Annual Report (ESEF) • Mar 30, 2023
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Download Source FileUntitled ANNUAL REPORT 2022 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. Lotus Bakeries - 5 A MESSAGE FROM OUR CEO AND CHAIRMAN It is not outlandish to say that the entire world is looking back on as a turbulent year. The Russian invasion of Ukraine, the global energy crisis and increasing inflation are just a few notable aspects that have characterised . COVID- may be gradually slipping into the background, but other challenges crossed our path. The availability of packaging and raw materials remains under pressure around the globe, resulting in exploding prices. There was also an unforeseen rise in energy and transport costs within a short period of time and labour costs are following this increasing trend. We are therefore very proud that Lotus Bakeries, despite all the global challenges, was able to flourish in and that once again we have seen double-digit growth as a group. QUALITY FOR EVERYONE As an organisation, we must be vigilant about maintaining our healthy financial position. Not only for today, but also for tomorrow and further ahead into the future. At Lotus Bakeries, we strive to keep our products accessible and aordable for all. In , we will continue to look for eciency improvements and savings to combat the cost of inflation and ensure that consumer price adjustments are fair and responsible. Finding eciency improvements is crucial, but obviously without ever compromising on the quality of our products. LOTUS® BISCOFF® ON EVERY TABLE AROUND THE WORLD Lotus® Bisco® has grown by double digits again, in all major consumer markets, from North America to Europe, the Middle East and Asia. Collaborations with global players such as Nestlé or Häagen-Dazs have contributed to this and only serve to fuel the fire of our international ambition. We are therefore very proud that Lotus® Bisco® cookies are once again the strongest riser in the top ten of the global ‘Cookie Brand Ranking’. Lotus® Bisco® cookies rose from seventh to sixth place. The ambition for Lotus® Bisco® to become a top cookie brand in the longer term rings truer than ever before. Jan Boone - CEO and Jan Vander Stichele - Chairman A message from our CEO and Chairman4 - Lotus Bakeries Lotus Bakeries - 7 DOUBLE-DIGIT GROWTH FOR LOTUS™ NATURAL FOODS BRANDS All our Lotus™ Natural Foods brands also continued to grow strongly in . Not only in the United Kingdom, their home country, but also internationally, as consumers are developing more and more of a taste for our natural foods brands! A key contributor to the international growth of Lotus™ Natural Foods in recent years is the success of BEAR in the United States. The brand was introduced there in and has become a huge success. Today, BEAR is already a leading brand in the United States in the ‘Kids Fruit Snacking’ category. Our BEAR plant in South Africa is now, after Lembeke, the second largest plant within the Lotus Bakeries Group with more than employees. That makes us one of the largest employers in the Ceres Valley (Western Cape province). Flemish Minister-President Jan Jambon symbolically broke the first ground during his working visit, when work on our new factory hall was started. It was a festive event, and it was heart-warming to feel the support of all local stakeholders out there. nākd is also a strong contributor to international growth and delivered strong results in continental Europe, including France, Spain and the Netherlands. LOCAL INVESTMENTS The more international our company becomes, the more important it is to invest locally. This is for economic, logistical, as well as environmental reasons. We would like to express our pride in the investments we have made over the past year. In , we invested in no less than four continents. We built additional production facilities and lines for Lotus® Bisco® in Belgium and in the United States, and we also announced our plans to start up a production facility in Thailand to further support the growth ambitions for Lotus® Bisco® in Asia Pacific. It is quite clear that we will have to expand our capacity even further in the coming years to be able to supply this growing volume of Lotus® Bisco® products to the growing number of markets worldwide. In addition, we also invested in capacity expansion for Lotus™ Natural Foods in South Africa to keep up with BEAR’s international success. We will also continue to invest in the production facilities of our Local Heroes in , including in Sweden, France, the Netherlands and Belgium. Investments that are needed to continue to meet consumer demand today and tomorrow. ONE LOTUS FAMILY has shown a lot of positive energy and dynamism. We will remember it as a year in which important steps were taken in our growth story, as well as an incredible sense of inter-connectivity, engagement and belonging among our employees. In the past year, it has once again been abundantly clear just what a unique family we are at Lotus Bakeries. The daily commitment, dedication, contagious enthusiasm and passion of all employees define our fantastic culture and winning mindset. CRYSTAL CLEAR STRATEGY AND AMBITIONS Although it may remain unclear how geopolitics and macroeconomics will evolve over the coming period, the Lotus objectives are crystal clear. As a company, we keep setting the bar higher every single year. Not only for our growth ambitions, but also in our pursuit of finding operational and logistical eciency improvements. Despite all the global challenges, we are investing more than ever. Why? Because we firmly believe in our strategy, in our products and in our employees who are committed day in and day out. We are already convinced that will yet again have a lot in store for us, which we will be able to look back on with a great sense of satisfaction. Jan Boone Jan Vander Stichele CEO Chairman A message from our CEO and Chairman6 - Lotus Bakeries Lotus Bakeries - 9 A message from our CEO and Chairman Highlights Key figures CONTENTS 8 - Lotus Bakeries Contents Lotus Bakeries - 11 01 0402 0503 06 OUR STRATEGY REPORT OF THE BOARD OF DIRECTORS OUR SUSTAINABILITY PROGRAMME CARE FOR TODAY, RESPECT FOR TOMORROW STOCK MARKET AND SHAREHOLDERS INFORMATIONOUR ORGANISATION FINANCIAL STATEMENTS Lotus® Bisco® Lotus™ Natural Foods Lotus® Local Heroes Our sustainability ambition Our sustainability strategy Our sustainability in action EU Taxonomy Limited Assurance Report Group structure and day-to-day management Activities in Financial information Prospects for Results and proposal for appropriation of results Corporate Governance Declaration Enterprise Risk Management External audit Consolidated income statement and statement of comprehensive income Consolidated statement of financial position Condensed five-year financial summary Stock market and shareholders information 10 - Lotus Bakeries Contents Lotus Bakeries - 13 HIGHLIGHTS 2022 SIMON MIGNOLET BECOMES NEW BRAND AMBASSADOR FOR TREK In , Red Devil and Club Bruges goalkeeper raises the brand awareness of TREK. Advertisements can be seen all year round on Belgian TV, in Belgian supermarkets and on social media. PUBLICATION OF VERY STRONG 2021 ANNUAL RESULTS As a group, Lotus Bakeries grew by double digits once again in and achieved a revenue of . million EUR, a growth of more than . VISIT FROM FLEMISH MINISTER- PRESIDENT JAN JAMBON AT LOTUS SOUTH AFRICA MANUFACTURING The first ground for the construction of the new factory hall in South Africa is broken in the presence of Minister-President Jambon. The ongoing investments make Lotus Bakeries one of the largest employers in the Ceres Valley (Western Cape province). ACQUISITION OF KUNG OSCAR BY ANNAS PEPPARKAKOR Kung Oscar Pepparkakor is a premium, traditional Swedish Pepparkakor brand with a history dating back to . The R&D and production teams have been working hard to ensure that this cookie, which is a little spicy and has a softer texture than the Annas Pepparkakor, can be produced and packaged in its own Annas factory. JANUARY FEBRUARY MARCH APRIL N KD GETS NEW LOOK Thanks to the new branding strategy and communication on the packaging, nākd’s unique features come more clearly to the fore. Consumers can now see at a glance that nākd is a tasty, healthy snack made with natural ingredients. CAPACITY OF SPREAD EXPANDED IN LEMBEKE In order to keep up with ever-growing demand, the production capacity for spread was expanded in Lembeke. This investment was necessary to support the further growth of Lotus® Bisco®. 12 - Lotus Bakeries Highlights 2022 Lotus Bakeries - 15 ANNOUNCEMENT OF COMPLETE TAKEOVER OF ARTISANAL SOURDOUGH CRACKER COMPANY PETER’S YARD Lotus Bakeries acquires of the shares of Peter’s Yard, a British artisanal sourdough company that produces a wide range of unique, delicious sourdough- based crackers, which are great as a cheese cracker or toast. LOTUS BAKERIES UNVEILS PRODUCTION PLANS IN ASIA Besides investments in Europe (Belgium) and North America (US), Lotus Bakeries unveils its plans to start a Lotus® Bisco® manufacturing facility on a third continent – Asia. The Thai ambassador to Belgium congratulated Lotus Bakeries on the plans during his visit to their headquarters. STRONG 2022 HALF-YEAR RESULTS ARE PUBLISHED In the first semester of , Lotus Bakeries continued to build on last year’s growth with consolidated revenue growth of .. MAY JUNE JULY AUGUST BOARDROOM CHANGE AND A FAREWELL TO MR JOHAN BOONE After years, Mr Johan Boone steps down from the Board of Directors. PMF NV, represented by Mr Emanuel Boone, is appointed as new non-executive director. HOSTING THE SUSTAINABLE ENTREPRENEURS FAIR Employees have the opportunity to engage in dialogue with various organisations that are active in the field of sustainability. The fresh insights and possible collaborations that emerge from this will strengthen the company’s sustainable mission. 14 - Lotus Bakeries Highlights 2022 Lotus Bakeries - 17 COURCELLES MANUFACTURING SITE EXPANDS AND GETS ADDITIONAL WAFFLE LINE In order to also be able to follow the increasing demand for waes, a second production hall was built in Courcelles on the same site. The extra production line increased its capacity for Liège waes. NEW PRODUCTION HALL AND TWO LOTUS® BISCOFF® PRODUCTION LINES BECOME OPERATIONAL IN MEBANE Significant investments are also made in Mebane (US) in order to follow the great success of Lotus® Bisco® worldwide. Two new production lines are already operational in the new building and there is room to add two more in the near future. NEW DOUGH PREPARATION ROOM OPERATIONAL IN LEMBEKE Lotus Bakeries also continued to invest in innovation and capacity in Belgium. This second dough room is necessary to provide additional dough preparation capacity to support the further growth of both Lotus® Bisco® cookies and Lotus® Bisco® spread. 16% YEAR-ON-YEAR GROWTH FOR LOTUS™ NATURAL FOODS SINCE THE FIRST ACQUISITION IN 2015 In , Lotus™ Natural Foods’ brands all continued to grow strongly and generated revenue of million EUR. This represents a increase from last year and a year-on-year growth since acquisitions in . SEPTEMBER OCTOBER NOVEMBER DECEMBER ‘HOUSE OF BISCOFF’ GRAND OPENING The current headquarters in Lembeke were expanded with a brand-new building called the ‘House of Bisco’. The ‘House of Bisco’ oers extra space for around employees, the entire ground floor is furnished with meeting rooms. MARIE-LOUISE RAYMOND, THE HEADMASTER OF KUSASA SCHOOL, VISITS LOTUS BAKERIES OFFICE IN ST. ALBANS During her visit, Mrs Raymond explains to all the employees how the Kusasa Project, a South African initiative that Lotus Bakeries has supported since , allows children from the region to be oered top-level education, and from there helps increase their chances of a better future. IQBAR BECOMES THE LATEST ADDITION TO THE FF2032-PORTFOLIO Lotus Bakeries, through its corporate venture fund FF, acquires a minority stake in IQBAR, an American producer of a plant-based nutrition bars containing six ingredients with benefits for the body and the mind. 16 - Lotus Bakeries Highlights 2022 Lotus Bakeries - 19 REVENUE: 877.5 €M (2021: 750.3 €M) REBIT: 140.2 €M (2021: 123.8 €M) NET RESULT 103.3 €M (2021: 90.7 €M) NET FINANCIAL DEBT 153.6 €M (2021: 81.8 €M) GROSS DIVIDEND 45.0 € (2021: 40.0 €) 90% 100% Lotus Bakeries’ Palm Oil Policy signed by palm oil suppliers 1 External quality certification 2,698 12 Employees (2,398 in 2021) Production facilities in 6 countries 21 50+ Sales Offices in 15 countries Countries with commercial partners 99.9% 90.5% Code of conduct signed by the current employees 2 Code of conduct signed by key suppliers 3 All employeesBoard of Directors Leadership Team 5 IN 2022, A TOTAL OF 1,757 TONNES OF PACKAGING WAS SAVED 97% OF ALL LOTUS BAKERIES PACKAGING IS RECYCLABLE 4 GENDER DIVERSITY 70% 30% 55% 45% 49% 51% KEY FIGURES 2022 + 17.0% + 13.2% + 13.8% + 12.5% An internal employee is an employee who is connected to Lotus Bakeries with an employment contract, either of unlimited duration or of limited duration. 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. 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 palm oil. The recyclability rate is the average technical recyclability of the packaging of all Lotus Bakeries brands at the end of . 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 OWN SITES HAVE EARNED THE CO 2 -NEUTRAL LABEL The group comprising the Executive Committee, the General Managers and the Corporate Directors. Men Women 18 - Lotus Bakeries Highlights 2022 Lotus Bakeries - 21 01 OUR STRATEGY Lotus® Bisco® Lotus™ Natural Foods Lotus® Local Heroes 20 - Lotus Bakeries Lotus Bakeries - 23 Lotus Bakeries aims to oer every consumer a versatile range of responsible and tasty snacks for every consumption moment. The cookies, ice cream, spread, chocolate, waes, cakes, gingerbread and natural snacks our company oers create a moment of pure joy for consumers. Lotus Bakeries wants to be an established part of consumers’ daily lives, in as many countries as possible. In order to climb to the top among global brands and achieve sustainable growth, Lotus Bakeries has a clear strategy in place. Building brands is central to this. Lotus Bakeries is active worldwide in the snacking segment with the Lotus, Lotus® Biscoff®, nākd, TREK, BEAR, Kiddylicious, Dinosaurus, Peijnenburg and Annas brands, among others. To give each of these brands, each of which has its own DNA and its own target group, sucient focus and attention, the strategy is shaped via three pillars. 22 - Lotus Bakeries Our strategy Lotus Bakeries - 25 MISSION Our mission is to create small moments of joy and happiness. We do that by oering a versatile range of branded snacks with superior taste experience. To every consumer. For every occasion. In every country. VISION Realising sustainable profitable growth by oering 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 SUPERIOR Each of our products oers 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 sustainable growth and are com- mitted to maximising opportunities for future generations. LOTUS® BISCOFF® Globalisation of Lotus® Biscoff® products with Lotus® Bisco® – 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. 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 oer every consumer worldwide a snack for every occasion. Read more on page 24 - Lotus Bakeries Our strategy Lotus Bakeries - 27 LOTUS® BISCOFF® STRATEGY The globalisation of Lotus® Bisco® is the first pillar of Lotus Bakeries’ strategy. Lotus® Bisco® has a highly unique but accessible flavour, with a subtle caramel touch. Lotus Bakeries believes in the universal character of its Lotus® Bisco® cookie, and consequently its Lotus® Bisco® spread, Lotus® Bisco® ice cream and its own range of chocolate with Lotus® Bisco® pieces and cream filling. The Lotus® Bisco® taste is appreciated across national borders and cultural dierences, which is quite unique in the food sector. Lotus® Bisco® is now enjoyed in about seventy countries. In years gone by, Lotus Bakeries achieved strong growth with Lotus® Bisco® in large consumer markets such as the United States, the United Kingdom, China, South Korea, Germany, Spain, Italy, Canada, Japan and Australia. This success supports the ambition of globalisation. The geographical expansion of Lotus® Bisco® is the primary growth area, with plenty of further potential. To support the further internationalisation of Lotus® Bisco®, Lotus Bakeries operates in fifteen countries with twenty-one entities with sales activities. Cooperation also takes place with local commercial partners in some fifty countries. The main sales potential lies in supermarkets, where we highlight our products via displays and promotions. E-commerce is also gaining momentum, focusing on traditional retailers with an online channel, as well as pure online retailers such as Amazon. We are also trying to introduce Lotus® Bisco® to consumers via the out-of-home channels (restaurants, hotels, airlines, etc.). The more households are familiar with our products, the better. Once a substantial percentage of households within a particular region consume our products, we can start advertising online and on TV to continue to grow steadily. Colleagues inspect freshly baked Lotus® Bisco® cookies Lotus in 2021 Lotus today Brand 9Brand 10 Brand 8 Brand 5 Brand 4 Brand 3 Brand 2 Brand 1 LOTUS BISCOFF® COOKIES RISE TO 6TH PLACE IN THE TOP 10 GLOBAL ‘COOKIE BRAND RANKING’ Lotus® Bisco® cookies are once again the strongest riser in the top ten of the global ‘Cookie Brand Ranking’ and rose from seventh to sixth place. The ambition for Lotus® Bisco® to become a top 3 cookie brand in the longer term rings truer than ever before. 26 - Lotus Bakeries Our strategy Lotus Bakeries - 29 LOTUS® BISCOFF® COOKIE Lotus® Bisco® is a surprisingly crunchy cookie loved the world over for its unique, caramelised taste. A great match for a cup of coee, a tasty treat or kitchen ingredient. It starts from the right combination of carefully selected natural ingredients. But the true magic happens in the oven, during the well-mastered caramelisation process. In fact, it is all a matter of craftsmanship. LOTUS® BISCOFF® SANDWICH COOKIE Lotus® Bisco® sandwich cookie is made of two crunchy original Bisco® cookies with a deliciously creamy chocolate, vanilla or Bisco® filling. Launched in April in Belgium, France, the United Kingdom and the United States, this cookie is now available in more than countries worldwide. And the internationalisation continues in ! Pack shot United Kingdom Pack shot United Kingdom 28 - Lotus Bakeries Our strategy Lotus Bakeries - 31 LOTUS® BISCOFF® SPREAD The Lotus® Bisco® spread is a, sweet spread with the familiar, unique taste of Lotus® Bisco®. There are two variants: with and without crunchy Bisco® pieces. Both variants oer a delicious alternative to traditional spreads or can be used as an ingredient in homemade pastries and desserts, such as brownies, mousses, cakes ... delicious and surprising! For our professional customers, in we introduced Lotus® Bisco® topping, a more liquid Lotus® Bisco® spread in a convenient squeeze bottle. The ideal and easy finish for ice cream, pancakes, waes ... in the out-of- home channel. Because Lotus® Bisco® spread is also enjoyed as a snack, we added Lotus® Bisco® ‘& Go’ to the range, a combination of our delicious Lotus® Bisco® spread and mini-breadsticks in a handy pack to eat on the go. LOTUS® BISCOFF® ICE CREAM The combination of Lotus® Bisco® and ice cream is enough to make everyone melt. The Lotus® Bisco® ice cream sticks are the driving force behind our international success. Crafted from delicious Lotus® Bisco® ice cream, covered with a thin layer of Lotus® Bisco® spread and finally coated in Belgian chocolate with pieces of crispy Lotus® Bisco® cookies, they come in dierent versions and sizes, including both milk and white chocolate, as well as standard and mini sizes. Pack shot United Kingdom Pack shot United Kingdom 30 - Lotus Bakeries Our strategy Lotus Bakeries - 33 LOTUS® BISCOFF® CHOCOLATE Lotus® Bisco® chocolate enjoyed a highly successful launch in the Belgian market in . It is already available in several other markets, including the Netherlands, France and the United Kingdom. In addition to milk chocolate with crunchy Lotus® Bisco® pieces and milk chocolate with crunchy Lotus® Bisco® cream filling, the same variants now exist in dark and white chocolate versions. We’re sure you’ll agree they taste sensational. SPEAKING New overarching Lotus® Biscoff® team to accelerate expansion Jean-Paul Van Hoydonck GLOBAL DIRECTOR BISCOFF ENGINEERING, PLANNING & CAPACITY Eddy Thijs GLOBAL BISCOFF ENGINEERING MANAGER Bert Noseda GLOBAL BISCOFF PLANNING & LOGISTICS MANAGER The taste of Lotus® Bisco® is enjoyed all around the world and is now available in about dierent countries. Around eight billion Lotus® Bisco® biscuits come rolling out of the ovens every year, both in Mebane, the United States and in Lembeke, Belgium. With global revenue growth, Lotus® Bisco® was one of the key drivers of Lotus Bakeries’ growth in . As a fast-growing company, Lotus Bakeries has a clear strategy in place with a focus on sustainable growth. For example, expansion in production capacity is crucial to keep up with the ever-increasing demand for Lotus® Bisco®. In that sense, Lotus Bakeries has invested heavily in production capacity in . In addition to investments in Europe (Belgium) and America (United States), it also announced that it will open up a Lotus® Bisco® manufacturing facility on a third continent – Asia – by . Since July , the newly created overarching Global Bisco Engi- neering, Planning & Capacity team ensures that all capacity expansions on the dierent continents are organised eciently and that strategic planning provides a good understanding of the potential future capacity challenges and investment opportunities for Lotus® Bisco®. A logical step in the growth story, given the ambitious future plans. PRODUCTION CAPACITY LOTUS® BISCOFF® ON THREE CONTINENTS To support further internationalisation, significant investments were made in at both the Belgian Lembeke manufacturing facility and the US Mebane facility. “In Mebane, a second production hall was built in that provides space for four Lotus® Bisco® production lines. Two lines were also installed in that same year and have been operational since October and December. This has doubled the production capacity in the United States. In Lembeke, the brand-new dough room was commissioned in and the production buildings were further expanded. For example, a new Lotus® Bisco® sandwich line, a new Lotus® Bisco® crumble filling line and an installation to expand the production capacity of the spread were introduced. Additional oces and social spaces were also provided. Pack shot United Kingdom 32 - Lotus Bakeries Our strategy Lotus Bakeries - 35 Despite the raw material scarcity and supply chain challenges, our colleagues managed to finalise the construction and installation of all equipment and technology at a lightning-fast pace,” says Jean-Paul Van Hoydonck, Global Director Bisco Engineering, Planning & Capacity. In August , Lotus Bakeries announced that a new production plant for Lotus® Bisco® will also be built in Thailand. “The Asia Pacific region has become increasingly important over the years. Both Lotus® Bisco® cookies and Lotus® Bisco® spread have established a growing presence in the region. At the same time, raising awareness about Lotus® Bisco® and its availability to the hundreds of millions of consumers in this region is still in full swing. The growth potential in this region is therefore still immense,” says Jean-Paul. GLOBAL APPROACH “The rapid growth that Lotus® Bisco® has achieved worldwide in recent years already encouraged our management to better identify that growth potential in the various consumer markets a few years ago. What markets do we want to tap into in the near future if we want to achieve our ambition on the dierent continents? With which products? And what do we actually need for this, both in terms of material and workforce? This growth trajectory is very ambitious and includes plans to achieve both the short-term and long-term objectives,” explains Jean-Paul. “Our expansion is occurring at a fast rate and on several continents at the same time. It quickly became clear that there was a need for a centralised team that could provide support. This in terms of technical know-how to manage all expansion projects, in terms of planning and logistics in order to be present in about countries with Lotus® Bisco® and in terms of operational support, given the variety of product lines in the dierent plants.” CENTRAL ENGINEERING TEAM “To date, our Engineering Services department has been organised within Area Belgium and colleagues have worked on both technical systems and processes for Lotus® Bisco® and other Lotus® products,” says Eddy Thijs, Global Bisco Engineering Manager. “Historically, the geographic focus was on the Belgian plants. With the expansion in America, ever- increasing volumes of Lotus® Bisco® in both production facilities, and planned start-up in Thailand, the need for a global approach and focus on Bisco® kept increasing. The development and implementation of the technical systems and processes on the various continents will now be supported from one central team, which operates internationally.” EFFICIENT PLANNING AND SMOOTH LOGISTICS WORLDWIDE As a fast-growing company, it is also of vital importance to ensure a well-organised supply chain and an ecient planning. “The logistics chain of a global player such as Lotus Bakeries spans more and more countries and continents. This also makes its management more complex. The rapid growth over the last decade, both in terms of the volume of Lotus® Bisco® products to be produced and the number of markets to be supplied, has led to the need for even more intensive collaboration between the planning and logistics teams, our various sales oces and the production teams,” explains Bert Noseda, Global Bisco Planning & Logistics Manager. “Supply and demand must be very well aligned, and this in all our dierent local markets. If we notice a potential imbalance, then we look at what measures we can take. This can be done, for example, by temporarily expanding shift systems in production, by optimising the timing of promotions or launches of new products or moving inventories around,” says Bert. Jean-Paul Van Hoydonck – Global Director Bisco Engineering, Planning & Capacity “Our expansion is occurring at a fast rate and on several continents at the same time. It quickly became clear that there was a need for a centralised team that could provide support in terms of technical know-how, in terms of planning and logistics and in terms of operational support.” – Jean-Paul Van Hoydonck 34 - Lotus Bakeries Our strategy Lotus Bakeries - 37 STRUCTURAL KNOWLEDGE EXCHANGE AND SYNERGIES “An additional benefit of this new team is that the knowledge, expertise and skills across the continents can be shared more easily. This will improve the productivity and overall performance of our production facilities and drive eciency gains in the future,” says Jean-Paul. “Our engineering team and the local engineering teams have virtual meetings on a regular basis to exchange information and thus continuously improve the performance of the production lines.” “Lembeke operators and technicians will also regularly provide training to the colleagues in Mebane,” Eddy adds. “Colleagues from production with years of expertise and extensive knowledge in processing, in automation, in packaging, obviously know the ‘tricks of the trade’. But the exchange of experience is certainly a two-way street. The new technology applied in the recently installed packaging lines in Mebane is also periodically evaluated by the engineering team, together with the colleagues in Mebane. These insights will enable us to implement this technology in the new Thailand production facility in the future, where relevant,” Eddy said. “Consumers can already be sure. No matter what continent Lotus® Bisco® is produced on, its quality and unique, delicious taste will be identical everywhere,” concludes Jean-Paul. Eddy Thijs – Global Bisco Engineering Manager and Bert Noseda – Global Bisco Planning & Logistics Manager “The new technology applied in the recently installed packaging lines in Mebane is also periodically evaluated by the engineering team, together with the colleagues in Mebane. These insights will enable us to implement this technology in the new Thailand production facility in the future, where relevant.” – Eddy Thijs 36 - Lotus Bakeries Our strategy Lotus Bakeries - 39 LOTUS™ NATURAL FOODS STRATEGY The internationalisation of our Lotus™ Natural Foods brands forms the second pillar of our strategy. Since , Lotus Bakeries has invested in the natural and healthy snacking category with the focus on the strong brands of nākd, BEAR, TREK and Kiddylicious. As of July , Peter’s Yard, with a range of healthy sourdough crackers, has also become part of Lotus Bakeries. Our aim is to create constant growth in the home market for these brands, the United Kingdom. We do so firstly through the activation of our own hero products, both at the point of sale and through targeted online marketing activities. Secondly, we make use of an ambitious innovation programme by which we strive to bring innovative products to the market in and outside the existing categories. The geographical expansion of our Lotus™ Natural Foods brands outside the United Kingdom is another major growth area. In , the first steps were taken towards further internationalisation. Today, of the revenue comes from outside the United Kingdom. In , Lotus Bakeries decided to accelerate this growth by centralising all international activities, brands and Global Brands at Lotus™ Natural Foods’ international headquarters. Organisationally, the whole international Natural Foods team has been brought together at new oces in Baar, Switzerland. This allows an abundance of synergies to be achieved. On the one hand, in terms of strategy, development and protection of the international brands. On the other hand, regarding the optimisation of the supply chain and sales strategies for Lotus™ Natural Foods products. Since , a central E-commerce Acceleration Team and regional Amazon teams have been accelerating the group’s e-commerce operations, also including Lotus™ Natural Foods, around the world. This will help drive the continuing international growth of these brands. The nākd, BEAR, TREK, Kiddylicious and Peter’s Yard brands bring healthy snacks to the market that are often disruptive in existing categories. That is the reason for the strong focus on communication to consumers about the advantages of these healthy and tasty snacks. This takes place on the packaging, at the point of sale and via video campaigns on tv and social media. Colleague from the Research & Development team participates in a taste panel 38 - Lotus Bakeries Our strategy Lotus Bakeries - 41 N KD. nākd bars only contain fruit and nuts. Nothing else! The nākd bars are made from natural ingredients. We mix the fruits and nuts and press them together into a delicious raw bar. They contain no added sugars or other unnecessary additives and are the perfect snack for anyone who wants to eat better, healthier and more consciously, without compromising on taste. nākd comes in a wide range of surprising flavours including ‘Blueberry Mun’, ‘Peanut Delight’ and ‘Salted Caramel’. Whether you are looking for the perfect morning or afternoon snack, there is a tasty nākd bar for every occasion. TREK TREK is the ideal snack for people with an active lifestyle. They have an extra dose of protein and all ingredients are plant-based. Moreover, they are rich in fibre. Our bars come in a variable range of grams and grams of protein to meet dierent consumer needs. TREK Flapjacks contain grams of plant-based protein. A flapjack is a tasty cereal bar made with a delicious topping. Our TREK Flapjack are available in a variety of flavours, such as ‘Cacao Oatmeal’, ‘Salted Caramel’, and ‘Peanut Butter’. TREK Power are our delicious protein bars, made with grams of plant-based protein and coated in vegan chocolate. We oer these bars in a variety of flavours, such as ‘Peanut Butter Crunch’ and ‘Millionaire Shortbread’. Looking for a great, delicious energy boost? Then TREK is the perfect solution. Pack shot United Kingdom Pack shot United Kingdom 40 - Lotus Bakeries Our strategy Lotus Bakeries - 43 BEAR The philosophy of the brand BEAR is simple: to oer healthy snacks that children enjoy and their parents can trust. BEAR’s healthy and innovative range comprises snacks made with real fruit. BEAR only uses gently baked, freshly picked seasonal fruits to ensure that as much as possible of the fruity goodness such as fibre, minerals and vitamins is kept in the end product. The products are free from added sugars , concentrate, preservatives and stabilisers. All BEAR products are not only delicious, they are fun for kids too. They are available in a variety of fun shapes, including rolls (BEAR Fruit Rolls) and paws (BEAR Fruit Minis and BEAR Paws). Each BEAR Fruit Rolls packet contains a free collectable card, so the enjoyment continues after eating a fruit roll. No low calorie food, see nutrition info for calorie and sugar content. KIDDYLICIOUS Delicious, nutritious snacks for the little ones are sold under the Kiddylicious brand. Snacks are an important part of the little ones’ diet to help bridge the periods between meals. Oered in a variety of shapes to teach little ones how to eat independently, they come in a variety of flavours that babies and toddlers love. This allows parents to get their little ones used to all sorts of flavours and textures. Furthermore, the portion-controlled packaging increases ease of use for parents. Kiddylicious is the first brand to expand the range of snacks to years within babyfood. Pack shot United States Pack shot United Kingdom 42 - Lotus Bakeries Our strategy Lotus Bakeries - 45 PETER’S YARD Peter’s Yard was founded in and is a bakery brand inspired by Swedish baking tradition, oering a broad range of unique, delicious sourdough-based crackers that can be enjoyed as a cheese cracker or toast. All products in the Peter’s Yard range are baked following the traditional Swedish recipe using a -year-old sourdough starter. Peter’s Yard is fully part of the Lotus Bakeries family since the summer of . TREK PROTEIN BARS TREK Flapjacks contain grams of plant-based protein. This bar is a mixture of textures and flavours with a delicious topping. Our latest flavour among the popular Flapjacks has a delicious ‘Peanut Butter’ topping, a flavour that is highly sought after by people with an active lifestyle. This flavour is available in the United Kingdom as well as in the Netherlands. TREK Power are our delicious protein bars, made with grams of plant-based protein and coated in vegan chocolate. The two flavours, ‘Peanut Butter Crunch’ and ‘Millionaire Shortbread’, are on the march internationally. INNOVATIONS 2022 Pack shot United Kingdom Pack shot United Kingdom 44 - Lotus Bakeries Our strategy Lotus Bakeries - 47 KIDDYLICIOUS 3+ RANGE Kiddylicious has successfully introduced snacks for toddlers within babyfood. The latest addition to the year range is the Quinoa Squares concept. These are perfect for little fingers. They are ‘air-popped’ to achieve the perfect crispy texture and are available in two flavours: tomato-basil and cheese flavour. With our Kiddylicous year product line, we support retailers’ ambitions to oer a broader range for toddlers and meet the demands of parents who want to give healthier alternatives to their children for a longer period of time. Children at that age often want to decide for themselves what they eat – we are therefore keen to be able to oer them our range of healthy options from now on, to which they will wholeheartedly say “Yes!”