annual report 31 march 2015 - fm logistic · 2015. 7. 23. · •ukraine fm logistic group 6 fm...

Annual report 31 March 2015

FM Logistic Group

6 FM Logistic: an international logistics organiser

8 FM Logistic: leading solutions

10 Focusing our energy on strengthening our leadA few words from Jean-Claude Michel, Chairman of the board

12 Our DNA: getting the best from our collaborators and building the futureInterview with Jean-Christophe Machet, CEO of FM Logistic

16 Board of directors

17 Executive committee

SUSTAINABLE DEVELOPMENT / OUR ECONOMIC COMMITMENT

Ensuring steady development and designing the logistics chain of the future

20 Ambition 2022: a sustainable development strategy • Ambition 2022: the future is in our DNA

• Succeeding in our cultural transformation to boost our countries’ strenght

• Building on our strength for a bright future

• Promoting continuous improvement and operational excellence

• Visual management: getting everyone involved

24 Anticipating customers’ requirements through innovation• Cross-channel: FM Logistic is ready to accompany its customers’ transformation

• Innovation strategy: a new organisation to invent the future

• Innovations that make the difference: the evidence speaks for itself

Contents

2 FM Logistic – Annual report – 31 March 2015

SUSTAINABLE DEVELOPMENT / OUR SOCIAL COMMITMENT

People are the pillars of our commitments

30 Managing, developing and drawing talents to our company • Developing the professional skills of our workforce

• Enhancing our employer brand to recruit and retain talents

• Ensuring safety at work for our collaborators

SUSTAINABLE DEVELOPMENT / OUR ENVIRONMENTAL COMMITMENT

Placing the environment at the heart of our development

36 Saving on resources to preserve the future • Reducing our carbon footprint

• Decreasing energy consumption

• Developing green offers for our customers

SUSTAINABLE DEVELOPMENT / OUR SOCIETAL COMMITMENT

Supporting the local economy

40 Collaborators involved in their local communities• Developing support to local causes

• Promoting professional opportunities for the disadvantaged

• Getting involved in societal projects

Financial information

46 Consolidated balance sheet

48 Consolidated income statement

49 Consolidated cash flow statement

Scan this QR Code to view our sustainabledevelopment policy in pictures

FM Logistic: committed men and women for sustainable success “

”

3FM Logistic – Annual report – 31 March 2015

FM Logistic Group


FM Logistic: an internationallogistics organiserSince its creation in 1967, FM Logistic has becomeone of the international leaders in the fields ofwarehousing, transportation and co-packing. As an independent and family group, it is recognisedas being expert in the consumer goods, retail,perfume/cosmetics, industrial and health markets. With 19 571 collaborators based in 12 countries, FM Logistic has increased its turnover by 2.3 % (10.2 % at constant rates) this financial year, reaching1.1 billion euros by 31 March 2015, with an operatingprofit of 39.4 millions euros, up by 8.2 %.

FM Logistic is also:

• 2 857 000 sqm of warehousing space,• 2 500 vehicles managed.

And every year:

• 1 700 000 deliveries,• 500 million parcels prepared,• 245 million units of consumer produced.

19 571 employees over 12 countries

Scan this QR code for a betterunderstanding of FM Logistic’s businesses

• France• Brazil• China• Czech Republic• Hungary• Iberia• Italy

• Poland• Romania• Russia• Slovakia• Ukraine

FM LOGISTIC GROUP


Transportation 33 %

Co-packing 10 %

Warehousing 57 %

Distribution of turnover by business

Retail 29 %

Industry 24 %

Perfume & cosmetics 6%

Health 3 %

Fast-moving consumer goods 38 %

Distribution of turnover by business sector

Eastern Europe 26 %

Central Europe 25 %

Western Europe 7 %

Brazil 4 %

China 2 %

France 36 %

Distribution of turnover by zone

Central Europe 23 %

Eastern Europe 21 %

Western Europe 11 %

China 1 %

France 37 %

Distribution of operating surfaces by zone

Increase in number of employees

15 345

31.03.2013

18 730

31.03.2014

19 571

31.03.2015

Increase in operating profit(in M€)

30

31.03.2013

36

31.03.2014

39

31.03.2015

Increase in turnover (in M€)

887

31.03.2013

1 043

31.03.2014

1 066

31.03.2015

Variance in turnover(in M€)

Growth - at constant rate 105.9

Foreign exchange effects -82.1

Total variation 23.8

Variance in operating profit(in M€)



Total variation 3.0

Brazil 7 %

France 25 %

Central Europe 24 %

Brazil 6 %

Western Europe 3 %

China 1 %

Eastern Europe 41 %

Distribution of employees by zone

Variance in net profit(in M€)



Total variation -2.6


FM Logistic:leading solutions

Fast-moving consumer goods

To win new markets and consolidate our position with existing customers byanticipating distributor strategies, FM Logistic developed a comprehensive andfunctional solution for product traceability, improved service rate and stock levels.An innovative solution called pooling is used to ensure constant product availabilityon the shelves by increasing delivery frequency while reducing stock. This supply chainwith no weak link guarantees steady product distribution, increased service rate andthe availability of innovating services for every logistics plan.

38 %of our turnover

Retail

To accompany the economic model of our customers in retail, FM Logistic provides aninnovating, modular and high performance solution: combining reactivity for shops witha well-adapted IT system, it optimises service rates on the shelf and distribution costs.

29 %of our turnover

Industry

With our know-how in delayed differentiation centres coordination and stock level opti-misation, FM Logistic developed a solution to secure each customer’s consumer relations.

24 %of our turnover


FM LOGISTIC GROUP

Health

Health product logistics requires strict compliance to norms and a high service standard.That’s why FM Logistic created FM Health, a transversal solution that fulfils allrequirements in a high-security IT and physical environment. This concept is destinedfor laboratories in direct contact with pharmacies and hospitals.

3 %of our turnover

Perfume & cosmetics

In order to accompany our customers’ cross channel distribution strategies andpromotional campaigns while optimising time to market, FM Logistic provides highquality services solution to guarantee secure management of luxury goods andcosmetics throughout the supply chain.

