Annual Report • Apr 21, 2017
Annual Report
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This is what drives us.
Encompassed in a single word: ZEAL. We apply this zeal to accomplish our mission: to bring delicious high-quality products to every dining table. And for this reason, we endorse our name Ter Beke with:
DRIVEN BY THE ZEAL FOR YOUR EVERYDAY MEAL
| Our mission | 2 |
|---|---|
| Contents | 5 |
| Ter Beke in brief | 6 |
| Message from the Chairman | 8 |
| Our core values | 10 |
| Interview CEO | 12 |
| Headlines and key figures in 2016 - Prospects for 2017 |
16 |
| Business overview | 19 |
|---|---|
| Strategy and innovations Processed Meats | 20 |
| Strategy United Kingdom | 24 |
| Rebranding | 26 |
| In search of the best ham | 28 |
| Family day | 32 |
| Corporate social responsibility | 34 |
| Strategy and innovations Ready Meals | 38 |
| Logistics & supply chain | 46 |
| Experience and renewal | 48 |
| Leadership Development | 50 |
| Young Potentials | 52 |
| Corporate Governance | 56 |
| Stock and shareholder information |
76 |
| Contact information | 79 |
Consolidated financial statements 81
Centre for the slicing and packaging of meat products (NL)
Centre for the slicing and packaging of meat products (NL)
Centre for the slicing and packaging of meat products (BE)
6
3
2
+1.050
7
The group has two core products: processed meats and fresh ready meals. It has 7 production sites in Belgium and the Netherlands and employs approximately 1,650 employees. Ter Beke generated a turnover of EUR 418.6 million in 2015.
Joint venture The Pasta Food Company established in Poland (2011).
Producer and slicer of processed meat products for Benelux, UK and Germany.
The policy set out by CEO Dirk Goeminne's team has made Ter Beke by far the most efficient performer in the EU in the large and medium-sized segment of our industry. This has been partly thanks to the ROCE (Return On Capital Employed). Ter Beke has very little debt and is strongly focusing on developing talent, its organisational structure and its company culture.
I do not mean to sound self-satisfied. Despite the good results, the management and the Board of Directors believe that we still have to improve a lot more.
You only have to open the papers and read the editorials to be confronted with social and political doom and gloom, which in some cases is translated into negative interest yields for investors. Despite this, there are still sometimes surprisingly positive economic signals in Ter Beke's markets. Both of these developments will influence our strategy.
The zeitgeist might best be described by the term 'uncertainty'. Uncertainty can have a paralysing effect on people and businesses. But it can also be an incentive to accelerate the development of skills, responsiveness, financial reserves, qualitative knowledge, networks… It is also important to study each of the opportunities that presents itself: will it make a lasting contribution to Ter Beke? We also see that the costs of acquisitions are often much higher than the rewards in the current market.
The Board of Directors and the management wish to thank all stakeholders for their efforts: they had an important positive effect on the market value of the company and its position as supplier and employer. In our experience, employees and partners who are able to contribute to this positive trend are happy to work together with Ter Beke.
We also believe that the uncertain situation described above is actually stimulating some parties to invest in companies like Ter Beke, because we do not run global and political risks, we couple familyscale investment to talent that knows how to change, and we have a sensible dividend policy that focuses on M&A opportunities that create sustainable added value.
I sincerely hope to meet you at our annual general meeting, when various other management members will also be present (as always); we are there to answer any questions you may have.
Your Chairman Louis-H. Verbeke
"Ter Beke has very little debt and is strongly focusing on developing talent, organisational structure and company culture."
Professional relationships based on mutual respect, confidence, willingness to listen and support. Commitment to achieving the Ter Beke objectives together.
INNOVATION
FOCUS ON RESULTS
Offer solutions for current and future demands of customers and consumers.
Communicate and work honestly and openly with business and social partners.
He says that a CEO is only in the company temporarily. It's not healthy to have the same person in that role for too long. A period of five years should keep the CEO on his toes. 2016 was Dirk Goeminne's fourth year at the helm of Ter Beke. "The first two years are to look around, the third is to say what should change, and from the fourth year onwards things start to happen. The fourth and fifth years are vital. This year we have put a great deal in motion, next year we will be putting the icing on the cake."
Ter Beke was established in 1934. The company that started as a small butchers' shop is now a group with several locations in Belgium and abroad. Both the size as well as the geographic diversification increase the need for an enthusiastic and uniform story. Which is why last year, Dirk Goeminne together with Bas Hauwert, worked hard on a rebranding.
"The story of Ter Beke must come more from within. We want our employees to help us tell our story to the wider world. Everyone should be able to explain how good it is to work for Ter Beke, or to be a client. For this, together with consultants, we have developed a toolkit for external communication. In this we are working towards One Ter Beke. But we want to go a step further: it is One Ter Beke & One Family."
Even though Ter Beke has already grown into an international company, the values of the family-owned company are still present. This should be more explicit in our communications with the outside world, but also among ourselves: "We must involve our employees in the Ter Beke story, we must make it clear: you are part of this family. As part of this effort, we made a film during our family day. We visualised the symbolism of ONE in the O, the N and the E. We formed these letters with everyone present and everything was filmed by a drone. We have supplemented the footage with testimonies in which our people explain why One Ter Beke is important to them. Not only Belgians and Dutch, but also English, French, Spanish, …"
That family feeling, that team spirit - we are going to apply that now on the work floor. The rebranding will help our sales people to better explain our story to our clients. Internally, working together and consultation will be further encouraged at all levels and in all departments: operations communicates with sales, product development with purchasing, technicians with the people on the work floor so they can operate the machines better, and so on.
Dirk Goeminne doesn't make hasty decisions. First think carefully, process internally and only then take it to the wider world: "We have been working on internal matters a lot. Last year we listened to our clients in the Safari project. We gathered all that information and we now want to communicate it as one package, internally and externally. We will do more external communication now - publicity, that is."
"We are working towards One Ter Beke. But we want to go a step further: it is One Ter Beke & One Family."
Ter Beke wants to create growth and value for all its stakeholders. To achieve this, we work to implement the following strategic objectives.
Satisfied customers and consumers are our primary objective. They make us who we are.
Every day we strive to excel in what we do by doing the right things in the right way. We do not compromise on the quality of our products and services.
We endeavour to keep the direct and indirect costs of our operations under control and reduce these wherever possible. Every day we endeavour to organise our activities as efficiently as possible, without compromising on the quality of our products and the service to our customers.
We consider innovation in products, processes and services as the driving force behind our strategy and our organisation. The development of new products, services and production processes is an absolute prerequisite for our future growth.
Quality is an important factor in this. It goes much further than excellent products, it affects the operations, the processes, the employees and the systems. The ERP system, implemented last year in the Ready Meals Division, was rolled out to the Processed Meats Division in 2016. In 2016 some more senior people joined our team, such as our new purchasing director. "Quality must be everywhere. We have appointed an integrity manager who monitors quality standards throughout the organisation. He has prepared our factories for the audits conducted without notice. And he is also working with us at the inception of the RACI project that will take Ter Beke to a higher level of management and quality."
The processed meats market is quite stable. Collectively, we eat less meat while the population continues to increase. Yet Dirk Goeminne still sees scope for growth: "We will not grow because more meat will be eaten, we will grow by gaining a greater market share for both divisions. You can acquire companies to grow, but we must not forget organic growth. For this, our innovations are vital. And for this, we will have to think bigger and adjust certain working practices."
Ter Beke is moving. There was the launch of Come a casa Delicious, a completely new range of lasagne. The Netherlands tasted Ter Beke's organic range and tapas. Innovation is not limited to products, but includes packaging too: the new multilayer packaging was praised as innovation of the year by one of our clients.
"We have more innovations on the shelf for the coming two years. We will tap into new segments close to home, and also take our products to other regions. For the halal lasagne we are in discussions with retailers in the Middle East and in Indonesia. If our ingredients are international, why shouldn't we market our products worldwide too? Chinese people who have accumulated a little wealth, delight in Western products. So we will also target the Chinese market with our lasagne, albeit with a slightly different recipe, and of course, a Chinese name. The first containers from France are already on their way. In 2017 we will launch the flexi processed meats – a combination of meat and vegetables."
Until recently, pâté was the most international product. It scored exceedingly well in the United Kingdom. But last year, Ter Beke lost two of its largest clients. And then, mid-2016, we had to cope with the fallout of Brexit: "The British pound has dropped 15%. Even though we have contracts in euros and pounds, it has still had an impact on our profitability. And English retailers are turning inwards, more frequently they seek national suppliers, or if they have suppliers in Europe, the products have to be made from British meat. All this has not made doing business with Britain any easier."
Events on the other side of the Channel have forced Ter Beke to revise its approach. Ter Beke appointed an English account manager, he now represents the interests of the Belgian company and from now on, will introduce our own brands.
"In fact our results in the first half of 2016 were fantastic. We were heading for a phenomenal year; without the loss of the pâté contract we would have broken all records. Despite this, we still hit our pre-defined budgets. So, all in all, I'm quite satisfied."
For the next few years, the consolidation of the market will demand our attention. However, retailers consolidate faster than manufacturers, they determine the rules of the game. "Our customers are gaining in size. Two of our largest clients have already merged. This has also had an impact on Ter Beke, the retailers are becoming more powerful. At the same time, the discounters already have more than 40% of the market. So we must act here too. This is also a source of innovations and new markets, so we must remain alert."
At the end of 2016, the main products in the processed meats division were salami, pâté, ham, chicken and cooked processed meats. Expansion here is essential: "For cooked ham we will develop a premium product, and for this we will even breed our own pigs. In the Netherlands we already do something similar with chicken fillet from Hubbard chickens. But it is for salami in particular we must pull out all the stops. It is our most important product. We are THE salami experts in Belgium. Salami is an ideal snack, people eat it everywhere, in cubes, in sausages, … You can make it just as you want: with chicken, healthy, with lots of salt, with only a little salt. But it is only bought in the Benelux, and I think this is a missed opportunity."
Goeminne will remain CEO until 2018. With much ambition. "I want to sell lasagne worldwide and I want to sell processed meats outside the Benelux. Lift the company to a turnover of more than a billion. And if that happens while I'm at the helm, I will be able to reflect on my period as CEO of Ter Beke with great satisfaction, I will have done my bit."
In 2016, Ter Beke achieved its best results ever. The total Group turnover increased by EUR 22.2 million (+5.6%) from EUR 396.3 million to EUR 418.6 million.
Net profits increased by 22% and the net financial debt was halved. The Group achieved this by launching new products, concepts and packagings. This approach will be continued and expanded in 2017.
In 2016, an amount of EUR 14.8 million was invested, primarily in the continuation of efficiency and infrastructure programmes at the various sites and the further roll-out of the ERP package. Also in 2016, the Group invested in two production lines for its Multilayer Packaging concept for processed meats. The launch of these two production lines went extremely well. In 2015, investments amounted to EUR 16.9 million.
The Board of Directors proposed to the General Meeting of Shareholders to distribute a gross dividend of 3.50 EUR per share. This will ensure that the company retains sufficient resources to implement its growth strategy.
No events have occurred after the balance sheet date that could have a relevant impact on the results as represented in this annual report.
In 2017, Ter Beke will continue to increase its focus on the profitability and growth of the product range and on extensive cost control and reduction measures. The group is confident that, barring unforeseen market circumstances, the results for 2017 will surpass those of 2016.
Recurring operating result (REBIT) +1,7% 15.3 13.9 12.8 16.2 18.6 18.9
2011 2012 2013 2014 2015 2016
+9,5% 2011 2012 2013 2014 2015 2016 Net cash flow 27.1 25.6 24.3 26.4 29.3 32.0
Strategy and innova tions processed meats
Interview with Bas Hauwert, Commercial Director Processed Meats
Bas Hauwert, a Dutchman, was a new face in the executive committee in 2016. He brought his experience from Ter Beke Netherlands to develop a strategy for the processed meats division. He will respond to a market in flux and prepare Ter Beke for the future!
TER BEKE / ANNUAL REPORT 2016 21
"For me, 2016 was the year I made the switch from Ter Beke Netherlands to the processed meats division for the whole group. At this level you have a better view of what we as Ter Beke do and you also have full responsibility for that. This year, I have learned a great deal by talking to people, and I've given a lot of thought to the vision and strategy for the processed meats division."
"The market for processed meats has been under pressure for many years. Nevertheless, in 2016 we succeeded in growing faster than the market. We sell more of our own products, and one of our great strengths is our service slicing of processed meat, covering slicing, packaging and distribution. In this way we create value for our clients on two fronts."
"We also develop new products. Consumers want to know more and more about where a product comes from, how it's made, and the story behind it. The Netherlands is taking the lead in this trend. They already have the 'Good life' label that awards one, two, or three stars to the meat. We don't see that as a threat, but as an opportunity. And we want to be a partner in this for our clients. We work with specific breeds, born and bred locally. For a Dutch retailer we make chicken fillet from the Hubbard chicken. The quality of these chickens is much higher than the standard chickens imported from Brazil or Thailand. We do the same for our cooked ham. We are going to breed our own pigs, in ideal circumstances, so we can produce the best cooked ham. So you see, we're not just doing what the client asks, we are even being proactive in this trend."
"There's a general trend at the moment to eat less meat and more vegetables. In response to this, in 2017 we will be launching a completely new concept of flexi processed meats. This range consists of processed meats with no less than 50% vegetables, such as chicken with Romanesco and roast pork roulade with cauliflower. And you will still be able to recognise the shape of the vegetables."
"We will market the flexi processed meats under the 'Fijn Vleesch en Groenten' (Fine Meat and Vegetables) concept. This innovation ties in with our shift to authentic products, and is also reflected in our less perfect - less polished products such as meat loaf and roulade. The vegetables will certainly introduce colour to the processed meats shelf, which at the moment gives the impression of a sea of pink."
COUNTRIES WHERE PROCESSED MEATS ARE SOLD
"We are not just innovating with our products, we are also innovative in our packaging. In 2016, we launched the multilayer packaging for a Belgian client. This package has two compartments: you can open the first part where there are three or four slices, and then a second part underneath with more slices. This means that consumers can use the sliced meat at different times, so they don't have to waste so much."
"We have distinguished ourselves with this packaging. We are the first to market this multilayer pack with some 30 products and this has pushed up our sales.
Nevertheless, the product is the same and consumers waste less. But you can persuade people who only want a small amount to still buy 100 gram or 150 gram, because it will stay fresh. The best before date of the product doesn't change, but you can decide for yourself how you make use of the freshness packaged in the second layer. This client called our multilayer packaging the product innovation of 2016."
Ter Beke has ambitious growth plans for its processed meats division. The aim is to double the revenue. The strategy is based on collaboration between the various departments, with a clearly defined plan for sales as well as operations, so that the two strengthen each other. There are five strategies: a preferred supplier position, growth, innovation, sustainability and all of this is being implemented by a top team of employees.
With these building blocks, each country will pursue the Ter Beke strategy in its own manner to achieve the target.
"Another innovative project is a range of tapas that we have launched through a Dutch retailer. We are really pleased with the volume. Tapas is a fast growing market in Belgium, the Netherlands, Germany, and the United Kingdom. Meat products, such as meat balls and little chicken kebabs, feature in this range. We would like to develop this further, if the retailer is interested too."
"Our service slicing model plays the leading role in this innovation. These tapas products come from all corners of the world. We can process these for our retailers. In 2017, we want to expand and optimise the range."
"We have a strong position in fine processed meats and slicing in Belgium and the Netherlands. In Germany and the United Kingdom we have another position; there, we are a supplier of pâté. Since Brexit, we see that the British are more inward looking. They are opting for manufacturers in their own country, and we as Ter Beke were not able to respond. We have lost two large retailers in the United Kingdom. We were market leader in pâté and we have now lost that position."
"We worked in the United Kingdom with one distributor. And so we were dependent on the way someone else sold our products. For this reason, we have now appointed a dedicated country manager, David Girdler."
Strategy and innova tions processed meats
Interview David Girdler, Country Manager United Kingdom
2016 was not the best year for Ter Beke in the United Kingdom. Following the loss of two key clients, Ter Beke is no longer the market leader. But at the same time, this situation offers new opportunities. Enter a new Country Manager: David Girdler, a true Brit.
"Sometimes you lose part of your business, but that enables you to evaluate your activities and make a new start. With a fresh perspective, I could play Ter Beke's trump cards to devise a new vision."
"The United Kingdom is the largest pâté market in Europe. In some cases we worked through an agent, in others we worked directly. Now we have opted to talk to retailers ourselves, and a large number are still our clients. We are going to build on this foundation."
"Ter Beke was an unknown pâté supplier to private labels. But we are so much more than that. We have the largest range of fine processed meats and British retailers don't know that. Neither do they know anything about our innovations. So it is my task to offer them a different perspective on what Ter Beke can do."
"We have created a brand specifically for the British market, where we previously always worked under private labels. We will be launching this in 2017. We now already supply gluten-free and lactose free pâté, products which we introduced first in the United Kingdom."
"Ter Beke has been making pâté for 80 years. The British public appreciates its origin and authenticity. We are going to target consumers directly and tell that magnificent story about Ter Beke. Surely you don't want Brussels or Ardennes pâté made in Sheffield or Manchester. No, those products must come from Belgium."
"In 2017 we are going to launch various hams, with gin and beer. These are products we already have within the Ter Beke range, but the British people don't know them yet. What matters is that we select the right products and adapt them to British tastes."
"We will have to wait to see what consequences the Brexit has. But whatever happens, it will be different. The British pound has already dropped by 15%, so our profitability has already taken a knock. But we have confidence in the future. There are still very many opportunities in the United Kingdom."
"I have chosen Ter Beke because of the people and the passion. There is a vision that I want to spread to the United Kingdom. I think I can make a difference here."
strategy United Kingdom
"Ter Beke has a fantastic story and the British love a good tale"
"We must work together as one family to achieve even better results."
One Ter Beke, One Family. Ter Beke is a collection of companies, but forms a unit, a family. Traditionally, Ter Beke is a family-owned company and Ter Beke wants the family values to live on in the international company we are today.
"It isn't about what you supply, but why you supply it", says Bas Hauwert. "So, if we want to convince our customers that we are the best supplier, then we must also explain why." And everyone at Ter Beke must give the same answer to this question. For this reason, senior management has outlined a clear vision.
The strategy is based on the question: how can Ter Beke create value for the client? According to the theory of value creation, you can only excel in one of the four elements: customer
satisfaction, innovation, impeccable service (operational excellence) and the best price/quality ratio (cost leadership). Ter Beke, on the other hand, is continually seeking the right combination of these elements. Innovation is required, but at the time it must be performed properly, and in close consultation with the client and at an affordable price.
Ter Beke also wants to involve every employee in this story, says CEO Dirk Goeminne. "Everyone is part of the family, everyone has a contribution to make. We work together to achieve even better results." The symbol for this is the ampersand, as the connection between all parts of Ter Beke. The people in the factory have the same goal as the technicians and the sales representatives, and vice versa. The same is true for our clients: Ter Beke and its clients work together as partners.
Interview Wim De Cock, COO (Ter Beke) and Stefaan Lambrecht, CEO (Danis)
Wim De Cock (Ter Beke) and Stefaan Lambrecht (Danis) happily don overalls over their suits and wellingtons on their feet; they've obviously done this before. The pigs sense our presence and grunt when we enter the shed. They congregate at the back of the pen. "We raise our pigs sustainably, but also based on a scientifically proven system," Stefaan Lambrecht proudly explains.
TER BEKE / ANNUAL REPORT 2016 29
You could say that both these men are fond of working with pigs; it is their common ground. "We want to work with pigs from a single breeding line, which gives us complete control of the product and guarantees us the best quality in cooked ham. Currently, there is too much variation in the pork that is delivered to us. The raw material of this new premium product – the meat – needs to be of constant quality," explains Wim De Cock, Operations Director with Ter Beke.
To this end, Ter Beke is collaborating with Danis, a pig breeder and producer of animal feed. "We are a family-oriented company," explains CEO Stefaan Lambrecht. "We work together with local family-run pig farms and partners in the chain to be able to offer innovative and customer-oriented concepts in the pigmeat industry." Danis will breed several lines of pigs for Ter Beke in order to find a breeding line that offers the best combination of meat yield and taste. Ter Beke's aim is to produce the finest cooked ham in Belgium by taking control of the complete chain, from pig to ham.
"We launched this project because cooked ham is one of the only processed meat products where the raw material is so defining for the appearance and the taste of the final product," explains Wim De Cock. "In many other meat products, such as salami and pâté, you cannot recognise the original raw materials in the final product. We want to develop more knowledge
and expertise in this segment. The key to a successful cooked ham is to use the very best raw materials. We turned to Danis because they are the best in Belgium at breeding pigs in an environment that is completely controlled for everything from genetics, feeding and housing, to the slaughter of the animals.
The project started in 2016, when the first sows were inseminated and the breeding programme started. Ter Beke produced the first hams from these breeding lines in 2017. "We give direct feedback to Danis", says Wim De Cock. "We let them know if the ham is too pale, too light, or has too much or too little fat. Danis always responds immediately, because we are both responsible for what lands up on the consumer's plate. We have short lines of communication and so we can get very quick results. Together, we manage the entire chain."
