Sligro Food Group NV Food Group NV based in the Netherlands is a wholesaler in a foodservice and a wholesaler and retailer in food retail.
In the Netherlands, the company’s food service division has a market share of 24%, according to FSIN, and in 2016 consisted of of 50 cash-and-carry and 8 delivery service wholesale outlets. The outlets serve large and small-scale hospitality, establishments, leisure facilities, volume users, company and other caterers, forecourt retailers, small and medium-sized enterprises, smaller retail businesses and the institutional market. As market leader in the sector, the Group primarily handles its own purchases of foodservice products. In the Netherlands, the Group serves the institutional market trading under the name Van Hoeckel and the other segments of the market as Sligro Food Group NV. In Belgium the company is currently a top-five player in the Belgian foodservice market, concentrating on the institutional, company catering and hotel chain segments, where it operates under the name Java Foodservice. Its revenue in 2016 in Belgium amounted for €145 million which includes sales from the delivery centres in the Netherlands to customers in Belgium, as well as sales to Belgian, sales from customers that are close to the border who buy supplies in the Dutch cash-and-carry outlets and sales from Belgium delivery centre.
In 2016, total revenue for the Food Service sector was €1,986 million – it increased by €157 million compared to 2015. Operating profit before amortization fell by €2 million from €101 million in 2015 to €99 million in 2016. Sligro Food Group NV ‘s net profit for 2016 decreased by 9.1% compared with 2015 and amounted for €73 million.
The food retail division at Sligro Food Group NV consists of 133 full-service EMTÉ supermarkets that are mainly located in the southeast of the Netherlands, three of which were opened in 2016. 34 of EMTÉ supermarkets are operated by independent retailers. The EMTÉ supermarkets offer around 75,000 products which include long-life and short-life perishables, frozen foods, wines and spirits and food-related non-food items. In 2016, revenue for this sector was €827 million. Compared with 2015, the revenue in 2016 decreased by €20 million. One of the reasons is that in the retail sectors non-food and food sales are moving to other retail channels. In Food Retail the company’s market share declined to 2.6%. Operating profit before amortization decreased by €8 million: from €21 in 2015 to €13 million in 2016.
Three acquisitions were made in 2016: In the Netherlands Sligro Food Group NV acquired the wholesale operations of De Kweker- a fiftieth outlet in the Netherlands and the entire share capital of EETnl Holding B.V. which operated the Van Heinde trading style in’s-Hertogenbosch. In Belgium the Company acquired Java – a top-five player among wholesale organizations in Belgium that focuses on the institutional and company catering market segments and hotel chains. The Group also started construction of a new frozen food distribution centre in Rotselaar which is expected to allow Java to grow further in the future. The company planned to open its first outlet at the end of 2016 or early 2017, but it was delayed due to the resistance from competitors in the planning permission process.
As a strategy for Netherlands, the Group wants to grow its market share from 24% in 2016 of 30% in 2017 for the Foodservice sector. Company’s international expansion concentrates entirely on foodservice and its focus is primarily on Belgium. The Group aims to achieve a leading position in the foodservice market through a combination of organic growth and acquisitions in Belgium. The company grows the fastest in Foodservice delivery channel and expects to benefit most from this part of the market in the next few years.
The company current focus is on conversion of its stores of the the cash-and-carry network to a 3.0 format with an increasingly refined and personal communications with customers. In 2016, the company invested €27 million to upgrade cash-and-carry outlets to Sligro Food Group NV 3.0. The company also invests continuously in developing online activities and master data management. Its Online 3.0, increasingly professional logistics by the specialized delivery operations and the range and image spin-off from the cash-and-carry outlets and 3.0 positioning are clearly bearing fruit. Sligro Food Group NV 3.0 operates on the four pillars – tastier, more personal, cheaper and more inspirational.
In Food Retail sector, the company expects a further shift to online, where growth will be significantly higher than in the traditional supermarkets. Everything in Food Retail is focused on making the transition to 3.0 a success and further restoring the performance of the 2.0 stores. At year-end 2016, the company had 15 new 3.0 format EMTÉ stores. In November 2016, the company also launched the first version of a new ordering platform Online 3.0.
The Group’s Goodwill at the end of 2016 is totaling €145 million, €30 million of which is allocated to Food retail division and € 115 million to Foodservice. There is an increase by €19 million since 2 January of 2016. The goodwill of €19 million is an acquisition of Java in Belgium, that added customer bases and store locations to the goodwill of the year. In the supermarket industry in particular, acquiring the right location is a very important determinant of value. Goodwill is not amortised but tested for impairment annually, or at other times when there is an indication of impairment.
Other intangible assets amount for € 72 million and also include Store locations (that come from acquisitions) and customer bases Software.
A big portion of the company’s assets are composed of a large amount of 1) Property, plant and equipment used by the Sligro Food Group NV Group itself, 2) investment property which is supermarket premises leased to Group franchisees, and 3) assets held for sale which are real estate projects which are planned to be sold in the short term.
