VANDEMOORTELE FINANCIAL REPORT 2021
1
KEY FINANCIAL FIGURES
VANDEMOORTELE FINANCIAL REPORT 2021
2
As of 2019 IFRS 16 was adopted and impacts EBITDA, Capital Employed and Capital Provided.
VANDEMOORTELE FINANCIAL REPORT 2021
3
For the year ended 31 December
Note
2021
2020
THOUSAND EURO
Revenue
Raw materials and consumables used and goods for resale
( 738 585 )
( 629 886 )
Changes in inventories of finished goods and goods purchased for resale
Services
6
( 237 952 )
( 227 428 )
Employee benefit expenses
7
( 259 413 )
( 249 040 )
Depreciation, amortisation and write down
8
( 62 173 )
( 62 259 )
Net impairment losses
8
( 1 901 )
( 405 )
Change in provisions
9
( 671 )
Other operating income
10
Other operating expenses
11
( 10 531 )
( 13 219 )
Profit/ (loss) from operations
Financial Income
12
Financial Expense
13
( 12 242 )
( 13 086 )
Gain on disposal of equity accounted investments
(1)
Profit/ (loss) before tax
Income tax (expense)
14
( 8 006 )
( 18 591 )
Profit/ (loss) from continuing operations
Profit/loss
Profit/loss attributable to the owners of the parent
(1) 2020 included a one-time capital gain of €26 million on the sale of our shares of Lipidos Santiga
As the shares are not traded in a public market, the standard IAS 33, § 66/70 relating the presentation and disclosure of the
basic or diluted earnings per share and the weighted average number of ordinary shares is not applicable.
VANDEMOORTELE FINANCIAL REPORT 2021
4
For the year ended 31 December
Note
2021
2020
THOUSAND EURO
Profit/(loss) for the year
Other Comprehensive income
-3 784
-4 880
23.4
23.4
23.3
-4 880
28
Total comprehensive income for the year
VANDEMOORTELE FINANCIAL REPORT 2021
5
For the year ended 31 December
Note
2021
2020
THOUSAND EURO
Assets
Goodwill
15
Other intangible assets
16
Property, plant & equipment
17
Deferred tax assets
19
Other financial assets
Other assets
20
Non-current assets
Inventories
21
Trade and other receivables
18
Derivatives
27
Other Financial assets
(1)
Cash and cash equivalents
22
Other assets
20
Current assets
Total Assets
Equity and liabilities
Share capital
23
Retained earnings & reserves
23
Equity
Borrowings
24
Deferred tax liabilities
19
Derivatives
27
Employee benefits
28
Provisions
29
Other non-current liabilities
30
Non-current liabilities
Borrowings
24
Current tax
Derivatives
27
Employee benefits
28
Trade payables and other liabilities
30
Current liabilities
Total equity and liabilities
(1) Includes Sicavs noted on the Luxembourg market and valued at the final recorded market price before closing date
VANDEMOORTELE FINANCIAL REPORT 2021
6
For the year ended 31 December
Note
2021
2020
THOUSAND EURO
Profit/ (loss) from operations
(1)
Amortisations
8
Depreciations
8
Impairments on intangible & tangible fixed assets
8
EBITDA from continuing operations
4
Depreciations on government grants
10
(407 )
(476 )
Fair value adjustments on commodity contracts
10
(72 )
Change in provisions
9
(1 )
Change in long-term employee benefits
(960 )
Write down on inventories and receivables
(1 381 )
Loss / (gain) on disposals of intangible assets and PPE
10 / 11
Other
(341 )
Cash flow from operating activities before changes in working capital
Decrease / (increase) in inventories
(21 580 )
Decrease / (increase) in trade receivables
(24 200 )
Increase / (decrease) in trade payables
(40 370 )
Increase / (decrease) in other working capital
(1 479 )
Net cash generated from operating activities
Interest received
Net interest paid
(8 060 )
(8 752 )
Income taxes paid
(9 580 )
(7 119 )
Other financial fees
(788 )
(774 )
Cash flow from operating activities in continuing operations
Acquisition of intangible assets
16
(634 )
(786 )
Acquisition of property, plant and equipment
17
(39 142 )
(57 630 )
Proceeds from sale of intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from sale of subsidiaries & associates
Government grants
Cash flow from investing activities in continuing operations
(38 925 )
(6 880 )
Proceeds from borrowings
Repayment of borrowings
(2 083 )
(37 158 )
Repayment of lease liabilities
(2)
(9 063 )
(11 466 )
Dividends paid
23.5
(22 760 )
(17 404 )
Dividends received
23.5
Acquisition of treasury shares / Sale of own shares
23.2
(5 022 )
Other
(50 )
Cash flow from financing activities in continuing operations
(36 626 )
(62 190 )
Net increase / (decrease) in cash & cash equivalents
(4 368 )
Cash and cash equivalents less bank overdrafts as of 1 January
22
Effect of exchange rate fluctuations
(2 )
Cash and cash equivalents less bank overdrafts as of 31 December
22
(1) Includes interests on leases and rent payments for low value assets, short term leases, variable lease payments and non-lease
(2) See note 17 - movements of lease liabilities
VANDEMOORTELE FINANCIAL REPORT 2021
7
2021
Attributable to owners of the parent
THOUSAND EURO
Share
Capital
Treasury
Shares
Currency
Translation
Adjustment
Retained
Earnings
and
Reserves
Hedging
reserves
Employee
benefits
Total
Non
control.
interest
Total
Equity
As of 1 January
( 62 117 )
( 178 )
Comprehensive income
Profit/(loss) for the year
-
-
-
-
-
-
Other comprehensive
income
-
-
-
-
-
Total comprehensive
income
-
-
-
-
Transactions with
owners
Movement treasury shares
-
( 5 021 )
-
( 1 )
-
-
( 5 022 )
-
( 5 022 )
Dividends paid
-
-
-
( 22 760 )
-
-
( 22 760 )
-
( 22 760 )
Dividends received
-
-
-
-
-
-
Total transactions with
owners
-
( 5 021 )
-
( 20 497 )
-
-
( 25 518 )
-
( 25 518 )
As of 31 December
( 67 139 )
2020
Attributable to owners of the parent
THOUSAND EURO
Share
Capital
Treasury
Shares
Currency
Translation
Adjustment
Retained
Earnings
and
Reserves
Hedging
reserves
Employee
benefits
Total
Non
control.
interest
Total
Equity
As of 1 January
( 64 000 )
( 1 274 )
Comprehensive income
Profit/(loss) for the year
-
-
-
-
-
-
Other comprehensive
income
-
-
( 4 880 )
-
( 3 784 )
-
( 3 784 )
Total comprehensive
income
-
-
( 4 880 )
-
-
Transactions with
owners
Movement treasury shares
-
-
-
-
-
-
Dividends paid
-
-
-
( 17 404 )
-
-
( 17 404 )
-
( 17 404 )
Dividends received
-
-
-
-
-
-
Total transactions with
owners
-
-
( 15 398 )
-
-
( 13 516 )
-
( 13 516 )
As of 31 December
( 62 117 )
( 178 )
VANDEMOORTELE FINANCIAL REPORT 2021
8
1 GENERAL INFORMATION ................................................................................................................................ .... 9
2 APPLICATION OF NEW AND REVISED IFRS
3 SIGNIFICANT ACCOUNTING POLICIES ................................................................................................................11
4 ALTERNATIVE PERFORMANCE MEASURES ...................................................................................................... 30
5 OPERATING SEGMENT INFORMATION ............................................................................................................. 36
6 SERVICES ................................................................................................ ............................................................ 41
7 EMPLOYEE BENEFIT EXPENSE .......................................................................................................................... 42
8 DEPRECIATION, IMPAIRMENT, AMORTISATION AND WRITE DOWN ............................................................... 43
9 CHANGE IN PROVISIONS ................................................................................................................................ ... 43
10 OTHER OPERATING INCOME ............................................................................................................................. 44
11 OTHER OPERATING EXPENSE ........................................................................................................................... 44
12 FINANCIAL INCOME ................................................................................................................................ ............ 45
13 FINANCIAL EXPENSE ................................................................................................................................ .......... 45
14 INCOME TAX EXPENSE ................................................................................................................................ ...... 46
15 GOODWILL ................................................................................................................................ ......................... 48
16 OTHER INTANGIBLE ASSETS .............................................................................................................................. 50
17 PROPERTY, PLANT AND EQUIPMENT ............................................................................................................... 51
18 TRADE AND OTHER RECEIVABLES .................................................................................................................... 54
19 DEFERRED TAXES ................................................................................................................................ ............... 56
20 OTHER ASSETS ................................................................................................................................ .................. 58
21 INVENTORIES ................................................................................................................................ ..................... 58
22 CASH AND CASH EQUIVALENTS ....................................................................................................................... 59
23 EQUITY ................................................................................................................................ ............................... 60
24 BORROWINGS ................................................................................................................................ .................... 62
25 FINANCIAL RISK MANAGEMENT ........................................................................................................................ 65
26 FAIR VALUE FINANCIAL INSTRUMENTS ............................................................................................................. 71
27 DERIVATIVES ................................................................................................................................ ...................... 72
28 EMPLOYEE BENEFITS ................................................................................................................................ .......... 73
29 PROVISIONS ................................................................................................................................ ....................... 78
30 TRADE PAYABLES AND OTHER LIABILITIES ...................................................................................................... 79
31 RELATED PARTIES ................................................................................................................................ ............. 80
32 COMMITMENTS AND CONTINGENCIES ............................................................................................................ 82
33 AUDITORS' ASSIGNMENTS AND RELATED FEES .............................................................................................. 84
34 EVENTS AFTER BALANCE SHEET DATE ................................ ............................................................................. 85
35 VANDEMOORTELE COMPANIES ....................................................................................................................... 86
36 AUDITOR'S REPORT ............................................................................................................................. ##AUDREP
37 STATEMENT BY RESPONSIBLE PERSON................................................................................................ ............ 95
38 COMBINED REPORT OF THE BOARD OF DIRECTORS ................................................................ ....... ##COMBOD
39 STATUTORY ACCOUNTS OF VANDEMOORTELE NV ........................................................................................ 107
VANDEMOORTELE FINANCIAL REPORT 2021
9
1. GENERAL
INFORMATION
owned business that has grown to become a leading food group on the European scale. The Group focuses on two
business lines or operating segments:
consolidated financial statements of the Group include the Company and 32 consolidated subsidiaries controlled by the
Company.
, the parent company of Vandemoortele NV, is a limited liability company incorporated and domiciled in
. The registered office of Vandemoortele
.
The consolidated financial statements and the statutory financial statements of Vandemoortele NV were approved for
issue by the Board of Directors on 17 March 2022. The shareholders will be requested to approve the consolidated
financial statements and the statutory financial statements of Vandemoortele NV at the annual meeting held on 10 May
2022.
VANDEMOORTELE FINANCIAL REPORT 2021
10
2.
APPLICATION
OF NEW AND REVISED IFRS
2.1 NEW AND REVISED IFRS
AFFECTING AMOUNTS REPORTED
AND/OR
DISCLOSURES
IN THE
FINANCIAL
STATEMENTS
In the current year, 202 1, the Group has considered a number of new and revised IFRS requirements issued by the
International Accounting Standards Board (IASB) that are mandatorily effective for accounting periods that begin on or
after 1 January 2021. This concerns:
●
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform
–
●
Amendment to IFRS 16 Leases: COVID-19-Related Rent Concessions
●
Amendments to IFRS 4 Insurance Contracts
–
January 2023
These improvements and amendments do not have a material impact on the amounts included in the 2021 financial
statements.
2.2 NEW AND
REVISED
IFRS ISSUED BUT NOT YET
EFFECTIVE
The Group has not applied the following new and revised IFRS requirements that have been issued but are not yet
effective. Once the standards become effective, they will be relevant to the Group:
●
Amendment to IFRS 16 Leases: COVID-19-Related Rent Concessions beyond 30 June 2021 (applicable for annual
periods beginning on or after 1 April 2021
●
Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use (applicable for annual
periods beginning on or after 1 January 2022)
●
Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets: Onerous Contracts - Cost of
Fulfilling a Contract (applicable for annual periods beginning on or after 1 January 2022)
●
Amendments to IFRS 3 Business Combinations: Reference to the Conceptual Framework (applicable for annual
periods beginning on or after 1 January 2022)
●
Annual Improvements to IFRS Standards 2018
–
2020 (applicable for annual periods beginning on or after 1
January 2022)
●
IFRS 17 Insurance Contracts (applicable for annual periods beginning on or after 1 January 2023)
●
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-
current (applicable for annual periods beginning on or after 1 January 2023, but not yet endorsed in the EU)
●
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of
Accounting Policies (applicable for annual periods beginning on or after 1 January 2023, but not yet endorsed in
the EU)
●
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of
Accounting Estimates (applicable for annual periods beginning on or after 1 January 2023, but not yet endorsed
in the EU)
●
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (applicable for annual periods beginning on or after 1 January 2023, but not yet endorsed in the EU)
VANDEMOORTELE FINANCIAL REPORT 2021
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3.
SIGNIFICANT ACCOUNTING POLICIES
3.1 BASIS FOR
PREPARATION
The consolidated financial statements for 2021 have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted for use by the European Union and effective as of 1 January 2021.
The key accounting policies applied in the preparation of these consolidated financial statements are set out below.
These policies have been consistently applied, unless otherwise stated.
Depending on the applicable IFRS requirements, the measurement basis used to prepare the consolidated financial
statements is the historical cost, with the exception of certain financial instruments that are measured at fair value at the
end of each reporting period as explained in notes 26 and 27.
