Royal Avebe aims to provide its members with their material needs. Avebe tries to achieve this goal by concluding agreements with them and processing raw materials into starch and other products.

Coöperatie Koninklijke Avebe U.A. has its actual registered office at Prins Hendrikplein 20, 9641 GK in Veendam, the Netherlands and is registered with the trade register under number 02300804.

These financial statements relate to the 2023/2024 financial year, which ended on the balance sheet date of July 31, 2024. All financial information in euros has been rounded to the nearest thousand

The consolidation includes financial data of Avebe together with its group companies and other legal entities over which it exercises control or which it centrally manages. Group companies are legal entities over which Avebe can directly or indirectly exercise dominant control, it has the majority of voting rights or can control the financial and operational activities in any other way. This also takes into account potential voting rights that can be exercised immediately on the balance sheet date. The group companies and other legal entities over which it can exercise dominant control or over which it has central management are 100% included in the consolidation. The share of third parties in the group equity and in the group result is stated separately.

Intercompany transactions, intercompany profits and mutual receivables and debts between group companies and other legal entities included in the consolidation are eliminated, to the extent that the results have not been achieved through transactions with third parties outside the group. Unrealised losses on intercompany transactions are also eliminated other than in cases where a special impairment has taken place. The accounting policies of group companies and other legal entities included in the consolidation have been changed where necessary to align with the applicable group accounting policies. For a list of consolidated group companies, please refer to 19. Financial fixed assets.

A merger or acquisition involves the merging of separate companies into one economic entity, resulting in the acquisition of an integrated set of activities, assets and/or liabilities capable of generating revenue.

From the acquisition date, the results and identifiable assets and liabilities of the acquired company are included in the consolidated financial statements. The acquisition date is the moment when predominant control can be exercised over the company in question.

The acquisition price consists of the amount of money or the equivalent thereof that has been agreed for the acquisition of the acquired company, plus any directly attributable costs. If the acquisition price is higher than the net amount of the fair value of the identifiable assets and liabilities, the excess is capitalised as goodwill under intangible fixed assets. If the acquisition price is lower than the net amount of the fair value of the identifiable assets and liabilities, the difference (negative goodwill) is recognised as a deferred liability item.

The companies involved in the consolidation remain included in the consolidation until they are sold; deconsolidation takes place when decisive control is transferred.

The consolidated financial statements are prepared in accordance with the provisions of Title 9, Book 2 of the Dutch Civil Code and the firm pronouncements in the Dutch Accounting Standards (RJ), as published by the Dutch Accounting Standards Board ('Raad voor de Jaarverslaggeving'), including RJ 620 Cooperatives.

Assets and liabilities are measured at historical cost or production cost, unless stated otherwise in the further accounting policies. An asset is recognised in the balance sheet when it is probable that future economic benefits will flow to Avebe and the asset has a cost or value whose amount can be reliably determined. Assets that do not meet these requirements are not included in the balance sheet but are classified as off- balance sheet assets.

A liability is recognised in the balance sheet when it is probable that its settlement will be accompanied by an outflow of resources embodying economic benefits and the amount at which settlement will take place can be determined reliably. Liabilities also include provisions. Liabilities that do not meet these requirements are not included in the balance sheet but are accounted for as off-balance sheet liabilities.

An asset or liability included in the balance sheet remains included on the balance sheet if a transaction does not lead to a significant change in the economic reality with regard to the asset or liability. Such transactions also do not give rise to the recognition of results. The assessment of whether there has been a significant change in economic reality is based on the economic benefits and risks that are likely to occur in practice and not on benefits and risks that cannot reasonably be expected to occur.

An asset or liability is no longer included in the balance sheet if a transaction results in all or virtually all rights to economic benefits and all or virtually all risks relating to the asset or liability being transferred to a third party. However, an asset or liability remains recognised on the balance sheet if transactions do not lead to a significant change in the economic reality with regard to the asset or liability in question.

Income is included in the profit and loss account when an increase in economic potential, associated with an increase in an asset or a decrease in a liability, has occurred, the amount of which can be reliably determined. Expenses are recognised when a reduction in economic potential, associated with a decrease in an asset or an increase in a liability, has occurred, the size of which can be reliably determined. The revenues and costs are allocated to the period to which they relate.

