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    2020 Annual Report Sligro Food Group


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    2 Sligro Food Group 2020 Annual Report Contents Foreword Koen Slippens Showed resilience 5 Strategy Market More Boundaries integration shifted 11 13 Our people CSR Foster Coordinated action for talent a better range of products 21 31


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    3 Sligro Food Group 2020 Annual Report Contents Contents Contents Key figures for 2020 4 Netherlands Financial statements Foreword 5 Key data 8 Market and market size in the Netherlands 60 Consolidated Financial results in the Netherlands 62 Consolidated statement of profit or loss 88 Sligro Food Group Netherlands Consolidated statement of comprehensive income 89 Sligro Food Group developments in 2020 62 Consolidated statement of cash flows 90 Plan for next year in the Netherlands 66 Consolidated statement of financial position 91 History 10 Consolidated statement Our strategy 11 of changes in shareholders’ equity 92 How we add value 12 Belgium Notes to the consolidated financial statements 93 Market approach 13 Synergies 16 Market and market size in Belgium 70 Company Developments in 2020 17 Financial results in Belgium 71 Company statement of profit or loss 132 Organisation and employees 21 Sligro Food Group Belgium developments in 2020 71 Company statement of financial position Corporate Social Responsibility 31 Plan for next year in Belgium 73 before profit distribution 133 Financial results 39 Notes to the company financial statements 134 Risk management 49 Other notes 136 Outlook 58 Governance Other information Executive Board member details 75 Independent auditor’s report 137 Supervisory Board member details 76 Profit distribution policy in the articles of association 147 Report of the Supervisory Board 77 Corporate governance 83 Statement of Directors’ responsibilities 85 Other information Corporate governance statement 86 Not pertaining to the financial statements Five-year overview 148 Profile 149 Key dates 150 Shares and dividend policy 151


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    4 Sligro Food Group 2020 Annual Report Contents Key figures Key figures for 2020 x € million 1) ‘From the moment we 1,946 75 Net sales EBITDA became 2019: 2,395 2019: 127 aware of the Change: –18.7% Change: –40.5% impact of COVID-19 on (70) Net profit (loss) (76) EBIT our net sales 2019: 34 2019: 44 and results, Change: –304.3% Change: –272.3% we shifted the organisation’s 67 - emphasis to Free cash flow Dividend per share proposed (x € 1) cash flow.’ 2019: Change: 38 +77.6% 2019: 0.55 Rob van der Sluijs CFO 22.7 Carbon reduction since 10.8 Sustainable product range 2010 (%) (% of net sales) 2019: 27.7 2019: 11.6 4,116 73/27 Employees Male/female ratio (full-time annual average) (%) 2019: 4,100 2019: 74/26 Change: +0.4% 1) Continuing operations


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    5 Sligro Food Group 2020 Annual Report Contents Foreword Foreword ‘Our teams Economy and market have As regards economic developments and our sales markets, 2020 was entirely defined by COVID-19. The outbreak of the demonstrated pandemic and the measures governments took to combat it flexibility and seriously affected our markets. The hospitality industry, sports clubs, stadiums, leisure facilities, corporate catering and vigour and events were all hit hard. The delivery channel was affected again and again suffering periods in which net sales fell by our market as much as 75%. In contrast, cash-and-carry gave many entrepreneurs a good alternative and net sales there even position increased. has been FoodService Instituut Nederland (FSIN) estimates that the market as a whole, which was redefined more broadly last consolidated’ year, saw wholesale value net sales drop by 33%. In this light, we considerably outperformed the market and gained market share. The combination of cash-and-carry and delivery service, Koen Slippens CEO the broad and varied customer base, and our company’s entrepreneurial culture all contributed to this feat. As pointed out earlier, we have little information on the Belgian market. A survey by Foodservice Alliance suggests that the hospitality industry in Belgium saw net sales drop by 51% in 2020, based on consumer spending. Much like in the Netherlands, net sales did not drop as sharply in the institutional market in Belgium. Given our assessment that the Belgian market was hit slightly harder than the Dutch market, we ultimately outperformed the market in Belgium. At group level, the total drop in net sales (excluding tobacco- related and acquisition-related revenue) due to the impact of COVID-19 measures came in at approximately €0.5 billion over the whole year.


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    6 Sligro Food Group 2020 Annual Report Contents Foreword Netherlands Organisation and employees In the Netherlands, our short-term focus was to offset the drop in net sales and We realise that happy, engaged, and professionally strong employees and teams ‘We have made adjust costs and investments to keep the cash in the organisation. We were are the basis for success in business. While we have had a good position in this successful in that regard and have also decided to still push ahead with a respect for many years now thanks to our family culture, a growing and substantial number of strategically important processes. The physical integration of the changing organisation still has to keep working to retain that position. To give progress in Heineken operations into our delivery service network has been completed and, as of the fourth quarter, all the functionality is operational, offering our joint this effort the attention it deserves, we developed our People Strategy in 2020, which we have meanwhile started to pursue step by step, focusing on the areas our Next-Gen Sligro-Heineken customers the ‘one order, one delivery, one invoice’ experience. Our ordering platform has been migrated to SAP and all our customers have of people & teams, leadership, culture, and organisation. Through ongoing dialogue with our employees, we address our employees’ specific needs and Cash-and-Carry been transferred to that new platform. The integration of De Kweker, which was acquired in 2019, was accelerated and completed and we have made substantial questions and come up with adequate solutions. Using StakeholderWatch, we continuously monitor our employees’ experience of these efforts, and we are programme, progress in our Next-Gen Cash-and-Carry programme which has enabled us to already seeing the first positive impact on our employee engagement scores. stimulate sales and make our cash-and-carry more future-proof. which has CSR Belgium The world is changing at rapid pace. In 2020, with our motto of ‘Going for enabled us to The fall in net sales in Belgium was likewise offset by specific interventions in sustainability together’ in mind, we have looked at several key themes that stimulate net costs. The preparation for the arrival of a new ERP landscape was and still is high on the agenda for Belgium. Numerous preliminary processes have been play regarding and alongside our sustainable 'eerlijk & heerlijk' product range. These include the steps we have taken with respect to our organic range, sales this year completed to make the transition easier and more controlled in 2021. Work has naturally also been done on further expanding our commercial capability by products made with respect for animals, our plant-based products, targets in terms of packaging, healthy food, and collaborations with stakeholders such and make our developing and introducing concepts targeted at specific customer segments, harmonising the range of products in Belgium and continuing to integrate the as Good Fish, TSC, and BSCI. In this annual report, we publicise, as we do every year, our performance in our key CSR focus areas, assessing it against our cash-and-carry logistics network into that of the Group. In the fresh groups, Belgium has taken sustainability targets for 2030. For more details about the above subjects, over responsibility for ‘Game and Poultry’ from our partner Ruig and the we refer you to our website. more future- transition of fresh fish from Belgium to the Netherlands commenced following the announced closure of Océan Marée. In an operational sense, there has been Results proof.’ clear improvement and embedding at cash-and-carry stores, which will benefit In 2020, our net profit was down €104 million, resulting in a loss of €70 million. both the quality of our service to our customers and the returns for the Group. This result is due partly to the direct impact of the drop in net sales caused by the COVID-19 pandemic and partly to the ensuing one-off non-cash impairment that we recognised in Belgium in the interim figures. On a positive note, we Koen Slippens posted an operating profit (EBIT) in the second half of the year, despite the CEO second lockdown. Plus, the focus on cost savings and limiting CAPEX has produced a positive free cash flow totalling €67 million. As a result, the net interest-bearing debt position (not including lease liabilities) was down €71 million to €165 million, meaning that we ended the year with a leverage ratio of 2.8. Like at the half-year point, the temporary broadening of the ‘basic covenants’ agreed with the banks and USPP financiers turned out not to be necessary at year-end. Thanks to the support of our main bank and the USPP financier, there is also additional leeway for 2021 to bridge the period until the market starts to recover.


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    7 Sligro Food Group 2020 Annual Report Contents Foreword Dividend Outlook Given the 2020 results and the uncertainty about the coming months, recovery The consequences of COVID-19 will also dominate a major part of 2021. of our financial position will take priority, as communicated earlier, and there are If the vaccination strategy is successful, we expect to see gradual recovery from insufficient grounds to pay a dividend for the 2020 calendar year. Furthermore the second quarter on. On the basis of our experiences in 2020, we know that we took advantage of the Dutch government’s NOW wage subsidy schemes, recovery can happen quickly and that consumers will return to hospitality and one of the conditions for NOW 3.1 is a ban on dividends for 2020. venues as soon as they are permitted to do so. These assumptions lead us to expect that we will approach our pre-COVID-19 net sales levels during the Risk management second half of the year. We expect cost-induced inflation not to show any We regularly meet with our Supervisory Board to identify and assess unusual movements and come in at a normal level between 1% and 2%. opportunities and threats in the market in which we operate, and how they impact on our business model. Like in previous years, the main risks and focus areas were reassessed against our strategic intentions in 2020. The focus was High Five also on COVID-19, the degree to which we were prepared for this kind of event, Our five strategic focus areas: and how we handled the impact. Our conclusion is that our flexibility, 1. Excel in customer satisfaction in the delivery segment. entrepreneurial culture, hands-on management, and long-term relationships with 2. Excel in customer satisfaction in the cash-and-carry segment. customers and partners were the driving forces behind our response. We look 3. Operational excellence and returns in the supply chain. back with satisfaction on the way we have handled the fallout of this 4. A happy, committed and professionally strong team. unforeseeable phenomenon. 5. Successfully launch SAP. Furthermore, we continue to focus on our five long-term strategic themes. These themes were launched in 2020 as part of our annual theme of ‘Give me Five’. Sadly, ‘giving each other five’ was precisely what we could not do in 2020. Despite the extreme drop in net sales, our cost base was well budgeted in 2020. We proceeded with a number of strategic programmes or even accelerated them and our five strategic priorities are still standing strong. Our teams have demonstrated flexibility and vigour and our market position has been consolidated. That basis and our expectation that markets will recover during the course of the year ensure that we enter 2021 with boundless energy and our heads held high. Developing the annual theme for 2020, we plan to reaffirm it in 2021 with ‘High Five’ as our theme. Koen Slippens CEO