Recognition and measurement alternatives permitted by IFRS:
STANDARD
ALTERNATIVE USED
IAS 2 Inventories
Measurement of the cost of inventories on a first in, first out (FIFO) basis
IAS 16 Property, Plant and
Equipment
Historical cost
IAS 38 Intangible Assets
Historical cost
IAS 40 Investment Property
Historical cost
The available exemptions regarding the retrospective application of IFRS at the transition date (1 January 2005, for the
Group):
STANDARD
IFRS 1 ALTERNATIVE USED
IFRS 3 Business Combinations
Non-application of IFRS 3 provisions to any business combinations prior to the
transition date.
Additional ownership interest purchase accounted for as goodwill for the
difference between the acquisition cost and the non-controlling interests’
share in net equity, with no remeasurement of the assets acquired and
liabilities assumed.
IAS 16 Property, Plant and
Equipment
The Group has opted to measure the land at the date of transition at fair value
and to consider it as deemed cost at the date of transition.
IAS 19 Employee Benefits
All non-recognised actuarial differences with respect to defined benefit plans
on 31 December 2004 were recognised in equity at the date of transition to
IFRS.
IAS 21 Effects of Changes in Foreign
Exchange Rates
Transfer into retained earnings of all cumulative translation differences for all
foreign operations as of 1 January 2005.
VANDEMOORTELE FINANCIAL REPORT 2021
12
Specific accounting policies with respect to the presentation applied:
STANDARD
IFRS 1 ALTERNATIVE USED
IAS 1 Presentation of Financial
Statements
Income statement by cost nature
Indirect method applied in preparing the cash flow statement
IAS 7 Cash Flow Statements
Interest paid and received presented as part of cash flows from operations
Dividends received/paid presented as cash flows from financing activities
IAS 16 Property, Plant and Equipment
The gain or loss on disposal of items of property, plant and equipment is
presented as other operating income/expense
IAS 19 Employee Benefits
The net interest expense with respect to defined benefit plans, other long
term employee benefits and termination benefits is presented as part of
employee benefits in the income statement
IAS 20 Accounting for Government
Grants and Disclosure of Government
Assistance
Capital grants are presented as deferred revenue and are recognised in
other operating income in the income statement
Grants related to income are recognised in the income statement as other
operating income
IAS 21 Effects of Changes in Foreign
Exchange Rates
Exchange differences on loans and receivables, trade payables and other
liabilities and borrowings are classified as financial income or expense
IAS 28 Investments in Associates and
Joint Ventures
The share of profit/loss from investments in associations and joint ventures
is excluded from profit/loss from operations but included in profit/loss
before tax
IAS 38 Intangible Assets
The gain or loss on disposal of intangible assets is presented as other
operating income/expense
IFRS 9 Financial Instruments
Fair value movements on currency and interest derivatives linked with loans
and receivables, trade payables and other liabilities and borrowings are
classified as part of financial income or expense when recognised in the
income statement
Fair value movements with respect to commodity derivatives are presented
within other operating income/expense
VANDEMOORTELE FINANCIAL REPORT 2021 13
3.2 KEY
JUDGEMENTS
AND MAJOR
SOURCES
OF
ESTIMATION UNCERTAINTY
3.2.1 KEY
JUDGEMENTS
In preparing the consolidated financial statements for 2021, no major judgements have been made that have a significant
impact on the results of 2021 and the measurement of Vandemoortele’s assets and liabilities at the end of 2021.
3.2.2
MAJOR
SOURCES
OF
ESTIMATION UNCERTAINTY
There are no major sources of estimation uncertainty at the end of 2021 that have a significant risk of resulting in a
material adjustment to the carrying amounts of assets and liabilities within the next financial year.
Covid-19 impact
Also in 2021, the world was still universally affected by the pandemic. The main impact was felt during the first months of
2021, with the year beginning with curfews, lockdowns and reduced social activities. This had a direct impact on food
consumption and the food service channel in general.
Vandemoortele’s Covid Taskforce continued in the same form as in 2020; consisting of several external experts, local
country/site leaders and HR managers. The Covid Taskforce monitored the situation on a daily basis, in line with the
information and guidelines provided by authorities and officials.
Several actions were continued, such as a mandatory work-from-home policy, provision of the utmost in protective
measures for Vandemoortele’s personnel and creation of optimal working conditions, while ensuring strong
communication at and across all levels of the organisation.
The total net impact of COVID-19 is estimated at
€
13 million on the adjusted EBITDA level. Vandemoortele’s debt
position ended up in line with expectations and with a reduced debt position compared to the previous year.
The Ukraine crisis
The Ukraine crisis does not have a direct effect on our business since Vandemoortele has no production sites or
commercial offices in Russia or Ukraine. However, we will feel the indirect effect through the impact on the general
European economy and through further price increases.
Ukraine and Russia are the largest suppliers of wheat and sunflower seeds worldwide. Therefore, we will face
further challenges in 2022 in terms of raw material price increases. In addition, the physical availability of sunflower seeds
will be a difficulty. Not only will raw material prices continue to rise, but we also expect a further increase in all input
costs, like energy, gas and oil, due to the crisis. Strict cost management will continue to be necessary in 2022 and passing
on these rising raw material prices to our customers will be unavoidable.
VANDEMOORTELE FINANCIAL REPORT 2021
14
3.3
ACCOUNTING POLICIES APPLIED
TO THE
CONSOLIDATED
FINA NCIAL
STATEMENTS
3.3.1
CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Parent Company and its subsidiaries.
Subsidiaries are all entities controlled by the Parent Group. They are fully consolidated from the date of acquisition, being
the date on which Vandemoortele Group acquired control, and will continue to be consolidated until the date that such
control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the financial
statements of the Parent Company, using consistent accounting policies (for like transactions and other events in similar
circumstances).
The following accounting procedures are followed:
●
The like items of assets, liabilities, equity, income, expenses and cash flows of the Parent Company are
combined with those of its subsidiaries.
●
The carrying amount of the Parent Company’s investment in each subsidiary and its portion of equity of each
subsidiary is offset.
●
All intercompany balances, income and expenses, unrealised gains and losses and dividends resulting from
intercompany transactions are eliminated in full (profits or losses resulting from intragroup transactions that are
recognised in assets, such as inventory and fixed assets, are eliminated in full).
Subsidiaries
An investor determines whether it is a parent by assessing whether it controls one or more investees. An investor
considers all relevant facts and circumstances when assessing whether it controls an investee. An investor controls an
investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee.
The income and expenses of the subsidiaries are included in the consolidated financial statements from the date the
Group gains control until the date the control ceases. Income and expenses of the subsidiary are based on the amounts of
assets and liabilities recognised in the consolidated financial statements at the acquisition date.
The Group uses the acquisition method of accounting to account for the acquisition of subsidiaries. The cost of an
acquisition is measured at the fair value of the assets given, equity issued and liabilities incurred or assumed on the date
of acquisition. Identifiable assets acquired and liabilities assumed in a business combination are initially measured at their
fair values on the acquisition date. The excess of the cost of the acquisition over the fair value of the Group’s share of the
identifiable net assets acquired is recognised as goodwill. If the cost of the acquisition is less than the fair value of the net
assets of the subsidiary acquired, the remaining difference is recognised directly in the income statement (as a gain from
a bargain purchase).
A parent presents non-controlling interests in its consolidated balance sheet as equity, separately from the equity of the
owners of the parent. Non-controlling interest consists of the amount of this interest on the date of the original business
combination and the non-controlling share of changes in equity from the date of the business combination. A reporting
entity attributes the profit or loss and each component of other comprehensive income to the owners of the parent and
to the non-controlling interests. The proportion allocated to the parent and the non-controlling interests are determined
on the basis of present ownership interests. The reporting entity also attributes the total comprehensive income to the
owners of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a
deficit balance.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated.
Unrealised losses are also eliminated, unless the transaction provides evidence of an impairment of the asset transferred.
VANDEMOORTELE FINANCIAL REPORT 2021
15
Transactions with non-controlling interest that do not result in a loss of control are accounted for as equity transactions.
That is, as transactions with the owners in their capacity as owners. The difference between fair value of any
consideration paid and the relevant share acquired of the carrying value of the net asset of the subsidiary is recorded in
net equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
The equity and net result attributable to non-controlling interests are shown separately in the balance sheet and income
statement.
Associates
Associates are companies in which the Vandemoortele Group, directly or indirectly, has a significant influence, but not
the level of control required to govern the financial and operating policies. This is generally evidenced when the Group
holds between 20% and 50% of the voting rights.
The results, assets and liabilities of associates are incorporated in these consolidated financial statements using the
equity method. Under the equity method, an investment in an associate is initially recognised in the consolidated
statement of financial position at cost and adjusted thereafter to recognise the Group’s share of the profit or loss, as well
as other comprehensive income of the associate. When the Group’s share of losses of an associate exceeds the Group’s
interest in that associate (which includes any long-term interests that, in substance, form part of the Group’s net
investment in the associate), the Group discontinues recognising its share of further losses. Additional losses are
recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf
of the associate or joint venture.
An investment in an associate is accounted for using the equity method from the date on which the investee becomes an
associate. On acquisition of the investment in an associate, any excess of the cost of the investment over the Group’s
share of the net fair value of the identifiable assets and liabilities of the investee is recognised as goodwill, and is included
in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the identifiable assets
and liabilities over the cost of the investment, after reassessment, is recognised immediately in profit or loss in the period
in which the investment is acquired.
When necessary, the entire carrying amount of the investment (including goodwill) is tested for impairment in
accordance with IAS 36 Impairment of Assets as a single asset by comparing its recoverable amount (higher of the value
in use and the fair value less costs to sell) with the carrying amount. Any impairment loss recognised is part of the
carrying amount of the investment. Any reversal of that impairment loss is recognised in accordance with IAS 36, to the
extent that the recoverable amount of the investment subsequently increases.
VANDEMOORTELE FINANCIAL REPORT 2021
16
3.3.2
SEGMENT
REPORTING
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, responsible for resource allocation and performance assessment for
the operating segments, has been identified as the Executive Committee that makes strategic decisions.
3.3.3
FOREIGN
CURRENCIES
The consolidated financial statements are presented in euro (
€
, EUR), which is also the functional currency of the Parent
Company. Each entity in the Group determines its own functional currency, and the items included in the financial
statements of each entity are measured in that functional currency. There are currently no subsidiaries for which the
functional currency differs from the local currency of the foreign entity.
Foreign currency transactions
Transactions in foreign currencies are recognised initially at the exchange rate prevailing on the date of the transactions.
Subsequently, at period closing, monetary assets and liabilities denominated in foreign currencies are translated at
balance sheet date rate. Gains and losses resulting from the settlement of foreign currency transactions and from the
translation of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
Exchange differences arising from the retranslation of non-monetary items carried at fair value are recognised in the
income statement for the reported period, with the exception to this being differences arising during the retranslation of
non-monetary items in respect of which gains and losses are recognised directly in equity.
Foreign operations
On consolidation, the assets and liabilities of the Group’s Companies, using a functional currency other than the euro, are
translated into euro at the exchange rates prevailing on the balance sheet date. Income and expense items of foreign
operations are translated into euro at the average exchange rates for the period. The components of sharehol ders’ equity
of foreign operations are translated at historical rates. Exchange differences arising from the translation of shareholders
’
Adjustments.
On the disposal of a foreign operation, all exchange differences accumulated in equity relating to that operation
attributable to the owners of the Company are reclassified to profit or loss. A disposal of a foreign operation means a
disposal of the Group’s entire interest in a foreign operation, or a disposal involving loss of control over a subsidiary that
includes a foreign operation. A partial disposal of an interest in a joint arrangement or an associate that includes a foreign
operation of which the retained interest becomes a financial asset, is also considered a disposal of a foreign operation.
In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the
Group losing control over the subsidiary, the proportionate share of accumulated exchange differences is reattributed to
non-controlling interests. The differences are not recognised in profit or loss. For all other partial disposals (i.e. partial
disposals of associates that do not result in the Group losing control), the proportionate share of the accumulated
exchange differences is reclassified to profit or loss.
Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity, and are translated at the closing rate.
VANDEMOORTELE FINANCIAL REPORT 2021 17
Exchange rates
The following exchange rates have been used in preparing the financial statements
3.3.4
GOODWILL
Goodwill arising from an acquisition of a business is carried at cost as established on the date of acquisition of the
business less accumulated impairment losses, if any.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer’s previously held equity interest in the acquiree (if any) over the
net fair value. The net fair value is determined on the date of acquisition of the identifiable assets acquired and the
liabilities assumed. If, after reassessment, the net fair value on the date of acquisition of the identifiable assets acquired
and liabilities assumed exceeds the sum of the consideration transferred, the amount of any non-controlling interests in
the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised
immediately in profit or loss as a gain from a bargain purchase.
The Group performs an annual impairment analysis, in accordance with the Group’s accounting policy. The recoverable
amounts of the cash-generating units are determined based on value-in-use calculations. Value-in-use is calculated based
on estimates and judgements of the expected cash flows, which are discounted on a WACC (weighted average cost of
capital) basis. For a description of the main estimates, valuation assumptions and a sensitivity analysis of the assumptions
applied, see note 15.
VANDEMOORTELE FINANCIAL REPORT 2021
18
3.3.5
INTANGIBLE
ASSETS
Acquired intangible assets
Patents, licences (e.g. computer software), trademarks, brands, and similar rights are valued at cost less accumulated
amortisation and impairment losses. If these assets are acquired in a business combination, the cost is equal to the fair
value assigned at the time of the acquisition. In other cases, the cost is equal to the purchase price.
Intangible assets are amortised using the straight-line method over their estimated useful lives as from the moment they
become available for use. Currently, the estimated useful lives range between three and five years.
Internally generated intangible assets
Costs associated with developing or maintaining computer software programs are generally recognised as an expense as
incurred. However, (internal or external) costs that are directly associated with the production of unique software
products controlled by the Group and that are likely to generate future economic benefits, are recognised as intangible
assets. They are amortised over their estimated useful life. Currently the estimated useful lives range between three and
five years.
