Background
Financial Statement

Notes to the consolidated balance sheet

 

1 - Intangible fixed assets

The composition and movement of intangible fixed assets in the financial year 2017/2018 were as follows:

  Costs of
research and
development
Goodwill Concessions, 
permits and
interlectual
properties
Total
2017 / 2018
         
Purchase value 949 5,002 3,817 9,768
Cumulative depreciation -559 -3,534 -545 -4,638
         
Book value as per July 1st> 390 1,468 3,272 5,130
         
Investments 3,493 - - 3,493
Depreciation -291 -485 -545 -1,321
         
Balance 3,202 -485 -545 2,172
         
Purchase value 4,442 5,002 3,817 13,261
Cumulative depreciation -850 -4,019 -1,090 -5,959

 

 

       
Book value
as per 30 June
3,592 983 2,727 7,302
         

The investments regarding the development of a new ERP system.

2 - Tangible fixed assets


The movement per category for tangible fixed assets for the year 2017/2018 is as follows:

  Company buildings
and land
Machines and
equipment
Other fixed
assets
Operating
assets under
construction
Total
2017/ 2018
           
Purchase value 38,619 23,324 2,916 - 64,859
Cumulative depreciation -22,446 -17,344 -2,357 - -42,147
           
Book value as per July 1st 16,173 5,980 559 - 22,712
           
Investments 508 1.517 615 272 2,927
Disposals -126 -56 -95 - -277
Depreciation -1,011 -1,986 -229 - -3,226
           
Balance -629 -525 291 - -591
           
Purchase value

39,001 24,785 3,436 272 67,399
Cumulative depreciation -23,457 -19,330 -2,586 - -45,278
           
Book value as per 30 June 15,544 5,455 850 272 22,121
           

 

3 - Financial fixed assets

The movement per category of financial fixed assets is as follows:

  Participations Receivables from
Association HZPC
Other
securities
Deferred tax
receivables
Other
receivables
Total
 
             
Book value as per July 1st 2,327 303 25 1,927 39 4,621
             
Investments/increase 183 72 - -268 416 942
Result of participating interests -1,033 - - - - -1,033
Depreciation/repayments -90 -126 - -145 -49 -410
Dividend -18 - - - - -18
Exchange rate fluctuations -47 - - - - -47
             
Movements 2017 / 2018 -1,005 -54 - -123 370 -566
             
Book value as per 30 June 1,322 249 25 2,050 409 4,055
             

Participations
These are participating interests that are not consolidated due to minority interests. For an overview of the capital interests, see page 40.

Receivables from Vereniging HZPC (HZPC Association)
These receivables are fully related to Vereniging HZPC regarding loans to growers for purchasing certificates of Vereniging HZPC. The agreed interest rate varies from 0.0% to 1.0%. The term of the loan is 5 years.

Other securities
The item other securities refers to securities that are intended to be held long-term. The market value of the different classes other securities approximates to the carrying value EUR 25,000.

Deferred taxes
The item deferred taxes relates to deductible temporary differences including tangible fixed assets. Of these assets, a limited amount is expected to be realised within one year. The forward loss compensation and deductible temporary differences that have not been valued amount to GBP 546,000.

Other receivables
The other receivables relates to loans granted to personnel in the amount of EUR 24,000 (2016/2017 EUR 39,000) with an average maturity of 5 years and an interest rate of 4%. This post also includes an interest cap to cover the interest risk on working capital financing up to EUR 15 million. The cap has a term of 10 years and an interest cap of 2%.

4 - Inventories

 

  30-06-2018 30-06-2017
     
Packaging 1,233 1,124
Finished product 930 337
     
  2,163 1,461

Finished product stock refers to self-developed mini-tubers in particular. On the balance sheet date, no provision for obsolescence is needed for supplies.

Receivables

 

5 - Trade receivables

  30-06-2018 30-06-2017
     
Amortised cost of outstanding receivables 55,583 53,519
Minus: provision due to bad debts -11,570 -12,630
     
  44,013 40,889

In the amount of the trade receivables there are no amounts with a term longer than one year that are not anticipated.

6 - Accounts receivable from participating interests

The amounts refer to participating interests with significant influence. The remaining term is shorter than one year and free from interest.

