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ANNUAL REPORT2017

Annual Report 2017 2

The 2017 financial statements were drawn up by the Board of Directors on 24 April 2018.The 2017 financial statements were adopted by the General Meeting of Shareholders on 24 April 2018.

3Annual Report 2017

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TABLE OF CONTENTS

I. KEY FIGURES 2017 4

II. REPORT OF DIRECTORS 2017 8 Letter from the CEO 9

2017: in Review 10

Outlook 2018 15

Risk and Risk management 15

III. GOVERNANCE 18

IV. REPORT OF THE SUPERVISORY BOARD 20

V. FINANCIAL STATEMENTS 23 Consolidated balance sheet as per 31 December | before appropriation of result 24

Consolidated income statement for the year ended 31 December 26

Consolidated cash flow statement for the year ended 31 December | in accordance with the indirect method 27

Consolidated statement of comprehensive result for the year ended 31 December 28

Notes to the consolidated balance sheet and income statement 29

Company balance sheet as per 31 December before appropriation of result 44

Company income statement for the year ended 31 December 46

Notes to the company balance sheet and income statement 47

VI. OTHER INFORMATION 52 Statutory profit appropriation 53

Independent auditor’s report 54

I. KEY FIGURES 2017

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5Annual Report 2017

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CAPEX 2016

CAPEX 2016

40MIO

€328

2017

2016MIO317

MIO

TOTAL TURNOVER


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AMOUNTS IN THOUSANDS OF EUROS 2017 2016 2015 2014 2013

Total turnover 327,938 316,730 304,355 292,451 276,258

Added value 119,112 117,315 109,691 106,642 97,203

Change total turnover compared to previous year 3.5% 4.1% 4.1% 5.9% (0.7%)

Change added value compared to previous year 1.5% 7.0% 2.9% 14.0% (3.0%)

Personnel costs 50,147 45,542 41,581 43,226 40,188

Depreciation & other changes in valuation of (in)tangible fixed assets 33,206 30,683 30,941 30,633 27,919

Other expenses 20,593 21,293 16,365 18,526 22,969

"Result from ordinary business activities before tax" 15,166 19,797 20,804 14,257 2,879

As % of added value 12.7% 16.9% 19.0% 13.4% 3.1%

Group equity 79,914 111,282 99,023 83,523 73,071

Long term debt as % of group equity 29.2% - 15.7% 29.1% 45.4%

Return on invested capital 8.1% 11.5% 11.4% 7.9% 4.0%

Fixed assets 136,993 130,067 129,166 125,867 125,487

Current assets 105,648 84,284 82,887 85,572 81,292

Non-current liabilities (22,987) - (15,497) (24,338) (33,184)

Current liabilities (126,893) (92,915) (87,384) (90,440) (90,868)

Provisions (12,847) (10,154) (10,149) (13,138) (9,656)

Group equity 79,914 111,282 99,023 83,523 73,071

Cash flow from operating activities 44,016 46,764 44,372 38,620 27,514

Cash flow from investment activities (36,570) (27,842) (34,723) (29,659) (20,509)

Free cash flow 7,446 18,922 9,649 8,961 7,005

Solvency 32.9% 51.9% 46.6% 39.5% 35.3%

Average number of employees 840 fte 755 fte 750 fte 762 fte 772 fte

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ABOUT US

POOLING PARTNERS IS EUROPE’S #1 INTEGRATED FULL-SERVICE POOLER

AND PRODUCER OF PALLETS AND BOXES

With a history dating back to 1891, this Dutch family business provides pallet and box pooling services across Europe and is one of Europe’s largest producers of wooden pallets. It operates three pooling networks in the demanding supply chains of IPP Logipal, PAKi Logistics, and PRS Return System.

The IPP Logipal pool is a leading rental provider of pallets and boxes in fast moving consumer goods and industrial supply chains across Europe. Customers rent the IPP pool rental pallets, supplied through an extensive service centre network, to store and deliver their products. By deploying its pooling expertise in recovery and refurbishment, IPP Logipal is able to provide its customers with pool pallets whenever and wherever they need them.

The European PAKi network is the market leader in pool management of exchangeable and standardised load carriers such as Euro pallets and box pallets. An extensive network of more than 10,000 pooling sta-tions across Europe supplies our customers with the pallets they need, whenever and wherever they may need them. Similarly, the pallets can be returned at the location and time of our customers’ choosing.

PRS Return System is an efficient and reliable pooling system for users of CP-type pallets in the demanding polymer and chemical sectors across Europe and Turkey. For nearly 20 years, it has contributed to sustainability by strongly stimulating pallet re-use and reducing packaging waste.

Pooling Partners is a long-standing and leading exponent of circular economy models, promoting recovery and continual re-use of durable standard pallets and boxes in efficient and sustainable pooling systems. Its production facilities source from sustainably managed forests and produce and repair over 20 million pallets and boxes per annum, from wood that is PEFC™ or FSC® certified.

MISSION

Pooling Partners offers the largest full-service network for pallets and boxes. Using smart and data driven solutions, we strive to be the ideal partner for the efficient transport of goods. We do this with the highest regard for customers, people and the environment.

VISION

We provide our customers with high quality pool materials and flexible service solutions, offering the most advanced pooling services for exchangeable and standardised load carriers in Europe. The quality of the pallets and boxes and our operational excellence distinguishes us from the competition.

II. REPORT OF DIRECTORS2017

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9Annual Report 2017

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LETTER FROM THE CEOOur strategy is to extend our leading position in the market as the only full-service pooler and producer of wooden pallets and boxes in Europe. We are convinced that supply chains are becoming more automated and increasingly data driven. Our future success, then, depends on our ability to service customised solutions. In line with this strategy and vision, Pooling Partners has continued to invest in its organisation, personnel and IT-systems in 2017.

Our investments have, in 2017, resulted in sustainable growth. However, strong competition has affected our margins. Combined with the aforementioned investments, this has had a negative impact on our operating result.

Despite the intensified competition within closed pooling, we were able to maintain market share in most market segments. The acquisition of El Palet Verde at the end of 2016 successfully contributed to market penetration in the Iberian Peninsula. After a year of integration, the company is poised to continue to grow in Spain and Portugal. Apart from the expansion in Southern Europe, we have also set up a repair facility in United Kingdom, in order to deliver excellent support and quality to our customers in England.

Open Pooling showed stable growth. Over the course of the year, we invested in pool size to respond to growth opportunities in the market. We will continue to invest in 2018.

The Pallet Production companies have been confronted with an exces-sive increase of timber prices. Sales price increases could not follow course at that pace. This forced us to further improve the operational performance and strengthen our timber purchase organisation. Our performance is expected to be back on track in 2018.

Our IT systems are the lifeblood of our pooling activities. Our customers’ requirements demand quicker, better and easier use of our systems. We understand the importance of quality and accessibility of our services and have chosen a clear direction in our IT-strategy and the related IT-landscape.

As the company continues to grow, we will put more emphasis on the quality of the internal organisation. We have set up an internal audit department and are further integrating the Internal Control Framework in our entire organisation.

In 2017, Kees Faber stepped down as member of the Supervisory Board. We are very grateful for all his work as CEO and his continued commitment towards the company as Supervisory Board member. He has been of great importance for the growth and the uniqueness of our culture and product portfolio. We will continue his hard work and we wish him all the best in his retirement. Furthermore, we would like to thank Marcel Fok, our former CFO, who stepped down after 18 years of service. His contribution safeguarded that our growth was combined with financial strength. In August, Marcel Fok was succeeded by Stan Peeters.

Pooling Partners has been transformed during the last two decades from a producer of pallets into a strongly data-driven, full-service pooling partner. By attracting talent for key positions, investing in the professional development of our existing employees and constantly encouraging an organisation culture in which the focus is on entrepreneurship and on doing business, we have been able to prepare for the future and further growth.

Looking ahead, we will continue to focus on the growth and expansion of our network. We feel confident that our investments in systems, people and network will enable our growth strategy and ensure that Pooling Partners is fit for the future. As a result of the investments we have done in 2017, we believe that 2018 will bring further growth.

We wish to thank all our customers, suppliers and other business partners for their confidence in Pooling Partners. We are particularly grateful for the efforts of our staff.

Ingrid FaberChief Executive Officer


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2017: IN REVIEW

BUSINESS UNIT PERFORMANCE

Pooling Partners operates three pooling networks and is a leading producer of wooden pallets and boxes.

It is organised into three primary business units: IPP Logipal Pool and PRS Return System; PAKi Pooling Network; Production.

The PAKi pooling network provides solutions for standardised and exchangeable load carriers, whilst the IPP Logipal and PRS pools are service pools of rented pallets and boxes.

IPP LOGIPAL POOL AND PRS RETURN SYSTEM

IPP Logipal is a leader in the rental provision of pallets and boxes in fast moving consumer goods, industrial supply chains and recycling sectors across Europe, whilst PRS Return System offers similar soluti-ons in the chemical industry. They orchestrate and synchronise com-plex and extensive recovery, inspection, repair and fulfilment operations to deliver seamless pooling solutions to European customers whenever and wherever they need them.

Late 2016, El Palet Verde was acquired. In 2017 IPP Iberia, was successfully integrated. The added value of this acquisition will come to full fruition in the years to come. Despite an increasingly competitive market environment, IPP Logipal and PRS business performance have improved, compared to 2016.

PAKI POOLING NETWORK

The European PAKi network is the European market leader in the pool management of exchangeable and standardised load carriers such as Euro pallets and Euro boxes. An extensive network of more than 10,000 pooling stations across Europe supplies our customers with the pallets they need, whenever and wherever they may need them. Similarly, the pallets can be returned at the location and time of our customers’ choosing. The organisation has grown over the past years and new colleagues with different cultural and linguistic backgrounds have joined us. Currently we serve PAKi network customers in 22 European countries. The customer base was developed even further across the supply chain with chargers, logistic- and retail companies.

In 2017, our unique PAKi’s pooling network solution was further validated by both our existing customers and new clients. In order to maintain and even further improve our service levels within a growing market, we have invested in the organisation and the pool size. We will

continue doing so in 2018, as we expect demand to grow further. The Euro pallet market is strongly focused on the retail sector, as quality demands based on material handling systems constantly increase. In the retail sector and the automotive industry, we are continually responding to demands for new types of load carriers.

PRODUCTION

Production capabilities have been the foundation of Pooling Partners since 1891. With eight pallet production facilities across Europe, Pooling Partners is one of Europe’s largest producers of wooden pallets.

In 2017, production units were confronted with increasing timber prices, which could not fully be charged on to clients. Next to the impact of timber prices, profitability of Production was affected by over-capacity which put pressure on the market prices. During the year, we continued the implementation of the initiated programs for long-term improvements of this business unit. The various Lean initiatives, organisational improvements and management focus are expected to improve the profitability in the coming years.

IT STRATEGY

IT systems are key in our ability to support our business strategy, custo-mer requirements and service levels. In 2017, we made a clear choice about the future IT landscape. The major focus for next year is the imple-mentation of interfaces between various satellite systems such as our own transport management system and the customer’s data systems.

PEOPLE & ORGANISATION

Focus The focus of Pooling Partners is on developing our employees. The success of Pooling Partners depends on the quality of its co-workers. Developments in the market suggest that customers have increasing demands with regards to, sustainability and efficiency. Our focus, then, is on continuously improving our services and products and investing in operational excellence. In 2017, we further improved the quality of management. Moreover, we are focusing on building a professional HR-organisation.

Development In 2017, we continued our Talent Management Program. This two-year program provides young talent with the opportunity to develop their technical and management skills. Along the way, young talent develop their communication skills, leadership skills and learn the basic steps of project management. They are familiarised with intercultural relationships and learn how to deal with cultural differences. The most important lesson, however, is what they learn by working together.

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We have organised various events like the yearly Summit, the Senior Management Meeting and the continuation of our Talent Management Program. In 2017, the business strategy was presented to our Senior Management, providing clear strategic goals to the business units. Based upon this strategy, Pooling Partners has chosen to decentralise HR if possible and centralise it in cases where this benefits the business. Tasks and responsibilities are delegated as locally as possible in the operational organisation. This allows local management to optimally carry out HR processes and responsibilities and to optimally align with the business.

