Bakeries for directors and executive managers. It will be submitted to the Ordinary General Meeting of May 14, 2024 for approval. The 2022 remuneration policy was adopted by 91.05% of the votes at the Ordinary General Meeting of May 12, 2023. The works council has also been informed in accordance with the provisions of the Act. The report has also been reviewed by the Auditor. This 2023 remuneration report explains how the remuneration corresponds to the remuneration policy approved by the Board of Directors on April 16, 2021 and which was adopted on May 18, 2021 by the General Meeting with 97.27% of the votes, in accordance with provision 7.3 of the Corporate Governance Code and Article 7:89(1) of the Belgian Companies Code. The remuneration policy remains unchanged since then. More information about our remuneration policy can be found on our website: https://www.lotusbakeries.com/ governance-practices-and-policies Statement on remuneration policy applied in 2023 Non-executive and executive directors The remuneration policy for directors of the Company approved at the Ordinary General Meeting of May 18, 2021 comprises a fixed remuneration, paid partly in cash and partly in shares in the Company and set based on the responsibilities of and time spent by the director and the latter’s specific role as Chairman of the Board of Directors or Chairman or member of a Committee. Specifically: Each director, except the Chairman, receives an annual remuneration of (i) EUR 20,000 and (ii) 4 shares in the Company. The Chairman of the Board of Directors receives an annual remuneration of (i) EUR 40,000 and (ii) 10 shares in the Company. The Chairman receives additional remuneration of EUR 100,000 for representing the Company with respect to interest groups. The members of the Audit Committee and the Remuneration and Nomination Committee receive an annual remuneration of EUR 5,000 per mandate. The non-executive directors must keep the shares they receive by way of remuneration for at least one year after leaving the Board and for at least three years after the awarding of these shares. The non-executive directors receive no performance-based remuneration such as bonuses, stock-related long-term incentive schemes, fringe benefits, pension plan-related benefits or share options. Besides the fee, all reasonable expenses of the members of the Board of Directors incurred with the consent of the Chairman of the Board of Directors are reimbursed. The provisions concerning the remuneration of non-executive directors apply equally to executive directors in their capacity as directors. The remuneration of the directors is evaluated every two years via a relevant random sample of other listed companies. This allows Lotus Bakeries to attract directors with the appropriate competencies to realise its ambitions. No adjustments have been made to the remuneration policy compared to 2021. 194 - Lotus Bakeries TOTAL REMUNERATION OF DIRECTORS (IN EUR) NAME & FUNCTION DIRECTOR YEAR FIXED REMUNERATION VARIABLE REMUNERATION EXTRAORDINARY EXPENSES 1 TOTAL REMUNERATION RATIO OF FIXED TO VARIABLE REMUNERATION Base salary Allowances Other benefits Pension costs 1 year variable Multiple years variable Mercuur Consult BV, represented by Jan Boone, executive (member BoD, CEO) 2023 20,000 20,000 100%/0% 2022 20,000 20,000 100%/0% Vasticom BV, represented by Jan Vander Stichele, non-executive (non-executive Chairman BoD, member Audit & Sustainability Committee and member Nomination and Remuneration Committee) 2023 50,000 100,000 150,000 100%/0% 2022 50,000 100,000 150,000 100%/0% PMF NV, represented by Emanuel Boone, non-executive (member BoD) 2023 20,000 20,000 100%/0% 2022 20,000 20,000 100%/0% Anton Stevens, non-executive (member BoD) 2023 20,000 20,000 100%/0% 2022 20,000 20,000 100%/0% Beneconsult BV, represented by Benedikte Boone, non-executive (member BoD) 2023 20,000 20,000 100%/0% 2022 20,000 20,000 100%/0% Concellent NV, represented by Sofie Boone, non-executive (member BoD) 2023 20,000 20,000 100%/0% 2022 20,000 20,000 100%/0% Palumi BV, represented by Peter Bossaert, non-executive (member BoD) 2023 20,000 20,000 100%/0% 2022 20,000 20,000 100%/0% Benoit Graulich BV, represented by Benoit Graulich, non-executive (member BoD, member Audit & Sustainability Committee and Chairman Remuneration and Nomination Commitee) 2023 30,000 30,000 100%/0% 2022 30,000 30,000 100%/0% Lema BV, represented by Michel Moortgat, non-executive (member BoD, Chairman Audit & Sustainability Committee) 2023 25,000 25,000 100%/0% 2022 25,000 25,000 100%/0% Sastraco BV, represented by Sabine Saggaert, non-executive (member BoD and member remuneration and nomination committee) 2 2023 25,000 25,000 100%/0% 2022 25,000 25,000 100%/0% Overview of remuneration 1 Renumeration for representing the company with respect to interest groups 2 Board member until May 12, 2023 Report of the Board of Directors Lotus Bakeries - 195 Overview of remuneration in shares TOTAL REMUNERATION DIRECTORS (IN SHARES) NAME & FUNCTION DIRECTOR MAIN CONDITIONS OF STOCK GRANT PLANS INFORMATION ABOUT THE REPORTED FINANCIAL YEAR DETAILS OF THE PLAN PERFORMANCE PERIOD GRANT DATE VESTING DATE END OF RETENTION PERIOD OPENING BALANCE SHEET DURING THE YEAR CLOSING BALANCE SHEET Stocks held at the start of the year 1 Granted stocks Vested stocks Stocks subject to performance Stocks granted but not vested Stocks subject to a retention period Mercuur Consult BV, represented by Jan Boone, executive (member BoD, CEO) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Vasticom BV, represented by Jan Vander Stichele, non-executive (non-executive Chairman BoD, member Audit & Sustainability Committee and member Nomination and Repuneration Committee) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 30 10 10 0 0 40 PMF NV, represented by Emanuel Boone, non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 4 4 4 0 0 8 Anton Stevens, non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Beneconsult BV, represented by Benedikte Boone , non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Concellent NV, represented by Sofie Boone, non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Palumi BV, represented by Peter Bossaert, non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Benoit Graulich BV, represented by Benoit Graulich, non-executive (member BoD, member Sustainability & Audit Committee and Chairman Remuneration and Nomination Commitee) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Lema BV, represented by Michel Moortgat, non-executive (member BoD, Chairman Audit & Sustainability Committee) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Sastraco BV, represented by Sabine Saggaert, non-executive (member BoD and member remuneration and nomination committee) 2 Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 130 46 46 0 0 176 196 - Lotus Bakeries TOTAL REMUNERATION DIRECTORS (IN SHARES) NAME & FUNCTION DIRECTOR MAIN CONDITIONS OF STOCK GRANT PLANS INFORMATION ABOUT THE REPORTED FINANCIAL YEAR DETAILS OF THE PLAN PERFORMANCE PERIOD GRANT DATE VESTING DATE END OF RETENTION PERIOD OPENING BALANCE SHEET DURING THE YEAR CLOSING BALANCE SHEET Stocks held at the start of the year 1 Granted stocks Vested stocks Stocks subject to performance Stocks granted but not vested Stocks subject to a retention period Mercuur Consult BV, represented by Jan Boone, executive (member BoD, CEO) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Vasticom BV, represented by Jan Vander Stichele, non-executive (non-executive Chairman BoD, member Audit & Sustainability Committee and member Nomination and Repuneration Committee) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 30 10 10 0 0 40 PMF NV, represented by Emanuel Boone, non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 4 4 4 0 0 8 Anton Stevens, non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Beneconsult BV, represented by Benedikte Boone , non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Concellent NV, represented by Sofie Boone, non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Palumi BV, represented by Peter Bossaert, non-executive (member BoD) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Benoit Graulich BV, represented by Benoit Graulich, non-executive (member BoD, member Sustainability & Audit Committee and Chairman Remuneration and Nomination Commitee) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Lema BV, represented by Michel Moortgat, non-executive (member BoD, Chairman Audit & Sustainability Committee) Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 Sastraco BV, represented by Sabine Saggaert, non-executive (member BoD and member remuneration and nomination committee) 2 Fixed annual remuneration adopted at OGM of May 18, 2021 01/01/2023 until 31/12/2023 May 12, 2023 May 12, 2023 At least 1 year after end of directorship and 3 years after rewarding 12 4 4 0 0 16 130 46 46 0 0 176 1 Only those shares are shown, which the directors hold by virtue of their mandate. 2 Board member until May 12, 2023 Total Report of the Board of Directors Lotus Bakeries - 197 Executive managers Furthermore, the Remuneration and Nomination Committee makes specific recommendations to the Board of Directors on the remuneration of members of the executive management. In addition to the fixed remuneration, there is a variable compensation for members of the executive management, which depends on the results of the Lotus Bakeries Group. The variable remuneration is based on well-defined criteria with a one- year evaluation period but also evaluation periods of two and three years. The criteria for determining the short-term bonus are as follows: 1/3 rd of the short-term bonus depends on the consolidated turnover growth achieved by Lotus Bakeries Group over the past financial year 1/3 rd of the short-term bonus depends on the consolidated recurring operating result achieved during the past financial year 1/3 rd of the short-term bonus depends on the consolidated recurring operating cash flow achieved during the past financial year. The Board of Directors approved the final, audited results on February 2, 2024, and, on this basis, on the advice of the Remuneration and Nomination Committee, established that all criteria were met. Consequently, 100% of the 2023 short-term bonus will be paid to all members of the executive management in 2024. The criteria for determining the long-term bonus are as follows: 1/3 rd of the long-term bonus depends on the consolidated revenue growth achieved by Lotus Bakeries Group as specified in the multi- year plan in place 1/3 rd of the long-term bonus depends on the consolidated recurring operating result as specified in the multi-year plan in place 1/3 rd of the long-term bonus depends on the consolidated recurring operating cash flow as specified in the multi-year plan in place. The long-term bonus is awarded and paid annually, with a settlement of accounts during the third year of the evaluation period. The Board of Directors approved the final, audited results on February 2, 2024, and, on this basis, on the advice of the Remuneration and Nomination Committee, established that all criteria were met. Consequently, 100% of the long-term bonus will be paid to all members of the executive management in 2024. The bonus plan for executive management provides that the bonus is earned only after approval of the consolidated figures by the Auditor and then by the Remuneration and Nomination Committee. Those members of the executive management who are subject to a contract of employment enjoy an additional (defined contribution) pension plan and other benefits, mainly comprising insured benefits such as guaranteed income and the cost of a car. Similar arrangements are in place for those members of the executive management who work through a management company. There also exists a stock option plan with a fixed number of options for the members of the executive management. Allocated options are not normally deemed to be acquired finally and cannot be exercised during the first three years after being allocated. Upon early departure, the options not yet exercisable at that time can no longer be exercised. Furthermore, the Board decided that members of the executive management will each have to own at least EUR 250,000 worth of shares in the company by the end of 2022, which must be kept so long as they remain a member of the executive management. All members of the executive management currently meet this requirement. 198 - Lotus Bakeries If a member of the executive management is also an executive director, his or her remuneration also includes the compensation he or she receives in the latter capacity. The remuneration policy for members of the Executive Committee is set every two years based on a proposal by the Remuneration and Nomination Committee. Individual remuneration is reviewed annually. For this Lotus Bakeries uses the services of an international HR consultancy firm, that assesses the functions and presents the corresponding salary package as commonly awarded in the relevant market. The consultant reports directly to the Remuneration and Nomination Committee and provides verbal explanations. Report of the Board of Directors Lotus Bakeries - 199 Overview of remuneration of CEO and executive management (in EUR) NAME & FUNCTION MEMBER EXECUTIVE MANAGEMENT YEAR FIXED REMUNERATION VARIABLE REMUNERATION EXTRAORDINARY EXPENSES TOTAL REMUNERATION RATIO OF FIXED TO VARIABLE REMUNERATION BASE SALARY ALLOWANCES OTHER BENEFITS 1 PENSION COSTS 1 YEAR VARIABLE MULTIPLE YEARS VARIABLE Mercuur Consult BV, represented by Jan Boone (CEO) 2023 1,172,788 - 51,236 190,619 618,275 618,275 - 2,651,193 53% / 47% 2022 1,028,017 - 47,156 166,235 541,954 541,954 - 2,325,316 53% / 47% Other members executive management 2023 2,169,103 - 139,429 347,646 900,765 900,764 - 4,457,707 60% / 40% 2022 2,003,327 - 107,057 323,731 831,645 831,645 - 4,097,404 59% / 41% 1 The other benefits relate primarily to insured benefits. 200 - Lotus Bakeries Report of the Board of Directors Lotus Bakeries - 201 Overview of compensation executive management (in options) NAME & FUNCTION MEMBER EXECUTIVE MANAGEMENT KEY CONDITIONS OF OPTION PLANS INFORMATION ABOUT THE REPORTED FINANCIAL YEAR DETAILS OF THE PLAN PERFORMANCE PERIOD GRANT DATE ACQUISITION DATE END OF RETENTION PERIOD EXERCISE PERIOD EXERCISE PRICE OF THE STOCK OPENING BALANCE SHEET DURING THE YEAR CLOSING BALANCE Options granted but not acquired at the start of the year Options granted Options acquired Options subject to performance Options granted but not acquired Options subject to a retention period Mercuur Consult BV, represented by Jan Boone (CEO) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 255 0 0 255 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 200 0 0 200 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 130 0 0 130 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 130 0 130 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 100 0 100 Valseba BV, represented by Isabelle Maes (CMO - CEO Natural Foods) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 128 0 0 128 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 100 0 0 100 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 65 0 0 65 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 65 0 65 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 50 0 50 Cumaco BV, represented by Mike Cuvelier (CFO) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 128 0 0 128 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 100 0 0 100 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 65 0 0 65 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 65 0 65 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 50 0 50 Heycom BV, represented by Ignace Heyman (COO) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 128 0 0 128 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 100 0 0 100 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 65 0 0 65 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 65 0 65 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 50 0 50 William Du Pré (Director Procurement, QA en R&D) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 128 0 0 128 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 100 0 0 100 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 65 0 0 65 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 65 0 65 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 50 0 50 1,757 690 0 0 2,447 0 202 - Lotus Bakeries Total NAME & FUNCTION MEMBER EXECUTIVE MANAGEMENT KEY CONDITIONS OF OPTION PLANS INFORMATION ABOUT THE REPORTED FINANCIAL YEAR DETAILS OF THE PLAN PERFORMANCE PERIOD GRANT DATE ACQUISITION DATE END OF RETENTION PERIOD EXERCISE PERIOD EXERCISE PRICE OF THE STOCK OPENING BALANCE SHEET DURING THE YEAR CLOSING BALANCE Options granted but not acquired at the start of the year Options granted Options acquired Options subject to performance Options granted but not acquired Options subject to a retention period Mercuur Consult BV, represented by Jan Boone (CEO) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 255 0 0 255 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 200 0 0 200 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 130 0 0 130 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 130 0 130 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 100 0 100 Valseba BV, represented by Isabelle Maes (CMO - CEO Natural Foods) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 128 0 0 128 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 100 0 0 100 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 65 0 0 65 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 65 0 65 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 50 0 50 Cumaco BV, represented by Mike Cuvelier (CFO) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 128 0 0 128 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 100 0 0 100 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 65 0 0 65 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 65 0 65 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 50 0 50 Heycom BV, represented by Ignace Heyman (COO) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 128 0 0 128 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 100 0 0 100 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 65 0 0 65 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 65 0 65 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 50 0 50 William Du Pré (Director Procurement, QA en R&D) S2019 10/05/2019 01/01/2023 01/01/2023-09/05/2024 2,351.58 128 0 0 128 T2020 08/05/2020 01/01/2024 01/01/2024-07/05/2025 2,828.95 100 0 0 100 U2021 18/05/2021 01/01/2025 01/01/2025-17/05/2026 4,517.14 65 0 0 65 W2022 13/05/2022 01/01/2026 01/01/2026-12/05/2027 5,114.50 0 65 0 65 Y2023 01/06/2023 01/01/2027 01/01/2027-31/05/2028 6,086.36 0 50 0 50 1,757 690 0 0 2,447 0 Report of the Board of Directors Lotus Bakeries - 203 Severance payments The members of the Executive Committee who are remunerated on an independent basis and through a number of board mandates, have a severance payment of a maximum of 12 months of the fixed and variable remuneration. The other member of the Executive Committee is bound by an employment contract for employees. No severance payments were paid to Executive Committee members in 2023. Executives The remuneration policy of the executives is determined by the Executive Committee, the Remuneration and Nomination Committee approves. For this Lotus Bakeries also uses the services of an international HR consultancy firm, which assesses the functions and presents the going- rate salary package for the relevant market. Lotus Bakeries ensures consistency between the compensation of Executive Committee members and the compensation of executives IN THOUSANDS OF EUR 2019 2020 2021 2022 2023 REMUNERATION OF NON-EXECUTIVE DIRECTORS Vasticom BV, represented by Jan Vander Stichele, non-executive (non-executive Chairman BoD, member Audit & Sustainabilitee Committee and member Nomination and Remuneration Committee) 150 150 150 150 150 100% 100% 100% 100% 100% PMF NV, represented by Emanuel Boone, non-executive (member BoD) / / / 20 20 / / / / 100% Anton Stevens, non-executive (member BoD) 20 20 20 20 20 100% 100% 100% 100% 100% Beneconsult BV, represented by Benedikte Boone, non-executive (member BoD) 20 20 20 20 20 100% 100% 100% 100% 100% Concellent NV, represented by Sofie Boone, non-executive (member BoD) 20 20 20 20 20 100% 100% 100% 100% 100% Palumi BV, represented by Peter Bossaert, non-executive (member BoD) 20 20 20 20 20 100% 100% 100% 100% 125.0% Benoit Graulich BV, represented by Benoit Graulich, non-executive (member BoD, member Audit & Sustainability Committee and Chairman Remuneration and Nomination Committee) 30 30 30 30 30 100% 100% 100% 100% 100% Lema BV, represented by Michel Moortgat, niet-uitvoerend (member BoD, Chairman Audit & Sustainability Committee) 25 25 25 25 25 100% 100% 100% 100% 100% Sastraco BV, represented by Sabine Sagaert, non-executive (member BoD and member Remuneration & Nomination committee) 2 25 25 25 25 25 100% 100% 100% 100% 100% and other employees, taking into account market conditions for each category of employees. This is designed to attract, reward and retain employees. Executive compensation, like that of Executive Committee members, is composed of fixed and variable compensation, plus fringe benefits such as company cars, cell phones and/or group insurance. The concrete interpretation of these components always depends on the position of the person concerned, as well as on the local regulations to which the employee is subject. As is the case for members of the Executive Committee, a share option plan is currently provided for the Lotus Bakeries Leaderships Team 1 . Evolution of the remuneration and of the performance of the Company over the last five years The following table shows the evolution of remuneration and business performance over the past five financial years. 1 The group comprises the Executive Committee, the General Managers and the Corporate Directors. 