A pig is very susceptible to stress. When they get stressed, their muscles acidify. The muscles then tend to lose moisture after slaughter. It also makes the hams pale and affects the structure of the meat. To improve the breeding line for further processing, Danis is experimenting with aspects such as feed, housing and genetics. The entire process is scientifically based: nothing is left to chance. The result is a matrix in which one factor is changed at a time, says Stefaan Lambrecht. "We test every variation, however small, and only once we have positive results do we go on to the next step. The result is added value for the consumer. For example, we are strongly committed to reducing the use of antibiotics and the occurrence of salmonella. All feed raw materials we receive are carefully analysed, and if we detect any deviations the products are returned to the supplier. We carefully monitor the entire chain and make adjustments where necessary." They also work solely with a local family-run slicing company, so the quality of that part of the chain is guaranteed too.
After two years, Ter Beke intends to evaluate which breeding line produces the best ham. This will be based on independent parameters such as the slicing yield of the carcasses, the pH value of the ham upon reception, the drip loss, the slicing loss of the finished product. And, most importantly, the findings of the taste panels. "We intend to become masters of the entire chain," explains Wim De Cock, "from the quality of the raw material to the production process. So we have set about acquiring expertise, of which raw materials knowledge is an important part. We hope that the end result will be a ham with the best taste, texture, bite and appearance. Once we have determined the best breeding line, we will have control of the entire chain."
Wim De Cock (left) and Stefaan Lambrecht (right)
An important part of this project is the pig carcase balance. In the initial test phase, Ter Beke purchases whole pigs from Danis. The shoulders are used in Ter Beke's lasagne and salami; the liver is processed in the pâté. An external partner produces the bacon. However, the ham is the selection criterion.
Ter Beke and Danis both have the same goal, and that is to serve the consumer. Stefaan Lambrecht: "If the consumer wants to eat less meat, then what they eat should be of the best quality. The consumer must be able to have complete confidence in what they eat. That is our mission." Wim De Cock agrees completely. "We want this to be a sustainable process that will culminate in our own Ter Beke pig."
The family day that Ter Beke holds every two years was once again a great success in 2016. This time the venue was De Nekker in Mechelen. Employees from all our locations in Europe were invited and were offered transport. The best represented location, with 20% of the participants, was our location in Wommelgem. But even 2% of employees from our locations in Spain and France were present. A total of 930 people enjoyed the performances and entertainment. And naturally there was ample opportunity to sample our own Ter Beke products. A wide range of lasagne, pizza, moussaka and penne products were on offer, and also some meat products, including Coeur d'Ardenne, Cobourg Classico and Rubens ham. All in all, no less than 205 kilograms of meat products and 500 kilograms of ready meals were out on display!
new employees joined Ter Beke with contracts of indefinite duration (2016)
20% (2016) 1,619
fulltime equivalents (2016)
1,588 fulltime equivalents (2015)
As R&D-Q.A. director, Guido Bresseleers is responsible for
In 2016, we asked all stakeholders which aspect of Ter Beke that we can improve them by 2020."
Consumers increasingly consider the product origin to be important. Digitalisation can help here. Ter Beke is already working on a project with a German client that enables consumers to scan a QR code and go to the relevant page on the client's website. There the consumer can read which farm the meat in the lasagne comes from. In Belgium, the same approach is in the pipeline. Naturally, the origin of the ingredients can also be found on the packaging.
Audits confirm the quality of the products. Each Ter Beke manufacturing unit can be audited at any point in time. During these inspections, which have been around since the nineties, the auditors check to what extent the food safety, products and processes within the factories meet the IFS (International Food Safety) and BRC (British Retail Consortium) quality standards. Until recently, it was customary for the annual audit to be announced : a date was chosen and everyone could prepare for it. In 2016 Ter Beke indicated that the auditors may now come without giving prior notice. This is a significant step: people are now ready for inspection every day and not just on the day of the audit. This openness forms part of our CSR policy.
The factories in Veurne, Wanze and Wommelgem were audited this way for the first time in 2016, with good results. Waarschoot, Marche-en-Famenne and Wijchen had their first audit without prior notice at the beginning of 2017. A similar inspection at Ridderkerk is also expected later in 2017. After that, all locations can expect new inspections.
Purchasing locally and keeping the supply chain short is also part of our CSR policy. 95% of the meat is sourced from within the EU15 countries, and from Belgium and the Netherlands in particular. That also applies to 82% of the other ingredients. In 2013, these percentages were 91% and 70% respectively. Ter Beke has made considerable progress in this respect, thanks to specifications and stricter standards demanded from the suppliers.
The use of palm oil has decreased by 42% compared to 2013. That is largely due to the ready meals, which hardly use any palm oil, and processed meats where almost none is used.
There are two arguments for the use of palm oil: on the one hand it produces an enormous amount of nutritional calories per hectare, in that respect palm oil plantations are much more sustainable than rapeseed oil fields. On the other hand, palm oil is produced on the other side of the globe and sometimes involves child labour, while Ter Beke always prefers ingredients produced locally. And finally, palm oil is one of the most saturated fats. For all these reasons, Ter Beke has decided to evolve away from using palm oil.
If it cannot be avoided – usually because a client does not want to replace this ingredient at this point in time – Ter Beke selects palm oil with the Mass Balance RSPO Label. This means that the sustainably produced palm oil that Ter Beke purchases is actually incorporated into Ter Beke products. This accounts for 90% of the palm oil used, while the remaining 10% bears the Book & Claim Green Palm label. This is mainly a remnant from 2015; however, the use of this type of palm oil will gradually be eliminated.
. Usage of palm oil in tonnes, per year
The declining use of palm oil reduces the amount of saturated fats in ready meals. In absolute figures, this is a reduction of 130 tonnes. At the end of 2016, Ter Beke reached an agreement in the Netherlands with the retailers and the government for a 10% reduction in the amount of salt and saturated fats in products by 2020. Ter Beke is giving priority to the products with the highest levels and has undertaken not to increase these levels in products that already meet the standard. In Belgium, talks are ongoing with the retail sector, but consultations held in previous years did not lead to an agreement about salt reduction.
The share of vegetables in the ready meals is 31%. However, Ter Beke would like to increase that percentage. Portfolio management and marketing can also contribute to this by promoting existing products containing vegetables. The ambition is to increase the share of vegetables to 45% by 2020.
Ter Beke has teamed up with external partners for energy audits at the various locations. This has resulted in energy-saving measures, such as the installation of LED lighting and combined heat and power installations. In this way we have been able to reduce electricity consumption of the whole group by 4% compared to 2013. Gas consumption has remained stable, despite continuously increasing production volume.
operating instructions are drawn up in greater detail for train-
The large-scale map shows the various possible routes and
Since Ter Beke sold less processed meat in the United Kingdom in 2016 (see page 24), less meat has been purchased according to specific animal welfare specifications. There was a reduction from 10% to 7%. At the same time, in the Netherlands, Ter Beke has committed to process pork and chicken with the 'Beter Leven' label in both processed meats and ready meals in 2017. So we can expect this percentage to increase again. Thanks to the use of the 'Beter Leven' meat with 1 star label, the share of non-castrated pork will also increase.
Male pigs are usually castrated. In the future, Ter Beke would like to stop using pork from castrated pigs. But 6 to 7% of boars develop an unpleasant smell and their meat may have a different flavour. In 2016, we conducted further research into the effect of non-castrated pork on the taste and smell of the products, the extent of the risk, and whether and how the specifications need to be adjusted.
Ter Beke does not want to process meat from animals that were not stunned before slaughter. For this reason, we decided to use chicken rather than beef in the halal lasagne; because currently there are no conclusive guarantees that the cattle are slaughtered painlessly.
No less than 95% of the eggs processed by Ter Beke are barn eggs. A further switch to outdoor free-range eggs is not appropriate because of the mandatory indoor confinement of poultry due to the recurring bird flu threats.
Again in 2016 Ter Beke worked on reducing waste. Two specific projects stand out:
Ter Beke investigates opportunities for recycling together with its suppliers. Wherever possible, packaging is manufactured from R-PET, recycled plastic from PET beverage bottles. In future, the plastic foils we use will also largely consist of R-PET. At present, Ter Beke is focusing on the bottom part of the packaging for processed meats and ready meals. By the end of 2017 we aim to only purchase bottom packaging that is contains 40% R-PET.
Ter Beke prints all its product labels itself, the labels are stuck on backing paper. Rather than throwing this away, the backing paper is collected and sold to a party that uses 100% of the material to produce recycled backing paper for labels. This is a very specific project that we piloted in Wommelgem which in 2017 will also be implemented at our Marche-en-Famenne and Wijchen locations. This approach has enabled us to reduce waste by 200 tonnes and also increases reuse of materials.
Ter Beke invests in innovation, research and development. In addition to new products and packaging, we also conducted research projects in 2016 into the use of biofilms, reducing phosphates, lactic acid bacteria, and alternative meat curing processes. In 2016, a number of students from the Catholic University of Leuven worked together with Ter Beke for their thesis.
The number of work-related accidents decreased by 8% compared to 2015. In 2016 there were 70 work-related accidents and 1700 lost calendar days.
Interview Christophe Bolsius, Director Ready Meals
Christophe Bolsius sees the bigger picture. He aims to conquer the world with Ter Beke's ready meals. For starters, in 2017 he launched a halal lasagne that he wants to freeze and ship to Asia. And the Belgian market can also expect new, healthy products.
past year we have worked very hard on
in 2016. In Scandinavia, the ready meals a considerable margin, we supply no less than 80% of the market there. And we are Republic, Hungary and Croatia."
"They are following the Western European model and the market is similar in terms of retail outlets and disposable income. We recently entered the market in the Baltic States and Romania. And everything is produced and supplied from Poland."
Nearer to home, Ter Beke became 'preferred supplier' of lasagne to one of the large Dutch retailers. Various flavours are offered under their own brand. This has resulted in substantial growth for our northern neighbours.
"We always take account of the specific local flavour profile. The French have different flavour preferences to Belgians, Swedish people like to eat fish, and the Spanish like their food to be spicier. There are countries where no pork is eaten at all, there chicken and beef are preferred. We base our flavour profiles on research and analyses conducted among consumers, and then we fine-tune our products to these preferences. This is how we want to become market leader."
Lasagne consumption per capita in Belgium is twice that of the Netherlands. Furthermore, the number of butchers decreases each year by approximately 6%, yet this still forms an important segment.
"The butcher buys our Vamos lasagne. The lasagne is supplied in large trays from which the portions can be easily served. We also supply aluminium trays so the butcher can prepare portions when business is quiet, and we give tips for attractive presentation. In this way, our culinary consultants help to increase turnover in the shops. The lasagne in the display still looks very fresh. We do not use any synthetic ingredients for this. The quality of the end product is high because we use good quality ingredients, such as full milk in our béchamel sauce. And the butcher appreciates all this effort. In 2016, our representatives have won many new clients. The penetration of Vamos among butchers has risen considerably. Vamos really is a strong brand."
Christophe Bolsius also fosters the ambition to make the Wanze and Marche-en-Famenne factories completely free of palm oil. This means that the Vamos products will no longer contain any palm oil. Target date is the middle of 2017.
Today's consumers travel a great deal, they seek new experiences and want to be spoilt. In 2014 and 2015, Ter Beke conducted a large survey and integrated the insights gained into its innovation strategy. Last year, Ter Beke began to reap the fruits of this hard work. The first newcomer was Come a casa® Delicious.
"We have developed a totally new concept and launched three flavours: Lasagne Royal, Farfalle Pancetta Formaggio and Penne Chorizo. These have
been in the Belgian shops since September. We respond to consumers who wish to treat themselves without having to go out to a restaurant. A quick meal should also be a good meal. We target people with busy lives who want to eat something hot and tasty between getting home from work and dashing off to the gym, and who are prepared to pay for this convenience. We give these consumers the impression of a home-made meal."
It took almost ten months to develop Come a casa® Delicious; it was quite a challenge for the various departments involved.
Everything began with a chef who developed a completely new recipe. As soon as that was ready, it was tested among consumers. When the green light came, we switched to large operational formats. The Delicious meals are packed in a wooden tray. Ter Beke even researched how consumers would respond to using wood in the oven.
"The Come a casa® Delicious is made with high quality ingredients and fresh toppings. It's a tremendous balance exercise to get everything from the kitchen into a wooden tray via a large industrial process. This is a fresh product, so the shelf life is limited. That means we have to deliver promptly; and so we developed a whole new logistics system."
"With a Come a casa® Delicious meal consumers can spoil themselves."
Delicious is a topper. We regard for disposable nappies.
pletely new range in 2017.
"In 2017 we will launch halal
Islamic populations. The Middle East and Asia will follow, that is
ping transport generally takes
Poland, to serve the entire Cenwe do not yet have a foothold."
supply. I want to go a step fur-
panies is low, most products are
play in the Ter Beke innovations.
was Amsterdam, the Walhalla of people to be successful with
Scandinavia PHASE 2 United Arab Emirates Morocco Algeria Tunisia Hong Kong Singapore Malaysia
EUROPE
ASIA
In 2016, Ter Beke took the Vendor Managed Inventory concept to a higher level. We have already been working with this concept: clients do not place orders, but Ter Beke ensures that all products are in stock. This year for the first time, Ter Beke supplied a Dutch retailer from the three different departments: Processed Meats, slicing, and Ready Meals. That required changes to the planning and production schedules.
The new halal lasagne will be a major challenge for logistics in 2017. Ter Beke will freeze products for the first time to extend the shelf life considerably. This also means that clients will hold more stock themselves, and so not place orders so frequently. This means a major change to the Ter Beke production schedule. The halal lasagne will be the first product to be supplied outside Europe: the transport will be over longer distances and, of course, the lasagne will remain frozen for the entire journey.
In 2017, Ter Beke will work with the same ERP software in all departments to structure and simplify each business process. We implemented the software in the Ready Meals Division at the end of 2015. In 2016 we resolved the remaining teething problems in the system. Fortunately, our clients did not notice any interruption to service. In 2017, the meat department will also start using the software.
The new ERP software made it difficult to avoid having overstock of ready meals in 2016. The standard in the food sector is about 0.5% overstock. Ter Beke was regularly above this level in 2016 and we will work on reducing this in 2017. We donate a proportion of our excess meals to organisations such as foodbanks. In the start-up phase, the supply of the multilayer packaging for processed meats was not always sufficient. Demand was greater than supply.
The launch of Come a casa Delicious had an impact on the logistics due to the limited shelf life of these products. As a result, the number of night time deliveries increased considerably. Manufacturing during the day, delivering at night, and on the shelves in the shops the same day. This way, Ter Beke could guarantee sufficient shelf life for the consumer.
"I've been working at Ter Beke for almost forty years, I've never worked anywhere else. I started as an engineer in technical support and in the 1980s moved into logistics. I shall retire in 2018. But I'm really enthusiastic about my last few years at Ter Beke."
"I look back fondly on the past four decades. Growth is in Ter Beke's genes and I've always been happy to grow along. The most challenging periods in my career were always just after an acquisition. That is when the existing corporate culture meets a different culture, other habits, alternative working practices. I find that very enriching."
"I really admire the young people who join the company. They often have to find their way within the organisation, but they are motivated and flexible. I say to these new and young people: be mobile. Look at the complete product chain, not just the aspect you're working on."
"We're on the right track with our CEO Dirk Goeminne. We're not relying on our past performance, we're looking to the future. New markets, new worlds, there is a clear plan. Ter Beke is a solid company, and even without me, is prepared for the future."
"I started working at Ter Beke in October 2016. I said to CEO Dirk Goeminne: 'Your Majesty, give me 100 days'. I wanted to gain my own impression of the way that the purchasing works and what action I want to take within the purchasing division."
"Twenty years ago I also worked at Ter Beke. I had just graduated and I started as product manager. Noël worked here then too. In the 1990s, Ter Beke was a completely different company, with only processed meats. No one could imagine the pre-packed sliced meats and ready meals that we market today. Eating habits were quite different then."
"Ter Beke has become much more dynamic and innovative. The customer is central to everything we do. So this is why we should dare to question everything, nothing is permanent. We should remember that there will always be a better way
to do things. I want to apply this principle within the purchasing department too. It is our job to procure ingredients and other resources wisely. That means that we must purchase smartly, better than the competition. I want to provide the best possible service for our organisation. For example, we research which ingredients and packaging are most suitable for new products. But we also think along with investments in the factories, we research where we can get the best deal for our energy needs and help colleagues with their lease cars, and so on."
"The style of leadership has also changed. I see myself as the trainer of the team. The trainer gives directions but is not actually in the field. I am doing my best to enable my team to perform at a higher level, by coaching them and seeking improvements together with them."
Ter Beke invests in people. Good leadership plays an important role in this. For this reason, in 2016 Ter Beke organised a Leadership Development training course for 38 employees from three groups: senior management, the management team and several young people or those who manage a smaller team. During the two-day final session, there was time to share experiences and to brainstorm, but also for relaxation. We will organise a sequel for 59 employees in 2017.
The Young Potentials are the future of Ter Beke. Marieke Vandenabeele (25), Martin Terlien (27) and Ellen Vanderlinden (25) are following a two-year training programme in various parts of the company. They are getting the opportunity to grow and to learn from their experienced colleagues. Every six months they change jobs within their domain. "Ter Beke is investing 200% in us."
52 TER BEKE / ANNUAL REPORT 2016
"Food is fascinating. Food is constantly changing. People will always have to eat. Eating is linked to a cosy, fun atmosphere, and that has an emotional factor. And it is a challenge to continually meet consumer demands. You have to constantly respond to their behaviour. I have known Ter Beke for years, because my father also works here. I chose Ter Beke because you can really help the company grow yourself."
"Through this programme we we are very quickly learning how Ter Beke works, because we get to work in all those different departments. In this way we quickly gain a good impression of how everything is done here. Which in turn, helps us to do our work better too. We young potentials are the guarantee for the future."
"I am very pleased with this opportunity. I'm now in the third part of my training programme. I've worked in Wommelgem in pâté product development and then on a project to make flavour objective, in Marcheen-Famenne. Now I'm working on a product integrity project in Waarschoot. I've been in each department for six months. That is long enough to find out how it all works, but not quite long enough to do your own thing. I'm also studying
Innovation in Food Technology at Ghent University. I get time off during working hours for this. Ter Beke really is investing in us. In September I will start in my permanent job, so that will be exciting for 2017."
"I had already applied for a job at Ter Beke when they told me about the Young Potential Programme, I grasped this opportunity straight away. I wanted to work for a company in a meaningful role. At Ter Beke, it certainly is that. I have already worked in the brand management department and in field sales. Now I'm working on my own 'over the counter' project. We are taking this very broadly, but not so deep, because it is only for six months. The biggest advantage is that I do not think in terms of my own department. I think in terms of the whole of Ter Beke. We really are One Ter Beke".
"Food is really very interesting. The shelf life is short and the products are very complex and that makes it absolutely fascinating. Ter Beke does a lot of different things. We have our own brands, we supply butchers, we have private labels. This is a great challenge for marketing and sales."
"Marieke and I drive a mini decorated with huge Ter Beke logos. We are noticed everywhere we go. Colleagues wave to us on our way to work, and the butcher in my street knows who I am and where I work."
"Meat runs like a common theme through my career. My first summer job was even at a butchers'. It is a fascinating product. I chose Ter Beke because it is a big organisation, and also because it has a vision for the future. And in my eyes there is still room for improvement, and I'm more than happy to contribute to that."
"The Young Potential Programme is very interesting, you get to know Ter Beke from the inside and the outside. Your personal development is the focal point, you get the opportunity to find out what you like to do most.. The important thing is that you learn from this and that you do your job better. At the moment, I'm working in product management. I'm also able to study food technology at the HAS University of applied sciences in Den Bosch, the Netherlands."
"Ter Beke does a lot of slicing for clients in the Netherlands. These don't necessarily have to be Ter Beke products. Slicing is a profession in itself. Its biggest challenge is the shelf life. If you slice meat and then put it in the fridge, it usually stays good for three to four days. With our procedure, we can turn that into a month, without additives, by using the right packaging and the right composition of gasses. In my view, coming up with a solution for this kind of challenge is one of Ter Beke's strengths."
This Corporate Governance Statement is based on Article 96 §2 and §3, Article 119 of the Belgian Company Code and the Corporate Governance Code 2009. It contains factual information about Ter Beke's corporate governance policy in 2016, including a description of the following:
We have used the Belgian Corporate Governance Code 2009 as a reference. This code is publicly available at www.commissiecorporategovernance.be.
Our Corporate Governance Charter is published on www.terbeke.com. In this Corporate Governance Statement, we clarify our position with regard to the provisions of the Corporate Governance Code 2009. We also describe other corporate governance practices applied in our company in addition to those from the Corporate Governance Code 2009.
We respect the statutory provisions on corporate governance as set out in the Belgian Company Code and other specific legislation in this regard. In 2016 we did not apply the following provisions of the Corporate Governance Code 2009 in full:
Provision 5.2./17: in July 2016, the group internal audits was appointed ERP Competence Centre Manager, following the introduction of a new ERP software system. This position was incompatible with the position of internal auditor. As the Board of Directors considered it a necessity to have an internal audit function within the group, a vacancy was issued for this position. This vacancy will be filled as soon as possible.
Provision 5.2./28: In 2016, the Audit Committee considered it would be able to do its work properly in three meetings instead of four.
Provision 5.3./1: since the end of the period of office held by Lemon Com.V., represented by Jules Noten, on 26 May 2016, the majority of the members of the Remuneration and Nomination Committee are no longer independent. This composition requirement will be met again after the appointment by the General Meeting of 24 May 2017 of the new nominated independent directors.
EDUCATION: Executive Secretary and Market Study/Distribution.
TER BEKE: She joined the Board of Directors in 2014 for a term of four years,
EDUCATION: Financial and Legal Sciences and Accountancy.
