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Notes to the consolidated financial statements
HZPC Holland B.V. with registered office at Edisonweg 5, Joure, Netherlands, is a private limited liability company incorporated under Dutch law, the shares of which are fully owned by the HZPC Association [Vereniging HZPC]. The figures are reported in euros and the figures for 2012/2013 have been reclassified to confirm the current year's presentation.
The financial statements have been prepared in accordance with Title 9, Book 2 of the Netherlands Civil Code. The applied accounting policies are based on the historical cost convention. In order to provide better insights to the reader of the financial statements, the layout of the profit and loss account differs from the prescribed models.
These financial statements have been prepared on the basis of the going concern assumption.
The financial year of the company runs from 1 July up to and including 30 June.
Use of estimates
The preperation of the financial statements requires the management to form opinions and to make estimates and assumptions that influence the application of principles and the reported values of assets and liabilities and of income and expenditure. Actual results may differ from these estimates. The estimates and the underlying assumptions are constantly assessed. Revisions of estimates are recognised in the period in which the estimate is revised and in the future periods for which the revision has consequences.
Transactions denominated in foreign currency are translated into the relevant functional currency of the group companies at the exchange rate applying on the transaction date. Assets and liabilities denominated in foreign currency are translated at the balance sheet date into to the functional currency at the exchange rate applying on that date. Translation gains and losses are taken to the profit and loss account as expenditure. The assets and liabilities of foreign operations are translated into euros at exchange rates applying on the balance sheet date. Income and expenses of foreign operations are translated into euros at the exchange rate applying on the transaction date. Translation gains and losses are taken to reserve for translation difference.
The development of the most important currencies was as follows:
|exchange rate||average||exchange rate|
|EUR 1 against foreign currency||30-06-2013||exchange rate||30-06-2014|
The consolidated Financial Statements comprise HZPC Holland B.V. and its group companies. The group companies have been included in their entirety in the consolidated financial statements.
The consolidated financial statements include the financial data of the company, its group companies and other legal entities over which it can exercise decisive control or which fall under the authority of the central management. Group companies are participating interests in which the company has a majority interest or in which decisive influence can be exercised by the company in another matter. In assessing whether decisive influence may be exercised, financial instruments that have potential voting rights which can be immediately exercised are considered. Participations which are held for sale are not consolidated.
Newly acquired participating interests are included in the consolidation from the time at which decisive influence can be exercised. Group companies that have been disposed of are included in the consolidation until the decisive influence has ceased to exist.
The intra-group debts, receivables and transactions are eliminated in the consolidated financial statements, just as the profits made within the group.
The following paragraph provides for an overview of the consolidated group companies.
Participating interests (direct and indirect) as of 30 June 2014
- 100.0% Stet Holland B.V., Emmeloord
- 100.0% Bonna Terra B.V., Emmeloord
- 100.0% ZOS B.V., Leeuwarden [NL] with its own participating interest in:
- 100.0% ZOS Wehe B.V., Wehe den Hoorn [NL]
- 100.0% Participatie Maatschappij Buitenland B.V., Joure [NL] with its own participating interest in:
- 100.0% Huchette - Cap Gris-Nez SAS, La Chapelle d’Armentières, France, with its own participating interest in:
- 100.0% * Fleur de Lys - Huchette SARL, La Chapelle d’Armentères, France
- 100.0% Patatas HZPC España S.L., Valencia, Spain
- 100.0% HZPC Portugal Lda., Aveiro, Portugal
- 100.0% HZPC Americas Corp., Charlottetown, Canada
- 100.0% HZPC UK Ltd., Crowle, Great Britain
- 100.0% HZPC Deutschland GmbH, Eydelstedt, Germany
- 100.0% HZPC Poland Sp. z o.o., Poznan, Poland
- 80.0% HZPC America Latina S.A., Buenos Aires, Argentina
- 100.0% HZPC Kantaperuna OY, Tyrnävä, Finland
- 100.0% HZPC Sverige AB, Lidköping, Sweden
- 100.0% HZPC China Ltd., Hong Kong
- 100.0% HZPC Ltd., Hong Kong
- 100.0% Huchette - Cap Gris-Nez SAS, La Chapelle d’Armentières, France, with its own participating interest in:
- 50.0% D.S.S. Opslag B.V., Dronten [NL]
- 20.0% Semillas SZ S.A., Santiago, Chile
- 41.3% HZPC Sadokas Oy, Tyrnävä, Finland with its 100% participating interest:
- ZAO HZPC Sadokas Oy, Saint Petersburg, Russia
• Fiscal unity with HZPC Holland B.V. for corporate income tax purposes. On the basis of the standard conditions, the entities included in the fiscal entity are jointly and severally liable for the tax debts of the fiscal unity as a whole.
