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ANNUAL REPORT Bell Holding Ltd.

www.bell.ch


Bell Annual Report 2007

ANNUAL REPORT 2007 CONTENTS About us_01

22_ FEATURE SWISS GYMNASTICS FESTIVAL

Editorial_02

24_ Catering

Interview with the executive board _06 FEATURE MORITZ’S PARTY_10 Fresh Meat_12 Charcuterie_14 FEATURE BARBECUE PARTY_16

25_ Maurer Frères SA / Frigo St. Johann AG 26_ Corporate Social Responsibility Quality management and food safety Environmental, energy and workplace safety issues Human Resources Marketing/Communication

30_ FEATURE FOOTBALL PARTY

Poultry_18

34_ Financial reporting 2007

Seafood_20

58_ Corporate Governance

Convenience_21

64_ Organigramm 70_ Contacts 71_ Imprint

ABOUT US

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Bell Annual Report 2007 –

Bell at a glance Financial Figures (in CHF thousand)

2007

Difference

2006

Gross sales

1 636 472

9.4%

1 496 290

Cash flow in % of sales

116 692 7.1%

9.4%

106 684 7.1%

EBIT in % of sales

72 954 4.5%

25.0%

58 364 3.9%

Net profit in % of sales

56 553 3.5%

28.8%

43 890 2.9%

Capital expenditure in operating assets in % of cash flow

49 624 42.5%

20.7%

41 105 38.5%

522 981 66.3%

9.2%

478 703 64.4%

Equity in % of assets

11.8%

Return on equity (ROE)

9.9%

Shares Keys (in CHF)

1 925 293 183 142 40

Share price as of 31.12. Cash flow per share EBIT per share Net profit per share Dividend per share

36.5% 9.2% 24.8% 28.7% 21.2%

1 410 268 147 110 33

Cash Flow (in CHF million)

Sales by product groups 43% Fresh meat

120

100

80

5% Sales abroad and other turnover 4% Convenience

Charcuterie 24%

4% Seafood 1% Meat specialities 19% Poultry

www.bell.ch

60

40

20

01

02

03

04

05

06

07


Performance Figures Meat production

Percentage of imports

2007

2006

1.3% 4.0% 3.9% 69.5% 97.2% 5.0% 31.7%

56 050 29 860 6 261 1 922 1 275 95 367 31 277

55 808 28 523 5 790 1 967 1 224 93 312 25 063

53.0%

54.0%

Processing Production volume of charcuterie (in tons)

29 245

29 611

Market key figures Animals for slaughter Slaughterings Bell Group (in tons) Bell market share*

87 162 22%

85 631 22%

Poultry Slaughterings Bell Group (in tons) Bell market share*

21 014 35%

16 301 32%

3 249 3 341

3 088 3 234

Purchased Own from third slaughtering parties/imports

(in tons)

Pork Beef Veal Lamb Game and other meat Total Poultry

53 056 27 897 5 587 587 36 87 162 21 014

2 994 1 963 674 1 335 1 239 8 205 10 263

Share of labelled meat in animals for slaughter Share of meat from appropriate care and feeding

Number of employees Average headcount calculated on the basis of full-time employees Headcount at December 31 in number of employees *

Source: Bell estimate

Consolidated profit (in CHF million)

Slaughterings of the Bell Group excluding poultry (in tons)

55

100 000

50

90 000

45

80 000

40

70 000

35

60 000

30

50 000

25

40 000

20

30 000

15 10

20 000

5

10 000

0

0

01

02

03

04

05

06

07

01

02

03

04

05

06

07


About us

– Bell ‘07

THE LEADER IN THE SWISS MEAT INDUSTRY AND ONE OF SWITZERLAND’S MOST POPULAR FOOD BRANDS.

When master butcher Samuel Bell opened his butcher shop in the inner city of Basel in 1869, no one imagined that this modest establishment would one day evolve into Switzerland’s largest meat provider. But Samuel’s unwavering commitment to quality and his fearlessness in blazing new trails did in fact lay the groundwork for Bell’s later success – now embodied by the over 3,000 employees of the Bell Group. Today we’re a full service meat products vendor for the retail and wholesale trade, food service, and food processing industry, offering an extensive range of meat, poultry, seafood, and charcuterie products – plus convenience foods that are fully in step with the zeitgeist. The pleasure we take in supplying outstanding products, our stringent quality standards, and our innovation are clearly evident in all of our product ranges – which if truth be told count as some of the highest quality elements of any meal. For Bell’s staff members, using top notch ingredients and taking the utmost care with every step in the manufacturing process is what matters most. The five divisions of the Bell Group encompass all the functions that are needed to address the respective market segments. Our specialised locations are equipped with state-of-the-art technology and have efficient and lean business structures. We gear our business activity towards targeted value creation and give top priority to the sustainable development of our company. Our responsibility with regard to social and ecological sustainability is something that we take very seriously. – 01


Bell Annual Report 2007 –

Editorial

DEAR SHAREHOLDERS Message from the Vice Chairman of the Board and the Chief Executive Officer

Record year We are delighted to be able to report on the most successful year in the Bell Group’s 138-year history. In 2007 operating income increased by 9.4% on the previous year’s figure, reaching the record level of CHF 1.636 billion, and net income rose by 28.8% to CHF 56.6 million. Bell increased its slaughter volume by 6.1% to a total figure of around 108,000 tons – this also represents a new high. We can attribute this excellent development of business in 2007 to three main factors: first of all, Bell benefited from the success enjoyed by its customers as well as from robust consumer confidence, which resulted in a greater demand for meat products and ensured that the use of the company’s production capacities was maintained at a good level. In addition, in this environment Bell was largely able to pass on the rise in raw material prices to the market. The second factor was the successful turnaround of Poultry. This division generated record sales and made a significant contribution to net profit. It therefore managed to overcome the slump in demand that resulted from the bird flu crisis. Thirdly, ranges with high value added sold particularly well. Following the launch of a number of innovations yet again last year, Bell can now offer a complete product range that is in line with its customers' tastes and is tailored to meet every requirement. Good development in all divisions It is particularly pleasing to be able to report that in 2007 business developed extremely 02 – www.bell.ch

well throughout the whole of the Bell Group. All business units managed to increase their sales: >

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The Fresh Meat Division benefited from increased sales of its value-added-intensive, self-service product groups, as well as from a good level of capacity use at its plants. The specialisation of the plants in Oensingen and Basel has proven its worth and the anticipated efficiency gains have been achieved. The Charcuterie Division posted pleasing sales growth, thanks in particular to good seasonal business. However, the inflationdriven increase in production costs meant that profit did not develop in parallel with sales. Bell Poultry increased both sales and profit substantially and took advantage of the turnaround in poultry consumption. The fact that the division seized the initiative at an early stage when the popularity of poultry rose again made a decisive contribution to this result. Thanks to good production planning and efficient processes, Bell was able to respond rapidly to the increase in demand and expand its share of the poultry market. The Convenience and Seafood business units continued to grow, both achieving a double-digit increase in sales. In the area of seafood, sourcing represents an ever-greater challenge. Against the background of the increasing overfishing of the world's seas, sustainable fishing is the future, and this is something to which Bell will continue to be strongly committed.


– Bell Editorial

Adolphe R. Fritschi Chief Executive Officer

Hans Peter Schwarz Vice Chairman of the Board of Directors

– 03


Bell Annual Report 2007 –

Editorial

The successful 2007 financial year demonstrates that the Bell Group is currently well positioned Growth potential abroad The successful 2007 financial year demonstrates that the Bell Group is currently well positioned. Substantial elements of our medium and long-term corporate strategy have been implemented. In future we will be placing the focus, on the one hand, on securing what we have achieved – in other words, on maintaining our leading position in Switzerland. On the other hand, we also intend to take advantage to a greater extent of growth opportunities abroad. We began our rollout into foreign markets in the Charcuterie Division last year. These export activities are showing positive development, even though they remain at a relatively low level at present. As the next step in its expansion, Bell is examining the possibility of making acquisitions in neighbouring countries, with Charcuterie once again the focus of these efforts. In 2008 important decisions are looming in the area of Swiss agricultural policy. At the centre of these lies the opening-up of the protected market in the form of a free trade agreement with the European Union. We are convinced that the advantages of such an agreement would clearly win through and would quickly make up for any disadvantages in the form of costs associated with adjusting to the new situation: lower prices would mean that domestic consumption would increase and market shares lost as a result of cross-border shopping tourism could be regained. Substantial new markets would be open to Swiss providers and, last but not least, the agricultural sector and upstream and downstream businesses would have clear prospects on which to base long-term investment decisions. Good development of share price and higher dividend Bell’s share price once again developed extremely pleasingly in 2007, reaching CHF 2,250 – a new high. At year’s end the Bell Group’s market capitalisation was CHF 770 million, and had therefore risen by more than CHF 200 million within the space of a year. Investors are acknowledging the good earnings development

04 – www.bell.ch


– Bell Editorial

“Investors are acknowledging the good earnings development shown by our company over the long term, even though they are aware that our sourcing and sales markets can be subject to short-term fluctuations.”

shown by our company over the long term, even though they are aware that our sourcing and sales markets can be subject to shortterm fluctuations. On account of the positive performance achieved in 2007 and the good prospects for the future the Board is asking the shareholders meeting to increase the share dividend by CHF 7 to CHF 40. A further issue of particular interest from the perspective of our shareholders is that of sustainability, an area to which the Bell Group has been committed for some time. The programmes and measures that we have implemented in this context are bearing fruit. Bell reports in detail on aspects of its business related to sustainability. This information can be found in the “Corporate social responsibility” section of this Annual Report. Staff issues A further piece of good news is that the health of the chairman of the Board, Jörg Ackermann, has been improving steadily and he has already been able to participate once again in the activities of Bell Ltd.’s Board of Directors. Vice chairman Hans Peter Schwarz will continue to act as chairman on a temporary basis. Unfortunately, we also have to report that Stefan Baumberger, who has been a member of the Board of Directors for many years, is suffering from health problems that are currently preventing him from carrying out his activities on the Board. We wish him a swift recovery and hope that he will soon be able to return to his duties. Organisational changes In future, transGourmet Schweiz AG, which operates in the wholesale cash and carry and delivery segments of the food service business, will focus on its trading activities, whilst Bell will take over the production of meat and meat products. The small meat processing operations in Kriens and Prilly – which specialise in the manufacture of product lines for the food service sector – are therefore being spun off from

transGourmet and reintegrated into the Bell Group. We do not expect this to have any substantial influence on profit. Bell has already taken over operational responsibility with effect from 1 January 2008. Outlook for 2008 We expect consumer confidence to remain strong in 2008 and therefore anticipate that demand will continue to be good. Raw material prices are likely to stay at their current high level or even to rise again slightly due to the increase in cereal prices. In addition, the cost of auxiliary and ancillary materials will rise, as well as energy and transport costs. Due to the fact that Bell has largely exhausted the streamlining potential within the company, it will only be possible to absorb these cost increases to a limited extent by improving efficiency. The development of earnings will therefore depend on the extent to which price increases can be passed on to the market. A word of thanks Bell is currently in excellent shape and this can be attributed first and foremost to our employees. On behalf of the Board and the executive board we would like to extend our gratitude to them for their exceptional efforts over the course of the past year. We would also like to thank our customers for their loyalty, our business partners for their excellent cooperation and you, our shareholders, for your confidence.

Hans Peter Schwarz Vice Chairman of the Board of Directors

Adolphe R. Fritschi Chief Executive Officer

– 05


Bell Annual Report 2007 –

Interview with the executive board of Bell Ltd.

“WE WILL REMAIN THE LEADER” Interview with the executive board of Bell Ltd.

Over the 2007 financial year Bell managed to achieve a disproportionate increase in its profit to CHF 57 million – in spite of the fact that margin pressures from raw material prices remained high. What has made this improved profitability possible? Adolphe R. Fritschi: There are a number of factors behind the good result we achieved. Most importantly, all of the Bell Group’s plants were operating at a high level of capacity use, thanks to above-average sales, and were working extremely efficiently. This resulted in good coverage of fixed costs and improved profitability. Martin Gysin: Another decisive factor was the fact that Bell managed to achieve a turnaround in the area of poultry towards the end of 2006. As a result, the Poultry Division posted positive figures throughout 2007, very much in contrast to the previous year. Josef Dähler: We launched new products with a higher degree of value added. And, last but not least, we were able to fully exploit the potential offered by fresh meat, as once again all cuts were in demand. This has not always been the case in recent years. 06 – www.bell.ch

Does this mean that Bell has exhausted its potential in the area of profitability or are further improvements still possible? Fritschi: Bell can look back on an extraordinarily good year. Nevertheless, we are naturally keen to achieve a positive result in 2008 too. To do this, however, we would need a great many things to run optimally once again. Daniel Böhny: In the area of poultry, we reaped the rewards in 2007 of the efforts we had made in previous years. Possibilities for optimisation always exist, of course, but another such upturn in profitability will no longer be possible for poultry. Bell’s share price rose by around 35% in 2007. However, the price was subject to strong fluctuations. To what can this be attributed? Gysin: For the most part, these fluctuations were caused by the market, as on the whole the stock market was highly volatile in 2007. In view of the free cashflows being generated, the Bell Group is adequately valued at present.


– Bell Interview with the executive board of Bell Ltd.

“The Swiss are spoiling themselves a little.”

On the basis of the current price, Bell is valued at CHF 760 million. The corresponding figure at the end of 2000 was CHF 175 million. Is Bell actually worth more than four times as much today as it was seven years ago? Gysin: Seven years ago the share price had fallen sharply, which was partly linked to the fact that results were not particularly inspiring. In spite of this, CHF 175 million represented a huge undervaluation. When it became clear that Bell was managing to achieve a turnaround and was once again generating a high level of free cashflows, the valuation gap gradually closed. What is more, Bell’s earnings quality is better now than it was in the past. The good result in 2007 was achieved in an unfavourable environment as far as raw material prices are concerned. The Bell Group once again posted an increase in sales in 2007. What are the reasons behind the good development of business? Fritschi: A decisive factor was the good level of consumer confi-

dence. The Swiss are confident that the economy is developing well and salaries are on the increase. This can be clearly seen in relation to the more expensive cuts of meat: in 2007 we did not quite have enough of these to meet demand. A positive development is the fact that, in addition to the inflation-driven increase in sales, Bell also managed to expand its volumes. This means that people not only bought more expensive meat, but their shopping baskets were heavier too. Did the industry also experience problems in 2007? Adolf Maassen: We have not been faced with any serious problems for some time now – as astonishing as that may sound. If I had to pick out particular problem areas, I would say that these related to price increases for raw materials and additives as well as energy and transport. The sharp rise in the cost of packaging materials, for example, is also giving us cause for concern. In addition, there is a threat of a shortage of natural sausage casings. – 07


Bell Annual Report 2007 –

Interview with the executive board of Bell Ltd. How sharp was the rise in raw material prices? Dähler: In the area of fresh meat, raw material prices went up across the board in 2007: by 5% for pigs, 4% for beef, 7% for cow meat and roughly 1% each for veal and lamb. Böhny: For poultry the situation is more complex: two years ago the industry suffered from the bird flu crisis. This urged suppliers to reduce their production capacities, including those for hatching-egg production. We are still feeling the effects of this now. Hatching eggs are in short supply, which naturally leads to rising prices. In addition, prices for animal feed have risen sharply for the first time in 20 years. This was another reason why raw material prices shot up. And how have prices developed in the area of seafood?