EXPERIENCE: : He has many years of experience in the banking sector and
TER BEKE: In addition to serving as an Independent Director, he is also the
EDUCATION: Applied Economics and Business Engineering at the University
EXPERIENCE: He has held management positions in manufacturing and retail
TER BEKE: He has been CEO of Ter Beke NV since 1 June 2013.
EDUCATION: Bioscience Engineering and Engineering Management.
EXPERIENCE: In 2014, she left her job as Export Manager to obtain a Master's
TER BEKE: She has been a Director of Ter Beke since 2008 and has been
EDUCATION: Applied Economics, additional programmes in Applied Mar-
EXPERIENCE: His career is characterised by several years of experience in the
TER BEKE: He joined the Board of Directors in 2011, where his mandate con-
EDUCATION: Doctor of Engineering (Ghent University), studied at
EXPERIENCE: She is Professor of Operations and Supply Chain Management at
TER BEKE: She joined the Board of Directors in 2014 as an Independent Direc-
EDUCATION: Economics, with an MBA from INSEAD.
EXPERIENCE: After a brief period at Deloitte Haskins & Sells, he joined the
TER BEKE: He was appointed Executive Chairman of Ter Beke-Pluma in 2006.
EDUCATION: Doctorate in Law (Ghent University), a Master's degree from
EXPERIENCE: He served as Senior Partner at the international law firm Allen TER BEKE: He joined Ter Beke as Director in 1980 and was appointed Chairman
The table below shows the evolution in the composition of the Board of Directors, its composition as on 31 December 2016, the meetings held in 2016 and the persons present at these meetings.
| End of | Meetings 2016 (x = present) | |||||||
|---|---|---|---|---|---|---|---|---|
| Name | Type * | mandate | Comittees ** | 9/6 | 1/9 | 21/10 | 1/12 | |
| Louis-H. Verbeke, Chair (1) | NE | 2018 | RNC | x | x | x | x | x |
| Dominique Coopman | NE | 2018 | x | x | x | x | x | |
| Ann Coopman | NE | 2018 | RNC ° |
x | x | x | x | |
| Eddy Van der Pluym | E | 2020 | x | x | x | x | x | |
| Thierry Balot (2) | I | 2017 | AC | x | x | x | x | |
| Ann Vereecke (3) | I | 2018 | RNC | x | x | x | x | x |
| Guido Vanherpe (4) | I | 2019 | AC | x | x | x | x | x |
| Dirk Goeminne (5), Managing Director |
E | 2018 | x | x | x | x | x |
As permanent representative for:
(1) BVBA Louis Verbeke, (2) NV Sparaxis, (3) BVBA Ann Vereecke, (4) BVBA Guido Vanherpe, (5) NV Fidigo
| * | ** |
|---|---|
| E=Executive | AC = Audit Committee |
| NE=Non-executive | RNC = Remuneration and Nomination Committee |
| I=Independent |
Honorary mandates: Daniël Coopman - Honorary Chairman, Prof. Dr. L. Kympers†- Honorary Director
As appropriate we confirm that, to the best knowledge of the group, the group complies with provision 4.5. of the Corporate Governance Code regarding the maximum number of mandates in listed companies for non-executive directors.
° per 1 September 2016
The internal regulations of the Board of Directors describe the detailed functioning of the Board. These regulations form an integral part of the group's Corporate Governance Charter.
The Board approved the interim results, the annual results, the budget and the group's strategy.
In 2015, the Board of Directors evaluated its own composition and functioning, as well as the composition and functioning of its committees, through an online survey using the Guberna Toolkit. A separate evaluation of the Chairman of the Board was also organised under the supervision of an independent director. The results of the evaluation were discussed by the Board. Immediate actions were set up to address the possible areas of improvement. In 2016 there was no formal evaluation of the Board. Ter Beke also complies with the Law of 28 July 2011 regarding the presence of women in the Board of Directors.
In 2016, the Board of Directors had two active committees: the Audit Committee and the Remuneration and Nomination Committee. Until 26 May 2016, the committees were composed in accordance with legislation and the provisions of the Corporate Governance Code. As indicated above, since 26 May 2016, the composition of the Remuneration and Nomination Committee deviates from the composition as prescribed by the Corporate Governance Code. This will be remedied after the appointment of the new nominated committee members. These committees work under a mandate issued by the Board of Directors. A description of this mandate can be found in the detailed regulations of the Corporate Governance Charter.
The table below shows the composition of the Audit Committee as on 31 December 2016, the meetings held in 2016 and the persons present at these meetings.
| Meetings 2016 (x = present) | |||||
|---|---|---|---|---|---|
| Name | 22/2 | 1/9 | 24/11 | ||
| Thierry Balot* | x | x | x | ||
| Jules Noten° | |||||
| Guido Vanherpe | x | x | x |
* Chairman
° Appointment was until 26 May 2016
All members of the Audit Committee are independent directors and have a thorough knowledge of financial management. The committee has the necessary collective expertise regarding the company's activities. The Committee met regularly in the presence of the statutory auditor.
The Audit Committee advised the Board of Directors regarding the following:
The Committee draws up the remuneration report and clarifies the results at the General Meeting of Shareholders. The Committee regularly assesses its own regulations and functioning.
REMUNERATION AND NOMINATION COMMITTEE The table below shows the composition of the Remuneration and Nomination Committee as on 31 December 2016, the meetings held in 2016 and the persons present at these meetings.
| Meetings 2016 (x = present) | ||||
|---|---|---|---|---|
| Name | 22/2 | 20/4 | 24/11 | |
| Louis-H. Verbeke * | x | x | ||
| Ann Vereecke | x | |||
| Jules Noten** | x | x | x | |
| Ann Coopman*** |
* Chairman
** Appointment was until 26 May 2016
*** Appointed per 1 September 2016
All members are non-executive directors and have a thorough knowledge of human resource management. After the appointment of the new nominated directors the majority of the members of the committee will be independent. The Remuneration and Nomination Committee advises the Board of Directors regarding the following:
The Committee draws up the remuneration report and clarifies the results at the General Meeting of Shareholders. The Committee regularly assesses its own regulations and functioning.
Mr Dirk De Backer is secretary to the Board of Directors and to the committees set up within the Board of Directors.
AS OF 31 DECEMBER 2016
In 2016, the Executive Committee held meetings once every two weeks and whenever a meeting was required due to operational reasons. The Executive Committee is responsible for the management reporting to the Board of Directors. The detailed functioning of the Executive Committee is described in the Committee's internal regulations. These regulations form an integral part of the group's Corporate Governance Charter.
Once a year – on the initiative of the Remuneration and Nomination Committee – the Board of Directors evaluates the performance of the CEO (without the CEO being present during the evaluation) as well as the performance of the other members of the Executive Committee (in the presence of the CEO). This evaluation was also carried out in 2016. For this, the Board uses both qualitative and quantitative criteria.
EDUCATION: Studied law at KU Leuven (Rouen), obtained an LLM degree from the University of Houston and MBA degrees from Vlerick Business School and
EXPERIENCE: Until 2004, he worked as a lawyer at the law firm Allen & Overy. TER BEKE: Since 15 November 2004, he has been serving as Secretary General to the Ter Beke group, a position he combines with that of Human Resources Director for the group since 1 May 2014. Dirk is also Secretary to the Board of Directors and has been appointed Compliance Officer for the group. He is a member of the Executive Committee since 1 December 2014.
EDUCATION: Bioscience Engineer from Ghent University and has an MBA
EXPERIENCE: He has served in various management positions throughout Operations Director at Campbell Foods Belgium NV (Devos Lemmens, Godiva Europe). He is also a member of the Board of Directors of FENAVIAN (Belgian TER BEKE: He has been a member of the group Executive Committee at
EDUCATION: HBO (Higher Vocational Education) diploma in Logistics Man-
EXPERIENCE: He has accumulated a long and varied experience within the Merchandising Development New Markets, General Manager AH To Go NL
TER BEKE: He joined Ter Beke in March 2015 as Commercial Director of the
EDUCATION: Applied Economics and Business Engineering at the University
EXPERIENCE: He has held management positions in manufacturing and retail V&D group and as member of the Board of Directors of Maxeda (Vendex/ KBB). He is also Chairman of the Supervisory Board of Stern Groep NV and the Board of Directors of Wereldhave Belgium NV.
TER BEKE: He has been CEO of Ter Beke NV since 1 June 2013.
EDUCATION: Studied Applied Economics at the University of Antwerp, Management Information Systems at KU Leuven and Tax Law at EHSAL Brussels, EXPERIENCE: He has held various financial positions at Sun International and
TER BEKE: He has been CFO of the Ter Beke group since 2005.
EDUCATION: Graduated with a Licentiate degree in Applied Economics and a EXPERIENCE: He has spent his entire career in the food industry. At the start BABM (Belgilux Association of Branded products Manufacturers), BMA, coffee
TER BEKE: He joined the commercial management of Ter Beke in December 2014 and from November 2015 onwards, assumed the position of Commer-
No conflicts of interest (within the meaning of Article 523 of the Belgian Company Code) were reported to the Board of Directors in 2016. Neither were there any reports of transactions with associated parties as referred to in Appendix 2 of the group's Corporate Governance Charter.
No conflicts of interest (within the meaning of Article 524 ter of the Belgian Company Code) occurred within the Executive Committee in 2016. Neither were there any reports of transactions with associated parties within the meaning of Appendix 2 of the group's Corporate Governance Charter.
The General Meeting of Shareholders of 26 May 2016 appointed Deloitte Bedrijfsrevisoren BV o.v.v.e. CVBA, represented by Ms Charlotte Vanrobaeys, as statutory auditor of NV Ter Beke. The appointment is for a term of three years.
We consult regularly with the statutory auditor. The statutory auditor is invited to attend the Audit Committee meeting for the half-yearly and annual reporting. The statutory auditor is also invited to attend the meeting to discuss the internal audit plan and the internal controls.
The statutory auditor does not maintain any relationships with Ter Beke that could influence its judgement. It has confirmed its independence with respect to the group.
In 2016, EUR 225,000 was paid for audit services to Deloitte Bedrijfsrevisoren BV o.v.v.e. CVBA and to the persons with whom Deloitte Bedrijfsrevisoren BV o.v.v.e. CVBA is associated. In 2016, we paid EUR 138,000 for non-audit services.
The Ter Beke Dealing Code regulates transactions in Ter Beke securities (Appendix 3 of the group's Corporate Governance Charter).
The remuneration policy for the members of the Board of Directors, CEO and members of the Executive Committee is prepared by the Remuneration and Nomination Committee and approved by the Board of Directors.
The remuneration of the members of the Board of Directors, CEO and members of the Executive Committee is an integral part of the Corporate Governance Charter and is incorporated as an appendix to the Remuneration and Nomination Committee's internal regulations. The Remuneration and Nomination Committee monitors the implementation of this policy and advises the Board of Directors in this matter.
The remuneration level of the members of the Board of Directors for the financial year 2016 was presented by the Board to the General Meeting of Shareholders held on 26 May 2016 for approval.
The remuneration level of the CEO and members of the Executive Committee for the financial year 2016 was confirmed by the Board of Directors based on the advice of the Remuneration and Nomination Committee.
The members of the Board of Directors and the Committees are entitled to an annual fixed remuneration (in EUR):
| Chairman of the Board of Directors |
67,000 (18,000 + 49,000) |
|---|---|
| Member of the Board of Directors |
18,000 |
| Chairman of the Audit Committee |
9,000 (5,000 + 4,000) |
| Member of the Audit Committee |
5,000 |
| Chairman of the Remuneration and Nomination Committee |
6,000 (4,000 + +2,000) |
| Member of the Remuneration and Nomination Committee |
4,000 |
Directors are not entitled to any variable, performance-related or equity-related remuneration, nor to any other remuneration for the mere performance of their mandate as director.
The remuneration of the CEO is made up of a fixed remuneration and an annual variable remuneration. The remuneration of the members of the group's executive management consists of a fixed remuneration, an annual variable remuneration, a company car, fuel card and other remuneration components such as pensions and insurance, all of this in line with current company guidelines.
The CEO and members of the executive management receive an annual variable remuneration that is granted depending on the achievement of annually set targets related to the financial year for which the variable remuneration is payable.
These targets are based on objective parameters and are closely linked to the group's results and the role played by the CEO and/or members of the executive management in achieving these results. The main parameters used are volume, turnover, REBIT, EAT and ROCE (for the definition of these parameters please refer to the financial part of this annual report). The specific parameters to be applied in any given year and the specific targets to be achieved are assessed annually by the Remuneration and Nomination Committee and presented to the Board of Directors for approval. For 2016, these parameters were volume, REBIT and ROCE. Twenty percent of the variable remuneration of the executive management (excluding the CEO) is granted on the basis of individual performance objectives.
The variable allowance is one quarter or less of the annual remuneration.
If less than 75% of a set target is achieved in a given year, the right to the variable remuneration linked to that target lapses. On the other hand, if the set target is exceeded, up to 150% of the variable remuneration linked to that target is granted.
In addition to the system of variable remuneration, the Board of Directors retains the authority to allocate, on the recommendation of the Remuneration and Nomination Committee, an (additional) bonus for specific performance or service to the CEO and/or to all the members of the executive management or to some of them, provided that this does not exceed the total variable remuneration budget for the CEO and the members of the executive management.
There are no specific agreements or systems entitling the company to recover the variable remuneration paid, if this has been granted based on information that subsequently transpires to be incorrect. If necessary, the company may rely on facilities provided under common law for such cases.
A cash remuneration will be paid to the CEO on the termination of his contract. This will be based on a percentage on the exceptional growth of the equity value of Ter Beke between 2012 and 2017. Agreements have already been made about the calculation of the equity value as well as for determining the exceptional character. The key parameters for determining the equity value are a multiple of REBITDA and the net financial debt. In the period 2013- 2016 a provision was made in line with these agreements. This concerns a provision, because the final cash remuneration will depend on the result in 2017, which is not certain and not fixed. In 2016 a provision of EUR 2,210,000 was made and in 2015 an amount of EUR 633,000 was reserved in the income statement, because the Group expects the equity value calculated for this purpose in 2017 will exceed that of 2016, barring unexpected market conditions.
In principle, the group's remuneration policy for the members of the Board of Directors and the executive management will not be subject to any substantial changes either in 2017 or in two following financial years.
The remuneration of the members of the Board of Directors (executive, non-executive and independent directors, see overview above) for the performance of their mandate as director in 2016 can be summarised as follows:
| Mandate | Mandate | Mandaet | ||
|---|---|---|---|---|
| director | Remuneration | Audit | Total | |
| committee | committee | |||
| BVBA Ann Vereecke | 18,000.00 | 4,000.00 | 22,000.00 | |
| BVBA Guido Vanherpe | 18,000.00 | 5,000.00 | 23,000.00 | |
| Sparaxis SA (Thierry Balot) | 18,000.00 | 9,000.00 | 27,000.00 | |
| BVBA Louis Verbeke | 67,000.00 | 6,000.00 | 73,000.00 | |
| Comm.V. Lemon (Jules Noten) | 7,500.00 | 1,666.67 | 2,083.33 | 11,250.00 |
| Dominique Coopman | 18,000.00 | 18,000.00 | ||
| Ann Coopman | 18,000.00 | 1,000 | 19,000.00 | |
| Eddy Van der Pluym | 18,000.00 | 18,000.00 | ||
| NV Fidigo (Dirk Goeminne) | 18,000.00 | 18,000.00 | ||
| Totaal mandaten | 200,500.00 | 12,666.67 | 16,083.33 | 229,250.00 |
In 2016, the individual remuneration of the Managing Director/Chairman of the Executive Committee (NV Fidigo, represented by Dirk Goeminne) and the combined remuneration of the other members of the Executive Committee and the executive directors
(René Stevens, Wim De Cock, Bas Hauwert, Christophe Bolsius, Eddy Van der Pluym and Dirk De Backer) amounted to (total cost for the group, excluding the remuneration for directorship of Ter Beke NV):
| Other members of | ||
|---|---|---|
| CEO | the executive management | |
| Base pay | 482,004 | 1,668,899.79 |
| Variable pay (cash - on a yearly base) | 139,747.35 | 230,864.85 |
| Pensions* | N/A** | 24,694.56 |
| Other insurances | N/A** | 621.60 |
| Other benefits (company car) | N/A** | 33,570.40 |
* The pension scheme is a defined contribution scheme
**N/A - not applicable
Neither the members of the Board of Directors nor the members of the Executive Committee hold any share options, warrants or any other rights to acquire shares.
No shares, share options, or any other rights to acquire shares were granted by the company in 2016 to any of the members of the Board of Directors or the members of the Executive Committee.
No appointment arrangements were agreed on with either the members of the Executive Committee or the executive directors that would entitle them to a severance payment of more than 12 months' remuneration or that would otherwise be in conflict with the statutory provisions, the provisions of the Corporate Governance Code 2009 or common market practices.
The notice period for NV Fidigo, Eddy Van der Pluym, BVBA WiDeCo (Wim De Cock) B.V. Halahdrôthu (Bas Hauwert) and Sagau Consulting BVBA (Christophe Bolsius) is no more than 12 months, while that for Dirk De Backer and René Stevens will, in principle, be calculated in accordance with the statutory provisions applicable to their employment contract.
We attach great importance to efficient internal control and risk management systems and we try to integrate these into our structure and business operations to the maximum possible extent. We have implemented numerous internal controls in line with the integrated COSO II or Enterprise Risk Management Framework®. The key elements can be summarised as follows:
Each year, based on the proposal put forward by the Executive Committee, the Board of Directors determines or confirms the group's mission, values and strategy as well as the risk profile of the group. We actively and repeatedly promote our values among all our employees during information meetings organised every six months. Integrity is the most important value in the context of risk management. At the same time, we communicate to all our employees the key aspects of the strategy and objectives for the group and the divisions.
The governance structure of our group, described in detail in our Articles of Association, Corporate Governance Charter and in this Corporate Governance Statement, clearly defines the various duties and responsibilities of each of our management bodies, and more specifically those of the Board of Directors, Audit Committee, Remuneration and Nomination Committee, Executive Committee and Managing Director/CEO. These duties and responsibilities are in line with the statutory provisions and the provisions of the Corporate Governance Code 2009 in this respect. Coherent regulations have been drawn up for each of the above-mentioned bodies which are evaluated regularly and adapted if necessary, so that the allocated powers and responsibilities are always at the right level and so that higher levels of management can exercise appropriate control on the exercise of powers delegated to the lower levels of the organisation.
We organise and monitor our human resources via a job classification system, in which all group employees are graded and where detailed job descriptions have been drawn up for each position. These job descriptions define both the educational and competency requirements for the job as well as the duties, responsibilities and reporting lines for the position. These job descriptions are adapted as the scope of certain jobs changes due to internal or external circumstances.
Each year, we appraise the performance of all our non-production employees using a detailed appraisal tool. This includes a specific assessment of whether employee behaviour is in line with our company values.
We have also defined clear policy lines with regard to the training and remuneration of our employees.
We rigorously apply the statutory provisions related to conflicts of interest (see above) and have implemented regulations for transactions with associated parties that do not constitute a legal conflict of interest (see Appendix 2 to the Corporate Governance Charter).
We have created an internal audit position that is responsible for periodically conducting risk audits and audits of the internal controls in all group departments and reporting on these to the Audit Committee. Based on the findings of the internal auditor and in consultation with the Audit Committee, the necessary adjustments are made in the internal control system.
We have an Audit Committee that, in principle, devotes two meetings per year to discussing the risks that we are exposed to (see above) as well as internal controls and risk management. This is based on a formal and detailed risk assessment procedure developed by the executive management, which includes reporting on how the identified risks are dealt with. The Audit Committee reports on its activities at the subsequent meeting of the Board of Directors.
We follow a Dealing Code to prevent market abuse (see Appendix 3 to the Corporate Governance Charter) and have appointed a compliance officer to ensure correct compliance with the rules on market abuse (see above).
We have concluded appropriate insurance contracts to protect us against the most serious risks.
We have a hedging policy in place to manage exchange rate risks.
A number of other risk management practices that we apply have been mentioned in the description of the main risks to which we are exposed.
The following control and risk management systems have been established with regard to the financial reporting process:
The internal regulations of the Board of Directors, Audit Committee and Executive Committee clearly describe the responsibilities in the context of preparing and approving the group's financial statements.
The financial results of the group and the divisions are reported by the finance department on a monthly basis to the Board of Directors. These results are discussed by the Board and made available to the members of the Board of Directors. The Executive Committee reports on the results of the group and the divisions to the Board of Directors on a quarterly basis. The Executive Committee reports the results of the first six months and the annual results to the Audit Committee in advance. These results are discussed in the Audit Committee, in the presence of the internal and external auditors. After this, these results are presented to the Board of Directors for approval and published in the legally prescribed format.
We publish a schedule, both internally and externally, which provides an overview of our periodic reporting obligations with respect to the financial market.
We have introduced clear schedules for financial reporting at all levels of the company, so that we can meet all the related statutory requirements in a timely and correct manner.
We have a clear policy regarding the protection of and access to financial data, as well as a system for the backup and storage of this data.
The finance department has a detailed manual describing all the relevant accounting principles and procedures for persons involved in this area.
We have implemented the key internal controls from the COSO II framework regarding financial matters.
These controls and systems are designed to help guarantee that the published financial results give a true and fair picture of the group's financial position.
65,2% - STAK COOVAN
On 31 December 2016, Ter Beke NV did not hold any treasury shares (neither did Ter Beke NV hold any treasury shares on 31 December 2015).
In 2016 we received a STAK Coovan and M6 NV transparency declaration over the shareholding in the Ter Beke NV capital. This declaration was included in the company website and the contents published in accordance with the applicable regulations and is shown above.