6 %of our turnover


Focusing our energy on strengthening our leadA few words from Jean-Claude Michel, chairman of the board of FM Logistic

Financial year 2014/15 has been good in terms of growth andoperational performance, with an increase of 2.3 % and 8.2 %respectively. However, our activity in Russia has suffered due to therouble crisis and the embargo on European imports has causedproduct shortages. At constant exchange rates, the Group’soperating results are on the rise, but the fall of the Russian currencyhas masked FM Logistic’s real performance.

The integration of FM Fresh in Russia and FM Brazil went perfectly:now, over a year later, our two major 2013 acquisitions are runningsmoothly and I would like to congratulate the teams involved forthe success of these strategic integrations. It also shows that ournew corporate governance has made our acquisition approach moreprofessional and secure.

We also continued our actions to adapt the Group’s culture andorganisational structure: it is necessary to give platform directorsand field managers a high level of autonomy. In Ukraine, Spain andChina, customer expectations and sales obligations are different.Our local teams are in a better position to take this into account andprovide reactive and pertinent solutions.

As we have placed a lot of trust in our local workforces, operationalmanagement monitoring will be reinforced to make sure that anydecisions made are conform to our commitments. The firstimportant steps in changing our management culture have beentaken this year and we will soon reap the benefits.

Finally, being firmly committed to our continuous improvementapproach, we were able to identify our weaknesses and implementthe necessary action plans to regain our competitive edge in termsof innovation and information systems. FM Logistic is well placed tobecome a pioneer and leader in these two areas that stronglycontribute to our competitive stance and value creation that we sharewith our customers. Thus, a new Innovation direction was createdwith ambitious but realistic objectives. We can now concentrate allof our energy on our 2015 objectives and fulfil the requirements ofour strategic plan, Ambition 2022.

Being firmly committed to our continuous improvementapproach, we were able to identify our weaknesses and implement the necessary action plans to regain our competitive edge in terms of innovation and information systems.

“

”10 FM Logistic – Annual report – 31 March 2015

FM LOGISTIC GROUP

Getting the best from our teams in order to prepare for the future and give our customersdistinctive value-creating offers.

“”


FM LOGISTIC GROUP

Our DNA: getting the best from ourcollaborators and building the future

Interview with Jean-Christophe Machet, CEO of FM Logistic

How would you sum up 2014/2015 ?

Jean-Christophe Machet: In relation to our strategic goals, ourend of year operating profit figures are perfectly in line with our“Ambition 2022” plan. This shows that we are in control of ourdevelopment despite an heterogeneous international environment.We had to deal with volatile currencies just like everyone else in themarket, especially in Russia from October 2014. Although ouroperational income was good and highlighted the strength of ourbusiness activities and improved performance, the adversedevelopments in the exchange rate impacted our turnover, ourfinancial result and our equity. A currency conversion at the March2014 closing rate would increase the Group’s turnover by 82 M€to 1 148 M€ and net profit would rise by 7.3 M€. It is a monetaryillusion masking our real performance which will disappear as soonas currency rates improve again.

Have the acquisitions FM Fresh, in Russia, and FM Brazil, been successful ?

J.-C. M.: A year on, we are extremely pleased with the results ofboth of our acquisitions: we found what we were looking for. FM Fresh gave us a double hit by getting into a new sector (freshproducts) and strengthening our presence in Russia. From Russia,we branched out to Hungary, Poland and Ukraine, bringing ourspecialised workforce to 2 500 in this sector and allowing us torespond to more complex calls for tender on all of our territories.The integration of FM Brazil was perfectly managed by MichèleCohonner, managing director of FM Brazil and her teams. It is nowa Brazilian company, in Brazil, ready to continue its growth in 2015.

Last year was a year of transformation : where are we now ?

J.-C. M.: The main project was to launch our simplification approachin the company. Our local workforces are closest to our clients and thebest placed to be reactive, make the right decisions and fuelcontinuous improvement, so we have to give them greater operationalautonomy. Objective n°1: to change from a process-based to anaccountability-based approach. This change in management cultureis accompanied by decentralisation to the relevant countries and fromthe countries to the sites. Today, we are present on three continents.Our increased size must not lead to complex administrative systemswhich reduce operating efficiency. Therefore, procedures were set up,and will continue in 2015 to simplify reporting and avoid joboverlapping. As for the head office of FM Logistic, it is refocusing onits core mission: getting ready for the future using high performancetools and providing a distinctive offer, creating value for our customersand ourselves.

�


Interview with Jean-Christophe Machet, CEO of FM Logistic

Is FM Logistic cultivating its difference now more than ever ?

J.-C. M.: Yes absolutely, FM Logistic is a really different company inits field. The people are at the heart of our company. The aim of everyproject is win-win. This philosophy improves our value-creatingcapacity for our clients and keeps us a step ahead of our competitors.Sustainable development is a global approach for us that benefits allparties, whether they be our workforce, our clients or our partners.At the moment, we are working on our employer brand to enhancethe assets that make FM Logistic the company to work for, in orderto participate in the 21st century logistic adventure. As one of ourthree founders says “we take risks but always with common sense”.Our controlled boldness was rewarded last September in Strasbourg,by the family business grand prize trophy “Les Chênes du GrandEst”, organised by the “Société Générale” and partnered by the“Echos” newspaper.

Is FM Logistic’s business model withstanding the crisis better than others ?

J.-C. M.: In a difficult economic context with financial, political andshort-term pressure, our business model based on the durability isan exceptional asset. Some of our competitors for example, areleaving Russia and Ukraine. Our long-term strategy keeps us oncourse when we decide to set up in a country, so we are able toaccompany our customers’ development on a long-term basis. Eventaking economic uncertainties into account, we are able to cut adeep furrow to stand strong and stable in each one of our markets.Today, we are recruiting and training staff in Russia while others areleaving the country. In this way, we strengthen our employer brandand attract the best talents. Tomorrow we’ll have a solid and uniquebase to accompany the development of our customers in this zone.

What’s the outlook for 2015/2016 ?

