Annual Report • Apr 26, 2019
Annual Report
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Enthusiasm. Determination. Drive. Dedication. Eagerness. Passion. Sincerity.
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CONTENTS
| Our mission | $\overline{2}$ |
|---|---|
| Content | 5 |
| Ter Beke in brief | 6 |
| Our core values | 8 |
| Headlines and key figures in 2018 - Prospects for 2019 | 10 |
| Strategic objectives | 12 |
| BUSINESS OVERVIEW | 13 |
| Message from the Chairman | 14 |
| Francis Kint | 16 |
| René Stevens | 18 |
| Yves Regniers | 19 |
| Ready Meals Division | $20 - 25$ |
| Processed Meats Division | $26 - 35$ |
| Group Functions | $36 - 37$ |
| Family Day | 38 |
| NON-FINANCIAL INFORMATION | 40 |
| CORPORATE GOVERNANCE | 44 |
| STOCK AND SHAREHOLDER INFORMATION | 62 |
| CONSOLIDATED FINANCIAL STATEMENTS | 65 |
| CONTACT INFORMATION | 114 |
Deeside, GB Production site
Opole, PL Production site
Mézidon-Canon, F Production site
Wanze, BE Production site
A Marche-en-Famenne, BE Production site
Veurne, BE Centre for slicing and packaging
Lievegem, BE Production site Centre for slicing and packaging
8 Wommelgem, BE Production site Centre for slicing and packaging
Ridderkerk, NL Centre for slicing and packaging
Aalsmeer, NL Centre for slicing and packaging
A Borculo, NL Production site
Wijchen, NL Centre for slicing and packaging
B Almelo, NL Administration Offerman
The group has two core products: processed meats and freshly prepared ready meals. It has 12 industrial sites in Belgium, the Netherlands, France, Poland and the United Kingdom and employs approximately 2700 employees. Ter Beke generated a turnover of EUR 680.5 million in 2018.
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OUR CORE VALUES
Encourage an entrepreneurial spirit to create future-oriented solutions that add value and differentiate us from our competitors.
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Professional relationships based on mutual respect, confidence, willingness to listen and support. Commitment to achieving the Ter Beke objectives together.
Offer solutions for current and future demands of customers and consumers.
Achieve common and agreed objectives
by working efficiently.
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Communicate and work honestly and openly with business and social partners.
TURNOVER 680.5 million EUR NUMBER OF EMPLOYEES about 2700 INVESTMENTS GROSS DIVIDEND 27.9 4.0 EUR million EUR REBITDA EAT $72$ 50.2 million EUR million EUR
This is the first time the results of the companies acquired in 2017 are included in the income statement for a full year. To recapitulate, these are the Dutch company Offerman for the Processed Meats Division and the French company Stefano Toselli, the Polish Pasta Food Company and the British company KK Fine Foods for the Ready Meals Division.
The new companies were quickly integrated in the Group and the acquisitions have brought Ter Beke a step further in its transformation into a diversified food group with sufficient scale. The Group now has more capacity to respond to the needs of consumers who are becoming increasingly aware of what they eat. The consolidated Group turnover increased by 36.8% to EUR 680.5 million, while the recurring business cash flow (REBITDA) increased from EUR 36.9 million to EUR 50.2 million (+36.2%). Ter Beke has herewith achieved its targeted result. The net profit decreased from EUR 17.1 million to EUR 7.2 million. The net financial debt decreased from EUR 126.9 million to EUR 122.7 million.
• Ter Beke is responding to new food trends in the food service channel by offering the highest possible quality combined with innovative technologies and sustainable solutions. The fresh lasagnes in wholesale packaging and the freshly frozen world cuisine meal solutions are driving further growth.
The Group invested 27.9 million in non-current assets in 2018 as opposed to FUR 13.5 million in 2017 (excluding the acquisitions). These relate primarily to the continuation of efficiency investments, infrastructure adjustments at the various sites, the further roll-out of the ERP package and, most importantly, investments to expand the slicing capacity in Veurne.
Taking the evolution of the results into account, the Board of Directors will propose to the General Meeting of Shareholders to maintain the gross dividend at 4.00 EUR per share.
The Group is confident that, barring unforeseen market circumstances, the results for 2019 will surpass those of 2018.
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2013 2013 2014 2015 2016 2017 2018
28.6 31.4 34.2 37.7 38.4 44
2013 2014 2015 2016 2017 2018 6.2 8.1 10.3 12.6 17.1 7.2
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On 1 June 2018, I made the move from the CEO role to becoming the Chairman of the Board of Directors.
However, I'd like to briefly return to my last year as CEO during which Ter Beke - thanks to four acquisitions - firmly established its growth strategy in both its home markets and the neighbouring countries. The acquisitions were made with specific objectives in mind, with the knowledge that big changes are on the way, some of which have a significant impact on Ter Beke. Firstly, more than ever before, consumers want to know what their food is made up of. One of their considerations is the right place of animal-based proteins in their daily diet. The scientific basis for the arguments for this is not always very precise, but this will undeniably have an effect on Ter Beke's original processed meats business. Secondly, there are major shifts in the retail landscape - i.e. Ter Beke's primary market segment blurring the distinction between the traditional supermarket and the discounter, and both are facing additional competition from home delivery start-ups and the Out-of-Home segment. All segments are looking for partners or suppliers who will think with them, in concrete terms, about the content of the assortment in this ever-changing market.
Therefore, the four acquisitions were aimed at transforming Ter Beke and making it more resistant to these changes in the consumer and retail landscape:
As a result of the four acquisitions in 2017, it was important that I remained involved in the integration process. When you have managed and completed an acquisition process, you know where the potential pitfalls lie. Francis Kint, the new CEO, shares my philosophy of 'giving time some time' in such a process. It is important that we proceed in a gradual manner, with respect for the identity of each business unit. He came with a strong background in the integration of companies into a larger group and knowledge of the animal-based proteins industry as well as the characteristics of the competitive private label industry.
So I'm very confident about the future of this Ter Beke, which offers its retail customers the right products and solutions within a rapidly changing food industry.
Dirk Goeminne
"This Ter Beke is resistant to changes in the consumer and retail landscape."
Since 1 June 2018, Francis Kint has been the new CEO of the Ter Beke Group. He succeeds Dirk Goeminne, whose term of office concluded at the end of May. We asked him a few questions.
"Ter Beke is a company that has undergone some fantastic developments over the last thirty years thanks to a number of strategic measures: a stock exchange listing, early diversification in ready meals, a merger with a major competitor to extend the range of in-house products, a vision for the importance of services - alongside products - such as slicing, and a quantum leap forward in 2017 with the targeted acquisition of four companies."
"I'd like to reiterate the quantum leap forward which Ter Beke made in 2017. The four companies we added to our Group have increased turnover by 60% when you compare the figures for 2018 to 2016. They have given us access to 3 new domestic markets: France, the United Kingdom and Poland, with a combined total of around 170 million consumers. They have widened the scope of our activities. Ter Beke can now quite rightly be labelled as a 'food concern with sufficient scale'. As a 'food concern' you are able to shift the emphasis of activities depending on food trends. And thanks to sufficient 'scale' it is possible to invest in innovation and development. The integration has progressed extremely smoothly. On the one hand, the four companies have performed according to plan individually and collectively. On the other hand, people feel comfortable within the Ter Beke culture. As it happens, arriving after the acquisitions, I never experienced the differences between the 'new' and 'legacy' companies."
"Admittedly, 2018 was a difficult year due to market conditions, but we also had other specific issues. However, it is good to report we will hit the targets
the company set itself after 2017. Let's be honest, after 4 acquisitions any stakeholder in Ter Beke will have wondered whether it would all turn out fine. The fact that the answer is a demonstrable 'ves' is significant and it provides a stable platform for future developments. Results could have been better without the squeeze on margins experienced by certain business units. Consumption of processed meats is declining. We shouldn't be making a secret of this. As a result, it releases capacity in the industry. As we know that this is an ongoing trend, this year we closed a site in the Netherlands sooner than originally planned, for example, and moved its production to two other factories in Belgium and the Netherlands"
"That's true. This was essential, on the one hand, to align our fixed costs with the current market situation and, on the other hand, to create a more flat structure with all business units reporting directly to the CEO. This is necessary if you want to manage operations more rigorously. The necessity of this had already been recognised in 2017."
"Ter Beke is currently much more than just a 'processed meats group', as some people still like to label us. Of course, processed meats are still an important part of our business. In the Benelux we are market leader thanks to the know-how we have built up over half a century. The visionary step into slicing and packaging activities that Ter Beke made in the 90s, often with respect to part or the whole of the range, enabled us to take on the role of a 'category partner' instead of just being a supplier. That's
something we acknowledge. Quite rightly, animal proteins still have a large part to play in our diets and we are quite happy to make scientific material available when asked. The processed meats market may be slightly declining, but it is still extremely large. In terms of consumer prices, the market in the Benelux is worth around $64$ 1 billion"
"When I started. I was surprised by the strong position we occupied in the European market for chilled pasta meals. For several decades the 'Come a casa' brand has been proving to Belgian consumers how tasty and convenient lasagne can be. Other countries too, are discovering this, which can only be a good thing for us. Pasta Food Company is situated in Poland but serves as a base for the whole of Central and Eastern Europe. Thanks to KK Fine Foods we now have a producer of quality ready meals for the Food Service market as well. The UK is a mecca when it comes to creativity in food concepts in the catering industry. Christophe Bolsius, the CEO of the Division, has succeeded in getting the 5 business units operating as a single family."
"Consumers are much more socially aware in their attitude to buying and eating food than in the past. Specific food trends are here to stay, for example, fewer animal proteins, the growth of organic foodstuffs, healthier nutrition - with all the issues to 'quantify healthiness', sustainable packaging and so on. All this without making concessions to convenience, individualisation of needs and growing community segments, such as halal."
" What excites me personally about this job is how a food concern such as ours can address these issues by devising new product concepts knowing that large volumes are being sold at ever keener prices in a hyper-competitive industry."
"As a 'food concern with sufficient scale', Ter Beke holds all the cards when it comes to translating these food trends into viable products in the future."
INTERVIEW CFO
René, you have been working at Ter Beke for 20 years now, 13 years of which as CFO. How do vou see the evolution of Ter Beke, at a hroad financial level?
"Ter Beke is an ambitious company with a focus on creating long-term shareholder value. For this, we're always looking for a good balance between the interests of our various stakeholders."
"In a highly competitive environment, characterised by food crises and continuous cycles of rising and falling raw material prices. Ter Beke succeeds in retaining its focus on the long term without losing sight of the short term."
"The Group generates cash from its operations and invests significant amounts each year in the future development of the company. As a result, we continue to guarantee our customers quality at the right price and keep paying our shareholders a correct dividend. And it is just as important to always provide our employees sufficient scope for professional development and continue to fulfil our obligations towards third parties in a correct manner"
turn, provides scope for acquisitions and a further expansion of our activities. Thanks to all this. Ter Beke's balance sheet is healthy."
"2018 was a difficult year. Ter Beke had to integrate the four major acquisitions made in the second half of 2017, which was not an easy task. The good news is that these four acquisitions, both individually and jointly, performed according to plan and in line with the strategic and financial objectives. Margins in certain segments, especially in the Processed Meats Division, are under very high pressure. Here too, the good news is that other segments, particularly in the Ready Meals Division, performed very well. This is the advantage of diversification."
"But Ter Beke wouldn't be Ter Beke if we didn't look to the future. That's why in 2018, we invested "This policy also enables us to reduce debts. This, in almost 7 million euros in various measures to prepare for future challenges. The most important of these include the earlier closure of the Zoetermeer site, reduction of fixed costs through restructuring, and the investment in a strategic study. And despite all these measures, we managed to reduce our net debt position by more than $4$ million euros"
"The environment in which Ter Beke operates is becoming increasingly challenging. The growing price pressure coming from the customer forces us and our partners to be more economical with available resources and strive for more efficiency and lower costs in all areas. Only this can guarantee Ter Beke's long-term success, so that we can
continue to invest the necessary resources to offer added value to direct and indirect customers1
"First and foremost, as a Group, it is important that we achieve the 2019 budget targets. For this it is essential that we intensify the use of the ERP system, whose roll-out is almost complete."
"Within my departments, the emphasis lies on further strengthening internal controls and fulfilling the long-term plan for IT services. Moreover, we want to optimise the legal group structure and prepare for the next steps with respect to our ERP system. As you can see, there's no shortage of challenges."
Yves Regniers is the new face within the Executive Committee. His primary goal is to contribute strategically to the direction in which Ter Beke is heading and focus on adding value through his connecting role.
"We want to create this added value for our various entities with the help of the Control team. Thanks to our sound category management, we know exactly what the customer wants. As Controller, I can help convert that insight into affordable, high-quality solutions for the customer Moreover we have access to a wealth of details. This allows us to focus on how we can become even more sustainable and innovative. You could even put it this way: control activities expose all the details of the film and offer insight into the material. Based on this, the various teams can edit the film under the direction of the CEO."
"When I started in 2017, Ter Beke was making a large number of acquisitions within a short period of time. I had the privilege of being closely involved in the process. I experienced the course of the collaboration from close by. Everyone is driven by the same passion, whether at Ter Beke, KK Fine Foods, Offerman, Stefano Toselli or Pasta Food Company. This 'moving forward together'
attitude can be seen everywhere. Our main objective was to find synergies, without losing sight of the uniqueness of each unit. Everyone who worked on this can take credit for our success."
"Sustainability is not just a superficial goal for us. It is in our DNA. We assess each investment based on our objectives. We are constantly looking for new cooking techniques, how to reuse energy and water, how to save energy through e.g. LED technology, and
"Everyone is driven by the same passion, whether at Ter Beke, KK Fine Foods, Offerman, Stefano Toselli or Pasta Food Company. This 'moving forward together' attitude can be seen everywhere."
other such innovations. At the same time, sustainability is just as much a focus area in the development of packaging and in every logistics choice we make."
One Team, One Goal: healthy and tasty products for our consumers with optimum service for our customers and partners.
The Ready Meals Division does not conceal its ambition. They believe that everybody in the world has a right to tasty and affordable lasagne. How do they plan to achieve this? CEO Christophe Bolsius explains.
"In 2018, we expanded our geographical distribution. We introduced the Stefano Toselli brand in Asia. while Come a casa hit the shelves in a number of countries in Central and Eastern Europe. For example, you can now buy our products in Poland and Croatia. We will soon continue to roll out in all seventeen countries where we are active in the region. In each case, our aim remains the same: to serve everyone the best lasagne."
"Our strengths? We do not only seek new customers and sales channels, but also continue to focus strongly on retaining our existing customer base, which our customers appreciate. We develop sustainable partnerships with our strategic customers, which clearly works, because we constantly keep doing business in the countries where we operate
"The Division's most important drive is and remains innovation. In 2018, we presented some new flavours, both for Come a casa®, Stefano Toselli and the private labels. The whole team got a real boost when an independent test panel representative for the Belgian population officially voted Come a casa® the best lasagne."
"2018 was a pivotal year for our Division. We have worked hard to integrate the acquisitions of the previous year. Our challenge was to become One Team, One Group. We are now reaping the rewards of our efforts. You can see that many colleagues are starting to share knowledge and best practices. The communication across the locations is running smoothly and the sites are helping each other out where possible. We all speak the same language at Ter Beke, which I think is very important for our
future growth. We strengthen each other, which makes the team enthusiastic. After all, we all have the same goal: to make even better products for our consumers and to improve the service to our strategic partners."
"Innovation is our answer to the food trends emerging today and to the requirements of the consumer and our partners. Our innovations are always developed independently of our production sites. First we develop a concept and then we decide which site can most efficiently produce it. This is part of our philosophy and strategy. We are now in a position that allows us this luxury of choice and we have reached the point that all sites implement the innovations using the same uniform method."
"Just before Christmas, we launched a new product in Belgium: 'DIPPA', a bread wreath with a lasagne in the middle. The innovative DIPPA concept fits in seamlessly with a trend that is catching on fast in many countries: sharing. The response was very positive and we will definitely be repeating it next year. We will probably also introduce the product in other countries."
"Our innovations go hand in hand with sustainability and corporate social responsibility. We will continue to do our part to reduce the plastic waste mountain, which forms part of an important process. Meanwhile, our customers are asking for healthy products, which is why we are constantly improving our recipes to reduce the salt, fat and sugar content. We are convinced that 'healthy' and 'tasty' form a perfect match."
"We will certainly continue on this course in 2019, for which we have a number of projects lined up with our customers and suppliers. We currently score an 'A' on the nutritional values table (nutriscore) that was introduced in Belgium a while ago. This means that our products are both tasty and healthy. So, we are living proof that the two can be combined. And we are doing our best to take things even further. You will see: plenty of interesting surprises in 2019!"
"The whole team got a real boost when an independent test panel representative of the Belgian population officially voted Come a casa® the best lasagne."
READY MEALS DIVISION
We cook like we would at home. only in larger saucepans.
Stavros Nalmpantidis. Head of NPD & QA Ready Meals
For Stavros, his work is his passion. He never stops. Nonetheless, first and foremost he wants his team to eniov what they are doing because it is precisely that which gives so much taste to a product like 'Come a casa'.
"Our brand name is a perfect fit. We may produce meals on an industrial scale, but we do this like we would at home. And while the computer controls the process, this is only in part. All the ingredients pass through our hands. Everything is done by people. We buy meat and mince it ourselves. We prepare our sauce with top-quality tomato pulp and concentrate. The lasagne is freshly made with pasta we make ourselves. We cook like we would at home. only in larger saucepans."
"Our industry is governed by strict rules and methods of preparation. After all, a product must stay fresh for a couple of weeks and taste just as good on the last day as on day one. Pasteurisation has to be borne in mind. Sometimes there can be a world of difference between a fantastic recipe dreamed up in the test kitchen and what rolls off the conveyor. It requires a lot of effort and insight to take all this into account in the product development."
"My work is my passion. Through constant retraining, my aim is to improve my skills so that I can understand people and methods better. I mostly want to ensure that my team can work calmly and with enjoyment, so that they too can improve. We must be able reproduce tomorrow the products we develop and produce today. Our clients deserve the same high levels of quality in all our dishes, now and in the future."
Our chefs are not just masters of their trade, they are impassioned creators.
For Donna Thompson, Head of NPD & Process (product development and processes) at KK Fine Foods, it's all about innovation and quality. Along with the rest of the team, she ensures that both features are ever-present during the NPD process.
"My job is to take responsibility for the team of chefs and the process team. I check every product we develop before presenting it to the customer, ensuring we have we followed and hit their brief, and that it meets the quality standards required. I also have to ensure the operational aspects of the product are achievable."
"A great deal of organisation is involved, so planning and prioritising is required. Often, it's quite a challenge to meet all the deadlines. So, how do we manage? When a tight deadline lands, the team pull together ensuring that the deadline is hit!"
"Before the customer presentation, we'll have already figured out how we can produce the meal in the factory, what packaging we will use, final reheat etc. The desire for innovation and perfection results in some fantastic meals."
"Our chefs are more than masters of their trade They are impassioned 'creators'. Each chef works with a number of specific customers. The customer briefs us on menu dish ideas. Not only do we develop these meals according to the briefing, we also suggest additional menu ideas that would hit the brief or are reflective of our market knowledge and gap analysis conducted for that specific customer. We present each meal fully garnished, in the same way as the customer might serve in a restaurant."
"We keep a close track of trends. Our chefs work closely with marketing to understand the new and upcoming market trends. This is key to ensuring we stay ahead of the game and ensure we continue to drive our passion for innovation. For example, the team will regularly visit various new and trendy restaurants. We check out how the meals are served and we analyse tastes and textures. This helps to generate new food and garnish ideas, adding that little extra to customer presentations. We also regularly order our own products from the end customer and assess whether the presentation and the taste are exactly as we intended. Customers appreciate this feedback and two-way traffic. We always think of the bigger picture."
"The desire for innovation and perfection results in some fantastic meals. "
Life Cycle Assessment
Ter Beke is constantly looking for innovations and sustainability plays an important role in this search. For us, sustainability is not just an empty concept but something that we take into account in all our decisions and activities
In 2018, we set up a working aroup on packaging. The working group includes employees from both divisions: Ready Meals and Processed Meats. Some of them work in technical areas, while others are responsible for handling customer issues. Together we develop technical solutions that are practical and relevant.
Together with external experts, we study the life cycle and ecological footprint of our packaaina. We examine each parameter and measure the impact of each adjustment: how much energy was needed to produce the packaging? Can it be recycled? Or reused? Our packaging suppliers also participate in this process. We want them to participate in the working group based on their vision. The auestion is always whether to re-use or recycle the packaging, because just throwing it away is not an ontion
There are no simple, universal answers, because packaging is also market-sensitive. For example, it is possible to recycle the aluminium foil travs used for ready meals. But the problem is that certain markets do not want aluminium packaging. Another example: in some countries, customers want to use a traditional oven to warm up our products, while in other countries a microwave is preferred. Therefore, we have to create a customised solution for each market. But thanks to Life Cycle Assessment (LCA), we can see where we stand now and then decide where we want to go.
The mix of own brands and distribution brands makes the difference.
Veerle Dejonghe, Product Manager Ready Meals
Veerle has been working at Ter Beke for 18 years now. And continues to do so with the greatest zeal and passion. What appealed to her then continues to motivate her every day: being part of a production company with a family atmosphere, short reporting lines and a vision. And most importantly: a company that delivers - and demands - top quality.