Sligro Food Group NV has an extensive network of outlets, mainly supermarkets, cash-and-carry wholesale outlets and customer distribution centres, some of which are owned while others are leased. In total, there are 61 Company-owned premises. Compared with 2015, there was an increase in Land and Buildings, Plant and equipment and Other Assets Assets under construction. Land and buildings are made up of €77 million in Land, €21 million in Supermarket store premises and €122 million in Buildings. There is also Land occupied by leased premises totaling €3 million and Leasehold improvements totaling €59 million.
Investments in associates total €51 million in 2016. The results of associates improved compared with the previous year by €3 million.
The Investment property totaling €20 million at the year-end 2016 includes 8 supermarket premises leased to franchisees on operating leases.
Inventories totaling €245 million in 2016 show an increase by €25 million compared with 2015. Approximately 66% of the inventories account for the €161 million in Stores and regional distribution centres, €73 million in Central distribution centre, €8 million in packaging deposits (the same level as previous year) and €3 million in Stock in transit.
At the end of 2016, Accounts receivables are totaling €179 million, compared with €144 million in 2015. They are made up by €119 million in Trade receivables and €60 million in receivables from suppliers – the latest are mainly related to agreed annual purchase volumes, which are paid after the end of the year. As at year-end 2016, the receivables from food retail customers totaled approximately €111 million including €23 million come from acquisitions.
In 2016, the Group invested €80 million in intangible assets and property, plant and equipment. €27 million stands for an upgrade of cash-and-carry outlets to Sligro Food Group NV 3.0, €2 million is a purchase of land for De in Purmerend where a company acquired the De Kweker outlet that it plans to close and change to a new a new Sligro Food Group NV 3.0 that will be built in 2017. The company also spent €3 million on the ZiN inspiration lab, €15 million on the conversion of EMTÉ supermarkets to EMTÉ 3.0, €5 million on three new EMTÉ supermarkets in the Netherlands, €7 million in a central distribution complex in Veghel and €13 million on ICT software and hardware for our online programmes and master data management.
Other financial assets totaling €17 million at the year-end 2016 are mainly composed of 6 million in interest-bearing loans to customers and €1 million in loans to associates. Fair value of derivatives is €10 million. These loans are carried at amortized cost less any impairment losses.
Other current assets totaling €24 million at the year-end 2016 include €13 million in the Fair value of derivatives, 2 million of which come from long-term loans. Other amounts receivable and prepaid expenses totaling €11 million include staff loans and receivables in respect of investment projects.
Cash and equivalents total €92 million at the year end 2016 are composed of €18 million in Cash balances and cash in transfer, €69 million in Freely available bank balances and €5 million in Time deposits. Cash equivalents are credit balances at banks and deposits and are carried at face value.
Total assets at the end of 2016 are €1,215 million. In order to see profitability of le the Group relative to its total assets, it is good to take a look at the Return on assets Ratio (ROA) as an indicator of asset performance.
The ROA ratio %: = * 100 = = 6.4
Comparing the ROA of 2016 with the Consumer Retailing industry average (which is 3.77), Sligro Food Group NV Food Group performs above average.
As at year-end 2016, total non-current liabilities were €136 million and showed a decrease of €31 million compared with a previous year, mainly due to a significant decrease in bank borrowings that fell by €35 million in 2016 and totaled €103 million at the year end 2016. Deferred tax liability increased to 28 million and is composed of €9 million in taxes for Intangible assets, 18 million for taxes in Property, plant and equipment and 1 million for taxes in Inventories. Employee benefits totaling €5 million account only for Long-service benefits.
As at year-end 2016, total current liabilities were €452 million. Out of this amount, the largest portion is attributable to Trade and other payables of €294 million. Current portion of long-term borrowings totaling €71 million are the amounts falling due within one year from the loans taken through US private placements. Trade and other payables totaling €294 million include €25 million in amount owed to the fresh produce suppliers, €95 million owed to the Superunie purchase cooperative €8 million owed to Vemaro B.V for tobacco products. Other liabilities, accruals and deferred income totaling 63 million at the year-end include €11 million in Customer bonuses, 8 million in Packaging deposits, €7 million Loyalty scheme liabilities and €10 in other. The biggest part of the item is employees totaling €27 million includes liabilities in respect of profit-sharing, accrued paid annual leave plus holiday allowances.
Other taxes and social security contributions totaling €24 million includes €16 million in VAT, excise duty and waste management contribution and €8 million in Payroll tax and social security contributions. The company paid 2 million in corporate income tax for all wholly owned subsidiaries in the Netherlands, with the exception of EMTÉ Vastgoed B.V.
In conclusion, we can say that according to the balance sheet of the Sligro Food Group NV Group, working capital position was managed cautiously, evidenced by an increase in total assets. Sligro Food Group NV Food Group’s cash and other short term assets cover long-term obligations of the Group.