LETTER OF THE CEO 2
KEY FIGURES 4
Key highlights 5
2020 Key developments 6
COMPANY PROFILE 7
Our business model 8
Our organisation 15
Our mission and values 18
VALUE CREATION 19
Our strategic focus areas for organic growth 20
Acquisition strategy 21
Business priorities 23
Strategic context 24
Stakeholder engagement 26
Materiality survey 27
Sustainable development goals 30
EXECUTIVE BOARD REPORT 33
Covid-19 response 34
Financial performance 36
Empowered people 47
Sustainable value chain 52
GOVERNANCE 57
Composition of the Executive Board 58
Composition of the Supervisory Board 59
RISK MANAGEMENT 66
SHARE INFORMATION 78
SUPERVISORY BOARD REPORT 81
Supervisory Board report 81
Audit and Risk Committee report 84
Remuneration report 87
CONSOLIDATED FINANCIAL STATEMENTS 94
Consolidated statement of profit or loss 95
Consolidated statement of profit or loss and
other comprehensive income 96
Consolidated statement of financial position 97
Consolidated statement of changes in equity 99
Consolidated statement of cash flows 101
Notes to the Consolidated Financial Statements 103
OTHER INFORMATION 152
Independent auditor’s report 152
List of subsidiaries 157
Contact 157
CONTENTS
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LETTER OF THE CEO
ADAPTING TO WIN
Welcome to our Annual Report 2020 — my first as CEO of B&S Group S.A.
This report reflects a year of unpredictability and adjustments, but also of resilience
and development. The Covid-19 pandemic has brought challenges we have never
seen before. It has altered our ways of working and forced us to rethink the everyday.
As a business, an important priority in 2020 has been to recognise these challenges
and utilise them as a catalyst for change.
After my appointment to the Executive Board on August 11, I have (digitally) met
with sta in all regions. I familiarised myself with all our businesses to get an
understanding of the key traits that connect the diversity of our activities. What
stood out in every (sub) segment was the spirit of our people and the way we
approach our challenges: with entrepreneurship, capability and flexibility.
What inspired me most, was the enthusiasm for improvement opportunities across
the board, especially in light of the new Covid reality we all had to adapt to. I was
energised by the flexibility and open mindset that our people demonstrated – which
is extremely relevant in a diversified business environment like ours. I took all their
inputs on board in the review of our business model in my first 100 days as CEO.
Tako de Haan, CEO B&S Group
group
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Business in the lead
It led to the introduction of our new business principle Business in the lead. All
our choices should support this principle towards creating a streamlined and
easy-to-understand organisation with a reduced cost base that facilitates the
business in scalable, profitable growth.
Digital first
We made steady progress with the centralisation of operations on Group level.
The introduction of our Project Management Oce (PMO) streamlined the selection
and execution of companywide projects to enhance synergies and increase
eciency. Covid-19 has also pushed us to accelerate the implementation of our
Digital First approach, in the first place to rebalance our costs with reduced turnover
in certain (sub) segments. The further automation of work flows across the board
remains key in facilitating operational agility and controlling cost levels structurally
to realise profitable growth.
Focus on adding value
Our segmental IT departments were restructured into specialisms on Group level
to boost our Digital First approach further. Marking e-commerce a dedicated IT
specialism within our organisation enhanced the roll out of our digital strategy,
which has already proven eective: we have risen to the global e-fulfilment
challenges presented by Covid-19. These capabilities enable us to reach out to
suppliers and customers digitally and provide unmatched service levels to manage
our value chain for growth – from the source all the way to the online end-consumer.
Brand development
And as we move closer to the end-consumer, the need for a compelling brand
identity becomes more vital than ever. The pandemic placed even greater focus
on the importance of responsible business. It provides opportunity for building
trust and lifting confidence in B&S Group as a brand – towards all our stakeholders.
This can only be realised if we commit to further developing our business for
people and planet, not just profit. Last year, we launched our three business
priorities for long term value creation. These were further defined in 2020 in light
of our Business in the lead principle and focus on Digital First. A vital part in our
2021 – 2023 strategy is to link each of our business priorities to corresponding
key performance indicators and targets defined by our strategy. In doing so, we
will monitor our progress and make ourselves accountable to all our stakeholders
in a transparent way.
Conclusion
Beyond Covid-19 there is still a huge amount of uncertainty and change. But if
one thing, our team has proven in 2020 that we are agile and able to adapt to
dicult and changing circumstances. A heartfelt thank you goes out to all our
people for their commitment and resilience. Also to all our business partners and
shareholders for their continued trust in B&S Group in these exceptional times.
I am confident that our disciplined and focused approach will create value for
shareholders and make a positive contribution to society for many years to come.
We are adapting to win.
Tako de Haan
CEO B&S Group
3B&S Group S.A. Annual Report 2020
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KEY FIGURES
x € million
(unless stated otherwise)
2020
reported
2019 2018*
PROFIT OR LOSS ACCOUNT
Turnover 1,861.8 1,978.8 1,746.5
Gross profit 254.9 271.9 242.3
Gross profit margin 13,7% 13.7% 13.9%
EBITDA 90.3 114.4 108.8
EBITDA margin 4.9% 5.8% 6.2%
Depreciation & Amortisation 32.5 26.6 10.7
Profit before tax 51.2 7 7.5 90.8
Profit for the year 40.6 60.3 71.4
Earnings per share (in euro) 0.26 0.56 0.72
FINANCIAL POSITION
Inventory in days 70 80 92
Working capital in days 85 95 113
Net cash from operations 147.0 113.4 3.5
Solvency Ratio 38.0% 31.9% 34.3%
Net Debt* 185.8 295.7 312.7
Net Debt/EBITDA* 2.3 2.8 2.9
*
On Pre-IFRS 16 basis.
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Consumer goods
5 key markets
4 main categories
Global spread of customers
> 100
countries
Turnover (in million)
€1,861.8
2019: € 1,978.8
Net cash from operations (in million)
€147.0
2019: € 113.4
EBITDA (in million)
€90.3
2019: € 114.4
Employees
2,158
53 nationalities on 4 continents
21.1%
5.9%
29.6%
KEY HIGHLIGHTS
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FEB
MARCH
MAY
AUGUST OCTOBER
DECEMBER
2020 KEY DEVELOPMENTS
Covid-19
first wave
Asian markets
aected by
lock down
Online
business
growth
Peter Kruithof
appointed as
CFO
Strict OPEX
reduction
measures
Acceleration
Digital First
approach
Introduction
Business in
the lead
Covid-19
second wave
Cruise & travel
retail business
severely hit
Working capital
program
enhanced
Covenant
holiday
arranged
Tako de Haan
appointed as
CEO
Development
matrix
organisation
6B&S Group S.A. Annual Report 2020
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WINNING BY REACH
B&S Group is a value adding
distribution partner for
consumer goods in a growing
number of attractive channels
and specialised markets
worldwide.
We focus on serving distinct
niche markets around the globe
that are generally dicult to serve
eciently due to their specific
demands and characteristics.
Our increasingly digitised services
make us a distribution partner unlike
any other, providing unmatched
reach in diversified markets.
7B&S Group S.A. Annual Report 2020
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OUR BUSINESS MODEL
ADDING VALUE SINCE 1872
Our proposition distinguishes itself in its high level of complexity, and we are
recognised for consistently delivering to the right place, at the right time. Our
flexible, well-invested and highly ecient distribution platform comes with
strong barriers to entry:
Dierentiated sourcing
Our sourcing mechanism enables us to act quickly and benefit from sourcing
opportunities whenever and wherever they arise. Our BiT Insights tool (Developed
within our proprietary Enterprise Resource Planning (ERP) system) provides full
internal price transparency and compares real time sourcing prices, trends, and
opportunities across our segments.
Supply chain expertise
Our extensive customs knowledge and regulatory expertise allows for a smooth
international supply chain across borders with all relevant paperwork in order,
from product sourcing to delivery, from full container loads to drop shipped
packages to the doorstep of the end-customer.
We operate a fully bonded supply chain with warehouses that have a registered
status with the Dutch government to store goods under bond. This allows us to
distribute our product assortment internationally without having to pay import
duties, VAT or excise duties anywhere other than in the end-market.
Automated and digitised procurement
Our digitised and automated warehousing solutions speed up operations and
resourcefully match demand with eciently procured supply based on data
intelligence. This is all facilitated and supported by BiT, our proprietary ERP system.
Scale and reach
Our global scale gives access to a vast range of suppliers and products while our
balance sheet allows us to take-in and supply large quantities at favorable prices.
This enables us to serve our customers with a large in-stock assortment on demand.
Our logistics expertise enables us to serve dicult to reach markets, while our
increasingly digitised service allows for ordering from any location on a 24/7 basis.
This enables us to continuously expand our reach, both for ourselves and our
business partners.
Trusted partnerships
Our focus on building long-term business relations is nurtured by our business
principles and values that foster trusted partnerships aimed at mutual growth.
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OUR BUSINESS
Our increasingly digitised services and marketing capabilities make us a distribution
partner unlike any other, serving unmatched reach by:
▪
providing essential distribution services;
▪
solving supply chain complexities;
▪
oering compelling value along the value chain.
By providing these tailored services throughout the supply chain, we link suppliers
and customers that would otherwise find it dicult to connect.
Suppliers
We engage in mutually beneficial relationships with our suppliers, seeking to
simplify the supply chain while enabling them to expand their business and increase
brand exposure in markets they cannot reach on their own. By partnering with
B&S Group, our suppliers benefit from market intelligence, deep customer
knowledge and (digital) marketing support.
Customers
At the other end of our value chain, we oer our B2B customers a one-stop
solution with a large and diversified portfolio at competitive prices, while adhering
to strict compliance standards and arranging customs handling and transportation
to locations that are often hard to reach. Adding to this, we simplify their operations
with (digital) inventory management services and automated procurement solutions.
For our end-customers both in specialty retail markets and in e-commerce, we
add the service of a long-tail and relevant assortment that is available on demand
and at attractive prices, delivered to their doorstep.
group
Linking suppliers and
customers that are
dicult
to connect
Dierentiated
sourcing
Automated
and digitised
procurement
Supply chain
expertise
Scale
and reach
Trusted
partnerships
Delivering consumer
goods to the right place,
at the right time
group
9B&S Group S.A. Annual Report 2020
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HIGHLIGHT
SUPPLIER BRAND DEVELOPMENT
To extend our service to suppliers,
in 2020 we launched our ‘brand
development’ proposition to help
A-brand suppliers better achieve their
growth ambitions. It combines our
traditional distribution strength with digital
solutions to advance supplier brand
potential in our specialised channels and
markets.
Market proximity & Customer know-how
Our sales satellites and partnerships with local parties in selected locations provide
in-depth knowledge and expertise of local markets. Having feet on the ground
simplifies distribution for our suppliers and speeds their time-to-market, while
local trend watching enables portfolio optimisation.
Boost sales activity with hyper-targeting
We implemented the use of new technology to better reach relevant audiences.
With targeted digital campaigns we reach key B2B audiences to drive sales within
high entry markets and reach consumers to increase brand awareness and drive
e-commerce and in-store sales for our B2B partners.
Performance management
In 2020 we introduced the first personalised performance dashboards for suppliers,
based on agreed KPIs and available to access real-time on a 24/7 basis.
Digitised partnership
In Q1 2021 we started a trial with selected supplier partners to handle their ongoing
business with B&S Group fully online. The development is set to continue in 2021
together with these selected partners to take further steps in optimising functionality
and user experience.
group
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PRODUCT OFFERING
We oer a wide variety of fast moving consumer goods across multiple categories
mostly from A-brands.
MARKETS
With our diversified assortment we serve five fragmented key markets.
HEALTH & BEAUTY
52%
OF TURNOVER FY 2020
RETAIL B2B
Value for money, E-commerce platforms, Underserved & duty-
free markets, Secondary channels
ONLINE B2C
Consumers on our e-commerce platforms
REMOTE
Remote industrial sites, Peacekeeping missions, Government
& defence operations
MARITIME
Ship supply and cruise lines
RETAIL B2C
Consumers in our (travel) retail outlets
LIQUORS
33%
OF TURNOVER FY 2020
FOOD & BEVERAGES
1
12%
OF TURNOVER FY 2020
CONSUMER ELECTRONICS & OTHER
3%
OF TURNOVER FY 2020
1
Including Medical assortment.
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Serving 100+ countries and complex end-markets
Turnover per region
America
€ 333
million
Europe
€ 930
million
Oceania
€ 15
million
Asia
€ 352
million
Middle East
€ 180
million
Africa
€ 51
million
group
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HTG HEALTH & BEAUTY
Distribution of perfumes, cosmetics and toiletries to
specialty retailers (value for money, e-commerce)
and online consumers in Europe, USA and Asia
see page 41
Turnover (in million)
€908.7
EBITDA (in million)
€87.0
HTG LIQUORS
Distribution of bonded liquors to specialty retailers
(e-commerce, underserved, duty-free, secondary)
in Europe and Asia
see page 41
Turnover (in million)
€474.6
EBITDA (in million)
€8.4
BUSINESS SEGMENTS
group
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B&S
Distribution of food, beverages and medical
products to retail (underserved & duty-free), remote
and maritime markets
see page 42
RETAIL
Specialty retail at high trac airports and remote
locations
see page 43
Turnover (in million)
€44.5
EBITDA (in million)
€(12.0)
BUSINESS SEGMENTS
Turnover (in million)
€433.9
EBITDA (in million)
€12.1
group
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OUR ORGANISATION
BUSINESS IN THE LEAD
All our business segments benefit
from our centralised backbone
that provides eciency, support
and control.
To further enhance our corporate
support, in 2020 we introduced
our business in the lead principle.
During the year we reshaped our
corporate support functions on
Group level to better facilitate our
business in maximising eciency and
profitability, and introduced
additional corporate functions to
support our strategic direction. Most
of these functions were recruited
internally from dierent segmental
departments and appointed to head
up the function on corporate level.
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IT
Our centralised IT function oers enhanced collaboration and interaction between
our segments and provides data-driven insights that support integrated
communication.
Our BiT ERP system is fully tailored to our operations, enabling us to track and
manage inventory levels across our platforms and to plug newly acquired businesses
into our centralised backbone in no-time.
IT is the driver behind our automated and high-capacity warehouses that especially
benefits our online proposition to e-commerce platforms. In our e-commerce
operations to end-customers, we utilise proprietary technology that continuously
strengthens our sourcing network, buying power and assortment by self-learning
and matches supply directly to demand of the end-customer.
▪
In the second half of 2020 we restructured IT into specialisms on Group level
to boost our Digital First approach further. E-commerce was marked a
dedicated IT specialism to enhance the roll out of our digital strategy.
Finance & control
Our strategy is defined by the Executive Board in close cooperation with broader
senior management and includes the encouragement of entrepreneurship and
accountability. To mitigate strategic and financial risks throughout the organisation,
our Enterprise Risk Management (ERM) is an integral part of our day-to-day
operations. Risk management procedures are performed in accordance with our
ERM model and combine various internal and external sources of information.
More information on Risk Management can be found under Governance.
Legal & Compliance
Our compliance function, both at group level and at segment level, focuses on
supplier and customer acceptance procedures, export controls, customs, tax, data
protection and general legal matters. We have very strict customs, quality control
and food safety standards that are vital to the organisation and top of mind
throughout the whole company. We are certified as an Authorised Economic
Operator in the Netherlands, making us a trusted partner to customs and related
authorities.
HR
Our people are our most important resource and we safeguard recruitment,
development and retention through a centrally-led HR function. Our strategic
programmes are typically developed centrally and executed locally. The nature
of our business requires an integrated approach from sta in all departments and
we believe their mindset is critical to identifying and capturing business
opportunities. Our Company DNA is instilled through our People & Development
program in which we train our talent at every stage of their careers.
More information on People and Culture can be found in the Report of the Executive
Board.
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Operations
Our warehouses are equipped with highly ecient and automated storage
mechanisms that increase workforce eciency and reduce warehouse space
requirements. This, combined with the quick turn-around of our assortment,
ensures optimal use of storage capacity. The continued expansion of automation
in our e-commerce procurement boosts the speed of operations, supports our
online proposition and enables us to directly serve the end-customer. The
outsourcing of transport to key partners enables us to focus on our core
competences and provide flexibility in capacity and costs.
▪
Our project management oce (PMO) was introduced and implemented in
our Operations function in 2020 to coordinate and prioritise projects between
our dierent commercial units. The role of PMO is to streamline the internal
organisation and intensify segmental collaboration, in order to further optimise
the success rate of companywide projects.
▪
Our Facility discipline (including Safety & Security and Quality) was added to
the overarching Operations function and a Facility Director on Group level was
appointed to further streamline costs levels and ecient use of resources across
the board.
▪
In January 2021 we announced extension of our Executive Team with a COO
to enhance progress on the implementation of the 2021 – 2023 strategic plan.
Marketing
▪
This function was introduced on Group level end 2020 to fuel commercial
objectives by accelerating marketing of our added value to suppliers and
customers and support our online proposition.
Corporate communications
▪
This function was introduced on Group level end 2020 to support our focus
on positioning our corporate B&S Group brand and simplifying communications
on corporate strategy towards all stakeholders.
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OUR MISSION AND VALUES
MORE THAN THE SUM OF PARTS
Our business builds on the mission: bringing together supply and demand for fast
moving consumer goods in niche markets around the globe. And by doing so,
being the preferred partner for our (end-) customers and suppliers. This mission
drives us in continuously expanding our reach by adding new customers, new
markets and new channels to complement and extend our business portfolio.
Our values are recognised across the Group and support our entrepreneurial
culture. They ensure that every colleague understands what is important, how we
work together as a team and how our growth strategy is at the center of the
decisions we make.
Leadership behaviors further guide our actions and decision-making so that we
do the right thing for the business and our stakeholders, with reward being linked
to delivery and performance.
This helps create a culture where everyone feels accountable, talent is fostered,
and colleagues can achieve their full career potential.
Reliable
we serve our customers with a
consistently high level of quality
and service that meets and
exceeds their expectations
Successful
we build on a strong and healthy
financial foundation with a long
and proven track record in
innovative value adding
distribution
Professional
we select prospective employees
based on professional
characteristics, their potential for
development and their ambition
to get the job done
Flexible
we showcase customer-driven
flexibility, dealing creatively and
eectively with unusual
challenges and opportunities
Ambitious
we foster entrepreneurship and
co-ownership in every level of
the company to keep up with
increasing scale of markets and
demands from customers (both
oine and online)
Unique
we focus on business
diversification in selected
product-market combinations
while creating operational
synergies between our segments
Ecient
we uphold a goal-oriented
approach with constant business
process innovation that is
supported by digitisation and
automation
Personal
we concentrate on long-term
relationships with suppliers,
customers and employees that
are based on trust, transparency
and understanding
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SUSTAINABLE AND
PROFITABLE GROWTH
Our overall focus lies on long term
value creation by pursuing sustainable
and profitable growth.
The ability to respond and adapt to
changing circumstances and
demands from the market, our
business partners and society is key
in executing on our strategy.
In our response to Covid-19,
in 2020 we enhanced focus on
optimising internal processes and
digitising our operations driven by
our Digital First approach.
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Value
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Centralisation of operations
▪
With close commercial involvement further centralise IT
and Logistics towards creating a more lean and focused
organisation
▪
Cluster overlapping segmental business activities to simplify
the supply chain and optimise inventory management
▪
Intensify segmental collaboration by optimising internal
processes
Digital transformation
▪
Use data driven insights to optimise internal processes and
identify commercial opportunities
▪
Digitise supply chain with commercial tools that support
centralised operations
▪
Continued innovation by embedding digital capabilities in our
organisation
Focus on growth markets
▪
Focus on niche markets driven by mega trends (digitisation,
globalisation, market disruption)
▪
Invest in unique positions with compelling advantage
▪
Complemented by selective M&A to strengthen niche
positions
Organic expansion
▪
Capture opportunities for geographical expansion in all
business segments
▪
Explore new Product Market Combinations in adjacent
channels or product/category per segment
▪
Drive organic growth through data driven customer services
OUR STRATEGIC FOCUS AREAS FOR ORGANIC GROWTH
In 2020, we accelerated our focus
on centralisation of operations and
digital transformation, driven by our
Digital First approach.
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Value
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ACQUISITION STRATEGY
Selected acquisitions form an integral part of our growth strategy and comple-
ment our four strategic focus areas further. Many markets in which we are active
are very sizable and highly fragmented by nature, providing ample opportunity
for targeted acquisitions that support our philosophy. We maintain a regular
dialogue with various market participants to ensure that we are ready to execute
on the right opportunities when they occur.
We believe it is important to enter into acquisitions as partnerships or joint ventures,
keeping management on board and fostering the entrepreneurship and
co-ownership that characterises the Group’s DNA. Strict criteria are applied when
evaluating and selecting potential acquisition candidates. We remain disciplined
on price, oered in combination with an attractive proposition to the selling
management and shareholders. This includes their continued involvement and
investment in the combined company, ensuring we maximise the benefits of
growth and synergies. This secures their business acumen at the front end, while
we put our immediate focus on the integration of back oce and controls.
All our acquisitions to date were executed to further strengthen our position in
the value chain either by adding complementary sourcing routes, by entering into
new product categories / regions as an extension to our existing business, or by
expanding our role as distributor towards the end-consumer.
Going forward, we look to further execute our acquisition strategy and build our
position in the value chain with carefully targeted companies that match both our
business model and our entrepreneurial culture, and that show potential for further
organic growth.
In 2020, main focus was on the continuance
and growth of our existing business.
For 2021, we look to further execute on our
acquisition strategy.
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ACQUISITION TIMELINE
1872
1912
1948
1974
1999
2001
2007
2012
2013
2016
2017
2018 2019
2020
Start
Köpcke
Start
Paul
Acquisition
Anker
Acquisition
JTG
B&S World
Supply founded
Acquisition
Alcodis
Acquisition
FragranceNet.
com
Acquisition
Airport shops
Weeze &
Rotterdam
Start
Bosman
Butterfahrt
founded by
Blijdorp &
Streng
B&S Segment
created
as merger
of Bosman,
Köpcke
and Paul
Acquisition
Royal Capi-Lux
Acquisition
Topbrands
Acquisition
Lagaay Medical
Group
Acquisition
Top Care
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Value
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BUSINESS PRIORITIES
In executing our strategy, we are committed to our three business priorities that
support long term value creation. Our overarching priority in 2020 has been the
safety and well-being of all our stakeholders. The progress per business priority
in 2020 is presented in the report of the Executive Board.
Sustainable value chain
Empowered people
Financial performance
▪
Creating long term value for our stakeholders by
pursuing sustainable and profitable growth
▪
Clear focus on building and expanding unique positions
in diversified markets
▪
Expanding our role in the value chain
▪
Providing an entrepreneurial and inspiring environment
▪
Attracting, retaining and developing a workforce with
capabilities to support our growth strategy
▪
Maintaining high ethical standards with all our
stakeholders
▪
Being a responsible, well-respected and reliable
organisation while at the same time seizing business
opportunities
▪
Committed to mitigating environmental risks and
adhering to all relevant regulations
▪
Creating opportunities for a sustainable and innovative
supply chain
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STRATEGIC CONTEXT
We continuously adapt and develop our organisation to benefit from changing
conditions in our business environment that support sustainable and profitable
growth. In 2020, Covid-19 has accelerated certain trends in digitisation, market
disruption and sustainability. In this new reality, we consider the following trends
most relevant to our operations:
Globalisation
Globalisation asks for distribution partners that can work seamlessly around the
globe. With operations in Europe, Asia, Africa and the US we can use our global
network to support our suppliers and customers in nearly any location. This further
supports our diversification strategy and focus on expansion into new geographies
and adjacencies.
Digitisation
Further accelerated by Covid, digital technologies open new possibilities to serve
customers more eciently and change the way we work. They also provide
opportunities for additional services to our current customer portfolio as well as
new business opportunities in our diversified markets, with the main growth driver
being e-commerce.
Geopolitical factors
Geopolitical factors such as trade wars and the Brexit have a noticeable impact
at a macroeconomic level. Because of our highly fragmented activities in diverse
geographies and markets, the impact of these developments are limited to specific
parts of our operations.
Selected distribution
In general, there is a clear demand from A-brand suppliers and manufacturers for
distribution partners that can oer supply chain simplification and sustainable
growth in both emerging and developed markets. The markets and channels in
which we operate are highly fragmented and require a distribution partner that
can oer a one-stop-shop solution with a wide and relevant range of products.
Suppliers in developed markets are increasingly looking to centralise (parts of)
their distribution with selected key partners. Entering into selected partnerships
with a reliable and long-term focused distribution partner enables them to
outsource their business operations in selected geographical areas and significantly
simplify their route-to-market.
Additionally, the specific distribution requirements to various end markets in terms
of delivery times and reliability are expected to continue to drive the trend among
suppliers and manufacturers of outsourcing part of their sales to a smaller number
of specialty distributors.
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Retail value chain redesign / disruption
Increasing demands from end-customers in delivery time and quality, require
continuous IT and automation development to provide ecient and innovative
distribution solutions.
The rise of value channels and shift from physical stores to online platforms has
further increased customer concentration into these non-traditional channels and
into the winning retailers within these channels. This redesign of the retail value
chain asks for new capabilities and services along the value chain such as digital
lead generation, oering marketing as a service to brand owners and oering data
analytics insights to both supplier and customers in these channels.
Additionally, more intense and more rapid communications allow customers
everywhere to purchase products made anywhere around the globe and to access
information about what to buy. This requires a wide and varied online product
range that is always in stock and available on demand at attractive pricing.
Sustainability and regulatory compliance
Consumers are more in touch with the impact the products and services they buy
have on people and environment, while the role companies have on society and
the environment is more relevant than ever in shaping corporate image.
This impacts regulations for example in product information transparency
throughout the supply chain, which is particularly relevant in our food distribution.
It requires continuous upgrades of facilities and processes related to food safety,
quality controls and customs compliance.
Disruptions in the value chain ask for new
capabilities and services such as digital lead
generation and data analytics.
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STAKEHOLDER ENGAGEMENT
To identify key material topics that support sustainable and profitable growth,
we rely on frequent and open communication with our stakeholders. We are
committed to mitigating environmental and social risks related to our operations
and creating opportunities for a sustainable and innovative supply chain, while
at the same time seizing business opportunities that support our growth strategy.
Employees
Our people are our most important asset. Our experienced and highly-qualified
employees are making the dierence when it comes to serving our customers,
suppliers and other stakeholders. Professional development of our people is key
to our future growth and focus on providing an inspiring work environment. We
encourage employees to speak their minds and we inform and consult them on
key developments regularly both directly and through our Works Councils.
Customers
Our global customer base is widely spread, and in order to align interests we foster
a climate of mutual awareness and understanding. We focus on long-term
partnerships based on expertise and engagement, which enables us to embed
sustainable practices that meet diverse customer needs.
Suppliers
We maintain relationships with over 1,200 suppliers globally, engaging in mutually
beneficial relationships to simplify the supply chain. All our suppliers are subject
to strict KYR (Know Your Relation) procedures to ensure that our supply chain is
transparent, not in breach with any regulations and that we are not infringing any
intellectual property or trademarks.
Investors
Our financial stakeholders play an important role in our long-term strategy to
create value. We strive to inform them as completely and transparently as possible
on our strategy and financial performance through a variety of communications
such as AGMs, conferences, roadshows, press releases, site visits, emails and calls.
Authorities
Ensuring food safety, customs compliance and adherence to local rules and
regulations in all our international (logistics) operations is of utmost importance.
That is why we emphasise on upholding good relations with authorities and
governmental bodies throughout our value chain by maintaining close contact
and adhering to all relevant rules and regulations.
Society
Although our activities vary widely in their potential impact, we aim to add value
for both the Group and society. We are involved in numerous partnerships and
collaborations with educational institutions, human rights organisations and sector
associations to share our knowledge and know-how and to provide better living
conditions for those in need.
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Material topic Description Business priority Relevant to
Governance & accountability Implementing policies and practices to ensure accountability and risk
management by the board and meet stakeholders expectations
Financial
performance
Investors, authorities
Long term partnerships Upholding good reputation with business partners and focusing on
adding value to our partners’ businesses to support their growth and our
own
Financial
performance
Investors, suppliers, customers
People development Committing to hire, manage, develop and retain talented employees Empowered
people
Employees, society
Employee well-being Promoting and protecting the physical and mental well-being of
employees and helping employees make more informed decisions to
achieve and maintain a healthy lifestyle
Empowered
people
Employees
Safety in the workplace Targeting zero accidents in the workplace and promoting safe employee
behaviours in every location were we conduct business
Empowered
people
Employees
Cyber security & data privacy Setting up and adhering to the right policies and control framework to
keep business, customers and employees’ data safe
Empowered
people
Employees, customers, suppliers
MATERIALITY SURVEY
Based on our stakeholder analysis, in 2019 we conducted a materiality survey
among stakeholder representatives that was based on a list of 12 material topics.
These material topics were the result of an assessment of 21 initial topics drawn
up together with an independent third party and based on ESG benchmarks
combined with a media and peer analysis. The assessment took into account the
concept of materiality as defined by the Global Reporting Initiative (GRI).
Stakeholder representatives were asked to take a survey to rate all 12 material
topics on a scale from 1 to 10 based on importance in relation to how they impact
these stakeholders, society, the environment and the economy.
As part of our 2021 - 2023 strategic review, we will undertake a materiality survey
to align the interests of our stakeholders with our strategic objectives and business
priorities.