"I'm responsible for our own brands and distribution brands. Product management is completely my thing. I love the industrial aspect: the focus on products and the relationship with the factories. At a factory, you can't just set up a project and finish it off with a 'Just do it'. You also have to explain why it is important and why you want to do certain things in a particular way. In the factory, the focus is always on efficiency and production. Sometimes an innovation goes against this focus. Fortunately, at Ter Beke, I get enough time to work on this together with the factories. I make sure that we retain our focus and I keep my factory colleagues informed of the different steps in a project: where we currently stand and what feedback we received from the customer. This model works."
"In addition to our own brands, we also work on distribution brands. As a result, we have access to a lot of consumer data. We conduct surveys and taste tests. And we can provide figures on what does or does not sell. This results in many insights that can also be used for our distribution brands. I believe that this is how we make a difference. We also organise business reviews with our customers. During these reviews, we share information and consider future possibilities. We test out concents
READY MEALS DIVISION
and ideas with the customer. After which I can discuss those concepts with the factories. This is how we arrive at the best solution together."
"At a factory, you can't just set up a project and finish it off with a 'Just do it'. You also have to explain why it is important."
READY MEALS DIVISION
What does our consumer want? A tasty, convenient, healthy and affordable product.
As Product & Marketing Manager, Dorothée Veron tries to understand the needs of our customers and the consumer as well as possible. The purpose? To offer customised products. The four Ps - product, price, positioning and promotion - are the golden rule throughout the process.
"To achieve the four Ps, I work closely with our Key Account Managers. I provide them with the necessary marketing tools, such as presentations, visual material and well-reasoned arguments. At the same time, I act as the link between them and the factories. I am in charge of the development of new products and improvements to our range."
"An example of best practice? In 2018, with Stefan Toselli, we launched a new range of products on the French market: 'Votre Traiteur Vous Propose'. The goal of this project was to present a single commercial point of contact for our customers. It was a highly productive collaboration between the different factories.'
"At Ter Beke we quite rightly refer to ourselves as an expert in ready-made pasta meals. Our Ready Meals Division enables us to offer customers a complete range of lasagne and pasta meals. To this end we take into account the wishes of the consumer: a tasty meal, easy to prepare, healthy and affordable."
"We are active in France and many European countries. This international expertise allows us to deliver a top-quality service to our customers and helps us to distinguish ourselves in a market with a lot of players. And we continue to innovate. For 2019, we have a variety of new projects in the pipeline, some of which I might even call 'disruptive'. Curious to know more? I'm sure you are! But just have a little patience
"For 2019, we have a variety of new projects in the pipeline, some of which I might even call 'disruptive."
We need to ensure we are not indispensable.
Kars joined our team in the Netherlands as Key Account Manager Retail for Ready Meals three vears ago and soon had a portfolio of international customers. Within his team, he does his utmost to satisfy the customers and to think along with them. He believes that this is what distinguishes Ter Beke from other suppliers.
"Our goal is to make sure we are not indispensable, which we can only achieve by continuously innovating: new products, even better recipes, innovative packaging and concepts. My job is to sell these innovations; to enthuse customers with our story and to respond immediately to changing conditions. Responding quickly is one thing our team is good at. For example, we are one of the leading suppliers of lasagnes and ready-made pasta meals with a reduced salt and saturated fat content. Customers respond to our products and have questions. Sometimes I need to sell my story twice; once to the team and once to the customers. The important thing is that we share feedback in the team and respond to it. That is how we distinguish ourselves from the competition."
"There is an art to defending and maintaining your position. We are doing well. The quality of our products is constant in all of our factories. Our Ready Meals Division has various factories from which we supply different parts of Europe. This provides us the flexibility we need to guarantee supply, and it is positive aspects like this that I can use to convince my customers."
halfway through the window.
Mariusz Liszega, Pasta Food Company
Mariusz Liszega is one of the two Account Managers at Pasta Food Company in Poland, He is in charge of the sale of our lasagnes in Eastern Europe. After four years working in the business, he is struck by one thing in particular.
"You have to be flexible and work wherever and whenever the market demands your presence. The market here is constantly evolving. We were already familiar with frozen meals, but fresh ready meals are a relatively new concept. The idea of 'fresh' ready meals initially was met with some degree of scepticism. For example: how can we keep our products fresh for so long? It is my job to explain this and to make it plain no additives are used. People have to have trust in both you and your product and this can only develop over time. Personal contact is key to this, so I am often on the road visiting existing and prospective clients. I often say - tongue in cheek -I have one foot in the door and the other halfway through the window."
"In the past we mostly worked with one kilogram portions, but since the end of 2018 we've also been producing individual servings. There are more and more single-person households and people are increasingly looking for a convenient solution. We are responding to this demand. There is still much to play for and that provides us with plenty of opportunities. When all is said and done, our lasagne must become an important part of that market. I plan to make my contribution to this. How? By sticking my foot in the door." "I'm eager to get things moving, but sometimes you just have to be patient. Often a lot of time passes between the initial contact and the first order. The map still shows a few blank spaces. I'd like to fill them in with Come a casa® logos in 2019."
READY MEALS DIVISION
One foot in the door and the other
"The map still shows a few blank spaces. I'd like to fill them in with Come a casa® loaos in $2019."$
The confidence on the work floor has its effect on our customers.
Martien joined Pluma in 2003. Right from the start, he showed a genuine passion for the product and for developing a close relationship with the customer. After the acquisition by Ter Beke, he was assigned commercial responsibility for the products as well as the Langeveld-Sleegers and Berkhout slicing lines. Recently, he was appointed Commercial Director for Ter Beke Netherlands.
"After Ter Beke's acquisition of Langeveld-Sleegers and Berkhout, we had two companies with slicing services. How did we want to present that story to the market? We didn't have to think too long. Our aim was to provide an even better service to our customers, because they had confidence in us as an independent service provider. We were also able to build a professionally strong, commercial team. which will help us achieve further growth and market developments.'
Confidence is the common thread running through Martien's storv. This new position is a sign of appreciation, forming an important basis for developing his team and the relationship with the customer. His colleague Patrick Toemen is responsible for the operational aspect. "This tandem works. The management gives us confidence, which we communicate to our customers."
"When we meet with customers, all discussions place in an atmosphere of trust and openness. We know what's really going on with them. We bring more than just numbers to the table. Together with category management, we develop growth and innovation proposals tailored to the customer. We try to understand fully where the needs lie and then, in full cooperation with the retailer, we look for ways to better serve their customers
"The major advantage of our service model is our independency. Together with the customer, we look for the best fit in the category. Obviously, I prefer to supply our own products. But we might just as easily decide, with the customer, to approach another supplier, to get the best range for every situation. In this way, we also develop a good relationship with the supplier, which ultimately benefits the customer. Easing the customer's burden, that's what we call it." "Here too, it's all about trust. That's what makes the relationship comfortable. Not only when things are going well, but also when you need to deliver more difficult messages. We want to pursue our pricing policy in a constructive climate. Not profit for profit's sake, but a clear policy where any increasing costs also offer clear guarantees for innovations and investments. This is the only way to stay ahead of the markat
"We bring more than just numbers to the table. Together with category management, we develop growth and innovation proposals tailored to the customer."
wonderful profession.
Patrick Toemen is head of operations of the companies in Ridderkerk and Wijchen. He shares the P&L (Profit & Loss) responsibility with Martien van den Boer, who heads the commercial activities. Before he found his match at Ter Beke in 2007. Patrick had completed a number of years at Zwanenberg (Offerman). As he says, it's nice how it all falls into place sometimes.
"I already knew at a young age what I wanted to do: manage a large company. Meat processing is an area where you can put all your knowledge and skills to work, with respect for the animal. Moreover, you always see the raw material you're working with. It's not something hidden in tanks or pipes. And there is a lot of technology and expertise. When I applied for a job at Ter Beke, I said that I found slicing and packaging to be a real profession. I still believe that. It's simply a wonderful profession."
"I started at Ter Beke just before the integration of Langeveld-Sleegers and Berkhout. The company was also expanding in other areas. This gave rise to a new business case. Together with a number of colleagues, we investigated all the possible logistical flows. We wanted to bring slicing, packaging and logistics under one roof. Our aim was to consolidate our largest flow of goods, processed meats and ready meals for the Netherlands, and thereby guarantee our service level. Based on this idea, we designed the ideal factory. That is how Wiichen came into being. What a challenge that was! Setting up a whole new organisation while keeping up volumes and above all: continuing to offer customers a high level of service while retaining our people and their skills. In our slicing factories, each team works for a specific customer. This ensures that our customers get the attention they need." "What we also must not forget is that we are at the service of our people on the work floor. They ensure that we deliver quality and that the package is ready
ROCESSED MEATS DIVISION
Let me be honest: it's simply a
at the right price and at the right time. Also important: our processes must serve the customer It is our task to make sure that these processes work properly. Ouality, food safety, sustainability. innovation and efficiency: all these aspects must be taken into account. That is what we focus our efforts on. 2019 is looking good, with a number of excellent projects and clear plans."
"What a challenge that was! Setting up a whole new organisation while keeping up volumes and above all: continuing to offer customers a high level of service while retaining our people and their skills."
PROCESSED MEATS DIVISION
Leonard started his career at Ter Reke in late 2015 as a consultant for a LEAN/Operational Excellence programme. In 2018, he accepted the role of Plant Manager in Lievegem. In early 2019, Leonard was appointed Business Unit Director of Processed Meats for Belgium.
"I have huge respect for what Carlos is doing in Lievegem. That flow he refers to is really important. If your production process does not flow properly. it will cause waste, delays and unnecessary interventions. With my background as an Operational Excellence consultant, I feel very strongly about this. Aquarius was a typical example.
"Last year, our team in Lievegem invested heavily in improving communication and employee commitment. I think we have made a number of important steps. We have changed the organisation on the work floor and, together with Carlos, conducted a broad optimisation programme. This new challenge means I will continue to keep close ties with this factory."
"It is a big challenge; we need to focus on what the market and the customer expect of us, and adjust our internal organisation and service levels to meet these expectations. We provide excellent and highquality products and we need to demonstrate this quality at all levels."
"The labour market is tight. It is not easy to find technical and operational staff. We have plenty of
people in-house with product experience who deliver constant quality. But it is important to ensure that this knowledge and experience is passed on to the next generation in a timely matter
"We need to focus on what the market and the customer expect of us, and adjust our internal organisation and service levels to meet these expectations."
Arjen started out in the 'fresh' division at Zwanenberg in 2015, from which Offerman was born in its current form. He helped to shape its development. Since 1 January 2019, he has been Business Director at Offerman.
meats."
"Offerman's strength lies in category management. Not only do we provide our customers with concepts and product ranges, we also advise them on shelf placement. We have been successful in doing so because we have been collecting data for many years, which is then processed in our specially integrated database. That way we can see exactly where the opportunities and obstacles lie for our customers"
"Collaboration with Ter Beke is going well. Our companies are well matched and complement each other effectively. All colleagues work with equal amounts of energy and enthusiasm. It connects people. We share know-how and experiences. A good example is the relocation of part of the production from Zoetermeer to Wommelgem. We truly did it together. The transition to a new ERP system has been successfully concluded, as well." "2018 was a year full of challenges: launching Offerman as an independent company, relocating to new offices, closing the production site in
"We believe in a close partnership with our customers. Our aim is to build an optimal chain together. This necessitates transparency and sharing each other's know-how and therefore demands a durable relationship. Whether it is about advice on shelf placement or logistical solutions, by working together, both parties achieve a better plan. If chain efficiency is improving, this is translated into better quality and better prices for the products supplied. It is a shared interest. Our mission is to take our customers further than where they currently are. There is more to it than simply producing processed
Zoetermeer, implementing a new ERP system, introducing FairBeleg® to the market, and so on. Just a few of the projects which our team have been working on energetically. Above all, we have managed to bring these projects to a successful conclusion. I look forward to 2019 with a great deal of confidence. For our customers and for Offerman we aim to make it another successful year."
"Our companies are well matched and complement each other. All colleagues work with equal amounts of energy and enthusiasm. That connects people."
The processes are complex, but the commitment of our staff is unquestionable.
Gunther Uyttenhove, Plant Manager in Wommelgem and Luc De Vos, Slicing Manager in Wommelgem
The site in Wommelgem is 'going places'. First and foremost, that's down to the dynamism of its workforce. Gunther Uyttenhove and Luc De Vos explain how their teams have been taking on complex challenges and are constantly trying to improve their workflow.
responsibility for the factory and its products. But above all. I'm responsible for my workforce. They are the crucial factor. It is thanks to them that new products keep rolling off the line flawlessly, safely and full of quality. It is a big responsibility, especially taking into account that our plant in Wommelgem works with complex processes and different flows. To get to grips with the complexity of it all, additional knowhow and expertise on the part of employees are required. And whilst this demands a learning phase, our workforce shows plenty of commitment. That means we can handle complex situations."
"Our product range is very diverse. In addition to paté, cooked sausages and cooked ham, we took on a whole new range of artisanal products after the closure of the Zoetermeer site last year. These are our liver and tongue products. I was highly impressed with the trust the group placed in us. After all, it is quite a challenge. We carry out slicing for most of our own products and have also started service slicing. This requires new process flows and different logistics. Add into the mix our huge diversity of international customers and you realise how multifaceted our work is'
30 TER BEKE / ANNUAL REPORT 2018
PROCESSED MEATS DIVISION
Luc: "Our 'improvement teams' have been building up considerable expertise over the vears. We regularly apply that methodology to existing processes that are no longer running as we wish or where we see room for improvement. Often the initiative for this comes from people in charge on the work floor. I hear them say: 'This can be done better Gunther: "My role as Plant Manager is to take on and more smoothly. Let's get an improvement team up and running'. Obviously, someone is always in overall charge of this, but the real commitment of staff on the work floor means that our teams are more or less independent.'
"Our employees are highly motivated to work in such a team. It is no talking shop: everyone takes their responsibilities seriously and that produces some excellent results. The change in culture is palpable. Our people have learned to cooperate with each other in a different way. They are more involved in the everyday comings and goings in the factory. Of course, that can only be good."
"Often the initiative for this comes from people in charge on the work floor. I hear them say: 'This can be done better and more smoothly. Let's get an improvement team up and running."
The Rainbow project was without doubt the greatest challenge in 2018 for Hugo Meersschaut's team in Veurne. It involved rolling out a total concept for a major customer; from slicing and packaging in the factory right up to delivery to the customer. It was a complicated exercise, explains Hugo.
"It's fair to say that Rainbow was an ambitious project. Together with the customer, we carefully developed it from A to Z. This included creating a new logistics flow, bringing various suppliers together and conceiving a new packaging concept. One of the biggest advantages is that all processed meats are sliced and packaged in our factory in Veurne, from where they are transported to the customer's depots and stores.'
"Whenever we launch a new project or implement a change in our factory, we always take three criteria into account: Is it safe? Is quality
guaranteed? Is it efficient? These three pillars are safety or quality."
"Succeeding was the only option, so we drew up a meticulous plan in advance. We started by completely changing the layout of the factory so we could house the new machines. Before the first new line arrived the new employees followed a training course using parallel lines. This was a learning experience for all of us. It is like driving a new car. You know how to drive it: you just have to get used to the slightly different dashboard." "We recruited a lot of new staff for the project. Where last year we had seventy employees, today we have about one hundred and fifty. That requires a different approach. Happily, I was able to rely on a tight-knit team from the start. Everyone in the office has known each other for a long time. They are all motivated people who are always ready to meet a new challenge and help each other when necessary."
PROCESSED MEATS DIVISION
carefully balanced, and if we need to make a choice, we prioritise as follows: safety first, then quality and then efficiency. This ensures that efficiency improvements will never compromise
Rachid coordinates the slicing activities in Veurne. The Rainbow project at the site in Veurne has brought in many new people. One of his most important tasks is training and supervising new members of staff.
"We aim to give new colleagues a proper welcome, so we set up a special programme to do just that. We show them our approach to work here and create the right framework. However, it must be said, the start of the Rainbow project was not easy. Not only did we acquire new colleagues, we also received new machines, new configurations, different types of packaging and so on. And whilst all the parameters had changed, we still had to meet the deadlines that had been set."
"The team took on the project with great gusto. I was pleased to play my own role in this. It was important to adjust to everyone's own speed. Some colleagues grasp how something works after seeing it done once, whilst others prefer a longer explanation. It's important to me that our approach has a human $scale"$
"What does the future hold in store? We continue to improve our sustainability. That applies to our productions lines too. For example, we train colleagues to keep slicing losses to a minimum. The purpose of this is to prevent too much being thrown away. After all, it is not respectful towards the animal and you lose valuable work, time and money."
LEAN is a strategy focused on constantly improving operational activities. In concrete terms, this involves putting the customer first and limiting waste. The outcome is quality improvement of the products and working methods, shorter lead times and cost reductions.
We introduced the LEAN strategy to the factories in Wommelaem. Wiichen. Veurne and Lieveaem a few vears ago. This vear, Ter Beke brought together all the involved employees from the relevant factories for the first time. The session focussed on standard solutions, one of the basic principles of LEAN Management. We reached several new insights and devised improvement proposals by sharing our best practices and knowledge. All the participants carried their newfound knowledge back to their own site to apply it there. We will certainly be holding a second I FAN session in 2019.
"Behind every process there are people; they are the critical factor."
PROCESSED MEATS DIVISION
To ensure a smooth flow, all unnecessary steps have to be removed.
Carlos Maenhout, Process Engineer in Lievegem
Carlos Maenhout has worked for Ter Beke for more than 40 years. He started as a lab assistant and then further developed and trained for a new role as Process Engineer, a job he has been doing since 1991. But what does he do exactly?
"A Process Engineer is constantly working on improving safety, quality and performance at the site. He does this by optimising the site's infrastructure, work processes and the machinery. He draws up and implements schedules to this end, of course while keeping an eye on the available budget." But this is only the briefest summary of Carlos' work. "There is much more to it than that. Behind every process there are people; they are the critical factor."
"Last year, we relocated the Aquarius production line and adapted the workflow here in Lievegem. A result of the Rainbow project in Veurne was that we also acquired another slicing line. Changes like these have a major impact on the factory, which has to keep producing throughout."
"The key words in projects like these are 'preparation' and 'organisation'. We drafted designs and agreed deadlines with external services. We cooperated intensively with colleagues here and in Veurne and made good agreements. Finally, we provided our own people with a timely briefing and appropriate training."
"We constantly try to optimise the various positions in the line. We want to produce more economically. but it is also important to increase bacteriological safety. We also look into more ergonomic and efficient working methods for our employees. Any unnecessary steps are removed to ensure a smooth flow. We need to constantly innovate in our factories and make the production processes as LEAN as possible. This is how we assure the quality of our products while at the same time keeping the costs under control"
If you ask Simon what he finds important in his job, the answer is clear: ensuring that customers receive the right products at the right time. This means: plan, plan and plan again.
"My job is all about planning and people. Production delivers the goods, we store everything in the warehouse and ensure a correct delivery. I love that dynamic. You're dependent on many factors: production, packaging, transport, planning, logistics, All these parts are connected to one another. And if you do it right, they all come together nicely. I'm right in the middle of it. Like a spider in the web, I keep track of everything.'
"We are constantly looking for the best solution, both for our customers and ourselves. When we introduce a new system, people ask for my opinion. I appreciate that. Did you know that we prepare orders for more than just the distribution centres? We also do this for the shops of many of our customers. Each customer has its own method, so we have to take a different approach each time. But we can handle it all"
"As Warehouse Manager, I supervise 37 people in total, either directly or indirectly. We have team meetings every day. We go over the planning together with the entire team. This is also an ideal moment to provide extra information. That's how we keep the lines of communication short."
Seeing a new product on the supermarket shelf for the first time is a magical feeling!
For years, category management and product management have been working hand in hand in the Processed Meats Division. Last year a decision was taken to merge the two into a single job. Greet Van Laecke became Business Development Manager. She is combining both jobs with panache.
"In practice we have been combining category and product management for quite some time. The synergy between them is logical. Category management is all about trying to understand the customer and finding out what drives the consumer. Through research, testing, market surveys and trends, you try to fathom the whole processed meats
category as effectively as possible. Product management succeeds in precisely translating these findings into specific product propositions and concepts. In doing so, we test and evaluate the quality of our products on an ongoing basis. We do this in cooperation with the New Product Development (NPD) department and the factories'
"Both approaches work in perfect tandem. They ensure that our team are proactive in identifying and addressing the needs of the customer. What's more, acting as a bridge between the departments enables us to address these needs effectively. In addition interaction with customers is crucial. Together we look at how the category is developing and what is necessary for further growth. We use detailed analyses to review the preceding period. We also look into the future and identify what we can improve. Each customer is different. For that reason. the approach we take is targeted and highly customised.'
"Last year, we spent a lot of time on packaging: new concepts, other types of film, and so on. Furthermore, we took a closer look at quite a number of products. We analysed unique qualities. such as flavour and quality, and tried to expand on these. This is our idea of proactive partnership. Ultimately, a complete concept gets worked out in detail in conjunction with the customer and the various teams. Sometimes this may take a year or even longer. The first time you pick up a new pack of processed meats from the supermarket shelf is a moment of pure magic!"
"Category management is about trying to understand the consumer and the customer. Product management succeeds in precisely translating these findings into specific product propositions and concepts which are tailor-made for our customers."
OCESSED MEATS DIVISION
PROCESSED MEATS DIVISION
Proud of the authentic character of our products.