. The Kiddylicious year range is sold in portion-controlled packaging, making them the perfect snack for kid’s lunchboxes. It also oers fun packaging to keep toddlers interested and oers a healthier alternative to traditional snacks for adults. BEAR SMOOTHIE YOYO: NOW ALSO WITH STRAWBERRY AND BANANA FLAVOUR For our iconic fruit rolls, we’ve drawn inspiration from classic smoothie flavours. The result is a deliciously soft and tasty fruit roll, mixed with gluten-free oat milk powder, with no added sugar and rich in fibre. This product line is available in the United Kingdom in three flavours: peach and banana smoothie, blueberry and banana smoothie and finally strawberry and banana smoothie as the newest flavour. It’s the perfect smoothie experience, but now in a fruit roll. Pack shot United Kingdom Pack shot United Kingdom No low calorie food, see nutrition info for calorie and sugar content. 46 - Lotus Bakeries Our strategy Lotus Bakeries - 49 The strategic choice to both focus on continued growth in the home market of the Lotus™ Natural Foods brands and also on international growth outside the United Kingdom is clearly paying o. In , Lotus™ Natural Foods recorded a growth in revenue of no less than . In the United Kingdom, the Lotus™ Natural Foods brands achieved double-digit growth. International operations, outside the United Kingdom, grew by more than in and already represent more than of Lotus™ Natural Foods’ total revenue. BEAR has had an extraordinary year in both the United States and the United Kingdom with significant growth in both revenue and market share. nākd has also achieved success in a number of countries outside its home country, including Spain. SPEAKING 2022, a record year for Lotus™ Natural Foods BEAR’s success story in the United Kingdom Joanna Agnew MARKETING DIRECTOR URBAN FRESH FOODS & NATURAL BALANCE FOODS Derren Plows SALES DIRECTOR URBAN FRESH FOODS In the United Kingdom, the category of healthy snacks has been on the rise for years. Lotus Bakeries has been active in the healthy snacks category since through acquisitions of strong brands such as nākd, TREK and BEAR, and adding Kiddylicious in . Peter’s Yard crackers were also added to the portfolio in . The ambition is to strengthen the strong positions of these brands within the United Kingdom. DOUBLE-DIGIT GROWTH FOR THE SECOND YEAR IN A ROW BEAR achieved double-digit growth in revenue again by the end of . That means BEAR has grown faster than the category and has also strengthened its market share in the ‘Kids Fruit Snacking’ category. The penetration rate of the BEAR products in the United Kingdom, i.e. the number of households that purchase a BEAR product at least once a year, is also growing. “One of the key factors behind the successful year for BEAR is the clear focus we set in ,” says Joanna Agnew, Marketing Director Urban Fresh Foods & Natural Balance Foods. “This means that we have focused on the strong activation of our ‘core products’, anticipating post-COVID trends and investing in product innovation.” WELL-THOUGHT-OUT ONLINE AND IN-STORE ACTIVATION STRATEGY “The growth achieved is partly due to the well-thought-out ‘in-store activation strategy’, in which we deliberately mapped out in which stores we wanted to activate BEAR at what time of the year. Our activations and promotions with key retail partners have helped to increase the visibility of our products, both on and o the regular shop shelves. Visibility at the retail point remains the main driver for raising brand awareness. But also the strong interaction with online activation has maximised the eectiveness of our marketing eorts over the past year. For example, our extensive online and oine plan for the ‘Back to School’ moment in the months of January and September was particularly successful. Our focus on young parents, who are looking for healthy and tasty lunchbox snacks, created an unprecedented sales spike of our BEAR fruit rolls (known as ‘yoyos’ in the United Kingdom) ,” continues Joanna. “We look back on with great satisfaction regarding our ‘on pack’ partnership with the outdoor adventure company Go Ape!. The on pack consumer promotion on the popular BEAR fruit rolls, whereby shoppers could win tickets for the Go Ape! adventure parks with every purchase, was supported by online campaigns, on the one hand, and an extraordinarily high visibility in the stores, on the other hand. We found that this edition worked even better than the previous year.” The key to success? “The timing of this campaign was also crucial. The visibility around this cooperation was intentionally planned for the summer months. Parents with young children get out and about, and so our healthy snacks are the perfect snack during such outdoor activities.” says Joanna. “It has led to increased sales of our BEAR products, even at a time of year when sales of our BEAR products have historically remained stable,” adds Derren Plows, Sales Director Urban Fresh Foods. “Our net revenue in June and the summer period has never been higher!” Derren Plows – Sales Director Urban Fresh Foods 48 - Lotus Bakeries Our strategy Lotus Bakeries - 51 How exactly will that be achieved? “Among other things, by expanding the distribution points even further across dierent sales channels. There is certainly still potential to further expand our presence outside our already existing customer base. It is important that we oer the BEAR products no matter where the consumers are. Just look at our current retail partners, smaller supermarkets, discounters or neighbourhood stores,” says Derren. “If we want to reach our target group eectively, we will also have to focus even more on strengthening our presence on social media in the coming years. For example, we find that parents with young children watch less TV, but are active on Facebook and Instagram. It is crucial that we are present on the media channels they spend their time on,” says Joanna. “Most parents care about healthy nutrition for their children, so we need to inform them about the benefits of our range, in a clear way. Similarly, in the future, we should continue to draw sucient attention to the fact that our natural BEAR products are made with real fruit and do not contain added sugars. By providing clear information, we can help parents make better-informed choices and encourage healthy lifestyles for both them and their children,” she concludes. RESPONDING TO POST-COVID TRENDS The ways in which consumers buy and shop have changed due to COVID-. That definitely caused them to start shopping online. A trend that has been on the rise for several years, but which the pandemic has only accelerated. “Young parents with children often have little time to go to the store or wait at the checkout. They clearly prefer to buy our BEAR products online,” says Derren. The year is considered the first post-COVID year, and Lotus Bakeries have definitely noticed that. “Finally, there have been opportunities to see and speak to customers, partners, as well as our colleagues in person!” says Derren enthusiastically. “That is why over the past year we have put our focus on maintaining and strengthening our good relationships with both large and smaller retailers and supermarkets. While the pandemic led to a significant increase in online sales, we find that some of the consumers are also going back to their old buying habits and again finding their way to physical stores. That is why we have made every eort over the past year to properly align our plans with our retail partners and ensure that our joint initiatives were in line with the actual needs of both the category and the consumers.” CONTINUING TO SURPRISE WITH SUCCESSFUL INNOVATIONS “We also continue to invest in BEAR by launching innovations,” says Joanna. “For example, we launched a number of new products in , including BEAR smoothie fruit rolls, inspired by classic smoothie flavours. In , our iconic BEAR fruit rolls also came in new packaging formats as well as new flavours, which consumers clearly appreciated. On the one hand, expanding our range ensures that existing consumers continue to be pleasantly surprised. On the other hand, it also tempts new consumers into trying out our products. The latter is important to us, as consumers who have tasted our BEAR products continue to buy our brand.” NEW GROWTH POTENTIAL TO UNLOCK At the same time, there is still a lot of unexplored terrain. “The United Kingdom has around . million families with children between the ages of zero and nine. We know that around . million of these already consume our BEAR products today. But that also means that there is still a lot of potential for us to reach other families with our tasty products!” , Joanna smiles. Joanna Agnew – Marketing Director Urban Fresh Foods and Natural Balance Foods “We also continue to invest in BEAR by launching innovations. On the one hand, expanding our range ensures that existing consumers continue to be pleasantly surprised. On the other hand, it also tempts new consumers into trying out our products. The latter is important to us, as consumers who have tasted our BEAR products continue to buy our brand.” – Joanna Agnew No low calorie food, see nutrition info for calorie and sugar content. 50 - Lotus Bakeries Our strategy Lotus Bakeries - 53 The situation is dierent in Spain. With the launch of nākd, a completely new category of healthy snacks had to be created. “Although there is an increasing awareness of healthy food in Spain, the category of healthy snacks does not really exist yet. The classic candy category as well as the category for cereal bars can easily be found in the retail market, but until recently the range of healthy snacks was very limited,” Els De Smet, General Manager Sales Oces Europe begins. SUCCESS THROUGH REAL NEED “That made it a real challenge for us in to launch the nākd brand in these markets,” she explains. “An additional challenge in Spain is that the retail market is very fragmented. Unlike some other countries, you don’t have just a handful of large retailers with many outlets. But rather many dierent chains, with a more limited number of stores selling A brands. That meant it was not easy for us to get a foothold quickly.” SPEAKING Heading to the top: nakd. wants to become Spain’s biggest cereal bars brand Els De Smet GENERAL MANAGER SALES OFFICES EUROPE Ton Kooi COUNTRY MANAGER SPAIN SYNERGY BETWEEN ONLINE AND IN-STORE ACTIVATION The good progress made in is certainly also due to the synergy between the online visibility and the activation in the shopping points. “Because people had often heard about our brand online before, our strong ‘second placements’ also made it easy for them to find our products in the store. It was a good way to also get other shoppers to discover our products, and it certainly helped to increase our market penetration. Thanks to a strong promotional plan, together with our retail partners, we managed to close the year with particularly good sales figures. Which in turn opens doors to be included in the product range of other Spanish retailers as well,” explains Ton. And yet, in , they can look back on an incredibly good year for nākd in Spain. “Four years ago, we sensed well that there was a real need for healthy snacks in Spain. We were the first to launch a healthy bar onto the market with nākd in . We now know that it is extremely important to be the ‘first mover’ and to build this new category together with our out-of-home customers and retailers,” says Els. EXTRA BOOST THROUGH REALFOODING But also Realfooding in Spain, also known as ‘movimiento de comida real’, really helped to boost our sales. This movement, whereby the supporters focus on eating food that is as natural as possible, is mainly spread through social media and particularly on Instagram. One nutritionist was so enthusiastic about the nākd bars that he started to serve as a real ambassador for the brand which has greatly boosted sales in Spain. “From the moment this influencer promoted our nākd bars, the ball really started rolling. He spontaneously explained the composition of our natural snacks and even led his followers by the hand, so much so that he started filming in retail outlets to show them exactly where they could find our products. In a few short years, his Instagram page has become one of the most popular healthy food accounts in Spain. His account now has more than . million followers,” says Ton Kooi, Country Manager Spain. “If you know Spain has around million people, you can understand how many people he is reaching with this account!” Els adds. “Now it’s a matter of, on top of those supporters who are obviously ‘early adopters’, taking it a step further and also reaching the greater masses with our story.” Els De Smet – General Manager Sales Oces Europe “Four years ago, we sensed well that there was a real need for healthy snacks in Spain. We were the first to launch a healthy bar with nakd in 2019. We now know that it is extremely important to be the ‘first mover’ and to build this new category together with our out-of-home customers and retailers.” – Els De Smet 52 - Lotus Bakeries Our strategy Lotus Bakeries - 55 EXPANDED RANGE In , the nākd range in Spain consisted of three dierent flavours. Two new flavours were added in and in the summer of , the product range was further expanded with two additional flavours. “We have found that expanding our range has each time led to more sales and has therefore been a real driver of more sales in Spain. Consumers clearly appreciate variety,” says Ton. In the past year, in addition to the introduction of new flavours, Lotus Bakeries has also made significant eorts to expand its distribution channels, particularly in the airports and major train stations in Spain. “These are high-trac locations, not only for Spaniards, but also for tourists. As a result of the recovery of the tourism sector, our sales increased significantly. nākd is now being sold at all major Spanish airports, such as Mallorca, Madrid or Barcelona, at various shopping points,” says Ton. “Particularly in the Canary Islands, sales of our nākd bars are disproportionately high. The large proportion of British tourists, who already know our brand well, probably plays a role in this,” explains Els. SPAIN’S LARGEST CEREAL BARS BRAND “We were really only able to glimpse this year what a huge potential nākd still has in Spain,” says Els. “This has only added more fuel to our ambition. We want to become the largest cereal bars brand in Spain. There is certainly still a lot of work to be done, but we are well launched and are heading for continued success in the future!” Ton Kooi – Country Manager Spain Peter’s Yard, a brand of tasty sourdough crackers based exclusi- vely on natural ingredients, has been part of Lotus Bakeries since July . Meet our newest addition to the Lotus TM Natural Foods portfolio. Swedish tradition meets British craftsmanship, natural quality ingredients and time. These are the secret elements that make Peter’s Yard’s artisanal sourdough crackers so unique. “All products in the Peter’s Yard range are prepared according to the traditional Swedish recipe using a -year-old sourdough starter, which is slowly fermented for hours. That is exactly what brings out the taste and crispiness,” starts Jean-Baptiste Robert, Managing Director of Peter’s Yard, enthusiastically. “Peter’s Yard has a wide range of crackers and flatbreads that can be used as toast, as an alternative to bread or just as a healthy snack. The crackers and flatbreads come in dierent flavours and sizes and there is also a ‘Selection Box’ on the market, which oers consumers a mix of all Peter’s Yard products.” SPEAKING PETER’S YARD, THE NEWEST MEMBER OF THE LOTUS TM NATURAL FOODS FAMILY Twan Thorn MANAGING DIRECTOR KIDDYLICIOUS Jean-Baptiste Robert MANAGING DIRECTOR PETER’S YARD PROMISING GROWTH COMPANY The potential of Peter’s Yard is beyond question; a unique product proposition in a large category, the revenue growth of recent years, supplemented by the expertise Lotus Bakeries adds in terms of distribution, marketing and production. “The market penetration rate of Peter’s Yard in the United Kingdom is still modest at this point, but the potential is enormous,” says Jean- Baptiste. “Over the past year, Peter’s Yard has been the fastest growing brand in its category in the United Kingdom. We are at the start of an incredibly beautiful growth story. There are already some strong players, such as Jacobs, Carrs or Ryvita, who have built up the category of savoury snacks. But this category is particularly large in the United Kingdom and continues to grow.” “The strength of the Peter’s Yard brand mainly lies in the superior taste and crispiness of the products. Building on the brand’s strong foundation, we believe we can leverage Lotus Bakeries’ expertise and experience to further accelerate Peter’s Yard’s growth,” adds Twan Thorn, Managing Director of Kiddylicious. “ And the ambitions are particularly high. With Peter’s Yard, we want to be United Kingdom’s best-known and best-rated sourdough cracker brand.” MORE DISTRIBUTION CHANNELS In order to achieve these objectives, a sustainable growth plan was drawn up. This plan focuses on increasing brand awareness on the one hand and strengthening the distribution channels for Peter’s Yard on the other. “Specialist shops have always been important sales channels for Peter’s Yard,” says Jean-Baptiste. “We are well represented in the best cheesemongers and farm shops in the United Kingdom. They are among the most powerful ambassadors for our brand and we will certainly continue to strengthen these relationships in the future. But if we want to make it quicker and easier for new customers to find our products, we will have to use more and also dierent distribution channels.” 54 - Lotus Bakeries Our strategy Lotus Bakeries - 57 “Peter’s Yard experienced strong growth in the retail channel in . Retailers like Sainsbury and Waitrose oer a wide range of Peter’s Yard products and the brand has particularly good rotations. These successful steps, in such a short time, confirm our belief in the brand,” Twan adds. In addition, it is precisely in the area of distribution that Lotus Bakeries can add value. “We are confident that the distribution network, contacts and experience of the Lotus teams will help take the brand to the next level,” says Jean-Baptiste. “Our goal now is to expand the distribution for our ‘hero’ products, being the crackers, flatbreads and the ‘Selection Box’, in the short term.” “The initial focus will mainly be on the further acceleration of the growth of Peter’s Yard products in the United Kingdom. Should steps be taken to the international markets in time, the network and experience of Lotus Bakeries will also be of great added value,” says Twan. Management is already confident in the cooperation between the two teams. In the past three years, Twan and Jean-Baptiste, as Managing Director Kiddylicious and Commercial Director Kiddylicious, respectively, have succeeded in growing the Kiddylicious brand to become the largest technologies or market approaches in the broader food and beverage sector, focusing heavily on the ‘better-for-you’ segment. Peter’s Yard was the first minority holding and has been owned by Lotus Bakeries since summer. “This has given us the opportunity to first work with the founders for multiple years and get to know the brand really well before being at the wheel ourselves,” says Jean-Baptiste. “It was a real pleasure to be able to work with them throughout those years. Our team is now all set to continue writing Peter’s Yard’s beautiful story for the future!” ‘Baby Finger Food’ brand category in the United Kingdom. It is up to them to now also continue to write the success story of the Peter’s Yard brand. OPTIMISING PRODUCTION CAPACITY In view of this growth story, further investment will also have to be made in production capacity. “We currently have one production line, but we are looking at how we can optimise the production on this line. In addition, we are mapping out what additional capacity will be needed to track and support future growth,” says Jean-Baptiste. “Optimising the current production capacity on the one hand and investing in additional capacity on the other are both important aspects to ensure Peter’s Yard’s future growth and success.” GREAT ADDITION TO LOTUS™ NATURAL FOODS PORTFOLIO Lotus Bakeries wants to oer every consumer a diverse range of healthy and tasty snacks for every moment of the day. Peter’s Yard is therefore a great addition to the existing portfolio of Lotus™ Natural Foods. Lotus Bakeries had already acquired an interest in Peter’s Yard through the Fast Forward investment fund. FF invests in promising brands and growth companies that develop innovative products, “Over the past year, Peter’s Yard has been the fastest growing brand in its category in the United Kingdom. We are at the start of an incredibly beautiful growth story.” – Jean-Baptiste Robert “With Peter’s Yard, we want to be United Kingdom’s best-known and best-rated sourdough cracker brand.” – Twan Thorn Twan Thorn — Managing Director Kiddylicious and Jean-Baptiste Robert — Managing Director Peter’s Yard 56 - Lotus Bakeries Our strategy Lotus Bakeries - 59 LOTUS® LOCAL HEROES STRATEGY The local ‘hero’ products or ‘Lotus® Local Heroes’ form the third pillar of Lotus Bakeries’ strategy. We are present in Belgium, the Netherlands, France and Sweden with a wide range of local ‘hero’ products: biscuits, waes, cakes and gingerbread. We want to develop these already strong market positions by investing continuously in this wide range. In this way, Lotus Bakeries strengthens its position as market leader in the relevant subsegments. Our belief in ‘hero’ products is great. It is no coincidence that, when making acquisitions, Lotus Bakeries has always focused on companies with a strong brand, exceptional products and a strong market position in the home market of the company concerned. We are firmly convinced that, by paying attention to these local ‘hero’ brands in their home market, we can make these products even more successful. Meticulous verification of the Lotus Madeleine dimensions 58 - Lotus Bakeries Our strategy Lotus Bakeries - 61 LOTUS® CAKE The Lotus® cake range comprises a wide range of cake specialties, including the hero concepts Frangipane, Madeleine, Tartélice and Zebra. They are all fabulous quality products to enjoy at home or on the go. DINOSAURUS Don’t we all know the deliciously crunchy cookies shaped like dierent dinosaurs. Lotus® Dinosaurus cookies inspire young and old to explore the world, try new things and let their imagination run wild. The basic version of the popular Dinosaurus cookies comes in three flavours – milk chocolate, dark chocolate and whole wheat. They are available in a mini-version too. The range also includes Lotus® Dinosaurus filled, a crunchy round cookie with a light filling of Belgian milk or dark chocolate. Since , the round stued Dinosaurus cookies are also available in a smaller version and with a vanilla or milk chocolate filling. Pack shot Belgium Pack shot Belgium 60 - Lotus Bakeries Our strategy Lotus Bakeries - 63 LOTUS® WAFFLES In Belgium and France, Lotus Bakeries continues to oer an extensive range of waes. In Belgium, the waes are marketed under the brand name Lotus® Suzy, with as its figurehead the young lady of the same name who promotes the waes from her retro van, winning many hearts in the process. Suzy is the brand name of the divine Liège Waes, Vanilla Waes, and since also Soft Waes from Lotus®. In any case, the members of the Lotus® wae family have one thing in common: they all stand out thanks to their high quality, taste and texture. PEIJNENBURG As a brand, Peijnenburg stands for simple enjoyment every day. Peijnenburg gingerbread has been baked at Geldrop in the Netherlands since . Over the years, the bakery grew into a fully-fledged factory. In , one hundred years of craftmanship were crowned with the title ‘Koninklijke’ or Royal. With its unique flavour, traditional baking and preparation process using nutritious ingredients, Peijnenburg is reliable choice. Peijnenburg Zero is made without added sugars, with specially selected and nutritious rye, making it high in fibre and low in fat. A delicious snack with a special blend of only a few natural ingredients, a unique spice mix and a soft structure. Pack shot Belgium Pack shot the Netherlands 62 - Lotus Bakeries Our strategy Lotus Bakeries - 65 SNELLE JELLE Snelle Jelle stands for energy, adventure and challenges. The brand has marketed delicious gingerbread since . This tasty rye gingerbread snack that’s handy to eat on the go is packed full of energy. A spicy gingerbread with a unique twist that inspires young and old to keep going. The brand houses a range of filling bars, packed with energy, also available in several flavours. There are also bars in handy formats for snacking on the go and a no added sugar version, Snelle Jelle Zero. ANNAS The Annas brand dates from , the year in which Anna and Emma Karlsson opened their bakery near Stockholm (Sweden). There they baked the typical Swedish specialty, of Pepparkakor biscuits: thin, crunchy biscuits flavoured with ginger and cinnamon. In the home markets of Sweden and Finland, Annas is the most beloved Pepparkakor brand, but it is also sold to more than other countries worldwide. Today there are several traditional taste variations as well as limited editions. Annas also markets special Annas Pepparkakor houses, which are traditionally assembled and decorated by the whole family. Although Annas Pepparkakor cookies are available all year round, in Scandinavia they are especially popular during the Christmas period. Pack shot the Netherlands Pack shot Sweden 64 - Lotus Bakeries Our strategy Lotus Bakeries - 67 LOTUS® TARTÉLICE LEMON In , Lotus® Tartélice lemon, a soft cake with a deliciously refreshing note, was added to the range. Treat yourself to this smooth cake tart with a delicate lemon aroma and a nice layer of lemon marmalade. The perfect snack or dessert to enjoy at home or on the go. ANNAS STRENGTHENS MARKET POSITION WITH ACQUISITION OF KUNG OSCAR To further strengthen its position as ginger cookie market leader in Scandinavia, Annas acquired the Kung Oscar brand in , a beloved brand in Sweden since . Kung Oscar Pepparkakor is well seasoned with its characteristic taste of ginger, cinnamon and cloves. Together with Annas, the two brands complement each other perfectly, targeting dierent consumers. INNOVATIONS 2022 ANNAS NOW ALSO AVAILABLE WITH BELGIAN CHOCOLATE In , Annas expanded its range and launched Annas Original Milk Chocolate. This new product combines high-quality Belgian chocolate with crispy pieces of Annas Pepparkakor. A true taste sensation that consumers love! ANNAS LIMITED EDITION 2022 WITH APPLE PIE FLAVOUR For eight years in a row, Annas has always launched one new and ‘Limited Edition’ flavour. In , the taste of äppelpaj (apple pie) was developed. A delicious combination of Peparkakkor with apple and vanilla to create a real taste sensation of freshly baked apple pie. A delicious winter classic! Pack shot Belgium Pack shot Sweden Pack shot Sweden Pack shot Sweden 66 - Lotus Bakeries Our strategy Lotus Bakeries - 69 Lotus Bakeries oers an extensive range of waes: Liège waes, vanilla waes, soft waes, filled waes and crispy galettes. The production facility where these Lotus® waes are baked is located in Courcelles, situated in the Belgian province of Hainaut. Hervé Springael, the Plant Manager at Courcelles, proudly looks back on the completed expansion at the manufacturing site. STRENGTHEN MARKET POSITION Since the end of , the entire production of waffles has been centralised at the Courcelles site. In order to build on the already strong market position, continuous investments are also made in this range. Lotus® waes have seen solid growth in recent years, so it’s the optimum timing for the expansion. “In the current building, we were simply at our limit if we wanted to continue to serve our customers on time and to be ready to face the future,” says Hervé Springael, Plant Manager Courcelles. “We are seeing our sales increasing further every year, especially those of the Liège waes. Thanks to previous adjustments to the work organisation, it was still possible to boost the production. For example, the usage of the SPEAKING Expansion of Courcelles production site to keep up with demand for waffles Hervé Springael PLANT MANAGER OF COURCELLES production lines was optimised to the maximum, as was the deployment of the teams. But all the lines are now running continuously, /, partly thanks to the weekend shifts. So only an extra production line would ensure that we could increase capacity and produce additional volumes of Liège waes.” NEW PRODUCTION HALL AND ADDITIONAL LINE Work on the new production hall commenced at the end of . By September , the main works on the hall had been completed, and the installation of the additional production line could get underway. The brand-new expansion, measuring more than , m in total, is located on the same plot as the existing production site and makes it a third larger than its existing surface area. The new hall includes space for new production lines, a new warehouse to store raw materials, a technical space for all utilities, as well as a storage area for packaging materials. “At present, one additional line for Liège waes has been installed in the new production area, but there is space for at least a second one. This additional line brings the total to four production lines for Liège waes in Courcelles,” Hervé continues. Hervé Springael — Plant Manager of Courcelles “Only an extra production line would ensure that we could increase capacity and produce additional volumes of Liège waffles.” – Hervé Springael 68 - Lotus Bakeries Our strategy Lotus Bakeries - 71 A lot of emphasis was placed on pleasant and energy-ecient LED lighting and maintenance-friendly materials. SOLUTIONS TO MEET DEADLINES However, the expansions experienced their fair share of setbacks. The ongoing global supply chain problems and limitations in the supply of parts and materials, including the unexpectedly quick recovery of the global economy after the pandemic and the ongoing war in Ukraine, created challenges. “The delivery times of building materials were longer than initially promised and we had to wait for specific electronic components for our equipment. Components that were critical in order to start the new line. These external factors did not always make it easy to follow the predetermined schedule. Fortunately, both the Engineering department colleagues, the Courcelles team and our suppliers were always able to find solutions and we managed to deliver on our promises to our commercial colleagues and to our customers,” Hervé explains. SPEAKING SYNERGIES THROUGH TEAMWORK What was the big secret to the success of this impressive piece of work? “The tremendous flexibility that our colleagues in the organisation have demonstrated and the excellent collaboration between the dierent teams,” Hervé answers without hesitation. Installing advanced and high- tech equipment for wae production and packaging lines requires a lot of expertise and experience. And that is exactly what the various teams put in to achieve this project together. “The colleagues from Courcelles have the knowledge and experience with the equipment and processes at the site, while the Engineering colleagues oered added value thanks to their specific expertise on the product, energy or packaging. Each problem or challenge could be approached from multiple angles and therefore could be solved much more quickly. We can really say that the synergy between the two teams has had a very positive eect. The fact that, despite everything, they succeeded in getting the line operational is the best proof of that. Well done for this achievement!” READY FOR THE FUTURE In addition to a new building and machinery, manpower has also increased. The workforce in Courcelles has more than doubled in the course of seven years. The Lotus team in Courcelles now has more than employees, who together ensure that the high-quality waes are in high demand, in particular in Belgium and France. “We very much welcome the future of Courcelles! The capacity expansion oers numerous new opportunities to be able to attract new consumers and to continue to inspire existing ones,” concludes Hervé. “The capacity expansion offers numerous new opportunities to be able to attract new consumers and to continue to inspire existing ones.” – Hervé Springael 70 - Lotus Bakeries Our strategy Lotus Bakeries - 73 02 OUR SUSTAINABILITY PROGRAMME CARE FOR TODAY, RESPECT FOR TOMORROW Our sustainability ambition Our sustainability strategy Our sustainability in action EU Taxonomy Limited Assurance Report 72 - Lotus Bakeries Lotus Bakeries - 75 1. OUR ENVIRONMENT We are committed to the environment and to help fight against global warming. We aim to reduce our ecological footprint in everything we do. We have further developed our commitment to market only recyclable packaging for all our brands and are well on our way to achieving our goals. Furthermore, we have again made eorts to significantly reduce the weight of packaging we bring to the market. Regarding CO emissions, all sites under our management are carbon neutral. We also signed the Commitment Letter of the Science Based Target initiative (SBTi), with which we are committed to formulating science-based reduction objectives in line with the SBTi Criteria and Recommendations, in order to limit global warming to . degrees Celsius above pre-industrial levels. 2. OUR EMPLOYEES We have an inclusive and non-discriminatory recruitment policy aimed at attracting a diversified and talented group of people who like us share and cherish our TOP values. We aim for long-term employment and oer our employees a pleasant, challenging, inspiring and safe working environment. In , we achieved excellent additional job creation. We use development, constant challenge and training to ensure our employees feel at home at Lotus Bakeries and can continue to develop themselves. 