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Material topic Description Business priority Relevant to
Business ethics Upholding ethical principles in the business relationships and activities
by adhering to strict internal policies and guidelines to avoid corruption,
bribery, fraud and other unethical behaviour
Empowered
people
All stakeholders
Waste management Reducing waste and optimizing opportunities for recovery, reuse or
recycling of by-products, and disposing of waste appropriately
Sustainable
value chain
All stakeholders
Innovative supply chain Promoting innovative technology to create new ways of conducting
business
Sustainable
value chain
All stakeholders
Customs compliance Ensuring compliance with all relevant rules and regulations to uphold
our relationship and status with customs authorities
Sustainable
value chain
Authorities, suppliers, customers
Food safety Ensuring a high-quality product and preventing health risks arising from
use, consumption, handling, preparation and storage throughout the
value chain
Sustainable
value chain
Authorities, customers
Energy use Implementing energy saving /energy ecient ways of working and using
energy responsibly in our premises and in the value chain
Sustainable
value chain
All stakeholders
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Financial performance
2 Long-term business relationships / partnerships
(value adding services, grow with our partners
)
10 Governance & accountability (board eectiveness,
succession planning, transparent reporting)
Empowered people
3 Business ethics (ethical decision making, AML policies,
FCPA, KYR)
4 Cyber security & data privacy (cyber security, data
protection, GDPR)
5 Safety in the workplace (working conditions, incident
rates, prevention measures)
6 People development & talent development (trainings,
educational programs, career opportunities /
promotions)
7 Employee well-being (remunerations, rotational
opportunities, healthy lifestyle support)
Sustainable value chain
1 Customs compliance (AEO Status, adherence to Union
Customs Code)
8 Innovative supply chain (automation &robotisation,
data-driven services)
9 Food safety (licensing, transparent product
information, quality controls (NVWA))
11 Energy use (renewable energy use, energy-ecient
oces, eciency of operations)
12 Waste management (recycling procedures, waste
reduction, sustainable packaging)
6.00 6.50 7.00 7.50 8.00 8.50 9.00 9.50 10.00
6.50
7.00
7.50
8.00
8.50
10
2
3
4
5
6
7
8
9
11
Impact
Relevance
1
12
Materiality matrix
Based on the materiality survey and the dialogue that emerged from
it, we identified the main topics of importance to our stakeholders
and our Board members.
These topics were connected to corresponding business priorities
that support the strategic growth areas we identified for the coming
years.
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SUSTAINABLE DEVELOPMENT GOALS
We support the Sustainable Development Goals (SDGs) directed at sustainable
development around the world as defined by the United Nations in 2015. We
contribute to the SDGs through our main business activities and sustainable growth
priorities.
As the B&S Group conducts business in numerous niche markets around the globe,
the four selected SDGs are a general representation of the key areas where we
contribute as a Group rather than in all the business activities we undertake. We
are working on the development of more detailed communication, where our
initial focus is to define our SDG contributions in key markets and activities and
develop a framework for reporting on progress in a consistent manner.
B&S Group is committed to further developing
our business for people and planet as part
of our 2021-2023 strategy, to make a
positive contribution to society
for many years to come.
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SDG Contribution by
When it comes to our employees and all people involved in our operations, focus lies on providing an environment that is safe and
healthy and stimulates well-being in all its facets; from food safety throughout the value chain to supporting local first initiatives and
from strict safety procedures in our premises to motivational support in maintaining a healthy lifestyle.
We employ over 2,100 people globally and reach a wide range of suppliers and customers in diversified markets all over the world. This
way, we play a key role in generating rewarding work opportunities, high level working conditions and a contribution to economic
growth.
Developing an innovative and sustainable distribution solution that connects suppliers and customers, reduces ineciencies in sourcing,
services and distribution in the consumer goods sector. With our robotised and digitised warehousing platform, we contribute to the
innovation and eciency of the supply chain in which we operate and facilitate further economic growth.
As long year member of the UN Global Compact, we contribute to the development and implementation of international norms and
standards. By focussing in the areas of anti-corruption, labor rights and human rights in all our operations and by our distribution activities
to government, defence and peacekeeping operations, we contribute to advancing peace and development.
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Delivering consumer
goods to the right place,
at the right time
INPUT
OUTCOMES FOR
STAKEHOLDERS
OUPUT VALUE CREATION
OUTCOMES FOR
STAKEHOLDERS
OUPUT
Financial performance
▪ Turnover € 1,861.8 million
▪ EBITDA € 90.3 million
▪ Net debt / EBITDA 2.3 (pre IFRS 16)
▪ Net cash from operations € 147.0 million
Empowered people
▪ 2,158 Employees
▪ 53 Nationalities on 4 continents
▪ Retention of 6.1 years
Sustainable value chain
▪ >40.000 SKUs available on demand globally with
▪ distribution options from bulk supply to drop-shipment
▪ Long term partnerships based on trust, expertise and
▪ mutual growth
Suppliers & customers
▪ Global business development in
niche markets and specialised
channels
Investors
▪ Long term value creation
▪ Proposed dividend of € 0.10
per share
Authorities
▪ Trustworthy partner with strict
focus on compliance
Society
▪ Contribution to 4 relevant SDGs
▪ Social and economical inclusion
Employees
▪ Inspiring work environment
with development and career
opportunities
group
Dierentiated
sourcing
Automated
and digitised
procurement
Supply chain
expertise
Scale
and reach
Trusted
partnerships
Empowered people
▪ Highly educated (young) professionals with focus
▪ on expanding our business profitably
Financial performance
▪ Equity and loans help us to invest in the growth of
▪ our business to service our stakeholders
Sustainable value chain
▪ Connecting supply and demand for consumer goods
▪ in niche markets around the globe
▪ Creating strong barriers to entry by scale, extensive
▪ licensing, customs knowledge, robotisation and
▪ digitisation
Linking suppliers and
customers that are
dicult to connect
Value creation model
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EXECUTIVE BOARD REPORT
STRATEGIC EVOLUTION,
SUSTAINABLE FUTURE
Besides our actions taken in response to the profound impact of Covid-19, B&S
Group continued to invest and plan for future growth. This was supported by
change in leadership and corporate structure to support our strategic evolution.
The composition of our Executive Board was transformed with the appointment
of Peter Kruithof as CFO in May, followed by the appointment of Tako de Haan
as CEO in August. Further extension of the team was initiated with the appoint-
ment of Ken Lageveen as COO in January 2021.
These developments in leadership combined with the impact of Covid-19, led to
further review of the Groups strategic direction. Besides prioritising the optimisation
of internal processes and digitisation of our operations driven by our Digital First
approach, we sharpened the strategic focus areas and business priorities as initiated
in 2019. We made the clear and conscious choice to put business in the lead in
all strategic decisions – and initiated the embedding of centralised support functions
to create a simpler and more productive company that is financially stronger and
sharply focuses on shareholder returns.
Peter Kruithof, CFO Tako de Haan, CEO
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COVID19 RESPONSE
Financial performance
When Covid-19 hit, we had the financial strength and agility to implement strict
control measures to keep our people safe while ensuring business continuity.
We implemented various measures related to working capital and cost control,
concentrated on aligning net debt and EBITDA levels to allow the group to keep
operating within its covenants. Our working capital focus was on aligning the
inflow levels of our inventory with the outflow of our sales and as such decreasing
our net debt position. As an example, all purchases for our European cruise
distribution were cancelled and we limited the inflow for our duty-free markets.
Cost control was mainly focused on reduction of operating expenses by layos
for temporary sta and expiration of fixed time contracts. It also led to the dicult
but necessary decision to carry out reorganisations in sub segments that were
severely hit by the pandemic.
In order to mitigate the risk of becoming limited by our balance sheet as soon
as business opportunities would arise, we pro-actively engaged with our
relationship banks to agree on a covenant holiday for three test periods (HY 2020,
FY 2020 and HY 2021).
Our strict measures reduced net debt amidst the pandemic, ensuring a strong
balance sheet and healthy solvency level in these volatile times.
The first priority throughout our Covid-19 response has been the health and
safety of our people, and supporting the health & safety of everyone involved in
our value chain. With the strong engagement of our workforce and the decisive
approach from our segmental leadership team, we were able to take swift action
in reducing and minimising impact within and outside our operations.
“Covid-19 transformed the world in
2020, touching every corner of society
and shaking the global economy.
B&S Group quickly realised that our
ability to continue our operations
through the pandemic, depended on
swift response to keep our people,
business relations, financial position
and the communities where we have
presence safe and healthy.”
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Empowered people
To facilitate social distancing and minimise infection risk, we reduced numbers
of people at our work locations through split-shifts at our warehouses, working
from home arrangements for all non-essential functions and strict requirements
for business-critical workers at our oce locations. We ceased face to face
meetings very early in the pandemic, implemented strict social protocols,
prohibited traveling between work locations for all non-essential sta as well as
non-essential site visits from external parties.
We also worked with our site-based suppliers (such as cleaning and maintenance)
to implement shared resilience plans and include social distancing and safety
measures in their on-site procedures to keep our people safe and our operations
running.
Our IT team supported our response to Covid-19, aiding all teams globally and
rapidly. They enabled our people to work remotely while ensuring the stability
and security of enterprise and operations systems. We accelerated the
implementation of our proprietary BiT ERP system in all segments to increase
connectivity and enhance collaboration between local operations. We also
increased availability of support services for our people, including a range of
communication tools, online training facilities and greater communication
opportunities to keep our people and teams connected.
Sustainable value chain
We kept in close communication with our supplier partners and adhered to our
regular payment terms as much as possible – especially with smaller parties - to
support our partners in relieving financial pressure as a result of the pandemic.
The impact of Covid-19 disruptions on our customers’ operations and our
engagement and arrangements with them to mitigate these, were exemplary for
our focus on long term relationships.
In our own operations, we focused on turning Covid-19 challenges into
opportunities: we revised our organisational structure and took action to build
more lean and agile management teams with clear responsibility and support
from corporate expertise. The introduction of our Business in the lead principle
together with our Digital First approach enabled the business in developing more
digital and value adding services to strengthen our business relationships in this
new reality. An example being our brand development service for brand owners.
Our focus on implementing our e-commerce strategy was further enhanced to
seize business opportunities in online channels and further develop our proposition
towards end-consumers.
More information on specific actions we took in 2020 in relation to our business
priorities, is available throughout the Executive Board report.
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“On the back of Covid-19 developments that heavily influenced some of our markets, we managed to
limit turnover decline to 5.9% with a gross proft margin similar to FY 2019. Our eorts to reduce
operational expenses to match sales volumes as much as possible has resulted in EBITDA margin of 4.9%.
Together with our segmental leadership team we implemented stricter working capital management
which has contributed to a healthy financial position. We realised a net debt reduction of 37% and
a net debt / EBITDA of 2.3 at year end 2020.“
Peter Kruithof, CFO
FINANCIAL PERFORMANCE
Organic growth
(8.1%)
Net cash from operations
€147.0
Inventory in days
70
(2019: 80)
Turnover (in million)
€1,861.8
EBITDA (in million)
€90.3
4.9% EBITDA margin
Net debt/EBITDA (pre IFRS 16)
2.3
(2019: 2.8)
Acquisitive growth
2.2%
Profit for the year (in million)
€40.6
Earnings per share
€0.26
Working capital in days
85
(2019:95)
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Financial performance
Non-IFRS financial measures
The table on the right presents an explanation on non-IFRS financial measures
used. These measures are not recognised measures of financial performance,
financial condition or liquidity under IFRS. We present these non-IFRS financial
measures because we consider them an important supplemental measure of our
performance and believe that they and similar measures are widely used in the
industry in which we operate as a means of evaluating a company’s operating
performance, financial condition and liquidity. The measures are used by
management to monitor the underlying performance of our business and
operations.
Gross profit margin Gross profit margin is defined as realised turnover minus
purchase value of items sold
EBITDA EBITDA is defined as earnings before interest, taxes,
depreciation and amortisation
EBITDA Margin EBITDA Margin is defined as EBITDA as a percentage of
turnover
Solvency Solvency is defined as group equity as a percentage of total
assets
Working capital Working capital is defined as Inventory plus Trade receivables
minus Trade payables
Net Debt Net debt is defined as interest bearing liabilities minus cash and
cash equivalents
Profit or loss performance
€ million (unless otherwise indicated) FY 2020 reported FY 2019 reported Δ (%) reported
Profit or loss account
Turnover ,. . (.%)
Gross profit (margin) . .% . .% (.%)
EBITDA (margin) . .% . .% (.%)
Depreciation & Amortisation . . .%
Profit before tax . . (.%)
Profit for the year . . (.%)
EPS (in euro) . . (.%)
Inventory in days
Working capital in days
Net cash from operations . .
Financial position
Solvency Ratio .% .%
Net Debt (pre IFRS 16) . .
Net Debt/EBITDA (pre IFRS 16) . .
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Turnover
The 2020 turnover decline of 5.9% was mainly driven by Covid-19 developments.
Organically, turnover declined by 8.1%. The decline was driven by travel restrictions
and lockdowns due to the global pandemic, having severe impact on our travel
retail business in the Retail segment and our cruise business and duty-free related
business in the B&S Segment. This decline was partly counterbalanced by growth
in our Liquor segment and the resilient performance in Health & Beauty, mainly
driven by online channels.
Turnover split per segment
€ million
(unless otherwise indicated)
FY 2020
reported
FY 2019
reported
Δ (%)
reported
HTG Segment ,. ,. .%
▪
Liquors . . .%
▪
Health & Beauty . . (.%)
B&S Segment . . (.%)
Retail Segment . . (.%)
Total turnover ,. ,. (.%)
Gross profit
Gross profit amounted to € 254.9 million (2019: € 271.9 million). As a percentage
of turnover, margins were similar to 2019. This was the outcome of lower margins
in our Liquor category and fast moving consumer goods (FMCG) activities in Asia
as a result of oversupply in the market caused by the lockdown, which were
compensated by the traditionally higher margins of our e-commerce business
that gained even more momentum during Covid-19 and saw increased contribution
to the overall business mix.
Operating expenses
Operating expenses increased from € 157.4 million to € 164.5 million. The increase
of € 7.1 million is the outcome of:
▪
Increase of sta costs (€ 5.1 million) primarily due to the inclusion of severance
arrangements of departing Executive board members, reorganisation costs at
the B&S and Retail Segments, full year consolidation of the acquired Lagaay
Medical Group and the increased sta costs at FragranceNet.com related to
company growth. This was partly counterbalanced by decline in temporary
sta costs, reorganisations and utilisation of government support;
▪
Increase of IT costs mainly driven by investments in e-commerce, further
harmonisation of our centralised ERP system and other digitisation projects.
This was oset to an extent by reduced travel and marketing costs due to global
lockdowns and shops being temporarily closed.
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Group result for the year
Depreciation of tangible fixed assets and amortisation of intangible fixed assets
amounted to € 32.5 million (2019: € 26.6 million) mainly as an eect of the full
year inclusion of Lagaay Medical Group and investments in software. Financial
expenses decreased to € 7.0 million (2019: € 10.7 million) as a result of decreased
lending rates and less outstanding debt following reduced working capital levels.
This resulted in profit before tax of € 51.2 million (2019: € 77.5 million).
The eective tax rate stood at 20.5% compared to 22.2% FY 2019 following the
change of business mix due to Covid-19, which caused decrease of business in
our travel related markets that are charged in higher tax jurisdictions. As a result,
net profit from continuing operations amounted to € 40.6 million (2019: € 60.3
million).
Net profit attributable to non-controlling interests amounted to € 18.9 million
(2019: € 13.4 million) as a result of growth in e-commerce (FragranceNet.com)
and medical supply (Lagaay Medical Group) as well as resilience of the value retail
business (Topbrands) during the Covid-19 pandemic. Net profit attributable to the
owners of the Company amounted to € 21.7 million (2019: € 47.0 million).
EBITDA
Due to the fixed cost base combined with the 5.9% turnover decline, our EBITDA
decline outpaced the decline in turnover and arrived at € 90.3 million (2019:
€ 114.4 million) or -21.1% when compared to FY 2019, with an EBITDA margin of
4.9% (2019: 5.8%). The measures taken to mitigate the Covid-19 eect on our
EBITDA were concentrated on reducing variable operating expenses (which mainly
comprise of sta costs) by bringing temporary sta in line with sales volumes,
utilising government support in the countries we are present, termination of fixed
term employee contracts and carrying out reorganisations in the B&S and Retail
segment.
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*
HTG Segment consists of HTG Liquors and HTG Health & Beauty. The details per sub segment are presented
on the next page.
“Our diversified business portfolio within the HTG segment assured resilience to the Covid-19 impact on
our overall segmental results. Where our physical retail distribution to Asia and Europe declined in the
Health & Beauty category amidst the pandemic, online business in this category profited from the
lockdown measures globally. Our Liquor business to physical retail in Asia and Europe also severely
declined due to restrictions on social gatherings, but our investments in e-commerce in this category
resulted in modest turnover growth of our European liquor business in H2 2020.”
Arben Hajrullahu, Manager Director HTG Segment
SEGMENTAL PERFORMANCE
HTG Segment TOTAL
*
€ million (unless stated otherwise) FY 2020
reported
FY 2019
reported
Δ (%)
reported
Turnover ,. ,. .%
Gross profit . . .%
EBITDA . . .%
EBITDA margin .% .%
HTG Liquors
€ million (unless stated otherwise) FY 2020
reported
FY 2019
reported
Δ (%)
reported
Turnover . . .%
Gross profit . . (.%)
EBITDA . . (.%)
EBITDA margin .% .%
HTG Health & Beauty
€ million (unless stated otherwise) FY 2020
reported
FY 2019
reported
Δ (%)
reported
Turnover . . (.%)
Gross profit . . .%
EBITDA . . .%
EBITDA margin .% .%
40B&S Group S.A. Annual Report 2020
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The HTG Health & Beauty Segment saw a sales decline of 0.4% with a gross profit
increase of 11.6% compared to FY 2019. EBITDA amounted to € 87.0 million,
resulting in an EBITDA margin of 9.6%. This was mainly the result of a changed
business mix due to Covid-19, with more sales in online B2C and declined sales
in physical B2B retail, of which the former comes at higher margins.
Our online distribution business to platforms and end-customers showed resilience
in Q1, performed even better than anticipated in Q2 and continued to show strong
performance in Q3 and Q4. This was driven by increased demand and more
favorable sourcing conditions related to Covid-19.
On the other hand, the temporary lockdowns of a vast number of countries and
the closing of physical shops throughout 2020 had an eect on our health &
beauty distribution to physical retail outlets mainly in the value retail in certain
European countries. End of Q1 we were confronted with the closing of all
non-essential shops, including value and discount retail. With convenience retail
shops in several countries opening again in Q2, our distribution to these channels
began to show a slow but noticeable upward trend. This resulted in sales recovery
to 2019 levels towards the end of Q2, and brought Q3 sales in these channels
back in line with 2019 levels. This Q3 performance was however oset by our
perfume distribution to physical retail outlets in Europe, which declined as
consumers shifted to online channels.
In Q4 new lockdowns throughout Europe were declared, again aecting our
distribution to physical retail outlets. Moreover, the distribution to physical retail
in Asia declined due to market oversupply.
The HTG Liquor Segment realised turnover growth of 2.5% with a gross profit
decline of 6.3% compared to FY 2019. EBITDA amounted to € 8.4 million, resulting
in an EBITDA margin of 1.8%.
Our liquor distribution to Asia, and particularly China, was severely impacted by
Covid-19 in the first months of 2020, albeit traditionally always a slow quarter after
the seasonal peak in Q4. When lockdowns in this area were gradually lifted end
Q1, the first signs of early recovery of sales volumes in this market were noticeable.
This market recovery gained further momentum in Q2 and continued in Q3 and
Q4, albeit at low margins compared to 2019 levels due to supply-demand imbalance
in this market.
Liquor wholesale in Europe was impacted by the social restrictions on
end-customers and the closing of public venues across Europe that started in
March 2020. Throughout Q2, this impact accelerated as more and more countries
in Europe declared a temporary lockdown or prolonged the initial period of their
lockdown, particularly in relation to public gatherings.
In Q3 of 2020, Liquor wholesale in Europe saw turnover increase when compared
to Q2 2020 and the same quarter in 2019. This was the result of both new and
intensified relationships mainly within e-commerce. However, due to the second
Covid-19 wave and consequent lockdowns and social restrictions in Q4, this
positive eect was oset by sales decline to physical wholesale.
41B&S Group S.A. Annual Report 2020
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The eect of Covid-19 on our business lines in this segment was varied. Our food
supply business to remote and military caterers remained stable in H1 and the
majority of our maritime business and international FMCG distribution also remained
relatively resilient in Q1 and Q2. The acquired medical supply business even saw
increased sales from Covid-19 developments in H1 of 2020. On the other hand,
the sub segments Cruise and international FMCG distribution to duty free markets
came to a standstill already towards the end of Q1. The market circumstances for
those two subsegments continued throughout 2020.
After the stable H1 2020 for our food distribution to remote caterers, the
downscaling of industrial sites due to Covid-19 became evident from Q3 onwards.
Adding to this, our distribution to military caterers started to see declined demand
from Q3 onwards as a result of geopolitical developments. Moreover, the
performance in our medical supply business stagnated in Q3 compared to Q2
given the absence of travel related business seasonality. In Q4, the segment
continued to see less demand from remote markets as industrial sites remained
understaed and distribution to military caterers further declined.
B&S Segment
€ million (unless stated otherwise) FY 2020
reported
FY 2019
reported
Δ (%)
reported
Turnover . . (.%)
Gross profit . . (.%)
EBITDA . . (.%)
EBITDA margin .% .%
The B&S Segment saw a sales decline of 6.4% with a gross profit decrease of 5.7%
compared to FY 2019. EBITDA amounted to € 12.1 million, resulting in an EBITDA
margin of 2.8%. This decline in EBITDA margin was to a large extent the result of
the fixed operating expenses related to keeping operations running. The variable
operating expenses are mainly related to sta cost, and severe measures were
taken to bring these costs in line with sales volumes as much as possible. This was
done by downsizing temporary sta in our warehouses, terminating fixed term
contracts and ultimately by carrying out a reorganisation in this segment.
“In 2020 we endured severe impact from the Covid-19 pandemic in some of our sub segments related to
travel. As a result we restructured our core business activities and dedicated resources to expanding our
marketing activities and developing digital solutions for our suppliers and customers to help them grow
their non-core markets.”
Maurice Riegel, Managing Director B&S Segment
42B&S Group S.A. Annual Report 2020
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Early Q2 we set up a dedicated committee within the Retail Segment for developing
and executing an action plan with primary focus on limiting the eect of Covid-19
on operating profit – which is driven by sales volumes, concession fees and sta
costs.
By scaling down temporary sta wherever possible, terminating fixed term
contracts, carrying out a reorganisation, and utilising support from government
regulations in the countries we are present, we aligned our cost base with business
volumes as much as possible.
Moreover, we kept in close contact with all airports where we operate to come
to agreements regarding the suspension or waiving of lease obligations and
concession fees. Discussions to obtain waivers and renegotiations for existing
concessions are nearing completion. In some cases, management took measures
to terminate (smaller) contracts for which no sustainable continuation could be
realised.
Retail Segment
€ million (unless stated otherwise) FY 2020
reported
FY 2019
reported
Δ (%)
reported
Turnover . . (.%)
Gross profit . . (.%)
EBITDA (.) . (.%)
EBITDA margin (.%) .%
The travel sector was severely impacted by Covid-19 related measures. The sales
of our international and regional airports retail activities came to an almost complete
standstill toward the end of March, and this situation continued throughout the
first half of 2020. Although most of our shops at airports reopened in the course
of Q3, performance was lagging in the remainder of 2020 due to the very limited
number of passengers. This resulted in a 68.1% turnover decline and gross profit
decline of 76.4%. EBITDA ended at €-12.0 million resulting a negative EBITDA
margin of 26.9%.
“The past year has been extremely challenging for our industry and has accelerated the need for digital
solutions to drive eciency and to profitably grow our business in the future. In 2020 we have invested in
further digitising our operations as part of our Digital First approach to permanently increase cost
eciency moving forward.”
Guus Jonge Poerink, Managing Director Retail Segment
43B&S Group S.A. Annual Report 2020
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Non-current assets
Non-current assets decreased to € 231.5 million at year-end 2020, compared to
€ 252.4 million at the end of 2019. The decrease is mainly the outcome of:
▪
A decrease of intangible fixed assets following the amortisation of assets
acquired as part of business combinations from previous years;
▪
Decrease in right-of-use assets as a result of regular depreciation of assets
recognised when IFRS 16 became eective in 2019.
Current assets
Current assets stood at € 576.0 million at year-end 2020, compared to € 662.1
million at year-end 2019.
This is the result of our focus on working capital reduction which was enhanced
even further during the Covid-19 pandemic. The number of inventory days
significantly improved from 80 days in 2019 to 70 days in 2020.
Trade receivables also decreased, from € 201.3 million at year-end 2019 to € 195.6
million at year-end 2020. The debtors in days remained in line with 2019 levels
and should be read as improvement compared to 2019, taking into account the
steep decrease in sales in retail which has no days of sales outstanding. Our debtors
in days in other business lines improved as a result of our ongoing communication
with business partners and maintaining our strict credit management during the
global pandemic.
Net working capital decreased to € 401.4 million at year-end 2020, compared to
€ 472.2 million at year-end 2019, as a result of the aforementioned focus on
working capital reduction. Working capital in days improved from 95 days in 2019
to 85 days in 2020.
Balance sheet
€ million (unless stated otherwise) 31.12.2020 31.12.2019 Change
Intangible fixed assets . . (.)
Tangible fixed assets . . (.)
Right-of-use assets . . (.)
Financial fixed assets . . (.)
Non-current assets . . (.)
Inventory . . (.)
Trade receivables . . (.)
Cash and cash equivalents . . (.)
Other current assets . . (.)
Current assets . . (.)
Total assets . . ()
Equity . . .
Non-current liabilities . . (.)
Current liabilities . . (.)
Total equity and liabilities . . .
44B&S Group S.A. Annual Report 2020
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Cash Flow
€ million (unless stated otherwise) 2020 2019
Net cash from operations . .
Net cash from investing activities (.) (.)
Net cash from financing activities (.) (.)
(.) .
As a result of our ongoing focus on working capital management as well as cost
control measures related to limiting the impact of Covid-19 on our results, net
cash from operations increased from € 113.4 million in 2019 to € 147.0 million in
2020.
Investing activities mainly related to investments in software and tangible fixed
assets as well as investments in small acquisitions of 100% Top Care Distribution S.L.
1
and the remaining 49% in Alcodis (STG Holding Import-Export S.L.). Overall,
investing activities decreased when compared to 2019, as last year we invested in
warehousing and the acquisition of Lagaay Medical Group within the B&S Segment.
Financing activities mainly related to changes in credit facilities, which are related
to working capital based financing.
Group equity
The Group’s equity increased to € 306.9 million at year-end 2020, compared to
€ 291.8 million at the end of 2019. During 2020, the Group did not pay divided to
owners of the company (2019: € 24.4 million) and paid € 13.3 million dividend to
non-controlling interests (2019: € 6.6 million).
Non-current liabilities
Non-current liabilities stood at € 162.1 million at the end of 2020, compared to
€ 172.6 million at year-end 2019. The non-current liabilities decreased mainly as
a result of lease payments and instalments paid with respect to borrowings from
banks.
Current liabilities
Current liabilities decreased to € 338.5 million at year-end 2020, compared to
€ 450.1 million at the end of 2019, mainly as a result of decreased liability to credit
institutions related to working capital.
Financing
B&S Group is mainly financed through short-term working capital credit facilities.
Net debt pre-IFRS 16 decreased from € 295.7 million as per year-end 2019 to
€ 185.8 million as per year-end 2020.
Including the eect of IFRS 16 net debt stood at € 252.5 million. Net debt / EBITDA
ratio on a like-for-like basis (pre-IFRS 16) stood at 2.3 (FY 2019: 2.8). Post IFRS 16,
net debt / EBITDA stood at 2.8 (FY 2019: 3.2).
1
Top Care Distribution S.L. is a perfume wholesale company established in Spain that was acquired
July 21, 2020.
45B&S Group S.A. Annual Report 2020
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H1 and especially the first quarter. Our main focus with these physical retail clients
is assortment expansion combined with geographical expansion.
Within the B&S segment the travel related sub segments (Cruise and Duty free)
are expected to remain dicult throughout 2021. At this stage, our view on
resuming Cruise business depends on the profitability or possibility thereof in the
foreseeable future. The primary business focus within this segment is currently
the development and enhancement of brand representation roles for supplier
brands in their non-core markets, marketing services for customers, digitising
existing services and further catering our assortments to global market trends and
local requirements.
Retail is expected to remain severely impacted for the coming years. Forecasts
from the airport retail markets regarding passenger numbers for 2021 currently
stand at around 40% of the 2019 volume. Although we have reached agreements
with most airports in 2020 on the contractual obligations, it will not be feasible
yet to break-even in 2021 with turnover levels of around 40% when compared to
2019 levels.
Overall, we will focus on markets where we foresee growth. This is supported by
continuing the digitisation of our services and investing in e-commerce solutions
to enable the business to leverage opportunities in online channels, both in B2B
and B2C markets across all product categories.
We will continue our cost control measures to reduce operating expenses
structurally and will further roll out our Digital First approach to enhance operational
eciency to support scalable growth. To ensure our currently healthy financial
position, we remain focused on our working capital throughout all segments and
especially on the aging thereof.
Divided proposal
At the Annual General Meeting to be held on May 18, 2021, B&S Group will propose
the payment of € 0.10 per share, in cash (subject to withholding tax if applicable).
This translates into a pay-out ratio of 40% of the annual Group results attributable
to the owners of the Company.
Outlook
The Covid-19 pandemic is still ongoing and there is still a huge amount of
uncertainty and change ahead. For 2021 we expect that all travel related markets
that B&S Group serves, will remain severely impacted - especially during H1. With
the start of world wide vaccination programs from late Q4 2020 onwards, we do
expect that current measures and lockdowns that are aecting our physical retail
markets within the Liquor and Health & Beauty segment, will be gradually lifted
during H1.
As long as European countries are in a lockdown, we expect our Liquor business
in Europe to be impacted in the same line as we have seen in Q4 2020. The liquor
Asia market started to recover at the end of 2020, both turnover and margin wise.
We expect this trend to continue throughout 2021 and our main focus for this
segment will lie on gross margin improvements driven by centralisation and
digitisation of processes that allow for stricter purchasing policies and more active
benchmarking.
