Annual Report 2014 Net Sales 500,000 €2,572 Sign-Ups Million

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Annual Report 2014 Net Sales 500,000 €2,572 Sign-Ups Million Sligro Food Group N.V. ANNUAL REPORT 2014 NET SALES 500,000 €2,572 SIGN-UPS MILLION GREEN BLOOD CERTIFICATES SLIGRO 3.0 MAASTRICHT MARKET SHARE TO 22,9% NET PROFIT SLIGRO €69 FOOD GROUP A LISTED COMPANY MILLION FOR 25 YEARS CONTENTS Annual review 2 FINANCIAL STATEMENTS 101 Key figures 8 Profile 9 CONSOLIDATED Locations 10 Consolidated profit and loss account for 2014 102 Important dates 11 Consolidated statement of recognised income and expense for 2014 103 Sligro shares 12 Consolidated cash flow statement for 2014 104 Directors and management 15 Consolidated balance sheet as at 27 December 2014 105 Consolidated statement of changes in equity for 2014 106 Notes to the consolidated financial statements 107 EXECUTIVE BOARD 17 Accounting policies 108 REPORT Notes 115 Strategy 17 COMPANY Commercial developments 18 Company profit and loss account for 2014 144 → Food retail 24 Company balance sheet as at 27 December 2014 145 → Foodservice 33 Notes to the company financial statements 146 Organisation and employees 45 Corporate social responsibility 54 OTHER INFORMATION 150 Risk and risk management 75 Corporate governance 78 Independent auditor’s report 150 Capital expenditure 81 Proposed profit appropriation 153 Results 82 Financing 86 OTHER INFORMATION NOT 25 years as a listed company 88 FORMING PART OF THE FINANCIAL Outlook 91 STATEMENTS Directors’ statement of responsibilities 92 Ten-year review 154 Corporate governance statement 93 Global Reporting Initiative (GRI) 156 Eerlijk & Heerlijk certification marks 158 Report of the Supervisory Board 94 Managers and officers 159 1 ANNUAL REVIEW 2014 This annual review contains a summary of the main topics in this report. ECONOMY MARKET The Netherlands started a slow climb out of an economic In 2014 the foodservice market remained in the red. It slump in 2014, resulting in a certain amount of growth. continued to contract slightly, although to a much lesser Consumer confidence also improved, and this was probably extent than in 2013. Moreover, this trend was due not so attributable in part to the resurgence in the housing market. much to consumers as to the 'corporate' market, there being This gives grounds for hope, as trends in the foodservice a substantial decline in sales to the care sector, owing to market are strongly correlated with consumer confidence. changes in and constraints on that market, and this situation will continue in the coming years. The decline was partly due to a shift away from residential care towards home care, and partly to budgetary constraints. This last trend is an unfor- tunate one because in the care market food is very important when it comes to the client's perception of quality, yet it is a relatively small component of cost. The market as a whole may possibly see some growth in 2015, following seven lean years in which more than 10% of the market 'evaporated' (the decline was even greater when measured in terms of volume). It is probably too much to hope that we will now have seven fat years, as in the Bible story, but we seem to be close to turning the corner. The supermarket channel saw sales stabilise in 2014. At the same time the price level rose slightly which meant volumes came under some pressure. This market has not experienced a year without any growth for a long time. In recent years it Koen Slippens, CEO managed to keep growing slowly by capturing market share from specialist retail outlets and the foodservice market. Most importantly, there was growth in employment. This However, retailers that have not traditionally been active in was very welcome, coming as it did after years of mainly bad the food market are now successfully offering more and news on the employment front. Although the recovery will be more supermarket product ranges, and this development, gradual, it does seem to have begun. Furthermore, as a together with the rise of Lidl, is bringing a great deal of business, we have learned to deal with a stagnating pressure to bear on full-service supermarkets. When a economy, and we have performed relatively well market comes under pressure, this tends to lead to pressure nevertheless. This is a strong starting position to have in an on prices and margins too. economy that appears to be slowly improving. 