3. OUR COMMUNITY We also actively accept our social responsibility. By implementing our internal Code of Conduct and the Supplier Code of Conduct, we guarantee ethical business practices throughout the organisation. This is always a given and embedded in our business processes. For example, considering the geopolitical situation in , there was an increased focus on being mindful of our existing export policy in light of the international restrictions. With our Foundation for Education we contribute to prospects for future generations through carefully chosen education and training projects. In , Lotus Bakeries expanded its initiatives, with support to, among others, Gammol, a non-profit organisation in Gambia focused on education and healthcare, and to the Youth Talent Atelier TAJO, aimed at socially vulnerable young people in the region of Ghent and Kortrijk (Belgium). In March we underlined our sustainability ambition by endorsing the UN Global Compact. Since then, we have renewed this commitment annually. In June , Lotus Bakeries reported for the first time on the progress of its eorts in the ‘Communication on Progress Report ’. Jan Boone – CEO Lotus Bakeries plans to grow by oering a varied range of branded snacks for every moment of the day. Lotus Bakeries’ vision is that the Group must not only be profitable, but also sustainable, maximising opportunities for the next generations. Our ‘Care for Today, Respect for Tomorrow’ sustainability strategy is an integral part of our vision and of our business strategy, which is based on three pillars: environment, employees and community. In , we took another great step towards realising our concrete ambitions within each of the pillars: OUR SUSTAINABILITY AMBITION 74 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 77 Lotus Bakeries’ sustainability strategy rests on three pillars: our environment, our employees and our community. We aim for good corporate governance in each pillar and set specific targets and priorities that will contribute to the realization of our sustainability objectives. ENVIRONMENT EMPLOYEES COMMUNITY We are committed to the environment and to help fight against global warming. In everything we undertake, we strive to reduce our ecological footprint. We have a recruitment policy aimed at attracting a diversified and talented group of people who share our TOP values. We aim for long-term employment and oer our employees a pleasant, challenging, inspiring and safe working environment. We actively take up our social responsibility. We guarantee ethical business practices throughout the organisation. With our Foundation for Education we support educational projects and help build a future for generations to come. AMBITIONS OUR SUSTAINABILITY STRATEGY Cycling to work 76 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 79 Our materiality matrix very low importance for Lotus Bakeries very high very low very highimportance for stakeholders Food safety Financially sound company Education for all Long-term strategy Taste experience Balanced portfolio of products Nutritional aspects Sustainability reporting Consumer packaging Code of Conduct Corporate governance Local involvement Procurement and traceability Energy consumption Diversity Corporate culture Waste reduction Climate change Water consumption and treatment Employee well-being GOVERNANCE AND REPORTING Lotus Bakeries’ ‘Care for Today, Respect for Tomorrow’ sustainability strategy is the responsibility of the Executive Committee (EXCO). The EXCO reports regularly to the Board of Directors on the dierent priorities and actions. In addition to various HR topics and the cybersecurity strategy, given the geopolitical and macroeconomic developments, the availability of raw materials and the energy policy were also high up on the agenda. In order to increase transparency in our reporting, we have been publishing a GRI report since that can be found on our website: https://www.lotusbakeries.com/reporting-disclosure The GRI report is part of the ESG compilation report. This full report can also be found on the Lotus Bakeries website: https://www.lotusbakeries.com/reporting-disclosure TOP 20 SUSTAINABILITY PRIORITIES A materiality assessment helps determine which topics are important to both the company and its stakeholders. It is important to also involve our stakeholders in our sustainability ambition and programme and to give them input. Lotus Bakeries conducts a full review of sustainability priorities on a periodic basis to ensure that all developments are reflected both inside and outside the company. The starting point was a questionnaire that was based on the pillars and existing priorities of our sustainability programme on the one hand and, on the other hand, was inspired by developments and priorities within the broader sustainability domain. These questions were submitted to a relevant group of stakeholders and the EXCO. The materiality assessment thus defined the following top sustainability priorities. The relevance and importance of these topics are confirmed on a periodic basis and updated as necessary. ENVIRONMENT EMPLOYEE COMMUNITY • Procurement and traceability • Energy consumption • Waste reduction • Climate change • Water consumption and treatment • Corporate culture • Diversity • Employee well-being • Food safety • Financially sound company • Long-term strategy • Taste experience • Balanced product portfolio • Nutritional aspects • Consumer packaging • Corporate governance • Education for all • Sustainability reporting • Code of Conduct • Local involvement Top sustainability priorities 78 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 81 UN GLOBAL COMPACT OF THE UNITED NATIONS In March Lotus Bakeries was accepted as a member of the UN Global Compact of the United Nations. 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 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. Lotus Bakeries is also committed to supporting projects that promote the broader development goals of the United Nations, in particular the sustainable development goals or SDGs. Our participation in the UN Global Compact also means that we renew our commitment annually and report on the progress of our eorts to implement the Ten Principles. Sustainable Development Goals of the United Nations 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 and consist of goals, to be achieved by . As a business our contribution focuses on those goals on which we as Lotus Bakeries can have the greatest and most direct impact. The SDGs that are directly supported by the priorities we have set in our sustainability strategy are set out in the discussion of the three pillars further in this chapter. 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 eective 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 diusion of environmentally friendly technologies; Businesses should work against all forms of corruption, including extortion and bribery. OUR SUSTAINABILITY IN ACTION In the report below, Lotus Bakeries aims to communicate transparently what the Group actually achieved in within its three sustainability pillars: environment, employee and community. This ‘Care for Today, Respect for Tomorrow’ chapter contains a set of indicators related to our three pillars of sustainability. A selection of indicators has been validated by PwC Bedrijfsrevisoren BV. The validation was carried out in accordance with the International Standard on Assurance Engagements (ISAE) , a model developed to provide assurance for non-financial data. The assurance indicators are marked throughout the text by . For the assurance report relating to the attested indicators for the year as per December , please refer to p. of this annual report. For the assurance report relating to the attested indicators for the year as per December and please refer to p. of the annual report and p. of the annual report. 80 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 83 LOTUS BAKERIES IN TOP 5% OF ‘PACKAGED FOOD COMPANIES’ In Sustainalytics’ rating, an independent company specialising in ESG research and ratings, Lotus Bakeries is ranked among the top 5% of the ‘packaged food companies’ they rated. For more information: https://www.sustainalytics.com/. LOTUS BAKERIES IS PART OF THE EURONEXT BEL® ESG The new BEL®ESG index was launched on February 15, 2023. This new index consists of companies from the BEL®20 and the BEL®Mid that have demonstrated strong ESG practices. For index market data, Euronext has partnered with Sustainalytics, a leading global provider of ESG research, ratings and data. The ESG rating of companies by Sustainalytics is the basis of the composition of the index. The Euronext BEL® ESG is designed to fully comply with the ‘Towards sustainability’ label of the Central Labelling Agency, a high-quality standard for sustainable financial products, such as indices and funds. Lotus Bakeries was one of 20 companies that were part of the Euronext BEL®ESG on the launch date. 82 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 85 ENVIRONMENT: 2022 AMBITIONS & ACHIEVEMENTS Lotus Bakeries is committed to the environment and the fight against global warming. We aim to reduce our ecological footprint in everything we do. LOTUS BAKERIES’ AMBITIONS WITHIN THE ENVIRONMENT PILLAR FOCUS ON TWO DOMAINS THAT IT CONSIDERS MOST RELEVANT WITHIN ITS ACTIVITIES: SUSTAINABLE PACKAGING CARBON FOOTPRINT The recyclability rate is the average technical recyclability of the packaging of all Lotus Bakeries brands by the end of . 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. This concerns residual waste, production waste, grease, paper and cardboard at our owned sites. Tonnes produced includes the produced volumes of margarine plant. As from , this includes company vehicles from the site in Comines. Following an analysis within the ESG project, the calculation of the external consultant was refined. The additional CO e emissions were compensated with additional certificates so that CO neutrality was maintained. PACKAGING UNIT 2022 2021 2020 Packaging-to-Product Ratio g/kg product 166 179 175 Reduction of plastic tonnes/year 62 22 19 Reduction of glass tonnes/year 1,120 Reduction of cardboard tonnes/year 526 % SKUs with 100% recyclable packaging % 81 73 70 % of packaging of all Lotus Bakeries brands that is recyclable 1 % 97 97 97 Use of recycled cardboard % 80 75 77 Use of cardboard with the ‘sustainable managed forest’ guarantee % 78 76 77 CARBON FOOTPRINT UNIT 2022 2021 2020 % of our owned sites that have earned the CO 2 -neutral label % 100 100 100 Output of scope 1 & 2 CO 2 equivalent emissions per tonne produced on our owned sites 3 kgCO 2 e/tonne 170 163 145 4 Output of scope 1 & 2 CO 2 equivalent emissions per tonne produced on our owned sites, excluding own transport 3 kgCO 2 e/tonne 161 156 139 4 Energy consumption per tonne kWh/tonne 1,074 1,064 1,071 4 Kg of waste per tonne generated 2 kg/tonne 60 63 54 84 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 87 . We only want to oer our consumers products of the highest product quality and with a superior taste experience. . That is why we must protect our products: packaging allows us to combat food waste and guarantee food safety. . 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 OF PACKAGING REDUCE WHAT WE USE DESIGN FOR TOMORROW AIM FOR CIRCULARITY Our commitment Lotus Bakeries is committed to designing all its packaging for all its brands to be technically recyclable by . The purpose of our packaging is to protect the product and guarantee food safety. Both en route to the retailer and from the shop shelf to the consumer’s pantry, up to the time of consumption. To guarantee the taste experience and product quality, we must package our product to create a barrier against external influences. High-quality packaging also ensures that Lotus Bakeries’ products have a longer shelf life and therefore helps prevent food waste, an issue as equally concerning as packaging waste. It is estimated that / rd of food products produced globally is lost through food waste, mainly at the point of sale and once it reaches the consumer. At the same time Lotus Bakeries recognises the problems relating to the use of packaging, including marine pollution, carbon emissions and the use of non-renewable resources. Lotus Bakeries shares this concern and is keen to accept its responsibility in making the transition from the current linear economy, where packaging is produced, used and thrown away, to a circular economy, in which materials are kept in circulation. Reduce what we use The ideal packaging contains as little packaging material as possible, without loss of flavour or freshness. In , Lotus Bakeries continued its eorts to innovate its packaging, with the goal of using as little material as possible. In so doing we pay the utmost attention to ensuring a superior taste experience for the consumer while minimising food waste. There is a delicate balance between using as little material as possible for the environment and yet enough material to be able to fully protect our products. In , Lotus Bakeries was able to realise a number of projects to further limit the packaging weight it brings to the market. Through various reductions, across the entire product portfolio, a total of approximately , tonnes of packaging was saved in compared to in the different material types and packaging categories. Less material also means less weight and volume, which in turn has a positive eect on reducing container transport and the related CO emissions. SUSTAINABLE PACKAGING PLASTIC -62 TONNES GLASS -1,120 TONNES CARDBOARD -526 TONNES OTHER -49 TONNES 86 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 89 Reduction in thickness and size of plastic packaging In , we also continued to look for ways to minimise the packaging weight placed on the market. For example, Lotus Bakeries succeeded in making the Lotus® Bisco® -piece packaging even thinner in , without compromising on quality. After extensive research, a suitable method was found to implement a similar reduction on the larger packages as well. The roll- out for this is scheduled for . The bundle packaging around the Lotus® Bisco® chocolate was also made even thinner in . In , Lotus Bakeries was able to make the nākd bar wrappers sit even tighter around the bars. Such a measure also ensures that less packaging material is required per bar. The BEAR wrappers were also changed to recyclable material in , which significantly reduces the amount of packaging brought onto the market. Thinning of cardboard packaging Besides plastic, Lotus Bakeries also tries to use as little cardboard as possible. Where possible, recycled paper fibres are used. In , thinner materials were already being used for the cardboard packaging of the Lotus® Bisco® -piece box. Based on that success, the cardboard packaging containing the Lotus® Bisco® gx was also optimised in . This cardboard also now contains thinner materials, which means it weighs less and a larger number of boxes can be put on a transport pallet. As a result, significantly fewer tonnes of cardboard are placed on the market every year and less trucks are needed to transport the cardboard to the factory, which has a positive impact on both CO emissions and water consumption. Reduction of glass per jar After extensive research, Lotus Bakeries succeeded in using thinner materials for the glass jars of Lotus® Bisco® spread in , without compromising on taste and freshness. This optimised packaging has a positive impact on CO emissions and energy consumption thanks to its lighter weight. GLASS CARDBOARD PLASTIC 88 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 91 Design for tomorrow All packaging recyclable by The recyclability of packaging starts with its design. We constantly explore sustainable and innovative packaging materials to increase the recyclability of our packaging and at the same time support the recycling process. We use objective eco-design guidelines to make our packaging recyclable, including CEFLEX and RecyClass. The technical recyclability rate is calculated as follows: the ratio of the total weight of the technically recyclable packaging is compared to the total weight of packaging of all our brands that we bring to the market as per the end of . This takes into account consumer packaging, distribution packaging as well as transport packaging. This technical recyclability rate is determined per packaging component on the basis of state-of-the-art design guidelines for recyclability (Ceflex, Recyclass). The weight of each packaging component is taken into account. All eorts that contribute to reducing the packaging weight we bring to market aect this percentage. This also includes reducing the weight of glass, a recyclable packaging. Therefore, the technical recyclability rate has remained stable at , despite the fact that a switch was made for a number of additional products from non-recyclable packaging to recyclable packaging. The significant reduction in the weight of the Lotus® Bisco® spread glass jar explains this stable percentage. Recyclable BEAR wrappers A significant achievement for is related to the brand BEAR from the Lotus™ Natural Foods product portfolio. The BEAR wrappers were changed from a non-recyclable packaging to a recyclable material. Projects to close the gap to recyclability In , a Close-the-GAP-action plan was drawn up to close the gap and achieve the technical recyclability of all product packaging in the Lotus® Bisco® range, the Lotus™ Natural Foods range, and for the Local Heroes. This action plan identifies all the steps to be taken to achieve the set objective by . Aim for circularity Since we design with recyclability in mind, we believe it is vitally important to evolve into a circular economy. Use of recycled material We contribute to this by using recycled content wherever possible, without losing sight of the requirements of quality and functionality. We always strive for what is technically the maximum possible: - For glass, we use recycled material, the maximum achievable without visual side eects. - For cardboard packaging this is . Circular economy partnerships Lotus Bakeries also supports various collection and recycling systems, including Ceflex, The Flexible Plastic Fund. Lotus Bakeries contributes to ‘Extended Producer Responsibility’ systems in various European countries. Raising awareness among our consumers; together we are reducing the plastic waste mountain Lotus Bakeries has informed consumers more explicitly about its packaging recyclability since . This is done by means of a custom icon that reads ‘recycle me’, combined with the slogan ‘Let’s care for our planet together’. That is how Lotus Bakeries wants to create even more awareness and encourage consumers to sort the packaging correctly so that it can actually be recycled. This icon will appear on every recyclable packaging, in the countries where that packaging can eectively be recycled. This ‘recycle me’ icon is an initiative undertaken by Lotus Bakeries and is not related to any ocial government authority or certification body. 90 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 93 CARBON FOOTPRINT CO 2 -NEUTRALITY Our scope , , emissions Climate change is one of our greatest global challenges. Partnership with CO logic, South Pole Group For more than years, Lotus Bakeries has been working with CO logic, the Belgian pioneer in climate action, to monitor our scope and emissions. Since , CO logic has been part of the South Pole Group, the international leader in climate and environmental services based in Switzerland. SCOPE 1 EMISSIONS SCOPE 2 EMISSIONS SCOPE 3 EMISSIONS For the calculation of our scope 1 emissions we take into account all GHG. The major part of our Scope 1 emissions relates to the use of natural gas. In 2022, our scope 2 emissions only included purchased electricity. In 2021-2022, we conducted a screening of our upstream and downstream scope 3 emissions. The scope of the screening exercise covered 90% of all our upstream and downstream activities. The result of the screening exercise of scope indicated that more than of our total emissions comes from scope . Analysis showed that more than of our scope emissions relate to raw materials. SBTI COMMITMENT: NET-ZERO BY 2050 Lotus Bakeries signed the Commitment Letter from the Science Based Target initiative (SBTi). A copy of the letter is published in the ESG compilation report. Science Based Target initiative (SBTi) The SBTi is a collaboration between Carbon Disclosure Project (CDP), UN Global Compact, the World Resources Institute (WRI) and WWF. SBTi has developed the first global science-based standard for organisations to set reduction targets to limit global warming to . degrees Celsius above pre-industrial levels and achieve net-zero CO 2 emissions by . Reduction objectives must include all GHG (greenhouse gases) emissions from scope , scope and scope . The ESG compilation report can be found on the Lotus Bakeries website: https://www.lotusbakeries.com/reporting-disclosure Scope includes emissions from all our upstream and downstream activities. For Lotus Bakeries, the upstream activity mainly comes from the purchase of raw materials. Since our raw materials come from agriculture, the FLAG Target-setting Guidance also applies to the raw materials and ingredients we purchase, which requires us to set both a specific FLAG target and a general scope target for the emissions associated with our purchasing activity. In order to achieve the reduction of scope emissions, we will work closely with our suppliers. Lotus Bakeries is carbon neutral Lotus Bakeries’ own sites are carbon neutral. This has been the case since and remains so in . All our scope and emissions are oset with certificates. For , we received a CO -neutral label from CO logic, a South Pole Company, for all our own sites. 92 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 95 In August , it was announced that Lotus Bakeries has plans to start a Bisco® production facility in Asia to further support its growth ambitions for Lotus® Bisco®. The rationale for a third Lotus® Bisco® plant is straightforward. The new plant will provide the necessary additional capacity for the Group, bring fresher cookies to the consumers, allows to respond more quickly and better to local opportunities and aside from transport costs also reduces the environmental footprint of the company. Multimodal transport in Europe In , in cooperation with the Vlerick Business School, it was investigated which alternative means of transport could be used in Europe to get Lotus Bakeries products to end customers. A combination of rail, ship and truck often oers a more environmentally friendly solution than only road transport. All logistics flows for Lotus Bakeries in Europe were mapped out in the study. Based on this analysis, alternative and more sustainable routes and modes of transport were identified. Both its eectiveness and feasibility as well as its cooperation with potential partners were evaluated. The first pilot projects were tested in the Czech Republic, Italy and the United Kingdom. These tests and new collaborations proved to be very successful. After the positive results, implementation of the multimodal system was started in the three aforementioned countries. The next steps are to further expand the multimodal transport plan to other European countries where possible. Greening of employee mobility Company cars The transition to a greener fleet has already been implemented in various countries via the car lease policy. The largest fleet is located in Belgium. Since , our employees in Belgium can only choose a fully electric vehicle as company car and electric charging stations are provided to further facilitate this use. Today, of the Belgian fleet are electric cars. This percentage will increase signficantly once the outstanding orders in will be delivered. In anticipation of this, additional charging stations were installed on the Belgian sites and in-home charging points were installed. Bicycle lease Furthermore, there is a bicycle leasing scheme in place for Lotus Bakeries employees in Belgium and the Netherlands. In Belgium, this programme has been up and running for several years. Employees who sign up for this bicycle leasing scheme are committed to coming to work by bicycle for a minimum number of days a year. More and more enthusiastic employees are choosing to purchase a bicycle through this program. This is not only good for the employees’ health, but also has a positive eect on CO emissions. CARBON FOOTPRINT REDUCTION Lotus Bakeries is aware of the need to look critically at its carbon footprint in the fight against global warming and climate change in general. Transition to more sustainable energy sources Further investments were also made in solar panels at all Lotus Bakeries sites in Belgium and at the site in South Africa. The expansion of the headquarters in Lembeke, the ‘House of Bisco’, inaugurated in October , was designed according to climate-friendly standards and is a so-called ‘BEN building’ (Bijna- Energie-Neutraal Almost-Energy-Neutral) with an E-level under . The new building includes a geothermal heat pump, LED lights, intelligent energy monitoring, its own PV production of green electricity on the roof and façade and variable ventilation flows according to CO measurements per room. Rainwater is also captured and optimal seepage of water into the ground is ensured. Transition to more sustainable logistics Reduction of container transport through local production In , the North Carolina plant in the United States was expanded to include a new production hall. That second hall now has two operational Lotus® Bisco® production lines. The capacity increase in the United States will make the continent more self-sucient for local demand of Lotus® Bisco® cookies. The plant in the United States is also sourcing its own raw materials and packaging locally and hence more responsibly and sustainably.This capacity expansion brings significant ecological benefits by avoiding container transport and the related CO emissions. The total capacity invested to date in the United States avoids , containers per year travelling from Belgium to the United States. 94 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 97 Combating deforestation Lotus Bakeries is committed to avoiding deforestation as much as possible by purchasing its raw materials and ingredients sustainably. This reduces deforestation in our supply chain. We believe that avoiding deforestation and conserving local ecosystems are of great importance in the fight against climate change. Farmers need to cultivate their raw materials in a sustainable way. Sustainable sourcing Lotus Bakeries is aware of the negative impact certain crops can have on the environment as well as on the communities living in the areas where those crops are grown. Palm oil All palm oil that Lotus Bakeries uses in its products is sustainably sourced. All Lotus Bakeries sites that use palm oil have also obtained the RSPO certificate. Cocoa of the cocoa butter and cocoa mass used in our Lotus® Bisco® chocolate has been certified by the Rainforest Alliance. This is a recognised quality mark for working conditions, the environment and nature conservation for products sourced from rainforest regions. Climate change and industrialisation put pressure on the availability of water, which increases the importance of ecient water management. Lotus Bakeries recognises that the sustainable use thereof is crucial. Water is a major source of health and well-being worldwide. Monitoring As part of its internal operational reporting, Lotus Bakeries reports on its water consumption. Since , water consumption has been among the standard KPIs that all production facilities report monthly. Based on these reported figures, Lotus Bakeries monitors the water usage across the various facilities. Lotus Bakeries used in its production sites , m water. In the new ‘House of Bisco’ in Belgium, technology is provided to collect rainwater and a well water filtration system has been installed. This well makes it easier for water to seep into the ground, meaning it is more evenly and better moisted. This contributes to a good groundwater balance. Wood and paper Today, of the cardboard 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. Local sourcing We also purchase our raw materials and packaging materials locally to a maximum extent. This means we purchase the greater part of our raw materials on the same continent as were we use these in our production. We continuously strive to keep the distance between grower and our production site as short as possible. AVOIDING DEFORESTATION AND SUSTAINABLE SOURCING WATER MANAGEMENT 96 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 99 EMPLOYEES: 2022 AMBITIONS & ACHIEVEMENTS We have a recruitment policy aimed at attracting a diversified and talented group of people who share our TOP values. Lotus Bakeries targets long-term employment and oers our employees a pleasant, challenging, inspiring and safe working environment. GENDER DIVERSITY 1 UNIT 2022 2021 2020 Board of Directors % 70 M | 30 F 70 M | 30 F 70 M | 30 F Leadership Team 2 % 55 M | 45 F 54 M | 46 F 58 M | 42 F All employees % 49 M | 51 F 48 M | 52 F 48 M | 52 F GEOGRAPHICAL 1 UNIT 2022 2021 2020 Belgium # 1,378 703 M I 675 F 1,233 597 M I 636 F 1.073 % 51 M I 49 F 48 M I 52 F South Africa # 518 221 M I 297 F 443 191 M I 252 F 314 % 43 M I 57 F 43 M I 57 F The Netherlands # 222 122 M I 100 F 229 129 M I 100 F 258 % 55 M I 45 F 56 M I 44 F United Kingdom # 119 46 M I 73 F 120 50 M I 70 F 152 % 39 M I 61 F 42 M I 58 F France # 142 76 M I 66 F 139 72 M I 67 F 140 % 54 M I 46 F 52 M I 48 F United States # 156 89 M I 67 F 92 49 M I 43 F 97 % 57 M I 43 F 53 M I 47 F China # 33 14 M I 19 F 28 14 M I 14 F 29 % 42 M I 58 F 50 M I 50 F South Korea # 19 9 M I 10 F 19 8 M I 11 F 21 % 47 M I 53 F 42 M I 58 F Sweden # 27 19 M I 8 F 23 18 M I 5 F 22 % 70 M I 30 F 78 M I 28 F Other (AT, CHE, CZ, DE, ES, IT, HK) # 84 33 M I 51 F 72 35 M I 37 F 49 % 39 M I 61 F 49 M I 51 F TOTAL # 2,698 1,332 M I 1,366 F 2,398 1,163 M I 1,235 F 2,155 % 49 M I 51 F 49 M I 52 F SAFETY IN THE WORKPLACE 1 UNIT 2022 2021 2020 Amount of occupational fatalities # 0 0 0 Total occupational accidents per average headcount % 3.2 2.3 2.8 Total occupational accidents involving < 7 days absence from work # 43 Total occupational accidents involving > 7 days absence from work # 42 Total occupational accidents involving absence from work # 85 52 62 The scope of the KPI includes our internal employees. The group comprises the Executive Committee, the General Managers and the Corporate Directors. GENDER DIVERSITY 70% 55% 49% 30% 45% 51% M M M V V V BOARD OF DIRECTORS LEADERSHIP TEAM ALL EMPLOYEES 98 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 101 PLEASANT, CHALLENGING, INSPIRING AND SAFE WORKING ENVIRONMENTS Our corporate values are TOP Team spirit: every link in the process is equally important, from marketing over production to 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 dealing 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 colleagues. Passion: our employees’ commitment is evident on a daily basis in the workplace. In their justified pride in our products and in our company. Investing in our employees benefits the whole company. Recruitment policy A key challenge for Lotus Bakeries is to attract competent employees who reflect the TOP values. When selecting new employees, the applicant’s competences and the TOP corporate 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. Depending on the position, the selection also includes objective testing or an external assessment tailored to the position for which the candidate is applying. 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. Diversity policy and inclusion For Lotus Bakeries, diversity is a value to be cherished. It also clearly incorporates in its Code of Conduct under Principle II: respect for people. Therefore, through its recruitment policy, Lotus Bakeries creates a foundation to attract a diverse and talented group of people. Attention to diversity is a key part 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 the desired competences, knowledge and/or experience of the candidate. In this way we know we are employing a diverse group of employees, with balanced gender diversity across all employees. We see a nice balance of men and women within the Lotus Bakeries Group. Also, if we take a closer look at the Leadership team ( men, women) and the Board of Directors ( men, women), the gender diversity in the Group is maintained. We also see a high level of diversity in age categories in Lotus Bakeries, and associated experience: in their twenties, in their thirties, in their forties, in their fifties and in their sixties. Lotus Bakeries is committed to rewarding all colleagues equally for their work based on the value they create. This regardless of gender, race, or other factors unrelated to performance. Young Graduate Programme The Lotus Bakeries ‘Young Graduate Programme’ is an intensive two- year programme designed specifically for graduated masters or MBA students. For two years, these recent graduates participate in one of the departments within Lotus Bakeries. In addition, they are given the opportunity to participate in a cross-departmental strategic project. The programme is unique in that it is a function-specific programme in which the Young Graduate enters a certain function domain (e.g. marketing). For two years, the Young Graduate is immersed in the various aspects of this domain by a combination of operational activities and projects. The programme was first launched on September . Five Young Graduates started at the time. Year after year, the programme is growing, with the edition consisting of seven Young Graduates and in the third wave included ten promising starters. Based on the intake of candidates and the feedback from the job market, the programme is highly coveted by students. Onboarding Once on board, Lotus Bakeries aims for thorough onboarding, in which new Lotus Bakeries employees are immersed in the company, the products, brands and the culture. Special induction days are organised for new employees. From the management level, new employees 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 dierent brands, the organisational structure and the dierent departments. A tour of the Lembeke plant is the cherry on the cake. In the case of acquisitions too, we ensure that employees are quickly integrated into the Lotus Bakeries Group. Each new oce employee will also be asked to complete a survey after several months of service and will be oered a follow-up interview. In this survey the employee is asked about the course of the recruitment and onboarding process, and is 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, such as Belgium, a specific questionnaire is provided. This is a very valuable tool and provides useful insights about what is going well and what can be improved . <30 30-39 40-49 50-59 60+ 746 28% 792 29% 569 21% 497 18% 94 4% Diversity in age 100 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 103 Training & development Once on board, it is important to retain these engaged and motivated TOP talents in the company. Areas of attention in this regard are the continuing development of our employees, the provision of training opportunities and constant challenge. Employees are encouraged to work with their supervisor to seek appropriate development initiatives. It is intended that all processes, from recruitment to onboarding, to development and succession, are centrally monitored and managed. To facilitate this, the MyLotus platform was launched. Performance process in MyLotus In , the performance process was fully integrated into the global HR platform MyLotus (SuccessFactors) where feedback between manager and employee can occur several times a year. Instead of annual reviews, this process provides ongoing opportunities to give and receive feedback and more frequently reflect on the employee’s career path. By gaining more insight into the strong qualities, areas for improvement and ambition, the right development and guidance can be given. This performance process will contribute positively to the employee’s personal growth, development and commitment. International connectivity MyLotus, the global HR platform, also encourages the connectivity between employees who therefore, despite the further internationalisation and continuing growth of the Group, can remain closely connected. Sta organisation and representation Team spirit belongs to our TOP values. As a group, we believe in an organisation that works with all employees, employee representatives, employee organisations and external social stakeholders. We believe that good collaboration contributes to our success. New career website In , Lotus Bakeries launched a brand-new career site. This website strengthens the employer identity and provides a complete overview of all career opportunities within the Group worldwide. The new, easy-to-use site highlights the unique aspects of Lotus Bakeries as an employer and shows how the organisation distinguishes itself from other employers. Cosy coee moment between colleagues 102 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 105 SPEAKING New career site strengthens Lotus Bakeries’ employer identity Stéphanie De Lange GROUP HR DIRECTOR Evy Van den Brande HR TECHNOLOGY & REPORTING MANAGER Stéphanie De Lange — Group HR Director Since early , interested candidates have easily been able to find all possible job opportunities at Lotus Bakeries, in all countries worldwide, on the new site www.lotusbakeriesjobs.com, the perfect spot to get acquainted with the unique Lotus Bakeries family. UNAMBIGUOUS EMPLOYER BRAND “Scarcity in the labour market is a challenge that also crosses our path,” starts Stéphanie De Lange, Group HR Director at Lotus Bakeries. “In the past, this scarcity was limited to specific bottleneck professions, but now we see that the War for Talent is prevalent in all markets and that a wide range of profiles in the labour market is now desired.” This created the need to define and profile Lotus Bakeries even more as an employer brand. After all, within the employer landscape, Lotus Bakeries has unique characteristics because it combines multiple worlds. “An international player with towering ambitions, grand expansion plans and yet still the warmth and humanity of a family business. Open- minded and inclusive, with room for personal impact. Professional and personal. Solid and adventurous. You won’t easily find those interesting combinations anywhere else,” says Stéphanie. “We also notice that in countries where our products already enjoy high brand awareness, our employer awareness can also ride this wave. In countries where we are not yet so well-established, this still has to be worked on. For example, attracting talent in Thailand, a new country for Lotus Bakeries, will require more eort.” “Where in the past only a limited number of countries in which Lotus Bakeries operates had their own job website, we wanted to centralise our wide range of career opportunities in response to our global growth on the same clear platform.” – Stéphanie De Lange WIDE RANGE OF CAREER OPPORTUNITIES An attractive career site is therefore the perfect place to highlight both the employer identity and the career opportunities. “Where in the past only a limited number of countries in which Lotus Bakeries operates had their own job website, we wanted to centralise our wide range of career opportunities in response to our global growth on the same clear platform,” continues Stéphanie. That way, visitors also immediately understand the international character and scope of Lotus Bakeries and also get to know Lotus Bakeries’ diversity of brands and products in an original way. “Our dierentiated portfolio, which on the one hand consists of the Lotus® Bisco® indulgences but also of the attractive range of natural and healthy snacks within Lotus™ Natural Foods, only serves to fuel further interest in our company. It often turns out to be an important motivator for new colleagues.” CULTURAL MATCH A good career site is more than just providing an overview of open positions. “It’s also a full on-brand introduction to Lotus Bakeries as a company, to our company culture and our TOP values. For example, passion is a very strong guiding and present value that all Lotus Bakeries colleagues have in common. We also wanted that to be reflected on the career site. And what better way to do that than having our own employees speak in testimonials,” says Stéphanie. Videos and photos of employees, taken at various locations around the world, give an authentic view of the organisation, giving interested parties a first look at what it is like to work at Lotus Bakeries. “We notice that if potential colleagues get to know our culture, combined with our personal approach and modus operandi, this ensures from the very beginning that they themselves also immediately feel whether or not they would be a good fit for our company.” SMOOTHER PROCESS FOR CANDIDATE AND EMPLOYER Create a fun, smooth and ecient experience from the moment a candidate arrives on the new website. That was the goal. Information needed to be intuitive and quick to find. When creating the site, a great deal of attention was paid to the smooth navigation and to making it as easy as possible to apply. 