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Interim financial report
Fiscal year 2012 - 1 January to 30 June 2012
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
2 2012 interim financial report | Naturex S.A
CONTENTS
Responsibility statement 03
Interim management report
05
Consolidated financial statements and notes at 30 June 2012
54
Auditors' report
109
Translation disclaimer: This is a free translation into English of the original French language version of the interim financial report (rapport financier semestriel) provided solely for the convenience of English speaking. This report should consequently be read in conjunction with, and construed in accordance with French law and French generally accepted accounting principles. While all possible care has been taken to ensure that this translation is an accurate representation of the original French document, this English version has not been audited by the company’s statutory auditors and in all matters of interpretation of information, views or opinions expressed therein, only the original language version of the document in French is legally binding. As such, the translation may not be relied upon to sustain any legal claim, nor be used as the basis of any legal opinion and the Naturex expressly disclaims all liability for any inaccuracy herein
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 3
RESPONSIBILITY STATEMENT
I. Person making the responsibility statement
Vice-Chairman of the Board of Directors and Chief Executive Officer
Thierry Lambert
Date of appointment
8 June 2012
Expiry date for term of office
General meeting voting on the financial statements for the period ending 31 December 2017
II. Responsibility statement
"To the best of my knowledge, and in accordance with applicable reporting principles for interim financial reporting, the condensed interim consolidated financial statements of the Company and all consolidated operations provide a fair view of its assets and liabilities, financial position and earnings, and the interim management report provides a fair view of material events of the first six months, their impact on the interim financial statements, the main transactions with related parties and as well as a description of the key risks and uncertainties for the remaining six months." 30 August 2012 Thierry Lambert Vice Chairman and Chief Executive Officer
The interim financial report including in particular the consolidated financial statements at 30 June
2012 and the notes thereto as well as the half-year management report was presented to the Audit
Committee on 30 August 2012 and approved by the meeting of the Company's Board of Directors on
this same date.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
4 2012 interim financial report | Naturex S.A
III. Financial information
Responsibility for financial information
Thierry Lambert
Chief Executive Officer
Telephone: +33 (0)4 90 23 96 89
E-mail: [email protected]
Financial communications / Investor Relations:
Carole Alexandre
Telephone: +33 (0)4 90 23 96 89
E-mail: [email protected]
The memorandum and the articles of association of Naturex S.A. as well as all of the legal documents
and the historical financial information for prior periods can be consulted at the Company's head
office:
Pôle Technologique d’Agroparc – BP 1218 – 84 911 Avignon Cedex 09 – France
All press leases and documents published by Naturex Group are also available to public at the
website www.naturex.com.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 5
INTERIM MANAGEMENT REPORT
Contents
PRESENTATION OF NATUREX ........................................................................................................................... 6
I. HALF-YEAR OPERATING HIGHLIGHTS .................................................................................................. 7
II. ANALYSIS OF FIRST-HALF RESULTS .................................................................................................... 13
III. MAIN RELATED PARTY TRANSACTIONS ............................................................................................. 27
IV. CORPORATE GOVERNANCE ............................................................................................................... 28
V. INFORMATION ON THE SHARE CAPITAL ............................................................................................ 33
VI. SHAREHOLDER INFORMATION.......................................................................................................... 49
VII. PRINCIPAL RISKS AND UNCERTAINTIES FOR THE REMAINING SIX MONTHS OF 2012 ........................ 52
VIII. OUTLOOK AND TRENDS .................................................................................................................... 53
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
6 2012 interim financial report | Naturex S.A
PRESENTATION OF NATUREX
Naturex is the global leader in speciality plant-based natural ingredients.
Naturex produces and sells speciality plant-based ingredients for the food, nutraceutical,
pharmaceutical and cosmetics industries.
Naturex's strength is in knowing how to develop genuine expertise on specific products that form
market niches that enables it provide customers with customised solutions fully compliant with
regulatory standards.
For many years now, Naturex's strategy has revolved around two aspects, sustained organic growth
and constant external growth, as such positioning itself as the world leader in the speciality plant-
based ingredients market.
This strategy has allowed Naturex to increase its size substantially by multiplying its revenue by
twenty over the last ten years, which gives it recognised know-how and legitimacy in integrating
companies or branches of activity and in creating value.
The success of Naturex is based on a proven economic model, of which the main engines are:
- A high degree of expertise in the sourcing of raw materials in more than 50 countries around
the world;
- Quality-certified high-performance industrial resources across its 15 industrial sites in Europe
(France, Italy, Spain, United Kingdom, Switzerland, Poland), in Morocco, the United States,
Brazil, Australia and India;
- A sustained Research & Development program;
- A product offering with high value added, segmented around three complementary markets
(Food & Beverage, Nutrition & Health, Personal Care);
- A fully dedicated sales network in 21 countries (France, Italy, Spain, Morocco, United
Kingdom, Belgium, Germany, Poland, Russia, UAE, Thailand, Singapore, Japan, China, South
Korea, Australia, United States, Canada, Brazil, Mexico, India).
In addition, Naturex enjoys the highly favourable underlying trend linked to increasing worldwide
demand, including in the emerging countries, for healthy natural-origin products, supported by
stricter and stricter regulations in this area.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 7
I. Half-year operating highlights
The forward momentum of 2011 continued under the combined effects of a reinforced structure, an
expanded product range and commercial synergies. These factors contributed to the performances
of the three markets (Food & Beverage, Nutrition & Health and Personal Care) and all geographical
regions with a noteworthy acceleration of growth in the emerging countries.
In parallel, the successful capital increase launched on 4 October 2011 raised €48.8 million. Its
primary objective was to provide financing for a new phase of external growth within a strategy for
development combining both sustained organic growth and acquisitions with potential for promising
synergies. The first acquisition was completed at the end of October 2011 (Burgundy in France and
Spain- see below).
The 2012 first half was devoted to pursuing this program of external growth and integrating the
acquired companies.
Pursuing this strategy for development will allow Naturex to strengthen its industrial base,
particularly in emerging countries, ramp up its global commercial network for increased synergies
and proximity with local customers and expand its range of innovative high value added ingredients.
A strengthened industrial base
Integration of Burgundy, the first acquisition of the program completed in October 2011
The first acquisition was made at the end of October 2011 in the same month as the capital increase.
Naturex announced the acquisition of Burgundy Botanical Extracts, a French manufacturer and
supplier of plant extracts for the nutraceutical, pharmaceutical and cosmetics industries.
This acquisition strengthened Naturex's industrial base by adding two new high quality
pharmaceutical production sites (France and Spain) with significant capacity for extraction,
purification and drying operations. This acquisition also offered Naturex additional expertise in
certain purified active ingredients and titrated extracts (raisin-seed, liquorice …), as well as an
expanded offering to accelerate sales growth in the pharmaceutical and personal care product
markets.
The integration process, well advanced at the end of 2011, continued in early 2012 has already
significantly contributed to reducing committed fixed costs (integration of teams, a simplified merger
procedure - transmission universelle de patrimoine/TUP with Naturex S.A at 1 January 2012) and
completion of the industrial extension of the French manufacturing site of Reyssouze.
Acquisition of Pektowin in Poland
Naturex announced in January 2012 the acquisition of 100% of the capital of Pektowin, a Polish
company specialised in fruit and vegetable pectins and concentrated juices.
Created in 1963, Pektowin is a Polish company based in Jaslo on a ground of 20 hectares, located in
south-eastern Poland, rich in fruit and vegetable crops.
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8 2012 interim financial report | Naturex S.A
The company employs nearly 320 people and generated €12.5 million in revenue in FY2011,
distributed as follows:
- A main activity (about 67% of revenue) with a historical know-how and a polyvalent industrial
tool for the production of pectins (apples and citrus) and fruit and vegetable juice concentrates
(apples, red beets, black radishes, etc.);
- Secondary activities (about 33% of revenue) dedicated mostly to the preparation of processed
food products (fruit wines, canned goods, etc.), for the Polish distribution sector.
The customer base from the main activity is comprised of national and international actors of the
Polish food industry (58% of sales) but also European (36% of sales) with a noteworthy presence in
Eastern Europe, and Russian (6% of sales).
The acquisition of Pektowin represents a real strategic interest for Naturex on the industrial side,
allowing on the one hand to double its pectin production capacity, as a complement to the Swiss
factory in Bischofszell, and on the other hand to acquire a new production tool in the field of juice
concentrates.
Naturex will indeed develop a full range of fruit and vegetable concentrates in order:
- To integrate partly the supply of raw materials for its production facilities in fruit and vegetable
powders;
- To meet the needs and support the development of its new range of colours, Vegebrite ™ (new
offering of "Colouring Foodstuffs");
- To offer all its customers a complete range of fruit and vegetable juice concentrates.
At the same time, the commercial location of Naturex in Warsaw (Poland) and the current
penetration of Pektowin in the Polish food industry will significantly strengthen the presence of the
Group in Eastern Europe with a broader customer base, and encourage locally the promotion and the
marketing of all its product lines.
This acquisition is an important milestone in Naturex's development as a strategic opening into
Eastern Europe countries which offer an excellent sales outlook for all of product ranges.
To date, Pektowin's integration is proceeding well for the main activities while measures are also
underway for the Group's exit of secondary activities.
The Installation of a specialised line for juice concentrates should permit this activity to be launched
in the second half of 2012
Acquisition of Valentine in India
On 21 March 2012, Naturex announced the acquisition of Valentine, an Indian company specialised
in the production of fruit and vegetable powders and natural colours for the food processing
industry.
Valentine has two production sites located near Mumbai and is among the main Indian players in the
fruit and vegetable powders and natural colours market.
Thanks to its expertise in formulation and spray drying processes, Valentine has been able to win
over the years the loyalty of a high-quality customer base within the Indian food industry, comprised
of local companies as well as subsidiaries of multinationals.
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Naturex S.A | 2012 interim financial report 9
Valentine, which has had a growth rate of 30% per year over the last two years, employs about fifty
people.
This acquisition constitutes a strategic point of entry in a country with 1.2 billion inhabitants with a
GDP per inhabitant of 3,700 USD ranking in consequence as the world's fourth-largest economy1. In
addition, the substantial development of a young and urban middle class for which the consumption
codes are largely influenced by western culture, represents genuine opportunities for growth in the
Indian food industry.
Carrying out this operation offers major strategic advantages to Naturex by allowing it:
- To become a local producer in India in order to strengthen its penetration in a market enjoying
high growth, as the image of the local producer is an important factor of success in Naturex's
business. This first industrial set-up in Asia will supplement the Group's regional production
centres in Europe and in the Americas, in particular for natural colours;
- To ensure promotion for all of the Group's product ranges while benefiting from the existing
commercial structure and to develop close relations with the Indian food industry.
At the same time, Naturex set up a purchasing office, like the one created in China a few years ago, in
order to better benefit from the wealth of the country's raw materials (herbs, spices, plant extracts,
etc.) at the scale of the Group.
Valentine's integration is in progress and, with no major problems expected, it represents a
profitable company with a very attractive customer base.
An offering of high value-added products
The acquisitions made by Naturex as part of its development strategy have enabled it to enhance its
product ranges and also to acquire specific knowledge and additional know-how on a plant, an
extract, a production process, etc.
- Accordingly, the integration of the Natraceutical Group’s Ingredients Division over 2010 allowed
Naturex to enhance its product portfolio with a range of fruit and vegetable powders, fruit
pectins, natural colourings, yeasts and Talin® (thaumatococcus daniellii). Talin® received the
“Best Innovative Stevia Product 2010” award at the Malta 2010 Conference on Stevia (natural
sweetener).
- In the same way, the Burgundy acquisition in October 2011 provided Naturex with additional
technical know-how on certain purified active principles and titrated extracts (grape seeds and
liquorice). In May 2012, at the Salon Vitafood held in Geneva, Naturex was granted a prize in the
category “Most Innovative Ingredient” for Utirose™ an active ingredient originating from the
Burgundy product portfolio (a hibiscus flower extract to reduce the frequency of urinary
infections) and developed and integrated within its NAT life™ range.
- Also, the acquisition completed in 2012 in Poland (Pektowin) will contribute to offering a
complete range of fruit and vegetable juice concentrates and developing a range of fruit and
vegetable powders and natural colours by partially integrating the sourcing of raw materials.
1 GDP per inhabitant in parity with purchasing power. Ranking after the United States, China and Japan. Source: Statistiques-mondiales.com
Interim financial report
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10 2012 interim financial report | Naturex S.A
- Finally, the acquisition Valentine in India, specialised in the production of fruit and vegetable
powders and natural colours, will provide the entire Group with the benefits of local sourcing in
this country for raw materials.
In this way, this expanded product offering, combined with the scientific and technical expertise of
Naturex teams, provide a means for proposing very high quality natural ingredients with significant
scientific potential (health claims, clinical studies, etc.) and innovative applications adapted to
customer expectations.
Robust expansion of commercial coverage
Boosted by an industrial and commercial positioning that has been strengthened since 2010
following the integration of the Ingredients Division of Natraceutical, in 2011 Naturex continued to
develop its commercial network with the opening of four new commercial offices in South Korea,
Japan, Canada and Mexico.
In the 2012 first half, this network was further expanded with the addition of three new locations:
- In Morocco (Casablanca) to meet growing local demand and supplementing the manufacturing
base operating in this country since Naturex's creation;
- In Poland (Warsaw) to reap the benefits of Pektowin's current penetration of the Polish food
industry and significantly strengthen the Group's presence in Eastern Europe with a broader
customer base, making it possible to promote and market all the Group's product lines.
- In India (Bombay), where Naturex already has an existing commercial base from the acquisition
of Valentine, in order to build local relations with the food processing industry and strengthen its
penetration in the rapidly growing Indian market through its local presence.
At 30 June 2012, Naturex was present on all five continents through a fully integrated sales network
covering 21 countries (France, Italy, Spain, Morocco, United Kingdom, Belgium, Germany, Poland,
Russia, UAE, Thailand, Singapore, Japan, China, South Korea, Australia, United States, Canada, Brazil,
Mexico, India).
This expanded geographical presence offers the Group major competitive strengths for:
- Growth in size and visibility;
- Strengthening relations with Naturex's customers throughout the world;
- Developing platforms for commercial growth near the main production sites;
- Penetration in selected markets through a local presence.
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Naturex S.A | 2012 interim financial report 11
A balanced regional mix between developed and emerging countries
Shingle Springs
South Hackensack
Milan
Avignon
Singapore
Shanghai
Tokyo
Birmingham
Brussels
Köln
Production facilities
Sales offices
Manaus
Sao Paulo
Sydney
Valence
Dubai
Moscow
Bischofszell
and Burgdorf
Casablanca
Bangkok
Seoul
Toronto
Mexico
Palafolls
Reyssouze
New acquisitions
Jaslo and
Warsaw
Mumbai
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
12 2012 interim financial report | Naturex S.A
Legal structure (30 June 2012)
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 13
II. Analysis of first-half results
Very positive first-half momentum
Sales growth of 15.0%
€000s IFRS Unaudited data
Fiscal 2012 Fiscal 2011 Change (%) Change (%) at constant
exchange rates
Q1 73,473 64,021 +14.8% +12.6%
Q2 73,684 63,904 +15.3% +9.6%
H1 revenue 147,157 127,925 +15.0% +11.1%
Consolidated revenue for the 2012 first half amounted to €147.2 million, up 15.0% compared to last
year's same period.
Activity in this period reflects strong organic growth that remained on track over both quarters
through a perfectly targeted offering and robust sales momentum despite a weaker economic
environment, especially in Europe.
The impact of changes in Group structure (about 6.3%) confirms the positive contribution of newly
acquired companies (Burgundy, Pektowin, Valentine), though noting however that because Naturex's
acquisitions are all to be fully consolidated, this information will no longer be relevant starting in the
second half of the financial period.
Finally, the 3.9% exchange rate effect reflects the favourable impact of the trends for certain
currencies, primarily the US dollar, compared to the 2011 first half.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
14 2012 interim financial report | Naturex S.A
64.1%
30.1%
1.8% 4.0%
Food & Beverage Nutrition & Health
Personal Care Toll & Miscellaneous
II.1 Analysis of revenue by business market and geographical region
Sustained growth across all markets
€000s IFRS Unaudited data
H1 FY 2012 H1 FY 2011*
Change (%)
Revenue mix (%)
Change (%)
at constant exchange
rates
Food & Beverage 94,309 85,561 +10.2% 64.1% +6.9%
Nutrition & Health 44,322 34,621 +28.0% 30.1% +22.2%
Personal Care 2,587 1,318 +96.3% 1.8% +90.2%
Miscellaneous and toll extraction 5,939 6,425 -7.6% 4.0% -8.8%
* The breakdown of the revenue over the 1st half of 2011 was restated in order to take into account the integration of the NAThealthy
range, for which the products are primarily intended for the food industry, in the Food & Beverage activity.
The three markets had sustained growth, driven by an expanded offering in solutions making it
possible to meet the expectations of manufacturers in terms of innovation, technical know-how and
quality.
- The Food & Beverage activity generated €94.3 million in revenue, up 10.2% and confirming
the market trends which are still very positive for natural ingredients;
- The Nutrition & Health activity had
revenues of €44.3 million, up 28.0%
thanks to the excellent performance
in the American market, especially
for the NATlife range (innovative
extracts that benefited from clinical
studies);
- Sales in the Personal Care activity
doubled over the half year, to €2.6
million from the contributions of a
more expanded range of plant
extracts and innovative agents,
especially through the integration of
Burgundy.
- The toll extraction activity got off to
a slower start-up in the first quarter
and recorded revenues of €5.9 million over the period. However its outlook is very good for the
second half of the financial year.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 15
49.9%
39.3%
10.7%
Europe / Africa Americas Asia / Pacific
Good performance in the three geographical regions
€000s IFRS Unaudited data
H1 FY 2012 H1 FY 2011
Change (%)
Revenue mix (%)
Change (%)
at constant exchange
rates
Europe/Africa 73,472 71,062 +3.4% 49.9% +2.2%
Americas 57,896 43,660 +32.6% 39.3% +24.9%
Asia/Pacific 15,789 13,203 +19.6% 10.7% +13.1%
All geographical regions grew over the period, despite a depressed economic situation and the
weakening consumption in Europe, confirming the strength of the sales network (21 offices)
worldwide and the contributions of local offices:
- The Europe / Africa region recorded
revenue of €73.5 million, up 3.4% and
represents nearly 50% of the Group's
sales;
- The Americas region grew 32.6% to €57.9
million in revenue, with a strong
contribution from North America and
accelerating growth in Latin America;
- The Asia / Pacific region has sales up 19.6%
at €15.8 million thanks to the recurring
activity in Australia and the progress of
sales in Asia.
The emerging markets in Eastern Europe, Latin
America, Africa and the Middle East form new
dynamic areas for growth and represent 15.2% of the Group's sales over the half year compared to
13.4% over the 2011 first half.
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FY 2012 (6-month period from 1 January to 30 June 2012)
16 2012 interim financial report | Naturex S.A
II.2 Analysis of consolidated results
Income statement
€ millions IFRS
H1 2012
H1 2011
Change (%)
FY 2011
Revenue 147.2 127.9 +15.0% 253.6
Gross margin 91.5 75.4 +24.1% 148.6
% gross margin 62.2% 59.0% 58.6%
Current operating income 17.9 16.0 +11.9% 30.1
% current operating margin 12.2% 12.5% 11.9%
Other non-current operating expenses (1.7) - - (1.6)
Other non-current operating income - - - -
Net operating income 16.2 16.0 +1.3% 28.5
% operating margin 11.0% 12.5% 11.3%
Net borrowing costs (2.4) (2.8) - (4.8)
Other financial income and expenses (0.6) 0.9 - 0.2
Income before tax 13.2 14.1 -6.4% 23.9
Tax expense (4.2) (4.4) - (8.3)
Net income, Group share 9.0 9.7 -7.2% 15.6
Net margin (%) 6.1% 7.6% 6.2%
Growth momentum for revenue over 2011 continued over the 2012 first half, under the combined effects of an enhanced product range through acquisitions and reinforced sales presence, despite a worsening economic situation, especially in Europe.
Consolidated sales in the 2012 first half amounted to €147.2 million, up 15% on last year's same period. This revenue includes a 6.3% impact from changes in the Group structure, confirming the positive contribution in the period from newly acquired companies (Burgundy, Pektowin, Valentine).
At constant exchange rates, sales grew 11.1%, in light of the favourable impact of the US dollar (with a 3.9% currency effect).
Despite expenditures incurred under the acquisition program and costs linked to the integration of newly added companies, Naturex benefits from positive operating drivers, confirming the quality and strength of its business model and the relevance of its positioning both in mature markets still active and emerging markets with high growth potential.
The consolidated gross margin amounted to €91.5 million, up 24.1% from the 2011 first half, outpacing growth in revenue.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 17
This performance reflects notably the change in the product mix towards increasingly high-value
added technical solutions and confirms that the slowdown in growth observed for the historical
Group structure, especially in Europe, has been concentrated among lower margin products.
The gross margin as a percentage of sales rose 3.2 points to 62.2% up from 59.0% at 30 June 2011.
Current operating income, up 11.9%, amounted to €17.9 million compared to €16.0 million over the
first half of the previous period. The current operating margin represents 12.2% of revenue
compared to 12.5% for the 2011 first half despite the very low contribution to the results of acquired
companies, especially Pektowin (consolidated on 1 January 2012) and Valentine (consolidated on 1
April 2012).
This includes a 13.2% increase in external charges linked to organic growth in business, and notably
transportation expenses, fees and marketing expenses relating to advertising costs and exhibitions at
trade fairs, travel expenses as well as operating and maintenance costs for laboratory and production
sites .
Most of Naturex's development expenditures do not meet the criteria for fixed assets provided for in
IAS 38, especially with regard to their future economic benefits. On this basis, €2.5 million were
expensed for the 2012 first half.
Staff costs were up 22% from last year' first half reflecting the strengthening of the sales structure in
international markets and the integration of acquisitions. These costs nevertheless have been kept
under control (19.9% of revenue compared with 18.1% in the 2011 first half).
Consolidated operating income for the 2012 first half stood at €16.2 million compared to €16.0
million for last year's same period and included €1.7 million in non-current operating expenses
primarily linked to:
- €1.2 million in acquisition fees recognised as expense in accordance with revised IFRS 3. This
includes all fees linked to the acquisition program, and in particular €0.5 million for the
acquisition of Pektowin (Poland) and €0.3 million for the acquisition of Valentine (India);
- €0.5 million in restructuring costs of which €0.3 million concerning the finalisation of the
integration process for Burgundy (France and Spain) and €0.2 million linked to costs generated by
the reorganisation of Pektowin activities.
After taking these non-recurring expenses into account, the operating margin stands at 11.0% of
revenue.
EBITDA2 for H1 2012 amounted to €23.9 million, up from €20.3 million year-on-year. At 31 December
2011, EBITDA amounted to €39.7 million.
Net borrowing costs for H1 2012 amounted to €2.4 million, down from €2.8 million in H1 2011. This includes mainly €2.5 million in interest and expenses from financing lines compared with €2.9 million in the H1 2011 and interest income of €0.1 million, unchanged from H1 2011.
