2.2.1 Basis of preparation

2.2.1.1 1. ForFarmers N.V.

ForFarmers N.V. (the ‘Company’) is a public limited company domiciled in the Netherlands. The Company’s registered office is at Kwinkweerd 12, 7241 CW Lochem. The consolidated interim financial statements for the financial year ended 31 December 2017 comprise ForFarmers N.V. and its subsidiaries (jointly the 'Group' or 'ForFarmers') and the Group’s interest in its joint venture.

As at 31 December 2017, the capital interest in the Company is distributed as follows: 

ForFarmers N.V. is an internationally operating feed company that offers Total Feed solutions for conventional and organic livestock farming. ForFarmers gives its very best “For the Future of Farming”: for the continuity of farming and for a financially secure agricultural sector.

2.2.1.2 2. Basis of accounting

Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (EU-IFRSs, hereafter stated as IFRS) and section 2:362 sub 9 of the Netherlands Civil Code.

The consolidated (and company) financial statements were approved for issuance by the Executive Board and Supervisory Board on 12 March 2018. The Group’s financial statements will be subject to adoption by the Annual General Meeting of Shareholders on 26 April 2018.

The consolidated financial statements are prepared in accordance with the going concern principle.

Changes in accounting policies in 2017

There were no new standard or changes in accounting policies, effective from 1 January 2017, that materially impact the Group. For standards issued but not yet effective a reference is made to Note 40.

Comparative information

When necessary prior year amounts have been adjusted to conform to the current year presentation.

Accounting policies

Details of the Group’s significant accounting policies are included in Notes 38 and 39.

2.2.1.3 3. Functional and presentation currency

These consolidated financial statements are presented in euro, which is the Company’s functional currency. All amounts have been rounded to the nearest thousand, unless otherwise indicated. The subsidiaries' functional currencies are mainly the euro and Pound sterling. Most of the transactions, and resulting balance occur in the local and functional currency. The following exchange rates have been applied for the during the year:

2.2.1.4 4. Use of judgements and estimates

In preparing these consolidated financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. The judgements, assumptions and estimates have been made, taking into account the opinions and advice of (external) experts. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.

A. Judgements

Information about judgements made in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated financial statements is included in the following notes:

• revenue: whether the Group acts as an agent in the transaction rather than as a principal (Note 8);
• consolidation: whether the Group has de facto control over an investee (Note 32);

B. Assumption and estimation uncertainties

The estimates and assumptions considered most critical are:

• measurement of defined benefit obligations: key actuarial assumptions (Note 15);
• recognition of deferred tax assets: availability of future taxable profit against which carry forward tax losses can be used (Note 16);
• useful life of property, plant and equipment and intangible assets (Notes 17 and 18);
• impairment test: key assumptions underlying recoverable amounts (Note 18);
• valuation of trade and other receivables (Note 21); and
• recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of an outflow of resources relating to provisions (Note 29).

C. Measurement of fair values

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

‘Fair value’ is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or, in its absence, the most advantageous market to which the Group has access at that date. The fair value of a liability reflects its non-performance risk.

When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair values are categorised into different Levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. A market is regarded as active if transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The chosen valuation technique incorporates all of the factors that market participants would take into account in pricing a transaction.

The Group recognises transfers between Levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
If the inputs used to measure the fair value of an asset or a liability might be categorised in different Levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same Level of the fair value hierarchy as the lowest Level input that is significant to the entire measurement.

If an asset or a liability measured at fair value has a bid price and an ask price, then the Group measures assets and long positions at a bid price and liabilities and short positions at an ask price.

The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price – i.e. the fair value of the consideration given or received. If the Group determines that the fair value on initial recognition differs from the transaction price and the fair value is evidenced neither by a quoted price in an active market for an identical asset or liability nor based on a valuation technique for which any unobservable inputs are judged to be insignificant in relation to the measurement, then the financial instrument is initially measured at fair value, adjusted to defer the difference between the fair value on initial recognition and the transaction price. Subsequently, that difference is recognised in profit or loss on an appropriate basis over the life of the instrument but no later than when the valuation is wholly supported by observable market data or the transaction is closed out.

The Group has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for over­seeing all significant fair value measurements, including Level 3 fair values, and reports directly to the CFO.

The valuation team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as broker quotes or pricing services, is used to measure fair values, then the valuation team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of IFRS, including the Level in the fair value hierarchy in which the valuations should be classified.

Significant valuation issues are reported to the Group’s Audit Committee.

Further information about the assumptions made in measuring fair values is included in the following notes.

Share-based payment arrangements (Note 14)

For depositary receipts granted to employees, the fair value of the depositary receipts is based on the market price of the entity’s shares as publically listed (until 24 May 2016: as listed on Captin Equity Management Services), and if necessary adjusted to take into account the terms and conditions upon which the depositary receipts were granted.

Property, plant and equipment and investment property (Notes 17 and 19)

The fair value of property, plant and equipment and investment property recognised as a result of a business combination, is the estimated amount for which property could be exchanged between a willing buyer and a willing seller in an arm’s length transaction wherein the parties have each acted knowledgeably. The fair value of items of property, plant and equipment and investment property is based on the market approach and cost approaches using quoted market prices for similar items when available and depreciated replacement costs when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence.

Intangible assets, excluding goodwill (Note 18)

The fair value of patents and trademark names acquired in a business combination is based on the discounted estimated royalty payments that are expected to be avoided as a result of the patents or trademarks being owned. The fair value of customer relationships acquired in a business combination, is determined using the multi-period excess earnings method. The fair value of other intangible assets is based on the discounted cash flows expected to be derived from the use and eventual sale of the assets.

Inventories (Note 22)

The fair value is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories.

Biological assets (Note 23)

Where there is an active market for biological assets, the quoted price in that market is the appropriate basis for determining the fair value of that asset. If an active market does not exist, one or more of the following methods are used to estimate the fair value:

• most recent transaction price (provided that there has not been a significant change in economic circumstances between the date of that transaction and the balance sheet date);
• market prices for similar assets with adjustments to reflect differences.

In measuring fair value of biological assets, management estimates are required for the determination of the fair value. These estimates and judgements relate to the average weight of an animal, mortality rates and the stage of the animal’s life.

Derivatives (Note 31)

The fair value of derivatives is determined using available market information or estimation methods. In case of estimation methods, the fair value is approximated:

• by inference from the fair value of its components or of a similar instrument, in case a reliable fair value can be demonstrated for its components or for a similar instrument; or
• using generally accepted valuation models and techniques.

Financial instruments, other than derivatives (Note 31)

The fair value at the first recognition of trade and other receivables, trade and other payables, outstanding for longer than a year, is determined on the present value of future cash flows, discounted at market interest at the balance sheet date (amortised cost), taking into account possible write-offs due to impairments or uncollectability (applicable if it regards an asset). When determining the effective interest rate, premiums or discounts, at the moment of acquisition, and transaction costs are taken into account.