References are included in the balance sheet, profit and loss account and cash flow statement that refer to the explanatory notes.

The accounting policies used are based on the going concern assumption.

In applying the principles and policies for preparing the financial statements, the executive committee of Avebe makes different estimates and judgments that may be essential to the amounts disclosed in the financial statements. This mainly concerns the valuation of assets, the valuation of inventories and provisions. If it is necessary in order to provide the transparency required under Book 2, article 362, paragraph 1 of the Dutch Civil Code, the nature of these estimates and judgments, including related assumptions, is disclosed in the notes to the relevant financial statement item.

The consolidated financial statements are presented in euros, which is the functional and presentation currency of Avebe. Items included in the financial statements of group companies are measured using the currency of the primary economic environment in which the respective group company operates (the functional currency).

All legal entities that can be controlled, jointly controlled or significantly influenced are considered to be a related party. Also entities which can control Avebe are considered to be a related party. In addition, statutory directors of Avebe are related parties. Significant transactions with related parties are disclosed in the notes insofar as they are not transacted under normal market conditions. The nature, extent and other information is disclosed if this is necessary in order to provide the required insight.

Financial instruments include both primary financial instruments (such as receivables and debts) and derivative financial instruments (derivatives).

In the notes to the various balance sheet items, the fair value of the instrument in question is explained if it differs from the book value. If the financial instrument is not included in the balance sheet, information about the fair value is given in the notes to 'Off-balance sheet rights and obligations and contingent assets and liabilities'.

For the principles of primary financial instruments, reference is made to the treatment per balance sheet item of the ‘Accounting policies applied to the valuation of assets and liabilities’.

The treasury activities, including currency and interest management as well as financing of the group and its operating companies, are centrally coordinated from the Netherlands. The policy approved by the board is aimed at hedging currency positions that arise as a result of purchases and sales in foreign currencies.

Currency call options and forward exchange contracts are mainly used as hedging instruments. Taking speculative positions is not permitted. The derivative financial instruments (currency forward contracts, currency call options, gas commodity contracts and interest rate swaps) are exclusively concluded with financial institutions that are lenders to Avebe. Derivatives are included in the balance sheet upon initial recognition recorded at fair value, the subsequent valuation of derivative financial instruments ('derivatives') depends on whether the underlying derivative is listed on a stock exchange or not. If the underlying is listed on the stock exchange, the derivative is recorded at fair value. If the underlying is unlisted, the derivative is recorded at cost price or lower market value. The method of accounting for changes in the value of the derivative financial instrument depends on whether hedge accounting is applied to the derivative financial instrument or not.

Avebe applies hedge accounting. This is documented at the time of entering into a hedging relationship. Avebe periodically determines the effectiveness of the hedging relationship by means of a test. This can be done by comparing the critical characteristics of the hedge instrument with those of the hedged position, or by comparing the change in fair value of the hedge instrument and the hedged position. If there is an indication of ineffectiveness, this possibly ineffective part is determined by means of a quantitative ineffectiveness measurement.

The foreign currency risks on a net investment in business operations abroad are hedged, with exchange rate differences being included in the legal reserve for translation differences in equity.

Intangible fixed assets are measured at historical cost less depreciation and impairments. With regard to the determination as to whether an intangible fixed asset is subject to an impairment, please refer to relevant section ‘Impairment of fixed assets’.

Expenditure on research for new products and new production techniques is recognised as costs. Development expenditure is only capitalised if it is beyond doubt that an identifiable asset will be created that will provide future economic benefit for Avebe and the costs can be determined reliably.

The tangible fixed assets are measured at acquisition costs or production costs plus additional costs less straight line depreciation based on the expected life and impairments, taking into account any residual value. If important components of a tangible fixed asset can be distinguished from each other and differ in useful life or expected use pattern, these components are depreciated separately.

Land is not depreciated. The annual straight-line depreciation is based on the expected useful life of buildings of twenty-five years and of machines and installations of ten years. The other fixed assets are depreciated over ten years or less, depending on the asset type.