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    8 Sligro Food Group 2020 Annual Report Contents Key data Key data 1) Change Change x € million 2020 2019 (%) 2020 2019 (%-point) Result Ratios Net sales 1,946 2,395 (18.7) Net sales growth as % (18.7) 2.1 (20.8) EBITDA2) 75 127 (40.5) Profit growth (loss) as % (304.3) (25.3) (279.0) EBITA 7 66 (89.1) Gross margin as % of net sales 24.0 24.4 (0.4) EBIT (76) 44 (272.3) EBITDA as % of net sales 3.9 5.3 (1.4) Net profit (loss) (70) 34 (304.3) EBITA as % of net sales 0.4 2.8 (2.4) Net cash flow from operating activities 101 132 (23.4) EBIT as % of net sales (3.9) 1.8 (5.7) Free cash flow 67 38 77. 6 Profit (loss) as % of net sales (3.6) 1.4 (5.0) Dividend proposed 24 (100.0) Net profit (loss) as % of average shareholders’ equity (15.0) 6.4 (21.4) EBIT as % of average net invested capital (8.9) 5.0 (13.9) Closing capital balance Net interest-bearing debts/EBITDA9) 2.8 2.2 0.6 Equity 432 500 (13.6) Shareholders’ equity as % of total capital 36.0 34.3 1.7 Net invested capital3) 802 902 (11.1) Net interest-bearing debts 402 424 (5.3) Details per share with nominal value of €0.06 Change Total capital 1,198 1,455 (17.7) x€1 2020 2019 (%) Employees Number of shares in issue (x million) 44.14 44.11 0.1 Annual average (full-time) 4,116 4,100 0.4 Shareholders' equity 9.78 11.33 (13.7) Workforce male/female ratio 73/27 74/26 Profit (loss) (1.59) 0.78 (304.2) Executive Board male/female ratio4) 87/13 83/17 Dividend proposed 0.55 Supervisory Board male/female ratio 80/20 80/20 Employee expenses5) 219 218 0.5 1) Continuing operations. Net sales per employee (x €1,000) 473 584 (19.1) 2) Gross operating result; the result before financial income and expenses, depreciation, amortisation and impairment. Employee expenses per employee (x €1,000) 53 53 0.1 3) Excluding associates. 4) Concerns the International Board, Dutch Management Team and Belgian Management Team. Corporate Social Responsibility 5) Salaries, social security costs and pension expenses. Carbon reduction since 2010 as % 22.7 27.7 6) Data based on StakeholderWatch, only for the Netherlands. Sustainable product range as % of net sales 10.8 11.6 7) In tangible fixed assets, assets held for sale, and software (on a transaction basis). Customer satisfaction6) 73 73 8) Excluding impairment. Employee satisfaction6) 63 56 9) Excluding IFRS 16 Leases. Supplier satisfaction6) 63 67 Investments Net investments7) 13 85 (84.2) Depreciation and amortisation8) (58) (54) 9.3


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    9 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Sligro Food Group B2B food service companies in the Netherlands and Belgium Wholesale sites for food and beverage enthusiasts Cash-and-carry Delivery Online Partnership with Heineken Nederland Net sales in 2020 Wide product range (€ x million) Food (dry groceries, fresh, frozen food) Drinks Non-food (food-related) 1,946 Number of articles 75,000 Belgium 9% Netherlands 91% Number of employees 5,284 Our formulas/market approach Sligro Delivery Cash-and-carry De Kweker 57% 43% Van Hoeckel Bouter Tintelingen Sligro-ISPC JAVA Foodservice Our production companies SmitVis Culivers Océan Marée Our fresh partners Kaldenberg Slagerijen Ruig, Wild & Gevogelte Smeding, AGF


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    10 Sligro Food Group 2020 Annual Report Contents Sligro Food Group History The acquisition of Prisma The acquisition of Acquisition of the Jan Louwers Foodretail (including the VEN Groothandelcentrum significantly Abel Slippens founded cash-and-carry wholesale Acquisition of Wunderink, an supermarket formats MeerMarkt, reinforced the Sligro brand’s position Sligro entered the Slippens Groothandel, a business in Eindhoven and first Arnhem-based family business, saw Attent, Golff and Rekra) kicked off in the food service market, Belgian market by taking Sligro-ISPC store in Antwerp wholesaler specialising in foray into the wholesale market the first hospitality industry Sligro’s food retail operations with especially in the Randstad area of over JAVA (2016) and opened its doors, the first margarine, fats and oils. for the hospitality industry. wholesaler added to the Group. proprietary retail formats. the Netherlands. ISPC (2017). Sligro-ISPC store in Belgium. The first Sligro cash-and-carry Sligro Food Group is listed Acquisition of Van Hoeckel was With the acquisition of EMTÉ, half of the The first Sligro 3.0 Start of strategic Acquisition of De Kweker store opened its doors. on the parallel market of completed; this launched Sligro Edah retail chain (2006), and Sanders cash-and-carry store opened food servicepartnership in Amsterdam. the Amsterdam stock Food Group in the institutional Supermarkten (2010), food retail its doors in Maastricht. with Heineken Nederland. exchange. segment of the food service operations continue to grow to over market. 130 EMTÉ supermarkets by 2018. In 2018, a decision was made to sell the food retail operations and focus solely on food service.


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    11 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Our strategy Sligro Food Group focuses specifically on the food service market in the Netherlands and Belgium with a comprehensive range of food and food-related non-food products and services. Each with their own distinct profile, our various business units focus primarily on our direct customers. Operating under centralised management and supported by a largely internationally integrated, professional and efficient back-office organisation, the business units work closely together on a national level, as well as across the border between the Netherlands and Belgium. Knowledge-sharing between the various operations is encouraged to maximise synergies across the Group. The organisation is driven by our culture of results, respect and We target average annual organic growth of approximately 3% across the entrepreneurship that consistently revolves around our customers and our economic cycle, based on an assumed level of inflation of 1.5%. We expect shared passion for delicious, good-quality and responsibly sourced food. to accelerate our growth through acquisitions, albeit that such inorganic Especially in times of crisis, culture is an important compass. During the growth is by definition less gradual. Our aim is for our profit to grow at least COVID-19 crisis, we have found that our ‘decency in business’ promise at the same pace as our net sales. enabled us to set ourselves apart from the competition in the market. Target: In a growing organisation, preserving and further conveying our signature Given the current level of fragmentation of the Dutch food service market, average organic net culture is a constant focus of attention for us. The influx of new talent, and we expect to be able to make further acquisitions over the coming years, sales growth across therefore new experience, and know-how of employees who have been whereby we will primarily target relatively large players, as the benefits the economic cycle working at Sligro Food Group for years creates an engaging and powerful of an acquisition need to outweigh the complexity of the integration. mix of people. That said, blending these two groups together is a key focus In Belgium, the food service landscape is still more fragmented, while the approx 3% point for our management, and will be high on the agenda of our leadership programme for the coming period. market is in full swing. The objective for our Belgian operations is to secure a leading position in the food service market through a combination of organic growth and acquisitions. Our focus for the coming years will be Aim for profit to grow Sligro Food Group operates in a highly competitive environment where on these two countries. at same pace as rising costs can only be passed on to consumers to a very limited degree. net sales We therefore absorb cost increases by continuously improving our Our strategy focuses on being able to offer shareholders attractive long- operational efficiency, using resources such as effective logistics, term returns. In doing so, we are committed to our corporate social communication, data and information systems. responsibility and we report on our CSR performance. At our listed family-run business, economic and social returns have been going hand The Group handles most of its own purchasing for both the Dutch and in hand for years, underpinning the independent market position that the Belgian business units. Being a member of the Superunie procurement Sligro Food Group aims to hold on to for many years to come. cooperative furthermore gives us access to economies of scale through joint procurement with our fellow members.


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    12 Sligro Food Group 2020 Annual Report Contents Sligro Food Group How we add value Our ambition is to be the undisputed market leader in food service and set the tone in good food in the Benelux countries by excelling in terms of customer experience and returns. By harnessing the power of our people, infrastructure and collaboration with our partners, we create value for all stakeholders. Resources Trends & Strategy Results Outcome Developments Committed employees, from Consumers Create breakthrough innovations in existing Being an attractive partner to customers unified in our • Acceleration of digitalisation and operations by challenging internal and by offering excellent service, adding entrepreneurial culture data-driven applications external world to come up with creative ideas 610,000 5,284 2,250 innovative concepts, and facilitating • Balance between working from and setting up an effective innovation funnel. customers employees suppliers relevant services at competitive prices. Centralised IT infrastructure home and working from the office partners with integrated online • Health, but also enjoying treats Perfect execution by making people Our international growth offers our & data capabilities • Making food and packaging more personally responsible and running operations employees development opportunities. sustainable vs. attention to hygiene based on approved business plans and Sustainable product range Net sales Integrated network of • Increase in take-away and OGSM1). % of net sales x € million Suppliers and partners are empowered cash-and-carry stores and deliveries to boost their sales and introduce new delivery network in the • Attention to green protein (flex People like to do business with us because of products and services. Netherlands and Belgium, consumers) our constant focus on our result-driven, supported from a Central • Importance of local and products ethical, enterprising, and customer-centric 8.2 8.7 10.0 11.6 10.8 2,813 2,142 2,346 2,395 1,946 Society benefits as we create jobs, make ’16 ’17 ’18 ’19 ’20 ’16 ’17 ’18 ’19 ’20 Distribution Centre in Veghel with a story to the professional culture. progress on our integrated CSR targets, Food Service customer Carbon reduction since 2010 EBITDA and pay taxes. ZiN Inspiration platform and Launching innovative Good Food concepts % x € million Sligro Solutions that allow from professional FS customers by tapping into the needs of foodies. Offering shareholders attractive us to offer our customers • Depleted reserves due to long-term returns through controlled relevant services and COVID-19 Retain existing customers by facilitating growth and careful management of 17.4 20.2 20.9 27.7 22.7 156 144 114 127 75 inspiration • Increase in dependency on B2C relevant services on a platform. resources. ’16 ’17 ’18 ’19 ’20 ’16 ’17 ’18 ’19 ’20 portals (compare, reserve, deliver) Central in-house procurement • Increase in format/chain formation Attract new customers through active and Customer satisfaction Dividend per share department combined with • Required rediscovery of corporate targeted marketing and lowering of Stakeholderwatch x€ partnerships through Superunie catering thresholds. and fresh partners • Persistent need for convenience in connection with costs and Pave the way for future international Long-term partnership with expertise of employees expansion with a new IT and organisational 75 73 73 1.30 1.40 1.40 0.55 0.00 Heineken structure. ’18 ’19 ’20 ’16 ’17 ’18 ’19 ’20 1) Strategy model: Objectives, Goals, Strategies & Measures


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    13 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Market approach Sligro Food Group is focused on the food and beverage market. Both in the Netherlands and in Belgium, Sligro Food Group operates in all key food service market segments. From restaurant to fast-food outlet, from hospital to hotel, from caterer to convenience, from amusement park to sports club, from SME to multinational corporation, from bar to cinema, they make up a market that is often referred to as the out-of-home channel. Given that we depend indirectly on consumers’ food spending, economic indicators such as consumer confidence and the unemployment rate are important indicators for developments in our markets. FoodService Instituut Nederland (FSIN) has plotted the link between consumer confidence and the development of food service net sales in the Netherlands over a period of several years: 90.0 9% from each other. Only in areas where integration is not deemed beneficial or 70.0 2% possible do we use individual systems and processes. In doing so, we aim for 50.0 -5% maximum synergies on the one hand and a focus on customers and the market 30.0 -12% situation for each business unit and country on the other. 10.0 -19% Link between consumer confidence and the growth of food service -10.0 -26% Sligro Food Group -30.0 -33% Central distribution centre and head office in Veghel (NL) Consumer confidence -50.0 -40% Food service net sales growth (as %) NETHERLANDS BELGIUM 1997 2001 2005 2009 2013 2017 2020 Central Back Office, Veghel Central Back Office, Rotselaar Through the Group’s various formulas, we target various segments of the food SLIGRO / DE KWEKER VAN HOECKEL SLIGRO-ISPC JAVA FOODSERVICE service market. Our primarily customer-oriented operations are separated to be able to respond to and anticipate customer needs in each specific segment Nationwide network of cash-and-carry and Cash-and-carry and delivery service sites, delivery service wholesale outlets and (former) delivery service site with pick-up option and to the maximum degree possible, whereby operations behind the scenes are Heineken distribution centres delivery from the Netherlands managed centrally as much as possible. Although we have adopted this structure both in the Netherlands and Belgium, we will in Belgium first complete Sligro fresh partners (participations in four fresh companies); specialist production sites another technical integration phase before proceeding to integrate the back for convenience (Culivers), fish (SmitVis and Océan Marée); industrial kitchens (Bouter); Christmas gifts (Tintelingen) office in its entirety. Not only does this synergy ensure a high level of efficiency, it also allows us to set ourselves apart from the competition and keep learning