2 EBITDA: Earnings before tax depreciation and amortisation.
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18 2012 interim financial report | Naturex S.A
Other financial income and expenses represented a net charge of €0.6 million and concerned €4.4 million in losses on foreign exchange and €3.8 million in gains. In H1 2011, this item amounted to €0.9 million reflecting gains on foreign exchange exceeding losses.
Net income attributable to the Group amounted to €9.7 million in H1 2011 after a tax charge of €4.2 million compared with €4.4 million in H1 2011.
Net earnings per share at 30 June 2012 amounted to €1.1692 compared to €1.5186 one year earlier.
This decline reflects both the dilutive effect of the capital increase of October 2011 for which the full
amount had not been fully invested in H1 2012 and the absence of contributions from the companies
acquired.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 19
II.3 Analysis of assets, cash flow and shareholders' equity
Balance sheet
Total assets at 30 June 2012 stood at €454.9 million at 30 June 2012 compared to €426.2 million at 31 December 2011.
ASSETS
€ millions - IFRS 30/06/2012 31/12/2011
Non-current assets 229.3 209.9
Goodwill 103.2 93.5
Other intangible assets 9.6 9.3
Property, plant and equipment 110.7 103.2
Financial assets 1.7 1.2
Non-current derivatives 0.2 0.3
Deferred tax assets 4.0 2.5
Current assets 225.5 216.3
Inventories 135.1 115.2
Current derivatives 0.4 1.2
Tax receivables 0.7 0.7
Trade and other receivables 73.6 61.6
Cash and cash equivalents 15.7 37.7
TOTAL ASSETS 454.9 426.2
Non-current assets
The Group's non-current assets amounted to €229.3 million at 30 June 2012 compared to €209.9 million at 31 December 2011 and included mainly:
- Goodwill of €103.2 million compared to €93.5 million at 31 December 2011. Goodwill is not amortised but is tested for impairment annually. Impairment tests were carried out on 31 December 2011. The assumptions used and rates applied to the geographical regions concerned are presented in note 7 to the consolidated financial statements. With no indication of impairment having been identified at 30 June 2012, no additional impairment tests were performed. The change in goodwill over the period breaks down as follows: - €2 million for Pektowin (Europe region); - €5.2 million for Valentine (Asia region), including two companies Valentine Agro and
Valentine Foods; - A fair value adjustment of €1.1 million for Burgundy (Europe region).
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FY 2012 (6-month period from 1 January to 30 June 2012)
20 2012 interim financial report | Naturex S.A
The acquisition of Burgundy in 2011 generated €7.7 million in goodwill recognised in the annual financial statements for the period ending 31 December 2011.
Goodwill at 30 June 2012 can be broken down as follows: €40.6 million for the Americas region after taking into account €1 million for positive
translation differences; €54.8 million for the Europe-Africa-Russia region including €2 million from the acquisition of
Pektowin, a €1.1 million fair value adjustment of goodwill from Burgundy and €0.6 million in translation differences.
€7.7 million for the Asia region including €5.2 million for the Valentine acquisition and a negative translation difference of €0.1 million.
- Other net intangible assets amounted to €9.6 million at 30 June 2012 compared with €9.3 million at 31 December 2011. Other gross intangible assets amounted to €15.3 million at 30 June 2012 compared with €14 million at 31 December 2011and including mainly:. €0.5 million for the acquisition of software and brands; €0.6 million for capitalised development expenditures corresponding notably to research and
development investments (the Italian ASMF project and the Spanish Senifood project described in note 18 of the consolidated financial statements);
€0.2 million for the acquisition of assets under construction.
- Net property, plant and equipment amounted to €110.7 million at 30 June 2012 compared with €103.2 million at 31 December 2011. The depreciable cost (gross value) of property, plant and equipment amounted to €174.4 million compared with €160.4 million at 31 December 2011.
- Net financial assets amounted to €1.7 million at 30 June 2012 compared with €1.2 million at 31 December 2011. The depreciable cost of these assets at 30 June 2012 amounted to €2.5 million compared with €2.4 million at 31 December 2011 and consisted mainly in deposits and guarantees.
- €0.2 million in non-current derivatives compared with €0.3 million at 31 December 2011. The calculation of the fair value of financial assets and liabilities is presented in Note 9 to the consolidated financial statements.
- €4 million in deferred tax assets compared with €2.5 million at 31 December 2011.
Current assets
Current assets amounted to 225.5 million compared to 216.3 million at 31 December 2011 and
included mainly:
€135.1 million at 30 June 2012 for net inventories compared with €115.2 million at 31 December 2011;
€136.4 million in gross inventories at 30 June 2012 compared to €116.2 million at 31 December 2011. The €20.2 million increase in this line item includes €3.6 million for inventories resulting from acquisitions. Gross inventories also include a €1.6 million positive translation difference.
Provisions for inventories at 30 June 2012 stood at €1.3 million compared to €1 million at 31 December 2011.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 21
- €0.4 million at 30 June 2012 for current derivatives compared with €1.2 million at 31 December 2011;
- €0.7 million in tax receivables, unchanged from 31 December 2011;
- €73.6 million in trades and related receivables, up €12 million from €61.7 million at 31 December 2011, and breaking down as follows:
- €57.5 million in trade receivables, up from €48.8 million at 31 December 2011;
- €13.6 million in tax and social security receivables, up from €11.7 million at 31 December 2011;
- €4.3 million for other receivables compared with €2.9 million at 31 December 2011.
The total provisions for trade receivables at 30 June 2012 amounted to €1.7 million, including €1.3 million on trade receivables and €0.5 million for other receivables.
- €15.7 million for cash and cash equivalents compared with €37.7 million at 31 December 2011. The change in cash and cash equivalents reflects expenses incurred after the end of fiscal 2011 on acquisitions in the period and investments relating to their integration into the Group structure.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
22 2012 interim financial report | Naturex S.A
EQUITY AND LIABILITIES
€ millions - IFRS 30/06/2012 31/12/2011
Shareholders' equity 247.3 236.1
Non-current liabilities 111.1 103.9
Long-term financial debt 93.1 87.3
Non-current derivatives 2.0 2.3
Employee benefits 4.2 2.9
Deferred tax liabilities 11.9 11.4
Current liabilities 96.5 86.2
Current financial debt 23.0 17.6
Current derivatives 0.9 0.9
Current provisions - -
Current tax liabilities 4.0 1.6
Trade and other payables 66.9 65.2
Bank credit facilities 1.6 0.9
TOTAL EQUITY AND LIABILITIES 454.9 426.2
Shareholders' equity
Shareholders' equity stood at €247.3 million at 30 June 2012 compared to €236.1 million at 31
December 2011 comprised of mainly:
- Net income for the period of €9 million;
- The dividend distribution of €0.8 million for the fiscal year ended 31 December 2011 paid on 30
July 2012 with an option for payment in cash or in shares;
- Income from the exercise by employees of the Company of stock options and related benefits of
€0.4 million;
- Restatement of the charge of €0.6 million for treasury shares held within the framework of the
liquidity agreement;
- Changes in other comprehensive income items (including the effective portion of changes in the
fair value of cash flow hedges net of tax and translation differences).
Non-current liabilities
Non-current liabilities amounted to €111.1 million at 30 June 2012 compared to €103.9 million at 31
December 2011 and included:
- €93.1 million at 30 June 2012 for long-term financial debt compared with €87.3 million at 31
December 2011;
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 23
- Non-current liability derivatives of €2.0 million compared with €2.3 million at 31 December 2011.
The calculation of the fair value of financial assets and liabilities is presented in Note 9 to the
consolidated financial statements;
- Employee benefits amounting to €4.2 million that concerned at 30 June 2012 exclusively
provisions for employee in France, Italy, Switzerland, Australia and Poland (following the
acquisition of Pektowin), compared with €2.9 million at 31 December 2011
Current liabilities
Current liabilities amounted to €96.5 million at 30 June 2012 compared to €86.2 million at 31
December 2011.
This includes, in addition to the current portion of long-term debt of €23 million compared with
€17.6 million at 31 December 2011, the following items:
- Current derivative instruments amounting to €0.9 million, unchanged from 31 December 2011;
- €4.0 million for current tax liabilities compared with €1.6 million at 31 December 2011;
- Trade and other payables totalling €66.9 million compared with €65.2 million at 31 December
2011;
- Bank credit facilities of €1.6 million compared with €0.9 million at 31 December 2011.
Breakdown of long-term debt
Gross financial debt amounted to €117.7 million at 30 June 2012 compared with €105.8 million at 31
December 2011, consisting mainly of the structured loan.
It should be noted that at 31 December 2009, the Group set up a new structured loan. The debt,
which was initially at a variable rate, was swapped for a portion at a fixed rate in 2010.
In consequence, at 30 June 2012, 57.2% of these borrowings were at a fixed rate (€67.3 million) and
42.8% at a variable rate (€50.4 million) At 31 December 2011, 60.7% were at a fixed rate
(€64.3million) and 39.3% at a variable rate (€41.6 million). The corresponding derivatives were taken
out starting 31 March 2010 and details are provided in Note 5.5 and 9 to the consolidated financial
statements.
Gross financial debt can be broken down as follows:
Loans put into place of €113.5 million at 30 June 2012 compared to €104.2 million at 31
December 2011. This increase includes a repayment of €10 million, €18.4 million in new
credit lines, €0.7 million in loans between consolidated companies in the period and €0.1
million related to foreign exchange fluctuations;
€1.1 million in debt on finance leases compared with €0.4 million at 31 December, that
includes an additional €0.8 million and repayment of €0.1 million;
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
24 2012 interim financial report | Naturex S.A
€1.5 million in debt related to equity investments and shareholder loans (partners' current
accounts) compared with €0.3 million at 31 December 2011, including €1.5 million in new
debt and a repayment of €0.2 million;
€1.6 million in bank credit facilities, up from €0.9 million at 31 December 2011, including an
additional bank facility of €0.5 million and €0.2 million for bank facilities granted to acquired
companies that were consolidated in the period.
The breakdown of all gross financial debt at 30 June 2012 is as follows:
- Current financial debt: €24.6 million or 20.9%;
- Long-term financial debt: €93.1 million or 79.1%.
At 30 June 2012, total net financial debt (current financial debt + long-term financial debt + net bank credit facilities for cash) amounted to €102 million, up from €68.2 million at 31 December 2011.
The increase in net debt is mainly the result of use of cash assets in connection with acquisitions made in the period along with investment projects carried out at the same time.
Net gearing (net financial debt/equity) at 30 June 2012 was 41.2% at 30 June 2012, up from 28.9% at
31 December 2011.
The increase in this ratio reflects the impact of acquisitions in the period in Poland (Pektowin) and
India (Valentine).
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 25
Consolidated cash flows
€ millions - IFRS 30/06/2012 30/06/2011
Operating cash flows 24.0 20.9
Tax payments (2.7) (3.0)
Change in WCR (28.2) (11.6)
Net cash used in operating activities (6.8) 6.3
Net cash used in investing activities (21.7) (7.4)
Net cash provided by financing activities 6.9 (3.3)
Net change in cash and cash equivalents (21.6) (4.4)
Closing cash and cash equivalents 14.1 10.6
Opening cash and cash equivalents 36.7 16.2
Effect of exchange rate changes on cash 1.0 1.1
Cash flows from operating activities amounted to €24 million at 30 June 2012 compared to €20.9
million at 30 June 2011.
Net cash used in operating activities amounted to €6.8 million including working capital expenditures
of €28.2 million, relating mainly to the significant changes in the Group structure following the
consolidation of Pektowin (Poland) and Valentine (India) in the period. The change in trade
receivables increased marginally also in response to the consolidation of these companies while the
change in trade payables represented a decrease of €3.3 million compared with an increase of €3.5
million at 30 June 2011.
Net cash used in investing activities generated an outflow of €21.7 million and includes:
- €11.8 million for the acquisitions of Pektowin and Valentine in the period, net of cash acquired;
- €1.2 million for intangible assets;
- €9.7 million for property, plant and equipment;
- €0.6 or financial investments; and
- €1.5 million on the disposal of fixed assets.
Net cash provided by financing activities represented inflows of €6.9 million and included mainly:
- €0.3 million in proceeds from the issuance of shares following the capital increase by the exercise of shares subscription warrants by selected Group employees;
- €18.4 million received from new loans;
- €9.9 million of debt repayments, net of derivatives;
- €0.1 million of debt repayments in connection with finance leases;
- €1.2 million from the net change of other financial liabilities;
- €2.9 million for interest expense payments.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
26 2012 interim financial report | Naturex S.A
Foreign exchange rate fluctuations had a positive impact on cash of €1 million compared with €1.1 million at 30 June 2011.
The corresponding net change in cash and cash equivalents represented a decrease of €21.6 million that resulted in closing cash and cash equivalents €15.7 million, in light of acquisitions in the reporting period and related investments.
II.4 Financing policy
In order to finance its development, Naturex signed a structured credit agreement on 30 December
2009, as a replacement for a previous structured credit dating from December 2008.
This credit agreement was amended during 2012 to include an additional tranche for capital
expenditure financing (tranche "CAPEX 2") for €30 million available to be drawn in 2012 and 2013.
The tranches for short-term credit lines were extended until 31/12/2018 through this same
amendment.
This structured credit facility breaks down as follows:
€107 million of instalment credit lines, which were primarily used to refinance previous loans and to finance the acquisition of Natraceutical’s Ingredients Division and including:
A €20 million (revolving) tranche for short-term authorisations with €15 million drawn at 30 June 2012;
A second €15 million (revolving) tranche for short-term authorisations. Of this multi-currency tranche, US$3 million had been drawn at 30 June 2012;
A €20 million (revolving) tranche for CAPEX financing with the full amount of this facility drawn at 30 June 2012;
A second €30 million (revolving) tranche for CAPEX financing set up in 2012. At 30 June 2012, this facility had not been used.
The loan agreement binding the Group to its lenders contains a clause regarding compliance with
two bank ratios, which are assessed every six months:
(i) gearing (net financial debt / total shareholders’ equity) and (ii) a financial leverage ratio (net
financial debt / EBITDA).
If the Group should breach these contractual ratios and/or the majority of lenders so request, the
lenders may demand the repayment of the corresponding loan.
At 30 June 2012, these ratios were respected.
II.5 Property, plant and equipment
See Note 8 – Non-current assets in the consolidated financial statements and notes shown in chapter
6 of this document.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 27
III. Main related party transactions
Details on transactions between related parties are provided in Note 24 to the interim consolidated
financial statements.
Information on executive compensation
Information on gross compensation of company executive officers and non-executive officers
pertaining to fiscal years 2011 and 2010 is provided in the registration document filed with the
French securities regulator (AMF) on 26 April 2012 (No.°D.12-0424).
Gross compensation for the 2012 first half of the company's three executive and non-executive
officers3 totalled €990,000 compared to €980,000 for last year's same period.
These amounts represent total gross compensation that includes benefits in kind and stock options
allocated over the year.
Of this amount, €827,000 is paid by Naturex Inc. (USA) and €163,000 by Naturex S.A (France).
No long-term benefits are paid to Naturex's executive and non-executive officers.
Transactions with SGD
At 30 June 2012, concerning SGD which holds 21% of the Company's capital and 22.62% of its voting
rights, Naturex SA paid interest of:
- €31,000 to SGD on the current account balance over the reporting period that amounted to
€1,519,000 at 30 June 2010.
On the filing date of this document, SGD held 21.02% of the share capital and 22.63% of the voting
rights of Naturex S.A.
3 Jacques Dikansky (Chairman and CEO of Naturex S.A. and Naturex Inc. ), Thierry Lambert (Vice Chairman and CFO of
Naturex S.A. and Vice Chairman of Naturex Inc.), Stéphane Ducroux (Director of Naturex S.A. and Vice Chairman of Naturex Inc.).
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FY 2012 (6-month period from 1 January to 30 June 2012)
28 2012 interim financial report | Naturex S.A
IV. Corporate governance
Corporate governance code serving as reference
Pursuant to the law of 3 July 2008 and the provisions of Article L.225-37 of the French Commercial Code, for financial year 2010 Naturex S.A refers to the principles of corporate governance for small caps and midcaps, published in December 2009 by the MiddleNext association and available at their website www.middlenext.com.
Chairmanship of the Board of Directors and Executive Management
On 13 April 2012, the Board of Directors of Naturex S.A duly noted the temporary absence for reasons of health of Mr. Jacques Dikansky, Chairman-Chief Executive Officer of the Company.
In accordance with the terms of the Company's Articles of Association, Thierry Lambert, in his capacity as director was appointed Vice Chairman of the Board of Directors for the purpose of assuring during this period the chairmanship of Board meetings, the effective conduct of the Board's work in coordination with other Board members, and making all decisions relating to the Company's management.
By decision of Naturex's shareholders, the directorships of Jacques Dikansky and Thierry Lambert
were renewed at the Combined Shareholders' Meeting of 8 June 2012 for terms of 6 years, i.e. until
the Shareholders' Meeting called approve the financial statements for the period ending 31
December 2017.
The Board of Directors of Naturex confirmed the re-election of Jacques Dikansky as Chairman for his
term of office as director. However, as his state of health currently prevents him from fulfilling this
function, the effective chairing of the Board of Directors is delegated to Thierry Lambert, in his
capacity as Vice-President; Mr Lambert is also appointed to the functions of CEO of Naturex.
The Board of Directors stipulated that if Jacques Dikansky's health so permitted, he will again be
entrusted with the General Management of the Company, Thierry Lambert would then return to his
function as Deputy CEO.
Composition of the Board of Directors
The Company's articles of association provide for a minimum of at least three members and a maximum of eighteen, except for temporary dispensation provided for in the event of a merger.
At 30 June 2012, the Company was governed by a Board of Directors with six members, including two meeting the criteria of independent directors as defined by the MiddleNext4 corporate governance code for small and mid caps.
4 It is specified that Paul and Olivier Lippens are also indirectly shareholders of Finasucre, part of SGD, the main shareholder
of Naturex, 40%-held by Jacques Dikansky.
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Naturex S.A | 2012 interim financial report 29
First name - Last name
Directorships and offices Age Date of appointment /
renewal Expiry date
of office
Jacques Dikansky Chairman of the Board of Directors
52 8 June 2012
AGM ruling on the financial statements for the year ending 31 December 2017
Thierry Lambert Vice-Chairman of the Board of Directors and Chief Executive Officer
58 8 June 2012
AGM ruling on the financial statements for the year ending 31 December 2017
Stéphane Ducroux Director 39 30 June 2008
AGM ruling on the financial statements for the year ending 31 December 2013
Jacqueline Dikansky Director 82 27 June 2011
AGM ruling on the financial statements for the year ending 31 December 2016
Paul Lippens Independent Director 59
13 September 2011 (appointed by co-
optation) 8 June2012 (AGM
ratification)
AGM ruling on the financial statements for the year ending 31 December 2014
Olivier Lippens Independent Director 59 8 June 2012
AGM ruling on the financial statements for the year ending 31 December 2017
Appointment and renewal of directors
Directors are appointed and renewed for terms of office by shareholders through Ordinary General Meetings that may revoke them at any time. Legal entities appointed as directors must designate a permanent representative subject to the same conditions and obligations as individual directors appointed in their own name. An employee of the Company can be appointed as director only if his or her employment contract corresponds to an actual position. The number of directors bound to the company by employment contracts with the Company cannot exceed one-third of the serving directors.
- The Combined Extraordinary and Ordinary General Meeting of 8 June 2012 renewed the offices of Jacques Dikansky and Thierry Lambert as directors for a term of six years ending on the close of the General Meeting that will be called to approve the financial statements for the fiscal year ending 31 December 2017;
- At the same meeting, the shareholders of the Company ratified the appointment of Paul Lippens, initially appointed in a temporary capacity by the Board of Directors on 13 September 2011 to replace Pierre Michel Passy, permanent representative of Edmond de Rothschild Investment Partners SAS, having resigned. In consequence, Paul Lippens will serve in this office for the remainder of his predecessors' term or until the end of the Annual General Meeting that will be called to approve the financial statements for the fiscal year ending 31 December 2014.
- The Combined Extraordinary and Ordinary General Meeting of 8 June 2012 renewed the office of Olivier Lippens as director for a term of six years that will expire at the end of the Annual General Meeting that will be called to approve the financial statements for the fiscal year ending 31 December 2017;
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FY 2012 (6-month period from 1 January to 30 June 2012)
30 2012 interim financial report | Naturex S.A
Gender representation on the Board of Directors
Law No. 2011-103 of 27 January 2011, pertaining to balanced gender representation on boards of directors and supervisory boards and professional gender equality, was published in the Journal Officiel (the official French publication for legal notices) on 28 January 2011 and established the following principles in companies whose shares are listed for trading in a regulated market:
- The proportion of the members of each sex cannot be less than 40% on the Board of Directors or Supervisory board;
- When one of the two genders is not represented on the Board of Directors on the date the law is published, at least one representative of this gender must be appointed at the next Shareholders' Meeting called to approve the appointment of directors; and
- When the composition of the Board is no longer in compliance (40%), the Board shall make provisional appointments to correct this situation within six months, starting from the day when the vacancy occurs.
The Law provides that on 1 January 2014, the board of directors and the supervisory board of listed companies must include at least 20% of men or women, and that on 1 January 2017 the 40% threshold must be reached. The assessment of this compliance will be done at the first Shareholders’ Meeting following this deadline.
Since the Company’s Board of Directors is composed of four men and one woman at 31 December 2011, the Company is already in compliance with the transitional system established by law.
Given Mr. Olivier Lippens’ appointment as director of the Company, during the Shareholders’ Meeting of 8 June 2012 called to approve the financial statements for the year ending 31 December 2011,the Company plans to re-establish the minimum rate of representation for women serving on the Board before 1 January 2014 in accordance with the law, proposing to the Board of Directors the creation of a Nominating and Compensation Committee notably for the purpose of making recommendations for the appointment of new directors in compliance with both the Company's corporate governance guidelines and statute.
Board committees
In the 2012 first half, two Board committees were created to support Naturex's development and adapt its organization to its new size in response to the series of acquisitions and rapid organic growth in recent years.
The Audit Committee
In accordance with the exemption provided for under Article L.823-20 of the French Commercial Code (Code de Commerce) and in light of its small and medium cap status (VaMPs)5, the Company has decided to assign the functions of Audit Committee to its Board of Directors.
The Company has referred to the "Report of the Working Group on Audit Committees" of the AMF working group6 of 22 July 2012 in defining the attributes of this Committee.
5 VaMPs (Valeurs Moyennes et Petites"): companies listed in the NYSE Euronext Paris market segments of compartment C and B. Naturex
S.A is listed in Compartment B (Mid-Caps). 6 Report of the Working Group Chaired by Olivier Poupart - Lafarge on Audit Committees, Member of the AMF Board.
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FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 31
In accordance with article L.823-19 of the French Commercial Code, the Audit Committee is responsible in particular for monitoring:
- The process used to produce financial information; - The efficiency and effectiveness of internal control and risk management systems; - The legal control of the annual and consolidated financial statements by the statutory auditors;
and - The independence of the statutory auditors.
