Page 1

ANNUAL REPORT

2016


Table of Contents 1

Foreword

2

Financial

5

13

3

Organisation and HR

4

Core Competencies

23

2.1 Revenue and Results

14

4.1 Sourcing & Advice

24

2.2 Supply Chain Finance

15

4.2 Operations & Supply Chain

24

4.3 IT and Business Intelligence

26

5

Communication

2

17

29


6

Sustainability

7

Aid Projects

8

Quality

33

37

41

3


4


1 Foreword

5


Foreword 2016 was a wonderful year for Royal Lemkes in terms of revenue development and the progress made on our path from ‘good to great’. We have made excellent strides with regards to our ongoing transformation and are very proud of the more targeted positioning, which gives our brand new direction and energy:

Royal Lemkes has a green heart. We believe in plants. As they can create a better life, stronger businesses and contribute to a healthier, green world. We strive for sustainable growth.  Of our people, of our relationships, of our common business and of the world we live in.

Plantify® = Creating a better life, stronger businesses and a healthier, green world with plants.

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There are three elements to the green heart of Royal Lemkes: 1. Our roots as a grower 2. Our knowledge of plants as our key competence 3. The sustainable heart of Royal Lemkes' shareholders, management and staff We have a strong belief in and great passion for plants, not only because they improve people's lives and our customers' businesses but also because they play a role in making the world greener. It’s something that's sorely needed given the trend towards increasing urbanisation and the various environmental issues that we currently face. Our mission is not only to secure sustaina-

moral duty and a privilege to strive to make a constructive contribution through our wonderful company. We realise that this is a journey with many dilemmas, but it’s a journey we learn from each and every day. The great thing is that sustainability is part of our company's genetic make-up and affects everything we do, whether in terms of the planet or more people-oriented issues. Sustainability also shapes our relationships with our colleagues, customers and suppliers. Of course, at Royal Lemkes we don't just believe in plants, we believe in people too. People make the difference. In line with our positioning, we strive to support sustainable growth for our employees. We are a

Our mission is sustainable growth. For our people and our relationships (and thus our company) as well as for the world in which we live. ble growth for our people and our business contacts (as well as our company), but, more than anything, to help achieve it for the world in which we live. This is reflected in our sustainability policy, which is included in Chapter 6 of this annual report. Sustainability is embedded in our company's DNA: it's a mentality, not a department. Royal Lemkes is a family business. Both the owner and the management are not driven by a need to maximise profits but by the ambition to make a positive difference to our employees, our customers and society, as well as the wider world in which we do business. The planet and many of the people who inhabit it require help. As we have the Earth on loan from future generations, we see it as a

family business and work hard to foster the company’s specific atmosphere and culture. Our HR policy aims to create involved, enthusiastic employees. We intend to measure this in concrete terms in 2017 and have great confidence in the results as it is apparent that the atmosphere and energy within the company are excellent. Our HR policy encompasses three themes: personal growth, vitality and diversity. More about this in Chapter 3. The company turnover grew by €30 million in 2016. We are both proud and happy about this as we believe in scale: not so much because of the impact on financial results but because scale also means that you can invest more in professionalism, customers, employees and society.

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We have experienced strong growth with virtually every customer and in nearly all of the 28 countries we supply. This has been due to autonomous growth on the part of our customers as well as the acquisitions they have made. In almost all cases, however, it is also because our market share with our customers has increased. In addition, we have acquired two new customers. This growth has enabled us to invest in professionalising the organisation still further. We have achieved this not only through leadership programmes and various other training but also by taking on various young potentials and new managers in IT, strategic sourcing, customer service, transport and logistics resources, sustainability and communication. This means that we are well-placed to face the challenges of the coming years. Our industry, like many others, is operating in what is an increasingly turbulent and challenging context. Royal Lemkes has traditionally often played a leading role in the sector, something which we want to continue to build on. In 2016, we developed various strategic initiatives towards this end, some of which are mentioned in this annual report. The theme for 2016 was 'From a strong foundation to excellent performance'. Striving to provide excellent service is the

foundation of our company. As one of our customers beautifully puts it, "The biggest room is the room for improvement." In other words: aim to improve each and every day. We made LEAN part of our operations last year to optimise our improvement strategy, and it has worked very well in terms of staff achieving increased quality and efficiency in the workplace. Following this positive experience, we decided to apply the LEAN principles across the company. There were many moments to be proud of in 2016, such as the new positioning and website, the conclusion of leadership and talent programmes, various growers' meetings and the supply logistics project. And let’s not forget too, the publication our new newsletter, Plantifeitjes, the 40th and 50th anniversary celebrations and our Christmas breakfast at which we were delighted to present staff with cheques for good causes. With our leading customers, a vibrant organisation and a strong dose of craftsmanship, we can look back on an eventful year in which we laid the foundation for a fantastic future. In 2017, we expect to see a slight increase in turnover and take further steps on our path from 'good to great'. The aim is for the company to be ‘great’ for our employees and customers as well as for society. We will also be celebrating our 135th anniversary in 2017. We're very proud of that too!