Becoming an expert in salami: it seemed like a sound ambition for Elke De Witte, when she started at Ter Beke in 2011. In the meantime. she is responsible for the development of all products within the Processed Meats Division at Ter Beke, So, what does it all involve?
"When it comes to developing new products in the Processed Meats Division, the team and I are all in it together. We also adapt existing products. This can be at the request of the customer, or as a way of proactively responding to challenges of the market. We always do this based on our technical expertise and our product knowledge. What's more, our developers often have a background in butchery and we can call on their expert knowledge. We are also closely involved in process optimisation. Any changes in our processes cannot not adversely affect taste, smell or quality."
"We do it all ourselves. The recipe of each product sent to our customers is worked out in detail by our team. We do not buy spice mixes, everything is 'handmade'. Our test kitchen is used every day to try out new products or to tweak existing recipes. We follow the whole process, from the raw material to the product you put on your sandwich."
"The link between creative and culinary skills and statutory regulations is not always an obvious one.
34 TER BEKE / ANNUAL REPORT 2018
"We follow the whole process, from the raw material
to the product you put on your sandwich."
We only make use of the much-talked-about E numbers in order to safeguard food safety, to facilitate the slicing of meats and to combat wastage. After all, for customers it is important for products to have a reasonable shelf life. In whatever event, we always strive to arrive at the best possible solution."
"Once a recipe has gone into production, it is kept under close scrutiny. Sometimes the final product is not identical to what we envisioned in the test kitchen. At that point, we go through the whole process again until we get it right. Our processed meats all have that typically authentic and honest taste, which is something we are proud of. We always put passion in our products. You can see it in their flavour, but also in their presentation. I get satisfaction from seeing how effectively our customers are persuaded.'
Daily improvements in the chain.
Bert Slagter, Sales Group Manager for Retail at Offerman
Seeking solutions that suit all parties involved, that is what drives Bert Slagter. Employees, customers and suppliers all need to support the idea. But there are other conditions as well. says the Sales Group Manager.
"To ensure a resilient portfolio, we need to ensure enthusiasm and a sound support base among consumers, our customers and the Offerman team. Our success is based on three important pillars: excellent category management, concept & product excellence and the ultimate chain for fresh foods" "Every solution must be suitable for embedding in this chain, with no exceptions. The ultimate chain we are striving for combines efficiency and sustainability, with a robust business model as its foundation. Transparency in the chain is also important: it can only function properly and be further optimised if you have a clear structure to $huidon'$
"We carry out analyses down to the level of the individual stores with supervision on store level. In the future, we plan to develop even more innovative and successful concepts. By combining our longterm partnerships with more transparency, we are really able to strengthen and distinguish our fresh food chains. This will enable our customers to supply their stores and the consumer even more effectively."
As Corporate Recruiter, I want to create strong teams and a strong employer brand.
"It's true; the meat industry doesn't always enjoy widespread popularity. However, at the same time, we are extremely fast, vative and dynamic. inno is highly appealing This to applicants."
Last year, Femke Driessen moved from Zwanenberg to Offerman as Corporate Recruiter. She is enthusiastic about her job and a firm believer in the power of employer branding. Femke explains how she intends to put the Offerman brand more powerfully on the map.
"I work as a Corporate Recruiter at Offerman, It was a conscious decision to have a recruiter within the organisation, simply because you know the company better: its culture, its needs, its functioning. This makes it easier to assess
whether someone suits the organisation or not. It doesn't solely depend on knowledge or job content1
Emphasis on Employer Branding
"As a recruiter, I put a lot of emphasis on our brand. Offerman has a plethora of USPs which we aim to promote to create a strong employer brand. People must be able to find us. It is not that easy, as we produce a lot of private labels. I feel it is important to work hard at employer branding by having an appealing website, being present at job fairs and ensuring good word-of-mouth advertising.'
"A recruiter can achieve strong employer branding by focusing on the positive aspects of our industry. It is true; the meat industry doesn't always enjoy widespread popularity. However, at the same time, we are extremely fast, innovative and dynamic. This is highly appealing to applicants. The whole onboarding process plays a key role. Candidates are more likely to be persuaded if you coach and supervise them from start to finish'
"We want to welcome newcomers to the 'club'. For example, by leaving a welcome card and gift on their desk on the first day, signed by their direct colleagues. At the same time, I am also keen to focus more on candidates who weren't successful and who invested a great deal of time and effort in the application procedure. I feel it is important to spend some effort thanking them for their time and interest. This kind of image building makes all the difference
"It is also satisfying to see a newcomer doing well, fitting in with the team and feeling at home. Only then you know your recruitment campaign has been a success. I like to keep track of these colleagues. For example, by looking them up to see if all is going well and if the team is happy with their new colleague. That's a big boost for a recruiter.
At Ter Beke, I found a company with drive and passion.
Monique Witteveen manages the team of product managers at Offerman. She and her team form the link between the customer, the sales department and the production locations. Last year, the move from Zwanenberg to Offerman marked a new start for Monique and her team
"Our ambition? To always deliver good products to our customers. Bringing new products and packaging to the market and maintaining that upward trend. Is a customer asking for a change in a product? Or do they want something new? Whatever it is, our team makes sure it gets done. That's hasically what it's all about"
"The physical move from Zwanenberg to Offerman in February was quite a challenge. As a company, you cannot afford to stand still. Everyone had to be back on the network immediately. You also have to continually guarantee delivery levels to the customer and quality cannot decline. An additional difficulty was that a lot of items were now branded differently. In 2018, we even launched a completely new brand in our Out-of-Home channel: FairBeleg®."
"Ultimately, however, we managed to meet all the deadlines. Ter Beke employees played a major role in this. Personally, I'm very happy that a company such as Ter Beke has acquired us. I instantly recognised the same drive and passion. Communications are also honest and smooth. Working well together means moving forward together."
GROUP FUNCTIONS
2018 was a year full of challenges for ICT. With Dirk Baeyens in charge, the team helped to implement the new ERP system at various sites. It also took care of the complete ICT integration of the Offerman business unit. On top of that, all happened while Dirk was working on the internal mechanisms of his toam
"My team consists of qualified computer scientists each with their own specialisation. Our goal is to avoid recurrent problem and incident solving ad hoc. By proactively thinking and focussing more on projects, we ease off daily pressure. At the same time, it is improving the added value of our services. The ICT team is now sharing more know-how, but also more concerns. We built a project structure in which we are working much more closely with the different departments in Ter Beke.'
"What does our internal customer want? What exactly is the question and the intention? From the very beginning, we are looking at this jointly and we seek technological solutions. The ICT team can assist and advise. Not only that, we can also establish links. Perhaps similar problems exist elsewhere, or maybe we can use a particular application for a number of different purposes. I aim to focus on this synergy."
"Raising awareness is important. Ensuring that projects are collectively owned and have joint goals. This also means we share the responsibility for optimising the use of human and material resources. Tracking technological developments, managing costs and constantly striving towards added value. That is what the ICT team wants to represent."
Ter Beke takes the privacy of its employees extremely seriously. Our privacy policy includes auidelines about how we collect. use, update, transfer, disclose and destrov the personal data of our employees. In this way, we are able to protect the rights of all employees and guarantee the confidentiality of everyone's data in accordance with GDPR principles.
In early 2018, we set up a GDPR project team. With the aid of an external expert, we identified exactly where personal and company-sensitive data were located and what the associated risks were. The team assessed the impact of data processes in the management of personal data and converted this into action plans. An awareness programme was set up for the HR and IT departments. All employees were aiven written confirmation that their personal data would only be used insofar as necessary in the context of their contract of employment.
The ICT team performs a key task in managing and securing personal data. It ensures that all personal data is only processed, stored and shared, where necessary and for as long as necessary, in a secure environment. It will also auarantee that only appropriate individuals have access to sensitive and important information. This process is constantly being updated. Where necessary, this process will be automated.
If a recipe changes, we have to redo the entire process.
Leen Heirlings and Hilde Hillaert are the driving forces behind Specification Management and they work in regular consultation with colleagues from the other business units. Leen and Hilde have been working at Ter Beke for a long time, 12 and 19 years respectively. They know our products in and out, down to the smallest component. Over the years, their range of tasks has expanded.
"Customers want increasingly more detailed information about our products. Most of our customers have their own webpage or customer profile, where we are required to enter all kinds of information such as the packaging material and list of ingredients. We also ensure that all the statutory information is mentioned on the label. We closely monitor all legislative amendments. We answer customer questions and keep our own database up-to-date. Our team stands at the crossroads of many information flows, both internal and external." "How do we go about launching a product? Our product development department (in short NPD) draws up a recipe. We convert that into a list of ingredients. We request laboratory analyses and information about the raw materials and fill in the customer profiles. As we work for both divisions, there are a lot of products involved. And what if a recipe changes? Then we have to redo the entire process."
Shifting gears quickly with each other's help "Thanks to our long cooperation, we operate in tandem extremely well. That gives a lot of satisfaction. You know you can count
receives the correct information in time, even in your absence. Sometimes things can get quite hectic. Take an urgent launch or an unexpected audit, for example. Then you have to immediately shift gears and collect all the necessary information without delay. In any case, never a dull moment around here!"
"The adjustment of the time registration system turned out to be the first major step. This especially had a great impact on the blue-collar workers. Everything had to be digital in the new system. No more applications or approvals on paper. From now on, everything went via the computer or via a special kiosk in the cafeterias"
smoothly.
Linda Baelen,
'Galileo'. Its five goals?
service
Linda Baelen is one of the main drivers of the Galileo project. The primary objective of this project is to set up a clear-cut and uniform pavroll calculation and time registration system for all Belgian sites of Ter Beke. Not an easy task but thanks to the commitment of many, the mission appears to be successful.
"Anyone who knows a little about the history of Ter Beke, knows that it is a story of mergers and acquisitions. A fusion of different organisations that all use their own HR system Eventually we arrived at three different systems at the five sites. Nevertheless, there was a need to combine everything on one platform. The working group assigned with this task decided to name the project
"It was an extremely complex project - one giant mathematical puzzle. There are countless calculation rules and data behind every system. We wanted to align all of these into one new system. To begin with, we split up the elements into separate, manageable projects."
"Apart from the adiustment itself, the communication regarding this was particularly important. We did this using videos, information sessions. kiosk trainings, etc. This appeared to be a good approach, as the switchover actually went very smoothly Now after a few months we see that we can closely monitor working hours, holidays and sick leave and immediately correct possible errors. Our mission has certainly been successful in this respect."
"There's more in the pipeline. The next version of the programme will include an app to make the login process even more mobile and flexible. Our goal is to create an 'employee self-service' system. A kind of digital counter where you can modify your personal information yourself. The new system will also offer the option of building additional modules, but in a uniform manner for each site. We don't want to go back to the tangle that it was!"
"It was an extremely complex project - one giant mathematical puzzle. There are countless calculation rules and data behind every system. We wanted to align all of these into one new system."
At Ter Beke, we work hard, but when we party, we do so with plenty of ZEAL.
The standard ingredients of the Family Day: good food, nice colleagues and a smile.
KK Fine Foods organised its first Family Day last summer. On a bright Sunday in early September, 250 employees and their families came together for a fun-filled barbecue. Everyone enjoyed the hamburgers, hotdogs, chips and ice cream. There were bouncy castles, a rodeo bull, an inflatable obstacle course, face painting, prizes and lots of other fun for young and old. In the middle of it all was the management team, who volunteered to go in the pillory and encouraged the children to pelt them with wet sponges.
Every June, Mézidon is the place to be for the annual 'Music Festival'. This is an opportunity for colleagues several colleagues showed off their singing skills; and their partners to let their hair down during an evening of fun, good music, tasty food and great company. After the opening speech and dinner, the party really got underway with a live concert and a DJ. Reliable sources have informed us that the party went on until the early hours of the morning...
PASTA FOOD COMPANY
Pasta Food Company celebrated twice in 2018. In
January, they held the annual staff party where
while everyone was eating, drinking and dancing,
they spontaneously grabbed hold of the
microphone from the karaoke machine. In June, our
colleagues in Poland spent a day in the outdoors.
They all had lots of fun doing various activities, such
as paddling a canoe against the wind on the Mala
River and riding the rodeo bull during the meal
afterwards. It was highly entertaining for both the
Ter Beke's Family Day in Belgium and the Netherlands always guarantees a pleasant afternoon with good food and fun attractions in the company of nice colleagues. During the previous editions, Belgium and the Netherlands celebrated the Family Day together. In September 2018, they each held their own events, albeit on the same day. The Rhederlaag recreation area in Lathum was the place to be for our Dutch colleagues, while the Belgian participants gathered at our Wanze site, which had been transformed into an amusement park for the occasion. CEO Francis Kint gave a speech for both locations in a livestream.
Ter Beke strives to be a sustainable company and operate with due regard and care for the environment. This means that we look after the environment and all the people connected to Ter Beke: our stakeholders. These stakeholders include our employees, our customers, the suppliers, the shareholders, our local communities and society in general.
Read more on this topic in 'Key features of internal control and risk Read more about this in the 'Board of Directors' section on page 46. management systems' on page 56.
Ter Beke respects all human rights. We make this explicit in our mission, our core values and our strategic objectives, which we have combined in a single word: ZEAL.
Every new employee is given the ZEAL manual at the start of his or her contract. This manual describes the relationship between Ter Beke and its employees, what is expected of them and what they can expect of us.
Read more in 'Key features of internal control and risk management systems' on page 56.
Ter Beke complies with all diversity legislation. Ter Beke consistently applies this principle to all employees.
Environmental impact*
Waste*
Water consumption Energy consumption
Waste water -18%
-5.2% -10.3%
Non-recyclable waste
in production
-26%
Recyclable waste in production
Organic waste in production
LM!' )+-('')+,(%)+(.-B(&)+-(9788H978:KLL*."/%'-(&)+-(+.-"('()%&("%
Nutrition and health
Global Food Safety Initiative
certified factories
Palm oil* -55%
in Ready Meals
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%(,-%'+2,I8>8>"'978>J 1730
113
The Corporate Governance Statement is based on Article 96 §2 and §3, Article We have used the Belgian Corporate Governance Code 2009 as a reference. 119 of the Belgian Company Code and the Corporate Governance Code 2009. This code is publicly available at www.commissiecorporategovernance.be. It contains factual information about Ter Beke's Corporate Governance policy in 2018, including a description of the following: Our Corporate Governance Charter is published on www.terbeke.com. In the
The statement also contains a number of elements of non-financial information as referred to in Article 96 §4 of the Belgian Company Code.
charter we clarify our position with regard to the provisions of the Corporate Governance Code 2009. And we describe other Corporate Governance practices which we apply in addition to 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.
Board of Directors
Ann Coopman passed away on 29 March 2019. This is a great loss for her fellow board members and the management of Ter Beke and a cause of much sorrow. Ann was closely involved with Ter Beke, not only as a board member, but also as a person. She was a regular visitor to the various sites and often attended company events of the company she grew up with. With her engaging and pleasant smile, she always complemented and supported the management team through both good times and bad.
Ann had a degree in Executive Secretary and Market Study. She began her career as a Marketing Assistant at Volvo Cars Belgium and also worked as a self-employed secretary for Vlerick Business School and the Flemish Strategy Society (Vlaamse Strategie Vereniging), in addition to caring for her four children. Ann Coopman was also active in local politics for 24 years, including 14 years as alderwoman and 10 vears as mayor of Waarschoot, where she was renowned for her enterprising but human approach. Besides the fact that she ushered the village of Waarschoot into the 21st century, she is also justly known as the mother of 'Lievegem', the municipal amalgamation of Waarschoot, Zomergem and Lovendegem.
Ann was appointed to the Board of Ter Beke in 2014 and was recently reappointed during the General Meeting of 31 May 2018. Her contributions to board meetings, including her attention to the human side of things, were greatly appreciated and will be sorely missed.
Studied Bioscience Engineering and Engineering Management. In 2014, she left her job as Export Manager to obtain a Master's degree from the University of Gastronomic Sciences of Pollenzo. She is currently working as a freelance consultant under the 'Bramabrom' label with a focus on food in the Italian context. Dominique Coopman has been a director at Ter Beke since 2008. The General Meeting of 31 May 2018 reappointed Dominique Coopman as director for a period of four years, concluding at the time of the General Meeting of 2022.
Is a Civil Engineer, Ghent University, supplemented with postgraduate studies at Vlerick Business School and an MBA at INSEAD. He built up an international career at various companies, including Sara Lee, Chiquita, Fiskars and UNIVEG. Prior to joining Ter Beke, Francis was CEO at Vion, an international meat processing company with its headquarters in Boxtel, the Netherlands. Francis was appointed director by the General Meeting of 31 May 2018 for a period of four years and was appointed CEO for the Group by the Board of Directors.
Studied Applied Economics and Business Engineering at the University of Antwerp. He has held management positions in manufacturing and retail companies. Until 2007, served as Chairman of the Executive Board of the V&D Group and as member of the Board of Directors of Maxeda (Vendex/KBB). Dirk Goeminne is Chairman of the Supervisory Board of Stern Groep NV and Beter Bed Holding NV, member of the Supervisory Board of Wielco BV and Non-Executive Director of Van de Velde NV. He is also Chairman of the Board of Directors of Wereldhave Belgium NV and JBC NV. Dirk Goeminne was CEO of Ter Beke from 2013 to 2018. He was appointed Chairman on 1 June 2018.
Is a Civil Engineer and Doctor in Management (Ghent University). She is Obtained a degree in Applied Economics at the University of Antwerp, a Professor of Operations and Supply Chain Management at Vlerick Business Master's degree at Vlerick Business School and also followed the International School and Ghent University. She was a Board Member and President of Directors Programme (INSEAD). He is General Manager of the listed holding EurOMA (European Operations Management Association) and a Board member company, Solvac. He has extensive experience as former CFO at Recitel and of POMS (Production and Operations Management Society in the US). She is Vandemoortele. He is an all-round financial and strategic expert, and is currently a Board Member of Picanol Group and North Sea Port. In 2014, she familiar with the values of a family business such as Ter Beke. His knowledge of the food sector is based on his experience as CFO at Vandemoortele and joined the Board of Directors at Ter Beke as an independent director. She is also a member of the Audit Committee and chairs the Remuneration and his position of director at Leonidas. Furthermore, he is member of the Board of Directors of Funds For Good and Sofindev IV, and member of the Nomination Committee. The General Meeting of 31 May 2018 reappointed Ann Vereecke as independent director for a period of four years, concluding at the Supervisory Board of Put & Co. He has been a director of Ter Beke since 2017. time of the General Meeting of 2022. He is Chairman of the Audit Committee and also a member of the Remuneration and Nomination Committee.
Studied Economics, supplemented with an MBA at INSEAD. After a brief period at Deloitte Haskins & Sells, he joined the family business Pluma NV, which was incorporated within Ter Beke in 2006. In 1989, he became the Managing Director of Pluma NV. In August 2018, Eddy Van der Pluym, as permanent representative of Arei NV, was co-opted as director until the General Meeting in 2019.
Has a degree in Industrial Engineering, specialising in automation & electronics. Kurt has 27 years' experience in Operations & Supply Chain, from working as a labour analyst on the shop floor at Vynckier (General Electric) Ghent, to European positions at Stanley Black&Dekker, and as COO at various companies such as Ontex (personal hygiene), Provimi (animal feed, the Netherlands), Cargill (animal nutrition & starch production) and Unilabs Switzerland (Clinical laboratories). He started out as an independent director of Ter Beke in 2017 and is also a member of the Audit Committee and Remuneration and Nomination committee.
The table below shows the composition of the Board of Directors on 31 December 2018, with an overview of the meetings and attendances in 2018.
| End of | Meetings 2018 (x = present) | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Name | Type * | mandate | Committees ** | 22/2 | 8/3 | 16/4 | 14/6 | 29/8 | 19/10 | 27/11 |
| Louis-H. Verbeke (1) | NE | 2018 | RBC | x | x | x | ||||
| Dirk Goeminne (2) | NE | 2022 | AC/RBC | x | x | x | x | x | x | x |
| Dominique Coopman | NE | 2022 | x | x | x | x | x | x | x | |
| Ann Coopman | NE | 2018 | RBC | x | ||||||
| Ann Coopman (3) | NE | 2022 | RBC | x | x | x | x | |||
| Eddy Van Der Pluym | E | 2018 | x | x | ||||||
| Eddy Van Der Pluym (4) | NE | 2019 | x | x | ||||||
| Ann Vereecke (5) | I | 2022 | AC/RBC | x | x | x | x | x | x | x |
| Dominique Eeman (6) | I | 2021 | AC/RBC | x | x | x | x | x | x | x |
| Kurt Coyn | I | 2021 | AC/RBC | x | x | x | x | x | x | |
| Guido Vanherpe (7) | I | 2018 | AC | x | ||||||
| Francis Kint (8) | E | 2022 | x | x | x | x |
(1) BVBA Louis Verbeke, (2) NV Fidigo, (3) NV Hico, (4) NV Arei, (5) BVBA Ann Vereecke, (6) BVBA Deemanco, (7) BVBA Guido Vanherpe, (8) BVBA Argalix
| * | ** |
|---|---|
| E = Executive | AC = Audit Committee |
| NE = Non-executive | RBC = Remuneration and Nomination Committee |
| I = Independent |
Honorary mandates: Daniël Coopman† - Honorary Chair, PhD Prof. L. Kympers† - Honorary Director
As appropriate, we confirm that 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.
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.