Expenditure on research activities is expensed in the income statement as incurred. Expenditure on development
activities in general does not meet the capitalisation criteria of IAS 38, and is expensed as incurred (unless the strict
criteria of IAS 38 would be met).
3.3.6
PROPERTY,
PLANT AND
EQUIPMENT
Property, plant and equipment are stated at cost less accumulated depreciations and impairment losses. The cost
includes all direct costs and all expenditure to bring the asset to its working condition and location of intended use.
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as
part of the cost of that asset. The estimated cost of dismantling an asset and restoring a site to its original location at the
end of its useful life is included in the cost of the asset. Major components of property, plant and equipment are
accounted for as separate assets when they have useful lives different to those of the other assets to which they relate.
Subsequent costs are recognised in the asset’s carrying amount only when it is probable that future economic benefits
associated with the item will flow to the Group and when the cost of the item can be reliably measured. All other repair
and maintenance costs are expensed as incurred.
Depreciation of property, plant and equipment is calculated from the date the asset becomes available for use, using the
straight-line method over the estimated useful life of the asset. The estimated useful lives are as follows:
Buildings 20 – 40 years
Equipment 3 – 10 years
Furniture and Fittings 3 – 10 years
Vehicles 4 – 8 years
Property, plant and equipment under construction, as well as land, are not depreciated.
The residual value and the useful life of the asset are adjusted annually if the change is material.
Improvements to leased buildings are capitalised and depreciated over the remaining term of the lease, or over their
expected useful life, if shorter.
VANDEMOORTELE FINANCIAL REPORT 2021
19
Gains and losses on disposals, determined by comparing proceeds with the carrying amount, are included in the income
statement.
3.3.7
LEASES
The Group assesses whether a contract is or contains a lease at inception of the contract. The Group recognises a right-
of-use asset and a corresponding lease liability in respect of all lease arrangements in which it is the lessee.
Assets and liabilities arising from a lease are initially measured at present value. Lease liabilities include the net present
value of the following lease payments:
●
fixed payments (less any lease incentives),
●
variable lease payments that are based on an index or rate,
●
the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
●
payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of the
liability.
The lease payments are discounted using the interest rate implicit in the lease, if the rate can be readily determined. For
most contracts the implicit interest rate cannot be readily determined and the Group’s incremental borrowing rate is
used. This is the interest rate a lessee would have to pay to borrow (over a similar period of time, for a similar security) the
funds necessary to obtain an asset of a comparable value to the right-of-use asset in a similar economic environment.
The Group is exposed to possible future increases in variable lease payments based on an index or rate, with these not
being included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate
become effective, the lease liability is reassessed and adjusted against the right-of-use asset.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability
(using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.
Right-of-use assets are measured at cost comprising the following:
●
the amount of the initial measurement of lease liability,
●
any lease payments made on or before the commencement date less any lease incentives received,
●
any initial direct costs, and
●
an estimate of the costs related to the dismantling and removal of the underlying asset.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
●
the lease term has changed or there is a significant event or change in circumstances resulting in a change in the
assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the
revised lease payments using a revised discount rate.
●
the lease payments change due to changes in an index or rate or a change in expected payment under a
guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease
payments using an unchanged discount rate (unless the change in lease payments is due to a change in a floating
interest rate, in which case a revised discount rate is used).
VANDEMOORTELE FINANCIAL REPORT 2021 20
●
a lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the
lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective date of the modification.
If it is reasonably certain that the Group will exercise a purchase option, the asset is depreciated on a straight-line basis
over its useful life (see 3.3.6 above). In all other circumstances, the asset is depreciated on a straight-line basis over the
shorter of the asset’s useful life or the lease term.
For short-term leases (a lease term of 12 months or less) or leases of low value items (mainly IT equipment and small
office furniture) to which the Group applies the recognition exemptions available in IFRS 16, the lease payments are
recognised as operating expenses.
Some property leases contain variable payment terms linked to the use of the property (mainly warehouses). Variable
lease payments that depend on the use are recognised as an operating expense in profit or loss in the period in which the
condition that triggers those payments occurs.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified
impairment loss as described in 3.3.8 Impairment of assets.
3.3.8
IMPAIRMENTS
OF
ASSETS
The Group regularly reviews the carrying value of property, plant and equipment, goodwill and intangible assets to
determine whether there is any indication of impairment. In addition, goodwill is reviewed for impairment at least
annually. If there is any indication of impairment, the asset ’s recoverable amount is estimated. An impairment loss is
recognised in the income statement as the amount by which the asset’s carrying amount exceeds its recoverable amount
(the higher of an asset’s fair value less costs of disposal and its value in use).
The fair value is the price that would be received for selling an asset in an orderly transaction between market
participants on the date in question, while value in use is the present value of estimated future cash flows. Estimated
future cash flows are expected to arise from the continuing use of an asset and from its disposal at the end of its useful
life.
To assess impairment, assets are grouped together at the lowest levels for which there are separately identifiable cash
inflows (cash-generating unit). In exceptional circumstances, impairment losses recognised in prior years are reversed
through the income statement. This occurs when there is an indication that the impairment losses recognised for the
asset no longer exist or have decreased. As an exception, an impairment loss recognised for goodwill is never reversed in
a subsequent period.
3.3.9
INVENTORIES
Inventories are valued at the lower of cost and net realisable value. Cost is determined by the first in, first out (FIFO)
method. Cost includes direct materials and, where applicable, direct labour costs, as well as those overheads that have
been incurred in bringing the inventories to their present location and condition (based on normal operating capacity).
3.3.10
FINANCIAL ASSETS
VANDEMOORTELE FINANCIAL REPORT 2021
21
Financial assets of the Group mainly include cash and cash equivalents, trade and other receivables, loans, and the
positive fair value of derivatives. Financial assets are treated consistently within the category to which they belong in
accordance with IFRS 9 Financial Instruments: financial assets at fair value and financial assets at amortised cost.
Financial assets are presented in the statement of financial position as current assets if they mature within one year and
as non-current assets if they mature after one year.
The classification of financial assets and contractual cash flows depends on the entity’s business model. The
management determines the classification of its financial assets at initial recognition.
Regular purchases and sales of financial assets are recognised on the trade date
–
to purchase or sell an asset.
At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at fair value through profit or loss are expensed in the income statement.
Financial assets (such as loans, trade and other receivables, cash and cash equivalents) are subsequently measured at
amortised cost using the effective interest method, less any impairment, if they are held to collect contractual cash flows,
with those cash flows solely representing payments of principal and interest.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating
interest income over the relevant period. The effective interest rate is the rate that precisely discounts estimated future
cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) over the expected life of the debt instrument, or, where appropriate,
a shorter period, to the net carrying amount on initial recognition.
Trade and other receivables after and within one year are initially recognised at fair value and subsequently measured at
amortised cost, i.e. at the net present value of the receivable amount, using the effective interest rate method, less
allowances for impairment.
Fair value is the price that would be received through sale of an asset in an orderly transaction on the principal or most
advantageous market on the date in question.
In accordance with IFRS 13, the hierarchy of fair values reflecting the importance of data used in valuations is comprised
of the following levels:
●
level 1 (unadjusted quoted prices): prices accessible to the entity on the measurement date in question on active
markets, for identical assets or liabilities,
●
level 2 (observable data): data concerning the asset or liability, other than the market prices included in initial
level 1 input, which are directly observable (such as a price) or indirectly observable (i.e. deducted from
observable prices),
●
level 3 (non-observable data): data that is not observable on a market, including observable data that has been
significantly adjusted (e.g. extrapolation of interest rate curves over long non-observable periods).
In compliance with IFRS 9, the Group analyses all of its contracts, both financial and non-financial, to identify the
existence of any “embedded” derivatives. Any component of a contract that affects the cash flows of that contract in the
same way as a stand-alone derivative corresponds to the definition of an embedded derivative. If they cannot be
considered as closely related to the host contract, embedded derivatives are accounted separately from the host contract
upon the inception date.
Accounting for derivatives is discussed in section 3.3.19 below.
VANDEMOORTELE FINANCIAL REPORT 2021 22
Changes in the fair value of these derivatives are recognised in profit or loss, unless they are designated as cash flow
hedges. Changes in the fair value of such hedging instruments are recognised directly in equity (other comprehensive
income), excluding the ineffective portion of the hedge.
The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at
amortised cost. For trade receivables, the Group applies the simplified approach permitted by IFRS 9. IFRS 9 requires
expected lifetime losses to be recognised from the initial recognition of the receivables. The amount of the allowance is
deducted from the carrying amount of the asset, and is recognised in the income statement.
The Group derecognises a financial asset when the contractual rights to the cash flows generated by the asset expire, or
the Group transfers the rights to receive contractual cash flows related to the financial asset through the transfer of a
substantial amount of the total risks and rewards associated with ownership of the asset. Any interest created or retained
by the Group in transferred financial assets is recorded as a separate asset or liability.
3.3.11
CASH AND CASH
EQUIVALENTS
Cash includes cash on hand and cash in banks. Cash equivalents are short-term, highly liquid investments that are readily
convertible to known amounts of cash. At the time of original recognition, they have a maturity of three months or less,
and are subject to an insignificant risk of change in value.
Cash and cash equivalents are carried in the balance sheet at nominal value. Bank overdrafts are shown on the balance
sheet within borrowings as a current liability.
3.3.12
ASSETS HELD FOR SALE
The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount will be recovered
principally through a sale transaction rather than through continued use. The criteria for held for sale classification are
considered as met only when:
●
management is committed to a plan to sell,
●
the asset is available for immediate sale,
●
an active program to locate a buyer is initiated,
●
the sale is highly probable, within 12 months of classification as held for sale,
●
the asset is actively marketed for sale at a selling price that is reasonable in relation to its fair value,
●
actions required to complete the plan indicate that it is unlikely that the plan will be significantly changed or
withdrawn.
Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.
Immediately before the classification as held for sale, the Group measures the carrying amount of the asset (or all the
assets and liabilities in the disposal group) in accordance with the applicable IFRS. Then, on initial classification as held for
sale, non-current assets (or disposal groups) are recognised at the lower of their carrying amounts and fair value less costs
to sell. Impairment losses are recognised for any initial or subsequent write-down of the asset (or disposal group) to fair
value less costs to sell.
VANDEMOORTELE FINANCIAL REPORT 2021 23
3.3.13
SHARE
CAPITAL
Debt and equity instruments issued by a Group entity are classified as either financial liabilities or as equity, in accordance
with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.
When the Group purchases its own shares, the amount of the consideration paid (including directly attributable
expenses) is recognised as a deduction from equity under treasury shares. Proceeds from the sale of treasury shares are
included directly in net equity without any impact on the income statement.
3.3.14
RESERVES
The reserves are shown before the proposed dividend. Dividends are recognised as a liability in the period in which they
are approved by the shareholders of the Company.
3.3.15
GOVERNMENT
GRANTS
Government grants are initially recognised as deferred income when there is reasonable assurance that they will be
received and that the Company will comply with the conditions attached to them. Grants that compensate for expenses
incurred are recognised as other operating income on a systematic basis in the same periods as those in which the
expenses are incurred. Grants that compensate the Company for the cost of an asset are recognised as other operating
income on a systematic basis over the useful life of the asset.
VANDEMOORTELE FINANCIAL REPORT 2021
24
3.3.16
FINANCIAL
LIABILITIES
Financial liabilities of the Group comprise loans and other financial liabilities, trade and other payables, and the negative
fair value of financial derivatives. Financial liabilities are classified as financial liabilities at fair value through profit or loss
(including derivatives with a negative fair value, except where the derivative is designated as a hedging instrument) and
other financial liabilities (including loans and other financial liabilities and trade and other payables).
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least 12 months after the balance sheet date.
Interest-bearing loans and borrowings are recognised initially at fair value, net of transaction costs incurred. After initial
recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective
interest rate method. Gains and losses are recognised in the income statement when the liabilities are derecognised, as
well as through the effective interest rate method amortisation process.
Fair value is the price that would be received through the sale of an asset or paid to transfer a liability in an orderly
transaction on the principal or most advantageous market on the date in question.
The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate is the rate that precisely discounts estimated future
cash payments (including all fees and points paid or received that form an integral part of the effective interest rate,
transaction costs and other premiums or discounts) during the expected life of the financial liability, or (where
appropriate) a shorter period, to the net carrying amount on initial recognition.
Financial liabilities are no longer recognised in the balance sheet when, and only when, they are extinguished. That is,
when the obligation specified in the contract is either discharged, cancelled or expires. If there has been an exchange
between an existing borrower and lender of debt instruments with substantially different terms or there has been a
substantial modification of the terms of an existing financial liability, that transaction is accounted for as an
extinguishment of the original financial liability and the recognition of a new financial liability. A gain or loss arising from
the extinguishment of the original financial liability is recognised in the statement of profit or loss.
Accounting for derivatives is discussed in section 3.3.19 below.
3.3.16.1
COMPOUND
FINANCIAL
INSTRUMENTS
Compound financial instruments are instruments that contain both a debt component and an equity component (such as
equity conversion options that meet certain conditions).
The liability component of a compound financial instrument is recognised initially at the fair value of a similar liability that
does not have an equity conversion option. The equity component is recognised initially at the difference between the
fair value of the compound financial instrument as a whole and the fair value of the liability component. All directly
attributable transaction costs are allocated to the liability and equity components in proportion to their carrying
amounts.
After initial recognition, the liability component of a compound financial instrument is measured at amortised cost using
the effective interest method. The equity component of a compound financial instrument is not re-measured after initial
recognition except upon conversion or expiry.