In addition, the Committee issues a recommendation on the statutory auditors proposed for appointment to the Shareholders’ Meeting. It reports regularly to the Board of Directors on its tasks and informs it immediately of any difficulty encountered.
The Committee can take up at any time any significant financial or accounting question and formulate any opinions or recommendations to the Board in the aforementioned areas.
The Board may also entrust the Committee with any other assignment it deems appropriate.
Composition of the Audit Committee
Based on the exemption provided in article L.823-20-4 of the French Commercial Code applicable to companies meeting the “small and mid caps” criteria and according to the recommendations of the AMF working group, the Committee is comprised of the following three members:
- Thierry Lambert, Vice Chairman of the Board of Directors and Chief Executive Officer;
- Stéphane Ducroux, Director and Vice-Chairman of Naturex Inc.;
- Paul Lippens, Independent Director with regard to the MiddleNext code;
- Olivier Lippens, Independent Director with regard to the MiddleNext code.
In accordance with the current legal provisions, the independent directors have special financial or accounting expertise.
The term of office for a Committee member does not exceed the term of his or her directorship.
Unless the Committee decides otherwise, the statutory auditors attend all meetings.
In addition to the statutory auditors, the Committee must be able to hear under the conditions it determines, any Company players it deems useful in carrying out its assignment, including the members of Senior Management, the managers of financial and accounting positions, internal audit, internal control, cash management, management control, legal, etc. as well as, where appropriate, the managers of operational departments. This Committee is chaired by Thierry LAMBERT, Vice Chairman of the Board of Directors and Chief Executive Officer of the Company.
Management Committee
With respect to operational management, a Management Committee was formed headed by Thierry Lambert and including the most experienced executives responsible for the Group's main operating departments, and who for the most part have worked at Naturex for many years.
This Committee exercises an essential role in the Group's corporate governance:
- It contributes to improved cooperation between the different Group departments and the decision-making process;
- Covering the most important or most sensitive operational areas, it determines and monitors actions to be carried out in these areas;
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32 2012 interim financial report | Naturex S.A
- It coordinates approaches to cross-functional subjects and projects; - It anticipates and prepares for organisational and strategic developments for the Company and
the Group; - It assists the Chief Executive Officer in preparing decisions to be submitted to the Board of
Directors' approval.
Composition of the Management Committee
- Thierry Lambert, Vice Chairman of the Board of Directors and Chief Executive Officer; - Stéphane Ducroux, Director, Vice Chairman of Naturex Inc., Vice President of Sales, Americas /
Asia-Pacific regions; - Marc Roller, Chief Science Officer; - Frédéric Seguin, Chief Industrial Officer; - Maxime Angelucci, Vice President of Sales, Europe / Africa region; - Serge Sabrier, Vice President of Purchasing and Supply-Chain
Nominating and Compensation Committee A proposal will be submitted to the Board of Directors' meeting called to approve the interim financial statements for the creation of a Nominating and Compensation Committee tasked with making recommendations and proposals to the Board on the following subjects: - The appointment of new directors, including in the event of unforeseeable vacancies; - The appointment or revocation, on proposal by the Chief Executive Officer, of any executive
officer of the Company; - The appointment or revocation, on proposal by the Chairman of the Board of Directors, of the
Chairman of the Board of Directors and Chief Executive Officer; - The composition and operating of the Board of Directors and the Board committees (including
appointments and revocations); - Application by the Company of the guidelines adopted for the principles of corporate
governance, notably with respect to the compensation policy for executive officers. The Committee also provides the Board with its opinion on the section of the annual report devoted to shareholders information relating to these matters and the work of the Board; the definition of independent director of the Company and the list thereof that are reproduced in the Company's annual report;
- All components of executive compensation including options to subscribe for or purchase shares as well as compensation and benefits of any nature (including retirement benefits and retirement service payments) paid by the Company or other Companies of the Group. The Board examines and defines rules for determining the variable portion of compensation, their coherence with the annual performance assessment of executive officers and the strategy of the Company, and ensures that these rules are then applied;
- The Company's general policy with respect to options to subscribe for or purchase shares including the frequency of grants as well as all proposed stock option plans, including their beneficiaries;
- The Company's general policy with respect to employee share ownership and any employee stock ownership plans that may be considered;
- Directors' fees and rules governing their allocation.
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FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 33
V. Information on the share capital
V.1 Share capital and voting rights
Share capital
At 30 June 2012, fully paid up share capital amounted to €11,566,812 for 7,711,208 shares (6,953,900 ordinary shares and 757,308 preferred shares), with a par value of €1.50 each after taking into account the capital increase resulting from Company employees' exercise of share subscription options in the 2012 first half. At 31 December 2011, fully paid up share capital stood at €11,558,370 for 7,705,580 shares (6,318,272 ordinary shares and 1,387,308 preferred shares) with a par value of €1.50 per share. On the filing date of this document, share capital amounted to €11,592,108.50 with a par value of €1.50 per share
As such, the share capital is comprised of 7,728,079 shares with a par value of €1.50 per share, broken down as follows:
- 6,968,924 ordinary shares (ISIN FR0000054694);
- 757,308 non-voting preferred shares (ISIN FR0010833251).
This new share breakdown includes ordinary shares and preferred shares created pursuant to the payment of dividends in shares of 30 July 2012 according to the option adopted by the Shareholders Meeting of 8 June 2012.
Voting rights
The voting right attached to ordinary capital or dividend shares is proportional to the share of capital they represent and each ordinary share confers a right to at least one vote.
However, the Extraordinary Shareholders’ Meeting of 19 March 2001 decided to allocate a voting right double that granted to other ordinary shares, with regards to the proportion of the share capital they represent, to all fully paid-up shares registered in the name of a single shareholder for at least two years.
In accordance with Article L.225-124 of the French Commercial Code, shares converted to bearer shares no longer benefit from double voting rights, and the same applies to shares resulting from a transfer of share ownership.
It was also decided that in the event of a capital increase via the incorporation of reserves, earnings or issue premiums, dual voting rights will be attached, upon issue, to registered shares allocated free of charge to shareholders in exchange for old shares with double voting rights.
No provisions exist that impose restrictions on voting rights.
Concerning preferred shares, their rights and those of their holders are governed by the applicable provisions of the French Commercial Code, in particular Articles L. 228-11 et seq.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
34 2012 interim financial report | Naturex S.A
It is stipulated that the preferred shares benefit from the same rights as those attached to ordinary shares (rights to dividends, subscription rights) but do not carry voting rights at ordinary and extraordinary shareholder meetings while however conferring a right to vote at special shareholders' meetings.
Preferred shares were issued in payment for the acquisition of the Natraceutical's Ingredients Division on 30 December 2009. These shares will recover their voting rights as soon as they have been converted into ordinary shares upon their sale to third parties to the Natraceutical Group.
Ordinary shares resulting from the conversion of preferred shares will carry double voting rights as long as said shares have been registered on the same shareholder's account for at least two years (whether in the form of preferred shares or in the form of ordinary shares).
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 35
Changes in share capital
Financial year
Nature of transaction Number of shares issued
Capital increase Additional paid-in capital
Par value Number of shares
Amount of capital
2005 Capital increase Board meeting of 06/01/2005
414,865 €622,297.50 €10,662,030.50
€1.50 2,579 383 €3,869,074.50
2005 Capital increase through share subscription warrants Board meeting of 06/01/05
2,743 €4,114.50 €93,262
€1.50 2,579,126 €3,873,189
2005 Capital increase through shares with equity warrants
79,000 €118,500.00 €784,470
€1.50 2,661,126 €3,991,689
2006 Capital increase through share subscription warrants Board meeting of 13/03/2006
362 €543.00 €12,308.00
€1.50 2,661,488 €3,992,232
2006 Capital increase through share subscription warrants Board meeting of 12/09/2006
30,747 €45,120.50 €1,045,398.00 €34 / share
€1.50 2,692,235 €4,038,352.50
2006 Capital increase 266,148 €399,222.00 €13,227,555.60
€1.50 2,958,383 €4,437,574.50
2006 Capital increase through share subscription warrants Board meeting of 30/11/2006
255 €382.50 €8,670.00
€1.50 2,958,638 €4,437,957
2006 Capital increase following the exercise of share subscription options
364 €546.00 €4,317.04
€1.50 2,959,002 €4,438,503
2006 Capital increase through share subscription warrants Board meeting of 26/12/2006
229 €343.50 €7,786
€1.50 2,959,231 €4,438,846.50
2006 Capital increase following the exercise of share subscription options
8,041 €12,061.50 €95,366.26
€1.50 2,967,262 €4,450,908
2007 Capital increase through share subscription warrants Board meeting of 02/07/2007
1,453 €2,179.50 €49,402.00
€1.50 2,968,725 €4,453,087.50
2007 Capital increase through share subscription warrants Board meeting of 31/12/2007
18,124 €27,186.00 €616,216.00
€1.50 2,986,849 €4,480,273.50
2007 Capital increase following the exercise of share subscription options Board meeting of 31/12/2007
660 €990.00 €4,233.90
€1.50 2,987,509 €4,481,263.50
2008 Capital increase through share subscription warrants
7,290 €10,935.00 €236,925.00
€1.50 2,994,799 €4,492,198.50
2008 Capital increase following the exercise of share subscription options
18,590 €27,885.00 €208,579.80
€1.50 3,013,389 €4,520,083.50
2008 Capital increase following the exercise of share subscription options
1,590 €2,385.00 €18,014.70
€1.50 3,014,979 €4,522,765.50
2009 Capital increase following the exercise of share subscription options
198 €297.00 €2,221.56
€1.50 3,015,177 €4,522,765.50
2009 Capital increase through share subscription warrants Board meeting of 06/03/2009
866,863 €1,300,294.50 €15,779,318.71
€1.50 3,882,040 €5,823,060.00
2009 Capital increase through the issue of ordinary shares AGM/EGM of 30/12/2009
961,557 €1,442,335.50 €29,261,703.00
€1.50 4,843,597 €7,265,395.50
2009 Capital increase through the issue of preferred shares AGM/EGM of 30/12/2009
1,520,403 €2,280,604.50 €46,268,273.00
€1.50 6,364,000 €9,546,000.00
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
36 2012 interim financial report | Naturex S.A
Fiscal year Nature of transaction Number of shares issued
Capital increase Additional paid-in capital
Par value Number of shares
Amount of capital
2010 Capital increase following the exercise of share subscription options Board meeting of 23/08/2010
23,192 €34,788.00 €603,920.00
€1.50 6,387,192 €9,580,788.00
2010 Capital increase by dividend paid in shares AGM/EGM of 30/06/10
23,739 €35,608.50 €578,648.00
€1.50 6,410,931 €9,616,396.50
2011 Capital increase by dividend paid in shares AGM/EGM of 27/06/2011
10,809 €16,214.00 €506,503.00 €1.50 6,421,740 €9,632,610.00
2011 Capital increase following the exercise of share subscription warrants
1,283,840 €1,925,760.00 €45,640,606.00 €1.50 7,705,580 €11,558,370.00
2012 Capital increase following the exercise of share subscription options Board meeting of 29/03/2012
5,496 €8,244.00 €264,632.40 €1.50 7,711,076 €11,566,614.00
2012 Capital increase following the exercise of share subscription options
132 €198.00 €3,437.28 €1.50 7,711,208 €11,566,812.00
2012 Capital increase by dividend paid in shares
16,781 €25,306.50 €637,372.94 €1.50 7,728,079 €11,592,118.50
V.2 Unissued authorised capital
The Combined Shareholders' Meeting of 27 June 2011 granted new authorisations and delegations of authority to the Company's Board of Directors with respect to capital increases.
The Combined Shareholders' Meeting of 8 June 2012 renewed certain authorisations, replacing and superseding those granted by the previous meeting of 27 June 2011.
The table hereafter summarises authorisations in force and delegations of authority granted to the Board of Directors by the Combined Shareholders Meeting of 27 June 2011 and 8 June 2012, with respect to capital increases.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 37
Current authorisations and delegation of authorities, granted by the Combined Shareholders’ Meeting of 27 June 2011 with respect to capital increases
Type of authorisation granted AGE date Amount authorised Term of authorisation Use made of the authorisation granted
Issue shares and/or marketable securities giving access to the Company's capital
27 June 2011 See detail hereinafter according to the delegations of authority granted
26 months
until 27 August 2013
- Delegation of authority to increase the capital with pre-emptive subscription rights maintained
27 June 2011
€4,000,000
+ nominal amount of the additional shares to be issued, where applicable
26 months
until 27 August 2013
€1,925,760
- Delegation of authority to increase the capital with pre-emptive subscription rights revoked for a public offering
27 June 2011 €4,000,000 (ceiling charged against the nominal ceiling of the authorisation with pre-emptive subscription rights revoked for private placement)
26 months
until 27 August 2013
None
- Delegation of authority to increase the capital with no pre-emptive subscription rights, via private distribution governed by Article L.411-2, II of the French Monetary and Financial Code
27 June 2011 €4,000,000 limited to 20% of the share capital per year (amount charged against the nominal ceiling of the authorisation with pre-emptive subscription rights revoked for a public offering)
26 months
until 27 August 2013
None
- Authorisation to increase the share capital in payment of contributions in kind of shares or marketable securities
27 June 2011 Limited to 10% of the share capital (ceiling independent of any other ceiling provided for in terms of authority to increase the capital
26 months
until 27 August 2013
None
- Delegation of authority to increase the share capital through the capitalisation of reserves, earnings or premiums
27 June 2011 €40,000,000 (ceiling independent of ceilings provided for other authorisations)
26 months
until 27 August 2013
None
- Authorisation to increase the number of securities to be issued in the event of excess demand
27 June 2011 In accordance with the provisions of Article L.225-135-1 of the French Commercial Code and within the ceilings set by the Shareholders’ Meeting, when the Board of Directors determines there is excess demand
26 months
until 27 August 2013
None
Authorisation to increase the share capital by issuing shares reserved for members of a Company Savings Plan
27 June 2011 Up to 3% of the share capital on the day of the Board of Directors’ decision
26 months
until 27 August 2013
None
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
38 2012 interim financial report | Naturex S.A
Current authorisations and delegation of authorities, granted by the Combined Shareholders’ Meeting of 8 June 2012 to the Board of Directors with respect to capital increases
These authorisations and delegations of authority replace and supersede those granted by the
Combined Shareholders Meeting of 27 June 2011.
Type of authorization granted AGE date Amount authorised Term of authorisation Use made of the authorisation granted
Authorisation granted for the purposes of cancelling shares purchased by the Company according to the provision of Article L.225-209 of the French Commercial Code
8 June 2012 Up to 10% of the share capital, on one or more occasions, per 24-month period
24 months
until 8 June 2014
None
Authorisation granted for the purposes of allocating Company share subscription and/or purchase options for employees and/or company officers
8 June 2012 Up to 3% of the share capital (combined ceiling with the authorisation to allocate Company shares free of charge (bonus shares)
38 months
until 8 August 2015
None
Authorisation granted for the purposes of allocating existing shares or new shares free of charge (bonus shares) to employees and/or company officers
8 June 2012 Up to 3% of the share capital (combined ceiling with the authorisation to allocate share subscription and/or purchase options)
38 months
until 8 August 2015
None
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 39
V.3 Breakdown of share capital and voting rights
Changes in the shareholder structure
The table below shows the breakdown of the capital and voting rights of Naturex S.A at June 30, 2012 and how it has changed compared to 31 December 2011 and 30 June 2011
30 June 2012 31 December 2011 30 June 2011
Number of shares
% of capital
% of voting rights
Number of shares
% of capital
% of voting rights
Number of shares
% of capital
% of voting rights
Naturex S.A (1) 12,028 0.16% - 4,660 0.06% - 7,934 0.12% -
SGD (2) 1,605,115 21.00% 22.63% 1,605,115 20.83% 24.60% 1,024,167 15.98% 20.15%
Jacques Dikansky 13,190 0.17% 0.18% 13,190 0.17% 0.20% 15,963 0.25% 0.31%
Natra Group - - - - - - 2,021,424 31.53% 12.11%
Concert parties (3) 1,632,920 21.17% 22.81% 1,618,305 21.00% 24.80% 3,061,554 47.76% 32.57%
Thierry Lambert 1,022 0.01% 0.03% 1,024 0.01% 0.02% 852 0.01% 0.02%
Stéphane Ducroux 4,837 0.06% 0.12% 4,837 0.06% 0.11% 4,026 0.06% 0.13%
Executive shareholders 5,859 0.07% 0.15% 5,861 0.08% 0.13% 4,878 0.07% 0.15%
Natra Group 1,365,002 17.70% 8.49% 1,595,002 20.70% 3.18% - - -
Public 4,695,399 60.90% 68.54% 4,481,752 58.16% 71.89% 3,336,565 52.05% 67.28%
Total shareholdings 7,711,208 100% 100% 7,705,580 100% 100% 6,410,931 100% 100%
(1) Naturex S.A. holds treasury shares within the framework of the liquidity contract concluded with Natixis.
(2) On the filing date of this document 40% of SGD’s capital was held by the Dikansky family and 60% by Finasucre.
(3) Jacques Dikansky, SGD and the NATRA Group jointly held shares (action in concert) within the framework of a shareholders' agreement concluded on 30 December 2009. The shareholders agreement and the action in concert ended on 28 October 2011 when the Natra Group crossed below the 5% voting threshold.
Source: Société Générale Securities Service – 30 June 2012
The breakdown of Naturex S.A’s capital and voting rights on the date this document was filed is as follows:
Société Générale Securities Service – August 2012
Capital7,728,079 actions
Voting rights7,178,312 votes
SGD / J. DIKANSKY
21.19%
Natraceutical17.71%
Public61.00%
Auto-Detention0.10%
Public68.69%
Natraceutical8.49%
SGD/J. DIKANSKY
22.82%
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
40 2012 interim financial report | Naturex S.A
Transaction of executives and parties mentioned in Article L.621-18-2 of the French Monetary and Financial Code on Company shares
In accordance with Articles L.621-18-2 of the French Monetary and Financial Code and Article 222-15-3 of the AMF’s General Regulations amended by decree on 9 March 2006 published in the Journal Officiel (French publication for legal notices) on 21 March 2006, the following operations were carried out on the Company's shares, at the date this document was filed.
These transactions were reported to the AMF by executive officers pursuant to the legal and regulatory requirements (Article L.621-18-2).
Declarations made by SGD
Shareholder identification
In accordance with Article 263-1 of the Law of 24 July 1966, the Company used the EUROCLEAR procedure to identify bearer shares on 29 July 2011.
Based on this procedure, 8,056 owners of bearer shares holding 49.2% of the Company's share capital at 29 July 2011 were identified, breaking down as follows:
- Individual investors holding 20% of the capital;
Financial instrument Date of the transaction Place of the transactionNb of shares Unit Price Amount of the transaction
Shares 23/05/2012 NYSE EURONEXT Paris 450 46,43 € 20 893,50 €
Shares 23/05/2012 NYSE EURONEXT Paris 500 46,66 € 23 330,00 €
Shares 24/05/2012 NYSE EURONEXT Paris 50 46,43 € 2 321,50 €
Shares 24/05/2012 NYSE EURONEXT Paris 500 46,49 € 23 245,00 €
Shares 24/05/2012 NYSE EURONEXT Paris 500 46,65 € 23 325,00 €
Shares 24/05/2012 NYSE EURONEXT Paris 949 46,01 € 43 663,49 €
Shares 28/05/2012 NYSE EURONEXT Paris 1 000 47,48 € 47 480,00 €
Shares 28/05/2012 NYSE EURONEXT Paris 500 47,90 € 23 950,00 €
Shares 28/05/2012 NYSE EURONEXT Paris 500 47,85 € 23 925,00 €
Shares 01/06/2012 NYSE EURONEXT Paris 1 000 46,57 € 46 570,00 €
Shares 01/06/2012 NYSE EURONEXT Paris 371 46,61 € 17 292,31 €
Shares 04/06/2012 NYSE EURONEXT Paris 629 46,61 € 29 317,69 €
Shares 05/06/2012 NYSE EURONEXT Paris 1 340 46,30 € 62 042,00 €
Shares 13/06/2012 NYSE EURONEXT Paris 500 46,84 € 23 420,00 €
Shares 13/06/2012 NYSE EURONEXT Paris 500 47,09 € 23 545,00 €
Shares 19/06/2012 NYSE EURONEXT Paris 36 46,50 € 1 674,00 €
Shares 20/06/2012 NYSE EURONEXT Paris 964 46,50 € 44 826,00 €
Shares 20/06/2012 NYSE EURONEXT Paris 1000 46,50 € 46 500,00 €
Shares 21/06/2012 NYSE EURONEXT Paris 500 45,86 € 22 927,50 €
Shares 21/06/2012 NYSE EURONEXT Paris 500 45,77 € 22 885,00 €
Shares 21/06/2012 NYSE EURONEXT Paris 600 45,95 € 27 568,50 €
Shares 21/06/2012 NYSE EURONEXT Paris 500 46,10 € 23 050,00 €
Shares 26/06/2012 NYSE EURONEXT Paris 84 46,18 € 3 879,12 €
Shares 27/06/2012 NYSE EURONEXT Paris 66 46,17 € 3 047,22 €
Shares 27/06/2012 NYSE EURONEXT Paris 75 46,36 € 3 477,00 €
Shares 27/06/2012 NYSE EURONEXT Paris 281 46,40 € 13 037,00 €
Shares 27/06/2012 NYSE EURONEXT Paris 500 46,45 € 23 226,45 €
Shares 27/06/2012 NYSE EURONEXT Paris 54 45,92 € 2 479,68 €
Shares 27/06/2012 NYSE EURONEXT Paris 66 46,33 € 3 057,78 €
Shares 28/06/2012 NYSE EURONEXT Paris 100 45,70 € 4 569,63 €
Shares 05/07/2012 NYSE EURONEXT Paris 500 47,10 € 23 552,35 €
Shares 05/07/2012 NYSE EURONEXT Paris 150 47,13 € 7 069,50 €
Shares 05/07/2012 NYSE EURONEXT Paris 50 47,15 € 2 357,50 €
Shares 10/07/2012 NYSE EURONEXT Paris 50 46,30 € 2 315,00 €
Shares 10/07/2012 NYSE EURONEXT Paris 50 46,34 € 2 317,06 €
Shares 10/07/2012 NYSE EURONEXT Paris 100 46,22 € 4 622,00 €
Shares 10/07/2012 NYSE EURONEXT Paris 52 46,29 € 2 406,89 €
Shares 10/07/2012 NYSE EURONEXT Paris 100 46,28 € 4 628,00 €
Shares 10/07/2012 NYSE EURONEXT Paris 49 46,35 € 2 271,27 €
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 41
- Foreign investors located in particular in Luxembourg, the United Kingdom, Belgium, Switzerland holding 7.7% of the capital;
- French investors and UCITS, who hold 21.5% of the capital.
The Company did not conduct a new study following the capital increase of 4 October 2011 that changed this breakdown by increasing the share of French institutional investors and foreigners.
Employee share ownership
On the filing date of this document, there were no employee incentive or profit-sharing plans as defined by Article L.225-102 of the French Commercial Code.