2 Board member until May 12, 2023 204 - Lotus Bakeries IN THOUSANDS OF EUR 2019 2020 2021 2022 2023 REMUNERATION OF EXECUTIVE DIRECTOR Mercuur Consult BV, represented by Jan Boone, executive (member BoD, CEO) 20 20 20 20 20 100% 100% 100% 100% 100% REMUNERATION CEO Jan Boone, CEO 1,914 1,962 2,058 2,325 2,651 Evolution (%) 131% 103% 105% 113% 114% REMUNERATION OF OTHER MEMBERS OF THE EXECUTIVE MANAGEMENT Total remuneration 3,296 3,466 3,636 4,097 4,457 Number of mlembers executive management incl, CEO 5 5 5 5 5 Evolution (%) 140% 105% 105% 113% 109% PERFORMANCE OF LOTUS BAKERIES Market capitalisation (on 31 dec) 2,113,470 3,002,928 4,561,513 5,157,202 6,715,787 Evolution market capitalisation (%) 121% 142% 152% 113% 130% Turnover 612,737 663,289 750,251 877,451 1,062,962 Evolution turnover (%) 110% 108% 113% 117% 121% Rebit 102,891 111,114 123,805 140,188 172,974 Evolution Rebit (%) 108% 108% 111% 113% 123% Rebitda 123,580 135,683 150,967 169,909 207,527 Evolution Rebitda (%) 112% 110% 111% 113% 122% Net result 75,769 82,545 90,743 103,283 129,333 Evolution net result (%) 112% 109% 110% 114% 125% REMUNERATION OTHER EMPLOYEES Total remuneration 123,493 137,116 152,857 173,618 205,310 Number of employees (FTE) 1 1,821 2,214 2,305 2,550 2,857 Evolution (%) 110% 111% 111% 114% 118% The ratio between the highest remuneration of members of management and the lowest compensation (in full-time equivalents) of employees of Lotus Bakeries NV, as stipulated by Article 3:6(3) CAC, cannot be 1 Full-time employee calculated as 12-month average. reported since Lotus Bakeries NV has no employees. With a view to transparency, this ratio is reported for Lotus Bakeries Corporate NV. This ratio is 18.2. Report of the Board of Directors Lotus Bakeries - 205 Enterprise Risk Management Risk management strategy Lotus Bakeries has implemented a continuous risk management process aimed at ensuring that risks are identified, assessed, prioritised, controlled and monitored in such a way that they can be kept at an acceptable level. The risk management process is aligned with the implementation of the strategic, operational and financial objectives of the Company. The entire risk management process is based on the COSO Enterprise Risk Management framework. The Company is exposed to a wide range of risks within the context of its activities that can result in its objectives being affected or not achieved. Mitigating these risks is a key task of the Executive Committee (EXCO). The EXCO has full responsibility for the risk management process for Lotus Bakeries and reports on this periodically to the Audit & Sustainability Committee. Lotus Bakeries has a one-tier governance model, in accordance with the Belgian Companies Code. The Board of Directors bears ultimate responsibility for the management of risks within the Company, assisted by the Audit & Sustainability Committee. The day-to-day management is delegated to the CEO, assisted by the EXCO. The Audit & Sustainability Committee receives regular reports on risk management. As such, the enterprise risk management of Lotus Bakeries consists of following key components: Risk identification: this involves identifying the sources of risk that could impact the Group. These sources could include anything from food safety and quality risks, to operational and financial risks. The double materiality methodology is used to identify and prioritise the main risks to which the Group is faced from two perspectives: financial materiality and impact materiality (see chapter 2 of the Annual Report). Risk assessment: once risks have been identified, it is important to assess their impact and likelihood of occurrence. This helps to prioritise the most critical risks and determine the appropriate response. Risk mitigation: after risks have been identified and assessed, strategies are developed to mitigate or manage those risks. This may include implementing process improvements, implementing controls, or transferring risk through insurance. Risk monitoring: ongoing monitoring of risks is critical to ensure that the Group is prepared for potential threats and to assess the effectiveness of risk mitigation strategies. Communication and training: effective communication and training are essential for an ERM programme to be successful. All employees should understand their role in identifying and managing risk and should be trained on how to do so. The Governance structure of Lotus Bakeries is supported by the implementation of various internal Governance policies, procedures and processes, such as: Corporate Governance Charter The Corporate Governance Charter is designed to give a detailed and transparent picture of Lotus Bakeries’ policy regarding corporate governance and is updated based on developments in such policy and changes in the relevant regulations. 206 - Lotus Bakeries Dealing Code The main purpose of the Dealing Code is to prevent the misuse or appearance of misuse of information which directors or employees of Lotus Bakeries may possess about Lotus Bakeries and which is not generally available to investors. Particular attention is paid to those shares, share options or other rewards received under Lotus Bakeries’ incentive plans, to those who buy or sell Lotus Bakeries shares, and to those who use Lotus Bakeries shares as collateral for a loan. Code of Conduct Lotus Bakeries is committed to act with integrity, honesty, fairness and in full compliance with applicable laws, rules and regulations at all times. It has developed a code of conduct which sets out six key principles which must be respected by all employees of Lotus Bakeries at all times. Remuneration Policy The approved remuneration policy complies with the Second Share- holder Rights Directive, Directive (EU) 2017/828, Article 7:89(1) of the Companies and Associations Code and the Corporate Governance Code 2020. This remuneration policy was approved at the Ordinary General Meeting of 18 May 2021 and is published on the website. The responsibilities of the various departments in the Lotus Bakeries Group ranging from procurement, manufacturing, logistics to sales, management of customer relations and Corporate services are set out in clear guidelines. As such, each employee clearly knows his role and responsibility. Principal risks and mitigating measures On a periodic basis, risks are assessed, monitored and adjusted by the EXCO. The risk management matrix defined is discussed with and reported to the Audit & Sustainability Committee. For each of the principal risks identified, a risk owner has been appointed who ensures a concrete action plan to mitigate the potential impact of the risks. The risk owner is also responsible for the follow-up of the defined actions. The results are reported periodically to the Audit & Sustainability Committee. The risk management programme of the Group is an ongoing process that requires regular review and revision to ensure that it remains effective in the face of changing risks and circumstances and new threats. The principal risks listed below are considered to be the most relevant for the business of the Group that might have an impact on the achievement of the Group’s strategic objectives. Report of the Board of Directors Lotus Bakeries - 207 Key component Risk Risk description & mitigating actions Product Safety & Quality Failure to meet quality and food safety standards expose the Group to business interruption, litigation, product liability and recall claims. Lotus Bakeries applies the highest product safety standards to the entire production and distribution process, from the purchase of raw materials through the distribution of the final product, supported and guaranteed by structured procedures and systematic internal quality audits. External audits take place at regular intervals. Counterfeiting/Intellectual property The success of the Lotus® Biscoff®, Lotus TM Natural Foods and Lotus® Local Heroes products and brands is accompanied with the risk of counterfeiting, both in terms of the recipes of our products and the visual identity of our brands. First of all, the recipe. The quality of all Lotus Bakeries products is an absolute priority. All employees are strongly committed to the continuous pursuit of high quality products and processes. The R&D depart- ment wants to use new insights into interactions between different raw materials to contribute to better products. For this purpose, we do not only call on our own expertise, but also on that of well-known univer- sity research institutes, as well as existing innovation platforms set up by the food industry. Our innovation efforts also translate into an extensive and innovative product range, in which quality and superior taste are paramount. To safeguard these efforts as much as possible, our recipes are protected as trade secrets wherever possible. To this end, strict procedures are in place regarding access, transfer and storage of data. In addition, the R&D team monitors and analyses competing products on a regular basis. To protect our brand identity in the best possible way, a clear strategy is in place aimed at identifying our brand assets, defining the desired protection, use and enforcement of our brands. Protection levels are updated annually, both at product and geographical level. Thanks to an automated, global notification system, the Intellectual Property department stays on top of identical or similar registrations. Furthermore, copycats in the market are reported on a continuous basis by our own employees and our distributors. Since 2021, Lotus Bakeries has also been working with an online monitoring system for even more accurate detection of copycats. Inflation and volatility of raw materials and packaging costs The risk of unfavourable effects of fluctuations in raw material prices on the results is limited by concluding forward contracts with a fixed price for the most important raw materials. For other raw materials and packaging, annual agreements are used where possible. People Job market shortages Given the scarcity on the labour market, Lotus Bakeries needs to pay attention to attracting sufficient talent to support its growth plans. To this end, Lotus Bakeries can rely on a professional recruitment policy, onboarding process and training & development plan. We have also been deploying a Young Graduate Programme since 2020, with which we make young talent enthusiastic about our company. Finally, much attention is paid to employer branding and translating our corporate identity internally and externally. 208 - Lotus Bakeries Key component Risk Risk description & mitigating actions ESG Climate change/ Carbon reduction We are committed to the environment and help fight global warming. Lotus Bakeries is aware of the negative impact the industry can have on the environment and society and the responsibility it bears as an industrial partner. Lotus Bakeries also sees opportunities to contribute to the progress of society and limiting global warming. Climate-related disruption (including extreme weather events, floods, deforestation) might impact our operations and/or consumer demands and preferences. In everything we do, we strive to reduce our ecological footprint. We are already carbon neutral today with our 12 factories. Beginning 2023, we signed the Commitment Letter of Science Based Target initiative (SBTi), committing to science-based reduction targets, in line with SBTi Criteria and Recommendations, in order to limit global warming to 1.5 degrees Celsius above pre-industrial levels. The ‘Care for Today - Respect for Tomorrow’ sustainability ambition clearly embodies how Lotus Bakeries wants to deal with sustainability and responsibility. This action plan has been widely distributed to all employees as well as to the Board of Directors. Lotus Bakeries chooses to report on its priorities, targets and achievements taking into account the Sustainable Development Goals (SDGs) as defined by the United Nations and in accordance with the core GRI standards. Furthermore, the Group monitors any emerging regulations which would impose specific carbon- reduction initiatives. Such initiatives could potentially impact the current operations and accelerate the transition to low-carbon production processes, materials and investments. Packaging Lotus Bakeries recognises the problems related to the use of plastic packaging, including ocean pollution, carbon emissions, and the use of non-renewable resources. Lotus Bakeries shares the concerns and wants to assume responsibility to move from the current linear economy, where packaging is produced, used and thrown away, to a circular economy, where materials are kept within the loop. To this end, Lotus Bakeries has formulated clear ambitions and a clear strategy. The Group also monitors regulatory measures to limit the use of single-use packaging, such as packaging taxes. The Group is constantly scanning and improving the packaging portfolio based on fact-based methodologies. Lotus Bakeries investigates various alternatives to the classic fossil-based plastics currently in use. However, alternative materials need to guarantee the same level of product safety, processability and sustainability as the current materials used. Sustainable sourcing Lotus Bakeries is aware of the possible negative impact of cultivation of key raw materials (such as oils, cocoa) on the environment, in particular deforestation, as well as the possible social impact in the regions where these raw materials are cultivated. For Lotus Bakeries, it is important that our consumers and cus- tomers have confidence that the above mentioned raw materials used in our products has been sustain- ably sourced. Lotus Bakeries carefully selects its suppliers based on its responsible sourcing standards according to NDPE: No-Deforestation, No-Peat, No-Exploitation . Lotus Bakeries is a member of RSPO and is committed to purchasing only certified sustainable palm oil. All Lotus Bakeries sites which process palm oil have also obtained the RSPO certificate. Furthermore, Lotus Bakeries requests its suppliers to invest in following initiatives and to actively inform the Company on a regular basis: - supporting smallholder producers to enter sustainable supply chains; - protecting and restoring forests in a palm oil production landscape; - support of a landscape/jurisdiction approach to sustainability in palm oil producing areas; and - support for one or more local conversion projects in palm oil producing countries. As such, Lotus Bakeries aims to drive the transformational change needed in the supply chain of key raw materials. Report of the Board of Directors Lotus Bakeries - 209 Key component Risk Risk description & mitigating actions IT architecture Data protection and cybersecurity Considering the ever-increasing digitalisation, the risk of unauthorised access to confidential data of Lotus Bakeries and personal data processed by Lotus Bakeries remains real. Fraud in the form of cybercrime is also high on the agenda. Within Lotus Bakeries, clear policies are in place regarding access and security of business-critical information. Multi-factor authentication contributes to the security of our information. Corporate ICT has taken various measures to prevent, detect and limit the impact of cyber-attacks. In addition, there is an annual audit of the security of our ICT systems. Automated and continuous awareness efforts among Lotus Bakeries employees are also implemented. Financial Foreign currencies The functional currency of the Company is the euro, which is also the Company’s reporting currency. Translation gains or losses that result from remeasuring foreign subsidiaries’ local currencies to EUR are recorded in other comprehensive income. Foreign currency transactions resulting in gains or losses are recorded in the consolidated statement of comprehensive income. The main foreign currency transactions are denominated in USD, GBP, SEK, ZAR, CNY, KRW, CZK and CHF. The Group assesses on a case by case basis how to avoid any unfavourable currency impact and aims to hedge as many transactions as possible through a natural hedge. Other financial risks The Group’s activities are exposed to a variety of other financial risks: market risk (including interest rate risk and price risk), credit risk and liquidity risk. For more details, refer to the consolidated financial state- ments in note 26. External environment Compliance and regulations Lotus Bakeries is a global company generating the bulk of its revenue outside the home countries. As such, the Group is subject to applicable laws and regulations in the global jurisdictions in which it operates. As a manufacturer of food products with global commercial operations, these applicable laws and regulations relate to product safety, product labelling, health and safety, carbon reduction, intellectual property rights, anti-bribery and corruption, competition, data protection, export regulations, human rights and taxes. Relevant teams within the Group monitor closely any evolutions in the regulatory landscape to warrant compliance of the Group with regulatory initiatives as they emerge. Wars As a global company, the Group may be impacted by conflicts in countries in which it operates. Operations and business could be affected indirectly by a conflict. These impacts may come from supply issues, an inflationary macro-economic environment, credit risks on customers and increasing financing costs. Pandemics and other infectious diseases As the Group is operating around the globe, a global epidemic or pandemic outbreak may affect our business contingency. As such, crisis management is in place, which has been proved to be effective in the context of the COVID-19 pandemic. 210 - Lotus Bakeries External audit PwC Bedrijfsrevisoren BV, represented by Ms Lien Winne, certified auditor, was appointed as Auditor of Lotus Bakeries NV on May 13, 2022 by the Ordinary General Meeting of Shareholders for a term of three years. Its mandate expires immediately after the 2025 Ordinary General Meeting of Shareholders. The fees paid in 2023 for audit and non-audit services to PwC Bedrijfsrevisoren and to the parties associated with PwC Bedrijfsrevisoren, are disclosed in note 31 of the consolidated financial statements. IN THOUSANDS OF EUR 2023 2022 Audit fees Lotus Bakeries NV 145 152 Lotus Bakeries Group 456 443 Total 601 595 Report of the Board of Directors Lotus Bakeries - 211 05 Stock market and shareholders’ information Stock market and shareholders’ information 214 212 - Lotus Bakeries Lotus Bakeries - 213 Stock market listing The Lotus Bakeries shares are listed since January 2002 on the Euronext Brussels stock exchange under the ticker LOTB and ISIN code 0003604155. Liquidity Lotus Bakeries has appointed KBC Securities as ‘liquidity provider’. Market capitalisation On the basis of a total number of 816,013 ordinary shares and a closing share price of EUR 8,230.00, Lotus Bakeries’ market capitalisation amounted to EUR 6,715.79 million at the end of 2023. Evolution of the Lotus Bakeries share The below graph presents the long-term performance of Lotus Bakeries’ shares as from January 1, 2000, in comparison to the BEL®20 index. The BEL®20 index is the benchmark stock market index of Euronext Brussels, reflecting the 20 most capitalised and liquid stocks traded on the Euronext Brussels stock exchange. 01/01/2000 214 - Lotus Bakeries Stock data on the Lotus Bakeries share Financial calendar Share performance data (in EUR) 2023 2022 2021 2020 2019 Highest share price of period 8,420.00 6,630.00 6,080.00 3,770.00 2,680.00 Lowest share price of period 5,690.00 4,455.00 3,630.00 2,500.00 2,080.00 Share price as per closing date 8,230.00 6,320.00 5,590.00 3,680.00 2,590.00 Market capitalisation as per closing date (in millions of EUR) 6,715.79 5,157.20 4,561.51 3,002.93 2,113.47 Number of shares as per closing date 816,013 816,013 816,013 816,013 816,013 Ratio price/earnings (PER) 1 as per closing date 51.63 49.93 50.26 36.36 28.21 event date Ordinary and Extraordinary Shareholders' meeting May 14, 2024 Dividend payable from May 21, 2024 2024 half-year results August 9, 2024 Corporate website and annual report The corporate website provides comprehensive information regarding investor relations, including information about the Company and its activities, its shares, corporate updates, financial reports, investor presentations and a financial calendar. This annual report is also available on the corporate website of Lotus Bakeries: www.lotusbakeries.com. The first part of the annual report, and the consolidated financial statements (second part), is available both in Dutch and in English. The third part of the annual report, consisting of the ESG and GRI reporting, is only available in English. 1 PER – Price Earnings Ratio: Share price at closing date divided by the earnings per share of the period Stock market and shareholders information Lotus Bakeries - 215 06 FINANCIAL STATEMENTS Consolidated statement of financial position 220 Consolidated statement of profit or loss and statement of comprehensive income 221 Condensed five-year consolidated financial statements 222 216 - Lotus Bakeries Lotus Bakeries - 217 The following chapter of the 2023 annual report includes the consolidated statement of financial position, the consolidated statement of profit or loss and the consolidated statement of comprehensive income and the condensed five-year financial summary for the Lotus Bakeries Group. The complete set of consolidated financial statements, including all disclosures in accordance with IFRS, is presented in the financial supplement to this annual report and is available in Dutch and English. These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted for application within the European Union with comparative figures for 2023. The Auditor has issued an unqualified audit opinion with respect to the consolidated and the separate financial statements of Lotus Bakeries NV. 218 - Lotus Bakeries Financial statements Lotus Bakeries - 219 Consolidated statement of financial position IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 ASSETS Non-current assets 875,583 820,000 Goodwill 222,915 225,246 Intangible assets 147,825 146,735 Property, plant and equipment 474,311 428,244 Investments in other companies 27,504 16,806 Deferred tax assets 2,120 2,212 Other non-current assets 908 757 Current assets 367,920 275,036 Inventories 76,906 70,361 Trade and other receivables 152,044 120,074 Current tax assets 4,888 4,947 Cash and cash equivalents 131,231 76,435 Other current assets 2,852 3,219 TOTAL ASSETS 1,243,503 1,095,036 IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 EQUITY AND LIABILITIES Equity 656,207 572,141 Share capital 16,388 16,388 Treasury shares (18,797) (18,976) Retained earnings 704,401 611,180 Other reserves (45,785) (36,451) Non-controlling interests - - Non-current liabilities 349,943 266,186 Interest-bearing liabilities 275,834 196,066 Deferred tax liabilities 68,024 63,716 Employee benefit obligations 4,183 4,411 Provisions 101 122 Derivative financial instruments - 107 Other non-current liabilities 1,801 1,765 Current liabilities 237,352 256,709 Interest-bearing liabilities 14,657 70,178 Employee benefit obligations 335 232 Provisions 21 21 Trade and other payables 205,110 172,995 Current tax liabilities 14,173 10,367 Other current liabilities 3,056 2,917 TOTAL EQUITY AND LIABILITIES 1,243,503 1,095,036 220 - Lotus Bakeries CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND STATEMENT OF COMPREHENSIVE INCOME IN THOUSANDS OF EUR 2023 2022 REVENUE 1,062,962 877,451 Raw materials, packaging and co-manufacturing (368,903) (311,310) Services and other goods (277,024) (218,277) Employee benefit expenses (205,310) (173,618) Depreciation and amortisation expenses (32,857) (25,245) Impairment on inventories and trade receivables (1,226) (3,992) Other operating expenses (6,348) (8,534) Other operating income 1,681 3,711 RECURRING OPERATING RESULT (REBIT) 172,974 140,188 Non-recurring income and expenses (2,544) (3,807) OPERATING RESULT (EBIT) 170,430 136,381 Financial result (2,533) (2,354) Interest income (expenses) (1,560) (2,565) Foreign exchange gains (losses) (119) 988 Other financial income (expenses) (854) (777) RESULT BEFORE TAXES 167,897 134,027 Income taxes (38,565) (30,744) NET RESULT 129,333 103,283 Attributable to non-controlling interests 72 43 Attributable to equity holders of Lotus Bakeries 129,261 103,240 IN THOUSANDS OF EUR 2023 2022 NET RESULT 129,333 103,283 Other comprehensive income Items that may be subsequently reclassified to profit and loss (9,192) (9,410) Currency translation differences (9,273) (9,608) Gain/(Loss) on cash flow hedges, net of tax 81 198 Items that will not be reclassified to profit and loss (142) (151) Remeasurement gains/(losses) on defined benefit plans (142) (151) Other comprehensive income (9,334) (9,560) TOTAL COMPREHENSIVE INCOME 119,999 93,722 Attributable to non-controlling interests 91 2 Attributable to equity holders of Lotus Bakeries 119,908 93,720 EARNINGS PER SHARE Weighted average number of shares 811,364 810,858 Basic earnings per share (EUR) 159.40 127.37 Attributable to equity holders of Lotus Bakeries 159.31 127.32 Weighted average number of shares after effect of dilution 812,373 812,106 Diluted earnings per share (EUR) 159.20 127.18 Attributable to equity holders of Lotus Bakeries 159.12 127.13 Financial statements Lotus Bakeries - 221 CONDENSED FIVE-YEAR CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of profit or loss in thousands of EUR 2023 2022 2021 2020 2019 REVENUE 1,062,962 877,451 750,251 663,289 612,737 RECURRING OPERATING RESULT (REBIT) 172,974 140,188 123,805 111,114 102,891 Non-recurring operating result (2,544) (3,807) (4,135) (4,593) (2,292) OPERATING RESULT (EBIT) 170,430 