3.3.17
EMPLOYEE BENEFIT OBLIGATIONS
Pension Obligations
VANDEMOORTELE FINANCIAL REPORT 2021 25
The Vandemoortele Group has various post-employment schemes, including both defined benefit and defined
contribution pension plans.
A defined benefit plan is a post-employment benefit plan that defines an amount of pension benefit that an employee
will receive upon retirement. The liability recognised in the balance sheet for a defined benefit retirement plan is the
present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets. The projected
unit credit method is used to calculate the defined benefit obligation on an annual basis. Remeasurements comprising
actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions, the effect of the
asset ceiling (if applicable) and the return on plan assets (excluding interest) are recognised as
‘
Other Comprehensive
Income
’
Past service cost is the increase in the present value of the defined benefit obligation for employee service in prior periods
as the consequence of the introduction of or change to post-employment benefits or other long-term employee benefits.
A defined contribution plan is a post-employment benefit plan. Under this plan, the Group pays fixed contributions into a
separate entity (a fund or an insurance company) and has no legal or constructive obligation to pay further contributions
if the fund does not hold sufficient assets to pay all employee benefits relating to an employee
’
s service in the current
and prior periods. The contributions are recognised as employee benefit expenses when they are due. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is
available. However, if, under a defined contribution plan, there remains a legal or constructive obligation for the
Vandemoortele Group, the plan is treated as a defined benefit plan.
Other long-term employee benefits
Some Group companies provide other long-term benefit schemes to their employees. The entitlement to these benefits
is usually conditional on the employee remaining in service up to retirement age and achieving a minimum service period.
The expected costs of these benefits are spread over the period of employment.
3.3.18
PROVISIONS
Provisions are recognised in the balance sheet (1) when the Group has a present obligation (legal or constructive) as a
result of a past event, (2) when it is probable (more likely than not) that an outflow of resources will be required to settle
the obligation, and (3) when the amount can be reliably measured.
The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation on
the balance sheet date.
Restructuring provisions
Provisions for restructuring costs (including termination benefits) are recognised when the Group has a detailed formal
plan. Furthermore, the Group should have raised a valid expectation among those affected that it will initiate the
restructuring by starting to implement the plan or announcing its main features to those affected by it. No provisions are
made for costs relating to the ongoing activities of the Company.
Litigations and tax risks
Provisions for tax risks other than corporate tax risks are recorded if the Group considers that the tax authorities might
challenge the position taken by the Group. Provisions for litigation are booked for those litigations where the Group is –
or could be – a defendant against claims of customers, suppliers or employees. An assessment is performed with respect
to the above-mentioned risks, together with the Group’s tax, HR and legal advisers. The Group books a provision for
VANDEMOORTELE FINANCIAL REPORT 2021
26
those litigations and tax risks that can be clearly identified and for which a reliable estimate can be made of the potential
cost.
Environmental provisions
The Group books a provision for those environmental risks that are clearly defined and for which there exists a legal
obligation to restore the environment, where a reliable estimate can be made of the potential cost.
Onerous Contracts
A provision for onerous contracts is recognised when the expected benefits from a contract are lower than the
unavoidable costs of meeting the contractual obligations.
Other provisions
Other provisions are booked for all other identifiable risks.
3.3.19
DERIVATIVE
FINANCIAL
INSTRUMENTS
The Group uses derivative financial instruments to manage the impact of foreign currencies, interest rates and
commodity prices on the Group’s financial performance. The Group’s risk management policies prohibit the use of
derivative financial instruments for speculative transactions.
Derivative financial instruments are recognised initially at fair value. Fair value is the price that would be received for the
sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the date in
question.
After initial recognition, derivative financial instruments are measured at their fair value on the balance sheet date. The
method of recognising the resulting gain or loss depends on whether the derivative financial instrument is designated as
a hedging instrument and, if so, on the nature of the item being hedged.
The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of
the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged
item is less than 12 months.
More specific to commodity contracts, the following distinction is made:
●
Commodity purchase and sale contracts that can be settled net in cash, but that do not meet the
“
own use
”
exception (see below)), are accounted for in accordance with IFRS 9, as if they were financial instruments.
●
Commodity purchase and sale contracts that can be settled net in cash, but were entered into and continue to be
held for the purpose of the receipt or delivery of a non-financial item in accordance with the entity
’
s expected
purchase, sale or usage requirements are excluded from the scope of IFRS 9. These are commonly referred to as
own use contracts. Own use contracts are accounted for as normal purchase or sale contracts (executory
contracts).
Derivative financial instruments that are economic hedges, but which do not meet the strict IFRS 9 criteria for hedge
accounting, are classified as financial assets and liabilities at fair value through profit or loss. When the criteria for hedge
accounting can be met, the Group designates derivative financial instruments as hedging instruments, either cash flow
hedges or fair value hedges.
Fair value through profit or loss
VANDEMOORTELE FINANCIAL REPORT 2021 27
Changes in fair value of derivative financial instruments that are not designated as financial hedges are recognised in the
income statement.
Cash Flow Hedge Accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognised in equity. The gain or loss relating to the ineffective portion is recognised in the income statement within net
finance expense for interest rate swaps hedging variable rate borrowings and within other operating income/expense for
hedges of commodity prices. Amounts accumulated in equity are recycled in the income statement in the periods when
the hedged item affects profit or loss. When a hedging instrument expires or is sold, or when a hedge no longer meets the
criteria for hedge accounting, any cumulative gain or loss existing in equity remains in equity until the forecast
transaction is ultimately recognised in the income statement.
Fair Value Hedge Accounting
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged
risk. The Group only applies fair value hedge accounting for hedging interest risk on borrowings. The gain or loss relating
to the effective portion of interest rate swaps and the changes in the fair value of the hedged borrowings that are
attributable to interest rate risk are recognised in the income statement within net finance expenses.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item
is amortised to profit or loss over the period to maturity (within net finance expense).
VANDEMOORTELE FINANCIAL REPORT 2021
28
3.3.20
REVENUE
RECOGNITION
Revenue is recognised at an amount that reflects the consideration to which the entity expects to be entitled in exchange
for transferring goods to the customers. The five-step model is applied to account for revenue arising from contracts with
customers.
The Group recognises revenue from contracts with customers and revenue from other sources.
Revenue from contracts with customers relates to a general agreement with a customer about the sale of goods.
●
Revenue is recognised from the point in time when control of the goods is transferred to the customer. There are
no contracts in which goods are transferred over time.
●
Contracts with customers have generally have a short-term duration.
●
The performance obligation in contracts with customers is satisfied upon delivery of the goods. Payment terms
are fixed in the contracts and are linked to the performance obligation being satisfied.
●
Contracts with customers include only one performance obligation; no allocation of the transaction to different
performance obligations is needed.
●
No warranties outside the legal warranties or specific related obligations (obligation for returns and refunds) are
included in contracts with customers.
Gross sales are recognised as the volume sold valued at list or contract price. The gross sales are compensated by two
types of discounts:
●
Invoiced discounts, which immediately affect the selling price of the products included in the invoice. These are
all allowances deducted from the invoice when specific conditions have been met.
●
Non-invoice discounts, which are allowances paid or payable to the customer when reaching specific targets
over a time horizon. These are materialised through a credit note of the company or an invoice from the
customer. These non-invoice discounts are deducted from the gross sales. The most frequently used non-invoice
discounts concern volume discounts, trade marketing allowances, cash discounts, coupons and variable
commissions. The recognition of some of these discounts includes an element of judgement for which
management relies on historical statistics about redemption rates.
3.3.21
INCOME
TAXES
Income tax for the year comprises current and deferred tax. Income tax is recognised in the income statement, except to
the extent that it relates to items recognised directly in equity. In such cases, the tax effect is also recognised directly in
equity.
Current tax is the expected tax payable, using tax rates enacted, on the taxable profit of the current year and adjustments
to tax expenses of previous periods.
Following IFRIC 23 Uncertainty over Income Tax Treatments a provision is recognised for matters in which the tax
determination is uncertain, but it is considered probable that there will be a future outflow of funds to a tax authority. The
provisions are measured at the best estimate of the amount expected to be paid. The assessment is based on the
judgement of tax professionals within the Company, supported by previous experiences in respect of such activities and,
in certain cases, based on independent specialist tax advice.
Deferred taxes are recognised on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit and are accounted for using the
balance sheet liability method.
VANDEMOORTELE FINANCIAL REPORT 2021
29
Under the balance sheet liability method, a deferred tax liability or asset is recognised for all taxable and deductible
differences between the tax bases of assets and liabilities and their carrying amount in the balance sheet.
A deferred tax asset is only recognised to the extent that it is probable that future taxable profits will be available against
which the asset can be utilised. A deferred tax asset is reduced to the extent that it is no longer probable that the related
tax benefit will be realised.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset
realised.
In the context of a business combination (see 3.3.1 above), deferred taxes are recognised for temporary differences
between the fair value of the acquired assets and assumed liabilities and their tax base. No deferred taxes are recognised
on goodwill that is not deductible for tax purposes.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends
to settle its current tax assets and liabilities on a net basis.
VANDEMOORTELE FINANCIAL REPORT 2021
30
4.
ALTERNATIVE PERFORMANCE MEASURES
Vandemoortele’s financial information contains indicators and measures prepared in accordance with applicable financial
reporting standards and regulations, as well as other measures prepared in accordance with the Group’s performance
reporting, defined as Alternative Performance Measures (APMs). APMs are measures that are “adjusted” compared to
those presented in accordance with IFRS, and the reader should therefore consider them in addition to, as opposed to
instead of, the latter.
APMs are useful to users of financial information, as they are the measures that the Company’s management uses to
evaluate its financial performance, cash flows or financial position when making operation al or strategic decisions for the
Group.
EBIT
EBIT is defined as the profit/loss from operations.
EBITDA
EBIT before depreciation, amortisation and impairments.
EBITDA can be reconciled as follows for the years ended 31 December 2021 and 31 December 2020:
After a slow start to the year due to the prolonged COVID-19 measures and despite the historically high input cost prices,
the Group realised an increase of 13 % of the EBITDA from
€
98.4 million in 2020 to
€
111.4 million in 2021.
Adjusted EBIT
This is the adjusted profit from operations consisting of all income and expenses relating to normal business operations
and before adjusting items (incl. depreciation and amortisation). Adjusted EBIT provides a normalised result that is not
distorted by irregular profits, losses or other.
Adjusted EBIT can be reconciled as follows for the years ended 31 December 202 1 and 31 December 2020:
VANDEMOORTELE FINANCIAL REPORT 2021
31
The adjusted EBIT at the end of 2021 amounted to
€
55.0 million which is
€
11.4 million or 26 % higher year-on-year.
Adjusted EBITDA
Adjusted EBIT before depreciation and amortisation.
Adjusted EBITDA increased to
€
118.5 million or 14% higher year-on-year
Adjusting items
Items that are related to restructuring programmes, lay-off costs that cannot be associated with the future organisation,
gains/losses on disposals, dismantling costs, impairment losses on assets (including goodwill), fade-out costs for
production or logistic sites that are closed during the year and consultancy fees relating to possible mergers and
acquisitions.
Adjusting items are composed of the following items for the years ended 31 December 202 1 and 31 December 2020:
The total adjusting items of
€
9.1 million are mainly related to restructuring costs in France and Belgium. Furthermore,
there was an impairment of some fixed assets and a loss on disposal for idle assets, such as machinery that is no longer in
operation. Consultancy fees for possible mergers and acquisitions are also included in the adjusted items.
Net fixed assets
VANDEMOORTELE FINANCIAL REPORT 2021
32
Assets that are used in the operations of our business and that are required to be used for a period longer than one year
(i.e. buildings, machinery, and similar).
The net book value of the fixed assets (property, plant and equipment) amounted to
€
398.8 million in 2021, compared to
€
414.0 million in 2020. This mainly concerns 25 production sites in 7 countries, of which 20 are for Bakery Products (BP)
and 5 for Margarines, Culinary Oils & Fats (MCOF).
The Group invested
€
39.8 million, of which
€
31.1 million was for the enhancement and improvement of the BP production
capacity and
€
8.6 million in the further rationalisation and modernisation of the MCOF production sites, more specifically
in:
●
a floor-baking oven in Arras,
●
a pastry line in Worcester,
●
the renewal and expansion of existing installations at Lyon, Seneffe and Eeklo
●
the implementation of a new automatic production control system in the MCOF plants,
●
an extrusion line in Izegem.
(Operational) working capital need
The current assets less the current liabilities.
A general decrease in working capital was observed despite the higher valuation of raw materials, energy, packaging, and
other assets. The trade receivables rose in 2021 due to sales price increases, but also due to higher sales volumes in
November and December. Trade payables also increased in the final months of the year due to the purchase of more raw
materials at a higher price. In 2021, inventories were valued at
€
141.0 million, compared to
€
119.4 million in 2020; an
increase of
€
21.6 million. Nevertheless, the volume of inventories is quite low in relation to the volumes sold.
Other working capital need
VANDEMOORTELE FINANCIAL REPORT 2021
33
Other current assets less other current liabilities.
Employee benefits increase from
€
36.8 million in 2020 to
€
41.9 million in 2021. Technical unemployment that was
implemented in 2020 due to the COVID -19 pandemic disappeared during the second half of 2021 and bonus provisions
were significant higher in 2021, as a result of the improved results of the Group in 2021.
Net financial debt
The borrowings excluding the issuance costs minus cash and cash equivalents and current other financial assets.
Senior net financial debt
Net financial debt excluding the subordinated loan.
VANDEMOORTELE FINANCIAL REPORT 2021
34
The decrease of the Senior Net Financial Debt by
€
41.1 million is explained by the following factors:
●
a cash flow from operating activities of €111.6 million (€81.2 million from BP and €30.3 million from MCOF)
●
a working capital need (before factoring) decrease of €13.0 million (-€19.5 million from BP and +€6.5 million from
MCOF)
●
CapEx of €39.8 million (€31.1 million from BP and €8.6 million from MCOF)
●
increased factoring and other cash outflows of -€4.8 million
●
interests paid of €8.8 million
●
income taxes paid of €9.6 million and a dividend pay-out of €20.5 million.