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    14 Sligro Food Group 2020 Annual Report Contents Sligro Food Group We firmly believe in the power of a strong network made up of an integrated In the Netherlands, we are the market leader in food service with a market whole of cash-and-carry stores and wholesale delivery services combined with share of 26.6% (source: FSIN). In Belgium, we are one of the top five Market shares one digital environment, whereby our people make the difference. The power of the network lies in mutual collaboration. Of our delivery service customers, 70% companies in our market with the JAVA Foodservice and Sligro-ISPC formats, with a market share of around 3.5% (our own estimation, based partly on data 26.6% visit their nearest cash-and-carry store on average twice a month for inspiration of Foodservice Alliance). and advice, or for a last-minute or forgotten purchase. The cash-and-carry stores are ideally suited as a source of inspiration or show room and stock/cash-and-carry Food service market leader centre for smaller food service customers who, when their business grows, can in the Netherlands seamlessly switch to delivery as and when they want. There are also relatively large cash-and-carry customers who prefer to do their own purchasing, to select their fresh and other products themselves, and who appreciate talking shop and 3.5% bouncing ideas off our specialists. Even though we have kept our operations separate to boost efficiency and be able to better meet our customers’ needs, collaboration on a commercial level is solidly anchored. This is reflected in the Food service top five unified pricing, bonus and management information structure for our customers in Belgium that makes purchasing through either channel equally convenient for them. ‘We consider it important to help hospitality professionals become even better at their speciality and their business.’ Hanna Polman Customer Solutions Manager at Sligro


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    15 Sligro Food Group 2020 Annual Report Contents Sligro Food Group 'A single definition of sustainability? There isn’t one. One person might view sustainability as stopping deforestation; another might focus on animal welfare or human rights. That’s the nice thing about my work: it’s never the same. I love working with colleagues, customers, suppliers and other stakeholders, looking at ways of continually improving sustainability and health in our spectrum, such as through our 'eerlijk & heerlijk' concept. Our goal is always to guide our customers as well as we can in their final choice of products.' Hilde Snoeijen Sustainable and Healthy Food Coordinator Head office Veghel ‘Sustainability is different for everyone.’


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    16 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Synergies Instead of a group of companies, Sligro Food Group is one single integrated company with overlapping customer groups and distribution channels. Although there are great differences between the Netherlands and Belgium in terms of culture and preferences in the food service market, there are indeed also a lot of similarities and opportunities for synergies. We are already serving a large number of customers in both countries We organise our procurement management and in particular our through our full network. The know-how and skills of both our Dutch assortment management close to our customers in each of the two and our Belgian employees are deployed on a broad scale across the countries and join forces in procurement across borders as and when organisation, and we have been pleased to see that employees in both possible. Being a member of the Superunie procurement cooperative countries are highly committed to sharing and adopting best practices. furthermore gives us access to significant savings on the part of our food service product range that overlaps with the retail market. In combination Our central distribution centre in Veghel plays a key role in the efficiency with the in-house procurement department, Sligro Food Group thus creates and effectiveness of the Group’s logistics operations, helping us make the a strong procurement block in the market, whereby we define 'strong’ most of the increased scale created by the use of different routes to in terms of ‘strength’ and not in terms of ‘power’. We are about creating market. Maximum supply chain efficiency is not only beneficial from a cost value, not about destroying it. We believe in long-term partnerships with and service quality perspective, it also offers opportunities for sustainability. suppliers. Together with our own production companies and fresh partners, 1 integrated company Owing to the geographic proximity, the network can also partly be used for our food service operations in Belgium. Although a cross-border network is still a threshold that a number of suppliers with a less international we are able to offer all our customers products that set us apart from the competition. The wide range of high-quality and innovative Exclusive Brands is another factor that sets our formulas apart in the market. Exclusive perspective are struggling to overcome, we are thankfully seeing plenty of Brands are developed primarily in close collaboration and based on progress in this respect. The same synergies are achieved in the centralised long-term partnerships with our suppliers. Passion for food and drink structure and systems, with departments and processes set up in a way that enables them to serve the Group as a whole wherever deemed useful. These joint activities are precisely what enables us to invest in people and The power of our unique company culture is an important factor that differentiates us from our competitors in the market. Given that our passion systems wherever it can make a difference. for food and beverages, as well as our customer focus, is in our DNA, and not something we have acquired, it is ‘genuine’ and virtually impossible Unique entrepreneurial company culture Our commercial systems and data can be deployed across all channels, albeit that we do vary the contents per segment based on our customers’ needs. We constantly see new opportunities for further development in this to copy, and our customers experience it that way. This is something that we are immensely proud of. In the Netherlands, we refer to this as our ‘Green Blood’, while in Belgium it is known as ‘Our Salt & Pepper’, which area, through internal benchmarking, but also through successes from are both concepts founded on the same underlying values that unite us. other markets. The supporting technology and data management are highly centralised. We believe that data-driven entrepreneurship will be a crucial factor for our future competitiveness.


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    17 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Developments in 2020 COVID-19 The mass drop in demand in our sector has had an enormous impact, especially because of our relatively high fixed costs (IT, data, logistics Last year was largely dominated by the COVID-19 pandemic and the impact network (fleet of lorries and DCs)), the cost of wastage (‘best before’) and the measures taken by the government had on our customers’ operations customer bankruptcies. Despite repeated requests, the government has and, by extension, those of Sligro Food Group. Although a pandemic did not not been prepared to help us to alleviate the consequences of this. feature as such in our risk analyses, by drawing on our culture of However, we were able to make use of the NOW and TWO wage subsidy entrepreneurship and action, our organisation showed great resilience. schemes in the Netherlands and Belgium, which really did help to We are therefore proud of the way in and speed at which our colleagues compensate our loss of net sales, but most of all to retain jobs for our responded time and again to the new developments around COVID-19. permanent employees. We explain the most significant non-recurring Continually upscaling and downscaling operations while remaining sensitive effects of COVID-19 on our figures under ‘Financial results’. to employees, customers, suppliers and all our partners took additional Flexible, effort but in doing so, we were even able to develop some sort of routine as the year went on. Our response was flexible, decisive and always under Netherlands decisive control, despite the enormous impact. We are grateful for the understanding shown by our shareholders, banks and USPP financiers who backed the company’s decisions and provided additional scope where The Group’s loss of net sales and the volatility over the year are represented in the graphs below, which show that delivery services suffered the greatest loss of sales while cash-and-carry actually grew and under necessary. Particularly in times like these, the investment in long-term relationships and partnerships with all our stakeholders pays off. somewhat. control We opened our cash-and-carry stores to non-cardholders in the Netherlands We were unable to influence the general fall in demand due to the COVID-19 measures in our market, but thanks to our broadly-based and Belgium during several periods. In the Netherlands, this was while customer portfolio, the combination of cash-and-carry and delivery services, hospitality venues were closed. That meant that we and other wholesalers and an entrepreneurial, positive attitude towards our customers, we were able to ease the pressure on supermarkets in the Netherlands and performed better than many of our competitors and gained market share. Belgium and enable a better distribution of consumers throughout the available retail space. It is therefore incomprehensible to us that the Dutch In the Netherlands, we also focused on the progress and accelerated government chose not to permit this during the busy Christmas period. completion of a number of major programmes. The physical integration of the Heineken activities was completed within the previously estimated time frame of three years. The technology to enable our joint customers to order from one platform and receive a single invoice was delivered and put into service, thus fulfilling our promise of one order, one delivery, one invoice. In the Netherlands, moreover, our new web environment built on SAP Hybris successfully went live in the summer and all 40,000 of Sligro’s delivery service customers have now been migrated from the old to the new environment. This platform also serves as the basis for our online activities in Belgium. We accelerated the integration of the De Kweker activities. Following its acquisition in 2019, the cash-and-carry activities,


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    18 Sligro Food Group 2020 Annual Report Contents Sligro Food Group the delivery service activities and the head office activities were merged into the Sligro systems and infrastructure in October 2020 – six months earlier than planned. Cash-and-carry stores had a good year, partly due to developments in the ‘Next-Gen Cash-and-Carry’ programme. Numerous adjustments to the range of products, promotional campaigns and management were implemented and well received by our customers. Netherlands Cash-and-Carry We started a delivery service from the cash-and-carry stores for customers 30 who had a need for ‘occasional or irregular’ deliveries and we have now Weekly development in net sales compared to last year made our range of products visible online to all our customers, including (x € million) 20 cash-and-carry customers. It was an important step to further extend digitalisation to the cash-and-carry sites. 2020 2019 10 Belgium 0 We estimate that our net sales developed slightly better in Belgium than 1st quarter 2nd quarter 3rd quarter 4th quarter in the market as a whole. We continued to implement the integration of our , Belgian activities, including the harmonisation of the range of products and prices in Sligro ISPC. The supply chain was further optimised, and the Netherlands Delivery Service central distribution centre in Veghel is increasingly supplying Belgian sites. 30 The procurement organisation is also transitioning to an international model Weekly development in net sales that will be centrally managed from our head office in Veghel. We compared to last year (x € million) announced the closure of the production site Océan Marée in Belgium in 20 the fourth quarter and also that its activities would be transferred to SmitVis 2020 in the Netherlands. The transfer is expected to be completed in the first 2019 10 quarter of 2021. This year was of course devoted to preparing for the arrival of SAP. Numerous processes in the old ERP environment have already been brought into line with the processes that will eventually be used in SAP. 0 1st quarter 2nd quarter 3rd quarter 4th quarter Other Belgium Cash-and-Carry & Besides the developments that impacted primarily on our food service Delivery Service activities in the countries in which we operate, we also worked on a 6 Weekly development in net sales number of cross-border projects at Group level. compared to last year (x € million) Our People Strategy was launched last year. We believe that a happy, 2020 3 engaged and professional team forms the basis for successfully achieving 2019 our goals. This is nothing new and, as a listed family business, is something we have known for a long time, but a strong business culture requires maintenance and continuous attention to retain its strength. The People 0 Strategy provides a solid structure to guarantee that now and in the future. 1st quarter 2nd quarter 3rd quarter 4th quarter


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    19 Sligro Food Group 2020 Annual Report Contents Sligro Food Group The strategy comprises four elements around people & teams, culture, leadership and organisation, and numerous initiatives were developed and implemented in these areas in 2020. The transition to a new digital and ERP environment is in full swing. Despite the operational challenges the market presented us with last year, we decided to continue along the planned route as far as possible. And we have tangible results to show for it: our new digital platform in the Netherlands has gone live, our new article master data environment has been put into operation and the build phase of the first version of the new ERP environment has largely been completed. Although we had expected to complete the build phase of the ERP environment earlier in 2020, we are satisfied that we managed to achieve these crucial milestones by the end of 2020, despite the complexity and size of the programme and the physical restrictions due to COVID-19. We will test, train and optimise in ‘I can place 2021 and go live with the first version of the ERP package in Belgium. orders really quickly on this new, clear platform!’ Dennis Raaijmakers Lunchroom Welkom Thuis, Helmond