Principles for valuation and determination of results
Unless stated otherwise, assets and liabilities are valued at nominal value. The profit and loss account is composed of the income from the transactions realised during the financial year reduced by the incurred costs on an historical basis, taking into account the movement considered necessary in the provisions and owed taxes. Net sales are the income from the goods delivered and services performed, reduced by the sales tax and under deduction of commissions. Other income also includes income with respect to production under licence. An asset is disclosed in the balance sheet when it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the cost of the asset can be measured reliably. A liability is recognised in the balance sheet when it is expected to result in an outflow from the entity of resources embodying economic benefits and the amount of the obligation can be measured with sufficient reliability.
An asset or liability that is included in the balance sheet remains on the balance sheet as long as no transaction (with regard to that asset of liability) leads to a major change in the economic reality with regard to that asset or liability. If a transaction results in a transfer of future economic benefits and or when all risks relating to assets or liabilities transfer to a third party, the asset or liability is no longer included in the balance sheet. Assets and liabilities are not included in the balance sheet if economic benefits are not probable and/or cannot be measured with sufficient reliability.
Income is recognised in the profit and loss account when an increase in future economic potential related to an increase in an asset or a decrease of a liability has arisen, the size of which can be measured reliably. Expenses are recognised when a decrease in the economic potential related to a decrease in an asset or an increase of a liability has arisen, the size of which can be measured with sufficient reliability.
If a transaction results in a transfer of future economic benefits and or when all risks relating to assets or liabilities transfer to a third party, the asset or liability is no longer included in the balance sheet. Assets and liabilities are not included in the balance sheet if economic benefits are not probable and/or cannot be measured with sufficient reliability.
Revenues and expenses are allocated to the period to which they relate. Revenues are recognized when the company has transferred the significant risks and rewards of ownership of the goods to the buyer.
Business activities abroad
The functional currency for HZPC is the euro. Where necessary, the assets and liabilities of business activities abroad, including goodwill and actual value corrections arising from consolidation, are translated into euros at the applicable exchange rate as per the balance sheet date. The income and expenses of foreign activities where necessary, are converted into euros at the applicable exchange rate on the transaction date. Currency conversion differences are processed in the currency translation reserve. If a foreign operation is sold whole or in part, the relevant amount is transferred from the currency translation reserve to the profit and loss account.
Financial instruments comprise investments in shares, trade and other receivables, liquid assets, loans and other financial liabilities, trade debts and other items to be paid.
Financial instruments also comprise derived financial instruments (derivatives) included in contracts. The company does not separate these derivatives from the underlying contract and they are therefore processed in accordance with the base contract.
Financial instruments are initially stated at fair value, including discount or premium and directly attributable transaction costs. However, if financial instruments are subsequently measured at fair value through profit and loss, then directly attributable transaction costs are directly recognised in the profit and loss account. After the initial booking, financial instruments are valued in the manner described below.
The fair value of a financial instrument is the amount for which an asset could be traded or a liability could be settled between two well-informed parties that are independent of each other and willing to enter into a transaction.
Financial instruments held for trading
Financial instruments (assets and liabilities) held for trading are carried at fair value and changes in the fair value are recognised in the profit and loss account. In the first period of recognition, attributable transaction costs are charged to the profit and loss account.
Purchased loans and bonds
Purchased loans and bonds which the company intends to hold to maturity (and is capable of doing so) are stated at amortised cost on the basis of the effective interest method, less impairment losses. If listed on a stock exchange, other purchased loans and bonds are carried at fair value. Changes in the fair value are recognised in the profit and loss account. Unlisted purchased loans and bonds are carried at amortised cost on the basis of the effective interest method, less impairment losses.