We expect our Health & Beauty segment to remain our main driver for growth
throughout 2021, although we should note that when comparing year-on-year,
2020 already includes a significant growth following the impact of Covid-19 on
our numbers. In 2021 we plan to expand our online B2C proposition to more
regions outside the USA such as Australia and the Middle East. We expect that the
lockdown measures (related to closures of non-essential retail) will remain to have
their eect on the physical (value) retail clients we serve in this segment during
46B&S Group S.A. Annual Report 2020
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2020 DEVELOPMENTS
EMPOWERED PEOPLE
Employees
2,158
Male to female ratio
Nationalities
53
Average age
37. 2
Average employee
tenure in years
6.1
Certified since 2020
ISO 45001
Commitment to
UNGC
since 2010
Continents
4
<25:
9.4%
25-35:
40.9%
35-45:
23.7%
>45:
26.0%
Male: 56.4% Female: 43.6%Group: 43 HTG: 1,222
* including shop employees
B&S: 609 Retail: 284
*
47B&S Group S.A. Annual Report 2020
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People development
Related to Material topic 6
Talent attraction
Our recruitment policy is to a substantial extent focused at young professionals,
typically recruited straight from university. Maintaining close relationships with
universities and selected business schools is key in that approach. By providing
guest lectures, career days, internships and dedicated learning projects we add
value to academic programs and can simultaneously spot, attract and select talent
early on.
For senior roles, recruitment takes place on Group level and is based on relevant
work experience, qualifications and organisational fit. The same standards and
application procedures are adhered to in all our business segments in all locations.
In 2020, we continued our eorts to add value to academic programs by digitising
our oering in online guest lectures, digital student mentoring and web based
recruitment events. We initiated digital oce tours and reached out to prospects
with digital resources (email marketing, social media marketing, newly launched
recruitment site) to familiarise young professionals with our organisation and
career opportunities during Covid-19.
Talent attraction was further focused on our Business in the lead principle, where
we actively sought expansion of corporate support functions - by recruiting both
internally and externally - on Group level as well as attraction of digital expertise
for developing our e-commerce strategy and accelerating the digitisation of
operations.
Development, retention and mobility
Providing a career path to management positions for high potential employees is
one of our priorities in continuously meeting changing demands of our stakeholders
and the markets in which we operate. With clear focus on intellect and fit, we
identify the next generation of leaders.
We train and develop high potential sta for (future) leadership roles and oer
external management programs and university masters in their field of expertise.
Over the years, the Group has developed an entrepreneurial and highly motivating
management culture evidenced by a vast majority of current management that
started their careers with the Group. They set an example and act as inspiration
for new recruits, illustrating the career development and opportunities open to
them at B&S Group.
In 2020, we revised our existing talent development program to further align with
strategic objectives. It led to the development of our People & Development
program (P&D) that contains three tracks to support our sta in every stage of
their career with a tailored onboarding, advancement and professional track. The
onboarding track was launched in 2020 and tailored to remote onboarding during
the pandemic with e-learnings and online tools.
Our P&D program is complemented with attractive remuneration programs and
rotational opportunities across dierent disciplines and in all our business segments
in all locations. In 2020, the average employee retention rate was 6.1 years.
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Inspiring work environment
Employees at all levels are trained, encouraged and incentivised to identify new
markets, new products, new sources of supply and new ways to expand our
business profitably. Over the years this has resulted in a global presence, adjacent
assortment expansion and continued expansion of our role in the value chain.
We stimulate our people to work on their own initiative and we encourage them
to act as pioneers and entrepreneurs. To ensure a high-quality working environment,
we provide direct access to senior management, encourage employees to speak
their minds and inform and consult them on key developments regularly through
management updates.
In 2020 we took action in remotely maintaining an inspiring work environment
by launching a renewed intranet to keep in contact and provide useful progress
updates between colleagues from all disciplines as well as sharing personal
experiences, motivational tips and fun facts during the lockdown.
We implemented an online Learning Management System with e-learnings to
support remote onboarding for new recruits and to ensure continuance of sta
training in a remote and online setting.
Sta was kept involved and informed on key developments throughout the year
by regular companywide HR communication and quarterly business updates from
the Executive team.
Equal opportunities & inclusion
The principles of equal opportunities are well embedded in our company’s approach
and objectives in respect of our workforce. Recruitment of sta is done on the
basis of equal opportunity, irrespective of gender, marital status, sexuality, sex,
ethnic origin, religion or physical ability.
We strive to provide equality of opportunity as an employer to all sta and potential
sta in terms of remuneration, recruitment, promotion, training and access to
opportunities. All sta involved in recruitment, selection and remuneration are
made familiar with their responsibilities with regards to ensuring equality of
opportunity for both current and prospective employees.
Additionally, we strive to improve inclusion in the local societies where we have
operations. We support ‘local first’ initiatives in our local operations for example
in Mali. In our logistics operations in the Netherlands we provide guided work
placements for people with a distance to the labour market. In our food distribution
services, we work with local food banks to ensure that food items that can no
longer serve commercial purposes but are still fit for consumption are distributed
to those in need.
Employee well-being
Related to Material topic 7
The health and well-being of employees in all our international locations is central
to our operations.
In 2020, our key business priority has been to ensure a safe working environment
for all employees. We acted quickly to support and facilitate all employees in
working from home with appropriate IT equipment and digitised communication
tools.
In addition to working from home wherever possible, measures were taken at our
work locations to ensure a safe work environment for vital functions that required
on site presence. Measures included increased spacing between workstations,
adjusted routing, appropriate protective equipment, staggered shifts and breaks,
enhanced cleaning processes and contingency planning, as well as a ban on
non-essential travel and visits to our facilities.
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Sustainable employability
We aim to support the continued employability of our sta by keeping employees
healthy and motivated through to their retirement. In 2019, we drafted a long-term
plan of approach to increase employability on the back of increasing importance
of a healthy work-life balance and the increasing pensionable age in the Netherlands.
In 2020, keeping employees healthy and motivated through to their retirement
became even more relevant, however resources were to a large extent dedicated
to the immediate priority of keeping our sta healthy and motivated throughout
the pandemic. For 2021, we plan to pick up on our initial plan of approach as
initiated in 2019. This plan was reviewed end 2020 in light of the pandemic, and
for the coming year has resulted in enhanced focus on employee development,
healthy lifestyle support (work/life balance) and employee satisfaction.
Safety in the workplace
Related to Material topic 5
We are highly committed to keeping our employees safe and secure and providing
an environment that is free from discrimination, harassment and victimisation and
in which everyone is treated equally.
The safety of our employees is particularly important when it comes to working
conditions in our warehouses, in operational activities and at our operations in
higher risk areas (related to our activities in remote markets). On an ongoing basis,
we provide employees with knowledge and tools aimed at eliminating injuries and
illness at work and at home. In our warehouses this involves proactive hazard
recognition, risk assessment, and risk control to prevent accidents. Employees are
trained in equipment use to ensure both their safety as well as strict adherence
to our processes related to food safety and customs compliance. All considering
the nuances of local culture, type of products handled in the warehouse as well
as associated regulations. Employees in higher risk regions and countries are
extensively trained to perform in such environments with specialised training
courses including food safety, security, personal health and hygiene.
To continuously guarantee safety in the workplace, we have a Safety & Security
discipline in place that is committed to safety management, security management
and integrity & review.
In the first quarter of 2020, we obtained an ISO 45001 certification (Working
Conditions) to aid achievement of the intended outcomes of our Operational
Health & Safety (OH&S) performance. We sustained our continuous focus on
compliant operations to keep in tune with market standards and stakeholder
requirements.
Besides this, in 2020 substantial resources were dedicated to implementing and
constantly updating Covid-19 related health & safety measures according to
applicable rules and guidelines. We introduced a 1.5 Meter Taskforce to keep all
relevant disciplines up to speed on needed action for keeping our premises
compliant to applicable rules and implementing measures accordingly to keep
on-site sta and suppliers safe and healthy.
Business ethics
Related to Material topic 3
We earn credibility with our stakeholders by keeping our commitments, acting
with honesty and integrity and pursuing our company goals solely through ethical
and professional conduct.
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Know Your Relations (KYR)
Strict Know Your Relations (KYR) procedures are in place for the acceptance of
new customers, suppliers and other business relations. We have anti-bribery,
anti-corruption and anti-money laundring (AML) policies in place that apply to all
our sta, and we expect our suppliers, customers and business partners to adhere
to the same standards. Creditworthiness of new relations is checked upfront and
their Ultimate Beneficial Owner(s) data is checked against the OFAC and the EU
Sanctions list. Established relationships are monitored on compliance standards
by an automated check that is performed on all business relations every two weeks.
Extensive knowledge of the substance and impact of the Foreign Corrupt Practices
Act (FCPA) is embedded at every level of the Company and our anti-bribery and
anti-corruption policy is embedded in our Code of conduct.
In 2020 we initiated the digitisation of onboarding new business relations, which
is planned to be implemented in 2021.
Human rights
Respecting human rights is a core part of our daily business, as we have many
international operations and source and distribute our assortment globally. Our
human rights procedures are firmly embedded in our Code of Conduct and all
employees are expected to work in the spirit of these principles. We actively
propagate them to protect and maintain our integrity and reputation, regardless
of the location of our operations. As an example, in some of the countries where
we have operations, the human rights conditions deviate from those in Europe.
We ensure that the same principles are adhered to in these operations as to those
applicable in the Netherlands.
To highlight our commitment to the 10 universally accepted principles in the areas
of human rights, labour rights, the environment and anti-corruption, we have been
a member of the UN global compact (UNGC) since 2010. As a signatory, we submit
a communication on progress to the UNGC on an annual basis.
Whistle-blower policy
For our employees, we have a whistle-blower policy in place that oers the
possibility to report suspected misconduct within the company. The policy can
be found on our corporate website.
In 2020, no material matters were reported.
Data protection & Cyber security
Related to Material topic 4
We focus on ensuring that appropriate privacy and information security controls
are in place to safeguard critical business and personal information. We respect
personal information of our people and our customers, and take appropriate steps
to protect it from loss, misuse or alteration by technical measures like firewalls,
intrusion detection and prevention systems, and passwords and encryptions.
Organisational measures are performed and enhanced on an ongoing basis and
include training sta on cyber security, identifying data incidents and risks, and
restricting sta access to personal information.
In 2020, we took several actions to cyber security, under which penetration tests
on our network and e-commerce applications that were executed by an
independent party (‘ethical hacker’). Based on both the reported observations and
the already existing internal cyber security agenda, the physical security was further
improved by amongst others harmonization of security policies, further
segmentation of the network and tightening of the external monitoring services.
We also continued and expanded our cybersecurity awareness program amongst
employees - especially in light of the remote working environment - with dedicated
company-wide project updates and explanatory messaging. We focused on security
awareness training that increases cybersecurity knowledge, motivates sta in
reporting possible cybersecurity threats and supports behavioral change to reduce
risk.
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”When I commenced my role as CEO of B&S Group in August this year, I quickly noticed how much
sustainable practices we already have in place in our local operations, driven by local teams and
individuals. What this demonstrated to me, is that we are already serious about sustainability.
Our key challenge now is to formalise this decentralised and local approach in a Group wide strategy that
enables us to set clear goals and KPIs that support our corporate business principles, demonstrate our
commitment at Executive level and position the B&S Group brand for future generations.”
Tako de Haan, CEO
SUSTAINABLE VALUE CHAIN
ISO 22000
certified since 2012
ISO 9001
certified since 2020
ISO 14001
certified since 2020
Officially registered supplier to
UN Global
market place
USAPHC
approved
AEOS & AEOC
status since 2008
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Safety & compliance
Related to Material topic 1 and 5
Food safety
We adhere to the strictest food safety standards to ascertain the safety of the food
supply chains we are active in. We actively promote transparency of product
information and comply with the most stringent international regulations. Our
warehouses are ISO 22000 and HACCP certified, and apply a high-level processing
risk management system. These certifications allow us to demonstrate to our
stakeholders that we comply with international food safety standards.
In the Netherlands, we are subject to the supervision of the Netherlands Food and
Consumer Product Safety Authority (NVWA), which performs audits of our
compliance with the HACCP system. To comply with food safety and transparency
requirements, we monitor our compliance and safety procedures constantly,
devoting specific attention to high-risk products, such as poultry and meat. Food
products received at our warehouses are subject to comprehensive quality controls
and are stored in climate-controlled environments.
We are approved by the US Army Public Health Command (USAPHC) for our food
distribution to military operations, which enables us to supply US Army caterers.
Additionally, we are an ocially registered supplier to the United Nations Global
Marketplace (UNGM), the common procurement portal of the United Nations
system of organisations. This enables us to participate in tender processes for
United Nations contracts.
In 2020, our ISO 22000 certification was audited externally and prolonged for
three years (the maximum period). Furthermore, in our food distribution operations
we enhanced commitment towards our business priorities by obtaining additional
ISO certificates in the area of Quality controls (ISO 9001).
Storage of dangerous goods
With regards to the storage of flammable household liquids that form part our
Health & Beauty assortment, we adhere to Seveso-III. This is the directive that
applies to establishments in the European Union where dangerous substances
are used or stored in large quantities and contributes to achieving a low frequency
of major accidents. In distributing these goods, we adhere to The European
Agreement concerning the International Carriage of Dangerous Goods by Road
(ADR).
Customs compliance
As we are a vital part of the international supply chain and are involved in customs-
related operations, we adhere to a range of criteria that grants us the status of
Authorised Economic Operator. This status allows us to work in close cooperation
with customs authorities to assure the common objective of supply chain security
based on the principles of mutual transparency, correctness, fairness and
responsibility. We are subject to the Union Customs Code (UCC), the EU regulation
that provides rules and procedures for products that are brought into or are taken
out of the customs territory of the European Union.
To ensure that our operations continuously meet all criteria for both customs
simplification (AEOC) and security and safety (AEOS), our focus lies on complying
with customs legislation and taxation rules, appropriate record keeping, financial
solvency, proven practical standards of competence and appropriate security and
safety measures.
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Long-term relationships
Related to Material topic 2
Integrity and transparency are key to our business and our long-term partnerships.
These principles ensure that we promote trust and respectful relations with our
customers and suppliers, as well as with our other stakeholders, such as
shareholders, governmental and non-governmental bodies and other authorities.
We seek to maintain open and constructive dialogues with national and local
authorities, meeting relevant legislative requirements and complying with health,
safety and environmental requirements. In this respect, regular meetings are
conducted with tax authorities to discuss duties, customs, corporate income tax
and VAT. Furthermore, we maintain good relations with the Dutch customs authority
with regards to our status as an Authorised Economic Operator.
Tax strategy
We pursue a principled and transparent tax strategy that aims to support our overall
business strategy. We adhere to the principle that profits are taxable in the countries
in which its economic activities occur. This in in line with the contents of
internationally accepted Guidelines that apply in the larger countries in which the
Group operates.
In 2020, our Tax department was expanded with a Tax Director at Group level
who holds overall responsibility for the Group’s direct and indirect tax position
and for further developing frameworks for tax governance and risk management.
The addition of this function to the current teams supports the acceleration of
automation of certain workflows and compliance related processes and adds to
current expertise with regards to international tax developments in relation to
e-commerce activities (both direct and indirect taxes).
Information disclosure
To ensure that relevant information is shared with and accessible to all our
stakeholders, we provide quality information on company developments promptly,
simultaneously and fully via our corporate website and through market regulators.
Specifically, with regards to the investor community we disclose material information
in a regulated manner focused on providing them with the information they need
to assess their investment. We aim to deliver sustainable shareholder returns and
to be a solid business partner to banks and other providers of credit facilities.
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Energy use & waste management
Related to Material topic 11 and 12
We aim to reduce our CO
2
footprint through energy ecient warehouses and
oces. As an example, we use geothermal energy as a heating / cooling source
and motion detection lightning to reduce energy consumption.
In our day-to-day operations we seek to reduce waste amongst others by promoting
a paperless oce, by separating waste, by reducing, reusing and recycling packaging
material in our warehouses and by using reusable drinking cups made of FSC
cardboard. In 2019 we started the implementation of solar panels as renewable
energy source in selected warehouses in the Netherlands. Further CO
2
reduction
is achieved by improving eciency through automation and robotisation in our
warehouses.
Our approach in optimising energy use and waste management has in the past
been characterised by our decentralised operations, where initiatives to reduce
energy use, emissions and waste were initiated and executed on (sub) segment
level.
In 2020, we have taken steps towards centralising our approach by incorporating
a centralised facility function on Group level to design a Group policy with regards
to sustainable business conduct, including energy use and waste management.
Concrete steps were taken with enhanced conservation of our oces and
warehouses. In our food distribution operations we renewed our 30.000 m
2
roofing
with Derbigum N, made of recycled materials and reducing CO
2
emission. In
addition, we formalised the plan for the installation of solar panels on this roofing
and explored further locations within our operations for implementation of solar
panels in the coming years.
Innovative supply chain
Related to Material topic 8
Digital transformation was marked in 2019 as one of our key growth areas for the
coming years. One of our priorities in digital transformation is building our digital
supply chain further with continued digitisation of warehousing operations
throughout the Group.
We also prioritised making our operations future fit by upgrading buying and sales
processes at Group level that generate data driven insights between our segments
and to digitise internal processes for integrated communication with our various
stakeholders throughout the supply chain.
In 2020, we accelerated digital transformation with the introduction of our Digital
First approach, which entails an operational and a commercial focus. In our daily
operations, we have further advanced the roll out of our proprietary BiT ERP system
in sub segments within the Group. We also took steps in digitising and automating
current business models by further integrating data analytics, reporting dashboards
and business insights through Power BI and Project Portfolio Management (PPM).
Identification of commercial priorities takes place in consultation with our suppliers
and customers As a result, we are upgrading current services in our EU Liquor
distribution with further roll out and optimisation of digitised ordering via our B2B
platforms. We have also started a trial with a key selection of customers for
developing a B2B platform providing fully digital business flow in our food
distribution.
At the same time we are developing additional services with new digital business
models. As an example, as part of our supplier brand development proposition,
in 2020 we introduced the service for (selected) suppliers to develop campaigns
for tailored audiences to increase their (online) reach.
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In 2020 we continued to see
greater interest from our
business partners and
employees to further embed
sustainable practices.
To underline our commitment,
▪
We have become ISO 14001 certified
(Environmental management systems).
▪
We have revised our fleet management
and added electric models to stimulate
and facilitate employees to drive electric.
▪
We committed to further identifying
and expanding our support to the
Sustainable Development Goals as part
of our 2021 – 2023 strategy.
▪
We identified key topics for improvement
under which carbon footprint reduction
and reducing (plastic) packaging in our
operations and shipment process.
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GOVERNANCE
B&S Group is a public limited
liability company incorporated
under the laws of Grand Duchy
of Luxembourg.
It operates a two-tier board
structure, managed by an
Executive Board comprising four
members and supervised by a
Supervisory Board comprising five
members.
The Group attaches great importance
to transparency and open
communication to all its stakeholders.
Taking a responsible approach to
entrepreneurship, integrity and
reliability are intrinsically linked to our
governance structure.
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COMPOSITION OF THE EXECUTIVE BOARD
Bas Schreuders, M (1954)
Position: Member of the Executive Board since 2012
(re-appointed in 2020) and Senior Counsel. In his role as
member of the Executive Board he holds responsibility for legal
aairs.
End of current term: 2024
Nationality: Dutch
Other position: board member at Samson & Surrey Holdings
Luxembourg S.à r.l.
Previous positions held: CEO of Intertrust Group in Geneva,
Switzerland until 2010, several senior legal positions at various
banks.
Niels Groen, M (1987)
Position: Member of the Executive Board since 2017
(re-appointed in 2020) and Managing Director. In his role as
member of the Executive Board he supports the CFO in the
responsibility for finance and risk management.
End of current term: 2024
Nationality: Dutch
Previous positions held: Started at B&S Group in 2011, held
several senior finance positions before becoming Managing
Director in 2020 for one of the business segments of the Group.
Tako de Haan, M (1960)
Position: CEO and member of the Executive Board since 2020.
In his role as CEO he holds responsibility for corporate strategy,
IT, business development, marketing and human resources.
End of current term: 2024
Nationality: Dutch
Previous positions held: Over 25 years of experience in senior
operations and managerial roles (mostly in capacity of COO)
at renowned brands such as Triumph and Nike.
Peter Kruithof, M (1981)
Position: CFO and member of the Executive Board since 2020.
In his role as CFO he holds responsibility for finance, tax, internal
audit, treasury and risk management.
End of current term: 2024
Nationality: Dutch
Previous positions held: joined the B&S Group in 2008 as
finance director. In this capacity he served as member of the
Management Board before becoming the Group Corporate
Treasurer in 2016.
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Jan Arie van Barneveld, M (1950), Chairman
First Appointed: 2018, End of current term: 2022
Nationality: Dutch
Audit and Risk Committee (member), Selection, Appointment
and Remuneration Committee (member)
Last position held: CEO of Brunel International N.V. until 2017
Supervisory Board memberships and other positions: member
of the Supervisory Board of Brunel International N.V., member
of the Advisory Board of Boels Topholding B.V., member of the
Supervisory Board of NCOI.
Willem Blijdorp, M (1952), Vice-Chairman
First Appointed: 2004, End of current term: 2022
Nationality: Dutch
Selection, Appointment and Remuneration Committee (member)
Last position held: Founder of Kamstra Shipstores – which
currently forms part of the HTG segment - and CEO of B&S
Group until 2004, member of the Supervisory Board since 2004.
Other positions: chairman of the Board of Directors of Clinuvel
Pharmaceuticals.
Coert Beerman, M (1955)
First Appointed: 2018, End of current term: 2021
Nationality: Dutch
Audit and Risk Committee (chair)
Position: Member of the Board of Directors of IHC B.V.
Supervisory Board memberships and other positions: chairman
of the Supervisory Board of the Hogeschool Rotterdam, chairman
of the Supervisory Board of Zwanenberg Food Group B.V.
Rob Cornelisse, M (1958)
First Appointed: 2018, End of current term: 2022
Nationality: Dutch
Last position held: Tax partner at Loyens & Loe N.V until 2018
Other positions: Professor of Tax Law at the University of
Amsterdam and serves as of counsel at Loyens & Loe N.V.
Kitty Koelemeijer, F (1963)
First Appointed: 2018, End of current term: 2021
Nationality: Dutch
Selection, Appointment and Remuneration Committee (chair)
Position: Full Professor of Marketing & Retailing and Director
Center of the Marketing & Supply Chain Management at Nyenrode
Business University.
Supervisory Board memberships and other positions: member
of the supervisory board of Brunel International N.V., CB Logistics,
Vereniging Eigen Huis and Handicapped Sports Fund,
NLinBusiness, Board Member at VNPF, vice-chair of the
Supervisory Board and chairman of the Remuneration Committee
of Intergamma Coöp U.A.
With the exception of Mr. Willem Blijdorp who, through Sarabel Invest S.à. r.l. (‘Sarabel’),
at year-end 2020 held 68.63% of the shares in B&S Group S.A., none of the Supervisory
Board members hold any ordinary shares or rights to obtain ordinary shares.
COMPOSITION OF THE SUPERVISORY BOARD
The Group values good governance and is committed to compliance with the
principles of Supervisory Board composition as laid down in the Dutch Corpo-
rate Governance Code.
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CORPORATE GOVERNANCE
B&S Group was incorporated on December 13, 2007 as a private limited liability
company (S.à. r.l.), under the laws of the Grand Duchy of Luxembourg. In March
2018, the Company was converted into a public limited liability company (S.A.).
The Executive Board and Supervisory Board are responsible for the company’s
corporate governance structure. The corporate governance of the Group is
determined by Luxembourg Law, the Articles of Association and – as these
are underwritten by the Group - by the regulations of the Dutch Corporate
Governance Code (the ‘Code’).
Executive Board
The Executive Board is responsible for day-to-day management, strategy and
advocacy of general stakeholders’ interest. The Executive Board may perform all
acts necessary or useful for achieving the company’s corporate purposes, except
for those expressly attributed to the General Meeting or Supervisory Board under
Luxembourg legislation or the Articles of Association.
Composition, appointment and dismissal
The Articles of Association provide that the Executive Board must consist of at
least two members. In the period under review, the Executive Board consisted of
four members. The composition of the Executive Board and information about
its members is provided on page 58 of this Annual Report.
Members of the Executive Board are appointed for a maximum period of four
years and may then be reappointed for an unlimited amount of times, each time
for a maximum of four years.
A member of the Executive Board may be removed or replaced with or without
cause, at any time, by a resolution adopted by the Supervisory Board or by General
Meeting of Shareholders.
No member can simultaneously be a member of the Executive Board and of the
Supervisory Board. However, in the event of any vacancy at the Executive Board,
the Supervisory Board may appoint one of its members to act on the Executive
Board until the following General Meeting. During that period, the duties of this
person within the Supervisory Board will be suspended.
Meetings and decision-making
In the financial year under review, the Executive Board had 25 formal meetings,
most of them by teleconference. The amount of formal meetings increased
substantially after Covid-19 commenced, to discuss (possible) impact, mitigating
actions to limit this impact and implementation, progress and result of these
actions.
The functioning of and decision-making within the Executive Board are governed
by the Executive Board Rules which can be found on the corporate website.
According to the Executive Board Rules, the company has installed an IT steering
committee that assists the Executive Board in its oversight of the Group’s IT function
and prepares recommendations for the Group’s IT policy.
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Supervisory Board
The Supervisory Board is responsible for supervising and providing advice on the
policy of the Executive Board. The Supervisory Board regularly discusses the
strategy, the implementation of the strategy and the principal risks associated with
it.
The Supervisory Board includes an account of its involvement in the establishment
of the strategy, and how it monitors its implementation in its report, which can
be found under ‘Supervisory Board Report’.
Composition, appointment and dismissal
The Articles of Association provide that the Supervisory Board must consist of at
least three members. In the period under review, the Supervisory Board consisted
of five members. The composition of the Supervisory Board and information about
its members is provided on page 59 of this Annual Report.
Members of the Supervisory Board are appointed for a maximum period of four
years and may then be reappointed for a maximum period of four years. A
Supervisory Board member may then subsequently be reappointed for a period
of two years. This reappointment may be extended by a maximum of two years.
For reappointment after an eight-year period, reasons must be provided in the
report of the Supervisory Board.
A member of the Supervisory Board may be removed or replaced with or without
cause, at any time, by a resolution adopted by the General Meeting of Shareholders.
In the event of one or more vacancies in the Supervisory Board, because of death,
resignation or otherwise, the remaining members of the Supervisory Board may
appoint one or more members of the Supervisory Board, as the case may be, to
temporarily fill any such vacancy until the next General Meeting of Shareholders
where a new member of the Supervisory Board will be appointed upon proposal
by the Supervisory Board, subject to compliance with any applicable nomination
rights as set out in the Articles of Association.
Meetings and decision-making
The Supervisory Board shall meet at least 4 times a year and as often as the business
and interests of the company require. Unless the Chairman decides otherwise,
Supervisory Board meetings shall be attended by all members of the Executive
Board.
In accordance with the Articles of Association, the functioning of and decision-
making within the Supervisory Board are governed by the Supervisory Board Rules
that can be found on the corporate website.
The Supervisory Board can only validly adopt resolutions if at least two of its
members are present or represented at a meeting duly convened in accordance
with the Articles of Association and Luxembourg Law.
Resolutions of the Supervisory Board may also be adopted outside of a meeting,
provided that such resolutions are adopted in writing and signed by each member
of the Supervisory Board. Pursuant to the Articles of Association, certain specified
resolutions of the Supervisory Board require the armative vote of majority
shareholder Sarabel as long as he holds at least 30% of the ordinary shares.
Committees
The Supervisory Board has established two committees from among its members;
the Audit and Risk Committee and the Selection, Appointment and Remuneration
Committee. Their task is to assist and advice the Supervisory Board in fulfilling its
responsibilities. These committees are governed by charters that have been drawn
up in line with the Dutch Corporate Governance Code and can be found on the
corporate website. The present composition of the committees are provided in
this Annual Report under ‘Report of the Supervisory Board’.
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Remuneration
The remuneration of the Supervisory Board members is determined by the General
Meeting of Shareholders. The General Meeting may grant a fixed remuneration
to members of the Supervisory Board which is not dependent on the results of
the Company and may grant an additional fixed remuneration to the Chairman
and the vice-chairman. The remuneration of the Supervisory Board members
should reflect the time spent and the responsibilities of their role.
Diversity
In the composition of the Boards, the Group strives for sucient complementarity,
pluralism and diversity with regard to age, gender and background. The main aim
is to create a diverse mix of knowledge, skills, expertise and personal characters.
The Group views diversity as a relevant mix of required elements that evolves with
time, based on business objectives and future needs of the Group. We treat diversity
of the Boards as means for improvement and development rather than as an
objective in itself.
In the selection of both CFO (appointed May 2020) and CEO (appointed August
2020), the Supervisory Board took into account these views and focused on adding
both inside and outside experience, selecting candidates with clear and distinctive
expertise to complement each other, and adding personal characters to the Board
that balance each other.
Board conflicts of interest
Conflicts of interest should be handled in accordance with Art. 28 of the Articles
of Association. If a member of the Executive Board or the Supervisory Board has
a direct or indirect financial interest opposite to the interest of the company in
any transaction that requires approval from the Executive Board or the Supervisory
Board, he or she should inform the Boards as per Art. 28.1 of the Articles of
Association. The member may not take part in the deliberations relating to the
transaction and may not vote on transaction related resolutions. For details on
transactions, reference is made to note 31 of the financial statements in this report.
Transactions were compliant with arm’s length principles.
General Meeting of Shareholders
At least once a year, the Group convenes a shareholder meeting.
The Executive Board and Supervisory Board ensure that the General Meeting of
Shareholders is properly informed and advised. The Company has, in accordance
with best practice provision 4.2.2 of the Code, drawn up a Policy on bilateral
contacts.
