Other disclosures
2.2.9.1 35. Operating leases
Leases as lessee
The Group has entered into operating leases on certain land and buildings, machinery and installations, cars and other transportation vehicles.
The Group has the option, under some of its leases, to lease the assets for additional periods. In these cases, the conditions of the contract are renegotiated at the end of the initial contract term. Furthermore, for certain contracts the lease payments increase periodically based on market terms.
Future minimum rentals payable under non-cancellable operating leases as at 31 December are, as follows:
| In thousands of euro | 31 December 2018 | 31 December 2017 |
| Less than 1 year | 5,866 | 5,398 |
| Between 1 and 5 years | 10,152 | 6,067 |
| More than 5 years | 17,088 | 4,795 |
| Total | 33,106 | 16,260 |
The total future minimum rentals payable under noncancellable operating leases increased to €33.1 million (31 December 2017: €16.3 million). The increase is mainly due to increases in lease payments and extensions of rent periods of factory locations in the United Kingdom and Germany. The net effect of acquisitions and divestments is limited.
For the lease payments an amount of €8,068 thousand was recognised in 2018 (2017: €8,279 thousand) in profit or loss as part of the other operating expenses. The decrease of the lease payments has been caused by assets that were leased in the past and which are currently being purchased by the Company. This mainly concerns vehicles. The decrease is partly off set by the increase in lease payments.
2.2.9.2 36. Commitments and contingencies
General
The Company and its group companies are or may become party to various claims, legal and/or administrative proceedings and investigations in the ordinary course of business or otherwise (e.g. commercial transactions, product liability, health & safety and environmental pollution). Since the outcome of asserted claims and proceedings (potential or actual), or the impact of any claims or investigations that may arise in the future, cannot be predicted with certainty, the Group's financial position and results of operations could be affected materially by the outcomes.
Purchase commitments
The purchase commitments of the Group are as follows:
| 31 December 2018 | ||||
| In thousands of euro | < 1 year | 1 - 5 years | > 5 years | Total |
| Purchase commitments raw materials | 609,175 | 2,029 | - | 611,204 |
| Purchase commitments energy (gas/electricity) | - | - | - | - |
| Purchase commitments property, plant and equipment | 6,584 | - | - | 6,584 |
| Purchase commitments other | 3,455 | 261 | - | 3,716 |
| Total | 619,214 | 2,290 | - | 621,504 |
| 31 December 2017 | ||||
| In thousands of euro | < 1 year | 1 - 5 years | > 5 years | Total |
| Purchase commitments raw materials | 495,566 | 622 | - | 496,188 |
| Purchase commitments energy (gas/electricity) | - | - | - | - |
| Purchase commitments property, plant and equipment | 4,971 | - | - | 4,971 |
| Purchase commitments other | 2,505 | - | - | 2,505 |
| Total | 503,042 | 622 | - | 503,664 |
The purchase commitments of raw materials are partly relating to existing sales contracts and the other purchase commitments mainly relate to IT licenses. The increase compared to 2017 is mainly due to the acquisitions.
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).
For the credit facilities reference is made to Note 29.
2.2.9.3 37. Related parties
Beside the subsidiaries that operate within the Group (refer to the overview "List of main subsidiaries", Note 33) and the BOCM PAULS Ltd. (United Kingdom) and HST Feeds Ltd. (United Kingdom) Pension Schemes (see Note 15A) , the Group has additional related parties and transactions, which are disclosed hereafter. The related party transactions that occurred in 2018 and 2017 were done at arm’s length. Outstanding balances at the year-end are unsecured and interest free. There have been no guarantees provided or received for any related party receivables or payables. Furthermore, the Group has not recorded any impairment of receivables relating to amounts owed by related parties (2017: nil).
A. Stichting Beheer- en Administratiekantoor ForFarmers and Coöperatie FromFarmers U.A.
Stichting Beheer- en Administratiekantoor ForFarmers (until 23 May 2016 named Stichting Administratiekantoor ForFarmers) (hereinafter: 'Stichting Beheer') holds 6.9% (31 December 2017: 7.7%) of the shares in ForFarmers N.V. as per 31 December 2018 and has issued depositary receipts in exchange for these shares. Coöperatie FromFarmers U.A. (hereinafter: de coöperatie) has a direct stake of 17.4% (2017: 17.4%), and an indirect stake of 28.4% (2017: 31.8%) of the ordinary shares of ForFarmers, and one priority share as per the aforementioned date. Depositary receipts are held by members of the Coöperatie, employees of ForFarmers or others. Members of the Coöperatie and employees of ForFarmers who own depositary receipts have the right to request their voting rights from Stichting Beheer.
Other depositary receipt holders cannot request voting rights. Stichting Beheer and the Coöperatie are related parties. Between the Coöperatie and a number of the members of the Coöperatie on one hand and the Group on the other hand, transactions (i.e. supply of goods and services) take place on a regular basis.