How would you assess conditions in Switzerland for domestic meat processing? Fritschi: At present we are working within a protected agricultural framework. In the medium term, however, the opening up of the market is unavoidable. We have set ourselves on the right course though. When borders open up, conditions will remain good in the area of beef. We will also be able to maintain charcuterie and poultry at the current level. Things will be more critical in relation to pork processing, as Swiss farmers will never be able to produce conventional pork as cheaply as farmers in the countries around us. For this reason it will be all the more important for them to focus uncompromisingly on quality and sustainable production.

Fritschi: When it comes to seafood we are experiencing a genuine phenomenon. Consumption is increasing constantly, in spite of massive price increases of up to 20%. Ultimately, this is the same development that we are seeing with expensive cuts of meat: the Swiss are spoiling themselves a little. As far as fish is concerned, requirements are increasingly being set with regard to sustainability. How is Bell dealing with this issue? Fritschi: Our main customer Coop is creating a strong profile for itself in the area of sustainability. Consequently, Bell is also attaching extremely high priority to this issue: the first area we are focusing on is the sourcing of fish from fish farms. The second is sustainable fishing. And, thirdly, we do not sell any species of fish that are under serious threat of extinction. How are sustainable fishing and the organic rearing of animals monitored? Fritschi: Monitoring is carried out via independent third-party organisations. For fish, for example, this takes place via the Marine Stewardship Council (MSC), which is also supported by the WWF. As far as the organic rearing of animals is concerned, the requirements in Switzerland are more stringent than they are abroad and are monitored by the federal government. Within the context of the Naturafarm production programme, Coop carries out its own controls, as does Swiss Animal Protection SAP, which has a mandate to perform such inspections. Organic products are monitored by the certification body of Bio Suisse. Overall, therefore, a tight network of controls is in place. Bell’s ultra-modern fresh meat plant in Oensingen has now been operating for more than a year. Has it fulfilled expectations in terms of improvements in productivity? Dähler: Yes, our expectations have been met. Although we are not yet quite where we would like to be, we are on schedule and heading in the right direction. A new factory is a highly complex affair. It takes time to fine-tune all the processes. 08 – www.bell.ch

Bell Poultry managed to increase its sales substantially. Has it “only” returned to the normal level that applied prior to the bird flu crisis, or has it actually been able to expand its market position to such an extent? Böhny: We correctly anticipated the recovery in poultry consumption. The Poultry Division has grown more quickly than the market, and what made this possible was good planning, something that was by no means easy last year. Before a chicken is ready for sale a processing time of three to four months is required. We managed to supply the right quantity of chickens to the consumer at the right time. In some cases this helped us to achieve record sales and gain market shares. Where did Bell place the emphasis with regard to innovation in 2007? Dähler: In the area of barbecue products we successfully launched a number of innovations. Marinated products such as meat skewers sold particularly well. With “Bell Easy Gourmet” and “Bell Finest Swiss Beef” we launched another two promising new product lines onto the market. Böhny: At Bell Poultry we first had to create the conditions and scope for innovation. With “Bell Pronto al Forno” we successfully launched a new product line for the convenience segment. The new conditions created have therefore already borne fruit. Maassen: Bell’s salami production celebrated its one hundredth anniversary in 2007. This makes us the salami producer with the longest tradition in Switzerland – and in spite of this long history we are still extremely innovative: in 2007 we introduced the “Bell Spécialités”, a combination of charcuterie and dipping sauces. This product line achieves higher value added thanks to the greater level of convenience it offers.


– Bell Interview with the executive board of Bell Ltd.

In 2006 the Charcuterie Division ventured into Luxembourg and Germany. How would you summarise this cross-border initiative? Fritschi: Expansion abroad is a marathon not a sprint. It takes years to build up business outside your own country. For us it is important that, when free trade with the EU arrives in the area of agricultural products, we already have a local presence and people are familiar with us. The work we are doing now is paving the way for this. Maassen: It goes without saying that countries outside Switzerland have not simply been waiting for us to arrive. If you want to establish yourself on the European markets, you need persistence, investment and a presence. In 2007 we managed to gain a foothold in our target markets, and we will be expanding our presence in 2008. Gysin: Bell is also driving forward its expansion on two levels: on the one hand, we are keen to develop direct exports and, on the other, have set acquisition as a clear target. We intend to grow outside Switzerland by means of a takeover. A number of promising projects are currently being analysed.

“Bell enjoys an excellent reputation in the sector – also outside Switzerland.”

a huge amount of experience into play. Dähler: Marketing for domestic meat would, however, need to be intensified. The Austrians are showing us how to promote your own meat in your own country. Switzerland has some catching up to do in this area. Bell has consolidated its position as number one on the Swiss meat market. What is it that gives the Bell Group its strength? Fritschi: There are a whole range of factors, and I will mention the three most important ones here: firstly, the work we carry out for Coop means that our plants can be sure of a certain base load. Secondly, we have invested consistently in the modernisation of our production facilities. Today, all our plants are of a top standard. Thirdly, our employees are also of the highest calibre as far as knowledge and motivation are concerned. Böhny: We have established a strong brand. In Switzerland Bell is the number one brand for meat. The name Bell enjoys a high level of familiarity and has positive associations. On the one hand, this helps us to assert ourselves on the market. On the other, it means that our employees are proud to represent the Bell brand. Where do you see priorities and challenges in the year ahead? Fritschi: Performing good work every day, satisfying our customers every day and ensuring our employees are motivated every day – this may sound boring, but it is our recipe for success. We will be further optimising our services, processes and quality to ensure that we can maintain the level we have achieved. We will remain the leader.

Which areas and countries will be the focus of a foreign acquisition? Gysin: Our main area of focus will be charcuterie produced using meat from slaughtered animals. From a geographical viewpoint, we will be placing the emphasis on the markets that surround us, i.e. Germany, France, Italy and Austria. In these countries there are a number of interesting objects and Bell also enjoys an excellent reputation in the sector outside Switzerland, which is particularly pleasing. Expansion abroad is not a one way street. How will Bell face up to foreign competition on its home market? Gysin: Competition essentially stimulates business. However, supplying the Swiss retail trade from abroad will not be easy. We are a good way ahead in terms of customer service and logistics. Bell distributes the goods prepared and picked for each store. This is not done anywhere else in Europe and is a service that gives us a clear competitive advantage. Bell’s knowledge of the Swiss market is also second to none and we are able to bring

From left to right: Adolf Maassen, Josef Dähler, Martin Gysin, Adolphe R. Fritschi, Daniel Böhny – 09


– Feature –

Colourful balloons float about, cheerful bunting decorates the room and, on the festively laid table, birthday candles burn.

Moritz is allowed to blow them out. After all, today is his day. He is sitting proudly on his high chair amidst his lively party of guests. All his friends have come to celebrate his fifth birthday with him. The birthday boy has asked for a hedgehog cake with spines made of lollies and colourful chocolate sweets as decoration. “If you give Felix a shake you’ll hear the Smarties rattling around inside him”. Kirsten and the others exchange tall stories and, after cake and apple juice, decide to play a game together. Luckily the sun is shining for Moritz today and noisily the young rascals race out into the garden. “Get into pairs and I’ll wrap two of your legs together, then you can hobble to the tree, go around it once and come back again. We’ll see whether you manage to do it without tearing the paper. Ready, steady, go!” It’s all go now for the hostess – playing with the children and comforting them. Moritz is crying. He's cross because he lost the race. But such minor crises are part and parcel of a children’s party. His tears are quickly forgotten as, after the race, the children bounce balloons from nose to nose, all the while yelling and charging around to their hearts’ content. Meanwhile Moritz’s little sister Charlotte tidies up. She totters across the grass with her rake and busily gathers up the scraps of paper. Because it's so nice outside, the children are allowed to paint animal masks on the terrace. It’s an excellent idea, as painting calms the children down and gets the little artists chatting: “The teeth are silver and I’m going to paint the eyes gold. It’s a beautiful tiger that lives in the jungle”. “My rhinoceros has got blood on its nose, because it ate red paint for breakfast”. Now the rhinoceros and tiger are having a pretend fight while an elephant watches the pair curiously in their merry-making. Inside, the food Moritz has requested for his birthday tea is being prepared. There’s Wiener sausages with chips and ketchup. The children are quieter now, tired from playing in the fresh air. They are thrilled with the party bags that Moritz gives them to take home as they say goodbye in the early evening.

"To host a children’s birthday party you need every qualification under the sun: circus ringmaster, psychologist, nurse, entertainer, mediator – and you need to be able to change roles at the drop of a hat. Every child deserves to be the centre of attention once a year and to feel that it’s his or her own special day.” (Irene von Mühlendahl, mother of Moritz, Carolin and Charlotte)

– 011 – www.bell.ch


Bell Annual Report 2007 –

Fresh Meat

MARKET LEADERSHIP IN SWITZERLAND STRENGTHENED FURTHER 2007 was a very successful year for the Fresh Meat Division: sales rose by 5.4% to CHF 692 million and the volume of meat sold increased markedly. This enabled Bell to consolidate its market leadership in the area of fresh meat production in Switzerland. The measures implemented with the aim of modernising and specialising plants brought about the desired rationalisation effects.

In 2007 Bell increased its meat sales by 0.5% on last year, achieving a figure of 45’788 tons. Slaughter volume rose by 1.8% to 87,162 tons. This higher volume was attributable to the extremely successful barbecue season. Demand for beef, in particular, went up, with all cuts selling well. Raw material prices increased by 6.4% in the year under review, which means that, on a volumeadjusted basis, Swiss farmers received considerably more for their slaughtered animals than in 2006. However, it was not only farmers who received more – the federal treasury also collected an additional amount of around CHF 35 million as a result of the new auction concept (of which CHF 21 million from poultry). Bell Fresh Meat launched a number of innovations in the year under review, the most important of which was a new packaging concept for self-service products. The successful changeover substantially increased the attractiveness of the self-service range and made a key contribution to its successful sale.

012 – www.bell.ch

Plant modernisation The modernised and expanded plant in Oensingen, the biggest investment project in Bell’s history, fulfilled the company’s expectations. With the Oensingen plant the Bell Group has at its disposal an ultra-modern, high-performance facility for the processing of fresh meats and self-service products that allows the company to centralise production and achieve an associated improvement in profitability. The Oensingen fresh meat plant processes beef and veal, while the Basel facility specialises in pork. This specialisation by the plants has brought about the desired rationalisation effects. As part of a project at the Cheseaux-sur-Lausanne plant in Frenchspeaking Switzerland an adjacent plot of land was acquired. The intention is to use this to integrate the Geneva and Lonay branches. A new ERP (Enterprise Resource Planning) system from SAP was also introduced in Cheseaux as a pilot project. Our aim is to record all industry-specific processes – purchasing, slaughtering, storage, production, batching, jointing, picking and distribution – as well as the most important business management functions in one standardised system. A rollout of this system to other locations is being planned.


– Bell Business Units

Bell Finest Swiss Beef – beef of the very highest quality In 2007 Bell Fresh Meat launched a new premium beef product onto the market. With this exclusive product Bell is targeting connoisseurs who love meat of the very highest quality. But what is it that distinguishes top-quality beef such as this from ordinary beef? First of all, only meat from special breeds of cattle is used. In a country like Switzerland, where milk-producing breeds dominate due to the strong milk industry, this is not something that can be taken for granted. The cattle are reared organically and are

selected individually by Bell's meat specialists, who pay particular attention to meatiness, fat deposition and weight limits – important factors to ensure tender meat and optimum flavour. The prime cuts are matured on the bone in accordance with a traditional method, lending them a strong, natural aroma. These top-quality products are available in selected speciality stores as well as through the retail trade and food service sector.

– 013


Bell Annual Report 2007 –

Charcuterie

BOOSTED BY GOOD SEASONAL BUSINESS In 2007 Bell Charcuterie increased its sales by 2.7% to CHF 389 million. The scalded sausage and cured meat product groups sold particularly well, although dry sausage sales did not quite match the previous year’s figures. The export business launched in 2006 is developing according to plan.

Besides the generally good level of consumer confidence, which stimulated demand for high-quality charcuterie and labelled products, last year the Charcuterie Division also benefited from strong seasonal business: thanks to the mild weather the barbecue season started relatively early and the Easter and Christmas holiday business was also pleasing. One negative development was the very high price for beef, something which also applied to pork in the last quarter of 2007. A general rise in the cost of auxiliary and ancillary materials, especially packaging materials, was also observed. These factors put pressure on margins.

014 – www.bell.ch

Success with innovations and exports In 2007 Bell Charcuterie launched the new “Bell Spécialités” product line. This consists of high-quality charcuterie products that are offered together with appropriate dipping sauces. This innovation met with a very positive response among consumers and is set to be expanded in the future. The export business launched last year is on course, even though the volume remains relatively low. For the time being Bell’s export activities should be regarded more as an investment in new markets than as volume business. The export department for charcuterie has been strengthened with additional staff and now takes care of all product areas of the Bell Group that are intended for export. Further communication measures aimed at supporting the export business are planned for this financial year.


– Bell Business Units

Bell salami – 100 years of pleasure In 2007 Bell salami celebrated its one hundredth anniversary. Since 1907 this product has stood for the very best in quality and unique pleasure – reason enough to take a look back at the beginnings of this success story: The Bell family dynasty of butchers settled in the Basel region at the beginning of the 18th century with the arrival of journeyman butcher Laurenz Bell from Lorraine. In 1869 his descendant, Samuel Rudolf Bell-Roth, opened a butcher shop at 13 Streitgasse. This was one of the first private butcher shops in the city. From butcher to meat and sausage producer The butcher shop business developed well and, in the 1890s, Samuel Bell made the decision also to move into sausage production. He set up a machine-operated sausage production facility and, on 1 October 1897, began selling charcuterie products, which instantly met with great demand. Space for the production of sausage products soon became tight and, in 1907, the Samuel Bell Söhne

AG company moved into a new factory building on Elsässerstrasse, near to the slaughterhouse – at the time, this was the most modern meat plant in continental Europe. This event clearly marked the transition from the craft butcher’s business of the 1890s, which employed just half a dozen staff, to the large-scale production of meat and sausage products, with a workforce, at that time, of 65 employees. By 1914 the company had 130 outlets throughout Switzerland. Swiss salami – a sausage with a migrational background In the years after 1880, many young men migrated from Italy to Switzerland, where they found work building the great railway tunnels through the Alps and erecting new residential quarters in the cities. They brought with them their gnarled, mealy, dried sausage – the salami. Soon it was not just Italian immigrant workers who were enjoying these sausages, but the whole of Switzerland. Bell’s resourceful butchers were there right at the start of the salami’s success story. Today, with a volume of around 3,400 tons per year, Bell is one of the biggest salami manufacturers in Switzerland.

