Report of the Supervisory Board
1.6.3.1
Agricultural businesses in Europe are, to an increasing extent, confronted with new challenges: ever-higher requirements are imposed in order to provide for sustainable business operations. In 2015, returns on farm were again under pressure. ForFarmers is aware of this and continuously works, together with its customers, strategic partners, and industry organisations, on new initiatives to keep facing these challenges.
To optimally share and deploy knowledge within the organisation ForFarmers specifically worked on the establishment of a matrix organisation in the past year. As a consequence the internal cooperation between the Business Units and the staff departments was strengthened. For ForFarmers the year under review was about further professionalisation and improvement of processes.
Another development in the year under review was the cooperation with the strategic partners. This resulted in the piglet feed concept VIDA. The Supervisory Board does not only qualify this concept as an example of fruitful cooperation between ForFarmers, its strategic partners and customers but also internally crossing borders between the employees in the various countries.
After having been involved in (legal predecessors of) ForFarmers for almost 30 years Jan Markink stood down as a supervisory director of ForFarmers in 2015. The vacancy that was consequently created was filled by Erwin Wunnekink. Mr Wunnekink also took up office in the remuneration committee. Mr Mulder currently fulfils the position of Deputy Chairman of the Supervisory Board.
In 2015 a lot of work was carried out in preparation for a potential stock exchange listing in 2016. The Supervisory Board emphasised the importance of a fluid preparation and transition from the current trading platform to a public listing with attention for accurate communication with the current participants of the trading platform to the Executive Board. In the light of the above the Supervisory Board approved, with consent of the audit committee, to draw the annual accounts over the 2015 financial year up on the basis of the IFRS. The present and future protection constructions against hostile takeovers were also discussed. In addition, the Supervisory Board also decided to nominate KPMG for reappointment as auditor for the financial year 2016.
Supervision
During the Supervisory Board meetings the Executive Board informed the Supervisory Board of strategic developments, investment proposals, the financial results, organisational developments, operational progress and specific market developments. To prepare the items on the agenda they were often first discussed in a meeting with one of the committees.
Strategy Horizon 2020
In 2014 the Horizon 2020 strategy was introduced and an energetic start was made with the implementation thereof. The Supervisory Board concluded that the implementation of the strategy was given further substance in the year under review. Below is an overview of the most important subject matters that were discussed in this context with the Executive Board.
Strategic partnerships
The results of the strategic partnerships that were concluded by ForFarmers in 2014 became distinctly visible in 2015 in the marketing of high-quality nutritional products and the bundling of purchasing power and knowledge of fertilisers, seeds and plant production products.
Acquisitions
During 2015 ForFarmers worked on the integration of the acquisitions of HST Feeds Ltd and Wheyfeed Holdings Ltd in the United Kingdom. In addition, the acquisition of the agricultural activities of Countrywide Farmers was completed and the integration thereof also took place.
During every meeting of the Supervisory Board developments in the area of acquisitions were discussed. The Supervisory Board supports the constructive and policy approach of the Executive Board with regard to potential acquisitions in other countries within the region of Europe and bordering countries (Europe+). Acquisitions remain an important part of the strategy of ForFarmers. In the countries and regions where ForFarmers is active the company continues pursuing a number one or two position.
Organisation, Executive Board and Board of Directors
During every meeting the Executive Board informed the Supervisory Board of organisational developments, in particular in terms of the filling of senior management positions and other positions relevant to the matrix organisation. In addition the Supervisory Board was informed during the year of the various Management Development Programmes. Moreover, the members of the Supervisory Board attended one of the two senior management conferences that take place each year.
In 2015 the Board of Directors team consisted of Yoram Knoop, Arnout Traas, Jan Potijk, Iain Gardner, Steven Read, Stijn Steendijk, Ronald van de Ven, and Nico de Vos. Ronald van de Ven will stand down as from 1 March 2016. He is succeeded by Adrie van der Ven, who will be responsible for the ForFarmers activities in Belgium and Germany and the expansion outside the present four key countries. The Supervisory Board thanks Ronald van de Ven sincerely for the integration of the Hendrix organisation into ForFarmers and the rollout of Horizon 2020 in Belgium and Germany.
The Executive Board, consisting of Yoram Knoop, Arnout Traas and Jan Potijk, is part of the Board of Directors as shown on the website of ForFarmers.
In 2015 the Supervisory Board held evaluation interviews with all members of the Board of Directors in the course of which two members of the Supervisory Board always spoke with one member of the Board of Directors. The conclusions from these interviews were then discussed with the plenary Board of Directors.
Remuneration
On the advice of the remuneration committee the Supervisory Board prepared the remuneration policy for the Executive Board. The intention is to submit the remuneration policy to the shareholders of ForFarmers for adoption during the Annual General Meeting on the 15th of April 2016. Page 93 of the Supervisory Board remuneration report contains the remuneration method used in the past financial year.
Financial reporting
The Supervisory Board received internal financial reports and they were elucidated and discussed in the meetings by the Executive Board. In this respect the course of affairs, market developments and risks, as well as the performance compared to the budget of the group as a whole and the individual units were discussed.
The Supervisory Board discussed the conclusions of the audit committee regarding the (layout and the operation of the) internal control and risk management systems and the most important risks that ForFarmers is confronted with. The Supervisory Board endorses and supports the internal risk management system as outlined in the Risk Management section of this report. In this context, tightening and follow-up of accounts receivable and interpretation of the internal audit function at ForFarmers were discussed with the Executive Board.