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    20 Sligro Food Group 2020 Annual Report Contents Sligro Food Group ‘Before I came to work at Culivers a year ago, I worked as a chef in the hospitality industry for many years. I’m enjoying my new job: the rhythm and the higher purpose we aspire to. The meals we create go to hospitals, care homes, etc.; in other words to people who are ill or vulnerable. It feels great to be putting in an effort for them, because even people with allergies, or those who have problems swallowing and can only eat puréed food are entitled to a tasty meal.’ Bastiaan Boevée Diet Chef at Culivers ‘Everyone is entitled to a tasty meal’


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    21 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Organisation and employees ‘COVID-proof enjoyment’ ‘One of my main tasks is 5,284 Employees organising events, in-house and for our customers: a fantastic responsibility! That feeling I get when everything comes together and the guests go home 4,116 FTEs satisfied...it puts a smile on my face every time. Many events had to be cancelled in 2020 unfortunately. Nonetheless, we still Diversity rolled up our sleeves and set to Male Female Nationalities work to devise new concepts. One was Happy Friday, where colleagues in the office were 73% 27% 44 able to enjoy COVID-proof refreshments or a dinner. Because Employment Learning and that’s what we enjoy most: treating development others to delicious food and drink.’ Average number of years E-learning Classroom 9.3 76% 24% Sara Sels Marketing Assistant at JAVA Foodservice


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    22 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Organisation and employees Sligro Food Group aspires to be an organisation where teams of happy, engaged and professionally strong employees work together to realise the Group’s ambition. We aspire to be an attractive employer to our current and future employees. People & teams We will continue to develop our approach to people management and development over the coming years, which will make learning and Our goal performance go hand in hand even more. To forge strong bonds with our talented employees, enable them to shine and make the most of their We have passionate employees who display great craftsmanship in all potential, we will further activate our talent management approach. Today’s domains, develop skills in new ways of working, and strike up effective rapidly changing world with major demographic shifts and impactful digital working relationships across the domains. developments calls for a focus on our employees’ sustainable employability to be able to face the resulting challenges together. We analysed all our management teams’ strengths and the strengthening We aim for relatively long-term employment relationships by keeping our factors that influence these teams’ performance last year, which has given employees interested and securing their loyalty. To do so, we stimulate us plenty of information about the qualities these teams already possess, employees’ development by allowing them to self-manage and by offering but also about their development requirements. In response, specific them structured and challenging training options and career opportunities. development activities were defined, which will help the teams to achieve Our HR policy will cater more to specific target groups to align it more the organisation’s goals. effectively with the specific needs of different segments of the labour market and of groups of employees. The four pillars of our employee vision: people & teams, leadership, culture and organisation will be used to develop this. We see this as an integral part of our business strategy. We have embedded and linked the People Strategy and Agenda, and the People Plans, in and to our business strategy and annual planning cycle. This will enable us to achieve active progress in these areas, while balancing them with our other business goals. Last year was devoted to setting up and establishing our plans for each pillar and we began defining and implementing numerous initiatives. Our primary focus was thereby on the Dutch organisation, after which the Belgian business units will soon follow in the same areas.


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    23 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Learning and development To emphasise how important learning and development is to us, we regularly organise events to show our appreciation for the people who have Continuous learning and development is key for all Sligro Food Group put a lot of time and energy into taking training. Last year, for example, we employees. Changes within and outside the organisation mean that organised another ‘Learning Heroes Day’, putting the limelight on a large activities and jobs are subject to constant change. Anyone who does not group of employees who completed a training course. We also awarded the keep up with changes and does not keep challenging themselves will be annual ‘Jan Hoenselaar Grant’ to the employee or the family member of left behind in the long run. The Sligro Academy therefore offers a range one of our employees who submitted the best internship report or thesis of learning programmes for employees from all levels of our organisation, (intermediate as well as higher vocational education / university level). which are focused both on skills for specific jobs and general competency levels. Besides the courses we have developed in-house, we use external We designed a new learning and performance cycle in 2020, which will training options through training institutions for specific domains or replace our current assessment cycle from 2021. Its central focus is the competency-based training. We are committed to training and developing development and long-term employability of our employees and informal new talent, such as by offering internships and professional placements for feedback and coaching will be provided on a continuous basis. Besides this, students from various educational programmes. This works both ways, as details of individual and team goals will be described and their progress having students work at our organisation brings in new and fresh insights. evaluated, which will provide more clarity and transparency about everyone’s roles and responsibilities. Learning and development at Sligro Training courses Number of courses Number of attended and training modules internships 9,238 251 380  76% online  284 MBO (vocational education)  6,969  2,269  24% classroom  96 HBO (higher vocational education)/ e-learning classroom  0% individual WO (university education)


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    24 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Health and safety Absenteeism in the Netherlands increased compared to the previous year. That can be largely ascribed to COVID-19, but this upward trend is one we It is key that employees feel comfortable and experience their workplace as have been seeing for a number of years and it is not in line with what we a safe and healthy environment. To achieve that, we have to keep investing are trying to achieve. We will intensify our efforts to reduce absenteeism in tangible measures and tools to increase workplace safety. We raise in the years to come. employees’ awareness of safety through training courses and communication and make it a constant priority. There was once again a fall in absenteeism in Belgium and here too, we will make efforts to continue this trend. Working safely became even more important in 2020 when COVID-19 emerged in the Netherlands and Belgium. We entered a period of great uncertainty about the consequences for health and we were forced to take measures to protect our colleagues’ physical and mental health. Looking back, we succeeded in this. We communicated with each other well, which enabled us to remove people’s concerns by taking additional measures. Face coverings, perspex screens, cleaning shopping trolleys, signposted routes, social distancing, communication on-site and security personnel on the door all helped to protect the health and safety of our employees and customers. We take people’s temperatures at the gate of our logistics operations, production and office environments to make people feel safe on the work floor. We make use of commercial COVID-19 tests to shorten waiting times for our employees, and we rolled out equipment to enable employees to work from home on a grand scale. Turnover and sickness absence Staff turnover in numbers Sickness absence in the Netherlands1) 1) Average percentage of hours absent due to sickness compared 2020 to contracted hours (actual hours Applicants 5.6% for auxiliary staff). Vacancies 2019 5.0% Left Sickness absence in Belgium1) Joined 0 2.000 4.000 6.000 8.000 10.000 12.000 2020 8.7%  2020  2019 2019 9.1%


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    25 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Diversity requires leadership and good people management with a positive impact on our employees’ engagement, performance and development and by At our company, diversity is a subject that is discussed openly, and not extension, that of our teams too. This approach will enable our employees a forced process that revolves only around quotas and targets. Diversity to maximise their own and each other’s potential every single day to really covers more dimensions than simply the ratio of men to women and we enhance our customers’ experience. intend to take that broad view too. We have a clear commitment to diversity, including in higher-level roles. Where candidates are equally To put this into practice, Sligro Food Group developed a leadership model suitable for a position, we will always increase diversity, including the last year, which will enable us to help our colleagues in managerial roles balance between men and women. We wholeheartedly endorse the to get the most out of their employees and teams every day. The model general opinion on gender balance, and are committed to achieving it step comprises five elements: lead, refine, develop, connect and deliver. It is a by step. The value of diversity also comes to the fore when working with structured approach which, for one thing, will help our managers to create multidisciplinary teams. Taking a broad approach to issues and possible clear frameworks and goals for their employees and for another, will help solutions helps ensure high-quality decision-making. ensure progress and results. We call this from leading to delivering. We are, however, aware that delivering is impossible without identifying Leadership and developing people’s individual competencies, coaching and guidance and genuinely being interested in each other. That is where refine, develop Our goal and connect come in. We have a modern leadership style that is aligned with the Group’s All this demands a great deal from our managers and they too need support cultural and growth ambitions, as well as with current developments in to perform their roles. To help them, we have started to clearly define society. managers’ roles. We have developed leadership profiles for the various levels, in which key responsibilities and result areas associated with the role of manager are defined and recorded. As a listed family business, our ambition is to grow further and become even more professional. The basis for this is teams of happy, engaged and professionally strong employees who together work at and on Sligro. That Diversity 80 40 90 70 35 80 as % of the total 70 60 30 60 50 25 50 40 20 40 30 15 30 20 10 20 10 5 10 0 0 0 The Netherlands Belgium Sligro Food Group The Netherlands Belgium Sligro Food Group The Netherlands Belgium Sligro Food Group Gender  male Age  < 20  40-50 Type of contract  2-12 hrs p/w (auxiliary staff)  female  20-30  50-60  12-36 hrs p/w (part-time staff)  30-40  ≥ 60  ≥ 36 hrs p/w (full-time staff)


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    26 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Apart from creating a framework, we also help managers as they develop and operations and the feeling that head office is somewhat failing to be in their role as people managers by offering them a specific training and a facilitator were recurring topics. Besides giving us a good idea of development programme. All managers attend workshops on learning & widely-held opinions, this also gives us a way of addressing them. performing, sustainability & vitality and 360-degree feedback, and they are also offered individual learning pathways with continuous coaching and Following major organisational changes in recent years and the resulting guidance, depending on their specific learning aims. departure of experienced colleagues and conveyors of culture, as well as the arrival of new colleagues, we see that many colleagues are still finding Culture their way when it comes to understanding the Sligro Food Group identity and their role within the organisation. We will again have to communicate Our goal the Sligro Food Group identity and what we stand for to our new recruits and more established colleagues and do so on a continuous basis. We have We have an entrepreneurial culture that supports further spent many years communicating about our core values as incorporated in professionalisation and fosters initiative, action and continuous ‘Our Green Blood’ and ‘Our Salt and Pepper’ but we will have to inject new improvement in a secure and inspiring environment. life into this communication in the organisation. We started to refresh it in the second half of the year and we expect to present our results throughout the organisation in early 2021. Our distinct culture, with the values and standards anchored in it, is an important mainstay for our way of doing business. Wherever you go across To continue to stimulate initiative, action and continuous improvement, we 2020 service our organisation, there is a palpable passion for our products, services and have developed a modern, digital version of the suggestions box (the Ideas customers. Instead of pursuing status, we seek to create transparency and Lab) which we will implement in the coming year. It is a good way of anniversaries an atmosphere of trust and respect. Broadening our people’s insights by encouraging the engagement and entrepreneurship already present in good forging bonds between colleagues with a long history at Sligro Food Group measure in our employees and of making use of the knowledge and skills 2 50 years and newly recruited talents requires constructive dialogue. Our entrepreneurial spirit gives us the kind of nimbleness that allows us to respond quickly to any developments, while always keeping in mind the all our colleagues have. We had similar initiatives in the past of course, but this digital variant will ensure that we can continue to do this in a growing organisation too. 19 course we have charted. Pursuing continuous improvement and celebrating successes together. In the Netherlands, we refer to this as ‘Green Blood’, Organisation while in Belgium it is known as ‘Our Salt & Pepper’. Terms appropriate to 40 years the country with the same underlying values. We are firmly embedded in Our goal 34 25 years society and always happy to render account on our business practices to all stakeholders. As a listed family business, this goes without saying for us; it is not something we consider an obligation. We are an international organisation that makes the most of both increasing scale and local proximity to the market and customers. 266 12.5 years In a fast-changing environment, culture requires active focus and maintenance. That was highlighted by the signals we picked up from our employees when we measured employee engagement in recent years. As a wholesaler with extensive logistics operations and a large number of sites, it is key that we keep growing and convert increased scale into To address this, we invested a great deal of time in dialogue with our greater efficiency. The process standardisation and complexity reduction employees (long-standing and recently recruited) in 2020 to identify the drive that we have launched is going full steam ahead. Aside from that, underlying areas requiring attention. There appeared to be a call for more we have adopted an international organisational structure this year, which defined frameworks and goals. Our people want to be listened to and brings centralised governance and support in combination with local market involved more, to be given more scope to develop and collaborate, and and customer responsibility. above all, to be appreciated. The perceived distance between head office