The composition of the Board of Directors takes into account the necessary complementarity with respect to competences, experience, know-how and diversity, including gender. See also Article 1.2 of the internal regulations (Appendix 1 of the Corporate Governance Charter).
The list of the members of the Board of Directors shows that these criteria have been satisfied for 2018.
Ter Beke also meets the requirements of diversity based on gender as specified in Article 518 of the Belgian Company Code.
Due to a number of important changes in the composition of the Board and the positions, the Board considered that it was not appropriate to hold a formal evaluation of the Board in 2018.
On 31 May 2018, the General Meeting accepted the resignation of BVBA Guido Vanherpe, represented by Guido Vanherpe, as well as the expiry of the mandate of BVBA Louis Verbeke, represented by Louis-H. Verbeke.
On the advice of the Remuneration and Nomination Committee, the General Meeting of 31 May 2018 reappointed as director: Ann Coopman, Dominique Coopman, BVBA Ann Vereecke (represented by Ann Vereecke) and NV Fidigo (represented by Dirk Goeminne). And this for a period of four years, concluding at the time of the General Meeting of 2022.
The General Meeting of 31 May 2018 appointed as director: BVBA Argalix, represented by Francis Kint. Also for a period of four years, concluding at the time of the General Meeting of 2022.
The Board of Directors appointed NV Fidigo, represented by Dirk Goeminne, as Chairman of the Board of Directors. In accordance with provision 4.7 of the Corporate Governance Code, the Board considered all the advantages and disadvantages of appointing the former CEO as Chairman and decided that this was in the best interest of the company from a perspective of ensuring continuity and advising the new CEO.
In 2018, the Board of Directors had two active committees: the Audit Committee and the Remuneration and Nomination Committee. The committees are composed in accordance with legislation and the provisions of the Corporate Governance Code. 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 2018, with an overview of the meetings and attendances in 2018.
| Meetings 2018 (x = present) | ||||
|---|---|---|---|---|
| Name | 19/2 | 14/6 | 27/8 | 27/11 |
| NV Fidigo (Dirk Goeminne) |
x | x | x | |
| BVBA Guido Vanherpe (Guido Vanherpe)* |
||||
| BVBA Deemanco (Dominique Eeman)** |
x | x | x | x |
| BVBA Louis Verbeke (Louis-H Verbeke)* |
x | |||
| BVBA Ann Vereecke (Ann Vereecke)*** |
x | x | x | |
| Kurt Coyn*** | x | x | x |
* mandate expired on 31 May 2018
** Chair
*** mandate commenced on 14 June 2018
All members of the committee are non-executive directors and have a thorough knowledge of financial management. The majority of members on the committee are independent. The committee has the necessary collective expertise regarding the company's activities. Meetings of the committee were regularly attended by the Statutory Auditor and on every occasion by the Internal Auditor.
The Audit Committee advised the Board of Directors regarding the following:
The Audit Committee monitors the internal audit function set up by it and regularly evaluates its own regulations and functioning.
The table below shows the composition of the Remuneration and Nomination Committee on 31 December 2018, with an overview of the meetings and attendances in 2018.
| Meetings 2018 (x = present) | ||
|---|---|---|
| Name | 19/2 | 27/11 |
| BVBA Louis Verbeke (Louis-H Verbeke)* |
x | |
| BVBA Ann Vereecke (Ann Vereecke)** |
x | x |
| Ann Coopman | x | |
| NV Hico (Ann Coopman) |
x | |
| BVBA Deemanco (Dominique Eeman) |
x | x |
| Kurt Coyn | x | |
| NV Fidigo (Dirk Goeminne) |
x |
* mandate expired on 31 May 2018
** Chair
All members are non-executive directors and have a thorough grounding in human resources management. The majority of members on the committee are independent. The Remuneration and Nomination Committee advises the Board of Directors with regard to:
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.
Studied law at KU Leuven (Rouen), and also obtained an LLM degree from the University of Houston and MBA degrees from Vlerick Business School and Amsterdam Business School. Until 2004, he worked as a lawyer at the law firm Allen & Overy. Since 15 November 2004, he has been serving as Secretary General to the Ter Beke Group, a position he has combined with that of Human Resources Director for the Group since 1 May 2014. Dirk De Backer is also Secretary to the Board of Directors and has been appointed Compliance Oicer for the Group. He has been a member of the Executive Committee since 1 December 2014.
Is a Civil Engineer, Ghent University, supplemented with postgraduate studies at Vlerick Business School and an MBA at INSEAD. He built up an international career at various companies, including Sara Lee, Chiquita, Fiskars and UNIVEG. Prior to joining Ter Beke, Francis was CEO at Vion, an international meat processing company with its headquarters in Boxtel, the Netherlands. Francis was appointed director by the General Meeting of 31 May 2018 for a period of four years and was appointed CEO for the Group by the Board of Directors.
Graduated with a Licentiate degree in Applied Economics and a specialisation in International Business from the University of Antwerp. He has spent his entire career in the food industry. At the start of his career, he worked in various sales and marketing positions in Belgium and abroad, e.g. at Dr Oetker, Sara Lee Meat Products and Campina. In 2009, he held successive management positions at Friesland Campina and Douwe Egberts. Christophe Bolsius has been an active member of the Executive Committees of various sector associations: VLAM (Flanders' Agricultural Marketing Board), BABM (Belgilux Association of Branded products Manufacturers), BMA, coee roasters' association. He joined the commercial management team of Ter Beke in December 2014 and from November 2015 onwards, assumed the position of Commercial Director Ready Meals. At the beginning of December 2017, he became CEO for the Ready Meals Division of the Ter Beke Group.
Studied law at Ghent University, then obtained an International Executive MBA from Warwick Business School (UK).
He started his career at PwC in financial audit. For the next 13 years, he went on to work in various financial positions at home and abroad for Multi Packaging Solutions. He has been the Group Financial Controller at Ter Beke since the beginning of 2017 and from January 2019 will become a member of the Executive Committee.
At the end of 2018, the Board of Directors terminated its collaboration with BVBA WiDeCo, represented by Wim De Cock, and with BVBA Tigris Consulting, represented by Ingeborg Koenraadt.
In 2018, The Executive Committee held meetings once every two weeks until the beginning of September and once a month from September onwards and whenever there were operational reasons to convene. The Executive Committee is responsible for 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, 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). The Board does this on the initiative of the Remuneration and Nomination Committee. This evaluation was also carried out in 2018. For this, the Board uses both qualitative and quantitative criteria. There is no direct relationship between the evaluation and the annual variable remuneration.
One conflict of interest (within the meaning of Article 523 or Article 524 of the Belgian Company Code) was reported to the Board of Directors in 2018. For further details, please refer to the 2018 Annual Report. There were no other 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 of the Belgian Company Code) occurred within the Executive Committee in 2018. 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 2018, EUR 413,740 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 2018, we paid EUR 178,828 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 2018 was approved by the General Meeting of Shareholders on 31 May 2018.
The remuneration level of the CEO and members of the Executive Committee for the financial year 2018 was confirmed by the Board of Directors based on the advice of the Remuneration and Nomination Committee.
In 2018, 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 | 239,000 |
|---|---|
| Member of the Board of Directors | 20,000 |
| Chairman of the Audit Committee | 10,000 |
| Member of the Audit Committee | 6,000 |
| Chairman of the Remuneration and Nomination Committee | 7,000 |
| Member of the Remuneration and Nomination Committee | 5,000 |
Directors are not entitled to any variable, performance-related or equityrelated remuneration, nor to any other remuneration for the 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.
The targets are based on objective parameters. They are closely linked to the Group's results and the role played by the CEO and the members of the executive management in achieving these results. The main parameters used for this are volume, turnover, REBIT, EAT and ROCE (for definitions 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 2018, these parameters were volume, REBIT and ROCE. Achieving the individual performance objectives determines 20% of the variable remuneration of the executive management.
The variable allowance is one quarter or less of the annual remuneration.
If the CEO or executive managers do not achieve the minimum of a set target 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, they may receive up to 150% of the variable remuneration linked to that target.
In addition to the system of variable remuneration, the Board of Directors is authorised to allocate, on the recommendation of the Remuneration and Nomination Committee, an (additional) bonus for specific performance or services to the CEO and/or to (some of) the members of the executive management, provided that this does not exceed the total variable remuneration budget for the CEO and the members of the executive management.
If a variable remuneration has been granted based on information that subsequently transpires to be incorrect, the company will rely on facilities provided under common law. There are no specific agreements or systems entitling the company to recover the variable remuneration paid.
Under normal circumstances, the Group's remuneration policy for members of the Board and executive management will not be subject to any significant changes in 2019, nor in the following two financial years. The remuneration paid to the Chairman of the Board of Directors will be reduced to EUR 75,000 on an annual basis aer the General Meeting, as he will no longer hold an executive role. Long-term incentives were established for the CEO of the Group and for the CEO of the Ready Meals Division in 2018. Aer a period of five years and three years respectively, they will be entitled to an additional remuneration, depending on the equity value of the Group and the results of the Ready Meals Division at the end of this period respectively.
The remuneration of the members of the Board of Directors (executive, non-executive and independent directors, see overview below) for their mandate as director in 2018 can be summarised as follows:
| Mandate of director |
Mandate Remuneration and Nomination Committee |
Mandate Audit Committee |
Total | |
|---|---|---|---|---|
| BVBA Louis Verbeke | 28,750.00 | 2,916.67 | 2,500.00 | 34,166.67 |
| NV Fidigo (Dirk Goeminne) | 147,750.00 | 2,916.67 | 3,500.00 | 154,166.67 |
| BVBA Argalix (Francis Kint) | 11,666.67 | 11,666.67 | ||
| NV Hico (Ann Coopman) | 11,666.67 | 2,916.67 | 14,583.34 | |
| NV AREI (Eddy Van Der Pluym) | 11,000.00 | 11,000.00 | ||
| BVBA Ann Vereecke | 20,000.00 | 6,166.66 | 3,500.00 | 29,666.66 |
| Deemanco BVBA (Dominique Eeman) | 20,000.00 | 5,000.00 | 10,000.00 | 35,000.00 |
| BVBA Guido Vanherpe – 5 months | 8,333.33 | 2,500.00 | 10,833.33 | |
| Ann Coopman | 8,333.33 | 2,083.33 | 10,416.66 | |
| Dominique Coopman | 20,000.00 | 20,000.00 | ||
| Eddy Van Der Pluym | 9,000.00 | 9,000.00 | ||
| Kurt Coyn | 20,000.00 | 5,000.00 | 3,500.00 | 28,500.00 |
| Total mandates | 316,500.00 | 27,000.00 | 25,500.00 | 369,000.00 |
In 2018, the individual remuneration of the Managing Director/Chairman of the Executive Committee (BVBA Argalix, represented by Francis Kint – as from 1 June 2018) and the combined remuneration of the other members of the Executive Committee and the executive directors: René Stevens, Wim De Cock, Christophe Bolsius, Eddy Van der Pluym (until 30 June 2018),
Ingeborg Koenraadt and Dirk De Backer amounted to (total cost for the Group, excluding the remuneration for the directorship of Ter Beke NV, including severance payments to BVBA WiDeCo (Wim De Cock) and BVBA Tigris Consulting (Ingeborg Koenraadt)):
| CEO | Other members of the executive management |
|---|---|
| 291,666.67 | 2,371,655.67 |
| 31,252.67 | 130,543.46 |
| N/A** | 26,990.18 |
| N/A** | 652.80 |
| N/A** | 38,214.24 |
* The pension scheme relates to fixed contribution contracts ** 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 Ter Beke shares were granted by the company in 2018 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 BVBA Argalix (Francis Kint), BVBA Esroh (Yves Regniers) and Sagau Consulting BVBA (Christophe Bolsius) is a maximum of 12 months, while the notice period for Dirk De Backer and René Stevens will, in principle, be calculated in accordance with the statutory provisions applicable to their employment contract.
At the end of 2018, the Group ended its collaboration with BVBA WiDeCo (Wim De Cock) and BVBA Tigris Consulting (Ingeborg Koenraadt). The severance payments corresponded to a 12-month notice period as contractually agreed.
We attach great importance to eicient internal control and risk management systems and we try to integrate these into our structure and business operations to the maximum possible extent. For this purpose, we have implemented numerous internal controls according to the integrated COSO II or Enterprise Risk Management Framework® . The key elements are summarised here.
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, the Audit Committee, the Remuneration and Nomination Committee, the Executive Committee and the Managing Director/CEO. These duties and responsibilities are in line with the statutory provisions and the provisions of the Corporate Governance Code 2009. Coherent regulations have been drawn up for each of the aforementioned bodies which are regularly evaluated and if necessary, amended so that powers and responsibilities are clearly defined and can be monitored at all times.
We organise (and monitor) our human resources via a job classification system, in which all Group employees are graded. 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. We attach extra importance to employee behaviour that 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 we 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).
The internal auditor periodically conducts risk audits and audits of the internal controls in all Group departments and reports on these to the Audit Committee. Based on the findings of the internal auditor and in consultation with the Audit Committee adjustments are implemented in the internal control system.
The Audit Committee devotes two meetings per year to evaluating the risks that we are exposed to (see above). Internal controls and risk management are also discussed at these meetings. 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 we have appointed a compliance oicer 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 specific 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. The committee discusses these results and makes them 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, which then discusses them with the internal and external auditor. These results are subsequently 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 statutory requirements in a correct and timely manner.
We also have a clear policy regarding the protection of and access to financial data, as well as a proper system for the backup and storage of this data.
The finance department has a detailed manual describing the relevant accounting principles and procedures.
We have implemented the internal controls subject to the greatest risk 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.
WHAT CAN HAPPEN IF WE DON'T MAKE THE RIGHT DECISIONS?
Every day, thousands of people eat our processed meats and ready meals. These products must be fresh and safe. The end consumer is also entitled to clear information about the composition of the product and its nutritional value.
The safety and the confidence of consumers are vitally important to us. Anything that can damage this confidence - either concerning our own products or the sector - will have a negative impact on our sales, our prospects and our reputation.
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.
The competition enables customers to increase pressure on our margins. This may have an impact on our profits.
Product and production technologies evolve rapidly.
Not being abreast with the latest production technologies can have a negative impact on eiciency and cost control. Competitors may have access to alternative product technology that at some point may win over consumers.
| We have constant high demands for product safety and quality. All our raw materials are traceable. Our packaging clearly states product composition and nutritional values per 100 grammes and per serving. We go further than the statutory requirements with regards to the safety of our packaging. We have insurance to cover our product liability. |
|---|
| We distinguish ourselves from our competitors in terms of concepts and products. We work continuously on improving eiciency and cost control. |
| Each year we invest considerable sums in tangible non-current 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 institutes such as Flanders' FOOD. |
| All systems are maintained appropriately. All systems are upgraded when necessary. Regular back-ups are made of all information. A new ERP system has been implemented to structure and simplify our business processes. |
| In 2015, we established a Young Potential programme: newly graduated young people receive an attractive training programme. They experience four dierent positions within the company during two years. |
For eicient business operations we are becoming increasingly dependent on information systems and integrated control systems which are managed by a complex set of soware applications.
If these systems do not work well, or if they were to become unavailable, this would have a negative impact on the production volume and on our reputation.
An organisation is only as strong as its employees. The knowledge and expertise is to be found in a group of employees who contribute to building the company and its brands.
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.
| $\sim$ | |
|---|---|
| o m ٧ $\sim$ |
In 2018, we received a STAK Coovan 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 persons 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 three-fourths 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-fihs of the votes present (Article 559 of the Belgian Company Code). On 31 December 2018, Ter Beke NV did not hold any treasury shares (neither did Ter Beke NV hold any treasury shares on 31 December 2017).
The procedure for the appointment/reappointment of directors, (see abovementioned 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 26 May 2017 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 Company Code. This authorisation is valid for a period of three years.
The Extraordinary General Meeting of Shareholders held on 26 May 2017 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 three years.
To the best of the Group's knowledge there are no other elements to be mentioned that may have an eect in the event of a public takeover bid.
In its internal operations, Ter Beke takes many precautions to reduce possible risks. As a food manufacturer, we are also subject to risks that lie beyond our control. Yet we act proactively to minimise any possible impact.
MAIN RISKS TO OUR OPERATING ACTIVITIES
HOW DO WE LIMIT THE RISKS IN GENERAL AND IN 2018 IN PARTICULAR?
MARKET RISKS
We work with natural raw materials. We must therefore take into account possible fluctuations in the quality and the price of our raw materials and packaging materials.
Price increases for raw materials and packaging can have a negative influence on the margins.
We enter into long-term contracts whenever possible. We work with volume arrangements on an annual basis.
For specific raw materials we are obliged to work with a limited number of suppliers.
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 enter into long-term contracts whenever possible. We work with volume arrangements on an annual basis. We oer our suppliers fair payment for their added value. We work with preferential suppliers for sustainability.
We market our products via a network of discount and retail customers throughout Europe. The number of large customer groups is limited.
The number or larger retail customers is small. If one of them terminates a contract, this may have a significant negative impact on our turnover and profit.
We diversify turnover in dierent products and contracts with other lead times; both with respect to our own brands as well as private labels of customers and in dierent countries. In 2016, we lost a contract with a UK customer, but were otherwise able to conclude various other major contracts.
Our sales are related to the eating habits and trends of the ultimate consumers, just as their spending habits.
If consumers no longer selected 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 aect the consumer spending patterns.
In 2015, we conducted a major market research survey on trends in dietary habits in various markets. We surveyed the satisfaction of our consumers to anticipate and minimise this risk. We ensure that our prices are in line with those of the market.
TO OUR OPERATING ACTIVITIES
WHAT CAN HAPPEN IF WE DON'T MAKE THE RIGHT DECISIONS?
FINANCIAL RISKS (SEE ALSO EXPLANATORY NOTE 28 IN THE ANNUAL ACCOUNTS)
We have receivables outstanding from our clients and retail customers.
Receivables not collected on time have a negative impact on the cash flow.
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.
Fluctuations in exchange rates can cause fluctuations in the value of financial instruments.
The forms of financing with variable interest rates mainly arise from Ter Beke's Revolving Credit Facility Agreement.
The fair value or future cash flows of a financial instrument will fluctuate as a result of changes in the market interest rates.
| HOW DO WE LIMIT THE RISKS IN GENERAL AND IN 2018 IN PARTICULAR? |
|---|
| We monitor customers and outstanding receivables in order to limit these potential risks. Most receivables relate to large European customers which limits the risk. |
| We adhere to a consistent hedging policy. We do not use financial instruments for trading and we do not speculate. |
| We adhere to a consistent hedging policy. We do not use financial instruments for trading and we do not speculate. |
| We have a significant net cash flow with respect to the net financial debt position. We have centralised our treasury policy and we hedge against interest rate risks. |
| We invest significant amounts annually to satisfy new legislation, likewise relating to sustainability and the environment. Each year we organise training programmes to keep our employees up-to-date on new legislation and its impact. |
| We anticipate the potential impact of these disputes in our accounts as soon as a risk is judged as realistic under the applicable accounting rules. |
As with any business, Ter Beke monitors liquidities and cash flow.
A shortage of cash and cash equivalents could put pressure on the relationships with certain parties.
(SEE ALSO EXPLANATORY NOTE 30 IN THE ANNUAL ACCOUNTS)
Now and then the government changes and tightens legislation on the production and sale of foods.
Not meeting these conditions can expose us to the risk of fines or sanctions.
Occasionally we are involved in legal proceedings or disputes with customers, suppliers, consumers or the government. Such litigation could have a negative impact on our financial situation.
TERB On 31 December 2018, the capital of Ter Beke was
ILSTED represented by 1,732.621 shares The charge the spot market (continuous market) of Euronext Brussels.
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.
The shareholder structure is described in the Corporate Governance STOCK PRICE EVOLUTION Statement (see above).
On 31 December 2018, 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 29 May 2019 to distribute a gross dividend of EUR 4.00 per share over 2018. If the General Meeting of 29 May 2019 approves this motion, we will make the net dividend per share payable from 14 June 2019.
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 2018.