– 015


– Feature –

After a long day, get together with colleagues to chat, wind down and recharge your batteries.

“When we spend time together outside working hours, it doesn’t always have to be a noisy affair – often it is the quiet moments that we appreciate and that give us energy.” (Bell employee)

– 017 – www.bell.ch


Bell Annual Report 2007 –

Poultry

SUBSTANTIAL IMPROVEMENT IN SALES AND PROFIT

Bell Poultry can look back on an extremely successful year: with an increase of 27.1% to CHF 333 million, sales reached a record level. Thanks to far-sighted planning, Bell was able to satisfy the strong growth in demand at all times and consolidate its market position.

018 – www.bell.ch


– Bell Business Units

In 2007 we were able to overcome the massive slump triggered by the bird flu crisis, and consumption of poultry went on to reach its highest ever level. In the year under review, the Poultry Division managed to derive outstanding benefits from this turnaround in consumer confidence, which was already evident in the second half of 2006. Far-sighted planning as a guarantee for success In the consumption-friendly environment, the provision of poultry in sufficient volume represented something of a challenge. Bell Poultry anticipated the turnaround in the market in good time and aligned its production planning accordingly. As a result, Bell was able to avoid supply shortages, despite sharply rising demand. Close and constructive collaboration with Bell’s partner fatteners made a substantial contribution in this area. Based on the considerable productive capacity and high availability of goods, with regard to both domestic and imported poultry, Bell was able to expand its market share. The volume of slaughters increased by 28.9% to 21,014 tons. The sale of chicken pieces in particular increased considerably, while demand for whole chickens fell somewhat.

Special meat from Bell – back to the roots of the meat industry Game was one of man’s earliest sources of food. In Central Europe evidence dating back 600,000 years has been found to support this claim. Even though the age of the hunter-gatherer has long since passed, wild meat specialities continue to be extremely popular. Traditional game such as roe deer, red deer, chamois, ibex, mouflon, wild boar, hare, and game birds are being joined by more exotic specialities such as springbok, kudu, blesbok, and ostrich. Complemented by rabbit and kid, together these meats

Restructuring and climate of innovation bear fruit In the year under review, the Poultry Division made an important contribution to the Bell Group’s overall result. Thanks to the high level of productivity, it was possible to convert the increase in demand directly into improved profitability. The restructuring measures which began in 2005 and have been implemented consistently over the last two years have, therefore, achieved their aim. With a view to the future expansion of business, in 2007 Bell Poultry improved its capacity to innovate. This measure has already borne its first fruit with the newly launched product line “Bell Pronto al Forno” for the convenience segment. Popularity of game continues The Special Meat business unit, which is integrated into the Poultry Division, also recorded a successful financial year. The excellent consumer climate ensured a very positive game season, even though prices for game reached a high level. Despite shortages on the world markets, Bell succeeded in maintaining a good level of product availability.

comprise the Bell Special Meat business unit. The greatest challenge presented by this area is sourcing. Although breeding programmes can be of help in some cases, for the most part the trend in terms of price and volume can be compared with other speculative commodities markets. For Bell, high demands with regard to sourcing and quality assurance also apply in this fascinating area of its business activities. Thanks to partnership-based supplier relationships of many years’ standing, Bell is able to guarantee excellent availability and the very best quality in the area of special meat.

– 019


Bell Annual Report 2007 –

Seafood

UNINTERRUPTED GROWTH TREND

Bell Seafood can once again reflect on a successful financial year: the business unit posted sales of CHF 67.9 million for 2007, representing an increase of 22%. The Seafood business unit also benefited from the excellent consumer climate. Despite considerable price increases for fish and seafood, unit sales increased by 14.7% to 2,598 tons. After the rapid growth of the last few years, 2007 was a year of consolidation: Bell optimised its processes in the Seafood Division and made investments primarily in logistics.

A further focal point in the year under review was the business unit’s commitment to sustainability. Bell Seafood sources its fish, seafood and crustaceans in line with strict sustainability criteria and removes endangered species from the range. The search for alternatives is an ongoing process, as part of which temporary drops in sales are also accepted.

Bell Seafood – committed to sustainable fishing In the sourcing and manufacturing of its products, Bell consistently focuses on environmentally sound and sustainable solutions. However, sourcing top-quality fresh fish at a good price and in sufficient volume currently represents something of a challenge. Overfishing of the world's seas has substantially reduced fish stocks. For many fish species sustainable fishing is only guaranteed to a limited extent. For this reason, Bell has removed from its range the fish species that, according to the WWF, are most seriously endangered: shark, ray, swordfish, grouper, alfonsino and red tuna.

fishing and ensure a transparent declaration of origin for consumers. In order for a fish to receive the MSC label, all stages of production must be certified. The label guarantees the traceability of the fish and affords certainty that the fish has been caught in line with the principles of sustainable fishing. Bell will incorporate its first products bearing the MSC label into its range this year.

Farmed fish offers an alternative to wild fish. However, not all fish farms are operated in an equally environmentally friendly manner. In order for a fish farmer to be able to label his products with the ‘organic’ label, special requirements have to be In future, Bell will be working together with the Marine met with regard to issues ranging from the construction of the Stewardship Council (MSC) in relation to its supply of sustainably facilities through to the origin and composition of the feed used. produced fish. This independent organisation was co-founded by Bell Seafood carries cod, gilt-head bream, bass, salmon, and the WWF, amongst others, and aims to encourage sustainable prawns in its organic range.

020 – www.bell.ch


– Bell Business Units

Convenience

LEADING THE SWISS CONVENIENCE MARKET

With an increase in sales of 14.8% to CHF 65.8 million, in 2007 the Convenience business unit once again recorded striking growth. Bell has now risen to become one of the key providers of convenience products in Switzerland.

In addition to the favourable weather conditions, this pleasing development of business can primarily be attributed to a product portfolio that is expertly geared to the needs of the market and to efficient processes. On top of this, capacity use was steady throughout the course of the year. Development was good in all product groups: sandwiches, salads, appetizers, party breads, components for set meals, and meat substitute products. However, the increase in raw material prices, combined with considerable pricing pressure in the market, also presented challenges for Bell Convenience.

Efficiency and innovation as success factors In the area of convenience, which is still relatively young, efficiency and innovation represent important factors for success. Bell Convenience has created the basic framework to ensure that the efficiency of the service can be increased and to allow innovative spirit to blossom. Evidence of this can be seen in, amongst other things, the many new products that have been launched over the course of the year. Bell Convenience bases its product development on the latest nutritional findings. Specific ingredients are also used which correspond with prevailing food trends and offer exceptional taste sensations.

Sandwiches for ‘Swiss’ – Bell Convenience takes off Since 1 July 2007, Bell has been supplying sandwiches to Switzerland’s national airline ‘Swiss’. The hotly contested tender was won by Bell Convenience in collaboration with the companies Howeg and LSG (Lufthansa Service Gesellschaft). Supplying an airline company means facing up to a new set of challenges in terms of production. For one thing, space in the aeroplane is very

limited, meaning that every square centimetre has to be utilised. Then there’s the changing air pressure in the flight cabin, which means that packaging has to be produced in such a way that it can withstand the varying pressure conditions. Bell Convenience supplies ‘Swiss’ in Zurich, Basel and Geneva and produces around 10,000 sandwiches for the airline each day.

– 021


– Feature –

A FESTIVAL OF MOVEMENT Push yourself to new heights, experience a sense of community, celebrate successes

Swiss Gymnastics Festival 2007, Frauenfeld, 50,000 participants and 100,000 visitors

– 023 – www.bell.ch


Bell Annual Report 2007 –

Catering

A HOST OF

PLEASURABLE EXPERIENCES We regard catering as a key marketing tool, with the Bell brand values – quality, innovation, and pleasure – being applied to a variety of catering events on a daily basis. Bell Catering is committed to making each and every catered event a memorably pleasurable experience for all guests, whether at an after-work reception, a VIP multi-course, sit-down dinner, or a major event with thousands of guests in attendance. Thanks to its comprehensive range of services, Bell Catering is the partner for companies wishing to put on events to strengthen relationships with their clients that will remain a fond memory in the guest’s mind for a long time to come.

024 – www.bell.ch

In 2007, Bell Catering was once again involved in a multitude of large and small events. The highlights included the Swiss Gymnastics Festival in Frauenfeld, with around 150,000 visitors, the Allianz Swiss Tennis Open in Gstaad, the World Cup skiing finals in Lenzerheide, the Basel Tattoo, the Greenfield open-air music festival in Interlaken and the Christmas market in Basel.


– Bell Business Units

Maurer Frères SA Bell Catering at EURO 2008 Domestically, the focus this year will be on the EURO 2008 European football championships, which are to be held in Switzerland and Austria. Together with Coop, Bell will be the official catering partner at the UBS ARENA locations. As part of this unique public-viewing project, dedicated stadia will be set up for football enthusiasts in 16 Swiss towns that are not hosting EURO 2008 games. Here, Bell Catering will take care of the catering for the public, VIPs and staff and will provide food for up to 2 million visitors in total. During the three weeks of the tournament in June, approximately 1,500 additional members of staff will make sure that everything goes smoothly. This will be Bell Catering’s biggest and most complex catering assignment to date. What is more, during EURO 2008, Bell Catering will also be in action at St. Jakob-Park in Basel and at the Stade de Suisse in Bern, where it will be catering for the public.

GROWTH THANKS TO ACQUISITION Maurer Frères, the Alsatian company with great tradition, realised a surge in growth in 2007, with sales increasing by 18.3% to CHF 51.8 million. In addition to respectable internal growth, this jump in sales can be attributed to the acquisition of Hassler in St-Louis, France. Thanks to this acquisition, Maurer Frères has strengthened its position in a hotly contested market. In order to exploit the greatest possible synergies in its approach to the market, Hassler’s integration has been driven forward with speed. Core activities will continue to be the manufacture and sale of Alsatian charcuterie specialities. These activities have been concentrated at the Kingersheim location and joint structures have been created. Maurer Frères will take its customers’ needs in relation to product range and pricing into account by means of additional programmes.

Frigo St. Johann AG

NEW CUSTOMERS FOR REFRIGERATED STORAGE Frigo St. Johann in Basel, which operates in the area of deep-freeze logistics, also felt the effects of the surplus capacities in the market in 2007. Competitive pressure intensified further, which had a negative impact on sales. On the costs side, substantially increased energy costs presented a great challenge. The strategic shifting of activities towards perishable goods handling which began last year bore its first fruits and will be continued. We were able to realise a perceptible increase in efficiency using new information technology (pick-by-voice system). This broader orientation and further increased service level enabled us to acquire new customers in the year under review. GVFI International AG, the largest importer of fresh meat in Switzerland, has also discovered the virtues of proximity to the goods handling point and will move into office premises that have been set up above a Frigo refrigerated warehouse in Basel in the course of 2008. – 025


Bell Annual Report 2007 –

Corporate Social Responsibility

QUALITY MANAGEMENT AND FOOD SAFETY Management system Bell has implemented a management system throughout the entire group. This management system defines processes and parameters which are systematically analysed and assessed. The parameters are incorporated into a report in the form of a cockpit scorecard. This report allows company executives to assess the individual locations and to monitor progress, and is discussed with the divisions and business units at two-month intervals. Bell’s management system is regularly audited by internal and external auditors, and auditing organisations. We were able to implement the joint certification of the business units fully in the 2007 financial year. Audits Internal and external audits were realised at all Bell Group locations over the course of 2007. All locations are certified in accordance with IFS (International Food Safety), ISO 9001:2000, and ISO 14001. In 2007, the executive board, competence centres, and central services were audited for the second time by an external auditing organisation. For the first time, a sales competence centre was created. This will also be included in the audit this year. With effect from 1 January 2008, version 5 of the IFS standard entered into force. This new version has an impact on the auditing deadlines and the number of KO criteria to be met.

customer complaints, and recorded it in the cockpit scorecard. The survey confirmed that general customer satisfaction is very high. In 2008, the Bell Group will also introduce a harmonised error reporting system. Process and food safety At Bell, the basic requirements for good manufacturing and hygiene practice are governed by the GMP (Good Manufacturing Practice) guideline. This defines the current standards for the entire Bell Group to ensure that the basic hygiene, structural, and technical requirements are at the same level in all plants. Observance of the guideline is checked by the competent authorities and auditors at regular intervals. The HACCP (Hazard Analysis Critical Control Point) concept builds on the GMP guideline. The HACCP concept is a systematic procedure which is used to analyse, assess and guarantee the production process. It will be harmonised across the whole Bell Group in the course of 2008.

Sourcing and qualification of suppliers Bell has defined the basic framework for the purchase of animals for slaughter in a variety of guidelines. These are published on the Bell website. In the case of the domestic fattening of poultry, Bell works together exclusively with partner fatteners. The underlying In addition, the specific certifications of individual Bell operations conditions that apply here are established on a regular basis, were also verified, as required. These certifications include: Bio with the interests of the chicken fattening organisation MOSEG Knospe, Suisse Garantie, Pro Montagna, Naturafarm, and EFSIS. also represented. As of 2008, Bell Seafood will also strive towards achieving certification in accordance with the Marine Stewardship Council (MSC). Imported meat originates from producers selected from around the world in accordance with strict criteria. These criteria include It was possible to integrate the internal control system (ICS) into the natural rearing of animals, organic farming methods, as well the existing management system as planned in the year under as animal welfare and animal health. Suppliers are subjected to review and for it to be audited internally at the locations. With regular internal and external audits and must document their the harmonisation of the process structure throughout the Fresh observance of the criteria set by Bell. Meat Division, the ICS will be implemented across the whole Suppliers of merchandise and non-food items are audited by our company in 2008. purchasing team. All our suppliers of ingredients and primary Customer satisfaction packaging (packaging material that comes into direct contact with In 2007, the Bell Group continued its practice of surveying custoproducts) have GFSI (Global Food Safety Initiative) certification. mer satisfaction, on the basis of returns, delivery capability, and

026 – www.bell.ch


– Bell Corporate Social Responsibility

ENVIRONMENTAL, ENERGY AND WORKPLACE SAFETY ISSUES The Bell Group understands sustainability in a comprehensive sense which incorporates the three pillars of economics, ecology and safety. Bell aims to count among the best companies within the industry in all three of these areas. All the plants of the Bell Group have been certified in accordance with the environmental standard ISO 14001:2004. Ecology The Bell Group’s task is to source meat for the manufacture of tasty meat products that are also safe. The slaughtered animals are processed with a high level of efficiency and in accordance with clear guidelines. Bell is committed to the production of meat based on organic methods. The complete traceability of the meat used is guaranteed. Customers and consumers are informed about the origin of the meat by means of a clear and detailed declaration. The by-products of meat production are channelled off in a separate flow under safe and hygienic conditions. At Centravo, these by-products are either processed further or disposed of in an ecological and economical manner. Together with every other major meat processor, Bell Ltd. holds a financial stake in Centravo, which allows us to exert influence through our representation on the Board of Directors. Bundling the total volume of by-products opens up the possibility of processing these in an ecologically sound manner.

sector with a view to achieving goals relating to energy and climate policy. By actively monitoring energy consumption and making corresponding improvements, Bell has already been able to reduce the amount of energy it consumes significantly. For example, today, production in the Charcuterie Division requires 35% less energy than in 1990. Production facilities are being optimised in accordance with economic, energy and safety considerations. By replacing older facilities with new technologies, Bell has lowered the average age of its production facilities to eight years. Small, decentral, and energy-intensive refrigeration facilities have been combined into larger units and equipped with more energy efficient screw compressors. Using high-pressure heat pumps, waste heat is used to generate hot water for heating and cleaning purposes. Workplace safety With a view to further increasing the standard of safety, in the year under review Bell performed analyses and derived measures for improvement from these. The spotlight here fell on the comprehensive training of safety officers within the company and targeted training sessions for the workforce. Absence management is being implemented by the Human Resources department and managers, and is showing good results. Working hours lost as a result of accidents fell by more than 20% in the past year.