104 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 107 All experiences are critical in forming an opinion about the workplace. Starting from the first contact, followed by recruitment and onboarding. “We have therefore ensured that the career site connects seamlessly with MyLotus, the global HR platform in which all HR data from the dierent countries is centralised and available in real time,” explains Evy Van den Brande, HR Technology & Reporting Manager. “This integration delivers eciency gains and ensures that much of the recruitment process, ranging from processing the applications to the administrative start-up and onboarding, is all digital and streamlined. Scanning documents, emailing back and forth with candidates all disappear thanks to our integrated tools. New employees often tell us that they really appreciate being onboarded in such a professional manner.” SHARING IS CARING The career site has been designed to look good on a laptop, tablet and mobile phone. An additional benefit is that jobs can also be shared on social media channels such as LinkedIn with just a few clicks. “The shift from traditional job platforms to social media as an employer channel is nothing new, so that sharing functionality on our website was a must- have,” says Evy. Besides ‘eciency’ and ‘digitalisation’, ‘personalisation’ and ‘fun’ were also important elements for the new site. “When visitors navigate our site, they are asked what their name and their favourite brand is. What follows next is a highly personalised and therefore unique experience, which fully matches our employer brand,” adds Stéphanie. IT DOES NOT STOP THERE The new website already received a very enthusiastic welcome. “We are getting hugely positive reactions from our HR colleagues from other countries, as well as from new colleagues who recently joined,” says Evy. According to the first statistics, on average , people visit the website every month. “We clearly see a higher inflow of new candidates since the launch of our new website, especially in countries such as the United States, Italy, Spain, Germany and Switzerland.” “Not only is the inflow important, but of course the number of eective hires we make through the job site is as well. We can present the first great results for this as well,” says Stéphanie. “We will invest even further in the future in optimising the techniques to make our career site score high in the search engines (SEO) and in developing authentic video material for specific recruitment campaigns,” she concludes. Evy Van den Brande — HR Technology & Reporting Manager “We clearly see a higher inflow of new candidates since the launch of our new website, especially in countries such as the United States, Italy, Spain, Germany and Switzerland.” – Evy Van den Brande 106 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 109 SAFE WORKING ENVIRONMENT Every accident is one too many. Lotus Bakeries will therefore continue to make extra eorts to ensure the risk of accidents at work is as low as possible. Strict occupational safety laws apply in all the countries in which Lotus Bakeries operates. Lotus Bakeries adheres strictly to this workplace safety legislation. Thus there are dierent procedures in place, tailored to the specific risks at each of the production sites and in our oces. We try to limit the risks within the following four key areas as much as possible: • Occupational health • Personal safety • Process safety • Rolling material safety The starting point in each case is a risk assessment, which is used as a basis for measures to be taken to limit the risks as far as possible. In practice New machinery is designed to the latest safety standards and undergoes an extensive Site Acceptance Test by our own safety ocers. Machinery is adapted where necessary to meet our high safety standards. Safety procedures to make working in the production environment as safe as possible are available. These procedures are transformed into work instructions for each workstation. Adapted work clothing also contributes to a safe work situation. There is constant focus on training, awareness and prevention: • Safety in the workplace is a fixed part of the onboarding programmes of new employees who start to work in the factory. • At each production site there is a programme in place for detecting and reporting unsafe situations. In Belgium this is an SOS (Safety Observation Stop) procedure. • Dierent actions illustrate this policy: − Belgium has the VAM (VeiligheidsActieMoment = Safety Action Moment) awareness-raising process and the ZAP (See and Address Prevention) prevention programme, in which training sessions are used to show people how they can approach someone about safety. − In South Africa, a health and safety questionnaire is completed each quarter, after which the existing risk assessments are evalu- ated and the existing procedures are tightened up. − In the Netherlands, the Geldrop and Enkhuizen production entities have the occupational health and safety vignette. − In the United States, a monthly safety walk is set up by an external partner. − All the sites report monthly on the number of accidents at work with absence. No fatalities occurred in the year . Despite various safety programmes and initiatives, the number of accidents at work increased in . In the majority of the cases, the incidents were not severe and employees could return back to work within days. After each incident, the necessary measures were taken immediately to raise awareness of the employees in the departments concerned. Internal motivational campaigns were also set up to reward accident-free months. Colleague supervises the fully automated line in the production plant 108 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 111 PLEASANT WORKING ENVIRONMENT Lotus Bakeries aims to provide a pleasant working environment, with a range of facilities such as standing desks to encourage working standing up, showers to make it easier for employees to cycle to work and sucient expanses of glass to create light and airy oces. New and more spacious oce buildings Given its ever growing workforce, Lotus Bakeries continues to invest in new pleasant workplaces. In , for example, various departments within Lotus Bakeries moved to new and more spacious oces. In Belgium, the brand new, modern extension of Lotus Bakeries’ headquarters, called the ‘House of Bisco’, was inaugurated in October . With its great expanse of glass, the ‘House of Bisco’ is an oasis of light and space. The green garden to the rear of the building and the broad terraces on the building’s first and third floors make a major contribution to the sense of space. In the brand-new Natural Balance Foods and Urban Fresh Food oce in St. Albans, United Kingdom, a deliberate choice was made for spacious, bright, open spaces rather than separate desks. These oces have both large and small meeting rooms for our employees to use. Here too light and space are of paramount importance and again there are cosy lunch areas for people to meet. Due to the growing number of colleagues, there was also a need for more oce space for the Lotus Bakeries UK team in the United Kingdom. They moved to a new building, located in Cheshire. All employees now have more space, more meeting facilities and a pleasant lunch area in the oce. In Germany, the growing team moved to a new, larger and much more modern oce in Dusseldorf, with more meeting facilities and more comfort. Here, too, a nice lunch area is provided, where employees can drink coee and enjoy a bite to eat together. Both the sales oce of Spain and the sales oce of the Czech Republic also continued to expand their teams. The current oces in Madrid and Prague were thoroughly renovated and significantly expanded in terms of surface area. In Madrid, the available area was even doubled. This extra space creates a more comfortable and pleasant working environment which promotes employee satisfaction and well-being. Exercising in the ‘House of Bisco’ gym Afternoon break in the recreation area Fitness and health A lot of attention has been paid to fitness and sports at all Lotus Bakeries locations. Dierent initiatives are taken depending on the site. For example, the ‘House of Bisco’ in Belgium and the oces in the United States and Sweden have a gym with showers, which employees are eager to use. In the Netherlands, the annual padel tournament was organised in October . 110 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 113 Other locations are also seriously involved in sports: the option of signing up to a bicycle lease programme, weekly boot camps, joint cycling or walking tours, or other sports activities. Health and mental well-being are also themes that are put on the agenda across all sites within the Group. In September , a working group in Belgium lent its support to a campaign to raise awareness about a healthy lifestyle. The week of October was all about mental well-being with a daily activity to highlight positivity. In France, another workshop on the theme of ‘healthy nutrition’ was organised in . In the Netherlands, several vitality workshops took place in , such as: ‘How do I reach ?’, ‘Shift work sleeping, fitness and things to do and not to do’, ‘Work-life balance’, ‘Health under control’. And in China, there was a visit from a health expert who provided guidance on healthy lifestyles and tips on ergonomic work postures. There are weekly healthy lunches or free pieces of fruit available at many sites. TEAM SPIRIT All Lotus Bakeries sites also make time to strengthen the belonging and team spirit. In Korea, a real baking competition took place in the month of May, at the time the coronavirus numbers had started to drop again, as well as a ‘welcome back to the oce’ event. Barbecues were organised in France and Belgium for the whole internal workforce. In the Netherlands, the entire plant team got together for a cosy Christmas dinner and in China, the team bonded over a cosy Thanksgiving team event. In the United States, they celebrate colleagues who have been working at Lotus Bakeries for a year with a little gift: a highly personalised mug, which shows characteristic qualities of the person in question. Baking competition with Lotus® Bisco® products 112 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 115 COMMUNITY: 2022 AMBITIONS & ACHIEVEMENTS THE AMBITIONS OF LOTUS BAKERIES WITHIN THE COMMUNITY PILLAR ARE FOCUSED ON FOUR DOMAINS THAT IT CONSIDERS MOST RELEVANT: ETHICAL BUSINESS PRACTICES UNIT 2022 2021 2020 % of internal employees who have signed the Code of Conduct 1 % 99.9 99.8 99 % of key suppliers which have signed the Code of Conduct 2 % 90.5 90.1 62 % of our key palm oil suppliers which have signed Lotus Bakeries’ Palm Oil Policy 3 % 90 90 96 RESPONSIBLE SOURCING UNIT 2022 2021 2020 % of our production sites which process palm oil and have achieved the RSPO certificate % 100 100 100 % of our Lotus® Biscoff® chocolate products with the Rainforest Alliance quality mark % 100 100 100 PRODUCT SAFETY UNIT 2022 2021 2020 Lotus Bakeries production sites where our products are produced with external quality certification (BRC, IFS) % 100 100 100 An internal employee is an employee who is connected to Lotus Bakeries with an employment contract, either of unlimited duration or of limited duration. 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. 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 palm oil, and in so far these products represent more than in any recipe. STATUS ETHICAL BUSINESS PRACTICES RESPONSIBLE SOURCING PRODUCT SAFETY EDUCATION 114 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 117 Lotus Bakeries actively assumes its social responsibility. We guarantee ethical business practices throughout the organisation. With our Foundation for Education, we support educational projects and contribute to the prospects of future generations. ETHICAL BUSINESS PRACTICES IN OUR OWN ORGANISATION The Code of Conduct was approved by the Board of Directors on April , and was implemented in . As of , every new employee who is recruited must sign this. This Code forms an integral part of the employment contract. The Code of Conduct Lotus Bakeries sets out at all times 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: ETHICAL BUSINESS PRACTICES The full Code of Conduct is available in dierent languages on our website: https://www.lotusbakeries.com/governance- practices-and-policies . 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. Practical example Lotus Bakeries also wishes to inform the consumer transparently about verified claims that were made with regard to the product. In a revamped database was developed to manage this information and the conversion into product specifications and customer information in a more ecient way. This database was taken into use at the first site in . The further roll-out to other sites and production partners will take place in . . 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 are treated with respect at all times and in accordance with the relevant rules and regulations. Practical example • In , Lotus Bakeries has first of all standardised its recruitment process unified at a global level in order to further streamline equal treatment of all potential candidates. By centralising the career opportunities, the company has to oer globally on a single, uncluttered platform – https://www.lotusbakeriesjobs.com – all candidates have access to the same information and each application follows a standard process that, in case of a successful match between the applicant and Lotus Bakeries, continues through to contract negotiations and onboarding. • In addition, Lotus Bakeries took further steps in its GDPR policy in as a result of the publication of the new standard contractual clauses by the European Commission for data transfers in . For example, the international data transfers have been reviewed, a data transfer impact assessment has taken place for all intercompany data flows in and out of the EU and a qualitative intercompany data transfer agreement has been entered into. . Trading fairly & compliant: Lotus Bakeries ensures fair competition, respect for export regulations and the prevention of insider trading. Practical example • Since the war started in Ukraine in February , also within Lotus Bakeries more focus has been put on tightened export regulations in order to ensure that in an ever-changing and evolving situation all applicable import and export laws and regulations continue to be complied with. • In , Lotus Bakeries further rolled out the ‘Competition Compliance Programme’. 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 are explained using real case studies. The existing teams in the United States, Asia and International Distributors Natural Foods also participated in this training, if they had been unable to join in , partly due to travel restrictions as a result of COVID-. employees have now joined the programme. All of them are sent an online training programme six times a year in which a competition law topic is explained once more, and they are invited to participate in a quiz. And lastly, reference is made to the Dealing Code which is available on our website: https://www.lotusbakeries.com/governance-practices-and-policies . Combating corruption: Lotus Bakeries has a policy of zero tolerance of bribery and corruption and oversees a clear process for conflict of interest and accurate accounts and records, reporting and bookkeeping. . Securing information: Lotus Bakeries does all it can to protect its own confidential information and the confidential information of third parties. Practical example Last year, Lotus Bakeries reviewed and further tightened up its Trade Secret Policy. Focusing on the trade secrets in the plants, now spread across three and soon across four continents, responsibilities, procedures, policies as well as access matrixes have been revised. . 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 our concrete operations, reference is made, among other things, to the ambitions and achievements for the environment on p. and to the implementation of the Supplier Code of Conduct on p. of this annual report. The full Code of Conduct is available in dierent languages on our website: https://www.lotusbakeries.com/ sustainability-policies 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 Ocer, supported by the local HR departments. 116 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 119 Whistleblowing All employees of Lotus Bakeries are encouraged to report concerns about the Code of Conduct to the Compliance Ocer. Lotus Bakeries prohibits retaliation against individuals who report problems in good faith and is committed to investigating such reported problems. In the context of Directive (EU) / of the European Parliament and of the Council of October , on the protection of persons reporting breaches of Union law (the Directive) and laying down the minimum standards for whistleblowing protection, Lotus Bakeries has revised its whistleblowing system. The Directive has now been implemented in part of the European Member States, including in Belgium, by the law of November , transposing the EU Whistleblowing Directive for the private sector. The law was published in the Belgian Ocial Journal on December , and enters into eect on February , . In order to comply, Lotus Bakeries has selected a platform in which, among other things, anonymous reporting is possible, confidentiality is guaranteed, and accurate follow-up of the legal obligations is guaranteed. Further implementation will take place in early . In , the Compliance Department received a range of queries through the reporting line referred to in the Code of Conduct. In addition, three complaints were received from employees, which were all investigated and resolved. These complaints were able to be handled locally. Reporting Where necessary, the Compliance Ocer reports to the Board of Directors once a year on the enforcement of the Code of Conduct, covering any breaches and concerns raised and also the action points formulated to prevent repetition. In , the Board of Directors was informed about the nature of the complaints received. Implementation The Code of Conduct has been translated into the ocial languages of those countries in which Lotus Bakeries has a sales oce or a factory. The document is available in ten languages. The Code of Conduct has been added to the onboarding pack for new employees at all our sites and the onboarding programme includes a presentation on it. 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 , . of employees had signed the Code of Conduct. RESPONSIBLE PURCHASING & ETHICAL BUSINESS PRACTICES AT OUR SUPPLIERS 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 , . of our key suppliers of finished products (external production), raw materials, packaging and machinery 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: . 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 . 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 . 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 . 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. From , they will also be able to report any complaints via the online whistleblowing platform selected by Lotus Bakeries, in which, among other things, anonymous reports are possible, confidentiality is guaranteed, and accurate follow-up of the legal obligations is guaranteed. 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. Lotus Bakeries already carries out audits at its suppliers, but they mainly focus on quality and food safety. It is looking at ways it can monitor proper enforcement by the suppliers of other principles in the Code of Conduct and if possible integrate them into the existing audits. Lotus Bakeries expects suppliers to take all the limiting action required as a result of any gaps found. 118 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 121 Implementation The Supplier Code of Conduct was implemented in , is supplied in the language of the contract and is available in ten languages. The suppliers of packaging, raw materials, equipment and finished products with which Lotus Bakeries had a framework agreement at the time of implementation were asked to sign the Code of Conduct separately. Since then, this code has been an integral part of the standard contracts with our new suppliers. Moreover, all our general purchase conditions contain a reference to the Supplier Code of Conduct, which is available on our website. In , . of key suppliers had signed the Code of Conduct. RESPONSIBLE SOURCING Lotus Bakeries is aware of the negative impact certain crops can have on the environment and also on the communities living in the areas where they are grown. PALM OIL RSPO certificate 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. That is why Lotus Bakeries only buys RSPO certified palm. In , Lotus Bakeries was a member of, among others, 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 Lotus Bakeries selects its key palm oil suppliers carefully on the basis of the NDPE principle (No Deforestation, No Peat, No Exploitation) in its purchasing standards. 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 , of key palm oil suppliers had endorsed Lotus Bakeries’ palm oil policy. The full text of the Sustainable palm oil policy is available on our website: https://www.lotusbakeries.com/sustainability- policies COCOA Rainforest Alliance The cocoa butter and cocoa mass used in our Lotus® Bisco® chocolate has been certified by the Rainforest Alliance. SOY IP certificate The soybean flour in the Lotus® Bisco® 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. Responsible Soy Association In , Lotus Bakeries was also a member of the RTRS (Round Table on Responsible Soy Association – Switzerland). 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. To assure this quality Lotus Bakeries has a quality policy in force, which can also be viewed on the website. The full text of the quality policy is available on our website: https://www.lotusbakeries.com/sustainability-policies 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’ oces. 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 eective quality and food safety management system, assured by an independent food safety certification body. An eective tracing system forms part of this, so that Lotus Bakeries knows where the raw materials come from at all times. 120 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 123 Specifications In addition, Lotus Bakeries has also 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 controls The products supplied by our suppliers are also subject to an inbound control. We assess the analysis report supplied by the supplier and check it with regular counter analyses by our own specialist internal laboratories. In July , the project for uniform registration of the acceptance sampling in SAP was successfully completed. In , the inbound controls will be further tightened in collaboration with the sites. The screening of suppliers Supplier screenings are also supplemented by supplier visits and audits, which are conducted annually on the basis of performance measurements, and also at new suppliers. In , eleven audits were carried out at suppliers of raw materials and three audits were carried out at suppliers of packaging materials. In addition, another four visits took place at raw material 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 HACCP Production processes are available for all production sites that are designed to assure the quality and the safety of our products. Detailed HACCP plans (product safety risk studies) have been produced. They are updated at least annually or with every major adjustment of the process or machinery. In , the framework for the HACCP plans was thoroughly revised and the production sites started working with this in . Quality assurance finished products 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. Training In , a thorough HACCP training course was organised by the Corporate Quality department for all local HACCP teams. There is also a food defence plan, aimed at preventing deliberate contamination, in place at each site. Every employee attends the necessary training on these processes. Internal audits Verification takes place on the basis of internal audits. In there were internal audits. 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. The quality management system undergoes an annual assessment on the basis of dierent criteria and corrective and preventive action is taken as a result. 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 eight physical audits last year, in-person visits and six 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. Products of production partners are assessed in the same way as our own products. 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 according the regulations of the country of commercialisation 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 a revamped database was developed to manage this information and the conversion into product specifications and customer information in a more ecient way. The database was put into use in and the further roll-out to other sites and production partners will take place in . We receive, register and handle product complaints systematically and, since , they have been registered in a central database for all the sales oces in the group. The number of complaints and their seriousness are monitored very closely and a monthly report is made to management. Thorough packaging inspection by colleagues from the QA team 122 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 125 Colleague performs microbiological control 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 oces. Each year, the procedures are tested unannounced 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 , Lotus Bakeries organised two recalls, one in Belgium and one in Germany, following 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. 124 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 127 NUTRITIONAL POLICY Lotus Bakeries has a clear nutritional policy, focusing on five specific objectives. The full text of the nutritional policy is available on our website: https://www.lotusbakeries.com/sustainability-policies The R&D department wants to contribute to better products through new insights into characteristics and interactions between raw materials and ingredients. To this end, it draws not only on its own expertise but also on that of well-known university knowledge institutions, as well as on existing innovation platforms set up by the food industry. Our eorts in the field of innovation are also translated into an extensive and innovative product range. The five objectives of our nutritional policy are always paramount. Superior taste experience Lotus Bakeries wants to be able to oer 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 biscuits 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 oer 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. No artificial flavours or colours To exclusively oer 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 . Variety in portion sizes It is our ambition to oer 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 Kcal a portion. Clear information and 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 ., which expands its commitment to responsible advertising for children compared to its existing commitment under the Belgian Pledge .. This revised version extends the guidelines to social media channels when communicating via influencers. SUPERIOR TASTE EXPERIENCE DIVERSE RANGE NO ARTIFICIAL FLAVOURS OR COLOURS VARIETY IN PORTION SIZES CLEAR INFORMATION & RESPONSIBLE MARKETING 126 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 129 Colleague measures out the exact doses and verifies the viscosity 128 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 131 LOTUS BAKERIES FOUNDATION FOR EDUCATION Mission: Lotus Bakeries aims to make a substantial contribution to carefully selected education projects with a focus on 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. Education provides future prospects. Education helps the child become an independent and self-reliant human being. Someone 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. In Lotus Bakeries supported development projects within the framework of the Lotus Bakeries Foundation for Education: Kusasa Academy The Kusasa Academy is an education project in the Western Cape province of South Africa for which Lotus Bakeries has been the main sponsor since . Every year, some children, girls and boys, receive a good basic education and are supported in their continued development. As a result, they can look forward to a better future, which also benefits society in the region. In , this non-profit celebrated its th anniversary, and has a proven, lengthy track record of having a meaningful impact on education and the community. The annual graduation ceremony took place in November . The ceremony was a combination of a school party, the graduation ceremony and the rebranding of the school. The name of the school was changed from ‘Early Learning Centre’ to ‘The Kusasa Academy’. As tradition would have it, all students took the floor and explained what The Kusasa Academy means to them and the dreams they cherish for the future. “No easy task to speak to an audience of ,” explains Marie- Louise Raymond, Headmaster of The Kusasa Academy. “But all the students have done a great job! We are extremely grateful to Lotus Bakeries for the annual financial donations, which play an important role in the future of these children.” 130 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 133 Lotus Bakeries child sponsorships This project was set up in conjunction with Cunina at the school in Reichenau, Underberg, South Africa. Since , the employees of Lotus Bakeries Corporate have been given the opportunity to become sponsors. All sponsored children are oered an education from the first year of primary to the final year of secondary. This is a long-term commitment of years for around children. TAJO By lending its support to the Ghent Talent Studio for Young People (TAJO), Lotus Bakeries is choosing to provide socially vulnerable young people in the Ghent region (Belgium), and as of also in Kortrijk (Belgium), with new opportunities and to fuel their motivation to start studying. This geographical expansion means that the non-profit organisation will reach even more vulnerable young people and will be able to make an even greater impact. That’s why Lotus Bakeries has decided to raise the financial support in , which should give this expansion an extra boost. TAJO introduces young people to the most diverse professions and the associated competencies and talents through interactive workshops every Saturday. These workshops are provided by experienced guest teachers. For example, young people can experience which disciplines appeal to them and are encouraged to study in a direction that takes them further, at school and in life. In order to maintain the connection with the young people over the summer of , TAJO organised summer activities for all TAJO youths in July and August. A trip to the beach, to the Blaarmeersen, an artful tour in Ostend, a day of discovery of technology or nature in the Technology Park-Zwijnaarde, the Bourgoyen and the University of Applied Sciences West Flanders (Howest), went down a treat. City Pirates Through City Pirates, a social football project in the Antwerp area (Belgium) that uses football to give young people a chance and to learn skills, we want to give young people from the Antwerp area a chance of training, a diploma and a job. The youths learn, among other things through sport, what teamwork, perseverance, eort and discipline is, with a focus on equality, respect and commitment. And all this in view of a stable and balanced future. City Pirates also provides social and financial guidance for parents, after-school activities and homework tutelage for the children. The non-profit organisation now has volunteers and , players, has a first team in second amateur division and receives logistical support from Club Brugge KV. In , among other things, a tournament for foreign-language newcomers was organised in collaboration with the Federal Agency for the reception of asylum seekers (Fedasil), International Organisation for Migration – UN Migration and CAW group, the Peace Run from the Stadspark to Schoonselhof took place and there was participation in the properebuurten (‘clean neighbourhoods’) initiative. Ketnet wrapper Héritier Tipo visited City Pirates in December as part of De Warmste Week (a Belgian solidarity campaign). Gammol Gammol is a non-profit organisation committed to the needs of education and healthcare in Gambia. In , they built a new school in Sanchaba, but additional construction projects were planned in . For example, in , they worked on additional classrooms, a teacher room and the playground was also levelled. Decent sanitary facilities, which were missing before, were provided in . Classes now have both new and used tables and chairs to accommodate the ever-increasing number of students. Gooikenshoeve VZW Gooikenshoeve was set up to provide psychologically and socially vulnerable young people and young adults from to with a worthwhile daytime activity in a small-scale, safe and warm environment. In this way they want to nurture the hope and the ability of their 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. 