J.-C. M.: For an international group like ours, set up on threecontinents, it is of utmost importance to continue the path ofsimplification and decentralisation, while giving more individualresponsibility. This additional continuous improvement leveragestrengthens our operational excellence and sustainable development.All of our countries will implement these strategic projects next yearwhile consolidating their positions and winning new markets tocontribute to reaching our 2022 objectives. 2015 will also be a yearof significant investments in terms of warehouse managementsystems (WMS), human resources and innovation. Our strategy willbe centred on technological innovation so as to improve ouroperational performance, and on developing added-value servicesfor our customers, like the Citylogin project in Rome.

�


FM LOGISTIC GROUP

In a difficult economic context with financial,political and short-term pressure, our business model based on the long-termand durability is an exceptional asset.

“”


From left to right:

Claude Faure – co-founder of FM Logistic

Régis Bello – independent director

Monique Zomeno – independent director

Jean-Claude Michel – president

Gilles Faure – family director

Marie-Laure Schreiber – family director

Vincent Mercier – independent director

Jean-Claude Michel

Former general manager then chairman of the

management board of Norbert Dentressangle Group.

Founder and head of Management and Participation.

Régis Bello

Former CEO of De Dietrich

Administrator (or member of the supervisory committee)

NSC Groupe, Socomec, De Dietrich, Ponycom,

EM Strasbourg, Alsace Innovation,

Fondation Université de Strasbourg.

Monique Zomeno

Former vice-president HR of Cephalon Europe group.

HR consultant for TEVA group.

Vincent Mercier

Managing partner then president of the supervisory board

of Roland Berger Strategy Consultants and member of the

board of directors of Neopost and Adie.

Board of directors


FM LOGISTIC GROUP

From left to right:

Daniel Ciz – chief financial officer

Hervé Hochstrasser – corporate legal director

Yannick Buisson – general manager, France

Cécile Cloarec – human resources director

Christophe Menivard – general manager, Russia

Olivier Faure – director of operational support services

Pablo Gomez – general manager, Western Europe and innovation

Jean-Christophe Machet – CEO

Carlos Velez – general manager, Central Europe

Hervé Dujardin – sales director

Michèle Cohonner – general manager, Brazil

Stéphane Descarpentries – strategic projects director

Executive committee


18 FM Logistic – Rapport annuel – 31 mars 201518 FM Logistic – Annual report – 31 March 2015

Ensuring steady development anddesigning the logistics chain of the future



Ambition 2022:a sustainable development strategy

Ambition 2022: our future is in our DNA

Since its creation, FM Logistic has focused on the long-term: ensuring sustainable developmentis what the company is all about, and it is essential for the Group’s clients to know that theyhave a partner that they can count on as they grow. With this vision, FM Logistic has adoptedan ambitious strategic plan for 2022. Its success depends on the evolution of FM Logistic’smanagement culture, its capacity to withstand crises, a strengthened position in its countries andits business sectors as well as promoting continuous improvement and operational excellence.

FM Logistic has always had a long-term approach, thanks to itsshareholders. This stance is what enables the company to withstanddifficult economic cycles better that its competitors because it canlean on solid, sustainable foundations. Uniting all the strengthsnecessary to be international logistics leader in its markets, FM Logisticadopted a strategy in 2012 that embodies its long-term culture:Ambition 2022. The Group has set a target of 10 % growth per yearto reach a revenue of 2 billion euros thanks to 3 main axes:

Reinforcing the bases

• by reinforcing core business in consumer goods and retailthrough meeting demands in logistics cost reduction andenvironmental issues;

• by boosting its position and being a reference in each country.

Developing new growth drivers

• by providing innovative solutions for high growth sectors, like the fresh product and specialised retail markets;

• by significantly developing the selective cosmetics sectorinternationally;

• by expanding to new geographical areas.

Reinforcing operational excellence

• by providing a comprehensive range of transport services, from parcel to full truck, country by country;

• by promoting continuous improvement and innovation.



Succeeding in our cultural transformation to boost our countries’ strenght

In the spring of 2014, FM Logistic launched the Simplificationproject, one of the 12 strategic programmes of our Ambition 2022plan. This project is a management programme that aims to simplifythe company’s overall organisation as well as:

• giving more autonomy and responsibility to teams and countries,• eliminating tasks that create no added value,• clarifying roles and responsibilities.

After three months of analysis and diagnosis, this programme wasimplemented at the FM Logistic headquarters, in France, in Russia,and will be implemented in Poland in 2015. Business sectors and ITare now managed together to enhance synergy and the number ofindicators requested in our countries fell by 75 %. Group processeswere also simplified to facilitate local implementation and give ourcountries more independence. At the same time, internal auditingwill be reinforced in the Group to guarantee the company’s security.Lastly, an important support programme will be implemented toaccompany the cultural transformation, led by FM Logistic’s HumanResources direction who will have a key role to play in this area.

Building on our strength for a bright future

FM Logistic’s international strength provides a solid base to maintainour high overall performance in case of difficulty in any one country.In 2014, good results in France and Poland compensated, in part,for the fall in the Russian currency and the difficulties in Ukraine.FM France’s contracts with new customers, pushed our operatingprofit up in a bleak market. In Poland, FM Logistic’s turnover andoperating profit rose by 5.4 %, maintaining their number 3 positionin the market. In Russia and Ukraine, the Group benefited from thisstrength to withstand the difficulties and continue with itsdevelopment strategy.

The first semester in Russia was excellent with high business volumesand a steady operating profit. At constant rates, FM Logistic Russia’sturnover went up by 17.6 %. In Ukraine, we accelerated transportdevelopment and, more importantly, consolidated our position ina country where our competitors are getting out rather thandeveloping.

Commercial development: excellence that keeps us growing

We have our sales director, Hervé Dujardin, and his team, to thank for FM Logistic’s organic growth.They address a daily challenge: ensuring organic growth with 2 figures.

“In 2014, we achieved 150 % of our sales targets in logistics and packing and 100 % in transport,says Hervé Dujardin. In France, for example, where the market is limp, we reached 125 % of ourobjectives. It was the same in Italy, the Czech Republic and Russia. This impressive sales performancebrings our organic growth to 12 % at constant exchange rates. It highlights FM Logistic’s highdevelopment capacity: even in hard times, we achieve remarkable results in most of our countries”.