Shareholders who individually or jointly hold at least 5% of the issued share capital
have the right to place items on the agenda and submit proposals for items included
in the agenda. The Company will include the item on the agenda if it receives the
substantiated proposal in writing clearly stating the item to be discussed, or a draft
resolution, in writing at least 22 days prior to the meeting date.
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The main powers of the General Meeting relate to:
▪
the composition, appointment and dismissal of members of the Executive
Board and the Supervisory Board;
▪
approval of the remuneration policy of the Executive Board and the Supervisory
Board;
▪
the adoption of the annual financial statements and declaration of dividends
on Ordinary shares;
▪
discharge from liability of the members of the Executive Board and the Super-
visory Board;
▪
any transaction or measure entailing an important change of the identity or
character of the Group;
▪
the issuance of ordinary instruments under the Ordinary Shares Authorised
Capital in the excess of 10% maximum set out in Art. 6.3(i) in the Articles of
Association;
▪
amendments to the Articles of Association in accordance with Art. 12.3 in the
Articles of Association.
For more information about the powers of the General Meeting, the Policy on
bilateral contacts as well as Articles of Association, please visit our corporate
website.
Share capital
The authorised share capital of the company consists of one single category of
shares: ordinary shares. All issued shares are fully paid up and each share confers
the right to cast a single vote in the General Meeting. At year-end 2020, the total
number of issued ordinary shares was 84,177,321.
The ordinary shares are freely transferable at the stock exchange of Euronext
Amsterdam.
Share ownership rights
There are no special control rights or restrictions on voting rights attached to the
ordinary shares. However, shareholder Sarabel invest S.à. r.l. (‘Sarabel’) has a right
to nominate candidates for appointment as members of the Supervisory Board.
Pursuant to Luxembourg law, if Sarabel, when making use of this nomination right,
includes at least two candidates for each position in the proposal for appointment
to the Supervisory Board, the General Meeting has to appoint one of the proposed
candidates.
Furthermore, the Articles of Association require the armative vote of the current
majority shareholder Sarabel in respect of reinforced approval matters of the
Supervisory Board as long as he holds at least 30% of the ordinary shares.
There are no specific powers for the Executive Board and Supervisory Board to
issue or buy back ordinary shares.
Preference shares
For a period of five years, starting March 22, 2018 the Executive Board, as per
Article 6 of the Articles of Association, is authorised to issue preference shares to
a foundation (Stichting Continuïteit B&S Group) up to a total number of voting
rights, after the issue, of 33.33%. The object of the foundation is limited to the
protection of the interests of (i) the Company, (ii) the business connected therewith
and (iii) all involved stakeholders. Contravening influence threatening the continuity,
the independence or the identity shall be averted as much as possible. The Executive
Board may only issue preference shares with the prior written consent of the
current majority shareholder Sarabel as long as he holds at least 30% of the ordinary
shares. In 2020, no preference shares were issued.
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Share transactions by management
The chart of transactions by persons discharging managerial responsibilities
(PDMR), which are members of the Executive Board and Supervisory Board of B&S
Group S.A., is available on our corporate website: www.bs-group-sa.com/
corporate-governance/share-transactions-by-management. This overview contains
any significant direct and indirect shareholdings within the meaning of the
Transparency Directive.
Major shareholdings
The Dutch Financial Supervision Act and the Luxembourg Transparency law require
investors who hold a share interest or voting interest exceeding (or falling below)
certain thresholds to (inter alia) notify their interest with the Authority for the
Financial Markets (AFM) in the Netherlands and the Commission de Surveillance
du Secteur Financier (CSSF) in Luxembourg. This information is included in this
Annual Report under the section “Share Information”.
Financial reporting and role of auditor
Annual financial statements as prepared by the Executive Board must be examined
by an external certified auditor before being presented to the General Meeting for
adoption.
The General Meeting has the authority to appoint the auditor. The Supervisory
Board nominates the auditor for (re-)appointment by the General Meeting, taking
into account the advice of the Audit and Risk Committee. The auditor’s assignment
and remuneration are resolved on by the Supervisory Board, on the recommendation
of the Audit and Risk Committee.
The external auditor attends Audit and Risk Committee meetings and meetings
of the Supervisory Board in which the annual financial statements are to be
approved and the year-end audit report of the external auditor is discussed. Half-
year results and reports are discussed with the Audit and Risk Committee in the
presence of the external auditors prior to publication.
Compliance with the Dutch Corporate Governance Code
As a public limited liability company organised under the laws of the Grand Duchy
of Luxembourg, the Group is not subject to the Code. However, we acknowledge
the importance of good governance and are committed to comply with the
principles as set out in the Code. The Executive Board and Supervisory Board
believe deviations or qualifications of some individual provisions of the Code are
justified. These deviations or qualifications are explained below.
Deviations from the Code
Independence of Supervisory Board members
Under the best practice provision 2.1.7 and 2.1.8, two out of five members of the
Supervisory Board are considered not to be independent. One member has had
an important business relationship with the company in the year prior to the
appointment and one member has a shareholding in the company of at least ten
percent. The Group deviates from this provision as it finds it necessary for its
Supervisory Board members to have a good understanding of the complex
environment in which the company operates.
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Establishment of committees
The Group reserves the right to deviate from provision 2.3.2 for practical reasons.
The regulation of committees states that if the Supervisory Board consists of more
than four members, it shall appoint an Audit committee, a Remuneration committee
and a Selection and Appointment committee. In the period under review, this
provision was deviated from as the Selection and Appointment committee and
the Remuneration committee were combined to form one committee.
Composition of committees
The Group reserves the right to deviate from provision 2.3.4 for practical reasons.
The regulation of committees states that more than half of the members of
committees should be independent within the meaning of best practice provision
2.1.8. In the period under review, this provision was deviated from as regards the
Audit and Risk Committee. One out of two members is not independent. (as
specified above under Members of the Supervisory Board).
Cancelling the binding nature of a nomination or dismissal
Pursuant to the Articles of Association, shareholder Sarabel has a right to nominate
candidates for appointment as members of the Supervisory Board. Pursuant to
Luxembourg law, if Sarabel, when making use of this nomination right, includes
at least two candidates for each position in the proposal for appointment to the
Supervisory Board, the General Meeting has to appoint one of the proposed
candidates. In that case, it is not possible under Luxembourg law to set aside the
binding nature of the nomination right, which would result in a deviation from
best practice provision 4.3.3.
Relevant documents on corporate website
▪
Articles of Association
▪
Executive Board Rules
▪
Supervisory Board Rules
▪
Charters of Committees
▪
Profile Supervisory Board
▪
Bilateral contacts policy
▪
Code of Conduct
▪
Whistleblower Policy
www.bs-group-sa.com/governance
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RISK MANAGEMENT
B&S Group is a globally operating listed company with a focus on long term
value creation. Being active in many dierent markets worldwide inherently
entails risks, not only in the specific markets we are active in but also with regards
to business strategy.
Group wide strategic objectives are defined by the Executive Board and include
the encouragement of entrepreneurship and accountability on segmental level.
The Executive Board, supported by senior management, has in place a well-
embedded risk management and internal control system to continuously evaluate
the degree to which the Group is in control. This helps to identify and mitigate
potential risks and to balance risk and reward in line with the Group’s risk appetite.
With the Covid-19 outbreak becoming a global pandemic, it moved from an
emerging risk for the business to a main risk, and has become an integral part of
our principal risks:
▪
Managing growth
▪
Inventory
▪
Liquidity and working capital management
▪
Credit
▪
IT & cybersecurity
Risks related to climate change and sustainability are an integral part of a number
of our main risks:
▪
Reputation
▪
Managing growth
▪
Non-compliance with laws and regulations
We have reviewed our risk descriptions for these principal risks over the year and
enhanced description where relevant to further reflect these developments. Other
principal risks remain largely unchanged from last year.
Risk appetite
In general, B&S Group adapts a conservative approach to risk-taking within an
entrepreneurial setting. The risk appetite diers per risk category and is defined
as follows:
▪
To achieve strategic objectives, the Group accepts associated risks up to a
moderate level
▪
The Group seeks to minimise the risks of operational failures within its business
processes
▪
With respect to compliance risks, the Group takes a risk averse stance
▪
Financial risks are mitigated through a cautious financing structure and strin-
gent cash management policy
Risk appetite
Averse Low Moderate High
Strategic
Operational
Compliance
Financial
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There may be risks or risk categories that are currently identified as not having a
significant impact on the business but that could develop into main risks in the
future. The objective of the Group’s Enterprise Risk Management model (‘ERM
model’) is to timely identify changes in risk profiles so that appropriate measures
can be taken. The main risks per category are described below.
Strategic
Risk Description Risk appetite
International nature The risk that trade protection measures, changes in taxation policies or
regulations will negatively impact revenues
Managing growth The risk that the Group is unable to manage sustainable organic and acquisitive
growth
Reputation The risk of an incident occurring that will harm the B&S Group brand
Operational
Risk Description Risk appetite
IT & Cybersecurity The risk of critical IT systems being unavailable or not well maintained and of the
Group being exposed to cyber crime
Sta The risk of not finding qualified people to support our strategy and the business
not achieving its full potential
Inventory The risk of being unable to manage inventory successfully, leading to tied up
capital and eroding margins
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Compliance
Risk Description Risk appetite
Compliance standards The risk of non-compliance with statutory laws and regulations in applicable
jurisdictions or with internal policies and procedures
Customs & Certifications The risk of losing any of or authorisations or certifications for our bonded
warehouses could have negative impact on revenues
Financial
Risk Description Risk appetite
Currency The risk of inadequately monitoring exchange rate risk that leads to exchange rate
losses
Credit The risk of delayed or failed payment by customers
Liquidity & Working Capital
Management
The risk that the business has insucient free cash flow to fund its operations and
stay within acceptable debt ratios
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Enterprise Risk Management
model
The Executive Board is responsible for
establishing and maintaining adequate
internal risk management and control
systems. Risk identification is
performed both top-down and bottom
up, based on the Group’s strategy and
the environment in which we operate.
The Group has developed an ERM
model which is continuously monitored
by the Supervisory Board, Executive
Board, Group Finance & Reporting,
Internal Audit and segmental
management. We involve various
internal and external stakeholders in
the identification, assessment and
monitoring of risks, which fits the
Group’s entrepreneurial and hands-on
mentality. The risk management model
is updated when required in order to
reflect changes in either internal or
external conditions.
ERM model
Peer
group-
learning/
Benchmarking
External
audit
External
advisors
Learning and
development
Internal
audit
TAX Legal
department
Finance &
control
Treasury Purchasing
Warehouse ICT Customs Sales HRM
Concern
controling
Supervisory board /
Executive board
Enterprise risk
management
model
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Main risks and control measures
The main risks and control measures are presented below.
Strategic
Risk type Description Mitigation by
International nature of our business The international scope of our operations, particularly in
certain developing countries and emerging markets, exposes
the Group to risks related to trade protection measures,
closure of borders and restriction of travel in case of a global
pandemic, changes to taxation policies, changes in regulation,
import/export licencing requirements, quotas or wage and
price controls.
These risks are mitigated by diversification in markets, product
groups, regions and client portfolio.
The Group has spread its risk over various niche markets all over
the world, making it less vulnerable to decline in specific market
segments and / or to geographical risks. Although geographical
economic recessions can have some eect, the risk of a
disproportionally adverse impact will be limited because of the
indicated market diversification and regional spread.
Managing growth Quality of the Group’s growth should always remain
sustainable, manageable and well under control. The Group
may fail to meet these standards by inecient organisational
aspects, challenging economic market conditions or adverse
global events, i.e. pandemics.
The Group may fail to acquire other businesses as
contemplated by the growth strategy or may fail realise the
expected benefits from such acquisitions.
The Group invests substantially in optimisation and digitisation
of business processes and compliance procedures, and in
expansion of warehousing and storage facilities. The
diversification in markets, product groups, regions and client
portfolio, makes the business less cyclical and less vulnerable to
changing market conditions. Furthermore, the Group is
continuously improving and digitising its processes in order to
be able to adapt quickly to changing circumstances.
Acquisitions are preceded by careful due diligence processes
carried out by both internal and external experts to ascertain
that an acquisition will provide adequate financial returns and
will contribute towards the Group’s synergy and integration
demands.
The added-value and cash flow contributions of intangible
assets is tested regularly.
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Strategic (continued)
Risk type Description Mitigation by
Reputation The Group’s reputation and relationship with suppliers and
customers could be harmed by performance failures by
internal or external parties in the supply chain, resulting in a
loss of sales.
The focus on maintaining long term partnerships with
customers and suppliers makes the Group less vulnerable to
reputational damage. The Group is focused on adding value to
its partners’ businesses by providing service and flexibility,
which results in trustworthy relationships.
Operational
Risk type Description Mitigation by
IT and cybersecurity The Group relies significantly on the integrity, reliability and
eciency of IT systems and on the services of its third-party
IT service providers. Inability to find qualified service providers
or the failure of service providers to perform their obligations
could have a material adverse eect on the business, financial
condition and results of operations.
With increased digitisation of company processes and cyber
criminals becoming increasingly active and sophisticated,
the Group considers cybercrime to be a significant IT threat.
During 2020 this risk became even more urgent as the
majority of the workforce had to work from home locations.
The Group has established partnerships with carefully selected
IT providers that are acquainted with our business activities and
associated needs, and pro-actively implement and continuously
optimise the IT systems. The Group maintains a wide range of
security measures including access and authorisation controls
and back-up and recovery procedures.
Additionally, the IT systems and procedures are checked
regularly by external experts while potential cyber-attacks on
the Group’s systems are externally monitored and internally
mitigated by various protective measures.
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Operational (continued)
Risk type Description Mitigation by
Dependency on key sta The Group relies significantly on the skills and experience of
the managerial sta as well as technical, sourcing and sales
personnel. A loss of any key individuals or the failure to recruit
suitable managers and other key sta, both for expanding
operations and for replacing people who leave the company,
could result in an inability to meet customer demand resulting
in a loss of customers.
This risk is mitigated by recruiting employees to cover both
business growth and fluctuations in employee composition. In
order to attract and retain sta, the Group oers a balanced
remuneration package, development programs and a
stimulating workplace oering attractive career opportunities.
Inventory risk The Group holds sizeable inventory levels with a certain
volatility throughout the year. The Group may be unable to
manage its inventory successfully resulting in additional tied
up capital and eroding margins.
The Group closely monitors inventory through dedicated
inventory management departments which are divided into
product categories.
Critical stress tests are regularly carried out on the theoretical
financial boundaries of inventory positions versus equity,
covenants and working capital financing. The financial
boundaries itself are continuously assessed to safeguard the
Group’s ability to quickly respond to changing market
circumstances, like for instance Covid-19.
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Compliance
Risk type Description Mitigation by
Non-compliance with
laws and regulations
The Group is subject to various laws and regulations in the
jurisdictions in which it operates. Changing laws might
interfere with the Group’s competitive advantage resulting in a
loss of business.
Litigation or investigations involving the Group, including
those related to the infringement of intellectual property rights
of third parties, could result in material settlements, fines or
penalties.
The business is subject to anti-money laundering, sanctions
and anti-bribery laws and regulation and related compliance
costs and third-party risks. Breaching these laws and
regulations might result in the loss of contracts in our
government and defence distribution operations.
Business partners are selected carefully and are only accepted
after extensive screening that ensures that the Group’s supply
chain is transparent, not in breach with any regulations and that
the Group is not infringing any intellectual property or
trademarks. If deemed necessary, the Group relies on the
services of local professional experts for designated compliance
areas.
Strict internal policies and guidelines regarding business
agreements with new suppliers and customers are applied
through an extensive Know Your Relation (KYR) procedure. In
order to avoid corruption, bribery, fraud and other unethical
behaviour, the new relations and their Ultimate Beneficiary
Owner(s) are checked with the OFAC and the EU Sanctions list.
Throughout the Company there is extensive knowledge of the
content and impact of the Foreign Corrupt Practices Act (FCPA)
and the UK Bribery Act.
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Compliance (continued)
Risk type Description Mitigation by
Customs and certifications The Group has its own warehouses for storing both bonded
and duty exempt goods, which requires extensive licensing
and certification as an Authorised Economic Operator (AEO)
by the customs authorities. Loss of any of the authorisations
or certifications could impact the Group’s ability to operate
its business, fulfil our obligations towards customers or attract
new customers. This may result in a loss of turnover or not
realising the growth ambition.
In order to mitigate the risks from customs activities, the Group
has its own expanding customs departments staed by well-
trained experts who are in close contact with customs
authorities. Sta follows on-going training courses to keep up
to date with customs legislation and related developments.
The Group is insured against the risks related to its customs
activities and adequate customs guarantees have been issued
for its activities. The financial consequences of customs related
calamities are, therefore, covered as far as possible.
Each year, the processes related to our AEO status are audited
internally and periodically audited externally. The Group follows
strict policies and performs crosschecks on compliance.
Financial
Risk type Description Mitigation by
Currency risks The Group is exposed to currency exchange rate risk in the
conduct of our business. Inadequate monitoring of our
positions might lead to exchange rate losses.
The Group deals with risks from transactions in non-Euro
currencies by matching incoming and outgoing cash flows as
closely as possible in the same currency.
Extraordinary currency positions and risks are dealt with at
Group level by a dedicated treasury department, which uses
hedging instruments when appropriate and on a case-by-case
basis to mitigate currency transaction risks.
Derivative transactions are subject to continuous risk
management procedures. Derivative financial contracts are only
entered into with banks that have a good credit rating.
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Financial (continued)
Risk type Description Mitigation by
Credit risks Delayed payment or failure to pay by our customers could
have an adverse eect on our business resulting in the
company not being able to grow at the desired rate.
The group applies strict internal policies and guidelines
regarding credit risk management. All transactions must be
secured, either by credit insurance, payment up front or by a
secured payment instrument (guarantee or letter of credit). A
centralised credit control department is in place to mitigate
credit risks.
Liquidity & Working Capital Any inability to raise capital or to continue the existing finance
arrangements could have a material adverse eect on the
business, financial condition and results of operations.
The Group’s activities are mainly financed on the basis of
medium and short-term credit facilities.
The sub segments within the business segments have been
assigned own working capital financing, which trigger segment
management to maintain control over inventory and debtor
positions, which helps towards reducing interest charges.
Both short and long-term financing arrangements are discussed
and negotiated exclusively at Group level by the Executive
Board.
The internal reporting allows for closely monitoring of the
operating segments on profitability and compliance with the
credit agreements. This also ensures that the companies within
the Group are in a position to generate sucient cash flows for
upward dividend streams.
For more details about financial risk management see note 30 in the consolidated
financial statements. These notes are considered to be part of this report.
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Internal Audit
Throughout the year, certain selected aspects of the execution, follow up and
quality of the design and eectiveness of controls are reviewed by the Group’s
internal audit function. Priorities for internal audit are defined in dialogue with
both the Executive Board and the Audit and Risk Committee of the Supervisory
Board. The internal audit function has direct access to both the Executive Board
and the Audit and Risk Committee and presents the results of the internal audit
activities during the quarterly meetings of the Audit and Risk Committee.
In addition to these reviews, sensitivity analyses are conducted on various scenarios
to identify focus areas for uncertainty reduction. These scenarios include the eect
of rapid changes in market conditions, changes in gross margin, increases of
interest rate and currency fluctuations.
Additionally, benchmark assignments are performed to compare various metrics
to peer averages and to identify best practices for individual business segments
within the Group.
Specific Risk-mitigating actions in 2020
In the period under review specific control measures were taken on the following
aspects:
IT & Cyber security
We have executed several actions during 2020 in order to mitigate risks related to
cyber security. An independent party (‘ethical hacker’) executed penetration tests
on our network and e-commerce applications. Based on both the reported
observations and the already existing internal agenda, the physical security has
been improved by amongst others harmonisation of security policies, further
segmentation of the network and tightening of the external monitoring services.
Next to that, the Group continued its cybersecurity awareness program amongst
employees in order to ensure that everyone remains alert on possible threats.
Internal audit function
In 2020, the internal audit function has been further established and professionalised.
In cooperation with the Audit and Risk Committee and the Executive Board, an
Internal Audit Charter defining the role, independence, authority and scope of the
internal audit function was issued.
Following the outbreak of Covid-19 and related impact on risk assessments and
business processes, the internal audit calendar that had been agreed with the
Audit and Risk Committee was adjusted in order to ensure that critical processes
were reviewed and reported upon.
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Liquidity & Working capital
An enhanced working capital program was launched early 2020 and further
boosted over the course of 2020 in order to quickly respond to fast changing
circumstances due to the outbreak of Covid-19. Inventory management and
purchase controls were tightened, as well as credit management and customer
payment terms. This enabled the Group to align working capital levels with turnover
levels as much as possible. Furthermore, in order to create headroom for when
sales volumes pick up again and sourcing opportunities arise, the Group has agreed
on a covenant holiday for three test periods (HY 2020, FY 2020 and HY 2021) with
all its relationship banks.
ERP migrations
Throughout 2020, a significant number of the remaining entities that used to work
with legacy systems were migrated to the Group’s inhouse developed and
maintained ERP system BiT. Amongst others all Retail entities have been migrated
to the tailor made Retail module of BiT. Internal Audit reviewed all migrations to
ensure accurate and complete conversion of critical data as well as proper
segregation of duties within the new BiT environment.
Specific internal control activities planned for 2021
In 2021, the Group plans to enhance streamlining of the finance discipline across
the Group by further harmonising accounting, period-closing and controlling
processes.
Furthermore, the internal control framework will be further developed by creating
a platform for risk & control (self) assessments, which will increase the eciency
and eectivity of review activities performed by both management and the internal
audit department.
In Q1 2021, the Group will enhance and formalise its procedures and controls on
related party transactions.
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SHARE INFORMATION
B&S Group SA shares have been listed on Euronext Amsterdam since March 23,
2018 and have been included in the Smallcap Index (AScX) since June 19, 2018.
The issued share capital as at December 31, 2020 amounts to € 5,050,639.26.
This is divided into 84,177,321 issued Ordinary Shares each with a nominal value
of € 0.06.
Key share information
ISIN LU1789205884
Euronext ticker BSGR
Number of shares outstanding 84,177,321
Free float 31.0%
Key figures per share
EPS € 0.26
Dividend yield
1
1.4%
Highest price € 10.18
Lowest price € 3.90
Year-end share price € 7.38
Dividend policy
Barring unexceptional circumstances, B&S Group aims to distribute a dividend of
between 40-60% of annual Group results attributable to the owners of the
Company, starting at the lower end of the target range. We envisage increasing
dividends per share over time within the set target range.
The Group proposed to the shareholders in the May 19, 2020 Annual Meeting to
shift from semi-annual payment of dividend to an annual payment, which was
approved by the meeting. The current dividend policy is to pay out annually, in
the second quarter of the following year, following shareholder approval of the
full-year financial statement.
Dividend proposal 2020
At the Annual General Meeting to be held on May 18, 2021, B&S Group will propose
the payment of € 0.10 per share, in cash (subject to withholding tax if applicable).
This translates into a pay-out ratio of 40% of the annual Group results attributable
to the owners of the Company.
Notification of capital interests
On December 31, 2020 the following shareholders with a substantial participating
interest (>3%) notified B&S Group about their major shareholding in accordance
with the Transparency Law
2
.
Sarabel Invest S.à r.l 68.83%
Mondrian Investment Partners Ltd 5.18%
JNE Partners LLP 5.17%
1
The proposal to distribute divided payment over 2020 shall be submitted to the General Meeting of
Shareholders on May 18, 2021.
2
Law of 11 January 2008 on transparency requirements in relation to information about issuers whose
securities are admitted to trading on a regulated market.
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Financial Calendar
Capital Markets Day April 15, 2021
Q1 2021 trading update May 17, 2021
Annual General Meeting May 18, 2021
HY 2021 results August 23, 2021
Q3 2021 trading update November 8, 2021
Investor relations policy
B&S Group provides shareholders and other parties in the financial markets with
information on matters that may influence the Company’s share price via an annual
report and an interim report, Q1 and Q3 trading updates and press releases. These
documents are published on the B&S corporate website and submitted to the AFM
(the Netherlands) and CSSF (Luxembourg).
B&S Group has a compliance ocer who monitors and enforces strict compliance
with any and all relevant laws and regulations. Together with the Executive Board
and the Disclosure Committee, the compliance ocer assesses whether and when
information is price-sensitive and whether a disclosure obligation applies to said
information. These regulations apply to both the Supervisory Board and the
Executive Board, but also to the management layer below the Executive Board
and all head oce sta who come into contact with price-sensitive information.
Investor contact
B&S Group communicates with its investors and analysts throughout the year via
meetings such as AGMs, roadshows, organised site visits and broker conferences.
The company holds regular investor calls and meetings to provide the investment
community with a well-balanced and complete picture of the performance,
opportunities and challenges the company faces, while taking into account insider
trading and the equal treatment of shareholders.
General meeting
General Meetings of Shareholders are convened in accordance with the provisions
of the Luxembourg law of May 24, 2011 on the exercise of certain rights of
shareholders in general meetings of listed companies and the Articles of Association.
The General Meeting of Shareholders will be held on May 18, 2021 in Luxembourg
(provided the absence of travel restrictions due to Covid-19).
Contacts with the capital markets are dealt with by the members of the Executive
Board and the Investor Relations Manager.
Independent analyst reports
The following analysts covered B&S Group in the course of 2020:
ABN AMRO Robert Jan Vos
Deutsche Bank Lucas Ferhani / Steven Goulden
ING Tijs Hollestelle
Kepler Cheuvreux Patrick Roquas
Morgan Stanley Annelies Vermeulen
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Statement of the Executive Board
The Executive Board has made a systematic assessment of the eectiveness of
the design and operation of the internal control and risk management systems.
On the basis of this assessment and in accordance with best practice 1.4.3 of the
Dutch Corporate Governance Code of December 2016, article 68ter of the
Luxembourg RCS Law
1
and article 3 of the Luxembourg Transparency Law
2
, the
aforementioned assessment and the current state of aairs, to the best of its
knowledge and belief, the Executive Board confirms that:
▪
the internal risk management and control systems of the Company provide
reasonable assurance that financial reporting does not contain any material
inaccuracies;
▪
there have been no material failings in the eectiveness of the internal risk
management and control systems of the Company;
▪
there are no material risks or uncertainties that could reasonably be expected
to have a material adverse eect on the continuity of the Groups’ operations
in the coming twelve months after drawing up the report, and;
▪
drawing up the financial reporting on a going concern basis is justified based
on the current state of aairs.
It should be noted that the above does not imply that these systems and procedures
provide absolute assurance as to the realisation of operational and strategic business
objectives, or that they can prevent all misstatements, inaccuracies, errors, fraud
and non-compliances with legislation, rules and regulations. Nor can they provide
certainty that we will achieve our objectives.
In view of all of the above, the Executive Board declares that, to the best of its
knowledge and belief, the financial statements presented in this annual report and
prepared in accordance with IFRS standards as adopted by the European Union,
give a true and fair view of the assets, liabilities, financial position and profit or loss
of the company and of the undertakings audited in the consolidation taken as a
whole; and that the management report includes a fair review of the position at
the balance sheet date and the development and performance of the business
during the financial year and of the undertakings audited in the consolidation
taken as a whole, together with a description of the principal risks and uncertainties
that the company faces.
Mensdorf, G.D. Luxembourg, February 22, 2021
Executive Board
Tako de Haan, CEO
Peter Kruithof, CFO
Bas Schreuders, Senior Counsel
Niels Groen, Managing Director
1
Law of 19 December 2002 on the register of commerce and companies and the accounting and annual
accounts of undertakings, as amended.
2
Law of 11 January 2008 on transparency requirements in relation to information about issuers whose
securities are admitted to trading on a regulated market, as amended.
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Jan Arie van Barneveld, Chairman of the Supervisory Board
This report of the Supervisory Board
sets out how the Supervisory Board
fulfilled its duties and responsibilities
during 2020.
Details on the organisational structure
can be found in the Governance
section of this Annual Report.
The activities of the Executive Board
are described in the Report of the
Executive Board, the letter of the CEO
and Value Creation chapters in this
Annual Report.
A TRANSFORMATIONAL YEAR
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Main topics in 2020
In exercising its tasks in 2020, the Supervisory Board (SB), after consultation with
the Executive Board (EB) and selected members of senior management, focused
on Covid-19 developments and their impact, the development and implementation
of strategic initiatives and management succession.
In March 2020, the first of additional meetings took place to discuss the impact
of Covid-19 on every business within the Group as well as on the Company and
its employees. The Executive Board discussed with the Supervisory Board the
measures already taken and planned in order to limit the impact of Covid-19
wherever possible. The EB continued to provide regular updates to the SB in the
period thereafter on market developments, financial position, progress on
implemented measures and possible additional measures, as well as an in-depth
scenario analysis on Covid-19 impact.
Frequent attention was paid to the progress of strategy implementation and further
development of the strategic objectives – which were under review by the Executive
Board in light of Covid-19 developments. In the August meeting the Executive
Board also addressed the strategy of making the organisational structure more
lean to enable the business to anticipate opportunities in its key growth markets
even faster and more eectively. The Supervisory Board approved of the proposed
approach and was continuously updated on progress. Next to these updates, the
Supervisory Board pro-actively enquired about the progress on the strategic
objectives in one-on-one meetings with Executive Board members as well as
during scheduled Supervisory Board and Committee meetings. Also, the individual
members of the Supervisory Board contributed with advice in their field of expertise
such as marketing, finance and e-commerce.
A major task in 2020 was management succession. Early 2020, Gert van Laar
retired as CFO and Peter Kruithof was appointed CFO on May 18, 2020. In Q2, the
search for a new CEO became one of the Supervisory Board’s priorities following
the decision of Bert Meulman to step down as CEO due to private circumstances
and the tech-oriented strategic direction the Group entered. The Supervisory
Board extensively discussed and considered candidates, taking the principles for
the composition of the Executive Board into account to create a diverse mix of
knowledge, skills, expertise and personal characters in the Executive Board.