132 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 135 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 and was continued in . 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 economy In , Lotus Bakeries also supported the project ‘Future for disadvantaged young people in Walungu’. Unemployment is particularly high in the Congolese region of Walungu. Even young people who have completed their studies are struggling to find work. On the one hand, this project aims to support young Congolese in their vocational training and on the other hand to strengthen the technical and entrepreneurial skills of their teachers. After graduation, the young people receive individual guidance on starting an independent activity within agriculture or a craft. The teachers are trained by experienced partners. The focus is on agricultural schools and crafts, because the Walungu area is mainly an agricultural area and there are many opportunities in that sector. The young people are taught exactly what sustainable agriculture is. In total, four agricultural schools receive intensive guidance, teachers receive additional training, students receive support, vulnerable young people receive an individualised programme and young people receive support in the development of their professional or entrepreneurial activities. The families of all these young people also benefit from the better opportunities they receive. The four participating schools are: Maka Technical Institute – Karhagwa Technical Institute – Muku Technical Institute – Ciherano Technical Institute. A few projects in : • As part of the social-professional integration of young people from agricultural schools in the Walungu region, last-year students from the various agricultural schools visited a micro farm. The students learned about the dierent farming methods, the horticultural crops grown using agroecological technology and were able to talk to the veterinarian. This visit introduced the young people to the profession and showed that it is possible to set up a sustainable and cost-eective agricultural project, even with little resources. • teachers and technical teachers, including four school headmasters, got trained on how to set up a continuous upskilling plan. Another two visits also took place to exchange experiences between technical teachers from the same disciplines. 134 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 137 EU TAXONOMY OVERVIEW OF THE EU TAXONOMY This section contains the EU Taxonomy disclosures required by Article of Regulation / (the EU Taxonomy Regulation). 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 catalogue of economic activities that can be considered for the first two environmental objectives: the Climate Delegated Regulations. The sectors currently covered include energy, selected manufacturing activities, transport and buildings. The manufacturing of food products and beverages is not yet covered by the Climate Delegated Regulations. APPLICATION OF THE EU TAXONOMY REGULATION We have concluded that our core economic activities related to the production and selling of indulgent and natural snacking products are not covered by the Climate Delegated Act and consequently are at present not considered Taxonomy-eligible. As none of our revenue-generating activities are described currently in the Climate Delegated Regulations, our reporting under the EU Taxonomy Regulation is limited. 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. 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 keep exploring ways to reduce our emissions. For a qualitative description of our CapEx and OpEx relating to climate change mitigation and adaptation we refer to Chapter 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. 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. 136 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 139 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 eective 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, 2022 As our economic activities are not covered by the Climate Delegated Act, the share of Taxonomy-eligible economic activities in our total revenue is . Consequently, the related CapEx and OpEx are also . We acknowledge that the Commission Delegated Regulation (EU) / of July , (hereafter referred as Regulation) requires to disclose the information referred to in Article , paragraphs and , of Regulation (EU) / 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. R&D colleague places sensor to measure the temperature of the dough 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 877.5 0% 0% 100% Capital expenditure (CapEx) 149.6 0% 0% 100% Operating expenditure (OpEx) 26.5 0% 0% 100% 138 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 141 LIMITED ASSURANCE REPORT INDEPENDENT LIMITED ASSURANCE REPORT ON THE SUBJECT MATTER INFORMATION OF THE CARE FOR TODAY SECTION IN THE ANNUAL REPORT 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 February (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 December of Lotus Bakeries NV (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 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 (Revised) “Assurance Engagements other than Audits or Reviews of Historical Financial Information” (ISAE ), 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 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 December presented in the Report; • conducting interviews with responsible ocers; • 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 . 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 CONTROL We have complied with the independence and other ethical requirements in respect of auditor independence, particularly in accordance with the rules set down in articles , , , , , and of the Belgian Act of December organizing the audit profession and its public oversight of registered auditors, and with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our firm applies International Standard on Quality Management n, 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. 140 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 143 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 December has not been prepared, in all material respects, in accordance with the criteria disclosed in the Report. 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. Lien Winne BV, member of the Board of Directors, represented by its permanent representative Lien Winne 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 December 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. Gent, March , PwC Bedrijfsrevisoren BV/Reviseurs d’Entreprises SRL represented by Lien Winne Registered auditor Environment Packaging % of packaging of all Lotus Bakeries brands that is recyclable Carbon footprint % of our owned sites that have earned the CO 2 -neutral label Output of scope 1 & 2 CO 2 equivalent emissions per tonne produced on our owned sites Output of scope 1 & 2 CO 2 equivalent emissions per tonne produced on our owned sites, excluding own transport Kg of waste per tonne generated People Gender diversity % men-%female for Board of Directors, Leadership team and all employees Geographical coverage Geographic distribution: total headcount per country and split between men/female (absolute and in %) Safety in the workplace Total occupational accidents involving absence from work Community Ethical business practices % of internal employees who have signed the Code of Conduct % of key suppliers which have signed the Code of Conduct % of our key palm oil suppliers which have signed Lotus Bakeries’ Palm Oil Policy Responsible sourcing % of our production sites which process palm oil that has achieved the RSPO certificate External quality certificates Lotus Bakeries production sites where our products are produced with external quality certification (BRC, IFS) APPENDIX – SUBJECT MATTER INFORMATION In section “ our sustainability programme - care for today, respect for tomorrow”: On page : On page : On page : 142 - Lotus Bakeries Our sustainability programme Lotus Bakeries - 145 03 OUR ORGANISATION Group structure and day-to-day management 144 - Lotus Bakeries Lotus Bakeries - 147 GROUP STRUCTURE AND DAY-TO-DAY MANAGEMENT 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 dierent business units, supported by the various corporate departments. JAN BOONE CEO ISABELLE MAES CEO NATURAL FOODS MIKE CUVELIER CFO IGNACE HEYMAN COO WILLIAM DU PRÉ Corporate Director Quality, Procurement and R&D BELGIUM THE NETHERLANDS FRANCE SALES OFFICES EUROPE AUSTRIA / CZECH REPUBLIC & SLOVAKIA GERMANY / ITALY / NORDICS SWITZERLAND / SPAIN / UK & IRELAND UNITED STATES INTERNATIONAL DISTRIBUTORS BISCOFF SALES OFFICES ASIA CHINA / SOUTH KOREA / JAPAN NATURAL BALANCE FOODS URBAN FRESH FOODS KIDDYLICIOUS PETER’S YARD SOUTH AFRICA MANUFACTURING BELGIUM THE NETHERLANDS FRANCE SALES OFFICES EUROPE CZECH REPUBLIC & SLOVAKIA / GERMANY ITALY / NORDICS / SWITZERLAND /SPAIN UNITED STATES INTERNATIONAL DISTRIBUTORS NF SALES OFFICES ASIA CHINA / SOUTH KOREA BUSINESS UNIT BISCUITS & BAKERY BUSINESS UNIT NATURAL FOODS BUSINESS UNIT CUSTOMER BRAND BUSINESS EXECUTIVE COMMITTEE CORPORATE DEPARTMENTS 146 - Lotus Bakeries Our organisation Lotus Bakeries - 149 Jan Boone has been CEO of Lotus Bakeries Group since and leads the members of the EXCO on a day-to-day basis. He began his career in the audit department of PwC. From -, he was responsible for corporate controlling, reporting and M&A at pharmaceutical company Omega Pharma. He sat on the Executive Committee and Board of Directors there. Jan joined Lotus Bakeries as General Manager and Director in May . Jan Boone is Chairman of the Board of Directors of Animalcare Group and sits on the Board of Directors of FC Bruges. Isabelle Maes is CEO Natural Foods within the Lotus Bakeries Group. She began her career as an auditor for PwC. In May , 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 Ocer of Barry Callebaut Belgium in . Between and , 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 . Isabelle Maes sits on the Board of Directors of Van de Velde NV. Mike Cuvelier has been CFO of Lotus Bakeries Group since September . Mike began his career in as an auditor for PwC. Between and he fulfilled various controlling roles at Bekaert in the United States, Asia and finally as Vice President Control Global Business Platforms in Belgium. From to , Mike was CFO of the Unilin Group, part of Mohawk Industries. Ignace Heyman is COO of Lotus Bakeries Group. He pursued a career in marketing in both Belgium and France, first at Procter & Gamble, PAB Benelux (Panzani-Amora-Blédina) and then at Reckitt Benckiser. In , Ignace joined Lotus Bakeries as Marketing Director Belgium, before going on to become Corporate Director Marketing in . From mid- to the end of he was General Manager France. He has been COO since . William Du Pré has been Corporate Director Quality, Procurement and R&D since , and is in charge of these corporate departments. William’s career with Lotus Bakeries began in . Over the years, he has occupied a variety of sales roles. He was General Manager Belgium for almost ten years (-). Together with the general managers from the various areas within the business units, the EXCO members form the Group Management Team (GMT). Each area implements the Lotus Bakeries strategy according to a clearly defined business model. The corporate services departments advise and support the Group across all business units and areas and report directly to the EXCO. 148 - Lotus Bakeries Our organisation Lotus Bakeries - 151 MARGO JORIS General Manager US JOHN VAN DE PAR General Manager Belgium LEON BROER General Manager ID Natural Foods PAUL HUNTER Managing Director UFF ELS DE SMET General Manager Sales Offices Europe RONALD DRIEDUITE General Manager SOF Asia JEAN-PHILIPPE KLOUTZ General Manager France BART BAUWENS General Manager ID Biscoff® JEROEN HARKS General Manager The Netherlands GARETH DUNNE Managing Director NBF TWAN THORN Managing Director Kiddylicious GENERAL MANAGEMENT SOFIE DE LETTER ICT Director ELENA BAYOD R&D Director ANNELIES SANTENS Director Treasury & Risk Management FOUAD ELOUCH Reporting & Consolidation Director BRECHTJE HAAN Corporate Legal, IP & Communication Director STÉPHANIE DE LANGE Group HR Director SASKIA DE PAEPE Corporate Finance & Supply Chain Director Lotus™ Natural Foods KATHLEEN BUYST Global Brand Director Lotus® Biscoff® ELS VAN PARYS Programme Manager Strategic Projects JEAN-PAUL VAN HOYDONCK Global Director Lotus® Biscoff® Engineering, Planning & Capacity SABIEN DEJONCKHEERE Global Brand Director Lotus™ Natural Foods MICHIEL BLOEMEN Corporate Director Finance Biscuits & Bakery WOUTER VERSTRINGE FF 2032 Investment Fund Director KATJA MAERSCHALCK Corporate Controlling & Auditing Director ELS RUTSAERT Corporate QA Director CORPORATE DIRECTORS 150 - Lotus Bakeries Our organisation Lotus Bakeries - 153 SALES STRUCTURE Lotus Bakeries has a total of entities with sales activities, spread across Belgium, France, the Netherlands, the United Kingdom, Spain, Germany, Italy, Sweden, Switzerland, the Czech Republic, Austria, the United States, Hong Kong, China and South Korea. Lotus Bakeries has brought together the four commercial organisations within Lotus™ Natural Foods – being BEAR, nākd, TREK, Kiddylicious and Peter’s Yard – in an oce in St. Albans, just outside London, to create additional synergies in the organisations of these teams. The team of Peter’s Yard and the team of Kiddylicious will move into the new oce in St. Albans in February . In approximately fifty other countries, we work closely with commercial partners. These partnerships are combined into the areas of International Distributors Lotus® Bisco® and International Distributors Lotus™ Natural Foods. PRODUCTION SITES Lotus Bakeries has a total of twelve production sites. They are spread across Belgium, France, the Netherlands, Sweden, the United States and South Africa. We also have our own distribution centre in Lokeren (Belgium). With the exception of nākd, TREK, Kiddylicious and Peter’s Yard, all products are manufactured at our own production sites. To guarantee the typical characteristics of our extensive product range, we deploy various production technologies. Mastering, managing and developing these technologies represent a permanent challenge for our Group. We therefore try to limit the number of products and technologies for each production site and to centralise production processes in specialised plants. INVESTMENTS AND EXPANSIONS In April , the symbolic ground breaking took place in the presence of Flemish Minister-President Jan Jambon, to kick o the construction of the third production hall in Wolseley, South Africa. The continuous investments in South Africa make Lotus Bakeries one of the largest employers in the Ceres Valley (Western Cape province). also saw substantial investments in production capacity for Lotus® Bisco®. Lotus® Bisco®’s faster than anticipated growth in the last two years, combined with the ambitions and plans for the future, necessitate a further urgent capacity expansion for Lotus® Bisco®. Accordingly, Lotus Bakeries has decided to invest and expand further in both Belgium and the United States. In Belgium, this primarily concerns a second dough preparation room. This investment is necessary to provide additional dough preparation capacity to support the further growth of both Lotus® Bisco® cookies and Lotus® Bisco® spread. It also reduces the operational dependency on a single dough room on the Lotus ® Bisco site at Lembeke. The production buildings were also expanded in Belgium. The building also received a new Lotus® Bisco® sandwich cookie line, which has been operational since January , a new Lotus® Bisco® crumble filling line and an installation to expand the production capacity of the spread as from . Additional oces and social areas were also provided at the site. In the United States, the construction of the second production hall was finalised and capacity was doubled with two new Lotus® Bisco® production lines. Four production lines are now operational in the factory in the United States. As announced on August , Lotus Bakeries plans to start a production facility in Asia for Lotus® Bisco® to further support its growth ambition for Lotus® Bisco®. Over the years, the Asia Pacific region has become increasingly important to Lotus® Bisco®. In China and South Korea, Lotus Bakeries has had sales oces with its own teams for many years, while the Lotus Bakeries team in Hong Kong is responsible for the other countries in the region, for which it collaborates with distribution partners. Revenue has increased significantly over the past five years with a double-digit CAGR. At the same time, the awareness of Lotus® Bisco® and its availability to the hundreds of millions of consumers in this region is still limited and raising awareness is now in full swing. The growth potential for Lotus® Bisco® in these large, growing consumer markets is therefore still immense. The rationale for a third Lotus® Bisco® plant is evident. The production facility must provide the necessary, additional capacity for the Group, bring the products to consumers more freshly, make it possible to respond more quickly and better to regional opportunities, and not only reduces transport costs, but also the environmental footprint. In addition, the project risk has been greatly reduced since Lotus Bakeries has already gained experience in the construction of the second Lotus® Bisco® plant in the United States, which means that a project canvas already exists. The site was formally purchased at the end of November . The project team is in the process of determining the scope of the investment. According to the current schedule, the first line will be operational in . The total budget for the first phase, including dough room, first production hall and infrastructure, production lines and oces, is estimated to be between and million EUR. OUR WORLDWIDE PRESENCE Employees (2,398 in 2021) 2,698 Sales Offices in 15 countries 21 Production facilities in 6 countries 12 Countries with commercial partners 50+ 152 - Lotus Bakeries Our organisation Lotus Bakeries - 155 LOCAL HEROES PRODUCTION SITES BISCOFF PRODUCTION SITES BEAR PRODUCTION SITES Mebane Wolseley OUR WORLDWIDE PRESENCE OVERVIEW PRODUCTION SITES Lembeke Courcelles Oostakker Eeklo Tyresö Comines Briec-de-L’Odét Enkhuizen Geldrop Sintjohannesga 154 - Lotus Bakeries Our organisation Lotus Bakeries - 157 SALES OFFICE San Francisco Manchester St. Albans (4) Madrid Tyresö Comines HQ OUR WORLDWIDE PRESENCE OVERVIEW SALES OFFICES Lembeke (2) Eeklo Milan Baar Geldrop Düsseldorf Prague Vienna Seoul Shanghai Hong Kong HQ HQ NATURAL FOODS 156 - Lotus Bakeries Our organisation Lotus Bakeries - 159 Belgium South Africa The Netherlands France United Kingdom United States China Switzerland Sweden South Korea Other SOFs EU 1 Hong Kong Total PERSONNEL 2018 2019 2020 2021 2022 1,604 1,378 EVOLUTION NUMBER OF EMPLOYEES PER COUNTRY NUMBER OF EMPLOYEES BY GENDER 2,056 518 2,155 222 2,398 142 2,698 119 1,332 49% 1,366 51% M F 156 33 36 27 19 45 3 2,698 Sales Oces EU: Germany, Spain, Czech Republic, Austria, Italy 158 - Lotus Bakeries Our organisation Lotus Bakeries - 161 04 REPORT OF THE BOARD OF DIRECTORS CAGR SINCE 2015 Activities in Financial information Prospects for Results and proposal for appropriation of results Corporate Governance Declaration Enterprise Risk Management External audit 160 - Lotus Bakeries Lotus Bakeries - 163 ACTIVITIES IN 2022 REVENUE 2022 INCREASES BY A RECORD EUR 127.2 MILLION In , Lotus Bakeries’ consolidated revenue grew by or by EUR . million to EUR . million. The . revenue growth shown in the first six months further strengthened to almost in the second half of the year, underpinned by strong pricing execution and solid volume growth. In the second half of the year, volumes increased by almost ending with a full year volume growth of .. Price increases, including positive exchange rate eects, represent . of the full year growth. The two strategic pillars, Lotus® Bisco® and Lotus™ Natural Foods, are the drivers of this high-quality organic growth with revenue increases of and respectively. The strong growth in both pillars confirms that the international expansion strategy is working, that the brands are strong and that the portfolio of aordable products is resilient against the global challenges of high inflation worldwide. Lotus® Bisco®, the Group’s first and largest strategic pillar, reported a revenue of EUR million in . The pillar achieved an accelerated growth rate of more than in the second half of the year, ending the full year of with a revenue increase of . Ten years ago, in , revenue amounted to EUR million equating to year-on-year growth in the past decade. With this stellar growth rate, Lotus® Bisco® has significantly outperformed the Consumer Products industry and in particular, the ‘Sweet Biscuits’ category in this period. In , double-digit growth was again broad-based across many countries and all continents. This is the case in North America, both in the US and Canada. In Europe, there is double-digit growth in the Netherlands, Germany, Spain, Italy, the Czech Republic, Switzerland, Slovakia, Austria and Sweden. This is also the case for several countries in the Middle East and Asia-Pacific regions, including China, the UAE, Saudi Arabia, South Korea, Malaysia, Turkey, Egypt, Singapore, Japan, Australia and New Zealand. Lotus® Bisco® cookies and Lotus® Bisco® spread continued to recruit more consumers across the world. Lotus® Bisco® cookies were again the strongest riser in the top ten of the global Cookie Brand ranking, moving up from th to th position. The ambition to become a top cookie brand in the longer term with Lotus® Biscoff® remains valid more than ever. Good productivity and availability of personnel in the factories on the one hand, and a reliable and solid supply chain of raw materials on the other, have been crucial to achieving the growth. Moreover, all previously announced investments in Belgium and the US were delivered and installed on time and successfully commissioned by the beginning of . In , the Lotus™ Natural Foods brands all continued to grow strongly, reporting a revenue of EUR million. This is a year-on- year increase of and a year-on-year growth of since the acquisitions in . The strength of the brands and the distinctiveness and aordability of the products in the respective categories supported continued growth and proved resistant to the implemented price increases. In terms of revenue, the Lotus™ Natural Foods pillar is now as large as the Lotus® Local Heroes. 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. Lotus™ Natural Foods’ international activities outside the UK grew by almost this year and already represent more than of total Lotus™ Natural Foods revenue. Also in the UK, the Lotus™ Natural Foods brands achieved double-digit growth. An important contributor to the international growth of Lotus™ Natural Foods in recent years is the success of BEAR in the US. BEAR was introduced there in in both the out-of-home channel —via its presence in more than , coee shops— and the specialty retail channel, as a newcomer in an already developed ‘Kids Fruit Snacking’ destination aisle. BEAR was an immediate success and convinced conscious parents of its category-distinctive healthy attributes for their kids, it being made with real fruit. BEAR has further capitalised on these distinctive qualities to convince more and more consumers. Today BEAR is a leading brand in the Kids Fruit Snacking category in the US, has a broad, nationwide distribution and is present across all channels. The third pillar of the Lotus Bakeries strategy is the focus on Local Heroes in the home markets of Belgium, the Netherlands, France and Sweden. Revenues for Local Heroes remained stable in . Lotus Bakeries will continue to invest in the brands and the products and is confident that constructive plans with retailers will support a positive evolution for Local Heroes going forward. The pillar is strategically important, it oers market leadership with a diversified assortment of products and generates strong cash flows. EVOLUTION OF TURNOVER IN €M 2022 2021 2020 2019 2018 750.3 877.5 663.3 612.7 556.4 Report of the Board of Directors162 - Lotus Bakeries Lotus Bakeries - 165 IMPORTANT PROJECTS AND INVESTMENTS Lotus® Bisco®’s faster than anticipated growth in recent years, combined with the ambitions for the future necessitates several capacity expansion projects. In the company invested a record amount in capacity expansion, mainly for Lotus® Bisco®. Limiting the net impact of shortages of building materials, machine parts and technical components on the delivery of the planned investments allowed the new capacity to come into operation by the beginning of and within the predefined investment budgets. Belgium In the Lotus® Bisco® plant in Belgium, a second dough preparation room became operational as foreseen by the end of September . This significant step-up investment is crucial to support the further growth of Lotus® Bisco® cookies and Lotus® Bisco® spread. In addition, a new Lotus® Bisco® sandwich cookie production line started up in January . The Lotus® Bisco® sandwich cookie was first launched in and is very successful across markets. It has become a hero SKU in the assortment and an important driver of incremental penetration in the countries where it was already introduced. The new, second line in the plant in Lembeke allows for the scaling up of internationalisation and distribution. This will also be supported commercially both in-store and via online and TV media support. United States In the Lotus® Bisco® plant in the US, a second production hall with two new Lotus® Bisco® production lines became operational as of the start of . The US plant has now four production lines in operation. The capacity increase in the US will make the continent more self- sucient for the local demand of Lotus® Bisco® cookies and will provide the US consumer with the freshest possible product. Moreover, the investment has both financial and ecological benefits. Financial benefits because of the natural currency hedge and savings on expensive ocean transport. An ecological return because of the avoidance of container transport and related CO emissions. The current capacity that was invested in the US avoids , containers per year travelling from Belgium to the US. The US plant is also sourcing its raw materials and packaging locally and hence more responsibly and sustainably. Thailand As announced on August , , Lotus Bakeries has plans to start up a production facility for Lotus® Bisco® in Asia to further support its growth ambition for Lotus® Bisco®. The Asia-Pacific region has become increasingly important for Lotus® Bisco® over the past few years. For many years already, Lotus Bakeries has had sales oces and its own teams in China and South Korea, while the Lotus Bakeries team in Hong Kong manages the other countries in the region in partnership with its distributors. Revenues have increased significantly with a double-digit CAGR over the past years. On the other hand, awareness of Lotus® Bisco® and its availability to the hundreds of millions of consumers in this region is still limited and evolving. The growth potential for Lotus® Bisco® in these large, growing consumer markets thus remains immense. The rationale for a third Lotus® Bisco® plant is straightforward. The new plant will provide the necessary additional capacity for the Group, bring fresher cookies to the consumer, will be able to respond faster and better to local opportunities, and will save transport costs, thereby further reducing the environmental footprint of the company. Recent experience with the construction and start-up of the second Lotus® Bisco® plant in the US provides the Group with a project framework and strongly reduces the project risk. The land was formally purchased at the end of November . The project team is currently scoping the investment. According to the current timescale, the first line will be operational in . The total budget for the first phase including dough room, first production hall and infrastructure, production lines and oces is estimated between EUR and million. INVESTMENTS IN €M 2022 2021 2020 2019 2018 65.7 153.0 48.0 95.6 111.9 Report of the Board of Directors164 - Lotus Bakeries Lotus Bakeries - 167 FINANCIAL INFORMATION PROFITABILITY AND OPERATING CASH FLOW The recurring operating result REBIT (EUR . million or . of revenue) and the recurring operating cash flow REBITDA (EUR . million or . on revenue) increased respectively by EUR . and . million compared to last year. The rise of the recurring operating result REBIT and recurring operating cash flow REBITDA of . and . respectively, with cost inflation accelerating through the end of , confirms the resilience of the Group and robustness of the business. A . increase in revenue is the result of strong volume increases of . on the one hand and price increases, including positive currency eects, of . on the other. Volume growth allows for the leveraging of the sustained investments in organisation and people needed to maintain the pace of growth. Logistical costs and, in particular, ocean freight costs remained at a high level throughout . Media support continues to be maintained in a disciplined and selective manner. Non-cash costs which mainly consist of depreciation increased by EUR . million. The non-recurring operating result of EUR -. million relates mainly to organisational restructuring, oce relocation, acquisition costs, start-up costs for capacity extensions and product range restructuring. The financial result of EUR -. million is in line with the previous year and consists mainly of interest expenses. Realised and unrealised exchange rate results on balance sheet positions in foreign currencies are limited. The tax expense amounts to EUR . million or . of the profit before tax. The tax charge is in line with the Group’s guided eective tax rate. Net profit increased by almost or EUR . million and amounts to EUR . million or . of revenue. Earnings Per Share (EPS) increased by to EUR . per share. The recurring net result increased to EUR . million or . of revenue. The recurring net result is the reported net result for the period excluding non-recurring income and expenses. Over the past months Lotus Bakeries has generated another record operating cash flow (REBITDA) of EUR . million, allowing the net financial debt to remain low at less than one times REBITDA. Total investments amounted to EUR million including both capital expenditures, the acquisition of of the shares of Peter’s Yard and the investments via the corporate venture fund FF. The large majority of investments relates to capacity expansion projects reaching a -month high of EUR million. Maintenance capex remained stable at . of revenue or EUR million. Despite volume growth and inflationary pressure on all components of working capital, the net increase was limited to EUR million. SIGNIFICANT EVENTS AFTER DECEMBER 31, 2022 No significant events have occurred since December , which have a material impact on the financial statements. Report of the Board of Directors166 - Lotus Bakeries Lotus Bakeries - 169 Jan Boone - CEO PROSPECTS FOR 2023 The macro-economic environment and company-specific conditions in were challenging. There are unprecedented increases in costs and accompanying necessary price increases, large and urgent capacity investments that needed to come onstream and increased risk of disruptions and delays in the supply chain. On top of that, the war in Ukraine led to increased uncertainties in energy and raw material markets and further rising input costs for raw materials, packaging materials, utilities, transport and labour as a consequence. Notwithstanding the challenges, Lotus Bakeries showed resilience in and reports a strong performance in terms of high-quality top-line growth, margin management, cash flow protection and investment execution. The company achieved a record growth rate of or EUR million in . Lotus® Bisco® and Lotus™ Natural Foods, the two strategic pillars focused on internationalisation, have again been the key drivers to attaining this exceptional growth. The revenue increase is underpinned with responsible price increases to reflect inflation of costs and continued high single-digit volume growth. The company is navigating through these challenging and unpredictable times focusing on its strategic priority to realise its growth potential and ambitions. At the same time, this also requires margin and profitability support through savings, improved operational and logistical eciencies, product mix and responsible pricing actions. In , the company invested a record amount mainly in capacity expansion projects. These projects are crucial to support the short and medium-term growth of Lotus® Bisco® and Lotus™ Natural Foods. A strong belief in future growth warrants the continuation of this investment programme. The capital expenditures for are estimated in the range of EUR million unless the greenfield investment in Thailand is progressing faster than expected. The other investments in the corporate venture fund provide the seeds for more long-term future growth. CEO JAN BOONE: “We raised the bar for ourselves once again. EUR million of organic growth is unprecedented. The growth is almost evenly split between responsible price increases to reflect inflation and solid volume growth. The broad-based progression in the large majority of countries is important and crucial to maintain. The macro-economic environment is challenging and inflation is impacting many people’s purchasing power. That’s why the price increases need to be fair and responsible because, ultimately, we want to keep our products aordable. Aordability is key for all our products across the three pillars. Lotus® Bisco® and Lotus™ Natural Foods are the strongholds in terms of growth but also our Local Heroes have been able to keep revenue stable, something which deserves a lot of credit in extremely dicult circumstances.” Going into , the macro-economic outlook remains unclear and volatile and the inflationary pressures are still omni-present. All cost categories are subject to significant inflation with labour and energy being more pronounced in comparison to . The challenge is therefore no less significant than it was months ago but the medicine remains the same: a balanced approach of implementing responsible price increases, realizing volume growth by continuing to invest in the brands and the organisation and cost optimisations within operations, supply chain and overheads. Report of the Board of Directors168 - Lotus Bakeries Lotus Bakeries - 171 RESULTS AND PROPOSAL FOR APPROPRIATION OF RESULTS CONSOLIDATED The consolidated net profit for amounted to EUR . million as compared to EUR . million in . STATUTORY The 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 year 130,145,781.77 PROFIT FOR THE YEAR AVAILABLE FOR APPROPRIATION 130,145,781.77 IN EUR Allocation to legal reserves 0 Allocation / (Transfer) to other reserves 93,175,196.77 Distribution of a gross dividend 1 36,720,585.00 Distribution of emoluments to directors 250,000.00 TOTAL 130,145,781.77 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 May , that a gross dividend of EUR per share for be paid compared with EUR per share in . This maintains the dividend policy of recent years, whereby at least one third of the recurring net profit is paid out. GROSS DIVIDEND (IN EUR) 2022 2021 2020 2019 2018 2017 40.0 45.0 35.5 32.0 29.0 19.5 CORPORATE GOVERNANCE DECLARATION Lotus Bakeries adopts the Corporate Governance Code as a reference code, in accordance with Article :() of the CAC and the Royal May , 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 April , . 