Loans granted and other receivables
Loans granted and other receivables are carried at amortised cost on the basis of the effective interest method, less impairment losses.
Goodwill is determined as the positive difference between the purchase price of the participating interests and the interest of the group in the net actual value of the transferred identifiable assets and the ‘conditional’ liabilities of the transferred participating interest less the cumulative depreciation and impairment losses. Goodwill paid during the acquisition of foreign group companies and participating interests is translated at the exchange rates at the date of acquisition. The capitalised goodwill is depreciated by the straight-line method over the estimated economic useful life of five years.
Tangible fixed assets
Tangible fixed assets are valued at the purchase cost reduced by linear depreciation on the basis of the estimated economic life span, taking the residual value into account. The acquisition value is determined after deduction of any investment grants. Land is not depreciated.
The depreciation expressed as an annual percentage of the purchase value for:
- buildings and alterations:
- machinery and installations:
- other fixed assets:
Depreciation rates are time-dependent.
Disposal of fixed assets
Assets available for sale are stated at the lower of their carrying amount and net realisable value.
Financial fixed assets
Participating interests where significant influence is exercised over the business and financial policy are valued according to the equity method on the basis of net asset value. The net asset value is calculated on the basis of the company’s accounting policies. Participating interests with a negative net asset value are valued at nil.
If the company fully or partially guarantees the debts of the relevant participating interest, then a provision is recognised accordingly. This provision is recognised primarily to the debit of the receivables on the respective participating interest and for the remainder presented under provisions for the part of the share of the losses incurred by the participating interest, or for the estimated payments by the company on behalf of these participating interests.
Participating interests where no significant influence is exercised are stated at the lower of cost or realisable value. Loans to non-consolidated participating interest are included at amortised cost using the effective interest method, less impairment losses.
The accounting policies for other financial fixed assets are included under the heading ‘Financial instruments’.
Dividends are accounted for in the period in which they are declared. Interest income is recognised in the profit and loss account on an accrual basis, using the effective interest rate method. Any profit or loss is recognised under financial income or expenses.
Bonds, listed and unlisted recognised under financial fixed assets, that are not held as part of a trading portfolio and which will be held to maturity, are valued at their amortised cost.
For tangible and intangible fixed assets an assessment is made as of each balance sheet date as to whether there are indications that these assets are subject to impairment. If there are such indications, then the recoverable value of the asset is estimated. The recoverable value is the higher of the value in use and the net realisable value. If it is not possible to estimate the recoverable value of an individual asset, then the recoverable value of the cash flow generating unit to which the asset belongs is estimated. If the carrying value of an asset or a cash flow generating unit is higher than the recoverable value, an impairment loss is recorded for the difference between the carrying value and the recoverable value.
In addition an assessment is made on each balance sheet date whether there is any indication that an impairment loss that was recorded in previous years has decreased. If there is such indication, then the recoverable value of the related asset or cash flow generating unit is estimated.
Reversal of an impairment loss that was recorded in the past only takes place in case of a change in the estimates used to determine the recoverable value since the recording of the last impairment loss. In such case, the carrying value of the asset (or cash flow generating unit) is increased up to the amount of the estimated recoverable value, but not higher than the carrying value that would have applied (after depreciation) if no impairment loss had been recorded in prior years for the asset (or cash flow generating unit).
An impairment loss for goodwill is not reversed in a subsequent period, unless the previous impairment loss was caused by an extraordinary specific external event that is not expected to recur and if there are successive external events that undo the effect of the earlier event.
The inventory of raw materials and supplies is valued against the purchase price, applicable on the balance sheet date, reduced by any depreciation for obsolescence.
Receivables are valued at amortised cost price on the basis of the effective calculation interest rate and are, where necessary, reduced by provisions for any irrecoverability.
Financial instruments that are designated as equity instruments by virtue of the economic reality are presented under shareholders’ equity. Payments to holders of these instruments are deducted from the shareholders’ equity as part of the profit distribution. Financial instruments that are designated as a financial liability by virtue of the economic reality are presented under liabilities. Interest, dividends, income and expenditure with respect to these financial instruments are recognised in the profit and loss as financial income or expense.