V.4 Shareholders agreement Lapsing of the shareholders agreement signed on 31 December 2009
On 4 January 2010, the Autorité des Marchés Financiers (AMF) (French Securities Regulator) was informed of a shareholders' agreement concluded between the SGD group and the NATRA Group. This agreement was concluded as part of the NATRA Group's contribution to Naturex of the assets comprising the Ingredients Division of its subsidiary Natraceutical S.A.
This agreement constituted an action in concert and provided for a number of commitments described in the AMF notice 210C0009 published on the AMF website on 6 January 2010.
This shareholders’ agreement is null and void since 28 October 2011 and resulted in the end of the action in concert described hereafter.
Action in concert
On 28 October 2011, following the sale of 400,000 Naturex shares held by Natraceutical (NATRA Group) to SGD, it was noted that the Natra Group had crossed below the 5% voting rights threshold. Crossing below this threshold caused the immediate termination of the shareholders’ agreement concluded between the parties on 30 December 2009.
Consequently, it was decided to end the joint action existing between Jacques Dikansky, SGD and the NATRA Group since 30 December 2009.
In view of the common interests and the existing ties between Jacques Dikansky and SGD, the action in concert between these parties was maintained.
V.5 Crossing of thresholds Thresholds fixed by the articles of association
In its articles of association, the Company has not set any obligation to declare crossing above or below a capital or voting rights threshold, other than the legal thresholds.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
42 2012 interim financial report | Naturex S.A
Legal thresholds
Any natural person or legal entity acting alone or in concert who ends up holding the number of shares or voting rights exceeding the thresholds provided by current regulations (Article L.233-7 of the French Commercial Code) must comply with the disclosure obligations provided by these regulations. The same information must be disclosed when the stake in the capital or voting rights crosses below the thresholds provided by current regulations.
The crossing of the following thresholds were reported to AMF (Autorité des Marchés Financiers) in the 2012 first half:
AMF declaration 212C0120 of 20 January 2012 - By letter received 20 January 2012, Natraceutical Group reported crossing above on 16 January
2012 the 5% threshold of voting rights of the Company and holding 1,595,002 Naturex shares (of which 987,308 non-voting preferred shares), representing 607,694 voting rights or 20.7% of the Company's capital and 8.77% of its voting rights. The crossing of this threshold resulted from the conversion of 400,000 Naturex preferred shares held by NATRACEUTICAL, into ordinary shares on 13 January 2012.
AMF 212C0724 declaration of 8 June 2012 - By letter received on 4 June 2012 supplemented by a letter received 7 June 2012, SAS Odyssée
Venture, acting on behalf of the fund under its management, reported, for the purpose of rectification, having crossed below, pursuant to the sale of Naturex shares on the market:
o On 31 October 2011, the 5% threshold of voting rights of the Company and holding on that date for said fund 322,068 Naturex shares representing a corresponding number of voting rights or 4.18% of the capital and 5.03% of the voting rights on that date;
o On 23 December 2011, the 5% threshold of voting rights of the Company and holding on that date for said fund 320,844 Naturex shares representing a corresponding number of voting rights or 4.16% of the capital and 4.91% of the voting rights.
Furthermore, Odyssée Venture reported for the record holding on 4 June 2012, 320,844 Naturex shares representing a corresponding number of voting rights or 4.16% of the capital and 4.48% of the voting rights of the Company
On the filing date of this document, the Company had no knowledge of the crossing of other thresholds.
V.6 Treasury shares
Own shares held directly by the Company
On 30 June 2012, Naturex directly held 12,028 of its own shares representing 0.16% of the share capital. These shares do not carry voting rights or an entitlement to the distribution of dividends or redemption of additional paid-in capital.
On the filing date of this document, Naturex directly held 7,710 of its own shares(0.10% of the Company's capital) within the framework of a liquidity agreement signed with Natixis in June 2009 and renewed every year based on authorisations granted by the Company's General Meeting to continue buying and selling its own shares.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 43
Own shares indirectly held through subsidiaries
No shares of the Company are indirectly held through subsidiaries.
Description of the share buyback programme approved at the Shareholders' meeting of 8 June 2012
The Shareholders’ Meeting of 8 June 2012 authorised the Company, in its 10th ordinary resolution,
to buy and sell treasury shares within the following limits:
- Maximum share of capital authorised: 10% of the number of shares comprising the share capital, with this number adjusted as required to take into account any operations to reduce or increase the capital that could take place during the duration of the program;
- Maximum amount allocated to the programme: €77,055,800 - Maximum purchase price per share: €100.00 In the event of an equity transaction, especially a split or consolidation of shares or the allocation of free shares, the aforementioned amount shall be adjusted according to the same proportions (multiplier equal to the ratio between the number of shares comprising the share capital before the operation and the number of shares after the transaction). The objectives of the Company's share buyback programme, as authorised by the Shareholders' Meeting of 8 June 2012, are as follows: - Support the secondary market and the Naturex share’s liquidity through an investment services
provider via a liquidity contract in accordance with the code of professional conduct of the French Association of Investment Firms (Association Française des Marchés Financiers or AMAFI) recognized by the AMF;
- Hold the shares thus purchased for subsequent use in exchange or as payment for any acquisitions, with the proviso that the shares acquired for this purpose cannot exceed 5% of the Company's capital;
- Set aside shares to cover share purchase option plans and other forms of share grants to employees and/or Company officers of the Group under the conditions and according to the methods provided for by law, especially with respect to profit sharing, a company savings plan or the allocation of bonus shares;
- Set aside shares for the requirements of securities conferring entitlement to grants of Company shares within the framework of the current regulation;
- Cancel any shares acquired, subject to authorisation by this Shareholders' Meeting under the 9th extraordinary resolution.
These share purchases can take place by any means, including through the acquisition of blocks of shares and at periods the Board of Directors deems fit.
These operations can be carried out during a public share offer in compliance with Article 232-15 of the AMF General Regulations, provided the offer is settled entirely in cash and the purchase operations are carried out as part of the ongoing implementation of the program underway and they are not likely to adversely affect the offer's success.
The Company reserves the right to use optional mechanisms or derivatives within the framework of the applicable regulations.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
44 2012 interim financial report | Naturex S.A
The Shareholders’ Meeting granted the Board of Directors full authority to carry out these operations, set their conditions and the methods, conclude any agreements and carry out any formalities.
This authorisation was granted for 18 months starting from the Shareholders’ Meeting of 8 June 2012. This authorisation cancels the authorisation granted to the Board of Directors by the Combined Shareholders’ Meeting of 27 June 2011.
During the previous share buyback program, the Company did not use any derivative products and to date does not hold any open positions on derivative products. The Company also did not use its authorisation to cancel any shares held.
Report on the liquidity contract
The authorisation to carry out this share buyback programme has been entrusted since June 2009 to NATIXIS which acts as an investment services provider (underwriter) to purchase shares for and in the name of the Company, in compliance with Articles 5 and 6 of the European Commission Regulation 2273/2003 of 22 December 2003, and in accordance with the code of professional conduct of the AMAFI (Assocation Française des Marchés Financiers), the French Association of financial market professionals (ex-AFEI) as recognised by the AMF.
The Company files the monthly declarations with the AMF concerning the purchases and sales of shares within the framework of the liquidity contract, distributes reports every six months on the liquidity contract and publishes them on its website.
Regarding the liquidity contract entrusted by Naturex to Natixis, at 30 June 2012, the liquidity account showed the following balance:
- 12,028 Naturex shares - €106,273.45
It should be noted that when the contract was established, the liquidity account showed the following balance:
- 923 Naturex shares - €277,801.85
On 16 February 2012, the Company contributed an additional €300,000 to the liquidity contract.
Indeed, the quality of Naturex’s results over the past few years, the successive capital increases and the Group’s acquisition policy have a very significant impact on the share’s natural liquidity.
Furthermore, the presence of investors in the capital who actively manage their investment has substantially increased the trading volume in the share’s market since 18 months.
In this context, NATIXIS’ valuation of the liquidity mechanism showed a need to increase the available funds in order to reduce the Naturex share’s volatility while providing it optimal liquidity.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 45
V.7 Potential capital
The Combined Shareholders' Meeting of 8 June 2012 authorised the Board of Directors, pursuant to Articles L. 225-177 to L. 255-185 of the French Commercial Code, to grant, on one or more occasions, options to subscribe to new Company shares or purchase existing Company shares, for the benefit of salaried employees or some of them and/or Company officers, as governed by Article L. 225-185 of the French Commercial Code, of the Company or companies that are connected to it directly or indirectly within the meaning of Article L. 225-180 of the French Commercial Code. The Shareholders’ Meeting decided that the total number of options that will be opened cannot
confer the right to subscribe to or purchase a number of shares representing more than 3% of the
existing share capital on the day of the first allocation.
The Board of Directors shall determine the subscription price for new shares or the purchase price
for existing shares, on the day the options are allocated, which may not be less than the minimum
price established by the applicable existing regulations.
The Combined Shareholders' Meeting of 8 June 2012 duly noted that no option can be granted (i)
during a period of ten trading days preceding and following the date on which the annual
consolidated financial statements are made public, (ii) during the period between the date when the
Company becomes aware of information which, if made public, could have a significant impact on
the Company’s share price, and the ten trading days after this information is made public and (iii) less
than twenty trading days after detaching a coupon giving the right to dividends or to an increase in
capital.
This authorisation is valid for a period of 38 months starting on 8 June 2012. On the date this
document was filed, the Company had not used the previous authorisation granted by the Combined
Shareholders' meeting of 27 June 2011.
On the filing date of this document, the Company had not used this new authorisation.
On this filing date, in light of the options that have expired in the different plans in effect, the maximum dilution resulting from the various share subscription plans would be 2.51%.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
46 2012 interim financial report | Naturex S.A
Share subscription plan highlights
The situation of share subscription option plans in effect on the filing date of this document, implemented by the Board of Directors subsequent to decisions taken during the Shareholders’ Meetings of 14 June 2006, 30 June 2007, 30 June 2008, 30 June 2009 and 30 June 2010, is as follows:
Plan No. 10 Plan No. 11 Plan No. 12 Plan No. 13 Plan No. 14
Board of Directors grant date 27/03/2007 25/03/2008 13/03/2009 26/04/2010 15/04/2011
Date of the Shareholders Meeting
authorising the grants 14/06/2006 30/06/2007 30/06/2008 30/06/2009 30/06/2010
Strike price (€) 49.65 27.54 24.00 30.12 45.33
Starting date for the exercise period 27/03/2010 25/03/2011 13/03/2012 26/04/2013 15/04/2014
Expiry date 27/03/2012 25/03/2014 13/03/2015 26/04/2015 15/04/2016
Total number of options granted
23,929 47,362 53,650 52,150 57,094
Of which to the top 10 employee beneficiaries 4,560 5,600 10,500 12,200 12,000
Of which to corporate officers 13,000 33,000 33,000 26,000 26,000
Jacques Dikansky 10,000 25,000 25,000 18,000 18,000
Thierry Lambert 1,500 4,500 4,500 4,500 4,500
Stéphane Ducroux 1,500 3,500 3,500 3,500 3,500
Total number of beneficiaries 48 59 64 78 195
Of which to corporate officers 3 3 3 3 3
Number of expired options 18,433 4,972 3,666 4,566 3,043
Number of options subscribed
5,496 132 - - -
Of which to corporate officers - - - - -
Number of outstanding options
0 42,258 49,984 47,584 54,051
As the expiry date of Plan No. 10 was 27 March 2012, the plan had consequently fully lapsed on the publication date of this document.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 47
Options granted to corporate officers and to the top 10 employee beneficiaries who are not corporate officers in the period from 1 January to 30 June 2021
Options to subscribe for shares granted to and exercised by each corporate
officer
Total number of
options granted/share
subscribed
Price (€) Plan Expiry date
Options granted over the period from 1 January to 30 June 2012 to corporate
officers by the issuer and by any company in the Group
None
Options exercised over the period from 1 January to 30 June 2012 by corporate
officers of the issuer and of any company in the Group
None
Options to subscribe for or purchase shares granted to and exercised by to the
top ten non-corporate officer employee beneficiaries
Total number of
options granted/share
subscribed
Average
weighted
price (€)
Plan Expiry date
Options granted over the period from 1 January to 30 June 2012 by the issuer and
by any company included within the option grant's scope, to the ten employees of
the issuer and of any company included within this scope to whom the most
options were granted
None
Options held on the issuer and the aforementioned companies exercised, over the
period from 1 January to 30 June 2012, by the ten employees of the issuer and of
these companies, who had subscribed to the most options
3,360 49.65 10 27/03/2012
Naturex’s Board of Directors duly noted on 29 March 2012 the exercise of share subscription options under plan No. 10 allotted by the Board of Directors on 27 March 2007, which expired on 27 March 2012:
- 5,496 options were exercised by 22 employee beneficiaries, resulting in the creation of 5,496 new ordinary shares, including 3,360 shares granted to top 10 non-corporate employee beneficiaries;
- The executive corporate officers did not exercise their options under this plan.
Given the plan’s expiry on 27 March 2012, options not subscribed have lapsed. The Company's Board of Directors duly noted on 29 March 2012 the exercise of share subscription options under plan No. 11 allotted by the Board of Directors on 25 March 2008 with an expiry date of 25 March 2014: - 132 options were exercised by 1 employed beneficiary resulting in the creation of 132 new
ordinary shares. Since the date of the filing of this document by the Company, the exercise of no options has been recorded.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
48 2012 interim financial report | Naturex S.A
V.8 Appropriation of income for the period ending 31 December 2011 and dividend distribution
V.8 Appropriation of income for fiscal 2011 and dividend distribution
The Naturex S.A. Shareholders' Meeting of 8 June 2012, acting on a proposal from the Board of
Directors, decided to allocate the profit of €3,908,053.21 for the year ended 31 December 2011 as
follows:
- Deduct €770,558 for the dividend;
- Appropriate 5% of the income (i.e.; €195,402.66) to the “Legal Reserve” item, which will thereby
be increased from €592,651.14 to €788,053.80; and
- Carry forward the balance of the income (i.e.; €2,942,092.55) to the line item “Retained Earnings
/ (Accumulated Deficit)”, that accordingly increased from -€351,744.68 to €2,590,347.87.
As such the total dividend for each share is set at €0.10 with the entire sum distributed eligible for
the 40% tax allowance mentioned in Article 158-3-2° of the French General Tax Code.
This dividend distribution was paid on 30 July 2012.
Option for the payment of dividends in cash or shares
The Shareholders Meeting of 8 June 2012 also gave shareholders the option of having the dividend paid in cash or in shares between the period from 15 June 2012 and 18 July 2012 inclusive, subject to making this request to financial intermediaries authorised to pay the dividend and/or the company. The share price used as payment for the dividend was €41.01 which is equal to 90% of the average of
the prices listed over the twenty trading preceding the Shareholders' Meeting of 8 June 2012, less
the net amount of the dividend, in accordance with the provisions of Article L.232-19 of the French
Commercial Code.
Two Euronext notices providing details on the practical procedures for this option were published on
4 and 12 June 2012.
The date for payment of the cash dividend and admission of the new shares to trading on NYSE Euronext Paris was 30 July 2012. The Company's Board of Directors formally recorded the issue of 16,871 new shares with a par value of €150 per share resulting from the exercise of the option for payment of the dividend in shares and the resulting capital increase.
These new shares have a record date of 1 January 2012 and break down as follows:
- 15,024 new ordinary shares, on presentation of 5,103,134 coupons; - 1,847 new preferred shares, on presentation of 757,308 coupons;
As such, the capital was increased €25,306,050 amounting to €11,592,118.50 on the filing date of this document for 7,728,079 shares with a par value of €1.50 per share
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 49
VI. Shareholder information
Naturex has been listed since October 1996 on NYSE Euronext in Paris, compartment B
Number of shares comprising the capital on the filing date of this document: 7,728,079 6,968,924 ordinary shares (ISIN FR0000054694) 759,155 preferred shares (ISIN FR0010833251) Naturex is part of the CAC Small and Gaïa indexes.
Naturex is eligible for the "long only" Deferred Settlement Service (SRD).
In December 2011, Naturex implemented a level 1 sponsored American Depositary Receipt (ADR) programme. Naturex’ ADRs are traded over-the-counter in the United States under the symbol NTUXY.
SYMBOL: NRX - Reuters: NATU.PA - Bloomberg: NRX:FP - DR Symbol: NTUXY
Securities management
Security management services for registered shares recorded directly in the Company's share
register (nominatif pur) are assured by:
Societe Generale Securities Service
Service Nominatif Clientèle Emetteurs
B.P. 81236
44312 Nantes Cedex 3 - France
Management of the liquidity contract
NATIXIS Corporate Broking manages the liquidity contract.
Analyst coverage
Arrowhead, Berenberg Bank, Cm-Cic Securities, Davy Research, ID Midcaps, Kepler Capital Market,
Natixis, Portzamparc, Société Générale.
2012 financial information schedule
Financial information
Revenue – Q1 2012 26 April 2012
Results – Q1 2012 29 May 2012
Revenue – H1 2012 25 July 2012
Results – H1 2012 30 August 2012
Revenue – Q3 2012 5 November 2012
Results – Q3 2012 29 November 2012
Revenue – FY 2012 24 January 2013
Results – FY 2012 27 March 2013
Press releases are released at the end of the trading day.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
50 2012 interim financial report | Naturex S.A
Information for individual and institutional shareholders
Since it was listed on the stock market, Naturex has enjoyed a relationship of trust with its shareholders, whether individuals or institutions, based on dialogue and transparency.
Naturex has made the commitment to keep its shareholders informed directly and precisely of its activity, strategy and growth prospects over the long-term.
To this end, Naturex provides the public with all of the published financial information (press releases, registration document, financial presentations, etc.) through its website www.naturex.com, available in French and English versions:
Registration document
Available in French and in English, this document can be downloaded from the Naturex website. A printed version can also be obtained free of charge by simply contacting the Company.
Shareholders' newsletter
Published twice a year, it is available on the website and is sent to identified shareholders by Naturex.
Committed to maintaining ongoing dialogue with its individual and institutional shareholders, Naturex participates in many events and meetings throughout the year:
Information meetings and site visits
Two SFAF (French Society of Financial Analysts) meetings are organised every year when the half-year and annual results are presented to the financial community (investors, analysts and financial press).
Naturex also organises visits to production sites in France at its Avignon site and in Europe.
Meetings with investors
Naturex participates in many investor meetings in the form of one-to-one meetings, conferences
and road shows, in France and abroad (London, Frankfurt, Brussels, Amsterdam, Geneva and the
United States).
The Actionaria trade show
The year's key investor relations event, Naturex has participated in the Actionaria Trade Show in
Paris since it was created. This event provides an opportunity to meet with and speak directly to
individual shareholders.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 51
Share price and trading activity trends
Price (in €) Trading volume (in number of shares)
Trading volume (in € millions)
Average closing price
High Low Per month Per trading session
Monthly total
Fiscal 2008 27.33 37.49 20.15 87,728 4,087 2.38
FY 2009 25.54 32.10 18.60 87,895 4,185 2.31
FY 2010 33.21 45.00 31.26 118,373 4,967 3.83
January 2011 41.20 43.13 39.46 147,664 7,032 6.32
February 2011 40.80 42.12 37.32 109,848 5,492 4.62
March 2011 41.02 42.90 34.46 301,525 13,110 12.80
April 2011 48.15 52.14 43.26 394,607 20,769 19.11
May 2011 51.41 57.67 48.71 324,250 14,739 17.42
June 2011 54.56 58.51 50.91 236,774 10,762 13.40
July 2011 54.69 61.56 50.17 242,748 11,559 13.83
August 2011 48.78 53.32 40.74 360,821 15,688 17.76
September 2011 49.80 53.32 46.53 158,012 7,182 8.17
October 2011 50.91 55.62 43.59 204,378 9,732 10.24
November 2011 51.28 55.0 46.09 194,446 8,838 10.01
December 2011 48.21 51.90 46.20 226,040 10,764 10.86
FY 2011 48.43 61.56 37.32 241,759 11,306 12.04
January 2012 48.18 51.86 46.65 207,467 9,430 9.95
February 2012 49.65 50.69 48.32 180,621 8,601 8.96
March 2012 51.81 54.50 49.27 140,319 6,378 7.28
April 2012 49.68 54.47 47.51 231,754 12,198 11.60
May 2012 45.93 49.40 42.50 190,109 8,641 8.72
June 2012 46.78 48.50 45.40 102,901 4,900 4.80
July 2012 46.49 47.90 44.13 100,310 4,560 4.65
Source: NYSE Euronext Paris (monthly information, trading ranges and averages for the period)
Monthly trading volume for the 2012 first half amounted to 203,301 shares and €12.4 million in capital, with an average closing price of €49.63 per share.
At 29 June 2012, the closing price of the Naturex share was €46.63 for a trading volume of 3,636 shares in the session. The market capitalisation on this date was €359.6 million.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
52 2012 interim financial report | Naturex S.A
VII. Principal risks and uncertainties for the remaining six months of 2012
Details on the financial risk management (credit risk, liquidity risk, exchange rate risk, interest rate risk are provided in Note 15 to the interim consolidated financial statements.
Except for items mentioned in this note the Company has not identified any material changes in risk and uncertainties for the next six months with respect to operations, the organisational structure, strategy and market environment as described on pages 47 to 52 of the 2011 registration document (Sustainable Development - section III- Identifying and managing the main risk factors), filed with the French securities regulator (Autorité des Marchés Financiers or AMF) on 26 April 2012 (No. D.12-0424) and available at the website of the company (www.naturex.com) or the AMF (www.amf-france.org).
Concerning the risk identified under the heading "Risk of dependence on executives" and pursuant to the extended absence of Jacques Dikansky for health reasons, the Company considers that it has taken the necessary measures to address the effects of this situation and prevent any adverse consequences on the development of the Group's strategic priorities:
- At the level of corporate governance, the directorships of Jacques Dikansky and Mr Thierry Lambert were renewed by the Combined Shareholders' Meeting of 8 June 2012 for terms of 6 years, i.e. until the Shareholders' Meeting called approve the financial statements for the period ending 31 December 2017. The other members of the Board of Directors include Paul and Olivier Lippens, independent directors and executive officers of Finasucre, Stéphane Ducroux, Icecap Chairman of Naturex Inc., and Jacqueline Dikansky.
The Board of Directors of Naturex confirmed the re-election of Mr Jacques Dikansky as Chairman
for his term of office as director. However, as the current state of his health does not allow him to
fulfil this function, the effective chairing of the Board of Directors is delegated to Mr Thierry
Lambert, in his capacity as Vice-Chairman; Mr Lambert is also appointed to the functions of CEO
of Naturex.
The Board of Directors stipulated that if the health of Mr Jacques Dikansky so permitted, he will
again be entrusted with the General Management of the Company, Mr Thierry Lambert would
then return to his function as Deputy CEO.
For a number of months Naturex has undertaken to implement changes in the organisation of
corporate governance involving:
- The creation of Board committees, including the Management Committee, Audit Committee
and the Nominating and Compensation Committee with the objective of formalising
processes for making strategic decisions;
- Expanding the Board of Directors by adding new members, and in particular, independent
directors.