In July 2020, Tako de Haan was nominated as member of the Executive Board
and CEO for a period of four years, and his nomination was approved in the EGM
of August 11, 2020. On January 15, 2021, the company announced an extension
of the Executive Team and Ken Lageveen commenced in the role of COO eective
immediately.
Meetings
In 2020 the majority of our meetings were held via videoconference, as permitted
by the Grand-Ducal regulation and subsequent laws due to Covid-19. In our
scheduled meetings in 2020 we addressed the topics as described earlier in this
report, as well as further development of the Group’s financial position, capital
allocation, and governance related topics such as risk management and
remuneration of the Boards.
In 2020, the Chairman met (digitally) with the Executive Board on multiple occasions,
both pre-scheduled in preparation for meetings between the Supervisory Board
and the Executive Board, as well as in impromptu meetings / conference calls.
The full Supervisory Board in its current form met six times in the presence of the
Executive Board.
Functioning of the Supervisory Board and Executive Board
In December 2020 we performed an annual assessment of the performance of
the Supervisory Board and Executive Board that addressed various aspects of the
performance of itself, the committees and individual members. The overall
conclusion is that both Boards individually work well, with mutual respect and
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transparency. Also, the relationship between the Supervisory Board and the
Executive Board and senior management is very open and the level of information
sharing is good. The committees operate as required, and the members in these
committees complement each other in the areas of knowledge, experience and
personalities.
Some points of attention were formulated under which providing support to the
CEO considering the complexity of this role in this transformational phase of the
company, retaining regular conversations with the Works Councils and with the
management layer under the Executive Board.
Composition of the Boards
In the composition of the Boards, the Group strives for sucient complementarity,
pluralism and diversity with regard to age, gender and background. The main aim
is to create a diverse mix of knowledge, skills, expertise and personal characters.
At the same time, the knowledge the Group requires in its key markets is still a key
appointment criterium.
The composition of the Supervisory Board is such that its members are able to
act independently of one another and provide the Executive Board with optimum
support in any particular field of interest. Each member of the Supervisory Board
has his or her own field of expertise, including expertise in retail markets,
international trade, IT and online consumer behaviour, general management,
finance and law.
For the current composition of the Executive Board and the Supervisory Board
and its committees, please refer to the Governance report.
Committees
The Supervisory Board has installed two committees, an Audit and Risk Committee
and a Selection, Appointment and Remuneration Committee. These committees
are also subject to the regulations that are available on the corporate website. The
task of these committees is to support and assist the Supervisory Board in the
performance of its designated tasks and to prepare the ground for the Supervisory
Board’s supervision of the Executive Board. The Supervisory Board as a whole
remains responsible for how it exercises its tasks, including the preparatory activities
carried out by the Audit and Risk Committee (ARC) and the Selection, Appointment
and Remuneration Committee (SARCO).
Independence of the Supervisory Board members /
Corporate governance
The Supervisory Board meets the requirements of the Dutch Corporate Governance
Code with regards to independence of the Chairman. Two out of five members
of the Supervisory Board do not qualify as independent members of the Supervisory
Board within the meaning of the Code, it concerns Mr Beerman and Mr Blijdorp.
Following the re-appointment of Mr. Cornelisse in the AGM of 2020, he qualifies
as an independent member as he no longer had an important business relationship
with the company or a company associated with it in the year prior to his
re-appointment. Under the chapter Governance in this report, the governance
structure of the Company as well as the deviations from the Dutch Corporate
Governance Code – as these are underwritten by the Group - are described in
more detail.
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The objective of the
Audit and Risk Committee
(ARC) is to support the
Supervisory Board in
monitoring the systems
of internal control, the
quality and integrity of
financial reporting and the
content of the financial
statements and reports.
The ARC is responsible for interactions and meetings with the external auditor as
well as establishing the procedure for the selection of the external auditor. It holds
responsibility for recommendations to the Supervisory Board of an external auditor
for nomination for appointment and its compensation, or dismissal by the General
Meeting. In addition, the ARC assists the Supervisory Board in making
recommendations to the General Meeting for the retention, oversight and
termination of the external auditor. It also interacts with several financial and
internal audit executives and assists in assessing and mitigating the business and
financial risks of the Group. The members of the ARC are Mr Beerman (chairman)
and Mr Van Barneveld.
Meetings
In 2020, the ARC had four regular scheduled meetings. All regular scheduled
meetings were attended by the Group CFO, the Finance Director and the Director
Internal Audit.
The ARC convened several additional meetings with the Executive Board and/or
support teams, and with the CFO individually to address specific risk developments
related to Covid-19 and actions taken to mitigate these. The Chairman of the
Committee also had regular contact with the external auditor and the Director
Internal Audit, to provide additional opportunity for open dialogue and feedback.
It is customary that the ARC shares its main discussions and findings and the
minutes of these meetings in the Supervisory Board meeting following the ARC
meeting.
During the meetings, the Company’s results as well as the annual and semi-annual
reports were discussed. The Audit Committee in particular paid attention to the
more technical reporting aspects, and the reporting on Covid-19 developments.
Coert Beerman,
Chair of the Audit and Risk Committee
AUDIT AND RISK COMMITTEE REPORT
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Financial statements
The FY2020 financial statements were prepared by the Executive Board, and the
external auditor subsequently issued an auditor’s report on said financial statements.
This report is included in the independent auditor’s report. In its February 2021
meeting, the ARC discussed the financial statements in detail with the Executive
Board and the Supervisory Board and discussed the audit of the financial statements
with the external auditor.
Risk management and control framework
In each scheduled meeting, the Director Internal Audit presented main internal
audit findings and progress made with regard to the annual internal audit plan was
discussed. The reduction of working capital as well as cost control and cash
management were recurring agenda items, and in light of the Covid-19
developments became prioritised topics on the agenda from Q2 onwards.
During the ARC meeting in February 2020, the scope and eectiveness of the
Group’s risk management and control systems were discussed with the Executive
Board and the support team involved in risk management and internal audit.
In the May meeting, the Director Internal Audit presented the internal audit plan
and agenda for 2020, which was primarily focused on further raising the quality
standard that was initiated with the introduction of this function in October 2019.
The ARC concluded that the agenda, program and tasks of the internal audit
function assumed all required internal control elements and therewith agreed on
the 2020 audit process.
The main points of discussion throughout the year were the internal control
framework and the execution of the 2020 internal audit calendar, with special
attention to the harmonisation of month-end closing procedures, migration of
BiT systems, key control self-assessments, and the Internal Audit Charter, which
was approved by the ARC in the August meeting.
External auditor
Throughout the year ARC discussed and assessed progress with external auditor
Deloitte on their key audit findings. As is customary, during the May meeting the
ARC evaluated the performance of the external Auditor Deloitte. During the August
meeting, the half year report was discussed as well as the external audit plan for
2020, which was approved.
Financing
Throughout the year, substantial attention was devoted to the financing of the
Company and mitigating the risk of possible covenant breaches due to Covid-19.
The Executive Board kept in close contact with all its relationship banks and shared
all relevant updates with the ARC accordingly. In the May meeting, the Executive
Board discussed its plan to pro-actively engage with all its relationship banks to
request a covenant holiday for three test periods, in order to avoid becoming
limited by its balance sheet when markets would pick up again. The ARC supported
this approach. The covenant holiday was granted by all banks for HY 2020, FY
2020 and HY 2021.
Alongside the activities described above, the ARC also discussed assumptions
used for impairment testing, the post-acquisition review of Lagaay Medical Group
(acquired July 2019) and the capital allocation policy.
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FY2020 financial statements and dividend
The Supervisory Board has approved the FY2020 financial statements and
recommends that the Annual General Meeting to be held on May 18, 2021 adopt
these financial statements. The Supervisory Board also recommends that the
Annual General Meeting discharge the members of the Executive Board for their
management of the Company and the members of the Supervisory Board for
their supervision of said management for the financial year 2020.
For practical reasons, the Group proposed to the shareholders in the May 2020
Annual General Meeting to shift from semi-annual payment of dividend to an
annual payment, which resulted in annual dividend payment as from 2021 onwards.
To ensure resilience during the uncertain market circumstances following the
Covid-19 outbreak and to further enhance its financial position, B&S Group
communicated in April 2020 that its proposal for final dividend payment in 2019
was withdrawn.
The distribution of dividend over 2020 was topic of discussion in the Supervisory
Board meeting of February 19, 2021. At the Annual General Meeting to be held
on May 18, 2021, B&S Group will propose the payment of € 0.10 per share, in cash
(subject to withholding tax if applicable). This translates into a pay-out ratio of 40%
of the annual Group results attributable to the owners of the Company.
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REMUNERATION REPORT
The remuneration of the members of the Executive Board is determined by the
Supervisory Board in accordance with the remuneration policy, as approved by
the General Meeting of Shareholders. The General Meeting of Shareholders also
approves the remuneration of the members of the Supervisory Board. This report
outlines the remuneration policy for the Executive Board and the Supervisory
Board as applied in 2020.
Executive Board remuneration policy
The remuneration of the members of the Executive Board is the responsibility of
the Supervisory Board. The objective of the remuneration policy for members of
the Executive Board is to provide a remuneration structure that will allow the
company to attract, motivate and retain highly qualified members of the Executive
Board by oering them a balanced and competitive remuneration that is focused
on sustainable results aligned with the long-term strategy of the company.
The remuneration policy follows best practice provision 3.1.2 of the Dutch
Corporate Governance Code. The pay ratios within the Group are taken into
consideration. The Supervisory Board believes that the remuneration policy
expedites the short-term operational performance and the objectives for the
strategy for long-term value creation within the meaning of best practice provision
1.1.1 of the Dutch Corporate Governance Code. Furthermore, the Supervisory
Board believes that the value of the remuneration for the members of the Executive
Board for 2020 also contributes to the aforementioned objectives and meets the
remuneration policy. All substantial future changes to the remuneration policy
will be submitted to the General Meeting of Shareholders for approval.
Kitty Koelemeijer,
Chair of the Selection, Appointment and
Remuneration Committee
“ In 2020, changes were made in the
composition of the Executive Board
with the appointment of a new CFO
and CEO. The current Board has
recognised the challenges related to
the Covid-19 pandemic and used
these as a catalyst for change in the
Company’s strategic direction. In
order to remain agile in responding to
these emerging changes, we reviewed
the remuneration policy with special
attention to rewarding long term value
creation and pay for performance.”
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Employment contracts
The eective dates of employment contract for members of the Executive Board
and their contract term shown in the table below.
Eective dates of employment contracts of the Executive Board members and
their contract term
Name Eective date contract Contract term
Mr. Meulman
1
January 1, 2018 4 years
Mr. van Laar
2
January 1, 2018 3 years
Mr. de Haan
3
August 11, 2020 4 years
Mr. Kruithof
4
May 19, 2020 4 years
Mr. Schreuders
5
May 19, 2020 4 years
Mr. Groen
6
May 19, 2020 4 years
1
Mr. Meulman stepped down from the Board on July 3, 2020.
2
Mr. van Laar retired on May 18, 2020.
3
Mr. de Haan was appointed to the Board on August 11, 2020.
4
Mr. Kruithof was appointed to the Board on May 19, 2020.
5
Mr Schreuders was reappointed to the Board on May 19, 2020.
6
Mr Groen was reappointed to the Board on May 19, 2020.
The terms of the agreements with the Executive Board members are in line with
B&S Group’s remuneration policy.
Remuneration policy review
The remuneration policy was last approved by the General Meeting of Shareholders
on May 19, 2020, and involved changes with regards to the following aspects:
▪
Long-term strategy and challenges the company will meet in the next few
years (including but not limited to Covid-19 related challenges)
▪
Shareholder Rights Directive II
▪
Views of senior stakeholders
As a result of the review, the current Remuneration Policy demonstrates increased
transparency of the various remuneration elements and includes challenging and
realistic performance targets related to sustainable growth – such as profit
generation and good working capital management. Additionally, the Remuneration
Policy includes a Supervisory Board remuneration section.
Following further developments in the second half of 2020 related to Covid-19
and additional changes in the composition of the Executive Board, the SARCO
decided to review the components of remuneration for the CEO and CFO to
enable suitable reward for realisation of long-term strategic objectives. In October
2020, the remuneration policy was updated with regards to performance incentives
as well as the duration, notice periods and termination agreements of management
service agreements of the Executive Board. Furthermore, this led to the proposal
of a Long Term Incentive component for both CEO and CFO in the form of Share
Appreciation Rights, which was adopted by the Supervisory Board and is subject
to approval of the Annual General Meeting of 2021.
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Fixed Compensation
The annual base pay salary of the members of the Executive Board was set by the
Supervisory Board, taking into account a variety of factors such as level of
responsibility, experience, scarcity of talent, scale and complexity of the Company.
The aggregate annual base pay in 2020 for the members of the Executive Board
was € 1.371.600.
Fringe benefits could include a company car. These benefits complement the
competitive remuneration package for our Executive Board.
Pension could be included in the salary of a member of the Executive Board.
Termination arrangements / Severance payments
The management service agreements with members of the Executive Board
contain termination arrangements. The management service agreement with the
current CEO and CFO contains a severance payment equal to twelve months fixed
salary. Payment is only provided in the event of termination on the day after which
the Annual General Meeting is held in the year the current term expires, or by
notice for termination given by the Company before that date, other than as a
result of seriously culpable or negligent behaviour or after two years of illness. In
all other cases of termination, e.g. in the event of termination at the CEO or CFO’s
initiative, the CEO or CFO shall not be entitled to the severance payment.
Management service agreements for other current members of the Executive
Board require payment of statutory severance payment.
In 2020, departing Board members (Mr. Meulman and Mr. van Laar) received a
severance payment based on their management service agreement given their
long standing service and commitment to the company which has resulted in
substantial successes and growth.
Remuneration structure
The remuneration structure for the Executive Board focuses on achievement of
both short-term results and long-term value creation by pursuing growth
opportunities through B&S Group’s capabilities as distribution partner in complex
supply chains.
The total remuneration and the remuneration components are based on the going
rates of what the Supervisory Board considers to be in line with international trade
and distribution services market and globally benchmarked against companies
which are similar to B&S Group in terms of scale and complexity.
Before the level of remuneration of individual board members is determined,
scenario analyses with regards to the variable remuneration components are
conducted to determine their consequences on the level of remuneration of these
board members.
The level and structure of the remuneration takes into account the previously
described scenario analyses and the pay dierentials within the company as well
as financial and non-financial indicators relevant to the long-term objectives of
the company.
Remuneration components
The members of the Executive Board express their views of their remuneration
packages with the Selection, Appointment and Remuneration Committee (SARCO)
at least once a year. The SARCO includes all feedback when evaluating the
Remuneration Policy. The remuneration package for members of the Executive
Board, following the adoption of the remuneration policy, consists of the following
components:
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For 2020, the Supervisory Board determined the PI criteria as presented in the
table above. The financial performance targets (1 and 2) contribute to the Company’s
overall focus on longterm value creation by pursuing sustainable and profitable
growth.
The non-financial performance target related to strategy (3), should contribute to
the Company’s goal of expansion of its role as value adding distribution partner
whilst creating sustainable and profitable growth. This performance target supports
overall focus on long-term value creation.
The non-financial performance target related to the quality of information,
administrative organisation and internal control (4), supports investor communication
and expectations, for the benefit of our relations with the investor community.
Furthermore, a sound administrative organisation and good internal controls
contribute to long-term value creation.
The Supervisory Board will determine suitable weightings per year, aligned with
the strategic objectives. Financial measures will usually have a weighting of 40%
and non-financial measures will usually weigh 60%. The Supervisory Board evaluates
the performance of the Executive Board at least once a year, in which they assess
to which extent the performance criteria have been met. The total annual
performance cash incentive shall not exceed 50% of their fixed fee for CEO and
CFO or 50% of the MD’s directors fee.
Performance Incentive (PI)
The PI is an annual cash bonus that is applicable to the CEO and CFO of the Group
and the Managing Director of our Dubai operations (MD). The objective of the
variable remuneration is to ensure that these members of the Executive Board are
well incentivised to achieve their performance targets.
Performance criteria and targets that underlie the PI, are set yearly by the Supervisory
Board based on the strategy aspirations and annual business plans and reviewed
annually. The performance targets are challenging, yet realistic and measure the
success of the execution of the strategy of B&S Group. The performance targets
that have been agreed, contribute to long-term value creation and the PI is linked
to measurable performance criteria determined in advance.
The final assessment of the performance, based on the audited financial results
at the end of the fiscal year, is done by the SARCO and proposed for decision
making by the Supervisory Board. In preparation for that final assessment, the
Supervisory Board members review the final outcomes as reported by the SARCO
and the Audit and Risk Committee, to ensure complete alignment on performance
by both committees.
Criteria CEO CFO MD
1
Financial performance targets
1 Profit before tax
• • •
2 Good working capital management
• •
Non-financial performance targets
3 Successful execution of Company strategy
• •
4 Quality of information, administrative organisation
and internal control
•
1
Criteria for MD are related to the business operations in Dubai.
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Share Appreciation Rights (SAR)
2020 Total
J.B. Meulman
- -
G. van Laar
- -
T. de Haan , ,
P. Kruithof , ,
B.L.M. Schreuders
- -
N.G .P. Groen
- -
Range of excercise prices in € .
Pension contribution
The pension scheme for the former CEO was a defined contribution plan. The
contribution was fully born by the company. For the current CEO and CFO of the
Executive Board, no pension contribution plan is in place. For the other members
of the Executive Board, the defined contribution pension expense is included in
the table ‘Overview remuneration Executive Board 2020’.
Discretionary adjustments for granting PI over 2020
In light of the Covid-19 pandemic as well as the changed composition of the
Board, as well as to attract the most qualified members, the Supervisory Board
made use of its right to perform discretionary adjustments for the financial year
2020 with regards to granting an annual cash bonus for the newly appointed CEO
and CFO. The annual cash bonus for 2020 for the CEO and CFO was subject to
approval of the Supervisory Board in its meeting of January 14, 2021. Considering
the discretionary adjustments, pay-out for 2020 will be € 100,000 for the CEO
and € 40,000 for the CFO. The annual bonus for the MD (Dubai) is discretionary
proposed at € 40,000. The annual cash bonus is paid in 2021 after approval of the
Annual Accounts 2020 by the Annual General Meeting.
Share Appreciation Rights (SAR)
In 2020, the Supervisory Board reviewed the elements of the Remuneration Policy
in light of company developments, the strategic objectives and the changed
composition of the Executive Board. As a result, the Supervisory Board is proposing
the addition of a long term incentive (LTI) in the form of share appreciation rights
(SAR) scheme for the CEO and CFO. On February 22, 2021 the Supervisory Board
granted 125,000 SARs to the CEO and 20,000 SARs to the CFO, subject to approval
of the revised Remuneration Policy by the Annual General Meeting of 2021. The
exercise price is set at € 7.34 The vesting date for SARs will be three years (up until
February 22, 2024). Options can be exercised during three years after vesting (from
February 22, 2024 to February 22, 2027). The SARs and the application of a vesting
period encourages commitment to the Company and long-term sustainability of
the business, the strategy and interests of the Company and its stakeholders. The
SAR scheme is subject to approval of the Annual General Meeting of 2021.
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Overview remuneration Executive Board 2020
Remuneration of Executive Board members for 2020
1
€ x 1,000
Fixed Remuneration –
annual base pay
Severance payments LTI
Base salary Fees Fringe
benefits
Fixed Variable PI – annual
cash bonus
plan
SARs Valuation Pension
expense
Total
Remunera-
tion
Proportion
of fixed and
variable
remunera-
tion
J.B. Meulman, CEO .
-
. . .
- -
. ,. % / %
G. van Laar, CFO .
-
. .
- - - -
. % / %
T. de Haan, CEO .
-
.
- -
. ,
.
-
. % / %
P. Kruithof, CFO .
-
.
- -
. , .
-
. % / %
B.L.M. Schreuders, Senior Counsel .
-
.
- - -
. . % / %
N.G.P. Groen, MD .
-
.
- -
.
-
. . % / %
1
Including payments from undertakings belonging to the same group with the meaning of Article 1711-1 of the
amended law of 19 August 1915.
Loans
The company has issued no loans or guarantees to members of the Executive
Board.
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proposed to the Annual General Meeting of Shareholders. The remuneration of
the members of the Supervisory Board consists of fixed annual fees for their role
as Supervisory Board member. In addition, the Chairman receives a fixed annual
fee for this role. The Group does not grant variable remuneration to the members
of the Supervisory Board. Members of the Supervisory Board do not receive any
performance or equity-related compensation and do not accrue any pension
rights with the company. The company does not grant stock options, share
appreciation rights or shares to the members of the Supervisory Board.
As per December 31, 2020, the members of the Supervisory Board have no loans
outstanding with the Group.
Supervisory Board remuneration in 2020
The annual base pay in 2020 for every Supervisory Board member was €50,000.
The Chairman of the Supervisory Board received an additional annual fee of
€5,000.
Supervisory Board remuneration 2020
Supervisory Board member (x €) Amount
Jan Arie van Barneveld (Chairman) ,
Willem Blijdorp (Vice-chairman) ,
Coert Beerman ,
Kitty Koelemeijer ,
Rob Cornelisse ,
Total ,
On behalf of the Supervisory Board
Jan Arie van Barneveld
Chairman
Comparative information on remuneration and company performance
According to the Supervisory Board, the Executive Board remuneration is
proportional and acceptable compared to the company performance and the
average remuneration of employees on a full-time equivalent basis.
Comparative table over the remuneration and company performance over the
last reported financial years after the company’s listing (RFY)
Annual Change, € x 1,000 Information
regarding the
RFY
RFY-1 RFY-2
Remuneration
J.B. Meulman . , ,
G. van Laar . . .
T. de Haan .
- -
P. Kruithof .
- -
B.L.M. Schreuders . . .
N.G .P. Groen . . .
Company Performance
Financial metric: Profit before tax . . .
Average remuneration on a
full-time equivalent basis of
employees
Employees of the group . . .
Supervisory Board remuneration
The Annual General Meeting of Shareholders determines the remuneration of the
Supervisory Board members, and it may be reviewed annually and thereafter
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REPORT2020
FINANCIAL
94B&S Group S.A. Annual Report 2020
14 Property, plant and equipment
15 Investments in associates
16 Receivables
17 Deferred tax assets
18 Inventory
19 Current receivables
20 Share capital
21 Reserves
22 Non-controlling interest
23 Borrowings
24 Leases
25 Deferred tax liabilities
26 Retirement and other employee benefit obligations
27 Other provisions
28 Other liabilities
29 Contingent liabilities and contingent assets
30 Risk management and financial instruments
31 Related party transactions
32 Acquisitions
33 Subsequent events
Consolidated statement of profit or loss
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
1 General
2 Adoption of new and revised International Financial Reporting Standards (“IFRS”)
3 Significant accounting policies
4 Critical accounting judgements and key sources of uncertainty
5 Segment reporting
6 Turnover
7 Personnel costs
8 Other operating expenses
9 Financial expenses
10 Taxation on the result
11 Earnings per share
12 Goodwill
13 Other intangible assets
CONSOLIDATED FINANCIAL STATEMENTS 2020
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95B&S Group S.A. Annual Report 2020
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED DECEMBER 31, 2020
x € 1,000 Note 2020 2019
Continuing operations
Turnover 6 1,861,760 1,978,817
Purchase value 1,606,869 1,706,925
Gross profit 254,891 271,892
Personnel costs 7 115,749 110,682
Amortisation 13 12,709 9,588
Depreciation 14 9,157 7,346
Depreciation right-of-use assets 24 10,580 9,712
Other operating expenses 8 48,823 46,822
Total operating expenses 197,018 184,150
Operating result 57,873 87,742
Financial expenses 9 (7,004 ) (10,666 )
Share of profit of associates 15 305 432
Result before taxation 51,174 77,508
Taxation on the result 10 (10,536 ) (17,196 )
Profit for the year from continuing operations 40,638 60,312
Attributable to:
Owners of the Company 21,697 46,962
Non-controlling interests 18,941 13,350
Total 40,638 60,312
Earnings per share (basic / diluted)
From continuing operations in euros 11 0.26 0.56
The accompanying notes are an integral part of these consolidated financial statements.
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96B&S Group S.A. Annual Report 2020
x € 1,000 2020 2019
Profit for the year from continuing operations 40,638 60,312
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
◾
Foreign currency translation dierences net of tax (9,891 ) 1,473
◾
Eective portion of changes in fair value of cash flow hedges 414 652
Other comprehensive income for the year net of tax (9,477 ) 2,125
Total comprehensive income for the year 31,161 62,437
Attributable to:
Owners of the Company 16,487 48,418
Non-controlling interests 14,674 14,019
Total 31,161 62,437
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED DECEMBER 31, 2020
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97B&S Group S.A. Annual Report 2020
x € 1,000 Note 31.12.2020 31.12.2019
Non-current assets
Goodwill 12 62,337 65,656
Other intangible assets 13 60,258 69,748
Property, plant and equipment 14 37,327 39,312
Right-of-use assets 24 66,075 71,498
Investments in associates 15 2,630 2,517
Receivables 16 1,444 3,270
Deferred tax assets 17 1,417 366
Current assets
Inventory 308,273 375,565
Trade receivables 195,628 201,256
Corporate income tax receivables 4,312 2,191
Other tax receivables 11,295 6,514
Other receivables 17,619 25,736
Cash and cash equivalents 38,870 50,884
Total assets 807,485 914,513
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT DECEMBER 31, 2020
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98B&S Group S.A. Annual Report 2020
x € 1,000 Note 31.12.2020 31.12.2019
Equity attributable to
Owners of the Company 256,375 242,671
Non-controlling interest 22 50,527 49,096
Non-current liabilities
Borrowings 23 49,496 54,557
Lease liabilities 24 56,698 62,091
Deferred tax liabilities 25 10,684 12,986
Employee benefit obligations 26 1,001 893
Other provisions 27 1,500
Other liabilities 28 42,727 42,124
Current liabilities
Credit institutions 166,393 280,482
Borrowings due within one year 23 11,737 11,548
Lease liabilities due within one year 24 10,034 9,575
Trade payables 102,477 104,620
Corporate income tax liabilities 9,096 6,920
Other tax liabilities 11,425 11,264
Other current liabilities 27,315 25,686
Total equity and liabilities 807,485 914,513
The accompanying notes are an integral part of these consolidated financial statements.
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99B&S Group S.A. Annual Report 2020
x € 1,000 2020
Paid-up
share
capital
Hedging
reserve
Translation
reserve
Retained
earnings
Total
attributable
to Owners
Non-
controlling
interest
Total equity
Opening balance at 01.01.2020 5,051 643 273 236,704 242,671 49,096 291,767
Total comprehensive income
◾
Profit for the year from continuing
operations
◾
Other comprehensive income for the year
(5,210 ) (4,267 ) (9,477 )
Other transactions
◾
Dividend
(13,262 ) (13,262 )
◾
Transactions under common control
(681 ) (681 ) (1,619 ) (2,300 )
◾
Profit share certificates
(79 ) (79 ) (292 ) (371 )
◾
Share-based payments
◾
Reclassification to non-current liabilities
◾
Fair value adjustment non-current liabilities
(2,923 ) (2,923 )
(2,923 )
(2,923 ) (2,923 ) 1,930 (993 )
Closing balance at 31.12.2020 5,051 1,066 (5,360 ) 255,618 256,375 50,527 306,902
The accompanying notes are an integral part of these consolidated financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED AT DECEMBER 31, 2020
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100B&S Group S.A. Annual Report 2020
x € 1,000 2019
Paid-up
share
capital
Hedging
reserve
Translation
reserve
Retained
earnings
Total
attributable
to Owners
Non-
controlling
interest
Total equity
Opening balance at 01.01.2019 5,051
(540 ) 229,474 233,985 39,110 273,095
Total comprehensive income
◾
Profit for the year from continuing
operations
◾
Other comprehensive income for the year
Other transactions
◾
Dividend
(24,411 ) (24,411 ) (6,544 ) (30,955 )
◾
Acquired in business combinations
◾
Profit share certificates
(38 ) (38 ) (465 ) (503 )
◾
Share-based payments
(23,549 ) (23,549 ) (3,230 ) (26,779 )
◾
Reclassification to non-current liabilities
(803 ) (803 )
◾
Fair value adjustment non-current liabilities
(16,183 ) (16,183 )
(16,183 )
(16,183 ) (16,183 ) (803 ) (16,986 )
Closing balance at 31.12.2019 5,051 643 273 236,704 242,671 49,096 291,767
The accompanying notes are an integral part of these consolidated financial statements.
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101B&S Group S.A. Annual Report 2020
x € 1,000 Note 2020 2019
Profit for the year from continuing operations 40,638 60,312
Adjustments for:
Taxation on the result 10 10,536 17,196
Share of profit of associates 15 (305 ) (432 )
Financial expenses 9 7,004 10,666
Depreciation right-of-use assets 24 10,580 9,712
Depreciation 14 9,157 7,346
Amortisation 13 12,709 9,588
Provisions 1,428 269
Non-cash share-based payment expense 21 900 900
Other non-cash movements (2,781 ) 378
Operating cash flows before movements in working capital 89,866 115,935
Decrease / (increase) in inventory 69,246 6,828
Decrease / (increase) in trade receivables 8,975 8,793
Decrease / (increase) in other tax receivables (4,399 ) (529 )
Decrease / (increase) in other receivables 8,471 (4,182 )
Increase / (decrease) in trade payables (5,166 ) 30,623
Increase / (decrease) in other taxes and social security charges 161 (3,572 )
Increase / (decrease) in other current liabilities 551 (4,853 )
Cash generated by operations 167,705 149,043
Income taxes paid (13,915 ) (24,433 )
Interest paid (6,787 ) (11,198 )
Net cash from operations 147,003 113,412
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2020
The accompanying notes are an integral part of these consolidated financial statements.