Waste is continuously monitored and managed within the framework of the waste concept (avoid, reduce, reuse). Further progress was made in the year under review with regard to the utilisation of waste. We were able to separate more waste and, therefore, it was possible for more of it to be recycled. Additional measures are planned for avoiding and reducing waste. On account of today’s requirements relating to hygiene and keeping food fresh, the packaging of meat represents a challenging area of production. Bell is endeavouring to come up with the most ecologically justifiable packaging, in line with the wishes of consumers and distributors. A great deal has already been achieved with regard to the reduction of packaging materials. Energy By the year 2010 Bell wants to have reduced group-wide CO2 emissions by 10%, compared with 1990 levels. This objective has been fixed within the framework of CO2 legislation through an agreement with the Swiss Private Sector Energy Agency (EnAW). The EnAW is a service platform for companies and stands for partnership-based collaboration between the state and the private

– 027


Bell Annual Report 2007 –

Corporate Social Responsibility

RESSOURCES HUMAINES Personnel satisfaction The size of our workforce increased in 2007 by 161 to a total of 3,249 FTEs. This can be attributed primarily to the higher production volume. The fluctuation rate across the entire Bell Group was 14 % and, consequently, in line with the long-term average. The level of satisfaction amongst Bell staff also remained extremely high. It emerged from meetings with employees that over 90% of staff are satisfied or very satisfied with Bell as an employer. The attractiveness of the Bell Group as an employer was also revealed by the fact that, once again, the number of applications rose in comparison with the previous year by approximately 20%. On average we receive just under 100 applications each week. With roughly 200 applications, we were also able to record an increase of around 20% in relation to apprenticeships. Human resource development Bell attaches great importance to the development of its staff. Our broad offering in the area of training comprises standardised and individual courses, which are held both internally and externally. All the training courses offered are appropriate to the level and position of the participating staff members. They are subjected to ongoing critical analysis and adapted to the everincreasing market requirements. The entire, up-to-date course programme can be viewed on the Intranet in a clear format, one of the benefits of which is a reduction in the administrative workload. In the 2007 financial year around 700 Bell Group staff members completed human resource development courses. For the most part, their feedback on the benefit of the training was positive. A new training concept was introduced for employees in the Catering business unit last year. Although the majority of these

028 – www.bell.ch

employees work on a part-time basis, the training programme has enabled them to take on responsible tasks and increase their employability. The issue of "empowerment" was on the agenda once again last year for managers of the Bell Group, with attention being paid to systematic basic training. The specific requirements of the individual divisions and business units are dealt with in team workshops. The butcher training syllabus has been revamped within the framework of the new education decree. In addition to the new job titles ‘Meat specialist’ [Fleischfachmann] and ‘Assistant meat specialist' [Fleischfachassistent], the revamp has also brought about a significant reform in terms of content: besides the existing areas of slaughtering, jointing, and finishing, industrial processing has now also been incorporated into the syllabus. With the commencement of the 2008 apprenticeships, Bell will consequently be able to familiarise apprentices with its industrial processes and internal goods flow systems. For the company this signifies the setting of a sound course with regard to the recruitment of qualified young staff with management potential. Social responsibility Bell is aware that the success of the company rests largely on its own employees and fair partnerships. Consequently, Bell takes its responsibility towards its employees and within the industry very seriously. A social policy applies to the entire Bell Group which outlines key rights such as the freedom to express opinions and the equal treatment of men and women, but also performancerelated pay and the open and timely provision of information to employees that is appropriate to their level. An essential element of social responsibility is a commitment to the training of young people. Bell currently offers training in seven occupations and in the future will have even more apprenticeship places available at other locations, e.g. for business informatics specialists in Basel or logisticians in Zell. In the last financial year, Bell Ltd. also intensified its already excellent collaboration with social partners, and the collective


– Bell Corporate Social Responsibility

agreement (GAV) was renewed in the spring. This new Bell GAV is marking the way ahead for the industry. On 8 September 2007, the 5th Swiss Meat Deboning Championship was held at Bell’s Oensingen plant. This annual event has developed into an important gathering for the meat industry where contacts can be made and maintained with industry representatives from outside the company.

MARKETING/ COMMUNICATION Marketing Brand management is one of Bell Marketing’s core tasks. Bell is the undisputed number 1 in the Swiss meat industry and, with an aided brand recognition level of over 90%, one of Switzerland’s most popular food brands. According to the ‘BusinessReflector’ market survey, a cross-industry study on the reputation of companies in Switzerland carried out by the market research institute GfK, ‘quality’ is one of the most important competency factors for food manufacturers. This factor is also one of the cornerstones of Bell’s brand positioning. It is therefore all the more pleasing that, according to this study, Bell has the most positive image of all the 100 companies in 12 sectors that were included in the study. A wide variety of marketing measures were devised and implemented for the purposes of brand management and advertising the product lines. These included TV ads, print media ads, posters, promotions, tastings, internet platforms, sponsoring, merchandising products, and more. In 2007, Bell was awarded the golden Marketing Trophy in the large-scale enterprise category for the “barbecue chef” brand management and marketing campaign.

This award is particularly prized, as it is not only the communication that is judged, but also the commercial success of the measures. Sponsoring programmes Sponsoring programmes are a core element of our marketing strategy. The sponsoring impact is strengthened even further through the presence of Bell Catering at numerous events. The one-two punch of sponsoring activities and our own catering activities brings the Bell brand and products to life for consumers at events. The stadium partnerships at St. Jakob-Park in Basel and the Stade de Suisse in Berne – the two biggest stadia in Switzerland – form the core of Bell's sponsoring activities. In addition, we would also like to highlight our commitments with Live Music Production (the major event organiser in French-speaking Switzerland), the Davidoff Swiss Indoors (the world’s third largest indoor tennis tournament) and the Tour de Romandie (cycle race). Corporate communication Bell’s communication has been rated as good to very good in a variety of independent surveys. This applies in particular to the areas of communication and investor relations. The most important sources of information are the Bell website, the annual and half-year report and the various media releases. The Bell media office handled an average of ten media enquiries a week and a total of 2,700 enquiries were registered and dealt with via the website in the course of 2007. In terms of internal communication, information on important developments concerning the Bell Group is provided primarily by means of personal communication, the Intranet, and the staff newspaper 'Bell News’. With most internal and external communication measures we offer the possibility of engaging in dialogue.

– 029


– Feature –

Football is about much more than just 90 minutes on the pitch.

Football is pure emotion. Before, during and after a match a fan experiences all kinds of different feelings. Passion for football means going through the tension together with others as your team walks the line between victory and defeat. Celebrating together or sharing disappointment about how your team has performed: That’s what football is all about. It’s the bond you feel with your favourite team, your pride in your own ground, the place the team and fans call home. It’s the anticipation. The fever. The rhythm of the game. People sharing their enthusiasm. Whether joyous or disillusioned, nobody is on their own in what they are feeling. After all, it is the sense of community that makes the game what it is. Whether down on the pitch or up in the stand. > It’s the good atmosphere among fans. The way they enjoy together the events unfolding in the stadium. Relaxed discussions over a beer and a hotdog. It all goes to make up a great game. > It’s the discussions after the final whistle: about missed chances, exciting incidents in the penalty box, that decisive penalty kick. About the decisions the referee got right or wrong. Criticism, disappointment, euphoria. > It’s the feelings that are still with you long after the game has finished: the feeling of being alive, of friendship and enjoyment, the euphoria of victory and the pain of defeat. What remains is the satisfaction of knowing you were there. >

>

– 031 – www.bell.ch


Bell Annual Report 2007 –

032 – www.bell.ch


– Bell Group Financial Reporting

Financial Reporting and Corporate Governance

Bell in Figures Bell Group

34_ Financial Report 36_ Balance Sheet 37_ Profit and Loss Account 38_ Cash Flow Statement 39_Statement of Changes in Equity 40_ Consolidation and Valuation Principles 42_ Appendix to Balance Sheet 47_ Appendix to Profit and Loss Account 52_ Additional Information 53_ Group Auditor’s Report 54_ Workforce 55_ 7-Year Overview 56_ Share Information 57_ Group Overview 57_ Important Dates 58_ Corporate Governance 64_ Organigram

Bell Holding

66_ Balance Sheet 67_ Profit and Loss Account 68_ Appropriation of Annual Profit/Appendix 69_ Auditor’s Report 70_ Contacts 71_ Imprint

– 33


Bell Annual Report 2007 –

Financial Reporting

Record result for the Bell Group Financial Report from Martin Gysin, CFO

In 2007 the Bell Group posted a 9.9 percent increase in sales and a 9.4 percent increase in net proceeds. All divisions contributed to the good growth achieved, with Poultry, Convenience and Seafood showing disproportionately strong development. Thanks to this good level of growth and the Group’s efficient production and distribution processes, results developed in a pleasing manner. The gross profit margin, measured as a percentage of net proceeds, fell slightly from 32.4 percent to 32.3 percent. This is a result of our continuous efforts to raise the convenience level of our products and enhance quality. At 5.6 percent, personnel costs were well above the previous year’s level. Of this figure, 2.5 percent can be attributed to rising wage costs and employer’s contributions. Taking the increase in volumes and the change in the sales mix into account, a clear upturn in productivity of around 2 percent was posted. As a result, personnel expenses, measured as a percentage of net proceeds, fell from 16.4 percent to 15.9 percent. The movement in other operating costs was in line with the development of proceeds. At 4.5 percent, or CHF 73 million, earnings before interest and taxes (EBIT) were at a level consistent with the long-term target. Net profit set a new record, reaching CHF 56.6 million. 34 – www.bell.ch

Contrary to our earlier announcement, the closure of our Geneva location was delayed by a year. The corresponding provision for the costs of the closure was carried forward. The unsatisfactory level of capacity use that continues to affect our deep-freezing stores at Frigo St. Johann AG and the fact that the situation appears unlikely to improve in the future prompted us to test these facilities for impairment. A valuation adjustment of CHF 3.2 million was applied, representing the amount of the future earnings shortfall. Other special depreciation of CHF 2.55 million relates to a number of other older facilities of limited value or that are no longer in use. During a ground survey at our site at Elsässerstrasse in Basel chemical residues were found and it emerged that Bell was responsible for these. The activities to which these residues can be attributed were discontinued as far back as the 1980s. We expect the total cost of the ground clean-up work to come to CHF 1.5 million over the next 5 years. In the spring of 2007 we decided to run the catering at public viewing areas (UBS ARENA) as part of Euro 2008. UEFA has awarded the sponsorship in the area of catering to an international group. Bell will not therefore have a visible presence. While we were working out the project to the last detail, it also emerged that, even on the basis of optimistic expectations, the contract signed will lead to a deficit. We


– Bell Group Financial Reporting

have therefore created a provision in the amount of CHF 1.4 million. In the summer of 2007 we decided to liquidate Bell Ltd.’s employee pension fund foundation. This was a foundation that managed the patronal pension fund. As it was subject to the Swiss Occupational Pensions Act (BVG), but the BVG does not recognise the unusual nature of the patronal pension fund, we came to the conclusion that it no longer made sense to continue this foundation in the form of a special fund. The foundation’s assets cannot be transferred in a single step, which means that the liquidation process will extend over several years. During the past financial year we were able to transfer around 60 percent of the assets to Bell Ltd. There was therefore a corresponding increase in the financial assets held directly by Bell Ltd. and those held indirectly by the foundation also decreased accordingly. The writing-back of the value fluctuation reserve also resulted in non-recurring income of CHF 1.55 million, which was accounted for in the financial statements under personnel costs. Otherwise, this matter had no impact on the financial statements. As a result of a review of taxation and the liquidation of Bell Finance Ltd. (Jersey), it became necessary to increase the rate for the provision for deferred taxes to 23 percent (previously 20 percent). As a counter-measure we wrote back provisions for deferred taxes on holdings. Although the exemption from

taxation that applies here will only officially take effect from 1 January 2009, from a economic viewpoint it is already possible to do without these provisions. With effect from 31 December 2007 we reacquired the Bell Gastro Production from transGourmet Schweiz AG. As a result, 96 people have been transferred back within our responsibility. We estimate that the impact on sales will be in the region of CHF 20 million p.a., although the reintegration is not likely to have any influence on profit. Over the past financial year we had to concentrate our investments almost without exception on the replacement of equipment. Our good operational results led to a high level of liquid funds. However, these could not be used entirely to reduce borrowings further, as in some cases these had been concluded with fixed terms. This explains the rise in liquid assets. In 2007 we increased our stake in Centravo AG from 22.3 percent to 24.8 percent of the issued capital (or 29.8 percent of the capital in circulation). Centravo had sold non-operating assets in 2006 and fed the proceeds back to its shareholders in 2007 in the form of a special dividend. As this meant that Centravo had become “less wealthy”, we deducted this dividend from the value of the holding.

– 35


Bell Annual Report 2007 –

Balance sheet

in CHF thousand

Liquid assets Securities Trade accounts receivable Receivables affiliated companies Other receivables Inventory Deferred expenses and accrued income Current assets

31.12.2007

Appendix

39.1%

41 604 – 47 021 65 123 7 994 74 938 905 237 585

32.0%

37 065 240 211 194 049 8 861 480 186

60.9%

47 969 251 545 194 310 11 713 505 537

68.0%

788 664

100.0%

743 122

100.0%

22.0%

34 159 57 634 9 422 9 926 7 244 18 021 136 406

18.4%

39 160 53 150 92 310

11.7%

74 463 53 550 128 013

17.2%

Liabilities

265 683

33.7%

264 419

35.6%

Share capital Retained earnings Company’s own shares Consolidated profit Equity before third-party interest in equity Third-party interest in equity

2 000 460 900 –1 036 56 553 518 417 4 564

Equity

522 981

66.3%

478 703

64.4%

Liabilities and equity

788 664

100.0%

743 122

100.0%

Financial assets Real property, buildings Machinery and equipment Intangible assets Fixed assets

1 2 3 4 5

14 12 13 15

Assets Short-term financial liabilities Trade accounts payable Accounts payable to affiliated companies Other accounts payable Short-term provisions* Deferred income and accrued expenses* Current liabilities Long-term financial liabilities Long-term provisions Long-term liabilities

*

9 6 7 10 8

9 11

67 378 17 770 56 912 72 319 13 037 74 828 6 234 308 478

31.12.2006*

30 363 72 317 18 584 18 380 8 960 24 769 173 373

Reclassification of liabilities in the previous year as a result of adaptation to frame concept Swiss GAAP FER 3.