With regard to the determination as to whether a tangible fixed asset is subject to an impairment, please refer to the relevant section ‘Impairment of fixed assets’.

Periodic major maintenance is activated according to the component approach. The total expenditure is allocated to the component parts. Major maintenance costs on assets that have been fully depreciated is capitalised and depreciated according to the depreciation period for the type of asset in question, provided that this extends the useful life.

Participating interests in group companies and other participating interests in which significant influence exercised on the business and financial policy are measured according to the net asset value method, but not lower than zero. In the event that 20% or more of the voting rights can be exercised, it may be assumed that there is significant influence. The net asset value is calculated in accordance with the accounting principles that apply for these financial statements.

If the measurement of a participation according to the net asset value is negative, it is stated at nil. If and insofar Avebe is fully or partially responsible for the debts of the participation or has the firm intention of enabling the participation to settle its debts, a provision is recognised for this.

Participating interests over which no significant influence can be exercised are valued at historical cost and, if applicable, after deduction of impairment losses.

The other receivables included under financial fixed assets include loans granted and other receivables. These receivables are initially measured at fair value less transaction costs (if material). These loans are subsequently measured at amortised cost price, which is, in general, equal to the nominal value. If there is a discount or premium when loans are granted, this is credited or charged to the result during the term as part of the effective interest. Transaction costs are also included in the initial valuation and charged to the result as part of the effective interest. If there is an impairment, valuation takes place at the realisable value (see also the section Impairment of fixed assets); write-down takes place at the expense of the profit and loss account.

We refer to the paragraph Deferred taxes for the valuation basis for deferred taxes.

Avebe assesses on each balance sheet date whether there are indications that an asset may be subject to impairment. If such indications are present, the realisable value of the asset is determined. If it is not possible to determine the realisable value for the individual asset, the realisable value of the cash-generating unit to which the asset belongs is determined. An impairment occurs if the carrying amount of an asset is higher than the realisable value; the realisable value is the higher of fair value less cost to sell and the value in use.

The realisable value is initially based on a binding sale agreement; if there is no such agreement, the realisable value is determined based on the active market, whereby usually the prevailing bid price is taken as market price. The costs deducted in determining net realisable value are based on the estimated costs that are directly attributable to the sale and are necessary to realise the sale.

For the determination of the value in use, an estimate is made of the future net cash flows in the event of continued use of the asset/cash generating unit; these cash flows are then discounted using a discount rate. The discount rate does not reflect risks that have already been taken into account in the future cash flows. An impairment loss is directly recognized in the profit and loss account while the carrying amount of the asset concerned is concurrently reduced.

If it is established that an impairment that was recognised in the past no longer exists or has reduced, the increased carrying amount of the asset concerned is set no higher than the carrying amount that would have been determined if no impairment value adjustment for the asset concerned had been reported.

Also, for financial instruments, the company assesses at each balance sheet date whether there are objective indications of impairment of a financial asset or a group of financial assets. If any such evidence exists, the impairment loss is determined and recognised in the profit and loss account.

Inventories (stocks) of raw materials and consumables are measured at historical price or production cost based on the FIFO method (first in, first out) or lower realisable value. The acquisition or manufacturing price consists of all costs associated with the acquisition or manufacture as well as the costs incurred to bring the stocks to their current location and condition. The lower realisable value is determined by individual assessment of the stocks. The stocks of goods for resale are individually measured at historical cost or lower net realisable value.

Starch, modified starch and by-products are measured at historical price or production cost, where necessary after deduction of a provision for obsolescence or, if applicable, at lower realisable value. The realisable value is the estimated sales price less directly attributable sales costs. The portion for potatoes included in the cost price is the approximate cost price based on the multi-year average purchase price of central wheat for which Avebe has made estimates for the average production per hectare and the variable costs. The fixed-cost mark-up incorporated in the cost price is based on a normative production per financial year.

Since 2008, Avebe has been allocated a certain amount of emission rights from the government (generally free of charge) with regard to annual CO₂ emissions. Such emission rights can be traded freely. After the calendar year, the actual CO₂ emission level is determined. The companies are required to submit emission rights to match their level. If a company has a deficit, a fine must be paid and with certain restrictions, the deficit will be charged to the rights issued for the subsequent year.