136,381 119,670 106,521 100,599 Financial result (2,533) (2,354) (2,373) (3,004) (2,514) RESULT FOR THE PERIOD BEFORE TAXES 167,897 134,027 117,297 103,517 98,086 Income taxes (38,565) (30,744) (26,554) (20,972) (22,317) NET RESULT 129,333 103,283 90,743 82,545 75,769 Attributable to non-controlling interests 72 43 (24) (48) 857 Attributable to equity holders of Lotus Bakeries 129,261 103,240 90,767 82,593 74,912 222 - Lotus Bakeries Consolidated statement of financial position in thousands of EUR December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 Non-current assets 875,583 820,000 690,120 622,840 641,122 Goodwill 222,915 225,246 224,846 216,485 229,365 Intangible assets 147,825 146,735 144,745 139,966 142,709 Property, plant and equipment 474,311 428,244 307,725 258,182 263,793 Investments in other companies 27,504 16,806 9,755 4,403 2,243 Deferred tax assets 2,120 2,212 2,182 3,351 2,505 Other non-current assets 908 757 867 453 507 Current assets 367,920 275,036 301,972 221,387 171,507 Inventories 76,906 70,361 57,901 46,827 44,461 Trade and other receivables 152,044 120,074 105,164 89,042 84,524 Current tax assets 4,888 4,947 5,276 3,142 1,075 Cash and cash equivalents 131,231 76,435 132,160 81,261 40,093 Other current assets 2,852 3,219 1,471 1,115 1,354 TOTAL ASSETS 1,243,503 1,095,036 992,092 844,227 812,629 Equity 656,207 572,141 519,532 433,744 402,477 Non-current liabilities 349,943 266,186 289,450 261,841 239,584 Interest-bearing liabilities 275,834 196,066 218,837 198,156 158,010 Deferred tax liabilities 68,024 63,716 64,243 57,195 50,737 Employee benefit obligations 4,183 4,411 4,020 3,748 3,712 Provisions 101 122 116 282 285 Derivative financial instruments - 107 371 717 2,340 Other non-current liabilities 1,801 1,765 1,863 1,743 24,500 Current liabilities 237,352 256,709 183,110 148,642 170,568 Interest-bearing liabilities 14,657 70,178 17,439 12,552 36,579 Employee benefit obligations 335 232 333 317 325 Provisions 21 21 21 21 21 Trade and other payables 205,110 172,995 154,377 118,647 118,356 Current tax liabilities 14,173 10,367 5,850 12,701 11,630 Other current liabilities 3,056 2,917 5,091 4,404 3,657 TOTAL EQUITY AND LIABILITIES 1,243,503 1,095,036 992,092 844,227 812,629 Financial statements Lotus Bakeries - 223 annexe EU Taxonomy Reporting 226 Glossary 232 224 - Lotus Bakeries Lotus Bakeries - 225 Annexe proportion of turnover from products or services associated with taxonomy-aligned economic activities - disclosure covering year 2023 financial year 2023 year Substantial contribution criteria dnsh criteria (‘does not significantly harm’) Economic Activities Code Turnover (in € million) Proportion of Turnover, year 2023 Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Minimum Safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, year 2022 Category enabling activity Category transitional activity A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Of which Enabling 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % E Of which Transitional 0.0 % 0.0 % 0.0 % 0.0 % T A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g) Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Subtotal A. Turnover of Taxonomy eligible activities (A.1 + A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % b. Taxonomy-non-eligible activities B. Turnover of Taxonomy-non-eligible activities 1,063.0 100.0 % 100.0 % Total (A+B) 1,063.0 100.0 % 100.0 % Taxonomy-aligned per objective Taxonomy-eligible per objective Climate Change Mitigation 0.0 % 0.0 % Climate Change Adaptation 0.0 % 0.0 % Water 0.0 % 0.0 % Circular Economy 0.0 % 0.0 % Pollution 0.0 % 0.0 % Biodiversity 0.0 % 0.0 % Proportion of turnover/Total turnover eu taxonomy reporting 226 - Lotus Bakeries financial year 2023 year Substantial contribution criteria dnsh criteria (‘does not significantly harm’) Economic Activities Code Turnover (in € million) Proportion of Turnover, year 2023 Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Minimum Safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, year 2022 Category enabling activity Category transitional activity A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) Turnover of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Of which Enabling 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % E Of which Transitional 0.0 % 0.0 % 0.0 % 0.0 % T A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g) Turnover of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Subtotal A. Turnover of Taxonomy eligible activities (A.1 + A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % b. Taxonomy-non-eligible activities B. Turnover of Taxonomy-non-eligible activities 1,063.0 100.0 % 100.0 % Total (A+B) 1,063.0 100.0 % 100.0 % Lotus Bakeries - 227 Annexe - EU Taxonomy Reporting proportion of capex from products or services associated with taxonomy-aligned economic activities - disclosure covering year 2023 Taxonomy-aligned per objective Taxonomy-eligible per objective Climate Change Mitigation 0.0 % 0.0 % Climate Change Adaptation 0.0 % 0.0 % Water 0.0 % 0.0 % Circular Economy 0.0 % 0.0 % Pollution 0.0 % 0.0 % Biodiversity 0.0 % 0.0 % Proportion of capex/Total capex financial year 2023 year Substantial contribution criteria dnsh criteria (‘does not significantly harm’) Economic Activities Code capex (in € million) Proportion of Turnover, year 2023 Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Minimum Safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, year 2022 Category enabling activity Category transitional activity A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Of which Enabling 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % E Of which Transitional 0.0 % 0.0 % 0.0 % 0.0 % T A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g) CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Subtotal A. CapEx of Taxonomy eligible activities (A.1 + A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % b. Taxonomy-non-eligible activities B. CapEx of Taxonomy-non-eligible activities 86.2 100.0 % 100.0 % Total (A+B) 86.2 100.0 % 100.0 % 228 - Lotus Bakeries financial year 2023 year Substantial contribution criteria dnsh criteria (‘does not significantly harm’) Economic Activities Code capex (in € million) Proportion of Turnover, year 2023 Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Minimum Safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, year 2022 Category enabling activity Category transitional activity A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) CapEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Of which Enabling 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % E Of which Transitional 0.0 % 0.0 % 0.0 % 0.0 % T A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g) CapEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Subtotal A. CapEx of Taxonomy eligible activities (A.1 + A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % b. Taxonomy-non-eligible activities B. CapEx of Taxonomy-non-eligible activities 86.2 100.0 % 100.0 % Total (A+B) 86.2 100.0 % 100.0 % Lotus Bakeries - 229 Annexe - EU Taxonomy Reporting proportion of opex from products or services associated with taxonomy-aligned economic activities - disclosure covering year 2023 Taxonomy-aligned per objective Taxonomy-eligible per objective Climate Change Mitigation 0.0 % 0.0 % Climate Change Adaptation 0.0 % 0.0 % Water 0.0 % 0.0 % Circular Economy 0.0 % 0.0 % Pollution 0.0 % 0.0 % Biodiversity 0.0 % 0.0 % Proportion of opex/Total opex financial year 2023 year Substantial contribution criteria dnsh criteria (‘does not significantly harm’) Economic Activities Code opex (in € million) Proportion of Turnover, year 2023 Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Minimum Safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, year 2022 Category enabling activity Category transitional activity A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Of which Enabling 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % E Of which Transitional 0.0 % 0.0 % 0.0 % 0.0 % T A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g) OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Subtotal A. OpEx of Taxonomy eligible activities (A.1 + A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % b. Taxonomy-non-eligible activities B. OpEx of Taxonomy-non-eligible activities 40.8 100.0 % 100.0 % Total (A+B) 40.8 100.0 % 100.0 % 230 - Lotus Bakeries financial year 2023 year Substantial contribution criteria dnsh criteria (‘does not significantly harm’) Economic Activities Code opex (in € million) Proportion of Turnover, year 2023 Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Climate Change Mitigation Climate Change Adaptation Water Pollution Circular Economy Biodiversity Minimum Safeguards Proportion of Taxonomy aligned (A.1.) or eligible (A.2.) turnover, year 2022 Category enabling activity Category transitional activity A. Taxonomy-eligible activities A.1. Environmentally sustainable activities (Taxonomy-aligned) OpEx of environmentally sustainable activities (Taxonomy-aligned) (A.1) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Of which Enabling 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % E Of which Transitional 0.0 % 0.0 % 0.0 % 0.0 % T A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (g) OpEx of Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) (A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % Subtotal A. OpEx of Taxonomy eligible activities (A.1 + A.2) 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % 0.0 % b. Taxonomy-non-eligible activities B. OpEx of Taxonomy-non-eligible activities 40.8 100.0 % 100.0 % Total (A+B) 40.8 100.0 % 100.0 % Lotus Bakeries - 231 Annexe - EU Taxonomy Reporting Concept Definition Paragraph in Annual report CPG Consumer Packaged Goods Lotus® Biscoff® Strategy CSRD Corporate Sustainability Reporting Directive Our sustainability ambition D4ACE Design for a circular economy External initiatives, commitments and evaluations ERP Enterprise Resource Planning Our materiality ESRS European Sustainability Reporting Standards Our materiality FLAG FLAG (Forest, Land, and Agriculture) emissions are a category of greenhouse gas emissions that encompass the many ways land use change and land-related activities impact the climate. Our Environment FSC Forest Stewardship Council Our Environment GHG Greenhouse Gas Our Environment GRI Global Reporting Initiative Our sustainability ambition HACCP Hazard Analysis and Critical Control Points Our Community Internal Employee An internal employee is an employee who is connected to Lotus Bakeries with an employment contract, either of unlimited duration or of limited duration. Our Employees Location-based A location-based method reflects the average emissions intensity of grids on which energy consumption occurs (using mostly grid-average emission factor data). Our Environment Market-based A market-based method reflects emissions from electricity that companies have purposefully chosen (or their lack of choice). Our Environment NDPE No Deforestation, No Peat, No Exploitation Our Environment Net financial debt Net financial debt is defined as interest-bearing liabilities (excluding lease liabilities recognised in accordance with IFRS 16) deducted with cash and cash equivalents, term deposits and treasury shares. Financial Statements Non-recurring income and expenses Non-recurring income and expenses are those items that are considered by management not to relate to transactions, projects and adjustments to the value of assets and liabilities taking place in the ordinary course of activities of the Company. Non-recurring income and expenses are presented separately, due to their size or nature, so as to allow users of the consolidated financial statements of the Company to get a better understanding of the normalised performance of the Company. Financial Statements PEFC Program for the Endorsement of Forest Certification Our Environment Permanent Employees Employees that have a permanent Lotus Bakeries contract Our Employees Primary packaging Primary packaging directly protects the product & informs the consumer. It is all packaging that a consumer takes home when purchasing the product. Our Environment PVdC coating Poly-Vinylidene Chloride is a water-based coating often used to improve barriers and reduce permeability. Our Environment Rate of recordable work-related accidents for own employees The number of work-related injuries with at least 1 day of absence of own employees divided by the number of total hours worked by own employees and multiplied by 1.000.000 hours. Our Employees REAT REAT is defined as the recurring earnings after tax and is determined by excluding the non-recurring income and expenses and the related tax effects from the net result. REAT is used as the basis for dividend distribution. Financial Statements REBIT REBIT (recurring operating result) is defined as the operating result after deducting the non-recurring income and expenses. Financial Statements REBITDA REBITDA is defined as the REBIT adjusted for depreciations and amortisation expenses, impairments on inventories and trade receivables and non-cash costs related to share-based payment plans. Financial Statements glossary 232 - Lotus Bakeries Concept Definition Paragraph in Annual report RSPO Round Table on Sustainable Palm Oil Our Environment SBTi Science Based Targets initiative Our Environment Scope 1 emissions Scope 1 emissions are direct emissions from company-owned and controlled resources. Examples are heating sources, refrigerators, CO 2 released during industrial processes… Our Environment Scope 2 emissions Scope 2 emissions are indirect emissions from the consumption of purchased energy such as electricity, steam, heat, and cooling. Our Environment Scope 3 emissions Scope 3 emissions are all other indirect emissions in the company's value chain - not included in scope 2 -, both upstream and downstream, such as the production of goods and services, transportation, and end-of-life treatment. Our Environment Secondary packaging Secondary packaging further protects the product & groups different primary packages for distribution. Used to distribute to and often showcase at the retailer. Our Environment SFI Sustainable Forestry Initiative Our Environment SKU Stock Keeping Unit Our Environment Temporary Employees Employees that have a fixed term Lotus Bakeries contract. Our Employees Tertiary packaging Tertiary packaging is used to guarantee the protection of the product during shipment via pallet, typically not seen by consumers. Our Environment Water withdrawal Water withdrawal describes the total amount of water withdrawn from a surface water of groundwater source. Our Environment Lotus Bakeries - 233 Annexe - Glossary REGISTERED OFFICE Lotus Bakeries NV Gentstraat 1 B-9971 Lembeke T + 32 9 376 26 11 www.lotusbakeries.com Register of legal persons of Ghent, Enterprise number 0401.030.860 CONTACT For further information about the data of the annual review or more information about the Lotus Bakeries Group, please contact: Lotus Bakeries NV Corporate Secretary Gentstraat 1 B-9971 Lembeke T + 32 9 376 26 11 [email protected] Concept and realisation Lotus Bakeries and Duval Branding duvalbranding.com Illustrations Sören Selleslagh sorenselleslagh.com Photography Bert Luyckx bertluyckx.be Sustainability is key at Lotus Bakeries; this report was printed on recycled paper. www.lotusbakeries.com Annual Report 2023 Financial supplement Lotus Bakeries NV (the ‘Company’) is a limited-liability company incorporated as a “naamloze vennootschap” (“NV”) under Belgian law with company registration number 0401.030.860. Lotus Bakeries NV has its registered office at Gentstraat 1, 9971 Lembeke, Belgium. The shares of Lotus Bakeries NV are listed on the regulated market of Euronext Brussels. Lotus Bakeries is active worldwide in the indulgent and natural snacking segment with the Lotus®, Biscoff®, nākd®, TREK®, BEAR®, Kiddylicious®, Peter’s Yard®, Dinosaurus®, Peijnenburg® and Annas brands, among others. Lotus Bakeries, with headquarters in Belgium, is a dynamic, internationally oriented company with production facilities in Belgium, the Netherlands, France, Sweden, South Africa and the United States, and 23 own sales organisations in Europe, America, Asia and Australia. By maintaining a healthy balance between tradition and innovation, the Lotus brand indulges consumers with a unique range of high-quality, tasty products. The consolidated financial statements of Lotus Bakeries Group (the ‘Group’) for the year ended December 31, 2023 were authorised for issue on March 28, 2024. These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as adopted for application within the European Union with comparative figures for 2022. The condensed statutory financial statements disclosed at the end of the consolidated financial report are extracted from the separate Belgian GAAP financial statements of the Company and are included as required by article 3:17 of the Belgian Company and Associations Code. The separate financial statements, together with the annual report of the Board of Directors to the general assembly of shareholders as well as the auditor’s report, will be filed with the National Bank of Belgium within the legally foreseen time limits. These documents are also available on the corporate website of Lotus Bakeries, www.lotusbakeries.com (Investor Relations) , or can be obtained for free from the Corporate Secretary of Lotus Bakeries on request. This financial report is part of the 2023 consolidated annual report of Lotus Bakeries NV. This annual report consists of three parts which are available on the Lotus Bakeries corporate website and also on request, separately and free of charge, from the Lotus Bakeries Corporate Secretary. The Group prepares and discloses financial statements in the ESEF format in Dutch and English. Additionally the Group makes available its financial statements in Dutch and English in pdf format. The financial statements prepared in the ESEF format by the Group in Dutch are the only ‘official ESEF version’ of the annual financial statements that discharge the Group from the obligations included in the Transparency Directive. Financial statements made available in pdf format on the website of the Group as well as financial statements prepared in ESEF format in another language than Dutch are therefore considered as non-official versions and translations. The official ESEF version prevails over all non-official and translated versions. The official ESEF version of the annual financial statements of the Group is filed on the website of the Group. The Auditor has issued an unqualified audit opinion with respect to the consolidated and the separate financial statements of Lotus Bakeries NV. 2 - Lotus Bakeries INDEX CONSOLIDATED FINANCIAL STATEMENTS 4 Consolidated statement of profit or loss and statement of comprehensive income 4 Consolidated statement of financial position 5 Consolidated cash flow statement 6 Consolidated statement of changes in equity 8 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 11 1. Basis of preparation and summary of material accounting policies 11 2. Changes to the consolidation scope 15 3. Segment reporting 16 4. Revenue 20 5. Services and other goods 21 6. Employee benefit expenses 21 7. Depreciation and amortisation expenses 21 8. Other operating income and expenses 21 9. Non-recurring income and expenses 22 10. Financial result 22 11. Income taxes 23 12. Earnings per share 26 13. Goodwill 27 14. Intangible assets 29 15. Property, plant and equipment and leases 32 16. Investments in other companies 35 17. Inventories 36 18. Trade and other receivables 36 19. Cash and cash equivalents 37 20. Other assets 37 21. Equity 37 22. Interest-bearing liabilities 40 23. Employee benefit obligations 42 24. Trade and other payables 45 25. Other liabilities 45 26. Financial instruments and financial risk management 46 27. Related parties 51 28. Commitments 51 29. Subsequent events 52 30. Management responsibility statement 52 31. Audit fees 52 32. Consolidation scope 54 33. Alternative performance measures 56 AUDITOR’S REPORT 58 CONDENSED FIVE-YEAR CONSOLIDATED FINANCIAL STATEMENTS 64 CONDENSED STATUTORY FINANCIAL STATEMENTS – LOTUS BAKERIES NV 66 Statutory balance sheet 66 Statutory income statement 67 Accounting principles 68 Lotus Bakeries - 3 Financial supplement CONSOLIDATED FINANCIAL STATEMENTS Consolidated statement of profit or loss and statement of comprehensive income IN THOUSANDS OF EUR note 2023 2022 REVENUE 4 1,062,962 877,451 Raw materials, packaging and co-manufacturing (368,903) (311,310) Services and other goods 5 (277,024) (218,277) Employee benefit expenses 6 (205,310) (173,618) Depreciation and amortisation expenses 7 (32,857) (25,245) Impairment on inventories and trade receivables 17, 18 (1,226) (3,992) Other operating expenses 8 (6,348) (8,534) Other operating income 8 1,681 3,711 RECURRING OPERATING RESULT (REBIT) 172,974 140,188 Non-recurring income and expenses 9 (2,544) (3,807) OPERATING RESULT (EBIT) 170,430 136,381 Financial result 10 (2,533) (2,354) Interest income (expenses) (1,560) (2,565) Foreign exchange gains (losses) (119) 988 Other financial income (expenses) (854) (777) RESULT BEFORE TAXES 167,897 134,027 Income taxes 11 (38,565) (30,744) NET RESULT 129,333 103,283 Attributable to non-controlling interests 72 43 Attributable to equity holders of Lotus Bakeries 129,261 103,240 IN THOUSANDS OF EUR note 2023 2022 NET RESULT 129,333 103,283 Other comprehensive income Items that may be subsequently reclassified to profit and loss (9,192) (9,410) Currency translation differences (9,273) (9,608) Gain/(Loss) on cash flow hedges, net of tax 81 198 Items that will not be reclassified to profit and loss (142) (151) Remeasurement gains/(losses) on defined benefit plans (142) (151) Other comprehensive income (9,334) (9,560) TOTAL COMPREHENSIVE INCOME 119,999 93,722 Attributable to non-controlling interests 91 2 Attributable to equity holders of Lotus Bakeries 119,908 93,720 EARNINGS PER SHARE 12 Weighted average number of shares 811,364 810,858 Basic earnings per share (EUR) 159.40 127.37 Attributable to equity holders of Lotus Bakeries 159.31 127.32 Weighted average number of shares after effect of dilution 812,373 812,106 Diluted earnings per share (EUR) 159.20 127.18 Attributable to equity holders of Lotus Bakeries 159.12 127.13 4 - Lotus Bakeries Consolidated statement of financial position IN THOUSANDS OF EUR note December 31, 2023 December 31, 2022 ASSETS Non-current assets 875,583 820,000 Goodwill 13 222,915 225,246 Intangible assets 14 147,825 146,735 Property, plant and equipment 15 474,311 428,244 Investments in other companies 16 27,504 16,806 Deferred tax assets 11 2,120 2,212 Other non-current assets 20 908 757 Current assets 367,920 275,036 Inventories 17 76,906 70,361 Trade and other receivables 18 152,044 120,074 Current tax assets 11 4,888 4,947 Cash and cash equivalents 19 131,231 76,435 Other current assets 20 2,852 3,219 TOTAL ASSETS 1,243,503 1,095,036 IN THOUSANDS OF EUR note December 31, 2023 December 31, 2022 EQUITY AND LIABILITIES Equity 656,207 572,141 Share capital 21 16,388 16,388 Treasury shares 21 (18,797) (18,976) Retained earnings 704,401 611,180 Other reserves (45,785) (36,451) Non-controlling interests - - Non-current liabilities 349,943 266,186 Interest-bearing liabilities 22 275,834 196,066 Deferred tax liabilities 11 68,024 63,716 Employee benefit obligations 23 4,183 4,411 Provisions 101 122 Derivative financial instruments - 107 Other non-current liabilities 25 1,801 1,765 Current liabilities 237,352 256,709 Interest-bearing liabilities 22 14,657 70,178 Employee benefit obligations 23 335 232 Provisions 21 21 Trade and other payables 24 205,110 172,995 Current tax liabilities 11 14,173 10,367 Other current liabilities 25 3,056 2,917 TOTAL EQUITY AND LIABILITIES 1,243,503 1,095,036 Lotus Bakeries - 5 Financial supplement Consolidated cash flow statement IN THOUSANDS OF EUR 2023 2022 1 Operating activities NET RESULT 129,333 103,283 Depreciation and amortisation expenses 32,857 25,245 Impairment of assets and results from disposal of assets (21) 259 Change in provisions (478) (16) Financial result 2,533 2,354 Income taxes 38,565 30,744 Employee share-based compensation expense 470 470 Gross cash provided by operating activities 203,259 162,339 Decrease/(Increase) in inventories (6,544) (11,596) Decrease/(Increase) in trade and other receivables (31,266) (15,675) Decrease/(Increase) in other assets 367 141 Increase/(Decrease) in trade and other payables 18,896 1,880 Increase/(Decrease) in other liabilities 1,015 1,430 Change in working capital (17,532) (23,820) Income taxes paid (31,352) (27,707) NET CASH PROVIDED BY OPERATING ACTIVITIES 154,375 110,812 Investing activities Investments paid for (in)tangible assets (65,457) (123,112) Proceeds received from sale of (in)tangible assets - 141 Acquisition of subsidiaries, net of cash acquired (note 2) - (9,205) Investments paid for financial assets (10,587) (9,281) Proceeds/(Reimbursement) of long-term receivables (151) 91 Interests received 2,110 421 NET CASH USED IN INVESTING ACTIVITIES (74,084) (140,945) IN THOUSANDS OF EUR 2023 2022 1 Financing activities Dividends paid (36,470) (32,805) (Acquisition)/Disposal of treasury shares 324 (8,841) Proceeds from interest-bearing liabilities 88,000 39,000 Reimbursement of interest-bearing liabilities (66,000) (14,000) Reimbursement of lease liabilities (5,490) (4,187) Interests paid (3,819) (2,642) NET CASH FROM FINANCING ACTIVITIES (23,456) (23,475) NET CHANGE IN CASH AND CASH EQUIVALENTS 56,835 (53,608) Cash and cash equivalents as at January 1 76,435 132,160 Effect of exchange rate fluctuations (2,038) (2,117) CASH AND CASH EQUIVALENTS AS AT DECEMBER 31 131,231 76,435 1 The presentation of the consolidated cash flow statement has been reviewed in the course of 2023. For consistency purposes, the presentation of the comparative cash flow statement has been aligned. Main change relates to the gross presentation of interests received and interests paid, where the interests received are now presented as part of the investing activities. 