- With respect to operational management, a Management Committee was formed headed by Thierry Lambert, Vice Chairman of the Board of Directors and Chief Executive Officer of the Company, and including the most experienced executives responsible for the Group's main operating departments, and who for the most part have worked at Naturex for many years.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 53
VIII. Outlook and trends
Demand for more natural alternatives for certain ingredients is growing both in geographical terms (traditional markets of Western Europe and North America/emerging markets of Asia, Latin America and Eastern Europe), but also by segment (strong penetration of natural ingredients not only in the food industry but also for products offering positive health effects and cosmetics). This trend is furthermore continuing despite a difficult macroeconomic environment, particularly in Europe.
Performances in the 2012 first half confirmed the technical expertise and commercial momentum of Naturex in markets with sustainable growth potential.
On the strength of these results and based on its capacity to develop new value-added projects, Naturex intends to pursue a strategy of development combining both sustained organic growth and acquisitions targeting opportunities for positive synergies.
In the second half of the year, Naturex will continue its efforts devoted to successfully integrating companies acquired in recent months.
The Company has not issued any forecasts for fiscal 2012.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
54 2012 interim financial report | Naturex S.A
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES AT 30 JUNE 2012
CONTENTS
CONSOLIDATED BALANCE SHEET.................................................................................................................. 55
CONSOLIDATED INCOME STATEMENT .......................................................................................................... 56
SUMMARY OF COMPREHENSIVE INCOME ..................................................................................................... 57
CASH FLOW STATEMENT ............................................................................................................................. 58
CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY .................................................................................... 59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ................................................................................ 61
NOTE 1 GENERAL INFORMATION ................................................................................................................ 61
NOTE 2 INFORMATION ON CONSOLIDATION ............................................................................................... 63
NOTE 3 COMPLIANCE STATEMENT.............................................................................................................. 67
NOTE 4 ACCOUNTING PRINCIPLES AND METHODS ....................................................................................... 68
NOTE 5 VALUATION RULES AND METHODS ................................................................................................. 71
NOTE 6 BUSINESS COMBINATIONS ............................................................................................................. 79
NOTE 7 GOODWILL ................................................................................................................................... 86
NOTE 8 NON-CURRENT ASSETS .................................................................................................................. 87
NOTE 9 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES........................................................................... 88
NOTE 10 INVENTORIES OF WORK IN PROGRESS ............................................................................................. 90
NOTE 11 TRADE AND OTHER RECEIVABLES .................................................................................................... 90
NOTE 12 FINANCIAL DEBT ........................................................................................................................... 91
NOTE 13 EMPLOYEE BENEFITS ..................................................................................................................... 94
NOTE 14 CURRENT PROVISIONS ................................................................................................................... 96
NOTE 15 FINANCIAL RISK MANAGEMENT...................................................................................................... 96
NOTE 16 OPERATING SEGMENTS ................................................................................................................. 98
NOTE 17 PAYROLL EXPENSES ..................................................................................................................... 100
NOTE 18 EXTERNAL EXPENSES AND DEVELOPMENT EXPENDITURES ............................................................... 102
NOTE 19 OTHER CURRENT OPERATING EXPENSES ........................................................................................ 103
NOTE 20 OTHER NON-CURRENT OPERATING EXPENSES ................................................................................ 103
NOTE 21 FINANCIAL INCOME AND EXPENSES .............................................................................................. 104
NOTE 22 INCOME TAX .............................................................................................................................. 104
NOTE 23 CAPITAL MANAGEMENT .............................................................................................................. 106
NOTE 24 RELATED PARTIES AND OFF-BALANCE SHEET COMMITMENTS .......................................................... 107
STATUTORY AUDITORS' REPORT ON 2012 INTERIM FINANCIAL INFORMATION ..................................................109
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 55
In €000sNotes 30/06/2012 31/12/2011
NON-CURRENT ASSETS 229 333 209 897
Goodwill 7 103 188 93 467
Other intangible assets 8 9 557 9 266
Property, plant and equipment 8 110 680 103 174
Financial assets 8 1 702 1 167
Non-current derivatives 9 213 343
Deferred tax assets 22 3 993 2 480
CURRENT ASSETS 225 549 216 321
Inventories 10 135 111 115 150
Current derivatives 9 429 1 200
Tax receivables 667 667
Trade and other receivables 11 73 619 61 642
Cash and cash equivalents 12 15 722 37 662
TOTAL ASSETS 454 882 426 218
In €000s30/06/2012 31/12/2011
Capital 11 567 11 558
Additional paid-in capital 164 863 164 594
Reserves 61 839 44 307
Income for the period 9 028 15 628
SHAREHOLDERS' EQUITY 247 297 236 088
Attributable to owners of the parent 246 908 235 714
Attributable to non-controlling interests 389 374
NON-CURRENT LIABILITIES 111 081 103 904
Long-term financial debt 12 93 064 87 327
Non-current derivatives 9 1 991 2 254
Employee benefits 13 4 161 2 913
Deferred tax liabilities 22 11 865 11 409
CURRENT LIABILITIES 96 504 86 227
Current financial debt 12 23 037 17 588
Current derivatives 9 947 893
Current provisions 14 44 40
Tax payables 4 005 1 582
Trade and other payables 66 884 65 208
Bank credit facilities 12 1 586 916
TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 454 882 426 218
CONSOLIDATED BALANCE SHEET
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
56 2012 interim financial report | Naturex S.A
CONSOLIDATED INCOME STATEMENT
In €000s
Notes 30/06/2012 30/06/2011
Revenue 16 147 154 127 925
Change in finished goods and in-progress inventory 7 559 6 822
Operating grants 1 162 1 321
Other operating income 3 581 2 039
Purchases -65 849 -59 307
Payroll expenses -29 313 -24 019
External charges 18 -35 267 -31 167
Taxes other than on income -637 -510
Amortisation/depreciation expenses 8 -7 332 -6 197
Other current operating expenses 19 -3 173 -878
INCOME FROM OPERATIONS 17 885 16 029
Other non-current operating expenses 20 -1 714 -
NET OPERATING INCOME 16 16 170 16 029
Income from cash management and cash equivalents 129 138
Gross borrowing costs -2 482 -2 938
NET BORROWING COSTS*** 21 -2 353 -2 800
OTHER FINANCIAL INCOME AND EXPENSES 21 -578 913
INCOME BEFORE TAX 13 239 14 142
TAX EXPENSE 22 -4 211 -4 408
NET INCOME FOR THE PERIOD 9 028 9 734
Income for the period attributable to:
Company shareholders 9 012 9 735
Non-controlling interests 16 -1
Earnings per share: 23.2
Basic earnings per share (in euros) 1,1692 1,5186
Diluted earnings per share (in euros) 1,1405 1,4677
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 57
SUMMARY OF COMPREHENSIVE INCOME
In €000s30/06/2012 30/06/2011
NET INCOME FOR THE PERIOD 9 028 9 734
Gains and losses from the translation of financial statements of foreign operations 3 028 -2 234
Fair value of hedging instruments
Changes in fair value of hedging instruments 164 306
Deferred taxes on hedging instruments -65 -103
TOTAL COMPREHENSIVE INCOME 12 156 7 704
Attributable to Company shareholders 12 141 7 705
Attributable to non-controlling interests 15 -1
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
58 2012 interim financial report | Naturex S.A
In €000s30/06/2012 30/06/2011
Net income for the period 9 028 9 734
Adjustments for non-cash items:
Net amortisation/depreciation a l lowances and provis ions 7 695 4 819
Expenses and income related to s tock options*** 109 45
Capita l ga ins / (losses) on disposals 51 47
Net borrowing costs 2 353 2 800
Other financia l income and expenses 578 (913)
Tax expense 4 211 4 408
Operating cash flow before WCR 24 025 20 939
Taxes pa id (2 652) (3 029)
Change in inventories (15 079) (7 004)
Change in trade receivables and related accounts (9 835) (8 088)
Change in trade payables and related accounts (3 306) 3 479
Net cash used in operating activities A (6 846) 6 298
Acquis i tion of subs idiary, net of cash acquired (11 758) -
Intangible investments (1 244) (2 217)
Capita l expenditures (9 690) (5 130)
Financia l investments (552) (371)
Disposals of fixed assets 1 502 30
Repayment of long-term investments 33 250
Net cash used in investing activities B (21 709) (7 438)
Proceeds from share i ssues 277 -Net dividends pa id to parent company shareholders - -Inflows from new borrowings 18 428 7 000
Loan reimbursements , net of derivatives (9 936) (7 659)
Debt reimbursements resulting from finance leases (96)
Changes in other financia l l iabi l i ties 1 207 (408)
Proceeds from the sa le of treasury shares -
Interest payments (2 932) (2 229)
Net cash provided by financing activities C 6 947 (3 296)
Net change in cash and cash equivalents A+B+C (21 608) (4 436)
Closing cash and cash equivalents 14 136 10 608
Opening cash and cash equivalents 36 746 16 166
Effect of exchange rate changes on cash 1 002 1 122
Net change in cash and cash equivalents (21 608) (4 436)
CASH FLOW STATEMENT
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 59
CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY
Equity attributable to the Group
Capital Additional paid-in capital
Group share
in €000s (Group share)
Shareholders' equity at 1 January 2012 11 558 164 594 41 051 2 891 15 619 235 714
Income for the period*** 9 012 9 012
Change in translation differences 3 029 3 029
Changes in fair value of hedging instruments, net of tax 99 99
Other comprehensive income - - - 99 3 029 - 3 128
Comprehensive income for the period - - - 99 3 029 9 012 12 140
Appropriation of income - - - 15 619 - (15 619) -
Dividends paid - - - (771) - - (771)
Capital increase - - - - - - -
Stock options exercised 8 268 - - - - 277
Stock option benefits - - - 109 - - 109
Change in treasury shares - - (561) - - - (561)
Non-controlling interests acquired - - - - - - -
Total transactions with shareholders 8 268 (561) 14 957 - (15 619) (946)
Shareholders' equity at 30 June 2012 11 567 164 863 (561) 56 107 5 920 9 012 246 908
Treasury shares Group reservesTranslation
differences Net income,
Group share
Shareholders'
equity
Capital Additional paid-in capital
Group share
in €000s (Group share)
Shareholders' equity at 1 January 2011 9 616 118 447 (201) 26 625 (894) 14 810 168 403
Income for the period*** 15 619 15 619
Change in translation differences 3 785 3 785
Changes in fair value of hedging instruments, net of tax 77 77
Other comprehensive income - - - 77 3 785 - 3 862
Comprehensive income for the period - - - 77 3 785 15 619 19 481
Appropriation of income - - - 14 810 - (14 810) -
Dividends paid 16 507 - (641) - - (118)
Capital increase 1 926 45 641 - - - - 47 566
Stock options exercised - - - - - - -
Stock option benefits - - - 180 - - 180
Change in treasury shares - - 201 - - - 201
Non-controlling interests acquired - - - - - - -
Total transactions with shareholders 1 942 46 147 201 14 349 - (14 810) 47 830
Shareholders' equity at 31 December 2011 11 558 164 594 41 051 2 891 15 619 235 714
Net income,
Group shareTreasury shares Group reserves
Translation
differences
Shareholders'
equity
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
60 2012 interim financial report | Naturex S.A
Equity attributable to non-controlling interests
Total shareholders’ equity***
in €000s (Group share)
Shareholders' equity at 1 January 2012 235 714 416 (51) 9 374 236 088
Income for the period*** 9 012 16 16 9 028
Change in translation differences 3 029 - (1) - (1) 3 028
Changes in fair value of hedging instruments, net of tax 99 - - - - 99
Other comprehensive income 3 128 - (1) - (1) 3 127
Comprehensive income for the period 12 140 - (1) 16 15 12 155
Appropriation of income - 9 - (9) - -
Dividends paid (771) - - - - (771)
Capital increase - - - - - -
Stock options exercised 277 - - - - 277
Stock option benefits 109 - - - - 109
Change in treasury shares (561) - - - - (561)
Non-controlling interests acquired - - - - - -
Total transactions with shareholders (946) 9 - (9) - (946)
Shareholders' equity at 30 June 2012 246 908 425 (52) 16 389 247 297
Shareholders'
equity
Total
shareholder
s’ equity***Net income for
the period
Attributable to non-controlling interests
Reserves
Shareholders'
equity
Translation
differences
Total shareholders’ equity***
in €000s (Group share)
Shareholders' equity at 1 January 2011 168 403 408 (56) 8 360 168 763
Income for the period*** 15 619 9 9 15 628
Change in translation differences 3 785 - 5 - 5 3 791
Changes in fair value of hedging instruments, net of tax 77 - - - - 77
Other comprehensive income 3 862 - 5 - 5 3 868
Comprehensive income for the period 19 481 - 5 9 14 19 495
Appropriation of income - 8 - (8) - -
Dividends paid (118) - - - - (118)
Capital increase 47 566 - - - - 47 566
Stock options exercised - - - - - -
Stock option benefits 180 - - - - 180
Change in treasury shares 201 - - - - 201
Non-controlling interests acquired - - - - - -
Total transactions with shareholders 47 830 8 - (8) - 47 830
Shareholders' equity at 31 December 2011 235 714 416 (51) 9 374 236 088
Shareholders'
equity
Translation
differences
Shareholders'
equity
Total
Shareholder
s’ Equity*** ReservesNet income for
the period
Attributable to non-controlling interests
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 GENERAL INFORMATION
1.1 Half-year operating highlights
1.1.1 Acquisition of Pektowin
Naturex announced in January 2012 the acquisition of 100% of the capital of Pektowin, a Polish
company specialised in fruit and vegetable pectins and concentrated juices.
ZPOW Pektowin SA (Pektowin) is a Polish company located in Jaslo (southeast of Poland), specialised
in the production of apple and citrus pectins and fruit and vegetable concentrated juices plus, to a
lesser extent, the preparation of processed foods.
This acquisition fits perfectly with the Group’s strategy to accelerate its international development,
expand its product line and strengthen its industrial presence, especially in emerging countries.
Furthermore it allows Naturex, not only to reinforce its plant and equipment in the pectin area, but
also to take advantage of a major expansion capacity in order to best meet customers’ needs.
This acquisition is accompanied by the opening of a sales office in Warsaw (Poland). The commercial location of Naturex in Warsaw and the current penetration of Pektowin in the Polish food industry will significantly strengthen the presence of the Group in Eastern Europe with a broader customer base, and encourage locally the promotion and the marketing of all its product lines.
The acquisition of Pektowin was finalized by the signature of 11 January 2012, confirming the lifting
of the standard conditions precedent related to the privatization of ZPOW Pektowin SA (Pektowin) in
favour of Naturex.
Naturex immediately replaced the administrative bodies of Pektowin, marking a first step in the
integration of the company consolidated by the Group as of 1 January 2012.
The acquisition cost (equivalent to the acquisition price) of €5.6 million resulted in a provisional
amount in goodwill of €2 million at 30 June 2012.
1.1.2 Acquisition of the Valentine companies
Naturex announced the acquisition of Valentine, an Indian company specialised in the production of
fruit and vegetable powders plus natural colours for the food processing industry. Valentine is
comprised of Valentine Agro Ltd. and Valentine Foods Ltd.
An Indian company created in 1994 and specialised in the production of natural colours (annatto,
turmeric, etc.) and fruit and vegetable powders (tomato, beet, etc.)., Valentine employs 40 people
and has two plants near Mumbai.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
62 2012 interim financial report | Naturex S.A
In conjunction with this acquisition, Naturex has established a purchasing office in order to take
better advantage of the country’s wealth of raw materials across the entire Group.
This acquisition fits perfectly with Naturex's strategy for developing in emerging countries. Naturex
has in this way significantly strengthened its commercial presence in India that account for the major
share of Valentine's revenue. This first industrial set-up in Asia will supplement the Group's regional
production centres in Europe and in the Americas, in particular for natural colours. With its expertise
in formulation and spray drying processes, Valentine has developed over the years a loyal customer
base of major names in the Indian food industry that include both local companies and subsidiaries
of multinationals.
At 30 June 2012 Naturex held 91.68% of the shares of Valentine Agro Private Ltd. and 100% of the
shares of Valentine Foods Private Ltd. The acquisition of the total amount of Valentine Agro Private
Ltd.'s shares will be definitively completed in the 2012 second half.
These two companies were fully consolidated on 1 April 2012.
The acquisition price of €3.9 million for Valentine Agro and €1.8 million for Valentine Foods resulted
in a provisional amount for goodwill of €3.4 million and €1.7 million respectively at 30 June 2012.
1.1.3 Acquisition of the Burgundy companies
In October 2011 Naturex acquired Burgundy, specialised in the production and commercialisation of
plant extracts for the nutraceutical, pharmaceutical and cosmetic industries, whose sales were
consolidated as of 1 October 2011.
This acquisition both strengthened the Group's industrial base by the addition of two new production
sites and increased its ability to meet customer needs by developing expertise in the nutraceutical,
pharmaceutical and personal care markets through its complementary product portfolio (active
substance master files, new botanical extracts, active ingredients).
At 31 December 2011, the consolidation was substantially finished, ending with simplified merger
procedure (transmission universelle de patrimoine) entailing the transfer of all assets and liabilities
from the French company to Naturex SA on 1 January 2012. The business combination of Burgundy’s
Spanish entity with Naturex SL is planned in the second half of 2012.
Burgundy France and Burgundy Iberia were consolidated by Naturex Group in the 2012 first half.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 63
1.2 Subsequent events
1.2.1 Acquisition of ITRAD
Naturex acquired all the ownership interest of the Abidjan-based Ivory Coast company ITRAD,
specialised in aril harvesting for the food industry for a total amount of £54,000.
In light of the acquisition date that was close to 30 June 2012 and the non-material nature of the
operations of this company for the reporting period, it will be fully consolidated in the second half of
2012.
NOTE 2 INFORMATION ON CONSOLIDATION
Consolidated subsidiaries and basis of consolidation
At 30 June 2012, the Group's consolidated operations included the following companies:
Company name AddressControlling
interest (%)
Ownership
interest (%)Consolidation method
Naturex SA
Site d'Agroparc - BP 1218
84911 Avignon Cedex 9
France
Siret No. 384 093 563 000 29
APE code: 2053Z
N/A N/A Full consolidation
Burgundy Iberia
Poligono Industrial Sector Mas Puigvert
Ouest
08389 Palafolls (Barcelona)
Spain
100% 100% Full consolidation
KF Specialty Ingredients Pty Ltd.
9 Garling Road, Kings Park,
NSW 2148,
Australia
100% 100% Full consolidation
Naturex AG
Industriestrasse, 8,
9220 Bischofszell
Switzerland
100% 100% Full consolidation
Naturex Australia Pty Ltd.
9 Garling Road, Kings Park,
NSW 2148,
Australia
100% 100% Full consolidation
Naturex Coöperatief U.A
Lairessestraat 154,
1075 HL Amsterdam,
Netherlands
100% 100% Full consolidation
Naturex Cooperative LLC
2711 Centerville Road,
Suite 400, Wilmington,
DE 19808,
USA
100% 100% Full consolidation
Naturex (South Korea)
Room 503, Leaders Bldg, 274-4, SeoHyun-
dong, BunDang-gu, SeongNam-si, GyeongGi-
do, 463-824
South Korea
100% 100% Full consolidation
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FY 2012 (6-month period from 1 January to 30 June 2012)
64 2012 interim financial report | Naturex S.A
Company name AddressControlling
interest (%)
Ownership
interest (%)Consolidation method
Naturex GMBH
Kranhais Süd Zolhafen 24,
50678 Köln
Germany
100% 100% Full consolidation
Naturex Holdings Inc.
2711 Centerville Road,
Suite 400, Wilmington,
DE 19808,
USA
100% 100% Full consolidation
Naturex Inc.
375 Huyler Street
South Hackensack, NJ 07606
USA
100% 100% Full consolidation
Naturex Inc. (Canada)
5955 Airport Road Suite 206
Mississauga L4VIR9, Ontario
Canada
100% 100% Full consolidation
Naturex - Ingredientes Naturais Ltda
Av. Buriti 5391 distrito Industrial
69075-000 Manaus
Brazil
100% 100% Full consolidation
Naturex Ingredientes Naturales S.A. de C.V
Sócrates 128, Int. 103 y 104;
Col. Polanco,
Mexico D.F. 11560
Mexico
100% 100% Full consolidation
Naturex K.K
TKK Bldg. 8th Floor, 1-2, Kanda-
Tomiyamacho, Chiyoda-ku, 101-0043 Tokyo,
Japan
100% 100% Full consolidation
Naturex LLC
15 Krijanovskogo Str. Block 5, Office 211
11728 Moscow,
Russia
99% 99% Full consolidation
Naturex Ltd.
Swadlincote, Derbyshire,
DE12 6JX,
United Kingdom
100% 100% Full consolidation
Naturex Maroc
Technopole Nouasser
BP 42 - 20240 Nouasser
Morocco
96% 96% Full consolidation
Naturex SpA
Via Galileo Ferraris, 44,
21042 Caronno Pertusella (VA)
Italy
100% 100% Full consolidation
Naturex Spain SL
Autovía A3, salida 343. Camino de Torrent
S/N
46930 Quart de Poblet
Spain
100% 100% Full consolidation
Naturex SPRL
Val d'or
Guldelle 96
1200 Brussels
Belgium
100% 100% Full consolidation
Naturex Trading Shanghai Co, Ltd.
Room 318, Building 2 N°8
1305, Huajing Road, Xuhui District
Shanghai, 200231
China
100% 100% Full consolidation
Valentine Agro Private Limited
1-3 Unmesh, 1255 Old Prabhadevi Road,
Mumbai – 400025
India
92% 100% Full consolidation
Valentine Agro Private Limited
1-3 Unmesh, 1255 Old Prabhadevi Road,
Mumbai – 400025
India
100% 100% Full consolidation
ZPOW PEKTOWIN SA
Jasło, ul.//K.K. Baczyńskiego 29,
38-200 Jasło
Poland
100% 100% Full consolidation
Naturex UK
Swadlincote, Derbyshire,
DE12 6JX,
United Kingdom
100% 100% Full consolidation
SCI Les Broquetons
Site D'Agroparc - BP 1218
84911 Avignon Cedex 9
France
100% 100% Full consolidation
The Talin Co Ltd.
Master House, 107 Hammersmith Road
London, W140QH,
United Kingdom
100% 100% Full consolidation
Biopolis
c/ Catedrático Agustín Escardino, 9 Edif. 2
Parc Científic Universitat de Valencia
46980 Paterna (Valencia)
Spain
25% 25% Not consolidated
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FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 65
Changes in Group structure in the period
Three companies were consolidated for the first time in the 2012 first half:
- Valentine Agro Private Limited (India) acquired and 91.68%-held by Naturex SA; - Valentine Agro Private Limited (India) acquired and wholly owned by Naturex SA; - ZPOW Pektowin SA (Poland) acquired and wholly owned by Naturex SA.
Their contribution to income and shareholders' equity for the period is disclosed in Note 6.
Because the impact of these acquisitions on the Group structure is less than 25%, the Group has not
produced pro forma financial statements.