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 , except for Article . 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 : et seq of the CAC, since the functioning of the Board is highly eective 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 ,,.. Notices with respect to Art. of the Royal Decree of November , - anti-takeover measures The Board of Directors of Lotus Bakeries NV was authorised by the Extraordinary General Meeting of May , 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 ,,.). This authorisation was granted for a period of five years starting on the date of the publication of the resolution of the Extraordinary General Meeting of May , in the Supplements to the Belgian Ocial Journal. 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 May , , within a period of three years commencing with the Extraordinary General Meeting of Shareholders of May , , 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. Report of the Board of Directors170 - Lotus Bakeries Lotus Bakeries - 173 Shares Since the beginning of January , Lotus Bakeries NV shares have been listed on the continuous trading market of Euronext (Brussels). Previously, the shares were listed on the spot market. On December , there were , shares of Lotus Bakeries NV, in registered or dematerialised form. Share options In the context of the Lotus Bakeries NV share option scheme, new share options were issued in . As at December , the total number of unexercised share options was ,. Purchase of treasury shares The Extraordinary General Meeting of May , authorised the Board of Directors of Lotus Bakeries NV as follows regarding the buying and selling of treasury shares: • For a period of five 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 : CAC. • 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 oer them to the sta, to oer them to one or more specified persons other than sta, 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. • 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 suering serious imminent damage. This authorisation is granted for a period of three years. , treasury shares were purchased over the course of . The total number of treasury shares in the portfolio at the end of the financial year is , shares. They represent an accounting par value of EUR ,. or . of the issued share capital. GRANTED IN 2017 2018 2019 2020 2021 2022 Number granted 1,846 1,179 1,199 962 660 792 Number exercised (1,593) (798) (60) (50) (33) - Number expired (253) (40) (50) (40) (26) - Available options - 341 1,089 872 601 792 SHAREHOLDERS AND SHAREHOLDERS STRUCTURE The shareholding structure of Lotus Bakeries NV on December , : 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 , * . 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 of the Law of May , 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 5,072 5,072 0.62% 0.40% Publicly held 402,934 433,802 49.38% 34.57% Total 816,013 1,254,888 100% 100% Communication according to Article () of the Law of May , on disclosure of major holdings Lotus Bakeries NV did not receive a transparency notification in . Communication according to Article () of the Law of April , on public takeover bids Lotus Bakeries NV is not aware of any updates to any communication according to article of the Law of April . Report of the Board of Directors172 - Lotus Bakeries Lotus Bakeries - 175 BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD OF DIRECTORS Board of Directors Composition On May , , the Ordinary General Meeting of Shareholders reappointed Lema NV (represented by its permanent representative, Michel Moortgat) as director of Lotus Bakeries NV. However, as a result of a demerger which took place on June , , Lema NV was dissolved without liquidation and this management mandate was cancelled. In light of this, the Board of Directors decided to provisionally fill the vacancy in accordance with Article of the Articles of Association of Lotus Bakeries NV and Lema BV (represented by its permanent representative Michel Moortgat) was co-opted as director. The next General Meeting of Shareholders will decide on the final appointment. Furthermore, on May , , the Ordinary General Meeting also accepted the resignation of PMF NV, represented by its permanent representative Johan Boone, as well as the appointment of PMF NV, represented by its permanent representative, Emanuel Boone. The current composition of the Board of Directors: Chairman: Vasticom BV, represented by its permanent representative Jan Vander Stichele Current term of oce ends: General Meeting Managing director: Mercuur Consult BV, represented by its permanent representative Jan Boone Current term of oce ends: General Meeting Non-executive directors: • Beneconsult BV, represented by its permanent representative Benedikte Boone Current term of oce ends: General Meeting • PMF NV, represented by its permanent representative Emanuel Boone Current term of oce ends: General Meeting • Concellent NV, represented by its permanent representative Sofie Boone Current term of oce ends: General Meeting • Anton Stevens Current term of oce ends: General Meeting Independent directors: • Palumi BV, represented by its permanent representative Peter Bossaert Current term of oce ends: General Meeting • Benoit Graulich BV, represented by its permanent representative Benoit Graulich Current term of oce ends: General Meeting • Lema BV, represented by its permanent representative Michel Moortgat Current term of oce ends: General Meeting • Sastraco BV, represented by its permanent representative Sabine Sagaert Current term of oce ends: General Meeting Secretary: • Brechtje Haan 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 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 and Head of Corporate Controlling, member of the Executive Committee and Board of Directors at Omega Pharma • Since , active at Lotus Bakeries as Managing Director and since as CEO • Member of the Board of Directors at FC Bruges and FF • President of the Board of Directors of Animal Care, a listed company in the veterinary sector • Since , member of the Board of Directors at Lotus Bakeries and Managing Director since Emanuel Boone Non-Executive Director • Master’s degree in Bioengineering (KU Leuven) • - technical and operational positions at several breweries (Heineken/Alken-Maes and Van Steenberge) • Since , business and process consultant for multiple breweries and maltster • Since , director at Herbafrost NV • Member of the Board of Directors at Lotus Bakeries since 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) • – : deputy pharmacist and titular pharmacist • Since , owner and titular pharmacist of Boone pharmacy in Tervuren • Since , active as volunteer departmental pharmacist at the Red Cross Tervuren • Member of the Board of Directors at Lotus Bakeries since Peter Bossaert Independent Director • Commercial engineer (University of Antwerp) • - : various marketing and sales roles at Unilever and Campina • Between and active at Medialaan (today DPG Media), from as CEO • Since , CEO at KBVB • Member of the Board of Directors at Lotus Bakeries since Report of the Board of Directors174 - Lotus Bakeries Lotus Bakeries - 177 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 he became a partner at EY. Currently he is a managing partner at Bencis Capital Partners • Various directorships at Cofinimmo and FF, among other organisations • Member of the Board of Directors, Audit Committee and Remuneration and Nomination Committee at Lotus Bakeries since Michel Moortgat Independent Director • Master’s degree in Business and Finance (Ichec Brussels) and MBA (Vlerick Business School) • Since , active at Duvel Moortgat and since as CEO • Member of the Board of Directors and Chairman of the Audit Committee at Lotus Bakeries since Sabine Sagaert Independent Director • Master’s degree in Commercial Engineering (KU Leuven), Master in Economic Legislation (UCL) and MBA (KU Leuven), graduate degree in Taxation (Fiscale Hogeschool Brussel) • Has held various positions at CBR Cementbedrijven and AB Inbev, for instance as Business Unit President Belux. Subsequently, she led the Dental Division at Arseus • Since , employed by Cargill as General Manager Malt Business Europe. As of , Global Managing Director Malt Business and since June , Managing Director Oils and Seeds Emea • Since October , Managing Director Bakery Products at Vandemoortele • Member of the Board of Directors and Chairman of the Remuneration and Nomination Committee at Lotus Bakeries since 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 Jan Vander Stichele Chairman of the Board of Directors • Master’s degree in Civil Engineering (KU Leuven) and Candidate degree in Applied Economics (KU Leuven) • Was technical director of the Verlipack Group • Since the end of , active in the Lotus Bakeries Group as General Manager Lotus Bakeries France, thereafter as General Manager Operations and between and as Executive Director • Member of the Board of Directors of Ardo Group, B.I.G., Connect, Frigilunch and OLV Ziekenhuis Aalst (hospital) • 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 Activities of the Board of Directors The Board of Directors met six times in . All directors were present at all meetings, except PMF NV, represented by Mr Johan Boone, on February , and Lema BV, represented by Michel Moortgat, on March and May . Within the Board of Directors, the following matters were discussed in detail: • Investment budget and global budget • Financial results • Growth plans • Sales results and channels • Organisational changes • Evolution of prices and availability of raw materials and packaging • Evolution of energy prices and labour costs • Price negotiations with customers • Results at / and / and proposed press release • General Meeting: − Agenda − (Re)appointments − Dividend proposal • Capex investments and expansions of capacity: − Europe, Belgium − Americas, United States − Asia, Thailand − Africa, South Africa • Strategy Lotus® Bisco® • Product developments and innovations • Redesign projects: − Lotus® Biscoff® − nākd • Lotus® Bisco® partnerships • Recruitment policy • Post-acquisition results Kiddylicious • Reports and recommendations from the Committees • Cyberstrategy Over the course of , there were no incidences within the Board of Directors which led to the application of the conflict of interest procedure as set out in Articles : and : CAC. Audit Committee The Audit 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 , the Audit 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 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 Report of the Board of Directors176 - Lotus Bakeries Lotus Bakeries - 179 Remuneration and Nomination Committee The Remuneration and Nomination Committee consists of two independent directors and one non-executive director. The independent directors are Sastraco BV, represented by its permanent representative Sabine Sagaert (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 both HR management and remuneration policy experience. The Committee met twice in , with all members present. The subjects examined were: • Remuneration policy and its application • Remuneration of CEO and Executive Committee 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 eectiveness 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. EXECUTIVE COMMITTEE Composition of the Executive Committee: • Jan Boone, permanent representative of Mercuur Consult BV, CEO • Isabelle Maes, permanent representative of Valseba BV, 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 official meetings in . 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 dierent 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 dierent gender than that of the other members. The aforementioned obligation is contained in Art. : CAC. It also wishes to point out in this connection that the abovementioned independent directors fulfil the independence criteria of Article : of the CAC and the Corporate Governance Code . However, concerning Benoit Graulich BV, it is noted that the Ordinary General Meeting of Shareholders of May reappointed Benoit Graulich BV as independent director, since all of the specific independence criteria of Article . of the Belgian Corporate Governance Code were fulfilled but one, i.e. the criterion that a director must have held the position of non-executive director for no longer than 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 of the shares which could jeopardise his independence. Report of the Board of Directors178 - Lotus Bakeries Lotus Bakeries - 181 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 dierent 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 suciently 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 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 on 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 page of this Annual Report. SENIORITY LEVEL WITHIN LOTUS BAKERIES GENDER DIVERSITY 2 80% 3 20% < 10 years men VARIOUS ACADEMIC BACKGROUNDS: 3 OUT OF 5 > 10 years women 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 February , . 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 Report of the Board of Directors180 - Lotus Bakeries Lotus Bakeries - 183 REMUNERATION REPORT Introduction The purpose of the 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 , for approval. The remuneration policy was adopted by . of the votes at the Ordinary General Meeting of May , . 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 remuneration report explains how the remuneration corresponds to the remuneration policy approved by the Board of Directors on April , and which was adopted on May , by the General Meeting with . of the votes, in accordance with provision . of the Corporate Governance Code and Article :() 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 Non-executive and executive directors The remuneration policy for directors of the Company approved at the Ordinary General Meeting of May , 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 , and (ii) shares in the Company. • The Chairman of the Board of Directors receives an annual remuneration of (i) EUR , and (ii) shares in the Company. The Chairman receives additional remuneration of EUR , 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 , 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 . 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) 2022 20,000 20,000 100%/0% 2021 20,000 20,000 100%/0% Vasticom BV, represented by Jan Vander Stichele, non-executive (Chairman BoD, member Audit Committee and member Nomination and Remuneration Committee) 2022 50,000 100,000 150,000 100%/0% 2021 50,000 100,000 150,000 100%/0% PMF NV, represented by Emanuel Boone, non-executive (member BoD) 2022 20,000 20,000 100%/0% 2021 Anton Stevens, non-executive (member BoD) 2022 20,000 20,000 100%/0% 2021 20,000 20,000 100%/0% Beneconsult BV, represented by Benedikte Boone, non-executive (member BoD) 2022 20,000 20,000 100%/0% 2021 20,000 20,000 100%/0% Concellent NV, represented by Sofie Boone, non-executive (member BoD) 2022 20,000 20,000 100%/0% 2021 20,000 20,000 100%/0% Palumi BV, epresented by Peter Bossaert, non-executive (member BoD) 2022 20,000 20,000 100%/0% 2021 20,000 20,000 100%/0% Benoit Graulich BV, represented by Benoit Graulich, non-executive (member BoD, member Audit Committee and member Remuneration and Nomination Committee) 2022 30,000 30,000 100%/0% 2021 30,000 30,000 100%/0% Lema BV, represented by Michel Moortgat, non-executive (member BoD, Chairman Audit Committee) 2022 25,000 25,000 100%/0% 2021 25,000 25,000 100%/0% Sastraco BV, represented by Sabine Sagaert, non-executive (member BoD, Chairman Remuneration and Nomination Committee) 2022 25,000 25,000 100%/0% 2021 25,000 25,000 100%/0% Overview of remuneration Renumeration for representing the company with respect to interest groups Report of the Board of Directors182 - Lotus Bakeries Lotus Bakeries - 185 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 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 8 4 4 0 0 16 Vasticom BV, represented by Jan Vander Stichele, non-executive (Chairman BoD, member Audit Committee and member Nomination and Remuneration Committee) Fixed annual remuneration adopted at OGM of 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 20 10 10 0 0 30 PMF NV, represented by Emanuel Boone, non-executive (member BoD) Fixed annual remuneration adopted at OGM of 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 0 4 4 0 0 4 Anton Stevens, non-executive (member BoD) Fixed annual remuneration adopted at OGM of 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 8 4 4 0 0 16 Beneconsult BV, represented by Benedikte Boone, non-executive (member BoD) Fixed annual remuneration adopted at OGM of 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 8 4 4 0 0 16 Concellent NV, represented by Sofie Boone, non-executive (member BoD) Fixed annual remuneration adopted at OGM of 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 8 4 4 0 0 16 Palumi BV, represented by Peter Bossaert, non-executive (member BoD) Fixed annual remuneration adopted at OGM of 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 8 4 4 0 0 16 Benoit Graulich BV, represented by Benoit Graulich, non-executive (member BoD, member Audit Committee and member Nomination and Remuneration Committee) Fixed annual remuneration adopted at OGM of 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 8 4 4 0 0 16 Lema BV, represented by Michel Moortgat, non-executive (member BoD, Chairman Audit Committee) Fixed annual remuneration adopted at OGM of 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 8 4 4 0 0 16 Sastraco BV, represented by Sabine Sagaert, non-executive (member BoD, Chairman Remuneration and Nomination Committee) Fixed annual remuneration adopted at OGM of 18 May 2021 01/01/2022 until 31/12/2022 May 13, 2022 May 13, 2022 At least 1 year after end of directorship and 3 years after awarding 8 4 4 0 0 16 84 46 46 0 0 162 Only those shares are shown, which the directors hold by virtue of their mandate. Total Report of the Board of Directors184 - Lotus Bakeries Lotus Bakeries - 187 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 , and, on this basis, on the advice of the Remuneration and Nomination Committee, established that all criteria were met. Consequently, of the short-term bonus will be paid to all members of the executive management in . • The criteria for determining the long-term bonus are as follows: − 1/3 rd of the long-term bonus depends on the consolidated reve- nue 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 , , and, on this basis, on the advice of the Remuneration and Nomination Committee, established that all criteria were met. Consequently, of the long-term bonus will be paid to all members of the executive management in . 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 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 , worth of shares in the company by the end of , 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. 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. To this end, 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 Directors186 - Lotus Bakeries Lotus Bakeries - 189 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) 2022 1,028,017 - 47,156 166,235 541,954 541,954 - 2,325,316 53% / 47% 2021 909,698 - 43,064 146,304 479,579 479,579 - 2,058,224 53% / 47% Other members executive management 2022 2,003,327 - 107,057 323,731 831,645 831,645 - 4,097,404 59%/41% 2021 1,783,189 - 87,839 285,614 739,784 739,784 - 3,636,210 59% / 41% The other benefits relate primarily to insured benefits. Consultation moment between colleagues in logistics warehouse Report of the Board of Directors188 - Lotus Bakeries Lotus Bakeries - 191 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) R2018 15/05/2018 01/01/2022 01/01/2022-14/05/2023 2,373.00 255 0 255 0 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 Valseba BV, represented by Isabelle Maes (CEO Natural Foods) R2018 15/05/2018 01/01/2022 01/01/2022-14/05/2023 2,373.00 128 0 128 0 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 Cumaco BV, represented by Mike Cuvelier (CFO) R2018 15/05/2018 01/01/2022 01/01/2022-14/05/2023 2,373.00 128 0 128 0 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 Heycom BV, represented by Ignace Heyman (COO) R2018 15/05/2018 01/01/2022 01/01/2022-14/05/2023 2,373.00 128 0 128 0 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 William Du Pré (Director Procurement, QA en R&D) R2018 15/05/2018 01/01/2022 01/01/2022-14/05/2023 2,373.00 128 0 128 0 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 2,459 325 767 0 2,017 0 Total Report of the Board of Directors190 - Lotus Bakeries Lotus Bakeries - 193 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 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 . Executives The remuneration policy of the executives is determined by the Executive Committee, the Remuneration and Nomination Committee approves. To this end, 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. IN THOUSANDS OF EUR 2018 2019 2020 2021 2022 REMUNERATION OF NON-EXECUTIVE DIRECTORS Vasticom BV, represented by Jan Vander Stichele, non-executive (Chairman BoD, member Audit Committee and member Remuneration and Nomination Committee) 150 150 150 150 150 100.0% 100.0% 100.0% 100.0% 100.0% PMF NV, represented by Emanuel Boone, non-executive (member BoD) / / / / 20 / / / / / Anton Stevens, non-executive (member BoD) 20 20 20 20 20 100.0% 100.0% 100.0% 100.0% 100.0% Beneconsult BV, represented by Benedikte Boone, non-executive (member BoD) 20 20 20 20 20 100.0% 100.0% 100.0% 100.0% 100.0% Concellent NV, represented by Sofie Boone, non-executive (member BoD) 20 20 20 20 20 100.0% 100.0% 100.0% 100.0% 100.0% Palumi BV, represented by Peter Bossaert, non-executive (member BoD) 20 20 20 20 20 100.0% 100.0% 100.0% 100.0% 100.0% Benoit Graulich BV, represented by Benoit Graulich, non-executive (member BoD, member Audit Committee and member Remuneration and Nomination Committee) 30 30 30 30 30 100.0% 100.0% 100.0% 100.0% 100.0% Lema BV, represented by Michel Moortgat, non-executive (member BoD, Chairman Audit Committee) 25 25 25 25 25 / 100.0% 100.0% 100.0% 100.0% Sastraco BV, represented by Sabine Sagaert, non-executive (member BoD, Chairman Remuneration and Nomination Committee) 25 25 25 25 25 100.0% 100.0% 100.0% 100.0% 100.0% 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. IN THOUSANDS OF EUR 2018 2019 2020 2021 2022 REMUNERATION OF EXECUTIVE DIRECTOR Mercuur Consult BV, represented by Jan Boone, executive (member BoD, CEO) 20 20 20 20 20 100.0% 100.0% 100.0% 100.0% 100.0% REMUNERATION CEO Jan Boone, CEO 1,458 1,914 1,962 2,058 2,325 Evolution (%) 115% 131% 102.5% 104.9% 113.0% REMUNERATION OF OTHER MEMBERS OF THE EXECUTIVE MANAGEMENT Total remuneration 2,358 3,296 3,466 3,636 4,097 Number of members executive management 5 5 5 5 5 Evolution (%) 138% 140% 105% 105% 113% PERFORMANCE OF LOTUS BAKERIES Market capitalisation (on 31 dec) 1,753,830 2,113,470 3,002,928 4,561,513 5,157,202 Evolution market capitalisation (%) 102% 121% 142% 152% 113% Turnover 556,435 612,737 663,289 750,251 877,451 Evolution turnover (%) 106% 110% 108% 113% 117% Rebit 95,030 102,891 111,114 123,805 140,188 Evolution Rebit (%) 106% 108% 108% 111% 113% Rebitda 110,346 123,580 135,683 150,967 169,909 Evolution Rebitda (%) 106% 112% 110% 111% 113% Net result 67,872 75,769 82,545 90,743 103,283 Evolution net result (%) 105% 112% 109% 110% 114% REMUNERATION OTHER EMPLOYEES Total remuneration 111,977 123,493 137,116 152,857 173,618 Number of employees (FTE) 1 1,555 1,821 2,214 2,305 2,550 Evolution (%) 106% 110% 111% 111% 114% 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 :() CAC, cannot be Full-time employee calculated as -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 .. Report of the Board of Directors192 - Lotus Bakeries Lotus Bakeries - 195 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 aected 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 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 Committee. The day-to-day management is delegated to the CEO, assisted by the EXCO. The Audit Committee receives regular reports on risk management. As such, the enterprise risk management of Lotus Bakeries consists of the 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. • 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 eectiveness of risk mitigation strategies. • Communication and training: eective communication and training are essential for an ERM program 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. • 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 May 18, 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, all employees clearly know their roles and responsibilities. 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 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 Committee. The risk management program of the Group is an ongoing process that requires regular review and revision to ensure that it remains eective in the face of changing risks and circumstances and new threats. The principal risks listed hereafter 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 Directors194 - Lotus Bakeries Lotus Bakeries - 197 KEY COMPONENT RISK RISK DESCRIPTION & MITIGATING ACTIONS Product Quality & Safety 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 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 department 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 university 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 an 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 conclud- ing 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 tal- ent 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. KEY COMPONENT RISK RISK DESCRIPTION & MITIGATING ACTIONS ESG Climate change 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. 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. Packaging Lotus Bakeries recognises the problems related to the use of plastic packaging, including ocean pollu- tion, 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. Palm oil Lotus Bakeries is aware of the possible negative impact of palm oil cultivation on the environment, in particular deforestation, as well as the possible social impact in the regions where palm oil plantations are cultivated. For Lotus Bakeries, it is important that our consumers and customers have confidence that the palm oil used in our products has been sustainably 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 palm oil supply chain. Water usage Our ESG approach and objectives require Lotus Bakeries to rethink the use of natural resources and more specifically water. Effective water supply and usage management is important for our activities. The risks related to water include water scarcity, water quality issues, regulatory compliance and reputational risks. As a consequence, understanding how our operations use water helps us to manage the risks associated with water supply and usage, while maximising the efficient use of this valuable resource. Report of the Board of Directors196 - Lotus Bakeries Lotus Bakeries - 199 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 cyberattacks. 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, CZK, CNY, KRW, SEK and ZAR. 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 statements 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, intellectual property rights, anti-bribery and corruption, competition, data protection, export regulations, human right and taxes. Wars As a global company, the Group may be impacted by conflicts in countries in which it operates. Op- erations 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. EXTERNAL AUDIT PwC Bedrijfsrevisoren BV, represented by Lien Winne, certified auditor, was appointed as Auditor of Lotus Bakeries NV on May , by the Ordinary General Meeting of Shareholders for a term of three years. Its mandate expires immediately after the Ordinary General Meeting of Shareholders. The fees paid in for audit and non- audit services to PwC Bedrijfsrevisoren and to the parties associated with PwC Bedrijfsrevisoren, are disclosed in note of the consolidated financial statements. AUDIT FEES 2022 IN THOUSANDS OF EUR Lotus Bakeries NV 152 Lotus Bakeries Group 443 Total 595 Report of the Board of Directors198 - Lotus Bakeries Lotus Bakeries - 201 05 STOCK MARKET AND SHAREHOLDERS INFORMATION great taste Stock market and shareholders information 200 - Lotus Bakeries Lotus Bakeries - 203 EVOLUTION OF THE LOTUS BAKERIES SHARE STOCK DATA ON THE LOTUS BAKERIES SHARE PER – Price Earnings Ratio: Share price at closing date divided by the earnings per share of the period SHARE PERFORMANCE DATA (IN EUR) 2022 2021 2020 2019 2018 Highest share price of period 6,630.00 6,080.00 3,770.00 2,680.00 2,690.00 Lowest share price of period 4,455.00 3,630.00 2,500.00 2,080.00 2,010.00 Share price as per closing date 6,320.00 5,590.00 3,680.00 2,590.00 2,150.00 Market capitalisation as per closing date (in millions of EUR) 5,157.20 4,561.51 3,002.93 2,113.47 1,753.83 Number of shares as per closing date 816,013 816,013 816,013 816,013 815,733 Ratio price/earnings (PER) 1 as per closing date 49.93 50.26 36.36 28.21 26.21 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10 ,000 01/01/2000 31/12/2000 31/12/2001 31/12/2002 31/12/2003 31/12/2004 31/12/2005 31/12/2006 31/12/2007 31/12/2008 31/12/2009 31/12/2010 31/12/2011 31/12/2012 31/12/2013 31/12/2014 31/12/2015 31/12/2016 31/12/2017 31/12/2018 31/12/2019 31/12/2020 31/12/2021 31/12/2022 Base 100 = 01/01/2000 Lo t us Bake ri es BEL®20 STOCK MARKET LISTING The Lotus Bakeries shares are listed since January on the Euronext Brussels stock exchange under the ticker LOTB and ISIN code . As of February , , Lotus Bakeries has been included within the BEL® ESG index on Euronext Brussels. The BEL® ESG index consists of the companies demonstrating strong Environmental, Social and Governance (ESG) practices from the BEL® and the BEL® Mid indices of the Euronext Brussels stock exchange. LIQUIDITY Lotus Bakeries has appointed KBC Securities as ‘liquidity provider’. MARKET CAPITALISATION On the basis of a total number of , ordinary shares and a closing share price of EUR ,., Lotus Bakeries’ market capitalisation amounted to EUR ,. million at the end of . EVOLUTION OF THE LOTUS BAKERIES SHARE The graph presents the long-term performance of Lotus Bakeries’ shares as from January , , in comparison to the BEL® index. The BEL® index is the benchmark stock market index of Euronext Brussels, reflecting the most capitalised and liquid stocks traded on the Euronext Brussels stock exchange. FINANCIAL CALENDAR Friday May , Ordinary and Extraordinary Shareholders Meeting Monday May , Payment of dividend as from May , Friday August , half-year results 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) are 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. 202 - Lotus Bakeries Stock market and shareholders information Lotus Bakeries - 205 06 FINANCIAL STATEMENTS Consolidated income statement and statement of comprehensive income Consolidated statement of financial position Condensed five-year financial summary 204 - Lotus Bakeries Lotus Bakeries - 207 The following chapter of the annual report includes the consolidated statement of financial position, the consolidated income statement and 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 . The Auditor has issued an unqualified audit opinion with respect to the consolidated and the separate financial statements of Lotus Bakeries NV. A technician keeps a predictive eye on the machineries 206 - Lotus Bakeries Financial statements Lotus Bakeries - 209 CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME IN THOUSANDS OF EUR 2022 2021 REVENUE 877,451 750,251 Raw materials, packaging and co-manufacturing (311,310) (250,617) Services and other goods (218,277) (192,231) Employee benefit expenses (173,618) (152,857) Depreciation and amortisation expenses (25,245) (23,115) Impairment on inventories and trade receivables (3,992) (3,384) Other operating expenses (8,534) (8,253) Other operating income 3,711 4,011 RECURRING OPERATING RESULT (REBIT) 140,188 123,805 Non-recurring income and expenses (3,807) (4,135) OPERATING RESULT (EBIT) 136,381 119,670 Financial result (2,354) (2,373) Interest income (expenses) (2,565) (2,766) Foreign exchange gains (losses) 988 886 Other financial income (expenses) (777) (493) RESULT FOR THE PERIOD BEFORE TAXES 134,027 117,297 Income taxes (30,744) (26,554) NET RESULT 103,283 90,743 Attributable to non-controlling interests 43 (24) Attributable to equity holders of Lotus Bakeries 103,240 90,767 IN THOUSANDS OF EUR 2022 2021 NET RESULT 103,283 90,743 OTHER COMPREHENSIVE INCOME Items that may be subsequently reclassified to profit and loss (9,410) 21,419 Currency translation differences (9,608) 21,160 Gain/(Loss) on cash flow hedges, net of tax 198 259 Items that will not be reclassified to profit and loss (151) (333) Remeasurement gains/(losses) on defined benefit plans (151) (333) Other comprehensive income (9,560) 21,086 TOTAL COMPREHENSIVE INCOME 93,722 111,829 Attributable to non-controlling interests 2 33 Attributable to equity holders of Lotus Bakeries 93,720 111,796 EARNINGS PER SHARE Weighted average number of shares 810,858 811,550 Basic earnings per share (EUR) - attributable to: Non-controlling interests 0.05 (0.03) Equity holders of Lotus Bakeries 127.32 111.84 Weighted average number of shares after effect of dilution 812,106 813,677 Diluted earnings per share (EUR) - attributable to: Non-controlling interests 0.05 (0.03) Equity holders of Lotus Bakeries 127.13 111.55 CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 ASSETS Non-current assets 820,000 690,120 Goodwill 225,246 224,846 Intangible assets 146,735 144,745 Property, plant and equipment 428,244 307,725 Investments in other companies 16,806 9,755 Deferred tax assets 2,212 2,182 Other non-current assets 757 867 Current assets 275,036 301,972 Inventories 70,361 57,901 Trade and other receivables 120,074 105,164 Current tax assets 4,947 5,276 Cash and cash equivalents 76,435 132,160 Other current assets 3,219 1,471 TOTAL ASSETS 1,095,036 992,092 IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 EQUITY AND LIABILITIES Equity 572,141 519,532 Share capital 16,388 16,388 Treasury shares (18,976) (9,514) Retained earnings 611,180 539,590 Other reserves (36,451) (26,932) Non-controlling interests - - Non-current liabilities 266,186 289,450 Interest-bearing liabilities 196,066 218,837 Deferred tax liabilities 63,716 64,243 Employee benefit obligations 4,411 4,020 Provisions 122 116 Derivative financial instruments 107 371 Other non-current liabilities 1,765 1,863 Current liabilities 256,709 183,110 Interest-bearing liabilities 70,178 17,439 Employee benefit obligations 232 333 Provisions 21 21 Trade and other payables 172,995 154,377 Current tax liabilities 10,367 5,850 Other current liabilities 2,917 5,091 TOTAL EQUITY AND LIABILITIES 1,095,036 992,092 208 - Lotus Bakeries Financial statements Lotus Bakeries - 211 CONDENSED FIVE-YEAR FINANCIAL SUMMARY CONSOLIDATED INCOME STATEMENT IN THOUSANDS OF EUR 2022 2021 2020 2019 2018 REVENUE 877,451 750,251 663,289 612,737 556,435 RECURRING OPERATING RESULT (REBIT) 140,188 123,805 111,114 102,891 95,030 Non-recurring income and expenses (3,807) (4,135) (4,593) (2,292) (3,005) OPERATING RESULT (EBIT) 136,381 119,670 106,521 100,599 92,025 Financial result (2,354) (2,373) (3,004) (2,514) (3,324) RESULT FOR THE PERIOD BEFORE TAXES 134,027 117,297 103,517 98,086 88,701 Income taxes (30,744) (26,554) (20,972) (22,317) (20,829) NET RESULT 103,283 90,743 82,545 75,769 67,872 Attributable to non-controlling interests 43 (24) (48) 857 964 Attributable to equity holders of Lotus Bakeries 103,240 90,767 82,593 74,912 66,908 CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2019 DECEMBER 31, 2018 Non-current assets 820,000 690,120 622,840 641,122 545,647 Goodwill 225,246 224,846 216,485 229,365 177,639 Intangible assets 146,735 144,745 139,966 142,709 138,887 Property, plant and equipment 428,244 307,725 258,182 263,793 219,897 Investments in other companies 16,806 9,755 4,403 2,243 2,460 Deferred tax assets 2,212 2,182 3,351 2,505 3,936 Other non-current assets 757 867 453 507 2,828 Current assets 275,036 301,972 221,387 171,507 165,925 Inventories 70,361 57,901 46,827 44,461 39,066 Trade and other receivables 120,074 105,164 89,042 84,524 78,593 Current tax assets 4,947 5,276 3,142 1,075 523 Cash and cash equivalents 76,435 132,160 81,261 40,093 45,597 Other current assets 3,219 1,471 1,115 1,354 2,146 TOTAL ASSETS 1,095,036 992,092 844,227 812,629 711,572 Equity 572,141 519,532 433,744 402,477 346,927 Non-current liabilities 266,186 289,450 261,841 239,584 198,042 Interest-bearing liabilities 196,066 218,837 198,156 158,010 116,500 Deferred tax liabilities 63,716 64,243 57,195 50,737 52,725 Employee benefit obligations 4,411 4,020 3,748 3,712 3,519 Provisions 122 116 282 285 377 Derivative financial instruments 107 371 717 2,340 2,319 Other non-current liabilities 1,765 1,863 1,743 24,500 22,602 Current liabilities 256,709 183,110 148,642 170,568 166,603 Interest-bearing liabilities 70,178 17,439 12,552 36,579 36,655 Employee benefit obligations 232 333 317 325 234 Provisions 21 21 21 21 21 Trade and other payables 172,995 154,377 118,647 118,356 111,526 Current tax liabilities 10,367 5,850 12,701 11,630 14,761 Other current liabilities 2,917 5,091 4,404 3,657 3,406 TOTAL EQUITY AND LIABILITIES 1,095,036 992,092 844,227 812,629 711,572 210 - Lotus Bakeries Financial statements 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 Jens Mollenvanger jensmollenvanger.be WWW.LOTUSBAKERIES.COM ANNUAL REPORT 2022 — FINANCIAL SUPPLEMENT ANNUAL REPORT 2022 FINANCIAL SUPPLEMENT 2 - Lotus Bakeries 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, Lotus® Biscoff®, nākd, TREK, BEAR, Kiddylicious, Dinosaurus, Peijnenburg, Annas and Peter’s Yard 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 US, and twenty-one entities with sales activities in Europe, America and Asia. 