7 - Taxes, contributions and social security

  30-06-2018 30-06-2017
     
Sales tax 5,173 4,673
Contributions and social insurances 16 61
Corporation tax 714 -
     
  5,903 4,734

 

8 - Other receivables and accrued income

  30-06-2018 30-06-2017
     
Pension contributions 220 165
Licences to be claimed 5,711 3,662
Prepaid expenses 2,225 4,355
Health insurance premium 225 222
Government grants 1,398 688
Receivables on growers 2,118 1,236
Other amounts 2,341 1,387
     
  14,238 11,715

The other receivables contain no amounts with a term longer than one year.

9 - Cash and cash equivalents

  30-06-2018 30-06-2017
     
Cash 8 10
Bank current account 25,224 28,451
     
  25,232 28,461

The item bank current account is freely available like last year.

10 - Group equity

For an explanation of the group equity, reference is made to the notes on equity in the company financial statement. The share of third parties in the group equity is zero.

11 - Provisions

 

Pensions
The entry for pensions includes the obligations based on pension regulations and comparable obligations.

The composition and the course of the pensions in the financial year 2017/2018 are shown in the following overview:

  Total
2017 / 2018
Total
2016 / 2017
     
Status as of 1 July 284 291
Donation 14 53
Withdrawal -149 -60
     
Status as of 30 June 149 284
     

The full amount of the pension provision is long-term. The pension provision relates to employees abroad. They have plans that are not comparable to the way in which the Dutch pension system is organised and functions. For these foreign schemes a best estimate of the existing pension liability is made as of the balance sheet date.

Other provisions
The following overview shows the movements in 2017/2018:

  Total
2017 / 2018
Total
2016 / 2017
     
Status as of 1 July 408 376
Donation 69 43
Withdrawal -75 -11
     
Status as of 30 June 402 408
     

The other provision relates to anniversary liabilities, calculated on the basis of a 4% discount rate and taking the expected turnover in personnel into account. Out of the total amount EUR 24,000 is short-term.

12 - Current liabilities

 

GROWERS DEPOSITS
The growers deposits are paid back as of 31 May 2018.

CURRENT ACCOUNT OVERDRAFT FACILITY 
The business has a current account overdraft facility with ING Bank N.V. and Deutsche Bank A.G. ING Bank N.V. has granted a current account overdraft facility. The current account overdraft facility in the current account with ING Bank N.V. amounts to EUR 11 million as of 30 June 2018 and the Euribor interest plus 0.75%. Deutsche Bank A.G. has also provided a current account overdraft facility. The current account overdraft facility with the ING Bank N.V. amounts to EUR 8.8 million as of 30 June 2018 and the Euribor interest plus 0.75%.

With respect to the current account overdraft facility with the ING B.V., the following collaterals have been provided in the form of:

  • Access to joint account and co-liability agreement, issued by: IPR B.V., HZPC Research B.V., HZPC Holding B.V., HZPC Holland B.V., STET Holland B.V., HZPC France S.A.S. and HZPC Deutschland GmbH.
  • Pledge of accounts receivable (first right of distraint) from:  IPR B.V., HZPC Research B.V., HZPC Holding B.V., HZPC Holland B.V., STET Holland B.V.

With respect to the current account overdraft facility with Deutsche Bank A.G., the following collaterals have been provided in the form of:

  • Mortgage collateral on real estate (from 20 million primary sum to be increased by 40% for interest and costs).

COVENANTS
The following covenants are linked to the credit facility:

  • Solvency ratio
  • Asset coverage ratio
  • Turnover coverage ratio
  • EBITDA coverage ratio
  • Cross default

The business has agreed the following covenants with its banks:

  Solvency
ratio ING
Solvency ratio
Deutsche Bank
Asset coverage
ratio ING
Coverage
ratio ING
EBITDA Coverage
ratio ING
EBITDA Cover ratio
Deutsche Bank
             
For the duration > 35% > 30% > 75% > 75% > 75% > 70%
             
30 June 2018 > 35% > 35% > 75% > 75% > 75% > 70%
             

The solvency ratio is defined for both the ING Bank B.V. and Deutsche Bank A.G. as follows: corrected capital/corrected balance sheet total.
The asset coverage ratio is defined as follows: assets from selected businesses (from the joint account)/consolidated assets.
The turnover coverage ratio is defined as follows: turnover from selected businesses (from the joint account)/consolidated assets.
The EBITDA coverage ratio is defined for the ING Bank B.V. as follows: EBITDA from selected businesses (from the joint account)/consolidated EBITDA.
The EBITDA coverage ratio is defined for the Deutsche Bank A.G. as follows: EBITDA from selected businesses (all Dutch co-debtors)/consolidated EBITDA.
The covenants are fulfilled at the end of the accounting year.