2.2.2 Results for the year

2.2.2.1 5. Operating segments

A. Basis for segmentation

The Group has the following three strategic clusters, which are its operating and reportable segments.

• The Netherlands
• Germany / Belgium
• United Kingdom

The Group’s products include, among others, compound feed and blends, feed for young animals and specialities, raw materials and co-products to seed and fertilisers. Core activities are feed production, logistics and providing Total Feed solutions based on nutritional expertise.

The clusters offer similar products and services and have similar production processes and methods to distribute products. However, as the clusters are managed separately and are also subject to different currencies (i.e. United Kingdom cluster versus the remaining clusters), the operating segments are not aggregated.

This allocation is consistent with the organisation structure and internal management reporting and also represents the geographical regions in which the Group operates. The corporate headquarters of the Group is domiciled in Lochem, The Netherlands.

The Group’s Executive Committee reviews internal management reports of each cluster on a monthly basis, and its members are jointly considered as the chief operating decision making body.

There are various levels of integration between the segments. This integration also includes transfers of inventories and shared distribution services, respectively. Inter-segment pricing is determined on an arm’s length basis.

B. Information about reportable segments

Information related to each reportable segment is set out below. The segment operating result represents the earnings before interest and income tax, and is used to measure performance. The Executive Committee believes that this measure is the most relevant in evaluating the results of the respective segments relative to other entities that operate in the same industries.

2.2.2.1.1

2.2.2.1.2

The column Group / eliminations represents both amounts as result of Group activities and eliminations in the context of the consolidation.

Other non-current assets for this purpose consist of investment property, non-current trade and other receivables and defferred tax asstes.

The working capital consists of inventories, biological assets, current trade and other receivables less current liabilities.

The Group is not reliant on any individually major customers.

C. Reconciliation of profit

The reconciliation between the reportable segments’ operating profits and the Group’s profit before tax is as follows:

Finance costs decreased by €1.4 million as a result of the additional contribution to the BOCM PAULS Ltd. (United Kingdom) pension plan at the beginning of 2017. More information about the pension plans is included in Note 15A.

2.2.2.2 6. Business combinations

Acquisition Wilde Agriculture Ltd. (United Kingdom)

On 25 May 2017 the Group acquired full control of Wilde Agriculture Ltd. The purchase consideration amounts to €2.0 million of which €0.5 million is a contingent consideration. The provisional fair values of the acquired assets has been determined at €2.1 million, including €0.9 million cash and cash equivalents. The provisional fair values of the assumed liabilities amount to €0.6 million. The related goodwill of €0.5 million is mainly attributable to the anticipated synergy benefits with the integration of Wilde Agriculture Ltd within the United Kingdom cluster. The goodwill has, therefore, been allocated to this cluster. This acquisition does not have a material effect on the Group in the context of the disclosure requirements of IFRS 3 Business Combinations.

Acquisitions 2016

Acquisition VleutenSteijnvoeders B.V. (the Netherlands)

On 22 July 2016 ForFarmers announced the acquisition of VleutenSteijnVoeders B.V. ('Vleuten-Steijn'). The proposed transaction was approved end September 2016, after which ForFarmers acquired all shares of Vleuten-Steijn. Vleuten-Steijn is a feed company focussed on the swine sector, predominantly in the South East of the Netherlands, and Germany. Vleuten-Steijn generated a revenue of some €91 million in 2015 from the sale of approximately 295,000 tons of feed to mostly larger companies, particularly in the sow and piglet segment. Vleuten-Steijn has outsourced the feed production to third parties. The business activities of Vleuten-Steijn are integrated in ForFarmers Netherlands.

Vleuten-Steijn is consolidated in the results of ForFarmers as from 1 October 2016. In 2016 Vleuten-Steijn contributed €21.9 million of revenue and €0.9 million profit before tax from the date of acquisition. If the acquisition of Vleuten-Steijn would have taken place at the beginning of the year 2016, the contribution to revenues would have been €85.1 million and the contribution to profit before tax would have been €3.1 million. Herewith, at the beginning of the year, Group 2016 revenues would have been €2,172 million and Group 2016 profit before tax would have been €70.4 million.

The acquisition price related to the acquisition amounted to €30.5 million. The positive difference between the purchase consideration and the fair value of the acquired identifiable assets and liabilities assumed is capitalised as goodwill. The goodwill has been set at €15.6 million. The goodwill concerns the value of expected synergies arising from the acquisition. Goodwill is allocated entirely to the Netherlands cluster.

As agreed in the share purchase agreement 70% of the total consideration was paid in 2016 (€20,5 million). The remainder is paid after 3 years, depending on the achievement of targets which have been specified in advance. For this purpose the Group has included €7,638 thousand as contingent consideration, which represent its fair value at the date of acquisition (1 October 2016). As at 31 December 2017 the contingent consideration had increased to €7,748 thousand (see Note 30).

The fair values of the identifiable assets and liabilities of VleutenSteijnVoeders B.V. acquired in 2016 as at the date of acquisition did not change and have become final in 2017:

Measurement of fair values

2.2.2.3 7. Disposals

There were no disposals during 2017.

Disposals 2016

As per 30 June 2016 the Group sold its interest in Leafield Feeds Ltd. to SugaRich for €1.3 million, resulting in a gain of €0.8 million that has been recognised as other operating income in the statement of profit or loss.

Furthermore, the Group sold the indirect transport business of Wheyfeed Ltd. (United Kingdom) to the former shareholder of Wheyfeed Ltd. The feed business of Wheyfeed Ltd. and the entity itself remain part of the Group. The gain of €0.4 million relates to the disposal of vehicles and is recognised as other operating income, see Note 10.

2.2.2.4 8. Revenue

The geographic distribution of the revenue can be represented as follows:

The distribution of the revenue per category can be represented as follows:

The increase of the revenu by €109.7 million includes a negative currency impact of €40.7 million. Furthermore, the net effect of acquisitions and disposals results in a positive effect on revenue of €61.8 million. This results in a like-for-like increase of €88.6 million. This increase is a result of higher volume, higher expenses for utilities/fuel and increased prices for raw material.

The other revenue mainly relates to the sale of single feed, other trading products and services (these categories are individually all immaterial for separate presentation).

2.2.2.5 9. Cost of raw materials and consumables

The increase in the cost of raw materials and consumables is caused by an increase in volume and an increase in the price of raw materials, partly offset by a negative currency impact.

In 2017 the addition to the provision of inventories was €40 thousand (2016: €35 thousand) which was included in the cost of raw materials and consumables.

2.2.2.6 10. Other operating income

2017

Other operating income 2017 mainly consist of a subsequent payment regarding the disposal of Adaptris of €0.3 million (United Kingdom) and the disposal of other operating assets in the Netherlands of €0.2 million. 

