Background
Financial statement

Notes for the consolidated balance sheet

1. Intangible fixed assets (in EUR x 1,000)


The composition and movement of intangible fixed assets in the financial year 2015/2016 were as follows:

  Software Goodwill Concessions,
licences and
intellectual
property
Total
         
Purchase value 803 3,416 - 4,219
Cumulative depreciation - -1,984 - -1,984
         
Book value as per July 803 1,432 - 2,235
         
Investments - 1,780 4,267 6,047
Disposals - -194 - -194
Depreciation -268 -558 - -826
         
Balance 535 2,460 4,267 7,262
         
Purchase value 803 5,002 4,267 10,072
Cumulative depreciation -268 -2,542 - -2,810
         
Book value
as per 30 June
535 2,460 4,267 7,262
         

The investments relate to the acquisitions of HZPC Sadokas Oy in Finland and KWS Potato in the Netherlands in particular.

2. Tangible fixed assets (in EUR x 1,000)


The movement per category for tangible fixed assets for the year 2015/2016 is as follows:

  Company buildings
and land
Plant and
equipment
Other fixed
operating assets
Total
2015/2016
Total
2014/2015
           
Purchase value 31,015 19,815 2,427 53,257 47,881
Cumulative depreciation -20,284 -13,913 -1,998 -36,195 -33,500
           
Book value as of 1 July 10,731 5,902 429 17,062 16,381
           
Investments 925 1,831 294 3,050 3,390
Other value adjustments 541 - - 541 -
Disposals - - - - -14
Depreciation -1,021 -1,687 -204 -2,912 -2,695
           
Balance 11,176 6,046 519 17,741 17,062
           
Purchase value as of 1 July

32,481 21,646 2,721 56,848 53,257
Cumulative depreciations -21,305 -15,600 -2,202 -39,107 -36,195
           
Book value as of 30 June 11,176 6,046 519 17,741 17,062
           

 

3. Financial fixed assets (in EUR x 1,000)

 

  Participations Receivables
from Vereniging
HZPC
Other
inventories
Latent
tax
receivables
Other
receivables
Total
 
             
Book value as of 1 July 3,073 366 25 1,480 60 5,004
             
Investments/increase - 106 - 8 1 115
Recorded in the consolidation -1,009 - - - - -1,009
Result for participating interests -3 - - - - -3
             
Dividends/repayments - -123 - - -21 -144
             
Movements 2015/2016 -1,012 -17 - 8 -20 -1,041
             
Book value as of 30 June 2,061 349 25 1,488 40 3,963
             

Receivables for 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 2.0%. The term of the loan is 5 years.

Other inventories
The item other inventories refers to inventories 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 realized within one year.
The loss carry forward and deductible temporary differences not brought for valuation are nil (2014/2015: EUR 90,000).

Other receivables
The item other receivables relates to loans granted to staff for an amount of EUR 40,000 (2014/2015 EUR 60,000) with an average term of 5 years and an interest rate of 4%.

4. Inventories (in EUR x 1,000)

  30-06-2016 30-06-2015
     
Packaging 1,098 1,036
Finished product 352 396
     
  1,450 1,432

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

Receivables

5. Trade receivables (in EUR x 1,000)

  30-06-2016 30-06-2015
     
Amortized cost of outstanding receivables 61,816 45,755
Minus: provision due to bad debts -15,441 -14,960
     
  46,375 30,795

In the amount of the trade receivables there are no amounts with a term longer than one year, which 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 (in EUR x 1,000)

 

  30-06-2016 30-06-2015
     
Sales tax 4,556 4,874
Contributions and social insurances 160 41
     
  4,716 4,915

 

8. Other receivables and accrued income (in EUR x 1,000)

  30-06-2015 30-06-2014
     
Pension contributions 926 855
Licences to be claimed 336 410
Prepaid expenses 525 345
Health insurance premium 209 206
Government grants 648 648
Other amounts 2,164 2,791
     
  4,808 4,746


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

 

9. Cash and cash equivalents (in EUR x 1,000)

  30-06-2016 30-06-2015
     
Cash 20 13
Bank current account 19,675 19,463
Deposits 25 8,100
     
  19,720 27,576

Deposits are included in cash and cash equivalents which are repayable on demand. The item bank current account is freely available like last year. HZPC has complied with all loan covenants that were made at year-end against the standby credit facility of EUR 15 million.