There are no parties holding securities with special control rights.
The voting rights of the group's own shares are suspended in accordance with the prevailing statutory provisions.
The Extraordinary General Meeting of Shareholders are authorised to modify the company's Articles of Association. This requires a threefourths majority of the votes present. Those present must represent at least half of the share capital, as provided for in Article 558 of the Belgian Company Code. The objective of the company may be altered with a majority of four-fifths of the votes present (Article 559 of the Belgian Companies Code).
The procedure for the appointment/reappointment of directors, (see above-mentioned reappointments) is described in Article 4 of the regulations of the Remuneration and Nomination Committee (appendix to the group's Corporate Governance Charter).
The Extraordinary General Meeting of Shareholders held on 28 May 2014 authorised the Board of Directors of Ter Beke NV to increase the share capital of the company within the limits of the authorised capital. This must be done in accordance with the conditions stated in Article 607 of the Belgian Companies Code. This authorisation is valid for a period of three years starting from 18 June 2014.
The Extraordinary General Meeting of Shareholders held on 28 May 2014 also authorised the Board of Directors to acquire, in accordance with Article 620 of the Belgian Company Code, shares in the company on behalf of the company. Such acquisition of shares is only permitted as a necessary means to avert an imminent and serious threat to the company. This authorisation is valid for a period of three years starting from 18 June 2014.
To the best knowledge of the group there are no other elements to be mentioned that may have an effect in the event of a public takeover bid.
In its internal operations, Ter Beke takes many precautions to reduce possible risks. As food manufacturer, we are also subject to risks that lie beyond our control. Yet we act proactively to minimise any possible impact.
Every day, thousands people eat our processed meats and ready meals. We must ensure that these products are fresh and safe. The end consumer is also entitled to clear information about the composition of the product and its nutritional value.
The processed meats market is extremely mature and is dominated by the private labels of large discount and retail customers. The ready meals market is growing, but here competition is very fierce.
Product and production technologies evolve rapidly. Not being abreast with the latest production technology can have
For efficient business operations we are becoming increasingly dependent on information systems and integrated control systems which are managed by a complex set of software applications.
An organisation is only as strong as its employees. The knowledge and expertise is among a group of employees who contribute to building the company and its brands.
| The safety and the confidence of consumers are vitally important to us. Anything that can damage this confidence - either concern ing our own products or the sector - will have a negative impact on our sales, our prospects and our reputation. |
We have constant high demands for product safety and quality. All our raw materials are traceable. Our packaging clearly states the product composition and nutritional value per 100 grammes and per serving. We go further than the statutory requirements with regard to the safety of our packaging. We have insurance to cover our product liability. |
|---|---|
| The competition enables customers to increase pressure on our margins. This may have an impact on our profits. |
We distinguish ourselves from our competitors in terms of con cepts and products. Our service is extensive and flawless. We work continuously on improving efficiency and cost control. |
| Not being abreast with the latest production technology can have a negative impact on efficiency and cost control. Competitors may have access to alternative product technology that at some point may win over consumers. |
Each year we invest considerable sums in tangible non-cur rent assets to maintain and improve our level of technology. We maintain good contact with our suppliers so that we are always well-informed of the most recent developments. We sound out consumer preferences. We work together with research institu tions such as Flanders' FOO D. |
| If these systems do not work well or if they were to be unavailable, this would have a negative impact on the production volume and on our reputation. |
All systems are maintained appropriately. All systems are upgraded when necessary. Regular backups are made of all information. A new ERP is being implemented to structure and simplify our business processes. |
| If too many good employees are plucked away by the competition and there is too little influx of young people, we run the risk that we will be unable to achieve our growth scenario. |
In 2015 we established a Young Potential programme: newly graduated young people receive an attractive training programme. They experience four different positions within the company during two years. |
We work with natural raw materials. Fluctuations in the quality and the price of our raw materials and food packaging materials are always possible.
For specific raw materials we are obliged to work with a limited number of suppliers.
We market our products via a network of discount and retail customers throughout Europe. The number of large customer groups is limited.
Our sales are related to the eating habits and trends of the ultimate consumers, just as their spending habits.
We have receivables outstanding from our clients and retail customers.
As Ter Beke operates in an international environment, we are exposed to an exchange rate risk on the sales, purchases and interest-bearing loans expressed in a currency other than the company's local currency.
As with any business, Ter Beke monitors liquidities and cash flow. A shortage of cash and cash equivalents could put pressure on the
Now and then the government changes and tightens legislation on the production and sale of foods.
Occasionally we are involved in legal proceedings or disputes with customers, suppliers, consumers or the government.
| Price increases for raw materials and packaging would have a negative influence on the margins. |
We agree long-term contracts. We work with volume agreements on an annual basis . |
|---|---|
| If one or more of these suppliers cannot fulfil its contractual commitments and we are unable to secure alternative supplies in time, this could have a negative impact on our business operations. |
We agree long-term contracts. We work with volume agreements on an annual basis. We offer our suppliers fair payment for their added value. We work with preferred suppliers for sustainability. |
| Considering the small number of larger retail customers, the termination of a contract may have a significant negative impact on our turnover and profit. |
We specify varying maturity dates in our contracts for different products; for our own brands as well as customer's private labels and in the various countries. In 2015 we lost a contract with a German client but were able to secure several new large contracts. |
| If consumers would no longer select our products or their eating habits were to change, this would have a significant impact on our business activities. General economic conditions such as cyclical fluctuations, unemployment and interest rates can also affect the consumer spending patterns. |
In 2015 we conducted a major survey on trends in dietary habits in various markets. We surveyed the satisfaction of our consum ers to anticipate and limit this risk. We ensure that our prices are competitive. |
| Receivables not collected on time, have a negative impact on the cash flow. |
We monitor customers and outstanding receivables closely in in order to limit these potential risks. The majority of the receivables concern large European retail customers which limits the risk. |
| Fluctuations in exchange rates can cause fluctuations in the value of financial instruments. |
We adhere to a consistent hedging policy. We do not use financial instruments for trading and we do not speculate. |
| A shortage of cash and cash equivalents could put pressure on the relationships with certain parties. |
We have a significant net cash flow with respect to the net financial debt position. We have centralised our treasury policy. |
| Not meeting these conditions can expose us to the risk of fines or sanctions. |
Each year we invest significant sums to ensure we comply with new legislation, also concerning sustainability and the environ ment. Each year we organise training sessions for our employees to keep them informed of new legislation and its impact. |
| Such litigation could have a negative impact on our financial situation. |
We anticipate the potential impact of these disputes in our accounts as soon as a risk is judged as realistic under the applica ble accounting rules. |
On 31 December 2016, the capital of Ter Beke was represented by 1,732,621 shares. The shares are quoted on the spot market (continuous market) of Euronext Brussels (symbol: TERB).
In order to promote the share's liquidity, in 2001 we concluded a liquidity provider agreement with Bank Degroof/Petercam. This means that the bank acts as third party if there are not enough buyers or sellers. The liquidity provider also ensures that the difference between the bid and ask prices (the prices for which you can sell and buy the shares) diminishes. Furthermore, he can usually allow smaller investors to trade at more advantageous rates and can reduce fluctuations in the share price.
The shareholder structure is described in the Corporate Governance Statement (see above).
On 31 December 2016 there were no share-related instruments, such as stock options or warrants in circulation.
Ter Beke wishes to offer its shareholders a competitive yield through an annual dividend payment. The Board of Directors will submit a proposal to the General Meeting of 24 May 2017 to distribute a gross dividend of EUR 3.50 per share over 2016. If the General Meeting of 24 May 2017 approves this motion, we will make the net dividend per share payable from 15 June 2017.
The actual price of the Ter Beke share can be consulted at all times on the www.terbeke.com and www.euronext.com websites.
Analysts at Degroof/Petercam and KBC Securities have monitored the Ter Beke share during 2016. We have published a number of the analyst's reports on the Ter Beke website: www.terbeke.com, under Investor Relations.
PROPOSALS TO THE GENERAL MEETING
The Board of Directors proposes the following to the general meeting of 24 May 2017:
On 25 May 2017, Dominique Eeman and Kurt Coffyn will start as independent directors.
Dominique Eeman (59) has extensive experience as CFO and member of the Board of Directors and Executive Committees of several Belgian multinationals. He is an all-round financial and strategic expert and his knowledge of the food sector is based on his experience as CFO at Vandemoortele and his position of Director at Leonidas. He is also familiar with the values of a family business such as Ter Beke. Furthermore, he is member of the Board of Directors of Funds For Good and Sofindev IV, and member of the Supervisory Board of Put & Co.
Kurt Coffyn (49) has 25 years of experience in operational positions in various sectors, including the food sector at Barry Callebaut and Cargill. He is currently the Global Operations Director Starchers & Sweeteners at Cargill Foods Europe. He is expected to strengthen Ter Beke with his extensive knowledge of production processes and his specialisation in mergers and acquisitions. It will be Kurt Coffyn's first experience of serving on a Board of Directors.
For the actual agenda and proposals to vote on please refer to the convening notice for the General Meeting of Shareholders.
| Shareholders' Meeting | 24 May 2017 at 11 am | ||
|---|---|---|---|
| Share quoted ex-coupon | 13 June 2017 | ||
| Dividend payment | 15 June 2017 | ||
| Results first semester 2017 | 01 September 2017 before market opening |
||
| Annual results 2017 | At the latest on 30 April 2018 |
NV TER BEKE Beke 1 - B-9950 Waarschoot RPR Gent 0421.364.139 E-mail: [email protected] Website: www.terbeke.com
NV FRESHMEALS Beke 1 - B-9950 Waarschoot RPR Gent 0884.649.304
LES NUTONS SA Chaussée de Wavre 259a - B-4520 Wanze RPM Huy 0442.475.396 Exploitatiezetel : 5 Chemin Saint-Antoine, 6900 Marche-en-Famenne
COME A CASA SA Chaussée de Wavre 259a - B-4520 Wanze RPM Huy 0446.434.778
TER BEKE FRANCE SA Parc d' Activités Annecy La Ravoire Metz-Tessy F-74371 Pringy Cedex RCS Annecy 309 507 176
FRESHMEALS IBERICA S.L. Vía de las Dos Castillas 33 Complejo Empresarial Ática Edificio 6, planta 3a, Officina B1 E-28224 Pozuelo de Alarcón (Madrid) ES B 82656521
FRESHMEALS NEDERLAND BV Bijsterhuizen 24/04 - NL-6604 LL Wijchen KvK Utrecht 200.53.817
PASTA FOOD COMPANY SP. Z.O.O. Ul. Północna 12 45-805 Opole Poland KRS 0000403908
NV TERBEKE-PLUMA Antoon Van der Pluymstraat 1 - B-2160 Wommelgem RPR Antwerpen 0475.089.271
NV PLUMA Antoon Van der Pluymstraat 1 - B-2160 Wommelgem RPR Antwerpen 0404.057.854
TERBEKE-PLUMA NEDERLAND BV Bijsterhuizen 24/04 - NL-6604 LL Wijchen KvK Amsterdam 18024675
NV TER BEKE VLEESWARENPRODUKTIE Beke 1 - B-9950 Waarschoot RPR Gent 0406.175.424
NV HEKU Ondernemingenstraat 1 - B-8630 Veurne RPR Veurne 0436.749.725
BERKHOUT LANGEVELD BV Bijsterhuizen 24/04 - NL-6604 LL Wijchen KvK Limburg Noord 12032497
LANGEVELD/SLEEGERS BV Bijsterhuizen 24/04 - NL-6604 LL Wijchen KvK Limburg Noord 12036519
H.J. BERKHOUT VERSSNIJLIJN BV Scheepmakerstraat 5 - NL-2984 BE Ridderkerk KvK Rotterdam 24140598
TERBEKE-PLUMA UK LTD Dixcart House Addlestone Road Bourne Business Park Addlestone KT15 2LE Surrey
PLUMA FLEISCHWARENVERTRIEB GMBH Ostwall 175 - D-47798 Krefeld 117 / 5830 / 1047 - DE 123 114 501
4 CONSOLIDATED FINANCIAL STATEMENTS
Contact information
Consolidated income statement 84
Consolidated overview of the comprehensive result 85
Consolidated balance sheet 86
Consolidated statement of changes in equity 87
Consolidated cash flow statement 88
Accounting policies for financial reporting and explanatory notes89
Abbreviated financial statements of Ter Beke NV 120
Consolidated key figures 2011- 2016 122
Declaration by the responsible persons 123
Report from the Statutory Auditor on the consolidated annual ac-
as at 31 December 2016 and 2015
Ter Beke NV is directly and indirectly 100% owner of all fully consolidated subsidiaries (see Note 35). The Group's share of the result is therefore also 100%.Ter Beke is also joint owner of The Pasta Food Company and Stefano Toselli, with a 50% and 33% share respectively. These last two are accounted for in the consolidated financial statements using the equity method.
| Note | 2016 | 2015 | |
|---|---|---|---|
| Revenue | 4 | 418,563 | 396,319 |
| Trade goods, raw and auxiliary items | 5 | -227,177 | -208,660 |
| Services and miscellaneous goods | 6 | -81,016 | -80,812 |
| Employee expenses | 7 | -73,577 | -74,110 |
| Depreciation costs | 15 +16 | -17,428 | -17,877 |
| Impairments, write-downs, and provisions | 8 | -2,117 | -567 |
| Other operating income and expenses | 9 | 942 | 1,536 |
| Result of operating activities | 10 | 18,190 | 15,829 |
| Financial income | 11 | 841 | 476 |
| Financial expenses | 12 | -1,270 | -1,677 |
| Results of operating activities after net financing expenses | 17,761 | 14,628 | |
| Taxes | 13 | -5,258 | -3,817 |
| Result for the financial year before result from businesses | |||
| accounted for using the equity method | 12,503 | 10,811 | |
| Share in the result of enterprises accounted for using the equity method |
59 | -513 | |
| Profit in the financial year | 12,562 | 10,298 | |
| Basic earnings per share | 33 | 7,25 | 5,90 |
| Diluted earnings per share | 33 | 7,25 | 5,90 |
as at 31 December 2016 and 2015
| 2016 | 2015 | |
|---|---|---|
| Profit in the financial year | 12,562 | 10,298 |
| Other elements of the result (recognised in the shareholders' equity) | ||
| Other elements of the result that may subsequently be reclassified to the results |
||
| Translation differences | -264 | 89 |
| Comprehensive income | 12,190 | 10,359 |
| 2016 | 2015 | |
|---|---|---|
| Cash flow hedge | 35 | 17 |
| Other elements of the result that may not subsequently be reclassified to the results |
||
| Revaluation of the net liabilities regarding defined benefit pension schemes |
-164 | -68 |
| Related deferred taxes | 21 | 23 |
| Comprehensive income | 12,190 | 10,359 |
as at 31 December 2016 and 2015
| Note | 2016 | 2015 | |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | 144,337 | 149,201 | |
| Goodwill | 14 | 35,204 | 35,204 |
| Intangible non-current assets | 15 | 5,323 | 5,410 |
| Tangible non-current assets | 16 | 79,536 | 85,005 |
| Participations using equity method | 17 | 12,307 | 12,635 |
| Loans to joint venture | 18 | 1,870 | 850 |
| Deferred tax assets | 20 | 0 | 0 |
| Other long-term receivables | 18 | 97 | 97 |
| Long-term interest-bearing receivables | 19 | 10,000 | 10,000 |
| Current assets | 105,314 | 92,327 | |
| Inventories | 21 | 22,256 | 20,421 |
| Trade and other receivables | 22 | 66,990 | 64,860 |
| Cash and cash equivalents | 23 | 16,068 | 7,046 |
| TOTAL ASSETS | 249,651 | 241,528 | |
| LIABILITIES | |||
| Shareholders' equity | 24 | 114,969 | 108,843 |
| Capital and share premiums | 53,191 | 53,191 | |
| Reserves | 61,778 | 55,652 | |
| Non-controlling interest | 0 | 0 | |
| Deferred tax liabilities | 20 | 4,335 | 5,852 |
| Long-term liabilities | 38,112 | 43,455 | |
| Provisions | 25 | 5,312 | 3,062 |
| Long-term interest-bearing liabilities | 26 | 32,800 | 40,393 |
| Other long-term liabilities | 0 | 0 | |
| Current liabilities | 92,235 | 83,378 | |
| Current interest-bearing liabilities | 26 | 10,815 | 10,965 |
| Trade liabilities and other payables | 27 | 66,779 | 58,830 |
| Social liabilities | 11,322 | 10,685 | |
| Tax liabilities | 3,319 | 2,898 | |
| Note | 2016 | 2015 | |
|---|---|---|---|
| TOTAL LIABILITIES | 249,651 | 241,528 |
as at 31 December 2016 and 2015
| Capital | Capital reserves |
Share premiums |
Reserved profits |
Cash flow hedge |
Pensions and taxes |
Translation differences |
Total | Number of shares |
|
|---|---|---|---|---|---|---|---|---|---|
| Balance on 1 January 2015 |
4,903 | 0 | 48,288 | 50,585 | -220 | -570 | -171 | 102,815 | 1,732,621 |
| Capital increase | 0 | ||||||||
| Treasury shares reserve | 0 | ||||||||
| Dividend | -4,331 | -4,331 | |||||||
| Results in the financial year |
10,298 | 10,298 | |||||||
| Other elements of the comprehensive income for the period |
0 | 17 | -45 | 89 | 61 | ||||
| Comprehensive income for the period |
10,298 | 17 | -45 | 89 | 10,359 | ||||
| Movements via reserves | |||||||||
| Result from treasury shares |
0 | ||||||||
| Balance on 31 December 2015 |
4,903 | 0 | 48,288 | 56,552 | -203 | -615 | -82 | 108,843 | 1,732,621 |
| Capital increase | 0 | ||||||||
| Treasury shares reserve | 0 | ||||||||
| Dividend | -6,064 | -6,064 | |||||||
| Results in the financial year |
12,562 | 12,562 | |||||||
| Other elements of the comprehensive income for the period |
0 | 35 | -143 | -264 | -372 | ||||
| Comprehensive income for the period |
12,562 | 35 | -143 | -264 | 12,190 | ||||
| Movements via reserves | |||||||||
| Result from treasury shares |
0 | ||||||||
| Balance on 31 December 2016 |
4,903 | 0 | 48,288 | 63,050 | -168 | -758 | -346 | 114,969 | 1,732,621 |
| 2016 | 2015 | |
|---|---|---|
| OPERATING ACTIVITIES | ||
| Result before taxes | 17,761 | 14,628 |
| Interest | 887 | 988 |
| Dividend from equity method | 333 | 0 |
| Depreciation | 17,428 | 17,877 |
| Write-downs (*) | 49 | 9 |
| Provisions (**) | 2,116 | 558 |
| Gains and losses on disposal of fixed assets | -642 | -24 |
| Cash flow from operating activities | 37,932 | 34,036 |
| Change in inventory | -1,843 | -114 |
| Change in receivables less than 1 year | -3,286 | -4,002 |
| Change in operational assets | -5,129 | -4,116 |
| Change in trade liabilities | 7,542 | 2,424 |
| Change in debts relating to remuneration | 664 | -238 |
| Change in other liabilities, accruals and deferred income (**) | 370 | -112 |
| Change in operational debts | 8,576 | 2,074 |
| (Change)/decrease in the operating capital | 3,447 | -2,042 |
| Taxes paid | -5,021 | -3,893 |
| NET CASH FLOW FROM OPERATING ACTIVITIES | 36,358 | 28,101 |
| INVESTMENT ACTIVITIES | ||
| Acquisition of intangible and tangible non-current assets | -14,485 | -17,871 |
| Acquisition of participating interest in associated companies | 0 | -9,428 |
| New loans | -1,020 | -350 |
| Total increase in investments | -15,505 | -27,649 |
| Sale of tangible non-current assets | 0 | 86 |
| Sale of participating interest | 2,920 | 0 |
| Repayment of loans | 0 | 15 |
| Total decrease in investments | 2,920 | 101 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | -12,585 | -27,548 |
| FINANCING ACTIVITIES | ||
| Change in short-term financial debts | 0 | 0 |
| Increase in long-term debts | 3,025 | 15,100 |
| Repayment of long-term debts | -10,768 | -14,032 |
| Interest paid interest (via income statement) | -887 | -988 |
| Dividend paid by parent company | -6,064 | -4,331 |
| CASH FLOW FROM FINANCING ACTIVITIES | -14,694 | -4,251 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 9,079 | -3,698 |
| Cash funds at the beginning of the financial year | 7,046 | 10,725 |
| Translation differences | -54 | 19 |
| Movement in the group consolidation | -3 | 0 |
| CASH FUNDS AT THE END OF THE FINANCIAL YEAR | 16,068 | 7,046 |
(*) Also includes adjustments that are part of the financial result (note. 12). This was EUR 48,000 in 2016; EUR 0 in 2015.
(**) Reclassification of pension-related costs of EUR 148,000 in 2015. This means that the cash flow statement corresponds to the income statement.
Ter Beke NV ('the Entity') is an entity domiciled in Belgium. The Entity's consolidated financial statements cover the Entity Ter Beke NV, its subsidiaries, a joint venture and an associated company (further referred to as 'the Group'). The consolidated financial statements were issued for publication by the board of directors on 21 February 2017. The consolidated financial statements were drawn up in accordance with the International Financial Reporting Standards (IFRS) as accepted within the European Union.
The consolidated statements are set out in EUR x 1000. The accounting principles are applied uniformly to the entire Group and are consistent with the previous financial year. The comparative information has been restated in accordance with IFRS.