36 – www.bell.ch

65.7%

2 000 429 620 –1 232 43 890 474 278 4 425

63.8%


– Bell Group Financial Reporting

Profit and Loss Account

in CHF thousand

2007

Appendix

2006

Sales proceeds Other operational proceeds Gross proceeds

16 16

1 629 918 31 247 1 661 165

Reductions in proceeds Operating income

16

–24 693 1 636 472

100.0%

–10 983 1 496 290

100.0%

1 108 383 528 089

67.7% 32.3%

1 010 848 485 442

67.6% 32.4%

259 653 15 078 23 845 28 714 32 672 15 393 15 823 391 178

15.9%

16.4%

23.9%

245 811 14 534 23 265 25 503 30 469 11 349 14 544 365 475

24.4%

136 911

8.4%

119 967

8.0%

57 395 3 562 3 000 72 954

3.5%

3.7%

4.5%

54 767 3 836 3 000 58 364

3.9%

4 813 3 450 74 317

4.5%

2 185 4 026 56 523

3.8%

17 648 56 669

3.5%

12 338 44 185

3.0%

Cost of goods sold Gross operating profit Personnel expenses Rent Energy, auxiliary materials Repair and maintenance Transport Advertising Other operating expenses Total operating expenses

17/24 18 19/24

20/24 21

Earnings before interest, taxes, depreciation and amortization (EBITDA) Depreciation of tangible assets Depreciation of intangible assets Depreciation of Goodwill Earnings before interest and taxes (EBIT) Income from financial accounts Financial expense Net profit before taxes (EBT) Taxes Net profit after taxes Third-party interest in profit Consolidated profit

12/13/24 15 15

22 22

23/24

1 483 289 23 984 1 507 273

–116 56 553

–295 3.5%

43 890

2.9%

– 37


Bell Annual Report 2007 –

Cash Flow Statement

2007

in CHF thousand

Net profits after taxes Depreciation of tangible assets Extraordinary expenses for depreciation of assets Depreciation of intangible assets Income from evaluation of not consolidated participations Income on assets of fondation Changes in provisions Cash flow

56 669 51 645 5 750 6 562

Inventory changes (–) increase (+) decrease Changes in receivables (–) increase (+) decrease Adjustments (–) increase (+) decrease Changes in short-term liabilities (+) increase (–) decrease Adjustments (+) increase (–) decrease Operating cash flow

166 –21 977 –5 326 32 223 6 608

Investments in machinery and equipment Divestments of machinery and equipment Investments in property and buildings Divestments of property and buildings Investments in financial assets Divestments of financial assets Investments in securities Divestments of own shares Investments in intangible assets Divestments of intangible assets Investment cash flow

–40 292 936 –6 473 217 –2 554 9 072 –8 120 606 –3 700 –

Changes in interest bearing liabilities Dividends Financing cash flow

2006

63 957 –2 662 –2 570 1 298 116 692

11 694 128 386

–39 356 –6 256

–996 –3 700 –50 308

44 185 50 679 4 088 6 836

16 223 8 504 4 380 –28 128 5 329

–33 218 598 –2 633 5 552 –1 166 1 110 – 271 –5 254 –

61 603 –779 – 1 675 106 684

6 308 112 992

–32 620 2 919

215 –5 254 –34 740

–39 147 –13 232 –52 379

–69 602 –12 019 –81 621

Cash flow balance

25 699

–3 369

Liquid assets as of January 01 Effect of currency conversion on liquid assets Changes in liquid assets Liquid assets as of December 31

41 604 75 25 699 67 378

44 801 172 –3 369 41 604

38 – www.bell.ch


– Bell Group Financial Reporting

Statement of Changes in Equity

Equity

Third-party interest in equity

Equity

35 497 –35 497 – – 43 890 – 43 890

441 885 – –11 929 271 43 890 161 474 278

4 060 – –90 – 295 160 4 425

445 945 – –12 019 271 44 185 321 478 703

–1 232 – – 196 – – –1 036

43 890 –43 890 – – 56 553 – 56 553

474 278 – –13 137 606 56 553 118 518 417

4 425 – –95 – 116 118 4 564

478 703 – –13 232 606 56 669 236 522 981

Shares issued 01.01.

Additions in treasury shares

Disposals of treasury shares

Addition own shares for employee stock ownership plan

Disposal own shares for employee stock ownership plan

Number of shares 31.12.

Shares Shares issued Own shares held by company Shares in circulation as of 31.12.2006

400 000 –2 725 397 275

– – –

– – –

– – –

– 355 355

400 000 –2 370 397 630

Shares issued Own shares held by company Shares in circulation as of 31.12.2007

400 000 –2 370 397 630

– –67 –67

– – –

– – –

– 625 625

400 000 –1 812 398 188

in CHF thousand

Share capital

Retained earnings

Own shares

Consolidated profit

Equity as of 01.01.2006 Appropriation of annual profit Dividends Additions/disposals of treasury shares Consolidated profit Influence of foreign currency conversion Equity as of 31.12.2006

2 000 – – – – – 2 000

405 805 35 497 –11 929 86 – 161 429 620

–1 417 – – 185 – – –1 232

Equity as of 01.01.2007 Appropriation of annual profit Dividends Additions/disposals of treasury shares Consolidated profit Influence of foreign currency conversion Equity as of 31.12.2007

2 000 – – – – – 2 000

429 620 43 890 –13 137 410 – 118 460 900

– 39


Bell Annual Report 2007 –

Consolidation and Valuation Principles

Consolidation and valuation principles The principles governing consolidation, valuation, structuring and presentation are in accordance with the Accounting and Reporting Recommendations (Swiss GAAP – ARR). They apply to all consolidated companies with the exception of Maurer Frères SA. Maurer Frères SA is subject to the IFRS Standards imposed by French law. The impact of using different standards is negligent, a separate presentation was not felt to be necessary. Basis of consolidation In the present balance sheet and profit and loss account, all holdings of Bell Holding Ltd in which Bell directly or indirectly holds more than 50 percent of the votes or where Bell is under contract to manage are fully integrated. Holdings of between 20 percent and 50 percent of the votes have been valued and balanced at equity. Holdings of less than 20 percent have been balanced at their market price as of December 31 or, if such a price was not available, at their purchase value plus or minus the corresponding valuation adjustment, if applicable. Refer to page 57 for an overview of the Groups holdings. In 2007, the stake in Centravo was increased by 2.5 percent to 29.8 percent of shares in circulation. Bell Finance Ltd., Jersey, was liquidated and deleted from the Jersey Commercial Register with effect from 26 October 2007. Foreign currency conversion All foreign-currencies balance sheets have been converted at the year-end rates as of December 31, the corresponding profit and loss accounts at the average annual rate. Conversion differences between the opening and closing balances as well as differences resulting from applying different conversion rates in the balance sheets and in the profit and loss accounts have been neutralized with the equity.

All intragroup sales and purchases have been offset and eliminated as part of the consolidation. Elimination of intra-group profits has been deemed unnecessary, as the companies are dealing amongst themselves at market conditions and market prices – and with negligible effect on the Group’s profit and loss account. Consolidation of equity The consolidation of equity has been carried out using the purchase method, i.e. balancing the company’s equity against the sales price at the time of purchase. Any goodwill resulting from this procedure is activated and depreciated over a period of five years via the profit and loss account. Any negative goodwill is posted via the profit and loss account on initial consolidation. Valuation In principle, the rules of business management apply, i.e. the current assets are valued at purchase value or at the lower market value. The current assets are thus carried at cost or at the lower market value. The tangible assets are recorded at cost less the necessary operating depreciation. Real estate is carried at cost less the necessary operating depreciation. All consolidated companies have been valued according to the same principles. Liquid assets Include fixed deposits and money market debts are repayable within 90 days. Securities Securities are marketable and are balanced at their December 31 price.

Receivables Losses recognizable and occurred are charged to the profit and loss account of the year in which they have occurred. The value adjustment for unidentifiable risks Conversion rates amounts to 1 percent of the receivables portfolio. The total Balance sheet EUR 1 = CHF 1,655 sum of the value adjustment is shown in the appendix. USD 1 = CHF 1,125 P/L-Account EUR 1 = CHF 1,646 Inventory Inventory is valued at manufacturing costs according to the first-in-first-out (FIFO) method. Any depreciation Consolidation of receivables, intra-group sales and intrawith respect to the cost price as well as warehousing risks, if group profit All intra-group assets and liabilities have been detectable, have been taken into account. offset and eliminated as part of the consolidation. Differences resulting from applying different conversion rates to net invest- Other financial assets Other financial assets contain nonments in foreign companies have been neutralized through listed securities. These are balanced at purchase price or the equity and have not been included in the profit and loss account. lower market price. 40 – www.bell.ch


– Bell Group Financial Reporting

Fixed assets Refer to page 57 for the complete overview of the Group’s non-consolidated holdings in 2007. Tangible assets have been valued at purchase value minus the necessary operating depreciations and permanent decrease in value. Depreciation was written down on a straight-line basis according to the useful life. Valuation adjustments are due to foreign currencies conversion. Leased assets have been activated and depreciated according to their regular useful life. The corresponding liabilities are listed under “Financial liabilities”.

Useful life of fixed assets: Production and administration facilities Machinery and equipment Installations Vehicles Furnishings IT hardware Software Goodwill

30 to 40 years 8 to 10 years 10 to 15 years 5 to 7 years 5 to 10 years 4 years 4 years 5 years

Intangible assets contain goodwill, in addition to IT software. In 2007, as part of the acquisition of the activities of Hassler SA in St-Louis, France, goodwill of TCHF 841 was paid. This is tested regularly for impairment in accordance with the IFRS standards that apply to Maurer Frères and, if necessary, is written down. Over the past year these impairment tests did not result in any need to make adjustments. Provisions/Provisions for pension costs Accruals and provisions have been valued in accordance with objective business management principles; risks have been duly taken into account. Using the “liability method,” deferred taxes on differences between the FER values and the book values for taxation purposes have been accrued at the average tax rate of 23 percent (previous year 20 percent) applicable to our company. The increase in the tax rate resulted from a review of taxation and from the liquidation of Bell Finance Ltd., Jersey.

of 2007, the CPV has a cover ratio acc. art. 44 BVV2 in excess of 100 percent. This surplus cover does not give rise to any capitalisable amount for Bell. Other liabilities for staff have only been balanced to the extent that they are not insured through the Coop pension plan. Bell Ltd.’s employee pension fund foundation is currently in liquidation. The employer’s contribution reserve recognised under financial assets was written back in full in lieu of contribution payments. This had no impact on the consolidated profit and loss account. The not bound foundation capital is recognised under financial assets. Equity Being negligible, changes in equity due to conversion and revaluation have been offset directly against retained earnings. Earnings from transactions and dividends on company’s own shares were assigned directly to retained earnings. Employee stock ownership plan From the third year of service, every employee of the Bell Group is entitled to buy 5 (Member of Board of directors, Executive board and Management 10) Bell Holding Ltd. shares each calendar year at a price of 80 percent of the share value in the calendar month immediately preceding the purchase. In addition, management and Executive Management are entitled to have half of their annual bonus paid in the form of Bell Holding Ltd. shares. The shares handed out within this employee stock ownership plan are subject to inalienability for four years. Within the framework of this programme, a total of 625 shares were distributed to employees in 2007 (previous year: 355). Rebates, refunds and cash discounts are deducted directly from the corresponding asset class and the cost price is reduced accordingly. Advance payments to suppliers are assigned to the corresponding asset class.

The employees of the Bell Group are affiliated to the Coop Personalversicherung (CPV) pension fund. As at the end – 41


Bell Annual Report 2007 –

Appendix to Balance Sheet

2007

Share

2006

1. Liquid assets Cash Cash in post accounts Cash in banks Fixed deposits Liquid assets

345 363 3 907 62 763 67 378

0.5% 0.5% 5.8% 93.2% 100.0%

237 571 5 353 35 443 41 604

2. Securities Shares and similar investments Bonds and similar investments Securities

5 885 11 885 17 770

33.1% 66.9% 100.0%

– – –

3. Trade accounts receivable Valuation adjustment balanced in receivables

–1 766

4. Receivables affiliated companies Companies of the Coop Group Other affiliated companies Receivables affiliated companies

60 000 12 319 72 319

83.0% 17.0% 100.0%

53 963 11 160 65 123

5. Inventory Raw materials and finished goods Auxiliary materials Value adjustments on the basis of value impairments Inventory

76 125 2 637 –3 934 74 828

101.8% 3.5% –5.3% 100.0%

75 537 2 129 –2 728 74 938

in CHF thousand

42 – www.bell.ch

–1 466


– Bell Group Financial Reporting

Appendix to Balance Sheet

2007

Share

2006

6. Accounts payable to affiliated companies Accounts payables to Coop Accounts payable to other affiliated companies Accounts payable to affiliated companies

17 309 1 275 18 584

93.1% 6.9% 100.0%

8 574 848 9 422

7. Other accounts payable Shareholders V.A.T. Capital and profit taxes Miscellaneous third parties Other accounts payable

10 53 17 320 997 18 380

0.1% 0.3% 94.2% 5.4% 100.0%

10 56 8 931 929 9 926

8. Deffered income and accrued expenses Miscellaneous deffered expense Accrued personnel and social security expense Deffered income and accrued expenses

13 993 10 776 24 769

56.5% 43.5% 100.0%

8 946 9 075 18 021

9. Financial liabilities Loans and credits from Banks Loans from third parties Current-accounts with third parties Short-term financial liabilities liabilities Long-term loans and credits Mortgage Long-term financial liabilities Financial liabilities

25 800 – 4 563 30 363 34 160 5 000 39 160 69 523

37.1% – 6.6% 43.7% 49.1% 7.2% 56.3% 100.0%

23 063 4 957 6 139 34 159 45 763 28 700 74 463 108 622

Statement of duration Due within 360 days Due within two years Due within three years ans later Financial liabilities

30 363 39 160 – 69 523

43.7% 56.3% – 100.0%

34 159 31 230 43 233 108 622

in CHF thousand

– 43


Bell Annual Report 2007 –

Appendix to Balance Sheet

Early retirements

Seniority presents

Holiday and extra hours charges

Other provisions

Restructuring

Total

10. Short-term provisions Provisions on 01.01.2006 Reclassification from long-term provisions Etablished Used Provisions on 31.12.2006

824 1 533 59 –930 1 486

709 598 139 –848 598

4 910 – 5 160 –4 910 5 160

– – – – –

– – – – –

6 443 2 131 5 358 –6 688 7 244

Provisions on 01.01.2007 Reclassification from long-term provisions Etablished Used Provisions on 31.12.2007

1 486 771 853 –2 338 772

598 753 130 –728 753

5 160 – 5 025 –5 160 5 025

– – 1 400 – 1 400

– 1 010 – – 1 010

7 244 2 534 7 408 –8 226 8 960

Early retirements

Seniority presents

Other provisions

Deffered taxes

Restructuring

Total

11. Long-term provisions Provisions on 01.01.2006 Reclassification into short-term provisions Etablished Used Released Translation differences Provisions on 31.12.2006

12 260 –1 533 3 492 –1 455 – – 12 764

2 207 –598 289 – – – 1 898

764 – 79 – – 12 855

38 156 – – – –1 142 9 37 023

– – 1 010 – – – 1 010

53 387 –2 131 4 870 –1 455 –1 142 21 53 550

Provisions on 01.01.2007 Reclassification into short-term provisions Etablished Released Translation differences Provisions on 31.12.2007

12 764 –771 1 600 – – 13 593

1 898 –753 1 013 – – 2 158

855 – 2 000 –73 13 2 795

37 023 – 1 375 –3 799 5 34 604

1 010 –1 010 – – – –

53 550 –2 534 5 988 –3 872 18 53 150

in CHF thousand

44 – www.bell.ch


– Bell Group Financial Reporting

Appendix to Balance Sheet

in CHF thousand

Production and administration Property facilities

12. Real property and buildings Value as of 01.01.

33 890

216 788

337

530

251 545

268 970

Purchase price on 01.01. Investments Divestments Restructuring Conversion differences Purchase price on 31.12.