2016

Under the other operating income 2016 amounts are included that relate to the disposal of Leafield Feeds Ltd. €0.8 million (United Kingdom), the disposal of vehicles of Wheyfeed Ltd. €0.4 million (United Kingdom), the disposal of the Doetinchem industry site €0.1 million (the Netherlands) and the disposal of the Oss site €0.9 million (the Netherlands). The latter was previously classified as asset held for sale. For disclosure about the disposals and assets held for sale reference is made to Note 7 and Note 25.

2.2.2.7 11. Operating expenses

The increase of the operating expenses amounts to  €3.3 million, despite a decrease of €7.7 million caused by a currency impact. The net effect of acquisitions and divestments amounts to €0.7 million. The like-for-like increase of the operating expenses was €10.3 million.

A. Other operating expenses

The other operating expenses increased by €0.8 million, despite a decrease of €3.5 million caused by a currency impact. The net effect of acquisitions and divestments is nil. The like-for like increase of the other operating expenses amounts €4.3 million. The increase in other operating expenses is mainly due to higher expenses for utilities/fuel, transport and maintenance. The sales expenses decreased mainly due to a net release of €1.6 million (2016: net addition of €0.9 million) of the allowance for impairment of the trade receivables. The other expenses in 2016 include also a one-off expense relating to the listing on Euronext (€1.5 million). Furthermore the IT expenses are higher in 2017 and the cost for third party personnel are higher in 2017.

B. Research and development expenses

In 2017 the Group incurred an amount of €5.6 million (2016: €4.8 million) relating to research and development expenses. These expenses mainly comprise personnel expenses of nutrition specialists, product managers and laboratory workers. 

C. Auditor’s fee

The following fees were charged by KPMG Accountants N.V. to the Company, its subsidiaries and other consolidated companies, as referred to in Section 2:382a(1) and (2) of the Netherlands Civil Code.

The fees mentioned in the table for the audit of the financial statements relate to the total fees for the audit of the financial statements, irrespective of whether the activities have been performed during the financial year. The remaining auditor´s costs (the 'Other audit engagements'), were charged to the financial year in which the services were rendered.

The engagements other than the audit of the financial statements consist of agreed-upon procedures regarding board remuneration, bonus targets and bank covenants. Furthermore, several subsidy audits are performed by KPMG.

2.2.2.8 12. Net finance costs

As a result of the devaluation of the Pound sterling, a loss was incurred in both 2017 and 2016 relating to foreign exchange results.

The other interest income mainly comprises interest received on long-term outstanding receivables (loans) and positive bank balances. The other interest expenses mainly comprise interest paid on bank loans and other financing liabilities.

The increase in other financial expenses is mainly caused by the unwinding of the contingent consideration with regard to the acquisition of Vleuten-Steijn in 2016, for more information reference is made to Note 6. Furthermore, the other financial expenses include amortisation of €0.4 million (2016: €0.4 million) which relates to capitalized cost in relation to financing arrangement concluded in 2014, as further disclosed in Note 28.

2.2.2.9 13. Earnings per share

A. Basic earnings per share

The calculation of basic earnings per share has been based on the following profit attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding.

For the number of ordinary shares outstanding as at 31 December a reference is made to Note 26.

B. Diluted earnings per share

The calculation of diluted earnings per share is equal to the calculation of basic earnings per share, since no new shares have been issued in 2016 and 2017. See Note 26 for further information.

2.2.3 Employee benefits

2.2.3.1 14. Share-based payment arrangements

A. Description of the share-based payment arrangements

The Group distinguishes two participation plans. One plan relates to members of the Executive Committee and senior management (applicable for 2014, 2015, 2016 and 2017), the other plan relates to other employees (applicable for 2015, 2016 and 2017). Both plans have further details set out for employees in The Netherlands ("The Netherlands participation plan") and for employees in the United Kingdom, Germany and Belgium, collectively the “Foreign participation plan”, respectively. The number of participants for all active participation plans is 24.2% (2016: 22.4%) of the number of employees of the Group.

The participation plans are annual plans only applicable for the respective year to which they relate, any additional participation plans are considered new plans. New plans can only be executed upon shareholder approval on the recommendation of the Supervisory Board for the purchase of shares related to the participation plan.

Participation plans 2017

On 27 April 2017, the Group offered two 2017 participation plans to the employees. One plan relates to members of the Executive Committee and senior management, the other plan relates to other employees. For both plans the participants are required to remain in service for 36 consecutive months to be entitled to the discount on the depositary receipts being purchased. The employee is entitled to buy depositary receipts at a discount between 13.5% and 20.0% on the fair value of the depositary receipt at the grant date, for which additional depositary receipts are provided. The conditions of both plans are consistent with the participation plans applicable for 2016, except for the lock-up period of the depositary receipts for the Executive Committee and senior management which have been extended to 5 years compared to 3 years for the 2015 and 2016 plans.

During 2017, 35 employees (of which 7 foreign employees) participated in the participation plan for the Executive Committee and senior management and 297 employees (of which 59 foreign employees) participated in the participation plan for other employees.

The number of depositary receipts granted with respect to the 2017 participations plans were as follows:

In 2017 a total of 133 granted depositary receipts were cancelled as a result of leavers.

Participation plans 2016 and 2015

In 2016 and 2015 the Group offered two participation plans to the employees. One plan relates to members of the Executive Committee and senior management, the other plan relates to other employees. For both plans the participants are required to remain in service for the 36 consecutive months to entitle the discount on the depositary receipts being purchased. The employee is entitled to buy depositary receipts at a discount between 13.5% and 20.0% on the fair value of the depositary receipt at the grant date, for which additional depositary receipts are provided.

During 2016, 34 employees (of which 8 foreign employees) participated in the participation plan for the Executive Committee and senior management and 319 employees (of which 61 foreign employees) participated in the participation plan for other employees. The total number of participants comprises 15% of the total number of the Group's employees. The number of depositary receipts granted with respect to the 2016 participations plans were as follows:

In 2017 a total of 750 granted depositary receipts were cancelled as a result of leavers. There were no cancellations or modifications to the awards in 2016.

During 2015, 33 employees (of which 9 foreign employees) participated in the participation plan for the Executive Committee and senior management and 428 employees (of which 103 foreign employees) participated in the participation plan for other employees. The number of depositary receipts granted with respect to the 2015 participations plans were as follows:

In 2017 a total of 1,448 granted depositary receipts were cancelled (2016: 4,825)  as a result of leavers. There were no cancellations or modifications to the awards in 2015.