Employee Satisfaction SurveyIn 2017, an independent employee satisfaction survey was held within the IPP Logipal and PRS organisation and headquarters. The survey had a response rate of 85.6%, guaranteeing reliable results. Pooling Partners gained data and insights that will be valuable in creating and maintaining employee satisfaction. The survey pointed out that our people are very engaged and committed. However, it also identified some areas of improvement with regards to efficiency, transparency of remuneration and communication. In Q4 of 2017, we organised a number of workshops and meetings, aiming to develop concrete im-provement plans based upon the results of the survey. We will continue with this effort in 2018. On top of that, we will organise an employee survey in 2018 at the production companies within Pooling Partners.

VitalityWithin our production companies, the average age of co-workers is relatively high. This will most probably lead to various challenges with regards to succession as well as personnel planning. Within Europe the age of retirement is rising. Working at the production companies is physically demanding; this means it will be difficult for our people to continue working at the same level during their career. To counter this, we started to invest in vitality programs in 2017, in order to keep our people healthy and prevent health-related absenteeism. In 2017, EPV, the business organisation of pallet production companies in the Netherlands, initiated a vitality research project. This project was also conducted in our Dutch production companies. It yielded valuable data; in 2018, this project will be continued and relevant actions will be taken upon the results.

Key ValuesIn 2017, the key values of Pooling Partners were determined: Customer oriented, Innovative, Excellence, Partnership and Sustainability. The key values will be further developed and implemented in more detail during the coming years.

Workforce At year-end 2017, the workforce had risen to 875 employees (measured in full time equivalent (FTE)); year-end 2016: 762 FTE). The increase in workforce is mainly due to expansion in the United Kingdom and the Iberian Peninsula. Furthermore, employees previously hired via agencies have now been given a labour contract. The average sick leave slightly increased to 5.1% in 2017 (2016: 4.9%).

Prospects 2018 It is anticipated that the workforce will continue to grow in 2018.

CORPORATE SOCIAL RESPONSIBILITY VISION

In Pooling Partners’ vision, a pallet design is only functional when, in addition to meeting all of the wishes and requirements of our custo-mers, comprehensive considerations are made between optimum use of the raw materials and the possibility of reusing the pallet as often as possible.

According to Professor Jan Jonker, Pooling Partners is one of the few examples of a truly circular Dutch company. Jan Jonker is professor at the Nijmegen School of Management (NSM) of the Radboud University Nijmegen [RU - Holland]. His research concerns corporate responsibility in relation to new business concepts and business strategy.

In his book called ‘Eén zwaluw voorspelt veel goeds’ (One swallow predicts a lot of good things), he describes the Pooling Partners case. ‘Initially, Pooling Partners was a ‘linear’ company, purely focused on producing and selling as many pallets as possible. The organisation of the cycle requires very different requirements: data analysis is now crucial in the company, so that pallet movements are optimal and the loss of pallets is kept to a minimum.’

Nowadays the Pooling Partners business model is circular and starts with buying timber. By using fast-growing softwood from sustaina-bly-managed forests, we are guaranteeing our most important raw material for the future. The majority of our timber originates from PEFC™ or FSC® certified forests in Europe. Due to stringent legislation and responsible management, the total area of forestry in Europe is increasing each year.

We endeavour to achieve efficient production processes by using fewer and fewer fossil energy sources. Despite the efficient production pro-cesses, a proportion of waste timber always remains; however, this tim-ber has a sustainable use. For example, shavings are sold to farms for animal bedding and other waste timber is used for making chipboard, amongst other things, or as an energy source for our drying ovens.

Production remains the main supplier for our Pooling companies. Our pooling branch specialises in optimising the logistic processes. This not only reduces the number of transport movements, and therefore costs, for the customer, but also encourages the re-use of pallets. On average, a pallet circulates in our pool for 7 years. When pallets become damaged, they are repaired so they always meet quality requirements and can continue to be used for as long as possible.

Pooling Partners’ Corporate Social Responsibility impacts on People, Planet and Profit in the following way:


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People Our production sites work according to the highest safety

standards; We focus on sustainable working relations with our people; We organise training programs for our young talents and

development programs for our management.

Planet Our aim is to re-use more than 95% of our product and to ensure

that waste timber is given a purposeful use, either in the form of other applications for woodchips or for generating heat;

We constantly improve our efficiency in order to reduce the number of transport kilometres for empty pallets;

All of the timber we use originates from sustainably-managed forests and more than 90% of the timber we use is PEFC™ or FSC® certified;

We are steadily reducing the CO2 emissions from our own production and services;

We help our customers reduce their CO2 emissions in their logistic chains by ensuring optimum pooling of their pallets.

Profit We constantly improve our products; We stand out because we excel in what we do (efficiency,

quality and professionalism); Pooling Partners puts the circular economy first: products

are reused as often as possible, which results in a sustainable business model.

SUSTAINABILITY INITIATIVES

In addition to our circular business model, it is always possible to achieve even more sustainability benefits. A few initiatives:

Sustainable employabilityIn the context of sustainable employability, the Social Fund for the Wood Processing Industry started an ESF project in 2017 called ‘Duur-zaam werken in het hout’ (Working in the wood business sustainably). Pooling Partners took part in this pilot project, which was nominated by the Ministry of Social Affairs for the ESF Award 2017. The objective of this ESF project is to raise awareness among both employers and employees in the sector that sustainable employability is important, so that companies and employees can continue to work on this.

CollaborationThe main thrust of our sustainability efforts is around collaboration with customers and retailers. As part of a war on waste (WoW) partnership with Pooling Partners, one of our UK customers has succeeded in reducing empty running and therefore reducing the number of road-miles, cutting the number of unnecessary journeys from its supply chain by a staggering 50,000 miles per year.

Electric fork-lift trucksDuring the coming years new electric fork-lift trucks will be delivered to our production sites in Belgium, Germany and the Netherlands. These fork-lift trucks will generate a cost saving and contribute towards a sustainable business operation with less fossil fuel. After all, there will no longer be any need to burn diesel, which means the overall carbon footprint of our production sites will reduce.

PRODUCE WOODENLOAD CARRIERS

GROW SUSTAINABLEFORESTS

RECOVERY & REPAIR

WOOD CHIPS BIOMASS

TRANSPORT

REUSE & EXCHANGE

10 years cycle

SUPPLY & REPAIR


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Wind-drying palletsA major cost item in the production of pallets is the drying of the timber. Pasec does this using an oven that is fuelled entirely using waste timber. Phoenix is currently experimenting with wind to dry the pallet. On warmer and breezy days, the pallets can be dried outside with good results. Even if the pallets still have to go into the oven after wind-drying, it will be for less time.

Reducing Pooling CO2 emissionsFor some time now, we have been using a Bilan Carbone® CO2 calcu-lation tool for our IPP pool. This tool allows us to accurately calculate the amount of CO2 released from pooling activities. Between 2010 and 2014, we reduced our CO2 emissions by three percent. We are currently upgrading our CO2 measurement system for pooling activities in Belgium, Germany, the Netherlands and the United Kingdom. This will allow us to focus on further future CO2 reductions in the pooling activities in these countries.

Lean manufacturing In recent years, all of our production businesses started working “lean”. Continuous improvements in work processes generate savings, both on the input side - because the timber is handled more efficiently - and on the capital side. The machinery is used more and more efficiently, which means production per machine is increasing, helping us achieve our target of generating a sustainable profit in both the short and long term.

Energy efficiency We are always looking for ways to increase the energy efficiency of our operations. In 2017 we have approved an investment in energy efficient dry chambers and a wood-fired boiler at our Phoenix Plant in Hasselt. These investment will take place in 2018 and we expect these to be operational per beginning of 2019.

MARKETING AND COMMUNICATION

The marketing organisation was further professionalised in 2017 by hiring a new Manager Corporate Marketing and Communication. Concerning branding, we decided that Pooling Partners should be managed as a Portfolio of Companies.

The Marketing Committee (consisting of management representatives from both the pooling and the production businesses) determines the marketing strategy and the guidelines for the operational staff. This staff, from all parts of the business, works on a project basis with well-briefed preferred suppliers and using shared tools such as a brand portal and a web shop. This helps us to safeguard the consistency of our corporate identity and our communication to the market.

In 2017, Pooling Partners implemented more than 100 marketing cam-paigns in Europe and elsewhere, ranging from active participation in around 30 large and small fairs and conventions, placement of various advertisements in trade magazines, publication and follow-up of press releases in multiple European languages, publication of various articles and the posting online and printing of brochures.

FINANCE

Result developments In 2017, Pooling Partners achieved a total turnover of € 327.9 million, compared to € 316.7 million in 2016, with an added value of € 119.1 million (2016: € 117.3 million).

The Pooling divisions showed continuous strong performance in 2017 with higher sales levels and higher added value which was invested in people and further strengthening of the organisation. The Production division increased its net sales but had difficulties maintaining its level of operating costs. This lead to a decreasing operating result compared to 2016.

The exchange rate movements of the GBP had a negative impact (€ 0.8 million) on the overall results during the year. Capitalised assets for production The pool size book value increased by 2.5% (2016: decrease of 2.5%) compared to last year, mainly to support the growth of the pooling activities. As a result, the capitalised assets for production increased by € 2.9 million compared to last year.

Total operating income Compared to 2016, total operating income increased by 2.8% (+ 4.1% at constant exchange rates).

AMOUNTS IN THOUSANDS OF EUROS 2017 2016 VARIANCE IN %

Net turnover 308,801 302,403 2.1%

“Changes in stock of finished products and semi-finished products” (1,254) (670) 87.2%

Capitalised assets for production 9,029 6,094 48.2%

Total operating income 316,576 307,827 2.8%

“Cost of materials, consumables and outsourced work” (197,464) (190,512) 3.6%

Added value 119,112 117,315 1.5%


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ExpensesTotal operating expenses of € 101.8 million increased by € 9.0 million compared to 2016. The increase in wages, salaries and social securities by 10.1% relates, amongst other things, to higher number of staff members as a result of higher operational activities and strengthening of our organisation.

In 2017, changes were made in our IT strategy and the use of software systems. As a consequence, one software system was therefore im-paired for an amount of € 1.3 million. The amortisation of the goodwill of the 2016 acquired company El Palet Verde increased amortisation costs by € 0.5 million. The larger pallet pool came with higher depreciation charges amounting to € 0.7 million.

Other operating costs were affected by a provision for asbestos removal of € 0.8 million. As a result of efforts to strengthen the organisation, the company also faced increased operating costs for factors such as IT and marketing.

Financial income and expensesThe financial income and expenses decreased by € 2.6 million. This was caused by more favourable exchange rate movements (€ 1.7 million) and a decrease in net interest charges (€ 0.8 million), mainly due to the lapsing of some interest rate swaps. The exchange rate gains and losses are highly influenced by movements in the EUR/GBP rate.

Tax on result from ordinary business activities In 2017 the change in discount rate of deferred taxes from 5% to 3% caused a one-off increase in tax expense of € 1.5 million, a provision of € 0.4 million for an uncertain foreign tax position was accounted for and a provision of double taxation of € 0.4 million was released. In absence of these non-recurring items the effective tax rate in 2017 is 27.5% compared to 27.3% in 2016.

Cash flow statement The positive operating cash flow of € 44.0 million includes a negative working capital movement of € 2.6 million, mainly due to the increase in trade accounts receivables.

Pooling Partners’ confidence in the future is reflected in the investment levels. Investment cash flow amounted to € 36.6 million, which is € 8.7 million higher than previous year. The majority of the investments was for pooling materials. Other capital expenditures include, amongst other things, € 0.8 million for the acquisition of Korafin Beheer Bvba.

During the year the company renewed its financing agreement into a € 80 million revolving credit facility and went into a long-term vendor-loan agreement of € 25 million. The total net cash inflow from loan activities was € 49.2 million, which was offset by the acquisition of own shares for an amount of € 38.6 million and dividend payments of € 1.4 million.

The company complies with the ratios agreed with financing companies. Financing charges dropped in 2017 to € 1.3 million (2016: € 2.1 million).