Promoting continuous improvement and operational excellence

2014 was a year of significant advancement in terms of ourcontinuous improvement approach in all of our countries. It is nowwell established in France, Russia, Poland, Ukraine and Romania, andin its final implementation phase in the Group’s other countries. Theprojects have been extended to copacking and the administrativeservices, with M.O.V.E. and SAVE respectively. The principle is thesame everywhere : more involvement locally, especially for operatorswho are best placed to identify possible improvement and contributeto implementing solutions. There are many advantages: process

simplification, problem solving, waste eliminating, flow optimisation,surface areas densification/reduction, standardisation, 5S, etc.A total of 42 platforms are involved in the Waste Hunting Programtoday, 28 M.O.V.E. projects are underway and about 1 000collaborators have been trained. In this, we are ahead of ourAmbition 2022 targets. It highlights the real desire in all of ourcountries to strengthen operational excellence. In 2015, the transportsector will also take on these projects.

3 powerful continuous improvement tools

For daily operation optimisation, FM Logistic teams have three continuous improvement tools :

• M.O.V.E.: this analysis method provides the keys to transform results into detailed action plans andmonitors project progress.

• Waste Hunting Program: this programme trains and sensibilises local staff how to identify wasteand its causes. It reinforces their role in the daily performance of activities and customer satisfaction.

• SAVE: specially designed for support functions, the aim of this programme is to optimise administrativemanagement by eliminating non-value-creating tasks.



Visual management: getting everyone involved

Visual management projects convey the dynamics of continuousimprovement locally and the commitment of operational teams. Thesame procedure was followed on the different sites where theproject was launched:

• Management and operator training on the fundamentals• Operational teams define the content, the steps and the form, inorder to meet activity’s needs in the best way,

• implementation by teams through a kaizen project.

Many visual elements were created and put on the sites: easy tounderstand, these management tools encourage operators toactively participate in identifying and correcting problems. Thecollective intelligence of the workforce is brought into play,motivating and making everyone proactive for customer satisfaction.Improvement is really continuous, everyday.

Russia: a vital approach in the logistics competition

“Our continuous improvement programme which was launched in 2013 enabled us to start 10 M.O.V.E. projects”, explainsSébastien Lardellier, FM Russia’s QHSE director. "In the second half of 2014, for example, we all put our heads together for abig cosmetics customer: 60 out of the 200 suggestions from our staff gave rise to concrete improvements in productivity. Atthe moment, cost is particularly important: Russia’s economic situation has brought more competition to the market andcontinuous improvement is a strategic tool to continue winning customers while staying competitive”.

Poland: operational excellence on the move

“This year, we have implemented several projects to improve operations on our platforms, our transport activities and ouradministrative processes”, explains Guilhem Vicaire, FM Poland’s Operations director. "Through these projects we have, forexample, increased picking speed for one of our main customers. We have also significantly reduced drivers waiting time fordocuments. The visual management approach has simplified the involvement of all collaborators in the process. It’s a realsuccess that we are sharing with our customers”.


Anticipating customers’ requirements through innovation

CROSS-CHANNEL

FM Logistic is ready to accompany its customers’ transformation

Value-creation in the supply chain shared with the customers is now, more than ever, the keyto being competitive and profitable. It means anticipating customers’ changing requirementsand constantly improving the quality of operations by optimising costs. FM Logistic hasintegrated e-commerce into its services to meet customer demands in cross-channel logistics.In 2014, changes were also made in Innovation to give structure to the approach and inventthe supply chain of tomorrow.

The future is of course Internet, but not only: among those involvedin e-commerce, except rare cases, only the companies with a“cross-channel” model are economically viable at the moment dueto fierce competition. Distributors with a network of shops wantsynergy between their distribution channels with, for example, shopdelivery (Click and Collect), whereas pure players envisage creatingtheir own network or going into partnership. Everyone is lookingfor a solution with high added value to improve the quality of theirservice while remaining competitive. The key is having strong, reliable processes that can cope withseasonal peaks and fast annual activity growth, often with twofigures. Many of FM Logistic’s customers are now engaged in theway of cross-channel. With expertise in managing complex logisticplans and in-depth customer knowledge, FM Logistic has integrateddemands in terms of mixed distribution network supply chain, inorder to optimise logistics’ performance right through to the endconsumer. We provide the best solutions to cross-channel logistics

challenges from warehousing to distribution through well adaptedIT, technical and human resources. It’s the case today for Yves Rocher,Oriflame, L’Oréal, Nespresso, Natura, Nestlé Dolce Gusto, as well asFerrero, Severa, Eugene Perma and Brother. In 2014 cross-channelrepresented 10 % of FM Logistic’s turnover. We are now veryinvolved with our customers’ overall distribution networktransformation. As a group, we are doing our utmost to significantlyincrease cross-channel operations in 2015 and 2016.

All your distribution channels A single platform Delivery according to consumer choice

Store

Shared and customizedsolution

Pickup point

In-store pickup

Home

On-line



INNOVATION STRATEGY

A new organisation to invent the future

In October 2014, FM Logistic decided to split “solutions” directioninto two entities: Innovation direction, lead by Pablo Gomez, workson long-term projects to prepare for the future while OperationsSupport direction, lead by Olivier Faure, optimises customer serviceon a day to day basis. This major change in FM Logistic’sorganisation is in line with our long-term vision as well as permanentvalue creation for our customers today and tomorrow. Effectively,in a market where logistics is often considered a service, the bestway to stand out form the crowd is through innovation, to createvalue and share it with customers.

As a pillar of the continuous improvement, the new Innovationdirection structures FM Logistic’s approach in this area and has twomissions :

• developing a range of innovating short and long-term offersand guaranteeing their implementation in the field;

• coming up with 4 technological innovations each year that can be industrialised in our countries and managing 2 co-developed innovations.

Innovation direction is in charge of setting up an idea managementsystem and an innovation selection committee over the next fewmonths. It will also implement collaborative intranet for innovation.During the first half of the year, teams will work with customers andprospects to identify their needs. Then, FM Logistic’s executivecommittee will select the offers to be implemented according to theiradded value potential. An FM Logistic Innovation Day will beorganised at the end of the year: theorists and practitioners willidentify new customer expectations in terms of informationtechnology. In 2015 and 2016, Innovation direction will use the newtechnologies selected, like automatic vision, to optimise quay andinventory management and will co-animate two training courseswith “l’Ecole Supérieure des Sciences Economiques et Commerciales”(ESSEC) (French graduate school) on the subject of : “Connectedobjects : what are the impacts on the supply chain ?”.