On behalf of the Board of Directors,

Cees van der Meij

Michiel de Haan

Michiel van Veen

Director and Majority Shareholder

Managing Director

Dir. Operations & Supply Chain

Bleiswijk, May 2017

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9


2016 in figures 12%

9%

12%

13%

249

1.2%

96,970,363

17,917

pre-tax profit

plants traded

different products

0%

9%

0%

12%

28

2,444

872

278

million revenue

countries across Europe

10

shops

suppliers

km of trucks lined up in a row


Revenue in 2016 + 50 million + 40 million + 30 million + 20 million + 10 million 0+

Top 10 1 . G ERMAN Y 2 . FR AN C E 3 . TH E N E TH ERL AN DS 4 . U N ITED K I N G D O M 5 . AUS TRIA 6 . SWED EN 7. ITALY 8 . SWIT ZERL AN D 9 . B ELG I U M 10. N O RWAY

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12


2 Financial

13


Financial Royal Lemkes exports to 28 countries across Europe and is a structural supplier to more than 2,000 shops. We boast ten leading retailers as customers, almost all of which are based on ongoing, long-term relationships. Two customers are recent additions.

2.1 RE VENUE AND RESULTS Net revenue in 2016 was €249 million (2015: €222 million). The forecast for 2017 is modest growth. Pre-tax profit was 1.2% (2015: 1.1%).

Revenue development 260,000 253,000

250,000

249,443

240,000 230,336

230,000

221,956

220,000 210,000 200,000 190,000 2013

2014

2015

2016

2017 Forecast

Net revenue (x €1000)

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Result development 1.80% 1.60% 1.40% 1.20% 1.00%

0.98%

0.80%

1.18%

1.09%

0.60% 0.40% 2013

2014

2015

2016

Pre-tax profit Balance sheet solvency (own equity in relation to total assets) at the end of 2016 was 35%, which is substantially higher than our norm of 30% (2015: 40%). Liquidity on the balance-sheet date was more than sufficient to meet the short-term liabilities. We have minimised risks based on interest, credit and currency as much as possible by using various measures, including forward foreign exchange contracts, buying and selling foreign currency at optimum rates, interest rate swaps and transacting appropriate financing agreements with the bank.

2. 2 SUPPLY CHAIN FINANCE The Supply Chain Finance project was further developed in 2016. Research was carried out into new and innovative ways of completing financial transactions in the supply chain. An extensive pilot will take place in 2017 in which Royal Lemkes will process financial transactions of major suppliers (carriers, employment agencies and direct growers) using the dynamic discounting method. This technology is new to the horticulture industry. It will involve suppliers and Royal Lemkes collaborating to bring additional benefits to the chain: transparency in financial transactions, flexibility, (very) fast payment, lower financing and insurance costs and improved cash flow. In 2017, the possibility of additional services, such as self-billing and container service, will be investigated during the pilot. We believe that by adopting new (and often disruptive) methods, we can increase our reliability as a partner and lower supply chain costs. The motto: better and cheaper.

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16


3 Organisation and HR

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Organisation and HR During 2016, alongside its usual activities, the HRM Department placed a lot of attention on further professionalising the organisation by restructuring Sourcing & Advice and Operations & Supply Chain and by reviewing job profiles, the job classification system and the salary structure. A lot of attention was also paid to staff intake and development. Thanks to our growth, we welcomed 35 new colleagues. We also said goodbye to 10 colleagues. In addition, 26 people moved to new positions within the organisation (we have an active policy on this issue). As a company, we are proud of having such a great blend of new staff and experienced employees with many years of service. The absenteeism rate in 2016 (5.48%) was lower than that of 2015 (5.97%), but, due to a large number of staff on long-term sick leave (4.14%), it was still far too high. We are working to score below 4% in 2017. Our active policy, combined with the new Occupational Health & Safety Service, is clearly beginning to show results. Our HR policy objective is to have involved and enthusiastic staff focusing on three main themes: personal growth, vitality and diversity. To encourage personal growth, Royal Lemkes aims to be a learning organisation. In late 2015, we implemented various programmes that have been very successful, including: The Personal Leadership Programme, a practical seven-day training programme in  which, in addition to looking at skills, participants spend a lot of time working on both personal and team development. Since its inception, three courses have been completed with more than 30 leaders from the various departments. The Talent Development Programme, a one-year programme for talented young  people. The next course begins at the end of 2017. Workshops on Covey's seven principles of effective leadership, which have involved  30 participants from across the company. Management skills workshops.  Professional training in Microsoft Office, for example, as well as various plant and  language courses.