Unless otherwise stated, provisions are valued at the nominal value of the expenditure that is expected to be necessary to settle the liabilities and losses.
A provision is included in the balance sheet when it concerns:
- a legal or constructive obligation arising from the past event; and
- of which a reliable estimate can be made; and
- It is probable that an outflow of recourses embodying economic benefits will be required to settle the obligation.
The anniversary provision concerns a provision for future anniversary payments. The provision concerns the present value of anniversary payments to be paid in the future. The calculation is based on commitments made, retention rate and age.
Sale of goods
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns and allowances, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing involvement with the goods.
Revenues from services rendered, including storage and grading, are recognised in the profit and loss account when the revenue amount can be determined in a reliable manner and collection of the related compensation to be received is probable.
Licence fees are payable for the use of the company's varieties. Revenues are recognised under other operating income after deduction of payments made to right-holders.
Dutch pension schemes
The main principle is that the pension charge to be recognised for the reporting period should be equal to the pension contributions payable to the pension fund over the period. In so far as the payable contributions have not yet been paid as at balance sheet date, a liability is recognised. If the contributions already paid exceed the payable contributions as at balance sheet date, a receivable is recognised to account for any repayment by the fund or settlement with contributions payable in future.
In addition, a provision is included as at balance sheet date for existing additional commitments to the fund and the employees, provided that it is likely that there will be an outflow of funds for the settlement of the commitments and it is possible to reliably estimate the amount of the commitments. The existence or non-existence of additional commitments is assessed on the basis of the administration agreement concluded with the fund, the pension agreement with the staff and other (explicit or implicit) commitments to staff. The liability is stated at the best estimate of the present value of the anticipated costs of settling the commitments as at balance sheet date.For any surplus at the pension fund as at balance sheet date, a receivable is recognised if the company has the power to withdraw this surplus, if it is likely that the surplus will flow to the company and if the receivable can be reliably determined.
The pension commitments are placed with a pension insurer. The pension scheme is of such a nature that the actuarial risks are covered by the pension insurer. In the annual accounts, the owed premiums are included as costs in the profit and loss account; insofar the periodic owed premiums have not yet been paid, they are included as a liability on the balance sheet.
A provision is also included on the balance sheet with regard to special pension amounts still owed as of the balance date, including:
- the available amount for indexation of HZPC pensions;
- other liability commitments that have not yet been funded.
Foreign pension plans
Pension plans that are comparable in design and functioning to the Dutch pension system, having a strict segregation of the responsibilities of the parties involved and risk sharing between the said parties (company, fund and members) are recognized and measured in accordance with Dutch pension plans (see previous section).
For foreign pension plans that are not comparable in design and functioning to the Dutch pension system, a best estimate is made of the commitment as at balance sheet date. This commitment should then be stated on the basis of an actuarial valuation principle generally accepted in the Netherlands.
Share in the results of companies in which HZPC participates
The share in the operating results of companies in which HZPC participates includes the share of the group in the results of these participating interests. Results on transactions, for which a transfer of assets and liabilities between the group and the non-consolidated participating interests and mutually between non-consolidated participating interests have take place, are not processed insofar as these can be considered as not yet realised. The results of participating interests that are acquired or disposed of during the financial year under review are processed in the result of the group from the time of acquisition, respectively up to the time of disposal.
Corporate income tax comprises the current and deferred corporate income tax payable and deductible for the reporting period. Corporate income tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly to equity, in which case it is recognised in equity. Current tax comprises the expected tax payable or receivable on the taxable profit or loss for the financial year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to the tax payable in respect of previous years.
For deferred taxes, a provision is taken for temporary differences between the book value of assets and liabilities for financial reporting and the fiscal book value of those items. A deferred tax asset is only included insofar it is probable that in the future there will be available taxable profits that can be used for the realisation of the temporary difference. Deferred tax receivables are revised as of each reporting date and are decreased insofar as it is no longer probable that the associated tax benefit will be realised.
The cash flow statement is prepared using the indirect method. Cash flows in foreign currency are translated into euros using the weighted average exchange rates at the dates of the transactions. Cash flows from financial derivatives that are stated as fair value hedges or cash flow hedges are attributed to the same category as the cash flows from the hedged balance sheet items.