VANDEMOORTELE FINANCIAL REPORT 2021
35
Capital employed
The amount of capital investment to operate.
The decrease in capital employed is explained by:
●
depreciation, amortisations and impairments (€65.5 million) that are higher than investments including IFRS 16
(€50.1 million) and disposals of idle assets that are no longer in operation.
●
lower working capital need (€13.0 million) combined with higher factoring (€10.5 million)
Capital provided
Capital provided consists of equity and debt. It is the means by which the capital employed is financed.
The increase of the equity is mainly explained by the net result of the year (
€
33.2 million) and the net dividend paid out
during the year (
€
20.5 million)
Return on capital employed (ROCE)
Adjusted EBIT after tax as a percentage of the capital employed as of 31 December.
VANDEMOORTELE FINANCIAL REPORT 2021
36
5.
OPERATING SEGMENT INFORMATION
The Executive Committee (ExCo) is the Group’s chief operating decision-maker. Management has determined the
operating segments for the purposes of allocating resources and assessing performance based on the information
reviewed by the ExCo. The Executive Committee considers the business from a product family perspective.
The Group operates using four performance measures, all measured on business performance. The primary performance
measure is adjusted EBITDA. Additional performance measures are EBITDA, adjusted EBIT and EBIT.
For its strategic decision-making process, Vandemoortele distinguishes between the Bakery Products (BP) operating
segment and the Margarines, Culinary Oils & Fats (MCOF) operating segment. The Bakery Products operating segment
comprises the development, production and sale of frozen bakery products. We supply bakery products to artisan bakers,
industrial and professional customers, and retail organisations through three channels: artisan bakery, food service and
retail. The MCOF operating segment comprises the development, production and sale of margarines, culinary oils & fats.
MCOF products are offered through four channels, namely artisan bakery, food service, retail and industry. In total, the
Group offers ten different brands, namely Gelfin’Or, Banquet D’Or, Les Pains Pérènes, Lanterna, My Original’s, La
Patisserie du Chef, Vandemoortele, Risso, Fama and Vitelma.
Sales between operating segments are carried out following the arm’s -length principle. Sales by MCOF to BP amounted
to €16.9 million in 2021 (2020: €12.9 million). Revenue from external parties reported to the ExCo is measured in a
manner consistent with that in the income statement.
The following tables present key financial information regarding the Group’s operating segments for the years ended 31
December 2021 and 31 December 2020 respectively.
VANDEMOORTELE FINANCIAL REPORT 2021
37
5.1
FINANCIAL SEGMENT INFORMATION
The adjusting items excluding depreciation, amortisation and impairments include mainly restructuring costs in France
and Belgium, loss on disposals for idle assets that are no longer in operation and consultancy fees for possible mergers or
acquisitions. Depreciation, amortisation and impairments include €1.6 million (2020 : €0.4 million) impairments in the BP
business line and €0,3 million (2020: €0.0 million) impairments in the MCOF business line.
Bakery Products
In 2021, our focus was placed on pastries and sweet treats in this product line, with both categories having a higher added
value. At the same time, we adjusted our raw bread capacity due to the declining trend in this category. Sales of bakery
products in Italy grew thanks to several contracts with new customers. Bakery products also did remarkably well in the
French market in 2021.
Due to the constraints imposed by COVID-19 measures upon the catering industry, our ambition to grow in the food
service channel lagged in the first half of the year. Therefore, a tight and active cost management was required the first
half of 2021. Marketing campaigns were temporarily put on hold, and recruitment was limited to strictly necessary
positions. From June onwards, the food service channel recovered, and we were able to re-initiate certain marketing
campaigns.
Altogether this resulted in a revenue increase of
€
88.3 million to
€
812.5 million in 2021 and an adjusted EBITDA of
€
87.0
million in this business line. Thanks to the focus on added value products and strict cost monitoring, we were able to
perform well in financial terms, and to improve margins in this business line.
MCOF
VANDEMOORTELE FINANCIAL REPORT 2021
38
The revenue in the MCOF business line increased by
€
46.6 million to
€
516.4 million. The adjusted EBITDA for this
business line amounted to
€
31.8 million compared to
€
42.9 million in 2020. This lower result is mainly due to the sharp
increase in raw material prices, which could only be passed on to the customers with delay. In 2021 price competition
also intensified and put additional pressure on sales prices, and thus on the margins. Sales in the food service channel
decreased in the first half of the year as a direct result of the imposition of COVID-19 restrictions, but recovered in the
second half . In the retail channels our sales volumes slightly grew, largely thanks to the growth in popularity of home
cooking during lockdown.
(1) Other current assets are not allocated to BP or MCOF and include other receivables, other financial assets and cash & cash
equivalents.
5.2 ENTITY WIDE
GEOGRAPHIC
AL
INFORMATION
Vandemoortele is a family business with Belgian roots that has grown to become a truly international food company. The
Group is active in various geographical regions as listed below. The rest of Europe mainly consists of Scandinavia, Poland
and Hungary. Outside Europe, the Group is mainly active in North America, Africa and the Middle East.
VANDEMOORTELE FINANCIAL REPORT 2021
39
The revenue per country is based on the geographical location of the external customers:
The non-current assets per country are based on the geographical location of our companies and concerns mainly the
plants of the Group. These are the values of acquired assets with an expected economic lifetime of more than one year.
VANDEMOORTELE FINANCIAL REPORT 2021
40
5.3 MAJOR
CUSTOMERS
The BP and MCOF operating segments are predominantly business-to-business activities. Our customers are food sellers
in all shapes and sizes, such as supermarkets, hotels, restaurants, quick-service restaurants, lunchrooms, petrol stations,
artisan bakers, industrial bakers and food industries. Our products are sold across the following distribution channels:
retail, artisan bakery, food service and food industry.
●
Retail: consumers can buy branded products from our range directly in the supermarket.
●
Artisan bakery: the product range for the artisan bakery is puff pastry sheets, bread, donuts, patisserie, savoury
and margarines.
●
Food service: with our extensive and complete range of convenience products, we respond to the latest food
trends and consumer needs. For example, restaurants can offer their customers our top quality sandwiches,
sauces, desserts and sweet and savoury snacks.
●
Food industry: we supply specialised margarines to other companies.
Overall, the retail distribution channel, which represents approximately 67 % and 30% of the sales volume of BP and
MCOF respectively, are partly concentrated, with three top retailers controlling at least half of the market share in
, Germany, the Netherlands, the United Kingdom and Belgium.
No individual customer represents more than 10% of Group revenue. The revenue from the top five customers combined
represented 17.9% of the total Group revenue in 202 1 (2020: 18.8%).
For the BP and MCOF business lines, the top five customers accounted for 24.8% (20 20: 26.1%) and 19.0% (2020: 19.4%)
of the total revenues in 2021. When we consider the top ten customers, the share increases to approximately 38.1% for
BP, 30.0% for MCOF and 28.1% for the total Group.
VANDEMOORTELE FINANCIAL REPORT 2021
41
6.
SERVICES
The increased transport expenses are related to the increased sales and production volumes. On top of this, shortage of
transport capacity in the market, in combination with increased fuel prices made transport more expensive.
VANDEMOORTELE FINANCIAL REPORT 2021
42
7.
EMPLOYEE BENEFIT
EXPENSE
After the slow start to the year due to the prolonged COVID-19 measures, lockdowns and curfews later in 2021 were less
harsh in most European countries. Sales volumes recovered compared to 2020. Production had to run at full speed to
follow the high demand of our customers and to keep inventories at target level. This led to the cessation of technical
unemployment and to the increased hiring of interim personnel. The better results of the Group resulting in higher bonus
provisions are another element of the explanation for the higher salaries and wages.
For more information on the compensation of key management personnel, see note 31.
The average number of full-time equivalents can be split as follows:
VANDEMOORTELE FINANCIAL REPORT 2021
43
8.
DEPRECIATION, IMPAIRMENT, AMORTISATION
AND WRITE DOWN
The depreciation expenses disclosed above include depreciation expenses related to property, plant and equipment
amounting to €50.3 million (2020 : €47.0 million) and depreciation expenses related to leased assets amounting to €10.7
million (2020: €10.6 million).
9.
CHANGE
IN
PROVISIONS
The provisions are further described in note 29.
VANDEMOORTELE FINANCIAL REPORT 2021
44
10.
OTHER OPERATING INCOME
11.
OTHER OPERATING
EXPENSE
“Other operating taxes” is divided into three categories: property tax (€3.6 million), packaging tax (€0.7 million) and
solidarity tax (€0.7 million). A decrease in the other operating taxes is mainly related to the decrease in property tax
(“taxe foncière”) in France (€1.2 million).
VANDEMOORTELE FINANCIAL REPORT 2021
45
12. FINANCIAL INCOME
Financial income rose by 47% resulting from the fair value gains on the interest rate swaps due to the increased interest
rates in the second half of the year.
13. FINANCIAL
EXPENSE
Financial expenses fell by 6%, which is explained by lower interest expenses due to a lower average senior net financial
debt and lower exchange losses in 2021. This decrease is partly offset by fair value losses on FX hedging instruments
mainly caused by an increased GBP rate.
VANDEMOORTELE FINANCIAL REPORT 2021
46
14. INCOME
TAX EXPENSE
14.1
INCOME TAX RECOGNISED
IN PROFIT OR
LOSS
Income taxes recognised in the income statement can be detailed as follows:
The income tax expense has decreased by 57% compared to last year.
On the one hand, the current year taxes for 2021 are higher than those in 2020, although the profit before tax was lower
than in 2020. This increase is caused by the fact that most profit of 2021 is realised by the companies without available
tax losses carried forward to offset this profit.
On the other hand additional deferred tax assets were recognized for tax losses of the current year and also for previous
year tax losses considering adjusted forecasts of future taxable results. The deferred taxes are described further in note
19.
The table below summarises the relationship between income tax and profit before income tax:
VANDEMOORTELE FINANCIAL REPORT 2021
47
The special tax regimes in 2020 mainly relate to the tax-exempt capital gain on the sale of the investment in Lipidos
Santiga. The contribution for value added by businesses (
cotisation sur la valeur ajoutée des entreprises
, CVAE) is a French
tax assessed on the added value that companies realised during the previous calendar year. The CVAE rate is 1.5% for
companies with an annual pre-tax turnover of +€50.0 million. If the company is part of a tax group, the CVAE rate is 1.5%
if the total annual pre-tax turnover of the group exceeds €50 million. Companies with a turnover below this amount are
subject to a reduced CVAE rate (depending on turnover). The minimum annual pre-tax turnover to be subject to CVAE is
€0.5 million.
14.2
INCOME TAX RECOGNISED
IN
OTHER
COMP
REHENSIVE
INCOME
VANDEMOORTELE FINANCIAL REPORT 2021
48
15.
GOODWILL
Goodwill represents approximately 20 % of the total assets of Vandemoortele as of 31 December 2021. In 2021, there are
no changes to goodwill. The goodwill is tested for impairment every year.
The test was performed on a cash-generating unit level (Bakery Products and Margarine, Culinary Oils & Fats) by
comparing each unit’s carrying value, including goodwill, to its value-in-use.
The value-in-use of each reporting unit was assessed using a discounted cash flow model based on divisional
management’s budget for the year 2022 and the latest update of the strategic plan covering a three-year period
extended by an additional year based on management’s expected developments.
The outcome of the goodwill impairment tests performed in a consistent way did not result in any impairment loss at the
end of 2021. Over the last three years the impairment test on goodwill did not result in any impairment loss.
The impairment testing performed is explained below.
Goodwill by cash-generating unit
On acquisition, goodwill acquired in a business combination is allocated to the cash-generating units that are
expected to benefit from that business combination. These cash-generating units correspond to the divisions Bakery
Products (BP) and Margarine, Culinary Oils & Fats (MCOF). Therefore, impairment testing is performed at the level of the
cash-generating units as presented below.
The carrying amount of goodwill (after impairment) has been allocated to the cash-generating units as follows:
The Group performed its annual impairment test as of 31 December 2021 consistently with the previous years.
The annual impairment tests were performed for each cash-generating unit. The recoverable amount for each of the
cash-generating units has been determined based on a value-in-use calculation using cash flow projections generated by
divisional management covering a five-year period, in conjunction with a perpetuity of cash flows to determine terminal
value.
Key assumptions used in value-in-use calculations
The calculation of value-in-use for the cash-generating units is most sensitive to following assumptions:
●
Annualized sales growth over the 5-year projected cash flows
●
Average EBITDA margin over the 5-year projected cash flows
●
Growth rate used to extrapolate cash flows beyond the 5-year projected cash flows
●
Discount rates
VANDEMOORTELE FINANCIAL REPORT 2021
49
The key parameters used for the impairment test of both cash generating units, BP and MCOF, and the resulting
available headroom (value-in-use exceeds carrying value) are shown in the table below:
Discount rate
risk premium is considered when the specific business context makes it necessary. This results in a post-tax discount rate
of 7.1 % (8.3 % in 2020) for BP and 7.1 % (6.8 % in 2020) for MCOF. The discount rate includes a specific risk premium of
0.5 % for both cash generating units (CGU’s) (in 2020: 1.5 % for Bakery Products, 0,0 % for MCOF). This specific risk
premium is applied because of the sensitivity of both CGU’s to specific business risks such as high (and fluctuating) raw
material prices which makes projections of future cash flows subject to more uncertain and volatile assumptions.
Sensitivity to changes in assumptions
The major sensitivities for the impairment tests are the sales evolution, the EBITDA margin and the discount rate.