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66 2012 interim financial report | Naturex S.A
2.3 Organisational structure
100% 100%
100% 100%
0,01%
100% 99,99%
100% 100%
100% 100%
100% 100%
100% 100%
100%
99%
96,30%
100%
100%
100%
100%
100%
100%
100%
100%
91,68%
100%
United States United States
NATUREX S.AFrance
NATUREX Holdings Inc NATUREX Inc
NATUREX AG NATUREX Cooperative LLC
Switzerland United States
NATUREX Spain SL NATUREX Coöperatief U.A
Spain Netherlands
NATUREX Trading Shanghai Co, Ltd NATUREX Ingredientes Naturais Ltda
China Brazil
NATUREX SpA KF Specialty Ingredients Pty Ltd
Italy Australie
NATUREX Sprl NATUREX Australia Pty Ltd
Morocco
Belgium Australia
NATUREX GmbH NATUREX Ltd
Germany United Kingdom
NATUREX LLC The Talin Co. Ltd
Russia United Kingdom
NATUREX Maroc S.A
BURGUNDY Iberia SAU
Spain
SCI Les Broquetons
Korea
France
NATUREX UK Ltd
United Kingdom
NATUREX Ingredientes Naturales SA de CV
Mexico
NATUREX Inc
Canada
NATUREX K.K
Japan
NATUREX
Zpow PEKTOWIN S.A
Poland
VALENTINE Agro Private Ltd
India
VALENTINE Foods Private Ltd
India
Europe / Africa
Americas
Asia / Oceania
Geographical area
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Naturex S.A | 2012 interim financial report 67
2.4 Affiliates and equity investments
No consolidated company included in the Group structure is a shareholder or affiliate of an ad hoc
entity.
2.4.1 Sanavie
An official notice (Feuille Officielle Suisse du Commerce or FOSC) of 10 February 2012 announced, by
decision of the Eastern Vaud District Court of 30 June 2011, the declaration of bankruptcy of the
company effective as of said date.
All assets of the Company were written off in previous periods.
As Naturex Group has not taken on any commitments beyond its initial investment, this dissolution
has not resulted in any additional losses for the Group.
2.4.2 Biopolis
During the business combination with Natraceutical’s Ingredients Division, the Group acquired a
24.9% stake in the research and development company Biopolis SL.
Since the Group has no significant influence on Biopolis, this equity investment is accordingly
presented under financial assets.
NOTE 3 COMPLIANCE STATEMENT
The interim condensed financial statements have been prepared in accordance with IAS 34 – Interim
Financial Reporting. As such, they do not include all disclosures required for complete annual
financial statements and must in consequence be read in conjunction with the Group's consolidated
financial statements published for the fiscal year ended 31 December 2011 (available at the website
www.naturex.com).
The interim condensed consolidated financial statements have been drawn up according to the
principles for recognition and measurement for IFRS accounts as adopted by the European Union on
this date.
These interim condensed financial statements were prepared under the responsibility of the Board of
Directors of 30 August 2012.
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68 2012 interim financial report | Naturex S.A
NOTE 4 ACCOUNTING PRINCIPLES AND METHODS
New standards and interpretations in issue not yet adopted
The accounting methods applied by the Group in the interim condensed financial statements are
identical to those used for the consolidated financial statements for the period ended 31 December
2011.
Note new standards or interpretations in effect have had an impact on the interim financial
statements. Furthermore, the Group does not anticipate a material impact from the new standards
and interpretations in issue but not yet applied with the exception of amended IAS 19 whose
application is mandatory for periods commencing on or after 1 January 2013 and concerning the
recognition of actuarial gains and losses under items of comprehensive income for which the
amounts are disclosed in Note 13.
4.2 Estimates and judgements
When drawing up consolidated financial statements, assumptions, estimates or assessments are
sometimes needed to establish certain data shown in the financial statements, particularly when it
comes to calculating provisions and carrying out impairment tests. These assumptions, estimates or
assessments are established on the basis of the information available or actual situations when the
accounts are closed. They are also based on past experience and various other factors.
Underlying estimates and assumptions are based on past experience and other factors that are
deemed to be plausible in light of the circumstances. They in turn serve as a basis for establishing the
carrying amounts of assets and liabilities, which cannot be directly ascertained from other sources.
Actual values can differ from estimated amounts.
Underlying estimates and assumptions are constantly re-examined. The impact of changes in
accounting estimates is recognised during the period in question when only that period is affected,
or during the period and any subsequent periods where the latter are also affected by the change.
All information on the main areas of uncertainty related to the estimates and judgements made in
applying the accounting methods liable to have the most significant impacts on the amounts
recognised in the financial statements, is reported in the following notes:
Note 5.1 Valuation rules and methods - Goodwill Note 5.4 Valuation rules and methods – Inventories
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Naturex S.A | 2012 interim financial report 69
4.3 Seasonal effects
Naturex’s activities have a very limited exposure to seasonal effects.
While the supply of certain raw materials is dependent on harvesting times, it is essentially spread
over the full year with a slight peak in spring and at the start of summer. The supply of extracts is not
affected at all by any seasonal effects.
Group sales are also globally unaffected by any seasonal effects. Certain specific product ranges are
subject to seasonal effects, such as colouring agents and flavourings for drinks in the Food &
Beverage Division in spring and summer, and a few of the Nutrition & Health product ranges, which
record higher growth in autumn and winter. Overall, these products offset each other and the
Group’s product mix is such that it is not exposed to any marked seasonal impact.
4.4 Initial recognition of assets and liabilities
The closing date for all annual financial statements is 31 December. The closing date for individual
financial statements of the Valentine companies, consolidated for the first time on 1 April 2012, was
31 March. For the purposes of consolidation, these companies will consequently provide financial
statements with a closing date of 31 December.
The condensed consolidated financial statements include the financial statements of the parent
company as well as those companies controlled by the parent at the end of the reporting period. The
notion of control in this context is taken to mean the power to define and manage the financial and
operational strategies of a company in order to benefit from its activities. The subsidiaries over which
the group exercises control, whether directly or indirectly, are fully consolidated.
Foreign currency transactions
Transactions are booked at the historic exchange rate when they are carried out.
The gains/losses on foreign exchanges resulting from these conversions are recognised in the income
statement, except for a financial liability designated as a hedge for a net investment in a foreign
entity or instruments characterised as cash flow hedges, which are recognised as other items in
comprehensive income.
When the settlement of a monetary item, which is a receivable from (or a payable to) a foreign
operation, is not scheduled or likely in the foreseeable future, the resulting foreign exchange gains
and losses are considered to be part of the net investment in the foreign operation and are
recognised as other items in comprehensive income and are presented in the translation reserve.
Translation of financial statements expressed in foreign currencies
The financial statements of the Group's foreign subsidiaries are held in their functional currency.
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FY 2012 (6-month period from 1 January to 30 June 2012)
70 2012 interim financial report | Naturex S.A
The balance sheets of companies whose functional currency is not the consolidation currency are
converted into euros at the closing exchange rate, except for shareholders' equity, which is
converted at its historical exchange rate.
Income statements are converted at the average exchange rate for the period, which, major
fluctuations aside, is generally close to the exchange rate at the transaction date.
Translation differences are recorded separately in the "Translation adjustments" line item under
shareholders' equity. They include the impact of changes in exchange rates on assets and liabilities
and the difference between income calculated based on the average exchange rate and income
calculated based on the closing exchange rate.
Goodwill and fair value adjustments arising from the acquisition of subsidiaries whose functional
currency is not the euro are considered as assets and liabilities of the subsidiary. They are therefore
expressed in the subsidiary's functional currency and converted at the closing exchange rate.
The closing exchange rates used are as follows:
30-juin-12 31-déc-11 30-juin-11
Austra l ia EUR / AUD 1,2381 1,2723 1,3485
Brazi l EUR / BRL 2,6169 2,4342 2,2601
Canada EUR / CAD 1,2894 1,3215 1,3951
China EUR / RMB 7,9490 8,1625 9,3416
South Korea EUR / KRW 1 457,9900 1 498,6900 1 543,1900
India EUR / INR 70,7204
Japan EUR / JPY 100,0400 100,2000 116,2500
Morocco EUR / MAD 11,1781 11,1505 11,3111
Mexico EUR / MXN 16,9596 18,0512
Poland EUR / PLN 4,2611
Russ ia EUR / RUB 41,7047 41,6714 40,4000
Switzerland EUR / CHF 1,2016 1,2156 1,2071
UK EUR / GBP 0,8055 0,8353 0,9025
USA EUR / USD 1,2578 1,2939 1,4453
Country CurrenciesClosing exchange rate
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FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 71
The average exchange rates used are as follows:
NOTE 5 VALUATION RULES AND METHODS
5.1 Goodwill
Pursuant to the revised IFRS 3 accounting standard, during a business combination, the Group
measures goodwill as the fair value of the counterparty transferred (including the fair value of any
equity investments previously held in the acquired company) plus the amount recognised for any
equity investments that do not confer control of the acquired company, less the net amount
recognised (generally the fair value) of the identifiable assets acquired and liabilities assumed. All of
these items are measured at the acquisition date. When the difference is negative, a profit on the
acquisition at advantageous conditions is immediately recognised in the income statement.
The Group chooses on a transaction-by-transaction basis, to value on the acquisition date any equity
investment that does not confer control, either at fair value or at the share of the acquired
company’s net identifiable assets.
30-juin-12 31-déc-11 30-juin-11
Austra l ia EUR / AUD 1,2629 1,3452 1,3549
Brazi l EUR / BRL 2,4346 2,3094 2,2881
Canada EUR / CAD 1,3110 1,3925 1,3985
China EUR / RMB 8,2475 8,9270 9,2406
South Korea EUR / KRW 1 457,9900 1 498,6900 1 543,1900
India EUR / INR 69,1447
Japan EUR / JPY 103,6348 110,8108 117,4739
Morocco EUR / MAD 11,1812 11,3230 11,3525
Mexico EUR / MXN 17,3956 18,0512
Poland EUR / PLN 4,2426
Russ ia EUR / RUB 39,6392 40,9021 40,3950
Switzerland EUR / CHF 1,2059 1,2376 1,2738
UK EUR / GBP 0,8266 0,8738 0,8700
USA EUR / USD 1,3082 1,4036 1,4086
Country CurrenciesAverage exchange rate
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72 2012 interim financial report | Naturex S.A
For acquisitions completed prior to 1 January 2010, the goodwill represents the surplus of the
acquisition cost compared to the Group’s share in the amounts recognised (generally at fair value)
for assets, liabilities and contingent liabilities.
Acquisition-related costs, other than those related to the issue of a debt or equity securities the
Group would incur due to the business combination, were accounted for in the acquisition cost.
Goodwill is allocated to the Group’s cash generating units (CGUs).
The CGUs adopted by the Group correspond to the three operating segments described in Note 5.10:
- Americas; - Europe, Africa, Russia; - Asia.
In accordance with revised IFRS 3 governing "Business combinations", goodwill is not amortised. It is
subject to an impairment test as soon as there is any indication of impairment and at least once a
year.
In accordance with IAS 36, the method used by the Group to test impairment of assets involves:
- Establishing after tax cash flows based on the strategic plan of the CGU in question;
- Determining the asset’s value in use comparable to the company valuation method by discounting cash flows (DCF) according to the sector’s weighted average cost of capital (WACC); and
- Comparing this value in use to the asset’s carrying amount to determine whether there is impairment or not.
The value in use is determined based on discounting forecasted future operating cash flows over a 5-
year period plus a terminal value without applying a perpetuity growth rate. The discount rate used
in these calculations is the WACC after capital tax.
At 30 June 2012, no indications of impairment were identified that might alter the results obtained at
31 December 2011.
5.2 INTANGIBLE ASSETS (EXCLUDING GOODWILL)
Research and development
Research expenditures incurred for the purposes of gaining understanding and new scientific or technical knowledge are expensed when incurred. Development activities imply the existence of a production plan or model for new products and
processes or for substantial improvements to them. Development expenditures are capitalised if and
only if the costs can be measured reliably and the Group can demonstrate the technical and
commercial feasibility of the product or process, the existence of likely future economic benefits and
its intention as well as the availability of sufficient resources to complete the development and use
or sell the asset. Expenditures recognised as assets include the costs of materials, direct labour and
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FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 73
overheads directly attributable and necessary to prepare the asset to be used as scheduled plus the
capitalised borrowing costs. Other development expenditures are expensed when incurred.
Development expenditures recorded under assets are recognised at cost, less any cumulative
amortisation and impairment.
Other intangible assets acquired are recognised at cost, less any cumulative amortisation and
impairment.
Estimated useful lives are as follows:
5.3 Property, plant and equipment
Property, plant and equipment are valued at cost, less any cumulative depreciation and impairment.
Depreciation is expensed according to the straight-line method over the estimated useful life of each
tangible asset.
Estimated useful lives are as follows:
Leasing contracts that result in the transfer to the Group of substantially all the risks and rewards
incidental to ownership of an asset are classified as finance leases.
Investment grants are recognised as deferred income and recorded in income symmetrically over the
asset’s useful life.
Grants that offset costs incurred by the Group are recognised symmetrically in income over the
period during which the costs are recognised.
Fixed asset category Useful l i fe
Customer goodwi l l Stra ight-l ine: 12
Software Stra ight-l ine: 3 to 5 years
Patents Stra ight-l ine: 10 to 20 years
Trademarks Stra ight-l ine: 4 to 5 years
Development expenditure Stra ight-l ine: 5
Fixed asset category Useful l i fe
Bui ldings on own land Stra ight-l ine: 15 to 20 years
Bui ldings on the leasehold property Stra ight-l ine: 10 to 20 years
Plant, machinery and equipment Stra ight-l ine: 5 to 10 years
Other tangible assets Stra ight-l ine: up to 10 years
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5.4 Inventories
The cost of inventories is evaluated by batch at the cost price and includes the purchase costs for raw
materials, production or transformation costs, the appropriate share of the indirect costs based on
the normal production capacity and the other costs incurred to transport the inventories to their
current location and state.
Inventories are valued at the lower of the cost and the net realisable value.
5.5 Financial instruments
5.5.1 Non-derivative financial assets
Non-derivative financial assets held by the Group include deposits and guarantees, non-consolidated
securities, receivables, cash equivalents and available-for-sale financial assets.
Deposits and guarantees and non-consolidated securities
Financial assets consist of deposits and guarantees and non-consolidated securities. They are
recognised at fair value and, in the rare cases when the fair value cannot be obtained, they are
valued at historical cost.
When there is an objective indication of impairment, significant and sustainable impairment is
recognised on the income statement.
Trade and other receivables
Accounts receivable are valued at their fair value when they are first booked and then at their
amortised cost, less any impairment. A provision for impairment is recognised when there is a
collection risk (even partial) on receivables.
Cash and cash equivalents
Cash and cash equivalents include liquidities, bank current accounts, very short-term marketable
securities readily convertible into liquidities and which are subject to an insignificant risk of changes
in value.
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Naturex S.A | 2012 interim financial report 75
5.5.2 Non-derivative financial liabilities
Financial liabilities include borrowings and bank overdrafts.
Except when hedged for fair value, financial liabilities are valued at amortised cost according to the
effective interest rate method.
5.5.3 Derivative financial instruments and hedge accounting
The Group holds derivative financial instruments to hedge its exposure to interest and foreign
exchange rates.
When the hedge is initially designated, the Group formally documents the relationship between the
hedging instrument and the hedged instrument, the risk management objectives and the strategy
followed when the hedge is set up, as well as the methods that will be used to assess the
effectiveness of the hedging relationship. The Group assesses, when the hedging relationship is set
up and continuously, if it expects the hedging instruments to be "highly effective" at offsetting the
changes in fair value or cash flows of the hedged items over the period for which the hedge is
designated.
For a cash flow hedge related to a planned transaction, it must be highly likely that the transaction
will take place and this transaction must include exposure to changes in cash flow that could end up
impacting the result.
Derivatives are recognised initially at fair value. After the initial recognition, derivatives are valued at
fair value and the resulting variations are recognised using the methods described above.
Cash flow hedges
When a derivative is designated as a hedging instrument in a hedge of cash flow variations that can
be attributed to a particular risk associated with a recognised asset or liability or with a planned
transaction that is highly likely and that could impact the result, the effective portion of the changes
in the fair value of the derivative is recognised in other items of comprehensive income and is shown
in the hedging reserve in shareholders' equity. The amount recognised in other items of
comprehensive income is removed and included in the income statement for the period during
which the hedged cash flow impacts earnings; this amount is recognised on the same line of
comprehensive income as the hedged item.
Any ineffective portion of the changes in the derivative’s fair value is immediately recognised in the
income statement.
The Group has set up interest rate swaps to cover its risks on cash flows.
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76 2012 interim financial report | Naturex S.A
Fair value hedging
A fair value hedge covers changes in the fair value of a recognised asset or liability, or of a non-
recognised firm commitment, which can impact earnings.
For hedging the fair value of existing assets and liabilities, the hedged portion of these items is valued
on the balance sheet at its fair value. The change in this fair value is recognised on the income
statement where it is offset by the symmetric changes in the fair value of the hedging instruments.
In order to hedge its foreign exchange risk, the Group has set up foreign exchange hedges on its
borrowings in foreign currencies.
5.6 Discontinued operations, assets and liabilities held for sale
In accordance with IFRS 5, assets and liabilities held for immediate sale in their present condition,
and consequently whose sale is highly probable, are shown on the balance sheet as assets and
liabilities held for sale. When a group of assets is held for sale in a single transaction, the group and
all related liabilities are recognised as a single unit. The sale must take place within one year of the
asset or group of assets being so recognised.
The assets or group of assets held for sale are valued at the lowest price between their net carrying
amount and the net fair value of the cost of the sale. Non-current assets shown on the balance sheet
as held for sale are no longer depreciated once they are presented as such.
Income from discontinued operations is presented separately from income generated by ongoing
operations and their cash flows are presented on a distinct line on the cash flow statement.
5.7 Employee benefits
Post-employment benefits granted by the Group vary according to the legal obligations and the
policy of each subsidiary in this matter. They include defined contribution and defined benefit
schemes.
With regards to defined contribution schemes, the Group's obligations are limited to the payment of
periodical contributions to outside organisations that provide the administrative and financial
management for them. The expenses recognised for these plans correspond to the contributions
paid during the period of reference.
In accordance with IAS 19, only defined benefit schemes create future commitments for the Group.
They are comprised of the obligations that result from retirement plans and severance
compensation.
Independent actuaries value these commitments periodically, based on assumptions that can vary
over time. In most cases, these obligations are pre-financed by employer and employee contributions
through external funds, which form separate legal entities for which the investments are subject to
fluctuations in the financial markets.
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Naturex S.A | 2012 interim financial report 77
The Group recognises, for defined benefit schemes, net actuarial gains and losses and total
expenditures for defined contribution schemes as payroll expense.
5.8 Provisions
A provision is booked when the Group has a current legal or implicit obligation resulting from a past
event, when the obligation can be estimated in a reliable manner and when it is likely that an outflow
of resources representing economic benefits will be necessary in order to settle the obligation. The
amount of the provision is determined by discounting expected future cash flows at the pre-tax rate
reflecting the market’s current assessments of the time value of money and the specific risks
concerning this liability. The impact of the accretion is recognised as a financial expense.
5.9 Asset sales
The proceeds from asset sales are recognised in the income statement when substantially all the
significant risks and rewards incident to ownership of the assets have been transferred to the buyer.
Consolidated revenue consists of the total sales (excluding tax) resulting from the ordinary activities
of consolidated group companies, after elimination of internal transactions.
5.10 Segment information
Pursuant to IFRS 8 concerning segment information, the Group defines an operating segment as a
component of an entity:
o That engages in business activities from which it may earn revenues and incur expenses, o Whose operating income is reviewed regularly by the entity's chief operating decision-maker
to make decisions about allocating resources to the segment and to assess its performance, and
o For which discrete financial information is available.
The internal reporting system made available to Naturex's chief operating decision makers, thus the
Chief Executive Officer, is structured in the same way as the Group's management organisation
which is based on the following three geographic regions:
o Americas: including Naturex Inc., Naturex Ingredientes Naturais Ltda (formerly Exnama), Naturex Inc. Canada and Naturex Ingredientes Naturales S.A de C.V;
o Europe, Africa: including the companies in the Naturex SA group, Naturex Spa, Naturex Ltd (formerly Overseal Natural Ingredients), SCI Les Broquetons, Naturex Maroc, Naturex UK Ltd, Naturex AG (formerly Obipektin AG), Naturex SL (formerly Xerutan SL), Naturex GMBH, Naturex SPRL, Naturex LLC (formerly Natraceutical Russia OOO), Burgundy Iberia and Pektowin; and
o Asia: including Group companies Naturex Trading Shanghai, KF Specialty Ingredients Pty Ltd (formerly Kingfood Australia Pty Ltd), Naturex Australia Pty Ltd, Naturex Japan, Naturex Korea and Valentine Agro Ltd et Valentine Foods Ltd.
The Group identifies and presents its operating segments based on the information reported to the
Group's management.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
78 2012 interim financial report | Naturex S.A
5.11 Income tax
Income tax includes current and deferred tax. Current tax payable and deferred taxes are recognised
in the income statement except when they are attached to a business combination or to items that
are recognised directly as shareholders' equity or as other items in comprehensive income.
Current tax is (i) the estimated amount of the tax owed (or receivable) for the taxable profit (or loss)
for a period, determined by using the income tax rates that have been adopted or practically
adopted on the reporting date, and (ii) any adjustment in the amount of the tax payable for prior
periods. Current tax also includes any tax liabilities generated by the declaration of dividends.
Accounting treatments or corrections carried out in the consolidation can result in a change in the
results of the consolidated companies. The timing differences that appear on the balance sheet
between the consolidated values and the tax values of the corresponding assets and liabilities give
rise to the calculation of deferred taxes.
In accordance with IAS 12, the Group presents deferred taxes on the consolidated balance sheet
separately from the other assets and liabilities. Deferred tax assets are written to the balance sheet
when it is more likely than not that they will be recovered in later years. Deferred tax assets and
liabilities are not discounted.
In order to assess the Group’s ability to recover these assets, the following items in particular are
taken into account:
- Forecasts of future taxable income; and
- History of taxable income for prior years.
Deferred tax assets and liabilities are valued using the balance sheet liability method (i.e.; using the
tax rate that is expected to be applied over the period when the carrying amount of the asset or
liability is recovered or settled, based on the income tax rate (and tax regulations) that have been
adopted or practically adopted at the closing date, taking any future increases or decreases in the
rates into account.
The valuation for deferred tax assets and liabilities reflects the tax consequences that would result
from the way the company expects, on the closing date, to recover or settle the book carrying
amount of these assets and liabilities.
5.12 Earnings per share
Earnings and diluted earnings per share are presented for total net income.
Basic earnings per share are calculated by dividing the net income for the period attributable to
shareholders by the average number of ordinary shares outstanding in the period, adjusted for
treasury shares.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 79
When calculating diluted earnings per share, the net profit attributable to shares and the average
number of shares outstanding are adjusted for the effects of all the potentially dilutive ordinary
shares.
