2.4.1

2.4.1.1 42. General

The Company financial statements are part of the 2018 financial statements of ForFarmers N.V. (the ‘Company’).

For the accounting principles as well as the explanatory notes to the Company balance sheet and the statement of profit or loss account reference is made to the policies and explanatory notes to the consolidated statement of financial position and of profit and loss.

All amounts are presented in euro's and have been rounded to the nearest thousand, unless otherwise indicated.

2.4.1.2 43. Principles for the measurement of assets and liabilities and the determination of the result

The Company financial statements have been prepared in accordance with Title 9, Book 2 of the Netherlands Civil Code. For setting the principles for the recognition and measurement of assets and liabilities and determination of the result for its company financial statements, the Company makes use of the option provided in section 2:362(8) of the Netherlands Civil Code. This means that the principles for the recognition and measurement of assets and liabilities and determination of the result (hereinafter referred to as principles for recognition and measurement) of the company financial statements of the Company are the same as those applied for the consolidated EU-IFRS financial statements. Refer to Note 39 and 40 of the consolidated financial statements for a description of these principles.

Participating interests in group companies

Participating interests in group companies are accounted for in the company financial statements according to the equity method. Refer to the basis of consolidation accounting policy in the consolidated financial statements.

Result of participating interests

The share in the result of participating interests consists of the share of the Company in the result of these participating interests. In so far as gains or losses on transactions involving the transfer of assets and liabilities between the Company and its participating interests or between participating interests themselves can be considered unrealised, they have not been recognised.

2.4.1.3 44. Investments in subsidiaries

The other movement in 2018 mainly relates to the liquidation of a subsidiary.

2.4.1.4 45. Receivables from and debts to group companies

The receivables from and debt to group companies are current.

2.4.1.5 46. Financial instruments

The Group has exposure to the following risks from its use of financial instruments:

• Credit risk
• Liquidity risk
• Market risk

In the notes to the consolidated financial statements information is included about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital. These risks, objectives, policies and processes for measuring and managing risk, and the management of capital apply also to the company financial statements.

Fair value

The fair values of the financial instruments stated on the balance sheet, including trade and other receivables, cash and cash equivalents, trade and other payables and debts to group companies are close to their carrying amounts. 

2.4.1.6 47. Taxes and social security

The net amount receivable and payable of taxes and social securities includes a current income tax payable amounting to €3.9 million (2017: €5.0 million).

A tax group is in place for the income tax between the Company and Dutch group companies in which the Company has a 100% interest. The total current receivable or liability towards the tax authorities is accounted for in the statement of financial position of the head of the tax group. The comparative figures of prior year have been adjusted. Settlement of the taxes within the tax group takes place as if each company is independently liable for tax. As of 1 January 2018 Coöperatie FromFarmers U.A. is no longer part of the VAT tax group and ForFarmers N.V. is the head of the VAT tax group. 

2.4.1.7 48. Shareholders' equity

Share capital and share premium

Change layout to 2 columns

On 15 April 2016, it was resolved to amend the articles of association of the Company in their entirety. Accordingly, the legal form of the Company was converted into a public limited company and the par value of the shares was reduced from €1.00 to €0.01 per share with an effective date per 23 May 2016. At 31 December 2018, the share capital consists of 106,261,040 (31 December 2017: 106,261,040) ordinary shares and 1 (31 December 2017: 1) priority share. At balance sheet date the shares were issued and fully paid up. The share premium consists of the positive difference between the issue price and the nominal value of the issued shares.

On 26 April 2017, the Annual General Meeting of Shareholders authorised ForFarmers to initiate a programme to repurchase its own shares for a period of 18 months for (a) an amount between €40 million and €60 million and (b) in addition to purchase shares for the implementation of employee participation plans. In 2018 ForFarmers repurchased 802,291 shares (2017: 5,747,993) for a total amount of €8.1 million (2017: €56.7 million) (including purchasing costs). From the total number of repurchased shares 179,579 (2017: 358,465) at an amount of €1.8 million (2017: €3.0 million) are reissued as certificates for employee participation plans, bringing the balance of repurchased shares to €60.0 million (2017: €53.7 million) (including purchasing costs). During 2018 the Group has completed the share buy-back programme.

Ordinary shares

Holders of these shares are entitled to dividends as declared from time to time, and are entitled to one vote per share at general meetings of the Company. On the shares held by the Company no dividend is paid and no voting rights are excercised.  

Priority share

The priority share provides the holder of the share the right to appoint four out of the six Supervisory Directors as defined in the Articles of Association of the Company. With a stake of fifty percent or less the holder has this right for three of the six Supervisory Directors. As long as the holder has more than fifty percent of the voting rights it will also have the control right over how the role of the Chairman of the Board of Supervisory Directors of ForFarmers N.V. is detailed. Issues of new shares must be approved by seventy-five percent of the Board of Supervisory Directors. Major acquisitions, for which the total consideration of more than 25% of shareholder's equity are to be approved by the holder of the priority share.

The Group’s priority share can only be held by the Company itself or the Cooperative FromFarmers U.A., provided that it may exercise twenty percent or more of the total votes on shares or depositary receipts to be cast in the capital of the Company.

The priority share is classified as equity, because the share does not contain any obligations to deliver cash or other financial assets and does not require settlement in a variable number of the Group’s equity instruments.

Treasury share reserve

The reserve for the Company’s treasury shares comprises the cost of the Company’s (depositary receipts for) shares held by the Group. The treasury shares are accounted for as a reduction of the equity attributable the owners of the parent.

Treasury shares are recorded at cost, representing the market price on the acquisition date, where the par value of treasury shares purchased is debited to the treasury share reserve. When treasury shares are sold or re-issued, the par value of the instruments is credited to the treasury share reserve. Any premium or discount to par value as result of the market price is shown as an adjustment to retained earnings.