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x € 1,000 Notes 2020 2019
Interest received 157 244
Dividend received from associates
New loan to associates and third parties 16 (392 ) (1,088 )
Repayments on loans issued to associates 16 818 149
Net cash outflow on acquisition of subsidiaries (2,457 ) (12,867 )
Payment for property, plant and equipment 14 (7,411 ) (15,126 )
Payment for intangible assets 13 (6,073 ) (5,643 )
Proceeds from disposals 122 68
Net cash from investing activities (15,236 ) (34,170 )
Repayments on loans from banks 23 (11,932 ) (9,848 )
Repayments on loans from shareholders 23
(2,500 )
Repayments on lease liabilities 24 (9,966 ) (9,363 )
New loans received from banks 23 3,000 10,100
New loans received from third parties 23 3,000
Paid to profit share certificates (371 ) (503 )
Dividend paid to owners of the Company 21
(24,411 )
Dividend paid to non-controlling interests 22 (13,262 ) (6,544 )
Change in supplier finance arrangements
(21,177 )
Changes in credit facilities (114,249 ) 8,988
Net cash from financing activities (143,780 ) (55,258 )
Balance January 1, 50,884 26,900
Movement (12,014 ) 23,984
Balance December 31, 38,870 50,884
The accompanying notes are an integral part of these consolidated financial statements.
The 2019 amounts have been reclassified to comply with 2020 presentation.
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103B&S Group S.A. Annual Report 2020
1. General
B&S Group S.A. (the “Company”) has its registered oce at 14 Rue Strachen,
Mensdorf, G.D. Luxembourg. B&S Group S.A. is a holding Company of an
international conglomerate of companies (together referred to as the “Group”).
A detailed list of the Group’s main subsidiaries is enclosed in the appendix on page
153.
The consolidated financial statements of the Group for 2020 include the accounts
of B&S Group S.A. and its subsidiaries, as well as the Company’s interests in
associates.
These consolidated financial statements are prepared in Euros, being the Company’s
functional and reporting currency. All financial information in Euros is rounded to
the nearest thousand. Foreign operations are included in accordance with the
policies set out in note 3.
2. Adoption of new and revised International Financial Reporting
Standards (“IFRS”)
On January 1, 2020 several new and amended standards and interpretations
became eective for annual periods beginning on or after January 1, 2020.
The impact of these changes on the Group’s consolidated financial statements is
described in this note.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2.1. New and amended IFRSs that are eective for the current year
Impact of the initial application of Interest Rate Benchmark Reform
amendments to IFRS 9 and IFRS 7.
In September 2019, the IASB issued Interest Rate Benchmark Reform (Amendments
to IFRS 9, IAS 39 and IFRS 7). These amendments modify specific hedge accounting
requirements to allow hedge accounting to continue for aected hedges during
the period of uncertainty before the hedged items or hedging instruments aected
by the current interest rate benchmarks are amended as a result of the on-going
interest rate benchmark reforms.
The amendments are not relevant to the Group given that it does not apply hedge
accounting to its benchmark interest rate exposures.
Impact of the initial application of Covid-19-Related Rent Concessions
Amendment to IFRS 16
In May 2020, the IASB issued Covid-19-Related Rent Concessions (Amendment
to IFRS 16) that provides practical relief to lessees in accounting for rent concessions
occurring as a direct consequence of Covid-19, by introducing a practical expedient
to IFRS 16. The practical expedient permits a lessee to elect not to assess whether
a Covid-19-related rent concession is a lease modification. A lessee that makes
this election shall account for any change in lease payments resulting from the
Covid-19-related rent concession the same way it would account for the change
applying IFRS 16 if the change were not a lease modification.
The amendment is not relevant to the Group given that it has not obtained rent
concessions occurring as a direct consequence of Covid-19.
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104B&S Group S.A. Annual Report 2020
Amendments to IFRS Standards applicable to the Group
In the current year, the Group has applied a number of amendments to IFRS
Standards and Interpretations issued by the IASB that are eective for an annual
period that begins on or after January 1, 2020.
Amendments to IAS 1 and IAS8 (Definition of material) The Group has adopted the amendments to IAS 1 and IAS 8 for the first time in the current year. The amendments make the
definition of material in IAS 1 easier to understand and are not intended to alter the underlying concept of materiality in IFRS
Standards. The concept of ‘obscuring’ material information with immaterial information has been included as part of the new
definition.
The threshold for materiality influencing users has been changed from ‘could influence’ to ‘could reasonably be expected to
influence’. The definition of material in IAS 8 has been replaced by a reference to the definition of material in IAS 1. In addition,
the IASB amended other Standards and the Conceptual Framework that contain a definition of ‘material’ or refer to the term
‘material’ to ensure consistency.
Amendments to References to the Conceptual
Framework in IFRS Standards
The Group has adopted the amendments included in Amendments to References to the Conceptual Framework in IFRS
Standards for the first time in the current year. The amendments include consequential amendments to aected Standards so
that they refer to the new Framework. Not all amendments, however, update those pronouncements with regard to references
to and quotes from the Framework so that they refer to the revised Conceptual Framework. Some pronouncements are only
updated to indicate which version of the Framework they are referencing to (the IASC Framework adopted by the IASB in 2001,
the IASB Framework of 2010, or the new revised Framework of 2018) or to indicate that definitions in the Standard have not
been updated with the new definitions developed in the revised Conceptual Framework.
The Standards which are amended are IFRS 2, IFRS 3, IFRS 6, IFRS 14, IAS 1, IAS8, IAS 34, IAS 37, IAS 38, IFRIC 12, IFRIC 19, IFRIC
20, IFRIC 22, and SIC-32.
Amendments to IFRS 3 (Definition of a business) The Group has adopted the amendments to IFRS 3 for the first time in the current year. The amendments clarify that while
businesses usually have outputs, outputs are not required for an integrated set of activities and assets to qualify as a business.
To be considered a business an acquired set of activities and assets must include, at a minimum, an input and a substantive
process that together significantly contribute to the ability to create outputs.
The amendments remove the assessment of whether market participants are capable of replacing any missing inputs or
processes and continuing to produce outputs. The amendments also introduce additional guidance that helps to determine
whether a substantive process has been acquired.
The amendments introduce an optional concentration test that permits a simplified assessment of whether an acquired set of
activities and assets is not a business. Under the optional concentration test, the acquired set of activities and assets is not a
business if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of
similar assets. The amendments are applied prospectively to all business combinations and asset acquisitions for which the
acquisition date is on or after January 1, 2020.
Their adoption has not had any material impact on the disclosures or on the
amounts reported in these consolidated financial statements.
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105B&S Group S.A. Annual Report 2020
2.2. New and revised IFRS standards in issue but not yet eective
At the date of authorisation of these consolidated financial statements, the Group
has not applied the following relevant new and revised IFRS Standards that have
been issued but are not yet eective (and, in some cases, have not yet been
endorsed by the EU):
IFRS 10 and IAS 28
(amendments)
Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
Not yet endorsed
Amendments to IAS 1 Classification of liabilities as current or
non-current
Not yet endorsed
Amendments to IFRS 3 Reference to the Conceptual Framework Not yet endorsed
Amendments to IAS 16 Property, Plant and Equipment – Proceeds
before Intended Use
Not yet endorsed
Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a
Contract
Not yet endorsed
IFRS 4, IFRS 7, IFRS 9,
IFRS 16 and IAS 39
(amendments)
Interest Rate Benchmark Reform - Phase 2 Endorsed
The Group does not expect that the adoption of the Standards listed above will
have a material impact on the consolidated financial statements of the Group in
future periods.
3. Significant accounting policies
3.1. Statement of compliance
The 2020 consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards as endorsed by the European
Union (EU-IFRS).
The consolidated financial statements were approved by the Executive Board and
authorised for issue on February 22, 2021.
3.2. Covid-19
The global outbreak of Covid-19 has aected the Group’s results, consolidated
statement of financial position and cash flows presented in these consolidated
financial statements. The impact of the pandemic on specific reporting areas is
included in the disclosure notes with respect to these areas. Other reporting areas
have also been impacted, but not significantly and are therefore not separately
disclosed.
3.3. Basis of preparation
The consolidated financial statements have been prepared on the historical cost
basis, except for the revaluation of certain financial instruments that are measured
at fair values at the end of each reporting period, as explained in the accounting
policies below. Historical cost is generally based on the fair value of the consideration
given in exchange for goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement
date, regardless of whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an asset or a liability,
the Group takes into account the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset
or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined on such a basis,
except for share-based payment transactions that are within the scope of IFRS 2,
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106B&S Group S.A. Annual Report 2020
3.5. Going concern
The directors have, at the time of approving the consolidated financial statements,
a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. Thus they continue to adopt the
going concern basis of accounting in preparing the consolidated financial
statements.
3.6. Basis of consolidation
The consolidated financial statements incorporate the financial statements of the
Company and entities (including structured entities) controlled by the Company
and its subsidiaries. Control is achieved when the Company:
◾
has power over the investee;
◾
is exposed, or has rights, to variable returns from its involvement with the
investee; and
◾
has the ability to use its power to aect its returns.
The Company reassesses whether or not it controls an investee if facts and
circumstances indicate that there are changes (none in 2020) to one or more of
the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the
subsidiary and ceases when the Company loses control of the subsidiary. Specifically,
results of subsidiaries acquired or disposed of during the year are included in the
consolidated statement of profit or loss from the date the Company gains control
until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed
to the owners of the Company and to the non-controlling interests. Total
comprehensive income of the subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-con-
trolling interests having a deficit balance.
leasing transactions that are within the scope of IFRS 16, and measurements that
have some similarities to fair value but are not fair value, such as net realisable
value in IAS 2 or value in use in IAS 36.
The principal accounting policies adopted are set out below.
3.4. Non-GAAP measures
Gross Profit Margin is used to provide insight in the gross profit realised on the
sale of products to customers and as such used to measure performance of product
lines, customer groups and companies. The gross profit is calculated by deducting
the purchase value of items sold from the realised turnover and gross profit margin
by dividing gross profit by turnover.
EBITDA is one of the measures that the Executive Board uses to assess the
performance of the Group and its operating segments. EBITDA is defined as
‘Operating result’ adjusted for ‘Depreciation and amortisation’.
Net Debt specifies the exposure towards banks and other lenders and is also used
to measure compliance with bank covenants. Net Debt can be reconciled to the
balance sheet as follows:
x € 1,000 31.12.2020 31.12.2019
Credit institutions , ,
Lease liabilities due within one year , ,
Borrowings due within one year , ,
Lease liabilities , ,
Borrowings from banks , ,
Cash and cash equivalents (,) (,)
, ,
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107B&S Group S.A. Annual Report 2020
retrospectively, with corresponding adjustments against goodwill. Measurement
period adjustments are adjustments that arise from additional information obtained
during the ‘measurement period’ (which cannot exceed one year from the
acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of the contingent
consideration that do not qualify as measurement period adjustments depends
on how the contingent consideration is classified. Contingent consideration that
is classified as equity is not remeasured at subsequent reporting dates and its
subsequent settlement is accounted for within equity. Other contingent
consideration is remeasured to fair value at subsequent reporting dates with
changes in fair value recognised in the consolidated statement of profit or loss.
lf the initial accounting for a business combination is incomplete by the end of the
reporting period in which the combination occurs, the Group reports provisional
amounts for the items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see above), or additional
assets or liabilities are recognised, to reflect new information obtained about facts
and circumstances that existed at the acquisition date that, if known, would have
aected the amounts recognised at that date. The accounting for business
combinations realised in 2020 has been completed.
3.8. Goodwill
Goodwill is initially recognised and measured as set out above.
Goodwill is not amortised but is reviewed for impairment at least annually, at the
end of the financial year. For the purpose of impairment testing, goodwill is allocated
to each of the Group’s cash-generating units (or groups of cash-generating units)
expected to benefit from the synergies of the combination. Cash-generating units
to which goodwill has been allocated are tested for impairment annually, or more
frequently when there is an indication that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than the carrying amount
of the unit, the impairment loss is allocated first to reduce the carrying amount of
any goodwill allocated to the unit and then to the other assets of the unit pro-rata
3.7. Business combinations
Acquisitions of businesses are accounted for using the acquisition method.
The consideration transferred in a business combination is measured at fair value,
which is calculated as the sum of the acquisition-date fair values of the assets
transferred by the Group, less liabilities incurred by the Group to the former owners
of the acquiree and the equity interests issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in the consolidated
statement of profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed
are recognised at their fair value, except that:
◾
deferred tax assets or liabilities and assets or liabilities related to employee
benefit arrangements are recognised and measured in accordance with lAS 12
and IAS 19 respectively;
◾
liabilities or equity instruments related to share-based payment arrangements
of the acquiree or share-based payment arrangements of the Group entered
into to replace share-based payment arrangements of the acquiree are measured
in accordance with IFRS 2 at the acquisition date.
Goodwill is measured as the fair value of the consideration transferred plus the
recognised amount of any non-controlling interest in the acquiree less the net
recognised amount (fair value) of the identifiable assets acquired and liabilities
assumed. If, after reassessment, the net of the acquisition-date amounts of the
identifiable assets acquired and liabilities assumed exceeds the sum of the
consideration transferred, the amount of any non-controlling interests in the
acquiree and the fair value of the acquirer’s previously held interest in the acquiree
(if any), the excess is recognised immediately in the consolidated statement of
profit or loss as a bargain purchase gain.
When the consideration transferred by the Group in a business combination
includes a contingent consideration arrangement, the contingent consideration
is measured at its acquisition-date fair value and included as part of the consideration
transferred in a business combination. Changes in fair value of the contingent
consideration that qualify as measurement period adjustments are adjusted
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108B&S Group S.A. Annual Report 2020
Revenue is measured based on the consideration to which the Group expects to
be entitled in a contract with a customer and excludes amounts collected on
behalf of third parties. The Group recognises revenue when it transfers control of
a product or service to a customer.
Revenue from the sale of goods
Revenue from the sale of goods is recognised when control of the goods has
transferred, at which time all the following conditions are satisfied:
◾
the performance obligation has been satisfied by the Group;
◾
the Group has transferred physical possession/control of the goods to the
customer;
◾
the Group has transferred the significant risks and rewards related to the
ownership of the goods to the customer;
◾
the Group has a present right to payment for the goods delivered, whereby it
should be noted that financing components are not included in the Group’s
sales contracts;
◾
the Group retains neither continuing managerial involvement to the degree
usually associated with ownership nor eective control over the goods sold;
◾
the amount of revenue can be measured reliably (it is noted that variable
considerations hardly occur within the Group);
◾
it is probable that the economic benefits associated with the transaction will
flow to the Group; and
◾
the costs incurred or to be incurred in respect of the transaction can be
measured reliably.
Right of return
Our sales to end-customers have a right of return policy which is compliant with
the local laws and regulations for consumer sales. In general terms the customers
have a 30 day right of return. The expected return rates are being based on the
actual return rates in the (recent) past periods. Based thereon the expected sales
return is being determined and a refund liability for the amounts expected to be
refunded is matched and recognised in the appropriate corresponding period.
The right to receive the corresponding products in return is accounted for as far
as the corresponding amount is material.
on the basis of the carrying amount of each asset in the unit. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
On disposal of the relevant cash-generating unit, the attributable amount of
goodwill is included in the determination of the profit or loss on disposal.
The Group’s policy for goodwill arising on the acquisition of associates is described
below.
3.9. Investments in associates
An associate is an entity over which the Group has significant influence. Significant
influence is presumed to exist when the Group holds more than 20% of the voting
power of the entity.
Associates are accounted for using the equity method from the date that significant
influence commences until the date that significant influence ceases. Initially,
investments in associates are recognised at cost. Goodwill identified on the
acquisition of the associate is included in the carrying amount of the investment.
When the Group’s share of losses of an associate exceeds the Groups interests in
that associate, the Group discontinues recognising its share of further losses.
Additional losses are recognised only to the extent that the Group has incurred
legal or constructive obligations or made payments on behalf of the associate.
The consolidated financial statements include the Group’s share of the net profit
or loss and other comprehensive income of the associates, after adjustments to
align the accounting policies with those of the Group.
3.10. Revenue recognition
The Group recognises revenue from the following major sources:
◾
Distribution of bonded liquors and health & beauty products to wholesalers,
specialty retailers and online end-customers;
◾
Specialty distribution of fast moving consumer goods and medical supplies to
maritime and remote markets;
◾
Specialty retail at high trac airports and remote locations.
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109B&S Group S.A. Annual Report 2020
The lease liability is presented as a separate line in the consolidated statement of
financial position. The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using the eective interest
method) and by reducing the carrying amount to reflect the lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment
to the related right-of-use asset) whenever:
◾
The lease term has changed.
◾
The lease payments change due to changes in an index or rate or a change in
expected payment under a guaranteed residual value, in which cases the lease
liability is remeasured by discounting the revised lease payments using an
unchanged discount rate (unless the lease payments change is due to a change
in a floating interest rate, in which case a revised discount rate is used).
◾
A lease contract is modified and the lease modification is not accounted for
as a separate lease, in which case the lease liability is remeasured based on the
lease term of the modified lease by discounting the revised lease payments
using a revised discount rate at the eective date of the modification.
The right-of-use assets comprise the initial measurement of the corresponding
lease liability, lease payments made at or before the commencement day, less any
lease incentives received and any initial direct costs. They are subsequently
measured at cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the shorter period of lease term and
useful life of the underlying asset. If a lease transfers ownership of the underlying
asset or the cost of the right-of-use asset reflects that the Group expects to exercise
a unilateral purchase option, the related right-of-use asset is depreciated over the
useful life of the underlying asset. The depreciation starts at the commencement
date of the lease.
The right-of-use assets are presented as a separate line in the consolidated
statement of financial position.
Rendering of services
Revenue from a contract for providing services, comprising logistical services
related to the sold goods, is recognised at the same moment when the underlying
sale of goods is recognised.
3.11. Purchase value
Purchase value represents the purchase price of trade inventory, including additional
costs such as incoming freight, handling and other charges directly attributable
to the purchase and/or sale of the goods and write-downs of inventories.
The purchase price is net of discounts and supplier bonuses.
3.12. Leases
The Group assesses whether a contract is or contains a lease, at inception of the
contract. The Group recognises a right-of-use asset and a corresponding lease
liability with respect to all lease arrangements in which it is the lessee, except for
short-term leases (defined as leases with a lease term of twelve months or less)
and leases of low value assets (such as tablets and computers, small items of oce
furniture and telephones). For these leases, the Group recognises the lease payments
as an operating expense on a straight-line basis over the term of the lease.
The lease liability is initially measured at the present value of the lease payments
that are not paid at the commencement date, discounted by using the rate implicit
in the lease. If this rate cannot be readily determined, the Group uses its incremental
borrowing rate. The incremental borrowing rate applied to the lease liabilities on
December 31, 2020 was 1.7% (December 31, 2019: 1.7%).
Lease payments included in the measurement of the lease liability comprise:
◾
Fixed lease payments (including in-substance fixed payments), less any lease
incentives receivable;
◾
The amount expected to be payable by the lessee under residual value
guarantees;
◾
Payments of penalties for terminating the lease, if the lease term reflects the
exercise of an option to terminate the lease.
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110B&S Group S.A. Annual Report 2020
items are translated at the average exchange rates for the period, unless exchange
rates fluctuate significantly during that period, in which case the exchange rates
at the dates of the transactions are used. Exchange dierences arising, if any,
are recognised in other comprehensive income and accumulated in a foreign
exchange translation reserve (attributed to non-controlling interests as appropriate).
3.14. Government grants
In various countries within Europe, governments have initiated a wide variety of
employment protection programs and fixed cost compensation following the
Covid-19 outbreak and related economic downturn. These programs compensate
for part of the salaries, social security charges, and other fixed cost incurred by
the Group. The Group has accounted for these programs in accordance with
IAS 20 ‘Accounting for Government Grants and Disclosure of Government
Assistance’.
Government grants are not recognised until there is reasonable assurance that
the Group will comply with the conditions attaching to them and that the grants
will be received. Since the Group complies with all the conditions as at December 31,
2020 attached to the government grants and the grants were already received
and could be matched with the related cost in 2020 which they are intended to
compensate, the grants have as such been recognised.
The grants have been requested and received based on turnover decrease estimates.
Based on the actual performance (and as such decrease) in the applicable period
(March, 2020 up until June, 2020) the actual amounts have been calculated.
The dierence between amounts received and amounts calculated of € 1.4 million
has been recognised as a liability (to be repaid) whereas the actual amount has
been recognised in the profit or loss. For further details, reference is made to
note 7 and 8.
3.15. Retirement and termination benefit costs
Defined contribution plans
Payments to defined contribution retirement benefit plans are recognised as an
expense when employees have rendered service entitling them to the contributions.
The Group applies IAS 36 to determine whether a right-of-use asset is impaired
and accounts for any identified impairment loss as described in the ‘Property, Plant
and Equipment’ policy.
As a practical expedient, IFRS 16 permits a lessee not to separate non-lease
components, and instead account for any lease and associated non-lease
components as a single arrangement. The Group has not applied this practical
expedient. For contracts that contain a lease component and one or more additional
lease or non-lease components, the Group allocates the consideration in the
contract to each lease component on the basis of the relative stand-alone price
of the lease component and the aggregate stand-alone price of the non-lease
components.
3.13. Foreign currencies
Foreign currency transactions
ln preparing the financial statements of each individual Group entity, transactions
in currencies other than the entity’s functional currency (foreign currencies) are
recognised at the rates of exchange prevailing at the dates of the transactions.
At the end of each reporting period, monetary items denominated in foreign
currencies are retranslated at the rates prevailing at that date. Non-monetary items
carried at fair value that are denominated in foreign currencies are retranslated at
the rates prevailing at the date when the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange dierences on monetary items are recognised in the consolidated
statement of profit or loss in the period in which they arise, except for exchange
dierences on transactions entered into in order to hedge certain foreign currency
risks.
Foreign operations
For the purpose of presenting these consolidated financial statements, the assets
and liabilities of the Group’s foreign operations are translated into Euro using
exchange rates prevailing at the end of each reporting period. Income and expense
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111B&S Group S.A. Annual Report 2020
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on dierences
between the carrying amounts of assets and liabilities in the consolidated financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the liability method. Deferred tax liabilities are
generally recognised for all taxable temporary dierences and deferred tax assets
are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary dierences can be utilised. Such assets and
liabilities are not recognised if the temporary dierence arises from the initial
recognition (other than in a business combination) of assets and liabilities in a
transaction that aects neither the taxable profit nor the accounting profit.
In addition, a deferred tax liability is not recognised if the temporary dierence
arises from the initial recognition of goodwill.
The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sucient taxable profits
will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected
to apply in the period in which the liability is settled or the asset realised, based
on tax rates (and tax laws) that have been enacted or substantively enacted by the
end of the reporting period.
The measurement of deferred tax liabilities and assets reflects the tax consequences
that would follow from the manner in which the Group expects, at the end of the
reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are oset when there is a legally enforceable
right to set o current tax assets against current tax liabilities and when they relate
to income taxes levied by the same tax authority and the Group intends to settle
its current tax assets and liabilities on a net basis.
The Group operates various pension schemes. These schemes are financed through
payments to insurance companies, industry branch pension funds or the collective
pension funds.
The industry pension funds are treated as multi-employer pension funds as the
plans are collectively negotiated by multiple employers and labor unions. Reference
is made to note 26 for more details on the retirement and termination benefits.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in respect of wages
and salaries, annual leave and sick leave in the period the related service is rendered.
Liabilities recognised in respect of short-term employee benefits are measured at
the undiscounted amount of the benefits expected to be paid in exchange for the
related service.
Liabilities recognised in respect of other long-term employee benefits are measured
at the present value of the estimated future cash outflows expected to be made
by the Group in respect of services provided by employees up to the reporting
date.
3.16. Taxation
Income tax expense represents the sum of the tax currently payable and deferred
tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit
diers from ‘profit before tax’ as reported in the consolidated statement of profit
or loss because of items of income or expense that are taxable or deductible in
other years and items that are never taxable or deductible. The Group’s liability
for current tax is calculated using tax rates that have been enacted by the end of
the reporting period.
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112B&S Group S.A. Annual Report 2020
Impairment of intangible assets
At each reporting date, the Group reviews the carrying amounts of its intangible
assets to determine whether there is any indication that those assets have suered
an impairment loss. No indication for impairment was identified based on
impairment tests performed.
3.18. Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and accumulated impairment losses.
Depreciation is recognised based on the cost or valuation of assets (other than
freehold land) less their residual values over their useful lives, using the straight-line
method, on the following bases:
◾
Property 5% per annum
◾
Equipment 10% - 20% per annum
◾
Other 12.5% - 20% per annum
The estimated useful lives, residual values and depreciation method are reviewed
at the end of each reporting period, with the eect of any changes in estimate
accounted for on a prospective basis.
Right-of-use assets are depreciated over the shorter period of the lease term and
the useful life of the underlying asset. If a lease transfers ownership of the underlying
asset or the cost of the right-of-use asset reflects that the Group expects to exercise
a purchase option, the related right-of-use asset is depreciated over the useful life
of the underlying asset.
An item of property, plant and equipment is derecognised upon disposal or when
no future economic benefits are expected to arise from the continued use of the
asset. Any gain or loss arising on the disposal or retirement of an item of property,
plant and equipment is determined as the dierence between the sales proceeds
and the carrying amount of the asset and is recognised in the consolidated
statement of profit or loss.
Current and deferred tax for the year
Current and deferred tax are recognised in the consolidated statement of profit
or loss, except when they relate to items that are recognised in other comprehensive
income or directly in equity, in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in equity respectively. Where
current tax or deferred tax arises from the initial accounting for a business
combination, the tax eect is included in the accounting for the business
combination.
3.17. Intangible assets other than goodwill
Intangible assets acquired separately
Intangible assets with finite useful lives that are acquired separately are carried at
cost less accumulated amortisation and accumulated impairment losses, if any.
Amortisation is recognised on a straight-line basis over their estimated useful lives
which are disclosed in note 13. The estimated useful life and amortisation method
are reviewed at the end of each reporting period, with the eect of any changes
in estimate being accounted for on a prospective basis.
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and recognised separately
from goodwill are initially recognised at their fair value at the acquisition date
(which is regarded as their cost).
Subsequent to initial recognition, intangible assets acquired in a business
combination are reported at cost less accumulated amortisation and accumulated
impairment losses, on the same basis as intangible assets that are acquired
separately.
Derecognition of intangible assets
An intangible asset is derecognised on disposal, or when no future economic benefits
are expected from use or disposal. Gains or losses arising from derecognition of
an intangible asset, measured as the dierence between the net disposal proceeds
and the carrying amount of the asset, are recognised in the consolidated statement
of profit or loss when the asset is derecognised.
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113B&S Group S.A. Annual Report 2020
Debt instruments that meet the following conditions are measured subsequently
at fair value through other comprehensive income (FVTOCI):
◾
the financial asset is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling the financial assets; and
◾
the contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount
outstanding.
By default, all other financial assets are measured subsequently at fair value through
profit or loss (FVTPL).
The Group only has financial assets classified as debt instruments measured
subsequently at amortised cost (amongst others trade and other receivables)
except for a few derivatives that are measured at FVTPL.
Financial assets at FVTPL are measured at fair value at the end of each reporting
period, with any fair value gains or losses recognised in the consolidated statement
of profit or loss to the extent they are not part of a designated hedging relationship.
Fair value is determined in the manner described in note 30.
Impairment of financial assets
The Group recognises a loss allowance for expected credit losses on investments
in debt instruments that are measured at amortised cost. The amount of expected
credit losses is updated at each reporting date to reflect changes in credit risk since
initial recognition of the respective financial instrument.
The carrying amount of the financial asset is reduced by the impairment loss
directly for all financial assets with the exception of trade receivables, where the
carrying amount is reduced through the use of an allowance account based on
the expected lifetime losses following the simplified approach as per IFRS 9. When a
trade receivable is considered uncollectible, it is written o against the allowance
account. Subsequent recoveries of amounts previously written o are credited
against the allowance account. Changes in the carrying amount of the allowance
account are recognised in the consolidated statement of profit or loss.
At each reporting date, the Group reviews the carrying amounts of its property,
plant and equipment to determine whether there is any indication that those assets
have suered an impairment loss. No indication for impairment has been identified.
3.19. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises
direct materials and, where applicable, direct labour costs and those overheads
that have been incurred in bringing the inventories to their present location and
condition. Costs of inventories are determined based on a first-in-first-out approach.
Net realisable value represents the estimated selling price less all estimated costs
to be incurred in marketing, selling and distribution.
3.20. Financial instruments
Financial assets
Financial assets are recognised when a Group entity becomes a party to the
contractual provisions of a financial instrument. Financial assets are derecognised
when the rights to receive cash flows from the financial assets expire, or if the
Group transfers the financial asset to another party and does not retain control of
the asset. Purchases and sales of financial assets in the normal course of business
are accounted for at settlement date (i.e., the date the asset is delivered).
At initial recognition, the Group measures its financial assets at fair value.
All recognised financial assets are measured subsequently in their entirety at either
amortised cost or fair value, depending on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are measured subsequently
at amortised cost:
◾
the financial asset is held within a business model whose objective is to hold
financial assets in order to collect contractual cash flows; and
◾
the contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount
outstanding.
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114B&S Group S.A. Annual Report 2020
A derivative with a positive fair value is recognised as a financial asset whereas a
derivative with a negative fair value is recognised as a financial liability. Derivatives
are not oset in the consolidated financial statements unless the Group has both
a legally enforceable right and intention to oset. A derivative is presented as a
non-current asset or a non-current liability if the remaining maturity of the
instrument is more than 12 months and it is not due to be realised or settled within
12 months. Other derivatives are presented as current assets or current liabilities.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets
of an entity after deducting all of its liabilities. Equity instruments issued by a Group
entity are recognised at the proceeds received, net of direct issue costs. Repurchase
of the Company’s own equity instruments is recognised and deducted directly in
equity. No gain or loss is recognised in the consolidated statement of profit or loss
on the purchase, sale, issue or cancellation of the Company’s own equity
instruments.