For the actual agenda and proposals to vote on please refer to the convening notice for the General Meeting of Shareholders
| Shareholders' Meeting | 29 May 2019 |
|---|---|
| Share quoted ex-coupon | 12.June 2019 |
| Dividend payment | 14 June 2019 |
| Half-yearly results 2019 | Friday 30 August before market opening |
| Annual results 2019 | Friday 28 February 2020 before market opening |
CONSOLIDATED FINANCIAL STATEMENTS
TER BEKE / ANNUAL REPORT 2018 65
INDEX
| Consolidated income statement | 68 |
|---|---|
| Consolidated overview of the comprehensive income |
69 |
| Consolidated balance sheet | 70 |
| Consolidated statement of | |
| changes in equity | 71 |
| Consolidated cash flow statement | 72 |
| Accounting policies for financial | |
| reporting and explanatory notes | 73 |
| Abbreviated financial statements of | |
| Ter Beke NV | 106 |
| Consolidated key figures 2013-2018 | 108 |
| Declaration by the responsible persons | 109 |
| Report from the Statutory Auditor | |
| on the consolidated annual accounts | 110 |
All amounts in EUR x 1000, unless stated otherwise.
| Note | 2018 | 2017 (*) | |
|---|---|---|---|
| Note | 4 | 680,460 | 497,386 |
| Trade goods, raw and auxiliary items | 5 | -399,416 | -292,646 |
| Services and miscellaneous goods | 6 | -116,286 | -88,003 |
| Employee expenses | 7 | -119,640 | -87,079 |
| Depreciation costs | 15 +16 | -27,126 | -18,830 |
| Impairments, write-downs, and provisions | 8 | -692 | 2,439 |
| Other operating income | 9 | 3,159 | 3,983 |
| Other operating expenses | 9 | -4,241 | -1,921 |
| Result of phased acquisition | 0 | 6,689 | |
| Result of operating activities | 10 | 16,218 | 22,018 |
| Financial income | 11 | 358 | 294 |
| Financial expenses | 12 | -3,748 | -1,738 |
| Results of operating activities aer net financing expenses | 12,828 | 20,574 | |
| Taxes | 13 | -5,587 | -4,006 |
| Result for the financial year before result from businesses accounted for using the equity method |
7,241 | 16,568 | |
| Share in the result of enterprises accounted for using the equity method | 0 | 571 | |
| Profit in the financial year | 7,241 | 17,139 | |
| Profit in the financial year: share third parties | 56 | 32 | |
| Profit in the financial year: share group | 7,185 | 17,107 | |
| Basic earnings per share | 33 | 4.15 | 9.87 |
| Diluted earnings per share | 33 | 4.15 | 9.87 |
(*) The amendment is a consequence of IFRS 15
| 2018 | 2017 | |
|---|---|---|
| Profit in the financial year | 7,241 | 17,139 |
| Other elements of the result (recognised in the shareholders' equity) | ||
| Other elements of the result that may subsequently be reclassified to the results | ||
| Translation dierences | -314 | 840 |
| Cash flow hedge | -204 | 223 |
| Other elements of the result that may not subsequently be reclassified to the results | ||
| Revaluation of the net liabilities regarding defined benefit pension schemes | -110 | -139 |
| Related deferred taxes | 37 | 57 |
| Comprehensive income | 6,650 | 18,120 |
| Note | 2018 | 2017 | |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | 243,591 | 242,573 | |
| Goodwill | 14 | 76,456 | 76,523 |
| Intangible non-current assets | 15 | 28,651 | 30,163 |
| Tangible non-current assets | 16 | 133,382 | 132,807 |
| Participations using equity method | 17 | 0 | 0 |
| Loans to joint venture | 0 | 0 | |
| Deferred tax assets | 19 | 5,027 | 3,003 |
| Other long-term receivables | 18 | 75 | 77 |
| Long-term interest-bearing receivables | 0 | 0 | |
| Current assets | 181,387 | 157,163 | |
| Inventories | 20 | 36,304 | 34,788 |
| Trade and other receivables | 21 | 121,908 | 115,862 |
| Cash and cash equivalents | 22 | 23,175 | 6,513 |
| TOTAL ASSETS | 424,978 | 399,736 | |
| LIABILITIES | |||
| Shareholders' equity | 23 | 125,028 | 125,308 |
| Capital and share premiums | 53,191 | 53,191 | |
| Reserves | 70,184 | 70,506 | |
| Non-controlling interest | 1,653 | 1,611 | |
| Deferred tax liabilities | 19 | 9,340 | 10,290 |
| Long-term liabilities | 139,683 | 52,164 | |
| Provisions | 24 | 5,835 | 5,289 |
| Long-term interest-bearing liabilities | 25 | 130,042 | 43,306 |
| Other long-term liabilities | 26 | 3,806 | 3,569 |
| Current liabilities | 150,927 | 211,974 | |
| Current interest-bearing liabilities | 25 | 15,812 | 90,132 |
| Trade liabilities and other payables | 27 | 115,423 | 101,379 |
| Social liabilities | 15,890 | 16,211 | |
| Tax liabilities | 3,802 | 4,252 | |
| TOTAL LIABILITIES | 424,978 | 399,736 |
| Capital | Capital reserves |
Share premiums |
Reserved profits |
Cash flow hedge |
Pensions and taxes |
Call/put option on mintority intrests |
Translation dierences |
Attributable to the shareholders |
Minority intrests |
Total | Number of shares |
|
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Balance on | ||||||||||||
| 1 January 2017 | 4,903 | 0 | 48,288 | 63,050 | -168 | -758 | 0 | -346 | 114,969 | 0 114,969 1,732,621 | ||
| Capital increase | ||||||||||||
| Treasury shares | 0 | 0 | ||||||||||
| reserve | 0 | 0 | ||||||||||
| Minority intrests as | ||||||||||||
| result of business | ||||||||||||
| combination | -3,296 | -3,296 | 1,579 -1,717 | |||||||||
| Dividend Results in the |
-6,064 | -6,064 | -6,064 | |||||||||
| financial year | 17,107 | 17,107 | 32 17,139 | |||||||||
| Other elements of | ||||||||||||
| the comprehensive | ||||||||||||
| income for the period | 0 | 223 | -82 | 840 | 981 | 981 | ||||||
| Comprehensive income for the |
||||||||||||
| period | 17,107 | 223 | -82 | 0 | 840 | 18,088 | 32 18,120 | |||||
| Movements via | ||||||||||||
| reserves | ||||||||||||
| Result from treasury shares |
||||||||||||
| Balance on | ||||||||||||
| 31 December 2017 | 4,903 | 0 | 48,288 | 74,093 | 55 | -840 | -3,296 | 494 | 123,697 | 1,611 125,308 1,732,621 | ||
| Capital increase Treasury shares |
0 | 0 | ||||||||||
| reserve | 0 | 0 | ||||||||||
| Minority intrests as | ||||||||||||
| result of business | ||||||||||||
| combination Dividend |
-6,930 | 0 -6,930 |
0 -6,930 |
|||||||||
| Results in the | ||||||||||||
| financial year | 7,185 | 7,185 | 56 | 7,241 | ||||||||
| Other elements of | ||||||||||||
| the comprehensive | ||||||||||||
| income for the period Comprehensive |
-204 | -73 | -300 | -577 | -14 | -591 | ||||||
| income for the | ||||||||||||
| period | 7,185 | -204 | -73 | 0 | -300 | 6,608 | 42 | 6,650 | ||||
| Movements via reserves |
||||||||||||
| Result from treasury | ||||||||||||
| shares | ||||||||||||
| Balance on 31 December 2018 |
4,903 | 0 | 48,288 | 74,348 | -149 | -913 | -3,296 | 194 | 123,375 | 1,653 125,028 1,732,621 | ||
| 2018 | 2017 | |
|---|---|---|
| OPERATING ACTIVITIES | ||
| Result before taxes | 12,828 | 20,574 |
| Interest | 2,144 | 1,209 |
| Depreciation | 27,126 | 18,830 |
| Write-downs (*) | 495 | 352 |
| Provisions | 197 | -2,840 |
| Gains and losses on disposal of fixed assets | 757 | -795 |
| Result of phased acquisition | 0 | -6,689 |
| Cash flow from operating activities | 43,547 | 30,641 |
| Change in receivables more than 1 year | 14 | 26 |
| Change in inventory | -2,001 | 1,015 |
| Change in receivables less than 1 year | -5,391 | -11,736 |
| Change in operational assets | -7,378 | -10,695 |
| Change in trade liabilities | 12,716 | 9,438 |
| Change in debts relating to remuneration | -561 | 1,276 |
| Change in other liabilities, accruals and deferred income | 906 | -1,389 |
| Change in operational debts | 13,061 | 9,325 |
| (Change) / decrease in the operating capital | 5,683 | -1,369 |
| Taxes paid | -9,526 | -7,493 |
| NET CASH FLOW FROM OPERATING ACTIVITIES | 39,704 | 21,779 |
| INVESTMENT ACTIVITIES | ||
| Acquisition of intangible and tangible non-current assets | -27,435 | -13,714 |
| Acquisition of participating interest in associated companies | 0 | -66,726 |
| Total increase in investments | -27,435 | -80,440 |
| Sale of tangible non-current assets | 452 | 1,227 |
| Total decrease in investments | 452 | 1,227 |
| CASH FLOW FROM INVESTMENT ACTIVITIES | -26,983 | -79,213 |
| FINANCING ACTIVITIES | ||
| Change in short-term financial debts | -59,575 | 53,753 |
| Increase in long-term debts | 120,000 | 14,555 |
| Repayment of long-term debts | -47,401 | -13,159 |
| Interest paid interest (via income statement) | -2,144 | -1,209 |
| Dividend paid by parent company | -6,930 | -6,064 |
| CASH FLOW FROM FINANCING ACTIVITIES | 3,950 | 47,876 |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 16,671 | -9,558 |
| Cash funds at the beginning of the financial year | 6,513 | 16,068 |
| Translation dierences | -9 | 3 |
| CASH FUNDS AT THE END OF THE FINANCIAL YEAR | 23,175 | 6,513 |
(*) Also includes adjustments that are part of the financial result.
This was nihil in 2018; EUR 153 000 in 2017
Ter Beke NV ('the Entity') is an entity domiciled in Belgium. The Entity's consolidated financial statements cover the Entity Ter Beke NV and its subsidiaries (further referred to as the 'Group'). The consolidated financial statements were issued for publication by the Board of Directors on 17 April 2019. 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, except regarding IFRS 15. The comparative information has been restated in accordance with IFRS.
The application of IFRS 9 has not resulted in any significant adjustments to the balance sheet and shareholders' equity concerning the classification and valuation of financial instruments.
The basic principle of IFRS 15 Revenue from Contracts with Customers (applicable for annual periods beginning on 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 impact of IFRS 15 for Ter Beke is that a part of the services and miscellaneous goods category will be deducted from turnover in the presentation of the accounts. This mainly concerns introduction fees, costs of cooperation agreements with customers, and other marketing costs related to turnover. Ter Beke has opted for the 'full retrospective' method for the first time adoption of IFRS 15 for the financial year that commences on 1 January 2018. The impact of IFRS 15 amounts to EUR 12,884,000 for 2018 and EUR 11,169,000 for 2017.
Amendments to IAS 1 and IAS 8 Definition of Material (applicable for annual periods beginning on or aer 1 January 2020, but not yet endorsed in EU)
IFRS 17 Insurance Contracts (applicable for annual periods beginning on or aer 1 January 2021, but not yet endorsed in EU)
There are no other standards that are not yet eective and that would be expected to have a material impact on the entity in the current of future reporting periods and on foreseeable future transactions, with the exception of the adoption of IFRS 16.
The new standard IFRS 16 is eective from 1 January 2019 and replaces IAS 17 regarding financial leases.
The new standard introduces a single unique accounting model that requires tenants (lessees) to recognise a right-of-use asset and a lease liability, unless the lease runs for a period of 12 months or less, or the underlying asset is of low value.
The main eects for the lessee are:
IFRS 16 requires the lessee to capitalise all lease liabilities and rental obligations on the balance sheet. The liability reflects all lease payments associated with the lease agreement, the asset reflects the right to use the asset during the agreed term of the lease.
However, there are two exceptions to IFRS 16:
Under IFRS 16, a lease is defined as: 'a contract or a part of a contract, that conveys the right to use an asset (the underlying asset) for a period of time in exchange for consideration'. A contract can only contain a lease when the asset concerned can be identified and the lessee has the right to use the asset identified. In other words:
IFRS 16 Leases oers the lessee two options for converting existing lease contracts to the right-of-use and lease liability. Ter Beke has opted to apply the retrospective approach. This means that we calculate the net book value of the future lease liabilities, in other words the present value of the remaining lease payments as at 1 January 2019. The interest rate used is the lessee's incremental borrowing rate of interest as at 1 January 2019 or the imputed rate of interest for the lease agreement, if the latter can easily be determined.
| Opening balance sheet 01/01/2019 |
Lands and buildings |
Instal lations, machines and equip ment |
Furniture and rolling equip |
ment Other Total | |
|---|---|---|---|---|---|
| Lease liabilities short term |
1,232 | 209 | 940 | 6 2,387 | |
| Lease liabilities long term |
8,250 | 238 | 1,434 | 1 9,923 | |
| Total 01/01/2019 | 9,482 | 447 | 2,374 | 7 12,310 |
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.
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.
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 until 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 whereby Ter Beke NV and other parties that have joint control of the agreement have 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.
If a Group member conducts transactions with a joint venture, profits and losses are eliminated to the extent of the Group's interest in the joint venture concerned.
Ailiated companies are those in which the Group has significant influence, directly or indirectly, but no 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 ailiated company is processed in the consolidated financial statements in accordance with the equity method.
The results, assets and liabilities of ailiated 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 ailiated 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 aer takeover, minus any exceptional depreciation in the value of individual investments.
Any losses of an ailiated company that exceed the Group's interests in that ailiated company (also taking account of all long-term interests that, in essence, form part of the Group's net investments in that ailiated company) are not recognised.
The dierence 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 ailiated 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 dierence aer reassessment between the fair value of the Group share in the identifiable assets, liabilities and conditional liabilities of the ailiated company and the cost price of the ailiated company is recognised immediately in the income statement.
If a Group member conducts transactions with an ailiated company, profits and losses are eliminated to the extent of the Group's interest in the ailiated company concerned.
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 ailiated companies are eliminated to the extent 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 dierence 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, aer 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.
Aer 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-generating units concerned.
Cash-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-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-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-generating unit retained.
In 2017, four new business combinations were conducted. No new business combinations were conducted in 2018.
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 nonmonetary item is 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 KK Fine Foods PLC and TerBeke-Pluma UK Ltd which conduct their business in British pounds and 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 dierences 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:
| 2018 | 2017 |
|---|---|
| 0.8945 | 0.8872 |
| 0.8845 | 0.8767 |
| 4.3000 | 4.1709 |
| 4.2621 | 4.2561 |
IFRS 8 defines an operational segment as a part of an entity of which the operational results are regularly assessed by a high ranking oicer 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.
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 non-current assets are initially valued at cost price. Intangible noncurrent 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. Aer their initial recognition, intangible non-current assets are valued at cost price less the accumulated depreciation and any accumulated impairments. Intangible non-current 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, which are 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 suicient 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 2018 and 2017 did not fulfil the criteria for capitalisation, these were recognised as expenditure in the income statement.
Other costs for internally generated intangible non-current assets, such as brand names, are recognised in the income statement as they occur. Other intangible non-current assets, such as brand patents or computer soware, acquired by the Group are valued at cost price less the accumulated depreciation and impairments. In 2017 and 2018 Ter Beke's consolidated other intangible non-current assets mainly consisted of computer soware, capitalised customer portfolios and brand names gained through acquisitions.
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 | 33.30% |
|---|---|
| Computer soware | 20% |
| Brand patents | 10% |
| Brand names | 10%, 20% |
| Client relationships | 7% |
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-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 aer 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.
Aer 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 | 2; 3.33; 4 & 5% |
|---|---|
| Installations | 5 & 10 % |
| Machines and equipment | 14.3; 20 & 33.3 % |
| Furniture and rolling equipment | 14.3; 20 & 33.3 % |
| Other tangible non-current assets | 10 & 20 % |
Land is not depreciated, since it is assumed that it has an unlimited useful life.
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 (possible) 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-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-generating unit) is estimated to be lower than the book value of the asset (or a cash-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.
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 tangible noncurrent 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 financial expenses.
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.
Up to and including 31 December 2018, lease payments based on operational leases are 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 cost price is calculated based on the average inventory valuation method and the FIFO method. 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.
Ter Beke classifies its financial assets in the following categories: measured at amortised cost or fair value through profit or loss (FVTPL). The classification depends on the contractual characteristics of the financial assets. Management determines the classification of its financial assets at initial recognition.
Financial assets are classified at amortised cost when the contract has the characteristics of a basic lending arrangement and they are held with the intention of collecting the contractual cash flows until their maturity. Ter Beke's financial assets at amortised cost comprises trade and other receivables, shortterm deposits and cash and cash equivalents in the balance sheet. They are measured at amortised cost using the eective interest method, less any impairment.
Ter Beke has a call option and the prior shareholder of KK Fine Foods has a put option on the remaining 10% of share in KK Fine Fods. The option is valued at fair value through profit or loss (FVTPL).
At each reporting date, Ter Beke assesses for financial assets measured at amortised cost (for example trade receivables) whether there is evidence of impairment at both individual level and at a collective level. Amounts deemed uncollectible are written o against the corresponding allowance account at each balance sheet date. In assessing collective impairment, the Group uses historical information on the amount of loss incurred, and made an adjustment if current economic and credit conditions where such that the actual losses were likely to be greater or lesser than suggested by historical trends. Additions to and recoveries from the bad debt allowance account related to trade receivables are reported under 'impairments and provisions' in the income statement.
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 eective interest method. Any dierence between the receipts (aer 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 eective 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 (aer 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 aer initial recognition are valued at fair value.
There are three sorts of hedging relationships:
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 nonfinancial 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 aects 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 aects the profit or loss.
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 lossmaking 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 Sta 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 dierences, 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 dierence between this retrospective approach and the prospective PUC method, is that benefit obligations are calculated as the discounted value of the projected benefits, assuming the minimum guaranteed rates of return currently applicable 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 income, 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 aer 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 sta 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 well 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 dierences 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 suiciently certain that the tax credit and the unused fiscal losses can be set o 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 dierences arising from participations in subsidiaries, unless the Group can decide on the time when the temporary dierence is reversed and it is unlikely that the temporary dierence 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 aer turnover tax and discounts.
Ter Beke recognised revenue from the following sources: delivery of products and services. Ter Beke assesses that the delivery of products represents the main performance obligation. Ter Beke recognised revenue at a point in time when it transfers control over a product to a customer. Customers obtain control when the products are delivered (based on the related inco terms in place). The amount of revenue recognised is adjusted for volume discounts. No adjustment is made for returns nor for any type of warranties as the impact is deemed immaterial based on historical information. Disaggregating revenue by timing of revenue recognition i.e. at a point in time versus over time does not add much value as service contracts are immaterial compared to total product sales.
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 eective duration of the asset to which it relates (the eective interest method).
Dividends are recognised at the time when the shareholder has been given the right to receive the payment thereof. Exchange rate dierences from noncompany 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, aer 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 dierences 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 |
|
| Non-recurring income and | Operating revenues and expenses related to restructuring, impairments, |
| expenses | discontinued operations and other activities, and transactions with a one-o impact |
In the application of the Group's accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. These judgements, estimates and assumptions are reviewed on an ongoing basis:
The Group consolidated annual accounts for 2018 include: Ter Beke NV and consolidated subsidiaries over which Ter Beke exercises full control (Note 35) and one joint venture over which the Group does not exercise full control.
On 30 June 2017, the Entity acquired full control of Stefano Toselli SAS and Pasta Food Company. Until 30 June 2017, the results of Stefano Toselli SAS and Pasta Food Company were recognised as earnings from joint ventures according to the equity method. From 1 July to 31 December 2017, the full balance sheet is recognised in the consolidated annual accounts and the second half-year of the income statement.
On 11 September 2017, the Entity acquired 90% of the shares of KK Fine Foods PLC. From 11 September to 31 December, the full balance sheet is recognised in the consolidated annual accounts and the proportional part of their income statement.
On 1 December 2017, the Entity acquired the Oerman Group. The Group acquired full control from 1 December 2017. The consolidated figures include the full Oerman Group balance sheet and 1 month of the income statement, that is from 1 December to 31 December 2017.
On 7 February 2018, FreshMeals Deutschland GmbH was founded with an initial capital of EUR 25,000.
Ter Beke is a food group. We are specialists in Europe for the development, production and sale of processed meats and fresh ready meals. At the end of 2018, the Ter Beke Group had a workforce of approximately 2,700 people. This number denotes the full-time equivalents on 31 December 2018 and the average number of temporary workers in 2018. In 2017, Ter Beke employed approximately 2,600 people.
The Group's management structure corresponds to its business activities. We also align the internal and external reporting systems with the two existing business segments:
The result of a segment includes the revenue and expenses generated directly by that segment. And this includes the revenue and expenses attributable to that 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.
Non-current assets per segment are the intangible non-current assets, goodwill, tangible non-current assets and financial non-current assets. Liabilities per segment are trade receivables, personnel debts, taxes and other debts that are directly attributable to the business segment. 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 equal the cost of the acquired assets with an expected useful life of more than one year. In the segment reporting we use the same accounting principles as in the consolidated financial statements.
Our two Divisions, Processed Meats and Ready Meals, sell our products to a large client base. This includes most large European discount and retail clients. The ten largest client groups represent 58% of the turnover (2017: 65%). We realise turnover with these clients through various products and contracts of varying duration. We do this in several countries, both for our own brands and clients' private labels. The Group's client portfolio is diverse. Nevertheless, it could have an impact on our operating activities if the relationship with a large group of clients came to an end. Turnover grew in 2018. Just as last year, the volume of business with one single external client exceeded 10% of the consolidated turnover (13% in 2018, 14% in 2017). The turnover related to this client was in both segments.
The turnover between both segments is immaterial, which is why we have chosen to only report turnover external to the Group.