33 890 1 163 –217 – 6 34 842

391 244 2 736 –69 – 232 394 143

482 596 – 1 314 – 2 392

530 1 978 – –407 3 2 104

426 146 6 473 –286 907 241 433 481

437 489 2 633 –14 107 –187 318 426 146

– – – – – – –

174 459 15 145 2 629 –69 – 149 192 313

144 172 – – 641 – 957

– – – – – – –

174 603 15 317 2 629 –69 641 149 193 270

168 519 13 254 1 191 –8 555 – 192 174 601

34 842

201 830

1 435

2 104

240 211

251 545

Machinery and equipement

Installations

Information technology

Furnishings and vehicles

Advance payments

2007

2006

91 085

79 703

6 170

16 372

980

194 310

201 701

Purchase price on 01.01. Investments Divestments Restructuring Conversion differences Purchase price on 31.12.

205 176 21 054 –7 878 784 161 219 297

152 025 7 359 –1 506 –824 155 157 209

33 381 2 250 –4 010 – 10 31 631

50 434 8 402 –2 374 58 96 56 616

980 1 227 – –925 – 1 282

441 996 40 292 –15 768 –907 422 466 035

434 851 33 218 –26 796 187 540 442 000

Cumulative depreciation on 01.01. Orderly depreciation Value impairments Cumulative depreciation of divestments Restructuring Conversion differences Cumulative depreciation on 31.12.

114 092 17 486 2 297 –7 006 – 135 127 004

72 322 9 978 719 –1 506 –641 102 80 974

27 210 3 199 4 –4 010 – 8 26 411

34 063 5 665 101 –2 310 – 78 37 597

– – – – – – –

247 687 36 328 3 121 –14 832 –641 323 271 986

233 150 37 425 2 897 –26 198 – 416 247 690

92 293

76 235

5 220

19 019

1 282

194 049

194 310

Cumulative depreciation on 01.01. Orderly depreciation Value impairments Cumulative depreciation of divestments Restructuring Conversion differences Cumulative depreciation on 31.12. Value as of 31.12.

13. Machinery and equipment Value as of 01.01.

Value as of 31.12.

Constructions in rented locations

Buildings under construction

2007

2006

– 45


Bell Annual Report 2007 –

Appendix to Balance Sheet

Non consolidated holdings

Loans to affiliated companies**

Loans to third parties

Equity of foundation**

Employers contribution reserves**

Other financial assets

2007

2006

14. Financial assets Value as of 01.01.

24 401

5 500

670

8 365

8 385

648

47 969

47 089

Purchase price on 01.01. Investments Divestments Reevaluation Conversion differences

24 401 1 476 –5 635 2 662 –

5 500 – –1 100 – –

670 1 000 – – 31

8 365 – –2 338 1 305 –

8 385 – –9 650 1 265 –

648 78 – – 2

47 969 2 554 –18 723 5 232 33

47 089 1 166 –1 110 779 45

Value as of 31.12.

22 904

4 400

1 701

7 332

728

37 065

47 969

in CHF thousand

** There are no loans to the corporation entities. ** In 2006 summarized under the position “Pension fund” (TCHF 16 750). The revaluation includes TCHF 1 550 from dissolution of the fluctuation reserve.

Software

Goodwill

2007

2006

15. Intangibles assets Value as of 01.01.

7 213

4 500

11 713

13 281

Purchase price on 01.01. Investments Divestments Restructuring Conversion differences Purchase price on 31.12.

16 823 2 859 –745 – 17 18 954

26 615 841 – – – 27 456

43 438 3 700 –745 – 17 46 410

38 877 5 254 –662 – 22 43 491

Cumulative depreciation on 01.01. Orderly depreciation Value impairments Cumulative depreciation of divestments Restructuring Conversion differences Cumulative depreciation on 31.12.

9 610 3 562 – –745 – 7 12 434

22 115 3 000 – – – – 25 115

31 725 6 562 – –745 – 7 37 549

25 596 6 836 – –662 – 8 31 778

6 520

2 341

8 861

11 713

Value as of 31.12.

46 – www.bell.ch


– Bell Group Financial Reporting

Appendix to Profit and Loss Account

2007

Difference

2006

16. Operating income Fresh meat Charcuterie own production Charcuterie purchased Poultry Meat specialities (game/rabbit and others) Seafood Convenience Sales abroad and other turnover Sales by product groups

692 167 325 871 63 277 309 420 23 947 67 865 65 752 81 619 1 629 918

5.4% 1.8% 7.7% 28.1% 14.8% 22.0% 14.8% 12.7% 9.9%

656 630 320 164 58 757 241 525 20 851 55 648 57 261 72 453 1 483 289

Sales to Coop Sales to other affiliated companies Sales to other wholesale Sales to end consumers Sales by distribution channels

999 625 162 962 439 462 27 869 1 629 918

8.4% 7.0% 14.2% 14.8% 9.9%

921 833 152 250 384 940 24 266 1 483 289

Retail trade Whole sale Food service Industry/trade Other buyers Sales by customer groups

1 059 953 126 543 129 750 229 623 84 049 1 629 918

7.8% 12.2% 5.8% 12.6% 37.8% 9.9%

982 954 112 747 122 623* 203 966* 60 999 1 483 289

Additional proceeds from Coop Additional proceeds from affiliated companies Additional third-party proceeds Other operational proceeds

1 666 2 503 27 078 31 247

37.6% –3.4% 34.2% 30.3%

1 211 2 590 20 183 23 984

Sales reductions with Coop Other sales reductions Reductions in proceeds

20 661 4 032 24 693

172.5% 18.6% 124.8%

7 582 3 401 10 983

in CHF thousand

A 10-year contract (with a commitment to supply and purchase) with Coop came into effect as of January 01, 2001. The supply of products to Coop is carried out under market conditions in consideration of Coop’s purchase volume. In 2007 the modality of invoicing toward Coop was changed resulting in higher sales-reductions. * Adjusted to 2007 structure.

– 47


Bell Annual Report 2007 –

Appendix to Profit and Loss Account

in CHF thousand

17. Personnel expenses Wages and salaries Employers’ contributions Other personnel expenses Outside work expenses Personnel expenses

2007

Difference

2006

183 890 37 732 5 132 32 899 259 653

3.8% 2.1% 9.2% 21.6% 5.6%

177 096 36 962 4 701 27 052 245 811

Contributions include social security contributions to the CPV/CAP Coop pension plan and other pension funds: TCHF 18 872 (previous year TCHF 17 211).

Compensation for Board of Directors and Members of Executive Board Board of Directors Jörg Ackermann, Chairman 1) Hans Peter Schwarz, Vice chairman 1) Stefan Baumberger, Member Anton Felder, Member 1) Prof. Dr. Joachim Zentes, Member Total Board of Directors

1)

Renumeration cash fix variable

2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006

50 50 30 30 25 25 25 25 25 25 155 155

Executive Board Adolphe R. Fritschi, CEO Total other Executive Board 2)

3)

20 20 12 12 10 10 10 10 10 10 60 60

Total TCHF

3 3 5 4 3 4 5 4 4 4 20 19

6 4 10 5 7 5 10 5 8 5 41 24

76 74 52 47 42 40 45 40 43 40 256 239

Share subscription number TCHF

Non-cash remuneration and contributions to pension fund

Total TCHF

114 65 476 175

638 540 1 916 1 450

2007

2006

230 206 2 150

173 118 1 752

The Coop representatives on the board work on a mandate basis, their fee is forwarded to the giver of the mandate Coop.

Remuneration cash fix variable

2)

Share subscription number TCHF

2007 2006 3) 2007 2006 3)

431 389 1 196 1 046

50 45 132 150

28 31 72 61

44 40 112 79

The 2007 remuneration of the Executive Board include contributions of TCHF 242 to a former member. In the annual report 2006 approximative amounts were stated for the variable remuneration.

Shares held as of 31.12. (number) Board of Directors Executive Management Other employees

48 – www.bell.ch


– Bell Group Financial Reporting

Appendix to Profit and Loss Account

in CHF thousand

2007

Difference

2006

18. Rent Building lease Lease of machinery and equipment Third-party storage Rent

8 021 5 053 2 004 15 078

–1.5% 4.2% 30.2% 3.7%

8 146 4 849 1 539 14 534

19. Energy, auxiliary materials Electricity Water Fuel Other energy Auxiliary materials Energy, auxiliary materials

9 185 3 847 492 3 587 6 734 23 845

11.5% –2.5% –1.1% –15.7% 6.4% 2.5%

8 236 3 946 497 4 257 6 329 23 265

20. Other operating expenses Administrative expenses Insurance and duties Capital tax and other corporate taxes Miscellaneous operating expenses Other operating expenses

5 463 2 296 1 665 6 399 15 823

–9.6% –9.8% –19.1% 64.1% 8.8%

6 042 2 545 2 058 3 899 14 544

3 919 4 321 508 2 860 4 031 694 16 333

–12.6% 17.1% –57.5% 54.8% 198.3% 7.3% 23.6%

4 483 3 691 1 193 1 847 1 351 647 13 212

Included in operating expenses: 21. Expenses with affiliated companies Building lease Lease of machinery and equipment Repair and maintenance Energy and auxiliary materials Publicity Other operating expenses Expenses with affiliated companies

– 49


Bell Annual Report 2007 –

Appendix to Profit and Loss Account

2007

Difference

2006

22. Financial return/financial expenses Deposit and other interest Interest from affiliated companies Gains on securities, realized and not realized Return on holdings Financial return

500 220 1 284 2 809 4 813

–42.2% –35.6% – 187.6% 120.3%

865 342 1 977 2 185

Interest to affiliated companies Other interest Bank charges Losses on securities, realized and not realized Financial expenses

30 2 649 140 631 3 450

77.5% –31.7% 7.6% – –14.3%

17 3 879 130 – 4 026

Financial return/financial expenses

1 363

–174.0%

–1 841

Average interest of interest-bearing liabilities

3.01%

2.72%

in CHF thousand

Interest rates of fixed advance payments and mortgages vary between 2,0% and 3,02%.

50 – www.bell.ch


– Bell Group Financial Reporting

Appendix to Profit and Loss Account

2007

in CHF thousand

Difference

2006

43.0%

13 480 –1 142 12 338

23. Taxes Taxes paid and changes in taxes due Changes in deferred taxes Taxes

20 072 –2 424 17 648

Group operating result Tax expenses included therein Profit before taxes

56 669 17 648 74 317

44 185 12 338 56 523

Tax thereon at the average applicable tax rate

17 687

12 401

Influence of different tax rates Adjusment of deffered tax rate Other taxes and taxes outside fiscal year Taxes on losses brought forward not activated Taxes (as reported)

–1 249 1 375 –165 – 17 648

–1 100 – 1 228 –191 12 338

1 010

– –1 550

1 073 –

750

1 400

500

1 500

3 200 2 550 – 1 375

– – 4 088 –

24. Non-recurring and infrequent expenses/income Non-recurring and infrequent expenses/income included in the operating expenses: Personnel expenses

Operating materials/ maintenance Other operating expenses

Depreciation

Taxes

Restructuring cost for closing of Geneva facility Adjustment of provision for early retirements Dissolution of the fluctuation reserve Measures associated with the Naturafarm brand Measures associated with Euro 2008 Measures associated with a third party damage event Measures associated with soil decontamination Extraordinary depreciation of assets of Frigo St. Johann AG Extraordinary depreciation on out of use equipment Total extraordinary depreciation previous year Adjustment of deffered tax rate

– 51


Bell Annual Report 2007 –

Additional Information

2007

2006

3 426

3 914

104 512 – –

113 236 243 243

6 308 120 467 125 408 774 18 872 9 280 670 670 7 940 11 015 3 877 3 626 3 512 1 000

– – 418 645 383 501 17 211 13 849 1 702 1 650 10 497 9 548 2 695 2 262 4 591 1 000

in CHF thousand

Total amount of guarantees, warranties and mortgages in favor of third parties Total amount of mortgaged assets at legal book values Not balanced liabilities from leasing due in the current financial year Derivative financial instruments Currencies contract-value residual value Fire insurance value of buildings Fire insurance value of equipment Expenses for liabilities from pension fund Obligations from contracts with third-party due in the current financial year due in the following financial year due later Obligations from contracts with affiliated companies due in the current financial year due in the following financial year due later Conditional increase in share capital as decided Principal shareholders

Shares eligible for dividend Voting regulations

52 – www.bell.ch

Coop, Basel; 60,54% Bestinver Gestion S.G.I.I.C., Madrid, Spain; 5,07% Sarasin Investmentfonds AG, Basel; 4,08% No further shareholders with over 3% of the shares All All registered third-party shareholders have full voting rights


– Bell Group Financial Reporting

Group Auditor’s Report

To the General Meeting of Bell Holding Ltd., Basel, 15 April 2008

As auditors of the group, we have audited the consolidated financial statements (balance sheet, income statement, statement of cash flows, statement of changes in equity and notes/pages 36 to 52) of Bell Holding Ltd. for the year ended 31 December 2007. These consolidated financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with Swiss Auditing Standards, which require that an audit be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in accordance with the Swiss GAAP FER and comply with Swiss law. We recommend that the consolidated financial statements submitted to you be approved.