The purchased emission rights are included as inventories as these emissions allowances are considered to be an input in the production process, similar to inventories. The emission rights allocated by the government free of charge are initially valued at the actual cost (generally nil). Additional bought emission rights are initially valued at acquisition cost.

The subsequent valuation takes place at cost price; these rights are only used/applied when they are surrendered to settle the obligation accrued due to the actual emissions. An obligation is only formed for the actual emissions to the extent that they exceed the by the government allocated emission rights, to be valued at the current value of the emission rights (yet to be obtained).

Receivables are initially measured at the fair value of the consideration to be received. Receivables are subsequently measured at the amortised cost price. If payment of the receivable is postponed under an extended payment deadline, fair value is measured on the basis of the discounted value of the expected revenues. Interest gains are recognised using the effective interest method. Provisions for bad debts are deducted from the carrying amount of the receivable. Other securities shown under the receivables are measured at their fair value.

Issued financial instruments that are designated as equity instruments by virtue of the economic reality are presented under shareholders’ equity. Payments to holders of these instruments are deducted from the shareholders’ equity as part of the profit distribution.

Issued financial instruments that are designated as a financial liability by virtue of the economic reality are presented under liabilities. Interest, dividends, income and expenditure with respect to these financial instruments are recognised in the profit and loss as financial income or expense.

The legal reserve concerns unrealised exchange results on net investments in foreign group companies and issued loans, as well as realised and unrealised exchange results on forward exchange contracts concluded to hedge the currency risk on the above-mentioned investments and loans. When a participating interest (group company) is sold, the cumulative translation differences relating to that investment are transferred to the profit and loss account and presented there as part of the result from sale of participation.

Provisions are recognised for legally enforceable or constructive obligations that exist at the balance sheet date, and for which it is probable that an outflow of resources will be required, and a reliable estimate can be made. Provisions are measured at the best estimate of the amount that is necessary to settle the obligation as per the balance sheet date. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation, unless the time value of money is not material. Where the effect of the time value of money is not material, provisions are measured at their nominal value.

Deferred taxes are recognised for temporary differences between the value of the assets and liabilities under tax regulations on the one hand and the book values applied in these financial statements on the other. The computation of the deferred taxes is based on the tax rates prevailing at the end of the reporting year or the rates applicable in future years, to the extent that they have already been enacted by law. Active and passive deferred taxes within the same fiscal entity and with the same background are offset. Deferred tax assets are recognised insofar as it is probable that future taxable profits will be available to offset the available tax losses.

On the Dutch pension schemes the provisions of the Dutch Pension Act (Pensioenwet) apply and Avebe pays premiums based on (legal) requirements, a contractual or voluntary basis to pension funds and insurance companies. The premiums are recognised as personnel costs as soon as they become due. If premiums already paid exceed the premium payable to the pension administrator, the excess is recognised as a prepayment if these lead to a refund or reduction of future payments. Premiums not yet paid are included as a liability on the balance sheet. Avebe has measured these pension plans according to the liabilities approach. The premium due for the reporting year is recognised as an expense. Changes in the pension provision are also included in the profit and loss account.

The obligation includes the present value (at current market rates) of the expenditures that are probably required to settle the obligation. Pension schemes of subsidiaries abroad, which are comparable to the way in which the Dutch pension system is designed and operates, are also processed according to the liabilities approach. For foreign pension schemes that are not comparable, a best estimate is made of the existing obligation as at the balance sheet date, based on an actuarial valuation methodology generally acceptable in the Netherlands.

A provision for onerous contracts is recognised in the balance sheet when the expected benefits to be achieved from a sales agreement are lower than the unavoidable costs of meeting the obligations under the agreement.

The provision is valued at the present value of the expected net costs of continuing the contract, or, if this is lower, at the present value of the expected costs of terminating the contract, being any compensation or penalty resulting from failure to compliance with the contract.

The costs of meeting the obligations of a contract include the costs directly related to the contract. These costs consist of both:

• the incremental costs of meeting the obligations of a contract, for example direct labor and material costs; as
• an allocation of other costs that are directly related to meeting the obligations of a contract, for example an allocation of the depreciation expenses of a tangible fixed asset that is used, among other things, in the performance of the contract.