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    27 Sligro Food Group 2020 Annual Report Contents Sligro Food Group We believe in an organisational model where strategic decisions are made Partly as a result of this, but also due to the major changes in the at Group level and where centralised functions solve complexity together organisation in recent years, we noticed that there was a more broadly to facilitate the operations of our delivery service sites and cash-and-carry supported need in the organisation to have the organisation's direction, stores. Our extensive knowledge of the operation enables us at roles, tasks and responsibilities re-established and clearly communicated. management and board level to make the right strategic and tactical We have therefore started to redefine the Target Operating Model (TOM) decisions. Building horizontal connections across the organisation, and for all business units, in which the responsibilities of each department, how certainly also vertical ones, is therefore crucial and traditionally one of Sligro they are to be fulfilled and how they can be supported by resources and Food Group’s strengths. In our logistics operation and at our sites, technology, for example, are clearly established. This might seem obvious, we manage our people based on easy-to-understand KPIs that they can but following the carve-out of EMTÉ and the subsequent changes to the influence directly. The frameworks within which our sites can operate central workforce, that renewed clarity was essential. on a local scale have been defined at Group level and help create scope for employees to develop an entrepreneurial mindset. This is how we ensure As of early 2021, we will be able to monitor and maintain the emerging flexibility and a local focus in both our day-to-day operations and our configurations from our digital environment in SuccessFactors and we will colleagues’ interaction with our customers. start developing and rolling out the new workforce management system throughout 2021. It continues to be our ambition to grow even more internationally in the longer term. However, we are aware that the speed at which this will occur will be lower than we originally planned. At year-end 2020, we reviewed the board and organisational structure aimed at enabling growth and will modify it as of 2021. In essence, we will focus more on a BeNe organisation, with a joint central Executive Board for the Netherlands and Belgium and an efficient consultative and communicative structure below it. This will help us to improve the speed and quality of decision-making in the coming years, in line with our current scale. Workforce Foodservice NL 575 11% 572 11% 547 13% 543 13% Foodservice BE Employees in 2020 Employees in 2019 FTEs in 2020 FTEs in 2019 5,284 5,367 4,116 4,100 4,709 89% 4,795 89% 3,569 87% 3,557 87%


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    28 Sligro Food Group 2020 Annual Report Contents Sligro Food Group ‘What makes my profession so interesting is the dynamics. No day is the same, just as every deal is different. I’m obviously trying to earn money for the company, but that isn’t the only thing: the customer has to benefit from the partnership too. That requires me to put myself in my customers’ shoes, to find out what matters to them. I look for a construction in which we can really make a difference. Only then can we both benefit.’ Jan de Kok Pricing & Contract Manager Van Hoeckel ‘Always looking for the best deal’


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    29 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Workforce Works council Sligro Food Group is a relatively large employer in the Netherlands (4,709 We set great store by good relationships and consultations with our employees), while our workforce in Belgium (575 employees) is also employees, both with employees directly and through the works councils. showing steady growth. That did not happen in the atypical year 2020, due Open and transparent consultations and timely involvement of works to the COVID-19 measures. Our employee population is characterised by councils has proven to be a clear value-adding practice for us. We do not a high level of skill, which is utilised with great passion. Digitalisation calls limit this to the bear minimum stipulated by law. The input we get on these for different expertise and skills that we are both developing and recruiting. points from the works councils, as well as feedback from workers, is We have a large number of employees on permanent contracts and aim to extremely valuable to us, and we treasure the good working relationship keep the number of agency workers down. In 2020, we had an average of we have built up. Although this is a universal vision that applies across our around 450 agency workers working in our logistics operation. Due to the entire company, there are specific differences in how it is implemented in relatively low availability of permanent staff and relatively high staff turnover the Netherlands and Belgium due to legal frameworks or cultural in logistics, we are increasingly using flexible and agency workers in our differences. logistics operation, who generally hail from eastern European countries. Given that these workers generally stay with us for a limited period, we After the Works Council elections in Belgium, we installed a single Works are also working to accelerate the onboarding process, improve operational Council for the whole of Belgium and we now have three regional management, create a good day-to-day work atmosphere, and reduce committees for prevention and protection at work. A new Works Council training to short e-learning programmes. We also offer colleagues from was installed in the Netherlands. The collaboration between these new eastern Europe specifically opportunities for permanent employment and Works Councils is taking place constructively as in the past. further growth to make it more attractive for them to stay with Sligro Food Group for longer and seize the opportunities that normally come with permanent employment. Employment terms and conditions In the Netherlands, we have subcontracted most of our transport to When it comes to general employment terms and conditions, we align with professional hauliers. In Belgium we employ our own drivers and outsource pay structures from the relevant industries. In the Netherlands, we adhere part of the transport. Whether drivers work for Sligro Food Group directly or to the collective labour agreement for the food wholesale industry, while through an external company does not make any difference to us in how in Belgium we have adopted the terms and conditions agreed on by joint we treat them. Our drivers are our face to the customer, our ambassadors, committees 119 and 200. Our aim is furthermore to make the employment as they are generally the ones who are most in contact with customers. terms and conditions that we can establish ourselves the same for all We train and support our drivers in this respect and get them all involved employees. Depending on what is possible and customary in either in Sligro Food Group. We made the decision in 2020 not to continue with country, these terms and conditions may differ per country. For the majority VRC Transport and transferred the activities and employees to two of our of our employees, our pay policy is dictated by the collective labour existing transport partners. agreement for the industry in question. Given that we are not bound by a specific collective labour agreement, we offer average market level pay, as well as benefits that are appropriate at Sligro Food Group, whereby there is a difference in structure between Belgium and the Netherlands. For a number of jobs, mostly commercial ones, we operate a bonus system. By ensuring that the amount of the bonus is nice to have and not a need-to-have, we avoid unwanted stimuli.


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    30 Sligro Food Group 2020 Annual Report Contents Sligro Food Group ‘Beer has been a passion of mine since I was young, but it was mostly limited to visiting breweries, reading books about beer and, naturally, drinking beer. When I got the chance to become a beer specialist four years ago, it was like entering paradise...And when I finished my training and became a beer sommelier in 2019, it was a dream come true. It was a shame that tasting sessions and courses had to be put on the back burner last year because of COVID-19, because there’s nothing better than sharing your passion with others. I can’t wait until I can start taking my customers into the wonderful world of beer again.’ Kees Heijnis Beer Specialist Sligro Amsterdam ‘It was like entering paradise’


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    31 Sligro Food Group 2020 Annual Report Contents Sligro Food Group CSR Carbon reduction since 2010 Share of sustainable product Dutch Yellowtail, range in sales % % sustainably farmed in Eastern Scheldt water, 22.7 10.8 (-0.8%) using 100% green Solar energy energy. Extremely Number of solar panels Output mln kWh sustainable and particularly 45,700 10.1 (+9,200) (+50%) suitable for raw Gas-free buildings preparations. m2 348,000 Frank Baiko (+9%) Buyer & Assortment Manager fish Development of satisfaction Stakeholderwatch 0-100 Customers Employees Suppliers 73 unchanged 63 (+7) 63 (-4)


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    32 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Corporate Social Responsibility At Sligro Food Group, corporate social responsibility, sustainability and business performance go hand in hand. This goes without saying at our listed family-run business. After all, as a family business you just want to treat your people and environment decently and respectfully, both today and with an eye to the future. CSR vision: how we work Our scope is not limited to the Netherlands and Belgium. We procure internationally and cross-border trade is an essential vehicle for human Sligro Food Group not only creates value in the form of purely financial prosperity and socioeconomic growth. We have been a member of BSCI performance, we also try to make a difference when it comes to food for many years, and we require our suppliers to adhere to the BSCI Code (safety, health, availability), energy, environmental and societal issues. of Conduct. Corporate social responsibility is consistent with our overall business philosophy of value creation on an economic (Profit), environmental (Planet) and social (People) level. In this same light, we consider the OECD BSCI Code of Conduct guidelines a natural frame of reference for our corporate social responsibility policy. This code is based on international conventions and is intended to improve employment conditions across the supply chain, containing a specific focus on the following: One company, one policy • The rights of freedom of association and collective bargaining • No discrimination As a company with a centralised management structure, we pursue • Fair remuneration a single sustainability policy for the whole Group, meaning that our core • Decent working hours values, ambitions and goals are the same for all our operations, both in • Occupational health and safety Belgium and in the Netherlands. How we work to achieve them, however, • No child labour may differ per country. When it comes to the measuring methods we use, • Special protection for young workers we are gradually working towards greater uniformity, but seeing as this • No precarious employment often also concerns external parties, certain methods are currently not yet • No bonded labour available in both countries. Wherever this is the case, we choose the • Protection of the environment Dutch reporting method, on account of the size of our Dutch operation. • Ethical business behaviour We share our sustainability policy with the companies in which we hold • Bribery and corruption a stake, and also put it on their agendas. They subsequently pursue the policy based on values that are relevant both to them and to us.


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    33 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Our place in the supply chain The report has been drawn up to correspond with the Core level in the GRI Sustainability Reporting Standards. The GRI table can be found We are part of a relatively large number of links in the food service supply on our website: sligrofoodgroup.nl/nl/mvo/mvo-publicaties. chain, as a result of which our sustainability efforts are broad in scope. Our SmitVis and Océan Marée production companies process primary products (mainly fish), while Culivers produces for the Group. Sligro, Approach and organisational embedding De Kweker, Van Hoeckel, JAVA and Sligro-ISPC are all wholesale operations. Each specific business unit creates value and sets itself apart from the The Group has had a CSR Steering Committee for many years. This steering competition. committee makes policy decisions and its individual members are responsible for embedding them in their respective fields and for their operational implementation. The CSR Steering Committee develops the About this report Sligro Food Group’s key focus areas and goals, it defines the sub-areas and associated remedial actions, and tracks progress. We have adopted a joined-up approach in our financial and sustainability reporting. This best matches our CSR vision, prevents duplication and keeps These have now become part of the normal approach taken in the this report readable. This chapter will go into the results and most important organisation to such an extent that their translation into projects and developments from 2020 in relation to our key focus areas and the monitoring the results have become a standard part of the annual plan. associated goals and indicators as at year-end 2020. As of 2021, the CEO and the two country directors will discuss, evaluate and adjust the policy framework for CSR every year, should the progress on meeting the targets – as monitored in management meetings – require this. Genetics and Primary Processors of Branded and PL Food service Food service Consumer breeding manufacturers primary products manufacturers wholesale outlets and residuals Production companies Sligro Food Group Our supply chain Sligro’s influence Sligro’s share in the supply Sligro’s influence chain