Differences between the Netherlands and Foreign plans

Key differences between the Netherlands and Foreign participation plans for the additional depositary receipts are:

• The Netherlands: A service related vesting condition applies, in that the original value of the discount is repaid by the employee to the Group if the employee leaves within 3 years after allocation. All allocated depositary receipts were granted in 2017, 2016 and 2015 respectively .
• Foreign participation plan: A service related vesting condition applies, in that the employee will not be entitled to receive the additional depositary receipts if employee leaves within 3 years after allocation. Additional depositary receipts for foreign employees are held in custody by the Company during the term and are issued to the foreign employees at settlement date. The total cost to the Company for the additional depositary receipts, including the cash-settled employee tax obligations, is limited to the total value of the discount provided to Dutch participants.

Participation plans 2014

The participation plan 2014 was completed during 2017.

B. Measurement of fair values

Participation plans 2017

The value of the depositary receipt of the Company, for which the employee (members of the Executive Committee, senior management and other employees) could buy their depositary receipts, was determined as the average of the closing prices in the 5 trading days during the period 2 - 8 May 2017, which amounted to €8.66.

Participation plans 2016

The value of the depositary receipt of the Company, for which the employee (members of the Executive Committee, senior management and other employees) could buy their depositary receipts, was determined as the average of the closing prices on the Euronext in the 5 trading days during the period 19 - 25 April 2016, which amounted to €6.24.

Participation plans 2015

(i) Members of the Executive Committee and senior management
The value of the depositary receipt for which the employee could buy their depositary receipts of the Company was determined as the average of the closing prices in the 5 trading days during the period 20 - 24 April 2015, which amounted to €5.04.

(ii) Other employees
The value of the depositary receipt for which the employee could buy their depositary receipts of the Group was determined as an average of a 5 trading days closing rate during the period 1 - 5 June, the averages rating amounted to €5.18.

For all participation plans, the fiscal obligations for a foreign employee are based on the fair value of the depositary receipt at the date of settlement.   

C. Amounts recognised in statement of profit or loss and statement of financial position 

The expenses are recognised in the statement of profit or loss over the term of the participation plan (3 years), see Note 15F. The depositary receipts for the employees in the Netherlands participation plan were fully granted in 2017 respectively 2016, 2015 and 2014. The non-vested portion was not recognized within profit and loss, but rather as other receivables within trade and other receivables of €565 thousand (2016: €569 thousand) of which €382 thousand was classified as current (2016: €319 thousand as current). The cumulative share-based payment reserve relating to the Foreign participation plan amounts to €233 thousand (2016: €187 thousand).

2.2.3.2 15. Employee benefits

Separate employee benefit plans are applicable in the various countries where the Group operates.

For details on the employee benefit expenses, see Note 15F.

A. Post-employment plans and funding

The Group contributes to the following post-employment plans which are described per cluster.

The Netherlands

In the Netherlands the employees of different subsidiaries were covered by two post-employment plans up and until 2015. An insured defined benefit plan was in place for (former) employees of Hendrix, which company was acquired by the Group in 2012. Furthermore, an insured defined contribution plan was in place for (former) ForFarmers employees. Effective per 1 January 2016, the Group entered into a new post-employment plan that is applicable for all Dutch employees, leaving all post-employment rights accrued until 31 December 2015 in the old post-employment plans.

Therefore, both former post-employment plans are closed as of 31 December 2015. From that date onwards, pension rights will be accrued under the new plan on the basis of collective defined contribution. An insurance company administers the obligations under that plan. As of that date no further obligations will remain under the former ForFarmers post-employment plan. Under the former Hendrix post-employment plan, for the pension rights accrued up to 31 December 2015, the Group will remain committed to pay the related guarantee premiums and as such accounts for the plan as a defined benefit plan.

Together with the new post-employment plan, the Group has also agreed on a defined contribution plan for employees with a salary above €52,763. An insurance company will be administering the obligations under both plans as of 1 January 2016.

The net liability related to the defined benefit plans in The Netherlands per 31 December 2017 amounts to €13,097 thousand (31 December 2016: €14,437 thousand). The decrease in this liability is mainly caused by the increase in the interest rate, whereby the change in the financial assumptions was recognized in other comprehensive income.

Germany / Belgium

The German subsidiaries have, for a limited number of persons, an in-house defined benefit plan that is already closed so no new obligations are being incurred. The commitments were calculated on the basis of actuarial calculations in the course of which the applicable discount rate was taken into account. Actuarial results are recorded directly into equity as other comprehensive income. The German defined benefit plan is unfunded.

In addition to the in-house defined benefit plan, a defined contribution plan is in place for all other employees of the German subsidiaries.

The net liability related to the defined benefit plans in Germany per 31 December 2017 amounts to €5,149 thousand (31 December 2016: €5,509 thousand).

The Belgian subsidiaries have two insured benefit plans for their employees which qualify as defined benefit plans. The net liability related to the defined benefit plans in Belgium per 31 December 2017 amounts to €138 thousand (31 December 2016: €185 thousand).

United Kingdom

In the United Kingdom, two defined benefit plans exist.

A net defined benefit liability has been recorded in the consolidated balance sheet for the obligations under these plans. The plan assets have been valued at fair value. The obligations have been calculated on the basis of actuarial calculations, with discounting at the applicable discount rate. Actuarial results are recorded directly into equity as other comprehensive income.

The first plan relates to (former) employees of BOCM PAULS Ltd., which company was acquired by the Group in 2012. As per 1 October 2006, this plan was closed, so no new obligations are being incurred. From that date, a new plan exists on the basis of defined contribution. An insurance company administers the obligations under that plan.

The second plan is a small defined benefit plan that relates to (former) employees of HST Feeds Ltd., which company was acquired by the Group in 2014. Also for this plan no new post-employment rights are being built up. Both defined benefit plans in the United Kingdom are funded plans, for which the funding requirements are based on the pension fund’s actuarial measurement framework set out in the funding policies of the plan.

End of 2016 it has been agreed that the BOCM PAULS Ltd. Pension Scheme will adopt CPI as the inflation reference for all pension increases in payment (including Guaranteed Minimum Pension (GMP) and excess pension over GMP) and revaluation in deferment (excluding GMP). Previously the practice was to use RPI as the inflation reference for pension increases in payment and revaluation in deferment for pensions in excess of GMP. This change has acted to reduce the net liability by around €17 million at 31 December 2016 which was measured through Other Comprehensive Income as a change in financial assumptions. Furthermore, the Group agreed to make an additional contribution in January 2017 of £10.0 million (€11.7 million) to make up a portion of the deficit in the BOCM PAULS Ltd. pension plan which will reduce the net defined benefit liability.

The net liability related to the defined benefit plans in the United Kingdom per 31 December 2017 amounts to €23,302 thousand (31 December 2016: €40,828 thousand). The decrease of this liability is mainly caused by the above-mentioned additional contribution, the foreign currency effect due to the decline of the Pound sterling and the return on the plan assets.