STANDARDS AND INTERPRETATIONS APPLICABLE TO THE AN-NUAL PERIOD BEGINNING ON 1 JANUARY 2016
These standards have no significant impact on the annual report.
STANDARDS AND INTERPRETATIONS PUBLISHED, BUT NOT YET APPLICABLE TO THE ANNUAL PERIOD BEGINNING ON 1 JANUARY 2016
endorsed in EU)
Only IFRS 15 and 16 will have an impact on the figures published.
The main impact of IFRS 16 is described in Note 29.
The basic principle of IFRS 15 Revenue from Contracts with Customers (applicable for annual periods beginning on or after 1 January 2018) is that a company must recognise goods or services at the amount for which the company expects to be entitled in exchange for the goods or services.
To apply this basic principle, a company must take the following steps:
The main impact of IFRS 15 for Ter Beke will be that a part of the services and miscellaneous goods category will be deducted from turnover in the presentation of the accounts. Ter Beke's assessment of the impact of this new rule on the financial statements is still ongoing. A reasonable estimate of the impact is not obvious. Ter Beke is still studying the implications. Ter Beke does not intend to apply this rule before 2018.
The consolidated annual accounts include the financial data of Ter Beke NV and its subsidiaries, joint venture and associate. A list of these entities is included in Note 35.
Subsidiaries are those over which Ter Beke NV exercises control. Ter Beke NV exercises control over a participating interest if Ter Beke NV is exposed to or has rights to variable revenues by virtue of its involvement in the participating interest, and has the means to influence these revenues due to its control over the participating interest. Such control is presumed to exist where Ter Beke NV directly or indirectly holds more than 50% of the voting power of the entity. In the assessment of their control, an investor takes account of both their own potential voting rights and the potential voting rights held by other parties. Potential voting rights are rights to acquire voting rights in a participating interest, such as rights ensuing from convertible instruments or options, including forward contracts. These potential voting rights only apply if they concern material rights.
The following factors are also taken into account in determining control:
The financial statements of the subsidiaries are recognised in the consolidated financial statements from the date on which such control begins till the date on which it ends. A list of the Group's subsidiaries is included in Note 35.
A joint venture is a joint agreement, where Ter Beke NV and other parties that have joint control of the agreement, rights to the net assets of the agreement. Joint ventures are recognised according to the equity method. The company eliminates the net results between the joint venture and the Ter Beke Group. On 22 June 2011 Ter Beke and the shareholders of Stefano Toselli established a 50/50 joint venture in Opole (Poland). This joint venture bears the name 'Pasta Food Company', it produces and markets lasagne and pasta meals in Central and Eastern Europe. As the Pasta Food Company is booked via the equity method, only 50% of the equity is recognised in the balance sheet and 50% of the net result is recognised in the Ter Beke group consolidated figures.
If a Group member conducts transactions with a joint venture, profits and losses are eliminated up to the amount of the interests of the Group in the joint venture concerned.
Affiliated companies are those in which the Group has significant influence, directly or indirectly, but not control over the financial and operational policy of the entity. This is assumed when the Group has 20% or more of the voting rights in the company. An investment in an affiliated company is processed in the consolidated financial statements in accordance with the equity method.
The results, assets and liabilities of affiliated companies are recognised in the financial statements in accordance with the equity method, unless the investment is classified as being held for sale and therefore must be processed in accordance with IFRS 5, Non-current assets held for sale and discontinued business activities. Investments in affiliated companies are initially recognised at cost price under the equity method, and then adapted to take account of the change in the investor's share of the net assets of the participation after takeover, minus any exceptional depreciation in the value of individual investments.
Any losses of an affiliated company that exceed the Group's interests in that affiliated company (also taking account of all long-term interests that, in essence, form part of the Group's net investments in that affiliated company) are not recognised.
The difference between the cost price of the investment and the investor's share in the net fair value of the identifiable assets, liabilities and conditional liabilities of the affiliated company, which were recognised on the takeover date, are recognised as goodwill. This goodwill is recognised in the book value of the investment and is tested for impairment as part of the investment. The difference after reassessment between the fair value of the Group share in the identifiable assets, liabilities and contingent liabilities of the affiliated company and the cost price of the affiliated company are recognised immediately in the income statement.
If a Group member conducts transactions with an affiliated company, profits and losses are eliminated up to the interests of the Group in the affiliated company concerned. On 28 August 2015, Ter Beke and GS & DH Holding, the sole shareholder in the French company Stefano Toselli SAS (a ready meals producer), signed an agreement whereby Ter Beke acquired a 33% minority interest in Stefano Toselli SAS, effective immediately.
All intra-group balances and transactions, including profits not realised on intra-group transactions, are eliminated when the consolidated financial statements are drawn up. Unrealised profits arising from transactions with affiliated companies are eliminated up to the amount of the Group's interest in the entity. Unrealised profits arising from transactions with associates are eliminated up to the amount of the participation in those entities. The same elimination rules apply to unrealised losses as for unrealised profits, with the difference that they are only eliminated if there is no indication of impairment.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is valued as the sum of the fair value on acquisition date of the consideration transferred and the amount of the non-controlling interest in the acquiree. For each business combination, the acquirer must value the minority interest in the acquiree either at fair value or at the proportionate share of the minority interest in the identifiable net assets of the acquiree. The costs relating to the acquisition are recognised immediately in the income statement.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.
If the business combination is achieved in stages, the minority interests previously held by the Group are revalued at fair value on acquisition date and any profit or loss is recognised immediately in the income statement.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value on the acquisition date. Subsequent changes to this fair value which is deemed to be an asset or liability will be recognised in accordance with IAS 39 either in profit or loss or in other elements of the comprehensive income. Changes to the fair value of the contingent consideration classified as equity, are not recognised.
Goodwill is initially recognised as the amount with which (i) the total of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of any equity interest previously held by the acquirer in the acquiree; (ii) exceeds the net balance of the amounts determined on acquisition date of the identifiable assets and liabilities acquired. If, after review, the interest of the Group in the fair value of the identifiable net assets exceeds the total of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any equity interest previously held by the acquirer in the acquiree, then the surplus must be recognised in the income statement as a profit on an advantageous purchase.
After initial recognition, goodwill is recognised as cost less any accumulated impairments. For the purpose of impairment testing, goodwill is allocated to the cash-generating units of the Group which are expected to generate synergy benefits for the business combination, irrespective of whether assets or liabilities of the acquired entity were assigned to the cash flow generating units concerned.
Cash flow generating units to which goodwill is allocated are tested for impairment annually or more frequently if there is an indication that the book value of the unit may exceed the realisable value. If the realisable value of a cash flow generating unit is less than the book value of the unit, the impairment is allocated first to reduce the book value of any goodwill allocated to the unit; the impairment is subsequently allocated to the other non-current assets of the unit pro-rata on the basis of the book value of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
Where goodwill forms part of a cash flow generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is recognised in the book value of the operation when determining the gain or loss on disposal of the operation. Goodwill 'disposed' of in this manner is valued at the relative value of the operation disposed of and the portion of the cash flow generating unit retained.
No business combinations were conducted in 2016 and 2015.
Foreign currency transactions in the Group's individual entities are recognised at the exchange rate applicable on the transaction date. Monetary balance sheet items in foreign currency are converted at the closing rate applicable on balance sheet date. Profits and losses arising from transactions in foreign currency and from the conversion of monetary balance sheet items in foreign currency are recognised in the income statement. Any profit or loss on a non-monetary item is recognised in the income statement, unless it was directly recognised in the shareholders' equity. For non-monetary items on which the profit or loss was directly recognised in the shareholders' equity, any exchange-rate component of that profit or loss is also recognised in the shareholders' equity.
All the Group's activities abroad are conducted in the Eurozone, except for TerBeke-Pluma UK Ltd which conducts its business in British pounds and the Pasta Food Company Sp. z.o.o. which conducts its business in Polish zloty. The assets and liabilities of these foreign entities are converted to euros at the exchange rate applicable on balance sheet date. The income statement of these entities is translated to euros monthly at average rates which approximate the exchange rate on the transaction date. Translation differences arising here are recognised immediately in the shareholders' equity.
The following exchange rates were used when drawing up the financial statements:
1 euro is equal to:
| 2016 | 2015 | |
|---|---|---|
| British pound | ||
| Closing rate | 0.8561 | 0.7339 |
| Average rate | 0.8193 | 0.7268 |
| Polish zloty | ||
| Closing rate | 4.4103 | 4.2639 |
| Average rate | 4.3624 | 4.1855 |
IFRS 8 defines an operational segment as a part of an entity of which the operational results are regularly assessed by a high ranking officer of the entity who takes important operational decisions, in order to be able to take decisions on the resources to be allocated to the segment and to assess the financial performance of the segment and on which separate financial information is available.
IFRS 8 replaces the earlier IAS 14 standard from 1 January 2009 but does not alter segment reporting.
In view of its mission, main strategic lines and management structure, for segment reporting Ter Beke has opted to split the Group's activities into two operational segments, according to the two business activities (business segments) of the Group: 'Processed Meats' and 'Ready Meals'. In addition, it provides geographical information for the regions in which the Group is active.
The profit or loss of a segment encompasses the income and expenses generated directly by a segment, including that part of the revenues and expenses that can reasonably be attributed to the segment.
The assets and liabilities of a segment encompass the assets and liabilities directly pertaining to a segment, including the assets and liabilities that can reasonably be attributed to the segment. The assets and liabilities of a segment are shown excluding deferred tax.
A discontinued operation is a clearly distinguishable component within the activities of the Group as a whole:
Intangible assets are initially valued at cost price. Intangible assets are recognised if it is likely that the Entity will enjoy the future economic advantages that accompany them and if the costs thereof can be determined reliably. After their initial recognition, intangible assets are valued at cost price less the accumulated depreciation and any accumulated impairments. Intangible assets are depreciated linearly over their best estimated period of use. The amortisation period and the depreciation method used are evaluated again each year at the conclusion of the reporting period.
Expenses incurred for research activities, undertaken with a view to gaining new scientific or technological knowledge, are recognised as an expense in the income statement as they occur. Expenses incurred for development activities, in which the findings of research are applied in a plan or design for the production of new or substantially improved products and processes, are recognised in the balance sheet if the product or process is technically and commercially viable and the Group has sufficient resources at its disposal to implement them. The capitalised expense includes the costs of raw materials, direct wage costs and a proportionate part of the overheads. Capitalised expenses for development are valued at cost price less the accumulated depreciation and impairments.
All other expenses for development are recognised as expense in the income statement as a debit in the income statement as they occur. As Ter Beke's development expenses in 2016 and 2015 did not fulfil the criteria for capitalisation, these were recognised as expenditure in the income statement.
Other costs for internally generated intangible assets, such as brand names, are recognised in the income statement as they occur. Other intangible assets, such as brand patents or computer software, acquired by the Group are valued at cost price less the accumulated depreciation and impairments. In 2016 and 2015 Ter Beke's consolidated other intangible non-current assets consisted only of computer software.
Intangible assets are depreciated according to the linear method over their expected economic lifetime, from the date they are first used.
The depreciation percentages applied are:
| Research and development | 33.3% |
|---|---|
| Computer software | 20% |
| Brand patents | 10% |
We talk of goodwill when the cost price of a business combination at acquisition date exceeds the interest of the Group in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree. Goodwill is initially recognised as an asset at cost price and is subsequently valued at cost price less any accumulated impairment losses.
The cash flow generating unit to which goodwill is attributed is tested each year for impairment. This test is also performed every time there is an indication that the unit might be impaired by comparing the book value of the unit with its realisable value. If the realisable value of the unit is lower than the book value, the impairment losses will first be allocated to the book value of the goodwill allocated to the unit and then to the unit's other assets in proportion to the book value of each asset in the unit. An impairment loss recognised for goodwill cannot be reversed in a subsequent period. When a subsidiary or joint venture is sold, the goodwill allocated is recognised when determining the profit or loss on the sale.
If the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities exceeds the cost of the business combination, the remaining surplus after reassessment is recognised immediately in the income statement.
Tangible non-current assets are recognised if it is likely that the future economic benefits associated with the asset will flow to the Entity and the cost price of the asset can be determined reliably.
Tangible non-current assets owned are valued at cost price or at production cost, less the accumulated amortisation and any accumulated impairment. In addition to the purchase price, the cost price also includes, if applicable, non-refundable taxes and all costs directly attributable to preparing the asset for use. The production cost of self-made property, plant and equipment (tangible non-current assets) includes direct material costs, direct manufacturing costs, a proportionate part of the fixed costs of material and manufacturing, and a proportionate part of the depreciation and write-downs of assets used in the production process.
After initial recognition costs are only recognised in the balance sheet as part of the book value of an asset, or for an exceptional asset, if it is likely that the future economic benefits associated with the asset will flow to the Group and these costs can be determined reliably. Improvement works are capitalised and depreciated over 4 years. Other repair and maintenance costs are recognised in the income statement in the period in which they were incurred.
Tangible non-current assets are depreciated in accordance with the linear method from the date they are first used and over the expected useful economic life.
The primary depreciation percentages currently applied are:
| Buildings | 3.33; 4 and 5% |
|---|---|
| Installations | 5 and 10% |
| Machines and equipment | 14.3; 20 and 33.3% |
| Furniture and rolling equipment | 14.3; 20 and 33.3% |
| Other tangible non-current assets | 10 and 20% |
|---|---|
| ----------------------------------- | ------------ |
Land is not depreciated, since it is assumed that it has an unlimited useful life.
Government subsidies may only be recognised if there is reasonable assurance that:
Government subsidies are systematically recognised as revenues over the periods necessary to attribute these subsidies to the related costs which they are intended to compensate. A government subsidy that is received in compensation for expenses or losses already incurred or for the purpose of providing immediate financial support to the Group without future related costs, is recognised as income in the period in which it is received.
Investment subsidies are deducted from the book value of the asset concerned.
Operating subsidies are recognised if they are received and reported under Other operating income.
A lease contract is recognised as a financial lease if almost all of the risks and benefits associated with the property are transferred to the lessee. All other forms of lease are considered as operational leases. The Group only acts as lessee.
Assets held under a financial lease are recognised as Group assets for amounts equal to the fair value of the leased asset or, if it is lower, at the present value of the minimum lease payments less the accumulated depreciation and impairment losses. The complementary liability to the lessor is recognised in the balance sheet as a liability under financial leases.
The minimum lease payments are recognised partly as financing costs and partly as repayment of the outstanding liability in such a way that this results in constant periodic interest over the remaining balance of the liability. The financing costs are recognised immediately as an expense in the income statement.
The amount of a leased asset to be depreciated is systematically attributed to each reporting period during the period of its expected useful economic life, on a basis that is consistent with the depreciation policy that the lessee applies to owned assets to be depreciated. If it is reasonably certain that the lessee will acquire the property at the end of the lease period, then the expected useful economic life period is equal to the useful life of the asset. In all other cases, the asset is depreciated over the lease term or its useful life, if the latter is shorter.
Lease payments based on operational leases should be recognised as an expense in time for the entire lease period, unless another systematic basis is more representative of the time pattern of benefits the user enjoys. Benefits received as incentive to conclude an operational lease contract are also spread over the lease period on a time-proportional basis.
Inventories are valued at the lowest value of the cost price or the net realisable value. The FIFO method forms the basis for calculating the cost price. The cost price for work in progress and finished products encompasses all conversion costs and other costs incurred to get the inventories to their current location and in their current state. The conversion costs include the production costs and the attributed fixed and variable production overhead costs (including depreciation). The net realisable value is the estimated sales price that the Group believes it will realise when selling inventory in normal business, less the estimated costs of finishing the product and the estimated costs of sales.
Impairment losses from intangible fixed assets and tangible non-current assets (except for goodwill): On every reporting date, the Group investigates its balance sheet values for intangible non-current assets and property, plant and equipment to determine whether there is any indication for impairment of an asset. If there is such an indication, the realisable value of the asset will be estimated in order to determine any impairment losses. However, if it is not possible to determine the realisable value of an individual asset, the Group will estimate the realisable value for the cash flow generating unit to which the asset belongs.
The realisable value is the highest value of the fair value minus the cost of sales and its value in use. The value in use is determined by discounting the expected future cash flows using a discount rate before tax. This discount rate reflects the present time value of the money and the risks specific to the asset.
If the realisable value of an asset (or a cash flow generating unit) is estimated to be lower than the book value of the asset (or a cash flow generating unit), the book value is reduced to its realisable value. An impairment loss is recognised immediately as expense in the income statement. A previously recognised impairment loss is reversed if a change has occurred in the estimates used to determine the realisable value, but not for a higher amount than the net book value that would have been determined, if in previous years no impairment loss had been recognised.
Trade receivables are initially booked at fair value and are then valued at the amortised cost price calculated based on the effective interest method. Appropriate impairment losses are recognised in the income statement for estimated non-realisable amounts if there are objective indications that an impairment loss has occurred.
The amount of loss is specified as the difference between the book value of the asset and the present value of estimated future cash flows discounted at the originally effective interest rate on initial recognition. Considering the short-term nature of the trade receivables in the Group, the trade receivables are in fact booked at fair value.
Investments are no longer recognised on the transaction date if the purchase or sale of the investment is linked to a contract whose conditions prescribe the delivery of the asset within the period generally prescribed or agreed on the market concerned. They are initially valued at the fair value, plus the directly attributable transaction costs. For an investment that is not valued at fair value, write-downs are incorporated in the income statement.
Debt securities which the Group definitely intends to hold till their maturity date (held-to-maturity debt securities) are valued at the amortised cost price calculated by means of the effective interest method, less any impairment losses for the purpose of taking non-realisable amounts into consideration.
Such impairment losses are recognised in the income statement if, and only if, there are objective indications for impairment losses. Impairment losses are reversed in subsequent periods if the rise in the realisable value can be objectively related to an event that took place after the write-down. The reversal may not exceed the amortised cost price as it would have been if the impairment had not been recognised.
Investments other than those held till maturity are classified as financial assets available for sale which are valued at fair value after initial recognition. If no fair value can be determined, they are valued at cost price. The profits and losses following changes in the fair value are recognised directly in the shareholders' equity until the financial asset is sold, or on determining the impairment losses. In this case the cumulative loss or profit that was recognised immediately in the shareholders' equity is transferred from the shareholders' equity to the income statement. Impairment losses recognised in the income statement on an investment in an equity capital instrument classified as available for sale are not reversed via the income statement.
Impairment losses recognised in the income statement on a debt instrument classified as available for sale are later reversed in the income statement if the rise in the fair value of the instrument can be objectively related to an event that took place after the impairments loss was recognised. With the exception of equity capital instruments, changes in the fair value due to exchange rate results are recognised in the income statement.
Cash and cash equivalents comprise cash, demand deposits and other short-term, highly liquid investments that can be immediately converted to cash, the amount of which is known and which bears no material risk of depreciation.
FINANCIAL LIABILITIES AND EQUITY CAPITAL INSTRUMENTS Financial liabilities and equity capital instruments issued by the Group are classified based on the economic reality of the contractual agreements and the definitions of a financial liability and an equity capital instrument. An equity capital instrument is any contract that includes the residual interest in the Group's assets, net of all liabilities. The financial reporting policies regarding specific financial liabilities and equity capital instruments are described below.
Interest-bearing bank borrowings and credit excesses are initially valued at fair value and are then valued at the amortised cost price calculated on the basis of the effective interest method. Any difference between the receipts (after transaction costs) and the repayment of a loan is recognised over the loan period, in accordance with the policies for financial reporting regarding financing costs, which are applied by the Group.
Trade liabilities are initially booked at fair value and are then valued at the amortised cost price calculated based on the effective interest method. Considering the short term nature of the trade liabilities in the Group, the trade liabilities are in fact booked at fair value.
Equity instruments issued by the company are recognised at the amount of the sums received (after deduction of directly attributable issue costs).
The Group uses derivatives to limit risks with regard to unfavourable swings in exchange rates and interest rates arising from operational, financial and investment activities.
The Group does not use these instruments for speculative purposes, does not hold any derivatives and does not issue derivatives for trading purposes. Derivatives are initially valued at cost price and after initial recognition are valued at fair value.
There are three sorts of hedging relationships:
a. Cash flow hedges: changes in the fair value of derivatives indicated as cash flow hedges are recognised in the shareholders' equity. The non-effective part is recognised in the income statement.
If the cash flow hedges of a firm commitment or an expected future transaction leads to the recognition of a non-financial asset or a non-financial liability, at the time the asset or liability is booked, the profits or losses on the derivative financial instrument previously incorporated in the shareholders' equity are recognised in the initial valuation of the asset or liability when it is booked.
If the hedge of an expected future transaction leads to the inclusion of a financial asset or a financial liability, the related profits or losses on the derivative financial instrument recognised directly in the shareholders' equity are transferred to the income statement in the same period or periods in which the acquired asset or the commitment affects the income statement. If it is expected that (part of) the loss incorporated directly into the shareholders' equity will not be realisable in one or more future periods, the expected non-realisable part is transferred to the income statement. For hedges that do not lead to the recognition of an asset or a liability, the amounts directly included in the shareholders' equity are transferred to the income statement in the same period or periods in which the hedged expected future transaction affects the profit or loss.
the fair value of derivatives that are not classified can be recognised immediately in the income statement as cash flow hedging (on the basis of IAS 39).
Certain derivatives do not qualify as hedging transactions. Changes in the fair value of each derivative that does not qualify as a hedging transaction are recognised immediately in the income statement.
If the Group repurchases its own treasury shares, the amount paid, including the directly attributable direct costs, is incorporated as a reduction in the shareholders' equity. The revenue from the sale of treasury shares is recognised directly in the shareholders' equity and has no impact on the net results.