EquityDuring the year, the company acquired own shares for a total amount of € 38.6 million. Most of these shares were received via the acquisition of Korafin Beheer Bvba.

Equity decreased to € 79.9 million at 31 December 2017 (2016: € 111.3 million), the decrease was mainly caused by the purchase of own sha-res of € 38.6 million. Furthermore the undivided result (positive € 9.5 million), dividend payments (€ 1.4 million) and translation differences (€ 0.8 million) affected the total equity. The solvency reduced to 33% (2016: 52%).


Cash flow from operating activities 44,016 46,764 (5.9%)

Cash flow from investment activities (36,570) (27,842) 31.3%

Cash flow from finance activities 9,134 (17,222) (153.0%)

Movements in cash at bank and in hand 16,580 1,700


Added value 119,112 117,315 1.5%

Wages, salaries and social securities 50,147 45,542 10.1%Depreciation and other changes in valuation of tangible and intangible fixed assets 33,206 30,683 8.2%

Other operating costs 18,468 16,586 11.3%

Total operating expenses 101,821 92,811 9.7%

Result on participations - (27) (100.0%)

Financial income and expense (2,125) (4,680) (54.6%)

Result from ordinary business activities before tax 15,166 19,797 (23.4%)

Tax on result from ordinary business activities (5,671) (5,396) 5.1%

Tax on result from ordinary business activities 9,495 14,401 (34.1%)


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OUTLOOK 2018In 2018 we expect continuing growth of the economy in Europe and expect that this growth has a positive effect on transport and logistics and therefore on the activities of Pooling Partners due to our:

Unique proposition: the only integrated full-service producer and pooler in Europe;

Strong brand; Smart, IT-driven solutions; Enterprising and innovative organisation structure; Strong financial position.

EMPHASIS ON POOLING ACTIVITIES

The core business of Pooling Partners is the production and reuse of pallets, and this will not change. We believe that by providing produc-tion, closed- and open-pooling solutions under one roof, we create significant scale and synergy benefits for our customers. We expect that future sales growth will come from our pooling activities and associated flexible services. Therefore, we will continue to invest in the availability and production of good quality pallets and will further increase our pool size.

PERSONNEL AND ORGANISATION

We will continue investing in good people, as we did in recent years, by training our existing workforce, by attracting new talent for key positions and by continuous investing in management development programs.

In 2018, we will continue with the further professionalisation of Pooling Partners. Our organisation is decentralised with a compact holding structure. This ensures an enterprising and innovative culture throughout the organisation and encourages local entrepreneurship, which ensures us to remain close to our customers and able to respond decisively. We cherish this culture because we believe that our customers (in particular our pooling customers) gain the most from this and because it aligns with our customer intimacy and operational excellence growth strategies.

CONTINUOUSLY FOCUSSING ON GROWTH OPPORTUNITIES

By successfully acquiring and integrating other businesses, Pooling Partners has a proven track record of expanding its services and/or network and this will continue to be an important tool for achieving growth. With our knowledge of the market, IT systems and rapid inte-gration possibilities we believe we are well positioned to further grow in existing markets or unlock new geographic markets.

BEYOND 2018

Technology is heavily affecting the world economy and impacting our daily lives and this already has and will increasingly have its impact on our business. In a few years, developments that currently seem like science fiction can become commonplace. Think of air-borne deliveries by drone or self-driving trucks. Such developments will place increasing pressure on the traditional manufacturer-retailer channel we currently serve. In addition, we expect further consolidation in the number of major players and a strong increase in smaller, specialist retailers and retail organisations. This outlines a picture of the future which is full of opportunities but also a future that we must start preparing for now.

RISK AND RISK MANAGEMENT

GENERAL

The pallet pooling industry is a cyclical and capital intensive business with a high level of fixed costs which operates with relatively small margins. This makes market entry relatively capital intensive. The pallet production industry can be characterised as a market with structural overcapacity, strongly fluctuating timber prices and currencies, and increasing legal constraints and regulations, for instance in the areas of compliance and environment.

This chapter focuses on the risks that Pooling Partners is facing, inclu-ding the management and monitoring of these risks. A distinction is made between strategic, operational and financial risks. Strategic risks are related to Pooling Partners’ strategic choices, operational risks are directly related to operational activities and financial risks are related to the financial and market developments.

These risks can have an impact on Pooling Partners’ brand, reputation, profitability, liquidity and access to capital markets.

RISK MANAGEMENT PROCESS

Pooling Partners has implemented a system in line with international risk management standards (COSO Enterprise Risk Management) to identify, monitor and control/manage risks which complies with the risk management part of the 8th EU company law directive.

The Pooling Partners Group Strategic Framework determines the stra-tegic risks (competition, economic growth, etc.) as well as the related action plans within the context of its work to establish the Pooling Partners’ strategy.


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Operational risk mapping processes have been established by all units. Pooling Partners units update and report, at least half-yearly, their own operational risks sheet which contains the risk itself, the probability that it will occur, its potential financial impact and actions taken or proposed. Risks are discussed in the management teams which own the risks. Both specific risks to each unit and transverse risks affecting the whole company, are the subject of reporting. Management teams present their risk sheets to Pooling Partners Group Control. Substantial risks are presented to the Supervisory Board.

Members of the Board of Directors and the Pooling Partners Supervisory Board review all measures implemented to control the substantial reported risk.

MONITORING

Pooling Partners continuously pays additional attention to financial reporting using its Internal Control Framework. The existing risk management system supports this additional attention and contributes to compliance with Dutch Corporate Governance principles. An annual internal process of issuing a Document of Representation (“DoR”) is used to facilitate the internal accountability process. In its DoR, business management confirms to the Board of Directors the reliability of the financial and other figures they have submitted and if control procedures have been applied. At the same time, business manage-ment acknowledges and certifies that it is responsible for:

reporting transparently on the outcomes of its risk management process;

maintaining a reliable internal control framework in general (including Pooling Partners-wide controls) and for financial reporting in particular;

reporting open control issues and the measures to monitor and mitigate the risks and related consequences of these control issues;

reporting that there is no knowledge of any undisclosed material fraud or suspected fraud.

FRAUD POLICY

By means of the Pooling Partners fraud policy, Pooling Partners miti-gates the risk of intentional acts designed to deceive or mislead others mainly to obtain unjust or illegal advantage to the detriment of Pooling Partners. By facilitating Self-Assessment Questionnaires, workshops and compliance roadshows, awareness is created with regards to the identification and prevention of fraud risks. As part of reporting on compliance to the Board of Directors and Supervisory Board, fraud- related cases and their potential financial impact are included, when applicable, in a more comprehensive reporting process.

RISK FACTORS AND RISK MANAGEMENT

Risks related to the pallet pooling and production industry Risks linked to the cyclical nature of the pallet pooling and production industry Local, regional and international economic conditions can have an impact on the company’s activities and its financial results. Periods of crisis are liable to affect demand for products by our customers and thus the demand for pallets or pallet pooling. Furthermore, during such periods, the company has to adjust its pool size or closely monitor its production capacity. The company monitors demand closely so as to adjust capacity when needed.

Risks linked to volatile timber pricesTimber is one of the largest cost items for a pallet pooling or produc-tion company. The volatility of timber prices thus represents a risk for the pallet pooling and production industry. Both an increase and decrease of timber prices may have an impact on the profitability of the company. Pooling Partners has a policy in place to manage these risks which is set out in the section “Financial risk management”.

Operational risksSafety and SecuritySafety and security are fundamental elements of Pooling Partners’ operations and a prerequisite for customer satisfaction. Pooling Partners is committed to continuously improving the safety of its operations by using a Safety Management System.

Risk of the failure of a critical IT system and IT risksPooling Partners depends on IT and telecommunications systems which are more and more used to exchange information with clients and third parties via a network of work stations and mobile devices. Systems are vulnerable to (cyber) threats from inside and outside the company and the number of (inter)national laws and regulations to comply with increases. This context demands a high level of security, security knowledge and a similar mandate for the responsible IT Com-mittee and its staff. Control measures are in place to safeguard data and IT processing, such as dedicated support centres and redundant networks, IT disaster recovery and access controls to the systems and data. These are checked regularly by external and internal auditors. Campaigns to raise the information security awareness of all staff are regularly carried out. External auditors and IT specialists, periodically evaluate the effectiveness of the solutions in place. Cybercrime refers to a broad range of activities conducted to misuse data and systems for economic, personal or psychological gain. The Pooling Partners IT Committee governs preventive and detective actions such as security assessments and intrusion protection. Awareness campaigns for staff are regularly organised.


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Risks related to the company’s activitiesRisks linked to non-compliance with antitrust legislation and compliance in generalPooling Partners has a set of procedures which are aimed at preventing a breach of antitrust legislation, such as online training modules and explanatory manuals.

Financing risksPooling Partners finances its capital requirements via operational cash flows and external financing. Any long-term obstacle to its ability to raise capital would reduce the Pooling Partners borrowing capability; any difficulty in securing financing under acceptable conditions could have a negative impact on the Pooling Partners activities and financial results.

Risks linked to labour disruptionsLabour cost accounts for a substantial part of the operating expenses of Pooling Partners. As such, the level of salaries has an impact on operating results. Any strike or cause for work to be stopped could have a negative impact on the company’s activity and financial results. Pooling Partners fosters social dialogue and employee agreements, amongst other things, to prevent the emergence of a conflict.

Risks linked to tax loss carry forwardsPooling Partners has tax loss carry forwards for which deferred tax assets have been recorded. These tax losses relate to a Belgian entity and originate from fiscal losses over the past years. Deferred tax assets are recognised only to the extent to which it is probable that future taxable profits, based on budget and medium term plans, will be available against which the asset can be utilised. If these future taxable profits do not materialise, this could have a significant impact on the recoverability of the capitalised tax loss carry forwards.

Transfer PricingThe combination of Pooling Partners units requires measures to be taken to ensure compliance with tax legislation including well-docu-mented cross border intercompany transactions. Strong monitoring and mitigating controls have been introduced, such as a Pooling Partners guideline and the active monitoring of the arms-length character of transactions.

Legal risks and arbitration proceduresIn relation to the normal exercise of activities, Pooling Partners is involved in disputes, which either result in provisions being booked in the consolidated financial statements or information being included in the notes to the consolidated financial statements as to the possible liabilities.

Risks linked to the use of third-party servicesPooling Partners’ activities depend to a certain extent on services provided by third parties, such as depots, suppliers of timber, pallets etc. Pooling Partners also uses suppliers which it does not directly control, such as transport companies. Any interruption in the activities of these third parties or any increase in taxes or prices of the services concerned could have a negative impact on Pooling Partners’ activity

and financial results. In order to secure supplies of goods and services, the contracts signed with third parties include, whenever possible, clau-ses for service, continuity and responsibility. Business continuity plans are being developed by Pooling Partners’ different operating units, in order to ensure the long-term viability of all commercial and operational activities.

FINANCIAL RISK MANAGEMENT

GeneralThe financial policy of the company is focused on limiting the short-term effects of exchange rate and interest fluctuations on the result, and to follow the market exchange rates and market rate of interest in the long term. The company uses financial derivatives to manage fi-nancial risks attached to the business activities. There is no significant concentration of credit risk. The company has a natural hedge for GBP and does not take speculative positions with financial derivatives.

Interest rate riskThe most important financial risks the company is subject to are interest rate risk and market risk. The interest rate risk policy has the objective of limiting the interest rate risks on variable interest rates (based on 1-month Euribor) that ensue from the financing of the group and to optimise the net interest charges. This policy translates into a close monitoring of the development of market interest rates with the intention to minimise volatility of the interest rates by means of interest rate swaps.

Market riskIncome partly depends on markets that are influenced by economic developments. The policy is to adjust the production and renting out capacity to the demand from the market. In addition, price develop-ments in purchase markets form a risk for the profitability of the enterprise. When market conditions permit, the fluctuation of prices in purchase markets is charged on to clients.

Insurance coveragePooling Partners units have pooled their risks into an overall insurance policy, to cover for damage to property, plant and equipment, business interruption and general third-party liability in connection with its activities.