Change layout to 1 column

B. Movement in net defined benefit (asset) liability

The following table shows a reconciliation from the opening balance to the closing balances for net defined benefit liability and its components.

The remeasurement gain (these are actuarial loss/gain and return on plan assets) of €5,158 thousand (2016: loss €527 thousand) after tax amounted to €4,168 thousand (2016: loss €210 thousand), see Note 16B. The change in the actuarial 'remeasurement result', compared to 2016, is mainly due to an increase in the discount rate in 2017 (in 2016, there was a decrease in the discount rate) and the return on the plan assets. For none of the defined benefit pension plans, the fair value of the plan assets exceeds the defined benefit obligation.

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C. Plan assets

Periodically, an Asset-Liability Matching study is performed in which the consequences of the strategic investment policies are analysed. Based on market conditions a strategic asset mix has been made between shares, bonds, real estate, cash and other investments in predominantly active markets, which is comprised as follows in the plan assets:

D. Defined benefit obligation

Risk exposure

The defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market (investment) risk.

Actuarial assumptions 

The principal actuarial assumptions at the reporting date (expressed as weighted averages) were the following:

Assumptions regarding future mortality have been based on published statistics and mortality tables:

• The Netherlands (funded plans): AG2016

• Germany (unfunded plans): RT Heubeck 2005G

• Belgium (funded plans): MR/FR-5

• UK (funded plans): CMI Mortality Projects Model “CMI_2016”

The current longevities underlying the values of the defined benefit obligation at the reporting date were as follows (expressed as weighted averages): 

As at 31 December 2017, the weighted-average duration of the defined benefit obligation was 18.0 years (31 December 2016: 18.3 years).

Sensitivity analysis

Possible changes at the reporting date to one of the relevant actuarial assumptions, which could reasonably be expected, keeping other assumptions constant, would have affected the defined benefit obligation of €285 million (31 December 2016: €298 million) by the amounts shown below:

Employer contributions

The Group expects to pay €3.4 million in contributions to its defined benefit plans in 2018 (for 2017 an amount of €15.7 million was expected). This decrease compared to last year is the result of a commitment of £10.0 million (€11.7 million) by ForFarmers to make up a portion of the deficit in the BOCM PAULS Ltd. (United Kingdom) pension plan in January 2017 (see Note 15A).

E. Other long-term service plans 

The liabilities and expenses related to other long-term service plans relate to anniversary benefits for employees in The Netherlands, Germany and Belgium and to a long-term incentive plan for the Executive Committee.

F. Employee benefit expenses

The employee benefit expenses increased by €0.9 million, despite a decrease of €2.8 million due to a currency effect and a decrease of €0.7 due to the net effect of acquisitions and divestments. As a result the like-for-like increase amounts to €4.4 million. The increase is caused by the increase of the number of employees, partly compensated by lower additions to the restructuring provision.

The expenses relating to the equity-settled share-based payments relate to the depositary receipts and shares granted to the employees according to the employee participation plans for 2017, 2016 and 2015 as disclosed under Note 14.

Due to the change in the lock-up period for the share-based payment arrangements the cash-settled share-based payments are not applicable anymore, refer to Note 14A for more information.

The post-employment expenses are specified as follows:

The interest charges related to the defined benefit plans amounting to €1,083 thousand (2016: €2,098 thousand) are recognised in the finance costs.

Refer to Note 15A for further details on the post-employment plans.

The increase by 52 full-time equivalents is mainly caused by the further strenghtening of the organisation and related to the increase in sales volume (in 2016: increase 4; due to the acquisition of Vleuten-Steijn ).

2.2.4 Income taxes

2.2.4.1 16. Income taxes

A. Amounts recognised in statement of profit or loss

2.2.4.1.1

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The total tax expense excluded the Group’s share of tax expense of the equity-accounted investees of €907 thousand (2016: €889 thousand), which has been included in ‘share of profit of equity accounted investees, net of tax’, see Note 16G.

2.2.4.1.2

B. Amounts recognised in Other Comprehensive Income (OCI)

2.2.4.1.2.1

Within the Group, loans are agreed between the different subsidiaries. Two of the loans in the United Kingdom are considered to form part of the net investment in the subsidiaries, and as such foreign exchange differences on these loans are recorded directly through other comprehensive income. For income tax purposes these

  foreign exchange differences are taxable or tax deductible. As the foreign exchange differences are recorded through other comprehensive income, the related current tax impact is also recorded through other comprehensive income for a positive amount of €290 thousand in 2017 (2016: €1,381 thousand positive).

2.2.4.1.3

C. Reconciliation of effective tax rate

D. Movement in deferred tax balances

2.2.4.1.4

The Group expects that its accruals for tax liabilities are adequate for all open years based on its assessment of many factors, including interpretations of tax law and prior experience. The Group off-sets tax assets and liabilities if, and only if, it has a legally enforceable right to do so. The Group recognises deferred tax assets to the extent that it is considered probable based on business forecasts that sufficient taxable profits will be available.

E. Unrecognised deferred tax assets

Part of the deferred tax assets have not been recognised in respect of tax losses carried forward in Germany as the Executive Committee has established that it is uncertain whether future taxable profits would be available against which these losses can be utilised. The not recognized deferred tax assets have been included in the balance of unrecognised losses for €3.2 million at 31 December 2017 (31 December 2016: €3.9 million), with a tax effect of €0.9 million (31 December 2016: €1.1 million). The tax losses can be carried forward indefinitely, but the Executive Committee applies a ten year period to determine the adequacy whether tax losses can be utilised.

Furthermore, deferred tax assets have not been recognised in respect of tax losses incurred on the sale of real estate in the United Kingdom amounting to €2.7 million (31 December 2016: €3.2 million), with a tax effect of €0.5 million (31 December 2016: €0.6 million). These tax losses can only be utilised against a future tax gain on the sale of specific assets such as real estate. As the Executive Committee does not have plans to dispose real estate, the recovery of the deferred tax asset is highly uncertain and as such not recognised.

In 2017 in the Netherlands a deferred tax asset is recognised related to individual real estate where the fiscal carrying amount is higher than the book carrying amount at the end of the year and there is no intention to sell or demolish this particular real estate. This concerns at 31 December 2017 an amount of €2.8 million (31 December 2016: €2.9 million), with a tax effect of €0.7 million (31 December 2016: €0.7 million). 

 F. Tax Group

The Company and the Dutch subsidiaries, in which the Company has a 100% interest, form a tax group for the purpose of income tax, of which ForFarmers N.V. is the head of the tax group. For VAT, a comparable tax group exists for the Dutch subsidiaries, which also includes the majority shareholder Coöperatie FromFarmers U.A. which is the head of this tax group. The total current receivable or liability towards the tax authorities is accounted for in the statement of financial position of the head of the tax group. Settlement of taxes within this tax group takes place as if each company is independently liable for tax. Each participating subsidiary is jointly and severally liable for possible liabilities of the tax group as a whole. As of 1 January 2018 Coöperatie FromFarmers U.A. is no longer part of the VAT tax group and ForFarmers N.V. is the head of the VAT tax group.