During the reporting period the Company purchased  802,291 of its shares to be able to re-issue the depositary receipts in relation to the employee participation plans. At 31 December 2018, the Group held 6,092,004 of the Company’s shares.

In 2017 the Company purchased 5,747,993 of its shares to be able to re-issue the depositary receipts in relation to the employee participation plans.  Besides the repurchase of the abovementioned number of shares, the 358,465 treasury shares, which were obtained on behalf of the previous liquidity provider agreement (SNS) which ended on May 24 2016, were used for the purpose of employee participation plans. At 31 December 2017, the Group held 5,469,292 of the Company’s shares.

The movement in the treasury shares can be summarised as follows:

The other movements 2017 relate to depositary receipts which are settled with outstanding receivables.

Legal translation reserve

The legal translation reserve comprises all foreign currency differences arising from the activities of foreign subsidiaries. The decrease in this reserve as at 31 December 2018 is caused by the devaluation of the pound sterling partly off set by the revaluation of the Polish zloty.

Legal hedging reserve

The legal hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition in profit or loss as the hedged cash flows affect profit or loss. This mainly relates to the result on derivatives for the acquisition of Tasomix and fuelhedges.

 Other legal reserves

The other legal reserves contain the undistributed results and direct changes in equity of participating interest, revaluation of certain land within property, plant & equipment and revaluation of biological assets and the part that is related to loans to staff for the purchase of depositary receipts in the period 2007-2009. Direct changes in equity do not include the changes in equity that derive from the relationship with the shareholder, such as paid-in share premium. The (change in the) legal reserve relating to participating interest is only recognised if, and to the extent that, ForFarmers N.V. cannot realise payment of the equity of the participating interest to itself without restrictions.

Retained earnings

Retained earnings comprise the balance of accrued profits that have not been distributed to the shareholder.

Pursuant to the Articles of Association a decision to distribute a dividend may be taken if and to the extent that equity exceeds the issued share capital plus the legal reserves.

A reference is made to the section Other information regarding the result appropriation scheme under the Articles of Association.

Unappropriated result

The result after tax is, after deduction of the addition to other legal reserves, included in the item unappropriated result within equity.

2.4.1.7.1

2.4.1.8 Proposal for profit appropriation

ForFarmers aims to distribute dividend, taking into consideration long-term value creation, a healthy financial structure and sufficient earnings to execute its strategy. The dividend policy of ForFarmers is to pay out between 40% and 50% of the profit after taxes (the result after tax attributable to the shareholders of the Company) excluding non-recurring effects.

This results in a proposed dividend distribution of €0.30 per ordinary share (based on 100.2 million outstanding shares). The proposed dividend contains a dividend of €0.283 and a special dividend of €0.017. The annual accounts will be presented to the Annual General Meeting of 26 April 2019 for adoption. The dividend is payable on 9 May 2019.

This method takes into account the strategy and a healthy balance sheet structure. Within these principles, ForFarmers N.V. aims for a stable development of the cash dividend paid to its shareholders. The Company will only make payments to the shareholders entitled to the distributable profit in so far as:

• the Company can continue to pay its outstanding debts after the distribution (the so-called distribution test), and
• the shareholders’ equity exceeds the legal reserves and statutory reserves under the articles of association to be maintained (the so-called balance sheet test).

If the distribution or the balance sheet test is not passed, then management will not approve the distribution (after agreement with the Supervisory Board). Preliminary tests revealed no indications that the proposed distribution of dividend will not be possible, but these tests have to be finalized (and the Executive Committee has to approve the distribution, after agreement with the Supervisory Board) prior to the actual payment of the dividend.

Dividends

The following dividends were declared and paid by the Company for the year:

The dividend is based on the total number of shares issued at year end of 100.2 million (2017: 100.8 million). The treasury shares are not entitled to dividend.

After the respective reporting date, the following dividends were proposed by the Executive Committee. The dividends have not been recognised as liabilities and there are no tax consequences for the Company.

2.4.1.9 49. Provisions

For more information on the other provisions a reference is made to Note 30.

2.4.1.10 50. Credit facilities

The credit facility or ForFarmers N.V. only relates to the financing agreement (multicurrency revolving facility agreement) that was concluded with ABN AMRO Bank, Rabobank, Lloyds Bank, and BNP Paribas and is free from securities. For a further explanation a reference is made to Note 29 to the consolidated financial statements.

2.4.1.11 51. Commitments and contingencies

A declaration of guarantee based on article 2:403 of the Dutch Civil Code has been issued by ForFarmers N.V. for the benefit of ForFarmers Nederland B.V., ForFarmers Corporate Services B.V., PoultryPlus B.V. and Reudink B.V.

For the acquisition of BOCM PAULS Ltd. (United Kingdom), guarantees have been issued amounting to €45 thousand (2017: €0.1 million).

2.4.1.12 52. Remuneration of the supervisory board and the executive board

The remuneration of the board of supervisory directors and the statutory board of directors equals the remuneration of the board of supervisory directors and the statutory board of directors as declared in Note 37 of the explanatory notes to the consolidated financial statements. During the year under review 6 employees (2017: 6 employees) were employed by the Company who were all partially employed in the Netherlands.

Lochem, 12 March 2019

Executive Board ForFarmers N.V.
Yoram Knoop, CEO
Arnout Traas, CFO
Jan Potijk, COO

Supervisory Board ForFarmers N.V.
Cees de Jong, Chairman
Sandra Addink-Berendsen, Vice-Chair
Roger Gerritzen
Vincent Hulshof
Cees van Rijn
Erwin Wunnekink