The Ter Beke Group is active in six geographical regions: Belgium, the Netherlands, the United Kingdom, Germany, France and the rest of Europe. The rest of Europe consists of Luxembourg, Denmark, 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 allocated per region according to the geographical location of the assets. The investment expenses per region are the cost price of the acquired assets with an expected useful economic life of more than one year.
| 2018 | 2017 | |||||
|---|---|---|---|---|---|---|
| Processed meats |
Ready Meals |
Total | Processed meats |
Ready Meals |
Total | |
| SEGMENT INCOME STATEMENT | ||||||
| Segment net turnover | 420,146 | 260,314 | 680,460 | 310,614 | 186,772 | 497,386 |
| Segment results | 1,227 | 23,674 | 24,901 | 6,839 | 16,653 | 23,492 |
| Non-allocated results | -8,683 | -1,474 | ||||
| Net financing cost | -3,390 | -1,444 | ||||
| Taxes | -5,587 | -4,006 | ||||
| Share in businesses accounted for using the equity method | 0 | 571 | ||||
| Consolidated result | 7,241 | 17,139 | ||||
| SEGMENT BALANCE SHEET | ||||||
| Segment non-current assets | 123,682 | 107,424 | 231,106 | 123,579 | 111,241 | 234,820 |
| Non-allocated non-current assets | 12,485 | 7,753 | ||||
| Total consolidated non-current assets | 243,591 | 242,573 | ||||
| Segment liabilities | 94,227 | 55,710 | 149,937 | 82,754 | 48,102 | 130,856 |
| Non-allocated liabilities | 275,041 | 268,880 | ||||
| Total consolidated liabilities | 424,978 | 399,736 | ||||
| OTHER SEGMENT INFORMATION | ||||||
| Segment investments | 20,612 | 5,573 | 26,185 | 5,303 | 6,128 | 11,431 |
| Non-allocated investments | 1,785 | 2,041 | ||||
| Total investments | 27,970 | 13,472 | ||||
| Segment depreciation and non-cash costs | 15,368 | 9,990 | 25,358 | 10,948 | 6,338 | 17,286 |
| Non-allocated depreciation and non-cash costs | 2,460 | -895 | ||||
| Total depreciation and non-cash costs | 27,818 | 16,391 |
In 2017, the non-allocated result was adjusted for EUR 6.7 million in response to the phased acquisition.
| Third party turnover (*) | 2018 | 2017 |
|---|---|---|
| Belgium | 177,983 | 162,418 |
| Netherlands | 306,472 | 213,157 |
| UK | 70,660 | 29,882 |
| Germany | 25,880 | 20,485 |
| France | 38,271 | 27,274 |
| Other | 61,194 | 44,170 |
| 680,460 | 497,386 |
(*) The amendment is a consequence of IFRS 15
| Liabilities per region | 2018 | 2017 |
|---|---|---|
| Belgium | 124,582 | 91,726 |
| Netherlands | 130,414 | 127,253 |
| France | 67,156 | 68,421 |
| UK | 46,797 | 47,672 |
| Other | 56,029 | 64,664 |
| 424,978 | 399,736 |
| Liabilities per region | 2018 | 2017 |
|---|---|---|
| Belgium | 18,111 | 9,607 |
| Netherlands | 6,302 | 1,697 |
| France | 788 | 517 |
| UK | 1,205 | 1,481 |
| Other | 1,564 | 170 |
| 27,970 | 13,472 | |
| Non-current assets | 2018 | 2017 |
| Belgium | 89,682 | 118,188 |
| Netherlands | 62,194 | 30,737 |
| France | 35,281 | 36,335 |
| UK | 33,031 | 34,344 |
| Other | 23,403 | 22,969 |
| 243,591 | 242,573 |
| 2018 | 2017 | |
|---|---|---|
| Sale of goods | 680,460 | 497,386 |
In 2018, the Group recognises turnover in accordance with IFRS 15. For 2017, there is no impact of the application of IFRS 15 on the 2017 results. The impact of the application of IFRS 15 (Revenue from Contracts with Customers) means that in 2018, the EUR 12.9 million (for 2017: EUR 11.2 million) that was formerly presented under the 'services and miscellaneous goods' category will be deducted from turnover in the presentation of the accounts.
This mainly concerns introduction fees, costs of cooperation agreements with customers, and other marketing costs related to turnover.
Ter Beke has opted for the 'full retrospective' method for the first adoption of IFRS 15 for the financial year starting on 1 January 2018. The 2017 figures were therefore restated for EUR 11.2 million.
| in '000 EUR | 31/12/18 Adjustments | reclassifica tions |
31/12/18 IFRS 15 |
31/12/17 Adjustments | reclassifica tions |
31/12/17 IFRS 15 |
||
|---|---|---|---|---|---|---|---|---|
| Revenue (net turnover) | 693,344 | 0 | -12,884 | 680,460 | 508,555 | 0 | -11,169 | 497,386 |
| Trade goods, raw and auxiliary materials | -399,416 | -399,416 | -292,646 | -292,646 | ||||
| Services and miscellaneous goods | -129,170 | 12,884 | -116,286 | -99,172 | 11,169 | -88,003 | ||
| Wages and salaries | -119,640 | -119,640 | -87,079 | -87,079 | ||||
| Depreciation costs | -27,126 | -27,126 | -18,830 | -18,830 | ||||
| Impairments and provisions | -692 | -692 | 2,439 | 2,439 | ||||
| Other operating income | 3,159 | 3,159 | 3,983 | 3,983 | ||||
| Other operating expenses | -4,241 | -4,241 | -1,921 | -1,921 | ||||
| Result of phased acquisition | 0 | 0 | 6,689 | 6,689 | ||||
| Result of operating activities | 16,218 | 0 | 0 | 16,218 | 22,018 | 0 | 0 | 22,018 |
| in '000 EUR | reclassifica | 31/12/18 | reclassifica | |||||
| 31/12/18 Adjustments | tions | IFRS 15 | 31/12/17 Adjustments | tions | 31/12/17 | |||
| Revenue (net turnover) | 693,344 | 0 | -12,884 | 680,460 | 508,555 | 0 | -11,169 | 497,386 |
| Processed Meats | 423,938 | 0 | -3,792 | 420,146 | 314,630 | 0 | -4,016 | 310,614 |
| Ready Meals | 269,406 | 0 | -9,092 | 260,314 | 193,925 | 0 | -7,153 | 186,772 |
On a similar basis, turnover in 2018 increased by 1.9% compared to the pro forma turnover in 2017. In the pro forma figures, the eects of the four acquisitions in 2017 were simulated as if they had been incorporated in the Ter Beke figures from 1 January 2017.
This is the first time the results of the companies acquired in 2017 are included in the income statement for a full year. To recapitulate, these are the Dutch Fine Foods for the Ready Meals Division.
The consolidated Group turnover increased by EUR 183 million, from EUR 497.4 million to EUR 680.5 million (+36.81%).
The turnover of the Processed Meats Division increased by EUR 109.5 million, from EUR 310.6 million to EUR 420.1 million. This is mainly due to the acquisition of Oerman.
company Oerman for the Processed Meats Division and the French company Stefano Toselli, the Polish Pasta Food Company and the British company KK During the full year, these four companies contributed jointly and individually to the turnover and result according to plan. 2017 included EUR 0.8 million in non-recurring expenses and EUR 7.4 million in non-recurring income. The non-recurring expenses relate to severance payments and expenses for due diligence activities. Due to the earlier takeover of French-based Stefano Toselli and the Polish Pasta Food Company on 30 June 2017, it was possible for the Group to achieve EUR 6.7 million in nonrecurring income. In addition, added value of EUR 0.7 million was achieved for the sale of a site.
| 2018 | 2017 | |
|---|---|---|
| Purchases | 401,419 | 292,409 |
| Change in inventory | -2,003 | 237 |
| Total | 399,416 | 292,646 |
| 2017 aer cor rection |
||||
|---|---|---|---|---|
| 2018 | 2017 | IFRS 15 | IFRS 15 | |
| Interim sta and consultants to the | ||||
| organisation | 22,761 | 14,946 | 14,946 | |
| Maintenance and repairs | 19,702 | 13,126 | 13,126 | |
| Cost of marketing and sales | 5,330 | 17,095 | -11,169 | 5,926 |
| Transport costs | 30,523 | 19,583 | 19,583 | |
| Gas and electricity | 12,265 | 8,556 | 8,556 | |
| Rent | 7,393 | 6,885 | 6,885 | |
| Advisory expenses and consultants | 10,319 | 9,998 | 9,998 | |
| Other | 7,993 | 8,983 | 8,983 | |
| Total | 116,286 | 99,172 | 88,003 |
Items such as insurance and oice expenses are recognised in the 'Other' account.
The acquisitions resulted in considerable increases.
The 'cost of marketing and sales' category was adjusted in response to the application of IFRS 15. Introduction fees, costs of cooperation agreements with customers, and other marketing costs that are related to turnover are deducted from the turnover.
In 2018, employee expenses amounted to EUR 119,640,000 compared to EUR 87,079,000 in 2017. For further details on employee benefits see Note 25.
Employee expenses can be analysed as follows:
| 2018 | 2017 | |
|---|---|---|
| Wages and salaries | 88,790 | 60,912 |
| Social security contributions | 21,665 | 17,636 |
| Other employee expenses | 9,185 | 8,531 |
| Total | 119,640 | 87,079 |
| Number of employees expressed in FTEs (excl. temporary employees) at year end |
2,408 | 2,314 |
| 2018 | 2017 | |
|---|---|---|
| Write-downs | 495 | 401 |
| on inventories | 426 | 437 |
| on trade receivables | 69 | -36 |
| Provisions | 197 | -2,840 |
| Total | 692 | -2,439 |
In 2017, the CEO's long-term incentive was booked under EBITDA (these costs being brought under recurring earnings in previous years). This is why this is considered a one-o cost, as is the reversal of the provision.
| 2018 | 2017 | |
|---|---|---|
| OTHER OPERATING INCOME | ||
| Recovery of wage-related costs | 827 | 780 |
| Recovery of logistics costs | 29 | -7 |
| Profits from the disposal of assets | 80 | 840 |
| Insurance recoveries | 81 | 119 |
| Compensation received | 189 | 253 |
| Rent | 40 | 94 |
| Others | 1,913 | 1,904 |
| Subtotaal | 3,159 | 3,983 |
| Result of phased acquisition | 0 | 6,689 |
| Total | 3,159 | 10,672 |
| OTHER OPERATING EXPENSES | ||
| Local taxes | 2,471 | 1,815 |
| Realised loss on disposal of assets | 837 | 45 |
| Others | 933 | 61 |
| Total | 4,241 | 1,921 |
| Other operating income and expenses | -1,082 | 8,751 |
| 2018 | 2017 | |
|---|---|---|
| EBITDA | 44,036 | 38,409 |
| Depreciations costs and impairments | -27,126 | -18,830 |
| Impairments and provisions | -692 | 2,439 |
| Result of operating activities (EBIT) | 16,218 | 22,018 |
| 31/12/18 | 31/12/17 | |
|---|---|---|
| Result of operating activities (EBIT) | 16,218 | 22,018 |
| Severance payment (incl social costs) | 3,822 | 793 |
| Realised gains on sale land | 0 | -721 |
| Costs of phased acquisition | 242 | 2,073 |
| Costs Spencer Stuart Mgt. Cons. | 150 | |
| Result of phased acquisition | -6,689 | |
| Strategic study | 1,252 | |
| Start up costs project new packaging concept | 356 | |
| Realised losses Zoetermeer | 511 | |
| Restructuring expenses Zoetermeer | 240 | |
| Impairment Zoetermeer | 386 | |
| Recurring operating result (REBIT) | 23,027 | 17,624 |
| EBITDA | 44,036 | 38,409 |
| Severance payment (incl social costs) | 3,822 | 793 |
| Realised gains on sale land | 0 | -721 |
| Costs of phased acquisition | 242 | 2,073 |
| Costs Spencer Stuart Mgt. Cons. | 150 | |
| LT CEO incentive | 2,843 | |
| Result of phased acquisition | 0 | -6,689 |
| Strategic study | 1,252 | 0 |
| Start up costs project new packaging concept | 356 | 0 |
| Realised losses Zoetermeer | 511 |
REBITDA 50,219 36,858
REBITDA increased by EUR 13.3 million, from EUR 36.9 million in 2017 to EUR 50.2 million in 2018 (+36.2%). This means that, despite a year of integration and consolidation, Ter Beke still managed to achieve its targets.
The Processed Meats Division's recurring results were influenced by the continuing pressure on prices in a market that faces a threat of overcapacity. In addition, various costs were incurred in 2018 that are expected to have a positive influence on the results in subsequent years. In 2018, in Belgium (Veurne) a 'slicing and packaging' project was started that covers much of the product range of one of our customers. The start-up costs reduced the initial profitability of the project, particularly in the first half of the year. In the Netherlands, the FairBeleg® label was launched for the food service channel
and the costs were booked to the income statement. Furthermore, Oerman switched over to the standard Ter Beke ERP package. It was also decided to close the Oerman site in Zoetermeer sooner than originally planned and to move production to Borculo and Wommelgem. All preparatory work at the two sites has been included in the costs.
The Ready Meals Division's results were positively influenced by turnover growth in almost all channels and markets. The Group continues to focus on innovation and product development in order to fully support the customer's needs. To do so, we make use of the strengths of the various companies in the Division.
The non-cash costs in 2018 (EUR 27.8 million) were EUR 11.4 million higher than in 2017. This increase can mainly be accounted to higher depreciation as a result of the acquisitions in 2017.
REBIT increased by EUR 5.6 million, from EUR 17.6 million in 2017 to EUR 23.0 million in 2018.
A number of non-recurring results need to be considered in the comparison of 2017 and 2018.
A total of EUR 6.8 million in non-recurring expenses was incurred in 2018. This concerns severance payments amounting to EUR 3.8 million and costs for the strategic study of EUR 1.3 million. The purpose of the study was twofold: firstly a valuation of the company following the acquisitions and an analysis of the ideal balance sheet structure; and secondly a market analysis of the core markets in which Ter Beke operates. In addition, EUR 0.4 million of exceptional costs were incurred for starting up the new slicing project in Veurne, EUR 0.2 million is related to acquisitions and EUR 1.1 million of restructuring costs due to the early closure of Zoetermeer.
These consist of the losses realised, the restructuring expenses and the impairment on Zoetermeer.
2017 included EUR 0.8 million in non-recurring expenses and EUR 7.4 million in non-recurring income. The non-recurring expenses relate to severance payments and expenses for due diligence activities. Due to the earlier takeover of French-based Stefano Toselli and the Polish Pasta Food Company on 30 June 2017, it was possible for the Group to achieve EUR 6.7 million in non-recurring income. In addition, added value of EUR 0.7 million was achieved for the sale of a site.
| 2018 | 2017 | |
|---|---|---|
| Interest income | 193 | 105 |
| Positive exchange rate dierences | 91 | 85 |
| Other | 74 | 104 |
| Total | 358 | 294 |
| 2018 | 2017 | |
|---|---|---|
| Interest cost on loans | 1,909 | 1,006 |
| Interest cost on leasing | 235 | 203 |
| Negative exchange rate dierences | 444 | 71 |
| Bank charges | 456 | 196 |
| Revaluation of financial instruments | 0 | 104 |
| Other | 704 | 158 |
| Total | 3,748 | 1,738 |
13. TAXES
TAXES BOOKED IN INCOME STATEMENT
| 2018 | 2017 | |
|---|---|---|
| Tax on profits | ||
| Financial year | 8,119 | 6,177 |
| Previous financial years | 308 | -43 |
| Deferred tax liabilities | ||
| Eect of temporary dierences | -2,840 | -2,128 |
| Total tax in the income statement | 5,587 | 4,006 |
The tax rate in 2018 (43.6%) was higher than in 2017 (19.5%). The tax rate in 2017 was lower than normal due to the non-taxable result of the phased acquisition (EUR 6.7 million). Taxes in 2018 were higher because there were no deferred tax assets for some losses.
RELATIONSHIP BETWEEN TAX BURDEN AND THE ACCOUNTING PROFIT
| 2018 | 2017 | |
|---|---|---|
| Accounting profit before tax | 12,828 | 20,574 |
| Tax at Belgian tax rate (2018: 29.58% and 2017: 33.99%) |
3,795 | 6,993 |
|---|---|---|
| Eect of the dierent tax rates of the foreign companies |
-368 | -1,221 |
| Eect on deferred tax of decreased Belgian tax rate from 33.99% to 29.58% |
-153 | |
| Eect of not recognising DTA during the financial year |
2,762 | |
| Eect of previously not recognised DTA | -1,091 | |
| Eect of the expenses not deductible for tax purposes |
430 | 610 |
| Eect of non-taxed phased acquisition | -2,274 | |
| Notional interest deduction | -45.38 | |
| Other eects: minimum tax | 59 | 96 |
| Actual tax burden | 5,587 | 4,006 |
| Eective tax percentage | 43.6% | 19.5% |
In 2018, a deferred tax asset was recognised for Pasta Food Company because from now on, Pasta Food Company has a recurrent profitable operating result.
| 78,263 0 -67 |
36,944 41,025 0 294 |
|---|---|
| 78,196 | 78,263 |
| 1,740 | 1,740 |
| 0 | 0 |
| 0 | 0 |
| 1,740 | 1,740 |
Net book value 76,456 76,523
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 acquiree's contingent liabilities, the identifiable assets and the liabilities.
The Group has opted to allocate the goodwill to the segments. To date, the risk profile of the acquired business combinations was almost identical to the existing business, and/or the 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 the goodwill. This is carried out using the discounted cash flow method. If the realisable value of the segment is lower than the book value, we first allocate the impairment losses to the book value of the goodwill. Next are the other assets of the unit, in proportion to the book value of each asset in the segment.
In 2018, the goodwill amounted to EUR 32,369,000 (2017: EUR 32,369,000) for Processed Meats. For Ready Meals this was EUR 44,087,000 (2017: EUR 44,157,000).
The impairment analysis described above is based on:
Estimated tax burden on the operational cash flow. For both segments, we have estimated an average tax rate of 25%, taking into account where the cash flows are taxed.
We adjust the calculated cash flows for each year with the replacement investments we think will be required to maintain the current production facilities in an operational status and with the movements in working capital. These dier per segment.
In both Divisions, the realisable value exceeds the book value significantly (by more than 150%). Therefore, this impairment analysis does not result in any impairments in any segment.
If the discount rate is increased by 1%, then the dierence between the estimated realisable value and the book value decreases. In Processed Meats by 23% and in Ready Meals by 21%. If the ratio of EBITDA to sales decreases by 1%, these dierences decrease by 23% and 9% respectively. If turnover growth aer 2017 decreases by 1%, the dierence decreases by 17% in Processed Meats and 20% in Ready Meals. In each of these three scenarios and in both Divisions, the realisable value exceeds the book value significantly.
If the three parameters described above simultaneously decrease by 1%, the dierence between the estimated realisable value and the book value decreases by 52% in Processed Meats and 42% in Ready Meals. Again in this scenario, the realisable value in both Divisions exceeds the book value significantly. If they simultaneously increase by 1%, this dierence increases by 111% in Processed Meats and 88% in Ready Meals.
| Brands, licences and |
Customer relation |
Brands, licences and |
Customer relation |
|||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Soware | patents | ships | R&D | Total | Soware | patents | ships | R&D | Total | |
| 2018 | 2017 | |||||||||
| ACQUISITION VALUE | ||||||||||
| Start of the financial year | 20,832 | 2,018 | 24,011 | 156 | 47,017 | 19,231 | 0 | 0 | 156 | 19,387 |
| Group consolidation extension | 0 | 1,055 | 1,092 | 23,625 | 0 | 25,772 | ||||
| Acquisitions | 2,474 | 160 | 2,634 | 1,425 | 0 | 0 | 0 | 1,425 | ||
| Transfers and decommissioning | -4 | -4 | 0 | 0 | 0 | 0 | 0 | |||
| Transfer from / to other entries | 0 | -890 | 890 | 0 | 0 | 0 | ||||
| Translation dierences | -8 | -90 | -98 | 11 | 36 | 386 | 0 | 433 | ||
| End of the financial year | 23,302 | 2,170 | 23,921 | 156 | 49,549 | 20,832 | 2,018 | 24,011 | 156 | 47,017 |
| DEPRECIATION | ||||||||||
| Start of the financial year | 15,678 | 682 | 338 | 156 | 16,854 | 13,908 | 0 | 0 | 156 | 14,064 |
| Group consolidation extension | 0 | 616 | 0 | 0 | 616 | |||||
| Depreciation* | 1,861 | 481 | 1,717 | 4,059 | 1,629 | 200 | 341 | 2,170 | ||
| Transfers and decommissioning | -4 | -4 | 0 | 0 | 0 | 0 | ||||
| Transfer from / to other entries | 0 | -483 | 483 | 0 | 0 | |||||
| Translation dierences | -11 | -11 | 8 | -1 | -3 | 4 | ||||
| End of the financial year | 17,535 | 1,163 | 2,044 | 156 | 20,898 | 15,678 | 682 | 338 | 156 | 16,854 |
| Net book value | 5,767 | 1,007 | 21,877 | 0 | 28,651 | 5,154 | 1,336 | 23,673 | 0 | 30,163 |
In 2018, the Group invested EUR 2.6 million in intangible non-current assets compared to EUR 1.43 million in 2017. The investment is mainly devoted to the further roll-out of the ERP package. In 2017, we acquired KK Fine Foods and Oerman BV, and consequently EUR 23.6 million was recognised in intangible non-current assets in the 'customer portfolio' account and EUR 1.1 million in the 'brands' account. These assets will be depreciated over five, ten and fourteen years respectively.