3.21. Hedge accounting
The Group designates certain financial instruments as hedging instruments in
respect of foreign currency risk in cash flows. Hedges of foreign exchange risk on
firm commitments are accounted for as cash flow hedges. Fair value hedges and
hedges of net investments in foreign operations are not applied by the Group.
At the inception of the hedge relationship, the Group documents the relationship
between the hedging instrument and the hedged item, along with its risk
management objectives and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing basis, the Group
documents whether the hedging instrument is eective in osetting changes in
fair values or cash flows of the hedged item attributable to the hedged risk, which
is when the hedging relationship meets all of the following hedge eectiveness
requirements:
◾
there is an economic relationship between the hedged item and the hedging
instrument;
The measurement of expected credit losses is a function of the probability of
default, loss given default (i.e. the magnitude of the loss if there is a default) and
the exposure at default. The assessment of the probability of default and loss given
default is based on historical data adjusted by forward-looking information as
described above. As for the exposure at default, for financial assets, this is
represented by the assets’ gross carrying amount at the reporting date.
Financial liabilities
Financial liabilities are recognised when the Group becomes a party to the
contractual provisions of a financial instrument. Financial liabilities are derecognised
when the Group’s obligations specified in the contract expire or are discharged
or cancelled. When financial liabilities are initially recognised, they are measured
at their fair value.
All financial liabilities are measured subsequently at amortised cost except for
derivatives and contingent considerations, which are measured at FVTPL. Financial
liabilities at FVTPL are stated at fair value, with any gains or losses arising on
remeasurement recognised in the consolidated statement of profit or loss. Fair value
is determined in the manner described in note 30.
Derivative financial instruments
The Group frequently enters into derivative financial instruments to manage its
exposure to interest rate and foreign exchange rate risks. During the year that
ended December 31, 2020, no material derivative financial instruments were
entered into by The Group.
Derivatives are initially recognised at fair value at the date the derivative contracts
are entered into and are subsequently remeasured to their fair value at the end of
the reporting period. The resulting gain or loss is recognised in the consolidated
statement of profit or loss immediately unless the derivative is designated and
eective as a hedging instrument, in which event the timing of the recognition in
the consolidated statement of profit or loss depends on the nature of the hedge
relationship.
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115B&S Group S.A. Annual Report 2020
Any gain or loss recognised in other comprehensive income and accumulated in
cash flow hedge reserve at that time remains in equity and is reclassified to the
consolidated statement of profit or loss when the forecast transaction occurs.
When a forecast transaction is no longer expected to occur, the gain or loss
accumulated in the cash flow hedge reserve is reclassified immediately to the
consolidated statement of profit or loss.
Movements in the hedging reserve in equity are detailed in note 21.
3.22. Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that the Group will be required
to settle the obligation, and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the reporting period, taking
into account the risks and uncertainties surrounding the obligation. When a
provision is measured using the cash flows estimated to settle the present obligation,
its carrying amount is the present value of those cash flows (when the eect of
the time value of money is material).
When some or all of the economic benefits required to settle a provision are
expected to be recovered from a third party, a receivable is recognised as an asset
if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
◾
the eect of credit risk does not dominate the value changes that result from
that economic relationship; and
◾
the hedge ratio of the hedging relationship is the same as that resulting from
the quantity of the hedged item that the Group actually hedges and the quantity
of the hedging instrument that the Group actually uses to hedge that quantity
of hedged item.
If a hedging relationship ceases to meet the hedge eectiveness requirement
relating to the hedge ratio but the risk management objective for that designated
hedging relationship remains the same, the Group adjusts the hedge ratio of the
hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying
criteria again.
Cash flow hedges
The eective portion of changes in the fair value of derivatives and other qualifying
hedging instruments that are designated and qualify as cash flow hedges is
recognised in other comprehensive income and accumulated under the heading
of cash flow hedging reserve, limited to the cumulative change in fair value of the
hedged item from inception of the hedge. The gain or loss relating to the ineective
portion is recognised immediately in the consolidated statement of profit or loss,
and is included in the ‘financial expenses’ line item.
Amounts previously recognised in other comprehensive income and accumulated
in equity are reclassified to the consolidated statement of profit or loss in the
periods when the hedged item aects profit or loss, in the same line as the
recognised hedged item. Furthermore, if the Group expects that some or all of
the loss accumulated in the cash flow hedging reserve will not be recovered in
the future, that amount is immediately reclassified to the consolidated statement
of profit or loss.
The Group discontinues hedge accounting only when the hedging relationship
(or a part thereof) ceases to meet the qualifying criteria (after rebalancing,
if applicable). This includes instances when the hedging instrument expires or is
sold, terminated or exercised. The discontinuation is accounted for prospectively.
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Valuation of right-of-use assets
The Group evaluates whether (significant parts of) leased property is not in use in
order to determine whether right-of-use assets could be subject to an impairment.
At the end of 2020, the Group has not identified such cases.
Useful lives of other intangible fixed assets
The useful lives are assessed at the end of every reporting period. The other
intangible assets mainly consist of concessions, customer/supplier relationships
and brand names.
Allowance for doubtful debts
The allowance for doubtful debts is based on the expected lifetime losses following
the simplified approach as per IFRS 9. Estimations and assumptions are applied to
determine the size of the allowance. Where the actual future cash flows based on
these estimations and assumptions are less than expected, a material eect on
this allowance may arise.
Provision for obsolescence of inventory
The provision for obsolescence of inventory is based on the Group’s best estimates
taking into account the market conditions and expectations on these market
conditions. If market conditions significantly change during the coming years this
may have a material eect on the provision.
5. Segment reporting
The operating segments are identified and reported on the basis of internal
management reporting as provided to the Executive Board and Supervisory
Board (which are the Chief Operating Decision Makers) to facilitate strategic
decision-making, resource allocation and to assess performance. The Group has
identified the following reportable segments, that jointly form the Group’s strategic
divisions: HTG Liquors, HTG Health & Beauty, B&S and Retail.
4. Critical accounting judgements and key sources of uncertainty
In the application of the Group’s accounting policies, which are described in note 3,
the Group is required to make judgements, estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant, such as the impact
of the global Covid-19 pandemic on the Groups’ expected future cash flows and
results. Actual results may dier from these estimates.
The estimates and underlying assumptions are reviewed on ongoing bases. Revisions
to accounting estimates are recognised in the period in which the estimate is
revised if the revision aects only that period, or in the period of the revision and
future periods if the revision aects both current and future periods.
The key assumptions concerning the future, and other key sources of estimation
uncertainty at the end of the reporting period that may have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are described below.
Impairment testing
Following the assessment of the recoverable amount of goodwill allocated to the
operating segments, the Group considers the recoverable amount of goodwill to
be most sensitive to the achievement of the budgeted future cash flows.
The sensitivity analysis in respect of the recoverable amount of goodwill is presented
in note 12.
Useful lives of tangible fixed assets
The Group assesses the estimated useful lives of property, plant and equipment
at the end of each reporting period. During the current year, the Group has not
determined any shortening of the useful lives of the property, plant and equipment.
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117B&S Group S.A. Annual Report 2020
costs allocated at the Group level. Transactions between segments are at arm’s
length.
As from 2020, the segment reporting below includes the external turnover only,
compared to total turnover (including intercompany turnover between segments)
in the previous years. The table below illustrates the impact of this change on the
comparative numbers:
x € 1,000 Restated 2019 Reported 2019
Turnover
HTG ,, ,,
B&S , ,
Retail , ,
Holdings & Eliminations (,)
,, ,,
In the current year, the HTG segment as previously reported has been split into
three operating segments, namely HTG-Liquors, HTG-Health & Beauty,
and HTG-Other. For comparison purposes, the comparative figures have also been
split.
x € 1,000 2020 2019
Turnover
HTG - Liquors , ,
HTG - Health & Beauty , ,
HTG - Other
,, ,,
B&S , ,
Retail , ,
Holdings & Eliminations
-
,, ,,
HTG Liquors is active as a global distributor of premium brand liquors to retailers,
local distributors and wholesalers. HTG-Liquors has its headquarters in Delfzijl,
the Netherlands.
HTG Health & Beauty mainly distributes and sells its premium brand perfumes,
cosmetics and personal care products to value, online and secondary retailers
(B2B), directly to consumers through webshops (B2C) and to local distributors and
wholesalers. HTG-Health & Beauty has its headquarters in Delfzijl, the Netherlands.
HTG Other consists of the entities that provide logistic services to the two
aforementioned segments as well as of the sub-holding company.
B&S is active as a specialty distributor for a wide range of Food and Beverage
products, Liquors and Health and Beauty products to maritime, remote and retail
B2B markets. B&S sources its product assortment from A-brand owners and
manufacturers. B&S has its headquarters in Dordrecht, the Netherlands.
Within our Retail operations, we primarily operate an electronic consumer lifestyle
format at international airports under the Royal Capi-Lux brand and a consumer
goods format at regional airports and other ‘away from home’ locations under the
B&S brand. Retail has its headquarters in Hoofddorp, the Netherlands.
The activities of the holding companies are group-wide activities including finance,
ICT, human resource management and marketing. Costs incurred at Group level
for business units have been allocated as much as possible to the operating
segments. The results of the holding activities are separately reported to the
Executive Board and are present on the line ‘Holding & Eliminations’.
A summary of the results of the reportable segments is provided on the next pages.
The Chief Operating Decision Makers assess the performance of the operating
segments on the basis of the EBITDA from ordinary activities. The accounting
policies applied by the operating segments are identical to those of the Group
described in note 3. The EBITDA from ordinary activities per segment include the
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x € 1,000 2020 2019
Gross profit
HTG - Liquors , ,
HTG - Health & Beauty , ,
HTG - Other , ,
, ,
B&S , ,
Retail , ,
Holdings & Eliminations
, ,
EBITDA
HTG - Liquors , ,
HTG - Health & Beauty , ,
HTG - Other , (,)
, ,
B&S , ,
Retail (,) ,
Holdings & Eliminations (,) (,)
, ,
Result before taxation
HTG - Liquors , ,
HTG - Health & Beauty , ,
HTG - Other (,) (,)
, ,
B&S ,
Retail (,) ,
Holdings & Eliminations (,) (,)
, ,
x € 1,000 2020 2019
Total assets
HTG - Liquors , ,
HTG - Health & Beauty , ,
HTG - Other (,) (,)
, ,
B&S , ,
Retail , ,
Holdings & Eliminations (,) (,)
, ,
6. Turnover
In addition to the operating segments, the Chief Operating Decision Makers also
monitor financial information based on the major product groups. The revenue
for each of these groups is as follows:
x € 1,000 2020 2019
Liquors , ,
Health & Beauty , ,
Food & Beverages , ,
Electronics , ,
Other , ,
,, ,,
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The number of employees in fulltime equivalents can be specified as follows:
2020 2019
HTG - Liquors
HTG - Health & Beauty
HTG - Other
B&S
Retail
Other
, ,
Please note that the fulltime equivalents for acquired companies are included on
a pro rata basis as from the closing date onwards, in line with the sta costs in the
statement of profit or loss.
8. Other operating expenses
The other operating expenses can be specified as follows:
x € 1,000 2020 2019
Personnel related costs , ,
Oce / warehouse costs , ,
Marketing costs , ,
ICT costs , ,
Insurance costs , ,
External advisory costs , ,
Other operating expenses , ,
, ,
The distribution of turnover over the geographical regions can be specified as
follows:
x € 1,000 2020 2019
Europe , ,,
America , ,
Asia , ,
Africa , ,
Middle East , ,
Oceania , ,
,, ,,
7. Personnel costs
The distribution of the personnel costs can be specified as follows:
x € 1,000 2020 2019
Salary costs , ,
Social security charges , ,
Pension costs , ,
Government grants (,)
-
Other personnel costs , ,
, ,
Temporary sta , ,
, ,
The remuneration of the Executive Board and the Supervisory Board is disclosed
in the note on related parties (refer to note 31).
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10. Taxation on the result
The taxation on the result can be specified as follows:
x € 1,000 2020 2019
Income tax current period , ,
Income tax previous periods ,
Deferred taxes (,) (,)
, ,
The following table shows the reconciliation between the nominal and eective
corporate income tax rates for the Group:
x € 1,000 2020 2019
Result before taxation , ,
Share of profit of associates () ()
Non-deductible amortisation , ,
Income not subject to income tax or
charged with 0% income tax (,) (,)
, ,
Blended tax charge ranging from
12.5% to 32.0% , ,
During 2020, the Group received € 400,000 compensation for fixed costs as part
of local Covid-19 support programs.
The fees of Deloitte that are directly attributable to the financial year of the Group
are incorporated in the ‘External advisory costs’ and specified as follows:
x € 1,000
Deloitte Audit
S.à r.l.
Other Deloitte
member firms
Total Deloitte
Audit fees for statutory audits , ,
Other assurance related
services
-
Other non-audit services
-
, ,
9. Financial expenses
The financial expenses can be specified as follows:
x € 1,000 2020 2019
Interest related to bank facilities , ,
Interest on lease liabilities , ,
Currency exchange results ()
Other interest ()
Changes in the fair value of derivatives ()
Changes in the fair value of contingent
considerations ()
, ,
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12. Goodwill
The carrying amount of goodwill has been allocated to the cash-generating units
(CGUs) as follows:
x € 1,000 31.12.2020 31.12.2019
HTG - Liquors , ,
HTG - Health & Beauty , ,
Retail , ,
B&S , ,
, ,
x € 1,000 31.12.2020 31.12.2019
The Netherlands , ,
Rest of the world , ,
, ,
The movements can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, , ,
Acquired in business combinations ,
Foreign currency translation (,)
Balance as at December 31, , ,
11. Earnings per share
The basic earnings per share can be specified as follows:
x € 1,000 2020 2019
Basic earnings per share from
continuing operations . .
The diluted earnings per share are equal to the basic earnings per share. The earnings
and weighted average number of ordinary shares used in the calculation of basic
earnings per share are as follows:
x € 1,000 2020 2019
Profit for the year attributable to
Owners of the Company , ,
x 1 2020 2019
Weighted average number of
ordinary shares ,, ,,
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Sensitivity to changes in assumptions
The Group has conducted an analysis of the sensitivity of the impairment test
model to changes in the key assumptions used to determine the recoverable
amount for each of the CGUs to which goodwill is allocated. The realisable value
is influenced by factors such as projections of future economic conditions and
expectations regarding market developments and operations. The estimates made
for these factors may change over time, which could lead to impairment recognised
as a profit or loss in the income statement. The recoverable amount also depends
on the discount rate used, which is based on an estimate of the weighted average
cost of capital for the unit concerned.
The following aspects provide an indication of the sensitivity of the impairment
tests to changes in key assumptions used:
◾
If the discount rate is assumed to be 1% higher than applied in the separate
impairment tests, no impairments would have been required.
◾
If future annual sales growth rate is set 1% lower than applied in the separate
impairment tests, whilst maintaining cost levels on the original assumptions,
no impairments would have been required.
◾
If gross margins were to show a cumulative decrease of 1.5% over the coming
years, while maintaining the other assumptions applied in the separate
impairment tests, no impairments would have been required.
The goodwill recognised in 2019 relates to the acquisition of Lagaay Medical Group
B.V. and is made up of the quality of the technical and commercial workforce,
the platform to expand the Group’s existing product oerings and the strengthening
of the Group’s position in the maritime and remote operations.
Impairment testing
The Group tests goodwill annually for impairment, or more frequently if there are
indications that goodwill might be impaired. The recoverable amounts of the
cash-generating units are determined based on a value in use calculation which
uses cash flow projections based on financial budgets and financial long-term
plans approved by the Executive Board covering a five-year period, and a discount
rate of 7.5 per cent per annum (2019: 8.1 per cent per annum). Increases in market
volume (due to increase of population and rising consumption) have been taken
into consideration as well as growing market pressure on prices, government-
induced or otherwise. This basis is valid in the long-term for our activities in all
countries where the Group operates. Cash flows beyond that five-year period have
been calculated using a steady 0.5 per cent (2019: 0.5 per cent) terminal growth
rate. This growth rate does not exceed the inflation rate for markets in the territories
B&S operates in.
The tests are carried out in local currency. The discount rate is based on the
weighted average cost of capital before tax that is relevant to the assets of the
unit. The applicable interest rate per country is taken into account for that purpose.
In determining the discount rate, country market risks are not taken in to
consideration, as specific market risks are included in the determination of expected
future cash flows. The main assumptions in the calculations are as follows:
Discount rate .%
Terminal growth rate .%
The impairment testing for 2020 did not result in impairments.
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13. Other intangible assets
The other intangible assets can be specified as follows:
x € 1,000 31.12.2020 31.12.2019
Software , ,
Brand names , ,
Concessions ,
Customer portfolios , ,
Supplier portfolios , ,
Private labels , ,
Other , ,
, ,
x € 1,000 31.12.2020 31.12.2019
The Netherlands , ,
Rest of the world , ,
, ,
Intangible assets are amortised over their useful economic life, defined at the
moment of acquisition. These intangible assets are amortised between 10% and
33%. Similar as in the previous year, no intangible assets have been pledged as
security for liabilities.
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The movements can be specified as follows:
x € 1,000 2020
Software Brand names Concessions Customer
portfolios
Supplier
portfolios
Private labels Other Total
At cost:
Balance as at January 1, , , , , , , , ,
Additions ,
- - - -
,
Acquired in business
combinations
- -
- - -
Foreign currency translation () ()
- -
(,) () () (,)
Disposals (,)
- - - - - -
(,)
, , , , , , , ,
Accumulated amortisation:
Balance as at January 1, (,) (,) (,) () (,) (,) (,) (,)
Acquired in business
combinations ()
- - - - - -
()
Disposals ,
- - - - - -
,
Reclassification from PP&E ()
- - - - - -
()
Foreign currency translation
- -
,
Amortisation (,) () () (,) (,) (,) () (,)
(,) (,) (,) (,) (,) (,) (,) (,)
Balance as at December 31, , , , , , , ,
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x € 1,000 2019
Software Brand names Concessions Customer
portfolios
Supplier
portfolios
Private labels Other Total
At cost:
Balance as at January 1, , , , , , , ,
Additions ,
- - - - -
,
Acquired in business
combinations
-
, ,
- - -
,
Foreign currency translation
- -
, , , , , , , ,
Accumulated amortisation:
Balance as at January 1, (,) (,) (,) () (,) () (,) (,)
Acquired in business
combinations
- - - - - - - -
Foreign currency translation () ()
- -
() () () ()
Amortisation (,) () () () (,) () () (,)
(,) (,) (,) () (,) (,) (,) (,)
Balance as at December 31, , , , , , , , ,
14. Property, plant and equipment
Property, plant and equipment can be specified as follows:
x € 1,000 31.12.2020 31.12.2019
Land and property , ,
Equipment , ,
Other , ,
, ,
x € 1,000 31.12.2020 31.12.2019
The Netherlands , ,
Rest of the world , ,
, ,
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The movements can be specified as follows:
x € 1,000 2020
Land and property Equipment Other Total
At cost:
Balance as at January 1, , , , ,
Additions , , , ,
Acquired in business combinations
-
Foreign currency translation () () () ()
Reclassification within PP&E
-
()
-
Disposals
-
() (,) (,)
, , , ,
Accumulated depreciation:
Balance as at January 1, (,) (,) (,) (,)
Acquired in business combinations
-
() () ()
Disposals
-
, ,
Foreign currency translation
Reclassification to Other intangible assets
- -
Reclassification within PP&E
-
()
-
Depreciation (,) (,) (,) (,)
(,) (,) (,) (,)
Balance as at December 31, , , , ,
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x € 1,000 2019
Land and property Equipment Other Total
At cost:
Balance as at January 1, , , , ,
IFRS 16 adoption
-
(,)
-
(,)
Additions , , , ,
Acquired in business combinations , , ,
Foreign currency translation
Disposals
-
() () ()
, , , ,
Accumulated depreciation:
Balance as at January 1, (,) (,) (,) (,)
IFRS 16 adoption
-
-
Acquired in business combinations () () () (,)
Disposals
-
Foreign currency translation () () () ()
Depreciation (,) (,) (,) (,)
(,) (,) (,) (,)
Balance as at December 31, , , , ,
The depreciation rates applied are as follows:
Land %
Property %
Equipment %
-
%
Other .%
-
%
Similar to previous year, the property, plant and equipment have been pledged as
security for non-current borrowings and current liabilities provided by credit
institutions. The Group is not allowed to pledge these assets as security for other
borrowings or to sell them to another entity.
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Next Generation Parfums B.V.
x € 1,000 31.12.2020 31.12.2019
Current assets , ,
Non-current assets , ,
Current liabilities
Non-current liabilities , ,
Turnover , ,
Profit (loss) for the year
Net assets of the associate , ,
Carrying amount of the Group’s interest , ,
STG Logistica Y Depositos S.L.
x € 1,000 31.12.2020 31.12.2019
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Turnover
Profit (loss) for the year
-
()
Net assets of the associate () ()
Carrying amount of the Group’s interest
15. Investments in associates
Investments in associated companies can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, , ,
Share of profit of associated companies
Foreign currency translation ()
Received dividend
-
()
Other changes ()
Balance as at December 31, , ,
The principal associated companies of the Group are as follows:
Comptoir & Clos SAS, France
(in liquidation) % %
Next Generation Parfums B.V.,
the Netherlands % %
STG Logistica Y Depositos S.L., Spain % %
Capi-Lux South Africa (PTY) Ltd.,
South Africa % %
These companies have the same principal activities as the Group. The aggregate
financial data of the principal associated companies are shown below, broken
down into total assets and liabilities and the most important items in the income
statement.
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This item consists of the following loans as at December 31, 2020:
◾
In 2019 the Company granted a loan to a minority shareholder for the original
amount of € 1,088,000. The applicable interest rate is 3.5%. The loan will be
repaid in total within seven years. No securities have been provided.
◾
In 2020 the Company granted a loan to an associate, STG Logistica Y Depositos
S.L., for the original amount of € 150,000. The applicable interest rate is 10%.
No securities have been provided.
◾
In 2020 the Company granted a loan to a third party for the original amount
of € 242,000. The applicable interest rate is 10%. No securities have been
provided.
17. Deferred tax assets
The movements in the deferred tax assets can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1,
Acquired in business combinations
-
Transfer to/ from profit or loss ,
Foreign currency translation ()
Balance as at December 31, ,
Capi-Lux South Africa (PTY) Ltd.
x € 1,000 31.12.2020 31.12.2019
Current assets , ,
Non-current assets
Current liabilities
Non-current liabilities
- -
Turnover , ,
Profit (loss) for the year ()
Net assets of the associate , ,
Carrying amount of the Group’s interest , ,
16. Receivables
The receivables can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, , ,
Acquired in business combinations (,)
-
New loans issued ,
Repayments () ()
, ,
Reclassification to ‘Current assets’
-
()
Balance as at December 31, , ,
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19. Current receivables
The trade receivables can be specified as follows:
x € 1,000 31.12.2020 31.12.2019
Trade receivables , ,
Allowance for doubtful debts (,) ()
, ,
The allowance for doubtful receivables provides a fair reflection of the risk of none
or late payments at the balance sheet date. Accordingly the carrying amount of
the trade receivables is approximately equal to its fair value. The provision has
been recognised at nominal value, given its current nature. An allowance for
doubtful debts was formed during the financial year amounting to € 1,975,000
(2019: € 462,000) that was charged to the profit or loss. No interest is charged on
past due trade receivables.
The movement in the allowance for doubtful debts can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, ,
Acquired in business combinations
Transfer from profit or loss ,
Amounts written o as uncollectable () ()
Balance as at December 31, ,
The working capital tied up in trade receivables is expressed in Days of Sales
Outstanding (DSO). The average DSO for 2020 was 38 days (2019: 37). The provision
for doubtful receivables, taking into account the expected lifetime losses following
the simplified approach as per IFRS 9, relates entirely to trade receivables past the
The deferred tax assets relate to the following items:
x € 1,000 31.12.2020 31.12.2019
Property, plant and equipment
Intangible fixed assets
Right-of-use assets
Carry forward interest costs
-
Other
-
,
18. Inventory
The inventory can be specified as follows:
x € 1,000 31.12.2020 31.12.2019
Value of trade goods , ,
Prepayments on trade inventory , ,
Provision for obsolescent inventory (,) (,)
, ,
The amount of the write-down during 2020 amounts to € 2,136,000 (2019:
€ 3,588,000) and has been recognised in the statement of profit or loss as a loss.
Similar to previous year, inventories have been pledged as a security for credit
facilities provided by financial institutions. The cost of inventories recognised as
an expense during the year in respect of continuing operations was € 1,477 million
(December 31, 2019: € 1,570 million).
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20. Share capital
Refer to the consolidated statement of changes in equity for information on the
composition, amount and changes of equity. Details of the share capital are set
out below. Information on other elements of equity (reserves) is set out in the next
note.
Issued share capital
The issued share capital as at December 31, 2020 amounted to € 5,050,639.26
and consists of 84,177,321 Ordinary shares with a nominal value of € 0.06 each.
Since March 23, 2018 the Company is listed on the Amsterdam Stock Exchange.
There have been no movements in the share capital in both 2020 and 2019.
Share-based payment
As per March 23, 2018, a group of managers has received a share incentive
amounting to € 4.5 million from the pre-IPO shareholders of B&S Group S.A.,
Sarabel Invest S.à.r.l. and Lebaras Belgium BVBA. A number of existing Ordinary
Shares (310,345) representing a total amount of € 4.5 million as per March 23,
2018, have been provided to Stichting Administratiekantoor B&S Participations
(STAK). The Ordinary Shares referred to will be held by the STAK and depositary
receipts for such Ordinary Shares have been issued to the managers pro rata to
their respective entitlements.
Five years following March 23, 2018, the managers will be entitled to acquire the
underlying Ordinary Shares from the STAK for no consideration. In the event any
of the managers ceases to be employed by B&S Group S.A. prior to the period of
five vesting years having been lapsed, the Ordinary Shares held by the STAK for
his benefit will be transferred back to the pre-IPO shareholders without any
compensation. During the vesting period the € 4.5 million will be charged to the
consolidated statement of profit or loss.
contractually agreed due date for payment. Items that are considered doubtful
have been fully provided for. Estimations and assumptions are applied to determine
the size of the provision. Those estimates and assumptions are based on age
analysis and specific developments in terms of market conditions and credit risks.
In the judgement of the Group, the credit quality for receivables past due at the
balance sheet date but not provided for is sucient.
The age of the receivables that are past due but not impaired are as follows:
x € 1,000 31.12.2020 31.12.2019
Trade receivables less than 30 days due , ,
Trade receivables between 30 and
60 days due , ,
Trade receivables more than 60 days due , ,
, ,
Trade receivables disclosed above include amounts that are past due at the end
of the reporting period for which the Group has not recognised an allowance for
doubtful debts because there has not been a significant change in credit quality
and the amounts are still considered recoverable. Based on an individual assessment
of all the due receivables it was concluded that impairment was not required for
these receivables due to the credit quality not being significantly changed.
The tax receivables include an amount of € 5,700,000 with a possible long-term
character. The maturity period of all other receivables is less than one year.
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Retained earnings
The retained earnings comprise all cumulative profit or loss movements less
cumulative changes. The movement can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, , ,
Profit for the period , ,
Dividend to the owners of the Company
-
(,)
Transactions under common control ()
-
Share-based payments
Other changes () ()
, ,
Fair value adjustment non-current
liabilities (,) (,)
Balance as at December 31, , ,
Proposed appropriation of the result for 2020
The Executive Board proposes to pay a dividend of € 8,418,000 and to add the
remaining result to the reserves. This proposed appropriation has not been
accounted for in the consolidated financial statements.
Profit appropriation 2019
The 2019 consolidated financial statements were approved during the General
Meeting on May 19, 2020. The General Meeting approved the proposed profit
appropriation.
21. Reserves
Direct changes in equity are recognised net of tax eects. The following elements
of reserves can be specified as follows:
Cash flow hedge reserve
The cash flow hedge reserve represents the cumulative amount of gains and losses
on hedging instruments deemed eective in cash flow hedges. The cumulative
deferred gain or loss on the hedging instrument is recognised in profit or loss only
when the hedged transaction impacts the profit or loss, or is included directly in
the initial cost or other carrying amount of the hedged non-financial items (basis
adjustment). The movement can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1,
-
Eective portion of changes in fair value
of cash flow hedges
Balance as at December 31, ,
Reserve for translation dierences
The reserve for translation dierences comprises all cumulative translation
dierences arising from the translation of the financial statements of activities in
currencies other than the euro. The reserve is not freely distributable. The movement
can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, ()
Foreign currency translation through OCI (,)
Balance as at December 31, (,)
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The movement in the non-controlling interest can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, , ,
Share of profit of associated companies , ,
Foreign currency translation (,)
Eective portion of changes in fair value
of cash flow hedges ()
Acquired in business combinations
-
,
Transactions under common control (,)
-
Dividend paid to non-controlling interest (,) (,)
Reserves transferred to profit right
certificates () ()
Other changes
-
, ,
Reclassification to ‘Other non-current
liabilities’ , ()
Balance as at December 31, , ,
The reclassification to ‘Other non-current liabilities’ relates to the 25% non-con-
trolling interest in FNet Acquisition Company LLC. Reference is made to note 28
for further details on this reclassification.