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HR plays an important role in further strengthening our culture, with a focus on the following core values:

RELIABILITY

We are honest and transparent. We keep our promises.

CUSTOMER ENGAGEMENT

We want to understand our customers and seek solutions and opportunities together.

CRAFTSMANSHIP

We know our business and believe in constantly developing our expertise.

PERSONAL LEADERSHIP

Our ambition is to make a difference. We take the initiative. We continue to innovate.

TOGETHERNESS

We want to establish connections: with each other and with our partners.

These core values are integrated into all HR tools (such as job profiles and the HR cycle) and leadership programmes. They are also an integral part of our internal communications. At the end of 2016, we laid the foundations for the Royal Lemkes Plantify Academy, which will facilitate the long-term professional growth of our staff. Within the academy, various programmes, training courses and workshops are divided into three themes: leadership, professional training and customised courses. In 2017, we will further define our policy on the themes of vitality and diversity; with this in mind, various activities are already underway. We will also initiate an annual employee engagement survey. We have high expectations of the survey because it is apparent that the atmosphere and energy within the company are already very positive. At the end of 2016, we began to establish a works council. Elections for the council were subsequently held in mid-March 2017, and we are proud to welcome seven new members. The works council comprises a well-balanced representation of all Royal Lemkes departments.

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Sickness absenteeism

5.48%

8%

(5.97% in 2015)

75

193 total

118

61%

42.94 41.0

39%

Age distribution 20-24 years

AVERAGE AGE

4 8%1

EMPLOYEES YEARS OF SERVICE

EMPLOYEES

<1

26

1-5

56

6-10

50

11-15

23

16-20

15

21-25

5

25+

18

25-34 years 228% 23 35-44 years 168% 33 45-54 years 248% 38 55-59 years

5 8% 16

>60 years

4 8%7

193 20

44.17

Inflow and outflow

+

35 10 outflow


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22


4 Core Competencies

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Core competencies We have embraced three core competencies: Sourcing & Advice, Operations & Supply Chain and IT and Business Intelligence.

4.1

SOURCING & ADVI CE

The Sourcing & Advice Department sprang from the Trading Department at the end of 2015, with some buyers/product specialists joining the customer teams to help bring the products closer to our customers. Within Purchasing, the Sourcing & Supply Chain Development Department started working alongside the day trade team. In the spirit of sustainable partnership, we want to work with our suppliers to look at how the entire supply chain can be optimised. This organisational change became more firmly rooted in 2016. Customers really value the frequent contact with product specialists. We have also started structural customer satisfaction measurement and are very proud of the initial results. In 2016, the Strategic Sourcing Department began making long-term agreements with growers, looking at the entire supply chain, and an inspiring strategy meeting was held for the 100 biggest growers. The Sourcing and Advice Department does more than just purchase at the lowest prices. We realise that investments made by our suppliers deserve to be rewarded with continuity. We therefore have discussions with our customers to achieve long-term partnerships with suppliers. Over the last year, the Concept and Creation Department, with the Creation Lab at its vibrant heart, has implemented the 'Green Box' concept, whereby we work with the customer to build appropriate collections based on trends and themes.

4. 2 OPER ATIONS & SUPPLY CHAIN An efficient logistics operation is one of the most important keys to success in the horticulture industry. We are proud of our well-organised logistics processes, which enable us to deliver very frequent small quantities of product to our customers from an exceptionally wide range of items and with an extremely high level of reliability. Extensive automation and close collaboration with our chain partners are vital to the process. We want to build on this even more in the coming years.

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We made great strides in 2016 with the introduction of LEAN, which further improved the quality and efficiency of the operational processes. Performance is measured daily and is shared with our staff via dashboards. The Customer Service Department, established in 2016, has successfully developed into a midpoint between trade and operations. Its vision is to achieve the highest possible level of customer satisfaction. To help facilitate this, we have a new initiative that aims to significantly reduce the number of claims. Another new department, Transport & Logistical Resources, was also established in 2016. The objective of both departments is to sharpen our focus on successful process execution with the aim of providing customers with the best possible service.