PricewaterhouseCoopers AG Daniel Suter Auditor in charge

Ralph Maiocchi

Basel, 8 February 2008

– 53


Bell Annual Report 2007 –

Workforce

2001

2002

2003

2004

2005

2006

2007

Workforce as of December 31 Number of employees

3 968

4 040

3 931

3 540

3 326

3 234

3 341

Average Workforce adjusted to full-time employees (= personnel units/PU)

3 654

3 716

3 693

3 394

3 146

3 088

3 249

403

406

416

448

459

480

502

372 2 896 386

376 2 946 394

389 2 921 383

215 2 839 340

173 2 640 333

170 2 593 325

175 2 751 323

67 3

58 7

79 7

51 6

59 5

49 4

35 10

Sales by personnel unit (in CHF thousand) Number of PU in sales/distribution Number of PU in production Number of PU in overhead sectors Apprentices Trainees

Ø Average Workforce

Company Structure by Business Area 2007

4000

10% Overhead Sectors

3000

5% Sales and distribution

2000

1000

Production 85%

0

01

02

03

04

05

06

07

Workforce Age Range and Ratio 2007 > 60 Y. 2%

Gender Ratio 2007

2% bis 19 Y.

50–59 Y. 18%

28% Women

20% 20–29 Y.

40–49 Y. 31% 27% 30–39 Y.

54 – www.bell.ch

Men 72%


– Bell Group Financial Reporting

7-Year Overview

2001

2002

2003

2004

2005

2006

2007

Affiliated companies Other wholesale End consumers Gross sales

883 095 509 739 79 734 1 472 568

868 886 562 579 75 971 1 507 436

911 751 553 804 71 092 1 536 647

909 595 580 788 29 047 1 519 430

1 054 989 364 730 23 729 1 443 448

1 074 083 384 940 24 266 1 483 289

1 162 587 439 462 27 869 1 629 918

Operating income

1 479 256

1 504 942

1 542 898

1 525 119

1 452 646

1 496 290

1 636 472

81 810 21%

83 471 22%

82 675 22%

86 634 24%

84 341 23%

85 631 22%

87 162 22%

489 497 268 154 44 134 64 591 37 669

512 778 274 600 45 985 71 185 45 305

516 790 277 642 48 559 68 015 48 424

487 117 261 739 49 306 51 265 35 835

454 745 240 936 48 506 43 595 35 847

485 442 245 811 54 767 58 364 44 185

528 089 259 653 57 395 72 954 56 669

Cash flow

90 934

102 068

95 629

85 315

83 426

106 684

116 692

Financial result

–9 612

–9 101

–4 688

–5 682

–4 760

–1 841

1 363

315 325 411 326 726 651 232 029 317 809

319 668 429 766 749 434 199 787 356 204

322 866 475 704 798 570 176 819 397 235

292 989 513 726 806 715 217 860 421 723

269 652 531 041 800 693 178 143 445 945

237 585 505 537 743 122 108 622 478 703

308 478 480 186 788 664 69 523 522 981

Margins Gross operating profits in % of operating income Cash flow in % of operating income EBIT in % of operating income Net profits in % of operating income Financial result in % of interest-bearing liabilities

33.1% 6.1% 4.4% 2.5%

34.1% 6.8% 4.7% 3.0%

33.5% 6.2% 4.4% 3.1%

31.9% 5.6% 3.4% 2.3%

31.3% 5.7% 3.0% 2.5%

32.4% 7.1% 3.9% 3.0%

32.3% 7.1% 4.5% 3.5%

4.1%

4.6%

2.7%

2.6%

2.7%

1.7%

–2.0%

Equity in % of assets Return on equity (ROE)

43.7% 12.9%

47.5% 14.3%

49.7% 13.6%

52.3% 9.0%

55.7% 8.5%

64.4% 9.9%

66.3% 11.8%

in thousand CHF

Slaughterings excluding poultry (in tons) Market share slaughtering Financial data Gross operating profit Personnel expenses Depreciation of assets Earnings before interest and taxes (EBIT) Consolidated profit

Current assets Fixed assets Total assets Interest-bearing liabilities Equity

1)

1)

Net profit/equity at the beginning of the financial year

– 55


Bell Annual Report 2007 –

Share Information

2001

2002

2003

2004

2005

2006

2007

Per-share data Share price as of 31.12. CHF Year’s high CHF Year’s low CHF Average daily trading volume Number

530 560 390 144

705 775 530 210

829 829 700 187

1 030 1 330 829 256

992 1 197 940 230

1 410 1 450 975 173

1 925 2 250 1 410 129

Stock exchange capitalization Year’s end in million CHF Year’s high in million CHF Year’s low in million CHF

212 224 156

282 310 212

332 332 280

412 532 332

397 479 376

564 580 390

770 900 564

800 94 227 161 17.7% 20 21.3% 3.8%

893 113 255 178 16.0% 25 22.1% 3.5%

990 121 239 170 14.6% 30 24.8% 3.6%

1 053 90 215 129 8.7% 30 33.5% 2.9%

1 112 89 210 110 9.0% 30 33.6% 3.0%

1 193 110 268 147 7.8% 33 29.9% 2.3%

1 302 142 293 183 7.4% 40 28.2% 2.1%

16 000

12 000

2 000

2 000

2 000

2 000

2 000

400 000

400 000

400 000

400 000

400 000

400 000

400 000

40

30

5

5

5

5

5

4 000 10

4 000 10

10 000 25

– –

– –

– –

– –

10 455

7 877

4 047

3 135

2 725

2 370

1 812

365 470 2 697

365 770 2 840

368 137 2 943

365 031 3 040

362 833 3 219

363 329 2 989

364 294 3 153

Equity per share Net profit per share Cash flow per Share EBIT per share Return per share 1) Distribution per share Distribution quota Dividend yield 2) 1) 2)

CHF CHF CHF CHF CHF

Profit per share/year-end closing price Distribution of the dividend per share/year-end price

Capital structure on 31.12. Share capital in CHF 1000 Number of registered shares Number Nominal value per registered share CHF Changes in capital Par value repayment in CHF 1000 Par value repayment CHF/share Own shares held by company Number Shares recorded in share register Number Registered shareholders Number Securities no. ISIN Symbols Trade

56 – www.bell.ch

441 041 CH 0004410418 Telekurs: BELN Reuters: BELZn SWX Swiss Exchange


– Bell Group Financial Reporting

Group Overview

Company

Domicile

Sphere of activity

Bell Ltd.

Basel

Fresh meat, charcuterie, poultry, convenience, seafood Logistics, cold storage Meat, charcuterie, delicatessen

Frigo St. Johann AG Maurer Frères SA SBA Schlachtbetrieb Basel AG Centravo AG 1) GVFI International AG Pensionsstiftung der Bell AG in liquidation

Basel Kingersheim/ FR Basel Zürich

Consolidation method

Capital CHF

Group share in capital

I I

20 000 000 2 000 000

100.0% 100.0%

960 000

50.0%

IE *

250 000

48.0%

Basel

Slaughterhouse By-products processing Meat trade

* G

2 400 000 3 000 000

29.8% 15.8%

Basel

Foundation

L

I Fully consolidated (uniform management) * Consolidation ad equity G Purchase price L Consideration acc. Swiss Gaap FER 16 1)

Share of equity relates to the shares in circulation. In the previous year listed Bell Finance Ltd. was merged with Bell Holding Ltd. in 2007.

Important dates Closing of accounts

31 December

Media sales release

1. half of January

Media conference annual report

14 February 2008

Presentation for financial community

14 February 2008

General Meeting

15 April 2008

Half-year results

14 August 2008

Presentation for financial community

14 August 2008

– 57


Bell Annual Report 2007 –

Corporate Governance

Responsible corporate governance All Bell Group business units orient themselves to economiesuisse’s Swiss Code of Best Practice for Corporate Governance, and adhere to the SWX (Swiss Exchange) Guideline on Corporate Governance Information (RLCG). The corporate governance rules and regulations followed by Bell Group are based on Swiss law, the company statutes and Bell Holding’s internal policies and directives. Our Board of Directors reviews all these various elements at regular intervals and adjusts them to emerging needs and issues. The currently valid company statutes are available for viewing at www.bell.ch.

Corporate structure

page 57

Principal shareholders Capital structure

page 56 page 56

Capital changes; shares Transferability Stock registry restrictions

page 56 Statutes Art.5 Statutes Art.5

Bell Group has no cross participations or holdings in listed companies. The company has no outstanding convertible bonds, options or certificates of beneficial interest. No restrictions Approval of the Board of Directors required Denial allowable for just cause only, and if one shareholder controls more than 5 percent of the total number of votes.

Board of directors * Jörg Ackermann, 1958, Swiss,

Chairman since 2001 until 2011, member of the board since 2000

Business economist HWV

Coop Deputy Chief Executive Officer; since 2004; Head of Division Logistics/IT/Production, since 2004 Head of Division IT/Production; since 2007 Board memberships > transGourmet Schweiz AG, Basel > HiCoPain, Dagmersellen > other Board memberships within Coop Group companies

Hans Peter Schwarz, 1950, Swiss, Accounting and Controlling Expert (Federal Diploma)

Vice chairman since 2004, member until 2011; member since 2001 Member of the Coop Executive Committee; since 2001; Head of Division Finances & Services (CFO), since 2001 Board memberships > Coop Mineraloel AG, Allschwil > Bank Coop AG, Basel > transGourmet Schweiz AG, Basel and its subsidiaries > CPV/CAP Coop Personalversicherung, Basel > Coop Vitality AG, Bern > Dipl. Ing. Fust AG, Oberbüren > Tropenhaus Frutigen AG, Frutigen and Wolhusen AG, Wolhusen > Raiffeisenbank Ettingen, Ettingen > other Board memberships within Coop Group companies

58 – www.bell.ch


– Bell Group Corporate governance

Stefan Baumberger, 1948, Swiss,

Member until 2011; member since 2001

Chemical engineer HTL

CEO and Delegate of the Board of Directors of Hänseler Holding AG, Herisau, since 1997 Board memberships > Coop, Basel > Coop Immobilien AG, Bern > Hänseler AG, Herisau > Appenzeller Bahnen AG, Herisau > Steinegg Aktiengesellschaft, Herisau

Anton Felder, 1948, Swiss,

Member until 2011; member since 1986 and 2002;

Accounting and Controlling Expert (Federal Diploma)

Chairman from 1991 to 2001 Full-time chairman of the Coop Board of Directors, since 2001 Board memberships > CPV/CAP Coop Personalversicherung, Basel (chairman) > Coop Immobilien AG, Bern (chairman) > Coop Mineraloel AG, Allschwil > Betty Bossi Verlag AG, Zurich > Dipl. Ing. Fust AG, Oberbüren > other Board memberships within Coop Group companies > Member of the foundation board of the ETH Zürich Foundation, Zurich

Prof. Dr. Joachim Zentes, 1947, German,

Member until 2011; member since 1997

Professor of Business Administration

Head of the Trade and International Marketing Institute (H.I.MA.) and Head of the European Institute, Faculty of Business Sciences, University of Saarland, since 1991 Board memberships > Goodyear Dunlop Tires Germany GmbH, Hanau (Germany) (chairman)

* For further details and earlier activities please see www.bell.ch/management

– 59


Bell Annual Report 2007 –

Corporate Governance

Board members’ financial compensation Financial compensation is made up of a fixed amount, plus a variable component that cannot exceed 40 percent of the fixed component and whose amount is based on the extent to which revenue goals are reached. In addition to this remuneration, board members are also paid an honorarium for each board meeting in the form of one-half a share in Bell Holding. Inasmuch as the Coop representatives on the board act as a proxy, their honorarium is paid directly to Coop, with the exception of the honorarium of Stefan Baumberger. For information on overall salaries and share ownership, see the Annex to the Annual Report on page 48. Election and terms of office Board members are elected at the Shareholders Meeting on the basis of nominations made by the chairman. The Board of Directors consists of a minimum of three members who are elected, by the shareholders, to a four year term and can be re-elected. Board members’ terms of office expire at the conclusion of the Shareholders Meeting in the relevant year. If a board member turns 65 while in office, he or she resigns at the shareholders general meeting following the relevant birthday. Internal organisation and spheres of responsibility The Bell Holding board of directors defines corporate strategy, issues the requisite instructions, and oversees all Bell Group activities. The company’s executive board is responsible for business operations. The Board of Directors reviews the company’s fundamental planning, in particular the annual, multiyear, investment and other key plans, as well as the company’s main objectives. The board also identifies opportunities and risks and initiates the necessary measures. The respective spheres of responsibility of the Board of Directors and the executive board are set forth in detailed organisational guidelines. The Board makes decisions concerning unassignable responsibilities, duties and competencies, as well as mergers, litigation, contracts of special importance, capital investments in excess 60 – www.bell.ch

of CHF 2 million, and real estate/corporate acquisitions and sales. The Board of Directors also determines Bell Group’s corporate structure and is responsible for hiring, discharging and overseeing company managers and executives. The Board defines the company’s salary, investment, and social security policies, and monitors their implementation. It also makes decisions concerning the company’s representation in industry associations and interest groups, the granting of third party loans exceeding CHF 100,000, and financial guarantees in any amount. The guidelines and recommendations concerning the functions and tasks of individual committees are discussed and acted upon at plenary sessions of the Board of Directors. This is considered appropriate in view of the manageable size and of Bell’s special status as a controlled company. The Board of Directors holds plenary sessions eight times per year, and the meetings are usually four to six hours long. One or two special meetings are also held each year to discuss corporate strategy and other major issues. The Chief Executive Officer and Head of the Finance/Services Division are called in to participate in these meetings. Twice a year the Board of Directors meets with Bell’s entire executive board. External advisors are only engaged in individual cases (none in 2007). In 2007 the Board of Directors held 8 ordinary meetings and one strategy meeting. In addition to ordinary business, the board also conducted in-depth discussions focusing on the internationalisation strategy for the Bell Group. Options for action were examined and the possible effects of market deregulation assessed. Two specific projects were dealt with in detail, one of which was written off. In addition, the internal control system was discussed in depth and risk management pursued further. The decision was also taken to reintegrate the Bell Gastro Production and approval was given to the liquidation of the pension fund foundation of Bell Ltd. Furthermore, the board approved the use of a reserve accrued on a 50/50 basis by the company and employees to allow insured parties to make retrospective contributions into the pension fund. Approval was given by the board to an expansion and modification


– Bell Group Corporate governance

project in Cheseaux with a value of CHF 6 million and a modification project in Oensingen costing around CHF 4 million. Both projects will be realised in 2008. Information and monitoring tools The executive board informs the Board of Directors about the development of business on a regular basis. The chairman or vice chairman of the Board of Directors maintains regular contact with the Chief Executive Officer and the Head of the Finance/Services Division and usually participates in the meetings of the executive board once a month. The management reporting (MIS) is issued by the executive board on a two-monthly basis and includes a report with overall and divisional profit and loss accounts as well as comprehensive key figures and analyses. The financial reporting is a constant element of the Board of Directors plenary sessions. Variations are discussed and measures initiated if necessary.

processes is the main emphasis. At the time this report went to press, the implementation status was around 70 percent. The level of achievement at the divisions that have implemented the ICS was in line with the target. Within the context of risk management, the Board of Directors and executive board deal with the assessment of major risks on an annual basis. Major risks are defined as those which could influence net income by more than 25 percent and for which there is a certain probability of occurrence. Besides risks which cannot be influenced, such as a sudden sharp rise in raw material prices, we have identified agricultural-policy decisions, epidemics and product and process safety, in particular, as areas in which greater risks apply and have taken precautions and measures to counter these, as far as it is within our power to do so. With regard to product, environmental and operational safety, in 2007 a risk assessment was carried out by the insurance company Zürich and a rating of “good” achieved in all areas.