6 - Lotus Bakeries Lotus Bakeries - 7 Financial supplement Consolidated statement of changes in equity IN THOUSANDS OF EUR Issued capital Share premium Share Capital Treasury shares Retained earnings Translation differences Remeasurement gains/ (losses) on defined benefit plans Cash flow hedge reserves Other reserves Equity - part of the Group Non-controlling interests Total Equity EQUITY as at January 1, 2023 3,591 12,797 16,388 (18,976) 611,180 (35,607) (764) (81) (36,451) 572,141 - 572,141 Net result - - - - 129,261 - - - - 129,261 72 129,333 Other comprehensive income - - - - - (9,292) (142) 81 (9,353) (9,353) 19 (9,334) Total comprehensive income - - - - 129,261 (9,292) (142) 81 (9,353) 119,908 91 119,999 Dividend to shareholders - - - - (36,531) - - - - (36,531) - (36,531) Transactions with treasury shares - - - 179 145 - - - - 324 - 324 Employee share-based compensation expense - - - - 470 - - - - 470 - 470 Impact written put options on non-controlling interests - - - - 72 19 - - 19 91 (91) - Other - - - - (196) - - - - (196) - (196) EQUITY as at December 31, 2023 3,591 12,797 16,388 (18,797) 704,401 (44,880) (905) - (45,785) 656,207 - 656,207 EQUITY as at January 1, 2022 3,591 12,797 16,388 (9,514) 539,590 (26,040) (613) (279) (26,932) 519,532 - 519,532 Net result - - - - 103,240 - - - - 103,240 43 103,283 Other comprehensive income - - - - - (9,567) (151) 198 (9,519) (9,519) (41) (9,560) Total comprehensive income - - - - 103,240 (9,567) (151) 198 (9,519) 93,720 2 93,722 Dividend to shareholders - - - - (32,428) - - - - (32,428) (293) (32,721) Transactions with treasury shares - - - (9,462) 621 - - - - (8,841) - (8,841) Employee share-based compensation expense - - - - 470 - - - - 470 - 470 Impact written put options on non-controlling interests - - - - (291) - - - - (291) 291 - Other - - - - (21) - - - - (21) - (21) EQUITY as at December 31, 2022 3,591 12,797 16,388 (18,976) 611,180 (35,607) (764) (81) (36,451) 572,141 - 572,141 8 - Lotus Bakeries IN THOUSANDS OF EUR Issued capital Share premium Share Capital Treasury shares Retained earnings Translation differences Remeasurement gains/ (losses) on defined benefit plans Cash flow hedge reserves Other reserves Equity - part of the Group Non-controlling interests Total Equity EQUITY as at January 1, 2023 3,591 12,797 16,388 (18,976) 611,180 (35,607) (764) (81) (36,451) 572,141 - 572,141 Net result - - - - 129,261 - - - - 129,261 72 129,333 Other comprehensive income - - - - - (9,292) (142) 81 (9,353) (9,353) 19 (9,334) Total comprehensive income - - - - 129,261 (9,292) (142) 81 (9,353) 119,908 91 119,999 Dividend to shareholders - - - - (36,531) - - - - (36,531) - (36,531) Transactions with treasury shares - - - 179 145 - - - - 324 - 324 Employee share-based compensation expense - - - - 470 - - - - 470 - 470 Impact written put options on non-controlling interests - - - - 72 19 - - 19 91 (91) - Other - - - - (196) - - - - (196) - (196) EQUITY as at December 31, 2023 3,591 12,797 16,388 (18,797) 704,401 (44,880) (905) - (45,785) 656,207 - 656,207 EQUITY as at January 1, 2022 3,591 12,797 16,388 (9,514) 539,590 (26,040) (613) (279) (26,932) 519,532 - 519,532 Net result - - - - 103,240 - - - - 103,240 43 103,283 Other comprehensive income - - - - - (9,567) (151) 198 (9,519) (9,519) (41) (9,560) Total comprehensive income - - - - 103,240 (9,567) (151) 198 (9,519) 93,720 2 93,722 Dividend to shareholders - - - - (32,428) - - - - (32,428) (293) (32,721) Transactions with treasury shares - - - (9,462) 621 - - - - (8,841) - (8,841) Employee share-based compensation expense - - - - 470 - - - - 470 - 470 Impact written put options on non-controlling interests - - - - (291) - - - - (291) 291 - Other - - - - (21) - - - - (21) - (21) EQUITY as at December 31, 2022 3,591 12,797 16,388 (18,976) 611,180 (35,607) (764) (81) (36,451) 572,141 - 572,141 Lotus Bakeries - 9 Financial supplement 10 - Lotus Bakeries NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of preparation and summary of material accounting policies 1.1 Basis of presentation The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU). These consolidated financial statements are presented in thousands of EUR and present the financial situation as at December 31, 2023. Due to rounding, numbers presented throughout these consolidated financial statements may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures. The accounting principles have been consistently applied to all periods presented and are consistent with those applied in the audited consolidated financial statements for the year ended December 31, 2022 of the Group. The consolidated financial statements have been prepared based on the historical cost methodology, except for certain financial instruments for which the fair value is used. These financial statements are prepared on an accrual basis and on the assumption that the Group is in going concern and will continue in operation in the foreseeable future. The Group has adopted the following relevant new standards, amendments to standards or interpretations for the first time for the financial year beginning January 1, 2023 and have been endorsed by the European Union: Amendments to IAS 1 – Presentation of Financial Statements and IFRS Practice Statement 2:Disclosure of Accounting policies. The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and changes in accounting policies. The IAS 1 amendment requires companies to disclose their material accounting policy information rather than their significant accounting policies. Further, the amendment to IAS 1 clarifies that immaterial accounting policy information need not be disclosed. To support this amendment, the Board also amended IFRS Practice Statement 2, ‘Making Materiality Judgements’, to provide guidance on how to apply the concept of materiality to accounting policy disclosures. Lotus Bakeries has reviewed the accounting policies reported in the prior years. This has resulted in retaining only the accounting policies which are deemed have a material impact on the consolidated financial statements or to be relevant for an understanding of the Group’s business. In this context, the Group has also restructured the presentation of these accounting policies. Amendments to IAS 8 – Accounting policies, Changes in Accounting Estimates and Errors:Definition of Accounting Estimates. The amendments to IAS 8 clarify how companies should distinguish changes in accounting policies from changes in accounting estimates. These amendments did not have an impact on the current consolidated financial statements. Amendments to IAS 12 – Income Taxes:Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The main change in the amendments is an exemption from the initial recognition exemption of IAS 12. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. These amendments did not have an impact on the current consolidated financial statements as the Group already recognised deferred taxes on a gross basis on its right-of-use assets and lease liabilities. Amendments to IAS 12 – Income Taxes: International Tax Reform – Pillar Two Model Rules. The amendments provide a temporary mandatory relief from accounting for deferred tax that arises from legislation implementing the GloBE model rules. More details on the impact of Pillar Two have been disclosed in note 11 relating to income taxes. Lotus Bakeries - 11 Financial supplement The following relevant new standards, amendments to standards or interpretations have been published, but are not yet mandatory for the first time for the financial year beginning January 1, 2023, and have not been early adopted: Amendments to IAS 1 – Presentation of Financial Statements:Classification of Liabilities as current or non-current (effective January 1, 2023, but not yet endorsed in EU), affect only the presentation of liabilities in the statement of financial position — not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. The amendments provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. The Group does not expect that the above-mentioned new pronouncements will have a material impact on the consolidated financial statements. 1.2 Critical accounting judgements and estimates In order to prepare the financial statements in accordance with IFRS, management has to make judgements, estimates and assumptions which have an impact on the financial statements and notes. Estimates and judgements made on the reporting date reflect existing conditions on that date (for example: market prices, interest rates and foreign exchange rates). Estimates and judgements are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Though these estimates are made by management based on maximum knowledge of ongoing business and of the actions that the Group may undertake, the actual results may be different. The estimates and judgements that could have an impact on the consolidated financial statements are listed below: Key assumptions used in the impairment test of goodwill and intangible assets (see note 13); and Key assumptions used in the measurement of post-employment benefits (see note 23). Nevertheless, the Company does not expect that the above-mentioned accounting judgements and estimates will have a significant impact on the operations of the Group. Next to the above items, the Company considers climate change and its sustainability commitments as one of the main items to include in the determination of future estimates and judgements. As such, the Company is aware that climate change can create disruptions in the supply chain and in the operating activities. Legislation requires significant investments to reach the sustainability targets defined. Therefore, Lotus Bakeries monitors and assesses how its business impacts the environment and the direct surroundings of its different locations. The Group assesses how sustainable CAPEX investments will impact in the future its cash forecasts, useful lives of assets... Furthermore, the changing customer behaviour to more healthy and sustainable products is considered a key item in identifying opportunities and business developments. At this stage, the Group does not expect that climate change or other environmental related risks would have a significant impact on the financial statements in the short term. However, the Group monitors closely its consumptions and usage of key commodities to mitigate any potential impact. This will be further elaborated in the context of the implementation of CSRD and ESRS applicable as from 2024. Furthermore, we refer to our SBTi commitment signed in March 2023 which requires that we file and get approval of our targets within 2 years. For this, the base year is 2023 as explained in our Annual Report. The ‘Net Zero by 2050’ target requires the Group to reassess its investment strategy and timing and alternatives of both CAPEX and OPEX investments. This will potentially impact the use of resources and available assets. As such, future financial statements would potentially be impacted through a revision of the useful lives of tangible assets, updated cash forecasts in impairment tests, investments in tools and assets improving our ecological footprint. 12 - Lotus Bakeries 1.3 Consolidation principles The consolidated financial statements comprise the financial statements of Lotus Bakeries NV and its subsidiaries (collectively referred to as the ‘Group’). Intercompany balances and transactions between Group companies are eliminated. Subsidiaries Subsidiaries are entities controlled by the Group. The Group has control over an investee when it is exposed to, or has the right to, variable returns arising from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are included in the consolidation scope as from the date that the Group obtains control until the date such control ceases. Acquisition of subsidiaries is accounted for according to the acquisition method. The cost of the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The cost includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities assumed and contingent liabilities assumed in a business combination are measured initially at their fair value at acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess of the cost of the acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary in the case of a bargain purchase, the difference is recognised directly in the statement of profit or loss. The financial statements of the subsidiaries have the same financial year as the Company and are prepared in accordance with the accounting principles of the Group. Liabilities related to put options granted to non-controlling interests The Group granted put options to non-controlling interests in a subsidiary, giving the holders the right to sell part or all of their investment in the subsidiary to the Company. This put option on non-controlling interests (own equity instrument) gives rise to a gross liability that is initially recognised against equity and measured at the present value of the redemption amount (exercise price) in accordance with IAS 32 – Financial Instruments: presentation. This financial liability is included in the other non-current liabilities. This gross liability is subsequently measured at fair value. The difference between the value of the non-controlling interest and the fair value of the liability is allocated to the retained earnings (Group share), which are included in shareholders’ equity. This liability is adjusted at the end of each reporting period to reflect changes in the estimated exercise price of the option and the carrying amount of non-controlling interests. If the option comes to maturity without exercising, the liability is derecognised against non-controlling interests and retained earnings (Group share). 1.4 Foreign currencies 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 euro, the Group’s reporting currency. Transactions in foreign currencies Transactions in foreign currencies are translated into the functional currency using the exchange rate applicable on the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the closing rate on the reporting date. Resulting foreign exchange gains and losses are recognised in the statement of profit or loss. Foreign exchange gains and losses that relate to interest-bearing liabilities and cash and cash equivalents are presented in the statement of profit or loss within the financial result. All other foreign exchange gains and losses are presented in the statement of profit or loss within operating result. Lotus Bakeries - 13 Financial supplement Financial statements of foreign entities For foreign entities using a different functional currency than the euro: assets and liabilities are translated to the euro using the exchange rate on the reporting date; items of income and expenses are translated at average exchange rate; and equity items are translated at the historical exchange rate. The resulting translation differences are recognised in other comprehensive income and accumulated in a separate component of equity (translation differences). These translation differences remain in equity up to the disposal of the relevant entity. In case of disposal, the accumulated amount in equity is reclassified to the statement of profit or loss as part of the result on disposal of the relevant foreign activity. Goodwill arising from the acquisition of a foreign entity and fair value adjustments to the carrying amount of the acquired assets and liabilities at the date of acquisition, are considered as assets and liabilities of the foreign activity and are translated at the exchange rate on the reporting date. The Group has no entities in hyperinflationary economies. Exchange rates The following exchange rates were used in preparing the financial statements: Closing rate average rate 2023 2022 2023 2022 EUR/CHF 0.926 0.985 0.972 1.005 EUR/CNY 7.851 7.358 7.662 7.075 EUR/CZK 24.724 24.116 24.000 24.570 EUR/GBP 0.869 0.887 0.870 0.852 EUR/KRW 1,433.660 1,344.090 1,413.178 1,357.681 EUR/SEK 11.096 11.122 11.477 10.624 EUR/THB 37.973 36.835 38.278 36.800 EUR/USD 1.105 1.067 1.082 1.054 EUR/ZAR 20.348 18.099 19.957 17.210 1.5 Material accounting policies The material accounting policies applied by the Group are disclosed in the relevant notes as a separate paragraph. 14 - Lotus Bakeries 2. Changes to the consolidation scope In 2023, B.W.I. BV merged into Biscuiterie Willems BV. The merge did not have a significant impact on the consolidated financial statements. Furthermore, the Group has established a new entity in Australia, Lotus Bakeries Australia Pty Ltd., and in Japan, Lotus Bakeries Japan G.K. The complete list of companies included in the consolidation scope is disclosed in note 32. Business combinations 2022 On December 31, 2022, the Company finalised the acquisition of the remaining shares in Peter’s Yard® through its 100% subsidiary Lotus Bakeries International und Schweiz AG. Peter’s Yard is a British artisanal sourdough company that produces healthy and delicious sourdough crackers and sourdough crisps made from only natural ingredients. Peter’s Yard has become part of the LotusTMNatural Foods business under the leadership of Isabelle Maes, CEO Natural Foods. The initial focus for Peter’s Yard will be to further accelerate growth in the UK. The brand complements the existing LotusTMNatural Foods portfolio that contains the strong brands of nākd®, BEAR®, TREK® and Kiddylicious®. In July 2019, the Company acquired a 20% stake in Peter’s Yard via its venture capital vehicle, Fast Forward 2032 (‘FF2032’). The consideration paid for the business combination (remaining 80% share) amounts to EUR 9.6 million in cash. The assets acquired and liabilities assumed recognised in the consolidated statement of financial position at acquisition date and the amount of goodwill are presented in the following table: IN THOUSANDS OF EUR Recognised amounts of identifiable assets acquired and liabilities assumed Cash and cash equivalents 433 Intangible assets 5,697 Right-of-use assets 651 Inventories 542 Trade and other receivables 2,290 Interest-bearing liabilities (502) Trade and other payables (1,950) Other current assets and liabilities (2,082) Deferred tax liabilities (890) Total identifiable net assets acquired 4,188 Allocation to goodwill 7,876 TOTAL CONSIDERATION 12,064 TOTAL CONSIDERATION Fair value of initial investment 2,425 Cash consideration 9,639 TOTAL CONSIDERATION 12,064 The following table presents the impact of the acquisition of subsidiaries within the investing activities in the consolidated cash flow statement: IN THOUSANDS OF EUR Consideration paid in cash 9,639 Cash and cash equivalents acquired (433) ACQUISITION OF SUBSIDIARIES, NET OF CASH ACQUIRED 9,205 Lotus Bakeries - 15 Financial supplement Upon acquisition of Peter’s Yard, the initial investment of 20% held by the Group through FF2032 has been remeasured at fair value in accordance with IFRS 3. As per December 31, 2022, the amounts above with respect to fair value of net assets acquired and goodwill were provisional as not all fair value measurements had been finalised. This has been finalised in the course of 2023, but no adjustments were necessary. As a result of the acquisition accounting, the Company has allocated the purchase price (consideration paid) and has calculated the fair value of the assets acquired and liabilities assumed, in accordance with generally applied valuation rules. The purchase price was allocated to intangible assets (brands), which have been measured at fair value. Goodwill arose because the consideration for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth and future market development. Management deems that there is a strategic fit between the LotusTMNatural Foods business and Peter’s Yard as they have complementing product offerings. The resulting goodwill is not tax deductible. The gross contractual amount of the trade receivables amounts to EUR 2.2 million, which equals the carrying amount. The Group has not incurred significant acquisition-related expenses. 3. Segment reporting 3.1 Accounting policy Group revenue is centralised around a number of products that are all included in the traditional and natural snack segment. For these products, the Group is organised according to geographical regions for sales, production and internal reporting. The result of a segment includes the income and expenses directly generated by a segment as well as the portion of the income and expenses that can be reasonably attributed to the segment. Intersegment price-fixing is defined based on the ‘at arm’s length’ principle. Considering that the chief operating decision maker does not review on a regular basis items of the statement of financial position per segment, segment assets and liabilities are not disclosed. For the purpose of sales, production and internal reporting, the Group is classified according to geographical regions. As a result of the increased performance of different regions and to sustain future growth, we have reviewed in 2023 the reportable segments and have therefore restated the comparative disclosure to align with the organisational and managerial alignment. Furthermore, aggregation of underlying countries into the below identified reportable segments have been done when such aggregation is consistent with the core principle of IFRS 8, the segments have similar long-term economic characteristics and the segments are similar in each of the following respects: The nature of products and services; The nature of the production processes; The procurement process; The type or class of customer for their products and services; The functional currencies of each market; The methods used to distribute their products or provide their services; and The nature of the regulatory environment. 