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    34 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Talks with stakeholders Sligro prevents misuse of nitrous oxide cartridges We conducted talks in 2020 about our sustainability approach with various We were the first to introduce a policy to limit the sale of nitrous oxide If you have any suggestions, stakeholders, including a specific group of employees, major shareholders cartridges (‘whipped cream chargers’) to less than the statutory comments, or suggestions and other shareholders, customers and our auditor. Initial talks also took minimum in March 2017. This served to inspire other market players and about CSR and GRI, place with Deloitte in preparation for the updated EU Directive on Non- politicians. Since then, we have shared our knowledge and experience please email them to Financial Reporting (EU NFRD). with the Dutch Ministry of Health, Welfare and Sport in preparation for mvo@sligro.nl the introduction of a bill by Paul Blokhuis, the State Secretary for Health, Welfare and Sport and Ferdinand Grapperhaus, the Minister of Justice Key focus areas and goals for 2030 and Security, proposing to add nitrous oxide to the list of soft drugs under the Dutch Opium Law, thus banning the recreational use of Our CSR policy is based on three key focus areas that have particular nitrous oxide. The ‘proper use’ of nitrous oxide, as used in the hospitality relevance for Sligro Food Group and contain important opportunities and sector, will be exempted from the ban. challenges for us, and where our responsibility in the supply chain is the greatest and the most self-evident: people, planet, and product range. Together, the above key focus areas and sub-areas make up our Within these three key focus areas, we have defined five sub-areas that CSR matrix, which specifies a large number of specific activities that each have major societal importance in relation to Sligro Food Group and contribute to the achievement of our goals for 2030. The matrix also therefore determine our scope: establishes a link between the SDGs and our activities. The most up-to-date • Health matrix can be seen on www.sligrofoodgroup.nl/mvo. • Food waste • Sustainable product range • More efficient supply chains • Energy CSR performance Key focus People Planet Product range our targets areas Sub-areas Customers Employees Suppliers Energy Sustainable product range Goals Improve customer Improve employee Improve Reduce carbon emissions Sustainable product range’s satisfaction engagement supplier as percentage of net sales share in sales satisfaction 2020 status Unchanged +7 -4 -22.7% 10.8% compared to 2010 Target year 2030 2030 Target value Improve satisfaction -50% 15%


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    35 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Sustainable Developments Goals (SDGs) Materiality analysis Our SDGs The full materiality analysis, which covers ambitions, goals and These SDGs are linked to our management approach, can be found on our website, specific actions points that End hunger, achieve food security www.sligrofoodgroup.nl/mvo. This report presents results and contribute towards achieving and improved nutrition, and promote developments with respect to our goals for 2030, as at year-end 2020. our goals for 2030, and they are sustainable agriculture. as such embedded in our sustainability approach. Promote sustained, inclusive and sustainable economic Temporary opening of cash-and-carry stores for growth, full and productive employment and decent non-cardholders work for all. Hospitality venues in the Netherlands were closed due to government measures in two periods: from 19 March to 31 May 2020 and from Ensure sustainable consumption and production 14 October. During the first lockdown and up to 13 December in the patterns. Take urgent action to combat climate change second lockdown, all cash-and-carry stores in the Netherlands were and its impacts. temporarily opened to non-cardholders as part of the CBL’s (Dutch Food Retail Association) Emergency Plan for Food Supplies, coordinated with Conserve and sustainably use the oceans, seas and the Dutch Ministry of Economic Affairs and Climate and the VNG marine resources for sustainable development. (Association of Netherlands Municipalities). Doing so contributed to the continuity of the food supply, the health and safety of customers and employees and to limiting food waste. Protect, restore and promote sustainable use of The cash-and-carry store is an important player in the food service chain terrestrial ecosystems, sustainably manage forests, and therefore also in food supplies to the key sectors and vulnerable combat desertification, and halt and reverse land sectors (care homes, childcare, corporate catering that was still open, the degradation and halt biodiversity loss. army, police and limited hospitality venues). To do this well, a minimum Strengthen the means of implementation and revitalize turnover of products is essential. the global partnership for sustainable development. Opening these stores immediately helped to calm down the food supply to consumers. It had become strained because almost the entire volume of the food supply had to be channelled through the supermarket supply chain due to the virtual disappearance of the out-of-home market (hospitality venues but also corporate catering). That out-of-home Certification consumption shifted to home consumption. Sligro Food Group holds the ISO 22000 certificate for its head office, Together, the cash-and-carry stores of all market parties added some central distribution centre, delivery service sites and its Belgian activities. 800,000m2 of additional sales area to the Netherlands, which is equivalent The production companies and the delivery service site in Amsterdam hold to 800 supermarkets. Enabling consumers to spread out over considerably the FSSC 22000 certificate. JAVA and ISPC in Belgium hold the ISO 14000 more m2 made it much easier to social distance. The large(r) area and certificate (environmental management). broad(er) aisles helped to prevent COVID-19 from spreading further. The cash-and-carry stores in Belgium were open to non-cardholders throughout the entire period.


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    36 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Results (in key focus areas) Employees People We have seen considerable improvement in satisfaction among our employees. We considered the score attained in 2019 (56) to be too low Satisfaction levels (StakeholderWatch 0-100) and that led us to invest in various improvement programmes under our People Strategy, including our culture as a listed family business. We first saw a major improvement in Q2 of 2020, which was also sector- wide. It was difficult to differentiate between what could be attributed Customers Employees Suppliers to COVID-19 effects and what could be attributed to our new initiatives in 73 63 63 the sector. StakeholderWatch recorded widespread normalisation in its employee satisfaction results for Q3, which applied similarly to us. However, in Q4, we saw another vast improvement in employee unchanged (+7) (-4) satisfaction at our company, which this time could not be directly related to coronavirus effects. The seven-point improvement gives us confidence The level of employee, customer and supplier satisfaction is an important that we are on the right track. indicator for our performance. We have been measuring satisfaction since 2019 by means of StakeholderWatch, a research method in which customers, employees and suppliers are questioned on a daily basis. Customers It basically works like a continuous thermometer that enables us to identify trends sooner and therefore respond to them sooner as well. This is a major Satisfaction among customers produced a score of 73 – the same as in improvement on many other indices and surveys which provide more of 2019. If we zoom in further, we can see a slight fall in customer satisfaction a snapshot and less insight into trends. among our delivery service customers as a consequence of the hospitality lockdown and the closure of most corporate catering. Our cash-and-carry StakeholderWatch captures stakeholder satisfaction on a scale of 0 to 100. stores, on the other hand, gained in satisfaction and appeal, partly because of the quality of the product range and our knowledgeable employees. Suppliers The picture among suppliers was erratic in 2020. After a score of 67 at year-end 2019, their satisfaction initially improved to 70 at the end of Q1. The score slackened off in Q2 before recovering again in Q3. On balance, satisfaction among suppliers was lower in Q4 (63) than in the previous year. Here too, the impact of the hospitality lockdown and the partial closure of corporate catering can be seen. As a result, commercial forecasts with respect to specific suppliers had to be revised downwards during the year.


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    37 Sligro Food Group 2020 Annual Report Contents ‘We’ve just finished the busiest period of the year. Despite the turbulent time we’ve had due to COVID-19, it’s been an absolute top year, maybe the best ever. We’ve treated a total of 550,000 end users to a Christmas or New Year’s gift! And we’ve done so with a relatively small team of thirteen colleagues. The way we’ve all mobilised our passion has led to countless satisfied customers. Obviously the new year is already in full swing, but when I look back at 2020, I am filled with pride about what the team has achieved.’ Michelle Hendriks Marketing Manager Tintelingen ‘Filled with pride about what the team has achieved’


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    38 Sligro Food Group 2020 Annual Report Contents Sligro Food Group The environment The product range Carbon emissions Share of sustainable product range in sales (per €100 in net sales) (in %) 50 20 45 17 goal for 2030:15% 40 14 35 11 30 goal for 2030: 23 per 8 €100 in net sales 25 20 5 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’14 ’15 ’16 ’17 ’18 ’19 ’20 Our mission obliges us to continuously show both boldness and common We have an immense range of over 75,000 acticles. We have adopted sense in our innovation drive, while also always seeking to strike a balance a clear sustainability focus for this entire product range: we encourage between environmental and economic returns. For maximum transparency customers to choose sustainable options by making products produced of our efforts, we calculate the carbon emissions from our operations. with respect for people, the planet and health simple, accessible and To be able to relate the resulting figure to the development of our company instantly recognisable. In 2010, we captured this in our 'eerlijk & heerlijk' and to be able to extrapolate a realistic long-term trend, we present our concept. All products in the 'eerlijk & heerlijk' range are sustainably sourced carbon emissions in relation to our net sales. and produced, which we guarantee through independent quality marks. This also allows us to track the development of our sustainable product range For the first time since 2010, we broke the trend of continuous with great precision. www.sligro.nl/inspiratie/themas/eerlijk-heerlijk. improvement in 2020. Although our consumption of electricity, gas and fuel for transport fell in absolute terms, an 18.7% decrease in net sales resulted The 'eerlijk & heerlijk' range generated 10.8% of Food Service Netherlands’ in an increase in our carbon emissions. This led to a 22.7% decline in net sales in 2020, a decrease of 0.8% points compared with 2019. improvement (lower than in 2010). Government measures such as working from home and closing hospitality venues had an enormous impact on the share of net sales attributable Our electricity consumption fell by 6%, partly as a result of increasing to the 'eerlijk & heerlijk' range. Sustainable procurement is crucial for the number of solar panels to 45,700. This generated 10.1 million kWh of corporate caterers and customers who supply public bodies, partly because green energy in 2020, an increase of over 50% compared to 2019. Our gas of the sustainable procurement criteria set by the government. In particular, consumption fell by 11%. The new delivery service sites in Maastricht and corporate caterers’ procurement volume fell considerably in 2020, which Breda are ‘gas-free’ and have been awarded a BREEAM sustainability led to a fall in the share of net sales attributable to the 'eerlijk & heerlijk' certificate. We currently heat 348,000m2 of our area using heat recovery range. Apart from the fall in net sales, there was also a decline in the from the cooling system and heat pump, 9% more than in 2019. absolute number of 'eerlijk & heerlijk' articles sold. The number of transport kilometres fell by 24.4%, largely due to the A change was made to the labelling of the fruit and vegetable group COVID-19 measures. from ‘Environmental label’ to ‘Planet-proof’. That process has not yet been completed at our suppliers or in the data systems. The meat products article group includes many items that carry the ‘Beter Leven’ (Better Life) label. Due to a quality issue, one brand in this group was withdrawn in 2020 and that also led to a fall in net sales of a number of 'eerlijk & heerlijk' articles.


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    39 Sligro Food Group 2020 Annual Report Contents Sligro Food Group ‘The acquisition has given me a power boost’ 'We’ve recently really become x € million a little cog in the vast Sligro Food Net sales EBITDA EBIT Group machine. The acquisition was pretty tricky, but an interesting and fun process nonetheless. And it was good for me personally 1,946 75 (76) too: I was a merchandiser at De Kweker and now I’m Food Shareholders’ Manager. I still have contact with Net profit (loss) equity Free cash flow customers, but I’m now head of a team: a completely new challenge! In fact, being part of (70) 432 67 something this special and huge – because the acquisition was Net Dividend exactly that – has given me a real investments per share (x € 1) power boost.’ 13 - Stefan van der Veen Food Manager at De Kweker


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    40 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Financial results We believe in the strength of the Group as a whole, and in knowledge-sharing and synergies across the Group, and we do not focus primarily on the results of the underlying business units. Sligro Food Group is a group of companies with a high level of (back-office) integration. Governance model and policy As we grow, we develop unequivocal international standards, which we communicate openly. Our Corporate Control and Internal Audit departments We stimulate a Group-based approach and try not to undermine it with supervise compliance with the standards, helping us keep up the quality complicated internal charging, accrual and approval procedures. of insights and reporting speed. The implementation of a new IT and data landscape also provides a positive impulse in this respect. The Executive Board is actively involved in policy-making at all business units, as well as in policy implementation. We govern our organisation To keep improving the service we provide to our customers, we based on a medium-term strategic plan with a three-year horizon. To convey permanently invest in improvements to our online environment, data strategic plans to the rest of the organisation, we capture them in specific quality, logistics and site networks, and our formulas. In the long term, goals and result areas that are clear and easy to understand for everyone. the Group’s net investment scope totals approximately 2.5% of net sales. We challenge our people to come up with (creative) plans themselves to achieve the goals and results. We finance investments through long-term and short-term credit facilities, whereby we aim for a comfortable margin with respect to the financing An annual budget is put together, based on a strategic multi-year plan. covenants we negotiate. By reducing capital lock-up in operating capital, On a quarterly basis, we review progress and make a projection based on we are able to free up funds for our investments. Only if, as a result of evolving insights whether the targeted results will or will not be achieved (major) acquisitions, the margin on the financing covenants is deemed to if we continue along the course we have charted. If the projection is that be inadequate, we may decide to use the option of issuing shares to raise we will not reach targeted goal, we will proceed to adjust our business funds for investments. Even in times of COVID-19, we expect to be able to operations. persevere with this vision. While we think the chance of us having to turn to the capital market for funds to absorb the impact of COVID-19 is slim, In governing our business operations, we draw on detailed reports on we cannot rule it out completely at this point, given the persistent actual developments viewed from multiple perspectives, whereby the focus uncertainty. is not on financial indicators but rather on clearly defined process-related key performance indicators (KPIs) that relate to operations that are within the user’s control. Given that we have similar operations at many different sites, we make widespread use of internal benchmarking to create focus and foment the pursued sense of continuous improvement and healthy competition. On several occasions every year, we establish the correlation between the performance indicators and our financial results.


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    41 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Development of net sales Development in net sales for each main customer segment compared to last year In 2020, we generated €1,946 million in net sales, down 18.7% on last year. In the first half of 2020, the acquisition of De Kweker added a further Share Growth €42 million to our net sales. Without the net sales from this acquisition, of net sales in 2020 our net sales would have shown an organic decrease of 20.5%. In the based compared Netherlands, net sales showed an organic decrease of 19.9%. In Belgium, Segment on 2019 to 2019 net sales showed a 26.0% organic decrease. The drop in net sales is the direct result of government measures taken in response to the COVID-19 Hospitality 40% (35%) pandemic, which also led to the composition of our net sales changing SME 20% 15% substantially compared to previous years. Catering 20% (40%) Petrol 10% 0% Firstly, the net sales mix changed in terms of the ratio of cash-and-carry Institutional 10% (15%) sales to delivery service sales. Net sales from the delivery service in particular were hit hard, while the cash-and-carry business held strong. These changes in the composition of our net sales have an effect on the The delivery/cash-and-carry ratio for 2020 ultimately came in at 57/43 (relative) gross margin and costs, regardless of non-recurring items in these (2019: 68/32). areas. Secondly, net sales in the petrol segment were only affected slightly. In this segment, the largest share of our net sales comes from tobacco products. Driven by both price and volume effects, net tobacco product sales were up €17 million to €260 million, representing 13% of our total net sales (2019: 11%). Thirdly, revenue from bars, nightlife venues, and events fell sharply, which also led to net sales from services to our partner Heineken falling by approximately €13 million to €11 million (2019: €24 million). Fourthly, and finally, we saw major differences in the other segments. In relative terms, the institutional sector, which comprises healthcare providers, hospitals, and public-sector organisations, was hit less hard, while corporate catering, the events industry, and the hotel industry were hit harder.


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    42 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Results Food service sales spread  Cash-and-carry The abridged statement of profit or loss can be presented as follows:  Delivery service As % of net sales 2.500.000 x € million 2020 2019 2020 2019 2,000,000 Net sales 1,946 2,395 100,0 100,0 Cost of net sales (1,478) (1,811) (76.0) (75.6) 1,500,000 Gross margin 468 584 24.0 24.4 1,000,000 Other operating income 4 13 0.2 0.5 500,000 Total operating costs excluding depreciation, amortisation and impairments (397) (470) (20.3) (19.6) 0 Gross operating result (EBITDA) 75 127 3.9 5.3 2016 2017 2018 2019 2020 Depreciation and impairment of tangible fixed assets and right-of-use assets (68) (61) (3.5) (2.5) Gross margin Operating result before amortisation (EBITA) 7 66 0.4 2.8 As a percentage of net sales, the gross margin was down 0.4% to 24.0%. Amortisation and impairment of tangible fixed assets (83) (22) (4.3) (1.0) Operating profit (EBIT) (76) 44 (3.9) 1.8 The development of the gross profit margin was severely affected by shifts in the operational mix in 2020. Financial income and expenses (2) (2) (0.1) (0.0) Especially the increase in net tobacco product sales, with a very low gross Pre-tax profit (loss) (78) 42 (4.0) 1.8 profit margin as a percentage of net sales, and the decrease in net sales from services to Heineken, which has a 100% gross profit margin, have led Income taxes 8 (8) 0.4 (0.4) to the gross profit margin of net sales falling by approximately 1.3%. In Profit (loss) from continuing operations (70) 34 (3.6) 1.4 addition, our inability to efficiently downscale and upscale our inventory during the lockdowns led to a greater gap of approximately €3 million compared to last year. As a percentage of net sales, this cost us approximately 0.2% compared to last year. These oppressive effects were largely compensated by positive mix effects and improvements in procurement conditions. There were great differences in the development of customer segments and the shift in the cash-and- carry/delivery ratio also had a significant positive impact.


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    43 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Costs, depreciation and amortisation Depreciation and amortisation also increased by €7 million compared to a year earlier. Of that, €3 million related to the increase in lease-related On balance, costs, including depreciation and amortisation, were down €5 amortisation as a consequence of the sale and leaseback transactions million on last year. As a percentage of net sales, that means an increase of arranged for our new delivery service sites in recent months. Furthermore, 5.0% to 28.1%. If we omit the non-recurring, non-cash impairments, costs investments in machinery and equipment specifically for delivery services, decreased by €66 million. As a percentage of net sales, that is an increase as well as the start of the amortisation of our new SAP Hybris web of 2.0% to 25.0%. environment from mid-2020 yielded an increase of €4 million. Employee expenses were €45 million lower than in the previous year. In response to the fall in net sales, we have reduced our flexible supply of Other operating income temporary staff to a minimum in the Netherlands and Belgium and only filled vacancies to a limited degree. Besides that, we took advantage of the Other operating income decreased by €9 million compared to the previous wage subsidy schemes NOW 1.0 and NOW 3.1 made available in the year. Last year, we received another €5 million in fees for services to the Netherlands, which together provided us with assistance worth €22 million. consortium that bought EMTÉ from us. Our rental income fell by €1 million, In Belgium, we took advantage of the wage subsidy scheme there, TWO, while book profit from sales transactions for vacant property and unused which gave us approximately €4 million. A restructuring provision of assets was €1 million lower than in the previous year. approximately €2 million was made in Belgium in relation to the forthcoming closure of Océan Marée. EBIT Logistics costs decreased by €26 million compared to the previous year. Transport costs increased as a percentage of the delivery service net sales, The operating profit fell by €120 million, resulting in a loss of €76 million. due to decreased transport efficiency as net sales in the delivery channel Over half of that drop came as a result of the increase in non-recurring, declined. Not only did the number of customers placing orders fall, non-cash impairments totalling €61 million. customers who did still order from us ordered less. In weeks that the fleet was largely inactive, we paid our transport partners compensation. An item Needless to say, this is not a result that we can be satisfied with. In a amounting to €2 million has been included for this under logistics costs. business model with high-value fixed infrastructure and high operating leverage, a stalling revenue generator puts huge pressure on profits. In a Sales costs declined by €3 million compared to the previous year. The cost year where we, as a group, saw our net sales fall by just under €0.5 billion of doubtful debts increased by over €1 million. Where possible, we due to COVID-19, it did not come as surprise that our result developed in facilitated our customers by offering payment agreements in the form of this direction. deferring or spreading costs. That trust we placed in them has certainly not been betrayed given that almost all these customers paid their outstanding That said, we are proud of our colleagues in the Netherlands and Belgium balances in line with agreements as soon as they could. By making for finding it within themselves to change tack and look for ways to cut targeted decisions with regard to our marketing expenditure, we were able costs and reduce spending. Our company’s culture of hard work, to make considerable savings compared to last year. entrepreneurship, and hands-on management was instrumental in our managing to somewhat limit the damage. While this does not show in our Impairments rose by €61 million compared to 2019. This included profit, it does show in our cash flows. decommissioning assets and software in addition to the one-off impairment in Belgium in mid-2020.


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    44 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Financial income and expenses Net profit Coming in at €2 million, financial income and expenses remained unchanged As a result of the above, net profit from ‘continuing operations’ fell by compared to last year. Interest and finance costs were up €2 million, of €104 million compared to last year, leading to a loss of €70 million for 2020. which €1 million due to costs relating to securing a deal for the temporary Earnings per share are calculated on the average number of shares in issue broadening of our financing covenants and acquiring additional liquidity, (externally) and amount to a loss of €1.59, compared to a profit of €0.78 in as well as higher interest surcharges in times of a higher leverage ratio. 2019. €1 million related to the increase in lease-related interest as a consequence of the sale and leaseback transactions arranged for our new delivery service sites in recent months. These increases in interest expenses and costs Investments were offset by better results from participations. We invested a gross amount of €65 million in both intangible and tangible fixed assets in 2020. Of this figure, a considerable part (€28 million) was Taxation invested in our delivery network, which we prepared for the integration of the former Heineken wholesale sites. On top of that, we have kept up our The reported effective tax rate is difficult to compare to last year’s rate, but investments in our new online platform, which went live shortly after the the underlying rate does not differ greatly. In the Netherlands, a tax asset of summer, and in our new ERP landscape that we are set to start using next €1 million from 2019 has been recognised. Aside from that, the government year (€23 million). Totalling €3 million, investments in the hardware and decided to reverse the previously announced gradual lowering of the software for our old ERP landscape were still considerable, but already corporation tax rate. Following this decision, we remeasured our deferral, lower than in previous years. Where possible, we postponed investments in which leads to a one-off expense of €3 million in 2020. In Belgium, the main our cash-and-carry sites and scaled maintenance back to the bare part of the impairments recognised is not included in the taxable result. minimum. In our original business case ahead of the Heineken integration, we 100 4.5% assumed there would be sale and leaseback constructions for all major new Food service and food retail 2011-2016 delivery sites. It turned out to be good timing given developments around 80 3.5% Food service 2017-2020 COVID-19 that the construction phase was largely completed in the first 60 2.5% quarter of 2020, as it enabled us to effectuate the sale and leaseback  Net profit (loss)  As % of net sales 40 1.5% transactions in the first half of the year. We were also able to sell most 20 0.5% of the unused properties in the first half of the year. All in all, we sold properties with a book value of €52 million, which brought in €62 million 0 -0.5% in cash. (20) -1.5% (40) -2.5% (60) -3.5% (80) -4.5% ‘11 ‘12 ‘13 ‘15 ‘15 ‘16 ‘17 ‘18 ‘19 ‘20 Food service and food retail Food service