5.13 Employee equity compensation
In accordance with IFRS 2 "Share-based compensation," the fair value of subscription or purchase
options and offers reserved for employees concerning Group shares are valued on the day they are
granted.
The value of subscription and purchase options is based on the strike price, the probability that the
conditions will be met for exercising the option, the lifespan of the option, the current price of the
underlying shares, the expected volatility of the share price, the expected dividends and the risk-free
interest rate over the option’s lifespan. This value is recorded as a payroll expense on a straight-line
basis over the period the rights are acquired with a direct counterparty in shareholders’ equity for
plans that are settled in shares and as debt vis-à-vis personnel for plans that are settled in cash.
NOTE 6 BUSINESS COMBINATIONS
6.1 Burgundy
In October 2011, the Group acquired 100% of the share capital and voting rights of Burgundy, a
French company specialised in the production and commercialisation of plant extracts for the
nutraceutical, pharmaceutical and cosmetic industries, itself the 100% parent of Burgundy Iberia, for
a fixed price of €6 million euros fully paid in cash.
The Burgundy companies were consolidated on 1 October 2011. Effective 1 January 2012, the date of
the simplified merger procedure (transmission universelle de patrimoine or TUP), Burgundy France
was transferred in full to Naturex SA.
The pre-acquisition carrying amounts were determined based on the IFRS standards applicable at the
acquisition date. Contingent assets and liabilities were recognized at their fair value on the
acquisition date (see note 5 – methods and valuations used to determine fair value).
The provisional allocation of the acquisition price and the assets and liabilities recognised for this
business combination break down as follows:
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
80 2012 interim financial report | Naturex S.A
The main fair value adjustments are described hereafter:
(a) The value of buildings and land was provisionally estimated at €6.8 million, until independent
appraisers can determine their fair value in the 2012 second half. This value includes the
valuation of a property finance lease for €836,000.
(b) The fair value of financial asset instruments was valued at €59,000.
(c) Impairment losses are recognized for inventories of €790,000 in connection with two below
cost sales contracts.
(d) Estimated financial debt relating to restated financial leases was €796,000.
(e) Trade payables increased €71,000 on remeasurement in light of various provisions for
accrued invoices and severance payments.
(f) Adjustments in value resulted in the recognition of deferred taxes, calculated according to
the rates of the countries to which they relate, amounting to €285,000 in deferred tax assets
and €633,000 in deferred tax liabilities.
in €000s
Carrying
amounts
acquired
Fair value
adjustments
Descriptive
note
Values
recognised at
acquisition date
Property, plant and equipment 3 921 2 836 (a) 6 757
Intangible assets 106 - 106
Long-term investments 102 - 102
Financial instruments - assets - 59 (b) 59
Inventories 3 079 (790) (c) 2 289
Trade and other receivables 7 638 - 7 638
Deferred tax assets 285 (f) 285
Cash and cash equivalents (748) - (748)
Borrowings (7 812) (796) (d) (8 607)
Deferred tax liabilities - (633) (f) (633)
Provisions (72) 6 (67)
Trade and other payables (9 791) (71) (e) (9 862)
Tax payables (46) - (46)
Identifiable net assets and liabilities (3 622) 896 (2 726)
Goodwill from the acquisition 8 714
Consideration paid in cash 5 988
Net cash acquired (748)
Net cash outflow 6 736
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 81
The goodwill recognised at the acquisition date primarily relates to the expected synergies from the
integration of these two companies with the Group’s activity in the production and distribution of
specialty natural extracts. Pursuant to IFRS 3, goodwill may be revised within the 12 months
following the acquisition.
6.2 Pektowin
In January 2012, the Group acquired 100% of the capital and voting rights of the Polish company
Pektowin, whose main activity is the production of fruit and vegetable concentrated juices plus the
preparation of processed foods (fruit wines, tinned foods) for the Polish distribution sector, for a
fixed price of €5.6 million paid in full in cash.
Before the acquisition, this company had revenue of €11.6 million in fiscal 2011 including €7.7 million
(66%) relating to Naturex Group's core business.
Pektowin was consolidated by the Group on 1 January 2012. For the consolidation period, Pektowin
generated revenue of €2.5 million and a net loss of €0.2 million.
The pre-acquisition carrying amounts were determined based on the IFRS standards applicable at the
acquisition date. Contingent assets and liabilities were recognized at their fair value on the
acquisition date (see note 5 – methods and valuations used to determine fair value).
The provisional allocation of the acquisition price and the assets and liabilities recognised for this
business combination break down as follows:
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
82 2012 interim financial report | Naturex S.A
The main fair value adjustments are described hereafter:
(a) Impairment losses of €223,000 were recognized for fixed assets relating to non-strategic
businesses.
(b) Inventories were measured at fair value for €3.7 million.
(c) Adjustments resulted in the recognition of deferred tax assets of €66,000 calculated
according to the tax rate applicable in Poland.
Goodwill recognised at the acquisition date primarily relates to the expected synergies from
Pektowin's integration with the Group’s activity in the production and distribution of pectins.
Pursuant to IFRS 3, goodwill may be revised within the 12 months following the acquisition.
6.3 Valentine
In March 2012, Naturex acquired Valentine, an Indian company specialised in the production of fruit
and vegetable powders plus natural colours for the food processing industry that before the
acquisition had revenue of approximately €1.9 million on a 12 month rolling basis. Valentine is
comprised of Valentine Agro Ltd. and Valentine Foods Ltd.
At 30 June 2012 Naturex held 91.68% of the shares of Valentine Agro and 100% of the shares of
Valentine Foods Ltd.
in €000s
Carrying
amounts
acquired
Reclassificatio
ns
Fair value
adjustments
Descriptive
note
Values
recognised at
acquisition date
Property, plant and equipment 3 172 (223) (a) 2 948
Intangible assets 3 - 3
Long-term investments - - -
Inventories 3 801 32 (99) (b) 3 734
Trade and other receivables 898 (32) (9) 857
Deferred tax assets 20 66 (c) 86
Cash and cash equivalents (47) - (47)
Borrowings (2 221) 2 221 - -
Deferred tax liabilities (4) (4)
Provisions (900) (900)
Trade and other payables (792) (2 245) (16) (3 053)
Tax payables (24) 24 - -
Identifiable net assets and liabilities 3 905 () (281) 3 623
Goodwill from the acquisition 1 984
Consideration paid in cash 5 608
Net cash acquired (47)
Net cash outflow 5 655
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 83
These two companies were fully consolidated on 1 April 2012. Since 1 April 2012, the Valentine
companies have contributed €422,000 in revenue and €83,000 in net income.
The pre-acquisition carrying amounts were determined based on the IFRS standards applicable at the
acquisition date. Contingent assets and liabilities were recognized at their fair value on the
acquisition date (see note 5 – methods and valuations used to determine fair value).
In light of the binding commitment to acquire the remaining 8.32% of the Valentine Agro shares, in
accordance with IFRS 3 the company was fully consolidated. In consequence, €352,000 in financial
debt was recognised for the fair value of the firm option to acquire the company's shares.
The provisional allocation of the acquisition price and the assets and liabilities recognised for this
business combination break down as follows:
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
84 2012 interim financial report | Naturex S.A
6.3.1 Valentine Agro
in €000s
Carrying
amounts
acquired
Fair value
adjustments
Values
recognised at
acquisition date
Property, plant and equipment 998 998
Intangible assets 81 81
Long-term investments 11 11
Inventories 510 510
Trade and other receivables 335 (6) 329
Current tax receivables 15 15
Deferred tax assets () 2 2
Cash and cash equivalents (437) (437)
Borrowings (355) (355)
Deferred tax liabilities (114) (114)
Provisions - -
Trade and other payables (220) (220)
Tax payables (24) (24)
Identifiable net assets and liabilities 801 (4) 796
Goodwill from the acquisition 3 439
Consideration paid in cash 3 884
Consideration*** recognised as short-term financial debt 352
Net cash acquired (437)
Net cash outflow 4 320
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 85
6.3.2 Valentine Foods
Fair value adjustments for Valentine Agro and Foods concern provisions for the impairment of trade
receivables and related deferred tax assets.
Goodwill recognised at the acquisition date primarily relates to the expected synergies from the
integration of these two companies with the Group’s activity in the production of natural colours and
fruit and vegetable powders.
Pursuant to IFRS 3, Valentine goodwill may be revised within the 12 months following the
acquisition.
in €000s
Carrying
amounts
acquired
Fair value
adjustments
Values
recognised at
acquisition date
Property, plant and equipment - -
Intangible assets - -
Long-term investments
Inventories 96 96
Trade and other receivables 57 (2) 55
Deferred tax assets () 1 1
Cash and cash equivalents 29 29
Borrowings - -
Deferred tax liabilities - -
Provisions - -
Trade and other payables (120) (120)
Tax payables (8) (8)
Identifiable net assets and liabilities 55 (1) 54
Goodwill from the acquisition 1 759
Consideration paid in cash 1 812
Net cash acquired 29
Net cash outflow 1 783
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
86 2012 interim financial report | Naturex S.A
NOTE 7 GOODWILL
The increase in goodwill in the reporting period results mainly from the acquisitions with goodwill in
€2 million from Pektowin recorded under Europe and €5.2 million from Valentine Agro and Valentine
Foods under Asia.
Goodwill for Europe was also increased by a €1 million fair value adjustments of goodwill from
Burgundy France.
Goodwill is subject to annual impairment tests. As no indications of impairment were identified,
additional impairment tests were not performed in the 2012 first half.
Impairment tests were carried out on 31 December 2011, based on the following assumptions:
5-year cash flows based on the 2011 actual and projections for the next 4 years. These projections are primarily indexed on past experience and adjusted for future medium- and long-term market forecasts.
In view of the international economic context at the end of the year, the Group used rates adapted
to the zones concerned:
After-tax discount rate of 10.69 % for the Europe/Asia zone and 12.42% for the Americas zone, calculated each year based on the WACC (Weighted Average Cost of Capital) method;
A terminal value without a perpetuity growth rate.
The discount rates used are after-tax rates. The application of a rate before tax has no impact when
calculating the value in use of CGUs.
Sensitivity to the discount rate was calculated at 31 December 2011, such that the recoverable value
was equal to the carrying amount. The discount rates obtained were much higher than those used by
the Group (21% for the Europe zone, 74% for the Asia zone and 30% for the Americas zone) and
indicated an absence of risk of impairment.
In €000s
01/01/2012 Fair value
adjustments
First-time
consolidation
Translation
differences30/06/2012
Americas 39 604 - 999 40 603
Europe / Africa / Russia 51 196 1 056 1 984 609 54 845
Asia 2 668 5 198 -124 7 742
Total 93 467 1 056 7 183 1 483 103 188
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 87
NOTE 8 NON-CURRENT ASSETS
8.1 Acquisitions and disposals
At 30 June 2012, gross values of fixed assets break down as follows:
The main investments concern production capacity and research and development laboratory
equipment.
At 31 December 2011, gross values of fixed assets break down as follows:
In €000s
Goodwill: 93 467 - 8 238 - 1 483 103 188
Intangible assets: 13 913 5 84 1 244 - 67 15 313
Commercial goodw ill 3 142 - - - - 48 3 189
Softw are and brands 5 118 - 3 457 - 10 5 587
Development expenditure 4 941 - 81 563 - - 5 585
Fixed assets under construction 713 5 - 224 - 10 952
Property, plant and equipment: 160 379 -7 3 946 11 151 -2 695 1 583 174 358
Land 14 042 17 714 300 -1 676 107 13 503
Buildings & improvements 75 051 520 1 760 1 993 -65 694 79 952
Plant, equipment and machinery 58 535 2 747 1 386 1 976 -477 686 64 853
Other tangible assets 8 517 34 85 881 -159 116 9 475
Fixed assets under construction 4 234 -3 325 2 6 001 -317 -19 6 575
Financial assets: 2 374 2 11 552 -453 3 2 488
Equity securities 1 546 - - - -420 - 1 126
Loans 14 - - - -7 7
Deposits and guarantees 814 2 11 552 -26 2 1 355
Total 270 133 - 12 279 12 947 -3 148 3 136 295 347
01/01/2012
First-time
consolidations and
value adjustments
Acquisitions 30/06/2012Inter-account
transfers
Disposals or inter-
account transfers
Translation
differences
In €000s
Goodwill: 83 867 - 7 658 - - 1 942 93 467
Intangible assets: 9 201 - 106 4 571 -79 114 13 913
Commercial goodw ill 2 523 - - 543 - 76 3 142
Softw are and brands 3 688 - 106 1 304 - 21 5 118
Development expenditure 2 762 - - 2 255 -79 3 4 941
Fixed assets under construction 228 - - 470 - 15 713
Property, plant and equipment: 138 388 - 5 921 14 653 -732 2 149 160 379
Land 11 229 - 1 317 1 334 -20 182 14 042
Buildings & improvements 67 474 651 1 861 4 202 -122 984 75 051
Plant, equipment and machinery 51 359 1 255 1 498 3 884 -270 810 58 535
Other tangible assets 6 370 33 150 2 120 -271 115 8 517
Fixed assets under construction 1 956 -1 939 1 095 3 113 -50 59 4 234
Financial assets: 1 931 - 102 393 -64 12 2 374
Equity securities 1 546 - - - - - 1 546
Loans 27 - - - -13 - 14
Deposits and guarantees 358 - 102 393 -51 12 814
Total 233 387 - 13 787 19 617 -875 4 218 270 133
01/01/2011First-time
consolidation Acquisitions 31/12/2011
Inter-account
transfers
Disposals or
decommissioned
assets
Translation
differences
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
88 2012 interim financial report | Naturex S.A
8.2 Amortisation, depreciation and impairment
At 30 June 2012, amortisation, depreciation and impairment on fixed assets break down as follows:
At 31 December 2011, amortisation, depreciation and impairment on fixed assets broke down as
follows:
NOTE 9 FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
The fair value of the Group's financial instruments is valued when the data from the financial markets
allows for a pertinent estimate of their market value in a non-liquidating context.
Provisions
In €000s
Intangible assets: 4 647 1 114 - - -4 5 757
Commercial goodw ill 427 - 130 - - -11 546
Softw are and brands 2 662 488 - - 7 3 157
Development expenditure 1 558 - 495 - - 2 053
Other intangible assets - - - - - - -
Property, plant and equipment: 57 206 - 6 219 -475 - 731 63 679
Buildings & improvements 18 551 132 2 538 -3 - 167 21 386
Plant, equipment and machinery 34 124 -131 2 942 -341 - 487 37 081
Other tangible assets 4 530 -1 739 -132 - 76 5 212
Financial assets: 1 206 - - -420 - - 786
Equity securities 1 206 - - -420 - - 786
Total 63 059 - 7 332 -896 - 726 70 221
01/01/2012Inter-account
transfersAllowances 30/06/2012
Disposals or
decommissioned
assets
Translation
differences
Provisions
In €000s
Intangible assets: 2 891 21 1 814 -79 - - 4 647
Commercial goodw ill 197 - 242 - - -12 427
Softw are and brands 1 817 26 807 - - 12 2 662
Development expenditure 871 - 765 -79 - - 1 558
Other intangible assets 5 -5 - - - - -
Property, plant and equipment: 46 075 -21 10 856 -464 - 760 57 206
Buildings & improvements 13 776 - 4 595 -9 - 189 18 551
Plant, equipment and machinery 28 739 - 5 152 -257 - 491 34 124
Other tangible assets 3 560 -21 1 109 -198 - 80 4 530
Financial assets: 1 206 - - - - - 1 206
Equity securities 1 206 - - - - - 1 206
Total 50 172 - 12 670 -543 - 759 63 059
01/01/2011Inter-account
transfersAllowances 31/12/2011
Disposals or
decommissioned
assets
Translation
differences
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 89
Future cash flows were discounted at a rate of 10.69%.
This rate corresponds to the WACC calculated for the Europe zone since the major share of the debt
was incurred in this region.
Marketable securities (level 1 fair value) and derivative instruments (level 2 fair value) are the only
financial instruments valued at fair value.
30/06/2012 31/12/2011
Accounting
categories
Carrying value Fair
value
Carrying
value
Fair
value
Loans and receivables 1 362 1 362 827 827
Financia l assets 340 340 340 340
Assets at fa i r va lue through profi t and loss 213 213 343 343
Assets at fa i r va lue through profi t and loss 429 429 1 200 1 200
Loans and receivables 15 722 15 722 37 662 37 662
18 066 18 066 40 372 40 372
Liabi l i ties at amortised cost 113 507 127 093 104 231 116 707
Liabi l i ties at amortised cost 1 073 1 201 372 416
Liabi l i ties at amortised cost 1 522 1 522 313 313
Liabi l i ties at fa i r va lue, hedging instruments 1 991 1 991 2 254 2 254
Liabi l i ties at fa i r va lue, hedging instruments 947 947 893 893
Liabi l i ties at amortised cost 1 586 1 586 916 916
120 626 134 341 108 979 121 500
102 560 116 275 68 607 81 127
Quoted prices Internal model based
on directly
observable market
inputs
Internal model
not based on
observable
market data
In €000s
Level 1 Level 2 Level 3
Marketable securi ties - -
Asset derivatives 642 642
Equity securi ties 340 340
Liabi l i ty derivatives 2 938 2 938
Fair value of asset
class at 30/06/2012
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
90 2012 interim financial report | Naturex S.A
The fair value for derivative financial instruments is as follows:
NOTE 10 INVENTORIES AND WORK IN PROGRESS
Inventories breakdown by type as follows:
NOTE 11 TRADE AND OTHER RECEIVABLES
Trade and other receivables break down as follows:
In €000s
Total Assets Current
assets
Non-current
assets
Total liabilities Current
liabilities
Non-current
liabilities
Derivatives relating to cash flow hedging 24 24 - 2 938 947 1 991
Interest rate derivatives - - - 2 909 920 1 989
Exchange rate derivatives 24 24 - 29 27 2
Derivatives relating to fair value hedging 618 405 213 - - -
Interest rate derivatives - - - - - -
Exchange rate derivatives 618 405 213 - - -
Net position at 30/06/2012 642 429 213 2 938 947 1 991
Net position at 31/12/2011 1 543 1 200 343 3 147 893 2 254
In €000s01/01/2012
Inter-account
transfers
First-time
consolidation Change
Translation
differences30/06/2012
Raw materials 37 317 - 851 6 978 280 45 427
Consumables 1 236 - 344 276 17 1 873
Finished and semi-f inished goods 77 622 - 1 525 8 095 1 280 88 522
Work-in-progress – goods & services - - 829 -271 40 598
Total inventories – gross 116 175 - 3 550 15 079 1 616 136 420
Provisions -1 025 - -265 -19 -1 309
Total inventories – net 115 150 - 3 550 14 814 1 597 135 111
In €000s30/06/2012 31/12/2011
Trade receivables 57 520 48 789
Tax and social security receivables 13 568 11 728
Other receivables 4 268 2 866
Total – gross 75 357 63 383
Impairment -1 738 -1 741
Total – net 73 619 61 642
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 91
The impairment of trade and other receivables has changed as follows:
NOTE 12 FINANCIAL DEBT
The Group's net financial debt amounted to €102 million at 30 June 2012 compared to €68 million at
31 December 2011.
The rise in net debt reflects mainly cash outflows of nearly €11.8 million for the acquisition of
Pektowin and Valentine and capital investment projects carried out in the 2012 first half for nearly
€10.9 million.
Gross financial debt amounted to €117.7 million on 30 June 2012, comprised primarily of the
structured loan.
The loan agreement between the Group and its lenders contains a clause regarding compliance with
the bank covenants on a half-yearly basis.
At 30 June 2012, these ratios were respected.
Financial debt breaks down by due date as follows:
Trade receivables – impairment 1 455 -765 561 20 1 271
Other receivables – impairment 286 171 24 -14 467
Total 1 741 -594 585 6 1 738
30/06/2012in €000s
01/01/2012 Reclassification Impairment Change
In €000s01/01/2012 New
First-time
consolidationRepaid Change 30/06/2012
Borrow ings 104 231 18 427 708 -9 990 132 113 507
Borrow ings related to f inance leases 372 796 - -96 1 1 073
Liabilities linked to investments and shareholder loans 313 1 452 - -246 3 1 522
Subtotal 104 916 20 675 708 -10 332 136 116 102
Bank credit facilities 916 512 183 -25 1 586
Total financial debt – gross 105 832 21 186 891 -10 357 136 117 688
Cash and cash equivalents 37 662 3 684 764 -26 516 128 15 722
Total financial debt – net 68 170 17 503 127 16 159 7 101 966
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
92 2012 interim financial report | Naturex S.A
12.1 Long-term financial debt
Non-current financial debt changed as follows:
12.2 Other current financial liabilities
Other current financial liabilities changed as follows:
12.3 Bank credit facilities
As indicated in Note 15.2, at 30 June 2012, the Group had short-term facilities of €85 million of which
€37 million have been drawn. At 31 December 2011, these credit lines had not been used.
The US subsidiary has a short-term facility of US$7 million of which US$1 million was drawn at 30
June 2012.
In €000s01/01/2012 New
First-time
consolidationRepaid
Transfers <1
yearChange 30/06/2012
Borrow ings 87 140 17 419 334 - -12 696 92 197
Borrow ings related to finance leases 187 749 - - -68 867
Total non-current financial debt 87 327 18 167 334 - -12 764 - 93 064
In €000s01/01/2012 New
First-time
consolidationRepaid
Transfers >1
yearChange 30/06/2012
Borrow ings 17 091 1 008 374 -9 990 12 696 132 21 310
Borrow ings related to f inance leases 184 47 - -96 68 1 205
Liabilities linked to investments and shareholder loans 313 1 452 - -246 - 3 1 522
Total current financial debt 17 588 2 507 374 -10 332 12 764 136 23 037
Bank credit facilities 916 512 183 -25 - 1 586
In €000s30/06/2012 31/12/2011
Bank credit facilities 1 586 916
Total 1 586 916
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 93
12.4 Cash and cash equivalents
12.5 Breakdown of debt by currency expressed in euros
The debt broken down by currency after hedging is as follows:
A €4.5 million foreign currency hedge covers a portion of the debt initially denominated in dollars in
the period. The change in fair value for this hedging instrument generated a financial loss of €54,000.
12.6 Breakdown of debt at fixed and variable rates
The debt, which was initially at a variable rate, was swapped for a portion at a fixed rate in 2010.
In €000s30/06/2012 31/12/2011
Cash and cash equivalents 15 722 37 662
Marketable securities - -
Total15 722 37 662
In €000sTotal EUROS US DOLLARS SWISS FRANCS OTHER
Borrow ings and leasing 114 579 55 571 42 483 16 008 518
Bank credit facilities 1 586 1 266 55 - 265
Liabilities linked to investments and shareholder loans 1 522 1 522 1 - -
Total financial debt at 30/06/2012 117 688 58 359 42 539 16 008 783
Total financial debt as a % at 30/06/2012 49,6% 36,1% 13,6% 0,7%
Total financial debt at 31/12/2011 105 832 46 263 41 751 17 584 233
Total financial debt as a % at 31/12/2011 43,7% 39,5% 16,6% 0,2%
In €000sTotal Fixed rate Variable rate
Borrow ings and leasing 114 579 65 756 48 823
Bank credit facilities 1 586 - 1 586
Liabilities linked to investments and shareholder loans 1 522 1 522 -
Total financial debt at 30/06/2012 117 688 67 279 50 409
Total financial debt as a % at 30/06/2012 57,2% 42,8%
Total financial debt at 31/12/2011 105 832 64 279 41 553
Total financial debt as a % at 31/12/2011 60,7% 39,3%
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
94 2012 interim financial report | Naturex S.A
The corresponding derivatives were taken out starting 31 March 2010 and details are provided in
Notes 5.5 and 9 to the consolidated financial statements.