Dividends are recognised as a liability in the period in which they are formally allocated.
Non-current assets and groups of assets that are divested are classified as 'held for sale' if their book value will mainly be realised in a sale transaction and not through the continued use thereof. This condition is met solely if the sale is highly probable and the asset (or the Group of assets being disposed of) is immediately available for sale in its current state. The management must have committed itself to a plan to sell the asset (or the Group of assets being disposed of), which is expected to be considered for inclusion as a completed sale within one year of the classification date.
A non-current asset (or group of assets being disposed of) classified as held for sale will be included at the lowest value of its book value and its fair value minus the costs of sale.
A provision will be recognised if:
The amount recognised as a provision must be the best estimate of the expenses required to settle the existing obligation on the balance sheet date.
If the impact is important, provisions are determined by discounting the expected future cash flows, using a discount rate before tax. This discount rate reflects the present time value of the money and the specific risks pertaining to the obligation.
A provision for restructuring is laid down when the Group has approved a detailed and formalised plan for the restructuring and when the restructuring has either commenced or has been announced publicly. No provisions are laid down for costs relating to the Group's normal activities. A provision for loss-making contracts will be laid down when the receivable economic benefits for the Group are lower than the unavoidable cost related to the obligatory quid pro quo.
Employee benefits comprise all forms of remuneration granted by the Entity in exchange for the services provided by employees.
Employee benefits include:
The Group provides retirement benefit plans for its employees mainly via defined benefit contribution schemes and has only a limited number of defined benefit pension schemes.
Contributions paid to these defined contribution schemes are recognised immediately in the income statement.
By law, defined contribution pension plans in Belgium are subject to minimum guaranteed rates of return. Hence, strictly speaking, those plans classify as defined benefit plans which would require that the 'projected unit credit' (PUC) method is applied in measuring the liabilities. However, the IASB recognises that the accounting for such so-called 'contribution-based plans' in accordance with the currently applicable defined benefit methodology is problematic (see also the IFRS Staff Paper 'Research project: Post-employment benefits' dated September 2014). Also considering the uncertainty with respect to the future evolution of the minimum guaranteed rates of return in Belgium, the Company adopted a retrospective approach whereby the net liability recognised in the statement of financial position is based on the sum of the positive differences, determined by individual plan participant, between the minimum guaranteed reserves and the accumulated contributions based on the actual rates of return at the closing date (i.e. the net liability is based on the deficit measured at intrinsic value, if any). The main difference between this retrospective approach and the prospective PUC method, is that benefit obligations would be calculated as the discounted value of the projected benefits, assuming the minimum guaranteed rates of return currently application continue to apply.
The book value of the defined benefit pension scheme is determined by the present value of the pension payment liabilities, less the past service pension costs not yet recognised and with the fair value of the investments in investment funds. All actuarial gains and losses are recognised in the comprehensive result, so that the full value of the deficit or surplus of the plan is recognised in the consolidated statements. The interest costs and projected revenue of the assets in the plan are shown as net interest.
The present value of the liabilities of the defined benefit plan and the related pension costs are calculated by a qualified actuary in accordance with the PUC method. The discount rate used is equal to the yield on the balance sheet date from corporate bonds of high creditworthiness with a remaining term that is comparable to the term of the Group's liabilities. The amount recognised in the income statement consists of the pension costs allocated to the year of service, the financing cost, the expected yield from the pension fund investments and the actuarial gains and losses.
Termination benefits are recognised as a liability and a cost if a Group Entity demonstrably commits itself to either:
If termination benefits are due after twelve months following the balance sheet date, then they are discounted at a discount rate equal to the yield on balance sheet date from corporate bonds of high creditworthiness with a remaining term that is comparable to the term of the Group's liabilities.
The variable pay of clerical staff and management is calculated based on key financial figures and the balanced scorecards. The expected amount of the variable pay is recognised as a cost in the reporting period concerned.
The cost of the Group's liability in relation to share option plans is the fair value of these instruments. This fair value is determined by means of the fair value of the shares on the allocation date. The total amount recognised as an expense over the vesting period is determined taking account of the fair value of the options granted. Conditions that must be met in order to make the options unconditional are included in the assumptions when calculating the number of options that are expected to be exercisable. The Group reviews the number of options that are expected to be exercisable at the end of each financial year. Any impact of this review is recognised in the income statement, together with an adjustment to the shareholders' equity over the remaining vesting period.
The tax on profits includes the tax on profits and deferred taxes. Both taxes are recognised in the income statement, except in those cases where it concerns components that are part of the shareholders' equity. In this latter case, this is recognised via the shareholders' equity. The term 'tax on profits' is taken to mean that which is levied on the taxable income for the reporting period, calculated at the tax assessment rates applicable at the balance sheet date, as wells as the adjustments to the tax due over previous reporting periods. Deferred taxes are calculated according to the balance sheet method and arise mainly from the differences between the book value of assets and liabilities in the balance sheet and the tax basis of those assets and liabilities. The amount of deferred tax is based on the expectations regarding the realisation of the book value of the assets and liabilities, whereby use is made of the tax assessment rates known on the balance sheet date.
A deferred tax liability is only recognised if it is sufficiently certain that the tax credit and the unused fiscal losses can be set off against taxable profits in the future. Deferred tax assets are reduced as and when it is no longer likely that the tax saving can be realised. Deferred taxes are also calculated on temporary differences arising from participations in subsidiaries, unless the Group can decide on the time when the temporary difference is reversed and it is unlikely that the temporary difference will be reversed in the near future.
Revenue is recognised if it is likely that the future economic benefits relating to the transaction will accrue to the Entity and the amount of the income can be determined reliably.
Turnover is reported after tax and discounts.
Revenue from the sale of goods is recognised if all the following conditions are met:
At that time the various discounts are also recognised based on the agreements with the clients concerned.
In order to encourage clients to pay immediately, the Group grants discounts for payments in cash. Such discounts are recognised as a reduction in the revenue.
Royalties are recognised according to the attribution principle in accordance with the economic reality of the contract concerned.
Rental income is recognised directly in the income statements on a linear basis, spread over the rental period.
Financial income consists of interest received, dividends received, the exchange rate revenues and the revenues from hedging instruments that are recognised in the income statement.
Interest is recognised on a proportional basis that takes account of the effective duration of the asset to which it relates (the effective interest method).
Dividends are recognised at the time when the shareholder has been given the right to receive the payment thereof. Exchange rate differences from non-company activities and profits from hedging instruments for non-company activities are also presented under financial income.
Expenses per type of cost are shown in the income statement. Expenses that relate to the reporting period or to previous reporting periods are recognised in the income statement, regardless of when the expenses are paid. Expenses can only be transferred to a subsequent period if they comply with the definition of an asset.
Purchases of trade goods, raw and auxiliary items, and purchased services are recognised at cost price, after deduction of the permitted trading discounts.
Research, advertising and promotional costs are recognised in the income statement in the period in which they were incurred. Development costs and system development costs are recognised in the income statement in the period in which they were incurred if they do not meet the criteria for capitalisation.
Financing expenses include such things as the interest on loans, exchange rate losses and losses on hedging instruments that are recognised in the income statement. Exchange rate differences from non-company activities and losses from hedging instruments for non-company activities are also presented under financing costs.
| EBIT | Operating result (earnings before interest and taxation) |
|---|---|
| EBITDA | Operating cash flow |
| Operating result (EBIT) + depreciation, write-downs and impairments of assets and negative goodwill | |
| REBIT | Operating result (EBIT) before non-recurring expenses and revenues |
| REBITDA | Operating cash flow before non-recurring expenses and revenues |
| Operating result before non-recurring costs and revenues (REBIT) + depreciation, write-downs and impairments of assets and negative goodwill |
|
| ROCE | Operating result (EBIT) in relation to average capital employed |
| Capital employed | Operating capital + net book value of goodwill, intangible and tangible non-current assets |
| Operating capital | Inventories + trade receivables + other short-term receivables - trade liabilities - social liabilities - tax liabilities - other short-term debt |
| Non-recurring income and expenses |
Operating revenues and expenses related to restructuring, impairments, discontinued operations and other activities, and transactions that have a one-off impact. |
The main estimates and assessments made by the management and board of directors include:
income statement, because the Group expects the equity value calculated for this purpose in 2017 will exceed that of 2016, barring unexpected market conditions.
The Group consolidated annual accounts for 2016 include the Entity and 18 consolidated subsidiaries over which the Entity exercises control (Note 35) and two joint ventures over which the Entity does not exercise full management control. On 15 July 2016, Binet SA was sold by Pluma NV. On 28 August 2015 the Entity acquired 33% of Stefano Toselli SAS.
The consolidated annual accounts for 2015 included nineteen consolidated subsidiaries and two joint ventures over which the Entity did not exercise full management control.
Ter Beke is a food group, specialising in the development, production and sale of processed meats and fresh ready meals in Europe. At the end of 2016 the Ter Beke Group had a workforce of 1,650 (2015: 1,588) (full-time equivalents on 31 December 2016 and the average number of temporary workers in 2016). The Group's management structure and the internal and external reporting systems have been set up in accordance with these business activities.
Ter Beke's reporting format therefore covers the organisation around the two existing product groups:
The profit or loss of a segment includes the revenue and expenses generated directly by a segment, including that part of the revenue and expenses to be allocated that can reasonably be attributed to the segment. Financial expenses and taxes are not attributed to the segments.
The assets and liabilities of a segment encompass the assets and liabilities directly pertaining to a segment, including the assets and liabilities that can reasonably be attributed to the segment. The assets and liabilities of a segment are shown excluding taxes.
Assets and liabilities per segment include the intangible non-current assets, goodwill, tangible non-current assets and financial non-current assets. All other assets and liabilities have not been allocated to the business segments and are stated as 'not allocated'. Assets and liabilities per segment are proposed for elimination of inter-segment positions. Competitive conditions form the basis for intersegment transfer pricing. The investment expenses per segment include the cost of the acquired assets with an expected useful life of more than one year. In this segment reporting the same accounting principles are used as in the consolidated financial statements.
Both the Processed Meats and Ready Meals divisions sell our products to a large client base which includes most large European discount and retail customers. The ten largest client groups represent 70% of the turnover (2015: 67%). Turnover with these clients is realised through a diversified number of contracts and products with various durations, under our own brand as well as under the clients' private labels, and in different countries. While our client portfolio is diversified, the complete termination of a relationship with a large group of clients could have an impact on our operating activities. Due to turnover growth in 2016, the volume of business with one single external client exceeded 10% of the consolidated turnover (14%). The turnover related to this client was in both segments.
to report only the turnover between both segments is non-material, the Group has opted to only report turnover external to the Group.
Ter Beke's geographical information shows the five geographical regions in which the Group is active - Belgium, the Netherlands, the United Kingdom, Germany and the rest of Europe. The rest of Europe contains the countries Luxembourg, Denmark, France, Ireland, Poland, Portugal, Romania, Spain, Sweden and Switzerland.
The net turnover is split per region based on the geographical location of the external clients. The total assets and investment expenses are split per region based on the geographical location of the assets. The investment expenses per region include the cost price of the acquired assets with an expected useful economic life of more than one year.
| 2016 | 2015 | |||||
|---|---|---|---|---|---|---|
| Processed meats |
Ready meals |
Total | Processed meats |
Ready meals |
Total | |
| SEGMENT INCOME STATEMENT | ||||||
| Segment net turnover | 295,844 | 122,719 | 418,563 | 281,716 | 114,603 | 396,319 |
| Segment results | 12,350 | 13,047 | 25,397 | 13,713 | 7,306 | 21,019 |
| 2016 | 2015 | |||||
|---|---|---|---|---|---|---|
| Processed meats |
Ready meals |
Total | Processed meats |
Ready meals |
Total | |
| Non-allocated results | -7,207 | -5,190 | ||||
| Net financing cost | -429 | -1,201 | ||||
| Taxes | -5,258 | -3,817 | ||||
| Share in businesses accounted for using the equity method |
59 | -513 | ||||
| Consolidated result | 12,562 | 10,298 | ||||
| SEGMENT BALANCE SHEET | ||||||
| Segment non-current assets | 93,091 | 22,957 | 116,048 | 96,514 | 26,013 | 122,527 |
| Non-allocated non-current assets | 28,289 | 26,674 | ||||
| Total consolidated non-current assets | 144,337 | 149,201 | ||||
| Segment liabilities | 57,565 | 27,168 | 84,733 | 52,146 | 24,899 | 77,045 |
| Non-allocated liabilities | 164,918 | 164,483 | ||||
| Total consolidated liabilities | 249,651 | 241,528 | ||||
| OTHER SEGMENT INFORMATION | ||||||
| Segment investments | 9,732 | 3,280 | 13,012 | 7,545 | 6,595 | 14,140 |
| Non-allocated investments | 1,820 | 2,780 | ||||
| Total investments | 14,832 | 16,920 | ||||
| Segment depreciation and non-cash costs | 10,136 | 5,404 | 15,540 | 11,724 | 5,375 | 17,099 |
| Non-allocated depreciation and non-cash costs | 4,005 | 1,345 | ||||
| Total depreciation and non-cash costs | 19,545 | 18,444 |
| Third party turnover | 2016 | 2015 |
|---|---|---|
| Belgium | 168,159 | 160,155 |
| Netherlands | 184,704 | 162,246 |
| UK | 14,915 | 23,096 |
| Germany | 21,433 | 24,320 |
| Other | 29,352 | 26,502 |
| 418,563 | 396,319 | |
| Assets per region | 2016 | 2015 |
| Belgium | 128,585 | 126,502 |
| Netherlands | 65,235 | 61,546 |
| Other | 55,831 | 53,480 |
| 249,651 | 241,528 | |
| Investments per region | 2016 | 2015 |
| Belgium | 13,114 | 13,819 |
| Netherlands | 1,713 | 3,100 |
| Other | 5 | 1 |
| 14,832 | 16,920 | |
| Non-current assets | 2016 | 2015 |
| Belgium | 112,050 | 115,783 |
| Netherlands | 30,418 | 31,546 |
| Other | 1,869 | 1,872 |
| 144,337 | 149,201 |
| Sale of goods | 418,563 | 396,319 |
|---|---|---|
The total Group turnover increased by EUR 22.2 million (+5.6%) from EUR 396.3 million to EUR 418.6 million
The turnover of the ready meals division increased by EUR 8.1 million compared to 2015 (+7.1%) thanks to the launch of new products and concepts. For example, in September 2016 the Group launched a new range of ultra-fresh lasagne and pasta meals under the brand name Come a casa® Delicious. Handsome growth was also achieved in the retail channels in Spain, France and the Netherlands.
The turnover of the Processed Meats Division increased by EUR 14.1 million (+5.1%). This increase is mainly due to considerable growth in the Netherlands, as a result of strategic investments in this market made by the Group. The Sharing Tapas concept was successfully introduced in the Dutch retail market. The growth in the Netherlands compensates amply the loss of a volume contract in the English market half way through 2016 and this negative effect of the decrease in value of the British pound on turnover. In addition, the launch in Belgium of the Multilayer Packaging concept for processed meats contributed to the increase in turnover of the division.
| 2016 | 2015 | |
|---|---|---|
| Purchases | 229,012 | 208,784 |
| Change in inventory | -1,835 | -124 |
| Total | 227,177 | 208,660 |
| 2016 | 2015 | |
|---|---|---|
| Interim staff and consultants to the organisation |
13,268 | 11,343 |
| Maintenance and repairs | 10,678 | 10,758 |
| Cost of marketing and sales | 16,334 | 16,854 |
| Transport costs | 14,852 | 14,148 |
| Gas and electricity | 7,359 | 8,288 |
| Rent | 6,531 | 6,259 |
| Advisory expenses and consultants | 6,473 | 8,342 |
| Other | 5,519 | 4,820 |
| Total | 81,016 | 80,812 |
Items such as insurance and office expenses are recognised in the 'Other' account. The increase in turnover is the main reason for the increase in number of interims and employees.
In 2016, employee expenses amounted to EUR 73,577,000 compared to EUR 74,110,000 in 2015.
Employee expenses can be analysed as follows:
| 2016 | 2015 | |
|---|---|---|
| Wages and salaries | 50,527 | 50,521 |
| Social security contributions | 15,518 | 16,214 |
| Other employee expenses | 7,532 | 7,375 |
| Total | 73,577 | 74,110 |
| 2016 | 2015 | |
|---|---|---|
| Number of employees expressed in FTEs (excl. temporary employees) |
||
| at year end | 1,326 | 1,348 |
| 2016 | 2015 | |
|---|---|---|
| Impairments, write-downs | 1 | 9 |
| Provisions | 2,116 | 558 |
| Total | 2,117 | 567 |
| 2016 | 2015 | |
|---|---|---|
| OTHER OPERATING INCOME | ||
| Recovery of wage-related costs | 536 | 494 |
| Recovery of logistics costs | 16 | 53 |
| Government grants | 0 | 0 |
| Profits from the disposal of assets | 642 | 77 |
| Insurance recoveries | 90 | 145 |
| Compensation received | 149 | 53 |
| Recovery of local taxes | 0 | 1,275 |
| Other | 833 | 770 |
| Total | 2,266 | 2,867 |
| OTHER OPERATING EXPENSES | ||
| Local taxes | 1,324 | 1,278 |
| Realised loss on disposal of assets | 0 | 53 |
| Total | 1,324 | 1,331 |
| Other operating income and | ||
| expenses | 942 | 1,536 |
| 2016 | 2015 | Delta | |
|---|---|---|---|
| REBITDA | 38,459 | 35,779 | 2,680 |
| Severance payments | -1,291 | -1,506 | 215 |
| Result of sale of Binet SA | 567 | 0 | 567 |
| EBITDA | 37,735 | 34,273 | 3,462 |
| Depreciation and impairments | -17,428 | -17,877 | 449 |
| Current profit from operating activities (REBIT) |
18,914 | 18,594 | 320 |
| 2016 | 2015 | Delta | |
|---|---|---|---|
| Impairments, write-downs, and | |||
| provisions | -2,117 | -567 | -1,550 |
| EBIT | 18,190 | 15,829 | 2,361 |
| EBIT | 18,190 | 15,829 | 2,361 |
| Severance payments | 1,291 | 1,506 | -215 |
| Result of sale of Binet SA | -567 | 0 | -567 |
| Impairment Binet premises | 0 | 1,259 | -1,259 |
| Current profit from operating activities (REBIT) |
18,914 | 18,594 | 320 |
The REBITDA rose by EUR 2.7 million (+7.5%) from EUR 35.8 million in 2015 to EUR 38.5 million in 2016.
This is both a consequence of the increased turnover in the second half of the year as well as the continued focus on the profitability of the product range and extensive cost control in both divisions.
However, the cost control measures are not preventing the Group from working on various developments for the future.
For example, in September 2016 the Group launched a completely new range of ultra-fresh lasagne and pasta meals under the brand name Come a casa® Delicious for which a major promotional campaign was established.
The Group also invested in two production lines for launching its Multilayer Packaging concept for processed meats, which was extremely well received.
In 2016, the Group also successfully launched products in its primary processed meats categories (salami, poultry and cooked ham) and in the first half of the year, also invested in restyling the packaging of its ready meals range which is marketed under the brand name Come a casa®. For the development of private label products, we continuously work together with our clients on the desired improvement and innovations in our product range.
Additional investments in efficiency improvements in the factories and the investment in ERP software have allowed us to optimise our business processes.
Furthermore, in 2016, severance payments were EUR 0.2 million lower than in 2015 and also in 2016 a non-recurring income of EUR 0.6 million was booked on the sale of Binet SA.
This explains the EBITDA increase of EUR 3.5 million (+10.1%) from EUR 34.3 million in 2015 to EUR 37.7 million in 2016.
The depreciation and impairments decreased by EUR 0.4 million and write-downs and provisions increased by EUR 1.6 million compared to 2015, mainly due to the provision for the CEO's long-term remuneration.
As announced last year, part this remuneration is formed by a component for exceptional growth in shareholder value achieved by the end of the CEO's mandate in 2018. Based on the current results a provision of EUR 2.2 million has been created (2015: EUR 0.6 million).
This means the EBIT increases by EUR 2.4 million (+14.9%) from EUR 15.8 million in 2015 to EUR 18.2 million in 2016.
In 2015, an impairment of EUR 1.3 million was booked to the assets of Binet SA. This, together with non-recurring elements mentioned above, explains the increase in the REBIT by 1.7% from EUR 18.6 million in 2015 to EUR 18.9 million in 2016.
| 2016 | 2015 | |
|---|---|---|
| Interest income | 188 | 196 |
| Positive exchange rate differences | 616 | 0 |
| Total | 841 | 476 |
| 2016 | 2015 | |
|---|---|---|
| Other | 37 | 280 |
| Total | 841 | 476 |
| 2016 | 2015 | |
|---|---|---|
| Interest cost on loans | 887 | 988 |
| Interest cost on leasing | 0 | 0 |
| Negative exchange rate differences | 0 | 509 |
| Bank charges | 131 | 140 |
| Revaluation of financial instruments | 48 | 0 |
| Other | 204 | 40 |
| Total | 1,270 | 1,677 |
TAXES BOOKED IN INCOME STATEMENT
| 2016 | 2015 | |
|---|---|---|
| Tax on profits | ||
| Financial year | 6,136 | 4,480 |
| Previous financial years | 180 | 132 |
| Deferred tax liabilities | ||
| Total tax in the income statement | 5,258 | 3,817 |
| 2016 | 2015 | |
|---|---|---|
| Effect of temporary differences | -1,058 | -795 |
| Total tax in the income statement | 5,258 | 3,817 |
| 2016 | 2015 | |
|---|---|---|
| Net book value | 35,204 | 35,204 |
The nominal tax rate in Belgium amounts to 33.99% (2015: 33.99%) For the other countries, the tax rates applicable in those countries are used.