Adherence to directives and regulations, process efficiency and monitoring instrument efficiency is assessed by the group auditors as well as by internal Coop auditors, who report directly to the Board of Directors. In some areas the various elements of our internal audits form the basis for the external audit. In this process, our internal auditors establish risk weighted assessment parameters that are mainly oriented toward future risk, and the audit results are submitted to the chairman of the Board. In addition, external auditors’ activities are independently monitored by the chairman of the Board, the CEO and the CFO. A comprehensive concept for an internal control system (ICS) was elaborated. This was implemented in 2007. Based on the COSCO recommendations, the system forms an integral part of quality assurance (QA). It places particular emphasis on the financial security of business processes, as issues such as product safety, quality assurance and traceability are all covered by various standards (ISO 9001, IFS etc.). Besides protecting the company from any infractions of the law or instances of negligence, asset protection within the production – 61


Bell Annual Report 2007 –

Corporate Governance

Executive board * Adolphe R. Fritschi, 1950, Swiss,

CEO; Head of Convenience Division;

Master Butcher (Federal Diploma),

with Bell since 1993, in this function since 1994

Commercial Diploma, Meat technologist

Board memberships

(Diploma from Federal Research Centre for Nutrition and

> Centravo AG, Zurich

Food in Kulmbach, Germany)

> Gesellschaft für Vieh- und Fleischimport International AG (GVFI), Basel

Martin Gysin, 1960, Swiss,

Deputy CEO; Head of Finances/Services Division;

Accounting and Controlling Expert (Federal Diploma)

with Bell since 1992, in this function since 1994 Board memberships > CPV/CAP Coop Personalversicherung, Basel

Daniel Böhny, 1961, Swiss,

Head of Poultry Division;

Business Economist (GSBA)

with Bell since 2004, in this function since 2005

Josef Dähler, 1955, Swiss,

Head of Fresh Meat Division;

Master Butcher (Federal Diploma), Bachelor in Business Administration

with Bell since 1996, in this function since 2007

Adolf Maassen, 1964, German,

Head of Charcuterie Division;

Master Butcher, State Certified Food Technologist, Management CCI

with Bell since 1990, in this function since 2007

* For further details and earlier activities please see www.bell.ch/management

Executive board members’ financial compensation Financial compensation is divided into a basic salary and a variable component. The basic salary is based on an agreement in the employment contract, which is reviewed annually and, if necessary, adjusted. In addition, the members of the executive board receive a lump-sum payment for expenses and are granted access to a company car. The variable component (profit share) is dependent on the extent to which the Group achieves its revenue goals and can represent up to a maximum of 24 percent of the basic salary. The basis and level of this profit share are determined annually by the Board of Directors. Up to half of the profit share can be received in the form of shares in Bell Holding AG. These shares are counted at the average price that applied in the month preceding the payment (usually March), with a discount of 20 percent. They are subject to a four-year ban on sale. As revenue goals were exceeded, a profit share of 23.5 percent was allocated to the executive board in 2007. For information on overall salaries and share ownership, see the Annex to the Annual Report on page 48. 62 – www.bell.ch


– Bell Group Corporate governance

Shareholders’ participation rights

Change of Auditors

Statutes Art. 8; Art. 12 and 13 of the Swiss Code of Obligations Swiss Code of Obligations

Auditors

Shareholders may be represented at Annual General Meeting by another shareholder, the depository bank, or an independent proxy The statutes contain no restrictions or provisions governing the change of auditors. PricewaterhouseCoopers since 1998 Daniel Suter, head auditor since 2003 The Auditor is elected each year. The auditor’s fee for 2007 is TCHF 306 (2006: TCHF 273). There are no fees for tax consulting and transaction services in 2007 (2006: TCHF 60).

The Board of Directors oversees the external auditor’s activities. The external auditor briefs the chairman of the Board twice yearly concerning the audit results and presents an annual report to a plenary session of the Board of Directors. The external auditor’s activities are assessed by the chairman of the Board, the CEO and the CFO on the basis of a comprehensive series of assessment criteria that take internal and external factors into consideration. Beside the statutory duties the audit mainly focused in 2007 on the efficiency of the ICS and on the assessment of the delivery and invoicing process

Information policy

pages 56, 57 and 70

www.bell.ch

– 63


Bell Annual Report 2007 –

Organigram At 1 January 2008

Chief Executive Officer Adolphe R. Fritschi

Fresh Meat Division Josef Dähler

Poultry Division Daniel Böhny

General Office Elisabeth Wegeleben

Quality Management José-Michel Perez

Fresh Meat Christoph Schatzmann

Planning/Technology Hanspeter Gyåsinå

Purchasing/Sales Paul Fahrni

Plant Thomas Graf

Marketing/Communication Davide Elia

Sales Josef Zuber Purchasing Martin Reinhard Marketing Roland Lienhard

Plants German Switzerland Paul Flückiger Plant Basel Michel Lerch Production Frozen Food Oensingen Robert Kurt

Plants French Switzerland Marcel Joseph Fresh Meat French Switzerland Christian Gremion Sales French Switzerland Jean-Luc Aebischer

SBA Schlachtbetrieb Basel AG Stefan Seiler

64 – www.bell.ch

Sales/Marketing/Purchasing Walter Bieri

Sales/KAM/Marketing Christine Schlatter


– Bell Groupe Organigram

Charcuterie Division Adolf Maassen

Convenience Division i. P. Adolphe R. Fritschi

Finance/Services Division Martin Gysin

QM/Laboratory Ursula Kuhn

Bell Convenience Markus Bänziger

Accounting/Controlling Martin Gysin

Processes

Marketing/Sales Peter Schneider Plant René Wirz

Accounting Ulrich Süss Controlling Thomas Denne Project SAP myMeat Thomas Studer

Bell Seafood José-Manuel Seabra

Organisation/IT Rudolf Graf

Purchasing/Sales Marco Märsmann Sales Emilenne Sester

IT Controlling Mario Bobbià

Bell Catering Marcel Allemann

Human Resources/Training Johannes Meister

Maurer Frères SA Philippe Hazout

Frigo St. Johann AG Bruno Flückiger

Scalded Sausages Basel Kurt Zenger Scalded Sausages Gossau Daniel Fässler Dry Sausages Jacques Grossenbacher Cured and Meat Products Andreas Nieling Commissioning Thomas Abt

Purchasing Non-Food/Trade Products Roland Rufener

Sales Jean-Matthieu Wurth Plant Jean-Noël Pourprix Administration/Finance André Roth Technology Georges Hassler Gastro Production Franz Kupper

– 65


Bell Holding Ltd. Annual Report 2007 –

Balance sheet

31.12.2007

in CHF thousand

Liquid assets Securities Receivables affiliated companies Other receivables Current assets

11.8%

31 – 10 457 136 10 624

4.8%

Fixed assets

54 884 8 784 147 478 715 2 367 214 228

88.2%

199 935 7 309 1 332 344 2 549 211 469

95.2%

Assets

242 869

100.0%

222 093

100.0%

0.3%

304 6 575 33 6 912

3.1%

Financial assets

Tangible assets

Miscellaneous accounts payable Accounts payable affiliated companies Deferred items Short-term liabilities Long-term liabilities Liabilities

31 8 475 20 081 54 28 641

31.12.2006

Majority interests Minority interests Loans/other financial assets Property Buildings

687 – 50 737 – 737

– 0.3%

6 912

3.1%

Share capital Legal reserves Own shares deducted Other reserves Annual profit

2 000 10 000 1 036 188 945 40 151

Equity

242 132

99.7%

215 181

96.9%

Liabilities

242 869

100.0%

222 093

100.0%

66 – www.bell.ch

2 000 10 000 1 232 167 514 34 435


– Bell Holding Ltd. Financial Reporting

Profit and Loss Account

2007

2006

32 976 6 704 3 139 42 819

33 871 227 2 918 37 016

Administration expenses Other expenses Interests Other financial expenses Depreciation of tangible assets Expenses

1 035 172 45 392 455 2 099

740 437 396 – 468 2 041

Operating profit before taxes

40 720

34 975

Income from divestments of equipment Profit before taxes Taxes

81 40 801 650

– 34 975 540

Profit after taxes

40 151

34 435

in CHF thousand

Income from holdings Other financial income Other proceeds Total income

– 67


Bell Holding Ltd. Annual Report 2007 –

Appropriation of Annual Profit

Proposals of the board of Directors to the General Meeting

in CHF thousand

Appropriation of annual profit Annual profit CHF 40 dividend (previous year CHF 33) Transfer to the other reserves Total appropriations

2007

2006

40 151 16 000 24 151 40 151

34 435 13 200 21 235 34 435

2007

2006

3 426

23 914

– 4 050 – 60.54% 5.07% 4.08% 1 000

– 3 943 – 60.54% 5.07% 4.08% 1 000

Appendix in CHF thousand

Total amount of guarantees, warranties and mortgages in favor of Group companies 1) Total amount of mortgaged assets at legal book values Fire insurance value of buildings Own shares corresponding to financial statements Principal shareholders: Coop Bestinver Gestion S.G.I.I.C., Madrid, Spain Sarasin Investmentfonds AG, Basel Conditional increase in share capital as decided Compensation for Board of Directors and Members of Executive Board see page 48. 1)

The company is jointly and unlimitedly liable for all taxes arising from VAT incl. Interest and fines of the VAT group, if any, for the time since its introduction as a Group member.

68 – www.bell.ch


– Bell Holding Ltd. Financial Reporting

Auditor’s Report

To the General Meeting of Bell Holding Ltd., Basel, 15 April 2008

As statutory auditors, we have audited the accounting records and the financial statements (balance sheet, income statement and notes/pages 66 to 68) of Bell Holding Ltd. for the year ended 31 December 2007. These financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these financial statements based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. Our audit was conducted in accordance with Swiss Auditing Standards, which require that an audit be planned and performed to obtain reasonable assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the accounting records and financial statements and the proposed appropriation of available earnings comply with Swiss law and the company's articles of incorporation. We recommend that the financial statements submitted to you be approved.

PricewaterhouseCoopers AG Daniel Suter Auditor in charge

Ralph Maiocchi

Basel, 8 February 2008

– 69


Bell Annual Report 2007 –

Contacts

Share register

Public Relations/Investor Relations

Bell Ltd.

Elsässerstrasse 174 • 4056 Basel • Phone +41 61 326 26 26 • Fax +41 61 322 10 84 • info@bell.ch • www.bell.ch

Bell Holding Ltd.

Elsässerstrasse 174 • 4056 Basel

Elisabeth Wegeleben

Phone +41 61 326 22 08 • Fax +41 61 326 22 15 • areg@bell.ch

Bell Ltd.

Elsässerstrasse 174 • 4056 Basel

Davide Elia

Phone +41 61 326 22 12 • Fax +41 61 326 21 14 • EliaD@bell.ch

Current information

www.bell.ch

Bell Fresh Meat

Bell Ltd.

Dünnernstrasse 31 • 4702 Oensingen • Phone +41 62 388 53 00 • Fax +41 62 388 53 98

Bell Romandie

Bell Ltd.

Chemin du Châtelard 5 • 1033 Cheseaux-sur-Lausanne • Phone +41 21 731 99 00 • Fax +41 21 731 99 99

Bell Charcuterie

Bell Ltd.

Elsässerstrasse 174 • 4056 Basel • Phone +41 61 326 26 26 • Fax +41 61 326 21 10

Bell Poultry

Bell Ltd.

Zelgmatte 1 • 6144 Zell • Phone +41 41 989 86 00 • Fax +41 41 989 86 01

Bell Special Meat

Bell Ltd.

Zelgmatte 1 • 6144 Zell • Phone +41 41 989 86 00 • Fax +41 41 989 86 01

Bell Convenience

Bell Ltd.

Rupperswilerstrasse 5 • 5503 Schafisheim • Phone +41 62 885 95 55 • Fax +41 62 885 95 66

Bell Seafood

Bell Ltd.

Neudorfstrasse 90 • 4056 Basel • Phone +41 61 326 29 29 • Fax +41 61 326 29 28

Bell Catering

Bell Catering

Basel Elsässerstrasse 174 • 4056 Basel • Phone +41 61 326 22 01 • Fax +41 61 326 26 24

Bell Catering

Lucerne Nidfeldstrasse 1 • 6010 Kriens • Phone +41 41 317 01 17 • Fax +41 41 317 01 12

Bell Catering

Oensingen Dünnernstrasse 31 • 4702 Oensingen • Phone +41 62 926 01 44 • Fax +41 62 926 05 56

Bell Catering

Berne Stauffacherstrasse 73 • 3014 Berne • Phone +41 31 330 25 15 • Fax +41 31 330 25 10

Bell Gastro Production

Bell Gift Shop

Elsässerstrasse 174 • 4056 Basel • Phone +41 61 326 22 66 • Fax +41 61 326 26 24

Bell Gastro Production

Kriens Nidfeldstrasse 1 • 6010 Kriens • Phone +41 41 317 01 89 • Fax +41 41 310 21 66 Prilly Av. du Chablais 18 • 1008 Prilly • Phone +41 21 623 99 26 • Fax +41 21 623 99 08

Finances/Services

Bell Ltd.

Elsässerstrasse 174 • 4056 Basel • Phone +41 61 326 26 26 • Fax +41 61 326 21 22

Further companies in the Bell Group

Maurer Frères SA

12 rue de l’Industrie • 68260 Kingersheim • France • Phone +33 389 52 21 11 • Fax +33 389 57 22 66 info@maurerfreres.fr • www.maurerfreres.fr

Frigo St. Johann AG

Neudorfstrasse 90 • 4056 Basel • Phone +41 61 327 11 33 • Fax +41 61 327 12 33 info@frigo-ag.ch • www.frigo-ag.ch

SBA Schlachtbetrieb Basel AG

70 – www.bell.ch

Schlachthofstrasse 55 • 4056 Basel • Phone +41 61 385 32 32 • Fax +41 61 322 66 63


– Bell Group Imprint

Imprint Forward-Looking Statements The Forward-Looking Statements made in this Annual Report reflect our current views with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause our actual results, performance or achievements to be materially different from any future results, performances or achievements that may be expressed or implied by these statements. This version of the Annual Report is an English translation of the original German report. The German text takes precedence in the event of any discrepancies. The Annual Reports are also available on www.bell.ch. Published by Bell Holding Ltd., Basel Supervising Editor Davide Elia, Marketing/Communication Content, concept, design, typesetting Trimedia Communications Schweiz AG, Basel Photography Peter Schönenberger, Winterthur Eugen Leu & Partner AG, Riehen Claudia Albisser Hund, Basel Other sources Printed by Werner Druck AG, Basel

– 71


www.bell.ch

bell_2007_gb_e  

http://www.bell.ch/Portaldata/1/Resources/5_investor_relations/geschaeftsberichte/bell_2007_gb_e.pdf

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