III. GOVERNANCE

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Pooling Partners is a brand name of Faber Halbertsma Beheer BV, which is a private limited liability company incorporated under Dutch Law. Supervision and management of Pooling Partners is structured in accordance with the two-tier model, i.e. a Board of Directors supervised by a Supervisory Board.

Pooling Partners’ corporate governance is based on the company’s bylaws. Furthermore, Pooling Partners has brought its corporate governance (insofar as possible) in line with generally accepted principles of good governance.

This section covers Pooling Partners’ corporate governance policy. There have been no material changes in the company’s governance policy in comparison with financial year 2016.

SUPERVISORY BOARD

Pooling Partners has a Supervisory Board that supervises the Board of Directors and the general performance of the company. It also provides the Board of Directors with advice. The Supervisory Board is appointed by the Shareholders’ meeting on the recommendation of the Supervisory Board. The Supervisory Board consists of five members.

Supervisory Board members resign after being appointed for four years. It is possible to reappoint Board members again for a further four-year period.

The Supervisory Board meets without the Board of Directors at least once a year to conduct a self-assessment. The Board also reviews the performance of the Board of Directors and each of its individual members, as well as the related conclusions, at least once a year.

The Supervisory Board evaluates corporate strategy at least once a year and executes a risk-assessment of the company as well as the structure and operational effectiveness of the internal control frame-work and all related modifications.

BOARD OF DIRECTORS

On 31 December 2017, the Board of Directors of Faber Halbertsma Beheer BV consisted of one member: Mrs. I.G.C. Faber. The Board of Directors of Pooling Partners as a group consisted of two members: Mrs. I.G.C. Faber (CEO) and Mr. C.M.F. Peeters (CFO), who are supervised by the Supervisory Board. On August 1st, Mr. C.M.F. Peeters succeeded Mr. M.J.P Fok as CFO. Regardless of the allocation of tasks among its members, the Board of Directors acts as a single entity with joint responsibility. The Management Board of the Pooling divisions consists of three members and the Production division of one member. All are appointed and supervised by the Board of Directors. The CEO is appointed by Shareholder resolution.

GENERAL MEETING OF SHAREHOLDERS

Annually, within six months of the closing of the book year, a General Meeting of Shareholders is held. In addition to the Annual General Meeting of Shareholders, a General Meeting of Shareholders may be convened by the CEO, the CFO, or by one or more shareholders who have an individual or combined interest of at least 10% of issued shares. Pooling Partners’ next Annual General Meeting of Shareholders will be held on 24 April 2018.

Primary authorities of the General Meeting of Shareholders are:

the right to appoint Supervisory Board members and to determine the yearly allowance;

adoption of Financial statements and discharge of the Board of Directors for the policy pursued and the Supervisory Board for their supervision in the past year;

making decisions on amendment of the articles of association or dissolution of the company;

approving decisions of the Board of Directors on major changes in the identity or character of the company or the business.

DUTCH ACT ON MANAGEMENT AND SUPERVISION Among other topics, the Dutch Act on Management and Supervision (as laid down in Article 2:276, Section 2 of the Dutch Civil Code) contains a guideline for balanced gender diversity on the Management Board and Supervisory Board of a (large) company. At least 30 percent of the positions are to be held by women and at least 30 percent by men.

At 31 December 2017, the Supervisory Board of the company is composed of more than two thirds men, thereby not complying with the gender diversity principle of the Act on Management and Supervision. In the event that candidates for new appointments to the Supervisory Board are to be selected, the Supervisory Board will duly consider the relevant diversity requirements when searching, selecting and evalua-ting the candidates.

CORPORATE GOVERNANCE

Pooling Partners’ Corporate Governance is, insofar as possible, in line with generally accepted principles of good governance, such as are laid down in the Dutch Corporate Governance Code.

Although Pooling Partners as a non-listed company is not formally obliged to comply with the Code, it has committed itself to follow the Code voluntarily where possible.

The supervision of the policies and actions of the Board of Directors of Pooling Partners units is entrusted to the Supervisory Board which, in the two-tier corporate structure under Dutch law, is a separate body and fully independent of the Board of Directors.

IV. REPORT OF THE SUPERVISORY BOARD

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SUPERVISION

In fulfilment of its duty to supervise and advise the company’s Board of Directors, the Supervisory Board met on six occasions during the financial year 2017. The Board of Directors was present at all but one of the meetings of the Supervisory Board. One of these meetings was organised at an external location and was combined with a tour of a production facility. In addition to regular meetings, the Supervisory Board and the Board of Directors have both formal and informal con-tact to discuss substantive issues and advise the Board of Directors on various topics.

As in previous years and in line with usual practice, four regular meetings were held close to the quarterly closing. Deliberations during these meetings concentrated on Pooling Partners’ financial results (quarterly and annual) and strategic options. These meetings were well attended by the members, with almost full attendance for all meetings combined.

FINANCIAL TOPICS

During these four regular meetings, the Supervisory Board was informed on the progress of the (financial) results versus Budget and Annual Plan and on other topics such as, but not limited to, human resour-ces, timber procurement and IT strategy. The Supervisory Board held intensive discussions with the Board of Directors on developments in the markets and on the best way to respond and in particular on margin development and risk mitigation.

The budget for 2018 was discussed and approved in a joint meeting with the Board of Directors and the Management Board of the three business units IPP/PRS, PAKi and Production. The Production division will continue to focus on operational excellence and increasing profitability, while focus for the Pooling divisions will be on gaining further market-share by means of continuous investments into market penetration.

Pooling Partners’ cash position was reviewed on several occasions. The ratios are well within the range set by our financial institutions in the renewed Credit Facility.

Towards the end of the year, Korafin Beheer Bvba was acquired. Via this acquisition, the company bought back all the shares of Mr. K.W.T. Faber, at the same time entering into long term vendor-loan agreement of € 25 million.

The design and operation of internal risk management and control were discussed during the regular meetings together with operational and commercial performance, based on quarterly financial reports prepared on behalf of the Board of Directors.

OTHER ACTIVITIES SUPERVISORY BOARD

With respect to its responsibility towards corporate governance and compliance, the Supervisory Board discussed Pooling Partners’ compliance framework and the continuous improvements that are being initiated. The Supervisory Board was regularly informed on the various developments and the ongoing improvements to the divisional structure.

OTHER TOPICS DISCUSSED DURING THE FINANCIAL YEAR, SOME OF WHICH ARE RECURRING:

Pooling Partners’ updated strategy; IT strategy; Management Development; Performance and remuneration of the Board of

Managing Directors.

COMPOSITION OF THE SUPERVISORY BOARD

The Supervisory Board of Faber Halbertsma Groep consists of Mr. P.J.J.M. Swinkels (chairman), Mr. H.J.G. Hendriks, Mr. L.M. Sondag and Mr. M. Kesteloo. At the end of 2017, Mr. K.W.T. Faber stepped down as member of the Supervisory Board.

Mr. Faber has laid the foundation for Pooling Partners; starting with a single company, he had transformed it into a group of international importance by the time he handed over his leadership as Chief Executive Officer in 2006. From that moment until late 2017, Mr. Faber was further committed to the group as a member of the Supervisory Board. The Supervisory Board wishes to express its respect and gratitude for the accomplishments of Mr. Faber.

Since late 2016, the Supervisory Board has a separate Audit Committee and Remuneration Committee in place.

AUDIT COMMITTEE

The Audit Committee consists of 2 Supervisory Board members: Mr. H.J.G. Hendriks (chairman) and Mr. M. Kesteloo. The Audit Committee’s task is to supervise in particular the (quality of the) accounting and financial reporting practices, including quarterly and annual repor-ting, accounting and financial reporting policies and procedures, the (quality of the) internal control system and internal audit function, the independent external audit of the Financial Statements, the performan-ce and evaluation of the external auditor, the policy on tax planning and compliance with relevant legislation and regulations. During the year several meetings were held in which, amongst others, the Internal Control Framework were discussed with the CFO and group controlling department.


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REMUNERATION COMMITTEE

The Remuneration Committee consists of 2 Supervisory Board mem-bers: Mr. P.J.J.M. Swinkels (chairman) and Mr. H.J.G. Hendriks. The task of the Remuneration Committee is to assist the Supervisory Board regarding the development and appropriate application of remuneration policies for our Board of Directors, including the remuneration of the members of the Board of Directors for the coming year and the remune-ration of members of the Supervisory Board, for submission to the Supervisory Board and to the General Meeting of Shareholders.

FINANCIAL STATEMENTS 2017

The Board of Directors hereby presents the annual report and the financial statements for financial year 2017. The financial statements were audited by Deloitte Accountants BV. The Supervisory Board has discussed the financial statements and the annual report with the external auditors and the Board of Directors. The unqualified auditor’s report, as issued by Deloitte, can be found in the Other Information section of the financial statements.

The Supervisory Board is satisfied that the annual report and the financial statements comply with all relevant requirements and proposes that the shareholders grant discharge to the Supervisory Board and Board of Directors for their respective performances during the financial year 2017.

INDEPENDENCE

The Supervisory Board considers all but one of its members to be independent pursuant to the Dutch Corporate Governance Code. Mr. K.W.T. Faber, in his capacity of former Chief Executive Officer of Faber Halbertsma Groep and (partly) shareholder, is not considered to be independent. Mr. K.W.T. Faber resigned as Chief Executive Officer of Faber Halbertsma Groep as per September 2006 and stepped down as member of the Supervisory board on the 31st of December 2017.

CLOSING REMARKS

In August, Mr. M.J.P. Fok stepped down as CFO and was succeeded by Mr. C.M.F. Peeters. We would like to thank Mr. Fok for his contribution to Pooling Partners during his 18 years of employment.

In 2017, the company continued to optimise the operating performance in order to improve the return on sales and investments. In the upco-ming year the company will continue to focus, amongst other things, on improving efficiency and productivity as well as on unit cost reduction.

The members of the Supervisory Board are grateful for the work undertaken by the Board of Directors in order to meet Pooling Partners’ strategic and business objectives. The Supervisory Board expresses its appreciation to all Pooling Partners’ employees for their hard work, dedication and commitment to Pooling Partners and its customers across Europe.

Eck en Wiel, 24 April 2018

P.J.J.M. SwinkelsChairman

V. FINANCIAL STATEMENTS

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CONSOLIDATED BALANCE SHEET AS PER 31 DECEMBER |BEFORE APPROPRIATION OF RESULT

ASSETS (AMOUNTS IN THOUSANDS OF EUROS) 2017 2016

Fixed Assets

Intangible fixed assets (1)

Goodwill 6,493 7,562

Other intangible assets 2,354 3,059

8,847 10,621

Tangible fixed assets (2)

Land and buildings 16,008 13,189

Plant and machinery 3,030 3,450

Other tangible fixed assets 105,845 102,415

Assets under construction and prepayments on tangible fixed assets 1,168 35

126,051 119,089

Financial fixed assets (3) 2,095 357

136,993 130,067

Current Assets

Inventories

Raw materials and consumables 8,392 8,092

Semi-manufactured 1,504 1,444

Finished goods 11,056 12,258

20,952 21,794

Receivables (4)

Trade receivables 56,933 50,462

Taxes and social securities 6,363 6,883

Participants and other companies that are participated in - 1,243

Other receivables 834 474

Prepayments and accrued income 1,308 750

65,438 59,812

Cash at banks and in hand 19,258 2,678

105,648 84,284

242,641 214,351


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LIABILITIES (AMOUNTS IN THOUSANDS OF EUROS) 2017 2016

Group equity (5)

Share of the legal entity in group equity 79,900 111,266

Share of third parties in group equity 14 16

79,914 111,282

Provisions (6)

Deferred tax liabilities 11,473 8,861

Pensions 445 502

Other provisions 929 791

12,847 10,154

Non-current liabilities (7)

Long term loans 22,987 -

22,987 -

Current liabilities (8)

Repayment obligations on non-current liabilities 3,073 17,638

Debts to lending institutions (9) 71,482 29,642

Trade creditors 29,862 27,556

Corporate income tax 3,032 517

Other taxes and social securities 4,296 3,569

Pensions - 5

Other liabilities, accruals and deferred income 15,148 13,988

126,893 92,915

242,641 214,351


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CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER

AMOUNTS IN THOUSANDS OF EUROS 2017 2016

Total turnover (10) 327,938 316,730

Production value used for pooling activities (19,137) (14,327)

Net turnover 308,801 302,403

Change in stock of finished and semi-finished products (1,254) (670)

Capitalised assets for production 9,029 6,094

Total operating income 316,576 307,827

Cost of raw materials, consumables and outsourced work 197,464 190,512

Added value 119,112 117,315

Wages, salaries and social securities (11) 50,147 45,542

Depreciation of intangible and tangible fixed assets (12) 31,906 30,683

Other changes in valuation of (in)tangible fixed assets (13) 1,300 -

Other operating costs (14) 17,636 16,006

Exceptional charges (15) 832 580

Total operating expenses 101,821 92,811

Operating result 17,291 24,504

Result on participations - (27)

Financial income and expenses (16) (2,125) (4,680)

Result from ordinary business activities before tax 15,166 19,797

Tax on result from ordinary business activities (17) (5,671) (5,396)

Result from ordinary business activities after tax 9,495 14,401

Result attributable to non-controlling interests 2 -

Result after taxation 9,497 14,401


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CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER | IN ACCORDANCE WITH THE INDIRECT METHOD


Operating result 17,291 24,504

Adjustments for:

Depreciation and other changes in valuation of intangible and tangible fixed assets 33,206 30,683

Other non cash transactions (346) 455

Foreign exchange rate results (1,101) (1,980)

Change in provisions 453 (248)

Changes in net working capital:

Movement in operational accounts receivable (3,593) 669

Movement in inventories 842 (18)

Movement in operational accounts payable 131 (1,447)

Cash flow from operations 46,883 52,618

Financial income received 72 169

Financial expenses paid (1,228) (2,338)

Income taxes (1,711) (3,685)

(2,867) (5,854)

Cash flow from operating activities 44,016 46,764

Investments intangible fixed assets (702) (902)

Divestments intangible fixed asstes 8 -

Investments tangible fixed assets (39,262) (30,395)

Divestments tangible fixed asstes 4,230 6,581

Investments in subsidiaries (844) (3,126)

Cash flow from investment activities (36,570) (27,842)

Cash flow from operating and investment activities 7,446 18,922

Movement in amounts owed to credit institutions 41,840 (6,698)

Repayment on non-current liabilities (17,638) (9,000)

Dividends paid (1,440) (1,525)

Movement in financial fixed assets - 1

Other changes in equity (13,628) -

Cash flow from finance activities 9,134 (17,222)

Movements in cash 16,580 1,700


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CONSOLIDATED STATEMENT OF COMPREHENSIVE RESULT FOR THE YEAR ENDED 31 DECEMBER


Consolidated result after taxation 9,497 14,401

Translation differences on foreign operations registered directly in equity capital (795) (618)

Total direct movements in equity as part of the group equity (795) (618)

Total results 8,702 13,783


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GENERAL

ActivitiesThe activities of Faber Halbertsma Beheer BV - with its registered office in Assen and its principal place of business at Prinses Beatrixstraat 35, Eck en Wiel - and its group companies, comprise mainly of the sale, production, repair and renting out of pallets and boxes.

Group relationships Faber Halbertsma Beheer BV in Assen is the principal of a group of legal entities, registered at the Chamber of Commerce with number 11063927. An overview of the data required on the basis of Sections 379 and 414 Book 2 of the Dutch Civil Code is included hereinafter. A notice of liability, as referred to in Section 403 Book 2 of the Civil Code, has been issued for companies marked with an *).

NOTES TO THE CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT

NAMEREGISTERED OFFICE

SHARE IN ISSUED SHARE CAPITAL

Doetichemse Emballage Fabriek BV Eck en Wiel 100%

Faber Halbertsma Groep BV *) Eck en Wiel 100%

Faber Halbertsma Holding BV *) Assen 100%

FHG Faber Pallets BV *) Assen 100%

FHG Germany BV *) Eck en Wiel 100%

FHG Germany Holding GmbH & Co KG Emmerich (D) 100%

FHG Halba Houtimport BV *) Eck en Wiel 100%

FHG Halbertsma Pallets (Grouw) BV *) Grouw 100%

FHG IPP Logipal Sp. z.o.o. Warsaw (PL) 100%

FHG Phoenix Pallets BV *) Hasselt 100%

FHG Satim BV *) Eck en Wiel 100%

FHG Satim Bela Russia BV Eck en Wiel 100%

FHG Verwaltungs GmbH Emmerich (D) 100%

Korafin Beheer Bvba Schoten (B) 100%

Fagot BV Eck en Wiel 100%

Francepal SAS Durtal (F) 100%

Halbertsma Pallets (Maastricht) BV Bunde 100%

International Pallet Pool BV *) Eindhoven 100%

IPP Logipal GmbH Ennepetal (D) 100%

Naus Kisten en Pallets BV *) Espel 100%

PK Beteiligungs GmbH Emmerich (D) 100%

PK Logistik Beteiligungs GmbH Emmerich (D) 100%

FHG P.R.S. Management BV *) Eindhoven 100%

P.R.S. Turkiye Limited Mersin (TR) 100%

Packaging Partners NV Westmalle (B) 100%

PAKi Logistics GmbH Ennepetal (D) 100%

Pasec NV Westmalle (B) 99%

T&A Paletten GmbH Emmerich (D) 100%

Pooling Partners Service Centre Glenfield Ltd Coventry (GB) 100%

Timwood AG Zug (CH) 100%

Zara & Logic, S.L. Zaragosa (ES) 100%


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TERMINATION OF BUSINESS ACTIVITIES Since the end of 2013, the activities of 2CP BV, C2CP BV, Easypal BV and Easypal Deutschland GmbH i.L. are no longer valued at the assu-med continuity value but at the direct net realisable value (liquidation value) of the assets reduced by the expenditures due to the settlement of obligations and liquidation costs. In 2018, their liquidation will probably be effected.

PRINCIPLES FOR THE CONSOLIDATION

The financial data of the companies forming part of the group and other legal entities over which predominant control can be exercised or over which central management is executed, are included in the consolidated financial statements of Faber Halbertsma Beheer BV. The consolidated financial statements have been drawn up subject to application of the principles for valuation and determination of results of Faber Halbertsma Beheer BV.

The financial data of Faber Halbertsma Beheer BV is included in the consolidated financial statements so that, making use of Section 402, Book 2 of the Civil Code, an abridged income statement suffices in the company financial statements.

The financial data of the group companies and other legal entities and companies involved in the consolidation are fully included in the consolidated financial statements, subject to the elimination of mutual relationships and transactions. Interests of third parties in the assets and in the result of group companies have been separately represented in the consolidated financial statements.

The results of newly acquired group companies, other legal entities and companies included in the consolidation are consolidated from the takeover date. On this date, assets, provisions and debts are valued at actual value. Goodwill paid is entered as an asset and depreciated over the economic life. The results of participating interests disposed of are processed in the consolidation until the group relationship is terminated.

GENERAL PRINCIPLES FOR THE DRAWING DRAWING UP OF THE CONSOLIDATED FINANCIAL STATEMENTS The consolidated financial statements have been drawn up in accor-dance with the provisions of Title 9, Book 2 of the Dutch Civil Code.

Unless stated otherwise, the valuation of assets and liabilities and the determination of the result take place on the basis of historical costs.

Revenue and expenses are allocated to the year to which they relate. Profits are only included insofar as they are realised on the balance sheet date. Obligations and possible losses that find their origin prior to the end of the reporting year, are taken into account if they became known prior to the drawing up of the financial statements.

The financial statements are presented in Euro, the company’s functio-nal currency. Unless otherwise stated, all financial information has been rounded to the nearest thousand.

ESTIMATES AND CHANGES IN ACCOUNTING ESTIMATE The drawing up of the financial statements requires that management forms opinions, estimates and assumptions that have an impact on the application of principles and the reported value of assets and obligati-ons and of revenue and expenditure. The actual outcomes can deroga-te from these estimates. The estimates and the underlying assumpti-ons are continuously assessed. Consequences of a review of estimates are included in the period during which an estimate is reassessed, and in the future periods for which the review will have consequences. For 2017, there were no changes in the accounting estimations.

FINANCIAL INSTRUMENTS

Derivatives are initially recognised in the balance sheet at fair value. The subsequent valuation of derivative financial instruments depends on whether or not the instrument is quoted in an open market. If the underlying object of the derivative financial instrument is listed on a stock exchange, it is valued at fair value. If the object is not quoted in an open market, it will be stated at cost or current value if lower.

However, if financial derivatives are eligible for hedge accounting and hedge accounting is applied, the processing of this profit or loss will depend on the nature of the hedge.

The effective part of the financial derivatives for which cost price hedge accounting is applied, is valued at cost price. Ineffectiveness is only processed in the income statement if, and insofar as, this concerns a (cumulative) loss. The group applies hedge accounting on the basis of generic documentation.

NAMEREGISTERED OFFICE

SHARE IN ISSUED SHARE CAPITAL

C2CP BV Sittard 51%

Easypal BV Eck en Wiel 81%

Easypal Deutschland GmbH i.L. Emmerich (D) 81%


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CONVERSION OF FOREIGN CURRENCY

Accounts receivable, debts and obligations in foreign currency are converted at the exchange rate as at balance sheet date. Transactions in foreign currency during the reporting period are processed in the financial statements at the exchange rate that applies at the time of the transaction. Exchange rate differences ensuing from the conversion as at the balance sheet date are included in the income statement.

Foreign group companies and participating interests that are not con-solidated, are classified as business operations abroad with a different functional currency from that of the company. For the conversion of the financial statements of these business operations abroad, the exchange rate is applied on the balance sheet date for balance sheet items and the average exchange rate for items of the income statement. Translation differences that occur are directly debited or credited to group equity.

ACCOUNTING POLICIES APPLIED TO THE VALUATION OF ASSETS AND LIABILITIES Intangible fixed assets The intangible fixed assets are valued at the historical cost less amorti-sation and, if applicable, with impairments. Impairments are taken into consideration in case the carrying amount of the asset is higher than its realisable value. The positive difference between the acquisition price and the share of the company in the actual value of the acquired identifiable assets and liabilities at the time of the acquisition of a participating interest, will be entered as goodwill in the balance sheet. Permitted adjustment of the acquisition price results in adjustment of the goodwill. Later adjustment of the actual value of the identifiable assets and liabilities will be processed in the goodwill, provided that the change is made before the end of the first financial year that has com-menced after the takeover (Article 2:389, sub 7 BW). The goodwill will be depreciated over the estimated economic life, which is estimated at 10 years (Article 2:386, sub 3 BW).

During the acquisitions in 2011 and 2012, the economic life of the goodwill was considered longer than the regular 5 years and was estimated at 10 years. The goodwill paid for the acquisition of Zara & Logic, S.L. in 2016 also, for similar reasons, has a considered economic life of 10 years. The estimated economic life is tested annually.

The annual depreciation amounts to a fixed percentage of the costs spent, with the exception of licenses, which are depreciated on the basis of expected turnover. Depreciation takes place from the time the asset is commissioned.

Tangible fixed assets The tangible fixed assets are valued at acquisition price, less amortisa-tion and if, applicable, impairments. The depreciation is based on the estimated economic life and is calculated on the basis of a fixed per-centage of the acquisition price, taking any residual value into account. Depreciation takes place from the time the asset is commissioned. Land is not depreciated.

Cost of periodical major repairs are charged directly to the profit and loss account at the time of their occurrence.

For pooling material, it is annually calculated whether, on the basis of the loss of materials, additional depreciation is necessary. The acquisition value is adjusted only for pooling material for which its loss is certain. Pooling material in an open exchange system is valued at average market value, whereby the write down from cost to average market value is recognised as depreciation. In the event of disposal or sale the “Last In, First Out” (LIFO) principle is applied.

Financial fixed assets Participations over which significant influence can be exercised, are valued according to the net asset value method, but not less than nil. This net asset value is calculated on the basis of the principles of Faber Halbertsma Beheer BV. The valuation at net asset value begins at the moment of use of the investment and the result of the participation is recorded as a result of the company from that moment on.