Goodwill arises when the cost price of a business combination at acquisition date exceeds the interest of the group in the net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree.
RELATIONSHIP BETWEEN TAX BURDEN AND THE ACCOUNTING PROFIT
| 2016 | 2015 | |
|---|---|---|
| Accounting profit before tax | 17,761 | 14,628 |
| Tax at Belgian tax rate (2016: 33.99% | ||
| and 2015: 33.99%) | 6,037 | 4,972 |
| Effect of the different tax rates of | ||
| the foreign companies | -1,401 | -1,651 |
| Effect of the expenses not | ||
| deductible for tax purposes | 813 | 783 |
| Deferred tax assets and liabilities | ||
| in result | 0 | 0 |
| Realisation of previously | ||
| unrecognised deferred tax assets | 0 | -285 |
| Notional interest deduction | -347 | -329 |
| Other effects | 156 | 327 |
| Actual tax burden | 5,258 | 3,817 |
| Effective tax percentage | 29.6% | 26.1% |
| 2016 | 2015 | |
|---|---|---|
| GOODWILL | ||
| Start of the financial year | 36,944 | 36,944 |
| Acquisitions | 0 | 0 |
| Transfers and decommissioning | 0 | 0 |
| Translation differences | 0 | 0 |
| End of the financial year | 36,944 | 36,944 |
| IMPAIRMENTS | ||
| Start of the financial year | 1,740 | 1,740 |
| Impairment losses | 0 | 0 |
| Transfers and decommissioning | 0 | 0 |
| End of the financial year | 1,740 | 1,740 |
| Net book value | 35,204 | 35,204 |
The group has elected to allocate the goodwill to its segments. This choice is based on the fact that to date, the acquired business combinations had a risk profile which was almost identical to the previous business and/or that cash flows were fully aligned. Furthermore, these business combinations were fully integrated in the segment right from the acquisition date, whereby it was impossible to recognise, let alone monitor, any individual cash flows at a lower level. Management reporting is therefore at segment level.
Each year the group conducts an impairment analysis on this goodwill based on the discounted cash flow method. If the realisable value of the segment is lower than the book value, the impairment losses will first be allocated to the book value of the goodwill allocated to the unit and then to the other assets of the unit in proportion to the book value of each asset in the segment.
In 2016 the goodwill amounted to EUR 29,096,000 (2015: EUR 29,096,000) for processed meats and EUR 6,108,000 (2015: EUR 6,108,000) for ready meals.
The impairment analysis described above is based on:
the budget estimate for the following year of the own operational cash flows for each segment individually. This budget estimate is the result of a detailed analysis of all known and estimated developments in turnover, margin and costs adjusted to the commercial environment for each segment. Here, equilibrium is sought between challenge and realism.
.
In both divisions, the realisable value exceeds the book value significantly (by more than 150%). This impairment analysis does not result in impairments in any segment.
If the discount rate is increased by 1%, the difference between the estimated realisable value and the book value decreases by 24% in Processed Meats and 17% in Ready Meals. Each time the ratio of EBITDA to sales decreases by 1% for both divisions, these differences decrease by 23% and 9% respectively. Each time the drop in turnover growth after 2017 decreases by 1%, the difference between the estimated realisable value and the book value decreases by 19% in Processed Meats and 17% in Ready Meals.
If the 3 parameters described above simultaneously decrease by 1%, the difference between the estimated realisable value and the book value decreases by 53% in Processed Meats and 37% in Ready Meals. If the 3 parameters described above simultaneously increase by 1%, the difference between the estimated realisable value and the book value increases by 129% in Processed Meats and 75% in Ready Meals.
| Software | R&D | Total | Software | R&D | Total | |
|---|---|---|---|---|---|---|
| 2016 | 2015 | |||||
| ACQUISITION VALUE | ||||||
| Start of the financial year | 19,971 | 156 | 20,127 | 17,357 | 156 | 17,513 |
| Group consolidation extension | 0 | 0 | ||||
| Acquisitions | 1,547 | 1,547 | 2,692 | 2,692 | ||
| Transfers and decommissioning | -2,268 | -2,268 | -78 | -78 | ||
| Transfer from / to other entries | -19 | -19 | 0 | |||
| End of the financial year | 19,231 | 156 | 19,387 | 19,971 | 156 | 20,127 |
| DEPRECIATION | ||||||
| Start of the financial year | 14,561 | 156 | 14,717 | 13,942 | 156 | 14,098 |
| Group consolidation extension | 0 | 0 | ||||
| Depreciation * | 1,615 | 1,615 | 697 | 697 | ||
| Transfers and decommissioning | -2,268 | -2,268 | -78 | -78 | ||
| End of the financial year | 13,908 | 156 | 14,064 | 14,561 | 156 | 14,717 |
| Net book value | 5,323 | 0 | 5,323 | 5,410 | 0 | 5,410 |
In 2015 and 2016 no additional costs for development activities were capitalised. The increase in 2016 is due to the investments in the new ERP package. In 2016, investments in intangible non-current assets amounted to EUR 1.5 million.
2016
| Installations, | |||||||
|---|---|---|---|---|---|---|---|
| Land and | machines, and |
Furniture and rolling |
Assets under | ||||
| buildings | equipment | equipment | Leasing | Other | construction | Total | |
| ACQUISITION VALUE | |||||||
| Start of the financial year | 95,896 | 233,401 | 2,656 | 99 | 81 | 1,683 | 333,816 |
| Group consolidation extension | 0 | ||||||
| Acquisitions | 768 | 12,220 | 38 | 259 | 13,285 | ||
| Transfers and decommissioning | -5,908 | -7,544 | -134 | -31 | -13,617 | ||
| Transfer from / to other entries | 257 | 1,406 | -1,663 | 0 | |||
| Translation differences | 0 | ||||||
| End of the financial year | 91,013 | 239,483 | 2,560 | 68 | 81 | 279 | 333,484 |
| DEPRECIATION | |||||||
| Start of the financial year | 60,369 | 183,960 | 2,531 | 99 | 81 | 0 | 247,040 |
| Group consolidation extension | 0 | ||||||
| Depreciation * | 2,217 | 13,562 | 78 | 15,857 | |||
| Transfers and decommissioning | -1,760 | -7,491 | -135 | -31 | -9,417 | ||
| Translation differences | 0 | ||||||
| End of the financial year | 60,826 | 190,031 | 2,474 | 68 | 81 | 0 | 253,480 |
| IMPAIRMENT | |||||||
| Start of the financial year | 1,259 | 0 | 0 | 0 | 0 | 0 | 1,259 |
| Group consolidation extension | 0 | ||||||
| Addition* | 0 | ||||||
| Reduction* | 0 | ||||||
| Transfers and decommissioning | -1,259 | -1,259 | |||||
| End of the financial year | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| NET CAPITAL GRANTS | |||||||
| Start of the financial year | 306 | 198 | 8 | 0 | 0 | 0 | 512 |
| Group consolidation extension | 0 | ||||||
| New allocations | 0 | ||||||
| Other | 0 | ||||||
| Depreciation * | -4 | -40 | -44 | ||||
| End of the financial year | 302 | 158 | 8 | 0 | 0 | 0 | 468 |
| Net book value as per 31 December 2016 | 29,885 | 49,294 | 78 | 0 | 0 | 279 | 79,536 |
2015
| Net book value as per 31 December 2015 | 33,962 | 49,243 | 117 | 0 | 0 | 1,683 | 85,005 |
|---|---|---|---|---|---|---|---|
| End of the financial year | 306 | 198 | 8 | 0 | 0 | 0 | 512 |
| Depreciation * | -23 | -130 | -153 | ||||
| Other | 0 | ||||||
| New allocations | 0 | ||||||
| Group consolidation extension | 0 | ||||||
| Start of the financial year | 329 | 328 | 8 | 0 | 0 | 0 | 665 |
| NET CAPITAL GRANTS | |||||||
| End of the financial year | 1,259 | 0 | 0 | 0 | 0 | 0 | 1,259 |
| Transfers and decommissioning | 0 | ||||||
| Reduction* | 0 | ||||||
| Addition* | 1,259 | 1,259 | |||||
| Group consolidation extension | 0 | ||||||
| Start of the financial year | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| IMPAIRMENT | |||||||
| End of the financial year | 60,369 | 183,960 | 2,531 | 99 | 81 | 0 | 247,040 |
| Translation differences | 0 | ||||||
| Transfers and decommissioning | -5,720 | -87 | -181 | -5,988 | |||
| Depreciation * | 2,305 | 13,663 | 106 | 16,074 | |||
| Group consolidation extension | 0 | ||||||
| Start of the financial year | 58,064 | 176,017 | 2,512 | 280 | 81 | 0 | 236,954 |
| DEPRECIATION | |||||||
| Translation differences End of the financial year |
95,896 | 233,401 | 2,656 | 99 | 81 | 1,683 | 0 333,816 |
| Transfer from / to other entries | 98 | -98 | 0 | ||||
| Transfers and decommissioning | -5,783 | -88 | -181 | -6,052 | |||
| Acquisitions | 711 | 11,829 | 22 | 1,666 | 14,228 | ||
| Group consolidation extension | 0 | ||||||
| Start of the financial year | 95,185 | 227,257 | 2,722 | 280 | 81 | 115 | 325,640 |
| ACQUISITION VALUE | |||||||
| buildings | equipment | equipment | Leasing | Other | construction | Total | |
| Land and | and | and rolling | Assets under | ||||
| machines, | Furniture | ||||||
| Installations, |
With respect to the takeover contract for the business units Pronto, Les Nutons and l'Ardennaise from Unilever Belgium NV, a 99-year ground lease contract was signed in July 1996 for the use of the land and buildings. The part for the buildings is recognised as financial leasing, the part for the land under operational leasing.
The lines selected with * in notes 15 and 16 are recognised in the amount of depreciations and impairments of non-current assets in the income statement.
In 2016, the Group invested EUR 14.8 million of which EUR 13.3 million in tangible non-current assets. These investments relate primarily to the continuation of various efficiency and infrastructure investments in all sites of the Group.
In 2015, the buildings and properties of Binet SA, which are no longer in use, were recognised for an amount of EUR 3 million. In 2016 Binet SA was sold.
| 2016 | 2015 | |
|---|---|---|
| Joint venture | 1,853 | 2,754 |
| Associates | 10,454 | 9,881 |
| Total | 12,307 | 12,635 |
On 28 August 2015, Ter Beke and GS & DH Holding, the sole shareholder in the French company Stefano Toselli SAS (a ready meals producer), signed an agreement whereby Ter Beke acquired a 33% minority interest in Stefano Toselli SAS, effective immediately.
| 2016 | 2015 | |
|---|---|---|
| Summary financial information | ||
| Operating revenues | 6,373 | 6,967 |
| Depreciation and other write | ||
| downs | -1,306 | -1,481 |
| EBIT | 5,067 | 5,486 |
| Interest expenses | 0 | -106 |
| Result before taxes | 4,555 | 4,639 |
| Tax on profits | -1,606 | -1,453 |
| Profit or (loss) of the period | 2,949 | 3,186 |
| Non-current assets | 11,600 | 11,713 |
| Current assets | 15,861 | 16,400 |
| Debts | -16,921 | -19,311 |
| Long-term interest-bearing liabilities |
1,419 | 2,736 |
Reconciliation of the above mentioned financial information regarding the net book value of the net book value of the participating interest.
| 2016 | 2015 | |
|---|---|---|
| Net assets of the affiliated company | 10,540 | 8,802 |
| Group participation percentage in the affiliated company |
33.00% | 33.00% |
| 3,478 | 2,905 | |
| Goodwill | 6,976 | 6,976 |
| 10,454 | 9,881 |
The figures above have been drawn up according to the IFRS rules. In order to make comparisons, the figures for 2015 were adjusted retroactively to the IFRS restatements. There are no constraints on the transfer of funds between Stefano Toselli SAS and the Ter Beke Group.
The French company Stefano Toselli (Caen, Normandy) and the Belgian listed company Ter Beke have agreed a joint venture to commercialise chilled lasagne and pasta meals in Central and Eastern Europe. The business plan also includes the construction of an automated production site in Central Europe which will manufacture exclusively for the Central and Eastern European markets. For this purpose, a joint holding company (50/50) was established by Ter Beke and YHS Holdings (YHS), the holding company that controls Stefano Toselli. For Ter Beke, the agreements include a call option on the share of YHS in the joint venture as well as on the shares of Stefano Toselli. The valuation formulas for these call options, which may be exercised in 2018, are based on cash flows and on generally accepted market multiples. Within the framework of the long-term collaboration between the partners, in 2011 Ter Beke issued a EUR 5 million loan to YHS and in 2012 to GS & DH Holding. These are interest-bearing loans and are guaranteed by a pledge on the shares in the joint venture structure.
This joint venture was established on 22 June 2011 in Opole (Poland) under the name of Pasta Food Company. The Group recognises this joint venture according to the equity accounting method. This means that the investments are recognised in the balance sheet under the Group's share (50%) in the equity of the joint venture. The balance sheet and income statement of the joint venture, drawn up according to IFRS standards – and which has been the subject of a limited review by a Polish auditor – is as follows (in EUR x 1000):
| 2016 | 2015 | |
|---|---|---|
| Summary financial information | ||
| Non-current assets | 17,595 | 19,672 |
| Current assets | 1,717 | 1,458 |
| Debts | -15,606 | -15,621 |
| Long-term interest-bearing liabilities |
9,080 | 11,117 |
| Current interest-bearing liabilities | 5,321 | 3,374 |
| Operating income | 8,225 | 6,085 |
| Operating expenses | -8,933 | -7,251 |
| Depreciation | -1,691 | -1,656 |
| Financial result | -985 | -765 |
| Interest expenses | -510 | -451 |
| Result before taxes | -1,694 | -1,930 |
| Net result | -1,694 | -1,930 |
Reconciliation of the above mentioned financial information regarding the net book value of the participating interest.
| 2016 | 2015 | |
|---|---|---|
| Net assets of the joint venture | 3,706 | 5,509 |
| Group participation percentage in the joint venture |
50.00% | 50.00% |
| 1,853 | 2,754 |
In 2016 the Ter Beke Group issued a new loan of EUR 1,020,000 – in addition to the existing loan of EUR 350,000 granted in 2015 – to the Pasta Food Company to finance liquidity shortages. As at 31 December 2014, Ter Beke had a subordinated loan of EUR 500,000 for financing the investments in the Pasta Food Company. This loan matures in 2018.
Within the framework of bank financing for the Pasta Food Company amounting to EUR 10 million, Ter Beke NV has guaranteed the loan for its share (50%) in the Pasta Food Company. Should the bank invoke this guarantee, the Group has privileged rights on the purchase of the Pasta Food Company production line in proportion to its share.
There are no restrictions on the transfer of funds from the joint venture to the joint venture partners.
| 2016 | 2015 | |
|---|---|---|
| Receivables Pasta Food Company | 1,870 | 850 |
| Receivables and securities in cash | 97 | 97 |
| Total | 1,967 | 947 |
As at 31 December 2016, Ter Beke has granted the Pasta Food Company a new loan of EUR 1,020,000 in addition to the existing loan of EUR 350,000 granted in 2015. The subordinated loan of EUR 500,000 issued within the framework of the financing of the Pasta Food Company's investments was issued in 2014. This loan matures in 2018. The loan bears a market-based interest.
Within the framework of the long-term collaboration between the partners in the joint venture (see Note 17) Ter Beke issued a EUR 5 million loan to YHS in 2011 and to GS & DH Holding in 2012. These are interest-bearing loans and are guaranteed by a pledge on the shares in the joint venture structure. The loans mature on 31 March 2018.
| Long term interest-bearing | ||
|---|---|---|
| receivables | 10,000 | 10,000 |
The deferred tax assets and liabilities are attributable to the following categories:
| 2016 | 2015 | |
|---|---|---|
| Debts | -186 | -110 |
| Tangible non-current assets | 4,153 | 5,483 |
| Receivables | 529 | 801 |
| Provisions | -456 | -550 |
| Transferred losses | 295 | 228 |
| Transferred losses less other items | 0 | 0 |
| Deferred tax assets and liabilities | 4,335 | 5,852 |
In 2016, the group did not acknowledge EUR 7,553,000 (EUR 8,748,000 in 2015) in deferred tax assets on tax deductible losses because it is insufficiently certain that these will be realised in the near future. These transferable losses are transferable with no time limitation, the transferable notional interest deduction is transferable for 7 years only. From 2011, the unused portion of the notional interest of the year is no longer tax deductible.
| 2016 | 2015 | |
|---|---|---|
| Raw and auxiliary items | 13,552 | 12,872 |
| Work in process | 3,508 | 2,917 |
| Finished products | 4,335 | 4,382 |
| Total | 22,256 | 20,421 |
| 2016 | 2015 | |
|---|---|---|
| Goods for resale | 861 | 250 |
| Total | 22,256 | 20,421 |
| 2016 | 2015 | |
|---|---|---|
| Trade receivables | 59,088 | 56,989 |
| VAT to be reclaimed | 2,230 | 2,200 |
| Taxes to be reclaimed | 0 | 503 |
| Adjustment accounts | 1,653 | 1,499 |
| Receivable interest | 9 | 9 |
| Empties | 4,010 | 3,649 |
| Other | 0 | 11 |
| Total | 66,990 | 64,860 |
Our trade receivables are not interest-bearing.
The average number of days of customer credit for the Group is 52 days (2015: 52 days). This number of days is distorted because of the strong sales in the fourth quarter of both years.
In 2016, write-downs on trade receivables to the value of EUR 1,000 were recognised as a cost in the income statement (EUR 9,000 in 2015).
The percentage of trade receivables owed older than 60 days amounted to less than 2% in 2016 and 2015 (see also Note 28).
| 2016 | 2015 | |
|---|---|---|
| Current accounts | 16,061 | 7,041 |
| Cash | 7 | 5 |
| Total | 16,068 | 7,046 |
The various components of the shareholders' equity, together with the changes between 31 December 2015 and 31 December 2016 are shown in the consolidated statement of changes in shareholders' equity.
The Entity's issued capital amounted to EUR 4,903,000 on 31 December 2016, divided into 1,732,621 fully paid-up ordinary shares without nominal value. Dividends are payable on all these shares, which have the same voting rights.
The treasury shares reserve includes the acquisition value of the treasury shares held by the Group. As at 31 December 2016 and 2015 the Group held no treasury shares.
The exchange rate differences include both the exchange rate differences arising from the conversion of the annual income statements of foreign activities that are not considered as being activities of the Entity itself, and the exchange rate differences arising from the conversion of the liability that covers the net investment of the Entity in a foreign entity.
On 21 February 2017, the Board of Directors proposed paying out EUR 6,064,173.50 or EUR 3.50 per share. This dividend has not yet been approved by the Ter Beke General Meeting of Shareholders and has therefore not yet been recognised in the accounts.
The Group and its subsidiaries provide for pension schemes and other employee benefits. On 31 December 2016 the total net debt for pension schemes and similar liabilities was EUR 5,312,000. On 31 December 2015 this was EUR 3,061,000.
| Obligations under IAS 19 defined | |||
|---|---|---|---|
| benefit plan | Other provisions | Total provisions | |
| 1 January 2015 | 2,288 | 0 | 2,288 |
| Group consolidation extension | 0 | ||
| Service costs | 136 | 136 | |
| Interest costs | 31 | 31 | |
| Actuarial effect by OCI | 69 | 69 | |
| Payments | 0 | ||
| Allocations and redemptions | 633 | 633 | |
| Other | -155 | 59 | -96 |
| 31 December 2015 | 2,369 | 692 | 3,061 |
| Group consolidation extension | 0 | ||
| Service costs | 950 | 950 | |
| Interest costs and income | 10 | 10 | |
| Actuarial effect by OCI | 65 | 65 | |
| Payments | 0 | ||
| Allocations and redemptions | 2,210 | 2,210 | |
| Other | -914 | -70 | -984 |
| 31 December 2016 | 2,480 | 2,832 | 5,312 |
| 2016 | 2015 | |
|---|---|---|
| Defined benefit pension schemes | ||
| Net liability / (asset) | 2,480 | 2,369 |
| Of which liabilities | 19,400 | 2714 |
| Of which investments in investment funds | -16,920 | -345 |
| Amounts recognised in the income statement: | ||
| Pension costs allocated to the year of employment | 950 | 136 |
| Interest cost | 10 | 31 |
| Expected return on investments in investment funds | ||
| Recognised actuarial (profits) / losses | -1 | |
| Past service pension costs | ||
| Losses / (profits) from curtailments or settlements | ||
| Administrative expenses | 27 | 1 |
| Cost recognised in the income statement regarding defined benefit pension schemes | 987 | 167 |
| 898 | 734 | |
| Amounts allocated to the shareholders' equity via the comprehensive result (OCI) Recognised actuarial (profits) / losses |
65 | 69 |
| Cumulative of via OCI recognised actuarial results at the beginning of the period | 833 | 665 |
| Present value of the gross liability at the beginning of the year | 2,714 | 2,647 |
| Impact of PUC method on the Belgian fixed contribution plans | 13,651 | |
| Employer's contributions | 0 | |
| Interest cost | 309 | 36 |
| Pension costs allocated to the year of employment | 842 | 133 |
| DBO profit (loss) for the period | 2,025 | 98 |
| Other | -141 | -200 |
| Present value of the gross liability at the end of the year | 19,400 | 2,714 |
| Fair value of the investments in investment funds at the beginning of the year | -13,897 | -359 |
| Expected employer's contributions | -1,110 | -160 |
| Expected benefits paid (excl. interest) | 215 | 136 |
| Expected return on investments in investment funds | 110 | 3 |
| Expected taxes on contributions paid Expected administrative expenses |
27 | 1 |
| Expected value of the investments in investment funds at the end of the year | -14,655 | -379 |
| Fair value of the investments in investment funds to the beginning of the year | -345 | -359 |
| Impact of PUC method on the Belgian fixed contribution plans | -13,552 | |
| Actual employer's contributions | -1,040 | -153 |
| Actual benefits paid | 142 | 201 |
| Interest revenue | -300 | -5 |
| Actual taxes on contributions paid | 109 | 2 |
| Actual administrative expenses | 27 | 1 |
| Actuarial profit (losses) on the investments in investment funds | -1,967 | -32 |
| Fair value of the investments in investment funds at the end of the year | -16,926 | -345 |
| Amount not recognised as investment in investment funds in accordance with the limit in §58(b) | 6 | |
| Fair value of the investments in investment funds at the end of the year | -16,920 | -345 |
| 2016 | 2015 | |||
|---|---|---|---|---|
| Belgium | France | Belgium | France | |
| Discount rate | 0.50% | 1.15% | 0.75% | 1.30% |
| Future salary increases including inflation | 2.30% | 4.00% | 2.30% | 4.00% |
| Inflation | 1.80% | 2.00% | 1.80% | 2.00% |
Ter Beke companies contribute to publicly or privately administered pension funds or insurance schemes. Once the contributions have been paid, the Group's companies have no further payment obligations, because the minimum guaranteed reserves are covered by the value of the fund investments.