A number of companies in Germany form a tax group for the purposes of income tax (‘Organschaft’ for Körperschaftsteuer and Gewerbesteuer). Settlement of taxes within this tax group takes place as if each company is independently liable for tax.

The companies in the United Kingdom form a tax group for the purposes of income tax (‘Group Relief’) and VAT. Settlement of taxes within this tax group takes place as if each company is independently liable for tax.

The above-mentioned effective tax rate deviates from the statutory tax rate mainly due to the impact of the following main items:

Netherlands 

The effective tax rate is lower due to innovation box benefits and the recognition of the deferred tax assets relating to the individual real estate where the fiscal carrying amount is above the carrying amount at the end of the year. These deferred tax assets were not recognized in previous years.

Germany

The effective tax rate is lower due to recognition of the deferred tax assets relating to the net operating losses.

Belgium

The effective tax rate is higher because of non tax deductible items and deferred tax asset revaluation due to a tax rate change.

UK

The effective tax rate is lower due to a change regarding prior years. This change is  mainly due to the recognition of a deferred tax asset relating to the tax deductibility of certain assets.

 G. Taxes on equity-accounted investees

Corporate income taxes on the results of HaBeMa are settled with the tax authorities by ForFarmers Langförden, Germany (indirect shareholder). The results of HaBeMa are accounted for based on the equity method and are presented net of tax in the consolidated statement of profit and loss. These corporate income tax charges are deducted from the share of profit of equity-accounted investees for an amount of €907 thousand (2016: €889 thousand).

Trade taxes ('Gewerbesteuer') applicable to HaBeMa are borne by the entity itself.

2.2.5 Assets

2.2.5.1 17. Property, plant and equipment

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A. Reconciliation of carrying amount

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As part of the periodic reassessment of the estimated remaining useful life of property, plant and equipment the depreciation periods and if applicable the residual value of the property, plant and equipment have been revised, as from 1 January 2017. In general, this resulted in an extension of the useful life whereby depreciation expenses based on these revised depreciation terms are €2.4 million lower compared to the depreciation terms previously used. In the Netherlands, Germany and Belgium the depreciation expenses decreased and in the United Kingdom the depreciation expenses increased.

Furthermore, as part of the periodical reassessment of property, plant and equipment, items that were incorrectly classified were corrected, which resulted in a reclassification within property, plant and equipment and between tangible and intangible assets.

In the United Kingdom the construction of a new production facility (Exeter) has started. This requires an investment of £10.4 million (equivalent to €11.3 million at the exchange rate of 31 December 2017), of which a factory (£9.5 million) is already in use and the remaining part has been recognised as assets under construction. Furthermore, a central office (Bury St. Edmunds) has been taken in use, which required an investment of £3.8 million (equivalent to €4.5 million at the exchange rate of 31 December 2017). The other investments 2017 relate to the Netherlands and mainly consist of a new process control system (€3.1 million), the renovation of bulk silos (€2.2 million), trucks (€7.4 million) and the replacement of a grinder (€1.0 million).

The reclassification to assets held for sale of €1.4 million relates to the announced disposal of transportation vehicles to Baks and the sale of argirculture activities to CZAV at the end of 2017. For more information a reference is made to Note 25 and 37.

Of the 2017 additions of €38.2 million an amount of €36.6 has been paid at year end. The remaining has been recognized as a liability.

B. Impairment loss

As a result of the supply chain optimalisation in the United Kingdom a production location has been impaired by €1.9 million. There were no indicators in 2016 for impairment of property, plant and equipment.

C. Leased other operating assets

The Group leases some other operating assets under a number of finance leases. The corresponding finance lease obligations are accounted for under loans and borrowings. As at 31 December 2017, the net carrying amount of leased equipment was €101 thousand (2016: €236 thousand). The decrease of the carrying amount was caused by the fact that the leased assets has been replaced by assets owned.

2.2.5.2 18. Intangible assets and goodwill

A. Reconciliation of carrying amount

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The goodwill and other changes 'acquisitions through business combinations' of €1,056 thousand relate to the acquisition of Wilde Agriculture Ltd. (2016: total of €24,608 thousand acquired intangible assets and goodwill of Vleuten-Steijn) see Note 6.

The reclassification to property, plant and equipment relates to software which was incorrectly classified, see also Note 17.

The reclassification to assets held for sale relates to the announced sale of arable activities to CZAV at the end of 2017. For more information a reference is made to Note 25 and 37.

B. Amortisation

The amortisation of customer relations, trademarks and software of €6,332 thousand (2016: €5,666 thousand) is included in the depreciation, amortisation and impairment expense.

C. Impairment test

(i) Impairment testing for cash generating units containing goodwill

Annually the Group performs its goodwill impairment test in the third quarter. Moreover, the test is conducted at another time if there is a trigger for goodwill impairment. Goodwill is monitored and tested at the level of the clusters. The Group evaluates, amongst others, the relationship between the recoverable amount and the carrying amount in the evaluation of indicators of potential impairment.

Goodwill is allocated as follows to the cash generating units:

The decrease of goodwill in the Netherlands is a result of a reclassification to assets held for sale due to the sale of the argirculture activities to CZAV in 2018, see also Note 25. The change of goodwill in the United Kingdom is caused by a change of the foreign exchange rate, partially compensated by the acquisition of Wilde agriculture Ltd.

Information about the net realisable value including the key assumptions

For the goodwill impairment test, the recoverable amount of the various cash generating units was based on its value in use, determined by discounting the future cash flows to be generated from the continuing use of the cash generating units. The fair value measurement was categorised as a Level 3 fair value based on the inputs in the valuation technique used (see Note 4).

The key assumptions used in the estimation of value in use per cash generating unit in 2017 were as follows.

The key assumptions used in the estimation of value in use per cash generating unit in 2016 were as follows.

The used discount rate was a pre-tax measure based on the yield of 30-year government bonds, issued by the government in the relevant market and in the same currency as the cash flows, adjusted for a risk premium to reflect both the increased risk of investing in equities generally, and the systemic risk of the specific cash generating unit.

The average EBITDA growth rates were based on expectations of future outcomes of gross profits taking into account past experience of the average growth of recent years and estimated sales volumes in tons. To estimate the forecasted gross profit, primarily an assessment has been made on margin development, and on not sales price development. The commodity price development is hard to predict, however it is charged to customers. In determining the developments in the expenses the volume, inflation and cost savings are considered. The average growth percentage in the United Kingdom decreased compared to 2016 due to an updated forecast of the market cirucmstances amongst others caused by the possible effects of the Brexit.