The following table provides the total amount of transactions that have been entered into with ForFarmers N.V. and its group companies.
| In thousands of euro | 2018 | 2017 |
| Interest income | 4 | - |
| Interest expenses | 4 | - |
| Receivable from | 66 | 3,297 |
| Payable to | - | - |
The receivable from the Cooperative in 2017 mainly related to positions arising from VAT, since the Cooperative is the head of the tax group for VAT purposes. 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 (see Note 16F).
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B. Executive Committee
In the financial year remuneration for the Executive Committee including pension expenses that were charged to the Company and its subsidiaries amounts of €5.2 million (2017: €6.3 million), which can be broken down as follows:
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The following table includes the ownership of the (depositary receipts for) shares at year end.
(Depositary receipts of) shares
In numbers
2018
2017
Y.M. Knoop
304,542
284,001
A.E. Traas
109,329
109,329
J.N. Potijk
622,558
602,593
Non statutory board members
98,379
178,501
Total
1,134,808
1,174,424
C. Supervisory board
In the financial year remuneration for members of the Supervisory Board, and former members of the Supervisory Board within the meaning of section 383 sub 1 of Book 2 of the Dutch Civil Code were charged to the Company and its subsidiaries for an amount of €339 thousand (2017: €338 thousand), which can be broken down as follows:
In the regular course of business the Group enters into sales transactions with members of the Supervisory Board. The related party transactions were carried out at arm’s length.
The following table provides the total amount of transactions with affiliated entities of the members of the Supervisory Board.
| In thousands of euro | 2018 | 2017 |
| Sales to | 465 | 525 |
| Purchases from | 703 | 497 |
The following table provides the total balances of receivables from and payables to the members of the Supervisory Board.
| In thousands of euro | 31 December 2018 | 31 December 2017 |
| Amounts owed by | 36 | 26 |
| Amounts owed to | - | - |
The following table includes the ownership of the (depositary receipts of) shares and the number of participation accounts issued by the cooperative and which can be converted into depositary receipts.
The members of Supervisory Board did not experience any impediment in the performance of their duties during the past year as a result of transactions that they conducted.
Followed by the appointment of Mr. C. de Jong as member of the Supervisory Board, Chr. Hansen Holding A/S including the activities of its subsidiaries (hereafter mentioned together as: Chr. Hansen), is a related party of the Group as from 26 April 2017 till 1 June 2018, since Mr. C. de Jong was holding the position of CEO till 1 June 2018 at this company. The Group has, as of 31 December 2018, no contractual obligations with Chr. Hansen (2017: idem) and has bought goods for an amount of €0.7 million in the period from 1Januari 2018 to 1 June 2018 (2017: €0.5 million in the period from 26 April 2017 to 31 December 2017). The related party transactions were carried out at arm’s length.
D. Executive Committee Coöperatie FromFarmers U.A.
In the regular course of business the Group enters into sales transactions with members of the executive Committee Coöperatie FromFarmers U.A. The related party transactions were carried out at arm’s length.
The following table provides the total amount of transactions.
| In thousands of euro | 2018 | 2017 |
| Sales to | 1,612 | 805 |
| Purchases from | - | - |
The following table provides the total balances of receivables from and payables to the members of the executive Committee Coöperatie FromFarmers U.A.
| In thousands of euro | 31 December 2018 | 31 December 2017 |
| Amounts owed by | 20 | 33 |
| Amounts owed to | - | - |
The transactions with, the receivables from and payables to the members of the executive Committee of the Coöperatie FromFarmers U.A. include the transactions with and position to the members who are part of the Supervisory Board of ForFarmers N.V.
E. Joint venture
The following table provides the total amount of transactions that have been entered into with the joint venture HaBeMa:
| In thousands of euro | 2018 | 2017 |
| Sales of goods and services | ||
| Sales to | 10 | 5 |
| Purchases from | 46,426 | 45,075 |
The following table provides the total balances with the joint venture HaBeMa:
| In thousands of euro | 31 December 2018 | 31 December 2017 |
| Amounts owed by | - | - |
| Amounts owed to | 2,847 | 1,893 |
F. Other
The following table provides the total amount of transactions that have been entered into with the minority shareholders of Tasomix (Poland):
| In thousands of euro | 2018 | 2017 |
| Sales to | 3,736 | - |
| Purchases from | 326 | - |
The following table provides the total balances with the minority shareholders of Tasomix (Poland):
| In thousands of euro | 31 December 2018 | 31 December 2017 |
| Amounts owed by | 5,730 | - |
| Amounts owed to | 3,051 | - |
2.2.9.4 38. Events after the reporting period
Poland
In January 2019 guarantees amounting to €1.9 million (PLN 8.0 million) have been issued to suppliers of the new mill in Pionki (Poland).
United Kingdom
In February 2019, ForFarmers UK announced its intention to close its site in Blandford after it has finalised the required consultation process. The current Blandford volume comprises conventional (compound) feed and organic feed. The plan is to relocate the production of conventional feed volume to the newly constructed Exeter mill and that of organic feed to Portbury, which has recently been equipped with additional raw material storage bins to support the production of organic feed. The intended closing of Blandford impacts approximately 30 employees.
Corporate site