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, 2022 were authorised for issue in accordance with a resolution of the Board of Directors on March 20, 2023. 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 2021. 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 2022 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 in pdf format its financial statements in Dutch and English. 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. Lotus Bakeries - 3 INDEX CONSOLIDATED FINANCIAL STATEMENTS 4 Consolidated income statement 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. Summary of significant accounting policies 11 2. Changes to the consolidation scope 24 3. Segment reporting 26 4. Services and other goods 28 5. Employee benefit expenses 28 6. Depreciation and amortisation expenses 28 7. Other operating income and expenses 28 8. Non-recurring income and expenses 29 9. Financial result 29 10. Income taxes 31 11. Earnings per share 31 12. Goodwill 32 13. Intangible assets 34 14. Property, plant and equipment 36 16. Inventories 38 15. Investments in other companies 38 17. Trade and other receivables 39 18. Cash and cash equivalents 40 19. Other assets 40 20. Equity 40 21. Interest-bearing liabilities 43 22. Employee benefit obligations 45 23. Trade and other payables 47 24. Other liabilities 47 25. Deferred and current taxes 48 26. Financial instruments and financial risk management 50 27. Related parties 54 28. Commitments 54 29. Subsequent events 55 30. Management responsibility statement 55 31. Audit fees 55 32. Consolidation scope 56 33. Alternative performance measures 58 AUDITOR’S REPORT 60 CONDENSED FIVE-YEAR CONSOLIDATED FINANCIAL STATEMENTS 66 CONDENSED STATUTORY FINANCIAL STATEMENTS – LOTUS BAKERIES NV 68 Statutory balance sheet 68 Statutory income statement 69 Accounting principles 70 Financial supplement Lotus Bakeries - 5 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION IN THOUSANDS OF EUR NOTE 2022 2021 REVENUE 3 877,451 750,251 Raw materials, packaging and co-manufacturing (311,310) (250,617) Services and other goods 4 (218,277) (192,231) Employee benefit expenses 5 (173,618) (152,857) Depreciation and amortisation expenses 6 (25,245) (23,115) Impairment on inventories and trade receivables 16, 17 (3,992) (3,384) Other operating expenses 7 (8,534) (8,253) Other operating income 7 3,711 4,011 RECURRING OPERATING RESULT (REBIT) 140,188 123,805 Non-recurring income and expenses 8 (3,807) (4,135) OPERATING RESULT (EBIT) 136,381 119,670 Financial result 9 (2,354) (2,373) Interest income (expenses) (2,565) (2,766) Foreign exchange gains (losses) 988 886 Other financial income (expenses) (777) (493) RESULT FOR THE PERIOD BEFORE TAXES 134,027 117,297 Income taxes 10 (30,744) (26,554) NET RESULT 103,283 90,743 Attributable to non-controlling interests 43 (24) Attributable to equity holders of Lotus Bakeries 103,240 90,767 IN THOUSANDS OF EUR NOTE DECEMBER 31, 2022 DECEMBER 31, 2021 ASSETS Non-current assets 820,000 690,120 Goodwill 12 225,246 224,846 Intangible assets 13 146,735 144,745 Property, plant and equipment 14 428,244 307,725 Investments in other companies 15 16,806 9,755 Deferred tax assets 25 2,212 2,182 Other non-current assets 19 757 867 Current assets 275,036 301,972 Inventories 16 70,361 57,901 Trade and other receivables 17 120,074 105,164 Current tax assets 25 4,947 5,276 Cash and cash equivalents 18 76,435 132,160 Other current assets 19 3,219 1,471 TOTAL ASSETS 1,095,036 992,092 IN THOUSANDS OF EUR NOTE 2022 2021 NET RESULT 103,283 90,743 OTHER COMPREHENSIVE INCOME Items that may be subsequently reclassified to profit and loss (9,410) 21,419 Currency translation differences (9,608) 21,160 Gain/(Loss) on cash flow hedges, net of tax 198 259 Items that will not be reclassified to profit and loss (151) (333) Remeasurement gains/(losses) on defined benefit plans (151) (333) Other comprehensive income (9,560) 21,086 TOTAL COMPREHENSIVE INCOME 93,722 111,829 Attributable to non-controlling interests 2 33 Attributable to equity holders of Lotus Bakeries 93,720 111,796 EARNINGS PER SHARE 11 Weighted average number of shares 810,858 811,550 Basic earnings per share (EUR) - attributable to: Non-controlling interests 0.05 (0.03) Equity holders of Lotus Bakeries 127.32 111.84 Weighted average number of shares after effect of dilution 812,106 813,677 Diluted earnings per share (EUR) - attributable to: Non-controlling interests 0.05 (0.03) Equity holders of Lotus Bakeries 127.13 111.55 IN THOUSANDS OF EUR NOTE DECEMBER 31, 2022 DECEMBER 31, 2021 EQUITY AND LIABILITIES Equity 572,141 519,532 Share capital 20 16,388 16,388 Treasury shares 20 (18,976) (9,514) Retained earnings 611,180 539,590 Other reserves (36,451) (26,932) Non-controlling interests - - Non-current liabilities 266,186 289,450 Interest-bearing liabilities 21 196,066 218,837 Deferred tax liabilities 25 63,716 64,243 Employee benefit obligations 22 4,411 4,020 Provisions 122 116 Derivative financial instruments 107 371 Other non-current liabilities 24 1,765 1,863 Current liabilities 256,709 183,110 Interest-bearing liabilities 21 70,178 17,439 Employee benefit obligations 22 232 333 Provisions 21 21 Trade and other payables 23 172,995 154,377 Current tax liabilities 25 10,367 5,850 Other current liabilities 24 2,917 5,091 TOTAL EQUITY AND LIABILITIES 1,095,036 992,092 4 - Lotus Bakeries Financial supplement Lotus Bakeries - 7 CONSOLIDATED CASH FLOW STATEMENT IN THOUSANDS OF EUR 2022 2021 1 OPERATING ACTIVITIES NET RESULT 103,283 90,743 Depreciation and amortisation expenses 25,245 23,159 Impairment on inventories and trade receivables 3,992 3,601 Impairment of assets and results from disposal of assets 259 442 Change in provisions (16) 139 Financial result 2,354 2,373 Income taxes 30,744 26,554 Employee share-based compensation expense 470 419 Gross cash provided by operating activities 166,331 147,430 Decrease/(Increase) in inventories (15,588) (12,957) Decrease/(Increase) in trade and other receivables (15,675) (4,778) Decrease/(Increase) in other assets 141 (5,366) Increase/(Decrease) in trade and other payables 1,880 18,576 Increase/(Decrease) in other liabilities 1,430 (3,504) Change in working capital (27,811) (8,029) Income taxes paid (27,707) (28,478) NET CASH PROVIDED BY OPERATING ACTIVITIES 110,812 110,923 INVESTING ACTIVITIES (In)tangible assets – Acquisitions (123,112) (42,048) (In)tangible assets – Disposals 141 541 Acquisition of subsidiaries, net of cash acquired (note 2) (9,205) (274) Financial assets – Investments (9,281) (5,353) Proceeds/(Reimbursement) of long-term receivables 91 (415) NET CASH USED IN INVESTING ACTIVITIES (141,368) (47,549) 1 The presentation of the consolidated cash flow statement has been reviewed in 2022. For consistency purposes, the presentation of the comparative cash flow statement has been aligned. Main changes relate to the following items: - Interests paid: presented as part of the financing activities - Other financial income and expenses received/(paid): presented as part of the financing activities - Proceeds/(Reimbursement) of long-term receivables: presented as part of the investing activities IN THOUSANDS OF EUR 2022 2021 1 FINANCING ACTIVITIES Dividends paid (32,805) (28,813) (Acquisition)/Disposal of treasury shares (8,841) 3,234 Proceeds from interest-bearing liabilities 39,000 30,000 Reimbursement of interest-bearing liabilities (14,000) (14,500) Reimbursement of lease liabilities (4,187) (4,255) Interests paid (2,221) (2,762) Other financial income and expenses received/(paid) (1,545) 1,664 NET CASH FROM FINANCING ACTIVITIES (24,599) (15,432) NET CHANGE IN CASH AND CASH EQUIVALENTS (55,155) 47,942 Cash and cash equivalents as at January 1 132,160 81,261 Effect of exchange rate fluctuations (570) 2,957 CASH AND CASH EQUIVALENTS AS AT DECEMBER 31 76,435 132,160 6 - Lotus Bakeries Financial supplement Lotus Bakeries - 9 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, 2022 3,591 12,797 16,388 (9,514) 539,590 (26,040) (613) (279) (26,932) 519,532 - 519,532 Net result of the period - - - - 103,240 - - - - 103,240 43 103,283 Other comprehensive income - - - - - (9,567) (151) 198 (9,519) (9,519) (41) (9,560) Total comprehensive income for the period - - - - 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 EQUITY AS AT JANUARY 1, 2021 3,591 12,797 16,388 (11,474) 476,724 (47,143) (280) (538) (47,961) 433,677 67 433,744 Net result of the period - - - - 90,767 - - - - 90,767 (24) 90,743 Other comprehensive income - - - - - 21,103 (333) 259 21,029 21,029 57 21,086 Total comprehensive income for the period - - - - 90,767 21,103 (333) 259 21,029 111,796 33 111,829 Dividend to shareholders - - - - (28,968) - - - - (28,968) - (28,968) Transactions with treasury shares - - - 1,960 - - - - - 1,960 - 1,960 Employee share-based compensation expense - - - - 419 - - - - 419 - 419 Non-controlling interests resulting from business combinations - - - - 67 - - - - 67 (67) - Impact written put options on non-controlling interests - - - - 33 - - - - 33 (33) - Other - - - - 548 - - - - 548 - 548 EQUITY AS AT DECEMBER 31, 2021 3,591 12,797 16,388 (9,514) 539,590 (26,040) (613) (279) (26,932) 519,532 - 519,532 8 - Lotus Bakeries Financial supplement Lotus Bakeries - 11 1. SUMMARY OF SIGNIFICANT 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, 2022. 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, 2021 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, 2022 and have been endorsed by the European Union: NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS • Amendments to IAS 16 – Proceeds before Intended Use: The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. • Amendments to IAS 37 – Onerous Contracts – Cost of Fulfilling a Contract: The amendments clarify the costs a company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. • Annual Improvements 2018-2020: The annual improvements package includes the following minor amendments: Subsidiary as a First-time Adopter (Amendment to IFRS 1); Fees in the ‘10 per cent’ Test for Derecognition of Financial Liabilities (Amendment to IFRS 9); Lease Incentives (Amendment to Illustrative Example 13 of IFRS 16); Taxation in Fair Value Measurements (Amendment to IAS 41). 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, 2022, 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. 10 - Lotus Bakeries Financial supplement Lotus Bakeries - 13 • Amendments to IAS 1 – Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (effective January 1, 2023). 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. • Amendments to IAS 8 – Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (effective January 1, 2023). The amendments to IAS 8 clarify how companies should distinguish changes in accounting policies from changes in accounting estimates. • Amendments to IAS 12 – Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single Transaction (effective January 1, 2023). 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. 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: • Initial and subsequent measurement goodwill (see note 12); • Measurement of intangible assets (see note 13); • Measurement of post-employment benefits (see note 22) and; • Measurement of financial derivatives and other financial instruments (see note 26). 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. The Group operates in and is impacted by global or regional macroeconomic and political environments which include the COVID-19 pandemic and the war in Ukraine. The macro-economic environment and company-specific conditions in 2022 were challenging. There are unprecedented increases in costs and accompanying necessary price increases, large and urgent capacity investments that needed to come onstream and increased risk of disruptions and delays in the supply chain. On top of that, the war in Ukraine led to increased uncertainties in energy and raw material markets and further rising input costs for raw materials, packaging materials, utilities, transport, and labour as a consequence. Notwithstanding the challenges, Lotus Bakeries showed resilience in 2022 and reports a strong performance in terms of high-quality top-line growth, margin management, cash flow protection, and investment execution. There is no material direct impact of Russia’s invasion of Ukraine and the sanctions imposed on the strategy, targets, operations, financial performance, financial position and cash-flows of the Group. Revenue has not been materially impacted. No additional principal risks or uncertainties have been identified as a result of Russia’s invasion of Ukraine and related events. The war has impacted the interest rates and inflation trends. Consequently, the discount rate used to determine the recoverable amount in the context of impairment tests in accordance with IAS 36 has been updated to reflect these developments, but has not led to any risk of impairment. Next to the above items, the Company considers the 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. However, at this stage, the Company assessed the impact of climate change and its sustainability commitments on the current accounting policies, estimates and judgements and concluded that there are currently no significant changes required. 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 income statement. 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. Investment in associates An associate is an entity over which the Group has significant influence and that is neither a subsidiary nor an interest in a joint arrangement. Significant influence is the power to participate in the financial and operating policy decisions of the investee but is not control or joint control over those policies. In its consolidated financial statements, the Group uses the equity method of accounting for investments in associates. Under the equity method, the investment is initially recognised at cost in the consolidated statement of financial position and adjusted thereafter to recognise the Group’s share of the profit or loss and other comprehensive income of the associate. An investment in an associate is accounted for using the equity method from the date on which the investee becomes an associate. On acquisition of the investment, any excess of the cost of the investment over the Group’s share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, which is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period in which the investment is acquired. The Group discontinues the use of the equity method from the date when the investment ceases to be an associate or when the investment is classified as held for sale. 12 - Lotus Bakeries Financial supplement Lotus Bakeries - 15 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 income statement. Foreign exchange gains and losses that relate to interest-bearing liabilities and cash and cash equivalents are presented in the income statement within financial result. All other foreign exchange gains and losses are presented in the income statement within operating result. 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 income statement 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 2022 2021 2022 2021 EUR/CHF 0.985 1.033 1.005 1.081 EUR/CNY 7.358 7.195 7.075 7.629 EUR/CZK 24.116 24.858 24.570 25.643 EUR/GBP 0.887 0.840 0.852 0.860 EUR/KRW 1,344.090 1,346.380 1,357.681 1,354.032 EUR/SEK 11.122 10.250 10.624 10.145 EUR/THB 36.835 37.653 36.800 37.891 EUR/USD 1.067 1.133 1.054 1.183 EUR/ZAR 18.099 18.063 17.210 17.472 14 - Lotus Bakeries Financial supplement Lotus Bakeries - 17 1.5 Goodwill 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. 1.6 Intangible assets 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. Intangible assets acquired upon acquisition of a subsidiary or as a result of the acquisition of a customer portfolio, are recognised separately in the statement of financial position at their estimated fair value at acquisition date. Costs for internally generated intangible assets are recognised in the income statement as incurred, unless they meet the criteria to be considered as development costs. 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. Intangible assets with indefinite useful lives are not amortised but tested for impairment annually 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. Investments in software and licences are amortised over a period of three to five years. The brands acquired in acquisitions, or the value of the customer portfolios obtained through acquisition are amortised on a straight-line basis over a maximum period of ten years, except when the brand has an indefinite useful life. 1.7 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. Costs of maintenance and repair of property, plant and equipment are capitalised if the cost can be measured reliably and the expenditure will result in a future economic benefit. All other costs are recognised as operating expenses when incurred. If an item property, plant and equipment consists of different components and each component has different useful lives, the separate components are depreciated according to their respective useful lives. 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. 1.8 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 following future lease payments over the lease term: • Fixed payments (less any lease incentives); • Variable lease payments that are based on an index or rate; • The exercise price of a purchase option if the Group is reasonably certain to exercise that option; • Payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. The above lease payments are discounted using the interest rate implicit in the lease, if it can be determined, or 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. 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. 16 - Lotus Bakeries Financial supplement Lotus Bakeries - 19 1.9 Government grants Government grants are recognised at fair value when it is probable that they will be received and that the Group will comply with the conditions attached to the grant. If the grant is related to a cost item, the grant is systematically recognised as income over the periods required to attribute these grants to the costs which they are intended to compensate. When the grant is related to an asset, it is presented in the statement of financial position as a deduction from the related asset. Grants are recognised in income net of the depreciation of the related asset. 1.10 Impairment of non-financial assets For the Group’s non-financial assets, other than deferred tax assets, the Group assesses at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. An asset’s recoverable amount is the higher of an asset’s or cash generating unit’s fair value less costs of disposal and the value in use. In assessing value in use, the estimated future cash flows are discounted using a pre-tax discount rate that reflects current market assessment of the time value of money and the risks specific to the asset or cash generating unit. When the carrying amount exceeds the recoverable amount, an impairment loss is recognised as an operating expense in the income statement. A previously recognised impairment loss is reversed where there has been a change in the assumptions used to determine the recoverable amount. Thus, the impairment loss no longer exists or has been reduced. An increase in the carrying amount of an asset resulting from the reversal of an impairment cannot be higher than the carrying amount (after depreciation) that would have been determined had no impairment loss been recognised in prior years. An impairment loss recognised on goodwill is never reversed in a subsequent period. 1.11 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. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. 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 permitted by 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 income statement 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 income statement. 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. If the financial asset is sold or an impairment loss is recognised, the accumulated gains or losses recognised in equity are transferred to the income statement. Derecognition of financial assets Trade receivables are no longer recognised when (1) the rights to receive cash flows from the trade receivables have expired, (2) the Group has transferred substantially all risks and rewards related to the receivables. The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. 1.12 Inventories 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. 18 - Lotus Bakeries Financial supplement Lotus Bakeries - 21 1.13 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 original maturities of three months or less. For the cash flow statement, cash and cash equivalents include cash and bank balances. Any negative cash is included under non-current interest-bearing liabilities in the statement of financial position. 1.14 Non-current assets (or disposal groups) held for sale and discontinued operations A non-current asset (or a disposal group) is classified as held for sale if the carrying amount will be recovered principally through a sale transaction rather than through continuing use. A non-current asset (or a disposal group) classified as held for sale is recognised at the lower of the carrying amount and the fair value less costs to sell. An impairment test is performed on these assets at each reporting date. A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is classified as held for sale, and: • Represents a major line of business or geographical area of operations; • Is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations or; • Is a subsidiary acquired exclusively with a view to resale. 1.15 Share capital and treasury shares 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. 1.16 Financial liabilities Financial liabilities (including interest-bearing financial liabilities, trade payables and other financial liabilities) are classified at amortised cost, except for derivative instruments (see 1.17 further on). Interest-bearing financial liabilities are initially recognised at fair value less direct attributable transaction costs. After initial recognition, the interest-bearing financial liabilities will be recognised at the amortised cost price based on the effective interest rate method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or, where appropriate, a shorter period, to the net carrying amount on initial recognition. 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 balance sheet 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. 1.17 Derivative financial instruments The Group uses derivative financial instruments to limit risks from adverse exchange rate and interest rate fluctuations, including foreign exchange forward contracts and interest rate swaps. No derivatives are used for trading purposes. All regular purchases and sales of financial assets are recognised on transaction date. Financial derivatives are initially recognised at cost. After initial recognition, these instruments are recognised at their fair value. Changes in fair value of the Group’s derivatives that do not meet the criteria of IFRS 9 for hedge accounting, are recognised immediately in the income statement. Hedge accounting The Group designates certain hedging instruments, which include derivatives in respect of foreign currency risk and interest rate risk, as cash flow hedges. The effective portion of the change in fair value of derivative financial instruments that are designated as cash flow hedges is recognised in other comprehensive income and accumulated in a separate equity reserve. The gain or loss on the ineffective portion is immediately recognised in the income statement. Amounts accumulated in equity are reclassified to the income statement in the periods in which the hedged position impacts the income statement. 1.18 Provisions Provisions are recognised in the statement of financial position if the Group has a present obligation (legal or constructive) resulting from a past event and if it is probable that fulfilment of these commitments will incur expenses that can be estimated reliably on reporting date. No provisions are recognised for future operating costs. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost. Restructuring A provision for restructuring is recognised when a formal, detailed restructuring plan is approved by the Group and if this restructuring has either begun or been announced to the persons concerned. 1.19 Employee benefits 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. 20 - Lotus Bakeries Financial supplement Lotus Bakeries - 23 Defined benefit costs are divided into 2 categories: • Current service cost, past service cost, gains and losses on curtailments and settlements; • 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 income statement. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income. Share-based payments The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. 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. 1.20 Revenue recognition Revenue is included in the income statement 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. Furthermore, the Group considers all payments made to customers and whether these are related to the revenue generated from the customer. 1.21 Income taxes Income taxes include current and deferred taxes. Both taxes are recognised in the income statement 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. 1.22 Segment reporting 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. To this is added 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. 22 - Lotus Bakeries Financial supplement Lotus Bakeries - 25 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 IN THOUSANDS OF EUR TOTAL Consideration paid in cash 9,639 Cash and cash equivalents acquired (433) ACQUISITION OF SUBSIDIARIES, NET OF CASH ACQUIRED 9,205 The following table presents the impact of the acquisition of subsidiaries within the investing activities in the consolidated cash flow statement: 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. The amounts above with respect to fair value of net assets acquired and goodwill are provisional as not all fair value measurements have been finalised. 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 Lotus TM Natural 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. Considering that the acquisition was only finalised at the reporting date, Peter’s Yard has not yet contributed to the Group’s profit for the period. If the acquisition of Peter’s Yard had been completed on the first day of the financial year, Group revenue for the year would have been approximately GBP 6 million higher and Group profit would not have been impacted significantly. Other changes to the consolidation scope In 2022, following entities have been liquidated or merged: • NBF USA Inc., merged into Lotus Bakeries North America Inc.; • FF2032 NV, liquidated; • Lotus Bakeries Chile SpA, liquidated. Furthermore, the Group has created a new entity in Thailand, Lotus Asia Pacifc Ltd., in the context of the establishment of a production facility for Lotus® Biscoff® to further support the Group’s growth ambition for Lotus® Biscoff®. In 2021, Lotus Bakeries acquired all remaining shares of Lotus Bakeries Italia S.r.l. for an amount of EUR 274 thousands. Furthermore, FF2032 AG was founded. The complete list of companies included in the consolidation scope is disclosed in note 32. 2. CHANGES TO THE CONSOLIDATION SCOPE Acquisitions 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. As a brand, it has grown significantly over the last three years, doubling revenue in the UK to around GBP 6 million in revenue. Peter’s Yard will become part of the Lotus TM Natural 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 Lotus TM Natural 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: 24 - Lotus Bakeries Financial supplement Lotus Bakeries - 27 PERIOD ENDED DECEMBER 31, 2022 IN THOUSANDS OF EUR BELGIUM FRANCE THE NETHERLANDS UK OTHER ELIMINATIONS / GROUP TOTAL SEGMENT REVENUE 358,123 107,929 81,100 224,754 342,041 (236,495) 877,451 Revenue from external customers 182,834 94,588 79,956 197,584 322,490 - 877,451 Intersegment revenue 175,289 13,341 1,144 27,170 19,551 (236,495) - SEGMENT RESULTS (REBIT) 36,733 10,806 8,344 35,013 43,960 5,333 140,188 Non-recurring income and expenses (3,807) Operating result (EBIT) 136,381 Financial result (2,354) Profit for the period before taxes 134,027 Income taxes (30,744) Result after taxes 103,283 OTHER SEGMENT INFORMATION Capital expenditure: Tangible assets 58,277 1,013 1,962 6,091 68,181 6,428 141,952 Intangible assets - - - - 522 784 1,306 Depreciations and amortisations on (in)tangible assets 11,316 1,149 2,948 1,266 5,688 2,878 25,245 PERIOD ENDED DECEMBER 31, 2021 IN THOUSANDS OF EUR BELGIUM FRANCE THE NETHERLANDS UK OTHER ELIMINATIONS / GROUP TOTAL SEGMENT REVENUE 324,701 105,170 84,459 195,266 233,248 (192,593) 750,251 Revenue from external customers 169,976 92,443 80,488 176,598 230,746 - 750,251 Intersegment revenue 154,725 12,727 3,971 18,668 2,502 (192,593) - SEGMENT RESULTS (REBIT) 39,166 7,043 10,152 34,377 23,569 9,498 123,805 Non-recurring income and expenses (4,135) Operating result (EBIT) 119,670 Financial result (2,373) Profit for the period before taxes 117,297 Income taxes (26,554) Result after taxes 90,743 OTHER SEGMENT INFORMATION Capital expenditure: Tangible assets 29,730 619 2,043 2,970 18,135 4,196 57,693 Intangible assets - - 40 11 - 1,692 1,743 Depreciations and amortisations on (in)tangible assets 10,282 1,217 2,954 1,195 5,063 2,404 23,115 3. SEGMENT REPORTING For the purpose of sales, production and internal reporting, the Group is classified according to geographical regions. The regions presented in the segment reporting, which are based on the internal reporting system, are composed as follows: • Belgium: sales by Sales Office Belgium and intra-group sales by factories in Belgium; • France: sales by Sales Office France and intra-group sales by factories in France; • The Netherlands: sales by Sales Office The Netherlands and intra-group sales by factories in the Netherlands; • UK: sales by Sales Office UK, Natural Balance Foods, Urban Fresh Foods and Kiddylicious, and the intra-group sales by the factory in South-Africa; • Other: sales from Belgium to countries without own Sales Office and by own Sales Offices in Germany, Austria, Switzerland, the Czech Republic/Slovakia, United States, Spain, Italy, China, South Korea, Sweden/Finland as well as intra-group sales by factories in Sweden and the US. Sales between the various segments are carried out at arm’s length. 26 - Lotus Bakeries Financial supplement Lotus Bakeries - 29 4. 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 2021 relates to increased sales and production volumes, next to increased costs of logistics and utilities. 5. EMPLOYEE BENEFIT EXPENSES The other employee benefit expenses include mainly the costs of training and other employee-related insurances. 7. 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 indirect taxes (property taxes, municipal taxes, packaging tax …) and penalties. IN THOUSANDS OF EUR 2022 2021 Short-term employee benefits 139,481 124,294 Social security contributions 21,789 19,690 Defined contribution costs 4,654 4,077 Defined benefit costs 303 128 Other employee benefit expenses 7,392 4,668 TOTAL EMPLOYEE BENEFIT EXPENSES 173,618 152,857 Average number of employees 2,655 2,305 Number of employees as at the end of the year 2,698 2,398 IN THOUSANDS OF EUR 2022 2021 Amortisation of intangible assets (see note 13) 1,033 1,086 Depreciation of property, plant and equipment (see note 14) 19,554 17,772 Depreciation of right-of-use assets (see note 14) 4,658 4,257 TOTAL DEPRECIATION AND AMORTISATION EXPENSES 25,245 23,115 IN THOUSANDS OF EUR 2022 2021 Organisation restructuring (1,269) (326) Product range restructuring (1,081) (784) Office relocations (785) (1,323) Start-up costs related to capacity extensions (288) (835) Other (383) (867) TOTAL NON-RECURRING INCOME AND EXPENSES (3,807) (4,135) 8. 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. 6. DEPRECIATION AND AMORTISATION EXPENSES In 2022, as in 2021, the non-recurring result relates mainly to expenses of organisation restructuring, office relocation, acquisition costs, start-up costs for capacity extensions and product range restructuring. 9. FINANCIAL RESULT IN THOUSANDS OF EUR 2022 2021 Interest expenses (3,115) (2,883) Interest income 551 117 Interest income (expenses) (2,565) (2,766) Foreign exchange gains (losses) 988 886 Other financial income (expenses) (777) (493) TOTAL FINANCIAL RESULT (2,354) (2,373) The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pound sterling) and USD (US dollar). 