| Installations, | Furniture | ||||||
|---|---|---|---|---|---|---|---|
| Land and | machines, and | and rolling | Assets under | ||||
| buildings | equipment | equipment | Leasing | Other | construction | Total | |
| ACQUISITION VALUE | |||||||
| Start of the financial year | 136,813 | 328,597 | 5,004 | 4,579 | 81 | 744 | 475,818 |
| Group consolidation extension | 0 | ||||||
| Acquisitions | 1,855 | 22,797 | 367 | 0 | 34 | 283 | 25,336 |
| Transfers and decommissioning | -104 | -4,755 | -646 | -5,505 | |||
| Transfer from / to other entries | 745 | -745 | 0 | ||||
| Translation dierences | -445 | -408 | -6 | -11 | -2 | -872 | |
| End of the financial year | 138,119 | 346,976 | 4,719 | 4,568 | 115 | 280 | 494,777 |
| DEPRECIATION | |||||||
| Start of the financial year | 82,674 | 254,300 | 4,354 | 1,023 | 81 | 0 | 342,432 |
| Group consolidation extension | 0 | ||||||
| Depreciation * | 3,565 | 18,026 | 211 | 1,374 | 2 | 23,178 | |
| Transfers and decommissioning | -4 | -3,915 | -542 | -4,461 | |||
| Translation dierences | -20 | -234 | -4 | -7 | -265 | ||
| End of the financial year | 86,215 | 268,177 | 4,019 | 2,390 | 83 | 0 | 360,884 |
| IMPAIRMENT | |||||||
| Start of the financial year | 0 | ||||||
| Group consolidation extension | 0 | ||||||
| Addition* | 0 | ||||||
| Reduction* | 0 | ||||||
| Transfers and decommissioning | 0 | ||||||
| End of the financial year | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| NET CAPITAL GRANTS | |||||||
| Start of the financial year | 269 | 300 | 10 | 0 | 0 | 0 | 579 |
| Group consolidation extension | 0 | ||||||
| New allocations | 44 | 44 | |||||
| Other | -1 | -1 | |||||
| Depreciation * | -7 | -103 | -1 | -111 | |||
| End of the financial year | 261 | 241 | 9 | 0 | 0 | 0 | 511 |
| Net book value as per 31 December 2018 | 51,643 | 78,558 | 691 | 2,178 | 32 | 280 | 133,382 |
| Installations, | Furniture | ||||||
|---|---|---|---|---|---|---|---|
| Land and buildings |
machines, and equipment |
and rolling equipment |
Leasing | Other | Assets under construction |
Total | |
| ACQUISITION VALUE | |||||||
| Start of the financial year | 91,013 | 239,483 | 2,560 | 68 | 81 | 279 | 333,484 |
| Group consolidation extension | 45,775 | 78,498 | 2,278 | 4,406 | 0 | 932 | 131,889 |
| Acquisitions | 879 | 10,873 | 198 | 97 | 12,047 | ||
| Transfers and decommissioning | -382 | -477 | -14 | -873 | |||
| Transfer from / to other entries | 0 | 451 | 5 | 1 | -457 | 0 | |
| Translation dierences | -472 | -231 | -23 | 7 | 0 | -10 | -729 |
| End of the financial year | 136,813 | 328,597 | 5,004 | 4,579 | 81 | 744 | 475,818 |
| DEPRECIATION | |||||||
| Start of the financial year | 60,826 | 190,031 | 2,474 | 68 | 81 | 0 | 253,480 |
| Group consolidation extension | 19,486 | 49,511 | 1,769 | 748 | 0 | 0 | 71,514 |
| Depreciation * | 2,441 | 15,324 | 127 | 203 | 0 | 0 | 18,095 |
| Transfers and decommissioning | -57 | -400 | -457 | ||||
| Translation dierences | -22 | -166 | -16 | 4 | -200 | ||
| End of the financial year | 82,674 | 254,300 | 4,354 | 1,023 | 81 | 0 | 342,432 |
| IMPAIRMENT | |||||||
| Start of the financial year | 0 | ||||||
| Group consolidation extension | 0 | ||||||
| Addition* | 0 | ||||||
| Reduction* | 0 | ||||||
| Transfers and decommissioning | 0 | ||||||
| End of the financial year | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| NET CAPITAL GRANTS | |||||||
| Start of the financial year | 302 | 158 | 8 | 468 | |||
| Group consolidation extension | 0 | ||||||
| New allocations | 6 | 1,523 | 17 | 1,546 | |||
| Other | 0 | ||||||
| Depreciation * | -39 | -1,381 | -15 | -1,435 | |||
| End of the financial year | 269 | 300 | 10 | 0 | 0 | 0 | 579 |
| Net book value as per 31 December 2017 | 53,870 | 73,997 | 640 | 3,556 | 0 | 744 | 132,807 |
The lines marked with * in Notes 15 and 16 are included in the income statement, in the amount for depreciations and impairments of non-current assets.
In 2018, the Group invested EUR 28.0 million of which EUR 25.4 million in tangible non-current assets. The investments primarily consist of eiciency and infrastructure investments in the Group's various sites and also of expanding the slicing capacity in Veurne.
| 2018 | 2017 | |
|---|---|---|
| Joint venture | ||
| Associates | ||
| Total | 0 | 0 |
On 30 June 2017, the Group acquired full control of Stefano Toselli and Pasta Food Company. In 2018, both participations are fully consolidated. In the first half-year of 2017, the equity method was still used.
| 2018 | 2017 | |
|---|---|---|
| Receivables and securities in cash | 75 | 77 |
| Total | 75 | 77 |
The deferred tax assets and liabilities are attributable to the following categories:
| 2018 | 2017 | |
|---|---|---|
| Tangible non-current assets | 8,734 | 9,705 |
| Receivables | 289 | 438 |
| Provisions | -175 | -202 |
| Debts | 492 | 349 |
| Transferred losses | ||
| Deferred tax assets | 9,340 | 10,290 |
| 2018 | 2017 | |
| Tangible non-current assets | 1,175 | 144 |
| Receivables | 78 | 78 |
| Provisions | 1,219 | 1,142 |
| Debts | 146 | 53 |
| 2,409 | 1,586 | |
| Deferred tax assets | 5,027 | 3,003 |
In 2018, the Group did not acknowledge EUR 9,843,000 in deferred tax assets on tax-deductible losses (2017: EUR 7,102,000) because the Group is insuiciently 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. In 2018, the transferred notional interest deduction was fully utilised.
| 2018 | 2017 | |
|---|---|---|
| Raw and auxiliary items | 20,658 | 20,593 |
| Work in process | 4,612 | 3,815 |
| Finished products | 6,090 | 6,900 |
| Goods for resale | 4,944 | 3,480 |
| Total | 36,304 | 34,788 |
For write-downs on inventories please refer to Note 8.
| 2018 | 2017 | |
|---|---|---|
| Trade receivables | 99,029 | 100,402 |
| VAT to be reclaimed | 4,365 | 3,672 |
| Taxes to be reclaimed | 2,579 | 1,702 |
| Adjustment accounts | 2,476 | 2,395 |
| Receivable interest | ||
| Empties | 4,675 | 3,885 |
| Other | 8,784 | 3,806 |
| Total | 121,908 | 115,862 |
Our trade receivables are not interest-bearing.
The average number of days of customer credit for the Group is 53 days (2017: 54 days).
In 2018, write-downs on trade receivables to the value of EUR 69,000 were recognised as a cost in the income statement (EUR 36,000 in 2017).
In 2018 and 2017, the percentage of trade receivables owed older than 60 days amounted to less than 2.3% (see also Note 27).
Cash is held at reputable banks.
| 2018 | 2017 | |
|---|---|---|
| Current accounts | 23,160 | 6,480 |
| Cash | 15 | 33 |
| Total | 23,175 | 6,513 |
On 17 April 2019, the Board of Directors confirmed the proposed distribution of EUR 4 per share. The Ter Beke General Meeting of Shareholders has not yet approved this dividend, which is why it has not yet been recognised in the accounts.
The Group and its subsidiaries provide for pension schemes and other employee benefits. On 31 December 2018, the total net debt for pension schemes and similar liabilities was EUR 5,835,000 for the Group's Belgian and French companies. On 31 December 2017, this was EUR 5,289,000.
| obligations under IAS 19 Defined benefit plan |
Other provisions | Total provisions | |
|---|---|---|---|
| 1 January 2017 | 2,480 | 2,832 | 5,312 |
| Group consolidation extension | 1,713 | 807 | 2,520 |
| Service costs | 1,148 | 1,148 | |
| Interest costs and income | 16 | 16 | |
| Actuarial eect by OCI | -872 | -872 | |
| Payments | 0 | ||
| Allocations and redemptions | -2,840 | -2,840 | |
| Other | -15 | 20 | 5 |
| 31 December 2017 | 4,470 | 819 | 5,289 |
| Group consolidation extension | 0 | ||
| Service costs | 1,206 | 1,206 | |
| Interest costs and income | 19 | 19 | |
| Actuarial eect by OCI | -109 | -109 | |
| Payments | 0 | ||
| Allocations and redemptions | -140 | 337 | 197 |
| Other | -767 | -767 | |
| 31 December 2018 | 4,679 | 1,156 | 5,835 |
| 2018 | 2017 | |
|---|---|---|
| Defined benefit pension schemes | ||
| Net liability / (asset) | 4,678 | 4,470 |
| Of which liabilities | 23,235 | 21,497 |
| Of which investments in investment funds | -18,557 | -17,027 |
| Amounts recognised in the income statement: | ||
| Pension costs allocated to the year of employment | 1,206 | 1,148 |
| Interest cost | 19 | 16 |
| Expected return on investments in investment funds | ||
| Recognised actuarial (profits)/losses | ||
| Past service pension costs | ||
| Losses/ (profits) from curtailments or settlements | ||
| Administrative expenses | 24 | 22 |
| Cost recognised in the income statement regarding defined benefit pension schemes | 1,249 | 1,186 |
| Amounts allocated to the shareholders' equity via the comprehensive result (OCI) | -83 | 26 |
| Recognised actuarial (profits)/losses | -109 | -872 |
| Cumulative of via OCI recognised actuarial results at the beginning of the period | 26 | 898 |
| Present value of the gross liability at the beginning of the year | 21,497 | 19,400 |
| Impact of PUC method on the Belgian fixed contribution plans | ||
| Employer's contributions | ||
| Interest cost | 258 | 186 |
| Pension costs allocated to the year of employment | 1,107 | 987 |
| DBO profit (loss) for the period | 1,171 | -149 |
| Other | -798 | 1,073 |
| Present value of the gross liability at the end of the year | 23,235 | 21,497 |
| Fair value of the investments in investment funds at the beginning of the year | -17,032 | -14,655 |
| Expected employer's contributions | -1,167 | -1,134 |
| Expected benefits paid (excl. interest) | 2,605 | 212 |
| Expected return on investments in investment funds | ||
| Expected taxes on contributions paid | 114 | 113 |
| Expected administrative expenses | 23 | 28 |
| Expected value of the investments in investment funds at the end of the year | -15,457 | -15,436 |
| Fair value of the investments in investment funds to the beginning of the year | -17,032 | -16,926 |
| Impact of PUC method on the Belgian fixed contribution plans | ||
| Actual employer's contributions | -1,149 | -1,038 |
| Actual employees contributions | 0 | -24 |
| Actual benefits paid | 777 | 662 |
| Interest revenue | -239 | -176 |
| Actual taxes on contributions paid | 119 | 110 |
| Actual administrative expenses | 24 | 21 |
| Actuarial profit (losses) on the investments in investment funds | -1,059 | 339 |
| Fair value of the investments in investment funds at the end of the year | -18,559 | -17,032 |
| Fair value of the investments in investment funds at the end of the year | 2 | 5 |
| Fair value of the investments in investment funds at the end of the year | -18,557 | -17,027 |
| Impact of PUC method on the Belgian fixed contribution plans | ||||||
|---|---|---|---|---|---|---|
The Ter Beke NV 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. The minimum guaranteed reserves are covered by the value of the investment funds.
The minimum guaranteed returns obtained (in accordance with the Law of 18 December 2015):
These pension schemes guarantee a minimum return on investment. We therefore regard these as defined benefit plans.
Each year, Ter Beke has a full actuarial calculation conducted according to the PUC method. The analysis of the pension schemes shows that there is a limited dierence between the statutory guaranteed minimum and the interest guaranteed by the insurance company. At the end of 2018, this net liability amounts to EUR 32,000 (2017: EUR 16,000). The periodic contributions constitute a cost for the year in which related rights are acquired. In 2018, this cost amounted to EUR 2,617,000 (2017: EUR 2,536,000).
Costs regarding IAS 19 are booked under employee expenses. The interest component is recognised in the financial result.
In 2017 and 2018, the other provisions consisted mainly of severance payments and the provision for Oerman Group employees to cover additional expenses due to changes in the place of employment.
| Maturity period | |||||
|---|---|---|---|---|---|
| Within the year | Between 1 and 5 years |
Aer 5 years | Total | ||
| Interest-bearing liabilities | |||||
| Credit institutions | 14,423 | 127,922 | 65 | 142,410 | |
| Lease liabilities | 1,389 | 2,055 | 3,444 | ||
| Total | 15,812 | 129,977 | 65 | 145,854 |
2018
| Maturity period | ||||
|---|---|---|---|---|
| Within the year | Between 1 and 5 years |
Aer 5 years | Total | |
| Other liabilities | 3,806 | 3,806 |
| Maturity period | |||||
|---|---|---|---|---|---|
| Within the year | Between 1 and 5 years |
Aer 5 years | Total | ||
| Interest-bearing liabilities | |||||
| Credit institutions | 88,060 | 36,474 | 3,416 | 127,950 | |
| Lease liabilities | 2,072 | 3,416 | 5,488 | ||
| Total | 90,132 | 39,890 | 3,416 | 133,438 |
| Maturity period | ||||
|---|---|---|---|---|
| Within the year | Between 1 and 5 years |
Aer 5 years | Total | |
| Other liabilities | 3,569 | 3,569 | ||
Loans from credit institutions in 2017 include:
Loans from credit institutions in 2018 include:
On 26 June 2018, Ter Beke concluded a long-term financing agreement with a consortium of three banks in the form of a 'Revolving Credit Facility' (RCF). The RCF has been agreed for a period of five years, with two possible extensions, each for one year. This provides the Group with EUR 175 million in guaranteed credit lines that can be extended to EUR 250 million if required. No guarantees were provided for this RCF. The RCF conditions include maintaining a net financial debt to adjusted EBITDA ratio of 3.0. In the event of new acquisitions, a temporary ratio of 3.5 will be accepted. On 31 December 2018, an amount of EUR 120 million in loans was subject to a variable interest rate.
At the end of 2018, the Group had EUR 3,444,000 in financial leasing from the recent acquisitions.
| 2018 | 2017 | |
|---|---|---|
| Loans with fixed interest rate | 1.60% | 1.65% |
| Loans with variable interest rate | 0.89% | 1.70% |
Minimum payments to credit institutions (including interest) in 2018:
| 2018 | 2017 | |
|---|---|---|
| Less than 1 year | 8,815 | 24,742 |
| More than 1 year and less than 5 years | 136,007 | 42,101 |
| More than 5 years | 67 | 2,128 |
The Group has suicient short-term credit lines to fulfil its short-term requirements. The Group has not pledged any assets to meet its obligations to credit institutions, and has not received guarantees from third parties. The conditions for the primary financial covenants are: net debt / adjusted EBITDA ratio of 3.0. In the event of new acquisitions, a temporary ratio of 3.5 will be accepted. The Group conformed to the requirements of these covenants in 2018. The Group conformed to the requirements of these covenants in 2017.
| 31/12/17 | Cash Flow | Non-cash adjustments | 31/12/18 | |||
|---|---|---|---|---|---|---|
| Acquisitions | Exchange rate adjustment |
Fair value adjustments |
||||
| Long term interest-bearing liabilities | ||||||
| Credit institutions | 39,890 | 88,314 | -217 | 127,987 | ||
| Lease liabilities | 3,416 | -1,350 | -11 | 2,055 | ||
| Short term Interest-bearing liabilities | ||||||
| Credit institutions | 88,060 | -73,481 | -156 | 14,423 | ||
| Lease liabilities | 2,072 | -677 | -6 | 1,389 | ||
| Other long term interest-bearing liabilities | 3,569 | 269 | -32 | 3,806 | ||
| Total | 137,007 | 13,075 | 0 | -422 | 0 | 149,660 |
As per 31 December 2018, the other long-term liabilities amounted to EUR 3,806,000. This concerns a put/call option on the remaining 10% of the shares in KK Fine Foods for non-controlling interests.
The option period runs from 31 December 2020 to 31 December 2024.
The put/call option entitles the minority interest shareholder to sell its interests in KK Fine Foods. The conditions are set out in the option contract with the Ter Beke Group, and are not based on publicly available market information. This liability is therefore classified according to level 3, in accordance with IFRS 13.
| 2018 | 2017 | |
|---|---|---|
| Trade liabilities | 110,457 | 97,308 |
| Dividends | 88 | 88 |
| Other | 4,878 | 3,983 |
| Total | 115,423 | 101,379 |
| Of which empties | 3,108 | 3,007 |
Most trade liabilities have a due date of 60 or 45 days from invoice date.
Interest rates and exchange rates are subject to risks. Our exposure is a normal consequence of the Group's activities. Derivative financial instruments are used to limit these risks. The Group's policy forbids the use of derivative financial instruments for speculation 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.
If the variable interest rate on all loans were to increase by 1%, this will mean an additional EUR 1,258,000 in interest expenses.
Ter Beke is exposed to the risk of interest rate fluctuations on EUR 120 million. On 28 June 2018, the Group has drawn EUR 120 million on the RCF. Ter Beke wishes to limit its interest risk by hedging. For this purpose, a floored IRS was agreed on 30 November 2018 with maturity dates at the end of every quarter for a notional amount of EUR 10 million, and an option for the same notional amount with a strike of 1% on the same maturity date.
The exchange rate risk lies in 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. On 31 December 2018, the Group had a net position in British pounds of GBP 5,769,000. On 31 December 2017, that was GBP 6,230,000. As hedge against exchange rate risk, on 31 December 2018 we had forward contracts for the sale of GBP 500,000 for EUR. On 31 December 2017, that was GBP 1,100,000 for EUR. On 31 December 2018, in Poland we had a net position in Polish zloty of PLN 1,717,000.
Credit risk is the risk that one of the contracting parties fails to honour its financial obligations, whereby the other party may incur a loss. Our Processed Meats and Ready Meals Divisions sell our products to a large client base. This includes most large European discount and retail clients. We realise the turnover with these clients through various products and contracts of varying duration. We do this in several countries, both for our own brands and clients' private labels. The ten largest client groups represent 58% of the turnover (2017: 65%). Just as in 2017, the volume of business with one single external client exceeded 10% of the consolidated turnover (13% in 2018, 14% in 2017). 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. .
| 2018 | |
|---|---|
| Total outstanding client receivables | 99,029 |
| Overdue < 30 days | 11,062 |
| Overdue between 30 and 60 days | 3,078 |
| Overdue > 60 days | 2,209 |
| Current assets | Note | 2018 | 2017 | ||
|---|---|---|---|---|---|
| as at 31 December 2018 and 2017 |
Book value |
Fair value |
Book value |
Fair value |
|
| Current assets | |||||
| Trade and other receivables | 22 121,908 121,908 115,862 115,862 | ||||
| Cash and cash equivalents | 23 | 23,175 | 23,175 | 6,513 | 6,513 |
| Long-term liabilities | |||||
| Long-term interest-bearing liabilities |
26 130,042 130,042 | 43,306 | 43,306 | ||
| Other long-term liabilities | 3,806 | 3,806 | 3,569 | 3,569 | |
| Current liabilities | |||||
| Current interest-bearing liabilities |
26 | 15,812 | 15,812 | 90,132 | 90,132 |
| Trade liabilities and other payables |
27 115,423 115,423 101,379 101,379 | ||||
| Social liabilities | 15,890 | 15,890 | 16,211 | 16,211 | |
| Tax liabilities | 3,802 | 3,802 | 4,252 | 4,252 |
Level 1: market prices in active markets for identical assets or liabilities Level 2: inputs other than Level 1 that are observable for the asset or liability, directly (i.e. as prices) or indirectly (i.e. derived from prices) Level 3: inputs that are not based on observable market prices
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. We also ensure that suicient credit lines are available. See also Note 25.
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. This is where Ter Beke has centralised the slicing activities of Langeveld-Sleegers and all Dutch logistics activities.
Future payments under this non-terminable operational leasing contract amount to:
| 2018 | 2017 | |
|---|---|---|
| Less than 1 year | 2,817 | 2,458 |
| More than 1 year and less than 5 years | 8,781 | 8,102 |
| More than 5 years | 3,297 | 4,908 |
| Total | 14,895 | 15,468 |
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 amounting to approximately EUR 2 million. The Group considers this demand from Creta Farms completely unfounded and has decided to 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. Ter Beke has appealed against this ruling. We have not made any provision for this.
On 11 September 2018, the French tax authorities informed the Ter Beke Group company Stefano Toselli SL that they wish to conduct a tax audit for the financial years ending 31 December 2015, 2016 and 2017. Since the start of this tax audit, The Stefano Toselli SL has cooperated constructively with the French tax authorities. On 20 December 2018, the French tax authorities served Stefano Toselli SL a notice of amendment relating to the financial year ending 31 December 2015. Stefano Toselli SL will respond to this amendment notice within the statutory period. As Stefano Toselli SL was still part of a joint venture structure in 2015, and since the proposed change in the taxable base (directly or indirectly) relates to the then joint venture partner, Ter Beke will recover this potential tax cost in full from the then joint venture partner. Therefore, at the end of 2018 no provision was established.
The Group has not set up any sureties as a guarantee for debts or obligations to third parties.