16 - Lotus Bakeries The regions presented in the segment reporting, which are based on the internal reporting system, are composed as follows: Continental Europe: sales by Sales Offices in Continental Europe and intra-group sales by factories in Continental Europe (homogeneous activities within Europe, excluding UK activities, and including Belgium, France and other European countries); UK: sales by Sales Offices UK, Natural Balance Foods, Urban Fresh Foods, Kiddylicious and Peter’s Yard; Americas: sales by Sales Offices in Americas and intra-group sales by the factory in the United States; Rest of the world: sales from Belgium to countries without own Sales Office and by own Sales Offices in China and South Korea. Lotus Bakeries - 17 Financial supplement 3.2 Segment information PERIOD ENDED DECEMBER 31, 2023 IN THOUSANDS OF EUR Continental Europe UK Americas Rest of the world Eliminations / Group Total segment REVENUE 648,919 271,901 155,753 144,730 (158,340) 1,062,962 Revenue from external customers 534,414 235,971 155,753 136,825 - 1,062,962 Intersegment revenue 114,505 35,931 - 7,905 (158,340) - SEGMENT RESULTS (REBIT) 97,438 51,373 27,945 30,995 (34,776) 172,974 Non-recurring income and expenses (2,544) Operating result (EBIT) 170,430 Financial result (2,533) Result before taxes 167,897 Income taxes (38,565) Net result 129,333 OTHER SEGMENT INFORMATION Acquisitions: Tangible assets 32,358 15,346 16,646 16,327 4,750 85,427 Intangible assets 8 - - - 774 783 Depreciations and amortisations on (in)tangible assets 20,510 1,668 6,588 458 3,633 32,857 18 - Lotus Bakeries PERIOD ENDED DECEMBER 31, 2022 IN THOUSANDS OF EUR Continental Europe UK Americas Rest of the world Eliminations / Group Total segment REVENUE 539,654 224,755 127,713 127,965 (142,634) 877,451 Revenue from external customers 433,994 197,584 127,628 118,244 - 877,451 Intersegment revenue 105,660 27,170 85 9,720 (142,634) - SEGMENT RESULTS (REBIT) 78,633 40,333 14,482 32,393 (25,653) 140,188 Non-recurring income and expenses (3,807) Operating result (EBIT) 136,381 Financial result (2,354) Result before taxes 134,027 Income taxes (30,744) Net result 103,283 OTHER SEGMENT INFORMATION Acquisitions: Tangible assets 65,091 6,082 50,884 13,466 6,428 141,952 Intangible assets 522 - - - 784 1,306 Depreciations and amortisations on (in)tangible assets 16,868 1,266 3,590 642 2,878 25,245 Sales between the various segments are carried out at arm’s length. The non-current assets (i.e. property, plant and equipment, right-of-use assets, intangible assets and goodwill) by location of assets are detailed in the table opposite: The Group’s revenue by country are disclosed in note 4. IN THOUSANDS OF EUR 2023 2022 Belgium 265,045 252,446 United Kingdom 212,773 207,064 United States 135,227 129,897 The Netherlands 100,342 100,167 South-Africa 55,292 49,154 Other 76,372 61,496 TOTAL NON-CURRENT ASSETS 845,051 800,225 Lotus Bakeries - 19 Financial supplement 4. Revenue 4.1 Accounting policy Revenue is included in the statement of profit or loss when it is probable that the Group will receive economic benefits from the transaction and the revenue can be measured reliably. Revenue of the Group is generated principally through the sale of goods with as only performance obligation the delivery of goods. Revenue recognition occurs at a point in time, when control of the asset is transferred to the customer, generally on delivery of the goods. Customer contracts include trade discounts or volume rebates, which are granted to the customer if the delivered quantities exceed a certain threshold. In these cases, the transaction price includes a variable consideration. The effect of the variable consideration on the transaction price is taken into account in revenue recognition by estimating the probability of the realisation of the discount or rebate for each contract. In the context of contracts with clients or as a result of business practices, Lotus Bakeries might pay certain amounts to its customer. The payments can be cash, either in the form of rebates or discounts, or could alternatively be a credit or some other form of incentive that reduces amounts owed to Lotus Bakeries by a customer. Amounts paid by Lotus Bakeries to customers on either a limited or a continuous basis may take various forms and are paid for a varying number of reasons, such as discounts, coupons, rebates, co-advertising, slotting or listing fees. In accordance with IFRS 15, Lotus Bakeries accounts for such consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the entity. It is therefore important to analyse the substance of such payment in order to properly reflect the substance of them, i.e. include in the transaction price of the transaction with the customer (revenue) or consider as a separate transaction (expense). 4.2 Overview Revenue is generated at a point in time mainly by branded products (Biscoff, Natural Foods brands and Local heroes). The sales generated in the country of domicile of the Group (Belgium) represent 15% of the Group’s revenue. Sales to countries in our top four countries are presented in the table below. The sales in all other individual country represent less than 10% of the Group’s revenue. IN THOUSANDS OF EUR 2023 2022 Belgium 159,848 118,077 United Kingdom 240,251 249,300 United States 155,753 127,628 France 150,816 109,218 Other 356,294 273,208 Total revenue 1,062,962 877,451 20 - Lotus Bakeries 5. Services and other goods Services and other goods include mainly commercial and marketing expenses, logistic expenses (transport and warehousing), professional fees (legal, accounting and consulting) and utilities. The increase compared to 2022 relates to increased sales and production volumes, next to increased plan-related expenses and professional fees, in line with the increased revenue performance. 6. Employee benefit expenses IN THOUSANDS OF EUR 2023 2022 Short-term employee benefits 165,997 139,481 Social security contributions 25,828 21,789 Defined contribution costs 3,628 4,654 Defined benefit costs 311 303 Other employee benefit expenses 9,546 7,392 TOTAL EMPLOYEE BENEFIT EXPENSES 205,310 173,618 Average number of employees 2,857 2,655 Number of employees as at the end of the year 2,984 2,698 The other employee benefit expenses include mainly the costs of training and other employee-related insurances. 7. Depreciation and amortisation expenses IN THOUSANDS OF EUR 2023 2022 Amortisation of intangible assets (see note 14) 1,274 1,033 Depreciation of property, plant and equipment (see note 15) 26,498 19,554 Depreciation of right-of-use assets (see note 15) 5,085 4,658 TOTAL DEPRECIATION AND AMORTISATION EXPENSES 32,857 25,245 8. Other operating income and expenses The other operating income consists primarily of external sales of raw materials and other non-core items, various costs recovered at the time of sale and indemnification payments. The other operating expenses include local levies (property taxes, municipal taxes, packaging tax…) and penalties. Lotus Bakeries - 21 Financial supplement 9. Non-recurring income and expenses Non-recurring income and expenses include operating income and expenses that do not belong to or derive from the recurring operating activities of the Group (normal course of business). This category includes primarily results from the disposal of fixed assets, any goodwill impairment losses, any impairment losses on fixed assets, expenses relating to the acquisition, disposal and start-up of new businesses, restructuring expenses and expenses relating to pandemics. IN THOUSANDS OF EUR 2023 2022 Start-up costs related to capacity extensions (2,546) (288) Organisation restructuring (62) (1,269) Office relocations (17) (785) Product range restructuring - (1,081) Other 81 (383) TOTAL NON-RECURRING INCOME AND EXPENSES (2,544) (3,807) In 2023, the non-recurring result relates mainly to expenses from the construction and establishment of the new plant in Thailand and the extension of the plant in South-Africa. The costs for the project in Thailand will increase towards the commissioning of the plant in 2026. As from reporting year 2024, the non-recurring items will be referred to as ‘Adjusting items to the operating result’. However, the scope of this reporting line item will not change, see also note 33 relating to the Alternative Performance Measures. 10. Financial result IN THOUSANDS OF EUR 2023 2022 Interest expenses (4,035) (3,115) Interest income 2,475 551 Interest income (expenses) (1,560) (2,565) Foreign exchange gains (losses) (119) 988 Other financial income (expenses) (854) (777) TOTAL FINANCIAL RESULT (2,533) (2,354) The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pounds sterling) and USD (US dollars). 22 - Lotus Bakeries 11. Income taxes 11.1 Accounting policy Income taxes include current and deferred taxes. Both taxes are recognised in the statement of profit or loss except if the underlying transaction has been recognised directly in other comprehensive income. If so, the related income taxes are also directly recognised in other comprehensive income. Current taxes include the amount of tax payable on the taxable earnings for the period calculated at the tax rate applicable on the reporting date. They also include adjustments to income tax liabilities for previous years. In line with IAS 12 – Income Taxes, management assesses on a periodic basis the positions taken in tax declarations in respect of items subject to interpretation in the tax legislation, and records, if necessary, additional income tax liabilities based on the expected amounts payable to the tax authorities. The assessment is made for all fiscal periods still subject to controls by the authorities. Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted. Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset. The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. 11.2 Income taxes in the statement of profit or loss The income tax recognised in the statement of profit or loss can be detailed as follows: IN THOUSANDS OF EUR 2023 2022 Current taxes in respect of the current year (33,699) (29,417) Current taxes in respect of the prior years 100 (2,213) Deferred taxes (4,966) 885 TOTAL INCOME TAXES (38,565) (30,744) The average effective tax rate is 23.0%, compared to 22.9% in 2022. Lotus Bakeries - 23 Financial supplement The income tax expense can be reconciled as follows: IN THOUSANDS OF EUR 2023 2022 Result for the period before taxes 167,897 134,027 Legal tax rate 25.00% 25.00% Income tax expense computed at the legal tax rate (41,974) (33,507) Effect of different tax rates in other countries 1,599 2,481 Deductions of taxable income 2,461 1,472 Tax adjustments for prior years 1,569 429 Disallowed expenses (898) (1,056) Tax exempted income 115 66 Tax losses used for which no deferred tax asset has been recorded - (21) Unrecognised deferred tax assets (1,232) - Changes in tax rate or new taxes 17 (670) Other (221) 61 TOTAL INCOME TAXES (38,565) (30,744) Effective tax rate 23.0% 22.9% In October 2021, the OECD reached agreement on the Pillar Two global minimum tax rules to address the tax challenges arising from digitalisation of the economy. The agreement includes a coordinated system of Global anti-Base Erosion (GloBE) rules that are designed to ensure large multinational companies pay a minimum level of tax on the income arising in each jurisdiction where they operate, establishing a global minimum corporate tax rate of 15% on the profit. This set of measures would be applied on a Country-by-Country basis to multinational companies with revenue exceeding EUR 750 million. Considering that the Group has exceeded the applicable thresholds in 2021, the Group is subject to the GloBE rules and has to consider the global minimum tax in the jurisdictions in which it operates as a legal entity. Belgium, where the Company is domiciled, has adopted the new tax legislation implementing the GloBE rules. The Company is currently monitoring the progress of adoption of the GloBE rules in each jurisdiction. Based on a first assessment and considering the effective and nominal tax rates in the different jurisdictions, it is clear that the Group will be able to benefit from the safe harbours provided by the OECD for most of its subsidiaries with a potential exception for Switzerland where the effective tax rate is close to 15%. However, in the meantime, the Swiss authorities have adopted the GloBE rules and the related qualified domestic minimum top-up tax (QDMTT). In accordance with the requirements introduced by the amendments to IAS 12 (see note 1.1), the Group applies the exception to the recognition of deferred taxes associated with income taxes arising from the Pillar Two model rules. Therefore, the Group has decided to not recognise deferred taxes under Pillar Two rules when these rules have been adopted in a jurisdiction. 24 - Lotus Bakeries 11.3 Income taxes in the statement of financial position Deferred taxes The deferred tax assets and liabilities can be reconciled as follows: IN THOUSANDS OF EUR As at January 1, 2023 Recognised through the statement of profit or loss Recognised through equity Business combinations Exchange differences As at December 31, 2023 Intangible assets (33,389) (167) - - (263) (33,820) Property, plant and equipment (32,416) (6,570) 141 - 393 (38,452) Inventories 232 436 - - (2) 666 Employee benefit obligations 844 (38) 192 - - 998 Other liabilities (1,848) (2,276) - - 11 (4,113) Derivative financial instruments 95 (68) (27) - - - Tax losses carried forward 3,649 2,903 - - (150) 6,402 Other 1,331 814 (141) - 410 2,414 TOTAL DEFERRED TAXES (61,503) (4,966) 165 - 398 (65,905) Of which deferred tax assets 2,212 2,120 Of which deferred tax liabilities (63,716) (68,024) IN THOUSANDS OF EUR As at January 1, 2022 Recognised through the statement of profit or loss Recognised through equity Business combinations Exchange differences As at December 31, 2022 Intangible assets (33,588) 661 - (1,424) 963 (33,389) Property, plant and equipment (32,542) 584 - - (458) (32,416) Inventories 511 (271) - 13 (21) 232 Employee benefit obligations 991 (135) (12) - - 844 Other liabilities (2,225) (144) - 521 - (1,848) Derivative financial instruments 161 - (66) - - 95 Tax losses carried forward 5,023 (1,600) - - 226 3,649 Other (392) 1,790 - - (68) 1,331 TOTAL DEFERRED TAXES (62,061) 885 (78) (890) 642 (61,503) Of which deferred tax assets 2,182 2,212 Of which deferred tax liabilities (64,243) (63,716) Lotus Bakeries - 25 Financial supplement The recognition of these deferred tax assets is supported by profit expectations in the foreseeable future. At year-end 2023, the Group did not recognise deferred tax assets for unused tax losses for a total gross amount of EUR 6.1 million, of which EUR 2.7 million have no expiry date and EUR 3.4 million have a maturity of 5 years. Current taxes The current tax assets mainly relate to the excess of pre-payments made compared to the actual income tax payable for the year. The current tax liabilities include actual corporate taxes payable. 12. Earnings per share Basic earnings per share is calculated by dividing the Group’s share in net result by the weighted average number of outstanding shares over the year (total number of shares – treasury shares). Diluted earnings per share is calculated by dividing the Group’s share in net result by the weighted average number of outstanding shares over the year, adjusted for the potential dilution of ordinary shares as a result of options granted under the stock option plan for management (see note 21). IN THOUSANDS OF EUR 2023 2022 Net result – Basic and diluted earnings per share 129,333 103,283 Of which attributable to equity holders of Lotus Bakeries 129,261 103,240 Weighted average number of shares – Basic earnings per share 811,364 810,858 Dilutive effect 1,009 1,249 Weighted average number of shares – Diluted earnings per share 812,373 812,106 BASIC EARNINGS PER SHARE (IN EUR) 159.40 127.37 Of which attributable to equity holders of Lotus Bakeries 159.31 127.32 DILUTED EARNINGS PER SHARE (IN EUR) 159.20 127.18 Of which attributable to equity holders of Lotus Bakeries 159.12 127.13 26 - Lotus Bakeries 13. Goodwill 13.1 Accounting policy Goodwill arising from a business combination is initially measured at cost (i.e., the excess between the cost of the business combination and the Group’s interest in the fair value of the identifiable assets acquired, liabilities assumed and contingent liabilities assumed). After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any. Goodwill is tested for impairment annually or more often if events or changes in circumstances indicate that the carrying amount may have been impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date onwards, allocated to each of the Group’s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. For sales, production and internal reporting, the Group is organised into geographic regions (see also note 3 Segment reporting). The segments consist of underlying business units. These business units represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These business units are the cash-generating units to which goodwill is allocated. 13.2 Overview The carrying amount of goodwill has been allocated to the various independent cash-generating units as follows: IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 Lotus™ Natural Foods (Natural Balance Food, Urban Fresh Foods, Kiddylicious and Peter’s Yard) 169,094 170,860 Belgium 20,773 20,773 The Netherlands 17,151 17,151 Asia 8,653 9,229 Nordics 5,541 5,528 Other 1,704 1,704 TOTAL GOODWILL 222,915 225,246 IN THOUSANDS OF EUR Carrying amount as at January 1, 2022 224,846 Acquisitions through business combinations 7,876 Effect of movements in foreign exchange rates (7,476) Carrying amount as at December 31, 2022 225,246 Effect of movements in foreign exchange rates (2,331) CARRYING AMOUNT AS AT DECEMBER 31, 2023 222,915 Lotus Bakeries - 27 Financial supplement 13.3 Impairment test Goodwill, representing approximately 18% of the total assets of Lotus Bakeries at December 31, 2023, is tested for impairment every year during the fourth quarter after the budget process (or whenever there is a specific reason to do so) by comparing the carrying amount of each cash-generating unit (CGU) with its recoverable amount. The recoverable amount of a cash-generating unit is determined on the basis of the value in use. The value in use is determined as the present value of expected future cash flows based on the current long-term planning of the Group. The discount rate used in determining the present value of expected future cash flows is based on a weighted average cost of capital (WACC) before taxes (pre-tax discount rate). The impairment test for goodwill is based on a number of critical judgements, estimates and assumptions. The assumptions are consistent and reasonable for all cash-generating units, which are mainly located in Europe and the UK: Revenue and operating result: revenue and operating result reflect management’s expectations based on past experience and taking into account the risks specific to the reportable business unit; The first year of the model is based on the budget for the year as approved by the board of directors, taking into account historical results and is management’s best estimate of the free cash flow outlook for the current year; In years two to three of the model, free cash flows are based on Lotus Bakeries’ long-term plan. The long-term plan is prepared country by country, based on reasonable internal plans that take into account the specific market situation and the past; Cash flows beyond the first three years are extrapolated by applying a perpetual growth rate; Projections are discounted at the pre-tax weighted average cost of capital (WACC). The WACC has been determined by jurisdiction and considering the specific risks related to each CGU. Main inputs include risk-free rate, market risk, risk premium and the cost of debt. The impairment test is highly sensitive to the key assumptions, pre-tax discount rate and perpetual growth rate, which are detailed below: Pre-tax discount rate 2023 Pre-tax discount rate 2022 Perpetual growth rate 2023 Perpetual growth rate 2022 Lotus™ Natural Foods CGU's 8.9%-9.4% 7.1%-7.5% 2.0% 4.0%-5.0% Other CGU's 7.6%-9.5% 6.1%-7.3% 2.0% 1.5%-3.0% At the end of 2023, Lotus Bakeries has completed its annual impairment test of goodwill. The discount rates have been updated to reflect the overall increase of the risk-free rates on the market. Furthermore, the perpetual growth rates have been aligned to the long-term targeted inflation rates instead of the company-specific estimated long-term growth rates. These changes in key assumptions have impacted negatively the different headrooms, but did not result in any impairment loss. As part of the impairment test, the Company carried out a sensitivity analysis for the key assumptions used, i.e. the pre-tax discount rate and perpetual growth rate. Here, a decrease in the perpetual growth rate by 100 basis points and an increase in the pre-tax discount rate by 100 basis points were applied. A change in the key assumptions used, as described above, does not lead to an impairment loss. Although Lotus Bakeries believes that its assessments, assumptions and estimates are suitable, actual results may differ from these estimates in the event of changed assumptions and conditions. 28 - Lotus Bakeries 14. Intangible assets 14.1 Accounting policy Intangible assets which are acquired separately are measured initially at cost. After initial recognition, intangible assets are measured at cost less accumulated amortisations and impairment losses. Costs for internally generated intangible assets are recognised in the statement of profit or loss as incurred, unless they meet the criteria to be considered as development costs. Intangible assets acquired in the context of a business combination are recognised separately in the statement of financial position at their estimated fair value at acquisition date. This concerns brands. The value of these brands was established as part of the valuation at fair value of the asset and liability components upon first consolidation. The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively. Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use. Investments in software and licences are amortised over a period of three to five years. Lotus Bakeries - 29 Financial supplement 14.2 Overview IN THOUSANDS OF EUR Brands Software Customer portfolio Total Acquisition cost 145,968 15,222 1,030 162,220 Accumulated amortisation and impairment losses (4,627) (11,818) (1,030) (17,475) Carrying amount as at January 1, 2022 141,341 3,404 - 144.745 Acquisitions 522 784 - 1,307 Acquisitions through business combinations 5,697 - - 5,697 Amortisation expense - (1,033) - (1,033) Effect of movements in foreign exchange rates (3,987) 6 - (3,980) Carrying amount as at December 31, 2022 143,573 3,162 - 146,735 Acquisition cost 148,200 16,013 1,030 165,243 Accumulated amortisation and impairment losses (4,627) (12,581) (1,030) (18,508) Acquisitions - 783 - 783 Amortisation expense - (1,274) - (1,274) Transfer from one heading to another 1 184 - 185 Effect of movements in foreign exchange rates 1,400 (3) - 1,396 CARRYING AMOUNT AS AT DECEMBER 31, 2023 144,974 2,851 - 147,825 Acquisition cost 149,601 13,989 - 164,620 Accumulated amortisation and impairment losses (4,627) (11,138) - (16,795) 30 - Lotus Bakeries Intangible assets include brands and software investments. Software relates mainly to the capitalised external and internal costs connected with the further roll-out of the ERP information system SAP across the Lotus Bakeries Group. The brands relate to the brands acquired by the Company over the years: Peijnenburg: base brand in the Netherlands; Dinosaurus: brand acquired in 2012; Annas: base brand for the Nordic region and base brand for the pepparkakor products outside the Nordic region; nākd: brand acquired in 2015 as part of the acquisition of Natural Balance Foods; BEAR: brand acquired in 2015 as part of the acquisition of Urban Fresh Foods; Kiddylicious: brand acquired in 2018; Kung Oscar: brand acquired in 2022; and Peter’s Yard: brand acquired in 2022. IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 Lotus™ Natural Foods (nākd, Bear, Kiddylicious, Peter's Yard) 73,559 72,174 Other brands (Dinosaurus, Peijnenburg, Annas, Kung Oscar) 71,415 71,399 TOTAL CARRYING AMOUNT 144,974 143,573 At year-end 2023, the Group tested the value of these brands to assess any recoverability issues. Taking into account the assumptions used, the value in use of the related cash-generating units exceeds its carrying amount and no impairment loss is recognised. For more details on the impairment test conducted per CGU, we refer to note 13 on goodwill. Although Lotus Bakeries believes that its assessments, assumptions and estimates are reasonable, actual results may differ from these estimates in the event of changed assumptions and conditions. During 2023, the Group has incurred research and development expenses of EUR 1,655 thousands (2022: EUR 1,458 thousands), which are mainly composed of employee benefit expenses and consumables. Lotus Bakeries - 31 Financial supplement 15. Property, plant and equipment and leases 15.1 Accounting policy Property, plant and equipment Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses. Cost includes the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of self-produced assets includes direct material costs, direct labour costs and a proportional part of the production overhead. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Depreciation of an asset begins when the asset is available for its intended use. The estimated useful lives are as follows: Buildings, incl. warehouses 25-30 years Plant and machinery 15-25 years Furniture 15 years Trucks 10 years Office equipment and motor vehicles 5 years Computer equipment 3-5 years Land is not depreciated considering that it has an indefinite useful life. The depreciation methods, residual values and the useful lives of the property, plant and equipment is reassessed and adjusted if appropriate, annually. Leases A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are recognised as a right-of-use asset and corresponding liability at the date the leased asset is available for use by the Group. The right-of-use assets are presented in the consolidated statement of financial position within the line item ‘Property, plant and equipment’. The Group recognises right-of-use assets at cost, which consists of the initial measurement of the corresponding lease liabilities and any initial direct costs less lease incentives received. These assets are generally depreciated on a straight-line basis over the lease term and are subject to impairment. If it is reasonably certain that the Group will exercise a purchase option, the asset shall be depreciated on a straight-line basis over its useful life. Lease liabilities are measured at the present value of future lease payments over the lease term. The lease payments are discounted using the Group’s incremental borrowing rate, i.e. the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, as the interest rate implicit in the lease cannot be readily determined. The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset. For leases with a term of 12 months or less (short-term leases) or leases of low-value items to which the Group applies the recognition exemptions available in IFRS 16, lease payments are recognised on a straight-line basis as an expense over the lease term. 32 - Lotus Bakeries 15.2 Overview IN THOUSANDS OF EUR Land and buildings Plant, machinery and equipment Furniture, office equipment and vehicles Assets under construction Right-of-use assets Total Acquisition cost 175,901 348,985 20,785 39,745 19,135 604,551 Accumulated depreciation and impairment losses (57,312) (217,028) (16,057) - (6,429) (296,826) Carrying amount as at January 1, 2022 118,589 131,957 4,728 39,745 12,706 307,725 Acquisitions 29,358 14,544 4,297 84,475 9,278 141,952 Acquisitions through business combinations - 651 - - - 651 Disposals (106) (130) (10) (94) (325) (665) Depreciation expense (4,896) (13,326) (1,332) - (4,658) (24,212) Impairment losses - - - - (519) (519) Transfers from one heading to another 4,587 11,576 (21) (16,142) - - Effect of movements in foreign exchange rates 1,703 1,434 96 419 (341) 3,311 Carrying amount as at December 31, 2022 149,235 146,706 7,758 108,403 16,142 428,243 Acquisition cost 209,647 369,907 25,014 108,403 23,098 736,069 Accumulated depreciation and impairment losses (60,412) (223,201) (17,256) - (6,957) (307,826) Acquisitions 13,248 26,820 1,092 36,432 7,835 85,427 Disposals (885) (77) (4) (52) (193) (1,211) Depreciation expense (6,782) (17,954) (1,761) - (5,085) (31,583) Transfers from one heading to another 42,729 54,275 227 (97,417) - (185) Effect of movements in foreign exchange rates (3,355) (1,832) (53) (1,109) (31) (6,380) Carrying amount as at December 31, 2023 194,190 207,937 7,259 46,257 18,667 474,311 Acquisition cost 260,318 439,530 20,307 46,257 28,181 794,593 Accumulated depreciation and impairment losses (66,128) (231,593) (13,048) - (9,514) (320,283) In 2023, an amount of EUR 77,592 thousands has been invested in property, plant and equipment. Lotus Bakeries is currently investing in Thailand (Chonburi) in a new greenfield production facility for Lotus® Biscoff® to further support its growth ambition in the Asia-Pacific region. The land was purchased in 2022 and the project team has now completed the land levelling and groundworks. The building construction is ongoing. Furthermore, the Group continues to invest in the Wolseley factory in South-Africa with an additional production facility for the production of the nākd® raw bars. The first commercial production takes place in January 2024. Lotus Bakeries - 33 Financial supplement In 2022, EUR 132,674 thousands was invested in property, plant and equipment. In the Lotus® Biscoff® plant in Belgium, a second dough preparation room became operational. In the US, a second production hall with two new Lotus® Biscoff® production lines was built. In the context of the establishment of a production facility for Lotus® Biscoff® in Asia to further support the Group’s growth ambition for Lotus® Biscoff®, land was acquired in Thailand. During 2023 and 2022, no government grants have been granted to the Group. No pledges have been set on the items of property, plant and equipment. 15.3 Right-of-use assets The carrying amount of the right-of-use assets arising from IFRS 16 – Leases is reconciled as follows: IN THOUSANDS OF EUR Carrying amount as at January 1, 2023 New leases Depreciations Other movements Carrying amount as at December 31, 2023 Land and buildings 11,766 2,091 (2,374) (48) 11,436 Plant, machinery and equipment 223 136 (69) - 290 Furniture, office equipment and vehicles 4,153 5,608 (2,643) (177) 6,942 Total right-of-use assets 16,142 7,835 (5,085) (225) 18,667 In 2023, additional right-of-use assets relate mainly to the lease of vehicles (transition to electric company cars). In 2022, additional right-of use assets relate mainly to the signing of new office leases in the UK and the US. 34 - Lotus Bakeries 16. Investments in other companies In 2019, Lotus Bakeries created the corporate venture fund FF2032, establishing a platform for investment in promising brands and growth companies offering innovative products, technologies or market approaches within the food sector. Considering that these investments do not provide the Group any control or significant influence, the investments are valued at fair value. An irrevocable election has been made at initial recognition to measure the investments subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. Investments for which no fair value can be determined reliably, are recognised at historical cost and are reviewed on a regular basis for impairment. The Group, through its subsidiary FF2032, has minority shares in: Love Brands Inc., an American company which markets delicious crunchy corn snacks under the LOVE Corn name. Partake Foods, operating in the American market with cookies free from the top eight allergens. Oot Granola, a Dutch brand which markets fresh, organic and gluten-free granola that are low in sugars. Oot Granola has a pure online ‘direct-to-consumer’ concept. The Good Crisp Company, an American company which produces natural, gluten-free chips, completely free of artificial flavourings and colorants. IQBAR, an American company manufacturing a set of plant-based nutritional bars that contain six brain nutrients and that tick all the boxes in terms of nutritional profile. In 2023, the Group invested in Aura Bora, a US company. Aura Bora produces natural zero calorie sparkling water infused with real herbs, fruits and flowers. Furthermore, a minority stake was acquired in Fit Joy, a US company manufacturing grain-free pretzels. Their products are vegan, dairy-, gluten-, nut-free, and non-GMO. Next to the aforementioned new investments, the Group has also invested additionally in The Good Crisp Company. Lotus Bakeries - 35 Financial supplement 17. Inventories 17.1 Accounting policy Inventories are measured at the lower of cost and net realisable value. For raw materials, consumables and goods for resale, cost is measured at the purchase price on a FIFO basis. The cost of finished products is the standard manufacturing cost price. This includes, in addition to direct production and material costs, a proportional part of the fixed and variable overhead costs based on the normal production capacity. The net realisable value is defined as the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. 17.2 Overview IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 Raw materials and consumables 20,412 20,261 Work in progress 3,912 5,288 Goods for resale and finished goods 52,581 44,812 TOTAL INVENTORIES 76,906 70,361 Write-down on inventories of EUR 2,673 thousands (2022: EUR 3,519 thousands) relate mainly to finished products (2023: EUR 1,009 thousands; 2022: EUR 1,297 thousands), goods for resale (2023: EUR 625 thousands; 2022: EUR 542 thousands), raw materials (2023: EUR 534 thousands; 2022: EUR 245 thousands) and packaging material (2023: EUR 494 thousands; 2022: EUR 1,411 thousands). Reversal of previously recognised write-downs amount to EUR 1,977 thousands in 2023. 18. Trade and other receivables IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 Trade receivables 142,762 111,558 Less allowance for impairment of trade receivables (1,294) (803) Trade receivables – net 141,468 110,755 VAT receivables 10,049 8,979 Other amounts receivable 527 339 Other receivables 10,576 9,318 TOTAL TRADE AND OTHER RECEIVABLES 152,044 120,074 The trade receivables represent an average of 46 days of customer credit (2022: 46 days). With regard to trade receivables there are no indications that debtors will not meet their payment obligations. Nor are there any customers representing more than 10% of the consolidated revenue. IFRS 9 requires the Company to recognise an allowance for expected losses on the recovery of trade receivables. This has no material impact. More information regarding the credit risk is disclosed in note 26. Movements on valuation for impairment of trade receivables are as follows: IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 Opening balance 803 526 Allowances recognised 531 472 Amounts written off during the year as uncollectible (51) (159) Effect of movements in foreign exchange rates 12 (37) TOTAL ALLOWANCE FOR IMPAIRMENT OF TRADE RECEIVABLES 1,294 803 36 - Lotus Bakeries 19. Cash and cash equivalents Cash and cash equivalents include cash in hand, bank balances (current and deposit accounts) and other short-term highly liquid investments with maturities since acquisition date of three months or less. IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 Short-term bank deposits 71,135 - Cash at bank and on hand 60,096 76,434 TOTAL CASH AND CASH EQUIVALENTS 131,231 76,434 For the cash flow statement, cash and cash equivalents include cash and bank balances and term deposits. Any negative cash is included under non-current interest-bearing liabilities in the statement of financial position. 20. Other assets The other non-current and current assets include mainly cash guarantees and deferred charges relating to the operational activities of the Group. 21. Equity 21.1 Accounting policy Ordinary shares are classified as equity. Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid is deducted from equity attributable to owners of the Company until the shares are cancelled or reissued. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Dividends payable to shareholders of the Company are recognised as a liability in the statement of financial position in the period in which the dividends are approved by the shareholders of the Company. 21.2 Share capital All shares are ordinary shares, registered or dematerialised. The ordinary share capital of the Company issued and full paid consists of 816,013 shares (2022: 816,013 shares), of which 4,313 treasury shares (2022: 5,072 treasury shares). The treasury shares have been purchased as part of the share option plans mentioned below. The following table presents the number of shares outstanding: NUMBER OF SHARES Shares issued Treasury shares Outstanding shares As at January 1, 2022 816,013 (4,110) 811,903 Treasury shares delivered for share option plans - 1,538 1,538 Purchase/sale of treasury shares - (2,500) (2,500) As at December 31, 2022 816,013 (5,072) 810,941 Treasury shares delivered for share option plans - 1,238 1,238 Purchase/sale of treasury shares - (479) (479) AS AT DECEMBER 31, 2023 816,013 (4,313) 811,700 Further details of the shareholding structure of Lotus Bakeries NV as of December 31, 2023 are disclosed in the Corporate Governance Statement in Part 1 of the 2023 annual report of Lotus Bakeries. Lotus Bakeries - 37 Financial supplement 21.3 Capital risk management The objective of Lotus Bakeries is to ensure that the Group can continue to operate as a going concern in order to generate a return for shareholders and provide benefits for other stakeholders. Furthermore, the Group aims for a capital structure (balance between debt and equity) that gives it the required financial flexibility to implement its growth strategy. The aim is to maintain the ratio of net financial debt (defined as interest-bearing liabilities minus cash and cash equivalents and term deposits minus treasury shares, and are reported excluding the ‘lease liabilities’) to recurring operating cash flow (REBITDA) at what is considered as a reasonable level in the financial market. 21.4 Share-based payments 21.4.1 Accounting policy The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium. 21.4.2 Overview Since 2012, each financial year the Board of Directors grants stock options to executives and senior management, based on category, results and performance. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below. Each option gives the holder the right to purchase one ordinary Lotus Bakeries share at a fixed exercise price. The exercise price is equal to the average closing stock market price of the underlying share during the thirty calendar days prior to the offering date. The granted options have a term of five years. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry. The stock options are only subject to services conditions so that it will vest gradually over the vesting period, i.e. three years. The options are exercisable if the option holder remains linked to the Company or a related entity as an employee or executive director. These rights are retained in the event of retirement, early retirement, invalidity or death. The stock option plans are considered equity-settled share-based payments. The fair value of the options is estimated at the grant date, using the binomial valuation model. This valuation model is based on the following market data and assumptions: the share price at the time of allotment, the exercise price, the exercise arrangements, the estimated volatility, the dividend expectations and the risk-free interest rate. The fair value of the share options is recognised linearly over the vesting period. 38 - Lotus Bakeries The following table details the different plans granted and the assumptions used for the measurement of the fair value: Granted in 2018 2019 2020 2021 2022 2023 Number granted 1,179 1,199 962 660 792 618 Number exercised (1,139) (911) (50) (33) - - Number expired (40) (50) (40) (26) - - Available options - 238 872 601 792 618 Key assumptions used for fair value measurement Exercise period 01/01/2022 – 14/05/2023 01/01/2023 – 09/05/2024 01/01/2024 – 07/05/2025 01/01/2025 – 17/05/2026 01/01/2026 – 30/06/2027 01/01/2027 – 31/05/2028 Exercise price (EUR) 2,373.00 2,351.58 2,828.95 4,517.14 5,057.32 6,086.36 Share price (EUR) 2,310.00 2,330.00 2,890.00 4,630.00 4,868.81 5,990.00 Expected volatility 22.43% 23.14% 25.07% 23.69% 25.39% 26.23% Dividend yield 0.93% 0.92% 0.95% 0.94% 0.97% 0.95% Risk-free rate 0.11% -0.29% -0.36% -0.34% 0.82% 2.57% FAIR VALUE PER OPTION (EUR) 316.29 331.55 471.65 720.51 790.38 1,167.59 The volatility is based on daily share prices of Lotus Bakeries over the last three years. Lotus Bakeries - 39 Financial supplement The following reconciles the options outstanding at the beginning and end of the year: Weighted average exercise price (EUR) Number of options Outstanding options at January 1, 2022 2,770 4,541 Granted 5,057 792 Exercised 2,420 (1,492) Expired 2,864 (146) Outstanding options at December 31, 2022 3,398 3,695 Granted 6,086 618 Exercised 2,358 (1,192) Expired - - OUTSTANDING OPTIONS AT DECEMBER 31, 2023 4,328 3,121 In 2023, a total expense of EUR 470 thousands was recognised (2022: EUR 470 thousands). 21.5 Dividends The dividend related to 2022 was paid in 2023, in accordance with the decision taken at the Ordinary General Meeting of Shareholders of May 12, 2023. The shareholders approved a gross dividend of EUR 45per share, resulting in a total dividend of EUR 36,470 thousands. The Board of Directors will propose to the Ordinary General Meeting of Shareholders of May 14, 2024 to pay a gross dividend of EUR 58per share for 2023. This amount is not recognised as a debt on December 31. 22. Interest-bearing liabilities in thousands of EUR December 31, 2023 December 31, 2022 Bank loans 261,000 182,500 Lease liabilities 14,834 13,566 Non-current interest-bearing liabilities 275,834 196,066 Bank loans 9,500 66,000 Lease liabilities 5,157 4,178 Current interest-bearing liabilities 14,657 70,178 TOTAL INTEREST-BEARING LIABILITIES 290,491 266,244 of which bank loans 270,500 248,500 of which lease liabilities 19,991 17,744 All bank loans are denominated in EUR. These loans bear a fixed interest rate. The weighted average interest rate is 1.26% (2022: 1.00%). The lease liabilities mainly relate to the lease of company cars and office buildings (see also note 15). 40 - Lotus Bakeries The following tables reconcile the movements of the interest-bearing liabilities to the cash flows arising from financing activities: Non-cash movements IN THOUSANDS OF EUR As at January 1, 2023 Cash flows New Leases and lease modifications Exchange differences Reclasses Other As at December 31, 2023 Non-current interest-bearing liabilities Bank loans 182,500 88,000 - - (9,500) - 261,000 Lease liabilities 13,566 (208) 7,852 20 (5,883) (512) 14,834 Current interest-bearing liabilities Bank loans 66,000 (66,000) - - 9,500 - 9,500 Lease liabilities 4,178 (5,282) - (32) 5,883 410 5,157 TOTAL LIABILITIES FROM FINANCING ACTIVITIES 266,244 16,510 7,852 (12) - (102) 290,491 Non-cash movements IN THOUSANDS OF EUR As at January 1, 2022 Cash flows New Leases and lease modifications Exchange differences Reclasses Other As at December 31, 2022 Non-current interest-bearing liabilities Bank loans 209,500 12,000 - - (39,000) - 182,500 Lease liabilities 9,337 9,847 (304) (4,990) (324) 13,566 Current interest-bearing liabilities Bank loans 14,000 13,000 - - 39,000 - 66,000 Lease liabilities 3,439 (4,187) - (64) 4,990 - 4,178 TOTAL LIABILITIES FROM FINANCING ACTIVITIES 236,276 20,813 9,847 (368) - (324) 266,244 Lotus Bakeries - 41 Financial supplement 23. Employee benefit obligations 23.1 Accounting policy Short-term employee benefits Bonuses for employees and management are calculated based on key financial objectives and individual objectives. The estimated amount of the bonuses is recognised as an expense in the period in which the related services have been rendered based on an estimate on the reporting date. Post-employment benefits (pension plans) Group companies operate various pension schemes. The Group has both defined benefit and 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 recognised as employee benefit expense when they are due. In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define 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. For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. Defined benefit costs are divided into 2 categories: Current service cost, past-service cost, gains and losses on curtailments and settlements; and Net interest expense or income. The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income. 23.2 Overview The Group operates defined contribution plans and defined benefit plans. For the defined contribution plans, the Group pays contributions to insurance companies. Management of the pension plan is outsourced to an insurance company. For 2023, the expense amounts to EUR 3,628 thousands compared to EUR 4,654 thousands for 2022 (see also note 6 on employee benefit expenses). The Group has no further obligations next to these contributions. In the consolidated statement of financial position, the employee benefit liabilities consist of the following items: IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 Non-current employee benefit obligations 4,183 4,411 Current employee benefit obligations 335 232 TOTAL EMPLOYEE BENEFIT OBLIGATIONS 4,518 4,642 of which post-employment benefits 4,518 4,642 of which termination benefits - - 42 - Lotus Bakeries The post-employment benefits are defined benefit pension plans granted by the Group in the Netherlands, France, Germany and Switzerland. Furthermore, as a result of the Belgian legislation applicable to pension plans (so-called ‘Law Vandenbroucke’), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. This ‘Law Vandenbroucke’, which came into force in 2004, states that in the context of defined contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions. As from January 1, 2016, these percentages have been reviewed and adjusted to a single rate which varies with the market rates, subject to a minimum of 1.75% and a maximum of 3.75%, reducing the risk for the employer. Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19. The following tables reconcile the amounts recognised in the statement of financial position, the statement of profit or loss and the statement of comprehensive income: IN THOUSANDS OF EUR 2023 2022 Defined benefit obligation 11,373 10,882 Fair value of plan assets (6,854) (6,240) TOTAL POST-EMPLOYMENT OBLIGATIONS (FUNDED STATUS) 4,518 4,642 Current service cost 311 303 Past service cost - - Service cost recognised as part of employee benefit expenses 311 303 Net interest expenses on post-employment liabilities 123 55 Total defined benefit cost (statement of profit or loss) 434 357 Remeasurements of defined benefit plans (other comprehensive income) 333 91 The following table reconciles the post-employment obligations: IN THOUSANDS OF EUR 2023 2022 Net liability as at January 1 4,642 4,353 Service cost 311 303 Net interest expense 123 55 Remeasurements of defined benefit plans 333 91 Employer contributions (891) (156) Effect of movements in foreign exchange rates - (4) NET LIABILITY AS AT DECEMBER 31 4,518 4,642 Lotus Bakeries - 43 Financial supplement For the defined benefit pension plan, the liabilities are measured on a discounted basis because they are settled many years after the employees render the related service. A qualified actuary has determined the present value of the defined benefit obligations and the fair value of the plan assets. These assets are held by an insurance company. The projected unit credit method was used to estimate the defined benefit obligations, the defined benefit cost and the remeasurements of the net liability. Provisions are determined by computing the actuarial value of future payments to the employees in question. The plan assets consist of insurance contracts. The actual return on plan assets amounted to EUR -239 thousands for 2023 (2022: EUR -1,464 thousands). Expected contributions to post-employment benefit plans for the year ending December 31, 2024 are EUR 538 thousands. The principal assumptions used in determining post-employment obligations for the Group’s plans are shown below: December 31, 2023 Belgium THE NETHERLANDS France Germany Switzerland Discount rate 3.90% 4.00% 3.90% 3.20% 2.00% Inflation rate 2.10% 1.50% 2.10% 2.20% 2.00% December 31, 2022 Belgium THE NETHERLANDS France Germany Switzerland Discount rate 3.12% 4.00% 3.12% 3.40% 2.24% Inflation rate 2.20% 1.50% 2.20% 2.20% 2.00% Through its defined benefit plans, the Group is exposed to a number of risks, the most relevant are detailed below: Changes in bond yields: a decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plan’s bond holdings. Salary risk: the majority of the plan’s benefit obligations are calculated by reference to the future salaries of plan members. As such, a higher-than-expected salary increase of plan members will lead to higher liabilities. Longevity risk: pension plans provide for benefits for the life of the plan members, so increases in life expectancy will result in an increase in the plan’s liabilities. The actuary has performed a sensitivity analysis on the above actuarial assumptions. As such, both the discount rate and the inflation rate were altered by 50 basis points. A change in the estimates used does not lead to a material impact on the consolidated financial statements. 44 - Lotus Bakeries 24. Trade and other payables IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 Trade payables 163,411 140,003 Employee benefit liabilities 38,026 29,725 VAT payables 1,498 1,186 Other payables 2,175 2,080 Other payables 41,698 32,992 TOTAL TRADE AND OTHER PAYABLES 205,110 172,995 Increase in trade and other payables relates mainly to higher outstanding payables at year-end as a result of the significant investment projects launched during 2023. 25. Other liabilities The other non-current liabilities relate to put options granted to third parties with respect to the remaining non-controlling interests in Natural Balance Foods Ltd., where these put options give holders the right to sell (part of) their investment in this subsidiary. At the end of December 2023, Lotus Bakeries held 97.9% of the shares, with the remaining 2.1% still held by the founders. These put options are unconditional and the exercise price depends on the future financial performance (revenue and operating result) of Natural Balance Foods Ltd. In accordance with IAS 32, where non-controlling interests hold put options giving them the right to sell their investment, a financial liability is recorded for the present value of the exercise price expected to be paid. These put options are classified as level 3 instruments in accordance with the fair value hierarchy of IFRS 7 – Financial Instruments: Disclosures. The counterpart of this liability Is a cancellation of the underlying non-controlling interest. The difference between the value of the non-controlling interest and the fair value of the liability is added to the consolidated reserves, which are included in shareholders’ equity. The other current liabilities include mainly accrued expenses and deferred income. Lotus Bakeries - 45 Financial supplement 26. Financial instruments and financial risk management 26.1 Accounting policy relating to financial assets The Group classifies its financial assets in the following categories: financial assets at fair value and financial assets at amortised cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition. Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Group commits to purchase or sell an asset. At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss. Financial assets at amortised cost Financial assets (such as loans, trade receivables, cash and cash equivalents) are subsequently measured at amortised cost using the effective interest method, less any impairment if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest. Trade and other receivables after and within one year are recognised initially at fair value and subsequently measured at amortised cost, i.e. at the net present value of the receivable amount, using the effective interest rate method, less allowances for impairment. The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. For trade receivables, the Group applies the simplified approach in accordance with IFRS 9 – Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables. The amount of the allowance is deducted from the carrying amount of the asset and is recognised in the statement of profit or loss under ‘Impairment on inventories and trade receivables’. Financial assets at fair value Financial assets at fair value consist of equity instruments held in companies in which the Group does not exercise control nor significant influence. An irrevocable election can be made at initial recognition to measure the investment subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. This classification is determined on an instrument-by-instrument basis. As such, changes in fair value are directly recognised in a separate component of other comprehensive income. For listed companies, the share price is the best estimate of the fair value. Investments for which no fair value can be determined, are recognised at historical cost. The Group assesses at each reporting date whether there is objective evidence that the asset is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost. 46 - Lotus Bakeries 26.2 Accounting policy relating to financial liabilities Financial liabilities (including interest-bearing financial liabilities, trade payables and other financial liabilities) are classified at amortised cost, except for derivative instruments. However, currently, the Group does not hold any derivative positions. Interest-bearing financial liabilities are initially recognised at fair value less direct attributable transaction costs. After initial recognition, the interest-bearing financial liabilities are recognised at the amortised cost price based on the effective interest rate method. Trade payables and other debts are recognised at their nominal value. A financial obligation is derecognised once the obligation is fulfilled, settled or lapsed. Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. 26.3 Overview of financial instruments The table below summarises all financial instruments by category in accordance with IFRS 9: IN THOUSANDS OF EUR IFRS 9 category December 31, 2023 December 31, 2022 Non-current financial assets 27,504 16,806 Investments in other companies At fair value through OCI 27,504 16,806 Current financial assets 272,699 187,190 Trade receivables At amortised cost 141,468 110,755 Cash and cash equivalents At amortised cost 131,231 76,435 TOTAL FINANCIAL ASSETS 300,203 203,995 Non-current financial liabilities 277,635 197,938 Interest-bearing liabilities At amortised cost 275,834 196,066 Derivative financial instruments Designated in a cash flow hedge - 107 Other non-current liabilities At fair value through P&L 1,801 1,765 Current financial liabilities 178,068 210,181 Interest-bearing liabilities At amortised cost 14,657 70,178 Trade payables At amortised cost 163,411 140,003 TOTAL FINANCIAL LIABILITIES 455,703 408,118 Lotus Bakeries - 47 Financial supplement The fair value of the financial assets and liabilities measured at amortised cost approximate their carrying amount. The financial instruments measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable: Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3 fair value measurements are those derived from valuation techniques that include input for the asset or liability that are not based on observable market data (unobservable input). The fair values of the derivatives of the Group are based on level 2 inputs as defined under IFRS 7.27. The fair value of the other non-current liabilities (put options, see note 25) is based on level 3 input. No transfers between the different fair value hierarchy levels took place in 2023 and 2022. Till 2022, the Group used financial derivatives to cover risks from adverse exchange rate and interest rate fluctuations. No derivatives were used for trading purposes. The following table presents an overview of the derivative instruments outstanding at reporting date: Fair value Notional amounts IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Designated in a cash flow hedge Interest rate swaps - 107 - 27,000 TOTAL DERIVATIVEFINANCIAL LIABILITIES - 107 - 27,000 The derivative instruments presented in the table above are all designated in a cash flow hedge relationship. 48 - Lotus Bakeries 26.4 Financial risk management The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and commodity price risk), credit risk and liquidity risk. Currency risk The functional currency of the Company is EUR, which is also the Group’s reporting currency. Translation gains or losses that result from remeasuring foreign subsidiaries’ local currencies to EUR are recorded in other comprehensive income. Foreign currency transactions resulting in gains or losses are recorded in the consolidated statement of profit or loss. As the Group is operating in various jurisdiction with different currencies, the Group is subject to foreign currency risks. The main foreign currency transactions (mainly sales and purchase transactions) take place in USD, GBP, SEK, ZAR, CNY, KRW, CZK and CHF. The Group did not enter into any currency hedging arrangements in order to cover this risk. The Group actively monitors its transactional currency exposures and consequently takes actions to mitigate any risks related to the outstanding foreign currency positions. The following table presents the carrying amounts of the Group’s main foreign currency denominated monetary assets and monetary liabilities at the end of 2023: IN THOUSANDS OF EUR Assets Liabilities EUR 643,084 (846,025) USD 156,986 (136,048) GBP 42,314 (27,097) THB 11,889 (13,871) ZAR 9,309 (10,679) CNY 8,177 (1,982) SEK 5,961 (15,770) KRW 3,471 (173) CHF 1,495 (200) CZK 1,227 (633) Interest rate risk The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied. As the Group only has fixed rate financial instruments at year-end 2023, it considers this risk to be limited and therefore no sensitivity analysis has been prepared. Commodity price risk Commodity price risk arises from transactions to purchase raw materials and energy on the market. The risk relates to the exposure of the Group to fluctuations in the prices of commodities which are necessary for the manufacturing of products. To mitigate the risk of unfavourable price evolutions, the Group enters into forward agreements with fixed prices for the key commodities (executory contracts) and closely monitors the price trends on the market. At year-end 2023, the Group did not enter into any hedging arrangements in order to cover this risk. Lotus Bakeries - 49 Financial supplement Credit risk Credit risk is the risk that one party to an agreement will cause a financial loss to another party by failing to discharge its obligation. Credit risk covers trade receivables, cash and cash equivalents, short-term deposits and other financial assets. The credit risk is managed on a group basis. It is the Group’s policy to deal with creditworthy partners to avoid significant risk exposure. The Group has a diversified international customer portfolio, consisting mainly of large retail, cash-and-carry and foodservice companies in various countries. For export outside Europe, the US, South Korea and China, the Group requires the use of letters of credits or credit insurance. Strict procedures and rules are in place to accurately monitor customers and mitigate and manage any potential risks as quickly and effectively as possible. For trade receivables, an impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type). Available liquidities are placed with several highly reputable financial institutions. The maximum credit risk to which the Group is theoretically exposed as at the reporting date is the carrying amount of the financial assets. Liquidity risk The Group manages liquidity risk by maintaining adequate reserves and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Group’s main sources of cash inflows are currently obtained through capital increases and external financing through bank loans from Belgian and international financial institutions. The following table details the Group’s remaining contractual maturity of its financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows. December 31, 2023 IN THOUSANDS OF EUR Within one year > 1 and < 5 years > 5 years Bank loans 9,623 165,977 108,507 Lease liabilities 5,644 12,438 3,298 December 31, 2022 IN THOUSANDS OF EUR Within one year > 1 and < 5 years > 5 years Bank loans 66,540 176,615 12,950 Lease liabilities 4,398 10,087 3,557 The unused committed credit lines amounted to EUR 150,100 thousands at year-end 2023 (2022: EUR 193,100 thousands). 50 - Lotus Bakeries 27. Related parties A list of all Group companies is provided in note 32. Further details of the shareholding structure of Lotus Bakeries NV as at December 31, 2023 are disclosed in the Corporate Governance Statement in Part 1 of the 2023 annual report of Lotus Bakeries. Balances and transactions between Lotus Bakeries NV and its subsidiaries, which are related parties of the Company, have been eliminated in consolidation and are not disclosed in this note. Key management personnel is composed of all members of the Board of Directors and members of the Executive Committee. For information on the remuneration of the CEO, the remuneration of the executive managers and the remuneration of the board members in 2023, we refer to the remuneration report included in Part 1 of the 2023 annual report. Apart from the key management remuneration, no significant transactions occurred with related parties. 28. Commitments Capital commitments As at December 31, 2023, the Group has EUR 74,760 thousands of commitments (2022: EUR 15,122 thousands) for the acquisition of property, plant and equipment. Contracts for raw materials and finished products Purchased but not yet delivered raw materials and finished products in 2024 and 2025 are detailed below: IN THOUSANDS OF EUR 2023 2022 Less than one year 156,499 112,971 More than one year and less than five years 28,085 34,244 Total 184,584 147,215 Other rights and commitments Bank guarantees as at December 31, 2023 amounted to EUR 1,905 thousands (2022: EUR 1,543 thousands). Lotus Bakeries commits itself not to dispose of, mortgage or pledge any fixed assets without prior consultation with the credit-granting institutions. These assets serve as guarantee for the loans (‘full negative pledge’). Lotus Bakeries - 51 Financial supplement 29. Subsequent events No significant events have occurred since December 31, 2023 which would have a material impact on the 2023 financial statements. 30. Management responsibility statement We hereby certify that, to the best of our knowledge, the consolidated financial statements for the year ended December 31, 2023, which have been prepared in accordance with IFRS (International Financial Reporting Standards), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the subsidiaries included in the consolidation as a whole, and that the annual report includes a fair review of the important events that have occurred during the year 2023 and of the major transactions with the related parties, and their impact on the consolidated financial statements, together with a description of the principal risks and uncertainties with which the company is confronted. Lembeke, March 28, 2024 On behalf of the Board of Directors Jan Boone, CEO 31. Audit fees IN THOUSANDS OF EUR 2023 2022 Audit fees Lotus Bakeries NV 145 152 Lotus Bakeries Group 456 443 Additional services rendered by the Auditor or its related parties Other audit-related fees 131 111 Tax fees 38 43 Other non-audit fees 181 50 TOTAL 951 799 52 - Lotus Bakeries Lotus Bakeries - 53 Financial supplement 32. Consolidation scope NAME Address VAT or national number 2023 2022 % % Lotus Bakeries België NV Gentstraat 52, 9971 Lembeke, BE VAT BE 0421.694.038 100.00 100.00 Interwaffles SA Rue de Liège 39, 6180 Courcelles, BE VAT BE 0439.312.406 100.00 100.00 Lotus Bakeries Corporate NV Gentstraat 1, 9971 Lembeke, BE VAT BE 0881.664.870 100.00 100.00 Lotus Bakeries NV Gentstraat 1, 9971 Lembeke, BE VAT BE 0401.030.860 100.00 100.00 Cremers-Ribert NV Gentstraat 52, 9971 Lembeke, BE VAT BE 0427.808.008 100.00 100.00 B.W.I. BV Ambachtenstraat 5, 9900 Eeklo, BE VAT BE 0898.518.522 - 100.00 Biscuiterie Willems BV Nieuwendorpe 33 Bus C, 9900 Eeklo, BE VAT BE 0401.006.413 100.00 100.00 Lotus Bakeries France SAS Place du Château 9 bis, 59560 Comines, F VAT FR93 320 509 755 100.00 100.00 Biscuiterie Vander SAS Place du Château 9 bis, 59560 Comines, F VAT FR28 472 500 941 100.00 100.00 Biscuiterie Le Glazik SAS 815 Avenue du Pays Glazik, 29510 Briec-de-l’Odet, F VAT FR95 377 380 985 100.00 100.00 Enkhuizer Koekfabriek BV Oosterdijk 3e, 1601 DA Enkhuizen, NL VAT NL823011112B01 100.00 100.00 Koninklijke Peijnenburg BV Nieuwendijk 45, 5664 HB Geldrop, NL VAT NL003897187B01 100.00 100.00 Peijnenburg's Koekfabrieken BV Nieuwendijk 45, 5664 HB Geldrop, NL VAT NL001351576B01 100.00 100.00 WK Koek Bakkerij BV Streek 71, 8464 NE Sintjohannesga, NL VAT NL006634151B01 100.00 100.00 WK Koek Beheer BV Streek 71, 8464 NE Sintjohannesga, NL VAT NL006634199B01 100.00 100.00 Lotus Bakeries Nederland BV Nieuwendijk 45, 5664 HB Geldrop, NL VAT NL004458953B01 100.00 100.00 Lotus Bakeries GmbH Roßstraße 92, 40476 Dusseldorf, DE VAT DE 811 842 770 100.00 100.00 Lotus Bakeries Réassurances SA 74, Rue de Merl, 2146 Luxembourg, L R.C.S. Luxembourg B53262 100.00 100.00 Lotus Bakeries International und Schweiz AG Neuhofstrasse 24, 6340 Baar, CH VAT CHE-105.424.218 100.00 100.00 FF2032 AG Neuhofstrasse 24, 6340 Baar, CH VAT CHE-241.819.783 100.00 100.00 Lotus Bakeries CZ s.r.o. Americká 415/36, 120 00 Praha 2, CZ VAT CZ 271 447 55 100.00 100.00 54 - Lotus Bakeries NAME Address VAT or national number 2023 2022 % % Lotus Bakeries North America Inc. 1000 Sansome Street Suite 350, San Francisco, CA 94111-1323, USA IRS 94-3124525 100.00 100.00 Lotus Bakeries US, LLC 2010 Park Center Drive, Mebane, NC 27302, USA IRS 82-1300286 100.00 100.00 Lotus Bakeries US Manufacturing, LLC 2010 Park Center Drive, Mebane, NC 27302, USA IRS 82-2542596 100.00 100.00 Lotus Bakeries Austria GmbH Fleischmarkt 1/6/12, 1010 Wien, AT VAT ATU72710827 100.00 100.00 Lotus Bakeries UK Ltd. First Floor Premises, Whitecroft House, 51 Water Lane, Wilmslow, Cheshire SK9 5BQ, UK VAT GB 896 168 761 100.00 100.00 Natural Balance Foods Ltd. Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK VAT GB 841 254 348 97.90 97.90 Urban Fresh Foods Ltd. Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK VAT GB 883 060 032 100.00 100.00 The Kids Food Company Ltd. Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK VAT GB 977 396 157 100.00 100.00 Peter's Yard Wholesale Ltd. Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK VAT GB 938 740 100 100.00 100.00 Lotus Bakeries Espana S.L. C/ Severo Ochoa, 3, 2ª Oficina 8A, 28232 Las Rozas (Madrid), ES VAT ESB80405137 100.00 100.00 AB Annas Pepparkakor Radiovägen 23, 135 48 Tyresö, SE VAT SE556149914501 100.00 100.00 Annas - Lotus Bakeries Holding AB Radiovägen 23, 135 48 Tyresö, SE Registration no. 556757-7241 100.00 100.00 Lotus Bakeries Asia Pacific Ltd. 5/F, Manulife, 348 Kwun Tong Road, Kowloon, HK Inland Revenue Department file no. 22/51477387 100.00 100.00 Lotus Bakeries China Ltd. Room 01.02.06, Floor 15, No. 511 Weihai Road, Jing'an Disctrict, Shanghai 200041, P.R. CN Registration no. 913100000781169357 100.00 100.00 Lotus Bakeries Italia S.r.l. Regus Dante Cairoli, Via Dante 16, Quartiere Castello, 20121 Milan, IT VAT IT03029890211 100.00 100.00 Lotus Bakeries Korea Co. Ltd. 4th FI, AIA Tower, 16 Tongil-ro-2-gil, Jung-gu, Seoul 04511, KR Registration no. 128-81-19621 100.00 100.00 Lotus South Africa Manufacturing Ltd. Erf 4109 Voortrekker Road, Wolseley, Western Cape 6830, ZA VAT 4190279762 100.00 100.00 Lotus Asia Pacific Manufacturing Ltd. No. 1106, Summer Hill, 3rd Floor, Unit TT11, Sukhumvit Road, Phrakhanong SubDistrict, Klongtoey District, 10110 Bangkok, TH VAT 0105565109964 100.00 100.00 Lotus Bakeries Japan G.K. Regus Shiodome – office, no. 149, 3F Shiodome Building, 1-2-20 Kaigan, Minato-Ku, 105-0022 Tokyo, JP VAT 4010403030721 100.00 - Lotus Bakeries Australia PTY Ltd. Regus Darling Park, Tower, 2, Level 20 & 21, 201, Sussex Street, Sydney NSW 2000, AU 665 233 545 (ACN) 100.00 - Lotus Bakeries - 55 Financial supplement 33. Alternative performance measures REAT REAT is defined as the recurring earnings after tax and is determined by excluding the non-recurring income and expenses and the related tax effects from the net result. REAT is used as the basis for dividend distribution. IN THOUSANDS OF EUR 2023 2022 Net result 129,333 103,283 Non-recurring income and expenses 2,544 3,807 Tax effect on non-recurring income and expenses (558) (873) REAT 131,319 106,216 REBIT REBIT (recurring operating result) is defined as the operating result after deducting the non-recurring income and expenses. REBITDA REBITDA is defined as the REBIT adjusted for depreciations and amortisation expenses, impairments on inventories and trade receivables and non-cash costs related to share-based payment plans. IN THOUSANDS OF EUR 2023 2022 Operating result (EBIT) 170,430 136,381 Non-recurring income and expenses 2,544 3,807 REBIT 172,974 140,188 Depreciation and amortisation expenses 32,857 25,245 Impairment on inventories and trade receivables 1,226 3,992 Other 470 484 REBITDA 207,527 169,909 56 - Lotus Bakeries Non-recurring income and expenses Non-recurring income and expenses are those items that are considered by management not to relate to transactions, projects and adjustments to the value of assets and liabilities taking place in the ordinary course of activities of the Company. Non-recurring income and expenses are presented separately, due to their size or nature, so as to allow users of the consolidated financial statements of the Company to get a better understanding of the normalised performance of the Company. Non-recurring income and expenses relate to: expenses relating to business combinations and other acquisitions of investments; changes to the Group structure, including costs related to the liquidation of subsidiaries and the closure, opening or relocations of activities; and impairment of assets and major litigations. As from reporting year 2024, the non-recurring items will be referred to as ‘Adjusting items to the operating result’. However, the scope of this reporting line item will not change. Net financial debt Net financial debt is defined as interest-bearing liabilities (excluding lease liabilities recognised in accordance with IFRS 16) deducted with cash and cash equivalents, term deposits and treasury shares. IN THOUSANDS OF EUR 2023 2022 Interest-bearing liabilities (note 22) 290,491 266,244 Minus lease liabilities recognised as