A reasonable change in one of these sensitivities (keeping the other parameters constant) does not lead to a potential
material impairment for either BP or MCOF.
A fall of the annualised sales growth to 4.1 % combined with a fall of the average EBITDA margin to 10.6 % combined
with an increase of the discount rate with 1% would reduce the headroom for BP to zero.
A fall of the annualised sales growth to 0.9 % combined with a fall of the average EBITDA margin to 6.6 % combined with
an increase of the discount rate by 1% would reduce the headroom for MCOF to zero.
The estimated impact of the Ukraine/Russia crisis on our results falls well within the assumptions used for the sensitivity
calculation.
Based on the above assumptions, the Group has concluded that no impairment losses need to be recorded as of 31
December 2021 on the goodwill of BP and MCOF.
VANDEMOORTELE FINANCIAL REPORT 2021 50
16.
OTHER INTANGIBLE
ASSETS
There are no liabilities secured on intangible assets. The research and development expenses that do not meet the
capitalisation criteria of IAS 38, and were therefore included in the income statement, amount to €6.6 million (2020: €6.5
million). The other intangible assets contain the net book value of the customer portfolio of LAG, amounting to €4.5
million, which has a remaining useful life of 3 years.
VANDEMOORTELE FINANCIAL REPORT 2021
51
17.
PROPERTY,
PLANT AND
EQUIPMENT
”Property, plant and equipment” contains assets that are no longer in use, amounting to €9.5 million. These assets are
related to buildings and equipment at two French sites on which impairments have been booked in the previous years to
bring the net book value close to the fair value.
The main CapEx projects in 2021 included:
●
a floor-baking oven in Arras,
●
a pastry line in Worcester,
●
the renewal and expansion of existing installations at Lyon, Seneffe and Eeklo
●
the implementation of a new automatic production control system in the MCOF plants,
●
an extrusion line in Izegem.
VANDEMOORTELE FINANCIAL REPORT 2021
52
With the exception of the financial lease liabilities, there are no liabilities secured on tangible fixed assets.
Leases
The following note provides information regarding leases where the Group acts as a lessee.
As a result of the initial application of IFRS 16 Leases, the Company opted to disclose the right-of-use assets as a separate
nature of assets, with this being explained in more detail below.
The Group mainly leases vehicles (company cars, forklifts) and buildings. The lease term varies from 4 to 5 years for
vehicles, and from 2 to 24 years for buildings.
The lease agreements do not impose any covenants other than the security interests in the leased assets that are held by
the lessor. Leased assets may not be used as security for borrowing purposes.
VANDEMOORTELE FINANCIAL REPORT 2021
53
The Group also leases certain plant and equipment with lease terms of 12 months or less, as well as office equipment of
low value. The Group applies the “short-term lease” and “lease of low-value assets” recognition exemptions for these
leases.
The statement of profit or loss shows the following amounts relating to leases:
The total cash outflow for leases in 2021 was €9.9 million.
At closing 2021, the Group was committed to €0.8 million for short-term leases.
For the lease of land and buildings, the Group is exposed to potential future increases in variable lease payments based
on an index, with these not being included in the lease liability until they take effect. When adjustments to lease
payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use
asset (see note 24).
Some limited property leases contain variable payment terms that are linked to the space used in the buildings.
Considering the limited impact of these lease contracts, the Company judges that a sensitivity analysis is not relevant.
Extension and termination options are included in several property and equipment leases across the Group. These are
used to maximise operational flexibility in terms of managing the assets used in the group’s operations. The majority of
extension and termination options held are exercisable only by the Group, and not by the respective lessor.
Set out below are the carrying amounts of lease liabilities (included under Borrowings) and their movements during the
reported period:
The maturity analysis of lease liabilities is disclosed in note 25.4.
VANDEMOORTELE FINANCIAL REPORT 2021
54
18. TRADE AND
OTHER RECEIVABLES
The balance of trade and other receivables can be detailed as follows:
There is no concentration of credit risk with respect to trade receivables, as the Group has a large number of dispersed
customers. The Group’s exposure to credit risk is further described in note 25.5.
The ageing of our trade receivables, interest receivables and loans to customers can be detailed as follows:
VANDEMOORTELE FINANCIAL REPORT 2021
55
In 2021, total overdue amounts decreased to €16.0 million, compared to €22.2 million in 2020. The bad debt reserve in
2021 amounted to 51.5% of trade receivables overdue for more than 30 days (2020: 49.1%). The Group applied the IFRS 9
simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance for all trade
receivables based on historical losses. The Group also assessed whether the historic pattern would materially change in
the future, and expects no significant impact.
The roll-forward of provisions for doubtful debtors is as follows:
In accordance with IFRS 7, “Financial Instruments: Disclosures”, the above analysis of the ageing of financial assets that
are past due as of the reporting date but not impaired includes the non-current part of these classes of financial assets.
Past due amounts were not impaired where collection was still considered probable.
The maximum exposure to credit risk on the reporting date is the fair value of the trade receivables, which approximates
the carrying value of the investments. In the past, the Group has not suffered significant losses due to unrecoverable
trade receivables.
The Group has entered into a non-recourse factoring agreement (in 2012 for the companies VDM Lipids NV and Vamix
NV, in 2013 for VDM Bakery Products France SAS, in 2015 for VDM Nederland BV, and in 2016 for VDM Lipids France)
entailing that the Group immediately and definitively receives 95% of the value of the sold trade receivables. The net
amount of the sold receivables is derecognised from the balance sheet. Consequently, on 31 December 2021, an amount
of €79.38 million was received in cash (2020: €68.87 million).
The continuing involvement of the Group in the transferred receivables is limited to the continuing involvement
guarantee (€0.40 million) and the continuing involvement interests for late payment risk (€0.16 million). The
corresponding financial obligation (€0.56 million) is recognised on the balance sheet under short-term borrowings.
VANDEMOORTELE FINANCIAL REPORT 2021
56
19.
DEFERRED TAXES
Deferred tax assets and liabilities are attributable as follows:
Deferred income tax assets are recognised to the extent that the realisation of the related tax benefit through the future
taxable profits is probable. For the tax losses of the current year 2021 deferred tax assets have been recognised,
considering the yearly updated forecasts show these tax losses will be used in the foreseen time horizon. Furthermore,
based on these updated forecasts, deferred tax assets have been recognised in 2021 that previously were not recognised
for a total amount of
€
3.2 million, of which 1,1 million relates to Poland and the remaining part to Belgium. The Group did
not recognise deferred income tax assets for an amount of €15.5 million (2020: €14.2 million) related to tax attributes of
€64.9 million (2020: €65.0 million). The not-recognised deferred income tax assets relate to €12.9 million for Belgium,
€2.2 million for Poland, €0.3 million for Italy and €0.1 million for Spain.
Judgement is required to determine the probability of the future taxable results and the future income tax rates of those
legal entities that have tax loss carry-forwards. Based on this judgement, the time horizon over which the tax benefits will
be realised varies between four and eight years. The majority of the tax attributes for which a deferred tax asset is
recognised can be transferred without any time limitation. For the tax attributes that can only be transferred for a limited
time, a deferred tax is only recognised to the extent that the tax attributes are expected to be used within the time
limitation. The management of the Group remains conservative in determining the future taxable results.
VANDEMOORTELE FINANCIAL REPORT 2021
57
The change in the net position of deferred taxes can be explained as follows:
VANDEMOORTELE FINANCIAL REPORT 2021
58
20.
OTHER
ASSETS
21.
INVENTORIES
The write-downs on inventories amounted to €5.4 million in 2021 (2020: €5.5 million).
The amount of the inventories increased to €141.0 million compared to €119.4 million in 2020. Nevertheless, the volume
of inventories is quite low in relation to the volume sold. This made it difficult to follow demand and keep our inventories
at target level. This unfortunately resulted in lower service levels for our customers in certain product categories.
VANDEMOORTELE FINANCIAL REPORT 2021
59
22. CASH AND CASH
EQUIVALENTS
Cash and cash equivalents relate to balances on bank accounts, remunerated at market conditions. The market value of
these cash and cash equivalents is therefore equal to the book value of the cash and cash equivalents.
VANDEMOORTELE FINANCIAL REPORT 2021
60
23. EQUITY
23.1
SHARE
CAPITAL
The issued capital of the Company amounts to €79.4 million as of 31 December 202 1 (€79.4 million as of 31 December
2020), represented by 547,208 shares (547,208 shares as of 31 December 2020). 2,315 of these are owned by the
Company itself. These shares are not entitled to a dividend. The Company’s shares are without par value. The
shareholders are entitled to receive dividends as declared, and to one vote per share at the Company’s shareholder
meetings. There is no authorised, un-issued capital.
23.2
TREASURY SHARES
The Company’s own shares and the Safinco certificates held by Vandemoortele NV or one of its subsidiaries are
recognised as treasury shares. As of 31 December 2021, Vandemoortele NV or one of its subsidiaries held 47,252 Safinco
certificates recognised as treasury shares.
During 2021, the Group sold none of its own shares.
23.3
CUMULATIVE TRANSLATION ADJUSTMENTS
The cumulative translation adjustments reserve represents the cumulative currency translation differences arising from
the translation of the financial statements of subsidiaries that operate in functional currencies other than the euro. As of
31 December 2021, no deferred tax has been booked in cumulative translation adjustments, meaning that the balance of
deferred taxes recognised in the cumulative translation adjustments is kept at -€49,000 euro.
23.4
RETAINED EARNINGS
&
RESERVES
The retained earnings consist of the reserves of the parent company (including the legal reserve of €3.3 million) and the
undistributed profits of the subsidiaries. The change in retained earnings and reserves during 202 1 is explained by the net
gain of the year and the payment of the dividend.
During 2021, Vandemoortele Group received a €2.3 million dividend on the Safinco shares. This dividend was recognised
in equity.
A summary of the change in the equity position of the Group can be found in the consolidated statement of changes in
equity.
VANDEMOORTELE FINANCIAL REPORT 2021
61
23.5
DIVIDENDS
On 17 March 2022 the Board of Directors proposed that a dividend of €20.9 million be paid on the result of 2021. The
dividend proposal is subject to approval by the shareholders at their annual meeting, to be held on 10 May 2022.
VANDEMOORTELE FINANCIAL REPORT 2021 62
24.
BORROWINGS
This note provides information about the Group’s borrowings and net financial debt. Additional information about the
exposure to interest rate and foreign currency risk on the borrowings can be found in note 25.
All borrowings of the Group are in euro. The fair value of the current borrowings is equal to their carrying amount, as the
impact of discounting is not significant.
To calculate the bank covenant (max. 3.5:1), the senior net financial debt of €92.2 million is calculated as the borrowings
excluding the subordinated loan and the issuance costs (€237. 5 million – €75.0 million + €0.5 million = €163.0 million)
minus cash and cash equivalents (€59.4 million) and current other financial assets (€11.4 million).
All bank borrowings are subject to bank covenants. A senior leverage ratio of 0.8:1 is well within the agreed boundaries
(max. 3.5:1). No defaults breaches on debt payments occurred. Note that, for the covenant reporting to the banks, the
frozen GAAP (generally accepted accounting principles) approach should be used, resulting in a senior net financial debt
of €56.5 million (2020: €99.8 million) with an even lower SNFD (senior net financial debt)/adjusted EBITDA debt ratio of
0.5:1 (2020: debt ratio of 1.0:1).
The available credit line as of 31 December 2021, which amounted to €200 million (2020: €200 million), was not used as of
31 December 2021.
24.1
SUBORDINATED LOAN
On 7 November 2016, the Group issued new subordinated bonds amounting to €75 million through private placement.
These bonds mature on 7 November 2023, and have a coupon rate of 3.50%.
VANDEMOORTELE FINANCIAL REPORT 2021
63
24.2
RETAIL
BOND
On 22 May 2015, Vandemoortele NV closed 7-year bonds to the amount of €100 million. The bond, due 10 June 2022,
were issued with a coupon rate of 3.06%.
24.3
UNSECURED
BANK
BORROWINGS
On 14 May 2018, Vandemoortele signed an amended and restated revolving facility agreement, which replaced the
existing facility. The agreement matures on 14 May 2025.
The Group has a margin over EURIBOR on the loans taken. This margin depends on the senior leverage ratio of the
Group, as described above.
24.4 LEASE
LIABILITIES
Lease liabilities are effectively secured, as the rights to the leased asset revert to the lessor in the event of default.
VANDEMOORTELE FINANCIAL REPORT 2021
64
24.5
RECONCILIATION
OF
MOVEMENTS
OF
LIABILITIES
TO CASH
FLOWS
ARISING FROM FINANCING
ACTIVITIES
VANDEMOORTELE FINANCIAL REPORT 2021 65
25.
FINANCIAL
RISK
MANAGEMEN
T
Exposure to interest rate, foreign exchange rate, liquidity, commodity and credit risk arises in the normal course of the
Group’s business. The Group uses derivative financial instruments to cover interest rate, currency rate and commodity
price risks.
The Group’s policies prohibit the use of derivatives for speculation. Currently, the main principle in terms of hedging
exposure is to hedge only clearly identifiable transactional risks (i.e. there is no hedging of net investments in foreign
entities).
Based on this policy, the Group only uses derivatives to cover clearly identified economic risks. Even though, from an
economic perspective, all derivatives are hedging instruments, the criteria for the application of hedge accounting
according to IFRS cannot always be met. Consequently, hedge accounting is not applied on all economic hedges.
The interest rate, currency rate and liquidity exposure of the Group, including the counterparty credit risk, are centrally
managed by the “Group Treasury”. As a consequence, entities other than the Vandemoortele Coordination Center are
not allowed to loan from external parties. The Group’s divisions jointly manage the commodity price exposure and credit
risk.