The value in use of the cash generating units is determined based on the budget 2017 (2016: budget 2016) and the medium term plans to 2020. For the period after 2020 a growth rate equal to the terminal value growth rate is used, which is common practice in the market.

Result of the goodwill impairment test and sensitivity analysis

The result of the goodwill impairment test of the cash-generating units in 2017 shows that the recoverable amount exceeds the carrying amount of the cash generating units, and no impairment was required (2016: ditto).

The recoverable amount exceeds the carrying amount significantly for the cash flow generating units the Netherlands and Germany/Belgium. For the cash flow generating unit United Kingdom the difference between the recoverable amount and carrying amount is €7.8 million (£7.1 million), based on an additional trigger based goodwill impairment test at year end 2017. This limited difference is mainly caused by an updated forecast of the market circumstances amongst others caused by the possible effects of the Brexit in combination with an increase in the carrying amount due to investments in tangible assets.

A reasonable change in the assumptions could result in a recoverable amount below the carrying amount of the cash flow generating unit. The key assumptions used in the goodwill impairment test of the United Kingdom and the changes to these assumptions which will result in a recoverable amount equal to the carrying amount are included in the table below: 

In 2016 a reasonable adjustment of the assumptions did not result in recoverable amounts below the carrying amounts of these cash generating units.

(ii) Impairment on intangible assets other than goodwill

During 2017 and 2016 the Group recognised no impairment on intangible assets other than goodwill.

2.2.5.3 19. Investment property

A. Reconciliation of carrying amount

Investment property comprises a number of Industrial properties that are no longer in use for the Group's feed activities.

B. Fair value information 

The fair value of investment property was determined by external, independent property valuators, having appropriate recognised professional qualifications and experience, and taking into account sales prices which have currently been agreed upon.

The fair value measurement for investment properties was €2.1 million (31 December 2016: €2.1 million) and has been categorised as a Level 3 fair value based on the information derived from market transactions.

The following table shows the valuation technique used in measuring the fair value of investment property, as well as the significant unobservable inputs used.

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2.2.5.4 20. Equity-accounted investees

The table below shows the amount of equity-accounted investees:

The table below shows share of profit of equity-accounted investees, net of tax:

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Joint venture

HaBeMa Futtermittel Produktions- und Umschlagsgesellschaft GmbH & Co. KG (HaBeMa) is the only joint venture in which the Group participates. HaBeMa is one of the Group’s suppliers and is principally engaged in trading of raw materials, storage and transhipment, production and delivery of compound feeds in Hamburg, Germany.

HaBeMa is structured as a separate vehicle and the Group has a residual interest in the net assets of the entity. Accordingly, the Group has classified its interest in HaBeMa as a joint venture. The Group does not have any commitments or contingent liabilities relating to HaBeMa, except for the purchase commitments of goods as part of the normal course of business. Corporate income taxes on the results of HaBeMa with regards to the residual interest of the Company are settled with the tax authorities by ForFarmers Langförden, Germany (indirect shareholder).

The results of HaBeMa are accounted for based on the equity method and are presented net of tax in the consolidated statement of profit and loss. These corporate income tax charges are deducted from the share of profit of equity-accounted investees for an amount of €907 thousand (2016: €889 thousand). Trade taxes ('Gewerbesteuer') applicable to HaBeMa are borne by the entity itself. 

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The following table summarises the financial information of HaBeMa as included in its own financial statements, adjusted for differences in accounting policies. The table also reconciles the summarised financial information to the carrying amount of the Group’s interest in HaBeMa.

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2.2.5.5 21. Trade and other receivables

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The non-current trade and other receivables consist of:

• Receivables that will be due after one year, that are largely interest-bearing and mainly include loans to customers for which, if possible, securities were provided in the form of feed equivalents, participation accounts and real estate.
• Loans to employees, of which the level of interest is equal to the interest on Dutch state loans and at least equal to the interest referred to in Article 59 of the Wages & Salaries Tax Implementing Regulation 2001. The repayment of the loans is a minimum of 7.5% per annum of the principal amount starting from 2015. As a collateral with respect to repayment, a lien was established on the depositary receipts purchased with the loan amount, the market value of which per balance sheet date exceeds the balance of the loans. These loans have been provided as part of the participation plan 2007-2009. No new loans will be provided to employees.

The other receivables, prepayments and accrued income mainly consist of unbilled revenue to customers and prepayments to suppliers.

Information about the Group’s exposure to credit and market risks, and impairment losses for trade and other receivables, is included in Note 31.

2.2.5.6 22. Inventories

The increase in inventories is mainly caused by Cluster the Netherlands.

Other inventories include trading inventories which are part of the Group’s Total Feed business, and include, amongst others, fertilizers and seeds.

In 2017, an amount of €40 thousand was added to the provision of inventories (2016: €35 thousand).

For important purchase commitments reference is made to the explanation of the commitments and contingencies under Note 35.

2.2.5.7 23. Biological Assets

A. Reconciliation of carrying amount

As at balance sheet date the poultry livestock comprises of 934,732 animals (2016: 1,144,592 animals) with a value of €4.7 million (2016: €5.1 million). The poultry livestock relate to hens and a number of roosters, reared to an age ranging between 16 and 20 weeks, which are sold to hatcheries. The entire inventory is a current balance.

B. Measurement of fair values 

Fair value hierarchy

The fair value measurement for the roosters and hens is based on the full production costs plus a proportional share of the margin to be realised at sale. No active market with quoted market prices exists for these hens and therefore, the Executive Committee considers the most recent market transaction price to be the most reliable estimate for fair value resulting in a fair value hierarchy Level 3.

Level 3 fair values

The following table shows a breakdown of the total gains (losses) recognised in cost of raw materials and consumables in respect of Level 3 fair values (livestock). The non-realised part of the adjustment in fair value is part of the revaluation of the biological assets at the balance date.

Valuation techniques and significant unobservable inputs

The following table shows the valuation techniques used in measuring Level 3 fair values, as well as the significant unobservable inputs used.

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C. Risk management of biological assets

The Group is exposed to the following risks relating to its livestock.

Regulatory and environmental risks

The Group is subject to laws and regulations in various countries in which it operates. The Group has established environmental policies and procedures aimed at compliance with local environmental and other laws.

Supply and demand risk 

The Group is exposed to risks arising from fluctuations in the price and sales volume of poultry livestock. The Executive Committee performs regular industry trend analyses for hens and rooster volumes and pricing.

Risks related to animal diseases

The Group is exposed to the regular risks relating agricultural activities, amongst others risks related to diseases. The Group follows the developments in the market closely and adjusts its policy where required.

2.2.5.8 24. Cash and cash equivalents

The outstanding deposits are saving accounts which can be withdrawn immediately without cost. As such the Group considered these to be part of cash and cash equivalents.

The cash and cash equivalents are at the free disposal of the Group. The increase of the cash and cash equivalents is mainly explained by the realised EBITDA and movements in working capital, partly compensated by the purchase of own shares, an additional contribution to the BOCM PAULS Ltd. (United Kingdom) pension plan, investments in assets and paid dividend.

2.2.5.9 25. Assets held for sale

As a result of the announced strategic partnership between ForFarmers the Netherlands and Baks transportation vehicles are reclassified from property, plant and equipment to assets held for sale. Furthermore, at the end of 2017 ForFarmers announced the sale of its agriculture activities to CZAV resulting in a storage facility, customer relationships and goodwill classified as assets held for sale. For more information a reference is made to Note 37.

In 2016, the land site Oss was sold for €5.6 million. Due to €0.1 million disposal costs this results in a gain of €0.9 million that has been recognised as other operating income in the statement of profit or loss, see Note 10.

2.2.6 Equity and liabilities

2.2.6.1 26. Equity

A. Share capital and share premium

On 15 April 2016, it was resolved to amend the Articles of Association of the Company, to change the legal form of the Company into a public limited company, and the par value of the shares was reduced from €1.00 to €0.01 per share with an effective date per 23 May 2016. As at 31 December 2017, the share capital consists of 106,261,040 ordinary shares and 1 priority share. At balance sheet date the shares were issued and fully paid up. The share premium consists of the positive difference between the issue price and the nominal value of the issued shares.

On 26 April 2017, the Annual General Meeting of Shareholders authorised ForFarmers to initiate a programme to repurchase its own shares for a period of 18 months for (a) an amount between €40 million and €60 million and (b) in addition to purchase shares for the implementation of employee participation plans in 2017. ForFarmers repurchased 5,747,993 shares for a total amount of €56.7 million (including purchasing costs) in the period from 2 May 2017 through 31 December 2017. From the total number of repurchased shares 358,465 at an amount of €3.0 million are reissued as certificates for employee participation plans, bringing the balance of repurchased shares to €53.7 million (including purchasing costs).

(i) Ordinary shares

All ordinary shares have equal rights. Holders of these shares are entitled to dividend as declared from time to time, and are entitled to one vote per share at annual general meetings of shareholders of the Company. All rights attached to the Company’s shares held by the Group are suspended until those shares are reissued.

(ii) Priority share

The priority share is held by Coöperatie FromFarmers U.A. As a result of the treasury shares held by the Group Coöperatie FromFarmers U.A., on the latest reference date of 1 January 2018, could exercise the voting right for 51.9% of votes to be cast on the total of ordinary shares on the shares it holds. Furthermore, the Coöperatie FromFarmers U.A. could give voting instructions with regard to the shares held by the Trust Office Foundation,  which would give Coöperatie FromFarmers U.A. 60.0% of voting rights. As priority share holder Coöperatie FromFarmers U.A.:
(i)        has a recommendation right for four of the six members of the Supervisory Board;

(ii)       may appoint a member of the Supervisory Board as Chairman after consultation with the Supervisory Board;

(iii)     has an approval right as regards the decisions of the Executive Board regarding:

1. moving the Company’s head office outside the east of the Netherlands (Gelderland and Overijssel);
2. an important change in the identity of nature of the Company or its enterprise as a result of (1) transfer of the enterprise or practically all of the enterprise to a third party or (2) entering into or breaking off a long-term partnership of the Company or a subsidiary thereof with another legal entity or company, or as fully liable partner in a limited partnership or general partnership, if such partnership or its termination represents a fundamental change to the Company;
3. taking or disposing of a participating interest in the capital of a company to a value of at least a third of the amount of the Company’s equity according to the balance sheet with explanatory notes or, in the event the Company draws up consolidated balance sheets, according to the consolidated balance sheet with explanatory notes, according to the most recently adopted annual accounts of the Company, or any of its subsidiaries;
4. changes to the Company’s articles of association;
5. affecting a merger or division.

Please refer to the Corporate Governance Statement for the conditions for holding the priority share and the special control rights associated thereto if that voting right and/or voting instruction can be exercised or given for 50% or less.

The priority share is classified as equity, because the share does not contain any obligations to deliver cash or other financial assets and does not require settlement in a variable number of the Group’s equity instruments.

B. Nature and purpose of reserves

(i) Treasury share reserve

The reserve for the Company’s treasury shares comprises the cost of the Company’s (depositary receipts) shares held by the Group. The treasury shares are accounted for as a reduction of the equity attributable to the owners of the parent.

Treasury shares are recorded at cost, representing the market price on the acquisition date, where the par value of treasury shares purchased is debited to the treasury share reserve. When treasury shares are sold or re-issued, the par value of the instruments is credited to the treasury share reserve. Any premium or discount to par value as result of the market price is shown as an adjustment to retained earnings.

During the reporting period the Company purchased 5,747,993 of its shares as part of the share buy-back programme and to be able to re-issue the depositary receipts in relation to the employee participation plans. Besides the repurchase of the abovementioned number of shares, the 358,465 treasury shares, which were obtained on behalf of the previous liquidity provider agreement (SNS) which ended on May 24 2016, were used for the purpose of employee participation plans. At 31 December 2017, the Group held 5,469,292 of the Company’s shares.

In 2016 the Company purchased 400,000 of its (depositary receipts) shares to be able to re-issue the depositary receipts in relation to the employee participation plans. At 31 December 2016, the Group held 77.580 of the Company’s shares.

 The movement in the treasury shares can be summarised as follows: 

The other movements 2016 relates to depositary receipts sold by the previous liquidity provider (SNS) independently from the Company.

(ii) Translation reserve

The translation reserve comprises all foreign currency differences arising from the translation of the financial statements of foreign operations. The decrease in this reserve as at 31 December 2017 is due to the devaluation of the Pound sterling.

(iii) Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition in profit or loss as the hedged cash flows affect profit or loss.

(iv) Other reserves and retained earnings

Other reserves are held by the Company for statutory purposes. Retained earnings comprise the balance of accrued profits that have not been distributed to the shareholders.

A reference is made to the section Other information regarding the result appropriation scheme under the Articles of Association.

For a further clarification of the other reserves and retained earnings a reference is made to Note 47 Shareholders’ equity of the Company financial statements.

C. Dividends

The following dividends were declared and paid by the Company for the year:

 The dividend is based on the total number of shares issued at year end of 100.8 million (2016: 106.2 million). In accordance with the dividend policy the payable dividend is adjusted for outstanding trade receivables and the receivable from the Coöperatie FromFarmers U.A.. As a result the total dividend paid in 2017 amounts to €25.7 million. The treasury shares are not entitled to dividend.

After the respective reporting date, the following dividends were proposed by the Executive Committee. The dividends have not been recognised as liabilities and there are no tax consequences.

2.2.6.1.1

D. Other comprehensive income accumulated in reserves, net of tax