If, and insofar as, Pooling Partners can be held fully or partially liable 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. During the determining of the extent of this provision, the provisions already deducted for irrecoverable claims against the participating interest will be taken into account. Participations over which no signi-ficant influence can be exercised are valued at historical cost and, if applicable, subject to impairments.

Deferred tax assets are included in the financial fixed assets if, and insofar as, it is probable that the tax claim will actually take place. The calculation of deferred tax assets occurs at the tax rates applicable at the end of the year or at the rates applicable in future years that have already been enacted. Deferred tax assets are carried at discounted value. Deferred tax assets originated from capitalised tax losses carry forward are valued at nominal value.

Inventory Stock of raw materials and consumables are valued at cost price. Stock of finished product and merchandise are valued at manufacturing cost or lower realisable value, whereby the manufacturing cost comprises of materials, direct personnel costs and a surcharge for general expenses. The lower net realisable value is determined by individual assessment of the stock.

The pool pallets included under finished product are valued at cost price after deduction of costs for collection, sorting and repair. The valuation of the stock of raw materials and consumables comes into effect on the basis of the FIFO method (first in, first out).

Receivables The receivables are included on initial recognition at the actual value and thereupon valued at the amortised cost. The actual value and amortised cost are equal to the nominal value.


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Provisions deemed necessary for possible losses as a result of irrecoverability are deducted. These provisions are determined on the basis of individual assessment of the receivables.

Cash at banks and in handThe cash at bank and in hand are valued at nominal value. If assets are not free for disposal, this will be taken into account in the valuation.

Share of third parties in the group equity The share of third parties in the group equity concerns the minority interest of third parties in the equity capital of consolidated companies. The share of third parties in the result of consolidated companies is deducted from the group result in the income statement. If the losses attributable to the minority interest of third parties exceed the minority interest of third parties in the equity capital of the consolidated compa-nies, the difference, as well as any further losses will be entirely debited to Faber Halbertsma Beheer BV, unless and insofar as the minority shareholder has the obligation, and is capable of, taking these losses on its account. If the consolidated companies thereupon make profit again, these profits will be entirely credited to Faber Halbertsma Beheer BV, until the losses taken on its account have been recuperated.

Provisions Pension for employee benefitsThe provisions of the Dutch Pensions Act apply to Dutch pension sche-mes and mandatory, contractual or voluntary contributions are paid to pension funds and insurance companies. For foreign entities, the local legislation and regulations are applied. Contributions are accounted for as personnel costs as soon as these become due. Contributions paid in advance are included as prepayments and accrued income, if this results in a return or in a reduction of future payments. Contributions not yet paid are included as an obligation in the balance sheet provision or, as the case may be, an account receivable is included for future obligations ensuing from the existing contract terms (other than the contributions to be paid) with the pension provider and/or undertakings to employees.

This concerns a provision/account receivable for:

Extra pension rights ensuing from the promised future salary increase in the event of a final pay scheme;

Interest or profit sharing, which (in accordance with the insurance contract) becomes available to Faber Halbertsma Beheer BV;

Advantages or disadvantages of individual transfers payments that are debited to Faber Halbertsma Beheer BV.

Pension schemes are valued on the basis of the best estimate. The obligation is thus valued at the cash value of the expenditure which is expected to be necessary to settle the obligation as per the balance sheet date. The starting point for the calculation of the value includes inter alia mortality tables and offers of prominent pension insurance companies. If the period over which the expenditure is made is longer than one year, the obligation will not be taken at cash value. Supple-ments to and release of pension schemes are debited or credited to the income statement.

Bonus and profit sharing schemes An obligation is included on the basis of the relevant performance schemes for bonus schemes and profit sharing. The obligation is included as such under the short-term liabilities.

Provisions for deferred tax liabilities For tax amounts to be paid in the future on the basis of differences between commercial and tax balance sheet valuations, a provision is made to the amount of the sum of these differences multiplied by the applicable tax rate. Short term valuation differences are calculated on the basis of nominal value. Valuation differences with a long-term character are accounted for at discounted value.

Other provisions A provision is included for existing, enforceable by law, obligations or actual obligations of an uncertain extent or with an uncertain point in time due to an event in the past and for which it is probable that the settlement will result in an outflow of resources.

Provisions that are settled within one year after the balance sheet date or that are of limited material importance, are included at nominal value. Other provisions are included at the discounted value of the expected expenditure. During the determining of these expenditures, the specific risk with regard to the obligation concerned is taken into account. The cash value is calculated with a discount rate for tax in which the actual market assessment of the time value of money is expressed. For the determining of the expected expenditure, detailed plans aimed to limit these uncertainties are taken into account.

Reorganisation A restructuring provision is included if a detailed reorganisation plan is approved whereby the most important characteristics of that plan are also reported to those who are directly involved (Dutch Accounting Standards Board (RJ) 252.413/414).

Long term and short-term liabilities At initial recognition, loans and debts are included at actual value and thereupon valued at the amortised cost.

PRINCIPLES FOR THE DETERMINATION OF THE RESULT General The result is the difference between the realisable value of the goods/services provided and the cost and other charges during the year. The results on transactions are recognised in the year in which they are realised.

Net turnover Net turnover includes the proceeds from goods and services delivered in the reporting year after deduction of rebates and value added tax.

The proceeds ensuing from the sale of goods are accounted for at the time when all important rights to economic advantages as well as all


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important risks have been transferred to the purchaser. The cost price of these goods is allocated to the same period.

The proceeds from renting activities are included pro rata insofar as the services are executed, based on the costs incurred until the balance sheet date in the context of the provision of service in relation to the estimated costs of the total provision of service to be executed. The cost price of these services is allocated to the same period. Production value used for pooling activities is eliminated so that the net turnover remains.

Costs of raw materials, consumables and outsourced work The costs of raw materials and consumables are comprised of the cost price of the sold, rented out or delivered goods, which is comprised of the direct use of materials and outsourced work, the direct wages, ma-chine costs and other direct and indirect costs that can be attributed.

The costs of the raw materials and consumables are calculated on the basis of historical cost price with the application of the FIFO (first in, first out) system; finished products purchased from third parties are included at historical cost. Any costs in the event of write-down of the stock are, insofar as these do not have an extraordinary character, added to the cost prices referred to.

Capitalised assets for production The cost of capitalised assets for production is comprised of the cost price of the sold goods attributed to group companies.

Wages and salaries General Wages and salaries (consisting of wages, salaries, social security contributions, etc.) are not presented as a separate item in the income statement, but disclosed in the supporting notes.

Short term cost wages and salaries Salaries, wages and social security contributions are charged to the income statement based on the terms of employment, when they are due to employees and the tax authorities respectively.

Amortisation of intangible fixed assets and depreciation of tangible fixed assets Intangible assets, including goodwill, are amortised and tangible fixed assets are depreciated over their estimated useful lives as from the moment that they are ready for use. Land is not depreciated.

Future depreciations and amortisation is adjusted if there is a change in estimated future useful life. Gains and losses from the occasional sales of property, plant or equipment are included in depreciation.

The share in the result of participating interests that are not consolidated and in which there is participation In the event of participating interests in which no influence of any importance is exercised over the commercial and financial policy, the dividend paid out is regarded as the result. Processing of this takes place under the item with the same name in the income statement.

Taxation Corporate income tax is calculated at the applicable rate over the result of the financial year, whereby permanent differences between the profit calculation according to the financial statements and the computation of taxable profits are taken into account and whereby deferred tax assets (if applicable) will only be valued insofar as the realisation thereof is likely.

Intercompany transactions Results from transactions with and between the group companies are entirely eliminated.

Interest Interest revenues and expenses are processed in proportion to time in the income statement, taking into account the effective interest rate of the assets concerned, if their amount can be determined reliably and their receipt is probable.

ACCOUNTING POLICIES FOR THE CASH FLOW STATEMENT The cash flow statement has been prepared using the indirect method. The cash items disclosed in the cash flow statement comprise cash at banks and in hand. Cash flows denominated in foreign currencies have been translated at average estimated exchange rates. Exchange differences affecting cash items are shown separately in the cash flow statement.

Interest paid and received, dividends received and income taxes paid are included in cash from operating activities. Dividends paid are recognised as cash used in financing activities.

Transactions not resulting in inflow or outflow of cash, including finance leases, are not recognised in the cash flow statement.


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1. INTANGIBLE FIXED ASSETS

The book value of goodwill relates for an amount of € 1,906,000 (2016: € 2,383,000) to the takeover of the shares in PK Beteiligungs GmbH and PK Logistik Beteiligungs GmbH (remaining lifespan 4 years), for € 404,000 (2016: € 532,000) to the takeover of the activities of Naus Kisten en Pallets BV (remaining lifespan 3 years) and for an amount of € 4,183,000 (2016: € 4,647,000) for the acquisition of the shares of Zara & Logic, S.L.

Impairment relates to a specific part of the capitalised expenditures of an Enterprise Resource Program, which does not fit in the IT-strategy defined in 2017.

NOTES TO THE CONSOLIDATED BALANCE SHEET AND INCOME STATEMENT

AMOUNTS IN THOUSANDS OF EUROSGOODWILL

OTHER INTANGIBLEFIXED ASSETS

TOTAL

Acquisition value till 1 January 2017 10,688 5,425 16,113

Amortisation till 1 January 2017 (3,126) (2,366) (5,492)

Book value as at 1 January 2017 7,562 3,059 10,621

Capital expenditures - 702 702

Disposals and sales - (10) (10)

Impairment - (1,300) (1,300)

Amortisation (1,069) (97) (1,166)

Book value as at 31 December 2017 6,493 2,354 8,847

Acquisition value until 31 December 2017 10,688 4,791 15,479

Amortisation until 31 December 2017 (4,195) (2,437) (6,632)

Book value as at 31 December 2017 6,493 2,354 8,847

Amortisation period 10 years 5 years


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2. TANGIBLE FIXED ASSETS

The investments in land and buildings due to mergers & acquisitions serve as collateral for a mortgage loan.Capital expenditure on other tangible fixed assets mainly relates to investments in pooling materials. For pooling material, it is annually calculated whether - on the basis of the loss of materials - an additional depreciation is necessary. The acquisition value is adjusted only for pooling material for which its loss is certain.

Changes due to mergers & acquisitions in land and buildings and tangible fixed assets relate to acquired tangible fixed assets by obtaining a new subsidiary (Fagot B.V.).

Net book values are determined on the basis of regularly conducted impairment assessments and, if necessary, corrected.

3. FINANCIAL FIXED ASSETS

Deferred tax assets relate to the discounted value of the differences between commercial and tax balance sheet valuations (€ 907,000) and tax losses carry forward (€ 1,168,000). Total nominal value of the deferred tax assets amounts to € 2,792,000 (2016: € 940,000).

AMOUNTS IN THOUSANDS OF EUROS

LAND AND BUILDINGS

PLANT AND MACHINERY

OTHER TANGIBLE

FIXED ASSETS

ASSETS UNDER CONSTRUCTION

AND PREPAYMENTS ON TANGIBLE FIXED ASSETS

TOTAL

Acquisition value till 1 January 2017 29,642 34,069 289,131 35 352,877

Depreciation till 1 January 2017 (16,453) (30,619) (186,716) - (233,788)

Book value as at 1 January 2017 13,189 3,450 102,415 35 119,089

Investments due to mergers & acquisitions 3,140 - 4 - 3,144

Currency translation - - (466) (8) (474)

Capital expenditures 406 1,067 36,646 1,143 39,262

Disposals and sales (23) (39) (4,166) (2) (4,230)

Depreciation (704) (1,448) (28,588) - (30,740)

Book value as at 31 December 2017 16,008 3,030 105,845 1,168 126,051

Acquisition value until 31 December 2017 32,732 34,040 308,733 1,168 376,673

Depreciation until 31 December 2017 (16,724) (31,010) (202,888) - (250,622)

Book value as at 31 December 2017 16,008 3,030 105,845 1,168 126,051

Depreciation period 20 years 5-7 years 4-10 years -

AMOUNTS IN THOUSANDS OF EUROS DEFERRED TAX ASSETS

OTHER FINANCIAL FIXED ASSETS

TOTAL

Book value as at 1 January 2017 326 31 357

Repayments - (1) (1)

Transfer from deferred tax liabilities 405 - 405

Capitalised carry forward losses 762 - 762

Translation differences (13) - (13)

Other changes 585 - 585

Book value as at 31 December 2017 2,065 30 2,095


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4. RECEIVABLES

The taxes and social securities concern mainly foreign VAT to be claimed that amount to € 5.0 million (2016: € 4.7 million) and other amounts to be settled with corporate income tax € 0.9 million (2016 € 2.0 million).