The 3 innovation principles at FM Logistic

Based on the Blue Ocean Strategy approach (BOS), FM Logistic’s innovation process comprises 3 principles:

1/ Don’t do it better than the competition, do it differently

2/ Take an interest in non-customers

3/ Draw inspiration from other industries


CO-DEVELOPMENT STRATEGIES FOR INNOVATION

Innovations that make the difference: the evidence speaks for itself

Embedded scanner: an asset for traceability

Managing traceability is one of the key process in terms ofoperational excellence in logistics. In partnership with DATALOGIC,specialist in automatic data collection and automation, and JAMFrance, automatic identification and traceability solutions integrator,FM Logistic has developed a new concept for its customer Unilever:the embedded scanner for forklift trucks. This solution makes workstations more ergonomic and improves productivity in identification.It replaces the normal barcode reader, which is used manually, by anautomatic barcode reader attached to the forklift. FM Logistic canuse this "Plug & Play"-type system for automatic pallet scanning onall of its sites. This progress makes working conditions safer and morecomfortable as well as profiting customers with whom the Groupshares the gain in productivity.

Put to Light: an end to order errors

To optimise pickers’ movement time in the warehouse, especially forsmall orders, a system of picking multi-order (PMO) or multi-supportis often used. It is a complex system that can cause quality issues: aproduct is placed on the wrong support and a wrong order is sent.To guarantee perfect service, FM Logistic and Balea (industrialcontrol system specialist and partner since 2009) have developed“Put to light”: an innovation that can equip any type of forklift,combining adaptability, flexibility and ergonomics for higher quality,higher productivity and more operating comfort.

Scan this QR Code to view the “put to light” innovation

Scan this QR Code to view the embedded scanner film



Solea: perfectly controlled quality

Providing a high quality service at a low price is a challenge:controlling everything increases the price and sampling cannotguarantee perfection. With the expertise of Balea in embeddedweighing systems and the collaboration of a customer, FM Logisticdeveloped Solea, a system that controls preparation conformity,in real time, by checking the weight. Solea was first implementedin 2010 for unit picking and has increased productivity by 25 %.Following this achievement, FM Logistic decided to use the systemfor parcel picking. “We have identified 30 priority activities whereSolea can provide added value, so we plan to invest 1.5 millioneuros in its implementation in 2015. This mature and industrialisedsystem concerns all our business sectors and all countries” explainsJean-Marc Tolini, FM Logistic’s Continuous Improvement manager.

Brazil: forklift truck driver training simulator

FM Brazil in São Paulo acquired a new forklift truck driver trainingsimulator to improve operator performances. The simulator, whichcan be compared to a flight simulator, started its test phase inSeptember 2014. It uses a software developed by ZaxisTools whoare specialised in new technologies for distribution centres. Thesimulator senses the operator’s movements so they can learn theright way to drive the machine in a risk-free, virtual environment. Thisnew training scheme greatly contributes to fast and safe operations.

27FM Logistic – Rapport annuel – 31 mars 2015 27FM Logistic – Annual report – 31 March 2015

People are the pillarsof our commitments



Managing, developing and drawing talents to our company

Developing the professional skills of our workforce

It is the men and women of FM Logistic who fulfil our sustainable development commitmentsin the field. It is because they are our foundation that the Group wishes to develop their skillsthrough sustained internal training in all business activities, with an accent on the internationalaspect of management training courses given by FM University (FM Logistic’s internal trainingschool). A lot of initiatives were also launched in 2014 to enhance FM Logistic’s employer brandand attract future talents.

Because logistics is first and foremost a service, FM Logistic considertheir collaborators to be of utmost importance. Internal promotionsfill 2/3 of new decision-making positions and the Group integratesand trains around 2 000 members of staff every year from all countriesto accompany its growth. FM University provides high quality trainingprogrammes designed and adapted to specific job requirements. Thelatest new training programme that started in 2014 is “DestinationPlant Manager”, for future platform managers and a second sessionbegan in February 2015. During one year, 10 participants of 6nationalities have ten 2 to 3 day sessions which cover all aspects oftheir future position: operations, management, cooperating withsupport functions, etc. The success of this multi-cultural programmeillustrates the international mentality that FM Logistic aims to developin its top managers to accompany its growth.

FM University also provides an on-line staff training system for skillsupdates. In 2014, an internal group of training managers was set-up:they have regular workshops to share their experience. FM Logisticalso encourages communication between managers of differentdomains, notably through Management Days which are held everyyear, or events such as the Istanbul seminar which involved thecompany’s top 100 managers, in September 2014. Innovatingprogrammes are also launched for managers: in Spain, for example,teams take part in a serious game to develop group skills and creativity.

Management Day - November 2014



FM University in Russia: 2014 in figures

• 3 435 collaborators took part in 37 mandatory training courses

• 585 collaborators went on 151 recommended training courses

• 116 collaborators participated in personal development programmes.

Some of the new themes introduced and taught by members of the Group’s management team werefinance (for non-finance staff), quality, personal skill development, professional communication, etc.

Poland: training courses for “living” work better

In 2014, cooperation actions were launched with universities to develop logistics skills and ensureproper training for future managers. FM Poland is also involved with logistics graduate schools todiffuse our best practices. Internally, information and training are given in diverse areas such asfirst aid, medical prevention, sport coaching and nutrition. Lastly, an online training system wasimplemented for all collaborators.

To support growth, the Group integrates and trainsaround 2000 collaborators every year.“

”


Enhancing our employer brand to recruit and retain talents

In order to attract the best talents, FM Logistic started enhancing itsemployer brand image in 2014 by creating partnerships withspecialised graduate schools like “l’Institut polytechnique deGrenoble” (INP), in France, and becoming more visible on socialnetworks. An awareness campaign was launched with the theme “We are recruiting today the talents of tomorrow”. This is FM Logistic’s n° 1 HR challenge: recruiting future managers early todevelop a pool of talents and encourage internal promotion tosupport our Ambition 2022 strategic plan.Students are presented with our logistics career opportunities,professional training and the possibility to join the Group’s pool of talent. To attract graduates, our communication focuses on

FM Logistic’s success story, the trust of the biggest internationalbrands, the great human relations and the possibility of professionalexpertise within 18 months. The international aspect for managers isof course highlighted as well as training and promotion opportunities.Lastly, operational and support specialists are invited to join the teamsof FM Logistic: in a community that is ambitious, supportive anddeeply human they are guided through integration and have theopportunity to progress professionally.