28 - Lotus Bakeries Financial supplement Lotus Bakeries - 31 IN THOUSANDS OF EUR 2022 2021 Current taxes in respect of the current year (29,417) (21,411) Current taxes in respect of the prior years (2,213) 1,885 Deferred taxes 885 (7,028) TOTAL INCOME TAX EXPENSE (30,744) (26,554) IN THOUSANDS OF EUR 2022 2021 Result for the period before taxes 134,027 117,297 Legal tax rate 25.00% 25.00% Income tax expense computed at the legal tax rate (33,507) (29,324) Effect of different tax rates in other countries 2,481 2,020 Deductions of taxable income 1,472 2,646 Tax adjustments for prior years 429 4,193 Disallowed expenses (1,056) (736) Tax exempted income 66 5 Tax losses used for which no deferred tax asset has been recorded (21) 20 Changes in tax rate or new taxes (670) (4,901) Other 61 (477) TOTAL INCOME TAX EXPENSE (30,744) (26,554) Effective tax rate 22.9% 22.6% In 2021, there was a one-off negative impact on deferred taxes as a result of the corporate income tax rate increase to 25% in the UK as from April 2023. This is an accounting and non-cash effect. The average effective tax rate is 22.9%, compared to 22.6% in 2021. The income tax expense can be reconciled as follows: 10. INCOME TAXES The income tax recognised in the income statement can be detailed as follows: 11. EARNINGS PER SHARE Basic earnings per share is calculated by dividing the Group’s share in net profit 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 profit 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 20). IN THOUSANDS OF EUR 2022 2021 Net result - Basic and diluted earnings per share 103,283 90,743 Attributable to non-controlling interests 43 (24) Attributable to equity holders of Lotus Bakeries 103,240 90,767 Weighted average number of shares - Basic earnings per share 810,858 811,550 Dilutive effect 1,249 2,127 Weighted average number of shares - Diluted earnings per share 812,106 813,677 BASIC EARNINGS PER SHARE (IN EUR) 127.37 111.81 Attributable to non-controlling interests 0.05 (0.03) Attributable to equity holders of Lotus Bakeries 127.32 111.84 DILUTED EARNINGS PER SHARE (IN EUR) 127.18 111.52 Attributable to non-controlling interests 0.05 (0.03) Attributable to equity holders of Lotus Bakeries 127.13 111.55 30 - Lotus Bakeries Financial supplement Lotus Bakeries - 33 12. GOODWILL IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 Lotus TM Natural Foods (Natural Balance Foods, Urban Fresh Foods, Kiddylicious and Peter's Yard) 170,860 170,021 Belgium 20,773 20,773 The Netherlands 17,151 17,151 Asia 9,229 9,214 Nordics 5,528 5,984 Other 1,704 1,703 TOTAL GOODWILL 225,246 224,846 IN THOUSANDS OF EUR TOTAL Carrying amount as at January 1, 2021 216,485 Effect of movements in foreign exchange rates 8,361 Carrying amount as at December 31, 2021 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 The addition in 2022 relates to the acquisition of Peter’s Yard (see note 2), which was allocated to the cash-generating unit Lotus TM Natural Foods. For sales, production and internal reporting, the Group is organised into geographic regions (see also 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. The carrying amount of goodwill has been allocated to the various independent cash-generating units as follows: Goodwill, representing approximately 21% of the total assets of Lotus Bakeries at December 31, 2022, is tested for impairment every year (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). 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 reflects 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, 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, lying between 1.0% and 4.0%; • Projections are discounted at the pre-tax weighted average cost of capital, which lies between 6.1% and 7.5%. At the end of 2022, Lotus Bakeries has completed its annual impairment test of goodwill and concludes no impairment was present. The Company believes all its assessments to be reasonable: they are consistent with the internal reporting and reflect management’s best estimates. As part of the impairment test, the Company carried out a sensitivity analysis for important assumptions used, including the weighted average cost of capital and long-term growth percentage. Here, a fall in the long-term growth percentage by 100 basis points and an increase in the weighted average cost of capital before tax by 100 basis points were applied. A change in the estimates used, as described above, does not lead to a potential material impairment. 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. 32 - Lotus Bakeries Financial supplement Lotus Bakeries - 35 13. INTANGIBLE ASSETS IN THOUSANDS OF EUR BRANDS SOFTWARE CUSTOMER PORTFOLIO TOTAL Acquisition cost 141,867 13,457 1,030 156,354 Accumulated amortisation and impairment losses (4,627) (10,817) (944) (16,388) Carrying amount as at January 1, 2021 137,240 2,640 86 139,966 Acquisitions - 1,743 - 1,743 Acquisitions through business combinations - - - - Amortisation expense - (1,000) (86) (1,086) Impairment losses - - - - Effect of movements in foreign exchange rates 4,101 22 - 4,123 Carrying amount as at December 31, 2021 141,341 3,404 - 144,745 Acquisition cost 145,968 15,222 1,030 162,220 Accumulated amortisation and impairment losses (4,627) (11,818) (1,030) (17,475) Acquisitions 522 784 - 1,307 Acquisitions through business combinations 5,697 - - 5,697 Amortisation expense - (1,033) - (1,033) Impairment losses - - - - 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) (12,851) (1,030) (18,508) 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 portfolio concerns Spanish out-of-home customers acquired in 2011. This was fully amortised at the end of 2021. 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; • Peter’s Yard: brand acquired in 2022. To invigorate its market leadership in the pepparkakor category in Sweden and further develop the category, the Company took the opportunity in 2022 to acquire the brand ‘Kung Oscar’ from the Orkla Group. Furthermore, the Group acquired Peter’s Yard in 2022. For more details, we refer to note 2. 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 currently not amortised as the useful life is deemed to be indefinite. Therefore, an annual impairment test is performed to assess the recoverability of the brands. At year-end 2022, 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. A reasonable change of the key assumptions (discount rate, growth rate) would not result in the recognition of any impairment loss. For more details on the impairment test conducted per CGU, we refer to note 12 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 2022, the Group has incurred research and development expenses of EUR 1,458 thousands (2021: EUR 1,473 thousands), which are mainly composed of employee benefit expenses and consumables. 34 - Lotus Bakeries Financial supplement Lotus Bakeries - 37 14. PROPERTY, PLANT AND EQUIPMENT 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 164,401 334,406 19,929 5,967 12,115 536,818 Accumulated depreciation and impairment losses (52,857) (205,174) (15,795) (149) (4,661) (278,636) Carrying amount as at January 1, 2021 111,544 129,232 4,134 5,818 7,454 258,182 Acquisitions 8,573 11,953 2,352 34,815 11,317 69,010 Disposals (421) (17) (615) - (2,079) (3,132) Depreciation expense (4,433) (12,188) (1,195) - (4,257) (22,073) Transfers from one heading to another 517 1,084 (70) (1,531) - - Effect of movements in foreign exchange rates 2,809 1,893 122 643 271 5,738 Carrying amount as at December 31, 2021 118,589 131,957 4,728 39,745 12,706 307,725 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) 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) In 2022, a record amount of EUR 132,674 thousands has been 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 has been built, but became only operational as of the start of 2023. The US plant now has four operational production lines. 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. In 2021, EUR 57,693 thousands was invested in property, plant and equipment. In Belgium, investments were made in a new waffle line in Courcelles and in the new Lotus® Biscoff® Sandwich Cookie line in Lembeke. Further investments were made in the expansion of capacity at the BEAR factory in South Africa and the factory in the US. The carrying amount of the right-of-use assets arising from IFRS 16 – Leases is detailed as follows: IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 Land and buildings 11,766 8,131 Plant, machinery and equipment 223 282 Furniture, office equipment and vehicles 4,153 4,293 TOTAL RIGHT-OF-USE ASSETS 16,142 12,706 In 2022, additional right-of use assets relate mainly to the signing of new office leases in the UK and the US. In 2021, additional right-of-use assets consisted mainly of new and extended lease contracts for company cars and office buildings. During 2022 and 2021, no government grants have been granted to the Group. No pledges have been set on the items of property, plant and equipment. 36 - Lotus Bakeries Financial supplement Lotus Bakeries - 39 15. 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. 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 that do not contain the top eight allergens; • Oot Granola, a Dutch brand which markets fresh, organic and gluten-free granolas that are low in sugars. Oot Granola has a purely online ‘direct-to- consumer’ concept; • The Good Crisp Company, an American company which produces natural, gluten-free chips, completely free of artificial flavourings and colourants; • 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 2021, the Group also had a minority share in Peter’s Yard, a British company that markets sourdough crackers & crispbreads in the UK. The Group acquired in the course of 2022 the remaining shares in Peter’s Yard and obtained as such control over the entity. See also note 2. In 2022, the Group, through its subsidiary FF2032, acquired additional minority stakes in Love Brands Inc. and The Good Crisp Company and a new minority stake in IQBAR, a US company, for a total amount of EUR 9,281 thousands. IQBAR’s primary product line is a set of plant-based nutritional bars that contain six brain nutrients and that tick all the boxes in terms of nutritional profile. IQBAR initially gained traction through its own website sales and large e-commerce platforms. In addition to its strong online presence, IQBAR has consistently expanded its offline footprint and is currently sold in roughly 8,000 stores across the US, including several national chains. 16. INVENTORIES 17. TRADE AND OTHER RECEIVABLES IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 Raw materials and consumables 20,261 16,061 Work in progress 5,288 2,978 Goods for resale and finished goods 44,812 38,862 TOTAL INVENTORIES 70,361 57,901 IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 Trade receivables 111,558 95,075 Less allowance for impairment of trade receivables (803) (526) Trade receivables - net 110,755 94,549 VAT receivables 8,979 10,079 Other amounts receivable 339 536 Other receivables 9,318 10,615 TOTAL TRADE AND OTHER RECEIVABLES 120,074 105,164 IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 Opening balance 526 697 Allowances recognised 472 12 Amounts written off during the year as uncollectible (159) (208) Exchange differences (37) 25 TOTAL ALLOWANCE FOR IMPAIRMENT OF TRADE RECEIVABLES 803 526 Write-down on inventories of EUR 3,519 thousands (2021: EUR 3,372 thousands) relate mainly to packaging material (2022: EUR 1,411 thousands; 2021: EUR 987 thousands), finished products (2022: EUR 1,297 thousands; 2021: EUR 1,053 thousands) and goods for resale (2022: EUR 542 thousands; 2021: EUR 1,236 thousands). The trade receivables represent an average of 46 days of customer credit (2021: 49 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: 38 - Lotus Bakeries Financial supplement Lotus Bakeries - 41 18. CASH AND CASH EQUIVALENTS Cash and cash equivalents consist of balances on bank accounts at market conditions. The fair value of these cash and cash equivalents is therefore equal to the carrying amount. 19. OTHER ASSETS The other non-current and current assets include mainly cash guarantees and deferred charges relating to the operational activities of the Group. NUMBER OF SHARES SHARES ISSUED TREASURY SHARES OUTSTANDING SHARES As at January 1, 2021 816,013 (5,542) 810,471 Treasury shares delivered for share option plans - 1,432 1,432 Purchase/sale of treasury shares - - - As at December 31, 2021 816,013 (4,110) 811,903 Treasury shares delivered for share option plans - 1,381 1,381 Purchase/sale of treasury shares - (2,343) (2,343) AS AT DECEMBER 31, 2022 816,013 (5,072) 810,941 20. EQUITY Share capital All shares are ordinary shares, registered or dematerialised. The ordinary share capital of the Company issued and fully paid consists of 816,013 shares (2021: 816,013 shares), of which 5,072 treasury shares (2021: 4,110 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: Further details of the shareholding structure of Lotus Bakeries NV as of December 31, 2022 are disclosed in the Corporate Governance Statement in Part 1 of the 2022 annual report of Lotus Bakeries. 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. 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 financial liabilities minus investments minus cash and cash equivalents minus treasury shares, and are reported excluding the ‘lease liability’ that results from the implementation of IFRS 16 Leases) to recurring operating cash flow (REBITDA) at what is considered as a reasonable level in the financial market. Share-based payments 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 further on. 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. 40 - Lotus Bakeries Financial supplement Lotus Bakeries - 43 GRANTED IN 2017 2018 2019 2020 2021 2022 Number granted 1,846 1,179 1,199 962 660 792 Number exercised (1,593) (798) (60) (50) (33) - Number expired (253) (40) (50) (40) (26) - Available options - 341 1,089 872 601 792 Key assumptions used for fair value measurement Exercise period 01/01/2021 - 11/05/2022 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 Exercise price (EUR) 2,331.77 2,373.00 2,351.58 2,828.95 4,517.14 5,057.32 Share price (EUR) 2,459.00 2,310.00 2,330.00 2,890.00 4,630.00 4,868.81 Expected volatility 22.02% 22.43% 23.14% 25.07% 23.69% 25.39% Dividend yield 1.07% 0.93% 0.92% 0.95% 0.94% 0.97% Risk-free rate -0.12% 0.11% -0.29% -0.36% -0.34% 0.82% FAIR VALUE PER OPTION (EUR) 378.27 316.29 331.55 471.65 720.51 790.38 The following table details the different plans granted and the assumptions used for the measurement of the fair value: 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, 2021 2,395 5,267 Granted 4,517 660 Exercised 2,179 (1,379) Expired 1,702 (7) Outstanding options at December 31, 2021 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 In 2022, a total expense of EUR 470 thousands was recognised (2021: EUR 419 thousands). Dividends The dividend related to 2021 was paid in 2022, in accordance with the decision taken at the Ordinary General Meeting of Shareholders of May 13, 2022. The shareholders approved a gross dividend of EUR 40 per share, resulting in a total dividend of EUR 32,805 thousands. The Board of Directors will propose to the Ordinary General Meeting of Shareholders of May 12, 2023 to pay a gross dividend of EUR 45 per share for 2022. This amount is not recognised as a debt on December 31. IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 Bank loans 182,500 209,500 Lease liabilities 13,566 9,337 Non-current interest-bearing liabilities 196,066 218,837 Bank loans 66,000 14,000 Lease liabilities 4,178 3,439 Current interest-bearing liabilities 70,178 17,439 TOTAL INTEREST-BEARING LIABILITIES 266,244 236,276 of which bank loans 248,500 223,500 of which lease liabilities 17,744 12,776 21. INTEREST-BEARING LIABILITIES The volatility is based on daily share prices of Lotus Bakeries over the last three years. All bank loans are denominated in EUR. These loans for the vast majority bear a fixed interest rate. The limited part carrying a floating rate (EURIBOR) is hedged using an interest rate swap (see note 26). The weighted average interest rate is 1.00%. The lease liabilities mainly relate to the lease of company cars and office buildings (see also note 14). 42 - Lotus Bakeries Financial supplement Lotus Bakeries - 45 22. EMPLOYEE BENEFIT OBLIGATIONS 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 2022, the expense amounts to EUR 4,654 thousands compared to EUR 4,077 thousands for 2021 (see also note 5 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, 2022 DECEMBER 31, 2021 Non-current employee benefit obligations 4,411 4,020 Current employee benefit obligations 232 333 TOTAL EMPLOYEE BENEFIT OBLIGATIONS 4,642 4,353 of which post-employment benefits 4,642 4,353 of which termination benefits - - IN THOUSANDS OF EUR 2022 2021 Defined benefit obligation 10,882 10,127 Fair value of plan assets (6,240) (5,774) TOTAL POST-EMPLOYMENT OBLIGATIONS (FUNDED STATUS) 4,642 4,353 Current service cost 303 128 Past service cost - - Service cost recognised as part of employee benefit expenses 303 128 Net interest expenses on post-employment liabilities 55 8 Total defined benefit cost (income statement) 357 136 Remeasurements of defined benefit plans (other comprehensive income) 91 268 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 income statement and the statement of comprehensive income: The following table reconciles the movements of the interest-bearing liabilities to the cash flows arising from financing activities for the year ending December 31, 2022: IN THOUSANDS OF EUR AS AT JANUARY 1, 2022 CASH FLOWS ACQUISITION 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 NON-CASH MOVEMENTS 44 - Lotus Bakeries Financial supplement Lotus Bakeries - 47 The following table reconciles the post-employment obligations: IN THOUSANDS OF EUR 2022 2021 Net liability as at January 1 4,353 4,065 Service cost 303 128 Net interest expenses 55 8 Remeasurements of defined benefit plans 91 268 Employer contributions (156) (116) Effect of movements in foreign exchange rates (4) - NET LIABILITY AS AT DECEMBER 31 4,642 4,353 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. Expected contributions to post-employment benefit plans for the year ending December 31, 2023 are EUR 479 thousands. 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% DECEMBER 31, 2021 BELGIUM THE NETHERLANDS FRANCE GERMANY Discount rate 0.35% 1.00% 0.00% 0.90% Inflation rate 1.80% 1.00% 1.80% 1.75% The principal assumptions used in determining post-employment obligations for the Group’s plans are as follows: 23. TRADE AND OTHER PAYABLES 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. IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 Trade payables 140,003 125,315 Employee benefit liabilities 29,725 26,515 VAT payables 1,186 402 Other payables 2,080 2,144 Other payables 32,992 29,061 TOTAL TRADE AND OTHER PAYABLES 172,995 154,377 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 2022. 24. 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 2022, 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. 46 - Lotus Bakeries Financial supplement Lotus Bakeries - 49 25. DEFERRED AND CURRENT TAXES Deferred taxes The deferred tax assets and liabilities can be reconciled as follows: IN THOUSANDS OF EUR AS AT JANUARY 1, 2022 RECOGNISED THROUGH THE INCOME STATEMENT 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) IN THOUSANDS OF EUR AS AT JANUARI 1, 2021 RECOGNISED THROUGH THE INCOME STATEMENT RECOGNISED THROUGH EQUITY BUSINESS COMBINATIONS EXCHANGE DIFFERENCES AS AT DECEMBER 31, 2021 Intangible assets (27,136) (5,610) - - (842) (33,588) Property, plant and equipment (30,802) (1,319) - - (421) (32,542) Inventories 350 158 - - 3 511 Employee benefit obligations 800 255 (65) - 1 991 Other liabilities (2,018) (260) - - 53 (2,225) Derivative financial instruments 248 - (87) - - 161 Tax losses carried forward 8,794 (3,988) - - 217 5,023 Other (4,080) 3,736 - - (48) (392) TOTAL DEFERRED TAXES (53,844) (7,028) (152) - (1,037) (62,061) Of which deferred tax assets 3,351 2,182 Of which deferred tax liabilities (57,195) (64,243) The recognition of these deferred tax assets is supported by profit expectations in the foreseeable future. At year-end 2022, there are no unrecognised deferred tax assets. 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. 48 - Lotus Bakeries Financial supplement Lotus Bakeries - 51 26. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT 26.1 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, 2022 DECEMBER 31, 2021 Current financial assets 187,190 226,709 Trade receivables At amortised cost 110,755 94,549 Cash and cash equivalents At amortised cost 76,435 132,160 TOTAL FINANCIAL ASSETS 187,190 226,709 Non-current financial liabilities 197,938 221,071 Interest-bearing liabilities At amortised cost 196,066 218,837 Derivative financial instruments Designated in a cash flow hedge 107 371 Other non-current liabilities At fair value through P&L 1,765 1,863 Current financial liabilities 210,181 142,754 Interest-bearing liabilities At amortised cost 70,178 17,439 Trade payables At amortised cost 140,003 125,315 TOTAL FINANCIAL LIABILITIES 408,118 363,826 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 24) is based on level 3 input. No transfers between the different fair value hierarchy levels took place in 2022 and 2021. The Group uses financial derivatives to cover risks from adverse exchange rate and interest rate fluctuations. No derivatives are used for trading purposes. The following table presents an overview of the derivative instruments outstanding at reporting date: The derivative instruments presented in the table above are all designated in a cash flow hedge relationship. 26.2 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 income statement. 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 2022: IN THOUSANDS OF EUR ASSETS LIABILITIES EUR 447,935 (688,719) USD 155,582 (145,307) GBP 39,108 (25,840) SEK 25,764 (26,744) ZAR 17,800 (9,574) CNY 8,789 (1,951) KRW 2,573 (174) CZK 1,322 (626) CHF 756 (305) FAIR VALUE NOTIONAL AMOUNTS IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2022 DECEMBER 31, 2021 Designated in a cash flow hedge Interest rate swaps 107 371 27,000 27,000 TOTAL DERIVATIVE FINANCIAL LIABILITIES 107 371 27,000 27,000 50 - Lotus Bakeries Financial supplement Lotus Bakeries - 53 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 mainly has fixed rate financial instruments and the floating rate debt is hedged using an interest rate swap at year-end 2022, 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 2022, the Group did not enter into any hedging arrangements in order to cover this risk. 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. 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, 2022 IN THOUSANDS OF EUR WITHIN ONE YEAR >1 AND <5 YEARS >5 YEARS Bank loans 66,540 176,615 12,950 Lease liabilities 4,178 9,648 3,918 DECEMBER 31, 2021 IN THOUSANDS OF EUR WITHIN ONE YEAR >1 AND <5 YEARS >5 YEARS Bank loans 14,138 205,967 11,727 Lease liabilities 3,439 5,830 3,506 The unused committed credit lines amounted to EUR 193,100 thousands at year-end 2022 (2021: EUR 130,536 thousands). 52 - Lotus Bakeries Financial supplement Lotus Bakeries - 55 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, 2022 are disclosed in the Corporate Governance Statement in Part 1 of the 2022 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 2022, we refer to the remuneration report included in Part 1 of the 2022 annual report. Apart from the key management remuneration, no significant transactions occurred with related parties. IN THOUSANDS OF EUR 2022 Less than one year 112,971 More than one year and less than five years 34,244 TOTAL 147,215 28. COMMITMENTS Capital commitments As at December 31, 2022, the Group has EUR 15,122 thousands of commitments (2021: EUR 35,747 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 2023 and 2024 are detailed below: 29. SUBSEQUENT EVENTS No significant events have occurred since December 31, 2022 which would have a material impact on the 2022 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, 2022, 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 2022 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 20, 2023 On behalf of the Board of Directors Jan Boone, CEO 31. AUDIT FEES Other rights and commitments Bank guarantees as at December 31, 2022 amounted to EUR 1,543 thousands (2021: EUR 1,564 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’). IN THOUSANDS OF EUR 2022 2021 Audit fees Lotus Bakeries NV 152 88 Lotus Bakeries Group 443 401 Additional services rendered by the Auditor or its related parties Other audit-related fees 111 65 Tax fees 43 107 Other non-audit fees 50 - TOTAL 799 661 54 - Lotus Bakeries Financial supplement Lotus Bakeries - 57 NAME ADDRESS VAT OR NATIONAL NUMBER 2022 2021 % % 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 0898.518.522 100.00 100.00 Biscuiterie Willems BV Nieuwendorpe 33 Bus C, 9900 Eeklo, BE VAT BE 0401.006.413 100.00 100.00 FF2032 NV Gentstraat 1, 9971 Lembeke, BE VAT BE 0730.550.847 - 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 NAME ADDRESS VAT OR NATIONAL NUMBER 2022 2021 % % Lotus Bakeries CZ s.r.o. Americká 415/36, 120 00 Praha 2, CZ VAT CZ 271 447 55 100.00 100.00 Lotus Bakeries North America Inc. 1000 Sansome Street Suite 350, San Francisco, CA 94111-1323, USA IRS 94-3124525 100.00 100.00 NBF USA Inc. 1000 Sansome Street Suite 350, San Francisco, CA 94111-1323, USA C3598146 - 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. Brassey Road, Old Potss Way 1 GB-SY3 7FA Shrewsbury UK VAT GB 938 740 100 100.00 - Lotus Bakeries Espana S.L. C/ Severo Ochoa, 3, 2a Planta Oficina 8A, 28232 Las Rozas (Madrid), ES VAT ESB80405137 100.00 100.00 AB Annas Pepparkakor Radiovägen 23, SE 135 48 Tyresö, SE VAT SE556149914501 100.00 100.00 Annas - Lotus Bakeries Holding AB Radiovägen 23, SE 135 48 Tyresö, SE Registration no. 556757-7241 100.00 100.00 Lotus Bakeries Asia Pacific Limited 5/F, Manulife, 348 Kwun Tong Road, Kowloon, HK Inland Revenue Department file no. 22/51477387 100.00 100.00 Lotus Bakeries Biscuits Trading (Shanghai) Company 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 Chile SpA Nueva Tajamar #555 OF401, Las Condes, Santiago, 7550099 CL VAT (RUT) 76.215.081-6 - 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. 4/F, 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 Summer Hill, Unit TT11, 3rd Floor, No. 1106 Sukhumvit Road, Phrakhanong Sub-district, Klongtoey District, Bangkok 10110, Thailand VAT 0105565109964 100.00 - 32. CONSOLIDATION SCOPE 56 - Lotus Bakeries Financial supplement Lotus Bakeries - 59 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 2022 2021 Net result 103,283 90,743 Non-recurring income and expenses 3,807 4,135 Tax effect on non-recurring income and expenses (873) (935) REAT 106,216 93,942 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 2022 2021 Operating result (EBIT) 136,381 119,670 Non-recurring income and expenses 3,807 4,135 REBIT 140,188 123,805 Depreciation and amortisation expenses 25,245 23,115 Impairment on inventories and trade receivables 3,992 3,384 Other 484 665 REBITDA 169,909 150,967 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; • Impairment of assets and major litigations. 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 and treasury shares. IN THOUSANDS OF EUR 2022 2021 Interest-bearing liabilities (note 21) 266,244 236,276 Minus lease liabilities recognised as a result of IFRS 16 (17,241) (12,776) Minus cash and cash equivalents (76,435) (132,160) Minus treasury shares (18,976) (9,514) NET FINANCIAL DEBT 153,591 81,826 58 - Lotus Bakeries Financial supplement Lotus Bakeries - 61 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 2022 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 16 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 2022, the consolidated income statement 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 1,095,036 and a profit for the year, attributable to equity holders of Lotus Bakeries, of EUR‘000 103,240. 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 2022, 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. Impairment testing of goodwill and brands - Notes 12 and 13 Description of the Key Audit Matter The carrying value of the Group’s goodwill and brands amounts to EUR’000 225,246 and EUR’000 143,573 respectively at 31 December 2022. 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 and industry 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 utilised 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 1 Description of the key audit matter As described in Note 1 ‘Summary of significant accounting policies’, 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 sales and 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. 60 - Lotus Bakeries Financial supplement Lotus Bakeries - 63 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 determine 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 intend 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’ [director(s)]* are described below. 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. 62 - Lotus Bakeries Financial supplement Lotus Bakeries - 65 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. Our responsibility is to obtain sufficient appropriate evidence to conclude that the format and marking language of the digital consolidated financial statements complies in all material respects with the ESEF requirements under the Delegated Regulation. Based on the work we have 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 2022 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, March 30, 2023 The statutory auditor PwC Reviseurs d’Entreprises SRL / PwC Bedrijfsrevisoren BV represented by Lien Winne Réviseur d’Entreprises / Bedrijfsrevisor 64 - Lotus Bakeries Financial supplement Lotus Bakeries - 67 CONDENSED FIVE-YEAR CONSOLIDATED FINANCIAL STATEMENTS IN THOUSANDS OF EUR 2022 2021 2020 2019 2018 REVENUE 877,451 750,251 663,289 612,737 556,435 Raw materials, packaging and co-manufacturing (311,310) (250,617) (216,376) (197,799) (184,804) Services and other goods (218,277) (192,231) (176,804) (168,966) (150,732) Employee benefit expenses (173,618) (152,857) (137,116) (123,493) (111,977)) Depreciation and amortisation expenses (25,245) (23,115) (21,001) (17,754) (12,942) Impairment on inventories and trade receivables (3,992) (3,384) (2,710) (2,135) (1,706) Other operating expenses (8,534) (8,253) (5,919) (3,254) (2,123) Other operating income 3,711 4,011 7,751 3,555 2,879 RECURRING OPERATING RESULT (REBIT) 140,188 123,805 111,114 102,891 95,030 Non-recurring income and expenses (3,807) (4,135) (4,593) (2,292) (3,005) OPERATING RESULT (EBIT) 136,381 119,670 106,521 100,599 92,025 Financial result (2,354) (2,373) (3,004) (2,514) (3,324) Interest income (expenses) (2,565) (2,766) (2,726) (4,460) (2,435) Foreign exchange gains (losses) 988 886 51 2,232 (596) Other financial income (expenses) (777) (493) (329) (285) (293) RESULT FOR THE PERIOD BEFORE TAXES 134,027 117,297 103,517 98,086 88,701 Income taxes (30,744) (26,554) (20,972) (22,317) (20,829) NET RESULT 103,283 90,743 82,545 75,769 67,872 Attributable to non-controlling interests 43 (24) (48) 857 964 Attributable to equity holders of Lotus Bakeries 103,240 90,767 82,593 74,912 66,908 IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 DECEMBER 31, 2020 DECEMBER 31, 2019 DECEMBER 31, 2018 Non-current assets 820,000 690,120 622,840 641,122 545,647 Goodwill 225,246 224,846 216,485 229,365 177,639 Intangible assets 146,735 144,745 139,966 142,709 138,887 Property, plant and equipment 428,244 307,725 258,182 263,793 219,897 Investments in other companies 16,806 9,755 4,403 2,243 2,460 Deferred tax assets 2,212 2,182 3,351 2,505 3,936 Other non-current assets 757 867 453 507 2,828 Current assets 275,036 301,972 221,387 171,507 165,925 Inventories 70,361 57,901 46,827 44,461 39,066 Trade and other receivables 120,074 105,164 89,042 84,524 78,593 Current tax assets 4,947 5,276 3,142 1,075 523 Cash and cash equivalents 76,435 132,160 81,261 40,093 45,597 Other current assets 3,219 1,471 1,115 1,354 2,146 TOTAL ASSETS 1,095,036 992,092 844,227 812,629 711,572 Equity 572,141 519,532 433,744 402,477 346,927 Non-current liabilities 266,186 289,450 261,841 239,584 198,042 Interest-bearing liabilities 196,066 218,837 198,156 158,010 116,500 Deferred tax liabilities 63,716 64,243 57,195 50,737 52,725 Employee benefit obligations 4,411 4,020 3,748 3,712 3,519 Provisions 122 116 282 285 377 Derivative financial instruments 107 371 717 2,340 2,319 Other non-current liabilities 1,765 1,863 1,743 24,500 22,602 Current liabilities 256,709 183,110 148,642 170,568 166,603 Interest-bearing liabilities 70,178 17,439 12,552 36,579 36,655 Employee benefit obligations 232 333 317 325 234 Provisions 21 21 21 21 21 Trade and other payables 172,995 154,377 118,647 118,356 111,526 Current tax liabilities 10,367 5,850 12,701 11,630 14,761 Other current liabilities 2,917 5,091 4,404 3,657 3,406 TOTAL EQUITY AND LIABILITIES 1,095,036 992,092 844,227 812,629 711,572 66 - Lotus Bakeries Financial supplement Lotus Bakeries - 69 CONDENSED STATUTORY FINANCIAL STATEMENTS – LOTUS BAKERIES NV STATUTORY BALANCE SHEET STATUTORY INCOME STATEMENT IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 ASSETS FIXED ASSETS 650,392 625,826 II. Intangible assets - 1,497 IV. Financial fixed assets 650,392 624,329 CURRENT ASSETS 44,272 38,686 VII. Amounts receivable within one year A. Trade debtors 21,784 18,603 B. Other amounts receivable 1,254 253 VIII. Current investments A. Own shares 18,976 9,514 IX. Cash at bank and in hand 2,215 10,286 X. Deferred charges and accrued income 44 30 TOTAL ASSETS 694,664 664,512 IN THOUSANDS OF EUR 2022 2021 I. OPERATING INCOME 21,784 18,506 II. Operating expenses B. Services and other goods (10,364) (4,253) D. Depreciation and other amounts written off of formation expenses, intangible and tangible fixed assets (1,497) (1,497) G. Other operating expenses (69) (77) I. Non-recurring operating expenses - - III. OPERATING PROFIT 9,854 12,679 IV. Financial income A. Income from financial fixed assets 127,495 6,533 B. Income from current assets 2 - C. Other financial income 637 2,179 V. Financial expenses A. Debt expenses (4,958) (3,813) C. Other financial expenses (194) (101) D. Non-recurring financial expenses (591) - VI. RESULT FOR THE PERIOD BEFORE TAXES 132,244 17,477 VIII. Income taxes (2,099) (3,526) NET RESULT 130,146 13,951 Result allocation A. Profit to be appropriated 1. Gain of the period available for appropriation 130,146 13,951 B. Withdrawals from capital and reserves 2. From reserves - 18,940 C. Transfer to capital and reserves 3. To other reserves 93,175 - F. Profit to be distributed 1. Dividends (36,721) (32,641) 2. Director's entitlements (250) (250) IN THOUSANDS OF EUR DECEMBER 31, 2022 DECEMBER 31, 2021 EQUITY AND LIABILITIES Equity 226,519 133,344 I. Contribution A. Share capital 3,591 3,591 B. Share premium 12,797 12,797 IV. Reserves A. Reserves not available 19,407 9,945 B. Untaxed reserves 545 545 C. Available reserves 190,179 106,466 VIII. Amounts payable after more than one year 198,455 208,311 A. Financial debts 198,455 198,455 D. Other amounts payable - 9,856 IX. Amounts payable within one year 269,689 322,857 B. Financial debts 215,433 280,182 C. Trade debts 15,372 7,561 E. Taxes, remuneration and social security 1,852 2,201 F. Other amounts payable 37,032 32,913 TOTAL EQUITY AND LIABILITIES 694,664 664,512 68 - Lotus Bakeries Financial supplement Lotus Bakeries - 71 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. 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 Belgie 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. 70 - Lotus Bakeries 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 report 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 www.duvalbranding.com Illustrations Sören Selleslagh www.sorenselleslagh.com Photography Bert Luyckx www.bertluyckx.be Jens Mollenvanger www.jensmollenvanger.be WWW.LOTUSBAKERIES.COM 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