OPER ATIONS & SUPPLY CHAIN PROJECTS Hub: Over the past year, extensive research has been carried out into the possibility of restructuring the European network. The research focused on setting up plant production at a more central European location in collaboration with Royal Lemkes customers and Dutch growers. The coming year, 2017, will focus on drawing up concrete plans in close co-operation with local parties. Supply: The ambition to serve the customer by providing excellent service begins with having everything in place at the start of the chain. In consultation with growers, a call for tenders was made in 2016 for grouping transport streams from growers in the Westland

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region to Royal Lemkes. This resulted in more full trucks travelling from growers to Bleiswijk, spread over the day and on time. This not only means that operations can be planned more efficiently, resulting in better performance, but it is also a prerequisite for the proposed mechanisation. In 2017, the pilot will be extended to other regions in the Netherlands.

4.3 IT AND BUSINES S INTELLIG EN CE We are aware of the growing importance of IT as a strategic success factor. Our own GreenSystems gives us enormous flexibility to meet customers' needs. In 2016, we set out the IT vision for the coming years and choices were made regarding IT infrastructure, including the realisation of innovation through subdivision. Project GrowbIT involves developing business processes and IT by revamping Royal Lemkes' IT environment and software. The first ‘IT subdivisions’ have been launched. More projects will be initiated in the coming year, and the IT environment will gradually be updated.

We believe in plants. As they can create a better life, stronger businesses and contribute to a healthier, green world. In 2016, we introduced Avalanche, a modern IT package for managing logistics resources. As of the end of 2016, IT is headed by an externally-recruited IT manager. Big data is becoming more important in our sector too. Royal Lemkes is using business Intelligence (BI) to support management reports (for ourselves and our customers), as well as specific tools such as vendor-managed replenishment, with increasing success. As we work with cash register scan data with many customers, this source of information is also becoming increasingly valuable to our partners. An additional person has therefore been brought into the BI Department. In 2016, we dotted the I's and crossed the T's on two major replenishment projects that were successfully implemented with customers in 2015. This resulted in a drastic reduction in inventory and loss for our customers.

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5 Communication

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Communication In 2016, we made great leaps forward in both external and internal communication. Regarding internal communication, the monthly staff meetings that were introduced in 2015 are now a regular feature. In addition, various '3-i meetings' were organised for leaders within the organisation with a focus on the themes 'Information, Integration and Inspiration'. We now also have introductory days for new employees, and staff receive the monthly Plantifeitjes digital newsletter. Our Intranet is set to undergo a revamp in 2017. Royal Lemkes has taken important steps towards becoming more expressive, not least in terms of the new positioning and the subsequent new website. We're proud of who we are and what we do, and that's something we could be a lot more open about. We have also started organising meetings for stakeholders and have become active on social media. In 2017, we will launch an external newsletter, the Plantifacts.

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6 Sustainability

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Sustainability Sustainability is an essential part of our positioning: of our roots, of our firmly held beliefs and of our mission. Royal Lemkes believes that sustainability is becoming increasingly important to our customers and their customers (the consumer). We therefore regard sustainability as a strategic pillar for stronger business. Plants and sustainability would appear to be a logical combination, but they don't automatically go together. Plant production and transport use large amounts of raw materials and result in high CO2 emissions. Moreover, the materials used in production are not always good for people and the environment. Fortunately, we are all becoming increasingly aware of such matters, as is also the case with the various social issues at play in our supply chain. We are a family business and social policy has always been a fundamental theme for Royal Lemkes. Environmental awareness also comes naturally to us. As part of our push towards energy-neutral operations, in 2012 we realised the biggest solar roof in the Netherlands. Our ambition is to play a leading role in making the sector more sustainable. We want to be trailblazers and really make a difference. We take an exemplary role within the sector in terms of operational management and collaborate with partners to make the chain more sustainable, from seed through to the actual plant in the consumer's home. We believe in: Let's PlantifyÂŽ the Future. Together. Royal Lemkes feels that more can be achieved through collaboration. We translate this into long-term relationships with our employees, suppliers and customers and on-going partnerships with other market actors. We are affiliated with MVO Nederland, Benefits of Nature, the Floriculture Sustainability Initiative and the Business Social Compliance Initiative. Last year, we, together with our employees, set down the pillars of our CSR policy. As a company, we worked together to identify six themes that are important for our products, our sector and our company. We looked at what we have already done and already know, and we also defined ambitions and the next steps for each theme. There are two different levels of ambition for each theme: ambitions we can achieve within Royal Lemkes itself (internal), and ambitions to 'inform, inspire and involve' others (external). While we have concrete ambitions for some of the themes, our goals are still somewhat vague for others due to the simple reason that we don't yet have enough knowledge to