The provision for disposal costs is determined on the basis of the expected disposal costs of residual flows (waste and other) from the supply of potatoes and the production process. This provision is stated at nominal value.

The other provisions relate to the provision for anniversary payments and asbestos costs. The provision for anniversary payments is included at the present value of the expected payments during the employment. The calculation of the anniversary provision takes into account, among other things, expected salary increases, survival chances based on the Prognosetafel AG 2022 with mortality experience adjustments and the chance of staying. When calculating the present value, the market interest rate of high-quality corporate bonds of 3.35% was used as the discount rate.

The provision for asbestos costs was determined on the basis of the expected costs for the asbestos removal of buildings. This provision was included at nominal value.

Lease contracts in which a large part of the risks and rewards associated with ownership are not for the benefit of or incurred by Avebe are recognised as operational leasing. Lease payments are recorded on a straight-line basis, taking into account reimbursements received from the lessor, in the consolidated profit and loss account for the duration of the contract. Avebe has no financial lease contracts.

Net turnover comprises the income from the supply of goods after deduction of discounts and such like and of taxes levied on the turnover and after elimination of intra-group transactions. Revenue from the sale of goods is recognised if the amount or the result can be reliably determined.

The turnover is processed for the amount to which Avebe expects to be entitled in exchange for transferring goods, this is the transaction price. This amount excludes amounts collected on behalf of third parties. The transaction price consists of a fixed fee and possibly variable fees. Credit risk is not taken into account when determining the transaction price. The starting point for determining the transaction price is that the goods will be delivered in accordance with the relevant agreement.

Revenues from the goods supplied are recognised when (substantially) all significant risks and significant rights to economic benefits in respect of the goods have been transferred to the buyer. The cost price of these goods is allocated to the same period.

Other operating income includes results that are not directly related to the delivery of goods or services in the context of normal, non-incidental business activities. These revenues are allocated to the reporting period in accordance with the terms of the agreement. Gains and losses from the incidental sale of tangible fixed assets are included in other operating income.

The cost of sales includes the cost price of the goods sold and delivered, consisting of direct material consumption, direct wage and machine costs and other direct and indirect costs that can be attributed to production. The costs of raw materials and consumables are calculated according to the FIFO method (first in, first out) and are allocated to the period to which they relate. The amount included here for the purchase of starch potatoes is determined on the basis of the campaign price plus surcharges and plus or minus the effect of the calculation of the potato component in the finished product. For the valuation basis, please refer to the paragraph Inventories.

This includes costs incurred to generate operating income, insofar as these costs have been charged by third parties and cannot be regarded as costs of raw materials and consumables. These costs are allocated to the period concerned.

Costs are determined on a historical basis and are attributed to the reporting year to which they relate.

Interest income and expenses are recognised on a pro rata basis, taking account of the effective interest rate of the assets and liabilities to which they relate. In accounting for interest expenses, the recognised transaction  expenses for loans received are taken into consideration.

Exchange differences that arise from the settlement or translation of monetary items are recorded in the profit and loss account in the period in which they occur, unless hedge-accounting is applied.

Tax on the result is calculated per country based on the result before tax in the profit and loss account, taking account of the losses available for set-of from previous financial years (to the extent that they have not already been included in the deferred tax assets) and exempt profit components and after the addition of non-deductible costs. Due account is also taken of changes which occur in the deferred tax assets and deferred tax liabilities in respect of changes in the applicable tax rate. Tax settlements within the fiscal unity in Avebe are processed.

Where significant influence is exercised over associated companies, the group’s share in the associated companies’ results is included in the consolidated profit and loss account. This result is determined on the basis of the accounting principles applied by Avebe. Where no significant influence is exercised, the dividend income is accounted for in the profit and loss as financial income and expenses.

Events that provide further information on the actual situation at the balance sheet date and that appear before the financial statements are being prepared, are recognised in the financial statements.

Events that provide no information on the actual situation at the balance sheet date are not recognised in the financial statements. When those events are relevant for the economic decisions of users of the financial statements, the nature and the estimated financial effects of the events are disclosed in the financial statements.