22. Non-controlling interest
The non-controlling interest consist of the third-party share in the following
companies:
31.12.2020 31.12.2019
J.T.G. Holding B.V., the Netherlands .% .%
STG Holding Import-Export S.L., Spain
-
%
J.T.G. WWL S.à r.l., G.D. Luxembourg .% .%
Topbrands Europe B.V., the Netherlands .% .%
FNet Acquisition Company LLC,
Delaware, United States % %
FNC International B.V., the Netherlands %
-
B&S HTG B.V., the Netherlands % %
Lagaay Medical Group B.V.,
the Netherlands % %
Europort Groep B.V., the Netherlands % %
Dutch Care Supplies B.V., the
Netherlands
-
%
Profit Rights:
B&S Investments B.V., Delfzijl, the
Netherlands % %
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23. Borrowings
The borrowings can be specified as follows:
x € 1,000 31.12.2020 31.12.2019
Borrowings from banks , ,
Borrowings from third parties ,
-
, ,
Borrowings from banks
The movements in borrowings from banks can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, , ,
Acquired in business combinations ,
New borrowings received , ,
Installments (,) (,)
, ,
Reclassification to ‘Current liabilities’ (,) (,)
Balance as at December 31, , ,
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This item consists of the following loans:
x € 1,000 Outstanding
From Original
amount
Securities Base
(Euribor)
Interest Repayment 31.12.2020 31.12.2019
2007 8,250 (1) 3-month + 1.5% Quarterly terms of € 137,500 ,
2015 500 (1) - + 2.95% Quarterly terms of € 25,000
-
2015 500 (1) - + 3.25% Quarterly terms of € 25,000
-
2016 20,000 (2) 3-month + 2.0%
Quarterly terms of € 700,000 and
€ 6,000,000 at maturity date in 2021 , ,
2017 2,000 None 1-month + 2.35% Equal monthly terms over 5 years ,
2017 2,000 None 6-month + 2.75% Equal monthly terms over 5 years
2018 5,250 (1) 1-month + 2.5%
Monthly terms of € 55,125 and
€ 2,659,125 at maturity date in 2022 , ,
2018 40,000 (2) 3-month + 2.5%
Quarterly terms of € 1,000,000 and
€ 20,000,000 at maturity date in 2023 , ,
2019 7, 500 (2) 3-month + 1.75% Quarterly terms of € 375,000 , ,
2019 2,000 (1) - + 2.59% Yearly installments of € 400,000 , ,
2019 600 None - + 1.41% Equal monthly terms over 3 years
2020 1,500 None - + 2.0%
Equal monthly terms over 4 years,
after grace period of 1 year ,
-
2020 1,500 None - + 1.5%
Equal monthly terms over 4 years,
after grace period of 1 year ,
-
2010* 125 (1) 3-month + 2.7% Equal quarterly terms over 12 years
-
2010* 200 (1) - + 3.1% Quarterly terms of € 3,350
-
2015* 180 (1) - + 2.95% Equal monthly terms over 10 years
-
2016* 1,600 (2) 1-month + 2.95% Equal monthly terms over 5 years
-
2016* 250 (1) - + 3.25% Equal monthly terms over 10 years
-
2020* 850 None - + 1.75%
Equal monthly terms over 4 years,
after grace period of 1 year
-
, ,
(1) Mortgage loan with underlying real estate provided as security.
(2) Pledges on the shares of the specific acquired company.
(*)
Borrowings acquired in business combinations.
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Maturity
The maturity and related value of the borrowings can be specified as follows:
x € 1,000 31.12.2020
< 1 year 1 <> 5 years > 5 years Total
Borrowings from third parties
-
,
-
,
Borrowings from banks , ,
-
,
, ,
-
,
24. Leases
The leases can be specified as follows:
x € 1,000 31.12.2020 31.12.2019
Property , ,
Vehicles , ,
, ,
Borrowings from third parties
The movements in borrowings from third parties can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1,
- -
New borrowings received ,
-
Balance as at December 31, ,
-
This item consists of the following loans:
◾
Two loans for the original amount of € 1,500,000 each. The applicable interest
rate is 2.5%, but will only become applicable after fulfilment of certain condi-
tions. No securities are provided. Repayment is dependent on fulfilment of
beforementioned conditions.
Borrowings from shareholders
The movements in borrowings from shareholders can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1,
-
,
Installments
-
(,)
Balance as at December 31,
- -
This item consisted of the following loan:
◾
A loan for the original amount of € 2,500,000. The applicable interest rate was
5%. The loan was repaid in full as at January 31, 2019. No securities were
provided.
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The movements in the lease liabilities can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, ,
First time IFRS 16 adoption
-
,
Restated opening balance as at
January 1, , ,
Additions , ,
Acquired in business combinations
-
Repayments on lease liabilities (,) (,)
Foreign currency translation ()
, ,
Reclassification to ‘Current liabilities’ (,) (,)
Balance as at December 31, , ,
The maturity and related value of lease liabilities can be specified as follows:
x € 1,000 31.12.2020
< 1 year 1 <> 5 years > 5 years Total
Lease liabilities , , , ,
, , , ,
The Group does not face a significant liquidity risk with regard to its lease liabilities.
Lease liabilities are monitored within the Group’s treasury function.
The movements in the Group’s right-of-use assets can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, ,
-
First time IFRS 16 adoption
-
,
Restated opening balance as at
January 1, , ,
Additions , ,
Acquired in business combinations
-
Depreciation right-of-use assets (,) (,)
Foreign currency translation ()
Balance as at December 31, , ,
x € 1,000 31.12.2020 31.12.2019
The Netherlands , ,
Rest of the world , ,
, ,
The Group leases several assets including buildings and vehicles. The average
remaining lease term is 4 years. At December 31, 2020, the Group is committed
to € 1.6 million for short-term leases. The total cash outflow for leases amounts
to € 11.2 million.
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The maturity and related value of the deferred tax liabilities can be specified as
follows:
x € 1,000 31.12.2020
< 1 year 1 <> 5 years > 5 years Total
Deferred tax liabilities , , , ,
, , , ,
The deferred tax liabilities relate to the following items:
x € 1,000 31.12.2020 31.12.2019
Property, plant and equipment
Intangible fixed assets , ,
Other
, ,
The amounts recognised in the profit or loss can be specified as follows:
x € 1,000 2020 2019
Depreciation expenses on right-of-use
assets (Property) , ,
Depreciation expenses on right-of-use
assets (Vehicles)
Interest expense on lease liabilities , ,
Expenses relating to short-term leases
and leases of low value assets , ,
, ,
25. Deferred tax liabilities
The change in deferred tax liabilities can be broken down as follows:
x € 1,000 2020 2019
Balance as at January 1, , ,
Acquired in business combinations ,
Transfer to profit or loss (,) (,)
Foreign currency translation ()
Reclassification from ‘Current corporate
income tax liability’ ()
Balance as at December 31, , ,
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Pension plan pension fund “Stichting Het nederlandse pensioenfonds”
Until August 2020, the Group operated defined contribution retirement benefit
plans for employees for whom the benefit plan was accommodated by the company
pension fund “Stichting Pensioenfonds B&S” (also referred to as ‘Company pension
fund’). The defined contribution plan (Pension Plan) was administered by a fund
that is legally separated from the entity. On August 1st, 2020, Stichting Pensioenfonds
B&S, transferred the pension entitlements of all participants to “Stichting Het
nederlandse pensioenfonds (Hnpf)”.
According to the pension plan the employer has the obligation to pay a fixed
annual premium to the pension fund of two-third of 22% of the pension base,
the remaining one-third is paid by the employee. The return on the contribution
payments has not been guaranteed. The only liability for the employer is to pay
the annual premium as the employer has no obligation to pay additional
contributions, neither to compensate for inflation nor to supplement in case the
fund does not hold sucient assets to fund the pension obligations. In the last
case, the fund would need to take other measures to restore its solvency, such as
reductions of the entitlements of the plan members.
The pensionable salary accommodated by Hnpf is limited to € 110,111 (Stichting
Pensioenfonds B&S 2019: € 107,593). The pension base is the dierence between
the pensionable (current) salary of the employee and the state retirement benefit.
Hnpf has stated that the funding ratio is 98.8% at December 31, 2020 (Stichting
Pensioenfonds B&S 2019: 96.2%).
Based on IAS 19, the Pension Plan as such is accounted for as a defined contribution
plan. The Group presents the employer contribution in the profit or loss item
“Personnel costs”.
Industry pension schemes ‘Bedrijfstakpensioenfonds voor de Detailhandel’
Pursuant to the Dutch pension system this plan is financed by contributions to an
industry pension fund. Participation in the industry pension fund is required by
the collective labour agreement applicable to Koninklijke Capi-Lux Holding B.V,
Anker Amsterdam Spirits B.V. and Square Dranken Nederland B.V.
26. Retirement and other employee benefit obligations
The obligation consists of a provision for pension obligation and employee benefit
obligations. The provision for pension obligations consists of a provision for
pensions of former personnel that have taken eect and are valued at fair value.
The maturity of these obligations is less than five years. The movements can be
summarised as follows:
x € 1,000 2020 2019
Balance as at January 1,
Paid during the financial year ()
-
Transfer to/from profit or loss
Balance as at December 31, ,
This provision also includes an end-of-service indemnity payable to employees
at the reporting date in accordance with the U.A.E. labour laws, and is based on
current remuneration and cumulative years of service at the reporting date.
Defined contribution plans
The Company operates defined contribution retirement benefit plans for all
qualifying employees. The assets of the plans are held separately from those of
the Company in funds under the control of trustees. When employees leave the
plans prior to full vesting of the contributions, the contributions payable by the
Company are reduced by the amount of forfeited contributions.
The total expense recognised in the profit or loss of € 4,680,000 (2019: € 4,121,000)
represents contributions paid or payable by the Group at rates specified in the
rules of the plans. As at December 31, 2020, contributions of € 375,000 (2019:
€ 382,000) due in respect of the 2020 (2019) reporting period had not been paid
over to the plans and hence were included in the short-term liabilities. These
amounts were paid after the end of the reporting period.
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27. Other provisions
The movements in the ‘Other provisions’ can be specified as follows:
x € 1,000 2020 2019
Balance as at 1 January
- -
Transferred to profit or loss ,
-
Balance as at 31 December ,
-
This item comprises of a provision for an onerous concession contract within the
Retail segment. Based on the contractual minimum guaranteed rental amounts
combined with the passenger expectations during the remaining contracted years,
management does expect a loss of € 1.5 million resulting from operating under
the terms of this concession contract. The provision will be released to the profit
or loss gradually over the remaining years of the contract.
28. Other liabilities
The other liabilities can be specified as follows:
x € 1,000 2020 2019
Subsidy (IPR)
Contingent consideration Lagaay
Deferred payment FragranceNet , ,
, ,
The related accrued entitlements are always fully financed in the related calendar
year through – at least – cost eective contribution payments. The pension plan
is a career average plan including – for both active and inactive participants (former
employees not yet retired and retired persons) – conditional granting of
supplements. The granting of supplements depends on it the investment return.
The annual accrual of the pension entitlements amounts to 1.56% of the pensionable
salary that is based on the gross wage net of a deductible (of € 14,034).
The pensionable salary is capped (at € 57,232). The annual employer-paid
contribution is 22.5% of which 5.7% is contributed by the employee. Based on the
funding ratio and expected returns the board of the industry pension fund sets
the contribution on a yearly basis.
The related industry pension fund has stated that the funding ratio is 111.0% at the
end of 2020 (2019: 111.9%). Based on the administrative regulations the group has
no obligation to make additional contributions in the event of a deficit other than
through higher future contributions.
Other defined benefit plans
The end-of-service indemnity payable in accordance with the U.A.E. labour laws
as noted before is considered as a defined benefit plan for which a provision is
accounted for. Total amount of end-of-service indemnity provision as per 2020
was € 320,000 (2019: € 314,000).
In several countries, defined benefit plans are in place. However due to the limited
number of employees and limited financial risk these plans are accounted for as
defined contribution plans. Pension plans for which the pension fund cannot
provide data on an individual company basis are, in line with IAS19, accounted for
as a defined contribution plans. In 2020 the premium related to these plans charged
to the consolidated statement of profit or loss amounts to € 347,000 (2019:
€ 293,000).
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Deferred payment FragranceNet
The movements in ‘Deferred payment FragranceNet’ ’ can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1, , ,
Reclassification from ‘Non-controlling
interest’ (,)
, ,
Fair value adjustment , ,
Balance as at December 31, , ,
ln October 2018 the Group acquired 75% of the shares of FNet Acquisition Company
LLC, the established 100% parent company of FragranceNet.com, Inc. As part of
the acquisition, two put and two call options have been written on the remaining
25% of the shares. The exercise date of the “first tranche”, a put and call option on
eectively 12.5% of the FNet Acquisition Company LLC shares, is 5 years after
closing date. The exercise date of the options on the remaining 12.5% of shares is
10 years after closing date (eectively October 29, 2028). The put and call options
have a similar strike price and exercise date and as such a liability exists. The exercise
prices are dependent on the EBITDA realised in the 12 months preceding the
exercise date and a multiple that is dependent on the EBITDA growth rate in the
years prior to the exercise date. The non-controlling interest is reclassified to other
liabilities (long-term) at the end of each reporting period and valued at fair value,
being the value of the expected future consideration discounted against long term
US government bond yields plus a company specific mark-up. As such, apart from
the discount rate, the fair value measurement is derived from valuation techniques
that include inputs that are not based on observable market data. The fair value
adjustments are recognised in retained earnings.
Subsidy (IPR)
The movements in ‘Subsidy (IPR)’ can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1,
Installments () ()
Reclassification to ‘Current liabilities’ () ()
Balance as at December 31,
This item comprises an “InvesteringsPremieRegeling (IPR)” subsidy with an original
amount of € 1,264,000 which is being reduced with € 35,000 per year and released
to the profit or loss.
Contingent consideration Lagaay
The movements in ‘Contingent consideration Lagaay’ can be specified as follows:
x € 1,000 2020 2019
Balance as at January 1,
-
Acquired in business combinations
-
Transfer to profit or loss ()
-
Charged interest
Reclassification to ‘Current liabilities’ ()
-
Balance as at December 31,
This contingent consideration relates to the acquisition of Lagaay Medical Group
B.V.
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Fair value hierarchy levels 1 to 3 are 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); and
◾
Level 3 fair value measurements are those derived from valuation techniques
that include inputs for the asset or liability that are not based on observable
market data (unobservable inputs).
29. Contingent liabilities and contingent assets
Concession fee
The Group has entered into long-term concession agreements. The maturity of
these agreements is between 1 and 10 years. The amounts involved are based on
the turnover of the particular agreement.
Guarantees
The Group has issued guarantees. These guarantees can be specified as follows:
x € 1,000 31.12.2020 31.12.2019
Total maximum level of guarantees
facility granted to the Group , ,
Issued guarantees in relation to import
duties , ,
Issued guarantees in relation to rental
agreements , ,
Other issued guarantees ,
, ,
30. Risk management and financial instruments
Financial instruments by category
The following table combines information about:
◾
classes of financial instruments based on their nature and characteristics;
◾
the carrying amounts of financial instruments;
◾
fair values of financial instruments (except financial instruments when carrying
amount approximates their fair value); and
◾
fair value hierarchy levels of financial assets and financial liabilities for which
fair value was disclosed.
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x € 1,000 Amortised cost FVTPL FVTOCI Total 31.12.2020
Level 1 Level 2 Level 3
Financial assets not measured at fair value
Receivables, non-current assets ,
- -
,
Trade receivables ,
- -
,
Cash and cash equivalents ,
- -
,
,
- -
,
Financial liabilities not measured at fair value
Borrowings, non-current liabilities ,
- -
,
Lease liabilities ,
- -
,
Credit institutions ,
- -
,
Borrowings, due within one year ,
- -
,
Trade payables ,
- -
,
,
- -
,
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x € 1,000 Amortised cost FVTPL FVTOCI Total 31.12.2019
Level 1 Level 2 Level 3
Financial assets measured at fair value
Derivative financial instruments
-
-
-
-
-
-
-
-
Financial assets not measured at fair value
Receivables, non-current assets ,
- -
,
Receivables, current assets
- -
Trade receivables ,
- -
,
Cash and cash equivalents ,
- -
,
,
- -
,
Financial liabilities not measured at fair value
Borrowings, non-current liabilities ,
- -
,
Lease liabilities ,
- -
,
Credit institutions ,
- -
,
Borrowings due within one year ,
- -
,
Supplier finance arrangements
- - - -
Trade payables ,
- -
,
,
- -
,
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Foreign currency risk
The Group purchases and sells internationally in dierent currencies however
mainly in USD, GBP and JPY. The Group as such has positions in non-functional
currencies being, purchase and sales obligations (recorded purchase and sales
orders) and forecasted sales (inventory destined to be invoiced in a non-functional
currency, for example inventory destined for a USD market). If B&S Group would
not hedge these positions it would run transactional risk until the moment the
cash is received. Since the Group does not want to be subject to these risks the
positions are hedged on a daily basis. The positions are hedged by maintaining a
bank balance in the matching currency. On a daily basis via spot FX purchases and
sales, the bank balance in foreign currencies is matched with the outstanding
exposure following the sales orders, purchase orders and forecasted sales
(inventory).
Foreign currency sensitivity analysis
The Group is mainly exposed to the US Dollar as indicated in the next table.
Assuming the Euro had strengthened (weakened) 3% against the US Dollar compared
to the actual 2020 rate with all other variables held constant the hypothetical result
on income before taxes would have been a change of € 4,726,000. A 3% increase
or decrease of the other currencies the Group is trading in would not have a
significant impact on both the income before taxes and the equity of the Group.
x 1,000 Foreign currency 31.12.2020 31.12.2019
Assets Liabilities Assets Liabilities
USD , , , ,
GBP , , , ,
JPY ,, , , ,,
Measurement of fair values
The following tables show the valuation techniques used in measuring Level 2 fair
values, as well as the significant unobservable inputs used:
Type Valuation technique Significant
unobservable
inputs
Inter-relation-
ship between
significant
unobservable
inputs and fair
value measure-
ment
Forward exchange
contracts
Market comparison
technique: The fair values
are based on broker
quotes. Similar contracts
are traded in an active
market and the quotes
reflect the actual
transactions in similar
instruments.
Not applicable Not applicable
Financial risk management objectives
As a result of its activities, the Company is exposed to various financial risks.
The Company applies a Group-wide treasury policy for the adequate management
of cash flows and financing flows combined with management of the related
financial risks, such as currency risks and interest rate risks.
A summary of the main financial risks is provided below. The risks are linked to
the Company’s core objectives and categorised as liquidity risks, currency risks,
interest rate risks and credit risks. Also mentioned is how the Company manage
these risks.
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management and acceptable for global trading. As a result of our stringent debtor
policies, debtor write-os are limited.
Management acknowledges that general client payment behaviour has been
adversely aected by the deteriorating creditworthiness of clients and the decline
of overall liquidity of the Group during the economic crisis. This is especially
relevant in respect of the insurance companies that have downgraded limits on
clients. It is certainly putting extra pressure on accurately dealing with credit risks.
Liquidity risk
Liquidity risk is the risk that B&S Group S.A. is unable at the required time to meet
its financial obligations. Liquidity management is based on the principle that
sucient liquidity is maintained in the form of credit facilities or cash and cash
equivalents to meet the obligations in both normal and exceptional circumstances.
Cash flows are forecasted within the Group on a regular basis and the extent is
determined to which the Group has sucient liquidity for the operating activities
while maintaining sucient credit facilities (headroom).
The total credit facilities, excluding non-current borrowings, amounted to € 483
million as at December 31, 2020, meaning a headroom of € 317 million under the
existing facilities. The Company therefore has credit facilities that are sucient for
the existing and expected credit requirements of the Group. Other than regular
exchange rate eects on liabilities in foreign currencies attracted to hedge the
exposure on receivables and payables in foreign currencies, the credit facilities
and supplier finance arrangements did not consist of non-cash movements.
The extent of the risk that covenants agreed with financial institutions are breached
is regularly determined. With the present Net Debt/EBITDA and interest coverage
B&S Group S.A. is comfortably within the covenants agreed with the various
financial institutions of a maximum Net Debt/EBITDA (pre-IFRS 16) of 3.5 and a
minimum interest cover (pre-IFRS 16) of 3.0. These agreed covenants are similar
for the main financial institutions. To avoid becoming limited by our balance sheet
when sales volumes pick up again post-Covid-19 and sourcing opportunities arise,
Interest rate risk
The Group is exposed to interest rate risks because the entities are financed by
both fixed and variable rate interest borrowings.
On the basis of the financing position as at year-end 2020, B&S Group S.A. estimates
that an increase of 1 percentage point in the euro money market interest rates
would have a negative eect of approximately € 1.9 million on net finance costs
and thus the result before taxes and a negative eect of € 1.4 million on equity.
Fluctuations in long-term interest rates had a limited direct eect on the result,
as the interest rate terms are fixed.
Credit risk
Credit risk is the risk of financial loss if a customer or counterparty in a financial
instrument fails to meet its contractual obligations. The risk for B&S Group S.A.
arises mainly from trade receivables, for which credit concentration is limited.
The activities of the retail segment consist mainly of retail activities in exchange
for direct cash. The segments B&S and HTG have a large number of customers
and accordingly there is no material concentration of credit risk.
As the Company trades with a large number of clients around the world, strict
internal policies and guidelines have been drawn-up regarding business agreements
with new clients as well as the setting of payment terms and credit risk management.
The Corporate rule is that trade transactions must be secured, either by payment
up front, insurance or by a secured payment instrument (guarantee or letter of
credit). Before doing business with new clients their creditworthiness is checked
by the internal credit risk department.
The internal credit risk department also monitors outstanding payments on a daily
basis using an automated and sophisticated credit risk monitoring system.
This process meets the requirements specified by the insurance institutions.
The rigid handling of new client acceptance and payment control means the
Company’s debtor risk is fairly limited and well under control. The average
outstanding debt period is less than 60 days, which is within the limits set by
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we pro-actively engaged with our relationship banks to agree on a covenant holiday
for three test periods (HY 2020, FY 2020 and HY 2021).
A 10% decrease in our operating result (defined for this purpose as operating result
before depreciation of property, plant and equipment and amortisation of intangible
assets and impairments) would increase Net Debt/EBITDA by 0.3 points,
at unchanged Net Debt. The Net Debt/EBITDA covenant agreed with financial
institutions is set at a maximum of 3.5 points. This covenant would only be breached
if the operating result decreases by more than 35%.
A 10% decrease in our operating result (defined for this purpose as operating result
before depreciation of property, plant and equipment and amortisation of intangible
assets and impairments) would reduce interest coverage by 1.5 points, at unchanged
interest rates on interest-bearing debt. The interest coverage rate covenant agreed
with financial institutions is set at a minimum of 3.0 points. This covenant would
only be breached if the operating result decreases by more than 79%.
The following table represents the Group’s remaining contractual maturity for its
non-derivative financial liabilities with agreed repayment periods. The tables contain
the non-discounted cash-flows as per the first date the Group can be required to
pay.
x € 1,000 31.12.2020
Interest < 1 year 1 <> 5 years > 5 years Total
Non-interest bearing ,
- -
,
Lease liabilities .% , , , ,
Variable interest rate instruments .% , ,
-
,
Fixed interest rate instruments .%
-
,
-
,
Closing balance at 31.12.2020 , , , ,
x € 1,000 31.12.2019
Interest < 1 year 1 <> 5 years > 5 years Total
Non-interest bearing ,
- -
,
Lease liabilities .% , , , ,
Variable interest rate instruments .% , ,
-
,
Closing balance at 31.12.2019 , , , ,
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Capital risk
No significant changes in terms of capital management were eected in the year
under review. An enabling condition in our policy is a healthy financing structure
that maintains a balance between adequate solvency, the availability of adequate
working capital and sucient available funding. The Company’s balance sheet
structure and cash flow generation remains strong over years. This enables us to
continue to grow organically and through acquisitions.
The following table detail the Group’s expected maturity for its non-derivative financial assets.
x € 1,000 31.12.2020
Interest < 1 year 1 <> 5 years > 5 years Total
Non-interest bearing ,
- -
,
Fixed interest rate instruments %
-
, ,
Cash and cash equivalents ,
- -
,
Closing balance at 31.12.2020 , , ,
x € 1,000 31.12.2019
Interest < 1 year 1 <> 5 years > 5 years Total
Non-interest bearing ,
- -
,
Fixed interest rate instruments % , ,
Cash and cash equivalents ,
- -
,
Closing balance at 31.12.2019 , , ,
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The table below sets out the remuneration of the Supervisory Board:
x € 1,000 2020 2019
Annual fee
Entities with joint control or significant influence over the entity
The table below sets out the transactions with entities where the main shareholders
have joint control or significant influence over the entity:
x € 1,000 31.12.2020 31.12.2019
Transaction
value
Balance
outstanding
Transaction
value
Balance
outstanding
Sales of products and services , , ,
Purchase of products and
services , , ,
Premises rented , , ,
Interest received on loans issued
- -
Loans issued
- - -
,
Loans received
-
,
- -
Other receivables
-
- -
Operating expenses
-
-
Charged costs , ,
Additionally, in 2020 the Group acquired the remaining 49% of the shares of STG
Holding Import-Export S.L. from a related party, for a consideration at arm’s length
of € 1,500,000.
31. Related party transactions
The members of the Executive Board and the members of the Supervisory Board
together are the key management of the Company.
Remuneration of members of the Executive Board
During 2020 the Executive Board consisted of the following members:
◾
Mr. T de Haan (as per August 11, 2020)
◾
Mr. J.B. Meulman (until July 3, 2020)
◾
Mr. P. Kruithof (as per May 19, 2020)
◾
Mr. G. van Laar (until May 19, 2020)
◾
Mr. B. Schreuders
◾
Mr. N.P.G. Groen
The table below sets out the remuneration of the Executive Board:
x € 1,000 2020 2019
Gross salary , ,
Social security charges
Pension charges
Severance payments ,
-
Variable short-term remuneration
, ,
Remuneration of members of the Supervisory Board
During 2020 the Supervisory Board consisted of the following members:
◾
Mr. J.A. van Barneveld
◾
Mr. W.A. Blijdorp
◾
Mr. J.C. Beerman
◾
Mr. R.P.C. Cornelisse
◾
Ms. K. Koelemeijer
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The assets acquired and liabilities recognised at the dates of the acquisitions can
be specified as follows:
x € 1,000
Non-current assets
Intangible fixed assets
Property, plant and equipment
Current assets
Inventory ,
Trade receivables ,
Other receivables ,
Cash and cash equivalents ,
Current liabilities
Trade payables (,)
Other current liabilities (,)
Non-current liabilities
Deferred tax liabilities ()
Borrowings ()
Other non-current liabilities (,)
,
Associated companies
The associated companies consist of the following entities:
◾
Comptoir & Clos SAS, France (in liquidation)
◾
Capi-Lux South Africa (PTY) Ltd., South Africa
◾
STG Logistica Y Depositos S.L., Spain
◾
Next Generation Parfums B.V., the Netherlands
The table below sets out the transactions with these companies:
x € 1,000 31.12.2020 31.12.2019
Transaction
value
Balance
outstanding
Transaction
value
Balance
outstanding
Sales of products and services ,
Purchase of products and
services
-
,
Interest received on loans issued
-
Loans issued
-
-
32. Acquisitions
During the financial year the Group acquired the following company:
% Date
Top Care Distribution, S.L.U., Spain % ..
Top Care Distribution is a wholesale distributor and its product portfolio has a
clear fit with the Health & Beauty business of the Group. The acquisition is fully
consolidated from the date on which the Group gained control, which was July 21,
2020. The acquisition is accounted for using the acquisition method.
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33. Subsequent events
There were no material events after December 31, 2020 that would have changed
the judgement and analysis by Management of the financial condition as at
December 31, 2020 or the result for the year of the Group.
The goodwill arising on these acquisitions can be specified as follows:
x € 1,000
Total considerations ,
Less: fair value of identifiable net assets acquired (,)
The goodwill is made up of the quality of the workforce and the expected synergies
from combining operations. None of the goodwill is expected to be deductible
for income tax purposes.
Impact of acquisition
The acquisition contributed € 8.4 million revenue and € 31 thousand to the Group’s
profit for the period between the date of acquisition and the reporting date. If the
acquisition had been completed on the first day of the financial year, Group
revenues for the year would have been € 12.5 million higher and Group profit
would have been € 0.1 million higher.
Transactions under common control
At July 21, 2020 the Group acquired the remaining 49% of the shares of STG
Holding Import-Export S.L. from a related party, for a consideration at arm’s length
of € 1,500,000. The dierence between the acquisition price and the non-con-
trolling interest in the assets and liabilities is accounted for in the retained earnings.
At September 14, 2020 the Group acquired the remaining 20% of the shares of
Dutch Care Supplies B.V. for an amount of € 800,000. The dierence between
the acquisition price and the non-controlling interest in the assets and liabilities
is accounted for in the retained earnings.
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157B&S Group S.A. Annual Report 2020
List of subsidiaries
Set out below are B&S Group S.A.’s significant subsidiaries at December 31, 2020.
The disclosed significant subsidiaries represent the largest subsidiaries and represent
approximate 90% of the total result before taxation of the Group. All subsidiaries
are 100% owned unless stated otherwise.
Anker Amsterdam Spirits B.V., the Netherlands
B&S B.V., the Netherlands
B&S Brand Distribution B.V., the Netherlands (formerly known as B&S Bosman Global B.V.)
B&S HTG B.V., the Netherlands (95%)
B&S International B.V., the Netherlands
B&S Investments B.V., the Netherlands
B&S Foodservice B.V., the Netherlands (formerly known as B&S Köpcke Global Supply B.V.)
B&S LMCS DMCC, U.A.E.
B&S World Supply DMCC, U.A.E.
Capi-Lux Netherlands B.V., the Netherlands
Checkpoint Distribution B.V., the Netherlands
F.C.T. B.V., the Netherlands
FragranceNet.com Inc., U.S.A.
JTG B.V., the Netherlands (75.38%)
HTG Liquors B.V., the Netherlands
Koninklijke Capi-Lux Holding B.V., the Netherlands
Lagaay Medical Group B.V., the Netherlands (70%)
New World Distribution DMCC, U.A.E.
Paul Retail B.V., the Netherlands
Topbrands Europe B.V., the Netherlands (67.17%)
World Class Products Group N.V., Netherlands Antilles
Contact
B&S Group S.A.
14, Rue Strachen
L-6933, Mensdorf
G.D. Luxembourg
Tel: +352 2687 0881
www.bs-group-sa.com
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