a result of IFRS 16 (note 22) (19,991) (17,241) Minus cash and cash equivalents (note 19) (131,231) (76,435) Minus treasury shares (note 21) (18,797) (18,976) NET FINANCIAL DEBT 120,472 153,591 Lotus Bakeries - 57 Financial supplement AUDITOR’S REPORT STATUTORY AUDITOR’S REPORT TO THE GENERAL SHAREHOLDERS’ MEETING OF LOTUS BAKERIES NV ON THE CONSOLIDATED ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 2023 We present to you our statutory auditor’s report in the context of our statutory audit of the consolidated accounts of Lotus Bakeries NV (the “Company”) and its subsidiaries (jointly “the Group”). This report includes our report on the consolidated accounts, as well as the other legal and regulatory requirements. This forms part of an integrated whole and is indivisible. We have been appointed as statutory auditor by the general meeting d.d. 13 May 2022, following the proposal formulated by the board of directors and following the recommendation by the audit committee. Our mandate will expire on the date of the general meeting which will deliberate on the annual accounts for the year ended 31 December 2024. We have performed the statutory audit of the Company’s consolidated accounts for 17 consecutive years. Report on the consolidated accounts Unqualified opinion We have performed the statutory audit of the Group’s consolidated accounts, which comprise the consolidated statement of financial position as at 31 December 2023, the consolidated statement of profit or loss and statement of comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow statement for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and which is characterised by a consolidated statement of financial position total of EUR’000 1,243,503 and a profit for the year, attributable to equity holders of Lotus Bakeries, of EUR‘000 129,261. In our opinion, the consolidated accounts give a true and fair view of the Group’s net equity and consolidated financial position as at 31 December 2023, and of its consolidated financial performance and its consolidated cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium. Basis for unqualified opinion We conducted our audit in accordance with International Standards on Auditing (ISAs) as applicable in Belgium. Furthermore, we have applied the International Standards on Auditing as approved by the IAASB which are applicable to the year- end and which are not yet approved at the national level. Our responsibilities under those standards are further described in the “Statutory auditor’s responsibilities for the audit of the consolidated accounts” section of our report. We have fulfilled our ethical responsibilities in accordance with the ethical requirements that are relevant to our audit of the consolidated accounts in Belgium, including the requirements related to independence. We have obtained from the board of directors and Company officials the explanations and information necessary for performing our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated accounts of the current period. These matters were addressed in the context of our audit of the consolidated accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 58 - Lotus Bakeries Impairment testing of goodwill and brands - Notes 13 and 14 Description of the Key Audit Matter The carrying value of the Group’s goodwill and brands amounts to EUR’000 222,915 and EUR’000 144,974 respectively at 31 December 2023. These assets are subject to impairment testing on an annual basis or more frequently if there are indicators of impairment. We consider this as most significant to our audit because the determination of whether or not an impairment charge is necessary involves significant judgement in estimating the future results of the business. How our Audit addressed the Key Audit Matter We evaluated the appropriateness of the Group’s accounting policies and assessed compliance with the policies in accordance with IFRS. We evaluated management’s annual impairment testing and assessment of the indicators of impairment and challenged impairment calculations by assessing the future cash flow forecasts used in the models, and the process by which they were drawn up, including comparing them to the latest budgets approved by the board of directors and internal forecasts. We understood and challenged: assumptions used in the Group’s budget and internal forecasts and the long- term growth rates by comparing them to economic forecasts; the discount rate by assessing the cost of capital and other inputs including benchmarking with comparable organisations; the historical accuracy of budgets to actual results to determine whether cash flow forecasts are reliable based on past experience; the mechanics of the underlying calculations. In performing the above work, we involved our internal valuation experts to provide challenge and external market data to assess the reasonableness of the assumptions used by management. We evaluated the sensitivity analysis around the key drivers within the cash flow forecasts to ascertain the extent of change in those assumptions and also considered the likelihood of such a movement in those key assumptions arising. Whilst recognizing that cash flow forecasting, impairment modelling and valuations are all inherently judgmental, we concluded that the assumptions used by management were within an acceptable range of reasonable estimates. Revenue recognition relating to commercial arrangements – Note 4 Description of the key audit matter As described in Note 4 Revenue , section 4.1 Accounting policy, the Group enters into commercial agreements with its customers whereby volume-related allowances, promotional and marketing allowances and various other fees and discounts are contractually agreed. The Group measures revenue, cost of services & other goods taken into consideration the estimated amount based on those contractual agreements and the specific classification criteria in accordance with IFRS. Due to the nature of some arrangements, there is a risk that these arrangements are not appropriately accounted for and as a result revenue would be misstated. We consider this as most significant to our audit because the assessment of customer allowances requires significant judgement from management concerning: the nature and level of fulfilment of the company’s obligations under the contractual agreements; determination with respect to sales volumes to support the required provision to fulfil the current obligation towards the customers. Lotus Bakeries - 59 Financial supplement How our audit addressed the key audit matter We evaluated the appropriateness of the Group’s revenue recognition accounting policies, in particular those relating to volume rebates and promotional & marketing allowances and assessed compliance with the policies in accordance with IFRS. We tested the effectiveness of the Group’s controls over accounting for commercial arrangements and the accuracy of the contractual agreements registered in the accounting system. In addition, we challenged management’s assumptions used in determining the commercial accruals through discussions with management and performing specific substantive procedures including: a sample basis on which we agreed the recorded amounts to contractual evidence; inspecting supporting documentation for a sample of journals posted to revenue accounts; testing credit notes issued after period end to assess the completeness of the commercial accruals recorded; a run down on prior years’ commercial accruals to evaluate the reliability of management’s estimates. Our procedures confirmed that management’s assumptions and estimates in respect of accounting for commercial arrangements are appropriate in all material aspects. Responsibilities of the board of directors for the preparation of the consolidated accounts The board of directors is responsible for the preparation of consolidated accounts that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium, and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated accounts that are free from material misstatement, whether due to fraud or error. In preparing the consolidated accounts, the board of directors is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board of directors either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Statutory auditor’s responsibilities for the audit of the consolidated accounts Our objectives are to obtain reasonable assurance about whether the consolidated accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated accounts. In performing our audit, we comply with the legal, regulatory and normative framework applicable to the audit of the consolidated accounts in Belgium. A statutory audit does not provide any assurance as to the Group’s future viability nor as to the efficiency or effectiveness of the board of directors’ current or future business management at Group level. Our responsibilities in respect of the use of the going concern basis of accounting by the board of directors are described below. 60 - Lotus Bakeries As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the consolidated accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control; Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors; Conclude on the appropriateness of the board of directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our statutory auditor’s report to the related disclosures in the consolidated accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our statutory auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern; Evaluate the overall presentation, structure and content of the consolidated accounts, including the disclosures, and whether the consolidated accounts represent the underlying transactions and events in a manner that achieves fair presentation; Obtain sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the audit committee 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 also provide the audit committee 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 audit committee, we determine those matters that were of most significance in the audit of the consolidated accounts 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. Lotus Bakeries - 61 Financial supplement Other legal and regulatory requirements Responsibilities of the board of directors The board of directors is responsible for the preparation and the content of the directors’ report on the consolidated accounts, the separate report on non- financial information and the other information included in the annual report on the consolidated accounts. Statutory auditor’s responsibilities In the context of our engagement and in accordance with the Belgian standard which is complementary to the International Standards on Auditing (ISAs) as applicable in Belgium, our responsibility is to verify, in all material respects, the directors’ report on the consolidated accounts, the separate report on non- financial information and the other information included in the annual report on the consolidated accounts and to report on these matters. Aspects related to the directors’ report on the consolidated accounts and to the other information included in the annual report on the consolidated accounts In our opinion, after having performed specific procedures in relation to the directors’ report on the consolidated accounts, this directors’ report is consistent with the consolidated accounts for the year under audit and is prepared in accordance with article 3:32 of the Companies’ and Associations’ Code. In the context of our audit of the consolidated accounts, we are also responsible for considering, in particular based on the knowledge acquired resulting from the audit, whether the directors’ report on the consolidated accounts and the other information included in the annual report on the consolidated accounts is materially misstated or contains information which is inadequately disclosed or otherwise misleading. In light of the procedures we have performed, there are no material misstatements we have to report to you. The non-financial information required by virtue of article 3:32, §2 of the Companies’ and Associations’ Code is included in the directors’ report on the consolidated accounts. The Company has prepared the non-financial information, based on the Sustainable Development Goals (SDG) framework. However, in accordance with article 3:80, §1, 5° of the Companies’ and Associations’ Code, we do not express an opinion as to whether the non-financial information has been prepared in accordance with the Sustainable Development Goals (SDG) framework as disclosed in the directors’ report on the consolidated accounts. Statement related to independence Our registered audit firm and our network did not provide services which are incompatible with the statutory audit of the consolidated accounts, and our registered audit firm remained independent of the Group in the course of our mandate. The fees for additional services which are compatible with the statutory audit of the consolidated accounts referred to in article 3:65 of the Companies’ and Associations’ Code are correctly disclosed and itemized in the notes to the consolidated accounts. European Uniform Electronic Format (“ESEF”) We have also verified, in accordance with the draft standard on the verification of the compliance of the financial statements with the European Uniform Electronic Format (hereinafter “ESEF”), the compliance of the ESEF format with the regulatory technical standards established by the European Delegate Regulation No. 2019/815 of 17 December 2018 (hereinafter: “Delegated Regulation”). The board of directors is responsible for the preparation, in accordance with ESEF requirements, of the consolidated financial statements in the form of an electronic file in ESEF format (hereinafter “digital consolidated financial statements”) included in the annual financial report. 62 - Lotus Bakeries Our responsibility is to obtain sufficient appropriate evidence to conclude that the format and marking language of the digital consolidated financial statements comply in all material respects with the ESEF requirements under the Delegated Regulation. Based on our procedures performed; we believe that the format of and marking of information in the digital consolidated financial statements included in the annual financial report of Lotus Bakeries per 31 December 2023 comply in all material respects with the ESEF requirements under the Delegated Regulation. Other statements This report is consistent with the additional report to the audit committee referred to in article 11 of the Regulation (EU) N° 537/2014. Ghent, 28 March 2024 The statutory auditor PwC Bedrijfsrevisoren BV/PwC Reviseurs d ‘Entreprises SRL Represented by Lien Winne Bedrijfsrevisor *Acting on behalf of Lien Winne BV Lotus Bakeries - 63 Financial supplement CONDENSED FIVE-YEAR CONSOLIDATED FINANCIAL STATEMENTS in thousands of EUR 2023 2022 2021 2020 2019 REVENUE 1,062,962 877,451 750,251 663,289 612,737 Raw materials, packaging and co-manufacturing (368,903) (311,310) (250,617) (216,376) (197,799) Services and other goods (277,024) (218,277) (192,231) (176,804) (168,966) Employee benefit expenses (205,310) (173,618) (152,857) (137,116) (123,493) Depreciation and amortisation expenses (32,857) (25,245) (23,115) (21,001) (17,754) Impairment on inventories and trade receivables (1,226) (3,992) (3,384) (2,710) (2,135) Other operating expenses (6,348) (8,534) (8,253) (5,919) (3,254) Other operating income 1,681 3,711 4,011 7,751 3,555 RECURRING OPERATING RESULT (REBIT) 172,974 140,188 123,805 111,114 102,891 Non-recurring income and expenses (2,544) (3,807) (4,135) (4,593) (2,292) OPERATING RESULT (EBIT) 170,430 136,381 119,670 106,521 100,599 Financial result (2,533) (2,354) (2,373) (3,004) (2,514) Interest income (expenses) (1,560) (2,565) (2,766) (2,726) (4,460) Foreign exchange gains (losses) (119) 988 886 51 2,232 Other financial income (expenses) (854) (777) (493) (329) (285) RESULT BEFORE TAXES 167,897 134,027 117,297 103,517 98,086 Income taxes (38,565) (30,744) (26,554) (20,972) (22,317) NET RESULT 129,333 103,283 90,743 82,545 75,769 Attributable to non-controlling interests 72 43 (24) (48) 857 Attributable to equity holders of Lotus Bakeries 129,261 103,240 90,767 82,593 74,912 64 - Lotus Bakeries in thousands of EUR December 31, 2023 December 31, 2022 December 31, 2021 December 31, 2020 December 31, 2019 Non-current assets 875,583 820,000 690,120 622,840 641,122 Goodwill 222,915 225,246 224,846 216,485 229,365 Intangible assets 147,825 146,735 144,745 139,966 142,709 Property, plant and equipment 474,311 428,244 307,725 258,182 263,793 Investments in other companies 27,504 16,806 9,755 4,403 2,243 Deferred tax assets 2,120 2,212 2,182 3,351 2,505 Other non-current assets 908 757 867 453 507 Current assets 367,920 275,036 301,972 221,387 171,507 Inventories 76,906 70,361 57,901 46,827 44,461 Trade and other receivables 152,044 120,074 105,164 89,042 84,524 Current tax assets 4,888 4,947 5,276 3,142 1,075 Cash and cash equivalents 131,231 76,435 132,160 81,261 40,093 Other current assets 2,852 3,219 1,471 1,115 1,354 TOTAL ASSETS 1,243,503 1,095,036 992,092 844,227 812,629 Equity 656,207 572,141 519,532 433,744 402,477 Non-current liabilities 349,943 266,186 289,450 261,841 239,584 Interest-bearing liabilities 275,834 196,066 218,837 198,156 158,010 Deferred tax liabilities 68,024 63,716 64,243 57,195 50,737 Employee benefit obligations 4,183 4,411 4,020 3,748 3,712 Provisions 101 122 116 282 285 Derivative financial instruments - 107 371 717 2,340 Other non-current liabilities 1,801 1,765 1,863 1,743 24,500 Current liabilities 237,352 256,709 183,110 148,642 170,568 Interest-bearing liabilities 14,657 70,178 17,439 12,552 36,579 Employee benefit obligations 335 232 333 317 325 Provisions 21 21 21 21 21 Trade and other payables 205,110 172,995 154,377 118,647 118,356 Current tax liabilities 14,173 10,367 5,850 12,701 11,630 Other current liabilities 3,056 2,917 5,091 4,404 3,657 TOTAL EQUITY AND LIABILITIES 1,243,503 1,095,036 992,092 844,227 812,629 Lotus Bakeries - 65 Financial supplement CONDENSED STATUTORY FINANCIAL STATEMENTS – LOTUS BAKERIES NV Statutory balance sheet IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 ASSETS Fixed assets 650,648 650,392 II. Intangible assets - - IV. Financial fixed assets 650,648 650,392 Current assets 28,341 44,272 VII. Amounts receivable within one year A. Trade debtors 7,162 21,784 B. Other amounts receivable 2,035 1,254 VIII. Current investments A. Own shares 18,797 18,976 IX. Cash at bank and in hand 295 2,215 X. Deferred charges and accrued income 52 44 TOTAL ASSETS 678,989 694,664 IN THOUSANDS OF EUR December 31, 2023 December 31, 2022 EQUITY AND LIABILITIES Equity 206,748 226,519 I. Contribution A. Share Capital 3,591 3,591 B. Share premium 12,797 12,797 IV. Reserves A. Reserves not available 19,228 19,407 B. Untaxed reserves 545 545 C. Available reserves 170,587 190,179 VIII. Amounts payable after more than one year 340,315 198,455 A. Financial debts 340,315 198,455 D. Other amounts payable - IX. Amounts payable within one year 131,926 269,689 B. Financial debts 69,448 215,433 C. Trade debts 14,777 15,372 E. Taxes, remuneration and social security - 1,852 F. Other amounts payable 47,701 37,032 TOTAL EQUITY AND LIABILITIES 678,989 694,664 66 - Lotus Bakeries Statutory income statement IN THOUSANDS OF EUR 2023 2022 I. OPERATING INCOME 26,199 21,784 II. Operating expenses B. Services and other goods (19,452) (10,364) D. Depreciation and other amounts written off of formation expenses, intangible and tangible fixed assets - (1,497) G. Other operating expenses (185) (69) I. Non-recurring operating expenses - - III. OPERATING PROFIT 6,562 9,854 IV. Financial income A. Income from financial fixed assets 29,717 127,495 B. Income from current assets 20 2 C. Other financial income 275 637 D. Non-recurring financial income - - V. Financial expenses A. Debt expenses (8,512) (4,958) C. Other financial expenses (268) (194) D. Non-recurring financial expenses - (591) VI. RESULT FOR THE PERIOD BEFORE TAXES 27,794 132,244 VIII. Income taxes 13 (2,099) NET RESULT 27,807 130,146 Result allocation A. Profit to be appropriated 1. Gain of the period available for appropriation 27,807 130,146 B. Withdrawals from capital and reserves 2. From reserves 19,772 - C. Transfer to capital and reserves 3. To other reserves - (93,175) F. Profit to be distributed 1. Dividends (47,329) (36,721) 2. Director's entitlements (250) (250) Lotus Bakeries - 67 Financial supplement Accounting principles 1. Assets 1.1. Formation expenses Formation expenses are recorded at cost and depreciated at 100%. 1.2. Intangible assets Intangible fixed assets are recorded at purchase or transfer price. The amortisation percentages applied are: Brands: 10% Software: 33% 1.3. Financial fixed assets Financial fixed assets are valued at acquisition price or contribution value without supplementary costs. Reductions in value are applied where the estimated value of the financial fixed assets is less than the accounting value and where the loss of value so determined is of a lasting nature in the opinion of the Board of Directors. The estimated value of the financial fixed assets is determined at the end of the accounting period based on the most recent available balance sheet and other relevant data. Reductions in value are reversed, up to the amount of the previously recorded reductions in value, where the valuation at the closing date of the accounting period concerned significantly exceeds the previous valuation. 1.4. Receivables The necessary reductions in value are applied to receivables, the collection of which is in doubt. Receivables are recorded at their nominal value, less any credit notes remaining to be drawn up. Receivables in foreign currencies are converted at the applicable exchange rate at balance sheet date. Negative exchange rate differences arising from translation of non-EUR currencies are included in the income statement. 1.5. Investments and cash at bank and in hand Treasury shares are valued at purchase price. Cash at bank and in hand in foreign currency is converted at the applicable exchange rate at the reporting date. Both the negative and the positive exchange rate differences are included in the income statement. 68 - Lotus Bakeries 2. Liabilities 2.1. Provisions for liabilities and charges Provisions are made for all normally foreseeable liabilities and charges. 2.2. Amounts payable within one year Suppliers Debts to suppliers are recorded at nominal value. Debts in foreign currencies are converted at the applicable rate at balance sheet date. Exchange rate differences are processed in the same way as for foreign currency receivables. 3. Additional disclosure The Company is part of a VAT unit that has been formed within the Group and to which the following companies belong: Lotus Bakeries NV; Lotus Bakeries België NV; Cremers-Ribert NV; Interwaffles SA; Lotus Bakeries Corporate NV; Biscuiterie Willems BV. Consequently, the Company is jointly and severally liable for the VAT debts of all the above companies. Lotus Bakeries - 69 Financial supplement REGISTERED OFFICE Lotus Bakeries NV Gentstraat 1 B-9971 Lembeke T + 32 9 376 26 11 www.lotusbakeries.com Register of legal persons of Ghent, Enterprise number 0401.030.860 CONTACT For further information about the data of the annual review or more information about the Lotus Bakeries Group, please contact: Lotus Bakeries NV Corporate Secretary Gentstraat 1 B-9971 Lembeke T + 32 9 376 26 11 [email protected] Concept and realisation Lotus Bakeries and Duval Branding duvalbranding.com Illustrations Sören Selleslagh sorenselleslagh.com Photography Bert Luyckx bertluyckx.be Sustainability is key at Lotus Bakeries; this report was printed on recycled paper. 70 - Lotus Bakeries Lotus Bakeries - 71 Financial supplement www.lotusbakeries.com 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