Pursuant to the legislation of 18 December 2015 the minimum guaranteed returns obtained are as follows:
Because these pension schemes guarantee a minimum return on investment, they are treated as defined benefit plans.
Ter Beke has had a full actuarial calculation according to the PUC method conducted in 2016. From the analysis of the pension schemes it transpires that there is a limited difference between the statutory guaranteed minimum and the interest guaranteed by the insurance company. This analysis confirmed that the impact over 2015 was minimal. At the end of 2016 this net liability amounts to EUR 312,000. The periodic contributions constitute a cost for the year in which they are owed. In 2016 this cost amounted to EUR 2,021,000 and in 2015 this was EUR 1,972,000.
Costs regarding IAS 19 are booked under employee expenses. The interest component is recognised in the financial result.
The other provisions consist mainly of severance payments and the provision for the supplementary remuneration of the CEO. A cash remuneration will be paid to the CEO on the termination of his contract. This will be based on a percentage on the exceptional growth of the equity value of Ter Beke between 2012 and 2017. Agreements have already been made about the calculation of the equity value as well as for determining the exceptional character. The key parameters for determining the equity value are a multiple of REBITDA and the net financial debt. In the period 2013- 2016 a provision was made in line with these agreements. This concerns a provision, because the final cash remuneration will depend on the result in 2017, which is not certain and not fixed. In 2016 a provision of EUR 2,210,000 was made and in 2015 an amount of EUR 633,000 was reserved in the income statement, because the Group expects the equity value calculated for this purpose in 2017 will exceed that of 2016, barring unexpected market conditions.
2016
| Maturity period | ||||
|---|---|---|---|---|
| Within the year | Between 1 and 5 years |
After 5 years | Total | |
| Interest-bearing liabilities | ||||
| Credit institutions | 10,815 | 30,693 | 2,107 | 43,615 |
| Lease liabilities | 0 | 0 | 0 | 0 |
| Total | 10,815 | 30,693 | 2,107 | 43,615 |
2015
| Interest-bearing liabilities | ||||
|---|---|---|---|---|
| Credit institutions | 10,965 | 35,596 | 4,797 | 51,358 |
| Lease liabilities | 0 | 0 | 0 | 0 |
Loans from credit institutions include:
| 2016 | 2015 | |
|---|---|---|
| Loans with fixed interest rate | 1.69% | 1.91% |
| Loans with variable interest rate | 1.33% | 1.48% |
If the variable interest rate on all loans were to increase by 1%, this will mean an additional EUR 136,000 in interest expenses.
Minimum payments to credit institutions (including interest) in 2016:
| 2016 | 2015 | |
|---|---|---|
| Less than 1 year | 11,432 | 11,908 |
| More than 1 year and less than 5 years | 31,423 | 37,033 |
| More than 5 years | 2,129 | 4,892 |
The Group has sufficient short-term credit lines to fulfil its short-term requirements. The Group did not pledge any assets, nor were any guarantees given by third parties to obtain the credit lines with the institutions mentioned above. The primary financial covenants are based on the net debt to EBITDA ratio (<3) and the consolidated equity to total consolidated assets ratio (>25%). The Group conforms to these covenants in 2016 and 2015.
| 2016 | 2015 | |
|---|---|---|
| Trade liabilities | 62,962 | 55,339 |
| Dividends | 89 | 89 |
| Other | 3,728 | 3,402 |
| Total | 66,779 | 58,830 |
| Of which empties | 2,826 | 2,676 |
Most trade liabilities have a due date of 60 days or 45 days from invoice date.
Exposure to risks associated with interest rates and exchange rates are a consequence of the normal conduct of the Group's business activities. Derivative financial instruments are used to limit these risks. The Group's policy forbids the use of derivative financial instruments for trading purposes.
The interest risk is the risk that the value of a financial instrument will fluctuate as a result of changes in the market interest rates.
In 2011 the company agreed a CAP without repayments for EUR 5 million for which interest rate increases have been limited to a pre-determined rate until the 31 March 2016. The market value on 31 December 2015 amounted to EUR 0.
The exchange rate risk consists of the potential fluctuations in the value of financial instruments due to fluctuation in exchange rates. The Group is exposed to an exchange rate risk on the sales, procurement and interest-bearing loans and borrowings expressed in a currency other than the company's local currency, for example, the British pound. On 31 December 2016, the Group had a net position in British pounds of GBP 1,609,000 on 31 December 2015 this position was GBP 1,901,000. As hedge against exchange rate risk, on 31 December 2016 the group had outstanding option contracts for the sale of GBP 2 million for EUR and forward contracts for the sale of GBP 600,000 for EUR. On 31 December 2015 the Group held futures for the sale of GBP 4,465,000 for EUR.
The credit risk is the risk that one of the contracting parties fails to honour its obligations with regard to the financial instrument, giving rise to a loss for the other party. Both the Processed Meats and Ready Meals divisions sell our products to a large client base which includes most large European discount and retail clients. Turnover with these clients is realised through a diversified number of contracts and products with various durations, under our own brand as well as under the clients' private labels, and in different countries. The ten largest client groups represent 70% of the turnover (2015: 67%). Due to turnover growth in 2016, the volume of business with one single external client exceeded 10% of the consolidated turnover (14%). The turnover related to this client was in both segments. The management has worked out a credit policy and exposure to the credit risk is continuously monitored.
The maximum credit risk for all these exposures equals the balance sheet amount.
Trade receivables are subject to standard terms of payment. There are no significant amounts outstanding or overdue at closing date.
The liquidity risk is the risk that the Group cannot honour its financial obligations. The Group limits this risk by monitoring the cash flows on a continuous basis and ensuring that sufficient credit lines are available. See also Note 26.
The Group leases its cars and several freight vehicles under a number of leasing contracts. At the end of 2010, the Group signed an operational agreement for a new state of the art value added logistics platform in Wijchen, where Ter Beke has now centralised the slicing activities of Langeveld/Sleegers and all the Dutch logistic activities. Future payments under this non-terminable operational leasing contract amount to:
| 2016 | 2015 | |
|---|---|---|
| Less than 1 year | 2,095 | 2,151 |
| More than 1 year and less than 5 | ||
| years | 7,326 | 7,570 |
| More than 5 years | 6,494 | 8,058 |
| Total | 15,915 | 17,779 |
On 7 February 2014 Ter Beke was summoned by the Greek company Creta Farms because of an alleged breach of a confidentiality agreement from 2010. Creta Farms asked the District Court in Athens to order Ter Beke to pay damages of amounting to approximately EUR 2 million. The Group considers this demand from Creta Farms completely unfounded and will use all means necessary to defend itself. For this reason no provision has been recognised in the consolidated annual accounts. In early 2015, Creta Farms reduced its claim to EUR 1.1 million. In 2016, the Greek district court ruled that Ter Beke must pay damages amounting to EUR 100,000. The order has not yet been served and Ter Beke intends to appeal against this ruling. No provision has been made for this.
The Group has not set up any sureties as a guarantee for debts or obligations to third parties.
The total purchase obligations concerning major investment projects for which the respective contracts had already been assigned or orders placed amounted on 31 December 2016 to EUR 1,231,000 (2015: EUR 1,698,000).
The compensation policy was prepared by the Compensation and Nomination Committee and approved by the Board of Directors. The remuneration paid to the executive directors and members of the Executive Committee is structured in a fixed part, a variable part that is defined as a function of an evaluation by the Compensation and Nomination Committee, and long-term incentives such as a pension plan. As from 1 January 2006, the remuneration policy was included as an integral part of the Group Corporate Governance Charter.
Only the CEO will be paid a cash allowance on termination of his/ her contract, if at that time an exceptional growth of the group equity value has been realised. This remuneration will be equal to an agreed percentage of the exceptional growth of the Group equity value realised. The Board of Directors makes an annual assessment of whether a provision needs to be created for applying the prevailing rules. The assessment will take account of the exceptional added value at the end of the previous financial year and the extent to which it is more than probable that this extraordinary added value will still exist on the expiry date. This probability is influenced by both market expectations and the proximity of the end date. At the end of 2015, the provision amounted to EUR 633,000. In 2016 the provision was increased by EUR 2.2 million. The remuneration received by members of the Board of Directors and the Executive Committee during the 2016 financial year is summarised in the table below.
We also refer to the remuneration report in the declaration of Corporate Governance (see above).
Transactions with directors:
| Remuneration to Board of Directors Ter Beke | ||
|---|---|---|
| NV for the execution of their mandate | 0.2 | 0.2 |
Remuneration for managers in a key position (in accordance with IAS 24.17):
| in EUR million | 2016 | 2015 |
|---|---|---|
| Short-term employee benefits | 2.3 | 2.6 |
| Post-employment benefits | - | - |
| Other long-term employee benefits | 0.1 | 0.1 |
| Termination benefit | - | - (*) |
| Share-based payments | - | - |
| in EUR million | 2016 | 2015 |
|---|---|---|
| (*)= concerns one person, consequently this termination benefit is |
recognised in the short-term employee benefits
Transactions with affiliated parties primarily concern commercial transactions and are based on the 'at arm's length' principle. The costs and revenues relating to these transactions are immaterial within the framework of the consolidated income statement.
For 2015 and 2016 no reports were received from directors or management within the framework of the provisions concerning related transactions, as included in the Corporate Governance Charter. For the application of the conflict of interest rules (articles 523 and 524 of the Belgian Company Code) we refer to the annual report chapter on Corporate Governance (see above).
Transactions with joint ventures and with affiliated companies 2016:
| Company | Pasta Food Company |
Stefano Toselli |
|---|---|---|
| Long-term receivables | 1,870 | - |
| Interest | 33 | - |
| Dividends | - | 333 |
Transactions with joint ventures and with affiliated companies 2015:
| Company | Pasta Food Company |
Stefano Toselli |
|---|---|---|
| Long-term receivables | 850 | - |
| Interest | 15 | - |
| Dividends | - | - |
The calculation of the basic earnings per share is based on assigning a net profit to the ordinary shareholders of EUR 12,562,000 (2015: EUR 10,298,000) and a weighted average number of outstanding ordinary shares during the year of 1,732,621 (2015: 1,732,621).
The weighted average number of outstanding ordinary shares was calculated as follows:
| 2016 | 2015 | |
|---|---|---|
| Number of outstanding ordinary shares on 1 January financial year |
1,732,621 | 1,732,621 |
| Effect of ordinary shares issued | ||
| Weighted average number of outstanding ordinary shares on 31 December financial year |
1,732,621 | 1,732,621 |
| Net profit | 12,562 | 10,298 |
| Average number of shares | 1,732,621 | 1,732,621 |
| Earnings per share | 7.25 | 5.94 |
When calculating the earnings per share after dilution, the weighted average number of shares is adjusted by taking account of all the potential ordinary shares that could give rise to dilution. In 2015 and 2016 there were no potential ordinary shares that could give rise to dilution.
| 2016 | 2015 | |
|---|---|---|
| Net profit | 12,562 | 10,298 |
| Average number of shares | 1,732,621 | 1,732,621 |
| Dilution effect warrant plans | 0 | 0 |
| Adjusted number of shares | 1,732,621 | 1,732,621 |
| Diluted earnings per share | 7,25 | 5,94 |
No business combinations were conducted in 2016 and 2015.
Binet on 15 July 2016 according to IFRS standards:
| Total assets | 3,064 Total liabilities | 3,064 |
|---|---|---|
| Tangible non-current assets | 3,000 Shareholders' Equity | 2,278 |
| Current assets | 64 Deferred taxes | 642 |
| Short-term liabilities | 144 |
On 15 July 2016 Pluma NV sold Binet SA for EUR 2,920,000. After deducting the costs of the sale, which amounted to EUR 75,000, the Group realised a net result of EUR 567,000.
The parent company of the Group, Ter Beke NV, Beke 1, B-9950 Waarschoot, Belgium, was directly or indirectly the parent company of the following companies as per 31 December 2016: Ter Beke is joint owner of The Pasta Food Company and Stefano Toselli, with a 50% and 33% share respectively. These last two are accounted for in the consolidated financial statements using the equity method.
| Name and full address of the company | Effective holding in % |
|---|---|
| Ter Beke Vleeswarenproduktie NV - Beke 1, 9950 Waarschoot - Belgium | 100 |
| Heku NV - Ondernemingenstraat 1, 8630 Veurne - Belgium | 100 |
| Ter Beke Immo NV - Beke 1, 9950 Waarschoot - Belgium | 100 |
| FreshMeals Netherlands BV - Bijsterhuizen 24/04, 6604 LL Wijchen - Netherlands | 100 |
| FreshMeals Ibérica SL - Vía de las Dos Castillas, 33 Complejo Empresarial Ática, Edificio 6, Planta 3a - Officina B1, 28224 Pozuelo de Alarcón, Madrid - Spain |
100 |
| Ter Beke Luxembourg SA - 534, rue de Neudorf - 2220 Luxembourg - Luxemburg | 100 |
| Les Nutons SA - Chaussée de Wavre 259 A, 4520 Wanze - Belgium | 100 |
| Come a Casa SA - Chaussée de Wavre 259 A, 4520 Wanze - Belgium | 100 |
| Ter Beke France SA - Parc d' Activités Annecy - La Ravoire - Metz-Tessy, 74371 Pringy Cedex - France | 100 |
| Berkhout Langeveld BV - Bijsterhuizen 24/04, 6604 LL Wijchen - Netherlands | 100 |
| Langeveld/Sleegers BV - Bijsterhuizen 24/04, 6604 LL Wijchen - Netherlands | 100 |
| TerBeke-Pluma NV - Antoon Van der Pluymstraat 1, 2160 Wommelgem - Belgium | 100 |
| Pluma NV - Antoon Van der Pluymstraat 1, 2160 Wommelgem - Belgium | 100 |
| TERBEKE-PLUMA UK LTD - Addlestone Road, Bourne Business Park, Addlestone, Surrey KT15 2LE - UK | 100 |
| Pluma Fleischwarenvertrieb GmbH - Ostwall 175, 47798 Krefeld - Germany | 100 |
| TerBeke-Pluma The Netherlands BV - Bijsterhuizen 24/04, 6604 LL Wijchen - Netherlands | 100 |
| FreshMeals NV - Beke 1, 9950 Waarschoot - Belgium | 100 |
| H.J. Berkhout Verssnijlijn BV - Scheepmakerstraat 5, 2984 BE Ridderkerk - Netherlands | 100 |
| Pasta Food Company Sp. z.o.o. - Ul. Północna 12 - 45-805 Opole - Poland | 50 |
| Name and full address of the company | Effective holding in % |
|---|---|
| Stefano Toselli SAS - ZI Espace Zuckermann - BP56 - 14270 Mézidon-Canon - France | 33 |
No events have occurred after the balance sheet date that could have a relevant impact on the results as represented in this annual report.
In relation to the 2016 financial year, the Statutory Auditor and the companies with whom the Statutory Auditor has a working relationship, invoiced to the Group additional fees for a total amount of EUR 138,000. These fees concern tax consultancy assignments, among others. The Statutory Auditor invoiced the Ter Beke Group a fee of EUR 225,000 with regard to the statutory audit.
| 2016 | 2015 | ||
|---|---|---|---|
| Non-current assets | 106,933 | 105,889 | |
| I. | Formation Expenses | 0 | 0 |
| II. | Intangible non-current assets | 406 | 351 |
| III. | Tangible non-current assets | 5,538 | 5,569 |
| IV. | Financial non-current assets | 100,989 | 99,969 |
| Current assets | 85,947 | 94,938 | |
| V. | Amounts receivable after 1 year | 10,020 | 10,020 |
| VI. | Inventories | ||
| VII. | Amounts receivable within one year | 67,463 | 82,036 |
| VIII. | Cash investments | 0 | 0 |
| IX. | Cash and cash equivalents | 7,745 | 2,064 |
| X. | Accrued income and deferred charges | 719 | 818 |
| TOTAL ASSETS | 192,880 | 200,827 | |
| Shareholders' equity | 75,783 | 74,859 |
| TOTAL LIABILITIES | 192,880 | 200,827 | |
|---|---|---|---|
| Provisions and deferred taxes | 2,843 | 633 | |
| V. | Transferred result | 19,232 | 18,308 |
| Reserves available for distribution | 575 | 575 | |
| Untaxed reserves | 679 | 679 | |
| Reserves not available for distribution | 1,457 | 1,457 | |
| Statutory reserves | 649 | 649 | |
| IV. | Reserves | 3,360 | 3,360 |
| II. | Share premiums | 48,288 | 48,288 |
| I. | Capital | 4,903 | 4,903 |
| Shareholders' equity | 75,783 | 74,859 |
| 2016 | 2015 | |
|---|---|---|
| Provisions for risks and costs | 2,843 | 633 |
| Deferred taxes | 0 | 0 |
| Debts | 114,254 | 125,335 |
| X. Debts payable after 1 year |
18,173 | 19,768 |
| XI. Debts payable within 1 year |
96,038 | 105,534 |
| XII. Accrued charges and deferred income |
43 | 33 |
| TOTAL LIABILITIES | 192,880 | 200,827 |
| 2016 | 2015 | |
|---|---|---|
| Operating income | 18,515 | 15,001 |
| Turnover | ||
| Change in inventory | ||
| Produced non-current assets | ||
| Other operating income | 18,515 | 15,001 |
| Operating costs | 18,087 | 14,851 |
| Trade goods, raw and auxiliary items | ||
| Services and miscellaneous goods | 9,211 | 9,233 |
| Remuneration, social security costs and pensions | 4,863 | 4,023 |
| Depreciation and write-downs on intangible and tangible non-current assets |
1,795 | 945 |
| Write-downs on inventory and trade receivables | 0 | 0 |
| Provisions for risks and costs | 2,210 | 633 |
| Other operating costs | 8 | 17 |
| Operating result | 428 | 150 |
| Financial income | 7,371 | 723 |
| Financial charges | -386 | -370 |
| Result from ordinary business operations before tax | 7,413 | 503 |
| Profit before tax | 7,413 | 503 |
| Tax on profits | -425 | -225 |
| Result for the financial year after tax | 6,988 | 278 |
The accounting principles and conversion rules for the statutory financial statements of the parent company meet the Belgian standards (BE GAAP). The consolidated financial statements were drawn up in accordance with the IFRS. These accounting principles differ widely from each other.
The Statutory Auditor has given an unqualified audit opinion on the financial statements of Ter Beke NV.
The comprehensive financial statements, the Statutory Auditor's unqualified audit opinion as well as the statutory annual report, which is not included in its entirety in this annual report, will be published in accordance with the statutory provisions and can be obtained free of charge upon request.
| 2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |
|---|---|---|---|---|---|---|
| Consolidated income statement | ||||||
| Revenue | 418,563 | 396,319 | 399,730 | 407,202 | 421,078 | 403,715 |
| EBITDA (1) | 37,735 | 34,273 | 31,418 | 28,602 | 31,130 | 33,233 |
| Recurring operating result | 18,914 | 18,594 | 16,174 | 12,757 | 13,948 | 15,333 |
| Non-recurring operating activities | -724 | -2,765 | -2,330 | -2,159 | -380 | 0 |
| Result of operating activities | 18,190 | 15,829 | 13,844 | 10,598 | 13,568 | 15,333 |
| Result after tax before share in the result of enterprises is | ||||||
| accounted for using the equity method | 12,503 | 10,811 | 8,805 | 6,313 | 8,024 | 9,206 |
Copywriting: Cantilis Translation: SGS Concept and Layout: Cantilis Responsible Editor: Dirk Goeminne
Portraits: Sven Everaert Other images Ter Beke.
The Dutch version of this annual report is the sole official version. Ce rapport annuel est également disponible en français. Dit jaarverslag is ook verkrijgbaar in het Nederlands.
We thank all our employees for their commitment and dynamism. It is thanks to them that we have achieved the results reported here. And it is thanks to them that we have full confidence in the future.
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