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    45 Sligro Food Group 2020 Annual Report Contents Sligro Food Group x € million 2020 2019 financier to relax the ratio of net interest-bearing debt to EBITDA as at 31 December 2020 and as at 30 June 2021 (5.5 and 4.5 respectively), Intangible fixed assets 26 22 which will give us the kind of leeway that, knowing what we know today, Tangible fixed assets 39 107 will help us make it through 2021. Divestments (52) (44) Net investments 13 85 When it comes to liquidity, Rabobank first raised the uncommitted credit line from €40 million to €100 million in 2020, subsequently converting this Depreciation of tangible fixed assets (48) (43) credit line into a committed credit line that will be available through to 31 Impairments (1) (1) December 2021. Knowing what we know today, this credit line will be more Amortisation of software (9) (10) than enough to meet the group’s liquidity needs. Depreciation and amortisation (58) (54) In 2021, we will look into which financing structure would be right for us for Net change in fixed assets (45) 31 the coming years and take the first steps in implementing that structure. The constructive attitude shown by our financiers and the way in which they have supported us in this unprecedented year fill us with confidence that In 2021, we will forge ahead with our investments in the new ERP we will always find suitable solutions, also in the still uncertain phase ahead landscape right up to the go-live in Belgium, while remaining selective with of us. respect to other projects in light of developments around COVID-19. While the upgrade of part of our central logistics complex, construction of our new cash-and-carry site at the wholesale market in Amsterdam, and Operating capital and cash flow perhaps construction of a new delivery service site in Belgium are all due to start, the expectation is that these projects will not start until mid-2021. If From the moment we became aware of the impact of COVID-19 on our net everything goes as we expect now, this will involve a gross investment of sales and results, we shifted the organisation’s emphasis to cash flow. Cost approximately €50 million in 2021. savings, lowering operation capital and postponing investments were our most important managerial instruments. In addition, we took advantage of the support made available by the governments of the Netherlands and Financing Belgium, such as the NOW and TWO wage subsidy schemes and deferral of taxation payments. For our financing, we use both the capital market (for long-term financing) and the bank market (for long-term and short-term financing). Note 24 to Both cost savings and government relief funds to cover wages have helped the financial statements gives an overview of the loans and short-term us keep our EBITDA (also when adjusted for leases) in the black. This borrowings from credit institutions and our bank facilities. In December means that there is no operating capital flowing out of the company in 2020, we repaid, as planned, the 75 million USD loan issued in 2010 and cash, which enabled and will enable us to bridge prolonged periods of made a €10 million repayment on a loan from Rabobank, of which there is uncertainty. currently still €40 million outstanding. Our operating capital position showed great fluctuations during the year. Falling demand in our markets had a great impact on our net sales and Our customers’ payment behaviour changed in step with the imposition profits, but by intervening in costs, investments, and not paying dividend and lifting of COVID-19-related restrictions, forcing us to downscale and we were able to manage cash flows in such a way that the net debt upscale our inventory and procurement at the start and end of each position reduced. While the debt itself was not so much a problem in 2020, lockdown phase. As the year progressed, however, we were increasingly the ratios on which our financing agreements are based did come under able to draw on the experience gained along the way, and towards the end pressure. Additional deals were struck with Rabobank and our USPP of the year we became better at anticipating changing behaviour. In light of


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    46 Sligro Food Group 2020 Annual Report Contents Sligro Food Group the considerably lower sales volumes, we also wound down our procurement volumes. As a result, our accounts payable balance was down €133 million, while inventory in our supply chain dropped by €42 million. The drop in net sales in the delivery segment led to our accounts receivable balance falling by €117 million. Overall, our operating capital position was down €18 million. Measured in days of net sales, this represents one day. The drop in operating capital was partly due to a tax payment deferral. As at year-end, an amount of €13 million was deferred, which will be paid after 1 July 2021. We managed to reduce net investments by making keen choices in our investment programme, selling our new delivery service sites and leasing them back, as planned in our business case for the Heineken integration, and selling unused property. We have generated a free cash flow of €67 million on balance, which has enabled us to lower our net interest-bearing debt (not including leases). At year-end, therefore, we were able to remain below the level of the basic covenants agreed with our financiers, making the broader-based covenants we had agreed with them unnecessary for now. Our objective of, above all, protecting our financial position has therefore been met. This position will enable us to face up to the challenging start to 2021 and there is scope to cope with setbacks should that be necessary. As stated earlier, our financial position comes first in these uncertain times and the results for 2020 do not give grounds for the payment of dividend for the year 2020.


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    47 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Development of operating capital x € million 2020 2019 2018 2017 2016 Current assets, excluding cash and cash equivalents 332 498 502 405 453 Current liabilities, excluding interest-bearing items (327) (475) (448) (338) (381) 5 23 54 67 72 As days of net sales 1 4 8 11 9 Abridged statement of cash flows x € million 2020 2019 2018 2017 2016 Net cash flow from operating activities1) 101 132 119 172 153 Lease liabilities paid (23) (18) Net cash flow from investing activities, excluding the net effect of acquisitions (11) (76) (17) (74) (81) Free cash flow 67 38 102 98 72 Compare: net profit (loss) from continuing operations (70) 34 46 76 73 Cash conversion as % 103 61 129 97 Free cash flow has been used as follows: Net acquisitions 1 (51) 0 (116) (49) Dividend payment and share repurchase2) 1 (63) (59) (57) (54) Balance of change in debt and liquidity (69) 76 (43) 75 31 (67) (38) (102) (98) (72) 1) In 2018, this included €74 million in operating capital compensation from the EMTÉ transaction. 2) In 2018 this excluded one-off special dividend.


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    48 Sligro Food Group 2020 Annual Report Contents Sligro Food Group 'I knew I wanted to be a chef from a young age. The best thing about cooking is the emotion: when your guests say ‘wow’, but also sharing personal stories, through products or dishes, for example. Together with the professionals in our fresh departments, I can advise customers on how they can get the ‘wow’ too. The butcher who recommends a good piece of meat or the fish specialist who knows exactly where his mussels come from: that’s a totally different experience to just looking things up on Google.' ‘The best thing Dario Stanojevic Culinary adviser about cooking Sligro Cash-and-Carry is when your in Gouda guests say ‘wow’


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    49 Sligro Food Group 2020 Annual Report Contents Sligro Food Group Risk management Risk management responsibility security policy. The Corporate Control department and Compliance and Security Officers work closely together in supporting departments such as Identifying and responding to potential events and risks that may affect the Legal, IT, Finance, and Programme and Process Management. Group’s strategy or continuity is something that we focus on continuously. The internal audit function is an independent and objective function that It is our conviction that risk management needs to be part of all our supports the Executive Board and the Supervisory Board in assessing the employees’ day-to-day thinking and working, not because the law requires organisation and effectiveness of internal risk management and control it to be, but because it feels natural and is the right thing to do. systems, including also management and financial information and controls in the area of compliance with laws and regulations. The Executive Board has ultimate responsibility for being in control of the Group, and therefore also for risk management. In this respect, the Executive Board is supported by the International Board, the Corporate Risk management and control systems Control department, the Compliance and Security Officers, and the internal audit function. The Executive Board meets with the Supervisory Board to In a growing, international organisation such as ours, we are very aware of identify and assess opportunities and threats in the market in which we the need for further formalisation to be able to stay in control. Such operate, and how they impact on our business model. formalisation must, however, be balanced with the (informal) hands-on entrepreneurial spirit that exists across our company. After all, we want our Executive Board people to keep thinking for themselves and identify both risks and opportunities, instead of blindly going by lists. Thankfully, this is embedded International Board in our culture, and we therefore consider our culture the main soft control that protects us from the inside against many risks and forms of fraud. In 1st line of defense 2nd line of defense 3rd line of defense these times of relatively high staff turnover across the market and as Sligro Corporate Control Food Group grows and becomes more international, we therefore continue Operational departments to focus heavily on preserving the strength of our culture. Compliance officer Internal audit Programme and process management Security officer We approach risk management from a strategic perspective, and subsequently translate risk management efforts to processes, people and systems on an operational level. In 2020, the Corporate Control department made further steps in supporting the Executive Board in its risk Corporate Control facilitates risk awareness and operationalisation of management efforts by further expanding and rolling out an Internal Control associated control measures within our organisation, which they also Framework (ICF) and sharing information with the Executive Board on the monitor. The Compliance Officer is the person in charge of overseeing status of and planned improvements to the various business processes. compliance with laws and regulations across Sligro Food Group. He The ICF maps out the risks and associated control measures required for ensures that the company’s operations and the conduct of its employees is each business process, and it was applied to the Group’s main primary in line with requirements set by the legislator, as well as that new laws and processes throughout 2020. Aside from that, application of the ICF regulations are implemented on time and in full. The Security Officer was also a key focus point in the transition to the new IT landscape. supports the Executive Board in defining and monitoring the (information) The Corporate Control department provides support in this area.


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    50 Sligro Food Group 2020 Annual Report Contents Sligro Food Group jgh ‘Keyword for Over the coming year, the scope of the ICF will be extended to include more processes, while the focus will primarily be on risks and controls 2020? Teamwork’ relating to the transition to the new IT landscape. The basic principle in all of this will always be for people to think for themselves and understand why certain control measures are important and what responsibility they have. 'My keyword for 2020? Teamwork. Last year was obviously a difficult All existing controls in the Internal Control Framework were assessed year for us, due to the coronavirus, in 2020 and action plans were put together by responsible members but the fact that we are still of the Executive Board and their teams for controls that did not yet exist (or only partly existed) or did not work properly. The majority of these working with four different ERP actions was handled in 2020. Some actions will be handled as part of systems made it even more the implementation of the new IT landscape, and a small number remain complex. It was therefore quite outstanding. The main focus points are the updating and communication complicated to deliver a of the policy, authorisation management and controls relating to master data editing. comprehensive KPI report. Nonetheless, our ‘customised’ ‘To measure is to know’ is a key principle of risk management. Using a report contains all the required central data warehouse where virtually all operational and financial data is KPIs and, what’s more, we can stored, as well as state-of-the-art analytical tools, the Corporate Control department monitors special developments or (series of) numbers. In 2020, already see various opportunities further steps were taken in reporting the findings from these analyses to for working more efficiently in the Executive Board. Given that the Group has similar operations at many 2021. The information from the different sites, internal benchmarking is a much-used resource, whereby KPIs moreover boosts our inter- management information supports the internal audit function and vice versa. departmental communication, which eases our cross- In early 2020, the Internal Audit position was vacated. In light of the departmental work. We’re making COVID-19 situation, a decision was made not to fill a number of vacancies progress as a team!' right away. One of these vacancies was the Internal Audit position. In the final quarter of 2020, the recruitment process for this position was resumed. While findings from earlier operational audit reports were Vanja Thoelen followed up on throughout 2020, with the help of the Corporate Control Manager Business Control at Sligro Food Group Belgium department, no new audits were conducted.

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