NOTE 13 EMPLOYEE BENEFITS
The main commitments (Swiss, Italian and French) were valued by an actuary on 30 June 2012.
With respect to the main commitment (Switzerland), application in advance of revised IAS 19
mandatory for periods commencing on or after 1 January 2013, resulted in the acquisition of
actuarial gains and losses through other comprehensive income (OCI), for €126,000 with the balance
of €27,000 through profit and loss for the period.
The addition to the Group structure concerned exclusively the first-time consolidation for Poland.
This commitment will be adjusted on 31 December.
The change in the discounted value of defined benefit commitments breaks down as follows:
In €000s30/06/2012
First-time
consolidation31/12/2011
Jun.
2012
Dec.
2011
Jun.
2012
Dec.
2011
Jun.
2012
Dec.
2011
Jun.
2012
First-time
consol idat
ion
Dec.
2011
Fair va lue of plan assets (14 208) - (13 273) (14 118) (13 183) - - (90) (90) - - -
Discounted value of commitments*** 18 369 966 16 186 16 557 15 469 539 450 265 210 1 008 966 57
Plan deficit (surplus) 4 161 966 2 913 2 439 2 286 539 450 175 119 1 008 966 57
Total Swiss plan Ita l ian plan French plan Other plans
In €000s30/06/2012 31/12/2011
Discounted value of obligations at 1 January 16 186 10 588
Plan benefi t payments (422) (968)
Cost of benefi ts and financia l cost 1 422 794
Experienced-based adjustment 197 4 435
Actuaria l losses / (ga ins ) recognised in income 611 671
Employee contributions 193 378
Effect of exchange rate fluctuations 182 289
Discounted value of commitments*** 18 369 16 186
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 95
The change in the fair value of the plan assets breaks down as follows:
The expense recognised as income breaks down as follows:
The main actuarial assumptions retained at the closing date are as follows:
In €000s30/06/2012 31/12/2011
Fair value of plan assets at 1 January 13 273 8 386
Contributions paid to the plan 193 378
Plan benefi t payments (379) (890)
Expected return on plan assets 231 321
Experienced-based adjustment 197 3 917
Actuaria l ga ins / (losses) recognised in income 346 547
Employee contributions 193 378
Effect of exchange rate fluctuations 154 238
Fair value of plan assets 14 208 13 273
In €000s30/06/2012 30/06/2011
Cost of benefi ts and financia l costs 480 398
Actuaria l losses (ga ins) in income 265 255
Expected return on plan assets (231) (153)
Effect of exchange rate fluctuations 3 75
Employer contributions (236) (202)
Expenses recognised in income: 282 373
In €000s30/06/2012 31/12/2011
Discount rate (CHF) 2,50% 2,85%
Discount rate (EUR zone) 3,21% 4,60%
Salary inflation
from 1.5%
to 6%
according
to
occupation
al
categories
and age
brackets
from 2% to
6%
according
to
occupation
al
categories
and age
brackets
Expected return on assets (CHF) 3,50% 3,75%
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
96 2012 interim financial report | Naturex S.A
The mortality assumptions are based on published statistics and mortality tables.
NOTE 14 CURRENT PROVISIONS
No significant contingent liabilities were identified at 30 June 2012.
NOTE 15 FINANCIAL RISK MANAGEMENT
The main risks likely to have a direct impact on the Group’s financial statements are set out and
assessed below:
- Credit risk
- Liquidity risk
- Exchange rate risk
- Interest rate risk
The Group’s exposure to non-financial risks is reviewed in the management report of the registration
document.
15.1 Credit risk
Credit risk is a risk of financial loss for the Group in the event a client fails to meet its contractual
obligations.
The Group’s credit risk is limited for several reasons, and notably its extensive customer base.
Accordingly, the top 10 customers account for 18% of Group revenue, the top 20 account for 25%
and the top 30 account for 31% compared to 20%, 28% and 34% respectively in 2011.
15.2 Liquidity risk
Liquidity risk is the risk that the Group may fail to honour its debts when they reach their term.
The Group's policy regarding the management of its liquidity risk is to ensure, through a Group wide
daily cash management system, that it always has sufficient funds to honour its liabilities when they
reach maturity, both under normal and "difficult" conditions, without incurring losses that could
harm the Group's reputation.
The company performed specific reviews of its liquidity risk and considers that it is able to honour
the terms for future payments.
The structured loan put into place on 30 December 2009 includes authorisations for four short-term
tranches: a €20 million Capex 1 (Euros) tranche used in full at 30 June 2012, a €30 million Capex 2
In €000s01/01/2012 Reclassification Constituted*** Used Change 30/06/2012
Other provisions 40 4 - - - 44
Total provisions 40 4 - - - 44
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 97
(Euros) tranche unused at 30 June 2012, a€20 million Revolving 1 (Euros) tranche with €15 million
used as well as a €15 million Revolving 2 (multi-currency) tranche, that may be drawn down in EUR,
USD and CHF, with US$3 million used at 30 June 2012. At 31 December 2011, these credit lines had
not been used.
The US subsidiary has a short-term facility of US$7 million of which US$1 million was drawn at 30
June 2012.
The Group's overdraft facilities and outstanding loans at year-end are presented in Note 12.3.
The loan agreement binding the Group to its lenders contains a clause regarding compliance with
two bank ratios, which are assessed every six months: These ratios are (i) a gearing ratio defined as
the ratio of net financial debt to total shareholders’ equity and (ii) a financial leverage ratio defined
as the ratio of net financial debt to EBITDA.
If the Group (i) should breach these contractual ratios and/or (ii) the majority of lenders so request,
the lenders may demand the repayment of the corresponding loan.
At 30 June 2012, these ratios were respected.
15.3 Exchange rate risk
Naturex Group carries out most of its transactions in foreign currencies and therefore incurs an
exchange rate risk due to exchange rate fluctuations of these currencies. Since 2010, the currency
exposure has been substantially modified by integrating, in addition to the dollar (41% of the Group's
revenue is billed in dollars), the pound sterling (7%) and the Swiss franc (4%).
These three currencies and the euro represent 91% of the Group's revenue. The financial debt was
restructured in 2009 in line with this change (see Note 12 – Financial debt).
At 30 June 2012 the Group had foreign exchange derivatives on the Swiss franc and the dollar.
Following the strong fluctuations by the Swiss franc during the period, the Group hedged part of its
exposure in this currency.
15.4 Interest rate risk
At 30 June 2012, the Group's interest rate risk was essentially linked to its variable-rate loans and
bank credit facilities
The Group's policy is to use financial derivatives only for cash flow hedging purposes, so that these
instruments do not correspond to speculative operations.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
98 2012 interim financial report | Naturex S.A
NOTE 16 OPERATING SEGMENTS
The operating segments are defined in Note 5.10.
The figures for each operating segment are set forth below:
At 30 June 2012:
At 30 June 2011:
At 30 June 2012:
At 31 December 2011:
In €000sAmericas Europe, Africa Asia / Pacific All segments Restatements
Inter-segment
eliminationsConsolidated
Revenue 57 843 81 054 8 257 147 154 - - 147 154
Inter-segment revenue 5 909 80 143 5 155 91 207 - -91 207 -
Allow ances for amortisation and depreciation -979 -5 919 -175 -7 072 -260 -7 332
Segments' operating income 4 929 15 570 1 055 21 554 -4 941 -443 16 170
Financial income -2 931 - - -2 931
Tax -4 211 - - -4 211
Net income 9 028 - - 9 028
In €000sAmericas Europe, Africa Asia / Pacific All segments Restatements
Inter-segment
eliminationsConsolidated
Revenue 44 120 77 426 6 379 127 925 - - 127 925
Inter-segment revenue 4 072 56 921 2 229 63 223 - -63 223 -
Allow ances for amortisation and depreciation -942 -4 899 -90 -5 931 -300 35 -6 197
Segments' operating income 3 182 12 356 193 15 731 102 196 16 029
Financial income - - - - - - -1 887
Tax - - - -4 408 - - -4 408
Net income - - - 9 734 - - 9 734
In €000sAmericas Europe, Africa Asia / Pacific All segments
Total assets 114 450 320 097 20 335 454 882
Total acquisitions of intangible investments 10 1 233 1 1 244
Total acquisitions of property, plant and equipment 1 991 8 908 252 11 151
Total liabilities 17 632 184 634 5 319 207 585
In €000sAmericas Europe / Africa Asia / Pacific All segments
Total assets 106 417 307 902 11 900 426 218
Total acquisitions of intangible investments 476 4 027 67 4 571
Total acquisitions of property, plant and equipment 2 035 12 381 236 14 653
Total liabilities 17 150 169 240 3 741 190 131
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 99
No customers account for more than 10% of Group revenues.
Revenues by business break down as follows:
The breakdown of the revenue over the 2011 first half was restated in order to take into account the
integration in the Food & Beverage activity of the NAThealthy range whose products are primarily
intended for the food industry.
In €000s
30/06/2012Share of revenue
at 30/06/2012
30/06/2011
restated
Share of revenue
at 30/06/2011
30/06/2011
reported
Share of revenue
at 30/06/2011
Food & Beverage 94 308 64% 85 561 67% 78 424 61%
Nutrition & Health 44 322 30% 34 621 27% 40 357 32%
Personal care 2 587 2% 1 318 1% 1 173 1%
Toll & Miscellaneous 5 939 4% 6 425 5% 7 971 6%
Total 147 154 100% 127 925 100% 127 925 100%
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
100 2012 interim financial report | Naturex S.A
Number of employees 30/06/2012 31/12/2011
Naturex Inc. 185 177
Naturex Ingredientes Natura is Ltda. 30 28
Naturex Mexique 3 2
Naturex Inc. Canada 3 3
Total Americas 221 210
Naturex SA 312 253
Naturex Maroc 95 92
Naturex S.p.A 87 80
Naturex AG 145 143
Naturex Ltd 88 89
Naturex Spain 44 44
Naturex LLC 9 7
Naturex GMBH 10 8
Naturex SPRL 6 5
Burgundy France 47
Burgundy Spain 22 24
Pektowin 310
Total Europe & Africa 1 128 792
Naturex Austra l ia 11 9
KF Specia l ty Ingredients Pty Ltd 22 22
Naturex Trading Shanghai Co., Ltd. 17 17
Naturex Corée 3 2
Naturex K.K 3 3
Valentine Agro 30
Va lentine Food 6
Total Asia 92 53
Total Group 1 441 1 055
NOTE 17 PAYROLL EXPENSES
17.1 Number of employees
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 101
17.2 Stock options
Options were valued at €109,000 using the Black and Scholes valuation model and recognised in
accordance with IFRS 2 as payroll expenses.
Employee benefits derived from stock options grants were calculated using the Libor rate in effect on
the date the plan was implemented. Volatility reflects the yearly average of the 20 trading sessions
preceding the grant date. The maturity period corresponds to the average time between the grant
date and the exercise date, namely 4 years. Options may not be exercised during the three year
period following the grant date. Since the dividend paid by Naturex is very low, no assumptions were
made concerning it.
Highlights of the different stock option plans are presented in the table below:
Plan No. 10 Plan No. 11 Plan No. 12 Plan No. 13 Plan No. 14
Shareholders' Meeting date 14/06/2006 30/06/2007 30/06/2008 30/06/2009 30/06/2010
Board of Directors' meeting date 27/03/2007 25/03/2008 13/03/2009 26/04/2010 15/04/2011
Type of option Subscription Subscription Subscription Subscription Subscription
Inception date to exercise options 27/03/2010 25/03/2011 13/03/2012 26/04/2013 15/04/2014
Expiry date 27/03/2012 25/03/2014 13/03/2015 26/04/2015 15/04/2016
Subscription or purchase price 49,65 27,54 24,00 30,12 45,33
Weighted average fair value at valuation date 49,65 23,85 20,89 30,12 45,58
Risk free rate 4,0% 2,5% 2,2% 1,0% 2,1%
Volatility 17,5% 33,6% 22,0% 17,0% 22,8%
Total number of options granted 23 929 47 362 53 650 52 150 57 094
Of which to corporate officers 13 000 33 000 33 000 26 000 26 000
Of which to employees 10 929 14 362 20 650 26 150 31 094
including the 10 employee beneficiaries granted the largest amount 4 560 5 600 10 500 12 200 12 000
Number of shares subscribed or cancelled at 31/12/2011 4 169 4 610 2 942 3 274 1 092
Number of shares exercised during the period 5 496 132 - - -
Number of shares cancelled during the period 14 264 362 724 1 292 1 951
Outstanding subscription or purchase options 0 42 258 49 984 47 584 54 051
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
102 2012 interim financial report | Naturex S.A
NOTE 18 EXTERNAL EXPENSES AND DEVELOPMENT EXPENDITURES
Most of Naturex's development expenditures do not satisfy the criteria for fixed assets set forth in
IAS 38, especially with regard to their future economic benefits. €2.5 million of such expenditures
were expensed for 2012 first half.
However, over the course of the year, expenditures linked to projects with significant potential in
terms of technical success and commercial profitability were capitalised.
The projects concern the Italian and Spanish companies.
The Italian project involves obtaining and complying with the terms of ASMF (Active Substance
Master File) in order to meet European regulations governing plant-based medication and allowing
Naturex S.p.A. to continue to market certain products in this market as well as adding to its
pharmacy-approved range of extracts. Expenditures on this project of €213,000 were incurred and
capitalised for the period.
The Spanish Ministry of Science and Innovation has approved the Spanish Senifood project. The
purpose of this project is to define specially developed ranges for the elderly in order to offer food
that is adapted to them. Expenditures on this project of €256,000 were incurred and capitalised for
the period.
In €000s30/06/2012 30/06/2011
Non-stock purchases 11 083 8 732
Subcontracting 1 408 1 795
Leasing 2 682 2 110
Maintenance 2 356 2 412
Insurance 1 150 1 024
Fees 4 143 3 704
Advertising, trade fairs, exhibitions 988 859
Shipping costs 7 177 6 463
Travel 2 801 2 411
Telecommunications 745 627
Miscellaneous 734 1 030
Total 35 267 31 167
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 103
NOTE 19 OTHER CURRENT OPERATING EXPENSES
NOTE 20 OTHER NON-CURRENT OPERATING EXPENSES
Other non-current expenses break down as follows:
Expenditures relating to external growth relate mainly to acquisition costs of €472,000 for Pektowin
and €289,000 for the Valentine companies.
Restructuring expenses of €311,000 correspond primarily to reorganisation measures related to the
Burgundy consolidation.
In €000s30/06/2012 30/06/2011
Other expenses 1 031 192
Impairment on current assets 586 653
Provisions - -
Disposals of f ixed assets 1 556 32
Provisions on available-for-sale assets*** - -
Total 3 173 878
In €000s30/06/2012
Additions to the Group structure 1 169
Reorganisations 545
Other non-current operating expenses 1 714
Other non-current operating income -
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
104 2012 interim financial report | Naturex S.A
NOTE 21 FINANCIAL INCOME AND EXPENSES
21.1 Net borrowing costs
21.2 Other financial income and expenses
NOTE 22 INCOME TAX
Breakdown of deferred taxes/taxes payable in the income statement
In €000s30/06/2012 30/06/2011
Financial income 129 138
Interest and related expenses -2 482 -2 938
Net borrowing costs -2 353 -2 800
In €000s30/06/2012 30/06/2011
Foreign exchange losses -4 355 -8
Foreign exchange gains 3 777 921
Other financial income and expenses -578 913
in €000s 30/06/2012 30/06/2011
Current tax 5 015 3 274
Deferred tax (805) 1 134
Total taxes 4 211 4 408
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 105
Reconciliation between the theoretical and actual tax expense
The tax rate for the Group over the reporting period was 31.8%, compared to 31.2% in the 2011 first
half.
Breakdown of recognised deferred tax assets and liabilities
in €000s30/06/2012 30/06/2011
Net income 9 028 9 735
Tax recognised (4 211) (4 408)
Net earnings before income tax 13 239 14 143
Theoretical tax 4 413 4 714
Impact of local tax rates (310) (721)
Impact of tax losses not recognised as assets (306)
Impact of permanent differences 413 415
Tax recognised 4 211 4 408
in €000s Assets Liabilities Assets Liabilities
Provisions (IAS 19) 368 - 292 -
Intangible assets 176 (3 971) 37 (3 605)
Property, plant and equipment 963 (6 682) 963 (6 884)
Provisions and other debts 2 886 - 1 656 -
Loss carryforw ards 812 - 477 -
Other timing differences 314 (3 696) 538 (3 156)
Financial instruments 902 56 991 (241)
Tax assets (liabilities) 6 422 (14 294) 4 956 (13 885)
Offset (2 429) 2 429 (2 476) 2 476
Net tax assets (liabilities) 3 993 (11 865) 2 480 (11 409)
30/06/2012 31/12/2011
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
106 2012 interim financial report | Naturex S.A
NOTE 23 CAPITAL MANAGEMENT
The Group's policy is to maintain a solid capital base to retain the trust of investors, creditors and the
market and support the future development of operations.
Note 23.1 Capital management
Ordinary and preferred shares
At 30 June 2012, the share capital consisted of 7,711,208 shares compared to 7,705,580 at 31
December 2011, with all shares having a par value of €1.50.
This increase corresponds to new shares resulting from the exercise of stock options.
At 30 June 2012, these shares include 757,308 shares with no voting rights.
They were issued as compensation for the acquisition operation of 30 December 2009 and will
recover their voting right as soon as they are sold to third parties outside the Natraceutical Group.
All of the shares issued were fully paid up.
Holders of ordinary shares have the right to any dividends decided upon and benefit from one vote
per share at shareholders’ meetings.
Holders of preferred shares also have the right to any dividends decided upon, but do not benefit
from a voting right at the shareholders’ meetings.
Translation reserve
The translation reserve includes all gains/losses on foreign currency conversions following the
translation of the financial statements of foreign operations, as well as the translation of liabilities
recognised as investments in a foreign subsidiary.
V.6 Treasury shares
The reserved for treasury shares includes the costs of shares of the company held by the Group. At
30 June 2012, the Group held 12,028 shares of the company through a liquidity agreement managed
by an independent services provider.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 107
23.2 Diluted earnings per share
For fiscal 2011, the shareholders' meeting approved the payment of a dividend of €0.10 per share,
with shareholders having the option of receiving all or part of their dividend in cash or in the form of
shares at a 10% discount on the share’s market price.
In 2011, the dividend paid for fiscal 2010 was €0.10 per share.
NOTE 24 RELATED PARTIES AND OFF-BALANCE SHEET COMMITMENTS
24.1 Related parties
The total gross compensation of Naturex’s management bodies amounted to €990,000 in the 2012
first half compared to €980,000 in last year's same period. This compensation includes all
remuneration, benefits in kind and stock options allocated over the year paid by Naturex Inc.
(€827,000) and Naturex S.A. (€163,000) respectively. Members of Naturex's management bodies are
not granted any long-term benefits.
Concerning SGD which holds 21% of the Company's capital and 22.63% of its voting rights, Naturex
SA paid interest of €31,000 to SGD on the current account balance over the reporting period that at
30 June 2012 amounted to €1,519,000.
On the filing date of this document of 30 August 2012, SGD held 21.02% of the share capital and
22.63% of the voting rights of Naturex S.A.
30/06/2012 30/06/2011
Net income attributable to the Group (in €000s) 9 012 9 735
Average number of shares comprising the capital 7 708 328 6 410 931
Earnings per share 1,1692 1,5186
Number of outstanding options exercisable 193 877 221 988
Diluted earnings per share 1,1405 1,4677
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
108 2012 interim financial report | Naturex S.A
24.2 Off-balance sheet commitments
Commitments received
In €000s
Commitments related to Group financing
Credit risk 52 385 39 910
Commitments relating to Group operating activities -
Guarantee related to the transport of alcohol Unlimited Unlimited
Commitments given
In €000s
Commitments related to Group financing
Guarantees for subsidiaries' commitments 5 859 6 453
Pledging of securities and/or business assets in connection w ith the structured loan agreement 107 733 98 957
Pledging of business assets and property mortgages in connection w ith loans
taken out by companies before their integration into the Group
Commitments relating to Group operating activities -
Customs guarantees 977 1 077
Guarantees for trade payables 1 048 31
Guarantees in connection w ith research and development projects 240 -
30/06/2012 31/12/2011
30/06/2012 31/12/2011
1 291 850
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
Naturex S.A | 2012 interim financial report 109
STATUTORY AUDITORS' REPORT
ON 2012 INTERIM FINANCIAL INFORMATION
This is a free translation into English of the statutory auditors’ report issued in the French language and is consequently provided solely for the convenience of English speaking readers. This report should be read in conjunction with, and is construed in accordance with, French law and professional auditing standards applicable in France. As the English version of the interim financial statements has not been audited by the Statutory Auditors, only the original French version of the Statutory Auditors' report is legally binding.
For the six-month period from 1 January to 30 June 2012
To the Shareholders,
In accordance with the terms of our appointment at your shareholders' meeting and the provisions
of Article L.451-1-2 III of the French monetary and financial code, we hereby submit our report
regarding:
- The limited review of the accompanying interim condensed consolidated financial statements of Naturex S.A for the six-month period from 1 January to June 30, 2012;
- The verification of the information given in the interim management report.
These interim condensed financial statements were prepared under the responsibility of your Board
of Directors. Our responsibility is to express a conclusion on these statements based on our limited
review.
I – Conclusion on the financial statements
We have conducted our limited review in accordance with the professional standards applicable in
France. A limited review consists mainly in meeting with the members of management in charge of
the accounting and financial aspects and in implementing analytical procedures. The scope of such a
review is substantially less than for an audit conducted in accordance with generally accepted audit
standards in France. As such, it provides a moderate assurance that the financial statements as a
whole are free of material misstatements that is lower than that which would result from an audit.
Based on our limited review, nothing has come to our attention to suggest that the interim
condensed financial statements do not comply in all material respects with IAS 34 in accordance with
IFRS as adopted by the European Union governing interim financial reporting.
Interim financial report
FY 2012 (6-month period from 1 January to 30 June 2012)
110 2012 interim financial report | Naturex S.A
II – Specific verification
We have also verified the information in the interim management report commenting on the interim
condensed consolidated financial statements that were the subject of our limited review. We have
no matter to report regarding its fair presentation and consistency with the interim condensed
consolidated financial statements.
Paris La Défense, 30 August 2012 Avignon, 30 August 2012
KPMG S.A AREs X.PERT AUDIT
[French original signed by]
Jean Gatinaud Laurent Peyre
Partner Partner