The Supervisory Board also approved the 2014 annual accounts and assessed the 2015 half-yearly report. In addition, the dividend policy and the dividend proposal for 2014, corporate governance, and the consequences of the International Financial Reporting Standards (IFRS) for the financial reporting of the company were discussed. The members of the Supervisory Board also participated in an internal IFRS training.
Preparations for transfer to listing on Euronext Amsterdam
The Supervisory Board carefully follows the preparations for a potential listing on Euronext Amsterdam in 2016 and has been kept informed about the progress thereof by the Executive Board during its meetings. In this respect, the Code of Conduct, the process of risk control, the transition to IFRS, corporate governance, the selection of assisting banks being Rabobank and ABN AMRO Bank and the communication process were discussed. The choice of the assisting banks has the approval of the Supervisory Board.
Other subjects and activities
The delivery of sustainable performance is part of the strategy. This means carrying out business with respect for people, the environment and the surroundings. ForFarmers contributes to this by offering innovative nutritional solutions. The objectives in the area of sustainability were sharpened in Horizon 2020. In its June meeting the Supervisory Board discussed the sustainability strategy with the Executive Board. The Supervisory Board supports the plan of ForFarmers to adopt a proactive approach in this matter and to establish a Sustainability Advisory Board. In this respect the importance of accurate communication and the involvement of customers and partners in the value chain were also discussed with the Executive Board.
The Supervisory Board sees the Code of Conduct as a means to stimulate integrity. The introduction took place in 2015. All employees have received a personal letter and a brochure about this. This information is also available on the intranet (Connect). In addition, employees followed an online training module and the Code of Conduct was discussed during various work meetings.
Sustainable performance is also relevant to the way in which ForFarmers handles safety and development of employees. The Supervisory Board observed that the necessary improvements in the area of safety were implemented. In this context the importance of reporting accident near-misses was repeatedly communicated within the organisation via the intranet and other methods. The number of near-miss notifications has significantly increased; the number of accidents for the group as a whole actually declined
In 2015 the first meeting of the European Works Council of ForFarmers took place. As indicated in the regulations of the Supervisory Board both the European Works Council and the Supervisory Board can take the initiative for a consultation request.
Meetings and attendance
In 2015 the Supervisory Board met eight times in plenary meetings. Seven of these meetings were regular meetings and on one occasion a meeting was held to discuss a specific issue with regard to a potential acquisition. These Supervisory Board meetings were always held in the presence of the CEO and the CFO, barring one meeting during which the CFO was not present. The members of the Board of Directors team were present (or with consent of the CEO represented in case of inability to attend) during the Supervisory Board meetings and the subject matters discussed included the annual accounts, half-yearly results, and the budget. There was one conference call.
During all meetings the Supervisory Board was present in plenary composition, barring one meeting. During the said meeting one member was not present, however this member had taken note of the items on the agenda and had communicated his standpoint prior to the meeting. The Supervisory Board also met three times without (representatives) of the Board of Directors. Items that were discussed included layout of the internal organisation as well as the method and remuneration (including the variable part thereof) of the Executive Board and the other members of the Board of Directors team. In addition the composition of committees and the independence of supervisory directors were discussed. Also in the light of the developments of the company the Supervisory Board again established its regulations and profile in November 2015. When preparing the regulations and the profile, harmonisation was sought, as much as possible, with the Corporate Governance Code. Finally the respective members met in the three committees (see page 81).
Preparation for the Annual General Meeting that ForFarmers held in April 2015 was carried out by the Supervisory Board during its regular meetings in February and March. During the latter meeting the annual accounts and the annual report were also discussed as well as developments in light of Horizon 2020. The external auditor was also present to provide an explanation. In addition, during the said meeting, without the presence of the auditor, the employee participation for 2015 was discussed. The 2015 half-yearly report and the budget for 2016 were discussed in the meetings of August and December respectively. The Supervisory Board approved the budget, which also includes the operational plan for 2016. This budget is based on the strategy approved by the Supervisory Board as formulated in Horizon 2020. This strategy also includes the operational and financial objectives of the company, the preconditions that are used in connection therewith, and the aspects of corporate social responsibility relevant to the company.
Evaluation of the Annual General Meeting took place in April and the meetings in June and November dealt with the sustainability strategy, the transition to IFRS and a Horizon 2020 update. Within the framework of the preparation of the transition to the public stock exchange the Board of Directors and the Supervisory Board elaborated the following guiding principles with regard to the assets.
Self-evaluation
In 2014 a self-evaluation exercise was carried out under the auspices of an external advisor. In 2015 the Supervisory Board carried out a self-evaluation without advisor and discussed its own performance, in terms of both the Supervisory Board as a whole and the individual members. In this respect the composition, the profile, and the training programme of the Supervisory Board were addressed. In addition, the Supervisory Board evaluated its meetings in the past year and the development and strategy of the company and the role of the Supervisory Board in connection therewith were also addressed. The nomination committee of the Supervisory Board prepared the meeting regarding the self-evaluation. The Supervisory Board concluded that, both as a whole and its individual members, performed satisfactorily.
The information as intended in provisions III.1.3 and III.5.2 of the Corporate Governance Code is included in, respectively, the section ‘Composition of the Supervisory Board’ and ‘Committees of the Supervisory Board’.
Corporate site