2 FOODSERVICE from our stores and the marketing and construction departments Foodservice performed better than expected in 2014. The have worked together closely over the past year and have acquisitions of Rooswinkel and Horeca Totaal Sluis were demonstrated just what our corporate culture is capable of. integrated into our company. The challenges presented by the Following Maastricht, Gouda and Eindhoven were also market over the past years took their toll on one of our former successfully converted to the 3.0 style. competitors, but we were able, by making great efforts and taking decisive action, to deal with the consequences for some of its customers. We also succeeded in securing many other new customers, as a result of which we were able to report yet another year of organic growth in our market share. We have been growing organically at a rate of around 0.5 percentage points of market share for more than a decade, and, thanks in part to the acquisitions, in 2014 our market share grew by as much as 1.7 percentage points to 22.9%. This is almost double the level of 10 years ago. In the long term, we aim to increase our market share to approximately 30%. The main way to gain market share is by focusing on the customer's needs. Sligro has set the bar higher, however, by aiming for superlative customer focus. Our gain in market share did, of course, cause pain for our competitors, which are, to a great extent, major multi- nationals. According to our data, with our market share of more than 20%, we achieved half of the operating profit of the sector as a whole. SLIGRO 3.0 The most important development at the foodservice business was without doubt the refinement of our commercial policy, which we refer to internally under the umbrella name of Sligro 3.0. We worked hard on this in 2013, and on 10 March 2014 we In 2014 a start was made on the second phase of the proudly opened our first new style cash-and-carry wholesale programme, Sligro 3.0 online, which, as the name indicates, outlet in Maastricht. We have four aims: to be Lekkerder, focuses primarily on the online environment. We have already Voordeliger, Persoonlijker en Inspirerender (‘Tastier’, ‘better made great progress in that area, as the new Sligro website Value’,’more Personal’ and ‘more Inspiring’). The changes, and online communications, among other things, go to show. however, go much further than our visual identity and our The Group has business-to-business online sales (including revamped product range and its presentation. It is a totally delivery service sales) of around €1 billion, which means we are different approach to excellent customer focus, and the first now by no means a small player in this field. The next phase major phase has been concluded. A large team of our colleagues will therefore concentrate mainly on the 'customer's journey', in which we will offer more inspiration, more information and more support. It goes without saying that we also hope to generate additional sales as a result. A great deal of work was carried out behind the scenes in 2014. Our new e-commerce platform for our delivery service customers, into which Slimis, our current online ordering application, will be integrated, will go live at the end of 2015. Our customers rate this application highly, but we still believe we can substantially exceed their expectations. Following the launch of the new application, new functionalities will gradually be added in stages in a process referred to internally as 'up and over to the power of ten', as a professional cyclist might say. We believe that Sligro 3.0 and Sligro 3.0 online represent significant steps forward in the strategy of our foodservice 3 business. The market is changing massively, and based on this sively that our 3.0 stores can count on an enthusiastic welcome we have come to some far-reaching conclusions. It is good that from our neighbours to the south. It will be important of course we have the courage to rebuild a system that is currently to include a number of local elements and product ranges. We rated 9 out of 10 by customers, because we know better than expect that in the course of 2015 we will be able to reach a anyone else how quickly demands and wishes can sometimes decision on how we intend to proceed in the medium to change. When good is no longer good enough, you need to be long term. ready to take drastic measures while you are still in good shape. FOOD RETAIL The dynamic nature of our company is not limited to Food- BELGIUM service. The food retail business has just come to the end of the During the past few years our activities on the Belgian market second year of its medium-term plan. One important step have quadrupled, with annual sales rising to a level of forward in 2014 was the introduction of the Fijnproevers approximately €40 million. In addition to serving customers in ('Gourmets') loyalty programme. Loyal members of the the border region who visit our cash-and-carry wholesale programme benefit by saving points, which can be used to outlets, we have been asked by some large customers whom obtain discounts, free items or lower-priced items either in we serve in the Netherlands to deliver to their Belgian branches.
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