Grenoble INP Institute of Technology and FM Logistic: a partnership for industry 4.0

Grenoble INP has been training engineers for over a century. At the beginning of the 1990s, several leading Frenchentrepreneurs decided to create a 6th school within this public institution which would specialised in industrial engineeringand place France at the forefront of this business. The founders are now part of the Industrial Club which constitutes its thinktank. Thanks to the Club, the programmes and business training provided by the school meet and anticipate the real needs ofindustry. Bernard Ruffieux, school director explains “Our general engineers are recognised as being among the best experts ininterface optimisation between flow of materials, of information and of diffusion. Logistics is therefore an integral part oftheir core business. Our approach has two components: the sustainable industrial development and the emergence of theindustry of the future also known as industry 4.0”.

Optimising industrial intelligence

The convergence of technologies is revolutionising industrial management. This is especially the case with 3D printing whichreduces raw material consumption, removes numerous design constraints and reshapes logistics by moving production closerto demand. “FM Logistic is a key player in this advancement because as well as meeting operational requirements, they aretransforming their customers’ manufacturing conditions and organisation right down to product design. FM Logistic is a keypartner to our school”, continues Bernard Ruffieux. “Some of our past students have decision-making positions in the Groupand for the past two years they have been part of the industrial Club which shapes our programmes. In March 2014, theindustrial Club met in Château-Thierry, at an FM Logistic platform, where industrialists and the school learnt about the Group’sbusiness and installations and discussed lean manufacturing. On the 1st October, Jean-Christophe Machet gave his inaugurallecture, in our great Babillon amphitheatre, to the new 2017 school year which he is sponsoring and is being named afterhim. He told his story, gave his vision of industry and highly stimulated our students with his dynamism. Together, we wantthis win-win partnership for both our school and FM Logistic to grow”.



Ensuring safety at work for our collaborators

There are risks involved in logistics and its jobs that have to becontrolled to ensure work safety. In 2014, FM Logistic continuedeverywhere their awareness campaign on following rules andcontinuous improvement by regularly reviewing objectives. The mainmessage given at all levels: safety concerns everyone. FM Logistic’sSafety Programme includes “Safety Law” which includes theregulations common to all countries and “Safety First Attitude”which aims to change the behaviour of managers and collaborators.Also included are evaluation plans for professional risks, accidentsat work monitoring and analysis and the quality of the workingenvironment. The monitoring indicators show that the efforts madein 2014 have paid off in most countries.

Lastly, a road safety awareness day was organised for staff at thehead office in Phalsbourg, France, where the car is one of the mainmeans of transport: in partnership with firemen and the FNATH (anassociation for accident victims, the handicapped and the ill),participants learnt how difficult it is to control a car in certainsituations and the consequences of an accident.

France: encouraging results in 2014 in terms of safetyat work

FM France implemented a safety challenge on all sites andin all businesses (from co-packing to transportation).Objective: to make progress on each site through 4 levels.All members of staff were actively involved in this projectgreatly strengthening the reduction-of-accidents-at-workapproach. FM France has also recruited an ergonomist tooptimise work stations and organisation. Together withsocial partners, we want to not only reduce hazardousworking conditions but prevent them.

High standards everywhere: giving all our membersof staff access to a health system

After analysis of practices in all of our countries, the Group’shuman resources team started working on equal healthcover for all collaborators. This commitment contributes totheir integration and their well-being as well as promotingbest practices and good working conditions in the Group.

Scan this code for work safetyawareness at FM Logistic


Putting the environmentat the heart of our development



Saving on resourcesto preserve the future

Reducing our carbon footprint

In 2014, FM Logistic intensified communication actions to raise awareness regardingenvironmental performance. The management team lead the initiative but our countries arethe cornerstone and the ones involved. A 3-minute film was made and broadcast everywhereon “Committed to a sustainable supply chain”. It testifies of FM Logistic’s aim to place theenvironment at the heart of development by associating economic performance with anenvironmentally-friendly approach. This standard means reducing our carbon footprint,reducing energy consumption and developing green offers for customers.

It is mainly transport that affects FM Logistic’s carbon footprint. Withthe invention of pooling, it has been proven that economic gain canbe synonymous with environmental benefits: it is a concept thatreduces greenhouse gases emissions by 35 % (ECR/Ademe 2009).However, optimising truck rotation and filling rate is not enough initself: drivers must be encouraged to eco-drive. In 2014, the Groupcontinued programmes launched with sub-contractors that aim toimprove profitability while reducing CO² emissions.All countries are actively involved in this initiative. In the Czechrepublic, FM Logistic launched a pilot project using electric vehicles

in the urban area of Prague. In Spain, FM Logistic has a truck thatruns on liquid natural gas. It is now in its test phase with a customer.The objective of the project is the deployement of a green fleet. InFrance, all vehicles comply with the “Euro 5” standard: they emit40 % less nitrogen oxide than the “Euro 4”. This year, FM Francehas continued optimising transport through pooling centres withthe aim of reducing emissions. In Italy, FM Logistic has designedCityLogin in partnership with the transporter Mag-Di. CityLogin isan ecological solution for the last kilometre of delivery.