25.1
FOREIGN
CURRENCY
RISK
The Group’s companies incur foreign exchange risk on sales, purchases and other transactions in a currency other than
their functional currency, and on sales and purchases in euro where the euro price is affected by a foreign exchange rate.
The subsidiaries of the Group are required to transfer the identified foreign exchange risk on their current and future
business commitments in foreign currency and on forecasted foreign currency flows (from 2 to 12 months) to the central
financing company of the Group. This systematic hedging relieves the operating entities of the foreign exchange risk, and
centralises the Group’s foreign exchange exposure. The Group Treasury then manages the remaining net exchange
exposure under the rules and specific limits set by the Group Treasury policy and procedures.
The Group Treasury is required to hedge the foreign exchange risks via the most optimal and agreed upon financial
instruments, i.e. spot and forward exchange contracts, currency swaps and currency purchase options. Currency options
are only allowed if the total current and future cost is known at the start and a budget is available. The maturity of
financial instruments may not exceed one year. The use of other instruments must be approved by the Executive
Committee.
The net equity risk (i.e. risks arising from the consolidation of equity investments in foreign currency subsidiaries) is not
hedged, as none of the subsidiaries in foreign currency (i) have a value exceeding 30% of the Group’s consolidated equity,
or (ii) are considered strategic, or (iii) are in a country with high inflation in comparison to the eurozone.
Assets denominated in foreign currency are financed by cash flows or borrowings in the same currency as the assets
(natural hedge) to as great an extent as possible.
The fair values of foreign currency derivative contracts are calculated using a valuation model, taking into account the
available current market exchange rate and interest rate information.
All of the outstanding forward foreign exchange contracts to which the Group has committed itself have maturity dates
within one year. The notional amount of these contracts as of 31 December 2021 is detailed in the table below:
VANDEMOORTELE FINANCIAL REPORT 2021
66
During 2021, the changes in the fair value of the FX derivatives are accounted for as financial income or expense. On 31
December 2021, the net fair value of those forward exchange contracts was a liability of €0.4 million (as of 31 December
2020: an asset of €0.4 million). The fair value loss of €0.8 million has been recognised as a finance result (20 20: fair value
gain of €1.4 million).
Currency sensitivity analysis
Around 10% (2020: 9%) of the revenue of the Group is generated by subsidiaries within which the activities are operated
in a currency other than the euro. A currency translation risk arises when the financial statements of these foreign
operations are translated into the presentation currency of the Group’s consolidated financial statements. The pound
sterling (GBP) and the US dollar (USD) are the only foreign currencies for which a change in exchange rate could have a
material impact on the Group’s consolidated accounts.
The currency sensitivity analysis is prepared assuming that the euro would have weakened/strengthened during 2021 by
10%, against the important foreign currencies (GBP/USD), which is estimated to be a reasonably possible change of the
exchange rate.
If the euro were to have weakened/strengthened by 10% versus the GBP, with all other variables holding the same, the
impact on the 2021 operational profit would be immaterial, while the translation reserves in equity would have been €0.8
million higher/lower (less than 1% of total equity). There is no significant impact from a change in USD on profit from
operations.
If the euro were to have weakened/strengthened by 10% versus the USD, the financial result would have been €1.2
million lower/€1.1 million higher as a result of the change in fair value of the FX instruments. If the euro would have
weakened/strengthened by 10% versus the GBP, the financial result would have been €3.3 million lower/€1.8 million
higher.
Currency transactional risk
Most of the Group’s non-derivative monetary financial instruments are either denominated in the functional currency of
the Group or are converted into the functional currency through the use of derivatives. The open positions for which no
hedging is performed are therefore immaterial, and a change in currency rate would not have a material impact on the
profits of the Group.
25.2 INTEREST RATE
RISK
VANDEMOORTELE FINANCIAL REPORT 2021 67
The interest rate risk is managed at the Group level, taking into account average lifetime, interest cover ratios and the
balance with the asset portfolio. The objective is to have a fixed interest rate for an average period for all consolidated
outstanding net financial debt between three and six years. This allows the Group Treasury to “tactically” manage the
interest rate risk based on its view of interest rates. A fundamental change to the average interest rate coverage period,
within the abovementioned limits, needs the prior approval of the Executive Committee.
In accordance with the Group Treasury policy and procedures, the Group Treasury can enter into agreements to hedge
against a potential change in interest rates through basic instruments (interest rate swaps, cross currency interest rate
swaps and forward rate agreements). The use of other instruments (such as interest rate options, caps, floors, collars and
futures) requires the prior approval of the Executive Committee.
The Group entered into several interest rate swaps to hedge the floating interest rate on borrowings. The notional
amount of the IRS contracts equalled €143 million as of 31 December 202 1 (€134 million as of 31 December 2020).
The table below indicates the maturity of the interest-bearing financial liabilities before the application of hedging
instruments.
Taken into account the impact of interest rate hedging, the analysis is as follows:
VANDEMOORTELE FINANCIAL REPORT 2021
68
There is a discrepancy between the maturity of the financing and the IRS contracts.
Although all these hedges are economic hedges, not all conditions were met to allow the application of hedge
accounting. As such, they are all accounted for as held-for-trading, and the change in fair value is recognised in the
income statement.
All fair values are calculated using a valuation model that takes into account available market information about current
and projected interest rates.
The change in fair value of the interest derivatives is detailed below:
Interest rate sensitivity analysis
As disclosed above, most of the Group’s interest-bearing financial liabilities bear a fixed interest rate.
The total interest expense recognised in the 2021 income statement on the Company’s variable rate debt portion
(excluding IFRS 16 lease debt), net of the effect of interest rate derivatives, is €1.2 million (before tax).
Applying a reasonable possible increase/decrease in value of the euro – market interest rates with 0.50% on the Group’s
floating rate debt as of 31 December 2021 – with all other variables held constant, 2021 profit would have been around
€0.5 million higher/lower.
In addition, this interest rate increase would cause a change in the fair values of the hedging instruments, which is
estimated to have a positive impact on the profit before tax of €2.1 million.
25.3
MATERIAL
PRICE RISK
The Group companies incur the risk of changing market prices of materials.
To minimise the risk of unfavourable purchase price changes, the Group utilises fixed price contracts for major materials
such as flour, packaging, etc.
To manage the risk of fluctuating refined vegetable oil prices, the Raw Material Department of the MCOF business line is
entering into forward purchase and sale agreements for crude vegetable oil. These commodity contracts are in
accordance with the entity’s expected purchase, sale or usage requirements, and are as such excluded from the scope of
VANDEMOORTELE FINANCIAL REPORT 2021
69
financial instruments. These are commonly referred to as own-use contracts. Own-use contracts are accounted for as
normal purchase or sale contracts (executory contracts).
25.4
LIQUIDITY
RISK
The aim of liquidity risk management is to ensure that the Group has sufficient funding facilities available, both now and
in the future, to meet all of its financial obligations through any economic or business cycle, and to have sufficient
borrowing capacity for the implementation of its strategic view and for tactical acquisitions.
The liquidity risk is managed at the Group level based on the consolidated budgeted and projected balance sheets and
cash flows, and implies:
●
a monitoring of the mix of short- and long-term funding versus total debt,
●
the overall composition of total debt,
●
the availability of used long-term and unused-but-committed credit facilities in relation to the fixed assets and
working capital needs of the Group,
●
the compliance with borrowing facilities’ covenants and undertakings,
●
the capital structure of the Group.
The table below analyses the Group’s borrowings in relevant maturity groupings based on the remaining period from the
date of the balance sheet to the contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows (capital and interest). Balances due within 12 months equal their carrying balances, as the
impact of discounting is not significant.
25.5 CREDIT RISK
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the balance sheet are
net of allowances for doubtful receivables.
The Group companies monitor the credit risk on an ongoing basis, and use trade finance instruments (i.e. letter of credit)
where appropriate. Furthermore, companies of the Group cover part of the credit risk exposure by credit insurance
policies, taking into account the cost and benefit of the insurance.
VANDEMOORTELE FINANCIAL REPORT 2021
70
Each year a credit risk analysis of the Group is carried out. In this analysis, the turnover of all clients of the Group, as well
as outstanding and overdue amounts, are checked. For financial losses due to bankruptcy, the Group has subscribed a
credit insurance contract “Excess loss”. If the total losses exceed €400,000, the financial losses due to bankruptcy are
covered by the insurer. Below this amount, the risk is carried by the Group.
The Group began to apply factoring to the two major Belgian companies in 2012. Since 2013, this is also applied in France,
and since 2015 in the Netherlands. For further information on the factoring agreements, see note 18 on trade and other
receivables.
Vandemoortele NV, an external bank, and a major supplier of Vandemoortele NV entered into an agreement pursuant to
which the supplier has the right to submit its invoices to the bank, which obliges itself to pay the supplier (without
recourse) pursuant to an irrevocable and revolving letter of credit issued by the bank. The Irrevocable and Revolving
Letter of Credit had an initial term from 30 April 2015 to 31 March 2016, subject to tacit renewal for one-year periods. The
supplier invoices represent a liability to pay for purchased raw materials, agreed upon with the supplier, and therefore
form part of the working capital used in the entity’s normal operating cycle. Moreover, the payment terms, which the
arrangement extends beyond the period available from the supplier, remain in line with the industry’s common practice.
As a result, these liabilities are presented as trade payables.
The Group has no significant concentration of credit risk, as exposure is spread over a large number of counterparties and
customers.
Finance-related counterparty credit risk is defined as the risk of sustaining a loss as a result of default by a counterparty
that:
●
has given credit lines or borrowings to the Group,
●
has accepted a deposit from the Group,
●
has entered into a hedging transaction with the Group.
The purpose of establishing counterparty credit risk limits is to ensure that the Group deals with creditworthy
counterparties and that counterparty concentration risk is addressed.
The core financial institutions for the Group are those that provide Long-Term Committed Credit Facilities, which should
comprise at least three parties.
The Group Treasury will ensure that all risks are spread over several counterparties in accordance with internal
procedures determining limits and maximum exposures per counterparty.
Counterparties with whom the Group is allowed to work with should have a minimum credit rating of A-.
VANDEMOORTELE FINANCIAL REPORT 2021
71
26.
FAIR VALUE FINANCIAL INSTRUMENTS
FAIR VALUE
OF THE GROUP’S
FINANCIAL
ASSETS AND
LIABILITIES
Except as detailed in the following table, the directors consider that the carrying amount of financial assets and financial
liabilities recognised in the consolidated financial statements approximate their fair values.
VANDEMOORTELE FINANCIAL REPORT 2021 72
27.
DERIVATIVES
Below can be found a summary of the fair values of the derivatives at the end of December:
VANDEMOORTELE FINANCIAL REPORT 2021
73
28.
EMPLOYEE BENEFITS
28.1
LONG
-TERM
EMPLOYEE BENEFITS
The amount recognised in the consolidated balance sheet arising from the Group’s obligations in respect of its long-term
employee benefits is detailed below:
28.1 .1 POST-
/OTHER LONG
-TERM
EMPLOYMENT BENEFITS
The Group operates various post-employment plans that provide benefits linked to salary and seniority. These post-
employment benefit plans are classified as either defined contribution plans or defined benefit plans. The contributions
for defined contribution plans amount to €2.7 million (2020: €2.4 million).
Other post-employment benefits include liabilities in relation to supplemental early retirement benefits.
The other long-term employee benefits consist mainly of liabilities for the stock option plan of Vandemoortele NV,
amounting to €1.8 million (2020: €3.9 million), a leave of absence arrangement in Vandemoortele Nederland BV,
amounting to €0.8 million (2020: €0.9 million), and jubilee benefits in Germany and the Netherlands, amounting to €0.7
million (2020: €0.3 million).
28.1 .2 DEFINED
BENEFIT
PLANS
The Group operates several defined benefit plans in Belgium, the Netherlands, France, Germany, Italy and Spain. These
plans are either funded or unfunded via external pension funds or insurance companies. Where a plan is unfunded, a
liability for the obligation is recorded in the Group’s balance sheet. For funded plans, the Group is liable for the deficits
between the fair value of the plan assets and the present value of the defined obligation. Accordingly, a liability (or an
asset, if the plan is overfunded) is recorded in the Group’s consolidated balance sheet. Independent actuaries assess all
main plans on an annual basis.
The Group’s largest defined benefit obligations exist in Belgium. They account for 74.1% (2020: 74.5%) of the Group’s
defined benefit obligations, and for 92.9% (2020: 92.6%) of the Group’s plan assets.
The main pension plan is a defined benefit pension plan in Belgium, which was closed for new entrants as of 31 December
2012. Employees hired as of 1 January 2013 are covered by a defined contribution plan. Due to Belgian legislation, the
employer is obliged to guarantee a minimum rate of return on the contributions. Therefore, the defined contribution plan
is classified and accounted for as a defined benefit plan.
VANDEMOORTELE FINANCIAL REPORT 2021 74
The amounts recognised in the balance sheet are determined as follows:
The principal weighted average actuarial assumptions used for the purposes of the actuarial valuations are as follows:
Assumptions regarding future mortality are based on recently published statistics for each country. The assumptions
regarding the turnover of employees are based on recent experience and expectations for the future.
The weighted average duration of the defined benefit obligation is 11.3 years.
The changes in the present value of the defined benefit obligation in the current year are as follows:
The changes in the fair value of plan assets in the current year are as follows:
VANDEMOORTELE FINANCIAL REPORT 2021 75
The fair value of the assets is split up into the following major asset classes:
The assets comprise assets held by a separate pension fund in Belgium and by qualifying insurance policies in other
countries. A large portion of assets in 2021 consisted of equities and bonds, although the Group also invests in property,
cash and investment funds. The plans are not exposed to significant foreign currency risk.