Trade receivables of € 56,993,000 (2016: € 50,462,000) are presented net of provision doubtful debtors € 1,687,000 (2016: € 1,657,000).

5. GROUP EQUITY

Share of the legal entity in group equityThe share of the legal entity in group equity is detailed in the notes to the company financial statements.

Share of third parties in the group equity Movements in the share of third parties in the group equity can be broken down as follows:

6. PROVISIONS

The provision for deferred tax liabilities is mainly of a long term nature. The pension schemes are long term (> 5yr) by nature.

Deferred tax liabilities The movement in deferred tax liabilities is as follows: The nominal value of deferred tax liabilities amounts to € 16,677,000 (2016: € 15,449,000).

Pension The group has various pension schemes whereof the Industry-wide pension fund for the Wood Processing Industry and Yacht Building (Dutch PHIJ) is the largest. This fund has a defined average pay scheme and has a coverage ratio of 101.6% as of December 2017 (December 2016: 94.6%). The pension fund has a recovery plan in place which should lead to coverage ratio above 120% in 2026. Main element of the recovery plan relates to indexation of pension payments.

The amount included in the balance sheet relates to a supplementary pension scheme at a subsidiary company abroad, which is classified as a defined benefit scheme and is insured externally with insurer AXA (2017: € 243,000; 2016: € 299,000). Additionally a provision is made (2017: € 202,000; 2016: € 202,000) for the financing of extra pension rights.

AMOUNTS IN THOUSANDS OF EUROS 2017

Book value as at 1 January 16

Result applicable to non-controlling interests (2)

Book value as at 31 December 14


Book value as at 1 January 8,861

New consolidations 501

Transfer to deferred tax assets 405

Additions 1,000

Releases (656)

Other changes 1,362

Book value as at 31 December 11,473


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Other provisions The movement in other provisions is as follows:

The reorganisation plan at a production location abroad was almost completed in 2017, during which the provision was fully utilised.

The environmental provision relates to the obligation for future clean-up of asbestos which was identified in buildings of certain production units. The provisions have a long-term character and are valued at discounted value with an annual interest rate of 1.5%. The nominal value of the expected obligation amounts to € 1,051,000.

7. NON-CURRENT LIABILITIES

The purchase price of the acquisition of Korafin Beheer BvbA was partially transferred into a vendor-loan of € 25 million. A repayment schedule of 15 years with annual repayments of € 1,667,000 was agreed. A fixed interest rate of 3% is charged. The total amount with a duration of more than 5 years amounts to € 16,667,000. Repayment obligations within 12 months after the end of the financial year (€ 1,667,000) are included in current liabilities.

Capitalised financing cost related to the new revolving credit facility amounts to € 407,000 and is depreciated over a period of 5 years.


Book value as at 1 January 502

Additions 2

Utilisation (59)

Book value as at 31 December 445

AMOUNTS IN THOUSANDS OF EUROS REORGANISATION

ENVIRON MENTAL

OTHER TOTAL

Book value as at 1 January 2017 310 - 481 791

Additions - 832 56 888

Releases (310) - (440) (750)

Book value as at 1 January 2017 - 832 97 929

AMOUNTS IN THOUSANDS OF EUROSLOANS

CAPITALISED FINANCING COST

TOTAL

Book value as at 1 January 2017 - - -

New loans 25,000 (407) 24,593

Amortisation capitalised financing cost - 61 61

Transfer to repayment obligations (1,667) - (1,667)

Book value as at 31 December 2017 23,333 (346) 22,987


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8. CURRENT LIABILITIES

The current liabilities mainly comprise of items that are expected to be settled within 12 months. The fair value of current liabilities approximates the book value due to their short-term character.

Current liabilities include the repayment obligations on the non-current liabilities for the next 12 months in relation to a mortgage loan which was acquired via the acquisition of Korafin Beheer Bvba and the annual repayment of the loan as referred to in note 7.

9. DEBTS TO LENDING INSTITUTIONS

Debts to lending institutions concern amounts drawn from a revolving credit facility. The total facility amounts to € 80 million and has a term of 5 years. Interest rates are variable based on 1 month Euribor (with a minimum of 0%) plus a margin depending on the leverage ratio and amounts to 1.0% on average in 2017 (2016 0.9%).

A negative pledge and pari pasu clause was agreed with the banks. The availability of the total credit facility depends on certain financial ratios, including a Leverage Ratio below 3.00 and a Loan Cover Ratio above 1.50. At year end, the ratios were well within the agreed limits.

FINANCIAL INSTRUMENTS

For an explanation of principal financial instruments, reference is made to specific explanatory notes for each item.

General Interest rate risk and market risk are the most important financial risks the group is subject to.

The financial policy of the group is focused on limiting short term effects of exchange rate and interest fluctuations on the result and to follow the market exchange rates and market rate of interest in the long term. The group uses financial derivatives to manage financial risks attached to the business activities.

The group does not take speculative positions with financial derivatives.

Interest rate risk The interest rate risk policy has the objective of limiting the interest rate risks that ensue from the financing of the group and to optimise the net interest charges. This policy translates into a close monitoring of the development of market interest rates, with the intention to minimise volatility of the interest rates by means of interest rate swaps. Per the end of 2017, interest rate swaps have lapsed. Per balance sheet date no interest rate swaps are outstanding. The group applies cost price hedging accounting for the processing of the interest rate swaps.

Market risk Income partly depends on markets that are influenced by economic developments. The policy is to adjust the production and renting out capacity to market demand. In addition, price developments in purchase markets are a risk for the profitability of the enterprise. When market conditions permit, the fluctuation of prices in purchase markets is charged on to clients.


Debts to lending institutions 71,482 29,642


Other liabilities 4,681 3,901

Accruals and deferred income 47,657 41,734

Book value as at 31 December 126,893 92,915


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ASSETS AND LIABILITIES NOT RECOGNISED IN THE BALANCE SHEET(CONTINGENT ASSETS AND LIABILITIES) Rental obligations The rental obligations at the end of the reporting period can be specified as follows:

The increase of rental obligations is caused by the renewal of some rental contracts.

Operational leasing The obligations from operational leases at the end of the reporting period can be specified as follows:

Investment obligations Investment obligations for machinery amounts to € 3.9 million.

10. TOTAL TURNOVER

Geographical:

Divisional:


Within one year 641 534

One to five years 1,133 311

After five years 96 -

Total obligations as at 31 December 1,870 845


Within one year 194 151

One to five years 172 422

Total obligations as at 31 December 366 573


Pooling activities 216,091 212,310

Production, trade and repair activities 111,847 104,420

Total 327,938 316,730


The Netherlands 63,771 60,909

France 61,996 58,383

Germany 58,886 60,957

Britain 40,042 42,697

Belgium 43,733 44,365

Spain and Portugal 19,287 13,304

Austia 8,216 6,120

Italy 13,295 7,842

Other 18,712 22,153

Total 327,938 316,730


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11. WAGES, SALARIES AND SOCIAL SECURITIES

The average number of employees working in the group, calculated on a fulltime basis and divided by geographical spread, is as follows:

12. DEPRECIATION OF INTANGIBLE AND TANGIBLE FIXED ASSETS

13. OTHER CHANGES IN VALUATION OF (IN)TANGIBLE FIXED ASSETS

This amount (€ 1,300,000) relates to the partial impairment of a software system.

14. AUDIT COST

In the financial year, the following fees for the external auditor and its network referred to in Section 1 subsection 1a and 1e of the Audit Firms (Supervision) Act, being Deloitte Accountants BV, have been charged to the company and its group companies. The audit fees relate to the audit of the financial statements for the 2017 financial year, regardless of whether the work was undertaken during the financial year.


Salaries and wages 31,976 30,501

Social charges 6,630 6,119

Pension cost 612 692

Other personnel cost 10,929 8,230

Total 50,147 45,542


Intangible fixed assets 1,166 711

Tangible fixed assets 30,740 29,972

Total 31,906 30,683


Total allowance for the audit of the annual report 247 212

Total allowance for tax declarations and council 112 356

Total allowance for other occasions 6 35

Total 365 603

2017 2016

The Netherlands 232 223

France 111 105

Germany 229 221

Britain 102 60

Belgium 129 120

Spain and Portugal 15 6

Italy 6 6

Other 16 14

Total 840 755


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15. EXCEPTIONAL CHARGES

In 2017, a provision for the obligation of future asbestos removal was recognised as an exceptional charge. In 2016, exceptional charges were recognised to end the operations at a production company location abroad.

16. FINANCIAL INCOME AND EXPENSES

An amount of € 604,000 (2016: € 1,297,000) related to interest rate swaps is included in interest cost and equivalent expenses.

Exchange gains and losses mainly relate to movements in the value of mainly the British Pound, and to some extent the Turkish Lira and Polish Zloty, versus the euro.

17. TAX ON RESULTS FROM ORDINARY BUSINESS ACTIVITIES

The company and most of its Dutch subsidiary companies form a fiscal unity. The not valued tax loss carry forward of € 290,000 at the end of 2017 (2016: € 242,000) is related to foreign companies.

The tax on result from ordinary business activities, amounting to € 5.7 million, can be specified as follows:

In 2017 the discount rate for long term deferred taxes was changed from 5% to 3%, € 0.4 million foreign tax risk was provided for and a provision for double taxation of € 0.4 million was released.


Interest income and equivalent revenues 76 134

Interest cost and equivalent expenses (1,420) (2,252)

Exchange gains and losses (781) (2,562)

Total (2,125) (4,680)


Corporate income tax current year (5,157) (6,427)

Corporate income tax previous years (24) 57

Deferred corporate income tax 935 1,003

Change in discount rate deferred corporate income tax (1,477) -

Provision for tax risks (430) -

Other 482 (29)

Total (5,671) (5,396)

2017 2016

Average applicable rate 26.0% 27.0%

Un-capitalised tax loss carry-forwards 0.8% (0.2%)

Non-deductible costs 1.3% 1.1%

Correction for previous years 0.2% (0.3%)

Changes in tax rates - 0.6%

Changes in discount rate deferred corporate income tax 9.7% -

Other deviations (0.6%) (0.9%)

Total 37.4% 27.3%


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OTHER EXPLANATORY NOTES

Statement of the remuneration of the sole director has been dispensed with in conformity with Section 383 subsection 1 Book 2 of the Dutch Civil Code. In 2017, a remuneration for members of the Supervisory Board of the company of € 180,000 (2016: € 118,000) was paid by the company and its subsidiaries or group companies.

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COMPANY BALANCE SHEET AS PER 31 DECEMBERBEFORE APPROPRIATION OF RESULT

ASSETS (AMOUNTS IN THOUSANDS OF EUROS) 2017 2016

Fixed Assets (I)

Financial fixed assets

Participations 120,122 103,231

Deferred tax assets 339 -

Receivable from group company - -

120,461 103,231

Current Assets (II)

Receivables

Group companies 126,074 2,273

Other related parties - 1,209

Other receivables 3 193

126,077 3,675

Cash at banks and in hand 536 88,648

126,613 92,323

247,074 195,554


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LIABILITIES (AMOUNTS IN THOUSANDS OF EUROS) 2017 2016

Equity (III)

Equity capital 83 83

Legal reserves 892 1,687

Other reserves 69,428 95,095

Undistributed result 9,497 14,401

79,900 111,266

Provisions

Deferred tax liabilities - 753

- 753

Non-current liabilities (IV)

Long term loans 22,987 -

22,987 -

Current liabilities (V)


Debts to lending institutions 93,582 64,342

Group companies 48,482 3,314

Corporate income tax 19 -

Accruals and deferred income 437 129

144,187 83,535

247,074 195,554


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COMPANY INCOME STATEMENT FOR THE YEARENDED 31 DECEMBER


Result group companies 8,857 14,366

Other income and expenses after taxes 640 35

Result after taxation 9,497 14,401


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NOTES TO THE COMPANY BALANCE SHEET AND INCOME STATEMENT

GENERAL

The company financial statements have been prepared in accordance with the statutory provisions of Title 9, Book 2 of the Dutch Civil Code and the firm pronouncements in the Dutch Accounting Standards as issued by the Dutch Accounting Standards Board. The accounting policies for the company financial statements and the consolidated financial statements are the same. For the accounting policies regarding the company balance sheet and income statement, reference is made to the notes to the consolidated balance sheet and income statement.