Pooling reduces greenhouse gases emissions by 35 %. “ ”View the Citylogin film:initiative for the last kilometre of delivery



Decreasing energy consumption

Developing green offers for our customers

In all countries where FM Logistic operates, we continue encouraginginitiatives for reducing energy consumption. In Slovakia, LED lightingis used to optimise working conditions, improve productivity whilereducing electricity consumption by 35 %. In Russia, the Dmitrovplatform is just about to get the LEED certification (Leadership inEnergy and Environmental Design). At all platforms around Moscow,paper is recycled and office supplies have been replaced by eco-products. In France, FM Logistic has also obtained the “NFHQE™ Bâtiments Tertiaires” (French standard for high environmental

quality buildings) certification for the design phase of their 28th

platform in Entraigues-sur-la-Sorgue, near Avignon, France. CERTIVEA(leading French independent organisation for environmentalcertifications of sustainable non-residential buildings and territories)has awarded the site with the “Excellent” level. Effectively, it meetsthe highest sustainable building standards in terms of energy,environment, health and working comfort. Eventually, the site will have a capacity of 7 million parcels prepared a year and over300 000 pallets dispatched.

In order to create value in our customers’ logistics chain, FM Logisticis working on innovating green services that come up to theirexpectations in terms of sustainable development. With the e-business, the “final kilometre” has become of major strategicimportance for distributors. With direct or shop delivery, theproducts must be available at all times. However, with urban logisticsthe challenge is to minimise the carbon footprint: having full truckson arrival but also when leaving town. That’s why FM Logistic hasdesigned CityLogin in partnership with the Italian transporterMag-Di, as an ecological solution to the last kilometre of delivery.

It has been implemented in Rome’s historical centre with electric orhybrid vehicles and logistics optimisation through a powerful,specially designed software. The CityLogin internet site provides areservation service for electric minivans that can be shared, withreserved parking and delivery areas.

3 sustainable development commitments

Three indicators are closely monitored every quarter by themanagement in order to validate our commitments:

• Energy consumption / turnover ratio, with a target of 3 % reduction per year (the Group reached andovertook this by January 2014),

• CO² emissions / turnover ratio for transport, with thesame target of 3 % per year,

• the percentage of LTIFR (Lost Time Injury Frequency Rate)with a 0.2 % objective for 2022.


Supporting the local economy



Collaborators involvedin their local community

Developing support to local causes

For FM Logistic, people are what count the most in the company. All collaborators are encouragedto get involved in supporting the local economy and community. This involvement includes helpingcommunities in difficulty and professional insertion for the handicapped and disadvantaged.

FM Logistic advocates skills sponsorship in all of our countries. Thatmeans occasionally allowing staff members to do volunteer workfor an NGO or a cultural, social, environmental or humanitariancharity. This year, staff members from the head office have donatedtheir time to the NGO “Anne-Marie Sœur du Monde”, notably tohelp design their internet site. In Russia, collaborators from the Stupinosite planted over one hundred trees and bushes on 29 October lastyear in a fight against deforestation.

In 2014, all of our countries took part in projects of social interest. InFrance, for example, containers were put on all the sites to collect forthe “Secours Populaire” charity. Logistics support was given to the“Restos du Cœur” charity who had lost one of their warehouses

through fire. In Romania, FM Logistic helped the “Frères d’Europe”(Emmaüs) association with the support of international transport todeliver the French donations. FM Ukraine also continued their charityprogramme “From Heart to Heart”, supporting the orphanage Nadia.

Lastly, in September 2014, the Group joined “Alliance 4 Youth”which is a Nestlé project in favour of youth employment in Europewhich now unites over 200 companies. The objective is to helpcreate 100 000 career opportunities for our young people who areup against an unprecedented unemployment rate all across Europe.The idea is to create jobs while encouraging public authorities totake the requirements of the market into account when training ouryouth, to prepare them better for a professional life.



Promoting professional opportunities for the disadvantaged

To reward initiatives taken by managers towards the professionalinsertion of disadvantaged people, FM Logistic has introduced aspecial Sustainable Development award. The Spanish programme,Blue Hearts, won in 2014 for the human pyramids that the teamsformed with handicapped people. These pyramids are a localtradition symbolising fraternity. As part of the Blue Heartsprogramme, all the FM Spain managers also gave their time duringthe year to cultivate vines, harvest grapes and produce wine to helpa sector strongly affected by the economic crisis.

In 2014, FM Brazil got involved with the APAE association. Thisassociation was founded in 1954 for Down’s syndrome sufferers.They decided to recruit volunteers from their collaborators to helpthe volunteers that work for the charity. In the Czech Republic, FM Logistic was the main partner, as they are every year, to theAdvent concert organised by the students and professors of the Jan Deyl conservatoire in aid of the Leontika foundation for the blind.

Last December, FM Logistic Ukraine worked with a local associationcalled UTOG. This association founded in 1933, helps people withdwarfism find jobs and lead lives like everyone else. 10 such peoplewere integrated into the Reckitt Benckiser project. The quality ofservice provided by the team was appreciated right through to thecustomer. The initiative will be repeated.



Getting involved in societal projects

FM Logistic participated in numerous societal projects. In France, inApril 2014, the Ressons-sur-Matz platform, in the Oise (France), tookpart in a European Logistics day organised by the French supplychain and logistics association (Aslog), to attract new talents in thissector. Students and graduates were able to visit FM Logistic’s firstnew generation platform built in 2011, HQE certified and HighlyProtected List (HPR) labelled. The Group was also chosen by “Pôleemploi” (French governmental employment agency) to make a filmabout logistics, the different jobs and career opportunities. Thefilming was done at the Longueil-Sainte-Marie platform with Jean-Philippe Labaronne (FM France HR Director) presenting the keyfigures and Eddy Kaminsky demonstrating the job of forklift truckdriver. The film has been online on the www.pole-emploi.fr websitesince last March.

The Group also encourages collaboration with schools. Through ourpartnership with “EM Strasbourg” (graduate business school), 25students from Florida came to the Brumath platform at the beginningof the year. As part of their MBA, these students, who are specialisedin sustainable development and Corporate social responsibility, areencouraged to visit international companies. In addition to theBrumath platform, they were given a presentation by Daniel Ciz(Group finance director) about the Group, and Gwladys Beckerpresented our sustainable development approach. There have beennumerous similar projects with FM Logistic partner schools (ESSEC,ENSAM, ESCP, NEOMA BUSINESS, INP Grenoble, université deNantes, etc.) involving Master Degree students specialised in logisticsand supply chain management, in international logistics andindustrial engineering.