TAXES, CONTRIBUTIONS AND SOCIAL INSURANCES

  2017 / 2018 2016 / 2017
Corporate income tax to be paid 170 2,106
Corporate sales tax to be paid 442 557
Payroll tax and social insurances 1,099 433
     
  1,711 3,096
     

Other debts and accrued liabilities contain no amounts with a term longer than one year.


OTHER DEBTS AND ACCRUED LIABILITIES

  2017 / 2018 2016 / 2017
     
Licences to be paid 2,023 1,366
Wages and salaries to be paid 439 1,262
Pension contributions 356 775
Holiday allowances 1,292 1,035
Product related costs 5,566 6,336
Growers 4,854 761
Pool operating result - 654
Other amounts 4,259 5,547
     
  18,789 17,736

Other debts and accrued liabilities contain no amounts with a term longer than one year.

FINANCIAL INSTRUMENTS
In the normal course of business, the Company uses financial instruments that expose the Company to market, currency, interest rate, credit and liquidity risks. To manage these risks, the company has developed a policy, including the establishment of a system of credit limits and procedures to reduce the risks of unpredictable adverse developments in financial markets and thus the financial performance of the company.

CREDIT RISK
The Company incurs credit risk on loans and receivables recorded under financial fixed assets, trade and other receivables and cash. The maximum credit risk facing the Company amounted to 50 million euros. Exposure to credit risk of the Company is primarily determined by the individual characteristics of each customer. In addition, management also considers the demographics of the customer base, including the default risk of the country in which customers operate, because these factors, particularly in the current deteriorating economic conditions, have an influence on the credit risk.

Due to the unrest in the Middle East, the credit risk in this region is high. The receivables from customers from this region are mostly covered. The Company has taken the following measures to limit credit risk:

  • Safeguard measures such as advance payments, letters of credit and bank guarantees are used regularly;
  • Credit limits are actively monitored throughout the season;
  • No new deliveries are allowed until debts from the previous season have been paid.


CURRENCY RISK
As a result of international activities the Company does by way of the receivables and debts recorded in the balance sheet, hold net investments in foreign companies and is exposed to a currency risk in relation to future foreign currency transactions in US Dollars / Pounds Sterling / Polish Zloty and Canadian Dollars in particular. On June 30 2018 the net exposure was converted into EUR at the spot rate on the balance sheet date as follows:
 


x 1000
ACTIVA
EUR

local currency
LIABILITIES
EUR

local currency
         
USD 4,383 5,660 - -
GBP 6,360 5,597 3,127 2,751
PLN 4,158 18,170 672 2,935
CAD 3,093 4,732 1,455 2,225
         
Total 18,449   5,254  
         


LIQUIDITY RISK
The Company monitors its liquidity position through successive liquidity budgets. The management will ensure that sufficient liquidity is available to meet the obligations. The business runs liquidity risks with respect to the interest on the credit facility. An interest cap has been implemented to cover the interest risk on the credit facility. The conditions of hedge accounting are fulfilled, whereby the hedge relationship is processed in accordance with the rules of cost price hedge accounting. For the securities provided, we refer you to ‘Credit facilities’ on page 54.

INTEREST RISK
The Company is exposed to interest risk on the interest bearing assets and liabilities. Both of these receivables and payables have agreed variable interest rates, which means that the Company is exposed to future cash flows. In order to limit the interest risk on the credit facility, a rent cap has been agreed as a mitigating measure.

OFF-BALANCE SHEET ASSETS AND LIABILITIES
These include:

  • Liabilities under operating leases and rent for an amount of EUR 1.5 million. Of this amount, EUR 0.6 million has a term of less than one year. The remaining amount concerns an obligation for less than five years.
  • One of the subsidiaries has an obligation to purchase products for the coming season, the value of which is set at GBP 233,000.
  • To hedge commercial transactions in ware potatoes for the coming harvest, HZPC Holland B.V. uses potato futures for the account and risk of the growers. These positions are valued daily at cost price or lower market value. Any results on the year end outstanding positions are recorded in the year to which the harvest relates. The unrealised exchange gain on the balance sheet date at the expense and risk of the growers amounted to EUR 28,850 positive.
  • Several claims have been filed against the company and/or group companies, including South Africa and against the Challenger variety, which are contested by it/them. Although the outcome of these disputes can not be predicted with certainty, it is assumed - partly on the basis of legal advice received - that it will not adversely affect the consolidated  position.