I. FINANCIAL FIXED ASSETS

II. RECEIVABLES

With regards to receivables on related parties, an interest rates ranging from 0.5% to 2.0% is charged. An amount of € 0 for tax to be claimed (2016: € 193,000) is included in the other receivables.

AMOUNTS IN THOUSANDS OF EUROS PARTICI PATIONS

DEFERRED TAX ASSETS

RECEIVABLES TOTAL

Gross value as at 1 January 2017 97,852 - 5,379 103,231

Provision receivables participations as at 1 January 2017 5,379 - (5,379) -

Book value as at 1 January 2017 103,231 - - 103,231

Share in results 2017 8,857 - - 8,857

Currency translation (795) - - (795)

Investments in subsidiaries 8,924 - - 8,924

Changes in receivables - - (95) (95)

Changes in provision receivables participations (95) - 95 -

Transfer from Deferred tax liabilities - 339 - 339

Book value as at 31 December 2017 120,122 339 - 120,461

Gross value until 31 December 2017 120,122 339 5,284 125,745

Provision receivables participations as at 31 December 2017 - - (5,284) (5,284)

Book value as at 31 December 2017 120,122 339 - 120,461


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III. EQUITY

Share capital The issued capital of the company amounts to € 83,250 and comprises of ordinary shares. The total number of authorised shares is 1,850 (2016: 1,850). The composition of the share capital is as follows:

During the year, the company acquired 274 Class A1 shares and 136 Class C shares. The total acquisition cost is deducted from the other reserves.

Other reserves

AMOUNTS IN EURO AUTHORISED SHARE

CAPITAL

NOT POSTED

HELD BY THE

COMPANY

ISSUEDCAPITAL

Class A1 shares at Number 1,000 726 274 274

€ 45,-- nominal value each € 45,000 32,670 12,330 12,330

Class A2 shares at Number 2,000 1,452 - 548

€ 45,-- nominal value each € 90,000 65,340 - 24,660

Class A3 shares at Number 2,000 1,452 - 548

€ 45,-- nominal value each € 90,000 65,340 - 24,660

Class B shares at Number 250 250 - -

€ 45,-- nominal value each € 11,250 11,250 - -

Class C shares at Number 2,030 1,550 144 480

€ 45,-- nominal value each € 91,350 69,750 6,480 21,600

Class D shares at Number 120 120 - -

€ 45,-- nominal value each € 5,400 5,400 - -

Total Number 7,400 5,550 418 1,850

Book value as at 31 December 2017 € 333,000 249,750 18,810 83,250

AMOUNTS IN THOUSANDS OF EUROS RESERVECLASS A1

RESERVECLASS A2

RESERVECLASS A3

RESERVECLASS C

RESERVETOTAL

Book value as at 1 January 2017 - 10,929 10,929 73,237 95,095

Profit distribution prior financial year 5 613 613 13,170 14,401

Purchase own shares (5) - - (38,623) (38,628)

Dividend 2017 - - - (1,440) (1,440)

Other changes in equity - - - - -

Movements 2017 - 613 613 (26,893) (25,667)

Book value as at 31 December 2017 - 11,542 11,542 46,344 69,428


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The movements in equity are as follows:

Allocation of the result of the financial year 2016The financial statements 2016 were adopted in the General Meeting held on 11 May 2017. The General Meeting has adopted the allocation of the result in conformity with the proposal made for this purpose.

Proposed appropriation of profits 2017The Board of Directors proposes, with the approval of the Supervisory Board, to the General Meeting to add the result after taxation of the financial year to the other reserves. This proposal has not been processed in the financial statements.

IV. NON-CURRENT LIABILITIES

The purchase price of the acquisition of Korafin Beheer BvbA was partially transferred into a vendor-loan of € 25 million. A repayment schedule of 15 years with annual repayments of € 1,667,000 was agreed upon. A fixed interest rate of 3% is charged. The total amount with a duration more than 5 years amounts to € 16,667,000. Repayment obligations within 12 months after the end of the financial year (€ 1,667,000) are included in current liabilities.

Capitalised financing cost related the new revolving credit facility amounts to € 407,000 and is depreciated over a period of 5 years.

V. CURRENT LIABILITIES

For an amount of € 48,482,000 (2016: € 3,314,000), short term liabilities relate to debts to participating interests in which the company can exercise influence of importance.

AMOUNTS IN THOUSANDS OF EUROS ISSUED CAPITAL

LEGAL RESERVES

OTHER RESERVES

UNDIVIDED RESULT

RESERVETOTAL

Book value as at 1 January 2017 83 1,687 95,095 14,401 111,266

Profit distribution prior financial year - - 14,401 (14,401) -

Undivided result 2017 - - - 9,497 9,497

Dividend 2017 - - (1,440) - (1,440)

Movement in reserve exchange rate diffences - (795) - - (795)

Purchase own shares - - (38,628) - (38,628)

Movements 2017 - (795) (25,667) (4,904) (31,366)

Book value as at 31 December 2017 83 892 69,428 9,497 79,900

AMOUNTS IN THOUSANDS OF EUROSLOANS

CAPITALISED FINANCING COST

TOTAL

Book value as at 1 January 2017 - - -

New loans 25,000 (407) 24,593

Amortisation capitalised financing cost - 61 61

Transfer to repayment obligations (1,667) - (1,667)

Book value as at 31 December 2017 23,333 (346) 22,987


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OBLIGATIONS NOT APPARENT ON THE FACE OF THE BALANCE SHEET

For the purpose of some of the group companies involved in the consolidation, the legal entity has issued notices of liability as referred to in Section 403 Book 2 of the Dutch Civil Code (cf. Paragraph II-5a). On this basis the legal entity is jointly and severally liable for debts ensuing from legal acts of these group companies.

The legal entity forms part of a fiscal unity for corporate income tax and value added tax and is on this basis jointly and severally liable for the tax liabilities of the fiscal unity in its entirety. Corporate income tax is charged on to companies that form part of a fiscal entity as if they were independent-ly liable for tax, with due regard to an allocation of the advantages of the fiscal entity to the various companies (Dutch Accounting Standards Board 272.803 b). Settlement of the tax position takes place through current account.

Faber Halbertsma Beheer BV and the majority of its group companies together entered into a revolving credit agreement with lending institutions. In this context, there is joint and several liability between the holding company and several group companies.

SUBSEQUENT EVENTS

No subsequent events after balance sheet date which may have an impact on these financial statements occurred.


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SIGNING OF THE FINANCIAL STATEMENTS

Eck & Wiel, 24 April 2018

Board of Directors

_____________________I.G.C. Faber

Supervisory Board

_____________________P.J.J.M. Swinkels

_____________________H.J.G. Hendriks

CFO Faber Halbertsma Group

_____________________C.M.F. Peeters

_____________________L.M. Sondag

_____________________M. Kesteloo

VI. OTHERINFORMATION

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STATUTORY PROFIT APPROPRIATIONThe profit appropriation in accordance with the articles of association (article 23) is available for perusal at the office of the company.


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INDEPENDENT AUDITOR’S REPORTTo the shareholders and the supervisory board of Faber Halbertsma Beheer B.V.

REPORT ON THE AUDIT OF THE FINANCIAL STATE-MENTS 2017 INCLUDED IN THE ANNUAL ACCOUNTS

Our opinionWe have audited the accompanying financial statements 2017 of Faber Halbertsma Beheer B.V., based in Assen.

In our opinion the accompanying financial statements give a true and fair view of the financial position of Faber Halbertsma Beheer B.V. as at 31 December 2017, and of its result for 2017 in accordance with Part 9 of Book 2 of the Dutch Civil Code.

The financial statements comprise:

1. The consolidated and company balance sheet as at 31 December 2017.

2. The consolidated and company profit and loss account for 2017.3. The notes comprising a summary of the accounting policies and

other explanatory information.

Basis for our opinionWe conducted our audit in accordance with Dutch law, including the Dutch Standards on Auditing. Our responsibilities under those standards are further described in the “Our responsibilities for the audit of the financial statements” section of our report.

We are independent of Faber Halbertsma Beheer B.V. in accordance with the EU Regulation on specific requirements regarding statutory audit of public-interest entities, the Wet toezicht accountantsorgani-saties (Wta, Audit firms supervision act), the Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten (ViO, Code of Ethics for Professional Accountants, a regulation with respect to independence) and other relevant independence regulations in the Netherlands. Furthermore, we have complied with the Verordening gedrags- en beroepsregels accountants (VGBA, Dutch Code of Ethics).

We believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

REPORT ON THE OTHER INFORMATION INCLUDED IN THE ANNUAL ACCOUNTS

In addition to the financial statements and our auditor’s report thereon, the annual accounts contain other information that consists of:

Report of directors. Other Information as required by Part 9 of Book 2 of

the Dutch Civil Code.Based on the following procedures performed, we conclude that the other information:

Is consistent with the financial statements and does not contain material misstatements.

Contains the information as required by Part 9 of Book 2 of the Dutch Civil Code.

We have read the other information. Based on our knowledge and un-derstanding obtained through our audit of the financial statements or otherwise, we have considered whether the other information contains material misstatements.

By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is substantially less than the scope of those performed in our audit of the financial statements.

Management is responsible for the preparation of the other informati-on, including the Report of the Directors 2017 in accordance with Part 9 of Book 2 of the Dutch Civil Code, and the other information as required by Part 9 of Book 2 of the Dutch Civil Code.

DESCRIPTION OF RESPONSIBILITIES REGARDING THE FINANCIAL STATEMENTS

Responsibilities of management and the supervisory board for the financial statementsManagement is responsible for the preparation and fair presentation of the financial statements in accordance with Part 9 of Book 2 of the Dutch Civil Code. Furthermore, management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to fraud or error.

As part of the preparation of the financial statements, management is responsible for assessing the company’s ability to continue as a going concern. Based on the financial reporting framework mentioned, management should prepare the financial statements using the going concern basis of accounting unless management either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.

Management should disclose events and circumstances that may cast significant doubt on the company’s ability to continue as a going concern in the financial statements.

The supervisory board is responsible for overseeing the company’s financial reporting process.


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Our responsibilities for the audit of the financial statementsOur objective is to plan and perform the audit assignment in a manner that allows us to obtain sufficient and appropriate audit evidence for our opinion.

Our audit has been performed with a high, but not absolute, level of assurance, which means we may not detect all material errors and fraud during our audit.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. The materiality affects the nature, timing and extent of our audit procedures and the evaluation of the effect of identified misstatements on our opinion.

We have exercised professional judgement and have maintained professional skepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included e.g.:

Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtai-ning audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material missta-tement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.

Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

Concluding on the appropriateness of management’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the com-pany’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial state-ments or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern.

Evaluating the overall presentation, structure and content of the financial statements, including the disclosures.

Evaluating whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Because we are ultimately responsible for the opinion, we are also res-ponsible for directing, supervising and performing the group audit. In this respect we have determined the nature and extent of the audit procedures to be carried out for group entities. Decisive were the size and/or the risk profile of the group entities or operations. On this basis, we selected group entities for which an audit or review had to be carried out on the complete set of financial information or specific items.

We communicate with the supervisory board regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant findings in internal control that we identified during our audit.

Utrecht, 24 April 2018

Deloitte Accountants B.V.

P. van Roemburg

www.poolingpartners.nl

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