Financial information


Consolidated balance sheet


FINANCIAL INFORMATION

ASSETS (in k€) 31.03.2015 31.03.2014

Goodwill 40 587 44 685

Intangible assets 9 922 7 675

Property, plant and equipment 143 308 165 684

Financial assets: 28 481 34 990

- Non-consolidated shares 158 292

- Other financial assets 28 323 34 698

FIXED ASSETS 222 298 253 034

Inventories 7 089 7 175

Trade receivables and related accounts 165 031 165 465

Prepayments for current assets 10 052 12 701

Tax and social receivables 14 027 13 334

Current accounts (debit) 5 227 3 355

Other receivables 1 906 1 184

Deferred tax assets 4 420 4 001

Prepaid expenses 4 443 5 088

Cash and cash equivalents 104 089 74 514

CURRENT ASSETS 316 284 286 815

TOTAL ASSETS 538 582 539 848


LIABILITIES (in k€) 31.03.2015 31.03.2014

Share capital 42 880 42 880

Premiums and reserves 85 943 77 653

Profit for the period 10 260 12 844

Foreign currency translation adjustment -32 187 -19 483

SHAREHOLDERS’ EQUITY - GROUP SHARE 106 897 113 893

Minority interests 0 0

TOTAL EQUITY 106 897 113 893

PROVISIONS FOR RISKS AND CHARGES 25 110 20 821

DEFERRED TAX LIABILITIES 4 772 5 322

Borrowings and other financial liabilities 160 278 159 851

Bank overdraft 3 242 16 656

FINANCIAL LIABILITIES 163 520 176 508

Trade payables and related accounts 126 753 113 098

Advance payments from third parties 1 898 931

Tax and social liabilities 93 757 90 402

Current accounts (credit) 134 83

Other liabilities 12 736 17 838

Deferred income 3 005 953

CURRENT LIABILITIES 238 283 223 304

TOTAL LIABILITIES 538 582 539 848

Consolidated income statement


FINANCIAL INFORMATION

(in k€) 31.03.2015 31.03.2014

TURNOVER* 1 066 436 1 042 655

Write-back of provisions and depreciations 1 407 2 053Other operating income 5 278 7 334

TOTAL OPERATING INCOME 1 073 121 1 052 041

Purchases 70 008 72 258External services 474 067 462 332Other external services 118 109 107 515Taxes, levies and similar payments 13 503 17 563Staff costs 316 915 318 427Allowances for depreciation and provisions 34 906 32 104Other operating expenses 6 179 5 397

TOTAL OPERATING EXPENSES 1 033 688 1 015 596

OPERATING PROFIT* 39 432 36 445

Financial profit/(loss) -11 261 -8 925Exceptional profit/(loss) -3 146 -3 984

PROFIT BEFORE INCOME TAX 25 025 23 536

Employee profit-sharing -1 536 -298Income tax -11 673 -8 604Deferred tax 1 351 809Goodwill amortisation allowance -2 908 -2 600

PROFIT/LOSS FOR THE PERIOD* 10 260 12 842

Attributable to:

- Minority interests 0 -1- Group share 10 260 12 844- Earnings per share (in €) 2.9 3.7- Diluted earnings per share (in €) 2.9 3.7

* Evolution of the main items at constant exchange rates

(in k€) 31.03.2015 At constant rates Foreign exchangeeffects

Turnover 1 066 436 1 148 535 -82 099

Evolution vs. 31.03.14 2.3 % 10.2 % -7.9 %

Operating profit 39 432 44 068 -4 636

Evolution vs. 31.03.14 8.2 % 20.9 % -12.7 %

Profit / loss for the period 10 260 17 596 -7 336

Evolution vs. 31.03.14 -20.1 % 37.0 % -57.1 %

Consolidated cash flow statement

Comments:

In conformance with the Regl. 99-02, restatements at the time of contract signature of financial leases are not presented in Consolidated cashflow statement in so far as they do not generate any cash flow. For information, the value of financial leases signed during the financial yearin the various consolidated companies of the FM Logistic Group is of € 11 952k (impact on the increase of gross values and of borrowings fromcredit institutions).

Therefore, these contracts should be accounted for during the comparison of the Consolidated cash flow statement and the different statementsof movements in the notes to the consolidated financial statements.


(in k€) 31.03.2015 31.03.2014

OPERATING ACTIVITIES NET PROFIT/LOSS - GROUP SHARE 10 260 12 844Profit for the period attributable to minority interests 0 -1

Adjustment for:

- Depreciation, amortisation and provisions 40 705 36 213

- Gains and losses on disposal of fixed assets -2 252 1 285

- Deferred tax expenses -1 351 -809

- Unrealized foreign exchange gains / losses 2 334 2 466

- Deferred charges 0 -1 653

- Grants 0 0

CASH FLOW GENERATED BY THE ACTIVITY 49 695 50 345Change in trade current assets and liabilities 18 782 15 275

- Change in inventories -81 -195

- Change in trade receivables -11 207 -3 193

- Change in trade payables 30 070 18 663

Change in non-trade current assets and liabilities -2 835 753

CHANGE IN WORKING CAPITAL REQUIREMENT 15 947 16 028NET CASH FROM OPERATING ACTIVITIES 65 642 66 372

INVESTMENT ACTIVITIES Payment/acquisition of intangible assets -4 671 -3 408

Payment/acquisition of PPE -35 101 -25 992

Receipts/disposal of PPE and intangible assets 6 277 1 825

Payment/acquisition of financial assets -2 487 -1 514

Receipts/disposal of financial assets 8 433 2 645

Net cash/acquisition and disposal of subsidiaries 29 005 -76 109

NET CASH FROM INVESTMENT ACTIVITIES 1 455 -102 554

FINANCING ACTIVITIES Increase in capital 0 0

Dividends paid to parent company shareholders -4 558 0

Cash from borrowings 34 861 103 382

Repayments of borrowings -46 494 -31 626

NET CASH FROM FINANCING ACTIVITIES -16 191 71 755

VARIATION IN CASH AND CASH EQUIVALENTS BEFORE EXCHANGE RATE FLUCTUATIONS 50 906 35 574Net effect of exchange rate fluctuations -7 917 -6 137

CASH AND CASH EQUIVALENTS AT THE OPENING 57 858 28 420CASH AND CASH EQUIVALENTS AT THE CLOSING 100 846 57 858

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