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The six themes are:

Planet

Biodiversity

Raw materials

People

Working conditions in the chain

Welfare, health & society

Climate

Our employees

formulate 'smart' objectives. This means that for almost every theme, understanding is an objective in itself. We realise that our customers regard biodiversity and working conditions as the most relevant themes. These two themes are therefore regarded as urgent and are accorded high priority. Health and wellbeing is a current theme and fits perfectly with our positioning. We aim to be a recognised authority on the positive role that plants play in people's lives and intend to make our knowledge available to our customers. In turn, they can then reach out to their own customers with this wisdom. The theme of climate has been quite topical at Royal Lemkes for some years now. With our solar roof and efficient LED lighting, we have been an energy producer since 2015. Moreover, in 2016, we reduced our gas consumption by almost 70% by introducing heat pumps. We want to be energy-neutral by 2020. When it comes to the theme of raw materials, we want to gain a good understanding of the relevant issues before formulating concrete actions and objectives. The extensive 'Plantify Sustainability' sustainability plan and our sustainable mission will be published on royallemkes.nl shortly. To achieve our ambitions, we took on a second sustainability employee in 2016 and formed working groups for each theme. The groups include representatives of the various departments. We also consulted our customers and suppliers on a range of issues, which included placing the sustainability theme high on the agenda at our supplier meeting in January 2017. In 2016, we also took the initiative, along with a number of competitors/colleagues, to move further forward with the biodiversity theme. As a contribution to help save the environment, we are working to make 90% of our sourcing and trading sustainable by 2020. 'Sustainable' means Good Agricultural Practice (GAP) certified as well as Global Social Compliance Program (GSCP) and GAP certified in at-risk countries. A manifesto on sustainability will be signed in mid-May 2017, and, in early June, a meeting on the subject will be held for growers.

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7 Aid Projects

37


Aid Projects Royal Lemkes wants to contribute to a world in which people are free to achieve their full potential and where wealth is more fairly distributed and our planet is treated with respect. That's why we support long-term sustainable projects in Eastern Europe, Ukraine, Kenya, Mozambique and Sierra Leone. Our preference is for projects that have a link to our agribusiness. As 2016 was a good year, we were able to share more with our staff and society in general. Last December, we therefore asked our employees to recommend their favourite good causes. At our traditional Christmas breakfast, some 20 employees were each presented with a cheque made out to the charity they support. In a follow-up to this at the end of 2016, we decided to set up the Royal Lemkes Foundation.

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39


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8 Quality

41


Quality As product quality, quality management and sustainability often go hand in hand, these topics are managed by a single department at Royal Lemkes. Our quality management system and handbook assist in structuring our processes and realising constant improvement. This system was reassessed in 2016, and we were cleared to extend our new Florimark Trade certificate (ISO9001: Traceability, Good Trade Practice) until 2018. In 2016, our own social policy was also assessed by means of a SMETA audit, which we successfully passed. At the end of 2016, we started implementing the requirements needed to trade in organic products. SKAL approved us for this in early 2017. Product quality is a very important factor in our business model, and, in 2016, we took the first steps towards a risk-based product control process that will be further developed in 2017. Developments relating to diseases and pests (such as Xylella Fastidosa) are also monitored closely.

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D ESIG NATION , CERTIFI CATES AND MEMB ERSHIP S We were granted the ‘Royal’ designation in 1993, a distinction awarded on behalf of the King of the Netherlands to Dutch companies at least 100 years old, employing a minimum of 100 people and distinguished by quality, craftsmanship and reliability. It’s something we are extremely proud of. We are MPS-Florimark Trade certified. This certificate comprises: Florimark Good Trade Practice Florimark TraceCert ISO 9001: 2008 We are a member of: MVO Nederland Benefits of Nature FSI BSCI We also meet our customers' strict requirements. In 2016, we successfully passed their audit once again. Royal Lemkes is ranked 15th in the 'Hillenraad 100', the top 100 companies in the agricultural sector.

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Profile for Communicatie Royal Lemkes

Annual Report 2016  

We are proud to present our Annual Report 2016. 2016 was a wonderful year for Royal Lemkes in terms of revenue development and the progress...

Annual Report 2016  

We are proud to present our Annual Report 2016. 2016 was a wonderful year for Royal Lemkes in terms of revenue development and the progress...

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