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 (in EUR x 1,000)

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 2015/2016 are shown in the following overview:

  Total
2015/2016
Total
2014/2015
Pension provision staff    
Status as of 1 July 317 351
Donation 96 102
Withdrawal -122 -136
     
Status as of 30 June 291 317
     

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 organized and functions. For these foreign schemes a best estimate of the existing pension liability is made as of the balance sheet date. The best estimate of the pension obligation is determined using the actuarial method. The principal actuarial assumptions that have been used include:

  • discount rates: 2.1% based on Bloomberg rate of June 30, 2016;
  • survival : Insee mortality table applied.


Other provisions
The composition and the course of the other provisions in the financial year 2015/2016 are shown in the following overview:

  Total
2015/2016
Total
2014/2015
     
Status as of 1 July 395 343
Donation 37 81
Withdrawal -56 -29
     
Status 30 June 376 395
     

The provision for anniversary liabilities is calculated on the basis of a 4% discount rate and taking the expected turnover in personnel into account. Out of the total amount EUR 35,000 is short-term.

12. Current liabilities


Growers deposit
The grower deposit has a long-term character, but has been classified under current liabilities because it can immediately be withdrawn by the members. Interest is paid (monthly) on the grower deposits. The interest rate paid at the end of the financial year is 0.6%.

Taxes, contributions and social insurances

  30-06-2016 30-06-2015
Payroll tax 1,019 372
Contributions and social insurances 566 624
     
  1,585 996
     

Taxes, contributions and social securities contain no amounts with a term longer than one year.

Other debts and accrued liabilities

  30-06-2016 30-06-2015
     
Licences to be paid 955 1,164
Wages and salaries to be paid 723 634
Holiday allowances 878 789
Product related costs 2,300 1,581
Pool result to be settled 3,346 815
Other amounts 3,898 3,588
     
  12,100 8,571

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

Financial instruments
In normal business operations the Company makes use of financial instruments which expose the Company to market, currency, interest rate, credit and liquidity risks. To manage these risks, the company has established a policy, which includes a system of credit limits and procedures, to reduce the risks of unpredictable adverse developments in financial markets and thus the effects on 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 amounts to 71 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, as these factors have an influence on the credit risk, particularly in the currently deteriorating economic conditions.

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.

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 2016 the net exposure was converted into EUR at the spot rate on the balance sheet date as follows:


x 1000
ASSETS
EUR

local currency
PASSIVA
EUR

local currency
         
USD 1,833 2,024 - -
GBP 5,950 4,972 1,596 1,333
PLN 5,188 22,683 1,744 7,626
CAD 3,146 4,525 1,588 2,285
         
Total 16,117   4,928  
         


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. In 2015, a centralized cash management system was introduced to manage cash flows within the European companies. The Company is partly funded by grower deposits which are repayable on demand by growers If a large number of growers collect their credit claims this will have a negative impact on the liquidity of the Company. For this the Company has an overdraft facility of EUR 15 million.

Interest risk
The company is exposed to an interest risk in relation to the interest bearing assets and liabilities, including the grower deposits. Agreements for variable interest are made concerning these assets and liabilities. The Company therefore faces a risk with regard to future cash flows. The interest rate risk on interest-bearing receivables and payables is very limited and therefore the management has taken no additional mitigating measures.

Off-balance sheet assets and liabilities
These include:

  • Liabilities under operating leases and rent for an amount of EUR 1.1 million. Of this amount, EUR 0.4 million has a term of less than one year. The remaining amount concerns an obligation for less than five years.
  • To hedge commercial transactions in ware potatoes for the coming harvest HZPC Holland B.V. takes forward positions in the futures market for potatoes at the expense 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 accounted for in the year to which the harvest relates. The unrealized exchange gain on the balance sheet date at the expense and risk of the growers amounted to EUR 10,450 positive.