The assets of the pension fund in Belgium and of qualifying insurance policies in other countries are built up by the
monthly contributions paid to the pension fund/insurance company by the entities of the Group. These contributions are
based on a plan (calculation) delivered by an actuary.
Defined benefit obligation and plan assets per country are as follows:
VANDEMOORTELE FINANCIAL REPORT 2021
76
The amounts recognised in the consolidated income statement and in the consolidated statement of comprehensive
income in respect of those defined benefit plans are as follows:
Estimated employer contributions for defined benefit plans in 202 2 amount to €1.8 million.
The sensitivity of the defined benefit obligation to changes in assumptions is set out below. The effects of a change in
assumption for each plan are weighted proportionately to the total plan obligations, in order to determine the total
impact of each assumption presented:
Each sensitivity analysis disclosed above is based on changing one assumption while holding all other assumptions
constant. In practice this is unlikely to occur, and changes in some of the assumptions may be correlated. When
calculating the sensitivity of the defined benefit obligation to variations in significant actuarial assumptions, the same
method has been applied as for calculating the liability recognised in the consolidated balance sheet.
Through its defined benefit plans, the Group is exposed to a number of risks, of which the most significant ones are
detailed below.
ASSET VOLATILITY
The plan liabilities are calculated using a discount rate set with reference to high-quality corporate yields; if plan assets
underperform this yield, the company’s net defined benefit obligation may increase. Most of the company’s funded plans
hold a significant portion of equities that are expected to outperform corporate bonds in the long term while providing
volatility and risk in the short term. As the plans mature, the company usually reduces the level of investment risk by
investing more in assets that better match the liabilities.
VANDEMOORTELE FINANCIAL REPORT 2021
77
However, the company believes that due to the long-term nature of the plan liabilities, a level of continuing equity
investment is an appropriate element of the company’s long-term strategy for efficient management of the plans.
CHANGES IN BOND YIELDS
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by any increase in the
value of the plans’ bond holdings.
INFLATION RISK
The majority of the plans’ benefit obligations are linked to inflation, and higher inflation will lead to increased liabilities.
The majority of the plans’ assets are either unaffected by or loosely correlated with inflation, meaning that an increase in
inflation could potentially increase the company’s net defined benefit obligation.
LIFE EXPECTANCY
Some of the plans’ (Germany and the Netherlands) obligations are intended to provide benefits for the lifetime of the
member, so increases in life expectancy will result in an increase in the plans’ liabilities.
In the case of funded plans, the Group ensures that the investment positions are managed within an asset-liability
matching (ALM) framework that has been developed to achieve long-term investments that are in line with the
obligations under the pension schemes. Within this framework, the company’s ALM objective is to match assets to the
pension obligations by investing in long-term fixed interest securities with maturities that match the benefit payments as
they fall due and in the appropriate currency. The Group actively monitors how the duration and the expected yield of the
investments match up with the expected cash outflows arising from the pension obligations. The Group has not changed
the processes used to manage its risks from previous periods. Investments are well diversified. As a result, the failure of
any single investment does not have a material impact on the overall level of assets.
28.2 SHORT -TERM
EMPLOYEE BENEFITS
The amount recognised in the consolidated balance sheet arising from the Group’s obligations in respect of its short-term
employee benefits is detailed below:
VANDEMOORTELE FINANCIAL REPORT 2021
78
29.
PROVISIONS
Restructuring provisions
The new provisions for restructuring set up in 2021 mainly relate to the optimisation of operations in France and Belgium.
Restructuring provisions are expected to be settled in the main within one year, and consequently no discounted value of
the expenditure has been calculated.
Litigations and tax risks
A new provision has been set up for a legal proceeding against a former consultant.
No discounted value has been calculated for litigations and tax risks, as the impact is immaterial and the settlement will
occur in the near future.
Other provisions
New provisions have been set up for disputes with suppliers and for agents’ termination fees.
VANDEMOORTELE FINANCIAL REPORT 2021
79
30. TRADE
PAYABLES
AND
OTHER LIABILITIES
Trade payables increased in the final months of the year due to the high production volumes and the consequent
purchase of more raw materials at a higher price.
VANDEMOORTELE FINANCIAL REPORT 2021 80
31.
RELATED PARTIES
The Group is controlled by Safinco NV, which owns 99.58% of the Company’s shares. The remaining 0.42% is owned by
the Company itself (own shares).
31.1
COMPENSATION
OF
DIRECTORS
AND KEY
MANAGEMENT PERSONNEL
The remuneration of directors and other key management personnel during the year is as follows.
Key management includes:
●
Board of Directors, Audit Committee, Compensation Committee
●
CEO, ExCo executives
●
Other executives of the Group
31.2 SHARE BASED
PAYMENTS
Since 2004, the Group has offered stock options to the members of the Executive Committee. Since 2018, the Group has
also offered certain stock options to some other executives, with this being classified as a cash-settled plan. Every stock
option gives the holder the right to buy a share of the Company at a pre-defined price during the exercise period. The
Company commits to buying the shares back at the last available share value at the moment of exercise. The options are
offered free of charge. They carry neither rights to dividends nor voting rights. The stock options can be exercised as from
the fourth calendar year after the offer date within the annually established exercise window.
The share value is determined once per year by an external financial institution and reviewed by the Group’s auditors.
In 2021, 3,120 new options were accepted and no options accepted in previous years were exercised.
VANDEMOORTELE FINANCIAL REPORT 2021 81
The following table gives an overview of all stock option movements during 202 1:
YEAR OF
ACCEPTANCE
LAST
EXERCISE
DATE
NUMBER OF
OUTSTANDING
OPTIONS AT
01/01/2021
OPTIONS
EXERCISED
DURING
2021 (a)
OPTIONS
ACCEPTED
DURING
2021
NUMBER OF
OUTSTANDING
OPTIONS AS
OF 31/12/2021
VALUE
PER
SHARE
(b)
EXERCISE
PRICE (c)
PAID IN
2021 TO
OPTION
HOLDER
(c-b)*a
2015
15/09/2023
728
728
1,201.01
2016
15/09/2024
760
760
1,416.00
2018
15/09/2026
3,233
3,233
1,284.00
2019
15/09/2027
2,162
2,162
1,480.00
2020
15/09/2028
2,310
2,310
1,716.00
2021
15/09/2029
0
+3,120
3,120
1,325.00
Total
9,193
0
+3,120
12,313
0
The fair value of this stock option plan (€1.82 million) has been calculated using a Black Scholes formula based on a
calculated share value and on assumptions on risk-free interest rate (-0.24%), volatility (23.0%), time remaining until
maturity (between 4 and 8 years) and dividend yield (3.15%).
VANDEMOORTELE FINANCIAL REPORT 2021 82
32.
COMMITMENTS
AND
CONTINGENCIES
32.1 LEASE
COMMITMENTS
The Group has entered into various leases. Since 2019, all lease commitments are expressed in the balance sheet
following IFRS 16. Short-term leases, low-value assets, variable lease payments and non-lease components (e.g.
maintenance) are excluded from the application of IFRS 16, and are immediately expensed under service costs (see note
17).
32.2
CONTINGENT LIABILITIES
Through the “Brexit Team” we investigated the consequences for the export from the EU to the UK and from the UK to
the EU in order to ensure a smooth implementation of the new rules (i.e. export/import declarations, sanitary
requirements and goods vehicle movement obligations) and to safeguard the continuity of our commercial activities (sale
of bakery products and margarines and fats) in the United Kingdom. Overall, we experienced no major business
interruptions relating to export to or import from the UK, but important additional administrative work and cost due to
the “third country” status. The products produced in Worcester (frozen bakery products) for sale on the local UK market
will not have to follow all of these formalities.
With respect to the customs import duties and related export and import formalities, an agreement has been entered
into with a Customs Agent (Ziegler) and an IT interface between VDM and the Customs agent installed to automate the
import and export declarations. If products are of “EU/UK origin” the import is exempt from import duties, but the
export/import clearance must be performed. The Brexit Team also investigated the consequences for the sanitary
requirements (pre-notification, health certificate, etc.) as different rules have been implemented by the UK and the EU
respectively. The EU sanitary rules provide for the provision of a health certificate and pre-notification in the EU TRACES
system for frozen and temperature controlled foodstuffs, among others, as from April 2021. The UK Border Control
Model also provides for the provision of a health certificate and pre-notification in the UK IPAFFS system for composite
products (containing ingredients of animal origin) as from 1 April 2021. This obligation has been subsequently postponed
until 1 July 2021, 1 November 2021 and 1 January 2022 (pre-notification) and 1 November 2022 (health certificate). The
Brexit Team also investigated the GMVS (Goods Vehicle Movement Service) obligations applicable as from 1 January
2022.
Outlook 2022:
2022. Through the “Brexit Team” we continue to investigate the consequences for export from the EU to the UK in order
to ensure the smooth implementation of the new rules. For instance, our unbaked bakery products will need a health
certificate to go from the EU to the UK as from 1 November 2022 (additional administrative work, costs, waiting time for
trucks, etc.). The additional time allows operators to better prepare.
The products produced in Worcester (frozen bakery products) for sale on the local UK market do not have to apply the
rules for imported products (competitive advantage).
32.3 ENTITIES FOR
WHICH VANDEMOORTELE
NV ASSUMES FULL
LIABILITY
VANDEMOORTELE FINANCIAL REPORT 2021 83
The company’s UK subsidiary, Vandemoortele UK (Limited - Registered number 1107148) is exempt from the
requirements to the audit of accounts under Section 479A of the Companies Act 2006. Under Section 479C of the
Companies Act 2006 related to subsidiary companies, Vandemoortele NV has given a statutory guarantee of all
outstanding liabilities (0 million euro) to which the company is subject as of 31 December 2021. This guarantee has been
filed at Companies House.
The subsidiaries Safinco Nederland B.V., Vandemoortele Nederland B.V. and Vandemoortele Brunssum B.V are exempt
from the requirements for the auditing of accounts under Article 403 of the Civil Law. The liabilities of Safinco Nederland
B.V., Vandemoortele Nederland B.V. and Vandemoortele Brunssum B.V are guaranteed by Vandemoortele NV to a total
amount of €26.3 million as of 31 December 2021.
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33.
AUDITORS' ASSIGNMENTS
AND
RELATED
FEES
Deloitte Bedrijfsrevisoren BV, represented by Tom Windelen, was appointed as the statutory auditor of the
Vandemoortele Group at the shareholders meeting of 12 May 2020.
Audit fees for 2021
in relation to services provided by Deloitte amounted to €570,000. These fees are detailed in the table
below:
The audit services for the subsidiaries are services performed in the role of statutory auditor in view of legal requirements.
Additional services for 2021 rendered by the auditor to the Group are detailed in the table below:
Additional services for 2021 rendered by parties related to the auditor of the Group are detailed in the table below:
VANDEMOORTELE FINANCIAL REPORT 2021 85
34. EVENTS AFTER
BALANCE
SHEET
DATE
The Board of Directors proposes the payment of a dividend of €20.87 million on the result of 2021. This proposal is
subject to approval by the shareholders at their annual meeting on 10 May 2022.
Vandemoortele was prepared for further cost price increases during the first months of 2022. These increases appear to
hold true, and have been even higher than expected during the first calendar months. The Ukraine crisis and the
sanctions imposed on Russia have a significant share in those price increases. As they are the main suppliers of wheat and
sunflower seeds worldwide, these prices have risen significantly since the start of the crisis and will continue to do so. In
addition, the Ukraine crisis has an effect on further strong energy, oil and gas price increases.
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35.
VANDEMOO
RTELE
COMPANIES
The scope of the consolidation of Vandemoortele Group includes Vandemoortele NV and 32 subsidiaries that are fully
consolidated. The consolidation includes Vandemoortele Europe NV and its branches. Participations in 8 companies are
not consolidated, as these do not meet the criteria of significance.
There are no restrictions on realising assets and settling liabilities, with the exception of financial leases.
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36. AUDITOR'S REPORT
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37.
STATEMENT
BY
RESPONSIBLE
PERSON
17 March 2022
STATEMENT BY RESPONISIBLE PERSON
Mr. Yvon Guérin, Chief Executive Officer confirms that to the best of his knowledge:
a)
The consolidated financial statements and the annual accounts as of 31 December 2021 of VANDEMOORTELE
NV, prepared in conformity with applicable accounting standards, reflect a true and fair view of the net worth,
the financial situation, and the results of VANDEMOORTELE NV and its subsidiaries consolidated in these
financial statements.
b)
The combined report of the Board of Directors on the financial statements and the annual accounts as of 31
December 2021 of VANDEMOORTELE NV contains a faithful presentation of the performance of the business,
the results of the VANDEMOORTELE Group and of VANDEMOORTELE NV and its consolidated subsidiaries,
together with a description of the main risks and uncertainties that they face.
VANDEMOORTELE NV
Ottergemsesteenweg-Zuid
816
B-9000 Gent
www.vandemoortele.com
Tel: +32 (0)9 242 45
11
Fax:+32 (0)9 242 45
20
BTW BE
0429.977.343
RPR Gent
KBC IBAN: BE47 7330 4979 5180
BIC: KREDBEBB
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38. COMBINED REPORT OF THE BOARD OF DIRECTORS
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39.
STATUTORY ACCOUNTS
OF
VANDEMOORTELE
NV
39.1
CONDENSED BALANCE
SHEET OF
VANDEMOORTELE
NV
The statutory annual accounts of the parent company Vandemoortele NV are shown below in condensed form. In June
2022, the annual report and annual accounts of Vandemoortele NV and the auditor’s report will be filed with the National
Bank of Belgium in accordance with Articles 3:10
–
The statutory auditor has issued an unqualified opinion.
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39.2 C
ONDENSED INCOME STATEMENT
OF
VANDEMOORTELE
NV
39.3
RESULT APPROPRIATION
The Board of Directors proposes that the profit available for appropriation will be appropriated as follows: