NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation and summary of material accounting policies
1.1 Basis of presentation
The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU).
These consolidated financial statements are presented in thousands of EUR and present the financial situation as at December 31, 2023. Due to rounding, numbers presented throughout these consolidated financial statements may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
The accounting principles have been consistently applied to all periods presented and are consistent with those applied in the audited consolidated financial statements for the year ended December 31, 2022 of the Group.
The consolidated financial statements have been prepared based on the historical cost methodology, except for certain financial instruments for which the fair value is used.
These financial statements are prepared on an accrual basis and on the assumption that the Group is in going concern and will continue in operation in the foreseeable future.
The Group has adopted the following relevant new standards, amendments to standards or interpretations for the first time for the financial year beginning January 1, 2023 and have been endorsed by the European Union:
Amendments to IAS 1 \u2013 Presentation of Financial Statements and IFRS Practice Statement 2:Disclosure of Accounting policies. The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and
changes in accounting policies. The IAS 1 amendment requires companies to disclose their material accounting policy information rather than their significant accounting policies. Further, the amendment to IAS 1 clarifies that immaterial accounting policy information need not be disclosed. To support this amendment, the Board also amended IFRS Practice Statement 2, \u2018Making Materiality Judgements\u2019, to provide guidance on how to apply the concept of materiality to accounting policy disclosures. Lotus Bakeries has reviewed the accounting policies reported in the prior years. This has resulted in retaining only the accounting policies which are deemed have a material impact on the consolidated financial statements or to be relevant for an understanding of the Group\u2019s business. In this context, the Group has also restructured the presentation of these accounting policies.
Amendments to IAS 8 \u2013 Accounting policies, Changes in Accounting Estimates and Errors:Definition of Accounting Estimates. The amendments to IAS 8 clarify how companies should distinguish changes in accounting policies from changes in accounting estimates. These amendments did not have an impact on the current consolidated financial statements.
Amendments to IAS 12 \u2013 Income Taxes:Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The main change in the amendments is an exemption from the initial recognition exemption of IAS 12. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. These amendments did not have an impact on the current consolidated financial statements as the Group already recognised deferred taxes on a gross basis on its right-of-use assets and lease liabilities.
Amendments to IAS 12 \u2013 Income Taxes: International Tax Reform \u2013 Pillar Two Model Rules. The amendments provide a temporary mandatory relief from accounting for deferred tax that arises from legislation implementing the GloBE model rules. More details on the impact of Pillar Two have been disclosed in note 11 relating to income taxes.
The following relevant new standards, amendments to standards or interpretations have been published, but are not yet mandatory for the first time for the financial year beginning January 1, 2023, and have not been early adopted:
Amendments to IAS 1 \u2013 Presentation of Financial Statements:Classification of Liabilities as current or non-current (effective January 1, 2023, but not yet endorsed in EU), affect only the presentation of liabilities in the statement of financial position \u2014 not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. The amendments provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.
The Group does not expect that the above-mentioned new pronouncements will have a material impact on the consolidated financial statements.
1.2 Critical accounting judgements and estimates
In order to prepare the financial statements in accordance with IFRS, management has to make judgements, estimates and assumptions which have an impact on the financial statements and notes.
Estimates and judgements made on the reporting date reflect existing conditions on that date (for example: market prices, interest rates and foreign exchange rates). Estimates and judgements are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Though these estimates are made by management based on maximum knowledge of ongoing business and of the actions that the Group may undertake, the actual results may be different.
The estimates and judgements that could have an impact on the consolidated financial statements are listed below:
Key assumptions used in the impairment test of goodwill and intangible assets (see note 13); and
Key assumptions used in the measurement of post-employment benefits (see note 23).
Nevertheless, the Company does not expect that the above-mentioned accounting judgements and estimates will have a significant impact on the operations of the Group.
Next to the above items, the Company considers climate change and its sustainability commitments as one of the main items to include in the determination of future estimates and judgements. As such, the Company is aware that climate change can create disruptions in the supply chain and in the operating activities. Legislation requires significant investments to reach the sustainability targets defined. Therefore, Lotus Bakeries monitors and assesses how its business impacts the environment and the direct surroundings of its different locations. The Group assesses how sustainable CAPEX investments will impact in the future its cash forecasts, useful lives of assets... Furthermore, the changing customer behaviour to more healthy and sustainable products is considered a key item in identifying opportunities and business developments.
At this stage, the Group does not expect that climate change or other environmental related risks would have a significant impact on the financial statements in the short term. However, the Group monitors closely its consumptions and usage of key commodities to mitigate any potential impact. This will be further elaborated in the context of the implementation of CSRD and ESRS applicable as from 2024. Furthermore, we refer to our SBTi commitment signed in March 2023 which requires that we file and get approval of our targets within 2 years. For this, the base year is 2023 as explained in our Annual Report.
The \u2018Net Zero by 2050\u2019 target requires the Group to reassess its investment strategy and timing and alternatives of both CAPEX and OPEX investments. This will potentially impact the use of resources and available assets. As such, future financial statements would potentially be impacted through a revision of the useful lives of tangible assets, updated cash forecasts in impairment tests, investments in tools and assets improving our ecological footprint.
1.3 Consolidation principles
The consolidated financial statements comprise the financial statements of Lotus Bakeries NV and its subsidiaries (collectively referred to as the \u2018Group\u2019). Intercompany balances and transactions between Group companies are eliminated.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group has control over an investee when it is exposed to, or has the right to, variable returns arising from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are included in the consolidation scope as from the date that the Group obtains control until the date such control ceases.
Acquisition of subsidiaries is accounted for according to the acquisition method. The cost of the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The cost includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities assumed and contingent liabilities assumed in a business combination are measured initially at their fair value at acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. The excess of the cost of the acquisition over the fair value of the Group\u2019s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary in the case of a bargain purchase, the difference is recognised directly in the statement of profit or loss.
The financial statements of the subsidiaries have the same financial year as the Company and are prepared in accordance with the accounting principles of the Group.
Liabilities related to put options granted to non-controlling interests
The Group granted put options to non-controlling interests in a subsidiary, giving the holders the right to sell part or all of their investment in the subsidiary to the Company. This put option on non-controlling interests (own equity instrument) gives rise to a gross liability that is initially recognised against equity and measured at the present value of the redemption amount (exercise price) in accordance with IAS 32 \u2013 Financial Instruments: presentation. This financial liability is included in the other non-current liabilities. This gross liability is subsequently measured at fair value. The difference between the value of the non-controlling interest and the fair value of the liability is allocated to the retained earnings (Group share), which are included in shareholders\u2019 equity.
This liability is adjusted at the end of each reporting period to reflect changes in the estimated exercise price of the option and the carrying amount of non-controlling interests. If the option comes to maturity without exercising, the liability is derecognised against non-controlling interests and retained earnings (Group share).
1.4 Foreign currencies
Items included in the financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u2018the functional currency\u2019). The consolidated financial statements are presented in euro, the Group\u2019s reporting currency.
Transactions in foreign currencies
Transactions in foreign currencies are translated into the functional currency using the exchange rate applicable on the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the closing rate on the reporting date. Resulting foreign exchange gains and losses are recognised in the statement of profit or loss.
Foreign exchange gains and losses that relate to interest-bearing liabilities and cash and cash equivalents are presented in the statement of profit or loss within the financial result. All other foreign exchange gains and losses are presented in the statement of profit or loss within operating result.
Financial statements of foreign entities
For foreign entities using a different functional currency than the euro:
assets and liabilities are translated to the euro using the exchange rate on the reporting date;
items of income and expenses are translated at average exchange rate; and
equity items are translated at the historical exchange rate.
The resulting translation differences are recognised in other comprehensive income and accumulated in a separate component of equity (translation differences). These translation differences remain in equity up to the disposal of the relevant entity. In case of disposal, the accumulated amount in equity is reclassified to the statement of profit or loss as part of the result on disposal of the relevant foreign activity.
Goodwill arising from the acquisition of a foreign entity and fair value adjustments to the carrying amount of the acquired assets and liabilities at the date of acquisition, are considered as assets and liabilities of the foreign activity and are translated at the exchange rate on the reporting date.
The Group has no entities in hyperinflationary economies.
Exchange rates
The following exchange rates were used in preparing the financial statements:
Closing rate | average rate | |||
2023 | 2022 | 2023 | 2022 | |
EUR/CHF | 0.926 | 0.985 | 0.972 | 1.005 |
EUR/CNY | 7.851 | 7.358 | 7.662 | 7.075 |
EUR/CZK | 24.724 | 24.116 | 24.000 | 24.570 |
EUR/GBP | 0.869 | 0.887 | 0.870 | 0.852 |
EUR/KRW | 1,433.660 | 1,344.090 | 1,413.178 | 1,357.681 |
EUR/SEK | 11.096 | 11.122 | 11.477 | 10.624 |
EUR/THB | 37.973 | 36.835 | 38.278 | 36.800 |
EUR/USD | 1.105 | 1.067 | 1.082 | 1.054 |
EUR/ZAR | 20.348 | 18.099 | 19.957 | 17.210 |
1.5 Material accounting policies
The material accounting policies applied by the Group are disclosed in the relevant notes as a separate paragraph.
2. Changes to the consolidation scope
In 2023, B.W.I. BV merged into Biscuiterie Willems BV. The merge did not have a significant impact on the consolidated financial statements.
Furthermore, the Group has established a new entity in Australia, Lotus Bakeries Australia Pty Ltd., and in Japan, Lotus Bakeries Japan G.K.
The complete list of companies included in the consolidation scope is disclosed in note 32.
Business combinations 2022
On December 31, 2022, the Company finalised the acquisition of the remaining shares in Peter\u2019s Yard\u00ae through its 100% subsidiary Lotus Bakeries International und Schweiz AG. Peter\u2019s Yard is a British artisanal sourdough company that produces healthy and delicious sourdough crackers and sourdough crisps made from only natural ingredients.
Peter\u2019s Yard has become part of the LotusTMNatural Foods business under the leadership of Isabelle Maes, CEO Natural Foods. The initial focus for Peter\u2019s Yard will be to further accelerate growth in the UK. The brand complements the existing LotusTMNatural Foods portfolio that contains the strong brands of n\u0101kd\u00ae, BEAR\u00ae, TREK\u00ae and Kiddylicious\u00ae.
In July 2019, the Company acquired a 20% stake in Peter\u2019s Yard via its venture capital vehicle, Fast Forward 2032 (\u2018FF2032\u2019).
The consideration paid for the business combination (remaining 80% share) amounts to EUR 9.6 million in cash.
The assets acquired and liabilities assumed recognised in the consolidated statement of financial position at acquisition date and the amount of goodwill are presented in the following table:
IN THOUSANDS OF EUR | |
Recognised amounts of identifiable assets acquired and liabilities assumed | |
Cash and cash equivalents | 433 |
Intangible assets | 5,697 |
Right-of-use assets | 651 |
Inventories | 542 |
Trade and other receivables | 2,290 |
Interest-bearing liabilities | (502) |
Trade and other payables | (1,950) |
Other current assets and liabilities | (2,082) |
Deferred tax liabilities | (890) |
Total identifiable net assets acquired | 4,188 |
Allocation to goodwill | 7,876 |
TOTAL CONSIDERATION | 12,064 |
TOTAL CONSIDERATION | |
Fair value of initial investment | 2,425 |
Cash consideration | 9,639 |
TOTAL CONSIDERATION | 12,064 |
The following table presents the impact of the acquisition of subsidiaries within the investing activities in the consolidated cash flow statement:
IN THOUSANDS OF EUR | |
Consideration paid in cash | 9,639 |
Cash and cash equivalents acquired | (433) |
ACQUISITION OF SUBSIDIARIES, NET OF CASH ACQUIRED | 9,205 |
Upon acquisition of Peter\u2019s Yard, the initial investment of 20% held by the Group through FF2032 has been remeasured at fair value in accordance with IFRS 3.
As per December 31, 2022, the amounts above with respect to fair value of net assets acquired and goodwill were provisional as not all fair value measurements had been finalised. This has been finalised in the course of 2023, but no adjustments were necessary.
As a result of the acquisition accounting, the Company has allocated the purchase price (consideration paid) and has calculated the fair value of the assets acquired and liabilities assumed, in accordance with generally applied valuation rules. The purchase price was allocated to intangible assets (brands), which have been measured at fair value.
Goodwill arose because the consideration for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth and future market development. Management deems that there is a strategic fit between the LotusTMNatural Foods business and Peter\u2019s Yard as they have complementing product offerings. The resulting goodwill is not tax deductible.
The gross contractual amount of the trade receivables amounts to EUR 2.2 million, which equals the carrying amount.
The Group has not incurred significant acquisition-related expenses.
3. Segment reporting
3.1 Accounting policy
Group revenue is centralised around a number of products that are all included in the traditional and natural snack segment. For these products, the Group is organised according to geographical regions for sales, production and internal reporting.
The result of a segment includes the income and expenses directly generated by a segment as well as the portion of the income and expenses that can be reasonably attributed to the segment. Intersegment price-fixing is defined based on the \u2018at arm\u2019s length\u2019 principle.
Considering that the chief operating decision maker does not review on a regular basis items of the statement of financial position per segment, segment assets and liabilities are not disclosed.
For the purpose of sales, production and internal reporting, the Group is classified according to geographical regions. As a result of the increased performance of different regions and to sustain future growth, we have reviewed in 2023 the reportable segments and have therefore restated the comparative disclosure to align with the organisational and managerial alignment. Furthermore, aggregation of underlying countries into the below identified reportable segments have been done when such aggregation is consistent with the core principle of IFRS 8, the segments have similar long-term economic characteristics and the segments are similar in each of the following respects:
The nature of products and services;
The nature of the production processes;
The procurement process;
The type or class of customer for their products and services;
The functional currencies of each market;
The methods used to distribute their products or provide their services; and
The nature of the regulatory environment.
The regions presented in the segment reporting, which are based on the internal reporting system, are composed as follows:
Continental Europe: sales by Sales Offices in Continental Europe and intra-group sales by factories in Continental Europe (homogeneous activities within Europe, excluding UK activities, and including Belgium, France and other European countries);
UK: sales by Sales Offices UK, Natural Balance Foods, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard;
Americas: sales by Sales Offices in Americas and intra-group sales by the factory in the United States;
Rest of the world: sales from Belgium to countries without own Sales Office and by own Sales Offices in China and South Korea.
3.2 Segment information
PERIOD ENDED DECEMBER 31, 2023 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 648,919 | 271,901 | 155,753 | 144,730 | (158,340) | 1,062,962 |
Revenue from external customers | 534,414 | 235,971 | 155,753 | 136,825 | - | 1,062,962 |
Intersegment revenue | 114,505 | 35,931 | - | 7,905 | (158,340) | - |
SEGMENT RESULTS (REBIT) | 97,438 | 51,373 | 27,945 | 30,995 | (34,776) | 172,974 |
Non-recurring income and expenses | (2,544) | |||||
Operating result (EBIT) | 170,430 | |||||
Financial result | (2,533) | |||||
Result before taxes | 167,897 | |||||
Income taxes | (38,565) | |||||
Net result | 129,333 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 32,358 | 15,346 | 16,646 | 16,327 | 4,750 | 85,427 |
Intangible assets | 8 | - | - | - | 774 | 783 |
Depreciations and amortisations on (in)tangible assets | 20,510 | 1,668 | 6,588 | 458 | 3,633 | 32,857 |
PERIOD ENDED DECEMBER 31, 2022 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 539,654 | 224,755 | 127,713 | 127,965 | (142,634) | 877,451 |
Revenue from external customers | 433,994 | 197,584 | 127,628 | 118,244 | - | 877,451 |
Intersegment revenue | 105,660 | 27,170 | 85 | 9,720 | (142,634) | - |
SEGMENT RESULTS (REBIT) | 78,633 | 40,333 | 14,482 | 32,393 | (25,653) | 140,188 |
Non-recurring income and expenses | (3,807) | |||||
Operating result (EBIT) | 136,381 | |||||
Financial result | (2,354) | |||||
Result before taxes | 134,027 | |||||
Income taxes | (30,744) | |||||
Net result | 103,283 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 65,091 | 6,082 | 50,884 | 13,466 | 6,428 | 141,952 |
Intangible assets | 522 | - | - | - | 784 | 1,306 |
Depreciations and amortisations on (in)tangible assets | 16,868 | 1,266 | 3,590 | 642 | 2,878 | 25,245 |
Sales between the various segments are carried out at arm\u2019s length.
The non-current assets (i.e. property, plant and equipment, right-of-use assets, intangible assets and goodwill) by location of assets are detailed in the table opposite:
The Group\u2019s revenue by country are disclosed in note 4.
IN THOUSANDS OF EUR | 2023 | 2022 |
Belgium | 265,045 | 252,446 |
United Kingdom | 212,773 | 207,064 |
United States | 135,227 | 129,897 |
The Netherlands | 100,342 | 100,167 |
South-Africa | 55,292 | 49,154 |
Other | 76,372 | 61,496 |
TOTAL NON-CURRENT ASSETS | 845,051 | 800,225 |
4. Revenue
4.1 Accounting policy
Revenue is included in the statement of profit or loss when it is probable that the Group will receive economic benefits from the transaction and the revenue can be measured reliably.
Revenue of the Group is generated principally through the sale of goods with as only performance obligation the delivery of goods. Revenue recognition occurs at a point in time, when control of the asset is transferred to the customer, generally on delivery of the goods.
Customer contracts include trade discounts or volume rebates, which are granted to the customer if the delivered quantities exceed a certain threshold. In these cases, the transaction price includes a variable consideration. The effect of the variable consideration on the transaction price is taken into account in revenue recognition by estimating the probability of the realisation of the discount or rebate for each contract.
In the context of contracts with clients or as a result of business practices, Lotus Bakeries might pay certain amounts to its customer. The payments can be cash, either in the form of rebates or discounts, or could alternatively be a credit or some other form of incentive that reduces amounts owed to Lotus Bakeries by a customer. Amounts paid by Lotus Bakeries to customers on either a limited or a continuous basis may take various forms and are paid for a varying number of reasons, such as discounts, coupons, rebates, co-advertising, slotting or listing fees.
In accordance with IFRS 15, Lotus Bakeries accounts for such consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the entity. It is therefore important to analyse the substance of such payment in order to properly reflect the substance of them, i.e. include in the transaction price of the transaction with the customer (revenue) or consider as a separate transaction (expense).
4.2 Overview
Revenue is generated at a point in time mainly by branded products (Biscoff, Natural Foods brands and Local heroes).
The sales generated in the country of domicile of the Group (Belgium) represent 15% of the Group\u2019s revenue. Sales to countries in our top four countries are presented in the table below. The sales in all other individual country represent less than 10% of the Group\u2019s revenue.
IN THOUSANDS OF EUR | 2023 | 2022 |
Belgium | 159,848 | 118,077 |
United Kingdom | 240,251 | 249,300 |
United States | 155,753 | 127,628 |
France | 150,816 | 109,218 |
Other | 356,294 | 273,208 |
Total revenue | 1,062,962 | 877,451 |
5. Services and other goods
Services and other goods include mainly commercial and marketing expenses, logistic expenses (transport and warehousing), professional fees (legal, accounting and consulting) and utilities.
The increase compared to 2022 relates to increased sales and production volumes, next to increased plan-related expenses and professional fees, in line with the increased revenue performance.
6. Employee benefit expenses
IN THOUSANDS OF EUR | 2023 | 2022 |
Short-term employee benefits | 165,997 | 139,481 |
Social security contributions | 25,828 | 21,789 |
Defined contribution costs | 3,628 | 4,654 |
Defined benefit costs | 311 | 303 |
Other employee benefit expenses | 9,546 | 7,392 |
TOTAL EMPLOYEE BENEFIT EXPENSES | 205,310 | 173,618 |
Average number of employees | 2,857 | 2,655 |
Number of employees as at the end of the year | 2,984 | 2,698 |
The other employee benefit expenses include mainly the costs of training and other employee-related insurances.
7. Depreciation and amortisation expenses
IN THOUSANDS OF EUR | 2023 | 2022 |
Amortisation of intangible assets (see note 14) | 1,274 | 1,033 |
Depreciation of property, plant and equipment (see note 15) | 26,498 | 19,554 |
Depreciation of right-of-use assets (see note 15) | 5,085 | 4,658 |
TOTAL DEPRECIATION AND AMORTISATION EXPENSES | 32,857 | 25,245 |
8. Other operating income and expenses
The other operating income consists primarily of external sales of raw materials and other non-core items, various costs recovered at the time of sale and indemnification payments.
The other operating expenses include local levies (property taxes, municipal taxes, packaging tax\u2026) and penalties.
9. Non-recurring income and expenses
Non-recurring income and expenses include operating income and expenses that do not belong to or derive from the recurring operating activities of the Group (normal course of business). This category includes primarily results from the disposal of fixed assets, any goodwill impairment losses, any impairment losses on fixed assets, expenses relating to the acquisition, disposal and start-up of new businesses, restructuring expenses and expenses relating to pandemics.
IN THOUSANDS OF EUR | 2023 | 2022 |
Start-up costs related to capacity extensions | (2,546) | (288) |
Organisation restructuring | (62) | (1,269) |
Office relocations | (17) | (785) |
Product range restructuring | - | (1,081) |
Other | 81 | (383) |
TOTAL NON-RECURRING INCOME AND EXPENSES | (2,544) | (3,807) |
In 2023, the non-recurring result relates mainly to expenses from the construction and establishment of the new plant in Thailand and the extension of the plant in South-Africa. The costs for the project in Thailand will increase towards the commissioning of the plant in 2026.
As from reporting year 2024, the non-recurring items will be referred to as \u2018Adjusting items to the operating result\u2019. However, the scope of this reporting line item will not change, see also note 33 relating to the Alternative Performance Measures.
10. Financial result
IN THOUSANDS OF EUR | 2023 | 2022 |
Interest expenses | (4,035) | (3,115) |
Interest income | 2,475 | 551 |
Interest income (expenses) | (1,560) | (2,565) |
Foreign exchange gains (losses) | (119) | 988 |
Other financial income (expenses) | (854) | (777) |
TOTAL FINANCIAL RESULT | (2,533) | (2,354) |
The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pounds sterling) and USD (US dollars).
11. Income taxes
11.1 Accounting policy
Income taxes include current and deferred taxes. Both taxes are recognised in the statement of profit or loss except if the underlying transaction has been recognised directly in other comprehensive income. If so, the related income taxes are also directly recognised in other comprehensive income.
Current taxes include the amount of tax payable on the taxable earnings for the period calculated at the tax rate applicable on the reporting date. They also include adjustments to income tax liabilities for previous years. In line with IAS 12 \u2013 Income Taxes, management assesses on a periodic basis the positions taken in tax declarations in respect of items subject to interpretation in the tax legislation, and records, if necessary, additional income tax liabilities based on the expected amounts payable to the tax authorities. The assessment is made for all fiscal periods still subject to controls by the authorities.
Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted.
Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset.
The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
11.2 Income taxes in the statement of profit or loss
The income tax recognised in the statement of profit or loss can be detailed as follows:
IN THOUSANDS OF EUR | 2023 | 2022 |
Current taxes in respect of the current year | (33,699) | (29,417) |
Current taxes in respect of the prior years | 100 | (2,213) |
Deferred taxes | (4,966) | 885 |
TOTAL INCOME TAXES | (38,565) | (30,744) |
The average effective tax rate is 23.0%, compared to 22.9% in 2022.
The income tax expense can be reconciled as follows:
IN THOUSANDS OF EUR | 2023 | 2022 |
Result for the period before taxes | 167,897 | 134,027 |
Legal tax rate | 25.00% | 25.00% |
Income tax expense computed at the legal tax rate | (41,974) | (33,507) |
Effect of different tax rates in other countries | 1,599 | 2,481 |
Deductions of taxable income | 2,461 | 1,472 |
Tax adjustments for prior years | 1,569 | 429 |
Disallowed expenses | (898) | (1,056) |
Tax exempted income | 115 | 66 |
Tax losses used for which no deferred tax asset has been recorded | - | (21) |
Unrecognised deferred tax assets | (1,232) | - |
Changes in tax rate or new taxes | 17 | (670) |
Other | (221) | 61 |
TOTAL INCOME TAXES | (38,565) | (30,744) |
Effective tax rate | 23.0% | 22.9% |
In October 2021, the OECD reached agreement on the Pillar Two global minimum tax rules to address the tax challenges arising from digitalisation of the economy. The agreement includes a coordinated system of Global anti-Base Erosion (GloBE) rules that are designed to ensure large multinational companies pay a minimum level of tax on the income arising in each jurisdiction where they operate, establishing a global minimum corporate tax rate of 15% on the profit. This set of measures would be applied on a Country-by-Country basis to multinational companies with revenue exceeding EUR 750 million.
Considering that the Group has exceeded the applicable thresholds in 2021, the Group is subject to the GloBE rules and has to consider the global minimum tax in the jurisdictions in which it operates as a legal entity. Belgium, where the Company is domiciled, has adopted the new tax legislation implementing the GloBE rules. The Company is currently monitoring the progress of adoption of the GloBE rules in each jurisdiction.
Based on a first assessment and considering the effective and nominal tax rates in the different jurisdictions, it is clear that the Group will be able to benefit from the safe harbours provided by the OECD for most of its subsidiaries with a potential exception for Switzerland where the effective tax rate is close to 15%. However, in the meantime, the Swiss authorities have adopted the GloBE rules and the related qualified domestic minimum top-up tax (QDMTT).
In accordance with the requirements introduced by the amendments to IAS 12 (see note 1.1), the Group applies the exception to the recognition of deferred taxes associated with income taxes arising from the Pillar Two model rules. Therefore, the Group has decided to not recognise deferred taxes under Pillar Two rules when these rules have been adopted in a jurisdiction.
11.3 Income taxes in the statement of financial position
Deferred taxes
The deferred tax assets and liabilities can be reconciled as follows:
IN THOUSANDS OF EUR | As at January 1, 2023 | Recognised through the statement of profit or loss | Recognised through equity | Business combinations | Exchange differences | As at December 31, 2023 |
Intangible assets | (33,389) | (167) | - | - | (263) | (33,820) |
Property, plant and equipment | (32,416) | (6,570) | 141 | - | 393 | (38,452) |
Inventories | 232 | 436 | - | - | (2) | 666 |
Employee benefit obligations | 844 | (38) | 192 | - | - | 998 |
Other liabilities | (1,848) | (2,276) | - | - | 11 | (4,113) |
Derivative financial instruments | 95 | (68) | (27) | - | - | - |
Tax losses carried forward | 3,649 | 2,903 | - | - | (150) | 6,402 |
Other | 1,331 | 814 | (141) | - | 410 | 2,414 |
TOTAL DEFERRED TAXES | (61,503) | (4,966) | 165 | - | 398 | (65,905) |
Of which deferred tax assets | 2,212 | 2,120 | ||||
Of which deferred tax liabilities | (63,716) | (68,024) |
IN THOUSANDS OF EUR | As at January 1, 2022 | Recognised through the statement of profit or loss | Recognised through equity | Business combinations | Exchange differences | As at December 31, 2022 |
Intangible assets | (33,588) | 661 | - | (1,424) | 963 | (33,389) |
Property, plant and equipment | (32,542) | 584 | - | - | (458) | (32,416) |
Inventories | 511 | (271) | - | 13 | (21) | 232 |
Employee benefit obligations | 991 | (135) | (12) | - | - | 844 |
Other liabilities | (2,225) | (144) | - | 521 | - | (1,848) |
Derivative financial instruments | 161 | - | (66) | - | - | 95 |
Tax losses carried forward | 5,023 | (1,600) | - | - | 226 | 3,649 |
Other | (392) | 1,790 | - | - | (68) | 1,331 |
TOTAL DEFERRED TAXES | (62,061) | 885 | (78) | (890) | 642 | (61,503) |
Of which deferred tax assets | 2,182 | 2,212 | ||||
Of which deferred tax liabilities | (64,243) | (63,716) |
The recognition of these deferred tax assets is supported by profit expectations in the foreseeable future.
At year-end 2023, the Group did not recognise deferred tax assets for unused tax losses for a total gross amount of EUR 6.1 million, of which EUR 2.7 million have no expiry date and EUR 3.4 million have a maturity of 5 years.
Current taxes
The current tax assets mainly relate to the excess of pre-payments made compared to the actual income tax payable for the year. The current tax liabilities include actual corporate taxes payable.
12. Earnings per share
Basic earnings per share is calculated by dividing the Group\u2019s share in net result by the weighted average number of outstanding shares over the year (total number of shares \u2013 treasury shares).
Diluted earnings per share is calculated by dividing the Group\u2019s share in net result by the weighted average number of outstanding shares over the year, adjusted for the potential dilution of ordinary shares as a result of options granted under the stock option plan for management (see note 21).
IN THOUSANDS OF EUR | 2023 | 2022 |
Net result \u2013 Basic and diluted earnings per share | 129,333 | 103,283 |
Of which attributable to equity holders of Lotus Bakeries | 129,261 | 103,240 |
Weighted average number of shares \u2013 Basic earnings per share | 811,364 | 810,858 |
Dilutive effect | 1,009 | 1,249 |
Weighted average number of shares \u2013 Diluted earnings per share | 812,373 | 812,106 |
BASIC EARNINGS PER SHARE (IN EUR) | 159.40 | 127.37 |
Of which attributable to equity holders of Lotus Bakeries | 159.31 | 127.32 |
DILUTED EARNINGS PER SHARE (IN EUR) | 159.20 | 127.18 |
Of which attributable to equity holders of Lotus Bakeries | 159.12 | 127.13 |
13. Goodwill
13.1 Accounting policy
Goodwill arising from a business combination is initially measured at cost (i.e., the excess between the cost of the business combination and the Group\u2019s interest in the fair value of the identifiable assets acquired, liabilities assumed and contingent liabilities assumed). After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is tested for impairment annually or more often if events or changes in circumstances indicate that the carrying amount may have been impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date onwards, allocated to each of the Group\u2019s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
For sales, production and internal reporting, the Group is organised into geographic regions (see also note 3 Segment reporting). The segments consist of underlying business units. These business units represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These business units are the cash-generating units to which goodwill is allocated.
13.2 Overview
The carrying amount of goodwill has been allocated to the various independent cash-generating units as follows:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Lotus\u2122 Natural Foods (Natural Balance Food, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard) | 169,094 | 170,860 |
Belgium | 20,773 | 20,773 |
The Netherlands | 17,151 | 17,151 |
Asia | 8,653 | 9,229 |
Nordics | 5,541 | 5,528 |
Other | 1,704 | 1,704 |
TOTAL GOODWILL | 222,915 | 225,246 |
IN THOUSANDS OF EUR | |
Carrying amount as at January 1, 2022 | 224,846 |
Acquisitions through business combinations | 7,876 |
Effect of movements in foreign exchange rates | (7,476) |
Carrying amount as at December 31, 2022 | 225,246 |
Effect of movements in foreign exchange rates | (2,331) |
CARRYING AMOUNT AS AT DECEMBER 31, 2023 | 222,915 |
13.3 Impairment test
Goodwill, representing approximately 18% of the total assets of Lotus Bakeries at December 31, 2023, is tested for impairment every year during the fourth quarter after the budget process (or whenever there is a specific reason to do so) by comparing the carrying amount of each cash-generating unit (CGU) with its recoverable amount. The recoverable amount of a cash-generating unit is determined on the basis of the value in use.
The value in use is determined as the present value of expected future cash flows based on the current long-term planning of the Group. The discount rate used in determining the present value of expected future cash flows is based on a weighted average cost of capital (WACC) before taxes (pre-tax discount rate). The impairment test for goodwill is based on a number of critical judgements, estimates and assumptions.
The assumptions are consistent and reasonable for all cash-generating units, which are mainly located in Europe and the UK:
Revenue and operating result: revenue and operating result reflect management\u2019s expectations based on past experience and taking into account the risks specific to the reportable business unit;
The first year of the model is based on the budget for the year as approved by the board of directors, taking into account historical results and is management\u2019s best estimate of the free cash flow outlook for the current year;
In years two to three of the model, free cash flows are based on Lotus Bakeries\u2019 long-term plan. The long-term plan is prepared country by country, based on reasonable internal plans that take into account the specific market situation and the past;
Cash flows beyond the first three years are extrapolated by applying a perpetual growth rate;
Projections are discounted at the pre-tax weighted average cost of capital (WACC). The WACC has been determined by jurisdiction and considering the specific risks related to each CGU. Main inputs include risk-free rate, market risk, risk premium and the cost of debt.
The impairment test is highly sensitive to the key assumptions, pre-tax discount rate and perpetual growth rate, which are detailed below:
Pre-tax discount rate 2023 | Pre-tax discount rate 2022 | Perpetual growth rate 2023 | Perpetual growth rate 2022 | |
Lotus\u2122 Natural Foods CGU's | 8.9%-9.4% | 7.1%-7.5% | 2.0% | 4.0%-5.0% |
Other CGU's | 7.6%-9.5% | 6.1%-7.3% | 2.0% | 1.5%-3.0% |
At the end of 2023, Lotus Bakeries has completed its annual impairment test of goodwill. The discount rates have been updated to reflect the overall increase of the risk-free rates on the market. Furthermore, the perpetual growth rates have been aligned to the long-term targeted inflation rates instead of the company-specific estimated long-term growth rates. These changes in key assumptions have impacted negatively the different headrooms, but did not result in any impairment loss.
As part of the impairment test, the Company carried out a sensitivity analysis for the key assumptions used, i.e. the pre-tax discount rate and perpetual growth rate. Here, a decrease in the perpetual growth rate by 100 basis points and an increase in the pre-tax discount rate by 100 basis points were applied. A change in the key assumptions used, as described above, does not lead to an impairment loss.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are suitable, actual results may differ from these estimates in the event of changed assumptions and conditions.
14. Intangible assets
14.1 Accounting policy
Intangible assets which are acquired separately are measured initially at cost. After initial recognition, intangible assets are measured at cost less accumulated amortisations and impairment losses.
Costs for internally generated intangible assets are recognised in the statement of profit or loss as incurred, unless they meet the criteria to be considered as development costs.
Intangible assets acquired in the context of a business combination are recognised separately in the statement of financial position at their estimated fair value at acquisition date. This concerns brands. The value of these brands was established as part of the valuation at fair value of the asset and liability components upon first consolidation.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
Investments in software and licences are amortised over a period of three to five years.
14.2 Overview
IN THOUSANDS OF EUR | Brands | Software | Customer portfolio | Total |
Acquisition cost | 145,968 | 15,222 | 1,030 | 162,220 |
Accumulated amortisation and impairment losses | (4,627) | (11,818) | (1,030) | (17,475) |
Carrying amount as at January 1, 2022 | 141,341 | 3,404 | - | 144.745 |
Acquisitions | 522 | 784 | - | 1,307 |
Acquisitions through business combinations | 5,697 | - | - | 5,697 |
Amortisation expense | - | (1,033) | - | (1,033) |
Effect of movements in foreign exchange rates | (3,987) | 6 | - | (3,980) |
Carrying amount as at December 31, 2022 | 143,573 | 3,162 | - | 146,735 |
Acquisition cost | 148,200 | 16,013 | 1,030 | 165,243 |
Accumulated amortisation and impairment losses | (4,627) | (12,581) | (1,030) | (18,508) |
Acquisitions | - | 783 | - | 783 |
Amortisation expense | - | (1,274) | - | (1,274) |
Transfer from one heading to another | 1 | 184 | - | 185 |
Effect of movements in foreign exchange rates | 1,400 | (3) | - | 1,396 |
CARRYING AMOUNT AS AT DECEMBER 31, 2023 | 144,974 | 2,851 | - | 147,825 |
Acquisition cost | 149,601 | 13,989 | - | 164,620 |
Accumulated amortisation and impairment losses | (4,627) | (11,138) | - | (16,795) |
Intangible assets include brands and software investments.
Software relates mainly to the capitalised external and internal costs connected with the further roll-out of the ERP information system SAP across the Lotus Bakeries Group.
The brands relate to the brands acquired by the Company over the years:
Peijnenburg: base brand in the Netherlands;
Dinosaurus: brand acquired in 2012;
Annas: base brand for the Nordic region and base brand for the pepparkakor products outside the Nordic region;
n\u0101kd: brand acquired in 2015 as part of the acquisition of Natural Balance Foods;
BEAR: brand acquired in 2015 as part of the acquisition of Urban Fresh Foods;
Kiddylicious: brand acquired in 2018;
Kung Oscar: brand acquired in 2022; and
Peter\u2019s Yard: brand acquired in 2022.
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Lotus\u2122 Natural Foods (n\u0101kd, Bear, Kiddylicious, Peter's Yard) | 73,559 | 72,174 |
Other brands (Dinosaurus, Peijnenburg, Annas, Kung Oscar) | 71,415 | 71,399 |
TOTAL CARRYING AMOUNT | 144,974 | 143,573 |
At year-end 2023, the Group tested the value of these brands to assess any recoverability issues. Taking into account the assumptions used, the value in use of the related cash-generating units exceeds its carrying amount and no impairment loss is recognised.
For more details on the impairment test conducted per CGU, we refer to note 13 on goodwill.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are reasonable, actual results may differ from these estimates in the event of changed assumptions and conditions.
During 2023, the Group has incurred research and development expenses of EUR 1,655 thousands (2022: EUR 1,458 thousands), which are mainly composed of employee benefit expenses and consumables.
15. Property, plant and equipment and leases
15.1 Accounting policy
Property, plant and equipment
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses. Cost includes the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of self-produced assets includes direct material costs, direct labour costs and a proportional part of the production overhead.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Depreciation of an asset begins when the asset is available for its intended use.
The estimated useful lives are as follows:
Buildings, incl. warehouses\t25-30 years
Plant and machinery\t15-25 years
Furniture\t15 years
Trucks\t10 years
Office equipment and motor vehicles\t5 years
Computer equipment\t3-5 years
Land is not depreciated considering that it has an indefinite useful life.
The depreciation methods, residual values and the useful lives of the property, plant and equipment is reassessed and adjusted if appropriate, annually.
Leases
A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are recognised as a right-of-use asset and corresponding liability at the date the leased asset is available for use by the Group. The right-of-use assets are presented in the consolidated statement of financial position within the line item \u2018Property, plant and equipment\u2019.
The Group recognises right-of-use assets at cost, which consists of the initial measurement of the corresponding lease liabilities and any initial direct costs less lease incentives received.
These assets are generally depreciated on a straight-line basis over the lease term and are subject to impairment. If it is reasonably certain that the Group will exercise a purchase option, the asset shall be depreciated on a straight-line basis over its useful life.
Lease liabilities are measured at the present value of future lease payments over the lease term.
The lease payments are discounted using the Group\u2019s incremental borrowing rate, i.e. the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, as the interest rate implicit in the lease cannot be readily determined.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
For leases with a term of 12 months or less (short-term leases) or leases of low-value items to which the Group applies the recognition exemptions available in IFRS 16, lease payments are recognised on a straight-line basis as an expense over the lease term.
15.2 Overview
IN THOUSANDS OF EUR | Land and buildings | Plant, machinery and equipment | Furniture, office equipment and vehicles | Assets under construction | Right-of-use assets | Total |
Acquisition cost | 175,901 | 348,985 | 20,785 | 39,745 | 19,135 | 604,551 |
Accumulated depreciation and impairment losses | (57,312) | (217,028) | (16,057) | - | (6,429) | (296,826) |
Carrying amount as at January 1, 2022 | 118,589 | 131,957 | 4,728 | 39,745 | 12,706 | 307,725 |
Acquisitions | 29,358 | 14,544 | 4,297 | 84,475 | 9,278 | 141,952 |
Acquisitions through business combinations | - | 651 | - | - | - | 651 |
Disposals | (106) | (130) | (10) | (94) | (325) | (665) |
Depreciation expense | (4,896) | (13,326) | (1,332) | - | (4,658) | (24,212) |
Impairment losses | - | - | - | - | (519) | (519) |
Transfers from one heading to another | 4,587 | 11,576 | (21) | (16,142) | - | - |
Effect of movements in foreign exchange rates | 1,703 | 1,434 | 96 | 419 | (341) | 3,311 |
Carrying amount as at December 31, 2022 | 149,235 | 146,706 | 7,758 | 108,403 | 16,142 | 428,243 |
Acquisition cost | 209,647 | 369,907 | 25,014 | 108,403 | 23,098 | 736,069 |
Accumulated depreciation and impairment losses | (60,412) | (223,201) | (17,256) | - | (6,957) | (307,826) |
Acquisitions | 13,248 | 26,820 | 1,092 | 36,432 | 7,835 | 85,427 |
Disposals | (885) | (77) | (4) | (52) | (193) | (1,211) |
Depreciation expense | (6,782) | (17,954) | (1,761) | - | (5,085) | (31,583) |
Transfers from one heading to another | 42,729 | 54,275 | 227 | (97,417) | - | (185) |
Effect of movements in foreign exchange rates | (3,355) | (1,832) | (53) | (1,109) | (31) | (6,380) |
Carrying amount as at December 31, 2023 | 194,190 | 207,937 | 7,259 | 46,257 | 18,667 | 474,311 |
Acquisition cost | 260,318 | 439,530 | 20,307 | 46,257 | 28,181 | 794,593 |
Accumulated depreciation and impairment losses | (66,128) | (231,593) | (13,048) | - | (9,514) | (320,283) |
In 2023, an amount of EUR 77,592 thousands has been invested in property, plant and equipment. Lotus Bakeries is currently investing in Thailand (Chonburi) in a new greenfield production facility for Lotus\u00ae Biscoff\u00ae to further support its growth ambition in the Asia-Pacific region. The land was purchased in 2022 and the project team has now completed the land levelling and groundworks. The
building construction is ongoing. Furthermore, the Group continues to invest in the Wolseley factory in South-Africa with an additional production facility for the production of the n\u0101kd\u00ae raw bars. The first commercial production takes place in January 2024.
In 2022, EUR 132,674 thousands was invested in property, plant and equipment. In the Lotus\u00ae Biscoff\u00ae plant in Belgium, a second dough preparation room became operational. In the US, a second production hall with two new Lotus\u00ae Biscoff\u00ae production lines was built. In the context of the establishment of a production facility for Lotus\u00ae Biscoff\u00ae in Asia to further support the Group\u2019s growth ambition for Lotus\u00ae Biscoff\u00ae, land was acquired in Thailand.
During 2023 and 2022, no government grants have been granted to the Group.
No pledges have been set on the items of property, plant and equipment.
15.3 Right-of-use assets
The carrying amount of the right-of-use assets arising from IFRS 16 \u2013 Leases is reconciled as follows:
IN THOUSANDS OF EUR | Carrying amount as at January 1, 2023 | New leases | Depreciations | Other movements | Carrying amount as at December 31, 2023 |
Land and buildings | 11,766 | 2,091 | (2,374) | (48) | 11,436 |
Plant, machinery and equipment | 223 | 136 | (69) | - | 290 |
Furniture, office equipment and vehicles | 4,153 | 5,608 | (2,643) | (177) | 6,942 |
Total right-of-use assets | 16,142 | 7,835 | (5,085) | (225) | 18,667 |
In 2023, additional right-of-use assets relate mainly to the lease of vehicles (transition to electric company cars).
In 2022, additional right-of use assets relate mainly to the signing of new office leases in the UK and the US.
16. Investments in other companies
In 2019, Lotus Bakeries created the corporate venture fund FF2032, establishing a platform for investment in promising brands and growth companies offering innovative products, technologies or market approaches within the food sector.
Considering that these investments do not provide the Group any control or significant influence, the investments are valued at fair value. An irrevocable election has been made at initial recognition to measure the investments subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. Investments for which no fair value can be determined reliably, are recognised at historical cost and are reviewed on a regular basis for impairment.
The Group, through its subsidiary FF2032, has minority shares in:
Love Brands Inc., an American company which markets delicious crunchy corn snacks under the LOVE Corn name.
Partake Foods, operating in the American market with cookies free from the top eight allergens.
Oot Granola, a Dutch brand which markets fresh, organic and gluten-free granola that are low in sugars. Oot Granola has a pure online \u2018direct-to-consumer\u2019 concept.
The Good Crisp Company, an American company which produces natural, gluten-free chips, completely free of artificial flavourings and colorants.
IQBAR, an American company manufacturing a set of plant-based nutritional bars that contain six brain nutrients and that tick all the boxes in terms of nutritional profile.
In 2023, the Group invested in Aura Bora, a US company. Aura Bora produces natural zero calorie sparkling water infused with real herbs, fruits and flowers. Furthermore, a minority stake was acquired in Fit Joy, a US company manufacturing grain-free pretzels. Their products are vegan, dairy-, gluten-, nut-free, and non-GMO. Next to the aforementioned new investments, the Group has also invested additionally in The Good Crisp Company.
17. Inventories
17.1 Accounting policy
Inventories are measured at the lower of cost and net realisable value.
For raw materials, consumables and goods for resale, cost is measured at the purchase price on a FIFO basis.
The cost of finished products is the standard manufacturing cost price. This includes, in addition to direct production and material costs, a proportional part of the fixed and variable overhead costs based on the normal production capacity.
The net realisable value is defined as the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale.
17.2 Overview
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Raw materials and consumables | 20,412 | 20,261 |
Work in progress | 3,912 | 5,288 |
Goods for resale and finished goods | 52,581 | 44,812 |
TOTAL INVENTORIES | 76,906 | 70,361 |
Write-down on inventories of EUR 2,673 thousands (2022: EUR 3,519 thousands) relate mainly to finished products (2023: EUR 1,009 thousands; 2022: EUR 1,297 thousands), goods for resale (2023: EUR 625 thousands; 2022: EUR 542 thousands), raw materials (2023: EUR 534 thousands; 2022: EUR 245 thousands) and packaging material (2023: EUR 494 thousands; 2022: EUR 1,411 thousands). Reversal of previously recognised write-downs amount to EUR 1,977 thousands in 2023.
18. Trade and other receivables
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Trade receivables | 142,762 | 111,558 |
Less allowance for impairment of trade receivables | (1,294) | (803) |
Trade receivables \u2013 net | 141,468 | 110,755 |
VAT receivables | 10,049 | 8,979 |
Other amounts receivable | 527 | 339 |
Other receivables | 10,576 | 9,318 |
TOTAL TRADE AND OTHER RECEIVABLES | 152,044 | 120,074 |
The trade receivables represent an average of 46 days of customer credit (2022: 46 days).
With regard to trade receivables there are no indications that debtors will not meet their payment obligations. Nor are there any customers representing more than 10% of the consolidated revenue. IFRS 9 requires the Company to recognise an allowance for expected losses on the recovery of trade receivables. This has no material impact.
More information regarding the credit risk is disclosed in note 26.
Movements on valuation for impairment of trade receivables are as follows:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Opening balance | 803 | 526 |
Allowances recognised | 531 | 472 |
Amounts written off during the year as uncollectible | (51) | (159) |
Effect of movements in foreign exchange rates | 12 | (37) |
TOTAL ALLOWANCE FOR IMPAIRMENT OF TRADE RECEIVABLES | 1,294 | 803 |
19. Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances (current and deposit accounts) and other short-term highly liquid investments with maturities since acquisition date of three months or less.
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Short-term bank deposits | 71,135 | - |
Cash at bank and on hand | 60,096 | 76,434 |
TOTAL CASH AND CASH EQUIVALENTS | 131,231 | 76,434 |
For the cash flow statement, cash and cash equivalents include cash and bank balances and term deposits. Any negative cash is included under non-current interest-bearing liabilities in the statement of financial position.
20. Other assets
The other non-current and current assets include mainly cash guarantees and deferred charges relating to the operational activities of the Group.
21. Equity
21.1 Accounting policy
Ordinary shares are classified as equity. Where any Group company purchases the Company\u2019s equity share capital (treasury shares), the consideration paid is deducted from equity attributable to owners of the Company until the shares are cancelled or reissued. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Dividends payable to shareholders of the Company are recognised as a liability in the statement of financial position in the period in which the dividends are approved by the shareholders of the Company.
21.2 Share capital
All shares are ordinary shares, registered or dematerialised. The ordinary share capital of the Company issued and full paid consists of 816,013 shares (2022: 816,013 shares), of which 4,313 treasury shares (2022: 5,072 treasury shares).
The treasury shares have been purchased as part of the share option plans mentioned below.
The following table presents the number of shares outstanding:
NUMBER OF SHARES | Shares issued | Treasury shares | Outstanding shares |
As at January 1, 2022 | 816,013 | (4,110) | 811,903 |
Treasury shares delivered for share option plans | - | 1,538 | 1,538 |
Purchase/sale of treasury shares | - | (2,500) | (2,500) |
As at December 31, 2022 | 816,013 | (5,072) | 810,941 |
Treasury shares delivered for share option plans | - | 1,238 | 1,238 |
Purchase/sale of treasury shares | - | (479) | (479) |
AS AT DECEMBER 31, 2023 | 816,013 | (4,313) | 811,700 |
Further details of the shareholding structure of Lotus Bakeries NV as of December 31, 2023 are disclosed in the Corporate Governance Statement in Part 1 of the 2023 annual report of Lotus Bakeries.
21.3 Capital risk management
The objective of Lotus Bakeries is to ensure that the Group can continue to operate as a going concern in order to generate a return for shareholders and provide benefits for other stakeholders. Furthermore, the Group aims for a capital structure (balance between debt and equity) that gives it the required financial flexibility to implement its growth strategy. The aim is to maintain the ratio of net financial debt (defined as interest-bearing liabilities minus cash and cash equivalents and term deposits minus treasury shares, and are reported excluding the \u2018lease liabilities\u2019) to recurring operating cash flow (REBITDA) at what is considered as a reasonable level in the financial market.
21.4 Share-based payments
21.4.1 Accounting policy
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
21.4.2 Overview
Since 2012, each financial year the Board of Directors grants stock options to executives and senior management, based on category, results and performance. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below.
Each option gives the holder the right to purchase one ordinary Lotus Bakeries share at a fixed exercise price. The exercise price is equal to the average closing stock market price of the underlying share during the thirty calendar days prior to the offering date. The granted options have a term of five years. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The stock options are only subject to services conditions so that it will vest gradually over the vesting period, i.e. three years. The options are exercisable if the option holder remains linked to the Company or a related entity as an employee or executive director. These rights are retained in the event of retirement, early retirement, invalidity or death.
The stock option plans are considered equity-settled share-based payments.
The fair value of the options is estimated at the grant date, using the binomial valuation model. This valuation model is based on the following market data and assumptions: the share price at the time of allotment, the exercise price, the exercise arrangements, the estimated volatility, the dividend expectations and the risk-free interest rate. The fair value of the share options is recognised linearly over the vesting period.
The following table details the different plans granted and the assumptions used for the measurement of the fair value:
Granted in | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Number granted | 1,179 | 1,199 | 962 | 660 | 792 | 618 |
Number exercised | (1,139) | (911) | (50) | (33) | - | - |
Number expired | (40) | (50) | (40) | (26) | - | - |
Available options | - | 238 | 872 | 601 | 792 | 618 |
Key assumptions used for fair value measurement\t | ||||||
Exercise period | 01/01/2022 \u2013 14/05/2023 | 01/01/2023 \u2013 09/05/2024 | 01/01/2024 \u2013 07/05/2025 | 01/01/2025 \u2013 17/05/2026 | 01/01/2026 \u2013 30/06/2027 | 01/01/2027 \u2013 31/05/2028 |
Exercise price (EUR) | 2,373.00 | 2,351.58 | 2,828.95 | 4,517.14 | 5,057.32 | 6,086.36 |
Share price (EUR) | 2,310.00 | 2,330.00 | 2,890.00 | 4,630.00 | 4,868.81 | 5,990.00 |
Expected volatility | 22.43% | 23.14% | 25.07% | 23.69% | 25.39% | 26.23% |
Dividend yield | 0.93% | 0.92% | 0.95% | 0.94% | 0.97% | 0.95% |
Risk-free rate | 0.11% | -0.29% | -0.36% | -0.34% | 0.82% | 2.57% |
FAIR VALUE PER OPTION (EUR) | 316.29 | 331.55 | 471.65 | 720.51 | 790.38 | 1,167.59 |
The volatility is based on daily share prices of Lotus Bakeries over the last three years.
The following reconciles the options outstanding at the beginning and end of the year:
Weighted average exercise price (EUR) | Number of options | |
Outstanding options at January 1, 2022 | 2,770 | 4,541 |
Granted | 5,057 | 792 |
Exercised | 2,420 | (1,492) |
Expired | 2,864 | (146) |
Outstanding options at December 31, 2022 | 3,398 | 3,695 |
Granted | 6,086 | 618 |
Exercised | 2,358 | (1,192) |
Expired | - | - |
OUTSTANDING OPTIONS AT DECEMBER 31, 2023 | 4,328 | 3,121 |
In 2023, a total expense of EUR 470 thousands was recognised (2022: EUR 470 thousands).
21.5 Dividends
The dividend related to 2022 was paid in 2023, in accordance with the decision taken at the Ordinary General Meeting of Shareholders of May 12, 2023. The shareholders approved a gross dividend of EUR 45per share, resulting in a total dividend of EUR 36,470 thousands.
The Board of Directors will propose to the Ordinary General Meeting of Shareholders of May 14, 2024 to pay a gross dividend of EUR 58per share for 2023. This amount is not recognised as a debt on December 31.
22. Interest-bearing liabilities
in thousands of EUR | December 31, 2023 | December 31, 2022 |
Bank loans | 261,000 | 182,500 |
Lease liabilities | 14,834 | 13,566 |
Non-current interest-bearing liabilities | 275,834 | 196,066 |
Bank loans | 9,500 | 66,000 |
Lease liabilities | 5,157 | 4,178 |
Current interest-bearing liabilities | 14,657 | 70,178 |
TOTAL INTEREST-BEARING LIABILITIES | 290,491 | 266,244 |
of which bank loans | 270,500 | 248,500 |
of which lease liabilities | 19,991 | 17,744 |
All bank loans are denominated in EUR. These loans bear a fixed interest rate. The weighted average interest rate is 1.26% (2022: 1.00%).
The lease liabilities mainly relate to the lease of company cars and office buildings (see also note 15).
The following tables reconcile the movements of the interest-bearing liabilities to the cash flows arising from financing activities:
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2023 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2023 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 182,500 | 88,000 | - | - | (9,500) | - | 261,000 |
Lease liabilities | 13,566 | (208) | 7,852 | 20 | (5,883) | (512) | 14,834 |
Current interest-bearing liabilities | |||||||
Bank loans | 66,000 | (66,000) | - | - | 9,500 | - | 9,500 |
Lease liabilities | 4,178 | (5,282) | - | (32) | 5,883 | 410 | 5,157 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 266,244 | 16,510 | 7,852 | (12) | - | (102) | 290,491 |
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2022 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2022 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 209,500 | 12,000 | - | - | (39,000) | - | 182,500 |
Lease liabilities | 9,337 | 9,847 | (304) | (4,990) | (324) | 13,566 | |
Current interest-bearing liabilities | |||||||
Bank loans | 14,000 | 13,000 | - | - | 39,000 | - | 66,000 |
Lease liabilities | 3,439 | (4,187) | - | (64) | 4,990 | - | 4,178 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 236,276 | 20,813 | 9,847 | (368) | - | (324) | 266,244 |
23. Employee benefit obligations
23.1 Accounting policy
Short-term employee benefits
Bonuses for employees and management are calculated based on key financial objectives and individual objectives. The estimated amount of the bonuses is recognised as an expense in the period in which the related services have been rendered based on an estimate on the reporting date.
Post-employment benefits (pension plans)
Group companies operate various pension schemes. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due.
In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Defined benefit costs are divided into 2 categories:
Current service cost, past-service cost, gains and losses on curtailments and settlements; and
Net interest expense or income.
The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income.
23.2 Overview
The Group operates defined contribution plans and defined benefit plans.
For the defined contribution plans, the Group pays contributions to insurance companies. Management of the pension plan is outsourced to an insurance company. For 2023, the expense amounts to EUR 3,628 thousands compared to EUR 4,654 thousands for 2022 (see also note 6 on employee benefit expenses). The Group has no further obligations next to these contributions.
In the consolidated statement of financial position, the employee benefit liabilities consist of the following items:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Non-current employee benefit obligations | 4,183 | 4,411 |
Current employee benefit obligations | 335 | 232 |
TOTAL EMPLOYEE BENEFIT OBLIGATIONS | 4,518 | 4,642 |
of which post-employment benefits | 4,518 | 4,642 |
of which termination benefits | - | - |
The post-employment benefits are defined benefit pension plans granted by the Group in the Netherlands, France, Germany and Switzerland.
Furthermore, as a result of the Belgian legislation applicable to pension plans (so-called \u2018Law Vandenbroucke\u2019), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. This \u2018Law Vandenbroucke\u2019, which came into force in 2004, states that in the context of defined contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions. As from January 1, 2016, these percentages have been reviewed and adjusted to a single rate which varies with the market rates, subject to a minimum of 1.75% and a maximum of 3.75%, reducing the risk for the employer. Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19.
The following tables reconcile the amounts recognised in the statement of financial position, the statement of profit or loss and the statement of comprehensive income:
IN THOUSANDS OF EUR | 2023 | 2022 |
Defined benefit obligation | 11,373 | 10,882 |
Fair value of plan assets | (6,854) | (6,240) |
TOTAL POST-EMPLOYMENT OBLIGATIONS (FUNDED STATUS) | 4,518 | 4,642 |
Current service cost | 311 | 303 |
Past service cost | - | - |
Service cost recognised as part of employee benefit expenses | 311 | 303 |
Net interest expenses on post-employment liabilities | 123 | 55 |
Total defined benefit cost (statement of profit or loss) | 434 | 357 |
Remeasurements of defined benefit plans (other comprehensive income) | 333 | 91 |
The following table reconciles the post-employment obligations:
IN THOUSANDS OF EUR | 2023 | 2022 |
Net liability as at January 1 | 4,642 | 4,353 |
Service cost | 311 | 303 |
Net interest expense | 123 | 55 |
Remeasurements of defined benefit plans | 333 | 91 |
Employer contributions | (891) | (156) |
Effect of movements in foreign exchange rates | - | (4) |
NET LIABILITY AS AT DECEMBER 31 | 4,518 | 4,642 |
For the defined benefit pension plan, the liabilities are measured on a discounted basis because they are settled many years after the employees render the related service. A qualified actuary has determined the present value of the defined benefit obligations and the fair value of the plan assets. These assets are held by an insurance company. The projected unit credit method was used to estimate the defined benefit obligations, the defined benefit cost and the remeasurements of the net liability. Provisions are determined by computing the actuarial value of future payments to the employees in question.
The plan assets consist of insurance contracts. The actual return on plan assets amounted to EUR -239 thousands for 2023 (2022: EUR -1,464 thousands).
Expected contributions to post-employment benefit plans for the year ending December 31, 2024 are EUR 538 thousands.
The principal assumptions used in determining post-employment obligations for the Group\u2019s plans are shown below:
December 31, 2023 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.90% | 4.00% | 3.90% | 3.20% | 2.00% |
Inflation rate | 2.10% | 1.50% | 2.10% | 2.20% | 2.00% |
December 31, 2022 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.12% | 4.00% | 3.12% | 3.40% | 2.24% |
Inflation rate | 2.20% | 1.50% | 2.20% | 2.20% | 2.00% |
Through its defined benefit plans, the Group is exposed to a number of risks, the most relevant are detailed below:
Changes in bond yields: a decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plan\u2019s bond holdings.
Salary risk: the majority of the plan\u2019s benefit obligations are calculated by reference to the future salaries of plan members. As such, a higher-than-expected salary increase of plan members will lead to higher liabilities.
Longevity risk: pension plans provide for benefits for the life of the plan members, so increases in life expectancy will result in an increase in the plan\u2019s liabilities.
The actuary has performed a sensitivity analysis on the above actuarial assumptions. As such, both the discount rate and the inflation rate were altered by 50 basis points. A change in the estimates used does not lead to a material impact on the consolidated financial statements.
24. Trade and other payables
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Trade payables | 163,411 | 140,003 |
Employee benefit liabilities | 38,026 | 29,725 |
VAT payables | 1,498 | 1,186 |
Other payables | 2,175 | 2,080 |
Other payables | 41,698 | 32,992 |
TOTAL TRADE AND OTHER PAYABLES | 205,110 | 172,995 |
Increase in trade and other payables relates mainly to higher outstanding payables at year-end as a result of the significant investment projects launched during 2023.
25. Other liabilities
The other non-current liabilities relate to put options granted to third parties with respect to the remaining non-controlling interests in Natural Balance Foods Ltd., where these put options give holders the right to sell (part of) their investment in this subsidiary. At the end of December 2023, Lotus Bakeries held 97.9% of the shares, with the remaining 2.1% still held by the founders.
These put options are unconditional and the exercise price depends on the future financial performance (revenue and operating result) of Natural Balance Foods Ltd. In accordance with IAS 32, where non-controlling interests hold put options giving them the right to sell their investment, a financial liability is recorded for the present value of the exercise price expected to be paid. These put options are classified as level 3 instruments in accordance with the fair value hierarchy of IFRS 7 \u2013 Financial Instruments: Disclosures.
The counterpart of this liability Is a cancellation of the underlying non-controlling interest. The difference between the value of the non-controlling interest and the fair value of the liability is added to the consolidated reserves, which are included in shareholders\u2019 equity.
The other current liabilities include mainly accrued expenses and deferred income.
26. Financial instruments and financial risk management
26.1 Accounting policy relating to financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value and financial assets at amortised cost. The classification depends on the entity\u2019s business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.
Regular purchases and sales of financial assets are recognised on the trade date \u2013 the date on which the Group commits to purchase or sell an asset.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets at amortised cost
Financial assets (such as loans, trade receivables, cash and cash equivalents) are subsequently measured at amortised cost using the effective interest method, less any impairment if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest.
Trade and other receivables after and within one year are recognised initially at fair value and subsequently measured at amortised cost, i.e. at the net present value of the receivable amount, using the effective interest rate method, less allowances for impairment.
The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. For trade receivables, the Group applies the simplified approach in accordance with IFRS 9 \u2013 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The amount of the allowance is deducted from the carrying amount of the asset and is recognised in the statement of profit or loss under \u2018Impairment on inventories and trade receivables\u2019.
Financial assets at fair value
Financial assets at fair value consist of equity instruments held in companies in which the Group does not exercise control nor significant influence.
An irrevocable election can be made at initial recognition to measure the investment subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. This classification is determined on an instrument-by-instrument basis. As such, changes in fair value are directly recognised in a separate component of other comprehensive income. For listed companies, the share price is the best estimate of the fair value. Investments for which no fair value can be determined, are recognised at historical cost.
The Group assesses at each reporting date whether there is objective evidence that the asset is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
26.2 Accounting policy relating to financial liabilities
Financial liabilities (including interest-bearing financial liabilities, trade payables and other financial liabilities) are classified at amortised cost, except for derivative instruments. However, currently, the Group does not hold any derivative positions.
Interest-bearing financial liabilities are initially recognised at fair value less direct attributable transaction costs. After initial recognition, the interest-bearing financial liabilities are recognised at the amortised cost price based on the effective interest rate method.
Trade payables and other debts are recognised at their nominal value. A financial obligation is derecognised once the obligation is fulfilled, settled or lapsed.
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
26.3 Overview of financial instruments
The table below summarises all financial instruments by category in accordance with IFRS 9:
IN THOUSANDS OF EUR | IFRS 9 category | December 31, 2023 | December 31, 2022 |
Non-current financial assets | 27,504 | 16,806 | |
Investments in other companies | At fair value through OCI | 27,504 | 16,806 |
Current financial assets | 272,699 | 187,190 | |
Trade receivables | At amortised cost | 141,468 | 110,755 |
Cash and cash equivalents | At amortised cost | 131,231 | 76,435 |
TOTAL FINANCIAL ASSETS | 300,203 | 203,995 | |
Non-current financial liabilities | 277,635 | 197,938 | |
Interest-bearing liabilities | At amortised cost | 275,834 | 196,066 |
Derivative financial instruments | Designated in a cash flow hedge | - | 107 |
Other non-current liabilities | At fair value through P&L | 1,801 | 1,765 |
Current financial liabilities | 178,068 | 210,181 | |
Interest-bearing liabilities | At amortised cost | 14,657 | 70,178 |
Trade payables | At amortised cost | 163,411 | 140,003 |
TOTAL FINANCIAL LIABILITIES | 455,703 | 408,118 |
The fair value of the financial assets and liabilities measured at amortised cost approximate their carrying amount.
The financial instruments measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include input for the asset or liability that are not based on observable market data (unobservable input).
The fair values of the derivatives of the Group are based on level 2 inputs as defined under IFRS 7.27.
The fair value of the other non-current liabilities (put options, see note 25) is based on level 3 input.
No transfers between the different fair value hierarchy levels took place in 2023 and 2022.
Till 2022, the Group used financial derivatives to cover risks from adverse exchange rate and interest rate fluctuations. No derivatives were used for trading purposes. The following table presents an overview of the derivative instruments outstanding at reporting date:
Fair value
Notional amounts
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 |
Designated in a cash flow hedge | ||||
Interest rate swaps | - | 107 | - | 27,000 |
TOTAL DERIVATIVEFINANCIAL LIABILITIES | - | 107 | - | 27,000 |
The derivative instruments presented in the table above are all designated in a cash flow hedge relationship.
26.4 Financial risk management
The Group\u2019s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and commodity price risk), credit risk and liquidity risk.
Currency risk
The functional currency of the Company is EUR, which is also the Group\u2019s reporting currency. Translation gains or losses that result from remeasuring foreign subsidiaries\u2019 local currencies to EUR are recorded in other comprehensive income. Foreign currency transactions resulting in gains or losses are recorded in the consolidated statement of profit or loss.
As the Group is operating in various jurisdiction with different currencies, the Group is subject to foreign currency risks. The main foreign currency transactions (mainly sales and purchase transactions) take place in USD, GBP, SEK, ZAR, CNY, KRW, CZK and CHF. The Group did not enter into any currency hedging arrangements in order to cover this risk.
The Group actively monitors its transactional currency exposures and consequently takes actions to mitigate any risks related to the outstanding foreign currency positions.
The following table presents the carrying amounts of the Group\u2019s main foreign currency denominated monetary assets and monetary liabilities at the end of 2023:
IN THOUSANDS OF EUR | Assets | Liabilities |
EUR | 643,084 | (846,025) |
USD | 156,986 | (136,048) |
GBP | 42,314 | (27,097) |
THB | 11,889 | (13,871) |
ZAR | 9,309 | (10,679) |
CNY | 8,177 | (1,982) |
SEK | 5,961 | (15,770) |
KRW | 3,471 | (173) |
CHF | 1,495 | (200) |
CZK | 1,227 | (633) |
Interest rate risk
The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
As the Group only has fixed rate financial instruments at year-end 2023, it considers this risk to be limited and therefore no sensitivity analysis has been prepared.
Commodity price risk
Commodity price risk arises from transactions to purchase raw materials and energy on the market. The risk relates to the exposure of the Group to fluctuations in the prices of commodities which are necessary for the manufacturing of products.
To mitigate the risk of unfavourable price evolutions, the Group enters into forward agreements with fixed prices for the key commodities (executory contracts) and closely monitors the price trends on the market.
At year-end 2023, the Group did not enter into any hedging arrangements in order to cover this risk.
Credit risk
Credit risk is the risk that one party to an agreement will cause a financial loss to another party by failing to discharge its obligation. Credit risk covers trade receivables, cash and cash equivalents, short-term deposits and other financial assets.
The credit risk is managed on a group basis. It is the Group\u2019s policy to deal with creditworthy partners to avoid significant risk exposure.
The Group has a diversified international customer portfolio, consisting mainly of large retail, cash-and-carry and foodservice companies in various countries. For export outside Europe, the US, South Korea and China, the Group requires the use of letters of credits or credit insurance. Strict procedures and rules are in place to accurately monitor customers and mitigate and manage any potential risks as quickly and effectively as possible.
For trade receivables, an impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type).
Available liquidities are placed with several highly reputable financial institutions.
The maximum credit risk to which the Group is theoretically exposed as at the reporting date is the carrying amount of the financial assets.
Liquidity risk
The Group manages liquidity risk by maintaining adequate reserves and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The Group\u2019s main sources of cash inflows are currently obtained through capital increases and external financing through bank loans from Belgian and international financial institutions.
The following table details the Group\u2019s remaining contractual maturity of its financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.
December 31, 2023 | |||
IN THOUSANDS OF EUR | Within one year | > 1 and < 5 years | > 5 years |
Bank loans | 9,623 | 165,977 | 108,507 |
Lease liabilities | 5,644 | 12,438 | 3,298 |
December 31, 2022 | |||
IN THOUSANDS OF EUR | Within one year | > 1 and < 5 years | > 5 years |
Bank loans | 66,540 | 176,615 | 12,950 |
Lease liabilities | 4,398 | 10,087 | 3,557 |
The unused committed credit lines amounted to EUR 150,100 thousands at year-end 2023 (2022: EUR 193,100 thousands).
27. Related parties
A list of all Group companies is provided in note 32. Further details of the shareholding structure of Lotus Bakeries NV as at December 31, 2023 are disclosed in the Corporate Governance Statement in Part 1 of the 2023 annual report of Lotus Bakeries.
Balances and transactions between Lotus Bakeries NV and its subsidiaries, which are related parties of the Company, have been eliminated in consolidation and are not disclosed in this note.
Key management personnel is composed of all members of the Board of Directors and members of the Executive Committee. For information on the remuneration of the CEO, the remuneration of the executive managers and the remuneration of the board members in 2023, we refer to the remuneration report included in Part 1 of the 2023 annual report.
Apart from the key management remuneration, no significant transactions occurred with related parties.
28. Commitments
Capital commitments
As at December 31, 2023, the Group has EUR 74,760 thousands of commitments (2022: EUR 15,122 thousands) for the acquisition of property, plant and equipment.
Contracts for raw materials and finished products
Purchased but not yet delivered raw materials and finished products in 2024 and 2025 are detailed below:
IN THOUSANDS OF EUR | 2023 | 2022 |
Less than one year | 156,499 | 112,971 |
More than one year and less than five years | 28,085 | 34,244 |
Total | 184,584 | 147,215 |
Other rights and commitments
Bank guarantees as at December 31, 2023 amounted to EUR 1,905 thousands (2022: EUR 1,543 thousands).
Lotus Bakeries commits itself not to dispose of, mortgage or pledge any fixed assets without prior consultation with the credit-granting institutions. These assets serve as guarantee for the loans (\u2018full negative pledge\u2019).
29. Subsequent events
No significant events have occurred since December 31, 2023 which would have a material impact on the 2023 financial statements.
30. Management responsibility statement
We hereby certify that, to the best of our knowledge, the consolidated financial statements for the year ended December 31, 2023, which have been prepared in accordance with IFRS (International Financial Reporting Standards), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the subsidiaries included in the consolidation as a whole, and that the annual report includes a fair review of the important events that have occurred during the year 2023 and of the major transactions with the related parties, and their impact on the consolidated financial statements, together with a description of the principal risks and uncertainties with which the company is confronted.
Lembeke, March 28, 2024
On behalf of the Board of Directors
Jan Boone, CEO
31. Audit fees
IN THOUSANDS OF EUR | 2023 | 2022 |
Audit fees | ||
Lotus Bakeries NV | 145 | 152 |
Lotus Bakeries Group | 456 | 443 |
Additional services rendered by the Auditor or its related parties | ||
Other audit-related fees | 131 | 111 |
Tax fees | 38 | 43 |
Other non-audit fees | 181 | 50 |
TOTAL | 951 | 799 |
32. Consolidation scope
NAME | Address | VAT or national number | 2023 | 2022 |
% | % | |||
Lotus Bakeries Belgi\u00eb NV | Gentstraat 52, 9971 Lembeke, BE | VAT BE 0421.694.038 | 100.00 | 100.00 |
Interwaffles SA | Rue de Li\u00e8ge 39, 6180 Courcelles, BE | VAT BE 0439.312.406 | 100.00 | 100.00 |
Lotus Bakeries Corporate NV | Gentstraat 1, 9971 Lembeke, BE | VAT BE 0881.664.870 | 100.00 | 100.00 |
Lotus Bakeries NV | Gentstraat 1, 9971 Lembeke, BE | VAT BE 0401.030.860 | 100.00 | 100.00 |
Cremers-Ribert NV | Gentstraat 52, 9971 Lembeke, BE | VAT BE 0427.808.008 | 100.00 | 100.00 |
B.W.I. BV | Ambachtenstraat 5, 9900 Eeklo, BE | VAT BE 0898.518.522 | - | 100.00 |
Biscuiterie Willems BV | Nieuwendorpe 33 Bus C, 9900 Eeklo, BE | VAT BE 0401.006.413 | 100.00 | 100.00 |
Lotus Bakeries France SAS | Place du Ch\u00e2teau 9 bis, 59560 Comines, F | VAT FR93 320 509 755 | 100.00 | 100.00 |
Biscuiterie Vander SAS | Place du Ch\u00e2teau 9 bis, 59560 Comines, F | VAT FR28 472 500 941 | 100.00 | 100.00 |
Biscuiterie Le Glazik SAS | 815 Avenue du Pays Glazik, 29510 Briec-de-l\u2019Odet, F | VAT FR95 377 380 985 | 100.00 | 100.00 |
Enkhuizer Koekfabriek BV | Oosterdijk 3e, 1601 DA Enkhuizen, NL | VAT NL823011112B01 | 100.00 | 100.00 |
Koninklijke Peijnenburg BV | Nieuwendijk 45, 5664 HB Geldrop, NL | VAT NL003897187B01 | 100.00 | 100.00 |
Peijnenburg's Koekfabrieken BV | Nieuwendijk 45, 5664 HB Geldrop, NL | VAT NL001351576B01 | 100.00 | 100.00 |
WK Koek Bakkerij BV | Streek 71, 8464 NE Sintjohannesga, NL | VAT NL006634151B01 | 100.00 | 100.00 |
WK Koek Beheer BV | Streek 71, 8464 NE Sintjohannesga, NL | VAT NL006634199B01 | 100.00 | 100.00 |
Lotus Bakeries Nederland BV | Nieuwendijk 45, 5664 HB Geldrop, NL | VAT NL004458953B01 | 100.00 | 100.00 |
Lotus Bakeries GmbH | Ro\u00dfstra\u00dfe 92, 40476 Dusseldorf, DE | VAT DE 811 842 770 | 100.00 | 100.00 |
Lotus Bakeries R\u00e9assurances SA | 74, Rue de Merl, 2146 Luxembourg, L | R.C.S. Luxembourg B53262 | 100.00 | 100.00 |
Lotus Bakeries International und Schweiz AG | Neuhofstrasse 24, 6340 Baar, CH | VAT CHE-105.424.218 | 100.00 | 100.00 |
FF2032 AG | Neuhofstrasse 24, 6340 Baar, CH | VAT CHE-241.819.783 | 100.00 | 100.00 |
Lotus Bakeries CZ s.r.o. | Americk\u00e1 415/36, 120 00 Praha 2, CZ | VAT CZ 271 447 55 | 100.00 | 100.00 |
NAME | Address | VAT or national number | 2023 | 2022 |
% | % | |||
Lotus Bakeries North America Inc. | 1000 Sansome Street Suite 350, San Francisco, CA 94111-1323, USA | IRS 94-3124525 | 100.00 | 100.00 |
Lotus Bakeries US, LLC | 2010 Park Center Drive, Mebane, NC 27302, USA | IRS 82-1300286 | 100.00 | 100.00 |
Lotus Bakeries US Manufacturing, LLC | 2010 Park Center Drive, Mebane, NC 27302, USA | IRS 82-2542596 | 100.00 | 100.00 |
Lotus Bakeries Austria GmbH | Fleischmarkt 1/6/12, 1010 Wien, AT | VAT ATU72710827 | 100.00 | 100.00 |
Lotus Bakeries UK Ltd. | First Floor Premises, Whitecroft House, 51 Water Lane, Wilmslow, Cheshire SK9 5BQ, UK | VAT GB 896 168 761 | 100.00 | 100.00 |
Natural Balance Foods Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 841 254 348 | 97.90 | 97.90 |
Urban Fresh Foods Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 883 060 032 | 100.00 | 100.00 |
The Kids Food Company Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 977 396 157 | 100.00 | 100.00 |
Peter's Yard Wholesale Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 938 740 100 | 100.00 | 100.00 |
Lotus Bakeries Espana S.L. | C/ Severo Ochoa, 3, 2\u00aa Oficina 8A, 28232 Las Rozas (Madrid), ES | VAT ESB80405137 | 100.00 | 100.00 |
AB Annas Pepparkakor | Radiov\u00e4gen 23, 135 48 Tyres\u00f6, SE | VAT SE556149914501 | 100.00 | 100.00 |
Annas - Lotus Bakeries Holding AB | Radiov\u00e4gen 23, 135 48 Tyres\u00f6, SE | Registration no. 556757-7241 | 100.00 | 100.00 |
Lotus Bakeries Asia Pacific Ltd. | 5/F, Manulife, 348 Kwun Tong Road, Kowloon, HK | Inland Revenue Department file no. 22/51477387 | 100.00 | 100.00 |
Lotus Bakeries China Ltd. | Room 01.02.06, Floor 15, No. 511 Weihai Road, Jing'an Disctrict, Shanghai 200041, P.R. CN | Registration no. 913100000781169357 | 100.00 | 100.00 |
Lotus Bakeries Italia S.r.l. | Regus Dante Cairoli, Via Dante 16, Quartiere Castello, 20121 Milan, IT | VAT IT03029890211 | 100.00 | 100.00 |
Lotus Bakeries Korea Co. Ltd. | 4th FI, AIA Tower, 16 Tongil-ro-2-gil, Jung-gu, Seoul 04511, KR | Registration no. 128-81-19621 | 100.00 | 100.00 |
Lotus South Africa Manufacturing Ltd. | Erf 4109 Voortrekker Road, Wolseley, Western Cape 6830, ZA | VAT 4190279762 | 100.00 | 100.00 |
Lotus Asia Pacific Manufacturing Ltd. | No. 1106, Summer Hill, 3rd Floor, Unit TT11, Sukhumvit Road, Phrakhanong SubDistrict, Klongtoey District, 10110 Bangkok, TH | VAT 0105565109964 | 100.00 | 100.00 |
Lotus Bakeries Japan G.K. | Regus Shiodome \u2013 office, no. 149, 3F Shiodome Building, 1-2-20 Kaigan, Minato-Ku, 105-0022 Tokyo, JP | VAT 4010403030721 | 100.00 | - |
Lotus Bakeries Australia PTY Ltd. | Regus Darling Park, Tower, 2, Level 20 & 21, 201, Sussex Street, Sydney NSW 2000, AU | 665 233 545 (ACN) | 100.00 | - |
33. Alternative performance measures
REAT
REAT is defined as the recurring earnings after tax and is determined by excluding the non-recurring income and expenses and the related tax effects from the net result. REAT is used as the basis for dividend distribution.
IN THOUSANDS OF EUR | 2023 | 2022 |
Net result | 129,333 | 103,283 |
Non-recurring income and expenses | 2,544 | 3,807 |
Tax effect on non-recurring income and expenses | (558) | (873) |
REAT | 131,319 | 106,216 |
REBIT
REBIT (recurring operating result) is defined as the operating result after deducting the non-recurring income and expenses.
REBITDA
REBITDA is defined as the REBIT adjusted for depreciations and amortisation expenses, impairments on inventories and trade receivables and non-cash costs related to share-based payment plans.
IN THOUSANDS OF EUR | 2023 | 2022 |
Operating result (EBIT) | 170,430 | 136,381 |
Non-recurring income and expenses | 2,544 | 3,807 |
REBIT | 172,974 | 140,188 |
Depreciation and amortisation expenses | 32,857 | 25,245 |
Impairment on inventories and trade receivables | 1,226 | 3,992 |
Other | 470 | 484 |
REBITDA | 207,527 | 169,909 |
Non-recurring income and expenses
Non-recurring income and expenses are those items that are considered by management not to relate to transactions, projects and adjustments to the value of assets and liabilities taking place in the ordinary course of activities of the Company. Non-recurring income and expenses are presented separately, due to their size or nature, so as to allow users of the consolidated financial statements of the Company to get a better understanding of the normalised performance of the Company.
Non-recurring income and expenses relate to:
expenses relating to business combinations and other acquisitions of investments;
changes to the Group structure, including costs related to the liquidation of subsidiaries and the closure, opening or relocations of activities; and
impairment of assets and major litigations.
As from reporting year 2024, the non-recurring items will be referred to as \u2018Adjusting items to the operating result\u2019. However, the scope of this reporting line item will not change.
Net financial debt
Net financial debt is defined as interest-bearing liabilities (excluding lease liabilities recognised in accordance with IFRS 16) deducted with cash and cash equivalents, term deposits and treasury shares.
IN THOUSANDS OF EUR | 2023 | 2022 |
Interest-bearing liabilities (note 22) | 290,491 | 266,244 |
Minus lease liabilities recognised as a result of IFRS 16 (note 22) | (19,991) | (17,241) |
Minus cash and cash equivalents (note 19) | (131,231) | (76,435) |
Minus treasury shares (note 21) | (18,797) | (18,976) |
NET FINANCIAL DEBT | 120,472 | 153,591 |
*Acting on behalf of Lien Winne BV
1.1 Basis of presentation
The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU).
These consolidated financial statements are presented in thousands of EUR and present the financial situation as at December 31, 2023. Due to rounding, numbers presented throughout these consolidated financial statements may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
The accounting principles have been consistently applied to all periods presented and are consistent with those applied in the audited consolidated financial statements for the year ended December 31, 2022 of the Group.
The consolidated financial statements have been prepared based on the historical cost methodology, except for certain financial instruments for which the fair value is used.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralInformationAboutFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f74749": { "value": "The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU).
These consolidated financial statements are presented in thousands of EUR and present the financial situation as at December 31, 2023. Due to rounding, numbers presented throughout these consolidated financial statements may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
The accounting principles have been consistently applied to all periods presented and are consistent with those applied in the audited consolidated financial statements for the year ended December 31, 2022 of the Group.
The consolidated financial statements have been prepared based on the historical cost methodology, except for certain financial instruments for which the fair value is used.
These financial statements are prepared on an accrual basis and on the assumption that the Group is in going concern and will continue in operation in the foreseeable future.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfConsolidationExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f74750": { "value": "The consolidated financial statements of the Group have been prepared in accordance with the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU).
These consolidated financial statements are presented in thousands of EUR and present the financial situation as at December 31, 2023. Due to rounding, numbers presented throughout these consolidated financial statements may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
The accounting principles have been consistently applied to all periods presented and are consistent with those applied in the audited consolidated financial statements for the year ended December 31, 2022 of the Group.
The consolidated financial statements have been prepared based on the historical cost methodology, except for certain financial instruments for which the fair value is used.
These financial statements are prepared on an accrual basis and on the assumption that the Group is in going concern and will continue in operation in the foreseeable future.
", "dimensions": { "concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f74889": { "value": "These financial statements are prepared on an accrual basis and on the assumption that the Group is in going concern and will continue in operation in the foreseeable future.", "dimensions": { "concept": "ifrs-full:DisclosureOfGoingConcernExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f74919": { "value": "The Group has adopted the following relevant new standards, amendments to standards or interpretations for the first time for the financial year beginning January 1, 2023 and have been endorsed by the European Union:
Amendments to IAS 1 \u2013 Presentation of Financial Statements and IFRS Practice Statement 2:Disclosure of Accounting policies. The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and
changes in accounting policies. The IAS 1 amendment requires companies to disclose their material accounting policy information rather than their significant accounting policies. Further, the amendment to IAS 1 clarifies that immaterial accounting policy information need not be disclosed. To support this amendment, the Board also amended IFRS Practice Statement 2, \u2018Making Materiality Judgements\u2019, to provide guidance on how to apply the concept of materiality to accounting policy disclosures. Lotus Bakeries has reviewed the accounting policies reported in the prior years. This has resulted in retaining only the accounting policies which are deemed have a material impact on the consolidated financial statements or to be relevant for an understanding of the Group\u2019s business. In this context, the Group has also restructured the presentation of these accounting policies.
Amendments to IAS 8 \u2013 Accounting policies, Changes in Accounting Estimates and Errors:Definition of Accounting Estimates. The amendments to IAS 8 clarify how companies should distinguish changes in accounting policies from changes in accounting estimates. These amendments did not have an impact on the current consolidated financial statements.
Amendments to IAS 12 \u2013 Income Taxes:Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The main change in the amendments is an exemption from the initial recognition exemption of IAS 12. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. These amendments did not have an impact on the current consolidated financial statements as the Group already recognised deferred taxes on a gross basis on its right-of-use assets and lease liabilities.
Amendments to IAS 12 \u2013 Income Taxes: International Tax Reform \u2013 Pillar Two Model Rules. The amendments provide a temporary mandatory relief from accounting for deferred tax that arises from legislation implementing the GloBE model rules. More details on the impact of Pillar Two have been disclosed in note 11 relating to income taxes.
The following relevant new standards, amendments to standards or interpretations have been published, but are not yet mandatory for the first time for the financial year beginning January 1, 2023, and have not been early adopted:
Amendments to IAS 1 \u2013 Presentation of Financial Statements:Classification of Liabilities as current or non-current (effective January 1, 2023, but not yet endorsed in EU), affect only the presentation of liabilities in the statement of financial position \u2014 not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. The amendments provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.
The Group does not expect that the above-mentioned new pronouncements will have a material impact on the consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesAccountingEstimatesAndErrorsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f74920": { "value": "The Group has adopted the following relevant new standards, amendments to standards or interpretations for the first time for the financial year beginning January 1, 2023 and have been endorsed by the European Union:
Amendments to IAS 1 \u2013 Presentation of Financial Statements and IFRS Practice Statement 2:Disclosure of Accounting policies. The amendments aim to improve accounting policy disclosures and to help users of the financial statements to distinguish between changes in accounting estimates and
changes in accounting policies. The IAS 1 amendment requires companies to disclose their material accounting policy information rather than their significant accounting policies. Further, the amendment to IAS 1 clarifies that immaterial accounting policy information need not be disclosed. To support this amendment, the Board also amended IFRS Practice Statement 2, \u2018Making Materiality Judgements\u2019, to provide guidance on how to apply the concept of materiality to accounting policy disclosures. Lotus Bakeries has reviewed the accounting policies reported in the prior years. This has resulted in retaining only the accounting policies which are deemed have a material impact on the consolidated financial statements or to be relevant for an understanding of the Group\u2019s business. In this context, the Group has also restructured the presentation of these accounting policies.
Amendments to IAS 8 \u2013 Accounting policies, Changes in Accounting Estimates and Errors:Definition of Accounting Estimates. The amendments to IAS 8 clarify how companies should distinguish changes in accounting policies from changes in accounting estimates. These amendments did not have an impact on the current consolidated financial statements.
Amendments to IAS 12 \u2013 Income Taxes:Deferred Tax related to Assets and Liabilities arising from a Single Transaction. The amendments clarify how companies account for deferred tax on transactions such as leases and decommissioning obligations. The main change in the amendments is an exemption from the initial recognition exemption of IAS 12. Accordingly, the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. These amendments did not have an impact on the current consolidated financial statements as the Group already recognised deferred taxes on a gross basis on its right-of-use assets and lease liabilities.
Amendments to IAS 12 \u2013 Income Taxes: International Tax Reform \u2013 Pillar Two Model Rules. The amendments provide a temporary mandatory relief from accounting for deferred tax that arises from legislation implementing the GloBE model rules. More details on the impact of Pillar Two have been disclosed in note 11 relating to income taxes.
The following relevant new standards, amendments to standards or interpretations have been published, but are not yet mandatory for the first time for the financial year beginning January 1, 2023, and have not been early adopted:
Amendments to IAS 1 \u2013 Presentation of Financial Statements:Classification of Liabilities as current or non-current (effective January 1, 2023, but not yet endorsed in EU), affect only the presentation of liabilities in the statement of financial position \u2014 not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities disclose about those items. The amendments provide a more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date.
The Group does not expect that the above-mentioned new pronouncements will have a material impact on the consolidated financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__16-1": { "value": "1.2 Critical accounting judgements and estimates
In order to prepare the financial statements in accordance with IFRS, management has to make judgements, estimates and assumptions which have an impact on the financial statements and notes.
Estimates and judgements made on the reporting date reflect existing conditions on that date (for example: market prices, interest rates and foreign exchange rates). Estimates and judgements are continuously evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Though these estimates are made by management based on maximum knowledge of ongoing business and of the actions that the Group may undertake, the actual results may be different.
The estimates and judgements that could have an impact on the consolidated financial statements are listed below:
Key assumptions used in the impairment test of goodwill and intangible assets (see note 13); and
Key assumptions used in the measurement of post-employment benefits (see note 23).
Nevertheless, the Company does not expect that the above-mentioned accounting judgements and estimates will have a significant impact on the operations of the Group.
Next to the above items, the Company considers climate change and its sustainability commitments as one of the main items to include in the determination of future estimates and judgements. As such, the Company is aware that climate change can create disruptions in the supply chain and in the operating activities. Legislation requires significant investments to reach the sustainability targets defined. Therefore, Lotus Bakeries monitors and assesses how its business impacts the environment and the direct surroundings of its different locations. The Group assesses how sustainable CAPEX investments will impact in the future its cash forecasts, useful lives of assets... Furthermore, the changing customer behaviour to more healthy and sustainable products is considered a key item in identifying opportunities and business developments.
At this stage, the Group does not expect that climate change or other environmental related risks would have a significant impact on the financial statements in the short term. However, the Group monitors closely its consumptions and usage of key commodities to mitigate any potential impact. This will be further elaborated in the context of the implementation of CSRD and ESRS applicable as from 2024. Furthermore, we refer to our SBTi commitment signed in March 2023 which requires that we file and get approval of our targets within 2 years. For this, the base year is 2023 as explained in our Annual Report.
The \u2018Net Zero by 2050\u2019 target requires the Group to reassess its investment strategy and timing and alternatives of both CAPEX and OPEX investments. This will potentially impact the use of resources and available assets. As such, future financial statements would potentially be impacted through a revision of the useful lives of tangible assets, updated cash forecasts in impairment tests, investments in tools and assets improving our ecological footprint.
13.3 Impairment test
Goodwill, representing approximately 18% of the total assets of Lotus Bakeries at December 31, 2023, is tested for impairment every year during the fourth quarter after the budget process (or whenever there is a specific reason to do so) by comparing the carrying amount of each cash-generating unit (CGU) with its recoverable amount. The recoverable amount of a cash-generating unit is determined on the basis of the value in use.
The value in use is determined as the present value of expected future cash flows based on the current long-term planning of the Group. The discount rate used in determining the present value of expected future cash flows is based on a weighted average cost of capital (WACC) before taxes (pre-tax discount rate). The impairment test for goodwill is based on a number of critical judgements, estimates and assumptions.
The assumptions are consistent and reasonable for all cash-generating units, which are mainly located in Europe and the UK:
Revenue and operating result: revenue and operating result reflect management\u2019s expectations based on past experience and taking into account the risks specific to the reportable business unit;
The first year of the model is based on the budget for the year as approved by the board of directors, taking into account historical results and is management\u2019s best estimate of the free cash flow outlook for the current year;
In years two to three of the model, free cash flows are based on Lotus Bakeries\u2019 long-term plan. The long-term plan is prepared country by country, based on reasonable internal plans that take into account the specific market situation and the past;
Cash flows beyond the first three years are extrapolated by applying a perpetual growth rate;
Projections are discounted at the pre-tax weighted average cost of capital (WACC). The WACC has been determined by jurisdiction and considering the specific risks related to each CGU. Main inputs include risk-free rate, market risk, risk premium and the cost of debt.
The impairment test is highly sensitive to the key assumptions, pre-tax discount rate and perpetual growth rate, which are detailed below:
Pre-tax discount rate 2023 | Pre-tax discount rate 2022 | Perpetual growth rate 2023 | Perpetual growth rate 2022 | |
Lotus\u2122 Natural Foods CGU's | 8.9%-9.4% | 7.1%-7.5% | 2.0% | 4.0%-5.0% |
Other CGU's | 7.6%-9.5% | 6.1%-7.3% | 2.0% | 1.5%-3.0% |
At the end of 2023, Lotus Bakeries has completed its annual impairment test of goodwill. The discount rates have been updated to reflect the overall increase of the risk-free rates on the market. Furthermore, the perpetual growth rates have been aligned to the long-term targeted inflation rates instead of the company-specific estimated long-term growth rates. These changes in key assumptions have impacted negatively the different headrooms, but did not result in any impairment loss.
As part of the impairment test, the Company carried out a sensitivity analysis for the key assumptions used, i.e. the pre-tax discount rate and perpetual growth rate. Here, a decrease in the perpetual growth rate by 100 basis points and an increase in the pre-tax discount rate by 100 basis points were applied. A change in the key assumptions used, as described above, does not lead to an impairment loss.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are suitable, actual results may differ from these estimates in the event of changed assumptions and conditions.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
Investments in software and licences are amortised over a period of three to five years.
At year-end 2023, the Group tested the value of these brands to assess any recoverability issues. Taking into account the assumptions used, the value in use of the related cash-generating units exceeds its carrying amount and no impairment loss is recognised.
For more details on the impairment test conducted per CGU, we refer to note 13 on goodwill.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are reasonable, actual results may differ from these estimates in the event of changed assumptions and conditions.
For the defined benefit pension plan, the liabilities are measured on a discounted basis because they are settled many years after the employees render the related service. A qualified actuary has determined the present value of the defined benefit obligations and the fair value of the plan assets. These assets are held by an insurance company. The projected unit credit method was used to estimate the defined benefit obligations, the defined benefit cost and the remeasurements of the net liability. Provisions are determined by computing the actuarial value of future payments to the employees in question.
The plan assets consist of insurance contracts. The actual return on plan assets amounted to EUR -239 thousands for 2023 (2022: EUR -1,464 thousands).
Expected contributions to post-employment benefit plans for the year ending December 31, 2024 are EUR 538 thousands.
The principal assumptions used in determining post-employment obligations for the Group\u2019s plans are shown below:
December 31, 2023 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.90% | 4.00% | 3.90% | 3.20% | 2.00% |
Inflation rate | 2.10% | 1.50% | 2.10% | 2.20% | 2.00% |
December 31, 2022 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.12% | 4.00% | 3.12% | 3.40% | 2.24% |
Inflation rate | 2.20% | 1.50% | 2.20% | 2.20% | 2.00% |
Through its defined benefit plans, the Group is exposed to a number of risks, the most relevant are detailed below:
Changes in bond yields: a decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plan\u2019s bond holdings.
Salary risk: the majority of the plan\u2019s benefit obligations are calculated by reference to the future salaries of plan members. As such, a higher-than-expected salary increase of plan members will lead to higher liabilities.
Longevity risk: pension plans provide for benefits for the life of the plan members, so increases in life expectancy will result in an increase in the plan\u2019s liabilities.
The actuary has performed a sensitivity analysis on the above actuarial assumptions. As such, both the discount rate and the inflation rate were altered by 50 basis points. A change in the estimates used does not lead to a material impact on the consolidated financial statements.
The fair value of the financial assets and liabilities measured at amortised cost approximate their carrying amount.
The financial instruments measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include input for the asset or liability that are not based on observable market data (unobservable input).
The fair values of the derivatives of the Group are based on level 2 inputs as defined under IFRS 7.27.
The fair value of the other non-current liabilities (put options, see note 25) is based on level 3 input.
", "dimensions": { "concept": "ifrs-full:DisclosureOfAccountingJudgementsAndEstimatesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__164-1": { "value": "1.3 Consolidation principles
The consolidated financial statements comprise the financial statements of Lotus Bakeries NV and its subsidiaries (collectively referred to as the \u2018Group\u2019). Intercompany balances and transactions between Group companies are eliminated.
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group has control over an investee when it is exposed to, or has the right to, variable returns arising from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are included in the consolidation scope as from the date that the Group obtains control until the date such control ceases.
Acquisition of subsidiaries is accounted for according to the acquisition method. The cost of the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The cost includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities assumed and contingent liabilities assumed in a business combination are measured initially at their fair value at acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. The excess of the cost of the acquisition over the fair value of the Group\u2019s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary in the case of a bargain purchase, the difference is recognised directly in the statement of profit or loss.
The financial statements of the subsidiaries have the same financial year as the Company and are prepared in accordance with the accounting principles of the Group.
Liabilities related to put options granted to non-controlling interests
The Group granted put options to non-controlling interests in a subsidiary, giving the holders the right to sell part or all of their investment in the subsidiary to the Company. This put option on non-controlling interests (own equity instrument) gives rise to a gross liability that is initially recognised against equity and measured at the present value of the redemption amount (exercise price) in accordance with IAS 32 \u2013 Financial Instruments: presentation. This financial liability is included in the other non-current liabilities. This gross liability is subsequently measured at fair value. The difference between the value of the non-controlling interest and the fair value of the liability is allocated to the retained earnings (Group share), which are included in shareholders\u2019 equity.
This liability is adjusted at the end of each reporting period to reflect changes in the estimated exercise price of the option and the carrying amount of non-controlling interests. If the option comes to maturity without exercising, the liability is derecognised against non-controlling interests and retained earnings (Group share).
1.4 Foreign currencies
Items included in the financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u2018the functional currency\u2019). The consolidated financial statements are presented in euro, the Group\u2019s reporting currency.
Transactions in foreign currencies
Transactions in foreign currencies are translated into the functional currency using the exchange rate applicable on the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the closing rate on the reporting date. Resulting foreign exchange gains and losses are recognised in the statement of profit or loss.
Foreign exchange gains and losses that relate to interest-bearing liabilities and cash and cash equivalents are presented in the statement of profit or loss within the financial result. All other foreign exchange gains and losses are presented in the statement of profit or loss within operating result.
Financial statements of foreign entities
For foreign entities using a different functional currency than the euro:
assets and liabilities are translated to the euro using the exchange rate on the reporting date;
items of income and expenses are translated at average exchange rate; and
equity items are translated at the historical exchange rate.
The resulting translation differences are recognised in other comprehensive income and accumulated in a separate component of equity (translation differences). These translation differences remain in equity up to the disposal of the relevant entity. In case of disposal, the accumulated amount in equity is reclassified to the statement of profit or loss as part of the result on disposal of the relevant foreign activity.
Goodwill arising from the acquisition of a foreign entity and fair value adjustments to the carrying amount of the acquired assets and liabilities at the date of acquisition, are considered as assets and liabilities of the foreign activity and are translated at the exchange rate on the reporting date.
The Group has no entities in hyperinflationary economies.
Exchange rates
The following exchange rates were used in preparing the financial statements:
Closing rate | average rate | |||
2023 | 2022 | 2023 | 2022 | |
EUR/CHF | 0.926 | 0.985 | 0.972 | 1.005 |
EUR/CNY | 7.851 | 7.358 | 7.662 | 7.075 |
EUR/CZK | 24.724 | 24.116 | 24.000 | 24.570 |
EUR/GBP | 0.869 | 0.887 | 0.870 | 0.852 |
EUR/KRW | 1,433.660 | 1,344.090 | 1,413.178 | 1,357.681 |
EUR/SEK | 11.096 | 11.122 | 11.477 | 10.624 |
EUR/THB | 37.973 | 36.835 | 38.278 | 36.800 |
EUR/USD | 1.105 | 1.067 | 1.082 | 1.054 |
EUR/ZAR | 20.348 | 18.099 | 19.957 | 17.210 |
1.5 Material accounting policies
The material accounting policies applied by the Group are disclosed in the relevant notes as a separate paragraph.
3.1 Accounting policy
Group revenue is centralised around a number of products that are all included in the traditional and natural snack segment. For these products, the Group is organised according to geographical regions for sales, production and internal reporting.
The result of a segment includes the income and expenses directly generated by a segment as well as the portion of the income and expenses that can be reasonably attributed to the segment. Intersegment price-fixing is defined based on the \u2018at arm\u2019s length\u2019 principle.
Considering that the chief operating decision maker does not review on a regular basis items of the statement of financial position per segment, segment assets and liabilities are not disclosed.
For the purpose of sales, production and internal reporting, the Group is classified according to geographical regions. As a result of the increased performance of different regions and to sustain future growth, we have reviewed in 2023 the reportable segments and have therefore restated the comparative disclosure to align with the organisational and managerial alignment. Furthermore, aggregation of underlying countries into the below identified reportable segments have been done when such aggregation is consistent with the core principle of IFRS 8, the segments have similar long-term economic characteristics and the segments are similar in each of the following respects:
The nature of products and services;
The nature of the production processes;
The procurement process;
The type or class of customer for their products and services;
The functional currencies of each market;
The methods used to distribute their products or provide their services; and
The nature of the regulatory environment.
The regions presented in the segment reporting, which are based on the internal reporting system, are composed as follows:
Continental Europe: sales by Sales Offices in Continental Europe and intra-group sales by factories in Continental Europe (homogeneous activities within Europe, excluding UK activities, and including Belgium, France and other European countries);
UK: sales by Sales Offices UK, Natural Balance Foods, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard;
Americas: sales by Sales Offices in Americas and intra-group sales by the factory in the United States;
Rest of the world: sales from Belgium to countries without own Sales Office and by own Sales Offices in China and South Korea.
4.1 Accounting policy
Revenue is included in the statement of profit or loss when it is probable that the Group will receive economic benefits from the transaction and the revenue can be measured reliably.
Revenue of the Group is generated principally through the sale of goods with as only performance obligation the delivery of goods. Revenue recognition occurs at a point in time, when control of the asset is transferred to the customer, generally on delivery of the goods.
Customer contracts include trade discounts or volume rebates, which are granted to the customer if the delivered quantities exceed a certain threshold. In these cases, the transaction price includes a variable consideration. The effect of the variable consideration on the transaction price is taken into account in revenue recognition by estimating the probability of the realisation of the discount or rebate for each contract.
In the context of contracts with clients or as a result of business practices, Lotus Bakeries might pay certain amounts to its customer. The payments can be cash, either in the form of rebates or discounts, or could alternatively be a credit or some other form of incentive that reduces amounts owed to Lotus Bakeries by a customer. Amounts paid by Lotus Bakeries to customers on either a limited or a continuous basis may take various forms and are paid for a varying number of reasons, such as discounts, coupons, rebates, co-advertising, slotting or listing fees.
In accordance with IFRS 15, Lotus Bakeries accounts for such consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the entity. It is therefore important to analyse the substance of such payment in order to properly reflect the substance of them, i.e. include in the transaction price of the transaction with the customer (revenue) or consider as a separate transaction (expense).
11.1 Accounting policy
Income taxes include current and deferred taxes. Both taxes are recognised in the statement of profit or loss except if the underlying transaction has been recognised directly in other comprehensive income. If so, the related income taxes are also directly recognised in other comprehensive income.
Current taxes include the amount of tax payable on the taxable earnings for the period calculated at the tax rate applicable on the reporting date. They also include adjustments to income tax liabilities for previous years. In line with IAS 12 \u2013 Income Taxes, management assesses on a periodic basis the positions taken in tax declarations in respect of items subject to interpretation in the tax legislation, and records, if necessary, additional income tax liabilities based on the expected amounts payable to the tax authorities. The assessment is made for all fiscal periods still subject to controls by the authorities.
Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted.
Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset.
The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
13.1 Accounting policy
Goodwill arising from a business combination is initially measured at cost (i.e., the excess between the cost of the business combination and the Group\u2019s interest in the fair value of the identifiable assets acquired, liabilities assumed and contingent liabilities assumed). After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is tested for impairment annually or more often if events or changes in circumstances indicate that the carrying amount may have been impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date onwards, allocated to each of the Group\u2019s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
For sales, production and internal reporting, the Group is organised into geographic regions (see also note 3 Segment reporting). The segments consist of underlying business units. These business units represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These business units are the cash-generating units to which goodwill is allocated.
14.1 Accounting policy
Intangible assets which are acquired separately are measured initially at cost. After initial recognition, intangible assets are measured at cost less accumulated amortisations and impairment losses.
Costs for internally generated intangible assets are recognised in the statement of profit or loss as incurred, unless they meet the criteria to be considered as development costs.
Intangible assets acquired in the context of a business combination are recognised separately in the statement of financial position at their estimated fair value at acquisition date. This concerns brands. The value of these brands was established as part of the valuation at fair value of the asset and liability components upon first consolidation.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
Investments in software and licences are amortised over a period of three to five years.
15.1 Accounting policy
Property, plant and equipment
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses. Cost includes the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of self-produced assets includes direct material costs, direct labour costs and a proportional part of the production overhead.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Depreciation of an asset begins when the asset is available for its intended use.
The estimated useful lives are as follows:
Buildings, incl. warehouses\t25-30 years
Plant and machinery\t15-25 years
Furniture\t15 years
Trucks\t10 years
Office equipment and motor vehicles\t5 years
Computer equipment\t3-5 years
Land is not depreciated considering that it has an indefinite useful life.
The depreciation methods, residual values and the useful lives of the property, plant and equipment is reassessed and adjusted if appropriate, annually.
Leases
A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are recognised as a right-of-use asset and corresponding liability at the date the leased asset is available for use by the Group. The right-of-use assets are presented in the consolidated statement of financial position within the line item \u2018Property, plant and equipment\u2019.
The Group recognises right-of-use assets at cost, which consists of the initial measurement of the corresponding lease liabilities and any initial direct costs less lease incentives received.
These assets are generally depreciated on a straight-line basis over the lease term and are subject to impairment. If it is reasonably certain that the Group will exercise a purchase option, the asset shall be depreciated on a straight-line basis over its useful life.
Lease liabilities are measured at the present value of future lease payments over the lease term.
The lease payments are discounted using the Group\u2019s incremental borrowing rate, i.e. the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, as the interest rate implicit in the lease cannot be readily determined.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
For leases with a term of 12 months or less (short-term leases) or leases of low-value items to which the Group applies the recognition exemptions available in IFRS 16, lease payments are recognised on a straight-line basis as an expense over the lease term.
17.1 Accounting policy
Inventories are measured at the lower of cost and net realisable value.
For raw materials, consumables and goods for resale, cost is measured at the purchase price on a FIFO basis.
The cost of finished products is the standard manufacturing cost price. This includes, in addition to direct production and material costs, a proportional part of the fixed and variable overhead costs based on the normal production capacity.
The net realisable value is defined as the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale.
21.1 Accounting policy
Ordinary shares are classified as equity. Where any Group company purchases the Company\u2019s equity share capital (treasury shares), the consideration paid is deducted from equity attributable to owners of the Company until the shares are cancelled or reissued. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Dividends payable to shareholders of the Company are recognised as a liability in the statement of financial position in the period in which the dividends are approved by the shareholders of the Company.
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.23.1 Accounting policy
Short-term employee benefits
Bonuses for employees and management are calculated based on key financial objectives and individual objectives. The estimated amount of the bonuses is recognised as an expense in the period in which the related services have been rendered based on an estimate on the reporting date.
Post-employment benefits (pension plans)
Group companies operate various pension schemes. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due.
In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Defined benefit costs are divided into 2 categories:
Current service cost, past-service cost, gains and losses on curtailments and settlements; and
Net interest expense or income.
The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income.
26.1 Accounting policy relating to financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value and financial assets at amortised cost. The classification depends on the entity\u2019s business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.
Regular purchases and sales of financial assets are recognised on the trade date \u2013 the date on which the Group commits to purchase or sell an asset.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets at amortised cost
Financial assets (such as loans, trade receivables, cash and cash equivalents) are subsequently measured at amortised cost using the effective interest method, less any impairment if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest.
Trade and other receivables after and within one year are recognised initially at fair value and subsequently measured at amortised cost, i.e. at the net present value of the receivable amount, using the effective interest rate method, less allowances for impairment.
The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. For trade receivables, the Group applies the simplified approach in accordance with IFRS 9 \u2013 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The amount of the allowance is deducted from the carrying amount of the asset and is recognised in the statement of profit or loss under \u2018Impairment on inventories and trade receivables\u2019.
Financial assets at fair value
Financial assets at fair value consist of equity instruments held in companies in which the Group does not exercise control nor significant influence.
An irrevocable election can be made at initial recognition to measure the investment subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. This classification is determined on an instrument-by-instrument basis. As such, changes in fair value are directly recognised in a separate component of other comprehensive income. For listed companies, the share price is the best estimate of the fair value. Investments for which no fair value can be determined, are recognised at historical cost.
The Group assesses at each reporting date whether there is objective evidence that the asset is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
26.2 Accounting policy relating to financial liabilities
Financial liabilities (including interest-bearing financial liabilities, trade payables and other financial liabilities) are classified at amortised cost, except for derivative instruments. However, currently, the Group does not hold any derivative positions.
Interest-bearing financial liabilities are initially recognised at fair value less direct attributable transaction costs. After initial recognition, the interest-bearing financial liabilities are recognised at the amortised cost price based on the effective interest rate method.
Trade payables and other debts are recognised at their nominal value. A financial obligation is derecognised once the obligation is fulfilled, settled or lapsed.
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
Non-recurring income and expenses are those items that are considered by management not to relate to transactions, projects and adjustments to the value of assets and liabilities taking place in the ordinary course of activities of the Company. Non-recurring income and expenses are presented separately, due to their size or nature, so as to allow users of the consolidated financial statements of the Company to get a better understanding of the normalised performance of the Company.
Non-recurring income and expenses relate to:
expenses relating to business combinations and other acquisitions of investments;
changes to the Group structure, including costs related to the liquidation of subsidiaries and the closure, opening or relocations of activities; and
impairment of assets and major litigations.
", "dimensions": { "concept": "ifrs-full:DisclosureOfSummaryOfSignificantAccountingPoliciesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__181-1": { "value": "Subsidiaries
Subsidiaries are entities controlled by the Group. The Group has control over an investee when it is exposed to, or has the right to, variable returns arising from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are included in the consolidation scope as from the date that the Group obtains control until the date such control ceases.
Acquisition of subsidiaries is accounted for according to the acquisition method. The cost of the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The cost includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities assumed and contingent liabilities assumed in a business combination are measured initially at their fair value at acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. The excess of the cost of the acquisition over the fair value of the Group\u2019s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary in the case of a bargain purchase, the difference is recognised directly in the statement of profit or loss.
The financial statements of the subsidiaries have the same financial year as the Company and are prepared in accordance with the accounting principles of the Group.
13.1 Accounting policy
Goodwill arising from a business combination is initially measured at cost (i.e., the excess between the cost of the business combination and the Group\u2019s interest in the fair value of the identifiable assets acquired, liabilities assumed and contingent liabilities assumed). After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is tested for impairment annually or more often if events or changes in circumstances indicate that the carrying amount may have been impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date onwards, allocated to each of the Group\u2019s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
For sales, production and internal reporting, the Group is organised into geographic regions (see also note 3 Segment reporting). The segments consist of underlying business units. These business units represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These business units are the cash-generating units to which goodwill is allocated.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsAndGoodwillExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f76060": { "value": "Subsidiaries
Subsidiaries are entities controlled by the Group. The Group has control over an investee when it is exposed to, or has the right to, variable returns arising from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are included in the consolidation scope as from the date that the Group obtains control until the date such control ceases.
Acquisition of subsidiaries is accounted for according to the acquisition method. The cost of the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The cost includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities assumed and contingent liabilities assumed in a business combination are measured initially at their fair value at acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. The excess of the cost of the acquisition over the fair value of the Group\u2019s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary in the case of a bargain purchase, the difference is recognised directly in the statement of profit or loss.
The financial statements of the subsidiaries have the same financial year as the Company and are prepared in accordance with the accounting principles of the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBusinessCombinationsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f76063": { "value": "Subsidiaries are entities controlled by the Group. The Group has control over an investee when it is exposed to, or has the right to, variable returns arising from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are included in the consolidation scope as from the date that the Group obtains control until the date such control ceases.
Acquisition of subsidiaries is accounted for according to the acquisition method. The cost of the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The cost includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities assumed and contingent liabilities assumed in a business combination are measured initially at their fair value at acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. The excess of the cost of the acquisition over the fair value of the Group\u2019s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary in the case of a bargain purchase, the difference is recognised directly in the statement of profit or loss.
The financial statements of the subsidiaries have the same financial year as the Company and are prepared in accordance with the accounting principles of the Group.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSubsidiariesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__201-1": { "value": "Acquisition of subsidiaries is accounted for according to the acquisition method. The cost of the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The cost includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities assumed and contingent liabilities assumed in a business combination are measured initially at their fair value at acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. The excess of the cost of the acquisition over the fair value of the Group\u2019s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary in the case of a bargain purchase, the difference is recognised directly in the statement of profit or loss.The Group granted put options to non-controlling interests in a subsidiary, giving the holders the right to sell part or all of their investment in the subsidiary to the Company. This put option on non-controlling interests (own equity instrument) gives rise to a gross liability that is initially recognised against equity and measured at the present value of the redemption amount (exercise price) in accordance with IAS 32 \u2013 Financial Instruments: presentation. This financial liability is included in the other non-current liabilities. This gross liability is subsequently measured at fair value. The difference between the value of the non-controlling interest and the fair value of the liability is allocated to the retained earnings (Group share), which are included in shareholders\u2019 equity.
This liability is adjusted at the end of each reporting period to reflect changes in the estimated exercise price of the option and the carrying amount of non-controlling interests. If the option comes to maturity without exercising, the liability is derecognised against non-controlling interests and retained earnings (Group share).
Costs for internally generated intangible assets are recognised in the statement of profit or loss as incurred, unless they meet the criteria to be considered as development costs.
Intangible assets acquired in the context of a business combination are recognised separately in the statement of financial position at their estimated fair value at acquisition date. This concerns brands. The value of these brands was established as part of the valuation at fair value of the asset and liability components upon first consolidation.
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.An irrevocable election can be made at initial recognition to measure the investment subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. This classification is determined on an instrument-by-instrument basis. As such, changes in fair value are directly recognised in a separate component of other comprehensive income. For listed companies, the share price is the best estimate of the fair value. Investments for which no fair value can be determined, are recognised at historical cost.
The Group assesses at each reporting date whether there is objective evidence that the asset is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
Interest-bearing financial liabilities are initially recognised at fair value less direct attributable transaction costs. After initial recognition, the interest-bearing financial liabilities are recognised at the amortised cost price based on the effective interest rate method. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f76141": { "value": "Acquisition of subsidiaries is accounted for according to the acquisition method. The cost of the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The cost includes the fair value of any asset or liability resulting from a contingent consideration agreement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired, liabilities assumed and contingent liabilities assumed in a business combination are measured initially at their fair value at acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree at fair value or at the non-controlling interest\u2019s proportionate share of the acquiree\u2019s net assets. The excess of the cost of the acquisition over the fair value of the Group\u2019s share of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary in the case of a bargain purchase, the difference is recognised directly in the statement of profit or loss.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognisingDifferenceBetweenFairValueAtInitialRecognitionAndAmountDeterminedUsingValuationTechniqueExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__208-1": { "value": "The Group granted put options to non-controlling interests in a subsidiary, giving the holders the right to sell part or all of their investment in the subsidiary to the Company. This put option on non-controlling interests (own equity instrument) gives rise to a gross liability that is initially recognised against equity and measured at the present value of the redemption amount (exercise price) in accordance with IAS 32 \u2013 Financial Instruments: presentation. This financial liability is included in the other non-current liabilities. This gross liability is subsequently measured at fair value. The difference between the value of the non-controlling interest and the fair value of the liability is allocated to the retained earnings (Group share), which are included in shareholders\u2019 equity.
This liability is adjusted at the end of each reporting period to reflect changes in the estimated exercise price of the option and the carrying amount of non-controlling interests. If the option comes to maturity without exercising, the liability is derecognised against non-controlling interests and retained earnings (Group share).
Lease liabilities are measured at the present value of future lease payments over the lease term.
The lease payments are discounted using the Group\u2019s incremental borrowing rate, i.e. the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, as the interest rate implicit in the lease cannot be readily determined.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
For leases with a term of 12 months or less (short-term leases) or leases of low-value items to which the Group applies the recognition exemptions available in IFRS 16, lease payments are recognised on a straight-line basis as an expense over the lease term.
26.1 Accounting policy relating to financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value and financial assets at amortised cost. The classification depends on the entity\u2019s business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.
Regular purchases and sales of financial assets are recognised on the trade date \u2013 the date on which the Group commits to purchase or sell an asset.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets at amortised cost
Financial assets (such as loans, trade receivables, cash and cash equivalents) are subsequently measured at amortised cost using the effective interest method, less any impairment if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest.
Trade and other receivables after and within one year are recognised initially at fair value and subsequently measured at amortised cost, i.e. at the net present value of the receivable amount, using the effective interest rate method, less allowances for impairment.
The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. For trade receivables, the Group applies the simplified approach in accordance with IFRS 9 \u2013 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The amount of the allowance is deducted from the carrying amount of the asset and is recognised in the statement of profit or loss under \u2018Impairment on inventories and trade receivables\u2019.
Financial assets at fair value
Financial assets at fair value consist of equity instruments held in companies in which the Group does not exercise control nor significant influence.
An irrevocable election can be made at initial recognition to measure the investment subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. This classification is determined on an instrument-by-instrument basis. As such, changes in fair value are directly recognised in a separate component of other comprehensive income. For listed companies, the share price is the best estimate of the fair value. Investments for which no fair value can be determined, are recognised at historical cost.
The Group assesses at each reporting date whether there is objective evidence that the asset is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
26.2 Accounting policy relating to financial liabilities
Financial liabilities (including interest-bearing financial liabilities, trade payables and other financial liabilities) are classified at amortised cost, except for derivative instruments. However, currently, the Group does not hold any derivative positions.
Interest-bearing financial liabilities are initially recognised at fair value less direct attributable transaction costs. After initial recognition, the interest-bearing financial liabilities are recognised at the amortised cost price based on the effective interest rate method.
Trade payables and other debts are recognised at their nominal value. A financial obligation is derecognised once the obligation is fulfilled, settled or lapsed.
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
The Group granted put options to non-controlling interests in a subsidiary, giving the holders the right to sell part or all of their investment in the subsidiary to the Company. This put option on non-controlling interests (own equity instrument) gives rise to a gross liability that is initially recognised against equity and measured at the present value of the redemption amount (exercise price) in accordance with IAS 32 \u2013 Financial Instruments: presentation. This financial liability is included in the other non-current liabilities. This gross liability is subsequently measured at fair value. The difference between the value of the non-controlling interest and the fair value of the liability is allocated to the retained earnings (Group share), which are included in shareholders\u2019 equity.
This liability is adjusted at the end of each reporting period to reflect changes in the estimated exercise price of the option and the carrying amount of non-controlling interests. If the option comes to maturity without exercising, the liability is derecognised against non-controlling interests and retained earnings (Group share).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__213-1": { "value": "The Group granted put options to non-controlling interests in a subsidiary, giving the holders the right to sell part or all of their investment in the subsidiary to the Company. This put option on non-controlling interests (own equity instrument) gives rise to a gross liability that is initially recognised against equity and measured at the present value of the redemption amount (exercise price) in accordance with IAS 32 \u2013 Financial Instruments: presentation. This financial liability is included in the other non-current liabilities. This gross liability is subsequently measured at fair value. The difference between the value of the non-controlling interest and the fair value of the liability is allocated to the retained earnings (Group share), which are included in shareholders\u2019 equity.
This liability is adjusted at the end of each reporting period to reflect changes in the estimated exercise price of the option and the carrying amount of non-controlling interests. If the option comes to maturity without exercising, the liability is derecognised against non-controlling interests and retained earnings (Group share).
Lease liabilities are measured at the present value of future lease payments over the lease term.
The lease payments are discounted using the Group\u2019s incremental borrowing rate, i.e. the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, as the interest rate implicit in the lease cannot be readily determined.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
For leases with a term of 12 months or less (short-term leases) or leases of low-value items to which the Group applies the recognition exemptions available in IFRS 16, lease payments are recognised on a straight-line basis as an expense over the lease term.
26.2 Accounting policy relating to financial liabilities
Financial liabilities (including interest-bearing financial liabilities, trade payables and other financial liabilities) are classified at amortised cost, except for derivative instruments. However, currently, the Group does not hold any derivative positions.
Interest-bearing financial liabilities are initially recognised at fair value less direct attributable transaction costs. After initial recognition, the interest-bearing financial liabilities are recognised at the amortised cost price based on the effective interest rate method.
Trade payables and other debts are recognised at their nominal value. A financial obligation is derecognised once the obligation is fulfilled, settled or lapsed.
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
The Group granted put options to non-controlling interests in a subsidiary, giving the holders the right to sell part or all of their investment in the subsidiary to the Company. This put option on non-controlling interests (own equity instrument) gives rise to a gross liability that is initially recognised against equity and measured at the present value of the redemption amount (exercise price) in accordance with IAS 32 \u2013 Financial Instruments: presentation. This financial liability is included in the other non-current liabilities. This gross liability is subsequently measured at fair value. The difference between the value of the non-controlling interest and the fair value of the liability is allocated to the retained earnings (Group share), which are included in shareholders\u2019 equity.
This liability is adjusted at the end of each reporting period to reflect changes in the estimated exercise price of the option and the carrying amount of non-controlling interests. If the option comes to maturity without exercising, the liability is derecognised against non-controlling interests and retained earnings (Group share).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTransactionsWithNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f76535": { "value": "1.4 Foreign currencies
Items included in the financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u2018the functional currency\u2019). The consolidated financial statements are presented in euro, the Group\u2019s reporting currency.
Transactions in foreign currencies
Transactions in foreign currencies are translated into the functional currency using the exchange rate applicable on the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the closing rate on the reporting date. Resulting foreign exchange gains and losses are recognised in the statement of profit or loss.
Foreign exchange gains and losses that relate to interest-bearing liabilities and cash and cash equivalents are presented in the statement of profit or loss within the financial result. All other foreign exchange gains and losses are presented in the statement of profit or loss within operating result.
Financial statements of foreign entities
For foreign entities using a different functional currency than the euro:
assets and liabilities are translated to the euro using the exchange rate on the reporting date;
items of income and expenses are translated at average exchange rate; and
equity items are translated at the historical exchange rate.
The resulting translation differences are recognised in other comprehensive income and accumulated in a separate component of equity (translation differences). These translation differences remain in equity up to the disposal of the relevant entity. In case of disposal, the accumulated amount in equity is reclassified to the statement of profit or loss as part of the result on disposal of the relevant foreign activity.
Goodwill arising from the acquisition of a foreign entity and fair value adjustments to the carrying amount of the acquired assets and liabilities at the date of acquisition, are considered as assets and liabilities of the foreign activity and are translated at the exchange rate on the reporting date.
The Group has no entities in hyperinflationary economies.
Exchange rates
The following exchange rates were used in preparing the financial statements:
Closing rate | average rate | |||
2023 | 2022 | 2023 | 2022 | |
EUR/CHF | 0.926 | 0.985 | 0.972 | 1.005 |
EUR/CNY | 7.851 | 7.358 | 7.662 | 7.075 |
EUR/CZK | 24.724 | 24.116 | 24.000 | 24.570 |
EUR/GBP | 0.869 | 0.887 | 0.870 | 0.852 |
EUR/KRW | 1,433.660 | 1,344.090 | 1,413.178 | 1,357.681 |
EUR/SEK | 11.096 | 11.122 | 11.477 | 10.624 |
EUR/THB | 37.973 | 36.835 | 38.278 | 36.800 |
EUR/USD | 1.105 | 1.067 | 1.082 | 1.054 |
EUR/ZAR | 20.348 | 18.099 | 19.957 | 17.210 |
Items included in the financial statements of each of the Group\u2019s entities are measured using the currency of the primary economic environment in which the entity operates (\u2018the functional currency\u2019). The consolidated financial statements are presented in euro, the Group\u2019s reporting currency.
Transactions in foreign currencies
Transactions in foreign currencies are translated into the functional currency using the exchange rate applicable on the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the closing rate on the reporting date. Resulting foreign exchange gains and losses are recognised in the statement of profit or loss.
Foreign exchange gains and losses that relate to interest-bearing liabilities and cash and cash equivalents are presented in the statement of profit or loss within the financial result. All other foreign exchange gains and losses are presented in the statement of profit or loss within operating result.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForFunctionalCurrencyExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__31-1": { "value": "2. Changes to the consolidation scope
In 2023, B.W.I. BV merged into Biscuiterie Willems BV. The merge did not have a significant impact on the consolidated financial statements.
Furthermore, the Group has established a new entity in Australia, Lotus Bakeries Australia Pty Ltd., and in Japan, Lotus Bakeries Japan G.K.
The complete list of companies included in the consolidation scope is disclosed in note 32.
Business combinations 2022
On December 31, 2022, the Company finalised the acquisition of the remaining shares in Peter\u2019s Yard\u00ae through its 100% subsidiary Lotus Bakeries International und Schweiz AG. Peter\u2019s Yard is a British artisanal sourdough company that produces healthy and delicious sourdough crackers and sourdough crisps made from only natural ingredients.
Peter\u2019s Yard has become part of the LotusTMNatural Foods business under the leadership of Isabelle Maes, CEO Natural Foods. The initial focus for Peter\u2019s Yard will be to further accelerate growth in the UK. The brand complements the existing LotusTMNatural Foods portfolio that contains the strong brands of n\u0101kd\u00ae, BEAR\u00ae, TREK\u00ae and Kiddylicious\u00ae.
In July 2019, the Company acquired a 20% stake in Peter\u2019s Yard via its venture capital vehicle, Fast Forward 2032 (\u2018FF2032\u2019).
The consideration paid for the business combination (remaining 80% share) amounts to EUR 9.6 million in cash.
The assets acquired and liabilities assumed recognised in the consolidated statement of financial position at acquisition date and the amount of goodwill are presented in the following table:
IN THOUSANDS OF EUR | |
Recognised amounts of identifiable assets acquired and liabilities assumed | |
Cash and cash equivalents | 433 |
Intangible assets | 5,697 |
Right-of-use assets | 651 |
Inventories | 542 |
Trade and other receivables | 2,290 |
Interest-bearing liabilities | (502) |
Trade and other payables | (1,950) |
Other current assets and liabilities | (2,082) |
Deferred tax liabilities | (890) |
Total identifiable net assets acquired | 4,188 |
Allocation to goodwill | 7,876 |
TOTAL CONSIDERATION | 12,064 |
TOTAL CONSIDERATION | |
Fair value of initial investment | 2,425 |
Cash consideration | 9,639 |
TOTAL CONSIDERATION | 12,064 |
The following table presents the impact of the acquisition of subsidiaries within the investing activities in the consolidated cash flow statement:
IN THOUSANDS OF EUR | |
Consideration paid in cash | 9,639 |
Cash and cash equivalents acquired | (433) |
ACQUISITION OF SUBSIDIARIES, NET OF CASH ACQUIRED | 9,205 |
Upon acquisition of Peter\u2019s Yard, the initial investment of 20% held by the Group through FF2032 has been remeasured at fair value in accordance with IFRS 3.
As per December 31, 2022, the amounts above with respect to fair value of net assets acquired and goodwill were provisional as not all fair value measurements had been finalised. This has been finalised in the course of 2023, but no adjustments were necessary.
As a result of the acquisition accounting, the Company has allocated the purchase price (consideration paid) and has calculated the fair value of the assets acquired and liabilities assumed, in accordance with generally applied valuation rules. The purchase price was allocated to intangible assets (brands), which have been measured at fair value.
Goodwill arose because the consideration for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth and future market development. Management deems that there is a strategic fit between the LotusTMNatural Foods business and Peter\u2019s Yard as they have complementing product offerings. The resulting goodwill is not tax deductible.
The gross contractual amount of the trade receivables amounts to EUR 2.2 million, which equals the carrying amount.
The Group has not incurred significant acquisition-related expenses.
13. Goodwill
13.1 Accounting policy
Goodwill arising from a business combination is initially measured at cost (i.e., the excess between the cost of the business combination and the Group\u2019s interest in the fair value of the identifiable assets acquired, liabilities assumed and contingent liabilities assumed). After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is tested for impairment annually or more often if events or changes in circumstances indicate that the carrying amount may have been impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date onwards, allocated to each of the Group\u2019s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
For sales, production and internal reporting, the Group is organised into geographic regions (see also note 3 Segment reporting). The segments consist of underlying business units. These business units represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These business units are the cash-generating units to which goodwill is allocated.
13.2 Overview
The carrying amount of goodwill has been allocated to the various independent cash-generating units as follows:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Lotus\u2122 Natural Foods (Natural Balance Food, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard) | 169,094 | 170,860 |
Belgium | 20,773 | 20,773 |
The Netherlands | 17,151 | 17,151 |
Asia | 8,653 | 9,229 |
Nordics | 5,541 | 5,528 |
Other | 1,704 | 1,704 |
TOTAL GOODWILL | 222,915 | 225,246 |
IN THOUSANDS OF EUR | |
Carrying amount as at January 1, 2022 | 224,846 |
Acquisitions through business combinations | 7,876 |
Effect of movements in foreign exchange rates | (7,476) |
Carrying amount as at December 31, 2022 | 225,246 |
Effect of movements in foreign exchange rates | (2,331) |
CARRYING AMOUNT AS AT DECEMBER 31, 2023 | 222,915 |
13.3 Impairment test
Goodwill, representing approximately 18% of the total assets of Lotus Bakeries at December 31, 2023, is tested for impairment every year during the fourth quarter after the budget process (or whenever there is a specific reason to do so) by comparing the carrying amount of each cash-generating unit (CGU) with its recoverable amount. The recoverable amount of a cash-generating unit is determined on the basis of the value in use.
The value in use is determined as the present value of expected future cash flows based on the current long-term planning of the Group. The discount rate used in determining the present value of expected future cash flows is based on a weighted average cost of capital (WACC) before taxes (pre-tax discount rate). The impairment test for goodwill is based on a number of critical judgements, estimates and assumptions.
The assumptions are consistent and reasonable for all cash-generating units, which are mainly located in Europe and the UK:
Revenue and operating result: revenue and operating result reflect management\u2019s expectations based on past experience and taking into account the risks specific to the reportable business unit;
The first year of the model is based on the budget for the year as approved by the board of directors, taking into account historical results and is management\u2019s best estimate of the free cash flow outlook for the current year;
In years two to three of the model, free cash flows are based on Lotus Bakeries\u2019 long-term plan. The long-term plan is prepared country by country, based on reasonable internal plans that take into account the specific market situation and the past;
Cash flows beyond the first three years are extrapolated by applying a perpetual growth rate;
Projections are discounted at the pre-tax weighted average cost of capital (WACC). The WACC has been determined by jurisdiction and considering the specific risks related to each CGU. Main inputs include risk-free rate, market risk, risk premium and the cost of debt.
The impairment test is highly sensitive to the key assumptions, pre-tax discount rate and perpetual growth rate, which are detailed below:
Pre-tax discount rate 2023 | Pre-tax discount rate 2022 | Perpetual growth rate 2023 | Perpetual growth rate 2022 | |
Lotus\u2122 Natural Foods CGU's | 8.9%-9.4% | 7.1%-7.5% | 2.0% | 4.0%-5.0% |
Other CGU's | 7.6%-9.5% | 6.1%-7.3% | 2.0% | 1.5%-3.0% |
At the end of 2023, Lotus Bakeries has completed its annual impairment test of goodwill. The discount rates have been updated to reflect the overall increase of the risk-free rates on the market. Furthermore, the perpetual growth rates have been aligned to the long-term targeted inflation rates instead of the company-specific estimated long-term growth rates. These changes in key assumptions have impacted negatively the different headrooms, but did not result in any impairment loss.
As part of the impairment test, the Company carried out a sensitivity analysis for the key assumptions used, i.e. the pre-tax discount rate and perpetual growth rate. Here, a decrease in the perpetual growth rate by 100 basis points and an increase in the pre-tax discount rate by 100 basis points were applied. A change in the key assumptions used, as described above, does not lead to an impairment loss.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are suitable, actual results may differ from these estimates in the event of changed assumptions and conditions.
The following table presents the impact of the acquisition of subsidiaries within the investing activities in the consolidated cash flow statement:
IN THOUSANDS OF EUR | |
Consideration paid in cash | 9,639 |
Cash and cash equivalents acquired | (433) |
ACQUISITION OF SUBSIDIARIES, NET OF CASH ACQUIRED | 9,205 |
The following tables reconcile the movements of the interest-bearing liabilities to the cash flows arising from financing activities:
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2023 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2023 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 182,500 | 88,000 | - | - | (9,500) | - | 261,000 |
Lease liabilities | 13,566 | (208) | 7,852 | 20 | (5,883) | (512) | 14,834 |
Current interest-bearing liabilities | |||||||
Bank loans | 66,000 | (66,000) | - | - | 9,500 | - | 9,500 |
Lease liabilities | 4,178 | (5,282) | - | (32) | 5,883 | 410 | 5,157 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 266,244 | 16,510 | 7,852 | (12) | - | (102) | 290,491 |
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2022 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2022 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 209,500 | 12,000 | - | - | (39,000) | - | 182,500 |
Lease liabilities | 9,337 | 9,847 | (304) | (4,990) | (324) | 13,566 | |
Current interest-bearing liabilities | |||||||
Bank loans | 14,000 | 13,000 | - | - | 39,000 | - | 66,000 |
Lease liabilities | 3,439 | (4,187) | - | (64) | 4,990 | - | 4,178 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 236,276 | 20,813 | 9,847 | (368) | - | (324) | 266,244 |
Upon acquisition of Peter\u2019s Yard, the initial investment of 20% held by the Group through FF2032 has been remeasured at fair value in accordance with IFRS 3.
As per December 31, 2022, the amounts above with respect to fair value of net assets acquired and goodwill were provisional as not all fair value measurements had been finalised. This has been finalised in the course of 2023, but no adjustments were necessary.
As a result of the acquisition accounting, the Company has allocated the purchase price (consideration paid) and has calculated the fair value of the assets acquired and liabilities assumed, in accordance with generally applied valuation rules. The purchase price was allocated to intangible assets (brands), which have been measured at fair value.
Goodwill arose because the consideration for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth and future market development. Management deems that there is a strategic fit between the LotusTMNatural Foods business and Peter\u2019s Yard as they have complementing product offerings. The resulting goodwill is not tax deductible.
The gross contractual amount of the trade receivables amounts to EUR 2.2 million, which equals the carrying amount.
The Group has not incurred significant acquisition-related expenses.
Costs for internally generated intangible assets are recognised in the statement of profit or loss as incurred, unless they meet the criteria to be considered as development costs.
Intangible assets acquired in the context of a business combination are recognised separately in the statement of financial position at their estimated fair value at acquisition date. This concerns brands. The value of these brands was established as part of the valuation at fair value of the asset and liability components upon first consolidation.
At year-end 2023, the Group tested the value of these brands to assess any recoverability issues. Taking into account the assumptions used, the value in use of the related cash-generating units exceeds its carrying amount and no impairment loss is recognised.
For more details on the impairment test conducted per CGU, we refer to note 13 on goodwill.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are reasonable, actual results may differ from these estimates in the event of changed assumptions and conditions.
19. Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances (current and deposit accounts) and other short-term highly liquid investments with maturities since acquisition date of three months or less.
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Short-term bank deposits | 71,135 | - |
Cash at bank and on hand | 60,096 | 76,434 |
TOTAL CASH AND CASH EQUIVALENTS | 131,231 | 76,434 |
For the cash flow statement, cash and cash equivalents include cash and bank balances and term deposits. Any negative cash is included under non-current interest-bearing liabilities in the statement of financial position.
The stock option plans are considered equity-settled share-based payments.
The fair value of the options is estimated at the grant date, using the binomial valuation model. This valuation model is based on the following market data and assumptions: the share price at the time of allotment, the exercise price, the exercise arrangements, the estimated volatility, the dividend expectations and the risk-free interest rate. The fair value of the share options is recognised linearly over the vesting period.
The following table details the different plans granted and the assumptions used for the measurement of the fair value:
Granted in | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Number granted | 1,179 | 1,199 | 962 | 660 | 792 | 618 |
Number exercised | (1,139) | (911) | (50) | (33) | - | - |
Number expired | (40) | (50) | (40) | (26) | - | - |
Available options | - | 238 | 872 | 601 | 792 | 618 |
Key assumptions used for fair value measurement\t | ||||||
Exercise period | 01/01/2022 \u2013 14/05/2023 | 01/01/2023 \u2013 09/05/2024 | 01/01/2024 \u2013 07/05/2025 | 01/01/2025 \u2013 17/05/2026 | 01/01/2026 \u2013 30/06/2027 | 01/01/2027 \u2013 31/05/2028 |
Exercise price (EUR) | 2,373.00 | 2,351.58 | 2,828.95 | 4,517.14 | 5,057.32 | 6,086.36 |
Share price (EUR) | 2,310.00 | 2,330.00 | 2,890.00 | 4,630.00 | 4,868.81 | 5,990.00 |
Expected volatility | 22.43% | 23.14% | 25.07% | 23.69% | 25.39% | 26.23% |
Dividend yield | 0.93% | 0.92% | 0.95% | 0.94% | 0.97% | 0.95% |
Risk-free rate | 0.11% | -0.29% | -0.36% | -0.34% | 0.82% | 2.57% |
FAIR VALUE PER OPTION (EUR) | 316.29 | 331.55 | 471.65 | 720.51 | 790.38 | 1,167.59 |
The volatility is based on daily share prices of Lotus Bakeries over the last three years.
For the defined benefit pension plan, the liabilities are measured on a discounted basis because they are settled many years after the employees render the related service. A qualified actuary has determined the present value of the defined benefit obligations and the fair value of the plan assets. These assets are held by an insurance company. The projected unit credit method was used to estimate the defined benefit obligations, the defined benefit cost and the remeasurements of the net liability. Provisions are determined by computing the actuarial value of future payments to the employees in question.
The plan assets consist of insurance contracts. The actual return on plan assets amounted to EUR -239 thousands for 2023 (2022: EUR -1,464 thousands).
Expected contributions to post-employment benefit plans for the year ending December 31, 2024 are EUR 538 thousands.
The principal assumptions used in determining post-employment obligations for the Group\u2019s plans are shown below:
December 31, 2023 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.90% | 4.00% | 3.90% | 3.20% | 2.00% |
Inflation rate | 2.10% | 1.50% | 2.10% | 2.20% | 2.00% |
December 31, 2022 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.12% | 4.00% | 3.12% | 3.40% | 2.24% |
Inflation rate | 2.20% | 1.50% | 2.20% | 2.20% | 2.00% |
Through its defined benefit plans, the Group is exposed to a number of risks, the most relevant are detailed below:
Changes in bond yields: a decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plan\u2019s bond holdings.
Salary risk: the majority of the plan\u2019s benefit obligations are calculated by reference to the future salaries of plan members. As such, a higher-than-expected salary increase of plan members will lead to higher liabilities.
Longevity risk: pension plans provide for benefits for the life of the plan members, so increases in life expectancy will result in an increase in the plan\u2019s liabilities.
The actuary has performed a sensitivity analysis on the above actuarial assumptions. As such, both the discount rate and the inflation rate were altered by 50 basis points. A change in the estimates used does not lead to a material impact on the consolidated financial statements.
25. Other liabilities
The other non-current liabilities relate to put options granted to third parties with respect to the remaining non-controlling interests in Natural Balance Foods Ltd., where these put options give holders the right to sell (part of) their investment in this subsidiary. At the end of December 2023, Lotus Bakeries held 97.9% of the shares, with the remaining 2.1% still held by the founders.
These put options are unconditional and the exercise price depends on the future financial performance (revenue and operating result) of Natural Balance Foods Ltd. In accordance with IAS 32, where non-controlling interests hold put options giving them the right to sell their investment, a financial liability is recorded for the present value of the exercise price expected to be paid. These put options are classified as level 3 instruments in accordance with the fair value hierarchy of IFRS 7 \u2013 Financial Instruments: Disclosures.
The counterpart of this liability Is a cancellation of the underlying non-controlling interest. The difference between the value of the non-controlling interest and the fair value of the liability is added to the consolidated reserves, which are included in shareholders\u2019 equity.
The fair value of the financial assets and liabilities measured at amortised cost approximate their carrying amount.
The financial instruments measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include input for the asset or liability that are not based on observable market data (unobservable input).
The fair values of the derivatives of the Group are based on level 2 inputs as defined under IFRS 7.27.
The fair value of the other non-current liabilities (put options, see note 25) is based on level 3 input.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueMeasurementExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__58-1": { "value": "3. Segment reporting
3.1 Accounting policy
Group revenue is centralised around a number of products that are all included in the traditional and natural snack segment. For these products, the Group is organised according to geographical regions for sales, production and internal reporting.
The result of a segment includes the income and expenses directly generated by a segment as well as the portion of the income and expenses that can be reasonably attributed to the segment. Intersegment price-fixing is defined based on the \u2018at arm\u2019s length\u2019 principle.
Considering that the chief operating decision maker does not review on a regular basis items of the statement of financial position per segment, segment assets and liabilities are not disclosed.
For the purpose of sales, production and internal reporting, the Group is classified according to geographical regions. As a result of the increased performance of different regions and to sustain future growth, we have reviewed in 2023 the reportable segments and have therefore restated the comparative disclosure to align with the organisational and managerial alignment. Furthermore, aggregation of underlying countries into the below identified reportable segments have been done when such aggregation is consistent with the core principle of IFRS 8, the segments have similar long-term economic characteristics and the segments are similar in each of the following respects:
The nature of products and services;
The nature of the production processes;
The procurement process;
The type or class of customer for their products and services;
The functional currencies of each market;
The methods used to distribute their products or provide their services; and
The nature of the regulatory environment.
The regions presented in the segment reporting, which are based on the internal reporting system, are composed as follows:
Continental Europe: sales by Sales Offices in Continental Europe and intra-group sales by factories in Continental Europe (homogeneous activities within Europe, excluding UK activities, and including Belgium, France and other European countries);
UK: sales by Sales Offices UK, Natural Balance Foods, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard;
Americas: sales by Sales Offices in Americas and intra-group sales by the factory in the United States;
Rest of the world: sales from Belgium to countries without own Sales Office and by own Sales Offices in China and South Korea.
3.2 Segment information
PERIOD ENDED DECEMBER 31, 2023 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 648,919 | 271,901 | 155,753 | 144,730 | (158,340) | 1,062,962 |
Revenue from external customers | 534,414 | 235,971 | 155,753 | 136,825 | - | 1,062,962 |
Intersegment revenue | 114,505 | 35,931 | - | 7,905 | (158,340) | - |
SEGMENT RESULTS (REBIT) | 97,438 | 51,373 | 27,945 | 30,995 | (34,776) | 172,974 |
Non-recurring income and expenses | (2,544) | |||||
Operating result (EBIT) | 170,430 | |||||
Financial result | (2,533) | |||||
Result before taxes | 167,897 | |||||
Income taxes | (38,565) | |||||
Net result | 129,333 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 32,358 | 15,346 | 16,646 | 16,327 | 4,750 | 85,427 |
Intangible assets | 8 | - | - | - | 774 | 783 |
Depreciations and amortisations on (in)tangible assets | 20,510 | 1,668 | 6,588 | 458 | 3,633 | 32,857 |
PERIOD ENDED DECEMBER 31, 2022 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 539,654 | 224,755 | 127,713 | 127,965 | (142,634) | 877,451 |
Revenue from external customers | 433,994 | 197,584 | 127,628 | 118,244 | - | 877,451 |
Intersegment revenue | 105,660 | 27,170 | 85 | 9,720 | (142,634) | - |
SEGMENT RESULTS (REBIT) | 78,633 | 40,333 | 14,482 | 32,393 | (25,653) | 140,188 |
Non-recurring income and expenses | (3,807) | |||||
Operating result (EBIT) | 136,381 | |||||
Financial result | (2,354) | |||||
Result before taxes | 134,027 | |||||
Income taxes | (30,744) | |||||
Net result | 103,283 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 65,091 | 6,082 | 50,884 | 13,466 | 6,428 | 141,952 |
Intangible assets | 522 | - | - | - | 784 | 1,306 |
Depreciations and amortisations on (in)tangible assets | 16,868 | 1,266 | 3,590 | 642 | 2,878 | 25,245 |
Sales between the various segments are carried out at arm\u2019s length.
The non-current assets (i.e. property, plant and equipment, right-of-use assets, intangible assets and goodwill) by location of assets are detailed in the table opposite:
The Group\u2019s revenue by country are disclosed in note 4.
IN THOUSANDS OF EUR | 2023 | 2022 |
Belgium | 265,045 | 252,446 |
United Kingdom | 212,773 | 207,064 |
United States | 135,227 | 129,897 |
The Netherlands | 100,342 | 100,167 |
South-Africa | 55,292 | 49,154 |
Other | 76,372 | 61,496 |
TOTAL NON-CURRENT ASSETS | 845,051 | 800,225 |
3. Segment reporting
3.1 Accounting policy
Group revenue is centralised around a number of products that are all included in the traditional and natural snack segment. For these products, the Group is organised according to geographical regions for sales, production and internal reporting.
The result of a segment includes the income and expenses directly generated by a segment as well as the portion of the income and expenses that can be reasonably attributed to the segment. Intersegment price-fixing is defined based on the \u2018at arm\u2019s length\u2019 principle.
Considering that the chief operating decision maker does not review on a regular basis items of the statement of financial position per segment, segment assets and liabilities are not disclosed.
For the purpose of sales, production and internal reporting, the Group is classified according to geographical regions. As a result of the increased performance of different regions and to sustain future growth, we have reviewed in 2023 the reportable segments and have therefore restated the comparative disclosure to align with the organisational and managerial alignment. Furthermore, aggregation of underlying countries into the below identified reportable segments have been done when such aggregation is consistent with the core principle of IFRS 8, the segments have similar long-term economic characteristics and the segments are similar in each of the following respects:
The nature of products and services;
The nature of the production processes;
The procurement process;
The type or class of customer for their products and services;
The functional currencies of each market;
The methods used to distribute their products or provide their services; and
The nature of the regulatory environment.
The regions presented in the segment reporting, which are based on the internal reporting system, are composed as follows:
Continental Europe: sales by Sales Offices in Continental Europe and intra-group sales by factories in Continental Europe (homogeneous activities within Europe, excluding UK activities, and including Belgium, France and other European countries);
UK: sales by Sales Offices UK, Natural Balance Foods, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard;
Americas: sales by Sales Offices in Americas and intra-group sales by the factory in the United States;
Rest of the world: sales from Belgium to countries without own Sales Office and by own Sales Offices in China and South Korea.
3.2 Segment information
PERIOD ENDED DECEMBER 31, 2023 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 648,919 | 271,901 | 155,753 | 144,730 | (158,340) | 1,062,962 |
Revenue from external customers | 534,414 | 235,971 | 155,753 | 136,825 | - | 1,062,962 |
Intersegment revenue | 114,505 | 35,931 | - | 7,905 | (158,340) | - |
SEGMENT RESULTS (REBIT) | 97,438 | 51,373 | 27,945 | 30,995 | (34,776) | 172,974 |
Non-recurring income and expenses | (2,544) | |||||
Operating result (EBIT) | 170,430 | |||||
Financial result | (2,533) | |||||
Result before taxes | 167,897 | |||||
Income taxes | (38,565) | |||||
Net result | 129,333 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 32,358 | 15,346 | 16,646 | 16,327 | 4,750 | 85,427 |
Intangible assets | 8 | - | - | - | 774 | 783 |
Depreciations and amortisations on (in)tangible assets | 20,510 | 1,668 | 6,588 | 458 | 3,633 | 32,857 |
PERIOD ENDED DECEMBER 31, 2022 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 539,654 | 224,755 | 127,713 | 127,965 | (142,634) | 877,451 |
Revenue from external customers | 433,994 | 197,584 | 127,628 | 118,244 | - | 877,451 |
Intersegment revenue | 105,660 | 27,170 | 85 | 9,720 | (142,634) | - |
SEGMENT RESULTS (REBIT) | 78,633 | 40,333 | 14,482 | 32,393 | (25,653) | 140,188 |
Non-recurring income and expenses | (3,807) | |||||
Operating result (EBIT) | 136,381 | |||||
Financial result | (2,354) | |||||
Result before taxes | 134,027 | |||||
Income taxes | (30,744) | |||||
Net result | 103,283 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 65,091 | 6,082 | 50,884 | 13,466 | 6,428 | 141,952 |
Intangible assets | 522 | - | - | - | 784 | 1,306 |
Depreciations and amortisations on (in)tangible assets | 16,868 | 1,266 | 3,590 | 642 | 2,878 | 25,245 |
Sales between the various segments are carried out at arm\u2019s length.
The non-current assets (i.e. property, plant and equipment, right-of-use assets, intangible assets and goodwill) by location of assets are detailed in the table opposite:
The Group\u2019s revenue by country are disclosed in note 4.
IN THOUSANDS OF EUR | 2023 | 2022 |
Belgium | 265,045 | 252,446 |
United Kingdom | 212,773 | 207,064 |
United States | 135,227 | 129,897 |
The Netherlands | 100,342 | 100,167 |
South-Africa | 55,292 | 49,154 |
Other | 76,372 | 61,496 |
TOTAL NON-CURRENT ASSETS | 845,051 | 800,225 |
Customer contracts include trade discounts or volume rebates, which are granted to the customer if the delivered quantities exceed a certain threshold. In these cases, the transaction price includes a variable consideration. The effect of the variable consideration on the transaction price is taken into account in revenue recognition by estimating the probability of the realisation of the discount or rebate for each contract.
In the context of contracts with clients or as a result of business practices, Lotus Bakeries might pay certain amounts to its customer. The payments can be cash, either in the form of rebates or discounts, or could alternatively be a credit or some other form of incentive that reduces amounts owed to Lotus Bakeries by a customer. Amounts paid by Lotus Bakeries to customers on either a limited or a continuous basis may take various forms and are paid for a varying number of reasons, such as discounts, coupons, rebates, co-advertising, slotting or listing fees.
In accordance with IFRS 15, Lotus Bakeries accounts for such consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the entity. It is therefore important to analyse the substance of such payment in order to properly reflect the substance of them, i.e. include in the transaction price of the transaction with the customer (revenue) or consider as a separate transaction (expense).
5. Services and other goods
Services and other goods include mainly commercial and marketing expenses, logistic expenses (transport and warehousing), professional fees (legal, accounting and consulting) and utilities.
The increase compared to 2022 relates to increased sales and production volumes, next to increased plan-related expenses and professional fees, in line with the increased revenue performance.
6. Employee benefit expenses
IN THOUSANDS OF EUR | 2023 | 2022 |
Short-term employee benefits | 165,997 | 139,481 |
Social security contributions | 25,828 | 21,789 |
Defined contribution costs | 3,628 | 4,654 |
Defined benefit costs | 311 | 303 |
Other employee benefit expenses | 9,546 | 7,392 |
TOTAL EMPLOYEE BENEFIT EXPENSES | 205,310 | 173,618 |
Average number of employees | 2,857 | 2,655 |
Number of employees as at the end of the year | 2,984 | 2,698 |
The other employee benefit expenses include mainly the costs of training and other employee-related insurances.
7. Depreciation and amortisation expenses
IN THOUSANDS OF EUR | 2023 | 2022 |
Amortisation of intangible assets (see note 14) | 1,274 | 1,033 |
Depreciation of property, plant and equipment (see note 15) | 26,498 | 19,554 |
Depreciation of right-of-use assets (see note 15) | 5,085 | 4,658 |
TOTAL DEPRECIATION AND AMORTISATION EXPENSES | 32,857 | 25,245 |
9. Non-recurring income and expenses
Non-recurring income and expenses include operating income and expenses that do not belong to or derive from the recurring operating activities of the Group (normal course of business). This category includes primarily results from the disposal of fixed assets, any goodwill impairment losses, any impairment losses on fixed assets, expenses relating to the acquisition, disposal and start-up of new businesses, restructuring expenses and expenses relating to pandemics.
IN THOUSANDS OF EUR | 2023 | 2022 |
Start-up costs related to capacity extensions | (2,546) | (288) |
Organisation restructuring | (62) | (1,269) |
Office relocations | (17) | (785) |
Product range restructuring | - | (1,081) |
Other | 81 | (383) |
TOTAL NON-RECURRING INCOME AND EXPENSES | (2,544) | (3,807) |
In 2023, the non-recurring result relates mainly to expenses from the construction and establishment of the new plant in Thailand and the extension of the plant in South-Africa. The costs for the project in Thailand will increase towards the commissioning of the plant in 2026.
As from reporting year 2024, the non-recurring items will be referred to as \u2018Adjusting items to the operating result\u2019. However, the scope of this reporting line item will not change, see also note 33 relating to the Alternative Performance Measures.
10. Financial result
IN THOUSANDS OF EUR | 2023 | 2022 |
Interest expenses | (4,035) | (3,115) |
Interest income | 2,475 | 551 |
Interest income (expenses) | (1,560) | (2,565) |
Foreign exchange gains (losses) | (119) | 988 |
Other financial income (expenses) | (854) | (777) |
TOTAL FINANCIAL RESULT | (2,533) | (2,354) |
The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pounds sterling) and USD (US dollars).
11.1 Accounting policy
Income taxes include current and deferred taxes. Both taxes are recognised in the statement of profit or loss except if the underlying transaction has been recognised directly in other comprehensive income. If so, the related income taxes are also directly recognised in other comprehensive income.
Current taxes include the amount of tax payable on the taxable earnings for the period calculated at the tax rate applicable on the reporting date. They also include adjustments to income tax liabilities for previous years. In line with IAS 12 \u2013 Income Taxes, management assesses on a periodic basis the positions taken in tax declarations in respect of items subject to interpretation in the tax legislation, and records, if necessary, additional income tax liabilities based on the expected amounts payable to the tax authorities. The assessment is made for all fiscal periods still subject to controls by the authorities.
Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted.
Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset.
The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
11.2 Income taxes in the statement of profit or loss
The income tax recognised in the statement of profit or loss can be detailed as follows:
IN THOUSANDS OF EUR | 2023 | 2022 |
Current taxes in respect of the current year | (33,699) | (29,417) |
Current taxes in respect of the prior years | 100 | (2,213) |
Deferred taxes | (4,966) | 885 |
TOTAL INCOME TAXES | (38,565) | (30,744) |
The average effective tax rate is 23.0%, compared to 22.9% in 2022.
The income tax expense can be reconciled as follows:
IN THOUSANDS OF EUR | 2023 | 2022 |
Result for the period before taxes | 167,897 | 134,027 |
Legal tax rate | 25.00% | 25.00% |
Income tax expense computed at the legal tax rate | (41,974) | (33,507) |
Effect of different tax rates in other countries | 1,599 | 2,481 |
Deductions of taxable income | 2,461 | 1,472 |
Tax adjustments for prior years | 1,569 | 429 |
Disallowed expenses | (898) | (1,056) |
Tax exempted income | 115 | 66 |
Tax losses used for which no deferred tax asset has been recorded | - | (21) |
Unrecognised deferred tax assets | (1,232) | - |
Changes in tax rate or new taxes | 17 | (670) |
Other | (221) | 61 |
TOTAL INCOME TAXES | (38,565) | (30,744) |
Effective tax rate | 23.0% | 22.9% |
In October 2021, the OECD reached agreement on the Pillar Two global minimum tax rules to address the tax challenges arising from digitalisation of the economy. The agreement includes a coordinated system of Global anti-Base Erosion (GloBE) rules that are designed to ensure large multinational companies pay a minimum level of tax on the income arising in each jurisdiction where they operate, establishing a global minimum corporate tax rate of 15% on the profit. This set of measures would be applied on a Country-by-Country basis to multinational companies with revenue exceeding EUR 750 million.
Considering that the Group has exceeded the applicable thresholds in 2021, the Group is subject to the GloBE rules and has to consider the global minimum tax in the jurisdictions in which it operates as a legal entity. Belgium, where the Company is domiciled, has adopted the new tax legislation implementing the GloBE rules. The Company is currently monitoring the progress of adoption of the GloBE rules in each jurisdiction.
Based on a first assessment and considering the effective and nominal tax rates in the different jurisdictions, it is clear that the Group will be able to benefit from the safe harbours provided by the OECD for most of its subsidiaries with a potential exception for Switzerland where the effective tax rate is close to 15%. However, in the meantime, the Swiss authorities have adopted the GloBE rules and the related qualified domestic minimum top-up tax (QDMTT).
In accordance with the requirements introduced by the amendments to IAS 12 (see note 1.1), the Group applies the exception to the recognition of deferred taxes associated with income taxes arising from the Pillar Two model rules. Therefore, the Group has decided to not recognise deferred taxes under Pillar Two rules when these rules have been adopted in a jurisdiction.
With regard to trade receivables there are no indications that debtors will not meet their payment obligations. Nor are there any customers representing more than 10% of the consolidated revenue. IFRS 9 requires the Company to recognise an allowance for expected losses on the recovery of trade receivables. This has no material impact.
More information regarding the credit risk is disclosed in note 26.
Movements on valuation for impairment of trade receivables are as follows:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Opening balance | 803 | 526 |
Allowances recognised | 531 | 472 |
Amounts written off during the year as uncollectible | (51) | (159) |
Effect of movements in foreign exchange rates | 12 | (37) |
TOTAL ALLOWANCE FOR IMPAIRMENT OF TRADE RECEIVABLES | 1,294 | 803 |
21.4 Share-based payments
21.4.1 Accounting policy
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
21.4.2 Overview
Since 2012, each financial year the Board of Directors grants stock options to executives and senior management, based on category, results and performance. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below.
Each option gives the holder the right to purchase one ordinary Lotus Bakeries share at a fixed exercise price. The exercise price is equal to the average closing stock market price of the underlying share during the thirty calendar days prior to the offering date. The granted options have a term of five years. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The stock options are only subject to services conditions so that it will vest gradually over the vesting period, i.e. three years. The options are exercisable if the option holder remains linked to the Company or a related entity as an employee or executive director. These rights are retained in the event of retirement, early retirement, invalidity or death.
The stock option plans are considered equity-settled share-based payments.
The fair value of the options is estimated at the grant date, using the binomial valuation model. This valuation model is based on the following market data and assumptions: the share price at the time of allotment, the exercise price, the exercise arrangements, the estimated volatility, the dividend expectations and the risk-free interest rate. The fair value of the share options is recognised linearly over the vesting period.
The following table details the different plans granted and the assumptions used for the measurement of the fair value:
Granted in | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Number granted | 1,179 | 1,199 | 962 | 660 | 792 | 618 |
Number exercised | (1,139) | (911) | (50) | (33) | - | - |
Number expired | (40) | (50) | (40) | (26) | - | - |
Available options | - | 238 | 872 | 601 | 792 | 618 |
Key assumptions used for fair value measurement\t | ||||||
Exercise period | 01/01/2022 \u2013 14/05/2023 | 01/01/2023 \u2013 09/05/2024 | 01/01/2024 \u2013 07/05/2025 | 01/01/2025 \u2013 17/05/2026 | 01/01/2026 \u2013 30/06/2027 | 01/01/2027 \u2013 31/05/2028 |
Exercise price (EUR) | 2,373.00 | 2,351.58 | 2,828.95 | 4,517.14 | 5,057.32 | 6,086.36 |
Share price (EUR) | 2,310.00 | 2,330.00 | 2,890.00 | 4,630.00 | 4,868.81 | 5,990.00 |
Expected volatility | 22.43% | 23.14% | 25.07% | 23.69% | 25.39% | 26.23% |
Dividend yield | 0.93% | 0.92% | 0.95% | 0.94% | 0.97% | 0.95% |
Risk-free rate | 0.11% | -0.29% | -0.36% | -0.34% | 0.82% | 2.57% |
FAIR VALUE PER OPTION (EUR) | 316.29 | 331.55 | 471.65 | 720.51 | 790.38 | 1,167.59 |
The volatility is based on daily share prices of Lotus Bakeries over the last three years.
The following reconciles the options outstanding at the beginning and end of the year:
Weighted average exercise price (EUR) | Number of options | |
Outstanding options at January 1, 2022 | 2,770 | 4,541 |
Granted | 5,057 | 792 |
Exercised | 2,420 | (1,492) |
Expired | 2,864 | (146) |
Outstanding options at December 31, 2022 | 3,398 | 3,695 |
Granted | 6,086 | 618 |
Exercised | 2,358 | (1,192) |
Expired | - | - |
OUTSTANDING OPTIONS AT DECEMBER 31, 2023 | 4,328 | 3,121 |
In 2023, a total expense of EUR 470 thousands was recognised (2022: EUR 470 thousands).
23. Employee benefit obligations
23.1 Accounting policy
Short-term employee benefits
Bonuses for employees and management are calculated based on key financial objectives and individual objectives. The estimated amount of the bonuses is recognised as an expense in the period in which the related services have been rendered based on an estimate on the reporting date.
Post-employment benefits (pension plans)
Group companies operate various pension schemes. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due.
In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Defined benefit costs are divided into 2 categories:
Current service cost, past-service cost, gains and losses on curtailments and settlements; and
Net interest expense or income.
The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income.
23.2 Overview
The Group operates defined contribution plans and defined benefit plans.
For the defined contribution plans, the Group pays contributions to insurance companies. Management of the pension plan is outsourced to an insurance company. For 2023, the expense amounts to EUR 3,628 thousands compared to EUR 4,654 thousands for 2022 (see also note 6 on employee benefit expenses). The Group has no further obligations next to these contributions.
In the consolidated statement of financial position, the employee benefit liabilities consist of the following items:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Non-current employee benefit obligations | 4,183 | 4,411 |
Current employee benefit obligations | 335 | 232 |
TOTAL EMPLOYEE BENEFIT OBLIGATIONS | 4,518 | 4,642 |
of which post-employment benefits | 4,518 | 4,642 |
of which termination benefits | - | - |
The post-employment benefits are defined benefit pension plans granted by the Group in the Netherlands, France, Germany and Switzerland.
Furthermore, as a result of the Belgian legislation applicable to pension plans (so-called \u2018Law Vandenbroucke\u2019), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. This \u2018Law Vandenbroucke\u2019, which came into force in 2004, states that in the context of defined contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions. As from January 1, 2016, these percentages have been reviewed and adjusted to a single rate which varies with the market rates, subject to a minimum of 1.75% and a maximum of 3.75%, reducing the risk for the employer. Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19.
The following tables reconcile the amounts recognised in the statement of financial position, the statement of profit or loss and the statement of comprehensive income:
IN THOUSANDS OF EUR | 2023 | 2022 |
Defined benefit obligation | 11,373 | 10,882 |
Fair value of plan assets | (6,854) | (6,240) |
TOTAL POST-EMPLOYMENT OBLIGATIONS (FUNDED STATUS) | 4,518 | 4,642 |
Current service cost | 311 | 303 |
Past service cost | - | - |
Service cost recognised as part of employee benefit expenses | 311 | 303 |
Net interest expenses on post-employment liabilities | 123 | 55 |
Total defined benefit cost (statement of profit or loss) | 434 | 357 |
Remeasurements of defined benefit plans (other comprehensive income) | 333 | 91 |
The following table reconciles the post-employment obligations:
IN THOUSANDS OF EUR | 2023 | 2022 |
Net liability as at January 1 | 4,642 | 4,353 |
Service cost | 311 | 303 |
Net interest expense | 123 | 55 |
Remeasurements of defined benefit plans | 333 | 91 |
Employer contributions | (891) | (156) |
Effect of movements in foreign exchange rates | - | (4) |
NET LIABILITY AS AT DECEMBER 31 | 4,518 | 4,642 |
For the defined benefit pension plan, the liabilities are measured on a discounted basis because they are settled many years after the employees render the related service. A qualified actuary has determined the present value of the defined benefit obligations and the fair value of the plan assets. These assets are held by an insurance company. The projected unit credit method was used to estimate the defined benefit obligations, the defined benefit cost and the remeasurements of the net liability. Provisions are determined by computing the actuarial value of future payments to the employees in question.
The plan assets consist of insurance contracts. The actual return on plan assets amounted to EUR -239 thousands for 2023 (2022: EUR -1,464 thousands).
Expected contributions to post-employment benefit plans for the year ending December 31, 2024 are EUR 538 thousands.
The principal assumptions used in determining post-employment obligations for the Group\u2019s plans are shown below:
December 31, 2023 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.90% | 4.00% | 3.90% | 3.20% | 2.00% |
Inflation rate | 2.10% | 1.50% | 2.10% | 2.20% | 2.00% |
December 31, 2022 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.12% | 4.00% | 3.12% | 3.40% | 2.24% |
Inflation rate | 2.20% | 1.50% | 2.20% | 2.20% | 2.00% |
Through its defined benefit plans, the Group is exposed to a number of risks, the most relevant are detailed below:
Changes in bond yields: a decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plan\u2019s bond holdings.
Salary risk: the majority of the plan\u2019s benefit obligations are calculated by reference to the future salaries of plan members. As such, a higher-than-expected salary increase of plan members will lead to higher liabilities.
Longevity risk: pension plans provide for benefits for the life of the plan members, so increases in life expectancy will result in an increase in the plan\u2019s liabilities.
The actuary has performed a sensitivity analysis on the above actuarial assumptions. As such, both the discount rate and the inflation rate were altered by 50 basis points. A change in the estimates used does not lead to a material impact on the consolidated financial statements.
31. Audit fees
IN THOUSANDS OF EUR | 2023 | 2022 |
Audit fees | ||
Lotus Bakeries NV | 145 | 152 |
Lotus Bakeries Group | 456 | 443 |
Additional services rendered by the Auditor or its related parties | ||
Other audit-related fees | 131 | 111 |
Tax fees | 38 | 43 |
Other non-audit fees | 181 | 50 |
TOTAL | 951 | 799 |
3. Segment reporting
3.1 Accounting policy
Group revenue is centralised around a number of products that are all included in the traditional and natural snack segment. For these products, the Group is organised according to geographical regions for sales, production and internal reporting.
The result of a segment includes the income and expenses directly generated by a segment as well as the portion of the income and expenses that can be reasonably attributed to the segment. Intersegment price-fixing is defined based on the \u2018at arm\u2019s length\u2019 principle.
Considering that the chief operating decision maker does not review on a regular basis items of the statement of financial position per segment, segment assets and liabilities are not disclosed.
For the purpose of sales, production and internal reporting, the Group is classified according to geographical regions. As a result of the increased performance of different regions and to sustain future growth, we have reviewed in 2023 the reportable segments and have therefore restated the comparative disclosure to align with the organisational and managerial alignment. Furthermore, aggregation of underlying countries into the below identified reportable segments have been done when such aggregation is consistent with the core principle of IFRS 8, the segments have similar long-term economic characteristics and the segments are similar in each of the following respects:
The nature of products and services;
The nature of the production processes;
The procurement process;
The type or class of customer for their products and services;
The functional currencies of each market;
The methods used to distribute their products or provide their services; and
The nature of the regulatory environment.
The regions presented in the segment reporting, which are based on the internal reporting system, are composed as follows:
Continental Europe: sales by Sales Offices in Continental Europe and intra-group sales by factories in Continental Europe (homogeneous activities within Europe, excluding UK activities, and including Belgium, France and other European countries);
UK: sales by Sales Offices UK, Natural Balance Foods, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard;
Americas: sales by Sales Offices in Americas and intra-group sales by the factory in the United States;
Rest of the world: sales from Belgium to countries without own Sales Office and by own Sales Offices in China and South Korea.
3.2 Segment information
PERIOD ENDED DECEMBER 31, 2023 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 648,919 | 271,901 | 155,753 | 144,730 | (158,340) | 1,062,962 |
Revenue from external customers | 534,414 | 235,971 | 155,753 | 136,825 | - | 1,062,962 |
Intersegment revenue | 114,505 | 35,931 | - | 7,905 | (158,340) | - |
SEGMENT RESULTS (REBIT) | 97,438 | 51,373 | 27,945 | 30,995 | (34,776) | 172,974 |
Non-recurring income and expenses | (2,544) | |||||
Operating result (EBIT) | 170,430 | |||||
Financial result | (2,533) | |||||
Result before taxes | 167,897 | |||||
Income taxes | (38,565) | |||||
Net result | 129,333 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 32,358 | 15,346 | 16,646 | 16,327 | 4,750 | 85,427 |
Intangible assets | 8 | - | - | - | 774 | 783 |
Depreciations and amortisations on (in)tangible assets | 20,510 | 1,668 | 6,588 | 458 | 3,633 | 32,857 |
PERIOD ENDED DECEMBER 31, 2022 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 539,654 | 224,755 | 127,713 | 127,965 | (142,634) | 877,451 |
Revenue from external customers | 433,994 | 197,584 | 127,628 | 118,244 | - | 877,451 |
Intersegment revenue | 105,660 | 27,170 | 85 | 9,720 | (142,634) | - |
SEGMENT RESULTS (REBIT) | 78,633 | 40,333 | 14,482 | 32,393 | (25,653) | 140,188 |
Non-recurring income and expenses | (3,807) | |||||
Operating result (EBIT) | 136,381 | |||||
Financial result | (2,354) | |||||
Result before taxes | 134,027 | |||||
Income taxes | (30,744) | |||||
Net result | 103,283 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 65,091 | 6,082 | 50,884 | 13,466 | 6,428 | 141,952 |
Intangible assets | 522 | - | - | - | 784 | 1,306 |
Depreciations and amortisations on (in)tangible assets | 16,868 | 1,266 | 3,590 | 642 | 2,878 | 25,245 |
Sales between the various segments are carried out at arm\u2019s length.
The non-current assets (i.e. property, plant and equipment, right-of-use assets, intangible assets and goodwill) by location of assets are detailed in the table opposite:
The Group\u2019s revenue by country are disclosed in note 4.
IN THOUSANDS OF EUR | 2023 | 2022 |
Belgium | 265,045 | 252,446 |
United Kingdom | 212,773 | 207,064 |
United States | 135,227 | 129,897 |
The Netherlands | 100,342 | 100,167 |
South-Africa | 55,292 | 49,154 |
Other | 76,372 | 61,496 |
TOTAL NON-CURRENT ASSETS | 845,051 | 800,225 |
4. Revenue
4.1 Accounting policy
Revenue is included in the statement of profit or loss when it is probable that the Group will receive economic benefits from the transaction and the revenue can be measured reliably.
Revenue of the Group is generated principally through the sale of goods with as only performance obligation the delivery of goods. Revenue recognition occurs at a point in time, when control of the asset is transferred to the customer, generally on delivery of the goods.
Customer contracts include trade discounts or volume rebates, which are granted to the customer if the delivered quantities exceed a certain threshold. In these cases, the transaction price includes a variable consideration. The effect of the variable consideration on the transaction price is taken into account in revenue recognition by estimating the probability of the realisation of the discount or rebate for each contract.
In the context of contracts with clients or as a result of business practices, Lotus Bakeries might pay certain amounts to its customer. The payments can be cash, either in the form of rebates or discounts, or could alternatively be a credit or some other form of incentive that reduces amounts owed to Lotus Bakeries by a customer. Amounts paid by Lotus Bakeries to customers on either a limited or a continuous basis may take various forms and are paid for a varying number of reasons, such as discounts, coupons, rebates, co-advertising, slotting or listing fees.
In accordance with IFRS 15, Lotus Bakeries accounts for such consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the entity. It is therefore important to analyse the substance of such payment in order to properly reflect the substance of them, i.e. include in the transaction price of the transaction with the customer (revenue) or consider as a separate transaction (expense).
4.2 Overview
Revenue is generated at a point in time mainly by branded products (Biscoff, Natural Foods brands and Local heroes).
The sales generated in the country of domicile of the Group (Belgium) represent 15% of the Group\u2019s revenue. Sales to countries in our top four countries are presented in the table below. The sales in all other individual country represent less than 10% of the Group\u2019s revenue.
IN THOUSANDS OF EUR | 2023 | 2022 |
Belgium | 159,848 | 118,077 |
United Kingdom | 240,251 | 249,300 |
United States | 155,753 | 127,628 |
France | 150,816 | 109,218 |
Other | 356,294 | 273,208 |
Total revenue | 1,062,962 | 877,451 |
3. Segment reporting
3.1 Accounting policy
Group revenue is centralised around a number of products that are all included in the traditional and natural snack segment. For these products, the Group is organised according to geographical regions for sales, production and internal reporting.
The result of a segment includes the income and expenses directly generated by a segment as well as the portion of the income and expenses that can be reasonably attributed to the segment. Intersegment price-fixing is defined based on the \u2018at arm\u2019s length\u2019 principle.
Considering that the chief operating decision maker does not review on a regular basis items of the statement of financial position per segment, segment assets and liabilities are not disclosed.
For the purpose of sales, production and internal reporting, the Group is classified according to geographical regions. As a result of the increased performance of different regions and to sustain future growth, we have reviewed in 2023 the reportable segments and have therefore restated the comparative disclosure to align with the organisational and managerial alignment. Furthermore, aggregation of underlying countries into the below identified reportable segments have been done when such aggregation is consistent with the core principle of IFRS 8, the segments have similar long-term economic characteristics and the segments are similar in each of the following respects:
The nature of products and services;
The nature of the production processes;
The procurement process;
The type or class of customer for their products and services;
The functional currencies of each market;
The methods used to distribute their products or provide their services; and
The nature of the regulatory environment.
The regions presented in the segment reporting, which are based on the internal reporting system, are composed as follows:
Continental Europe: sales by Sales Offices in Continental Europe and intra-group sales by factories in Continental Europe (homogeneous activities within Europe, excluding UK activities, and including Belgium, France and other European countries);
UK: sales by Sales Offices UK, Natural Balance Foods, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard;
Americas: sales by Sales Offices in Americas and intra-group sales by the factory in the United States;
Rest of the world: sales from Belgium to countries without own Sales Office and by own Sales Offices in China and South Korea.
3.2 Segment information
PERIOD ENDED DECEMBER 31, 2023 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 648,919 | 271,901 | 155,753 | 144,730 | (158,340) | 1,062,962 |
Revenue from external customers | 534,414 | 235,971 | 155,753 | 136,825 | - | 1,062,962 |
Intersegment revenue | 114,505 | 35,931 | - | 7,905 | (158,340) | - |
SEGMENT RESULTS (REBIT) | 97,438 | 51,373 | 27,945 | 30,995 | (34,776) | 172,974 |
Non-recurring income and expenses | (2,544) | |||||
Operating result (EBIT) | 170,430 | |||||
Financial result | (2,533) | |||||
Result before taxes | 167,897 | |||||
Income taxes | (38,565) | |||||
Net result | 129,333 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 32,358 | 15,346 | 16,646 | 16,327 | 4,750 | 85,427 |
Intangible assets | 8 | - | - | - | 774 | 783 |
Depreciations and amortisations on (in)tangible assets | 20,510 | 1,668 | 6,588 | 458 | 3,633 | 32,857 |
PERIOD ENDED DECEMBER 31, 2022 | ||||||
IN THOUSANDS OF EUR | Continental Europe | UK | Americas | Rest of the world | Eliminations / Group | Total |
segment REVENUE | 539,654 | 224,755 | 127,713 | 127,965 | (142,634) | 877,451 |
Revenue from external customers | 433,994 | 197,584 | 127,628 | 118,244 | - | 877,451 |
Intersegment revenue | 105,660 | 27,170 | 85 | 9,720 | (142,634) | - |
SEGMENT RESULTS (REBIT) | 78,633 | 40,333 | 14,482 | 32,393 | (25,653) | 140,188 |
Non-recurring income and expenses | (3,807) | |||||
Operating result (EBIT) | 136,381 | |||||
Financial result | (2,354) | |||||
Result before taxes | 134,027 | |||||
Income taxes | (30,744) | |||||
Net result | 103,283 | |||||
OTHER SEGMENT INFORMATION | ||||||
Acquisitions: | ||||||
Tangible assets | 65,091 | 6,082 | 50,884 | 13,466 | 6,428 | 141,952 |
Intangible assets | 522 | - | - | - | 784 | 1,306 |
Depreciations and amortisations on (in)tangible assets | 16,868 | 1,266 | 3,590 | 642 | 2,878 | 25,245 |
Sales between the various segments are carried out at arm\u2019s length.
The non-current assets (i.e. property, plant and equipment, right-of-use assets, intangible assets and goodwill) by location of assets are detailed in the table opposite:
The Group\u2019s revenue by country are disclosed in note 4.
IN THOUSANDS OF EUR | 2023 | 2022 |
Belgium | 265,045 | 252,446 |
United Kingdom | 212,773 | 207,064 |
United States | 135,227 | 129,897 |
The Netherlands | 100,342 | 100,167 |
South-Africa | 55,292 | 49,154 |
Other | 76,372 | 61,496 |
TOTAL NON-CURRENT ASSETS | 845,051 | 800,225 |
4. Revenue
4.1 Accounting policy
Revenue is included in the statement of profit or loss when it is probable that the Group will receive economic benefits from the transaction and the revenue can be measured reliably.
Revenue of the Group is generated principally through the sale of goods with as only performance obligation the delivery of goods. Revenue recognition occurs at a point in time, when control of the asset is transferred to the customer, generally on delivery of the goods.
Customer contracts include trade discounts or volume rebates, which are granted to the customer if the delivered quantities exceed a certain threshold. In these cases, the transaction price includes a variable consideration. The effect of the variable consideration on the transaction price is taken into account in revenue recognition by estimating the probability of the realisation of the discount or rebate for each contract.
In the context of contracts with clients or as a result of business practices, Lotus Bakeries might pay certain amounts to its customer. The payments can be cash, either in the form of rebates or discounts, or could alternatively be a credit or some other form of incentive that reduces amounts owed to Lotus Bakeries by a customer. Amounts paid by Lotus Bakeries to customers on either a limited or a continuous basis may take various forms and are paid for a varying number of reasons, such as discounts, coupons, rebates, co-advertising, slotting or listing fees.
In accordance with IFRS 15, Lotus Bakeries accounts for such consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the entity. It is therefore important to analyse the substance of such payment in order to properly reflect the substance of them, i.e. include in the transaction price of the transaction with the customer (revenue) or consider as a separate transaction (expense).
4.2 Overview
Revenue is generated at a point in time mainly by branded products (Biscoff, Natural Foods brands and Local heroes).
The sales generated in the country of domicile of the Group (Belgium) represent 15% of the Group\u2019s revenue. Sales to countries in our top four countries are presented in the table below. The sales in all other individual country represent less than 10% of the Group\u2019s revenue.
IN THOUSANDS OF EUR | 2023 | 2022 |
Belgium | 159,848 | 118,077 |
United Kingdom | 240,251 | 249,300 |
United States | 155,753 | 127,628 |
France | 150,816 | 109,218 |
Other | 356,294 | 273,208 |
Total revenue | 1,062,962 | 877,451 |
3.1 Accounting policy
Group revenue is centralised around a number of products that are all included in the traditional and natural snack segment. For these products, the Group is organised according to geographical regions for sales, production and internal reporting.
The result of a segment includes the income and expenses directly generated by a segment as well as the portion of the income and expenses that can be reasonably attributed to the segment. Intersegment price-fixing is defined based on the \u2018at arm\u2019s length\u2019 principle.
Considering that the chief operating decision maker does not review on a regular basis items of the statement of financial position per segment, segment assets and liabilities are not disclosed.
For the purpose of sales, production and internal reporting, the Group is classified according to geographical regions. As a result of the increased performance of different regions and to sustain future growth, we have reviewed in 2023 the reportable segments and have therefore restated the comparative disclosure to align with the organisational and managerial alignment. Furthermore, aggregation of underlying countries into the below identified reportable segments have been done when such aggregation is consistent with the core principle of IFRS 8, the segments have similar long-term economic characteristics and the segments are similar in each of the following respects:
The nature of products and services;
The nature of the production processes;
The procurement process;
The type or class of customer for their products and services;
The functional currencies of each market;
The methods used to distribute their products or provide their services; and
The nature of the regulatory environment.
The regions presented in the segment reporting, which are based on the internal reporting system, are composed as follows:
Continental Europe: sales by Sales Offices in Continental Europe and intra-group sales by factories in Continental Europe (homogeneous activities within Europe, excluding UK activities, and including Belgium, France and other European countries);
UK: sales by Sales Offices UK, Natural Balance Foods, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard;
Americas: sales by Sales Offices in Americas and intra-group sales by the factory in the United States;
Rest of the world: sales from Belgium to countries without own Sales Office and by own Sales Offices in China and South Korea.
4.1 Accounting policy
Revenue is included in the statement of profit or loss when it is probable that the Group will receive economic benefits from the transaction and the revenue can be measured reliably.
Revenue of the Group is generated principally through the sale of goods with as only performance obligation the delivery of goods. Revenue recognition occurs at a point in time, when control of the asset is transferred to the customer, generally on delivery of the goods.
Customer contracts include trade discounts or volume rebates, which are granted to the customer if the delivered quantities exceed a certain threshold. In these cases, the transaction price includes a variable consideration. The effect of the variable consideration on the transaction price is taken into account in revenue recognition by estimating the probability of the realisation of the discount or rebate for each contract.
In the context of contracts with clients or as a result of business practices, Lotus Bakeries might pay certain amounts to its customer. The payments can be cash, either in the form of rebates or discounts, or could alternatively be a credit or some other form of incentive that reduces amounts owed to Lotus Bakeries by a customer. Amounts paid by Lotus Bakeries to customers on either a limited or a continuous basis may take various forms and are paid for a varying number of reasons, such as discounts, coupons, rebates, co-advertising, slotting or listing fees.
In accordance with IFRS 15, Lotus Bakeries accounts for such consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the entity. It is therefore important to analyse the substance of such payment in order to properly reflect the substance of them, i.e. include in the transaction price of the transaction with the customer (revenue) or consider as a separate transaction (expense).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f79268": { "value": "Customer contracts include trade discounts or volume rebates, which are granted to the customer if the delivered quantities exceed a certain threshold. In these cases, the transaction price includes a variable consideration. The effect of the variable consideration on the transaction price is taken into account in revenue recognition by estimating the probability of the realisation of the discount or rebate for each contract.
In the context of contracts with clients or as a result of business practices, Lotus Bakeries might pay certain amounts to its customer. The payments can be cash, either in the form of rebates or discounts, or could alternatively be a credit or some other form of incentive that reduces amounts owed to Lotus Bakeries by a customer. Amounts paid by Lotus Bakeries to customers on either a limited or a continuous basis may take various forms and are paid for a varying number of reasons, such as discounts, coupons, rebates, co-advertising, slotting or listing fees.
In accordance with IFRS 15, Lotus Bakeries accounts for such consideration payable to a customer as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the entity. It is therefore important to analyse the substance of such payment in order to properly reflect the substance of them, i.e. include in the transaction price of the transaction with the customer (revenue) or consider as a separate transaction (expense).
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscountsAndRebatesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f79697": { "value": "5. Services and other goods
Services and other goods include mainly commercial and marketing expenses, logistic expenses (transport and warehousing), professional fees (legal, accounting and consulting) and utilities.
The increase compared to 2022 relates to increased sales and production volumes, next to increased plan-related expenses and professional fees, in line with the increased revenue performance.
", "dimensions": { "concept": "ifrs-full:DisclosureOfGeneralAndAdministrativeExpenseExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__140-1": { "value": "5. Services and other goods
Services and other goods include mainly commercial and marketing expenses, logistic expenses (transport and warehousing), professional fees (legal, accounting and consulting) and utilities.
The increase compared to 2022 relates to increased sales and production volumes, next to increased plan-related expenses and professional fees, in line with the increased revenue performance.
6. Employee benefit expenses
IN THOUSANDS OF EUR | 2023 | 2022 |
Short-term employee benefits | 165,997 | 139,481 |
Social security contributions | 25,828 | 21,789 |
Defined contribution costs | 3,628 | 4,654 |
Defined benefit costs | 311 | 303 |
Other employee benefit expenses | 9,546 | 7,392 |
TOTAL EMPLOYEE BENEFIT EXPENSES | 205,310 | 173,618 |
Average number of employees | 2,857 | 2,655 |
Number of employees as at the end of the year | 2,984 | 2,698 |
The other employee benefit expenses include mainly the costs of training and other employee-related insurances.
7. Depreciation and amortisation expenses
IN THOUSANDS OF EUR | 2023 | 2022 |
Amortisation of intangible assets (see note 14) | 1,274 | 1,033 |
Depreciation of property, plant and equipment (see note 15) | 26,498 | 19,554 |
Depreciation of right-of-use assets (see note 15) | 5,085 | 4,658 |
TOTAL DEPRECIATION AND AMORTISATION EXPENSES | 32,857 | 25,245 |
8. Other operating income and expenses
The other operating income consists primarily of external sales of raw materials and other non-core items, various costs recovered at the time of sale and indemnification payments.
The other operating expenses include local levies (property taxes, municipal taxes, packaging tax\u2026) and penalties.
9. Non-recurring income and expenses
Non-recurring income and expenses include operating income and expenses that do not belong to or derive from the recurring operating activities of the Group (normal course of business). This category includes primarily results from the disposal of fixed assets, any goodwill impairment losses, any impairment losses on fixed assets, expenses relating to the acquisition, disposal and start-up of new businesses, restructuring expenses and expenses relating to pandemics.
IN THOUSANDS OF EUR | 2023 | 2022 |
Start-up costs related to capacity extensions | (2,546) | (288) |
Organisation restructuring | (62) | (1,269) |
Office relocations | (17) | (785) |
Product range restructuring | - | (1,081) |
Other | 81 | (383) |
TOTAL NON-RECURRING INCOME AND EXPENSES | (2,544) | (3,807) |
In 2023, the non-recurring result relates mainly to expenses from the construction and establishment of the new plant in Thailand and the extension of the plant in South-Africa. The costs for the project in Thailand will increase towards the commissioning of the plant in 2026.
As from reporting year 2024, the non-recurring items will be referred to as \u2018Adjusting items to the operating result\u2019. However, the scope of this reporting line item will not change, see also note 33 relating to the Alternative Performance Measures.
With regard to trade receivables there are no indications that debtors will not meet their payment obligations. Nor are there any customers representing more than 10% of the consolidated revenue. IFRS 9 requires the Company to recognise an allowance for expected losses on the recovery of trade receivables. This has no material impact.
More information regarding the credit risk is disclosed in note 26.
Movements on valuation for impairment of trade receivables are as follows:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Opening balance | 803 | 526 |
Allowances recognised | 531 | 472 |
Amounts written off during the year as uncollectible | (51) | (159) |
Effect of movements in foreign exchange rates | 12 | (37) |
TOTAL ALLOWANCE FOR IMPAIRMENT OF TRADE RECEIVABLES | 1,294 | 803 |
21.4 Share-based payments
21.4.1 Accounting policy
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
21.4.2 Overview
Since 2012, each financial year the Board of Directors grants stock options to executives and senior management, based on category, results and performance. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below.
Each option gives the holder the right to purchase one ordinary Lotus Bakeries share at a fixed exercise price. The exercise price is equal to the average closing stock market price of the underlying share during the thirty calendar days prior to the offering date. The granted options have a term of five years. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The stock options are only subject to services conditions so that it will vest gradually over the vesting period, i.e. three years. The options are exercisable if the option holder remains linked to the Company or a related entity as an employee or executive director. These rights are retained in the event of retirement, early retirement, invalidity or death.
The stock option plans are considered equity-settled share-based payments.
The fair value of the options is estimated at the grant date, using the binomial valuation model. This valuation model is based on the following market data and assumptions: the share price at the time of allotment, the exercise price, the exercise arrangements, the estimated volatility, the dividend expectations and the risk-free interest rate. The fair value of the share options is recognised linearly over the vesting period.
The following table details the different plans granted and the assumptions used for the measurement of the fair value:
Granted in | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Number granted | 1,179 | 1,199 | 962 | 660 | 792 | 618 |
Number exercised | (1,139) | (911) | (50) | (33) | - | - |
Number expired | (40) | (50) | (40) | (26) | - | - |
Available options | - | 238 | 872 | 601 | 792 | 618 |
Key assumptions used for fair value measurement\t | ||||||
Exercise period | 01/01/2022 \u2013 14/05/2023 | 01/01/2023 \u2013 09/05/2024 | 01/01/2024 \u2013 07/05/2025 | 01/01/2025 \u2013 17/05/2026 | 01/01/2026 \u2013 30/06/2027 | 01/01/2027 \u2013 31/05/2028 |
Exercise price (EUR) | 2,373.00 | 2,351.58 | 2,828.95 | 4,517.14 | 5,057.32 | 6,086.36 |
Share price (EUR) | 2,310.00 | 2,330.00 | 2,890.00 | 4,630.00 | 4,868.81 | 5,990.00 |
Expected volatility | 22.43% | 23.14% | 25.07% | 23.69% | 25.39% | 26.23% |
Dividend yield | 0.93% | 0.92% | 0.95% | 0.94% | 0.97% | 0.95% |
Risk-free rate | 0.11% | -0.29% | -0.36% | -0.34% | 0.82% | 2.57% |
FAIR VALUE PER OPTION (EUR) | 316.29 | 331.55 | 471.65 | 720.51 | 790.38 | 1,167.59 |
The volatility is based on daily share prices of Lotus Bakeries over the last three years.
The following reconciles the options outstanding at the beginning and end of the year:
Weighted average exercise price (EUR) | Number of options | |
Outstanding options at January 1, 2022 | 2,770 | 4,541 |
Granted | 5,057 | 792 |
Exercised | 2,420 | (1,492) |
Expired | 2,864 | (146) |
Outstanding options at December 31, 2022 | 3,398 | 3,695 |
Granted | 6,086 | 618 |
Exercised | 2,358 | (1,192) |
Expired | - | - |
OUTSTANDING OPTIONS AT DECEMBER 31, 2023 | 4,328 | 3,121 |
In 2023, a total expense of EUR 470 thousands was recognised (2022: EUR 470 thousands).
23. Employee benefit obligations
23.1 Accounting policy
Short-term employee benefits
Bonuses for employees and management are calculated based on key financial objectives and individual objectives. The estimated amount of the bonuses is recognised as an expense in the period in which the related services have been rendered based on an estimate on the reporting date.
Post-employment benefits (pension plans)
Group companies operate various pension schemes. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due.
In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Defined benefit costs are divided into 2 categories:
Current service cost, past-service cost, gains and losses on curtailments and settlements; and
Net interest expense or income.
The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income.
23.2 Overview
The Group operates defined contribution plans and defined benefit plans.
For the defined contribution plans, the Group pays contributions to insurance companies. Management of the pension plan is outsourced to an insurance company. For 2023, the expense amounts to EUR 3,628 thousands compared to EUR 4,654 thousands for 2022 (see also note 6 on employee benefit expenses). The Group has no further obligations next to these contributions.
In the consolidated statement of financial position, the employee benefit liabilities consist of the following items:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Non-current employee benefit obligations | 4,183 | 4,411 |
Current employee benefit obligations | 335 | 232 |
TOTAL EMPLOYEE BENEFIT OBLIGATIONS | 4,518 | 4,642 |
of which post-employment benefits | 4,518 | 4,642 |
of which termination benefits | - | - |
The post-employment benefits are defined benefit pension plans granted by the Group in the Netherlands, France, Germany and Switzerland.
Furthermore, as a result of the Belgian legislation applicable to pension plans (so-called \u2018Law Vandenbroucke\u2019), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. This \u2018Law Vandenbroucke\u2019, which came into force in 2004, states that in the context of defined contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions. As from January 1, 2016, these percentages have been reviewed and adjusted to a single rate which varies with the market rates, subject to a minimum of 1.75% and a maximum of 3.75%, reducing the risk for the employer. Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19.
The following tables reconcile the amounts recognised in the statement of financial position, the statement of profit or loss and the statement of comprehensive income:
IN THOUSANDS OF EUR | 2023 | 2022 |
Defined benefit obligation | 11,373 | 10,882 |
Fair value of plan assets | (6,854) | (6,240) |
TOTAL POST-EMPLOYMENT OBLIGATIONS (FUNDED STATUS) | 4,518 | 4,642 |
Current service cost | 311 | 303 |
Past service cost | - | - |
Service cost recognised as part of employee benefit expenses | 311 | 303 |
Net interest expenses on post-employment liabilities | 123 | 55 |
Total defined benefit cost (statement of profit or loss) | 434 | 357 |
Remeasurements of defined benefit plans (other comprehensive income) | 333 | 91 |
The following table reconciles the post-employment obligations:
IN THOUSANDS OF EUR | 2023 | 2022 |
Net liability as at January 1 | 4,642 | 4,353 |
Service cost | 311 | 303 |
Net interest expense | 123 | 55 |
Remeasurements of defined benefit plans | 333 | 91 |
Employer contributions | (891) | (156) |
Effect of movements in foreign exchange rates | - | (4) |
NET LIABILITY AS AT DECEMBER 31 | 4,518 | 4,642 |
For the defined benefit pension plan, the liabilities are measured on a discounted basis because they are settled many years after the employees render the related service. A qualified actuary has determined the present value of the defined benefit obligations and the fair value of the plan assets. These assets are held by an insurance company. The projected unit credit method was used to estimate the defined benefit obligations, the defined benefit cost and the remeasurements of the net liability. Provisions are determined by computing the actuarial value of future payments to the employees in question.
The plan assets consist of insurance contracts. The actual return on plan assets amounted to EUR -239 thousands for 2023 (2022: EUR -1,464 thousands).
Expected contributions to post-employment benefit plans for the year ending December 31, 2024 are EUR 538 thousands.
The principal assumptions used in determining post-employment obligations for the Group\u2019s plans are shown below:
December 31, 2023 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.90% | 4.00% | 3.90% | 3.20% | 2.00% |
Inflation rate | 2.10% | 1.50% | 2.10% | 2.20% | 2.00% |
December 31, 2022 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.12% | 4.00% | 3.12% | 3.40% | 2.24% |
Inflation rate | 2.20% | 1.50% | 2.20% | 2.20% | 2.00% |
Through its defined benefit plans, the Group is exposed to a number of risks, the most relevant are detailed below:
Changes in bond yields: a decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plan\u2019s bond holdings.
Salary risk: the majority of the plan\u2019s benefit obligations are calculated by reference to the future salaries of plan members. As such, a higher-than-expected salary increase of plan members will lead to higher liabilities.
Longevity risk: pension plans provide for benefits for the life of the plan members, so increases in life expectancy will result in an increase in the plan\u2019s liabilities.
The actuary has performed a sensitivity analysis on the above actuarial assumptions. As such, both the discount rate and the inflation rate were altered by 50 basis points. A change in the estimates used does not lead to a material impact on the consolidated financial statements.
6. Employee benefit expenses
IN THOUSANDS OF EUR | 2023 | 2022 |
Short-term employee benefits | 165,997 | 139,481 |
Social security contributions | 25,828 | 21,789 |
Defined contribution costs | 3,628 | 4,654 |
Defined benefit costs | 311 | 303 |
Other employee benefit expenses | 9,546 | 7,392 |
TOTAL EMPLOYEE BENEFIT EXPENSES | 205,310 | 173,618 |
Average number of employees | 2,857 | 2,655 |
Number of employees as at the end of the year | 2,984 | 2,698 |
The other employee benefit expenses include mainly the costs of training and other employee-related insurances.
21.4 Share-based payments
21.4.1 Accounting policy
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
21.4.2 Overview
Since 2012, each financial year the Board of Directors grants stock options to executives and senior management, based on category, results and performance. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below.
Each option gives the holder the right to purchase one ordinary Lotus Bakeries share at a fixed exercise price. The exercise price is equal to the average closing stock market price of the underlying share during the thirty calendar days prior to the offering date. The granted options have a term of five years. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The stock options are only subject to services conditions so that it will vest gradually over the vesting period, i.e. three years. The options are exercisable if the option holder remains linked to the Company or a related entity as an employee or executive director. These rights are retained in the event of retirement, early retirement, invalidity or death.
The stock option plans are considered equity-settled share-based payments.
The fair value of the options is estimated at the grant date, using the binomial valuation model. This valuation model is based on the following market data and assumptions: the share price at the time of allotment, the exercise price, the exercise arrangements, the estimated volatility, the dividend expectations and the risk-free interest rate. The fair value of the share options is recognised linearly over the vesting period.
The following table details the different plans granted and the assumptions used for the measurement of the fair value:
Granted in | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Number granted | 1,179 | 1,199 | 962 | 660 | 792 | 618 |
Number exercised | (1,139) | (911) | (50) | (33) | - | - |
Number expired | (40) | (50) | (40) | (26) | - | - |
Available options | - | 238 | 872 | 601 | 792 | 618 |
Key assumptions used for fair value measurement\t | ||||||
Exercise period | 01/01/2022 \u2013 14/05/2023 | 01/01/2023 \u2013 09/05/2024 | 01/01/2024 \u2013 07/05/2025 | 01/01/2025 \u2013 17/05/2026 | 01/01/2026 \u2013 30/06/2027 | 01/01/2027 \u2013 31/05/2028 |
Exercise price (EUR) | 2,373.00 | 2,351.58 | 2,828.95 | 4,517.14 | 5,057.32 | 6,086.36 |
Share price (EUR) | 2,310.00 | 2,330.00 | 2,890.00 | 4,630.00 | 4,868.81 | 5,990.00 |
Expected volatility | 22.43% | 23.14% | 25.07% | 23.69% | 25.39% | 26.23% |
Dividend yield | 0.93% | 0.92% | 0.95% | 0.94% | 0.97% | 0.95% |
Risk-free rate | 0.11% | -0.29% | -0.36% | -0.34% | 0.82% | 2.57% |
FAIR VALUE PER OPTION (EUR) | 316.29 | 331.55 | 471.65 | 720.51 | 790.38 | 1,167.59 |
The volatility is based on daily share prices of Lotus Bakeries over the last three years.
The following reconciles the options outstanding at the beginning and end of the year:
Weighted average exercise price (EUR) | Number of options | |
Outstanding options at January 1, 2022 | 2,770 | 4,541 |
Granted | 5,057 | 792 |
Exercised | 2,420 | (1,492) |
Expired | 2,864 | (146) |
Outstanding options at December 31, 2022 | 3,398 | 3,695 |
Granted | 6,086 | 618 |
Exercised | 2,358 | (1,192) |
Expired | - | - |
OUTSTANDING OPTIONS AT DECEMBER 31, 2023 | 4,328 | 3,121 |
In 2023, a total expense of EUR 470 thousands was recognised (2022: EUR 470 thousands).
23. Employee benefit obligations
23.1 Accounting policy
Short-term employee benefits
Bonuses for employees and management are calculated based on key financial objectives and individual objectives. The estimated amount of the bonuses is recognised as an expense in the period in which the related services have been rendered based on an estimate on the reporting date.
Post-employment benefits (pension plans)
Group companies operate various pension schemes. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due.
In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Defined benefit costs are divided into 2 categories:
Current service cost, past-service cost, gains and losses on curtailments and settlements; and
Net interest expense or income.
The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income.
23.2 Overview
The Group operates defined contribution plans and defined benefit plans.
For the defined contribution plans, the Group pays contributions to insurance companies. Management of the pension plan is outsourced to an insurance company. For 2023, the expense amounts to EUR 3,628 thousands compared to EUR 4,654 thousands for 2022 (see also note 6 on employee benefit expenses). The Group has no further obligations next to these contributions.
In the consolidated statement of financial position, the employee benefit liabilities consist of the following items:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Non-current employee benefit obligations | 4,183 | 4,411 |
Current employee benefit obligations | 335 | 232 |
TOTAL EMPLOYEE BENEFIT OBLIGATIONS | 4,518 | 4,642 |
of which post-employment benefits | 4,518 | 4,642 |
of which termination benefits | - | - |
The post-employment benefits are defined benefit pension plans granted by the Group in the Netherlands, France, Germany and Switzerland.
Furthermore, as a result of the Belgian legislation applicable to pension plans (so-called \u2018Law Vandenbroucke\u2019), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. This \u2018Law Vandenbroucke\u2019, which came into force in 2004, states that in the context of defined contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions. As from January 1, 2016, these percentages have been reviewed and adjusted to a single rate which varies with the market rates, subject to a minimum of 1.75% and a maximum of 3.75%, reducing the risk for the employer. Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19.
The following tables reconcile the amounts recognised in the statement of financial position, the statement of profit or loss and the statement of comprehensive income:
IN THOUSANDS OF EUR | 2023 | 2022 |
Defined benefit obligation | 11,373 | 10,882 |
Fair value of plan assets | (6,854) | (6,240) |
TOTAL POST-EMPLOYMENT OBLIGATIONS (FUNDED STATUS) | 4,518 | 4,642 |
Current service cost | 311 | 303 |
Past service cost | - | - |
Service cost recognised as part of employee benefit expenses | 311 | 303 |
Net interest expenses on post-employment liabilities | 123 | 55 |
Total defined benefit cost (statement of profit or loss) | 434 | 357 |
Remeasurements of defined benefit plans (other comprehensive income) | 333 | 91 |
The following table reconciles the post-employment obligations:
IN THOUSANDS OF EUR | 2023 | 2022 |
Net liability as at January 1 | 4,642 | 4,353 |
Service cost | 311 | 303 |
Net interest expense | 123 | 55 |
Remeasurements of defined benefit plans | 333 | 91 |
Employer contributions | (891) | (156) |
Effect of movements in foreign exchange rates | - | (4) |
NET LIABILITY AS AT DECEMBER 31 | 4,518 | 4,642 |
For the defined benefit pension plan, the liabilities are measured on a discounted basis because they are settled many years after the employees render the related service. A qualified actuary has determined the present value of the defined benefit obligations and the fair value of the plan assets. These assets are held by an insurance company. The projected unit credit method was used to estimate the defined benefit obligations, the defined benefit cost and the remeasurements of the net liability. Provisions are determined by computing the actuarial value of future payments to the employees in question.
The plan assets consist of insurance contracts. The actual return on plan assets amounted to EUR -239 thousands for 2023 (2022: EUR -1,464 thousands).
Expected contributions to post-employment benefit plans for the year ending December 31, 2024 are EUR 538 thousands.
The principal assumptions used in determining post-employment obligations for the Group\u2019s plans are shown below:
December 31, 2023 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.90% | 4.00% | 3.90% | 3.20% | 2.00% |
Inflation rate | 2.10% | 1.50% | 2.10% | 2.20% | 2.00% |
December 31, 2022 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.12% | 4.00% | 3.12% | 3.40% | 2.24% |
Inflation rate | 2.20% | 1.50% | 2.20% | 2.20% | 2.00% |
Through its defined benefit plans, the Group is exposed to a number of risks, the most relevant are detailed below:
Changes in bond yields: a decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plan\u2019s bond holdings.
Salary risk: the majority of the plan\u2019s benefit obligations are calculated by reference to the future salaries of plan members. As such, a higher-than-expected salary increase of plan members will lead to higher liabilities.
Longevity risk: pension plans provide for benefits for the life of the plan members, so increases in life expectancy will result in an increase in the plan\u2019s liabilities.
The actuary has performed a sensitivity analysis on the above actuarial assumptions. As such, both the discount rate and the inflation rate were altered by 50 basis points. A change in the estimates used does not lead to a material impact on the consolidated financial statements.
6. Employee benefit expenses
IN THOUSANDS OF EUR | 2023 | 2022 |
Short-term employee benefits | 165,997 | 139,481 |
Social security contributions | 25,828 | 21,789 |
Defined contribution costs | 3,628 | 4,654 |
Defined benefit costs | 311 | 303 |
Other employee benefit expenses | 9,546 | 7,392 |
TOTAL EMPLOYEE BENEFIT EXPENSES | 205,310 | 173,618 |
Average number of employees | 2,857 | 2,655 |
Number of employees as at the end of the year | 2,984 | 2,698 |
The other employee benefit expenses include mainly the costs of training and other employee-related insurances.
21.4 Share-based payments
21.4.1 Accounting policy
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
21.4.2 Overview
Since 2012, each financial year the Board of Directors grants stock options to executives and senior management, based on category, results and performance. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below.
Each option gives the holder the right to purchase one ordinary Lotus Bakeries share at a fixed exercise price. The exercise price is equal to the average closing stock market price of the underlying share during the thirty calendar days prior to the offering date. The granted options have a term of five years. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The stock options are only subject to services conditions so that it will vest gradually over the vesting period, i.e. three years. The options are exercisable if the option holder remains linked to the Company or a related entity as an employee or executive director. These rights are retained in the event of retirement, early retirement, invalidity or death.
The stock option plans are considered equity-settled share-based payments.
The fair value of the options is estimated at the grant date, using the binomial valuation model. This valuation model is based on the following market data and assumptions: the share price at the time of allotment, the exercise price, the exercise arrangements, the estimated volatility, the dividend expectations and the risk-free interest rate. The fair value of the share options is recognised linearly over the vesting period.
The following table details the different plans granted and the assumptions used for the measurement of the fair value:
Granted in | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Number granted | 1,179 | 1,199 | 962 | 660 | 792 | 618 |
Number exercised | (1,139) | (911) | (50) | (33) | - | - |
Number expired | (40) | (50) | (40) | (26) | - | - |
Available options | - | 238 | 872 | 601 | 792 | 618 |
Key assumptions used for fair value measurement\t | ||||||
Exercise period | 01/01/2022 \u2013 14/05/2023 | 01/01/2023 \u2013 09/05/2024 | 01/01/2024 \u2013 07/05/2025 | 01/01/2025 \u2013 17/05/2026 | 01/01/2026 \u2013 30/06/2027 | 01/01/2027 \u2013 31/05/2028 |
Exercise price (EUR) | 2,373.00 | 2,351.58 | 2,828.95 | 4,517.14 | 5,057.32 | 6,086.36 |
Share price (EUR) | 2,310.00 | 2,330.00 | 2,890.00 | 4,630.00 | 4,868.81 | 5,990.00 |
Expected volatility | 22.43% | 23.14% | 25.07% | 23.69% | 25.39% | 26.23% |
Dividend yield | 0.93% | 0.92% | 0.95% | 0.94% | 0.97% | 0.95% |
Risk-free rate | 0.11% | -0.29% | -0.36% | -0.34% | 0.82% | 2.57% |
FAIR VALUE PER OPTION (EUR) | 316.29 | 331.55 | 471.65 | 720.51 | 790.38 | 1,167.59 |
The volatility is based on daily share prices of Lotus Bakeries over the last three years.
The following reconciles the options outstanding at the beginning and end of the year:
Weighted average exercise price (EUR) | Number of options | |
Outstanding options at January 1, 2022 | 2,770 | 4,541 |
Granted | 5,057 | 792 |
Exercised | 2,420 | (1,492) |
Expired | 2,864 | (146) |
Outstanding options at December 31, 2022 | 3,398 | 3,695 |
Granted | 6,086 | 618 |
Exercised | 2,358 | (1,192) |
Expired | - | - |
OUTSTANDING OPTIONS AT DECEMBER 31, 2023 | 4,328 | 3,121 |
In 2023, a total expense of EUR 470 thousands was recognised (2022: EUR 470 thousands).
23. Employee benefit obligations
23.1 Accounting policy
Short-term employee benefits
Bonuses for employees and management are calculated based on key financial objectives and individual objectives. The estimated amount of the bonuses is recognised as an expense in the period in which the related services have been rendered based on an estimate on the reporting date.
Post-employment benefits (pension plans)
Group companies operate various pension schemes. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due.
In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Defined benefit costs are divided into 2 categories:
Current service cost, past-service cost, gains and losses on curtailments and settlements; and
Net interest expense or income.
The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income.
23.2 Overview
The Group operates defined contribution plans and defined benefit plans.
For the defined contribution plans, the Group pays contributions to insurance companies. Management of the pension plan is outsourced to an insurance company. For 2023, the expense amounts to EUR 3,628 thousands compared to EUR 4,654 thousands for 2022 (see also note 6 on employee benefit expenses). The Group has no further obligations next to these contributions.
In the consolidated statement of financial position, the employee benefit liabilities consist of the following items:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Non-current employee benefit obligations | 4,183 | 4,411 |
Current employee benefit obligations | 335 | 232 |
TOTAL EMPLOYEE BENEFIT OBLIGATIONS | 4,518 | 4,642 |
of which post-employment benefits | 4,518 | 4,642 |
of which termination benefits | - | - |
The post-employment benefits are defined benefit pension plans granted by the Group in the Netherlands, France, Germany and Switzerland.
Furthermore, as a result of the Belgian legislation applicable to pension plans (so-called \u2018Law Vandenbroucke\u2019), all Belgian defined contribution plans have to be considered under IFRS as defined benefit plans. This \u2018Law Vandenbroucke\u2019, which came into force in 2004, states that in the context of defined contribution plans, the employer must guarantee a minimum return of 3.75% on employee contributions and 3.25% on employer contributions. As from January 1, 2016, these percentages have been reviewed and adjusted to a single rate which varies with the market rates, subject to a minimum of 1.75% and a maximum of 3.75%, reducing the risk for the employer. Because of this minimum guaranteed return for defined contribution plans in Belgium, the employer is exposed to a financial risk (there is a legal obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods). These plans should therefore be classified and accounted for as defined benefit plans under IAS 19.
The following tables reconcile the amounts recognised in the statement of financial position, the statement of profit or loss and the statement of comprehensive income:
IN THOUSANDS OF EUR | 2023 | 2022 |
Defined benefit obligation | 11,373 | 10,882 |
Fair value of plan assets | (6,854) | (6,240) |
TOTAL POST-EMPLOYMENT OBLIGATIONS (FUNDED STATUS) | 4,518 | 4,642 |
Current service cost | 311 | 303 |
Past service cost | - | - |
Service cost recognised as part of employee benefit expenses | 311 | 303 |
Net interest expenses on post-employment liabilities | 123 | 55 |
Total defined benefit cost (statement of profit or loss) | 434 | 357 |
Remeasurements of defined benefit plans (other comprehensive income) | 333 | 91 |
The following table reconciles the post-employment obligations:
IN THOUSANDS OF EUR | 2023 | 2022 |
Net liability as at January 1 | 4,642 | 4,353 |
Service cost | 311 | 303 |
Net interest expense | 123 | 55 |
Remeasurements of defined benefit plans | 333 | 91 |
Employer contributions | (891) | (156) |
Effect of movements in foreign exchange rates | - | (4) |
NET LIABILITY AS AT DECEMBER 31 | 4,518 | 4,642 |
For the defined benefit pension plan, the liabilities are measured on a discounted basis because they are settled many years after the employees render the related service. A qualified actuary has determined the present value of the defined benefit obligations and the fair value of the plan assets. These assets are held by an insurance company. The projected unit credit method was used to estimate the defined benefit obligations, the defined benefit cost and the remeasurements of the net liability. Provisions are determined by computing the actuarial value of future payments to the employees in question.
The plan assets consist of insurance contracts. The actual return on plan assets amounted to EUR -239 thousands for 2023 (2022: EUR -1,464 thousands).
Expected contributions to post-employment benefit plans for the year ending December 31, 2024 are EUR 538 thousands.
The principal assumptions used in determining post-employment obligations for the Group\u2019s plans are shown below:
December 31, 2023 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.90% | 4.00% | 3.90% | 3.20% | 2.00% |
Inflation rate | 2.10% | 1.50% | 2.10% | 2.20% | 2.00% |
December 31, 2022 | Belgium | THE NETHERLANDS | France | Germany | Switzerland |
Discount rate | 3.12% | 4.00% | 3.12% | 3.40% | 2.24% |
Inflation rate | 2.20% | 1.50% | 2.20% | 2.20% | 2.00% |
Through its defined benefit plans, the Group is exposed to a number of risks, the most relevant are detailed below:
Changes in bond yields: a decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plan\u2019s bond holdings.
Salary risk: the majority of the plan\u2019s benefit obligations are calculated by reference to the future salaries of plan members. As such, a higher-than-expected salary increase of plan members will lead to higher liabilities.
Longevity risk: pension plans provide for benefits for the life of the plan members, so increases in life expectancy will result in an increase in the plan\u2019s liabilities.
The actuary has performed a sensitivity analysis on the above actuarial assumptions. As such, both the discount rate and the inflation rate were altered by 50 basis points. A change in the estimates used does not lead to a material impact on the consolidated financial statements.
7. Depreciation and amortisation expenses
IN THOUSANDS OF EUR | 2023 | 2022 |
Amortisation of intangible assets (see note 14) | 1,274 | 1,033 |
Depreciation of property, plant and equipment (see note 15) | 26,498 | 19,554 |
Depreciation of right-of-use assets (see note 15) | 5,085 | 4,658 |
TOTAL DEPRECIATION AND AMORTISATION EXPENSES | 32,857 | 25,245 |
8. Other operating income and expenses
The other operating income consists primarily of external sales of raw materials and other non-core items, various costs recovered at the time of sale and indemnification payments.
The other operating expenses include local levies (property taxes, municipal taxes, packaging tax\u2026) and penalties.
10. Financial result
IN THOUSANDS OF EUR | 2023 | 2022 |
Interest expenses | (4,035) | (3,115) |
Interest income | 2,475 | 551 |
Interest income (expenses) | (1,560) | (2,565) |
Foreign exchange gains (losses) | (119) | 988 |
Other financial income (expenses) | (854) | (777) |
TOTAL FINANCIAL RESULT | (2,533) | (2,354) |
The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pounds sterling) and USD (US dollars).
10. Financial result
IN THOUSANDS OF EUR | 2023 | 2022 |
Interest expenses | (4,035) | (3,115) |
Interest income | 2,475 | 551 |
Interest income (expenses) | (1,560) | (2,565) |
Foreign exchange gains (losses) | (119) | 988 |
Other financial income (expenses) | (854) | (777) |
TOTAL FINANCIAL RESULT | (2,533) | (2,354) |
The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pounds sterling) and USD (US dollars).
10. Financial result
IN THOUSANDS OF EUR | 2023 | 2022 |
Interest expenses | (4,035) | (3,115) |
Interest income | 2,475 | 551 |
Interest income (expenses) | (1,560) | (2,565) |
Foreign exchange gains (losses) | (119) | 988 |
Other financial income (expenses) | (854) | (777) |
TOTAL FINANCIAL RESULT | (2,533) | (2,354) |
The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pounds sterling) and USD (US dollars).
10. Financial result
IN THOUSANDS OF EUR | 2023 | 2022 |
Interest expenses | (4,035) | (3,115) |
Interest income | 2,475 | 551 |
Interest income (expenses) | (1,560) | (2,565) |
Foreign exchange gains (losses) | (119) | 988 |
Other financial income (expenses) | (854) | (777) |
TOTAL FINANCIAL RESULT | (2,533) | (2,354) |
The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pounds sterling) and USD (US dollars).
10. Financial result
IN THOUSANDS OF EUR | 2023 | 2022 |
Interest expenses | (4,035) | (3,115) |
Interest income | 2,475 | 551 |
Interest income (expenses) | (1,560) | (2,565) |
Foreign exchange gains (losses) | (119) | 988 |
Other financial income (expenses) | (854) | (777) |
TOTAL FINANCIAL RESULT | (2,533) | (2,354) |
The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pounds sterling) and USD (US dollars).
10. Financial result
IN THOUSANDS OF EUR | 2023 | 2022 |
Interest expenses | (4,035) | (3,115) |
Interest income | 2,475 | 551 |
Interest income (expenses) | (1,560) | (2,565) |
Foreign exchange gains (losses) | (119) | 988 |
Other financial income (expenses) | (854) | (777) |
TOTAL FINANCIAL RESULT | (2,533) | (2,354) |
The foreign exchange gains (losses) are related to the realisation and revaluation of financial positions mainly in GBP (pounds sterling) and USD (US dollars).
11. Income taxes
11.1 Accounting policy
Income taxes include current and deferred taxes. Both taxes are recognised in the statement of profit or loss except if the underlying transaction has been recognised directly in other comprehensive income. If so, the related income taxes are also directly recognised in other comprehensive income.
Current taxes include the amount of tax payable on the taxable earnings for the period calculated at the tax rate applicable on the reporting date. They also include adjustments to income tax liabilities for previous years. In line with IAS 12 \u2013 Income Taxes, management assesses on a periodic basis the positions taken in tax declarations in respect of items subject to interpretation in the tax legislation, and records, if necessary, additional income tax liabilities based on the expected amounts payable to the tax authorities. The assessment is made for all fiscal periods still subject to controls by the authorities.
Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted.
Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset.
The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
11.2 Income taxes in the statement of profit or loss
The income tax recognised in the statement of profit or loss can be detailed as follows:
IN THOUSANDS OF EUR | 2023 | 2022 |
Current taxes in respect of the current year | (33,699) | (29,417) |
Current taxes in respect of the prior years | 100 | (2,213) |
Deferred taxes | (4,966) | 885 |
TOTAL INCOME TAXES | (38,565) | (30,744) |
The average effective tax rate is 23.0%, compared to 22.9% in 2022.
The income tax expense can be reconciled as follows:
IN THOUSANDS OF EUR | 2023 | 2022 |
Result for the period before taxes | 167,897 | 134,027 |
Legal tax rate | 25.00% | 25.00% |
Income tax expense computed at the legal tax rate | (41,974) | (33,507) |
Effect of different tax rates in other countries | 1,599 | 2,481 |
Deductions of taxable income | 2,461 | 1,472 |
Tax adjustments for prior years | 1,569 | 429 |
Disallowed expenses | (898) | (1,056) |
Tax exempted income | 115 | 66 |
Tax losses used for which no deferred tax asset has been recorded | - | (21) |
Unrecognised deferred tax assets | (1,232) | - |
Changes in tax rate or new taxes | 17 | (670) |
Other | (221) | 61 |
TOTAL INCOME TAXES | (38,565) | (30,744) |
Effective tax rate | 23.0% | 22.9% |
In October 2021, the OECD reached agreement on the Pillar Two global minimum tax rules to address the tax challenges arising from digitalisation of the economy. The agreement includes a coordinated system of Global anti-Base Erosion (GloBE) rules that are designed to ensure large multinational companies pay a minimum level of tax on the income arising in each jurisdiction where they operate, establishing a global minimum corporate tax rate of 15% on the profit. This set of measures would be applied on a Country-by-Country basis to multinational companies with revenue exceeding EUR 750 million.
Considering that the Group has exceeded the applicable thresholds in 2021, the Group is subject to the GloBE rules and has to consider the global minimum tax in the jurisdictions in which it operates as a legal entity. Belgium, where the Company is domiciled, has adopted the new tax legislation implementing the GloBE rules. The Company is currently monitoring the progress of adoption of the GloBE rules in each jurisdiction.
Based on a first assessment and considering the effective and nominal tax rates in the different jurisdictions, it is clear that the Group will be able to benefit from the safe harbours provided by the OECD for most of its subsidiaries with a potential exception for Switzerland where the effective tax rate is close to 15%. However, in the meantime, the Swiss authorities have adopted the GloBE rules and the related qualified domestic minimum top-up tax (QDMTT).
In accordance with the requirements introduced by the amendments to IAS 12 (see note 1.1), the Group applies the exception to the recognition of deferred taxes associated with income taxes arising from the Pillar Two model rules. Therefore, the Group has decided to not recognise deferred taxes under Pillar Two rules when these rules have been adopted in a jurisdiction.
11.3 Income taxes in the statement of financial position
Deferred taxes
The deferred tax assets and liabilities can be reconciled as follows:
IN THOUSANDS OF EUR | As at January 1, 2023 | Recognised through the statement of profit or loss | Recognised through equity | Business combinations | Exchange differences | As at December 31, 2023 |
Intangible assets | (33,389) | (167) | - | - | (263) | (33,820) |
Property, plant and equipment | (32,416) | (6,570) | 141 | - | 393 | (38,452) |
Inventories | 232 | 436 | - | - | (2) | 666 |
Employee benefit obligations | 844 | (38) | 192 | - | - | 998 |
Other liabilities | (1,848) | (2,276) | - | - | 11 | (4,113) |
Derivative financial instruments | 95 | (68) | (27) | - | - | - |
Tax losses carried forward | 3,649 | 2,903 | - | - | (150) | 6,402 |
Other | 1,331 | 814 | (141) | - | 410 | 2,414 |
TOTAL DEFERRED TAXES | (61,503) | (4,966) | 165 | - | 398 | (65,905) |
Of which deferred tax assets | 2,212 | 2,120 | ||||
Of which deferred tax liabilities | (63,716) | (68,024) |
IN THOUSANDS OF EUR | As at January 1, 2022 | Recognised through the statement of profit or loss | Recognised through equity | Business combinations | Exchange differences | As at December 31, 2022 |
Intangible assets | (33,588) | 661 | - | (1,424) | 963 | (33,389) |
Property, plant and equipment | (32,542) | 584 | - | - | (458) | (32,416) |
Inventories | 511 | (271) | - | 13 | (21) | 232 |
Employee benefit obligations | 991 | (135) | (12) | - | - | 844 |
Other liabilities | (2,225) | (144) | - | 521 | - | (1,848) |
Derivative financial instruments | 161 | - | (66) | - | - | 95 |
Tax losses carried forward | 5,023 | (1,600) | - | - | 226 | 3,649 |
Other | (392) | 1,790 | - | - | (68) | 1,331 |
TOTAL DEFERRED TAXES | (62,061) | 885 | (78) | (890) | 642 | (61,503) |
Of which deferred tax assets | 2,182 | 2,212 | ||||
Of which deferred tax liabilities | (64,243) | (63,716) |
The recognition of these deferred tax assets is supported by profit expectations in the foreseeable future.
At year-end 2023, the Group did not recognise deferred tax assets for unused tax losses for a total gross amount of EUR 6.1 million, of which EUR 2.7 million have no expiry date and EUR 3.4 million have a maturity of 5 years.
Current taxes
The current tax assets mainly relate to the excess of pre-payments made compared to the actual income tax payable for the year. The current tax liabilities include actual corporate taxes payable.
11.1 Accounting policy
Income taxes include current and deferred taxes. Both taxes are recognised in the statement of profit or loss except if the underlying transaction has been recognised directly in other comprehensive income. If so, the related income taxes are also directly recognised in other comprehensive income.
Current taxes include the amount of tax payable on the taxable earnings for the period calculated at the tax rate applicable on the reporting date. They also include adjustments to income tax liabilities for previous years. In line with IAS 12 \u2013 Income Taxes, management assesses on a periodic basis the positions taken in tax declarations in respect of items subject to interpretation in the tax legislation, and records, if necessary, additional income tax liabilities based on the expected amounts payable to the tax authorities. The assessment is made for all fiscal periods still subject to controls by the authorities.
Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted.
Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset.
The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
11.2 Income taxes in the statement of profit or loss
The income tax recognised in the statement of profit or loss can be detailed as follows:
IN THOUSANDS OF EUR | 2023 | 2022 |
Current taxes in respect of the current year | (33,699) | (29,417) |
Current taxes in respect of the prior years | 100 | (2,213) |
Deferred taxes | (4,966) | 885 |
TOTAL INCOME TAXES | (38,565) | (30,744) |
The average effective tax rate is 23.0%, compared to 22.9% in 2022.
The income tax expense can be reconciled as follows:
IN THOUSANDS OF EUR | 2023 | 2022 |
Result for the period before taxes | 167,897 | 134,027 |
Legal tax rate | 25.00% | 25.00% |
Income tax expense computed at the legal tax rate | (41,974) | (33,507) |
Effect of different tax rates in other countries | 1,599 | 2,481 |
Deductions of taxable income | 2,461 | 1,472 |
Tax adjustments for prior years | 1,569 | 429 |
Disallowed expenses | (898) | (1,056) |
Tax exempted income | 115 | 66 |
Tax losses used for which no deferred tax asset has been recorded | - | (21) |
Unrecognised deferred tax assets | (1,232) | - |
Changes in tax rate or new taxes | 17 | (670) |
Other | (221) | 61 |
TOTAL INCOME TAXES | (38,565) | (30,744) |
Effective tax rate | 23.0% | 22.9% |
In October 2021, the OECD reached agreement on the Pillar Two global minimum tax rules to address the tax challenges arising from digitalisation of the economy. The agreement includes a coordinated system of Global anti-Base Erosion (GloBE) rules that are designed to ensure large multinational companies pay a minimum level of tax on the income arising in each jurisdiction where they operate, establishing a global minimum corporate tax rate of 15% on the profit. This set of measures would be applied on a Country-by-Country basis to multinational companies with revenue exceeding EUR 750 million.
Considering that the Group has exceeded the applicable thresholds in 2021, the Group is subject to the GloBE rules and has to consider the global minimum tax in the jurisdictions in which it operates as a legal entity. Belgium, where the Company is domiciled, has adopted the new tax legislation implementing the GloBE rules. The Company is currently monitoring the progress of adoption of the GloBE rules in each jurisdiction.
Based on a first assessment and considering the effective and nominal tax rates in the different jurisdictions, it is clear that the Group will be able to benefit from the safe harbours provided by the OECD for most of its subsidiaries with a potential exception for Switzerland where the effective tax rate is close to 15%. However, in the meantime, the Swiss authorities have adopted the GloBE rules and the related qualified domestic minimum top-up tax (QDMTT).
In accordance with the requirements introduced by the amendments to IAS 12 (see note 1.1), the Group applies the exception to the recognition of deferred taxes associated with income taxes arising from the Pillar Two model rules. Therefore, the Group has decided to not recognise deferred taxes under Pillar Two rules when these rules have been adopted in a jurisdiction.
Deferred taxes
The deferred tax assets and liabilities can be reconciled as follows:
IN THOUSANDS OF EUR | As at January 1, 2023 | Recognised through the statement of profit or loss | Recognised through equity | Business combinations | Exchange differences | As at December 31, 2023 |
Intangible assets | (33,389) | (167) | - | - | (263) | (33,820) |
Property, plant and equipment | (32,416) | (6,570) | 141 | - | 393 | (38,452) |
Inventories | 232 | 436 | - | - | (2) | 666 |
Employee benefit obligations | 844 | (38) | 192 | - | - | 998 |
Other liabilities | (1,848) | (2,276) | - | - | 11 | (4,113) |
Derivative financial instruments | 95 | (68) | (27) | - | - | - |
Tax losses carried forward | 3,649 | 2,903 | - | - | (150) | 6,402 |
Other | 1,331 | 814 | (141) | - | 410 | 2,414 |
TOTAL DEFERRED TAXES | (61,503) | (4,966) | 165 | - | 398 | (65,905) |
Of which deferred tax assets | 2,212 | 2,120 | ||||
Of which deferred tax liabilities | (63,716) | (68,024) |
IN THOUSANDS OF EUR | As at January 1, 2022 | Recognised through the statement of profit or loss | Recognised through equity | Business combinations | Exchange differences | As at December 31, 2022 |
Intangible assets | (33,588) | 661 | - | (1,424) | 963 | (33,389) |
Property, plant and equipment | (32,542) | 584 | - | - | (458) | (32,416) |
Inventories | 511 | (271) | - | 13 | (21) | 232 |
Employee benefit obligations | 991 | (135) | (12) | - | - | 844 |
Other liabilities | (2,225) | (144) | - | 521 | - | (1,848) |
Derivative financial instruments | 161 | - | (66) | - | - | 95 |
Tax losses carried forward | 5,023 | (1,600) | - | - | 226 | 3,649 |
Other | (392) | 1,790 | - | - | (68) | 1,331 |
TOTAL DEFERRED TAXES | (62,061) | 885 | (78) | (890) | 642 | (61,503) |
Of which deferred tax assets | 2,182 | 2,212 | ||||
Of which deferred tax liabilities | (64,243) | (63,716) |
The recognition of these deferred tax assets is supported by profit expectations in the foreseeable future.
At year-end 2023, the Group did not recognise deferred tax assets for unused tax losses for a total gross amount of EUR 6.1 million, of which EUR 2.7 million have no expiry date and EUR 3.4 million have a maturity of 5 years.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__159-1": { "value": "11.1 Accounting policy
Income taxes include current and deferred taxes. Both taxes are recognised in the statement of profit or loss except if the underlying transaction has been recognised directly in other comprehensive income. If so, the related income taxes are also directly recognised in other comprehensive income.
Current taxes include the amount of tax payable on the taxable earnings for the period calculated at the tax rate applicable on the reporting date. They also include adjustments to income tax liabilities for previous years. In line with IAS 12 \u2013 Income Taxes, management assesses on a periodic basis the positions taken in tax declarations in respect of items subject to interpretation in the tax legislation, and records, if necessary, additional income tax liabilities based on the expected amounts payable to the tax authorities. The assessment is made for all fiscal periods still subject to controls by the authorities.
Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted.
Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset.
The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
11.3 Income taxes in the statement of financial position
Deferred taxes
The deferred tax assets and liabilities can be reconciled as follows:
IN THOUSANDS OF EUR | As at January 1, 2023 | Recognised through the statement of profit or loss | Recognised through equity | Business combinations | Exchange differences | As at December 31, 2023 |
Intangible assets | (33,389) | (167) | - | - | (263) | (33,820) |
Property, plant and equipment | (32,416) | (6,570) | 141 | - | 393 | (38,452) |
Inventories | 232 | 436 | - | - | (2) | 666 |
Employee benefit obligations | 844 | (38) | 192 | - | - | 998 |
Other liabilities | (1,848) | (2,276) | - | - | 11 | (4,113) |
Derivative financial instruments | 95 | (68) | (27) | - | - | - |
Tax losses carried forward | 3,649 | 2,903 | - | - | (150) | 6,402 |
Other | 1,331 | 814 | (141) | - | 410 | 2,414 |
TOTAL DEFERRED TAXES | (61,503) | (4,966) | 165 | - | 398 | (65,905) |
Of which deferred tax assets | 2,212 | 2,120 | ||||
Of which deferred tax liabilities | (63,716) | (68,024) |
IN THOUSANDS OF EUR | As at January 1, 2022 | Recognised through the statement of profit or loss | Recognised through equity | Business combinations | Exchange differences | As at December 31, 2022 |
Intangible assets | (33,588) | 661 | - | (1,424) | 963 | (33,389) |
Property, plant and equipment | (32,542) | 584 | - | - | (458) | (32,416) |
Inventories | 511 | (271) | - | 13 | (21) | 232 |
Employee benefit obligations | 991 | (135) | (12) | - | - | 844 |
Other liabilities | (2,225) | (144) | - | 521 | - | (1,848) |
Derivative financial instruments | 161 | - | (66) | - | - | 95 |
Tax losses carried forward | 5,023 | (1,600) | - | - | 226 | 3,649 |
Other | (392) | 1,790 | - | - | (68) | 1,331 |
TOTAL DEFERRED TAXES | (62,061) | 885 | (78) | (890) | 642 | (61,503) |
Of which deferred tax assets | 2,182 | 2,212 | ||||
Of which deferred tax liabilities | (64,243) | (63,716) |
The recognition of these deferred tax assets is supported by profit expectations in the foreseeable future.
At year-end 2023, the Group did not recognise deferred tax assets for unused tax losses for a total gross amount of EUR 6.1 million, of which EUR 2.7 million have no expiry date and EUR 3.4 million have a maturity of 5 years.
Current taxes
The current tax assets mainly relate to the excess of pre-payments made compared to the actual income tax payable for the year. The current tax liabilities include actual corporate taxes payable.
11.1 Accounting policy
Income taxes include current and deferred taxes. Both taxes are recognised in the statement of profit or loss except if the underlying transaction has been recognised directly in other comprehensive income. If so, the related income taxes are also directly recognised in other comprehensive income.
Current taxes include the amount of tax payable on the taxable earnings for the period calculated at the tax rate applicable on the reporting date. They also include adjustments to income tax liabilities for previous years. In line with IAS 12 \u2013 Income Taxes, management assesses on a periodic basis the positions taken in tax declarations in respect of items subject to interpretation in the tax legislation, and records, if necessary, additional income tax liabilities based on the expected amounts payable to the tax authorities. The assessment is made for all fiscal periods still subject to controls by the authorities.
Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted.
Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset.
The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.23.1 Accounting policy
Short-term employee benefits
Bonuses for employees and management are calculated based on key financial objectives and individual objectives. The estimated amount of the bonuses is recognised as an expense in the period in which the related services have been rendered based on an estimate on the reporting date.
Post-employment benefits (pension plans)
Group companies operate various pension schemes. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due.
In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Defined benefit costs are divided into 2 categories:
Current service cost, past-service cost, gains and losses on curtailments and settlements; and
Net interest expense or income.
The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income.
Non-recurring income and expenses are those items that are considered by management not to relate to transactions, projects and adjustments to the value of assets and liabilities taking place in the ordinary course of activities of the Company. Non-recurring income and expenses are presented separately, due to their size or nature, so as to allow users of the consolidated financial statements of the Company to get a better understanding of the normalised performance of the Company.
Non-recurring income and expenses relate to:
expenses relating to business combinations and other acquisitions of investments;
changes to the Group structure, including costs related to the liquidation of subsidiaries and the closure, opening or relocations of activities; and
impairment of assets and major litigations.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExpensesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f80542": { "value": "11.1 Accounting policy
Income taxes include current and deferred taxes. Both taxes are recognised in the statement of profit or loss except if the underlying transaction has been recognised directly in other comprehensive income. If so, the related income taxes are also directly recognised in other comprehensive income.
Current taxes include the amount of tax payable on the taxable earnings for the period calculated at the tax rate applicable on the reporting date. They also include adjustments to income tax liabilities for previous years. In line with IAS 12 \u2013 Income Taxes, management assesses on a periodic basis the positions taken in tax declarations in respect of items subject to interpretation in the tax legislation, and records, if necessary, additional income tax liabilities based on the expected amounts payable to the tax authorities. The assessment is made for all fiscal periods still subject to controls by the authorities.
Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted.
Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset.
The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f80694": { "value": "Deferred taxes are calculated using the balance sheet method and result mainly from temporary differences between the carrying amount of both assets and liabilities in the statement of financial position and their respective tax base. Deferred taxes are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at reporting date. Deferred taxes are recognised at their nominal value and are not discounted.
Deferred tax assets from deductible temporary differences and unused tax losses carry forwards are recognised to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be offset.
The carrying amount of deferred tax assets is reassessed at each reporting date and reduced when it is no longer probable that the related tax savings can be generated. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it is probable that future taxable profits allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f82493": { "value": "12. Earnings per share
Basic earnings per share is calculated by dividing the Group\u2019s share in net result by the weighted average number of outstanding shares over the year (total number of shares \u2013 treasury shares).
Diluted earnings per share is calculated by dividing the Group\u2019s share in net result by the weighted average number of outstanding shares over the year, adjusted for the potential dilution of ordinary shares as a result of options granted under the stock option plan for management (see note 21).
IN THOUSANDS OF EUR | 2023 | 2022 |
Net result \u2013 Basic and diluted earnings per share | 129,333 | 103,283 |
Of which attributable to equity holders of Lotus Bakeries | 129,261 | 103,240 |
Weighted average number of shares \u2013 Basic earnings per share | 811,364 | 810,858 |
Dilutive effect | 1,009 | 1,249 |
Weighted average number of shares \u2013 Diluted earnings per share | 812,373 | 812,106 |
BASIC EARNINGS PER SHARE (IN EUR) | 159.40 | 127.37 |
Of which attributable to equity holders of Lotus Bakeries | 159.31 | 127.32 |
DILUTED EARNINGS PER SHARE (IN EUR) | 159.20 | 127.18 |
Of which attributable to equity holders of Lotus Bakeries | 159.12 | 127.13 |
13. Goodwill
13.1 Accounting policy
Goodwill arising from a business combination is initially measured at cost (i.e., the excess between the cost of the business combination and the Group\u2019s interest in the fair value of the identifiable assets acquired, liabilities assumed and contingent liabilities assumed). After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is tested for impairment annually or more often if events or changes in circumstances indicate that the carrying amount may have been impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date onwards, allocated to each of the Group\u2019s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
For sales, production and internal reporting, the Group is organised into geographic regions (see also note 3 Segment reporting). The segments consist of underlying business units. These business units represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These business units are the cash-generating units to which goodwill is allocated.
13.2 Overview
The carrying amount of goodwill has been allocated to the various independent cash-generating units as follows:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Lotus\u2122 Natural Foods (Natural Balance Food, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard) | 169,094 | 170,860 |
Belgium | 20,773 | 20,773 |
The Netherlands | 17,151 | 17,151 |
Asia | 8,653 | 9,229 |
Nordics | 5,541 | 5,528 |
Other | 1,704 | 1,704 |
TOTAL GOODWILL | 222,915 | 225,246 |
IN THOUSANDS OF EUR | |
Carrying amount as at January 1, 2022 | 224,846 |
Acquisitions through business combinations | 7,876 |
Effect of movements in foreign exchange rates | (7,476) |
Carrying amount as at December 31, 2022 | 225,246 |
Effect of movements in foreign exchange rates | (2,331) |
CARRYING AMOUNT AS AT DECEMBER 31, 2023 | 222,915 |
13.3 Impairment test
Goodwill, representing approximately 18% of the total assets of Lotus Bakeries at December 31, 2023, is tested for impairment every year during the fourth quarter after the budget process (or whenever there is a specific reason to do so) by comparing the carrying amount of each cash-generating unit (CGU) with its recoverable amount. The recoverable amount of a cash-generating unit is determined on the basis of the value in use.
The value in use is determined as the present value of expected future cash flows based on the current long-term planning of the Group. The discount rate used in determining the present value of expected future cash flows is based on a weighted average cost of capital (WACC) before taxes (pre-tax discount rate). The impairment test for goodwill is based on a number of critical judgements, estimates and assumptions.
The assumptions are consistent and reasonable for all cash-generating units, which are mainly located in Europe and the UK:
Revenue and operating result: revenue and operating result reflect management\u2019s expectations based on past experience and taking into account the risks specific to the reportable business unit;
The first year of the model is based on the budget for the year as approved by the board of directors, taking into account historical results and is management\u2019s best estimate of the free cash flow outlook for the current year;
In years two to three of the model, free cash flows are based on Lotus Bakeries\u2019 long-term plan. The long-term plan is prepared country by country, based on reasonable internal plans that take into account the specific market situation and the past;
Cash flows beyond the first three years are extrapolated by applying a perpetual growth rate;
Projections are discounted at the pre-tax weighted average cost of capital (WACC). The WACC has been determined by jurisdiction and considering the specific risks related to each CGU. Main inputs include risk-free rate, market risk, risk premium and the cost of debt.
The impairment test is highly sensitive to the key assumptions, pre-tax discount rate and perpetual growth rate, which are detailed below:
Pre-tax discount rate 2023 | Pre-tax discount rate 2022 | Perpetual growth rate 2023 | Perpetual growth rate 2022 | |
Lotus\u2122 Natural Foods CGU's | 8.9%-9.4% | 7.1%-7.5% | 2.0% | 4.0%-5.0% |
Other CGU's | 7.6%-9.5% | 6.1%-7.3% | 2.0% | 1.5%-3.0% |
At the end of 2023, Lotus Bakeries has completed its annual impairment test of goodwill. The discount rates have been updated to reflect the overall increase of the risk-free rates on the market. Furthermore, the perpetual growth rates have been aligned to the long-term targeted inflation rates instead of the company-specific estimated long-term growth rates. These changes in key assumptions have impacted negatively the different headrooms, but did not result in any impairment loss.
As part of the impairment test, the Company carried out a sensitivity analysis for the key assumptions used, i.e. the pre-tax discount rate and perpetual growth rate. Here, a decrease in the perpetual growth rate by 100 basis points and an increase in the pre-tax discount rate by 100 basis points were applied. A change in the key assumptions used, as described above, does not lead to an impairment loss.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are suitable, actual results may differ from these estimates in the event of changed assumptions and conditions.
14. Intangible assets
14.1 Accounting policy
Intangible assets which are acquired separately are measured initially at cost. After initial recognition, intangible assets are measured at cost less accumulated amortisations and impairment losses.
Costs for internally generated intangible assets are recognised in the statement of profit or loss as incurred, unless they meet the criteria to be considered as development costs.
Intangible assets acquired in the context of a business combination are recognised separately in the statement of financial position at their estimated fair value at acquisition date. This concerns brands. The value of these brands was established as part of the valuation at fair value of the asset and liability components upon first consolidation.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
Investments in software and licences are amortised over a period of three to five years.
14.2 Overview
IN THOUSANDS OF EUR | Brands | Software | Customer portfolio | Total |
Acquisition cost | 145,968 | 15,222 | 1,030 | 162,220 |
Accumulated amortisation and impairment losses | (4,627) | (11,818) | (1,030) | (17,475) |
Carrying amount as at January 1, 2022 | 141,341 | 3,404 | - | 144.745 |
Acquisitions | 522 | 784 | - | 1,307 |
Acquisitions through business combinations | 5,697 | - | - | 5,697 |
Amortisation expense | - | (1,033) | - | (1,033) |
Effect of movements in foreign exchange rates | (3,987) | 6 | - | (3,980) |
Carrying amount as at December 31, 2022 | 143,573 | 3,162 | - | 146,735 |
Acquisition cost | 148,200 | 16,013 | 1,030 | 165,243 |
Accumulated amortisation and impairment losses | (4,627) | (12,581) | (1,030) | (18,508) |
Acquisitions | - | 783 | - | 783 |
Amortisation expense | - | (1,274) | - | (1,274) |
Transfer from one heading to another | 1 | 184 | - | 185 |
Effect of movements in foreign exchange rates | 1,400 | (3) | - | 1,396 |
CARRYING AMOUNT AS AT DECEMBER 31, 2023 | 144,974 | 2,851 | - | 147,825 |
Acquisition cost | 149,601 | 13,989 | - | 164,620 |
Accumulated amortisation and impairment losses | (4,627) | (11,138) | - | (16,795) |
Intangible assets include brands and software investments.
Software relates mainly to the capitalised external and internal costs connected with the further roll-out of the ERP information system SAP across the Lotus Bakeries Group.
The brands relate to the brands acquired by the Company over the years:
Peijnenburg: base brand in the Netherlands;
Dinosaurus: brand acquired in 2012;
Annas: base brand for the Nordic region and base brand for the pepparkakor products outside the Nordic region;
n\u0101kd: brand acquired in 2015 as part of the acquisition of Natural Balance Foods;
BEAR: brand acquired in 2015 as part of the acquisition of Urban Fresh Foods;
Kiddylicious: brand acquired in 2018;
Kung Oscar: brand acquired in 2022; and
Peter\u2019s Yard: brand acquired in 2022.
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Lotus\u2122 Natural Foods (n\u0101kd, Bear, Kiddylicious, Peter's Yard) | 73,559 | 72,174 |
Other brands (Dinosaurus, Peijnenburg, Annas, Kung Oscar) | 71,415 | 71,399 |
TOTAL CARRYING AMOUNT | 144,974 | 143,573 |
At year-end 2023, the Group tested the value of these brands to assess any recoverability issues. Taking into account the assumptions used, the value in use of the related cash-generating units exceeds its carrying amount and no impairment loss is recognised.
For more details on the impairment test conducted per CGU, we refer to note 13 on goodwill.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are reasonable, actual results may differ from these estimates in the event of changed assumptions and conditions.
During 2023, the Group has incurred research and development expenses of EUR 1,655 thousands (2022: EUR 1,458 thousands), which are mainly composed of employee benefit expenses and consumables.
13. Goodwill
13.1 Accounting policy
Goodwill arising from a business combination is initially measured at cost (i.e., the excess between the cost of the business combination and the Group\u2019s interest in the fair value of the identifiable assets acquired, liabilities assumed and contingent liabilities assumed). After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is tested for impairment annually or more often if events or changes in circumstances indicate that the carrying amount may have been impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date onwards, allocated to each of the Group\u2019s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
For sales, production and internal reporting, the Group is organised into geographic regions (see also note 3 Segment reporting). The segments consist of underlying business units. These business units represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These business units are the cash-generating units to which goodwill is allocated.
13.2 Overview
The carrying amount of goodwill has been allocated to the various independent cash-generating units as follows:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Lotus\u2122 Natural Foods (Natural Balance Food, Urban Fresh Foods, Kiddylicious and Peter\u2019s Yard) | 169,094 | 170,860 |
Belgium | 20,773 | 20,773 |
The Netherlands | 17,151 | 17,151 |
Asia | 8,653 | 9,229 |
Nordics | 5,541 | 5,528 |
Other | 1,704 | 1,704 |
TOTAL GOODWILL | 222,915 | 225,246 |
IN THOUSANDS OF EUR | |
Carrying amount as at January 1, 2022 | 224,846 |
Acquisitions through business combinations | 7,876 |
Effect of movements in foreign exchange rates | (7,476) |
Carrying amount as at December 31, 2022 | 225,246 |
Effect of movements in foreign exchange rates | (2,331) |
CARRYING AMOUNT AS AT DECEMBER 31, 2023 | 222,915 |
13.3 Impairment test
Goodwill, representing approximately 18% of the total assets of Lotus Bakeries at December 31, 2023, is tested for impairment every year during the fourth quarter after the budget process (or whenever there is a specific reason to do so) by comparing the carrying amount of each cash-generating unit (CGU) with its recoverable amount. The recoverable amount of a cash-generating unit is determined on the basis of the value in use.
The value in use is determined as the present value of expected future cash flows based on the current long-term planning of the Group. The discount rate used in determining the present value of expected future cash flows is based on a weighted average cost of capital (WACC) before taxes (pre-tax discount rate). The impairment test for goodwill is based on a number of critical judgements, estimates and assumptions.
The assumptions are consistent and reasonable for all cash-generating units, which are mainly located in Europe and the UK:
Revenue and operating result: revenue and operating result reflect management\u2019s expectations based on past experience and taking into account the risks specific to the reportable business unit;
The first year of the model is based on the budget for the year as approved by the board of directors, taking into account historical results and is management\u2019s best estimate of the free cash flow outlook for the current year;
In years two to three of the model, free cash flows are based on Lotus Bakeries\u2019 long-term plan. The long-term plan is prepared country by country, based on reasonable internal plans that take into account the specific market situation and the past;
Cash flows beyond the first three years are extrapolated by applying a perpetual growth rate;
Projections are discounted at the pre-tax weighted average cost of capital (WACC). The WACC has been determined by jurisdiction and considering the specific risks related to each CGU. Main inputs include risk-free rate, market risk, risk premium and the cost of debt.
The impairment test is highly sensitive to the key assumptions, pre-tax discount rate and perpetual growth rate, which are detailed below:
Pre-tax discount rate 2023 | Pre-tax discount rate 2022 | Perpetual growth rate 2023 | Perpetual growth rate 2022 | |
Lotus\u2122 Natural Foods CGU's | 8.9%-9.4% | 7.1%-7.5% | 2.0% | 4.0%-5.0% |
Other CGU's | 7.6%-9.5% | 6.1%-7.3% | 2.0% | 1.5%-3.0% |
At the end of 2023, Lotus Bakeries has completed its annual impairment test of goodwill. The discount rates have been updated to reflect the overall increase of the risk-free rates on the market. Furthermore, the perpetual growth rates have been aligned to the long-term targeted inflation rates instead of the company-specific estimated long-term growth rates. These changes in key assumptions have impacted negatively the different headrooms, but did not result in any impairment loss.
As part of the impairment test, the Company carried out a sensitivity analysis for the key assumptions used, i.e. the pre-tax discount rate and perpetual growth rate. Here, a decrease in the perpetual growth rate by 100 basis points and an increase in the pre-tax discount rate by 100 basis points were applied. A change in the key assumptions used, as described above, does not lead to an impairment loss.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are suitable, actual results may differ from these estimates in the event of changed assumptions and conditions.
13.1 Accounting policy
Goodwill arising from a business combination is initially measured at cost (i.e., the excess between the cost of the business combination and the Group\u2019s interest in the fair value of the identifiable assets acquired, liabilities assumed and contingent liabilities assumed). After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is tested for impairment annually or more often if events or changes in circumstances indicate that the carrying amount may have been impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date onwards, allocated to each of the Group\u2019s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
For sales, production and internal reporting, the Group is organised into geographic regions (see also note 3 Segment reporting). The segments consist of underlying business units. These business units represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These business units are the cash-generating units to which goodwill is allocated.
14.1 Accounting policy
Intangible assets which are acquired separately are measured initially at cost. After initial recognition, intangible assets are measured at cost less accumulated amortisations and impairment losses.
Costs for internally generated intangible assets are recognised in the statement of profit or loss as incurred, unless they meet the criteria to be considered as development costs.
Intangible assets acquired in the context of a business combination are recognised separately in the statement of financial position at their estimated fair value at acquisition date. This concerns brands. The value of these brands was established as part of the valuation at fair value of the asset and liability components upon first consolidation.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
Investments in software and licences are amortised over a period of three to five years.
13.1 Accounting policy
Goodwill arising from a business combination is initially measured at cost (i.e., the excess between the cost of the business combination and the Group\u2019s interest in the fair value of the identifiable assets acquired, liabilities assumed and contingent liabilities assumed). After initial recognition, goodwill is measured at cost less accumulated impairment losses, if any.
Goodwill is tested for impairment annually or more often if events or changes in circumstances indicate that the carrying amount may have been impaired. For the purpose of impairment testing, goodwill acquired in a business combination is, from acquisition date onwards, allocated to each of the Group\u2019s cash generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.
For sales, production and internal reporting, the Group is organised into geographic regions (see also note 3 Segment reporting). The segments consist of underlying business units. These business units represent the lowest level within the Group at which the goodwill is monitored for internal management purposes. These business units are the cash-generating units to which goodwill is allocated.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForGoodwillExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__218-1": { "value": "13.3 Impairment test
Goodwill, representing approximately 18% of the total assets of Lotus Bakeries at December 31, 2023, is tested for impairment every year during the fourth quarter after the budget process (or whenever there is a specific reason to do so) by comparing the carrying amount of each cash-generating unit (CGU) with its recoverable amount. The recoverable amount of a cash-generating unit is determined on the basis of the value in use.
The value in use is determined as the present value of expected future cash flows based on the current long-term planning of the Group. The discount rate used in determining the present value of expected future cash flows is based on a weighted average cost of capital (WACC) before taxes (pre-tax discount rate). The impairment test for goodwill is based on a number of critical judgements, estimates and assumptions.
The assumptions are consistent and reasonable for all cash-generating units, which are mainly located in Europe and the UK:
Revenue and operating result: revenue and operating result reflect management\u2019s expectations based on past experience and taking into account the risks specific to the reportable business unit;
The first year of the model is based on the budget for the year as approved by the board of directors, taking into account historical results and is management\u2019s best estimate of the free cash flow outlook for the current year;
In years two to three of the model, free cash flows are based on Lotus Bakeries\u2019 long-term plan. The long-term plan is prepared country by country, based on reasonable internal plans that take into account the specific market situation and the past;
Cash flows beyond the first three years are extrapolated by applying a perpetual growth rate;
Projections are discounted at the pre-tax weighted average cost of capital (WACC). The WACC has been determined by jurisdiction and considering the specific risks related to each CGU. Main inputs include risk-free rate, market risk, risk premium and the cost of debt.
The impairment test is highly sensitive to the key assumptions, pre-tax discount rate and perpetual growth rate, which are detailed below:
Pre-tax discount rate 2023 | Pre-tax discount rate 2022 | Perpetual growth rate 2023 | Perpetual growth rate 2022 | |
Lotus\u2122 Natural Foods CGU's | 8.9%-9.4% | 7.1%-7.5% | 2.0% | 4.0%-5.0% |
Other CGU's | 7.6%-9.5% | 6.1%-7.3% | 2.0% | 1.5%-3.0% |
At the end of 2023, Lotus Bakeries has completed its annual impairment test of goodwill. The discount rates have been updated to reflect the overall increase of the risk-free rates on the market. Furthermore, the perpetual growth rates have been aligned to the long-term targeted inflation rates instead of the company-specific estimated long-term growth rates. These changes in key assumptions have impacted negatively the different headrooms, but did not result in any impairment loss.
As part of the impairment test, the Company carried out a sensitivity analysis for the key assumptions used, i.e. the pre-tax discount rate and perpetual growth rate. Here, a decrease in the perpetual growth rate by 100 basis points and an increase in the pre-tax discount rate by 100 basis points were applied. A change in the key assumptions used, as described above, does not lead to an impairment loss.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are suitable, actual results may differ from these estimates in the event of changed assumptions and conditions.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
An irrevocable election can be made at initial recognition to measure the investment subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. This classification is determined on an instrument-by-instrument basis. As such, changes in fair value are directly recognised in a separate component of other comprehensive income. For listed companies, the share price is the best estimate of the fair value. Investments for which no fair value can be determined, are recognised at historical cost.
The Group assesses at each reporting date whether there is objective evidence that the asset is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__222-1": { "value": "13.3 Impairment test
Goodwill, representing approximately 18% of the total assets of Lotus Bakeries at December 31, 2023, is tested for impairment every year during the fourth quarter after the budget process (or whenever there is a specific reason to do so) by comparing the carrying amount of each cash-generating unit (CGU) with its recoverable amount. The recoverable amount of a cash-generating unit is determined on the basis of the value in use.
The value in use is determined as the present value of expected future cash flows based on the current long-term planning of the Group. The discount rate used in determining the present value of expected future cash flows is based on a weighted average cost of capital (WACC) before taxes (pre-tax discount rate). The impairment test for goodwill is based on a number of critical judgements, estimates and assumptions.
The assumptions are consistent and reasonable for all cash-generating units, which are mainly located in Europe and the UK:
Revenue and operating result: revenue and operating result reflect management\u2019s expectations based on past experience and taking into account the risks specific to the reportable business unit;
The first year of the model is based on the budget for the year as approved by the board of directors, taking into account historical results and is management\u2019s best estimate of the free cash flow outlook for the current year;
In years two to three of the model, free cash flows are based on Lotus Bakeries\u2019 long-term plan. The long-term plan is prepared country by country, based on reasonable internal plans that take into account the specific market situation and the past;
Cash flows beyond the first three years are extrapolated by applying a perpetual growth rate;
Projections are discounted at the pre-tax weighted average cost of capital (WACC). The WACC has been determined by jurisdiction and considering the specific risks related to each CGU. Main inputs include risk-free rate, market risk, risk premium and the cost of debt.
The impairment test is highly sensitive to the key assumptions, pre-tax discount rate and perpetual growth rate, which are detailed below:
Pre-tax discount rate 2023 | Pre-tax discount rate 2022 | Perpetual growth rate 2023 | Perpetual growth rate 2022 | |
Lotus\u2122 Natural Foods CGU's | 8.9%-9.4% | 7.1%-7.5% | 2.0% | 4.0%-5.0% |
Other CGU's | 7.6%-9.5% | 6.1%-7.3% | 2.0% | 1.5%-3.0% |
At the end of 2023, Lotus Bakeries has completed its annual impairment test of goodwill. The discount rates have been updated to reflect the overall increase of the risk-free rates on the market. Furthermore, the perpetual growth rates have been aligned to the long-term targeted inflation rates instead of the company-specific estimated long-term growth rates. These changes in key assumptions have impacted negatively the different headrooms, but did not result in any impairment loss.
As part of the impairment test, the Company carried out a sensitivity analysis for the key assumptions used, i.e. the pre-tax discount rate and perpetual growth rate. Here, a decrease in the perpetual growth rate by 100 basis points and an increase in the pre-tax discount rate by 100 basis points were applied. A change in the key assumptions used, as described above, does not lead to an impairment loss.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are suitable, actual results may differ from these estimates in the event of changed assumptions and conditions.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfNonfinancialAssetsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f83858": { "value": "14. Intangible assets
14.1 Accounting policy
Intangible assets which are acquired separately are measured initially at cost. After initial recognition, intangible assets are measured at cost less accumulated amortisations and impairment losses.
Costs for internally generated intangible assets are recognised in the statement of profit or loss as incurred, unless they meet the criteria to be considered as development costs.
Intangible assets acquired in the context of a business combination are recognised separately in the statement of financial position at their estimated fair value at acquisition date. This concerns brands. The value of these brands was established as part of the valuation at fair value of the asset and liability components upon first consolidation.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
Investments in software and licences are amortised over a period of three to five years.
14.2 Overview
IN THOUSANDS OF EUR | Brands | Software | Customer portfolio | Total |
Acquisition cost | 145,968 | 15,222 | 1,030 | 162,220 |
Accumulated amortisation and impairment losses | (4,627) | (11,818) | (1,030) | (17,475) |
Carrying amount as at January 1, 2022 | 141,341 | 3,404 | - | 144.745 |
Acquisitions | 522 | 784 | - | 1,307 |
Acquisitions through business combinations | 5,697 | - | - | 5,697 |
Amortisation expense | - | (1,033) | - | (1,033) |
Effect of movements in foreign exchange rates | (3,987) | 6 | - | (3,980) |
Carrying amount as at December 31, 2022 | 143,573 | 3,162 | - | 146,735 |
Acquisition cost | 148,200 | 16,013 | 1,030 | 165,243 |
Accumulated amortisation and impairment losses | (4,627) | (12,581) | (1,030) | (18,508) |
Acquisitions | - | 783 | - | 783 |
Amortisation expense | - | (1,274) | - | (1,274) |
Transfer from one heading to another | 1 | 184 | - | 185 |
Effect of movements in foreign exchange rates | 1,400 | (3) | - | 1,396 |
CARRYING AMOUNT AS AT DECEMBER 31, 2023 | 144,974 | 2,851 | - | 147,825 |
Acquisition cost | 149,601 | 13,989 | - | 164,620 |
Accumulated amortisation and impairment losses | (4,627) | (11,138) | - | (16,795) |
Intangible assets include brands and software investments.
Software relates mainly to the capitalised external and internal costs connected with the further roll-out of the ERP information system SAP across the Lotus Bakeries Group.
The brands relate to the brands acquired by the Company over the years:
Peijnenburg: base brand in the Netherlands;
Dinosaurus: brand acquired in 2012;
Annas: base brand for the Nordic region and base brand for the pepparkakor products outside the Nordic region;
n\u0101kd: brand acquired in 2015 as part of the acquisition of Natural Balance Foods;
BEAR: brand acquired in 2015 as part of the acquisition of Urban Fresh Foods;
Kiddylicious: brand acquired in 2018;
Kung Oscar: brand acquired in 2022; and
Peter\u2019s Yard: brand acquired in 2022.
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Lotus\u2122 Natural Foods (n\u0101kd, Bear, Kiddylicious, Peter's Yard) | 73,559 | 72,174 |
Other brands (Dinosaurus, Peijnenburg, Annas, Kung Oscar) | 71,415 | 71,399 |
TOTAL CARRYING AMOUNT | 144,974 | 143,573 |
At year-end 2023, the Group tested the value of these brands to assess any recoverability issues. Taking into account the assumptions used, the value in use of the related cash-generating units exceeds its carrying amount and no impairment loss is recognised.
For more details on the impairment test conducted per CGU, we refer to note 13 on goodwill.
Although Lotus Bakeries believes that its assessments, assumptions and estimates are reasonable, actual results may differ from these estimates in the event of changed assumptions and conditions.
During 2023, the Group has incurred research and development expenses of EUR 1,655 thousands (2022: EUR 1,458 thousands), which are mainly composed of employee benefit expenses and consumables.
14.1 Accounting policy
Intangible assets which are acquired separately are measured initially at cost. After initial recognition, intangible assets are measured at cost less accumulated amortisations and impairment losses.
Costs for internally generated intangible assets are recognised in the statement of profit or loss as incurred, unless they meet the criteria to be considered as development costs.
Intangible assets acquired in the context of a business combination are recognised separately in the statement of financial position at their estimated fair value at acquisition date. This concerns brands. The value of these brands was established as part of the valuation at fair value of the asset and liability components upon first consolidation.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
Investments in software and licences are amortised over a period of three to five years.
The brands are not amortised as the useful life is deemed to be indefinite as based on all of the relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows for the Group and are sustained by continuous marketing support. Therefore, an impairment test is performed to assess the recoverability of the brands on annual basis or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The indefinite useful life is re-assessed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made prospectively.
Intangible assets with a finite useful life are amortised on a straight-line basis over the estimated useful life and reviewed for impairment whenever there is an indication that the intangible asset may be impaired. Amortisation begins when the intangible asset is available for its intended use.
Investments in software and licences are amortised over a period of three to five years.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Depreciation of an asset begins when the asset is available for its intended use.
The estimated useful lives are as follows:
Buildings, incl. warehouses\t25-30 years
Plant and machinery\t15-25 years
Furniture\t15 years
Trucks\t10 years
Office equipment and motor vehicles\t5 years
Computer equipment\t3-5 years
Land is not depreciated considering that it has an indefinite useful life.
The depreciation methods, residual values and the useful lives of the property, plant and equipment is reassessed and adjusted if appropriate, annually.
These assets are generally depreciated on a straight-line basis over the lease term and are subject to impairment. If it is reasonably certain that the Group will exercise a purchase option, the asset shall be depreciated on a straight-line basis over its useful life. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDepreciationExpenseExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f84905": { "value": "During 2023, the Group has incurred research and development expenses of EUR 1,655 thousands (2022: EUR 1,458 thousands), which are mainly composed of employee benefit expenses and consumables.", "dimensions": { "concept": "ifrs-full:DisclosureOfResearchAndDevelopmentExpenseExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f84949": { "value": "15. Property, plant and equipment and leases
15.1 Accounting policy
Property, plant and equipment
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses. Cost includes the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of self-produced assets includes direct material costs, direct labour costs and a proportional part of the production overhead.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Depreciation of an asset begins when the asset is available for its intended use.
The estimated useful lives are as follows:
Buildings, incl. warehouses\t25-30 years
Plant and machinery\t15-25 years
Furniture\t15 years
Trucks\t10 years
Office equipment and motor vehicles\t5 years
Computer equipment\t3-5 years
Land is not depreciated considering that it has an indefinite useful life.
The depreciation methods, residual values and the useful lives of the property, plant and equipment is reassessed and adjusted if appropriate, annually.
Leases
A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are recognised as a right-of-use asset and corresponding liability at the date the leased asset is available for use by the Group. The right-of-use assets are presented in the consolidated statement of financial position within the line item \u2018Property, plant and equipment\u2019.
The Group recognises right-of-use assets at cost, which consists of the initial measurement of the corresponding lease liabilities and any initial direct costs less lease incentives received.
These assets are generally depreciated on a straight-line basis over the lease term and are subject to impairment. If it is reasonably certain that the Group will exercise a purchase option, the asset shall be depreciated on a straight-line basis over its useful life.
Lease liabilities are measured at the present value of future lease payments over the lease term.
The lease payments are discounted using the Group\u2019s incremental borrowing rate, i.e. the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, as the interest rate implicit in the lease cannot be readily determined.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
For leases with a term of 12 months or less (short-term leases) or leases of low-value items to which the Group applies the recognition exemptions available in IFRS 16, lease payments are recognised on a straight-line basis as an expense over the lease term.
15.2 Overview
IN THOUSANDS OF EUR | Land and buildings | Plant, machinery and equipment | Furniture, office equipment and vehicles | Assets under construction | Right-of-use assets | Total |
Acquisition cost | 175,901 | 348,985 | 20,785 | 39,745 | 19,135 | 604,551 |
Accumulated depreciation and impairment losses | (57,312) | (217,028) | (16,057) | - | (6,429) | (296,826) |
Carrying amount as at January 1, 2022 | 118,589 | 131,957 | 4,728 | 39,745 | 12,706 | 307,725 |
Acquisitions | 29,358 | 14,544 | 4,297 | 84,475 | 9,278 | 141,952 |
Acquisitions through business combinations | - | 651 | - | - | - | 651 |
Disposals | (106) | (130) | (10) | (94) | (325) | (665) |
Depreciation expense | (4,896) | (13,326) | (1,332) | - | (4,658) | (24,212) |
Impairment losses | - | - | - | - | (519) | (519) |
Transfers from one heading to another | 4,587 | 11,576 | (21) | (16,142) | - | - |
Effect of movements in foreign exchange rates | 1,703 | 1,434 | 96 | 419 | (341) | 3,311 |
Carrying amount as at December 31, 2022 | 149,235 | 146,706 | 7,758 | 108,403 | 16,142 | 428,243 |
Acquisition cost | 209,647 | 369,907 | 25,014 | 108,403 | 23,098 | 736,069 |
Accumulated depreciation and impairment losses | (60,412) | (223,201) | (17,256) | - | (6,957) | (307,826) |
Acquisitions | 13,248 | 26,820 | 1,092 | 36,432 | 7,835 | 85,427 |
Disposals | (885) | (77) | (4) | (52) | (193) | (1,211) |
Depreciation expense | (6,782) | (17,954) | (1,761) | - | (5,085) | (31,583) |
Transfers from one heading to another | 42,729 | 54,275 | 227 | (97,417) | - | (185) |
Effect of movements in foreign exchange rates | (3,355) | (1,832) | (53) | (1,109) | (31) | (6,380) |
Carrying amount as at December 31, 2023 | 194,190 | 207,937 | 7,259 | 46,257 | 18,667 | 474,311 |
Acquisition cost | 260,318 | 439,530 | 20,307 | 46,257 | 28,181 | 794,593 |
Accumulated depreciation and impairment losses | (66,128) | (231,593) | (13,048) | - | (9,514) | (320,283) |
In 2023, an amount of EUR 77,592 thousands has been invested in property, plant and equipment. Lotus Bakeries is currently investing in Thailand (Chonburi) in a new greenfield production facility for Lotus\u00ae Biscoff\u00ae to further support its growth ambition in the Asia-Pacific region. The land was purchased in 2022 and the project team has now completed the land levelling and groundworks. The
building construction is ongoing. Furthermore, the Group continues to invest in the Wolseley factory in South-Africa with an additional production facility for the production of the n\u0101kd\u00ae raw bars. The first commercial production takes place in January 2024.
In 2022, EUR 132,674 thousands was invested in property, plant and equipment. In the Lotus\u00ae Biscoff\u00ae plant in Belgium, a second dough preparation room became operational. In the US, a second production hall with two new Lotus\u00ae Biscoff\u00ae production lines was built. In the context of the establishment of a production facility for Lotus\u00ae Biscoff\u00ae in Asia to further support the Group\u2019s growth ambition for Lotus\u00ae Biscoff\u00ae, land was acquired in Thailand.
During 2023 and 2022, no government grants have been granted to the Group.
No pledges have been set on the items of property, plant and equipment.
15.3 Right-of-use assets
The carrying amount of the right-of-use assets arising from IFRS 16 \u2013 Leases is reconciled as follows:
IN THOUSANDS OF EUR | Carrying amount as at January 1, 2023 | New leases | Depreciations | Other movements | Carrying amount as at December 31, 2023 |
Land and buildings | 11,766 | 2,091 | (2,374) | (48) | 11,436 |
Plant, machinery and equipment | 223 | 136 | (69) | - | 290 |
Furniture, office equipment and vehicles | 4,153 | 5,608 | (2,643) | (177) | 6,942 |
Total right-of-use assets | 16,142 | 7,835 | (5,085) | (225) | 18,667 |
In 2023, additional right-of-use assets relate mainly to the lease of vehicles (transition to electric company cars).
In 2022, additional right-of use assets relate mainly to the signing of new office leases in the UK and the US.
15.1 Accounting policy
Property, plant and equipment
Property, plant and equipment is measured at cost less accumulated depreciation and impairment losses. Cost includes the purchase price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. The cost of self-produced assets includes direct material costs, direct labour costs and a proportional part of the production overhead.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Depreciation of an asset begins when the asset is available for its intended use.
The estimated useful lives are as follows:
Buildings, incl. warehouses\t25-30 years
Plant and machinery\t15-25 years
Furniture\t15 years
Trucks\t10 years
Office equipment and motor vehicles\t5 years
Computer equipment\t3-5 years
Land is not depreciated considering that it has an indefinite useful life.
The depreciation methods, residual values and the useful lives of the property, plant and equipment is reassessed and adjusted if appropriate, annually.
Leases
A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are recognised as a right-of-use asset and corresponding liability at the date the leased asset is available for use by the Group. The right-of-use assets are presented in the consolidated statement of financial position within the line item \u2018Property, plant and equipment\u2019.
The Group recognises right-of-use assets at cost, which consists of the initial measurement of the corresponding lease liabilities and any initial direct costs less lease incentives received.
These assets are generally depreciated on a straight-line basis over the lease term and are subject to impairment. If it is reasonably certain that the Group will exercise a purchase option, the asset shall be depreciated on a straight-line basis over its useful life.
Lease liabilities are measured at the present value of future lease payments over the lease term.
The lease payments are discounted using the Group\u2019s incremental borrowing rate, i.e. the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, as the interest rate implicit in the lease cannot be readily determined.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
For leases with a term of 12 months or less (short-term leases) or leases of low-value items to which the Group applies the recognition exemptions available in IFRS 16, lease payments are recognised on a straight-line basis as an expense over the lease term.
A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are recognised as a right-of-use asset and corresponding liability at the date the leased asset is available for use by the Group. The right-of-use assets are presented in the consolidated statement of financial position within the line item \u2018Property, plant and equipment\u2019.
The Group recognises right-of-use assets at cost, which consists of the initial measurement of the corresponding lease liabilities and any initial direct costs less lease incentives received.
These assets are generally depreciated on a straight-line basis over the lease term and are subject to impairment. If it is reasonably certain that the Group will exercise a purchase option, the asset shall be depreciated on a straight-line basis over its useful life.
Lease liabilities are measured at the present value of future lease payments over the lease term.
The lease payments are discounted using the Group\u2019s incremental borrowing rate, i.e. the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, as the interest rate implicit in the lease cannot be readily determined.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
For leases with a term of 12 months or less (short-term leases) or leases of low-value items to which the Group applies the recognition exemptions available in IFRS 16, lease payments are recognised on a straight-line basis as an expense over the lease term.
15.3 Right-of-use assets
The carrying amount of the right-of-use assets arising from IFRS 16 \u2013 Leases is reconciled as follows:
IN THOUSANDS OF EUR | Carrying amount as at January 1, 2023 | New leases | Depreciations | Other movements | Carrying amount as at December 31, 2023 |
Land and buildings | 11,766 | 2,091 | (2,374) | (48) | 11,436 |
Plant, machinery and equipment | 223 | 136 | (69) | - | 290 |
Furniture, office equipment and vehicles | 4,153 | 5,608 | (2,643) | (177) | 6,942 |
Total right-of-use assets | 16,142 | 7,835 | (5,085) | (225) | 18,667 |
In 2023, additional right-of-use assets relate mainly to the lease of vehicles (transition to electric company cars).
In 2022, additional right-of use assets relate mainly to the signing of new office leases in the UK and the US.
22. Interest-bearing liabilities
in thousands of EUR | December 31, 2023 | December 31, 2022 |
Bank loans | 261,000 | 182,500 |
Lease liabilities | 14,834 | 13,566 |
Non-current interest-bearing liabilities | 275,834 | 196,066 |
Bank loans | 9,500 | 66,000 |
Lease liabilities | 5,157 | 4,178 |
Current interest-bearing liabilities | 14,657 | 70,178 |
TOTAL INTEREST-BEARING LIABILITIES | 290,491 | 266,244 |
of which bank loans | 270,500 | 248,500 |
of which lease liabilities | 19,991 | 17,744 |
All bank loans are denominated in EUR. These loans bear a fixed interest rate. The weighted average interest rate is 1.26% (2022: 1.00%).
The lease liabilities mainly relate to the lease of company cars and office buildings (see also note 15).
The following tables reconcile the movements of the interest-bearing liabilities to the cash flows arising from financing activities:
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2023 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2023 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 182,500 | 88,000 | - | - | (9,500) | - | 261,000 |
Lease liabilities | 13,566 | (208) | 7,852 | 20 | (5,883) | (512) | 14,834 |
Current interest-bearing liabilities | |||||||
Bank loans | 66,000 | (66,000) | - | - | 9,500 | - | 9,500 |
Lease liabilities | 4,178 | (5,282) | - | (32) | 5,883 | 410 | 5,157 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 266,244 | 16,510 | 7,852 | (12) | - | (102) | 290,491 |
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2022 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2022 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 209,500 | 12,000 | - | - | (39,000) | - | 182,500 |
Lease liabilities | 9,337 | 9,847 | (304) | (4,990) | (324) | 13,566 | |
Current interest-bearing liabilities | |||||||
Bank loans | 14,000 | 13,000 | - | - | 39,000 | - | 66,000 |
Lease liabilities | 3,439 | (4,187) | - | (64) | 4,990 | - | 4,178 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 236,276 | 20,813 | 9,847 | (368) | - | (324) | 266,244 |
A lease exists if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Leases are recognised as a right-of-use asset and corresponding liability at the date the leased asset is available for use by the Group. The right-of-use assets are presented in the consolidated statement of financial position within the line item \u2018Property, plant and equipment\u2019.
The Group recognises right-of-use assets at cost, which consists of the initial measurement of the corresponding lease liabilities and any initial direct costs less lease incentives received.
These assets are generally depreciated on a straight-line basis over the lease term and are subject to impairment. If it is reasonably certain that the Group will exercise a purchase option, the asset shall be depreciated on a straight-line basis over its useful life.
Lease liabilities are measured at the present value of future lease payments over the lease term.
The lease payments are discounted using the Group\u2019s incremental borrowing rate, i.e. the rate of interest that a lessee would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment, as the interest rate implicit in the lease cannot be readily determined.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
For leases with a term of 12 months or less (short-term leases) or leases of low-value items to which the Group applies the recognition exemptions available in IFRS 16, lease payments are recognised on a straight-line basis as an expense over the lease term.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f86339": { "value": "During 2023 and 2022, no government grants have been granted to the Group.", "dimensions": { "concept": "ifrs-full:DisclosureOfGovernmentGrantsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f86354": { "value": "No pledges have been set on the items of property, plant and equipment.", "dimensions": { "concept": "ifrs-full:DisclosureOfCollateralExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f86582": { "value": "16. Investments in other companies
In 2019, Lotus Bakeries created the corporate venture fund FF2032, establishing a platform for investment in promising brands and growth companies offering innovative products, technologies or market approaches within the food sector.
Considering that these investments do not provide the Group any control or significant influence, the investments are valued at fair value. An irrevocable election has been made at initial recognition to measure the investments subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. Investments for which no fair value can be determined reliably, are recognised at historical cost and are reviewed on a regular basis for impairment.
The Group, through its subsidiary FF2032, has minority shares in:
Love Brands Inc., an American company which markets delicious crunchy corn snacks under the LOVE Corn name.
Partake Foods, operating in the American market with cookies free from the top eight allergens.
Oot Granola, a Dutch brand which markets fresh, organic and gluten-free granola that are low in sugars. Oot Granola has a pure online \u2018direct-to-consumer\u2019 concept.
The Good Crisp Company, an American company which produces natural, gluten-free chips, completely free of artificial flavourings and colorants.
IQBAR, an American company manufacturing a set of plant-based nutritional bars that contain six brain nutrients and that tick all the boxes in terms of nutritional profile.
In 2023, the Group invested in Aura Bora, a US company. Aura Bora produces natural zero calorie sparkling water infused with real herbs, fruits and flowers. Furthermore, a minority stake was acquired in Fit Joy, a US company manufacturing grain-free pretzels. Their products are vegan, dairy-, gluten-, nut-free, and non-GMO. Next to the aforementioned new investments, the Group has also invested additionally in The Good Crisp Company.
16. Investments in other companies
In 2019, Lotus Bakeries created the corporate venture fund FF2032, establishing a platform for investment in promising brands and growth companies offering innovative products, technologies or market approaches within the food sector.
Considering that these investments do not provide the Group any control or significant influence, the investments are valued at fair value. An irrevocable election has been made at initial recognition to measure the investments subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. Investments for which no fair value can be determined reliably, are recognised at historical cost and are reviewed on a regular basis for impairment.
The Group, through its subsidiary FF2032, has minority shares in:
Love Brands Inc., an American company which markets delicious crunchy corn snacks under the LOVE Corn name.
Partake Foods, operating in the American market with cookies free from the top eight allergens.
Oot Granola, a Dutch brand which markets fresh, organic and gluten-free granola that are low in sugars. Oot Granola has a pure online \u2018direct-to-consumer\u2019 concept.
The Good Crisp Company, an American company which produces natural, gluten-free chips, completely free of artificial flavourings and colorants.
IQBAR, an American company manufacturing a set of plant-based nutritional bars that contain six brain nutrients and that tick all the boxes in terms of nutritional profile.
In 2023, the Group invested in Aura Bora, a US company. Aura Bora produces natural zero calorie sparkling water infused with real herbs, fruits and flowers. Furthermore, a minority stake was acquired in Fit Joy, a US company manufacturing grain-free pretzels. Their products are vegan, dairy-, gluten-, nut-free, and non-GMO. Next to the aforementioned new investments, the Group has also invested additionally in The Good Crisp Company.
32. Consolidation scope
NAME | Address | VAT or national number | 2023 | 2022 |
% | % | |||
Lotus Bakeries Belgi\u00eb NV | Gentstraat 52, 9971 Lembeke, BE | VAT BE 0421.694.038 | 100.00 | 100.00 |
Interwaffles SA | Rue de Li\u00e8ge 39, 6180 Courcelles, BE | VAT BE 0439.312.406 | 100.00 | 100.00 |
Lotus Bakeries Corporate NV | Gentstraat 1, 9971 Lembeke, BE | VAT BE 0881.664.870 | 100.00 | 100.00 |
Lotus Bakeries NV | Gentstraat 1, 9971 Lembeke, BE | VAT BE 0401.030.860 | 100.00 | 100.00 |
Cremers-Ribert NV | Gentstraat 52, 9971 Lembeke, BE | VAT BE 0427.808.008 | 100.00 | 100.00 |
B.W.I. BV | Ambachtenstraat 5, 9900 Eeklo, BE | VAT BE 0898.518.522 | - | 100.00 |
Biscuiterie Willems BV | Nieuwendorpe 33 Bus C, 9900 Eeklo, BE | VAT BE 0401.006.413 | 100.00 | 100.00 |
Lotus Bakeries France SAS | Place du Ch\u00e2teau 9 bis, 59560 Comines, F | VAT FR93 320 509 755 | 100.00 | 100.00 |
Biscuiterie Vander SAS | Place du Ch\u00e2teau 9 bis, 59560 Comines, F | VAT FR28 472 500 941 | 100.00 | 100.00 |
Biscuiterie Le Glazik SAS | 815 Avenue du Pays Glazik, 29510 Briec-de-l\u2019Odet, F | VAT FR95 377 380 985 | 100.00 | 100.00 |
Enkhuizer Koekfabriek BV | Oosterdijk 3e, 1601 DA Enkhuizen, NL | VAT NL823011112B01 | 100.00 | 100.00 |
Koninklijke Peijnenburg BV | Nieuwendijk 45, 5664 HB Geldrop, NL | VAT NL003897187B01 | 100.00 | 100.00 |
Peijnenburg's Koekfabrieken BV | Nieuwendijk 45, 5664 HB Geldrop, NL | VAT NL001351576B01 | 100.00 | 100.00 |
WK Koek Bakkerij BV | Streek 71, 8464 NE Sintjohannesga, NL | VAT NL006634151B01 | 100.00 | 100.00 |
WK Koek Beheer BV | Streek 71, 8464 NE Sintjohannesga, NL | VAT NL006634199B01 | 100.00 | 100.00 |
Lotus Bakeries Nederland BV | Nieuwendijk 45, 5664 HB Geldrop, NL | VAT NL004458953B01 | 100.00 | 100.00 |
Lotus Bakeries GmbH | Ro\u00dfstra\u00dfe 92, 40476 Dusseldorf, DE | VAT DE 811 842 770 | 100.00 | 100.00 |
Lotus Bakeries R\u00e9assurances SA | 74, Rue de Merl, 2146 Luxembourg, L | R.C.S. Luxembourg B53262 | 100.00 | 100.00 |
Lotus Bakeries International und Schweiz AG | Neuhofstrasse 24, 6340 Baar, CH | VAT CHE-105.424.218 | 100.00 | 100.00 |
FF2032 AG | Neuhofstrasse 24, 6340 Baar, CH | VAT CHE-241.819.783 | 100.00 | 100.00 |
Lotus Bakeries CZ s.r.o. | Americk\u00e1 415/36, 120 00 Praha 2, CZ | VAT CZ 271 447 55 | 100.00 | 100.00 |
NAME | Address | VAT or national number | 2023 | 2022 |
% | % | |||
Lotus Bakeries North America Inc. | 1000 Sansome Street Suite 350, San Francisco, CA 94111-1323, USA | IRS 94-3124525 | 100.00 | 100.00 |
Lotus Bakeries US, LLC | 2010 Park Center Drive, Mebane, NC 27302, USA | IRS 82-1300286 | 100.00 | 100.00 |
Lotus Bakeries US Manufacturing, LLC | 2010 Park Center Drive, Mebane, NC 27302, USA | IRS 82-2542596 | 100.00 | 100.00 |
Lotus Bakeries Austria GmbH | Fleischmarkt 1/6/12, 1010 Wien, AT | VAT ATU72710827 | 100.00 | 100.00 |
Lotus Bakeries UK Ltd. | First Floor Premises, Whitecroft House, 51 Water Lane, Wilmslow, Cheshire SK9 5BQ, UK | VAT GB 896 168 761 | 100.00 | 100.00 |
Natural Balance Foods Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 841 254 348 | 97.90 | 97.90 |
Urban Fresh Foods Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 883 060 032 | 100.00 | 100.00 |
The Kids Food Company Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 977 396 157 | 100.00 | 100.00 |
Peter's Yard Wholesale Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 938 740 100 | 100.00 | 100.00 |
Lotus Bakeries Espana S.L. | C/ Severo Ochoa, 3, 2\u00aa Oficina 8A, 28232 Las Rozas (Madrid), ES | VAT ESB80405137 | 100.00 | 100.00 |
AB Annas Pepparkakor | Radiov\u00e4gen 23, 135 48 Tyres\u00f6, SE | VAT SE556149914501 | 100.00 | 100.00 |
Annas - Lotus Bakeries Holding AB | Radiov\u00e4gen 23, 135 48 Tyres\u00f6, SE | Registration no. 556757-7241 | 100.00 | 100.00 |
Lotus Bakeries Asia Pacific Ltd. | 5/F, Manulife, 348 Kwun Tong Road, Kowloon, HK | Inland Revenue Department file no. 22/51477387 | 100.00 | 100.00 |
Lotus Bakeries China Ltd. | Room 01.02.06, Floor 15, No. 511 Weihai Road, Jing'an Disctrict, Shanghai 200041, P.R. CN | Registration no. 913100000781169357 | 100.00 | 100.00 |
Lotus Bakeries Italia S.r.l. | Regus Dante Cairoli, Via Dante 16, Quartiere Castello, 20121 Milan, IT | VAT IT03029890211 | 100.00 | 100.00 |
Lotus Bakeries Korea Co. Ltd. | 4th FI, AIA Tower, 16 Tongil-ro-2-gil, Jung-gu, Seoul 04511, KR | Registration no. 128-81-19621 | 100.00 | 100.00 |
Lotus South Africa Manufacturing Ltd. | Erf 4109 Voortrekker Road, Wolseley, Western Cape 6830, ZA | VAT 4190279762 | 100.00 | 100.00 |
Lotus Asia Pacific Manufacturing Ltd. | No. 1106, Summer Hill, 3rd Floor, Unit TT11, Sukhumvit Road, Phrakhanong SubDistrict, Klongtoey District, 10110 Bangkok, TH | VAT 0105565109964 | 100.00 | 100.00 |
Lotus Bakeries Japan G.K. | Regus Shiodome \u2013 office, no. 149, 3F Shiodome Building, 1-2-20 Kaigan, Minato-Ku, 105-0022 Tokyo, JP | VAT 4010403030721 | 100.00 | - |
Lotus Bakeries Australia PTY Ltd. | Regus Darling Park, Tower, 2, Level 20 & 21, 201, Sussex Street, Sydney NSW 2000, AU | 665 233 545 (ACN) | 100.00 | - |
16. Investments in other companies
In 2019, Lotus Bakeries created the corporate venture fund FF2032, establishing a platform for investment in promising brands and growth companies offering innovative products, technologies or market approaches within the food sector.
Considering that these investments do not provide the Group any control or significant influence, the investments are valued at fair value. An irrevocable election has been made at initial recognition to measure the investments subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. Investments for which no fair value can be determined reliably, are recognised at historical cost and are reviewed on a regular basis for impairment.
The Group, through its subsidiary FF2032, has minority shares in:
Love Brands Inc., an American company which markets delicious crunchy corn snacks under the LOVE Corn name.
Partake Foods, operating in the American market with cookies free from the top eight allergens.
Oot Granola, a Dutch brand which markets fresh, organic and gluten-free granola that are low in sugars. Oot Granola has a pure online \u2018direct-to-consumer\u2019 concept.
The Good Crisp Company, an American company which produces natural, gluten-free chips, completely free of artificial flavourings and colorants.
IQBAR, an American company manufacturing a set of plant-based nutritional bars that contain six brain nutrients and that tick all the boxes in terms of nutritional profile.
In 2023, the Group invested in Aura Bora, a US company. Aura Bora produces natural zero calorie sparkling water infused with real herbs, fruits and flowers. Furthermore, a minority stake was acquired in Fit Joy, a US company manufacturing grain-free pretzels. Their products are vegan, dairy-, gluten-, nut-free, and non-GMO. Next to the aforementioned new investments, the Group has also invested additionally in The Good Crisp Company.
16. Investments in other companies
In 2019, Lotus Bakeries created the corporate venture fund FF2032, establishing a platform for investment in promising brands and growth companies offering innovative products, technologies or market approaches within the food sector.
Considering that these investments do not provide the Group any control or significant influence, the investments are valued at fair value. An irrevocable election has been made at initial recognition to measure the investments subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. Investments for which no fair value can be determined reliably, are recognised at historical cost and are reviewed on a regular basis for impairment.
The Group, through its subsidiary FF2032, has minority shares in:
Love Brands Inc., an American company which markets delicious crunchy corn snacks under the LOVE Corn name.
Partake Foods, operating in the American market with cookies free from the top eight allergens.
Oot Granola, a Dutch brand which markets fresh, organic and gluten-free granola that are low in sugars. Oot Granola has a pure online \u2018direct-to-consumer\u2019 concept.
The Good Crisp Company, an American company which produces natural, gluten-free chips, completely free of artificial flavourings and colorants.
IQBAR, an American company manufacturing a set of plant-based nutritional bars that contain six brain nutrients and that tick all the boxes in terms of nutritional profile.
In 2023, the Group invested in Aura Bora, a US company. Aura Bora produces natural zero calorie sparkling water infused with real herbs, fruits and flowers. Furthermore, a minority stake was acquired in Fit Joy, a US company manufacturing grain-free pretzels. Their products are vegan, dairy-, gluten-, nut-free, and non-GMO. Next to the aforementioned new investments, the Group has also invested additionally in The Good Crisp Company.
25. Other liabilities
The other non-current liabilities relate to put options granted to third parties with respect to the remaining non-controlling interests in Natural Balance Foods Ltd., where these put options give holders the right to sell (part of) their investment in this subsidiary. At the end of December 2023, Lotus Bakeries held 97.9% of the shares, with the remaining 2.1% still held by the founders.
These put options are unconditional and the exercise price depends on the future financial performance (revenue and operating result) of Natural Balance Foods Ltd. In accordance with IAS 32, where non-controlling interests hold put options giving them the right to sell their investment, a financial liability is recorded for the present value of the exercise price expected to be paid. These put options are classified as level 3 instruments in accordance with the fair value hierarchy of IFRS 7 \u2013 Financial Instruments: Disclosures.
The counterpart of this liability Is a cancellation of the underlying non-controlling interest. The difference between the value of the non-controlling interest and the fair value of the liability is added to the consolidated reserves, which are included in shareholders\u2019 equity.
", "dimensions": { "concept": "ifrs-full:DisclosureOfNoncontrollingInterestsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f86917": { "value": "17. Inventories
17.1 Accounting policy
Inventories are measured at the lower of cost and net realisable value.
For raw materials, consumables and goods for resale, cost is measured at the purchase price on a FIFO basis.
The cost of finished products is the standard manufacturing cost price. This includes, in addition to direct production and material costs, a proportional part of the fixed and variable overhead costs based on the normal production capacity.
The net realisable value is defined as the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale.
17.2 Overview
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Raw materials and consumables | 20,412 | 20,261 |
Work in progress | 3,912 | 5,288 |
Goods for resale and finished goods | 52,581 | 44,812 |
TOTAL INVENTORIES | 76,906 | 70,361 |
Write-down on inventories of EUR 2,673 thousands (2022: EUR 3,519 thousands) relate mainly to finished products (2023: EUR 1,009 thousands; 2022: EUR 1,297 thousands), goods for resale (2023: EUR 625 thousands; 2022: EUR 542 thousands), raw materials (2023: EUR 534 thousands; 2022: EUR 245 thousands) and packaging material (2023: EUR 494 thousands; 2022: EUR 1,411 thousands). Reversal of previously recognised write-downs amount to EUR 1,977 thousands in 2023.
17.1 Accounting policy
Inventories are measured at the lower of cost and net realisable value.
For raw materials, consumables and goods for resale, cost is measured at the purchase price on a FIFO basis.
The cost of finished products is the standard manufacturing cost price. This includes, in addition to direct production and material costs, a proportional part of the fixed and variable overhead costs based on the normal production capacity.
The net realisable value is defined as the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f87115": { "value": "Write-down on inventories of EUR 2,673 thousands (2022: EUR 3,519 thousands) relate mainly to finished products (2023: EUR 1,009 thousands; 2022: EUR 1,297 thousands), goods for resale (2023: EUR 625 thousands; 2022: EUR 542 thousands), raw materials (2023: EUR 534 thousands; 2022: EUR 245 thousands) and packaging material (2023: EUR 494 thousands; 2022: EUR 1,411 thousands). Reversal of previously recognised write-downs amount to EUR 1,977 thousands in 2023.", "dimensions": { "concept": "ifrs-full:DisclosureOfImpairmentOfAssetsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f87186": { "value": "18. Trade and other receivables
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Trade receivables | 142,762 | 111,558 |
Less allowance for impairment of trade receivables | (1,294) | (803) |
Trade receivables \u2013 net | 141,468 | 110,755 |
VAT receivables | 10,049 | 8,979 |
Other amounts receivable | 527 | 339 |
Other receivables | 10,576 | 9,318 |
TOTAL TRADE AND OTHER RECEIVABLES | 152,044 | 120,074 |
The trade receivables represent an average of 46 days of customer credit (2022: 46 days).
With regard to trade receivables there are no indications that debtors will not meet their payment obligations. Nor are there any customers representing more than 10% of the consolidated revenue. IFRS 9 requires the Company to recognise an allowance for expected losses on the recovery of trade receivables. This has no material impact.
More information regarding the credit risk is disclosed in note 26.
Movements on valuation for impairment of trade receivables are as follows:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Opening balance | 803 | 526 |
Allowances recognised | 531 | 472 |
Amounts written off during the year as uncollectible | (51) | (159) |
Effect of movements in foreign exchange rates | 12 | (37) |
TOTAL ALLOWANCE FOR IMPAIRMENT OF TRADE RECEIVABLES | 1,294 | 803 |
With regard to trade receivables there are no indications that debtors will not meet their payment obligations. Nor are there any customers representing more than 10% of the consolidated revenue. IFRS 9 requires the Company to recognise an allowance for expected losses on the recovery of trade receivables. This has no material impact.
More information regarding the credit risk is disclosed in note 26.
Movements on valuation for impairment of trade receivables are as follows:
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Opening balance | 803 | 526 |
Allowances recognised | 531 | 472 |
Amounts written off during the year as uncollectible | (51) | (159) |
Effect of movements in foreign exchange rates | 12 | (37) |
TOTAL ALLOWANCE FOR IMPAIRMENT OF TRADE RECEIVABLES | 1,294 | 803 |
19. Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances (current and deposit accounts) and other short-term highly liquid investments with maturities since acquisition date of three months or less.
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Short-term bank deposits | 71,135 | - |
Cash at bank and on hand | 60,096 | 76,434 |
TOTAL CASH AND CASH EQUIVALENTS | 131,231 | 76,434 |
For the cash flow statement, cash and cash equivalents include cash and bank balances and term deposits. Any negative cash is included under non-current interest-bearing liabilities in the statement of financial position.
", "dimensions": { "concept": "ifrs-full:DisclosureOfCashAndCashEquivalentsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f87525": { "value": "19. Cash and cash equivalents
Cash and cash equivalents include cash in hand, bank balances (current and deposit accounts) and other short-term highly liquid investments with maturities since acquisition date of three months or less.
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Short-term bank deposits | 71,135 | - |
Cash at bank and on hand | 60,096 | 76,434 |
TOTAL CASH AND CASH EQUIVALENTS | 131,231 | 76,434 |
For the cash flow statement, cash and cash equivalents include cash and bank balances and term deposits. Any negative cash is included under non-current interest-bearing liabilities in the statement of financial position.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyToDetermineComponentsOfCashAndCashEquivalents", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f87638": { "value": "For the cash flow statement, cash and cash equivalents include cash and bank balances and term deposits. Any negative cash is included under non-current interest-bearing liabilities in the statement of financial position.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForCashFlowsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f87671": { "value": "20. Other assets
The other non-current and current assets include mainly cash guarantees and deferred charges relating to the operational activities of the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherAssetsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f87672": { "value": "20. Other assets
The other non-current and current assets include mainly cash guarantees and deferred charges relating to the operational activities of the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentAssetsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f87673": { "value": "20. Other assets
The other non-current and current assets include mainly cash guarantees and deferred charges relating to the operational activities of the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentAssetsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f87674": { "value": "20. Other assets
The other non-current and current assets include mainly cash guarantees and deferred charges relating to the operational activities of the Group.
", "dimensions": { "concept": "ifrs-full:DisclosureOfPrepaymentsAndOtherAssetsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f87701": { "value": "21. Equity
21.1 Accounting policy
Ordinary shares are classified as equity. Where any Group company purchases the Company\u2019s equity share capital (treasury shares), the consideration paid is deducted from equity attributable to owners of the Company until the shares are cancelled or reissued. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Dividends payable to shareholders of the Company are recognised as a liability in the statement of financial position in the period in which the dividends are approved by the shareholders of the Company.
21.2 Share capital
All shares are ordinary shares, registered or dematerialised. The ordinary share capital of the Company issued and full paid consists of 816,013 shares (2022: 816,013 shares), of which 4,313 treasury shares (2022: 5,072 treasury shares).
The treasury shares have been purchased as part of the share option plans mentioned below.
The following table presents the number of shares outstanding:
NUMBER OF SHARES | Shares issued | Treasury shares | Outstanding shares |
As at January 1, 2022 | 816,013 | (4,110) | 811,903 |
Treasury shares delivered for share option plans | - | 1,538 | 1,538 |
Purchase/sale of treasury shares | - | (2,500) | (2,500) |
As at December 31, 2022 | 816,013 | (5,072) | 810,941 |
Treasury shares delivered for share option plans | - | 1,238 | 1,238 |
Purchase/sale of treasury shares | - | (479) | (479) |
AS AT DECEMBER 31, 2023 | 816,013 | (4,313) | 811,700 |
Further details of the shareholding structure of Lotus Bakeries NV as of December 31, 2023 are disclosed in the Corporate Governance Statement in Part 1 of the 2023 annual report of Lotus Bakeries.
21.3 Capital risk management
The objective of Lotus Bakeries is to ensure that the Group can continue to operate as a going concern in order to generate a return for shareholders and provide benefits for other stakeholders. Furthermore, the Group aims for a capital structure (balance between debt and equity) that gives it the required financial flexibility to implement its growth strategy. The aim is to maintain the ratio of net financial debt (defined as interest-bearing liabilities minus cash and cash equivalents and term deposits minus treasury shares, and are reported excluding the \u2018lease liabilities\u2019) to recurring operating cash flow (REBITDA) at what is considered as a reasonable level in the financial market.
21.4 Share-based payments
21.4.1 Accounting policy
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
21.4.2 Overview
Since 2012, each financial year the Board of Directors grants stock options to executives and senior management, based on category, results and performance. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below.
Each option gives the holder the right to purchase one ordinary Lotus Bakeries share at a fixed exercise price. The exercise price is equal to the average closing stock market price of the underlying share during the thirty calendar days prior to the offering date. The granted options have a term of five years. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The stock options are only subject to services conditions so that it will vest gradually over the vesting period, i.e. three years. The options are exercisable if the option holder remains linked to the Company or a related entity as an employee or executive director. These rights are retained in the event of retirement, early retirement, invalidity or death.
The stock option plans are considered equity-settled share-based payments.
The fair value of the options is estimated at the grant date, using the binomial valuation model. This valuation model is based on the following market data and assumptions: the share price at the time of allotment, the exercise price, the exercise arrangements, the estimated volatility, the dividend expectations and the risk-free interest rate. The fair value of the share options is recognised linearly over the vesting period.
The following table details the different plans granted and the assumptions used for the measurement of the fair value:
Granted in | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Number granted | 1,179 | 1,199 | 962 | 660 | 792 | 618 |
Number exercised | (1,139) | (911) | (50) | (33) | - | - |
Number expired | (40) | (50) | (40) | (26) | - | - |
Available options | - | 238 | 872 | 601 | 792 | 618 |
Key assumptions used for fair value measurement\t | ||||||
Exercise period | 01/01/2022 \u2013 14/05/2023 | 01/01/2023 \u2013 09/05/2024 | 01/01/2024 \u2013 07/05/2025 | 01/01/2025 \u2013 17/05/2026 | 01/01/2026 \u2013 30/06/2027 | 01/01/2027 \u2013 31/05/2028 |
Exercise price (EUR) | 2,373.00 | 2,351.58 | 2,828.95 | 4,517.14 | 5,057.32 | 6,086.36 |
Share price (EUR) | 2,310.00 | 2,330.00 | 2,890.00 | 4,630.00 | 4,868.81 | 5,990.00 |
Expected volatility | 22.43% | 23.14% | 25.07% | 23.69% | 25.39% | 26.23% |
Dividend yield | 0.93% | 0.92% | 0.95% | 0.94% | 0.97% | 0.95% |
Risk-free rate | 0.11% | -0.29% | -0.36% | -0.34% | 0.82% | 2.57% |
FAIR VALUE PER OPTION (EUR) | 316.29 | 331.55 | 471.65 | 720.51 | 790.38 | 1,167.59 |
The volatility is based on daily share prices of Lotus Bakeries over the last three years.
The following reconciles the options outstanding at the beginning and end of the year:
Weighted average exercise price (EUR) | Number of options | |
Outstanding options at January 1, 2022 | 2,770 | 4,541 |
Granted | 5,057 | 792 |
Exercised | 2,420 | (1,492) |
Expired | 2,864 | (146) |
Outstanding options at December 31, 2022 | 3,398 | 3,695 |
Granted | 6,086 | 618 |
Exercised | 2,358 | (1,192) |
Expired | - | - |
OUTSTANDING OPTIONS AT DECEMBER 31, 2023 | 4,328 | 3,121 |
In 2023, a total expense of EUR 470 thousands was recognised (2022: EUR 470 thousands).
21.5 Dividends
The dividend related to 2022 was paid in 2023, in accordance with the decision taken at the Ordinary General Meeting of Shareholders of May 12, 2023. The shareholders approved a gross dividend of EUR 45per share, resulting in a total dividend of EUR 36,470 thousands.
The Board of Directors will propose to the Ordinary General Meeting of Shareholders of May 14, 2024 to pay a gross dividend of EUR 58per share for 2023. This amount is not recognised as a debt on December 31.
21.1 Accounting policy
Ordinary shares are classified as equity. Where any Group company purchases the Company\u2019s equity share capital (treasury shares), the consideration paid is deducted from equity attributable to owners of the Company until the shares are cancelled or reissued. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Dividends payable to shareholders of the Company are recognised as a liability in the statement of financial position in the period in which the dividends are approved by the shareholders of the Company.
21.2 Share capital
All shares are ordinary shares, registered or dematerialised. The ordinary share capital of the Company issued and full paid consists of 816,013 shares (2022: 816,013 shares), of which 4,313 treasury shares (2022: 5,072 treasury shares).
The treasury shares have been purchased as part of the share option plans mentioned below.
The following table presents the number of shares outstanding:
NUMBER OF SHARES | Shares issued | Treasury shares | Outstanding shares |
As at January 1, 2022 | 816,013 | (4,110) | 811,903 |
Treasury shares delivered for share option plans | - | 1,538 | 1,538 |
Purchase/sale of treasury shares | - | (2,500) | (2,500) |
As at December 31, 2022 | 816,013 | (5,072) | 810,941 |
Treasury shares delivered for share option plans | - | 1,238 | 1,238 |
Purchase/sale of treasury shares | - | (479) | (479) |
AS AT DECEMBER 31, 2023 | 816,013 | (4,313) | 811,700 |
Further details of the shareholding structure of Lotus Bakeries NV as of December 31, 2023 are disclosed in the Corporate Governance Statement in Part 1 of the 2023 annual report of Lotus Bakeries.
The treasury shares have been purchased as part of the share option plans mentioned below.
The following table presents the number of shares outstanding:
NUMBER OF SHARES | Shares issued | Treasury shares | Outstanding shares |
As at January 1, 2022 | 816,013 | (4,110) | 811,903 |
Treasury shares delivered for share option plans | - | 1,538 | 1,538 |
Purchase/sale of treasury shares | - | (2,500) | (2,500) |
As at December 31, 2022 | 816,013 | (5,072) | 810,941 |
Treasury shares delivered for share option plans | - | 1,238 | 1,238 |
Purchase/sale of treasury shares | - | (479) | (479) |
AS AT DECEMBER 31, 2023 | 816,013 | (4,313) | 811,700 |
Further details of the shareholding structure of Lotus Bakeries NV as of December 31, 2023 are disclosed in the Corporate Governance Statement in Part 1 of the 2023 annual report of Lotus Bakeries.
21.3 Capital risk management
The objective of Lotus Bakeries is to ensure that the Group can continue to operate as a going concern in order to generate a return for shareholders and provide benefits for other stakeholders. Furthermore, the Group aims for a capital structure (balance between debt and equity) that gives it the required financial flexibility to implement its growth strategy. The aim is to maintain the ratio of net financial debt (defined as interest-bearing liabilities minus cash and cash equivalents and term deposits minus treasury shares, and are reported excluding the \u2018lease liabilities\u2019) to recurring operating cash flow (REBITDA) at what is considered as a reasonable level in the financial market.
", "dimensions": { "concept": "ifrs-full:DisclosureOfObjectivesPoliciesAndProcessesForManagingCapitalExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f88220": { "value": "21.4 Share-based payments
21.4.1 Accounting policy
The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.
21.4.2 Overview
Since 2012, each financial year the Board of Directors grants stock options to executives and senior management, based on category, results and performance. In accordance with the terms of the plan, as approved by shareholders, employees may be granted options to purchase ordinary shares at an exercise price as mentioned below.
Each option gives the holder the right to purchase one ordinary Lotus Bakeries share at a fixed exercise price. The exercise price is equal to the average closing stock market price of the underlying share during the thirty calendar days prior to the offering date. The granted options have a term of five years. No amounts are paid or payable by the recipient on receipt of the option. The options carry neither rights to dividends nor voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry.
The stock options are only subject to services conditions so that it will vest gradually over the vesting period, i.e. three years. The options are exercisable if the option holder remains linked to the Company or a related entity as an employee or executive director. These rights are retained in the event of retirement, early retirement, invalidity or death.
The stock option plans are considered equity-settled share-based payments.
The fair value of the options is estimated at the grant date, using the binomial valuation model. This valuation model is based on the following market data and assumptions: the share price at the time of allotment, the exercise price, the exercise arrangements, the estimated volatility, the dividend expectations and the risk-free interest rate. The fair value of the share options is recognised linearly over the vesting period.
The following table details the different plans granted and the assumptions used for the measurement of the fair value:
Granted in | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
Number granted | 1,179 | 1,199 | 962 | 660 | 792 | 618 |
Number exercised | (1,139) | (911) | (50) | (33) | - | - |
Number expired | (40) | (50) | (40) | (26) | - | - |
Available options | - | 238 | 872 | 601 | 792 | 618 |
Key assumptions used for fair value measurement\t | ||||||
Exercise period | 01/01/2022 \u2013 14/05/2023 | 01/01/2023 \u2013 09/05/2024 | 01/01/2024 \u2013 07/05/2025 | 01/01/2025 \u2013 17/05/2026 | 01/01/2026 \u2013 30/06/2027 | 01/01/2027 \u2013 31/05/2028 |
Exercise price (EUR) | 2,373.00 | 2,351.58 | 2,828.95 | 4,517.14 | 5,057.32 | 6,086.36 |
Share price (EUR) | 2,310.00 | 2,330.00 | 2,890.00 | 4,630.00 | 4,868.81 | 5,990.00 |
Expected volatility | 22.43% | 23.14% | 25.07% | 23.69% | 25.39% | 26.23% |
Dividend yield | 0.93% | 0.92% | 0.95% | 0.94% | 0.97% | 0.95% |
Risk-free rate | 0.11% | -0.29% | -0.36% | -0.34% | 0.82% | 2.57% |
FAIR VALUE PER OPTION (EUR) | 316.29 | 331.55 | 471.65 | 720.51 | 790.38 | 1,167.59 |
The volatility is based on daily share prices of Lotus Bakeries over the last three years.
The following reconciles the options outstanding at the beginning and end of the year:
Weighted average exercise price (EUR) | Number of options | |
Outstanding options at January 1, 2022 | 2,770 | 4,541 |
Granted | 5,057 | 792 |
Exercised | 2,420 | (1,492) |
Expired | 2,864 | (146) |
Outstanding options at December 31, 2022 | 3,398 | 3,695 |
Granted | 6,086 | 618 |
Exercised | 2,358 | (1,192) |
Expired | - | - |
OUTSTANDING OPTIONS AT DECEMBER 31, 2023 | 4,328 | 3,121 |
In 2023, a total expense of EUR 470 thousands was recognised (2022: EUR 470 thousands).
", "dimensions": { "concept": "ifrs-full:DisclosureOfSharebasedPaymentArrangementsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "s9_notes__6__190-1": { "value": "The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.23.1 Accounting policy
Short-term employee benefits
Bonuses for employees and management are calculated based on key financial objectives and individual objectives. The estimated amount of the bonuses is recognised as an expense in the period in which the related services have been rendered based on an estimate on the reporting date.
Post-employment benefits (pension plans)
Group companies operate various pension schemes. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due.
In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Defined benefit costs are divided into 2 categories:
Current service cost, past-service cost, gains and losses on curtailments and settlements; and
Net interest expense or income.
The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f88234": { "value": "The stock option plan allows employees to acquire shares in the Company at relatively advantageous conditions. The stock option plan is accounted for as equity-settled share-based payments. The exercise price of the option is equal to the average stock market closing price of the Lotus Bakeries share during the thirty calendar days preceding the date of offering. A personnel cost is recognised for options granted to employees as part of the stock option plan. The cost is determined based on the fair value of the stock options on the grant date and, together with an equal increase in equity, is recognised over the vesting period, ending on the date when the employees receive full right to the options. When the options are exercised, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForSharebasedPaymentTransactionsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f89266": { "value": "21.5 Dividends
The dividend related to 2022 was paid in 2023, in accordance with the decision taken at the Ordinary General Meeting of Shareholders of May 12, 2023. The shareholders approved a gross dividend of EUR 45per share, resulting in a total dividend of EUR 36,470 thousands.
The Board of Directors will propose to the Ordinary General Meeting of Shareholders of May 14, 2024 to pay a gross dividend of EUR 58per share for 2023. This amount is not recognised as a debt on December 31.
", "dimensions": { "concept": "ifrs-full:DisclosureOfDividendsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f89306": { "value": "45", "decimals": 0, "dimensions": { "concept": "ifrs-full:DividendsRecognisedAsDistributionsToOwnersPerShare", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "f89344": { "value": "58", "decimals": 0, "dimensions": { "concept": "ifrs-full:DividendsProposedOrDeclaredBeforeFinancialStatementsAuthorisedForIssueButNotRecognisedAsDistributionToOwnersPerShare", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00", "unit": "iso4217:EUR/xbrli:shares" } }, "s9_notes__6__29-1": { "value": "22. Interest-bearing liabilities
in thousands of EUR | December 31, 2023 | December 31, 2022 |
Bank loans | 261,000 | 182,500 |
Lease liabilities | 14,834 | 13,566 |
Non-current interest-bearing liabilities | 275,834 | 196,066 |
Bank loans | 9,500 | 66,000 |
Lease liabilities | 5,157 | 4,178 |
Current interest-bearing liabilities | 14,657 | 70,178 |
TOTAL INTEREST-BEARING LIABILITIES | 290,491 | 266,244 |
of which bank loans | 270,500 | 248,500 |
of which lease liabilities | 19,991 | 17,744 |
All bank loans are denominated in EUR. These loans bear a fixed interest rate. The weighted average interest rate is 1.26% (2022: 1.00%).
The lease liabilities mainly relate to the lease of company cars and office buildings (see also note 15).
The following tables reconcile the movements of the interest-bearing liabilities to the cash flows arising from financing activities:
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2023 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2023 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 182,500 | 88,000 | - | - | (9,500) | - | 261,000 |
Lease liabilities | 13,566 | (208) | 7,852 | 20 | (5,883) | (512) | 14,834 |
Current interest-bearing liabilities | |||||||
Bank loans | 66,000 | (66,000) | - | - | 9,500 | - | 9,500 |
Lease liabilities | 4,178 | (5,282) | - | (32) | 5,883 | 410 | 5,157 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 266,244 | 16,510 | 7,852 | (12) | - | (102) | 290,491 |
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2022 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2022 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 209,500 | 12,000 | - | - | (39,000) | - | 182,500 |
Lease liabilities | 9,337 | 9,847 | (304) | (4,990) | (324) | 13,566 | |
Current interest-bearing liabilities | |||||||
Bank loans | 14,000 | 13,000 | - | - | 39,000 | - | 66,000 |
Lease liabilities | 3,439 | (4,187) | - | (64) | 4,990 | - | 4,178 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 236,276 | 20,813 | 9,847 | (368) | - | (324) | 266,244 |
22. Interest-bearing liabilities
in thousands of EUR | December 31, 2023 | December 31, 2022 |
Bank loans | 261,000 | 182,500 |
Lease liabilities | 14,834 | 13,566 |
Non-current interest-bearing liabilities | 275,834 | 196,066 |
Bank loans | 9,500 | 66,000 |
Lease liabilities | 5,157 | 4,178 |
Current interest-bearing liabilities | 14,657 | 70,178 |
TOTAL INTEREST-BEARING LIABILITIES | 290,491 | 266,244 |
of which bank loans | 270,500 | 248,500 |
of which lease liabilities | 19,991 | 17,744 |
All bank loans are denominated in EUR. These loans bear a fixed interest rate. The weighted average interest rate is 1.26% (2022: 1.00%).
The lease liabilities mainly relate to the lease of company cars and office buildings (see also note 15).
The following tables reconcile the movements of the interest-bearing liabilities to the cash flows arising from financing activities:
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2023 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2023 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 182,500 | 88,000 | - | - | (9,500) | - | 261,000 |
Lease liabilities | 13,566 | (208) | 7,852 | 20 | (5,883) | (512) | 14,834 |
Current interest-bearing liabilities | |||||||
Bank loans | 66,000 | (66,000) | - | - | 9,500 | - | 9,500 |
Lease liabilities | 4,178 | (5,282) | - | (32) | 5,883 | 410 | 5,157 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 266,244 | 16,510 | 7,852 | (12) | - | (102) | 290,491 |
Non-cash movements
IN THOUSANDS OF EUR | As at January 1, 2022 | Cash flows | New Leases and lease modifications | Exchange differences | Reclasses | Other | As at December 31, 2022 |
Non-current interest-bearing liabilities | |||||||
Bank loans | 209,500 | 12,000 | - | - | (39,000) | - | 182,500 |
Lease liabilities | 9,337 | 9,847 | (304) | (4,990) | (324) | 13,566 | |
Current interest-bearing liabilities | |||||||
Bank loans | 14,000 | 13,000 | - | - | 39,000 | - | 66,000 |
Lease liabilities | 3,439 | (4,187) | - | (64) | 4,990 | - | 4,178 |
TOTAL LIABILITIES FROM FINANCING ACTIVITIES | 236,276 | 20,813 | 9,847 | (368) | - | (324) | 266,244 |
Group companies operate various pension schemes. The Group has both defined benefit and defined contribution plans.
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. The contributions are recognised as employee benefit expense when they are due.
In addition, there are also defined benefit pension plans in certain subsidiaries of the Group (mainly Germany, the Netherlands and France). Typically, defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
For the defined benefit pension plans, the liability is measured at the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method.
Defined benefit costs are divided into 2 categories:
Current service cost, past-service cost, gains and losses on curtailments and settlements; and
Net interest expense or income.
The current and past service cost, the net interest expense, the remeasurement of other long-term personnel expenses, administrative expenses and taxes for the reporting period are included in the personnel expenses in the statement of profit or loss. The remeasurement on the net defined benefit liability as a consequence of actuarial gains or losses is included in other comprehensive income.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTerminationBenefits", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f91668": { "value": "24. Trade and other payables
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 |
Trade payables | 163,411 | 140,003 |
Employee benefit liabilities | 38,026 | 29,725 |
VAT payables | 1,498 | 1,186 |
Other payables | 2,175 | 2,080 |
Other payables | 41,698 | 32,992 |
TOTAL TRADE AND OTHER PAYABLES | 205,110 | 172,995 |
Increase in trade and other payables relates mainly to higher outstanding payables at year-end as a result of the significant investment projects launched during 2023.
25. Other liabilities
The other non-current liabilities relate to put options granted to third parties with respect to the remaining non-controlling interests in Natural Balance Foods Ltd., where these put options give holders the right to sell (part of) their investment in this subsidiary. At the end of December 2023, Lotus Bakeries held 97.9% of the shares, with the remaining 2.1% still held by the founders.
These put options are unconditional and the exercise price depends on the future financial performance (revenue and operating result) of Natural Balance Foods Ltd. In accordance with IAS 32, where non-controlling interests hold put options giving them the right to sell their investment, a financial liability is recorded for the present value of the exercise price expected to be paid. These put options are classified as level 3 instruments in accordance with the fair value hierarchy of IFRS 7 \u2013 Financial Instruments: Disclosures.
The counterpart of this liability Is a cancellation of the underlying non-controlling interest. The difference between the value of the non-controlling interest and the fair value of the liability is added to the consolidated reserves, which are included in shareholders\u2019 equity.
The other current liabilities include mainly accrued expenses and deferred income.
25. Other liabilities
The other non-current liabilities relate to put options granted to third parties with respect to the remaining non-controlling interests in Natural Balance Foods Ltd., where these put options give holders the right to sell (part of) their investment in this subsidiary. At the end of December 2023, Lotus Bakeries held 97.9% of the shares, with the remaining 2.1% still held by the founders.
These put options are unconditional and the exercise price depends on the future financial performance (revenue and operating result) of Natural Balance Foods Ltd. In accordance with IAS 32, where non-controlling interests hold put options giving them the right to sell their investment, a financial liability is recorded for the present value of the exercise price expected to be paid. These put options are classified as level 3 instruments in accordance with the fair value hierarchy of IFRS 7 \u2013 Financial Instruments: Disclosures.
The counterpart of this liability Is a cancellation of the underlying non-controlling interest. The difference between the value of the non-controlling interest and the fair value of the liability is added to the consolidated reserves, which are included in shareholders\u2019 equity.
26.1 Accounting policy relating to financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value and financial assets at amortised cost. The classification depends on the entity\u2019s business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.
Regular purchases and sales of financial assets are recognised on the trade date \u2013 the date on which the Group commits to purchase or sell an asset.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets at amortised cost
Financial assets (such as loans, trade receivables, cash and cash equivalents) are subsequently measured at amortised cost using the effective interest method, less any impairment if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest.
Trade and other receivables after and within one year are recognised initially at fair value and subsequently measured at amortised cost, i.e. at the net present value of the receivable amount, using the effective interest rate method, less allowances for impairment.
The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. For trade receivables, the Group applies the simplified approach in accordance with IFRS 9 \u2013 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The amount of the allowance is deducted from the carrying amount of the asset and is recognised in the statement of profit or loss under \u2018Impairment on inventories and trade receivables\u2019.
Financial assets at fair value
Financial assets at fair value consist of equity instruments held in companies in which the Group does not exercise control nor significant influence.
An irrevocable election can be made at initial recognition to measure the investment subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. This classification is determined on an instrument-by-instrument basis. As such, changes in fair value are directly recognised in a separate component of other comprehensive income. For listed companies, the share price is the best estimate of the fair value. Investments for which no fair value can be determined, are recognised at historical cost.
The Group assesses at each reporting date whether there is objective evidence that the asset is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
26.2 Accounting policy relating to financial liabilities
Financial liabilities (including interest-bearing financial liabilities, trade payables and other financial liabilities) are classified at amortised cost, except for derivative instruments. However, currently, the Group does not hold any derivative positions.
Interest-bearing financial liabilities are initially recognised at fair value less direct attributable transaction costs. After initial recognition, the interest-bearing financial liabilities are recognised at the amortised cost price based on the effective interest rate method.
Trade payables and other debts are recognised at their nominal value. A financial obligation is derecognised once the obligation is fulfilled, settled or lapsed.
Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
26.3 Overview of financial instruments
The table below summarises all financial instruments by category in accordance with IFRS 9:
IN THOUSANDS OF EUR | IFRS 9 category | December 31, 2023 | December 31, 2022 |
Non-current financial assets | 27,504 | 16,806 | |
Investments in other companies | At fair value through OCI | 27,504 | 16,806 |
Current financial assets | 272,699 | 187,190 | |
Trade receivables | At amortised cost | 141,468 | 110,755 |
Cash and cash equivalents | At amortised cost | 131,231 | 76,435 |
TOTAL FINANCIAL ASSETS | 300,203 | 203,995 | |
Non-current financial liabilities | 277,635 | 197,938 | |
Interest-bearing liabilities | At amortised cost | 275,834 | 196,066 |
Derivative financial instruments | Designated in a cash flow hedge | - | 107 |
Other non-current liabilities | At fair value through P&L | 1,801 | 1,765 |
Current financial liabilities | 178,068 | 210,181 | |
Interest-bearing liabilities | At amortised cost | 14,657 | 70,178 |
Trade payables | At amortised cost | 163,411 | 140,003 |
TOTAL FINANCIAL LIABILITIES | 455,703 | 408,118 |
The fair value of the financial assets and liabilities measured at amortised cost approximate their carrying amount.
The financial instruments measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include input for the asset or liability that are not based on observable market data (unobservable input).
The fair values of the derivatives of the Group are based on level 2 inputs as defined under IFRS 7.27.
The fair value of the other non-current liabilities (put options, see note 25) is based on level 3 input.
No transfers between the different fair value hierarchy levels took place in 2023 and 2022.
Till 2022, the Group used financial derivatives to cover risks from adverse exchange rate and interest rate fluctuations. No derivatives were used for trading purposes. The following table presents an overview of the derivative instruments outstanding at reporting date:
Fair value
Notional amounts
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 |
Designated in a cash flow hedge | ||||
Interest rate swaps | - | 107 | - | 27,000 |
TOTAL DERIVATIVEFINANCIAL LIABILITIES | - | 107 | - | 27,000 |
The derivative instruments presented in the table above are all designated in a cash flow hedge relationship.
25. Other liabilities
The other non-current liabilities relate to put options granted to third parties with respect to the remaining non-controlling interests in Natural Balance Foods Ltd., where these put options give holders the right to sell (part of) their investment in this subsidiary. At the end of December 2023, Lotus Bakeries held 97.9% of the shares, with the remaining 2.1% still held by the founders.
These put options are unconditional and the exercise price depends on the future financial performance (revenue and operating result) of Natural Balance Foods Ltd. In accordance with IAS 32, where non-controlling interests hold put options giving them the right to sell their investment, a financial liability is recorded for the present value of the exercise price expected to be paid. These put options are classified as level 3 instruments in accordance with the fair value hierarchy of IFRS 7 \u2013 Financial Instruments: Disclosures.
The counterpart of this liability Is a cancellation of the underlying non-controlling interest. The difference between the value of the non-controlling interest and the fair value of the liability is added to the consolidated reserves, which are included in shareholders\u2019 equity.
26.3 Overview of financial instruments
The table below summarises all financial instruments by category in accordance with IFRS 9:
IN THOUSANDS OF EUR | IFRS 9 category | December 31, 2023 | December 31, 2022 |
Non-current financial assets | 27,504 | 16,806 | |
Investments in other companies | At fair value through OCI | 27,504 | 16,806 |
Current financial assets | 272,699 | 187,190 | |
Trade receivables | At amortised cost | 141,468 | 110,755 |
Cash and cash equivalents | At amortised cost | 131,231 | 76,435 |
TOTAL FINANCIAL ASSETS | 300,203 | 203,995 | |
Non-current financial liabilities | 277,635 | 197,938 | |
Interest-bearing liabilities | At amortised cost | 275,834 | 196,066 |
Derivative financial instruments | Designated in a cash flow hedge | - | 107 |
Other non-current liabilities | At fair value through P&L | 1,801 | 1,765 |
Current financial liabilities | 178,068 | 210,181 | |
Interest-bearing liabilities | At amortised cost | 14,657 | 70,178 |
Trade payables | At amortised cost | 163,411 | 140,003 |
TOTAL FINANCIAL LIABILITIES | 455,703 | 408,118 |
The fair value of the financial assets and liabilities measured at amortised cost approximate their carrying amount.
The financial instruments measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include input for the asset or liability that are not based on observable market data (unobservable input).
The fair values of the derivatives of the Group are based on level 2 inputs as defined under IFRS 7.27.
The fair value of the other non-current liabilities (put options, see note 25) is based on level 3 input.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFinancialInstrumentsAtFairValueThroughProfitOrLossExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f91806": { "value": "25. Other liabilities
The other non-current liabilities relate to put options granted to third parties with respect to the remaining non-controlling interests in Natural Balance Foods Ltd., where these put options give holders the right to sell (part of) their investment in this subsidiary. At the end of December 2023, Lotus Bakeries held 97.9% of the shares, with the remaining 2.1% still held by the founders.
These put options are unconditional and the exercise price depends on the future financial performance (revenue and operating result) of Natural Balance Foods Ltd. In accordance with IAS 32, where non-controlling interests hold put options giving them the right to sell their investment, a financial liability is recorded for the present value of the exercise price expected to be paid. These put options are classified as level 3 instruments in accordance with the fair value hierarchy of IFRS 7 \u2013 Financial Instruments: Disclosures.
The counterpart of this liability Is a cancellation of the underlying non-controlling interest. The difference between the value of the non-controlling interest and the fair value of the liability is added to the consolidated reserves, which are included in shareholders\u2019 equity.
", "dimensions": { "concept": "ifrs-full:DisclosureOfInvestmentContractsLiabilitiesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f91808": { "value": "25. Other liabilities
The other non-current liabilities relate to put options granted to third parties with respect to the remaining non-controlling interests in Natural Balance Foods Ltd., where these put options give holders the right to sell (part of) their investment in this subsidiary. At the end of December 2023, Lotus Bakeries held 97.9% of the shares, with the remaining 2.1% still held by the founders.
These put options are unconditional and the exercise price depends on the future financial performance (revenue and operating result) of Natural Balance Foods Ltd. In accordance with IAS 32, where non-controlling interests hold put options giving them the right to sell their investment, a financial liability is recorded for the present value of the exercise price expected to be paid. These put options are classified as level 3 instruments in accordance with the fair value hierarchy of IFRS 7 \u2013 Financial Instruments: Disclosures.
The counterpart of this liability Is a cancellation of the underlying non-controlling interest. The difference between the value of the non-controlling interest and the fair value of the liability is added to the consolidated reserves, which are included in shareholders\u2019 equity.
", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherNoncurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92004": { "value": "The other current liabilities include mainly accrued expenses and deferred income.", "dimensions": { "concept": "ifrs-full:DisclosureOfAccruedExpensesAndOtherLiabilitiesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92005": { "value": "The other current liabilities include mainly accrued expenses and deferred income.", "dimensions": { "concept": "ifrs-full:DisclosureOfDeferredIncomeExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92006": { "value": "The other current liabilities include mainly accrued expenses and deferred income.", "dimensions": { "concept": "ifrs-full:DisclosureOfOtherCurrentLiabilitiesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92047": { "value": "26.1 Accounting policy relating to financial assets
The Group classifies its financial assets in the following categories: financial assets at fair value and financial assets at amortised cost. The classification depends on the entity\u2019s business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.
Regular purchases and sales of financial assets are recognised on the trade date \u2013 the date on which the Group commits to purchase or sell an asset.
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.
Financial assets at amortised cost
Financial assets (such as loans, trade receivables, cash and cash equivalents) are subsequently measured at amortised cost using the effective interest method, less any impairment if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest.
Trade and other receivables after and within one year are recognised initially at fair value and subsequently measured at amortised cost, i.e. at the net present value of the receivable amount, using the effective interest rate method, less allowances for impairment.
The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. For trade receivables, the Group applies the simplified approach in accordance with IFRS 9 \u2013 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The amount of the allowance is deducted from the carrying amount of the asset and is recognised in the statement of profit or loss under \u2018Impairment on inventories and trade receivables\u2019.
Financial assets at fair value
Financial assets at fair value consist of equity instruments held in companies in which the Group does not exercise control nor significant influence.
An irrevocable election can be made at initial recognition to measure the investment subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. This classification is determined on an instrument-by-instrument basis. As such, changes in fair value are directly recognised in a separate component of other comprehensive income. For listed companies, the share price is the best estimate of the fair value. Investments for which no fair value can be determined, are recognised at historical cost.
The Group assesses at each reporting date whether there is objective evidence that the asset is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
Trade and other receivables after and within one year are recognised initially at fair value and subsequently measured at amortised cost, i.e. at the net present value of the receivable amount, using the effective interest rate method, less allowances for impairment.
The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. For trade receivables, the Group applies the simplified approach in accordance with IFRS 9 \u2013 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables.
The amount of the allowance is deducted from the carrying amount of the asset and is recognised in the statement of profit or loss under \u2018Impairment on inventories and trade receivables\u2019.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92398": { "value": "Financial assets at fair value consist of equity instruments held in companies in which the Group does not exercise control nor significant influence. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92424": { "value": "An irrevocable election can be made at initial recognition to measure the investment subsequently at fair value through other comprehensive income (FVTOCI), with dividend income recognised in the statement of profit or loss. This classification is determined on an instrument-by-instrument basis. As such, changes in fair value are directly recognised in a separate component of other comprehensive income. For listed companies, the share price is the best estimate of the fair value. Investments for which no fair value can be determined, are recognised at historical cost.
The Group assesses at each reporting date whether there is objective evidence that the asset is impaired. Objective evidence would include a significant or prolonged decline in the fair value of the investment below its cost.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForImpairmentOfFinancialAssetsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92606": { "value": "Interest-bearing financial liabilities are initially recognised at fair value less direct attributable transaction costs. After initial recognition, the interest-bearing financial liabilities are recognised at the amortised cost price based on the effective interest rate method. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForBorrowingsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92644": { "value": "Trade payables and other debts are recognised at their nominal value. A financial obligation is derecognised once the obligation is fulfilled, settled or lapsed. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92645": { "value": "Trade payables and other debts are recognised at their nominal value. A financial obligation is derecognised once the obligation is fulfilled, settled or lapsed. ", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherPayablesExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f92671": { "value": "Financial assets and liabilities are offset and the net amount is reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForOffsettingOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f93024": { "value": "The fair value of the financial assets and liabilities measured at amortised cost approximate their carrying amount.
The financial instruments measured at fair value are grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 fair value measurements are those derived from valuation techniques that include input for the asset or liability that are not based on observable market data (unobservable input).
The fair values of the derivatives of the Group are based on level 2 inputs as defined under IFRS 7.27.
The fair value of the other non-current liabilities (put options, see note 25) is based on level 3 input.
", "dimensions": { "concept": "ifrs-full:DisclosureOfFairValueOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f93201": { "value": "No transfers between the different fair value hierarchy levels took place in 2023 and 2022. ", "dimensions": { "concept": "ifrs-full:DisclosureOfReclassificationOfFinancialInstrumentsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f93218": { "value": "Till 2022, the Group used financial derivatives to cover risks from adverse exchange rate and interest rate fluctuations. No derivatives were used for trading purposes. The following table presents an overview of the derivative instruments outstanding at reporting date:
Fair value
Notional amounts
IN THOUSANDS OF EUR | December 31, 2023 | December 31, 2022 | December 31, 2023 | December 31, 2022 |
Designated in a cash flow hedge | ||||
Interest rate swaps | - | 107 | - | 27,000 |
TOTAL DERIVATIVEFINANCIAL LIABILITIES | - | 107 | - | 27,000 |
The derivative instruments presented in the table above are all designated in a cash flow hedge relationship.
26.4 Financial risk management
The Group\u2019s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and commodity price risk), credit risk and liquidity risk.
Currency risk
The functional currency of the Company is EUR, which is also the Group\u2019s reporting currency. Translation gains or losses that result from remeasuring foreign subsidiaries\u2019 local currencies to EUR are recorded in other comprehensive income. Foreign currency transactions resulting in gains or losses are recorded in the consolidated statement of profit or loss.
As the Group is operating in various jurisdiction with different currencies, the Group is subject to foreign currency risks. The main foreign currency transactions (mainly sales and purchase transactions) take place in USD, GBP, SEK, ZAR, CNY, KRW, CZK and CHF. The Group did not enter into any currency hedging arrangements in order to cover this risk.
The Group actively monitors its transactional currency exposures and consequently takes actions to mitigate any risks related to the outstanding foreign currency positions.
The following table presents the carrying amounts of the Group\u2019s main foreign currency denominated monetary assets and monetary liabilities at the end of 2023:
IN THOUSANDS OF EUR | Assets | Liabilities |
EUR | 643,084 | (846,025) |
USD | 156,986 | (136,048) |
GBP | 42,314 | (27,097) |
THB | 11,889 | (13,871) |
ZAR | 9,309 | (10,679) |
CNY | 8,177 | (1,982) |
SEK | 5,961 | (15,770) |
KRW | 3,471 | (173) |
CHF | 1,495 | (200) |
CZK | 1,227 | (633) |
Interest rate risk
The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
As the Group only has fixed rate financial instruments at year-end 2023, it considers this risk to be limited and therefore no sensitivity analysis has been prepared.
Commodity price risk
Commodity price risk arises from transactions to purchase raw materials and energy on the market. The risk relates to the exposure of the Group to fluctuations in the prices of commodities which are necessary for the manufacturing of products.
To mitigate the risk of unfavourable price evolutions, the Group enters into forward agreements with fixed prices for the key commodities (executory contracts) and closely monitors the price trends on the market.
At year-end 2023, the Group did not enter into any hedging arrangements in order to cover this risk.
Credit risk
Credit risk is the risk that one party to an agreement will cause a financial loss to another party by failing to discharge its obligation. Credit risk covers trade receivables, cash and cash equivalents, short-term deposits and other financial assets.
The credit risk is managed on a group basis. It is the Group\u2019s policy to deal with creditworthy partners to avoid significant risk exposure.
The Group has a diversified international customer portfolio, consisting mainly of large retail, cash-and-carry and foodservice companies in various countries. For export outside Europe, the US, South Korea and China, the Group requires the use of letters of credits or credit insurance. Strict procedures and rules are in place to accurately monitor customers and mitigate and manage any potential risks as quickly and effectively as possible.
For trade receivables, an impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type).
Available liquidities are placed with several highly reputable financial institutions.
The maximum credit risk to which the Group is theoretically exposed as at the reporting date is the carrying amount of the financial assets.
Liquidity risk
The Group manages liquidity risk by maintaining adequate reserves and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The Group\u2019s main sources of cash inflows are currently obtained through capital increases and external financing through bank loans from Belgian and international financial institutions.
The following table details the Group\u2019s remaining contractual maturity of its financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.
December 31, 2023 | |||
IN THOUSANDS OF EUR | Within one year | > 1 and < 5 years | > 5 years |
Bank loans | 9,623 | 165,977 | 108,507 |
Lease liabilities | 5,644 | 12,438 | 3,298 |
December 31, 2022 | |||
IN THOUSANDS OF EUR | Within one year | > 1 and < 5 years | > 5 years |
Bank loans | 66,540 | 176,615 | 12,950 |
Lease liabilities | 4,398 | 10,087 | 3,557 |
The unused committed credit lines amounted to EUR 150,100 thousands at year-end 2023 (2022: EUR 193,100 thousands).
Currency risk
The functional currency of the Company is EUR, which is also the Group\u2019s reporting currency. Translation gains or losses that result from remeasuring foreign subsidiaries\u2019 local currencies to EUR are recorded in other comprehensive income. Foreign currency transactions resulting in gains or losses are recorded in the consolidated statement of profit or loss.
As the Group is operating in various jurisdiction with different currencies, the Group is subject to foreign currency risks. The main foreign currency transactions (mainly sales and purchase transactions) take place in USD, GBP, SEK, ZAR, CNY, KRW, CZK and CHF. The Group did not enter into any currency hedging arrangements in order to cover this risk.
The Group actively monitors its transactional currency exposures and consequently takes actions to mitigate any risks related to the outstanding foreign currency positions.
The following table presents the carrying amounts of the Group\u2019s main foreign currency denominated monetary assets and monetary liabilities at the end of 2023:
IN THOUSANDS OF EUR | Assets | Liabilities |
EUR | 643,084 | (846,025) |
USD | 156,986 | (136,048) |
GBP | 42,314 | (27,097) |
THB | 11,889 | (13,871) |
ZAR | 9,309 | (10,679) |
CNY | 8,177 | (1,982) |
SEK | 5,961 | (15,770) |
KRW | 3,471 | (173) |
CHF | 1,495 | (200) |
CZK | 1,227 | (633) |
Commodity price risk
Commodity price risk arises from transactions to purchase raw materials and energy on the market. The risk relates to the exposure of the Group to fluctuations in the prices of commodities which are necessary for the manufacturing of products.
To mitigate the risk of unfavourable price evolutions, the Group enters into forward agreements with fixed prices for the key commodities (executory contracts) and closely monitors the price trends on the market.
At year-end 2023, the Group did not enter into any hedging arrangements in order to cover this risk.
", "dimensions": { "concept": "ifrs-full:DisclosureOfMarketRiskExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f93946": { "value": "Credit risk
Credit risk is the risk that one party to an agreement will cause a financial loss to another party by failing to discharge its obligation. Credit risk covers trade receivables, cash and cash equivalents, short-term deposits and other financial assets.
The credit risk is managed on a group basis. It is the Group\u2019s policy to deal with creditworthy partners to avoid significant risk exposure.
The Group has a diversified international customer portfolio, consisting mainly of large retail, cash-and-carry and foodservice companies in various countries. For export outside Europe, the US, South Korea and China, the Group requires the use of letters of credits or credit insurance. Strict procedures and rules are in place to accurately monitor customers and mitigate and manage any potential risks as quickly and effectively as possible.
For trade receivables, an impairment analysis is performed at each reporting date using a provision matrix to measure expected credit losses. The provision rates are based on days past due for groupings of various customer segments with similar loss patterns (i.e., by geographical region, product type).
Available liquidities are placed with several highly reputable financial institutions.
The maximum credit risk to which the Group is theoretically exposed as at the reporting date is the carrying amount of the financial assets.
Liquidity risk
The Group manages liquidity risk by maintaining adequate reserves and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.
The Group\u2019s main sources of cash inflows are currently obtained through capital increases and external financing through bank loans from Belgian and international financial institutions.
The following table details the Group\u2019s remaining contractual maturity of its financial liabilities with agreed repayment periods. The table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The table includes both interest and principal cash flows.
December 31, 2023 | |||
IN THOUSANDS OF EUR | Within one year | > 1 and < 5 years | > 5 years |
Bank loans | 9,623 | 165,977 | 108,507 |
Lease liabilities | 5,644 | 12,438 | 3,298 |
December 31, 2022 | |||
IN THOUSANDS OF EUR | Within one year | > 1 and < 5 years | > 5 years |
Bank loans | 66,540 | 176,615 | 12,950 |
Lease liabilities | 4,398 | 10,087 | 3,557 |
The unused committed credit lines amounted to EUR 150,100 thousands at year-end 2023 (2022: EUR 193,100 thousands).
27. Related parties
A list of all Group companies is provided in note 32. Further details of the shareholding structure of Lotus Bakeries NV as at December 31, 2023 are disclosed in the Corporate Governance Statement in Part 1 of the 2023 annual report of Lotus Bakeries.
Balances and transactions between Lotus Bakeries NV and its subsidiaries, which are related parties of the Company, have been eliminated in consolidation and are not disclosed in this note.
Key management personnel is composed of all members of the Board of Directors and members of the Executive Committee. For information on the remuneration of the CEO, the remuneration of the executive managers and the remuneration of the board members in 2023, we refer to the remuneration report included in Part 1 of the 2023 annual report.
Apart from the key management remuneration, no significant transactions occurred with related parties.
27. Related parties
A list of all Group companies is provided in note 32. Further details of the shareholding structure of Lotus Bakeries NV as at December 31, 2023 are disclosed in the Corporate Governance Statement in Part 1 of the 2023 annual report of Lotus Bakeries.
Balances and transactions between Lotus Bakeries NV and its subsidiaries, which are related parties of the Company, have been eliminated in consolidation and are not disclosed in this note.
Key management personnel is composed of all members of the Board of Directors and members of the Executive Committee. For information on the remuneration of the CEO, the remuneration of the executive managers and the remuneration of the board members in 2023, we refer to the remuneration report included in Part 1 of the 2023 annual report.
Apart from the key management remuneration, no significant transactions occurred with related parties.
28. Commitments
Capital commitments
As at December 31, 2023, the Group has EUR 74,760 thousands of commitments (2022: EUR 15,122 thousands) for the acquisition of property, plant and equipment.
Contracts for raw materials and finished products
Purchased but not yet delivered raw materials and finished products in 2024 and 2025 are detailed below:
IN THOUSANDS OF EUR | 2023 | 2022 |
Less than one year | 156,499 | 112,971 |
More than one year and less than five years | 28,085 | 34,244 |
Total | 184,584 | 147,215 |
Other rights and commitments
Bank guarantees as at December 31, 2023 amounted to EUR 1,905 thousands (2022: EUR 1,543 thousands).
Lotus Bakeries commits itself not to dispose of, mortgage or pledge any fixed assets without prior consultation with the credit-granting institutions. These assets serve as guarantee for the loans (\u2018full negative pledge\u2019).
Capital commitments
As at December 31, 2023, the Group has EUR 74,760 thousands of commitments (2022: EUR 15,122 thousands) for the acquisition of property, plant and equipment.
Contracts for raw materials and finished products
Purchased but not yet delivered raw materials and finished products in 2024 and 2025 are detailed below:
IN THOUSANDS OF EUR | 2023 | 2022 |
Less than one year | 156,499 | 112,971 |
More than one year and less than five years | 28,085 | 34,244 |
Total | 184,584 | 147,215 |
Other rights and commitments
Bank guarantees as at December 31, 2023 amounted to EUR 1,905 thousands (2022: EUR 1,543 thousands).
Lotus Bakeries commits itself not to dispose of, mortgage or pledge any fixed assets without prior consultation with the credit-granting institutions. These assets serve as guarantee for the loans (\u2018full negative pledge\u2019).
29. Subsequent events
No significant events have occurred since December 31, 2023 which would have a material impact on the 2023 financial statements.
", "dimensions": { "concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f94846": { "value": "30. Management responsibility statement
We hereby certify that, to the best of our knowledge, the consolidated financial statements for the year ended December 31, 2023, which have been prepared in accordance with IFRS (International Financial Reporting Standards), give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the subsidiaries included in the consolidation as a whole, and that the annual report includes a fair review of the important events that have occurred during the year 2023 and of the major transactions with the related parties, and their impact on the consolidated financial statements, together with a description of the principal risks and uncertainties with which the company is confronted.
Lembeke, March 28, 2024
On behalf of the Board of Directors
Jan Boone, CEO
", "dimensions": { "concept": "ifrs-full:DisclosureOfAuthorisationOfFinancialStatementsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } }, "f94986": { "value": "31. Audit fees
IN THOUSANDS OF EUR | 2023 | 2022 |
Audit fees | ||
Lotus Bakeries NV | 145 | 152 |
Lotus Bakeries Group | 456 | 443 |
Additional services rendered by the Auditor or its related parties | ||
Other audit-related fees | 131 | 111 |
Tax fees | 38 | 43 |
Other non-audit fees | 181 | 50 |
TOTAL | 951 | 799 |
32. Consolidation scope
NAME | Address | VAT or national number | 2023 | 2022 |
% | % | |||
Lotus Bakeries Belgi\u00eb NV | Gentstraat 52, 9971 Lembeke, BE | VAT BE 0421.694.038 | 100.00 | 100.00 |
Interwaffles SA | Rue de Li\u00e8ge 39, 6180 Courcelles, BE | VAT BE 0439.312.406 | 100.00 | 100.00 |
Lotus Bakeries Corporate NV | Gentstraat 1, 9971 Lembeke, BE | VAT BE 0881.664.870 | 100.00 | 100.00 |
Lotus Bakeries NV | Gentstraat 1, 9971 Lembeke, BE | VAT BE 0401.030.860 | 100.00 | 100.00 |
Cremers-Ribert NV | Gentstraat 52, 9971 Lembeke, BE | VAT BE 0427.808.008 | 100.00 | 100.00 |
B.W.I. BV | Ambachtenstraat 5, 9900 Eeklo, BE | VAT BE 0898.518.522 | - | 100.00 |
Biscuiterie Willems BV | Nieuwendorpe 33 Bus C, 9900 Eeklo, BE | VAT BE 0401.006.413 | 100.00 | 100.00 |
Lotus Bakeries France SAS | Place du Ch\u00e2teau 9 bis, 59560 Comines, F | VAT FR93 320 509 755 | 100.00 | 100.00 |
Biscuiterie Vander SAS | Place du Ch\u00e2teau 9 bis, 59560 Comines, F | VAT FR28 472 500 941 | 100.00 | 100.00 |
Biscuiterie Le Glazik SAS | 815 Avenue du Pays Glazik, 29510 Briec-de-l\u2019Odet, F | VAT FR95 377 380 985 | 100.00 | 100.00 |
Enkhuizer Koekfabriek BV | Oosterdijk 3e, 1601 DA Enkhuizen, NL | VAT NL823011112B01 | 100.00 | 100.00 |
Koninklijke Peijnenburg BV | Nieuwendijk 45, 5664 HB Geldrop, NL | VAT NL003897187B01 | 100.00 | 100.00 |
Peijnenburg's Koekfabrieken BV | Nieuwendijk 45, 5664 HB Geldrop, NL | VAT NL001351576B01 | 100.00 | 100.00 |
WK Koek Bakkerij BV | Streek 71, 8464 NE Sintjohannesga, NL | VAT NL006634151B01 | 100.00 | 100.00 |
WK Koek Beheer BV | Streek 71, 8464 NE Sintjohannesga, NL | VAT NL006634199B01 | 100.00 | 100.00 |
Lotus Bakeries Nederland BV | Nieuwendijk 45, 5664 HB Geldrop, NL | VAT NL004458953B01 | 100.00 | 100.00 |
Lotus Bakeries GmbH | Ro\u00dfstra\u00dfe 92, 40476 Dusseldorf, DE | VAT DE 811 842 770 | 100.00 | 100.00 |
Lotus Bakeries R\u00e9assurances SA | 74, Rue de Merl, 2146 Luxembourg, L | R.C.S. Luxembourg B53262 | 100.00 | 100.00 |
Lotus Bakeries International und Schweiz AG | Neuhofstrasse 24, 6340 Baar, CH | VAT CHE-105.424.218 | 100.00 | 100.00 |
FF2032 AG | Neuhofstrasse 24, 6340 Baar, CH | VAT CHE-241.819.783 | 100.00 | 100.00 |
Lotus Bakeries CZ s.r.o. | Americk\u00e1 415/36, 120 00 Praha 2, CZ | VAT CZ 271 447 55 | 100.00 | 100.00 |
NAME | Address | VAT or national number | 2023 | 2022 |
% | % | |||
Lotus Bakeries North America Inc. | 1000 Sansome Street Suite 350, San Francisco, CA 94111-1323, USA | IRS 94-3124525 | 100.00 | 100.00 |
Lotus Bakeries US, LLC | 2010 Park Center Drive, Mebane, NC 27302, USA | IRS 82-1300286 | 100.00 | 100.00 |
Lotus Bakeries US Manufacturing, LLC | 2010 Park Center Drive, Mebane, NC 27302, USA | IRS 82-2542596 | 100.00 | 100.00 |
Lotus Bakeries Austria GmbH | Fleischmarkt 1/6/12, 1010 Wien, AT | VAT ATU72710827 | 100.00 | 100.00 |
Lotus Bakeries UK Ltd. | First Floor Premises, Whitecroft House, 51 Water Lane, Wilmslow, Cheshire SK9 5BQ, UK | VAT GB 896 168 761 | 100.00 | 100.00 |
Natural Balance Foods Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 841 254 348 | 97.90 | 97.90 |
Urban Fresh Foods Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 883 060 032 | 100.00 | 100.00 |
The Kids Food Company Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 977 396 157 | 100.00 | 100.00 |
Peter's Yard Wholesale Ltd. | Second floor, 45 Grosvenor Road, St. Albans, AL1 3AW, UK | VAT GB 938 740 100 | 100.00 | 100.00 |
Lotus Bakeries Espana S.L. | C/ Severo Ochoa, 3, 2\u00aa Oficina 8A, 28232 Las Rozas (Madrid), ES | VAT ESB80405137 | 100.00 | 100.00 |
AB Annas Pepparkakor | Radiov\u00e4gen 23, 135 48 Tyres\u00f6, SE | VAT SE556149914501 | 100.00 | 100.00 |
Annas - Lotus Bakeries Holding AB | Radiov\u00e4gen 23, 135 48 Tyres\u00f6, SE | Registration no. 556757-7241 | 100.00 | 100.00 |
Lotus Bakeries Asia Pacific Ltd. | 5/F, Manulife, 348 Kwun Tong Road, Kowloon, HK | Inland Revenue Department file no. 22/51477387 | 100.00 | 100.00 |
Lotus Bakeries China Ltd. | Room 01.02.06, Floor 15, No. 511 Weihai Road, Jing'an Disctrict, Shanghai 200041, P.R. CN | Registration no. 913100000781169357 | 100.00 | 100.00 |
Lotus Bakeries Italia S.r.l. | Regus Dante Cairoli, Via Dante 16, Quartiere Castello, 20121 Milan, IT | VAT IT03029890211 | 100.00 | 100.00 |
Lotus Bakeries Korea Co. Ltd. | 4th FI, AIA Tower, 16 Tongil-ro-2-gil, Jung-gu, Seoul 04511, KR | Registration no. 128-81-19621 | 100.00 | 100.00 |
Lotus South Africa Manufacturing Ltd. | Erf 4109 Voortrekker Road, Wolseley, Western Cape 6830, ZA | VAT 4190279762 | 100.00 | 100.00 |
Lotus Asia Pacific Manufacturing Ltd. | No. 1106, Summer Hill, 3rd Floor, Unit TT11, Sukhumvit Road, Phrakhanong SubDistrict, Klongtoey District, 10110 Bangkok, TH | VAT 0105565109964 | 100.00 | 100.00 |
Lotus Bakeries Japan G.K. | Regus Shiodome \u2013 office, no. 149, 3F Shiodome Building, 1-2-20 Kaigan, Minato-Ku, 105-0022 Tokyo, JP | VAT 4010403030721 | 100.00 | - |
Lotus Bakeries Australia PTY Ltd. | Regus Darling Park, Tower, 2, Level 20 & 21, 201, Sussex Street, Sydney NSW 2000, AU | 665 233 545 (ACN) | 100.00 | - |
Non-recurring income and expenses are those items that are considered by management not to relate to transactions, projects and adjustments to the value of assets and liabilities taking place in the ordinary course of activities of the Company. Non-recurring income and expenses are presented separately, due to their size or nature, so as to allow users of the consolidated financial statements of the Company to get a better understanding of the normalised performance of the Company.
Non-recurring income and expenses relate to:
expenses relating to business combinations and other acquisitions of investments;
changes to the Group structure, including costs related to the liquidation of subsidiaries and the closure, opening or relocations of activities; and
impairment of assets and major litigations.
As from reporting year 2024, the non-recurring items will be referred to as \u2018Adjusting items to the operating result\u2019. However, the scope of this reporting line item will not change.
", "dimensions": { "concept": "ifrs-full:DescriptionOfAccountingPolicyForExceptionalItemsExplanatory", "language": "en", "entity": "scheme:5493004C0K34IFI67I03", "period": "2023-01-01T00:00:00/2024-01-01T00:00:00" } } } }