On 31 December 2018, the total purchase obligations concerning major investment projects amounted to EUR 2,211,000 (2017: EUR 1,155,000). For this we have already assigned contracts or placed orders.
The Compensation and Nomination Committee has prepared the compensation policy for Ter Beke, which the Board of Directors has approved. The remuneration of the executive directors and members of the Executive Committee is structured in a fixed and a variable part. The variable part is subject to evaluation by the Remuneration and Nomination Committee and to long-term incentives such as a pension plan. As from 1 January 2006, we have incorporated the remuneration policy in the Corporate Governance Charter.
The remuneration received by members of the Board of Directors and the Executive Committee during the 2018 financial year is summarised in the table below.
For details, please refer to the remuneration report in the declaration of Corporate Governance (see above).
| 2018 | 2017 |
|---|---|
| 0.37 | 0.2 |
Remuneration for managers in a key position (in accordance with IAS 24.17)
| in EUR million | 2018 | 2017 |
|---|---|---|
| Short-term employee benefits | 1.9 | 5.3 |
| Post-employment benefits | ||
| Other long-term employee benefits | 0.1 | |
| Termination benefit | 0.7 | |
| Share-based payments |
Transactions with ailiated parties are mainly commercial transactions and are based on the 'at arm's length' principle. The costs and revenues of these transactions are immaterial in the consolidated income statement.
For 2017 and 2018, we did not receive any reports from directors or management about related transactions, as stipulated 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).
The calculation of basic earnings per share is based on:
The weighted average number of outstanding ordinary shares was calculated as follows:
| 2018 | 2017 | |
|---|---|---|
| Number of outstanding ordinary shares on 1 January financial year |
1,732,621 | 1,732,621 |
| Eect of ordinary shares issued | ||
| Weighted average number of outstanding ordinary shares on 31 December financial year |
1,732,621 | 1,732,621 |
| Group share in net profit of financial year | 7,185 | 17,107 |
| Average number of shares | 1,732,621 | 1,732,621 |
| Earnings per share | 4.15 | 9.87 |
When calculating diluted earnings per share, we adjust the weighted average number of shares. We take into account all the potential ordinary shares that could give rise to dilution. There were none in 2018 and 2017.
| 2018 | 2017 | |
|---|---|---|
| Net group profit | 7,185 | 17,107 |
| Average number of shares | 1,732,621 | 1,732,621 |
| Dilution eect warrant plans | 0 | 0 |
| Adjusted number of shares | 1,732,621 | 1,732,621 |
| Diluted earnings per share | 4.15 | 9.87 |
In 2018, The Group did not make any acquisitions, in contrast to the various acquisitions completed in 2017.
To clarify the impact of the acquisitions of Stefano Toselli, Pasta Food Company, KK Fine Foods and Oerman B.V. on an annual basis, Ter Beke has simulated the eects of the pre-acquisition period as if they has been incorporated in the Ter Beke's figures from 1 January 2017.
On 30 June 2017, Ter Beke NV acquired the remaining 67% of the shares of Stefano Toselli SAS.
Stefano Toselli SAS produces ready meals in Mézidon (France). In 2015, Ter Beke had already acquired 33% of the shares in Stefano Toselli.
On 30 June 2017, Ter Beke acquired the remaining 50% of the shares in the joint venture Pasta Food Company SP z.o.o.
Ter Beke and GS&DH Holdings established this company in 2011 as a 50/50 joint venture, with the aim of producing and marketing ready meals in Central and Eastern Europe. Since October 2014, the highly automated production facility in Opole (Poland) has been fully operational.
On 11 September 2017, Ter Beke acquired 90% of the shares of KK Fine Foods PLC. 10% is for non-controlling interests.
KK Fine Foods PLC produces and distributes fresh ready-made meals which are sold in the food service and retail markets as frozen products.
On 1 December 2017 Ter Beke acquired 100% of the shares in the Oerman Group.
The Oerman Group produces and sells sliced processed meats, whole coldcuts and meat delicacies at three production facilities in the Netherlands.
| 31/12/18 | Proforma (*) 31/12/17 |
|
|---|---|---|
| REBITDA | 50,219 | 50,200 |
| REBIT | 23,027 | 23,750 |
(*) non-audited numbers
The parent company of the Group, Ter Beke NV, Beke 1, B-9950 Lievegem, Belgium, was directly or indirectly the parent company of the following companies as per 31 December 2018:
| Name and full address of the company | Eective holding in % |
|---|---|
| Ter Beke Vleeswarenproduktie NV - Beke 1, 9950 Lievegem - Belgium | 100 |
| Heku NV - Ondernemingenstraat 1, 8630 Veurne - Belgium | 100 |
| Ter Beke Immo NV - Beke 1, 9950 Lievegem - 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 - Oicina 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 Netherlands BV - Bijsterhuizen 24/04, 6604 LL Wijchen - Netherlands | 100 |
| FreshMeals NV - Beke 1, 9950 Lievegem - 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 | 100 |
| Stefano Toselli SAS - ZI Espace Zuckermann - BP56 - 14270 Mézidon-Canon – France | 100 |
| KK Fine Foods PLC - Estuary House 10th Avenue - Zone 3 Deeside Industrial Park – Deeside – Flintshire - CH5 2UA - United Kingdom | 90 |
| Cebeco Meat Products Netherlands B.V. - Twentepoort West 10 - NL-7609 RD Almelo– Netherlands | 100 |
| Oerman B.V. - Twentepoort West 10 - NL-7609 RD Almelo– Netherlands | 100 |
| Oerman Borculo B.V. - Parallelweg 21, 7271 VB Borculo– Netherlands | 100 |
| Oerman Aalsmeer B.V. - Turfstekerstraat 51, 1431 GD Aalsmeer– Netherlands | 100 |
| Oerman Holding B.V. - Twentepoort West 10 - NL-7609 RD Almelo– Netherlands | 100 |
| Gebr. Kraak Vlees en Vleeswaren B.V. - Turfstekerstraat 51, 1431 GD Aalsmeer– Netherlands | 100 |
| Oerman Zoetermeer B.V. - Philipsstraat 3, 2722 NA Zoetermeer– Netherlands | 100 |
| Vleeswaren en Saladefabrieken Oerman B.V. - Twentepoort West 10 - NL-7609 RD Almelo– Netherlands | 100 |
| Oerman Hazerswoude B.V. - Twentepoort West 10 - NL-7609 RD Almelo – Netherlands | 100 |
| FreshMeals Deutschland GmbH - Ostwall 175 - 47798 Krefeld - Germany | 100 |
No events have occurred aer the balance sheet date that could have a relevant impact on the results in this annual report.
In relation to the 2018 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 179,000. These fees concern tax consultancy assignments, among others. The Statutory Auditor invoiced the Ter Beke Group a fee of EUR 414,000 with regard to the statutory audit.
| 2018 | 2017 | ||
|---|---|---|---|
| Non-current assets | 231,922 | 169,580 | |
| I. | Formation Expenses | 0 | 0 |
| II. | Intangible non-current assets | 167 | 277 |
| III. | Tangible non-current assets | 5,392 | 5,761 |
| IV. | Financial non-current assets | 226,363 | 163,542 |
| Current assets | 93,217 | 99,773 | |
| V. | Amounts receivable aer 1 year | 0 | 14 |
| VI. | Inventories | ||
| VII. Amounts receivable within one year | 87,920 | 97,273 | |
| VIII. Cash investments | 0 | 0 | |
| IX. | Cash and cash equivalents | 4,159 | 1,591 |
| X. | Accrued income and deferred charges | 1,138 | 895 |
| TOTAL ASSETS | 325,139 | 269,353 | |
| Shareholders' equity | 64,795 | 69,883 | |
| I. | Capital | 4,903 | 4,903 |
| II. | Share premiums | 48,288 | 48,288 |
| IV. | Reserves | 3,360 | 3,360 |
| Statutory reserves | 649 | 649 | |
| Reserves not available for distribution | 1,457 | 1,457 | |
| Untaxed reserves | 679 | 679 | |
| Reserves available for distribution | 575 | 575 | |
| V. | Transferred result | 8,244 | 13,332 |
| Provisions and deferred taxes | 0 | 0 | |
| Provisions for risks and costs | 0 | 0 | |
| Deferred taxes | 0 | 0 | |
| Debts | 260,344 | 199,470 | |
| X. | Debts payable aer 1 year | 124,309 | 17,241 |
| XI. | Debts payable within 1 year | 135,725 | 182,142 |
XII. Accrued charges and deferred income 310 87 TOTAL LIABILITIES 325,139 269,353
| 2018 | 2017 | |
|---|---|---|
| Operating income | 18,161 | 13,803 |
| Turnover | ||
| Change in inventory | ||
| Produced non-current assets | ||
| Other operating income | 18,161 | 13,803 |
| Operating costs | 20,680 | 19,688 |
| Trade goods, raw and auxiliary items | ||
| Services and miscellaneous goods | 12,767 | 14,581 |
| Remuneration, social security costs and pensions | 5,633 | 5,923 |
| Depreciation and write-downs on intangible and tangible non-current assets | 2,264 | 1,947 |
| Write-downs on inventory and trade receivables | 0 | |
| Provisions for risks and costs | 0 | -2,843 |
| Other operating costs | 16 | 80 |
| Operating result | -2,519 | -5,885 |
| Financial income | 23,400 | 7,670 |
| Financial charges | -18,805 | -749 |
| Result from ordinary business operations before tax | 2,076 | 1,036 |
| Profit before tax | 2,076 | 1,036 |
| Tax on profits | -234 | -5 |
| Result for the financial year aer tax | 1,842 | 1,031 |
| 2018 | 2017 | |
|---|---|---|
| Operating income | 18,161 | 13,803 |
| Turnover | ||
| Change in inventory | ||
| Produced non-current assets | ||
| Other operating income | 18,161 | 13,803 |
| Operating costs | 20,680 | 19,688 |
| Trade goods, raw and auxiliary items | ||
| Services and miscellaneous goods | 12,767 | 14,581 |
| Remuneration, social security costs and pensions | 5,633 | 5,923 |
| Depreciation and write-downs on intangible and tangible non-current assets | 2,264 | 1,947 |
| Write-downs on inventory and trade receivables | 0 | |
| Provisions for risks and costs | 0 | -2,843 |
| Other operating costs | 16 | 80 |
| Operating result | -2,519 | -5,885 |
| Financial income | 23,400 | 7,670 |
| Financial charges | -18,805 | -749 |
| Result from ordinary business operations before tax | 2,076 | 1,036 |
| Profit before tax | 2,076 | 1,036 |
| Tax on profits | -234 | -5 |
| Result for the financial year aer tax | 1,842 | 1,031 |
The accounting principles and conversion rules for the statutory financial statements of the parent company meet the Belgian standards (BE GAAP). We have drawn up the consolidated financial statements in accordance with the IFRS. These accounting principles dier widely from each other.
The Statutory Auditor has given an unqualified audit opinion on the financial statements of Ter Beke NV.
We publish the following documents in accordance with the statutory requirements and they are available free of charge: the comprehensive financial statements, the Statutory Auditor's unqualified audit opinion and the statutory annual report, which is not included in its entirety in this document.
| 2018 | 2017 | 2016 | 2015 | 2014 | 2013 | |
|---|---|---|---|---|---|---|
| Consolidated income statement | ||||||
| Revenue (net turnover) | 680,460 | 508,555 | 418,563 | 396,319 | 399,730 | 407,202 |
| EBITDA | 44,036 | 38,409 | 37,735 | 34,273 | 31,418 | 28,602 |
| Result of operating activities | 16,218 | 22,018 | 18,190 | 15,829 | 13,844 | 10,598 |
| Result aer taxes before share in the result of enterprises is accounted for using the equity method |
7,241 | 16,568 | 12,503 | 10,811 | 8,805 | 6,313 |
| Earnings aer taxes | 7,241 | 17,139 | 12,562 | 10,298 | 8,132 | 6,202 |
| Net cash flow | 35,059 | 32,959 | 32,048 | 29,255 | 26,379 | 24,317 |
| Consolidated balance sheet and financial structure | ||||||
| Non-current assets | 243,591 | 242,573 | 144,337 | 149,201 | 140,926 | 144,493 |
| Current assets | 181,387 | 157,163 | 105,314 | 92,327 | 91,799 | 96,183 |
| Equity | 125,028 | 125,308 | 114,969 | 108,843 | 102,815 | 99,489 |
| Total of balance sheet | 424,978 | 399,736 | 249,651 | 241,528 | 232,725 | 240,676 |
| Net financial debts | 122,679 | 126,925 | 17,547 | 34,312 | 29,566 | 40,823 |
| Net financial debts / Equity | 98.1% | 101.3% | 15.3% | 31.5% | 28.8% | 41.0% |
| Equity/Total of balance sheet | 29.4% | 31.3% | 46.1% | 45.1% | 44.2% | 41.3% |
| Stock and dividend information | ||||||
| Number of shares | 1,732,621 | 1,732,621 | 1,732,621 | 1,732,621 | 1,732,621 | 1,732,621 |
| Average number of shares | 1,732,621 | 1,732,621 | 1,732,621 | 1,732,621 | 1,732,621 | 1,732,621 |
| Average stock price (December) | 120.60 | 175.73 | 139.80 | 96.51 | 61.99 | 56.94 |
| Basic profit per share | 4.15 | 9.87 | 7.25 | 5.94 | 4.69 | 3.58 |
| Diluted profit per share | 4.15 | 9.87 | 7.25 | 5.94 | 4.69 | 3.58 |
| EBITDA per share | 25.42 | 22.17 | 21.78 | 19.78 | 18.13 | 16.51 |
| Net cash flow per share | 20.27 | 19.04 | 18.50 | 16.88 | 15.22 | 14.03 |
| Dividend per share | 4.00 | 4.00 | 3.50 | 3.50 | 2.50 | 2.50 |
| Payout ratio | 96.50% | 40.51% | 48.27% | 49.13% | 53.27% | 69.84% |
| Dividend return (December) | 3.30% | 2.30% | 2.50% | 3.60% | 4.00% | 4.40% |
| Valuation | ||||||
| Market capitalisation (December) | 208,867 | 304,473 | 242,238 | 167,215 | 107,405 | 98,655 |
| Net financial debt | 122,679 | 126,925 | 17,547 | 34,312 | 29,566 | 40,823 |
| Market value of the company | 331,546 | 431,398 | 259,785 | 201,527 | 136,971 | 139,478 |
| Market value / Result | 46.0 | 26.000 | 20.800 | 18.5 | 15.6 | 22.1 |
| Market value / EBITDA | 7.5 | 11.2 | 6.9 | 5.9 | 4.4 | 4.9 |
| Market value / Net cash flow | 9.5 | 13.1 | 8.1 | 6.9 | 5.2 | 5.7 |
The undersigned, Francis Kint* - Managing Director, and René Stevens - Chief Financial Oicer, declare that, to the best of their knowledge:
The financial statements for the financial year 2018 and 2017, which have been prepared in accordance with the International Financial Accounting Standards (IFRS), give a true and fair view of the equity, of the financial status and of the results of Ter Beke NV and the companies included in the consolidated
The annual report is a fair review of the development, the results and the position of Ter Beke NV, and of the companies included in the consolidation.
René Stevens Francis Kint* Chief Financial Oicer Managing Director
* Permanent representative of BVBA Argalix
At 31 December 2018 the total recorded amount of goodwill amounts to 76 456 (000) EUR. The group has allocated its goodwill to its two cashgenerating units (CGU) 'Processed Meat' (32 369 (000) EUR) and 'Ready Meals' (44 087 (000) EUR).
The group defines annually the carrying amount of non-current assets allocated to its two cash-generating units. Ter Beke assesses the recoverable amount by calculating the value in use of the assets within the cash-generating unit, using a discounted cash flow method ("DCF"). This method requires significant judgement in making estimates of cash flow projections, sales growth, EBITDA margin evaluation and discount rate. Due to the inherent uncertainty involved in forecasting and discounting cash flows, we consider this assessment as a key audit matter.
The group disclosed the nature and the value of the assumptions used in the impairment analysis in note 14 of the consolidated financial statements.
In our audit, we assessed and tested, with the assistance of our valuation experts, management critical assumptions used in the discounted cash flow model.
We challenged the key drivers of projected future cash flows, including estimated sales growth, estimated EBITDA margin and the applied discount rate. Our procedures furthermore include the evaluation of the design and implementation of controls over the preparation and approval of Ter Beke's budget, which serves as the basis in the DCF model. We critically assessed the budgets by taking into account the historical accuracy of the budgeting process. Moreover, we performed sensitivity analysis with respect to the available headroom of the two CGU's considering changes in discount rate, sales growth rates and EBITDA margin.
We assessed the adequacy of the company's disclosure note to the consolidated financial statements.
The board of directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium and for such internal control as the board of directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the board of directors is responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters to be considered for going concern and using the going concern basis of accounting unless the board of directors either intends to liquidate the group or to cease operations, or has no other realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a statutory auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISA will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.
During the performance of our audit, we comply with the legal, regulatory and normative framework as applicable to the audit of consolidated financial statements in Belgium.
As part of an audit in accordance with ISA, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
In the context of the statutory audit of the consolidated financial statements of Ter Beke NV ("the company") and its subsidiaries (jointly "the group"), we hereby submit our statutory audit report. This report includes our report on the consolidated financial statements and the other legal and regulatory requirements. These parts should be considered as integral to the report.
We were appointed in our capacity as statutory auditor by the shareholders' meeting of 26 May 2016, in accordance with the proposal of the board of directors issued upon recommendation of the audit committee and presentation of the works council. Our mandate will expire on the date of the shareholders' meeting deliberating on the financial statements for the year ending 31 December 2018. Due to a lack of online archives dating back prior to 1997, we have not been able to determine exactly the first year of our appointment. We have performed the statutory audit of the consolidated financial statements of Ter Beke NV for at least 22 consecutive periods.
We have audited the consolidated financial statements of the group, which comprise the consolidated balance sheet as at 31 December 2018, the consolidated income statement, the consolidated overview of the comprehensive income, the consolidated statement of changes in equity and the consolidated cash flow for the year then ended, as well as the summary of significant accounting policies and other explanatory notes. The consolidated statement of financial position shows total assets of 424 978 (000) EUR and the consolidated income statement shows a profit for the year then ended of 7 241 (000) EUR.
In our opinion, the consolidated financial statements give a true and fair view of the group's net equity and financial position as of 31 December 2018 and of its consolidated results and its consolidated cash flow for the year then ended, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and with the legal and regulatory requirements applicable in Belgium.
We conducted our audit in accordance with International Standards on Auditing (ISA), as applicable in Belgium. In addition, we have applied the International Standards on Auditing approved by the IAASB applicable to the current financial year, but not yet approved at national level. Our responsibilities under those standards are further described in the "Responsibilities of the statutory auditor for the audit of the consolidated financial statements" section of our report. We have complied with all ethical requirements relevant to the statutory audit of consolidated financial statements in Belgium, including those regarding independence.
We have obtained from the board of directors and the company's oicials the explanations and information necessary for performing our audit.
We believe that the audit evidence obtained is suicient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This report is consistent with our additional report to the audit committee referred to in article 11 of Regulation (EU) No 537/2014.
Gent, 19 April 2019 The statutory auditor
Deloitte Bedrijfsrevisoren CVBA
Represented by Charlotte Vanrobaeys
related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our statutory auditor's report. However, future events or conditions may cause the group to cease to continue as a going concern;
We communicate with the audit committee regarding, amongst other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the audit committee with a statement that we have complied with relevant ethical requirements regarding independence, and we communicate with them about all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated to the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our report unless law or regulation precludes any public disclosure about the matter.
The board of directors is responsible for the preparation and the content of the directors' report on the consolidated financial statements, the statement of non-financial information attached to the directors' report on the consolidated financial statements and other matters disclosed in the annual report on the consolidated financial statements.
As part of our mandate and in accordance with the Belgian standard complementary (revised in 2018) to the International Standards on Auditing (ISA) as applicable in Belgium, our responsibility is to verify, in all material respects, the director's report on the consolidated financial statements, the statement of non-financial information attached to the directors' report on the consolidated financial statements and other matters disclosed in the annual report on the consolidated financial statements, as well as to report on these matters.
In our opinion, aer performing the specific procedures on the directors' report on the consolidated financial statements, this report is consistent with the consolidated financial statements for that same year and has been established in accordance with the requirements of article 119 of the Companies Code.
In the context of our statutory audit of the consolidated financial statements we are responsible to consider, in particular based on information that we became aware of during the audit, if the directors' report on the consolidated financial statements and other information disclosed in the annual report on the consolidated financial statements, i.e. chapter 2 of this annual report is free of material misstatements, either by information that is incorrectly stated or otherwise misleading. In the context of the procedures performed, we are not aware of such a material misstatement.
The non-financial information as required by article 119, § 2 of the Companies Code, has been disclosed in chapter 2 of the directors' report on the consolidated financial statements that is part of the annual report. This non-financial information has been established by the company in accordance with the GRI Standards. In accordance with article 144, § 1, 6° of the Companies Code we do not express any opinion on the question whether this non-financial information has been established in accordance with these GRI Standards.
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Copywriting: Scriptorij NV / Ter Beke Translation: SGS Concept and Layout: Action nv Responsible Editor: Francis Kint
Portraits: Sven Everaert Photography, www.sveneveraert.com Simone-Michelle de Blouw, www.simonemichelle.nl 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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